New Fed Regulations Make Workers Eligible for Overtime Pay

Overtime PayUnder California law, pay to employees whose positions are considered to be executive, administrative, or professional are exempt from overtime pay if their salaries are at least twice the full-time minimum wage. With the current minimum wage in California being $10 per hour, the necessary overtime pay salary level is $41,600 a year. This is a significantly higher level than the overtime pay exemption level under federal law, which is currently $23,660 a year.

However, new federal regulations recently announced by the U.S. Department of Labor will greatly decrease the number of workers who are exempt from overtime pay. Beginning December 1, 2016, the Fair Labor Standards Act will stipulate that full-time workers are not eligible for this exemption unless they make $47,476 per year or more. Thus, many California executive, administrative and professional workers will become eligible for overtime under federal law, even though California law does not currently require it. (As the California minimum wage increases to $15 an hour, however, California’s exemption level will once again become higher than the federal level.)

The regulations also make several other significant changes, including the following:

A New Definition of “Highly Compensated” Employees

The FLSA establishes a salary level at which an employee is considered “highly compensated.” If an employee has a salary that is at this level or higher, and the employee performs at least one duty of “an executive, administrative or professional employee,” then he or she will be considered a highly compensated employee who is exempt from the overtime requirements. (The FLSA clarifies that an employee’s primary duty must include office or non-manual work in order to be exempt as a highly compensated employee.)

This salary level is currently specified as $100,000 per year. However, starting on December 1, that number will increase to $134,004. According to the White House, this change is being made because employees at this salary level are more likely to perform the kinds of job duties that would make them exempt.

Inclusion of Bonuses

One change that will likely please employers is that non-discretionary bonuses, incentive payments, and commissions can now be included when determining whether an employee meets the salary level requirement. If an employer is tabulating an employer’s salary to determine his or her exemption status, these types of income can account for up to 10 percent of the total salary.

For example, if an employee has a salary of $45,000, and also earns $6,000 in bonuses, then the employee’s salary would be tabulated as $50,000. (The full $6,000 would not be counted, because only 10%  of the employee’s income can consist of bonuses, incentive payments, or commissions.) The employee would thus be exempt, so long as he or she meets the other requirements. [Read more…]

Labor Law Overtime Violations and Employee Commute

labor law overtime violations, california labor law overtime violationsLabor law overtime violations and employee commute. Must I pay overtime for my employee’s commute? Your receptionist has clocked out for the day and is driving home; yet, while at a stop light, gets a text from a co-workers regarding a work related question. It requires a simple “yes” or “no” and being a diligent employee he/she pulls over and responds with a text back. A few minutes later, another text is received that requires a very simple response which only takes a minute. In total, your receptionist spent approximately 1 minute and 20 seconds to read and respond to these texts.

No big deal right? Wrong! It is a big deal. The receptionist, being a non-exempt employee, is due overtime for the work performed answering texts while commuting home. For employers, the modern use of devices and smart phones by employees has further complicated the lines between clocking in and out of work and what is considered “working”.

The Fair Labor Standards Act in the United States regulates overtime, and additional state laws are in place that can affect employers, especially in regard to non-exempt employees who communicate on devices prior to and after work hours.

Employers need strict guidelines for non-exempt employees regarding work related texts, emails, face chats and messaging while commuting to and from work or employers may be liable for expensive penalties and fines.

It is important that employers evaluate non-exempt status to determine if their business is following fair labor standards regarding overtime. A general rule of thumb is: if a non-exempt employee is working (doing something for their employer) no matter their location, including being “on-call” they are considered “working” and must be paid appropriately. Additionally, if non-exempt employees are sent off-site during working hours they must be paid for their travel time as well.

Violations to labor laws carry serious penalties and fines, so small business owners should have carefully written policies. Labor law violations can trigger a domino effect for an employer: when one employee files a complaint with the Labor Board, other employees often follow. Even past employees can get in on the action.

A clearly defined policy regarding telecommuting, such as provided below, should be included in your Employee Handbook:


For non-exempt employees, telecommuting (working from another location, i.e., mobile, smart phone and/or from one’s home computer) is not permitted, unless pre-approved by your immediate supervisor, in writing, via e-mail communication. Without express written permission to telecommute, all non-exempt employees must perform their job duties at their primary central and customary workplace, “on clock” and cannot work or resume work if clocked out. Failure to comply with these requirements will subject the employee to disciplinary action and/or termination of employment.


 When pre-approved for telecommuting (working off site), it is a requirement that non-exempt employees work “on clock” via e-mail certified time by following this procedure:

  • Before beginning any work, send one (1) e-mail to your immediate supervisor outlining the anticipated duties you will be performing; the time recorded on this e-mail is your certified start time.
  • At the end of work, send one (1) e-mail to your immediate supervisor outlining the work you accomplished; this e-mail will certify your finish time.

Non-exempt employees may not work before the first e-mail is sent, and may not resume work after the second e-mail is sent. For clarification, the time that is marked “sent” on the e-mails will be the certified/official time record for purposes of compensation. It is the employee’s responsibility and word of honor to use this e-mail certified time “clock” system in an accurate manner and to strictly follow all break/rest period labor law requirements when working via telecommunication, no matter their location. [Read more…]


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