Category Archives: FLSA

President Proposes Changes to FLSA Regulations

In an article yesterday, the President announced that he would be proposing changes to FLSA overtime and minimum wage exemptions. These changes, if approved will have a significant impact on many business who rely on executive or administrative exemptions to the FLSA. These exemptions permit an employer to pay a straight salary to certain employees even when those employees work more than 40 hours per week. Without these exemptions, the employer would be required to pay the employee one and one half times his regular rate of pay for each hour over 40. These proposed changes mean that fewer employees will be eligible for these exemptions.

The Law, the Rules, and the Proposed Changes

Section 213(a)(1) of the Fair Labor Standards Act (“FLSA”) provides that employees “employed in a bona fide executive, administrative, or professional capacity” are not subject to the minimum wage and overtime provisions of the FLSA. The rules defining these employees provide, among other things, that the employee must be “[c]ompensated on a salary basis at
a rate of not less than $455 per week.” 29 CFR Sections 541.100(a)(1) & 541.200(a)(1). Based upon this, employees who meet the other requirements of an executive or administrative employee, who are paid at least $23,660 a year, do not need to be paid a minimum wage nor do they need to be paid one and one half times their regular rate when they work more than 40 hours in a week.

The President plans to have this amount increased to $50,400 per year (almost $970.00 per week) in 2016. While this change will most likely affect executive, administrative, and professional employees, from a practical standpoint, this will largely affect companies using the executive and administrative exemptions.

Executive Employees
In addition to the salary requirements, to meet the executive exemption, the employee must:

  • Have a primary job duty of “management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof;”
  • “[C]ustomarily and regularly [direct] the work of two or more other employees;”
  • Have “the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight.”

29 CFR Section 541.100(a).

Management activities include: “interviewing, selecting, and training of employees; setting and adjusting their rates of pay and hours of work; directing the work of employees; maintaining production or sales records for use in supervision or control; appraising employees’ productivity and efficiency for the purpose of recommending promotions or other changes in status; handling employee complaints and grievances; disciplining employees; planning the work; determining the techniques to be used; apportioning the work among the employees; determining the type of materials, supplies, machinery, equipment or tools to be used or merchandise to be bought, stocked and sold; controlling the flow and distribution of materials or merchandise and supplies; providing for the safety and security of the employees or the property; planning and controlling the budget; and monitoring or implementing legal compliance measures.” 29 CFR Section 541.102.

Administrative Employees

In addition to the salary requirements, to meet the administrative exemption, the employee’s primary job duty must be the “performance of office or non-manual work directly related to the management or general business operations” and must include “the exercise of discretion and independent judgment with respect to matters of significance.” 29 CFR Section 541.200(a). As examples of administrative employees, the CFR lists administrative assistants to business owners and executives, project leads, human resource managers, employees in the financial service industry, and insurance claims adjusters.


The President expects these rules to be in place by the end of the year. This means that employers relying on the administrative and executive exemptions to the FLSA need to closely follow these rule changes and be prepared to reevaluate their exemptions upon their passing. This is a significant, over 100%, increase in the salary threshold to meet these exceptions. As these are rule changes, not legislative changes, the approval of congress is not needed. However, there is a procedure which must be followed for any change to the CFR (outlined here).

If you have questions or concerns regarding these exemptions, the proposed rule changes, or any other employment law mater, please contact the experienced professionals at Smith & Associates for a free consultation.

FLSA and the Department of Labor Rules

Yesterday, the United States Supreme Court issued its ruling in of Perez v. Mortgage Bankers Ass’n, No. 13-1041, 2015 WL 998535, at *1 (U.S. Mar. 9, 2015). The facts leading to this case were explained by the Court as follows:

In 1999 and 2001, the Department of Labor’s Wage and Hour Division issued letters opining that mortgage-loan officers do not qualify for the administrative exemption to overtime pay requirements under the Fair Labor Standards Act of 1938. In 2004, the Department issued new regulations regarding the exemption. Respondent Mortgage Bankers Association (MBA) requested a new interpretation of the revised regulations as they applied to mortgage-loan officers, and in 2006, the Wage and Hour Division issued an opinion letter finding that mortgage-loan officers fell within the administrative exemption under the 2004 regulations. In 2010, the Department again altered its interpretation of the administrative exemption. Without notice or an opportunity for comment, the Department withdrew the 2006 opinion letter and issued an Administrator’s Interpretation concluding that mortgage-loan officers do not qualify for the administrative exemption.

Perez v. Mortgage Bankers Ass’n, No. 13-1041, 2015 WL 998535, at *9 (U.S. Mar. 9, 2015)

While the majority of the opinion revolves around a government agency’s ability to interpret its own rules, the impact to the Mortgage Bankers Association (“MBA”) is that mortgage-loan officers are now subject to the overtime provisions of the FLSA. However, as the Court points out, the MBA would have a defense to any FLSA liability that occurred before the agency reversed its interpretation.

As amended by the Portal–to–Portal Act of 1947, 29 U.S.C. § 251 et seq., the FLSA provides that “no employer shall be subject to any liability” for failing “to pay minimum wages or overtime compensation” if it demonstrates that the “act or omission complained of was in good faith in conformity with and in reliance on any written administrative regulation, order, ruling, approval, or interpretation” of the Administrator of the Department’s Wage and Hour Division, even when the guidance is later “modified or rescinded.” §§ 259(a), (b)(1).


This shows why it is important for employers to not only understand the FLSA, but the rules and interpretations promulgated by the Department of Labor. By understanding and following these rules, interpretations, and opinions, an employer reduce its potential FLSA liability. At Smith & Associates, we provide all aspects of Employment Related Legal Representation to Employers including: Compliance Review, Litigation, Appeals, Employment Contracts, Handbook and Policy Drafting, and Unemployment Appeals. If you need held with employment related law issues, contact us for a free consultation.

The FLSA and Nursing Care Facilities – Unique Challenges

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While most businesses are subject to the Fair Labor Standards Acts’ (“FLSA”) overtime and minimum wage requirements, skilled nursing facilities, assisted living facilities, and nursing homes (collectively “Nursing Care Facilities”) face unique challenges when attempting to comply with the FLSA’s requirements. In fact, a Department of Labor survey conducted in 2000 showed that 84% of nursing homes were in violation of the FLSA’s overtime provisions. See Violations of the FLSA can be costly. If found to be in violation, an employer will be liable for all of the past overtime owed, liquidated damages (which effectively doubles the amount owed), and attorney fees. 29 U.S.C. § 216(b). If not handled quickly and effectively, oftentimes the attorney fees can far outweigh the actual damages. To avoid these costs, Nursing Care Facilities need to continually ensure that they are in compliance with the FLSA.

Live–In Care Staff

Recently, a Central Florida ALF, Alta HealthCare Group, Inc. (“Alta”), was sued by a live-in care provider for violations of the FLSA’s overtime provisions. “Florida regulations require ALFs to have at least one staff member certified in cardiopulmonary resuscitation (“CPR”) on-site at all times.” Maldonado v. Alta Healthcare Grp., Inc., No. 6:12-CV-1552-ORL-36, 2014 WL 1661265 (M.D. Fla. Mar. 26, 2014) citing Fla. Admin. Code Ann. r. 58A–5.0191(4). To comply with this requirement, Alta hired a staff member at each of its facilities to reside at the ALF. This staff member was expected to perform regular duties when scheduled during the day shift (8:00 a.m. to 8:00 p.m.), and, if an issue arose, provide services during the night shift (8:00 p.m. to 8:00 a.m.). Alta considered any night issues to be minor and non-compensable because the staff “benefited from the ‘implicit value’ of not having to pay living expenses.” I d. Due to these working conditions, Norma Maldonado, a live-in care staff member, filed a lawsuit alleging FLSA overtime violations.

The Court stated that, due to the fact-specific nature of arrangements involving residing on the employer’s premises, employers and employees were free to construct reasonable agreements regarding compensation. Id. citing 29 C.F.R. § 785.23. However, the Court stated, “to be reasonable, employees must be compensated for any actual interruptions in sleep and, moreover, no more than eight hours of sleep time may be deducted for each 24-hour on-duty period.” Id. Emphasis added. The Court held that because Alta’s agreement did not compensate Maldonado for the interrupted sleep and because it attempted to deduct more than 8 hours of sleep time, it was unreasonable and unenforceable. Id.

With the agreement unenforceable, the Court then went on to determine if there were any overtime violations. The Court found that, because Maldonado put notes in each resident’s file every time she had an issue during the night shift, Alta had constructive knowledge of her work and was required to pay for that time. Id. Further, while Alta could claim the value of the residence as compensation, its mere assertion that the value was worth $1,085.00 was not sufficient and it would need to provide more evidence as to the reasonable value of the residence if it wished to apply that amount towards compensation. Id.

Shortly after the Court made this ruling, the parties settled. There are three key lessons to be taken from this case. First, employers should always ensure that working hours are recorded and properly compensated. If a Nursing Care Provider knows or should know that an employee is working, that person is entitled to compensation. Second, if a Nursing Care Provider has live-in staff, it needs to have an agreement with the employee that complies with all of the applicable regulations to be enforceable. If a Court determines that the agreement is not enforceable, the Nursing Care Provider will be liable for all uncompensated time. Third and finally, if a Nursing Care Provider plans on compensating an employee in ways other than monetarily, it needs to have an objectively reasonable and factually supported basis to determine the value of that compensation.

8 and 80 Rule

In general, an employer is required to pay its employees one and one-half times their regular rate of pay for every hour worked over 40 hours in a work week. 29 U.S.C. § 207(a)(2). However, due to the unique issues faced by health care providers when it comes to staffing, the FLSA includes a second option for calculating overtime – the 8 and 80 rule. The 8 and 80 rule allows Nursing Care Facilities, with the agreement of the employee, to calculate overtime on a 14-day basis as opposed to a 7-day basis. While there are exceptions, the agreement should be in writing, signed by the employee, and kept in their file. See 29 C.F.R. § 778.601(c). When overtime is calculated under the 8 and 80 rule, an employee is entitled to one and one-half times their regular rate of pay for any hours worked over 8 in one day and any hours worked over 80 in the fourteen day period. See 29 U.S.C. § 207(j). Further, premium pay for daily overtime under the 8 and 80 system may be credited towards the overtime compensation due for hours worked in excess of 80 for that period. 29 C.F.R. § 778.601(d).

For example, take this employee’s two week timesheet:

During this two week period, the employee worked a total of 80 hours, 56 hours on Week 1 and 24 hours on Week 2. Under the standard overtime rules, the employee would be entitled to 16 hours of overtime pay for Week 1. However, under the 8 and 80 rule, the employee would only be entitled to 8 hours of daily overtime for Monday of Week 2 and, since the total number of hours worked for the two week period did not exceed 80 hours, the employee would not be entitled to any additional overtime for the two week period. In this situation, the 8 and 80 Rule saved the employer 8 hours of overtime pay.

The 8 and 80 rule can provide much needed flexibility to Nursing Care Providers when it comes to staffing. However, this rule adds another layer of complexity to an already complex system of rules that employers must follow. Nursing Care Providers that wish to implement the 8 and 80 rule should consult with an experienced employment law attorney to ensure that they are in compliance with the FLSA.


Complying with the FLSA can prove a difficult challenge for any organization. The unique situations presented by Nursing Care Facilities only amplify those challenges. Further, the cost of non-compliance is incredibly high. Not only will the facility be liable for double damages, it will be liable for the employees’ attorney’s fees. And, with 80% of Nursing Care Facilities out of compliance, the potential for liability is huge.

Many Nursing Care Facilities don’t want to incur the fees of an experienced FLSA attorney to ensure that they are in compliance. However, failure to comply with the FLSA can result in the facility paying not just their attorney fees, but the attorney fees of their employees. If you are a Nursing Care Facility and you need help understanding or dealing with a FLSA issue, contact us a Smith & Associates for a free consultation.

Susan C. Smith is a shareholder in the law firm of Smith & Associates, and has practiced in the area of health care law for over 15 years.

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Employer Liability Under the FLSA

If your company has received a demand letter or a complaint alleging Fair Labor Standards Act (“FLSA”) violations, it needs to act quickly to protect itself and its rights.

  • Institute a Litigation Hold: Once your business becomes aware that there is or may be a lawsuit against it, it has a duty to protect the relevant records. Failure to do so may lead to sanctions from the Court which could include the entry of a default judgment for the employee.
  • Compile Timekeeping Records: It will come down to you, the employer, to ultimately produce records to show that there was no FLSA violation. Getting these records in order soon can cut down on litigation time and costs.
  • Don’t Retaliate: If the person bringing the claim is still employed with you, do not fire, demote, or otherwise retaliate against him or her. This can result in additional claims and damages.
  • Timely Respond: Ensure that you timely respond to all due dates. Failure to timely respond to the complaint can lead to a default judgment in favor of the employee.

    • Hire an Experienced Attorney
      If the employee prevails in the lawsuit, the FLSA provides that the employer must pay for the employee’s attorney fees. So, if you are thinking of saving money by not hiring an attorney, you may end up paying for one anyway—the employee’s. FLSA litigation can be complex, involving not just the statute, but rules from the Department of Labor and case law. Navigating through FLSA litigation requires an attorney who understands these details and will vigorously defend your business against these claims. At Smith & Associates, we understand employment litigation and are committed to providing you with the quality representation you deserve.

      At Smith & Associates, we provide all aspects of Employment Related Legal Representation to Employers including:Compliance Review, Litigation, Appeals, Employment Contracts,Handbook and Policy Drafting, and Unemployment Appeals. If you need held with employment related law issues, contact us for a free consultation.