Current Event Analysis #3 â€“ Exempt Or Non-Exempt? That Is The Question!
Current Event Analysis exempt / non exempt
US labor department proposes that more than a million more American workers eligible for overtime.
Under presently enforced law, workers with an income below $455 per week ($23,660 yearly) must be salaried overtime if they work more than 40 hours per week. This proposal also updates the salary from January 2020 from $455 to $679 per week (equal to $35,308 yearly). The Government proposed a labor reform to modify the Statute of Workers and recognize their right to know the real duration of their workday, as well as their schedule and distribution. That is, sign the entry and exit of the job, as was traditionally done (in fact, it is still done in large companies, even if it is a forgotten practice in most medium and small companies). These changes will be the result of a proposal submitted by the Department of Labor, which includes changes to measures directly linked to the Labor Law of 1938, which determines who should receive an additional payment equivalent to a salary and a half when they work more than 40 hours per week. (U.S. Department of Labor Releases Overtime Update Proposal, 2019).
This proposal must get Parliament's support to be definitively approved, although it already has that of the CCOO and UGT unions, which they consider will avoid the practice that some companies carry out when not paying overtime to their workers. The CEOE, however, does not seem to agree with this modification of the Workers' Statute and calls the reform costly and unfeasible for most companies. Another rejection comes from some large companies, arguing that this type of practice is contrary to the "development of new work models based on labor flexibility." That is, they would hinder flexible hours and tend to traditional hours.
What the Government wants to do this change and is that for employee records the start and end time of their workday and that companies. The data for possible future inspections (and even internal labor audits, as it would be a handy tool for measure and improve office productivity ) or so that Social Security can dispose of them. The idea is that this information stored for four years. Besides, it must be sent monthly to employees so that they can keep track of the hours (ordinary and extraordinary) worked, as well as their representatives. The reform would apply to both companies and unions, and the Government and social agents could agree on some exceptions.
Why do you want to carry out this labor reform?
As a central premise, this reform is designed to end the fraud of overtime not paid and those considered partial days that are no more than full-time undercover. When the Law on Infractions and Sanctions in the Social Order is modified, those companies that fail to comply with the new regulations will be sanctioned (for each employee with whom they have refused to make the hourly record, or if this record is fraudulent). The problem of overtime is considered a form of exploitation of workers, in addition to negatively affecting Social Security and being part of the underground economy. That is why the Government is interested in putting letters in the matter. And it is not the first time it has been tried. In 2017, a proposal for a law to make a time control by companies already approved, and the National Court itself already declared such registration necessary, after the cases of Bankia, Abanca and Sabadell. Although the word "signing" provides rejection and feeling of excessive control in the worker, it is intended as a way to ensure the payment of their overtime, in addition to solving other problems that companies find, such as absenteeism. (U.S. Department of Labor Releases Overtime Update Proposal, 2019).
Changes in the new proposal for time control
The text that has been drafted for this reform includes the modification of four articles of the Workers' Statute; 4, 12, 34 and 35, which refer to the control by workers of their day, part-time contract and overtime. Besides, they indicate that the union representatives will receive the information from the workers. To ensure the compliance of a modified article of the Law related to Infractions and Sanctions in the Social Order. It awards a sanction to those companies that fail to comply with it. That is, companies will not only be obliged to keep the information of the time control but must send it, together with the overtime record, to the workers and/or their representatives. As for the way to do it, it will be the collective agreements that will be able to decide how they organize such records. (Final Rule: Overtime Update, 2019).
There are different solutions available to companies to exercise this obligation and have a record of the hours their employees work; Applications, hardware, more intuitive software. In short, programs that will prevent companies from having a work overload by doing it manually and accumulating millions of files.
What will happen to the proposal shortly?
In recent weeks, the Spanish Association for Digitalization has indicated that the hourly control of workers is contrary to productivity and competitiveness in companies. However, the Labor Inspectorate claims that it has no means to control the overtime that workers pay for and do not charge, nor to know if there is a fraud in part-time contracts. Everything indicates that the labor reform will be carried out. However, the aspect of the time control is the one that has had more controversy for the different affected parties, and it is the one that can change the most in the coming days.
Within the work of any company, there are times when there are high seasons or essential projects, and you need to stay longer in the company, so in many immigrant workers, there is a doubt about how overtime is paid in the United States. Today we will explain how to calculate your overtime pay and for what cases it is applicable, according to the United States Department of Labor.
What is overtime or overtime work?
It is all work activity carried out beyond the number of work hours allowed in the day or the week and outside the regular work schedule. Federal provisions regarding overtime pay are found in it are contained in the Fair Labor Standards Act (FLSA) or the Fair Labor Standards Act. It indicates that workers who are covered under this Law must receive payment for working more than 40 hours a week. The extra hour is paid at least 150% of the value of a regular hour. That is the proper time plus half. To estimate the payment of each extra hour, you must multiply the amount of one hour by 1.5. (Final Rule: Overtime Update, 2019).
According to the United States Department of Labor, workers covered by the Law must receive their overtime pay. However, US law does not detail the payment of overtime for working Saturdays, Sundays, holidays or rest days, unless overtime is worked on such days. The workweek is a continuous period of 168 hours. That is seven consecutive periods of 24 hours. You can start any day at any time. The payment of overtime earned must be received on the same day as the regular salary payment for the period worked. In other words, you are not allowed, for example, to work overtime in February and get paid at the end of the year. They must be settled as the payment period is established. Most workers in the United States have the right to receive overtime pay. However, some do not qualify for payment.
According to the FLSA, workers who earn $ 455.00 or more in a week and who perform an administrative or "management" function are not candidates for overtime pay. Functions exempt from receiving overtime may be:
Executive: When the work is done in an office or it is non-manual work related to the administration of operations. Jobs in which the criteria and discretion of the worker is required.
Technical: When tasks require advanced knowledge in a scientific field or a discipline that involves specialized instruction in a technical area.
Creative: When work involves arts in a given area, invention, the generation of ideas, imagination, etc. (U.S. Department of Labor Releases Overtime Update Proposal, 2019).
External sales: When the worker works in the sales area outside the office.
Computer workers: They are also exempt from overtime pay.
However, remember that if your weekly salary is better than the one indicated by the Law, you must be paid overtime in this type of work. This also means that if you receive a fixed salary as such and not an hourly payment, you must convert to hourly payment. To do this, divide your salary between 30 days and then between 8 hours. The result obtained is the value of your hourly pay in ordinary hours. (U.S. Department of Labor Releases Overtime Update Proposal, 2019).
Is it an obligation to pay overtime?
The employer is obliged to recognize the extraordinary work to its workers under the conditions established by the FLSA. In addition, this includes the shift time, breaks for rest or feeding and dead or non-productive time, which is when there is nothing to do at that time. It also includes the time used to perform any work-related task that your employer requests. It doesn't matter if it's something simple like going to leave documents or if it's more complicated work. This means that, if you take work home, you should be paid, as long as your boss knows that you are doing it and that he allows you to do it. Also if you arrive before the office to start work or if you retire later. Of course, you must do it in agreement with your superior. You cannot just decide to arrive earlier without any need or without a superior authorizing it.
2) Yes, under this job description employee is eligible to get over time and it is not exempt. Most employees covered by the Fair Labor Standards Act ("FLSA") must be paid at least once and a half their regular salary for any hour they work more than 40 in a work week. An employer that requires or allows an employee to work overtime is generally required to pay the employee's premium pay for that overtime job. For executives on the annual day plan, the exemption applies only to the days of rest they waive in return for an increase in their remuneration. It therefore applies from the 219th day of work. (Final Rule: Overtime Update, 2019).
For executives on a flat-rate basis in hours, the exemption applies as soon as the legal working time is exceeded if the fixed rate is monthly and from 1 607 hours when the fixed rate is annual. This figure corresponds to the legal duration of the annual work, deduction made of the 5 weeks of paid holidays and public holidays which are not Sundays. It's an average. The exemption does not apply to salary recalls when overtime was completed in 2018. (U.S. Department of Labor Releases Overtime Update Proposal, 2019).
Tax-free overtime only applies to employees
Exemption from social security contributions only concerns salary costs within the limits of the rates in tranche 1. Employers' expenses are not affected. The device covers both overtime and overtime. It applies to hours plus 10%, 25% or 50%. The exemption applies to all employees in the public and private sectors, including public servants and those hired by private employers. (Final Rule: Overtime Update, 2019).The part-time employee who signs an amendment to his employment contract, even temporarily to increase the number of hours, is not affected by the exemption. Hours worked as part of a work contract or an endorsement below the legal working hours are not exempt but remain so if the employee makes additional hours beyond his contract and endorsement . The modulated part-time is excluded from the device.
Finally, the exemption rate is capped according to the average rate applicable to employees whose salary exceeds the social security ceiling, which may be exempted from the rate of 11.31%. The decree of social protection and against labor precariousness that the Government plans to approve this Friday includes the obligation on the part of the companies to register the working hours of the workers and keep that register for four years. This is a measure that the Executive already contemplated in the labor counter- reform he was preparing and that the abrupt end of the legislature has prevented him from moving forward . In the statement of reasons of the decree, always according to the draft to which the country has had access, the registration is justified as a measure to combat job insecurity. Labor flexibility, the text points out, cannot lead to breach of the regulations on maximum hours and overtime.
Final Rule: Overtime Update. (2019). Retrieved from https://www.dol.gov/whd/overtime2019/.
U.S. Department of Labor Releases Overtime Update Proposal. (2019). Retrieved from
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