Category Archives: Overtime


According the Wall Street Journal, and as anticipated, the US Department of Labor (DOL) is appealing the injunction that halted the December 1 implementation of a sweeping overtime-pay regulation, advancing a federal court battle over a rule that could face an eventual challenge from President-elect Donald Trump.

Image result for appeals court

Labor Secretary Thomas Perez and other department officials filed a notice of appeal on Thursday with the Fifth U.S. Circuit Court of Appeals in New Orleans to defend an Obama administration rule requiring employers to start paying overtime to workers earning salaries of less than $47,476 a year.  Ironically, the rule was struck down by Obama appointee, Judge Amos Mazzant of Texas.

The WSJ notes that even barring court action that could permanently block the rule, the regulation could face a challenge from President-Elect Donald Trump, who has said he would be rolling back business regulations he thinks do economic harm.  While Mr. Trump hasn’t commented specifically about the overtime-pay regulation, Republicans have criticized the rule as excessive.

What can businesses expect and how can they plan given the legal wrangling?:  businesses that did not implement the proposed, but now banned, rule, can continue to operate lawfully under the “old,” existing rule.  That rule requires  exempt, salaried workers be paid at least $23,660.

The appeals process will likely extend into 2017, be decided by the court of appeals, and then reach a crescendo and conclusion at the US Supreme Court.  Separately, expect the Trump administration, after he is inaugurated on January 20, to try and bury the proposed new rule through an administrative and/or executive action.

HR Law Insider will immediately inform businesses if there is any change in the law and what they need to do.

For further information on these or other employment, business, and HR matters, contact Art Bourque at Bourque Law Firm.


Yesterday, in a shocking decision, and a stern rebuke to the Obama administration, a United States federal court judge in Texas struck down the Department of Labor’s (DOL) new overtime rule that was set to go into effect on December 1.

This brief HR Law Insider article explains all you need to know about the judge’s decision and its huge impact on businesses throughout the nation.

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The DOL’s much ballyhooed regulation that was to raise the salary limit below which workers automatically qualified for overtime pay to $47,476 from $23,660 was set to go into full force and effect on December 1.

However, months ago over 20 states sued the DOL arguing, among other things, that the DOL exceeded its authority in enacting the new regulations.  The states contended that Congress’ law — the Fair Labor Standards Act (FLSA) — could not be changed by a fiat of the DOL.  In other words, the states contended that the Obama administration’s DOL exceeded its authority.


Judge Amos L. Mazzant III of the Eastern District of Texas ruled that the DOL has indeed exceeded its authority by raising the overtime salary limit.  The judge promptly enjoined (i.e. stopped) the DOL rule from going forward not only in Texas, but nationwide.

Understand, the court’s injunction is a temporary ruling that stops the regulation until the judge can issue a final ruling on the merits.  However, the handwriting is on the wall: the judge is highly likely to strike down the regulation when he issues his final ruling.

Until further notice, the rule increasing the minimum salary threshold of exempt workers to $47,476 from $23,660 is dead.  Businesses need not pay exempt workers more than $23,660 to comply with the FLSA.

Judge Mozzant’s ruling is clearly the first shot across the bow in a changing business landscape.  Expect more such pro-business directives from the incoming Trump administration.  These will inevitably be met with fierce resistance from pro-labor groups.

As the battle rages on, HR Law Insider will be here to provide cutting edge information and commentary to guide businesses, managers, and HR professionals.

For further information on these or other employment, business, and HR matters, contact Art Bourque at Bourque Law Firm.



Today, President Obama and Secretary Perez announced that the US Department of Labor’s final rule will automatically extend overtime pay eligibility to 4.2 million workers.

Here is all you need to know about the new rule:

TIMING:  The salary increases will not go into effect until December 1, 2016.

SALARY THRESHOLD:  On December 1, the threshold to claim an overtime exemption for salaried workers is $47,476, or $913 a week.

HIGHLY COMPENSATED EMPLOYEES(HCE):  On December 1, the threshold to claim an overtime exemption for highly compensated employees moves from $100,000 to $134,004 a year.

AUTOMATIC UPDATES:  The salary threshold will be updated every three years, beginning January 1, 2020.

BONUSES, INCENTIVE PAYMENTS, AND COMMISSIONS:  The final rule will allow up to 10 percent of the salary threshold for non-HCE employees to be met by non-discretionary bonuses, incentive pay, or commissions, provided these payments are made on at least a quarterly basis.

DUTIES TEST:  The final rule does not make any changes to the “duties test” that determines whether white collar salaried workers earning more than the salary threshold are ineligible for overtime pay.

Here is a more detailed summary of the final rule.

There you have it!

For further information on this or other employment law topics, contact Art Bourque at Bourque Law Firm.



Yesterday, the US Department of Labor sent its overtime rule to the White House Office of Management and Budget (OMB). This occurred much sooner than anticipated.

The result:  because OMB review typically takes four to six weeks, the final rule will be the law of the land as early as next month.

The effect:  the new regulations will abolish the overtime exemption for all currently salaried employees that make less than $50,000 per year.  When enacted, the regulations will greatly reduce businesses’ ability to claim executive, administrative, professional, outside sales, and computer exemptions under the Fair Labor Standards Act (FLSA). The regulations will affect millions of workers  and their employers.

Here is a more in-depth article on the topic.

For further information on this or other employment law topics, contact Art Bourque at Bourque Law Firm.


The US Department of Labor (DOL) announced last Thursday that it investigated an Arizona painting contractor and found Fair Labor Standards Act (FLSA) violations resulting in nearly $200,000 in damages.  This is yet another reminder for Arizona businesses that the DOL is aggressively on the hunt for employers who misclassify employees, fail to properly record workers’ time, and do not pay overtime.

Let’s review the facts of Arizona Painting Company case so that your company will not find itself in a $200,000 (or more) bind.


Arizona Painting Company is a painting contractor located in the Phoenix suburb of Chandler.

A DOL investigation found that the company failed to pay their employees the federal minimum wage and overtime in violation of the FLSA.

Employees legally-entitled to minimum wage and overtime were paid flat weekly salaries that, when divided by the number of hours they actually worked, fell short of the federal minimum wage, currently $7.25 per hour. These employees routinely worked between 50-55 hours per week, yet the employer also failed to keep an accurate record of hours worked and failed to pay them overtime for hours worked beyond 40 per week, as required by the FLSA.

Other employees, who were paid on a commission basis without regard to how many hours they had worked, were also paid less than the minimum wage and were denied overtime.

Arizona Painting Company agreed to comply with the FLSA and will pay $165,638 in back wages and damages to 79 workers. The commercial and residential painting contractor will also pay an additional $29,546 in civil money penalties. As part of the settlement, the employer notified employees about the case and agreed to provide them with training on their rights under the FLSA.


“Workers in [the contracting] industry are among the most vulnerable that we see,” said Eric Murray, director of the Wage and Hour Division’s district office in Phoenix. “As the back wages, damages and penalties paid in this case illustrate, we are committed to ensuring that workers receive every penny they have rightfully earned.”

“Other employers should take note of this investigation, and ensure that they are in compliance with the law. Other employees being paid in this manner should give us a call. Our services are free, and confidential.”


How can your business avoid the painting contractor’s mistakes?  Here’s how:

  • Make sure you have a solid and defensible recordkeeping system that accurately records all time worked
  • For FLSA recordkeeping requirements, read this previous HR Law Insider article
  • Pay non-exempt employees on an hourly, not salary, basis; this way it is much easier to accurately determine any overtime due and much less likely you will miscategorize employees
  • Conduct an annual internal audit with counsel; this should neither be difficult nor expensive — few employees fall into a grey area when it comes to classifying and properly paying employees


The tips listed above are but several of many measures that go into an effective FLSA compliance program.  Put the proper systems in place, execute consistently, and your business needn’t fear the “dreaded” DOL audit.

Art Bourque has guided businesses and individuals in various FLSA and DOL audits and investigations.  He has defended and brought claims under the FLSA and other DOL and EEOC regulated laws.  Contact Mr. Bourque with any questions regarding these or other employment or human resource issues.


As explained in a previous article, the most effective way to avoid a DOL audit is to treat your employees well —  because the number one cause of audits is employee complaints.

So, while pondering the state of your employees’ morale, enjoy The Trees by Rush.  This Neal Peart creation brilliantly captures what happens when those above (the Oaks) and those below (the Maples) do not get along.  Namely, “hatchet, axe, and saw” intervene (the Government).  At least this has always been my interpretation of the song — one of my favorites.  The lyrics appear below the video:

There is unrest in the Forest
There is trouble with the trees
For the Maples want more sunlight
And the Oaks ignore their pleas.

The trouble with the Maples
(And they’re quite convinced they’re right)
They say the Oaks are just too lofty
And they grab up all the light
But the Oaks can’t help their feelings
If they like the way they’re made
And they wonder why the Maples
Can’t be happy in their shade?

There is trouble in the Forest
And the creatures all have fled
As the Maples scream ‘Oppression!’
And the Oaks, just shake their heads

So the Maples formed a Union
And demanded equal rights
‘The Oaks are just too greedy
We will make them give us light’
Now there’s no more Oak oppression
For they passed a noble law
And the trees are all kept equal
By hatchet,
And saw…


2016 is almost upon us.  As previously discussed, businesses need to plan now for new regulations that will go into effect abolishing the overtime exemption for all currently salaried employees that make less than $50,000 per year.

When enacted, the regulations will greatly reduce businesses’ ability to claim executive, administrative, professional, outside sales, and computer exemptions under the Fair Labor Standards Act (FLSA). The regulations will affect millions of workers and their employers.


I am receiving a number of questions about the new regulations, including “when exactly will they go into effect?” and “will we have any advance notice?”

Here are the answers:

  • The new regulations are almost sure to go into effect in 2016.
  • Businesses will likely have 60 days’ notice before the change in the law.

Because of the 2016 presidential and other elections, there is virtually no chance the DOL would wait until 2017 to implement the new regulations.   Neither the DOL nor the Obama administration will risk a conservative victory and a shift back towards “pro business” policies.

Earlier this week I emailed the DOL regarding how much advance notice we can expect.  I received the following response:  “We will not know the effective date of the final rule until the Final Rule publishes sometime in 2016.  Typically, the effective date is sixty days after publication of a final rule.”


Plan now for the new rule changes — which are discussed in more detail here and here.  This way, when the 60 day notice arrives, your business will transition smoothly — as opposed to undergoing a rushed fire-drill that may lead to mistakes.

Speaking of mistakes:  understand, the DOL will be closely watching businesses to ensure they do not attempt any end-runs around the new regulations.  So, while business creativity is normally to be applauded, make sure that your business does not pay, classify, or otherwise treat employees in a way that might violate the Fair Labor Standards Act.

In any event, HR Law Insider and Bourque Law Firm will stay on top of any new developments in the pending rules and will immediately announce when they are enacted.  Until then, enjoy Bruce Springsteen’s awesome salute to Bob Dylan’s salute to the fact that The Times They Are a Changin’:



Today the Department of Labor announced a proposed rule that would extend overtime protections to nearly 5 million white collar workers within the first year of its implementation.  This proposed rule was anticipated and discussed in last week’s HR Law Insider article.

If enacted, the proposal will guarantee overtime pay to most salaried workers earning less than an estimated $50,440 next year.

As part of its annual brown bag employment law seminar for businesses, in October Bourque Law Firm will be holding informational seminars on how to deal with the proposed rules, which will likely become law sometime in 2016. The seminars will also include a more general discussion of current trends in employment law and ways to reduce exposure to employee and government claims.

Please contact Mr. Bourque if you are interested in attending these free seminars, which are Mr. Bourque’s way of “giving back.”

Note:  to add some spice — or salsa — we are moving the venue from Bourque Law Firm’s offices to across the street at Aunt Chilada’s.


Regarding the proposed rules, the White House issued the following press release:

“The salary threshold guarantees overtime for most salaried workers who fall below it, but it is eroded by inflation every year.  It has only been updated once since the 1970s, when the Bush Administration published a weak rule with the strong support of industry.  Today, the salary threshold remains at $23,660 ($455 per week), which is below the poverty threshold for a family of four, and only 8 percent of full-time salaried workers fall below it.

President Obama directed the Secretary of Labor to update regulations relating to who qualifies for overtime pay so that they once again reflect the intent of the Fair Labor Standards Act, and to simplify the rules so they’re easier for workers and businesses to understand and apply.  Following months of extensive consultations with employers, workers, unions, and other stakeholders, the Department of Labor developed a proposal that would:

  • Raise the threshold under which most salaried workers are guaranteed overtime to equal the 40th percentile of weekly earnings for full-time salaried workers.  As proposed, this would raise the salary threshold from $455 a week ($23,660 a year) – below the poverty threshold for a family of four – to a projected level of $970 a week ($50,440 a year) in 2016.
  • Extend overtime pay and the minimum wage to nearly 5 million workers within the first year of its implementation, of which 56 percent are women and 53 percent have at least a college degree.
  • Provide greater clarity for millions more workers so they – and their employers – can determine more easily if they should be receiving overtime pay.
  • Prevent a future erosion of overtime and ensure greater predictability by automatically updating the salary threshold based on inflation or wage growth over time.

In conclusion, big change is coming, which is the perfect segue for this week’s HR Law Insider music video — a sweet ditty named Change by Blind Mellon:


Does your business have any salaried employees making less than $50,000 per year?  Not for long, if a widely anticipated federal law goes into effect.

This week, the US Department of Labor (DOL) is expected to propose new regulations that may abolish the overtime exemption for all currently salaried employees that make less than $50,000 per year. 

When enacted, the regulations will greatly reduce businesses’ ability to claim executive, administrative, professional, outside sales, and computer exemptions under the Fair Labor Standards Act (FLSA). The regulations will affect millions of workers  and their employers.

Does your business have any managers, assistant managers, supervisors, bookkeeper/accountants, office administrators, or other salaried employees earning less than $50,000 per year?  If so, start planning NOW for what appears to be inevitable change.


Employers currently need not pay overtime to salaried employees who make more than $23,660  and meet the other criteria for one of the FLSA’s exemptions (administrative, executive, professional, etc.).

However, many employees and pro-labor groups have argued that $23,660  is inadequate as a minimum threshold for “managerial” employees that are often forced to work up to and beyond 60 hours per week.

They also contend that many employers abuse the exemption by falsely labeling manual workers as “assistant managers” and “managers.” In truth, they say, the label is nothing more than an end run around paying overtime to these hard working employees.

The Obama administration and Department of Labor have listened.  In a 2014 memorandum to the Secretary of Labor, President Obama said that the exemptions “have not kept up with our modern economy.” The administration then requested that the Department of Labor propose new regulations that could more than double the minimum salary necessary for employers to meet the overtime exemption.

In a “Rewarding Hard Work” blog post just last month, the Secretary of Labor made no bones about his belief that “millions of salaried workers have been left without the guarantee of time and a half pay for the extra hours they spend on the job and away from their families.”


If your business has salaried employees making less than $50,000, it should begin evaluating how it will deal with being forced to pay such employees overtime.

Many employers will simply reclassify the workers as hourly and pay overtime when it is due; others will reduce hourly wages, such that the employees’ overall compensation is the same as it is now when overtime is calculated; and yet other businesses will ensure that no overtime is worked.

Businesses should be careful, however, not to get too “crafty” with any changes — lest such changes violate the FLSA.  Consult with legal counsel regarding the legality of changes, as the DOL is sure to be on the lookout for companies trying end runs around the new regulations.

There are many other aspects of the upcoming regulations that will affect the proper classification of workers as hourly or exempt.  When the proposed regulations are announced, the HR Law Insider will provide an update on the central issues confronting employers.

One final note:  it is possible that the threshold for salaried workers will be something less than $50,000.  In any event, it will be substantially greater than $23,660 given the President’s and Secretary’s pronouncements.

Regardless of what businesses will do when the new regulations become law — likely in 2016 — they should annually conduct internal audits with counsel to determine whether employees are properly classified. I have recently defended a number of Department of Labor Audits in the construction, real estate, manufacturing, and restaurant industries.  Properly classifying employees and paying appropriate overtime is almost always the DOL’s top priority.


This week’s video — “Are Bosses Cheating Workers Out of Overtime”  — crystallizes the battle between employees and businesses regarding overtime:

For further information on this or other employment law topics, contact Art Bourque at Bourque Law Firm.


Many employers pay wages to employees without considering the laws they must comply with. Typically, employers are never “reminded” of these laws until they confront a Department of Labor audit or damages lawsuit from a disgruntled ex-employee.

The main law governing the payment of wages is the Fair Labor Standards Act (FLSA). The FLSA establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in federal, state, and local governments.   The FLSA is enforced by the United States Department of Labor (DOL). Various states, including Arizona, have their own laws regarding the payment of wages. The federal minimum wage is $7.25 per hour, but in Arizona it is $7.90 per hour. If a company’s state has a higher minimum wage than the federal minimum, the company must pay the higher amount.


Unless specifically exempted, employees covered by the FLSA must receive overtime pay for hours worked in excess of 40 in a workweek at a rate not less than time and one-half their regular rates of pay. The overtime requirement may not be waived by agreement between the employer and employees. An agreement that only 8 hours a day or only 40 hours a week will be counted as working time does not affect an employer’s obligation to pay overtime. An announcement by the employer that no overtime work will be permitted, or that overtime work will not be paid unless authorized in advance, also will not impair the employee’s right to compensation for overtime hours that are worked. In short, employers should advise employees they can only work overtime that is authorized in advance. If an employee violates this policy, an employer may discipline the employee up to and including discharge — but the overtime still must be paid.


Certain employees are exempt from the FLSA’s overtime pay provisions. Exemptions are narrowly construed against the employer asserting them. Employers should always closely check the exact terms and conditions of an exemption in light of the employee’s actual duties before assuming that the exemption might apply. An employer that improperly categorizes an employee as exempt when, in fact, the employee does not so qualify can be liable for significant overtime pay, which may be doubled or tripled under the FLSA.

The most frequent FLSA exemption that confuses employers is the “administrative” exemption. The test to determine whether the administrative exemption is as follows: (1) the employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week; (2) the employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and (3) the employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

“Primary duty” means the principal, main, major or most important duty that the employee performs. “Directly related to management or general business operations” means an employee must perform work directly related to assisting with the running or servicing of the business, as distinguished, for example from working on a manufacturing production line or selling a product in a retail or service establishment. Work “directly related to management or general business operations” includes, but is not limited to, work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations; government relations; computer network, Internet and database administration; legal and regulatory compliance; and similar activities.

In general, the exercise of discretion and independent judgment involves the comparison and the evaluation of possible courses of conduct and acting or making a decision after the various possibilities have been considered. The term implies that the employee has authority to make an independent choice, free from immediate direction or supervision. Factors to consider include, but are not limited to: whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices; whether the employee carries out major assignments in conducting the operations of the business; whether the employee performs work that affects business operations to a substantial degree; whether the employee has authority to commit the employer in matters that have significant financial impact; whether the employee has authority to waive or deviate from established policies and procedures without prior approval, and other factors set forth in the regulation.

Wages may be determined on a piece-rate, salary, commission, or some other basis, but in all such cases the overtime pay due must be computed on the basis of the average hourly rate derived from such earnings. This is calculated by dividing the total pay for employment (except for the statutory exclusions noted above) in any workweek by the total number of hours actually worked.


Every employer covered by the FLSA must keep certain records for each non-exempt employee. Employers must keep records on wages, hours, and other information as set forth in the DOL regulations. There is no required form for the records. However, the records must include accurate information about the employee and data about the hours worked and the wages earned.

An employer that fails to maintain proper records exposes itself not only to DOL penalties and fines, but also to increased employee wage claims. For example, if an employer fails to maintain records and an employee claims that he or she worked significant overtime, the DOL is more likely to accept the employee’s word when the employer possesses no records to refute the claim. This can result in substantial exposure for back wages — even for time that was never truly worked.

The following is a list of the basic payroll records that an employer must maintain:

  • Employee’s full name, as used for Social Security purposes, and on the same record, the employee’s identifying symbol or number if such is used in place of name on any time, work, or payroll records
  • Address, including zip code
  • Birth date, if younger than 19
  • Sex and occupation
  • Time and day of week when employee’s workweek begins
  • Hours worked each day and total hours worked each workweek
  • Basis on which employee’s wages are paid (e.g., “$9 per hour”, “$440 a week”, “piecework”)
  • Regular hourly pay rate
  • Total daily or weekly straight-time earnings
  • Total overtime earnings for the workweek
  • All additions to or deductions from the employee’s wages
  • Total wages paid each pay period
  • Date of payment and the pay period covered by the payment

Employers may use any timekeeping method they choose. For example, they may use a time clock, have a timekeeper keep track of employee’s work hours, or tell their workers to write their own times on the records. Any timekeeping plan is acceptable as long as it is complete and accurate.

Many employees work on a fixed schedule from which they seldom vary. The employer may keep a record showing the exact schedule of daily and weekly hours and merely indicate that the worker did follow the schedule. When a worker is on a job for a longer or shorter period of time than the schedule shows, the employer must record the number of hours the worker actually worked, on an exception basis.


Failure to comply with the FLSA and state wage laws can result in severe penalties and other consequences. Private lawsuits often result in the payment of double or triple damages plus attorneys’ fees if the employer is found liable.  The DOL uses a variety of remedies to enforce compliance with the FLSA’s requirements. When investigators encounter violations, they require changes in employment practices to bring the employer into compliance and demand payment of any back wages due to employees. In addition, willful violators may be prosecuted criminally and fined. A second conviction may result in imprisonment. For child labor violations, employers are subject to a civil money penalty of up to $11,000 per worker for each violation of the child labor provisions.  In Arizona, a bad faith failure to pay wages to employees can expose employers to damages of three times the amount actually owed.

Periodically perform self-audits to make sure you have properly categorized employees and are keeping adequate records. When in doubt, consult with legal counsel to determine if an employee is truly exempt and how best to ensure that you do not do anything to jeopardize that exemption (e.g. docking an exempt employee an hour of pay when they are late forfeits the exemption; a poor job description can be used against an employer to establish a non-exemption).