Paid Sick Leave Expansions Within the Families First Coronavirus Response Act

Introduction

In response to the unprecedented public health crisis arising from the Novel Coronavirus outbreak, and to address the needs of workers who take sick leave in response to the outbreak, the federal government included important sick leave expansions within the Families First Coronavirus Response Act (the “Act”), which was passed into law on March 18, 2020.  The Act will become effective on or about April 2, 2020 and contains important protections that all employees should be aware of.

Paid Sick Leave Mandate

The Act mandates paid sick time to an employee for the following reasons:

  1. To self-isolate after diagnosis of COVID-19,
  2. To get a medical diagnosis when showing COVID-19 symptoms,
  3. To comply with an official order to quarantine,
  4. To care for a family member who has been diagnosed with COVID-19; or
  5. To care for school age children who do not have day-care because of school closure.

Extent of Paid Sick Time

The Act grants 80 hours of paid sick time to full-time employees required to take sick leave for one of the above-mentioned reasons.  Part-time employees are entitled to paid sick time equivalent to the average number of hours worked in a 2-week period.

Paid Sick Time Termination

An employee that exercises the right to take paid sick time will receive pay until the time of the next scheduled shift after the need to take sick time has terminated.  This means that although 2 full weeks of pay is available, this can be limited by circumstances.  For example, where an employee takes sick leave to care for a school age child, and school resumes prior to the end of the two week period, the employee’s entitlement to sick leave pay would end at the beginning of the next shift scheduled after school goes back in session. 

Relation of Paid Sick Time to Other Benefits

The expansion of paid sick time in the Act is in addition to other employer granted sick time benefits.  For example, if an employee earns paid sick time as part of their regular compensation package, the paid sick time granted by the Act is in addition to the paid sick time available under the benefits already granted by their employer.

The expansion of paid sick time is designed to act in tandem with the first 2-week period of the Family and Medical Leave Act (“FMLA”) expansion within the Act.  The FMLA expansion provides for up to 12 weeks of paid leave to a qualifying employee but does not provide pay for the first 2-week period.  The paid sick time expansion within the Act bridges that gap.

Prohibited Acts

An employer cannot require an employee to use the sick time, or other benefits they have accrued as part of their normal compensation prior to use of the paid sick time made available by the Act.  An employer cannot require an employee to find their replacement, or to have their shifts covered if they exercise their right to paid sick time under the Act.  An employer cannot deny an employee the right to take this sick time, if the employee qualifies for it, regardless of the length of the employee’s service with the employer – there is no vesting period.  An employer is prohibited from retaliating against an employee for exercising the right to paid sick time under the Act.

Enforcement

If an employer engages in any prohibited act set forth above, they are subject to various forms of liability, depending on the nature of the violation.  If the employer requires the employee to use sick time benefits already accrued as part of normal instead of paid sick time under the Act, refuses to grant paid sick time to a qualifying employee, requires the employee to get shifts covered or find a replacement, or otherwise interferes with the employee’s rights under the Act, they are liable for unpaid wages, plus liquidated damages in the amount of the unpaid wages, plus attorney fees and costs.  If the employer retaliates against the employee for exercising rights under the Act, the employee may, in addition to the remedies described above, be entitled to reinstatement or promotion.

Conclusion

The current public health crisis caused by the Coronavirus outbreak is unprecedented.  Congress has passed emergency measures designed specifically to help workers affected by the outbreak.  It is especially important that employees learn the new rules and be mindful of the fact that public health and safety is the national priority.  As is always the case, there are some employers who, for whatever reason, will not follow rules designed for the collective good.  Employees must assert their rights when dealing with non-compliant employers for the health and safety of all. 

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FMLA Expansions Within the Families First Coronavirus Response Act

Introduction

In response to the unprecedented public health crisis arising from the Novel Coronavirus outbreak, and to address the needs of workers who take medical leave, the federal government included important expansions of the Family and Medical Leave Act (“FMLA”) within the Families First Coronavirus Response Act (the “Act”), which was passed into law on March 18, 2020.  The Act will become effective on or about April 2, 2020 and contains important protections that all employees should be aware of.

Eligible Employee

The Act expands the definition of an “eligible employee” entitled to medical leave. 

The FMLA provides 12 weeks of medical leave to qualifying employees who have been employed with their employer for at least 1 year for the birth of a child, the adoption of a child, if the employee has a serious health condition, to care for an immediate family member with a serious health condition, or for an emergency arising from active duty in the armed forces. 

The Act expands coverage and provides for 12 weeks of medical leave for employees who have been employed for at least 30 calendar days and have a “qualifying need related to a public health emergency.”  A “public health emergency” is defined as an emergency with respect to Coronavirus declared by a federal, state, or local authority. 

As an important caveat, the U.S. Department of Labor has the discretion regarding the extent this definition applies to certain types of healthcare workers, which this article does not address.

Definition of Employer

The Act changes the definition of “employer” from “an employer having 50 or more employees during each of 20 or more calendar workweeks in the current or preceding calendar year” to “an employer with fewer than 500 employees during each of 20 or more calendar workweeks in the current or preceding calendar year.”  Despite the changed definition, employers with fewer than 50 employees may still be exempt from the expanded FMLA requirements within the Act. 

It appears that to get the expanded employee protections, certain constituencies required a more limited definition of “employer” so that large corporate entities would not be mandated to provide the additional employee protections.

Qualifying Need Related to a Public Health Emergency

An employee cannot get the expanded protections afforded by the Act unless the leave is based on a qualifying need related to a public health emergency. A “qualifying need related to a public health emergency” is defined as a need for leave:

  1. To comply with the recommendation of a medical provider or public health official that the presence of the employee on the job would jeopardize the health of others because of exposure to the Coronavirus or an exhibition of Coronavirus symptoms;
  2. To care for a family member of an eligible employee where a medical provider or public health official has stated the presence of the family member in the community would jeopardize the health of others in the community because of exposure to the Coronavirus, or the exhibition of Coronavirus symptoms; or
  3. To care for a child whose school has closed or if the child-care provider is unavailable due to the public health emergency.

It is important to note that the employee must be able to demonstrate either exposure to the Coronavirus, or Coronavirus symptoms, to be eligible under the first two requirements.  The declaration of a public health crisis by public health authorities is not enough.  Otherwise, the employee must demonstrate that they cannot go to work because they must care for a child whose school has closed because of the Coronavirus outbreak. 

Taking Leave

To take leave based on a qualifying need related to a public health emergency, the employee must provide the employer with reasonable notice where practicable before taking leave.  Written notice is advisable.  Although FMLA leave for reasons not related to the Act is without pay, the Act provides full time pay for the first 2 weeks of leave and then 2/3 pay for the remaining 10 weeks of leave.

Restoration After Leave

An employee that takes leave because of a qualifying need related to a public health emergency is entitled to restoration to their position after the leave period ends unless the employer has less than 25 employees and economic conditions stemming from the Coronavirus have eradicated the position.  If that is the case, the employer must make reasonable efforts to immediately place the employee in an equivalent position, and if that is not possible, the employer must make reasonable efforts, for a period of 1 year, to restore the employee to an equivalent position if an equivalent position becomes available.

Enforcement

If an employer violates any of the expanded FMLA protections contained within the Act, the employer is liable to an eligible employee for damages equal to twice the amount of lost wages, salary, benefits or other compensation, with interest, plus reasonable attorney fees and costs.  The eligible employee may also be entitled to reinstatement of their position or even promotion, depending on the facts of the case.

Conclusion

The current public health crisis caused by the Coronavirus outbreak is unprecedented.  Congress has passed emergency measures designed specifically to help workers affected by the outbreak.  It is especially important that employees learn the new rules and be mindful of the fact that public health and safety is the national priority.  As is always the case, there are some employers who, for whatever reason, will not follow rules designed for the collective good.  Employees must assert their rights when dealing with non-compliant employers for the health and safety of all. 

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Resources for Workers Affected by the Coronavirus

As of today, March 17, 2020, the City of Las Vegas is moving into a mass quarantine to stop the spread of the novel Coronavirus.  These actions, while indicated as a matter of public health to limit both the human and the economic impact of the disease, have already had a distressing effect on many workers and their families.  Fifteen major hotels have decided to temporarily suspend or limit operations, school has been cancelled, and restaurants, clubs, and other service-based businesses are closed.  There have been mass layoffs and tens of thousands of jobs have been lost overnight.  Those who have not been laid-off are concerned about things such as paid-leave and workplace safety.

Resources for the Unemployed or Under-employed Worker

Unemployment Insurance

Critically, the federal and state governments are expanding coverage for unemployment benefits. It is not only those workers recently laid-off because of the Coronavirus for whom the government plans to expand coverage, the government also plans to expand coverage for those under-employed workers who have been placed on a reduced schedule, or who have been placed on call because of the Coronavirus outbreak.

On March 12, 2020, the United States Department of Labor issued new guidance to give the states flexibility to adjust unemployment insurance programs to better assist unemployed and under-employed workers.  The federal guidance allows states to pay benefits where an employer temporarily ceases operations due to the Coronavirus epidemic.  States are also permitted to make eligible for benefits those individuals who are currently quarantined but expect to return to work.  The guidance recommends that states allow individuals who leave employment due to risk of exposure or to care for a family member to qualify for benefits.  It also allows states to pay unemployment benefits to a worker who is placed on-call or given a reduced schedule, even though the worker is not technically unemployed.  Importantly, the State of Nevada ultimately has discretion about how to apply this new guidance, but current indicators suggest the state will expand coverage to meet worker needs during this historic crisis.

Early on Saturday morning, March 14, 2020, the United States House of Representatives passed an emergency Coronavirus bill that contained a series of measures designed to assist workers whose livelihoods are being affected by the virus.  One such provision is $1 billion in state aid to assist with processing and paying unemployment claims.  This further support is intended to help the states meet the needs of unemployed and under-employed workers and their families during this difficult time.

The State of Nevada, Department of Employment, Training and Rehabilitation has been actively preparing for an increased demand in unemployment claims for some time now.  If you are unemployed or under-employed, claims can be filed online at ui.nv.gov or by telephone at 702-486-0350.  Be aware that before filing the claim, you will need to gather the following information:

  1. Names, addresses, and phone numbers for your last two employers;
  2. Dates of employment for last two employers;
  3. The corporate name of each employer you have worked for during the prior 18 months;
  4. The reason for unemployment;
  5. Gross wages, before deductions;
  6. Alien registration number and expiration date (if not a citizen);
  7. DD-214 (if discharged from the military in the past 18 months); and
  8. SF-8 or SF-50 (if you have worked for the federal government in the past 18 months).

While the federal and state governments are responding rapidly to the unemployment crisis caused by the outbreak, submitting a claim is your responsibility, don’t wait.  Once you file your claim, a determination of whether you qualify for unemployment benefits will be sent.  The sooner your claim is filed, the sooner your unemployment payments will begin. 

Food Pantries

Anyone suffering from a short-term foot shortage because of unemployment may seek supplies from one of the city’s many food pantries.  SHARE Village has expanded access to its community food pantry to meet increased need.  The organization offers four public pantry days every week but plans to expand distribution days as needed to assist those affected by lay-offs.  The pantry located at 50 N. 21st St. is open from noon to 1 p.m. on Monday and Wednesday, and the pantry located at 1150 Las Vegas Blvd. South is open on Sunday from noon to 1 p.m.  For updates, go to sharelasvegas.org

A list of additional food pantries is located at foodpantries.org/ci/nv-las_vegas.  These organizations are often funded by wealthy donors who make it a point of civic duty and humanitarian concern to keep the shelves stocked.  If one pantry is temporarily low on supplies, seek out another until your needs are met. Remember, you are a working person looking for work so this is not a “hand-out,” it is a “hand-up.” 

Meals for Children

Many school-aged children rely on the Clark County School District for their breakfast and lunch.  Now that school is cancelled for the next month, there is concern that this resource will be unavailable to school children and their parents.  Fortunately, the Clark County School District will continue to serve breakfast and lunch to students at certain locations.  Student food distribution pods will be set up at the following fifteen school locations throughout the valley from 8 a.m. to 11 a.m.:

  1. Basic HS
    400 Palo Verde Dr., Henderson, NV 89015
  2. Canyon Springs HS
    350 E Alexander Rd., North Las Vegas, NV 89032
  3. Centennial HS
    10200 Centennial Pkwy., Las Vegas, NV 89149
  4. Chaparral HS
    3820 Annie Oakley Dr., Las Vegas, NV 89121
  5. Cheyenne HS
    3200 W Alexander Rd., North Las Vegas, NV 89032
  6. Cimarron-Memorial HS
    2301 N Tenaya Way, Las Vegas, NV 89128
  7. Clark HS
    4291 W Pennwood Ave, Las Vegas, NV 89102
  8. Desert Pines HS
    3800 E Harris Ave, Las Vegas, NV 89110
  9. Las Vegas HS
    6500 E Sahara Ave, Las Vegas, NV 89142
  10. Mojave HS
    5302 Goldfield St., North Las Vegas, NV 89031
  11. Shadow Ridge HS
    5050 Brent Ln., Las Vegas, NV 89131
  12. Sierra Vista HS
    8100 W Robindale Rd., Las Vegas, NV 89113
  13. Silverado HS
    1650 W Silver Hawk Ave, Las Vegas, NV 89123
  14. Spring Valley HS
    3750 S Buffalo Dr., Las Vegas, NV 89147
  15. Veteran’s CTA
    2531 Vegas Dr., Las Vegas, NV 89106

It is anticipated that further food aid support will be coming from the federal government soon.  The House bill includes approximately $1 billion dollars for food security programs to assist those who have difficulty getting access to food during the crisis.  The government plans to funnel the funds into food banks and free or reduced-priced school meals.

Resources for the Employed Worker

Paid Leave

The Centers for Disease Control (“CDC”) have recommended that employers actively encourage sick employees to stay home, especially those with respiratory illness or fever.  Many employers have sick leave policies that allow workers to take paid time off if they are sick.  Further, the CDC recommends that employers do not require a physician’s note for employees suffering from Coronavirus-like symptoms to prevent medical providers from diverting resources to non-life-threatening illness.  Employers are directed to expand sick leave, vacation, and paid time off policies to allow workers to quarantine, stay home to care for family members affected by the outbreak, or otherwise receive pay while on reduced work schedules.  Worker’s should take advantage of these expanded pay policies and self-quarantine to help stop the spread of the Coronavirus. 

The Americans With Disabilities Act

The Americans with Disabilities Act (“ADA”) prohibits employers from discriminating against employees because of a disability.  This includes excluding individuals with disabilities from the workplace for health and safety reasons unless the employee poses a direct threat to the health and safety of themselves, or others, that cannot be eliminated or reduced through a reasonable accommodation.  Where the disability becomes a “direct threat” to anyone’s safety, employers may choose to exclude that individual from the workplace.  The ADA recognizes a properly classified pandemic as a “direct threat” and employers may exclude from the workplace any employee who exhibits symptoms of the disease, who has been exposed to the disease, or who has recently traveled to a disease afflicted area.  Employers may also ask these employees to telecommute from home, and may otherwise require infection control practices, including regular hand-washing, and the use of personal protective equipment.

Telecommuting

The Americans with Disabilities Act does not require employers to allow employees to telecommute, unless the employee qualifies for a reasonable accommodation and there is no reasonable alternative.  To qualify for this accommodation, the employee must generally inform the employer that they have a medical condition that requires an accommodation in the way the job is performed.  The employer has the discretion to determine whether the disability is one that will best be accommodated through telecommuting, or whether some other accommodation is more appropriate.  Given the current situation, any employee who has been exposed to someone with Coronavirus, or who is otherwise exhibiting symptoms, should request the ability to telecommute if the type of job they have makes that possible.  While an employer is not necessarily required to accommodate the request, given the current situation, most employers likely will.

Workplace Safety

The Occupational Safety and Health Administration (“OSHA”) is the federal agency responsible for the regulation of workplace safety.  While OSHA has no standards that directly apply to the Coronavirus, there are certain guidelines that generally apply. 

OSHA requires personal protective equipment, which include gloves, eye, face, and respiratory protection, when necessary to protect worker health and safety.  Concerning healthcare workers, OSHA issued an Enforcement Memorandum regarding healthcare respiratory protection on March 14, 2020.  Employers are required to provide and train healthcare employees in the safe use of appropriate respiratory protection necessary to protect their health.  The Department of Labor has stated that it has a priority to increase the availability of general use respirators for healthcare personnel.  Healthcare facilities responsible for direct care of known or suspected Coronavirus patients are directed to practice infection control procedures that include airborne isolation rooms for patients, telecommuting for administrative personnel, sanitation practices such as hand-washing and disinfecting, and mandatory use of personal protective equipment.

All employees should know that OSHA has a general duty clause that requires a place of employment free from recognized hazards that cause or are likely to cause death or serious physical harm.  In the current situation, this may mean vigilant sanitation measures to prevent the spread of disease, the use of personal protective equipment, or even telecommuting for certain administrative personnel.  Importantly, the Occupational Safety and Health Act of 1970 prohibits employers from retaliating against workers for raising concerns about safety and health conditions.  If you have a concern for your health and safety, immediately bring it to the attention of your employer.

FMLA Leave

The recent House bill expands Family Medical Leave Act (“FMLA”) protections to certain workers affected by the Coronavirus.  The bill, in its current form, does not apply to employers with five hundred or more employees.  The bill has yet to pass in the United States Senate, but some version of it is expected to. 

For eligible employees, the proposed bill provides up to twelve weeks of FMLA leave to employees who have been employed with the same employer for at least thirty days.  The employer can withhold pay for the first two weeks, but the employee is entitled to use other benefits during this time.  Notably, the bill mandates increased benefits for covered employees with up to eighty hours of paid Coronavirus related sick leave, so for certain employees the first two week pay gap is ultimately covered by this provision.  During the remaining ten weeks, the bill requires employers to provide two-thirds the rate of normal pay.  Eligible employees are those who have received a recommendation from a health authority or health provider, who need to care for a sick family member, or who must care for a child whose school has been closed due to the virus.  The protections do not apply if an employer chooses to quarantine staff for the purpose of preventing the spread of Coronavirus, or if employees are able to telecommute to work.  While employers are required to pay for these benefits, there are tax credits designed to off-set the employer’s expense. 

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2020 – The Year of the Employee

In the absence of a contract between an employee and employer, employment in Nevada is “at-will.”[1] Most people understand this to mean that employees have vanishingly few rights in the workplace, and that employers can do almost anything they want.  While for many years this was largely accurate, the Nevada legislature has recently taken major steps to shift the balance of power between employees and employers.  In fact, the changes to Nevada law in this area are so significant that 2020 may rightly be described as the Year of the Employee.

Paid Vacation for All

As of January 1, 2020, Nevada law requires many employers to provide paid leave to employees at a rate of 0.01923 hours of paid leave for every hour worked by an employee.[2] This is the equivalent of a full 40 hours of paid leave per year for full-time workers. Although the benefit is calculated based on hours worked, it applies regardless of whether an employee is paid on an hourly, salary, commission, or piece-rate basis.[3] While there are exceptions for small employers[4] and newly opened businesses,[5] the impact of this new policy will be far-reaching, and will provide a valuable benefit to countless employees.

Minimum Wages On the Rise

Nevada currently has a two-tiered minimum wage that permits employers to pay a lower wage to employees who are offered qualifying health benefits as part of their employment.[6] Beginning January 1, 2020, the applicable minimum wages will be $8.00/hour and $9.00/hour.[7] The applicable minimum wages will further increase every year through 2024, when they will be $11/hour for employees offered qualifying health benefits, and $12.00/hour for those not offered such benefits.[8] These forward looking rates will help to ensure that Nevada workers receive a living wage for full-time work.

Health Benefits Improved for Minimum Wage Workers

Beginning January 1, 2020, the qualifying health benefits that allow an employer to pay the lower of the two minimum wage tiers in effect at any given time are defined and expanded to ensure that they include certain coverages, and provide employees with a certain minimum value of coverage.[9] In essence, employers will not be able to pay a reduced minimum wage without providing employees with a legitimately valuable health insurance benefit.

Marijuana Use No Longer a Bar to Employment

Following the legalization of recreational marijuana, Nevada has taken steps to align employees’ rights at work with their right to consume marijuana outside of work. New laws effective January 1, 2020 ensure that the use of marijuana outside of work will not prevent most employees from being considered for employment.[10] Specifically, an employer cannot refuse to hire a prospective employee because a screening test indicated the presence of marijuana, except in certain limited circumstances, for example when an applicant is seeking a position as a firefighter or EMT.[11] This policy strikes a balance between an individual’s rights to use legal substances outside of work with the safety of the public and other employees in the workplace.


It is clear that Nevada is taking employee rights seriously, and there are many ongoing changes in all areas of employment law. While the fast pace of change may inconvenience some employers, the overall impact will be to even the playing field between employees and employers. The above-mentioned policies, and other employment law developments, will ensure that Nevada continues to be a great place to open and operate a business, while also being a great place to work.


[1] E.g., Yeager v. Harrah’s Club, 111 Nev. 830, 834, 897 P.2d 1093, 1095 (1995)(citing Smith v. Cladianos, 104 Nev. 67, 68, 752 P.2d 233, 234 (1988)).
[2] NRS 608.0197(1)(a).
[3] See NRS 608.0197(1)(e).
[4] NRS 608.0197(9)(b).
[5] NRS 608.0197(7).
[6] NRS 608.250; Nev. Const. Art. 15, § 16.
[7] NRS 608.250(1)(b).
[8] NRS 608.250(1)(f).
[9] NRS 608.258.
[10] NRS 613.132
[11] NRS 613.132(2).

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What is the Deadline for Receipt of Final Pay on Termination or Resignation?

Whether by involuntary termination, or by voluntary resignation, Nevada law establishes strict rules for payment of final wages to employees upon separation from employment. Employers are required to make payment of all wages owed to an employee within certain deadlines, depending on whether the separation was voluntary or involuntary, and failure to do so may entitle the employee to recover substantial “waiting time” wages, in addition to the unpaid final wages.[1]

If you resigned or were terminated and did not immediately receive your final pay in full, we encourage you to Contact Us to meet with an attorney and discuss your situation.

Involuntary Termination

Whenever an employer discharges an employee, the wages and compensation earned and unpaid at the time of such discharge shall become due and payable immediately.[2] If an employer fails to make immediate payment of all compensation owed to an employee at the time of termination, the employee is entitled to additional waiting time wages in the amount of the employee’s regular daily rate of pay for each day from the date of termination until receipt in full of the unpaid compensation, or for 30 days, whichever is less.[3]

Although the unpaid wages are due immediately, Nevada law provides a safe harbor period for the employer to tender payment in full. So long as the employer makes payment within three days after the date of termination, the employer is not subject to payment of any additional waiting time wages to the employee.[4] However, if payment in full is not made within the safe harbor period, waiting time wages will be owed for each day final wages remain unpaid, beginning with the date of the termination.

The final pay requirements and waiting time provisions of Nevada law apply only to private employers, and are inapplicable in the case of separation from employment with a state or Federal employer.[5]

Voluntary Resignation

When an employee voluntarily resigns from employment, the wages and compensation earned and unpaid at the time of the employee’s resignation must be paid no later than the next regularly occurring pay day, or seven days after the employee resigns, whichever is earlier.[6] If an employer fails to make payment of all wages owed to an employee who has resigned on the date such wages are due, the employee is entitled to additional waiting time wages in the amount of the employee’s regular daily rate of pay for each day from the date the wages were due until receipt in full of the unpaid compensation, or for 30 days, whichever is less.[7]

The final pay requirements and waiting time provisions of Nevada law apply only to private employers, and are inapplicable in the case of separation from employment with a state or Federal employer.[8]

Interaction with Other Wage and Hour Laws

Nevada law requires that an employer pay all wages and compensation owed to an employee who is terminated or resigns within certain deadlines, or be liable for payment of additional waiting time wages to the separated employee.[9] As such, employees who are owed unpaid wages for off-the-clock work, failure to pay at least the minimum wage for all hours worked, or failure to pay wages at the applicable overtime rate where required, or who are owed any other wages or compensation not included in the final paycheck, are entitled to recover waiting time wages even in cases where the final paycheck is received within the deadlines set forth by statute.


If you resigned or were terminated and did not immediately receive your final pay in full, we encourage you to Contact Us to meet with an attorney and discuss your situation.


[1] Neville v. Eighth Judicial Dist. Court of Nev., 406 P.3d 499, 504 (Nev. 2017)(holding that NRS 608.140 implies the existence of a private right of action to enforce, inter alia, NRS 608.020-608.050).
[2] NRS 608.020.
[3] NRS 608.040(1).
[4] NRS 608.040(1)(a).
[5] AGO 154 (7-8-1920); AGO 81-9 (9-24-1981).
[6] NRS 608.030.
[7] Fn. 3, supra.
[8] Fn. 5, supra.
[9] See NRS 608.020, et seq.

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When is a Sales Employee Exempt from Overtime?

The Fair Labor Standards Act (“FLSA”) is a Federal law that requires employees be paid overtime for all hours worked in excess of 40 in a workweek. Certain sales employees may be exempt from the overtime provisions of the FLSA if they are subject to the “outside sales exemption”[1] or the “retail service establishment exemption.”[2] If you believe you may be misclassified as an overtime exempt, salaried employee, we encourage you to Contact Us to meet with an attorney and discuss your situation.

The Outside Sales Exemption

The overtime requirements of the FLSA do not apply to, “. . . any employee employed . . . in the capacity of outside salesman. . . .”[3] In order to be considered employed “in the capacity of outside salesman” an employee must satisfy ALL of the following conditions:

  1. The employee’s primary duty must be making sales or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer;[4] and
  2. the employee must be customarily and regularly engaged away from the employer’s place or places of business in performing such primary duty.[5]
What Does “Primary Duty” Mean?

A task performed by an employee is considered that employee’s “primary duty” for the purposes of exemption from FLSA overtime requirements when it is the, “. . . principal, main, major or most important duty that the employee performs.”[6] As a general rule, if more than 50% of the hours worked by an employee in any given workweek are spent performing exempt, outside salesperson tasks, then that employee will be considered overtime exempt.[7]

Where is the Employer’s “Place of Business?”

Outside sales means the process of soliciting at the customer’s place of business or, if selling door-to-door, at the customer’s home. Outside sales excludes sales made by mail, telephone, or the internet. Any fixed site, whether home or office, used by a salesperson as a headquarters or for telephonic solicitation of sales is considered one of the employer’s places of business, regardless of whether the employer actually owns or rents the property.[8] So even a salesperson that has never been to the employer’s brick and mortar location, but makes telephonic sales entirely from their home, would not be considered an outside salesperson under the FLSA.

Is There a Minimum Salary Requirement for Exempt Outside Salespersons?

Of note, the minimum salary requirements that apply to professional, executive, and administrative employees who are exempt from overtime under the FLSA, discussed at When is a Non-Sales Employee Exempt from Overtime?, do not apply to outside salespersons.[9] There is no minimum salary required to be classified as an exempt outside salesperson, so long as all of the other requirements are met.

The Retail Service Establishment Exemption

The FLSA provides for an exemption from its overtime requirements for inside salespersons who meet certain requirements. In order for an inside salesperson to be considered overtime exempt under the FLSA, the employee must be employed by a retail or service establishment; AND must be paid (when computed on an hourly basis) more than one and one-half times the applicable minimum wage; AND more than 50% of the employee’s total compensation in a given month must consist of commission payments.[10] Tips are not considered commission payments for the purposes of this exemption, only bona fide commission payments will qualify.

For the purposes of the FLSA, a retail or service establishment is defined as, “. . . an establishment 75 per centum of whose annual dollar volume of sales of goods or services (or of both) is not for resale and is recognized as retail sales or services in the particular industry.”[11]


The protections of the FLSA are designed to ensure that you receive the full value of the work you perform on behalf of your employer. Determining whether you are subject to one of the exemptions to FLSA overtime requirements requires careful, individualized inquiry. If you believe you may be misclassified as an overtime exempt, salaried employee, we encourage you to Contact Us to meet with an attorney and discuss your situation.


[1] 29 U.S.C. § 213(a)(1).
[2] 29 U.S.C. § 207(i).
[3] Fn. 1, supra.
[4] 29 C.F.R. § 541.500(a)(1).
[5] 29 C.F.R. § 541.500(a)(2).
[6] 29 C.F.R. § 541.700(a).
[7] 29 C.F.R. § 541.700(b).
[8] 29 C.F.R. § 541.502.
[9] 29 C.F.R. § 541.500(c).
[10] Fn. 2, supra.
[11] 29 C.F.R. § 779.411; 29 C.F.R. § 779.24 .

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When is a Non-Sales Employee Exempt from Overtime?

The Fair Labor Standards Act (“FLSA”) is a Federal law that requires employees be paid overtime for all hours worked in excess of 40 in a workweek. The FLSA also establishes three narrow “exemptions” from the overtime rule. Certain employees paid on a salary basis may be exempt from overtime, if the majority of tasks they perform in each workweek are properly classified as: “professional,” “executive,” or “administrative.”[1]  Each of these exemptions requires that an employee be compensated at a weekly rate of not less than $455.00 per week for work performed prior to January 1, 2020, and not less than $684.00 per week for work performed thereafter.[2]

In addition, certain sales employees may be exempt from the overtime provisions of the FLSA if they are subject to the “retail service establishment exemption”[3] or the “outside sales exemption.”[4] These exemptions are discussed at: When is a Sales Employee Exempt from Overtime?

There are other, limited circumstances in which an employee may be exempt from the overtime requirements of the FLSA. If you believe you may be mis-classified as an overtime exempt, salaried employee, we encourage you to Contact Us to meet with an attorney and discuss your situation.


The Professional Exemption

The professional exemption applies only to employees such as licensed accountants, engineers, attorneys, doctors, or others who perform work that is traditionally regarded as part of a recognized professional occupation, and which customarily requires the employee to complete a “prolonged course of specialized intellectual instruction” or which requires “invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.”[5] Additionally, the employee must be compensated at a weekly rate of not less than $455.00 per week for work performed prior to January 1, 2020, and not less than $684.00 per week for work performed thereafter.[6]

The Executive Exemption

The executive exemption is limited to workers who are engaged in the management of an enterprise or subdivision thereof, supervise two or more other full-time employees, and have the authority to hire or fire other employees.[7] Additionally, the employee must be compensated at a weekly rate of not less than $455.00 per week for work performed prior to January 1, 2020, and not less than $684.00 per week for work performed thereafter.[8]

The Administrative Exemption

The administrative exemption by its plain terms cannot apply to workers who are involved in the “production side” of a business enterprise, such as workers whose primary role is to assist the company in carrying out the activities for which it is hired by customers (as opposed to ancillary administrative roles such as accounting, human resources, database management, etc.).  Where a worker is involved in production work, they are, per se, a production worker, and not subject to the administrative exemption.

Even if the nature of an employee’s job duties generally meet the requirements of the administrative exemption, the employee must “regularly and customarily” be engaged in work that requires the exercise of discretion and independent judgment.[9]  Federal regulations explain that “discretion and independent judgment involves the comparison and evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered,” and requires “more than the use of skill in applying well-established techniques, procedures or specific standards in manuals or other sources.”[10]  The term “‘matters of significance’ refers to the level of importance or consequence of the work performed.”[11]  Additionally, the employee must be compensated at a weekly rate of not less than $455.00 per week for work performed prior to January 1, 2020, and not less than $684.00 per week for work performed thereafter.[12]

The Burden of Proof

It is important to note that any claim of exemption from the overtime requirements of the FLSA is an affirmative defense, and the burden of proof rests with the employer.  Furthermore, it is an enhanced burden of proof, requiring the employer to demonstrate that a particular employee falls “clearly and unmistakably” within the confines of one or more exemptions. [13] Close calls are thus resolved in favor of the employee.


The protections of the FLSA are designed to ensure that you receive the full value of the work you perform on behalf of your employer. Determining whether you are subject to one of the exemptions to FLSA overtime requirements requires careful, individualized inquiry. If you believe you may be misclassified as an overtime exempt, salaried employee, we encourage you to Contact Us to meet with an attorney and discuss your situation.


[1] 29 U.S.C. § 213(a)(1).
[2] Although the Department of Labor issued a final rule in 2016 increasing the minimum salary basis to a weekly rate of not less than the 40th percentile of weekly earnings of full-time non hourly workers in the lowest-wage Census Region, or $913.00 per week, 29 C.F.R. § 541.600(a), that regulation was struck down in the matter of Nevada v. U.S. Dep’t of Labor, 218 F. Supp. 3d 520 (E.D. Tex. 2016), and cannot be enforced.
[3] 29 U.S.C. § 207(i).
[4] 29 U.S.C. § 213(a)(1).
[5] 29 C.F.R. § 541.300.
[6] See fn. 2, supra.
[7] 29 C.F.R. § 541.100.
[8] See fn. 2, supra.
[9] 29 C.F.R. § 541.200(a)(3).
[10] 29 C.F.R. § 541.202(a) and (e).
[11] 29 C.F.R. § 541.202(a).
[12] See fn. 2, supra.
[13] See, e.g., Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 80 S. Ct. 453, 456 (1960); see also, Alvarez v. IBP, Inc., 339 F.3d 894, 905 (9th Cir. 2003).

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