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Q&A FORUM: The New Overtime Rules

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in Employment Law,Human Resources

The federal government published final rules in April redefining which employees are eligible for overtime pay (see our May 17 issue). Research Recommendations hosted a telephone conference that answered questions on the new rules. Following are excerpts from the audioconference. To order a tape or CD of the full audioconference, call (800) 543-2055.

For a detailed description of the new rules, access our free E-visory report, Complying With the New Overtime Rules, at www.research-recs.com/extra.

New exemption definitions take effect Aug. 23; they aren't retroactive

Q. If, according to these new regulations, we've been improperly classifying certain employees as exempt from overtime pay, would we need to go back and reimburse them? At that time, we thought they were properly classified. Becky, Texas

A. The new regulations take effect Aug. 23. If you have properly classified them under the old regulations, there isn't a problem. These regulations are not retroactive. But if you find today that you've been misclassifying someone in the past, you really need to make the correction now. You don't want to allow a misclassification to go forward.

Employee's four-year degree won't automatically earn exemption

Q. Regarding employees that fall in the "learned professional" exemption category, is it safe to say that a person with a four-year degree would be considered exempt from overtime, but a person with a two-year degree would not? Marilyn, Pennsylvania

A. I would not say that everyone who has a four-year degree is a "professional." In fact, many workers who have four-year degrees are not considered professionals. For example, many paralegals have four-year degrees but they generally don't qualify as exempt. If you want to draw a line in the sand, as a general rule, learned professionals have knowledge that cannot be acquired at the high school level.

For exempt employees, make full-day deductions, not partial

Q. If an exempt employee uses all her sick time and vacation time, then takes a half day off for personal reasons, can I deduct for that half day, or does it have to be a whole day? Has that changed under the new law? Barbara, Louisiana

A. You can't deduct the half day; it must only be in full-day increments. The rule is the same under the old and new regulations. If you make a part-day deduction for an exempt employee's part-day absence, you're going to defeat the salary-basis test. So if they're absent for two days, you take two days. If they're absent for a day and a half, you can only deduct for one full-day absence without affecting their classification.

Look at big picture to determine employees' 'primary duty'

Q. The duties test talks about determining the employee's "primary duty." How do we determine that? Marie, Pennsylvania

A. The old and the new regulations both say that you're looking for the person's most important duty—the reason you hired him or her. Is this person hired as a supervisor or so there can be another set of hands on the assembly line? You want to look at the relative importance of the employee's exempt duties versus nonexempt duties, the amount of time spent performing nonexempt work and how much supervision is exercised over the employee. A good rule of thumb is to look at whether they spend more than 50 percent of their time on exempt duties.
Audioconference questions were answered by Jonathan Landesman, an employment law attorney at the Philadelphia firm of Cohen, Seglias, Pallas, Greenhall & Furman P.C.; and Maria Greco Danaher, an attorney at Dickie, McCamey & Chilcote, P.C. in Pittsburgh.

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