Tag Archives: Fennemore Craig

Nonexempt Vs. Exempt Employees

Exempt Employees Versus Nonexempt Employees

Classifying employees as exempt or nonexempt might seem easy at first glance.  Either they are salaried or they are hourly.  Accordingly, they either are eligible to earn overtime for hours worked or they are not.

But it’s not that simple. Nor are the penalties a business can face. Complaints can be made against a business up to two years after an alleged misclassification and resulting lost wages.

Compliance is Key

Such allegations can prove costly, especially if tension in the workplace escalates between the accuser and the business to the level of what could be considered discrimination or harassment. In fact, the U.S. Department of Labor Website’s compliance section states:

“It is a violation to fire or in any other manner discriminate against an employee for filing a complaint or for participating in a legal proceeding under the FLSA.

“Willful violations may be prosecuted criminally and the violator fined up to $10,000. A second conviction may result in imprisonment.”

In addition, any employer found to have willfully violated employee rights, whether exempt or nonexempt from the guidelines outlined in the FLSA, “may be prosecuted criminally and fined up to $10,000,” DOL documents state. “A second conviction may result in imprisonment. Employers who willfully or repeatedly violate the minimum wage or overtime pay requirements are subject to civil money penalties of up to $1,100 per violation.”

When Wage and Hour investigators uncover violations, the DOL will often work with that employers to help them become compliant. In addition, they will be required to pay any back wages that may be due to employees.

Two-Part Test

So what is the standard by which an exempt and nonexempt employee can be measured, and what rules apply to each classification? To be considered exempt, a salaried employee must meet specific salary and duty requirements.

An employee, who is salaried who earns less than $455 per week would be nonexempt and therefore eligible for overtime and other protections under the FLSA.  An exempt employee would not be eligible for overtime, but with limited exceptions, must receive their full salary for any week during which they work, Compensation Management News reports. For more information, visit Compensation.BLR.com.

The second portion of the test relates to the duties an employee performs, their job category such as administrative, computer specialists, outside sales and more. For specific exemptions, see the accompanying chart or visit the DOL Website. In some cases, as with computer specialists, otherwise exempt employees may be paid hourly instead as long as they earn $27.63 or more per hour.

Managing Expectations

In Arizona, there is no legal definition for exempt and nonexempt employees. Everybody is entitled to a minimum wage. However, Arizona does have its own unique minimum wage law. Arizona’s minimum wage is $7.35 per hour and federal minimum wage is $7.25.

While exempt employees are generally not eligible for overtime, they reap other benefits.

“If a person works part of a day and then leaves, you cannot dock them if they are exempt,” explained John Balitis, an employment and labor attorney with Fennemore Craig. “The caveat is that you can dock a salaried, exempt employee’s leave days, so long as it does not result in a loss of compensation during the pay period in which the docking occurs. So, the docking rule for partial day absences is different, depending on whether you are talking about pay or leave.”

Paul W. Barada, a salary and negotiation expert for Monster, agrees. “Exempt employees are generally expected to devote the number of hours necessary to complete their respective tasks, regardless of whether that requires 35 hours per week or 55 hours per week. Their compensation doesn’t change based on actual hours expended. Exempt employees aren’t paid extra for putting in more than 40 hours per week; they’re paid for getting the job done,” Barada wrote in a career advice article published on Monster.com.

If not hours, what then, constitutes an exempt employee’s fulfillment of having completed a day’s work?

“This is an interesting issue that judges and lawyers are talking about, but there is no clear answer,” Balitis said. “Given the proliferation of smart phones and employees checking their email, voice mail and texts while they are at home or in the car on the way to work, there is case law that says that becomes compensable time—so the day has started and exempt/salaried employees have to be paid.”

Balitis said employers, regardless of size, would be well-advised to to purchase a multi-law comprehensive poster for the workplace. If purchased as a subscription from a service, he said, companies generally send updated posters when any of the requirements change.

Commonly Used Exemptions

Commissioned sales employees of retail or service establishments are exempt from overtime if more than half of the employee’s earnings come from commissions and the employee averages at least one and one-half times the minimum wage for each hour worked. You may also wish to review the applicable regulation.

Computer professionals: Section 13(a)(17) of the FLSA provides that certain computer professionals paid at least $27.63 per hour are exempt from the overtime provisions of the FLSA.

Drivers, driver’s helpers, loaders and mechanics are exempt from the overtime pay provisions of the FLSA if employed by a motor carrier, and if the employee’s duties affect the safety of operation of the vehicles in transportation of passengers or property in interstate or foreign commerce. You may also wish to review the applicable regulation.

Farmworkers employed on small farms are exempt from both the minimum wage and overtime pay provisions of the FLSA. You may also wish to review the specific regulation.

Young workers employed on small farms, with parental consent, are also exempt from the child labor provisions of the FLSA. For more information on exemptions from the child labor provisions of the FLSA in agriculture, click the underlined text. Other farmworkers are exempt from the FLSA’s overtime provisions. You may also wish to review the specific regulation.

Salesmen, partsmen and mechanics employed by automobile dealerships are exempt from the overtime pay provisions of the FLSA. You may also wish to review the applicable regulation.

Seasonal and recreational establishments: Employees employed by certain seasonal and recreational establishments are exempt from both the minimum wage and overtime pay provisions of the FLSA. You may also wish to review the applicable regulation.

Executive, administrative, professional and outside sales employees: (as defined in Department of Labor regulations) and who are paid on a salary basis are exempt from both the minimum wage and overtime provisions of the FLSA.

For more information about commonly used exemptions, visit www.dol.gov.

Source: US Department of Labor elaws – Fair Labor Standards Act Advisor

[stextbox id=”grey”]Learn more about nonexempt vs. exempt employees at Compensation.BLR.com.[/stextbox]

 

Fennemore Craig lawyers, AZ Business Magazine September/October 2011

Centennial Series: Fennemore Craig Continues Legal Legacy

Fennemore Craig, founded in 1885, has helped shape the legal landscape of Arizona and its economy for more than a century. Founded more than a quarter-century before Arizona attained statehood, the firm has both helped the state grow and grown within the state.

What started as a frontier town law office has grown to more than 180 attorneys concentrated in Phoenix, Tucson, Denver, Las Vegas, and Nogales, with 440 total employees firm-wide. In the beginning, it was known as Sloan & Chalmers at what is now First Avenue and Washington Street in Phoenix. Even then, long before moving into swanky downtown offices, the law firm was contributing to the quality of life for Arizonans.

A Fennemore Craig spokesperson identified some significant milestones from the past 100 years:

1. In 1910, Edward Kent, who served on the Arizona Territorial Supreme Court and later became a firm partner, authored the Kent’s Decree. It established and governed water rights in Arizona for decades. The decree is still referred to today. The firm also authored the Arizona Workmen’s Compensation Act and Arizona Sales Tax Act in 1912.

2. In 1927, the firm helped organize the State Bar.

3. From 1954-1962, Fennemore Craig partner Cal Udall was a member of the legal team that represented Arizona in its battle with California for control of Colorado River water. Fennemore Craig’s efforts here spurred development of Arizona’s major cities.

4.  The Arizona Groundwater Management Act. Jim Johnson, a Fennemore Craig water, natural resources and environmental lawyer, was a principal negotiator and draftsman of the 1980 Arizona Groundwater Management Act. As special counsel to the state’s newly created Arizona Department of Water Resources, he successfully defended  the Act’s constitutionality. The Act marked a critical benchmark in Arizona’s efforts to manage and preserve its groundwater. It established comprehensive and effective approaches to groundwater management and allocation.

5.  Arizona Telecommunications Deregulation, 1995-96. Tim Berg and Theresa Dwyer-Federhar, Fennemore Craig utilities and appellate lawyers, served as Arizona  primary outside counsel to US West, the predecessor to Qwest, now CenturyLink, when Congress mandated telecommunications deregulation with the Federal Telecommunications Act of 1996. They represented US West, which had commenced working with other communications companies and stakeholders and the Arizona Corporation Commission on telecommunications deregulation issues in 1995. When Congress passed the Telecommunications Deregulation in 1996, a competitive telecommunications framework for residential and business customers emerged in Arizona that provided a regulatory regime for multiple providers, competitive pricing and use of a company’s infrastructure by other providers.

6.  Arizona Sports and Tourism Authority. Fennemore Craig lawyer Sarah Strunk, who practices in the area of business and finance, served as general counsel (and continues to do so) to the Arizona Sports and Tourism Authority in connection with the siting, development, construction, and ongoing operation and maintenance of University of Phoenix Stadium, home of the Arizona Cardinals and an anchor of Glendale’s sports complex. The development of University of Phoenix stadium, also home of the Fiesta Bowl and site of Super Bowl XLII, marked a shift in the economic landscape of the West Valley and Arizona sports.

Fennemore Craig, AZ Business Magazine September/October 2011

[stextbox id=”grey”]Fennemore Craig
3003 N. Central Ave., Ste. 2600
Phoenix, AZ 85012
(602) 916-5000
www.fclaw.com[/stextbox]

Arizona Business Magazine September/October 2011

State budget crisis - AZ Business Magazine July/August 2011

The State’s Budget Crisis Is Further Straining The Judiciary System

When talk turns to the state’s budget crisis, the discussion almost invariably focuses on the impact funding cuts will have on Arizona’s health and education systems. Among the general public, however, little to no thought is given to the effect budget cuts are having on the state’s judicial system.

“The state’s lack of resources promises to remain a challenge for several years,” says Timothy Berg, managing partner at Fennemore Craig. “However, it is important to remember that there are pronounced constitutional, social and economic dangers in rendering the Arizona court system ineffective by undue budget cuts.”

According the Arizona Judicial Branch, there were more than 2.6 million filings in Arizona courts in 2010.

“To make matters worse, the total number of persons working full-time in the Arizona judicial system decreased from 9,684 in 2009 to 9,379 in 2010 — a 3.1 percent decrease,” says David E. Funkhouser III, an associate at Quarles & Brady. “Thus, an already-strained judiciary is being forced to work more with less.”

As it is, the state’s judicial system receives just above 1 percent of the general budget, according to Don Bivens and Trish Refo, partners at Snell & Wilmer. Just a few years ago, Bivens says that allocation stood at 2.75 percent, a number still inadequate for the judicial branch’s needs.

“Funding state courts is a challenge all across America, as state courts face additional cuts to already inadequate budgets,” Refo adds. “Indeed, the situation is of such concern that American Bar Association President Steve Zack has formed a blue ribbon task force … to address the funding crisis in our state courts. State courts cannot fulfill their constitutional mandate to provide justice without adequate resources to do so.”

According to Snell & Wilmer, 80 percent of Arizona’s funding of the justice system goes to probation services. The remaining 20 percent is allocated across the supreme court, the appellate courts, and partial judicial salaries in local superior courts throughout the state. At least one county, Maricopa, is now shouldering the full burden for superior court salaries.

As Berg points out, cutting funding for the judicial branch will create an ineffective civil court system, which will have serious economic and social consequences on the state.

“Arizona’s judiciary is the arbiter of disputes involving government, corporations and individuals,” he says. “If businesses and entrepreneurs are unable to have their disputes resolved in a fair and timely manner, it is reasonable to expect that, over time, they will look to locate in other states.”

Thomas Irvine, a shareholder at Polsinelli Shughart, contends that the situation with civil cases will
likely become more dire as the court system continues to do more with less.

“Even with the 2012 opening of the new downtown criminal courthouse, we are out of courtrooms,” Irvine says. “Management miracles, as accomplished by the superior court in the last decade, cannot — without more — keep up with growth. There will be a need for more judges, staff and courthouses.”

In Maricopa County alone, Bivens of Snell & Wilmer says the clerk’s office has laid off 182 clerks. As a result, the court system is learning to work smarter.

“That loss of person power has accelerated the change over to electronic filing of court records, which, while causing commotion in the short term, will likely save millions in the future as the courts move from the laborious task of preserving mounds of paper for every court case, to filing and storing all court records digitally,” Bivens says.

Still, there’s no getting around the fact that funds for the judicial system are growing more and more scarce. To make up for the loss in tax revenue, fees for court filings have increased 44 percent during the last two years, according to Snell & Wilmer. Irvine of Polsinelli Shughart emphasizes that the funding cuts and fee increases are not just a problem for the legal community.

“Arizona business must take the lead in supporting adequate budgets and resources for the courts,” he says. “Justice, victims, our community and the low priority of business cases demands that this effort be made. Slowing down the dance of justice is out of the question.”

Arizona Business Magazine July/August 2011

Fennemore Craig has implemented a new way to communicate with its clients

Local Law Firm Enhances Attorney-Client Communication With Red Phone

Fennemore Craig, the oldest and one of the largest law firms in Arizona, has implemented a new way to communicate with its clients. The “Red Phone” is an iPod Touch in a red case that has pre-programmed information linked to a specific case and group of lawyers that translates case-related information between client and attorney.

Fennemore Craig Red PhoneHow does this increase communication? Clients are provided with the iPad or iPod Touches to send delicate attorney/client information through email, camera functions and Skype — a system that allows face-to-face interaction via video and voice communication. When a client needs to talk, a special number programmed into the phone calls all the attorneys linked to the case and one must answer at all times.

The Red Phone has already been assisting families incapacitated with seriously-injured loved ones who may be in a place with no Internet access or office setting with equipment such as a phone, fax machine or computer.

James Goodnow, an associate for Fennemore Craig, believes this new program will impact the practices’ relationship with its clients in a tremendous way.

“We want our clients to always have human communication,” says Goodnow. “The immediate response time has gotten positive reviews from the clients.”

The camera function allows clients to take case-relevant photos and send them immediately to their attorney.

Documents that pertain to the case can be sent with preloaded email addresses directly to the attorneys involved, and clients can review papers sent from the office.

Videos conferences are used to inform parties involved of the evidence retained.

“Instead of reading about our clients, the other lawyers will see them,” says Goodnow. “We can also show them how a case will be presented to a jury.”

It also allows attorneys to update the patient’s condition.

Fennemore Craig 2011

The phone costs nothing to clients. After the case has been resolved and there is no need for communication, the phones are returned to Fennemore.

Everyone with a case at Fennemore is eligible for the phone. iPads are given to those who are less tech savvy and don’t have internet access. Everyone else receives an iPod Touch.

The Fennemore Craig Law Firm was founded more than 110 years ago in Phoenix. The firm has over 120 attorneys with offices in Phoenix and Tucson. They are looking out for the best interest of their clients and know the Red Phone will enhance their abilities to do so.