FSLA & YOUR AGENCY

Most agency owners feel that their CSRs are professionals. They are (or should be) licensed by the state to sell insurance and some even have other certifications like CISR, CPSR, or CIC. Since they are professionals, you consider them to be exempt employees and you are not required to pay them overtime. WRONG!

Just because an employee is licensed by the state doesn't necessarily make them a professional. Hairdressers and manicurists are licensed by the state, yet you wouldn't think about not paying them overtime if they were your employees. Just because you pay a "salary" instead of on an hourly basis, doesn't make them exempt from overtime either.

The Fair Labor Standards Act was created to establish minimum wage, overtime pay, record keeping and child labor standards for non-exempt employees. A non-exempt employee is one that doesn't fall into one of the FSLA's exempt categories. If your CSR, or receptionist, or bookkeeper are not exempt, you MUST pay them overtime for hours in excess of 40 per week.

So let's see who in your agency is exempt from receiving overtime.

THE DUTIES TEST

Executives: If their primary duty (80% of their time) is management and they direct the work of two or more full-time employees, they are exempt. This would eliminate the agency owners and probably the office manager, but what about the Personal Lines Department Manager or her Commercial Lines counterpart? It depends. If all they are doing is managing others and the department and don't have their own book of business, they are probably exempt. Otherwise they are probably non-exempt.

Administrative: If primary duties are office work related to the agency's management policies or business operations, they are exempt. Human Resource Director? Exempt. Controller / Accountant? Exempt.

Outside Sales: Obviously this exemption eliminates your producers. But what about the inside CSR/Agent that is handling personal lines new business call-ins? Not exempt.

Professional: Does the work require advanced knowledge and do they exercise discretion and judgement? You would think that this would exempt the CSRs from overtime, but it doesn't. The agency owner tells them when to come and go, how to process a renewal or a piece of new business, and they don't usually supervise others. In the eyes of the FSLA, a CSR is considered clerical and non-exempt.

THE SALARY TEST

Many agencies think they can get away from paying overtime by paying their employees on a salary basis. They regularly receive the same amount on payday regardless of the number of hours worked and they aren't docked for hours not worked. Although this is a requirement for exemption, it must be in addition to the duties test.

So let's assume your CSRs and receptionist and other clerical people are non-exempt and you have a written policy in your employee handbook that says "No overtime unless approved by management." But, as a manager, you know that a CSR is coming in early and/or staying late to get the work done. Since this overtime has not been authorized, you feel that you are not required to pay accordingly. This is not true, the law is clear on payment of overtime authorized or not.

If an employee chooses to put in extra hours and you as the employer know about it, you must still pay overtime. Otherwise, you have been unjustly enriched.

So what about giving "comp time?" That CSR puts in an extra two hours per day for four days this week and you give her a day off next week or some other point in the future. According to the law you must pay time and a half for the eight hours in excess of forty worked during the week.

As an employer, you have certain record-keeping requirements for your non-exempt employees. You need to maintain the:

·        Time and day of the week the employee's workweek begins.

·        Hours worked each day.

·        Total hours each workweek.

·        Regular hourly rate of pay.

If your employees work on a set schedule that seldom varies, you can keep a record showing the exact schedule of daily and weekly hours and then indicate that the schedule was followed. But be careful. A disgruntled ex-employee can always claim that those records were inaccurate. And what if her attorney gets access to your automation system showing when his client signed on and off the system? This may show something different than your manual records and could hold up in court.

Violations of the FLSA are enforced by the Wage and Hour Division. You can receive penalities up to $1,000 per violation. Willful violation can also be prosecuted with fines up to $10,000. Employers may also be held responsible for back wages, back overtime and damages.