WorkComp Advisory
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Q & A: Remuneration issues: overtime, salary adjustments, USERRA

Q. “I am confused about NCCI’s rules regarding overtime. Is there a situation when overtime can be 100% excluded?”

A. Overtime is never 100% excluded. The overtime exclusion applies to the half time portion of the time and a half pay. You still pay on the straight time pay. For example, an employee is paid $20/hr for straight time and $30/hr for overtime. The employee works 50 hours. Forty hours are paid at $20/hr and 10 hours at $30/hr for a total of $1100. The Work Comp premiums are paid on $1000 that is 50 hours times $20.

Q. “In light of the economic conditions, we are considering changing the base hours and salary of some of our professional employees. Would this practice jeopardize overtime exemptions?”

A. Changes to an employee’s salary can jeopardize the overtime exemption provided by the Fair Labor Standards Act (FSLA). A case related to Wal-Mart in the 10th U.S. Circuit Court of Appeals found an employer that frequently adjusts a professional employee’s salary to match the employee’s expected hours will lose the overtime exemption provided by FSLA. The case is Archuleta v. Wal-Mart Stores, Inc., 10th Circuit, No. 07-1065 (Oct. 6, 2008)

Q. “We have an employee who resigned to join the Army. Since he voluntarily resigned does USERRA still apply?”

Yes. Section 1002.88 of the U.S. Department of labor’s USERRA regulations stipulate that even if the employee tells the employer that he or she does not intend to seek reemployment, the employee does not forfeit the right to reemployment after completing uniformed service. Moreover, the employee is prohibited from waiving specific rights under USERRA and USERRA supersedes all other contracts, agreements, etc. that reduce or limit any right or benefit provided under the law.