An Overview of Louisiana’s Salaried Workers
The definition and classification of salaried employees are not always clear-cut under Louisiana labor laws. The inquiry begins with the determination of what constitutes a salaried employee. For an employee to be considered salaried, they must be compensated on a salary basis. A salary is a payment paid as a periodic rate (e.g., weekly, bi-weekly, bi-monthly, etc.) that is not calculated on an hourly basis.
Furthermore, payments made in the form of bonuses or commissions do not count toward the salary basis requirement, nor does reimbursement for business expenses or fringe benefits. The Department of Labor has more information in its Final Rule issued on October 8 , 2019 that provides an extensive analysis of the requirements for the proper classification of an employee.
The concern for employers and supervisors is to definitively classify an employee as "exempt" (i.e., "salaried") or "non-exempt" (i.e., "hourly"). The classification is important as it determines if there are any overtime provisions under Louisiana law that the employee is subject to, if an exemption exists under Louisiana law that would exempt an employee from said overtime provisions.
Under Louisiana law, employees who make more than $684 per week are automatically exempt from overtime requirements, so long as the salary is not a "bona fide pay practice designed to convert overtime-eligible employees to salaried status" and the employee performs exempt job duties.
Minimum Salary Guidelines
For exempt salaried employees, there also must be a minimum salary for Louisiana labor laws. For exempt employees working a full calendar week, this amounts to $684 per week as of 2020. This has increased from the previous $455 per week, which was the amount established by the U.S. Department of Labor in its 2004 rule change.
For Louisiana labor laws, as long as you are at or above this minimum salary amount, you have satisfied the salary level test portion for whether the employee qualifies for exemption.
These minimum salary requirements are based on federal regulations as well as the Louisiana Department of Labor. Employers based in Louisiana can pay even lower than this to an employee as long as that employee qualifies for exemption under other criteria described below, but it is not recommended.
The minimum weekly salary in Louisiana is not equal to what it takes for out-of-state workers to become exempt. The federal standard requires a minimum weekly salary of at least $684 for all employees in order to qualify for exemption.
While Louisiana labor laws allow for no minimum weekly salary to be set as long as employers can prove that exempt employees fit into one of the exemption categories, it is unwise to take this route because it opens up the business to a lot of legal liability. If legal action is taken against the employer, the defense could be challenging, as the business has removed the barrier to entry for proving exemption. This means that if the employee is found to not meet any of the exemption requirements, he or she could instantly be classified as non-exempt, and the company would owe back pay at the minimum wage over the previous three years (at 1.5 times the rate of regular, non-overtime hours worked).
Exempt vs. Non-Exempt Salaried Workers
Going back to the days of the Industrial Revolution, Congress has wrestled with the difficult task of preventing employers from unfairly exploiting their employees. In the wake of the Great Depression, it was federal law that accepted that mantle in an effort to stave off the widespread unemployment and economic collapse facing the nation. Later laws ultimately extended the reach of federal power beyond the protection of merely fair payment for labor to preclude other economic abuses of workers through legislation such as the Fair Labor Standards Act and the National Labor Relations Act. Any employer in Louisiana or across the nation must be mindful of these employment laws, yet the focus of this discussion will be solely on those federal laws that control pay. More specific to the Louisiana employee, employers must consider state law as well.
The Fair Labor Standards Act requires employers to pay employees an agreed upon wage for each hour worked. The FLSA makes no distinction in a given workweek between those employees who are paid on a "salaried" basis or those who receive an hourly wage. Instead, its requirements are all based on the number of hours worked. Most states, including Louisiana, have now followed suit and enacted their own wage and hour laws. As time has proven so far, though, the federal wage and hour laws have proven to be the most comprehensive and have been adopted, in total, by many states like Louisiana.
Thus, the first step for employers in Louisiana is determining whether an employee should be classified as exempt versus non-exempt. The general rule is this: all employees should be paid overtime or time and a half for every hour they work in excess of 40 (forty) in one workweek, unless their job falls into one of the exempt classifications. Those exempt classifications include executive, administrative, professional, outside sales, and highly compensated employees. Exempt employees are not required to record their time worked in a given workweek.
This law has been around for decades and employers in Louisiana commonly see the executive, administrative, and professional classifications used most frequently at most businesses, hospitals, schools, factories, and financial institutions. The duties test for each classification falls within the following categories: 1. The Executive Exemption: To qualify for the white collar executive exemption, the employee must meet the following criteria: • his/her effective salary level must be greater than $1500/ wk.; • his/her primary duty must be that of management of the enterprise; • he/she must regularly direct the work of at least two subordinates; and • his/her primary duty must consist of the exercise of discretionary powers with respect to matters of significance.
L.A.R.S. 40:2812(A)(8).
2. The Administrative Exemption: To qualify for the white collar administrative exemption, the employee must satisfy all of the following criteria: • his/her effective salary level is greater than $1500 /wk.; • his/her primary duty is "performing office or non-manual work directly related to the management or general business operations of the employer …" • his/her main job duties include the exercise of discretionary powers with respect to matters of significance • his/her primary duty does not involve the use of manual skill and thus, fairly approximates exempt job duties.
L.A.R.S. 40:2812(A)(7).
3. The Professional Exemption: To qualify for the white collar professional exemption, the employee must meet the following criteria: • his/her effective salary level is greater than $1500 /wk.; • his/her primary duty is "the performance of work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction …; and • the employee is employed by a hospital or related establishment meeting the following criteria: A hospital/medical establishment will be considered to be a "related establishment" under the provisions of this Part when its activities are performed in conjunction with or in close proximity to a hospital. When a hospital/medical establishment and a related establishment are separate entities, only the hospital will be considered to be the same employer and both are still considered establishment.
L.A.R.S. 40:2812(A)(8).
Although the above explanation is meant to summarize the exemptions, it obviously does not touch on all of the intricacies of those regulations. Employers must be wary with regard to any classification of employees as exempt to avoid future liability. The above listed factors are the minimum requirements. A more thorough understanding of the particular business, the job description, and the exact facts of a situation are essential prior to concluding that a given employee’s position may be exempt under the FLSA.
Overtime Payment Requirements
The majority of Louisiana employers are required to pay their overtime-eligible employees overtime pay for all time worked over 40 hours in a workweek. The method by which those overtime payments are computed will depend on the employee’s regular rate (hourly rate x "time and one half" factor), which is a tricky calculation under federal law. Federal rules require that such rates be calculated using a formula based on the regular workweek, with all forms of remuneration factored into the calculation. For example, bonuses must be apportioned over the number of hours worked in the workweek during which they were earned.
However, Louisiana also has statutes and regulations governing the application of the FLSA to overtime-eligible employees. For example, Louisiana law provides that overtime-eligible employees who are required by law to be licensed or certified by the State of Louisiana are entitled to at least time and one half of their hourly wage regardless of how that hourly wage was calculated, except for teachers, principals, assistant principals, and administrative personnel in elementary and secondary schools. In other words, this class of employees can receive overtime pay computed on their hourly wages only without regard to other benefits such as bonuses, etc.
Louisiana law also exempts certain classes of employees from overtime requirements, such as bona fide executives and managers.
Meal and Rest Break Guidelines
Under state law, there are no requirements for employers to provide a meal break or a rest period to hourly or salaried employees. However, if the employer chooses to offer such breaks to hourly employees and fails to compensate the employee for the break, the employee may be owed compensation at his overtime rate for the amount of time not compensated.
The Louisiana Wage Payment Act, La. R.S. 23:631, et seq., does not speak to whether an employee should receive a meal or rest breaks. La. R.S. 23: 641 does address the payment of wages at termination, however it makes no distinction between hourly and salaried workers.
The United States Department of Labor’s Fair Labor Standards Act does not contain any meal or rest break requirements either. However, unlike the Louisiana Wage Payment Act, it has a provision stating "a covered employer may require that a meal, or rest period of a specified length or on specific work schedule not be counted as hours worked…" 29 U.S.C. A§207 (a)(2)(A). The fair labor standards act also states that " [a]n employer is not required to pay for meal periods during which the employee is relieved of all duties…" 29 C.F.R. 553.223(b)(1) .
The Fair Labor Standards Act does allow an employer to make deductions from an employee’s pay for "sickness, unexcused absences, tardiness, or other such things of similar nature." 29 C.F.R. 778.107.
The U.S. Department of Labor has informed the Louisiana Attorney General that if an employer does not deduct pay for the length of a meal or rest break then the period should be hours worked and the employee should be paid for the period at the employee’s normal rate of pay. 29 C.F.R. 553.223(c).
Another option is to deduct 30 minutes from an employee’s time sheet, even if the employee worked through the meal or rest period. If a salaried employee is paid his guaranteed salary each week, despite any deductions for scheduled meal or rest periods, the Fair Labor Standards Act will recognize him to be compliant with the FLSA regulations and not due unpaid wages.
Usually employers offer meal periods that range from 30 minutes to one hour in length. An employer can give an employee a full hour for lunch, even if the employee returns in half the time. Under the Fair Labor Standards Act, the employer must not require the employee to complete a daily time sheet where employees are required to clock in and out for meal and rest periods. If a time sheet exists, the employer cannot subtract time from the sheet, for example, 30 minutes for lunch.
Deductions and Paychecks: What You Need to Know
In both voluntary and involuntary wage deductions, there are nuances that may go unnoticed. In a voluntary deduction situation, an employer may deduct for anything that an employee consented to in writing. An employer may be required to pay back any amount deducted to which the employee did not specifically consent. For wage assignments, garnishments, and other involuntary deductions, the employer must comply with all restrictions provided by law. Such restrictions may only allow certain amounts to be withheld from an employee’s wages or may impose caps on the frequency of such deductions. For example, the maximum amount of an individual wage garnishment in Louisiana is 25% of disposable income, unless the employee has multiple garnishments. Even for garnishments in which the employee has creditor debt, there are protections from garnishment in cases of the seizure of workers’ compensation and Social Security benefits. There are also protections for child support wage garnishments for individuals who receive regular workers’ compensation payments.
There is an exception to the general rule that an employer shall not apply a garnishment, attachment, or other order for the seizure of an employee’s wages to any part of an employee’s salary which is less than the federal minimum wage, adjusted for cost-of-living raises. This means that an employer cannot garnish any wages that the employee earns in excess of the federal minimum wage in the state in which the employee earns such wages, unless the pay period is more than one week long. For instance, Louisiana has a minimum wage of $7.25 per hour. If an employee working in Louisiana does not receive a raise, but also does not receive a reduction in hours so that his regular bi-weekly pay is always $600 dollars, the employer does not need to in good faith check whether the employee’s deduction will put his pay below the minimum wage (assuming he has no other deductions). This is because, although the employee may have worked for years, the employee’s base pay is always above the minimum wage.
An employer must also comply with the "pay stub" requirements set forth in the Louisiana Revised Statutes. Louisiana defines a pay stub as "any document, memorandum, or record, however produced or reproduced, including, but not limited to, a record produced or reproduced by computer, giving notice to the employee of the facts pertaining to his earnings during the work period, any deductions and the net earnings." Pay stubs must include an employee’s name, the total hours worked, the rate of pay, and itemized deductions. If the employer pays on an hourly basis, the employer may choose to not list the rate of pay, as long as the employer maintains the correct records and such records are made accessible to the employee. For an employee paid on a commission basis, the amount of commissions earned, the accrued vacation time, and the type of compensation paid to the employee must be included on the pay stub. Other information is not required on the face of the pay stub but must be disclosed in writing upon the employee’s request. Although pay stubs are not subject to garnishment or seizures, the employer remains liable for damages and attorneys’ fees if the employer fails to comply with the statutory provisions regarding pay stubs.
Rights to Protection from Workplace Discrimination and Harassment
Employees are protected from discrimination in Louisiana on the basis of race, color, religion, national origin, sex, age, and disability according to the Louisiana Employment Discrimination Law found at LSA-R.S. 51:2231, et seq. In addition, since 2018, Louisiana statute prohibits employment discrimination based on sexual orientation and gender identity. La. R.S. 23:331. The protections against gender-based employment discrimination include discrimination based on gender nonconformity, transgender status or intersex characteristics, and discrimination based on gender-stereotypes or lack thereof. Id. Although Louisiana law only prohibits discrimination based on the above-protected categories, Louisiana law does prohibit discrimination by employers for engaging in protected political activities and for volunteer services as a firefighter. See LSA-R.S. 23:967.
State agencies help enforce Louisiana’s anti-discrimination laws. Like Title VII, Louisiana law prohibits employers from discriminating against employees on the basis of a protected class, such as by failing to hire or firing someone on the basis of their gender. Id. However, unlike Title VII, Louisiana law is not limited to employment (e.g., advertising, promotion, compulsion to engage in an unlawful act such as prostitution, etc.), but applies to any action where compliance with a statute, ordinance, written rule or regulation, or other municipal, parochial, or county charters, has been requested or required or would be required should the conditions established therein occur. La. R.S. 23:332. Also, although Title VII does provide some protection against workplace harassment, Louisiana law is very limited in its protections against sexual harassment in the workplace.
The Louisiana Commission on Human Rights is created to prevent discrimination by investigating discrimination claims, attempting conciliation, and conducting hearings. LSA-R.S. 51:2240. If the commission is unable to settle any alleged discrimination complaint, the commission shall issue a complaint which would then be heard before a hearing officer by a multi-member panel. LSA-R.S. 51:2245. As discussed more fully in the section on Federal Laws Related to Louisiana Labor Laws, the EEOC Act is the federal counterpart to the establishment of the Louisiana Commission on Human Rights. This Act provides the same protections and procedures as the aforementioned Louisiana Act.
Current Developments and Future Directions
In recent years, a string of legislative actions have brought Louisiana in line with the national trend in reevaluating the rules governing salaried employees. Although the changes have been modest so far, signs indicate that additional changes may be on the horizon.
First, in 2017, Act 293 was passed and became effective January 1, 2018. Act 293 amended La. R.S. 23:1005 by increasing the salary threshold for administrative, executive, and professional exemptions from the current $455 to $684 per week. Also effective January 1, 2018, La. R.S. 23:1023(9) will no longer explicitly categorize workers who primarily sell products or obtain contracts for their employer as non-exempt inside sales workers. This statutory change makes this class of employees subject to a particular test to determine whether they are exempt. The Act also expressly authorizes the Louisiana Workforce Commission to adopt rules to implement this exemption and does so with or without federal regulations. Although the Act is not as expansive as its federal counterpart, when the administrative rules are adopted in 2018, Louisiana will fall in line with the approach entertaining the possibility of exempting certain inside sales workers.
Second, Act 249 of 2017 became effective on August 1, 2017. The Act created statutory categories of "Connecticut Plan," "medical leave," and "medical leave laws" referring to state and local laws allowing an employee to take leave to provide care for family members with serious health conditions on the same terms and conditions as approved leave under the Family Medical Leave Act (FMLA) . Employees who attend school or daycare also qualify for protected leave if they have exhausted other protected leave under local or state law. Any employer that allows employees to take leave for the above referenced reasons on the same terms and conditions as allowed under FMLA will qualify as a "Connecticut Plan" employer. Acts 249 and 293 are good examples of the increased focus on expanding the scope of covered employment and benefits.
Third, it is unclear if the Department of Labor may continue its efforts to enact new regulations on the "white collar" exemptions at the federal level. Although currently halted, a lawsuit called State of Nevada v. U.S. Dep’t of Labor et al., was filed in October 2016 in Texas federal district court challenging the White Collar Rule (the Rule). Along with the rule’s salary requirement, the Rule eliminated the exemption for highly compensated employees who, among other things, have a primary duty of performing office or non-manual work of a "professional," "administrative," or "executive" nature. The Rule was intended to take effect on December 1, 2016 until it was enjoined in a nationwide stay order. On August 31, 2017, the Eastern District of Texas agreed to permanently vacate the Rule. The United States Court of Appeals for the Fifth Circuit recently granted the DOL’s request to hear the case.
Louisiana payroll attorneys will continue to track changes in labor and employment laws. In light of the increasing state and federal efforts to regulate labor issues, Louisiana employers should develop a thorough understanding of Louisiana labor laws and proactively consult legal counsel whenever they have questions or concerns.