On Overtime & Classification
Tools:
Federal Fair Labor Standards Act
The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in Federal, State, and local governments. Covered nonexempt workers are entitled to a minimum wage of not less than $7.25 per hour effective July 24, 2009. Overtime pay at a rate of not less than one and one-half times their regular rates of pay is required after 40 hours of work in a workweek.
The primary focus of the balance of this note concerns who must be paid overtime wages for work in excess of 40 hours per week. An employee who is not paid overtime wages may sue the employer for twice the wages due plus attorneys fees. The federal courts have not hesitated to award these sums in cases where overtime wages were not properly paid.
Executive, Administrative, Professional, Outside Sales and Computer Employees may be exempt employees, meaning employees to whom the Act does not apply. However, merely calling an employee’s position "executive" or "administrative" and so forth does not make it so; the rules concerning who qualifies as exempt are detailed and particularized for each category. Additionally, the current Department of Labor rules state that entire classes of employees cannot be exempted. For example, "blue collar" workers who perform work involving repetitive operations with their hands, physical skill and energy cannot be exempt. This includes non-management production-line employees and non-management employees in maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, construction workers, licensed practical nurses, laborers, police officers, fire fighters, paramedics, emergency medical technicians and similar public safety employees who perform work such as preventing, controlling or extinguishing fires of any type; rescuing fire, crime or accident victims; preventing or detecting crimes; conducting investigations or inspections.
As to employees who might be exempt because they do not fall within the class exclusions, here are a few general rules, offered with the caution that a little knowledge is a dangerous thing and doubts should be resolved by consultation (memorialized in writing) with the Department of Labor or with counsel:
- Executive employees must be actively engaged in management functions, including customarily directing the work of two or more employees and having authority to hire and fire, promote and advance other employees or at least have a formalized function of making recommendations regarding these actions.
- Administrative employees must be compensated at a rate of not less than $455 per week, perform office or non-manual work directly related to the management or business operations or the employer or its customers, and exercise independent judgment and discretion.
- Professional employees must be must be compensated at a rate of not less than $455 per week, and whose primary duties is work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction; or requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.
These general rules are followed in Department regulations by a number of specific rules that must be considered in connection with the classification of employees. Also, to address historic instances where creative employers sought to avoid the overtime wage requirements, a number of detailed rules have arisen that create pitfalls for the honest employer to whom a peculiarity of the details has not been made apparent. We offer one example to show the scope of the risk:
- Under the "joint employment" rule, a non-exempt employee employed by one, two or more employers in separate jobs is considered to be employed by a single employer in a single job if the employers are associated with each other.
- For example, a licensed practical nurse employed at an acute care hospital during the week and a nursing home on the weekend was deemed to be entitled to overtime for all cumulative work in excess of 40 hours per week where the hospital and nursing home shared a common president and board of directors.
- A further example concerns a janitorial contractor service that serves a series of manpower contracts for different companies. An employee hired to provide services at one site under one such contract who also provides services at a second site under a different contract will be deemed to have a single job and be entitled to overtime wages for all work in excess of 40 hours per week in the two jobs combined.
Of lesser weight to the deciding bureacrat, but helpful in making a case, is how the employee's leave affects pay. While exempt employees are expected to work on a regular basis, and while an exempt employee who is unusually absent from work may expect prospective consequences (such as reprimands, reduced future salaries, and so forth), an exempt employee's pay should not be withheld during a particular pay cycle (i.e., contemporaneously) because less than a certain number of hours are worked or a block of work time is missing.
Simply put, the employer that claims an employee to be exempt but who habitually docks pay when the employee is absent will have a hard time proving its claim. Some employers pay hourly employees for certain holidays or allow a certain amount of paid sick leave, so the fact that an emploiyee is paid vacation or sick leave doesn't necessarily prove that the employee is exempt. Pay for legal holidays illustrates the point. An employee who earns less in a pay period because a legal holiday results in fewer work days appears to be a covered employee regardless of how an employer proposes to classify. But if the employer pays its hourly employees a base rate for legal holidays, being paid for the holiday or sick time doesn't prove the employee was treated as exempt. Vacation is another test: employees with paid vacation are more likely to be regarded as exempt employeess, while employees who are not paid for any vacation time are more likely to be regarded as covered. Of course, an employer's policy may be to not allow any vacation with pay or allow vacation with pay only after some initial period of employement.
Eisen & Shapiro has helped clients --both employers and employees-- resolve wage and hour disputes and we can counsel an assist you efficiently.
For more information on some of these matters see the Department of Labor's Compliance website.
10028 Woodhill Road
Bethesda, MD 20817
PHONE: (301) 469-8590
FAX: (301) 469-8120
Site Map
Directions
Contact Us