Under the Fair Labor Standards Act (FLSA), workers are entitled to one and a half times their normal pay for any time worked more than 40 hours in one week unless their job meets the standards of a three-part test: to be exempt from overtime, they must be paid on a salary basis, they must make more than the new minimum salary level, which in December will be set at $47,476 (see story, page 30), and their job duties must be in a “non-exempt” category of white collar office workers.

It’s the last category that has proved the trickiest. Who is exempt from overtime, and who isn’t?

There is a fair amount at stake for both employers and employees, according to a law firm specializing in the Fair Labor Standards Act (the Albany, New York-based Chamberlain, Kaufman and Jones, a firm with an appropriate URL — www.flsa.com).

While “non-exempt” employees are entitled to overtime, the New York law firm notes on its website that “exempt” employees have “virtually no rights at all under the FLSA overtime rules. About all an exempt employee is entitled to under the FLSA is to receive the full amount of the base salary in any work period during which he or she performs any work (less any permissible deductions). Nothing in the FLSA prohibits an employer from requiring exempt employees to ‘punch a clock,’ or work a particular schedule, or ‘make up’ time lost due to absences. Nor does the FLSA limit the amount of work time an employer may require or expect from any employee, on any schedule. (‘Mandatory overtime’ is not restricted by the FLSA.)”

According to the law firm’s website, the Department of Labor sets the following guidelines:

An employee who meets the salary level tests and also the salary basis tests is exempt only if he or she also performs exempt job duties. These FLSA exemptions are limited to employees who perform relatively high-level work . . . Job titles or position descriptions are of limited usefulness in this determination . . . It is the actual job tasks that must be evaluated, along with how the particular job tasks “fit” into the employer’s overall operations.

There are three typical categories of exempt job duties, called “executive,” “professional,” and “administrative.”

Exempt executive job duties. Job duties are exempt executive job duties if the employee regularly supervises two or more other employees, and also has management as the primary duty of the position, and also has some genuine input into the job status of other employees . . .

The supervision must be a regular part of the employee’s job, and must be of other employees. Supervision of non-employees does not meet the standard.

“Mere supervision” is not sufficient. In addition, the supervisory employee must have “management” as the “primary duty” of the job. The FLSA regulations contain a list of typical management duties. These include (in addition to supervision): interviewing, selecting, and training employees; setting rates of pay and hours of work; maintaining production or sales records (beyond the merely clerical); appraising productivity; handling employee grievances or complaints, or disciplining employees; and determining work techniques; among others . . .

Determining whether an employee has management as the primary duty of the position requires case-by-case evaluation. A “rule of thumb” is to determine if the employee is “in charge” of a department or subdivision of the enterprise (such as a shift). One handy clue might be to ask who a telephone inquiry would be directed to if the caller asked for “the boss” . . .

An employee may qualify as performing executive job duties even if he or she performs a variety of “regular” job duties as well. For example, the night manager at a fast food restaurant may in reality spend most of the shift preparing food and serving customers. He or she is, however, still “the boss” even when not actually engaged in “active” bossing duties. In the event that some “executive” decisions are required, he or she is there to make them, and this is sufficient.

The final requirement for the executive exemption is that the employee have genuine input into personnel matters . . . Usually, it will mean that making personnel recommendations is part of the employee’s normal job duties, that the employee makes these kinds of recommendations frequently enough to be a “real” part of the job, and that higher management takes the employee’s personnel suggestions or recommendations seriously.

Exempt professional job duties. The job duties of the traditional “learned professions” are exempt. These include lawyers, doctors, dentists, teachers, architects, clergy. Also included are registered nurses (but not LPNs), accountants (but not bookkeepers), engineers (who have engineering degrees or the equivalent and perform work of the sort usually performed by licensed professional engineers), actuaries, scientists (but not technicians), pharmacists, and other employees who perform work requiring “advanced knowledge.”

Professionally exempt work means work that is predominantly intellectual, requires specialized education, and involves the exercise of discretion and judgment. Professionally exempt workers must have education beyond high school, and usually beyond college, in fields that are distinguished from (more “academic” than) the mechanical arts or skilled trades. Advanced degrees are the most common measure of this, but are not absolutely necessary if an employee has attained a similar level of advanced education through other means.

Some employees may also perform “creative professional” job duties that are exempt. This classification applies to jobs such as actors, musicians, composers, writers, cartoonists, and some journalists . . .

Exempt administrative job duties. The most elusive and imprecise of the definitions of exempt job duties is for exempt “administrative” job duties.

The regulatory definition provides that exempt administrative job duties are (a) office or nonmanual work, which is (b) directly related to management or general business operations of the employer or the employer’s customers, and (c) a primary component of which involves the exercise of independent judgment and discretion about (d) matters of significance.

The administrative exemption is designed for relatively high-level employees whose main job is to “keep the business running.” A useful rule of thumb is to distinguish administrative employees from “operational” or “production” employees . . . Administrative employees provide “support” to the operational or production employees. They are “staff” rather than “line” employees. Examples of administrative functions include labor relations and personnel (human resources employees), payroll and finance, records maintenance, accounting and tax, marketing and advertising, quality control, public relations, legal and regulatory compliance, and some computer-related jobs . . .

To be exempt under the administrative exemption, the “staff” or “support” work must be office or nonmanual, and must be for matters of significance. Clerical employees perform office or nonmanual support work but are not administratively exempt. Nor is administrative work exempt just because it is financially important, in the sense that the employer would experience financial losses if the employee fails to perform competently. Administratively exempt work typically involves the exercise of discretion and judgment, with the authority to make independent decisions that affect the business as a whole or a significant part of it.

Questions to ask might include whether the employee has the authority to formulate or interpret company policies; how major the employee’s assignments are in relation to the overall business operations of the enterprise (buying paper clips versus buying a fleet of delivery vehicles, for example); whether the employee has the authority to commit the employer in matters that have significant financial impact; whether the employee has the authority to deviate from policy without prior approval.

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