Fair Labor Standards Act: Are your employees exempt from overtime?

By Kathleen Pohlid Founder and Managing Member, Pohlid, PLLC | June 17, 2012

True or False: Managers are exempt from overtime. Employers who assume that managerial titles or merely bestowing a title upon an employee makes them exempt are making a mistake that can cost them significantly. The U.S. Department of Labor has stepped up enforcement efforts which will likely scrutinize whether employees are exempt. As this article discusses, the Fair Labor Standards Act places no relevance in a job “title.” Therefore, it is important that hotel establishments ensure that employees for whom an exemption is claimed, do in fact qualify for the exemption.

The Fair Labor Standards Act (FLSA) sets forth the minimum federal requirements with respect to the minimum wage and overtime obligations of covered employers to include hotel establishments. The FLSA also sets forth the following employee classifications that are exempt from these requirements: bona fide executive, administrative, professional, outside sales employees, and computer employees. Do not assume that merely giving an employee a job title or classifying them under one of these classifications suffices to avoid overtime pay obligations. It does not.

In order to qualify for an exemption under any of the exempt classifications as set forth by the FLSA, employers bear the burden to establish that the job for which the exemption is claimed satisfies both the salary basis and duties tests. Since the FLSA sets the minimum obligations under federal law, states may impose additional restrictions with respect to overtime exemptions. Therefore, hotel establishments should review the position descriptions for the job positions which they contend an exemption applies to ensure the primary duties and salary satisfy the requirements under both federal and state laws.

In addition to complying with federal and state laws, hotel establishments who send employees to work in California even on a temporary basis should be aware that the California Supreme Court has held that California Labor Code overtime provisions apply to non-resident employees who perform work in California. Although the California Supreme Court decision issued in Sullivan v. Oracle Corporation on June 30, 2011 pertained to a California based business, the decision may also be interpreted to apply to employers not based in California, entitling their non-California resident employees to be paid under California law for work they temporarily perform within the state.

Under federal law, determination of the exempt status of an employee requires assessment as to whether the employee’s duties and salary qualify for the exemption or exemptions claimed. Since it is possible for an employee’s job position to fall within multiple exemptions, it is important to establish written descriptions setting forth all of the principal duties and to ensure that the employee’s work conforms to those duties.

Job titles do not determine the exemptions status. In fact, employers who assign a job title such as “manager” to imply the exemption exists when in fact, the employee’s duties do not qualify for the exemption may find their selves in a more precarious situation if such action is construed to be an attempt to willfully violate the FLSA.

Coming up in January 2018...

Mobile Technology: Relentless Innovation

Technology has become a crucial component in attracting and retaining hotel guests, and the need to enhance a guest’s technology experience is driving a relentless pace of innovation. To meet and exceed guest expectations, 54% of hotels will spend more on technology in 2018, and mobile solutions in particular will top the list of capital investments. Many hotels are integrating mobile booking, mobile keys, mobile payments and mobile check-in into their operations. Other hotels are emphasizing the in-room experience, boosting bandwidth and upgrading flat screen TVs to more easily interface with guest mobile devices. And though not yet mainstream, there are many exciting technology developments on the near horizon. The Internet of Things (loT) is taking form in some places, and can be found in guest room control systems, voice activation systems, and in wearable sensors that can be used for access and payment options. Virtual reality headsets are available at some hotels so guests can enjoy virtual trips to exotic locations or if off-property, preview conference facilities and guest rooms. How long will it be before a hotel employs a fleet of robots for room service, or utilizes a hologram as a concierge, or installs gesture-controlled walls that feature interactive digital displays? Some hotels are already using augmented reality for translation services, or interactive wall maps, or even virtual décor. This pace of innovation is challenging property owners and brands to stay on top of the latest technology trends while still addressing current projects. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in the mobile technology space.