Fair Labor Standards Act: Are your employees exempt from overtime?
By Kathleen Pohlid Founder & 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.