Are Your Exempt Employees Really Exempt?
No Problem - They're Salaried!
By John E. Thompson Partner, Atlanta office of Fisher & Phillips LLP | October 05, 2014
This article was co-authored by Ted Boehm, Associate in the Atlanta Office of Fisher & Phillips LLP
A leading source of employment law liability today flows from failing to comply with the federal Fair Labor Standards Act, the wage-hour law of broadest application.
The number of FLSA lawsuits and U.S. Labor Department investigations has skyrocketed. Court complaints alone total in the tens of thousands over the last decade, and the most-recent reporting year's tally of more than 8,000 new FLSA lawsuits – nearly a 5 percent increase – has continued this trend. Furthermore, since at least 2010, the Labor Department has viewed hotels, resorts and other lodging establishments as presenting a high risk for FLSA violations. It is therefore more likely than ever that an industry employer will face wage-hour claims.
The FLSA requires that the non-exempt employees it covers be paid a minimum wage of at least $7.25 an hour (for now) for all of their hours worked. These employees also must be paid overtime at a rate of at least 1.5 times their "regular rates" of pay for all hours worked over 40 in a single workweek. Employers also must keep accurate records of each such employee's hours worked each workday and each workweek.
But the FLSA does provide for some exemptions from these requirements. Those most commonly relied upon, and the ones typically involved in FLSA exemption disputes, are those applying to executive, administrative, professional or outside sales employees as those terms are defined in regulations issued by the U.S. Labor Department (which also deal with certain computer employees and some "highly compensated" employees). These are often called the "white collar" exemptions.
Many of today's FLSA claims and investigations have to do with whether employees have been correctly classified as being exempt under one or more of these provisions. Consequently, one thing industry employers should ensure is that they have made the right decision when they decide to compensate an individual on the basis that he or she is an exempt white collar employee.