Employees – Overtime Pay Issues and FLSA Exempt Status

 

To avoid costly and time-consuming legal hassles, you might want to review your overtime pay policy and all your exempt-employees’ status to comply with the Fair Labor Standards Act (FLSA).

Many employers continue to violate the FLSA’s wage and hour rules. For exempt employees, the FLSA issued an opinion letter in Nov. 2018 regarding reasonable relationship tests for employers.

Typically, such employers incur costly expenses because they incorrectly classify employees as exempt to avoid paying them for overtime. Such a mistake is costly because employees can get two years in back wages.

Worse, if it’s shown it was an intentional act, employees can get three years back pay at one-and-a-half times the hourly rate as well as liquidated damages that equivalent to the unpaid wages.

So, it’s important to examine your job descriptions and your employees’ classifications.

And when you hire an employee, you must correctly classify the person either as exempt or nonexempt.

General exempt guideline

In essence, the Department of Labor (DOL) has two requirements for exempt status:

  1. The employee is paid a salary.
  2. The person has certain duties termed exempt. Such positions are administrative, computer, executive, professional, outside sales and other highly compensated employees.

For example, employees who are paid at least $455 per week, if they meet certain levels for administrative, executive or professional.

The professional category includes erudite professional and creative professional.

Special levels or tests, determine the classifying of computer professionals and outside salespersons.

As for highly compensated employees classified as exempt, that usually means some who is paid $100,000 annually and who performs duties as an administrator, executive or professional.

From the DOL, here are more details more details on each classification — they are:

Executive Exemption

To qualify for the executive employee exemption, all of the following tests must be met:

  • The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $455* per week;
  • The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;
  • The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and
  • The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

Administrative Exemptions

To qualify for the administrative employee exemption, all of the following tests must be met:

  • The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455* per week;
  • The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
  • The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

Professional Exemption

To qualify for the learned professional employee exemption, all of the following tests must be met:

  • The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455* per week;
  • The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;
  • The advanced knowledge must be in a field of science or learning; and
  • The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

To qualify for the creative professional employee exemption, all of the following tests must be met:

  • The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455* per week;
  • The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

Computer Employee Exemption

To qualify for the computer employee exemption, the following tests must be met:

  • The employee must be compensated either on a salary or fee basis (as defined in the regulations) at a rate not less than $455*per week or, if compensated on an hourly basis, at a rate not less than $27.63 an hour;
  • The employee must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the duties described below;
  • The employee’s primary duty must consist of:

1) The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;

2) The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications;

3) The design, documentation, testing, creation or modification of computer programs related to machine operating systems; or

4) A combination of the aforementioned duties, the performance of which requires the same level of skills.

Outside Sales Exemption

To qualify for the outside sales employee exemption, all of the following tests must be met:

  • The employee’s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and
  • The employee must be customarily and regularly engaged away from the employer’s place or places of business.

Highly Compensated Employees

Highly compensated employees performing office or non-manual work and paid total annual compensation of $100,000 or more (which must include at least $455* per week paid on a salary or fee basis) are exempt from the FLSA if they customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee identified in the standard tests for exemption.

For additional information, visit the wage and hour DOL page DOL’s wage and hour page and/or call the toll-free information and helpline, available 8 a.m. to 5 p.m. in your time zone, 1-866-4USWAGE (1-866-487-9243).

From the Coach’s Corner, here are related management resource links:

16 Best Practices to Stay out of Legal Trouble with Employees — Generally, in human resources, companies find themselves in legal hot water because they inadvertently make mistakes with their employees. It’s important to triple down on preventative measures and responses to legal hazards when necessary.

How to avoid EEOC Discrimination Suits — Here are six tips for micro-companies and 13 strategies for larger organizations to avoid EEOC migraines.

10 Tips on Responding to EEOC Complaints — Despite all the court cases, warnings and complaints filed at the Equal Employment Opportunity Commission, a study shows big companies are guilty of favoritism in their promotion practices. If you’re so accused, here’s what to do.

Avoid EEOC Legal Hassles over Unpaid Leave Requirements — You might want to review your current human resource policies. The Equal Employment Opportunity Commission (EEOC) has continued to push employers on unpaid leave under the Americans with Disabilities Act (ADA).

Tips to Avoid Legal Stress from Nonexempt Pay Errors — If your pay program for nonexempt employees isn’t kosher, you’ll likely be confronted with legal hassles. Such hassles will result in having to pay back wages, overtime, liquidated or double damages.

“Corporate culture matters. How management chooses to treat its people impacts everything – for better or for worse.”

-Simon Sinek

 

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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.





Facebook Privacy: Advice for Job Seekers and Employers


The practice by some companies to require job seekers to reveal their Facebook passwords so they can spy on the applicants’ private information prompts a couple of Biz Coach reactions — for both job applicants and employers. 

For job seekers: 

Any company that would require disclosure of your Facebook password is an undesirable employer. At the very least, it’s really tacky for an interviewer to request such information. It also leads to divulging of your family’s and friends’ private information. Who needs a voyeur or an identity thief for a boss? 

Facebook’s chief privacy officer, Erin Egan, issued a warning to such companies: “We’ll take action to protect the privacy and security of our users, whether by engaging policymakers, or where appropriate, by initiating legal action…”

This issue serves as a catalyst to warn job seekers to be smart about what they insert in their social media. No employer wants to be embarrassed.

Unfortunately, many people looking for work open the door for employers to spy on their Facebook pages. An HR management study shows 30 percent of job seekers use social media to get more information about open positions or employers; of these, more than 70 percent use Facebook, 43 percent each use Google+ or LinkedIn.

In addition, to be fair, you shouldn’t be accessing social media at work unless authorized — usually, it’s OK only if you’re promoting your employer’s products and services (here’s why).

For employers:

Admittedly, recruiters and bosses have been looking at applicants’ social media for some time now. Reading openly published comments are different than private comments, which are tantamount to reading someone’s personal diary or bank statement.

But for an employer to ask for passwords is a violation of federal law: The Stored Communication Act or the Computer Fraud and Abuse Act. It’s important to avoid EEOC discrimination suits and here’s more why companies are falling into the management lawsuit trap.

“In recent months, we’ve seen a distressing increase in reports of employers or others seeking to gain inappropriate access to people’s Facebook profiles or private information,” wrote Ms. Egan. “This practice undermines the privacy expectations and the security of both the user and the user’s friends. It also potentially exposes the employer who seeks this access to unanticipated legal liability.”

Sharing or asking for a Facebook password violates Facebook’s Statement of Rights and Responsibilities.

“If you are a Facebook user, you should never have to share your password, let anyone access your account, or do anything that might jeopardize the security of your account or violate the privacy of your friends,” she wrote. We have worked really hard at Facebook to give you the tools to control who sees your information.”

She explains the legal land mines very well.

“For example, if an employer sees on Facebook that someone is a member of a protected group (e.g. over a certain age, etc.) that employer may open themselves up to claims of discrimination if they don’t hire that person,” wrote Ms. Egan.

And in this litigious environment, it wouldn’t take long for a single applicant or a group of applicants to sue, not to mention getting the attention of the American Civil Liberties Union.

You’re much safer just looking at the person’s LinkedIn account, and it’s more important for you to have a heart as an employer.

Finally, employers should be careful about their social media policies. The federal government ruled against Costco on its social media policy.

From the Coach’s Corner, here are related tips:

Job seekers:

Stand Out: Get a Job Interview with a Great Resume — More and more job seekers complain they don’t get acknowledgment when they apply for positions with prospective employers. It’s disappointing, especially if you’ve done your best to stand out in a crowd when jobs are scarce. Worse for you, a significant number of employers use an online tracking system to accept applications and screen out applicants.

Your Career Success is Determined by your Spouse’s Personality — Study — Your spouse’s attitude has an indirect, powerful impact on whether you succeed in your career. That’s the conclusion from an important study by researchers at Washington University in St. Louis. “Our study shows that it is not only your own personality that influences the experiences that lead to greater occupational success, but that your spouse’s personality matters too,” said Joshua Jackson, Ph.D., assistant professor of psychology in Arts & Sciences and lead author of the study.

Top 11 Tips for a Great Elevator Pitch — In job interviews, you need to prepare for any opportunities. Don’t be caught off guard. Create an introduction describing the value you provide, be concise, customize it for your target audience, and really know it – so you can deliver a flawless elevator pitch.

Employers:

HR Management: Think Like a Sales Pro to Recruit the Best Talent — One-size-fits-all approach to recruiting employees is not a strategy. You and your peers in human resources might be enamored with technology, but job candidates want more focus on the personal touch. That necessitates thinking like a sales professional.

Hiring Impact An Impact Person Starts with Screening Resumes — 5 Tips — If you want to hire an impact person, your hiring process is really important. The place to start is using best practices in screening resumes. The wrong hires result in costly turnover — a waste of money and time. Before you start interviewing, the place to start is your screening of resumes. Don’t take shortcuts.

6 Tips to Turn Your HR Department into a Profit Center — At least 50 percent of a company’s profits are contingent on employee problems. If you have challenges in one department, odds are you have HR issues in other departments. In fact, human capital is the No. 1 reason why CEOs lose sleep. Many businesses often need an objective source of information and expertise from critical thinkers. It’s true you can turn your human resources department into a profit center.

“The employer generally gets the employees he deserves.”


-J. Paul Getty

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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.




Seattle business consultant Terry Corbell provides high-performance management services and strategies.