If you have employees you’re not paying overtime, be ready to explain why their duties make them exempt under the FLSA, not their title.
Just because you call it a hole in 1, doesn’t make it so!
The Fair Labor Standards Act (FLSA) is not a law that has much give—it takes! Just like the rules of golf, you have to get the FLSA right each and every time!On the other hand, TopGolf takes a hard game and makes it easy. If you haven’t tried TopGolf, you should. It is fun, regardless of your golf skills! Real golf is hard; it requires near-perfect coordination of every limb, motion, and measurement. But this message is not about the game. It is about the rules of the game!
Titles Mean Nothing (to the DOL)!
For years we have told you that titles mean nothing under the FLSA. You can call employees “Event Sales Managers” or “Event Sales Consultants” or even “KING FOR A DAY!” TopGolf learned the hard way when it gave employees what Department of Labor (DOL) referred to as “hollow” management titles and paid these employees a salary plus commissions, despite the fact that their duties indicated they should receive overtime. This cost the company over $750,000.00! Ouch—that is a major penalty stroke!
The FLSA considers job duties, not titles. We are all trying to do more with less and suffering through this pandemic together, but the rules still apply. If you have employees that you are not paying 1.5 times their regular rate of pay for any hours over 40 in a workweek, you had better be ready to explain why you believe their duties make them exempt.
First, Update Your Job Descriptions
Now you understand that duties are what really matter. Before you read any further, make a note to have your managers update your job descriptions!! If you are going to look at an employee’s duties to determine whether they are exempt, you need to know what they actually do. Then check your payroll to confirm you are correct.
Next, Review Overtime Exemptions
Once your job descriptions are up to date, start with the presumption that an employee is entitled to overtime. This is the rule. The exception is that the employee would be “EXEMPTED” from overtime. If you, as an employer, are going to take advantage of an exemption you had better be right. Remember, whether an employee is entitled to overtime pay does not depend on whether the employee is salaried, rather, what matters are the employees’ duties.
While there are many exemptions under the FLSA [pdf], the primary white-collar exemptions are the ones most employers rely on:
|Executive Exemption||Administrative Exemption||Professional Exemption|
|The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise||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||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|
|The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent||The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance||The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance|
|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||The employee’s primary duty requires advanced knowledge in a field of science or learning.|
For all exemptions, the employee must be compensated on a salary basis (as defined in the regulations) at a rate of at least $684/week.
There are more nuances, but suffice to say, unless your employees meet these general duty and salary requirements, you can call them anything you want – but you will have to pay for that mistake!
In golf, a bogey can cost you one stroke, but when it comes to the FLSA a violation may cost you money, your business reputation, and the trust of your employees.
COVID-19 continues to dominate the conversation, but make no mistake, these old laws are still alive and well—even as applied to remote work situations!
The Woods Rogers Labor & Employment Team stands ready to answer any questions you have about the FLSA and exempt employees (and the new Virginia Overtime Wage Payment laws). Contact us—we’ll keep you out of the rough!