Let’s look at a recent article from CBS News: Companies Save Billions Of Dollars By Giving Employees Fake “Manager” Titles, Study Shows. The article is a summary of a report generated by researchers from the University of Texas and Harvard Business School. Specifically, the paper and article calculate that employers keep approximately $4 Billion in wages simply by slapping a manager title on a non-managerial employee. While this amount appears to be accurate, the companies are not saving money but rather stealing it. This is wage theft plain and simple. This means that there are $4 Billion in stolen wages out there for recovery if you have been misclassified and not properly paid overtime.
The article wrongly asserts that when employees are paid more than $455 per hour (which is the old salary threshold and only one of the criteria for determining whether an employee is exempt from overtime), employers slap a fancy title on a job, pay the employee a salary, and can legally avoid paying overtime. Wrong! Wrong! Wrong!
That is not how it works. To be fair, this is how many employers try to game the system – especially with the administrative and professional exemptions – but under the law, this is wage theft.
Under federal law, the Fair Labor Standards Act (“FLSA”) controls the requirements for paying overtime wages to workers. Let’s break this down.
How does the FLSA require payment for overtime?
The FLSA requires employers to pay their employees a rate of 1.5 times their regular pay rate for any hours worked over 40 in a workweek. This is known as “overtime pay.” Employers must pay overtime to covered, non-exempt employees who work more than 40 hours in a workweek.
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What employees are considered exempt from overtime under the FLSA?
Under the FLSA, employees who meet certain criteria are considered exempt from overtime pay. These employees are referred to as “exempt employees.” The criteria for exemption typically include a minimum salary level and a job duties test.
The most common exemptions are for executive, administrative, professional, outside sales, and certain computer employees. To qualify as exempt under these categories, an employee must typically be paid a salary rather than an hourly wage, and their job duties must involve primarily exempt work such as management, professional, or creative tasks.
It is important to note that the criteria for exemption can be complex and it is the employer’s responsibility to properly classify their employees as exempt or non-exempt. Misclassifying employees can result in significant legal consequences for the employer.
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What is the job duties test under the FLSA and do titles matter?
The job duties test under the FLSA is a set of criteria used to determine whether an employee is exempt from overtime pay. The test is based on the type of work performed and the responsibilities of the job, rather than the job title or salary level.
To meet the job duties test, an employee must primarily perform exempt job duties that are executive, administrative, professional, outside sales, or computer-related. These exempt duties typically involve the exercise of discretion and independent judgment, and involve tasks such as management, professional, or creative work.
Titles do not determine exemption status under the FLSA. An employee may have a job title that implies exemption, but if their actual job duties do not meet the requirements of the test, they would still be considered non-exempt and eligible for overtime pay.
It is the employer’s responsibility to correctly classify employees as exempt or non-exempt based on the job duties test and to ensure compliance with the FLSA. Misclassifying employees can result in significant legal consequences for the employer.
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What is the administrative exemption under the FLSA?
The administrative exemption under the FLSA applies to employees who perform non-manual work related to the management or general business operations of the employer or the employer’s customers. To qualify for the administrative exemption, an employee must meet both the salary basis test and the duties test.
The salary basis test requires that the employee be paid a guaranteed salary of at least $684 per week, which is adjusted periodically by the Department of Labor (“DOL”). The duties test requires that the employee’s primary job duties include performing office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers, and that the employee exercises discretion and independent judgment in performing these duties.
Examples of employees who may qualify for the administrative exemption include office managers, human resources managers, administrative assistants, and customer service supervisors. However, the titles do not matter, and Courts will look to job functions. Some common examples of misclassification under the administrative exemption include:
- Paying an employee on an hourly basis instead of a salary: To qualify for the administrative exemption, an employee must be paid a guaranteed salary of at least $684 per week.
- Failing to meet the duties test: The duties test for the administrative exemption requires that an employee’s primary job duties include performing office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers, and that the employee exercises discretion and independent judgment in performing these duties.
- Improperly defining job responsibilities: An employer may improperly describe an employee’s job duties as administrative when in reality, the employee performs primarily manual or routine tasks.
- Not allowing the employee to use discretion and independent judgment: An employee who does not have the authority to make decisions and does not have significant discretion in performing their job duties may not qualify for the administrative exemption.
It is important to note that the criteria for exemption under the FLSA can be complex and employees should get legal advice from the best wage and hour attorneys in their state.
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What is the professional exemption under the FLSA?
The professional exemption under the FLSA applies to employees who perform work that requires advanced knowledge in a field of science or learning and that is predominantly intellectual in character. To qualify for the professional exemption, an employee must meet both the salary basis test and the duties test.
The salary basis test requires that the employee be paid a guaranteed salary of at least $684 per week. The duties test requires that the employee’s primary job duties consist of work that requires advanced knowledge in a field of science or learning and that is predominantly intellectual in character.
Examples of employees who may qualify for the professional exemption include doctors, lawyers, architects, engineers, certified public accountants, and teachers. Some common examples of misclassification under the professional exemption include:
- Paying an employee on an hourly basis instead of a salary: To qualify for the professional exemption, an employee must be paid a guaranteed salary of at least $684 per week.
- Failing to meet the duties test: The duties test for the professional exemption requires that an employee’s primary job duties consist of work that requires advanced knowledge in a field of science or learning and that is predominantly intellectual in character.
- Improperly defining job responsibilities: An employer may incorrectly describe an employee’s job duties as professional when in reality, the employee performs primarily manual or routine tasks.
- Not requiring advanced knowledge: An employee who does not possess advanced knowledge in a field of science or learning may not qualify for the professional exemption.
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What should I do if my employer is not paying me overtime pay?
Best Ohio Wage Theft Attorney Answer: As you can see from the above, the FLSA is tricky and complex. There are a lot of factors that go into determining if you have been wrongly denied overtime pay or even underpaid for your overtime pay. If you believe that your employer is not paying you all of your wages for all of your lawfully earned overtime compensation at a rate of one and half times your normal wages as requires under the Federal Fair Labor Standards Act or Ohio Minimum Fair Wage Standards laws or you are an nonexempt employee that has been misclassified as exempt or independent contractor, contact the attorneys at Spitz, The Employee’s Law Firm today for a free and confidential initial consultation. The experienced wage and hour lawyers at Spitz will provide you with the top options for your overtime pay dispute situation. (Read: What is the Spitz No Fee Guarantee?). Do not wait. The longer that you wait, the less that your claim may be worth.
Disclaimer:
The wage theft and overtime pay materials available at the top of this overtime, wage and hour web page and at this employment law website are for informational purposes only and not for the purpose of providing legal advice. Web information will only get you so far. Your best option is to contact an experienced overtime attorney to obtain advice with respect to FLSA questions or any particular employment law issue. Use and access to this employment law website or any of the links contained within the site do not create an attorney-client relationship. The legal opinions expressed at the top of this page or through this site are the opinions of the individual lawyer and may not reflect the opinions of The Spitz Law Firm, Brian Spitz, or any individual attorney.