The FLSA sets forth specifics guidelines that must be met for an employee classified in a managerial or other exempt status to be classified correctly. To qualify for the executive exemption under the FLSA, an employee must perform office or non-manual work, and the employee’s duties must meet all of the following criteria:
- The employee must have a “primary duty” of managing the enterprise or 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 the 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.
Most employers are accurate and in good faith properly classify their employees though some court cases have shed light on those who have classified improperly. In Goodrow v. Lane Bryant, Inc., 432 Mass. 165, 173 (2000), the court held that having "manager" in an employee's title is not enough to qualify as exempt if they merely manage a function, project, account, etc. In Ely v. Dolgencorp, LLC, 2011 U.S. Dist. LEXIS 140882 (E.D. Ark. 2011), the Court noted that areas of business like retail need to be careful as many employees labeled in management may spend the majority of their time performing non-exempt work as part of a multi-level management system.
In addition to the work performed by an employee in an exempt position is the compensation they receive. The FLSA requires the exempt employee must regularly receive a pre-determined amount of compensation every pay period, regardless of the quality or quantity of the employee’s work. The minimum amount required by the FLSA is $455 per week. Some states, such as California, require higher minimum salaries. Certain deductions from the employee’s salary could cause the employee not to meet the salary basis requirement and, therefore, not qualify for the exemption.
Thus, it is not always black-and-white or so easy to determine whether an employee has been properly classified as exempt from overtime pay under the FLSA so if you believe you are improperly classified, contact a wage & hour attorney to assess your case.