Exempt employee overtime cases?

by on March 30, 2009 · 0 Comment POSTED IN: HR Info Center

DOL sharpens its claws for violators of FLSA regulations.

In a past post, we detailed the growing threat of “white-collar” class-action lawsuits alleging violations of FLSA regulations.

Not to beat you over the head with bad news, but employees aren’t the only ones you have to watch out for.

New data from DOL shows that the feds, too, are more likely than ever to whack you with white-collar exempt employee cases.

DOL’s enforcement statistics for 2007 show a 21% increase in back wages clawed back from employers in “541” cases. (The numeral refers to the section of FLSA regulations defining the managerial and administrative duty exemptions.)

DOL collected $16 million in such cases, on behalf of 12,000 employees.

Administrative and Managerial positions are defined as an exempt employee

What did the employers do wrong? The most common violation of FLSA regulations was of the administrative-duty test. That’s the regulation that says adminstrative employees are owed overtime for hours over 40 per week unless their main duty is office work “directly related to management or general business operations.”

Some 2,500 employees got back overtime pay in cases like these. But the most costly violation involved the separate managerial duties test. Cases in which employers claimed exemptions for “managers,” only to see in FLSA regulations that management wasn’t their primary duty, cost unhappy employers $4.5 million in 2007.


With the stakes so high, a reminder or three is in order:

  1. For “managers” to be classified as an exempt employee, they must be tasked with hiring, disciplining and evaluating employees, planning and scheduling work, monitoring safety and so on. They can have other, non-managerial duties, but managerial work must predominate.
  2. An exempt employee classified as a manager also must be salaried, earn $455 or more a week, and supervise at least two employees besides themselves.
  3. Administrative employees, also subject to the $455 weekly minimum, must exercise “independent judgment and discretion about matters of significance” to be exempt. Thus, an ordinary clerical worker would not be exempt but one with authority to buy a $10,000 office machine might be.

Source: www.dol.gov/esa/whd/statistics/ 200712.htm Issue 6.13 2-4-08

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