The Fair Labor Standards Act (“FLSA”) requires employers to pay most workers minimum wage and overtime to nonexempt workers for work in excess of 40 hours per workweek. Overtime must be paid unless the worker is defined as “exempt” under the Act. Many employers believe that simply paying employees on a salary basis makes them exempt from overtime, but several more factors affect the classification than whether you pay employees a salary or pay them hourly.
Last week, the Department of Labor (“DoL”) announced that Halliburton, one of the world’s largest providers of products and services to the energy industry, agreed to pay almost $18.3 million in overtime to workers it incorrectly categorized as exempt under the FLSA. Further, because Halliburton classified the 1,016 workers as exempt, it did not properly record their working hours as required by the FLSA. According to Betty Campbell, the DoL’s acting southwest regional administrator, “[i]gnorance is never an excuse for violating the law.”
The most common exemptions are referred to as the “White Collar Exemptions” and include executive, administrative, professional, computer, and outside sales employees who meet certain tests. The DoL has provided a fact sheet that summarizes these tests. Like paying an employee a salary, a title alone does not help to meet the exemption tests. A close analysis of the person’s duties, responsibilities, discretion, and authority must be made to determine whether the employee is exempt. A wise employer will also make sure the position’s job description is up to date and reflects the exempt status of the employee.
If you have any questions about this or any other employment or business law topic, please feel free to contact me.