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Frequently Asked Questions About Employment Law

Common Questions and Answers About Your Right to Wages

Exempt Status of Specific Jobs


 

What is the Applicable Law Governing Payment of Wages?

The federal law governing the payment of overtime and minimum wages is called the Fair Labor Standards Act ("FLSA"). The Law governing overtime and minimum wage in New York is the New York Minimum Wage Act. Generally, both federal and state law require an employer to pay an employee "time and a half," or overtime compensation for each "hour worked" in excess of 40 hours in a workweek, unless that employee is identified as "exempt" from the law. Therefore, if the employee makes $8.00 per hour, he/she should be paid $12.00 per hour for every hour worked over forty (40) per workweek. Additionally, the law requires that employers pay their employees the current minimum wage of $7.25 per hour worked. Employers often violate the minimum wage law by refusing to provide employees with their final paycheck. The law provides that if an employee can establish a violation of the overtime of the overtime or minimum wage laws, he/she can recover attorneys' fees and costs. In certain circumstances, the employee also may be entitled to recover double or "liquidated" damages.

What is Considered Hours Worked?

Under the FLSA's provisions, employees are required to be paid for all hours they work. Unfortunately, employers typically fail to include, in determining hours worked, various periods of time that are compensable. As a result, employees frequently receive less compensation than that to which they are entitled. Many times, the employer's failure to count all hours worked results in a loss of overtime and wages paid to the employee. Over a very short period of time, these deductions can result in the employee losing thousands of dollars that he/she earned.

Common examples of hours worked, but frequently not counted by employers, are as follows:

  • Standard Work Time
    Typically, any job related time spent by an employee for the benefit of the employer is considered hours worked. This time can take the form of "on the clock" work, as well as "after hours" or "off the clock work." The FLSA provides that if an employer knows, or should know, that the employee is working, and continues to allow the employee to work, the employer will be responsible for paying for the work time. This is true regardless of whether the work performed actually is approved by the employer beforehand. The rationale for this principle is that an employer is responsible for controlling the work performed by its employees. Therefore, if an employer does not want an employee to work, it must prohibit the employee from doing so, or face the consequences of having to pay the employee for the time incurred. Simply put, the law states that an employer cannot accept the benefits of time worked by its employees without counting that time in computing an employee's pay.
     
  • Lunch/Break Deductions
    Employers frequently violate the FLSA by automatically deducting for lunch periods that are not actually taken by their employees. Specifically, many employers automatically deduct thirty (30) minutes of time each day for lunch, regardless of whether the employee actually takes a break or not. Many employees do not take any lunch break, while others simply eat at their desk and continue to perform work for their employer. This time generally is considered hours worked, and may not be deducted by the employer. Therefore, an employee who actually works forty-two and one-half hours per week (42.5) but only gets paid for forty (40) because a thirty (30) minute lunch period automatically is deducted, may be entitled to recover the two and one-half (2.5) hours of unpaid overtime for each week during which the improper deductions were made.
    Similarly, if an employee takes a fifteen (15) to twenty (20) minute break during the day, the employer may not deduct this time from hours worked. Employees who are subjected to a break deduction from their hours worked by their employers likewise may be entitled to recover unpaid compensation for such deductions.
     
  • Travel Time/The Commute
    In most circumstances, travel time between home and work is not considered compensable working time so long as the employee is not performing any work during the commute. There are, however, situations in which travel time that must be considered as compensable time by the employer. For example, if the employee is required to pick-up co-employees or materials prior to arriving at work, or stop a certain job site or location prior to reporting, the employee typically is entitled to receive compensation for travel time spent once the initial pick-up or stop is made. Additionally, an employee may be entitled to additional compensation when he/she uses a company vehicle to commute, and: (1) is required to travel outside the normal commuting area for the employer's business; and (2) there is no agreement between the employer and employee that the additional travel is not excluded as compensable time.
     
  • Travel During Working Hours
    In general, travel during an employee's regularly scheduled hours must be counted as "hours worked." This is true regardless of whether the employee is required to travel on weekends or holidays (so long as the hours of travel match the typical hours of work for the employee) Therefore, if, during an employee's workday, he/she travels to meet with vendors, co-employees, or customers, or travels from job site to job site, the time spent traveling to and from these meetings and job sites is compensable.
     
  • "After-Hours" Travel
    Whether an employee is entitled to compensation for time spent traveling "after hours" depends on the particular situation. For example, if the employee travels solely as a passenger on a plane, train, boat, bus or automobile, the travel time will not be compensable, unless the employee performs work during the time spent traveling (reports, telephone calls, etc.). If the employee is the driver, however, the travel time is compensable, regardless of whether the employee is actually performing work other than driving. Out of town travel
     
  • Out of town travel for the day
    Generally, when an employee travels for a daily assignment out of town, that does not involve an overnight stay, the time spent traveling (and working) is considered "hours worked." This includes time that occurs before, during, and after the employee's regular working hours for the day. Bona fide meal periods and travel between the employee's home and the airport/train station need not be counted as hours worked.
     
  • Overnight out of town travel
    Typically overnight out of town travel time is not considered "hours worked." If, however, as discussed above, the employee is driving the vehicle or performing work for the employer during this travel time, that time will be compensable.
     
  • Off The Clock Work
    Very commonly, employers fail to include working time spent by employees performing work activities outside of their normal shifts as "hours worked." For example, many employees arrive prior to their scheduled shifts and begin working before they can actually clock in to work. As this work is for the benefit of their employer, it is considered compensable time, and an employer must include such hours in its pay computations. Another common example of "off the clock" work is when employers require employees to attend meetings prior to, or after, their scheduled work shift. Employers typically do not allow employees to stay on the clock for these meetings resulting in the loss of "hours worked". Most usually, employers require employees to punch out at the end of their shift (or do not allow the employees to punch in before their shift), yet the employer requires the employee to continue to work. This work typically includes cleaning equipment, doing paperwork, dropping off mail or depositing checks, taking phone calls on the way home or at home, or simply taking work home for the evening. Remember, employees are entitled to recover compensation for "hours worked," and it does not matter whether that work occurs on the clock, or off. If the work performed by the employee benefits the employer, and the employer knows, or should know, that the work is being performed, the employee is entitled to be paid for that time
  • On-Call Time
    There are very specific rules governing whether an employee is entitled to be paid for "on call" or waiting time. Employees such as police officers, firefighters, and other emergency personnel typically are subjected to "on call" time compensation issues. Generally speaking, if an employee is "on call" but is free to use his or her time for their own purposes (read a book, go to the mall, go the park with the kids), then the time probably will not be considered "hours worked." If however, the employee is not free to use the time as he or she wishes, the "on call" time may be compensable. Every "on call" situation and the factors applied to that situation are different. Therefore, if you have any questions regarding your particular "on call" situation is compensable, contact a qualified FLSA lawyer to discuss the issue.

Common Questions and Answers About Your Right to Wages

What is the Governing Law?

The federal law governing the payment of wages to employees is called the Fair Labor Standards Act ("FLSA"). The FLSA establishes the standards governing employees' rights to minimum wage and overtime compensation. Simply put, the FLSA states that most employees are required to be paid time and one-half their regular hourly rate for any hours worked over forty (40) in a workweek. Additionally, the FLSA generally requires that employees be paid a minimum of $7.25 per hour.

How does overtime work?

Generally, employees must be paid a time and one-half their hourly rate for any hour worked over forty (40) in a workweek. For example, if you make $8.00 per hour, then you should be paid $12.00 per hour for all hours you work over forty (40) in a workweek. If you are paid a salary by another method or basis (day rate or piece rate), your overtime rate needs to be converted to an hourly rate using the methods set forth established by the Department of Labor ("DOL"). As these methods typically differ depending on a particular situation, consult with a wage and hour attorney to determine how to accurately calculate your overtime compensation.

What is considered "work" under the FLSA?

Typically, work time under the FLSA includes all time spent performing job-related activities which: (1) benefit the employer; (2) the employer "knows or has reason to believe" are being performed by an employee; and (3) which the employer does not prohibit the employee from performing. This includes time spent doing "off the clock" work such as maintaining equipment before or after the work shift, staying late after work shifts without recording for overtime, doing job-related paperwork at home, making and responding to job-related telephone calls, and working through meal periods but having hours deducted from the employee's time sheet. Additionally, time spent traveling during the workday as well as "on call" or "waiting" time may likewise be compensable as hours worked. Therefore, even if an employer typically pays overtime, but does not compensate its employees for "off the clock" work or the other activities described above, the employee may be entitled to recover additional overtime compensation.

How is a workweek defined under the FLSA? - Can My Employer Average Two Weeks?

Under the FLSA, a workweek is defined as any seven (7) day consecutive period. The starting and ending point for the workweek is defined by the employer. Overtime must be computed on a week by week basis. Each workweek stands alone under the FLSA, and working time cannot be averaged from week to week. Therefore, if an employee typically is paid every two weeks, he/she is entitled to be paid overtime compensation for each hour worked over forty (40) in each of the two weeks of the pay period. For example, if an employee worked 50 hours in week one, followed by 30 hours in week two, he/she is entitled to 10 hours of overtime pay for the first week, even though the average hours for the pay period totals forty (40) per week.

Can my employer prevent me from working more than forty (40) hours in a workweek?

Yes. An employer may adjust its employee's work shifts within a workweek to avoid an employee working overtime. For example, if employees work "extra" time early in the workweek, the employer may send them home later in the same work week so that total hours actually worked in that work week will not exceed forty (40). Under this scenario, no overtime compensation would be due to the employee.

Must Overtime Be Approved By the Employer To Be Compensable?

Typically not. The law states that if an employer knew, or had reason to know that you were working overtime, you are likely entitled to recover such time. This is true even if your employer tells you not to work overtime but still is aware of the additional hours worked. And, while many employers tell employees that overtime will not be paid if not approved, the fact remains that if you work overtime and the employer knows about it or should know about it, they must pay you for it.

Am I required to ask for, or report overtime to be paid for it?

No. The employer is responsible for managing its workplace and hours worked, not the employee. Therefore, it is up to the employer to ensure that the employee is not working more hours than scheduled. Additionally, an employee's failure to ask for overtime after it has been worked generally is not a defense to a claim for overtime compensation. A narrow exception to this rule exists where the employer requires that all time be reported and enforces this policy through disciplinary measures if an employee fails to adhere to the policy.

I'm paid a salary. Does this mean I am not entitled to overtime?

No. The most common mistake made by employers and employees alike is that simply paying an employee a salary makes the employee exempt from the overtime laws. THIS IS NOT TRUE. Being paid a salary is not the same as being an exempt employee. Generally, to be "exempt," an employee must be paid a salary and perform certain executive, administrative, or professional duties. These exemptions apply to "white collar" workers. Therefore, if you work with your hands or outside of an office type environment, these exemptions likely will not apply to your situation and you may be entitled to overtime.
Typically, to be an executive employee, the employee must regularly: (a) supervise two or more other employees; (b) manage an organization, department, or subdivision of the company; and (c) have the authority to hire and fire employees or make recommendations regarding these tasks that are given significant consideration in the ultimate decision making process. Executive employees typically are high ranking members of an organization/employer. However, the actual duties performed, not a fancy job title will control.
To be an administrative employee, an individual must: (a) perform "office" or non-manual work that is related to management of the company or the general business operations of the company; and (b) regularly exercise "independent discretion and judgment" with regard to matters of significance. Typically, employees who fall within the following categories are administratively exempt: insurance claims adjusters, human resource managers, computer/network administrators, financial services providers, and management consultants. On the other hand, clerks, examiners, graders, financial product salespersons, and processors are not administratively exempt.
To be a professional employee, an individual's job duties require the application of advanced, usually specialized, learning or credentials of the type commonly associated with the "traditional learned professions" such as medicine, law, accounting or engineering. Typically, but not necessarily, a professionally exempt employee will hold a specialized academic degree in the field, and professionally exempt job duties imply that the employee exercises a good deal of judgment and discretion in performing the work. The DOL specifically identifies the following categories of employees as falling within the professional exemption so long as licensing requirements of the profession are met: (a) registered or certified medical technologists; (b) registered nurses (RN); (c) dental hygienists; (d) physician assistants; (e) CPA's; (f) chefs; and (g) athletic trainers.
To the contrary, the DOL identifies the following categories of employees as NOT falling within the professional exemption: (a) cooks; (b) licensed practical nurses (LPN); (c) bookkeepers; (d) paralegals or legal assistants; and (e) trainees.
The bottom line is this - exemptions need to be examined on a case by case basis. There are other exemptions that apply to employees in particular industries (such as employees who work at auto dealerships, in agriculture, as taxi drivers, as commissioned sales employees, as computer professionals, and outside sales representatives) Therefore, if you are unsure whether your job duties or pay structure make you exempt, contact a qualified wage and hour attorney.

Are Independent Contractors Entitled to Overtime?

If an individual truly is an independent contractor, they are not entitled to overtime compensation for hours worked over forty (40) in a workweek. To determine whether an individual is an independent contractor, courts typically apply what is called the "economic realities" test; this test analyzes the following factors: (a) the degree of control exercised by the alleged employer; (b) the extent of the relative investments of worker and alleged employer; (c) the degree to which the workers' opportunity for profit and loss is determined by the employer; (d) the skill and initiative required in performing the job; (e) permanency of the relationship; and (f) the extent to which the worker's services are integral to the entity. While no one factor is dispositive of the issue of whether an individual is an independent contractor or employee, courts typically conclude that if two (2) or more of the above factors cut against the existence of an employer-employee relationship, the individual will be considered an independent contractor and therefore, not entitled to overtime compensation.

What is the standard for determining whether my employer should have known that I was working overtime?

Typically, an employer will be held to "know" what it "could have (or should have) found out" if it was paying attention to the hours its employees were working. The standard typically applied by the courts analyzes whether the employer could have learned of the employee's activities by making reasonably diligent inquiries. Frankly, it is very unusual for a court to find that an employer did not have the requisite knowledge when the activities in question are a vital or important part of an employee's job, unless the employee has deliberately hidden the fact that he/she is performing these duties and working those additional hours.

Am I required to keep records of the additional time I worked?

No. The burden is on the employer to maintain accurate time records of hours worked by its employees. Courts typically find that, where an employer failed to maintain accurate time records, the employee is entitled to recover what he/she determines is a reasonable and realistic estimation of hours worked. The burden is on the employer to show that the hours estimated by the employee are inaccurate. If the employer did not maintain accurate time records, however, the employer's burden to dispute the hours estimated by the employee is difficult. Remember, the employer, not the employee, has the burden of keeping accurate records of hours worked and amounts paid.

Instead of paying me overtime for hours worked over forty (40) in a workweek, my employer "banks" the time or gives me "comp. time" for later use. Can it do that?

Not unless you work for the government. This is a common violation by private employers of the FLSA. "Banked" or "Comp. Time" is not permissible in the private sector. The FLSA specifically requires that if employees work more than forty (40) hours in a workweek, they must be paid cash (or its equivalent). Therefore, if your employer is giving you "Banked" or "Comp. Time," when you work over forty (40) hours in a workweek, your employer is violating the FLSA.

I am not a legal citizen of the United States. Am I still entitled to recover overtime?

Yes. Federal and New York State law provide that even if an individual is not a citizen, he/she still is entitled to pursue a claim for unpaid overtime or minimum wage compensation.

My employer only pays me in cash. Am I prevented from pursuing a claim for overtime or minimum wage compensation?

No. employees paid solely in cash are still entitled to pursue claims for unpaid overtime and minimum wage compensation against their employer if the employer wrongfully failed to pay the employee time and one-half (overtime) for hours worked in excess of forty (40) in a workweek, or less than the current federal minimum wage of $7.25 per hour.

I quit/got fired and did not get paid for my final weeks of work. Can I recover this unpaid compensation?

Yes. This is an incredibly common violation of the FLSA's minimum wage requirements. The FLSA's current minimum wage is $7.25 per hour. Therefore, if an employee worked any hours for his/her employer during those final weeks and did not receive any pay either due to resignation or termination, the employee's average hourly wage is $0.00 per hour, well below the current minimum wage requirement. The employee could file an FLSA lawsuit solely to recover the unpaid minimum wages due.

How do I file an FLSA lawsuit?

You should hire an attorney if you wish to file an FLSA lawsuit. Because of the complex legal principles involved in analyzing FLSA claims, not all attorneys are familiar with this area of the law. Employees wishing to enforce their rights should find an attorney with significant FLSA experience. If you already have a lawyer and he or she is not familiar with this law, your attorney may choose to "affiliate" with a lawyer experienced in this area of the law. If you are interested in having us review your potential claim, please contact us.

If I file an FLSA lawsuit and win, what can I recover?

If an employee prevails on his/her FLSA claim, he/she typically will be entitled to recover back pay for all unpaid overtime, usually beginning two years before the complaint is filed. In certain situations, the court will allow three (3) years of recovery. Additionally, in some instances, employees are entitled to recover double the amount of back pay or what is called "liquidated damages." Most importantly, the FLSA requires that the employer, not the employee, reimburse out of pocket litigation expenses and pay the employee's attorneys' fees.

How far back can I go to recover unpaid overtime wages?

New York State law permits recovery for work performed beginning six (6) years from the date a complaint is filed in court. One can recover under the federal law for work performed beginning two (2) years from the date a complaint is filed in court. In certain instances, an additional year's recovery period is permitted if the employer "knew" that its pay policies and practices violated the FLSA, but "disregarded" these obligations. The only way to stop the clock from "ticking" on an employee's claims is to file a legal complaint in court. Simply complaining to the employer or calling the Department of Labor does not stop the clock.

My current employer is not paying me overtime. I am concerned that if I file an FLSA lawsuit, I will get fired. Am I protected?

Yes, you are protected. The FLSA specifically states that it is: "unlawful for any person . . . to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted any or caused to be instituted any proceeding under or related to this Act, or has testified or is about to testify in any such proceeding." An employer who retaliates or discriminates against an employee in violation of this statute is subject to fines or even criminal prosecution, and the affected employee is entitled to "legal or equitable relief ... including without limitation employment, reinstatement, promotion, and the payment of wages lost and an additional equal amount" plus attorneys' fees and court costs. Punitive damages also are available in appropriate cases, and "anti-retaliation" cases may be brought against individuals as well as institutional employers. Retaliation can take on other forms other than firing. For example, courts typically find retaliation in the following circumstances: blacklisting employees who make FLSA claims, refusing to hire applicants who previously made FLSA claims, reducing job responsibilities or importance of position, assigning employees to difficult or "unpopular job duties or shifts," disciplining employees disproportionately, providing unusually poor performance evaluations, or declining typical raises.

I signed a waiver stating that I would not pursue a claim for overtime compensation. Can I still pursue a claim?

Yes. Employers generally may not ask their employees to sign away their rights to minimum wages and overtime pay, even in the context of a waiver. Only waivers supervised by the DOL or obtained in a private lawsuit can eliminate your rights.

What are the most common mistakes made by employers that deprive employees of overtime compensation?

1) Assuming that an employee's fancy job title makes them exempt
Remember, the courts will focus on the job duties performed by the employee to determine whether he or she is exempt. It does not matter if the employer labels the employee a manager when, in reality, the employee does nothing different than the employees he or she is supposed to be "supervising."

2) Assuming that because an employee is salaried, he or she is exempt
This is the biggest misconception out there regarding overtime. Remember, an employee must be paid a salary AND meet the duties test for a particular exemption to be considered exempt. For example, if a person is a dishwasher, a cook, a landscaper, or clerical worker, they are likely not exempt regardless of how much of a salary they receive.

3) Straight misclassification of employees
Even when employers understand the law regarding exemptions, they still may misclassify an employee as exempt and wrongfully withhold overtime pay due to that employee. Even worse, some employers know that the employee should receive overtime but make the decision to classify the employee as exempt because: (a) the employee may never find out; and/or (b) the cost of having to pay unpaid overtime wages and attorneys' fees and costs, if discovered by the employee, is cheaper than doing it the right way. Being misclassified and not getting paid overtime in accordance with the law can result in thousands of dollars of lost unpaid overtime.

4) Making employees work off the clock
Employers may tell workers to clock out and finish their work; additionally, employers may have employees work before their shift begins or attend a pre-shift meeting. Employers regularly fail to consider this additional time worked by their employees as "hours worked." This practice results in employees receiving less overtime pay than they otherwise are entitled to receive.

5) Refusing to pay overtime that was not pre-approved
Remember, if the employer knows or has reason to know that an employee is working overtime, the overtime must be paid whether the employer approves it. The employer is not allowed to get the benefit of the employee's work without paying for it.

6) Assuming that if an employee quits or gets fired, the employee is not entitled to receive his or her final paycheck
Under the FLSA, an employee is entitled to earn a minimum of $7.25 per hour for every hour worked. If the employee quits or gets fired, and does not receive his or her final paycheck for the hours worked in his or her last pay period, the employee earns the equivalent of $0.00 per hour - well below the minimum wage. Therefore, if an employee is not paid his or her final paycheck, he or she can pursue those wages under the FLSA.

7) Paying an employee "straight time" rates for overtime work
The FLSA requires that overtime be paid and time and one-half, not straight time. Therefore, if an employee makes $8.00 per hour, he or she should get paid $12 per hour for hours worked over forty (40) in a workweek. Many employers simply continue to pay a straight time rate ($8.00 in the example) for any hours over forty (40) worked by their employees in a workweek. The result of this practice is that the employee does not receive the "half" of the time and one-half rate of pay required for overtime work. The value of this "half" time adds up quickly.

8) Automatic Lunch, Break, and Other Deductions
It is much easier for the employer when it does not have to keep accurate records of its employees' start, stop, and break times. To facilitate this process, employers frequently make automatic punch and lunch deductions to employees' time cards, regardless of whether the employee worked early, stayed late, or worked through lunch. These automatic deductions result in hundreds of unpaid hours per employee each year. Employers cannot avoid their obligation to keep accurate time and pay records at the expense of the employee.

9) Compensatory Time is not allowed in the private sector
Employers regularly tell employees that they can get compensatory time off ("comp. time") at some later point if they work more than forty (40) hours in a workweek. For example, an employee works fifty-five (55) hours in a workweek and is told that he or she can have time off in some other week to offset the extra fifteen (15) hours instead of being paid overtime that is due. Employees who are subjected to this "comp. time" practice typically have a claim for unpaid overtime. This is because employees are supposed to be paid overtime for any hours worked over forty (40) in each workweek. Employees subjected to this practice of "banking" hours typically lose thousands of dollars per year. What is most troubling, however, is that most employers do not even keep track of the "banked" hours and typically do not repay the "comp time" because the business operations are always "too busy." Even worse, employees who are fired or quit receive payment for the "banked" time when they leave.

10) Failing to include other payments to the employee in calculating the rate of overtime owed
Employers who pay overtime frequently do so incorrectly. For example, employers fail to include productivity bonuses or shift premium payments in calculating the appropriate time and one-half wage. For example, if you make $8.00 per hour and get a $100 productivity bonus per week, your compensation must include the additional productivity bonus in calculating overtime due. As a result, an employee's overtime rate will be higher. Employees that do not get the benefit of having these additional bonuses included in their overtime pay are regularly owed additional wages. Assuming an individual is an independent contractor, not an employee

The FLSA's overtime and minimum wage provisions only apply to "employees," not "independent contractors." Therefore, employers often attempt to avoid the payment of wages by classifying their workers as "independent contractors." When courts look at whether or not a person is an independent contractor or an employee, they analyze the "economic realities" of the relationship. What this means, is that the courts analyze the true nature of the relationship based on the actual facts and not based on what the parties label the relationship. The factors typically considered include:

  1. The degree of control exercised by the alleged employer;
  2. The extent of the relative investments of worker and alleged employer;
  3. The degree to which the workers' opportunity for profit and loss is determined by the employer;
  4. The skill and initiative required in performing the job;
  5. The permanency of the relationship; and
  6. The extent to which the worker's services are integral to the entity.

If one or more of these factors is resolved in favor of finding an employer-employee relationship, the individual misclassified as an "independent contractor" likely is entitled to all overtime and minimum wages not paid. This can result in a significant payment of back wages not only to the individual, but to other individuals classified the same way by the employer.

Am I Exempt from the overtime provisions of the FLSA?

The FLSA provides for certain categories of employees that are not entitled to receive overtime compensation regardless of the amount of hours the employee works in a workweek. Therefore, the first step in determining whether an employee is entitled to overtime is to examine his or her exempt status. Simply put, if the employee is exempt, his/her employer is not obligated to pay him/her overtime compensation. The good news is, however, that the courts typically construe exemptions to the FLSA's overtime provisions against the employer. The most common exemptions applied by the courts are called the "white collar" exemptions. These exemptions include the "executive," "administrative," and "professional" exemptions.

First Things First

The most common mistake made by employers and employees alike is that simply paying an employee a salary makes the employee exempt. THIS IS NOT TRUE. Being paid a salary is not the same as being an exempt employee. Rather, to be "exempt," each of the following criteria must be met: A. The employee must be paid a fixed salary or fee basis not subject to improper deductions; AND B. The employee must perform the duties identified by the Department of Labor and the courts of an exempt employee. Remember, that if an employee is paid on an hourly, not salaried basis, he/she cannot be exempt and is entitled to overtime regardless of the type of duties or work they perform. The only exception to this rule is for teachers, lawyers, and doctors. Another thing to remember is that these exemptions are called the "white collar" exemptions. Therefore, they do not apply to "blue collar" workers such as laborers, police officers, firefighters, construction workers, woodworkers, or other types of employees that do not work in an office or "white collar" environment.

Salary Basis

As of August 23, 2004, to meet the salary basis test, an employee must be paid a predetermined salary of at least $455 per week. For work performed prior to August 23, 2004, the employee had to be paid a predetermined salary of $250 per week. If an employer makes certain improper deductions to this predetermined salary, the employee is not paid on a salary basis and is entitled to overtime compensation. For example, if the employer deducts from the employee's salary because there is no work to perform, the employee is not paid on a salary basis and us entitled to overtime compensation. Additionally, if the employer forces the employee to take time off from work, the employee still is entitled to receive all of his/her predetermined salary for the week. The general rule is that, if a salaried employee works any portion of the workweek (even a few hours on one day of the week), the employee must be paid his/her full salary to meet the salary basis test. Employers are, however, permitted to deduct from an employee's salary without forfeiting the employee's exempt status as follows:

Permissible Deductions

  • if the employee is absent from work for one or more full days for personal reasons, other than sickness or disability;
  • if the employee is absent from work for one or more full days due to sickness or disability if the deductions are made under a bona fide plan, policy or practice of providing wage replacement benefits for these types of absences (such as short term disability or other leave plan);
  • as an offset or to reduce any amounts received by the employee as payment for jury fees, witness fees, or military pay if the employee is absent from work for these reasons;
  • if the employer imposes a penalty faith for violating safety rules of "major significance" (such as smoking in an explosives plant);
  • if the employer imposes an unpaid disciplinary suspension of one or more full days imposed in good faith for violations of workplace conduct rules. An example of such an instance would be a violation of the employer's sexual harassment or workplace violence policies;
  • to pay a proportionate part of an employee's salary for partial time actually worked in the first and last weeks of employment; and unpaid leave taken pursuant to the Family and Medical Leave Act ("FMLA").

Common Improper Deductions

The following deductions are examples of improper deductions made by an employer which likely will defeat the claim that an employee is paid on a salary basis. The result of these improper deductions means that the otherwise exempt employee may be entitled to overtime compensation for the weeks in which such improper deductions were made:

  • deductions for a partial-day absence to attend a parent-teacher conference;
  • deduction of a day of pay because the employer was closed due to inclement weather or a company holiday;
  • deduction of three days of pay because the employee was absent from work for jury duty, rather than merely offsetting any amount received as payment for the jury duty;
  • deduction for a two day absence due to a minor illness when the employer does not provide wage replacement benefits for such absences (under a disability or other leave plan)

Duties Tests

Assuming an employee is truly paid on a "salary basis," he/she must still perform certain duties to be considered exempt and thus, not entitled to overtime. So, even if an employee is paid on a "salary basis," but does not perform the duties described below, he/she is entitled to receive overtime compensation for hours worked over forty (40) in a workweek. The most common exemptions employers try and apply are the executive, administrative, and professional exemptions. The duties required to be performed to meet each of these exemptions is described below.

Executive
An employee who falls within the executive exemption must regularly:

  • supervise two or more other employees;
  • manage an organization, department, or subdivision of the company; and
  • have the authority to hire and fire employees or make recommendations regarding these tasks that are given significant consideration in the ultimate decision making process.

Importantly, an employee's fancy job title means nothing if the employee does not actually perform the above duties. Therefore, a job title that suggests that an employee is in charge when, in reality, the employee has no supervisory authority is not performing executive job duties. Accordingly, a "manager," for example, who does nothing more than the employees he "supervises" is not performing executive job duties.

Administrative
The most frequently litigated, and most difficult exemption to interpret is the administrative exemption. Generally speaking, an employee performs administratively exempt duties if he/she:

  • performs "office" or non-manual work that is related to management of the company or the general business operations of the company;
  • regularly exercises "independent discretion and judgment" with regard to matters of significance.

Generally, employees who fall within the administrative exemption perform work that is of a relatively high-level of importance to the company, and involves the use of significant judgment and discretion (such as comparing two alternatives and having the ability to choose one or the other). Tasks such as filing, filling out forms, preparing routine reports, answering telephones, making travel arrangements, working on customer "help desks," and similar duties are not likely considered administratively exempt. While again, job titles alone mean little, the Department of Labor has identified the following types of jobs that may fall within the administrative exemption if the above criteria are met: insurance claims adjusters, human resource managers, computer/network administrators, financial services providers, and management consultants. On the other jobs such as clerks clerks, examiners, graders, financial product salespersons, and processors. Again, while the foregoing constitutes general guidelines for interpreting the administrative exemption, it is important to remember that each position must be evaluated on a case by case basis.

Professional
Typically, the professional exemption includes persons such as doctors, lawyers, accountants, teachers, computer programmers and network administrators. Employees are considered to perform exempt professional duties if their work involves the application of advanced, usually specialized, learning or credentials of the type commonly associated with the "traditional learned professions" such as medicine, law, accounting or engineering. In most instances, a professionally exempt employee will possess a specialized academic degree in their respective field, and exercise significant independent judgment and discretion in performance of their duties. Recently, the Department of Labor identified the following categories of employees (in addition those identified above): (a) registered or certified medical technologists; (b) registered nurses (RN); (c) dental hygienists; (d) physician assistants; (e) chefs; and (f) athletic trainers. To the contrary, the Department of Labor identified the following categories of employees as NOT falling within the professional exemption: (a) cooks; (b) licensed practical nurses (LPN); (c) bookkeepers; (d) paralegals or legal assistants; and (e) trainees. Other exemptions as well

The bottom line is this - exemptions need to be examined on a case by case basis. There are other exemptions that apply to employees in particular industries (such as employees who work at auto dealerships, in agriculture, as taxi drivers, as commissioned sales employees, as computer professionals, outside sales representatives, etc.) Each exemption has particular requirements that need to be examined prior to determining whether an employee is exempt. The good news for employees, however, is that exemptions are typically construed in favor of the employee. Therefore, if you are unsure whether your job duties or pay structure make you exempt, contact a qualified FLSA lawyer to discuss whether you may be entitled to overtime compensation.


Law Office of Justin A. Zeller assists clients throughout the Five Boroughs of NYC: Manhattan, Bronx, Queens, Brooklyn, Staten Island in New York, New Jersey and Connecticut.



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