Loren Kean Law

Loren Kean Law

Loren Kean Law

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STOP ASSUMING THAT “SALARIED” EMPLOYEES ARE AUTOMATICALLY EXEMPT FROM THE OVERTIME REQUIREMENTS OF THE FAIR LABOR STANDARDS ACT Brandon J. Camilleri and Bruce E. Loren | Apr 15 2020

During the COVID-19 pandemic, it is important that employers be able to distinguish between employees that are “exempt” from the overtime requirements of the federal Fair Labor Standards Act, and those that are “non-exempt.” Employers regularly assume that an employee who is paid based upon a salary, rather than an hourly basis, is automatically exempt from overtime. That is completely inaccurate.

This issue has become important because employers, in an effort to reduce payroll, have reduced the hours of employees during the COVID-19 pandemic. That is acceptable for non-exempt employees who only have to be paid for each hour they work. But exempt employees are entitled to a full week’s pay so long as they have worked any portion of the week. In other words, reducing the hours of an exempt employees does not entitle the employer to reduce their compensation. For exempt employees, the Employer has to reduce their salary. (Note that Employers may not reduce salaries of exempt employees under an employment agreement without the employee’s agreement).

  1. How do I know if an employee is Exempt or Non-Exempt?

An employee is exempt from overtime if they are paid $648 per a week and they act as an “administrative” or as an “executive” employee. Additionally, an employee is exempt if they are paid over $107,432 and they act as a “highly compensated” employee. Employers can use non-discretionary bonuses (including commission) to satisfy up to 10% of the salary level. Here are some informative guidelines to determine the nature of the employees work and whether they would be considered exempt or non-exempt.

Executive Exemption

Administrative Exemption

Professional Exemption

Primary duty must be managing the business or a department of the business.

Must customarily and regularly direct the work of at least two employees and have the authority to hire or fire workers or the ability to influence hiring or firing.

Primary duty must be office or nonmanual work that is directly related to the management or general business operations.

Must include the exercise of discretion and independent judgment with respect to matters of significance without prior approval.

Primary duty must require advanced knowledge in a field of science or learning that is customarily acquired by prolonged, specialized, intellectual instruction and study.

Must have advanced skill in field of science or learning (architecture, engineering, accounting, etc.)

Highly Compensated Employee

Primary duty must be office or non-manual work and must regularly perform one of the exempt job duties for an executive, administrative, or professional employee.

2. How do Courts determine if an employee is Exempt or Non-Exempt?

Courts look to three primary factors to determine whether an employee is exempt under the FLSA: (a) the job description; (b) the actual job duties; and (c) the employee’s level of authority and discretion. The employer has the burden of proving its employee is exempt. Courts will often interpret the FLSA broadly to benefit the employee. Generally, the administrative exemption requires the most complex analysis and creates the biggest challenge for employers. Courts routinely reference job descriptions as evidence of an exemption. By creating carefully tailored job descriptions in writing, employers can decrease the risk of incorrectly classifying an employee as exempt.

Bruce E. Loren and Brandon J. Camilleri of the Loren & Kean Law Firm are based in Palm Beach Gardens and Fort Lauderdale. Loren & Kean Law is a boutique law firm concentrating in construction law, employment law, and complex commercial litigation. Mr. Loren has been certified in construction law by the Florida Bar since 2004, exemplifying the Bar’s recognition of his expertise. Mr. Loren and Mr. Camilleri can be reached at: bloren@lorenkeanlaw.com or bcamilleri@lorenkeanlaw.com or 561-615-5701.