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TECHWORKPLACE
by Jeffrey L. Berger, Esq.
Jeffrey L. Berger
specializes in management-side employment and business law, and related litigation in
Washington, D.C., and nationally. Questions and comments on the TECHWORKPLACE are
encouraged. Other articles are available at www.bergerlaborlaw.com.
OVERTIME:
TEACHING AN OLD LAW NEW TRICKS
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Although the Fair Labor Standards Act (FLSA) has been
around since the late 1930's, it likely ranks as the employment law most misunderstood and
misapplied by employers and employees alike. The law was originally conceived as part of
Roosevelt's New Deal with the purpose of using overtime requirement as an incentive for
employers to spread work among an under-employed population. Today, high tech employers
face a shortage of qualified workers and are often forced to have staff work longer to
meet production deadlines. As a rash of recent overtime cases demonstrate, without careful
attention to the FLSA's overtime exemption criteria, companies can incur tremendous
liability for entire segments of their workforce.
The FLSA divides employees into those who are
"exempt" from overtime requirements, and those who are "nonexempt" and
must be paid one and one-half times their wage for hours worked in excess of forty. Many
employers and employees simply assume that employees paid a salary are exempt and those
paid by the hour are not. While in most cases a salary, i.e., a guaranteed minimum payment
made regardless of hours worked, is an essential component for a FLSA exemption, an
employee must also meet specific duties tests to qualify. With the tremendous growth in
alternative work structures such as flex time and telecommuting, and the evolving nature
of professional, administrative, and management positions in high tech firms, many
employers have been shocked when entire classes of their employees are found not to meet
the complex requirements of the salary basis or duties tests and must be paid back pay and
damages.
The FLSA requires overtime for all employees, unless
they are exempt as administrative, executive, professional, or computer related employees,
or meet one of the generally outdated sales exemptions. Except for the computer
professional exemption, which applies to certain employees making at least $27.62 per
hour, the non-sales exemptions require payment of a salary that cannot be reduced when,
for example, an employee takes a few hours off to go to the dentist or a child's soccer
game. This salary requirement has proved to be particularly problematic for government
contractors, who often pay professional employees on an hourly basis tied to hours charged
to a particular contract.
To further complicate matters, each exemption also has a
separate duties test requiring such things as the exercise of discretion and judgement,
supervision of others, and specialized education and expertise. Whether an employee meets
the duties requirement for an exemption is dependent upon what she actually does, rather
than her job title or position description. Indeed, inside the beltway, where an
impressive title is often bestowed on the most routine position, employees are frequently
misclassified as exempt administrative or professional staff.
The FLSA and its regulations were developed in a world
without computers, telecommuting, or flexible staffing, and should be revised to
accommodate the modern workplace. As those who enforce the FLSA continue to apply outdated
definitions and concepts to employees working with new forms of technology in
non-traditional arrangements, employers must become cognizant of the complex requirements
for overtime exemptions. As their businesses change, employers should routinely review job
classifications to avoid inadvertently creating overtime liability from evolving position
responsibilities, working practices, and management structure.
© 1998 Jeffrey Berger
REPRINTED FROM:
TECHGAZETTE - March 1999, Vol. 2, No. 3
The Berger Law Firm, 1825 Eye St. N.W., Suite 400, Washington, D.C.
20006.
Phone: (202) 861-1361 Fax: (202) 861-1362
Legal advice is case specific and is not intended to be provided by this article.
The Berger Law Firm, P.C. may not be held responsible for any consequences
that may arise in connection with the use of or reliance on the information provided.
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