Archive for the ‘Exemptions to FLSA’ Category

For all of you who were or are mortgage loan officers and have not been paying attention, the United States Department of Labor (“DOL”), Wage and Hour Division, recently published an Administrator’s Interpretation that takes the position that mortgage loan officers with certain “typical” job duties are not subject to the administrative employee exemption of the Fair Labor Standards Act. The DOL reasoned that mortgage loan officers’ primary duties are to make sales, and these are not administrative functions as defined by federal regulations. As a result, mortgage loan officers are not exempt from the FLSA’s minimum wage and overtime compensation rules under the administrative employee exemption.

The DOL based its new interpretation on the statutory and regulatory framework, as well as on a thorough review and analysis of recent case law. With this determination, the DOL reverses its previously held position and explicitly withdraws Opinion Letters from February 2001 and September 2006, which stated that mortgage loan officers could be considered exempt administrative employees.

The DOL noted that a mortgage loan officer’s typical duties include contacting and gathering financial information from customers, entering data into computer programs to determine which loan products may be offered to a customer, assessing the loan products identified, and trying to match the customer’s needs with one of the company’s products. Those duties, combined with other factors, led the DOL to conclude that mortgage loan officers’ primary duty is to make sales, rather than administrative functions.

In reaching its conclusion, the DOL also relied on the following factors:

In lawsuits brought by mortgage loan officers, mortgage companies have typically conceded that the officers’ primary duty is sales;

Mortgage loan officers are usually paid commissions based on sales, and their performance is evaluated based on sales volume;

The DOL could not find any reported case holding that a mortgage loan officer, whether working inside or outside, had a primary duty other than sales;

While administrative interpretations of the Department of Labor are not law per se, they are given great weight in courts of law.

So if you are currently a mortgage loan officer or have been one in the past three years, you should speak to an employment law attorney to determine whether you are owed unpaid overtime for the time that you worked for them.

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As you my recall, I have blogged on occasions about whether employees are entitled to be paid overtime. Under the Federal Law that governs this issue, the Fair Labor Standards Act (FLSA), many employees are considered “exempt” from overtime based upon different Federal regulations. One of the federal exemptions applies to Outside Sales Employees.

According to the U.S. Department of Labor and to be exempt from overtime as an Outside Sales Employee, The employee’s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and the employee must be customarily and regularly engaged away from the employer’s place or places of business. The U.S. Department of Labor further defines these terms in their Fact Sheet 17F.

Just recently, however, a federal court judge has ruled Abbott Lab reps are not exempt from overtime provisions of the Fair Labor Standards Act and, therefore, should be paid overtime. The ruling, which came in the form of a summary judgment and is now headed to trial to determine damages for about 80 Abbott rep.

Drugmakers argue their sales reps are, indeed, outside salespeople who close sales because the primary customer is the physician. But recently, the US Department of Labor added an unexpected twist to the debate by filing an amicus brief with a federal appeals court contending that a lower court was wrong to toss their lawsuit.
In the latest ruling, US District Court Judge Ruben Castillo of the Northern District Court of Illinois, decided the Labor Department’s “interpretation is both persuasive and consistent with our analysis of the regulations (which) dictate that if an employee does not make any sales or obtain any sales orders or contracts, then the outside sales exemption does not apply.” He also rejected Abbott’s argument that reps are exempt from overtime as administrative employees. To qualify for the exemption, employees must exercise discretion and independent judgment “with respect to matters of significance.” The DOL maintains reps don’t have that kind of independence since they’re given lists of docs to visit and must present scripted messages.

I have attached a copy of the Judge’s recent decision.Decision of Court Against Abbot Labs

So if you are a sales person or pharmaceutical rep who sells outside of the office, but is not paid overtime, consult with an employment lawyer to discuss what you may be entitled to be paid.

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On many occasions, employees come to me who are working dozens of hours for their employers, but are not getting paid overtime.  I ask them why and the response is , I’m salaried or I’m exempt.  However, you should be aware that just because your employer calls you salaried or exempt does not necessarily make it so as a matter of federal law.  I mean, if your employer calls an apple an orange, it does not make it so, right?

In many instances, employers will call an employee exempt and pay them a salary merely to avoid having to pay their employees overtime.  Getting your employee to work for as many hours as possible for no additional compensation makes good business sense, right?  But its not fair to employees.

So the question for you to determine and ask the U.S. Department of Labor or an employment law attorney is whether I am really an exempt salaried employe or not.  This is not a simple question and the body of Federal law that governs this area,  the Fair Labor Standards Act or FLSA, is complex.

On of the areas that an employer is entitled to pay an employee a salary and call them exempt is if they are in a management or executive type of position.  There are a number of guidelines issued under the Fair Labor Standards Act which determine whether or not you are really a manager who should not get overtime.  I have had many clients where they were called “assistant manager” by their employer to avoid being paid overtime, but according to law should have been paid hourly with overtime.

With few exceptions, to be exempt an employee must (a) be paid at least $23,600 per year ($455 per week), and (b) be paid on a salary basis, and also (c) perform exempt job duties. These requirements are outlined in the FLSA Regulations (promulgated by the U.S. Department of Labor). Most employees must meet all three “tests” to be exempt.

An employee who meets the salary level tests and also the salary basis tests is exempt only if s/he also performs exempt job duties. These FLSA exemptions are limited to employees who perform relatively high-level work. Whether the duties of a particular job qualify as exempt depends on what they are. Job titles or position descriptions are of limited usefulness in this determination. (A secretary is still a secretary even if s/he is called an “administrative assistant,” and the chief executive officer is still the CEO even if s/he is called a janitor.) It is the actual job tasks that must be evaluated, along with how the particular job tasks “fit” into the employer’s overall operations.

There are three typical categories of exempt job duties, today I am just going to discuss executive or management level job duties.

Job duties are exempt executive job duties if the employee

  1. regularly supervises two or more other employees, and also
  2. has management as the primary duty of the position, and also,
  3. has some genuine input into the job status of other employees (such as hiring, firing, promotions, or assignment of job tasks)

“Mere supervision” is not sufficient. In addition, the supervisory employee must have “management” as the “primary duty” of the job. The FLSA Regulations contain a list of typical management duties. These include (in addition to supervision):

  • interviewing, selecting, and training employees;
  • setting rates of pay and hours of work;
  • maintaining production or sales records (beyond the merely clerical);
  • appraising productivity; handling employee grievances or complaints, or disciplining employees;
  • determining work techniques;
  • planning the work;
  • apportioning work among employees;
  • determining the types of equipment to be used in performing work, or materials needed;
  • planning budgets for work;
  • monitoring work for legal or regulatory compliance;
  • providing for safety and security of the workplace.

Determining whether an employee has management as the primary duty of the position requires a case-by-case evaluation.   This is why if you have any doubts, you should consult with the U.S. Department of Labor or with an employment law attorney.

Will try to cover over the next couple of days some of the other FLSA exemptions.  A listing of many other exemptions contained in the FLSA are on the U.S. Department of Labor web site at http://www.dol.gov/elaws/esa/flsa/screen75.asp.

Don’t let your employer take advantage of you…..get the overtime you deserve.

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