Presenting a live 90 ‐ minute webinar with interactive Q&A Exempt or Non ‐ Exempt? Latest Employee p p p y Misclassification Challenges Identifying Vulnerabilities and Minimizing Liability Under FLSA and State Law WEDNES DAY, MARCH 20, 2013 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific T d Today’s faculty features: ’ f l f Mark E. Tabakman, Partner, Fox Rothschild , Roseland, N.J. Brent E. Pelton, Esq., Pelton & Associates , New Y ork Daniel J. McCoy, Partner, Fenwick & West , Mountain View, Calif. Daniel J. McCoy, Partner, Fenwick & West , Mountain View, Calif. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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EXEMPT OR NON-EXEMPT? EMPLOYEE MISCLASSIFICATION CHALLENGES CHALLENGES Positions Most Vulnerable to FLSA and State Claims FLSA and State Claims Mark Tabakman, Esq. Fox Rothschild LLP mtabakman@foxrothschild.com taba a @ o ot sc d co http://wagehourlaw.foxrothschild.com March 20, 3013
FLSA EXEMPTIONS: EMERGING CLASS ACTION THREAT EMERGING CLASS ACTION THREAT AT-RISK POSITIONS Financial Services Industry I T W I.T. Workers/Computer Programmers k /C t P Assistant Managers Clerical/Administrative Employees Clerical/Administrative Employees Sales Staff 5
FLSA SECTION 13(a)(1), GENERALLY • Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for individuals employed as bona minimum wage and overtime pay for individuals employed as bona fide executive, administrative, professional, and outside sales employees. Sections 13(a)(1) and 13(a)(17) also exempt certain computer employees. – To qualify for exemption, employees generally must meet certain tests T lif f ti l ll t t t i t t regarding their job duties and be paid on a salary basis at not less than $455 per week. – Job titles do not determine exempt status. – In order for an exemption to apply, an employee s specific job duties In order for an exemption to apply an employee’s specific job duties and salary must meet all the requirements of the DOL’s regulations. 6
ASSISTANT MANAGERS • To qualify for the executive employee exemption, all of the following tests must be met: must be met: – The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $455 per week; – The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise; – The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and – The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must p y g p y be given particular weight. 7
ASSISTANT MANAGERS (cnt’d) • The duties and responsibilities of assistant managers vary and may be determined by the industry in which the assistant manager works the size determined by the industry in which the assistant manager works, the size of the business and/or the structure of the business (e.g., single establishment versus multi-establishment). An assistant manager whose primary duties or functions are ordinary production work or routine, recurrent or repetitive tasks is not exempt under the Regulations, Part 541. p p g , • However, to determine whether a worker employed as an assistant manager who regularly supervises the work of others meets the duties tests for exemption from the FLSA's minimum wage and overtime pay requirements, begin with the Executive Employee analysis. 8
ASSISTANT MANAGERS (cnt’d) • The Assistant Manager classification has always been problematic from an FLSA exemption The Assistant Manager classification has always been problematic from an FLSA exemption perspective. These employees must be endowed with some actual/real authority relating to hiring and firing as well as other employee terms and condition or the employer will be an easy target for a class action suit. Moreover, they must supervise and manage the majority of the time. – This becomes a fine line that often gets crossed in the hectic world of store operations, where the job has to get done. • Plaintiffs claiming to be misclassified as exempt Assistant Managers often assert that they were Plaintiffs claiming to be misclassified as exempt Assistant Managers often assert that they were compelled to perform non-exempt duties a disproportionate amount of their work day and this amount of rank-and-file work destroyed the exemption. • On the Assistant Manager issue, the best defense is that these workers are truly exempt. The second best defense is that the class certification motion must fail because individualized assessment of each Assistant Manager is needed because some might have exercised more assessment of each Assistant Manager is needed because some might have exercised more managerial duties than others. The need for individual scrutiny is the antithesis of a class action . 9
ADMINISTRATIVE EMPLOYEE EXEMPTION • To qualify for the administrative employee exemption, all of the f ll following tests must be met: i b – The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week; – The employee’s primary duty must be the performance of office or non- The employee s primary duty must be the performance of office or non manual work directly related to the management or general business operations of the employer or the employer’s customers; and – The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. independent judgment with respect to matters of significance. 10
PROFESSIONAL EMPLOYEE EXEMPTION • To qualify for the professional employee exemption, q y p p y p , following must be met: – The employee must be compensated on a salary or fee basis at a rate of not less than $455 per week exclusive of board a rate of not less than $455 per week, exclusive of board, lodging, or other facilities; and – Whose primary duty is the performance of work: • • Requiring knowledge of an advanced type in a field of science or Requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction; or • Requiring invention, imagination, originality or talent in a recognized q g , g , g y g field of artistic or creative endeavor. 11
FINANCIAL SERVICES • Over the last several years there has been a Over the last several years there has been a torrent of litigation concerning the exempt status of positions in the financial services industry (mortgage brokers, originators, etc.). 12
FINANCIAL SERVICES (cont’d) • Prior to the DOL’s issuance of its 2010 White Paper (guidance statement) on the matter, employees were deemed exempt as ) h l d d administrative if their duties included work such as collecting and analyzing information regarding a customer’s income, assets, investments, or debts; determining which financial products best investments, or debts; determining which financial products best meet the customer’s needs and financial circumstances; advising the customer regarding the advantages and disadvantages of financial products; and servicing, promoting, and marketing the employer’s financial products. l ’ fi i l d t 13
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