Avoiding liability for unpaid overtime under the FLSA

Most employers in Texas are aware of the mandatory overtime provisions of the Fair Labor Standards Act (FLSA), but many do not understand the potential booby traps in the regulations governing the payment of mandatory overtime.

One of the most common errors made by employers is to assume that an employee can be placed in a category that is exempt from the mandatory overtime requirement by simply assigning the employee’s position a job title that matches one of the several categories of exemptions. A review of the regulations demonstrates that this assumption is erroneous and can lead to severe financial penalties. 

What are the exempt categories?

The exempt categories are executive, administrative, professional, computer and outside sales employees. To qualify for exemption as an executive or administrative employee, the following conditions must be satisfied:  

• The classification must be bona fide; the mere labeling of the position will not suffice. 
• The employee must be compensated by means of a regular salary and not hourly wage at a rate of not less than $684 per week. 
• The employee’s full-time duty must be managing the enterprise or a regularly recognized department or subdivision of the enterprise. 
• The employee must supervise the work of at least two or more full-time employees. 
• The employee must be authorized to hire and fire other employees. 
• The employee’s main responsibility includes discretion and independent judgment with respect to matters of significance to the enterprise. 

To sustain an exemption in the face of an investigation by the Wage and Hour Division of the Labor Department, the employer must provide evidence proving that most of the above conditions have been satisfied.

What are the requirements to establish a bona fide exemption for the other classes of exempt employees?

The requirements for the other classifications of exempt employees are not as numerous or detailed as for the executive or administrative classes. For example, a learned professional is exempt if the salary exceeds the minimum noted above and the employee’s primary duty is the performance of work requiring advanced knowledge, i.e., work that is predominantly intellectual in nature and requires the consistent exercise of discretion and judgment.

Blue collar workers are not exempt

None of the exempt classifications apply to blue-collar workers or to police officers, detectives, and other first responders. The requirements of the FLSA can be exceeded by state law or a collective bargain agreement, but the requirements cannot be reduced or replaced by lesser requirements. 

Conclusion

Anyone with questions about the applicability of the FLSA overtime regulations may wish to consult an experienced labor lawyer for advice on the facts of the situation under consideration.