There has been a lot of discussion lately about the upcoming changes to the requirements for employees to be considered exempt from the overtime provisions of the Federal Labor Standards Act (FLSA). While most people know that the salary level test is changing from $23,600 per year ($455 per week) to $47,476 ($913 per week) many may not understand the other requirements. The FLSA looks at job duties as well, rather than just job titles. We are going to focus on one of the “Duties” tests.
Perhaps one of the most abused tests is the one for Exempt Managers. Merely assigning the job title is not enough to qualify as exempt. The basic job duties are pretty straightforward:
Job duties are exempt Executive/Managerial if:
- The employee regularly supervises two or more other employees,
- The employee has management as the primary duty of the position.
- The employee has some genuine input into the job status of other employees (such as hiring, firing promotions, or assignments).
Let’s look at each of these requirements.
Supervision
This requirement means just that. Supervision must be a regular part of the employee’s job, and must be of other employees. Non-employees do not count. The requirement for two or more employees refers to two or more full-time equivalent employees. Therefore this requirement could be met by supervising 4 part-time employees working at least half the full time hours.
Management
Merely supervising the day to day duties of employees is not enough. The employee must have management as the primary duty of the job. In California this spelled out as being at least 50% of the employee’s work time. Typical management duties are considered to include:
- interviewing, selecting, and training employees;
- setting rates of pay and hours of work;
- maintaining production or sales records;
- 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.
Input into Personnel Matters
While the employee may not be the final decision maker on personnel matters, they should be involved in make recommendations regarding hiring, firing, promotions and demotions. Higher management may make the final approval of such recommendation.
Conclusions
What you call a position does not have any weight when it comes to the exempt classification. Accurate job descriptions and regular review of job duties will help companies correctly classify their employees and protect them from the inevitable audits that will be occurring with the new focus on overtime.
