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Wage and Hour Laws: Minimum Wage, Overtime and Exempt Employees

The Fair Labor Standards Act (FLSA) requires most employees in the United States to be paid at least the federal minimum wage for all hours worked and overtime, at a rate of one and one-half the regular pay rate, for all hours worked over 40 hours during a single workweek.

The FLSA provides a “floor” or a minimum standard that may be exceeded, but never reduced or waived. Employers must also comply with any Federal, State or municipal laws, which establish a higher minimum wage or lower maximum workweek than those established under the FLSA. Many employers, on their own, set a higher minimum wage, a lower maximum workweek or a higher overtime rate than the FLSA mandates.

Yet under Section 13(a)(1) of the FLSA, some employees are exempt from both minimum wage and overtime pay if they are employed as an executive, administrative, professional, computer and outside sales employees.

For employees to qualify for exemption, they must meet certain tests regarding their job duties and salary basis. An employee’s specific job duties and salary must meet all of requirements under the law to qualify for the exemption. The salary basis may not be less than $455 per week and job titles are not dispositive in determining exempt status. Non-exempt employees cannot have their salary reduced if they come to work late or take a half-day off but reductions can be made for a full-day absence for personal reasons or a sick leave according to the employer’s plan. The following are tests an employee must satisfy to qualify for each exemption.

Executive Exemption

• The employee must receive a salary no less than $455 per week;
• The employee’s primary duty must be managing the enterprise, a 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; and
• The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations are given particular weight as to hiring, firing, promotion or any other status change of other employees.

Administrative Exemption

• The employee must receive a salary no less than $455 per week;
• The employee’s primary duty must be the performance of office or non-manual work directly related to management or general business operations of the employer or the employer’s customers; and
• The employee’s primary duty includes exercising independent judgment in matters of significance.

Professional Exemption

• The employee must receive a salary no less than $455 per week;
• The employee’s primary duty must be the performance of work requiring advanced knowledge, which is work that is predominantly intellectual in nature and requires consistent exercise of discretion and judgment;
• The advanced knowledge must be in a field of science or learning; and
• The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

Creative Professional Exemption

• The employee must receive a salary no less than $455 per week; and
• The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

Computer Employee Exemption

• The employee either must receive a salary no less than $455 per week or, if compensated on an hourly basis, at a rate no less than $27.63 an hour;
• The employee must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field who performs duties such as: the application of systems analysis techniques and procedures—including consulting with users in order to determine hardware, software or system functional specifications; the design, development, documentation, analysis, creation, testing or modification of computer systems or programs—including prototypes based on and related to user or system design specifications; the design, documentation, testing, creation or modification of computer programs related to machine operating systems; or a combination of these duties that requires the same level of skills to perform.

Outside Sales Exemption

• The employee’s primary duty must be making sales, or obtaining orders or contracts for services; and
• The employee must be customarily and regularly working away from the employer’s place of business.

Highly Compensated Employees Exemption

• The employee must receive a total annual salary of $100,000 or more, which must include at least $455 per week paid on either a salary or fee basis;
• The employee performs office or non-manual work; and
• The employee must customarily or regularly perform at least one of the duties of an exempt executive, administrative or professional employee.

“Blue Collar” Employees

The exemptions under FLSA Section 13(a)(1) apply only to “white collar” employees who meet the salary and duty test set forth in Part 541 of the regulations. The exemptions do not apply to manual laborers or other “blue collar” workers who perform work involving repetitive operations with their hands, physical skill and energy. Workers such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, construction workers and laborers are entitled to minimum wage and overtime pay under the FLSA. These workers are not exempt under Part 541 no matter how highly paid they may be.

Police, Firefighter, Paramedics and Other First Responders

The exemptions also do not apply to police officers, detectives, deputy sheriffs, state troopers, highway patrol officers, investigators, inspectors, correctional officers, parole or probation officers, park rangers, fire fighters, paramedics, emergency medical technicians, ambulance personnel, rescue workers, hazardous materials workers and other similar employees, regardless of their rank or pay level. These employees are exempt because the jobs they perform are important to public safety and because the employees put their lives at risk.

Deductions

If employers deduct exempt employees’ salary, these employees may be re-categorized as non-exempt employees. This allows re-categorized employees to sue for liquidated damages and back up for up to two years. However, there is a “safe harbor” rule that protects employers who make mistaken deductions. Under this rule, if an employer has a written company policy, which is communicated to employees and followed, and the errors are correctly promptly, then employer is protected from liquidated damages and back pay payments.

Employers can deduct the costs of company uniforms from an employee’s paycheck as long as the deduction does not reduce the employee’s earnings below the minimum wage rate. If the company uniforms can be used for the employee’s benefit when not at work, than the employer can force the employee to pay for the uniform. However, if the uniform can only be worn exclusively at work, then the employer is responsible to provide the employee with a uniform.

Under New York Labor Law Section 193, deductions other than those required by law or requested by the employee for the employee’s own benefit are illegal. A 401k plan is an example of a permissible deduction that is requested by the employee for his or her own benefit. Even if an employee breaks equipment or merchandise while working, the employer cannot deduct the lost value from the employee’s pay.

Work Time vs. Non-Work Time

Non-exempt employees are not paid for meals, breaks and rest times as long as employees do not perform any work during those times. Travel time is not considered work time because employees take their own time to get to work. Travel time may qualify as work time if the employer instructs the employee to travel and it is for the employer’s benefit.

Company meetings or trainings can be considered work time. If such meetings or trainings are job related and required by the employer, then employees must be paid for their time. But if the meetings or trainings are voluntary and not job related, the employer is not required to pay the employees for their time.

At Leeds Morelli & Brown, PC, our employment law attorneys are dedicated to resolving issues of wage and hour disputes. Our firm has had considerable success in handling matters such as these throughout Long Island and the New York City area. We take great pride not only in providing quality legal service and representation, but also in being there for clients when they need it most.

For more information, contact Leeds, Morelli and Brown, PC at 1-800-585-4658

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