FLSA WHITE COLLAR EXEMPTIONS

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1 FLSA WHITE COLLAR EXEMPTIONS Presented by William S. Myers Eckert Seamans Cherin & Mellott, LLC Human Resources Forum May 8 & 16, 2014

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3 FLSA White Collar Exemptions Where They ve Been, Where They re Going Presented by: William S. Myers May 2014 White Collar Exemptions - Introduction Executive Employees Administrative Employees Professional Employees Computer Professional Employees Outside Sales Employees Highly Compensated Employees Combination Exemption Multiple Exemptions 1

4 White Collar Exemptions The Rule The most consistent rule has been confusion, misunderstanding, misapplication 2004 Bush Administration changes 2014 Obama Administration changes Intervening changes in the workplace Continued technological advancements Evolving employer-employee relationship White Collar Exemptions It Matters* 01/02/14 - Mortgage Loan Officers Class Action 01/07/14 - Retail Department Managers Class Action 01/08/14 - Retail Managers Class Action 01/14/14 - Human Resource Managers Class Action 01/22/14 - Accounting Firm's Managing Associates Class Action 01/23/14 - Mortgage Loan Officers Class Action 01/28/14 - Law Firm Document Reviewers Class Action 01/28/14 - Rental Car Branch Managers Class Action 01/28/14 - Tour Company Chaperons Class Action 01/31/14 - Retail Store Manager Class Action 02/03/14 - Healthcare Field Case Managers Class Action 02/04/14 - Engineers Class Action 2

5 White Collar Exemptions It Matters* 02/06/14 - Mortgage Loan Officers Class Action 02/14/14 - Technical Support Employees Class Action 02/14/14 - Mortgage Loan Officers Class Action 03/17/14 - Lumber Company Managers As Executives 03/20/14 - Customer Support Representative Class Action 03/25/14 - Real Estate Agents Class Action 04/02/14 - Mortgage Loan Reviewers Class Action 04/02/14 - Real Estate Agents Class Action 04/08/14 - Real Estate Mortgage Underwriters Class Action 04/15/14 - Script Writers Class Action 04/21/14 - Financial Services Employees Class Action 04/21/14 - Mortgage Underwriters Class Action White Collar Exemptions It Matters* 04/22/14 - Bank Fraud Investigators Class Action 04/23/14 - Four Consolidated Bank Employee Class Actions 04/25/14 - Telecom Assistant Managers Class Action 04/28/14 - Residential Mortgage Loan Employees Class Action 04/28/14 - Fire Chiefs Class Action 04/29/14 - Package Delivery Managers Class Action 04/29/14 - Human Resources Managers Class Action 04/30/14 - Law Firm Document Reviewers Class Action 05/02/14 - Aerospace Parts Industrial Supervisors Class Action 05/06/14 - Clothing Store Assistant Managers Class Action * Recent articles on different class actions on misclassification under the White Collar Exemptions 3

6 White Collar Exemptions The Basics In General Categorical exclusion for blue collar workers Categorical exclusion for police, firefighters, other law enforcement and public service workers Job titles do not govern Job descriptions do not govern Actual duties and pay are determinative Improper deductions can kill the exemption Minimum standards may be exceeded, not waived Executive Employees - Criteria Compensated on a salary basis at a rate of not less than $455 per week, ; Whose primary duty is management of the enterprise... [or] a customarily recognized department ; Who customarily and regularly directs the work of two or more employees; and Who has the authority to hire or fire other employees or whose suggestions and recommendation are given particular weight 4

7 Administrative Employees - Criteria Compensated on a salary or fee basis at a rate of not less than $455 per week ; Whose primary duty is 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 includes the exercise of discretion and independent judgment with respect to matters of significance Administrative Employees - Examples Insurance claims adjusters Financial services industry Team leaders Executive assistant or administrative assistant to executive Human resources managers Purchasing agents (with authority to bind) Educational Administrators 5

8 Professional Employees - Criteria Compensated on a salary or fee basis at a rate of not less than $455 per week ; Whose primary duty is the performance of work Requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction; OR Whose primary duty is the performance of work Requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor; OR Whose primary duty is teaching in a school Professional Employees - Learned Registered or Certified Medical Technologists Registered Nurses Dental Hygienists Physician Assistants Accountants (CPA and other) Chefs and Sous Chefs Paralegal (with advanced non-legal degrees) Athletic Trainers 6

9 Professional Employees - Creative Actors Novelists Musicians Short Story Writers Composers Screenplay Writers Conductors Advertising Writers Soloists Analytical Journalists Painters Cartoonists Essayists Hourly Professionals Doctors & Lawyers Exemption Exception Licensed to practice medicine or law Actually engaged in the practice May be paid on an hourly basis without losing exemption 7

10 Hourly Professionals Computer Geeks Compensated on a salary or fee basis at a rate of not less than $455 per week ; OR Compensated on an hourly basis of at least $27.63 Whose primary duty consists of: Application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications; 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; Design, documentation, testing, creation or modification of computer programs related to machine operating systems; or A combination of the above. Outside Sales Employees - Criteria Whose primary duty is: Making sales; OR Obtaining orders or contracts for services or for the use of facilities ; AND Who is customarily and regularly engaged away from the employer s workplace No salary-basis requirement 8

11 Highly Compensated Employees - Criteria Primary duty is office or non-manual work Customarily and regularly performs one or more exempt duties of executive, administrative, or professional employees Total annual compensation at least $100,000 January bonus allowed the for previous year Pro rata for partial years Combination and Multiple Exemptions If at first you don t succeed, try the Combo Allows the combination of activities that are exempt under different named exemptions to be combined as the employee s primary duty If not one, try another If Professional Exemption fails, try Administrative; if that fails, try Executive 9

12 Special Issues Salary amount Salary basis Primary duty Discretion and independent judgment Customarily and regularly Directly and closely related Improper deductions Special Issues Cont d Minimum guarantee plus Salary plus commissions or other bonus No amount restrictions Minimum guarantee plus Hourly, daily, shift calculation Minimum bears reasonable relationship to total Trainees Emergencies Occasional Tasks 10

13 Pitfalls and Point-Getters Job descriptions Job titles Evolving duties jobs For same employee over time in the same job From predecessor to successor employees Among different employees in same job Training for managers, employees Improper deductions from salary Bush Administration Changes Salary Test Duties Tests Team leaders Working supervisors, workers with some executive duties Professionals and work experience qualifier Financial services employees Computer professionals (FLSA amendment in 1996) Highly Compensated Employees 11

14 Obama Administration Changes March 13 Presidential Memorandum What lies ahead procedurally Proposed rules Comment period Final rules What lies ahead substantively Focus on expanding reach of non-exempt status Obama Administration Changes Salary Amount Test Likely to approach $1,000 per week Based on updating the 1978 salary minimum Indexing future salary minimum for inflation Primary Duties Test Percentage based test (from before 2004) Highly Compensated Employees 12

15 Questions? William S. Myers (Bill) (412)

16 William S. Myers Special Counsel 600 Grant Street, 44 th Floor Pittsburgh, PA P: F: E: Bill Myers has been a labor and employment lawyer for more than twenty years. He is both an advocate and a counselor, and he carries both sets of tools to work on every client matter. Bill is experienced in employment discrimination claims, compensation and benefits litigation, labor relations, employee safety, and other aspects of employment regulated by federal law. He also has expertise on state laws governing the formation and termination of employment and the conduct of employees and employers before, during, and after employment. This includes questions of wrongful discharge, defamation, invasion of privacy, and tortious interference, as well as breach of employment contract and the full range of claims and issues relating to employee competition. Representative Matters Handled cases involving individual plaintiffs, Rule 23 class actions, and Section 16(b) collective actions in state and federal courts and trial and appellate courts throughout the country, and before various arbitration and mediation services; Advised employers on employment decisions, employee handbooks, policy manuals, and employment contracts. Advised individual executives and professionals on employment contracts and their rights and duties during voluntary and involuntary career changes. Advised transaction lawyers on labor and employment aspects of mergers, acquisitions, and other corporate deals and documents; Negotiated Section 8(f) and 9(a) collective bargaining agreements for employers, filed and defended Section 301 claims, defended Section 302 actions, handled unfair labor practice charges, investigations, hearings, and appeals, and worked on national, corporate, and single-site representation cases and election campaigns; Represented employers in OSHA inspections, citations, and Review Commission litigation; Conducted internal client investigations involving highly sensitive information and issues, including those implicating senior executives of the client, both at corporate offices and in remote facilities. Also represented individual executives implicated in such investigations. Practice Groups Labor and Employment Litigation Education J.D., University of Pittsburgh School of Law, 1983, Pitt Law Review A.B., Franklin & Marshall College, 1980

17 Admissions Pennsylvania Georgia (non-resident) All Pennsylvania and Georgia Courts United States Supreme Court U.S. Court of Appeals for the Third, Fourth, Ninth and Eleventh Circuits U.S. District Court for the Northern, Middle and Southern Districts of Georgia U.S. District Court for the Western District of Pennsylvania U.S. District Court for the Western District of Michigan Professional Affiliations Pennsylvania Bar Association Community Involvement Board of Directors, Guyasuta Area Football Association Board Representative, Keystone Bantam Youth Football Special Recognition Attained an AV Preeminent rating from Martindale-Hubbell Articles Are they or aren t they? Noel Canning and the status of the NLRB, Eckert Seamans Legal Update, Spring 2013.

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