When employers conduct overtime-exemption audits, there are many issues to consider. There are several primary overtime exemption classifications, which include the following:
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- Administrative
- Executive (Manager)
- Professional (Licensed/Learned/Computer/Creative)
- Outside Sales
- Fair Labor Standards Act (FLSA) Highly Compensated
In a BLR webinar titled "Advanced Exemption Audits: Evaluate Your Overtime Classifications Now To Avoid Costly Trouble Later," Mary Topliff, Esq., summarized the administrative, professional, and executive exemptions and outlined the most common misclassification issues for each.
Fair Labor Standards Act (FLSA) Administrative Exemption Summary:
This exemption involves work that directly relates to management policies or general business operations of the employer or the customers, and the primary duty involves discretion and independent judgment.
Common misclassification issues include:
- Jobs involving production (product or service of business) or sales
- Jobs that do not involve specialized work
- Jobs that involve processing reports or data, but lack analytical work and recommendations
FLSA Professional Exemption Summary:
This exemption involves those licensed to practice law or medicine or learned or artistic professions in an advanced field of science/learning after a prolonged course of study. It also includes a subset, computer professionals. The computer professional exemption requires that the employee's primary duties involve systems analysis, programming or software engineering.
Common misclassification issues include:
- Advances in technology have decreased specialized technical aspects of some jobs (i.e., web/graphics designers)
- Coders and testers with lofty job titles
FLSA Executive Exemption Summary:
This exemption includes supervisors of at least two full-time employees with the authority to hire and fire. Over 50 percent of the employee's time must be spent in supervisory functions.
Common misclassification issues:
- Managers who are performing the same duties as their direct reports
- Having handful of direct reports
Mary Topliff, Esq. founded the Law Offices of Mary L. Topliff in San Francisco in 1997, after practicing civil and employment litigation for nine years. ( www.joblaw.com) The firm specializes in employment law counseling, training, and compliance, focusing on practical solutions to avoid costly legal issues. She has advised many organizations regarding overtime exemption analyses and strategies for minimizing the risk. Topliff is a published author and frequent speaker on legal issues impacting the workplace.