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Employee Misclassification

The FLSA exempts certain types of jobs from the overtime requirement. The FLSA’s “white collar” exemptions are the most common. Employees employed as bona fide executive, administrative and professional employees are exempt from the overtime pay requirement if they meet certain criteria regarding their job duties and are paid on a salary basis at least $455 per week. However, unless an employee qualifies for one of the overtime exemptions, it is likely that the employee should be paid one and one-half times the employee’s regular rate of pay for any hours worked in excess of 40 hours per workweek. If an employee works more than 40 hours per workweek but does not receive overtime pay, and fails to qualify for any of the FLSA’s exemptions, the employee could be misclassified and be entitled to up to three years of unpaid overtime, plus additional compensation, including liquidated damages and attorney’s fees. The Atlanta attorneys at Moeller Barbaree have litigated numerous misclassification cases across the country.

The following are the most common types of exempt job positions.

Executive Exemption

To qualify for the FLSA’s executive exemption, an employee must meet all parts of the following test:

  • Compensated on a salary basis at a rate not less than $455 per week.
  • Primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise.
  • Must customarily and regularly direct the work of at least two or more full-time employees or their equivalent.
  • Must have authority to hire or fire other employees, or suggestions and recommendations as to hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

If an employer classifies an employee as exempt from the FLSA’s overtime requirement under the executive exemption, but the employee does not meet all four requirements above, the employer may be misclassified and the employee could recover up to three years of unpaid overtime, plus additional compensation.

Administrative Exemption

To qualify for the FLSA’s administrative exemption, an employee must meet all parts of the following test:

  • Compensated on a salary basis at a rate not less than $455 per week.
  • Primary duty must be 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.
  • Primary duty must include the exercise of discretion and independent judgment with respect to matters of significance. The exercise of discretion and independent judgment implies that one has the authority to make an independent choice, free from immediate direction or supervision. The term “discretion and independent judgment” includes things such as the employee has authority to formulate, affect, interpret, or implement management policies or operating practices, whether the employee has authority to commit the employer in matters that have significant financial impact, and whether the employee has authority to waive or deviate from established policies and procedures without prior approval.

Employers often misclassify workers as exempt under the administrative exemption who may be doing office or administrative-type work, but those responsibilities are not related to managing the business, are not related to the company’s business operations, or the workers are not actually exercising discretion and independent judgment. These employees typically are not exempt under the administrative exemption. Moreover, if an employee’s primary duty is sales, the law provides that they typically are not exempt under the administrative exemption. Moeller Barbaree’s lawyers have handled misclassification cases in state and federal courts across the United States.

Professional Exemption

There are two types of professional exemptions under the FLSA: (1) the learned professional exemption; and (2) the creative professional exemption.

To qualify for the FLSA’s learned professional exemption, an employee must meet all parts of the following test:

  • Compensated on a salary basis at a rate not less than $455 per week.
  • Primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominately intellectual in character and which includes work requiring the consistent exercise of discretion and judgment.
  • Advanced knowledge must be in a field of science or learning.
  • Advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

Under the learned professional exemption, having a degree alone may not satisfy the exemption requirements. Instead the employee’s primary duty must actually require the employee to perform work requiring that advanced degree and the exercise of discretion. To qualify for the FLSA’s creative professional exemption, an employee must meet both parts of the following test:

  • Compensated on a salary basis at a rate not less than $455 per week.
  • Primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.
Computer Related Exemption

To qualify for the FLSA’s computer related exemption, an employee must meet all three parts of the following test:

  • Compensated on a salary basis at a rate not less than $455 per week or be compensated on an hourly basis at a rate not less than $27.63 an hour.
  • Employed as a computer systems analyst, computer programmer, software engineer, or other similarly skilled worker in the computer field.
  • Primary duty must consist of at least one of the following: (1) application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications; (2) 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; (3) design, documentation, testing, creation or modification of computer programs related to machine operating systems; or (4) a combination of the aforementioned duties.

Employees engaged in the manufacture or repair of computer hardware and related equipment do not typically meet the requirements for the computer exemption and are entitled to overtime pay for hours worked over 40 in a workweek.

Outside Sales Exemption

In order to qualify for the FLSA’s outside sales exemption, an employee must meet both parts of this test:

  • Primary duty must be making sales or obtaining orders or contracts for services.
  • Be customarily and regularly engaged away from your employer’s place of business.

Unlike many other FLSA exemptions, you need not be paid a certain amount per week to qualify for the outside sales exemption. Courts have typically held that sales employees who do not spend fifty percent of their work time away from the employer’s place of business do not qualify for the outside sales exemption.

Retail or Service Establishment Exemption

In order to qualify for the FLSA’s retail or service establishment exemption, an employee must meet all of the following test:

  • Employed by a retail or service establishment.
  • More than half of employee’s total earnings must represent commissions.
  • Employee’s total compensation divided by the number of hours worked or regular hourly rate must be greater than one and one-half times the federal minimum wage.
Highly Compensated Employees

An employee who performs office or non-manual work and is paid a total annual compensation of $100,000 or more, which must include at least $455 per week, may be exempt from the FLSA’s overtime requirements if the employee customarily and regularly performs at least one of the duties of an exempt executive, administrative or professional employee, listed above.

Free & Confidential Consultation with Our Employment Attorneys

Moeller Barbaree’s Atlanta-based employment lawyers have vast experience in the area of misclassification of employees. If you have questions regarding a misclassification or wage and hour claim, contact the Atlanta overtime and minimum wage lawyers at Moeller Barbaree at 404-692-5543, for a free, no obligation consultation or use our convenient email form.