Overtime Exemptions and
Misclassification Issues:
Brewing Wage and Hour Violations
Could Seriously Interrupt Your Craft
Presented by:
Megan Winter
mwinter@laborlawyers.com
858-597-9622
www.laborlawyers.com ● Phone (858) 597-9600
Number One Mistake Related to
Employee Classification
• Not just anyone can be paid a
salary, come and go without keeping
track of their time, and not receive
overtime.
www.laborlawyers.com ● Phone (858) 597-9600
Exemptions: Exempt from
What?
–One or more of the following:
• Minimum wage requirements
• Overtime premium
www.laborlawyers.com ● Phone (858) 597-9600
Overtime Pay
How to Calculate?
• Count hours worked over 40 in a workweek.*
– Exceptions: Alaska, California, Colorado, Nevada
• Pay 1.5 times the "regular rate" of pay (all pay ÷
all hours the pay covers)
• Include in the regular rate things like bonuses,
commissions, incentive pay and other kinds of
extra pay
www.laborlawyers.com ● Phone (858) 597-9600
Overtime Pay
• Some payments can be
excluded from the “regular
rate.” For example:
– Pay for un-worked holidays
– Pay for un-worked vacation
time
– “Discretionary” bonuses (be
careful with this!)
www.laborlawyers.com ● Phone (858) 597-9600
Exemptions
• The default is non-exempt – Employees must
receive overtime unless an exemption applies
• Exemptions are defined by law, not by
agreement, job descriptions, or either party’s
intention.
• Employer bears the burden to show that the
employee meets the exemption requirements
www.laborlawyers.com ● Phone (858) 597-9600
Why Does It Matter?
• Employee compensation and related costs are
often one of the largest cash outlays that
business owners face.
• This is compounded by the risk of making a
mistake on how individuals are compensated.
• Wage and hour lawsuits and administrative
charges against employers rise every year.
www.laborlawyers.com ● Phone (858) 597-9600
Why Does It Matter?
•
Back Wages
• Possible Individual Liability
•
Liquidated Damages
• Probably Not Insurable
•
Civil Money Penalties
• Injunctions
•
"Reasonable"
Attorney's Fees
• Criminal Penalties
www.laborlawyers.com ● Phone (858) 597-9600
White Collar
Exemptions
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White Collar Exemptions
• Executive
• Administrative
• Professional
– Each have a salary basis test
– Duties test
– Must meet both to qualify for
exemption
www.laborlawyers.com ● Phone (858) 597-9600
White Collar Exemptions
Requirement One: Salary
Basis Test
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White Collar Exemptions
• Salary Basis Test: Must be paid on “salary basis” of at
least:
$455 per week
$1971.67 per month
$23,660 per year
*state law may have different salary requirements
www.laborlawyers.com ● Phone (858) 597-9600
White Collar Exemptions
Salary Basis Test:
• Salary is a fixed, predetermined amount of
compensation
• Weekly salary must be paid without reduction for
quantity or quality of work for any week in which any time
was worked.
• No de minimus rule on “work performed” test
www.laborlawyers.com ● Phone (858) 597-9600
White Collar Exemptions
May dock in full-day increments for one or more days of
absence caused by:
• First and last week of employment
• Full-day absences for personal leave, vacation, and
religious observances
• Full-day absences for illness or accidents if employer
has bona fide paid leave program for sickness or
accident and employee has no accrued benefits
under that program
• Qualifying FMLA/CFRA leave can dock in smaller
increments
www.laborlawyers.com ● Phone (858) 597-9600
White Collar Exemptions
Requirement Two: Duties
Test
www.laborlawyers.com ● Phone (858) 597-9600
Duties Test
• Exemptions Relate To Individuals – Not To Job
Descriptions, Pay Classifications, Positions, Job
Groups, Conventional Wisdom, Etc.
• Detailed, Accurate, Current Job Information Is Essential.
• Must Be Based Upon Actual Work, Real Facts.
• Job Descriptions Do Not "Make Employees Exempt".
www.laborlawyers.com ● Phone (858) 597-9600
Job Descriptions
• Current, Accurate, Well-Written Ones Can Play A Role In
Defending Exempt Status.
• Unrealistic, Inaccurate, Puffed-up, Out-Of-Date, Or PoorlyWritten Job Descriptions Can:
• Cause Management To Make An Incorrect Decision
Regarding Exempt Status,
• Hurt Defense Efforts.
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White Collar Exemptions
• Customarily and Regularly Exercises Discretion and
Independent Judgment as to Matters of Significance:
– Authority to make independent choices without
immediate supervision about matters of significance.
– Contrast with the mere application of procedures and
policies.
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White Collar Exemptions
• “Primarily” engaged in duties which meet the test of the
exemption
• Actual duties must meet test, although employee
cannot underperform out of an exemption.
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Primary Duty
• Relative importance of exempt
duties.
• Percentage of time spent performing
exempt duties.
• Relative freedom from supervision.
• Comparison of salary vs. hourly pay
for non-exempt work.
www.laborlawyers.com ● Phone (858) 597-9600
White Collar Exemptions:
Executive
• Four-part duties test:
• Management of enterprise or subdivision;
• Supervises 2 or more full-time employees;
• Authority to hire and fire; and
• Customarily and regularly exercise
discretion and independent judgment
www.laborlawyers.com ● Phone (858) 597-9600
Staffing meets the “Two or More”
Requirement”
General Manager
Assistant
Manager
Full-time
Employee
Full-time
Employee
Assistant
Manager
Full-time
Employee
Assistant
Manager
Half-time
Employee
Half-time
Employee
Half-time
Employee
Half-time
Employee
Half-time
Employee
Half-time
Employee
www.laborlawyers.com ● Phone (858) 597-9600
White Collar Exemptions:
Executive
Who meets this duties test?
• General Manager?
• Tasting Room manager?
• Assistant Manager?
www.laborlawyers.com ● Phone (858) 597-9600
White Collar Exemptions:
Administrative
•
Three-part duties test:
• Office or non-manual work related to general business
operations of employer or customer
• Customarily and regularly exercise discretion and
independent judgment
• Regularly assists a proprietor or bona fide executive or
administrative employee; OR performs under only
general supervision work along specialized or technical
lines requiring special training, experience, or
knowledge; OR executes under only general
supervision special assignments and tasks.
www.laborlawyers.com ● Phone (858) 597-9600
White Collar Exemptions:
Administrative
Who meets these duties?
– Controller
– Human Resources professional
– Marketing manager
– Event coordinator?
www.laborlawyers.com ● Phone (858) 597-9600
White Collar Exemptions:
Professional & Creative
• Employee’s primary duty is the performance of work
requiring advanced knowledge, predominantly
intellectual in character
• Work that requires advanced knowledge in a field of
science or learning and is customarily acquired by a
prolonged course of specialized intellectual
instruction.
• Examples: law, medicine, theology, accounting,
engineering, architecture, teaching, pharmacy
OR
• Primary duty is performance of work requiring
invention, imagination, originality or talent in a
recognized field of artistic or creative endeavor
www.laborlawyers.com ● Phone (858) 597-9600
Highly Compensated Employee
• Earns annual compensation of at least
$100,000 or more, which includes at least
$455 per week on salary basis
• Primary duty includes performing office or
non-manual work
• Customarily and regularly performs at
least one of the exempt duties of an
exempt executive, administrative or
professional employee
www.laborlawyers.com ● Phone (858) 597-9600
What About Brewmaster/Head
Brewer?
• Level of importance to the business is not
a factor
• Usually engaging in manual work
• If large enough, and he or she is
managing at least two employees, then
can fit in executive exemption
– Management must be “primary duty”
www.laborlawyers.com ● Phone (858) 597-9600
OTHER
EXEMPTIONS
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New Jersey · New Orleans · Orlando · Philadelphia
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Outside-Sales Exemption
•
Primary duty: making sales, or obtaining orders for
contracts for services, products, or use of facilities for
which the customer or client will pay.
•
The employee is customarily and regularly engaged in
this activity away from the employer’s place of business.
•
More than occasional but less than constant,
normally done every work week
•
No minimum pay requirement
www.laborlawyers.com ● Phone (858) 597-9600
Family Members & Business
Owners
• Business that has as its only regular employees
the owner, parent, spouse, child or other
immediate family member, may not be an
enterprise engaged in commerce pursuant to
the FLSA.
• Business owners who own a bona fide 20%
equity interest and who are actively engaged in
management, are bona fide exempt employees.
www.laborlawyers.com ● Phone (858) 597-9600
The Big Picture





Regularly Reconsider Exemption Status:
• Work Evolves Over Time – Sometimes Away From Exempt
Status, Sometimes Towards It.
• New Positions Continually Introduced – No Assumptions About
Exemption Status!
Don't Fall For "Conventional Wisdom":
• "Everybody Treats These Jobs As Exempt."
• "The Employees Want To Be Exempt."
• "The Employee Agreed To Be Exempt.“
Quickly Consider What To Do To Correct Any Problems
Be Careful About How You Implement The Changes
Compliance Does Not Necessarily Mean Higher Wage Costs
www.laborlawyers.com ● Phone (858) 597-9600
The Big Picture

Whether A Particular Job Will Be Ruled Exempt Is Often
Uncertain.

To Some Extent, A Question Of Risk And Risk-Tolerance.

The "Scale" Approach: Ranking From 1 To 5.

•
(1) :
Successful Defense Prospects Are Low
•
(5) :
Successful Defense Prospects Are High
•
(2), (3), (4) :
Shades of Gray
Resist Any Urge To Rationalize Exempt Status – The Risk Of
Claims And The Risk Of Loss Are Real.
www.laborlawyers.com ● Phone (858) 597-9600
Fisher & Phillips LLP
ATTORNEYS AT LAW
Solutions at Work®
Final
Questions?
Presented by:
Megan Winter
Phone: (858) 597-9622
mwinter@laborlawyers.com
www.laborlawyers.com
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Irvine · Kansas City · Las Vegas · Los Angeles · Louisville · Memphis · New England · New Jersey · New Orleans
Orlando · Philadelphia · Phoenix
· Portland · San Diego
· San
www.laborlawyers.com
● Phone
(858)Francisco
597-9600 · Tampa · Washington, DC
Fisher & Phillips LLP
ATTORNEYS AT LAW
Solutions at Work®
Thank You
Presented by:
Megan Winter
Phone: (858) 597-9622
mwinter@laborlawyers.com
www.laborlawyers.com
Atlanta · Boston · Charlotte · Chicago · Cleveland · Columbia · Dallas · Denver · Fort Lauderdale · Houston
Irvine · Kansas City · Las Vegas · Los Angeles · Louisville · Memphis · New England · New Jersey · New Orleans
Orlando · Philadelphia · Phoenix
· Portland · San Diego
· San
www.laborlawyers.com
● Phone
(858)Francisco
597-9600 · Tampa · Washington, DC