Wage and Hour Law:
Your Company’s Not Exempt
from Litigation
Presented by Robert E. Lewis, Ph.D.
and Toni S. Locklear, Ph.D.
 2015 APTMetrics
About APTMetrics
Global Talent Management Solutions Provider Comprised of:
• Ph.D. industrial/organizational psychologists
• Human resource consultants
• Information technology specialists
What Sets APTMetrics Apart:
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Professional integrity
Evidence-based approach
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business by the US SBA
Global
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Our Areas of Expertise
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Agenda
• Introduction to
wage-hour law
• Why care about
wage-hour laws?
• Difficulties
implementing
wage-hour laws
• How to limit risks
associated with
wage-hour laws
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Introduction to Wage-Hour Law
• What is regulated by wage-hour law?
• Federal law:
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overtime pay
minimum wage
child labor
record-keeping requirements
• State law:
• meal and rest breaks
• discharge notices
• pay upon discharge
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Introduction to Wage-Hour Law
• Key issue in wage-hour litigation: Exemption
• Exempt—not subject to overtime pay
regulations
• Non-exempt—subject to overtime pay
regulations
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Exemption Standards
• Based on the work as it is done
• Individual determination
• Exemption types:
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Executive
Administrative
Professional
Computer Professional
Outside Sales
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Exemption Standards
• Key work tests:
• Salary level test
• Duties test
• Discretion
• Independent judgment
• Authority
• Hire/fire authority
• Prolonged course of specialized instruction
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Polling Question
1. What percent of jobs in your company are
classified as exempt from federal and state wagehour laws?
a.
b.
c.
d.
e.
f.
Less than 20%
20 – 40%
41 – 60%
61 – 80%
81 - 100%
I don’t know
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Little Known Facts
• Classifying jobs as exempt is voluntary
• No requirement to claim exemption for any job
• Employers bear the burden of proof when
claiming exemption
• The Department of Labor
estimates 70 percent
of employers are not in
compliance with the
FLSA in some way
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Wage-Hour Issues are Important
• Lawsuits are on the rise
• Wage hour suits outpace others (e.g., discrimination)
• 77 percent rise in lawsuits filed between 2004
and 2009
• Multi-million dollar settlements—
• $1.77 billion in settlements in 2007-2010
• Average settlement of $12.8 million per case
• Damages
• Back pay for lost wages, interest,
liquidated damages, and attorneys’ fees
• Treble damages in some states
• Changing exemption status
can create litigation risk
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Difficulties Implementing Wage-Hour
Laws
• Wage-hour administration crosses organizational
lines
• The HR, finance, legal functions generally have some responsibility
• Little coordination among them
• Key players: legal and HR
• Work is changing
• Leaner staffing levels require managers to do more
“non-managerial” work
• Laws require interpretation
• What is “work time”?
• When is doing non-management work “essential” to doing
management work?
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Polling Question
2. Which jobs do you wrestle with most regarding
wage-hour issues?
a.
b.
c.
d.
e.
Assistant managers/team leaders
Computer technicians
Accountants
Project managers
Other
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Key Wage-Hour Concerns
• Employees working off the clock
• Ensuring that employees take meal breaks
• Determining a job’s exemption status
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Level of Effectiveness
Reactions to Wage-Hour Challenges
• Delegate wage-hour compliance to
field/district management
• Conduct compensation/market analyses
• Empower Staffing to make exemption
decisions at hire
• Create policy manual section on wagehour compliance
• Regular audits of wage-hour
policies/implications
• Train managers on managing meal breaks
and overtime
• Conduct job analysis
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Case Study – Guinup v. Petr-All Petroleum
Are retail store managers entitled to overtime pay?
• The Plaintiff’s Claim -- the company misclassified all of its store
managers as exempt from both the FLSA and state wage-hour law
• Plaintiff managed a convenience store/gas station in NY state
• Plaintiff spent:
• 80% of her time on nonexempt duties such as counting
cigarettes and verifying gas readings
• 20% of her time on exempt duties such as scheduling,
supervising, and evaluating employees
• Most of her day free from supervision; the regional manager
was generally not in the store
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Limiting the Risk of Wage-Hour Issues
• Knowing the work that is done is the number one way to
limit wage-hour risk
• Job Analysis is the preferred method for documenting work
requirements
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Structured
Defensible
Drives coordination
Documents critical job components
• Frequency and importance of work activities
• Entry requirements for knowledge, skills and abilities
• Level of discretion and autonomy
• Policy creation versus enforcement versus execution
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Limiting the Risk of Wage-Hour Issues
• Job analysis process
• Determine jobs that present risk
• Collect structured, verifiable data
• Develop a comprehensive work activity and knowledge/skill/ability
list with job experts
• With your employment attorney, decide which activities are exempt
• Identify the ratings you need based on your state (importance, time
spent, level of autonomy, etc.)
• Administer the survey to the entire population
• Analyze the data, including for exemption implications
• Means and standard deviations
• Illustrate the findings using visuals to facilitate comparing jobs
on relevant dimensions
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Limiting the Risk of Wage-Hour Issues
Job Analysis Results
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How important are these job activities for the Manager job?
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3 – Critically important– this activity has significant impact on profit, performance, or safety
2– Important-- poor performance on this activity hinders performance
1-- Minor Importance– this activity must be done but has little impact on profit, performance or safety
0– Not Applicable– this activity is not performed in this job
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Limiting the Risk of Wage-Hour Issues
Job Analysis Results
• Including both exempt and non-exempt activities allows
you to assess the degree to which job respondents meet
exemption criteria
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Limiting the Risk of Wage-Hour Issues
• Develop job descriptions based on the job analysis
• Key activities and
responsibilities
• Key and required KSAs
• Minimum and preferred
qualifications
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Job Profiles
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Job Profiles
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Job Profiles
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Limiting the Risk of Wage-Hour Issues
• HR Audit
• Policies—are wage-hour considerations reflected in policies?
• Use of pagers and smartphones for email access
• On-call duty for computer operators/technicians
• Use of company-owned vehicles
• Practices—are processes in effect for managing issues
on an ongoing basis?
• Grievance process for work time complaints
• Active training program for managers to understand their
responsibilities
• Cross-functional committee responsible for wage-hour
issues that meets regularly
• Regular employee survey to determine how employees
spend their time in important work activities
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Summary
• Wage-hour issues require cross-functional
management
• Typically from Legal, HR and Finance
• Knowing the job is your best proactive and defensive
measure
• A job analysis is a court-tested method of determining status
• Changing an employee’s exemption status without knowing and
changing activities/skills is a recipe for litigation
• Audit your policies and practices to ensure
coordination and proactive measurement
• Policies to ensure guidance
• Practices to ensure execution
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Contact Information
APTMetrics, Inc.
One Thorndal Circle
Second Floor
Darien, CT 06820
203.655.7779
TalentSolutions@APTMetrics.com
www.APTMetrics.com
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Strategies
for Talent
Management.
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