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THIS WEEK’S E-TIP
FLSA Executive Exemption: Tips for Compliance Q&A |
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An employee must supervise two or more full-time employees to be
considered an exempt executive. But how many hours do those full-time
employees have to work?
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Q: We know that in order for an employee to
be considered an exempt executive, she must direct the work of two or
more full-time employees. Can you clarify how many hours are considered
full-time? Our hourly, nonexempt employees are considered full-time if
they work between 30 to 40 hours per week. If an executive employee is
supervising two 30-hour per week employees, will she meet the executive
exemption?
(Download free
Hours of Work model policy including HR best practices
and legal background.)
A: In order to be considered an exempt executive under the Fair Labor
Standards Act (FLSA), an employee must, among other things, customarily
and regularly direct the work of two or more full-time employees or their
equivalent. For example, according to the FLSA regulations, one full-time
employee plus two half-time employees equal two full-time employees.
Similarly, four half-time employees are considered equivalent to two
full-time employees. However, the FLSA exemption regulations do not
specify how many hours an employee must work in order to be considered
full-time under the executive exemption.
The Department of Labor (DOL) provides some guidance on its
interpretation of full-time employee in the preamble to the 2004 FLSA
exemption regulations (online at http://www.dol.gov/whd/regs/compliance/fairpay/preamble.pdf).
The preamble indicates that the DOL intended full-time employment to mean
40 hours a week. Here is what the DOL said in the preamble to the section
addressing full-time employees:
“The Department … stands by its current interpretation that an exempt
supervisor generally must direct a total of 80 employee-hours of work
each week. As the Wage and Hour Division’s Field Operations Handbook (FOH)
states, however, circumstances might justify lower standards. For
example, firms in some industries have standard workweeks of 37 1/2 hours
or 35 hours for their full-time employees. In such cases, supervision of
employees working a total of 70 or 75 hours in a workweek will constitute
the equivalent of two full-time employees. FOH 22c00.”
You can find a copy of the referenced DOL’s Field Operation Handbook
online at http://www.dol.gov/whd/FOH/FOH_Ch22.pdf. Note that the DOL’s
Web site indicates that Chapter 22 is being revised to reflect the 2004
exemption regulations, but that section 22c00 unlikely will change based
on the DOL’s statement in the preamble.
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The preamble to the regulations is considered
helpful in interpreting the regulations but does not hold the same
authority as if the full-time definition was stated in the actual
regulation. If your organization, and preferably your industry, defines
full-time employees to include those that work 30 or more hours a week,
then you may be able to argue that an employee who supervises two
employees working 30 or more hours a week meets the supervision
requirement of the executive exemption. However, you should discuss this
issue with an attorney who has an expertise in the FLSA exemptions, or
with the DOL.
Of course, the employee also must meet the other criteria for the
exemption described in 29 C.F.R. §§541.100, et seq., including that she
is paid on a salary or fee basis of at least $455 a week. In addition,
her primary duty must consist of the management of the enterprise in
which she is employed, or of a customarily recognized department or
subdivision of it. Examples of the “management of the enterprise”
include: interviewing, selecting, and training employees; setting and
adjusting employee pay and hours of work; directing the work of
employees; appraising employee productivity and efficiency for the
purpose of recommending promotions or other changes in status;
disciplining employees; planning the work; determining the type of
materials, supplies, machinery, equipment, or tools to be used or
merchandise to be bought, stocked, and sold; providing for the safety and
security of employees or the property; planning and controlling the
budget; and implementing legal compliance measures.
(Download free
Hours of Work model policy including HR best practices
and legal background.)
And, she must have the authority to hire or fire other employees, or
their suggestions and recommendations are given particular weight
concerning the hiring, firing, advancement, promotion, or any other
change of status of other employees. Factors to consider in determining
if suggestions and recommendations are given “particular weight” include
whether it is part of the employee’s job duties to make the suggestions
and recommendations, the frequency with which they are made or requested,
and the frequency with which they are relied on. |
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Content for your HR Matters
E-Tips newsletter is developed from our
flagship publication, the
Personnel Policy Manual System (PPMS).
Subscribers to the PPMS and HR Policy Answers on CD can find information
on the executive exemption in Hours of Work, Chapter 207, note 24.
If you don’t have access to the PPMS, but would like to have a free, no-
obligation 30-day review, go to:
www.ppspublishers.com/ppm-ez.htm
Or just give us a call at 1-800-437-3735. |
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Information provided in HR Matters E-Tips is researched and reviewed
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law attorneys. However, it is not intended as legal advice. Readers are
encouraged to seek appropriate legal or other professional advice.
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