Overtime Exemptions and Salaried Employees

Overtime Exemptions and Salaried Employees

| Nov 9, 2020 | Firm News

There are any number of generally-applicable laws which nevertheless contain so many exceptions and caveats that it can be surprising that they end up applying to anyone at all. This can result in cases where Defendants, rather than arguing the facts of a particular case, merely contend that the particular law at issue just doesn’t apply to the Plaintiff at all. An illustrative example of this which caught my eye recently is the Arkansas Eastern District court case of Thomas et al v. Viskase Companies Inc. No. 3:19-cv-330. The company, facing allegations of violating the Fair Labor Standards Act (FLSA), attacked the Complaint on various grounds, including that one of the Plaintiffs was not actually covered by the Act’s protections. On October 30th, the Judge disagreed.

The case itself is actually a two-part collective action claim. The first claim involved the hourly employees, and the manner in which Viskase rounds it’s time clocks up and down depending on when an employees is clocking in or out. Viskase argued that the 57 different members of the class of hourly employees are too differently situated to be presenting a collective claim, but the Court ruled that the differences in each individual employees situation was more about the specific amount of damages that they were due rather than the merits of the wage violation.

Perhaps more interesting is the second claim in the complaint: a collective group of salaried shift supervisors who contend that they were misclassified as exempt Executive employees when they should have been eligible for overtime. Well, more precisely, since exactly one Shift Supervisor actually joined the suit, the court could be more specific: a woman named Arguster Williams is contending that she is entitled to overtime under the FLSA. Viskase argued that Williams falls within the so-called executive exemption, one of a long list on exempt categories of employees that also includes administrative workers, professionals (including people like teachers), outside salespeople, some agricultural workers, camp counselors, small newspaper workers, switchboard operators, border patrol agents, and others…(you get the picture).

Of course, the first three categories of executives, professionals, and administrative workers are the biggest categories here. If one is deemed an Executive, the federal minimum wage and maximum hours regulations just don’t apply to them, so one could see why a company would want to cram as many employees into these categories as they can.

In the case of Ms. Williams, she actually did fit some of the requirements for an executive employee as laid out in federal regulations at 29 CFR § 541.100: (1) she was paid a salary, (2) her primary duty was management, (3) and she regularly oversaw two or more other employees. Where the court disagreed with Viskase was the fourth requirement: whether or not she had authority to hire or fire other employees or whether her suggestions and recommendations on personnel decisions was given particular weight.

Viskase noted that Williams occasionally participated in the interview process, and her niece and nephew had been hired at that particular plant after she recommended them after a plant-wide call for recruiting new employees. This, they argued, indicated her opinion had the weight to put her into the category of an executive employee.

The Court shot down this argument in the Motion, although the judge left open the possibility that Viskase could still succeed in its case at trial. It pointed out that although Williams got pulled into interviews about once a month when one of the upper management employees wasn’t available, and she gave her opinion on the merit of the new hires she interviewed, the company didn’t always follow the recommendation that she made. That is, there wasn’t any real evidence that they gave her opinion much weight in hiring decisions. As to her two family members, Viskase didn’t really produce any clear evidence that her referral made any real difference other than drawing Viskase’ s attention to their applications.

So Williams case goes forward, along with the (larger) group of hourly employees. These sorts of statutory exceptions and pitfalls exist in every area of law, and drawing the distinctions to navigate them is why having skilled legal counsel is so important.

-Attorney Travis Dunn