Under the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL) most employees “on salary” earning less than $100,000 per year are entitled to overtime. Frequently, employers pay an employee a fixed salary and require them to work more than 40 hours per week in order to save on labor costs – specifically, overtime pay. However, in order for an employee to be labeled as “exempt” from overtime pay, their job duties must satisfy the strict criteria set forth under the FLSA and the NYLL. Some of the common exemptions that employers claim for employees so that they can avoid paying overtime are the “executive” and “administrative” exemptions. Fitapelli & Schaffer, LLP has represented numerous employees who have been misclassified as exempt from overtime pay. Often time’s salaried assistant managers are misclassified by employers as exempt from overtime pay.
According to the Executive Exemption under the FLSA and NYLL, in order for an assistant manager to be considered exempt from the overtime pay requirements they would have to supervise at least two other full-time employees and have the authority to hire and fire employees, or at the very least, they’re recommendations as to hiring and/or firing must be given significant weight. For example, an assistant manager who often makes recommendations that employees be hired or fired, but that are never followed, most likely does not fulfill this prong of the test. Moreover, an assistant manager whose suggestions are taken into account and often followed should also be able to make recommendations for promotions which are taken seriously as well. Other duties of an exempt assistant manager include, but are not limited to: interviewing prospective employees, training new employees, scheduling employees, and disciplining employees. It is important to remember that the assistant manager must be paid a fixed salary, which in New York must be at least $675.00 per week, in addition to these duties to be considered an exempt executive under the FLSA and NYLL.
For example, a salaried assistant manager that works at a warehouse and spends a majority of their time performing manual labor, and only a small portion of their time supervising other employees without any real authority to hire or fire, may be working in excess of 40 hours per week, but does not receive any overtime pay. According to the FLSA and NYLL, this salaried assistant manager could very well be misclassified as an exempt employee, and therefore entitled to unpaid overtime wages. Similarly, a salaried assistant manager working at a restaurant that spends most of their day performing the same work as the hourly employees, including, but not limited to, stocking, greeting, cleaning, seating, and serving customers, may also be entitled to overtime pay. If the salaried assistant manager at the restaurant works over 40 hours per work week, does not have the authority to schedule, hire, fire, promote, demote, or conduct interviews of potential employees, the salaried assistant manager may also have misclassification claims against their employer. It is important to note that exemption determination depends on the tasks performed and the authority given to the salaried assistant manager, not simply what title the employee is given.
Another exemption under the FLSA and NYLL is the Administrative Exemption, which also requires an employee to meet certain criteria in order to be considered exempt. In order to be considered exempt under the Administrative Exemption, an employee has to satisfy all of the following tests: (1) the employee is compensated on a salary or fee basis at a rate not less than $455 per week (currently not less than $656.25 per week in New York, and going up to $675.00 after 12/31/15);
(2) the employee’s primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer; and (3) the employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
A fixed salary means an employee receives a pre-set amount either weekly, monthly, annually, or less frequently. This pre-set amount is given to the employee each pay period and is neither reduced, nor increased based on the number of hours worked. An exempt employee would receive the full amount for any week that they perform work, regardless of the number of days or hours worked, as per the FLSA and NYLL.
The “primary duty” of an exempt employee is considered the most important duty that the employee performs and is determined after taking into account the employee’s role in its entirety. To be performing work that is “directly related to management or general business operations” means to be handling job duties that assist with running or servicing the business directly, such as tax, finance, accounting, budgeting, quality control, advertising, marketing, human resources, internet and database administration and more. An employee who works on a manufacturing production line or sells a product or service in a retail establishment does not perform work directly related to management or general business operations. Some examples of employees who may perform work directly related to the management or general business operations of the employer’s customers are tax experts or financial consultants.
An employee who can “exercise discretion and independent judgment” is someone who has the authority to make an independent choice, free from any immediate direction or supervision. To determine whether an employee satisfies this requires the balancing of several factors, including, but not limited to, whether the employee has the authority to create and implement management policies or operating practices, whether the employee performs major assignments during the normal course of employment, whether the employee can perform work that substantially affects the employer and the employer’s finances, and whether the employee has the authority to waive or deviate from the established procedures without asking for approval. “Matters of significance” refers to any operations that are of utmost importance. However, it is important to note that an employee does not necessarily exercise discretion and independent judgment with respect to matters of significance because they operate expensive machinery or their failure to perform their job will result in financial losses.
Whether a salaried assistant manager satisfies this prong of the administrative exemption requires an in-depth examination into the aspects of their job. Regardless of the title allotted to the employee by their employer, you may still qualify as non-exempt and may potentially have claims against your employer if you do not satisfy all of these requirements. Some examples of employees that are commonly misclassified as exempt include, front desk managers, front desk supervisors, assistant store managers, and assistant restaurant managers. If you feel you have been misclassified by your employer, are entitled to unpaid overtime wages, or have more questions regarding these topics, please contact the employment lawyers at Fitapelli & Schaffer, LLP at (212) 300-0375 for a free consultation.
To read more about misclassification, overtime, and exemptions, please visit our website www.fslawfirm.com.
This web site is designed for general information only. The information presented at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.
Please do not send documents or include any confidential or sensitive information in this form. This form sends information by non-encrypted e-mail which is not secure.
Submitting this form does not create a lawyer/client relationship.
Do you agree with the terms?AGREE DISAGREE