Pursuant to the FLSA, employees who are not exempt must be paid at a rate of one and one half times their regular rate of pay for all hours worked in excess of 40 hours in any workweek.

One of the biggest issues to arise under the FLSA is whether the work you do is considered “exempt.” Generally, exemptions under the FLSA fall into three main categories – executive, administrative, and professional.

In Novartis, the company asserted that the representatives were covered by the administrative exemption as outside sales employees. Under the FLSA, an “outside salesman” is an employee whose primary duty is make sales or “obtaining order of contracts for services.”

Judge Amayla L. Kearse, writing for the U.S. Court of Appeals for the Second Circuit disagreed, reasoning that although a pharmaceutical representative may be “actively engaged in persuading physicians to prescribe a drug” the reps were not specifically making sales. As a result, the reps did not fit within the “outside salesman” definition and were not exempt. Judge Kearse noted that although her interpretation differed from other federal district courts’, it more closely followed the Secretary of Labor’s interpretation of this provision.

Further, Kearse noted that the skills characterized by the company as evidence of the reps’ exercise of discretion were actually developed and/or honed in Novartis training sessions. These skills were not evidence of independent thinking and judgment, but rather actions further bolstering the reps’ claims that their work was strictly controlled by the company.

Determining whether a particular job is covered by the FLSA can be confusing. As this case demonstrates, even federal courts may disagree on what job duties are considered exempt.

The current federal minimum wage is $6.55 per hour, although in a few states – unfortunately not Georgia – the minimum wage is higher.

In Luiken v. Domino’s Pizza, the court reviewed whether a compensation scheme that was based certain factors such as drivers’ fuel economy, maintenance, operating and other fixed costs but did not reimburse for actual delivery costs ended up paying drivers less than the federal minimum wage. In 2009, the delivery driver filed a suit on behalf of current and former delivery drivers from 2006 to the present for unpaid wages and liquidated damages.

Domino's argued that the drivers’ reimbursement rates varied by region and should not be allowed to proceed as a class. The court disagreed, concluding that all drivers were subject to the same nationwide policy. The court also stated that it was exercising its discretion to provide notice to all potential class members due to the large size and geographic scope affected.

Often a company may follow a policy that on its face seems fair, but in practice violates the FLSA – either by denying its workers minimum wage or all overtime compensation due. In Luiken, the policy in question met federal minimum wage standards on its face, but on closer look, the actual wages earned fell below the minimum wage requirements.

The FLSA provides that all employees who are not exempt from the FLSA must be paid overtime benefits at a rate of one and one half times their regular rate of pay for all hours worked in excess of 40 hours in a work week.

In Alvarado, the window washers often worked between 60 and 70 hours per week, but never received overtime premiums. Despite the employees’ demands for payment, the employer asserted that the window washers were exempt from the FLSA because they were partially paid on a commission-based compensation system. Under the FLSA, employees who receive more than half their compensation in the form of “commissions on goods or services” are generally not entitled to overtime payment.

Determining whether a “commission-based” compensation scheme exists is not always clear-cut. Case law has found a commission-based system exists where compensation is linked to the price charged to the consumer for the good or service being sold and where compensation is “related to the value of the service performed.”

Although some evidence indicated that the window washers were paid a commission – i.e. the window-washers were paid on a point system rather than an hourly wage – additional evidence showed that the employer was inconsistent in charging customers in this manner. As a result, the federal judge denied the employer’s motion for summary judgment and allow

Pursuant to the FLSA, Sec. 29 U.S.C. Sec. 203(o), under certain circumstances employers may exclude the time spent changing clothes from employee’s compensable time. Previous Bush-era interpretations concluded that the exclusion extended to protective clothing.

Stating that these interpretations should no longer be relied upon, the WHD administrator concluded that employers are not excused from paying employees for time spent “donning and doffing” protective equipment that is “required by law, by the employer, or the nature of the job.”

This interpretation follows several recent cases that have evaluated whether individuals – such as firefighters – are entitled to pay for time spent donning and doffing.

Emphasizing the difference between the plain meaning of the term “clothes” and the protective equipment worn by workers such as in the meat packing industry, the WHD administrator determined that compensating those who must don and doff protective clothing and equipment “adheres most closely” to the guidance provided by statutory language and legislative history.

In a recent case, a federal court in Indiana ruled that FedEx workers are employees of the company and not independent contractors.

Applying Illinois law, the court determined that the FedEx workers duties and actions were in furtherance of FedEx’s course of business, and hence not excluded from the legal definition of employee.

In making its determination, the court reasoned that such factors as the requirement that the drivers wear FedEx uniforms and drive trucks displaying FedEx logos, along with testimony from FedEx officials that drivers are the “centerpiece” of the workforce created an employment relationship. FedEx’s relationship with its drivers could be distinguished from other messenger delivery companies wherein the drivers were allowed to work for other delivery companies and weren’t required to wear uniforms.

FedEx drivers were also subject to other rules such as being required to pick up packages at a FedEx terminal, meet company approval, and follow a prescribed delivery list. Each one of these actions showed a connection between the worker’s action and the company. Hence, the court determined their appropriate classification was as employees and not independent contractors.

Often the best and most efficient way to seek redress for the same discriminatory action across a group of employees is to file a collective action. In order to bring a collective action, the plaintiffs must demonstrate that all of the potential members were “similarly situated.”

In a recent case, University of Phoenix enrollment counselors sought to bring a class action based on overtime violations of the Fair Labor Standards Act against the University’s parent company, Apollo Group, Inc.

At campuses across the country, counselors were required to meet specific performance goals each week. The counselors were told that they would not be compensated for overtime if it took more than 40 hours to complete these tasks. In fact, plaintiffs were told they had to meet certain goals and they [the managers] didn’t care how they met them.”

In making its determination on the collective action, the U.S. District Court for the Eastern District of Pennsylvania considered whether the counselors fit the “similarly situated” criteria.

Factors considered included:
• Consistent performance requirements of employees throughout the company;
• Similar overtime practices at all locations; and
• Difficulty by employees at all campuses completing required tasks during an eight-hour workday.

Here, the court held that the evidence presented was sufficient to demonstrate that the class members experienced an injury resulting from an employment policy affecting all members in a similar fashion. As a result, conditional certification was justified, notwithstanding the existence of a company policy providing for overtime compensation.

Pursuant to the FLSA, all non-exempt employees must be paid at a rate of one and one half times their regular rate of pay for all hours worked in excess of 40 hours in any workweek. “Regular rate” is defined under the act as “all remuneration for employment.” The overtime rate then become s a mathematical computation based on a factual determination.

In Gagnon v. United Technisource, Inc. an employee – a skilled craftsman – was paid $5.50 per hour plus a $12.50 per diem per hour payment by a staffing company. The typical rate of pay for his position was as much as $24 per hour.

The lower court acknowledged that in some instances per diem payments are not included in the regular rate of pay analysis. In this instance however, the court was suspicious that the payment schedule was designed to circumvent overtime laws. A skilled craftsman typically earns 3-4 times the rate of pay offered by the staffing company. The court noted that they were “troubled by the fact that the combined ‘straight time’ and ‘per diem’ hourly rates matched the prevailing wages.”

The court likened this fee arrangement to other situations where employers artificially lower an employee’s regular rate of pay as a bonus in order to avoid paying a premium for overtime work.

As a result, the lower court held it was a violation not to include the per diem payments as part of the “regular rate of pay” calculation. The 5th Circuit affirmed.

Overtime premiums can be a great source of extra income to employees. However, in order to avoid paying employees the total compensation due, some employers and companies try to alter how overtime is calculated. In most cases when an employer mischaracterizes your rate of pay, they have violated the FLSA.

Here, a group of 54 paramedics brought a collective action under the Fair Labor Standards Act (the “FLSA”) based on the City of Chicago’s miscalculation of overtime pay. The case was later certified and more than 300 paramedics consented to the action. Several types of counting errors were alleged, resulting in 10 different subclaims. Although each paramedic alleged a miscalculation of pay, different combinations of challenged practices affected the amount owed to each individual.

The District Court dismissed the collective action as being “hopelessly heterogeneous,” holding that the paramedics were not “similarly situated” because each individual’s matter raised a different combination of the 10 subclaims. The District Court also found that although paramedics were not required to pursue claims using grievance/arbitration procedures, arbitration would be more efficient way to resolve the disputes.

The 7th Circuit Court of Appeals reversed, finding that if the paramedics prove liability, recovery will be based on a mathematical formula common to all class members. As a result, it was error for the District Court to dismiss the matter.

Often an employer engages in a common type of inappropriate or adverse behavior – in this case allegedly intentionally failing to pay paramedics overtime rightfully due – that affects a large group of employees similarly. Here each employee allegedly received less pay than they were entitled to – although the specific calculation of how much may be a based on a formula. If you are part of a large group of workers who have been denied compensation, including overtime or benefits, you may be entitled to file a claim for violation of the FLSA either individually or collectively.

The court determined that he was not, in part because Thomas failed to satisfy the “nearly identical” standard. This standard provides that a prima facie case for race discrimination exists where an employee of a protected class can demonstrate he received less favorable treatment in a “nearly identical circumstance” than an employee from a non-protected class. Even if he had met the “nearly identical” burden, the court noted that Thomas’ repeated failure to follow the department’s overtime policy exposed it to liability under the Fair Labor Standards Act (the “FLSA”) and created a legitimate, non-discriminatory reason for termination.

Here – a worker’s actions by doing more than what was required of him cost him his job. Under the FLSA, whenever an employer requires or “suffers” the employee to work overtime house, non-exempt employees must receive over-time compensation (typically at a rate of one and one-half times your rate of pay). Employers are also permitted not to allow overtime. Well-intentioned employees who work extra hours without reporting it, may ultimately end up out of work if these hours have not been approved – even if the hours benefit the employer.

Before you jeopardize your job by working overtime hours, it’s best to check with your employer and ask about their overtime policy. Working too much – without proper authorization - may cost you your job. For questions about overtime and the FLSA or any other employment law issues, please contact Buckley & Klein, LLP, a Georgia law firm dedicated to protecting employee’s rights.

Under the FLSA, employers are required to pay “non-exempt” workers overtime, typically at a rate of 1 ½ times your hourly rate for each hour over 40 worked in a work week. Alternatively, if you perform certain types of work, then you are “exempt” from overtime laws and your employer is not required to pay your overtime, regardless of how many hours you work.

In J.P. Morgan Chase & Co. v. Whalen, the 2d Circuit Court of Appeals determined that a home equity underwriter – Andrew Whalen – was entitled to overtime pay. The court’s analysis focused on the distinction between “production” and “administrative” work duties. Where an employee’s primary duties are considered “production” i.e. related to the production of goods and services, in most cases no exemptions apply and overtime must be paid. However if the duties are administrative – i.e. directly related to the management or general business operations of the company and involving the exercise of discretion or independent judgment with respect to important company business, then an employee may be considered exempt and not entitled to overtime.

In Whalen, the underwriter was required to follow a detailed “credit guide” to determine whether to approve loan. The 2d Circuit Court reasoned that while performing these duties, Whalen used little ‘independent judgment’ or discretion, rather his work fell under the category of production work - i.e. he was “directly engaged in creating the ‘goods’ – loans and other financial services- produced and sold by Chase.” As a result, he was entitled to overtime compensation. On May 3rd, the S.Ct. declined to review this ruling.

As a result, being classified as an independent contractor or as an employee can have significant legal and financial implications. Many employers either mistakenly or intentionally misclassify employees as independent contractors or non-employees in order to avoid paying adequate wages and overtime.

In an attempt to rectify this problem, lawmakers have recently introduced the “Employee Misclassification Prevention Act” aimed at reducing misclassification errors.

The Act includes the following provisions:

• Employers must keep accurate records of each workers’ status and clarifying that it’s a violation of the FLSA to misclassify workers;
• Increased fines for misclassification;
• Workers must be notified of their classification;
• Creation of an “employee’s rights website” containing relevant information concerning state and federal wage and hour issues;
• Workers who are discriminated/retaliated against for requesting proper classification will be protected;
• Mandating state audits of classifications along with DOL oversight; and
• Directing DOL to audit employers in industries with routinely misclassified employees.

Under the FLSA, activities, which are an “integral and indispensable part” of an employee’s workday, are compensable. Here, police officers filed a claim against the City of Mesa for time spent changing into their uniforms at the police station.
In determining whether the officers were entitled to compensation, the court focused primarily on the location where the changing occurred. The court cited a Department of Labor memorandum that indicated “donning and doffing of required gear is only considered part of the work day where the job mandates that the changing takes place on the employer’s premises.”

Here, because the police officers were not required to change at the station but have the option of changing at home, the 9th circuit determined that the police officers were not entitled to compensation.

Further, the court noted the uniforms the officers were changing into were “generic protective gear” and not specific uniforms designed for the employer’s benefit.

Generally, under the FLSA, employers must pay employees overtime at the rate of time-and-a-half times their regular rate of pay for all hours in excess of 40 in any work week. However, public agencies engaged in “fire protection” and “law enforcement” are subject to different rules. Under federal law, firefighters must work up to 212 hours in a 28-day period, whereas law enforcement employees need only work 171 hours. (29 U.S.C. Sec. 207(k)).

In Creemens v. City of Montgomery, 661 F.Supp.2d 1253 (M.D. Ala. 2009) the 11th U.S. Circuit Court of Appeals reviewed whether a 1999 amendment which specifically defined “fire protection” and “law enforcement” activities rendered a longstanding Department of Labor regulation obsolete. The regulation, 29 C.F.R. Sec. 553.213(b), provides that for those employees performing both fire protection and law enforcement activities, overtime is determined by how the employee spends the majority of his work time during the work period.

Last year, the lower court determined that the previous regulation was no longer valid. Cremeens v. City of Montgomery, 661 F.Supp.2d 1253 (M.D. Ala. 2009). However, earlier this month the 11th Circuit reversed this decision reasoning that the new amendment simply defined what constitutes “fire protection” and “law enforcement activities,” but didn’t impact how overtime law was applied to these job categories. As such, no conflict exists between the amendment and the regulation. Hence in this case, determining if the arson investigators are entitled to overtime, and how much, depends on how they spent the majority of their time during the pay period.

The DOL issued its opinion after reviewing whether a mortgage loan officer was “exempt” based on the 3-part test set forth by Federal Regulations. This test asks the following questions:
1) Is the employee paid more than $455 a week?
2) Is the employee’s “primary duty the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers? and
3) Does the employee’s primary duty include the exercise of discretion and independent judgment with respect to matters of significance? 29 C.F.R. Sec. 541.200.

In considering the status of mortgage loan officers, the DOL focused primarily on the second question – are mortgage loan officer’s duties are directly related to the management or general business operations of the company?

The DOL determined that a mortgage loan officer’s main job function is sales – each action that they take such as analyzing financial data, is in furtherance of making a sale. Determining whether a customer qualifies for a mortgage loan and the benefits of different types of loan products, relates to the sale of a product, for which the mortgage broker or loan officer receives a commission. These actions are not part of the internal operation of the company – they are not servicing the company itself or providing advice to the company. Rather, they are selling a product and “fall squarely on the production (non-exempt) side of the business.” Further, to the extent mortgage loan officers provide customers advice for their personal needs and not for “management of general business operation” these actions are not exempt.

As Georgia employment attorneys, we help or clients ensure they receive fair compensation. Many times, employees are denied overtime compensation because their employer has told them they are exempt. If you believe you are entitled to overtime pay, but are unsure if you qualify, please contact our offices.