PENALTIES

Misclassification of exempt or non-exempt status may result in a combination of fines, penalties, or the payment of unpaid wages, as imposed by the Department of Labor (DOL). Willful violations may result in criminal prosecution and employers may be fined up to $10,000. Second convictions may result in imprisonment. Employers who willfully or repeatedly violate the minimum wage or overtime pay provisions of the FLSA also are subject to civil money penalties of up to $1,100 for each violation.

Employees may file a complaint with the DOL within two years of the violation (three years in the case of a willful violation). Alternatively, they have the right to file an independent suit in court for unpaid overtime. These suits may also seek legal fees and liquidated damages.  The FSLA prohibits employers from taking adverse action against any employee who files a complaint regarding minimum wage or overtime violations or participates in an investigation initiated by the DOL.  The DOL may audit an employer at any time. Many investigations are initiated by employee complaints.  Employers should be aware that an investigation can expand beyond the initial complaint to all wage and hour practices.

•          EXEMPT

•          Exempt executives generally decide when to perform nonexempt duties and remain responsible for the success or failure of business operations.

•          Factors include, but are not limited to:

•          Whether the employee has authority to commit the employer in matters that have significant financial impact

•          Whether the employee has authority to waive or deviate from established policies and procedures without prior approval

•          Whether the employee has authority to negotiate and bind the company on significant matters

•          Whether the employee provides consultation or expert advice to management

•          Whether the employee is involved in planning long- or short-term business objectives

•          Whether the employee investigates and resolves matters of significance on behalf of management

•          Whether the employee represents the company in handling complaints, arbitrating disputes or resolving grievances

•          NON-EXEMPT

•          Nonexempt employees generally are directed by a supervisor to perform the exempt work or perform the exempt work for defined time periods.

•          Discretion and independent judgment does not include:

•          Applying well-established techniques, procedures or specific standards described in manuals or other sources

•          Clerical or secretarial work

•          Recording or tabulating data

•          An employee who leads a team of other employees assigned to complete major projects

•          Executive assistant or administrative assistant to a business owner or senior executive of a large business who has been delegated authority regarding matters of significance

•          Management consultants who study the operations of a business and propose changes in organization

•          Performing mechanical, repetitive, recurrent or routine work

•          Concurrent performance of exempt and nonexempt work does not automatically disqualify an employee from exemption.

•          Whose primary duty is 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

•          Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

•          The comparison and evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered

•          Must be exercised with respect to “matters of significance,” which refers to the level of importance or consequence of the work performed

•          Discretion and independent business judgment

•          Decisions and recommendations may be reviewed at a higher level and, upon occasion, revised or reversed

•          Predominantly intellectual in character

•          Includes work requiring the consistent exercise of discretion and judgment

•          The advanced knowledge is generally used to analyze, interpret or make deductions from varying facts or circumstances

•          Not work involving routine mental, manual, mechanical, or physical work

•          Cannot be attained at the high school level

•          The learned professional exemption is not available for occupations that may be performed with:

•          Only the general knowledge acquired by an academic degree in any field

•          Knowledge acquired through an apprenticeship

•          Training in the performance of routine mental, manual, mechanical or physical processes

•          Creative professional exemption

•          The exemption also does not apply to occupations in which most employees acquire skill by experience

•          The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor

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