|
Fact Sheet:
Administrative Duties Test Court Decision
The FLSA requires that most employees in
the United States be paid at least the federal minimum wage for all hour
worked and overtime pay at time and one-half the regular rate of pay for
all hours worked over 40 in a workweek. However, Section 13(a)(1) of
the FLSA provides an exemption from both minimum wage and overtime pay
for employees employed as bona fide executive, administrative,
professional and outside sales employees. Section 13(a)(1) and Section
13(a)(17) also exempts certain computer employees. To qualify for
exemption, employees must meet certain tests regarding their job duties
and be paid on a salary basis at not less than $455 per week.
Equally Protective
Duties Tests; Exemption Not Based on Job Titles
The standard duties tests of the final
regulations are effective August 23, 2004, and are as protective as, if
not more protective than, the short duties test of the old regulations.
Prior to the issuance of these final regulations, the last major
revision of the duties tests occurred in 1949. The duties tests of the
old regulations were complicated and contained difficult provisions to
apply. These old regulations were based upon a work place that has
experienced dramatic transformations and were not relevant to the work
environment of the 21st century. The final regulations use
objective, plain language so that employees can understand their rights
to overtime pay and employers can know their responsibilities for
overtime pay.
Recently, the United States District
Court for the District of Columbia confirmed that the standard duties
tests for the administrative exemption of the final regulations are
substantially the same as those in the old regulation. In a case
brought against Government Employees Insurance Company (GEICO) under the
old regulation, insurance claims adjusters were seeking overtime pay.
GEICO claimed it was not liable for any overtime pay because these
adjusters were exempt administrative employees. The court looked to the
final regulations that are effective August 23, 2004 for guidance in
concluding that GEICO improperly classified the employees as
administratively exempt. Even though the final regulations were not in
effect when the court announced its decision, it found that “they are
instructive with respect to the Department of Labor’s interpretation of
the requirements of the administrative exemption.” The court also
observed that “[t]he general criteria for employees employed in a bona
fide administrative capacity are essentially the same under the
August 2004 regulations as in the current regulations.” Thus, this
decision confirms that the standard administrative duties tests of the
final regulations are equally protective as the old regulations.
The decision also is instructive because
it confirms that the exemption does not apply based upon job title
alone, but rather that a case-by-case assessment of an employee’s job
duties is required. Thus, there is no blanket exemption for claims
adjusters, and when such an individualized inquiry is made, some claims
adjusters will fail to satisfy the tests for exemption.
 |
