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Workers still have rights
Change in classification affects employees, employers


May 27, 2009

In this era of corporate belt-tightening at the expense of Wisconsin’s white-collar workers, employees need to understand their rights and employer expectations as defined by the Fair Labor Standards Act of 1938.

When the FLSA was amended by the Republican Congress and President George W. Bush in August 2004, few realized the impact it would immediately make for all types of salaried employees. The amendment allowed companies to broaden the definition of employees who qualify as "exempt" from overtime pay, collecting a salary instead of an hourly pay rate, without possibility of earning additional pay for additional hours worked.

This exemption can apply only to employees who are classified as administrative employees, executive employees, professional employees, outside sales employees, and highly skilled computer-related employees. But the 2004 amendment widely expanded the number of employees in these categories who can be considered salaried employees, and exempt from overtime pay.

Prior to the 2004 amendment, administrative staff could only be considered as salaried exempt if those employees carried a "position of responsibility," such as a middle management role. The amendment, pushed through by a Republican Congress just months before losing power, changed the definition to exempt administrative employees who have "discretion and independent judgment as to matters of significance." What does this mean? Simply by changing job descriptions, companies all over the U.S. used the 2004 FLSA amendment to classify millions of additional employees as exempt from overtime pay. Some human resources consulting firms even offer specialized services to help employers rewrite job descriptions to find loopholes to exempt as many employees as possible. Does an employee have discretion to order office supplies of his or her choosing? As of 2004, he or she can likely be qualified as exempt from overtime pay based on the newly classified high level of responsibility at work.

Why do employers want to exempt as many employees as possible? That’s an easy one. Who doesn’t like a two-for-one deal? Asking one employee to perform the equivalent of two or three jobs for the pay of one employee allows for an increase in the bottom line based solely on the backs of dedicated workers, who are willing to put up with just about anything to retain their jobs during an economic downturn.

But employers seem to be banking on the fact that employees will not take the time to understand employee rights as defined under the original FLSA, and the inherent employee flexibility that salary exemption brings. In reality, the Fair Labor Standards Act still carries many employee protections for exempted employees, about which employers are not always forthcoming.

For example, a common misconception is that an employer can specifically demand unlimited work hours from exempt white-collar employees with no additional pay. For many southeastern Wisconsin companies, this practice has become the status quo, as job cuts have increased the work requirements of existing employees, leading some companies to mandate weekend work hours. But by classifying employees as salaried and exempt from overtime, companies agree to make an employee’s paycheck dependent upon their job requirements and work output instead of the number of hours or days of the week worked. Employers want to simultaneously abuse overtime exempt classifications while still mandating specific long work hours, but the law does not allow employers to legally do so.

Fortunately for exempted employees, this employment agreement carries benefits for both sides. Under exemption status, employees are responsible for completing all of the work which is assigned to them. Period. If an employer demands that an employee arrive at work by 7:30 and leave work no earlier than 5:00, that employer is setting work hours and treating that employee like an hourly employee, thereby violating the exemption requirements in the FLSA. Similarly, if an employer demands that all employees start working on Saturdays to complete the same amount of work with fewer employees, that employer is setting specific work hours for an exempt employee, a breach of the FLSA overtime exemption.

How about current popular trend of mandatory unpaid time off for salaried exempt employees? Nice try, but no dice. By exempting employees, employers agree to pay those employees a consistent salary, regardless of whether or not work is considered available or unavailable at any particular time.

How about snow days or other days of work missed due to bad weather? Surely employers can require a salaried employee to use eight hours of vacation time on a day when that employee is unable to come to work due to unsafe road conditions, right? In reality, employers must pay exempted employees for an entire week of work, even if that employee misses a day or two due to bad weather. Furthermore, an employer cannot legally demand that exempted employees recover missed hours later in the week or on the weekend.

Misclassifying employees as exempt carries stiff penalties. Exempted employees who are determined as misclassified as exempt based on mandatory work hours, for example, may bring a legal case against an employer for up to two years of back overtime pay - three years if the violations are determined to be intentional.

Employee desperation born out of an economic downturn does not allow businesses to ignore long-established rights of employees in the white-collar workplace.

(Tim Schilke is the author of "Growing up Red" and lives in Grafton. His column runs Wednesdays in The Freeman.)

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