Correctly classifying employees as nonexempt vs. exempt can be a challenge for many employers. It’s sometimes difficult to know whether your employees meet the requirements of any of the allowed exemptions under the Fair Labor Standards Act (FLSA). In a recent BLR webinar, John Skousen lent his expertise on this complex topic and was on hand to answer questions from webinar participants. For everyone’s benefit, here’s a recap of some of the participant questions, broken down by category:
FLSA Overtime Pay: Using Automatic Time Clocks
Q. Is it legal to deviate an employee’s time clock minutes to the time the shift starts instead of the exact clock-in time? For example, sometimes my warehouse workers clock-in 10 to 15 minutes prior to their shift start time, but the time clock we use changes that time to the time that the shift starts. Are there potential issues with this practice?
A. Yes, there are potential issues. There are a lot of lawsuits in the area of rounding. The bottom line is that the employer is liable for each and every minute worked. As such, rounding is only allowed as long as the employer can show that it is not detrimental to the employee.
In other words, you must round in such a way that the benefits and deficits are offset over time. Under federal law, you can round to as much as the nearest 15 minutes, and anything less is fine, but only if the employee is not hurt by it over time.
For example, let’s say that you round an extra 7 minutes every day because the employee typically leaves every day just a little late and it is always rounded in the employer favor. At the end of the year that’s roughly 40 hours of work that the employee has performed that the employee was not paid for. If the rounding is not compensating them fully for all hours worked over time – like in this example – then you’ve got a problem.
Q. Our system currently captures total hours worked per day. Is this allowable or should we require employees to "punch-in" and "punch-out" their times?
A. If there’s a reliable, fool-proof methodology by which you determine the hours worked, I don’t know that there’s any requirement under the law that it be a mechanical procedure. However, every electronic or high-tech solution to time-keeping problems involves potential glitches. For example, if lunch breaks are automatically deducted for all employees, you will have an issue if someone in fact works through lunch and now is not getting paid for it. If you have a way of capturing time that is reliable and fool-proof, that would be adequate, but every situation needs to be reviewed with its own facts.
FLSA Exemption Specifics
Q. I have two floor supervisors with primary responsibility to monitor the machine operators and packers on the manufacturing floor. They are out on the floor more than half the day and they lend a hand when necessary with operating the machines and producing the product. They do make hiring and firing recommendations. Do they qualify for the executive exemption under the FLSA?
A. That’s a loaded question. You can indeed be supervising and managing while walking around. There is even an argument under federal law that if you occasionally pitch in and help somebody, your primary duty is still that of a manager. However, the answer cannot be given conclusively without more information. In this scenario you’ve got to look at the distinction between working foreman and true supervisor. Some questions to ask yourself include:
- Who actually manages the unit? Is there really somebody above the supervisor who’s in charge of the whole unit who’s simultaneously supervising those people?
- Is the person in question responsible for profit and loss?
- Do they get involved in budgeting? Do they get involved in purchasing?
- Do they exercise discretion and judgment in their position? Or are they just a supplemental work element?
In short, they may be exempt, but it can’t be said conclusively without knowing the full circumstances.
For more information on properly classifying employees as nonexempt vs. exempt and other related classification concerns, order the webinar recording of "Exempt or Nonexempt? Determining Employee Classification and Overtime Compensation." To register for a future webinar, visit http://catalog.blr.com/audio.
John Skousen is a partner in the Irvine, California, office of Fisher & Phillips LLP (www.laborlawyers.com). His law practice is concentrated on wage and hour law, compliance training, and employment litigation.