Tuesday, February 23, 2010

Do you know? Administrative employees vs. the administrative exemption

Nothing in employment law has a more misleading name than the administrative exemption in the Fair Labor Standards Act. Employers routinely mis-believe that if an employee performs administrative tasks, that employee is exempt from being paid overtime under the FLSA. In fact, the administrative exemption only applies to a narrow group of employees – those 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 which includes the exercise of discretion and independent judgment with respect to matters of significance.

The following story from the National Law Journal illustrates the risks of confusing employees who perform administrative functions and employees who are exempt under the FLSA:

When legal secretary Karla Osolin used to work at Jones Day, she was paid a salary and overtime.

That's what caused red flags to go up when she took a job in September 2008 with Ohio intellectual property boutique Turocy & Watson. Now the firm faces a suit alleging wage-and-hour violations and stands accused of misclassifying Osolin and many others to avoid paying overtime.

Examples of some professions that the Department of Labor has found could qualify for the administrative exemption include mortgage loan officers, insurance agents, sales managers, marketing analysts, purchasing agents, financial services registered representatives, and loss prevention managers.

These categories are merely guidelines to observe, and not dogma to follow. Whether an administrative employee is administratively exempt is determined on an employee-by-employee basis, even within the same job category within the same organization. The analysis is fact-specific, and should be done by a professional well-versed in these issues.

Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.