Do you know? The FLSA’s Administrative Exemption

Do you know? What does it take for an employee to qualify under the Fair Labor Standards Act’s Administrative Exemption?

To qualify for the administrative employee exemption, all of the following tests must be met:

• The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;

• The employee’s primary duty must be 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

• The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

“Primary duty” means the principal, main, major or most important duty that the employee performs, with the major emphasis on the character of the employee’s job as a whole.

Work “directly related to management or general business operations” includes, but is not limited to, work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations; government relations; computer network, Internet and database administration; legal and regulatory compliance; and similar activities. It’s work directly related to assisting with the running or servicing of the business, as distinguished from working on a manufacturing production line or selling a product in a retail or service establishment. It also covers employees acting as advisors or consultants to their employer’s clients or customers.

The exercise of discretion and independent judgment involves the comparison and the evaluation of possible courses of conduct and acting or making a decision after the various possibilities have been considered. It implies that the employee has authority to make an independent choice, free from immediate direction or supervision. Factors to consider include, but are not limited to:

• whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices;
• whether the employee carries out major assignments in conducting the operations of the business;
• whether the employee performs work that affects business operations to a substantial degree;
• whether the employee has authority to commit the employer in matters that have significant financial impact; and
• whether the employee has authority to waive or deviate from established policies and procedures without prior approval.

“Matters of significance” refers to the level of importance or consequence of the work performed.

Information on other FLSA exemptions is also available:

• The Executive Exemption.

Next week, we'll examine the Professional Exemption.

Blawg Review of the Year nominations

For the uninitiated, Blawg Review is a weekly compilation of the prior week’s best posts from the legal blogosphere. It’s peer-reviewed, which means that each week a different blogger hosts the carnival. I had the pleasure of hosting Blawg Review #172 in August, which means that I’ve earned the right to vote for Blawg Review of the Year 2008. In chronological order, here are my votes:

Blawg Review #147, hosted by Rush Nigut of Rush on Business, for teaching me more than I ever thought I could know about Iowa’s geography.

Blawg Review #153, hosted by Declarations and Exclusions, because it’s always fun to talk like a pirate.

Blawg Review #164, hosted by cearta.ie, for transporting me back to the best vacation I’ve ever taken, my 2 weeks in Ireland.

Blawg Review #191, hosted by Likelihood of Confusion, for all of the little Jewish boys and girls who never had a Rankin-Bass holiday special to call their own.

Announcing the KJK Employment Law Breakfast Briefing

On Wednesday, January 28, 2009, Kohrman Jackson & Krantz will hold its inaugural Employment Law Breakfast Briefing: The Top 10 Labor & Employment Law Issues to Face Your Business in 2009.

Spend part of your morning with KJK’s Labor and Employment Law attorneys to learn about the emerging issues that will challenge your business and your employee relations in the coming year – the Employee Free Choice Act, the new FMLA regulations, the ADA Amendments Act, and other key issues. 2009 will likely be the most demanding year employers have faced in decades. Get a leg up on all of these changes in an informal discussion with KJK’s Labor & Employment team.

Date: Wednesday, January 28, 2009
Time: 8:00-8:30 Continental Breakfast
          8:30-9:30 Presentation
          9:30-10:00 Q&As
Place: The Club at Key Center, 127 Public Square, Cleveland, OH 44114

If you are interested in attending, or for more information, please contact Andrea Hill, (216) 736-7234 or ach@kjk.com, by January 23, 2009.

Presented by Kohrman Jackson & Krantz

A few predictions for 2009

Since I ended 2008 with a look back at the top stories of the past year, I thought I’d start 2009 with a look forward at what to expect in the new year.

1. Sexual Orientation will Become a Protected Class.

Under current federal and Ohio law, it is not illegal to discriminate in employment on the basis of sexual orientation. President Obama will seek to change this omission. One need only look to Change.gov, President Obama’s administration’s website, to glean that he will target the elimination of discrimination based on sexual orientation and gender identity:

The Obama-Biden Transition Project does not discriminate on the basis of race, color, religion, sex, age, national origin, veteran status, sexual orientation, gender identity, disability, or any other basis of discrimination prohibited by law.

The Employment Non-Discrimination Act would add sexual orientation and gender identity to the litany of classes protected from discrimination in employment by Title VII. Note that in the 6th Circuit, discrimination on the basis of real or perceived gender identity is already illegal as sex discrimination. Eliminating discrimination on the basis of sexual orientation should pass with ease. The facet of the ENDA that focus of gender identity is much more controversial, but at least in Ohio, is largely unnecessary in light of Smith v. Salem. Nevertheless, the ENDA should become law this year.

2. Family Responsibility Issues Will Receive Special Attention from President Obama.

In September, Governor Strickland and Senator Sherrod Brown persuaded union leaders to remove the Ohio Healthy Families Act from November’s ballot. If passed, it would have required all businesses with 25 or more employees to grant all employees seven paid sick days per year, with a prorated amount for part-time employees. The same measure will be introduced on a national level in this Congress, it will pass, and President Obama will sign it into law.

President Obama also favors making certain key changes to the FMLA. He will seek to loosen the definition of “employer” from 50 or more employees to 25 or more employees. He will also seek to expand the categories of covered leave to include elder care, children’s school activities, domestic violence, and sexual assault. It is a safe bet that some of these FMLA amendments will become law at some point in the next four years, if not this year.

3. Employment Litigation Will be Hot in 2009.

2009 will test my theory that the strength of the economy is inversely proportional to the number of lawsuits filed against employers. By all accounts, the economy will continue to slump well into 2009. As more employees lose their jobs, whether by layoff, plant closures, or good old fashioned terminations, they will look to the OCRC/EEOC and the courts for help. I expect age discrimination, WARN Act, and wage and hour claims to fuel this litigation boom.

4. The Employee Free Choice Act will Face an Uphill Battle.

A Senate filibuster blocked the EFCA on its last consideration. As the Democrats will not reach the magic super-majority of 60 Senators necessary to block a Republican filibuster, this controversial law will face stiff opposition. Despite all of the doom and gloom prognostications, I do not believe that the EFCA will become law in its current form. The only way it would ever defeat a Republican filibuster is if it was presented in a compromised, watered-down form.

Nevertheless, it is not too early for businesses to start planning for the possibility of card-check union recognition. The best defense against a labor union is a combination of positive employee relations, an open door for employees to air grievances, and a fair, even-handed management. If the EFCA becomes law, it will too late to fight a union once the cards are signed. The only way to combat an organizing drive, especially one that you do not know about, is to proactively make your work environment one that employees will not want to unionize.

Top 10 Labor & Employment Law Stories of 2008: Nos. 2 and 1

Today brings us to the end of our countdown, and the top two labor and employment law stories of the year. Each of these stories will have far reaching implications into 2009:

2. The economic downturn and the proliferation of layoffs and shutdowns: It’s no secret that our economy is in the toilet, and will continue to be at least in the short term. Companies have been and will continue to shed employees and operations as they try to stay afloat or fail. Unemployment insurance systems will continue to be stressed to the max. As employers continue to feel economic pressure, acronyms like OWBPA and WARN will continue to be on the tips of their tongues and at the core of employees’ fears. This story very well could climb to number in 2009 as the economy is predicted to continue to suffer, and employment lawsuits are expected to continue to rise.

1. The election of President Obama: In the last two years, the Democratic majorities in the House and Senate have proposed a cornucopia of new labor and employment laws – Employee Free Choice Act, Employment Non-Discrimination Act, Ledbetter Fair Pay Act, Arbitration Fairness Act, Working Families Flexibility Act, Independent Contractor Proper Classification Act, RESPECT Act, Equal Remedies Act, Civil Rights Act of 2008, and the Health Families Act. While jump starting the economy should preoccupy the new administration, we cannot overlook that Senator Obama sponsored most if not all of these bills. With the Democrats in charge of the White House and Capitol Hill for the first time in 14 years, there is a real chance that we will see the most sweeping changes to our nation’s labor and employment laws in decades. This story is number one in 2008, and very well could repeat as the top story of 2009, 2010, 2011, 2012, and beyond.

Top 10 Labor & Employment Law Stories of 2008: Nos. 4 and 3

Today brings us numbers 4 and 3 of our countdown of the year’s top labor and employment law stories:

4. President Bush signs the ADA Amendments Act: The ADA Amendments, which go into effect Jan. 1, will undo several employer-friendly Supreme Court decisions that limited who could qualify as “disabled” under the statute. These amendments will make it easier for an employee to qualify for protection under the ADA, and make it harder for employer to get cases dismissed on summary judgment on the issue of whether an employee is disabled.

3. President Bush enacts new FMLA provisions for military leave, and the Department of Labor publishes new FMLA regulations: Thanks to the National Defense Authorization Act for FY 2008, the FMLA now provides for additional unpaid leave for family members to care for a servicemember with a serious illness or injury suffered in the line of duty, and for employees to take FMLA leave for certain emergencies stemming from a family members’ active duty. In a few weeks, the DOL’s regulations interpreting these new provisions and reinterpreting the original FMLA will go into effect. Covered employers will have to re-learn the FMLA in light of these new regulations, which, while being employer-friendly, significantly change how the FMLA operates. An already confusing statute is going to become that much more confusing, at least in the short-term.

Top 10 Labor & Employment Law Stories of 2008: Nos. 6 and 5

Our year-end countdown the year’s top 10 labor and employment law stories continues with numbers 6 and 5:

6. The Ohio Supreme Court holds that retained memories can qualify as trade secrets: In Al Minor & Assocs. v. Martin, the Ohio Supreme Court held that a customer list compiled by a former employee strictly from retained memory can form the basis for a statutory trade secret violation. According to the Court, information that constitutes a trade secret does not lose its character by being recreated from memory. In doing so, it not only greatly expanded the scope of statutory trade secret claims, but also expanded the class of employees against whom a non-competition agreement can be held to be enforceable.

5. The Ohio Healthy Families Act crashes and burns as its supporters pull it off the November ballot: The Ohio Healthy Families Act, if passed, would have provided 7 annual days of paid sick leave to employees of all Ohio employers with 25 or more employees. Thanks to an 11th hour compromise struck by Gov. Strickland and Sen. Brown, the SIEU agreed to remove this measure from November’s ballot. Had this measure been on the ballot, it would have likely passed, making Ohio the first state to mandate such a paid benefit. The last thing Ohio’s economy needs is a disincentive for businesses to call our state home. Thankfully, common sense prevailed.