According to the Fair Labor Standards Act (FLSA), there are two types of employees in an organization with respect to overtime pay. An employee can be classified as either exempt or Non-exempt. Non-exempt employees are entitled to overtime pay and provisions while exempt employees are not subject to overtime pay. There are a few exceptions of exempt employees who may be entitled to overtime pay. The employees’ level of responsibility and their professional status determine their classification into the two categories. Employees with executive roles and with more responsibilities are generally classified as exempt employees (Faillace, 2000). These may include managers and licensed professionals such as doctors, lawyers, and engineers. Employees without significant responsibilities within the organization are classified as Non-exempt and must therefore for the extra hours they have worked.
In the case ‘Exempt or Non-exempt, Jones Department Store considers Jane swift as a member of the management team and therefore not entitled to overtime pay for the extra hours worked. The store manager, Amy Kostner explains to her that as a shift leader, she is not entitled to overtime pay. Classification of shift leaders as exempt employees is advantageous to Jones Department Store.
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Advantages of Classifying Shift Members as Exempt Employees
Amy classified the shift leaders as exempt because she considers them to be part of the management team. The shift leaders have supervisory roles and are also involved in managerial positions. For instance, the shift leaders are engaged in employment interviews, and they are the first to know when an employee is about to be terminated. Also, the shift leaders assign duties to associates after the assistant managers prepare the daily work schedules for the week. Due to these managerial responsibilities, Amy classifies shift leaders as exempt employees. This is per the Fair Labor Standards Act which describes managers or employees with supervisory duties as exempt employees.
Jones Department Store has the advantage of having the shift leaders work extra hours in the department store at no extra pay. This may improve the production levels in the store without the department store accruing additional production costs. For instance, Jane works for an extra 5 to 10 hours each week which is not paid for as extra time. These productive hours are an advantage to the department store since they are not paid for as overtime hours.
Are the Shift Leaders Properly Classified as Exempt Employees?
The shift leaders are not correctly classified as exempt employees. This is because they are not paid the minimum annual payment that qualifies the employee to be classified as exempt. According to the regulations put in place by the Department of Labor, an employee is classified as exempt if he or she receives a minimum of $23,660 annually which is equivalent to $455 every week (Faillace, 2000). An employee who receives an amount less than the recommended pay is eligible to overtime payment.
As a shift leader, Jane is not paid nearly as much as an assistant manager despite her managerial duties. She is paid slightly more than the associates, but the pay is still lower than the other management team members’ salary. She works extra hours to ensure the store’s objectives are achieved, but she is not rewarded for the extra work done. The shift leaders have equal or more responsibilities than the assistant managers, and therefore their pay should be improved. This explains why Jane is not satisfied with her working conditions hence she requests for overtime pay from the store manager. The fact that the shift leaders at Jones Department Store do not receive the recommended minimum salary indicates that they are not correctly classified as exempt employees.
Factors to Consider When Determining Exempt and Non-exempt Employees
There are factors that Amy should consider when determining whether shift leaders are exempt or non-exempt. First, Amy should consider the nature of the job based on the responsibilities that the shift managers are assigned (Faillace, 2000). Fair Labor Standards Act has the regulations on the kind of job responsibilities that warrants an individual to be an exempt or non-exempt employee. For instance, employees with executive and administrative duties are often classified as exempt employees. Amy should, therefore, consider the tasks performed by the shift leaders before making the decision.
Secondly, Amy should consider the salaries that the shift leaders receive. The Fair Labor Standards Act defines the salary limits for the exempt and non-exempt employees. The exempt employees must earn a minimum payment of $455 every week (Faillace, 2000). The exempt employees should receive this pay as the minimum amount regardless of the number of hours worked during the week. If the shift leaders do not receive this minimum pay, then it would not be appropriate to classify them as exempt employees.
In conclusion, the Fair Labor Standards Act is an essential guideline for employers when classifying their employees as either exempt or non-exempt. An employee who feels that he or she has been unfairly or inappropriately categorized as an exempt employee should approach their employers to inquire the basis of the categorization.
References
Faillace, M. A. (2000). Automatic Exemption of Highly-Paid Employees and Other Proposed Amendments to the White-Collar Exemptions: Bringing the Fair Labor Standards Act into the 21st Century. The Labor Lawyer, 357-390.
