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There are countless misconceptions about overtime law. This Feature Article is the first in a three-part series, based on real overtime scenarios, to help provide insight into how overtime affects various positions.
Joan works as a product manager for a national chemical supply company based in Atlanta, Georgia. She began her career in sales but worked her way up through the organization to manage one of the company's leading products.
Joan's position came with a move from an hourly wage to a salary and it also entailed some new responsibilities and longer hours. She found herself routinely working more than 40 hours in a week. Previously, Joan had received overtime for any hours she worked over 40 per week, but now the company claims that because she is paid a salary they are no longer required to pay her overtime.
After a few months, Joan decided to contact an overtime attorney in Atlanta. The attorney explained to Joan that under the federal Fair Labor Standards Act (FLSA) the company is required to pay any non-exempt employee overtime for any hours worked in excess of 40 in a week. The exemptions aren't based on a job title or description; instead, a court looks at an employee's actual duties to determine if they are exempt from FLSA protections.
Joan filed a complaint against the company and finally had her day in court. Joan's attorney set out to prove that Joan was not an exempt employee and she should have received overtime wages for any hours she worked in excess of 40 in a week while she was a product manager.
But the company fought back. They argued that Joan was exempt under the Administrative exemption of the FLSA. To qualify as exempt for the Administrative exemption the employer must show that the employee spends a majority of their workday engaged in duties directly related to management policies or business operations, that the employee customarily and regularly exercises independent judgment and discretion performing their work and the work requires an advanced training or specific skills. Being paid a salary instead of an hourly wage is necessary for an employee to be considered exempt, but it is not sufficient by itself.
To the company, it seemed that Joan met the requirements for the exemption. They argued that Joan played an important part in the running of the business. She was in charge of one of the company's most important products and they felt she used her own judgment and discretion in performing her day-to-day duties.
But the judge disagreed with the company's arguments. While Joan was “in charge” of the product as the product manager, the judge did not feel that she exercised discretion and independent judgment in her day to day duties. The judge pointed out that the company presented a specific way for Joan to perform her duties; Joan performed her job by using her skills and applying well-established techniques and procedures. She did not have the authority to commit the employer in matters that have a significant financial impact nor could she wave or deviate from the established policies and procedures without approval from the people above her in the organization.
To be eligible for an exemption an employer must show that the employee meets all the parts of the test. Joan's employers could not show that she met the parts of the test that require the employee to regularly exercise independent judgment and discretion in performing their duties. Even though it appeared that Joan would not be entitled to overtime because of her job title and the fact that she received a salary, the only way to truly examine whether or not she was exempt was to look closely at the duties she performed day to day.