All ee's classified as non-exempt - good or bad?

Ettelok

We are a small city. Every employee, except for the 10 department heads, is non-exempt. This has been the case for many years. There are several managers, supervisors and Admins who would qualify for Administrative, Executive, or Professional exemptions, but we've just never pursued correcting their designations. Although we know this is not the most correct way to operate, we feel that by being 'more generous', we are pretty well covered. Are there any legal ramifications for not designating exempt ee's as exempt?
Thanks.

Rockie

The department heads could come back and ask why they are not paid by the hour while other traditionally exempt individuals are paid by the hour. If "all" of your employees were classified as non-exempt, you probably would not have a problem, but not all of them are classified this way. You may have some "splaining to do" if this is ever brought up to the Department of Labor and these exempt folks may have a claim for back wages.

Pork

HECK NO, WE TAX PAYERS LOVE TO SEe OUR GOVERNMENTS WASTE OUR MONEY!!!!!!!!!!!!!!

AS YOUR HR, I WOULD MAKE LOTS MORE MONEY TO DO THE SAME THINGS I DO NOW BECAUSE I WOULD GET PAID FOR THE 60 AND 70 HOUR WORK WEEKs. Oh yes, and the holidays that I would, otherwise, not get any income for, You would now pay me. And the time cards now required for submission would be taken care of by somebody else, because I have never filled one out, so I just write 40 hours on it each week and you pay me my 40 hours. The real card that I use and keep my actual time on is locked up in my home strong box, and when I retire in 30 years, I will submit these time cards as my proof of overtime never paid, it will be supported by my stacks of calendars with daily projects listed and time elements to support my real time card and the hours of night and week-end work accomplished that I could not turn in because the city government does not allow O/T payments.

I suggest you have someone look throughly at your procedures and the actual happenings because, there could definately be some legal issues. You may think you are doing better than the law but is that really factual?

PORK

Hunter1

Pork: Don't get so excited, you're going to have a coronary! I agree that the employees should be classified correctly, and that our tax dollars should not be wasted by any unit of government, but if EVERY employer that had one or more employees misclassified thereby made themselves subject to claims by every other employee, practically every employer would be in trouble.

Pork

You got that right! I had 22 1/2 years of government service with no overtime, I thought after leaving and going to private sector service I would now get to draw overtime and get paid for all of my long and dedicated hours of work! Wrong, I have continued to be an EXEMPT employee now for 18 years and have never seen the money for the first O/T hour.

My current employer has always provided hourly rate of pay to supervisors, I attempted to fix that situation and was told to leave it alone, our company understands and are willing to pay the overtime. I have one supervisor that gets about 25 hours a week in O/T and makes more money that several of our managers, including me? The company does not have to do this, but the concerned individual treatened me with quiting, if I continued to pursue this avenue. I know he is riding the clock, but his manager will not stop him, therefore, I no longer worry about it. One manager is on an hourly rate and he is older than me, and makes right ar a $1000.00 a week gross pay. He has recently had a heart attack; he is back to work, and clocking large O/T hours. I put my foot down recently when I began to see an upper climb of working hours. If he is working those hours he is an accident or a stress case looking for a place to happen! The GM has also begun to watch hours and cost, soon the managers will also be watching hours and labor cost more closely.

PORK

Don D

At first when I read your post, I thought you were OK by actually paying more than the FLSA might require. Then after reading Rockie's post, I agree with her. If you are never challenged, you'll be OK; but, isn't that the case in all misclassifications? It would be relatively simple for the few exempt department heads to show that the employer has "No apparent knowledge of nor do they observe the classification system laid out by the FLSA, therefore our exempt status cannot be applied either, and we demand back pay for overtime hours worked."

Surely there is a city attorney, even though half time who might never have heard of labor law, who can root out an answer to this for the city to consider.

Hatchetman

[font size="1" color="#FF0000"]LAST EDITED ON 08-06-03 AT 11:00AM (CST)[/font][p]
Firstly, FLSA does NOT prohibit any employer from deeming an exempt position as "non-exempt." Remember, FLSA sees the benefit to be "non-exempt." That's why the employer never has to justify a position being non-exempt. So, you won't be in trouble with USDOL just because you have deemed all exempt position as non-exempt. In our governmental jurisdiction, we have done that with all of our professioanl classifications that represented by unions for over 10 years.

Secondly, even if you made the "exempt" positions exempt, under 541.5d, you may still dock partial days' absences, in certain circumstances, unless your Ohio wage and hours law prohibit it for public sector employers in the state. Also, remember, if you do go this route, that under USDOL rulings, you may pay overtime for exempt employees who work beyond their regular schedules without jeopardizing their exempt status.

The link to 29CFR541.5d is

[url]http://www.access.gpo.gov/nara/cfr/waisidx_02/29cfr541_02.html[/url]

As far as the executives of your departments coming back and claiming that they should be non-exempt, on what basis would they have a leg to stand on, unless they can establish that there was intentional discrimination or adverse impact discrimination under Title VII of Civil Rights Act? I'm sure your department heads probably are under personal contract with the city. Besides, as department heads, they certainly know the status of the employees in their departments and have been consenting to the non-exempt status. How many of them have gone to the city attorney, chief administrative office or mayor, or city council to maintain that the non-exempt status for the exempts needs to be changed?

Shadowfax

I agree with the Hatchet - no harm, no foul. But Pork raises the point on which I have disagreed with others on other forums: keeping some sort of time records for even exempts. Pork says the 'real' time card he keeps at home in the lock box! That is my experience exactly, and if you are so unlucky as to have misclassified a non exmpt as exmpt - and,you have no time records, you are absoultely stuck with the ees time records, and I assure you he is keeping them, just as Pork says. Now, if Pork is actually signing one that says 40 hrs, it may reflect his credibility when he sues for back unpaid o/t, but if the em/er has no records whatsoever, you will be looking at a potentially huge back pay plus double damage and attorney fee, on top of paying your own attorney and costs. Is everyone so absolutely certain they have correctly classified every exempt position? If in doubt, keep in non exempt and pay the o/t rather than risk subsequent liability. No requirement that even legit exempt be salaried - but don't guess wrong going the other way!

Pork

Shadowfax: Just my point!!! Been there and done that and the clerks records were maticulousily taken and noted like a diary every day and there we stood like a dumn bunny sitting on the log. Obviously, this poor clerks records were better than our (BIG CORPORATE) records which were signed by everyone in the world including the ee. Her comeback was simple, "my sister, the manager told me to keep my mouth shut and she was the boss for 7 years so I just knew she was right, and I have always since I was a child kept a diary of my everyday, I have them with me if you would like to see them"! Case closed and zipped shut with no where to go, the jury awarded the ee every minute in back pay plus penalities & her attorney fees. Additionally, the judge made us go back through our records for anyone else that had a similiar situation. We had to write the letter and provide a copy to the judge and wait for the responses from other employees. The judge did set a deadline on the time for other employees to respond. WE got three more letters, and we had to make payments to them, not bad out of 3500 employees. None was as bad as the first, which we knew we were going to win because we had the official records so we thought.

Bottom line, we can not have it both ways, if the company chooses to go non-exempt then you must pay according to the rules of the non-exempt. I remain steadfast in my position that the system set up for management/supervisors by the DOL is there and we should use it, accordingly.

PORK

markita

Pork,
I am still learning the ropes on all the rules and regulations.
Where should I go to learn the rules of the non-emempt and the rules for exempt employees. I have a boss that believes, "do what I say because I know that it is right." He is a wonderful man, but a little behind on current ruling.
Thanks for any help.
[email]Markita@BayouStateOil.com[/email]

Hatchetman

[font size="1" color="#FF0000"]LAST EDITED ON 08-18-03 AT 10:44AM (CST)[/font][p]Try the US Department of Labor Website and look at its "elaws Advisor"

[url]http://www.dol.gov/elaws[/url]

Also, the complete FLSA Regulations can be found at:

[url]http://www.access.gpo.gov/nara/cfr/waisidx_02/29cfrv3_02.html[/url]

Also, check out your state's labor agency and the state's wage and hour laws, if any.

System

Markita: There's an overview of exempt/nonexempt stuff in the book HR Quicklist, and this chapter ("You're deciding whether an employee is exempt") is available free on this website. It's a pretty good book, even though I wrote most of it.
[url]http://www.hrhero.com/hrquicklist.shtml[/url]

Also, I really like our 70-some-page Special Report, "Defusing the Overtime Bomb: How to Comply with the FLSA." It's free online if you subscribe to our Employment Law Letter in your state:
[url]http://www.hrhero.com/special.shtml#overtime[/url]

James Sokolowski
HRhero.com

Pork

Markita: Contact your friendly Wage and Hour office, ask for your free copy of regulatios Part 541: Defining the Terms-Executive, Administrative, Professional and Outside Sales. This will help you to better understand the "EXEMPT from FLSA" group of employees, the NON-EXEMPT. Then, again ask for the copy of Regulations Part 785: Hours worked under the Fair Labor Standards Act (FLSA) of 1938, as amended. Regulations, Part778: Interpertative Bulletin on Overtime compensation. My copy of each is well marked up and have my personal references for quick research. These booklets have been with me for years through 5 different companies; each has had its own sample of your "know it all" BOSS. He will come around as soon as you can answer questions of others which you run by him first. When you start hearing him say "wow, I did know that, or things have really changed. Problem is nothing has changed since 1938!

NEWS: There are some changes coming on the horizon so get "up to snuff" on the ole before you get hit with the new.

BY STUDYING THESE THREE BOOKLETS YOU WILL LEARN WHEN YOUR BOSS IS SMART AND RIGHT; ALSO YOU WILL BE ABLE TO LEARN WHEN HE IS WRONG AND THEN FIGURE OUT A SMART WAY TO TEACH HIM WHAT IS RIGHT AND NOT LOOSE YOUR JOB FOR BEING A "SMART ASS"!!!

PORK
PORK

Don D

Hatchetman, you always sound angry. No one has implied that anything is violated when an employer classifies one as non-exempt who might ordinarily under the rule be classified as exempt. That can be done all day long and with all exempts, as you state. The problem that arises is when only a few select exempts are properly classified and a large number of others have a different logic applied to their classification, for whatever reason) and they gain non-exempt status. The smaller group could claim themselves to be unfairly targeted and could claim that the company has no consistency in application and in fact does not know the difference in exempt and non-exempt since their classification system is so willy-nilly. They might even be all black or all female, or all male for that matter. At a minimum, it is biting off more investigation than one wants to chew, even if no fine or back-pay results. Can it be legally done? Sure, I think we all agree to that. Should it be? Depends on what battle one wants to choose.

Pork

"Dandy Don" I knew you could come through with those outspoken words necessary to win this debate! We Southern Gentlemen must remember, however, that HATCHMAN is coming to us from CA and he must make sure everything is tied down real tight or it will blow away with the flower petals and get sand in everyone's eyes. HE IS IN THE LAND OF POLITICS, AND FREE WHEELING ENTERTAINERS,AND THE RECALL OF A GOVERNOR,etc. They need to eat more pork!

May we all have a Blessed day and a finer tomorrow.

PORK

Hatchetman

Don, I am not angry.

In your original post you you the term "misclassify" as if the city erred by classifying only the department heads as exempt. I don't see that as a misclassificaiton. It was a deliberate call NOT to make exempt employees exempt but to have them paid as non-exempt and to leave the exempt top executive as exempt. I don't see that as a misclassification. The option is there to make them exempt, but no employer is required to do that. On the face of it I don't see any capriciousness or arbitrariness to what the city did. What of course ean emplyer MAY not do without jeopardizing the exempt status is to have various exempt positions doing the same job classified as exempt while others are classified as non-exempt.

It wasn't a "few, select positions" that were deemed to be exempt. It was a whole category of the top executives of the city -- the department heads.

Secondly, as I mentioned it seems to me that the department heads know the situation (they may very well be under persona contract witht he city). I don't see any basis under federal law that they would have a realistic chance to have their exempt status overturned simply on the basis that other who could be exempt are non-exempt, absent any violation of Title VII or other federal law, or possibly state law. And I judt don't see that here.

The city government probably can offer up a justifiable explanation for its action not to make the HEAD of a city agency non-exempt. But even if it can't on what basis do you think a court would find illegal discrimination or even that it's against public policy for a city to pay its top executives, who work with the city's political authority and are immediately responsible to it, as exempts while everyone else in every other exempt position is paid as non-exempt?

Don D

Not to sound argumentative Hatchet, but my main point is that the employer might want to consider the disruption of business should an investigation ensue. All it will take is one visit or telephone call to the proper state or DOL oversight body and an investigation is going to result and it will not be in the form of a letter. I don't know about a city government, but, in private business, I know we do not have free time or free staff to engage in unnecessary visits from government inspectors. As you've said, to which I have agreed, it is strictly an employer's decision whether to classify as non-exempt those positions that might ordinarily be determined exempt. It boils down to options in this case and an employer making a judgement regarding the business value of choosing a path versus the potential headaches that may result. x:-)

Pork

"Dandy Don" right on, Hatchetman, remember my position on this matter was from the perspective of the TAX PAYER. No one disagrees with the right of the organization to go one better than the FEDERAL LAW, which the city has done. My concern, as a TAX PAYER in that city, is the city using my TAX DOLLAR to its best advantage? Again I say NO!!!

See, we are starting this day off Blessed already, moneyman is going to wake up and also tune in and we will all be happier for it! Good morning to all HRs, please find someone to greet with "thanks, and glad you are here"!

PORK

moneyman

Hey Pork, is this my wake up call?

It is the end of the day and I am just tuning in for the first time today. It feels like Monday, since March we have had 2 rounds of layoffs and today we were hit with a reduction in admin staff hours, and yep, I was a lucky winner too. So, not so cheerful here today x:'( but at least the last one to get hit.

But, I am here to greet this HR Clan and say that I am glad that everyone else is still out there. I appreciate all of the opinions, dissenting or not, and the fun that this group provides. I am sure that I will still be around in the months to come.

gillian2

We are here for the amusement of those less fortunate!

Dan Krawczyk

There is no legal reason not to have all employees classified as non-exempts, HOWEVER and this is a big HOWEVER, be sure they are paid OT when they work OT. In AK OT is anything over 8 hours in a day OR 40 hours in a week, and comp time is not recoginzed.

I agree with Rookie concerning those others classified as Exempt. I'd make sure those classifications were correct.

Dan
Yukon Fuel Company
Anchorage, AK
[email]dkrawczyk@yukonfuel.com[/email]

Don D

I'm still pondering Gillian's remark. I thought I had it figured out yesterday afternoon, but am revisiting it this morning. I picture Gillian as a Greek Philosopher type with his chin on his fist, thinking up deep stuff to feed to the masses throughout the day. But then I remember he is from California and I begin to question his sanity.

gillian2

My post was a response to Pork's commentary about California - his #10 post. Mine ended up out of order somehow - I can't account for what computers do - they are beyond me.

Don D

I understand. Gillian, I still picture you as a Greek Philosopher sitting there with your chin on your fist, only now your other hand is reaching for the tissue paper roll.