Understanding Administrative Exemptions Allowed for Tennessee Businesses
Experienced wage and hour attorneys serving clients in and around Nashville, Chattanooga, Memphis, and Jackson
When a long-term employee runs out of room to progress in his or her salary range, some employers will invent a new job title with a higher salary range to accommodate them. Sometimes a change of job classification, from non-exempt to exempt, accompanies the new title so that the incumbent becomes eligible for additional perquisites as well, such as not having to punch a time clock, while also becoming ineligible for overtime compensation. This is especially true of senior level secretarial and clerical positions whose incumbents are promoted to “Administrative Assistant” or “Executive Assistant” and reclassified as exempt administrative staff even though their job duties remain unchanged.
Pay level and job title do not, in and of themselves, justify overtime exemptions. Job content is the all-important factor. If your employer reclassifies your job into a higher pay grade with a more “prestigious” title that makes you ineligible for overtime but keeps your job duties essentially the same as they were, they may be violating the Fair Labor Standards Act (FLSA). Even if you received a pay increase in the process, you should consider reviewing the matter with one of the experienced Tennessee wage and hour attorneys at Gilbert Russell McWherter Scott Bobbitt, PLC.
The criteria for administrative exemptions
The Wage and Hour Division of the United States Department of Labor (DOL) has established the criteria by which employees’ duties qualify them for administrative exemptions from overtime. To be qualified, all of the following criteria must be met:
- “The employee must be compensated on a salary or fee basis at the rate of at least $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.”
The Firm’s lawyers know that the second and third criteria are the ones most likely to cause interpretive problems. Work “directly related to management or general business operations” has been interpreted by DOL as that “directly related to assisting with the running or servicing of the business.” This includes work in major functional areas such as finance, accounting, auditing, purchasing, and the like. DOL has also interpreted “exercise of discretion and independent judgment” in a job as the incumbent having authority to make independent choices, free from immediate direction or supervision, in which possible courses of action are evaluated and a selection or selections made and prioritized. Such employees may have authority to interpret management policies or practices, and their judgments could commit the employer in matters having significant financial impact. As DOL’s interpretive statement expresses it, “