Tag Archives: Fair Labor Standards Act

Does A Degree Make An Employee Exempt Under Wage And Hour Law?

wage-and-hour timesheetA recent federal court decision examined the potential exempt status of entry-level audit associates working for KPMG. In that case, the U.S. Court of Appeals for the Second Circuit found that those employees were exempt under the “professional exemption” even though they performed many routine tasks. Would that decision be the same for all professionals with certain degrees? The answer to that question will depend upon the particular facts of the case.

The Fair Labor Standards Act (FLSA) requires that most employees be paid overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek. However, the FLSA does recognize certain exemptions from this requirement, including the “professional exemption.” To qualify for that exemption, the employee must (1) be compensated on a salary or fee basis at a rate of at least $455 per week; (2) have the primary duty where the performance of work requires advanced knowledge, which includes work requiring the consistent exercise of discretion and judgment; (3) the advanced knowledge must be in a field of science or learning; and (4) the advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction. This exemption is not restricted to the traditional professions of law, medicine, and teaching, but includes professions that have a recognized status and are based on the acquirement of professional knowledge through prolonged study. Generally speaking, these include professions such as nursing, accountancy, engineering, architecture, etc.

In the KPMG case mentioned above, the court relied heavily on the degrees required for the position and found that an entry-level member of a profession is still a professional and may fall under the exemption. The Court found it “hardly surprising” that the audit associates did not make high-level decisions for KPMG’s business, but noted that the professional exemption does not require that the professional reach conclusions that guide or alter the course of business. The critical question, according to the Court, was whether the workers act in a manner that reflects knowledge and requires judgments characteristic of a worker practicing that particular profession.

A reading of this case indicates that the answer to the question asked in the title of this article is “no.” A degree alone will not make an employee exempt under the professional exemption under wage and hour law. As acknowledged in the KPMG case, the critical question for the professional exemption is whether the employee’s particular position requires duties that are appropriately considered professional for that particular profession, entry-level or otherwise.

If you have a question regarding whether an employee falls into an exemption, it is important to look at the facts of your particular situation and get legal counsel involved if necessary. Remember that even though an employee may not fall under the professional exemption, they may fall under another exemption, such as the executive, administrative, or computer employee exemption.

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Supreme Court Narrows Categories Of Work Covered By The FLSA

Are all activities required by employers compensable under the Fair Labor Standards Act? How about activities that are for the primary benefit of the employer? Not necessarily, according to the United States Supreme Court.

On December 9, the Supreme Court unanimously ruled that a staffing agency was not required to pay workers at Amazon warehouses for the time they spent waiting to go through a required security screening at the end of the day. In that case, Integrity Staffing Solutions, Inc. provided warehouse staffing to Amazon.com throughout the United States. The warehouse employees were employed to retrieve products from the shelves and package those products for delivery to Amazon customers. Integrity Staffing required the warehouse employees to undergo a security screening before leaving the warehouse at the end of each day. During the screening, employees were required to remove items such as wallets, keys, and belts and pass through metal detectors.

Two employees filed a putative class action against Integrity Staffing on behalf of similarly situated employees and alleged that they were entitled to compensation under the Fair Labor Standards Act (FLSA) for the time spent waiting to undergo and actually undergoing the security screenings, which the employees claimed amounted to 25 minutes. The employees also alleged that the screenings were solely for the benefit of the employers and their customers because they were conducted to prevent employee theft. The United States Court of Appeals for the Ninth Circuit found that these activities were compensable because Integrity Staffing required the security screenings to prevent employee theft and that the screenings were necessary to the employees’ primary work as warehouse employees and done for Integrity Staffing’s benefit.

The Supreme Court disagreed. The Portal-to-Portal Act (the Act), which amended the FLSA, provides that companies need not pay for “preliminary” or “postliminary” activities. The Supreme Court previously interpreted the Act to require pay only for tasks that are an “integral and indispensable part of the principal activities for which covered workmen are employed.” The Court determined that the security screenings were not the principal activity or activities which the employee is employed to perform. The employees were not employed to undergo security screenings but rather to retrieve products from warehouse shelves and package those products for shipment to Amazon customers. As a result, the Court found that the activity, even though required by the employer, was not compensable under the FLSA.

This decision is a win for employers because it further narrows the categories of work that are covered under the FLSA. Additionally, the Court made clear that the integral and indispensable test is “tied to the productive work that the employee is employed to perform” and explicitly rejected tests that focused on whether an employer requires a particular activity or whether the activity is for the benefit of the employer as overbroad.

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