Follow Benton Linkedin Twitter
Email Benton Email
Legal Issues
Jan 15, 2015

Myth-Busting And The FLSA

Sponsored Content provided by Benton Toups - Attorney, Cranfill Sumner & Hartzog LLP

Between the internet and Law and Order-type television shows, there is no shortage of myths and misconceptions when it comes to the law. However, as an employment attorney, there is one that I hear over and over again and it causes a ton of headaches (and costs a ton of money), especially for small employers. It has to do with employee pay. The typical conversation goes something like this:

Client: Benton, I have an employee who is complaining about working too much and getting paid too little.

Me: OK, tell me a little about this employee.

Client: He’s my assistant. His job is pretty much to do what I tell him, when I tell him.

Me: How many hours a week is he working?

Client: It varies, but anywhere from 35 to 60.

Me: Do you pay him overtime?

Client: No, I don’t need to pay him overtime. He’s on salary.

This is the point in the conversation when I get out of my chair and ring the giant gong in my office.  Many employers believe that paying an employee a salary automatically means that the employee does not need to be paid overtime. That is SIMPLY NOT TRUE!

The federal Fair Labor Standards Act (FLSA), among other things, establishes a default rule that employees who work more than 40 hours in a given week must be paid an overtime premium of 1.5 times their regular hourly rate for all hours worked over 40 in a given week. Some classifications of employees, however, are exempt from the FLSA’s overtime provisions. Payment on a salary basis is indeed one of the several criteria that must be met in order for an employee to be classified as exempt, but payment on a salary basis, standing alone, is most definitely not enough to make an employee exempt. Some of the most common exempt classifications are: executives; professionals; administrative employees, and outside sales. For employees to qualify under these classifications, they must meet each of the following criteria, of which salary is but one.

Executive Exemption:

  • Paid on a salary basis of at least $455/week;
  • Primary duty is management of the enterprise or of a customarily recognized department or subdivision;
  • Customarily and regularly directs the work of two or more other employees; and
  • Has authority to hire or fire other employees or exert influence over such decisions. 
Administrative Exemption:
  • Paid on a salary basis of at least $455/week;
  • Primary duty is 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
  • Primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. 
Professional Exemption:
  • Paid on a salary basis of at least $455/week;
  • Primary duty is the performance of work requiring advanced knowledge requiring exercise of discretion;
  • Advanced knowledge must be in a field of science or learning; and
  • Requires prolonged course of specialized intellectual instruction. 
Outside Sales:
  • Primary duty is making sales or obtaining orders or contracts for services or facilities for consideration paid by customer; and
  • Customarily and regularly engaged away from the employer’s place(s) of business in performing such primary duty (remember, this is the OUTSIDE sales exemption).
These are but a few of the most common exemptions. I set these out only to illustrate that each exemption requires that several criteria be met, only one of which is payment by salary. Unless an employee meets each of the criteria necessary to establish an exemption, an employer must:
  • Track the employee’s hours; and 
  • Pay an overtime premium for hours worked in excess of 40 in a given week.
An employer who fails to do so risks liability to the employee for:
  • Back wages for two to three years;
  • "Liquidated damages” in an amount equal to the back wages owed; and
  • Attorneys’ fees.
As you can see, the FLSA has real teeth. Don’t get bitten.

This content has been prepared for general information purposes only. This information is not intended to provide specific legal advice. Legal advice is dependent upon the specific circumstances of each situation. The information provided cannot replace the advice of competent legal counsel by a licensed attorney in your state.

Benton L. Toups is a partner at Cranfill Sumner & Hartzog LLP and serves as vice-chair of the Employment Law Practice Group. His practice concentrates on representing businesses in all aspects of labor and employment law. A firm believer in the adage that “an ounce of prevention is worth a pound of cure,” Toups counsels employers on day-to-day issues and assists them in developing and implementing policies to avoid employment litigation. To contact Toups, call (910) 777-6011 or email him at [email protected].

Wbj insights revised 0510
Ico insights

INSIGHTS

SPONSORS' CONTENT
Billhunter300x300 b&w

Fake News! Read All About It

Bill Hunter - Wilmington Design Company
Beckybrown 1041811127

Should You Quit Renting and Try Home Ownership?  

Becky Brown - KBT Realty
Infinity 891835159

What is EMV and Am I Liable?

Kyle Thorpe - Infinity Payment Systems

Trending News

Chef And Managing Partner Dean Neff Leaving PinPoint Restaurant

Jessica Maurer - Feb 20, 2019

Business Owners, Elected Official Among TEDxAirlie Speaker Lineup

Johanna Cano - Feb 20, 2019

Pita Delite Welcomes Diners At New Landfall Shopping Center Location

Jessica Maurer - Feb 20, 2019

ILM's Travelers In January Reach A Record

Christina Haley O'Neal - Feb 19, 2019

Appraisal To Move Forward This Week On Former Wave Transit Building

Christina Haley O'Neal - Feb 20, 2019

In The Current Issue

Tourism Group Names Azalea Festival Top Event

The Southeast Tourism Society recently named the N.C. Azalea Festival one of the group’s Top 20 Events in the Southeast for April this year....


Navy Week To Coincide With Azalea Festival

The U.S. Navy is coming to the Port City this spring, coinciding with the N.C. Azalea Festival. Wilmington is among the 14 selected sites –...


Changing Tides

While some might expect the growth spurt in the town of Carolina Beach to cause major growing pains, town officials say the challenges posed...

Book On Business

The 2019 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

Health Care Heroes 2018
2018 WilmingtonBiz Expo - Keynote Lunch with Eric Dinenberg, Rouse Properties