Managers typically don’t receive overtime because they’re exempt. Employers often assume that their management trainees fall into the same category and are exempt. They don’t, and they aren’t.
This mistake is more significant now because under the Obama administration, the Department of Labor has increased its efforts to crack down on employers who misclassify employees as exempt. Also, recently, the “hottest” litigation for plaintiffs’ attorneys is wage and hour lawsuits. Because this issue arises under federal law, it applies to employers whether they operate in Indiana or in other states.
Two common exemptions are the executive and administrative. An employee who meets all the requirements of either is exempt. Managers often qualify for one or both. Although the FLSA doesn’t address managers in training, a regulation provides that a management trainee must meet all the requirements of either exemption to be exempt from overtime. The bar isn’t lowered simply because the employee is in training.
Another common misconception by employers is the mere fact they’re paying someone a salary means that person is exempt from overtime. This too is incorrect. Being paid a salary is only one of multiple requirements that must be met for an employee to be exempt.
Executive and Administrative Exemptions
To qualify for either the executive or administrative exemption, an employee must receive at least $455 per week on a salary basis and meet other primary duty requirements. Although time isn’t determinative, a good rule of thumb is that the primary duty is the duty on which the employee spends more than 50% of his time.
To meet the executive exemption, the employee’s primary duty must be management of a department or subdivision of the business; he must regularly direct at least two full-time employees or their equivalent; and he must have authority to hire and fire, or his recommendations on changes of status must be given particular weight.
To meet the administrative exemption, the employee’s primary duty must be the performance of office or non-manual work directly related to management or general business operations of the employer or its customers; and that primary duty must include exercising discretion and independent judgment on matters of significance. Exercising discretion and independent judgment entails the comparison and evaluation of possible courses of action and making a decision after considering them.
Why Management Trainees Usually Aren’t Exempt
Management trainees often meet the $455 weekly salary requirement but fail to satisfy one or more of the other requirements for either the executive or administrative exemption.
For example, a management trainee may shadow a manager who is in charge of a department or subdivision of the business. However, if the trainee isn’t in charge of a department or subdivision, doesn’t supervise at least two full-time employees or their equivalent (shared responsibility isn’t sufficient), or doesn’t have the authority to hire and fire or have meaningful input into changes of status, the trainee doesn’t satisfy the other exemption requirements. Simply being present when the manager interviews, discharges, disciplines, or evaluates other employees isn’t sufficient.
Management trainees also often fail to satisfy other requirements for the administrative exemption. For example, a trainee may shadow a manager who exercises discretion and independent judgment. However, if the trainee doesn’t exercise discretion and independent judgment, or doesn’t make any decisions or recommendations but simply follows instructions or procedures, he doesn’t satisfy the other exemption requirements.
“Management or general business operations” doesn’t include production or sales. To satisfy the second requirement, the employee must assist with the running of the business.
If you consider your management trainees to be exempt, carefully review whether they satisfy all the requirements of at least one exemption. If they qualify for either the executive or administrative exemption, they’re not entitled to overtime. On the other hand, if they don’t satisfy all the requirements of at least one exemption, they’re entitled to overtime for all hours they work over 40 in a week at one and one half times their regular rate. Thus, for example, if the management trainee is paid a salary of $600 a week and worked 50 hours then his regular rate is $12 an hour ($600/50 hrs.) and his overtime rate is $18 for all hours over 40 using the fluctuating work week method of calculating overtime. In this example, he would be entitled to $600 plus $180 in overtime pay for a total of $780. The more hours your management trainees work, the greater the potential liability. Consult with employment counsel if you’re unsure as mistakes in this area can be costly.
As the rate of home foreclosures continues to rise and the next tide is about to come in, more and more home owners will be faced with the decision of hiring an attorney to defend them. When picking a firm there are a number of things to consider:
1. What do you want the law firm to accomplish for you? Do you want to stay in your home or do you want to do a deed in lieu of foreclosure or pursue a short sale? Do you want a modification; can you even afford a reduced mortgage. Finally, do you believe you have been defrauded and want to fight the bank until the bitter end? We at Pinkert Legal understand that this is a stressful experience and will do our best job to make the process less stressful. However, we must inform you that according to statistics from the county’s dockets, those who hire an attorney may slow a foreclosure sale more than those without an attorney just by participating in the legal process. We encourage adequate and correct participation in the legal process.
2. Can the law firm accomplish your goal? Before hiring an attorney, you should discuss with them what they can accomplish for you. Bring your loan and mortgage documents with you so the attorney can quickly determine if you have strong defenses that that can actually defeat the bank’s foreclosure action, or are you simply going to go through the legal process without any true hope of defeating the foreclosure; eventually the bank will win. Honesty is critical at this moment to try to ensure your position and expectations.
3. What will the law firm charge for their services? Firms are charging not only different rates for foreclosure defense but also different payment terms. Some firms will charge you a flat rate and have you pay up front or over time. Again be sure the services include trial costs as this is additional in many cases. Other firms will charge you a smaller fee up front but have you pay a monthly fee of anywhere from $300 to $500 while they are litigating the case. Be cautious of this scenario because cases can be in court for 2-3 years and for months with nothing going on. Under those circumstances you are paying thousands of dollars with little or no work being done. Also keep in mind that if you stop making your monthly payments to the law firm, that may give your attorney the right to withdraw from the case making all of your time and money worthless.
4. Will the legal fees include helping with a modification package? Some lawyers include assisting you with modification of your loan as part of their defense. Others may charge extra. While modification is a process that homeowners can do on their own without legal representation, you want to make sure whether you or your attorney will be handling this aspect of your defense.
I have heard that some home owners have retained attorneys for foreclosure defense and when the bank prevails, the same attorneys offer bankruptcy services. If that is a strategy you and your attorney decide to follow, find out in advance what they will charge for representing you in a bankruptcy court.
As with all services, if you understand what services you will be provided in advance, your expectations have a better chance of being met and both you and your attorney will have a more harmonious relationship.
Jury Finds in Favor of Child Actor and Three Time World Champion in Contentious Trial of a Defectively Designed Machine Manufactured by Life Fitness: Rewards $751,000.
Miami, Florida- November 16, 2010.A Miami-Dade County Jury rendered a verdict in the amount of $751,000.00 against Life Fitness, Inc., an Illinois Company and subsidiary of Brunswick Corporation as the result of what it found to be a defectively designed adjusting mechanism on its cable cross-over fitness trainer referred to as “The Dual Adjustable Pulley”.
Pinkert Law, product liability experts, were retained by the plaintiff and trial began on September 27, 2010 in the Eleventh Judicial Circuit in Miami-Dade County and concluded with the jury verdict on October 1, 2010. This case was brought about as the result of the collapse of the push pin position selector which collapsed on Mr. Cooper’s head while he was exercising at the Equinox Fitness Center in South Miami Beach, Florida in March of 2006. The collapse occurred while Mr. Cooper was doing the last of many repetitions of a particular exercise.
James Pinkert and Steven Pinkert, who is also an M.D., of the Pinkert Law Firm, prosecuted the case defeating Life Fitness and the K&L Gates legal team of defense attorneys when the jury rewarded the plaintiff $751,000. The jury deliberated for almost four hours after one week of testimony from fifteen witnesses, finding in favor of the plaintiff.
About Pinkert Law Firm. With Headquarters in Miami, Florida, the Pinkert Law Firm serves clients in the United States, China and The Latin America. The firm’s first-hand experience working with international patents, trademarks and product liability makes it one of the leading global legal enterprises. www.pinkertlaw.com
In March 2010, the Miami-Dade County Commissioners passed an ordinance Chapter 22 which prohibits “wage theft” and applies to employees who work in Miami-Dade County, regardless of where the employer is located. The ordinance provided a new avenue for employees in the county to recover money owed to them by their employers. The penalties for violating the ordinance are back wages, liquidated damages equal to double the back wages, and administrative costs. Attorney’s fees are not recoverable, and there is a threshold amount of $60 to maintain a claim. Sec. 22-2(g).
This was a real breakthrough for the employees. Over the past years, dozens of clients would visit my office complaining that their employer or former employer failed to pay them back wages they had earned. Unfortunately, the amounts owed were either too small to make it practical or the employers or their actions weren’t covered under applicable state or federal law. I thought to myself, if only there were a cost effective way for these people to recover. Then low and behold the ordinance was passed. Last year, I was visited by three gentlemen who were formerly working as couriers for a local courier service. They each had worked there for about a month and when it came time for them to be paid, the employer offered them far less than they were originally promised and refused to pay them for costs such as parking and tolls as was agreed up front.
I agreed to represent them to judge for myself how the system works. We appeared at the hearing and while the employer failed to appear, we still had to plead enough facts to place under the jurisdiction of the ordinance. Two issues arose. The first was whether my clients were considered employees or independent contractors. Despite my clients’ signature acknowledging they were independent subcontractors, we were able to establish enough facts to convince the hearing officer that they did qualify as employees under IRS regulations. The final issue that arose is when we requested that the hearing officer find the employer personally liable for the wages and other damages.
Attached is a draft letter of what I submitted to advance my position.
The ordinance defines an Employer as: “Employer shall include any person who, acting either individually or as an officer, agent or employee of another personal, acts directly or indirectly in the interest of a person or entity employing an employee….”
The ordinance defines employer as any “person”, acting either individually or as an officer, or agent. The exact language of the ordinance seems to state that persons as well as companies are the ones to be held responsible. It states that an employer is an officer or agent who acts directly or indirectly in the interest of the entity employing the complainant. There is no language whatsoever in the ordinance limiting liability of an individual. Furthermore, the ordinance is by nature one imposing strict liability; there is no requirement of proof or intent or fraud. Nor is there any requirement of knowledge of the wage violation other than the requirement of notice which was provided in this case.
Section 22-3 then goes on to define a wage theft violation by stating that “for any employer to fail to pay any portion of wages due an employee . . . is found to have unlawfully failed to pay wages. Furthermore, the ordinance is by nature one imposing strict liability; there is no requirement of intent or fraud. Nor is there any requirement of knowledge of the wage violation other than the requirement of notice which was provided in this case. If it’s proved that wages were unlawfully withheld, then the “person” is liable.
The rules of statutory construction hold that a statute or ordinance is to be given its clear meaning. If the County wanted to limit personal liability, they would have included that language, or, taken out the language “agent …”. As it is, the statute clearly states that the person acting on behalf of the entity is liable for their or their entities violation of the ordinance. The ordinance is directed at individuals. To hold otherwise would frustrate the purpose of the ordinance as set forth below.
Sec. 22-1. Declaration of Policy.
It is hereby declared to be the policy of Miami-Dade County in the exercise of its police power for the public safety, health and general welfare, to eliminate and prevent wage theft. Eliminating the underpayment or nonpayment of wages earned by persons working in the County serves the public purpose by promoting economic security and dignity for those working in the County; by promoting business and economic development through the elimination of unfair economic competition by unscrupulous businesses that do not pay or that underpay their employees; and by relieving the burden on the public that subsidize unscrupulous employers whose employees are forced to rely on public assistance because of unpaid or underpaid wages.
As there is a dearth of case law defining the subject ordinance, it might be helpful to look at similar laws from another jurisdiction. I wish to refer to the Illinois Wage Payment and Collection Act, a copy of which is attached hereto. This act uses the same language of the Miami Dade Ordinance. In the second paragraph of section 2 of the Act, it defines employer in part as “or any person or group of persons acting directly or indirectly in the interest of an employer to an employee, for which one or more persons gainfully employed.”
I have also attached a copy of a recent National Law Review article which discusses personal liability under the Illinois Law. The article states that based on current case law “personal liability will now attach in such situations (and generally) as long as the individual is an officer or agent acting in the employer’s interest.”
Respondents were clearly acting on behalf of the corporation and were agents of the corporate defendant. XXXXXX responded to the complaint and through her use of first person pronouns, clearly indicated that she was an agent of the company. The checks that were purportedly made to my clients were signed by her. Finally, she is listed on sunbiz as the president of defendant corporation.
In summary, the ordinance clearly was meant to hold “persons” liable. Other similar laws using the exact same language have been interpreted by courts to impose personal liability if they are agents of the company.
I respectfully request that the hearing officer consider this letter and the attachments and issue an order holding XXXXXXXXX and the Corporation liable for their wage violations. I believe that holding her personally liable as well as the corporation will implement the intended meaning of the ordinance and further dissuade others to violate the ordinance.
As I write this blog, I am still awaiting the board’s order on this issue.