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Claim Your Free Copy of Overtime Primer: Highlights from the New Regulations

The federal DOL overtime regulations go into effect this year. Are you ready?

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This report includes a summary of key changes, including the salary level test and salary basis test.

As a bonus, we've included a handy flowchart to help you determine exemption status under the FLSA.

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July 02, 2002
Exempt Employees Aggravated by Long Hours
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the American workweek grows longer, conflicts over overtime pay are heating up, according to the Christian Science Monitor.

The newspaper gives these examples:

- Despite being named to Fortune magazine's "best places to work in 2002" list, Starbucks Coffee Company announced in April that it would pay up to $18 million to settle a lawsuit filed by more than 1,000 managers of its California stores. The managers had claimed they were forced to spend long hours doing non-managerial tasks and denied overtime pay.

- Wal-Mart currently finds itself embroiled in a legal battle involving allegations of unpaid overtime by hourly workers.

- In May, the Labor Department filed a lawsuit against Tyson Foods, Inc. to recover back wages for workers who were not paid for time spent putting on and taking off work clothing and protective gear.

These companies are hardly alone, according to the Monitor. Many major employers are spending millions of dollars to settle cases brought under federal and state laws that require overtime pay for such nonexempt employees.

Employees who'd normally be classified as exempt from overtime under the Fair Labor Standards Act - managers, professionals, and office and sales workers - are challenging the designation, saying they are not beyond the reach of federal and state overtime-pay provisions.

"Misclassification of employees under the FLSA is rampant," says Atlanta employment lawyer Charles T. Huddleston. The price employers pay "for misclassifying employees can be up to two years of unpaid overtime, doubled by statute, plus attorneys' fees."

There are four white-collar exemptions to the minimum-wage and overtime requirements of the FLSA: executives (managers), administrators, professionals, and outside sales representatives.

"To be exempt, an employee must fall under one of these categories and be paid on a salary basis," says Rob S. Ghio, partner and head of the employment-law group at the firm Arter & Hadden in Dallas.

The exemptions hinge on the actual duties performed, however, not on the job title or method of payment.

"Exempt workers manage, think, direct, supervise, and establish," said Neil Martin, a partner in the labor and employment section of Houston law firm Gardere Wynne Sewell. "The more routine the task, the more mundane the assignment, the more manual the work, the less is likely that the workers are exempt."

The most common overtime pay complaint today rests with the white-collar classifications, and employers are losing more of these cases. Last year, Rite Aid Corp. paid $25 million to 3,000 managers and assistants. Bank of America Corp. settled with some 6,000 personal assistants for $22 million.


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