No Overtime for UPS Supervisor, Court Rules

Yesterday, we looked at the case of Taylor v. United Parcel Service, Inc., in which longtime UPS supervisor David Taylor claimed he was entitled to back overtime pay. Today, the ruling of the California Court of Appeals

[for the details of the case, click here]

In reviewing the case, the court noted that when an employee challenges his or her classification as exempt, it’s up to the employer to prove the employee is properly classified.

The Executive Exemption

To show that an employee qualifies for the executive exemption, an employer must show all of the following:

1. The employee’s monthly salary is at least double the state minimum wage of $8 per hour for full-time employment (40 hours per week).

2. The employee’s duties and responsibilities involve management of the company or of one of its departments or subdivisions.

3. The employee customarily and regularly directs the work of at least two other employees.

Exempt or nonexempt? How to get it right.

4. The employee has the authority to hire or fire other employees, or his or her suggestions about the hiring, firing, promotion, or any other change of status of other employees are given particular weight.

5. The employee customarily and regularly exercises discretion and independent judgment.

6. The employee spends more than 50 percent of his or her time performing exempt duties. (The federal test only requires that the “primary duty” of the employee falls within the exempt duties, with no percentage test.)

Exempt duties include:

• interviewing, hiring, and training employees
• setting or suggesting pay rates and hours
• directing work
• evaluating employees
• disciplining employees
• planning work

Nonexempt executive duties include performing the same work as employees or routine clerical duties.

How to avoid costly misclassification errors: May 17 webinar

The Administrative Exemption

To show that an employee qualifies for the administrative exemption, an employer must show all of the following:

1. The employee’s monthly salary is at least double the state minimum wage for full-time employment.

2. The employee’s duties and responsibilities involve performing office or nonmanual work directly related to management policies or general business operations.

3. The employee customarily and regularly exercises discretion and independent judgment.

4. The employee either:

• regularly and directly assists an executive or administrative employee, or
• under only general supervision:
  • performs work requiring special training, experience, or knowledge, or
  • executes special assignments and tasks.

5. The employee spends more than 50 percent of his or her time performing exempt duties. (The federal test requires only that the “primary duty” of the employee falls within the exempt duties.) Exempt duties include:

• planning
• negotiating
• representing the employer
• purchasing
• advising management

Nonexempt duties include performing clerical duties, making deliveries, and operating equipment.

The Role of Employer Policies and Procedures

The Court of Appeals concluded that UPS had successfully established that Taylor was exempt as an executive and administrative employee in each of his positions.

The court had little trouble finding that UPS proved all of the elements of the executive and administrative exemptions but devoted particular attention to the “exercise of discretion and independent judgment.” It explained that the phrase refers to the authority to make an independent choice on matters of significance, free from immediate direction or supervision.

Taylor contended that he didn’t have such authority because all of his decisionmaking was dictated by stringent UPS procedures and methods. The court, however, concluded that the exemptions can still apply when employer policies and procedures simply channel the exercise of discretion and judgment — as opposed to eliminating it entirely or restricting it to a degree where any discretion is largely inconsequential. That was the case here, as Taylor was required only to follow some internal guidelines and only for some of his duties.

Exempt or Nonexempt? How To Avoid the Misclassification Mistakes You Simply Can’t Afford To Make in California

In theory, it should be simple: Nonexempt workers get overtime pay, and exempt workers don’t. But in the real world, of course, figuring out who’s who is anything but simple. And even the best-intentioned employers misclassify employees on a regular basis.

In fact, the federal Department of Labor estimates that nearly 70 percent of employers are noncompliant with the federal Fair Labor Standards Act. And it’s not taking this statistic lightly: Last year alone, it set aside $25 million for FLSA enforcement. Plus, the DLSE is aggressively pursuing noncompliant employers at the state level, too. 

As if all of this wasn’t bad enough, eager plaintiffs’ attorneys are lining up in record numbers to represent employees in lucrative wage/hour class-action lawsuits — which, given the high rates of employer mistakes, has led some of these attorneys to liken these cases to “shooting fish in a barrel.”  

Don’t be the next fish. Join us on May 17 for a can’t-miss webinar — specifically for California employers — on avoiding the most common (and costly) employee classification errors. You’ll learn:

• The specific industries and positions the plaintiffs’ bar and government agencies are honing in on
• How “white collar” exemptions in California differ from the federal rules
• Why many seemingly exempt positions — including certain analysts, managers, specialists, and salespeople — aren’t
• Why “industry practices” don’t insulate you from liability (and some staggering recent judgments that graphically illustrate this)
• Which managers and assistant managers qualify for the executive exemption, and how to strengthen their exempt status
• Why it’s now harder than ever to successfully establish the administrative exemption
• The limited scope of the computer professional exemption at both the state and federal level, and why the classification of IT workers poses unique challenges
• Why paying employees a fixed salary is not sufficient to guarantee their exempt status — and what you need to focus on instead
• Why your “inside” salespeople aren’t exempt — and how to best structure your “outside” sales positions
• The importance of involving counsel in wage and hour audits
• Your organization’s responsibilities and options if misclassifications are discovered, including strategies for communicating with your workforce about status changes

Download your free copy of Who’s Entitled to Overtime: How To Avoid Mistakes When Classifying California Employees today!