Job descriptions are important for several reasons, including providing evidence of the exempt nature of positions classified as exempt under the federal Fair Labor Standards Act (FLSA). This article discusses ways of emphasizing the “exemptness” of positions classified as exempt under the FLSA’s executive and the administrative exemptions.
The FLSA generally requires employers to pay at least minimum wage and overtime compensation to nonexempt employees. Two common exemptions are the executive exemption and the administrative exemption. If an employee qualifies for either exemption, her employer is not required to pay her minimum wage and overtime compensation. If an employer misclassifies an employee (i.e., treats the employee as exempt when in fact he is nonexempt), it could be liable for back pay, liquidated damages (in an amount equal to the amount of back pay), attorneys’ fees, and litigation costs. Consequently, if you classify a position as exempt, you should be able to defend the classification.
A useful piece of evidence for demonstrating the exempt nature of a position is its job description. A job description should list the duties performed by the person in the position. To emphasize the exempt nature of the position, the job description should include the exempt duties the employee performs. Of course, the job description should be accurate.
The executive exemption has four requirements, one of which is that the employee’s primary duty is managing the enterprise or a customarily recognized department or subdivision of the enterprise. “Management” includes, but is not limited to, the following duties:
- Interviewing, selecting, and training employees;
- Setting and adjusting employees’ rates of pay and hours of work;
- Directing the work of employees;
- Maintaining production or sales records for use in supervision or control;
- Appraising employees’ productivity and efficiency for the purpose of recommending promotions or other changes in status;
- Handling employee complaints and grievances;
- Disciplining employees;
- Planning the work;
- Determining the techniques to be used;
- Apportioning the work among employees;
- Determining the type of materials, supplies, machinery, equipment, or tools to be used or merchandise to be bought, stocked, and sold;
- Controlling the flow and distribution of materials or merchandise and supplies;
- Providing for the safety and security of employees or the property;
- Planning and controlling the budget; and
- Monitoring or implementing legal compliance measures.
To the extent that it is feasible and accurate for the position, a job description for a position classified as exempt under the executive exemption should list the above duties to emphasize its exempt nature.
Another requirement of the executive exemption is that the employee must customarily and regularly direct the work of at least two full-time employees or the equivalent. The job description for an exempt executive employee should therefore indicate that she performs such a duty.
The executive exemption also requires that (1) the employee must have the authority to hire or discharge other employees or (2) his recommendations and suggestions about hiring, discharging, advancing, promoting, or changing the job status of other employees must be given particular weight. The job description of an exempt executive employee should therefore indicate that he has such responsibility.
The administrative exemption has three requirements, one of which is that the employee’s primary duty include the exercise of discretion and independent judgment with respect to matters of significance. Factors to consider when determining whether an employee exercises discretion and independent judgment with respect to matters of significance include, but are not limited to:
- Whether the employee has the authority to formulate, affect, interpret, or implement management policies or operating practices;
- Whether the employee carries out major assignments in conducting the operations of the business;
- Whether the employee performs work that affects business operations to a substantial degree, even if her assignments are related to the operation of a particular segment of the business;
- Whether the employee has the authority to commit the employer in matters that have significant financial impact;
- Whether the employee has the authority to waive or deviate from established policies and procedures without prior approval;
- Whether the employee has the authority to negotiate and bind the employer on significant matters;
- Whether the employee provides consultation or expert advice to management;
- Whether the employee is involved in planning longor short-term business objectives;
- Whether the employee investigates and resolves matters of significance on behalf of management; and
- Whether the employee represents the employer in handling complaints, arbitrating disputes, or resolving grievances.
To the extent that it is feasible and accurate for the position, a job description for a position classified as exempt under the administrative exemption should list the above duties and responsibilities to emphasize its exempt nature.
Job descriptions are important for several reasons, including allowing you the ability to emphasize the exempt nature of jobs you’ve classified as exempt. Your job descriptions should list the duties and responsibilities discussed above, to the extent that it’s feasible and accurate, for positions you’ve classified as exempt under the executive or administrative exemptions. If you have questions, consult with counsel.
Tareen Zafrullah is an attorney with Faegre Baker Daniels LLP (Indianapolis) and a contributor to Indiana Employment Law Letter. If you have questions about this issue or any other employment concerns, you may contact him at firstname.lastname@example.org.