april2021 - 9

THE LABOR LAW ADVISOR

Paying People Properly
RICHARD D. ALANIZ

Senior Partner
Alaniz Schraeder Linker Faris Mayes, L.L.P.
ralaniz@alaniz-schraeder.com

The FLSA has existed since the
Great Depression. In addition to
mandating a federal minimum wage,
it mandates overtime pay of one-andone-half times an employee's regular
rate of pay for all hours worked over
40 in a workweek. The overtime
requirement was intended to create
more jobs in response to massive
unemployment by making employees
working long hours more expensive.
By requiring a 50% premium for an
employee working more than 40
hours, as was quite common, it was
thought employers would find it
cheaper to hire additional employees
to work more hours at straight time
pay. Today, the FLSA applies to virtually every workplace.
The primary reason employees
allege FLSA violations as the basis of
so many lawsuits is that violations
are easy to prove. Additionally, an
award of damages normally includes
liquidated (double) damages, as well
as attorney's fees. Class or " collective "
actions involving unpaid overtime
have resulted in multi-million-dollar
judgments and settlements covering
thousands of employees of some of
the nation's largest companies.

MISCLASSIFICATION
Perhaps the largest cause of liability
for unpaid wages is the misclassification of employees as exempt
from overtime. The so-called " white
collar " exemptions under the FLSA
set out categories of employees
exempt from overtime pay, which

THE FAILURE TO correctly pay employees as required by the Fair Labor Standards Act
(FLSA), as well as similar state wage and hour laws, causes the most frequently filed
style of lawsuits by employees against their employers. The claims made in these
cases are more often than not proven true. The Biden Administration has announced
its intention to focus more aggressive enforcement efforts at these wage and hour
compliance issues. It is the proverbial low hanging fruit.
are executive, administrative,
professional, computer employees,
highly compensated employees,
and outside sales exemptions. To be
exempt, the employee must generally
be paid above the minimum salary
and perform certain, specified duties.

SALARY RULES
The minimum salary required
for exempt status under the
FLSA is currently $684 per week
($35,568 annually). The " computer
employee " exemption has two,
separate minimum pay limits
under different FLSA provisions.
There is a minimum salary similar
to the other exempt categories, as
well as an hourly rate of no less
than $27.63 per hour. The " outside
sales " exemption has no minimum
salary requirement.

DUTIES RULES
The required duties for the executive, administrative and professional categories sound relatively
straightforward. To be an exempt
" executive, " the employee must
have as their primary duties the
management of the enterprise or
a recognized department thereof,
the direction of two full-time
employees or their equivalents,
and have the authority to hire, fire,
promote, or to effectively recommend such action. To qualify for
the " administrative " exemption,
an employee must have as their
primary duty the performance of

office or non-manual work
directly related to management or general business
operations.
The person must also
exercise discretion and
independent
judgment
with respect to " matters of
significance. " Exempt " professionals " generally fall into two
primary categories " learned "
and " artistic/creative. " By
far the most common are
" learned " professionals. They
must perform work requiring
advanced knowledge in a field
of science or learning, which
generally involves a prolonged
course of specialized instruction.
Only computer professionals
performing high-level technical work
such as systems analysis, computer
systems or program design, and similar, specialized functions qualify. To
qualify for the " outside sales " exemption the employee must regularly be
engaged in sales functions away from
the office. Inside sales personnel do
not qualify for the exemption.

INDEPENDENT
CONTRACTORS
In this age of Uber, Lyft, and
countless gig economy jobs, the
question of who truly qualifies as
an " independent contractor " is a
hotly contested issue. The issue has
arisen regarding Microsoft contract
workers, Uber and Lyft drivers,
Fed Ex and Grub Hub delivery

APRIL 2021 ■

personnel, and numerous others.
In 2019 the Department of Labor
(DOL) issued revised guidelines on
who qualifies as an independent
contractor. The Biden Administration has put these guidelines on
hold for further review. They will
likely be rescinded in favor of what
is referred to as the " ABC test. "
Under that test the relevant
factors are: 1) whether the worker is
free from control and direction of the
hiring entity; 2) whether the worker
performs work that is outside the
normal course of the hiring entity's
business; and 3) whether the worker is
customarily engaged in an independently established trade, occupation,
or business of the same nature as that
involved in the work performed. The
goal is to make proving independent
contractor status more difficult.

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april2021

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