A client this week asked us to provide an opinion letter regarding the exempt status of certain supervisors, and some tips on how to avoid lawsuits regarding mis-classification.  Although some of the advice was specific to the client’s business, much of the advice is applicable to a wide variety of industries.  An excerpt from the memo is below.

  • Carefully craft job descriptions to emphasize exempt duties over non-exempt duties – require employees to acknowledge their job descriptions in writing.
  • List the two or more employees supervised by an exempt manager in the job description (either by name or by title). This ensures this requirement is not inadvertently overlooked.
  • Ensure that managers are involved in both hiring and termination decisions.  The Company should have a paper trail easily proving this element.  Even if managers do not typically make termination decisions, consider having them “sign off” on the termination of employees at their location, thus establishing their participation in the process.
  • Supervising two or more employees is a minimum requirement, not necessarily a safe guidepost. Often, supervising only a handful of employees is not a full time job, leaving a manager with most of their time spent on non-exempt work. If the manager does not have a sufficient number of subordinates to justify spending most of his or her time on management, reconsider whether the employee should be classified as exempt.
  •  Exempt managers should be paid differently than non-exempt workers. For example, a manager’s pay should be notably different from those he or shesupervises, not only in amount but also in type. A manager’s pay should be related primarily to management performance (i.e. performance of the department or office as a whole), not the performance of non-exempt tasks. Likewise, bonuses and other incentives should not be tied to non-exempt tasks.
  • Consider how the number of managers in an office or location will be perceived by a judge or jury reviewing the facts. Someone has to be in charge, and one manager of a department or office is likely to pass muster as a valid exempt employee. As the number of exempt managers in a single location rises, however, the defensibility of the exemptions goes down.