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3.1.4 FLSA Exemptions
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From the course by University of Minnesota
Managing Employee Compensation
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University of Minnesota
345 ratings
Course 4 of 5 in the Specialization Human Resource Management: HR for People Managers
From the lesson
Benefits and Compliance
This module covers pay compliance, the Fair Labor Standards Act, statutory benefits (like OASDI), and non-statutory benefits (like 401ks).
Meet the Instructors
Alan BensonAssistant Professor
Carlson School of Management, Department of Work and Organizations
Mike DavisSenior Lecturer
Carlson School of Management, Department of Work and Organizations
Welcome back, today we are going to be going into the FLSA's exemptions, and
we'll do a longer case study as well to kind of illustrate how state and
federal laws work according to FLSA.
So remember as an outline,
we'll have employers that are not covered by the FLSA.
Employees who are exempt from the FLSA by the salary test and job duties test.
And then we'll define contractors.
So remember, not covered employers are employers that are seasonal,
certain small farms, and certain small businesses.
There are employers that are not covered by the FLSA.
And so therefore would not be legally required to pay a minimum wage, or
overtime, or any of the other protections.
And then again remember we had this FLSA salary test, that is to be an exempt
employee under the FLSA an employee must be paid at least $455 per week.
And then we have the FLSA's Job Duties Test, which is to be an exempt employee
under the FLSA, and employee's primary job duty must also be exempted.
And you must pass both the salary test and
the job duties test to be exempt from the FLSA, and
therefore be allowed by your employer to give you a salary as opposed to a wage.
So the exempt job duties are very explicit under the FLSA.
They include executives, supervisors, administrators,
learned professionals, computer professionals, and outside sales people.
So just to give a flavor, each of these definitions, each of these
jobs, are very specifically defined within the FLSA.
So executives manage the enterprise.
Direct the work of at least two other employees, and
they have authority over hiring and firing.
Supervisors also supervises two or more employees, has management
as a primary job duty, and solicits input into job status of other employees.
So just to give an example, if we have, for
example, a shift supervisor or line supervisor,
they might not necessarily qualify as a supervisor under the FLSA.
So for example, let's say you have a supervisor.
And they are paid a salary, and maybe they nominally supervise three other employees.
But their primary job duty is really to also be working on the line, and
also act as a supervisor whenever certain exceptions come up.
Well in that case, that employer that's paying that supervisor a salary,
would be violating the FLSA because even though there's supervising,
not only supervising terminal employees, managements is now their primary job duty.
Let's also look at administrators.
So for administrators, primary job duty, for the office non manual work,
directly related to the management or business operations.
It also requires discretion and independent judgement.
And to just give an example here.
An administrative assistant typically would not be considered
exempt from the FLSA.
Yes, their primary job duties relate to the office non-manual work.
But typically would not be considered directly related to the management of
business operations that requires independent discretion and judgement.
Next is learning professionals, learning professionals are exempted under the FLSA.
These are individuals who apply intellectual knowledge and
independent judgment to their job.
It typically requires advanced knowledge and specialized instruction.
And typically, the benchmark for that is that the job requires a bachelors degree.
So for example, if you have a job description, and the job description
says that, as a requirement for the job, a bachelor's degree, or equivalent
experience, that doesn't necessarily mean that you'd be able to exempt that job,
because you're saying that experience equivalent to a bachelor's degree,
it could also satisfy for that job, whereas, for learner professionals,
learner professionals would require a bachelor's degree.
Next, computer employees are also exempted under the FLSA.
This requires the application of advanced knowledge of computer systems.
And so, for example, your administrative assistant
who is working on the computer and spends most of the time on their computer,
if they're not actually applying advanced knowledge of computer systems
on their job than they would not be considered exempt under the FLSA.
So again, once again computer employees require not just that you're working
with computers, but again that you're applying that more advanced knowledge.
Lastly, outside sales people are exempted from the FLSA.
And for outside salespeople, selling must be a primary duty.
And the employee must be engaged away from the workplace,
that is they're an outside salesperson.
And so just to give an example,
let's look into the case of NFL cheerleaders.
So the NFL, the National Football League is a US sports league.
And it's games are played over 17 weeks, beginning in each September.
And in 2014, 2015 former, and current cheerleaders under five NFL teams
alleged that they weren't paid the minimum wage, where as they should have been.
And just as a note, a cheerleader will typically pay for
their own uniforms and travel.
They are told how and where to perform, and they're told how to groom themselves,
and so on.
And so, would the cheerleaders have a case under the Fair Labor Standards Act?
Alleging that these franchises which are not paying them the minimum wage,
that they were illegally doing a sale under the FLSA.
So let's look at a little bit deeper into what happened.
So first of all we had the NFL's defense.
The NFL said that they are a seasonal employer,
because they only play over those, over that set part of the year.
And so because as a seasonal employer,
they are not a covered employer under the FLSA.
The second question is whether they're regular employees.
And the NFL defended that cheerleaders are contractors.
And because they're contractors, they purchase their own uniforms and so on.
They're not covered by the FLSA.
And so for both of these reasons,
cheerleaders aren't entitled to minimum wage.
So, let's look at the Department of Labor.
So this case came up in Florida.
And the cheerleaders sought relief from the US Department of Labor.
And they decided that the NFL is correct.
That the NFL is a seasonal amusement of employer.
And so the NFL is not covered by the FLSA.
And so therefore all of the minimum wage rules and overtime rules and
so on, don't apply to any employees, or anyone working under the NFL.
However, it's said that cheerleaders are employees, as opposed to contractors.
And when they decided that cheerleaders are employees rather than contractors,
they were saying that cheerleaders are typically working for
a single franchise, as opposed to working for several different franchises,
which would make them more consistent with contractors.
Cheerleaders also were directed over not just what to deliver, but also the way
to deliver that, again make in a way this more consistent with employees and so on.
And so, but remember according to our flowchart, since the NFL is
not a covered employer, that the question of whether they are contractors or
employees was irrelevant because the NFL was not covered by
the FLSA the cheerleaders were not entitled to minimum wage.
And stuff played out in Florida, but
then in California this allegation also came up against the Oakland Raiders.
And so they said,
well here in California we don't have a seasonal amusement exemption.
And so therefore the Raiders are a covered employer.
And then they look down and they say, okay, well, are they employees or
contractors?
Once again, they said, well, cheerleaders are still employees.
And therefore they're not considered contractors who wouldn't be
covered by the FLSA.
And so this case was ultimately settled out of court.
So that's kind of a brief summary of the Fair Labors Standards Act.
And I'll see you next time, thanks
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