The Obama administration recently took a closer look at the Professional Exemption. Their scrutiny was followed by instructions to the Department of Labor to narrow the definition of the exemption. Changes are set to take effect in 2015, but Courts may begin utilizing the new definitions and strictures immediately if recent activity is any indication.
Court cases that involve the proper classification of employees are generally the most contentious. This makes sense as the stakes are higher than cases involving potential repayment of back wages and/or penalties for overtime. They can also require complete reclassification of employees listed in the case with overtime required from that point forward. In proper classification cases, a ruling against the employer often means a complete change in the way the company runs their business.
Many employers have been cutting corners to save money on overtime. Some say it’s due to the Labor Code coming across as complex. But it’s more likely a combination of complexity allowing for loose interpretations/purposeful misinterpretations embraced during low cash flow points in a troubled economy. Employers feel they need to save the money and many are deciding to do whatever they can (legal or not) to save money on overtime costs.
A recent case involving day rate employees being classified under the labor code as professionals exempt from overtime pay seems to support the idea that the courts will consider changes to the Professional Exemption now rather than waiting until 2015. Workers in the recent case were working 12-hour shifts, sometimes 7 days a week leaving them totaling in excess of 84 hours some weeks. Their work was compensated by a day rate. Some weeks their total pay (if they worked only a couple days) was less than $455/week. Legal representation for the plaintiffs in the case argued that claiming an employee is a salaried professional, but paying them less than $455/week some weeks does not meet the requirements of the Professional Exemption’s first prong.
The case was concluded on March 27, 2014. The Federal Middle District of Pennsylvania court clerk recorded judgment for wage and hour violations in the case (3:14-cv-00042-RDM). Allegations accused the employer of failing to pay workers overtime for their hours that exceeded the full time 40. The court supported the claims. We can most likely expect to see more decisions leaning towards the new understanding of the Professional Exemption.
If you feel that you may be due past overtime or know someone who is in an untenable work environment, get in touch with the experts at Blumenthal, Nordrehaug & Bhowmik today.