Meat+Poultry - February 2022 - 78

LABOR
Examining 'exempt' status
Approximately 43 million workers
are classified as " exempt " under the
Fair Labor Standards Act (FLSA),
meaning they are not entitled to
overtime pay for hours worked
over 40 in a workweek. To expand
overtime eligibility to millions more
workers, the Obama era Department
of Labor (DOL) proposed to more
than double the then-current $23,660
per year eligibility threshold. Twentyone
states and numerous business
associations challenged this proposal
in federal court. The court ultimately
blocked the increase, and it remained
blocked as the Trump administration
took office. It then withdrew the
2016 proposal and proposed a lesser
increase to $35,563, which was
adopted in March 2019.
President Joe Biden's DOL may
seek to increase the threshold beyond
the 2016 proposal under Obama.
Obviously, the higher the threshold
the more workers whose salaries
fall below the threshold and become
eligible for overtime pay.
EXEMPT STATUS
An employee must satisfy both the
salary threshold and a duties test to be
" exempt " under the FLSA. Employees
must be paid a salary of at least $684
per week/$35,568 annually and an
employees' duties must fall within
one of the so-called " white-collar
exemptions. " Those exemptions are
the " executive, " " administrative, "
" professional, " " computer
professional, " and " outside sales. " Each
one of these exemptions requires the
performance of unique duties.
In preparation for an increase in
the salary threshold, employers should
conduct a thorough review of the job
duties of all salaried employees.
Employers should identify key
positions where the employer must
increase the salary above any new
threshold. Employers must also
account for salary compression issues.
Guidelines for exemptions include:
* Executive - The " executive "
exemption applies to employees
whose primary duties are
management of the business or a
customarily recognized subdivision.
The employee must direct the work
of two or more employees and have
the authority to hire and fire, or to
effectively recommend such action.
* Administrative - The
" administrative " exemption is
the most-used exemption and
draws the most legal challenges.
It requires the employee perform
office or non-manual work directly
related to the management of the
business and exercise discretion
and independent judgment on
significant matters.
* Professional - The FLSA recognizes
four separate categories of exempt
professional employees: " learned
professionals, " " artistic or creative
professionals, " " teachers " and
" employees engaged in the practice
of law or medicine. " They will have
a degree or substantial training
qualifying them as a professional in
their area of expertise.
* Computer professional - There
are two " computer professional "
exemptions, one with a salary of at
least $684 per week and another for
those who are paid at least $27.63
per hour. Neither exemption applies
to employees who merely install,
upgrade, or maintain computer
station software, nor to those
who install hardware for their
employer's local area network.
* Outside sales - Employees who
are engaged in " outside sales " are
exempt. There is no minimum
salary requirement, but the
employee's primary duty must be
making sales while away from the
employer's facility more than 50% of
the time. Outside sales employees
generally receive a commission
based upon sales generated.
It is hard to predict exactly when
this will occur, but through careful
consideration employers should
be in a better position to defend a
claimed exemption.
RICHARD D. ALANIZ | meatpoult r y@sos land.com
An employee must satisfy both the
salary threshold and a duties test
to be " exempt " under the FLSA.
78 MEAT+POULTRY | 02.22 | www.meatpoultry.com
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Meat+Poultry - February 2022

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