Salaried Employees/Misclassification

For a combined over 30 years, the Atlanta overtime attorneys at Martin & Martin have successfully represented misclassified salaried employees in overtime cases under the Fair Labor Standards Act (FLSA). On a regular basis, dedicated, knowledgeable, and experienced overtime attorneys, Tom Martin and Kimberly Martin, bust the myth perpetuated by companies that salaried employees are never entitled to overtime. They unapologetically aggressively fight to recover the all of the unpaid overtime damages owed to their salaried employee clients.

Atlanta Overtime Attorneys Fight for Salaried Employees to
Recover their Unpaid Overtime

What Does Misclassification Mean?

Wrongly classifying employees as exempt (not entitled to overtime pay) as opposed to non-exempt (entitled to overtime pay) is called “misclassification.”

By telling their employees that under the FLSA all salaried employees are exempt from overtime, companies save millions of dollars in unpaid overtime wages. Many salaried employees work long, arduous hours simply believing that the FLSA does not provide for overtime wages for all salaried employees. The federal overtime law, however, states that all employees are entitled to overtime unless their employer can prove that they fall within a valid FLSA exemption to overtime pay. If the employer fails to meet its burden to prove that a salaried employee falls under an exemption to overtime, the employer must pay overtime wages to their salaried employee. 

The absolute main consideration of whether a salaried employee is exempt from overtime is based upon the employee’s primary job duties -- not their job title. The main exemptions from overtime for salaried employees under the FLSA include: Executive, Administrative, Professional, and Highly Compensated Employee.

In order for an employee to be considered exempt pursuant to the Executive Exemption of the FLSA, all of the following tests must be met:

1. The employee must be compensated on a “salary basis” (as defined by the FLSA regulations) at a rate not less than $684 per week;
2. The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;
3. The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and
4. The employee must have the authority to hire or fire other employees, or the employee’s suggestions, and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.
5. Examples of Executive Employees: executives, officers, owners, managers, and supervisors.

The most litigated FLSA exemption is the Administrative Exemption. In order for the Administrative Exemption to apply to a salaried employee, all of the following must be met:

1. The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $684 per week;
2. The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
3. The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
4. Examples of Administrative Employees: administrators, analysts, and accountants.

The Administrative Exemption is designed to apply to relatively high-ranking employees whose main job is to “keep the business running.” They must perform work for matters of significance and exercise discretion and independent judgment with respect to significant matters of the business. An employee who follows a written work plan or manual on a daily basis and cannot detour from that written plan does not exercise independent judgment. While clerical work may be administrative, it is not exempt. For example, answering telephones, preparing routine reports, filling out forms, transcribing dictation, etc. are not exempt job functions. Administrative work is not exempt just because it is financially important to the company meaning that the company would experience financial losses if the employee makes a mistake.

In determining whether a salaried employee falls under the Administrative Exemption, federal courts ask questions that include:

1. Whether the employee has the authority to formulate or interpret company policy;
2. How significant are the employee’s assignments in relation to the overall business operations;
3. Whether the employee has the authority commit the company to matters of significant financial impact; or
4. Whether the employee has the authority to deviate from the company policy without prior approval.

FLSA’s Salaried Professional Exemption to Overtime

In order for an employee to qualify for the learned Professional Exemption from overtime, all of the following must be met:

1. The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $684 per week;
2. The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;
3. The advanced knowledge must be in a field of science or learning; and
4. The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.
5. Examples of Professional or Creative Employees: attorneys, doctors, architects, engineers, and musicians.

Highly Compensated Employee Test

Another relevant salaried employee FLSA exemption is the Highly Compensated Employee Exemption which excludes employees from overtime pay who meet the following criteria:

1. Performs office or non-manual work;
2. Receives a total annual compensation of $107,432 or more per year including at least $684 per week on a salary or fee basis; and
3. Regularly performs at least one of the duties of an exempt executive, administrative, or professional employee.

Answers by Atlanta Overtime Attorneys to
Frequently Asked Questions from Salaried Employees

When Can an Employer Deduct Wages From a Salaried Employee?

At least once a week, the overtime attorneys in Atlanta at Martin & Martin receive questions from salaried workers regarding deductions in pay. Subject to very limited exceptions, an employer must pay an exempt salaried employee their full salary for any week in which the employee performs any work, regardless of the number of days or hours worked (with the exception of the first and last weeks of employment if the employee did not work the full workweeks). Employers are not required to pay exempt salaried employees for any workweek in which they perform no work. However, if the employer makes deductions from an exempt salaried employee’s predetermined salary because of the operating requirements of the business, the employee is not paid on a “salary basis” and thus does not fall under the salary exemptions of the FLSA. If the employee is ready and able to perform their job, deductions cannot be made for time during which work is not available. 

A company may make the following deductions to a salaried employee’s pay:

1. When a salaried exempt employee is absent from work for one or more full days for personal reasons other than sickness or disability;
2. For absences of one or more full days due to sickness or disability if the deduction is made in accordance with a bona fide plan, policy, or practice of providing compensation for salary lost due to illness;
3. For weeks taken under the Family and Medical Leave Act;
4. To offset the amounts that the employee receives as a jury or witness, or for military pay;
5. For penalties in good faith for infractions of safety rules of major significance; or
6. For unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions.

If the Georgia employer has an “actual practice” of making improper deductions from the pay of a salaried employee, the employer will lose the exemption. This means that the salaried employee is no longer exempt from overtime and the employer must pay the salaried employee for all overtime hours worked at an overtime rate of pay. There are a variety of factors that courts look at to determine whether the employer has an “actual practice” of improper deductions including, the number of times the employer has made the improper deductions and whether the employer has a clearly communicated policy permitting or prohibiting improper deductions. Isolated one-time inadvertent improper deductions will not result in the loss of the exemption if the employer reimburses the employee for the improper deductions, has a policy in place prohibiting the deduction and makes a good faith commitment to comply in the future. However, if the employer willfully violates the policy by continuing the improper deductions after receiving employee complaints, it will lose the deductions.

If a Georgia salaried employee is successful in their FLSA case, the employer must pay the employee all unpaid overtime, liquidated damages a/k/a double damages, and attorney’s fees and litigation costs. Liquidated damages double the amount of unpaid overtime wages. For example, if an employee is entitled to $10,000 in unpaid overtime wages, they will also be entitled to $10,000 in liquidated damages. 

The FLSA statute of limitations is two years from the date the federal complaint is filed. In cases where the employer has acted willfully, the court increases the statute of limitations to three years of lost wages instead of two years. This can be a significant recovery for improperly classified salaried employees.

1. Are you paid at on a salaried basis;
2. What are your job duties;
3. What is the primary purpose of your job;
4. With respect to other employees, what type of duties do you perform (hire, fire, train, supervise, counsel, discipline, etc.);
5. Do you supervise two or more full-time employees or their equivalent;
6. What kind of significant company decisions do you make in performing your job duties (sign contracts, commit the company to significant financial decisions, etc.);
7. Do you implement legal compliance measures;
8. In performing your job duties, what type of decisions do you make without your supervisor’s approval;
9. What type of significant corporate matters require you to use discretion and your independent judgment;
10. Do you follow a written policy, procedure manual, or handbook to perform your job duties or do your duties require you to make independent decisions on how to perform them on a daily basis;
11. Does your employer dock your pay or deduct for absences; and
12. For the previous three years, approximately how many overtime hours have you worked?

Martin & Martin’s FLSA Quiz includes a sample of the types of questions that courts ask in determining whether an employee falls under the FLSA’s exemptions to overtime for salaried employees.

If you have been misclassified by your employer, you would be entitled to your overtime pay at a rate of 1 ½ of your regular rate for the time period of the remaining statute of limitations. Additionally, you would be entitled to liquidated damages a/k/a “double damages” which doubles the amount of pay you are entitled to receive. The Court would also require that the company pay your attorneys’ fees and costs.

In order to recover these damages, you would be required to file a lawsuit. Overtime lawsuits can be filed on behalf of a single employee or as a collective or class action which permits other similar employees to join the case to recover their overtime as well. 

The FLSA salaried overtime attorneys in Atlanta at Martin & Martin are passionate about ensuring that salaried employees are properly classified and paid. After reading the firm’s FLSA Quiz, overtime attorneys, Tom Martin and Kimberly Martin, invite you to contact them to discuss your job duties so that they can perform a free FLSA audit to determine whether you are properly classified. If your employer has misclassified your position as exempt, your unpaid overtime damages owed by your employer could be significant. 

Atlanta overtime lawyers, Martin & Martin, routinely successfully litigate FLSA exemptions on behalf of salaried employees across Georgia. In fact, Kimberly Martin spent five years at national and international law firms prior to co-founding Martin & Martin where she routinely performed FLSA audits on job positions at regional and national companies. And, Tom Martin spent 28 years as a senior corporate executive tasked with due diligence evaluations to ensure his companies were not open to liability under any state or federal laws, including the FLSA. Years of representing and defending employers provides Tom and Kimberly with unique perspectives in fighting on behalf of employees.

Dedicated overtime attorneys in Atlanta, Georgia, Tom Martin and Kimberly Martin, successfully represent employees like you every single day. They offer free consultations and can usually provide same day responses to any salaried employee who believes that their employer has misclassified them as exempt under the FLSA. You worked hard for your pay, let Martin & Martin work hard to get you what you are owed. The law firm welcomes salaried employees to Contact Us or call at 404.831.8721. 

For more additional information about the FLSA, you can also check out the firm’s Overtime Blog as well as Frequently Asked Questions.