The "wage and duties" test and non-exempt executives

Last week we discussed the recent settlement of 14 lawsuits against Rite Aid. The drugstore chain and Fortune 500 company was named as a defendant in 15 wage and hour suits alleging that they improperly classified managers as exempt employees.

Exempt employees are paid on a salaried basis and do not receive extra payment for any hours worked above 40. Many employers automatically classify supervisors and managers as exempt because they have certain titles and salaries.

However, what federal law has to say about exempt versus nonexempt employees is a bit more complicated. The "wage and duties" test is used by the Department of Labor to determine how an executive employee should be classified. It involves four factors.

First, to be exempt an employee must be salaried at a rate of at least $455 per week and their primary duties must include managing the enterprise. This must include directing the work of at least two other full-time employees. Lastly, the employee must have the power to hire or fire other employees.

This test helps ensure that the appropriate employees receive the benefits of being non-exempt, such as overtime. If your employer has classified you improperly or failed to pay you fairly for hours worked, you don't need to stand for it. Every employee is entitled to fair treatment and is protected by state and federal labor laws.

If you're engaged in a wage and hour dispute with your employer, consider speaking with an experienced employment law attorney. He or she can help you protect your rights and pursue any appropriate claims for damages.

Source: Free Enterprise, "Rite Aid Settles Overtime Lawsuit for $20.9M," Andrew Lu, Jan. 10, 2013

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