Preventing A Messy "Failed Exemption" Lawsuit

by Fisher Phillips

(Labor Letter, February 2014)

In recent years employers have become all too familiar with lawsuits alleging violations of the federal Fair Labor Standards Act (FLSA). According to the Administrative Office of the United States Courts, there were more than 7,000 FLSA federal lawsuits filed in 2012, and 2013 was similar. Many of these lawsuits include claims that the employee was “misclassified” as exempt from the FLSA’s overtime-pay requirements.

In the face of these statistics, employers should not just blindly hope that they have classified their employees correctly. Instead, you should proactively plan ahead for the possibility of such litigation and begin now to build the evidence you will need to prove an exemption in court.

Don’t Neglect Your Duties

All of the so-called “white-collar” exemptions under the FLSA (executive, administrative, professional, outside sales, and computer professional) contain a “duties test.”  For example, to qualify for the “administrative” exemption under the FLSA, 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 the employee’s primary duty must include the exercise of discretion and independent judgment with respect to matters of significance. Sound familiar?  Probably. But it’s not enough for an employer to be vaguely familiar with the duties test.

Regardless of which exemption is being relied upon, you need to analyze whether the employee at issue actually performs the duties that are required to support the exemption. One way of verifying an employee’s duties is to work with the individual who supervises or manages the exempt employee. This higher-level supervisor/manager is usually the most reliable source for information about what the employee does on a daily basis.

By engaging with the higher-level supervisor/manager, you or your attorney can evaluate the strengths and weaknesses of the exemption and can make recommendations as necessary. While your HR team may be perfectly capable of such a review, by using an attorney the communication should be covered by the attorney-client privilege. This allows a free exchange of information without fear of having to disclose potentially damaging communications in a subsequent lawsuit. A confidential and privileged Position Analysis Questionnaire is one tool we like to use.

Mind Your Documents

You should also review your human resources documents to determine whether those documents will help or hurt in any lawsuit. While documents alone will not prove the duties test for an exemption, you do not want inaccurate documents that could undermine an exemption. If an offer letter or job description does not accurately reflect the duties to be performed, those documents should be revised. This is particularly true if the employee’s actual duties satisfy a test for an exemption but employer-created documents suggest otherwise.

Some commentators have suggested that employers should ask employees to create self-assessments which state, in the employees’ own words, what duties they perform. While such a document would undoubtedly be compelling evidence if employees always described duties in a way that satisfied an exemption, be careful. The possibility exists that an employee might describe duties in a way that undermines an exemption.

In that scenario, you will have created “bad” evidence, and put yourself in the awkward position of deciding how to explain it. Most troubling, of course, would be a self-assessment that did not support an exemption and that did not accurately reflect the employee’s duties. For these reasons, we suggest consulting with employment counsel before implementing such a self-assessment program.

And remember, most of the white-collar exemptions also require payment on a “salary basis,” which means a weekly guarantee not subject to reductions except in limited circumstances.

Clean Up Salary Misunderstandings

In addition to proactively shoring up the duties test for an exemption defense when possible, take steps to limit damages in any future litigation. Veterans of failed-exemption lawsuits are familiar with the disputed issue of how to calculate overtime damages in such cases. An employee is likely to argue that the salary was intended as compensation for only 40 hours, and that the employer thus owes “one and one-half” the employee’s “forty-hour rate” of pay for any hours worked over 40.

To undercut this argument, make clear in offer letters and elsewhere that the exempt employee’s salary is being paid to compensate the employee for all hours worked whether few or many. When a salary is paid to compensate all hours worked, the salary itself is the “one” of “one and one-half.”  FLSA overtime premium is therefore figured at one-half of the rate obtained by dividing the weekly salary by all of the hours worked in each particular overtime workweek. Calculating damages using this method, instead of using the employee’s method, can result in savings of nearly 80%.

The wise old saying, “an ounce of prevention is worth a pound of cure,” is particularly true in the wage-hour arena.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Fisher Phillips | Attorney Advertising

Written by:

Fisher Phillips

Fisher Phillips on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.