Changing FLSA exemption

SM

H.R. realized a long-time employee has been classified as exempt but should be non-exempt. The employee's manager does not want to increase her duties so the exempt status would be appropriate. At the time the employee is advised of her reclassification to non-exempt, does the FLSA require the employer to attempt to calculate and pay her overtime for the last two years, when no time cards or other documentation has been kept? Can we make a good faith effort to mutually calculate back OT and have the employee sign a release with her payment that she agrees the amount is a fair estimation?

Douglas Neu RI

It sounds like you're in a tough situation in calculating the overtime owed. In cases like this, the US Department of Labor and the courts generally look at whatever evidence they can get - in this case, the mutual recollection that the employee worked, on average, a certain amount of overtime per week.

While it depends on the particular office and investigator if a complaint were made, the US Department of Labor is generally pretty reasonable is situations such as this one, particularly if the employee agrees with the calculation. It does not sound like there is much else that you can do to calculate the number of overtime hours worked.

As to having the employee sign a release, it may be helpful in proving that the employee agreed with the calculation, but you should be aware that it will not be a bar to an FLSA suit or a complaint to and investigation by the US Department of Labor. A release of an FLSA claim is only valid when approved by the US Department of Labor or a court. So getting the release is not the end of the line if the employee, or other employees if they are in the same situation, files suit or a complaint with the Department of Labor.

I hope this helps. Please feel free to call or email me if you want to discuss this more.

Douglas B. Neu
Editor, Rhode Island Employment Law Letter
Powers, Kinder & Keeney, Inc.
(401)454-2000
[email]dneu@pkklaw.com[/email]

(BJ)

The law requires that overtime is time and half the minimum wage at the time. A good faith effort will likely resolve the matter if the employee is truely in agreement, and as received proper counsel and had adequate time to view the options.