Overtime Archives - Page 2 of 2 - Ortiz & Moeslinger, P.C.

Credit Cards as Basis for Individual FLSA Coverage

February 9, 2017/in Overtime/by competenow

Not all employees and business are covered by the federal minimum wage and overtime law, the Fair Labor Standards Act. If a business is covered, all of its employees are covered. However, even if a business is not covered, some of its employees may be covered. For Massachusetts employees, this matters because there are some exemptions under Massachusetts overtime law, such as for workers in hospitals and restaurants, that don’t exist under federal law. So, in these circumstances, it’s key to determine if the employee or business is covered by federal law to know whether that employee is entitled to overtime.

“Enterprise” coverage means coverage for the business, and generally exists when there have been annual gross revenues of more than $500,000.

“Individual” coverage determines whether or not an employee is covered, irrespective of whether the business is covered. Individual coverage exists when an employee is engaged in interstate commerce or in the production of goods for interstate commerce.

This Department of Labor fact sheet explains the distinction.

Many things are obviously interstate commerce, like the manufacture of goods to be sold throughout the United States, and many things are clearly not interstate commerce, such as painting a house. The question in this post is whether an employee who handles customer credit card transactions is engaged in interstate commerce, thereby invoking “individual” coverage.

First, the idea of “interstate commerce” has vast implications in constitutional and federal law generally. The federal courts have interpreted the phrase expansively to permit Congress to regulate local activities. However, in the context of employees’ entitlement to overtime and the minimum wage, federal courts have interpreted the phrase quite narrowly and in favor of business defendants. Generally, the test is:

whether an employee engages in interstate commerce by performing work involving or related to the movement of persons or things (whether tangibles or intangibles, and including information and intelligence) between one state and another.
The employee must engage in these interstate activities as a “substantial part” of their work.
It is not enough that the employee’s activities affect or indirectly relate to interstate commerce, but they must be in or so closely related to the movement of the commerce as to be a part of it.

An employee who regularly uses the instrumentalities of interstate commerce in their work, e.g., regular and recurrent use of interstate telephone, telegraph, mails, or travel, is engaged in interstate commerce. See Thorne v. All Restoration Servs., Inc., 448 F.3d 1264, 1266 (11th Cir. 2006).

So, what about credit cards? A waiter or retail employee who is processing credit cards throughout the day, every day, seems to be using an instrumentality of interstate commerce. The electronic signal transmitting the credit card transaction information travels through the phone lines or the internet, and the actual transaction is approved and processed in a different state (a plaintiff’s lawyer must gather admissible evidence showing all of this). Isn’t this enough like using the phone lines or mails to render an employee’s activities to be in interstate commerce? Well, opinions differ.

First, the Dept. of Labor believes that an employee who regularly handles credit card transactions is engaged in interstate commerce: “[e]mployees … are individually covered under the FLSA if, in the performance of their duties, they are engaged in interstate commerce …. Such employees include those who regularly handle interstate mail and telephone calls, engage in banking or credit card transactions, or receive or handle goods or materials from or destined for out-of-state sources.” Dept. of Labor Opinion Letter, FLSA, 1999 WL 1002373 (March 5, 1999).

However, federal courts routinely ignore the DOL’s guidance and provide it very little deference. In the 2006 case cited above, Thorne v. All Restoration Servs, the court didn’t give the DOL’s position any weight and largely sidestepped the legal issue by stating, “Even assuming, without deciding, that credit card transactions alone could constitute an instrumentality of interstate commerce, Thorne did not produce sufficient evidence of interstate activity […] Thorne did not produce evidence that he corresponded with merchants outside the state of Florida using the mail, phone, or fax, and nor did he produce evidence that he made purchases of goods from out-of-state vendors.” Id at 1267.

In short, the plaintiff in Thorne didn’t produce enough evidence about the regularity of the employee’s credit card processing and the interstate nature of those transactions. Yet, throughout Florida in the coming years, at least four district courts after Thorne have held that, as a matter of law, credit card transactions for the purchase of local goods could not form the basis for individual FLSA coverage. Marckenson v. LAL Peker, LLC, 2011 WL 5023422, *4 (S.D.Fla. Oct. 19, 2011); Kitchings v. Fla. United Methodist Children’s Home, Inc., 393 F.Supp.2d 1282, 1293 n. 26 (M.D.Fla.2005); Dent v. Giaimo, 606 F.Supp.2d 1357, 1361 (S.D.Fla.2009); Joseph v. Nichell’s Caribbean Cuisine, Inc., 862 F. Supp. 2d 1309, 1313 (S.D. Fla. 2012), as amended (July 17, 2012).

This conversation has been dominated by federal courts in the 11th Circuit (headquartered in Atlanta but governing Florida). However, a few voices have emerged from elsewhere, such as in Owusu v. Corona Tire Shop, Inc., No. 09-CV-3744 NGG JO, 2013 WL 1680861, at *4 (E.D.N.Y. Apr. 17, 2013), where the court credited the DOL’s opinion that credit card transactions could form the basis of individual FLSA coverage. The federal courts in Massachusetts have not addressed this issue, and I cannot predict much about the outcome. However, I believe that, for a plaintiff wanting to put himself in the best possible position, a key is laying a strong foundation regarding the interstate nature of the credit card transaction itself, and arguing that the nature of these transactions makes the employee engaged in interstate commerce, despite any local nature of the goods sold.

Contact Us

"*" indicates required fields

Buyer of car shaking hands with seller in auto dealership, view from interior of car.

Overtime for Car Sales in Massachusetts

October 5, 2015/in Overtime/by competenow

Most salespeople who work in car dealerships are paid on commission, or receive a base salary plus commissions. A common misconception is that these salespeople are exempt from receiving overtime wages. This is not true. Car salespersons are entitled to overtime pay even when they receive salary and commissions. Salary paid and commissions earned do not count towards the employer’s obligation to pay the salesperson premium overtime pay. The employer must separately pay employees earned overtime wages.

Under Massachusetts law, car salespersons are entitled to overtime. This means that for every hour worked in excess of 40 in one workweek, a car salesperson must be paid at one and one half times their regularly hourly rate. Premium pay for overtime hours is in addition to salary and commissions.

The Department of Labor Standards recently updated its regulations to clarify this rule. According to the DLS, a car dealership must pay its sales staff at least the minimum wage for the first 40 hours they work each week. The minimum wage in Massachusetts is currently $11.00 per hour, meaning that a salesperson who works 40 hours per week must earn at least $360 (before taxes) each week.

If a salesperson earning the minimum wage works more than 40 hours in a week, the employer must pay the employee one and one-half times the employee’s regular rate of pay ($11.00 per hour), or a total of $16.50 per hour for all hours over 40, regardless of how much the employee earns in commissions that week.

If the salesperson instead earns a salary and commissions, the employer must still pay the employee one and one-half times their regular rate of pay. A salaried employee’s regular hourly rate is calculated by dividing the amount of salary received in a week by the number of hours worked in that week. For example, an individual receiving $600 per week in salary who works 50 hours in the week has a regular hourly rate of $12 per hour. The employer must pay that employee $18.00 per hour (1.5 x $12.00) for each hour worked over 40, even if that employee earns commissions that exceed the earned overtime wages.

If an employer fails to compensate its employees for overtime pay, the employer is liable for treble damages, meaning the employer must pay the employee three times the amount of withheld wages.

If you work as a car salesperson and do not receive overtime pay, or receive less than the minimum wage, feel free to call us to speak with an attorney about your rights.

Contact Us

"*" indicates required fields

Learn more about commission pay

Commission Pay and Overtime Rights

August 31, 2015/in Commissions, Overtime/by competenow

Are you an employee who is paid commissions only, or a combination of salary plus commissions? You might think you are not entitled to overtime pay. However, unless you are exempt from the overtime law (such as traveling salespersons who do not regularly report to an office, bona fide executives and professionals, and others), you must receive a premium overtime wage for all hours you work over forty in a week.

The Massachusetts Overtime Law

The Massachusetts Overtime Law, M.G.L. c. 151, s. 1A, provides that employees must be paid one and one-half times their “regular rate” of pay for all hours worked in excess of forty in a workweek. An employee’s “regular rate” of pay includes all forms of compensation except for commissions, draw pay (recoverable or non-recoverable), bonuses, and “other incentive pay based on sales or production.” Once you have added together all the compensation an employee receives in a workweek (with those noted exceptions), you divide that total by the number of hours the employee worked to get the employee’s “regular rate.”

Commissions-Only Employees

What if you’re only paid commissions for your work? Because commissions are excluded from calculating the regular rate, as mentioned above, the regular rate is zero, right? The overtime regulations do not permit that result. Instead, the regulations prohibit the regular rate from falling below the minimum wage (currently $9.00 per hour). 454 CMR 27.03(1). So, the “regular rate” for a commissions-only employee is $9.00 per hour.

Then, we multiply that number by 1.5 and get an “overtime rate” of $13.50 per hour. In other words, for each hour a commissions-only employee works in excess of forty in a workweek, that employee must receive $13.50.

Employees Who Get Paid Salary Plus Commission

If an employee is paid both a salary and commissions, the calculation changes. While commissions are still excluded from the regular rate calculation, salary payments are included. So, the regular rate for an employee earning a salary would be his total weekly salary divided by the number of hours he worked. For example, if an employee earns a $50,000 salary per year ($961.54 weekly) and works 50 hours in a given week, his or her regular rate is $19.23 per hour. This employee’s overtime rate would be $28.85 ($19.23 x 1.5). This means that he must receive $28.85 for every hour worked in excess of forty in a workweek.

What if the commissions an employee earns exceed the amount of overtime wages owed?

Up until recently, this was an open question under state law. However, the Massachusetts Department of Labor Standards recently updated the overtime regulations to make clear that an employer cannot credit earned commissions toward meeting its overtime obligations. The new regulations provide:

Whether a nonexempt employee is paid on an hourly, piece work, salary, or any other basis, such payments shall not serve to compensate the employee for any portion of the overtime rate for hours worked over 40 in a work week …

Simply put, an employer cannot credit the commissions (or other forms of payment) an employee receives toward that employee’s earned overtime wages. Instead, the employer must separately pay that employee premium overtime wages for all hours worked in excess of forty in a workweek.

If you are an employee who earns commissions only (or salary and commissions), works over forty hours per week, and doesn’t receive premium overtime wages, call us at the number above or just email us at [email protected] for a free consultation.

Contact Us

"*" indicates required fields

Learn more about commission pay

Overtime for Snow Plow Drivers

February 6, 2015/in Overtime/by competenow

During the winter, snow plow drivers often end up working in excess of 40 hours per week. At times they work around the clock during snow emergencies. So, are snow plow drivers entitled to overtime for hours worked over 40 in a week under Massachusetts and/or federal law?

There is an overtime exception for seasonal work under Massachusetts law. The law states that no overtime must be paid “in a business or specified operation of a business which is carried on during a period or accumulated periods not in excess of one hundred and twenty days in any year, and determined by the commissioner to be seasonal in nature.” (You can read the law here).

The key issue here is that even if the snow removal operation operates for less than four months a year, the business owner must apply for the exemption with the commissioner before the overtime work happens. This is infrequently done, and therefore most snow plow drivers are entitled to overtime under Massachusetts law.

The motor carrier exemption also applies under both state and federal law, but this will not affect snow plow drivers who drive vehicles weighing less than 10,000 pounds and who often do not cross state lines in their work.

The bottom line is that snow plow drivers should get overtime pay for hours in excess of 40 in Massachusetts.

Contact Us

"*" indicates required fields

New Massachusetts Overtime Statute of Limitations

December 9, 2014/in Overtime/by competenow

Starting in November 2014, you can look back three years before to recover unpaid overtime. This expands the previous Massachusetts overtime statute of limitations by one year. (It was two years, now it is three). Lawyers are now debating whether the change is retroactive or not, and the courts will weigh in on that question in the future.

As always with statutes of limitations, you only lock in the time at the beginning of the period once you file a case in a court. (Although, also starting this month, the filing of a complaint with the AG tolls the statute until she issues a private right of action letter.)

A brief word about the federal statute of limitation for overtime cases: The look-back period is two years, unless you can prove that the employer was “willful” in its failure to pay lawful overtime. If so, the limitations period is also three years.

Contact Us

"*" indicates required fields

Overtime Pay for Bus Drivers

October 25, 2014/in Overtime/by competenow

Bus drivers often do not receive the overtime pay they deserve if they work more than 40 hours a week. Why? Some employers think that bus drivers are not entitled to overtime, and this is sometimes true under federal law. However, some states, like Massachusetts and several others, have laws that grant overtime rights to bus drivers. The legal basis for this is the following:

Many bus drivers are not entitled to overtime pay under federal law due to the Motor Carrier Act (“MCA”) exemption found in 29 U.S.C. § 213(b)(1). The MCA states that overtime pay is not required for “any employee with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service….” According to another section of federal law, the Secretary has these powers “over transportation by motor carrier … to the extent that passengers, property, or both, are transported by motor carrier between a place in … a State and a place in another State.” So, in other words, the federal MCA applies to drivers who drive between states. Sometimes passenger drivers who only drive within one state can be swept up into the federal MCA exemption, but those circumstances are more common for drivers of cargo. For bus drivers (and other passenger drivers) who drive only within one state, the federal MCA almost always doesn’t apply. These drivers should get overtime under federal law no matter what state they live in and no matter where they drive.

However, the point of this article is slightly different. Whether or not you are entitled to overtime under the federal MCA, you are entitled to overtime under Massachusetts law because the state version of the MCA only applies to drivers of trucks–and buses, limos, vans, taxis, etc. are not trucks. The Massachusetts motor carrier exemption states that it applies to “a driver or helper on a truck with respect to whom the Interstate Commerce Commission has power to establish qualifications …” G.L. c. 151 § 1A(8). (The federal MCA is not limited just to trucks.)

This was explained recently by the United States District Court for the District of Massachusetts in O’Brien v. Lifestyle Transp., Inc., 956 F.Supp.2d 300 (2013). In that case, the court followed an opinion letter by the Division of Occupational Safety which stood for the relatively straightforward proposition that “the generally understood meaning of the word truck is different than the generally understood meaning of the words automobile, van, bus or motor vehicle.” So in Massachusetts, drivers of passengers–like bus, limo, and van drivers–are entitled to overtime, even if they drive across state lines.

A final note: The FAA Act does not preempt Massachusetts overtime law with respect to drivers of passengers.

Contact Us

"*" indicates required fields

Unpaid Wages and Overtime for Undocumented Workers

July 2, 2013/in Overtime, Wage/by competenow

Can undocumented workers sue for unpaid wages? This question has been addressed by many courts, and the answer is yes. Undocumented workers are frequent victims of wage and overtime exploitation, and it would be extraordinarily bad policy to allow employers a free pass because they hired an undocumented worker and then failed to pay them. It is the employer’s job to verify (via form I-9) whether a worker can legally work in the U.S. An employer cannot hide behind its own dereliction of duty to escape liability under the wage and overtime laws.

The Eleventh Circuit Court of Appeals recently addressed this in Lamonica v. Safe Hurricane Shutters, Inc., 711 F. 3d 1299 (11th. Cir. 2013), finding that unpaid workers could sue under the Fair Labor Standards Act (“FLSA”). Here in Massachusetts, the U.S. District Court in Jin-Ming Lin v. Chinatown Restaurant Corp., 771 F. Supp. 2d 185 (D. Mass. 2012) reached the same conclusion. These were cases under the federal wage laws, but the state courts here in Massachusetts will almost certainly reach the same conclusion. The Massachusetts wage and overtime laws are even more employee-friendly than their federal counterparts. The Massachusetts Minimum Wage Law specifically states, “It is hereby declared to be against public policy for any employer to employ any person in an occupation in this commonwealth at an oppressive and unreasonable wage.”

But what about retaliation against undocumented workers who sue to get unpaid wages and overtime? Sometimes employers threaten to report workers to immigration authorities if they sue. This is unlawful. Reporting undocumented workers after they have filed a lawsuit is retaliation under wage laws, so if this happens, the employee can amend their complaint to add additional claims. See, for example, Contreras v. Corinthian Vigor Insurance Brokerage, 103 F. Supp. 2d 1180 (N.D. Cal. 2000) (concluding that an employer’s report to then-INS and Social Security Administration of an undocumented worker’s status violated anti-retaliation provisions of the FLSA).

Also, the Department of Labor (“DOL”) and Department of Homeland Security, which is in overall control of the enforcement of immigration laws, have entered into an agreement (PDF) which generally prohibits immigration work site enforcement during a DOL investigation and related proceedings. So, sometimes it is wise to report the unpaid wage claims to the DOL in addition to bringing a lawsuit in order to get additional protection under that agreement.

Contact Us

"*" indicates required fields

Unpaid Wage and Overtime Retaliation

June 18, 2013/in Overtime, Wage/by competenow

Under Massachusetts law, when an employee complains about unpaid wages or overtime, he is protected from discharge or other punishment because of the complaint. This protection extends to formal complaints filed in court or with the attorney general, but it also includes protection for making informal written or verbal complaints directly to your employer for violations of the pay laws.

Here are the laws:

Overtime Retaliation: Section 19 of Chapter 151 of the Massachusetts General Laws states that an individual who is punished for an overtime complaint shall recover in a lawsuit at least one month’s wages but no more than two month’s wages. In addition, the individual will receive the costs of the suit and reasonable attorneys’ fees. Of course, employees usually also sue for the unpaid overtime.

Unpaid Wage Retaliation: The damages for unpaid wage retaliation can be significant because lost wages resulting from a retaliatory discharge can be recovered under Massachusetts law, and this recovery is trebled in a court judgment. Attorneys’ fees and costs will also be awarded. In addition to “back pay,” an employee who was the victim of unlawful retaliation can recover “front pay.” So, for example, when an employee is fired for complaining about unpaid wages, and he doesn’t find another job immediately or takes a job making less money, the wages that he lost out on after being fired can be recovered and tripled in a lawsuit. In appropriate cases, an employee can also recover for emotional distress damages.

Section 148A of Chapter 149 of the Massachusetts General Laws makes retaliation unlawful for wage complaints (formal and informal), and Section 150 creates a private right of action and includes the treble damages provision.

Contact Us

"*" indicates required fields

Salary and Overtime Pay

May 12, 2013/in Overtime/by competenow

Even if you are paid a salary, you may be entitled to overtime. This is because you can be paid a salary and be either exempt OR nonexempt from overtime. This is a common mistake that employers make, intentional or not.

The fact that you get paid a salary should not deter you from seeking your rightful overtime pay, even if you don’t track all of your hours. Your job duties (and sometimes the industry you’re in) determine if you are entitled to overtime, not how you are paid. There are many exemptions from overtime, including the executive, administrative and professional exemptions, and many rules that go along with defining these exemptions. However, it is fairly common for employees to be misclassified as exempt (and here is a previous blog post on that topic). After all, this can save an employer a lot of money. So, it’s worth investigating.

Calculating your regular rate of pay when you are on salary is not always straightforward, but it can be done if there are some time records or if the fact of overtime work can be established and some fair estimate made. Once the weekly work hours are known or estimated, the method for calculating an employee’s all-important regular rate of pay can vary.

When you work hours that fluctuate in a given week–which is common–yet get paid a fixed salary, the question arises as to whether one should divide the salary by 40 or the actual hours worked to arrive at the regular rate of pay. When you use the actual hours, the regular rate will be lower for overtime purposes, so employers like to use this method. This is called the “fluctuating work week”. The authority for fluctuating work week comes from a Supreme Court decision and, controversially, a regulation that many argue should not be used by employers to remedy a misclassification. Recent circuit court opinions from the 4th and 7th Circuits support the use of this employer-friendly calculation method. The bottom line is that the fluctuating work week method can be used in some circumstances and arrives at the regular rate by dividing weekly salary by the actual hours worked in that week rather than by 40, and then it calculates the overtime owed as 50 percent of the regular rate for all overtime hours worked in that week.

But don’t forget the big picture: Even if the fluctuating work week is used, you are still entitled to overtime over and above your salary for your overtime hours if you are a nonexempt employee.

Contact Us

"*" indicates required fields

Overtime Rules for Nurses

February 3, 2013/in Overtime/by competenow

The Fair Labor Standards Act (“FLSA”) regulations have become more restrictive with respect to nurses and overtime. Fewer nurses are now entitled to overtime under current Department of Labor regulations interpreting the FLSA. However, there are some important rules to remember.

In general, Registered Nurses (“RNs”) who are paid a salary that meets certain requirements (at least $455/week) are exempt from overtime under the learned professional exemption. As the regulation puts it:

Registered nurses who are registered by the appropriate State examining board generally meet the duties requirements for the learned professional exemption. Licensed practical nurses and other similar health care employees, however, generally do not qualify as exempt learned professionals because possession of a specialized advanced academic degree is not a standard prerequisite for entry into such occupations.

See 29 C.F.R. § 541.301(e)(2)

The regulations previously excluded RNs from the professional exemption. See, e.g., 29 C.F.R. § 541.314(b)(3) (1973); Brock v. Superior Care, Inc., 840 F.2d 1054, 1061 n. 1 (2d Cir.1988) (holding that § 541.3(e) does not apply to nurses); Harrison v. Washington Hosp. Ctr., 1979 WL 1923, at *2-*3 (D.D.C.1979) (same).

However, there are two key exemptions:

(1) So-called “practical nurses” are generally entitled to overtime whether or not they are paid a salary. The academic requirements involved in becoming a practical nurse are fewer than for an RN. Here’s a more detailed explanation of the difference between a practical and registered nurse.

(2) Importantly, an RN who is paid hourly is entitled to overtime. 29 C.F.R. § 541.600(e) states that doctors are exempt from overtime even if they are paid hourly, but this exception specifically does not apply to “pharmacists, nurses, therapists, technologists, sanitarians, dietitians, social workers, psychologists, psychometrists, or other professions which service the medical profession.” Consequently, any nurse paid hourly is entitled to overtime.

Contact Us

"*" indicates required fields

Massachusetts Overtime Claims and Exemptions

June 19, 2012/in Overtime/by competenow

There are two overtime laws that apply to Massachusetts employees: the federal Fair Labor Standards Act and the Massachusetts Overtime Law. There is a lot on the web about the federal law, but this posting will mainly be about the Massachusetts Overtime law, which, like the Massachusetts Wage Act, provides for treble damages and attorneys’ fees for prevailing plaintiffs. However, the discussion at the bottom of the page about the executive, administrative, professional, and outside sales exemptions will apply to both the state and federal laws.

The basic part of the law, which is found at MGL c. 151, Section 1A, requires employees to receive time and a half (one and a half times their regular rate of pay) for hours worked in excess of 40 in a week unless they are exempt from overtime. There are many types of “exempt” employees, and the devil is in the details with these exemptions. Below are the ones specifically listed in the Massachusetts law. However, there are more exemptions under Massachusetts law than under federal law, so if you are exempt from overtime under one of these exemptions, you still may be entitled to overtime under the federal law. Employees are exempt when they work as or in the following places and capacities:

(1) as a janitor or caretaker of residential property, who when furnished with living quarters is paid a wage of not less than thirty dollars per week.

(2) as a golf caddy, newsboy or child actor or performer.

(3) as a bona fide executive, or administrative or professional person or qualified trainee for such position earning more than eighty dollars per week.

(4) as an outside salesman or outside buyer.

(5) as a learner, apprentice or handicapped person under a special license as provided in section nine.

(6) as a fisherman or as a person employed in the catching or taking of any kind of fish, shellfish or other aquatic forms of animal and vegetable life.

(7) as a switchboard operator in a public telephone exchange.

(8) as a driver or helper on a truck with respect to whom the Interstate Commerce Commission has power to establish qualifications and maximum hours of service pursuant to the provisions of section two hundred and four of the motor carrier act of nineteen hundred and thirty-five, or as employee of an employer subject to the provisions of Part 1 of the Interstate Commerce Act or subject to title II of the Railway Labor Act.

(9) in a business or specified operation of a business which is carried on during a period or accumulated periods not in excess of one hundred and twenty days in any year, and determined by the commissioner to be seasonal in nature.

(10) as a seaman.

(11) by an employer licensed and regulated pursuant to chapter one hundred and fifty-nine A.

(12) in a hotel, motel, motor court or like establishment.

(13) in a gasoline station.

(14) in a restaurant.

(15) as a garageman, which term shall not include a parking lot attendant.

(16) in a hospital, sanitorium, convalescent or nursing home, infirmary, rest home or charitable home for the aged.

(17) in a non-profit school or college.

(18) in a summer camp operated by a non-profit charitable corporation.

(19) as a laborer engaged in agriculture and farming on a farm.

(20) in an amusement park containing a permanent aggregation of amusement devices, games, shows, and other attractions operated during a period or accumulated periods not in excess of one hundred and fifty days in any one year.

Most of these exemptions just exist in the state, and not the federal, law. However, the important general exemptions, the so-called executive, professional, administrative, and outside sales exemptions, exist under both sets of laws. These general exemptions are “essentially identical” under the state and federal laws, see Swift v. AutoZone, Inc., 441 Mass. 443, 806 N.E.2d 95, 98 (2004), so Massachusetts courts look to the more plentiful federal precedent when interpreting them. Here are the requirements for each general exemption:

Executive Exemption

You make more than $455 per week;
Your primary duty is managing the business or a subgroup of the business;
You regularly supervise the work of two or more full-time employees; and
You have the authority to hire or fire other employees, or your suggestions and recommendations about the hiring, firing, advancement, promotion, etc. of other employees is given “particular” weight.

Administrative Exemption

Note: This is the tough one. Many, many people are exempt under this flexible definition, and the courts have tended to interpret it liberally in favor of employers.

You make more than $455 per week;
Your primary duty is office or non-manual work directly related to the management or general business operations of your employer or your employer’s customers; and
Your primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

Professional Exemption

You make more than $455 per week;
Your primary duty is the performance of work requiring “advanced knowledge”, i.e. work which is mainly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment; and
The advanced knowledge must be in a field of science or learning; and
The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

“Creative” Professional Exemption

You make more than $455 per week; and
Your primary duty is work that requires invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

Outside Sales Exemption

Your primary duty must be making sales, or obtaining orders or contracts for services or for the use of facilities; and
You must customarily and regularly work away from your employer’s place(s) of business.

Most of these exemptions speak for themselves, but the administrative exemption is tricky. It has three broad requirements: (1) salary basis, (2) management, and (3) discretion. The “management” requirement is the toughest.

To meet this requirement, an employee must perform work directly related to assisting with the running or servicing of the business, as distinguished, for example, from working on a manufacturing production line or selling a product in a retail or service establishment. […] Work directly related to management or general business operations includes work in functional areas such as finance, quality control, and personnel management.

Cash v. Cycle Craft Co., 508 F.3d 680 (1st Cir. 2007); see also Reich v. John Alden Life Insurance Co., 126 F.3d 1 (1st Cir. 1997) and Hines v. State Room, No. 10-2298 (1st Cir. 2011). Many people service a business in an administrative capacity and do not perform the production-type work generally necessary to avoid coverage under the administrative exemption. This is where most of the battles in the overtime exemption context are fought, and employees have been losing. Any employee seeking to bring an overtime case based on being wrongly classified as exempt should look very carefully at the administrative exemption. However, it warrants mention that the Department of Labor regulations interpreting the exemption were modified in 2004 to depreciate the old production/staff dichotomy, which, in many ways, was anachronistic in a modern service economy. The regulations can be viewed here (opens PDF). A non-manufacturing employee can be a “production” employee when the employee’s job is to generate the product or service that the business offers to the public.

Contact Us

"*" indicates required fields