Exempt Or Nonexempt from Extra Time Pay

ExemptOr Nonexempt from Extra Time Pay


Inan organization, the human resource management plays an importantrole in employee’s welfare. The most important aspect of employeewelfare regards compensation and recognition of employees. Variouslegislations by both the state and federal authorities have beenenacted with the aim of protecting and regulation of the relationshipbetween the employees and the employers. Some of these legislationsinclude the minimum wage compensation rate and the employee’ssafety and protection act. In organizations, management has astructure and hierarchy of authority that clearly defines themanagement responsibilities within the organization. Compensation ofemployees and the engagement, thereto, depends on the employees rankwithin the organization. The law also directs on the minimum salaryrequirements that organizations management should use as a guidelineto determine the amount of compensation. The fair labor standards actestablishes the guidelines for awarding overtime and the categoriesthat can qualify to benefit from the same (Leader, 2014).


Thefair labor standards act stipulates that workers are entitled to anextra wage if and only if they are engaged in an overtime work.However, employers would like to maximize profit by denying employeestheir rightful overtime wages. That is why the law was enacted toprotect. Some groups is accepted from enjoying these privileges in anorganization.one of these groups are those who are the executiveemployee and the administrative employees. However, the groups mustalso meet some criteria including the requirement that the employeesshould be compensated through a salary. The primary duty of theemployee should be managing a specific department. The employee mustdirect people to perform activities and must have the authority tohire and fire or their suggestions and recommendations can be usedfor the same purpose. The employee is in a position to make adecision in matters of due significance. Exemption from the generalapplications of the fair labor standards act is aimed at ensuringthat those people who may be able to award themselves benefits interms of overtime wages does not happen. In the case study, Amyclassified shift leaders as exempt correctly in my honest opinion.This is because Jane has been employed on a permanent basis and has amanagerial position serving as a shift team leader. In that capacity,her recommendation can be used to fire and hire employees, and shesits on the hiring committee. She also is in charge of the floor andmake managerial decisions including approving a refund of less than$50 (Wilcox &amp Youngsmith, 2014).

Theadvantages of categorizing the floor managers as exempt fromreceiving extra wages as a result of working overtime can include areduction in cost. Overtime wages for a manager will obviously behigh and if the shift team managers are not exempt will result inincreased cost of labor. The rate for managers is also high than thatof other ordinary employees, and that will push the cost further.Categorizing the shift team leaders as exempt from extra time wagescan also help in increasing efficiency and effectiveness of theorganizations operations. Aware that the extra time will not be paidfor, the shift team leaders will have to utilize time well to avoid asituation that will warrant the need for extra time. Increased timemanagement increases efficiency and avoids the losses that couldresult from the waste of time. Efficient time management will lead tofew incidences of extra time and, hence, reduce the extra cost to payfor the extra time worked (Barron, 2013).


Accordingto me, the shift leaders have been clearly classified as exempt. Fromthe description of the roles and duties of a shift leader asspecified in the case study, I cannot hesitate to declare Amy’sclassification as justified. According to the fair labor standardsact, it is clear that an employee who is either in an executive or anadministrative level is exempt from benefiting from any privilegeawarded by an extra time activity. According to the case study, Janeacknowledges that she belongs to the managerial team. Nevertheless,being in the managerial team is not sufficient reason to exempt anemployee from benefiting from the privileges entitled to employeesengaging in extra time activity. The employee should be in a positionto either directly or indirectly hire or fire an employee. Further,the employee should be employed on a permanent basis, and thecompensation method should be in the form of monthly or annualsalaries as opposed to hourly, daily or weekly wages. Last but notleast, the employees should be in a position to make a decisionconcerning a significant activity center in the duties andresponsibility bestowed upon the employee (Berry &amp Bell, 2012).

Inthe case study, it is on record that Jane has been employed on apermanent basis on her terms of engagement. This by extension meansshe is employed on a specific salary or an annual compensation plan.Secondly, shift leaders are involved in a managerial function. Underthe same, they are allowed to sit on the interviewing committee. Atthe same time, the recommendations and suggestions by the shift teamleaders are used to making firing and hiring decisions. Jane, in hercapacity as a shift leader, is in charge of the floor while she is onduty. She handles assigning duties to the low-level employees whenshe is given the schedule of work from the associate managers. It isher responsibility to decide on who to allocate to what activitiesare depending on the needs of the work and tasks ahead (Hamermesh,2014).

Shealso makes some decisions and solving disputes that arise from herdepartment. For instance, she can make a decision on whether or notto refund a sale for a sale that do not exceed $50. Although Janespends a lot of time in other spending work other than the associatemanagers duty, her primary role is to manage the floor and onlyperform other activities if and only when her supervisory andmanagerial duties are not engaged. Therefore, it is sufficient provethat shift leaders are justifiable to be exempt from the extra timepay (Mooney, 2015).


Indetermining whether a worker is exempt or nonexempt, various factorsought to be considered before reaching these decisions. First andforemost, all the provisions of the fair labor standards act shouldbe considered in the decision. The act specifically exempts someparties from extra time pay that include the executive andadministration employees. Employees who are involved in managerialresponsibilities are exempt from extra time pay. Further, theemployees should handle making significant decisions regardingimportant aspects of the organization`s operations. It is alsoexpected that these employees handle designating duties to otheremployees who are lower to him. This is because the employee candirectly influence an instance that warrant an extra time. The majorpoint is to look at the power bestowed upon the employees to verifythat they are in a position to make a decision that influence theoperations. The employees in question should be queried to confirmthat they are directly or indirectly engaged in hiring or firing ofother employees. Shift leaders in Army`s organization are entitled tosit on the interviewing committee of new employees. In that capacity,the shift leaders are also involved in making suggestions andrecommendations that are used as a reason for making a hiring andfiring decision. Prior to any hiring or the firing decisions, theshift leaders are always aware of the facts (Wilkins, 2013).


Amyshould use other factors other than the provisions of the fair laborstandards act. Amy is supposed to gauge the benefit and costs ofeither categorizing or not categorizing an employee in terms of extratime pay. The benefits of exempting shift leaders have been clearlystated above. However, to non-exempt shift leaders as from extra timecould lead to reduced motivation to work and promote employees frommanaging time in the hope of making extra pay from the extra timepay. If the advantages exceed the cost, then it is better to exceptotherwise, shift employees should be non-except. Lastly, Amy shoulduse prudence and due diligence in deciding whether or not to exemptshift leaders from extra time pay and get the greatest benefit forthe good of the organization. The decision made should be good inpromoting the needs of employees and human resource in general(Altman &amp Golden, 2015).


Altman,M., &amp Golden, L. (2015). Alternative Economic Approaches toAnalyzing Hours of Work Determination. Lawand Economics: Alternative Economic Approaches to Legal andRegulatory Issues,286.

Barron,L. E. (2013). Fair Day`s Pay for a Fair Day`s Work: Why CongressShould Amend the Fair Labor Standards Act to Include an Actual TimeTest for Retroactive Damages, A. IowaL. Rev.,99,1297.

Berry,D., &amp Bell, M. P. (2012). Inequality in organizations:stereotyping, discrimination, and labor law exclusions. Equality,Diversity and Inclusion: An International Journal,31(3),236-248.

Hamermesh,D. S. (2014). Do labor costs affect companies’ demand for labor?.IZAWorld of Labor.

Leader,L. E. (2014). State Wage-Hour Laws and Wage Orders. Wages&amp Hours: Law and Practice,1.

Mooney,D. (2015). To Pay or Not to Pay: Interpretation of Section 302 of theLabor Management Relations Act as Evidenced by Titan Tire. Am.U. Bus. L. Rev.,4,153.

Wilcox,K. C., &amp Youngsmith, D. M. (2014). Overview of Equal EmploymentOpportunity Laws. CaliforniaEmployment Law,2.

Wilkins,E. (2013). Silent Workers, Disappearing Rights: ConfidentialSettlements and the Fair Labor Standards Act. BerkeleyJournal of Employment and Labor Law,34(1).