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Should You Be Paying Overtime to Your Office Staff?

Office workers who perform receptionist, secretarial, and other administrative tasks often are incorrectly classified as exempt from overtime pay because they receive a salary and have job titles such as "executive assistant." However, such employees will not necessarily be found exempt from the requirement to pay overtime merely because they receive a salary, perform important administrative duties, and hold impressive job titles. Clerical and administrative employees often do not have sufficiently high-level positions or perform primary duties that meet the "administrative employee" exemption. And misclassification of these employees as exempt can result in costly claims for non-payment of overtime.

The federal Fair Labor Standards Act (FLSA) and state wage and hour laws require that employees who work more than 40 hours in a workweek be paid 1.5 times their regular rate of pay for any hours worked above 40 unless they qualify for an exemption. To qualify as exempt, employees must be paid on a salary basis of not less than $684 per week and must also perform job duties that qualify for an exemption. Generally, for office workers performing administrative tasks the exemption for "administrative employees" must be met.

Determining whether an employee's position qualifies for this exemption involves a two-part analysis:

  1. The employee's primary duty must be the performance of office or non-manual work that is directly related to management or general business operations (as distinguished from, for example, working on a production line or selling the company’s products to customers).
  2. The employee's primary duty must include the exercise of "discretion and independent judgment" on "matters of significance."

Administrative assistants often meet the first part of this test, but fail the second part.

Moreover, the FLSA regulations state that executive or administrative assistants only will qualify as exempt from overtime pay if they assist "business owners or senior executives of large organizations." Thus, if the administrative employee is one of several assistants in the office performing general administrative duties and is not primarily assigned to assist an owner or senior officer of the business, then the exemption usually will not apply.

And remember that the employee also must be delegated authority to exercise “discretion and independent judgment on matters of significance. This means that the job must involve considering, comparing, and evaluating different courses of action and then making a decision (or at least recommending a decision) on sufficiently important and consequential matters. This part of the test usually will not be met where the employee merely follows specific instructions or prescribed procedures.

Generally, an exempt executive or administrative assistant will perform fewer clerical tasks and will receive a substantially higher salary than most administrative employees. The executive assistant's primary duty typically will involve important duties such as: managing the owner or executive's schedule; acting as his or her representative in dealings with third parties; prioritizing and handling correspondence; researching and handling special projects; and arranging board of directors or shareholder meetings. The employee's primary duty and the importance of his or her position to the owner or executive's role should be accurately reflected in both job descriptions and performance evaluations, which can serve as evidence to support the employer’s decision to classify an employee as exempt from overtime.

If you have any questions regarding overtime pay, payment of wages, or the classification of your employees, please contact Scott Connolly or another member of Verrill's Employment & Labor Group.