Duties tests help employers determine whether or not an employee is eligible to receive certain forms of payment. This includes PTOs, sick leave payments, and other company and job-specific payments according to workplace policies and contracts.
How Do You Ensure Duty Tests are Conducted Properly?
Companies and employers have several options available to them to justify whether an employee is eligible to receive certain payments by performing tests stipulated by the Fair Labor Standards Act.
Employers should always check out the United States Department of Labor's recommendations for different types of companies first before conducting duties tests. But as a general rule of thumb, the following can be done by any employer to ensure that the evaluation is fair:
Never Considering Titles or Job Positions Only: Job titles and positions become irrelevant because these tests are done to determine eligibility based on the tasks and duties an individual performs.
Consulting Experts: When in doubt, it is always best to consult an expert to help assess the situation. For instance, some job duties vary from one company to another, so when an employer hires an expert, say, a lawyer or attorney, they can offer a detailed analysis and feedback that would be accurate. This eliminates the chances of unfair or improper assessments.
Updating Job Role Expectations and Descriptions: This should be self-explanatory; it is a good practice to routinely and regularly update job descriptions, expectations, KPIs, and so on. This ensures that you are in a position to do a fair evaluation of whether a certain employee is being compensated fairly or not.
Why is it Necessary?
Any organization should always keep in mind and be aware of the obligations of each position available to employees. You are mistaken if you believe that you can get away with it just because your job title falls into one of the exempt categories; you need to reconsider your position.
The fact that a job title contains the word "manager" does not necessarily mean that the person who holds that position is qualified to receive the exemption reserved for executives.
In addition, it is essential to carry out routine job inspections within your company. The status of an exempt post may need to be revised if the employment requirements for the position change.
If you have any questions or doubts, you should consult a professional such as a lawyer or attorney. Suppose the Department of Labor scrutinizes the FLSA exemption status of an employee. In that case, the relevant employee explanations should be documented because failure to conduct duties tests properly may even result in a lawsuit that bankrupts your business!
Exemptions from FLSA Duties Test
According to FLSA, the following are exempted:
1. Employees Working in Administration
Personnel who do clerical or non-manual work that is directly relevant to business operations may be exempted as administrative employees. People working in administrative roles are expected to make independent decisions that significantly impact the company.
2. Employees that Work as Executives
To qualify for the exemption provided to executive workers, staff must meet several criteria.
Their primary duty is to oversee the operation of the business as a whole or some clearly defined subset of it.
They must be fully responsible for guiding and providing constant direction to two or more full-time employees.
Either they must have the authority to hire and fire employees within their jurisdiction, or they must have a considerable say in who is employed, fired, and promoted.
3. Employees Working in IT
Software developers, engineers, and analysts who work on software development, creation, and testing of software are considered computer employees and, as a result, qualify for the exemption.
However, this exception does not apply to employees responsible for installing and maintaining computer hardware (such as IT technicians).
4. Sales Persons from Outside the State
This is self-explanatory. The exemption for out-of-state sales staff is available to workers whose jobs require them to routinely carry out their responsibilities in locations other than their employer's offices. Their primary responsibility must consist of making sales to existing customers or facilitating the formation of new contracts with existing customers.
5. Employees with High Salaries
Employees who earn around $107,432 annually belong to this category, according to the FLSA.
6. Professional Employees
Employees that possess expertise in their jobs that few possess are professionals. They are learned and/or creative individuals who excel at what they do and have knowledge and skills beyond textbooks. For instance, doctors, engineers, lawyers, designers, writers, photographers, etc.
If a job does not qualify for one of these exemptions, then the Fair Labor Standards Act classifies it as a non-exempt position and makes it subject to the payment procedures defined in the act.
Under the Fair Labor Standards Act, the Department of Labor's minimum salary rate is used to determine whether or not an employee is exempt from overtime pay.