National Clothesline

federal appeals court recently upheld a judgment of nearly $10,000 in unpaid overtime and liquidated damages for a salaried car wash manager on the ground that his management duties were slim at best.

The manager, who scheduled, trained, and disciplined other employees, was found to have performed non-supervisory duties nearly 95 percent of his time.

More importantly, when the court looked at his effective hourly rate (salary divided by hours actually worked), he made about the same as the employees he supposedly supervised.

This decision should be of great interest to owners of small shops. The court was quick to point out that most of the real supervisory decisions were made by the owner of the car wash.

Further, while the court acknowledged that the manager performed important tasks, this was not sufficient to make him a “bona fide executive” under the federal Fair Labor Standards Act.

As I have pointed out in this column before, the wage and hour laws are impossibly complex. I guarantee that virtually every employer in the United States is technically violating the Fair Labor Standards Act in some fashion. Until I read this appeals court decision, however, I would have believed that a salaried manager who supervised, in any degree, two or more employees would be exempt from overtime.

If you have salaried employees who are not being paid overtime after 40 hours, and they regularly work more than 40 hours, you might want to have a competent labor attorney review their duties to determine if you have any exposure under the wage and hour laws.

Remember, payment of a salary does not create the exemption. It is only one factor courts look at in determining whether the exemption is available.

In addition, even in cases where employees are exempt based on their duties, you can lose the exemption by improperly docking them for time missed. In essence, less than full day absences cannot be docked, and full day absences can be docked only if part of a bona fide leave plan.

See, I told you the law was complicated.

While you are having your exemptions reviewed, you might also have your time-keeping practices looked over. Are you properly rounding the hours of employees who punch in early or punch out late? Are you properly accounting for lunch periods, travel time, and other “non-working” hours? Are you properly using the “workweek” as the basis for overtime compensation, or are you improperly using a system of “comp” time?

The damages for violating the wage and hour laws can be sizable. Employees who sue can get back pay, plus an equal amount in liquidated damages. Attorneys fees can also be awarded.

To make the situation even more complicated, an employee cannot settle for less than he was entitled to receive, even if he had a lawyer who supervised the settlement. So, if you owe employees money under the Fair Labor Standards Act, you cannot compromise on the amount. If you do, the employee can sue you for the difference, no matter how good the settlement agreement and release are.

Don’t ignore the wage and hour laws. Mistakes are difficult to correct.

Frank Kollman is a partner in the law firm of Kollman & Saucier, PA, in Baltimore, MD. He can be reached by phone at (410) 727-4300 or fax (410) 727-4391. His firm’s web site at www.kollmanlaw.com has articles, sample policies, news and other information on employee/employer relations.