Human Resources (HR) is responsible for monitoring employee job classifications. The framework of the job description and job analysis ensures a company is compliant and compensates employees fairly. Companies have two options for determining how to categorize their workers, based on the Fair Standards Labor Act (FSLA); employers must recognize an employee job classification as an exempt employee or non-exempt employee. The guidelines suggest the nature of the work performed by the employee determines which classification a company selects. Certain job classifications warrant an employee to receive overtime pay, if a worker works over forty hours during a workweek, which would require the employer to compensate the worker at a higher rate. This process has had conflicts and legal litigation since its inception. There have been numerous complaints filed by employees who feel their jobs are incorrectly classified, and they should be eligible to receive overtime pay. The case below is an example of a legal action filed against employers. These cases are increasing across the country as employer look for ways to augment their payrolls and main production cost.
Whalen v. J.P. Morgan Chase
The case of Andrew Whalen an employee for JP Morgan Chase, involves a conflict with the FSLA overtime exemption provision. The Case hinged on the classification of work performed by the Whalen. Whalen, a mortgage underwriter with Chase, performed mortgage eligibility and approvals based on predetermined guidelines established by Chase. Whalen filed suit and sought a declaratory judgment from district on the grounds that Chase violated the FSLA overtime provision by treating him as an exempt employee and not paying him overtime. Initially, the district court ruled in favor of Chase, citing the work performed by Whalen, correctly satisfied his employment classification guidelines as an exempt employee. The court decided the work performed by the Whalen was administrative.
On appeal, the US Second Circuit Court reversed the district court’s decision. The job the underwriter performed was not an administrative function since Chase established the guidelines for loan decisions. The second circuit concluded that in a very limited role, the underwriter used discretionary judgment and this was not enough to warrant appellant’s position be considered an exempt position. “The statute specifying that employees who work in “bona fide executive, administrative, or professional capacit[ies]” are exempt from the FLSA overtime pay requirements does not define “administrative. Federal regulations specify, however, that a worker is employed in a bona fide administrative capacity if she performs work “directly related to management policies or genera business operations” and “customarily and regularly exercises discretion and independent judgment”, Walsh, D. (2012). The Second Circuit furthermore stated they did not see the relationship between how the district...