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Use performance evaluation to bolster exempt status

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in Leaders & Managers,Performance Reviews

Employers have the burden of proving that exempt employees meet one of the exemptions of the Fair Labor Standards Act (FLSA). That means you must be prepared to show that the actual job the employee performs meets an exemption.

Regular performance appraisals provide a convenient and effective way to do that. They can catalog the evidence you may need to prove that the employee is exempt. Here’s how to do it:

  • Design a performance appraisal process that matches up annual goals with the exemption you have designated for the position.
  • As part of the evaluation, have the employee document in writing how he or she has met these goals. This provides evidence the employee performed the exempt duties.

Recent case: Barbara Scott, who marketed beauty products, was hired as an exempt employee under the FLSA’s administrative exemption. Her duties included staffing a product hot line and recommending improvements for products and educational materials sent to salons and other outlets.

When Scott lost her job, she sued, alleging she actually had performed the work of an hourly employee. Scott argued she should not have been classified as exempt.

The administrative exemption requires that an employee exercise discretion and independent judgment in his or her work. But the company lacked the proof that Scott met the requirement—just some notes she had made on one project she had worked on. The company had nothing to show that she consistently made decisions or used independent judgment in her work over the past few years. The court said the company hadn’t proven she was exempt. (Scott v. Farouk Systems, No. H-06-2182, SD TX, 2007)

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