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Executive exemption requires true hiring/firing authority

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in Best-Practices Leadership,Firing,Hiring,Human Resources,Leaders & Managers,Performance Reviews

Before you classify supervisors as exempt executive employees, make sure you've given them enough authority to make that classification stick. That means delegating true hiring/firing power with the clear understanding that your organization will typically follow the supervisors' recommendations.

If you give power in name only, the Labor Department or courts could reclassify your managers as nonexempt, hourly employees. And that could cost you big bucks in overtime pay and fines.

Recent case: A Delaware chicken farm employed five crew leaders to transport "chicken-catcher" workers to the farm and supervise them as they caught birds. The farm classified the crew leaders as exempt executive employees and refused to pay overtime or travel time. Reasoning: Crew leaders could suggest who should be hired or disciplined.

The crew leaders sued, claiming they should be classified as nonexempt and receive overtime. A federal court agreed, saying it takes more than mere hiring and discipline suggestions to earn executive-exemption status. Employers must show that they nearly always follow through on those suggestions. (Davis, et al., v. Mountaire Farms, Inc., No. 05-3982, 3rd Cir., 2006)

Bottom line: Make sure your exempt executive employees play a major role in employment decisions. If they don't, you have two choices: (1.) Reclassify their jobs as nonexempt and pay overtime, or (2.) beef up their roles to make sure you give their hiring/firing suggestions "particular weight." (That can simply involve pulling supervisors into performance reviews and personnel decisions.)  

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