Changing work conditions may strip worker’s exemption — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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Changing work conditions may strip worker’s exemption

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in Firing,Human Resources,Leaders & Managers,Performance Reviews

As a U-Haul field manager, William Whitesides spent a lot of time on the road visiting dealerships. But soon after he had an accident, Whitesides was reassigned to office work, where he had a set schedule and had to work under a supervisor.

When he arrived 15 minutes late on the first day, he was suspended without pay for three days. A few months later, he was fired for poor performance.

Whitesides sued for overtime, claiming he was improperly classified as an exempt administrative employee. A lower court rejected his claim, but the state Supreme Court sided with him.

To qualify as an exempt administrative employee under state law, the court said, a worker must be paid on a salary basis and work under only general supervision. U-Haul failed on both counts.

U-Haul had tried to make a partial fix. Two years after the firing, the company did admit that it made a mistake in withholding pay for the three-day sus-pension. It sent him a check, in-cluding interest. But that fix came too late to take advantage of the "window of correction" for paying an employee who was supposed to be on salary. (Whitesides v. U-Haul Co. of Alaska, No. S-9204, Alaska S. Ct., 2001)

Advice: Be careful not to ease employees who are nonexempt into salaried positions by simply giving them a fixed income.

Also, don't treat exempt employees like hourly employees by taking small deductions and penalties from their paychecks. That's one of the most common ways to lose the exemption.

Note: Get advice on the exemption rules and other Fair Labor Standards Act details at the Labor Department's Web site,



Who is exempt?

Call us at (800) 543-2055 and we'll fax you our free, two-page checklist, Exempt vs. Nonexempt: Where to Draw the Line.

For more advice on the FLSA, order NIBM's newest book, You and the FLSA, by calling (800) 543-2055 or visiting

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