By Ronnie Miles, Director of Advocacy, NGCOA
From time to time, we receive information from our owners who face different challenges from local and state government officials worthy of sharing with our members. I recently had a member share a problem they face involving the Department of Labor (DOL). This case involves whether or not the owner properly designated an employee as exempt under the FLSA standards. While this case is still under review, should the DOL find the employee did not meet the exempt employee standard, the owner could be liable for pay reaching back to prior years the employee worked.
The golf course owner faced a complaint by a previously employed PGA professional claiming they were unfairly designated as an exempt employee, denying him overtime pay. The employer established their PGA professional was an exempt employee using the Executive Employee standard. Following an initial review by the state Labor and Workforce Office, they referred the employee’s complaint to the US Department of Labor. DOL audited the employer’s records and determined the employee failed to meet the exempt employee standards. The primary finding was the employee did not supervise two full-time employees or their equivalent.
One of DOL’s findings was the PGA professional failed to regularly have 80 hours of scheduled subordinate employees reporting directly to him each week (two full-time or equivalent). Thus, the employees’ hours were being recorded to other departments and could not be included in the Exempt Employee’s chain of command. Thus he failed the test of supervising at least two full-time or equivalent employees.
You may recall back in 2019, we released information on the Department of Labor’s guidance on their Overtime Rule, which addressed Exempt Employees’ standards. Most of our industry’s exempt employees would fall under the Executive Employee, Administrative, or Professional status. The DOL criteria used to determine an employee is designated correctly include:
Executive Employee
- The employee's primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;
- The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and
- The employee must have the authority to hire or fire other employees. The employee's suggestions and recommendations regarding hiring, firing, advancement, promotion or any other change of status of other employees must be given a particular weight.
Administrative Employee
- The employee's primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers; and
- The employee's primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
Professional Employee
- The employee's primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;
- Advanced knowledge must be in a field of science or learning; and
- Advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.
Under the Department of Labor’s Code of Federal Regulations Part 41, the two full-time employees or their equivalent supervised includes;
(a) The employee must customarily and regularly direct the work of two or more other employees. The phrase “two or more other employees” means two full-time employees or their equivalent. One full-time and two half-time employees, for example, are equivalent to two full-time employees. Four half-time employees are also equivalent.
(b) The supervision can be distributed among two, three or more employees, but each such employee must customarily and regularly direct the work of two or more other full-time employees or the equivalent. Thus, for example, a department with five full-time non-exempt workers may have up to two exempt supervisors if each such supervisor customarily and regularly directs the work of two of those workers.
(c) An employee who merely assists the manager of a particular department and supervises two or more employees only in the actual manager's absence does not meet this requirement.
(d) Hours worked by an employee cannot be credited more than once for different executives. Thus, shared responsibility for the supervision of the same two employees in the same department does not satisfy this requirement. However, a full-time employee who works four hours for one supervisor and four hours for a different supervisor, for example, can be credited as a half-time employee for both supervisors.
While this case is still open, NGCOA would like to remind owners and operators to review their organizational structure to assure employees are correctly assigned and your pay records support your staffing plan. If you need assistance or have questions, please email me at rmiles@ngcoa.org.
Ronnie Miles is NGCOA's Director of Advocacy.