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Benefits of Being Exempt Go Beyond Compensation

May 09, 1999

Q. I regularly read the column and want to ask a simple question. Why would someone want to be an exempt employee?

It seems to me that every single answer that your respondents give is to the detriment of an exempt employee. Please give us a few good reasons why someone would want to be exempt as opposed to hourly.

--K.K., Valencia

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A. Good question. Bona fide executive, administrative and professional employees are exempt from state and federal overtime requirements. In general, executives manage a business, administrative employees carry out important management policies, and professionals work as doctors, lawyers, accountants, etc. All three categories perform non-manual office work regularly requiring independent judgment and discretion.

Executives, administrators and professionals are more highly paid than regular employees and have some control over their working hours. They determine which tasks require their attention and how much time they will devote to each task. Their hours may vary from week to week, so that a slow week may be followed by a period of intense work.

According to the Labor Department, more than 22 million employees are classified as exempt executives, administrators or professionals. Critics complain that this number is too high, and that the courts and government agencies have permitted too many low-level employees to be classified as exempt.

Many salaried employees undoubtedly wish that they could receive the same overtime premiums and other benefits enjoyed by hourly employees. Nonetheless, under current law exempt employees are considered to be so well compensated and to have so much independence and control over their own working hours that it would be unfair to require their employers to pay them the overtime and other benefits reserved for hourly employees.

--Joseph L. Paller Jr., Union and employee attorney, Gilbert & Sackman

Abrupt Demotion Questioned

Q. I work for a retail specialty store in Orange County. Normally, the store is closed on Sundays but during the months of January, February and March, it is open. Each employee is expected to work two Sundays a month, 10 a.m. to 5 p.m.

One of my co-workers offered to work every Sunday, but wanted the opportunity to attend her church in the morning, asking to be able to work noon to 5 p.m. She was immediately demoted from sales consultant to stock personnel.

Salary was not decreased per se, but the fact that sales consultants earn commission and stock personnel do not in effect made that a decrease.

Very understandably, she quit. What do you think?

--C.R., Garden Grove

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A. You state that employees were aware of the expectation that sales consultants must work 10 a.m. to 5 p.m. on Sundays, so your former colleague was soliciting a change in existing policy.

Perhaps your boss felt that this was the best accommodation he or she could make given the desire to keep enough sales consultants on the floor on Sunday mornings.

The abrupt demotion makes me think that there was probably more to it, but only your boss can tell you that for sure. Although it appears that your boss may have overreacted, perhaps your former co-worker could have attended an earlier service.

If you want more information about the scheduling policy for your own sake, you should ask for it. Otherwise, this situation was between the former employee and the boss.

If I were you, I would let it drop.

--Ron Riggio, director, Kravis Leadership Institute, Claremont McKenna College

No Law Requiring Retroactive Raises

Q. My company conducts performance reviews annually. The majority of the time, they are completed well before the employee's anniversary date.

When reviews have been late, any pay increases have been retroactive to the employee's hiring date. This year, my review was very late, but the company did not pay a retroactive salary increase. My supervisors could not explain why and have not been very helpful in resolving this matter.

The employee handbook does not address the subject of retroactive raises. Are there any state laws that would apply to this issue?

P.C., Los Angeles

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A. Although many employers make pay increases retroactive to an employee's anniversary date when performance reviews are conducted late, there is no legal requirement that this be done.

Usually it is done simply to enhance employee morale and to treat employees consistently, but an employer is not legally obligated to pay an employee at a higher rate until that rate actually goes into effect.

If there were evidence that pay raises were delayed for certain employees based on some prohibited factor such as gender, race, age, etc., the practice might be legally vulnerable.

Without such a factor, or some written policy guaranteeing retroactive increases, you really do not have a legal basis for challenging your employer's late review.

--James J. McDonald Jr., Attorney, Fisher & Phillips, Labor law instructor, UC Irvine

If you have a question about an on-the-job situation, please mail it to Shop Talk, Los Angeles Times, P.O. Box 2008, Costa Mesa, CA 92626; dictate it to (714) 966-7873; or e-mail it to shoptalk@latimes.com. Include your initials and hometown. The Shop Talk column is designed to answer questions of general interest. It should not be construed as legal advice.

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