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The FLSA and the Primary Duty: Classifying Employees Working Both Exempt and Non-Exempt Jobs

Stores are already putting up Thanksgiving and even Christmas displays (at my local Sam’s Club!), and Urban Outfitters is getting ready.  Gawker published an e-mail this past week asking its full time employees at URBN, Urban Outfitters’ Philadelphia-based parent company, to “volunteer” to work without pay during five weekend days in October.  URBN (which includes not only Urban Outfitters, but Anthropologie and Free People) explained that October was its busiest month and it needed these salaried (exempt, I hope) employees to “pick, pack, and prepare packages for shipment.”

URBN’s call for volunteers raises an interesting wage and hour issue: what happens if one of URBN’s  exempt employees accepts the invitation and works in a non-exempt job?  At one of my former employers, our receptionist doubled as our graphic designer for a couple of years. How should you pay employees who perform both exempt and non-exempt duties? Are “mixed duty” employees ever entitled to overtime?

The FLSA and an Employee’s Primary Duty

To answer this question, you have to know what the employee’s “primary duty” is.  Under the FLSA regulations, an employee can either be exempt for all purposes or non-exempt for all purposes, but not both depending on the day or the job.  It is this concept of “primary duty” that governs which status applies.  The FLSA regulations explain that the primary duty is an employee’s “principal, main, major or most important duty” and that, as with nearly any wage and hour issue, the “[d]etermination of an employee’s primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee’s job as a whole.” This primary duty definition is one that employers should immediately recognize, since this same test determines whether an employee qualifies for an overtime exemption. For example, under the regulations, an exempt executive has a “primary duty” of managing the business, or some recognized department or subdivision. Similarly, both the administrative and professional exemptions contain primary duty tests, too.  (Of course, these tests might change from qualitative to quantitative ones under the DOL’s new FLSA regulations, as we have discussed).

Because an employee can only hold one status, a non-exempt employee whose primary duty is performing non-exempt work will also be considered non-exempt under the FLSA when performing exempt duties. Similarly, as in the case of URBN’s call for salaried, exempt volunteers, an employee whose primary duty is exempt will still be exempt even when performing non-exempt duties like picking, packing, and preparing packages for shipment.  While it is not clear whether it would be true in URBN’s case, non-exempt duties can even be so “directly and closely related” to an employee’s regular, exempt work for purposes of the FLSA regulations that the non-exempt duties themselves can still be counted toward an employee’s primary duty.

You will find some exceptions to the general rule, though.  First, the percentage of time spent performing exempt or non-exempt duties is important, but not dispositive. The FLSA regulations do not currently require an employee to spend a majority of his or her time performing exempt duties, though those that do are generally exempt.  In the URBN situation, it seems unlikely that the salaried workers who volunteer some extra hours will spend anything like a majority of their time on non-exempt duties, but this can happen in other jobs (particularly those with “working foremen” or “assistant managers” who work alongside non-exempt employees). Second, and most importantly, remember that state laws might impose a requirement that an employee perform exempt duties for a particular percentage of time to qualify for the exemption. Again, the primary duty test is always a fact-dependent determination.

Upshot for Employers

Even if the analysis to determine how to classify and pay a mixed duty employee is not always easy, the effect of your conclusion is.  The employee’s primary duty will dictate how you must pay him or her under the FLSA. If you determine that the employee has primarily non-exempt duties, you must pay him or her at least 1.5 times the regular rate of pay for any hours worked over 40. That’s true even during those times when the employee performs exempt duties.  You must compensate an employee whose primary duty is non-exempt as if he or she works non-exempt duties all of the time, even if that does not reflect reality.  Remember: employees can have only one status under the FLSA.

On the flipside, if you determine that an employee’s primary duties are exempt, then you do not need to provide any overtime compensation to that employee, even when the employee performs non-exempt work. (However, you can elect to do so. Although from the e-mail Gawker published, it does not appear that URBN is doing so, the FLSA regulations state that an employer may provide exempt employee with additional compensation without losing the exemption or violating the salary basis requirement, under certain conditions).

With the caveat that state laws may impose different requirements, determining an employee’s primary duty (with the help of wage and hour counsel) will help you pay him or her accordingly, even when they perform mixed duties.

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