The rules established in the Federal Fair Labor Standards Act (FLSA) are well-known. An employer must establish a workweek and must pay overtime when hours worked exceed 40 hours in the workweek for “non-exempt” employees (not managers, paid hourly). Pay must be at least minimum wage and overtime must be at the rate of time and one-half the regular rate for hours over 40. In spite of the clear rules established in the act, bank employees who are paid hourly often miss out on overtime pay. Almost all banks have stopped giving overtime altogether.
Hourly Employees Are Not Exempt:
Hourly employees of banks, mortgage companies, or insurance companies are often classified as “exempt employees,” a category reserved for executive, administrative, or professional work categories. In order to be classified that way, an hourly employee must meet the conditions of an administrative exception, which comes in when in the work they do, the employee can work with a level of discretion that can considerably impact the business. In actuality, few bank employees meet that exception, most are more comparable to production employees. Their work has little to with the running of the business, rather it’s focused on the goods and services the company offers.
Duties Test:
According to the law, the bank can’t make an employee exempt simply by changing a job title. The exception has to do with actual work done, not the job title. Employees must pass a “duties test” to be reclassified. A secretary is still a secretary even if the title gets changed to “administrative assistant.” The exempt “executive” category, for instance, means that the employee:
- Regularly supervises two or more employees (as a real part of the job function).
- Has management as the primary duty of the position.
- Has some genuine input into the job status of other employees (such as hiring, firing, promotions, or assignments).
Legal Action:
Banks and financial services were the subject of a U.S. Supreme Court decision in 2015 when they upheld the Department of Labor’s interpretation that mortgage loan officers do not qualify for the administrative exemption to the FLSA. There have been a number of collective legal actions in this area. This may be one of the most litigated areas of labor law. Recently, a $36 million settlement was won by loan appraisers who were ruled not to be exempt from FLSA’s overtime and requirements. The Department of Labor has proposed a significant change to the salary requirement for exemption to the overtime rule as well.
Banks Counterattack:
Paying overtime wages to hourly employees is regarded by many banks as a serious incursion on their profitability. Many financial institutions are being advised by their consultants to reorganize their staffing to force a fit into the letter of the law.
To counter changes in labor law, some banks are reportedly working on plans to convert hourly wages to a salary basis, on an hourly rate equivalence (with a downward adjustment in the salary to account for possible overtime pay). Some institutions are considering a fluctuating work week as a countermeasure as well.
Part of the problem is that many of misclassified employees regard their misclassification as a badge of honor. They believe that their classification as “management” or “executive” really reflects their value to their employer. Their willingness to seek regress is uneven at best.
Some banks are considering changes in the duties employees are actually performing to make employees fit within the exemption conditions. Banks are examining the duties their potentially non-exempt employees are actually performing and how much time they spend on each function in an effort to optimize job descriptions into a form which could pass the duties test for exemption. They are being urged to proceed with all due care, documenting the process in anticipation of future legal challenges.
Personal Action:
On the other hand, if you are an employee of a bank or financial institution and have been misclassified, you should contact a lawyer who can help you take action to restore your just wages.
Aiman-Smith & Marcy are a team of collaborative lawyers who work together on every aspect of your case. We view each case as a partnership between ourselves and you, the client. If you are being treated unfairly or under an illegal working arrangement, please contact us.
