Administrative Employee Overtime Exemption: What is the Exercise of Discretion and Judgment Requirement?

Proving the Administrative Employee Overtime Exemption: “Exercise of Discretion and Judgment” Explained by our New York City Overtime Lawyer

Under the Fair Labor Standards Act (FLSA) and New York Labor Law, employees are entitled to overtime wages at a rate of 1.5 times their regular rate of pay for all hours worked over 40 hours in a workweek.  However, some employees are exemption from overtime.  Meaning they are not entitled to overtime.  One of the exemptions is the administrative employee overtime exemption.  However, just labeling an employee an administrative employee does not mean that the exemption applies unless the “exercise of discretion and judgment” test applies.  Learn what this means from our New York City overtime lawyer.

What is the Administrative Employee Overtime Exemption?

Even though both FLSA and the New York Labor Law allow for overtime wages to be paid for hours over 40 hours in a workweek, New York Labor Law section 651 provides some exemptions.  One of the exemptions is for administrative employees.  This means that employers do not need to pay overtime wages for administrative employees in New York.  This is significant because it can case employers a lot of money.

But because this can result in a large savings for employers, some employers will claim that an individual is an administrative employee without actually making the individual and administrative employee.  This is just to save money.  However, the Labor Law requires that certain criteria are met before the exemption can apply.  One criteria is the “exercise of direction and judgment” and it can result in a substantial savings to employers or substantial earnings to employees.

What Constitutes “Exercise of Discretion and Judgment”?

For an individual to be considered an administrative employee he or she must exercise discretion and independent judgment involving the comparison and/or evaluation of possible courses of conduct.  The individual must have the authority to make an independent choice which is free from interference or supervision by another individual.

There are some factors that should be considered to help determine if an employee is an administrative employee.  This includes whether the individual reviews, interprets, and implements policies or practices in making a decision.  It also considers whether individuals to carry out major assignments in conducting the business.  An individual’s daily work must affect the business or the operations to a substantial degree.  If an individual’s decisions can make financial impacts.

If the individual’s daily business performs many of these tasks, then it is likely the individual is an administrative employee and exempt from overtime.  However, if the individual is not performing many of these tasks or having these affects, it is unlikely that the individual is an administrative employee.

Unsure if the Administrative Employee Exemption Applies?  Call SAMUEL & STEIN to Learn More!

If you are not being paid overtime because you are told you are an administrative employee, call the experienced New York City wage and hour attorneys at SAMUEL & STEIN who are dedicated to asserting and defending the rights of employers and working people throughout New York and New Jersey.  We have the resources, experience, and knowledge necessary to ensure your legal rights are protected and you are not taken advantage of.  Call us today by dialing (646) 480-2149 or use the convenient “Evaluate Now” box on our webpage.  Together we can help answer your questions and protect your rights.

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