When did a "Receptionist" become an "Assistant Manager of Reservations?" According to a new research study, employers' use of exaggerated job titles has increased rapidly over the past decade. The study points to a trend that some employers may be attempting to avoid overtime pay by casting more employees as "managers." Understanding the intricacies of the federal overtime statute (the Fair Labor Standards Act) and equivalent state wage and hour laws is challenging - but one thing that is easily understood is that job titles alone are not necessarily determinative of whether an employee is eligible for overtime pay under the law.
The FLSA presumes that all employees are eligible for overtime pay unless an employer can demonstrate that one of several applicable exemptions apply to an employee's position (thus making the employee "exempt"). The FLSA provides exemptions for individuals employed as bona fide executive, administrative, and professional employees – the so-called “white collar” exemptions – among some other exemptions. To qualify for a white collar exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis of not less than $684 per week. The Department of Labor, which enforces the FLSA, has made clear that job titles do not determine exempt status. While many managers may qualify as "exempt" from overtime rules under these exemptions, employers should be careful to review each employee's job duties (both per their job description and in practice) in order to ensure that each employee clearly meets the exemption’s requirements. If an employee or group of employees within a job title are incorrectly classified as "exempt," the employer could find itself subject to a private lawsuit or enforcement action and the possibility of serious damages and back payments.
It's not just workers who can exaggerate their job titles — their employers are doing it too, and it's to avoid paying them for their work. That's according to a new paper from the National Bureau of Economic Research, which found that companies avoid paying their employees overtime by taking advantage of a loophole in federal labor law, in which managers are paid their fixed salaries even when they work beyond their prescribed hours. That loophole involves misclassifying workers as managers, even if they don't have actual managerial duties. The researchers highlighted some particularly egregious examples they found, including barbers who are classified as "grooming managers" and front desk attendants who are hired as "Directors of First Impressions."
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