Does The FLSA "Emergency" Exception Apply To You?
Laws and regulations are changing rapidly. After the publication of this article they are subject to change. Check back regularly for updates.
Many businesses have been in an “all hands on deck” mode for several weeks now.. Employees are being asked to do whatever is necessary to keep our businesses running. Some workers are being asked to perform duties outside the usual scope of their jobs and financial constraints are forcing some of us to change the way that we compensate our employees. Neither of these things poses a real problem when dealing with a non-exempt employee. However, if we require an exempt employee to perform “non-exempt” duties or if we significantly reduce or change the manner in which we pay an exempt employee, we run the risk of losing the exemption for that employee. The FLSA contains a seldom-used exception that can provide some partial protection right now.
Emergency Exception to Duties Requirement
The Federal Regulations applicable to the FLSA provide that an exempt employee may not lose her exempt status by performing work of a non-exempt nature because of an emergency. The regulations generally define an “emergency” as circumstances beyond an employer’s control for which they cannot reasonably provide in the normal course of business. Emergencies are conditions that employers cannot realistically anticipate that rarely occur.
The COVID-19 pandemic has many of the signs of an “emergency” under the FLSA: it is beyond employers’ control; it is unanticipated and employers could not reasonably provide for it in the normal course of business. However, as far as we know, no regulatory agency or court has yet to address this issue. However, if you are requiring your exempt employees to take on non-exempt duties, you should determine if this exception applies to your situation.
Unfortunately, the Emergency exception applies only to the performance of non-exempt duties; it does not make any allowance to the requirement that almost all exempt employees must be paid at least $684 a week on a salary basis. (Very few positions can be paid by the hour and still be exempt: primarily doctors, lawyers, teachers and computer workers.) If you reduce the salary of an exempt employee below $684 a week or if you pay them on a basis other than a salary you will probably lose the exemption. (I say probably because the FLSA is rife with exceptions: outdoor sales, commissioned sales…)
Keep in mind that an employee has up to three years to assert a claim under the FLSA. To make matters worse, the FLSA often allows a prevailing plaintiff to recover 100% of her actual damages as a penalty, plus her attorney’s fees and court costs. The mere fact that an employee has agreed to a change to her job duties and/or compensation right now does not mean that she cannot sue you several years down the road.
Bottom line: Run the traps before you change your employees’ compensation and duties. If you are concerned that you may lose the exemption for a particular employee, the most logical choice may be to convert them to non-exempt.