By: Ala Salameh
Employees under heightened demands to care for their health and families are using time off and sick leave in record numbers. This has left many employers, particularly those qualified as “essential businesses,” short-staffed in a phase of critical need. To fill the void, employers are contemplating a temporary reshuffle of work assignments including posting exempt employees to traditionally non-exempt work. As a result, employers must grapple with whether those employees would lose the exemption by changing the duties of exempt positions on a short-term basis.
Exemptions During an Emergency
A scantly cited, but increasingly relevant, FLSA provision provides insights on the recommended calculus when making emergency work assignment decisions. Under the FLSA (29 C.F.R § 541.706), an exempt employee will not lose exempt status by performing work of a normally nonexempt nature because of an emergency. Accordingly, when emergencies arise, any work performed by exempt employees in an effort to continue operations during an emergency is considered exempt work.
What Constitutes an Emergency?
Emergencies are defined as circumstances beyond an employer’s control, for which they cannot reasonably provide in the normal course of business. They are largely rare conditions that employers cannot realistically anticipate. The Department of Labor issued guidance regarding the work during emergencies indicating that the regulation is intended to provide flexibility and account for real emergencies. Classic examples of emergencies include strikes resulting in the reduced availability of labor to continue operations and a mine explosion requiring exempt employees to immediately assist in digging out trapped workers. Alternatively, heavy work periods, rush orders, and times during which necessary equipment needs routine repair do not qualify as emergencies.
How is an Emergency Measured?
The Third Circuit provides the seminal analysis for measuring exempt status during an emergency. In Marshall v. Western Union Telephone Company, Western Union experienced a prolonged strike during which managerial employees performed nonexempt work. Exempt plaintiff-employees alleged that they were covered by the FLSA’s overtime provision as a significant portion of their job duties were then non-exempt and thus entitled to overtime premiums. In response, Western Union argued that the labor strike qualified because it was beyond the employer’s control and could not have been reasonably managed in the normal course of business.
In determining that the strike qualified as an emergency, the primary question before the Court was over what period of time exempt status should be measured. The Court rejected the notion that exempt status should be measured on a weekly basis. It reasoned that Congress created exempt status for managerial employees with the power to direct, supervise, and manage operations. Exempt employees are generally not required to keep time sheets or provide reports of day-to-day tasks accomplished on the job. Therefore, using the workweek as a yardstick would not comport with how Congress intended to create exempt status. Instead, a weekly assessment would demand new recordkeeping requirements and oversight to properly inform micro-decisions regarding exempt status. Work of exempt employees can shift on a week-to-week basis. Therefore, due to the logistical burdens and intent of the emergency provision of the exempt status regulations, the Third Circuit held that exempt status should be measured over a more protracted period of time.
While Marshall v. Western Union did not provide a precise measurement period for exempt status, it provided two key take-aways: 1) even prolonged periods of unanticipated labor shortages may constitute emergencies under the FLSA, and 2) exempt status must be measured over a period of time that does not result in significantly heightened administrative burdens to the employer. In 2017, the California Court of Appeals held that each emergency determination must be grounded in the unique facts of the circumstances, asserting that a “court cannot simply presume it loses its emergency status after a set amount of time.”
Does the COVID-19 Pandemic Qualify as an Emergency?
The COVID-19 global pandemic is uncharted terrain in many ways, including the emergency regulation for exempt status. Based on precedent and corresponding guidance, the pandemic has all the hallmarks of an emergency under the FLSA—wholly beyond employers’ controls, unanticipated, not reasonably provided for in the normal course of business, and threatening employee safety and company operations. While national reopening and relaxation of restrictions appear on the horizon, it remains unclear how long the pandemic will have its grip on the labor force. Regardless, even prolonged labor shortages due to COVID-19 may underlie a proper emergency classification.
As employers endeavor to meet business needs, difficult decisions regarding work assignments will continue to prompt questions and create potential legal risks. Unfortunately, the U.S. Department of Labor has never issued guidance or regulations relative to the period of time applicable to a determination of exempt status. When considering whether to reassign exempt employees to non-exempt posts, it is best to consult your wage and hour counsel to evaluate your unique business needs and circumstances as well as state law limitations.