By: James B. Sherman, Esq.
On July 9, 2012, the Minnesota Court of Appeals ruled that agricultural workers who are paid on an hourly basis are not exempt from overtime under the Minnesota Fair Labor Standards Act (MFLSA).
In this case, the employer was not paying its agricultural workers overtime because they were receiving an hourly wage, that when calculated per week, brought their compensation above a predetermined amount found in MFLSA. The Minnesota Department of Labor and Industry (DLI) disagreed and ordered the employer to pay overtime. The DLI said that although the agricultural workers' were generally performing duties consistent with an overtime exemption and their compensation was above the required threshold; the workers were still entitled to overtime because they were not being paid a straight salary. The Court of Appeals agreed and said that although paying agricultural workers an hourly wage might be acceptable under the Federal Fair Labor Standards Act (FLSA), MFLSA requires the workers to be paid a straight salary.
There are several exemptions under both state and federal law that must be paid on a salary basis or the employer risks losing that exemption, such as the well-known white-collar exemptions. This decision illustrates that determining whether any overtime exemption applies is not always an easy task. Generally, the employer must first determine if an employee's job duties place them in an exempt category and then determine if the amount and manner in which an employee is paid preserves or destroys the exemption. It also requires an understanding of the interplay between state and federal law. In this case, (although there was no dispute that the workers' agricultural duties initially qualified them for an overtime exemption under both state and federal law, and that the employer paid the workers more than what was required for the exemption to apply under state and federal law) the manner in which the workers were paid caused the employer to forfeit the exemption under state law.
If you have any questions about properly categorizing your employees as exempt under federal and/or state law be sure to contact any of our offices to speak with a knowledgeable and experienced attorney.