Starting Up – Set Up Part 2

September 4, 2017

Authored by: BCLP at Work

This three-part series highlights the steps startups should take before hiring their first employee. Part One of this series focused on several of the federal and local filings and registrations that new employers will need to make in preparation for their first hires. In this Part Two, we’re diving into drafting job descriptions and their use in determining whether a position should be classified as exempt or non-exempt under federal and local wage and hour laws.

A well-drafted job description provides employees and employers alike with a wealth of information, including the necessary qualifications, responsibilities, and pay rate of the relevant position.  The drafting alone is a great exercise for small companies to think about how they want to distribute their work.  Job descriptions can also serve the basis for – and later support – the classification of a position as exempt under wage and hour laws.

The federal Fair Labor Standards Act (“FLSA”) provides, among other things, that employees are entitled to a federal minimum wage and an overtime rate of compensation for any week in which s/he works more than 40 hours.  Most states have local wage and hour laws that mirror, if not provide more protection than, the FLSA.  Some employees, however, are exempt from the FLSA’s overtime pay regulations.  Although the FLSA identifies a number of exemptions, the most common exemptions are the executive, administrative, professional, computer and outside sales exemptions.

To qualify for any one of these exemptions, a position must satisfy the specific exemption’s multi-part test, as outlined in the Department of Labor’s rules and regulations.  Most, but not all, of these exemption tests require that an employee be paid a certain minimum salary, which, under the Department of Labor’s recently issued rules, will be equivalent to approximately $913 per week beginning on December 1, 2016.

The most nuanced part of the exemption test involves an analysis of the primary duties of the relevant position.  This analysis is highly fact-specific and relies on the duties actually performed by the individual holding the position.  The job description is an excellent starting point for determining whether a position satisfies the duties section of the relevant exemption test, but it is the employer’s obligation to ensure that the individual is in fact performing the duties identified therein – and only those duties.

After drafting the job description and determining the appropriate classification under wage and hour laws, you’re ready to start meeting with applicants.  In Part Three, we will take a look at the specific details of extending an offer of employment.

Bryan Cave LLP has a team of knowledgeable lawyers and other professionals prepared to help employers assess their obligations when starting a business and hiring employees. If you or your organization would like more information on best practices for hiring employees or any other employment issue, please contact an attorney in the Labor and Employment practice group.

Many thanks to our former colleague, Lily Kurland, for contributing this article to our blog.