Cash.gifThe saying goes that “Cash is King.” However, entrepreneurs often quickly learn (sometimes in painful ways) that it is Cash Flow that is really King. Run a quick Google search for “accounts receivable” financing or factoring to get a sense of how important that market is for businesses. Working for a telecommunications manufacturer, I can

White Collar 925264.jpgLast month, the U.S. Court of Appeals for the Eighth Circuit issued an opinion that essentially watered down the Fair Labor Standards Act (FLSA) overtime exemption for executives. This decision perhaps makes an unwitting case for President Obama’s intended overhaul of the FLSA’s white collar exemptions that we discussed recently.

An employer must satisfy four elements to take advantage of the FLSA’s executive exemption:

  • The employer must pay the worker a salary of at least $455 per week;
  • The employee’s primary duty must be management;
  • The employee must customarily and regularly direct the work of two or more employees; and
  • The employee must have the authority to hire or fire employees, or at least have the ability to offer suggestions and recommendations as to hiring, firing, advancement, promotion, or other status changes for employees, with the employer giving particular weight to those suggestions.  29 CFR § 541.100

This four-element standard is what remained after the Department of Labor’s 2004 revisions to the FLSA regulations that ditched what were then known as the “long test” and the “short test” under the former regulations. The long test had a lower salary basis and also required the employee to have regularly exercised discretionary powers to have devoted no more than 40% of their workweek to activities not directly and closely related to management. 29 C.F.R. § 541.1 (2003). The short test used a higher salary basis, but only required employees to regularly direct two or more employees and to have a primary duty of management.  Id.

Because there is no objective test for determining what an employee’s “primary duty” is or what “particular weight” means, this has led to substantial litigation, including the Eighth Circuit’s Madden v. Lumber One Home Center decision last month.


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