Fair Labor Standards Act (FLSA) Overtime Regulations

CHECKLIST - SALARY AND DUTIES TESTS FOR EXECUTIVE EXEMPTION FROM OVERTIME

Effective August 23, 2004

If the following four questions (A, B, C & D) are all answered “yes,” then the employee meets the executive exemption test.

A. Does the employee receive a salary of at least $455 per week? Yes __ No __

1. Salary means employee regularly receives a predetermined amount each pay period for work he performs any week.

2. Salary must be exclusive of board, lodging or other facilities.3. Salary may not be subject to reductions based on variations in the quality or quantity of

work (i.e., “snow” days).4. Employee may be subject to disciplinary deductions, in full-day increments, pursuant to a

written policy uniformly applied to infraction of workplace safety rules.5. Absences of a work day or longer may result in full-day increment salary reductions if the

absence is caused by personal illness or other personal reasons.6. Deductions are unavailable for absences caused by jury duty, witness duty, or temporary

military leave.7. Salary deductions are available for absences governed by the FMLA.8. Special treatment is available to employees who receive total annual compensation of at

least $100,000, composed of salary, incentive, and other nondiscretionary payments.

B. Is the employee’s primary duty the management of a customarily recognized department or subdivision of the company? Yes __ No __

1. Management duties include interviewing, selecting, and training of employees; setting and adjusting their rates of pay and hours of work; directing their work; maintaining their production or sales records for use in supervision or control; appraising their productivity and efficiency for the purpose of recommending promotions or other changes in their status; handling their complaints and grievances and disciplining them when necessary; planning the work; determining the techniques to be used; proportioning the work among the employees; determining the types of materials, supplies, machinery or tools to be used, or merchandise to be bought, stocked and sold; controlling the flow and distribution of materials or merchandise and supplies; providing for the safety of employees and property.

2. Primary duty generally means the principal or most important duty the employee performs.

3. When an employees spends less than the majority of his/her time performing management functions, he/she may still be considered an executive depending upon other factors such as:

a. the relative importance of the managerial duties as opposed to the other types of duties;

b. the frequency with which the employee exercises discretionary powers;c. the employee’s relative freedom from supervision; andd. the relationship between the employee’s salary and the wages paid to other

employees who perform the same kind of non-exempt work performed by the supervisor.

4. Employee must direct a unit of employees with a permanent status-continuing function, not merely a collection of employees assigned to complete a project.

5. Consider what percentage of time employee spends performing similar duties to those completed by his subordinates. If significant administrative or professional duties are performed, consider the “combination” exemption.

6. If fewer than six subordinates are supervised, examine primary duty very closely (i.e., employee turnover, contacts with internal and external customers, maturity of functional area).

C. Do the employee’s duties include the regular supervision of two or more full-time employees or the equivalent (at least 80 hours of subordinate time each week)? Yes __ No __

1.Joint or shared supervision with another exempt classified employee is insufficient.2.Supervision only in the regular manager’s absence is insufficient.

D. To qualify as an exempt executive, an employee must have the authority to hire or fire other employees, or have his or her suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees be given “particular weight.” Does the employee have the authority to hire or fire assigned employees, or at least the responsibility to effectively recommend hiring, firing, advancement, promotion, or other change in assigned employee status? Yes __ No __

a. It does not include occasional suggestions regarding co-workers. b. Is it part of the employee’s job duties to make such recommendations, and the frequency

with which such recommendations are made, requested, and relied upon? For example, an employee who provides few recommendations that are never followed would not meet the requirement

c. A supervisor who provides recommendations on any one of the above specified changes in employment status may be considered to meet the requirement

d. An employee whose primary duty is ordinary production work or routine, recurrent or repetitive tasks does not qualify for exemption as an executive even if the employee also has some supervisory responsibilities.

e. Concurrently (or simultaneously) performing both exempt and nonexempt duties does not automatically disqualify an otherwise exempt employee from the executive exemption if all the requirements for exemption are met.

i. For example, if the primary duty of a manager of a retail food service establishment is management of that establishment, performing work such as serving customers or cooking food during peak customer periods would not preclude exempt status.

ii. Generally, exempt executives make the decision regarding when to perform nonexempt duties and remain responsible for the success or failure of business operations under their management while performing such nonexempt tasks, and can both supervise subordinate employees and serve customers at the same time without being disqualified from the exemption. In contrast, the nonexempt employee generally is directed by a supervisor to perform the exempt work or performs the exempt work for defined time periods.

Exemption of business owners with 20 percent equity interestAn employee who owns at least a bona fide 20-percent equity interest in the enterprise in which employed, regardless of the type of business organization (e.g., corporation, partnership, or other), and who is actively engaged in its management, is considered a bona fide exempt executive. The salary and salary basis requirements do not apply to the exemption of business owners. An individual with a 20 percent or greater interest in a business who is required to work long hours, makes no management decisions, supervises no one and has no authority over personnel does not qualify for the executive exemption. To qualify for the exemption, a minority owner with at least a bona-fide 20 percent interest in the business must be actively engaged in its management.

JOB DESCRIPTION EXAMPLE

Title: COO Manufacturing Job Code: Grade: FLSA: Exempt-Exec  “Executive exemption” is granted since the primary duty of this position is management of a customarily recognized department or subdivision. This position customarily and regularly directs the work of two or more other employees.  The incumbent’s suggestions and recommendations are given particular weight as to hiring, firing, advancement, promotion or other change of status of other employees.□ P rimary duty (“Primary duty” means the principal, main, major or most important duty

that the employee performs. Determination of an employee’s primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee’s job as a whole.) is management of the enterprise

□ ,“management” includes, but is not limited to, activities such as:□ interviewing, selecting, and training of employees; setting and adjusting their

rates of pay and hours of work; directing the work of employees; maintaining production or sales records for use in supervision or control; appraising employees’ productivity and efficiency for the purpose of recommending promotions or other changes in status; handling employee complaints and grievances; disciplining employees; planning the work; determining the techniques to be used; apportioning the work among the employees; determining the type of materials, supplies, machinery, equipment or tools to be used or merchandise to be bought, stocked and sold; controlling the flow and distribution of materials or merchandise and supplies; providing for the safety and security of the employees or the property; planning and controlling the budget; and monitoring or implementing legal compliance measures.) or of a customarily recognized department or subdivision thereof; (The phrase “a customarily recognized department or subdivision” is intended to distinguish between a mere collection of employees assigned from time to time to a specific job or series of jobs and a unit with permanent status and function.)

□ Customarily and regularly (The phrase “customarily and regularly” means greater than occasional but less than constant; it includes work normally done every workweek, but does not include isolated or one-time tasks.) directs the work of two or more other employees; (The phrase “two or more other employees” means two full-time employees or their equivalent. For example, one full-time and two half-time employees are equivalent to two full-time employees. The supervision can be distributed among two, three or more employees, but each such employee must customarily and regularly direct the work of two or more other full-time employees or the equivalent. For example, a department with five full-time nonexempt workers may have up to two exempt supervisors if each supervisor directs the work of two of those workers.) and

□ Has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight. (Factors to be considered in determining whether an employee’s recommendations as to hiring, firing, advancement, promotion or any other change of status are given “particular weight” include, but are not limited to, whether it is part of the employee’s job duties to make such recommendations, and the frequency with which such recommendations are made, requested, and relied upon. Generally, an executive’s recommendations must

pertain to employees whom the executive customarily and regularly directs. It does not include occasional suggestions. An employee’s recommendations may still be deemed to have “particular weight” even if a higher level manager’s recommendation has more importance and even if the employee does not have authority to make the ultimate decision as to the employee’s change in status.)

GENERAL SUMMARYDesign, develop and execute a business strategy that address all critical aspects of a systems integrator competing in both domestic and international markets. Develop and implement supporting tactical plans in manufacturing operations. Ensure that the support disciplines of human resources, information resources, and finance fully support the line operations. Keep the corporation apprised of all key developments and provide subordinates the outstanding leadership that is expected of a general manager. Actions and decisions have a direct impact on the long-term future of the business in virtually every area including engineering, operations and domestic and international markets. Actions and decisions on a short-term basis have a direct impact on corporate profits and share prices.

PRINCIPAL DUTIES AND RESPONSIBILITIES- Direct all aspects of production operations including P&L, in an organized method to establish and maintain

company/industry standards in plant efficiency, product quality, customer service, plant sanitation (EPA), and employee safety (OSHA).

- Direct/lead/support engineering and capital projects, quality assurance, and product development activities, sales and customer service efforts, productivity improvements, personnel and employee relations programs and initiatives, accounting and financial practices and analysis, and good community relations.

- Design, develop and execute a business strategy that addresses all critical aspects of a systems integrator competing in both domestic and international markets.

- Direct all aspects of components manufacturing, assembly, quality control and building of, or improving, manufacturing operations for the company. This includes translating strategic goals into achievable line-of-site stretch-objectives, new product and process introduction, quality metrics, lean manufacturing, and initial component technology research.

- Work closely with operations director/managers - design, develop and execute operational plans that successfully meet customer expectations and strategically set financial goals.

- Work closely with department directors/managers to support the design, develop and execute marketing and operational plans that capture and execute business in accordance with the business strategy.

- Work closely with the directors of human resources, information resources and finance to ensure that these support disciplines provide cost effective, superior service to the line organization.

- Provide policy and personal leadership in key organization initiatives: diversity, total quality management, ethics, waste minimization, training and education, and people development.

- Contribute broadly to the strategy, culture and operations of the company as a member of senior management. - Identify, evaluate, select, and negotiate supply agreements and serve as primary contact with

key component suppliers, including negotiating contract, maintaining strong relationships and effective communication, verify quality and availability of materials,

- Lead manufacturing line transfer, installation, qualification, validation, and commercial start-up.- Ensure that suppliers are allocating sufficient, competent resources to our programs.- Ensuring that suppliers are following Quality Assurance practices. - Ensure that adequate and appropriate technical support is provided by the company to

suppliers.- Ensure that the manufacturing equipment is appropriately maintained.- Ensure that excess production equipment is properly warehoused and inventoried.- Ensure that appropriate levels of inventory and adequate storage capacity throughout the

production cycle are forecast and maintained.- Wherever feasible in the process ensure that there are second sources of supply and/or

emergency contingency plans.- Ensure that there is an efficient distribution system in place for the final product.- Working with Product Development and suppliers to develop and implement cost reduction

programs.- Maintain close working relationship with product development, regulatory and commercial staff.- Hire, train and manage the Manufacturing and Supply Chain organizations and their budgets.

- Participate in special projects and perform other duties as necessary and required. - Resolves employee issues, concerns, and problems within limits of company policies and practices.

- Contacts requiring judgment and tact in presentation occur frequently with individuals in administrative or executive positions and high-ranking customers and include important daily interactions with staff requiring consultation on problems.

- Probable errors may cause serious delays in operation; errors in decisions and recommendations may be costly to company and have important effects on labor relations.

- Provide leadership for the shared responsibility of employee development.- Ensures that the employees and the work environment are compliance with OSHA regulations and company

safety objectives.- Performs other duties as necessary and appropriate to this position.

KNOWLEDGE, SKILLS, AND ABILITIES REQUIRED 1. B.S. degree in Engineering, Business, Production Management, Computer Science, or related field.2. Minimum ten years’ manufacturing experience, three years management level experience in Manufacturing

Operations management including at least 5 years direct management experience with proven positive results in process improvement, material and strategic planning.

3. Must have demonstrated knowledge of manufacturing and quality principles and government regulations; engineering; information systems; and, effective supplier/customer interface.

4. Demonstrated ability to supervise, motivate, train and evaluate personnel.5. Excellent communication skills.6. Experience working within a non-union environment with proven leadership in a production/manufacturing

setting.7. Demonstrated applied knowledge of manufacturing processes and procedures and proven results in

prioritizing and addressing multiple issues.

KEY RELATIONSHIPSFulfills the most senior executive role responsible for leading and directing the manufacturing and supply chain activities for the company and is a key participant within the senior management team. This position will be responsible for all contract manufacturers as well as upstream vendors and downstream distribution channels.Constant contact with the President & CEO of (insert Company name). Constant contact with the (insert Company name) directors and key managers. Constant contact with members of the (insert Company name) Executive Operating Committee. This contact is to ensure effective Manufacturing operations and proper resource allocation.

WORKING CONDITIONS

PHYSICAL DEMANDSWhile performing the duties of this job, the employee is occasionally required to stand; walk; sit; use hands to finger, handle, or feel objects, tools or controls; reach with hands and arms; climb stairs; balance; stoop; kneel; crouch or crawl; talk or hear. The employee must occasionally lift and/or move up to 50 pounds. Specific vision abilities required by the job include close vision, distance vision, peripheral vision, depth perception, and the ability to adjust focus. The work schedule for this classification is full-time. Incumbents must work a full-time forty (40) hours per week schedule with occasional overtime based on meeting schedules and deadlines.

WORK ENVIRONMENT While performing the duties of this job, the employee is not normally exposed to normal indoor non-air-conditioned temperatures and may on occasion work in seasonal outdoor weather conditions. The noise level in the work environment is usually low to moderate where hearing protection is necessary based on OSHA requirements. Work environment characteristics described here are representative of those that must be met by an employee to successfully perform the essential functions of this job. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

REPORTING RELATIONSHIPReports to: President and CEO of <Insert Company Name>

Approvals and Dates

President & CEO President & CEO Signature Title Date

Vice President, Human Resources VP Human Resources Signature Title Date

The above is intended to describe the general content of and requirements for the performance of this job. It is not to be construed as an exhaustive statement of duties, responsibilities or requirements. The principal duties and responsibilities enumerated are all essential job functions except those that begin with the word “May.”