Matthew DeVries and J.D. Humphries, III
Posted: January 28, 2016 | Legal Advice
The lowest rung on the management ladder for most contractors is the superintendent. While residing on the lowest rung on the management ladder, the position is one of critical importance to profitability and repeat business. The superintendent's performance results in an on time, on budget project, or a loss. Due to their importance, many contractors pay superintendents even when they do not have an active project, are not working, and provide them with company-owned trucks. When working, superintendents work long hours and are not paid overtime.
Superintendents are typically paid a good salary and keep time records. They often have company credit cards to order miscellaneous supplies and materials for their projects. They usually have authority to hire laborers and trades on an as needed basis. While written job descriptions describing duties and authority usually do not exist, contractors treat superintendents as salaried management employees not entitled to overtime. However, when contested in court, whether the superintendent is entitled to overtime is decided on a case-by-case basis dependent entirely on the particular facts of the case. The outcome rests on the actual authority and discretion exercised by the superintendent in the field.
The Federal Fair Labor Standards Act ('FLSA') requires the payment of overtime to employees unless exempt from such law. Whether the superintendent is an exempt employee is not decided by whether a good salary is paid. It is determined by job description, duties, and discretion. A superintendent is exempt from wage and hour laws if he is paid $100,000 a year or more, or is an 'administrative' employee. An 'administrative' employee is an employee paid more than $455 per week, whose primary duty is performance of office or non-manual work related to the business of the contractor, and exercises discretion and independent judgment on matters of 'significance.' Alternatively, there is an 'executive' exemption for an employee who makes more than $455 per week, whose primary duty is 'management,' who regularly directs the work of two or more other employees, and has authority to hire or fire other employees.
Courts find that if a superintendent is called a duck (exempt employee) and he also flies and quacks (exercises discretion, makes decisions and exercises independent judgment), he is a duck (exempt). If, on the other hand, the superintendent neither flies nor quacks (lacks decision making authority, lacks power to hire and fire, etc.), he is not a duck, not exempt, and must be paid overtime.
The contractor has the burden of proving its superintendent is exempt as either an 'administrative' or 'executive' employee by clear and affirmative evidence. The FLSA is construed liberally in favor of the employee by courts. Paying a salary is not determinative, and requiring time records is not helpful. The ability to hire, fire, interpret drawings, execute and make changes to subcontracts, supplement subcontractors, direct and supervise work and employees, initiate change order requests, are positive indicators of an exempt superintendent. A superintendent performing manual labor, keeping time records, conducting safety meetings, with no authority over subcontracts, schedule, other workers and tasks is reflective of a non-exempt employee entitled to overtime.
When employees are terminated many contractors obtain written releases of all claims. Any waiver or release of an overtime claim must be approved by the U.S. Department of Labor or a court to be enforceable. Under limited circumstances, some courts have held that an employee in actual litigation represented by a lawyer who enters into a settlement agreement advisedly may release overtime claims without court approval.
To add insult to injury, when an employee prevails and is entitled to overtime, the recovery is doubled (if 'wilfully' not paid overtime) and the employee entitled to attorneys' fees. While a non-construction case, a recent case involved an office clerical worker who kept no time records and claimed $25,000 in overtime over a two year period. The employer contended she was an exempt 'administrative' employee and reconstructed her time. The jury found her to be non-exempt, made an award of $6,907, which was doubled to $13,814, and the Court awarded $173,300 in attorneys' fees.
Consider not requiring superintendents to keep time records; the daily report should suffice. Time records are evidence of hours worked, and if not rejected, an admission of hours worked by the employer. Consider written job descriptions for superintendent's granting them specific express authority and discretion. Consider authority to hire and fire, initiate change orders, supplement subcontractors, and submit RFI's. When a claim is made, or a lawsuit filed, given the penalties imposed by federal law, consider a reasonable early settlement as a money saving business decision. However, if your facts are good, and the superintendent both flies and quacks, he is exempt, and the downside could be limited to attorneys' fees. Unfortunately, a successful contractor in litigation does not get its attorneys' fees awarded to it.
About the Authors:
Matt and JD are members of the Construction Service Group of Stites & Harbison, PLLC. Matt lives in Nashville and is the founder of www.bestpracticesconstructionlaw.com. JD lives in Atlanta and frequently writes on construction issues. You can reach the authors at email@example.com and Jhumphries@stites.com.