Who’s The Boss?

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Who’s the boss? Who’s in charge here? You would think the answer is, whoever you say the boss is, or the foreman, or the lead, or any other title you like to use. But the answer might surprise you if you ask the National Labor Relations Board. And, you might get a different answer if you ask the Equal Employment Opportunity Commission. And just to make things interesting, go ask the United States Department of Labor, and you might get yet another answer.

Here is why the answer is important to any employer. For some purposes, you want an individual to be deemed a supervisor so that, for example, you can pay that individual a salary without having to account for every working hour and therefore incurring overtime. Supervisors and members of management may be exempt from certain protections such as the right to form and join unions. On the other hand, a supervisor may mean someone who is the employer’s agent–and that means that whatever that person does — good or bad –can bind the employer to an obligation or expose the organization to liability.

Let’s start with the National Labor Relations Act which is enforced by the National Labor Relations Board. Under the NLRA, non-supervisory employees have the right to engage in protected concerted activity about their terms and conditions of employment free of retaliation by their employer. This means, for example, employees may use Facebook and other social media to complain about their working conditions and even specifically about their bosses, and such speech is considered a right under the National Labor Relations Act. And of course the NLRA gives employees the right to form and join unions. For purposes of coverage under the NLRA, it often becomes critical to determine whether an employee is a supervisor or not.

The NLRA defines “supervisor” as “any individual having authority, in the interest of the employer, to hire, transfer, suspend, lay-off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibly to direct them, or to adjust their grievances, or effectively to recommend such action if in connection with the foregoing the exercise of such authority is not of a merely routine or clerical nature but requires the use of independent judgment.”

There is a lot of verbiage in that legal definition but here is the key element: for an individual to be considered a supervisor under the NLRA, that individual must exercise “independent judgment” in carrying out certain important duties on behalf of the employer. In practice the Labor Board will generally find someone to be a supervisor if they have, for example, hiring or firing authority. However, in today’s litigious environment, relatively fewer supervisors are given complete autonomy in hiring or terminating employees. Nonetheless, if such individuals are intimately involved in hiring and firing decisions because they make recommendations which are generally followed, then they may indeed be deemed supervisors by the Labor Board.

Much recent litigation involving the Labor Board concerns whether independent judgment is required in directing a workforce. Several recent, surprising decisions underscore a growing tendency by the Labor Board to refuse to grant supervisor status. For example, the Labor Board has said that taking action in instances of safety violations may not make an individual a supervisor. In one such case the employer’s supervisory personnel could suspend employees who were caught sleeping. The Labor Board held that no independent judgment was required to determine whether a subordinate was asleep—either the employee was asleep or not. In a related vein, transit company foremen who were authorized to add additional trolley cars when passenger volume increased were also not  supervisors, again on the ground that no independent judgment was required to make such determinations. More passengers, more trolley cars.

A particularly revealing case involved security officers who guard nuclear facilities against terrorist attacks. Despite the fact that the squad leaders could deploy sophisticated, top-secret defensive measures against terrorist attacks, the Labor Board held that they were not supervisors, once again saying that the paramilitary reaction to such threats to nuclear facilities was outlined in doctrine which was practiced over and over again. Arguments to the Labor Board that threats which these security forces were required to defend could not possibly be scripted in every potential instance fell on deaf ears.

One refrain which appears frequently in Labor Board cases is that technical expertise is not the same as management responsibility.

The result? In each of these cases the National Labor Relations Board decided that individuals who had always been considered supervisors by their employers were allowed to join unions and collectively bargain with their employers. More to the point, these were individuals on whom their employers had always depended as representatives of their companies. But with extension of NLRA rights to these individuals comes even the right to strike.

Issues of who is a supervisor or a “manager” or an “executive” also arise under the Fair Labor Standards Act when it comes to determining who is eligible for overtime. Like the NLRA, the FLSA is almost deceptively simple in its reach. The general rule is that all employees are entitled to minimum wage and overtime at 1½ times their normal rate after 40 hours in a week. (Different rules apply in the public sector and to certain healthcare employees.) But there are many exemptions under the FLSA including some that apply to individuals who many employers consider as supervisors.

The “executive” or “managerial” exemption applies to supervisors who supervise two or more full time employees and who earn a weekly salary of at least ­­­­­­­­­­­­­$455 per week. Clearly, hiring and firing authority will suffice to qualify for this exemption. Even if such direct authority over subordinates is lacking, generally speaking an individual who is responsible for the activities of two or more full-time subordinates and who meets the requisite weekly salary amount will be characterized as a supervisor.

More difficult is the “administrative” exemption under the FLSA. Unlike the executive or managerial exemption which focuses on responsibility for subordinates, the administrative exemption recognizes those who may not have authority over subordinates but who have significant responsibilities in the interest of the employer. Commonly meeting this exemption are such positions as human resources managers, purchasing agents, and others who are in a position of significant responsibility on behalf of their employer. As will sound familiar, it is imperative in order to meet the administrative exemption, there must be independent judgment and discretion in the exercise of the individual’s duties. And they must earn a weekly salary of at least $455.

Positions which often do not meet these FLSA criteria, despite having the trappings of supervisory authority, are such jobs as “payroll supervisor” or “accounts payable manager”. Despite their titles, these positions often entail relatively little independent judgment and discretion. If one drills down into, for example, the job of payroll supervisor, it is difficult to find the authority to deviate from the essential responsibility of making sure everyone in the organization gets a paycheck. Similarly, being in charge of paying an organization’s bills is almost purely an administrative function with judgment and discretion left to higher-ranking managers to make decisions such as whether to defer paying a particular bill.

One particular characteristic of a supervisor’s work which the U.S. Department of Labor will investigate when determining supervisory status is how much time the individual spends doing work that is essentially the same as the work performed by those he or she is said to be supervising. This becomes especially tricky for working foremen who may in fact work side-by-side with their subordinates, perhaps doing the same work for part of the day but also conducting other business such as approving timesheets or work orders or responding to customer complaints. The devil will be in the details.

But sometimes it may not be in the employer’s best interest for an individual to be deemed a supervisor for legal purposes. Job discrimination laws hold an employer responsible for acts committed by employees who may be seen as agents of the employer.

For example, an employer can be held liable for sexual harassment when one employee harasses another employee of an equivalent position within the organization, if the employer knew or should have known of the inappropriate conduct and did not act promptly and appropriately. On the other hand, an agent of the employer — and in many cases, supervisors will be deemed as employers’ agents – who harass or discriminate may almost automatically expose their employer to liability for their conduct. The more supervisory authority an individual has, the more likely it is that his or her bad acts will be attributed to the employer.

In practical terms this means that, as a best practice, the employer should also ensure that those individuals receive training in the various laws that regulate the work place. It can appear contradictory to a court or an agency to argue on the one hand that a supervisor meets the various criteria so as to be excepted from NLRA coverage, or that he may be considered salaried and exempt from overtime, while at the same time taking the position that such an individual does not stand in the place of the employer when it comes to conduct toward other employees and especially subordinates. In plain English, it is difficult to have it both ways. That’s why savvy employers make sure their supervisory folks are trained in workplace law in addition to their organization’s policies and procedures, and that they are held accountable for their actions and their areas of responsibility.

Finally, it is important to understand that these various workplace laws reach even some of the smallest employers. The National Labor Relations Act and the Fair Labor Standards Act require only that an employer be engaged in interstate commerce and hardly any employer in today’s world can successfully argue that their operations don’t somehow implicate interstate commerce. Federal job discrimination laws cover employers with as few as 15 workers; state laws may encompass even smaller workplaces.

Every organization needs to understand that ignorance is not bliss and that, large or small, every employer is expected to understand its obligations and responsibilities.

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Posted In: ACCA Now, Legal