Are Shareholder Employees Subject To FLSA?

Oct 28, 2022
By Peter Friedmann

Companies, especially public companies, often have both shareholders and employees that participate in the running of the business. Shareholders are considered partial owners to a degree while employees work for the company and receive payment for their work.

But in some cases, certain employees have the opportunity to purchase or acquire stock in the company, making them shareholder employees. For shareholder employees, questions can arise around certain federal laws such as the Fair Labor Standards Act and how such laws apply to them.

Below, we take a look at whether or not shareholder employees are subject to the FLSA or not.

What is the FLSA?

The FLSA is a federal law that determines whether certain jobs are non-exempt or exempt from overtime requirements. The law covers a few different things such as record keeping, overtime pay, and the federal minimum wage.

The FLSA provides certain protections to all employees who are considered non-exempt. Most employees will be considered non-exempt unless they meet certain requirements. Some particular types of exemptions include:

  • The professional exemption
  • The executive exemption
  • The administrative exemption

Each of the above has certain requirements that must be met by each individual employee’s job duties to qualify them as exempt.

An important note: job title does not factor into exempt or non-exempt status. For example, if you work as an administrative assistant, you may still be considered non-exempt based on your job duties.

What Qualifies an Employee as Exempt?

For employees that are exempt from the FLSA, this means that they will not be paid any kind of overtime wages for hours that they work over 40 hours in a workweek, and they may not be covered by other FLSA protections.

To be considered exempt, an employee must be paid on a salary basis of at least $455 a week and meet certain tests in regard to their job duties.

Additional tests consider your individual job duties as well.

Are Shareholder Employees Subject to FLSA?

So, what does this all mean for shareholder employees?

Shareholder employees, who most often are counted as executive employees (particularly by title and via job duties), will likely be considered exempt in most cases.

To fall under the executive exemption, your primary duties must be of a managerial or executive nature. Some examples of these duties include:

  • Your primary duty must include “managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise”
  • You regularly oversee and direct the work of “at least two or more other full-time employees or their equivalent”
  • You have the authority to hire or fire other employees of your recommendations on the hiring or firing of employees are given significant weight

As a shareholder employee, you are most likely not subject to the FLSA – especially if you believe your job duties fit under the executive exemption.

Keep in mind that the above is general information and your job duties as a shareholder employee will need to be looked at on an individual basis to determine if you are truly exempt from the FLSA. We recommend reaching out to our FLSA lawyers near Columbus, Ohio.

The Friedmann Firm team is well-versed in determining FLSA status and we are happy to help explain how the FLSA may or may not apply to you. We can help answer more questions related to are shareholder employees subject to FLSA that you may have as well too.

Questions on the FLSA? Connect with Our FLSA Lawyers

If you have further questions about how the FLSA may or may not apply to you as a shareholder employee, reach out to our experienced employment lawyers near Columbus, Ohio today. The Friedmann Firm is committed to helping you understand your rights as an employee.

Schedule a free, confidential consultation online or over the phone at 614-610-9755.