No Overtime for Banquet Hall Sales Managers

Sales managers for a company that owns high-end banquet halls were expected to maintain relationships with existing clients and secure new clients for custom events, such as weddings or corporate parties. Sales managers functioned as the primary client contact and were responsible for designing, coordinating and executing the event to the client’s approval within the fee structure outlined by their employer. They were given a handbook that contained some sales guidelines, but the handbook did not provide prescribed techniques or “sales pitches.” Also, the sales managers could neither issue discounts to clients nor sign-off on client contracts without the employer’s consent. They received salaries and were not paid overtime if they worked more than 40 hours in a week. A group of former sales managers challenged this practice and sued to recover overtime under the Fair Labor Standards Act (FLSA). The employer claimed that the sales managers were not entitled to overtime because they fit within the statute’s “administrative exemption.” To establish that the sales managers qualified under the administrative exemption, the employer had to demonstrate that the sales managers routinely exercised “discretion and independent judgment with respect to matters of significance.” The U.S. Court of Appeals for the First Circuit held that the sales managers were exempt in spite of their lack of authority to make financial and contractual decisions on behalf of their employer because their work in securing clients and creating a custom product, personalized to individual tastes and budgets, was sufficient to meet the independent discretion requirement. Regarding the handbook, the court concluded that the rules were not so numerous or specific as to restrict the judgment required to engage with clients and prospective clients. Employers are reminded that not all “sales managers” will meet the independent-discretion factor of the administrative exemption. Employers are urged to work with their counsel to review the business practices in place and the responsibilities assigned to a position to determine if the position is properly classified as exempt from the overtime requirements.

Hines v. State Room, Inc., No 10-2298 (1st Cir. Nov. 28, 2011)

CA Supreme Court Issues Insightful Ruling on Application of Administrative Exemption

Today the California Supreme Court issued its ruling in Harris v. Superior Court. This case dealt with whether or not insurance adjusters were properly classified as exempt employees, or whether they should have been entitled to overtime compensation under the California Industrial Welfare Commission’s Wage Orders and the California Labor Code. More ›

Ninth Circuit: Social Workers are not “Learned Professionals” Under FLSA and are Therefore not Exempt From Overtime Requirements

On September 9, 2011, the Ninth Circuit Court of Appeals held that social workers in the state of Washington are not “learned professionals” under the Fair Labor Standards Act and therefore, are not exempt from overtime compensation. More ›

Unlicensed Accountants may be Exempt From Overtime Pay Requirements

Unlicensed junior accounts who performed audits and provided other accounting services for their employer’s clients brought a wage-and-hour class action against the employer for overtime pay they were allegedly owed. The employer argued that the accountants were exempt from the wage-and-hour law’s overtime provisions under the “professional” exemption. Under California law, to claim the “professional” exemption, the employer must show that the employees were: (1) licensed or certified by the State of California and primarily engaged in law, medicine, dentistry, or accounting; or (2) primarily engaged in an occupation commonly recognized as a learned or artistic profession. The U.S. Court of Appeals for the Ninth Circuit held that the accountants could be exempt if their job duties indicated that they were engaged in a “learned profession,” even though they did not have CPA licenses. The court emphasized that when determining whether an unlicensed accountant is exempt or non-exempt, a “fact-specific inquiry” is required. This case serves as a reminder that whether an employee is exempt or non-exempt should not be determined categorically, but should be determined according to the job duties the employee actually performs.