By John T. Lovett

The U.S. 6th Circuit Court of Appeals—which covers Kentucky, Michigan, Ohio, and Tennessee—recently held that employees were sometimes exempt from receiving overtime but were not exempt other times. The deciding factor was a very slight difference between the discretionary authority exercised in each role.

Facts

Randstad General Partners, a staffing agency, provides temporary employees to its clients. Three Randstad employees filed a collective action in federal court seeking to recover overtime pay for themselves and all "similarly situated" employees.

The employees worked in several different positions over the course of their employment, but they all were responsible for recruiting and assigning temporary employees to the firm's clients. Their job titles included "Staffing Consultant," "Senior Staffing Consultant," "Account Manager," and "Assistant Branch Manager." Randstad argued that the employees qualified for the administrative exemption under the Fair Labor Standards Act (FLSA) and therefore were not entitled to overtime.

To qualify for the administrative exemption, an employee must have as her "primary duty" the "performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers." Importantly, the employee's primary duty must involve "the exercise of discretion and independent judgment with respect to matters of significance."

The trial court found that each of the employees qualified for the administrative exemption under the FLSA. Although their jobs involved a "mix of exempt and non-exempt recruitment and placement tasks," the types of exempt duties performed by the managers and consultants were virtually the same. The difference between the managers' and consultants' job titles made no difference. "Manager" may sound more like an exempt job, but the FLSA's exemptions turn on job duties, not job titles. The employees appealed to the 6th Circuit.

Court's Decision

The appellate court agreed that the senior account manager, account manager, and assistant branch manager jobs involved sufficient discretion and independent judgment to qualify for the administrative exemption. However, the court ruled that the staffing consultant position did not qualify for the exemption because staffing consultants performed their job duties with "less independence" and worked under "more supervision."

The court pointed out that account managers had the ability to write job descriptions and staffing consultants tracked Randstad's required format for writing job descriptions. Staffing consultants recruited from independent sources only if Randstad's website produced no qualified candidates, while account managers were free to use their own judgment to determine how best to recruit qualified candidates. Those distinctions made all the difference.

Under the ruling, Randstad could be held liable for overtime premiums for all hours worked over 40 per workweek by the staffing consultants. Plus, Randstad may be at risk of paying liquidated damages, which would double its liability for overtime pay, plus the employees' attorneys' fees.

Bottom Line

Randstad decision demonstrates that merely a few "fine lines" can be the difference when trying to determine whether a particular job's duties qualify for an exemption from overtime pay. Whether the administrative exemption applied depended on the degree to which the employees were free to exercise "discretion" and "independent judgment."

Yet almost no employee is free to exercise complete discretion, and few employees work completely free of supervision. When determining whether an employee is exempt from overtime pay, employers are forced to guess about what courts may decide is too little discretion and too much supervision for an employee to qualify as exempt.

Employees' lawyers are increasingly discovering that employers are forced to gamble on how a judge or jury will react to their decision to treat a particular job as exempt from overtime pay. Class and collective actions enable employees' lawyers to consolidate the wage and hour claims of many employees over several years into a single lawsuit. The potential for collective recoveries, combined with the uncertainty of wage and hour exemptions, makes wage and hour class and collective actions the next big source of employer liability.

John Lovett, an editor of Kentucky Employment Law Letter, can be reached at jlovett@fbtlaw.com.