A group of banquet sales managers in Massachusetts and Rhode Island sued their former employers, charging that they should not have been classified as administrative exempt employees but were actually nonexempt and deserving of overtime pay.

What happened. The first plaintiff, unhappy with the severance package offered her by the State Room, an event site in Boston, initially sought to mount a class action lawsuit. But she soon dropped it, and two other plaintiffs, both of whom had worked at Belle Mer, another event site in Newport, Rhode Island, joined her suit.

The three argued that although they earned the minimum of $455 per week and performed nonmanual work related to the sites' business operations—the first two requirements of an administrative exemption—they did not exercise enough discretion and independent judgment to be exempt. They could neither set prices for meals nor approve contracts with customers. But a judge in Massachusetts federal district court ruled in the sites' favor, believing that the sales managers exercised plenty of discretion and judgment in their work. The three plaintiffs appealed to the 1st Circuit, which covers Maine, Massachusetts, New Hampshire, and Rhode Island.

What the court said. Appellate judges needed only to review their rulings in two earlier and similar cases to decide what to do in this case. In 1997, they had ruled that a group of marketing representatives who sold insurance products to field agents exercised their judgment in knowing each agent's customer base and pitching products accordingly. And in 2007 they reached a related decision regarding a customer service manager who outfitted and delivered motorcycles to customers, ensuring the customers were satisfied.

Here, the banquet sales managers could consult a sales handbook but had to create their own pitches for customers. In all three cases, judges confirmed that the employees deserved the classification of administrative exemption and were not entitled to overtime. Hines et al. v. State Room & Belle Mer, U.S. Court of Appeals for the 1st Circuit, No. 10-2298 (2011).

Point to remember: Both the Department of Labor and some other circuits have decided the opposite way on this question, such as the 2nd Circuit (CT, NY, VT) regarding pharmaceutical sales representatives. Judges in that circuit found that since drug reps can't make financial decisions or judge independently, they are not exempt. In the 1st Circuit, however, if employees have "creative freedom" and their primary duties require 'invention, imagination, and talent," they can be classified as exempt.