Liaison Between

Software Developers and

Ad Agencies Exempt from OT

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Employee’s Duties

“Administrative in Nature”

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But 7th Circuit Thinks DOL

Regs “Pretty Vague”

             Perhaps the least understandable of the exemption classifications under the Fair Labor Standards Act is the administrative.  Regulations promulgated several years ago by the US Department of Labor were less than helpful, and employers can struggle with this gray area when crafting job descriptions and measuring the amount of discretion afforded the employee in question.

             In Penny Verkuilen v. MediaBank LLC, __F3rd__, No. 10-3009 (7th Cir. May 27, 2011), plaintiff held the position of “account manager” at a company that sold media buying software to advertising firms.  Verkuilen worked directly with customers and obtained the customers’ needs, then communicated them in the form of specifications to the software developers.  Thereafter she assisted customers in using the application after it was developed.  She sued for overtime, arguing that she was not an administrative exempt.

             The Seventh Circuit turned to the DOL regulations, specifically 29 CFR 541.200, which states that an administrative exempt must have as her primary duty “both the exercise of discretion and independent judgment with respect to matters of significance.”  Those that directly assist with running the business are administrative exempts, but the court noted a “gap” between the categorization of employees as directly assisting or not directly assisting.  How closely a worker’s primary duty is tied to the operations of both the employer and its customers is a factor.

             Unfortunately Judge Posner filled in the gap his way – a resort for which he is well known – and explained that the coverage of the regulations “doesn’t fit a worker who spends much of his time off the employer’s premises, where he can’t be supervised and so if entitled to overtime would be tempted to inflate his hours.”  This logic would not be easily reconciled with the numerous classifications of workers who labor off the premises (landscapers, construction workers, local delivery drivers, temp workers, repair persons, etc.) and unquestionably are entitled to overtime. 

             In any event, the court held that the plaintiff’s job was directly related to the general business operations both of her employer and its customers.

7/14/2011