As most employers are aware, the Fair Labor Standards Act (“FLSA”) requires that employers pay non-exempt employees overtime compensation for any hours worked over 40 in a workweek. 29 U.S.C. § 207(a)(1). In an Eleventh Circuit case decided this month, Adams v. BSI Management Systems America, Inc., 2013 WL 3722115 (11th Cir. July 17, 2013), a Supply Chain Security Program Manager who was terminated for poor performance sued her former employer alleging that she should have been paid overtime as a non-exempt employee.
According to the job posting for Adams’ position, Adams was “responsible for assessing, documenting and incorporating multiple country level compliance programs into a single compliance system for international supplier assessments.” Id. at 1. She reported directly to the Senior Vice President of the company’s Supply Chain Solutions group.
The employer contended that Adams’ position satisfied the “administrative exemption” to the FLSA’s overtime requirements. An employee who meets the administrative exception is one who: (1) is paid a salary of at least $455 per week; (2) “[w]hose primary duty is 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;” and (3) “[w]hose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.” 29 C.F.R. § 541.200. It is the employer’s burden to prove that an employee fits within the exemption, and the exemption is construed narrowly.
It was undisputed that Adams satisfied the salary basis test, but she alleged that her duties failed to meet the second or third prongs of the test. Adams alleged that she merely worked on the “production” side of the business to ensure that the company’s product was timely built, and so did not perform work directly related to management or general business operations of the employer or its customers. The court rejected this argument, reasoning that the evidence showed that Adams spent the vast majority of her time running projects for a couple of clients, which included creating project tasks, putting together plans, and ensuring that client needs were met. Notably, Adams “conducted client meetings, marketed for BSI, served as the primary contact with prospective clients, and spent significant time researching industry trends,” all of which the court found directly related to the management of the organization and its customers.
Adams further alleged that she did not exercise discretion and independent judgment with respect to matters of significance as required by the third prong of the test, but that she simply followed the direction of her supervisor. The evidence showed otherwise. Adams took the lead in and managed projects, tasks which, by their very nature, include the exercise of independent discretion and judgment. The FLSA regulations define the exercise of discretion and independent judgment as involving “the comparison and the evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered.” 29 C.F.R. §541.202(a). Adams planned project tasks and ensured they went through, which the court found met this prong.
Project managers, like Adams, though not “managers” for purposes of the executive exemption, can be administratively exempt. Further, performing work related to the company’s customers’ business operations—not just to the internal operations of the employer—is an important principle that broadens application of the administrative exemption, and it helped Adams’ employer satisfy its burden to show that she was properly classified as exempt under the administrative exemption.