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Director who performed nonexempt work for 80% of his workday ruled FLSA exempt

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Dive Brief:

  • Travel plaza operator HMSHost properly classified a former district director of operations as an overtime-exempt employee under the Fair Labor Standards Act, the 6th U.S. Circuit Court of Appeals held Aug. 17 in Manteuffel v. HMS Host Tollroads, Inc.
  • HMS Host classified the district director as both an executive and administrative employee, but the employee disputed that he met the FLSA’s definition of an executive. For example, he testified that he spent about 80% to 90% of his workday performing hourly, nonexempt work and that this meant management tasks were not his “primary duty,” as defined by the FLSA.
  • A district court granted summary judgment to HMS Host and the 6th Circuit upheld that ruling, stating that its analysis showed that management was the employee’s primary duty. The court also held that the employee’s job met other criteria for an executive exemption, noting that he customarily and regularly directed and had the authority to hire or fire other employees.

Dive Insight:

Generally, employees may only be considered exempt from the FLSA’s overtime requirements if they perform specific job duties — i.e., meet a “duties test” — and are paid on a salary basis at a rate of less than $684 per week.

For executive employees, part of the duties test requires that the employee’s primary duty is management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof. An employee’s primary duty, under the FLSA’s definition, “must be based on all the facts in a particular case, with the major emphasis on the character of the employee’s job as a whole.”

The law’s regulations note that while the amount of time an employee spends performing exempt work “can be a useful guide” in determining whether that work is the employee’s primary duty — and therefore indicative of exempt status — time alone “is not the sole test” and the FLSA does not require exempt employees to spend more than 50% of their time doing exempt work.

In Manteuffel, the 6th Circuit cited this component of the FLSA in discussing the employee’s percentage breakdown of his work, and it determined that additional factors effectively showed that management constituted the employee’s primary duty. Namely, the 6th Circuit said that the record showed:

  • The employee’s management duties were of greater importance to the overall success of the company than any nonexempt work he performed.
  • The employee operated “‘free from direct over-the-shoulder oversight on a day-to-day-basis,’” and was relatively free from supervision.
  • The employee earned an annual salary of $75,000, whereas nonexempt front-line employees earned $10 per hour.

“Each of these factors weighs in favor of determining that [the employee’s] primary duty was management, even if he spent most of his time performing nonexempt work,” the court said.

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