In 1946, after the Supreme Court ruled that the term “workweek” in the Fair Labor Standards Act of 1938 (FLSA) included the time employees spent walking from time clocks near a factory entrance to their workstations, Congress passed the Portal-to-Portal Act of 1947, which excluded from FLSA coverage walking on the employer’s premises to and from the location of the employee’s “principal activity or activities,” and activities that are “preliminary or postliminary” to “said principal activity or activities.” Eight years after the enactment of the Portal-to-Portal Act, the court explained that the “term ‘principal activity or activities’ . . . embraces all activities which are ‘an integral and indispensable part of the principal activities,’ ” including the donning and doffing of specialized protective gear “before or after the regular work shift, on or off the production line.”
On November 8, 2005, the Supreme Court clarified the limits of FLSA coverage with respect to principal activities in a unanimous decision in IBP, Inc. v. Alvarez, No. 03-1238 (2005). In IBP, employees filed a class action seeking compensation for time spent donning and doffing required protective gear and walking from the locker rooms to the production floor of a meat processing facility and back. The employer argued that, because donning is not the “principal activity” that starts the workday, walking occurring immediately after donning and immediately before doffing is not compensable. The court rejected this argument, finding that activities that are “integral and indispensable” to “principal activities” are themselves “principal activities.” Because donning and doffing gear that is “integral and indispensable” to employees’ work is a “principal activity” under the statute, the continuous workday rule mandates that the time the employees spend walking to and from the production floor after donning and before doffing, as well as the time spent waiting to doff, are not covered by the Portal-to-Portal Act and compensable under the FLSA. However, the court excluded from the FLSA’s scope the time employees spend waiting to don the first piece of gear that marks the beginning of the continuous workday.
This decision provides additional guidance to what preliminary or postliminary activities are compensable under the FLSA. Employers should take this opportunity to carefully examine the activities in which their employees engage prior and subsequent to the commencement of their continuous workdays. If those preliminary or postliminary activities are integral and indispensable to the employees' work, those activities may be considered "principal activities" and compensable under the FLSA.
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Department of Labor Releases Guidance on Administrative Exemption to the FLSA
In a series of recently-issued opinion letters, the Department of Labor (DOL) provided insight into its interpretation of the newly-promulgated revisions to the administrative exemption regulation under the Fair Labor Standards Act. While the DOL’s opinion letters do not carry the force of binding law, the letters are nonetheless helpful to employers in that they reveal the department’s likely strategy in enforcing the wage and hour requirements and, in this case, a DOL investigator’s likely reaction to an employer’s claim that an employee is exempt from overtime pay requirements based on the act’s administrative exemption. In this latest guidance, the DOL stressed its intention to examine the job tasks of each employee designated by the employer as an administrative employee to determine the employee’s level of discretion and autonomy in carrying out his or her non-manual duties.
The exemption for administrative employees, as revised in 2004, applies to any employee (1) who earns a salary of at least $455 per week, (2) who performs primarily non-manual office work that is directly related to the management or general business operations of the employer or the employer’s customers, and (3) whose primary duty involves “the exercise of discretion and independent judgment with respect to matters of significance.” 29 C.F.R. § 541.200. The DOL’s most recent string of opinion letters illuminates the importance of this last requirement.
While the DOL opined that a museum curator, academic advisors at a community college, and a staffing manager at a temporary employment placement agency exercised sufficient discretion and independent judgment to render them exempt from the act’s overtime requirements under the administrative exemption, it found that a maintenance supervisor of a water district was not exempt. The letters specifically cited the tasks performed by the employees it found to be exempt: selecting, formulating and implementing the museum’s exhibits and programs for the museum curator; the ability to approve changes to the students’ academic schedules and records for the academic advisors; and the human-resource-like functions of firing, assigning and promoting employees for the staffing manager. These non-manual tasks related to the management of the employer, and required a sufficient amount of discretion, so as to make those employees exempt as administrative employees. In contrast, the maintenance supervisor’s main task of maintaining the water district’s pumping, electrical and mechanical systems was manual, not office work, and the supervisor did not have the authority to hire and fire subordinate employees. Thus, the DOL opined that the maintenance supervisor was not an “administrative employee,” so was subject to overtime for hours worked in excess of 40 each week.
In the letter addressing the staffing manager, however, the DOL stressed its intention to examine each employee’s responsibilities on a case-by-case basis, clarifying that all staffing managers might not be exempt, especially if their placement recommendations were not routinely followed, or if the manager performed primarily a screening function and presented a group of possible employees to a client without specifying which employee(s) would be best suited to specific positions at the client. In the case presented in the letter, the DOL found that the “selectivity exercised in matching persons seeking employment with the requirements of the job opening and in deciding which employee to send to any particular employer” made that specific staffing manager exempt under the administrative exemption.
A lesson employers can take from these letters is that employees’ job responsibilities and the extent of their independent judgment and discretion will undergo scrutiny by the Department of Labor in reviewing exempt status. Well-written job descriptions, as well as familiarity with specific examples of independent judgment exercised by each of the administrative employees during his or her work day are good starting points for employers faced with any inquiries.
If you have any questions or concerns about this update, please call your regular contact at Calfee or John Cernelich at 216.622.8251, jcernelich@calfee.com, Daniel Petrov at 216.622.8818, dpetrov@calfee.com or Laura Kendall at 216.622.8847, lkendall@calfee.com.
