DOL Issues Recent Opinion Letters Construing White Collar Exemptions Revealing Trend of Applying Principles In Place Before 2004 Amendments

Lew Clark
October 15, 2006 — 2,186 views  
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Within the last few months, the United States Department of Labor's Wage and Hour Division ("the DOL") has issued a number of opinions construing the executive, professional, and administrative exemptions to the Fair Labor Standards Act ("FLSA") with respect to a number of very specific positions: (1) loss prevention managers for a large group of department stores; (2) gasoline service station managers; (3) senior legal analysts for a corporation; (4) respiratory therapists of a hospital; and (5) mortgage loan officers. Letters addressing the status of mortgage loan officers, loss prevention managers, and service station managers each state that the positions qualify for the administrative and executive exemptions. The letter referring to mortgage loan officers evaluates a group of employees who primarily perform the function evaluating loan applicants and analyzing prevailing economic trends in the mortgage industry to determine whether to approve a putative customer for a loan. While noting that the loan officers in question were also involved in the sale of mortgage products to prospective customers, the DOL found that although significant sales activity would have disqualified the employees from the exemption, their primary role -- the thing they were employed to do -- was to effectuate the evaluation process, an exempt duty. Finally, the DOL determined that although the use of sophisticated computer programs to accomplish an otherwise-exempt calculation or process might have the effect of destroying the exemption, under the specific facts before it the loan officers continued to display sufficient discretion and independent judgment. On the same note, the letter referring to loss prevention managers ("LPMs") indicates that their role in implementing in developing and implementing loss prevention, fraud deterrent, and shortage control programs is directly related to the management or general business operations of his or her employer in a manner sufficient to trigger the administrative exemption. The opinion letter regarding service station managers and their exempt status, on the other hand, couches its exploration of the executive exemption by examining four different types of duties in which the employees in question engaged, asking whether they were exempt as employees whose primary duty "is management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof." The DOL determined that three of the duties described -- printing daily sales reports to check inventory status and audit cash receipts, and training other managers -- were exempt duties. It stated that the fourth duty -- essentially, acting as a gas station attendant -- would not destroy the exemption if the service station manager performed such work only occasionally. The DOL found that a Senior Legal Analyst -- an individual with a two-year "legal studies" degree whose primary duty was to analyze legal issues and draft memoranda for the use of corporate attorneys in litigating cases, was not exempt under either the professional or administrative exemptions. The professional exemption, the DOL found, could not be applied because the employee's "legal studies" degree was not the kind of "course of advanced instruction" which had typicaly qualified individuals. Similarly the legal analyst was not an administrative employee because he exercised no discretion or independent judgment; he merely examined and analyzed the legal problems he was directed to solve. Finally, the DOL found that certain respiratory therapists were not exempt under the "learned professional" exemption because although their employer required certain stringent licensures to act in this capacity, the state did not. Because the education required for the position was only a two-year associate's degree, it could not qualify for the professional exemption. There are few principles of general application that can drawn from these opinions, which engage a number of very different positions. One strikingly similar idea presented implicitly by all the letters (and stated explicitly with respect to mortgage loan officers) is that the DOL is continuing to evaluate the administrative, executive, and professional exemptions under the same rubrics and standards utilized prior to the latest series of regulatory revisions to the exemptions, which occurred in 2004. This would seem to confirm what many practitioners had surmised: although it was initially feared that the 2004 regulatory changes might work a wholesale alteration to the legal criteria for application of the exemptions, in practice the DOL has chosen to utilize pre-existing tests and standards to judge exemption status, even now. As a result, it is likely that employees exempt under previous iterations of the regulations are exempt now, unless there is some special reason to believe otherwise.

Lew Clark


Lewis Clark concentrates his practice on counseling and advocacy for both private and public sector employers in all types of labor and employment matters and is an experienced mediator of employment and other civil litigation matters.