Sixth Circuit Revisits the Administrative Exemption Under FLSA

By Malorie A. Alverson, Esq.

Earlier this month the Sixth Circuit ruled in Lutz v. Huntington Bancshares, Inc., et al. that the Plaintiffs, loan underwriters at Huntington Bank, were properly classified as exempt employees under the administrative exemption of the Fair Labor Standards Act (FLSA).  Due to their exempt status, the underwriters were not entitled to overtime pay under the FLSA. This decision is important for employers in the financial services and loan origination sectors.

The FLSA provides that administrative employees are exempt from overtime pay. The FLSA describes an administrative employee as one who 1) is paid a salary of at least $455 per week; 2) primarily performs work related to management; and 3) performs duties which primarily require the exercise of discretion and independent judgement. Cases alleging violation of the FLSA’s administrative overtime exemption are fact intensive and often turn on the employee’s job duties and the level of discretion exercised by the employee.

Here, because the underwriters exercised independent decision-making and discretion and performed non-manual, office duties that affected Huntington’s business, the court held that the underwriters qualified as administrative employees under the FLSA white collar exemption as they perform duties similar to claims adjusters and financial services advisors.

Most notably, the Sixth Circuit reiterated that, when determining whether an employee primarily preforms work related to management, the appropriate inquiry is whether the employee helps to run or service a business; if the answer is yes, the employee is administrative. This approach differs from the standard adopted by the Second Circuit where, if an employee’s duties merely touch upon a production activity, then the employee is not exempt from receiving overtime pay. The split between the circuits could result in a future decision on this issue by the U.S. Supreme Court.