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The administrative exemption creates one of the most difficult distinctions in the wage and hour area. Whether somebody works in an “administrative capacity” has a lot to do with whether they work “in the business” or “on the business.” A telling case was recently decided in the Northern District of West Virginia, Desmond v. PNGI Charles Town Gaming (08-1216).

In this case, racing officials at the Charles Town Gaming racetrack were treated as exempt employees. After extensive analysis, the appellate court overturned the previous court, ruling that the employees were not exempt and overtime was owed.

Remember, an employer bears the burden of proving, by clear and convincing evidence, that an employee’s job falls within the administrative exemption.

These exemptions are “narrowly construed against the employee seeking to assert them.” In viewing the dichotomy, the court made these points to keep in mind:

The indispensability of an employee’s position within the business cannot be the determining factor of whether the position is directly related to the employer’s general business operations.

Regulations generally exclude “run of the mill” jobs with administrative classification. So although secretaries and clerks might be “indispensable,” they are not exempt under the FLSA. In the same way, just because an employee is required under state law (i.e., posting a flagman around highway work), it does not mean that they are indispensable for purposes of exemption analysis.

The employee must perform work directly related to assisting with the running or servicing of the business, as distinguished, for example, from being a secretary, working on a manufacturing production line, or selling a product in a retail or service establishment.
According to the DOL, administrative exempt work includes -- but is not limited to -- functional areas such as
  • Tax
  • Finance
  • Accounting
  • Budgeting
  • Auditing
  • Insurance
  • Quality Control
  • Purchasing
  • Procuring
  • Advertising
  • Marketing
  • Research
  • Safety and Health
  • personnel management
  • Human Resources
  • Employee Benefits
  • Labor Relations
  • Public Relations
  • Government Relations
  • Computer Network
  • Internet and Database Administration
  • Legal and Regulatory Compliance
  • Other Similar Activities
Not included would be work consisting of tasks similar to those performed on a manufacturing production line or selling of a product in a retail or service establishment. (See 29 C.F.R. § 541.241) To learn more, please click here.
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