First Circuit Serves Up Employer-Friendly Ruling; FLSA Admin. Exemption Does Not Cater to Banquet Employees

source: superweddings.com

Banquet sales managers do qualify for the administrative exemption under the Fair Labor Standards Act — meaning no overtime is on the menu. So says the 1st U.S. Circuit Court of Appeals in Hines v. State Room, Inc.

Plaintiffs in the case are former employees of banquet facilities that “host high-end wedding receptions and other social functions,” in Boston, Mass., and Newport, R.I. They claim their work for the State Room, Longwood Events, Inc., Belle Mer, Inc., and James Apteker did not involve “meaningful discretion.”

But the 1^st Cir. agreed with a district court’s decision that “the duties of the employees did involve substantial discretion,” and so the FLSA’s administrative exemption should apply.

An administrative employee — other than a “highly compensated employee” (¶342 of the Guide) — must meet all of the following requirements to be exempt from minimum wage and overtime provisions:

1. Duties: Must have a primary duty that includes the performance of office or nonmanual work directly related to the management or general business operations of the employer or the employer’s customers;
2. Discretion: Must have a primary duty that includes the exercise of discretion and independent judgment with respect to matters of significance; and
3. Compensation: Must be compensated on a salary or fee basis at a rate of not less than $455 per week, exclusive of board, lodging or other facilities.

The former banquet company employees made cold calls to secure event business, replied to inquiries by potential clients and determined which, if any, of those potential clients might pan out. They did not, however, have any authority to make financial decisions on behalf of the defendant companies.

The court referred to its similar decisions in Cash v. Cycle Craft Co. and Reich v. John Alden Life Insurance Co. and noted that such authority is a factor the [FLSA] says the court must consider, but it’s not a requirement. Additionally, the 1^st Cir. said, “working with a client to create a custom product, personalized to individual tastes and budgets, exhibits … creative freedom.”