Employees can qualify for multiple exemptions under the Fair Labor Standards Act, so employers should remember that if they document an employee’s specific exemption, they should note any and all applicable exemptions, so that they are able to argue multiple exemptions in any FLSA litigation. This principle is illustrated in Schaefer La-Rose v. Eli Lilly & Co. (No. 10-3855 (7th Cir., May 8, 2012)) and Jirak v. Abbott Lab., Inc. (Nos. 11-1980 & 11-2131 (7th Cir., May 8, 2012)), two rulings by the 7th U.S. Circuit Court of Appeals.
DOL’s current exemption regulations (29 C.F.R. 541.708) state that employees who perform a combination of exempt duties — as provided for executive, administrative, professional, outside sales and computer employees — may qualify for an exemption. Thus, for example, an employee whose primary duty involves a combination of exempt executive and exempt administrative work may qualify for either exemption. Such a combination is what permitted the 7th Circuit to find pharmaceutical sales representatives exempt. Although the U.S. Supreme Court is expected to soon rule on whether such representatives are exempt from the FLSA under the “outside sales” exemption, the Court’s impending decision did not prevent the 7th Circuit from finding that PSRs were exempt under the FLSA’s “administrative exemption.”
However, case outcomes like Schaefer and Jirak could become non-existent for employers who do not note more than one exemption, particularly in light of DOL’s “Right to Know” initiative. This initiative aims to “enhance the transparency and disclosure to workers of their status as the employer’s employee or some other status, such as an independent contractor” by requiring employers to give documentation to employees of their classification status and how their pay is computed. Although DOL has delayed issuing a proposed rule to implement this plan, it is possible the rule will be revisited, especially in light of DOL’s misclassification initiatives.
Until such a rule is implemented, however, employers should remember that an employee can qualify for FLSA multiple exemptions — and if employers are documenting the statuses of employees, remember to document as many applicable exemptions as possible.