I am always interested in administrative exemption cases because they are the hardest to prove for an employer. In an interesting case that illustrates the parameters of this exemption, the Eleventh Circuit has ruled (in affirming a lower court decision) that Business Development Managers (“BDM”) whose duties entailed soliciting and selling vehicles to corporate clients for their fleets fell within this very nuanced exemption. The case is entitled Brown v. Nexus Business Solutions, LLC and issued from the Eleventh Circuit Court of Appeals.
These BDMs developed and nurtured relationships with corporate entities and developed leads to facilitate the growth of business. These duties necessitate that they mold their presentation and strategy to the unique circumstances of every corporate client. Although they facilitated these relationships, the BDMs did not have the ultimate decision-making power over price or the actualization of the deal itself.
The employees conceded that they earned the requisite minimum salary ($684 per week) and that they performed office or non-manual work directly related to the employer’s customers, as the regulations demand. They focused their attack on their alleged lack of discretion and independent judgment in the performance of their duties. They claimed their work was repetitive and thus they were unable to exercise “discretion” as the regulations define that vague term. They also argued that they did use discretion with allegedly tangential issues that affected matters of significance, that exercise of discretion did not, according to the plaintiffs, affect actual matters of significance.
In rejecting the employees’ argument, the Eleventh Circuit noted that the “discretion exercised by the business development managers goes straight to the heart” of General Motors’ customer recruitment efforts and “straight to the core service that [their employer] provides.” The business development managers chose what leads and relationships to foster, conducted specific research before meeting the leads, and delivered customized presentations to each customer. The Court noted that a total absence of supervision was not required, nor did the discretion exercised be unfettered to be administratively exempt. What was needed was the “authority to make an independent choice, free from immediate discretion or supervision.” The exemption calls for the comparison and evaluation of different course of action by the employee. The employee who exercises discretion makes a decision after weighing different possibilities. That is the essence of independent judgment.
It is vital for employers to understand that a job title, by itself, means nothing. The Department of Labor or a court (or a jury) will not look to the title but to the actual duties performed on the ground. The administrative exemption is murky and nuanced and intensely fact sensitive, especially on the discretion issue, where most of the defenses fail for the employer. If the employee’s work is heavily reliant on manuals and guidebooks, that should be a signal that they might not exercise the type of discretion that the regulations demand. An in-depth audit of all exemption classification decisions should be instituted by prudent employers.
An ounze of prevention, you know…