Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
On April 1, 2022, the U.S. Court of Appeals for the Eleventh Circuit, in Brown v. Nexus Business Solutions, LLC1 affirmed a district court’s decision2 that business development managers who solicited and sold General Motors vehicles to corporate clients are not entitled to overtime compensation under the Fair Labor Standards Act (FLSA).3 Specifically, the appellate court held that the business development managers were “bona fide executive, administrative, or professional capacity”4 employees because they exercised discretion in the performance of their business development tasks. Accordingly, they fell within the FLSA’s “administrative exemption” and were not entitled to overtime, notwithstanding they regularly spent over 40 hours per week convincing corporate clients to buy General Motors vehicles for their fleets.
In their capacity as business development managers, the employees built relationships and developed leads, which required creative thinking and tailoring to each corporate client. While they developed opportunities between clients and dealerships, the business development managers did not have the final authority to quote prices or close deals themselves.
In deciding that the business development managers were exempt from the FLSA and subject to the administrative exemption, the district court found the exemption applied because: (1) the employees’ compensation met or exceeded the U.S. Department of Labor’s minimum salary requirement of $684.00 per week; (2) they were engaged in office or non-manual work directly related to the management or general business operations of General Motors; and (3) they exercised sufficient discretion in the day-to-day performance of their duties.5
On appeal, the employees did not dispute that their salaries exceeded the requisite minimum or that they performed office or non-manual work directly related to the employer’s customers. Rather, they argued they did not exercise discretion and independent judgment with respect to matters of significance because their work was too repetitive to allow for meaningful discretion. They also tried to draw what the Eleventh Circuit described as a “strained distinction” by arguing that though they used discretion with respect to matters that impacted or affected matters of significance, they did not directly exercise discretion with respect to 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. Limitless discretion or a total lack of supervision is not required for the administrative exemption to apply. Instead, mere “authority to make an independent choice, free from immediate discretion or supervision” suffices.6 Employees who compare and evaluate possible courses of conduct and make a decision after considering several possibilities generally satisfy the requirement of exercising discretion and independent judgment as to matters of significance,7 provided the specific work at issue is not “mechanical, repetitive, recurrent or routine.”8
While the Eleventh Circuit held that the business development managers in this case were exempt from the FLSA’s overtime provision, it is important for employers to understand that the applicability of an FLSA exemption is not based on job titles, but, rather, on job functions. Accordingly, employers should consider conducting a detailed case-by-case analysis of job functions prior to classifying an employee as FLSA exempt. This is particularly true considering the potential consequences of misclassification, including double damages and attorneys’ fees. Thus, employers should work closely with their employment counsel to determine whether a particular employee exercises the requisite discretion on matters of significance and otherwise meets the requirements of an FLSA exemption.
1 Brown v. Nexus Bus. Sols., LLC, No. 20-13909, 2022 WL 982860 (11th Cir. Apr. 1, 2022).
2 Brown v. Nexus Bus. Sols., LLC, 488 F. Supp. 3d 1287 (N.D. Ga. 2020).
3 The FLSA requires an employer to pay its employees at a rate not less than 1.5 times the regular rate of pay for any hours exceeding 40 in a workweek. 29 U.S.C. § 207(a)(1).
4 29 U.S.C. § 213(a)(1).
5 Under the Department of Labor regulations, an “employee employed in a bona fide administrative capacity” means any employee: (1) whose salary exceeds the minimum established by the regulation; (2) who primarily performs “office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers;” and (3) whose “primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.” 29 C.F.R. § 541.200(a). Work relating to “matters of significance” refers “to the level of importance or consequence of the work performed.” 29 C.F.R. § 541.202(a).
6 29 C.F.R. § 541.202(c).
7 29 C.F.R. § 541.202(a).
8 29 C.F.R. § 541.202(e).