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.
The First Circuit Court of Appeals recently held that banquet sales managers qualified for the administrative exemption to the Fair Labor Standards Act (FLSA). The court reached this holding in the case of Hines v. State Room, Inc. even though the banquet sales managers were bound by a price schedule established by their employer and therefore had virtually no authority to make financial decisions.
In this case, the banquet sales managers were responsible for contacting potential clients, assisting clients in selecting the appropriate venue, and designing a function so as to meet the client’s objectives and budgetary constraints. The “vast majority” of their work involved “unscripted conversations” with current and potential customers regarding the details of the event.
In the course of their employment, the banquet sales managers received a handbook that stated that all contracts must be pre-approved by supervisors before the banquet sales managers could sign them. Additionally, prices were fixed by their supervisors, and “sales managers were not permitted to deviate or discount in any way without management approval.”
A number of banquet sales managers sued claiming that they were misclassified under the FLSA, as well as the wage and hour laws of Massachusetts and Rhode Island. The district court granted the employer’s motion for summary judgment, concluding that the banquet sales managers were exempt employees. The banquet sales managers then appealed to the First Circuit.
The First Circuit affirmed the district court’s decision, concluding that the banquet sales managers qualified as exempt administrative employees. The primary issue on appeal was whether the banquet sales managers exercised sufficient discretion and independent judgment to qualify for the exemption. The court rejected plaintiffs’ argument that they fell outside this exemption because they had no supervisory, policymaking, or financial decision-making authority. The court reasoned such authority “is a factor that the regulations instruct us to consider, it is not, however, a requirement.” According to the court, “working with a client to create a custom product, personalized to individual tastes and budgets” constitutes sufficient discretion and independent judgment to satisfy the requirements of the administrative exemption. Moreover, the court noted that “an employee’s discretionary action need not ‘have a finality that goes with unlimited authority and a complete absence of review.’”
Image credit: Tracy Hunter