Courts Finds Account Manager for Media Buyer Meets FLSA Administrative Exemption

The administrative exemption from the FLSA overtime requirements presents a challenge for many employers, so much so that some employer don't try to use it.  It is much less clear and therefore more difficult to apply than the professional or executive exemptions (and contrary to the latter's name, the exemption applies to supervisors who have some meaningful input into hiring or firing).  A decision issued today (Verkuilen v. MediaBank) from the federal court of appeals in Chicago helps to better define the rather vague DOL regulation that governs the administrative exemption.

In general terms (from a DOL fact sheet on the subject) the administrative exemption requires that:

• The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;
• The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
• The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

The court of appeals sitting in Chicago dealt with the "primary duty" questions.  The employer was in the business of selling a software package to advertising firms that would help them place advertising in media outlets.  The software was complex, the court explained, "because it integrates so many functions, and it must be customized to the needs of each client, which vary. The complexity and variance are where the account manager comes in. The manager of a customer’s account has to learn about the customer’s business and help MediaBank’s software engineers determine how its software can be adapted to the customer’s needs."

The account manager's job was "to learn about the customer’s business and help MediaBank’s software engineers determine how its software can be adapted to the customer’s needs."  She is

on the customer’s speed dial during the testing and operation of the customer’s MediaBank software. As the intermediary between employees of advertising agencies struggling to master complex software and the software developers at MediaBank, she has to spend much of her time on customers’ premises training staff in the use of the software, answering questions when she can and when she can’t taking them back to MediaBank’s software developers, and then explaining their answers to the customer and showing the customer how to implement the answers in its MediaBank software. Identifying customers’ needs, translating them into specifications to be implemented by the developers, assisting the customers in implementing the solutions—in the words of MediaBank’s chief operating officer, account managers are expected to “go out, understand [the customers’ requirements], build specifications, understand the competency level of our customers. Then they will build functional and technical specifications and turn it over to . . . developers who will then build the software, . . . checking in with the account manager, making sure what they are building is ultimately what the customer wanted.”

 This, the court held, meant that the account managers "primary duty was directly related to the general business operations both of her employer and (as in a consulting role) of the employer’s customers."  It didn't matter, the court further held, that the account manager did not perform all or even many of the functions listed in the DOL regulation on what makes a job administratively exempt. See 29 C.F.R. § 541.202 (listing numerous "[f]actors to  consider when determining whether an employee exercises discretion and independent judgment with respect to matters of significance.")