By Doug Weiner

            In a decision dated January 5, 2010 the D.C. Circuit raised that question in a case involving the administrative exemption in a Fair Labor Standards Act class action.  

Stating the District Court had no occasion to decide whether the job of a GEICO auto damage adjuster is so easy a caveman could do it, (referring to GEICO’s well known ad campaign in a light hearted footnote) the appellate court held that GEICO satisfied its burden of proof that its employees performed exempt administrative duties. The appellate court reversed the district court’s summary judgment for plaintiffs, and in a lengthy and well reasoned decision, upheld the exempt classification. Reversing the lower court, the appellate court directed judgment be entered for the employer. 

Exemptions to the FLSA are generally narrowly construed. The administrative exemption applies only to employees paid on a salary basis of at least $455 a week whose “primary duty consists of …the performance of office or non-manual work directly related to management policies or general business operations of his employer…which includes work requiring the exercise of discretion and independent judgment with respect to matters of significance.” 29 C.F.R. 541.200 et. seq. The court noted the question of whether an employee comes within an FLSA exemption is a question of law, and the appellate court reviewed de novo the district court’s grant of summary judgment to the plaintiffs. 

Plaintiffs did not dispute that they were paid the requisite salary, and performed non-manual work directly related to GEICO’s business operation. However the plaintiffs argued, and the district court found, that the amount of discretion they exercised was “insufficient” for exemption because the vast majority of their work consisted of using their training and skills to assess the value of the damage to customers’ vehicles in accordance with the employer’s directions, “limited in scope by both the information and standards contained in the computer software and the guidelines and limits on negotiating authority laid out by GEICO”. 

The appellate court found that although the parties disputed how much discretion the plaintiffs exercised, there was no dispute that plaintiffs work “includes some discretion” to perform their duties. The court then held that because it was undisputed that the plaintiffs’ job “includes” work requiring the exercise of discretion and independent judgment, the employer had met its burden of proof, and directed the district court to enter judgment for the employer.

The court, citing decisions from “sister” circuits finding auto damage adjusters exempt from overtime requirements by virtue of the administrative exemption, held that the defining regulation merely required the employees’ primary duty to “include” discretion and independent judgment, but does not specify how frequently the discretion must be exercised. The court held that because it was undisputed that the plaintiff exercised “some discretion and independent judgment during the course of his job” the employer had satisfied the final test to support the exempt classification.

How broadly will the D. C. Circuit’s analysis of the auto damage adjusters’ duties be applied to other employment circumstances? Because each worker’s classification of exemption depends upon a detailed factual analysis, and employers are required to bear the burden to prove an exemption is applicable, employers should proceed cautiously before reaching a determination that their employees satisfy all the criteria necessary for exemption. The court noted that in this case GEICO had re-classified their auto damage adjusters as non-exempt during the course of the litigation to limit further exposure in the event the exempt classification was not upheld. 

As many employers have learned to their sorrow, the question of properly applying FLSA exemptions is not so easy even a cave man could do it. 

            The court decided the appeals of Jerome Robinson-Smith v. Geico, case number 08-7146, and Christine Lindsay et. al. v. Geico, case number 08-7147, in the U.S. Court of Appeals for the District of Columbia Circuit.

Back to Wage and Hour Defense Blog Blog

Search This Blog

Blog Editors

Related Services

Topics

Archives

Jump to Page

Subscribe

Sign up to receive an email notification when new Wage and Hour Defense Blog posts are published:

Privacy Preference Center

When you visit any website, it may store or retrieve information on your browser, mostly in the form of cookies. This information might be about you, your preferences or your device and is mostly used to make the site work as you expect it to. The information does not usually directly identify you, but it can give you a more personalized web experience. Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change our default settings. However, blocking some types of cookies may impact your experience of the site and the services we are able to offer.

Strictly Necessary Cookies

These cookies are necessary for the website to function and cannot be switched off in our systems. They are usually only set in response to actions made by you which amount to a request for services, such as setting your privacy preferences, logging in or filling in forms. You can set your browser to block or alert you about these cookies, but some parts of the site will not then work. These cookies do not store any personally identifiable information.

Performance Cookies

These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.