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News | Apr 24, 2009

Under Third Circuit Law, Employers Seeking to Use the “Executive” Exemption to FLSA Overtime Coverage Must Satisfy EACH of the Four Requirements Described in 29 C.F.R. sec. 541.100.

I recently came across the Third Circuit’s sometimes overlooked 2006 decision in Davis v. Montaire Farms, Inc., which can be found at 453 F.3d 554. In Davis, the Third Circuit (which covers Pennsylvania, New Jersey, and Delaware) reviewed a district court’s grant of summary judgment on grounds that the plaintiff was exempt from overtime coverage under the FLSA’s “executive employee” exemption. As many of you know, the exemption applies to an employee “(1) [who is] [c]ompensated on a salary basis at a rate of not less than $ 455 per week . . . exclusive of board, lodging or other facilities; (2) Whose primary duty is management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof; (3) Who customarily and regularly directs the work of two or more other employees; and (4) Who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight.” 29 C.F.R.  § 541.100.

Davis is important for the Circuit’s instruction that the company must satisfy EACH of the four factors described in 29 C.F.R.  § 541.100. In particular, the Circuit wrote: “In dealing with all of the definitions issued since the enactment of the FLSA, courts have generally recognized that since the requisite characteristics of executive employment are stated in the conjunctive rather than the disjunctive, it is necessary, for an employee to be exempt as one employed in an “executive capacity,” that the employee be shown to meet all of the administrative requirements for such exemption. See 131 A.L.R. FED. 1  § 2(a) (1996).” Davis, 453 F.3d at 557.

If you are a New Jersey or Pennsylvania overtime attorney, Be sure to keep Davis in mind when you litigate your next overtime lawsuit.

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