The FLSA provides that administrative employees are exempt from overtime pay. The FLSA described an administrative employee as one who 1) is paid a salary of at least $455 per week; 2) primarily performs work related to management; and 3) performs duties which primarily require the exercise of discretion and independent judgement. In Lutz v. Huntington Bancshares, Inc., et al., the plaintiffs filed a class action asserting that their position as residential-loan underwriters while employed by Huntington Bank was not an administrative position; therefore, the plaintiffs were entitled to overtime pay from Huntington Bank.
The district court granted Huntington Bank’s motion for summary judgment, agreeing that the residential-loan underwriters performed duties related to the general business operations of the Bank, and they exercised discretion and independent judgment when performing those duties. The Sixth Circuit, which cited two early, precedential decisions on the topic Renfro v. Ind. Mich. Power Co., 370 F.3d 512 (6th Cir. 2004) and Foster v. Nationwide Mut. Ins. Co., 710 F.3d 640, 642 (6th Cir. 2013)), upheld the district court’s ruling in a divided 2-1 decision.
Most notably, the Sixth Circuit reiterated that, when determining whether an employee primarily preforms work related to management, Sixth Circuit precedent dictates that the appropriate inquiry is whether the employee helps to run or service a business; if the answer is yes, the employee is administrative. This approach differs from the approach adopted by the Second Circuit where, if an employee’s duties merely touch upon a production activity (as the Second Circuit has said that residential-loan underwriters’ duties do), then the employee is not exempt from receiving overtime pay. Wednesday’s decision demonstrates the Sixth Circuit’s commitment to its interpretation of the overtime pay exemption provision of the FLSA, but the split here could attract attention by the Supreme Court. .
In dissent, Judge White argued that the defendants had failed to demonstrate that the residential-loan underwriters exercise discretion and independent judgement with respect to matters of significance as a part of their duties. Judge White notes that the administrative exemption is “to be narrowly construed against the employer seeking to assert it.” As such, the “explicit and detailed manual and guidelines” which directed nearly all of the actions of the residential-loan underwriters created a genuine issue of material fact with respect to the third element of the administrative exemption.