As Human Resources professionals already know, running an HR department – or fulfilling the HR function on one’s own – is an integral component of administering an employer’s business. But do those duties necessarily translate into qualifying exempt duties under the FLSA? One recent federal decision confirms that the answer is yes. Farnham v. Riimic, 2012 U.S. Dist. LEXIS 150716 (S.D. Fla. Oct. 19, 2012).
In Farnham, the court concluded without detailed analysis that plaintiff HR Manager for defendant construction company met the salary basis test and that she performed office work, the first prong of the three-pronged “duties” test. The court further found that the work of administering the HR department related to the general business operations of the employer (as opposed to being “production” work). This centered the litigation around the final prong, whether the Plaintiff’s primary duty involved the exercise of discretion and independent judgment. Because, as HR manager, plaintiff “created, implemented and interpreted policies and procedures governing [defendant’s] employees . . . served as the main advisor to management on issues affecting employees, and . . . helped resolve employee conflicts,” in the Court’s view she clearly exercised such discretion. The Court also cited plaintiff’s research regarding compliance with employment laws and negotiation with vendors for new construction sites as further evidence of such discretion. Id. at *13-14 citing 29 C.F.R. 541.203(e)(HR managers who formulate, interpret or implement employer policies generally meet administrative exemption test).
While it might seem intuitive that an HR manager would be precisely the type of employee contemplated by the administrative exemption, and the DOL regulations even confirm same, lawsuits challenging the classification of employees historically classified as exempt continue. Employers must be mindful of their classification of all HR professionals especially if an entire HR department is classified as exempt, and indeed all employees classified as exempt under the white collar exemptions.