In Pippins v. KPMG LLP, the Second Circuit Court of Appeals recently upheld a District Court’s decision to grant summary judgment dismissing the claims of several entry-level accountants seeking unpaid overtime under the Fair Labor Standards Act (“FLSA”).
To be an exempt “learned professional,” an employee’s primary duty must be “the performance of work requiring advanced knowledge in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction.” The work must be predominantly intellectual in character and require the consistent exercise of discretion and judgment in a field of science or learning in which specialized academic training is a standard prerequisite for entrance into the profession.
The accountants in this case argued that they did not fall within the learned professional exemption because they received the training and instruction necessary to perform their job while working at KPMG and not through a prior course of intellectual instruction. They further argued that their “low-level, routine work” did not permit them to consistently exercise professional judgment.
In an issue of first impression, the Court of Appeals held that “discretion and judgment” in the context of the professional exemption should not be interpreted in the same way as the parallel requirement of “discretion and independent judgment” in the administrative exemption. The Court of Appeals clarified that learned professionals “need not exercise management authority to operate as professionals; what matters is whether they exercise intellectual judgment within the domain of their particular expertise.” However, for the administrative exemption, “the standard serves to identify, from among the many workers whose jobs could generally be characterized as ‘administrative,’ those who perform duties primarily directed towards ‘management or general business operations.’”
The Court of Appeals found that the accountants were learned professionals exempt from the FLSA’s overtime requirements because: (i) they were employed in a field of science and learning; (ii) they relied on advanced knowledge customarily acquired by prolonged specialized instruction; and (iii) their work involved consistent exercise of professional judgment. The Court of Appeals further ruled that the fact that the accountants were required to bring errors to the attention of more senior members did not undermine a finding that they exercise discretion and judgment.
Although this decision is specific to entry-level accountants, it will likely be instructive in future cases. As such, employers should be aware of these standards when making decisions regarding the exempt status of job classifications.