Administrative Exemption for Overtime Pay Clarified in New York
The Fair Labor Standards Act requires that employees be paid overtime (time and half) for all hours worked over 40 in a week. Seems like a simple concept, but it is not. Many employees are exempt from the overtime requirement and therefore are not entitled to overtime pay even if they work more than 40 hours per week. Employees who are considered “administrative” are exempt from the overtime requirement. The Second Circuit just issued a case, Whalen v. J.P. Morgan Chase & Co., which clarifies what it means for an employee to be deemed administrative under the FSLA.
The Whalen court focused on the difference between jobs that are” production” oriented as opposed to “administrative.” Employees who spend their time working on production activities are entitled to overtime pay, while those who work at administrative tasks are not entitled to overtime. The court never provides a solid reason as to why production employees are entitled to overtime pay and administrative workers are not. According to Whalen, a human resources associate is engaged in administrative work and not entitled to overtime pay, but a police detective is engaged in production work and therefore entitled to overtime. The court goes on for eighteen pages pointing out the differences between production and administrative jobs, but sadly a solid underlying reason for this distinction is not provided. Maybe that is because the rules that regulate the payment of overtime pay are not based on logic, but instead rooted in lobbying and politics. The next post will focus on the nuances that differentiate administrative and production employees under the FSLA.
