The Administrative Exemption in New York
A common defense to claims for unpaid overtime is the argument that overtime pay is not required because the employee's position falls within the administrative exemption. The overtime laws "exempt" certain kinds of jobs or positions such that overtime pay is not required. Employees who fall into the "administrative" exemption are not entitled to overtime pay. But as a federal judge told us in court today, the Second Circuit takes a narrow view of the administrative exemption argument. Therefore in New York, the administrative exemption is reserved only for those positions that squarely meet the standards.
But what exactly is the "administrative" exemption? First, an administrative position must directly relate to the management or general business operations of the company or the employer's customers. This means that the job must involve assisting with the running of the company as opposed to creating the product or service offered by the company. Classic administrative positions are marketing, compliance etc - jobs that involve the running of the business itself.
Second, in order for a position to fall within the administrative exemption, the job must also involve the exercise of independent discretion or judgment. For example, the position must involve fairly high level decision making that might involve advising the company on important matters or making plans for the companies near or long term goals or negotiating and binding the company with respect to significant matters.
So what does all of this mean? Basically it means that a job falls within the administrative exemption if the work involves the running of the business such as marketing and that the marketing position itself is a high level (non-routine) position that involves making important decisions and rendering advice and the like. Low level routine or clerical positions do not qualify. The courts in New York will closely scrutinize these administrative exemption arguments as the Second Circuit has recently reversed a trial court for erroneously determining that certain pharmaceutical sales representatives were exempt under the administrative exemption.
