Staffing Firms Benefit from Sixth Circuit Administrative Exemption Ruling
Staffing firms may have something extra to be thankful for this holiday season: Finding that certain account managers exercised discretion and independent judgment when matching candidates with temporary positions, the Sixth Circuit Court of Appeals recently held that these temporary staffing firm employees fell within the FLSA’s administrative exemption. Perry v. Randstad Gen. Partner (US) LLC, 2017 U.S App. LEXIS 23297 (6th Cir. Nov. 20, 2017). The Sixth Circuit has jurisdiction over Michigan, Ohio, Kentucky and Tennessee.
Examining the duties of the account manager, the Sixth Circuit concluded that writing job descriptions, recommending employees for assignment, collaborating with clients to determine wage rates and determining the method to post available positions demonstrated that these managers exercised sufficient discretion and independent judgment to qualify for the administrative exemption. Vital to the Court of Appeals’ determination, the account managers used subjective criteria, such as the candidate’s personality and the client’s corporate culture, as opposed to merely applying objective criteria when placing candidates in suitable positions. Further, the Sixth Circuit found that drafting job descriptions, deciding which recruitment tools to use, negotiating employee wage and client billing rates, and counseling or disciplining employees also required the account managers to exercise independent judgment.
By contrast, the Court of Appeals held that material issues of fact existed as to whether the employer’s staffing consultants qualified for the exemption. The staffing consultants had far less independence and discretion than account managers and were required to follow established techniques and procedures to perform their job duties. Finally, the Court of Appeals held that the company failed to prove that it acted in “good faith” in applying the exemption to the staffing consultants, finding insufficient its reliance on opinion letters from the Wage and Hour Division because aspects of the staffing consultant duties were distinct from those analyzed in the WHD letters. In addition, the Sixth Circuit held that because the company knew that its staffing consultants devoted varying, and sometimes insufficient, time to the duties that might have sufficed for the exemption, the company should have inquired further before applying the exemption.
As a case of first impression in the Sixth Circuit, Randstad clarifies the analytical framework for employers applying the administrative exemption to employees in the temporary staffing industry. In particular, staffing firms that rely upon the administrative exemption for their account managers should ensure that the job duties and responsibilities of the position require sufficient discretion and independent judgment to qualify for the exemption, and that these managers do not simply follow prescribed procedures and a predetermined set of objective criteria. As always, state law requirements should also be reviewed.