74 | Massachusetts Wage & Hour Peculiarities, 2025 ed. © 2025 Seyfarth Shaw LLP In assessing whether an employee meets the requirements of the administrative exemption, courts sometimes look to what is called the “administrative-production dichotomy.”417 In so doing, courts ask whether the employee’s main job function is to “generate . . . [the] product or service that the employer’s business offers to the public,” or whether the employee’s job function is “ancillary” to the generation of that product or service.418 An employee whose main job function is generating the employer’s product will typically not qualify for the administrative exemption.419 Under certain circumstances, however, an employee may meet the “directly related to management or general business operations” prong of the duties test even if some of his or her job functions would be considered production duties.420 For example, an employee may qualify for the administrative exemption if his or her primary duty is the performance of office or nonmanual work directly related to the management or business operations of the employer’s customers.421 Thus, employees acting as advisors or consultants to the employer’s customers— such as tax experts or financial consultants—may be exempt, even though their employer’s main business is the sale of such services.422 (2) Exercise of Discretion and Independent Judgment To qualify for the administrative exemption, an employee’s primary duty must include the 417 See Reich v. John Alden Life Ins. Co., 126 F.3d 1, 9-10 (1st Cir. 1997) (holding that insurance sales personnel were not “production” employees because they did not “generate” company’s main product—insurance policies); Marcus, 80 F.4th at 47-48 (Tournament Directors, National Tournament Directors, and Associate Tournament Directors of bridge tournament were not subject to administrative exemption because their primary duty was “the very service that [the employer, a bridge league] is in the business of providing”). 418 Reich, 126 F.3d at 9-10; Marcus, 80 F.4th at 47-48. See also Hines v. State Room, Inc., 665 F.3d 235, 242 (1st Cir. 2011) (sales managers at banquet facility exempt because their work was ancillary to employer’s business of providing banquets); Cash v. Cycle Craft Co., 508 F.3d 680, 686 (1st Cir. 2007) (new purchase/customer relations manager exempt because his role in improving customer service and creating bid proposals to meet the needs of his agent’s customers involved “exercis[ing] independent judgement as he engaged in the company’s business operations”); but see Su v F.W. Webb Co., 677 F. Supp. 3d 7, 21 (D. Mass. 2023) (inside sales personnel do not qualify for administrative exemption because their primary duty was helping customers buy products as opposed to servicing the business). 419 The administrative-production dichotomy has received renewed attention after the DOL’s Wage and Hour Division issued an “Administrator’s Interpretation” in which it concluded that the administrative exemption does not apply to the “typical” mortgage loan officer because a loan officer’s duties generally involve sales and servicing customers, rather than focusing on the management or general business operations of the employer. See DOL Wage & Hour Administrator’s Interpretation FLSA No. 2010-1, Application of the Administrative Exemption Under Section 13(A)(1) of the Fair Labor Standards Act, 29 U.S.C. § 213(a)(1), to Employees Who Perform the Typical Job Duties of a Mortgage Loan Officer (Mar. 24, 2010), available at https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/FLSAAI2010_1.pdf (last visited Mar. 5, 2025). The U.S. Supreme Court held that the DOL’s interpretation did not violate the notice-and-comment procedures of the Administrative Procedures Act. Perez v. Mortg. Bankers Ass’n, 575 U.S. 92 (2015). 420 See, e.g., Roe-Midgett v. CC Servs., Inc., 512 F.3d 865, 872-73 (7th Cir. 2008). 421 29 C.F.R. § 541.201(c). 422 Id. See also Roe-Midgett, 512 F.3d at 872 (holding that employees of company that specialized in processing insurance claims on behalf of insurance companies were exempt because they “serviced” clients’ businesses, even though their own employer’s primary business was to sell the claim processing services they performed).
RkJQdWJsaXNoZXIy OTkwMTQ4