Are Recruiters Exempt Under the FLSA?

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[author: Deborah A. Catalano]

Recruiters may or may not be exempt from the payment of overtime under the Fair Labor Standards Act, depending on their specific job duties. One employer recently settled three collective actions brought by medical recruiters in Betancourt v. Maxim Healthcare Services, Inc., No. 1:10-cv-04763 (N. D. Ill. 2010).  The recruiters are expected to receive $12.3 as a result of the settlement; and the fee award for their lawyers may be up to $4.3 million. 

Employers typically attempt to characterize recruiters as exempt under: (i) the Executive Exemption; (ii) the Administrative Exemption; and/or (iii) the Outside Sales Exemption.  In Goff v. Bayada Nurses, Inc., 424 F.Supp.2d 816 (E.D. Pa. 2006), a former supervisor of nurses employed by a provider of in-home nursing care sued for overtime.  The plaintiff admitted in her deposition that "her specific responsibilities included scheduling, monitoring her caseload, facilitating, supervising, evaluating field staff performance, helping with interviewing, hiring, salary determinations and terminations."  Id. at 819.  

Marketing and Human Resources work performed by recruiters was deemed to be exempt work under the Administrative Exemption in Goff.  The court agreed with the employer that the recruiters' "direct role in managing and dealing with customers to ensure that standards were met" satisfied the requirement that the employee be involved with the general operation of the business and, thus, rendered the employee exempt from overtime"  Id.  See also Andrade v. Aerotek, Inc., 700 F.Supp.2d 738 (D. Md. 2010)(Aerotek defended overtime claim by recruiters, showing they performed work which was administrative in nature). 

An employer successfully relied on the Outside Sales Exemption to avoid an overtime claim in Stevens v. Simplexgrinnell, LLP, 190 Fed. App'x 768, 2006 WL 1914247 (11th Cir. 2006).  The employee sold maintenance contracts for indoor sprinkler systems.  In her deposition, she admitted that she spent less than 20% of her time on non-sales activities. She also testified that she earned commissions for the sales she made during service calls to existing customers.  Id. at *2-3 (employee testified that "her salary and job performance depended on her ability to make sales.")  

In order to maximize the likelihood that a court will uphold an exemption, an employer should take the following steps:

1. Draft a job description which stresses the primary duties of the position, including the percentage of time anticipated to be spent on certain tasks such as sales, management, or interacting with client companies, as well as freedom from supervision. 

2. Regularly conduct performance evaluations that are drafted to highlight the exempt nature of the work performed by the employee.  Performance evaluations have been used by employers to defeat overtime claims.  See Mims v. Starbucks, Inc., 2007 WL 10369 (S.D. Tx. 2007)(Starbucks rated managers on leadership skills and traits and store revenue). 

3. Provide self-evaluations to exempt employees at the same intervals as performance evaluations. Employee self-evaluations are helpful in the defense of wage and hour claims..  In Goff, the court noted, that the plaintiff acknowledged in her self-evaluation form that her "main function" was to "oversee all caseload management activity."  Id. at 821.