A recent federal court decision examined the potential exempt status of entry-level audit associates working for KPMG. In that case, the U.S. Court of Appeals for the Second Circuit found that those employees were exempt under the “professional exemption” even though they performed many routine tasks. Would that decision be the same for all professionals with certain degrees? The answer to that question will depend upon the particular facts of the case.
The Fair Labor Standards Act (FLSA) requires that most employees be paid overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek. However, the FLSA does recognize certain exemptions from this requirement, including the “professional exemption.” To qualify for that exemption, the employee must (1) be compensated on a salary or fee basis at a rate of at least $455 per week; (2) have the primary duty where the performance of work requires advanced knowledge, which includes work requiring the consistent exercise of discretion and judgment; (3) the advanced knowledge must be in a field of science or learning; and (4) the advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction. This exemption is not restricted to the traditional professions of law, medicine, and teaching, but includes professions that have a recognized status and are based on the acquirement of professional knowledge through prolonged study. Generally speaking, these include professions such as nursing, accountancy, engineering, architecture, etc.
In the KPMG case mentioned above, the court relied heavily on the degrees required for the position and found that an entry-level member of a profession is still a professional and may fall under the exemption. The Court found it “hardly surprising” that the audit associates did not make high-level decisions for KPMG’s business, but noted that the professional exemption does not require that the professional reach conclusions that guide or alter the course of business. The critical question, according to the Court, was whether the workers act in a manner that reflects knowledge and requires judgments characteristic of a worker practicing that particular profession.
A reading of this case indicates that the answer to the question asked in the title of this article is “no.” A degree alone will not make an employee exempt under the professional exemption under wage and hour law. As acknowledged in the KPMG case, the critical question for the professional exemption is whether the employee’s particular position requires duties that are appropriately considered professional for that particular profession, entry-level or otherwise.
If you have a question regarding whether an employee falls into an exemption, it is important to look at the facts of your particular situation and get legal counsel involved if necessary. Remember that even though an employee may not fall under the professional exemption, they may fall under another exemption, such as the executive, administrative, or computer employee exemption.