Court Finds Headhunters Exempt From Overtime Pay

Originally published April 7, 2010

A federal district court in Maryland recently granted a staffing company summary judgment on the claim that its recruiters should have been paid overtime and were improperly classified as overtime exempt. In Andrade v. Aerotek Inc., a former recruiter sued Aerotek on behalf of herself and other recruiters, and the court certified some of those claims as a collective action under the Fair Labor Standards Act (FLSA).

The principal allegation advanced by the recruiters was that Aerotek misclassified the recruiters as overtime exempt and they should have received overtime pay for all hours they worked in excess of 40 hours in any week. The court disagreed and found the recruiters exempt from overtime pay, relying on the FLSA's oft-litigated administrative exemption.

To qualify for the administrative exemption under U.S. Department of Labor regulations, employees must:

1. earn at least $455 per week;
2. primarily perform office or non-manual work that relates to the management or general business operations of the employer (or the employer's customers); and
3. primarily perform duties that involve discretion and independent judgment about matters of significance.

The dispute in Andrade centered on whether the recruiters' work directly related to Aerotek's management or its business operations, and whether their work required discretion and independent judgment. The recruiters' involvement in human resources-related functions led the court to answer both questions in the affirmative. Aerotek's recruiters' chief task was to find potential employees and place them in positions with Aerotek's clients. This involved selecting and interviewing candidates, negotiating pay and vacation, and some oversight once the candidates were placed. Recruiters also regularly consulted with client employers about their personnel needs and working environments in an effort to solicit future business. Importantly, the recruiters in Andrade did not just screen applicants for minimum qualifications and then send them on for selection by the client. Rather, the recruiters (or at least the named plaintiff in Andrade) developed their own recruiting strategies in light of the client's particular job requirements and culture.

The court's decision in Andrade provides a useful example of how technical the distinctions can become under the overtime exemptions, and how a few key factors can quickly alter the analysis.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.