The administrative exemption for overtime relates to employees who perform non-manual work that is directly related to the management or general business operations of the company. Of course to qualify, an employee must be salaried and exercise discretion and independent judgment in their work. A recent Minnesota case is a good reminder of this. Farmers Insurance Exchange employed persons as special investigators, classifying them as exempt employee under the administrative exemption. However, when an employee sued on behalf of the class, he explained that his job largely involved gathering information about potential fraudulent claims, and he was not even allowed to comment or express an opinion as to whether or not the claim was in fact fraudulent. Only supervisors made those decisions. The investigator’s subjective opinions or conclusions were excluded from all written reports, and they did not make specific recommendations about whether a claim should be paid. It was determined that this was not sufficient discretion or judgment to qualify for the administrative exemption. Indeed, the insurance claims adjuster regulation specifically refers to the adjuster making recommendations regarding coverage of claims, determining liability and negotiating settlements as well as making recommendations regarding litigation, which obviously were not met in this case. The Court determined that his title as a special investigator did not have enough discretion or exercise significant independent judgment to be classified as exempt. Fenton, et al. v. Farmers Insurance Exchange (D.C. Minn. 2009)
