Business Development Managers are exempt from overtime

Take-out: When an employer classifies an employee as exempt under the FLSA, the employer bears the burden of proving that all exemption requirements are met. Duties are not determinative and the employee’s actual job duties must be carefully evaluated to determine whether the second and third requirements of the exemption are met. Employers must critically evaluate whether all employees classified as exempt meet all exemption requirements.

​Employees hired as business development managers to persuade corporate customers to buy General Motors (GM) vehicles are exempt and not entitled to overtime, according to the 11th U.S. Circuit Court of Appeals.

GM developed a program to use business development managers in an effort to increase fleet sales for its dealers. These employees were responsible for identifying new corporate customers, convincing those customers to purchase GM vehicles for their fleets, and then transitioning sales opportunities to GM dealers.

The business development managers worked for a company called Nexus Business Solutions through an outsourcing arrangement with GM. They filed a class action lawsuit alleging that Nexus owed them overtime under the Fair Labor Standards Act (FLSA). The 11th Circuit ruled that they were not entitled to overtime because they were covered by the administrative exemption.

The administrative exemption has three requirements: 1) the employee must be paid a salary of at least $684 per week, 2) the employee must primarily perform “office or non-manual work related to the management or general business operations of the employer” or its customers, and 3) the employee’s primary duty must include “the exercise of discretion and independent judgment in matters of importance.” The third requirement is met only when the employee’s job involves “comparing and evaluating possible courses of conduct and action or making a decision after considering various options.”

The business development managers agreed that the first two requirements for the exemption were met. Their only argument was that they did not meet the third requirement – the exercise of discretion and independent judgment in matters of importance.

Employees argue that their work is too repetitive and too limited to involve discretion and independent judgment. They claimed that their work involved asking predetermined questions, following literal scripts, repeating pre-approved phrases and using canned presentation materials, with little or no deviation on their part. The 11th Circuit disagreed.

The court explained that business development managers were involved in selecting leads to develop, they conducted personalized research before meeting with selected prospects, and they delivered presentations that necessarily required a degree of personalization. The court also noted that the officers themselves described their primary role as “developing business potential and opportunities for dealers,” that they acted as a “facilitator[s] and connection[s]“between the customer and the dealerships” and that the focus of their work is “developing these new relationships and bringing them to the dealer.” All of this requires creative thinking and tailoring to each individual customer – in other words, discretion and independent judgment.

The court also concluded that the business development managers exercised discretion and independent judgment with respect to important matters. As to this aspect of the third requirement, the court explained that securing new customers for GM was “undoubtedly an important matter from the point of view of Nexus” because Nexus’ entire business involved supplying GM employees. The matters on which these employees exercised discretion, the court explained, “go right to the heart of GM’s efforts to solicit customers — and right to the core service that Nexus provides.”

Brown v. Nexus Business Solutions LLC11th Cir., No. 20-13909 (April 1, 2022).

Michael E. Wilbur is an attorney at Apex Employment Law, LLP, a Worklaw® Network member firm in Oakland, California.

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