Overtime Pay Exemption Considered

Lynore Reiseck worked for Universal Communications of Miami Inc. as regional director of advertising sales for the company’s magazine Elite Traveler. Reiseck received a base salary plus commissions but was never paid for overtime. Her job required that she sell advertising space to individual customers. In 2004, after she was fired, Reiseck filed a lawsuit alleging claims including denial of overtime pay.

The district court found that Reiseck was exempt, and not entitled to overtime pay compensation, because she was the “key executive responsible for generating advertising revenue” and exercised discretion and independent judgment with respect to matters of significance. It granted Universal’s summary-judgment motion and dismissed the case.

The New York-based 2nd U.S. Circuit Court of Appeals vacated the district court’s grant of summary judgment on the issue of whether Reiseck was entitled to overtime pay. The court reasoned that “an employee making specific sales to individual customers is a salesperson for the purposes of the [Fair Labor Standards Act], while an employee encouraging an increase in sales generally among all customers is an administrative employee for the purposes of the FLSA.”

The court said Reiseck was “a salesperson responsible for selling specific advertising space, and so seems to fit comfortably on the ‘sales’ side of the administrative/sales divide, and also ‘promoted sales’ in some sense, and thus seems to have performed administrative operations.” Since advertising sales were a critical source of revenue for the free magazine, “one could thus conclude that advertising space is Universal’s ‘product.’ ” Since Reiseck’s primary duty was the sale of that product, she may reasonably be considered a sales employee, rather than an administrative employee and was thus entitled to overtime pay. Reiseck v. Universal Communications of Miami Inc., 2d Cir. No. 09-1632 (1/11/10).

Impact: Careful review of job descriptions, together with review of applicable state and federal overtime exemptions, is necessary to make informed decisions about overtime pay obligations.

Workforce Management, March 2010, p. 8 — Subscribe Now!