Case 3 John Krauss and National Bank Essay Assignment Paper

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Case 3 John Krauss and National Bank Essay Assignment Paper

Assignment: The Fair Labor Standards Act

Your grade is a combination of the following elements:

1. Appropriate length of answer. One paragraph per question answered. Individual question minimum of 3 well-structured sentences in 12 point font.

2. Identification of correct human resource or management topic.

3. Full quality answers which include research to determine how to apply standards, regulations, or laws covering human resources. These cases require you to research current federal employment law, regulations, and issues in order to answer them correctly. Review “Website resources” tab. Also you can google topics, laws, cases, etc.

4. Correct notation of sources listed at the bottom of each answered case. You should list the textbook and any websites or other resources you used; cite direct quotes from sources in parenthesis and put (author’s last name, page #).

Case #74 “You Be the Judge: Is This Job Exempt?, p. 225-228. This case is difficult and will take you at least 10 hours to complete. You may want to go to the website for more help. The Fair Labor Standards Act has multiple provisions and you need to read through each one to fully understand whether these jobs are exempt or non-exempt. Please provide detailed answers that show your rationale for your decisions. What is this job exempt? What is this job non-exempt? What is your proof or evidence that you would use if the Department of Labor audited your personnel classifications. How would you defend the organization’s classification of these jobs? For each of the 3 people, please answer the 2 questions under “procedures C”.

Your answer should be at least 2-3 pages with references listed at the end of the document on page 4 and in MLA 7th edition format


Instructors Manual – Use Only as Guide – Plagiarism Software will be used!!!


I. Objectives

A. To help you understand the application of the Fair Labor Standards Act (FLSA).

B. To help you understand how the law is applied in determining whether jobs are exempt or non-exempt under FLSA.

II. Out-of-Class Preparation Time: 60 minutes

III. In-Class Time Suggested: 45 minutes

IV. Procedures

A. Read the exercise and review the Fair Labor Standards Act excerpt pertaining to exempt status (See Exhibit in textbook).

B. The class should be divided into groups of four.

C. Each group should read each of the incidents that follow and answer these questions:

1. Analyze each case in respect to the tests that must be considered for determination of exempt status of executive, professional or administrative jobs.

2. If you were the judge, how would you rule? Is the job exempt or non-exempt? Why or why not?


General Note: It is important that the instructor go over the tests for the different exemptions. Students must really understand that all of the different components of the test must be satisfied for a job to fall within the exemption. All three cases deal with the administrative exemption because this it is the one that is most difficult and where there have been recent important court cases.

Case 1 Harry Phipps, Senior Professional Sales Representative

This scenario is based on an actual court case (Patty Lee Smith versus Johnson & Johnson). The issue is whether Phipps’ position is exempt from the FLSA. The students should first decide if the position of senior professional sales representative falls within one of the FLSA’s exemptions. The court decided the outside sales exemption did not apply to Smith but the administrative exemption did apply. The administrative employee test has three requirements. While the company agreed that Phipps could be defined as an administrative employee under the first requirement: Compensated on a salary or fee basis at a rate of not less than $455 per week. But they disputed his qualification for that exemption under the remaining two requirements: (2) whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or employer’s customers and (3) Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. The court found the administrative exemption applies to Phipps. Phipps’ position required him to form a strategic plan designed to maximize sales in the territory. The court felt this requirement satisfied the “directly related to the management or general business operations of the employer” provision of the administrative employee exemption because it involved a high level of planning and foresight, and the strategic plan that Phipps developed guided the execution of the remaining duties. In terms of exercise of discretion and independent judgment with respect to matters of significance, the court found that Phipps executed nearly all of his duties without direct oversight. Phipps could be viewed as the owner of his own business because he could run his territory as he saw fit. Thus, Phipps is subject to the administrative employee exemption and not entitled to overtime.

Case 2 Cheryl Wiley, Auto Damage Adjuster

This case is based on Jerome Robinson Smith versus Geico Insurance. The court found in favor of Geico and concluded that the position of auto damage adjuster falls within the administrative employee exemption. The decision is based on the following:

· The primary duty of a GEICO auto damage adjuster consists of assessment, negotiation, and settlement of automobile damage claims all of which requires exercise of discretion and independent judgement. Although the parties differed on how much, both the company and employee agree the auto damage adjuster exercised some discretion. The frequency of discretion is enough to satisfy the requirements of the long test for administrative employees.

· tThe auto damage adjuster has the power to make independent choices free from immediate direction or supervision. Employees can exercise discretion and independent judgment even if their decisions or recommendations are reviewed at a higher level.

· Adjusters have the power to settle clams within their limits as long as they can justify their decision on the facts of the claim.

· Adjusters make choices with respect to matters of significance.

Case 3 John Krauss and National Bank

This case is based on Michael J. Davis vs. J P Morgan Chase heard in the United States Court of Appeals in August 2009). The court had to assess whether Davis performed day-to-day sales activities or more substantial advisory duties as an underwriter. As an underwriter, Davis’s primary duty was to sell loan products under the detailed directions of the Credit Guide. There is no indication that underwriters were expected to advise customers as to what loan product best their needs and abilities. Underwriters did their job following procedures specified in the Credit Guide in order to produce a yes or no decision. Their work is related neither to setting management policies nor to general business operations such as human relations or advertising. The court found that all of the documentation submitted by Chase supported the observation that the underwriter position is one of production work. Chase even referred to the job as production work and the department was categorized as “operations”. Paying production incentives also suggests that the work of underwriters can be quantified. The court concluded that the work of underwriter falls under the category of production rather than of administrative work. The work was not conceptual nor did they exercise independent judgment. Davis did not perform work directly related to management policies or general business operations. Thus, the job of underwriter does not meet the administrative exemption because: “an employee must both perform work directly related to management policies or general business operations and customarily and regularly exercise discretion and independent judgment. Therefore, the position of underwriter does qualify for overtime pay. Please note the administrative test is in three parts and all three parts must be satisfied to fall within the exemption

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