A critical determination for any job is determining whether the position is exempt or non-exempt from the Fair Labor Standards Act (FLSA). Review the FLSA excerpt below pertaining to exemplary status, and then analyze each of the three cases. For each case, consider the tests that must be considered for determination of exempt status of executive, professional, or administrative jobs. Is the job exempt or non-exempt, and why? Case 3: John Krauss and National Bank
John Krauss was employed by National Bank for two years as an underwriter. As an underwriter, Krauss evaluated whether to issue loans to individual loan applicants by referring to a set of guidelines, known as the Credit Guide, provided to him by the bank. The Guide specified how underwriters should determine loan applicant characteristics such as qualifying income and credit history. It also instructed underwriters to compare such data with criteria set out in the Guide. The Guide contained standards for what qualified a loan applicant for a particular loan product. National Bank also provided supplemental guidelines and product guidelines with information specific to individual loan products. Krauss was expected to evaluate the applications using the Credit Guide and approving the loan if it met the standards set. As such, he had no interactions with applicants since this was a back-office operation. Underwriters were evaluated not by whether the approved loans were paid back, but by measuring each underwriter’s productivity in terms of average of total actions per day and assessing whether the underwriters’ decisions met National’s Credit Guide standards.
National Bank sometimes used incentive schemes based on number of decisions made to increase underwriter performance. Underwriters at National Bank earned a salary of $42,000 per year. To keep up with the number of applications he had to evaluate, Krauss regularly worked overtime. When he inquired about being paid for overtime, Krauss was told the underwriter position was exempt from the Fair Labor Standards Act. Krauss did not agree and felt that he was basically an administrative employee who performed work that was well- defined by the company. Subsequently, Krauss filed a lawsuit requesting that he be paid overtime for the hours he had worked in excess of the required forty for the past two years.