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Fourth Circuit Rejects Use of Combination Exemption in FLSA Overtime Suit Without Guaranteed Salary

    Client Alerts
  • August 03, 2007

Most employees classified as exempt from the overtime provisions of the Fair Labor Standards Act fall within one of the three so-called “white collar” exemptions applying to executive, administrative, and professional positions.  In some cases, the employee’s “primary duties” used to determine eligibility for the exemption will be split into two of the white collar exemptions.  Even though no single exemption would apply to the employee due to the amount of time spent on specified activities, when viewed in combination, the employee’s primary duties meet the overall exemption test.  In a recent decision from the Fourth Circuit Court of Appeals (which includes North and South Carolina), the court cautioned employers over the limits of use of the combination exemption.  In this case, IntraComm, Inc. v. Bajaj, the employer based its failure to pay overtime on its contention that the employee performed a combination of executive and administrative duties.  The plaintiff contended that the combination exemption did not apply because he was not paid a salary.


The Fourth Circuit noted that both parties conceded that the employee would not meet the requirements of either individual exemption.  The plaintiff argued that the combination exemption as set forth in Department of Labor regulations is independent of the salary requirement that applies to the individual executive or administrative exemptions.  The court had little trouble rejecting this position.  It relied upon a brief from DOL stating the agency’s interpretation that the combination exemption rule only deals with a combination of primary duties.  The employee must still meet all other prerequisites for the white collar exemptions, including the salary requirement.  While the combination exemption may be applicable to some employees, those employees must be paid a salary meeting FLSA minimums in order to qualify.