On Monday, the U.S. Supreme Court declined review of a First Circuit Court of Appeals decision rejecting a facial challenge to the way the Department of Labor and federal courts determine exempt versus non-exempt duties under the white collar overtime exemptions to the Fair Labor Standards Act (FLSA). F.W. Webb Co. v. Micone involved an employer that classified its inside salespersons as administrative exempt. DOL rules have long characterized inside sales as ineligible for the exemption, because those employees are engaged in production rather than administrative support activities.

In its appeal, the employer challenged the First Circuit’s reliance on the company’s business purpose in making its determination that the employees in question performed sales activities that benefitted the employer’s bottom line. Instead, they argued that the FLSA exemption analysis should focus on the employees’ actual day-to-day activities without regard to the overall business purpose. In this situation, the employer contended that the employees’ primary duties involved promotions and other support work.

The Supreme Court did not comment on its reasons for rejecting this appeal. A decision for the employer would have reversed settled law in most federal appellate circuits. Under this approach, courts look at the business’s overall purpose when determining whether activities performed by particular employees involves production as opposed to support work. In this case, the plaintiffs engaged in activities relating to sale of the company’s products, which were deemed to be production duties.

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