Skip to Content

Federal Appeals Court Declares Updated Standard on ‘Exempt’ Employees


Employers should take note of a recent ruling from the 1st U.S. Circuit Court of Appeals regarding who is considered an “administrative” employee exempt from overtime requirements under the federal Fair Labor Standards Act (FLSA).

The case involved dispatchers and controllers working for Unitil Service, a company that operates electrical grids and gas pipelines for power companies across New England.

The job of “dispatcher” involved around-the-clock monitoring and control of electric transmission and distributions for the various power companies in the Unitil network. The job of “controller” entailed overseeing operation and control of each company’s gas transmission distribution system.

Dispatchers and controllers were also charged with ensuring that operations complied with local, state and federal regulations.

The U.S. Department of Labor brought a legal action against Unitil Service claiming it violated the FLSA by classifying the controllers and dispatchers as administrative employees who weren’t entitled to overtime pay.

A U.S. District Court judge threw out the case, ruling that the employees’ primary duties were directly related to the general business operations of Unitil’s customers. This made them “administrative” and therefore exempt from the FLSA, the judge ruled.

But the 1st Circuit reversed the decision.

Specifically, the higher court found that the employer had not shown that the workers’ primary duty consisted of work “directly related” to the management and general business operations of its customers.

The case isn’t over yet; it was sent back to the District Court for further findings. But in the meantime, it highlights for employers just how complicated the process of classifying workers for FLSA purposes can be. In order to avoid running afoul of the law, it would be a good idea to talk to local counsel.