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Bank Misclassified Appraisers as Exempt from Overtime Pay, Court Says
By: Sarah Burch

This summer a federal court ruled that a class of current and former residential real estate appraisers were improperly classified as exempt from overtime pay under the Federal Labor Standards Act (“FLSA”). In doing so, the court rejected the bank’s argument that the appraisers fell under the administrative, professional, and highly compensated employee exemptions.

The case involved two classes—one comprised of residential appraisers, and another made up of review appraisers. Both groups of appraisers alleged that the bank misclassified them as exempt from overtime under state and federal law. Last fall the parties settled the claims of the review appraisers for approximately $5.8 million, leaving only the residential appraisers pursuing their claims.
Administrative Exemption. Under the FLSA, an employee qualifies for the administrative exemption if the following three requirements are met: (1) the employee is compensated on a salary or fee basis meeting a certain threshold; (2) the employee’s primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and (3) the employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
The parties disputed whether the appraisers’ work directly related to the bank or its clients’ general business operations. The court agreed with the appraisers’ argument that their work essentially involved production work, with no impact on the bank’s policy decisions. The court rejected the bank’s argument that appraisers engaged in advisory and consulting services, conducted business research, and      Continue Reading...

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