U.S. Court of Appeals, Second Circuit Finds Loan Underwriters Entitled to Overtime Pay

In Whalen v. J.P. Morgan Chase, the United States Court of Appeals for the Second Circuit, held that a loan underwriter, whose job involved approving loans, in accordance with specific guidelines provided by his employer, was not exempt from the Fair Labor Standards Act (“FLSA”). The Second Circuit covers New York, Connecticut, and Vermont.


Whalen claimed that he frequently worked in excess of 40 hours per week, requiring the payment of overtime under the FLSA as well as New York’s Minimum Wage Act and regulations. His employer, Chase, treated underwriters as exempt from overtime. Chase relied upon the “bona fide administrative” exemption recognized under the FLSA and New York law. The lower court had ruled in favor of Chase.
A worker is employed in a bona fide administrative capacity if he or she performs work “directly related to management policies or general business operations” and “customarily and regularly exercises discretion and independent judgment.” 29 C.F.R. § 541.2(a). However, production or sales-related work does not constitute “administrative” type work sufficient to trigger the exception. The Second Circuit reversed the district court, and found that Whalen was employed in a “production” and not administrative capacity.
According to the court,

we have drawn an important distinction between employees directly producing the good or service that is the primary output of a business and employees performing general administrative work applicable to the running of any business.

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