Labor & Employment Law Daily Wrap Up, WAGE-HOUR—EXEMPTIONS—N.D. Ill.: Corporate recruiter gets trial on claims she was misclassified under the FLSA’s administrative employee exemption, (Feb 12, 2025)

By Marjorie Johnson, J.D.

While she admittedly used her judgment to perform certain tasks, the record suggested that she applied “well-established techniques” and “standards” and that the tasks were repetitive and routine.

A corporate recruiter for a staffing agency survived summary judgment on claims that her employer misclassified her as an exempt administrative employee under the FLSA and the Illinois Minimum Wage Law (IMWL) and as such unlawfully denied her overtime pay. A federal district court in Illinois found that although the salary threshold was met and her primary duties were “directly related to the management or general business operations” of the employer and its clients, triable issues existed as to whether her primary job duties involved the exercise of discretion and judgment with respect to “matters of significance” (White v. APFS LLC, No. 23-cv-05464 (N.D. Ill. Feb. 6, 2025)).

Finance and accounting vertical. From November 2019 until August 2021, the employee worked as recruiter in the staffing agency’s industry vertical that placed finance and accounting professionals in contract roles. Business development managers (BDMs) generated job orders which corresponded to open job positions with client companies, and she was responsible for finding candidates with the requisite skills to fill the job orders assigned to her. The employer classified her as exempt and paid her a salary of $42,000 per year plus any earned commissions and bonuses.

The employee would work to fill open job orders to which she was assigned by reviewing the job order and necessary qualifications and then contacting candidates she believed may be qualified. She would then assess their interests and qualifications and edit their resumes and submit them to the BDM for consideration. If they were offered an interview with the client company, she would prep them for that interview and negotiate their pay, with a bonus incentive to get them to accept a lower salary. If a candidate was hired and placed with a client, she would periodically check in to see how things were going.

FLSA and IMWL. At the outset, the court rejected the employee’s contention that the FLSA’s analysis did not apply to her IMWL claim since the state law incorporated the FLSA administrative exemption as it existed “on March 30, 2003,” and the Department of Labor’s revisions to the FLSA in 2004 included changing the wording of the exemption. The Seventh Circuit addressed this issue and concluded that the only differences between the two versions were the salary requirement and the additional explanation that an administrative employee must exercise discretion or independent judgment “with respect to matters of significance.” Therefore, because these changes were not substantive, the FLSA analysis applied to her IMWL claims.

Administrative exemption. Three factors must be met for the administrative exemption to apply. 29 C.F.R. § 541.200(a). First, the employee must have received a minimum salary of $684 per week, which the parties did not dispute was met here. Second, her “primary duty” must be “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.” Finally, her primary duties must include “the exercise of discretion and independent judgment with respect to matters of significance.”

Supported staffing agency’s core business. Despite the employee’s arguments to the contrary, the staffing agency established that her duties were directly related to the management or general business operations of the firm and its clients. Even though she didn’t have the authority to hire anyone or make hiring recommendations directly to the employer’s clients, her work supported its core business with respect to contract placements performed by her vertical. For instance, she sought out and identified prospective candidates, assessed their qualifications, prepared their materials for submission, and prepped them for interviews. “Placing candidates with clients is how Addison makes money, and [the recruiter’s] tasks directly supported that effort,” stated the court. “Indeed, it is hard to imagine tasks more directly related to running Addison’s business.”

The employee countered that her duties were largely entry-level, clerical tasks subject to oversight and dictated by the employer’s templates and procedures and that she lacked authority to negotiate with the staffing agency’s clients. However, these arguments were relevant to the third prong of the administrative exemption test concerning exercise of discretion and independent judgment. Regardless of how much supervision and control her employer exercised over her tasks, no triable issue existed as to whether her tasks supported the core of the staffing agency’s business.

Exercise of discretion and independent judgment. However, a factfinder would need to decide whether her primary job duties involved the exercise of discretion and judgment with respect to matters of significance. The employer pointed to certain tasks to make its case—including her role in determining whether a candidate was interested in a contract role and would be a good fit for a certain job and then negotiating with them about their salary expectations. But while she used her judgment to perform those tasks, she presented evidence that she applied “well-established techniques” and “standards” to do so, and that the tasks were repetitive and routine. It was also not clear whether her assessment of a candidate’s qualifications was subjective enough to qualify her for the exemption since there was no evidence she had first-hand contact with clients and therefore was limited to working from the information provided by the BDM.

She also claimed that while she may have independently chosen which candidates to recommend to a BDM, the employer created templates, checklists, and processes that limited her exercise of discretion. In addition, during a performance review she was told to rely more on her supervisors rather than “relying on herself.” The court found that this evidence “cuts both ways” since it suggested both that she worked independently in some respects and that the employer preferred for her not to because she was too junior. It was also unclear from the record what tasks she performed with respect to salary negotiations that required independent judgment and discretion since she presented evidence that she received guidance from her managers in this regard.

“Matters of significance.” Finally, even if she exercised discretion and judgment in some tasks, it was unclear she did so with respect to “matters of significance” as required by the regulations. For example, there was no evidence that she had the “authority to formulate, affect, interpret, or implement management policies or operating practices.” § 541.202(b). It was also clear she lacked the “authority to waive or deviate from established policies and procedures without prior approval.”

The case is No. 23-cv-05464.

Judge: Jenkins, L.

Attorneys: Richard J. Burch (Bruckner Burch) for Cassidy White. Carl A. Fitz (Fitz Law) for Juli Marconi. Michael Ross Phillips (McGuireWoods) for APFS LLC dba Addison Professional Financial Search.

Companies: APFS LLC; Addison Professional Financial Search

Cases: WageHour Exemptions Overtime WorkingTime StateLawClaims IllinoisNews