Overtime Pay Issue Case Analysis
EMPLOYMENT LAW FOR HUMAN RESOURCE PRACTICING 2
Overtime Pay Issue Case Analysis
In Chapter 12 of your text, the case of Whalen versus J.P. Morgan Chase (2010) highlights the issue of
an employer’s attempt to classify employees in a manner to avoid paying overtime.
In this assignment, summarize the important issues in this case and the outcome. Address whether you
believe Whalen should be classified as a production or administrative employee. Also, offer your opinion
regarding the reasons why this employee should be classified as an exempt or non-exempt employee
and how the court applied these criteria to the facts of the case to reach its decision. Your paper should
be 2�3 pages in length. Submit your Overtime Pay Issue Case Analysis paper in this assignment.
Walsh, D. J. (2013). Employment law for human resource practice (4th ed.). Stamford, CT: Thomson
Learning. ISBN: 9781111972196.
Overtime Pay Issue Case Analysis
In the case of Whalen v J.P. Morgan Chase (2009), a group of loan underwriters brought
a class action against J.P. Morgan Chase, their employer, for unpaid overtime. The plaintiffs
alleged that they were misclassfified as administrative employees due to the fact that their duties
did not qualify as administrative duties under the Federal Department of Labor’s definition. A
New York district court dismissed the allegations and granted summary judgment for the
defendant company. On appeal, the Second Circuit reversed the judgment on ground that loan
underwriters cannot be exempt administrative employees since their work was in furtherance of
Chase’s business of making loans rather than assisting in running or directing the company.
Plaintiff Andrew Whalen worked for Chase for four years as an underwriter. His work
entailed evaluation of whether to give loans to individuals, applying detailed guidelines provided
by Chase. Sometimes, some underwriters were allowed to deviate from these guidelines. Whalen
alleged that he often worked for over 40 hours a week, although the defendant company
classified him as an administrative employee exempt from the overtime requirements provided
under the Fair Labor Standards Act (FLSA). Ultimately, Whalen filed a lawsuit for a declaratory
judgment that Chase was in violation of the FLSA because of its failure to pay overtime.
However, Chase succeeded on cross-motions for summary judgment and Whalen appealed.
EMPLOYMENT LAW FOR HUMAN RESOURCE PRACTICING 3
Reversing the decision of the district court, the Second Circuit held that Whalen’s work
did not have a direct relationship to management policies or general business operations. Since
an administrative employee needs to carry out duties directly connected to management policies
or general business operations and ordinarily and frequently exercise discretion and independent
judgment, the court concluded that Whalen could not be classified as having been employed in a
bona fide administrative capacity. In addition, the court noted that there was no need to
determine whether Whalen ordinarily and regularly exercised discretion and independent
judgment.
I believe that Whalem should be classified as a production or administrative employee
because analysis of the administrative exemption is very crucial when dealing with the issue of
whether financial services employees are exempt from overtime. The FLSA provides three
requirements that an employee should qualify in order to fall under the administrative exemption.
First, the employee’s primary duties should entail the performance of office or non-manual work
directly connected to the management or general business operations of the employer or the
customers of the employer. Secondly, the primary duties of the employee should entail the
exercise of discretion and independent judgment on significant matters. Thirdly, the employee
should receive payment on a salary or fee basis at not less than $455 per week.
Whalen should be classified as a non-exempt employee because he does not meet the
three requirements provided under the FLSA. The court looked at the definition of administrative
work by the Federal Department of Labor which states that it is work directly related to
management policies or general business operations and where the employee customarily and
regularly exercises discretion and independent judgment. The court distinguished between
EMPLOYMENT LAW FOR HUMAN RESOURCE PRACTICING 4
exempt employees who have advisory duties and non-exempt employees whose work is to carry
out the employer’s daily operations.
Whalen’s work entailed selling loans according detailed guidelines by Chase, rather than
advising clients on which loans to get. This clearly places Whalen’s duties on the production side
as distinct from management duties or general business operations such as human resource. In
addition, Chase itself considered the duties of underwriters as production work. This, the court
concluded, is adequate to show that Whalen was not a bona fide administrative employee.
EMPLOYMENT LAW FOR HUMAN RESOURCE PRACTICING 5
References
The Fair Labor Standards Act of 1938.
Whalem v J.P. Morgan Chase Co., No. 08-4092 (2 nd . Cir.Nov.20, 2009).
