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Are Your Recruiters Exempt or Non-Exempt? Recent Court Cases Scrutinize Staffing Industry Classification Practices

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Recently, a California appeals court sent shockwaves through the staffing industry when it ruled in Pellegrino v. Robert Half International, Inc., No. G039985,1 that staffing firm recruiters are not overtime-exempt administrative employees under California law. Since many staffing firms classify their recruiters as exempt administrative employees, there was concern that this decision could have a sweeping effect on staffing industry overtime classification practices.

Soon after Pellegrino, a federal district court in Maryland decided Andrade v. Aerotek, Inc., No. CCB-08-2668,2 another case in which a staffing firm recruiter challenged her classification as administratively exempt from the requirement to pay overtime. The Aerotek court held the complete opposite of the California appeals court in Pellegrino, and found that the recruiter was an exempt administrative employee under the Fair Labor Standards Act, and thus not entitled to overtime.


Read together with Aerotek, Pellegrino does not suggest the need for any wholesale, industry-wide change in staffing firm classification practices as was initially feared. Rather, these cases serve to remind staffing firm industry employers of the parameters of the exemption, and to illustrate its application to two very different types of staffing firm recruiters – those who exercise high-level human resources and management functions, and others who do not.

Pellegrino v. Robert Half International, Inc.

This case was brought by a group of Account Executives against Robert Half International (RHI) alleging that the company failed to comply with provisions of California law pertaining to overtime compensation, commissions, meal periods, itemized wage statements and unfair competition.

For its primary defense, RHI argued that the plaintiffs' claims were barred because most of them had signed employment agreements containing a clause that shortened the limitations period applicable to their claims to six months. RHI also argued that the plaintiffs were exempt from wage and hour laws based on California's administrative exemption. The trial court disagreed and determined that the limitations provision contained in the employment agreements violated public policy and was thus unenforceable. Thereafter, the trial court found that the plaintiffs did not qualify for the exemption. The appeals court affirmed the trial court opinion in its entirety.

Plaintiffs' Job Duties

The duties and responsibilities of RHI Account Executives involved recruiting, interviewing, and evaluating candidates to be placed as temporary employees. Additionally, Account Executives were responsible for selecting and placing candidates on job orders, assisting clients with business needs, and developing new business.

The duties and responsibilities of RHI Account Executives involved recruiting, interviewing, and evaluating candidates to be placed as temporary employees. Additionally, Account Executives were responsible for selecting and placing candidates on job orders, assisting clients with business needs, and developing new business.

In performing these functions, Account Executives were expected to follow the "recipe" established by RHI's corporate headquarters. This "recipe" required Account Executives to operate on a three-week rotation broken down into a "sales week," followed by a "desk week," and then a "recruiting week." During sales week, Account Executives were expected to make 125 telephone calls to clients, conduct 15 client visits, and participate in networking events. During desk week, Account Executives were required to handle incoming phone calls and take job orders from clients. During recruiting week, Account Executives were expected to interview 15 to 25 potential candidates to determine whether they should be added to RHI's "inventory" of potential placements.

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Written by

Suellen Oswald is a Shareholder in Littler Mendelson's Cleveland office, and Reagan Wilkins Oden is an Associate in Littler Mendelson's Minneapolis office. If you would like further information, please contact your Littler attorney at 1.888.Littler, info@littler.com, Ms. Oswald at soswald@littler.com, or Ms. Wilkins Oden at roden@littler.com.

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