This week, the US Court of Appeals for the Second Circuit held in Pippins v. KPMG, Docket No. 13‐889‐cv (2d Cir. July 22, 2014) that entry-level accountants are professionals exempt from overtime under the FLSA. The test applied in making the determination is a three-part inquiry: 1) is the work predominantly intellectual in character, requiring the consistent exercise of discretion and judgment; 2) is the work within a recognized field of science or learning, and 3) does entry into the profession, as a standard prerequisite, require specialized academic training? Frequently, “junior accountants,” even when CPAs, are disqualified by the US Department of Labor auditors because of the degree of discretion and judgment exercised by the individual in their work; however, the Second Circuit observed that “what matters is whether [employees] exercise intellectual judgment within the domain of their particular expertise.” For the court, the “critical question” was whether “workers act in a manner that reflects knowledge and requires judgments characteristic of a worker practicing that particular profession.” That the accountants were supervised in their audit functions did “not relegate the junior professionals to the role . . . of non-professional staff,” if they still exercised professional judgment in their determination of the issues to bring to a supervisor’s attention. Although the plaintiffs claimed that much of their audit training was on-the-job, the court observed that their understanding of KPMG’s materials was only possible because of their “advanced knowledge” that was acquired, as 29 CRF Part 541 requires, “by a prolonged course of specialized intellectual instruction.” The court concluded that without such prolonged academic training, the accountants could not have developed “the requisite understanding of the audit function, on the basis of the brief training period.” The territorial jurisdiction of the Second Circuit includes Connecticut, New York, and Vermont. Text of the decision is available at: ca2.uscourts.gov/decisions/isysquery/ddd0e305-7563-4c31-b86f-a6954f41324b/1/doc/13-889_opn.pdf#xml=ca2.uscourts.gov/decisions/isysquery/ddd0e305-7563-4c31-b86f-a6954f41324b/1/hilite/. ltblaw/members/scott-a-mills/
Posted on: Thu, 24 Jul 2014 15:20:12 +0000
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