FLSA2007-7 — Case managers for individuals with disabilities and section 13(a)(1)

U.S. Department of Labor
Employment Standards Administration
Wage and Hour Division
Washington, D.C. 20210

FLSA2007-7

February 8, 2007

Dear Name*:

This is in response to your request for an opinion concerning the applicability of the
administrative exemption under section 13(a)(1)
1
of the Fair Labor Standards Act (FLSA) to
Case Managers employed by your client (“Company”). For the reasons that follow, it is our
conclusion that these employees do not qualify for the administrative exemption and must be
paid in compliance with the minimum wage and overtime requirements of the FLSA.

You state that the Company is a service provider for individuals with disabilities. The
Company works with physicians and other third parties to help consumers with disabilities
increase their self-sufficiency at home and in the community. The primary duty of Case
Managers is to meet and to work with consumers to gather information, to assess each
consumer’s needs, to assess the costs of care, to prepare a plan of care, and to identify and to
implement services to meet the consumer’s needs. Case Managers do not personally deliver or
administer services to the consumers, but are responsible for planning and helping to obtain
those services from third-party service providers.

Case Managers do not operate pursuant to written protocols or formulas. Rather, Case
Managers draw upon their education and experience to identify and to procure whatever group
of services may be appropriate for each consumer, maximizing that consumer’s ability to live
outside an institution (such as a group home, assisted living center, nursing home, or state
hospital). Case Managers may seek information and input from colleagues and other resources,
but are independently responsible for developing a plan of care for each consumer. Each plan
of care is, by necessity, driven by the individual needs and abilities of the consumer. A plan of
care may include services such as advocacy/case management, independent living skills
training, peer support, physical therapy, cognitive therapy, speech therapy, occupational
therapy, or vocational rehabilitation.

Case Managers also monitor the delivery of services in coordination with the consumer and
third-party service providers. In addition, Case Managers assist consumers with related
matters, including consumers’ eligibility for benefits through Medicaid, Medicare, Social
Security, and private insurance.

Case Managers perform their work free from direct supervision. Case Managers develop and
implement plans of care without the requirement of approval by a superior, but their work is
regularly reviewed by a Company vice president for quality and timeliness. The Company
prefers that Case Managers have a bachelor’s degree in social services or one to three years of
related experience. For purposes of our response, you ask us to assume that Case Managers are
paid on a salary basis at a rate of at least $455 per week.

1
Unless otherwise noted, any statutes, regulations, opinion letters, or other interpretive material cited in this letter
can be found at www.wagehour.dol.gov.

Section 13(a)(1) of the FLSA provides a complete minimum wage and overtime pay exemption
for any employee employed in a bona fide executive, administrative, or professional capacity,
as those terms are defined in 29 C.F.R. Part 541. An employee may qualify for exemption if all
of the pertinent tests relating to duties and salary are met.

As stated in 29 C.F.R. § 541.200(a), the term “employee employed in a bona fide
administrative capacity” means “any employee”:

(1) Compensated on a salary or fee basis at a rate of not less than $455 per week
. . . ;

(2) Whose primary duty is 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; and

(3) Whose primary duty includes the exercise of discretion and independent judgment
with respect to matters of significance.

In the context of the administrative exemption, the phrase “work directly related to the
management or general business operations of the employer” refers to work in such functional
areas as tax, finance, accounting, marketing, research, public relations, and computer network,
among others. See 29 C.F.R. § 541.201(b). In addition, “[a]n employee may qualify for the
administrative exemption if the employee’s primary duty is the performance of work directly
related to the management or general business operations of the employer’s customers.” 29
C.F.R. § 541.201(c). This may include “employees acting as advisers or consultants to their
employer’s clients or customers.” Id.

With regard to the type of work performed, the preamble to the Department’s 2004 revisions to
the Part 541 regulations explains that “the administrative exemption covers only employees
performing a particular type of workwork related to assisting with the running or servicing of
the business.” 69 Fed. Reg. 22,122, 22,141 (Apr. 23, 2004). Furthermore, the administrative
exemption “relates to employees whose work involves servicing the business itselfemployees
who ‘can be described as staff rather than line employees.’” Id. Although the “production
versus staff” dichotomy is illustrative, rather than dispositive, it “is still a relevant and useful
tool in appropriate cases to identify employees who should be excluded from the exemption.”
Id.

After reviewing the information you provided, we believe that the activities performed by Case
Managers employed by your client are more related to providing the Company’s ongoing, day-
to-day case management services for its consumers, which involves duties such as assessing
costs of care, preparing a plan of care, and identifying and implementing services to meet the
consumers’ needs, rather than performing administrative functions directly related to managing
either your client’s business or any business of your client’s customers. A Case Manager is not
primarily tasked with performing duties in any of the management or general business
functional areas described in 29 C.F.R. § 541.201(b); nor is the Case Manager primarily tasked
Page 2 of 3

with providing administrative services to the employer’s customers as contemplated in 29
C.F.R. § 541.201(c). Therefore, it is our opinion that Case Managers employed by your client
do not qualify for the administrative exemption under section 13(a)(1). See Wage and Hour
Opinion Letters
FLSA2006-20NA (Sept. 8, 2006) and FLSA2005-30 (Aug. 29, 2005).

This opinion is based exclusively on the facts and circumstances described in your request and
is given based on your representation, express or implied, that you have provided a full and fair
description of all the facts and circumstances that would be pertinent to our consideration of the
question presented. Existence of any other factual or historical background not contained in
your letter might require a conclusion different from the one expressed herein. You have
represented that this opinion is not sought by a party to pending private litigation concerning
the issues addressed herein. You have also represented that this opinion is not sought in
connection with an investigation or litigation between a client or firm and the Wage and Hour
Division or the Department of Labor.

We trust that this letter is responsive to your inquiry.

Sincerely,

Paul DeCamp
Administrator

* Note: The actual name(s) was removed to preserve privacy in accordance with 5 U.S.C.
§ 552(b)(7).
Page 3 of 3