FLSA2018-10 — Residential construction project supervisor and section 13(a)(1)

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

FLSA2018-10
January 5, 2018
Dear Name*:
This letter responds to your request that the Wage and Hour Division (“WHD”) reissue Opinion
Letter FLSA2009-29. On January 16, 2009, then-Acting WHD Administrator Alexander J.
Passantino signed the opinion letter as an official statement of WHD policy. On March 2, 2009,
however, WHD withdrew the opinion letter “for further consideration” and stated that it would
“provide a further response in the near future.”
We have further analyzed Opinion Letter FLSA2009-29. From today forward, this letter, which
is designated FLSA2018-10 and reproduces below the verbatim text of Opinion Letter
FLSA2009-29, is an official statement of WHD policy and an official ruling for purposes of the
Portal-to-Portal Act, 29 U.S.C. § 259.
I thank you for your inquiry.

Bryan L. Jarrett
Acting Administrator

Dear Name*:
This is in response to your request for an opinion regarding whether a project supervisor in the
residential homebuilding industry qualifies for an exemption under section 13(a)(1) of the Fair
Labor Standards Act (FLSA).
∗
You ask specifically whether the project supervisor qualifies as
an employee employed in a bona fide administrative capacity. It is our opinion that the position
is exempt from the minimum wage and overtime requirements of the FLSA.
You indicate that project supervisors are employed by homebuilding companies to supervise and
coordinate the construction of residential homes. Often the homebuilding company will
outsource the actual construction of the home to various subcontractors, and the project

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

supervisor will serve as the company’s representative at the worksite in dealings with
subcontractors, suppliers, customers, and government inspectors. A project supervisor spends
more than half of his/her time directing, scheduling, managing, and paying subcontractors and
suppliers. Additionally, the project supervisor reviews and modifies new home plans; interacts
with building inspectors; ensures each home is ready for each required inspection; responds to
customer concerns and complaints; reviews the initial home construction budget to ensure the
estimates are reasonable; inspects the work of subcontractors and suppliers; tracks the home
costs against original estimates as construction progresses; acts as the company safety inspector
at the worksite; works with subcontractors to ensure compliance with all federal and state safety
procedures and regulations; and takes appropriate and necessary action if an accident occurs.
Section 13(a)(1) of the FLSA exempts from its minimum wage and overtime pay provisions “any
employee employed in a bona fide executive, administrative, or professional capacity.” 29
U.S.C. § 213(a)(1). The exemption is determined not by occupational title or job classification,
but rather by the duties and salary of the individual employee involved. See 29 C.F.R. § 541.2.
The term “employee employed in a bona fide administrative capacity” in section 13(a)(1) of the
FLSA includes “any employee:”
(1) Compensated on a salary or fee basis at a rate of not less than $455 per week ... exclusive of
board, lodging, or other facilities;
(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.
29 C.F.R. § 541.200.
Regarding the first requirement that the project supervisor is compensated on a salary or fee
basis at a rate of not less than $455 per week, exclusive of board, lodging, or other facilities, you
request that we assume the project supervisor meets this requirement and is paid accordingly.
Therefore, we focus on whether the position also meets the primary duty test in determining
whether the project supervisor qualifies for the administrative exemption. To satisfy the primary
duty test, the project supervisor’s primary duty must include both the performance of office or
non-manual work directly related to the management or general business operations of the
employer and the exercise of discretion and independent judgment with respect to matters of
significance.
As stated in 29 C.F.R. § 541.201(a):
To qualify for the administrative exemption, an employee’s 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 ... To meet this
requirement, an employee must perform work directly related to assisting with the running or
servicing of the business, as distinguished, for example, from working on a manufacturing
production line or selling a product in a retail or service establishment.

Additionally, as stated in 29 C.F.R. § 541.201(b):
Work directly related to management or general business operations includes, but is not
limited to, work in functional areas such as tax; finance; accounting; budgeting; auditing;
insurance; quality control; purchasing; procurement; advertising; marketing; research; safety
and health; personnel management; human resources; employee benefits; labor relations;
public relations; government relations; computer network; internet and database
administration; legal and regulatory compliance; and similar activities.
We recently issued an opinion, Wage and Hour Opinion Letter January 16, 2009, in which we
concluded that project superintendents employed by a commercial construction company qualify
as exempt administrative employees because their primary duties appeared “to relate directly to
the management or general business operation of [the employer], i.e., they are responsible for
overseeing a commercial construction project from start to finish.” (citing 29 C.F.R. §
541.201(a)-(c)). As we explained in Wage and Hour Opinion Letter January 16, 2009, recent
decisions in the federal courts demonstrate that the application of these requirements is highly
fact specific. See Gottlieb v. Construction Servs. & Consultants, Inc., No. 05-14139, 2006 WL
5503644, at *6-7 (S.D. Fla. July 24, 2006) (project superintendents whose primary duty
“involved producing the product their company existed to market” rather than servicing the
company itself, and where “all ‘matters of significance’ were determined by [the project
supervisor’s] superiors” were not exempt administrators).
In Gottlieb, the project superintendent did not qualify for the administrative exemption because,
in part, his duties were primarily to inspect the work of subcontractors to ensure compliance with
the builder’s plans to schedule the subcontractors and supplies to ensure they were both in place
at the proper time. See 2006 WL 5503644, at *6; 29 C.F.R. § 541.203(g) (“[o]rdinary inspection
work generally does not meet the duties requirements for the administrative exemption”); 29
C.F.R. § 541.202(e) (“the exercise of discretion and independent judgment must be more than
the use of skill in applying well-established techniques, procedures, or specific standards
described in manuals or other sources”). The fact that the project superintendent’s work was
important to the company, affecting its profitability and reputation, was not dispositive. See
Gottlieb, 2006 WL 5503644, at *6 (citing Sack v. Miami Helicopter Svc., Inc., 986 F. Supp.
1456, 1469 (S.D. Fla. 1997)); 29 C.F.R. § 541.202(f).
From your letter describing the project supervisor’s duties, it appears that an overwhelming
majority of his/her work is non-manual work directly related to the management or general
business operations of the employer, a homebuilding company, and includes tasks such as
budgeting, auditing, quality control, purchasing, procurement, safety and health, personnel
management, human resources, labor relations, public relations, government relations, legal and
regulatory compliance, and similar activities.
To begin, the actual manual work of constructing the home is outsourced to subcontractors and
suppliers. As previously stated, the project supervisor supervises and coordinates the
construction of the home and serves as the homebuilding company’s representative at the
worksite in dealings with subcontractors, suppliers, customers, and government inspectors.

In your letter, you indicate that the project supervisor spends more than half of his/her time
directing, managing, scheduling, and paying subcontractors and suppliers. In discharging these
duties, the project supervisor evaluates the quality and efficiency of the subcontractors’ and
suppliers’ work, is authorized to stop their work to correct any observed deficiencies, and may
require them to remove any of their employees from the worksite. If necessary, the project
supervisor may recommend the dismissal of subcontractors and suppliers whose work is not
satisfactory. When a particular subcontractor’s contract is up for renewal, the project supervisor
provides significant input as to who will be re-contracted for future services.
Additionally, the project supervisor reviews and modifies new home plans, making sure there are
no conflicts between the plans and the actual construction of the home. The project supervisor
ensures that each home meets all safety, quality, and legal requirements; ensures each home is
ready for inspection; and negotiates the best solution for any issue that may arise with a building
inspector, subcontractor, or supplier. Also, the project supervisor schedules the subcontractors
and suppliers and commits the homebuilding company to pay when appropriate.
Furthermore, the project supervisor serves as each homebuyer’s primary contact in dealing with
the construction of the home and also meeting with prospective customers to explain the
construction process. The project supervisor reviews the initial home construction budget to
ensure the estimates are reasonable and tracks the construction costs against the original
estimates once construction begins. Finally, the project supervisor is not typically subject to any
on-site supervisors by any other company employee. It appears that, like the project
superintendents in Wage and Hour Opinion Letter January 16, 2009, the project supervisors
oversee the commercial construction project from start to finish, using a similar amount of
discretion and independent judgment when carrying out their duties. The exercise of discretion
and independent judgment implies that the project supervisors make independent choices
concerning matters of significance, such as whether to depart from prescribed standards or
permitted tolerances. See 29 C.F.R. § 541.202(a)-(c). Unlike in Gottlieb, the primary duties of
the project supervisors seem to be more involved than just inspecting work to ensure compliance
with the builders’ plans and scheduling subcontractors and supplies. Therefore, it appears the
project supervisor’s primary duties meet the requirement of being office or nonmanual work
directly related to the management or general business operations of the employer as stated in 29
C.F.R. § 541.200(a)(2) and further described in 29 C.F.R § 541.201.
As stated in 29 C.F.R. §541.202(a):
To qualify for the administrative exemption, an employee’s primary duty must include the
exercise of discretion and independent judgment with respect to matters of significance. In
general the exercise of discretion and independent judgment involves the comparison and the
evaluation of possible courses of conduct, and acting or making a decision after the various
possibilities have been considered. The term “matters of significance” refers to the level of
importance or consequence of the work performed.
Additionally, as stated in 29 C.F.R. § 541.202(b):
Factors to consider when determining whether an employee exercises discretion and
independent judgment with respect to matters of significance include, but are not limited to:

whether the employee has authority to formulate, affect, interpret, or implement management
policies or operating practices; whether the employee carries out major assignments in
conducting the operations of the business; whether the employee performs work that affects
business operations to a substantial degree, even if the employee’s assignments are related to
operation of a particular segment of the business; whether the employee has authority to
commit the employer in matters that have significant financial impact; whether the employee
has authority to waive or deviate from established policies and procedures without prior
approval; whether the employee has authority to negotiate and bind the company on
significant matters; whether the employee provides consultation or expert advice to
management; whether the employee is involved in planning long- or short-term business
objectives; whether the employee investigates and resolves matters of significance on behalf
of management; and whether the employee represents the company in handling complaints,
arbitrating disputes or resolving grievances.
“The exercise of discretion and independent judgment implies that the employee has authority to
make an independent choice, free from immediate direction or supervision. However,
employees can exercise discretion and independent judgment even if their decisions or
recommendations are reviewed at a higher level.” 29 C.F.R. § 541.202(c).
It appears the project supervisor’s primary duties involve the exercise of discretion and
independent judgment with respect to matters of significance. For example, in your letter, you
indicate that the project supervisor has significant authority to adjust the construction process as
necessary when, in his/her opinion, such a change is needed to meet any safety, quality, or legal
requirements, or to ensure a high quality home is provided within the estimated budget, and to
commit the homebuilding company to any payments that are required to complete such an
alteration; to negotiate solutions to issues raised by the building inspector, subcontractors, or
suppliers; to schedule subcontractors or suppliers; to stop their work when it is unsatisfactory; to
order the removal of their employees when necessary; to recommend the dismissal of a
subcontractor or supplier if appropriate; to commit the homebuilding company to any payments
to subcontractors or suppliers for any work or building materials provided; and to stop payment
to any subcontractor or supplier when appropriate. Additionally, as previously stated the project
supervisor serves as the homebuilding company’s sole representative at the worksite and must
deal with any issues, concerns, unforeseen events, or problems that may arise during the entire
homebuilding process. Thus, the project supervisor has the authority to formulate, affect,
interpret, and implement management policies and operating practices; carry out major
assignments in conducting the operations of the homebuilding company; perform work that
affects business operations to a substantial degree; commit the employer in matters that have
significant financial impact; waive or deviate from established policies and procedures without
prior approval; negotiate and bind the company on significant matters; and investigate and
resolve matters of significance on behalf of the company. Therefore, it appears the project
supervisor’s primary duties meet the requirement of including the exercise of discretion and
independent judgment with respect to matters of significance as stated in 29 C.F.R. §
541.200(a)(3) and further described in 29 C.F.R § 541.202.
It is our opinion that the project supervisor position is exempt from the FLSA’s minimum wage
and overtime requirements as an employee employed in a bona fide administrative capacity,
provided that the salary basis requirement is met.

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 issue
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,

Alexander J. Passantino
Acting Administrator
*Note: The actual name(s) was removed to preserve privacy in accordance with 5 U.S.C. §
552(b)(7).