FLSA2006-23 — Acquisition, relocation, and property management agents for land acquisition firm under section 13(a)(1)

U.S. Department of Labor
Employment Standards Division
Wage and Hour Division

June 29, 2006 FLSA2006-23

Dear Name*:

This is in response to your letter inquiring whether Acquisition Agents, Relocation Agents, and
Property Management Agents for a land-acquisition service firm are exempt from the minimum wage
and overtime requirements of the Fair Labor Standards Act (FLSA) as administrative employees
under section 13(a)(1). It is our opinion that the three categories of employees qualify as
administrative employees.

Your client is a land-acquisition service that assists government agencies in the acquisition of
property for public works projects such as airports, highways and rapid transit systems. The
employees assist the government agencies in complying with federal funding requirements relating
to eminent domain that require public agencies to acquire real property fairly, expeditiously, and cost
effectively, and to ensure that displaced persons do not suffer disproportionate injuries as a result of
the public works. Many of the employees in question hold real estate licenses and/or possess a
baccalaureate degree in real estate or law-related studies. You state that the employees fulfill the
minimum salary requirements for exemption and are paid on a salary basis. See 29 C.F.R.
§ 541.600 (copy enclosed).

Acquisition Agents – Your client employs several Acquisition Agents (AAs) to perform various tasks
relating to the acquisition of property for the employer’s clients. The AAs are responsible for
purchasing the property by negotiating with the property owners, analyzing property appraisals, and
making recommendations to the client using real estate practices, legal concepts, governmental
standards, and regulations. The AAs represent the client in negotiations with the property owners
and attorneys. They regularly recommend to the client whether a reasonable compromise is likely
and further negotiations should be pursued, or whether to pursue condemnation litigation. If the
property owner has a legitimate basis for seeking a substantially higher amount, the employees can
recommend such increases to the client. If the negotiation process fails, the AAs prepare the lawsuit
packages for condemnation proceedings, assist the client’s attorney, and serve as an expert witness
in mediation or trial. The AAs are also responsible for preparing for the real estate closing, including
preparing closing documents.

Relocation Agents – Relocation Agents (RAs) assist in property appraisal and provide relocation
assistance to the owners and tenants of the property purchased by the client. The RAs evaluate
possible replacement properties and make recommendations as to the amount of the “replacement
housing payment” to be paid to the displaced property owner. The RAs conduct research and
analyze the best options for the property owners. They also analyze possible alternative properties
under federal law. The RAs provide advice to the property owner on the moving process and any
relocation assistance that might be available to them. The RAs can also make recommendations to
the client to offer additional payments to the property owner or to extend the occupancy period given
to the displaced property owner. They represent the client in appeals of the relocation payment
amount, serving as expert witnesses in administrative appeals and/or in litigation. Where the tenant
of the property is a business, the proceedings can be especially complicated because there often is
tenant-installed equipment or machinery and/or significant build-outs by the tenant. In such cases,
the relocation benefits can be as much as a million dollars, and RAs have saved clients hundreds of
thousands of dollars at a time in appeals of business relocation payments. The RAs also assist the
property owner in preparations for the property closing.

Property Management Agents – The Property Management Agents (PMAs) serve as spokespersons
and representatives of the client. They are responsible for dealing with governmental authorities,
utility companies, contractors and other consultants during the conversion of the property for public
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U.S. Department of Labor
Employment Standards Division
Wage and Hour Division

use. They are responsible for contacting and developing rapport with various local officials and
explaining the project in order to develop good relationships and ensure compliance with the law.
Additionally, they must protect the client’s investment by working with the officials to keep the
property safe from possible vandals and by making police reports in the event of vandalism. The
PMAs work with environmental consultants to address environmental issues such as the presence of
asbestos and to ensure compliance with environmental protection laws. The PMAs coordinate all of
their work and develop an Operations and Maintenance Plan to ensure that the consultants and
contractors follow proper procedures. The PMAs also coordinate and direct the demolition of the
property, including preparing detailed specifications prior to the bidding, advertising for bids, and
conducting pre-bid meetings to explain the project prior to accepting bids for the demolition work.
They have authority to use their knowledge and experience with contractors to select preferred
contractors from an approved list or to shop for the best price for the work. After selection, the PMAs
oversee and evaluate the work of all contractors.

Please note that the Department issued revisions to the Part 541 regulations exempting certain
executive, administrative, and professional employees and these revisions were published as a final
rule in the Federal Register on April 23, 2004 (69 Fed. Reg. 22122). The revised Part 541
regulations went into effect on August 23, 2004. We have answered your letter based on the new
regulations.

Under the Department’s regulations, an exempt administrative employee is an 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.

29 C.F.R. § 541.200(a) (copy enclosed). The regulations define “primary duty” as “the principal,
main, major, or most important duty that the employee performs.” 29 C.F.R. § 541.700(a) (copy
enclosed).

To qualify for the administrative exemption, an employee’s primary duty must be “directly related to
management or general business operations.” This “refers to the type of work performed by the
employee. 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.” 29 C.F.R.
§ 541.201(a) (copy enclosed). Work that is “directly related to management or general business
operations includes”:

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.

29 C.F.R. § 541.201(b). Additionally, as described in 29 C.F.R. § 541.201(c), an employee who
performs “work directly related to the management or general business operations of the employer’s
customers” qualifies for the exemption. The fact that the work is performed for the employer’s
government clients, rather than the employer, does not affect the employee’s exemption status. 29
C.F.R. § 541.201(c).

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U.S. Department of Labor
Employment Standards Division
Wage and Hour Division

Furthermore, the employee’s primary duty must involve the exercise of discretion and independent
judgment as to significant matters. The regulation gives guidance on what may be considered the
exercise of discretion and independent judgment. See 29 C.F.R. § 541.202 (copy enclosed). In
determining whether the employee’s work meets this threshold, factors to consider “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.

29 C.F.R. § 541.202(b).

Additionally, 29 C.F.R. § 541.203 (copy enclosed) lists several examples of jobs and duties that
generally fulfill the requirements for the administrative exemption. Included in the list of exempt jobs
are insurance claims adjustors, whose duties include inspecting property damage, evaluating and
making recommendations regarding coverage of claims, negotiating settlements, and making
recommendations regarding litigation, and purchasing agents, who have the ability to bind the
company on significant purchases. 29 C.F.R. § 541.203. This list also includes examples of jobs and
duties that do not generally qualify for exempt status because they do not fulfill all the requirements
of the exemption. Id. These nonexempt positions include ordinary inspection work and public sector
inspectors and investigators whose job duties do not involve the exercise of discretion and
independent judgment; rather, their work involves the use of technical skills and well-established
techniques and procedures. Id.

Acquisition Agents
: Based on the facts you have provided, the Acquisition Agents qualify for the
administrative exemption. The type of work performed by the AAs is directly related to the general
business operations of the employer’s clients. As noted in 29 C.F.R. § 541.201(b), work in the
functional areas of purchasing, procurement, and legal and regulatory compliance qualifies as work
that is directly related to management or general business operations. Additionally, the many
responsibilities of the AAs meet the discretion and independent judgment standard. The AAs
interpret management policies, negotiate, consult with and provide expert advice to management,
and bind the client financially on significant matters, as discussed in several of the factors found in
29 C.F.R. § 541.202(b). See Wage and Hour Opinion Letter May 14, 1980 (copy enclosed).
Furthermore, the AAs are similar to the insurance claims adjustors listed as exempt in 29 C.F.R.
§ 541.203, because they are responsible for inspecting and determining the value of property
including unique real property, negotiating settlements, and making recommendations regarding
litigation when necessary.

Relocation Agents
: Similarly, the Relocation Agents qualify for the administrative exemption. The
type of work performed by the RAs is directly related to the general business operations of the
employer’s clients. Like the AAs, the RAs work in the functional areas of procurement, government
relations, and legal and regulatory compliance, which are management and general business
operations functions. 29 C.F.R. § 541.201(a). The RAs exercise discretion and independent
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U.S. Department of Labor
Employment Standards Division
Wage and Hour Division

judgment as to significant matters by analyzing housing alternatives, recommending “replacement
housing payments,” and advising the client on significant financial matters. 29 C.F.R. § 541.202(b).
The RAs are also similar to the insurance claims adjustors listed as exempt in 29 C.F.R. § 541.203
because they are responsible for inspecting property, evaluating and making recommendations
regarding the “replacement housing payment,” negotiating settlements with property owners, and
representing management in any appeals.

Property Management Agents: The Property Management Agents are also exempt administrative
employees. A PMA’s primary duty of serving as a liaison between the client and various government
agencies qualifies as management and general business operations because it involves government
relations and legal and regulatory compliance. In addition, their work during the bid process and in
the selection of contractors relates to purchasing and procurement, and their oversight activities
involve quality control. The PMAs implement management policies, carry out major assignments,
and negotiate on behalf of the company on significant matters, thereby fulfilling the exercise of
discretion and independent judgment requirement. 29 C.F.R. § 541.202(b).

Therefore, it is our opinion that the Acquisition Agents, Relocation Agents, and Property
Management Agents qualify as exempt administrative employees and are exempt from the minimum
wage and overtime requirements of the FLSA pursuant to section 13(a)(1).

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 the above is responsive to your inquiry.

Sincerely,

Alfred B. Robinson, Jr.
Acting Administrator

Enclosures:
29 C.F.R. § 541.200-.203
29 C.F.R. § 541.600
29 C.F.R. § 541.700
Wage and Hour Opinion Letter May 14, 1980

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

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