Courts Asked To Determine Whether Accountants Are Entitled to Overtime Pay Under FLSA

With tax season underway, it is a good time to consider whether junior accountants or associate accountants are properly classified as exempt or nonexempt from overtime under the Fair Labor Standards Act (“FLSA”).  According to the Department of Labor regulations, 29 C.F.R. 541.301(e)(5):

Certified public accountants generally meet the duties requirements for the learned professional exemption.  In addition, many other accountants who are not certified public accountants but perform similar job duties may qualify as exempt learned professionals.  However, accounting clerks, bookkeepers and other employees who normally perform a great deal of routine work generally will not qualify as exempt professionals.

Regardless of the title used, determination of whether an accountant is exempt from the FLSA is made by the courts by analyzing actual job duties.  If the job does not require a CPA license and the accounting employees are not given independent discretion in decision-making, junior accountants or associate accountants could be entitled to overtime pay for hours they work over 40 in a given week.  The key inquiry is whether work done is routine or that of a learned professional.  The question is worth examining because misclassification of a non-CPA accountant as “exempt” from the FLSA can be costly, subjecting an employer to back pay liability for overtime, as well as liquidated damages,  leading to a substantial monetary recovery by the employee.

Recently, accounting firms and financial services companies have been subject to lawsuits, some of which are class actions, brought by junior accountants and associate accountants claiming they were misclassified as nonexempt, and seeking to recover unpaid overtime.  In one case, decided in December 2009, a federal judge in Connecticut declined to dismiss a wage and hour case brought by JP Morgan Chase accountants who worked in their hedge fund services business.  The accountants claimed they were merely “internet age bookkeepers” whose positions did not require knowledge of accounting, thus making them eligible for paid overtime.  The court determined that the nature of their primary duties was a question of fact to be determined at trial.  A jury now will decide whether these accountants were or were not exempt.