Labor & Employment Law

Snake Eyes Comes Up For Plaintiffs In Casino Exemption/Overtime Case

By Mark E. Tabakman, Esq.

A class of table games supervisors sued Harrah's, claiming they were non-exempt and entitled to overtime.  The casino defended by asserting that they were exempt under the administrative exemption.  This exemption remains (even after the August 2004 revisions to the FLSA regulations) the grayest and most difficult (for an employer) to prevail upon in an overtime claim.  Interestingly, in this case, the employer did prevail.

The supervisors performed a number of functions that were non-manual in nature, which were important to the casino's general business operations.   They regularly opened and closed the tables games, approved customer purchases of $10,000 or more in gaming chips, monitored the dealers and the customers and rated the customers' activities at the tables.  This last activity was important in determining whether and how much to "comp" customers, which are, beyond dispute, the lifeblood of a casino's operation.  They also participated in the hiring and development of dealers and their ratings of dealers impacted on whether dealers received raises and the amount of those raises.

Although the plaintiffs argued that their tasks were predominantly clerical in nature, the Court rejected that contention.  The Court stressed the nature of their work as it related to Harrah's customers and also highlighted the supervisors' role in developing, training and disciplining dealers as well as being involved in determining their compensation.  These were clearly administrative functions under the FLSA regulations, according to the Court.

The exercise of discretion and independent judgment is also essential to meeting the administrative test and this is often the Titanic-like iceberg that employer arguments for exemption always run smack into.  In this case, the employer argued that the supervisors displayed the use of discretion in the coaching, discipline and appraisal of dealers, especially on their performance, as well as deciding whether and when to issue comps to customers and when to open/close table games.  The plaintiffs did not directly dispute this, but contended that they performed these functions so infrequently as to render them only "occasional" duties.  The Court disagreed, holding that this utilization of independent judgment need not be exercised on a daily basis, but, rather, when the particular situation called for it.

This case provides valuable guidance for employers on the meaning of the administrative exemption.  Although still the most difficult and esoteric of the so called white collar exemptions to meet, there is still hope.   So, let it ride! 

Full post as published by Wage & Hour - Development & Highlights on June 30, 2008 (boomark / email).