Are Recruiters Exempt From FLSA Wage and Hour Laws?

Recruiters are often exempt from Federal wage and hour premium overtime requirements as exempt administrative employees.  However, as with all exempt employee determinations, their status is based on the particular facts and circumstances of each case rather than a title or general rule.

A Recruiter’s duties are to find and place qualified individuals with client companies.  The job duties may include sourcing, screening, interviewing, contact with client managers, negotiation of terms of employment, post hire communications, getting industry referrals, maintaining relationship with referral sources, customer service.

Pursuant to the Fair Labor Standards Act (“FLSA”), employees must be paid time and a half for work over forty (40) hours in a workweek.  Certain employees are exempt from this requirement, however, including those persons “employed in a bona fide executive, administrative or professional capacity”.  An employer bears the burden of proving by clear and convincing evidence that an employee’s job is exempted.

Whether Recruiters are exempt usually is based on an analysis of the administrative exemption.  In order to qualify for that exemption, an employee must (1) be compensated on the salary or fee basis of at least $455 per week; (2) have a primary duty of 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.  Salary alone is not dispositive under the FLSA and employees must satisfy all these requirements commonly known as the duties and salary tests.

Administrative workers are differentiated from production workers in that administrative workers do not engage in production aspects of the business.  Recruiters working for staffing firms or personnel agencies may be considered to be part of the production work of that enterprise and hence not exempt.  However, since the test permits work performed for the customers the administrative exemption may be satisfied provided all the other requirements have been met.

Generally the exercise of discretion and independent judgment “involves the comparison and evaluation of possible courses of conduct, and acting or making decision after the various possibilities have been considered.”

Sufficient discretion may be exercised even when the decisions of an employee are subject to review.  The Recruiter need not make the ultimate hiring decision and recommendation with a history of acceptance are ofttimes sufficient.  With regard to Recruiters, the meaning of the regulation depends on the amount of selectively exercised in matching persons seeking employment with requirements of the job opening and deciding which candidate to send to any particular employer for consideration, as opposed to referring to the employer several prospects who generally meet the qualifications for the job.  Other case law regulatory interpretation indicates that rather than selecting a single candidate, a Recruiter may still be exempt if they send one or more candidates who best fit the position as judged amongst candidates who are otherwise qualified.  A determination of whether a candidate would be a good fit based on knowledge of the client’s personality and intangible aspects of the candidate can help to make their independent judgment and discretion prong of the test.

Some case law differentiates between Recruiters as entry level non-exempt employees and those with experience who have been trained in the aspects of their jobs.

In cases where the Recruiter is a non-exempt employee they must be paid time and a half the regular rate of pay for all hours worked over forty (40) in a workweek.  The regular rate would include commissions and bonuses earned during that period.

Not all Recruiters, including those who simply access a database and send all qualified candidates to the client for the client to make a selection, will be considered exempt. 

The determination of whether a particular Recruiter is exempt or non-exempt requires an analysis of a number of factors such as those indicated above.  Personnel agencies and staffing firms are urged to consult with competent counsel prior to making any such determination.