The United States Court of Appeals for the Second Circuit recently held that a group of entry level accountant employees were not misclassified as learned professionals under the Fair Labor Standards Act (FLSA).  The employees worked as "Audit Associates," which required them to regularly work more than forty hours per week.  They were denied overtime compensation for those hours, however, on the basis that their positions qualified for the learned professional exemption from the FLSA's overtime provisions.  The employees filed suit alleging that they were misclassified and denied overtime.  The trial court disagreed and granted the employer's motion for summary judgment on the ground that the "Audit Associate" position was properly classified as exempt.  The employees appealed the trial court decision to the Second Circuit.

On review, the court affirmed the lower court decision, agreeing that the "Audit Associate" position was properly classified under the learned professional exemption.  For a position to be properly classified under that exemption, certain salary and duties requirements must be met.  With respect to the latter, the following elements must be met:  (1) The work must be intellectual in character and require the consistent exercise of discretion and judgment; (2) the position must involve work in a field of science or learning; and (3) the work must be of a type that requires specialized academic training to occur prior to entry into the field.

The employees claimed that elements (1) and (3) listed above were unmet in this case, but the court disagreed, noting that the plaintiffs had confused being an entry-level member of a profession with not being a professional at all.  With respect to element (1), the court noted that while the "Audit Associate" position was the lowest on the audit team, employees working in that position relied on advanced knowledge of their specialty to exercise discretion and judgment that is characteristic of the accounting field doing tasks like conducting client inventory observation (sometimes without any more senior auditor present) and walkthroughs of financial reporting procedures, and preparing documents that review audit procedures and client controls.  With regard to element (3) above, the court reasoned that the evidence showed that this requirement was met because employer's requirements that Audit Associate candidates are generally required to be either eligible or nearly eligible to become Certified Public Accountants (CPAs) fulfilled the FLSA's mandate that a learned professional position have a few years of relevant, specialized training, which may include a bachelor's degree in the applicable field.  As such, the court concluded, summary judgment was proper and these entry-level accountants were not entitled to overtime compensation.   Pippins v. KPMG LLP