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March 12th, 2013
When Do Writers Fall Within the FLSA “Creative” Exemption?
The Fair Labor Standards Act (FLSA) establishes minimum wage and overtime pay standards for employees. How you classify employees under the FLSA is critical: there's a lot of money involved, and a mistake can lead to audits, class action lawsuits, and unnecessary expense. Two recent cases have focused on an especially difficult area of classification law - the so-called "creative professional exemption." It's an area of particular import for owners and managers in creative industries.
Wang v. Chinese Daily News. A closely watched case in the media world, in Wang, the Chinese Daily News classified a group of its writers as "exempt" under the "creative professional exemption." The classification relieved the employer of the duty to pay the writers overtime and other benefits. The writers disagreed with the classification and sued to recover, among other things, overtime pay, and compensation for meals and rest breaks. To bring more pressure on the company, they asked the court to certify their claims as a class action.
The trial court certified the plaintiffs as a class action and applied the rules governing the "creative professional exemption." To be properly exempt under the creative professional exemption, an employee must meet the minimum salary requirement and his or her "primary duty" must be "the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor as opposed to routine mental, manual, mechanical or physical work." The court determined in this case that the writers should not have been classified as exempt; and that they should have received overtime pay and other benefits.
The court said employees of newspapers and other media are not exempt creative professionals if they "only collect, organize and record information that is routine or already public, or if they do not contribute a unique interpretation or analysis to a news product. Thus, for example, newspaper reporters who merely rewrite press releases or who write standard recounts of public information by gathering facts on routine community events are not exempt creative professionals." The trial court considered the "sophistication" of the articles and found them lacking: these writers worked at an intense pace and their primary duties did not involve conducting investigative interviews, analyzing and interpreting public events, writing editorial opinion or other commentary. Instead, they forged "standard recounts of public information [created] by gathering facts on routine community events."
After a 16 day jury trial and a three day trial before the judge, the plaintiffs were awarded $7.7 million in damages. A federal appeals court affirmed the decision. But the Chinese Daily News appealed to the U.S. Supreme Court. The Supreme Court overturned the decision and sent the case back to the appeals court. As a result of an intervening change in class action law, the appeals court "vacated" the trial court's class certification order (decision here). The trial court will now reconsider the class certification issue. We will continue to follow this important media company litigation and report.
Chicago Tribune case. In another case involving overtime claims by journalists against a media company, the Chicago Tribune reportedly agreed last week to pay $660,000 to settle a class action by 46 reporters who worked for its Trib Local suburban editions. As in the Wang case, the issue in the Trib Local case was whether the media company had correctly applied the "creative professional exemption" to its writers.
These cases draw attention to the critical issue of whether journalists and other employees who create media content have been properly classified as exempt or are entitled to overtime pay, and the ability of plaintiffs to use the class action vehicle to pursue these kinds of claims. As the cases make clear, applying classification rules is difficult, aggrieved employees are willing to litigate, and the stakes are high. If you have any questions about these cases, about employee classifications, or about other employment law matters, please contact Wendy Stryker at (212) 705 4838 or email@example.com; Gavin McElroy at (212) 826 5541 or firstname.lastname@example.org; or any other member of the Frankfurt Kurnit Executive Compensation and Employment Group.
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