FLSA2018-13 — Fraud/theft analysts and agents under section 13(a)(1)

U.S. Department of Labor Wage and Hour Division
Washington, D.C. 20210

FLSA2018-13
January 5, 2018
Dear Name*:
This letter responds to your request that the Wage and Hour Division (“WHD”) reissue Opinion
Letter FLSA2009-32. On January 16, 2009, then-Acting WHD Administrator Alexander J.
Passantino signed the opinion letter as an official statement of WHD policy. On March 2, 2009,
however, WHD withdrew the opinion letter “for further consideration” and stated that it would
“provide a further response in the near future.”
We have further analyzed Opinion Letter FLSA2009-32. From today forward, this letter, which
is designated FLSA2018-13 and reproduces below the verbatim text of Opinion Letter
FLSA2009-32, is an official statement of WHD policy and an official ruling for purposes of the
Portal-to-Portal Act, 29 U.S.C. § 259.
I thank you for your inquiry.

Bryan L. Jarrett
Acting Administrator

Dear Name*:
This is in response to your request for an opinion regarding whether five of your client’s
positions qualify for exemption under section 13(a)(1) of the Fair Labor Standards Act (FLSA).
∗

Based on the information you furnished about the employees’ job descriptions, we believe the
Field Information Analyst (FIA) and the Supervisory Special Agent (SSA) positions qualify for
the administrative and executive exemptions, respectively. The Analyst 1, Analyst 2, and
Special Agent (SA) positions, however, do not appear to qualify for the administrative
exemption.

∗
Unless otherwise noted, any statutes, regulations, opinion letters, or other interpretive material cited in this letter
can be found at www.wagehour.dol.gov.

You state that your client combats fraud and theft in the insurance industry by gathering,
analyzing, and distributing information to member companies and law enforcement agencies;
conducting investigative operations; providing educational services; and communicating
messages on theft and fraud to member companies and the public.
Analyst 1
The primary duties of Analyst 1 are using analytical methodologies and technical skills to
recognize and extract relevant information from internal and external sources, evaluating the
pertinence and accuracy of the information, analyzing and predicting patterns of activity that
indicate potential fraud, and preparing reports documenting the results. Your client, law
enforcement agencies, and member companies use the information to make decisions on whether
to pursue criminal charges against perpetrators.
Other duties include: handling assignments that are fluid in nature and lack clear steps to reach
the stated objective; developing self-initiated inquiries related to industry issues that impact
member companies; presenting findings and proposed recommendations; advising your client’s
management team on administrative issues, including appropriate allocation of resources; and
determining new procedures to prevent, detect, and investigate fraud. Analyst 1 develops,
manages, documents, and utilizes professional relationships, and works closely with member
companies, law enforcement agencies, and others.
Analyst 2
The primary duties of Analyst 2 are similar to Analyst 1, except Analyst 2 does not develop self-
initiated inquiries related to industry issues. Other duties of Analyst 2 include directing project
resources if assigned a leadership role for a particular project.
Field Information Analyst
The FIA’s primary duties are managing the collection of information and coordinating the
collection efforts of area personnel, which include SAs and special investigative units of member
companies, with minimal supervision and guidance. The FIA’s other duties include evaluating
and approving information entered into a database by area personnel to ensure accurate and
relevant information; reviewing SA reports to capture items of specific value; identifying
fraudulent schemes; producing case assessment reports; reviewing SA recommendations; setting
a security designation on reports; training and mentoring new analysts; evaluating and assisting
the development of new software applications to improve investigative functions; marketing
strategic and tactical information products to member companies; advising management on
administrative issues such as appropriate allocation of resources; developing self-initiated
inquiries related to industry issues and presenting findings and proposed recommendations; and
determining new procedures to prevent, detect, and investigate fraud.
Supervisory Special Agent
The SSA’s primary duty is the management of the data entry department for the U.S. and Mexico
border, including the supervision of more than two full-time data entry personnel. The SSA’s
other duties include ensuring the timely and accurate collection and entry of information into a

database; training data entry personnel; handling all personnel decisions; monitoring
subordinates’ work load; and advising management on administrative issues such as the
appropriate allocation of resources.
Special Agent
The SA’s primary duties are initiating and conducting criminal investigations, collecting and
analyzing relevant data, and deciding which cases to submit to law enforcement and/or
prosecutors for consideration of legal action. The SA’s other duties include testifying as an
expert witness; interacting with member companies, law enforcement, and government agencies
on behalf of your client; providing training to member companies and law enforcement agencies;
identifying new clients; advising management on administrative issues such as appropriate
allocation of resources; and determining new procedures to prevent, detect, and investigate
crime.
Section 13(a)(1) of the FLSA provides a minimum wage and overtime exemption for executive
and administrative employees as defined in 29 C.F.R. Part 541. An employee employed in a
bona fide administrative capacity may qualify for the administrative exemption if the duties and
salary tests are met. Under 29 C.F.R. § 541.200(a), “employee employed in a bona fide
administrative capacity” means “any employee”:
(1) Compensated on a salary or fee basis at a rate of not less than $455 per week;
(2) Whose primary duty is the 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.
We note the salary and actual duties performed, not the occupational title and job classification,
will determine whether the employee is exempt. See 29 C.F.R. § 541.2. For purposes of this
opinion, we assume the employees in question receive at least $455 per week on a salary basis.
With regard to the type of work that qualifies for the administrative exemption,
[t]he phrase “directly related to the management or general business operations” refers to the
type of work performed by the employee. To meet this requirement, an employee must
perform work directly related to assisting with the running or servicing of the business, as
distinguished, for example, from working on a manufacturing production line or selling a
product in a retail or service establishment.
29 C.F.R. § 541.201(a). Examples of management or general business operations work include
quality control, marketing, research, personnel management and public relations. 29 C.F.R. §
541.201(b).
Under the second criteria for the administrative exemption test,

an employee’s primary duty must include the exercise of discretion and independent
judgment with respect to matters of significance. In general, the exercise of discretion and
independent judgment involves the comparison and the evaluation of possible courses of
conduct, and acting or making a decision after the various possibilities have been considered.
The term ‘matters of significance’ refers to the level of importance or consequence of the
work performed.
29 C.F.R. § 541.202(a). Section 541.202(c) notes, “[t]he exercise of discretion and independent
judgment implies that the employee has the authority to make an independent choice, free from
immediate direction or supervision.” The regulations cite several factors “to consider when
determining whether an employee exercises discretion and independent judgment with respect to
matters of significance”:
whether the employee has authority to ... interpret, or implement management policies or
operating practices; ... whether the employee performs work that affects business operations
to a substantial degree, even if the employee’s assignments are related to operation of a
particular segment of the business; ... [and] whether the employee provides consultation ... to
management.
29 C.F.R. § 541.202(b).
The preamble to the Department’s 2004 revision of Part 541 notes that federal courts generally
find that although a case by case analysis is required, employees meeting two or three of the
indicators in 29 C.F.R. § 541.202(b) exercise discretion and independent judgment. See 69 Fed.
Reg. 22,122, 22,143 (Apr. 23, 2004).
The administrative exemption thus has requirements pertaining to the “type of work performed”
and “the level of importance or consequence of the work performed.” Id. at 22,139. With regard
to the type of work performed, the preamble explains that “the administrative exemption covers
only employees performing a particular type of work – work related to assisting with the running
or servicing of the business.” Id. at 22,141. Furthermore,
this exemption is intended to be limited to those employees whose duties relate “to the
administrative as distinguished from the ‘production’ operations of a business.” Thus, it
relates to employees whose work involves servicing the business itself – employees who
“can be described as staff rather than line employees, or as functional rather than
departmental heads.”
Id. Although the production-versus-staff dichotomy is not dispositive, it “is still a relevant and
useful tool in appropriate cases to identify employees who should be excluded from the
exemption.” Id.
We believe that Analyst 1 and 2 provide ongoing, day-to-day gathering, analyzing, and reporting
of information rather than performance of administrative functions directly related to managing
your client’s business. See 29 C.F.R. § 541.201(b). From the information provided, the primary
duty of Analyst 1 and Analyst 2 is production of analytical reports. Such activity does not
directly relate to the management or general business operations of your client or your client’s
customers within the meaning of the regulations; rather they fall on the production side of the

production-versus-staff dichotomy. See Wage and Hour Opinion Letter FLSA2006-20NA (Sept.
8, 2006).
Similarly, the SA’s activities relate to the ongoing, day-to-day investigative services, rather than
administrative functions directly related to managing your client’s business or that of your
client’s customers. See 29 C.F.R. § 541.201(b). The SA’s primary duties are conducting
investigations and collecting and analyzing data. Such activities do not relate to the management
or general business operations of your client within the meaning of the regulations. See Wage
and Hour Opinion Letter FLSA2005-21 (Aug. 19, 2005). Like Analyst 1 and Analyst 2, the SA
generally works in furtherance of the primary mission of your client and therefore is engaged in
“production” work. Based upon the information provided, it is our opinion that Analyst 1,
Analyst 2, and the SA fail to meet the requirement of § 541.200(a)(2) and therefore do not
qualify for the administrative exemption under section 13(a)(1) of the FLSA.
We believe the FIA’s primary duties of managing the collection of intelligence information,
coordinating the collection efforts of area personnel and evaluating and approving information to
ensure accuracy and relevancy directly relates to the functional area of quality control. See 29
C.F.R. § 541.201(b). Therefore, the FIA’s primary duty involves the “performance of office or
non-manual work directly related to the management or general business operations of the
employer.” 29 C.F.R. § 541.200(a)(2). We also believe the FIA’s primary duty “includes the
exercise of discretion and independent judgment with respect to matters of significance.” 29
C.F.R. § 541.200(a)(3). Examples of duties indicating an FIA has “authority to ... interpret, or
implement management policies or operating practices” include evaluating and approving
information to ensure accuracy and relevancy, reviewing reports and recommendations, and
applying security designation on reports depending on the sensitivity of information. 29 C.F.R. §
541.202(b). In training and mentoring new analysts, the FIA “carries out major assignments in
... the operations of the business.” Id.
Based on the information provided, the FIA meets the requirements of § 541.200(a)(1)-(3).
Therefore, it is our opinion that the FIA qualifies for the administrative exemption.
Under 29 C.F.R. § 541.100(a), the term “employee employed in a bona fide executive capacity”
means “any employee”:
(1) Compensated on a salary basis at a rate of not less than $455 per week;
(2) Whose primary duty is management of the enterprise in which the employee is
employed or of a customarily recognized department or subdivision thereof;
(3) Who customarily and regularly directs the work of two or more other employees; and
(4) Who has the authority to hire or fire other employees or whose suggestions and
recommendations as to the hiring, firing, advancement, promotion or any other change
of status of other employees are given particular weight.
Under 29 C.F.R. § 541.100(a)(2), an exempt executive’s “primary duty” must be management of
the enterprise or of a customarily recognized department or subdivision of the enterprise.
Primary duty is defined in § 541.700(a) as the “principal, main, major, or most important duty

that the employee performs.” Furthermore, “a customarily recognized department or subdivision
must have a permanent status and a continuing function.” 29 C.F.R. § 541.103(a).
Management includes “training of employees; ... directing the work of employees; maintaining
production or sales records for use in supervision or control; appraising employees’ productivity
and efficiency for the purpose of recommending promotions or other changes in status; handling
employee complaints and grievances; [and] disciplining employees.” 29 C.F.R. § 541.102.
As to the fourth prong of the executive test, whether an employee’s suggestions and
recommendations are given “particular weight” will depend upon “whether it is part of the
employee’s job duties to make such suggestions and recommendations; the frequency with which
such suggestions and recommendations are made or requested; and the frequency with which the
employee’s suggestions and recommendations are relied upon.” 29 C.F.R. § 541.105.
The SSA’s primary duties, as you describe them, are included in the type of activities
constituting “management” within the meaning of the regulations. The SSA supervises at least
two full-time employees, trains employees, monitors employees’ work load, evaluates
employees, and handles grievances and disciplinary matters. Assuming the SSA manages “a unit
with a permanent status and function,” and the SSA either has the authority to hire or fire other
employees or the SSA’s recommendations regarding hiring, firing, and job advancement are give
“particular weight,” the SSA meets the requirements of 29 C.F.R. § 541.100(a)(2)-(4). 29 C.F.R.
§§ 541.103, 541.105. Therefore, it is our opinion that the SSA qualifies for the executive
exemption.
This opinion is based exclusively on the facts and circumstances described in your request and is
given based on your representation, express or implied, that you have provided a full and fair
description of all the facts and circumstances that would be pertinent to our consideration of the
question presented. Existence of any other factual or historical background not contained in your
letter might require a conclusion different from the one expressed herein. You have represented
that this opinion is not sought by a party to pending private litigation concerning the issues
addressed herein. You have also represented that this opinion is not sought in connection with
an investigation or litigation between a client or firm and the Wage and Hour Division or the
Department of Labor.
We trust that this letter is responsive to your inquiry.
Sincerely,

Alexander J. Passantino
Acting Administrator
*Note: The actual name(s) was removed to preserve privacy in accordance with 5 U.S.C. §
552(b)(7).