FLSA2018-15 — Product demonstration coordinators and section 13(a)(1)

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

FLSA2018-15
January 5, 2018
Dear Name*:
This letter responds to your request that the Wage and Hour Division (“WHD”) reissue Opinion
Letter FLSA2009-34. 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 FLSA2009-34. From today forward, this letter, which
is designated FLSA2018-15 and reproduces below the verbatim text of Opinion Letter
FLSA2009-34, 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 concerning whether out-of-town coordinators
(Coordinators) qualify for the administrative exemption under section 13(a)(1) of the Fair Labor
Standards Act (FLSA)
1
. Based on a review of the information provided, it is our opinion that the
Coordinators are exempt administrative employees.
You state that your client is a product-demonstration company (Company). Product-
demonstration companies implement product-demonstration events for national marketing firms
and manufacturers and coordinate the staffing of such events at the locations and during the

1
Unless otherwise noted, any statutes, regulations, opinion letters, or other interpretive material cited in this letter
can be found at www.wagehour.dol.gov.

times that the manufacturers or marketing firms request. For events conducted in locations
distant from the Company’s corporate offices, the Company employs Coordinators to perform
such functions as establishing and maintaining relationships with a large number of freelance
product demonstrators (demonstrators) and engaging them to staff these events.
The primary duties of a Coordinator include developing and implementing strategies for
recruiting and maintaining relationships with a large number of demonstrators including those
who possess special skills or credentials, such as foreign language proficiency or a specific
license or certification; determining the amount of effort to devote to expanding the pool of
demonstrators; ensuring that a demonstrator executes a contract before performing an event;
determining the order in which to staff events that are held in multiple sites in different locations;
acting as liaison to managers of retail locations where events are scheduled; developing a
contingency plan for demonstrator no-shows or late cancellations and any problems that may
arise; assessing the viability of a project and advising the Company on whether the client’s terms
and conditions are realistic in the Coordinator’s local market; keeping the Company apprised of
ideas or concerns expressed by demonstrators; receiving and resolving store or demonstrator
complaints; and facilitating the communication and transfer of information and client materials
between the Company and demonstrators. The Coordinators perform office or non-manual
work.
The Coordinator assumes complete responsibility for ensuring that the appropriate number of
demonstrators appear at the assigned events with the materials provided by the Company’s
clients. Occasionally, the Company provides the Coordinator with a list of demonstrators in the
Coordinator’s geographic territory. The Coordinator, however, decides whether to offer
opportunities to demonstrators from the Company list or to rely on his or her own local contacts.
The Coordinator develops and executes a strategy for any problems that may occur. For
example, if an event is at a remote location and the Coordinator receives feedback from
demonstrators that the client fee is insufficient, the Coordinator can negotiate with the Company
to seek higher demonstrator pay in order to attract enough demonstrators to conduct the event.
The Company does not provide Coordinators with guidelines or rules on how to perform their
duties. The Coordinators operate without any direct supervision and must rely on their own
judgment in performing their duties. In fact, the Company often does not learn about a problem
at an event until after the event is completed.
The Coordinators perform duties critical to the Company’s national operations. You state that
without the logistics and coordination functions that Coordinators perform, the Company’s
business model would collapse.
The Company pays Coordinators on a project-by-project basis. The fee established for a
particular project depends on numerous factors, such as the number and remoteness of event
locations involved, the amount of lead time for the events, whether demonstrators require special
skills or expertise, the difficulty level of the particular event, and the number of demonstrators
required. Each project presents its own issues and difficulties. Thus, when negotiating a fee, the
parties take into account many variables.

The fee is a flat amount that is subject only to possible reductions for nonperformance. For
example, one engagement could consist of fifteen events, with three events being held at each of
five different stores and four demonstrators for each event. For this project, the Coordinator’s
fee could be $800, subject to possible reduction, e.g., for one or more events not performed. The
fee is not subject to increase and is not affected by the number of hours actually devoted to the
project. The fee, when translated into an hourly rate, exceeds $11.38 per hour ($455 divided by
40 hours).
Section 13(a)(1) of the FLSA provides a complete minimum wage and overtime pay exemption
for any employee employed in a bona fide administrative capacity as defined in 29 C.F.R. Part
541. An employee may qualify for the administrative exemption if all of the pertinent tests
relating to duties and salary are met.
As stated in 29 C.F.R. § 541.200(a), the term “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 examine each of the necessary elements in the administrative exemption below.
First, the regulations allow payment on a fee basis for administrative employees. See 29 C.F.R.
§§ 541.200(a)(1), 541.605(a). The fee basis is payment of “an agreed sum for a single job”
regardless of completion time. 29 C.F.R. § 541.605(a). A fee “is paid for the kind of job that is
unique” in contrast to payment on a piece rate basis. Id. Also, payments based on hours worked
or days worked would not be considered payments on a fee basis. Moreover, a fee will satisfy
the salary requirement if the rate “would amount to at least $455 per week if the employee
worked 40 hours.” 29 C.F.R. § 541.605(b).
Second, in the context of the administrative exemption, the phrase “work directly related to the
management or general business operations of the employer or the employer’s customers” refers
to work in such functional areas as marketing, personnel management, and human resources. 29
C.F.R. § 541.201(a)-(b).
Third, “an employee’s primary duty must include the exercise of discretion and independent
judgment with respect to matters of significance.” 29 C.F.R. § 541.202(a). Section 541.202(b)
cites several factors “to consider when determining whether an employee exercises discretion
and independent judgment with respect to matters of significance includ[ing] . . . authority to
formulate, affect, interpret, or implement management policies or operating practices; [and]
perform[ing] work that affects business operations to a substantial degree.”

After reviewing the information provided, we believe that the Company’s fee payment plan
meets the salary requirements of § 541.605(a). The factors described above that determine the
fee amount for a particular project indicate that this “kind of job ... is unique.” Id. In fact, the
fee is negotiated by taking into account many variables. Thus, the fee is not “for a series of jobs
repeated an indefinite number of times and for which payment on an identical basis is made over
and over again.” Id. Moreover, the fee amount is not affected by the number of hours actually
devoted to the particular project. Id. Also, since you state that the fee paid would exceed $455
per week if the Coordinator worked 40 hours, the Company’s fee payment plan meets the
requirements of § 541.605(b). Therefore, the Coordinators receive at least $455 per week on a
fee basis. See 29 C.F.R. § 541.200(a)(1).
We also believe that the Coordinator’s primary duties of developing and implementing strategies
for recruiting and maintaining relationships with demonstrators, deciding how much effort to
devote to expanding the pool of demonstrators, ensuring that a demonstrator executes a contract
before conducting an event, and receiving and resolving demonstrator complaints, all directly
relate to the functional areas of personnel management and human resources. Additionally, the
Coordinator’s primary duties of ensuring that the appropriate number of demonstrators staff
events, and are fully prepared for them, determining the order in which to staff events, acting as
liaison to managers of retail locations where events are scheduled, and developing a contingency
plan for demonstrator no-shows or late cancellations, are each directly related to the functional
area of marketing as it applies to the Company’s clients. Therefore, the Coordinator’s primary
duty involves the “performance of office or non-manual work directly related to the management
or general business operations of the employer” and the employer’s clients. 29 C.F.R. §§
541.200(a)(2), 541.201(b).
Moreover, we believe that the Coordinator’s primary duties “include[] the exercise of discretion
and independent judgment with respect to matters of significance.” 29 C.F.R. § 541.200(a)(3).
As described above, Coordinators operate without direct supervision. Examples of duties that
indicate Coordinators have “authority to make an independent choice, free from immediate
direction or supervision” include determining the amount of effort devoted to expanding the pool
of demonstrators, deciding whether to offer opportunities to demonstrators from the Company
list or to rely on his or her own local contacts, determining the order in which to staff events, and
developing a contingency plan for demonstrator no-shows or late cancellations and any problems
that may arise. These duties, along with developing and implementing strategies for recruiting
and maintaining relationships with demonstrators, satisfy one of the factors under section
541.202(b), that the employee “has authority to formulate, affect, interpret, or implement
management policies or operating practices.” Additionally, by assuming complete responsibility
upon assignment of a project, including developing and executing a strategy for any problems
that may arise, the Coordinator “performs work that affects business operations to a substantial
degree.” Id. Also, by assessing the viability of a project and advising the Company on whether
the client’s terms and conditions are realistic in the Coordinator’s local market, the Coordinator
“provides consultation or expert advice to management.” Id. Finally, by receiving and resolving
store or demonstrator complaints, the Coordinator “investigates and resolves matters of
significance on behalf of management.” Id.

Based on a review of the information provided, the Coordinators meet the requirements of
section 541.200(a)(1)-(3). Therefore, it is our opinion that the Coordinators are exempt
administrative employees.
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).