KPMG Scores a Major Victory in the War Against Overtime



The idea, in case you haven't been paying attention, is that a bunch of KPMG audit associates got together and realized they were getting ripped off under the Fair Labor Standards Act, which "mandates, inter alia, that employers pay additional compensation at a higher rate to employees who work more than forty hours per week." Well dang, if that's the case, how do firms get away with not paying associates overtime?

Easy. They don't have to, says the appeals court.

Judge Colleen McMahon, in a 51-page opinion, concluded "that because plaintiffs were employed as accountants, a profession in a field of advanced science and learning, deployed knowledge that is customarily acquired by a prolonged course of specialized education, and exercised professional discretion and judgment, they were exempt from the FLSA provisions."

In order to be exempt from FLSA, the employer must meet a three pronged requirement:

[T]he work must be (1) "predominantly intellectual in character, and . . . requir[e] the consistent exercise of discretion and judgment," id. § 541.301(b); (2) in a "field of science or learning," which includes accounting, id. § 541.301(c); and (3) of a type where "specialized academic training is a standard prerequisite for entrance into the profession," id. § 541.301(d).

The Plaintiffs argued that the only requirement met was the fact that they worked in accounting, but basically started at KPMG not knowing a debit from a credit:


You should read the entire thing but the part you need to know is that the court determined associates are educated professionals, if at the entry level. Therefore, no overtime for you!


The original case is "Kyle Pippins, et al., v. KPMG LLP," in the Southern District of New York, Case No. 1:11-cv-00377-CM-JLC. The appeals case is "Kyle Pippins, et al., v. KPMG LLP," in the United States Court of Appeals, Second Circuit, Docket No. 13-889-cv.

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