Customer Service Representatives – The Law Has Been Clarified

My last post was about the change made earlier this year by the U.S. Department of Labor (“USDOL”) in determining whether an intern must be paid for the time spent performing services for their employer.  As noted in that post, the change made by the USDOL was an employer friendly one.  At the same time, the USDOL released an opinion letter that addressed whether customer service representatives employed by an insurance agency qualified for the administrative employee exemption from the overtime pay requirements of the Fair Labor Standards Act.  It too was an employer friendly ruling.  My last post on this subject was made before the new salary requirements proposed by the Obama administration for that exemption were overturned by the federal courts.  For those agency owners who are willing to do so, the new opinion letter offers a road map for structuring the duties of customer service representatives so they will qualify for the administrative employee exemption.

The employees in question in the opinion letter are referred to as “customer service managers”, but their job title is not relevant.  What is relevant is the duties they perform, which appear to be a combination of the duties performed by producers and customer service representatives of my clients with which I am familiar.   The employees referred to in the opinion letter not only handle routine service requests concerning existing policies, their “primary duty is generally to serve as insurance advisers and consultants to the agency’s clients” and they have “the authority to execute insurance and finance contracts that legally bind [the] agency and its clients.”   These duties and others described in the opinion letter sound more like those of producers for my clients.  For example, the customer service managers “work with the clients to develop an insurance program that will adequately respond to the client’s total risk management needs. . . .consult with the client to identify risk and exposure, advise on the proper values for the client’s assets, and then recommend solutions to manage the client’s risk and exposure. . . . .audit the client’s selected insurance program to ensure it meets all regulatory compliance matters.”  These duties are performed using the employees’ own discretion and independent judgment and they are “free from immediate supervision or direction.”

Unfortunately, as the opinion letter makes clear, any employee whose primary duty is to “sell an insurance product” cannot qualify for the administrative employee exemption.  So, to make an agency’s customer service representatives eligible for this exemption, they will have to take on the duties of producers, but not to the extent that their primary duty becomes  to sell insurance products.  Instead, they would be more like insurance counselors.  In any event, they will have to have at least an insurance agent license, so they can discuss the specifics of and bind insurance coverages.   The requirement that they be paid on a salary basis at the minimum rate of $455 a week or $23,660 a year remains, at least for now.

As noted in my previous posts, if an agency’s customer service representatives don’t qualify for the administrative employee exemption, they will be entitled to receive overtime pay for any hours worked in excess of 40 in one work week.  This whether they are paid by the hour or on a salary basis.  Each agency’s owner will need to decide whether they want to follow the road map laid out by the opinion letter to qualify their customer service representatives for that exemption or be prepared to pay overtime in the event those representatives work more than 40 hours in a work week.


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