In its February 16, 2016 decision in Tsyn v. Wells Fargo Advisors, LLC, Case No. 14-cv-02552-LB, the federal district court for the Northern District of California confirmed that licensed financial advisors qualified for the administrative exemption under the Fair Labor Standards Act (FLSA).  Specifically, the plaintiffs’ primary duties fell within the examples of exempt duties in the first sentence of 29 C.F.R. § 541.203(b).  That regulation (“Section 203(b)”), which comports with nearly 70 years of regulatory practice, states that “[e]mployees in the financial services industry generally meet the duties requirements for the administrative exemption if their duties include work such as collecting and analyzing information regarding the customer’s income, assets, investments or debts; determining which financial products best meet the customer’s needs and financial circumstances; advising the customer regarding the advantages and disadvantages of different financial products; and marketing, servicing or promoting the employer’s financial products.”

The U.S. Department of Labor (DOL) confirmed the effect of Section 203(b) in a 2006 opinion letter, concluding that licensed financial professionals who mainly perform the duties listed in the first part of Section 203(b) qualify for the FLSA’s administrative exemption, even if as an incident to providing their clients investment advice, the financial advisors bring about the purchase or sale of such investments for their clients and execute the actual transactions that result from their financial advice.  (See DOL Op. Ltr. FLSA2006-43 (Nov. 27, 2006).)  In other words, that the interaction between financial advisor and client often results in a purchase or sale of securities or other investment products does not render the primary duties of the financial advisor non-exempt.

The DOL’s guidance is the right one on this issue.  Indeed, as early as 1949, the agency’s explanatory bulletin interpreting the FLSA regulations included as an example of discretion and independent judgment under the administrative exemption “the kind of discretion and independent judgment exercised by a customer’s man in a brokerage-house in deciding what recommendations to make to a customer for the purchase of securities.”  (14 Fed. Reg. 7738 (Dec. 28, 1949).)

The decision in Tsyn comports with the Ninth Circuit’s ruling in In re Farmers Ins. Exchange, Claims Reps. Overtime Pay Litig., 481 F.3d 1119 (9th Cir. 2006) (insurance claims adjusters qualify for the administrative exemption), as well as with the opinions of other courts that have considered the exempt status of financial advisors.

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Photo of Allan Bloom Allan Bloom

Allan Bloom is the co-chair of Proskauer’s Labor & Employment Law Department and a nationally recognized litigator and advisor who represents employers, business owners, and management in a broad range of employment and labor law matters. As a litigator, Allan has successfully defended…

Allan Bloom is the co-chair of Proskauer’s Labor & Employment Law Department and a nationally recognized litigator and advisor who represents employers, business owners, and management in a broad range of employment and labor law matters. As a litigator, Allan has successfully defended many of the world’s leading companies against claims for unpaid wages, employment discrimination, breach of contract and wrongful discharge, both at the trial and appellate court levels as well as in arbitration, before government agencies, and in private negotiations. He has secured complete defense verdicts for clients in front of juries, as well as injunctions to protect clients’ confidential information and assets.

As the leader of Proskauer’s Wage and Hour Practice Group, Allan has been a strategic partner to a number of Fortune 500 companies to help them avoid, minimize and manage exposure to wage and hour-related risk. Allan’s views on wage and hour issues have been featured in The New York Times, Reuters, Bloomberg and Fortune, among other leading publications. His class-action defense work for clients has saved billions of dollars in potential damages.

Allan is regularly called on to advise operating companies, management companies, fund sponsors, boards of directors and senior leadership on highly sensitive matters including executive and key person transitions, internal investigations and strategic workforce planning. He has particular expertise in the financial services industry, where he has litigated, arbitrated, and mediated disputes for more than 20 years.

A prolific author and speaker, Allan was the Editor of the New York State Bar Association’s Labor and Employment Law Journal from 2012 to 2017. He has served as an author, editor and contributor to a number of leading treatises in the field of employment law, including ADR in Employment Law (ABA/Bloomberg BNA), Employment Discrimination Law (ABA/Bloomberg BNA), Cutting Edge Advances in Resolving Workplace Disputes (Cornell University/CPR), The Employment Law Review (Law Business Research, U.S. Chapter Author), and The Complete Compliance and Ethics Manual (SCCE).

Allan has served as longtime pro bono counsel to Lincoln Center for the Performing Arts and The Public Theater, among other nonprofit organizations.  He is a past Vice Chair of Repair the World, a nonprofit organization that mobilizes volunteers and their communities to take action to pursue a just world, and a past recipient of the Lawyers Alliance Cornerstone Award for extraordinary contributions through pro bono legal services.

Allan is a Fellow of the College of Labor and Employment Lawyers and has been recognized as a leading practitioner by Chambers since 2011.