Financial Advisors Not Entitled To Overtime, California Court Confirms

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...