Department of Labor and Industry

Executive Employees

Defining the Terms

 

WAGES AND HOURS

Sub-Chapter 2

Executive, Administrative and Professional,

Defining the Terms

(Note:  This section of the administrative rules were repealed on May 14, 2010 and is only applicable to work performed prior to this date.)

24.16.201 EXECUTIVE (1)  The term "employee employed in a bona fide executive * * * capacity" in Section 39-3-406(1)(j) MCA of the Montana Minimum Wage and Overtime Compensation Act shall mean any employee:

(a)  Whose primary duty consists of the management of the enterprise in which he is employed or of a customarily recognized department or subdivision thereof; and

(b)  Who customarily and regularly directs the work of two or more other employees therein; and

(c)  Who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring or firing and as to the advancement and promotion or any other change of status of other employees will be given particular weight; and

(d)  Who customarily and regularly exercises discretionary powers; and

(e)  Who does not devote more than 20 percent or in the case of an employee of a retail or service establishment who does not devote as much as 40 percent, of his hours of work in the workweek to activities which are not directly and closely related to the performance of the work described in subsections (a) through (d) of this section:

Provided, that this paragraph shall not apply in the  case of an employee who is in sole charge of an independent establishment or a physically separated branch establishment, or who owns at least a 20 percent interest in the enterprise in which he is employed; and

(f)  Who is compensated for his services on a salary basis at a rate of not less than $150 per week, exclusive of board, lodging, or other facilities:

Provided, that an employee who is compensated on a salary basis at a rate of not less than $200 per week, exclusive of board, lodging, or other facilities, and whose primary duty consists of the management of the enterprise in which he is employed or a customarily recognized department or subdivision thereof, and includes the customary and regular direction of the work of two or more other employees therein, shall be deemed to meet all of the requirements of this section.  This subsection (1) (f) shall not apply to employees whose salary or wages are fixed by legislative action.  (History:  Sec. 39-3-403, MCA; IMP, Sec. 39-3-406(1)(j); EMERG, NEW, Eff. 5/6/73; AMD, Eff. 10/5/73.)

24.16.202 ADMINISTRATIVE (1)  The term "employee employed in a bona fide * * * administrative * * * capacity" in Section 39-3-406(1)(j) MCA of the Montana Minimum Wage and Overtime Compensation Act shall mean any employee whose primary duty consists of the performance of office or nonmanual work directly related to management policies or general business operations of his employer or his employer's customers,

(2)  Who customarily and regularly exercises discretion and independent judgment; and

(3)  (a)  Who regularly and directly assists a proprietor, or an employee employed in a bona fide executive or administrative capacity (as such terms are defined in the regulations of this subpart), or

(b)  Who performs under only general supervision work along specialized or technical lines requiring special training, experience, or knowledge, or

(c)  Who executes under only general supervision special assignments and tasks;

(4)  Who does not devote more than 20 percent or, in the case of an employee of a retail or service establishment, who does not devote as much as 40 percent, of his hours worked in the workweek to activities which are not directly and closely related to the performance of the work described in paragraph (1) of this section; and

(5)  Who is compensated for his services on a salary or fee basis at a rate of not less than $150 per week, exclusive of board, lodging, or other facilities, or

Provided, that an employee who is compensated on a salary or fee basis at a rate of not less than $200 per week, exclusive of board, lodging, or other facilities and whose primary duty consists of the performance of work described in paragraph (1) of this section, which includes work requiring the exercise of discretion and independent judgment, shall be deemed to meet all of the requirements of this section.  This subsection (5) shall not apply to employees whose salary or wages are fixed by legislative action.  (History:  Sec. 39-4-403, MCA; IMP, Sec. 39-4-406(1)(j), MCA; EMERG, NEW, Eff. 5/6/73; AMD, Eff. 10/5/73.)

24.16.203 PROFESSIONAL (1)  The term "employee employed in a bona fide    * * * professional capacity" in Section 39-3-406(1)(j) MCA of the Montana Minimum Wage Law shall mean any employee:

(a)  Whose primary duty consists of the performance of:

(i)  Work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study, as distinguished from a general academic education and from an apprenticeship, and from training in the performance of routine mental, manual, or physical processes, or

(ii) Work that is original and creative in character in a recognized field of artistic endeavor (as opposed to work which can be produced by a person endowed with general manual or intellectual ability and training), imagination, or talent of the employee, or

(b)  Whose work requires the consistent exercise of discretion and judgment in its performance; and

(c)  Whose work is predominantly intellectual and varied in character (as opposed to routine mental, manual, mechanical, or physical work) and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time; and

(d)  Who does not devote more than 20 percent of his hours worked in the workweek to activities which are not an essential part of and necessarily incident to the work described in paragraphs (a) through (c) of this section; and

(e)  Who is compensated for his services on a salary or fee basis at a rate of not less than $150 per week, exclusive of board, lodging, or other facilities:

Provided, that this paragraph shall not apply in the case of an employee who is the holder of a valid license or certificate permitting the practice of law or medicine or any of their branches and who is actually engaged in the practice thereof, nor in the case of an employee who is the holder of the requisite academic degree for the general practice of medicine and is engaged in an internship or resident program pursuant to the practice of medicine or any of its branches, and

Provided further, that an employee who is compensated on a salary or fee basis at a rate of not less than $200 per week, exclusive of board, lodging, or other facilities, and whose primary duty consists of the performance of work described in paragraph (1) of this section which includes work requiring the consistent exercise of discretion and judgment, or of work requiring invention, imagination, or talent in a recognized field of artistic endeavor, shall be deemed to meet all of the requirements of this section.  This subsection (1) (e) shall not apply to employees whose salary or wages are fixed by legislative action.  (History:  Sec. 39-1-403, MCA; IMP, Sec. 39-4-406(1)(j), MCA;EMERG, NEW, Eff. 8/6/73; AMD, Eff. 10/5/73.)

24.16.204 EMPLOYEE EMPLOYED IN A BONA FIDE EXECUTIVE CAPACITY (1)  Section 39-4-406(1)(j) MCA of the Montana Minimum Wage Law, exempts from the wage and hour provisions of the Law "any employee employed in a bona fide executive, administrative, or professional capacity" (as such terms are defined and delimited from time to time by regulations of the Administrator, subject to the provisions of the Administrative Procedure Act, except that an employee of a retail or service establishment shall not be excluded from the definition of employee employed in a bona fide executive or administrative capacity because of the number of hours in his workweek which he devotes to activities not directly or closely related to the performance of executive or administrative activities, if less than 40 per centum of his hours worked in the workweek are devoted to such activities).

(a) ·The duties and responsibilities of an exempt executive employee are described in subsection (a) through (d) of ARM 24.16.201.  Subsection (e) of ARM 24.16.201 contains among other things, percentage limitations on the amount of time which an employee may devote to activities "which are not directly and closely related to the performance of the work described in paragraphs (a) through (d) of that section.  For convenience in discussion, the work described in paragraphs (a) through (d) of ARM 24.16.201 and the activities directly and closely related to such work will be referred to as "exempt" work, while other activities will be referred to as "nonexempt" work.

(2)  In the usual situation the determination of whether a particular kind of work is exempt or nonexempt in nature is not difficult.  In the vast majority of cases the bona fide executive employee performs managerial and supervisory functions which are easily recognized as within the scope of the exemption.

(a)  For example, it is generally clear that work such as the following is exempt work when it is performed by an employee in the management of his department or the supervision of the employees under him:  Interviewing, selecting and training of employees; setting and adjusting their rates of pay and hours of work; directing their work; maintaining their production or sales records for use in supervision or control; appraising their productivity and efficiency for the purpose of recommending promotions or other changes in their status; handling their complaints and grievances and disciplining them when necessary; planning the work; determining the techniques to be used; apportioning the work among the workers; determining the type of materials, supplies, machinery or tools to be used or merchandise to be bought, stocked and sold; controlling the flow and distribution of materials or merchandise and supplies providing for the safety of the men and property.

(3)  A determination of whether an employee has management as his primary duty must be based on all the facts in a particular case.  The amount of time spent in the performance of the managerial duties is a useful guide in determining whether management is the primary duty of an employee.  In the ordinary case it may be taken as a good rule of thumb that primary duty means the major part, or over 50 percent, of the employees time.  Thus, an employee who spends over 50 percent of his time in management would have management as his primary duty.  Time alone, however, is not the sole test, and in situations where the employee does not spend over 50 percent of his time in managerial duties, he might nevertheless have management as his primary duty if the other pertinent factors support such a conclusion.  Some of these pertinent factors are the relative importance of the frequency with which the employee exercises discretionary powers, his relative freedom from supervision, and the relationship between his salary and the wages paid other employees for the kind of nonexempt work performed by the supervisor.

(4)  Department or subdivision.

(a)  In order to qualify under ARM 24.16.201 the employees managerial duties must be performed with respect to the enterprise in which he is employed or a customarily recognized department or subdivision.  The phrase "a customarily recognized department or subdivision" is intended to distinguish between a mere collection of men assigned from time to time to a specific job or series of jobs and a unit with permanent status and function.  In order properly to classify an individual as an executive he must be more than merely a supervisor of two or more employees; nor is it sufficient that he merely participates in the management of the unit.  He must be in charge of and have as his primary duty the management of a recognized unit which has a continuing function.

(b)  In the vast majority of cases there is no difficulty in determining whether an individual is in charge of a customarily recognized department or subdivision of a department.  For example, it is clear that where an enterprise        comprises more than one establishment, the employee in charge of each establishment may be considered in charge of a subdivision of the enterprise.  Questions arise principally in cases involving supervisors who work outside the employer's establishment, move from place to place, or have different subordinates at different times.

(c)  In such instances, in determining whether the employee is in charge of a recognized unit with a continuing function, it is the Division's position that the unit supervised need not be physically within the employer's establishment and may move from place to place, and that continuity of the same subordinate personnel is not absolutely essential to the existence of a recognized unit with a continuing function, although in the ordinary case a fixed location and continuity of personnel are both helpful in establishing the existence of such a unit.  The following examples will illustrate these points.

(d)  The projects on which an individual in charge of a certain type of work is employed may occur at different locations, and he may even hire most of his work force at these locations.  The mere fact that he moves his location would not invalidate his exemption if there are other factors which show that he is actually in charge of a recognized unit with a continuing function in the organization.

(e)  Nor will an otherwise exempt employee lose the exemption merely because he draws the men under his supervision from a pool, if other factors are present which indicate that he is in charge of a recognized unit with a continuing function.  For instance, if this employee is in charge of the unit which has the continuing responsibility for making all installations in a particular city or a designated portion of a city, he would be in charge of a department or subdivision despite the fact that he draws his subordinates from a pool of available men.

(f)  It cannot be said, however, that a supervisor drawn from a pool of supervisors who supervises employees assigned to him from a pool and who is assigned a job or a series of jobs from day to day or week to week has the status of an executive.  Such an employee is not in charge of a recognized unit with a continuing function.

(5)  Two or more other employees.

(a)  An employee will qualify as an "executive" under ARM 24.16.201 only if he customarily and regularly supervises at least two fulltime employees or the equivalent.  For  example, if the "executive" supervises one full-time and two part-time employees of whom one works morning and one, afternoons; or four part-time employees, two of whom work mornings and two afternoons, this requirement would be met.  The  "equivalent" of two full-time employees can therefore be met by part-time employees who do work a number of hours equal to the number of hours that would normally be worked by two fulltime employees.

(b)  The employees supervised must be employed in the department which the "executive" is managing.

(c)  It has been the experience of the Divisions that a supervisor of as few as two employees usually performs non-exempt work in excess of the general 20 percent tolerance provided in ARM 24.16.201.

(d)  In a large machine shop there may be a machine-shop supervisor and two assistant machine-shop supervisors.  Assuming that they meet all the qualifications of ARM 24.16.201 and particularly that they are not working foremen, they should certainly qualify for the exemption.  A small department in a plant or in an office is usually supervised by one person.  Any attempt to classify one of the other workers in the department as an executive merely by giving him an honorific title such as assistant supervisor will almost inevitably fail as there will not be sufficient true supervisory or other managerial work to keep two persons occupied.  On the other hand, it is incorrect to assume that in a large department, such as a large shoe department in a retail store which has separate sections for men's, women's and children's shoes, for example, the supervision cannot be distributed among two or three employees, conceivably among more.  In such instances, assuming that the other tests are met, especially the one concerning the performance of nonexempt work, each such employee "customarily and regularly directs the work of two or more other employees therein".

(e)  An employee who merely assists the manager or buyer of a particular department and supervises two or more employees only in the actual manager's or buyer's absence, however, does not meet this requirement.  For example, where a single unsegregated department, such as a women's sportswear department or a men's shirt department in a retail store, is managed by a buyer, with the assistance of one or more assistant buyers, only one employee, the buyer, can be considered an executive, even though the assistant buyers at times exercise some managerial and supervisory responsibilities.  A shared responsibility for the supervision of the same two or more employees in the same department does not satisfy the requirement that the employee "customarily and regularly directs the work of two or more employees therein".

(6)  Authority to hire or fire.  ARM 24.16.201 requires that an exempt executive employee have the authority to hire or fire other employees or that his suggestions and recommendations as to hiring or firing and as to advancement and promotion or any other change of status of the employees whom he supervises will be given particular weight.  Thus, no employee, whether high or low in the hierarchy of management, can be considered as employed in a bona fide executive capacity unless he is directly concerned either with the hiring or the firing and other change of status of the employees under his supervision, whether by direct action or by recommendation to those to whom the hiring and firing functions are delegated.

(7)  Discretionary powers.

(a)  Subsection (d) of ARM 24.16.201 requires that an exempt executive employee customarily and regularly exercise discretionary powers.  A person whose work is so completely routinized that he has no discretion does not qualify for exemption.

(b)  The phrase "customarily and regularly" signifies a frequency which must be greater than occasional but which, of course, may be less than constant.  The requirement will be met by the employee who normally and recurrently is called upon to exercise and does exercise discretionary powers in the day-to-day performance of his duties.  The requirement is not met by the occasional exercise of discretionary powers.

(8)  Work directly and closely related.

(a)  This phrase brings within the category of exempt work not only the actual management of the department and the supervision of the employees therein, but also activities which are closely associated with the performance of the duties involved in such managerial and supervisory functions or responsibilities.  The supervision of employees and the management of a department include a great many directly and closely related tasks which are different from the work performed by subordinates and are commonly performed by supervisors because they are helpful in supervising the employees or contribute to the smooth functioning of the department for which they are responsible.   Frequently such exempt work is of a kind which in establishments that are organized differently, or which are larger and have greater specialization of function, may be performed by a nonexempt employee hired especially for that purpose.  Illustration will serve to make clear the meaning to be given the phrase "directly and closely related".

(b)  Keeping basic records of working time, for example, is frequently performed by a timekeeper employed for that purpose.  In such cases the work is clearly not exempt in nature.  In other establishments which are not large enough to employ a timekeeper, or in which the timekeeping function has been decentralized, the supervisor of each department keeps the basic time records of his own subordinates.  In these instances, as indicated above, the timekeeping is directly related to the function of managing the particular department and supervising its employees.  However, the preparation of a payroll by a supervisor, even the payroll of the employees under his supervision, cannot be considered to be exempt work, since the preparation of a payroll does not aid in the supervision of the employees or the management of the department.  Similarly, the keeping by a supervisor of production or sales records of his own subordinates for use in supervision or control would be exempt work, while the maintenance of production records of employees under his direction would not be exempt work.

(c)  Another example of work which may be directly and closely related to the performance of management duties is the distribution of materials or merchandise and supplies.  Maintaining control of the flow of materials or merchandise and supplies in a department is ordinarily a responsibility of the managerial employee in charge.  In many nonmercantile establishments the actual distribution of materials is performed by nonexempt employees under the supervisor's direction.  In other establishments it is not uncommon to leave the actual distribution of materials and supplies in the hands of the supervisor.  In such cases it is exempt work since it is directly and closely related to the managerial responsibility of maintaining the flow of materials.  In a large retail establishment, however, where the replenishing of stocks of merchandise on the sales floor is customarily assigned to a nonexempt employee, the performance of such work by the manager or buyer of the department is nonexempt.  The amount of time the manager or buyer spends in such work must be offset against the statutory tolerance for nonexempt work.  The supervision and control of a flow of merchandise to the sales floor, of course, is directly and closely related to the managerial responsibility of the manager or buyer.

(d)  Setup work is another illustration of work which may be exempt under certain circumstances if performed by a supervisor.  The nature of setup work differs in various industries and for different operations.  Some setup work is typically performed by the same employees who perform the "production" work; that is, the employee who operates the machine also "sets it up" or adjusts it for the particular job at hand.  Such setup work is part of the production operation and is not exempt.  In other instances the setting up of the work is a highly skilled operation which the ordinary production work or machine tender typically does not perform.  In some plants, particularly large ones, such setup work may be performed by employees whose duties are not supervisory in nature.  In other plants, however, particularly small plants, such work is a regular duty of the executive and is work performance of his subordinates and for the adequacy of the final product.  Under such circumstances it is exempt work.

(e)   Similarly, a supervisor who spot checks and examines the work of his subordinates to determine whether they are performing their duties properly, and whether the product is satisfactory, is performing work which is directly and closely related to his managerial and supervisory functions.  However, this kind of examining and checking must be distinguished from the kind which is normally performed by an "examiner," "checker," or "inspector," and which is really a production operation rather than a part of the supervisory function.  Likewise, a department manager or buyer in a retail or service establishment who goes about the sales floor observing the work of sales personnel under his supervision to determine the effectiveness of their sales techniques, checking on the quality of customer service being given, or observing customer preferences and reactions to the lines, styles, types, colors, and quality of the merchandise offered, is performing work which is directly and closely related to his managerial and supervisory functions.  His actual participation, except for supervisory training or demonstration purposes, in such activities as making sales to customers, replenishing stocks or merchandise on the sales floor, removing merchandise from fitting rooms and returning to stock or shelves, however, is not.  The amount of time a manager or buyer spends in the performance of such activities must be included in computing the percentage limitation on nonexempt work.

(f)  Watching machines is another duty which may be exempt when performed by a supervisor under proper circumstances.  Obviously the mere watching of machines in operation cannot be considered exempt work where, as in certain industries in which machinery is largely automatic, it is an ordinary production function.  Thus, an employee who watches machines for the purpose of seeing that they operate properly or for the purpose of making repairs or adjustments is performing nonexempt work.  On the other hand, a supervisor who watches the operation of the machinery in his department in the sense that he "keeps an eye out for trouble" is performing work which is directly and closely related to his managerial responsibilities.  Making an occasional adjustment in the machinery under such circumstances is also exempt work.

(g)  A work of caution is necessary in connection with these illustrations.  The recordkeeping, material distributing, setup work, machine watching and adjusting, and inspecting, examining, observing and checking referred to in the examples of exempt work are presumably the kind which are supervisory and managerial functions rather than merely "production" work.  Frequently it is difficult to distinguish the managerial type from the type which is a production operation.  In deciding such difficult cases it should be borne in mind that it is one of the objectives of ARM 24.16.201 to exclude from the definition foreman who hold "dual" or combination jobs.  Thus, if work of this kind taxes up a large part of the employee's time it would be evidence that management of the department is not the primary duty of the employee, that such work is a production operation rather than a function directly and closely related to the supervisory or managerial duties, and that the employee is in reality a combination foreman "setup" man, foreman-machine adjuster (or mechanic), or foreman-examiner, floorman-salesperson, etc., rather than a bona fide executive.

(9)      Emergencies

(a)       Under certain occasional emergency conditions, work which is normally performed by nonexempt employees and is nonexempt in nature will be directly and closely related to the performance of the exempt functions of management and supervision and will therefore be exempt work.  In effect, this means that a bona fide executive who performs work of a normally nonexempt nature on rare occasions because of the existence of a real emergency will not, because of the performance of such emergency work, lose the exemption.  Bona fide executives include among their responsibilities the safety of the employees under their supervision, the preservation and protection of the merchandise, machinery or other property of the department of subdivision in their charge from damage due to unforseen circumstances, and the prevention of widespread breakdown in production, sales, or service operations.  Consequently, when conditions beyond control arise which threaten the safety of the employees, or a cessation of operations, or serious damage to the employer's property, any manual or other normally nonexempt work performed in an effort to prevent such results is considered exempt work and is not included in computing the percentage limitation on nonexempt work.

(b)       The rule is subsection (9) (a) above is not applicable, however, to nonexempt work arising out of occurrences which are not beyond control or for which the employer can reasonably provide in the normal course of business.

(c)        A few illustrations may be helpful in distinguishing routine work performed as a result of real emergencies of the kind for which no provision can practicably be made by the employer in advance of their occurrence and routine work which is not in this category.  It is obvious that a mine superintendent who pitches in after an explosion and digs out the men who are trapped in the mine is still a bona fide executive during that week.  On the other hand, the manager of a clothing establishment who personally performs the operations on expensive garments because he fears damage to the garment if he allows his subordinates to handle them is not performing "emergency" work of the kind which can be considered exempt.  Nor is the manager of a department in a retail store performing exempt work when he personally waits on a special or impatient customer because he fears the loss of the sale or the customer's goodwill if he allows a salesperson to serve him.  The performance of nonexempt work by executives during inventory-taking, during other periods of heavy workload, or the handling of rush orders are the kinds of activities which the percentage tolerances are intended to cover.  For example, pitching in on the production line in a canning plant during seasonal operations is nonexempt "emergency" work even if the objective is to keep the food from spoiling.  Similarly, pitching in behind the sales counter in a retail store during special sales or during Christmas or Easter or other peak sales periods is not "emergency" work, even if the objective is to improve customer service and the store's sales record.  Maintenance work is not emergency work even if performed at night or during weekends.  Relieving subordinates during rest or vacation periods cannot be considered in the nature of "emergency" work since the need for replacements can be anticipated.  Whether replacing the subordinate at the work bench, or production line, or sales counter during the first day or partial day of an illness would be considered exempt emergency work would depend upon the circumstances in the particular case.  Such factors as the size of the establishment and of the executive's department, the nature of the industry, the consequences that would flow from the failure to replace the ailing employee immediately, and the feasibility of filling the employee's place promptly would all have to be weighed.

(d)       All the regular cleaning up around machinery, even when necessary to prevent fire or explosion, is not "emergency" work.  However, the removal by an executive of dirt or obstructions constituting a hazard to life or property need not be included in computing the percentage limitation if it is not reasonable practicable for anyone but the supervisor to perform the work and it is the kind of "emergency" which has not been recurring.  The occasional performance of repair work in case of a breakdown of machinery, or the collapse of a display rack, or damage to or exceptional disarray of merchandise caused by accident or a customer's carelessness may be considered exempt work if the breakdown is one which the employer cannot reasonably anticipate.  However, recurring breakdowns or disarrays requiring frequent attention, such as that of an old belt or machine which breaks down repeatedly or merchandise displays constantly requiring resorting or straightening, are the kind for which provision could reasonably be made and repair of which must be considered as nonexempt.

(10)     Occasional tasks.

(a)    In addition to the type of work which by its very nature is readily identifiable as being directly and closely related to the performance of the supervisory and management duties, there is another type of work which may be considered directly and closely related to the performance of these duties.  In many establishments the proper management of a department requires the performance of a variety of occasional, infrequently recurring tasks which cannot practicably be performed by the production workers and are usually performed by the executive.  These small tasks when viewed separately without regard to their relationship to the executive's overall functions might appear to constitute nonexempt work.  In reality they are the means of properly carrying out the employee's management functions and responsibilities in connection with men, materials, and production.  The particular tasks are not specially assigned to the "executive" but are performed by him in his discretion.

(b)  It might be possible for the executive to take one of his subordinates away from his usual task, instruct and direct him in the work to be done, and wait for him to finish it.  It would certainly not be practicable, however, to manage a department in this fashion.  With respect to such occasional and relatively inconsequential tasks, it is the practice in industry generally for the executive to perform them rather than to delegate them to other persons.  When any other of these tasks is done frequently, however, it takes on the character of a regular production which could be performed by a nonexempt employee and must be counted as nonexempt work.  In determining whether such work is directly and closely related to the performance of the management duties, consideration should be given to whether it is;

(i)    the same as the work performed by any of the subordinates of the executive; or

(ii)        a specifically assigned task of the executive employees; or

(iii)       practicably delegable to nonexempt employees in the establishment; or

(iv)       repetitive and frequently recurring.

(11)     Nonexempt work generally.

(a)    As indicated in subsection (b) of ARM 24.16.204 the term "nonexempt work", as used in this subpart includes all work other than that described in ARM 24.16.201 (a) through (d) and the activities directly and closely related to such work.

(b)       Nonexempt work is easily identifiable where, as in the usual case, it consists of work of the same nature as that performed by the nonexempt subordinates of the "executive".  It is more difficult to identify in cases where supervisory employees spend a significant amount of time in activities not performed by any of their subordinates and not consisting of actual supervision and management.  In such cases careful analysis of the employee's duties with reference to the phrase "directly and closely related to the performance of the work" will usually be necessary in arriving at a determination.

(12)     Percentage limitations on nonexempt work.

(a)     An employee will not qualify for exemption as an executive if he devotes more than 20 percent, or in the case of an employee of a retail or service establishment if he devotes as much as 40 percent, of his hours worked in the workweek to nonexempt work.  This test is applied on a workweek basis and the percentage of time spent on nonexempt work is computed on the time worked by the employee.

(b)       The maximum allowance of 20 percent for nonexempt work applies to the establishment by which the employee is employed.  Such an establishment must be a distinct physical place of business, open to the general public, which is engaged on the premises in making sales of goods or services.  Types of establishments which may meet these tests include stores selling consumer goods to the public; hotels; motels; restaurants; some types of amusement or recreational establishments (but not those offering wagering or gambling facilities); public parking lots and parking garages; auto repair shops; gasoline service stations; funeral homes; cemetaries; etc.

(c)    There are two special exceptions to the percentage limitations of subsection (a):

(1)       That relating to the employee in "sole charge" of an independent or branch establishment, and

(2)       That relating to an employee owning a 20 percent interest in the enterprise in which he is employed.

These except the employee only from the percentage limitations on nonexempt work.  They do not except the employee from any of the other requirements of ARM 24.16.201.  Thus, while the percentage limitations on nonexempt work are not applicable, it is clear than an employee would not qualify for the exemption if he performs so much nonexempt work that he could no longer meet the requirement of ARM 24.16.201 that his primary duty must consist of the management of the enterprise in which he is employed or of a customarily recognized department or subdivision thereof.

(13)     Sole-charge exception.

(a)    An exception from the percentage limitations on nonexempt work is provided in ARM 24.16.201 subsection (e) for "an employee who is in sole charge of an independent establishment or a physically separated branch establishment ***".  Such an employee is considered to be employed in a bona fide executive capacity even though he exceeds the applicable percentage limitation on nonexempt work.

(b)       The term "independent establishment" must be given full weight.  The establishment must have a fixed location and must be geographically separated from other company property.  The management of operations within one among several buildings located on a single or adjoining tracts of company property does not qualify for the exemption under this heading.  In the case of a branch, there must be a true and complete physical separation from the main office.

(c)        A determination as to the status as "an independent establishment or a physically separated branch establishment" of any part of the business operations on the premises of a retail or other establishment, however, must be made on the basis of the physical and economic facts in the particular situation.  A leased department cannot be considered to be a separate establishment where, for example, it and the retail store in which it is located operate under a common trade name and the store may determine, or have the power to determine, the leased department's space location, the type of merchandise it will sell, its pricing policy, its hours of operation and some or all of its hiring, firing and other personnel policies, and matters such as advertising, adjustment and credit operations, insurance and taxes, are handled on a unified basis by the store.

A leased department may qualify as a separate establishment, however, where, among other things, the facts show that the lessee maintains a separate entrance and operates under a separate name, with its own separate employees and records, and in other respects conducts his business independently of the lessor's.  In such a case the leased department would enjoy the same status as a physically separated branch store.

(d)       Since the employee must be in "sole" charge, only one person in any establishment can qualify as an executive under this exception, and then only if he is the top person in charge at that location.  Thus, it would not be applicable to an employee who is in charge of a branch establishment but whose superior makes his office on the premises.  An example is a district manager who has overall supervisory functions in relation to a number of branch offices, but makes his office at one of the branches.  The branch manager at the branch where the district manager's office is located is not in "sole-charge" of the establishment and does not come within the exception.  This does not mean that the "sole-charge" status of an employee will be considered lost because of an occasional visit to the branch office of the superior of the person in charge, or in the case of an independent establishment, by the visit for a short period on one or two days a week of the proprietor or principal corporate officer of the establishment.  In these situations, the sole-charge status of the employee in question will appear from the facts as to his functions, particularly in the intervals between visits.  If, during these intervals, the decisions normally made by an executive in charge of a branch or an independent establishment are reserved for the superior, the employee is not in sole-charge.  If such decisions are not reserved for the superior, the sole-charge status will not be lost merely because of the superior's visits.

(e)       In order to qualify for the exception the employee must ordinarily be in charge of all the company activities at the location where he is employed.  If he is in charge of only a portion of the company's activities at his location, then he cannot be said to be in sole-charge of an independent establishment or a physically separated branch establishment.  In exceptional cases the Division has found that an executive employee may be in sole-charge of all activities at a branch office except that one independent function which is not integrated with those managed by the executive is also performed at the branch.  This one function is not important to the activities managed by the executive and constitutes only an insignificant portion of the employer's activities at that branch.  A typical example of this type of situation is one in which "desk space" in a warehouse otherwise devoted to the storage and shipment of parts is assigned a salesman who reports to the sales manager or other company official located at the home office.  Normally only one employee (at most two or three, but in any event an insignificant number when compared with the total number of persons employed at the branch) is engaged in the nonintegrated function for which the executive whose sole-charge status is in question is not responsible.  Under such circumstances the employee does not lose his "sole-charge" status merely because of the desk-space assignment.

(14)     Exception for owners of 20 percent interest.

(a)      An exception from the percentage limitations on nonexempt work is provided in ARM 24.16.201, subsection (e) for an employee "who owns at least 20 percent interest in the enterprise in which he is employed".  This provision recognizes the special status of a shareholder of an enterprise who is actively engaged in its management.

(b)       The exception is available to an employee owing a bona fide 20 percent equity in the enterprise in which he is employ-ed regardless of whether the business is a corporate or other type of organization.

(15)     Working foremen.

(a)       The primary purpose of the exclusionary language placing a limitation on the amount of nonexempt work is to distinguish between the bona fide executive and the "working" foreman or "working" supervisor who regularly performs "production" work or other work which is unrelated or only remotely related to his supervisory activities.

(b)       One type of working foreman or working supervisor most commonly found in industry works alongside his subordinates.  Such employees, sometimes known as strawbosses, or gang or group leaders perform the same kind of work as that performed by their subordinates, and also carry on supervisory functions.  Clearly, the work of the same nature as that performed by the employee's subordinates must be counted as nonexempt work and if the amount of such work performed is substantial the exemption does not apply.  A foreman in a dress shop, for example, who operates a sewing machine to produce the product is performing clearly nonexempt work.  However, this should not be confused with the operation of a sewing machine by a foreman to instruct his subordinates in the making of a new product, such as a garment, before it goes into production.

(c)        Another type of working foreman or working supervisor who cannot be classed as a bona fide executive is one who spends a substantial amount of time in work which, although not performed by his own subordinates, consists of ordinary production work or other routine, recurrent, repetitive tasks which are a regular part of his duties.  Such an employee is in effect holding a dual job.  He may be, for example, a combination foreman-production worker, supervisor-clerk, or foreman combined with some other skilled or unskilled occupation.  His nonsupervisory duties in such instances are unrelated to anything he must do to supervise the employees under him or to manage the department.  They are in many instances mere "fill-in" tasks performed because the job does not involve sufficient executive duties to occupy an employee's full time.  In other instances the nonsupervisory, nonmanagerial duties may be the principal ones and the supervisory or managerial duties are subordinate and are assigned to the particular employee because it is more convenient to rest the responsibility for the first line of supervision in the hands of the person who performs these other duties.  Typical of employees in dual jobs which may involve a substantial amount of nonexempt work are:

(i)         Foremen or supervisors who also perform one or more of the "production" or "operating" functions, though no other employees in the plant perform such work.  An example of this kind of employee is the foreman in a millinery or garment plant who is also the cutter, or the foreman in a garment factory who operates a multiple-needle machine not requiring a full-time operator.

(ii)        Foreman or supervisors who have a regular part of their duties the adjustment, repair, or maintenance of machinery or equipment.  Examples in this category are the foreman-fixer in the hosiery industry who devotes a considerable amount of time to making adjustments and repairs to the machines of his subordinates, or the planer-mill foreman who is also the "machine man" who repairs the machines and grinds the knives.

(iii)· Foreman or supervisors who perform clerical work other than the maintenance of the time and production records of their subordinates; for example, the foreman of the shipping room who makes out the bills of lading and other shipping records, the warehouse foreman who also acts as inventory clerk, the head shipper who also has charge of a finished goods stock room, assisting in placing goods on shelves and keeping perpetual inventory records, or the office manager, head bookkeeper, or chief clerk who performs routine bookkeeping.  There is no doubt that the head bookkeeper, for example who spends a substantial amount of his time keeping books of the same general nature as those kept by the other bookkeepers, even though his books are confidential in nature or cover different transactions from the books maintained by the under bookkeepers, is not primarily an executive employee and should not be so considered.

(16)     Trainees, executive.  The exemption is applicable to an employee employed in a bona fide executive capacity and does not include employees training to become executives and not actually performing the duties of an executive.

(17)     Amount of Salary required.

(a)    Except as otherwise noted in (b) of this subsection, compensation on a salary basis at a rate of not less than $150 per week, exclusive of board, lodging, or other facilities, is required for exemption as an executive.  The $150 a week may be translated into equivalent amounts for periods longer than one week.  The requirement, will be met if the employee is compensated biweekly on a salary basis of $300, semimonthly on a salary basis of $325 or monthly on a salary basis of $650.  However, the shortest period of payment which will meet the requirement of payment "on a salary basis" is a week.

(b)       The payment of the required salary must be exclusive of board, lodging, or other facilities; that is, free and clear.  On the other hand, the regulations do not prohibit the sale of such facilities to executives on a cash basis if they are negotiated in the same manner as similar transactions with other persons.

(18)     Salary basis.

(a)    An employee will be considered to be paid "on a salary basis" within the meaning of the regulations if under his employment agreement he regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of his compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed.  Subject to the exceptions provided below, the employee must receive his full salary for any week in which he performs any work without regard to the number of days or hours worked.  This policy is also subject to the general rule that an employee need not be paid for any workweek in which he performs no work.

(i)         An employee will not be considered to be "on a salary basis" if deductions from his predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business.  Accordingly, if the employee is ready, willing and able to work, deductions may not be made for time when work is not available.

(ii)        Deductions may be made, however, when the employee absents himself from work for a day or more for personal reasons, other than sickness or accident.  Thus, if an employee is absent for a day or longer to handle personal affairs, his salaried status will not be affected if deductions are made from his salary for such absences.

(iii)· Deductions may also be made for absences of a day or more occasioned by sickness or disability (including industrial accidents), if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for loss of salary occasioned by both sickness and disability.  Thus, if the employer's particular plan, policy or practice provides compensation for such absences, deductions for absences of a day or longer because of sickness or disability may be made before an employee has qualified under such plan, policy or practice, and after he has exhausted his leave allowance thereunder.  It is not required that the employee be paid any portion of his salary for such days or days for which he receives compensation for leave under such plan, policy or practice.  Similarly, if the employer operates under sickness and disability insurance plan, deductions may be made for absences of a working day or longer if benefits are provided in accordance with the particular law or plan.  In the case of an industrial accident, the "salary basis" requirements will be met if the employee is compensated for loss of salary in accordance with the applicable compensation law or the plan adopted by the employer, provided the employer also has some plan, policy or practice of providing compensation for sickness and disability other than that relating to industrial accidents.

(iv)       The effect of making a deduction which is not permitted under these interpretations will depend upon the facts in the particular case.  Where deductions are generally made when there is no work available, it indicates that there was no intention to pay the employee on a salary basis.  In such a case the exemption would not be applicable to him during the entire period when such deductions were being made.  On the other hand, where a deduction not permitted by these interpretations is inadvertent or is made for reasons other than lack of work, the exemption will not be considered to have been lost if the employer reimburses the employee for such deductions and promises to comply in the future.

(b)       Minimum guarantee plus extras.  It should be noted that the salary may consist of a predetermined amount constituting all or part of the employee's compensation.  In other words, additional compensation besides the salary is not inconsistent with the salary basis of payment.  The requirement will be met for example, by a branch manager who receives a salary of $150 or more per week and, in addition, a commission of one percent of the branch sales.  The requirement will also be met by a branch manager who receives a percentage of the sales or profits of his branch, if the employment arrangement also includes a guarantee of at least the minimum weekly salary (or the equivalent for a monthly or other period) required by the regulations.  Another type of situation in which the requirement will be met is that of an employee paid on a daily or shift basis, if the employment arrangement includes a provision that he will receive not less than the amount specified in the regulations in any week in which he performs any work.  Such arrangements are subject to the exceptions in subsection (a) of this subsection (18).  The test of payment on a salary basis will not be met, however, if the salary is divided into two parts for the purpose of circumventing the requirement of payment "on a salary basis".  For example, a salary of $175 a week may not arbitrarily be divided into a guaranteed minimum of $125 paid in each week in which any work is performed, and an additional $50 which is made subject to deductions which are not permitted under subsection (a) of this subsection (18).

(c)        Initial and terminal weeks.  Failure to pay the full salary in the initial or terminal week of employment is not considered inconsistent with the salary basis of payment.  In such weeks the payment of a proportionate part of the employee's salary for the time actually worked will meet the requirement.  However, this should not be construed to mean that an employee is on a salary basis within the meaning of the regulations if he is employed occasionally for a few days and is paid a proportionate part of the weekly salary when so employed.  Moreover, even payment of the full weekly salary under such circumstances would not meet the requirement, since casual or occasional employment for a few days at a time is inconsistent with employment on a salary basis within the meaning of the regulations.

(19)     Special provision for high salaried executives.

(a)       Except as otherwise noted in subsection (b) of subsection (19), ARM 24.16.204 contains a special proviso for managerial employees who are compensated on a salary basis at a rate of not less than $200 per week, exclusive of board, lodging, or other facilities.  Such a highly paid employee is deemed to meet all the requirements in subsections (a) through (f) of ARM 24.16.201 if his primary duty consists of the management of the enterprise in which he is employed or of a customarily recognized department or subdivision thereof and includes the customary and regular direction of the work of two or more other employees therein.  If an employee qualifies for exemption under this proviso, it is not necessary to test his qualifications in detail under paragraphs (a) through (f) of ARM 24.16.201.

(b)       Mechanics, carpenters, linotype operators, or craftsmen or other kinds are not exempt under the proviso no matter how highly paid they might be.  (History:  Sec. 39-3-403, MCA; IMP, Sec. 39-3-406(1)(j), MCA;  Eff. 12/31/72.)

24.16.205  EMPLOYEE EMPLOYED IN A BONA FIDE ADMINISTRATIVE CAPACITY (1)  Types of administrative employees.

(a)       Three types of employees are described in subsection (3) ARM 24.16.202 who, if they meet the other tests in ARM 24.16.202 qualify for exemption as "administrative" employees.

(i)         Executive and administrative assistants.  The first type is the assistant to a proprietor or to an executive or administrative employee.  In modern industrial practice there has been a steady and increasing use of persons who assist an executive in the performance of his duties without themselves having executive authority.  Typical titles of persons in this group are executive assistant to the president, confidential assistant, executive secretary, assistant to the general manager, administrative assistant and, in retail or service establishments, assistant manager and assistant buyer.  Generally speaking such assistants are found in large establishments, where the official assisted has duties of such scope and which require so much attention that the work of personal scrutiny, correspondence and interviews must be delegated.

(ii)        Staff employees.

Employees included in the second alternative in the definition are those who can be described as staff rather than line employees, or as functional rather than departmental heads.  They include among other employees who act as advisory specialists are tax experts, insurance experts, sales research experts, wage-rate analysts, investments consultants, foreign exchange consultants, and statisticians.  Also included are persons who are in charge of a so-called functional department, which may frequently be a one-man department.  Typical examples of such employees are credit managers, purchasing agents, buyers, safety directors, personnel directors, and labor relations directors.

(iii)· Those who perform special assignments.

The third group consists of persons who performed away from the employer's place of business.  Typical titles of such persons are lease buyers, field representatives of utility companies, location managers of motion picture companies, and district gaugers for oil companies.  It should be particularly noted that this is a field which is rife with honorific titles that do not adequately portray the nature of the employee's duties.  The field representative of a utility company, for example, may be a "glorified serviceman".  This classification also includes employees whose special assignments are performed entirely or partly inside their employer's place of business.  Examples are special organization planners, so-called account executives in advertising firms and contact or promotion men of various types.

(b)       Job titles insufficient as yardsticks.

(i)         The employees for whom exemption is sought under the term "administrative" have extremely diverse functions and a wide variety of titles.  A title alone is of little or no assistance in determining the true importance of an employee to the employer or his exempt or nonexempt status under the regulations.  Titles can be had cheaply and are of no determinative value.  Thus, while there are supervisors of production control (whose decisions affect the welfare of large numbers of employees) who qualify for exemption under section 39-3-406(1)(i) MCA, it is not hard to call a rate setter (whose functions are limited to timing certain operations and jotting down times on a standardized form) a "methods engineer" or a production-control supervisor".

(ii)        Many more examples could be cited to show that titles are insufficient as yardsticks.  As has been indicated previously, the exempt or nonexempt status of any particular employees must be determined on the basis of whether his duties, responsibilities and salary meet all the requirements of the appropriate section of the regulations.

(2)       Categories of work.

(a)       The work generally performed by employees who perform administrative tasks may be classified into the following general categories for purposes of the definition:

(i)        The work specifically described in subsections (1), (2) and (3) of ARM 24.16.202.

(ii)        Routine work which is directly and closely related to the performance of the work which is described in subsections (1), (2), and (3) of ARM 24.16.202; and

(iii)· Routine work which is not related or is only remotely related to the administrative duties.

(b)       The work in category (ii), that which is specifically described in ARM 24.16.202 as requiring the exercise of discretion and independent judgment, is clearly exempt in nature.

(c)        Category (ii) consists of work which if separated from the work in category 1 would appear to be routine, or on a fairly low level, and which does not itself require the exercise of discretion and independent judgment, but which has a direct and close relationship to the performance of the more important duties.  The directness and closeness of this relationship may vary depending upon the nature of the job and the size and organization of the establishment in which the work is performed.  This "directly and closely related" work includes routine work which necessarily arises out of the administrative duties, and routine work without which the employee's more important work cannot be performed properly.  It also includes a variety of routine tasks which may not be essential to the proper performance of the more important duties but which are functionally related to them directly and closely.  In this latter category are activities which an administrative employee may reasonably be expected to perform in connection with carrying out his administrative functions including duties which either facilitate or arise incidentally from the performance of such functions and are commonly performed in connection with them.

(d)       These "directly and closely related" duties are distinguishable from the last group, category (iii), those which are remotely related or completely unrelated to the more important tasks.  The work in this last category is nonexempt and must not exceed the 20 percent limitation for nonexempt work (up to 40 percent in the case of an employee of a retail or service establishment) if the exemption is to apply.

(3)       Nonmanual work.

(a)       The requirement that the work performed by an exempt administrative employee must be office work or non-manual work restricts the exemption to "white-collar" employees who meet the tests.  If the work performed is "office" work it is immaterial whether it is manual or nonmanual in nature.  This is consistent with the intent to include within the term "administrative" only employees who are basically white-collar employees since the accepted usage of the term "white-collar" includes all office workers.  Persons employed in the routine operation of office machines are engaged in office work within the meaning of ARM 24.16.202 (although they would not qualify as administrative employees since they do not meet the other requirements of ARM 24.16.202.)

(b)       ARM 24.16.202 does not completely prohibit the performance of manual work by an "administrative" employee.  The performance by an otherwise exempt administrative employee of some manual work which is directly and closely related to the work requiring the exercise of discretion and independent judgment is not inconsistent with the principal that the exemption is limited to "white-collar" employees.  However, if the employee performs so much manual work (other than office work) that he cannot be said to be basically a "white-collar" employee he does not qualify for exemption as a bona fide administrative employee, even if the manual work he performs is directly and closely related to the work requiring the exercise of discretion and independent judgment.  Thus, it is obvious that employees who spend most of their time in using tools, instruments, machinery, or other equipment, or in performing repetitive operations with their hands, no matter how much skill is required, would not be bona fide administrative employees within the meaning of MCA ARM 24.16.202.  An office employee, on the other hand, is a "white-collar" worker, and would not lose the exemption on the grounds that he is not primarily engaged in "nonmanual" work, although he would lose the exemption if he failed to meet any of the other requirements.

(4)       Directly related to management policies or general business operations.

(a)       The phrase "directly related to management policies or general business operations of his employer or his employer's customers" describes those types of activities relating to the administrative operations of a business as distinguished from "production" or, in a retail or service establishment, "sales" work.  In addition to describing the types of activities, the phrase limits the exemption to persons who perform work of substantial importance to the management or operation of the business of his employer or his employer's customers.

(b)       The administrative operations of the business include the work performed by so-called white-collar employees engaged in "servicing" a business as, for example, advising the management, planning, negotiating, representing the company, purchasing, promoting sales, and business research and control.  An employee performing such work is engaged in activities relating to the administrative operations of the business not withstanding that he is employed as an administrative assistant to an executive in the production department of the business.

(c)        As used to describe work of substantial importance to the management or operation of the business, the phrase "directly related to management policies or general business operations" is not limited to persons who participate in the business as a whole.  Employees whose work is "directly related" to management policies or to general business operations include those whose work affects policy or whose responsibility it is to execute or carry it out.  The phrase also includes a wide variety of persons who either carry out major assignments in conducting the operations of the business, or whose work affects business operations to a substantial degree, even though their assignments are tasks related to the operation of a particular segment of the business.

(i)     It is not possible to lay down specific rules that will indicate the precise point at which work becomes of substantial importance of the management or operation of a business.  It should be clear that the cashier of a bank performs work at a responsible level and may therefore be said to be performing work directly related to management policies or general business operations.  On the other hand, the bank teller does not.  Likewise it is clear that bookkeepers, secretaries, and clerks of various kinds hold the run-of-the-mill positions in any ordinary business and are not performing work directly related to management policies or general business operations.  On the other hand, a tax consultant employed either by an individual company or by a firm of consultants is ordinarily doing work of substantial importance to the management or operation of a business.

(ii)        An employee performing routine clerical duties obviously is not performing work of substantial importance to the management or operation of the business even though he may exercise some measure of discretion and judgment as to the manner in which he performs his clerical tasks.  A messenger boy who is entrusted with carrying large sums of money or securities cannot be said to be doing work of importance to the business even though serious consequences may flow from his neglect.  An employee operating very expensive equipment may cause serious loss to his employer by the improper performance of his duties.  An inspector, such as, for example, an inspector for an insurance company, may cause loss to his employer by the failure to perform his job properly.  But such employees, obviously, are not performing work of such substantial importance to the management or operation of the business that it can be said to be "directly related to management policies or general business operations" as that phrase is used in ARM 24.16.202.

(iii)· Some firms employ persons whom they describe as "statisticians".  If all such a person does in effect, is to tabulate data, he is clearly not exempt.  However, if such an employee makes analysis of data and draws conclusions which are important to the determination or, or which in fact, determine financial merchandising, or other policy, clearly he is doing work directly related to management policies or general business operations.  Similarly, a personnel employee may be a clerk at a hiring window of a plant, or he may be a man who determines or effects personnel policies affecting all the workers in the establishment.  In the latter case, he is clearly doing work directly related to management policies or general business operations.  These examples illustrate the two extremes.  In each case, between these extreme types there are many employees whose work may be of substantial importance to the management or operation of the business, depending upon the particular facts.

(A)       Another example of an employee whose work may be important to the welfare of the business is a buyer of a particular article or equipment in an industrial plant or personnel commonly called assistant buyers in retail or service establishments.  Where such work is of substantial importance to the management or operation of the business, even though it may be limited to purchasing for a particular department of the business, it is directly related to management policies or general business operations.

(B)       The test of "directly related to management policies or general business operations" is also met by many persons employed as advisory specialists and consultants of various kinds, credit managers, safety directors, claim agents and adjusters, wage-rate analysts, tax experts, account executives of advertising agencies, promotion men, and many others.

(C)       It should be noted in this connection that an employer's volume of activities may make it necessary to employ a number of employees in some of these categories.  The fact that there are a number of other employees of the same employer carrying out assignments of the same relative importance or performing identical work does not affect the determination of whether they meet this test so long as the work of each such employee is of substantial importance to the management or operation of the business.

(d)       Under ARM 24.16.202 the "management policies or general business operations" may be those of the employer or the employer's customers.  For example, many bona fide administrative employees perform important functions as advisers and consultants but are employed by a concern engaged in furnishing such services for a fee.  Typical instances are tax experts, labor relations consultants, financial consultants, or resident buyers.  Such employees, if they meet the other requirements of ARM 24.16.202, qualify for exemption regardless of whether the management policies or general business operations to which their work is directly related are those of their employer's clients or customers, or those of their employer.

(5)       Primary duty.

(a)       The definition of "administrative" exempts only employees who are primarily engaged in the responsible work which is characteristic of employment in a bona fide administrative capacity.  Thus, the employees must have as his primary duty, office or nonmanual work directly related to management policies or general business operations of his employers or his employer's customers.

(b)       In determining whether an employee's exempt work meets the "primary duty" requirement, the principles explained in section (3) of ARM 24.16.204 in the discussion of "primary duty" under the definition of "executive" are applicable.

(6)       Discretion and independent judgment.

(a)       In general, the exercise of discretion and independent judgment involves the comparison and the explanation of possible courses of conduct and acting or making a decision after the various possibilities have been considered.  The term as used in the regulations, implies that the person has the authority or power to make an independent choice, free from immediate direction or supervision and with respect to matters of significance.

(b)       The term must be applied in the light of all the facts involved in the particular employment situation in which the question arises.  It has been most frequently misunderstood and misapplied by employers and employees in cases involving the following:

(i)       Confusion between the exercise of discretion and independent judgment, and the use of skill in applying techniques, procedures, or specific standards; and

(ii)        Misapplication of the term to employees making decisions relating to matters of little consequence.

(c)        Distinguished from skills and procedures:

Perhaps the most frequent cause of misapplication of the term "discretion and independent judgment" is the failure to distinguish it from the use of skill in various respects.  An employee who merely applies his knowledge in following prescribed procedures or determining which procedure to follow, or who determines whether specific standards are met or whether an object falls into one or another of a number of definite grades, classes, or other categories, with or without the use of testing or measuring devices, is not exercising descretion and independent judgment within the meaning of ARM 24.16.202.  This is true even if there is some leeway in reaching a conclusion, as when an acceptable standard includes a range or a tolerance above or below a specific standard.

(i)         A typical example of the application of skills and procedures is ordinary inspection work of various kinds.  Inspectors normally perform specialized work along standardized lines involving well established techniques and procedures which may have been catalogued and described in manuals or other sources.  Such inspectors rely on techniques and skills acquired by special training or experience.  They may have some leeway in the performance of their work but only within closely prescribed limits.  Employees of this type may make recommendations on the basis of the information they develop in the course of their inspections (as for example to accept or reject an insurance risk or a product manufactured to specifications), but these recommendations are based on the development of the facts as to whether there is conformity with the prescribed standards.  In such cases a decision to depart from the prescribed standards or the permitted tolerance is typically made by the inspector's superior.  The inspector is engaged in exercising skill rather than discretion and independent judgment within the meaning of the regulations.

(ii)        A related group of employees usually called examiners or graders perform similar work involving the comparison of products with established standards which are frequently catalogued.  Often, after continued reference to the written standards, or through experience, the employee acquires sufficient knowledge so that reference to written standards is unnecessary.  The substitution of the employee's memory for the manual of standards does not convert the character of the work performed to work requiring the exercise of discretion and independent judgment as required by the regulations.  The mere fact that the employee uses his knowledge and experience does not change his decision, i.e., that the product does or does not conform with the established standard, into a real decision in a significant matter.

(iii)· For example, certain "graders" of lumber turn over each "stick" to see both sides, after which a crayon mark is made to indicate the grade.  These lumber grades are well established and the employee's familiarity with them stems from his experience and training.  Skill rather than discretion and independent judgment is exercised in grading the lumber.  This does not necessarily mean, however, that all employees who grade lumber or other commodities are not exercising discretion and independent judgment.  Grading of commodities for which there are no recognized or established standards may require the exercise of discretion and independent judgment as contemplated by the regulations.  In addition, in those situations in which an otherwise exempt buyer does grading, the grading, even though routine work may be considered exempt if it is directly and closely related to the exempt buying.

(iv)       Another type of situation where skill in the application of techniques and procedures is sometimes confused with discretion and independent judgment is the "screening" of applicants by a personnel clerk.  Typically such an employee will interview applicants and obtain from them data regarding their qualifications and fitness for employment.  These data may be entered on a form specially prepared for the purpose.  The "screening" operation consists of rejecting all applicants who do not meet standards for the particular job or for the employment by the company.  The standards are usually set by the employee's superior or other company officials, and the decision to hire from the group of applicants who do meet the standards is similarly made by other company officials.  It seems clear that such a personnel clerk does not exercise discretion and independent judgment as required by the regulations.  On the other hand an exempt personnel manager will often perform similar functions; that is, he will interview applicants to obtain the necessary data and eliminate applicants who are not qualified.  The personnel manager will then hire one of the qualified applicants.  Thus, when the interviewing and screening are performed by the personnel manager who does the hiring they constitute exempt work, even though routine, because this work is directly and closely related to the employee's exempt functions.

(v)        Similarly, comparison shopping performed by an employee of a retail store who merely reports to the buyer his findings as to the prices at which a competitor's store is offering merchandise of the same or comparable quality does not involve the exercise of discretion and judgment as required in the regulations.  Discretion and judgment are exercised, however by the buyer who evaluates the assistant's reports and on the basis of their findings directs that certain items be repriced.  When performed by the buyer who actually makes the decisions which effect the buying or pricing policies of the department he manages, the comparison shopping although in itself a comparatively routine operation, is directly and closely related to his managerial responsibility.

(d)       Decisions in significant matters:

(i)         The second type of situation in which some difficulty with this phrase has been experienced relates to the level or importance of the matters with respect to which the employee may make decisions.  In one sense almost every employee is required to use some discretion and independent judgment.  Thus, it is frequently left to a truck driver to decide which route to follow in going from one place to another; the shipping clerk is normally permitted to decide the method of packing and the mode of shipment of small orders; and the bookkeeper may usually decide whether he will post first to one ledger rather than another.  Yet it is obvious that these decisions do not constitute the exercise of discretion and judgment of the level contemplated by the regulations.  The Division has consistently taken the position that decisions of this nature concerning relatively unimportant matters are not those intended by the regulations, but that the discretion and independent judgment exercised must be real and substantial, that is, they must be exercised with respect to matters of consequence.  This interpretation has also been followed by courts in decisions involving the application of the regulations in this part, to particular cases.

(ii)        It is not possible to state a general rule which will distinguish in each of the many thousands of possible factual situations between the making of real decisions in significant matters and the making of choices involving matters of little or no consequence.  It should be clear, however, that the term "discretion and independent judgment," within the meaning of the regulations, does not apply to the kinds of decisions normally made by persons who formulate or participate in the formulation of policy within their spheres of responsibility or who exercise authority within a wide range to commit their employer in  substantial respects financially or otherwise.

(iii)· The regulations, however, do not require the exercise of discretion and independent judgment at so high a level.  The regulations also contemplate the kind of discretion and independent judgment exercise by an administrative assistant to an executive, who without specific instructions or prescribed procedures, arranges interviews and meetings, and handles callers and meetings himself where the executive's personal attention is not required.  It includes 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.  It may include the kind of discretion and judgment exercised by buyers, certain wholesale salesmen, representatives, and other contact persons who are given reasonable latitude in carrying on negotiations on behalf of their employers.

(e)       Final decisions not necessary:

(i)      The term "discretion and independent judgment" as used in the regulations does not necessarily imply that the decisions made by the employee must have a finality that goes with unlimited authority and a complete absence of review.  The decisions made as a result of the exercise of discretion and independent judgment may consist of recommendations for action rather than the actual taking of action.  The fact that an employee's decision may be subject to review and that upon occasion the decisions are reviewed or reversed after review does not mean that the employee is not exercising discretion and independent judgment within the meaning of the regulations.  For example, the assistant to the president of a large corporation may regularly reply to correspondence addressed to the president.  Typically, such an assistant will submit the more important replies to the president for review before they are sent out.  Upon occasion, after review, the president may alter or discard the prepared reply and direct that another be sent instead.  This action by the president would not, however, destroy the exempt character of the assistant's function, and does not mean that he does not exercise discretion and independent judgment in answering correspondence and in deciding which replies may be sent out without review by the president.

(ii)        The policies formulated by the credit manager of a large corporation may be subject to review by higher company officials who may approve or disapprove these policies.  The management consultant who has made a study of the operations of a business and who has drawn a proposed change in organization, may have the plan reviewed or revised by his superiors before it is submitted to the client.  The purchasing agent may be required to consult with top management officials before making a purchase commitment for raw materials in excess of the contemplated plant needs for a stated period, say 6 months.  These employees exercise discretion and independent judgment within the meaning of the regulations despite the fact that their decisions or recommendations are reviewed at a higher level.

(f)        Distinguished from loss through neglect:  A distinction must also be made between the exercise of discretion and independent judgment with respect to matters of consequence and the cases where serious consequences may result from the negligence of an employee, the failure to follow instruction or procedures, the improper application of skills, or the choice of the wrong techniques.  The operator of a very intricate piece of machinery, for example, may cause a complete stoppage of production or a breakdown of his very expensive machine merely by pressing the wrong button.  A bank teller who is engaged in receipt and disbursement of money at a teller's window and in related routine bookkeeping duties may, be crediting the wrong account with a deposit, cause his employer to suffer a large financial loss.  An inspector charged with responsibility for loading oil onto a ship may, by not applying correct techniques fail to notice the presence of foreign ingredients in the tank with resulting contamination of the cargo and serious loss to his employer.  In these cases, the work of the employee does not require the exercise of discretion and independent judgment within the meaning of the regulations.

(g)       Customarily and regularly:  The work of an exempt administrative employee must require the exercise of discretion and independent judgment customarily and regularly.  The phrase "customarily and regularly" signifies a frequency which must be greater than occasional but which, of course, may be less than constant.  The requirement will be met by the employee who normally and recurrently is called upon to exercise and does exercise discretion and independent judgment in the day-to-day performance of his duties.  The requirement is not met by the occasional exercise of discretion and independent judgment.

(7)       Directly and closely related.

(a)       As indicated in ARM 24.16.205, work which is directly and closely related to the performance of the work described in ARM 24.16.202 is considered exempt work.  Some illustrations may be helpful in clarifying the differences between such work and work which is unrelated or only remotely related to the work described in ARM 24.16.202.

(b)       For purposes of illustration, the case of a high-salaried management consultant about whose exempt status as an administrative employee there is no doubt will be assumed.  The particular employee is employed by a firm of consultants and performs work in which he customarily and regularly exercises discretion and independent judgment.  The work consists primarily of analyzing and recommending changes in, the business operations of his employer's client.  This work falls in the category of exempt work described in ARM 24.16.202.

(i)       In the course of performing that work, the consultant makes extensive notes recording the flow of work and materials through the office and plant of the client.  Standing alone or separated from the primary duty such note-making would be routine in nature.  However, this is work without which the more important work cannot be performed properly.  It is "directly and closely related" to the administrative work and is therefore exempt work.  Upon his return to the office of his employer the consultant personally types his report and draws, first in rough and then in final form, a proposed table of organization to be submitted with it.  Although all this work may not be essential to the proper performance of his more important work, it is all directly and closely related to that work and should be considered exempt.  While it is possible to assign the typing and final drafting to nonexempt employees and in fact it is frequently the practice to do so, it is not required as a condition of exemption that it be so delegated.

(ii)        Finally, if because this particular employee has a special skill in such work, he also drafts tables or organization proposed by other consultants, he would then be performing routine work wholly unrelated, or at best only remotely related, to his more important work.  Under such conditions, the drafting is nonexempt.

(c)        Another illustration is the credit manager who makes and administers the credit policy of his employer.  Establishing credit limits for customers and authorizing the shipment of orders on credit, including the decisions to exceed or otherwise vary these limits in the case of particular customers, would be exempt work of the kind specifically described in ARM 24.16.202.  Work which is directly and closely related to these exempt duties may include such activities as checking the status of accounts to determine whether the credit limit would be exceeded by the shipment of a new order, removing credit reports from the files for analysis and writing letters giving credit data and experience to other employers or credit agencies.  On the other hand, any general office or bookkeeping work is nonexempt work.  For instance, posting to the accounts receivable ledger would be only remotely related to his administrative work and must be considered nonexempt.

(d)       One phase of the work of an administrative assistant to a bona fide executive or administrative employee provides another illustration.  The work of determining whether to answer correspondence personally, call it to his superior's attention, or route it to someone else for reply requires the exercise of discretion and independent judgment and is exempt work of the kind described in ARM 24.16.202.  Opening the mail for the purpose of reading it to make the decisions indicated will be directly and closely related to the administrative work described.  However, merely opening mail and placing it unread before his superior or some other person, would be related only remotely, if at all, to any work requiring the exercise of discretion and independent judgment.

(e)       The following additional examples may also be of value in applying these principles.  A traffic manager is employed to handle the company's transportation problems.  The exempt work performed by such an employee would include planning the most economical and quickest routes for shipping merchandise to and from the plant, contracting for common carrier and other transportation facilities, negotiating with carriers for adjustments for damages to merchandise in transit and making the necessary rearrangements resulting from delays, damages, or irregularities in transit.  This employee may also spend part of his time taking "city orders" (for local deliveries) over the telephone.  The order-taking is a routine function not "directly and closely related" to the exempt work and must be considered nonexempt.

(f)        An office manager who does not supervise two or more employees would not meet the requirements for exemption as an executive employee but may possibly qualify for exemption as an administrative employee.  Such an employee may perform administrative duties, such as the execution of the employer's credit policy, the management of the company's traffic, purchasing, and other responsible office work requiring the customary and regular exercise of discretion and judgment, which are clearly exempt.  On the other hand, this office manager may perform all the bookkeeping, prepare the confidential or regular payrolls, and send out monthly statements of account.  These latter activities are not "directly and closely related" to the exempt functions and are not exempt.

(8)       Percentage limitations on nonexempt work.

(a)       Under subsection (d) of ARM 24.16.201 an employee will not qualify for exemption as an administrative employee if he devotes more than 20 percent, or, in the case of an employee of a retail or service establishment if he devotes as much as 40 percent, of his hours worked in the workweek to nonexempt work; that is, to activities which are not directly and closely related to the performance of the work described in subsections (1) through (3) of ARM 24.16.202.

(b)       This test is applied on a workweek basis and the percentage of time spent on nonexempt work is computed on the time worked by the employee.

(c)        The tolerance for nonexempt work allows the performance of nonexempt manual or nonmanual work within the percentages allowed for all types of nonexempt work.

(d)       Refer to subsection (12) (b) of ARM 24.16.204 for the definition of a retail or service establishment as this term is used in paragraph (a) of this section.

(9)       Trainees, administrative.  The exemption is applicable to an employee employed in a bona fide administrative capacity and does not include employees training for employment in an administrative capacity who are not actually performing the duties of an administrative employee.

(10)     Amount of salary or fees required.

(a)     Except as otherwise noted in subsection (b) of this subsection, compensation on a salary or fee basis at a rate of not less than $150 a week, exclusive of board, lodging, or other facilities, is required for exemption as an "administrative" employee.  The requirement will be met if the employee is compensated biweekly on a salary basis of $300, semimonthly on a salary basis of $325, or monthly on a salary basis of $650.

(b)       The payment of the required salary must be exclusive of board, lodging, or other facilities; that is, free and clear.  On the other hand, the regulations do not prohibit the sale of such facilities to administrative employees on a cash basis if they are negotiated in the same manner as similar transactions with other persons.

(11)     Salary basis.  The explanation of the salary basis of payment made in subsection (18) of ARM 24.16.204 in connection with the definition of "executive" is also applicable in the definition of "administrative".

(12)     Fee basis.  The requirements for exemption as an administrative employee may be met by an employee who is compensated on a fee basis as well as by one who is paid on a  salary basis.  For a discussion of payment on a fee basis, see subsection (13) of ARM 24.16.206.

(13)     Special proviso for high salaried administrative employees.

(a)       Except as otherwise noted in paragraph (b) of this subsection, ARM 24.16.206 contains a special proviso including within the definition of "administrative" an employee who is compensated on a salary or fee basis at a rate of not less than $200 per week exclusive of board, lodging, or other facilities, and whose primary duty consists of either the performance of office or nonmanual work directly related to management policies or general business operations of his employer or his employer's customers, where the performance of such primary duty includes work requiring the exercise of discretion and independent judgment.  Such a highly paid employee engaged in such work as his primary duty is deemed to meet all the requirements in subsections (1) through (5).  If an employee qualifies for exemption under this provision, it is not necessary to test his qualifications in detail under (1) through (5).  (History:  Sec. 39-3-403, MCA; IMP, Sec. 39-3-406 (1)(j) MCA; Eff. 12/31/72.)

24.16.206 EMPLOYEE EMPLOYED IN A BONA FIDE PROFESSIONAL CAPACITY (1)  General.  The term "professional" is not restricted to the traditional professions of law, medicine, and theology.  It includes those professions which have a recognized status and which are based on the acquirement of professional knowledge through prolonged study.  It also includes the artistic professions, such as acting or music.  Since the test of the bona fide professional capacity of such employment is different in character from the test for persons in the learned professions, an alternative test for such employees is contained in the regulations, in addition to the requirements common to both groups.

(2)       Learned professions.

(a)       The "learned" professions are described in subsection (1)(a) of ARM 24.16.203 as those requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study as distinguished from a general academic education and from an apprenticeship and from training in the performance of routine mental, manual or physical processes.

(b)       The first element in the requirement is that the knowledge be of an advanced type.  Thus, generally speaking, it must be knowledge which cannot be attained at the high school level.

(c)        Second, it must be knowledge in a field of science or learning.  This serves to distinguish the professions from the mechanical arts where in some instances the knowledge is of a fairly advanced type, but not in a field of science or learning.

(d)      The requisite knowledge, in the third place, must be customarily acquired by a prolonged course of specialized intellectual instruction and study.  Here it should be noted that the word "customarily" has been used to meet a specific problem occurring in many industries.  As is well known, even in the classical profession of law, there are still a few practitioners who have gained their knowledge by home study and experience.  Characteristically, the members of the profession are graduates of law schools, but some few of their fellow professionals whose status is equal to theirs, whose attainments are the same, and whose work is the same did not enjoy that opportunity.  Such persons are not barred from the exemption.  The word "customarily" implies that in the vast majority of cases the specific academic training is a prerequisite for entrance into the profession.  It makes the exemption available to the occasional lawyer who has not gone to law school, or the occasional chemist who is not the possessor of a degree in chemistry, etc., but is does not include the members of such quasi-professions as journalism in which the bulk of the employees have acquired their skill by experience rather than by any formal specialized training.  It should be noted also that many employees in these quasi-professions may qualify for exemption under other sections of the regulations or under the alternative paragraph of the "professional" definition applicable to the artistic fields.

(e)       No need appears to translate the word "prolonged" into arithmetical terms.  Generally speaking, the professions which meet this requirement will include law, medicine, nursing, accountancy, actuarial computation, engineering, architecture, teaching, various types of physical, chemical and biological sciences, including pharmacy and so forth.  The typical symbol of the professional training and the best prima facie evidence of its possession is, of course, the appropriate academic degree, and in these professions an advanced academic degree is a standard (if not absolutely universal) prerequisite.

(f)        Many accountants are exempt as professional employees (regardless of whether they are employed by public accounting firms or by other types of enterprises).  However, exemption of accountants, as in the case of other occupational groups (subsection (8)), must be determined on the basis of the individual employees duties and the other criteria in the regulations.  It has been the Divisions' experience that certified public accountants who meet the salary requirement of the regulations will, except in unusual cases, meet the requirements of the professional exemption since they meet the tests contained in ARM 24.16.203.  Similarly, accountants who are not certified public accountants may also be exempt as professional employees if they actually perform work which requires the consistent exercise of discretion and judgment and otherwise meet the tests prescribed in the definition of "professional" employee. Accounting clerks, junior accountants, and other accountants, on the other hand, normally perform a great deal of routine work which is not an essential part of and necessarily incident to any professional work which they may do.  Where these facts are found such accountants are not exempt.  The title "Junior Accountant", however, is not determinative of failure to qualify for exemption any more than the title "Senior Accountant" would necessarily imply that the employee is exempt.

(3)       Artistic professions.

(a)       The requirements concerning the character of the artistic type of professional work are contained in subsection (1) (a)(ii) of ARM 24.16.206.  Work of this type is original and creative in character in a recognized field of artistic endeavor (as opposed to work which can be produced by a person endowed with general manual or intellectual ability and training), and the result of which depends primarily on the invention, imagination, or talent of the employee.

(b)       The work must be "in a recognized field of artistic endeavor."  This includes such fields as music, writing, the theater, and the plastic and graphic arts.

(c)        (i)  The work must be original and creative in character, as opposed to work in which can be produced by a person endowed with general manual or intellectual ability and training.  In the field of music there should be little difficulty in ascertaining the application of this requirement.  Musicians, composers, conductors, soloists, all are engaged in original and creative work within the sense of this definition.  In the plastic and graphic arts the requirements are, generally speaking, met by painters who at most are given the subject matter of their painting.  It is similarly met by cartoonists who are merely told the title or underlying concept of a cartoon and then must rely on their own creative powers to express the concept.  It would not normally be met by a person who is employed as a copyist, or as an "animator" of motion-picture cartoons, or as a retoucher of photographs since it is not believed that such work is properly described as creative in character.

(ii)        In the field of writing the distinction is perhaps more difficult to draw.  Obviously the requirement is met by essay-  ists or novelists or scenario writers who choose their own subjects and hand in a finished piece of work to their employers (the majority of such persons are, of course, not employees but self-employed).  The requirement would also be met, generally speaking, by persons holding the more responsible writing position in advertising agencies.

(d)       Another requirement is that the employee be engaged in work "the result of which depends primarily on the invention, imagination, or talent of the employee".  This requirement is easily met by a person employed as an actor, or a singer, or a violinist, or a short-story writer.  In the case of newspaper employees the distinction here is similar to the distinction observed above in connection with the requirement that the work be "original and creative in character".  Obviously the majority of reporters do work which depends primarily on intelligence, diligence, and accuracy.  It is the minority whose work depends primarily on "invention, imagination, or talent".  On the other hand, this requirement will normally be met by actors, musicians, painters, and other artists.

(e)       The field of journalism also employs many exempt as well as many nonexempt employees under the same or similar job titles.  Newspaper writers and reporters are the principal categories of employment in which this is found.

(i)         Newspaper writers, with possible rare exceptions in certain highly technical fields, do not meet the requirements of subsection (a) of ARM 24.16.206 for exemption as professional employees of the "learned" type.  Exemption for newspaper writers as professional employees is normally available only under the provisions for professional employees of the "artistic" type.  Newspaper writing of the exempt type must therefore, be "predominantly original and creative in character".  Only writing which is analytical, interpretative or highly individualized is considered to be creative in nature.  (The writing of fiction to the extent that it may be found on a newspaper would also be considered as exempt work.)  Newspaper writers commonly performing work which is original and creative within the meaning of ARM 24.16.203 are editorial writers, columnists, critics, and "top-flight" writers of analytical and interpretative articles.

(ii)        The reporting of news, the rewriting of stories received from various sources, or the routine editorial work of a newspaper is not predominantly original and creative in character within the meaning of and must be considered as non-  exempt work.  Thus, a reporter or news writer ordinarily collects facts about news events by investigation, interview, or personal observation and writes stories reporting these events for publication, or submits the facts to a rewrite man or other editorial employees for story preparation.  Such work is nonexempt work.  The leg man, the reporter covering a police beat, the reporter sent out under specific instructions to cover a murder, fire, accident, ship arrival, convention, sport event, etc., are normally performing duties which are not professional in nature within the meaning of the Act and ARM 24.16.

203.

(iii) Incidental interviewing or investigation, when it is performed as an essential part of and is necessarily incident to an employee's professional work, however, need not be counted as non-exempt work.  Thus, if a dramatic critic interviews an actor and writes a story around the interview, the work of interviewing him and writing the story would not be considered as nonexempt work.  However, a dramatic critic who is assigned to cover a routine news event such as a fire or a convention would be doing nonexempt work since covering the fire or the convention would not be necessary and incident to his work as a dramatic critic.

(4)       Primary duty.

(a)       For a general explanation of the term "primary duty" see the discussion of this term under "executive" in subsection (3) of ARM 24.16.204.  See also the discussion under "administrative" in subsection (5).

(5)       Discretion and judgment.

(a)       Under ARM 24.16.203 a professional employee must perform work which requires the consistent exercise of discretion and judgment in its performance.

(b)       A prime characteristic of professional work is the fact that the employee does apply his special knowledge or talents with discretion and judgment.  Purely mechanical or routine work is not professional.

(6)       Predominantly intellectual and varied.  ARM 24.16.203 requires that the employee be engaged in work predominantly intellectual and varied in character as opposed to routine mental, manual, mechanical, or physical work.  This test applies to the type of thinking which must be performed by the employee in question.  While a doctor may make 20 physical examinations in the morning and perform in the course of his examinations essentially similar tests, it requires not only judgment and discretion on his part but a continual variety in his interpretation of the tests to perform satisfactory work.  Likewise, although a professional chemist may make a series of similar tests, the problems presented will vary as will the deductions to be made therefrom.  The work of the true professional is inherently varied even though similar outward actions may be performed.

(7)       Essential part of and necessarily incident to.

(a)       Subsection (d) of ARM 24.16.203, it will be noted, has the effect of including within the exempt work activities which are an essential part of and necessarily incident to the professional work described in subsections (a) through (c).  This provision recognized the fact that there are professional employees whose work necessarily involves some of the actual routine physical tasks also performed by obviously nonexempt employees.  For example, a chemist performing important and original experiments frequently finds it necessary to perform himself some of the most menial tasks in connection with the operation of his experiments, even though at times these menial tasks can be conveniently or properly assigned to laboratory assistants.  See also the example of incidental interviewing or investigation in subsection (3) (e) (iii) of ARM 24.16.206.

(b)       It should be noted that the test of whether routine work is exempt is different in the definition of "professional" from that in the definition of "executive" and "administrative".  Thus, while routine work will be exempt if it is "directly and closely related" to the performance of the professional duties will not be exempt unless it is also "an essential part of and necessarily incident to" the professional work.

(8)       Nonexempt work generally.

(a)       It has been the Divisions' experience that some employers erroneously believe that anyone employed in the field of accountancy, engineering, or other professional fields, will qualify for exemption as a professional employee by virtue of such employment.  While there are many exempt employees in these fields, the exemption of any individual depends upon his duties and other qualifications.

(b)       It is necessary to emphasize the fact that Section 39-3-406(1)(j)MCA exempts "any employee employed in a bona fide * * * professional capacity".  It does not exempt all employees of professional employers, or all employees in industries having large numbers of professional members, or all employees in any particular occupation.  Nor does it exempt as such, those learning a profession.  Moreover, it does not exempt persons with professional training, who are working in professional fields, but performing subprofessional or routine work.  For example, in the field of library science there are large numbers of employees who are trained librarians but who, nevertheless, do not perform professional work or receive salaries commensurate with recognized professional status.  The field of "engineering" has many persons with "engineer" titles, who are not professional engineers, as well as many who are trained in the engineering profession, but are actually working as trainees, junior engineers, or draftsmen.

(9)       20-percent nonexempt work limitation.  Time spent in nonexempt work, that is, work which is not an essential part of and necessarily incident to the exempt work, is limited to 20 percent of the time worked by the employee in the workweek.

(10)     Trainees, professional.  The exemption applies to an employee employed in a bona fide professional capacity and does not include trainees who are not actually performing the duties of a professional employee.

(11)     Amount of salary or fees required.

(a)       Except as otherwise noted in paragraphs (b) and (c) of this subsection, compensation on a salary or fee basis at a rate of not less than $150 per week, exclusive of board, lodging, or other facilities, is required for exemption as a "professional" employee.  An employee will meet the requirement if he is paid a biweekly salary of $300, a semi monthly salary of $325, or a monthly salary of $650.

(b)       The payment of the compensation specified in subsection (a) or (b) of this subsection is not a requisite for exemption in the case of employees exempted from this requirement by the proviso to subsection (e) of ARM 24.16.204, as explained in subsection (14) of ARM 24.16.206.

(c)        The payment of the required salary must be exclusive of board, lodging, or other facilities; that is free and clear.  On the other hand, the regulations do not prohibit the sale of such facilities to professional employees on a cash basis if they are negotiated in the same manner as similar transactions with other persons.

(12)     Salary basis.  The salary basis of payment is explained in subsection (18) of ARM 24.16.204 in connection with the definition of "executive".

(13)     Fee basis.

(a)       The requirement for exemption as a professional (or administrative) employee may be met by an employee who is compensated on a fee basis as well as by one who is paid on a salary basis.

(b)       Little or no difficulty arises in determining whether a particular employment arrangement involves payment on a fee basis.  Such arrangements are characterized by the payment of an agreed sum for a single job regardless of the time required for its completion.  These payments in a sense resemble piece-work payments with the important distinction that generally speaking a fee payment is made for the kind of job which is unique rather than for a series of jobs which are repeated an indefinite number of times and for which payment on an identical basis is made over and over again.  Payments based on the number of hours or days worked and not on the accomplishment of a given single task are not considered payments on a fee basis.  The type of payment contemplated in the regulations is thus readily recognized.

(c)        The adequacy of a fee payment - whether it amounts to payment at a rate of not less than $150 per week to a professional employee or at a rate of not less than $150 per week to an administrative employee can ordinarily be determined.  In determining whether payment is at the rate specified in the regulations, the amount paid to the employee will be tested by reference to a standard workweek of 40 hours.  Thus compliance will be tested in each case of a fee payment by determining whether the payment is at a rate which would amount to at least $150 per week to a professional employee or at a rate of not less than $150 per week to an administrative employee can ordinarily be determined only after the time worked on the job has been determined.  In determining whether payment is at the rate specified in the regulations, the amount paid to the employee will be tested by reference to a standard workweek of 40 hours.  Thus compliance will be tested in each case of a fee payment by determining whether the payment is at a rate which would amount to at least $150 per week to a professional employee or at a rate of not less than $150 per week to an administrative employee if 40 hours were worked.

(d)       The following examples will illustrate the principle stated above:

(i)         A singer receives $50 for a song on a 15 minute program (no rehearsal time is involved).  Obviously the requirement will be met since the employee would earn $150 at this rate of pay in far less than 40 hours.

(ii)        An artist is paid $90 for a picture.  Upon completion of the assignment, it is determined that the artist worked 20 hours.  Since earnings at this rate would yield the artist $180 if 40 hours were worked, the requirement is met.

(iii) An illustrator is assigned the illustration of a pamphlet at a fee of $120.  When the job is completed it is determined that the employee worked 60 hours.  If he worked 40 hours at this rate, the employee would have earned only $100.  The fee payment of $120 for work which required 60 hours to complete therefore does not meet the requirement of payment at a rate of $150 per week and the employee must be considered nonexempt.  It follows that if in the performance of this assignment the illustrator worked in excess of 40 hours in any week, overtime rates must be paid.  Whether or not he worked in excess of 40 hours in any week, records for such an employee would have to be kept in accordance with the regulations covering records for nonexempt employees.

(14)     Exception for physicians and lawyers.

(a)       A holder of a valid license or certificate permitting the practice of law or medicine or any of their branches, who is actually engaged in practicing the profession, or a holder of the requisite academic degree for the general practice of medicine who is engaged in an internship or resident program pursuant to the practice of his profession, is excepted from the salary or fee requirement.  This exception applies only to the traditional professions of law, medicine and not to employees in related professions which merely serve these professions.

(b)       In the case of medicine:

(i)         The exception applies to physicians and other practitioners licensed and practicing in the field of medical science and healing or any of the medical specialties practiced by physicians or practitioners.  The term physicians means medical doctors including general practitioners and specialist, and osteopathic physicians (doctors of osteopathy).  Other practitioners in the field of medical science and healing may include podiatrists (some times called chiropodists), dentists (doctors of dental medicine), optometrists (doctors of optometry or bachelors of science in optometry).

(ii)        Physicians and other practitioners included in subsection (i) of this subsection, whether or not licensed to practice prior to commencement of an internship or resident program, are expected from the salary or fee requirement during their internship or resident program, where such a training program is entered upon after the earning of the appropriate degree required for the general practice of their profession.

(c)        In the case of medical occupations, the exception from the salary or fee requirement does not apply to pharmacists, nurses, therapists, technologists, sanitarians, dietitians, social workers, psychologists, psychometrists, or other professions which service the medical profession.

(15)     Special proviso for high salaried professional employees.

(a)       Except as otherwise noted in subsection (b) of this section, the definition of "professional" contains a special proviso for employees who are compensated on a salary or fee basis at a rate of at least $200 per week exclusive of board, lodging, or other facilities.  Under this proviso, the requirements for exception in subsections (a) through (e) of ARM 24.16.203 will be deemed to be met by an employee who consists of the performance or work requiring knowledge of an advanced type in a field of science or learning, which includes work requiring the consistent exercise of discretion and judgment, or consists of the performance of work requiring invention, imagination, or talent in a recognized field of artistic endeavor.  Thus, the exemption will apply to highly paid employees employed either in one of the "learned" professions or in an "artistic" profession and doing primarily professional work.  If an employee qualifies for exemption under this proviso, it is not necessary to test his qualifications in detail under subsections (a) through (e) of ARM 24.16.203.  (History:  Sec. 39-3-403, MCA; IMP, Sec. 39-3-406(1)(j), MCA; Eff. 12/31/72.)