Tag Archives: Misclassification

M.D.Ga.: Dollar General “Store Manager” May Have Been Misclassified As Executive Exempt; Defendant’s Motion For SJ Denied

Myrick v. Dolgencorp, LLC

Pending before the Court was Defendant Dolgencorp, LLC’s (Dollar General) Motion for Summary Judgment, seeking an Order holding that Plaintiff, a “Store Manager” was subject to the Executive Exemption to the FLSA, and not entitled to overtime compensation.  The Court denied Defendant’s Motion, reasoning that a reasonable jury could find that Plaintiff’s primary duty was not management, as required for application of the Executive Exemption.

Discussing the applicable burden and facts of the case, the Court said, “Dollar General bears the burden of proving the executive exemption affirmative defense. Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1269 (11th Cir.2008). The Eleventh Circuit has recognized the “Supreme Court’s admonition that courts closely circumscribe the FLSA’s exceptions.” Nicholson v. World Bus. Network, Inc., 105 F.3d 1361, 1364 (11th Cir.1997). The exemption “is to be applied only to those clearly and unmistakably within the terms and spirit of the exemption.” Morgan, 551 F.3d at 1269 (quotation omitted). Thus, the Court is required to narrowly construe exemptions to the FLSA overtime requirement. Id .

The Eleventh Circuit does not use a “categorical approach” to decide whether an employee is an exempt executive. Id. “[W]e have noted the ‘necessarily fact-intensive nature of the primary duty inquiry,’ that ‘the answer is in the details,’ and that ‘where an issue turns on the particular facts and circumstances of a case, it is not unusual for there to be evidence on both sides of the question, with the result hanging in the balance.’ “ Id. (quotation and alteration omitted).

Department of Labor regulations interpret the executive exemption defense. Myrick’s claims span between 2001 and 2003. Accordingly, the “old regulations,” which were in effect prior to August 23, 2004, apply to this case. Id. at 1265-66. The regulations contain a short test that defines the phrase “employee employed in a bona fide executive … capacity.” 29 C.F.R. § 541.1 (2003). “This short test has three requirements: (1) an employee ‘is compensated on a salary basis at a rate of not less than $250 per week,’ (2) his ‘primary duty consists of the management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof,’ and (3) his work ‘includes the customary and regular direction of the work of two or more other employees.’ “ Id. at 1266 (quoting 29 C.F.R. § 541.1 (2003)).

Myrick does not dispute Dollar General’s argument or evidence showing that she met the salary requirement of the short test, or that she regularly directed the work of two other employees. Thus, the first and last requirements of the short test are met. The parties do, however, dispute the second element-whether Myrick’s primary duty was management.

1. Primary duty is management

The regulations provide examples of managerial tasks:

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 the property.  29 C.F.R. § 541.102.

The regulations do not, however, provide a definition of “primary duty.” “A determination of whether an employee has management as his primary duty must be based on all the facts in a particular case.” 29 C.F.R. § 541.103 (2003). The regulations provide a list of factors a court should consider when determining whether an employee’s primary duty is management. These factors are: (1) “[t]he amount of time spent in the performance of the managerial duties”; (2) “the relative importance of the managerial duties as compared with other types of duties”; (3) “the frequency with which the employee exercises discretionary powers”; (4) “his relative freedom from supervision”; and (5) “the relationship between [the employee's] salary and the wages paid other employees for the kind of nonexempt work performed by the supervisor.” Id.; Morgan, 551 F.3d at 1267.

a. The amount of time spent in the performance of managerial duties

Myrick testified during her deposition that she spent 20% of her time on managerial duties, and 80% of her time on non-managerial tasks.

Myrick also testified that she did managerial work. This included interviewing potential employees, reviewing the revenue reports, completing various paperwork, ordering merchandise, evaluating employees, preparing the work schedules, receiving mail, hiring some employees, investigating customer complaints, and reviewing store policies. (Myrick dep., pp. 33, 54, 70, 77, 94, 95-96, 99, 130-32, 166, 175, 227, 250).

Myrick was required to complete her paperwork at night after the store closed, and on occasion took the paperwork home with her. (Myrick dep., p. 281). It normally took her an hour every day to do the required paperwork. (Myrick dep., p. 131). Myrick had to perform this managerial task after store hours because “[w]hile I was at the store I was always busy doing something else. Didn’t have time to do paperwork.” (Myrick dep., p. 281).

The regulations state that “an employee who spends over 50 percent of his time in management would have management as his primary duty.” 29 C.F.R. § 541.103 (2003). Taking Myrick’s testimony as true, she does not meet the 50% threshold. However, “[t]ime alone … 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.” 29 C.F.R. § 541.103 (2003). Thus, the Court must consider the other four factors.

b. The relative importance of the managerial duties as compared with other types of duties

The Court must examine the importance of Myrick’s duties in light of their value to Dollar General. See Dalheim v. KDFW-TV, 918 F .2d 1220, 1227 (5th Cir.1990). Dollar General argues that Myrick’s managerial duties were most important, as she had more impact on store profitability than any other employee, and was responsible for ensuring profitability. Because of her efforts, the Quitman store “turned around.” (Myrick dep., p. 52). Myrick also testified that if the store manager leaves the store, “things don’t get done.” (Myrick dep., p. 173). Dollar General also argues that the importance of Myrick’s managerial tasks is evidenced by the Store Manager job description and the criteria on which she was evaluated as a Store Manager. Finally, Dollar General argues that the importance of Myrick’s managerial duties was reflected in the fact that Dollar General paid her a higher salary and she had bonus potential.

While Myrick did testify in her deposition that she thought the Store Manager had the most impact on store profitability (Myrick dep ., p. 173), when asked what she thought had more impact on the profitability of the stores, the managerial duties (scheduling, employee training, hiring, watching for inventory shrink, ensuring customer satisfaction) or the non-managerial duties (cleaning the bathroom, stocking the shelves, sweeping the floor), Myrick testified that “[i]t all goes together.” (Myrick dep., p. 174). Later, Myrick testified that some of the most important job duties she had as a Store Manager for Dollar General were “provid[ing] superior customer service, leadership.” (Myrick dep., p. 274). When asked what went into those tasks, Myrick identified making sure the store was stocked and clean, and making sure inventory got out on the floor. Id. These were all manual labor tasks that Myrick had to do herself because she did not have enough employees to do them. (Myrick dep., p. 276). And while Myrick did testify that she turned the Quitman store around through her efforts, when asked what she did differently than the previous store manager, Myrick stated that she “actually put the merchandise on the floor.” (Myrick dep., p. 52). When asked if she did anything else, Myrick testified, “No. That’s basically it.” Id.

Dollar General argues that Myrick has raised no issue of fact to dispute that Dollar General found her managerial duties to be of significant importance, and again points to the facts that Dollar General paid Myrick a higher salary and evaluated her on her managerial duties. Dollar General states that Myrick admitted to performing the duties outlined by the Store Manager job description, and that testimony further shows that Myrick performed managerial duties, rather than non-exempt duties. While a review of Myrick’s deposition confirms that she testified that she performed the job functions outlined in the job description, her testimony shows that her physical labor was required to meet these goals, including “facilitat[ing] the efficient staging, stocking and storage of merchandise by following defined company work processes,” “ensur [ing] that all merchandise is presented according to established practices, …” and “maintain[ing] a clean, well organized store, facilitat [ing] a safe and secure working and shopping environment.” (Doc. 26-3, p. 2).

Dollar General contends that what Myrick believed her most important duties to be is unimportant, as an employee’s primary duty is “what [the employee] does that is of principal value of the employer….” (Doc. 27, p. 6). Dollar General repeatedly states that the focus must be on what the employer values, not what the employee subjectively believes her employer values. Yet, the only evidence before the Court is Myrick’s subjective testimony about what she thought was and was not important. Dollar General makes the conclusory statement that it found Myrick’s managerial duties to be of significant importance, but provides no evidence to support that conclusion. It is not for the Court to guess or assume on summary judgment that a higher salary or a bonus means that Dollar General valued one set of duties over another. Dollar General wants to have it both ways. At one point, it states that “Plaintiff’s principal value to Dollar General was her management of her stores, as she herself testified.” (Doc. 25-2, p. 15). But when Myrick points to portions of her testimony which support her position that there is an issue of fact as to whether her managerial or nonmanagerial duties were more important, Dollar General replies that what Myrick believes to be more important is irrelevant and her opinions as to the duties she believes added the most value should be disregarded. (Doc. 27, pp. 6-7). The Court will not accept Myrick’s testimony when it is favorable to Dollar General’s position and ignore it when it is favorable to her own.

Dollar General has not presented sufficient evidence to meet its burden of showing that Myrick’s managerial duties were of principal value to Dollar General.  Thus, this factor does not favor Dollar General.

c. Frequency with which an employee may exercise discretionary powers

Dollar General next argues that Myrick exercised tremendous discretion on a daily basis. Specifically, Myrick exercised discretion with respect to scheduling her subordinates’ hours, apportioning payroll budgets, delegating, assigning, and prioritizing tasks, training employees, counseling employees, appraising employee performance, resolving customer service issues, determining who to hire or fire, and how to best implement company policies and procedures. Dollar General states that Myrick’s managerial discretion was not fettered by the company’s standard operating procedure manual because she testified that she did not know such a manual existed. Dollar General further notes that Myrick was the highest store-level supervisory personnel in her stores, and she “determined what was important and what needed to be done.” (Myrick dep., p. 231).

When asked during her deposition how much discretion she felt like she had to run her own store, Myrick replied, “Not a lot.” (Myrick dep., p. 276). Myrick points to this testimony to show that she did not frequently exercise discretionary powers. To rebut Dollar General’s allegation that she exercised discretion every day in the store, Myrick relies on her deposition testimony that she was severely restricted in the way in which employees were scheduled because of the labor budget she was assigned, that she would be asked questions if she exceeded the labor budget, that she had limited discretion over how to apportion the payroll budget as 40% of it had to be devoted to truck day, and that she could not exercise discretion over delegating and assigning tasks because there was usually only one other employee in the store with her at a time, which meant that she could not delegate non-managerial tasks, as she would end up having to do non-managerial work either in running the register or stocking shelves, for example. (Myrick dep., pp. 70-71, 112, 167, 275).

In Morgan, the Eleventh Circuit found that the evidence presented regarding the frequency with which the employee exercised discretionary power supported the jury’s verdict in favor of the employees. The plaintiffs presented evidence that store managers rarely exercised discretion because either the store’s manuals or the district managers controlled the store’s operations. “The manuals and other corporate directives micro-managed the days and hours of store operations, the number of key sets for each store, who may possess the key sets, entire store layouts, the selection, presentation, and pricing of merchandise, promotions, payroll budgets, and staffing levels.” 551 F.3d at 1270.

Myrick’s testimony shows that Dollar General decided who had keys to the stores and how many were issued, set the weekly payroll budget, decided what merchandise was ordered, set the store hours of operation, and set the store and merchandise layouts, other than in approximately 25% of the store, and even that discretion could be overridden by the district manager. (Myrick dep., pp. 69, 76-77, 128-29, 199-200, 277, 287-88). Furthermore, Myrick had no discretion to deviate from or change the company’s planogram. (Myrick dep., p. 277). She also testified that even if she ordered merchandise, that did not mean she would receive it, as Dollar General could decide not to send it to her. (Myrick dep., p. 77).

Looking at the evidence in the light most favorable to Myrick, the discretionary power factor does not favor Dollar General, or is at least neutral.

d. The employee’s relative freedom from supervision

Dollar General argues that Myrick operated autonomously for the most part, as she had limited contact with her district manager, had an office she kept locked that only the Assistant Store Manager had access to, was the only employee with a key to the back door of the stores, and was unaware of the company’s standard operating procedures. (Myrick dep., pp. 46, 49-50, 129, 161, 233).

A review of Myrick’s testimony shows that on at least one occasion, the district manager personally directed Myrick to stock merchandise. Before any repairs could be made at the stores, Myrick had to get approval from Dollar General’s home office. When Myrick took a set of keys from an employee whom she believed to be stealing from the store, the district manager made Myrick give the keys back to the employee. If employees got into a dispute, Myrick had to refer them to the corporate resolution office. Myrick did not have the authority to set rates of pay or recommend raises. When Myrick wanted to take a day off from work, she had to get approval from the district manager. Myrick could only discipline employees for serious infractions after receiving approval from the district manager. The district manager instructed Myrick to spray the parking lot with Round-Up and to make repairs to the eaves of the Quitman store. On at least one occasion, Myrick was required to lend her employees to another store. Myrick could not mark down damaged goods or make special orders without the district manager’s approval. The district manager at least once made Myrick relocated products she had put in a purported “flex” area of the store. Myrick had to have the district manager’s approval before hiring an Assistant Store Manager, though she never actually hired one. When Myrick asked for more hours for her store because she did not have enough manpower to get all of the required work done, the request was refused.  Myrick never terminated any employee without the district manager’s approval. The district manager was in charge when the stores did inventory, and also checked the paperwork completed by Myrick to make sure she did it right. (Myrick dep., pp. 46-49, 63-64, 100-102, 113-114, 175, 188, 197, 202, 220-21, 227, 256, 258, 276, 285, 287-88).

The evidence presented by Myrick could support a finding that she was not relatively free from direct supervision. Thus, this factor does not weigh in favor of Dollar General.

e. The relationship between the employee’s salary and the wages paid other employees for the kind of non-exempt work performed by the supervisor

When Myrick first became a store manager at Pavo, she was paid $500 weekly. She later received a raise to $510 weekly. After her move to the Quitman store, Myrick was paid $650 weekly. She was paid this flat rate for all hours worked. (Myrick dep., p. 39). Myrick testified that she worked an average of 66 hours per week. (Myrick dep., p. 122). She also earned annual bonuses as a Store Manager of $1,474.59 in 2002 and $1,500 in 2003. (Myrick dep., p. 140).

Using Myrick’s figure of 66 hours per week, she made $7.58 per hour when first made a store manager, then $7.73 per hour, and finally $9.85 per hour. According to documents produced by Dollar General, Assistant Store Managers earned $7 per hour and clerks generally earned $5.35 per hour.

The evidence in Morgan showed that assuming a 60-hour week, store managers earned approximately $2 to $3 more per hour than hourly-paid assistant store managers. The Eleventh Circuit found that “[g]iven the relatively small difference between the store managers’ and assistant managers’ hourly rates, it was within the jury’s province to conclude that this factor either did not weigh in Family Dollar’s favor or at least did not outweigh the other factors in Plaintiffs’ favor.” 551 F.3d at 1271. Similarly, Myrick made, at most, $2.85 more per hour than the Assistant Store Managers. As this difference in pay is similar to that in Morgan, this factor does not weigh in Dollar General’s favor, or at least, is neutral as to whether management was Myrick’s primary duty.”

Based on a review of all of the specific facts of this case, as applied to the factors necessary for the Executive Exemption to apply, the Court concluded, “[i]t is Dollar General’s burden to show that the executive exemption applies in this case. It has failed to establish each element of the exemption. As a question of fact exists as to whether Myrick’s primary duty was management, Dollar General’s Motion for Summary Judgment (Doc. 25) is denied.”

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U.S. Supreme Court Will Not Hear Family Dollar Appeal Of $35 Million Verdict; Dow Jones Reports

Dow Jones is reporting that the, “The U.S. Supreme Court on Monday rejected Family Dollar Stores Inc.’s (FDO) appeal of a $35 million verdict in favor of store managers who said the company wrongly denied them overtime pay.

Family Dollar argued the managers were salaried employees who were not eligible for overtime pay under the [Fair Labor Standards Act ("FLSA")]. The discount retailer also objected to letting the store managers bring their cases in one collective lawsuit.

More than 1,400 Family Dollar employees joined the case as plaintiffs. They argued that they were eligible for overtime pay because they performed few managerial duties and spent most of their time doing the same work as their hourly-wage subordinates.

An Alabama jury ruled for the workers in 2006 and the trial court entered a $ 35.6 million judgment against the company. A federal appeals court upheld the judgment last year. The Supreme Court rejected Family Dollar’s appeal without comment.”

Click here to read the original report.

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E.D.Ark.: “Payroll Manager” Demonstrated Lack Of Discretion And Independent Judgment; Defendant’s SJ Motion On Administrative Exemption Denied

Reedy v. Rock-Tenn Co. of Arkansas

Plaintiff was, at points relevant to this case, Defendant’s “payroll manager.” The case was before the Court on Defendant’s Motion for summary judgment, based on Defendant’s assertion that Plaintiff was exempt from the FLSA’s overtime provisions under the administrative exemption. Finding issues of fact as to whether Plaintiff had the requisite discretion and independent judgment, the Court denied Defendant’s Motion.

The Court recited the following relevant facts, “Dolores Reedy worked at Rock-Tenn’s folding carton plant in Conway, Arkansas, from June 1986 until March 15, 2007, when she voluntarily resigned. Reedy, who has no college degree or formal accounting training, began as a temporary employee and later worked full-time as a payroll clerk. Rock-Tenn originally treated her as an hourly employee and paid her overtime. At some point, Reedy acquired the title of “Payroll Manager,” was paid on a salary basis, and stopped receiving overtime compensation.

Reedy was responsible for Rock-Tenn’s payroll. Rock-Tenn hired several assistants to work with Reedy in the payroll department, including Linda Suggs, Carolyn Hansen, and Denise Bent. Sometimes assistants worked only as temporary employees. Reedy’s responsibilities in the payroll department included maintaining employee files; wage garnishments; referring Family and Medical Leave Act (“FMLA”) matters to her immediate supervisor, Ken Hogan, or the Benefit Services Center; completing some Employment Eligibility Verification forms based on the documents in employees’ files; and responding to requests for information from the Arkansas Employment Security Department. At some point, Reedy composed a policy reference book for the payroll department.

Reedy says that after she stopped receiving overtime pay, she continued to log her hourly time and report her time to Hogan. She says she spoke with someone in Rock-Tenn’s corporate office about whether she should be exempt from overtime compensation under FLSA. Reedy also says that she and Hogan attended a class in which the instructors conducted an exercise to determine which persons were exempt under the FLSA, and Reedy says that at the end of the exercise she was in the group of persons who were not exempt. Reedy says that she discussed the exercise with Hogan, but Rock-Tenn made no changes to her exempt status.”

After a recitation of the relevant law, the Court applied same stating, “Reedy’s job title of “payroll manager,” standing alone, is of little use in determining whether she was exempt, and the Court must examine evidence relating to the nature of Reedy’s duties. See Lentz v. Hospitality Staffing Solutions, LLC, 2008 WL 269607, at *4 (N.D.Ga. Jan. 28, 2008). A reasonable jury could conclude that Reedy did not exercise discretion and independent judgment in her job as payroll manager. Therefore, the nature of Reedy’s duties and her position relative to the payroll assistants is a disputed issue of fact.

Regarding Reedy’s investigatory duties, Rock-Tenn asserts that she investigated alleged pay discrepancies and notified management if there were any problems requiring remedial action. Rock-Tenn argues that her investigatory duties were similar to those of the postal workers in Dymond, wherein the Eighth Circuit held that postal workers exercised discretion and independent judgment inasmuch as they determined when a situation required immediate action and whether an alleged violation was minor or required reporting to the United States Attorney for prosecution. Dymond, 670 F.2d at 95. Reedy responds that her investigatory responsibilities were distinguishable from the postal workers in Dymond.Reedy says that employees came to her about payroll discrepancies because she was the one who computed payroll, that she had no authority to issue a corrective check, and that she had to receive permission from management before taking any remedial action.

Reedy’s deposition testimony does not demonstrate that her payroll duties required independent judgment or discretion. She reviewed the payroll records in response to complaints; but she was not authorized to proceed with remedial action unless approved by management. Her responsibilities were more clerical than investigatory, unlike those of the postal inspectors in Dymond.Rock-Tenn has failed to show that, as a matter of law, her authority to investigate and remedy payroll discrepancies required the exercise of discretion and independent judgment.

As to the completion of I-9s, Reedy responds that she received no special training qualifying her to recognize a fake employment form, that her job was merely to check the documents in the employee’s personnel file, and that she then signed the I-9s to indicate that Rock-Tenn did in fact have the proper documentation on a particular employee. Rock-Tenn replies that the fact that Reedy signed the I-9s under penalty of perjury-swearing that she had examined the employee’s documents-means that she had to compare and evaluate possible courses of conduct and use her common sense. Rock-Tenn cites to Haywood v. North Am. Van Lines, 121 F.3d 1066, 1073 (7th Cir.1997), for the proposition that an employee who uses common sense satisfies the discretion and independent judgment prong of the administrative employee exception. In that case, however, the Seventh Circuit mentioned “common sense” in a footnote, referencing the employer’s guidelines which informed its employees, whose job it was to negotiate with customers, that they had considerable latitude to negotiate and were to “just use [their] common sense.” Haywood, 121 F.3d at 1073 n. 8. The Seventh Circuit did not hold that every employee who exercises common sense in the performance of a job duty is exercising discretion and independent judgment, and Rock-Tenn has cited no cases holding that completing I-9s amounts to exercising discretion and independent judgment. Furthermore, other than the I-9s and Hogan’s affidavit, there is no other evidence relating to Reedy’s completion of the I-9s, and Reedy was not questioned about the I-9s in her deposition testimony.

As to Reedy’s communications with the Arkansas Employment Security Department, Reedy seemingly characterizes those communications as routine clerical work. Rock-Tenn, relying on Hogan’s affidavit, asserts that Reedy’s responses to the Department’s requests for information often triggered Rock-Tenn’s responsibility to pay unemployment benefits. However, Rock-Tenn offers no authority for the proposition that acting as a liaison between the employer and a governmental agency in and of itself rises to the level of exercising discretion and independent judgment. It is a disputed issue of fact whether Reedy’s work in this area was routine clerical work, providing information to a state department when requested, or actually involved discretion and independent judgment.

Regarding Reedy’s understanding and application of the FMLA, Reedy responds that she was merely instructed to look for certain “red flags” that could indicate that an employee might be asking for FMLA-qualifying leave. Reedy points to Hogan’s deposition, in which he stated that Reedy would bring a potential FMLA-related request to him, and he would make the final decision. Reedy also states that FMLA issues were ultimately referred to a separate entity, the Benefit Services Center. Therefore, Reedy argues, she had no authority to exercise discretion or make decisions regarding FMLA matters. Rock-Tenn replies that Reedy exercised discretion because she stated in deposition testimony that she “felt like [she] was understanding when to ask [Hogan] if [she] should offer an employee FMLA.”Because Reedy stated that she felt like she understood FMLA well enough to notify Hogan of a potential FMLA-related request, Rock-Tenn argues that she was exercising discretion and independent judgment. Reedy characterizes her testimony as showing that she merely looked for “red flags,” whereas Rock-Tenn characterizes her testimony as Reedy touting her ability to interpret and apply the FMLA. After reviewing Reedy’s deposition testimony, it is unclear that either party’s characterization is completely accurate. Thus, the degree to which Reedy actually exercised discretion and independent judgment in reviewing leave requests for FMLA issues and the nature of Reedy’s review of those requests are issues of fact best left to a jury to resolve.

As to Reedy’s job questionnaire responses indicating that she engaged in policy clarification and research, Reedy responds that Rock-Tenn has cited no authority for the proposition that doing research requires the use of discretion or independent judgment with respect to matters of significance. Reedy also states that she eventually had to suspend her research due to other obligations, and Rock-Tenn offers no evidence showing that Reedy actually engaged in research and policy clarification during the period of time relevant to her lawsuit. Furthermore, the record is inadequate to show that whatever research and policy clarification Reedy performed involved the exercise of discretion and independent judgment.

Finally, regarding Reedy’s involvement in garnishing wages, Reedy responds that her duties consisted of merely following the court orders and company procedure, and that Rock-Tenn offers no authority for the proposition that performing wage garnishments amounts to exercising discretion or independent judgment. Rock-Tenn argues that Reedy admitted in deposition testimony that she followed the applicable garnishment laws, and that following those laws required the use of discretion and independent judgment insofar as she was required to “interpret, construe, and explain the laws, policies, and regulations applicable to her work.”In her deposition testimony, however, Reedy stated only that she followed the court orders and the applicable laws regarding precedence when there were multiple garnishments. Reedy did not talk about interpreting, construing, and explaining the laws, policies, and regulations applicable to her work, as Rock-Tenn contends. Rather, it appears from her deposition testimony that, in her position as payroll manager, Reedy simply followed the court orders she received regarding garnishments and then followed the proper procedures where there were multiple garnishments. The nature of Reedy’s work with garnishments and the extent to which her garnishment work involved discretion or independent judgment are disputed issues of fact for a jury to decide.

In summary, issues of fact remain regarding the nature of Reedy’s duties and the extent to which they involved the exercise of discretion or independent judgment.”

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U.S.Jud.Pan.Mult.Lit.: 7 “Assistant Manager” Misclassification Cases Against Enterprise Rent-A-Car Suitable For Centralization

In re Enterprise Rent-A-Car Wage & Hour Employment Practices Litigation

Before the Multidistrict Litigation Panel was Plaintiff in an action pending in the Northern District of Illinois’ ( Averill ) Motion, pursuant to 28 U.S.C. § 1407, for centralization of this litigation in the Northern District of Illinois. This litigation currently consists of two actions pending in the Northern District of Illinois (including the moving plaintiff’s action) and five actions pending in the Middle District of Florida, the Southern District of Florida, the Northern District of Georgia, the Southern District of New York, and the Western District of Pennsylvania, respectively, as listed on Schedule A.

Granting Plaintiff’s Motion, the Court reasoned, “Plaintiffs in the six other constituent actions support centralization. With the exception of plaintiff in the Western District of Pennsylvania action, who urges that the Panel select that district as transferee district, all responding plaintiffs support selection of the Northern District of Illinois. Responding defendants Enterprise Rent-A-Car Co., Inc., and its affiliates, however, oppose centralization, and, if the Panel orders centralization over their objections, ask that the Eastern District of Missouri be selected as transferee district.

On the basis of the papers filed and hearing session held, we find that these seven actions involve common questions of fact, and that centralization under Section 1407 in the Western District of Pennsylvania will serve the convenience of the parties and witnesses and promote the just and efficient conduct of the litigation. All actions involve allegations that defendants violated the Fair Labor Standards Act (FLSA) by misclassifying their assistant managers as salaried and thus not entitled to overtime. Centralization under Section 1407 will eliminate duplicative discovery and prevent inconsistent pretrial rulings (particularly with respect to plaintiffs’ multiple requests for certification of a nationwide collective action), and conserve the resources of the parties, their counsel and the judiciary.

In opposing centralization, defendants argue, inter alia, that the actions do not share factual issues, because individual Enterprise subsidiaries-unique to each state-employed the assistant branch managers and were responsible for classifying them as exempt and ensuring compliance with the FLSA. We are not persuaded by this argument, however, because the record indicates that the involvement vel non of Missouri-based Enterprise Rent-A-Car Co., Inc., in overseeing its subsidiaries and, in particular, setting policies affecting the employment of assistant managers is, in fact, an open question common to the actions in the litigation. On this and any other common issues, centralization under Section 1407 has the benefit of placing all actions in this docket before a single judge who can structure pretrial proceedings to consider all parties’ legitimate discovery needs, while ensuring that common parties and witnesses are not subjected to discovery demands that duplicate activity that has already occurred or is occurring in other actions. See, e.g., In re Department of Veterans Affairs (VA) Data Theft Litigation, 461 F.Supp.2d 1367, 1368-69 (J.P.M.L.2006). As centralized proceedings evolve in the transferee district, it may be that unique issues in one or more of the subject actions render their continued inclusion in the multidistrict proceedings unnecessary or inadvisable. At that point, defendants (or the involved plaintiff or plaintiffs) are free to approach the transferee judge for a suggestion of remand to the transferor court. Whenever the transferee judge deems remand of any claims or actions appropriate, procedures are available whereby this may be accomplished with a minimum of delay. See Rule 7.6, R.P.J.P.M.L., 199 F.R.D. 425, 436-38 (2001).”


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W.D.Va.: “Assistant Manager” At Auto Parts Store Not Administrative Exempt; Damages To Be Calculated At Time And A Half Not Half-time

Brown v. Nipper Auto Parts and Supplies, Inc.

The case was before the Court on cross motions for summary judgment pertaining to whether Plaintiff was exempt from the FLSA’s overtime provisions under the FLSA. Additionally, Plaintiff moved for summary judgment on the issues of willfulness (3 year statute, as well as liquidated damages), and for a finding that the method under which his overtime should be calculated was the default time and a half method. As discussed below, the Court found Plaintiff nonexempt and further held that his damages were due to be calculated based on time and a half and not the fluctuating workweek’s half-time formula.

Addressing the exemption issue first, the Court noted, “Brown’s primary duties were sales and other non-exempt work, not running or servicing; the business. Nipper Auto attempts to characterize Brown’s duties as procurement and quality control, exempt activities; but since his activities generally concerned ordering auto parts based on customers’ requests, these duties are more aptly described as sales, a non-exempt activity. Roger Nipper has indicated no significant managerial decisions or changes that he has made during Brown’s tenure at Nipper Auto in which Brown had input. Indeed, Nipper Auto’s music section, where Brown is purported to have had primary authority, existed before Brown’s hiring and has continued to exist after his termination. Finally, Brown’s intermittent supervision of Shultz fails to show that his primary duty was an exempt activity.” Therefore, the Court found Brown nonexempt.

Later in the decision, the Court addressed the issue of calculating Plaintiff’s damages: “Nipper Auto argues that if Brown is entitled to overtime compensation, it should be calculated using the fluctuating workweek method of payment (the “FWW”), under which an employee’s overtime pay rate is half his regular pay rate. Brown argues that the FWW should not apply and that his overtime compensation rate should be one and one-half times his regular rate. The court agrees with Brown.

Generally, the rate for overtime compensation is one and one-half times the regular rate of pay, 29 U.S.C. § 207(a)(1), but when the FWW method applies, the rate for overtime compensation is one-half the regular pay. 29 C.F.R. § 778.114(a) (2003); Knight v. Morris, 693 F.Supp. 439, 445 (W.D.Va.1988). The FWW method is not an exception to the normal method of computing overtime compensation under the FLSA, “[i]t merely provides an alternative means by which an employer can determine its employees’ regular and overtime rate of pay.” Flood v. New Hanover County, 125 F.3d 249, 252 (4th Cir.1997). The employer must satisfy five conditions in order to take advantage of the FWW calculation: (1) the employee’s hours must fluctuate from week to week, (2) the employee must receive a fixed salary, (3) the salary must meet the minimum wage standards, (4) the employee and the employer must have a clear mutual understanding that the salary (not including overtime premiums) is fixed regardless of the number of hours the employee works, and (5) the employee must receive overtime compensation for hours worked in excess of forty hours, not less than the one-half rate of pay. Id.; 29 C.F.R. § 778.114(a). Though the first three FWW requirements are established, the court finds that the FWW method does not apply because Nipper Auto cannot fulfill the fourth and fifth requirements.

Under the fourth requirement, the parties must have a clear mutual understanding that “the fixed salary is to be compensation for all straight time hours worked, whether few or many.” Mayhew, 125 F.3d at 219. The burden is on the employer to show the existence of a clear mutual understanding. Monahan v. County of Chesterfield, 95 F.3d 1263, 1275 n. 12 (4th Cir.1996). If the employer believed the employee was exempt from overtime compensation, “then it was not possible … to have had a clear mutual understanding … that [the employee] was subject to [a] calculation method applicable only to non-exempt employees who are entitled to overtime compensation.” Cowan v. Treetop Enter., 163 F.Supp.2d 930, 942 (M.D.Tenn.2001); (quoting Rainey v. Am. Forest & Paper Ass’n Inc., 26 F.Supp.2d 82, 102 (D.D.C.1998)).

Nipper Auto cannot establish the fourth requirement because its principal argument is that Brown is an FLSA-exempt employee not entitled to any overtime compensation; in the alternative, Nipper Auto argues that the parties had an implied understanding with Brown regarding his salary and overtime compensation. If Nipper Auto believed Brown was exempt, the requisite clear mutual understanding for the application of the FWW method could not have existed. Rainey, 26 F.Supp.2d at 102. Both parties understood that Brown would receive no additional salary no matter how many hours he worked in a given week, but § 778.114(a) specifies that the fixed salary does not include overtime premiums. The court finds that, because Nipper Auto believed Brown was an FLSA-exempt employee, it has failed to create a material issue of fact as to the clear mutual understanding required to apply the FWW method.

In addition to this clear mutual understanding, under the fifth FWW requirement, the employer must also demonstrate that the employee has actually received some form of overtime compensation. See Cowan, 163 F.Supp.2d at 941 (“Moreover, to comply 29 C.F.R. Section 778.114 requires a contemporaneous payment of the half-time premium for an employer to avail itself of the fluctuating workweek provision.”). Indeed, the Fourth Circuit has applied the FWW method only when the employee has received contemporaneous payment for overtime. See generally Flood, 125 F.3d at 252 (applying the FWW where the employer contemporaneously provided some form of overtime compensation); Griffin, 142 F.3d at 715 (same); Mayhew, 125 F.3d at 218 (same). It is undisputed that Nipper Auto did not pay Brown any overtime compensation during his employment. Because no form of overtime compensation was provided, Nipper Auto cannot apply the FWW method retroactively. Flood, 125 F.3d at 249; Griffin, 142 F.3d at 716. The court finds that Nipper Auto’s evidence is insufficient to allow a reasonable jury to conclude that Brown is subject to the FWW method of compensation; therefore, Brown’s overtime pay rate is one and one-half times his regular rate of pay. The court grants Brown’s motion for summary judgment on this matter.”

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Filed under Damages, Exemptions, Fluctuating Workweek