Home » Posts tagged 'Exempt Employees'
Tag Archives: Exempt Employees
6th Cir.: Telecommunications Project Manager Was Computer Exempt From FLSA Overtime Requirements
Bennink v. Cincinnati Bell Tel. Co., LLC
The Fair Labor Standards Act (“FLSA”) generally requires employers to pay nonexempt employees overtime—usually one-and-one-half times their regular rate—for hours worked beyond 40 in a workweek. But the statute contains exemptions, including one for qualifying computer employees. In Bennink v. Cincinnati Bell Telephone Company, LLC, the U.S. Court of Appeals for the Sixth Circuit held that a telecommunications company’s interactive voice response (“IVR”) project manager fell within that computer-employee exemption and therefore was not entitled to overtime under the FLSA.
The decision is a useful reminder that an employee’s job title, degree, and hands-on coding responsibilities do not necessarily decide whether the exemption applies. Instead, courts examine the employee’s actual primary duties.
Background: A Longtime IVR Project Manager Worked Extensive Hours
Loren Bennink worked on Cincinnati Bell’s contact-center technology for years, first as a contractor and then as a W-2 employee beginning in 2016.
His work centered on the company’s IVR system—the automated telephone platform that presents callers with menu options and routes them to the appropriate assistance or information.
According to the court, Bennink documented the existing and proposed IVR systems, helped determine how the system should connect with company databases, coordinated with other IT personnel, documented system changes, and assisted with major system integration projects.
Bennink alleged that his workload eventually required extremely long days—at times as many as 18 hours—particularly while he was helping integrate Hawaii Telecom’s contact-center operations after Cincinnati Bell acquired that company.
After leaving the company, Bennink sued, alleging that Cincinnati Bell violated the FLSA by failing to pay overtime and breached an agreement to pay him $75 for every hour he worked.
The Central Legal Issue: Did the Computer Employee Exemption Apply?
The FLSA’s computer-employee exemption applies to certain employees whose primary duty includes the design, development, documentation, analysis, creation, testing, or modification of computer systems or programs based on user or system design specifications.
For hourly-paid employees, the exemption also requires compensation of at least $27.63 per hour.
The parties agreed that Bennink’s pay exceeded that threshold, so the appellate court focused on whether his primary duties fit within the exemption.
Cincinnati Bell, as the employer asserting the exemption, bore the burden of proving that the exemption applied by a preponderance of the evidence.
The Sixth Circuit’s Analysis
The IVR Platform Was a Computer System
Bennink argued that he did not work on a computer system in the relevant sense, characterizing his role as the creation of “complicated flowcharts” while other employees performed the actual programming.
The Sixth Circuit disagreed. It concluded that the IVR platform was a complex computer system because it used programmed menus to route calls while drawing information from multiple databases and systems.
His Documentation, Design, and Development Work Was Central to the Job
The court found that Bennink’s IVR responsibilities included several statutory functions: documentation, design, and development.
His documentation did more than merely record information; it mapped how calls moved through the system and gave other personnel an understanding of how the system worked and how it could be changed.
The court also found that Bennink’s work gathering feedback from system users, determining the IVR’s structure, and proposing call flows constituted design and development.
Although Bennink did not personally carry out all programming and performed some project-management functions, the court concluded that his system-focused work was the principal or most important part of his job.
A Formal Computer Science Background Was Not Required
Bennink also emphasized that he lacked formal education or training in computer systems and coding.
The Sixth Circuit held that neither the statute nor the applicable regulations require a particular degree, job title, or formal credential.
Instead, the court concluded that Bennink’s experience demonstrated that he was capable of performing the exempt system-design, development, and documentation work.
The Court’s Decision
The Sixth Circuit affirmed summary judgment for Cincinnati Bell.
The court held that Bennink was an exempt computer employee under the FLSA and that the offer letter did not create an enforceable contract requiring payment at $75 per hour for overtime hours.
Because the computer-employee exemption applied, the court did not address Cincinnati Bell’s alternative arguments that Bennink also qualified for the administrative or highly compensated employee exemptions.
Takeaways for Employees and Employers
For employees
This case demonstrates that overtime eligibility does not always turn on whether an IT employee writes code, has a technical degree, or holds a traditionally technical title. The court focused on the real substance of Bennink’s work: whether his central responsibilities involved the design, development, and documentation of a computer system.
Employees questioning an exempt classification should preserve job descriptions, calendars, project records, communications, time records, and evidence showing their day-to-day duties—not merely their title. The FLSA inquiry examines how an employee actually spent working time and whether those activities legally fit an exemption.
For employers
Employers should ensure that FLSA classifications are tied to actual primary duties. An employee who provides routine technical support or follows predetermined procedures may present a different classification question from one who helps design system architecture, translates user needs into system specifications, and creates documentation that directs future development
The Bottom Line
Bennink v. Cincinnati Bell confirms that the computer-employee exemption can cover work beyond direct programming. Where an employee’s primary duties involve designing, developing, or documenting a complex computer system, the exemption may apply even if other staff handle coding and the employee lacks formal technical credentials.
Workers who believe they were improperly denied overtime should document their actual responsibilities and compensation practices. Employers should periodically review whether their exempt IT classifications remain supported by the work employees actually perform.
Click Bennink v. Cincinnati Bell Tel. Co., LLC to read the entire decision.
6th Cir.: Effect Of Impermissible Deductions On Exempt Status; Under Old Regs “Significant Likelihood” Standard All Weeks Rendered Non-Exempt; Under New Regs Only Weeks Where Impermissible Deductions Actually Occurred
Baden-Winterwood v. Life Time Fitness, Inc.
In this case, the 6th Circuit addressed a common issue raised in mis-classification cases: the effect of a compensation plan which makes impermissible deductions to otherwise exempt employees, whose exemptions require they be paid on a “salary basis.”
On July 10, 2007, the district court granted in part Plaintiffs’ motion for summary judgment, finding “that the deductions from the salaries of eight Plaintiffs were deductions resulting from ‘variations in the quality or quantity of the work performed,’ in violation of the salary-basis test.”Baden-Winterwood v. Life Time Fitness, No. 2:06-CV-99, 2007 U.S. Dist. LEXIS 49777, at *42 (S.D.Ohio July 10, 2007) (quoting 29 C.F.R. § 541.602(a)). However, the district court limited Plaintiffs’ recovery to overtime pay for the three pay periods in 2005-the periods ending November 9, November 23, and December 9-during which Life Time Fitness took actual deductions from Plaintiffs’ salaries. Id. The court dismissed all other claims for overtime pay, including, in their entirety, the claims of the ten Plaintiffs who appealed.
The issue before the Court was whether Plaintiffs’ compensation plans satisfy the salary-basis test. Prior to August 23, 2004, the salary-basis test, as defined by regulation, provided:
“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. 29 C.F.R. § 541.118(a) (1973). In August 2004, the DOL updated the regulations defining the salary-basis test. The new regulation states: An employee will be considered to be paid on a “salary basis” within the meaning of these regulations if the employee regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee’s compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed. 29 C.F.R. § 541.602(a) (effective August 23, 2004). Under both versions, Life Time Fitness bears the burden of proving that Plaintiffs were paid: (1) a predetermined amount, which (2) was not subject to reduction (3) based on quality or quantity of work performed. Notably, however, rather than include the term “employment agreement,” the updated regulations focus on pay received. Compare29 C.F.R. §§ 541.118(a), 541.602(a).”
Significantly, the Court explained, “[f]or our purposes, the salary-basis test has two interpretations of the phrase ‘subject to,’ both of which are relevant here. In 1997, in Auer v. Robbins, 519 U.S. 452 (1997), the Supreme Court adopted the interpretation offered by the Secretary of Labor that the salary-basis test denies exempt status “if there is either an actual practice of making … deductions [based on variations in quality or quantity of work performed] or an employment policy that creates a ‘significant likelihood’ of such deductions.” Id. at 461. Specifically, the Auer Court held
‘The Secretary’s approach rejects a wooden requirement of actual deductions, but in their absence it requires a clear and particularized policy-one which “effectively communicates” that deductions will be made in specified circumstances. This avoids the imposition of massive and unanticipated overtime liability … in situations in which a vague or broadly worded policy is nominally applicable to a whole range of personnel but is not “significantly likely” to be invoked against salaried employees.’
Thus, under Auer, an employee is not paid on a salary basis if (1) there is an actual practice of salary deductions or if (2) an employee is compensated under a policy that clearly communicates a significant likelihood of deductions. Id.
Following Auer, on March 31, 2003, the DOL provided published notice on a proposed set of new FLSA regulations. See Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, 68 Fed.Reg. 15,560 (Mar. 31, 2003). After a 90-day comment period, the DOL revised and released its final regulations, defining the exemptions under the FLSA. See Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, 69 Fed.Reg. 22,122 (Apr. 23, 2004). The new regulations became effective on August 23, 2004. Id.
Under the new regulations, the Secretary of Labor reinterpreted the salary-basis test. Life Time Fitness argues that the DOL specifically eliminated the “policy” part of the Auer test, whereby a “significant likelihood” of improper deductions was sufficient to cause an employee to lose his or her FLSA exemption. The new regulations (” § 541.603“) provide that “[a]n actual practice of making improper deductions demonstrates that the employer did not intend to pay employees on a salary basis.” 29 C.F.R. § 541.603(a). Moreover, Life Time Fitness argues that the new regulations limit the scope of recovery by providing that “[i]f the facts demonstrate that the employer has an actual practice of making improper deductions, the exemption is lost during the time period in which the improper deductions were made for the employees in the same job classification working for the same managers responsible for the actual improper deductions.” 29 C.F.R. § 541.603(b).
In its comments, the DOL explains that while the new rule represents a departure from the Secretary’s position in Auer,”[t]he ‘significant likelihood’ test is not found in the FLSA itself or anywhere in the existing Part 541 regulations. Moreover, nothing in Auer prohibits the [DOL] from making changes to the salary[-]basis regulations after appropriate notice and comment rulemaking.” Defining and Delimiting the Exemptions, 69 Fed.Reg. at 22,180. The DOL stated its reasoning behind the changes:
Any other approach, on the one hand, would provide a windfall to employees who have not even arguably been harmed by a “policy” that a manager has never applied and may never intend to apply, but on the other hand, would fail to recognize that some employees may reasonably believe that they would be subject to the same types of impermissible deductions made from the pay of similarly situated employees.
Under the Auer test, the Court, found that Defendants’ policy whereby deductions would be made (although they were not in practice violated the salary basis requirements) violated the salary basis test, explaining:
The district court erred in concluding that there was not enough evidence to suggest Life Time Fitness intended to enforce its permissive policy. The Auer subject-to-reduction test requires only a “clear and particularized policy-one which ‘effectively communicates’ that deductions will be made in specified circumstances.” 519 U.S. at 461. The test does not require a formulaic set of “magic words” indicating that the test is mandatory. If employers can avoid overtime liability by crafting payment policies with permissive (may ) language instead of mandatory (will ) language, then the purposes of the FLSA would clearly be frustrated. Rather, as set out by this Court in Takacs and Whisman, Auer’s test is better satisfied by a policy that demonstrates that deductions are “more than a mere theoretical possibility” and that “permit[s] disciplinary or other deductions in pay ‘as a practical matter.’ ” 246 F.3d at 781
Here, Life Time Fitness’s pre-August 23, 2004 compensation plan subjected employees’ pay to reductions under the Auer test. The compensation plan at issue does more than create a theoretical possibility of deduction; instead it plainly lays out a policy under which Life Time Fitness would make future deductions. Therefore, under the old regs, the Court found the Plaintiffs were non-exempt for all weeks within the relevant statute of limitations period.
However, since the current regulations require an actual violation, the Court held that the otherwise exempt employees were only stripped of their exempt status, and thus entitled to overtime for the 3 weeks when the pay practice was actually used to reduce their “salary.” In all other weeks, the Court found the salary basis test met, and thus found that, aside from three weeks where actual reduction were made, the Plaintiffs remained exempt, notwithstanding the three weeks where deductions were actually made.”