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N.D.Ala.: GM’s Salary Based on Forecast Sales of Store Did Not Qualify As a “Bona Fide Commission Plan;” Retail Exemption Inapplicable
Kuntsmann v. Aaron Rents, Inc.
This case was before the court on the defendant’s motion for summary judgment. The defendant asserted that plaintiff was exempt under either the executive exemption, administrative exemption or the so-called combination exemption of the two. As discussed here, the defendant further argued that even if the plaintiff was not properly deemed exempt under any of the 3 exemptions, he was paid in accordance with 207(i), the “retail exemption” and thus not entitled to overtime compensation. After holding that issues of fact regarding the plaintiff’s primary duties precluded summary judgment, the court addressed the defendant’s final contention regarding the retail exemption and held that it was inapplicable because the plaintiff had not been paid “commissions” as required for application of the retail exemption.
Describing the compensation plan at issue, the court explained:
During his time as GM of that store, Kuntsmann was the highest ranking and only employee in the store whom Aaron classified as exempt from the FLSA’s minimum wage and overtime requirements. Aaron’s compensation scheme for GMs is based on the revenue and operating profits of each individual store. The GM of each store receives a monthly income that approximates the expected financial performance of the store in a month. This approximation, called the “draw,” is compared with the actual earnings of the store on a monthly basis. Then, Aaron adjusts salary upwards when the store performance exceeds the draw and sometimes downward when the store performance does not meet the draw. GMs are also eligible for monthly bonuses based on set financial goals. Aaron reviews each store’s performance twice a year and can increase or decrease the draw according to performance. Aaron also looks at the financial performance of the store at the end of each quarter and provides the GM a bonus if his total monthly commission is greater than the GM’s quarterly draw.
After disposing of the plaintiff’s argument that the retail exemption argument was waived by the defendant’s failure to assert it in its answer (the court reasoned that it wasn’t really an exemption despite referring to it as same, but rather an “exception”), and discussing the elements necessary for the retail exemption, the court explained that it was not applicable, because the plaintiff had not been paid under a “bona fide commission plan.” After noting a lack of authority on the issue, the court distinguished two prior cases from within the Eleventh Circuit.
First, the court noted that time did not play any role in the compensation system at bar, which the court reasoned supported its finding that the plaintiff had not been paid a commission as defendant claimed:
The compensation scheme examined in Klinedinst is distinguishable from the one at issue in the present case. The Eleventh Circuit emphasized the importance of time as a factor in the Klinedinst compensation scheme; time does not play a role in the compensation of an Aaron’s GM. In addition, inherent differences appear between how the auto mechanics in Klinedinst and the GMs at Aaron earn their compensation. The auto mechanics’ compensation derived from each individual job that they performed that was assigned a particular number of “flag hours.” The connection between individual sales and the compensation of an Aaron GM is much more attenuated, however. At Aaron, GMs are neither paid on a “per job basis,” nor an hourly basis but a monthly compensation based on previous quarters’ revenue that could possibly be increased or decreased based on the store’s profits. The payment system in Klinedinst is different enough from the Aaron compensation scheme so that the opinion does not guide this court’s analysis as to whether Aaron’s payment scheme meets the final requirements of § 207(i) at the summary judgment stage—whether its compensation scheme qualifies as a bona fide commission plan.
The court also reasoned that plaintiff’s salary at issue was not a “commission,” because he was not being paid based on total sales attributed to him, but rather based on his store’s overall profits and whether they exceeded the company’s expectations:
A great difference exists between simply adding up total sales attributed to a salesperson each month and then giving the salesperson a certain percentage of those sales in compensation, and awarding a store manager a “bonus” if his store’s profits exceeded the company’s predictions. As Kuntsmann argued, his monthly salary was based on a published rate and did not change based solely on his sales or the store’s sales alone. The payment system in Ethan Allen diverges enough from the Aaron compensation scheme so that the opinion does not direct this court’s analysis as to whether Aaron’s scheme qualifies as a bona fide commission plan under § 207(i).
Thus, the court concluded:
Therefore, this court finds that Aaron has not demonstrated that its compensation scheme qualifies as a “bona fide commission plan.” 29 U.S.C. § 207(i). Although some circuits have doubted the validity of the “clear and affirmative evidence” standard, the Eleventh Circuit has not retreated from this standard, and Aaron has not met it regarding the applicability of the § 207(i) exception. Moreover, regardless of how exacting Aaron’s burden should be when proving the applicability of an FLSA exception, the Eleventh Circuit has also instructed this court to construe FLSA exceptions “narrowly and sensibly.” Klinedinst, 260 F.3d at 1254. After narrowly construing § 207(i), the court has serious doubts as to whether Aaron’ compensation scheme qualifies under the statutory section. While recognizing that determining whether a compensation system qualifies as a bona fide commission plan is a question of law for the court, Aaron has not met its burden of proof at this stage.
Click Kuntsmann v. Aaron Rents, Inc. to read the entire Memorandum Opinion.
The last few weeks have brought their share of interesting misclassification/exemption cases. In one case, a law school graduate performing non-lawyer duties was held to be non-exempt. In another, a court within the Fifth Circuit held that a tax lien negotiation business- clearly within the CFR’s definitions of a business lacking a retail concept- was in fact a retail business subject to 7(i)’s so-called retail sales exemption. Lastly, despite his managerial duties at times, a court held that a police sergeant might not be exempt under the executive exemption and denied the police department-employer’s motion for summary judgment. Each of these decisions is discussed in greater detail below.
Law School Graduate Employed as a Graphic Consultant Non-Exempt
Kadden v. VisuaLex, LLC
In the first case, the defendant- a litigation support company- employed plaintiff- a college and law school graduate as a graphics consultant. At issue was whether the defendant had properly deemed plaintiff to be exempt from the FLSA’s overtime requirements. The defendant (“VisuaLex”) contended that the plaintiff was exempt under either the creative professional exemption, the administrative exemption, or the so-called combination exemption whereby an employer can utilize elements of multiple white-collar exemptions to render an employee exempt. While acknowledging that the case presented a close call, the court held that the plaintiff lacked the requisite primary duties to meet the elements of any of the exemptions asserted. Thus, the court held that the plaintiff had been misclassified and should have been paid proper overtime. In so doing, the court reiterated that the fundamental tenet of exemption cases is an examination of the employees primary duties and not simply a job description or a list of duties performed. The court also reminded us that the learned professional examination is only applicable where the advanced degree of learning or science is actually required for and by the position performed by the employee- holding such a degree alone is not sufficient to meet the stringent exemption requirements.
Click Kadden v. VisuaLex, LLC to read the entire Opinion and Order.
Tax Consultants Subject to 7(i) Retail Exemption Notwithstanding CFR Regs Defining “Tax Services” Establishments as “Lacking a Retail Concept”
Wells v. TaxMasters, Inc.
The second case was before the court on the parties’ competing motions for summary judgment. Deciding the case in favor of the defendants, the court held that the plaintiffs were subject to the so-called retail exemption codified in 7(i) of the FLSA. It was uncontested that the plaintiffs regularly worked in excess of 40 hours. Similarly, the duties they performed were not at issue nor was the methodology by which they were paid (qualifying for the pay element of the retail sales exemption). Rather the sole issue appears to have been whether or not defendants- an enterprise engaged in rendering “tax resolution services”- was in a retail establishment within the meaning of 7(i) such that plaintiffs could properly be deemed to be exempt from overtime under the so-called retail exemption.
Holding that the defendants were a retail establishment, notwithstanding the Department of Labor’s regulations stating otherwise, the court reasoned:
Whether Defendants were exempt under Section 207(i) thus turns on whether they were “an establishment 75 percentum of whose annual dollar volume of sales of goods or services (or of both) is not for resale and is recognized as retail sales or services in the particular industry.” 29 U.S.C. § 213(a)(2). According to Department of Labor regulations, a retail or service establishment must have a “retail concept.” 29 C.F.R. § 779.316 (2005). Section 318 of the regulations describes the “characteristics and examples” of retail or service establishments:
Typically a retail or service establishment is one which sells goods or services to the general public. It serves the everyday needs of the community in which it is located. The retail or service establishment performs a function in the business organization of the Nation which is at the very end of the stream of distribution, disposing in small quantities of the products and skills of such organization and does not take part in the manufacturing process.
Such an establishment sells to the general public its food and drink. It sells to such public its clothing and its furniture, its automobiles, its radios and refrigerators, its coal and its lumber, and other goods, and performs incidental services on such goods when necessary. It provides the general public its repair services and other services for the comfort and convenience of such public in the course of its daily living. 29 C.F.R. § 779.318. Section 317 of the regulations provide a “partial list of establishments lacking ‘retail concept’ ” which includes, among over one hundred other examples, “tax services.” 29 C.F.R. § 779.317.
Plaintiffs do not dispute that Defendants sold more than 75 per cent of their products directly to the consumer. Instead, Plaintiffs insist that the Department of Labor regulations, which expressly define “tax services” companies as lacking a retail component, are determinative. See Doc. 60, 61, 63. Defendants contend both that they were not a “tax services” establishment and that Section 779.317 therefore does not apply and that Fifth Circuit precedent holds that the Department of Labor’s list of non-retail establishments is not determinative. Doc. 64.
The Defendants are correct that the Fifth Circuit has declined to follow strictly the Department of Labor’s list. See Rachal v. Allen, 376 F.2d 999 (5th Cir.1967) (rejecting Secretary of Labor’s position that a fixed base aeronautics operator’s business has no retail concept merely because it is part of an industry, namely, the air transportation industry, that Section 779.317 lists as lacking a retail concept). “There is no magic in placing a business in a category and then asserting that since it is in that category, it is like all businesses with which it has been placed.” Id. at 1003. In Rachal, the Fifth Circuit rejected the Secretary of Labor’s argument that because a fixed-base operator engaged in servicing and selling aircraft at airports was in the air transportation industry, and because the Secretary had made a determination in Section 779.317 that the air transportation industry lacked a retail concept, a fixed base operator necessarily lacked a retail concept:
[T]he Secretary’s argument … assumes the result of the issue we are asked to determine…. The issue is whether, under the statute, there may be, as a matter of law, and if so whether there is as a matter of fact, a retail concept in the defendants’ business, notwithstanding the Secretary’s determination. It is, of course, the function of the Court, as well as of the Secretary, to interpret the statute. Id. (citing Walling v. La Belle S.S. Co., 148 F.2d 198 (6th Cir.1945)). The question for this Court, then, is whether Defendants provided services that meet the Secretary’s four criteria for establishments with a retail concept. 29 C.F.R. § 770.319 (listing criteria).
Certainly Defendants sold their services to the general public. In fact, the Plaintiffs in this action worked as salespeople in a call center and sold Defendants’ services directly to consumers. Plaintiffs contend, however, that Defendants’ “services do not serve the every day needs of the public” because “these services provide a specialized function that is not necessary for the community’s daily routine.” Doc. 68 at 22. It is not the case that an establishment must provide a product or service used by each member of the community on daily basis for it to serve the everyday needs of the community. Addressing just such an argument, the District Court for the Middle District of Florida reasoned that:
[t]he list provided in the regulations of businesses which are recognized as retail reflects that such narrow interpretation would be incorrect. This list includes billiard parlors, bowling alleys, cemeteries, coal yards, crematories, dance halls, embalming establishments, funeral homes, fur repair and storage shops, hotels, masseur establishments, recreational camps, taxidermists, theatres, and undertakers, none of which would be used daily by everyone in the community. Reich v. Cruises Only, Inc., 1997 WL 1507504, *4 (M.D.Fla.1997).
This Court agrees. The summary judgment evidence before the Court indicates that Defendants provided not only tax preparation services that each member of the community may well utilize, but also tax dispute services to address issues that may, in some instances, arise in the course of filing taxes. Doc. 64–1 at 7–8. Each member of “the community” does not require tax services on a daily basis any more than they require frequent visits to the undertaker. Yet these services derive inevitably from the only two certainties in life. Such certain, but periodic, services are no less retail in nature than the sale of “automobiles, … radios and refrigerators,” or the “incidental services on such goods when necessary.” 29 C.F.R. § 779.318. Defendants’ tax resolution services clearly were “services for the comfort and convenience of such public in the course of its daily living.” Id.
It is not clear if the case would have been decided differently outside the Fifth Circuit. Of interest, in footnote 5 of its opinion, the court declined to follow a Sixth Circuit opinion on point that reached the opposite conclusion, Hodgson v. N.G. Kallas Co., 480 F.2d 994 (6th Cir.1973).
Click Wells v. TaxMasters, Inc. to read the entire Opinion and Order.
Notwithstanding Management Duties, Police Lieutenant Might be Non-Exempt; Defendant’s Motion for Summary Judgment re: Executive Exemption Denied
Jones v. Williams
In the third exemption case of interest, the case was before the court on the defendant’s motion for summary judgment regarding all of plaintiff’s asserted claims (Title VII, retaliation, unpaid overtime, etc.). As discussed here, the court denied the defendant’s motion with regard to plaintiff’s unpaid overtime claim, citing issues of fact precluding a finding- as a matter of law- that plaintiff was subject to the executive exemption.
The court’s brief description of the plaintiff’s duties was as follows:
Steven Jones currently works as a police supervisor with the rank of lieutenant at BCCC. (Defs.’ Mot. Summ. J., ECF No. 44, at 2, Ex. 1; Deposition of Steven Jones, ECF No. 51, at 7–8.) Jones’s duties include making shift assignments, reviewing paperwork, responding to calls in the event he is needed, and “mak[ing] sure everybody is on their post, looking clean and doing their jobs.”
After noting that the defendant’s cited an outdated regulation as the basis for their exemption defense, the court ultimately held that the defendant failed to show that the plaintiff’s primary duties were the performance of exempt work:
Here, the defendants’ exemption claim fails summary judgment on two fronts. First, the defendants have failed to adduce any evidence that Jones has any responsibility with respect to hiring or firing or that his opinions are given “particular weight” with regard to these matters. See
29 C.F.R. § 541.105. Without such evidence, the defendants cannot sustain an exemption claim under § 541.100.
Second, taking the available facts regarding his job responsibilities in the light most favorable to Jones, the defendants have not convincingly demonstrated that, even though he supervises other officers, Jones’s primary duty is not law enforcement. See 29 C.F.R. § 541.3(b). As evidence that Jones primarily performs exempt work, the defendants point to Jones’s statement that his duties include “making shift assignments … review[ing] all paperwork and … respond[ing] to calls in the event an officer has an issue or my sergeant is unable to deal with an issue … mak[ing] sure everybody is on their post, looking clean and doing their jobs.” (Jones Dep. at 9.) However, in interpreting a similar job description (“a lieutenant’s ‘primary responsibility … is to make sure that their people in the field can handle any situation that happens at any time’ “), the Tenth Circuit noted that this description could merely encompass “the kind of front-line supervision” that the regulations deem “non-managerial.” Maestas, 664 F.3d at 830. Elsewhere in the record, Jones has indicated that his duties also include being “on-call” (Jones Dep. at 59), maintaining emergency generators when needed, ensuring campus safety, and setting up traffic barrels. Jones was, apparently, essential to front line security during the snow storms that caused him to work substantial overtime. Jones may perform enough non-exempt duties like these to fall outside the scope of the exemption. The defendants have certainly not demonstrated his job position falls squarely within an exemption. Accordingly, the defendants’ motion for summary judge with respect to Jones’s FLSA claim will be denied.
Click Jones v. Williams to read the entire Memorandum opinion.
M.D.Ala.: Wal-Mart Assistant Store Managers (ASMs) May Be Entitled To Overtime Pay; Wal-Mart’s Motion for Summary Judgment Denied
Davis v. Wal-Mart Stores, Inc.
This case was before the Court on Wal-Mart’s motion for summary judgment. Wal-Mart asserted that the Plaintiffs, two (2) former Assistant Store Managers (“ASMs”) were exempt from the overtime provisions of the Fair Labor Standards Act (“FLSA”). Citing issues of fact raised by the Plaintiffs, the Court denied Wal-Mart’s motion.
After noting that the court was due to accept the facts in the light most favorable to the Plaintiffs (as the non-moving party), the court recited the following facts pertinent to the motion:
“The facts of this case concern the job duties of the Plaintiffs. Plaintiff Nancy Davis was employed at the Wal-Mart in Opelika, Alabama as a salaried assistant manager from June of 2006 until September 2009. Davis states that during her employment she performed such tasks as stocking, acting as cashier, sweeping, mopping, cleaning, unloading trucks, bringing in shopping carts, and doing price checks. Plaintiff Shirley Toliver was employed with the Wal-Mart store in Opelika from August 2001 to May 20, 2009. She also states that she performed tasks such as stocking, running the cash register, sweeping, mopping, cleaning, loading trucks, pulling pallets, bringing in shopping carts and performing price checks. The Plaintiffs have testified in their depositions that these tasks comprised 80-90 % of their work duties. Wal-Mart has presented documentary and deposition evidence that Davis and Toliver also engaged in managerial tasks, including delegation of duties, interviewing and hiring applicants, coaching associates, evaluating associates, and terminating associates.”
The Court held that, on these facts, the Plaintiffs could not be said, as a matter of law, to fall under the FLSA’s executive exemption or administrative exemption. After outlining the elements of the executive exemption, the Court reasoned:
“In a case relied upon by Davis and Toliver, the Eleventh Circuit has engaged in a lengthy analysis of the primary duty requirement in the context of store managers of Family Dollar Stores, a retail establishment. See Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233 (11th Cir.2008). In Morgan, the plaintiffs were store managers who spent 80 to 90 % of their time performing manual labor tasks such as stocking shelves, running cash registers, unloading trucks, and cleaning. Id. at 1270. They were also assigned tasks such as completing paper work and making bank deposits, but those tasks were strictly prescribed. In evaluating the claim that the executive exemption did not apply to these managers, the court emphasized that at the executive exemption to FLSA overtime pay is to be narrowly construed because the Supreme Court has directed that the exemption be applied only to plaintiffs who fall “clearly and unmistakably within the terms and spirit of the exemption.” Id. at 1269 (citation omitted). The court further noted that the inquiry is fact-intensive, and if there is evidence “on both sides of the question,” the facts should be determined by a jury. Id. The factor of time spent on manual, nonexempt work, however, did not establish that the plaintiffs were nonexempt. Id. Instead, the court found that the jury’s determination that the managers were nonexempt was supported not just by the amount of time spent performing nonexempt work, but also by evidence that non-managerial tasks were of “equal or greater importance to the store’s functioning and success.” Id. The court found significant that the employer described manual labor performed on delivery day as an “essential function” of the position. Id. The court also concluded that the evidence of little time spent in discretionary matters, little freedom from direct supervision, and the difference between managerial and other wages supported the jury’s finding of non-exempt work as the primary duty. Id. at 1270-71. As Wal-Mart points out, the court distinguished other courts’ opinions on the basis that in Morgan the manual labor was not performed concurrently with managerial duties. Id. at 1272-73.
Davis and Toliver contend that here, as in Morgan, all four of the primary duty factors weigh in their favor in this case. With respect to managerial duties, Davis and Toliver contend that they spent the vast majority of their time performing non-managerial tasks, and that the managerial tasks they performed were relatively less important than their non-managerial duties. The court begins with the factor of the amount of time spent performing management duties.
1. Time Spent Performing Management Duties
Davis and Toliver have testified that 80-90 % of their time was spent performing nonmanagerial tasks. Davis Dep. at page 125: 19-126: 4. Davis stated that she would run the cash register for 15 or 20 minutes at a time all day long, three out of five days a week, on day and night shifts, and that she found herself doing sweeping and cleaning, particularly on the third shift. Id. at page 128: 18-129:16. Toliver testified that she performed the same tasks testified to by Davis, adding that sometimes she would be a cashier for three hours at a time. Toliver Dep. at pages 95: 16-96: 4, 17-11-19.
While Wal-Mart characterizes this testimony as self-serving, the court must accept the Plaintiffs’ testimony that they performed the sort of tasks described 80-90 % of the time. Those tasks testified to are not considered managerial duties.
Managerial duties are defined by the C.F.R. to include interviewing, selecting and training employees, directing the work of employees, maintaining sales records, appraising employees’ productivity and efficiency, handling employee complaints and grievances, disciplining employees, planning work, determining techniques to be used, apportioning work, determining merchandise to be bought and sold, controlling distribution of merchandise, providing for safety and security of employees or property, planning and controlling the budget, and implementing and monitoring legal compliance measures. 29 C.F.R. § 541.102. Clearly the tasks which Davis and Toliver have identified as comprising 80-90 % of their working time do not fall within these examples of managerial tasks. The C.F.R. also states, however, that
Occasional, infrequently recurring tasks that cannot practicably be performed by nonexempt employees, but are the means for an exempt employee to properly carry out exempt functions and responsibilities, are considered exempt work. The following factors should be considered in determining whether such work is exempt work: Whether the same work is performed by any of the exempt employee’s subordinates; practicability of delegating the work to a nonexempt employee; whether the exempt employee performs the task frequently or occasionally; and existence of an industry practice for the exempt employee to perform the task. 29 C.F.R. § 541.707.
The Plaintiffs argue that the extent to which they performed nonmanagerial tasks meant that the tasks cannot be considered to be exempt work. Davis and Toliver state that their time spent doing the managerial duties of performance evaluation was minimal, averaging 10 to 15 minutes. Toliver Dep. at page 98: 8-16. Davis described her duties as running the register, pulling pallets, unloading trucks, working freight by pulling it off a truck and putting it on the shelf, zoning by fronting merchandise, and cleaning. Davis Dep. at 156: 3-10. Given the testimony of the extent of their nonmanagerial duties, the court concludes that a reasonable jury could conclude that the tasks which, according to the Plaintiffs’ testimony, comprised 80-90 % of their work, were more than occasional, infrequently recurring tasks and, therefore, were nonexempt tasks.
Wal-Mart argues that the Plaintiffs’ choice to perform nonexempt tasks, rather than to delegate those tasks, because they were ultimately responsible for those tasks, does not make them nonexempt. Wal-Mart points to the C.F.R. and argues that concurrent performance of exempt and nonexempt work does not disqualify an employee from the executive exemption. See 29 C.F.R. § 106(a). That C.F.R. section states, however, that if exempt and nonexempt work occurs concurrently, the exemption can still apply, if the requirements for the exemption are otherwise met. Id. The C.F.R. offers as an example an assistant manager who supervises employees and serves customers at the same time, without losing the executive exemption. § 541.106(b). The C.F.R. draws a distinction between persons who make the decision of when to perform nonexempt duties and those directed to perform exempt work. § 541.106(a).
The Eleventh Circuit relied on such a distinction in Morgan. The court distinguished cases from other courts which had given less weight to plaintiffs’ estimates of time performed on nonexempt tasks because those plaintiffs concurrently performed exempt tasks. Morgan, 551 F.3d at 1272. The court explained that the amount of manual labor performed by the managers in Morgan overwhelmed their capacity to perform managerial duties concurrently during store hours. Morgan, 551 F.3d at 1272. The court further explained that management duties could not be performed concurrently because, for example, “a store manager unloading a truck and stocking the storeroom was not concurrently supervising the cashier out front.” Id. at 1273. The court noted that many of the tasks were performed before and after the store closed. Id. at 1272. The court concluded that the jury “may well have given more weight to the Plaintiffs’ evidence that they spent 80 to 90 % of their time solely on nonexempt work.” Id.
Davis stated in her deposition that she would receive managerial notes from the store manager which would tell her tasks that needed to be accomplished during a shift. Id. at page 126:15-127:14. She explained that “[w]e were told what to do, either find somebody to do it or do it yourself.” Id. at page 126: 15-16. Davis explained that she was assigned duties by the store manager or co-manager in the shift notes that told her what they wanted done. Id. at 150:8-22. If there were minimal associates working, she had to perform the manual labor tasks herself. Id. at page 150: 17-151:17. Davis gave as an example that if two or three trucks came in carrying freight during the third shift, she would have to go to that department. Id. at 151:10-17. She further explained that she would get in trouble for not getting the tasks done. Id. at 151:21-22. Davis testified that she performed sweeping, mopping, and cleaning duties “mostly on third shift” because there were not “enough associates to get everything done that needed to be done.” Id. at 129: 8-16. She also stated that she has been told to scrape dirt from under shelves with a scraper on third shift. Id. at 156:18-157. Davis also testified that she would stay on past the end of her shift on some occasions so that she averaged 54 to 65 hours per week. Id. at page 110: 13-19.
According to the Plaintiffs’ evidence, they were not responsible for the scheduling of associates. The scheduling of employees was conducted by co-Manager Ken King. King explained in his deposition that he set the schedules based on a budget he was provided by corporate headquarters, which came down through the regional and district manager. King Dep. at page 12. Although King also stated that assistant managers also set schedules, in her deposition, Toliver disputed that she made schedules, and stated that the co-manager made the schedules. Toliver Dep. at page 20: 8-12, 21-3.
While Wal-Mart has contended that the Plaintiffs chose to perform nonmanagerial tasks instead of delegating those tasks, viewing the evidence in a light most favorable to the non-movants, the Plaintiffs were directed to perform tasks even in the face of inadequate staffing levels. Furthermore, the nonexempt tasks performed by Davis and Toliver in this case were similar to those in Morgan, such as unloading of freight, which would not allow for the supervision of associates in other sections of the store. The court concludes, therefore, that Wal-Mart has not conclusively shown that the nonexempt tasks were performed concurrently with exempt tasks, for purposes of its affirmative defense. Here, as in Morgan, the court concludes that there is sufficient evidence to support the Plaintiffs’ estimate that 80 % to 90 % of their work was nonexempt work.
The C.F.R. states that the amount of time spent on managerial tasks “can be a useful guide in determining whether exempt work is the primary duty of an employee,” but it is not the sole test. § 541.700(b). A person who spends more than 50 percent of her time performing exempt work generally will satisfy the primary duty requirement, but “employees who do not spend more than 50 percent of their time performing exempt duties may nonetheless meet the primary duty requirement if the other factors support such a conclusion.” Id.
Given the Plaintiffs’ evidence, the factor of the amount of time spent on nonexempt tasks, while not dispositive, weighs against a finding of exempt work as the primary duty in this case. See Morgan, 551 F.3d at 1270.
2. Relative Importance of Managerial Duties
The next primary duty factor to be examined is the relative importance of managerial duties as compared to other duties. 29 C.F .R. § 541.700(a).
Wal-Mart has submitted multiple records evidencing managerial tasks, such as coaching for improvement of hourly associates, performance evaluations, and job offers. Wal-Mart states that Davis and Toliver managed recognized departments during the day shift, and were “in charge” of the store on night shifts. Wal-Mart further states that these duties were important, as they were evaluated in the Plaintiffs’ performance evaluations.
Davis and Toliver do not dispute that they coached associate employees, evaluated performance of associates, checked the status of inventory, and monitored store conditions. See Doc. # 20 at page 15. As noted above, however, they state their time spent doing managerial duties, for example, employee evaluation, was minimal, consisting of 10 to 15 minutes, and that these duties were secondary to their primary duties of waiting on customers, stocking shelves, cleaning, merchandising, unloading delivery trucks, and bringing in shopping carts. As further evidence of the relative importance of the nonmanagerial tasks, the Plaintiffs point out that in the job description’s listing of physical activities necessary to perform essential job functions an assistant manager is required to move, lift, carry, and place merchandise and supplies weighing up to 25 pounds without assistance, and to grasp, turn, and manipulate objects of varying size and weight, requiring fine motor skills and hand-eye coordination. As described extensively above, there is evidence that Davis and Toliver were required to perform manual tasks also performed by associates, and that the budget-based schedule, which left the store understaffed at times, required them to perform manual labor tasks.
In Morgan, the court concluded that nonmanagerial duties were more important because the essential job functions as listed by the employer required that the managers do the same work as stock clerks and cashiers, and that a large amount of manual labor by managers was a key to the business model, given the limited payroll and large amount of labor that had to be performed. Morgan, 551 F.2d at 1270.
Viewing the evidence presented in a light most favorable to the nonmovant, the court concludes that here, as in Morgan, there is enough evidence for a jury to find not only that nonmanagerial tasks consumed 80-90 % of Davis and Toliver’s time, but also that the nonmanagerial work was relatively more important than managerial work.
3. Relative freedom from Direct Supervision
As to the analytical factor of relative freedom from direct supervision, Davis and Toliver argue that not only were they governed by policies put in place by Wal-Mart at its corporate headquarters, but also policies created, implemented, and enforced by the store manager or co-manager who were present in the store daily. For instance, Toliver states in her deposition that there was a time during which assistant managers set the schedules, but during the relevant time period, the co-manager set schedules. Toliver Dep. at page 20: 4-12. She also explained that she thought it should be within her discretion to decide whom to interview for an position which was open, but that she was told whom to choose at times. Id. at page 78: 3-12. She testified that the rate of starting pay was dictated by policy and that she was not allowed to give raises. Id. at 107:10-23.
Davis testified that when the store manager and co-manager were present in the store, they were supervising the assistant supervisors and were supervising the hourly associates. Davis Dep. at page 148: 9-17. With respect to the placement of merchandise, Davis testified that the home office, store manager, or co-manager directed where to place merchandise, and that placement was dictated by planograms. Id. at page 152:12-153:4. Even on the third shift, when Wal-Mart insists the Plaintiffs were “in charge” of the store, as set out above, upper management gave instructions of what was to be done, down to tasks such as scraping dirt from beneath shelves.
In Morgan, the Eleventh Circuit found that the factor of freedom from supervision weighed in favor of a finding of the primary duty being nonexempt work, because managers above the level of the store managers were responsible for enforcing detailed store operating policies, closely reviewed inventory, closely monitored the payroll, controlled employee hourly rates and pay raises, routinely sent to-do lists and emails with instructions to the managers, closely supervised displays, and closely supervised store operations. Morgan, 551 F.3d at 1271. When viewed in a light most favorable to the non-movants, many of the same considerations present in Morgan, such as instructions from upper management as to tasks to perform, and pay rates and budget-controlled staffing by upper management, are present in this case as well. Therefore, the court concludes that this factor also weighs in Davis and Toliver’s favor.
4. Relative wages
As to the fourth primary duty factor, the relationship between employee’s salary and wages paid to other employees for the kind of nonexempt work performed by the employee, although Davis and Toliver have argued, correctly, that the court should account for the extra hours they worked in comparing salaries and wages, the court has not been pointed to evidence of the amount of hourly wages paid for the same nonexempt work duties. Therefore, the court cannot conclude that this factor weighs in favor of the Plaintiffs in this case.
Considering together the evidence of the relative importance of the management duties as compared with other types of duties, the amount of time spent performing management duties, the employee’s relative freedom from direct supervision, and the lack of evidence of relative wages, along with the fact that there is evidence that the Plaintiffs performed several types of managerial duties, it appears to the court there is a close question as to whether Davis and Toliver had primarily nonexempt duties. While the Morgan case is helpful in applying the analytical factors and considerations set forth in the C.F.R., the Morgan decision is also distinguishable to the extent that the evidence of managerial responsibilities of the plaintiffs in that case was somewhat limited. Bearing in mind that Wal-Mart has the burden of proof on its affirmative defense, and viewing the evidence in a light most favorable to the non-movants, however, the court concludes that there is sufficient evidence to create a question of fact as to whether the Plaintiffs’ primary duties were managerial. Having concluded that there are questions of fact which preclude judgment in Wal-Mart’s favor on the exemption requirement of primary duty, the court need not address the remaining requirements for application of the executive exemption.”
The Court then went on to hold that Plaintiffs may not be administratrively exempt either. While, this case was limited to the facts of the two (2) ASM Plaintiffs here, this will be an interesting one to watch.
Cliok here Davis v. Wal-Mart Stores, Inc. to read the entire opinion.
W.D.Va.: Dollar General “Store Manager” May Have Been Misclassified As Executive Exempt; Defendant’s Motion For SJ Denied
Hale v. Dolgencorp, Inc.
This case was before the Court on Defendant’s Motion for Summary Judgment. Defendant asserted the Plaintiff, the “Store Manager” of its Dollar General store was properly classified as exempt from the Fair Labor Standard Act’s (“FLSA”) overtime provisions, under the executive exemption. Citing factual issues, that needed to be resolved by a jury, the Court denied Defendant’s Motion however.
The Court conducted a detailed factual inquiry in reaching its holding, as is typical in most exemption cases:
“Dollar General operates a chain of discount retail stores located around the country. Hale was hired as a full-time clerk in one of the stores in 1996. Initially, she earned $4.75 per hour and worked as a clerk until January 1997, when she was promoted to a position known as “third key.” A third key worker is a clerk who can open and close the store, and may take deposits to the bank. A year later, in 1998, Hale was promoted to assistant store manager. During this period she transferred from her original store to several different Dollar General stores in Southwest Virginia. With each promotion Hale also received a pay raise. She was promoted to the position of store manager in November 1999, and she worked in this position until July 2003, when she left the company for a new job.
During her tenure as a store manager, Hale was paid a weekly salary and she was eligible for bonuses based upon her store’s profitability. In the four years that she managed a store, Hale received one bonus for $1,182.02. Her salary as a manager ranged from $313 per week to $431 per week. As a manager Hale estimated that she averaged between sixty to seventy hours of work per week. In her management position, Hale was not required to punch a time clock and the company did not pay her overtime.
The parties in this case agree that Hale made more than $250 and her work included the regular direction of two or more employees. The central issue thus is whether Hale’s primary duty consisted of management.
Contrary to the defendant’s assertion, it is not particularly helpful to compare Hale’s situation to that of other discount store managers, such as the one described in Grace v. Family Dollar Stores Inc., No. 3:08 MD 1932, 2009 WL 2045784 (W.D.N.C. July 9, 2009). The question here centers upon the facts of Hale’s employment. I must, therefore, perform a fact-intensive inquiry as to each prong of the five-factor test as applied to Hale in order to determine whether the management issue can be decided as a matter of law.
Although the plaintiff’s estimate of time spent on managerial tasks is important, it has been held that “ ‘when non-management duties are performed simultaneous to the supervision of employees or other management tasks” this supports a finding “ ‘that the employee’s primary duty is managerial.’ “ Jones, 69 F. App’x at 637 (quoting Horne v. Crown Cent. Petroleum, Inc., 775 F.Supp. 189, 190 (D.S.C.1991)).
Hale stated she spent ten percent of her time, about six hours each week, performing management duties such as ordering supplies and scheduling workers. The remainder of her time was spent performing menial labor: cleaning restrooms, scrubbing floors, checking out customers, and stocking shelves.
Hale’s district manager determined how many labor hours each store was allotted. As a store manager, Hale was responsible for scheduling employees according to the district manager’s allotment of labor hours. Hale’s primary concern was making certain she had enough staff to unload supply trucks and place merchandise on the store floors on “truck day.” (Hale Dep. 274.) Dollar General required stores to place stock on the floor within twenty-four hours of a supply truck’s arrival. The store referred to this as their “door-to-store in 24” strategy. (Hale Dep. 278.) Hale would save her staff’s hours for truck day so merchandise could be placed in the store within twenty-four hours. During the rest of the week, Hale had to run the store with a skeleton crew.
To save labor hours for truck day, Hale worked alone in the store for about four hours every day during her ten-hour shift. During this time she manned the cash register, which could not be left unattended. When staff was in the store with her, Hale would have the other individual man the register while she stocked merchandise on shelves according to the company’s “Plan-O-Grams.” A Plan-O-Gram was a chart that instructed employees where to place specific merchandise within a store. Typically, ninety percent of Hale’s store was organized according to the Plan-O-Gram, with the remaining ten percent stocked according to rules prescribed by Dollar General and Hale’s discretion. (Hale Dep. 125-128.)
In response to questions from defense counsel in her deposition, Hale admitted that she was always thinking about how to manage her store even when she performed menial labor such as stocking shelves or cleaning. (Hale Dep. 205-207.) Hale’s answer, however, did not indicate that she actively managed the store while performing menial labor. Rather, she performed menial tasks and at the same time she pondered ways to clean the store or organize merchandise.
The defendant argues that a reasonable jury “could only” conclude that these facts demonstrate Hale’s primary duty was management. (Def.’s Individual Reply Br. 6.) But, in fact, a reasonable juror could reach the opposite conclusion. Based upon these facts, a juror could decide that Hale spent very little time managing the store. Hale spent forty percent of her time alone in the store, during which she supervised no one and she performed tasks typically done by a clerk. A juror could conclude that her mental management of the store, such as spotting empty shelves while performing menial labor, did not constitute management or supervision of others. Further, a reasonable juror could determine that the company’s strict policies and stringent allocation of staff labor hours resulted in Hale forgoing true management duties in order to perform menial tasks so the store could simply remain open. Thus, a genuine issue of material fact exists as to whether Hale’s primary duty was management, or, whether Hale essentially performed a clerk’s duties under a different title and pay scale.
Dollar General argues that it principally valued Hale’s management abilities. This is evidenced, the defendant asserts, by the fact that Hale had to take a test to become a manager and that Hale’s district manager transferred Hale to two different locations to “rescue” the troubled stores. (Id.) Further evidence of the store’s emphasis on Hale’s management duties was Hale’s salary-she earned more than any other employee in the store-and the fact that she could receive a bonus based upon the profitability of her store. The defendant also notes that Hale was subject to very little supervision because the district manager only visited Hale’s location once every few months for twenty to thirty minutes. The company asserts that this shows that it trusted Hale’s management abilities and that she was the individual responsible for the store’s overall performance.
Although Dollar General asserts that these facts indicate Hale’s management duties were the most important tasks that she performed, a reasonable juror could reach a different conclusion.
Hale’s deposition testimony emphasizes that she spent a significant amount of time alone in the store manning the cash register. Further, the company frequently sent Hale to a store in nearby West Virginia where she spent the day stocking shelves. While Hale testified that her district manager, Judy Spangler, never interfered with her ability to perform her duties, a possible reason for this was that Spangler did not have enough time to frequently visit Hale’s store or to spontaneously review Hale’s work. As Hale testified, Spangler served as the district manager for twenty to thirty stores within in a 200-mile radius. In addition, Spangler worked from an office located three hours away from Hale’s store. Hale testified that Spangler left frequent voice mails for her, which included detailed instructions on running the store. Under Dollar General’s policies, the company expected store managers to immediately report issues to district managers, which Hale did. The company’s policies did not instruct store managers to wait for a district supervisor’s visit to discuss issues or problems.
Based upon these facts, a reasonable juror could conclude that Dollar General valued Hale’s ability to quickly stock shelves, man a cash register, and serve as an employee who promptly informed her superior about problems. Hale’s testimony could lead a juror to conclude that what Dollar General truly valued was Hale’s unquestionable compliance with company rules and her ability to promptly report problems to a supervisor who could then decide how to proceed.
As a store manager, Hale interviewed and recommended candidates for hiring, trained employees, conducted employee performance evaluations, created employees’ work schedules, and recommended employees for raises, promotions and terminations. While Dollar General permitted Hale to perform these tasks, she did so under rules that a reasonable juror could interpret as severely limiting the frequency with which Hale truly exercised discretion.
Although Hale created work schedules, she had no control over the amount of labor hours allotted to the store. Given the company’s emphasis on its “door-to-store in 24” policy, Hale had almost no discretion with scheduling staff because her primary focus was to make sure she had enough staff for truck day. Hale was unable to discipline or terminate employees unless the district manager directed her to do so. While Hale could recommend that employees receive raises or promotions, the district manager decided whether to adopt such recommendations. Further, the company’s standard operating procedures dictated, with step-by-step directions, how Hale should respond to numerous issues, such as angry customers, answering the phone, and store operations during possible weather emergencies.
Hale testified that the true amount of discretion she exercised depended upon the specific task at hand. When it came to general staff issues on a day-to-day basis, things were “pretty open.” (Hale Dep. 280.) But, when she made decisions about inventory, procedures, and stocking shelves, Hale “didn’t feel like [she] had that much discretion….” (Id.)
Dollar General argues that Hale had the discretion to manage inventory and to mark down items, but Hale testified that she never discounted an item unless she had express permission from her district manager. The defense asserts that Hale had discretion as to what she placed within the “flex-space” that constituted ten percent of the store’s floor area. But, even within this space, Hale had to adhere to company policies such as placing related items near one another.
Given these facts, it would be rational for a juror to conclude that in reality, the company’s policies left little for Hale to decide and therefore, she did not frequently exercise her discretion.
Hale testified that Spangler, the district manager, spent relatively little time inside Hale’s store. Hale testified that Spangler was in the store for eight to ten hours during inventory visits. Outside of inventory days, Spangler was in the store for about twenty minutes every two to three months.
Clearly, the record demonstrates that Hale had little face-to-face contact with her supervisor. This factor weighs in favor of the exemption. But the record does not show that Hale was genuinely free from supervision. Rather, Hale’s testimony indicates that she knew she did not have the freedom to make unfettered decisions about employee pay, promotions, terminations, or punishment. Further, Hale was constantly reminded by Spangler’s frequent voice mails or in-store visits that she had to closely adhere to Dollar General’s rules regarding placement of merchandise, store cleanliness, and other customer relations policies such as greeting customers within ten feet of entry.
Viewing the evidence at this stage most favorably to Hale, it appears that her decisions about merchandise and store procedures were dictated by company policies, from which she could not deviate. So while Spangler did not personally supervise Hale on a day-to-day basis, Hale had little freedom from the supervisory rules and regulations outlined in Dollar General’s corporate publications and ultimately enforced by Spangler.
Hale testified that on average, she worked sixty to seventy hours. Prior to her departure from Dollar General, Hale earned $431 per week. When she started as a manager, her pay was $313 per hour. Converted to an hourly rate, Hale’s salary ranged from $4.47 to $5.21 when she began as a manager, and between $6.16 and $7.19 per hour when she left the company. The actual hourly rate depends upon whether Hale’s salary is based upon her minimum work week, sixty hours, or the higher end of her average work week, seventy hours.
During the time Hale worked as a manager, the federal minimum wage was $5.15. When Hale left the company in 2003, the lowest paid clerk earned $5.60 per hour. (Hale Dep. 112). At that same time, assistant managers earned about $7 per hour.
Hale was also eligible for bonuses and during her tenure as a manager she received one for $1,182. The bonus paid to Hale weighs against a finding that Hale’s salary was similar, or close to, the salary of an hourly worker because Hale earned a ten percent bonus based upon the store’s profit while the remainder of the profit was pro-rated among lower-paid employees.
The analysis of Hale’s salary, however, when converted to an hourly rate, weighs toward a finding that Hale essentially earned the same as a clerk. For example, had a clerk earning $5.60 per hour, the lowest paid salary in Hale’s store, worked a sixty-hour week, she would have earned $224 for the first forty hours, and time and a half, or $168, for the next twenty hours. If this clerk worked a sixty-hour week she would earn $392 to Hale’s $431. If the same clerk worked seventy hours, she would earn $476 to Hale’s salary of $431. Thus, only when Hale worked a sixty-hour week would she earn slightly more than an hourly employee. Given these facts, a reasonable juror could determine that this factor weighs in favor of Hale and demonstrates that her primary duty was not management.
Whether Hale’s primary duty consisted of management is a question which must be answered by a jury. Based upon the applicable five-prong test, a reasonable juror could determine that Hale’s primary duty was not management. Thus, summary judgment in favor of the defendant is inappropriate.”
Similarly, the Court denied the branch of Defendant’s Motion seeking summary judgment regarding the alleged willful nature of its FLSA violations.
The Court’s analysis and holding was starkly similar to another case, recently discussed here, where another Court held that issues of fact required a jury determination of whether a Dollar General “Store Manager” was exempt under the executive exemption.
EDITOR’S NOTE: On July 8, 2010, another Court reached virtually the same decision, regarding another claim alleging that a Dollar General “Store Manager” was improperly denied overtime. In that case, Kanatzer v. Dogencorp, Inc., No. 4:09CV74 CDP (E.D. Mo. July 8, 2010), the Court denied Defendant’s motion for summary judgment, citing to factual issues regarding the applicability of the executive exemption.
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.”
W.D.Tenn.: “Maintenance Director” Not Executive Exempt; Management Not Primary Duty; Defendant Failed To Establish Plaintiff Supervised 2 Or More Co-Employees
Jones v. FMSC Leasehold, LLC
Before the Court was Plaintiff’s Motion for Partial Summary Judgment seeking a finding that he was not executive exempt as a matter if law, because management was not his primary duty, and because he did not supervise 2 or more employees. The Court granted Plaintiff’s Motion, agreeing that neither of these required elements of the executive exemption were present here.
Plaintiff was employed at High Pointe Health and Rehabilitation Center (“the facility”) from June 19, 2005 to February 5, 2008. Starting in November 2005 and continuing until his employment ended, Plaintiff served as Maintenance Director at the facility. Plaintiff averred that he had only one assistant reporting to him during that time, and Sanford Mann, the administrator of the facility, verified that Plaintiff had only one assistant during the time Mann worked at the facility from June 2007 to January 2008. Plaintiff contended that his primary job duty as Maintenance Director was manual labor performing general maintenance tasks at the facility. Plaintiff received a salary and was not compensated by the hour. During weeks in which he worked more than forty (40) hours, Plaintiff was not paid one and one-half (1.5) times his regular rate of pay. Plaintiff argued that Defendant could demonstrate that Plaintiff was an exempt employee for purposes of overtime pay as defined under the FLSA and its regulations.
First, the Court discussed Defendant’s failure to raise an issue of triable fact regarding Plaintiff’s primary duty, stating, “[t]he Court holds that Defendant has failed to carry its burden as to the second element, whether Plaintiff’s primary duty was management. Defendant argues that Plaintiff held the title “Maintenance Director” at the facility and his primary duty was to manage the maintenance department and the assistants who reported to him. According to Defendant, Plaintiff had input on the hiring, firing, promotion and assignment of his assistants and was able to set his own work schedule. Plaintiff disputes that he ever had actual managerial duties and argues that his duties were limited to only maintenance tasks.
Rather than rely on a job description or an employee’s job title, the Court must analyze an employee’s “actual duties” in light of the factors set forth and defined in the Department of Labor regulations. With respect to this second element of the exemption, Defendant must prove that Plaintiff’s primary duty was “management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof.”The regulations implementing the FLSA define “management” to include activities such as interviewing, selecting, and training of employees; setting and adjusting their rates of pay and hours of work; directing the work of employees; maintaining production or sales records for use in supervision or control; appraising employees’ productivity and efficiency for the purpose of recommending promotions or other changes in status; handling employee complaints and grievances; disciplining employees; planning the work; determining the techniques to be used; apportioning the work among the employees; determining the type of materials, supplies, machinery, equipment 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 and security of the employees or the property; planning and controlling the budget; and monitoring or implementing legal compliance measures.
The phrase “a customarily recognized department or subdivision” indicates “a unit with permanent status and … a continuing function.” Furthermore, “[c]ontinuity of the same subordinate personnel is not essential to the existence of a recognized unit with a continuing function.”
Perhaps most importantly, the Court must determine that management was the employee’s primary duty in order for the exemption to apply. A “primary duty” means “the principal, main, major or most important duty that the employee performs.”
Based on the record before the Court, Defendant has failed to adduce evidence from which a reasonable juror could conclude that Plaintiff’s primary duty was management. In his affidavit Plaintiff has stated that his primary job duties were as follows: manual labor such as replacing lights, replacing receptacles, cutting the lawn, law (sic) maintenance, cleaning and servicing heating and air units, minor plumbing, painting, carpeting, tiling floors, minor pipe replacement, some small motor repair, and other preventive maintenance including record keeping and documentation….
Defendant has not demonstrated the amount of time Plaintiff spent performing exempt work or the scope of discretion Plaintiff was granted in performing that work. Defendant has presented no evidence concerning Plaintiff’s relative freedom from direct supervision other than to state Defendant could set his own schedule. Defendant has failed to provide evidence about wages paid to other employees including employees Plaintiff allegedly supervised for the same kind of nonexempt work performed by Plaintiff. As a result, Defendant has provided very little from which a reasonable juror could find that this element is satisfied.
Defendant has proffered a job description for Plaintiff’s position. However, there is no corroborating evidence that the duties listed in the five-page job description were the actual duties carried out by Plaintiff….
Having failed to meet its burden as to this element, the Court concludes that Defendant is not entitled to the affirmative defense that Plaintiff was an exempt employee.”
The Court further held that Defendant could not satisfy the so-called 2 or more element either.
Therefore, the Court held that, as a matter of law, Plaintiff was not subject to the FLSA’s executive exemption.
11th Cir.: Issue Of Fact Precludes Finding “Manager” Subject To Executive Exemption; Summary Judgment Reversed
Barreto v. Davie Marketplace, LLC
This FLSA overtime case was before the Court on Plaintiff’s appeal from an Order awarding Defendant summary judgment based on a finding that Plaintiff, a”manager” of Defendant’s produce department, was subject to the FLSA’s executive exemption. Reviewing the evidence de novo, the Eleventh Circuit held that the Court below erred and reversed. The record, taken in the light most favorable to Plaintiff, the non-moving party, could support a finding that Plaintiff was not subject to the executive exemption.
“Barreto claims that although his title was that of “manager” and he admittedly performed some managerial-type tasks, his deposition testimony, considered in the light most favorable to him, creates a genuine dispute as to whether management was his primary duty. We agree. The parties agree that Barreto performed the managerial tasks of ordering produce, pricing produce, and scheduling and directing produce department employees; however, it is also undisputed that Barreto spent more than 50% of his time performing tasks identical to those performed by the hourly, non-exempt employees. Indeed, Barreto testified that, due to management’s under-staffing of the department, he was required to perform non-exempt work for such a large percentage of his time that he had no time to fulfill some of the managerial responsibilities he had been nominally given, i.e., to supervise other employees and to purchase the least expensive produce. He also testified that the four other non-exempt employees did not require his supervision, as they already “knew what the job was.” This evidence suggests that Barreto’s non-management responsibilities were more important to the operation of the store than his few managerial duties. Cf. Diaz v. Team Oney, Inc., 291 Fed. Appx. 947 (11th Cir.2008) (rejecting plaintiff’s claim that management was not his “prime responsibility” where the record was clear that “his managerial duties-as the highest ranking employee on duty during the majority of his shifts, in which he supervised the drivers, counterpersons, and cooks, apportioned work, made deposits, filled out required forms, interviewed prospective employees, and engaged in local restaurant marketing-were significantly more important to the operation of the restaurant than his non-managerial tasks”).
Barreto also presented evidence that his discretion in performing his managerial tasks was limited and his work was subject to supervision. Specifically, Barreto testified that he was required to order the cheapest produce available from a list of vendors pre-selected by management, to fix the pricing of the produce by increasing the wholesale prices according to a set scale given to him by management, and to order produce only as needed to restock preexisting supplies. He testified that he was told at the managers’ meeting how many employees he needed to schedule for each shift and how many hours the employees would work. Barreto also testified that when he asked management to hire one or two more employees for his understaffed department, management denied his request and instructed him to cut the hours of the remaining hourly employees from 40 to 30 hours per week. This testimony, considered in the light most favorable to Barreto, contradicts Dhawan’s conclusory affidavit statements that Barreto was given “wide latitude” in managing his department and that he was responsible for using “his judgment” to accomplish certain business goals. As such, Barreto’s testimony creates a genuine issue of fact regarding the extent of Barreto’s discretionary powers and relative freedom from direct supervision while performing his identified managerial tasks, i.e., ordering produce, setting prices, and setting the work schedule for non-exempt employees.
In summary, Barreto’s sworn testimony suggests that Barreto spent the majority of his time performing non-management duties; the management duties he did perform were less important to his position than the other types of duties he performed; and Barreto infrequently exercised his discretion and was subject to direct supervision. Accordingly, even though the evidence suggests that Barreto’s wages were significantly greater than the wages paid to the non-exempt employees in the produce department, we conclude that a reasonable factfinder could find that Barreto’s managerial tasks did not constitute his “primary duties” under the balancing test set forth in the Regulations. See Morgan, 551 F.3d at 1280-81 (holding that store managers were not exempt executives where evidence showed that they “spent most of their time performing manual, not managerial, tasks, that corporate manuals micro-managed store managers’ performance of those tasks, that the 380 district managers closely supervised their store managers, and that store managers had little discretion or freedom from supervision”).
Based solely on Barreto’s deposition, the district court also found that the evidence established that Barreto “customarily and regularly directed the work of two or more employees” and that his recommendations in hiring, firing or the advancement of employees were given “particular weight.” Accordingly, the court found Davie Marketplace met the third and fourth prongs of the executive exemption test as a matter of law. Specifically, the district court noted that Barreto admitted that “he told employees who worked in the produce department their schedules and place[d] them on either the morning shift or afternoon shift,” that “he would assign jobs to the employees to take merchandise outside, and had them rotate bad produce and refill missing produce,” and that “none of [the other employees] were experienced.” The district court also noted that Barreto admitted that he had recommended that an employee be terminated for eating “very expensive fruit” and that the employee had subsequently been fired. Furthermore, although Barreto made no recommendations regarding hiring or advancement of employees, the district court found that “it is unlikely that evaluations and recommendations of advancement of employees would be made” in the five months Barreto worked for Davie Marketplace. Therefore, although Dhawan’s affidavit did not comment upon Barreto’s authority to direct other employees or upon the weight given to his hiring or firing recommendations, the district court found that Barreto’s deposition testimony alone established that the third and fourth prongs of the executive exemption had been met as a matter of law.
We conclude, however, that Barreto’s deposition testimony, when read in its entirety, does not support the district court’s conclusion. First, regarding the third prong, the Regulations define “two or more other employees” as either two full-time workers or their equivalent. 29 C.F.R. § 541.104(a). As to equivalency, “[o]ne full-time and two half-time employees, for example, are equivalent to two full-time employees. Four half-time employees are also equivalent.” Id.; Morgan, 551 F.3d at 1274. In his deposition, Barreto testified that the produce department consisted of five employees, including himself, during his first week of employment, but that after the first week, “two of them were reduced” and that ultimately, there were “three less” employees in the department. Barreto also testified that after the first week, there were “three [employees in the produce department] in the morning and one in the afternoon.” Considering this testimony in the light most favorable to Barreto, after his first week on the job, Barreto supervised two half-time employees in the morning and was by himself in the department in the afternoon. Davie Marketplace offers no evidence refuting this testimony. Accordingly, we conclude that Davie Marketplace has not satisfied its burden of proving that Barreto regularly directed the work of two or more full-time employees.
Regarding the fourth prong, we disagree that evidence of one employment recommendation that was followed is sufficient to establish as a matter of law that Barreto’s recommendations regarding hiring and firing were given a “particular weight.” The Regulations explain that “[t]o determine whether an employee’s suggestions and recommendations are given ‘particular weight,’ factors to be considered include, but are not limited to, whether it is part of the employee’s job duties to make such suggestions and recommendations; the frequency with which such suggestions and recommendations are made or requested; and the frequency with which the employee’s suggestions and recommendations are relied upon.” 29 C.F.R. § 541.105. Here, Barreto’s testimony established that, in one instance, his recommendation to fire an employee for a serious infraction-stealing-was followed; however, his testimony also showed that in another instance, he recommended hiring additional employees and this advice was not heeded. Indeed, after he recommended that additional employees be hired, Barreto was directed instead to cut the hours of his remaining employees. Furthermore, Barreto stated that he did not evaluate the employees in his department and it is uncontested that he did not interview candidates or make any decisions regarding the hiring or advancement of other employees. As such, the evidence in the record creates a genuine issue of fact as to whether Barreto’s employment recommendations were given “particular weight.”
Viewing the evidence in the light most favorable to Barreto, there are questions of fact as to whether his “primary duty” consisted of management, whether he regularly directed the work of two or more full-time employees, and whether his recommendations in hiring, firing, or advancement of employees were given particular weight. Summary judgment based on the executive exemption is appropriate only where the four prongs of the “executive exemption” test are met as a matter of law; it is not the appropriate disposition where, as here, there remain issues of fact regarding three of the four elements. Accordingly, we vacate the entry of summary judgment and remand this matter to the district court.”