Header graphic for print

Wage & Hour – Development & Highlights

To Highlight Recent and Noteworthy Developments In Cases And Regulations on Wage and Hour Laws That Affect Large and Small Businesses

“Suffer or Permit” Case Again Shows Danger Of Implicitly Requiring Overtime

Posted in Overtime Issues

I have often warned clients that simply having a policy against working unauthorized overtime does not immunize an employer against a successful lawsuit claiming payment for off-the-clock work.  A recent case (yet again) proves this maxim.

An appellate court has now held that a group of nurses working for the US Department of Veterans Affairs need not have been “expressly directed” to work overtime in order for them to receive overtime compensation.   The case is entitled Mercier v. United States and issued from the Federal Circuit Court of Appeals.

The nurses alleged that the VA required them to work overtime by imposing increased scrutiny, including a greater risk of discipline, on those who would not work.  The nurses claimed that the VA knew the nurses were working overtime “on a recurring and involuntary basis.”  The Federal Circuit concluded the work could be considered “officially ordered and approved,” as required by the statute and that the nurses had been “induced” to work overtime, but then the agency avoided paying for the overtime by contending that the work had not been ordered or approved. Thus, the Court concluded that work that was “induced” but not specifically required was nonetheless “ordered or approved.”

The Court succinctly stated that “we therefore hold that Anderson’s interpretation of [the Federal Employee Pay Act], namely that overtime is ‘officially ordered or approved’ where it is induced by one with the authority to order or approve overtime but not expressly directed, remains good law.”

The plaintiffs stated that the overtime was necessary to discharge the tasks known as “View Alerts,” which were described as time-sensitive requests for information related to patient care.  They contended that their supervisors, who had the power to order or approve the overtime, required the extra work and then threatened them with more enhanced scrutiny and the threat of disciplinary action.

The Takeaway

Employers cannot condone employees working or making the employees believe that they must perform certain tasks and then defend an overtime claim by asserting the “I did not order it” defense.  That is the essence of “suffering and permitting” work to be done and then seeking to avoid paying for it.

If employees believe they will be disciplined or can reasonably face discipline if they do not perform the off-the-clock work and the activity at issue is sufficiently connected to the job, then the activity will be considered “work” for which compensation is owed.

Bigger Rigs Are Better In the Trucking Industry, Says the Third Circuit

Posted in Class Actions, Overtime Issues

In March, the Third Circuit joined other circuits in its ruling in McMaster v. Eastern Armored Services, Inc.  that trucking companies are not relieved from the payment of overtime wages to their employees whose job “in whole or in part” affects the safe operation of vehicles lighter than 10,000 pounds. In its precedential decision, the Third Circuit found that the enactment of the Corrections Act of 2008 removed certain “covered” drivers from the Motor Carrier Exemption.

Writing for our Garden State Gavel blog, my colleague Irina Elgart from our Princeton office discussed the decision and what it means for trucking companies. I invite you to read her recap of the case and the issues involved.

Third Circuit Clarifies Meaning Of “Interstate Commerce” In Motor Carrier Exemption Suit

Posted in Overtime Issues

SemiTruckWhen analyzing the so-called motor carrier exemption under the Fair Labor Standards Act, 29 USC 213(b)(1), controversies often arise as to whether the drivers are involved in “interstate commerce.” This is because, as a rule, the safety sensitive nature of the driver’s job and the fact that the employer-defendant is a “motor carrier” are often not in dispute.
There are many variations on this interstate commerce theme/issue and the Third Circuit Court of Appeals (in a case litigated by my partner, Randy Schauer) has sought to clarifiy the circumstances under which drivers are deemed to be involved in interstate commerce for purposes of the exemption. In this case, the Court held that the possibility that any of Krapf’s Coaches Inc. drivers could be called to cross state lines on certain bus routes placed them in the stream of interstate commerce and therefore, exempt from overtime under the FLSA. The case is entitled Resch v. Krapf’s Coaches Inc.

In an interesting twist, the district court judge granted conditional certification for a class, but then, subsequently, granted summary judgment for the employer on the applicability of the motor carrier exemption. This was based on evidence that showed that although the routes at issue were but a small component of the Company’s revenue, i.e. 10 percent annually, maximum, this nevertheless qualified the work as interstate. Put differently, drivers only crossed state lines a total of 178 of the 13,956 total trips the plaintiffs drove in the three-year statute of limitations period encompassed by the suit, but this was enough.

The appellate court rejected the plaintiffs’ argument that only the opt-ins should be considered and rather focused on the issue of whether there was a reasonable expectation that a given driver might have to cross state lines while performing his regular duties. The Third Circuit noted that “with regard to distribution of interstate routes, KCI had a company policy of training its drivers on as many routes as possible, retaining discretion to assign drivers to drive either interstate or intrastate routes — at any time — on which they had been trained, and disciplining any driver who refused.” The Court was also impressed that all drivers were trained, tested and required to comply with DOT regulations for commercial drivers.

The Takeaway

The motor carrier exemption can be highly nuanced. As these employees usually work so-called overtime hours on a weekly basis, if they do not fall with Section 213(b)(1), there can be considerable liability for the employer. What this case highlights is the relatively small amount of interstate work or the “possibility” of interstate work that it takes to qualify the activity as “interstate.” Employers can defend and win such a case by showing a tiny component of their business is interstate and, most importantly, that any driver, at any time, can be asked to drive such an interstate route.

Randy, again, kudos…

NFL Cheerleaders To Be Deemed “Employees” And Protected Under Proposed Law

Posted in Independent Contractor, Working Time

With the NFL draft just completed (and my Giants taking a much needed offensive lineman)  it is ironic that a law focusing on wage hour rights of NFL team cheerleaders is headed towards possible passage in California.  I have often blogged about independent contractor cases and cases involving claims for off-the-clock work.  The circumstances that this statute seeks to resolve involve both of these issues.

This pending legislative development puts a somewhat different face on these issues.  The California Legislature is on the verge of passing a law that would require NFL and NBA teams to classify their cheerleaders as statutory employees and pay them at least the state minimum wage.  This is the issue that the Oakland Raiders (and the Bills, Jets, Bengals and Buccaneers) have faced, in court, in the last few years.

The proposed law (A.B. 202) came out of the Committee on Arts, Entertainment, Sports, Tourism and Internet Media on Tuesday, with a 5-2 vote in its favor.  It now heads to the state appropriations committee.  The law requires that cheerleaders be paid for the time they spend representing the teams both on and off the field.  The bill was first introduced in January by Assemblywoman Lorena Gonzalez, a former Stanford cheerleader.  She said that the proposed law “simply demands that any professional sports team — or their chosen contractor — treat the women on the field with the same dignity and respect that we treat the guy selling beer.”

The Raiders case, Lacy T. et al. v. the Oakland Raiders, settled in September for more than one million dollars. The plaintiffs in that class action had accused the Raiders of wage theft and other unfair employment process.  The suit alleged that the team did not pay the “Raiderettes” anything until the season ended, did not pay for all hours worked and forced the cheerleaders to pay a large portion of their business expenses.  The suit alleged that these workers were actually paid less than five dollars per hour for the hours of rehearsing, performing and appearing at events.

The Takeaway

This situation raises both the independent contractor and “working time” issues, although in a different (i.e. unique) context.  That context, however, does not change the fundamental legal issues at stake.  If an individual is under the control of an employer, as the workers here were clearly, they are “employees” and if there is any managerial direction or compulsion exerted on them to perform certain activities (off-the-field appearance), that is working time.

Supreme Court Will Not Hear Case Involving Waiver (In A Severance Agreement) Of FLSA Collective Action Participation

Posted in Class Actions

In a significant ruling (or lack of same) the US Supreme Court has declined to review an appellate court decision that held that employees could pursue a Fair Labor Standards Act collective action even though they signed severance agreements that included collective action waivers.  The Sixth Circuit had held that as the severance agreements did not contain arbitration provisions, the employees could still become members of a class action.  The case is entitled KeHE Distribs., LLC v. Killion. (761 F.3d 574, 23 WH Cases2d 16 (6th Cir. 2014).

The employer contended that the Sixth Circuit ruling conflicted with the decisions of seven other federal appellate courts as well as the Supreme Court.  The Company argued that the Sixth Circuit misread those decisions as relying on the Federal Arbitration Act.  In fact, the Company argued, these Courts of Appeals actually ruled that the FLSA did not create substantive rights to collective lawsuits that employees were legally foreclosed from waiving as a quid pro quo for severance compensation (i.e. consideration).

The plaintiffs countered by asserting that there no split existed between the Circuits because the precedent relied upon by KeHE involved collective action waivers in arbitration agreements that foreclosed class claims in arbitration.  The plaintiffs observed that enforcement of those class action waivers vindicated an “emphatic federal policy in favor of arbitral dispute resolution.”  This set of circumstances was not at work in this case, according to the plaintiffs.

The Sixth Circuit took the position that the other decisions all involved class/collective action waivers engrafted into arbitration agreements, which implicated the Federal Arbitration Act.  The defendant countered by asserting that these other decisions involved interpretation of the FLSA, rather than the Federal Arbitration Act.   The Company argued that these other federal courts found nothing “in the text, legislative history or purpose of the FLSA” to suggest Congress “intended to confer a non-waivable right” to class litigation of FLSA claims.”  The Company claimed that none of the other decisions turned on anything unique about arbitration.

The Takeaway

I agree with the Company when it asserted to the Court that individual litigation will not preclude effective vindication of an employee’s FLSA rights, although it could get expensive.   As the Supreme Court, “the fact that it is not worth the expense involved in pursuing a statutory remedy does not constitute the elimination of the right to pursue that remedy.”  I do not believe that waiver is not barred simply because a statute allowed for a class or collective action and several federal courts have ruled that if an individual could opt into an FLSA collective action, then that same person could choose (voluntarily) to waive participation in class suits under the statute.

Do Lower Gasoline Prices Signal A New Wave Of FLSA Actions In The Energy Industry?

Posted in FLSA Retaliation, Independent Contractor

We are all happy with the falling gasoline prices we have experienced, but, as lawyers, we (seemingly) always look for the dark spot in the sky. Some commentators are positing that the sharp drop in oil prices may trigger an increase in Fair Labor Standards Act suits against employers in the energy sector, as involuntarily separated workers seek out lawyers who look for weaknesses in employer compensation procedures, such as dubious classifications of workers as exempt or independent contractors. In fact, I recently posted on just such a misclassification lawsuit in this industry (won by the plaintiffs).

Factors possibly impelling this increase are the rather lenient standard for securing conditional collective action certification in FLSA cases and the widespread use of independent contractors by oil companies.  From numerous experiences, I can safely say that the issue of who is and who is not an independent contractor is often a murky question and the term “consultant” is used a little too loosely.

The use of independent contractors is more pervasive in the energy space industry, as opposed to other industries, according to Becky Baker, of Houston’s Bracewell & Giuliani.  She opines that oil companies rely “heavily on a contract workforce in the field.”  Although using independent contractors is certainly lawful, the issue of whether such workers are actually employees is extremely fact sensitive and the law is generally tilted (in any State) in favor of finding people to be employees.

Starting a FLSA lawsuit is easier for plaintiff side attorneys because many of them now use a detailed intake questionnaire, which probes not only “standard” type discrimination issues but also ferrets out the manner and mode of payment of the potential client, whether they receive overtime and whether they are in fact classified as independent contractors.   If the person answers that they do not receive overtime, then a whole line of inquiry opens, with now a new focus on FLSA type issues.

The Takeaway

Perhaps the larger energy companies, which may have already been sued on classification issues (exemption and independent contractor status) may be well positioned to defend such new cases, but there will be many opportunities for plaintiff lawyers to go after small and mid-size employers.  Although lower/falling oil prices may not be good for all kinds of employment cases, wage-hour suits specifically are a genre of cases that may have legs.  This is because, unlike many discrimination lawsuits, which must first begin with the filing of a Charge before the Equal Employment Opportunity Commission, FLSA plaintiffs do not have to go through this procedural hurdle, as they would for a Title VII claim.

Further, although an employer can ultimately seek to decertify a FLSA collective action, there is only a modest burden placed on plaintiffs to secure conditional certification, which then triggers the sending of notices to all putative plaintiffs, which then raises the stakes geometrically.  Also, is extraordinarily expensive to defend such actions and the fee shifting nature of the FLSA further multiplies the fees at issue.

So, fill up and let’s ride…

Employees With “Meaningful Managerial Authority” Cannot Participate In A Tip Pool

Posted in Hospitality

The New York State Appellate Division, Third Department, recently reaffirmed the proposition that under New York law employees with meaningful managerial authority cannot participate in a tip pool.  See Marzovilla v. New York State Industrial Board of Appeals, 2015 WL 1724727 (3rd Dept., April 16, 2015).   In this action, several service members complained that a New York Italian restaurant, iTrulli, violated New York Labor Law Section  196-d by distributing shares of the tip pool to the “head waiter” and the “wine steward,” who the service members alleged were managers.  New York Labor Law Section 196-d provides that “[n]o employer or his [or her] agent … shall demand or accept, directly or indirectly, any part of the gratuities, received by an employee, or retain any part of a gratuity or of any charge purported to be a gratuity for an employee … Nothing in this subdivision shall be construed as affecting … the sharing of tips by a waiter with a busboy or similar employee.”  The New York State Department of Labor (DOL) agreed with the service members that the head waiter and wine steward were managers.  As such, the DOL ruled that the tip pool violated Section 196-d and assessed a charge of $407,000, which included the disgorgement of the misappropriated tips, interest, and a civil penalty.   Following a hearing, the New York State Industrial Board of Appeals (IBA) modified the amount of civil penalties and otherwise affirmed the DOL’s ruling.  Nicola Marzovilla, the owner of the restaurant, thereafter initiated an Article 78 in the New York Appellate Division, Third Department to review the DOL’s ruling as modified by the IBA.

In reviewing this matter, the Third Department specifically considered Barenboim v Starbucks Corp., 21 N.Y.3d 460 (2013), a recent determination by the New York Court of Appeals.  In Barenboim, the Court of Appeals addressed Section 196-d and held that the eligibility of certain employees to participate in a tip pool “shall be based upon duties and not titles.”  Id. at 471.   The Barenboim Court explained that “employer-mandated tip splitting should be limited to employees who, like waiters and busboys, are ordinarily engaged in personal customer service, a rule that comports with the ‘expectation[s] of the reasonable customer’”  Id. at 471-72 (quoting, Samiento v. World Yacht Inc., 10 N.Y.3d 70, 79 (2008)).  Barenboim recognized the long standing DOL policy that “employees who regularly provide direct service to patrons remain tip-pool eligible even if they exercise a limited degree of supervisory responsibility.”  Id. at 472.  However, as the Barenboim Court warned, “there comes a point at which the degree of managerial responsibility becomes so substantial that the individual can no longer fairly be characterized as an employee similar to general wait staff within the meaning of Labor Law § 196-d.” Id.   On this issue, the Barenboim Court explained that “[m]eaningful authority might include the ability to discipline subordinates, assist in performance evaluations or participate in the process of hiring or terminating employees, as well as having input in the creation of employees work schedules, thereby directly influencing the number and timing of hours worked by staff as well as their compensation.”  Id.

The Court in Marzovilla  was confronted with the issue of when an employee’s supervisory authority becomes significant enough to impact that individual’s eligibility to participate in a tip pool with non-supervisory employees.  In Marzovilla several servers testified that the head waiter sometimes told them that they had to give him a full share of the tip pool when a large amount of money had been collected.  Moreover, when the head waiter served customers and received personal tips, those tips were not shared with any other waiters.  This testimony was credited by the IBA and the Third Department found that this evidence was sufficient under Barenboim to establish “meaningful authority because it established that [the head waiter] ‘directly influenced the compensation received by other waiters’ …” 2015 WL 1724727 at *2 (quoting, Barenboim, 21 N.Y.3d at 473).  The Marzovilla court further noted that several servers testified that the head waiter was a “manager” who “gave orders, supervised and instructed them while they were working.”  Two servers also testified that the head waiter introduced himself as a manager.  In addition, the serves claimed that the head waiter “participated in the process of hiring employees and had input in the creation of employee work schedules.”   Although the witnesses confirmed that the head waiter was required to check with Marzovilla to see if jobs were open before interviewing a potential employee, the Marzovilla court observed that “final authority” is not the standard, and “the power to hire and fire is not the exclusive test.”  Id. (quoting, Barenboim, 21 N.Y.3d at 473).  Accordingly, the Marzovilla court confirmed the determination of the IBA that the head waiter’s managerial authority precluded his participation in the tip pool.

The Marzovilla court next considered the duties of the wine steward.  Initially, both the IBA and the Third Department noted that the wine steward’s own description of his duties revealed that much of his work involved initially programing and maintaining, then improving, the restaurant’s computer system as well as maintaining and updating the restaurant’s massive wine cellar.   The IBA further credited the testimony of servers that the wine steward was rarely on the floor during lunch shifts, and during dinner shifts, his service duties were limited as he sometimes discussed wine with customers, but rarely opened and poured wine unless the bottle was expensive or the customer was high-profile or a regular.  Accordingly, the Marzovilla  court found that there was substantial evidence to support the IBA determination that the wine steward’s service duties were occasional or incidental to his functions at the restaurant, and thus, he was not a food service worker “whose personal service to patrons [was] a principal or regular part of his … duties.” Id.  As such, the wine steward was not permitted to participate in a tip pool with food service workers, such as servers.

The Marzovilla case serves an important reminder that when employees either have meaningful managerial authority, such as the head waiter at issue, or have minimal personal service to patrons, such as the wine steward at issue, then under New York law such employees may not participate in a mandatory tip pool with non-managerial, food service workers employees. While an employee can have some limited supervisory authority and still participate in the tip pool, meaningful managerial authority – such as making decisions that impact an employee’s compensation and/or having input into hiring/firing – will necessarily preclude participation in the tip pool.

Gawker FLSA Collective Action Illustrates Clash of Technology and Law

Posted in Class Actions

When a class is certified in a Fair Labor Standards Act collective action, the employer turns over names and addresses and the opt-in letters go out.  Nowadays, there is a distinct variation on this theme.  I have often commented (lamented) on the clash of technology and the law and this is another example of that tension.  A federal judge has now approved the request of former Gawker Media LLC interns to notify potential class members of the proposed collective action through social media.  The Judge, however, (thankfully) concluded that “friending” these putative opt-ins was too much.  The case is entitled Mark et al. v. Gawker Media LLC and was filed in federal court in the Southern District of New York.

The interns, who claim they are actually employees under the Fair Labor Standards Act and entitled to unpaid wages/overtime, requested that they be allowed to notify potential class members via Facebook, Twitter and LinkedIn.  The employees assert that email/mailing addresses for fifty-five (55) former interns were not available, but they claimed that more than two dozen of them had Facebook/Twitter accounts and sixteen had LinkedIn accounts.

The employees asked permission to “follow” the former interns on Twitter so they could send them a direct private message.  They also wanted to “friend” former interns on Facebook so that they could send a direct message that did not go automatically to spam; they also wanted to send “InMail” messages to other former interns on LinkedIn.

The Judge’s Order approved the requests but set two conditions: 1) the plaintiffs “unfollow” any former intern on Twitter if the intern does not opt in by the set deadline; and, 2) the plaintiffs were not allowed to “friend” individuals on Facebook “as it could create a misleading impression of the individual’s relationship with plaintiffs’ counsel.”  The Judge denied the request to send email notices to a mass list of intern applicants which could or could not include individuals who actually worked as interns, as that was overbroad.

Last month, the Judge denied the plaintiffs’ request to notify putative opt-ins by posting notices on social media sites Tumblr and Reddit, concluding that this would tend to notify people not connected to the case, as opposed to individuals with opt-in rights.

The Takeaway

Oh, how I yearn for the “old days” when snail mail ruled!

The purpose of the FLSA notice is to advise eligible people of the lawsuit and to give them the opportunity to opt in.  The purpose of the notice is not to advertise the alleged violations of the employer and to give unbridled and widespread publicity to the lawsuit.  This is exactly what can (and will) happen if plaintiffs win the right to utilize social media in their dissemination of the opt-in procedure.  The fear for me, as a management side practitioner, and for employers, is that it also may incite others to file similar lawsuits, founded or otherwise.

It does not matter if this is right or wrong.  It is here to stay.  I have been involved in a number of class actions where this social media reach outreach has been allowed.  This is more the rule than the exception and employers need to be keenly aware of this.

No Soup for You, Part II: an attorney’s claim of retaliation for being banned by a business he filed a lawsuit against

Posted in FLSA Retaliation

In November we reported on Wigdor v SoulCycle, which had been filed in New York Supreme Court, New York County.  In that action a well-known plaintiff’s attorney, Douglas Wigdor, alleged that SoulCycle retaliated against him by banning him from the Company’s establishments because Wigdor had filed a putative wage and hour class action against SoulCycle.

This action reminded us of Jerry Seinfeld’s “Soup Man,” who would decline to serve customers that did not properly place a soup order.  We had previously asked whether the owner of a store has a right to prevent counsel from entering, for example, to solicit business in their establishment.  The answer is apparently: yes …. and no.

In Wigdor v SoulCycle, Mr. Wigdor asserted four claims: (1) retaliation under New York Labor Law (NYLL) § 215; (2) retaliation under California Labor Code (CLC); (3) prima facie tort; and (4) breach of an obligation of good faith and fair dealing.  SoulCycle moved to dismiss all claims for failure to state a claim, and now the Court has issued a decision on that motion.

The Court dismissed three of the four claims – the retaliation claims under NYLL and CLC as well as the prima facie tort claim – but declined to dismiss the claim for good faith and fair dealing.  See Wigdor v SoulCycle, Index 161572/2014 (Sup. Ct, NY County April 13, 2015).  In dismissing the NYLL and CLC retaliation claims the Court recognized, as we noted in the November blog, that both statutes prohibit retaliation against an “employee.”  Indeed, NYLL § 215 states: “No employer … shall discharge, penalize, or in any other manner discriminate against any employee because such employee has made a complaint to his employer….” id. (emphasis supplied).  The CLC contains a similar provision.  Yet neither statute references protection for the employee’s lawyer.  The Court explained:

Contrary to the plaintiff’s contention, the text of Labor Law § 215 does not reveal a clear intent to authorize a claim where an employer retaliates against an attorney that represents a former employee of the employer.  Indeed, neither the plain language of the statute nor its legislative history, as revealed by the 1967 bill jacket accompanying its enactment and the 1986 bill jacket accompanying its amendment, contemplates an action by someone other than an employee making complaints regarding a former employer.

Id.  Additionally, the Court dismissed the claim for prima facie tort because “other than conclusory contentions, there are no facts supporting the assertion that defendants sole motivation for banning plaintiff from SoulCycle premises was intended to maliciously injure plaintiff.”   Id.  Thus, Seinfeld’s Soup Man would appear to be vindicated.

Unfortunately, the case took a turn for the worse for SoulCycle as the Court refused to dismiss the final claim for breach of good faith and fair dealing.  A prerequisite for asserting such a claim under New York law is that a plaintiff must plead and prove that there was a contractual relationship between the plaintiff and defendant.  SoulCycle argued that it never had a contractual relationship with Wigdor and therefore the claim should be dismissed. The Court disagreed concluding that when Wigdor plead that he had “electronically agreed to SoulCycle’s terms and conditions” he established, at least for the purpose of stating a claim, that a contractual relationship was created.   Accordingly, the breach of good faith and fair dealing claim survives, for now.

Thus, it seems the Court’s ruling does give some guidance to our inquiry as to when a business owner has an appropriate say in deciding who should not be allowed to patronize his/her business.  Certainly, had there been no prior business relationship between Wigdor and SoulCycle, and then this case would have been dismissed.  Yet, apparently when there is some prior “contractual relationship” then the lines become a little cloudy as to when the business owner can decide whether someone should continue to patronize the business.  We are now left to ask, merely because someone had patronized the business before and abided by the terms and conditions of the business owner, such as paying for the goods and services rendered, when can the business owner end that relationship?  How long does the former patron get to ask, as Oliver Twist might – “Please Sir, can I have some more?”

The FLSA Administrative Exemption Not Applicable To Oil Company Employees

Posted in Exemptions

Another administrative exemption lawsuit! The FLSA administrative exemption is the most difficult to defend and toughest to prove for an employer. The Fifth Circuit has now held that three marine superintendents at petroleum shipping loss-control company were non-exempt and did not meet the tests for the administrative exemption under the Fair Labor Standards Act. The case is entitled Zannikos et al. v. Oil Inspections (USA) Inc. and issued from the Fifth Circuit Court of Appeals.

Both the Company and the employees appealed from the lower court’s decision. The Company wanted the non-exempt ruling reversed and the employees wanted the finding of non-willfulness reversed. Neither side got what it wanted. The appellate court found no evidence of willfulness but also agreed that the workers were non-exempt. The plaintiffs’ lawyer hailed the decision as “a major victory for the marine superintendents who for years have been denied their overtime pay.”

The Company oversees and monitors oil transfers to make sure such shipments are in compliance with industry standards. The marine superintendents were entrusted with observing the transfers and for making sure that the loads were accurate, legal and safe. The superintendents oversaw the loading and unloading of the cargo; they reported errors or losses, monitored compliance with safety standards, and inspected equipment. They also recommended the adoption of policies as necessary or appropriate.

The employees alleged (as is usual in these administrative exemption suits) that they did not exercise discretion or independent judgment in significant matters, one of the essential (and often disputed) elements for the exemption. The Company contended that the marine superintendents interpreted and implemented management policies, carried out major assignments and performed work affecting business operations, thereby qualifying the employees for the exemption.

The Takeaway

The administrative exemption “fight” always is joined on the issue of whether it is skill and experience being utilized, as opposed to the required “discretion and independent judgment.” In this case, it seems that the superintendents were guided by standards and procedures that were already set in place. Thus, they were not making the evaluative kind of picking-and-choosing choices that the FLSA demands, but rather they were measuring events that happened (the various shipments) against the protocols applicable to those events. That does not suffice for the administrative exemption.