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 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.