By Bonnie M. Boryca
The Fair Labor Standards Act (FLSA) requires employers to pay minimum wage and overtime to nonexempt employees. Most employers are familiar with the Act’s exemptions for executive, administrative, professional, computer, and outside sales employees. The particulars of the exemptions are set forth in U.S. Department of Labor (DOL) regulations, and deciding whether an exemption applies to a certain job can be very fact-intensive.
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ConAgra Foods found that out in a recent decision from the U.S. 8th Circuit Court of Appeals (which covers Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota).
Background
Evelyn Garrison and 10 other employees sued ConAgra under the FLSA for misclassification and unpaid overtime. The question was whether they were executive employees under the DOL’s exemption from the overtime requirement.
Under 29 C.F.R. § 541.100, an employee is properly classified as an executive if (1) she receives a salary of at least $455 per week, (2) her primary duty is the management of the employer’s enterprise or a subdivision of it, (3) she customarily and regularly directs the work of two or more employees, and (4) she has the authority to hire or fire other employees or her “suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight”(emphasis added). Note that the salary requirement will change on December 1, 2016, under the DOL’s updated regulations.
In this case, the final clause of the fourth prong was disputed by the employees and ConAgra, but they agreed that the other aspects of the exemption were satisfied.
The exemption applied
The employees, who were all team leaders, testified at depositions, and their testimony was considered by the appeals court. One employee testified that he was told to appraise the performance of probationary employees and report good and bad performance to managers. Others testified that they recommended the discharge of a probationary employee, and their recommendation was followed by management.
One employee testified that team leaders evaluated employees and gave feedback on whether they could do their jobs. If the feedback was negative, employees were demoted. Still another employee testified that team leaders were able to fill temporary vacancies by moving workers from one job to another and by managing the schedules of hourly employees within their area. The team leaders testified that they recommended discipline and that management followed their recommendations most of the time.
The team leaders’ testimony made clear that they made suggestions and recommendations regarding changes to the status of employees. The next question was whether management afforded their suggestions “particular weight.”
A regulation explains what “particular weight” means: If an employee’s job duties require her to make suggestions and recommendations on hiring, firing, and other changes in employment status and the suggestions are frequently made, requested, or relied upon, then the requirement is likely satisfied.
The regulation states: “Generally, an executive’s suggestions and recommendations must pertain to employees whom the executive customarily and regularly directs.” The suggestions may have “particular weight” even if a high-level manager has the final decision-making authority.
Job duties that amount to recommendations or suggestions regarding changes in employment status include offering personnel recommendations that are acted upon by managers, being involved in screening applicants for interviews, and participating in interviews. If the employee alleged to be an executive has more input into personnel decisions than hourly employees have, that is further evidence that the fourth element of the exemption is satisfied.
The 8th Circuit easily concluded that Garrison and the other employees satisfied the fourth element of the executive exemption. By their own admission, their jobs included making recommendations, and ConAgra’s management frequently relied on their recommendations in making personnel decisions.
Costs available for prevailing employer
There was another issue on appeal: whether ConAgra could recover $15,000 in costs incurred in defending the case. The FLSA does not expressly provide that prevailing defendants can recover costs, but it does not prohibit it, either. Therefore, the appeals court ruled that the general rule in Federal Rule of Civil Procedure 54(d)(1) applied and that ConAgra could ask the district court to award costs against the employees. Garrison et al. v. ConAgra Foods Packaged Foods, LLC, d/b/a ConAgra Foods, Nos. 15-1177/15-1428 (8th Cir., Aug. 15, 2016).
Takeaway for Nebraska employers
As the employees and ConAgra discovered in this case, the FLSA’s exemptions from overtime are very fact-specific. Furthermore, employers should note that amendments to the overtime regulations will go into effect later this year. (For steps to take in response to the changes, see 7 steps for communicating employee transitions from exempt to nonexempt) We recommend consulting with your attorneys when faced with an exemption issue and for updates on changes to the law.
Bonnie Boryca, an editor of Nebraska Employment Law Letter, can be reached at boryca@eslaw.com.