An Employee’s Primary Duty is Key to Whether an Employee is Exempt from Overtime

By | January 5th, 2012 | General

As proof that wage and hour litigation is alive and kicking, even in the conservative MidWest, the Tenth Circuit in Maestas v. Day & Zimmerman, LLC, recently sent such a case back to the district court for trial. In the Maestas case, employees of a private security firm sued their employer, claiming that the employer had misclassified them as exempt from overtime. The district court had found that the employees were exempt under the executive exemption and granted summary judgment in favor of the employer, thus avoiding a trial. The Tenth Circuit reversed for all but one of the employees.

Each of the plaintiffs weree supervisors or managers in the company’s hierarchial scheme. Several, however, also performed the same or similiar duties as those they supervised, or performed other duties not considered exempt under the Fair Labor Standards Act (FLSA). Under the FLSA, an employee’s primary duty/duties must be exempt. In this case the argument was that the duties were managerial or administrative in nature and therefore the executive, administrative, or combination exemption applied.

The Appellate Court ruled that it was the duty of the jury to decide an employee’s primary duty and not for the Court to determine as a matter of law. Summary Judgment, a process by which the Court makes the final determination instead of the jury, is only proper if no reasonable factfinder would conclude that the exemption did not apply. To see if the employer met this “heavy burden” in this case, the Court looked at: the amount of time devoted to each task, the relative importance of each task, the degree of freedom from direct supervision enjoyed by the employee, and the pay received relative to the pay to subordinates.

Each of the plaintiffs held some sort of “hybrid” position — wherein they performed both exempt and non-exempt duties. For the first plaintiff, Mr. Maestas, the evidence was that he spent only about 5-10% of his time performing exempt duties, was subject to considerable supervision, and only received a 10% increase in salary over that of his subordinates. For the second plaintiff, Mr. Marquez, he appeared to perform exempt duties approximately half of the time and was also paid only 10% more than that of his subordinates. For both of these individuals, the Court found that a reasonable juror could conclude that their primary duty was non-exempt versus exempt. There was an absence of evidence as to how the third plaintiff, who clearly had greater managerial responsibilities and more freedom from direct supervision, divided his time between his exempt and non-exempt duties and how much he was paid in relation to his subordinates. The Court found that the absence of information made summary judgment improper (the burden was on the employer at this stage). Finally, the last plaintiff was the highest-ranking field officer, who was in charge of daily briefing, distributing and collecting weapons from subordinates, and supervising the staff, all of which are management duties. As the highest-ranking field official, he also enjoyed a greater degree of independence. Even without evidence of his salary premium, the Court found that this employee, Major May, clearly performed managerial duties as his primary duty. Therefore, summary judgment against him was proper. A jury, however, should make the final factual decision for the other three plaintiffs and the case was remanded to the district court for trial.

Many employers designated a team “Lead” or “assistant manager” to perform supervisory duties in addition to duties performed by subordinates. Assuming that adding supervisory duties automatically converts the employee’s position to an exempt one would be a mistake. Anytime an employee is performing both exempt and non-exempt duties, the employer should analyze whether the employee’s primary duty/duties are exempt, keeping in mind that exemptions are to be narrowly construed. The default for close calls are in favor of coverage under the Act — i.e. classifying the employee as non-exempt and paying the employee overtime.

Wage and Hour litigation and enforcement continues to be a hot issue as the Maestas case demonstrates. Employers should review annually the duties actually being performed by their employees to assess the continued applicability of any exemption. For assistance with such an analysis, contact the Employers Legal Resource Center.

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