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FLSA's Executive Exemption Applies to Warehouse Supervisors: Second Circuit
Practical Law Legal Update 0-520-4148 (Approx. 4 pages)
FLSA's Executive Exemption Applies to Warehouse Supervisors: Second Circuit
by PLC Labor & Employment
| Published on 17 Jul 2012 • USA (National/Federal) |
On July 12, 2012, the US Court of Appeals for the Second Circuit ruled in Ramos v. Baldor Specialty Foods, Inc. that a group of workers charged with supervising employees at a warehouse are subject to the executive exemption from the overtime pay protections of the Fair Labor Standards Act (FLSA).
Key Litigated Issues
On July 12, 2012, the US Court of Appeals for the Second Circuit issued an opinion in Ramos v. Baldor Specialty Foods, Inc., affirming the district court's grant of summary judgment for the defendant. The key issue in the case was whether the plaintiffs, a group of captains who each directed the work of several employees in the warehouse of a food distributor, were subject to the executive exemption from the FLSA's overtime pay protections.
Background
The plaintiffs are a group of current or former captains employed on the night shift at the warehouse of Baldor Specialty Foods, a wholesale food distributor. All captains assigned to the night shift perform the same job duties, which include:
- Overseeing the work of a team of three to six employees, or "pickers."
- Improving the team's performance and efficiency over time.
Captains arrive at work around 30 minutes before their teams for preparatory work. At the end of each shift, captains complete production reports, which are used to determine which pickers will receive productivity bonuses from the night warehouse manager. Although the manager gives performance evaluations to pickers, captains always attend these evaluations.
Captains also have the authority to:
- Ask that pickers be transferred to other teams.
- Recommend pickers for raises or promotions.
- Issue warnings or fire pickers.
Captains earn $700 a week and spend no more than one hour during each shift on non-supervisory tasks.
A group of captains filed suit against Baldor, seeking unpaid overtime wages under the FLSA and the New York Labor Law (NYLL). The district court granted Baldor's motion for summary judgment, holding that the captains were "executives" exempt from the overtime pay provisions of the FLSA and the NYLL.
Outcome
The Second Circuit affirmed the decision of the district court, holding that the captains qualify as executives under DOL regulations. The court began by noting that, under the FLSA, the overtime pay rule does not apply to persons employed in a bona fide executive, administrative or professional capacity. An executive employee, under DOL regulations, is a person:
- Compensated with a salary of at least $455 per week, not including room, board or other facilities.
- Whose primary duty is management of:
- the enterprise in which the employee is employed; or
- a customarily recognized department or subdivision of that enterprise, defined by the regulations as a unit with a permanent status and a continuing function.
- Who customarily and regularly directs the work of at least two other employees.
- Who has the authority to hire or fire other employees, or whose suggestions and recommendations as to certain personnel decisions are given particular weight.
The captains did not dispute that they satisfied the first, third and fourth requirements, or that, under the second requirement, their primary duty was managerial. Rather, they argued that they did not manage a customarily recognized department or subdivision because each team performs the same tasks as other teams at the same time and in the same warehouse. Teams cannot have a permanent status and a continuing function, the captains argued, when they are functionally identical to other units.
The court rejected this argument, finding that:
- The text of the DOL regulations does not require that a department or subdivision perform distinct tasks or be otherwise distinguishable from other units.
- The decisions of other courts do not suggest that the FLSA's executive exemption imposes a uniqueness requirement for departments or subdivisions.
- The purpose of the executive exemption is to distinguish managerial and non-managerial employees, and that a supervisory job becomes no less managerial simply because a team operates alongside other teams doing the same work in the same building.
Because it found the captains to be supervisors of customarily recognized departments or subdivisions, and because all other requirements were indisputably satisfied, the court affirmed the district court's judgment, holding that the captains were executive employees exempt from FLSA overtime pay requirements.
Practical Implications
For employers in the Second Circuit, the decision provides welcome clarification that managerial employees will not fall outside the executive exemption solely because their teams perform parallel tasks, even where the employees do not fit popular notions of bona fide executives. However, employers should continue to carefully assess their employees' status as exempt or nonexempt under the FLSA.