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Volume XIII, Number 28

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Sixth Circuit Affirms that, for Executive Exemption to Apply, Class of Employees Must Do More than Merely Carry Out Supervisors’ Orders Regarding Hiring and Firing

In a recent decision, the Sixth Circuit Court of Appeals issued helpful guidance to employers – albeit in a decision in favor of a class of employees – as to what responsibilities employees must have in order to satisfy the executive exemption to the Fair Labor Standards Act (FLSA).

To satisfy the executive exemption, employees must (1) be compensated on a salary basis at a rate of not less than $455 per week; (2) have a primary duty of management of the enterprise or of a customarily recognized department or subdivision thereof; (3) customarily and regularly direct the work of two or more other employees; and (4) have “the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight.” 29 C.F.R. 541.100.

In Bacon v. Eaton Corp., 2014 U.S. Dist. LEXIS 75636 (E.D.Mich. May 30, 2013), rev’d, 2014 U.S. App. LEXIS 8375 (6th Cir. May 1, 2014), a class of “front-line” supervisors at one of the employer’s manufacturing plants claimed that they were misclassified under the executive exemption, and therefore they were owed overtime compensation.  Although the employees conceded that they satisfied the first three elements of the exemption, they disputed the extent to which their “suggestions and recommendations” as to the hiring and firing of other employees were given sufficient weight to meet the standard for the exemption.  The district court awarded summary judgment to the employer, finding it “fatal” to the employees’ claim that their suggestions concerning whether probationary employees should be retained, whether employees were qualified to advance, and whether to initiate disciplinary action were indeed “given particular weight” by the employer’s upper management.

Last month, the Sixth Circuit disagreed.  Following the employees’ appeal, the Sixth Circuit held that, to warrant summary judgment, the employer must show that “no reasonable jury could find that individual Plaintiffs lacked sufficient influence over personnel changes of status to qualify for the FLSA’s executive exemption.”  The Sixth Circuit then looked to the employees’ evidence that “their personnel recommendations were disregarded and rejected, that they were not trained to participate in personnel recruitment and intake, and that their job descriptions did not include decision-making regarding personnel.”  In light of this evidence, the Court stated that, “[a]s a matter of law, an employee who merely carries out the orders of a superior to effectuate a change of status is not performing exempt executive duties.”  The Court concluded that “[w]hile Plaintiffs certainly did work in supervisory positions, the record reflects substantial controversy as to the material facts at issue in this case­­—whether or not Plaintiff’s suggestions and recommendations as to hirings, firings, promotions, or other changes in status were given particular weight by Defendants.”  Accordingly, the Court reversed the district court’s decision – and the award in favor of the employer – and remanded the case for trial.

Takeaway

The Sixth Circuit’s opinion in Bacon serves as a warning to employers that employees who may supervise other employees but who cannot hire or fire such employees, or at least make meaningful recommendations as to such decisions, are unlikely to satisfy the executive exemption.  Per the employees in Bacon, even a perfunctory “voice at the table,” i.e., employees whose suggestions are routinely disregarded or ignored by management, will not suffice.  Rather, employers should take care that executive employees are given significant input in employment decisions in order to avoid claims of misclassification.

Jackson Lewis P.C. © 2023National Law Review, Volume IV, Number 174
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About this Author

William J. Anthony, Class actions attorney, Jackson Lewis, pharmaceutical sales lawyer
Principal

William J. Anthony is a Principal in the Albany, New York, and Hartford, Connecticut, offices of Jackson Lewis P.C. He is Co-Leader of the Class Actions and Complex Litigation Practice Group, and is a member of the firm's Board of Directors.

Mr. Anthony has handled numerous class and collective actions, including wage and hour claims alleging claims for improper payment of bonuses, misclassification of customer service employees, dispatchers, assistant retail managers, time share resort salespeople, pharmaceutical sales...

518-434-1300
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