May 2018 - Case Study: Manager Who Supervised Employees May Not Be Exempt
Audrey L. Stanley
April 17, 2018
A building manager who attended management meetings and supervised and directed others could still be entitled to overtime pay under the Fair Labor Standards Act (FLSA), the 2nd U.S. Circuit Court of Appeals held.
Total Management Solutions (TMS) employed the plaintiff as a building manager at St. John's University in New York and paid him an annual salary of $80,000. His duties included ensuring the cleanliness of buildings, supervising six to 15 cleaners, directing cleaners in their work, reallocating workers when short-staffed, setting up rooms for meetings or events, and attending a daily management meeting led by his supervisor. His boss distributed work orders to the plaintiff, who then selected cleaners to carry out the orders.
The plaintiff also handled off-campus work and event setups, and had a separate agreement in which he was paid for overseeing athletic facilities during basketball games. Although a collective bargaining agreement prohibited him from performing cleaning duties, the plaintiff testified that he performed nonsupervisory cleaning duties 90 percent of the time.
In 2015, the plaintiff sued TMS, claiming it violated the FLSA by failing to pay him overtime. The district court dismissed his FLSA claim, concluding the plaintiff qualified for the executive exemption and was not entitled to overtime.
The district court reasoned that the plaintiff's primary duty was managerial, and he had authority to recommend the hiring, firing or change in status of other employees. The district court disregarded the plaintiff's testimony that the majority of his work involved nonsupervisory duties, finding it untrue.
The appeals court disagreed. Because the plaintiff had testified that 90 percent of his work was nonsupervisory physical cleaning, TMS could not conclusively establish that his primary duties involved management activities. According to the appellate court, the district court erroneously disregarded the plaintiff's testimony, as the district court cannot assess the credibility of evidence on summary judgment but must determine only whether a factual dispute exists.
Similarly, because the plaintiff testified that he never recommended disciplinary action; did not have authority to hire or fire employees; and did not make recommendations to hire, promote and fire employees, there was a dispute as to whether he indeed had such authority. Additionally, TMS identified only one instance when the plaintiff recommended disciplinary action, and the plaintiff himself did not administer discipline on that occasion. Accordingly, there was a factual dispute as to whether he met the test for the executive exemption from the overtime provisions of the FLSA, and therefore dismissal was inappropriate.
The appellate court's decision to vacate the dismissal does not establish that the plaintiff proved his claim but only that he presented enough evidence to dispute that he was employed in an executive capacity exempt from the FLSA's overtime wage provisions.
Paganas v. Total Maintenance Solution LLC, 2d Cir., No. 17-0040 (March 12, 2018).
Professional Pointer: This case serves as a reminder that employers should engage in a periodic analysis of exempt employees' actual job duties. The fact that an employee is called a manager and has authority to supervise according to a job description does not mean that the employee is exempt from overtime requirements.
Audrey L. Stanley is an attorney with Marr, Jones, & Wang LLP, the Worklaw® Network member firm in Honolulu.