In a decision issued May 1, 2014, the United States Court of Appeals for the Sixth Circuit in Bacon v. Eaton Corp., 6th Dist No. 13-1816, found that eight former industrial supervisors at a Michigan plant could proceed with their claims for unpaid overtime compensation and damages under the Fair Labor Standards Act (“FLSA”). The plaintiffs were former “front line” supervisors who supervised crews of 20 hourly employees. They claim that their employer misclassified them as “exempt executives,” thereby wrongfully exempting them from the overtime provisions under the FLSA.
The Department of Labor (“DOL”) has established a four-part test to determine whether an employee is appropriately classified under the executive exemption. Under this test, an employee qualifies as an exempt executive if the employee:
- is compensated on a salary basis at a rate of not less than $455 per week;
- whose primary duty is management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof;
- customarily and regularly directs the work of two or more other employees; and
- has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change in status of other employees are given particular weight.
There was no dispute that the employer could show that the first three prongs of the above test were satisfied with respect to these front line supervisors. However, the parties disagreed over whether the plaintiffs had sufficient influence over personnel decisions to qualify as exempt executives.
Applying the DOL’s test, the Sixth Circuit held that a “change of status” for purposes of the fourth prong meant a tangible employment action that constitutes a significant change in employment status. To be a change of status, the action must be more disruptive than a mere inconvenience or alteration of job duties. Moreover, the Court held that an employee that merely carries out the orders of his or her supervisor to effectuate a change of status is not performing executive duties for purposes of the executive exemption under the FLSA.
Noting that the DOL’s test is to be narrowly construed against the employer claiming the exemption, the Sixth Circuit held that there were sufficient issues of fact to warrant a trial over whether the plaintiffs had sufficient influence over personnel changes of status to qualify for the executive exemption. In so holding, the Court pointed to evidence that the plaintiffs’ evaluations of probationary employees were not given any weight in whether or not the probationary employee was hired, none of the plaintiffs were given training on conducting interviews and none participated in the interview process, and that the employer removed past disciplinary action forms completed by plaintiffs from employees’ files. Based upon such evidence, the Court concluded that a jury could determine that the plaintiffs lacked sufficient influence over other employees’ changes of status to be properly classified as exempt employees under the FLSA. Accordingly, their claims for unpaid overtime were permitted to proceed. This decision serves as a reminder that title and a supervisory role alone are insufficient to satisfy the executive exemption prong under the FLSA.