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.
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.