In Smith v. The Bank of New York Mellon Corporation, 2011 U.S. Dist. LEXIS 21996 (W.D. Pa. Jan. 20, 2011), the Western District of Pennsylvania denied an employer’s motion for summary judgment that an information technology worker was an exempt administrative employee under the Pennsylvania Minimum Wage Act (“PMWA”). Plaintiff Herman Smith worked as an “FXR Specialist” which performed formal file transfers between internal BNY Mellon business units and other external entities. In this position, Mr. Smith earned a salary of over $70,000 a year but alleged that he did not recieve overtime compensation for the 50 plus hours he worked each week. Unlike the FLSA, the PMWA does not have an exemption for computer employees, so the employer attempted to escape liability by arguing that Mr. Smith was a bona fide administrative employee.
The Court ruled in favor of Mr. Smith due to the existence of genuine issues of material facts surrounding Plaintiff’s primary duties as an FXR Specialist as well as the discretion and independent judgment he was able to utilize in that position. The Court relied heavily upon federal regulations and cases interpreting the administrative exemption under the FLSA in reaching its conclusion.

Companies opposing FLSA misclassification lawsuits regularly oppose class/collective certification by arguing that the determination of whether individual workers within a job title are exempt under the FLSA requires an “individualized” analysis that precludes class or collective treatment of the litigation.  This legal argument, however, almost always contradicts the company’s business practice of simply classifying all of the workers within the job title as exempt from the FLSA.

Here is the question we must ask corporate defendants in our FLSA misclassification cases:  If the determination of whether each individual worker really entails an “individualized” analysis, why doesn’t the company ever conduct such an analysis prior classifying each and every worker as exempt?  Corporate defendants will have difficulty answering this question where, as is often the case, they often are operating under the following double-standard:  When workers seek to enforce their FLSA rights in court, an “individualized” analysis becomes indispensible.  But when corporate executives decide to take away the FLSA rights of these same workers, sweeping, accross-the-board classifications of everyone as exempt are perfectly acceptable.

Fortunately, some federal courts are catching on to the hypocrisy of this double-standard.  In Morgan v. Family Dollars Stores, Inc., 2008 U.S. App. LEXIS 25187 (11th Cir. Dec. 16, 2008), the Eleventh Circuit Court of Appeals repeatedly addressed the double-standard in rejecting Family Dollar’s argument that the district court erred in certifying as a collective action an FLSA overtime lawsuit brought on behalf of over 1,000 Store Managers classified as exempt “executive” employees.  In one of several noteworthy passages, the Court wrote:  “Here, Family Dollar argues that the store’s size, sales volume, and location cause store managers’ job duties to vary and preclude a collective trial. The facts – that Family Dollar never examined how store managers spent their time and that none of those factors had anything to do with Family Dollar’s decision to exempt all store managers from overtime pay – counter Family Dollar’s argument in that regard.”  Id. at *76 n. 46.

Another great example of the above reasoning appears in Wang v. Chinese Daily News, Inc., 231 F.R.D. 602 (C.D. Cal. 2005):  “The Court rejects Defendant’s argument that the ‘overriding’ issue in this case is whether reporters and account executives are exempt or non-exempt from overtime requirements and that the Court must engage in an individualized inquiry into each reporter’s and account executive’s job duties, hours, and/or income in order to determine whether or not that individual should be classified as ‘exempt.’ . . . Defendant’s argument is unpersuasive because Defendant itself classifies all reporters and account executives as exempt. Defendant cannot, on the one hand, argue that all reporters and account executives are exempt from overtime wages and, on the other hand, argue that the Court must inquire into the job duties of each reporter and account executive in order to determine whether that individual is ‘exempt.’”  Id. at 613.

It was a busy quarter for issuing opinions in FLSA collective actions by federal district courts within the Fifth Circuit.  These opinions touched on a number of different compensation related issues, from tip sharing to conditional certification of classes alleging that they worked off-the-clock.  Below is a brief summary of each of the opinions issued from March 16, 2008 through June 15, 2008 that concern FLSA collective actions. (more…)