Gagnon v. Resource Technology, Inc. , 19 F. App'x 745 ( 2001 )

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
AUG 13 2001
FOR THE TENTH CIRCUIT
PATRICK FISHER
Clerk
GLORIA J. GAGNON,
Plaintiff-Appellant,
v. No. 00-2410
(D.C. No. CIV-99-653 DJS/WWD)
RESOURCE TECHNOLOGY, INC., (D. N.M.)
a domestic corporation,
Defendant-Appellee.
ORDER AND JUDGMENT *
Before SEYMOUR and McKAY , Circuit Judges, and BRORBY , Senior Circuit
Judge.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument.
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
Plaintiff Gloria J. Gagnon sued her former employer, defendant Resource
Technology, Inc., under the Fair Labor Standards Act (FLSA), 29 U.S.C.
§§ 201-219, and New Mexico state law. She claimed defendant failed to pay her
overtime wages, fired her in retaliation for seeking to enforce her rights under the
FLSA, and breached its employment contract by terminating her employment.
Defendant responded that plaintiff was not entitled to overtime wages because she
was an exempt employee. It further stated that plaintiff was an at-will employee
and her employment was terminated for poor work performance and attitude.
After a bench trial, the district court 1
dismissed plaintiff’s claims and entered
judgment in favor of defendant. Plaintiff appeals, pursuing here only her
overtime-wages and breach-of-contract claims. We exercise jurisdiction under
28 U.S.C. § 1291 and affirm, but for different reasons than those relied on by
the district court regarding the FLSA claim. Sipma v. Mass. Cas. Ins. Co. ,
No. 00-1289, 2001 WL 811651, at *1 (10th Cir. July 17, 2001).
Background
Plaintiff was the office manager and bookkeeper for defendant’s consulting
and engineering firm from 1991 to 1999. She supervised the bank accounts,
accounts receivable and payable, employee time slips and employment
1
The parties consented to proceed before a magistrate judge, pursuant to
28 U.S.C. § 636(c).
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verification forms, payroll records, tax records, purchase orders, and health and
other insurance policies. She also attended and actively participated in senior
staff meetings, attended interviews with prospective job applicants and made
recommendations on both hiring and firing, kept and revised the company
employment manual, signed letters of job offers, signed notices to employees and
former employees regarding health insurance benefits, and dealt with vendors.
She set up and managed a $5,000 emergency spending account. In addition, she
performed some tasks also performed by the secretary/receptionist, such as
answering telephones, as did other employees. Her starting salary was $22,000
per year. Her ending salary was $38,000 per year.
Defendant had a written employee manual that provided for progressive
discipline and set forth the company’s sick leave policy. The manual also
provided that an employee could be fired “[w]ith or without cause.” Appellant’s
App. at 118, 154. The district court found that defendant had considered
discharging plaintiff for more than one year before the actual discharge and
that plaintiff was aware of this. Id. at 18.
Overtime Wages Claims
Generally, the FLSA requires employers to pay their employees at least
one and one-half times their regular wages for the number of hours worked that
exceed forty in any week. 29 U.S.C. § 207(a)(1). An exception is made for
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employees “employed in a bona fide executive, administrative, or professional
capacity.” Id. § 213(a)(1). The Secretary of Labor has issued regulations
defining and delimiting these statutes, the authority for which was delegated
by Congress. Id. Therefore, the regulations have “the force and effect of law.”
Batterton v. Francis , 432 U.S. 416, 425 n.9 (1977).
We review the district court’s findings of fact for clear error. Icicle
Seafoods, Inc. v. Worthington , 475 U.S. 709, 714 (1986). The question of how
plaintiff spent her time at work is a question of fact. Id. The determination of
whether plaintiff’s work activities brought her within an exception to the FLSA’s
overtime pay requirements is a question of law, which we review de novo. Id.“Exemptions to the FLSA are to be narrowly construed; the employer must show
the employee[] fit[s] ‘plainly and unmistakenly within [the exemption’s] terms.’”
Reich v. Wyoming , 993 F.2d 739, 741 (10th Cir. 1993) (quoting Arnold v.
Ben Kanowsky, Inc. , 361 U.S. 388, 392 (1960)).
On plaintiff’s claims for overtime wages, the district court held that she
was a bona fide executive employee, and therefore was not entitled to overtime
pay. 29 C.F.R. § 541.1. The qualifications for an exempt executive employee
include “the customary and regular direction of the work of two or more other
employees.” Id. § 541.1(f). Here, there was no evidence that plaintiff directed
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the work of more than one other employee. Therefore, we must reverse the
district court’s conclusion that plaintiff was an exempt executive employee.
We affirm the denial of overtime wages, however, based on the facts found
by the district court, as well as the undisputed facts, which establish that plaintiff
was employed in a bona fide administrative capacity. Id. § 541.2. We apply the
“short test” because we hold that plaintiff meets both the salary test and the duties
test. See Hays v. City of Pauls Valley , 74 F.3d 1002, 1008 (10th Cir. 1996);
29 C.F.R. § 541.214.
Plaintiff disputes that she meets the salary test, which requires defendant to
demonstrate (1) that plaintiff’s compensation was not less than $250 per week,
id. § 541.214(a), and (2) that she “regularly receive[d] each pay period on
a weekly or less frequent basis, a predetermined amount constituting all or
part of [her] compensation, which amount is not subject to reduction because
of variations in the quality or quantity of the work performed .” Id.
§§ 541.118(a); 541.212 (emphasis added). Deductions for absences of a day or
more for personal reasons or sickness may be made without affecting an
employee’s salaried status. Id. § 541.118(a)(2) & (3).
Plaintiff concedes that the amount of her compensation exceeded the $250
weekly minimum. She maintains, however, that her salary was subject to
reduction for absences of less than a day due to illness, thus disqualifying her
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under the salary test. Plaintiff relies on defendant’s sick leave policy,
which provides for an employee’s pay to be reduced for sick leave if several
conditions are met.
The instances of pay reduction must amount to an actual practice of making
such deductions. Spradling v. Tulsa , 198 F.3d 1219, 1224 (10th Cir. 2000) (citing
Auer v. Robbins , 519 U.S. 452, 461 (1997)). Here, “no clear inference can be
drawn as to the likelihood” that a reduction in pay for less than one day of sick
leave would have been applied to employees such as plaintiff. Auer , 519 U.S.
at 462. Plaintiff does not allege that any deductions were made, or that defendant
had a policy or practice of deductions, nor does the record suggest any reason to
infer such a policy. “Accordingly, [d]efendant did not maintain an actual practice
of making such deductions,” and the sick leave policy does not defeat the salary
test. Spradling , 198 F.3d at 1224.
We now turn to the duties test to determine whether plaintiff was employed
in a bona fide administrative capacity. The administrative exemption short test is
met if plaintiff’s primary duty consisted of office or nonmanual work related to
management policies or general business operations for defendant and included
work requiring the exercise of discretion and independent judgment. 29 C.F.R.
§§ 541.2(a); 541.214; accord Hays , 74 F.3d at 1008.
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Plaintiff’s work was undeniably nonmanual office work, but she asserts
her primary duty was bookkeeping, work specifically excluded from the
administrative exemption. 29 C.F.R. § 541.205(c)(1) (“[I]t is clear that
bookkeepers . . . hold the run-of-the-mine positions in any ordinary business and
are not performing work directly related to management policies or general
business operations.”). The district court found that “[a] significant portion of
Plaintiff’s job duties were bookkeeping functions,” and noted that “Plaintiff
estimated that the majority of her time was occupied by her bookkeeping duties.”
Appellant’s App. at 17, 18.
Generally, “primary duty” means the major part, or over fifty percent,
of the employee’s time. Dep’t of Labor v. City of Sapulpa , 30 F.3d 1285, 1287
(10th Cir. 1994); 29 C.F.R. §§ 541.103; 541.206(b). “Time alone, however, is not
the sole test,” and if an employee does not spend fifty percent of her time in
administrative functions, other factors should be considered. Id. § 541.103.
Administrative duties include “advising the management, planning, negotiating,
representing the company, purchasing, promoting sales, and business research
and control,” even where the employee acts “as an administrative assistant to
an executive in the production department of the business.” Id. § 541.205(b).
The administrative exemption is limited to those who perform work of substantial
importance to the employer’s business, id. § 541.205(a), and includes those
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whose work “affects policy or whose responsibility is to execute or carry it out.”
Id. § 541.205(c).
The summary of plaintiff’s responsibilities given above demonstrates that
plaintiff’s primary duty was to administer and carry out the office work necessary
to run defendant’s business. Plaintiff alone was charged with those
responsibilities, demonstrating that her duties were of primary importance to
defendant. Cf. Lott v. Howard Wilson Chrysler-Plymouth, Inc. , 203 F.3d 326,
331 (5th Cir. 2000) (exempt administrative office manager’s primary duty was
“office work directly related to the general business operations”). Plaintiff also
participated in policy decisions and was often charged with executing them.
Consequently, we hold that plaintiff’s primary duty consisted of office or
nonmanual work related to management policies or general business operations
for defendant.
The final inquiry in the short test for the administrative exemption is
whether plaintiff’s job included work requiring the exercise of discretion and
independent judgment. “In general, the exercise of discretion and independent
judgment involves the comparison and the evaluation of possible courses of
conduct and acting or making a decision after the various possibilities have been
considered.” 29 C.F.R. § 541.207(a). “The decisions made as a result of the
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exercise of discretion and independent judgment may consist of recommendations
for action rather than the actual taking of action.” Id. § 541.207(e)(1).
Plaintiff claims she merely collected information and presented it to the
company president and the senior staff, who made the decisions. She attended
the senior staff meetings at which most decisions were made, usually by
consensus. The district court found credible and persuasive the testimony of
defendant’s witnesses that “Plaintiff actively participated in the Senior Staff
meetings and had a say in how the company was run.” Appellant’s App. at 17.
As noted above, plaintiff also participated in and made recommendations in the
areas of insurance policies, hiring and firing, and banking. She clearly exercised
the requisite discretion and independent judgment to qualify as an exempt
administr ative employee. Because we determine that plaintiff was employed in
a bona fide administrative capacity, we affirm the district court’s dismissal of
her FLSA overtime wages claim, as well as her similar claim brought under the
New Mexico Minimum Wage Act, see N.M. Stat. Ann. § 50-4-21(C)(2)
(exempting employee in bona fide administrative capacity).
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State Law Breach of Employment Contract Claim
Plaintiff alleges defendant breached its employment contract with her
because it failed to follow the progressive discipline outlined in the employee
manual. In this claim based on New Mexico state law, we must reach the same
conclusion the state’s highest court would reach. Cf. Blanke v. Alexander ,
152 F.3d 1224, 1228 (10th Cir. 1998) (diversity action).
The employee manual stated that any employee could be discharged “[w]ith
or without cause.” Appellant’s App. at 118, 154. Plaintiff argues that the joint
proposed findings of fact and conclusions of law, adopted by the district court,
precludes application of that provision to her. That document notes that the
employee manual provided for “progressive discipline and for-cause termination
following successful completion of the probationary period,” id. at 11, but does
not prohibit application of the provision for discharge with or without cause.
The district court held that defendant had cause to discharge plaintiff and that
the manual permitted it to discharge her without cause.
Under New Mexico law, employment is generally at-will, absent an express
agreement specifying the employment terms. Lopez v. Kline , 953 P.2d 304, 306
(N.M. Ct. App. 1997) (collecting cases). Plaintiff does not claim that the
employee manual affected her status as an at-will employee. “An at-will
employer-employee relationship is subject to termination at any time, with
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or without cause.” Id. Plaintiff’s legal authorities are inapposite. We hold
that the district court properly dismissed plaintiff’s state law
breach-of-employment-contract claim.
AFFIRMED.
Entered for the Court
Wade Brorby
Senior Circuit Judge
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