Marzuq v. Cadete Enterprises, Inc.

United States Court of Appeals
For the First Circuit
No. 14-1744
GASSAN MARZUQ, et al.,
Plaintiffs, Appellants,
v.
CADETE ENTERPRISES, INC., et al.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. F. Dennis Saylor, District Judge]
Before
Howard, Chief Judge,
Souter, Associate Justice,*
and Lipez, Circuit Judge.
Shannon Liss-Riordan, with whom Benjamin J. Weber, Lichten &
Liss-Riordan, P.C., and Elayne N. Alanis were on brief, for
appellants.
Nicholas B. Carter, with whom Maria T. Davis and Todd & Weld
LLP were on brief, for appellees.
Peter Winebrake, Mark J. Gottesfeld, and Winebrake &
Santillo, LLC on brief for amici curiae National Employment Law
Project, Economic Policy Institute, and National Employment
Lawyers Association; Audrey Richardson and Greater Boston Legal
Services on brief for amicus curiae Massachusetts Fair Wage
Campaign; Catherine Ruckelshaus, Anthony Mischel, National
* Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
Employment Law Project, Roberta L. Steele, and National Employment
Lawyers Association on brief for amicus curiae National Employment
Lawyers Association; and Ross Eisenbrey and Economic Policy
Institute on brief for Economic Policy Institute.
December 9, 2015
LIPEZ, Circuit Judge. Two former managers of Dunkin'
Donuts stores in Massachusetts brought this action claiming they
were improperly denied overtime pay in violation of the Fair Labor
Standards Act ("FLSA"). See 29 U.S.C. § 207(a)(1). Based on facts
it deemed undisputed, the district court rejected the
recommendation of the magistrate judge and granted summary
judgment for the defendant employers, finding that plaintiffs were
"bona fide executive[s]" excluded from the statute's overtime pay
requirement. Id. § 213(a)(1). Our review of the law and the
record persuades us that material factual disputes remain
concerning the exemption's applicability to plaintiffs and, hence,
we vacate the summary judgment and remand for further proceedings.
I.
A. Factual Background
In this appeal from a summary judgment, we present the facts
in the light most favorable to the plaintiffs, the nonmoving party.
See Ray v. Ropes & Gray LLP, 799 F.3d 99, 112 (1st Cir. 2015).
Here we provide a brief recital of facts to set the stage for the
analysis that follows. We provide additional detail later as part
of that analysis.
Plaintiff Gassan Marzuq worked as a manager at a Dunkin'
Donuts store in Massachusetts from 2007 until his termination in
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2012,1 and plaintiff Lisa Chantre was a manager at another
Massachusetts store from 2009 until her termination in 2010.2 Both
stores are among multiple Dunkin' Donuts franchises owned and
operated by three related corporate entities -- Cadete
Enterprises, Inc., T.J. Donuts, Inc., and Samoset St. Donuts, Inc.
-- whose common president is John Cadete.
Pursuant to manager agreements they signed with Cadete
Enterprises, Marzuq and Chantre were expected to work "no less
than a six day, 48 hour work week." (Emphasis in original.)
Often, however, store managers work more than sixty hours, in part
because they substitute for crew members who are out sick or miss
a shift for other reasons. Marzuq testified in his deposition
that his regular schedule added up to sixty-six hours over six
days, but that he was in fact "there all the time, seven days a
week."3 Managers' responsibilities include calibrating the
1 In addition to managing the regular store, Marzuq also
managed for a period a separate drive-up kiosk that opened in 2009
at a nearby gas station. The kiosk served a limited menu and was
open only during daytime hours. The regular store is open 24
hours, seven days a week.
2 Chantre died after the complaint was filed, and the personal
representative of her estate, Tanisha Rodriguez, was substituted
as a plaintiff. For convenience, we, like the district court,
refer to Chantre as the plaintiff rather than Rodriguez.
3 For purposes of our analysis, we must rely on Marzuq's
description of his work, as there is no deposition in the record
from Chantre. She died four months before Marzuq's deposition was
taken, in late November 2012. The record also contains a
deposition of Marzuq taken in November 2011, in a separate state
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equipment to Dunkin' Donuts specifications, handling cash, keeping
the store and grounds properly maintained, training and
supervising the employees, periodic counting of every non-
perishable item in the store, and substantial paperwork.
Marzuq and Chantre were supervised by a district manager,
Aaron Dermandy, who oversaw at least seven stores during the time
plaintiffs were managers. Among other duties, Dermandy determined
staffing levels, arranged maintenance, and ordered the baked goods
for the stores. He visited each store every week, and was involved
in both the hiring and firing of crew members.
Marzuq viewed himself as "in charge" and "the captain" of his
store, and his sons, both of whom worked at Marzuq's store,
likewise saw him that way. Sarmad Marzuq testified that "[i]t was
always expected that if [his father] wasn't around that he would
be always on call," and Ahmad Gassan Marzuq reported that no one
else was in charge when his father was not at the store: "If anyone
had questions, we would just call my father and he usually would
come in . . . [a]nd solve the problem for us."
The record, however, also contains evidence of Marzuq's
difficulty in fulfilling his role as "leader of th[e] team." In
addition to reporting that he worked on Sundays because his regular
six-day schedule was insufficient to get the necessary work done,
court proceeding.
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Marzuq testified that he "did not have [] time actually to be the
manager as required to be a manager." He elaborated as follows:
I'm always on the floor 90 percent of my time,
serving customers, cleaning, cleaning the
outside, doing the landscaping, cleaning the
papers out of the bushes, cleaning the
bathroom, serving customers, covering shifts,
employees that they call in, I have to cover.
So really I don't have time to be 100 percent
manager.4
He explained that he could not routinely delegate the clean-up to
crew members "because you're always short on staff." When asked
about the company policy that employees take a day off, he
responded: "How [are] you going to run . . . the operation with no
management to take care of that location? So you have to work."
B. Procedural Background
Marzuq and Chantre filed this action in February 2011 seeking
overtime compensation under the FLSA,5 and the defendants filed a
motion for summary judgment two years later that relied heavily on
the depositions of Marzuq and Dermandy. In recommending that the
motion be denied, the magistrate judge found a genuine issue of
4
At another point, Marzuq stated that he did not "spend
enough time actually to be in the office or directing employees
the proper way because I'm always working on the floor, if you
want to say the counter, as any other employees and I'm putting a
lot of -- a lot of hours on the floor."
5
Marzuq was fired in April 2012, and he subsequently filed
an amended complaint that added retaliation claims under the FLSA
and state law. The district court denied the defendants' motion
for summary judgment on those claims, but the parties resolved
them before trial and, hence, they are not part of this appeal.
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material fact as to whether plaintiffs fell within the FLSA's
overtime-pay exclusion for employees serving in a "bona fide
executive" capacity. 29 U.S.C. § 213(a)(1).
As described more fully below, the district court disagreed
that a jury could find in plaintiffs' favor. It concluded that
the facts in this case are "in substance indistinguishable" from
those we encountered in Donovan v. Burger King Corp., 672 F.2d 221(1st Cir. 1982) ("Burger King"), where we held that certain
assistant managers were exempt from the overtime provision. The
court thus granted summary judgment for defendants, and this appeal
followed.
II.
Before examining the district court's conclusion that Burger
King "controls the disposition of plaintiffs' FLSA claims," we
review the governing law and the reasoning in Burger King that led
us to find the overtime exemption applicable there.
A. The FLSA Executive Exemption
The FLSA requires employers to pay their employees at least
"one and one-half times the regular rate" for any hours worked in
excess of a forty-hour workweek. 29 U.S.C. § 207(a)(1). The
overtime requirement has multiple exceptions. The one at issue in
this case excludes "any employee employed in a bona fide executive
. . . capacity." Id. § 213(a)(1). Pursuant to regulations issued
by the Secretary of Labor, an employer seeking to establish that
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an employee is an exempted "executive" must show: (1) the
employee's salary is at least $455 per week, (2) the employee's
"primary duty" is management, (3) the employee "customarily and
regularly directs the work of two or more other employees," and
(4) the employee "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 of status of other
employees are given particular weight." 29 C.F.R. § 541.100(a)
(2009).6 Each of these requirements must be met for the exemption
to apply.
The regulations explicitly address the situation of an
employee who concurrently performs exempt and nonexempt work --
i.e., one who supervises other employees while also doing non-
supervisory tasks along with those subordinates -- stating that
such an employee may fall within the exemption so long as the four
requirements of § 541.100 listed above are otherwise met. See id.
§ 541.106. Whether an employee who concurrently performs both
types of duties meets the requirements is determined on a case-
by-case basis. Id. For example, a manager "can supervise
6"Although the regulations merely state the Secretary's
official position on how the statutes should be interpreted, a
court must give them 'controlling weight unless [the court finds
them] to be arbitrary, capricious, or contrary to the statute."
Cash v. Cycle Craft Co., 508 F.3d 680, 683 (1st Cir. 2007)
(alteration in original) (quoting Reich v. John Alden Life Ins.
Co., 126 F.3d 1, 8 (1st Cir. 1997) (citing Chevron U.S.A., Inc. v.
Nat. Res. Def. Council, 467 U.S. 837, 843-44 (1984))).
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employees and serve customers at the same time without losing the
exemption." Id. § 541.106(b). Hence, even a substantial overlap
in the performance of non-managerial and managerial work will not
disqualify an employee from the exemption if the executive duties
are his or her "primary duty." Id.
The regulations provide guidance on how to determine an
employee's "primary duty," including a set of non-exclusive
factors (in boldface below) to consider. See id. § 541.700.
Because the primary duty inquiry is central to this case, we
reproduce all but the introductory line of the pertinent
regulation:
(a) . . . The term "primary duty" means
the principal, main, major or most important
duty that the employee performs.
Determination of an employee's primary duty
must be based on all the facts in a particular
case, with the major emphasis on the character
of the employee's job as a whole. Factors to
consider when determining the primary duty of
an employee include, but are not limited to,
the relative importance of the exempt duties
as compared with other types of duties; the
amount of time spent performing exempt work;
the employee's relative freedom from direct
supervision; and the relationship between the
employee's salary and the wages paid to other
employees for the kind of nonexempt work
performed by the employee.
(b) The amount of time spent performing
exempt work can be a useful guide in
determining whether exempt work is the primary
duty of an employee. Thus, employees who
spend more than 50 percent of their time
performing exempt work will generally satisfy
the primary duty requirement. Time alone,
however, is not the sole test, and nothing in
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this section requires that exempt employees
spend more than 50 percent of their time
performing exempt work. Employees who do not
spend more than 50 percent of their time
performing exempt duties may nonetheless meet
the primary duty requirement if the other
factors support such a conclusion.
(c) Thus, for example, assistant managers
in a retail establishment who perform exempt
executive work such as supervising and
directing the work of other employees,
ordering merchandise, managing the budget and
authorizing payment of bills may have
management as their primary duty even if the
assistant managers spend more than 50 percent
of the time performing nonexempt work such as
running the cash register. However, if such
assistant managers are closely supervised and
earn little more than the nonexempt employees,
the assistant managers generally would not
satisfy the primary duty requirement.
Id. (emphasis added). Briefly stated, the regulation explains
that an employee's "primary" duty is not determined solely by the
amount of time he or she devotes to the different categories of
tasks -- i.e., exempt vs. nonexempt -- but on the overall character
of his or her position.
B. The Burger King Decision
In Burger King, the district court had found after a bench
trial that the restaurant chain's assistant managers did not have
management as their primary duty and, hence, were entitled to
overtime under the FLSA. See 672 F.2d at 224. Among other tasks,
the Burger King assistant managers scheduled employees, oversaw
product quality, spoke with customers, trained employees, and
"perform[ed] various recordkeeping, inventory, and cash
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reconciliation duties." Id. at 223. However, the assistant
managers also spent a substantial portion of their time -- more
than 40 percent of their weekly work hours, id. at 224 --
"performing many of the same tasks as hourly employees, such as
taking orders, preparing food, and 'expediting' orders." Id. at
223. The district court found that, "in the absence of the
manager, the assistant manager on duty was 'de facto in charge of
the store,'" id. at 225, but the court nonetheless concluded that
assistant managers did not work primarily as managers as required
for the FLSA overtime exemption.
In reversing, we stated that, "[i]n light of the district
court's finding here that the assistant managers were 'in charge'
of the restaurant during their shifts, its conclusion that they do
not have management as their primary duty cannot stand." Id. at
227. We noted that employees may concurrently perform exempt and
nonexempt tasks, and we observed that the regulation "makes it
quite clear that an employee can manage while performing other
work, and that this other work does not negate the conclusion that
his primary duty is management." Id. at 226. We found applicable
"the proposition that the person 'in charge' of a store has
management as his primary duty, even though he spends the majority
of his time on non-exempt work and makes few significant
decisions." Id. at 227.
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Because the issue of primary duty was the only disputed factor
for certain of the Burger King assistant managers, our rejection
of the district court's finding on that issue meant that those
managers fell within the FLSA's "bona fide executive" exemption.
Id. at 224.7 Accordingly, we vacated the district court's judgment
insofar as it ordered Burger King to pay back overtime wages to
the group of assistant managers earning at least $250 per week.
Id. at 229.8
C. The District Court's Dunkin' Donuts Decision
The role played by the Burger King assistant managers, as
described in our decision, appears to largely coincide with the
responsibilities of Marzuq and Chantre as depicted by the evidence
7 This holding covered only assistant managers earning at
least $250 per week. Pursuant to the regulations then in effect,
the eligibility of such employees for the exemption was evaluated
under a "short test" consisting of only two requirements: the
employee's "primary duty" must be management, and he or she must
regularly direct the work of at least two other employees. See
Burger King, 672 F.2d at 223. The "long test" applicable to
employees earning between $155 and $250 per week included, inter
alia, a time limitation on work "not 'closely related' to their
management duties" (no more than 40 percent). Id. at 223-24. As
revised in 2004, and as described above, the regulations now set
out a single test applicable to employees earning at least $455
per week. See supra Section A; see also Morgan v. Family Dollar
Stores, Inc., 551 F.3d 1233, 1265-66 & n.48 (11th Cir. 2008)
(explaining the shift from two tests to one).
8 We affirmed the district court's judgment that assistant
managers earning less than $250 were entitled to overtime pay
because of the 40 percent limit -- under the long test -- on the
amount of non-managerial work they could perform. See 672 F.2d at
228.
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recounted in Section I above. Given that factual similarity, the
district court unsurprisingly looked to our analysis in Burger
King for guidance. The court stated that, like the Burger King
assistant managers, it is "clear" that "plaintiffs were at all
times 'in charge' of their respective stores," including while
"serving customers like normal hourly employees." Dist. Ct. Op.
at 9; see also id. at 8 (noting that "[t]he Burger King court found
that an employee can still be 'managing' even while physically
doing something else"). The district court also expressly invoked
the FLSA regulation that provides that "employees who perform
exempt and nonexempt work concurrently are not disqualified from
the executive exemption." Id. at 9 (citing 29 C.F.R.
§ 541.106(a)).
Hence, echoing our holding in Burger King, the district court
found it undisputed that plaintiffs had management as their primary
duty, even though they spent "much of their time" on nonexempt
work and "had little discretion to make significant decisions."
Id. In addition, despite their limited authority overall, the
court found that plaintiffs wielded influence over personnel
decisions -- the other contested requirement for the exemption.9
9
The parties do not dispute that plaintiffs satisfy the
remaining two factors for the executive exemption. They earned at
least $455 per week, 29 C.F.R. § 541.100(a)(1) (2009), and they
"customarily and regularly direct[ed] the work of two or more other
employees," id. § 541.100(a)(3).
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Id. at 11. Accordingly, the court held that "the undisputed facts
show that plaintiffs were employed in a bona fide executive
capacity," and thus not entitled to overtime pay. Id.
III.
On appeal, plaintiffs contend that the district court failed
to perform the multi-factor analysis required by the FLSA
regulations to determine an employee's "primary duty" and
improperly "gloss[ed] over a clear factual dispute" as to whether
Marzuq was able to manage his store while also serving customers
and completing other non-managerial tasks. They further assert
that the court's reliance on Burger King was misplaced, as that
case involved a verdict entered after a bench trial rather than a
ruling on summary judgment for which they are entitled to the
benefit of favorable factual inferences. All told, plaintiffs
contend that summary judgment was improper because the evidence in
the record would permit a reasonable factfinder to conclude that
the overtime exemption does not apply to them.
A. Standards of Review
We review the district court's summary judgment ruling de
novo, assessing the facts in the light most advantageous to
plaintiffs and also drawing all reasonable inferences in their
favor. Ray, 799 F.3d at 112.
The burden is on the employer to prove an exemption from the
FLSA's requirements, Cash v. Cycle Craft Co., 508 F.3d 680, 683
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(1st Cir. 2007), and "the remedial nature of the statute requires
that [its] exemptions be 'narrowly construed against the employers
seeking to assert them,'" Reich v. John Alden Life Ins. Co., 126
F.3d 1, 7 (1st Cir. 1997) (quoting Arnold v. Ben Kanowsky, Inc.,
361 U.S. 388, 392 (1960)); see also Hines v. State Room, Inc., 665
F.3d 235, 240 (1st Cir. 2011) (stating that exemptions must be
"drawn narrowly against the employer"); Wirtz v. Keystone Readers
Serv., Inc., 418 F.2d 249, 261 (5th Cir. 1969) (noting the FLSA's
"dual mandates of broad coverage and narrow exemptions").
B. Discussion
As noted above, it is undisputed that plaintiffs meet two of
the four criteria for the "bona fide executive" exemption from
overtime pay: they earned more than $455, and they "customarily
and regularly direct[ed] the work of two or more other employees."
29 C.F.R. § 541.100(a) (2009). We thus begin with an examination
of one of the remaining requirements: that management be an
exempted executive's primary duty.
1. Primary Duty
Appellants argue that the district court improperly failed to
consider the four non-exclusive factors listed in the governing
regulation as pertinent to the primary-duty determination: "the
relative importance of the exempt duties as compared with other
types of duties; the amount of time spent performing exempt work;
the employee's relative freedom from direct supervision; and the
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relationship between the employee's salary and the wages paid to
other employees for the kind of nonexempt work performed by the
employee." 29 C.F.R. § 541.700(a)(2009). They further assert that
the record evidence on these factors, viewed in their favor, does
not lead inevitably to the conclusion that management was their
primary duty -- thus taking this case outside the scope of our
holding in Burger King.
As an initial matter, we agree that Burger King is not on all
fours with this case. Our analysis there rested on findings made
by the district court after a bench trial, while on summary
judgment we must construe the facts in plaintiffs' favor.
Moreover, the reported facts in the two cases are not identical.
In Burger King, for example, the district court found that the
assistant managers "devoted more than 40 percent of their time to
non-managerial duties," 672 F.2d at 224, while Marzuq testified
that he was "on the floor 90 percent of [the] time" doing nonexempt
tasks like serving customers and cleaning. The difference between
performing nonexempt work most of the time -- i.e., 90 percent --
and possibly less than half the time -- i.e., "more than 40
percent" -- could be significant in evaluating whether a manager
is able to perform supervisory and nonexempt tasks concurrently.
At least in some settings, a nominal "manager" who spends nearly
his entire shift doing the same work as his subordinates might not
be able to simultaneously manage the store. See Morgan v. Family
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Dollar Stores, Inc., 551 F.3d 1233, 1272 (11th Cir. 2008) (noting,
in a decision affirming jury's finding that store managers did not
have management as their primary duty, a distinction between
managers who spent "80 to 90% of the time performing manual labor"
and those who spent 60% or "'more than fifty percent'" of their
time on nonexempt tasks). As discussed below, other differences
also exist, including comparative pay rates.
Importantly, when an employee performs both exempt and
nonexempt work, the question of primary duty "is determined on a
case-by-case basis" in light of the factors specified by regulation
and identified above. 29 C.F.R. § 541.106. Appellants correctly
observe that the district court did not expressly examine those
factors. Instead, the court treated Burger King as dispositive on
the primary duty inquiry based on the court's assessment that
plaintiffs indisputably were "in charge" of their stores at all
times.
Notwithstanding the procedural and factual differences
between the cases, Burger King does articulate a principle that is
relevant here: a manager who is "in charge" when on the job "can
still be 'managing' . . . even while physically doing something
else," id. at 226, and may have management as his primary duty
"even though he spends the majority of his time on non-exempt work
and makes few significant decisions," id. at 227. However, Burger
King was anchored in factual findings that the assistant managers
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were "'in charge' of the restaurant during their shifts," id., and
that they spent substantial time on managerial duties, see id. at
224. Hence, our analysis implicitly assumed that being "in charge"
is not merely a label belied by the realities of the workplace.
We also observed that some of the pertinent regulatory factors
"quite clearly cut in favor of Burger King's contention [that the
plaintiffs' primary duty was management], especially those related
to freedom from supervision and a comparison of wages with other
employees." Id. at 226.
Although this case resembles Burger King in certain respects,
the primary duty question cannot be answered without the case-
specific inquiry contemplated by regulation. Whether plaintiffs
are similarly situated to the Burger King assistant managers
depends both on whether they were in fact "in charge" while at
their stores and whether, in the particular circumstances of this
case, their being "in charge" compels the conclusion that
management was their primary duty. To fully engage those issues,
it is necessary to closely examine the record evidence on the
factors specified in § 541.700(a) as pertinent to the primary duty
determination. We thus consider each factor in turn.
a. Relative importance of plaintiffs' exempt and other
duties
The record contains evidence that plaintiffs' managerial and
non-managerial duties were both essential for the smooth
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functioning of their restaurants. Marzuq testified to multiple
tasks that only he performed, including recordkeeping, depositing
cash, calibrating equipment, and setting schedules. In his
supervisory role, he also interviewed potential employees, trained
new hires, and generally oversaw the day-to-day operation of the
stores. These responsibilities reflected the expectations set in
Cadete's formal employment documents, which portray the manager's
duties as almost exclusively supervisory. The "Cadete Enterprises
Position Profile" lists more than two dozen managerial tasks
expected of a restaurant manager, only one of which directly
anticipates a manager's assistance with nonexempt tasks
("Supervise & assist in quality Customer Service").10 Similarly,
the "Restaurant Manager Position Agreement" states that "[t]he
Restaurant Manager's majority of time is spent leading the team to
meet Guest expectations, recruiting, hiring, and training new crew
members as required."
10
The position profile states that the purpose of the
restaurant manager position is to "[i]ncrease Franchise sales and
profitability through proper implementation of Cadete Enterprises
and Dunkin Brands policies & procedures." The document provides
that the "Primary Contributions" of a manager include: "Increase
Franchise sales"; "Improve Franchise operating standards";
"Delegate tasks and ensure Restaurant Employees remain engaged";
"Ensure proper implementation of Restaurant Sanitation program";
"Properly deploy staff during peak and non-peak hours of
operation"; and "Monitor and properly handle all customer
complaints & concerns."
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Despite the corporate emphasis on supervisory
responsibilities, Marzuq's testimony permits the conclusion that,
as a factual matter, his non-managerial work also was "critical to
the success of the restaurant." Donovan v. Burger King Corp., 675
F.2d 516, 521 (2d Cir. 1982). The bulk of Marzuq's workweek was
spent performing nonexempt work, including serving customers and
cleaning. As recounted above, he reported routinely substituting
for hourly employees who were sick or absent for other reasons,
explaining that "every day it's a challenge." He had particular
difficulty finding replacements for certain shifts -- "especially
the midnight shift and the night shift on the weekend" -- and would
fill those slots himself.11 He needed to do that nonexempt work,
he explained, because he rarely was fully staffed with hourly
employees -- "[o]nce every five, six months." Indeed, he stated
11Marzuq testified that he regularly covered shifts when
employees "call[ed] in":
[I]f there's a call in, somebody calls in, for
example, the midnight to six in the morning,
I'm there. If somebody calls in six to
midnight shift, I'm there. If somebody calls
in in the afternoon shift, I'm there. And, of
course, when they call in the morning, I'm
there anyhow, so --
Marzuq stated that he also called Dermandy for assistance in
finding substitutes, and Dermandy sometimes provided an employee
from another store.
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that he had no choice but to come in on Sundays -- the seventh day
of his workweek -- to complete the paperwork required of him.12
If, contrary to their job descriptions, managers could not
prioritize their supervisory duties because "quality Customer
Service" demanded that they regularly perform tasks ordinarily
assigned to hourly employees, a factfinder could reasonably
conclude that plaintiffs' exempt and nonexempt duties were equally
important to the successful operation of their restaurants. See,
e.g., Morgan, 551 F.3d at 1270 (upholding jury's verdict that store
managers are not exempt executives where "ample evidence supported
a finding that the non-managerial tasks not only consumed 90% of
a store manager's time but were of equal or greater importance to
a store's functioning and success"). Hence, whether the "relative
importance" of duties factor supports the overtime exemption
cannot be determined without a factfinder's judgment on the impact
of the plaintiffs' varied undertakings. See id. ("The jury was
free to weigh the relative importance of the store managers'
managerial and non-managerial duties . . . .").
b. Amount of time spent on exempt work
Marzuq reported that his daily managerial activity included
checking calibration on the equipment for about thirty minutes
12Marzuq's son, Sarmad, testified that he "rarely" saw his
father in his office or doing paperwork "because he was always
on the floor with us," including afternoons and Sundays.
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every morning, counting the cash at the end of the morning shift
(between 11 AM and noon),13 entering sales and cash data into the
computer, and depositing money at the bank. Once a week, he also
prepared employee schedules,14 and twice a week he spent five or
ten minutes placing an order for dry goods and frozen food items.
In addition, he spent between ninety minutes and three hours on
training when new employees were hired. More generally, he
reported that he did his "office work" -- the money counting and
deposit, schedules, payroll, inventories, ordering, customer count
-- between 1 and 3 PM on weekdays, and from about noon to 1 or 2
PM on Saturdays, and he completed paperwork on Sunday mornings and
evenings.
For Marzuq, however, those administrative tasks added up
to a relatively small portion of his workweek because he estimated
that he was "on the floor," supplementing the crew, for 90 percent
of his work hours. Of course, working alongside the hourly
employees "on the floor" does not necessarily signify that Marzuq
was engaged only in non-managerial activity during those times.
As explained above, the regulations contemplate the concurrent
13The regular store shifts were from 6 AM to noon, noon to
3 PM, 3 PM to 6 PM, 6 PM to midnight, and midnight to 6 AM.
14Although the schedules were supposed to remain largely the
same from week to week, Marzuq testified that creating a schedule
could "take[] a while" because of employee absences and a
persistent staff shortage.
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performance of exempt and nonexempt tasks. See, e.g., In re Family
Dollar FLSA Litig., 637 F.3d 508, 516 (4th Cir. 2011) ("Family
Dollar") ("Thus, while [plaintiff] unloaded freight or swept the
floors, she was also the manager, and no one else was directly
supervising her work."). Indeed, certain of Marzuq's managerial
responsibilities would appear to be advanced by his working side-
by-side with his subordinates, including coaching them and
correcting their mistakes.
Nonetheless, the record contains evidence indicating
that Marzuq's supervisory role was, at least at times, overwhelmed
by his non-managerial tasks. More than once, he clarified that he
"tried" to exercise his managerial duties,15 and he reported
needing to do various tasks that would take him away from the
customer service area of the store (cleaning the bathroom, cleaning
up outside the store, landscaping) and, hence, appear inconsistent
with employee supervision. By contrast, in Family Dollar, where
the appellate panel affirmed summary judgment for the employer on
an FLSA overtime claim, the plaintiff acknowledged that, "while
[she] performed nonmanagerial tasks around the store as she
determined necessary, she concurrently performed the managerial
15
For example, Marzuq was asked, "[W]hile you were in the
store helping to serve customers, you continued to act in your
managerial capacity, right?" He responded: "I tried, yes."
Similarly, he immediately followed up his acknowledgement that he
was "the captain" of his store by noting that he "tried to be" the
captain.
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duties of running the store." 637 F.3d at 515-16 (emphasis
omitted).16
The time factor is particularly complex in this case because
Marzuq routinely worked far in excess of the forty-eight-hour
threshold required by the Cadete manager agreement. His regular
schedule called for sixty-six hours over seven days,17 but because
he substituted for absent employees, his average workweek was
seventy to eighty hours. In addition, he acted as "captain" of
the store even when he was off duty, fielding phone calls from
16The Fourth Circuit elaborated on the plaintiff's multi-
tasking:
As she explained, "whether or not [she]
happened to be putting up stock at a given
moment or running a register or talking to a
customer, at the same time [she was]
responsible for making sure the whole store
ran successfully." Similarly, she stated,
"When [she was] running a cash register, [she
was] at the same time looking at the condition
of the front end and keep [sic] an eye out for
theft, etc." She explained, "When [she was]
doing [her] paperwork for [her] cash registers
and [her] money, [she was] thinking about what
had to be done later with regard to that money
and all that paperwork for that and store
deliveries."
637 F.3d at 516 (alterations in original); see also id. at 517(noting that "she testified plainly, 'I ran the store when I was
in the building,' and, according to her, she was in the building
most of the time, as she spent between 50 and 65 hours per week
at the store").
17He was scheduled Monday through Saturday from 4 AM to 2:30
PM, and Sunday from 5 AM to 8 AM. He also reported working Sunday
evenings to finish his paperwork.
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employees and going into work if necessary to resolve problems.
Yet, given the competing demands routinely placed on Marzuq, a
factual dispute exists as to how much of his workweek he actually
was "in charge" of the store. Allocating percentages of Marzuq's
work hours to exempt and nonexempt duties is thus not a
straightforward calculation.
Hence, the second factor -- like the first -- does not point
decisively in either direction. Cf. Donovan, 675 F.2d at 522(affirming district court's finding, after a bench trial, that
Burger King assistant managers were exempt from overtime where
"[t]he record [] shows that for the great bulk of their working
time, Assistant Managers are solely in charge of their restaurants
and are the 'boss' in title and in fact" (emphasis added)).
c. Freedom from direct supervision
Testimony from both Marzuq and his district manager,
Dermandy, suggests that Dunkin' Donuts managers have some autonomy
over the day-to-day operation of their stores, though -- like the
Burger King assistant managers -- they are "unable to make any
significant or substantial decisions on [their] own." Burger King,
672 F.2d at 227. Managers create weekly schedules and decide how
many hours to assign particular employees, but company directors
(ranked above Dermandy in the Cadete hierarchy) set the store
budgets and Dermandy determines the overall staffing levels for
his district's stores. Managers in all Cadete stores are expected
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to follow uniform procedures. Dermandy testified that the primary
tools used to instruct new managers in his district are an online
training course provided by Dunkin' Brands and two to eight weeks
of "hands-on," in-store training, sometimes supervised by him and
sometimes conducted at a Cadete "training store." That training
covers, inter alia, customer service skills, leadership, equipment
calibration, scheduling, and paperwork.
Regular supervision continues throughout a manager's tenure.
Dermandy spends between fifteen minutes and four hours at each
store in his district each week. He explained that his weekly
agenda depends on "whether I have new managers that . . . need
more attention, more of my help, whether or not certain stores are
up or down in sales, whether or not they have budget concerns and
about 10 million other things." Marzuq agreed that Dermandy was
at his store at least once a week, and sometimes more frequently.18
Store managers' authority to problem solve is limited.
Dermandy's managers are required to call him if they need
maintenance work they are unable to perform themselves, and he
will then place the reported malfunction on a repair list for an
outside maintenance person. Managers appear to have little
flexibility in resolving customer complaints. In response to "my
18Marzuq reported Dermandy's visits as follows: "Some weeks
every day, some weeks every other day, some weeks once. It all
depends on his own schedule, and all depends on what kind of
problems that I have at the store."
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coffee was cold yesterday," for example, a manager may "buy" the
customer a new cup of coffee, but the manager may not issue a gift
card without Dermandy's approval.
The record contains inconsistent evidence on personnel
decisions. For example, Dermandy stated that a store manager has
authority to terminate a crew member for some reasons -- such as
tardiness -- while the district manager needs to be involved for
"big" issues, such as theft or verbal abuse between employees.
Marzuq, however, said that Dermandy had to approve any termination,
adding: "He ha[s] to know everything that's going on." Managers
also need permission to hire additional crew members when they are
short staffed, as well as to add an assistant manager position.
From Marzuq's perspective, managers have little independence.
When asked how Dermandy supervised his work, he stated: "From every
way, from the records that I send him weekly, from coming down
[to] the store or from the office if he heard anything, from phone
calls, from e-mails, or from showing up different times. . . . I
. . . have to go through my bosses for anything that I have to
do."
In sum, the record depicts a dynamic that, at least in broad
strokes, appears typical for a fast-food franchise manager:
limited decision-making authority, particularly when a matter
involves spending money; close monitoring by an off-site superior
to ensure compliance with the company's policies, practices, and
- 27 -
expectations; and everyday responsibility for the smooth operation
of a clean, adequately staffed restaurant. This scenario is
similar to our description of the circumstances in Burger King,
where the assistant managers' equivalent tasks were "governed by
highly detailed, step-by-step instructions contained in Burger
King's 'Manual of Operating Data,' and admit of little or no
variation." 672 F.2d at 223; see also Morgan, 551 F.3d at 1271(concluding that "[s]tore managers had little freedom from direct
supervision," where, inter alia, district managers "were
responsible for enforcing the detailed store operating policies;"
closely reviewed each store's inventory, orders, and net sales
figures; monitored weekly payroll; controlled employee pay rates
and raises; and "routinely sent to-do lists and emails with
instructions to store managers").
The record thus shows that Dermandy closely supervised
plaintiffs. On its own, this factor tends to favor plaintiffs.
Burger King, however, accepted a confined level of authority as
consistent with a conclusion that the assistant managers had
management as their primary duty. Hence, this factor, like the
two factors already discussed, does not decisively point one way
or the other on the primary duty question.
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d. The relationship between plaintiffs' salaries and the
wages paid hourly employees for similar nonexempt work
The parties' combined statement of undisputed facts gives
Marzuq's weekly salary as $825 and Chantre's as $600, and reports
that crew members are paid $8 per hour. If, on an hourly basis,
a manager's salary for performing a high percentage of nonexempt
work is about the same as the wages of crew members for such work,
the justification for exempting the manager from overtime pay is
weakened. See generally, e.g., Donovan, 675 F.2d at 520 ("Where
salary is low and a substantial amount of time is spent on non-
exempt work, the inference that the employee is not an executive
is quite strong . . . ."); Marshall v. W. Union Tel. Co., 621 F.2d
1246, 1251 (3d Cir. 1980) (noting that "granting managerial
employees exempt status must have been a recognition that they are
seldom the victims of substandard working conditions and low
wages"). An accurate comparison of weekly and hourly wages
necessarily depends on the number of hours attributed to the
salaried employees, yet -- as described above -- it is difficult
on this record to fix a number of hours worked by the managers.
Taking the facts in the light most favorable to plaintiffs,
however, we at a minimum must presume that Marzuq regularly worked
sixty-six hours per week. Based on their salaries, that would be
an hourly rate of $12.50 for Marzuq and roughly $9 for Chantre.
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Two other factors also must be considered. First, the hourly
employees also received tip income, increasing their earnings by
some margin. We thus must determine how much tip income to add to
the crew members' $8-per-hour base rate to make a fair comparison
with plaintiffs' salaries. The record contains evidence
indicating that tips may have been as low as fifty cents per hour
or as much as $2.70 per hour.19 In their brief, appellants propose
a $2-per-hour tip estimate, which we conclude is adequately
supported by the record for purposes of summary judgment.
Second, a fair comparison of wages also needs to take into
account that, if managers were compensated like hourly employees,
hours worked over forty would be paid at the overtime rate of time-
and-a-half. Hence, taking a sixty-six-hour workweek, compensated
at $8 per hour for the first forty hours ($320) and $12 per hour
for the remaining twenty-six hours ($312), supplemented by $2-per-
hour in tips ($132), a non-managerial crew member would earn $764
-- significantly more than Chantre and insignificantly less than
Marzuq. See, e.g., Morgan, 551 F.3d at 1271 (describing as
"relatively small" a two- or three-dollar difference between
19
Cadete assumed employees earned fifty cents per hour in tip
income, but Marzuq testified that, when he shared in tips, he
received roughly $180 per week in such income. Based on a sixty-
six-hour week, $180 would amount to about $2.70 per hour. At some
point during Marzuq's tenure with Cadete, the company changed its
policy to prohibit managers from receiving tips.
- 30 -
hourly rates of salaried store managers and hourly assistant
managers).
At least at this juncture, the equivalence in pay shown
by this calculation means that the salary vs. hourly wages factor
is squarely in plaintiffs' favor.
e. The primary duty inquiry as a whole
As our discussion of the factors listed in § 541.700(a)
demonstrates, the evidence in the record does not lead inevitably
to a conclusion that, in practice, Marzuq and Chantre's primary
duty was management. To evaluate at least two of the factors --
the time spent on exempt work and the wage comparison -- a
factfinder would need to determine the number of hours plaintiffs
regularly worked, the percentage of time they were engaged in
nonexempt work, and the portion of that nonexempt time in which
they were concurrently performing managerial duties. See, e.g.,
Reich v. Stewart, 121 F.3d 400, 404 (8th Cir. 1997) ("[T]he amount
of time an employee works and the duties he or she performs present
factual questions[.]").
Indeed, if a factfinder determined that plaintiffs' nonexempt
duties regularly consumed more than forty hours per week,20 and
that plaintiffs did not, in fact, simultaneously perform
20
Ninety percent of his scheduled sixty-six hours -- the
amount of time Marzuq said he was "on the floor" -- would be
about 59 hours.
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managerial duties during a substantial portion of that time, a
conclusion that management was plaintiffs' primary duty seems
unlikely -- even if, as Marzuq testified, he spent at least another
twenty to thirty hours each week on exempt work. Taken as true,
the fact that Marzuq worked seven days a week, logging a minimum
of sixty-six hours and often more, together with a finding that
most of those hours were exclusively devoted to nonexempt work,
would suggest that he effectively was doing two jobs, for one
salary: a fulltime nonexempt position and a part-time exempt one.
In that scenario, a reasonable factfinder might be reluctant to
characterize the "part-time" managerial position as his primary
duty for the company.
Moreover, such a scenario would appear to conflict with one
of the principal goals of the FLSA's overtime provision: "to spread
employment more widely through the work force by discouraging
employers from requiring more than forty hours per week from each
employee." Marshall v. Chala Enters., Inc., 645 F.2d 799, 803
(9th Cir. 1981); see also Overnight Motor Transp. Co. v. Missel,
316 U.S. 572, 578 (1942) ("In a period of widespread unemployment
and small profits, the economy inherent in avoiding extra pay was
expected to have an appreciable effect in the distribution of
available work. Reduction of hours was a part of the plan from
the beginning."), superseded on other grounds by statute, Portal-
to-Portal Pay Act, 61 Stat. 84, 86-87 (1947), as stated in Trans
- 32 -
World Airlines, Inc. v. Thurston, 469 U.S. 111, 128 n.22 (1985);
Mechmet v. Four Seasons Hotels, Ltd., 825 F.2d 1173, 1176 (7th
Cir. 1987) (noting that one purpose of the FLSA overtime
requirement was "to spread work and thereby reduce unemployment,
by requiring an employer to pay a penalty for using fewer workers
to do the same amount of work as would be necessary if each worker
worked a shorter week"); "Defining and Delimiting the Exemptions
for Executive, Administrative, Professional, Outside Sales and
Computer Employees," 69 Fed. Reg. 22,122, 22,124, 2004 WL 865626(Apr. 23, 2004) (hereafter "Defining and Delimiting the Exemptions
2004") (noting "the potential job expansion intended by the FLSA's
time-and-a-half overtime premium").
Managers, of course, typically work more than a forty-hour
week without entitlement to overtime compensation under the FLSA,21
21
The regulations do not address executive employees whose
managerial responsibilities require an extraordinary number of
work hours, apparently reflecting an assumption that such
employees are adequately compensated in other ways. See "Defining
and Delimiting the Exemptions 2004," 69 Fed. Reg. at 22,123-24
(stating that "[t]he legislative history indicates that the
. . . exemptions were premised on the belief that the workers
exempted typically earned salaries well above the minimum wage,
and they were presumed to enjoy other compensatory privileges such
as above average fringe benefits and better opportunities for
advancement"); Dep't of Labor, Wage and Hour Division, "Defining
and Delimiting the Terms 'Any Employee Employed in a Bona Fide
Executive, Administrative, or Professional Capacity . . . or in
the Capacity of Outside Salesman,'" 46 Fed. Reg. 3010, 3016 (1981)
(stating that the executive exemption "stemmed from the
recognition that such personnel have special work
responsibilities, compensatory privileges and benefits which are
superior to those of other employees").
- 33 -
and the Secretary's regulations expressly reject a percentage
threshold for triggering overtime pay. See 29 C.F.R. § 541.700(b)
("[N]othing in this section requires that exempt employees spend
more than 50 percent of their time performing exempt work.");22 see
also Family Dollar, 637 F.3d at 515 ("There is no per se rule that
once the amount of time spent on manual labor approaches a certain
percentage, satisfaction of [the time] factor is precluded as a
matter of law."). Yet, the percentages may have an impact when
combined with other factors. Under the regulations, managers who
"spend more than 50 percent of the time performing nonexempt work
such as running the cash register" would generally not fulfill the
primary duty requirement if they are "closely supervised and earn
little more than the nonexempt employees." 29 C.F.R. § 541.700(c).
In short, as explained above, the evidence is inconclusive on
multiple factors in the primary-duty inquiry. Hence, the
plaintiffs' primary duty cannot be determined as a matter of law
at this stage of the case.
22 The FLSA "Exemptions" provision anticipates that a
managerial employee in "a retail or service establishment" will
spend some time on nonexempt duties, and thus provides that exempt
status should not be denied based on "the number of hours in his
workweek which he devotes to activities not directly or closely
related to the performance of executive or administrative
activities, if less than 40 per centum of his hours worked in the
workweek are devoted to such activities." 29 U.S.C. § 213(a)(1).
Under the regulations, the number of nonexempt hours can exceed 40
percent so long as the employee otherwise satisfies the exemption
requirements.
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2. Authority or Influence on Personnel Decisions
The open question of primary duty means that it is unnecessary
for us to address the remaining element of the "bona fide
executive" inquiry: plaintiffs' role in changing the status of
other employees, including hiring, firing, and promotion. The
factual dispute concerning primary duty suffices to foreclose
summary judgment.
IV.
Viewing the record in the light most favorable to plaintiffs,
a reasonable factfinder could conclude that defendants have failed
to meet their burden of showing that Marzuq and Chantre fell within
the "bona fide executive" exception to the FLSA's overtime pay
requirement. Hence, we vacate the summary judgment for defendants
and remand the case for further proceedings.
So ordered. Costs to appellants.
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