Ramos v. Baldor Specialty Foods, Inc.

11-2616-cv
Ramos v. Baldor Specialty Foods, Inc.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term, 2011
(Argued: June 22, 2012 Decided: July 12, 2012)
Docket No. 11-2616-cv
LUIS RAMOS, HERBER MARTINEZ, LEOBARDO MORENO, WILNER DUBON, SERGIO
CALDERON, JOSE BARRANCO, OSWALDO ERAZO, MARIANO CASTRO,
on behalf of themselves and others similarly situated,
Plaintiffs-Appellants,
— v. —
BALDOR SPECIALTY FOODS, INC., KEVIN MURPHY,
Defendants-Appellees.*
B e f o r e:
POOLER, RAGGI, and LYNCH, Circuit Judges.
__________________
Plaintiffs, a group of “captains” in defendants’ wholesale food warehouse, seek
unpaid overtime wages, along with liquidated damages and attorneys’ fees and costs,
under the Fair Labor Standards Act (“FLSA”) and an analogous section of New York
*
The Clerk of Court is respectfully directed to amend the official caption as shown
above.
Labor Law (“NYLL”). They appeal a decision of the United States District Court for the
Southern District of New York (Richard M. Berman, Judge) granting summary judgment
for defendants on all claims on the ground that plaintiffs are “executives” exempt from
the overtime pay provisions of the FLSA and NYLL. We affirm the district court’s
decision because the summary judgment record allows for no conclusion other than that
each team of employees supervised by plaintiffs is a customarily recognized subdivision
of defendants’ company with a permanent status and function. Plaintiffs therefore qualify
as “executives” as that term is defined by Department of Labor regulations, and are
exempt from the overtime-pay protections of the FLSA and NYLL.
AFFIRMED.
C.K. LEE (Robert L. Kraselnik, on the brief), Kraselnik & Lee, PLLC, New
York, New York, for Plaintiffs-Appellants.
MARC B. ZIMMERMAN (Jon Schuyler Brooks, Chryssa V. Valletta, on the
brief), Phillips Nizer LLP, New York, New York, for Defendants-
Appellees.
GERARD E. LYNCH, Circuit Judge:
Plaintiffs-appellants Luis Ramos, Herber Martinez, Leobardo Moreno, Wilner
Dubon, Sergio Calderon, Jose Barranco, Oswaldo Erazo, and Mariano Castro
(“plaintiffs”), proceeding individually and on behalf of other “similarly situated”
employees working the night shift in a warehouse operated by defendants-appellees
2
Baldor Special Foods, Inc. (“Baldor”), filed suit in the United States District Court for the
Southern District of New York (Richard M. Berman, Judge), seeking unpaid overtime
wages, liquidated damages, and attorneys’ fees and costs under the Fair Labor Standards
Act (“FLSA”), 29 U.S.C. §§ 207(a)(1), 216(b), and analogous sections of New York
Labor Law (“NYLL”), N.Y. Labor L. §§ 2, 651, 663(1); see also N.Y. Comp. Codes R. &
Regs. tit. 12, § 142-2.2 (2003).1 The district court granted summary judgment for
defendants, concluding that as “captains” employed in Baldor’s warehouse, they fell
within the FLSA’s “executive exemption,” which provides that the FLSA’s overtime
compensation protections “shall not apply” to “any employee employed in a bona fide
executive, administrative, or professional capacity,” as those terms are defined by
Department of Labor regulations. 29 U.S.C. § 213(a)(1).
Plaintiffs do not dispute that they satisfy all but one of the criteria for exempt
executives. The only disputed criterion, and the only issue on appeal, is whether the
teams of employees that plaintiffs concededly supervise constitute “customarily
recognized department[s] or subdivision[s]” of Baldor, 29 C.F.R. § 541.100(a)(3), defined
by Department of Labor regulations as units with “a permanent status and a continuing
function,” id. § 541.103(a). We agree with the district court that the summary judgment
record allows for no conclusion other than that the teams of warehouse employees
1
Like the FLSA, the NYLL “mandates overtime pay and applies the same exemptions
as the FLSA.” Reiseck v. Universal Commc’ns of Miami, Inc., 591 F.3d 101, 105 (2d Cir.
2010). We therefore discuss only the FLSA, and do not engage in a separate analysis of
plaintiffs’ NYLL claims, which fail for the same reasons as their FLSA claims.
3
managed by plaintiffs constitute units with a permanent status or function. Plaintiffs thus
fall within the FLSA’s executive exemption and are not entitled to FLSA overtime pay.
Accordingly, we affirm the district court’s grant of summary judgment for defendants.
BACKGROUND
I. Facts
The pertinent facts of this case are not in dispute.2
Defendant Baldor is a wholesale food distributor in the Hunts Point area of the
Bronx, New York. Defendant Kevin Murphy is the company’s chief executive officer.
Baldor’s employees are divided into day and night shifts. The night shift “has a number
of different departments, such as the warehouse department, transportation department,
receiving department, maintenance department, night sales and International Produce
Exchange team.”
2
These facts are drawn primarily from the deposition of plaintiff Jose Barranco, the
only deposition taken in this case, and from the portions of defendants’ Rule 56.1 statement
that plaintiffs admitted or did not materially dispute. To the extent plaintiffs contest the
accuracy of Barranco’s deposition statements by citing statements made by plaintiffs in
subsequent declarations, their argument is foreclosed by the stipulation entered by the parties
in the district court, which provided that plaintiffs would not call as witnesses any of the
other plaintiffs whom defendants did not depose “to in any way contradict anything that
[Barranco] said” in his deposition, and that “the people who by agreement don’t get deposed
are not going to contradict something important said by one of the deposed plaintiffs.” Like
the district court, we decline to consider those portions of plaintiffs’ declarations that conflict
with Barranco’s prior deposition testimony. See Brown v. Henderson, 257 F.3d 246, 252 (2d
Cir. 2001) (“[F]actual allegations that might otherwise defeat a motion for summary
judgment will not be permitted to do so when they are made for the first time in the plaintiff’s
affidavit opposing summary judgment and that affidavit contradicts [his] own prior
deposition testimony.”).
4
Plaintiffs are current or former “captains” employed on the night shift in the
Warehouse Department. Baldor employs twenty captains on the warehouse night shift,
each of whom performs the same job duties as other captains. These duties include
overseeing the work of a “team” of three to six “pickers,” the employees who retrieve
food products from the warehouse shelves and load them onto trucks to be delivered to
Baldor’s customers. Each captain is “in charge of” his team. He is responsible for
making sure that his pickers arrive at work on time for each shift, retrieve the correct
products from the warehouse shelves, and load the products onto the correct trucks. He is
also responsible for improving his team’s performance and efficiency over time. Each
captain has the power to assign slow pickers “easier work” so that they do not fall behind
or hurt the team’s performance, and the captain can “give certain orders to certain pickers
if [he] trust[s]” a particular picker “to get the right product.” It is the captain’s job to
ensure pickers “have done their job right.” Supervising his team is the “main part” of a
captain’s job. The company has continuously operated its Warehouse Department in its
current structure, with captains in charge of teams of pickers, since at least 1999.
Although each team performs the same general tasks as other teams, each team has
a distinct “assigned work area” in the warehouse where the captain and his team of
pickers “report each shift.” However, captains “are not given offices or even chairs.”
Every night, each captain arrives at work approximately thirty minutes before his team to
prepare the team’s work area for the shift and, inter alia, to “sign out” and “inspect” the
equipment that his team will use. At the end of every shift, each captain completes a
5
“Pickers Production Report” for each picker on his team. The results of these reports
determine whether the night warehouse manager will award productivity bonuses to
individual pickers.
Captains report to the night warehouse manager. He regularly meets with each
captain to discuss each team’s performance. There are “too many” pickers for the
manager to watch each of them every night, and so he relies on captains “to let him
know” whether pickers are performing well. Each picker reports to his captain, but
sometimes has direct contact with the night warehouse manager as well, including when
the manager gives each picker his periodic performance evaluation. A captain always
attends the performance evaluations of his pickers.
On every night shift, a picker works exclusively with his assigned team and
captain. If a picker is not performing adequately, a captain may ask the night warehouse
manager to transfer that picker to a different team; the manager typically grants such
requests. Captains can recommend pickers to the manager for pay raises and for
promotion to captain, and the manager sometimes asks captains for such
recommendations. In addition, captains can issue warnings to pickers if they are
underperforming. It is undisputed that captains also have the authority to fire pickers,
although plaintiffs insist that defendants never told them that they had this authority until
after plaintiffs filed their complaint in this case.
Captains earn $700 per week. They spend no more than one hour of each shift on
non-supervisory tasks, such as sweeping up their team’s work area.
6
II. The District Court’s Decision
The district court concluded that the undisputed facts in the summary judgment
record “unequivocally establishe[d]” that plaintiffs satisfied all of the regulatory
requirements for the executive exemption from the FLSA’s overtime-pay protections,
because (1) plaintiffs were paid at least $455 per week; (2) their “primary duty” was
managing teams of pickers, each of which constituted a customarily recognized
department or subdivision of Baldor; (3) each captain directed the work of at least two
other employees; and (4) plaintiffs’ “suggestions and recommendations as to the hiring,
firing, advancement, promotion or any other change of status of” pickers were “given
particular weight.” Ramos v. Baldor Specialty Foods, Inc., No. 10 Civ. 6271, 2011 WL
2565330, at *5-7 (S.D.N.Y. June 16, 2011), quoting 29 C.F.R. § 541.100(a)(2).
Plaintiffs appealed.
DISCUSSION
I. Standard of Review
We review de novo a district court’s award of summary judgment, “construing the
evidence in the light most favorable to the nonmoving party and drawing all reasonable
inferences in that party’s favor.” Kuebel v. Black & Decker Inc., 643 F.3d 352, 358 (2d
Cir. 2011). We will affirm the grant of summary judgment only if “there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). “A fact is material if it might affect the outcome of the suit under
the governing law, and an issue of fact is genuine if the evidence is such that a reasonable
7
jury could return a verdict for the nonmoving party.” Niagara Mohawk Power Corp. v.
Hudson River-Black River Regulating Dist., 673 F.3d 84, 94 (2d Cir. 2012) (internal
quotation marks omitted).
“The exemption question” under the FLSA “is a mixed question of law and fact.”
Myers v. Hertz Corp., 624 F.3d 537, 548 (2d Cir. 2010). “The question of how the
[employees] spent their working time . . . is a question of fact. The question whether their
particular activities excluded them from the overtime benefits of the FLSA is a question
of law . . . .” Icicle Seafoods, Inc. v. Worthington, 475 U.S. 709, 714 (1986). We review
that question of law de novo. See Martin v. Malcolm Pirnie, Inc., 949 F.2d 611, 614 (2d
Cir. 1991). We likewise review de novo a district court’s “interpretations of
administrative regulations.” Reiseck v. Universal Commc’ns of Miami, Inc., 591 F.3d
101, 104 (2d Cir. 2010).
“[B]ecause the FLSA is a remedial act, its exemptions, such as the ‘bona fide
executive’ exemption claimed in this case, are to be narrowly construed.” Martin, 949
F.2d at 614. “To extend an exemption to other than those plainly and unmistakably
within its terms and spirit is to abuse the interpretative process and to frustrate the
announced will of the people.” A.H. Phillips, Inc., v. Walling, 324 U.S. 490, 493 (1945).
Accordingly, “an employer bears the burden of proving that its employees fall within an
exempted category of the Act.” Martin, 949 F.2d at 614; see also Corning Glass Works v.
Brennan, 417 U.S. 188, 196-97 (1974).
8
II. The FLSA Executive Exemption
Section 7(a)(1) of the FLSA provides that, subject to certain exceptions, an
employee who works more than forty hours per week must receive compensation for
“employment in excess of the hours above specified at a rate not less than one and one-
half times the regular rate at which he is employed.” 29 U.S.C. § 207(a)(1). One
exception is that the overtime-pay rule “shall not apply with respect to . . . any employee
employed in a bona fide executive, administrative, or professional capacity.” 29 U.S.C.
§ 213(a)(1). The FLSA does not define “bona fide executive, administrative, or
professional” employment, and instead directs the Secretary of Labor to “define[] and
delimit[]” those terms “from time to time by regulations.” Id.Issued pursuant to statutory authority, the Department of Labor’s 2004 regulations
defining the terms of the FLSA executive exemption “have the force of law, and are to be
given controlling weight unless they are found to be arbitrary, capricious, or manifestly
contrary to the statute.” Freeman v. Nat’l Broadcasting Co., 80 F.3d 78, 82 (2d Cir.
1996) (citations omitted); see also Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158,
165 (2007) (noting that the FLSA “explicitly leaves gaps” that the Department of Labor
has “the power to fill . . . through rules and regulations”); Fanelli v. U.S. Gypsum Co.,
141 F.2d 216, 218 (2d Cir. 1944); Dep’t of Labor, Wage & Hour Div., Defining and
Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and
Computer Employees, 69 Fed. Reg. 22,122, 22,124 (Apr. 23, 2004) (“Because the FLSA
delegates to the Secretary of Labor the power to define and delimit the specific terms of
9
these exemptions through notice-and-comment rulemaking, the regulations so issued have
the binding effect of law.”).
“Unlike regulations,” however, the Department of Labor’s interpretations of its
own regulations “are not binding and do not have the force of law,” Freeman, 80 F.3d at
83, although “we will generally defer to an agency’s interpretation of its own regulations
. . . so long as the interpretation is not plainly erroneous or inconsistent with the law,”
Cardiano v. Metacon Gun Club, Inc., 575 F.3d 199, 207 (2d Cir. 2009); see also Long
Island Care at Home, 551 U.S. at 171 (“[A]n agency’s interpretation of its own
regulations is controlling unless plainly erroneous or inconsistent with the regulations
being interpreted.” (internal quotation marks omitted)).
We consider and defer to the Department of Labor’s interpretation of a regulation
– including the regulatory preamble included in the Federal Register, see 69 Fed. Reg.
22,122 – only if the regulation is ambiguous. See Christensen v. Harris County, 529 U.S.
576, 588 (2000); Mullins v. City of New York, 653 F.3d 104, 113 (2d Cir. 2011). If the
text of a regulation presents no ambiguity, then “we are simply tasked with the
application of an unambiguous regulation to the particular facts” of a case. Schaefer-
LaRose v. Eli Lilly & Co., 679 F.3d 560, 572 n.20 (7th Cir. 2012).3
3
Plaintiffs do not argue that the regulations are ambiguous or urge us to consider
regulatory interpretations. We conclude that the regulations unambiguously exempt plaintiffs
from the overtime pay requirements of the FLSA. Accordingly, we need not defer to the
Secretary’s interpretations of those regulations. Nevertheless, as discussed below, those
interpretations only bolster our conclusion.
10
The Department’s regulations defining the terms of the FLSA’s executive
exemption provide that “[t]he term ‘employee employed in a bona fide executive
capacity’ . . . shall mean any employee”:
(1) Compensated on a salary basis at a rate of not less than
$455 per week . . . , exclusive of board, lodging or other
facilities;
(2) Whose primary duty is management of the enterprise in
which the employee is employed or of a customarily
recognized department or subdivision thereof;
(3) Who customarily and regularly directs the work of two or
more other employees; and
(4) Who 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). The parties agree that the first, third, and fourth requirements of
this definition are satisfied: each captain is paid more than $455 per week, each captain
customarily and regularly directs the work of two or more pickers, and captains’
suggestions and recommendations concerning the hiring, firing, and promotion of pickers
“are given particular weight.” Id.With respect to the second requirement, plaintiffs do not dispute that their
“primary duty” is supervising their respective teams. 29 C.F.R. § 541.100(a)(2). They
dispute, however, that each captain manages “a customarily recognized department or
subdivision” of Baldor. Id. They insist that the teams of pickers do not constitute
customarily recognized departments or subdivisions as defined in the regulations, because
each team performs the same tasks as other teams at the same time and in the same
warehouse, and that the executive exemption therefore does not apply to captains.
11
The regulations define “a customarily recognized department or subdivision” as “a
unit” that “must have a permanent status and a continuing function,” as opposed to “a
mere collection of employees assigned from time to time to a specific job or series of
jobs.” 29 C.F.R. § 541.103(a). The regulations provide the illustrative example of “a
large employer’s human resources department,” which “might have subdivisions for labor
relations, pensions and other benefits, equal employment opportunity, and personnel
management, each of which has a permanent status and function.” Id. However, the
regulations go on to explain that the concept of a customarily recognized department or
subdivision is flexible: each unit “need not be physically within the employer’s
establishment and may move from place to place,” and merely because an “employee
works in more than one location does not invalidate the exemption if other factors show
that the employee is actually in charge of a recognized unit with a continuing function in
the organization.” Id. § 541.103(c). In addition, “[c]ontinuity of the same subordinate
personnel is not essential to the existence of recognized unit with a continuing function”:
An otherwise exempt employee will not lose the exemption
merely because the employee draws and supervises workers
from a pool or supervises a team of workers drawn from other
recognized units, if other factors are present that indicate that
the employee is in charge of a recognized unit with a
continuing function.
Id. § 541.103(d).
The most recent version of the regulations appeared in 2004 in the Federal
Register, along with a preamble, in which the Department of Labor noted, with regard to
§ 541.103:
12
Several commenters request that the Department expand or
clarify the phrase “department or subdivision.” The Morgan
Lewis & Bockius law firm asks the Department to expand the
phrase “department or subdivision” to include “grouping.”
The Public Sector FLSA Coalition suggests that the phrase be
broadened to account for a functional unit which would
provide for a more flexible or fluid organizational philosophy.
The National Council of Chain Restaurants asks for
confirmation of the Department’s historic enforcement
position that “front of the house” and “back of the house” are
recognized subdivisions. The U.S. Chamber of Commerce
states that the phrase “department or subdivision” is outdated
and the applicable units should provide for project teams.
Finally, the League of Minnesota Cities questions whether a
subdivision would include supervision of a day shift.
The Department has decided not to expand the term
“department or subdivision” because the phrase has not
caused confusion or excessive litigation. Expanding the
definition would unduly complicate this requirement and
likely lead to unnecessary litigation. Indeed, the courts
already have provided clarification of the phrase on a number
of occasions. For example, several courts have stated that a
shift can constitute a department or subdivision, which
responds to the question raised by the League of Minnesota
Cities. The Department notes that the issue identified by the
National Retail Federation as to whether “front of the house”
in a store constitutes a department or subdivision was
answered by at least one court in the affirmative. Finally, the
Department observes that “groupings” or “teams” may
constitute a department or subdivision under the existing
definition, but a case-by-case analysis is required. The
Department believes these cases correctly define and delimit
the term “department or subdivision.”
Defining and Delimiting the Exemptions, 69 Fed. Reg. at 22,134 (citations omitted)
(emphasis added).
Although this regulatory preamble does not bind us to any particular interpretation
of the FLSA or the regulations, it is “persuasive because it rests on a ‘body of experience
13
and informed judgment to which courts and litigants may properly resort for guidance.’”
See In re Beacon Assocs. Litig., 745 F. Supp. 2d 386, 424 (S.D.N.Y. 2010), quoting
Alaska Dep’t of Envtl. Conserv. v. EPA, 540 U.S. 461, 487 (2004). As explained below,
the teams of pickers constitute subdivisions of defendants’ Night Warehouse Department
for purposes of the FLSA executive exemption. Captains are therefore “executives” for
purposes of the FLSA and exempt from the statute’s overtime-pay protections.
III. Analysis
In our previous FLSA cases, we have not had occasion to interpret the meaning of
“a customarily recognized department or subdivision thereof,” 29 C.F.R. § 541.100(a)(2),
or of a unit with “a permanent status and a continuing function,” id. § 541.103(a). This
case therefore presents an issue of first impression for our Court: whether a unit can have
“a permanent status and a continuing function” when it is functionally identical to other
units, when it works the same shift as other units, and when it operates in the same
physical space as other units. Plaintiffs insist that because the teams of pickers cannot be
distinguished from one another “by a specific standard such as function, geographical
area or operational responsibility,” Pls.’ Br. 9, the teams cannot as a matter of law be
considered customarily recognized subdivisions of Baldor under 29 C.F.R.
§ 541.100(a)(2). In plaintiffs’ view, a subdivision must, as a matter of law, “have at least
some sort of functional independence from other subdivisions in the same department
(i.e., independence of role, location or time),” and does not fall within the exemption if it
“perform[s] the same role in the same location at the same time” as other subdivisions.
Pls.’ Reply Br. 5.
14
Plaintiffs’ argument relies largely on caselaw, rather than on the text of the
regulations. Their only textual argument derives from the list of illustrative examples of
“subdivisions” in 29 C.F.R. § 541.103(a). A list of illustrative examples in a statute or
regulation may, on occasion, properly be read as imposing a limit on general terms in the
statute or regulation. See, e.g., Begay v. United States, 553 U.S. 137, 143-44 (2008);
N.Y. Currency Research Corp. v. Commodity Futures Trading Comm’n, 180 F.3d 83,
89-90 (2d Cir. 1999). But we are not persuaded that this particular list of examples – the
“labor relations, pensions and other benefits, equal employment opportunity, and
personnel management” subdivisions of a hypothetical “large employer’s human
resources department,” 29 C.F.R. § 541.103(a) – indicates that the Department of Labor
intended to require that subdivisions be limited to units that perform distinct tasks or are
otherwise distinguishable by some “specific standard,” Pls.’ Br. 9, a requirement that is
not otherwise stated in the regulatory text.
Indeed, while a few of our sister circuits and several district courts have interpreted
the meaning of a “customarily recognized department or subdivision,” no court that we
know of has adopted the limiting construction that plaintiffs urge. Nor has the
Department of Labor adopted that construction in its interpretations of its regulations.
See, e.g., Defining and Delimiting the Exemptions, 69 Fed. Reg. at 22,134. And none of
the cases cited by the Department in its preamble to the regulations, see id., stands for the
proposition that plaintiffs now urge us to endorse: that, as a matter of law, multiple units
unit cannot have a permanent status and continuing function if they are functionally,
15
temporally, or geographically identical to each other. This proposition finds no support in
the legislative history of the FLSA, in the regulations, or in the Department’s
interpretations of those regulations.
Furthermore, the decisions of other courts do not suggest that the FLSA’s
executive exemption imposes any such uniqueness requirement for customarily
recognized departments or subdivisions. Indeed, plaintiffs have not cited a single case in
which a court found that the executive exemption did not apply because a unit was found
not to be a customarily recognized department or subdivision. The Fourth Circuit, for
example, has noted that “[a] station or a shift” of firefighters “constitutes a recognized
department or subdivision of the Fire Department” for purposes of the exemption. West
v. Anne Arundel County, 137 F.3d 752, 763 (4th Cir. 1998). The Southern District of
West Virginia found a fire station to be a customarily recognized department or
subdivision of a city or of its fire department, with a permanent status and continuing
function. Masters v. City of Huntington, 800 F. Supp. 363, 366 (S.D. W. Va. 1992). The
court noted that fire stations
are, of course, physically separated and have specific areas
within their purview. Though transfers are available, distinct
groups of firefighters are assigned to each station and each
station, as has been seen, is under the command of a station
captain. In light of such circumstances, it cannot reasonably
be argued that the six fire stations located in the City of
Huntington lack the status of a “customarily recognized
department or subdivision” . . . .
Id. However, the court did not articulate a minimum set of requirements – for example,
16
that physical separation is necessary for the exemption to apply. The court merely treated
physical separation as one factor indicating that each station was a customarily
recognized department or subdivision.4
The Northern District of Illinois has recognized that the “front end” staff in a
grocery store (cashiers and baggers) constituted a department or subdivision, Debartolo v.
Butera Finer Foods, No. 95 C 2705, 1995 WL 516990, at *4 (N.D. Ill. Aug. 29, 1995),
and that a customarily recognized department or subdivision can “include small groups of
employees working on a related project within a larger department, such as a group leader
of four draftsmen in the gauge section of a much larger department,” Gorman v. Cont’l
Can Co., No. 76 C 908, 1985 WL 5208, at *6 (N.D. Ill. Dec. 31, 1985); see also Baudin v.
Courtesy Litho Arts, Inc., 24 F. Supp. 2d 887, 892 (N.D. Ill. 1998). Similarly, several
district courts have acknowledged that work shifts can constitute customarily recognized
departments or subdivisions. The Northern District of Ohio, for example, held that one of
two 12-hour night shifts in a factory’s forge department “constituted a separate
subdivision” of the department with a permanent status and continuing function because,
4
The Fourth Circuit’s unpublished decision in Kessler v. Howard County, 972 F.2d
340 (Table), 1992 WL 204344 (4th Cir. 1992), relied on by plaintiffs, is not to the contrary.
In that case, the court stated that a unit must have at least some “functional independence”
to qualify as a customarily recognized department or subdivision. Id. at *4. Read in context,
it is clear that the Fourth Circuit used the quoted phrase not to describe units’ performing
distinct types of work, but rather to reference the units’ having at least some degree of
autonomy in their operation. See id. (requiring further inquiry by the district court into
whether “sections operate independently of one another and the importance of the sections’
independent functions”). There appears to be no dispute that the teams at issue here have
such autonomy.
17
among other reasons, the shifts “were ongoing units” and “employees generally stayed on
one shift and worked under one supervisor.” Burson v. Viking Forge Corp., 661 F. Supp.
2d 794, 800 (N.D. Ohio 2009).5
While operating in different locations, working different shifts, or performing
distinct functions from other teams are certainly factors that can support the conclusion
that a team of employees constitutes a customarily recognized department or subdivision,
plaintiffs have not cited and we have not found any case – in our circuit or elsewhere –
that goes so far as to require one of those specific types of distinguishability as a matter
of law. Nor do the Department’s interpretations or the scant legislative history of the
FLSA’s executive exemption support such a reading.6
5
See also Maestas v. Day & Zimmerman, LLC, Civ. No. 09-019, 2010 WL 5625914,
at *9 (D.N.M. Nov. 30, 2010) (eight-hour shifts of security guards constituted customarily
recognized subdivisions), aff’d in part and rev’d in part on other grounds, 664 F.3d 822 (10th
Cir. 2012); Beauchamp v. Flex-N-Gate LLC, 357 F. Supp. 2d 1010, 1012-18 (E.D. Mich.
2005) (shift supervisor in the production department of an auto parts manufacturer was an
exempt executive); Joiner v. City of Macon, 647 F. Supp. 718, 721-22 (M.D. Ga. 1986)
(shifts of bus drivers were customarily recognized subdivisions “since they occupy a
permanent and continuous position within the system, rather than providing a temporary
function”).
6
The Department of Labor, reviewing the FLSA’s legislative history, describes the
exemptions as being “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,
setting them apart from the nonexempt workers entitled to overtime pay.” Defining and
Delimiting the Exemptions, 69 Fed. Reg. at 22,123-24. In addition, “the type of work they
performed was difficult to standardize to any time frame and could not be easily spread to
other workers after 40 hours in a week, making compliance with the overtime provisions
difficult and generally precluding the potential job expansion intended by the FLSA’s
time-and-a-half overtime premium.” Id. at 22,124; see also H.R. Rep. No. 95-521 (1977)
18
Furthermore, we see no reason that Congress would have intended to impose the
distinction that plaintiffs ask us to impose here, between supervision of unique and non-
unique teams. The purpose of the FLSA’s “bona fide executive” exemption, 29 U.S.C.
§ 213(a)(1), is to distinguish managerial employees from non-managerial employees. The
job of supervising a team of employees becomes no less managerial merely because the
team operates alongside other teams performing the same work in the same building.7 A
company’s decision to organize its workforce in that way does not render each team a
“mere collection of employees assigned from time to time to a specific job.” 29 C.F.R.
§ 541.103.
The Department of Labor has recognized that “‘groupings’ or ‘teams’ may
constitute a department or subdivision under the existing definition, but a case-by-case
analysis is required.” Defining and Delimiting the Exemptions, 69 Fed. Reg. at 22,134.
Here, that analysis leaves no doubt that each team of pickers is a customarily recognized
subdivision of Baldor’s Night Warehouse Department. Each team has a defined
membership; each captain leads the same team on each shift; pickers do not change teams
without being transferred by the night warehouse manager, often at the request of a
(reviewing history of FLSA minimum-wage provisions); H.R. Rep. No. 93-913 (1974)
(same).
7
Under plaintiffs’ interpretation, for example, a lead accountant supervising two
bookkeepers would be an exempt executive if the unit were the only one working on
employee benefits, while others with the same title would not be executives, even if they
supervised larger teams, if those teams all did similar work dealing with accounts receivable.
Such a distinction would make no sense in terms of the purpose of the exemption.
19
captain; at the start of every shift, each team meets at its “assigned work area” in the
warehouse; and each captain is “in charge of” supervising his team, evaluating their work,
and making promotion recommendations to the night warehouse manager.
Particularly given that all of the other requirements of the executive exemption are
indisputably satisfied here, these factors clearly establish that each team is a customarily
recognized subdivision with a continuing status and function. Whether all of the
warehouse teams “perform the same responsibility and thus are interchangeable,” as
plaintiffs assert, Pls.’ Br. 11, is ultimately immaterial. Interchangeability of a team’s
function does not alter the supervisory nature of the captain’s job. Defendants have met
their burden of establishing that the executive exemption applies to the captains. It is not
for us to decide whether, as a policy matter, plaintiffs ought to be entitled to overtime
pay. “Members of this Court are vested with the authority to interpret the law; we
possess neither the expertise nor the prerogative to make policy judgments.” Nat’l Fed’n
of Indep. Bus. v. Sibelius, — S.Ct. —, 2012 WL 2427810, at *9 (2012).
Admittedly, a warehouse worker who earns $700 per week ensuring that
vegetables and other foodstuffs are loaded onto the correct delivery trucks and who lacks
an office, a cubicle, or even a chair to call his own does not fit the popular image of a
“bona fide executive.” 29 U.S.C. § 213(a)(1). But whatever incongruity there may be has
nothing to do with the criterion plaintiffs would have us read into the regulation.
Plaintiffs do not dispute the applicability of any of the criteria for executive status that
concern their own managerial role. Rather, they argue that they are not executives
20
because of a characteristic of the units that they supervise, based on a rule that would
assuredly deny exemption to any number of highly paid managerial employees who head
distinct teams of subordinates, simply because those teams perform parallel, rather than
functionally distinct, tasks. In any event, Congress left the linedrawing task to the
Department of Labor, which has drawn lines that exempt plaintiffs from the FLSA’s
overtime protections. Congress or the Department would be free, of course, to redraw
those lines. But under the current regulations, which are not “arbitrary, capricious, or
manifestly contrary to the [FLSA],” Freeman, 80 F.3d at 82, plaintiffs are not entitled to
overtime pay.
CONCLUSION
For the foregoing reasons, the judgment of the district court is AFFIRMED.
21