Wednesday, July 25, 2012

No overtime for food warehouse supervisors

The Second Circuit holds that food warehouse supervisors are exempt from the FLSA's overtime entitlement under the "executive exemption"

The case is Ramos v. Baldor Specialty Foods, decided on July 12. The plaintiffs work the night shift in a warehouse run by a wholesale food distributor in The Bronx. They sued to recover unpaid overtime. The employer argued that plaintiffs are not entitled to overtime under the "executive exception" to the Fair Labor Standards Act. The issue is whether plaintiffs supervised "customarily recognized departments or subdivisions," that is, units with "a permanent status and a continuing function" under the regulations. The Court of Appeals (Lynch, Raggi and Pooler) finds that the "executive exception" applies and plaintiffs do not get their overtime pay.

Plaintiffs are "captains" in the warehouse. Their subordinates take orders from the plaintiffs and bring food products from the warehouse shelves and load them onto trucks that take the food to the grocery stores where, I guess, surly teenagers unload the trucks and place them nicely on the shelves.(At least that's the way that I remember it).

Normally, if you work more than 40 hours per week, you get overtime. But under the FLSA, not everyone qualifies for overtime. These cases usually turn on intricate analysis of the statute to see of the plaintiffs can maintain a class-action on behalf of similarly-situated employees. The Second Circuit says that these plaintiffs are exempt from the overtime entitlement. "Bona-fide executives" are among the exemptions. Now, when we think of executives, we think of guys sitting in an air-conditioned office in expensive suits talking on the phone to other executives. But the FLSA defines executives more broadly. The Second Circuit notes, "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.” Under the regulations,

“[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.
Elements 1, 3 and 4 apply to plaintiffs. The question is whether the second element applies. This is a question of first impression for the Court of Appeals: "whether a unit can have '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." The Second Circuit says that these supervisors do in fact work in a customarily recognized department or subdivision of the warehouse even if the plaintiffs do not work in unique units or perform distinct tasks. The Court of Appeals finds no authority to support the plaintiffs' position, and no court has adopted such a position. Rather, Judge Lynch writes:

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 nonunique 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. 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.”

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