Michael L. SCHAEFER, Plaintiff-Appellant, v. INDIANA MICHIGAN POWER COMPANY, d/b/a American Electric Power, Defendant-Appellee.
No. 02-1401.
United States Court of Appeals, Sixth Circuit.
Decided and Filed: Feb. 13, 2004.
Argued: Sept. 18, 2003.
354 F.3d 394
Thus, we conclude that the district court properly dismissed Arrow‘s complaint pursuant to
Accordingly, we AFFIRM the district court‘s judgment.
Joseph J. Vogan (argued and briefed), Peter Smit (briefed), Elizabeth Wells Skaggs (briefed), Varnum, Riddering, Schmidt & Howlett, Grand Rapids, MI, for Appellee.
Before: SUHRHEINRICH, COLE, and ROGERS, Circuit Judges.
COLE, J., delivered the opinion of the court. SUHRHEINRICH, J. (pp. 407-08), delivered a separate concurring opinion. ROGERS, (p. 408), delivered a separate dissenting opinion.
OPINION
COLE, Circuit Judge.
Plaintiff-Appellant Michael L. Schaefer appeals the district court‘s grant of summary judgment in favor of his employer, Indiana Michigan Power Company, d/b/a American Electric Power (“AEP“), and the denial of his motion for summary judgment, in this action alleging that AEP violated the Fair Labor Standards Act (the “FLSA“),
I. BACKGROUND
Indiana Michigan Power Company, doing business as American Electric Power (“AEP“), operates the Cook Nuclear Plant (“Cook“) in Bridgman, Michigan, where Plaintiff-Appellant Michael L. Schaefer is employed. AEP produces electricity at Cook through nuclear reaction. Schaefer began his employment at Cook as a “radiation protection technician, junior,” in 1987. Through promotion and company reorganization, Schaefer has subsequently held the positions of radiation protection technician, engineering technologist, radioactive material specialist, and environmental specialist. Schaefer is a “qualified shipping specialist” under Department of Transportation regulations. Although Schaefer, who is paid a yearly salary, has worked in positions classified as exempt from FLSA overtime requirements by AEP since 1988, he nonetheless received time-and-a-half overtime pay for hours in excess of forty hours in a given workweek until 1997. Beginning in 1997, AEP began to pay only straight overtime under its exempt-overtime plan, and in 1999 the plan was
The parties disagree regarding the nature of Schaefer‘s daily activities. AEP argues that Schaefer “has overall responsibility for the waste disposal program.” AEP points out that Schaefer has responsibility for various activities in addition to actual shipping, such as writing and revising procedures, preparing position papers, investigating corrective actions, and surveying other nuclear facilities as to how they deal with radioactive waste. In support of its position, AEP primarily relies on AEP‘s written job description for the position of environmental specialist; the testimony of Schaefer‘s supervisor, Jeffrey H. Long; various job performance reviews; and Schaefer‘s own resume. These sources generally portray Schaefer as a white-collar employee who performs his job independently; makes recommendations regarding various aspects of the shipping process; has an important role in assuring AEP‘s compliance with various federal and state regulations and primary responsibility for developing procedures to implement these regulations; and supervises the manual tasks involved in shipping radioactive materials.
Schaefer‘s deposition testimony presents a different picture of his day-to-day activities. He claims that eighty percent of his time is spent on tasks related to actual shipments of radioactive materials and waste. These tasks include setting up the shipment with the transporter and the waste management facility; determining the type and method of packaging to be used; preparing shipping documents such as manifests; and inspecting packaging containers, trucks, load bracings, and truck signage. Schaefer claims that he does not often exercise discretion or independent judgment when working on shipments because the work is tightly governed by federal regulations and company procedures. He acknowledges that some of his other tasks sometimes require the exercise of discretion and independent judgment, but he maintains that he performs such tasks much less frequently than AEP indicates and that the exercises of discretion are much more limited than AEP contends. Finally, Schaefer disputes AEP‘s job description and performance reviews: He testified in his deposition that those documents cover activities that he does not actually perform and do not accurately reflect his day-to-day responsibilities. He also claims that he embellished his own resume to include more responsibility and authority than he actually exercises.
II. DISCUSSION
A. Standard of Review
This Court reviews de novo a district court‘s grant of summary judgment. Stephenson v. Allstate Ins. Co., 328 F.3d 822, 826 (6th Cir.2003). Summary judgment is appropriate if, examining the record and drawing all inferences in a light most favorable to the non-moving party, there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.
B. The Fair Labor Standards Act and the Administrative Exemption
The Fair Labor Standards Act requires employers to pay their employees time-and-a-half for work performed in excess of forty hours per week.
To prove that Schaefer is a bona fide administrative employee under the applicable Department of Labor (“DOL“) regulations (described as the “short test“), AEP must demonstrate that: (1) the employee is “compensated on a salary or fee basis at a rate of not less than $250 per week“; (2) the employee‘s “primary duty consists of [t]he performance of office or nonmanual work directly related to management policies or general business operations of his employer or his employer‘s customers“; and (3) the employee‘s primary duty “includes work requiring exercise of discretion and independent judgment.”
1. Salary Basis
AEP must first establish that it pays Schaefer on a salary or fee basis.
Although Schaefer is paid a yearly salary, he argues that AEP does not treat him as a salaried employee because he must account for at least forty hours of work each week on his time sheet and must make up partial-day absences by either working extra hours on another day or using part of a vacation day. Exempt status, however, is only affected by monetary deductions for work absences and not by non-monetary deductions from fringe benefits such as personal or sick time. See Haywood v. N. Am. Van Lines, Inc., 121 F.3d 1066, 1070 (7th Cir.1997). Schaefer has presented no evidence to contradict AEP‘s showing that it does not dock employees’ pay for partial-day absences. Moreover, Schaefer admitted in his deposition that he has never been docked pay for partial-day absences. Accordingly, the district court correctly concluded that AEP satisfied its burden of showing that Schaefer was paid on a salary basis.
2. Office or Nonmanual Work Directly Related to Management Policies or General Business Operations of the Employer
Next, AEP must show the absence of a material factual dispute over whether Schaefer‘s “primary duty” consists of the “performance of office or nonmanual work directly related to management policies or general business operations of his employer or his employer‘s customers.”
Schaefer‘s tasks can be grouped into two categories: (1) tasks relating to actual, specific shipments of radioactive materials and waste, and (2) tasks relating to the maintenance of the waste disposal program as a whole. The DOL regulations provide that “[i]n the ordinary case it may be taken as a good rule of thumb that primary duty means the major part, or over 50 percent, of the employee‘s time.”
“Time alone, however, is not the sole test....”
a. Nonmanual
To meet the exemption such that AEP need not pay him time-and-a-half for overtime, Schaefer‘s primary duty must consist of “nonmanual work directly related to management policies or general business operations.” Although an exempt employee can perform some manual work without losing exempt status, “if the employee performs so much manual work (other than office work) that he cannot be said to be basically a ‘white-collar’ employee he does not qualify for exemption as a
The evidence, viewed in the light most favorable to Schaefer, supports his contention that he spends some of his time performing manual tasks outside the office but this amount of time is not so much that he no longer qualifies for the exemption. Schaefer admits that for the past few years he has spent fifty percent of his time at his desk and that he currently spends greater than eighty percent of his time at his desk. Even when he is away from his desk, he does not spend all of his time on manual tasks. Although Schaefer spends some of this time inspecting trucks, examining load bracings, inspecting shipping containers, and examining shipping labels, these “inspection” tasks—even if not performed at his desk—are nonetheless not manual tasks. Schaefer performs manual tasks when he actually picks up a hammer to brace a load or installs or tightens a strap. Accordingly, Schaefer does not spend so much of his time on these manual tasks so as to fall outside exempt status.
b. Directly Related to Management Policies or General Business Operations
To qualify for the exemption, Schaefer‘s primary duty must also be “directly related to management policies or general business operations of the employer or the employer‘s customers.”
AEP urges us to conclude that Schaefer is an administrative employee simply because he is not involved in the direct production of electricity.
Work related to waste disposal is not necessarily “administrative” work as that term is commonly understood. The very nature of AEP‘s business at Cook—the production of electricity by nuclear reaction—entails very complex waste issues that require types of employees that a more traditional factory would not require. Such employees do unique work which, although not part of production proper, is also not “administrative” or part of “servicing the business.” The problem posed by the dichotomy is not limited to waste. For example, Long testified that the employees who wear protective clothing and work in areas of active contamination are not production workers: “I guess if—if you want to say direct production of electricity, I would think of—of the operators. The majority of these people [who wear the protective gear] are probably in maintenance.” J.A. 126.
As this case indicates, the administrative versus production analysis does not fit all cases. The analogy—like various other parts of the interpretive regulations—is
Where Schaefer is asked to do benchmarking or make recommendations regarding how AEP should deal with an unusual shipment, those aspects of the task might qualify but they do not suffice to change the nature of the actual shipping work and are too infrequent by either party‘s account to form the basis for finding that Schaefer‘s “primary job duty consists of ... work directly related to management policies or general business operations.” Similarly, some of Schaefer‘s other tasks—for example, writing or updating procedures and preparing an annual scaling factor report—appear to meet the “directly related” requirement, but they are not part of Schaefer‘s primary job duty. See supra. Because Schaefer‘s primary job duty is not “directly related,” we need not address whether it is of substantial importance to AEP.
Thus, genuine issues of material fact exist as to whether Schaefer‘s primary duty is “directly related to management policies or general business operations of the employer or the employer‘s customers.”
3. Discretion and Independent Judgment
Even if AEP could meet its burden in proving that Schaefer‘s primary duty consists of the “performance of office or nonmanual work directly related to management policies or general business operations of his employer or his employer‘s customers,” AEP must also prove that Schaefer customarily and regularly exercised discretion and independent judgment in the performance of his primary duty.
There are genuine issues of material fact regarding the extent to which Schaefer actually exercises discretion and independent judgment. According to
Perhaps the most frequent cause of misapplication of the term “discretion and independent judgment” is the failure to distinguish it from the use of skill in various respects. An employee who merely applies his knowledge in following prescribed procedures or determining which procedure to follow, or who determines whether specified standards are met or whether an object falls into one or another of a number of definite grades, classes, or other categories, with or without the use of testing or measuring devices, is not exercising discretion and independent judgment within the meaning of § 541.2. This is true even if there is some leeway in reaching a conclusion, as when an acceptable standard includes a range or a tolerance above or below a specific standard.
Schaefer contends that his shipping-related tasks do not require the exercise of discretion or independent judgment within the meaning of the regulations. Specifically, Schaefer argues that many of his tasks are so heavily regulated by DOT regulations, Nuclear Regulatory Commission regulations, state regulations, and company procedures, that his primary duty requires little or no exercise of discretion or independent judgment. The district court rejected this argument on the ground that “it could apply to almost anyone in the nuclear power industry.” Schaefer v. Ind. Mich. Power Co., 197 F.Supp.2d 935, 948 (W.D.Mich.2002). We disagree with the district court‘s analysis. Each person in the industry, including Schaefer, must be individually examined in order to determine whether he or she actually exercises discretion and independent judgment. The fact that the industry is heavily regulated may indeed mean that a facility like Cook may employ fewer individuals who actually exercise discretion. Cook employs a different type of employee—those who can follow regulations—than it would have to employ in the absence of the regulations—that is, those who could make the kinds of decision made by those who write the various regulations. The very purpose of such detailed regulations and procedures is to create conformity which has the practical effect of minimizing discretion. We must, therefore, examine whether Schaefer, constrained by regulations, actually exercises discretion and independent judgment. See Ale, 269 F.3d at 687.
AEP also argues that there are gaps in the regulations that Schaefer must “bridge” using his discretion and independent judgment. AEP offers several exam-
Indeed, the term “exercise of discretion and independent judgment” as it appears in the regulations has a specific meaning which excludes “the use of skill” and the application of “knowledge in following prescribed procedures or determining which procedure to follow, or ... determin[ing] whether specified standards are met or whether an object falls into one or another of a number of definite grades, classes, or other categories.” Many of AEP‘s examples either are of simple decisions that do not require the exercise of discretion within this definition or involve procedures that provide more guidance than AEP implies. For example, a material either does or does not have a specific activity level of less than 70 Bq/gram (0.002 iCi/gram) for purposes of determining what shipping procedures will govern. Likewise, blocking and bracing a load is an exercise of skill rather than discretion.2 AEP additionally argues that there are times when a package could be classified in more than one shipping category under the regulations. Long, however, testified that Cook had a preferred method of selecting the least restrictive classification, and AEP has presented no evidence that Schaefer exercised his discretion and diverged from the preferred method.
Nor is the mere fact that Schaefer has extensive knowledge of the regulations sufficient to turn their application into exercises discretion and independent judgment.
AEP has not demonstrated that these shipping tasks require Schaefer to exercise discretion and independent judgment for purposes of summary judgment. We therefore make no determination whether decisions made related to these types of tasks would be “with respect to matters of significance.”
To the extent that AEP does point to some tasks that undisputedly require the exercise of discretion, AEP has failed to establish the extent to which Schaefer completes these tasks as part of his pri-
Likewise, AEP has not established that Schaefer exercises discretion with sufficient frequency while completing condition reports as part of his primary duty. Schaefer spends ten to twenty percent of his time on condition reports, “depending on the ebb and flow of them.” J.A. 95. According to Schaefer‘s deposition, condition reports are part of AEP‘s “corrective action program.” J.A. 427. According to Long, “[a] condition report is—what we call something adverse to quality; a problem.” J.A. 122. These problems “[m]ay be small; may be large.” Id. All employees—exempt and nonexempt—participate in this program. J.A. 427. Schaefer testified that condition reports have parts: “condition identification, condition evaluation, the proposed actions and actual actions that have been performed.” J.A. 241. Schaefer admits that some analysis is required when he is assigned the “condition evaluation” section. Id. He testified that he performs condition evaluation “[r]arely to infrequently ... maybe onto the infrequently side.” Id. Other times he comes in where the specific action is to be performed in which case “there‘s no analysis required, there‘s no determination to be made, other than just perform that task, perform the action that was proposed.” Id. Some condition reports no doubt have required that Schaefer exercise discretion and independent judgment. We have insufficient information, however, on how often that might have occurred and, of the times it occurred, how often it related to an actual shipment as opposed to a secondary task.
Most of AEP‘s argument that Schaefer customarily and regularly exercises discretion and independent judgment is based upon tasks that are not part of Schaefer‘s primary job duty, many of which Schaefer has completed infrequently or even only once. We need not consider whether Schaefer exercises discretion when completing secondary tasks.
Here, where the employer bears the burden of proving an exemption that is to be construed narrowly against the employer, AEP has not demonstrated that no reasonable trier of fact could find that Schaefer‘s primary duty does not consist of work “directly related to management policies or general business operations of his employer” or that Schaefer does not exercise sufficient discretion and independent judgment to meet the exemption when the facts are viewed in the light most favorable to Schaefer. Issues of material fact persist and it must be left to a trier of fact to weigh the credibility of Schaefer‘s characterization of his day-to-day duties with that of AEP. Accordingly, we REVERSE the decision of the district court granting summary judgment to AEP and REMAND for further proceedings.
SUHRHEINRICH, Circuit Judge, concurring.
I concur in Judge Cole‘s analysis. I write separately simply to indicate my belief that we can decide this issue as a matter of law in favor of Plaintiff-Appellant Schaefer. I would therefore grant Plaintiff‘s motion for summary judgment and deny AEP‘s.
The decision of whether an employee is exempt from the FLSA‘s overtime compensation provisions under
In my view, AEP has, at a minimum, failed to create a genuine issue of fact on the question of whether Schaefer‘s primary duty “includes work requiring exercise of discretion and independent judgment.”
Many skilled people, like electricians, nurses, and other skilled professionals and tradesmen, make all kinds of discretionary decisions in carrying out their skill, profession or trade, but that is not the kind of discretion envisioned by the short test. Indeed, the applicable regulation, explicitly makes this distinction. See Ale, 269 F.3d at 685 (stating that “section 541.207(c) distinguishes the exercise of discretion and independent judgement from the use of skill in applying techniques, procedures, or specific standards“).
Perhaps the most frequent cause of misapplication of the term “discretion and independent judgement” is the failure to distinguish it from the use of skill in various respects. An employee who merely applies his knowledge in the following prescribed procedures or deter-
Furthermore, as the majority holds, of those tasks that indisputably require Schaefer to exercise discretion, “AEP has failed to establish the extent to which Schaefer completes these tasks as part of his primary duty.” Maj. Op., ante, at 405. Nor did AEP establish that Schaefer exercises discretion with sufficient frequency while completing condition reports as part of his primary duty. Thus, AEP has failed to meet its burden of establishing that Schaefer “customarily and regularly” exercises discretion and independent judgment. Having failed to meet its burden of showing that the employee meets every aspect of the definition for an exempt employee, see Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 80 S.Ct. 453, 4 L.Ed.2d 393 (1960) (holding that employer bears burden of proof, on each and every element of the claimed exemption); see generally Corning Glass Works v. Brennan, 417 U.S. 188, 196-97, 94 S.Ct. 2223, 41 L.Ed.2d 1 (1974) (application of an exception under the FLSA is a matter of affirmative defense, and the employer has the burden of proof), summary judgment for Schaefer is appropriate. I would therefore remand to the district court with instructions to enter summary judgment in favor of Schaefer.
ROGERS, Circuit Judge, dissenting.
Essentially for the reasons given in Judge Quist‘s careful opinion below, 197 F.Supp.2d 935, I would affirm the judgment of the district court.