CITING EMPLOYEE’S LACK OF AN ADVANCED DEGREE, SECOND CIRCUIT FINDS EMPLOYER WILLFULLY MISCLASSIFIED ENGINEER AS AN EXEMPT PROFESSIONAL

A recent decision issued by the U.S. Court of Appeals for the Second Circuit serves as a stark reminder that exemptions to the FLSA’s overtime requirements are narrowly construed and must be applied judiciously based on an individual assessment of each employee’s actual job duties.  In Young v. Cooper Cameron Corp., __ F.3d __, 2009 WL 3763848 (2d Cir. Nov. 12, 2009), the Second Circuit affirmed a trial court’s findings that an engineer was improperly classified as an exempt professional and that the employer’s FLSA violation was willful, thereby extending the recovery period from two years to three.

The plaintiff in this case, Andrew Young, was a high school graduate who had worked for better than twenty years as a detailer, draftsman and designer, and was a member of the American Society of Mechanical Engineers.  In 2001, Cooper Cameron offered Young a position as a Mechanical Designer in the hydraulic power units (“HPU”) group, where he had been working in another capacity for several years.  This was a non-exempt job that paid $26.00 per hour.  Dissatisfied with the rate of compensation, Young rejected the position.

Shortly thereafter, Cooper Cameron invited Young to fill an opening for a Product Design Specialist II (“PDS II”), a position that paid a salary of $62,000.00 per year and, after extensive review, was determined by the company to be exempt.  No formal advanced education was required for this position and, in fact, none of Cooper Cameron’s PDS II’s possessed an advanced degree.  This time Young accepted the offer and for the next three years he was the principal PDS II in charge of drafting HPU plans, a role that, according to the Second Circuit, “required depth of knowledge and experience, and entailed considerable responsibility and discretion.”

In 2004, Cooper Cameron terminated Young’s employment as part of a reduction-in-force.  Shortly thereafter, Young sued Cooper Cameron alleging that he had been misclassified as exempt and was entitled to overtime pay for hours worked in excess of forty per week during his tenure as a PDS II.  The district court entered partial summary judgment in favor of Young on Cooper Cameron’s exemption defense, finding as a matter of law that the position of PDS II did not qualify for the professional exemption.  A bench trial ensued on the issue of whether Cooper Cameron’s violation of the FLSA was willful, and again the district court ruled for Young.  Cooper Cameron appealed both adverse determinations to the Second Circuit, but to no avail.

Applying the Department of Labor Regulations in effect at the time of the alleged violation, the Second Circuit observed that exempt status turned on a three part test.  First, the employee’s “knowledge must be of an advanced type … generally speaking, it must be knowledge which cannot be at the high school level.  Second, the knowledge must be in a field of science or learning.  Third, the knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction and study.”  Finding that the case hinged largely on the meaning of the term “customarily,” the Second Circuit again looked to the regulations for guidance; the regulations explain that “the word ‘customarily’ implies that in the vast majority of cases the specific academic training is a prerequisite for entrance into the profession.  It makes the exemption applicable to the occasional lawyer who has not gone to law school, or the occasional chemist who is not the possessor of a degree in chemistry, etc., but it does not include the members of such quasi-professions as journalism in which the bulk of the employees have acquired their skill by experience rather than by any formal specialized training.”

Against this backdrop, the Second Circuit framed the question as “whether a position can be exempt notwithstanding the lack of an educational requirement, if the duties actually performed require knowledge of an advanced type in a field of science or learning.”  In concluding that the  answer to this question is No, the Second Circuit noted as a threshold matter that the term “customarily in this context makes the exemption applicable to the rare individual who, unlike the vast majority of others in the profession, lacks the formal educational training and degree.”  But, the Court of Appeals went on to explain, “[i]f a job does not require knowledge customarily acquired by an advanced degree—as for example when many employees in the position have no more than a high school diploma—then, regardless of the duties performed, the employee is not an exempt professional under the FLSA.”  Because “the PDS II position required no advanced educational training or instruction and …, in fact, no PDS II had more than a high school education,” the Second Circuit found it “clear that Young is not exempt.”

Cooper Cameron fared no better on the willfulness issue.  Pointing to various differences between the duties associated with the positions of Mechanical Engineer and PDS II, Cooper Cameron asserted that it was justified in concluding that the latter position came within the parameters of the professional exemption even if the former did not.  The Court of Appeals was not persuaded by this argument because it “answer[ed] the wrong question.”  Elaborating, the Court reasoned that “[t]his evidence might help establish that the position of PDS II differs from that of Mechanical Designer; but, … what matters is whether Young did the work of a non-exempt Mechanical Designer, not whether PDS IIs generally did more advanced work than Mechanical Designers.”  Because the actual duties Young performed were essentially the same as those of a non-exempt Mechanical Designer, the Second Circuit concluded that the district court did not err in determining that Cooper Cameron willfully violated the FLSA.

The Department of Labor has long taken the position that actual job duties, not job titles, are determinative of exempt status.  Young hammers home the point.

Lawrence Peikes, Wiggin and Dana LLP

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: