Second Circuit Finds Warehouse Captains Qualify For FLSA’s Executive Exemption

“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,’” but the United States Court of Appeals for the Second Circuit says such an employee fits within the Department of Labor’s definition of the term nonetheless.  In an opinion handed down on July 12, 2012, the Second Circuit determined that summary judgment was properly entered in favor of a wholesale food distributor sued by a class of “warehouse captains” for unpaid overtime wages.  The decision,  in Ramos v. Baldor Specialty Foods, Inc., __ F.3d __, 2012 U.S. App. LEXIS 14333 (2d Cir. July 12, 2012), is predicated on a welcome employer-friendly construction of the FLSA’s executive exemption.

 

The Ramos plaintiffs were a class of night-shift captains employed in Baldor’s warehouse who were responsible for supervising nearly identical teams of “pickers,” employees who retrieved food products from warehouse shelves and loaded them onto trucks for delivery.  Each captain was in charge of his team of pickers, including ensuring timely attendance and providing daily work assignments, and was ultimately accountable for the team’s performance.

 

Applicability of the executive exemption in this case turned principally on whether the captains’ primary duty involved “management …of a customarily recognized department or subdivision thereof.”  Regulations promulgated by the DOL 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.”  The plaintiffs argued that because “each team [of pickers] performs the same tasks as the other teams at the same time and in the same warehouse,” the executive exemption did not apply.  The Second Circuit framed the issue of first impression as “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.”

 

Answering this question in the affirmative, the Second Circuit rejected the plaintiffs’ contention that as a matter of law “multiple units cannot have a permanent status and continuing function if they are functionally, temporally, or geographically identical to each other” as being without “support in the legislative history of the FLSA, in the regulations, or in the Department’s interpretations of those regulations.”  The Court determined there was simply no requirement for some type of distinguishability, such as operating in different locations, working different shifts, or performing distinct functions, before teams of employees could constitute a “customarily recognized department or subdivision,” explaining that “[t]he 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.”  The fact that the warehouse teams performed the same tasks and were effectively interchangeable was, according to the Second Circuit, “immaterial” because the “[i]nterchangeability of a team’s function does not alter the supervisory nature of the captain’s job.”  For these reasons, the Court agreed that the plaintiffs were properly classified as exempt executives and, as such, not entitled to overtime pay.

 

As this case illustrates, commonly held perceptions of “executives” as clothed in business attire and stationed in an office do not always hold true.  While employers must remain cautious in classifying non-traditional “executives” as FLSA-exempt, the practical approach to this often vexing challenge embodied in the Second Circuit’s decision in Ramos is certainly an encouraging development.

Lawrence Peikes

Joshua Walls

Wiggin and Dana LLP

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