Two recent appellate decisions serve as reminders that in order to meet the requirements of the executive exemption, it is not enough that an employee provide day-to-day supervision of at least two other employees. An exempt executive employee must also have the authority to hire or fire other employees, or his or her suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight. 29 C.F.R. § 541.100(a)(4).
In both Taylor v. AutoZone, Inc., No. 12-15378 (9th Cir., decided May 12, 2014), and Bacon v. Eaton Corp., No. 13-1816 (6th Cir., decided May 1, 2014), the court of appeals reversed decisions granting summary judgment for the defendants, and ruled that a genuine issue of material fact existed as to whether the plaintiffs had sufficient influence over personnel decisions to meet the requirements of the executive exemption.
Bacon was a suit brought by first-line shift supervisors who claimed they were entitled to overtime compensation. Each directed the work of more than twenty non-exempt employees and were, themselves, under the supervision of second-level managers. The record included evidence that while the plaintiffs completed probationary evaluations for employees under their supervision, the company hired probationary employees as a matter of course, and did not place great weight upon the plaintiffs’ evaluations. Some of the plaintiffs only submitted probationary evaluations after the probationary employee’s probation had ended, and, therefore, had no influence upon whether the probationary employee was hired.
The employer also argued that the plaintiffs had indirect, but significant, influence over employees’ changes of status through a “progressive discipline” system. Again, however, the court of appeals held that there was a factual issue as to the nature of the employer’s disciplinary system and the role of the plaintiffs in carrying out that system.
Similarly, in Taylor, a suit by AutoZone’s store managers, the court of appeals found that, in light of conflicting evidence as to the frequency with which the store managers make hiring, firing, and promotion-related recommendations, and the extent to which their supervisors relied upon these recommendations, there were genuine issues of material fact as to whether such suggestions and recommendations were given particular weight.
Also at issue in Taylor was whether the store managers’ primary duty was management, as required by 29 C.F.R. § 541.100(a)(2). AutoZone conceded that the plaintiffs spent less than fifty per cent of their time performing exempt work. The court of appeals noted, however, that under 29 C.F.R. § 541.700(a), the plaintiffs might, nevertheless, be primarily involved in management activities if other pertinent factors supported that conclusion. These factors would include: (1) the relative importance of the plaintiffs’ managerial duties as compared with other types of duties; (2) whether they have relative freedom from supervision; and (3) the relationship between the store managers’ salaries and the wages paid to other employees for the same kind of non-managerial work performed by those employees. The court found there was conflicting evidence on these issues and reversed the award of summary judgment.