RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 2 Schaefer v. Indiana Mich. Power Co. No. 02-1401 ELECTRONIC CITATION: 2004 FED App. 0050P (6th Cir.) File Name: 04a0050p.06 HOWLETT, Grand Rapids, Michigan, for Appellee. ON BRIEF: Stephen D. Turner, Gregory N. Longworth, LAW, WEATHERS & RICHARDSON, Grand Rapids, UNITED STATES COURT OF APPEALS Michigan, for Appellant. Joseph J. Vogan, Peter Smit, Elizabeth Wells Skaggs, VARNUM, RIDDERING, FOR THE SIXTH CIRCUIT SCHMIDT & HOWLETT, Grand Rapids, Michigan, for _________________ Appellee.
MICHAEL L. SCHAEFER, X COLE, J., delivered the opinion of the court. Plaintiff-Appellant, - SUHRHEINRICH, J. (pp. 19-21), delivered a separate - concurring opinion. ROGERS, (p. 22), delivered a separate - No. 02-1401 dissenting opinion. v. - > _________________ , INDIANA MICHIGAN POWER - COMPANY , d/b/a AMERICAN OPINION - _________________ ELECTRIC POWER, - Defendant-Appellee. - R. GUY COLE, JR., Circuit Judge. Plaintiff-Appellant - Michael L. Schaefer appeals the district court’s grant of N summary judgment in favor of his employer, Indiana Appeal from the United States District Court Michigan Power Company, d/b/a American Electric Power for the Western District of Michigan at Grand Rapids. (“AEP”), and the denial of his motion for summary judgment, No. 00-00559—Gordon J. Quist, District Judge. in this action alleging that AEP violated the Fair Labor Standards Act (the “FLSA”), 29 U.S.C. §§ 201-219, by Argued: September 18, 2003 failing to pay Plaintiff for overtime work at one-and-a-half times his normal hourly rate as required by 29 U.S.C. Decided and Filed: February 13, 2004 § 207(a)(1). The central issue on appeal is whether the district court erred in granting summary judgment in favor of Before: SUHRHEINRICH, COLE, and ROGERS, Circuit AEP based on its conclusion that Plaintiff’s position as an Judges. environmental specialist at AEP is properly classified as exempt under the administrative exemption of the FLSA. For _________________ the following reasons, we REVERSE the decision of the district court granting summary judgment to AEP and COUNSEL REMAND for further proceedings. ARGUED: Stephen D. Turner, LAW, WEATHERS & RICHARDSON, Grand Rapids, Michigan, for Appellant. Joseph J. Vogan, VARNUM, RIDDERING, SCHMIDT &
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I. BACKGROUND federal and state regulations and primary responsibility for developing procedures to implement these regulations; and Indiana Michigan Power Company, doing business as supervises the manual tasks involved in shipping radioactive American Electric Power (“AEP”), operates the Cook Nuclear materials. Plant (“Cook”) in Bridgman, Michigan, where Plaintiff- Appellant Michael L. Schaefer is employed. AEP produces Schaefer’s deposition testimony presents a different picture electricity at Cook through nuclear reaction. Schaefer began of his day-to-day activities. He claims that eighty percent of his employment at Cook as a “radiation protection technician, his time is spent on tasks related to actual shipments of junior,” in 1987. Through promotion and company radioactive materials and waste. These tasks include setting reorganization, Schaefer has subsequently held the positions up the shipment with the transporter and the waste of radiation protection technician, engineering technologist, management facility; determining the type and method of radioactive material specialist, and environmental specialist. packaging to be used; preparing shipping documents such as Schaefer is a “qualified shipping specialist” under Department manifests; and inspecting packaging containers, trucks, load of Transportation regulations. Although Schaefer, who is bracings, and truck signage. Schaefer claims that he does not paid a yearly salary, has worked in positions classified as often exercise discretion or independent judgment when exempt from FLSA overtime requirements by AEP since working on shipments because the work is tightly governed 1988, he nonetheless received time-and-a-half overtime pay by federal regulations and company procedures. He for hours in excess of forty hours in a given workweek until acknowledges that some of his other tasks sometimes require 1997. Beginning in 1997, AEP began to pay only straight the exercise of discretion and independent judgment, but he overtime under its exempt-overtime plan, and in 1999 the maintains that he performs such tasks much less frequently plan was changed so that overtime generally did not begin than AEP indicates and that the exercises of discretion are until after 45 hours were worked in a given workweek. much more limited than AEP contends. Finally, Schaefer disputes AEP’s job description and performance reviews: He The parties disagree regarding the nature of Schaefer’s testified in his deposition that those documents cover daily activities. AEP argues that Schaefer “has overall activities that he does not actually perform and do not responsibility for the waste disposal program.” AEP points accurately reflect his day-to-day responsibilities. He also out that Schaefer has responsibility for various activities in claims that he embellished his own resume to include more addition to actual shipping, such as writing and revising responsibility and authority than he actually exercises. procedures, preparing position papers, investigating corrective actions, and surveying other nuclear facilities as to how they II. DISCUSSION deal with radioactive waste. In support of its position, AEP primarily relies on AEP’s written job description for the A. Standard of Review position of environmental specialist; the testimony of Schaefer’s supervisor, Jeffrey H. Long; various job This Court reviews de novo a district court’s grant of performance reviews; and Schaefer’s own resume. These summary judgment. Stephenson v. Allstate Ins. Co., 328 F.3d sources generally portray Schaefer as a white-collar employee 822, 826 (6th Cir. 2003). Summary judgment is appropriate who performs his job independently; makes recommendations if, examining the record and drawing all inferences in a light regarding various aspects of the shipping process; has an most favorable to the non-moving party, there is no genuine important role in assuring AEP’s compliance with various issue as to any material fact and the moving party is entitled No. 02-1401 Schaefer v. Indiana Mich. Power Co. 5 6 Schaefer v. Indiana Mich. Power Co. No. 02-1401
to judgment as a matter of law. Fed.R.Civ.P. 56(c); Agristor receives each pay period on a weekly, or less frequent basis, Fin. Corp. v. Van Sickle, 967 F.2d 233, 236 (6th Cir. 1992). a predetermined amount constituting all or part of his compensation, which amount is not subject to reduction B. The Fair Labor Standards Act and the because of variations in the quality or quantity of the work Administrative Exemption performed.” 29 C.F.R. § 541.118(a). The Fair Labor Standards Act requires employers to pay Although Schaefer is paid a yearly salary, he argues that their employees time-and-a-half for work performed in excess AEP does not treat him as a salaried employee because he of forty hours per week. 29 U.S.C. § 207(a)(1). The FLSA, must account for at least forty hours of work each week on his however, exempts employers from this requirement with time sheet and must make up partial-day absences by either respect to individuals “employed in a bona fide executive, working extra hours on another day or using part of a vacation administrative, or professional capacity.” 29 U.S.C. day. Exempt status, however, is only affected by monetary § 213(a)(1). “This exemption is to be ‘narrowly construed deductions for work absences and not by non-monetary against the employers seeking to assert [it],’” Douglas v. deductions from fringe benefits such as personal or sick time. Argo-Tech Corp., 113 F.3d 67, 70 (6th Cir. 1997) (quoting See Haywood v. N. Am. Van Lines, Inc., 121 F.3d 1066, 1070 Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960)), and (7th Cir. 1997). Schaefer has presented no evidence to the employer bears not only the burden of proof, but also the contradict AEP’s showing that it does not dock employees’ burden on each element of the claimed exemption. Arnold, pay for partial-day absences. Moreover, Schaefer admitted in 361 U.S. at 392. his deposition that he has never been docked pay for partial- day absences. Accordingly, the district court correctly To prove that Schaefer is a bona fide administrative concluded that AEP satisfied its burden of showing that employee under the applicable Department of Labor (“DOL”) Schaefer was paid on a salary basis. regulations (described as the “short test”), AEP must demonstrate that: (1) the employee is “compensated on a 2. Office or Nonmanual Work Directly Related to salary or fee basis at a rate of not less than $250 per week”; Management Policies or General Business (2) the employee’s “primary duty consists of . . . [t]he Operations of the Employer performance of office or nonmanual work directly related to management policies or general business operations of his Next, AEP must show the absence of a material factual employer or his employer’s customers”; and (3) the dispute over whether Schaefer’s “primary duty” consists of employee’s primary duty “includes work requiring exercise the “performance of office or nonmanual work directly related of discretion and independent judgment.” 29 C.F.R. to management policies or general business operations of his §§ 541.2, 541.214. employer or his employer’s customers.” 29 C.F.R. §§ 541.2(a)(1), (e)(2), 541.214. Accordingly, we must first 1. Salary Basis analyze Schaefer’s “primary duty.” We focus on evidence regarding the actual day-to-day activities of the employee AEP must first establish that it pays Schaefer on a salary or rather than more general job descriptions contained in fee basis. 29 C.F.R. § 541.2(e)(2); Douglas, 113 F.3d at 70. resumes, position descriptions, and performance evaluations. DOL regulations provide that an employee is paid on a salary Ale v. Tennessee Valley Authority, 269 F.3d 680, 688-89 (6th basis “if under his employment agreement he regularly Cir. 2001). Neither the job description that Schaefer wrote No. 02-1401 Schaefer v. Indiana Mich. Power Co. 7 8 Schaefer v. Indiana Mich. Power Co. No. 02-1401
for his resume nor Schaefer’s failure to dispute AEP’s “Time alone, however, is not the sole test . . . .” 29 C.F.R. position descriptions or performance evaluations prior to this §§ 541.103, 541.206(b). A job duty that occupies less than lawsuit preclude him from arguing that his day-to-day fifty percent of the employee’s time can still be the primary activities differ from those described in these documents – duty if that duty is of principal importance to the employer or such actions merely raise credibility questions for the if the other duties performed are collateral to that duty. Rutlin factfinder. Indeed, we have recognized that “resumes may v. Prime Succession, Inc., 220 F.3d 737, 742 (6th Cir. 2000). not provide the most accurate picture of an employee’s job Yet AEP has not argued that Schaefer’s non-shipping tasks because resumes are typically ‘designed to enhance the are more important than shipping or that shipping is merely employee[’]s duties and responsibilities in order to obtain a collateral to these tasks. AEP argues only that these other job.’” Id. at 689 n.2. Here, the deposition testimony appears tasks are “equally important” to shipping. Even if AEP had to provide a more detailed window into Schaefer’s day-to-day submitted evidence sufficient to support this proposition, the activities. contention is not sufficient to trump the fifty-percent “rule of thumb” set forth in 29 C.F.R. § 541.103. Schaefer’s tasks can be grouped into two categories: (1) tasks relating to actual, specific shipments of radioactive a. Nonmanual materials and waste, and (2) tasks relating to the maintenance of the waste disposal program as a whole. The DOL To meet the exemption such that AEP need not pay him regulations provide that “[i]n the ordinary case it may be time-and-a-half for overtime, Schaefer’s primary duty must taken as a good rule of thumb that primary duty means the consist of “nonmanual work directly related to management major part, or over 50 percent, of the employee’s time.” 29 policies or general business operations.” Although an exempt C.F.R. §§ 541.103, 541.206(b). Schaefer contends that he employee can perform some manual work without losing spends roughly eighty percent of his time dealing with the exempt status, “if the employee performs so much manual preparation of shipments and the remaining twenty percent of work (other than office work) that he cannot be said to be his time on other tasks – some of which may also relate to basically a ‘white-collar’ employee he does not qualify for preparation of specific shipments – including condition exemption as a bona fide administrative employee . . . .” reports, procedural revisions, and position papers. Because 29 C.F.R. § 541.203(a). we view the evidence in the light most favorable to Schaefer, we accept his contention that he spends the majority of his The evidence, viewed in the light most favorable to time working on actual shipments of radioactive materials and Schaefer, supports his contention that he spends some of his waste.1 time performing manual tasks outside the office but this
1 Two of AEP’s experts’ reports and Long’s deposition provide three shipment also greatly incre ased, so the focus of Schaefer’s job shifted alternative breakdowns of Schaefer’s time. It is not clear from the record more firmly to shipping during that time. This lawsuit, filed on July 31, whether this indicates disagreement with Schaefer’s breakdown, or merely 2000, cove rs conduct dating b ack to July 31 , 199 8 or, if willfulness is a focus on a different period of time. Cook was offline for a pproximately found, July 31, 1997. three years, roughly between 1998 and 2000. T hat is, the nuclear reactors W e offer no opinion on whether our result would be the sam e if were shut down but the plant remanded op en while work was done on the actual shipments became a substantially less significant part of Schaefer’s reactors. As a result of the increased w ork on the reactors, the number of job; presumably at some point the “primary job duty” would shift to contaminated items – protective clothing, tools, replaced parts – requiring maintenance of the program. No. 02-1401 Schaefer v. Indiana Mich. Power Co. 9 10 Schaefer v. Indiana Mich. Power Co. No. 02-1401
amount of time is not so much that he no longer qualifies for the business of shipping radioactive waste, but instead is in the exemption. Schaefer admits that for the past few years he the business of producing electricity.” Appellee’s Brief at 40. has spent fifty percent of his time at his desk and that he According to AEP, since Schaefer’s work is collateral to the currently spends greater than eighty percent of his time at his production of electricity, he is therefore doing administrative desk. Even when he is away from his desk, he does not spend work. We reject this contention. all of his time on manual tasks. Although Schaefer spends some of this time inspecting trucks, examining load bracings, Work related to waste disposal is not necessarily inspecting shipping containers, and examining shipping “administrative” work as that term is commonly understood. labels, these “inspection” tasks – even if not performed at his The very nature of AEP’s business at Cook – the production desk – are nonetheless not manual tasks. Schaefer performs of electricity by nuclear reaction – entails very complex waste manual tasks when he actually picks up a hammer to brace a issues that require types of employees that a more traditional load or installs or tightens a strap. Accordingly, Schaefer factory would not require. Such employees do unique work does not spend so much of his time on these manual tasks so which, although not part of production proper, is also not as to fall outside exempt status. “administrative” or part of “servicing the business.” The problem posed by the dichotomy is not limited to waste. For b. Directly Related to Management Policies or General example, Long testified that the employees who wear Business Operations protective clothing and work in areas of active contamination are not production workers: “I guess if – if you want to say To qualify for the exemption, Schaefer’s primary duty must direct production of electricity, I would think of – of the also be “directly related to management policies or general operators. The majority of these people [who wear the business operations of the employer or the employer’s protective gear] are probably in maintenance.” J.A. 126. customers.” 29 C.F.R. § 541.214. This provision, in addition to describing the types of activities performed by an exempt As this case indicates, the administrative versus production employee, “limits the exemption to persons who perform analysis does not fit all cases. The analogy – like various work of substantial importance to the management or other parts of the interpretive regulations – is only useful to operation of the business of his employer or his employer’s the extent that it is a helpful analogy in the case at hand, that customers.” 29 C.F.R. § 541.214(a). is, to the extent it elucidates the phrase “work directly related to the management policies or general business operations.” AEP urges us to conclude that Schaefer is an administrative Bothell v. Phase Metrics, Inc., 299 F.3d 1120, 1126 (9th Cir. employee simply because he is not involved in the direct 2002); see also Shaw v. Prentice Hall Computer Publ’g, Inc., production of electricity. 29 C.F.R. § 541.205(a) does 151 F.3d 640, 644 (7th Cir. 1998) (noting that the distinguish administrative work from production work, and a administrative/production dichotomy is to be used only to the number of courts have applied an administrative versus extent that it is a helpful analogy in the case at hand). This production analysis, sometimes referred to as the dispute must therefore be resolved using other analytical tools administrative/production dichotomy, to the issue. See, e.g., set out in the regulations for resolving this question. Dalheim v. KDFW-TV, 918 F.2d 1220 (5th Cir. 1990). AEP argues that Schaefer does not fall on the “production” side of 29 C.F.R. § 541.205(b) provides further guidance on the this so-called dichotomy because “the Appellant is overseeing “types” of work that are administrative: “The administrative the shipment of radioactive waste in a company that is not in operations of the business include the work performed by so- No. 02-1401 Schaefer v. Indiana Mich. Power Co. 11 12 Schaefer v. Indiana Mich. Power Co. No. 02-1401
called white-collar employees engaged in ‘servicing’ a 3. Discretion and Independent Judgment business as, for example, advising the management, planning, negotiating, representing the company, purchasing, promoting Even if AEP could meet its burden in proving that sales, and business research and control.” We cannot Schaefer’s primary duty consists of the “performance of conclude, without more from the employer, that shipping office or nonmanual work directly related to management radioactive materials is in the same category as “advising the policies or general business operations of his employer or his management, planning, negotiating, representing the employer’s customers,” AEP must also prove that Schaefer company, purchasing, promoting sales, and business research customarily and regularly exercised discretion and and control.” The fact that some shipments are unique or independent judgment in the performance of his primary duty. challenging does not convert them into “servicing the 29 C.F.R. §§ 541.2(e)(2), 541.214(a); Douglas v. Argo-Tech business” or make them “directly related to management Corporation, 113 F.3d 67, 72 (6th Cir. 1997). AEP has policies or general business operations.” An inquiry into argued that the “short test” requires only occasional exercises whether the work is of a routine nature is relevant for of discretion and independent judgment rather than determining whether the administrative work is of “customary and regular” exercises. Yet Douglas, in which we “substantial importance” to the employer – not whether the articulated the “customarily and regularly” requirement, is work is actually of an administrative nature. binding on this panel. See Moltan Co. v. Eagle-Picher Industries, Inc., 55 F.3d 1171, 1176 (6th Cir. 1995) (“We Where Schaefer is asked to do benchmarking or make cannot overturn the prior published decision of another panel recommendations regarding how AEP should deal with an and are therefore bound by these previous decisions.”). In unusual shipment, those aspects of the task might qualify but any event, if we were to accept AEP’s contention, then any they do not suffice to change the nature of the actual shipping minimal amount of discretion would satisfy this prong and work and are too infrequent by either party’s account to form nonexempt employees given as examples in the regulations, the basis for finding that Schaefer’s “primary job duty such as bank tellers and book keepers, would potentially be consists of . . . work directly related to management policies swept into the exemption upon performance of an occasional or general business operations.” Similarly, some of discretionary task. Schaefer’s other tasks – for example, writing or updating procedures and preparing an annual scaling factor report – There are genuine issues of material fact regarding the appear to meet the “directly related” requirement, but they are extent to which Schaefer actually exercises discretion and not part of Schaefer’s primary job duty. See supra. Because independent judgment. According to 29 C.F.R. § 541.207(a): Schaefer’s primary job duty is not “directly related,” we need “In general, the exercise of discretion and independent not address whether it is of substantial importance to AEP. judgment involves the comparison and the evaluation of possible courses of conduct and acting or making a decision Thus, genuine issues of material fact exist as to whether after the various possibilities have been considered.” The Schaefer’s primary duty is “directly related to management regulations also distinguish the exercise of discretion and policies or general business operations of the employer or the independent judgment from use of skill or application of employer’s customers.” knowledge: Perhaps the most frequent cause of misapplication of the term “discretion and independent judgment” is the failure No. 02-1401 Schaefer v. Indiana Mich. Power Co. 13 14 Schaefer v. Indiana Mich. Power Co. No. 02-1401
to distinguish it from the use of skill in various respects. whether Schaefer, constrained by regulations, actually An employee who merely applies his knowledge in exercises discretion and independent judgment. See Ale, 269 following prescribed procedures or determining which F.3d at 687. procedure to follow, or who determines whether specified standards are met or whether an object falls into AEP also argues that there are gaps in the regulations that one or another of a number of definite grades, classes, or Schaefer must “bridge” using his discretion and independent other categories, with or without the use of testing or judgment. AEP offers several examples of “decisions” or measuring devices, is not exercising discretion and “judgments” made by Schaefer when applying the independent judgment within the meaning of § 541.2. regulations, yet each only entails the application of skill or This is true even if there is some leeway in reaching a knowledge rather than the exercise of discretion or conclusion, as when an acceptable standard includes a independent judgment. It is not enough to merely latch on to range or a tolerance above or below a specific standard. words like “decision,” “recommendation,” “judgment,” or “determine” in the procedures and in Schaefer’s deposition 29 C.F.R. §541.207(c)(2). testimony. Cf. Ale, 269 F.3d at 691 (“The words ‘in charge’ are not a magical incantation that render an employee a bona Schaefer contends that his shipping-related tasks do not fide executive regardless of his actual duties.”). require the exercise of discretion or independent judgment within the meaning of the regulations. Specifically, Schaefer Indeed, the term “exercise of discretion and independent argues that many of his tasks are so heavily regulated by DOT judgment” as it appears in the regulations has a specific regulations, Nuclear Regulatory Commission regulations, meaning which excludes “the use of skill” and the application state regulations, and company procedures, that his primary of “knowledge in following prescribed procedures or duty requires little or no exercise of discretion or independent determining which procedure to follow, or . . . determin[ing] judgment. The district court rejected this argument on the whether specified standards are met or whether an object falls ground that “it could apply to almost anyone in the nuclear into one or another of a number of definite grades, classes, or power industry.” Schaefer v. Ind. Mich. Power Co., 197 other categories.” Many of AEP’s examples either are of F.Supp.2d 935, 948 (W.D. Mich. 2002). We disagree with simple decisions that do not require the exercise of discretion the district court’s analysis. Each person in the industry, within this definition or involve procedures that provide more including Schaefer, must be individually examined in order to guidance than AEP implies. For example, a material either determine whether he or she actually exercises discretion and does or does not have a specific activity level of less than 70 independent judgment. The fact that the industry is heavily Bq/gram (0.002 :Ci/gram) for purposes of determining what regulated may indeed mean that a facility like Cook may shipping procedures will govern. Likewise, blocking and employ fewer individuals who actually exercise discretion. bracing a load is an exercise of skill rather than discretion.2 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 2 Vaughn v. Watkins M otor Lines, Inc., 291 F.3d 9 00 (6th Cir. 2002), kinds of decision made by those who write the various is inapp osite because it involves the M otor Carriers Act (“MC A”) regulations. The very purpose of such detailed regulations exemption from the FLSA. The MCA allows the Secretary of and procedures is to create conformity which has the practical Transportation to regulate the hours of loaders. In Vaughn, the Court found that blocking freight and loading it high and tight met the MCA effect of minimizing discretion. We must, therefore, examine “judgment and d iscretion” req uirement. Id. at 904 . “Judgment and No. 02-1401 Schaefer v. Indiana Mich. Power Co. 15 16 Schaefer v. Indiana Mich. Power Co. No. 02-1401
AEP additionally argues that there are times when a package its burden of establishing that Schaefer “customarily and could be classified in more than one shipping category under regularly” exercises discretion and independent judgment. the regulations. Long, however, testified that Cook had a Specifically, some benchmarking and the completion of some preferred method of selecting the least restrictive of the condition reports are probably also part of Schaefer’s classification, and AEP has presented no evidence that primary job duty. There is insufficient evidence of record, Schaefer exercised his discretion and diverged from the however, to determine how often he performed them as part preferred method. of his primary job duty or how often they required him to exercise discretion or independent judgment. Schaefer spends Nor is the mere fact that Schaefer has extensive knowledge less than one percent of his time on benchmaking, which of the regulations sufficient to turn their application into involves calling various facilities and talking to an employee exercises discretion and independent judgment. 29 C.F.R. with a near corresponding position to his own about how that § 541.207(c)(3) specifically states that “[o]ften, after facility handles a particular issue. Schaefer then narrows the continued reference to written standards, or through options based on what is feasible at Cook, presenting these experience, the employee acquires sufficient knowledge so options to his supervisor, sometimes with a recommendation that reference to written standards is unnecessary. The about the option he prefers. Of the one percent of his time substitution of the employee’s memory for the manual of that Schaefer spends on benchmarking, only a portion of this standards does not convert the character of the work time relates to his primary duty, such as when he performs performed to work requiring the exercise of discretion and benchmarking to ascertain how to ship an unusual piece of independent judgment.” Rather, Schaefer “merely applies his waste – for example, a large block of concrete. Other times, knowledge in following proscribed procedures or determining the benchmarking relates to secondary duties – for example, which procedures to follow” and “determines whether justifying a current practice or researching a specific issue specified standards are met.” 29 C.F.R. § 541.207(c)(1). such as when he was asked to look into different ways companies estimated the amount of tritium found in waste AEP has not demonstrated that these shipping tasks require because AEP was concerned that they were over-estimating Schaefer to exercise discretion and independent judgment for the amount. The record does not reveal what amount of the purposes of summary judgment. We therefore make no total one percent of time Schaefer spent on benchmarking determination whether decisions made related to these types relates to his primary duty. of tasks would be “with respect to matters of significance.” 29 C.F.R. § 541.207(a). Likewise, AEP has not established that Schaefer exercises discretion with sufficient frequency while completing To the extent that AEP does point to some tasks that condition reports as part of his primary duty. Schaefer spends undisputedly require the exercise of discretion, AEP has ten to twenty percent of his time on condition reports, failed to establish the extent to which Schaefer completes “depending on the ebb and flow of them.” J.A. 95. these tasks as part of his primary duty and thus fails to meet 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 discretion” under the regulations for the MCA does not, however, appear adverse to quality; a problem.” J.A. 122. These problems to have the specific and specialized meaning of “discretion and “[m]ay be small; may be large.” Id. All employees – exempt independent judgment” under the administrative exem ption – particularly the exc lusion o f “application o f skill.” and nonexempt – participate in this program. J.A. 427. No. 02-1401 Schaefer v. Indiana Mich. Power Co. 17 18 Schaefer v. Indiana Mich. Power Co. No. 02-1401
Schaefer testified that condition reports have parts: “condition persist and it must be left to a trier of fact to weigh the identification, condition evaluation, the proposed actions and credibility of Schaefer’s characterization of his day-to-day actual actions that have been performed.” J.A. 241. Schaefer duties with that of AEP. Accordingly, we REVERSE the admits that some analysis is required when he is assigned the decision of the district court granting summary judgment to “condition evaluation” section. Id. He testified that he AEP and REMAND for further proceedings. 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 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. 29 C.F.R. § 541.214(a). AEP has not met its burden of demonstrating that the undisputed facts show that Schaefer customarily and regularly exercises discretion and independent judgment. III. CONCLUSION 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 No. 02-1401 Schaefer v. Indiana Mich. Power Co. 19 20 Schaefer v. Indiana Mich. Power Co. No. 02-1401
______________________ Many skilled people, like electricians, nurses, and other skilled professionals and tradesmen, make all kinds of CONCURRENCE 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 SUHRHEINRICH, Circuit Judge, concurring. I concur in makes this distinction. See Ale, 269 F.3d at 685 (stating that Judge Cole’s analysis. I write separately simply to indicate “section 541.207(c) distinguishes the exercise of discretion my belief that we can decide this issue as a matter of law in and independent judgement from the use of skill in applying favor of Plaintiff-Appellant Schaefer. I would therefore grant techniques, procedures, or specific standards”). Plaintiff’s motion for summary judgment and deny AEP’s. Perhaps the most frequent cause of misapplication of the The decision of whether an employee is exempt from the term “discretion and independent judgement” is the FLSA’s overtime compensation provisions under 29 U.S.C. failure to distinguish it from the use of skill in various § 213(a)(1) is primarily a fact question. Lott v. Howard respects. An employee who merely applies his Wilson Chrysler-Plymouth, Inc., 203 F.3d 326, 330 (5th Cir. knowledge in the following prescribed procedures or 2000); see also Ale v. Tennessee Valley Auth., 269 F.3d 680, determining which procedures follow, or who determines 688-89, 691 (6th Cir. 2002) (stating that the DOL regulations whether specified standards are met . . . is not exercising indicate that courts must look to specific fact in determining discretion and independent judgement within the whether an employee is exempted for overtime provisions, meaning of § 514.2. This is true even if there is some citing 29 C.F.R. § 541.103, 207(b)). However, the ultimate leeway in reaching a conclusion, as when an acceptable decision of whether the employee is exempt from the standard includes a range or tolerance above or below a overtime compensation provision, § 207(a)(1), is a question specific standard. of law. Ale, 269 F.3d at 691; Lott, 203 F.3d at 331. 29 C.F.R. § 541.207(c)(1) (2003). Schaefer’s own testimony In my view, AEP has, at a minimum, failed to create a reflects that the decisions he makes are applications of his genuine issue of fact on the question of whether Schaefer’s skill or knowledge as an environmental specialist in following primary duty “includes work requiring exercise of discretion proscribed procedures or determining which procedures to and independent judgment.” 29 C.F.R. § 541.1(e)(2); 29 follow. See 29 C.F.R. § 541.207(c)(1). The district court did C.F.R. § 541.214(a). As the majority points out in its not consider this subsection (c)(1) in its analysis. analysis, AEP failed to demonstrate (as part of its burden in response to Schaefer’s motion for summary judgment) that Furthermore, as the majority holds, of those tasks that the “decisions” and “judgments” made by Schaefer when indisputedly require Schaefer to exercise discretion, “AEP has applying DOT regulations, require use of his discretion or failed to establish the extent to which Schaefer completes judgment distinct from the application of skill or knowledge. these tasks as part of his primary duty.” Maj. Op., ante, at That is, AEP’s examples of “judgments” made by Schaefer 15. Nor did AEP establish that Schaefer exercises discretion when applying the regulations entail only the application of with sufficient frequency while completing condition reports his skill or knowledge. 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. No. 02-1401 Schaefer v. Indiana Mich. Power Co. 21 22 Schaefer v. Indiana Mich. Power Co. No. 02-1401
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, DISSENT 392 (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, ROGERS, Circuit Judge, dissenting. Essentially for the 196-97 (1974) (application of an exception under the FLSA reasons given in Judge Quist's careful opinion below, 197 is a matter of affirmative defense, and the employer has the F.Supp.2d 935, I would affirm the judgment of the district burden of proof), summary judgment for Schaefer is court. appropriate. I would therefore remand to the district court with instructions to enter summary judgment in favor of Schaefer.