Employment-Eighth Circuit Holds That, Of The Three Plaintiffs, Two Fail To Meet the Executive Emption From FLSA Overtime Requirements, While One Meets This Exemption And Need Not Be Paid Overtime Under The FLSA

In Madden v. Lumber One Home Center, Inc., No. 13-2214 (8th Cir. 2014), three former employees of Lumber One Home Center, Inc. (“Lumber One”), a lumberyard in Mayflower, Arkansas, filed suit against the company. The employees claimed Lumber One incorrectly classified them as executive employees who were exempt from overtime pay regulations under the Fair Labor Standards Act (the “FLSA”). In the district court, the jury found that all three plaintiff-employees worked in an executive capacity and were therefore not entitled to recover overtime wages. Following trial, the plaintiffs moved for judgment as a matter of law, which the district court granted. After overturning the jury verdict, the district court awarded the plaintiffs overtime pay and attorneys’ fees. Lumber One appeals.

In analyzing the case, the Eighth Circuit Court of Appeals (the “Court”) said that the employer has the burden to prove that its employee is an executive and therefore exempt from the FLSA’s overtime pay requirements. The Court determines whether an employee meets the executive exemption by applying Department of Labor (“DOL”) regulations, which state in pertinent part:

(a) The term `employee employed in a bona fide executive capacity’ in section 13(a)(1) of the [FLSA] shall mean any employee:
(1) Compensated on a salary basis at a rate of not less than $455 per week… exclusive of board, lodging or other facilities;
(2) Whose primary duty is management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof;
(3) Who customarily and regularly directs the work of two or more other employees; and (4) Who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight.
29 C.F.R. § 541.100.

The Court then said that issue in this case is whether the plaintiffs meet element (4). The district court had found that Lumber One presented no evidence that the plaintiffs had the authority to make personnel decisions or that the company gave their hiring recommendations particular weight. Examining the evidence, the Court concluded that Lumber One failed to present any evidence which shows that two of the plaintiffs-Madden and O’Bar- met the element (4). However, the Court concluded that Lumber One did prove that the third plaintiff-Wortman- met element (4) and thus was eligible for the executive exemption. Lumber One did present sufficient evidence to allow a jury to conclude that Wortman provided a recommendation for at least one employee and that Lumber One relied on that recommendation when deciding to hire the applicant. Thus the Court upheld the district court’s judgment as to Madden and O’Bar, while it reversed the judgment as to Wortmen.