Opinion ID: 4521334
Heading Depth: 2
Heading Rank: 1

Heading: Hybrid Class and Collective Actions

Text: Because FLSA and [state law] claims usually revolve around the same set of facts, plaintiffs frequently bring both types of claims together in a single action using the procedural mechanisms available under 29 U.S.C. § 216(b) to pursue the FLSA claims as a collective action and under Rule 23 to pursue the [state law] claims as a class action under the district court's supplemental 12 jurisdiction. Shahriar v. Smith & Wollensky Rest. Grp. Inc., 659 F.3d 234, 244 (2d Cir. 2011). In this hybrid class and collective action, plaintiffs claim that they worked overtime, they were legally entitled under state and federal law to overtime pay, and Chipotle denied them such payment. The crux of the dispute is whether plaintiffs were entitled to overtime under the FLSA and state labor laws. The answer to this question turns on whether Chipotle improperly classified plaintiffs as exempt employees under Labor Department guidelines and parallel state law, which in turn will require the district court to decide a number of subsidiary questions, Myers v. Hertz Corp., 624 F.3d 537, 548 (2d Cir. 2010) (internal quotation marks omitted), as discussed below.
Under the FLSA, employers are required to pay employees who work over forty hours per week not less than one and one-half times the regular rate at which [the employees are] employed for those overtime hours. 29 U.S.C. § 207(a)(1). This requirement is subject to certain exemptions based on employee classification. As relevant here, the FLSA exempts from the overtime 13 requirement employee[s] employed in a bona fide executive [or] administrative . . . capacity. 29 U.S.C. § 213(a)(1). Administrative regulations classify employees as executive if (1) they are [c]ompensated on a salary or fee basis, (2) their primary duty is management of the enterprise . . . or of a customarily recognized department or subdivision thereof, (3) they customarily and regularly direct[] the work of two or more other employees, and (4) they ha[ve] the authority to hire or fire other employees or if their suggestions and recommendations on personnel decisions are given particular weight. 29 C.F.R. § 541.100(a). The second element -- whether an employee's primary duty is managerial in nature -- generally requires consideration of activities such as interviewing, selecting, and training of employees; setting and adjusting their rates of pay and hours of work; directing the work of employees; maintaining production or sales records for use in supervision or control; appraising employees' productivity and efficiency for the purpose of recommending promotions or other changes in status; handling employee complaints and grievances; disciplining employees; planning the work; determining the techniques to be used; apportioning the work among the employees; determining the type of materials, supplies, machinery, equipment or tools to be used or merchandise to be bought, stocked and sold; controlling the flow and distribution of 14 materials or merchandise and supplies; providing for the safety and security of the employees or the property; planning and controlling the budget; and monitoring or implementing legal compliance measures. 29 C.F.R. § 541.102. Regulations classify employees as administrative if (1) they are [c]ompensated on a salary basis, (2) their primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers, and (3) their primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. 29 C.F.R. § 541.200(a). The second element -- whether the employee's primary duty is directly related to management -- requires consideration of whether the employee perform[s] work directly related to assisting with the running or servicing of the business, as distinguished . . . from working on a manufacturing production line or selling a product in a retail or service establishment. 29 C.F.R. § 541.201(a). The applicability of both exemptions turns on the primary duty of an employee. See 29. C.F.R. § 541.2 (providing that [t]he exempt or nonexempt status of any particular employee must be determined on the basis of whether the employee's salary and duties meet the requirements of the regulations 15 defining executive and administrative employees). The regulations make clear that these questions should be resolved by examining the employees' actual job characteristics and duties. Myers, 624 F.3d at 548; see also 29 C.F.R. § 541.700(a) (providing that determining an employee's primary duty requires analysis of all the facts in a particular case, looking to the principal, main, major or most important duty that the employee performs). Among other things, courts are to consider the following factors in assessing an employee's primary duty: the relative importance of the exempt duties as compared with other types of duties; the amount of time spent performing exempt work; the employee's relative freedom from direct supervision; and the relationship between the employee's salary and the wages paid to other employees for the kind of nonexempt work performed by the employee. 29 C.F.R. § 541.700(a). Although the amount of time spent performing exempt work is not dispositive, it can be a useful guide. Id. § 541.700(b). Thus, employees who spend more than 50 percent of their time performing exempt work will generally satisfy the primary duty requirement. Id. The exemption question under the FLSA is a mixed question of law and fact. The question of how the employees spent their working time is a question of fact. The question of whether their particular activities excluded them from the overtime benefits of the FLSA is a question of law. Pippins v. 16 KPMG, LLP, 759 F.3d 235, 239 (2d Cir. 2014) (quoting Ramos v. Baldor Specialty Foods, Inc., 687 F.3d 554, 559 (2d Cir. 2012)).
State exemption criteria in the six states implicated in the class plaintiffs' claims largely track the FLSA. 3 Indeed, Chipotle conceded below that state executive/administrative exemption[s] . . . , unless specifically noted, parallel the analysis set forth under the FLSA. Dkt. No. 1100, at 22. There are, however, some minor differences. As Chipotle notes, whereas under federal law the amount of time an employee spends performing an activity is merely a useful guide to determining that employee's primary duty, see 29 C.F.R. § 541.700(b), Colorado and Washington have strict percentage limitations governing how much time an employee can spend on non-exempt activities and still properly be considered an exempt employee, see 7 Colo. Code Regs. § 1103- 1.5(b) (providing that overtime law only applies only if the employee spends a minimum of 50% of the workweek in duties directly related to supervision); Wash. Admin. Code § 296-128-510(5) (providing that overtime law applies only if 3 See N.Y. Comp. Codes R. & Regs. Tit. 12, §§ 146-1.4, 146-1.6; N.Y. Lab. Law § 195 (New York); Mo. Rev. Stat. § 290.527.1 (Missouri); 820 Ill. Comp. Stat. § 105/4a (Illinois); N.C. Gen. Stat. § 95-25.22(a1); 13 N.C. Admin. Code § 12.080 (North Carolina); see also Dejesus v. HF Mgmt. Servs., LLC, 726 F.3d 85, 89 n.5 (2d Cir. 2013). 17 the employee does not devote as much as 40% . . . of his hours worked . . . to activities which are not directly and closely related to the performance of managerial work). Thus, the exemption analysis under state law is largely the same as the analysis under the FLSA, subject to these minor caveats.