Court Opinion

ID: 6495383
Source: CourtListenerOpinion
Date Created: 2022-06-27 16:00:38.97242+00
Date Added: 2024-06-11T08:46:22.414739
License: Public Domain

USCA11 Case: 19-12277    Date Filed: 06/27/2022   Page: 1 of 24

                                                   [PUBLISH]

                          In the

         United States Court of Appeals
               For the Eleventh Circuit

                 ____________________

                        No. 19-12277
                 ____________________

PHILIP FOWLER
JEFFREY SWANS,
                                          Plaintiffs-Appellants,
versus
OSP PREVENTION GROUP, INC.
WILLIAM E MABRY II,

                                        Defendants-Appellees.
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2                       Opinion of the Court                19-12277

                      ____________________

             Appeal from the United States District Court
                for the Northern District of Georgia
                D.C. Docket No. 1:17-cv-03911-MHC
                      ____________________

Before ROSENBAUM, LAGOA, and ED CARNES, Circuit Judges.
ED CARNES, Circuit Judge:

       Philip Fowler and Jeffrey Swans worked as property damage
investigators for OSP Prevention Group. It contracts with broad-
band service providers to investigate damage to the providers’ in-
frastructure and then tries to collect money for them from the peo-
ple who caused the damage. After their employment with OSP
ended, Fowler and Swans brought Fair Labor Standards Act
(“FLSA”) claims against the company and its owner (collectively
“OSP”) for unpaid overtime wages.
        The district court granted summary judgment in OSP’s fa-
vor after concluding that Fowler and Swans fit within an FLSA ex-
emption covering “administrative” employees. They both contend
that they weren’t administrative employees but instead were “pro-
duction” employees who performed the core service that OSP sold
to its clients: investigating damage to property.
        I.       The Statutory and Regulatory Background
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19-12277                    Opinion of the Court                                 3

       The FLSA generally requires employers to pay overtime to
covered employees who work more than 40 hours a week, 29
U.S.C. § 207(a), but it exempts certain categories of employees
from that requirement, see id. § 213. See also Encino Motorcars,
LLC v. Navarro, 138 S. Ct. 1134, 1138 (2018). This “administrative
exemption” applies to workers who are “employed in a bona fide
executive, administrative, or professional capacity.” 29 U.S.C. §
213(a)(1). The employer has the burden of showing that the ex-
emption applies. See Corning Glass Works v. Brennan, 417 U.S.
188, 196–97 (1974) (stating that generally “the application of an ex-
emption under the Fair Labor Standards Act is a matter of affirma-
tive defense on which the employer has the burden of proof”); Diaz
v. Jaguar Rest. Grp., LLC, 627 F.3d 1212, 1214–15 (11th Cir. 2010)
(describing the administrative exemption as an affirmative defense
to an FLSA claim); see also Novick v. Shipcom Wireless, Inc., 946
F.3d 735, 738 (5th Cir. 2020) (“In a FLSA suit for unpaid overtime,
the defendant employer bears the burden of proof to establish that
an employee falls under an exemption.”). FLSA exemptions must
be given a “fair reading” and not a “narrow” one. Encino Motor-
cars, 138 S. Ct. at 1142. 1

1 In its order granting summary judgment to OSP, the district court referred
to the old rule that FLSA exemptions must be “narrowly construed,” and OSP
repeated the old rule in its brief to this Court. Counsel for Fowler and Swans
correctly pointed out in their reply brief that regrettably (for their clients) the
Supreme Court has held that the old “narrow reading” standard no longer ap-
plies. Encino Motorcars decision. See 138 S. Ct. at 1142.
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4                        Opinion of the Court                    19-12277

       The requirements for establishing that a person is an “ad-
ministrative employee” are set out in a Department of Labor Wage
and Hour Division regulation. See 29 C.F.R. § 541.200. Because
the regulation is unambiguous, we must give it the meaning its
terms indicate. See Kisor v. Wilkie, 139 S. Ct. 2400, 2415 (2019)
(explaining that if an agency’s regulation is unambiguous, it “just
means what it means—and the court must give it effect, as the
court would any law”); see also Schaefer-LaRose v. Eli Lilly & Co.,
679 F.3d 560, 572 (7th Cir. 2012) (“Under the statute’s express del-
egation of rule-making authority, the Secretary has issued, after no-
tice-and-comment procedures, detailed regulations that define
each of the exemptions in § 213(a)(1).”); Clements v. Serco, Inc.,
530 F.3d 1224, 1227 (10th Cir. 2008) (“The Department of Labor
regulations are entitled to judicial deference and are the primary
source of guidance for determining the scope of exemptions to the
FLSA.”) (quotation marks omitted).
       According to the regulation, for the administrative exemp-
tion to apply an employer must show that an employee’s “primary
duty” was “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” that it “include[d] the
exercise of discretion and independent judgment with respect to

We do appreciate the candor and adherence to high standards of professional
responsibility displayed by their counsel, Mitchell D. Benjamin and Matthew
W. Herrington.
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19-12277                  Opinion of the Court                               5

matters of significance.” 29 C.F.R. § 541.200(a)(2)–(3) (emphasis
added). The conjunctive means that unless both of those require-
ments are met, the exemption does not apply. See McKeen-Chap-
lin v. Provident Sav. Bank, FSB, 862 F.3d 847, 849 n.1 (9th Cir. 2017)
(noting that the “test to qualify for the administrative exemption
under FLSA is conjunctive, not disjunctive,” so employers must
“satisfy each of” its requirements); cf. Kisor, 139 S. Ct. at 2415 (not-
ing that courts must give effect to unambiguous regulations).
       It is undisputed that Fowler and Swans’ work was “non-
manual” and that their “primary duty” was conducting property
damage investigations for OSP. The question, then, is whether
their investigative work was “directly related to” OSP’s “manage-
ment or general business operations” and, if so, whether Fowler
and Swans “exercise[d] . . . discretion and independent judgment
with respect to matters of significance” when they did that work.
29 C.F.R. § 541.200(a)(2)–(3). 2
                                II.     Facts
     OSP contracts with broadband service providers to provide
them with services related to damage that occurs to their property.
The property the contract covers, if there is damage, is the

2The regulation also covers a primary duty that is directly related to the man-
agement or general business operations of an employer’s customers. See 29
C.F.R. § 541.200(a)(2). But OSP hasn’t argued that Fowler and Swans’ duties
had anything to do with the management or general business operations of its
customers, so we don’t need to address that part of the regulation.
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6                      Opinion of the Court                19-12277

providers’ infrastructure, including fiber optic cable, aerial wires,
and above ground “housing” where wires or cables are bundled
and enclosed. To provide its services, OSP divides its operations
into three separate departments: damage investigation, subroga-
tion, and recovery. First, its investigators conduct investigations,
calculate damages, and determine who caused the damage. Then
the subrogation department creates and sends to the liable party a
“subrogation package,” which includes an invoice for the damage.
After that, the recovery department attempts to obtain a monetary
settlement to compensate the broadband service provider cus-
tomer for the damage.
       When Fowler and Swans worked for OSP as property dam-
age investigators in Georgia, Comcast was OSP’s only client.
Fowler and Swans’ primary duty was to investigate damage to
Comcast’s infrastructure, determine who was liable for it, and cal-
culate the cost of repairs. They did not directly participate in the
subrogation or recovery parts of OSP’s business, and they did not
settle claims. OSP billed Comcast by the hour for Fowler and
Swans’ work. OSP classified the two of them as administrative em-
ployees under the FLSA, and as a result, did not pay them for hours
they worked beyond a 40-hour work week.
       According to OSP’s Director of Investigations, there are
“standard operating procedures that all [damage investigators] are
required to follow when conducting investigations, and there are
certain steps [they] have to follow.” When conducting their inves-
tigations, Fowler and Swans followed the procedures and steps
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19-12277                 Opinion of the Court                             7

outlined in two documents: the “Damage Investigator’s Responsi-
bilities” and the “Georgia [Damage Investigator] Employee Man-
ual.” 3
       The two of them were free to choose the order in which
they completed those procedures and steps, but whatever order
they chose they had to gather the necessary information about the
damage to Comcast’s property — the “who, what, where, and
when” facts. And whatever order they chose, in virtually every in-
vestigation OSP required its investigators to complete all of the
steps. That was true even when the damage came from a rodent
with a bushy tail (aka a squirrel) chewing through wires. As the
Director of Investigations explained, even when that happens:
       [Y]ou still have to do your full investigation, your in-
       terviews, the whole nine yards. You still have to fol-
       low the same format. So once you do that and you
       come to your conclusion, you write your conclusion
       and your recommendation. So it goes to your man-
       ager. Your manager will review it and determine
       whether or not, you know, the case is not going to be
       pursued. So you still have to follow — it doesn’t mat-
       ter what the situation is. You still have to follow all of
       the steps for investigation.

3 Fowler helped OSP develop the manual, but that was not his primary duty;
it is undisputed that his primary duty was conducting damage investigations.
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8                       Opinion of the Court                 19-12277

       Although hungry squirrels, thieves, vandals, and car acci-
dents, occasionally caused property damage, sixty percent of the
time the cause was excavation, which most of us would call dig-
ging. That’s why, as part of their classroom and field-based damage
investigation training, Fowler and Swans learned to apply Georgia
“dig laws” to identify who was liable for excavation damage to an-
other’s property.
       It was, however, rarely unclear who violated which dig laws
and was therefore responsible for the damage. As OSP’s Director
of Investigations testified, a “thorough investigation . . . can easily
determine who’s at fault and what laws they violated.” He ex-
plained that most damage investigations were “simple”: investiga-
tors go out, take pictures, and conduct interviews. As he said, “it’s
not homicide or robbery.” The “biggest problem” was “just track-
ing [down] the people to interview.”
       In addition to conducting general investigations and apply-
ing state dig laws, Fowler and Swans performed onsite investiga-
tions and compiled their findings into reports that were eventually
submitted to OSP’s subrogation department. OSP’s Director of In-
vestigations described its overall investigation process this way:
       Once you do your onsite investigation, basically it’s
       simple. It’s the who, what, where, and when, you
       know, that’s what you determine. And once you do
       your investigation, you go out to the damage scene,
       you collect all your information, you pull the dig
       ticket, and you pull pre-locate photos that the locate
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19-12277                  Opinion of the Court                               9

       company puts down.[ 4] You get their post-locate pho-
       tos. That’s all part of your investigation. Once you
       collect all this data, you type and you write a report
       based off your independent investigation who you be-
       lieve is at fault. Once you put all that information in,
       you take your documents, you put it in your case
       folder, and once you feel that you’ve completed your
       investigation, you send it to your manager for review.
       Your manager will review it and make sure all the
       documents are there, the case makes sense, and you
       pretty much determine who is at fault and they’ll sign
       off on it, and it goes over to the next department.
The next department to be involved was subrogation (or “invoic-
ing”), followed by recovery. As we have mentioned, Fowler and
Swans did not do subrogation or recovery work, only investiga-
tions.
        Fowler and Swans did analyze the facts and evidence they
collected during their onsite investigations to determine whether a
liable party could be identified. If a liable party couldn’t be identi-
fied, they could request that a claim be abandoned. But for all prac-
tical purposes the liability determination was akin to plugging data
into a formula. OSP’s Area Manager and Supervisor of Damage
Investigators in Georgia testified that if a thousand different

4A “locate company” is a utility location company that visits sites and “put[s]
down the locate marks” for utilities before any digging is done, creating a
“ticket” for the digging.
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10                       Opinion of the Court                    19-12277

investigators each investigated the same damage, they should all
reach the same conclusions and have roughly the same measure-
ments, 5 even though they might arrive at their answers by slightly
different methods.
       Once they determined the liable party, OSP’s investigators
used a cost sheet furnished by Comcast to calculate the monetary
value of the damages. Investigators did not have discretion to de-
termine the cost of Comcast’s infrastructure repairs. Instead, a
Comcast technician would tell the investigators how much mate-
rial was used in a repair and the type of material used, and the in-
vestigators would enter that information into a database, which
would tabulate the cost of the repair materials. Investigators had
no authority to challenge the method the technicians used to make
the repairs or the amount of time the technicians reported that they
had spent on their work. They took what they were told and
plugged it in.
       After that, OSP’s investigators wrote reports summarizing
their investigative findings, liability determinations, and damage
calculations. Managers reviewed those reports and then sent them
to OSP’s subrogation department so that the responsible party
could be invoiced. OSP did not send its investigators’ reports to

5 OSP’s investigators took measurements during their onsite investigations,
including using a measuring wheel to calculate damaged sections of cable.
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19-12277                   Opinion of the Court                              11

Comcast. Investigators were not involved in invoicing or settling
claims.
       OSP classified the following investigative duties as adminis-
tratively exempt work: “reviewing permits and applicable dig laws,
interviewing witnesses, conducting site inspections, and making
general requests for information regarding the damage incident.”
                          III. Procedural History
       Fowler and Swans sued OSP for violating the FLSA by not
paying them overtime wages, and they sought to recover those
wages, liquidated damages or prejudgment interest, attorney’s
fees, and costs. OSP moved for summary judgment, asserting the
affirmative defense that, as salaried investigators, Fowler and
Swans were FLSA exempt administrative employees. Fowler and
Swans moved for partial summary judgment, asking the court to
rule that: (1) they were not exempt administrative employees; (2)
they were entitled to overtime pay under the FLSA calculated at
one-and-one-half times their regular hourly rates; and (3) OSP
could not prove a “good faith” defense to the FLSA violation. 6

6 Fowler and Swans argued in their motion for partial summary judgment that

OSP had produced no evidence to establish a good faith defense to liquidated
damages, see 29 U.S.C. § 260, and that it could not establish that defense as a
matter of law. In OSP’s response to that motion, it argued that good faith
involves a jury question involving credibility determinations about a subjec-
tive state of mind and that it could not be decided as a matter of law. Neither
side has brought up to us any issue involving good faith, so we will not address
the subject.
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12                     Opinion of the Court                19-12277

Their primary contention was that OSP sold damage investigation
services, and as the workers who performed those investigations,
they were production employees not administrative ones.
       The district court applied § 541.200(a), the regulation that
governs the administrative exemption. The court analyzed Fowler
and Swans’ primary job duties as they related to the management
of OSP’s business, and it considered their exercise of discretion and
independent judgment. Concluding that Fowler and Swans were
administrative employees, the court granted summary judgment
to OSP and denied Fowler and Swans’ cross-motion for it. Because
it determined that the administrative exemption applied, the court
did not consider whether the alleged FLSA violation was willful, or
the rate of any overtime compensation Fowler and Swans would
have been entitled to receive. It didn’t get to damages.
                         IV.    Discussion
       We review de novo the grant of summary judgment. Huff
v. Dekalb Cnty., 516 F.3d 1273, 1277 (11th Cir. 2008). To deter-
mine whether OSP has established as a matter of law that Fowler
and Swans’ work fit within the administrative exemption, we con-
sider their “primary duty,” which is “the principal, main, major or
most important duty that the employee performs.” 29 C.F.R. §
541.700(a). It is undisputed that Fowler and Swans’ primary duty
was conducting factfinding investigations of damage to Comcast’s
property. Those investigations, along with subrogation and recov-
ery, are the service that OSP sells, the product it produces.
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19-12277               Opinion of the Court                        13

        As we have mentioned, to establish that the administrative
exemption applies to Fowler and Swans, in addition to certain sal-
ary minimums that everyone agrees are satisfied here, OSP must
show that their “primary duty”: (1) was “work directly related to
[OSP’s] management or general business operations” and (2) “in-
clude[d] the exercise of discretion and independent judgment with
respect to matters of significance.” Id. § 541.200(a). “To meet [the
first] requirement, an employee must perform work directly re-
lated to assisting with the running or servicing of the business, as
distinguished, for example, from working on a manufacturing pro-
duction line or selling a product in a retail or service establish-
ment.” Id. § 541.201(a). Fowler and Swans contend that, as inves-
tigators, they performed “production” work, not administrative
work directly related to running or servicing of OSP’s business.
        A Department of Labor regulation provides a non-exhaus-
tive list of “functional areas” that are representative of administra-
tive work: “tax; finance; accounting; budgeting; auditing; insur-
ance; quality control; purchasing; procurement; advertising; mar-
keting; research; safety and health; personnel management; human
resources; employee benefits; labor relations; public relations, gov-
ernment relations; computer network, internet and database ad-
ministration; legal and regulatory compliance; and similar activi-
ties.” Id. § 541.201(b). Conducting investigations is not on the list.
The jobs that are on the list generally involve duties that call for
discretionary analysis and decision making. By contrast, investiga-
tive duties primarily involve investigation (of course) and
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14                      Opinion of the Court                   19-12277

factfinding, compiling reports, and making calculations and recom-
mendations about liability according to prescribed criteria.
       A related regulation provides examples of categories of
workers who “generally meet the duties requirements for the ad-
ministrative exemption.” Id. § 541.203(a)–(f) (listing categories of
workers and some of the duties they perform). Workers who gen-
erally are administratively exempt employees include: insurance
claims adjusters (so long as they have certain responsibilities, in-
cluding the authority to settle claims), id. § 541.203(a); financial ser-
vices employees (so long as they conduct analysis and do not
simply sell financial products), id. § 541.203(b); team leaders as-
signed to complete major projects, id. § 541.203(c); executive or ad-
ministrative assistants to business owners or senior executives (so
long as they work “without specific instructions or prescribed pro-
cedures” and have delegated authority on matters of significance),
id. § 541.203(d); human resources managers (but not personnel
clerks who just gather information to “screen” job applicants based
on minimum requirements), id. § 541.203(e); and purchasing
agents who have the authority to bind a company on significant
purchases, id. § 541.203(f).
       That same regulation provides examples of categories of
workers who “generally do not meet the duties requirements for
the administrative exemption.” Id. § 541.203(g)–(j). Workers who
generally aren’t administratively exempt include: employees who
do “[o]rdinary inspection work” using “well-established techniques
and procedures” often derived from manuals, id. § 541.203(g);
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19-12277                Opinion of the Court                         15

“examiners or graders” who compare products using established
standards, id. § 541.203(h); comparison shoppers who report com-
petitors’ prices (so long as they are not responsible for evaluating
reports on competitors’ prices), id. § 541.203(i); and “inspectors or
investigators of various types” in the public sector whose work in-
volves using “skills and technical abilities in gathering factual infor-
mation,” applying “known standards or prescribed procedures, de-
termining which procedure to follow, or determining whether pre-
scribed standards or criteria are met,” id. § 541.203(j). The regula-
tion draws a line between administrative employees, who help run
the business by setting standards, and “production” employees,
who help the business run by following the standards that have
been set for them.
       Production employees who perform the core function of the
business are not transformed into administrative employees just
because the work they do is essential to what the company sells —
its “marketplace offerings.” See Bothell v. Phase Metrics, Inc., 299
F.3d 1120, 1127 (9th Cir. 2002) (“The administration/production
distinction . . . distinguishes between work related to the goods
and services which constitute the business’ marketplace offerings
and work which contributes to running the business itself.”) (quo-
tation marks omitted); Desmond v. PNGI Charles Town Gaming,
L.L.C., 564 F.3d 688, 694–95 (4th Cir. 2009) (holding that horse race
track “officials” were not administrative employees and explaining
that “non-manufacturing employees can be considered ‘produc-
tion’ employees in those instances where their job is to generate
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16                     Opinion of the Court                 19-12277

(i.e., ‘produce’) the very product or service that the employer’s
business offers to the public”) (quoting Reich v. John Alden Life Ins.
Co., 126 F.3d 1, 9 (1st Cir. 1997)); Dalheim v. KDFW-TV, 918 F.2d
1220, 1230–31 (5th Cir. 1990) (holding that television news produc-
ers were not administrative employees and explaining that the ex-
emption differentiates “those employees whose primary duty is ad-
ministering the business affairs of the enterprise from those whose
primary duty is producing the commodity or commodities,
whether goods or services, that the enterprise exists to produce and
market”).
       Department of Labor guidance indicates that when a fact-
finding investigator works for a company whose business is to pro-
vide investigative services, that investigator is likely a production
employee and not an administrative one. In an August 2005 Wage
and Hour Division opinion letter, for example, the Division’s Dep-
uty Administrator determined that background investigators who
worked for a private firm that contracted with government agen-
cies for background checks were production employees:
      [T]he activities performed by Investigators employed
      by your client are more related to providing the on-
      going, day-to-day investigative services, rather than
      performing administrative functions directly related
      to managing your client’s business. From the infor-
      mation provided in your letter, it appears that the pri-
      mary duty of the Investigator is diligent and accurate
      fact-finding, according to [agency] guidelines, the re-
      sults of which are turned over to [the agency] who
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19-12277               Opinion of the Court                       17

      then makes a decision as to whether to grant or deny
      security clearances. Such activities, while important,
      do not directly relate to the management or general
      business operations of the employer within the mean-
      ing of the regulations.
U.S. Dep’t of Labor, Wage & Hour Div., Opinion Letter on the
FLSA’s Administrative Exemption (Aug. 19, 2005),
https://www.dol.gov/sites/dol-
gov/files/WHD/legacy/files/2005_08_19_21_FLSA_Investigator
s.pdf; see also U.S. Dep’t of Labor, Wage & Hour Div., Opinion
Letter on the FLSA’s Administrative Exemption, 1997 WL 971811,
at *3 (Sep. 12, 1997) (concluding that investigators who performed
background investigations were “production” employees because
investigations were the product that the business existed to pro-
duce).
       Like the background investigators the opinion letter dis-
cussed, Fowler and Swans performed duties that focused on dili-
gent and accurate factfinding according to guidelines set by their
employer. And duties that are focused on diligent and accurate
factfinding differ substantively from duties related to managing a
company’s business. Duties related to managing a company’s busi-
ness typically involve significant decision-making authority, includ-
ing authority to make policy-level decisions. Compare 29 C.F.R. §
541.203(a) (referring to administratively exempt insurance claims
adjusters’ authority to negotiate settlements and make recommen-
dations about litigation), with Deluca v. Farmers Ins. Exch., 386 F.
Supp. 3d 1235, 1256–57 (N.D. Cal. 2019) (determining that special
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18                           Opinion of the Court                     19-12277

investigators’ “primary duty of conducting factual investigations
that inform the [insurance] [c]laims representatives’ ultimate deter-
mination of whether to pay claims does not qualify as ‘directly re-
lated’ to running [the insurance company’s] business or formulat-
ing or helping to execute policy,” and as a result, the administrative
employee exemption does not apply).
       The reason that insurance claims adjusters, a category of
employees that the district court relied heavily on, are generally
considered administrative employees is that they do have signifi-
cant, policy-infused, decision-making authority, including evaluat-
ing and making recommendations about coverage for claims, ne-
gotiating settlements, and making recommendations about litiga-
tion. See 29 C.F.R. § 541.203(a). 7 There is no evidence that Fowler

7   The regulation relating to insurance claims adjusters provides:
          Insurance claims adjusters generally meet the duties require-
          ments for the administrative exemption, whether they work
          for an insurance company or other type of company, if their
          duties include activities such as interviewing insureds, wit-
          nesses and physicians; inspecting property damage; reviewing
          factual information to prepare damage estimates; evaluating
          and making recommendations regarding coverage of claims;
          determining liability and total value of a claim; negotiating
          settlements; and making recommendations regarding litiga-
          tion.
29 C.F.R. § 541.203(a). While it’s true that Fowler and Swans performed some
of the activities listed in § 541.203(a), they had no authority to negotiate set-
tlements or make recommendations about litigation, which are key
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19-12277                Opinion of the Court                          19

and Swans’ duty to conduct factfinding investigations involved any
authority to make higher-level business decisions, like administra-
tively exempt insurance claims adjusters have. See Deluca, 386 F.
Supp. 3d at 1256–57.
       The Department of Labor has also determined that certain
public sector investigators who focus on factfinding investigations
are not administrative employees. A regulation covering law en-
forcement investigators explains that:
       [I]nvestigators, inspectors, . . . and similar employees,
       regardless of rank or pay level, who perform work
       such as . . . preventing or detecting crimes; conduct-
       ing investigations or inspections for violations of law;
       . . . interviewing witnesses; . . . preparing investigative
       reports; or other similar work . . . do not qualify as
       exempt administrative employees because their pri-
       mary duty is not the performance of work directly re-
       lated to the management or general business opera-
       tions of the employer or the employer’s customers as
       required under § 541.200.
29 C.F.R. § 541.3(b)(1), (3). Like law enforcement investigators,
Fowler and Swans were primarily engaged in factfinding investiga-
tive work. And the Department of Labor’s opinion letters and

components of the authority vested in insurance claims adjusters. Nor did
Fowler and Swans’ duties include any comparable authority.
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20                     Opinion of the Court                19-12277

regulations reflect its position that the administrative exemption
does not apply to investigators with those types of duties.
       Other circuits that have considered whether factfinding in-
vestigators are administrative employees have concluded they are
not. Evaluating investigators with job duties strikingly similar to
the ones Fowler and Swans performed, the Fourth Circuit deter-
mined the administrative exemption did not apply to them. See
Calderon v. GEICO Gen. Ins. Co., 809 F.3d 111, 130 (4th Cir. 2015).
In Calderon, the court concluded that insurance company employ-
ees who investigated fraudulent claims were not administratively
exempt because the “applicable regulations and Labor Department
opinion letters . . . indicate that employees whose primary duty is
to conduct factual investigations do not satisfy the directly related
[to business operations] element, even when the work is of signifi-
cant importance to the employer.” Id. at 125. The court affirmed
the grant of summary judgment in the investigators’ favor, holding
that the administrative exemption did not apply because their pri-
mary duty was to conduct interviews and report their findings,
which was not directly related to the insurance company’s man-
agement or general business operations. Id. at 130.
       Comparing the fraud investigators in Calderon to claims ad-
justers, the Fourth Circuit explained that an adjuster’s primary duty
involved more than just investigation; an adjuster had to “adjust
insurance claims by investigating, assessing, and resolving them.”
Id. at 117. An adjuster had the important responsibilities of “de-
cid[ing] how much, if anything,” the insurance company would
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19-12277               Opinion of the Court                        21

pay on a claim and of “negotiat[ing] any settlements.” Id. By con-
trast, the fraud investigators’ primary duty, on which they spent
“about 90%” of their work time, was to investigate claims that
were referred to them as potentially fraudulent; they initiated in-
vestigations only in “limited circumstances.” Id. The fraud inves-
tigators had to follow company procedures when handling the re-
ferred claims, which required a “thorough investigation,” “[i]den-
tification and interviews of potential witnesses,” use of “industry
recognized databases,” “[p]reservation of documents and other ev-
idence,” and a summary of the investigation that included their
findings about “the suspected insurance fraud and the basis for their
findings.” Id.
        Those company-mandated procedural steps in Calderon of-
ten required the fraud investigators to interview witnesses, includ-
ing preserving their testimony and evaluating their credibility; tak-
ing photographs; and reviewing property damage. Id. While those
procedural steps “govern[ed]” investigations, the fraud investiga-
tors still had to “use their judgment to determine exactly how to
conduct their investigations and what inferences to draw from the
evidence they uncover[ed].” Id. at 117–18. And most fraud inves-
tigators had to submit their investigation reports to a supervisor for
input and review. Id. at 118. They had “no supervisory responsi-
bility” and didn’t “develop, review, evaluate, or recommend” busi-
ness “polices or strategies.” Id. at 124 (quotation marks omitted).
      As a result, the Fourth Circuit concluded in Calderon that
even though the fraud investigators’ work was “important” to the
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22                     Opinion of the Court                 19-12277

company, they were “in no way part of the management” and did
not “run or service the general business operations” of the com-
pany. Id. (cleaned up). Instead, “by assisting” adjusters in pro-
cessing claims, the fraud investigators’ “duties simply consist[ed] of
the day-to-day carrying out of [the company’s] affairs to the pub-
lic.” Id. (cleaned up).
        Like the Calderon fraud investigators, Fowler and Swans in-
terviewed witnesses, made credibility determinations, preserved
evidence, took photographs, and reviewed property damage.
They followed OSP’s prescribed procedures while using their judg-
ment to decide the order of the steps in their investigations and
what inferences to draw from the data they gathered. They wrote
reports and submitted them to their supervisors. They did not set-
tle claims or develop business strategies. And like the fraud inves-
tigators, Fowler and Swans performed duties that were important
but were neither managerial nor directly related to running OSP’s
business.
       They were factfinders whose work enabled OSP’s subroga-
tion and recovery departments to collect money from those who
damaged property belonging to its client, Comcast. The nature of
the jobs Fowler and Swans did is similar to that of the Calderon
fraud investigators, whose investigations helped insurance adjust-
ers resolve claims but who were not adjusters themselves, and who
had no authority to settle a claim. See 809 F.3d at 129–30.
       There can be no doubt that Fowler and Swans’ work was
essential to the service OSP provides — the company bills by the
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19-12277                Opinion of the Court                        23

hour for its investigators’ time and uses investigative findings as the
basis for collecting money from people who have damaged its cli-
ents’ property. But as essential as their work was, Fowler and
Swans were not part of OSP’s management, and they did not run
or service the general business operations of the company.
       The importance of the work that employees do does not
make them administrative employees. See Desmond, 564 F.3d at
694; Bothell, 299 F.3d at 1128; Reich, 126 F.3d at 11; Dalheim, 918
F.2d at 1231. Fowler and Swans did important work, but the ex-
emption is not for all of those who do important work; it is only
for those who do administrative work. The two of them did im-
portant, non-administrative work.
       Fowler and Swans engaged in OSP’s core function of dam-
age investigations. Given the nature of their employer’s business,
their investigative factfinding duties amounted to production
work. Those duties did not involve “work directly related to
[OSP’s] management or general business operations.” 29 C.F.R. §
541.200(a)(2). We need not address whether their work met the ad-
ditional administrative exemption requirement of “includ[ing] the
exercise of discretion and independent judgment with respect to
matters of significance.” Id. § 541.200(a)(3). Both requirements
must be met for the exemption to apply. See id.
                         V.      Conclusion
      OSP has failed to show that the FLSA’s administrative ex-
emption applies to Fowler and Swans. As a result, we VACATE
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the judgment of the district court and REMAND for further pro-
ceedings consistent with this opinion.
      VACATED AND REMANDED.