Court Opinion

ID: 2971192
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:30:39.674369+00
Date Added: 2024-06-11T15:29:35.344536
License: Public Domain

RECOMMENDED FOR FULL-TEXT PUBLICATION
            Pursuant to Sixth Circuit Rule 206            2    Renfro, et al. v. Ind. Mich. Power Co.       No. 02-2342
   ELECTRONIC CITATION: 2004 FED App. 0161P (6th Cir.)
               File Name: 04a0161p.06                                         _________________
                                                                                   COUNSEL
UNITED STATES COURT OF APPEALS
                                                          ARGUED: Stephen D. Turner, LAW, WEATHERS &
              FOR THE SIXTH CIRCUIT                       RICHARDSON, Grand Rapids, Michigan, for Appellants.
                _________________                         Joseph J. Vogan, VARNUM, RIDDERING, SCHMIDT &
                                                          HOWLETT, Grand Rapids, Michigan, for Appellee.
KURT RENFRO ; WILLIAM            X                        ON BRIEF: Stephen D. Turner, Gregory N. Longworth,
SOUTHWORTH; RICHARD               -                       LAW, WEATHERS & RICHARDSON, Grand Rapids,
                                  -                       Michigan, for Appellants. Joseph J. Vogan, Peter A. Smit,
PETERSON ; JAMES FITCHUK,                                 VARNUM, RIDDERING, SCHMIDT & HOWLETT, Grand
                                  -   No. 02-2342
individually and as Class         -                       Rapids, Michigan, for Appellee.
Representatives on behalf of       >
                                  ,                                           _________________
other persons similarly           -
situated,                         -                                               OPINION
          Plaintiffs-Appellants, -                                            _________________
                                  -
            v.                    -                         COOK, Circuit Judge. Plaintiffs-Appellants Kurt Renfro
                                  -                       and Richard Peterson, on behalf of themselves and other
                                  -                       similarly situated persons, appeal the district court’s grant of
INDIANA MICHIGAN POWER            -                       summary judgment in favor of their employer, Indiana
COMPANY , d/b/a American          -                       Michigan Power Company d/b/a American Electric Power
Electric Power,                   -                       (AEP), and denial of their motion for summary judgment on
           Defendant-Appellee. -                          their claims that AEP failed to pay overtime wages in
                                  -                       violation of the Fair Labor Standards Act of 1938 (FLSA), 29
                                 N                        U.S.C. §§ 201-219 (2000). Because AEP properly treated
       Appeal from the United States District Court       plaintiffs as administratively exempt from the FLSA’s
  for the Western District of Michigan at Grand Rapids.   overtime requirement, we affirm the district court’s judgment.
    No. 99-00877—Wendell A. Miles, District Judge.
                                                                                         I
               Argued: February 4, 2004                     Indiana Michigan Power Company, doing business as AEP,
                                                          operates several power-generating facilities, including the
           Decided and Filed: June 2, 2004                Cook Nuclear Plant in Bridgman, Michigan, where the
                                                          plaintiffs worked as “planners.” According to plaintiffs,
Before: BATCHELDER, GIBBONS, and COOK, Circuit            planners “take job orders that identify work (maintenance or
                  Judges.                                 new construction) and prepare work packages that the plant’s

                           1
No. 02-2342     Renfro, et al. v. Ind. Mich. Power Co.     3    4    Renfro, et al. v. Ind. Mich. Power Co.      No. 02-2342

craft workers use to perform the work in the field.”            placing on AEP the burden of proving that the administrative
(Appellants’ Br. at 6.) In creating work packages, planners     employee exemption applies to the planners, Douglas v.
determine which plant procedures apply to the particular        Argo-Tech Corp., 113 F.3d 67, 70 (6th Cir. 1997). AEP must
repairs and identify any permits necessary to allow the         establish each element of the exemption by a preponderance
repairs.                                                        of the clear and affirmative evidence. Ale v. Tennessee
                                                                Valley Auth., 269 F.3d 680, 691 n.4 (6th Cir. 2001).
   During some workweeks, plaintiffs (the planners) work
more than forty hours, but AEP does not pay them time-and-             B. The Administrative Employee Exemption
a-half for the overtime. Under section 7(a) of the FLSA, non-
exempt employees are entitled to this additional                   To demonstrate that the planners are bona fide
compensation for overtime work. 29 U.S.C. § 207(a)(1).          administrative employees under the applicable Department of
Section 13(a) sets forth an exception from the Act’s overtime   Labor regulations (described as the short test), AEP must
requirement for any salaried employee who works in a bona       demonstrate (1) that it pays the planners at least $250 per
fide administrative or executive capacity. 29 U.S.C.            week on a salary or fee basis; (2) that the planners’ primary
§ 213(a)(1). AEP classified the planners as administrative      duty consists of office or nonmanual work directly related to
employees, making them ineligible under section 13(a) for       AEP’s management policies or general business operations;
overtime compensation. The planners, disagreeing with           and (3) that the planners’ primary duty requires them to
AEP’s classification, filed this suit seeking damages,          exercise discretion and independent judgment. 29 C.F.R.
attorneys’ fees, and an injunction requiring AEP to comply      §§ 541.2(a)(1), 541.2(e)(2); see, e.g., Schaefer v. Ind. Mich.
with the FLSA’s overtime compensation provisions. The           Power Co., 358 F.3d 394, 400 (6th Cir. 2004); Ale, 269 F.3d
district court found that the planners meet the FLSA criteria   at 683–85.
for exempt administrative employees and therefore granted
summary judgment to AEP and denied the planners’ motion                                1. Salary Basis
for summary judgment.
                                                                   An employee is paid on a “salary basis” if the employee
                             II                                 “regularly receives each pay period on a weekly, or less
                                                                frequent basis, a predetermined amount constituting all or part
  This court reviews de novo the district court’s grant of      of his compensation, which amount is not subject to reduction
summary judgment to AEP and denial of summary judgment          because of variations in the quality or quantity of the work
to the planners, Williams v. Mehra, 186 F.3d 685, 689 (6th      performed.” 29 C.F.R. § 541.118(a). Such an employee
Cir. 1999), applying the axiomatic standard from Celotex        “must receive his full salary for any week in which he
Corp. v. Catrett, 477 U.S. 317, 324 (1986), and Anderson v.     performs any work without regard to the number of days or
Liberty Lobby, 477 U.S. 242, 251 (1986).                        hours worked,” subject to certain exceptions. Id.

                    A. Burden of Proof                            Although the planners concede that they receive at least
                                                                $250 per week, they argue that they cannot be exempt even
  In determining whether a FLSA exemption applies to the        though salaried because AEP requires them to account for at
planners, we narrowly construe the exemption against AEP,       least 40 hours of work each week and to make up for partial-
Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960),         day absence either by working extra hours or by taking
No. 02-2342      Renfro, et al. v. Ind. Mich. Power Co.      5    6    Renfro, et al. v. Ind. Mich. Power Co.      No. 02-2342

vacation time or paid time off. An employer may require                          a. Office or Nonmanual Work
exempt salaried employees to make up for time missed from
work due to personal business. It is only when an employer          Although the planners concede that they perform much of
actually deducts from an employee’s paycheck that the             their work at a desk, they claim that they perform so much
employee is ineligible for the exemption. See, e.g., Cowart       manual work through the “field walk-downs” (used to assess
v. Ingalls Shipbuilding, Inc., 213 F.3d 261, 265–66 (5th Cir.     repair projects) that they cannot be considered white-collar
2000) (finding that employees who were required to make up        employees. Performing some manual work does not
personal time off and suffered no salary deductions for the       automatically remove an employee from exempt status so
lost time were paid on a salary basis); Haywood v. North          long as the manual work is “directly and closely related to the
Amer. Van Lines, Inc., 121 F.3d 1066, 1070 (7th Cir. 1997)        work requiring the exercise of discretion and independent
(holding that the regulations prohibit only monetary discipline   judgment . . . .” 29 C.F.R. § 541.203(b). If, however, the
of exempt employees). Because the planners concede that           planners perform “so much manual work (other than office
AEP has not docked their salaries for missed time from work,      work) that [they] cannot be said to be basically ‘white-collar’
their argument in this regard fails.                              employee[s],” then they are not exempt administrative
                                                                  employees. Id.
  The planners also argue that they are not salaried
employees because AEP controls their work schedules and             The evidence, viewed in the light most favorable to the
does not permit them to come and go as they please. These         planners, does not support their contention. The planners
criteria, however, play no part in defining salaried employees.   admitted at their depositions that they performed most of their
See 29 C.F.R. § 541.118(a).                                       work at their desks; they generally described their duties as
                                                                  office-based, rather than manual. Additionally, the field
  Accordingly, the district court correctly determined that       walk-downs—performed as part of the planners’ preparation
AEP demonstrated that the planners were paid on a salary          of work repair packages—are “directly and closely related to
basis.                                                            the [planners’] work requiring the exercise of discretion and
                                                                  independent judgment,” supporting exemption from the
2. Nonmanual Work Directly Related to General Business            FLSA. 29 C.F.R. § 541.203(b).
                   Operations
                                                                    The planners further argue that because certain planners
  AEP must next show that the planners’ primary duty              worked without overtime pay removing ice at the Cook plant
consists of (1) office or nonmanual work, (2) directly related    for a month or two in 1998, the planners cannot be considered
to management policies or general business operations,            nonmanual workers. Exempt employees’ status under the
(3) that is of “substantial importance” to the management or      FLSA does not change merely because they perform some
operation of AEP’s business. 29 C.F.R. §§ 541.2(a)(1),            nonexempt work. See, e.g., Counts v. South Carolina Elec.
541.205(a). The parties do not dispute that the planners’         & Gas Co., 317 F.3d 453 (4th Cir. 2003) (holding that
primary duty involves preparing work repair packages.             because the language and structure of the FLSA call for a
                                                                  “holistic approach” to determining employees’ primary
                                                                  duties, the court need not engage in a “day by day scrutiny”
                                                                  of the tasks of administrative employees). The ice removal
                                                                  project does not concern the planners’ primary duty (“the
No. 02-2342      Renfro, et al. v. Ind. Mich. Power Co.       7    8    Renfro, et al. v. Ind. Mich. Power Co.     No. 02-2342

major part, or over 50 percent, of the employee’s time,” 29        ancillary to AEP’s principal production activity of generating
C.F.R. § 541.103), nor does performing this manual labor           electricity. While not precisely “administrative,” the
preclude the planners from otherwise meeting the exemption.        planners’ duties form the type of “servicing” (“advising the
                                                                   management, planning,” etc.) that the FLSA deems
                                                                   administrative work directly related to AEP’s general
  b. Directly Related to Management Policies or General            business operations. 29 C.F.R. § 541.205(b); see, e.g.,
                   Business Operations                             Cowart, 213 F.3d 261 (finding that employees responsible for
                                                                   planning production work requirements in a shipyard
  AEP must also demonstrate that the planners’ primary duty        performed administrative work).
is “directly related to management policies or general
business operations.” 29 C.F.R. § 541.2(a)(1). According to                    c. Work of Substantial Importance
the regulations, work “directly related to management policies
or general business operations” must involve “the                    The planners claim that their primary duty is not of
administrative operations of a business as distinguished from      “substantial importance to the management or operation of
‘production.’” 29 C.F.R. § 541.205(a). Work concerning the         [AEP’s] business” because their work is standardized and
“administrative operations” of a business includes “work           because it does not involve setting company policy or
performed by so-called white-collar employees engaged in           performing major assignments affecting AEP’s business
‘servicing’ a business, as for example, advising the               operations. 29 C.F.R. § 541.205(a).
management, planning, negotiating, representing the
company, purchasing, promoting sales, and business research          According to the Department of Labor regulations, the
and control.” 29 C.F.R. § 541.205(b). The planners maintain        category of employees whose work is of substantial
that their work is not administrative but rather, “a               importance includes, but is not limited to, those “whose work
maintenance function best categorized as production.”              affects business operations to a substantial degree, even
(Appellants’ Br. at 45.)                                           though their assignments are tasks related to the operation of
                                                                   a particular segment of the business.”             29 C.F.R.
  Under the administrative/production dichotomy analysis,          § 541.205(c). This does not include “routine clerical duties”
the job of “production” employees “is to generate (i.e.            or even operating expensive equipment or activities that, if
‘produce’) the very product or service that the employer’s         improperly performed, would cause loss to an employer.
business offers to the public.” Reich v. John Alden Life Ins.      29 C.F.R. § 541.205(c)(2).
Co., 126 F.3d 1, 9 (1st Cir. 1997). When employees engage
in work that is “ancillary to an employer’s principal                The planners’ primary duty can only be viewed as
production activity,” those employees are administrative.          substantially important to AEP’s operations.           Their
Martin v. Cooper Elec. Supp. Co., 940 F.2d 896, 904 (3d Cir.       work—interpreting and carrying out plant policies, creating
1991). This analysis, however, “is only useful to the extent       plans that permit the continued operation of the equipment
that it is a helpful analogy in the case at hand.” Schaefer, 358   and systems that generate AEP’s main product—affects
F.3d at 402–03. AEP’s principal production activity is             AEP’s general business operations to a substantial degree.
generating electricity, and the product it offers the public is    See, e.g., Haywood, 121 F.3d at 1072 (holding that
electricity; the planners’ primary duty—creating plans for         employee’s work, while not involving the principal service of
maintaining equipment and systems in the nuclear plant—is          the employer, was nevertheless “important to the success of
No. 02-2342      Renfro, et al. v. Ind. Mich. Power Co.       9    10   Renfro, et al. v. Ind. Mich. Power Co.     No. 02-2342

the firm” and therefore exempt). Moreover, the planners            but which, of course, may be less than constant”); see also
themselves testified that their work is crucial to keeping the     Schaefer, 358 F.3d at 403–04; Douglas, 113 F.3d at 72.
Cook plant in compliance with its licensing requirements.
And although their work may involve some routine clerical            We disagree with the planners’ argument that the heavily-
tasks, the planners’ primary duty is not clerical in nature. See   regulated nature of their primary job duty prohibits their
Part II.B.3. infra.                                                exercise of discretion and independent judgment. While
                                                                   “[t]he very purpose of such detailed regulations and
  In sum, the planners have failed to produce evidence             procedures is to create conformity which has the practical
indicating the existence of a genuine issue as to whether their    effect of minimizing discretion,” we nevertheless examine
primary duty consists of nonmanual work that affects AEP           whether the planners, constrained by regulations, actually
business operations to a significant degree and is therefore of    exercise discretion and independent judgment. Schaefer, 358
substantial importance to the operation of AEP’s business.         F.3d at 404.
          3. Discretion and Independent Judgment                     The process of generating repair work packages is neither
                                                                   wholly mechanical nor restricted to “merely appl[ying]
  Finally, AEP must show that the planners’ primary duty           knowledge in following prescribed procedures.” 29 C.F.R.
requires “the exercise of discretion and independent               § 541.207(c)(1). When there is no procedure that can be
judgment.” 29 C.F.R. § 541.2(e)(2). The planners claim that        applied to a particular task, the planners independently
they do not exercise discretion and independent judgment           determine the nature of the repair task and prepare a repair
because AEP’s procedures and other guidelines standardize          plan. In those situations, planners use their own skill,
and narrowly circumscribe their work such that the planners        experience, judgment, and discretion in formulating a repair
make no independent choices when generating repair work            solution. Additionally, the planners exercise independent
packages.                                                          decisionmaking when choosing among various options to
                                                                   remedy a problem—for example, determining whether to
  “Discretion and independent judgment” generally means            replace or repair equipment. The deposition evidence
“the comparison and the evaluation of possible courses of          demonstrates that the planners make such independent
conduct and acting or making a decision after the various          decisions and exercise judgment on a daily basis.
possibilities have been considered.” 29 C.F.R. § 541.207(a).
This process implies “that the person has the authority or            Because the summary judgment evidence shows the
power to make an independent choice, free from immediate           planners’ primary duty of problem-solving requires them to
direction or supervision, and with respect to matters of           exercise discretion and independent judgment customarily
significance.” Id. (This is distinct from “[a]n employee who       and regularly, we conclude that the planners have failed to
merely applies his knowledge in following prescribed               produce evidence indicating a factual dispute with respect to
procedures or determining which procedure to follow.”              whether their primary duty required the exercise of discretion
29 C.F.R. § 541.207(c)(1).) Additionally, the regulations          and independent judgment. See, e.g., Reich, 126 F.3d at 14
require exempt administrative employees to exercise                (finding that despite extensive training in sales techniques,
discretion and independent judgment “customarily and               sales representatives still exercised discretion and
regularly.” 29 C.F.R. § 541.207(g) (stating that the phrase        independent judgment in applying the techniques to particular
signifies “a frequency which must be greater than occasional       clients).
No. 02-2342     Renfro, et al. v. Ind. Mich. Power Co.   11

                            III
  For the foregoing reasons, we affirm the district court’s
judgment.