Court Opinion

ID: 2792534
Source: CourtListenerOpinion
Date Created: 2015-04-09 20:00:45.812719+00
Date Added: 2024-06-11T11:29:01.519860
License: Public Domain

NOT PRECEDENTIAL

            UNITED STATES COURT OF APPEALS
                 FOR THE THIRD CIRCUIT
                      _____________

                          No. 14-1274
                         _____________

                       ALBERT ITTERLY,
       on behalf of himself and similarly situated employees,
                                         Appellant

                                 v.

            FAMILY DOLLAR STORES, INC.;
    FAMILY DOLLAR STORES OF PENNSYLVANIA, INC.
                  ______________

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR
     THE EASTERN DISTRICT OF PENNSYLVANIA
            (D.C. Civ. Action No. 5-08-cv-01266)
        District Judge: Honorable Lawrence F. Stengel
                       ______________

           Submitted Under Third Circuit L.A.R. 34.1(a)
                       January 22, 2015
               ____________________________

Before: FISHER, JORDAN, and GREENAWAY, JR., Circuit Judges.

                  (Opinion Filed: April 9, 2015)
                                    ______________

                                       OPINION*
                                    ______________

GREENAWAY, JR., Circuit Judge.

       Albert Itterly (“Appellant”) appeals the District Court’s grant of summary

judgment to Family Dollar Stores, Inc. and Family Dollar Stores of Pennsylvania, Inc.

(“Family Dollar” or “Appellees”) on Appellant’s claims under the Pennsylvania

Minimum Wage Act (the “PMWA”). Appellant argues that there is a genuine dispute of

material fact as to whether he is an executive employee exempt from overtime payments

under the PMWA. We find there is no basis to upset the District Court’s determination

that summary judgment on this issue is appropriate. We will affirm.1

                        I.      Factual and Procedural History

       Appellant worked as the Store Manager at the Family Dollar store in Allentown,

Pennsylvania (the “Allentown Store”) between July and November of 2007. Appellant’s

responsibilities included supervision of other employees, scheduling of employees,

delegating duties to site employees, disciplining employees, and hiring. Appellant also

spent much of his time unloading freight, stocking shelves, and working a register. He

worked an average of 63.5 hours per week. He was paid a weekly salary of $930.00 and

received a single bonus of $904.75. He was not paid for overtime work.

       *
       This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does
not constitute binding precedent.
       1
       The District Court exercised jurisdiction pursuant to 28 U.S.C. §§ 1331 and
1367; we have jurisdiction under 28 U.S.C. § 1291.
                                             2
       Appellant filed a complaint in the District Court alleging that the denial of

overtime pay for his work in excess of forty hours per week violated the Fair Labor

Standards Act (the “FLSA”), 29 U.S.C. § 201 et seq.,2 and the PMWA, 43 PA. CONS.

STAT. ANN. § 333.101 et seq. Appellant argued that because he spent “virtually all of his

time” performing nonmanagerial tasks and physical labor, his “primary duty” as Store

Manager was not management. As such, he was not an “executive” employee exempt

from overtime payments under the PMWA. Appellant also argued that management was

not his primary duty because (1) he shared responsibility for many of his managerial

duties with nonexempt Assistant Store Managers (“ASMs”) and (2) Family Dollar’s

corporate policies and his supervising District Manager limited any discretion he had to

manage the store.

       The District Court held that there were no genuine disputes of material fact and

that Family Dollar was entitled to summary judgment as a matter of law. The District

Court rejected Appellant’s arguments, concluding that Appellant was an executive

employee exempt from overtime payments under the PMWA.

                                      II.    Analysis

       “[W]e employ a plenary standard in reviewing orders entered on motions for

summary judgment . . . .” Blunt v. Lower Merion Sch. Dist., 767 F.3d 247, 265 (3d Cir.

2014). We employ the same standard as the District Court, and “‘view the underlying

facts and all reasonable inferences therefrom in the light most favorable to the party
       2
        Appellant withdrew his FLSA claim in September 2011, leaving only his
individual and class claims under the PMWA.
                                             3
opposing the motion.’” Id. (quoting Pa. Coal Ass’n v. Babbitt, 63 F.3d 231, 236 (3d Cir.

1995)). “‘[A] factual dispute is material if it bears on an essential element of the

plaintiff’s claim, and is genuine if a reasonable jury could find in favor of the nonmoving

party.’” Id. (quoting Natale v. Camden Cnty. Corr. Facility, 318 F.3d 575, 580 (3d Cir.

2003)).

       Under the PMWA’s executive employee exemption, anyone employed in a “bona

fide executive . . . capacity” is exempt from the PMWA’s overtime protections. 43 PA.

CONS. STAT. ANN. § 333.105(a)(5). The employer has the burden of establishing an

exemption, and such exemptions are narrowly construed against the employer. Pignataro

v. Port Auth., 593 F.3d 265, 268 (3d Cir. 2010). It is undisputed that Appellant earned

more than $250 per week and is thus subject to the “short test” for determining whether

he is an exempt executive employee pursuant to Pennsylvania regulations. 34 PA. CODE

§ 231.82(6). Under the short test, the exemption applies only to employees “whose

primary duty consists of the management of the enterprise in which he is employed . . .

and includes the customary and regular direction of the work of two or more other

employees.” Id.

       Appellant concedes that he regularly directed the work of two or more employees.

The only issue on appeal is whether Appellant’s “primary duty” as a Store Manager at

Family Dollar was “management of the enterprise.” Appellant argues that where: (1) he

spent nearly all of his time performing manual labor, (2) the nonexempt ASMs performed

the same managerial duties as he did, (3) his District Manager micro-managed the store,

                                              4
and (4) Family Dollar’s detailed corporate policies limited Appellant’s discretion to such

an extent that he did not actually “manage” the store, there was a genuine dispute of

material fact as to whether Appellant’s primary duty was management and summary

judgment was thus inappropriate. We reject this argument.3

A.     Appellant Performed Managerial Duties.

       The record demonstrates that Appellant performed managerial tasks as the Store

Manager of the Allentown Store. The federal regulations implementing the FLSA4

define “management” to include activities such as:

       [I]nterviewing, selecting, and training of employees . . . directing the work
       of employees; . . . appraising employees’ productivity and efficiency for the
       purpose of recommending promotions or other changes in status;
       disciplining employees; . . . apportioning the work among the employees;

       3
         To the extent Appellant argues that Morgan v. Family Dollar Stores, Inc., 551
F.3d 1233 (11th Cir. 2008) (holding that sufficient evidence supported jury’s
determination that Family Dollar Store Managers were nonexempt employees) compels a
different result, his reliance is misplaced. The Morgan court expressly found that the
Store Managers in that case did not perform exempt and non-exempt activities
concurrently. Id. at 1272-73. We find the Fourth Circuit’s decision in In re Family
Dollar FLSA Litigation, 637 F.3d 508 (4th Cir. 2011) (affirming a district court’s grant of
summary judgment in favor of Family Dollar) more persuasive. There, the Fourth Circuit
noted that even though the appellant performed nonmanagerial tasks 99% of the time, she
performed them concurrently with her managerial duties and “in the context of her
overall responsibility to see that the store operated successfully and profitably.” Id. at
516. This emphasis on the importance of the Appellant’s managerial duties rather than on
the amount of time spent performing nonexempt tasks is consistent with our own
precedent. See, e.g., Guthrie v. Lady Jane Collieries, Inc., 722 F.2d 1141 (3d Cir. 1983).
       4
        The parties agree that the FLSA’s definitions of “primary duty” and
“management” apply to Appellant’s claim. Pennsylvania courts have looked to federal
law regarding the FLSA for guidance in applying the PMWA. See Commonwealth v.
Stuber, 822 A.2d 870, 873 (Pa. Commw. Ct. 2003), aff’d, 859 A.2d 1253 (Pa. 2004)
(applying “federal case law” regarding the FLSA to a PMWA claim).
                                            5
       . . . [and] providing for the safety and security of the employees or the
       property . . . .

29 C.F.R. § 541.102.

       Appellant admitted in his deposition to performing many of these activities during

the course of his employment as Store Manager of the Allentown Store. He

acknowledged that he (i) determined which employees worked which shifts; (ii) assigned

work to employees; (iii) interviewed and hired cashiers, (iv) recommended hiring of

assistant store managers; (v) trained employees on store policies and procedures; (vi)

evaluated employee performance; (vii) disciplined an employee for a rule violation; (viii)

reviewed daily sales; (ix) worked to increase sales; (x) adjusted his staff schedules to stay

within the allocated payroll budget; and (xi) maintained the security of the store and

reported any concerns to the police.

B.     Appellant’s Primary Duty was Management.

       Appellant’s responsibility for the tasks above and the general character of his

position demonstrate that management was his “primary duty” as a Family Dollar Store

Manager. The regulations define the “primary duty” as the “principal, main, major or

most important duty that the employee performs.” 29 C.F.R. § 541.700(a). Further, we

should specifically consider:

       [T]he 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.

Id.
                                              6
       Consideration of each factor yields the conclusion that Appellant’s primary

duty was management.

       1.     Relative Importance of Exempt Duties and Time Spent Performing
              Exempt Work

       Appellant’s primary contention on appeal is that because he spent the vast

majority of his time performing nonexempt tasks such as unloading freight, stocking

shelves, and ringing a register, management was not his “primary duty.” We, however,

have recognized that an employee need not spend the majority of his time performing

managerial tasks in order to be considered exempt. See, e.g., Guthrie v. Lady Jane

Collieries, Inc, 722 F.2d 1141 (3d Cir. 1983) (holding that foremen who spent no more

than 44% of their time performing managerial work were exempt executives under the

FLSA). Indeed, § 541.700(b) specifically notes that “time [allocation] alone . . . is not

the sole test, and nothing in this section requires that exempt employees spend more than

50 percent of their time performing exempt work.”

       Rather, the regulations set out a qualitative standard that considers the relative

importance of the managerial duties as compared with the employee’s nonexempt duties.

In making this determination, we look to “whether the management activities are critical

to the successful operation of the enterprise.” Guthrie, 722 F.2d at 1145 (citing Donovan

v. Burger King Corp., 675 F.2d 516, 521 (2d Cir. 1982)).

       According to Family Dollar’s policies, a Store Manager’s first “essential job

function[]” is to “[s]upervise all store personnel, including assigning tasks [and] ensuring

compliance with merchandising and operational policies.” App. 2584a. Appellant
                                              7
managed the Allentown Store on a daily basis, preparing the store cash and sales book,

maintaining store safety and security, assigning work, scheduling store associates, and

ensuring that an ASM was scheduled to assist with these duties if he was not in the store.

Appellant’s performance of these managerial duties was essential to the success of the

Allentown Store. See Thomas v. Speedway SuperAmerica, LLC, 506 F.3d 496, 505 (6th

Cir. 2007) (noting that store “would not function at all” had manager failed to perform

managerial duties such as hiring, scheduling, and training employees).

       Moreover, Appellant performed many of these managerial responsibilities

concurrently with nonexempt duties such as unloading freight, stocking shelves, and

operating a register.5 See Guthrie, 722 F.2d at 1145 (“[T]o the extent that these

[managerial] functions are carried out simultaneously with the performance of nonexempt

work, we are not persuaded that they must be regarded as nonmanagerial.”); 29 C.F.R.

§ 541.106(a) (“Concurrent performance of exempt and nonexempt work does not

disqualify an employee from the executive exemption . . . .”). Federal regulations

recognize that “[g]enerally, exempt executives . . . remain responsible for the success or

failure of business operations under their management while performing the nonexempt

work.” 6 29 C.F.R. § 541.106(a). Thus, even while stocking shelves or operating a

       5
         For instance, Appellant testified that he maintained security while unloading
freight. See App. 130-31a (“It was a way of the manager still having control of that
situation in the back and still unloading the truck . . . .”).
       6
       Indeed, the regulations specifically cite retail managers as exempt executive
employees who perform many nonexempt tasks. See 29 C.F.R. § 541.700(c) (retail
managers “may have management as their primary duty even if the . . . managers spend
                                            8
register, Appellant remained responsible for supervising and directing his employees,

among other things. See In re Family Dollar FLSA Litig., 637 F.3d 508, 515 (4th Cir.

2011) (noting that even when performing nonmanagerial tasks, Store Manager was

responsible for running the store).

       Appellant’s argument that management was not his primary duty because

nonexempt ASMs performed the same managerial tasks as he did is also unavailing.

Family Dollar’s policies demonstrate that the Store Manager had primary responsibility

for management of the store and that the ASMs assisted him in that role. The fact that

nonexempt ASMs assisted Appellant with many of his managerial duties does not render

these duties nonmanagerial for the purposes of our primary duty analysis. See Baldwin v.

Trailer Inns, Inc., 266 F.3d 1104, 1115 (9th Cir. 2001).

       2.     Relative Freedom from Direct Supervision

       Appellant’s argument that the active supervision of a District Manager renders

him nonexempt also fails. The record does not show that Appellant was micro-managed

by a District Manager; rather, the District Manager oversaw 19 Family Dollar stores and

visited the Allentown Store roughly once or twice a week. See In re Family Dollar, 637

F.3d at 517 (noting that Family Dollar Store Manager was relatively free from

supervision where District Manager supervised 17 stores, “which would hardly permit

him to micro-manage all 17”). Although Appellant often received instructions from the

more than 50 percent of the time performing nonexempt work such as running the cash
register”); 29 C.F.R. § 541.106(b) (“An exempt employee can also simultaneously direct
the work of other employees and stock shelves.”).
                                            9
District Manager and consulted with the District Manager regarding hiring and

disciplinary decisions, Appellant retained discretion to manage the store. For the vast

majority of the time, Appellant was the highest-ranking employee at the Allentown Store

and managed it with little direct supervision. See Guthrie, 722 F.2d at 1146 (noting that

section foremen were the persons on the property with the highest authority about half the

time, supporting their classification as exempt employees); see also Murray v. Stuckey’s,

Inc., 50 F.3d 564, 570 (8th Cir. 1995) (“[A]ctive supervision and periodic visits by a

regional manager do not eliminate the day-to-day discretion of the onsite store

manager.”).

       The existence of detailed corporate policies likewise does not render Appellant’s

managerial work any less important. Courts have recognized that such corporate policies

are commonplace, particularly in large retail chains, and do not render the managers

subject to those policies nonexempt.7

       Appellant was subject to Family Dollar’s detailed corporate policies, but still

exercised discretion in applying those policies. For example, though Appellant was

bound by the pre-made Family Dollar staff scheduler, he testified that he was responsible

for assigning a staff member to each shift and for adjusting the employee schedules to fit

       7
         See, e.g., Murray, 50 F.3d at 570 (“[N]ationwide companies . . . establish
standardized procedures and policies to guide individual store managers. This practice
may circumscribe[,] but it does not eliminate[,] the discretion of the on-site manager of
an isolated store . . . .”); In re Family Dollar, 637 F.3d at 517 (Store Manager subject to
Family Dollar company policies was relatively free from supervision).
                                             10
his payroll budget. Further, the Family Dollar corporate policies themselves vested

Appellant with discretion in hiring, evaluating, and disciplining personnel.

       3.     Appellant’s Salary Relative to Non-Exempt Employees’ Wages

       Finally, the regulations call for an analysis of the relationship between Appellant’s

salary and the wages paid to nonexempt employees. Ultimately, this factor favors Family

Dollar because Appellant received significantly greater compensation than Family

Dollar’s nonexempt employees in addition to his bonus of $904.75 that the nonexempt

employees were ineligible to receive. 8 Appellant received $930 per week compared with

the $400 per week received by the hourly ASMs (assuming a forty hour work-week).

Even if the ASMs had worked as many hours as Appellant, they would only have

received $752.50 per week (including overtime). Thus, even accounting for overtime

compensation, Appellant still received roughly 24% more than the next highest paid

Family Dollar employees (not including his bonus).9

       Based on our de novo review, there are no genuine disputes of material fact.

Appellant is an exempt employee under the PMWA as a matter of law. Appellant

       8
         Further, Store Manager bonuses are tied to the managerial task of controlling the
store’s expenses.
       9
         The parties dispute which formulation should be used to calculate and compare
Appellant’s salary with that of nonexempt employees. Appellees argue that Appellant’s
salary should be compared to the average hourly wage received by nonexempt
employees, $8.21, and Appellant argues that his salary should be compared to the ASMs’
hourly wage of $10.00. Appellant also argues that his “effective” hourly rate is only
$13.02. We note, however, that under any method of comparison, Appellant is better
compensated than the nonexempt employees.
                                            11
performed managerial duties critical to the success of the Allentown Store with minimal

direct supervision. The fact that he consistently performed nonexempt tasks the majority

of the time does not alter our analysis.

                                     III.   Conclusion

       For the foregoing reasons, we will affirm the order of the District Court.

                                             12