Court Opinion

ID: 9401933
Source: CourtListenerOpinion
Date Created: 2023-06-14 18:00:37.398546+00
Date Added: 2024-06-11T17:19:56.296684
License: Public Domain

Case: 22-50185        Document: 00516786449             Page: 1      Date Filed: 06/14/2023

             United States Court of Appeals
                  for the Fifth Circuit
                                                                                     United States Court of Appeals
                                                                                              Fifth Circuit

                                     ____________                                           FILED
                                                                                        June 14, 2023
                                       No. 22-50185                                    Lyle W. Cayce
                                     ____________                                           Clerk

   Shawn Mondeck, Individually, and for Others Similarly Situated;
   Garrett Nichols,

                                                                  Plaintiffs—Appellants,

                                            versus

   LineQuest, L.L.C.,

                                               Defendant—Appellee.
                     ______________________________

                     Appeal from the United States District Court
                          for the Western District of Texas
                               USDC No. 7:19-CV-221
                     ______________________________

   Before Stewart, Dennis, and Southwick, Circuit Judges.
   Per Curiam: *
         Two employees sued their employer under the Fair Labor Standards
   Act for failure to pay overtime.            The district court granted summary
   judgment in favor of the employer. We find genuine issues of material fact
   with respect to whether the roles of the two employees fulfill the
   “administrative exemption” to the Act. REVERSED and REMANDED.

         _____________________
         *
             This opinion is not designated for publication. See 5th Cir. R. 47.5.
Case: 22-50185      Document: 00516786449           Page: 2     Date Filed: 06/14/2023

                                     No. 22-50185

                  FACTUAL AND PROCEDURAL BACKGROUND
          Garrett Nichols and Shawn Mondeck were employees of LineQuest,
   L.L.C., a “damage prevention” company.               LineQuest specializes in
   providing “line locating, mapping, and hydro-excavation” services to its
   customers, which typically are oil and gas companies. Companies with
   buried utilities in oilfields contract with LineQuest to ensure their sunken
   assets are not hit when there is digging in the oilfields.
          Plaintiff Garrett Nichols worked as a “Line Locator” for LineQuest
   from November 2018 to September 2019 in west Texas and New Mexico.
   For most of his tenure, Nichols was assigned to perform line locating services
   for EnLink Midstream, a LineQuest customer. As a Line Locator, Nichols
   was responsible for locating buried utilities using an RD7100 tool and
   marking the buried assets with flags and paint. When Nichols located a line
   that planned digging might affect, he coordinated a time with the digging
   company to be present when the excavation occurred. Although Nichols
   observed the excavation and reported to EnLink whether the digging crew
   had followed protocol, he did not have authority to require the digging crew
   to follow proper procedures.
          Plaintiff Shawn Mondeck worked for LineQuest from May until
   September 2019. He initially trained as a Line Locator before undergoing a
   three-day training to become a Right of Way Technician. Right of Way
   Technicians observe the final phase of a pipeline construction project to
   ensure it is completed according to requisite standards. Mondeck was
   assigned to work with Medallion Midstream, a LineQuest customer.
   Mondeck observed the backfilling projects and filled out a report for
   Medallion detailing whether proper procedures were followed. Like Nichols,
   he did not have the authority to require the crew to follow proper procedures.

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          In September 2019, Mondeck, for himself and others similarly
   situated, sued LineQuest. He alleged violations of the Fair Labor Standards
   Act (“FLSA”) for failure to pay overtime. 29 U.S.C. §§ 201, et seq. Nichols
   joined the lawsuit in December 2019; no other employees became plaintiffs.
   LineQuest moved for summary judgment, arguing plaintiffs were
   administrative employees exempt from overtime under the FLSA.
          On August 3, 2021, the magistrate judge entered his Report and
   Recommendation, finding there were genuine issues of material fact
   regarding the application of the administrative exemption to both plaintiffs
   that precluded summary judgment. The district court disagreed and granted
   summary judgment for LineQuest against both Nichols and Mondeck. The
   court held that the administrative exemption test had been met as a matter of
   law with respect to both plaintiffs because: (1) the FLSA salary basis test was
   satisfied; (2) Nichols’s and Mondeck’s primary duties each involved non-
   manual work directly related to management or general business operations
   of the employer or employer’s customers; and (3) those primary duties
   involved the exercise of discretion and independent judgment in matters of
   significance. Plaintiffs timely appealed.
                                  DISCUSSION
          “We review a grant of summary judgment de novo, applying the same
   legal standards as the district court.” Adams v. All Coast, L.L.C., 15 F.4th
   365, 368 (5th Cir. 2021) (quotation marks and citation omitted). Summary
   judgment is appropriate when “the movant shows that there is no genuine
   dispute as to any material fact and the movant is entitled to judgment as a
   matter of law.” FED. R. CIV. P. 56(a). “In a dispute about an FLSA
   exemption, the employer has the burden of establishing that the exemption
   applies by a preponderance of the evidence.” Adams, 15 F.4th at 368.
   “When summary judgment is sought on an affirmative defense . . . the

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   movant must establish beyond peradventure all of the essential elements of
   the claim or defense to warrant judgment in his favor.” Dewan v. M-I, L.L.C.,
   858 F.3d 331, 334 (5th Cir. 2017) (emphasis in original) (quotation marks and
   citation omitted). “Because of the Act’s remedial nature, we narrowly
   construe its exemptions in favor of the employee.” Id.
           Under the FLSA, an employee who works more than 40 hours in one
   workweek must be paid overtime compensation. Olibas v. Barclay, 838 F.3d
   442, 448 (5th Cir. 2016); 29 U.S.C. § 207. This requirement does not apply
   to “any employee employed in a bona fide executive, administrative, or
   professional capacity.”          29 U.S.C. § 213(a)(1).             The administrative
   exemption applies to an employee: (1) who is “[c]ompensated on a salary or
   fee basis at a rate of not less than [$455] per week;” (2) “[w]hose 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) “[w]hose primary duty includes the exercise
   of discretion and independent judgment with respect to matters of
   significance.” 29 C.F.R. § 541.200 (through December 31, 2019). 1
           The two plaintiffs were paid a weekly salary above the minimum of
   $455 per week, but they argue LineQuest engaged in impermissible
   “deductions” that rendered their pay structure ineligible to satisfy the
   “salary basis” test of the administrative exemption. See 29 C.F.R. § 541.200;
   § 541.602(a). The argument is based on LineQuest’s policy of not paying
   employees for sick days if they used up their vacation days or Paid Time Off
   (“PTO”). Such a pay structure is permissible under the exemption if “made
   in accordance with a bona fide plan, policy or practice of providing

           _____________________
           1
            As of January 1, 2020, the salary basis test was revised to require that an employee
   earn a minimum of $684 per week to qualify for the administrative exemption.

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   compensation for loss of salary occasioned by such sickness or disability.” 29
   C.F.R. § 541.602(b)(2). Under LineQuest’s policy, employees could use
   PTO for sick days or sick leave. If PTO was exhausted, employees were not
   paid during sick leave. We agree with the district court that the plaintiffs’
   arguments here fail, and this first requirement of the administrative
   exemption was satisfied. 2
           The administrative exemption also requires that the employee’s
   primary duty be (2) “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) “includes the exercise of discretion and
   independent judgment with respect to matters of significance.” 29 C.F.R. §
   541.200(a). To analyze those requirements, we obviously need to determine
   the employee’s primary duty. “The term ‘primary duty’ means the
   principal, main, major or most important duty that the employee performs.”
   29 C.F.R. § 541.700(a). “Determination of an employee’s primary duty must
   be based on all the facts in a particular case, with the major emphasis on the
   character of the employee’s job as a whole.” Id. 3
           As to primary duty, we first examine plaintiff Nichols’s duties. He
   was a Line Locator. The district court held that Nichols’s primary duty was

           _____________________
           2
            The plaintiffs also argue that LineQuest improperly docked their salaries if they
   could not work outside their normal schedule on Saturdays, which precludes their salaries
   from satisfying the salary basis test. See 29 C.F.R. § 541.602. This argument was not
   presented to the district court and is therefore forfeited. See Rollins v. Home Depot USA, 8
   F.4th 393, 397 (5th Cir. 2021).
           3
            Among the factors to consider in defining the primary duty of an employee are (1)
   “the relative importance of the exempt duties as compared with other types of duties”; (2)
   “the amount of time spent performing exempt work”; “(3) the employee’s relative
   freedom from direct supervision”; and (4) “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).

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   “non-manual and directly related to the management or general business
   operations of LineQuest’s customer, EnLink.” Nichols contends the record
   demonstrates a fact dispute about his primary duty, which, according to him,
   was manually locating lines. Nichols highlights that, under LineQuest policy,
   Line Locators in a municipal market do not qualify for the administrative
   exemption, whereas Line Locators for construction and backfilling
   operations do qualify. In making the “primary duty” determination, we are
   to consider “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. According to Nichols, as a construction and backfilling Line
   Locator, he is “earning less than [the] non-exempt” municipal Line Locators
   “for the same kind of work.”
          The district court acknowledged that Line Locators in the municipal
   market are non-exempt.       As a result, it concluded that “the question
   presented is whether Nichols, as a Line Locator for construction and
   backfilling operations in the oil and gas industry, performs his job duties in a
   distinctly different manner with a unique primary duty than that of a
   municipal Line Locator.” In other words, the court needed to determine
   “whether Nichols’s primary duty was something other than the general line
   location and flagging services provided by municipal Line Locators.” The
   court found that Nichols’s “primary duty” was not in physically locating
   lines; rather, he was a “site representative for surveillance,” which is “non-
   manual and directly related to the management or general business
   operations of LineQuest’s customer.” In sum, the district court determined
   Nichols’s role fell within the administrative exemption.
          We agree with Nichols that there is sufficiently conflicting evidence
   in the record that a reasonable jury could consider the Section 541.700(a)
   factors and find that Nichols’s primary duty was physically locating lines.
   Under Section 541.700(b), the “amount of time spent performing exempt

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                                          No. 22-50185

   work can be a useful guide,” yet the record is unclear as to the amount of time
   Nichols spent line locating versus “surveilling”; Nichols’s testimony that he
   spent “80 percent” of his time inside his truck driving to job sites is not
   dispositive either way. We also agree with Nichols that the “relative
   importance” of his various duties is not clear from the record. See 29 C.F.R.
   § 541.700(a).       Although the LineQuest Chief Executive Officer stated
   Nichols’s assignments were “site surveillance,” Nichols’s declaration
   described his primary duty as “locat[ing] and mark[ing] buried utilities,”
   while his deposition discussed both line locating and site surveillance duties.4
   For Nichols, then, there is a dispute of material fact regarding his primary
   duty that precludes summary judgment.
           We now review the evidence of Mondeck’s primary duty. His job title
   was “Right of Way Technician.” Both parties highlight that Mondeck stated
   his responsibilities were to “observe the finalization of the construction of
   covering a pipeline” or to “observe the completion phase of Medallion
   pipeline construction projects (backfilling).”               Mondeck states he was
   responsible for ensuring Medallion’s “rules and specifications” were
   followed, although, like Nichols, he did not himself have the authority to
   actually enforce the standards. At the end of each day, Mondeck filled out a

           _____________________
           4
              The district court also cited contracts, supposedly between EnLink and
   LineQuest, that defined “Site Surveillance” as “watch[ing] over and protect[ing]
   Company’s Facilities during unusual or extensive excavation projects (i.e., road widening
   projects, sewer projects, etc.) and providing such continuous on-site Locate Services.”
   We agree with Nichols that this does not necessarily demonstrate that the primary purpose
   of the contract was “to provide site supervision services,” nor does it necessarily show that
   Nichols’s “primary duty was observing contractors for compliance with regulations.” The
   contract also defines “Locate Service” as “the process of determining the presence or
   absence of Company’s Facilities, their conflict with proposed excavations, and the Marking
   of the places and routes,” which Nichols contends was his primary duty. It is not clear
   from the contract how common these “unusual or extensive excavations projects” were
   that required “Site Surveillance.”

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   report for Medallion regarding the backfilling work he observed that day.
   Though LineQuest characterizes Mondeck’s duty as to “oversee and
   supervise”— while the plaintiffs argue it was merely to “observe” — the
   rough contours of his duties are more or less clear, i.e., some combination of
   supervision and observation. 5
           The third administrative exemption factor requires that an
   employee’s primary duty “include the exercise of discretion and
   independent judgment with respect to matters of significance.” 29 C.F.R. §
   541.200(a)(3). This “discretion and independent judgment must be more
   than the use of skill in applying well-established techniques, procedures or
   specific standards described in manuals or other sources.” § 541.202(e).
   Relevant non-exclusive factors include whether the employee has authority
   to “formulate, affect, interpret, or implement management policies or
   operating practices,” “waive or deviate from established policies and
   procedures without prior approval,” and “negotiate and bind the company
   on significant matters.” 29 C.F.R. § 541.202(b).                    The degree of an
   employee’s discretion is considered “in the light of all the facts involved in
   the particular employment situation in which the question arises.” Id.
           The district court found that both plaintiffs exercised discretion and
   independent judgment, then granted summary judgment for the defendant.
   The district court noted in particular that both Nichols and Mondeck (1) had
   “Stop Work Authority,” and (2) were each the only representative of
   LineQuest’s customer on the job site, where they performed duties without

           _____________________
           5
              The parties do dispute, however, that Mondeck’s primary duty was “directly
   related” to “management or general business operations,” i.e., element (2) of the
   administrative exemption. See 29 C.F.R. § 541.200(a)(2). Because we disagree with the
   district court’s holding that the plaintiffs’ primary duties satisfy the third element, we do
   not analyze whether Mondeck’s primary duty satisfied the second element.

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   immediate direction from a supervisor. The plaintiffs contend that the
   district court mischaracterized the level of discretion that accompanies
   “Stop Work Authority.” The plaintiffs also argue that under the relevant
   Section 541.202(b) factors it is not dispositive that they were often the only
   LineQuest representative on the job site. This is because, according to the
   plaintiffs, they did not have any actual authority to implement policies or
   conduct operations of the business, nor did they possess any of the other
   responsibilities contemplated in Section 541.202(b).
          We agree with the plaintiffs that, on this summary judgment record, a
   reasonable jury could determine that they did not exercise discretion and
   independent judgment on matters of significance.           See 29 C.F.R. §
   541.202(a). The record indicates that LineQuest not only grants Stop Work
   Authority to every employee, but also that all employees have the “Authority
   and Responsibility to stop work for safety violations that could be a potential
   hazard” (emphasis added). “Section 541.202 clarifies that an employee does
   not exercise discretion or judgment in the relevant sense if his decisions are
   essentially ‘the use of skill in applying well-established techniques,
   procedures or specific standards described in manuals or other sources.’”
   Hobbs v. EVO Inc., 7 F.4th 241, 250 (5th Cir. 2021) (quoting 29 C.F.R. §
   541.202(e)). The fact that all employees had the responsibility to stop unsafe
   work — which the plaintiffs each exercised only once or twice during their
   monthslong tenure at LineQuest — is not sufficiently dispositive to grant
   summary judgment.
          Moreover, we agree with the plaintiffs that there is insufficient
   evidence in the record that they possessed or exercised authority over
   matters of significance, regardless of whether they were the only LineQuest
   representative on the jobsite. The plaintiffs rely on the fact that neither had
   the “authority to require anyone [on the job site] to do anything,” that
   Mondeck underwent only “three days of field training” to become a Right of

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   Way Technician, and that neither had the authority to negotiate contracts or
   create or develop standards regarding the backfilling operations. See § 29
   C.F.R. 541.202(b). There is not enough in the record to conclude that
   Mondeck and Nichols possessed the level of authority necessary for a grant
   of summary judgment to LineQuest.
         There are questions of material fact regarding Nichols’s primary duty
   and whether Mondeck’s and Nichols’s primary duties satisfy element (3) of
   the administrative exemption.      We REVERSE and REMAND for
   proceedings consistent with this opinion.

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