Employment Law Daily Giving the executive exemption its ‘fair reading,’ court holds battalion chiefs are FLSA-exempt
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Friday, June 7, 2019

Giving the executive exemption its ‘fair reading,’ court holds battalion chiefs are FLSA-exempt

By Harold S. Berman J.D. and Lisa Milam, J.D.

Battalion chiefs who primarily perform managerial functions satisfied the FLSA’s executive exemption. The appeals court rejected their plea that, despite the Supreme Court’s contrary holding, exemptions generally are to be narrowly construed.

A city fire department had no obligation to pay two battalion chiefs overtime for their standby shifts because the chiefs primarily managed other employees and had input into personnel decisions, and so were exempt from the FLSA’s overtime requirements, the Sixth Circuit ruled. The appeals court affirmed the federal district court’s finding in favor of the city, concluding that the chiefs satisfied the FLSA’s executive exemption (Holt v. City of Battle Creek, June 3, 2019, Clay, E.).

Battalion chiefs’ job responsibilities. A current and former battalion chief for the City of Battle Creek fire department brought suit alleging that the city violated the FLSA by failing to pay them overtime. The battalion chief’ position is supervisory, second only to the fire chief. Although the battalion chiefs did not hire and fire employees, they conducted performance evaluations which impacted employees’ career advancement. Their primary responsibility, according to one former fire chief, was to provide management and leadership, rather than physical work.

Standby duty. The battalion chiefs periodically served on standby duty, during which they were required to be on call overnight for a 15-hour period. They received 1.5 hours of pay for each day of standby duty, as well as overtime for any hours worked if they were called back to active duty during their standby shift.

While on standby, the battalion chiefs were required to monitor a pager and radio, answer phone calls as needed, assist with problems that arose, and occasionally report to a fire scene. They could neither drink alcohol nor leave the city. The battalion chiefs testified they stopped playing organized sports while on standby duty out of concern they would not hear their pager while they were playing.

However, a former fire chief testified to a less restrictive view of the battalion chiefs’ activities while on standby duty. According to the fire chief, they were not expected to monitor their radios 24/7, and other battalion chiefs had played golf and worked on a horse farm while on standby.

Wage suit. Their suit alleged the city did not pay overtime for hours worked over 40 per week because of standby duty. Following a bench trial, the district court ruled that the battalion chiefs were exempt from overtime under both the executive and administrative exemptions. The district court also found that, even if the battalion chiefs were nonexempt, their standby duty requirements were not so onerous as to prevent them from pursuing personal activities during standby time.

Executive exemption applied. The Sixth Circuit affirmed the district court’s decision that the battalion chiefs were exempt from the FLSA’s overtime provisions. The evidence supported the lower court’s determination that the battalion chiefs’ primary duty was to manage the city’s fire department and so the executive exemption applied. (As such, the appeals court did not need to address the lower court’s determination that the administrative exemption also applied.).

The district court had noted that the battalion chiefs directly supervised lower-ranking officers and other staff, evaluated staff, administered and enforced department policy, and coordinated the department’s daily operations. There was testimony that battalion chiefs were expected to take charge of operations at fire scenes, and they had extensive supervisory responsibilities, with one of the battalion chiefs having 27 officers directly reporting to him. The battalion chiefs even referred to themselves as “management” in correspondence to one of the fire chiefs.

Additionally, the district court did not commit clear error in finding that the executive exemption applied because the battalion chiefs’ input concerning fire department staff was given particular weight in determining staff member’s opportunities for career advancement. The district court recognized that the battalion chiefs were not granted independent authority to hire, fire, or suspend fire fighters, but credited testimony as showing that their suggestions and recommendations concerning hiring, firing, and changes of status of staff members were given particular weight.

One of the battalion chiefs was responsible for disciplinary proceedings of fire fighters, and issued most of the discipline in the department. The other battalion chief managed department members’ vacation days, and two fire chiefs testified they gave significant weight to the battalion chiefs’ recommendations concerning personnel.

“Fair reading” standard applies. In its 2018 decision in Encino Motorcars, LLC v. Navarro, the Supreme Court rejected the common notion that FLSA exemptions are to be narrowly construed, and instead adopted a “fair reading” standard to evaluate whether a particular exemption applies in any given instance. The battalion chiefs tried to brush this off as dicta, arguing that in endorsing a “fair” construction over a “narrow” construction, the High Court was referring solely to the narrow class of workers in the case before it—auto dealership service advisors—and the salesman exemption at issue. “Under Plaintiffs’ theory, all exemptions other than the salesman exemption are still subject to a narrow interpretation,” the appeals court wrote. “Plaintiffs’ theory is incorrect.”

The appeals court observed that even if the Supreme Court’s pronouncement was dicta except for the narrow exemption question before the Court, lower courts are obligated to follow it—and a number of courts indeed have, applying the “fair reading” approach to several FLSA exemptions outside the salesman context. The lower court did not err in applying the Supreme Court’s directive here.

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