Misclassification cases are grist for the mill in wage and hour litigation. As we have pointed out previously, the typical pattern is for the plaintiff to assert claims for unpaid overtime on the grounds that the position involved allegedly did not entail exempt work, to obtain conditional certification under the lower “stage one” procedure and then settle.
But it doesn’t always work out that way, as a recent case demonstrates.
In Blake v. Broadway Services, Inc., Civil Case No. SAG-18-0086 (D. Md. April 6, 2020), the plaintiffs worked as “majors” for a security company that used police-style titles for its staff. In that position, each was, at least on paper, the highest-ranking security officer at a particular job site, such as a shopping mall, hospital or college campus. They contended that they were entitled to overtime and brought a collective action under the Fair Labor Standards Act.
The district court granted conditional certification and permitted a period for opting in. The claims of most of the opt-ins settled, but three putative collective members, including, interestingly, the lead representative plaintiff, did not settle.
These plaintiffs argued on summary judgment that they did not exercise sufficient managerial authority to be classified as exempt. They also asserted that they were actually hourly employees, not salaried, and therefore the executive exemption was inapplicable regardless of their duties.
The claims that they did not manage defied common sense. The three remaining plaintiffs were responsible for between 10 and 50 security officers and were responsible for their own job sites. Although they argued in briefs that they did not manage, the district court found the evidentiary support for that argument to be lacking and at times contrary to their own testimony.
The second argument, that they were not actually “salaried,” might have had more meat, but it turned out to be a question of semantics. As the district court found, under the regulations, an employee is paid on a “salary basis” if “the employee regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee’s compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed.” 29 C.F.R. § 541.602(a).
The quirk in this case was that the company structured its pay practices around reducing every “salary” to an hourly rate, and it paid straight-time overtime to employees it classified as exempt. Despite that company practice, majors were always paid at least the base weekly salary (40 hours times their rate) even when they worked fewer than 40 hours per week. Thus, as noted in the regulation, they always received a set amount that was not “subject to reduction.” Relying on settled law, the district court also found that the payment of additional amounts as straight-time overtime did not render the majors hourly employees.
Finding that the majors both performed managerial duties and were paid by salary, the court concluded that they were exempt employees and not entitled to overtime.
Blake is notable for being a case in which the matter did not follow the typical pattern and for its unusual salary issue. As we have noted previously, while the conditional certification process puts undue pressure on defendants to settle, it is not uncommon to see a defendant either prevail on the merits or obtain decertification if it continues the litigation.
The bottom line: The flip side of a certified collective action is that the employer may obtain summary judgment on the collective claims.