Chapter § 2-1 29 CFR § 541.0. Introductory Statement

• Jurisdiction: United States

2-1 29 CFR § 541.0. Introductory Statement

(a) Section 13(a)(1) of the Fair Labor Standards Act, as amended, provides an exemption from the Act's minimum wage and overtime requirements for any employee employed in a bona fide executive, administrative, or professional capacity (including any employee employed in the capacity of academic administrative personnel or teacher in elementary or secondary schools), or in the capacity of an outside sales employee, as such terms are defined and delimited from time to time by regulations of the Secretary, subject to the provisions of the Administrative Procedure Act. Section 13(a)(17) of the Act provides an exemption from the minimum wage and overtime requirements for computer systems analysts, computer programmers, software engineers, and other similarly skilled computer employees.

(b) The requirements for these exemptions are contained in this part as follows: executive employees, Subpart B; administrative employees, Subpart C; professional employees, Subpart D; computer employees, Subpart E; outside sales employees, Subpart F. Subpart G contains regulations regarding salary requirements applicable to most of the exemptions, including salary levels and the salary basis test. Subpart G also contains a provision for exempting certain highly compensated employees. Subpart H contains definitions and other miscellaneous provisions applicable to all or several of the exemptions.

(c) Effective July 1, 1972, the Fair Labor Standards Act was amended to include within the protection of the equal pay provisions those employees exempt from the minimum wage and overtime pay provisions as bona fide executive, administrative, and professional employees (including any employee employed in the capacity of academic administrative personnel or teacher in elementary or secondary schools), or in the capacity of an outside sales employee under Section 13(a)(1) of the Act. The equal pay provisions in Section 6(d) of the Fair Labor Standards Act are administered and enforced by the United States Equal Employment Opportunity Commission.

2-1:1 Commentary

2-1:1.1 Judicial Deference to Regulations

At the outset, there is always a question of how much deference courts should give to the regulations. Prior to the United States Supreme Court decision in Christopher v. Smithkline Beecham Corp., 567 U.S. 142 (2012), the courts generally gave a wide berth to the Department of Labor's interpretation of the FLSA regulations. This ended in Smithkline.

• Christopher v. Smithkline Beecham Corp., 567 U.S. 142 (2012) (United States Supreme Court rejects giving deference to DOL regulations on the outside sales exemption because pharmaceutical industry had for decades classified pharmaceutical representatives as exempt and the DOL had never challenged that practice, noting that by failing to challenge an employer could be lulled into believing it was in compliance with the FLSA; the court stressed that courts must perform functional as opposed to formal analysis of the employee's duties, one that views an employee's responsibilities in the context of the particular industry in which the employee works; thus, longstanding and unchallenged industry tradition of making these positions exempt factored into a ruling for the employer that the plaintiffs were exempt, and there was no deference to the DOL's contrary view.).

One district court in a case applied the teachings in finding exempt status under the learned professional exemption.

• Pippins v. KPMG LLP, 921 F. Supp. 2d 26 (S.D.N.Y 2012) (classification of audit associates, who are not CPAs, was in dispute; in finding exempt status court noted that in the "context of the accounting industry" this position was treated as exempt despite the fact that their work was reviewed by more experienced auditors because "the industry's professional standards require both that certain procedures be followed and that everyone's work be extensively supervised and reviewed at every level from the bottom up"; thus plaintiffs were held to be exempt).

2-1:1.2 Judicial Deference to Opinion Letters Issued by DOL and Field Operations Handbook

A collateral issue is the deference given to opinion letters issued by the Department of Labor.

• Gagnon v. United Technisource, Inc., 607 F.3d 1036, 1041 n.6 (5th Cir. 2010) (deference given to agency opinion letter).
• Blackmore v. Vaughn & Bowden, P.A., No. 1:10cv561KS-MTP, 2012 WL 2064534 (S.D. Miss. June 7, 2012) (acknowledging Fifth Circuit authority but noting that the opinion letters, to be of value, must deal with underlying facts of a position, not merely the title; thus, while opinion letters state that paralegal position is not exempt, no deference given here when the positions described in the letters arguably reflected different job duties than in the letters).

A complete discussion on opinion letters was in 2015 issued by a federal district court in Houston.

• Ford v. Houston Indep. Sch. Dist., 97 F. Supp. 3d 866 (S.D. Tex. 2015) (court notes that unlike a regulation, an opinion letter is an informal agency determination and the weight given it will depend upon the thoroughness evident in the DOL's consideration, the validity of the reasoning, and its consistency with earlier and later pronouncements; court notes though that opinion letters have a limited role because, by their own terms, they are based on a particular set of facts and circumstances).

An issue that occasionally arises is whether deference should be paid to the DOL's Field Operations Handbook.

• Sanchez v. Las Fiestas, Inc., No. 3:10-CV-0614-SLB, 2012 WL 3853847 (N.D. Ala. Sept. 4, 2012) (noting that not entitled to Chevron deference but that it is "persuasive").

2-1:1.3 FLSA Does Not Preclude State From Enacting More Favorable Laws

• Esparza v. Two Jinn, Inc., No. SACV 09-0099 AG, 2009 WL 2912657 (C.D. Cal. Sept. 9, 2009) (FLSA permits states to enact wage and overtime laws stricter than the FLSA, and thus plaintiffs are not barred from pursuing state law claims and such claims are not precluded by FLSA).

2-1:1.4 Defenses to FSLA Suits

A threshold issue that is sometimes overlooked by employers is whether the plaintiff has worked overtime. Some lawyers believe that if the plaintiff claims unpaid overtime and the defendant has no records of time spent working, then the testimony of the plaintiff is sufficient. In 2017, the Fifth Circuit took a more nuanced approach and affirmed summary judgment for the employer when a plaintiff was unable to meet this threshold issue.

• Kirk v. Invesco, Ltd., No. 16-20601, 2017 U.S. App. LEXIS 12055 (5th Cir. July 6, 2017) (plaintiff testified that she worked an average of sixty hours a week; there were no accurate time records; thus, it was plaintiff's burden to prove that she in fact performed work for which she was improperly paid, and she must produce sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference; if so, burden then shifts to employer to come forward with evidence of the precise amount of work performed or with evidence to negate the reasonableness of the inference drawn from plaintiff's evidence; here, plaintiff presented a list of work emails sent before, during, and after regular hours; however the emails only showed two to three day snapshots, but did not show that she worked more than forty hours a week).
• Ihegword v. Harris Cty. Hosp. Dist., 555 F. App'x 372 (5th Cir. 2014) (plaintiff gave vague deposition testimony saying that on days that she worked overtime, it could have been "three, or two, or one hours"; employer submitted affidavit of a co-worker who testified that she worked the shift after plaintiff and that plaintiff rarely worked beyond her shift and when she did it was on the clock; in granting summary judgment the appeals court agreed with the district court, which held that "an unsubstantiated and speculative estimate of uncompensated overtime does not constitute evidence sufficient to show the amount of and extent of that work a matter of just and reasonable inference." Ihegword v. Harris Cty. Hosp. Dist., 929 F. Supp. 2d 635 (S.D. Tex. 2013)).

Sometimes, plaintiff lawyers try to turn the tables on employers who do not keep records by arguing that the failure to do so is a violation of the FLSA, presumptively entitling a plaintiff to receive damages in the amount he or she claims. This argument has been rejected.

• Edwards v. 4JLJ, LLC, No. 2:15-CV-299, 2017 U.S. Dist. LEXIS 684 (S.D. Tex. Jan. 4, 2017) (violation of recordkeeping provisions does not create a private right of action nor does it excuse the plaintiff from proving how many overtime hours the plaintiff worked).

Another threshold defense is that the employer did not know, actually or constructively, that the employee was working overtime. The Seventh Circuit in 2017 issued an opinion expanding on this defense.

• Allen v. City of Chicago, No. 16-1029, 2017 U.S. App. LEXIS 14230 (7th Cir. Aug. 3, 2017) (police officers brought suit claiming that they were not paid for messaging on work-related matters on their Blackberries when they were off duty; court affirmed dismissal of the suit because city provided a way for the officers to record their time but they did not always use it; court rejected the argument that city could have determined whether they were working overtime by stating: "The reasonable diligence standard asks what the employer should have known, not what it could have known.").

Two other circuit courts have adhered to the reasonable diligence standard.

• White v. Baptist Mem'l Health Care Corp., 699 F.3d 869 (6th Cir. 2012) (affirming summary judgment for employer: "When the employee fails to follow reasonable time reporting procedures she prevents the employer from knowing its obligation to compensate the employee. . . .").
• Forrester v. Roth's I.G.A. Foodliner Inc., 646 F. 2d 413 (9th Cir. 1981) (affirming summary judgment where "employer has no knowledge

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