Osler Institute, Inc. v. Inglert

• Decision Date: 27 August 1990
• Docket Number: No. 84A01-8911-CV-448,84A01-8911-CV-448
• Citation: 558 N.E.2d 901
• Parties: 29 Wage & Hour Cas. (BNA) 1560, 30 Wage & Hour Cas. (BNA) 31, 116 Lab.Cas. P 35,382 The OSLER INSTITUTE, INC., Defendant-Appellant, v. Debra INGLERT, Plaintiff-Appellee.
• Court: Indiana Appellate Court

Page 901

558 N.E.2d 901

29 Wage & Hour Cas. (BNA) 1560, 30 Wage & Hour

Cas. (BNA) 31,

116 Lab.Cas. P 35,382

The OSLER INSTITUTE, INC., Defendant-Appellant, v. Debra INGLERT, Plaintiff-Appellee.

No. 84A01-8911-CV-448.

Court of Appeals of Indiana,

First District.

Aug. 27, 1990.

Opinion on Denial of Rehearing Oct. 15, 1990.

Eric A. Frey, Terre Haute, for defendant-appellant.

James L. Crawford, Effner, Wagner and Crawford, Terre Haute, for plaintiff-appellee.

BAKER, Judge.

Defendant-appellant Osler Institute, Inc. (Osler) appeals a judgment in favor of the plaintiff-appellee Debra Inglert (Inglert) for the amount of $4,507.60. We affirm.

ISSUES

Osler presents the following issues for our review:

I. Whether the trial court erred in concluding Inglert was not exempt from the overtime provisions of the Fair Labor Standards Act.

II. Whether the court erred in finding Inglert was entitled to vacation pay.

III. Whether the court erred in awarding statutory liquidated damages and attorney fees to Inglert.

FACTS

The facts most favorable to the judgment reveal Inglert was hired by Osler in May of 1987 as a salaried employee. At that time, Osler was in the business of producing continuing medical education seminars. Inglert's annual salary was $12,000. Osler had two other salaried employees at that time: Dr. Selliken, the president of the corporation who earned $114,000 annually, and his wife who earned $38,000 per year.

Inglert performed a variety of duties during her employment including contacting hotels and doctors, answering the phones, opening the mail, unloading trucks, and assisting at some of the medical seminars. She did not supervise any of the other employees. She was terminated from her employment in November of 1987. In December of 1987, Inglert requested overtime pay and accrued vacation pay. Osler did not pay these amounts because it contended Inglert was an exempt employee under the Fair Labor Standards Act and thus not entitled to overtime pay and Inglert was not eligible for vacation pay because she had not yet worked for a full year for Osler. Inglert subsequently brought this action for overtime and vacation pay.

DISCUSSION AND DECISION

Initially we note this was a bench trial and the trial court made findings of fact and conclusions of law; we will not set aside the trial court's findings or judgment unless clearly erroneous. Ind. Trial Rule 52(A). We neither reweigh the evidence nor judge the credibility of the witnesses in determining whether the court's findings and judgment are clearly erroneous. We consider only the evidence in the record which supports the judgment along with the reasonable inferences to be drawn from the evidence. This court will disturb the trial court's findings only if the record is devoid of facts or inferences to support the findings. Craig v. ERA Mark Five Realtors (1987), Ind.App., 509 N.E.2d 1144.

I.

Osler first contends that Inglert was not entitled to overtime pay because she was an exempt employee under the Fair Labor Standards Act, 29 U.S.C. Section 201 et seq. (the Act). Section 207 of the Act provides that employees shall receive overtime compensation for hours worked in excess of forty hours per week. 29 U.S.C.A. Section 207. The Act exempts certain employees from this requirement, including employees who are employed in a bona fide executive, administrative, or professional capacity. 29 U.S.C.A. Section 213. The trial court found that Inglert was not employed in an administrative or executive capacity and was not an exempt employee under the provisions of the Act.

Osler, in its issues presented for review, argues the trial court erred by concluding An administrative employee is defined in 29 CFR 541.2. There are two tests for determining whether an employee is an exempt administrative employee, the long and the short tests. O'Dell v. Alyeska Pipeline Service Co. (9th Cir. Alaska 1988) 856 F.2d 1452. The short test is applicable to high salaried employees, and contains more lenient requirements for exemption than the long test. Under the short test, to be an exempt employee the employee's job need only include work which requires the exercise of discretion and independent judgment. Id. An employee "who is compensated on a salary or fee basis at a rate of not less than $250 per week" and whose primary duty consists of certain work which includes work requiring the exercise of discretion and independent judgment is deemed a bona fide administrative employee and is exempt from the requirement of overtime pay for work in excess of 40 hours. 29 CFR 541.2(e)(2). Inglert does not meet this test because she earned only $240 per week. Osler argues that considering all forms of compensation paid to Inglert (including payment of her health insurance premiums and a bonus payment of $100) Inglert did earn more than $250 per week. However, the regulations define salary basis as that predetermined amount which is regularly received each pay period and constitutes all or part of the employee's compensation. 29 CFR 541.118, 541.212. The trial court found one week's salary to be $240, and Osler has not demonstrated that Inglert regularly received a higher predetermined amount each pay period. The trial court's finding was not clearly erroneous. Inglert is not an exempt administrative employee under the short test.

                Inglert was not employed in an administrative or executive capacity.  Its argument discusses only the administrative aspect and we will address only that issue. 1  Exemptions from the Act are defined by regulations promulgated by the Department of Labor.  The regulations are entitled to great weight and have been held to carry the full force of law.  Lang v. Midwest Advanced Computer Serv.  (E.D.Mich.1981), 506 F.Supp. 595.   The statutory exemptions are to be narrowly construed, and the burden is on the employer to show an exemption from the Act exists.  Id
                

Under the long test, the employee qualifies as an exempt administrative employee only if the job requires that the employee customarily and regularly exercise discretion and independent judgment. O'Dell, supra. 29 CFR 541.2 delineates a five part test: the employee's primary duty must consist of work directly related to management policies or general business operations of the employer; the employee must customarily and regularly exercise discretion and independent judgment; the employee must regularly and directly assist the proprietor or an employee employed in a bona fide executive or administrative capacity; the employee must not devote more than twenty percent of time worked to activities which are not directly and closely related to the above described work; and the employee must receive at least $155 per week on a salary or fee basis. 29 CFR 541.2(a)-(e)(1). Each of the five qualifications must be met in order for an employee to be exempted under the long test. Lang, supra.

The trial court found Inglert was not an exempt employee and we do not think that finding was clearly erroneous. Although there was conflicting evidence, the record demonstrates adequate facts and inferences to support the trial court's findings. The record showed Inglert performed a variety of activities on the job including assimilating program material, answering the phone, opening the mail, unloading trucks and phoning hotels and doctors to organize the seminars. Osler contends Inglert exercised independent judgment in negotiating a health plan for the company, contracting with hotels, and recruiting faculty. The evidence showed that recruiting faculty consisted of attempting to phone various doctors chosen by Dr. Selliken and then putting the doctors through to speak with Dr. Selliken. Inglert did participate in the development of a health plan for Osler; however, this was not a large part of her duties.

As discussed above, all five parts of the long test must be met in order for the employee to be exempt from the requirements of the Act. Considering the facts most favorable to the judgment, Inglert did not customarily and regularly exercise discretion and independent judgment, and she devoted more than 20% of her hours worked to activities which were not directly

and closely related to the performance of specified work as required by the long test. Thus, at least two of the requirements were not met, Inglert was not an exempt administrative employee, and she was entitled to overtime compensation. Osler does not dispute the amount of overtime compensation and we affirm the trial court's findings regarding overtime pay.

II.

Osler next argues the trial court erred in concluding Inglert earned vacation pay because there was a company policy that required one year of work as a condition precedent to earning any vacation pay. The trial court found Osler had a policy of providing vacation pay to employees based upon length of employment and that Inglert was entitled to one week of vacation pay. We will not disturb these findings.

"Vacation pay is in the nature of deferred compensation in lieu of wages earned each week the employee works, and is payable at some later time." Die & Mold, Inc. v. Western (1983), Ind.App., 448 N.E.2d 44, 46. Unless an agreement or published policy exists to the contrary, when there is an agreement to pay vacation an employee is entitled to a pro rata share of vacation pay to the time of termination. Baesler's Super-Valu v. Indiana Com'r of Labor (1986), Ind.App., 500 N.E.2d 243.

There was an agreement to pay vacation to employees in this case; the substance and details of that agreement are unclear. Osler contends the employee had to work for one year before earning any vacation pay. The evidence is equivocal concerning this requirement. There were some handwritten notes dated 6-17-87 concerning vacation pay which stated: "Vacation-Must work 1 yr. to get a vacation. Must work 2080 hours to get 80 hours vacation. How ever [sic] many hours you work is in proportion to how many hours...