Perry v. Randstad Gen. Partner (US) LLC

• Decision Date: 20 November 2017
• Docket Number: No. 16-1010,16-1010
• Citation: 876 F.3d 191
• Parties: Judith PERRY; Erin Lane ; Aimee Dooling, Plaintiffs–Appellants, v. RANDSTAD GENERAL PARTNER (US) LLC, Defendant–Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

876 F.3d 191

Judith PERRY; Erin Lane ; Aimee Dooling, Plaintiffs–Appellants,

v.RANDSTAD GENERAL PARTNER (US) LLC, Defendant–Appellee.

No. 16-1010

United States Court of Appeals, Sixth Circuit.

Argued: November 30, 2016

Decided and Filed: November 20, 2017

ARGUED: Jordan M. Lewis, KELLEY/UUSTAL, PLC, Fort Lauderdale, Florida, for Appellants. Jennifer A. Riley, SEYFARTH SHAW LLP, Chicago, Illinois, for Appellee. ON BRIEF: Jordan M. Lewis, KELLEY/UUSTAL, PLC, Fort Lauderdale, Florida, Barry S. Fagan, Jennifer L. McManus, FAGAN MCMANUS, P.C., Royal Oak, Michigan, for Appellants. Jennifer A. Riley, Gerald L. Maatman, Jr., Ashley C. Workman, SEYFARTH SHAW LLP, Chicago, Illinois, for Appellee.

Before: MOORE, SUTTON, and WHITE, Circuit Judges.

WHITE, J., delivered the opinion of the court in which MOORE and SUTTON, JJ., joined in part. MOORE, J. (pp. 216–18), delivered a separate opinion concurring in part and dissenting from the court's opinion regarding matchmaking duties. SUTTON, J. (pp. 218–20), delivered a separate opinion concurring in part and dissenting from the court's opinion regarding sales duties.

HELENE N. WHITE, Circuit Judge.

In this putative collective action under the Fair Labor Standards Act (FLSA), Judith Perry, Erin Lane, and Aimee Dooling (Plaintiffs) appeal the district court's grant of summary judgment to their employer, Randstad General Partner (US) LLC (Randstad), rejecting their argument that Randstad improperly classified them as exempt employees not entitled to overtime pay. We AFFIRM IN PART and REVERSE IN PART .

I. BACKGROUND

Randstad is a staffing company; it recruits temporary workers (talent) and hires them out to other companies (clients). Plaintiffs were in-house Randstad employees (not temporary workers hired out) in the company's Troy, Michigan, office. Each Plaintiff held multiple positions over the course of her employment with Randstad, but Plaintiffs' responsibilities generally included marketing and selling Randstad's services; recruiting and evaluating workers and placing them with clients; overseeing those placements; and various administrative and clerical tasks. Randstad tracked Plaintiffs' performance using a points-based system called the Work Planning Index (WPI). Each work activity earned a set number of points, e.g., two points for interviewing a recruit and one point for completing reference checks. Plaintiffs were required to accrue 100 points each week. Of those 100 points, Plaintiffs were expected to earn a certain number in particular categories, such as sales and recruiting. Randstad maintained a progressive discipline system for employees who did not meet the 100-point quota each week, with penalties up to and including termination.

Randstad also held periodic "contests," which required Plaintiffs to perform a particular task a specified number of times in a given week, e.g., make 40 telephone connections with potential new customers via cold calls. According to Plaintiffs, participation in these contests was mandatory for all employees in the Troy branch, regardless of job description or title, even if the "contest" task was not within an employee's regular duties, thereby taking time away from meeting the category quotas. Further, while all employees accrued points for the contest activities, their category quotas did not change simply because a contest was taking place. Thus, if a contest required an employee to perform tasks outside her regular duties, she might have to earn more than 100 points total in order to accrue enough points in each category to meet all her quotas.

According to Plaintiffs, the quotas set by Randstad and enforced through the WPI system were impossible to meet working only 40 hours per week. As a result, Plaintiffs regularly worked significantly more than 40 hours per week, and Randstad managers were aware they did so.

II. PROCEDURAL HISTORY

Perry, Lane, Dooling, and a fourth plaintiff, Suhaima Choudhury, filed this suit in March 2014. The one-count complaint seeks unpaid overtime and liquidated damages under the FLSA, attorneys' fees, costs, and a declaratory judgment that Randstad's practices are unlawful. Plaintiffs styled their complaint as a collective action, and sought to represent all similarly-situated staffing employees who worked for Randstad in the three years prior to the commencement of the lawsuit.

Randstad answered the complaint in May 2014, and the parties spent several months engaging in discovery. Subsequently, Plaintiffs filed a motion for conditional class certification, and Randstad filed a motion for summary judgment seeking the dismissal of all four named plaintiffs' claims. After a joint hearing on both motions, the district court granted summary judgment to Randstad on the claims brought by Dooling, Lane, and Perry, but allowed Choudhury's claims to proceed. Based on Plaintiffs' own testimony, the court found that Dooling, Lane, and Perry exercised discretion and independent judgment, and therefore were covered by the administrative exemption to the FLSA.¹ The court also found that Randstad was insulated from any liability because it relied, reasonably and in good faith, on an opinion letter issued by the Department of Labor's (DOL) Wage and Hour Division (WHD). Finally, the court denied the certification motion on the merits as to Choudhury, and as moot as to the other Plaintiffs.

Plaintiffs timely filed a Rule 60 motion for relief from the order granting summary judgment. Plaintiffs argued that certain WPI-related reports produced by Randstad after summary judgment was granted constituted new evidence sufficient to justify relief. Plaintiffs reasoned the reports showed Randstad used the WPI to compare and evaluate employees, and created a triable fact issue regarding how much discretion Plaintiffs had. The district court denied the motion, concluding that ranking employees based on how many points they earn "is not inconsistent with those employees using independent judgment and discretion in how they complete their work." (R. 104, PID 2416.)

Finally, after Choudhury's claims were resolved by the parties and voluntarily dismissed, the remaining parties stipulated to the entry of judgment. This appeal followed.

III. DISCUSSION

Plaintiffs contend the district court erred both in finding Randstad eligible for the good-faith-reliance defense and in finding the FLSA's administrative exemption applicable.^{2 ,3}

A. Standard of Review

We review the district court's decision granting summary judgment de novo. Foster v. Nationwide Mut. Ins. Co. , 710 F.3d 640, 643 (6th Cir. 2013) (citations omitted). "Summary judgment is appropriate if, examining the record and drawing all inferences in a light most favorable to the non-moving party, there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Schaefer v. Ind. Mich. Power Co. , 358 F.3d 394, 399 (6th Cir. 2004).

B. The Administrative Exemption

1. Applicable Law

The FLSA was enacted "to compensate those who labored in excess of the statutory maximum number of hours for the wear and tear of extra work and to spread employment through inducing employers to shorten hours because of the pressure of extra cost." Bay Ridge Operating Co. v. Aaron , 334 U.S. 446, 460, 68 S.Ct. 1186, 92 L.Ed. 1502 (1948). "Consistent with this goal, the [FLSA] requires employers to pay their employees time-and-a-half for work performed in excess of forty hours per week, but exempts ‘bona fide executive, administrative, or professional’ employees from the overtime pay requirements." Acs v. Detroit Edison Co. , 444 F.3d 763, 764–65 (6th Cir. 2006) (quoting 29 U.S.C. § 213(a)(1) ; other citations omitted) (brackets and other internal quotation marks removed). "Congress did not define these exemptions, but delegated authority to the Department of Labor ... to issue regulations to define and delimit these terms." Foster , 710 F.3d at 642.

At all times relevant to this litigation, the operative regulation provided that an "employee employed in a bona fide administrative capacity" is one who is:

(1) Compensated ... at a rate of not less than $455 per week ...;

(2) Whose 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) Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

29 C.F.R. § 541.200(a) ;⁴ Foster , 710 F.3d at 642. "The exemption is to be narrowly construed against the employer, and the employer bears the burden of proving each element by a preponderance of the evidence."

Foster , 710 F.3d at 642 (citing Renfro v. Ind. Mich. Power Co. , 497 F.3d 573, 575–77 (6th Cir. 2007) ( Renfro II ));⁵ see Auer v. Robbins , 519 U.S. 452, 462, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997). Here, the parties agree that the first two elements are met. Further, Plaintiffs do not argue that their duties did not involve "matters of significance." Thus, the only issue is whether Plaintiffs' "primary dut[ies] include[d] the exercise of discretion and independent judgment." 29 C.F.R. § 541.200(a)(3).

"In general, the exercise of discretion and independent judgment involves the comparison and the evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered." 29 C.F.R. § 541.202(a). Whether a particular employee exercises discretion and independent judgment must be determined "in the light of all the facts involved in the particular employment situation in which the question arises." Id. § 541.202(b).

Additionally, "[t]he exercise of discretion and independent judgment implies that the employee has authority to make an independent choice, free from immediate direction or supervision. However, employees can exercise discretion and independent judgment even if their decisions or recommendations are reviewed at a higher level." 29...