Reeves v. International Telephone & Telegraph Corp., Civ. A. No. 13234.

Decision Date27 April 1973
Docket NumberCiv. A. No. 13234.
CourtU.S. District Court — Western District of Louisiana
PartiesHewett M. REEVES v. INTERNATIONAL TELEPHONE & TELEGRAPH CORPORATION.

COPYRIGHT MATERIAL OMITTED

Leroy H. Scott, Jr., Shreveport, La., for plaintiff.

Ben E. Coleman, Morgan, Baker, Skeels & Coleman, Shreveport, La., Gordon E. Jackson and W. Kerby Bowling, Bowling, Brackhahn & Jackson, Memphis, Tenn., for defendant.

OPINION

DAWKINS, Chief Judge.

This action was instituted by Reeves, a microwave field engineer, against International Telephone & Telegraph, his former employer, for overtime pay allegedly due under the Fair Labor Standards Act. 29 U.S.C. § 201 et seq.

I. T. & T. is a well known world-wide diversified corporation with substantial earnings. It also is a conglomerate of huge scope, owning stock control over many varied corporations having no connection with the field of electronic communication. (Witness the Ditta Beard Affair of 1971-72.)

There has been no disagreement as to jurisdiction having been conferred upon this Court by the provisions of 28 U.S.C. § 1337.

Defendant contends that plaintiff, as a microwave field engineer, was employed by it in a bona fide executive, administrative, or professional capacity within the meaning of 29 U.S.C. § 213(a)(1) and the regulations issued thereunder; and that he therefore is exempt from the overtime compensation benefits of 29 U.S.C. § 207. We hold otherwise; and our reasons follow:

This decision, the transcript, and evidence upon which it is based are limited to the issue of whether the plaintiff was employed in a bona fide executive, administrative, or professional capacity. All other issues have been pretermitted, by agreement of the parties, until resolution of this question.

Title 29 U.S.C. § 213(a)(1) provides, in pertinent part, the following:

"(a) The provisions of sections 206 and 207 of this title shall not apply with respect to—
"(1) Any employee employed in a bona fide executive, administrative, or professional capacity, . . . (as such terms are defined and delimited from time to time by regulations of the Secretary) . . . ."

It should be foremost in our consideration of this action that exemptions contained in the Fair Labor Standards Act are to be narrowly construed against the employer. Brennan v. Great American, Inc., 477 F.2d 292, 1973 (5th Cir.); Shultz v. Louisiana Trailer Sales, Inc., 428 F.2d 61 (5th Cir., 1970) cert. den'd 400 U.S. 902, 91 S.Ct. 139, 27 L.Ed.2d 139.

The issue is clear—if Reeves' employment does not fall within the scope of the exemptions, then he is covered by the Act and entitled to compensation for overtime pay.

We turn now to the regulations issued by the Administrator of the Wage-Hour Division as directed by the Act. They are found at 29 CFR § 541.0, et seq. These regulations establish certain basic criteria which an employee must meet to be considered exempt under the Act. The regulations provide two standards by which an employer's claim of exemption may be determined, i. e., the "streamline test" or the "long test." In applying the "long test," a court may decide that an employee is exempt from the Act's coverage only if the conditions of the employee's employment are such as to satisfy the requirements as set forth in Sections 541.1, 541.2, and 541.3. However, if an employee was paid on a salaried basis of not less than $150 per week at the time of his employment, then the employer's contention that he is exempt may be determined by the use of the "streamline test" (at present this minimum rate is $200 per week). Therefore, we first must determine whether Reeves was employed on a salary basis, and, if so, was this salary basis at a rate of not less than $150 per week?

Of course, as noted, the burden clearly is upon the employer affirmatively to show that the plaintiff-employee is within the scope of the exemption. Great American, Inc., supra; Idaho Sheet Metal Works, Inc., v. Wirtz, 383 U.S. 190, 86 S.Ct. 737, 15 L.Ed.2d 694 (1966); Louisiana Trailer Sales, Inc., supra.

The Secretary's interpretations of the General Regulations Subpart A are found at Subpart B of Title 29 CFR, beginning at Section 541.99. Section 541.118 provides strong guidance for determining when an employee will be considered to be paid on a salary basis within the meaning of the Regulations:

". . . If under his employment agreement he regularly receives each pay period on a weekly, or less frequent, basis a predetermined amount constituting all or part of his compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed . . . the employee must receive his full salary for any week in which he performs any work without regard to the number of days or hours worked."

Of course, defendant urges that plaintiff here made in excess of $150 weekly on a salary basis as required under the interpretation just quoted. The evidence readily bears out defendant's contention as far as that minimum figure is considered alone. When plaintiff began working for defendant, he was compensated at a monthly salary of $700, or $161.54 a week. Adams, personnel director of defendant during plaintiff's tenure, testified he had sent plaintiff a letter confirming defendant's offer of $700 for employment as a microwave engineer. Adams further testified that plaintiff would receive this $161.54 per week, whether he worked 40 hours or not. Gradually, Reeves received yearly increases—not hourly increases—$8400 per year to $9,000, and from $9,000 to $9,500.

He participated in I.T. & T.'s long-term disability insurance plan and also in its hospital and life insurance plan. The carrier for the latter plan for salaried employees was Equitable Life Assurance Society, whereas Travelers Insurance Company was the carrier for those employees paid at an hourly rate. Reeves participated in Equitable's plan. The former plan was available only to salaried employees and not to persons employed on an hourly basis. Moreover, all witnesses testified that microwave engineers were employed on a salaried basis unless there was a special agreement providing otherwise. Reeves alleges that such a special agreement was entered into; however, Adams says that he had no authority to enter such agreement, which he denies he did enter in the first place with Reeves.

Of course, plaintiff contends he was employed on an hourly basis. He points out that there were over 120 entries from the employer's pay roll ledger showing an hourly rate of pay; that he was required to keep hourly records, and that he worked for a certain number of hours and was paid a certain wage based on those hours. In response to this testimony, defendant adequately has shown that the employee's salary was broken down to an hourly rate in order to show how much the employee would be compensated for overtime work, i. e., Reeves was paid straight time for any time over 40 hours per week. Also, it was neces-for him to keep hourly records for billing purposes as concerned defendant's customers. Therefore, based upon the foregoing, we find that plaintiff was compensated on a weekly salary basis at a rate equivalent to not less than $150 per week, exclusive of board, lodging, and other facilities. It also is readily apparent from the evidence, although not pertinent to the exemption question, that Reeves worked substantially in excess of 40 hours per week, on which occasions he was not paid overtime compensation at not less than one and one-half times his regular rate of pay for the hours worked in excess of 40 hours during a work week.

The "streamline tests" for the respective exemptions urged by defendant to be applicable to plaintiff are as follows:

"Section 541.1 Executive
* * * * * *
"(f) . . . An employee who . . . is compensated on a salary basis at a rate of not less than $150 per week . . . exclusive of board, lodging, or other facilities, and whose primary duties consist of the management of the enterprise in which he is employed or of a customarily recognized department or subdivision thereof, and includes the customary and regular direction of the work of two or more other employees therein, shall be deemed to meet all the requirements of this section.
"Section 541.2 Administrative
* * * * * *
"(e) . . . An employee who . . . is compensated on a salary or fee basis at a rate of not less than $150 per week . . . exclusive of board, lodging, or other facilities, and whose primary duty consists of the performance of work described in paragraph (a) of this section which includes work requiring the exercise of discretion and independent judgment shall be deemed to meet all the requirements of this section.
"Section 541.3 Professional
* * * * * *
"(e) . . . An employee who . . . is compensated on a salary or fee basis at a rate of not less than $150 per week . . . exclusive of board, lodging, or other facilities, and whose primary duty consists of the performance either of work described in paragraph (a)(1) or (3) of this section, which includes work requiring the consistent exercise of discretion and judgment, or of work requiring invention, imagination . . . shall be deemed to meet all the requirements of this section."

It next becomes necessary to consider the nature of each such exemption. We begin with the executive classification. The interpretation of the term "management" is found at section 541.102:

"(b) For example, it is generally clear that such work as the following is exempt work when it is performed by an employee in the management of his department or the supervision of the employees under him: Interviewing, selecting and training of employees; setting and adjusting the rates of pay and hours of work; directing their work; maintaining the production or sales records for use in supervision or control; appraising their productivity and efficiency for the purpose of recommending promotions or other changes in
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    ...relevant to the determination of whether [plaintiff] falls within the computer employee exemption"); Reeves v. Int'l Tel. & Tel. Corp., 357 F.Supp. 295, 302–03 (W.D.La.1973) ("the exemption of any individual depends upon his duties and other qualifications and not upon how the employer clas......
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2 books & journal articles
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    • James Publishing Practical Law Books Archive Texas Employment Law. Volume 2 - 2016 Part VIII. Selected Litigation Issues
    • July 27, 2016
    ...and Power Co. , 4 S.W.3d 374, 378 (Tex. App.—Houston [1st Dist.] 1999, pet. denied), §31:4.A Reeves v. International Tel. & Tel. Corp. , 357 F. Supp. 295 (W.D. La. 1973), subsequent proceeding, 1978 U.S. Dist. LEXIS 15641 (W.D. La. 1978), aff’d , 616 F.2d 1342 (5th Cir. 1980), §9:3.D.2.b Re......

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