Shaw v. Prentice Hall Computer Pub., Inc., 97-3116

• Decision Date: 16 September 1998
• Docket Number: No. 97-3116,97-3116
• Citation: 151 F.3d 640
• Parties: 135 Lab.Cas. P 33,709, 4 Wage & Hour Cas.2d (BNA) 1412 Teresa M. SHAW, Plaintiff-Appellant, v. PRENTICE HALL COMPUTER PUBLISHING, INC., a/k/a Macmillan Computer Publishing, Inc., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 640

151 F.3d 640

135 Lab.Cas. P 33,709, 4 Wage & Hour Cas.2d

(BNA) 1412

Teresa M. SHAW, Plaintiff-Appellant, v. PRENTICE HALL COMPUTER PUBLISHING, INC., a/k/a Macmillan Computer Publishing, Inc., Defendant-Appellee.

No. 97-3116.

United States Court of Appeals, Seventh Circuit.

Argued April 2, 1998.

Decided Aug. 4, 1998.

Rehearing and Suggestion for Rehearing En Banc Denied Sept.

16, 1998.

Robert S. Rifkin (argued), Maurer, Rifkin & Hill, Indianapolis, IN, for Plaintiff-Appellant.

Richard A. Smikle, Thomas E. Mixdorf (argued), Ice, Miller, Donadio & Ryan, Indianapolis, IN, for Defendant-Appellee.

Before MANION, ROVNER and DIANE P. WOOD, Circuit Judges.

MANION, Circuit Judge.

Teresa Shaw sued her former employer, now known as Macmillan Computer Publishing Inc., ¹ for violating the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., because she had regularly worked more than 40 hours per week but was not paid overtime. After a bench trial, the district court concluded that Shaw's position as production editor was exempt under the Act as a bona fide administrative employee. Shaw appeals and we affirm.

I. Background

Shaw began working for Macmillan in May 1993 as a production editor. Macmillan publishes computer-related books. The entire process from the point an idea for a book is conceived to the point the finished product is shipped is complex and involves many different people who contribute in larger or smaller amounts to the finished product. This case concerns the process after a completed manuscript enters the editing process, at which point the manuscript is assigned to a managing editor. The managing editor sets the overall schedule for the process and assigns the book project to a production editor like Shaw.

Shaw's job as production editor involved various tasks and responsibilities--including training new employees, designing new forms, and participating on a design team to revise a product line. As the job related to the editorial process, it had two main parts: an editorial component and a project management component. As a project manager, Shaw delegated work to copy editors, proofreaders, and employees in the Illustration Department. She set and monitored deadlines so that the book project would be completed in accord with the overall schedule set by the managing editor. As an editor, Shaw, among other things, reviewed the work of the proofreaders and copy editors and accepted or rejected their suggested edits. She also edited the book herself for "clarity and readability as well as for grammar, word choice and spelling." Shaw could also contact the author to suggest that more substantial changes be made. No one reviewed Shaw's editing decisions.

The district court concluded that the project management was the more significant component of Shaw's job. Specifically, the court found that Shaw's "primary duty, that which was most valuable to Macmillan, was to manage and coordinate book projects through the entire editorial and production process. Shaw served as a link between the managing editor and other members of the editing/production team. She was responsible for monitoring and enforcing internal deadlines within the overall schedule set by her managing editor." In performing these tasks, Shaw was expected to be very organized and to act as a troubleshooter, solving problems as they arose or preempting them.

Macmillan paid Shaw a salary. She started at $24,000 per year and received incremental raises, ending up at $27,850 after about two years. No one kept track of the number of hours Shaw worked, although Macmillan concedes it was more than 40 per week. Production editors were expected to put in whatever time was necessary to meet the production deadlines, and Shaw sometimes worked until the early morning hours. The production editors and managing editors had an informal understanding that if a production editor put in a lot of late work, she could take some time off (perhaps coming in late or leaving early) to compensate. Macmillan does not suggest that this "comp time" was on an hour-for-hour basis or that it brought the hours Shaw worked in a week to 40 or less. Shaw never received additional compensation for working more than 40 hours in a week.

Shaw could have suffered some sort of "burnout" at her job because her initially high ratings in reviews eventually declined. Macmillan terminated Shaw in September 1995, and she then brought this suit under the FLSA, claiming that she had worked more than 1,400 hours of overtime for which Macmillan was required to pay her one-and- a-half times her normal hourly rate of compensation. Macmillan asserted that as a production editor Shaw was exempt from the time-and-a-half provisions because she was either a bona fide administrative employee or a bona fide professional employee. After a two-day bench trial, the district court found that Shaw was not a professional employee but was an administrative employee, and therefore exempt.

II. Analysis

We review the district court's findings of historical fact and the inferences to be drawn from them only for clear error. Icicle Seafoods, Inc. v. Worthington, 475 U.S. 709, 714, 106 S.Ct. 1527, 89 L.Ed.2d 739 (1986). We will conclude that a finding is clearly erroneous if, after reviewing the entire record, we have the definite and firm conviction that the district court made a mistake. United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948); Anderson v. Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985). The district court's interpretation of the statute and regulations is a question of law reviewed de novo. And its ultimate application of the facts to the legal standard is also a question of law. Icicle Seafoods, 475 U.S. at 714, 106 S.Ct. 1527.

The FLSA requires a covered employer to pay time-and-a-half to employees who work more than 40 hours per week. 29 U.S.C. § 207(a)(1). But it need not do so for "bona fide executive, administrative, or professional" employees. 29 U.S.C. § 213(a)(1). The FLSA does not define these terms, but directs the Secretary of Labor to promulgate regulations doing so, and these regulations have the binding effect of law. Batterton v. Francis, 432 U.S. 416, 425 n. 9, 97 S.Ct. 2399, 53 L.Ed.2d 448 (1977); Haywood v. North American Van Lines, Inc., 121 F.3d 1066, 1069 (7th Cir.1997) (citing Batterton). The Secretary has also promulgated interpretive regulations, which serve as guides to the Secretary's view of the Act's application to various fact settings. These interpretive regulations do not have the force of binding law. Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944); Batterton, 432 U.S. at 425 n. 9, 97 S.Ct. 2399. The Fifth Circuit has succinctly stated how the interpretive regulations are to be used:

To the extent that a district court finds in the interpretations an analogy useful in deciding the case before it, it may rely on the interpretations as persuasive evidence both of Congress's legislative and the Secretary's regulatory intent. At the same time, should a district court find the concepts expressed inapposite to the facts before it, the court is free to engage in its own application of [the exemption] and the pertinent regulations.

Dalheim v. KDFW-TV, 918 F.2d 1220, 1228 (5th Cir.1990).

As the employer, Macmillan bears the burden of proving that Shaw is exempt. Corning Glass Works v. Brennan, 417 U.S. 188, 196-97, 94 S.Ct. 2223, 41 L.Ed.2d 1 (1974). Macmillan argued below that Shaw was either an administrative employee or a professional employee. The parties argue the applicability of both provisions on appeal, but because the district court decided this case by finding Shaw an administrative employee, and we conclude that it did not err, we need address only that issue.

Courts generally refer to the defining regulations as having a "long test" and a "short test." See, e.g., Haywood, 121 F.3d at 1069. The Secretary's regulation defining an administrative employee, 29 C.F.R. § 541.2, has five parts, § 541.2(a)-(e), most of which have two subparts. This is the so-called long test. At the end, the regulation adds a proviso, the so-called short test, which has only two parts:

Provided, that 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 the performance of work described in [§ 541.2(a) ], which includes work requiring the exercise of discretion and independent judgment, shall be deemed to meet all the requirements of this section.

See also 29 C.F.R. § 541.214 (indicating proviso is a separate two-part test for "high salaried" employees). The incorporated § 542.1(a) provides in relevant part that the employee's primary duty must "consist[ ] of ... (1) The performance of office or nonmanual work directly related to management policies or general business operations of his employer." ²

There is no dispute that Shaw was paid a salary of more than $250 per week, so that short test applies to her. For Shaw to be exempt, then, her primary duty must have involved (1) office or nonmanual work directly related to management policies or business operations; and (2) the exercise of discretion and independent judgment. See Haywood, 121 F.3d at 1069 (includes salary requirement as third part of test). Shaw does not challenge the district court's finding that her job involved discretion, focusing her arguments only on the finding that her "primary duty" was directly related to Macmillan's management policies or business operations. Shaw makes a three-part attack on the district court's conclusion: First, she asserts the district court clearly erred in finding that she was "ultimately responsible" for the book projects on which she worked. Second, Shaw argues that the district court erred in concluding that she was involved in "major assignments" relating to Macmillan's...