• March 29, 2011

As any employment lawyer will tell you, wage-and-hour litigation has been a hot area for the last several years.  A recent opinion by U.S. District Judge Michael Davis provides a useful overview of the elements of one type of such a claim – the claimed misclassification of a non-exempt employee.

John Berscheid worked as a branch manager/respiratory therapist for Northwest Respiratory Services beginning in 2006.  NRS provides respiratory products and services to clients in their homes.   As a branch manager, Berscheid’s duties included directing the daily operations of the branch; facilitating communications between the branch and corporate; dispatching employees; setting up routes; maintaining the vehicles; hiring and firing employees; and conducting performance evaluations.  

In April 2009, NRS fired Berscheid for performance reasons; he sued, alleging that he had been wrongly classified as a non-exempt employee under both federal and state wage and hour laws, and therefore denied overtime pay.  He also claimed that he was fired in retaliation for complaining about his pay.  Last week, Judge Michael Davis granted summary judgment to NRS and dismissed Berscheid’s claims under the federal Fair Labor Standard Act (“FLSA”) and its Minnesota counterpart (“MFLSA”).

The central issue in this case was whether Berscheid was properly classified as an “exempt” employee under the FLSA.   NRS claimed that Berscheid was an “executive, administrative or professional” employee; Judge Davis noted under Department of Labor regulations, there are four tests that an employer must meet to demonstrate that its employee is actually exempt:

  1. Was the employee paid on a salary basis of not less than $455 per week?  This requires a showing that the employee received a predetermined amount each paycheck, and that the amount did not vary based on the quality or quantity of work performed (although the employee may receive additional compensation as long as there is a minimum guaranteed.)  The fact that the employee is required to submit time sheets has no bearing on whether the employee is salaried, as long as the compensation did not vary. 
  2. Were the employee’s primary duties managerial?  Because Berscheid’s duties included training, approving overtime, recommending salary changes, scheduling work, designing routes, conducting annual reviews, disciplining employees, handling grievances and responding to customer complaints, NRS met this test. 
  3. Did the employee customarily and regularly direct the work of two or more other employees?  Berscheid did.  
  4. Did the employee have the authority to hire or fire other employees, or were his suggestions and recommendations about hiring, firing, promotions, etc. given weight?  Yes.

Based on his analysis of each of these four factors, Judge Davis concluded that Berscheid was properly classified as exempt, and therefore not entitled to overtime pay.  And because the test under the Minnesota Rules is similar to that under the federal regulations, the result was the same for Berscheid’s MFLSA claim.

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