Sixth Circuit: Dueling Diagnoses Justified Employer's Request for New Medical Examinations

At the end of July, a unanimous Sixth Circuit affirmed an employer’s summary judgment on an ADA retaliation and public policy wrongful discharge claim where the employee objected to the employer’s reasonable accommodation conditions (that he wear a CPAP machine) and the parties debated conflicting medical reports as to whether he suffered from sleep apnea.  Allmanv. WalMart, Inc., No. 19-4220 (July 30, 2020).   The Court found the employer’s conditions to be reasonable under the circumstances and entitled to request additional medical examinations.  Ultimately, “arguing about the accuracy of the employer’s assessment is a distraction because the question is not whether the employer’s reasons for a decision are right but whether the employer’s description of its reasons is honest.”

According to the Court’s opinion, the plaintiff commercial truck driver disputed that he suffered from sleep apnea.  Federal DOT regulations require drivers to submit to annual physical examinations by specially certified physicians and to be free of sleep apnea.   Accordingly, once sleep apnea had been indicated during a mandatory annual medical examination, the employer required the plaintiff to submit at the employer’s expense to a sleep study, which confirmed the diagnosis.  He was thereafter required to wear a CPAP machine for at least four hours each night that he slept in his truck and this was apparently monitored remotely.  The plaintiff found the machine to be uncomfortable and objected to the requirement.  He was suspended each time he did not comply and could not return to work until he had worn it for five consecutive nights.  

The plaintiff then paid for his own sleep study, which was conducted by a physician who had not been certified by the DOT (or at least no evidence of such certification was ever provided), and it denied that he suffered from sleep apnea.   The employer requested that the plaintiff submit to a new DOT physical.  Sadly, the physician assistant simply accepted the results of the recent sleep study without conducting an independent examination. Accordingly, the employer requested that the plaintiff submit to a third sleep study by a third sleep specialist to resolve the prior conflict.  This study again confirmed that plaintiff suffered from sleep apnea.  After this study, the employer directed the plaintiff to wear the CPAP machine for 8 hours/night every night and would not permit him to return to work until he had worn it for three consecutive nights.

When the plaintiff still refused to wear the CPAP machine, the employer gave him one last chance:  within seven days he could take BOTH his non-apnea report and its most recent sleep study to a DOT certified physician of his choice to evaluate the conflicting medical reports and render a medical opinion.   The plaintiff refused and instead resigned his employment.  This lawsuit followed.

The Court found the employer’s accommodation of the plaintiff’s sleep apnea condition to be reasonable because without regular treatment with a CPAP machine, the plaintiff would not be qualified to work as a commercial truck driver under DOT regulations and could be a danger to other drivers when suffering from sleep deprivation while working. 

Regardless of whether the plaintiff could prove a prima facie case of retaliation, the employer provided a legitimate and non-retaliatory reason for its actions.

This court has explained that “[a]n employee is not protected when he violates legitimate rules and orders of his employer, disrupts the employment environment, or interferes with the attainment of his employer’s goals.” Booker v. Brown & Williamson Tobacco Co., 879 F.2d 1304, 1312 (6th Cir. 1989). And Walmart’s program of requiring drivers who have sleep apnea to wear a CPAP machine constitutes a legitimate safety requirement and disability accommodation.

The Court rejected the plaintiff’s pretext arguments.  “Walmart had before it two separate studies demonstrating that Allman had sleep apnea, and the company reasonably sought to ensure that Allman’s twice-diagnosed medical condition was under control.”  The plaintiff could not belatedly attack the validity of the two sleep studies and require his employer to believe his explanation over the accounts of two different certified professionals.   The employer was not required to accept the results of his physician’s sleep study, especially since he failed to ever produce evidence that his physician was DOT certified.  The plaintiff also failed to produce evidence that the CPAP requirement was imposed out of spite.  On the contrary, he admitted that the employer imposed the requirement because it believed that he suffered from sleep apnea.

The employer was not required to accept as binding a DOT recertification which was issued in error.  Instead, “employers may permissibly disregard DOT cards issued in error.”  The employer’s request for a third-sleep study – after the erroneous DOT recertification the first two studies disagreed  -- was reasonable.  Indeed, it confirmed the result of the first sleep study finding sleep apnea.

The Court also rejected the plaintiff’s wrongful discharge claim.  First, it could not find where he had opposed unsafe working conditions by refusing to wear the CPAP machine: “Walmart’s CPAP requirement was not an unsafe working condition, but instead a disability accommodation meant to promote public safety on the highways and to ensure compliance with federal law.”

Further, the Court questioned whether his objection to the CPAP machine’s safety had been made in good faith:

we believe that “good faith” required an objectively reasonable belief that the CPAP machine was an unsafe working condition. Nothing in the record before us would allow a reasonable person to hold such a belief. Allman’s personal discomfort in wearing a CPAP machine that so many others have successfully used to alleviate the dangers of sleep apnea is indeed unfortunate, but his personal discomfort does not satisfy the jeopardy element of his Greeley claim.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit: Employee Facebook Posts About Police Shooting May Be Protected by First Amendment as a Matter of Public Concern

Two weeks ago, a unanimous Sixth Circuit reversed a summary judgment for the City of Cleveland involving the termination of an EMT officer for offensive comments about Tamir Rice posted on his private Facebook page.  Marquardt v. Carlton, No. 19-4223 (6^th Cir. 8-19-20).  The plaintiff denied posting the comments and asserted that he deleted them within hours as soon as he discovered them.  However, his co-workers/friends had reported the comments and he had been promptly fired.  The trial court had found that the comments were not protected by the First Amendment because they related to a private matter rather than a matter of public concern.  However, the Sixth Circuit found that the comments could be protected as discussion of a public concern, although it remanded so that the trial court could determine whether the statements were protected by the First Amendment and whether the employer’s efficiency interest outweighed the employee’s interest.

According to the Court’s opinion, the plaintiff had been an EMT officer.  He claimed that while a friend was visiting that friend posted on the plaintiff’s Facebook account during non-work hours while plaintiff slept.  The Facebook account did not identify him as a City employee and was visible only to his friends.  The plaintiff claimed that he discovered the post a few hours later and immediately deleted it.  In the meantime, his cousin had responded and he had apparently replied.   Some co-workers apparently reported it to the City and, following a hearing, he was fired for his posts violating the City’s social media policies and not relating to a matter of public concern.  He filed suit that this violated his First Amendment rights.   The trial court found that the posts related to only private interests and not public concern.

The comments at issue related to the shooting of Tamir Rice fourteen months earlier.    Rice’s death provoked a national debate over the use of lethal force by the police.   The event was back in the headlines because a few days prior to the posts, a grand jury had declined to indict the police officer and it had been revealed that the City had mistakenly billed Rice’s family for the ambulance to the hospital.   The post essentially contended that Rice deserved to get shot for waiving around his toy gun and scaring people in the park and that he was glad he was dead.   It referred to Rice as a “ghetto rat” and regretted that the plaintiff did not get to shoot him that day.

To assess whether a public employer impermissibly retaliated against an employee for his speech, we ask three questions: one, whether the employee engaged in protected speech; two, whether the action taken against the employee would discourage an individual of “ordinary firmness” from engaging in the activity that led to his discipline; and three, whether the employee’s protected speech was “a motivating factor” behind the adverse action taken against the employee.  . . . The first in this series raises further questions of its own. For in resolving whether the employee engaged in protected speech, we employ a separate two-part test. We ask first whether the speech was on a “matter of public concern,” and if it was, we balance the interests of the employer and employee, asking whether the “employee’s free speech interests outweigh the efficiency interests of the government as an employer.”

In this case, the trial court found that the posts were not protected speech because the comments did not relate to a matter of public concern.  The Sixth Circuit reversed and remanded the case back to the trial court to resolve the remaining questions about the employer’s efficiency interest and, if necessary, the ultimate retaliation issue.

Speech involves a matter of public concern when it can be “fairly considered as relating to any matter of political, social, or other concern to the community.”  . . . To resolve the public/private distinction, we look to the “content, form, and context of a given statement, as revealed by the whole record.”  . . . .For whether speech is shocking or inappropriate is irrelevant to whether it concerns a public matter.

The gist of the posts was that the police shooting was justified. “Given the widespread local and national scrutiny of the Rice shooting, these aspects of the posts directly relate to a “subject of general interest and of value and concern to the public.”  The death of Rice “was no private matter.”  The Court found the comments to be analogous to similarly offensive comments following the assassination attempt on President Reagan, expressing the hope that the next attempt was successful, and those of the Westboro Baptist Church members at military funerals.  While the trial court had focused on the comments' alleged pleasure at the death of a twelve-year old boy to concern only private interest,

these disturbing first-person sentiments do not, as a matter of law, alter the broader subject of the speech or transform it into a “personal grievance.” The First Amendment is not so fragile that its guarantees rise or fall with the pronouns a speaker selects. And expressions of opinion, even distasteful ones, do not become matters of personal interest simply because they are phrased in the first person or reflect a personal desire.

There was nothing in the posts reflecting a personal or professional knowledge or dispute with Rice, which might have turned it from speech on a matter of public concern to a “private beef.”

[E]ven if the more extreme excerpts from the posts could somehow be construed as involving matters of personal interest, the “public concern/private interest analysis does not require that a communication be utterly bereft of private observations or even expressions of private interest.” . . . . Rather, the relevant question is whether the communication “touches ‘upon matters only of personal interest.’”

The posts did not lose their protected nature by virtue of the fact that they were visible only to the plaintiff’s “friends.” “[S]peech need not be communicated to the general public to be on a matter of public concern. . . . Whether one’s public expression comes from the ink of a quill pen, the stroke of a keyboard, or the tapping of an iPhone, that expression is entitled to First Amendment protection under the same strictures.”

Finally, the context of the posts supported a finding of public concern.

The known context gives no indication that the speech concerned primarily a matter of Marquardt’s personal interest. Whether the posts were spontaneous expressions or long-developed ideas, their substance still reflects matters of public concern because they relate to a “matter of political, social, or other concern to the community.” . . . .That fairly describes the circumstances surrounding the Rice shooting, which generated intense public debate and quickly became a matter of public discussion. As the posts touch on these same issues, they too address a matter of public concern.

At the end of the day, the trial court on remand will need to evaluate whether the employer’s efficiency interest outweighed the plaintiff’s First Amendment rights because “the government, when acting as an employer, may regulate employee speech to a greater extent than it can that of private citizens, including to discipline employees for speech the employer reasonably predicts will be disruptive.”

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Rejects Jury Verdict on National Origin Harassment, Retaliation and Discharge

On Monday, a unanimous Sixth Circuit Court of Appeals reversed a jury verdict finding a hostile work environment based on race and national origin and retaliatory discharge.   Khalaf v. Ford Motor Co., No. 19-1435 (6^th Cir. 8-31-20).  The plaintiff had complained that the disrespect of his subordinate employees created a hostile work environment as did his own supervisor’s criticism of his English skills, the Court found that the plaintiff failed to show that the disrespect was motivated by discriminatory animus.  Further, criticism of his communication skills was about his managerial job performance and not his accent. In addition, his attempt to compare his treatment by only two of his subordinates with how they interacted with his predecessor were insufficient to show discriminatory animus.  The alleged incidents were not nearly severe or pervasive enough to constitute harassment.  His complaints about his subordinates were too vague to constitute protected conduct.  Further, his complaints about his manager and supervisor took place after the decision to place him on a performance plan.  Finally, his rejection of a transfer following a lengthy medical leave of absence constituted a resignation and not a termination. 

Following years of average performance, the plaintiff had been promoted to a supervisory position.  However, his leadership skills were apparently very poor and lead to him being reassigned and receiving mediocre performance evaluations.  He was also given a quality assurance team to lead and his manager was unhappy with the performance of his team, who blamed his lack of leadership.  Despite several warnings and opportunities to improve, when he was placed on a performance improvement plan, he claimed national origin and race discrimination and retaliation.  When his second performance improvement plan was about to expire, he began a year-long medical leave of absence, during which he began teaching at a local college while collecting LTD.   After filling his prior job, he was offered a demotion but with the same pay and without having to report to his prior supervisor or manager.  He rejected the position and accepted a higher paying position with another company.  He then filed a lawsuit and the jury ruled in his favor on his harassment, retaliation and discharge claims.  The Sixth Circuit reversed.

Title VII does “not prohibit all verbal or physical harassment in the work place; it is directed only at ‘discriminat[ion] . . . because of’” protected characteristics under the statutes. Oncale v. Sundowner Offshore Servs., Inc., 523 U.S. 75, 80 (1998). Mere disrespect or antipathy will not be actionable under the statute unless a plaintiff can prove that such was motivated by discriminatory animus. See id. The “conduct of jerks, bullies, and persecutors is simply not actionable under Title VII unless they are acting because of the victim’s [protected status].”

            . . . “the bulk of the evidence presented demonstrated disrespect by [Dr. Khalaf’s] subordinates.” . . . . Such disrespect, standing alone, is not enough to show unlawful discrimination.

An anonymous comment -- that he had difficulty understanding English or writing – was not directed at his accent.  Although

discrimination based on accent “can be national origin discrimination.”  . . . this is a fine line, and each factual scenario must be evaluated contextually, considering that “[u]nlawful discrimination does not occur . . . when a Plaintiff’s accent affects his ability to perform the job effectively.” Id. (citation omitted). For example, in Igwe v. Salvation Army, we concluded that there was no evidence of national-origin discrimination towards the plaintiff-employee, given that a single comment by another company employee regarding the plaintiff’s “broken speech” related to concern about the plaintiff’s “communication skills,” as opposed to being motivated by discriminatory animus towards his national origin. 790 F. App’x 28, 36 (6th Cir. 2019). Similarly here, the comments about Dr. Khalaf’s English skills (which did not reference Dr. Khalaf’s accent) related to frustration expressed by Dr. Khalaf’s subordinates about their manager’s ability to manage and communicate clearly with them in preparation for the weekly BPR meetings—a critical activity performed by the group.  Because clear communication skills are a fundamental skillset required of managerial positions across the United States, and such ability was a necessary part of Dr. Khalaf’s specific role as QS&PP Department Manager, there is simply no basis, without more evidence, to infer that the comments were motivated by discriminatory animus.

The Court also rejected the plaintiff’s attempt to show discriminatory animus by a few isolated instances of when only two of his subordinates demonstrated a preference for his white predecessor. “This court has held that a comparison between one member of a protected class and one employee outside of that protected class is not “comparative evidence about how the alleged harasser[s] treated members of both races in a mixed-race workplace.”  That there is different treatment of two individuals is not indicative of treatment of a class of individuals based on their protected traits.

The Court also found that the evidence of the isolated incidents of disrespect and comments about his communication skills were not nearly severe or pervasive enough to create a hostile work environment.

“A hostile work environment occurs ‘[w]hen the workplace is permeated with discriminatory intimidation, ridicule, and insult that is sufficiently severe or pervasive to alter the conditions of the victim’s employment and create an abusive working environment.’” . . .

Alleged harassment in the context of a hostile-work environment-claim must be sufficiently “pervasive” or “severe” to alter the conditions of employment. . . . . This standard sets a high bar for plaintiffs in order to distinguish meaningful instances of discrimination from instances of simple disrespect. In this court’s determination of whether conduct clears that bar, we consider various factors, including “‘the frequency of the discriminatory conduct; its severity; whether it is physically threatening or humiliating, or a mere offensive utterance; and whether it unreasonably interferes with an employee’s work performance.’” Id. at 512–13 (citing Harris, 510 U.S. at 21). “Isolated incidents (unless extremely serious) will not amount to discriminatory changes in the ‘terms and conditions of [a plaintiff’s] employment.’” Id. (citing Faragher v. City of Boca Raton, 524 U.S. 775, 788 (1998)). “Occasional offensive utterances do not rise to the level required to create a hostile work environment.” Grace v. USCAR, 521 F.3d 655, 679 (6th Cir. 2008). “To hold otherwise would risk changing Title VII into a code of workplace civility, a result we have previously rejected.” Id. (citation omitted).

Despite his testimony of extremely disrespectful behavior by his manager in criticizing his English skills, the Court ultimately decided the criticism were motivated by his poor communication skills and not his accent or national origin.  Although “discrimination based on manner of speaking can be national origin discrimination,” the plaintiff failed to produce any evidence that criticism of his English skills was based on his accent, rather than his ability to understand and be comprehended.

Our court recognizes the difference between discriminatory animus motivating accent-based comments directed at an employee, . . . and situations “when a [p]laintiff’s accent affects his ability to perform the job effectively,” when criticism of English skills does not constitute unlawful discrimination. Ang, 932 F.2d at 549; see also Igwe, 790 F. App’x at 36 (determining that in certain contexts where a job requires a specific skillset, it is not unlawful to complain of an employee’s “communication skills–– whether related to his national origin or not”).

Dr. Khalaf presents no evidence that Fowler’s statements included any criticism of Dr. Khalaf’s accent. Dr. Khalaf also fails to provide any relevant context regarding the referenced statements by Fowler that would allow a reasonable jury to find discriminatory animus. There is no proof that could help a jury and this court assess what motivated the comments. Undoubtedly, Dr. Khalaf’s role as QS&PP Department Manager required that he communicate clearly with the team he managed, as well as with Fowler.

And, while Dr. Khalaf was offended by Fowler’s comments, a plaintiff’s mere subjective offense does not rise to the situations we deemed “discriminatory” . . .. Based on those cases, Dr. Khalaf needed to present proof to allow a reasonable inference that Fowler’s remarks about Dr. Khalaf’s English were really about Dr. Khalaf’s accent. Then, Dr. Khalaf would have to offer evidence to allow a reasonable inference that criticism of his accent was related or motivated by Fowler’s animus towards Dr. Khalaf’s Lebanese national origin. This, Dr. Khalaf did not do.

Fowler’s derogatory statements, though abusive, were not enough to establish a hostile work environment based on Fowler’s national origin. Rude, yes; discriminatory, no. Therefore, we hold that there was insufficient evidence to conclude that Fowler’s criticism of Dr. Khalaf’s English skills and other comments constituted national-origin discrimination.

The Court also rejected the plaintiff’s various retaliation claims.  His first claim of a demotion (and replacement with a higher level employee) was based on his recommendation to a subordinate that she file a claim with HR about a sexist statement made to her by a co-worker.  However, when he mentioned his recommendation to HR, he never mentioned that the comment was sexist. “For a plaintiff to demonstrate a qualifying 'protected activity,' he must show that he took an 'overt stand against suspected illegal discriminatory action.'  . . . In other words, an employee ‘may not invoke the protections of the Act by making a vague charge of discrimination.’”

As for the HR complaint that he filed against his manager and supervisor in early April 2014, his complaints were made after the March 2014 decision was made to place him on a performance improvement plan in later April based on his poor performance.  In fact, he made his complaint the day that he was supposed to receive the performance improvement plan and it was only postponed because he called off work.   Further, as previously discussed, his prior complaints about the disrespect of his subordinates failed to indicate any connection to his national origin or race. Accordingly, any such complaints were too vague to constitute protected activity.  In addition, those complaints were made two months before his supervisor was appointed and 10 months before the performance improvement plan and were made to HR, not his supervisor. 

The Court also rejected the argument that the plaintiff had been terminated when he rejected the offered transfer and resigned to accept another position with a different employer.   The plaintiff conceded that he was offered the only available comparable position at the time he finally agreed to return to work.  Because he had been gone more than a year, his prior position had long since been filled.   That he viewed the new position subjectively as a demotion -- based on an incorrectly perceived effect on his pension plan when his salary remained unchanged – did not constitute a termination. “Any reduction in grade or benefits, or perception of 'self-demotion' related to a job, does not indicate that Dr. Khalaf was actually terminated.”  Importantly, he never alleged or pursued a constructive discharge theory. “An actual discharge . . . occurs when the employer uses language or engages in conduct that would logically lead a prudent person to believe his tenure has been terminated.”

The Court rejected the argument that the employer’s offer of severance benefits indicated that he had been terminated instead of voluntarily resigning.   “Namely, as was the case with Dr. Khalaf upon his return from disability leave, when a Ford employee’s position 'goes away' or is no longer available, and the only replacement position “available” to that employee requires a reduction in level, then Ford’s personnel system classifies the situation 'as an involuntary separation,' which thereby qualifies that employee for severance benefits.”

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit: Going Door To Door Does Not Necessarily Mean Outside Sales under the FLSA

On Monday, a divided Sixth Circuit Court of Appeals affirmed a jury verdict in favor of door-to-door salespeople for an energy company, finding that they were not exempt outside salespeople.   Hurt v. Commerce Energy, Inc., No. 18-4058 (6^th Cir. 8-31-20).  The Court found that they did not have authority to make sales where the company retained the unfettered discretion to reject the customer applications they obtained, that they were not taking orders for a service and that their compensation was far less than the minimum wage.  Accordingly, the jury could reasonably find that they did not satisfy the regulatory requirements and did not reflect the other indicia of outside salespeople which justifies them being exempt in the first place.

According to the Court’s opinion, the plaintiffs were hired to go door to door in assigned neighborhoods soliciting energy contracts and were paid purely on a commission basis.   They signed agreements calling them independent contractors and were not required to work a minimum number of hours.  They were required to attend daily meetings and to adhere to a dress code. Once they obtained the customer’s signature on an application and put them in touch with a third-party verifier (as required by the State), they were not allowed to have any further contact with the customer.  Further, the company possessed unfettered discretion to reject the customer’s application for a variety of reasons, including poor credit.  The plaintiffs were never told why an application was rejected.  The plaintiffs were never paid much commission, some earning nothing, some earning only $400/month and the rest earning much less than that despite working 10-hour days seven days/week. Some plaintiffs were allowed to set their own workdays; others were not.  The jury found that the plaintiffs were not exempt outside salespeople.

Section 541.500 defines an outside salesperson as someone “customarily and regularly engaged away from the employer’s place or places of businesses,” whose primary duty is either 1) “making sales” or 2) “obtaining orders or contracts for services.”

The Court rejected the argument that the plaintiffs were “obtaining orders or contracts for services,” because electricity and natural gas are commodities, not services.  As to the first part of the regulation – to make sales, the Court’s majority found that these salespeople could not be exempt because the orders they obtained could be (and frequently were) rejected by the company without explanation to the plaintiffs, who had no ability to again contact the customer.  “Plaintiffs’ lack of authority to finalize the transactions is significant when reviewing the facts under a “functional, rather than formal, inquiry . . . in the context of the particular industry in which the employee works.”

The Court distinguished a number of other cases, including a Supreme Court case, Christopher v. SmithKline Beecham Corp., 567 U.S. 142, 161 (2012), where pharmaceutical drug sales representatives were still considered to be making sales by obtaining merely a verbal commitment from a physician.  The Court found that case to be distinguishable because only physicians could prescribe the drug and claimed that there was no such legal restriction here even though the State required third-party verification of all of the company’s sales. Instead, the Court relied on Killion v. KeHE Distributors, LLC, 761 F.3d 574, 583–84 (6th Cir. 2014) declining to find sales representatives to be exempt because the employer’s account managers could control the volume and restrictions on food orders obtained.

In Killion, we reversed summary judgment in favor of the distributor because a jury could conclude that the plaintiffs did not actually make sales. 761 F.3d at 584–85. Similarly, Plaintiffs here communicated with potential customers, convinced them to try Just Energy products, and inputted their information onto the agreement. But Just Energy retained discretion over completion of sales, just as the account managers in Killion could restrict and control the volume of orders. It was appropriate for the jury and now this court to consider Just Energy’s retention of discretion over completion of sales as a factor in determining whether Plaintiffs were making sales.

The Court also rejected a contrary opinion about the defendant company in the Second Circuit.   In New York, the Flood plaintiffs were not required to leave the customer’s residence after placing the verification call.  Instead, they would wait and insert the verification code into the agreement and could answer any of the customer’s additional questions.  More importantly, they were paid far more, making as much as $70,000/year in commissions plus incentive awards.

. . . .Wage issues, which the minimum wages requirements of the FLSA seek to address, also highlight the distinctions between the workplaces. The lead plaintiff in Flood earned more than $70,000 in commissions per year, was eligible to earn residual payments, and received incentive awards for travel around the world. Flood, 904 F.3d at 226. In contrast, testimony revealed that one Ohio plaintiff made only $1,200 over three or four months, while another made only $196 while working 12- to 14-hour days, six to seven days a week for about two months. And others testified to making nothing at all, even after working 11- to 12- hour days, six to seven days a week for several weeks. Of the 3,840 total individuals with compensation data available in the trial spreadsheets, 69% of the individuals made under $1,000 in total compensation and 62% of the individuals made under $500. In sum, Plaintiffs had significantly less control over their work, sale methods, and compensation than the New York solicitors. . . .

In addition to the regulation, the Court also considered other factors that could indicate whether the exemption for outside sales applied.

In analyzing the outside sales exemption, the Supreme Court has considered the “external indicia of salesmen,” which include: whether the workers were hired for their sales experience, whether they were trained to obtain the maximum commitment possible, whether they worked away from the office with minimal supervision, and whether they were rewarded with incentive compensation. Christopher, 567 U.S. at 165–66. Even though the Court considered these indicia as part of its conclusion that pharmaceutical detailers conducted more atypical sales work (qualifying as “other disposition” under the definition of “sale” in the statute, 29 U.S.C. § 203(k)), it did not limit the indicia analysis to exempt salespeople who fall under the catchall sales category of “other disposition.” See id. 164–66. We apply these indicia to the practices and procedures of Plaintiffs’ Ohio workplace.

In this case, the company did not require any prior sales experience.   The plaintiffs were assigned streets to cover, given a script and required to leave as soon as the third-party verification process started. 

Importantly, the sales commissions paid were minimal and far less than the minimum wage.

In determining whether the workers were “employed . . . in the capacity of outside salesman,” 29 U.S.C. § 213(a)(1), the Supreme Court also considered whether a plaintiff’s capacity “comports with the apparent purpose of the FLSA’s exemption for outside salesmen.” Christopher, 567 U.S. at 166. The Court explained that “[t]he exemption is premised on the belief that exempt employees ‘typically earned salaries well above the minimum wage’ and enjoyed other benefits that ‘se[t] them apart from the nonexempt workers entitled to overtime pay.’ Preamble 22124.” Id. The pharmaceutical detailers there earned an average of more than $70,000 per year, including both a base salary and incentive pay, which was “well above the minimum wage”; they were “not required to punch a clock or report their hours, and they were subject to only minimal supervision.” Id. at 151, 166. The pharmaceutical detailers also performed work that “was difficult to standardize to any time frame and could not be easily spread to other workers after 40 hours in a week.” Id. at 166. The Court concluded that pharmaceutical detailers are “hardly the kind of employees that the FLSA was intended to protect.” Id.

The Court also found the trial court’s jury instruction to be an accurate statement of the law:

In determining whether a particular transaction qualifies as a sale for purposes of the Fair Labor Standards Act, you are required to consider the extent to which the employee has the authority to bind the company to the transaction at issue. However, when governmental regulatory requirements limit an employee’s ability to bind his employer, compliance with those governmental regulatory requirements do not disqualify the transaction from constituting a sale for the purposes of the outside salesperson exemption. . . . On the other hand, if the employer retains and/or exercises discretion to accept or reject any transactions for reasons that are unrelated to regulatory requirements applicable to the industry, the transaction should not be considered a sale for purposes of the Fair Labor Standards Act.

The Court also affirmed the admission of evidence about how much compensation was actually paid to the plaintiffs instead of accepting the stipulation that they were paid less than the minimum wage.  The evidence was relevant to a number of different issues in the case.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

DOL Issues New Opinion Letters on Exempt Status and Fluctuating Workweek

This morning, the DOL issued four new FLSA letter opinions.  One concerned the exempt status of part-time corporate trainers and one concerned eligibility for the fluctuating work week method of overtime compensation.

In the first letter, the employer asked about part-time corporate trainers who were paid a day rate and then extra hourly pay for training that they provided to executives of clients and developing materials for those training sessions.   Some trainers work as few as 15 days/year while other work on almost a full-time basis.  They are highly educated with an advanced knowledge in business finance and adult education.  Each trainer has at least a master’s degree and 10 years of experience and some Ph.D degree.  While the employees likely would have qualified for the learned professional exemption, they were not paid on a salary basis and, thus, could not be exempt.  While the extra hourly pay would not defeat the exemption, their payment of a day rate was not consistent with the salary basis test.

In the second letter, the question involved whether a non-exempt employee’s fluctuating work week had to fluctuate both above and below 40 hours/week in order to qualify for that method of calculating overtime compensation with a fixed salary.   While the regulations require that the employee’s working hours fluctuate from week to week, there is no requirement that those hours ever fluctuate below 40 hours per week.  Thus, when the employee’s work hours always fluctuate between 40 and 60 or 70 hours, they are still eligible to be paid on a fluctuating workweek basis.   The DOL also warned, however, that this method of overtime compensation has some restrictions:  employers cannot deduct from the fixed salary personal absences that the employee takes even in full day increments as employers can with other salaried or non-exempt employees.   But, employers can still impose disciplinary deductions from salary under this method of compensation.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.