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Broader Interpretation Of Executive Exemption Upheld By Second Circuit

Published by on July 30, 2012

Nightshift warehouse team captains were denied unpaid overtime when the Second Circuit Court of Appeals affirmed a decision that broadens the “executive” exemption under the Fair Labor Standards Act.  As noted in the Connecticut Employment Law Blog, the executive exemption is mistakenly understood to just include senior executives of a company.  More after the break. […]

Nightshift warehouse team captains were denied unpaid overtime when the Second Circuit Court of Appeals affirmed a decision that broadens the “executive” exemption under the Fair Labor Standards Act.  As noted in the Connecticut Employment Law Blog, the executive exemption is mistakenly understood to just include senior executives of a company.  More after the break.

At issue in the case was whether teams of employees supervised by the plaintiffs constituted “customarily recognized subdivisions.”  The teams performed the same task as other teams at the same time and in the same warehouse, and thus were not functionally independent of one another.  Nonetheless, the particular facts left the court with no doubt about its holding.  For instance, each team had defined membership; each captain lead the same team on each shift; and team members did not change teams without being formally transferred.  As observed by the Wage and Hour Litigation Blog, “there [is] no requirement that a department or subdivision operate in different locations, shifts, or have varied functions. While those characteristics may help define a department, they are not mandatory.”

Although this case shows an expanded interpretation of customarily recognized subdivisions, a court will review each employer’s particular circumstances and organization.   Therefore, employers should continue to take care when defining its subdivisions and classifying employees for FLSA purposes.

Download the case here.

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