Informal Input On Personnel Decisions Does Not Satisfy Test For FLSA Executive Exemption
A key element of the Department of Labor’s definition of an “executive” employee – meaning one who is exempt from Fair Labor Standards Act (“FLSA”) requirements relating to overtime pay – is the so-called “hire/fire” prong, or test. This test states that an executive is an employee who, among other things, “has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight.”
Three employees seeking overtime compensation sued their employer under the FLSA. The employer responded that the employees were executives, and thus exempt from FLSA overtime requirements. Following a jury verdict in favor of the employer, the trial court granted plaintiffs’ motion for judgment notwithstanding the verdict, ruling that as a matter of law the employer had failed to satisfy its burden of proof regarding the executive exemption. The employer appealed and the Eighth Circuit, in St. Louis, affirmed with respect to two of the three plaintiffs in Madden v. Lumber One Home Center, Inc., 2014 U.S. App. LEXIS 4929 (8th Cir. Mar. 17, 2014).
The court analyzed the “hire/fire” prong of the FLSA executive exemption, detailing the degree to which an employee must be involved in personnel decisions in order for the executive exemption to apply. Here, the employees concededly had no ability to hire and fire other employees, so the question was whether their hiring recommendations were given “particular weight.” Factors to be considered in determining whether an employee’s suggestions and recommendations are given “particular weight,” the court stated, include: (a) whether it is part of the employee’s job duties to make such suggestions and recommendations; (b) the frequency with which such suggestions and recommendations are made or requested; and (c) the frequency with which the employee’s suggestions and recommendations are relied upon by management.
The court pointed out that an employee’s hiring and firing suggestions and recommendations must: (a) pertain to employees whom the employee customarily and regularly directs; (b) be more than “occasional” suggestions with regard to the change in status of a co-worker; (c) be more than informal input that is solicited from all employees; and (d) demonstrate a significant level of involvement, such as offering personnel recommendations that were acted upon by managers, and active participation in screening applicants for interviews and conducting interviews.
In this case, none of the plaintiffs hired or fired other employees or were involved in activities such as screening applicants, reviewing resumes, conducting interviews, ranking applicants, checking references, or anything else related to its hiring process. In sum, their input into personnel decisions was not given particular weight and could not support an executive exemption under the FLSA.