ANA CERBU, Plaintiff, v. CHICAGO BUILDING SERVICES, INC., an
Illinois Corporation, G. MCKEE KIRKPATRICK and HOAN LE,
Defendants.
No. 97 C 2215
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS, EASTERN DIVISION
1998 U.S. Dist. LEXIS 969
January 21, 1998, Decided
January 22, 1998, Docketed
DISPOSITION: [*1] Defendants' motion for summary judgment pursuant to Federal Rules of Civil Procedure Rule 56 denied. Plaintiff's motion to strike cohen affidavit and paragraph 12 of Hoan Le affidavit denied as moot.
COUNSEL: For ANA CERBU, plaintiff: Ronald Barry Schwartz, Hedberg, Tobin, Flaherty & Whalen, P.C., Chicago, IL.
For CHICAGO BUILDING SERVICES, INC, G MCKEE KIRKPATRICK, HOAN LE, defendants: Norman James Lerum, Attorney at Law, Chicago, IL.
JUDGES: John F. Grady, United States District Judge.
OPINIONBY: John F. Grady
OPINION: MEMORANDUM OPINION
Before the court is defendants' motion for summary judgment pursuant to Federal Rule of Civil Procedure 56. For the reasons stated in this opinion, the motion is denied.
BACKGROUND
The facts relevant to this motion are few. Plaintiff Ana Cerbu used to work for defendants Chicago Building Services and its officers G. McKee Kirkpatrick and Hoan Le. n1 Chicago Building Services provides cleaning and janitorial services to area buildings on a contractual basis. Plaintiff was employed as a project manager, essentially responsible for overseeing the cleaning services provided to a particular building. Plaintiff brought suit against defendants [*2] seeking compensation for overtime pay to which she believes she is entitled under @ 207 of the Fair Labor Standards Act ("FLSA").
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n1 Plaintiff's complaint alleges that both individual defendants qualify as "employers" within the meaning of the FLSA's definition of "employer."
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Defendants filed this motion for summary judgment, arguing that @ 213 of the FLSA exempts plaintiff from @ 207's overtime provision. Section 213 exempts "any employee employed in a bona fide executive, administrative, or professional capacity" from @ 207's overtime pay coverage. 29 U.S.C. 213(a)(1) (1994). Defendants claim that plaintiff was employed in either an executive or administrative capacity while working for them, and thus, is not entitled to any overtime compensation.
DISCUSSION
Summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that [*3] the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). In considering such a motion, the court must view all inferences in the light most favorable to the nonmoving party. Plair v. E.J. Brach & Sons, Inc., 105 F.3d 343, 346 (7th Cir. 1997). "A dispute over material facts is genuine if 'the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Kennedy v. Children's Serv. Soc'y of Wis., 17 F.3d 980, 983 (7th Cir. 1994) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986)). The court will enter summary judgment against a party who does not "come forward with evidence that would reasonably permit the finder of fact to find in [plaintiff's] favor on a material question." McGrath v. Gillis, 44 F.3d 567, 569 (7th Cir. 1995).
To prevail on this motion for summary judgment, defendants must show that there is no genuine dispute that the plaintiff works in an "executive" or "administrative" capacity within the meaning of @ 213 of the FLSA. Neither term is defined in the FLSA but both are defined in the Code of Federal Regulations, to which we now turn.
A. [*4] Executive Capacity
There are two sets of requirements that can be used to demonstrate that an employee works in an executive capacity: a "long list" of six requirements outlined in 29 CFR @ 541.1 and a "short list" of three requirements outlined in 29 CFR @ 541.1(f). Defendants argue that the "short list" is applicable in this case, relevant portions of which are the following: (1) that the employee is "compensated on a salary basis rate of not less than $ 250 per week;" and (2) that the employee's "primary duty consists of the management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof;" and (3) that the employee's job "includes the customary and regular direction of the work of two or more other employees therein." 29 CFR @ 541.1(f)(1997).
It is the defendants' burden to show that all requirements are met. Haywood v. North American Van Lines, Inc., 121 F.3d 1066, 1069 (7th Cir. 1997). Because plaintiff does not dispute that she directed the work of more than one employee -- indeed paragraph 14 of her affidavit offers proof of this -- the court analyzes only the first two requirements.
1. Compensation on [*5] a Salary Basis
The parties do not dispute that plaintiff's earnings exceeded the threshold amount of at least $ 250 per week. In dispute is whether plaintiff received this money on a "salary basis." "Salary basis" is interpreted by the Secretary of Labor to mean that the employee "regularly receives each pay period . . . a predetermined amount constituting all or part of his compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed." 29 CFR @ 541.118 (1997).
Defendants have not explained why plaintiff's "salary" is "not subject to reduction," even when plaintiff attests that her pay was docked when she took a sick day. Affidavit of Ana Cerbu, P 11. Plaintiff argues this deduction shows that her pay was subject to reduction based on the quantity of work she performed.
In analyzing whether the one-time docking in pay means plaintiff's pay was "subject to reduction," we must apply the recent Supreme Court decision clarifying what it means for pay to be "subject to" reduction. Auer v. Robbins, 137 L. Ed. 2d 79, 117 S. Ct. 905 (1997). n2 The Court ruled in Auer that the mere theoretical possibility that an employee's [*6] pay could be reduced was insufficient to prove that the employee's pay was "subject to" reduction. Id. at 911. Rather, the Court adopted the Secretary of Labor's view that, "as a practical matter," pay is subject to reduction "if there is either an actual practice of making such deductions or an employment policy that creates a 'significant likelihood' of such deductions." Id. (quoting the Secretary of Labor's amicus brief).
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n2 Neither party fully analyzed Auer, but it is controlling. And although Auer involved deductions for disciplinary reasons, not for sick leave, the difference is unimportant. Auer interprets the precise regulation (@ 541.118(a)) and language ("subject to reduction") at issue here. Moreover, the Court adopted the position of the Secretary of Labor's amicus brief, which in turn recommended applying Auer's newly articulated interpretation of @ 541.118 not only to disciplinary deductions, but to "'disciplinary or other deductions.'" Auer, 117 S. Ct. at 911 (quoting the amicus brief from the Secretary of Labor). Presumably, this would include deductions for sick leave.
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In this case, there is enough evidence in the record to show a genuine issue of material fact as to whether defendants had an actual practice of, or a significant likelihood of, making deductions. The court initially notes that defendants never denied deducting money for sick leave. More importantly, the record shows that on the one and only sick day plaintiff took, defendants docked her pay. Affidavit of Ana Cerbu, P 11. Based on defendants' actual treatment of plaintiff, the court must conclude that there is a genuine issue about both the defendants' likelihood of making such deductions and its actual practice of doing so.
Defendants could have argued (although they did not do so) that Auer held one-time deductions, as a matter of law, are insufficient to demonstrate a practice or likelihood of deductions. In Auer, the Court found no practice or likelihood of reduction, even though the record showed one actual deduction. On this, the Court simply stated: "Nor, under the Secretary's approach, is such a likelihood established by the one-time deduction in a sergeant's pay, under unusual circumstances." Some lower court decisions interpret this sentence as establishing a categorical [*8] rule that one deduction is always insufficient. See Childers v. City of Eugene, 120 F.3d 944, 946-47 (9th Cir. 1997)("Auer explicitly held that the mere existence of such a policy, even when coupled with an actual violation of the salary basis test, does not render exempt employees nonexempt under the salary basis test."); see also Digiore v. Ryan, 1997 WL 767175, No. 96 C 1785, *9 (N.D. Ill. 1997)(stating in dicta that "Auer made clear that a one-time deduction in a salaried employee's pay does not affect exempt status").
But Auer did not hold that a one-time deduction is always insufficient. Most importantly, the decision does not clearly articulate this as a rule for all cases, and the single sentence from the opinion on this issue (mentioned above) only makes specific reference to the case before the Court. Moreover, the relevant administrative interpretation counsels against adopting such a per se rule. The Secretary of Labor has stated that the "effect of making a deduction which is not permitted under these interpretations will depend upon the facts in the particular case." 29 CFR @ 541.118(a)(6)(1997). Giving this interpretation the deference to which [*9] it is due, and considering its emphasis on the case-specific nature of these disputes, this court concludes that the one-time deduction in this case is sufficient to create a genuine factual issue.
Even assuming that a one-time deduction would always be insufficient under Auer, there is another reason why defendants fail: Auer clearly says that the one-time permissible deduction must be the result of an "unusual circumstance." Auer, 117 S. Ct. at 912; see also Carpenter v. City & County of Denver, 115 F.3d 765, 767 (10th Cir. 1997)(stating that the Court in Auer "recognized that such one time deductions under unusual circumstances will not oust exempt status")(emphasis added). Defendants have not attempted to point out how plaintiff's deduction was the result of an unusual circumstance. Plaintiff has attested that the deduction resulted from her taking a sick day. A sick day is not an unusual circumstance.
Defendants attempt to argue that the deduction in plaintiff's pay was of a kind that did not destroy her exempt status. Although certain types of deductions are permitted under the FLSA, defendants have failed to prove that its deduction qualifies. First, [*10] defendants claim 29 CFR @ 541.118(a)(3) "specifically provide[s] that deductions in pay may be made for absence due to illness without destroying" the exemption. Defendants' Reply Memorandum at p. 2. But defendants only tell half the story. The whole story is that deductions for sick leave are allowed, provided they are made "in accordance with a bona fide plan, policy or practice of providing compensation for loss of salary occasioned by" the sick leave. 29 CFR @ 541.118(a)(3)(1997). Defendants have not produced any evidence demonstrating that plaintiff's deduction was in accordance with a bona fide plan, policy or practice of providing compensation for her sick leave, and consequently, have failed to prove that the deduction was consistent with exempt status by virtue of @ 541.118(a)(3).
Defendants also seemingly attempt to avail themselves of the administrative provision that allows an employer to correct "inadvertent" deductions without losing the exemption by reimbursing the employee for the docked pay. 29 CFR @ 541.118(a)(6). But defendants have not even alleged that the deduction was inadvertent. They only say that "if the deductions ... were inadvertently made, then [*11] the company would be willing to reimburse the plaintiff." Defendants' Reply Memorandum at p. 4 (emphasis added). Whatever the reason is for defendants' reluctance to claim that the deduction was inadvertent, they cannot claim entitlement to use the corrective provision without first showing that the requirements of the provision have been met.
2. Primary Duty of Management
Besides the fact that defendants are unable to meet the first requirement, an independent ground for denying defendants' motion is that they fail to demonstrate that they met the second requirement. Defendants are obliged to show that no material issue of fact exists regarding whether plaintiff's "primary duty consists of the management" of her department. 29 CFR @ 541.1(f)(1997).
There is no question that plaintiff had management responsibility. n3 However, it is not clear whether her "primary duty" was management. Section 541.103 offers guidance in determining whether an employee has management as her primary duty. Like the issue of salary, the determination "must be based on all the facts in a particular case." 29 CFR 541.103 (1997). The most useful indicator, though, is the amount of time spent in the performance [*12] of management duties. If an employee spends over 50% of her time in management, then "a good rule of thumb" is that the employee's "primary duty" is management. Id.
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n3 29 CFR 541.102 identifies the kinds of work that are properly considered to be management. Among other things, the following work qualifies: directing the work of employees, apportioning the work, and ordering supplies. Plaintiff admits to performing these tasks. Affidavit of Ana Cerbu, P 14; Plaintiff's Memorandum in Opposition to Defendant's Motion for Summary Judgment at p. 13 (admitting that plaintiff's duty of assigning work "constituted a management function").
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Defendants made no initial showing that plaintiff spent over 50% of her time in management. Nevertheless, plaintiff responded that she spent at least 6 hours of every 8 to 11 hour shift engaged in manual labor and cleaning tasks unrelated to management. Affidavit of Ana Cerbu, P 15. In response, defendants direct the court to reports written by plaintiff that supposedly took a [*13] significant amount of time to write, arguing that they "undercut plaintiff's assertion that she performed manual labor six hours a day." Defendants' Reply Memorandum at 5. However, defendants' reference to these reports does no more than suggest a dispute as to the amount of time plaintiff spent in management activities -- it does not dispose of the issue. Consequently, this situation is removed from the "rule of thumb" approach outlined in @ 541.103.
In situations where the employee spends less than 50% of her time in management, @ 541.103 points to pertinent factors for the court to consider. The interpretation outlines the four most important: (1) "the relative importance of the managerial duties as compared with other types of duties;" (2) "the frequency with which the employee exercises discretionary powers;" (3) the employee's "relative freedom from supervision;" (4) "the relationship between his salary and the wages paid other employees for the kind of nonexempt work performed by the supervisor." 29 CFR 541.103 (1997).
Defendants make only passing reference to these factors and make little attempt to provide facts supporting them. Plaintiff, on the other hand, has made a [*14] sufficient showing to create a genuine issue on at least two of the factors. She attests that she exercised discretionary powers relatively infrequently -- only when scheduling work for employees. Affidavit of Ana Cerbu, PP 14, 18. Also, plaintiff says she was not relatively free from supervision -- she was supervised by Hoan Le on work relating to tenant complaints, disciplining employees, and matters relating to the day shift. Id. at P 14, 16.
The fourth and final factor calls for information that defendants should be able to provide-- a comparison of the salaries of the employee and others doing similar nonexempt work. Defendants have failed to produce any information on this factor. n4
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n4 The closest defendants come to submitting evidence on this point is the affidavit of Hoan Le, Cerbu's supervisor. Le points out the hourly wage of "working supervisors" as being $ 11.05. Affidavit of Hoan Le, P 11. Cerbu's hourly wage was $ 15.40. However, no attempt is made to compare the work of the two positions. The court is uncertain as to whether working supervisors perform "similar nonexempt work," an essential aspect of the fourth factor.
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When all the factors relevant to the "primary duty" analysis are considered, it is clear that defendants have not met their summary judgment burden. There are many genuine issues of material fact relating to plaintiff's "primary duty." Consequently, the court denies defendants' summary judgment motion with regard to the executive exemption affirmative defense.
B. Administrative Capacity
Defendants also argue that plaintiff is exempt because she worked in an administrative capacity. Like the executive exemption, the administrative exemption has a "short list" of three requirements that can be used in lieu of the six-requirement "long list." See 29 CFR @ 541.2(e)(2)(1997). And like the executive exemption, one of the requirements is that the employee be compensated on a salary basis of at least $ 250. Id. The "salary basis" requirement is the same for both exemptions. As the preceding analysis demonstrates, there are genuine issues as to whether plaintiff was compensated on a salary basis. These issues prevent summary judgment on the administrative exemption just as they do on the executive exemption.
CONCLUSION
Defendants have made only a minimal attempt [*16] to show an absence of genuine issue of material facts, making vague references to many aspects of the applicable law and little attempt to provide facts to support their motion. n5 On one key issue, defendants simply referred the court to the two governing Secretary of Labor interpretations and suggested that if the court were to apply the factors contained therein the conclusion would be that plaintiff is exempt. Defendants' Memorandum of Law in Support of Their Motion for Summary Judgment, at p. 2. Just as the court is not required to "scour the record in search of a genuine issue of triable fact" for the nonmoving party, n6 it is under no obligation to scour the record on behalf of the movant party.
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n5 Also, Local General Rule 12M requires the party moving for summary judgment to submit a statement of material facts as to which there is no genuine issue, and to include "specific references to the affidavits, parts of the record, and other supporting material relied upon to support the facts set forth." Defendants submitted a statement but did not make specific reference to any supporting material, an omission that, by itself, is grounds for denial of the motion under Rule 12M. [*17]
n6 Brasic v. Heinemann's Inc., 121 F.3d 281, 285 (7th Cir. 1997).
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Defendants' motion for summary judgment is denied. n7
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n7 Plaintiff's motion to strike the portions of Hoan Le's affidavit is rendered moot by this outcome and is denied for that reason.
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DATED: JAN 21 1998
ENTER:
John F. Grady, United States District Judge