was not willful and therefore, as a matter of law, the applicable statute of limitations in this action is the FLSA's two year statute of limitations.
The parties have filed briefs as well as deposition testimony, affidavits, and exhibits in support of their respective positions. For the reasons set forth below, Defendant Powerex Inc.'s Motion will be denied as to the exemption of Plaintiffs and others similarly situated from overtime pay under the FLSA and granted as to the applicability of the FLSA's two year statute of limitations to this action.
Summary judgment may only be granted 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 the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). Rule 56 mandates the entry of summary judgment, after adequate time for discovery and upon motion, against the party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). In considering a motion for summary judgment, the Court must examine the facts in a light most favorable to the party opposing the motion. International Raw Materials, Ltd. v. Stauffer Chemical Co., 898 F.2d 946, 949 (3d Cir. 1990). The burden is on the moving party to demonstrate that the evidence creates no genuine issue of material fact. Chipollini v. Spencer Gifts, Inc., 814 F.2d 893, 896 (3d Cir. 1987). The dispute is genuine if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). A fact is material when it might affect the outcome of the suit under the governing law. Id., Where the non-moving party will bear the burden of proof at trial, the party moving for summary judgment may meet its burden by showing that the evidentiary materials of record, if reduced to admissible evidence, would be insufficient to carry the non-movant's burden of proof at trial. Celotex, 477 U.S. at 322.
Viewing the facts of this action in a light most favorable to Plaintiffs, Plaintiffs' cause of action centers around a Powerex disciplinary policy, entitled "Rules of Conduct", which was in effect throughout the time Plaintiffs were employed by Powerex. It is Plaintiffs' position that because they and others similarly situated were subject to discipline under the Rules of Conduct, they were not employed in bona fide executive, administrative or professional capacities, as defined in 29 C.F.R. § 541 et seq., and thus, pursuant to the FLSA, were entitled to overtime compensation for overtime worked while employed by Powerex. Conversely, Powerex argues that Plaintiffs and others similarly situated (1) were not and never have been subject to disciplinary suspension without pay pursuant to the Rules of Conduct and (2) have never been suspended or had their pay reduced because of the Rules of Conduct and therefore, are exempt from receiving overtime pay under the FLSA.
Powerex's Rules of Conduct lists examples of employee conduct considered unacceptable by Powerex and therefore, for which a Powerex employee can be disciplined. Many of the infractions listed in the Rules of Conduct are not safety related and those that are safety related are not all of major significance. Further, the Rules of Conduct provides, inter alia, for suspensions without pay for infractions that are not safety violations of major significance. On its face, the Rules of Conduct appears to apply to all Powerex employees.
A copy of the Rules of Conduct was posted in a number of Powerex buildings, including the Powerex administration building in which Plaintiffs worked. Copies of the Rules of Conduct were handed out to Powerex employees, including Plaintiff Hess, upon hiring by Powerex. Other correspondence addressed and sent out by Powerex to all its employees, including Plaintiffs, referred the reader to the Rules of Conduct and warned that violation of a particular company rule, for example, not wearing safety glasses, was a violation of the Rules of Conduct and could result in discipline under the Rules.
Although other, non-exempt Powerex employees apparently were told by Powerex management that exempt employees were not subject to discipline under the Rules of Conduct,
Plaintiffs were never informed, orally or in writing, that the Rules of Conduct and its disciplinary mechanism were inapplicable to exempt employees. Moreover, Plaintiff Gillott participated in a team of Powerex managers who adopted and put into place the Rules of Conduct and Plaintiff Gillott stated that throughout the discussion, formulation and adoption of the Rules of Conduct by Powerex not only was it never indicated that the Rules of Conduct would not apply to all segments of Powerex's employees, but, rather, the discussions concerning the Rules of Conduct indicated that the Rules of Conduct were to be applied to all Powerex employees. Powerex also utilized an attendance form for Plaintiffs which listed "Disciplinary Furlough" as one possible reason for Plaintiffs' absence from employment.
None of the Plaintiffs were ever disciplined pursuant to the Rules of Conduct. Plaintiffs, however, allege that two other exempt Powerex employees (only one employee of which Powerex admits was exempt) were disciplined pursuant to the Rules of Conduct. The first employee was suspended from work without pay for three days in 1986 pursuant to the Rules of Conduct for insubordination and reluctance to follow directions. The second employee, whom Powerex admits was an exempt employee, was found to have engaged in falsification of an expense report and was given the option by Powerex of either being involuntarily discharged by Powerex for his actions or resigning; the Rules of Conduct state that falsification may result in immediate discharge. This employee elected to resign rather than to be discharged.
Reviewing the provisions of the FLSA applicable to this action, the FLSA provides, in pertinent part, that:
(a) Except as otherwise provided in this section, no employer shall employ any of his employees who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce, for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate of not less than one and one half times the regular rate at which he is employed.
29 U.S.C. § 207(a). An exception to this general rule mandating overtime compensation is that under the FLSA, an employer is not required to pay overtime compensation to employees "employed in a bona fide executive, administrative, or professional capacity;" said employees are deemed "exempt." 29 U.S.C. § 213(a)(1).
The Department of Labor has enacted regulations defining this exemption. First, to be exempt, an employee must primarily have managerial or supervisory duties. 29 C.F.R. §§ 541.103-541.117. Second, to be exempt, an employee must earn at least $ 250.00 per week in wages. 29 C.F.R. § 541.117. Finally, to be exempt, an employee must be paid "on a salary basis." 29 C.F.R. § 541.118.
In making the determination of whether an employee is one employed in a bona fide executive, administrative or professional capacity and therefore, is an exempt employee not entitled to overtime pay, the burden of proof rests on the employer--i.e. an employee will not be exempt from the overtime pay requirements of the FLSA unless the employer affirmatively shows that the employee fits all the exemption's requirements. Corning Glass Works v. Brennan, 417 U.S. 188, 196-97, 94 S. Ct. 2223, 41 L. Ed. 2d 1 (1974); McGrath v. City of Philadelphia, 864 F. Supp. 466, 483 (E.D. Pa. 1994). Moreover, the overtime compensation provisions of the FLSA are to be construed broadly in favor of the employee and narrowly against the employer. Mitchell v. Lublin, McGaughy & Assoc., 358 U.S. 207, 211, 3 L. Ed. 2d 243, 79 S. Ct. 260 (1959); Reich v. Gateway Press, Inc., 13 F.3d 685 (3d Cir. 1994); McGrath, 864 F. Supp. at 483. Furthermore, the employer "must demonstrate that its employees fit 'plainly and unmistakably within [the exemption's] terms'." McGrath, 864 F. Supp. at 483, citing, Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 4 L. Ed. 2d 393, 80 S. Ct. 453 (1960).
As indicated above, in determining whether an employee is entitled to overtime pay under the FLSA, one must determine, inter alia, whether or not an employee is paid "on a salary basis." It is the status of Plaintiffs and others similarly situated as "salaried" Powerex employees that lies at the heart of Powerex's Motion; neither Plaintiff nor Powerex have raised the argument that Plaintiffs and others similarly situated do not otherwise satisfy the requirements for exemption from overtime compensation under the FLSA.
"Salary basis" is defined, in pertinent part, in the FLSA's regulations as follows:
an employee will be considered to be paid "on a salary basis" within the meaning of the regulations if under his employment agreement he regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting of 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. Subject to the exceptions provided below, the employee must receive his full salary for any week in which he performs any work without regard to the number of days or hours worked.