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GILLOTT v. POWEREX

September 20, 1995

DAVID GILLOTT, JOHN S. HESS, JR., and JOHN G. KOMLENIC, acting for themselves and as representatives of others similarly situated, Plaintiffs, -vs- POWEREX, INC., Defendant.


The opinion of the court was delivered by: AMBROSE

 and

 ORDER OF COURT

 Currently pending before the Court is a Motion by Defendant Powerex, Inc. ("Powerex") for Summary Judgment or, in the Alternative, Motion for Partial Summary Judgment (Docket #: 19) ("Motion"). On April 29, 1994, named Plaintiffs, David Gillott, John S. Hess, Jr. and John G. Komlenic ("Plaintiffs"), acting for themselves and as representatives of others similarly situated, commenced this action against Powerex for unpaid overtime pay pursuant to the Fair Labor Standards Act of 1938, as amended 29 U.S.C. § 201 et seq. ("FLSA"), and the regulations enacted pursuant to the FLSA at 29 C.F.R. § 841. Specifically, Plaintiffs allege that (1) they and others similarly situated were eligible under the FLSA, but were not paid by Powerex, for overtime hours worked while employed by Powerex; (2) Powerex failed to properly make, keep and preserve adequate and accurate records of the hours worked by Plaintiffs and others similarly situated and of the overtime compensation due these individuals each week; and (3) the FLSA's three year statute of limitations is applicable to the action because Powerex's violation of the FLSA was willful.

 In its Motion, Powerex disputes Plaintiffs' position of eligibility of themselves and others similarly situated for overtime compensation, arguing that when employed by Powerex, Plaintiffs and others similarly situated were properly classified as being employed in bona fide executive, administrative or professional capacities, as defined in 29 C.F.R. § 541 et seq., and thus, as a matter of law, were exempt from receiving overtime compensation under the FLSA. Powerex also argues in its Motion that if it is liable to Plaintiffs and others similarly situated under the FLSA, its violation of the FLSA provisions 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. *fn1"

 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, *fn2" 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 ...

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