NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 14-1274
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ALBERT ITTERLY,
on behalf of himself and similarly situated employees,
Appellant
v.
FAMILY DOLLAR STORES, INC.;
FAMILY DOLLAR STORES OF PENNSYLVANIA, INC.
______________
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR
THE EASTERN DISTRICT OF PENNSYLVANIA
(D.C. Civ. Action No. 5-08-cv-01266)
District Judge: Honorable Lawrence F. Stengel
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Submitted Under Third Circuit L.A.R. 34.1(a)
January 22, 2015
____________________________
Before: FISHER, JORDAN, and GREENAWAY, JR., Circuit Judges.
(Opinion Filed: April 9, 2015)
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OPINION*
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GREENAWAY, JR., Circuit Judge.
Albert Itterly (“Appellant”) appeals the District Court’s grant of summary
judgment to Family Dollar Stores, Inc. and Family Dollar Stores of Pennsylvania, Inc.
(“Family Dollar” or “Appellees”) on Appellant’s claims under the Pennsylvania
Minimum Wage Act (the “PMWA”). Appellant argues that there is a genuine dispute of
material fact as to whether he is an executive employee exempt from overtime payments
under the PMWA. We find there is no basis to upset the District Court’s determination
that summary judgment on this issue is appropriate. We will affirm.1
I. Factual and Procedural History
Appellant worked as the Store Manager at the Family Dollar store in Allentown,
Pennsylvania (the “Allentown Store”) between July and November of 2007. Appellant’s
responsibilities included supervision of other employees, scheduling of employees,
delegating duties to site employees, disciplining employees, and hiring. Appellant also
spent much of his time unloading freight, stocking shelves, and working a register. He
worked an average of 63.5 hours per week. He was paid a weekly salary of $930.00 and
received a single bonus of $904.75. He was not paid for overtime work.
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does
not constitute binding precedent.
1
The District Court exercised jurisdiction pursuant to 28 U.S.C. §§ 1331 and
1367; we have jurisdiction under 28 U.S.C. § 1291.
2
Appellant filed a complaint in the District Court alleging that the denial of
overtime pay for his work in excess of forty hours per week violated the Fair Labor
Standards Act (the “FLSA”), 29 U.S.C. § 201 et seq.,2 and the PMWA, 43 PA. CONS.
STAT. ANN. § 333.101 et seq. Appellant argued that because he spent “virtually all of his
time” performing nonmanagerial tasks and physical labor, his “primary duty” as Store
Manager was not management. As such, he was not an “executive” employee exempt
from overtime payments under the PMWA. Appellant also argued that management was
not his primary duty because (1) he shared responsibility for many of his managerial
duties with nonexempt Assistant Store Managers (“ASMs”) and (2) Family Dollar’s
corporate policies and his supervising District Manager limited any discretion he had to
manage the store.
The District Court held that there were no genuine disputes of material fact and
that Family Dollar was entitled to summary judgment as a matter of law. The District
Court rejected Appellant’s arguments, concluding that Appellant was an executive
employee exempt from overtime payments under the PMWA.
II. Analysis
“[W]e employ a plenary standard in reviewing orders entered on motions for
summary judgment . . . .” Blunt v. Lower Merion Sch. Dist., 767 F.3d 247, 265 (3d Cir.
2014). We employ the same standard as the District Court, and “‘view the underlying
facts and all reasonable inferences therefrom in the light most favorable to the party
2
Appellant withdrew his FLSA claim in September 2011, leaving only his
individual and class claims under the PMWA.
3
opposing the motion.’” Id. (quoting Pa. Coal Ass’n v. Babbitt, 63 F.3d 231, 236 (3d Cir.
1995)). “‘[A] factual dispute is material if it bears on an essential element of the
plaintiff’s claim, and is genuine if a reasonable jury could find in favor of the nonmoving
party.’” Id. (quoting Natale v. Camden Cnty. Corr. Facility, 318 F.3d 575, 580 (3d Cir.
2003)).
Under the PMWA’s executive employee exemption, anyone employed in a “bona
fide executive . . . capacity” is exempt from the PMWA’s overtime protections. 43 PA.
CONS. STAT. ANN. § 333.105(a)(5). The employer has the burden of establishing an
exemption, and such exemptions are narrowly construed against the employer. Pignataro
v. Port Auth., 593 F.3d 265, 268 (3d Cir. 2010). It is undisputed that Appellant earned
more than $250 per week and is thus subject to the “short test” for determining whether
he is an exempt executive employee pursuant to Pennsylvania regulations. 34 PA. CODE
§ 231.82(6). Under the short test, the exemption applies only to employees “whose
primary duty consists of the management of the enterprise in which he is employed . . .
and includes the customary and regular direction of the work of two or more other
employees.” Id.
Appellant concedes that he regularly directed the work of two or more employees.
The only issue on appeal is whether Appellant’s “primary duty” as a Store Manager at
Family Dollar was “management of the enterprise.” Appellant argues that where: (1) he
spent nearly all of his time performing manual labor, (2) the nonexempt ASMs performed
the same managerial duties as he did, (3) his District Manager micro-managed the store,
4
and (4) Family Dollar’s detailed corporate policies limited Appellant’s discretion to such
an extent that he did not actually “manage” the store, there was a genuine dispute of
material fact as to whether Appellant’s primary duty was management and summary
judgment was thus inappropriate. We reject this argument.3
A. Appellant Performed Managerial Duties.
The record demonstrates that Appellant performed managerial tasks as the Store
Manager of the Allentown Store. The federal regulations implementing the FLSA4
define “management” to include activities such as:
[I]nterviewing, selecting, and training of employees . . . directing the work
of employees; . . . appraising employees’ productivity and efficiency for the
purpose of recommending promotions or other changes in status;
disciplining employees; . . . apportioning the work among the employees;
3
To the extent Appellant argues that Morgan v. Family Dollar Stores, Inc., 551
F.3d 1233 (11th Cir. 2008) (holding that sufficient evidence supported jury’s
determination that Family Dollar Store Managers were nonexempt employees) compels a
different result, his reliance is misplaced. The Morgan court expressly found that the
Store Managers in that case did not perform exempt and non-exempt activities
concurrently. Id. at 1272-73. We find the Fourth Circuit’s decision in In re Family
Dollar FLSA Litigation, 637 F.3d 508 (4th Cir. 2011) (affirming a district court’s grant of
summary judgment in favor of Family Dollar) more persuasive. There, the Fourth Circuit
noted that even though the appellant performed nonmanagerial tasks 99% of the time, she
performed them concurrently with her managerial duties and “in the context of her
overall responsibility to see that the store operated successfully and profitably.” Id. at
516. This emphasis on the importance of the Appellant’s managerial duties rather than on
the amount of time spent performing nonexempt tasks is consistent with our own
precedent. See, e.g., Guthrie v. Lady Jane Collieries, Inc., 722 F.2d 1141 (3d Cir. 1983).
4
The parties agree that the FLSA’s definitions of “primary duty” and
“management” apply to Appellant’s claim. Pennsylvania courts have looked to federal
law regarding the FLSA for guidance in applying the PMWA. See Commonwealth v.
Stuber, 822 A.2d 870, 873 (Pa. Commw. Ct. 2003), aff’d, 859 A.2d 1253 (Pa. 2004)
(applying “federal case law” regarding the FLSA to a PMWA claim).
5
. . . [and] providing for the safety and security of the employees or the
property . . . .
29 C.F.R. § 541.102.
Appellant admitted in his deposition to performing many of these activities during
the course of his employment as Store Manager of the Allentown Store. He
acknowledged that he (i) determined which employees worked which shifts; (ii) assigned
work to employees; (iii) interviewed and hired cashiers, (iv) recommended hiring of
assistant store managers; (v) trained employees on store policies and procedures; (vi)
evaluated employee performance; (vii) disciplined an employee for a rule violation; (viii)
reviewed daily sales; (ix) worked to increase sales; (x) adjusted his staff schedules to stay
within the allocated payroll budget; and (xi) maintained the security of the store and
reported any concerns to the police.
B. Appellant’s Primary Duty was Management.
Appellant’s responsibility for the tasks above and the general character of his
position demonstrate that management was his “primary duty” as a Family Dollar Store
Manager. The regulations define the “primary duty” as the “principal, main, major or
most important duty that the employee performs.” 29 C.F.R. § 541.700(a). Further, we
should specifically consider:
[T]he relative importance of the exempt duties as compared with other
types of duties; the amount of time spent performing exempt work; the
employee’s relative freedom from direct supervision; and the relationship
between the employee’s salary and the wages paid to other employees for
the kind of nonexempt work performed by the employee.
Id.
6
Consideration of each factor yields the conclusion that Appellant’s primary
duty was management.
1. Relative Importance of Exempt Duties and Time Spent Performing
Exempt Work
Appellant’s primary contention on appeal is that because he spent the vast
majority of his time performing nonexempt tasks such as unloading freight, stocking
shelves, and ringing a register, management was not his “primary duty.” We, however,
have recognized that an employee need not spend the majority of his time performing
managerial tasks in order to be considered exempt. See, e.g., Guthrie v. Lady Jane
Collieries, Inc, 722 F.2d 1141 (3d Cir. 1983) (holding that foremen who spent no more
than 44% of their time performing managerial work were exempt executives under the
FLSA). Indeed, § 541.700(b) specifically notes that “time [allocation] alone . . . is not
the sole test, and nothing in this section requires that exempt employees spend more than
50 percent of their time performing exempt work.”
Rather, the regulations set out a qualitative standard that considers the relative
importance of the managerial duties as compared with the employee’s nonexempt duties.
In making this determination, we look to “whether the management activities are critical
to the successful operation of the enterprise.” Guthrie, 722 F.2d at 1145 (citing Donovan
v. Burger King Corp., 675 F.2d 516, 521 (2d Cir. 1982)).
According to Family Dollar’s policies, a Store Manager’s first “essential job
function[]” is to “[s]upervise all store personnel, including assigning tasks [and] ensuring
compliance with merchandising and operational policies.” App. 2584a. Appellant
7
managed the Allentown Store on a daily basis, preparing the store cash and sales book,
maintaining store safety and security, assigning work, scheduling store associates, and
ensuring that an ASM was scheduled to assist with these duties if he was not in the store.
Appellant’s performance of these managerial duties was essential to the success of the
Allentown Store. See Thomas v. Speedway SuperAmerica, LLC, 506 F.3d 496, 505 (6th
Cir. 2007) (noting that store “would not function at all” had manager failed to perform
managerial duties such as hiring, scheduling, and training employees).
Moreover, Appellant performed many of these managerial responsibilities
concurrently with nonexempt duties such as unloading freight, stocking shelves, and
operating a register.5 See Guthrie, 722 F.2d at 1145 (“[T]o the extent that these
[managerial] functions are carried out simultaneously with the performance of nonexempt
work, we are not persuaded that they must be regarded as nonmanagerial.”); 29 C.F.R.
§ 541.106(a) (“Concurrent performance of exempt and nonexempt work does not
disqualify an employee from the executive exemption . . . .”). Federal regulations
recognize that “[g]enerally, exempt executives . . . remain responsible for the success or
failure of business operations under their management while performing the nonexempt
work.” 6 29 C.F.R. § 541.106(a). Thus, even while stocking shelves or operating a
5
For instance, Appellant testified that he maintained security while unloading
freight. See App. 130-31a (“It was a way of the manager still having control of that
situation in the back and still unloading the truck . . . .”).
6
Indeed, the regulations specifically cite retail managers as exempt executive
employees who perform many nonexempt tasks. See 29 C.F.R. § 541.700(c) (retail
managers “may have management as their primary duty even if the . . . managers spend
8
register, Appellant remained responsible for supervising and directing his employees,
among other things. See In re Family Dollar FLSA Litig., 637 F.3d 508, 515 (4th Cir.
2011) (noting that even when performing nonmanagerial tasks, Store Manager was
responsible for running the store).
Appellant’s argument that management was not his primary duty because
nonexempt ASMs performed the same managerial tasks as he did is also unavailing.
Family Dollar’s policies demonstrate that the Store Manager had primary responsibility
for management of the store and that the ASMs assisted him in that role. The fact that
nonexempt ASMs assisted Appellant with many of his managerial duties does not render
these duties nonmanagerial for the purposes of our primary duty analysis. See Baldwin v.
Trailer Inns, Inc., 266 F.3d 1104, 1115 (9th Cir. 2001).
2. Relative Freedom from Direct Supervision
Appellant’s argument that the active supervision of a District Manager renders
him nonexempt also fails. The record does not show that Appellant was micro-managed
by a District Manager; rather, the District Manager oversaw 19 Family Dollar stores and
visited the Allentown Store roughly once or twice a week. See In re Family Dollar, 637
F.3d at 517 (noting that Family Dollar Store Manager was relatively free from
supervision where District Manager supervised 17 stores, “which would hardly permit
him to micro-manage all 17”). Although Appellant often received instructions from the
more than 50 percent of the time performing nonexempt work such as running the cash
register”); 29 C.F.R. § 541.106(b) (“An exempt employee can also simultaneously direct
the work of other employees and stock shelves.”).
9
District Manager and consulted with the District Manager regarding hiring and
disciplinary decisions, Appellant retained discretion to manage the store. For the vast
majority of the time, Appellant was the highest-ranking employee at the Allentown Store
and managed it with little direct supervision. See Guthrie, 722 F.2d at 1146 (noting that
section foremen were the persons on the property with the highest authority about half the
time, supporting their classification as exempt employees); see also Murray v. Stuckey’s,
Inc., 50 F.3d 564, 570 (8th Cir. 1995) (“[A]ctive supervision and periodic visits by a
regional manager do not eliminate the day-to-day discretion of the onsite store
manager.”).
The existence of detailed corporate policies likewise does not render Appellant’s
managerial work any less important. Courts have recognized that such corporate policies
are commonplace, particularly in large retail chains, and do not render the managers
subject to those policies nonexempt.7
Appellant was subject to Family Dollar’s detailed corporate policies, but still
exercised discretion in applying those policies. For example, though Appellant was
bound by the pre-made Family Dollar staff scheduler, he testified that he was responsible
for assigning a staff member to each shift and for adjusting the employee schedules to fit
7
See, e.g., Murray, 50 F.3d at 570 (“[N]ationwide companies . . . establish
standardized procedures and policies to guide individual store managers. This practice
may circumscribe[,] but it does not eliminate[,] the discretion of the on-site manager of
an isolated store . . . .”); In re Family Dollar, 637 F.3d at 517 (Store Manager subject to
Family Dollar company policies was relatively free from supervision).
10
his payroll budget. Further, the Family Dollar corporate policies themselves vested
Appellant with discretion in hiring, evaluating, and disciplining personnel.
3. Appellant’s Salary Relative to Non-Exempt Employees’ Wages
Finally, the regulations call for an analysis of the relationship between Appellant’s
salary and the wages paid to nonexempt employees. Ultimately, this factor favors Family
Dollar because Appellant received significantly greater compensation than Family
Dollar’s nonexempt employees in addition to his bonus of $904.75 that the nonexempt
employees were ineligible to receive. 8 Appellant received $930 per week compared with
the $400 per week received by the hourly ASMs (assuming a forty hour work-week).
Even if the ASMs had worked as many hours as Appellant, they would only have
received $752.50 per week (including overtime). Thus, even accounting for overtime
compensation, Appellant still received roughly 24% more than the next highest paid
Family Dollar employees (not including his bonus).9
Based on our de novo review, there are no genuine disputes of material fact.
Appellant is an exempt employee under the PMWA as a matter of law. Appellant
8
Further, Store Manager bonuses are tied to the managerial task of controlling the
store’s expenses.
9
The parties dispute which formulation should be used to calculate and compare
Appellant’s salary with that of nonexempt employees. Appellees argue that Appellant’s
salary should be compared to the average hourly wage received by nonexempt
employees, $8.21, and Appellant argues that his salary should be compared to the ASMs’
hourly wage of $10.00. Appellant also argues that his “effective” hourly rate is only
$13.02. We note, however, that under any method of comparison, Appellant is better
compensated than the nonexempt employees.
11
performed managerial duties critical to the success of the Allentown Store with minimal
direct supervision. The fact that he consistently performed nonexempt tasks the majority
of the time does not alter our analysis.
III. Conclusion
For the foregoing reasons, we will affirm the order of the District Court.
12