Counts v. South Carolina Electric & Gas Co.

PUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

CARROLL M. COUNTS; CHARLES J. 
DICKEY, JR.; DONALD M. FISHER;
JOHN K. KNOX; CHARLES J.
MCKINNEY; ROBERT K. MARSH;
BARRY E. MATHER; JERRY R.
NOLTING; SUSAN B. REESE; MARTY S.
RUFF; KARL D. SEASE; JOHN E.
THOMPSON; LYNDELL WARREN
HOLSONBACK; DENNIS LAWAYNE
HUTTON; DEAN G. BROUILLETTE;
DOUGLAS OWEN WATSON,
individually, and as representatives
for the benefit and on behalf of
others similarly situated,
 No. 02-1131
Plaintiffs-Appellants,
and
JOHN DOE, I; JOHN DOE, II; JOHN
DOE, III; JOHN DOE, IV; JOHN DOE,
V; ROBERT D. DERRICK,
Plaintiffs,
v.
SOUTH CAROLINA ELECTRIC & GAS
COMPANY,
Defendant-Appellee.

Appeal from the United States District Court
for the District of South Carolina, at Columbia.
Joseph F. Anderson, Jr., Chief District Judge.
(CA-99-3659-3-17)

Argued: December 4, 2002
Decided: January 31, 2003
2 COUNTS v. SOUTH CAROLINA ELECTRIC & GAS CO.
Before WILKINSON, Chief Judge, and WILLIAMS and
MOTZ, Circuit Judges.

Affirmed by published opinion. Chief Judge Wilkinson wrote the
opinion, in which Judge Williams and Judge Motz joined.

COUNSEL

ARGUED: Arthur K. Aiken, HAMMER, HAMMER, CARRIGG &
POTTERFIELD, Columbia, South Carolina, for Appellants. Sue
Erwin Harper, NELSON, MULLINS, RILEY & SCARBOROUGH,
L.L.P., Columbia, South Carolina, for Appellee. ON BRIEF: Wil-
liam C. Wood, Jr., Debbie N. Whittle, NELSON, MULLINS, RILEY
& SCARBOROUGH, L.L.P., Columbia, South Carolina, for Appel-
lee.

OPINION

WILKINSON, Chief Judge:

Plaintiffs in this case sued their employer, South Carolina Electric
and Gas Company, for overtime wages for work done during two
five-week periods in 1997 and 1999. Plaintiffs’ status as exempt
administrative employees under the Fair Labor Standards Act, how-
ever, does not change merely because they perform some nonexempt
labor. Therefore, their claim for overtime pay must fail.

I.

Plaintiffs are seventeen salaried employees of South Carolina Elec-
tric and Gas ("SCE&G") who work at the V.C. Summer Nuclear Sta-
tion in Jenkinsville, South Carolina. All earn between $52,000 and
$65,000 a year. They brought a class action suit pursuant to the Fair
Labor Standards Act ("FLSA") on behalf of themselves and others
similarly situated. Plaintiffs contended that they were entitled to
 COUNTS v. SOUTH CAROLINA ELECTRIC & GAS CO. 3
recover unpaid wages for overtime work performed during two plant
outages, as well as liquidated damages and attorney’s fees.

Approximately every eighteen months, the V.C. Summer plant
must be shut down for the performance of routine maintenance. Dur-
ing these outages, workers refuel the plant and complete other tasks
which cannot be accomplished while the reactor is on-line. Outages
generally last thirty-five to forty days, during which time SCE&G uti-
lizes both its own staff and contract employees to complete the work
as efficiently as possible. Employees who are not exempt from the
overtime provisions of FLSA are paid time and a half for any hours
over forty a week worked during the outages.

Many employees are reassigned during these down periods and
asked to perform outage-specific tasks. Because this is a busy time for
the plant, employees are also asked to work extra hours. Assignments
are based on the company’s need and the employees’ expertise. Dur-
ing an outage in October and November of 1997, SCE&G asked 282
of its 290 exempt employees to work more than forty hours during at
least one work week. Twelve of these 282 employees were reassigned
to jobs normally considered nonexempt. During an outage in April
and May of 1999, 282 of SCE&G’s 285 exempt employees worked
overtime. Sixteen of those employees were asked to complete tasks
normally performed by nonexempt workers.

The seventeen plaintiffs in this case were administrative employees
asked to perform nonexempt duties during the outages in question.
None of these employees were paid overtime wages for this work.
Each received his normal management salary during this time, and
each returned to his regular job after the outage tasks were complete.

Plaintiffs filed this suit in state court alleging that SCE&G violated
Section 7(a) of FLSA by failing to compensate them for overtime
worked during these two fueling outages. Specifically, plaintiffs
claimed that they were entitled to be paid time and a half for overtime
hours worked at non-exempt tasks during these five-week periods.
SCE&G removed the case to the United States District Court for the
District of South Carolina and, following the completion of discovery,
moved for summary judgment. The district court granted SCE&G’s
motion on December 27, 2001. Plaintiffs appeal.
4 COUNTS v. SOUTH CAROLINA ELECTRIC & GAS CO.
II.

Section 7(a) of FLSA mandates that employees be paid at least
time and a half for any time they work over forty hours a week. 29
U.S.C § 207(a). However, those employed in an executive, adminis-
trative, or professional capacity are subject to a specific exemption
from this overtime pay eligibility. 29 U.S.C. § 213. The issue in this
case is whether plaintiffs at all times fit within this exemption and
therefore were not entitled to overtime pay.

The Department of Labor has promulgated specific regulations
implementing the FLSA exemptions. See 29 C.F.R. §§ 541.1, 541.2,
541.3. These regulations state that in order to be exempt from over-
time pay requirements, an employee must be paid on a salaried rather
than an hourly basis, and his employment must be of a bona fide
administrative, professional, or executive nature. Id. Whether an
employee qualifies for this exemption is determined by applying two
tests contained in these regulations.

Under the "long test," an employee’s duties are examined on a
workweek basis. If an employee spends more than 20% of his hours
in each workweek performing non-administrative duties, then he may
not be treated as exempt under this test. 29 C.F.R. § 541.2. However,
if an employee earns a salary of more than $250 per week, his exempt
status is determined using a "short test." Under this test, an employee
is exempt from the overtime provisions so long as (1) the employee’s
primary duty consists of the performance of office or non-manual
work directly related to management or general business operation;
and (2) the employee customarily and regularly exercises discretion
and independent judgment. 29 C.F.R. § 541.214.

All of the plaintiffs in this case earn more than $250 a week, and
they admit that under ordinary circumstances they are properly classi-
fied under the short test as administrative employees exempt from the
overtime provision of FLSA. They argue, however, that during the
five weeks out of every eighteen months that they perform nonexempt
outage-related tasks, their status should change. We disagree.

A.

First, plaintiffs contend that each workweek should be viewed
independently for purposes of applying the FLSA regulations. There-
 COUNTS v. SOUTH CAROLINA ELECTRIC & GAS CO. 5
fore, they argue that they are entitled to overtime pay for each week
that their primary duty was not administrative in nature. The short test
under which these employees’ status must be determined, however,
contains no mention of a workweek standard.

In Marshall v. Western Union Telegraph Co., 621 F.2d 1246 (3d
Cir. 1980), the Third Circuit specifically rejected a similar attempt to
import a workweek standard into the short test. In Marshall, the Sec-
retary of Labor sought to require an employer to pay overtime wages
to managerial employees who, during a strike, performed functions
normally performed by nonexempt employees. The court rejected the
use of a workweek standard for determining these employees’ exempt
status, finding that the "careful inclusion of the workweek standard in
[the long test] and its exclusion in the [short test] indicates that the
exclusion was intentional." Id. at 1251.

The Third Circuit found that FLSA was meant to protect low paid
rank and file employees, not higher salaried managerial and adminis-
trative employees who "are seldom the victims of substandard work-
ing conditions and low wages." Marshall, 621 F.2d at 1251. Thus, it
was logical for the regulations to provide for greater scrutiny of the
day to day duties of lower earning employees in determining their
exempt status. Higher earning employees such as the plaintiffs are
more likely to be bona fide managerial employees. The regulations
reflect a belief that there is no need to examine the actual duties of
such employees on a weekly basis to determine their exempt status.
In accordance with the language of the regulations and our sister cir-
cuit’s opinion in Marshall, we hold that the short test does not incor-
porate a workweek standard.

B.

Plaintiffs further argue that even if the court does not utilize a
workweek standard, SCE&G’s assignment of non-exempt and non-
emergency work to the plaintiffs for an extended period of time
should be covered by FLSA’s overtime provisions. Plaintiffs assert
that because the outages are continuous periods of planned reassign-
ment of employees, the court should focus on the five weeks of the
outage in assessing whether plaintiffs’ primary duties made them
exempt from FLSA overtime requirements.
6 COUNTS v. SOUTH CAROLINA ELECTRIC & GAS CO.
Nothing in the FLSA compels any particular time frame for deter-
mining an employee’s primary duty. To the extent the regulations
refer to time at all, it is only to provide that "a good rule of thumb
[is] that primary duty means the major part, or over 50 percent, of the
employee’s time." 29 C.F.R. §§ 541.103, 541.206. There is no indica-
tion of what time period this percentage is to be evaluated within.
And, in fact, the regulations explicitly state "time alone, however, is
not the sole test," and that any assessment of primary duty should "be
based on all the facts in a particular case." Id. It is clear from this lan-
guage that primary duty is meant to be assessed by the totality of the
circumstances. Thus, the regulations go on to explain that "where the
employee does not spend over 50 percent of his time in managerial
duties, he might nevertheless have management as his primary duty
if the other pertinent factors support such a conclusion." Id. These
factors might include "the relative importance of the managerial
duties as compared with other types of duties, the frequency with
which the employee exercises discretionary powers, his relative free-
dom from supervision, and the relationship between his salary and the
wages paid other employees for the kind of nonexempt work per-
formed by the supervisor." Id.

The district court found that the plaintiffs’ primary duties were
administrative in nature. In doing so, it utilized an eighteen month
time frame and found that the performance of nonexempt work for
five or six weeks out of every eighteen months could not alter the
plaintiffs’ exempt status. The use of an eighteen month framework is
not compelled by the regulations. But neither is it without basis. Eigh-
teen months comprises the natural business cycle of the power plant.
Assessing employees’ duties on the basis of one business cycle is a
common sense means of determining the primary duties of those
employees. And the district court here correctly determined that plain-
tiffs’ customary and regular tasks are administrative in nature. Plain-
tiffs are therefore not entitled to overtime pay.

III.

Plaintiffs’ approach to FLSA is untenable. Their interpretation of
the regulations would spawn disputes over the contours of the admin-
istrative exemption. For example, lawyers would have to hash out
how many days or hours a management employee could do non-
 COUNTS v. SOUTH CAROLINA ELECTRIC & GAS CO. 7
exempt work before his primary duty is no longer managerial or
administrative in nature. And courts would have to decide whether a
given decision to utilize management or administrative employees for
nonexempt tasks was made on an emergency basis or was planned by
a company in advance, a distinction not always easily made.

The language and structure of the FLSA regulations call for an
holistic approach to determining an employee’s primary duty. We
cannot reject this approach in favor of day by day scrutiny of the tasks
of managerial or administrative employees. Nothing in the "primary
duty" test of 29 C.F.R. § 541 suggests, much less compels, companies
to handle management employees under one set of rules when they
are performing administrative duties and another when they perform
nonexempt tasks. The regulatory burden that would result from such
an approach would be significant as employees who "are not normally
required to keep time sheets or punch time clocks" would have to
"keep records on a daily or weekly basis of their time spent perform-
ing a given task." Marshall, 621 F.2d at 1251, 1254. The prospect of
such additional record keeping might in turn deprive businesses of
flexibility in the assignment of salaried managers to occasional, but
necessary, company tasks.

For the foregoing reasons, the judgment of the district court is

AFFIRMED.