LIPEZ, Circuit Judge.
Two former managers of Dunkin' Donuts stores in Massachusetts brought this action claiming they were improperly denied overtime pay in violation of the Fair Labor Standards Act ("FLSA"). See 29 U.S.C. § 207(a)(1). Based on facts it deemed undisputed, the district court rejected the recommendation of the magistrate judge and granted summary judgment for the defendant employers, finding that plaintiffs were "bona fide executive[s]" excluded from the statute's overtime pay requirement. Id. § 213(a)(1). Our review of the law and the record persuades us that material factual disputes remain concerning the exemption's applicability to plaintiffs and, hence, we vacate the summary judgment and remand for further proceedings.
In this appeal from a summary judgment, we present the facts in the light most favorable to the plaintiffs, the non-moving party. See Ray v. Ropes & Gray LLP, 799 F.3d 99, 112 (1st Cir.2015). Here we provide a brief recital of facts to set the stage for the analysis that follows. We provide additional detail later as part of that analysis.
Plaintiff Gassan Marzuq worked as a manager at a Dunkin' Donuts store in Massachusetts from 2007 until his termination in 2012,
Pursuant to manager agreements they signed with Cadete Enterprises, Marzuq and Chantre were expected to work "
Marzuq and Chantre were supervised by a district manager, Aaron Dermandy, who oversaw at least seven stores during the time plaintiffs were managers. Among other duties, Dermandy determined staffing levels, arranged maintenance, and ordered the baked goods for the stores. He visited each store every week, and was involved in both the hiring and firing of crew members.
Marzuq viewed himself as "in charge" and "the captain" of his store, and his sons, both of whom worked at Marzuq's store, likewise saw him that way. Sarmad Marzuq testified that "[i]t was always expected that if [his father] wasn't around that he would be always on call," and Ahmad Gassan Marzuq reported that no one else was in charge when his father was not at the store: "If anyone had questions, we would just call my father and he usually would come in . . . [a]nd solve the problem for us."
The record, however, also contains evidence of Marzuq's difficulty in fulfilling his role as "leader of th[e] team." In addition to reporting that he worked on Sundays because his regular six-day schedule was insufficient to get the necessary work done, Marzuq testified that he "did not have [ ] time actually to be the manager as required to be a manager." He elaborated as follows:
He explained that he could not routinely delegate the clean-up to crew members "because you're always short on staff." When asked about the company policy that employees take a day off, he responded: "How [are] you going to run . . . the operation
Marzuq and Chantre filed this action in February 2011 seeking overtime compensation under the FLSA,
As described more fully below, the district court disagreed that a jury could find in plaintiffs' favor. It concluded that the facts in this case are "in substance indistinguishable" from those we encountered in Donovan v. Burger King Corp., 672 F.2d 221 (1st Cir.1982) ("Burger King"), where we held that certain assistant managers were exempt from the overtime provision. The court thus granted summary judgment for defendants, and this appeal followed.
Before examining the district court's conclusion that Burger King "controls the disposition of plaintiffs' FLSA claims," we review the governing law and the reasoning in Burger King that led us to find the overtime exemption applicable there.
The FLSA requires employers to pay their employees at least "one and one-half times the regular rate" for any hours worked in excess of a forty-hour workweek. 29 U.S.C. § 207(a)(1). The overtime requirement has multiple exceptions. The one at issue in this case excludes "any employee employed in a bona fide executive. . . capacity." Id. § 213(a)(1). Pursuant to regulations issued by the Secretary of Labor, an employer seeking to establish that an employee is an exempted "executive" must show: (1) the employee's salary is at least $455 per week, (2) the employee's "primary duty" is management, (3) the employee "customarily and regularly directs the work of two or more other employees," and (4) the employee "has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight." 29 C.F.R. § 541.100(a) (2009).
The regulations explicitly address the situation of an employee who concurrently performs exempt and nonexempt work— i.e., one who supervises other employees while also doing non-supervisory tasks along with those subordinates—stating that such an employee may fall within the exemption so long as the four requirements
The regulations provide guidance on how to determine an employee's "primary duty," including a set of non-exclusive factors (in boldface below) to consider. See id. § 541.700. Because the primary duty inquiry is central to this case, we reproduce all but the introductory line of the pertinent regulation:
Id. (emphasis added). Briefly stated, the regulation explains that an employee's "primary" duty is not determined solely by the amount of time he or she devotes to the different categories of tasks—i.e., exempt vs. nonexempt—but on the overall character of his or her position.
In Burger King, the district court had found after a bench trial that the restaurant chain's assistant managers did not have management as their primary duty and, hence, were entitled to overtime under the FLSA. See 672 F.2d at 224. Among other tasks, the Burger King assistant managers scheduled employees, oversaw
In reversing, we stated that, "[i]n light of the district court's finding here that the assistant managers were `in charge' of the restaurant during their shifts, its conclusion that they do not have management as their primary duty cannot stand." Id. at 227. We noted that employees may concurrently perform exempt and nonexempt tasks, and we observed that the regulation "makes it quite clear that an employee can manage while performing other work, and that this other work does not negate the conclusion that his primary duty is management." Id. at 226. We found applicable "the proposition that the person `in charge' of a store has management as his primary duty, even though he spends the majority of his time on non-exempt work and makes few significant decisions." Id. at 227.
Because the issue of primary duty was the only disputed factor for certain of the Burger King assistant managers, our rejection of the district court's finding on that issue meant that those managers fell within the FLSA's "bona fide executive" exemption. Id. at 224.
The role played by the Burger King assistant managers, as described in our decision, appears to largely coincide with the responsibilities of Marzuq and Chantre as depicted by the evidence recounted in Section I above. Given that factual similarity, the district court unsurprisingly looked to our analysis in Burger King for guidance. The court stated that, like the Burger King assistant managers, it is "clear" that "plaintiffs were at all times `in charge' of their respective stores," including while "serving customers like normal hourly employees." Dist. Ct. Op. at ___;
Hence, echoing our holding in Burger King, the district court found it undisputed that plaintiffs had management as their primary duty, even though they spent "much of their time" on nonexempt work and "had little discretion to make significant decisions." Id. In addition, despite their limited authority overall, the court found that plaintiffs wielded influence over personnel decisions—the other contested requirement for the exemption.
On appeal, plaintiffs contend that the district court failed to perform the multi-factor analysis required by the FLSA regulations to determine an employee's "primary duty" and improperly "gloss[ed] over a clear factual dispute" as to whether Marzuq was able to manage his store while also serving customers and completing other non-managerial tasks. They further assert that the court's reliance on Burger King was misplaced, as that case involved a verdict entered after a bench trial rather than a ruling on summary judgment for which they are entitled to the benefit of favorable factual inferences. All told, plaintiffs contend that summary judgment was improper because the evidence in the record would permit a reasonable factfinder to conclude that the overtime exemption does not apply to them.
We review the district court's summary judgment ruling de novo, assessing the facts in the light most advantageous to plaintiffs and also drawing all reasonable inferences in their favor. Ray, 799 F.3d at 112.
The burden is on the employer to prove an exemption from the FLSA's requirements, Cash v. Cycle Craft Co., 508 F.3d 680, 683 (1st Cir.2007), and "the remedial nature of the statute requires that [its] exemptions be `narrowly construed against the employers seeking to assert them,'" Reich v. John Alden Life Ins. Co., 126 F.3d 1, 7 (1st Cir.1997) (quoting Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 80 S.Ct. 453, 4 L.Ed.2d 393 (1960)); see also Hines v. State Room, Inc., 665 F.3d 235, 240 (1st Cir.2011) (stating that exemptions must be "drawn narrowly against the employer"); Wirtz v. Keystone Readers Serv., Inc., 418 F.2d 249, 261 (5th Cir.1969) (noting the FLSA's "dual mandates of broad coverage and narrow exemptions").
As noted above, it is undisputed that plaintiffs meet two of the four criteria for the "bona fide executive" exemption from overtime pay: they earned more than $455, and they "customarily and regularly direct[ed] the work of two or more other
Appellants argue that the district court improperly failed to consider the four non-exclusive factors listed in the governing regulation as pertinent to the primary-duty determination: "the 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." 29 C.F.R. § 541.700(a)(2009). They further assert that the record evidence on these factors, viewed in their favor, does not lead inevitably to the conclusion that management was their primary duty—thus taking this case outside the scope of our holding in Burger King.
As an initial matter, we agree that Burger King is not on all fours with this case. Our analysis there rested on findings made by the district court after a bench trial, while on summary judgment we must construe the facts in plaintiffs' favor. Moreover, the reported facts in the two cases are not identical. In Burger King, for example, the district court found that the assistant managers "devoted more than 40 percent of their time to non-managerial duties," 672 F.2d at 224, while Marzuq testified that he was "on the floor 90 percent of [the] time" doing nonexempt tasks like serving customers and cleaning. The difference between performing nonexempt work most of the time—i.e., 90 percent— and possibly less than half the time—i.e., "more than 40 percent"—could be significant in evaluating whether a manager is able to perform supervisory and nonexempt tasks concurrently. At least in some settings, a nominal "manager" who spends nearly his entire shift doing the same work as his subordinates might not be able to simultaneously manage the store. See Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1272 (11th Cir.2008) (noting, in a decision affirming jury's finding that store managers did not have management as their primary duty, a distinction between managers who spent "80 to 90% of the time performing manual labor" and those who spent 60% or "`more than fifty percent'" of their time on nonexempt tasks). As discussed below, other differences also exist, including comparative pay rates.
Importantly, when an employee performs both exempt and nonexempt work, the question of primary duty "is determined on a case-by-case basis" in light of the factors specified by regulation and identified above. 29 C.F.R. § 541.106. Appellants correctly observe that the district court did not expressly examine those factors. Instead, the court treated Burger King as dispositive on the primary duty inquiry based on the court's assessment that plaintiffs indisputably were "in charge" of their stores at all times.
Notwithstanding the procedural and factual differences between the cases, Burger King does articulate a principle that is relevant here: a manager who is "in charge" when on the job "can still be `managing' . . . even while physically doing something else," id. at 226, and may have management as his primary duty "even though he spends the majority of his time on non-exempt work and makes few significant decisions," id. at 227. However, Burger King was anchored in factual findings that the assistant managers were "`in charge' of the restaurant during their
Although this case resembles Burger King in certain respects, the primary duty question cannot be answered without the case-specific inquiry contemplated by regulation. Whether plaintiffs are similarly situated to the Burger King assistant managers depends both on whether they were in fact "in charge" while at their stores and whether, in the particular circumstances of this case, their being "in charge" compels the conclusion that management was their primary duty. To fully engage those issues, it is necessary to closely examine the record evidence on the factors specified in § 541.700(a) as pertinent to the primary duty determination. We thus consider each factor in turn.
The record contains evidence that plaintiffs' managerial and non-managerial duties were both essential for the smooth functioning of their restaurants. Marzuq testified to multiple tasks that only he performed, including recordkeeping, depositing cash, calibrating equipment, and setting schedules. In his supervisory role, he also interviewed potential employees, trained new hires, and generally oversaw the day-to-day operation of the stores. These responsibilities reflected the expectations set in Cadete's formal employment documents, which portray the manager's duties as almost exclusively supervisory. The "Cadete Enterprises Position Profile" lists more than two dozen managerial tasks expected of a restaurant manager, only one of which directly anticipates a manager's assistance with nonexempt tasks ("Supervise & assist in quality Customer Service").
Despite the corporate emphasis on supervisory responsibilities, Marzuq's testimony permits the conclusion that, as a factual matter, his non-managerial work also was "critical to the success of the restaurant." Donovan v. Burger King Corp., 675 F.2d 516, 521 (2d Cir.1982). The bulk of Marzuq's workweek was spent performing nonexempt work, including serving customers and cleaning. As recounted above, he reported routinely substituting for hourly employees who were sick or absent for other reasons, explaining that "every day it's a challenge." He had particular difficulty finding replacements for certain shifts—"especially the midnight shift and the night shift on the weekend"—
If, contrary to their job descriptions, managers could not prioritize their supervisory duties because "quality Customer Service" demanded that they regularly perform tasks ordinarily assigned to hourly employees, a factfinder could reasonably conclude that plaintiffs' exempt and nonexempt duties were equally important to the successful operation of their restaurants. See, e.g., Morgan, 551 F.3d at 1270 (upholding jury's verdict that store managers are not exempt executives where "ample evidence supported a finding that the non-managerial tasks not only consumed 90% of a store manager's time but were of equal or greater importance to a store's functioning and success"). Hence, whether the "relative importance" of duties factor supports the overtime exemption cannot be determined without a factfinder's judgment on the impact of the plaintiffs' varied undertakings. See id. ("The jury was free to weigh the relative importance of the store managers' managerial and non-managerial duties. . . .").
Marzuq reported that his daily managerial activity included checking calibration on the equipment for about thirty minutes every morning, counting the cash at the end of the morning shift (between 11 AM and noon),
For Marzuq, however, those administrative tasks added up to a relatively small portion of his workweek because he estimated that he was "on the floor," supplementing the crew, for 90 percent of his work hours. Of course, working alongside the hourly employees "on the floor" does not necessarily signify that Marzuq was
Nonetheless, the record contains evidence indicating that Marzuq's supervisory role was, at least at times, overwhelmed by his non-managerial tasks. More than once, he clarified that he "tried" to exercise his managerial duties,
The time factor is particularly complex in this case because Marzuq routinely worked far in excess of the forty-eight-hour threshold required by the Cadete manager agreement. His regular schedule called for sixty-six hours over seven days,
Hence, the second factor—like the first—does not point decisively in either direction. Cf. Donovan, 675 F.2d at 522 (affirming district court's finding, after a
Testimony from both Marzuq and his district manager, Dermandy, suggests that Dunkin' Donuts managers have some autonomy over the day-to-day operation of their stores, though—like the Burger King assistant managers—they are "unable to make any significant or substantial decisions on [their] own." Burger King, 672 F.2d at 227. Managers create weekly schedules and decide how many hours to assign particular employees, but company directors (ranked above Dermandy in the Cadete hierarchy) set the store budgets and Dermandy determines the overall staffing levels for his district's stores. Managers in all Cadete stores are expected to follow uniform procedures. Dermandy testified that the primary tools used to instruct new managers in his district are an online training course provided by Dunkin' Brands and two to eight weeks of "hands-on," in-store training, sometimes supervised by him and sometimes conducted at a Cadete "training store." That training covers, inter alia, customer service skills, leadership, equipment calibration, scheduling, and paperwork.
Regular supervision continues throughout a manager's tenure. Dermandy spends between fifteen minutes and four hours at each store in his district each week. He explained that his weekly agenda depends on "whether I have new managers that . . . need more attention, more of my help, whether or not certain stores are up or down in sales, whether or not they have budget concerns and about 10 million other things." Marzuq agreed that Dermandy was at his store at least once a week, and sometimes more frequently.
Store managers' authority to problem solve is limited. Dermandy's managers are required to call him if they need maintenance work they are unable to perform themselves, and he will then place the reported malfunction on a repair list for an outside maintenance person. Managers appear to have little flexibility in resolving customer complaints. In response to "my coffee was cold yesterday," for example, a manager may "buy" the customer a new cup of coffee, but the manager may not issue a gift card without Dermandy's approval.
The record contains inconsistent evidence on personnel decisions. For example, Dermandy stated that a store manager has authority to terminate a crew member for some reasons—such as tardiness—while the district manager needs to be involved for "big" issues, such as theft or verbal abuse between employees. Marzuq, however, said that Dermandy had to approve any termination, adding: "He ha[s] to know everything that's going on." Managers also need permission to hire additional crew members when they are short staffed, as well as to add an assistant manager position.
From Marzuq's perspective, managers have little independence. When asked how Dermandy supervised his work, he stated: "From every way, from the records that I send him weekly, from coming down [to] the store or from the office if he heard anything, from phone calls, from e-mails,
In sum, the record depicts a dynamic that, at least in broad strokes, appears typical for a fast-food franchise manager: limited decision-making authority, particularly when a matter involves spending money; close monitoring by an off-site superior to ensure compliance with the company's policies, practices, and expectations; and everyday responsibility for the smooth operation of a clean, adequately staffed restaurant. This scenario is similar to our description of the circumstances in Burger King, where the assistant managers' equivalent tasks were "governed by highly detailed, step-by-step instructions contained in Burger King's `Manual of Operating Data,' and admit of little or no variation." 672 F.2d at 223; see also Morgan, 551 F.3d at 1271 (concluding that "[s]tore managers had little freedom from direct supervision," where, inter alia, district managers "were responsible for enforcing the detailed store operating policies;" closely reviewed each store's inventory, orders, and net sales figures; monitored weekly payroll; controlled employee pay rates and raises; and "routinely sent to-do lists and emails with instructions to store managers").
The record thus shows that Dermandy closely supervised plaintiffs. On its own, this factor tends to favor plaintiffs. Burger King, however, accepted a confined level of authority as consistent with a conclusion that the assistant managers had management as their primary duty. Hence, this factor, like the two factors already discussed, does not decisively point one way or the other on the primary duty question.
The parties' combined statement of undisputed facts gives Marzuq's weekly salary as $825 and Chantre's as $600, and reports that crew members are paid $8 per hour. If, on an hourly basis, a manager's salary for performing a high percentage of nonexempt work is about the same as the wages of crew members for such work, the justification for exempting the manager from overtime pay is weakened. See generally, e.g., Donovan, 675 F.2d at 520 ("Where salary is low and a substantial amount of time is spent on non-exempt work, the inference that the employee is not an executive is quite strong. . . ."); Marshall v. W. Union Tel. Co., 621 F.2d 1246, 1251 (3d Cir.1980) (noting that "granting managerial employees exempt status must have been a recognition that they are seldom the victims of substandard working conditions and low wages"). An accurate comparison of weekly and hourly wages necessarily depends on the number of hours attributed to the salaried employees, yet—as described above—it is difficult on this record to fix a number of hours worked by the managers. Taking the facts in the light most favorable to plaintiffs, however, we at a minimum must presume that Marzuq regularly worked sixty-six hours per week. Based on their salaries, that would be an hourly rate of $12.50 for Marzuq and roughly $9 for Chantre.
Two other factors also must be considered. First, the hourly employees also received tip income, increasing their earnings by some margin. We thus must determine how much tip income to add to the crew members' $8-per-hour base rate to make a fair comparison with plaintiffs' salaries. The record contains evidence indicating that tips may have been as low as fifty cents per hour or as much as $2.70 per hour.
Second, a fair comparison of wages also needs to take into account that, if managers were compensated like hourly employees, hours worked over forty would be paid at the overtime rate of time-and-a-half. Hence, taking a sixty-six-hour workweek, compensated at $8 per hour for the first forty hours ($320) and $12 per hour for the remaining twenty-six hours ($312), supplemented by $2-per-hour in tips ($132), a non-managerial crew member would earn $764—significantly more than Chantre and insignificantly less than Marzuq. See, e.g., Morgan, 551 F.3d at 1271 (describing as "relatively small" a two- or three-dollar difference between hourly rates of salaried store managers and hourly assistant managers).
At least at this juncture, the equivalence in pay shown by this calculation means that the salary vs. hourly wages factor is squarely in plaintiffs' favor.
As our discussion of the factors listed in § 541.700(a) demonstrates, the evidence in the record does not lead inevitably to a conclusion that, in practice, Marzuq and Chantre's primary duty was management. To evaluate at least two of the factors—the time spent on exempt work and the wage comparison—a factfinder would need to determine the number of hours plaintiffs regularly worked, the percentage of time they were engaged in nonexempt work, and the portion of that nonexempt time in which they were concurrently performing managerial duties. See, e.g., Reich v. Stewart, 121 F.3d 400, 404 (8th Cir.1997) ("[T]he amount of time an employee works and the duties he or she performs present factual questions[.]").
Indeed, if a factfinder determined that plaintiffs' nonexempt duties regularly consumed more than forty hours per week,
Moreover, such a scenario would appear to conflict with one of the principal goals of the FLSA's overtime provision: "to spread employment more widely through the work force by discouraging employers from requiring more than forty hours per week from each employee." Marshall v. Chala Enters., Inc., 645 F.2d 799, 803 (9th Cir.1981); see also Overnight
Managers, of course, typically work more than a forty-hour week without entitlement to overtime compensation under the FLSA,
The open question of primary duty means that it is unnecessary for us to address the remaining element of the "bona fide executive" inquiry: plaintiffs' role in changing the status of other employees, including hiring, firing, and promotion. The factual dispute concerning primary duty suffices to foreclose summary judgment.
Viewing the record in the light most favorable to plaintiffs, a reasonable factfinder could conclude that defendants have failed to meet their burden of showing that Marzuq and Chantre fell within the "bona fide executive" exception to the FLSA's overtime pay requirement. Hence, we vacate the summary judgment for defendants and remand the case for further proceedings.
So ordered. Costs to appellants.
Marzuq stated that he also called Dermandy for assistance in finding substitutes, and Dermandy sometimes provided an employee from another store.
637 F.3d at 516 (alterations in original); see also id. at 517 (noting that "she testified plainly, `I ran the store when I was in the building,' and, according to her, she was in the building most of the time, as she spent between 50 and 65 hours per week at the store").