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Jan. 15 --A federal district court in Florida Jan. 10 conditionally certified a nationwide collective action of at least 1,750 human resources workers alleging that home improvement chain Lowe's implemented a uniform policy of denying them overtime because it misclassified them as “managers” exempt from certain provisions of the Fair Labor Standards Act (Lytle v. Lowe's Home Centers, Inc., 2014 BL 6463, M.D. Fla., No. 8:12-cv-01848, 1/10/14).
Judge Virginia M. Hernandez Covington of the U.S. District Court for the Middle District of Florida determined that Lizeth Lytle sufficiently showed that Lowe's Home Centers Inc. and two co-defendants failed to pay her and similarly situated workers the FLSA-mandated time-and-a-half hourly rate for any hours worked beyond 40 in a week, even though the workers lacked discretionary authority over hiring, firing and supervising other employees.
Based on about 60 supporting declarations of current and former “human resources managers,” the court held that Lytle met the fairly lenient standard of proceeding as a collective action. The decision could implicate at least one such titled employee in each of Lowe's approximately 1,750 stores around the country, including 107 in Florida alone.
But Covington denied Lytle's request to toll the statute of limitations. Lytle argued that when the court mooted her original motion for conditional certification, some potential class members may have been prevented from timely opting in. The judge rejected her contention, saying that potential class members were free to file their own individual FLSA claims or join the putative collective action if they knew about it.
Lytle, who worked as an HR manager at a Lowe's store in Brandon, Fla., from 2007 to March 2012, sued for unpaid overtime compensation in August 2012, according to the court record.
Lytle claimed in her July 2013 second amended complaint that the Lowe's defendants willfully misclassified her and similarly situated employees as FLSA-exempt managers to avoid paying overtime. Lytle contended that she was not a manager because she primarily did clerical work such as processing payroll and record maintenance, and she lacked the power to hire, fire or supervise other employees without the store manager's prior approval.
The former employee also sought to represent a national class of “[a]ll Human Resources Managers or other Human Resources store employees with other titles, who are or were employed with LOWE'S, within the past three years preceding this lawsuit (i.e. August 14, 2012) to the day of trial, and elect to opt-in to this action pursuant to FLSA 29 U.S.C. Section §216(b) who have worked in excess of forty (40) hours per week and were not paid overtime wages.”
The court found that potential class members are similarly situated, considering their job requirements, pay structures, and commonality of claims.
The allegations described the stores as mirror images of one another in terms of personnel hierarchy, and stated that the corporate office established job duties and hours.
HR managers were scheduled to work 11-hour days and alternating Saturdays, the court said. but they were not paid overtime even though they didn't exercise independent judgment concerning significant matters and lacked authority to fire or discipline other employees.
Reacting to the ruling, management side attorneys--who were not involved in the Lowe's case--opined that many employers may be wrongly misclassifying HR professionals as exempt from certain provisions of the FLSA.
“Conditional certification is a low bar,” Charles H. Wilson, a member in Cozen O'Connor's Houston office, said in a Jan. 15 interview with Bloomberg BNA.
On the other hand, he allowed, the case could be a harbinger. “I'm not surprised by it,” Wilson said. “I've often wondered when the plaintiffs' arm is going to start focusing on HR people that don't exercise independent judgment.”
That's one of the conditions, or “prongs” in legal jargon, necessary for an employee to be deemed FLSA-exempt, Khristan Heagle of Klein Zelman Rothermel Jacobs & Schess LLP in New York City said in a separate Jan. 15 interview. “The individual has to exercise discretion and independent judgment on matters of significance,” she said.
The other prong is, for administrative employees, having as their primary duties non-manual or office work that is directly related to the running of the business, on a salary or fee basis of not less than $455 a week.
Executive or managerial workers are also exempted from the FLSA, Heagle said. “If you supervise two or more individuals, you usually will fall within the executive exemption,” she said. This may be true even if the individual in question cannot directly make decisions about hiring or firing, as long as the person's recommendations are considered in such decisions, Wilson commented.
An additional wrinkle is that the FLSA actually mentions HR professionals who interpret and implement HR policies as examples of exempt administrative workers, Wilson said.
HR professionals are also mentioned in a Department of Labor fact sheet on the FLSA, Heagle said. The real issue, she added, is that “job titles do not in any way determine exemption--you have to look at functions.”
“Since HR people very often fall” into either the administrative or the executive exemption, “employers assume they all do,” which is not always true, Heagle stressed. She and Wilson both noted that large retailers such as Lowe's, with many sites and one or two HR people posted to each site to deal with payroll and other clerical issues, may be assuming incorrectly that these people are exempt.
“Employers should continually be looking at their employees and how they function in the organization,” Heagle said.
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Text of the opinion is available at http://www.bloomberglaw.com/public/document/Lytle_v_Lowes_Home_Centers_Inc_Docket_No_812cv01848_MD_Fla_Aug_15.
Fact Sheet #17B: Exemption for Executive Employees Under the Fair Labor Standards Act is available at http://www.dol.gov/whd/regs/compliance/fairpay/fs17b_executive.pdf; Fact Sheet #17C: Exemption for Administrative Employees Under the Fair Labor Standards Act is available at http://www.dol.gov/whd/regs/compliance/fairpay/fs17c_administrative.pdf.
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