A U.S. District Court Judge has granted summary judgment in favor of the U.S. Department of Labor, ruling that F.W. Webb Inside Sales Representatives were misclassified as exempt employees and improperly denied overtime compensation.
United States District Court
SUMMARY: (court decision – opens in PDF)
“Plaintiff Julie Su, the Acting Secretary of the United States Department of Labor (‘the ‘Secretary’), brings this action against Defendant F.W. Webb Company (‘Webb’) pursuant to the Fair Labor Standards Act of 1938 (the ‘FLSA’), as amended, 29 U.S.C. §201 et seq., asserting three claims for (1) misclassifying its Inside Sales Representatives (‘ISRs’) as exempt from overtime pay; (2) failing to maintain records of the hours each of their non-exempt employees worked; and (3) unlawfully retaliating against employees by dissuading them from speaking freely to the Secretary’s investigators. … The Secretary has moved for partial summary judgment on its overtime, recordkeeping, and retaliation claims. … Webb has also moved for partial summary judgment as to the Secretary’s retaliation claim. …
“For the following reasons, the Secretary’s motion for summary judgement [Dkt. 63] is granted in part on the following issues: (1) Webb’s ISRs are not administratively exempt under the FLSA; (2) Webb failed to pay its ISRs the premium required by the FLSA for all overtime hours worked from August 4, 2018 to present; and (3) Webb violated the recordkeeping requirements of the FLSA. The Secretary and Webb’s motion for summary judgment [Dkt. 60; Dkt. 63] are both denied on the issue of whether Webb violated the anti-retaliation requirements of the FLSA. …
“The critical question regarding the Secretary’s overtime and recordkeeping claims is whether the administrative exemption of the FLSA applies to the ISRs. The Secretary argues that the ISRs are ineligible for the administrative exemption because their primary duty is to produce sales, Webb’s principal business is producing sales, and the ISRs are not predominately engaged in administrative work. … Webb responds that the ISRs are covered under the administrative exemption because their primary duty is providing solutions to Webb’s customers, they help develop strategy, and they enjoy broad discretion and authority on matters of significance as part of their role. …
“Webb’s business purpose is to produce wholesale sales of its products to its customers. … The company generates its revenue from the sale of its products via its salespersons, including its ISRs. … Since the ISRs’ primary duty closely relates to Webb’s business purpose, ‘in that they produce the product or provide the service that the company is in business to provide,’ Webb cannot meet the second prong of the administrative exemption test. … In other words, Webb’s business purpose is to sell Webb’s products, and the ISRs’ primary duty is to help sell Webb’s products. …
“The facts presented here, even after drawing all reasonable inferences therefrom in the light most favorable to Webb, do not create a genuine issue of material fact. Webb may be able to add context to the ISRs’ role, but that would not change their function. On their claim that the ISRs do not qualify for the FLSA’s administrative exemption, the Secretary is entitled to judgment as a matter of law. As a result, the Court also grants summary judgment for the Secretary on Webb’s failure to pay its ISRs the premium required by the FLSA for all overtime hours worked from August 4, 2018, to present, and on Webb’s violation of the recordkeeping requirements of the FLSA.”