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Who's Your Supervisor? — Guidance From Kentucky Federal Court

Posted on Thu, Jan 17, 2013 @ 09:30 AM

by Jack B. HarrisonJack B. Harrison

The United States District Court for the Western District of Kentucky recently dismissed a putative class action suit against Family Dollar, Inc. brought by Family Dollar Store Managers.  Plaintiffs in the case had sued Family Dollar, alleging that the conditions of their employment at Family Dollar prevented them from receiving applicable overtime pay, mandatory rest breaks, and additional compensation due for working seven days a week.  In his opinion, Judge John G. Heyburn, II, held that under Kentucky labor law, Plaintiffs were exempt from receiving these benefits because they were, in effect, supervisory employees.

In this case, Plaintiffs, Store Managers of Family Dollar Stores, were paid weekly salaries but worked the equivalent of seven days a week, with weeks that often exceeded sixty hours.  On average, the pay of these Store Managers amounted to between $8.04 per hour and $10.83 per hour, while hourly employees at the same stores made between minimum wage and $9.00 per hour.  Thus, Plaintiffs alleged that they were Store Managers “in name only.”  Plaintiffs asserted that because they performed essentially the same duties as the nonexempt Family Dollar employees, they should not be treated as “supervisors” for the purpose of deciding whether of not they were required to receive overtime pay, mandatory rest breaks, and additional compensation due for working seven days a week.

The Court, in finding in favor of Family Dollar, held that unlike the federal wage and hour regulations contained in the Fair Labor Standards Act, Kentucky law places the burden of proving that he or she is not an exempt employee on the plaintiff.  In contrast, the FLSA contains narrower exemptions to its application and places the burden to prove an exemption upon the employer, rather than the employee.  Under the Kentucky statute, for an employee to be considered an exempt employee, the employee must generally supervise or direct the work of two or more employees and must be compensated at a rate of more than $455.00 per week.  Judge Heyburn held that the Plaintiffs in this case fit this supervisor exemption, in that, as store managers, Plaintiffs set employee schedules, apportioned job responsibilities, supervised other employees’ job duties and tasks, and gave directives to other employees in their stores.  Additionally, Plaintiffs customarily had two or more employees working in their stores under their “supervision.”

While Judge Heyburn agreed that Plaintiffs had shown that much of their time was spent attending to nonsupervisory activities, he concluded that such a showing was not conclusive evidence under Kentucky law of Plaintiffs’ “primary” duty.  Rather, Judge Heyburn indicated that what mattered was the crucial nature of the supervisory duties performed by Plaintiffs in their role as Store Managers.  Judge Heyburn stated that without Plaintiffs’ direction as Store Managers, the other employees at Family Dollar would not perform their jobs and “Family Dollar…could not function.”

Judge Heyburn’s decision in this case will likely be appealed to the United States Court of Appeals for the Sixth Circuit.  However, the lesson for employers from this decision is that where an employer has supervisory employees who perform a majority of non-supervisory duties, employers must take care to ensure that employees who are placed on salary, and who the employer considers to be exempt, meet both the salary basis and duties tests under applicable federal and state statutes.  Employers should review with their labor and employment counsel decisions as to who is a “supervisor” in their workforce with a careful eye on both federal and state law.

Tags: Labor & Employment, Labor Law

"Supervisor" Re-Defined?

Posted on Mon, Dec 17, 2012 @ 08:36 AM

by Jack B. HarrisonJack B. Harrison

U.S. Supreme Court now has an opportunity to expand the definition of “supervisor” in a Title VII Hostile Work Environment Context

 

On November 26, 2012, the U.S. Supreme Court heard oral argument in Vance v. Ball State University, No. 11-556.  Vance presents the Court with the question of whether to adopt, for Title VII purposes, the broad, employee friendly definition of supervisor applied by the Second, Fourth, and Ninth Circuit Courts of Appeals or whether to adopt the more narrow, employer friendly definition that has been employed by the First, Seventh and Eighth Circuit Courts of Appeals.  The Second, Fourth, and Ninth Circuits have defined a “supervisor” as any employee who “directs and oversees” another employee’s daily work, while the First, Seventh, and Eighth Circuits have defined a “supervisor” as only those employees who have the power to “hire, fire, demote, promote, transfer, or discipline” another employee.

In Faragher v. City of Boca Raton and Burlington Industries, Inc. v. Ellerth, the Court had previously held that employers are liable for a sex-based hostile work environment carried out by the victim’s supervisor.  Where the harasser is not a supervisor but only a co-worker, the employer is not liable unless it is found negligent in its handling of the victim’s complaint.   Thus, the question of who is defined as a supervisor has become critical in a Title VII hostile work environment context.

Facts of Vance

In Vance, Maetta Vance, a catering assistant, claimed that Saundra Davis, a catering specialist, had made her work environment stressful through physical acts and racial harassment.   According to Vance, the harassment included racial epithets, references to the Ku Klux Klan, and veiled threats of physical harm. Vance sued her employer, Ball State University, for workplace harassment by a supervisor. Vance asserted that Davis was a supervisor by virtue of the fact that she assigned a daily list of work-related tasks to Vance.  Ball State asserted that Davis was not Vance’s supervisor, because she did not have the power to “hire, fire, demote, promote, transfer, or discipline” Vance.  Vance urged the Court to adopt the standard set by the Circuits that define a supervisor broadly to include employees with authority to “direct and oversee” another employee’s daily work.

Procedural History

The District Court granted summary judgment in favor of Ball State.  The Court of Appeals for the Seventh Circuit affirmed, determining that Davis was not Vance’s supervisor because Davis did not have the power to hire, fire, demote, promote, transfer, or discipline Vance.  Additionally, both lower courts found Ball State had an adequate system in place for reporting and investigating claims of harassment under Title VII and, therefore, the University could not be found negligent.  Because of the conflict in the circuit courts described above, the Supreme Court granted review.

Potential Importance of Court’s Decision

If the Court adopts the broader standard of who is a “supervisor” for Title VII purposes and concludes that a “supervisor” is anyone with authority to “direct and oversee” an employee’s daily work, employers could see increased findings of liability for hostile work environment claims.  Additionally, if this were to be the Court’s ultimate determination, employers might want to rethink not only their training programs but also the job responsibilities of workers with quasi-leadership roles.

It is anticipated that Vance should be decided by June.  Once a decision is issued, we will provide an update on the Court’s ruling.  In the meantime, prudent employers should be cautious regarding how “supervisor” type duties are assigned within a workforce of employees who generally would be deemed non-supervisory.

Tags: Labor & Employment, Hostile Work Environment, Harassment

UPDATE: NLRB Posting Rule on Hold

Posted on Mon, Apr 23, 2012 @ 09:13 AM

describe the imageRobert J. Hollingsworth

Court Blocks NLRB Employee Rights Notice Posting Requirement

On April 17, 2012, the Court of Appeals for the District of Columbia temporarily blocked implementation of the NLRB's new rule requiring private sector employers to post the NLRB's Employee Rights notice.  Additionally, on April 13, 2012, a federal district court in South Carolina ruled that the NLRB lacked authority to promulgate the notice rule.  In light of these rulings, the NLRB announced that it "will not implement the rule pending resolution of the issues before the court."

The fate of the posting rule is now unclear.  While federal courts have the authority to decide whether the posting rule is valid, even if the rule is ultimately upheld by the courts, the fate of the rule may still be decided by the presidential election in November.  If the election results in a Republican majority appointed to the NLRB, the Board could scrap the notice rule.

Stay tuned.  We will report new developments and details as they become available.

Tags: Labor & Employment, National Labor Relations Board (NLRB), Unfair Labor Practices (ULP), Employee Rights Notice

Court Upholds NLRB Employee Rights Notice

Posted on Fri, Mar 16, 2012 @ 10:05 AM

Robert Hollingsworth, Labor & EmploymentBy Robert Hollingsworth

Employee Rights Notice Must Be Posted By April 30, 2012

On March 2, 2012, the U.S. District Court for the District of Columbia upheld the NLRB’s right to require employers to post the NLRB’s Employee Rights Notice.  This Notice informs employees in the private sector of their rights under the National Labor Relations Act to engage in “protected concerted activity.”  In a 46-page opinion, the District Court rejected all of the challenges made by the National Association of Manufacturers to the NLRB’s authority to require employers to post the Notice.

This Notice must be posted by April 30, 2012.  It is available in English and 26 other languages at the following webpage:  www.nlrb.gov/poster.

There was some consolation for employers in the Court’s decision. 

The Court struck down two of the penalties prescribed by the Board for an employer’s failure to post the Notice.  The NLRB’s Final Rule on the Notice provided that the failure to post the Notice would be an independent unfair labor practice (ULP) and would suspend the six-month statute of limitations for other ULP’s (i.e., the charging party would have more than six months to file a ULP charge).  The Court ruled that the NLRB lacked authority to expand the statutory list of unfair labor practices, or to change the statute of limitations.  But the Court also indicated that an employer’s failure to post the Notice might be properly used by the NLRB in other ULP cases against the noncompliant employer as evidence of the employer’s unlawful motive.

National Association of Manufacturers v. NLRB, Case No. 11-1629 (D.C. March 2, 2012)

Tags: Labor & Employment, National Labor Relations Board (NLRB), Unfair Labor Practices (ULP), Employee Rights Notice, National Association of Manufacturers