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The 5th U.S. Circuit Court of Appeals reversed the United States District Court for the Southern District of Texas' finding that "mud engineers" were exempt from overtime based on the Fair Labor Standards Act (FLSA) administrative exemption and sent the case back for further proceedings.
To qualify for the administrative exemption, an employer must demonstrate that its employee:
If an employer can establish that these factors are present, it does not have to provide overtime to the employee.
M-I LLC employs drilling fluid specialists, informally referred to as "mud engineers," to manage drilling fluid systems at customer locations and ensure that the drilling fluid is within specifications dictated by the project engineer's mud plan. Mud engineers are required to have high school diplomas and to complete an eight-week internal training program. Drilling fluid is tested by measuring the "mud's pH, rheology, weight and viscosity." Mud engineers are allowed to give recommendations to customers based on the test results without needing permission from a supervisor.
Two former mud engineers, Matthew Dewan and William Casey, sued M-I, on behalf of themselves and others similarly situated, for overtime. M-I argued that mud engineers were exempt based on outside sales, administrative and combination exemptions. The district court rejected M-I's outside sales and combination exemption arguments. However, it accepted the administrative exemption argument and granted M-I's motion for summary judgment.
[SHRM members-only toolkit: Determining Overtime Eligibility in the United States]
On appeal, the 5th Circuit found that the second and third aspects of the standard (primary work and independent judgment) required a jury's analysis rather than the lower court's legal analysis.
First, the 5th Circuit questioned whether a mud engineer's primary duties were "directly related" to the management or general business operations because the duties seemed more closely related to the production of the commodity than to the administration of business affairs. Further, the 5th Circuit found that the exemption requires applicable employees to make policy determinations rather than mere recommendations to customers. Quoting a prior opinion, the 5th Circuit warned that " 'work that is primarily functional rather than conceptual' does not meet the standard."
Second, the 5th Circuit determined that there was enough dispute regarding mud engineers' independent judgment and discretion that a jury would have to weigh the issue. Despite the ability to make recommendations without permission from a supervisor, Dewan and Casey argued that their decisions were nothing more than recitations of well-established procedures. The 5th Circuit found that the facts could be interpreted to favor either M-I or Dewan and Casey, and thus the lower court was wrong to grant the motion for summary judgment.
Dewan v. M-I LLC, 5th Cir., No. 16-20182 (May 30, 2017).
Professional Pointer: A title and creatively written job duties are not sufficient evidence of a wage and hour exemption; actual work performed dictates whether an employee should be paid minimum wage and overtime. With respect to the administrative exemption, an exempt employee should have the ability to effectively advise and make recommendations about business operations. Making recommendations to a customer about a product or service will not be sufficient. Moreover, the employee's decision-making should be more than routine and should come from a place of expertise or inventiveness.
Kaitlin H. Ziegler is an attorney with Kamer Zucker Abbott, the Worklaw® Network member firm in Las Vegas.
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