Labor & Employment Law Daily Wrap Up, WAGE-HOUR—EXEMPTIONS—E.D.N.Y.: Employer denied summary judgment as to whether salaried employee was exempt from overtime, (Feb 10, 2025)

By Ronald Miller, J.D.

Although the employee’s salary satisfied the salary level test, there was a material dispute of fact as to the salary basis and the duties tests.

A federal district court in New York denied an employer’s motion for summary judgment as to whether an employee was exempt from the overtime requirements of the FLSA and NYLL. With regard to the salary basis test, the court found the evidence was inconsistent as to whether the employee was paid a fixed weekly rate that was improperly reduced when he did not work his full schedule. There were also questions of fact as to whether the employee met the duties test. Accordingly, the court found there was a material dispute regarding the salary basis test and the duties test for purposes of the executive exemption (Pastuizaca v. Mihwa Jo Corp. dba Noodle Flower, No. 22-CV-5561 (MKB) (E.D.N.Y. Feb. 8, 2025)).

Employment duties. The employer was a sole proprietorship that operated a restaurant and flower shop. The employee worked for the employer for over 10 years. He worked six days per week and had a variety of duties. He spent most of his time at the flower shop from March through August, and about 70 percent of his time at the restaurant and 30 percent at the flower shop from September to February.

The parties agree that the defendants paid the employee more than the minimum salary requirement for exemption status under the FLSA and NYLL. The employer did not pay the employee overtime when he worked more than 40 hours per week, and his paystubs did not show an hourly or overtime rate.

The employee’s job responsibilities included buying and preparing food, selling flowers, gardening, making deliveries, and minor handyman tasks. The employee identified himself as a “manager” in his loan application to purchase his home. Further, while he occasionally helped with plating and serving tables when there were staff shortages, he did not share tips with the servers.

The employee was asked to evaluate the performance of other employees. Other employees would also sometimes call the employee to inform him when they were not coming in to work.

In September 2022, the employee filed suit against the employer. The parties unsuccessfully attempted mediation. In March 2024, the employer moved for summary judgment as to the employee’s FLSA and NYLL overtime claims.

Overtime claims. The employer argued there was no dispute of material fact that the employee was an exempt employee and therefore not entitled to overtime pay. It argued that the employee was paid the minimum salary requirement to qualify for exempt status under the FLSA and the NYLL. The employer also contended that the employee was a manager, and was left to manage the restaurant, the flower shop, and the sauce-making business.

For his part, the employee argued that he was not an exempt employee. He asserted that although his minimum salary was higher than that required for exempt status under the FLSA and NYLL, it was insufficient to qualify him as an exempt employee under the salary basis test. He also contended that his work was primarily manual rather than managerial, and that he did not maintain discretion over significant matters, including directing the work of other employees or hiring and firing employees.

“Bona fide executive.” The Supreme Court, in Helix Energy Solutions Group, Inc. v. Hewitt, recently explained that an employee is a “bona fide executive” under the FLSA if their employment satisfies each of three distinct tests. The first is the salary basis test, which asks if an employee “receives a ‘predetermined and fixed salary’—one that does not vary with the precise amount of time he works.” The second test, the salary level test, “asks whether that preset salary exceeds a specified amount.” Finally, the third duties test asks if the employee carries out certain responsibilities, namely, “managing the enterprise, directing other employees, and exercising power to hire and fire.”

State-law claim. As an initial matter, the court concluded that during the weeks of employment where the employee’s wages did not meet the minimum requirement under the NYLL to be exempt from overtime pay, the employee was not exempt for those weeks of his employment and he was entitled to summary judgment as to his nonexempt status for those weeks.

The employer’s pay records showed that the employee was always paid at least the prevailing weekly minimum required by the FLSA, but there were at least 18 weeks between September of 2019 and June of 2021 when the employee was not paid the minimum required for exempt employees under the NYLL. Accordingly, based on the employer’s own pay records, the employee was not an exempt employee under the NYLL for at least the 18 weeks when he was not paid the requisite salary for exempt employees and therefore might be entitled to overtime pay for those weeks.

Overtime claim. With regard to the employee’s remaining overtime claims, the court concluded that under the FLSA and NYLL, there were genuine issues of material fact as to the employee’s exempt status. The employer’s records indicated that the employee typically worked more than 40 hours per week and therefore was entitled to overtime payments.

The NYLL applies a similar standard as the FLSA to unpaid compensation claims. An employee bringing an action for an unpaid overtime claim under the FLSA “must prove that he performed work for which he was not properly compensated, and that the employer had actual or constructive knowledge of that work.”

Here, the court found that the employee’s timesheets provided “sufficient evidence” to show the amount and extent of his uncompensated overtime work. The employee appeared to have regularly clocked in and clocked out during the weeks where his salary was below the NYLL statutory minimum. Moreover, both parties testified that the employee’s regular schedule was six days per week, which was supported by his timecards.

Exempt status. Finally, the court analyzed whether the employee was an executive or administrative employee under the FLSA or NYLL. Applying the three-part test for an employee to qualify for the executive or administrative exemption under the FLSA, the court found that, although the employee’s salary satisfied the salary level test, there was a material dispute of fact as to the salary basis and the duties tests.

Salary basis. Based on the record, the court concluded that there were questions of fact as to whether the employee was paid on a salary basis. The evidence was inconsistent as to whether he was paid a fixed weekly rate that was improperly reduced when he did not work his full schedule, or whether the employee was paid based on a daily or hourly rate. Moreover, the employer’s payment records showed that the employee’s salary fluctuated over the course of his employment.

Duties test. There were also questions of fact as to whether the employee met the duties test. Here, the court found a factual dispute regarding the employee’s duties and the extent to which they were managerial. The parties disagreed about the employee’s primary responsibilities, the amount of time he spent on exempt versus nonexempt work, and the amount of discretion he had in performing his tasks. The parties also disagreed as to whether the employee “customarily and regularly” directed the work of two or more other employees, and whether he had “the authority to hire or fire other employees” or if his “suggestions and recommendations” on personnel decisions were “given particular weight.

The case is No. 22-CV-5561 (MKB).

Judge: Brodie, M.

Attorneys: Liane Fisher (Fisher | Taubenfeld) for Juan Pastuizaca. Diane Hwakyung Lee (The Law Offices of Diane H. Lee) for Mihwa Jo Corp dba Noodle Flower.

Companies: Mihwa Jo Corp; Noodle Flower

Cases: WageHour Exemptions Overtime StateLawClaims NewYorkNews