Labor & Employment Law Daily Wrap Up, WAGE-HOUR—EXEMPTIONS—S.D. Tex.: Employer granted summary judgment finding that employees were exempt from FLSA requirements, (Feb 12, 2025)

By Ronald Miller, J.D.

The employer pleaded that the employees could not recover under the FLSA because they were exempt employees.

A federal district court in Texas adopted a magistrate judge’s recommendation to grant an employer’s motion for summary judgment regarding whether certain employees were exempt from the requirements of the FLSA because they were highly compensated executive or administrative employees and paid in compliance with 29 CFR §§ 602(a), 604(a), (b). The court deemed the employer to have pleaded the relevant affirmative defenses, including its good faith defense and that the employees fell under the FLSA exemptions for highly compensated executive or administrative employees. Further, the court noted that the magistrate listed the employees’ respective duties, describing how they fit the parameters of the respective exemptions. Accordingly, the court overruled the employees’ objections to the magistrate’s recommendation (Descant v. CTCI Americas, Inc., No. 2:22-CV-00308 (S.D. Tex. Feb. 10, 2025)).

The employer filed a motion seeking summary judgment that the employees were exempt from the requirements of the FLSA because they are highly compensated executive or administrative employees under 29 U.S.C. § 213(a)(1), paid in compliance with the terms of 29 C.F.R. §§ 602(a), 604(a), (b). For their part, the employees sought to eliminate the affirmative defenses of good faith and any FLSA exemption due to insufficient pleading.

Magistrate’s recommendations. A magistrate judge recommended that the court (1) deny the employees’ motions to the extent that they complained of a failure to plead the exemptions because the sparse pleading did not amount to a waiver, and (2) grant the employer’s motion for summary judgment and deny the employees’ motion for partial summary judgment because the evidence supported the exemptions as a matter of law.

The employer pleaded that the employees could not recover under the FLSA because they are exempt employees. The magistrate judge found the correct FLSA exemptions to have been developed by pretrial discovery and that the employees had not objected to that finding.

The court adopted the magistrate judge’s findings and recommendation as to the employer’s Rule 15 request for leave to amend its affirmative defenses and granted the employer’s motion to amend. Thereafter, the court deemed the employer to have pleaded the relevant affirmative defenses, including its good faith defense and that the employees fell under the FLSA exemptions for highly compensated executive or administrative employees.

Accordingly, the court denied the employees’ motion because the employer was deemed to have amended its answer to plead the relevant affirmative defenses, preventing the requested judgment on the pleadings.

Exemptions. To prevail on summary judgment that the employees were exempt from FLSA overtime provisions, the employer must show that they were paid on a salary basis, at a statutorily-prescribed minimum level, and that they performed duties consistent with the exemptions.

Salary basis. The employees objected to the magistrate’s recommendation that the evidence conclusively established that they were paid on a salary basis rather than an hourly basis. They relied largely on Gentry v. Hamilton-Ryker IT Solutions, L.L.C., 102 F.4th 712 (5th Cir. 2024). However, the magistrate judge considered Gentry in detail and found that it was distinguishable on the facts and actually supported finding the employer’s pay practices in this case to reflect a salary basis. The employees did not point out any error in the factual distinctions made between this case and Gentry or in the ways the magistrate found that the case supported the employer’s practices as consistent with a salary basis. After reviewing Gentry, the court agreed with the magistrate’s analysis.

There was no dispute that the evidence showed that the employees had never been paid less than their weekly salary for any purpose inconsistent with a salary basis, much less that deductions were “so frequent as to make the salary the functional equivalent of an hourly wage.”

Computation of pay. Next, the employees argued that the magistrate ignored the evidence of computation of pay on an hourly basis or otherwise weighed the evidence against giving effect to the hourly computation testimony. But the evidence of hourly rate computations in the context here did not logically extend to any issue that affects the salary basis test.

Accordingly, the court overruled the employees’ objections that the magistrate’s recommendation arrived at the wrong conclusion regarding the import of hourly computation testimony, weighed the evidence contrary to summary judgment procedure, or impliedly shifted the burden of proof to the employees.

Salary level. The magistrate also found that the required salary levels were proven and there were no objections to this part of the analysis.

Exempt administrative or executive duties. Finally, the employees objected regarding duties applicable to the exemptions. Here, the court found that the employees did not indicate any inability to address the affirmative defenses on the merits, having filed their own motion for partial summary judgment in that regard. Accordingly, those objections were denied.

Here, the magistrate listed the employees’ respective duties, describing how they fit the parameters of the respective exemptions. For their part, the employees did not identify any factual error in recounting what their responsibilities were. They did not explain why those duties should be interpreted as income-generating commodities rather than as managerial and supervisory oversight, discretionary authority, and/or company-level decision-making. Accordingly, the employees’ arguments were overruled.

The case is No. 2:22-CV-00308.

Judge: Ramos, N.

Attorneys: Melissa Moore (Moore & Associates) for Shane Descant. Christopher Earl Moore (Ogletree Deakins) for CTCI Americas, Inc.

Companies: CTCI Americas, Inc.

Cases: WageHour Exemptions Overtime Procedure TexasNews