UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION. v. 1:11-CV-1397-CAP ORDER

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1 Case 1:11-cv CAP Document 69 Filed 02/27/13 Page 1 of 10 TAMMY DRUMMONDS, UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION Plaintiff, CIVIL ACTION NO. v. 1:11-CV-1397-CAP HMS EDUCATIONAL SERVICES, INC., Defendant. ORDER This matter is before the court on the defendant s motion for summary judgment [Doc. No. 42] and motion to strike [Doc. No. 63]. I. Statement of Facts This lawsuit arises out of the plaintiff s claim that her employer violated the Fair Labor Standards Act ( FLSA ) by failing to pay her overtime for wages for hours worked in excess of forty hours per week. The defendant contends that the plaintiff was an exempt employee pursuant to 13(a)(1) of the FLSA. The defendant, owned solely by Joyce Meadows and Michael Martin, does business as Georgia Career Institute ( GCI ). GCI operates two private vocational trade schools in Tennessee and one private vocational trade school

2 Case 1:11-cv CAP Document 69 Filed 02/27/13 Page 2 of 10 in Conyers, Georgia. These schools provide training in cosmetology, esthetics, nail technology, and massage therapy In July 2005, GCI hired the plaintiff as a part-time telemarketer. In March 2007, the plaintiff began working as an admissions representative. She continued working as an admissions representative until her resignation on January 22, As an admissions representative, the plaintiff was paid an annual salary of $50,000 plus she received $50 for every student she enrolled who graduated. The plaintiff worked in an office located on GCI s campus in Conyers, Georgia; the purpose of her job was to enroll students. The plaintiff s job duties included interviewing potential applicants, evaluating their suitability for the program, taking them on school tours, and addressing any concerns a student may have regarding the decision to enroll. II. Legal Discussion A. Summary Judgment Standard Rule 56(c) of the Federal Rules of Civil Procedure authorizes a court to enter summary judgment if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. The party seeking summary judgment bears the burden of 2

3 Case 1:11-cv CAP Document 69 Filed 02/27/13 Page 3 of 10 demonstrating that no dispute as to any material fact exists. Adickes v. S.H. Kress & Co., 398 U.S. 144, 156 (1970); Johnson v. Clifton, 74 F.3d 1087, 1090 (11th Cir. 1996). The moving party's burden is discharged merely by "'showing' that is, pointing out to the district court that there is an absence of evidence to support [an essential element of] the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). In determining whether the moving party has met this burden, the district court must view the evidence and all factual inferences in the light most favorable to the party opposing the motion. Johnson, 74 F.3d at Once the moving party has adequately supported its motion, the nonmovant then has the burden of showing that summary judgment is improper by coming forward with specific facts showing a genuine dispute. Matsushita Electrical Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). In deciding a motion for summary judgment, it is not the court's function to decide issues of material fact but to decide only whether there is such an issue to be tried. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251 (1986). The applicable substantive law will identify those facts that are material. Id., 477 U.S. at 247. Facts that in good faith are disputed, but which do not resolve or affect the outcome of the case, will not preclude the entry of summary judgment as those facts are not material. Id. Genuine 3

4 Case 1:11-cv CAP Document 69 Filed 02/27/13 Page 4 of 10 disputes are those by which the evidence is such that a reasonable jury could return a verdict for the nonmovant. Id. In order for factual issues to be "genuine" they must have a real basis in the record. Matsushita, 475 U.S. at 586. When the record as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no "genuine issue for trial." Id. B. Administrative Exemption to the FLSA The FLSA establishes minimum labor standards to eradicate labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers. 29 U.S.C. 202(a). The statute was designed to aid the unprotected, unorganized, and lowest paid of the nation's working population; that is, those employees who lacked sufficient bargaining power to secure for themselves a minimum subsistence wage. Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 707 n.18 (1945). A cornerstone of the FLSA is the requirement to pay employees engaged in commerce or in the production of commerce overtime when they work more than forty hours in a week. 29 U.S.C. 207(a)(1). There are, however, exemptions from the overtime pay requirement that may apply depending upon the type of work performed by the employee; the overtime provisions of the FLSA do not apply to any employee employed 4

5 Case 1:11-cv CAP Document 69 Filed 02/27/13 Page 5 of 10 in a bona fide executive, administrative, or professional capacity as defined by regulations promulgated by the Secretary of Labor. 29 U.S.C. 213(a)(1). In this case, the defendant contends the plaintiff falls under the administrative exemption. Pursuant to 29 C.F.R , the term employee employed in a bona fide administrative capacity is defined as any employee: (1) Compensated on a salary or fee basis at a rate of not less than $455 per week... exclusive of board, lodging or other facilities; (2) Whose primary duty is the performance of office or nonmanual work directly related to the management or general business operations of the employer or the employer's customers; and (3) Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. It is undisputed that the plaintiff was paid on a salary basis of not less than $455 per week. Thus, the dispute between the parties is whether the plaintiff meets the second and third elements of the exemption. 1. Primary Duty The second prong of the administrative employee exemption provides that the employee's primary duty must be work directly related to the management or general business operations of the employer or the employer's customers. 29 C.F.R In determining whether work relates to management or general business operations, courts have applied 5

6 Case 1:11-cv CAP Document 69 Filed 02/27/13 Page 6 of 10 the administration/production dichotomy described in the Secretary of Labor's regulations which state: The phrase directly related to management policies or general business operations refers to the type of work performed by the employee. To meet this requirement, an employee must perform work directly related to assisting with the running or servicing of the business, as distinguished, for example, from working on a manufacturing production line or selling a product in a retail or service establishment. 29 C.F.R (a); Hogan v. Allstate, 361 F.3d 621, (11th Cir. 2004). The plaintiff s primary duty as an admissions representative was securing students for the school who would successfully complete the program. She did not participate in the production end of the business, i.e., training students to be cosmetologists, nail technicians, massage therapists, etc. The plaintiff attempts to characterize her role as being on the production side of the business because through enrolling students, she generated profits for GCI. However, it is important to recognize that the money paid to the school was in exchange for specific vocational training, not for the administrative task of enrolling students. The undisputed facts in this case demonstrate that the plaintiff was an employee performing work directly related to assisting with the running or servicing of the business; she was not performing production work, which would be the actual teaching of students in a particular vocation. Therefore, the second prong of the administrative exemption has been met. 6

7 Case 1:11-cv CAP Document 69 Filed 02/27/13 Page 7 of Exercise of Discretion or Independent Judgment The third prong of the administrative employee exemption provides that an employee's primary duty must involve the exercise of discretion or independent judgment with respect to matters of significance. 29 C.F.R An employee exercises discretion when she compares and evaluates possible courses of conduct and acts after considering the various possibilities. 29 C.F.R The exercise of discretion must relate to matters of consequence, but final decision-making authority over such matters is unnecessary. Lott v. Howard Wilson Chrysler-Plymouth, Inc., 203 F.3d 326, 331 (5th Cir. 2000) (citing Reich v. John Alden Life Ins., Co., 126 F.3d 1, 13 (1st Cir. 1997)). The ultimate question is whether the employee has the ability to make an independent choice, free from immediate direction or supervision. Id (c). Although there is no requirement that the employee operate free from oversight, see id., the employee's duties must involve more than the use of skill in applying well-established techniques, procedures or specific standards described in manuals or other sources. Id (e). In multiple instances throughout her deposition, the plaintiff refers to using her discretion in making decisions about students to be considered for enrollment at GCI. For example, she said that when she interviewed a 7

8 Case 1:11-cv CAP Document 69 Filed 02/27/13 Page 8 of 10 student who she did not believe to be motivated to complete the program at GCI, she used her discretion to inform the student that GCI was not the place for him or her. Drummonds Dep. at The plaintiff argues that all decision-making she undertook was simply using her skill in applying well-established techniques, procedures, or specific standards described in manuals or other sources. In fact, she contends that she made no decisions because prospective students were automatically admitted if they met the objective admissions criteria [Doc. No. 51 at 17]. This argument is contrary the plaintiff s own testimony. She repeatedly discussed her role in evaluating a prospective student s desire and motivation. Drummonds Dep. at 21, 22, Moreover, the plaintiff had an incentive to carefully and thoughtfully make her decisions on which students to enroll because she received a bonus for every student who completed the program. Additionally, the plaintiff described her student interviews as rapportbuilding opportunities during which she, based upon comments made by the student, would assess the likelihood of a student s success. Drummonds Dep. at She further described the necessity to deal with student objections, which she defined as reasons a student may have for not enrolling in the program. Drummonds Dep. at She provided an 8

9 Case 1:11-cv CAP Document 69 Filed 02/27/13 Page 9 of 10 example in which a potential student may have concerns about career options or class structure; the plaintiff stated that it was her job to determine where to direct that student to get the concerns addressed. Drummonds Dep. at 73. These examples demonstrate that the plaintiff repeatedly exercised discretion in performing her job as admissions representative. 1 The plaintiff argues that any decisions she made were not matters of significance. Matters of significance refers to the level of importance or consequence of the work performed. 29 C.F.R (a). However, evaluation of prospective students is of great importance to a school whose very existence depends on a steady stream of successful students. Furthermore, the consequence of poor decision-making in this arena would be the inability to operate as a school. The undisputed facts establish that the plaintiff s job included the exercise of discretion regarding matters of significance. Therefore, the third prong of the administrative exemption has been met. 1 In her affidavit supporting her opposition to the defendant s motion for summary judgment, the plaintiff offers her own legal conclusion that she did not exercise any independent discretion or judgment.... [Doc. No at 3]. This legal conclusion is not supported by the facts and is therefore irrelevant to the court s determination of the summary judgment motion. 9

10 Case 1:11-cv CAP Document 69 Filed 02/27/13 Page 10 of 10 III. Conclusion Because the undisputed facts in this case demonstrate that the plaintiff falls within the administrative exemption of the FLSA, the defendant s motion for summary judgment [Doc. No. 42] is GRANTED. The motion to strike [Doc. No. 63] is DISMISSED as moot. The clerk is DIRECTED to close this civil action. SO ORDERED this 27th day of February, /s/ Charles A. Pannell, Jr. CHARLES A. PANNELL, JR. United States District Judge 10

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