Second Circuit Affirms Applicability of Executive Exemption to Warehouse Captains

Last year, in a decision discussed here, District Court Judge Richard Berman of the Southern District of New York determined that warehouse captains for defendant Baldor Specialty Foods qualified for the executive exemption under both federal and New York state law, because their duties were “clearly managerial.”Ramos v. Baldor Specialty Foods, Inc., 2011 U.S. Dist. LEXIS 66631 (S.D.N.Y. June 16, 2011),The Court of Appeals for the Second Circuit has now reviewed and affirmed the ruling.Ramos v. Baldor Specialty Foods Inc., Second Circuit Case No. 11-2616-cv, 07/12/12.

On appeal, Plaintiff argued that the district court erred in applying the executive exemption because each warehouse captain supervised a team of pickers who all performed the same basic function, and thus each captain did not manage a “customarily recognized department or subdivision” of the employer’s business, as set forth in implementing regulation 29 C.F.R. § 541.100(a)(2).As the appeals court framed the issue, the question before them was one of first impression as to “whether a unit can have ‘a permanent status and a continuing function’ when it is functionally identical to other units, when it works the same shift as other units, and when it operates in the same physical space as other units.”Because “[e]ach team has a defined membership; each captain leads the same team on each shift; pickers do not change teams without being transferred by the night warehouse manager, often at the request of a captain; at the start of every shift, each team meets at its ‘assigned work area’ in the warehouse; and each captain is ‘in charge of’ supervising his team, evaluating their work, and making promotion recommendations to the night warehouse manager,” the Court concluded that the exemption requirement was satisfied.The Court expressly rejected plaintiff’s argument that, in order to be a recognized subdivision, the units in question would need to be “operating in different locations, working different shifts, or performing distinct functions."The other requirements for the executive exemption, including salary basis compliance and the duties performed, were not subjects of dispute.

Ramos is a victory for Second Circuit employers and demonstrates a practical, reasonable interpretation of the FLSA regulations.