I’ve never visited, but I’m told that the New York Finger Lakes region is lovely. But with apparently twelve lakes (eleven glacial lakes plus Lake Ontario), there isn’t exactly a middle lake. This is disappointing.
But of course, a resident of the region recently decided to give the middle finger, if not a middle finger-lake, to his former employer. Specifically, I’m referring to the case of McKenzie v. Finger Lakes Distilling LLC et. al. – filed on June 8 in the U.S. District Court for the Western District of New York.
According to the complaint, the plaintiff was employed by Finger Lakes Distilling as its Distiller from January 1, 2007 through January 3, 2016. During that time, he alleges that he had no supervisory or managerial responsibilities. Rather, the complaint states that in his role as Distiller he was responsible for the following:
- cleaning the interior of metal drums or interiors of barrels by rinsing them with water and alcohol;
- stenciling and/or painting identifying information on barrelheads;
- rolling barrels into position for filling;
- receiving grain shipments of corn, rye, barley;
- operating the cooker to produce a mash;
- operating the still;
- emptying barrels or drums filled with liquor into dumping trough; and
- cleaning and sanitizing all equipment and production work spaces.
Glamorous work, no?
What’s more, the complaint alleges that the plaintiff – because of the work schedule required by the Company – regularly put in approximately 110 hours per week on these various tasks. And that’s where things begin to get interesting.
The Fair Labor Standards Act generally requires employers to pay overtime wages to employees who work in excess of 40 hours per week. I say “generally” because some workers are exempt from this requirement. But the default characterization of an employee under the FLSA is “nonexempt” – meaning that overtime protections will apply unless the specific employee earns a certain minimum amount (currently $455 per week calculated on a salary basis) and his or her duties fall within certain relatively narrow categories.
At all times relevant for the Complaint, Mr. McKenzie was paid more than $455 per week. So the minimum compensation was paid in order for him to be considered an exempt employee. But he is alleging that his duties were outside the scope of those for which the exemption is available.
Broadly speaking, employers can avoid paying overtime to individuals receiving the minimum compensation above if their duties fall within exemptions for executive, administrative, professional, computer employees or outside sales categories. Our plaintiff distiller clearly wasn’t employed within the computer employee or outside sales categories, so we can dismiss those out of hand. That leaves Finger Lakes with just a few options if it is to justify classifying the Plaintiff as an exempt employee (and thus avoid paying him overtime).
To qualify for the executive employee exemption, an employee’s primary duty must be managing the enterprise (or at least a department or division of it). That authority must include the authority to direct the work of at least two or more other employees, and the authority to hire and fire employees (or at least have substantial influence on that decision). Finger Lakes Distilling hasn’t yet filed a response to the Complaint, so we don’t have information about whether Mr. McKenzie was doing this work. But if he’s crawling around inside the fermenters to clean them, it seems reasonably unlikely that he was supervising other people and I’m guessing this exemption doesn’t apply.
To qualify for the administrative employee exemption, the employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employee’s customers, and the employee’s duties must require him to exercise discretion and independent judgment on matters of significance. This too seems problematic with respect to Finger Lakes Distilling’s classification of Mr. McKenzie. He doesn’t appear to be performing “office or non-manual work.” Sure, there is probably some paperwork involved in the job – keeping production records, for example. But that seems like it was probably a fairly small part of his overall time.
To qualify for the professional employee exemption, the employee’s primary duty must be the performance of work requiring advanced knowledge which is predominantly intellectual in character and which requires the consistent exercise of discretion and judgment. Further, the advanced knowledge must be in a field of science or learning which is customarily acquired by a prolonged course of specialized intellectual instruction. Alternatively, an employee might fit within the creative professional employee exemption if the primary duty is in the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.
This exemption may be the Defendants’ best shot at justifying its failure to pay Mr. McKenzie overtime. Clearly the work of a distiller can involve the consistent exercise of discretion and judgment. And one could make a coherent argument that the field of advanced knowledge required is, in essence, the science of chemistry. Alternatively, one could perhaps fashion an argument that this same work involves invention, imagination or talent with respect to flavor profiles.
But just because you can come up with an argument to support the Defendant’s conduct doesn’t mean that it will win. And in this case I think the arguments are likely to fail.
The rules require that the employee’s primary duties fall within these specific areas. But the only one of Mr. McKenzie’s duties which appear to fall within the exemption is the actual operation of the still. The rest of the work clearly does not involve any particular level of professional skill. Rather, it is basic blue collar factory work, and as the Department of Labor’s materials make clear, the exemptions to overtime pay provided by these various categories is only attended to apply to white collar employees. Specifically, the DOL states:
The exemptions do not apply to manual laborers or other “blue collar” workers who perform work involving repetitive operations with their hands, physical skill and energy. FLSA-covered, non-management employees in production, maintenance, construction and similar occupations . . . are entitled to minimum wage and overtime premium pay under the FLSA, and are not exempt . . . no matter how highly paid they might be.
The Finger Lakes case brings to the forefront the importance of appropriately classifying employees. Even if Mr. McKenzie hadn’t brought his case, businesses should note that employee misclassification is a current hot-button topic for the Department of Labor (and various state authorities).
So take this opportunity to learn from Finger Lakes Distilling’s misfortune. If they lose this case, they’re going to owe Mr. McKenzie some $59,530 in unpaid wages (the amount of overtime they allege he should have been paid) plus – potentially – his attorneys’ fees and costs of bringing the action. Don’t be the next test case.