The City of Battle Creek is not required to pay its fire department battalion chiefs for the hours they are required to be on “standby” duty, a federal appeals court has ruled.

In Holt v City of Battle Creek, the 6th U.S. Circuit Court of Appeals said that battalion chiefs are subject to the “executive exemption” of the Fair Labor Standards Act (FLSA) and, therefore, are not entitled to overtime compensation for their standby duties.

The primary responsibility of the battalion chiefs is managing the fire department, the 6th Circuit noted in its opinion. Although the battalion chiefs do not have the direct authority to hire, fire or suspend other employees, their recommendations on employee status changes are given “particular weight,” the appeals court observed.

Accordingly, the battalion chiefs fall within the FLSA’s executive exemption and are not entitled to overtime pay, the 6th Circuit concluded.

Standby Duty

The plaintiffs are battalion chiefs for the defendant, City of Battle Creek. The defendant classifies its battalion chiefs as exempt employees, which means they are not paid for overtime.

Battalion chiefs are second-in-command to the fire chief. Their duties include supervising firefighters, devising work plans, administering disciplinary action and inspecting/maintaining equipment, among other things. Although battalion chiefs do not have the authority to hire and fire, they do conduct employee performance evaluations and their suggestions regarding the status of employees are considered.

In addition, battalion chiefs must be on standby when they are off duty and are expected to report to fires, when necessary.

The plaintiffs alleged they are so restricted during their standby duty that they should be compensated for their time. Accordingly, they filed this lawsuit in the U.S. District Court for the Western District of Michigan, challenging their exempt status.

After considering the evidence, the federal district court ruled the plaintiffs were properly classified as exempt and were not due overtime pay under both the FLSA’s executive and administrative exemptions. The plaintiffs appealed to the 6th Circuit.

Executive Exemption

On appeal, the 6th Circuit explained the FLSA requires that employers pay overtime to employees who work more than 40 hours a week, unless an exemption applies. Here, the district court held that both the administrative and executive exemptions applied.

In reviewing this conclusion, the 6th Circuit focused on the executive exemption, noting it has four elements. “Only the second and fourth elements are at issue in this case. The second element states that an executive employee is one ‘[w]hose primary duty is management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof.’ … The fourth element states that an executive employee is one ‘[w]ho has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight.’”

Next, the 6th Circuit pointed out that FLSA exemptions have historically been “narrowly construed.” However, this changed with the decision in Encino Motorcars, LLC v Navarro, 138 S Ct 1134 (2018). In Encino, the U.S. Supreme Court said that courts should apply a “fair reading” to FLSA exemptions.

The plaintiffs argued the district court improperly relied on Encino and the “fair reading” standard because Encino involved the salesperson exemption - not the executive and administrative exemptions. The 6th Circuit disagreed, noting that even if the “fair reading” language in Encino was dicta (i.e., not determinative of the case outcome) it should still be followed, especially since no other rulings have since been issued casting doubt on the Encino analysis.

Meanwhile, the 6th Circuit acknowledged that some of the evidence presented did not support an exempt status. However, other evidence showed the plaintiffs were “in charge” and referred to themselves in memos as “management,” the appeals court noted. The executive exemption requires that an employee’s input on hiring, firing, and changes in employment status be given “particular weight,” the appeals court observed. 

The plaintiffs asserted the district court should have weighed the evidence differently to find that their primary duties were not managerial. “This argument is unpersuasive,” the 6th Circuit wrote. “Ample evidence supports the district court’s conclusion, so this Court cannot second-guess the district court’s factual findings. … The district court did not commit clear error in concluding that Plaintiffs’ duties were primarily managerial.”

In conclusion, the 6th Circuit said the district court did not commit clear error in its executive exemption analysis. “Therefore, we need not address the district court’s additional conclusions that Plaintiffs were also subject to the FLSA’s administrative exemption and that, even if the exemptions did not apply, standby time was not so onerous as to be compensable under the FLSA.”