Kim v. Capital Dental Technology Laboratory, Inc. et al
Filing
106
MEMORANDUM Opinion and Order Signed by the Honorable Elaine E. Bucklo on 10/2/2017. Mailed notice. (mgh, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
Joon
al.,
Young
Chul
Kim,
et )
)
)
Plaintiffs,
)
)
v.
)
Capital Dental Technology )
Laboratory, Inc., d/b/a LSK )
)
121, and Luke S. Kahng,
)
)
Defendants.
No. 14-cv-5014
Memorandum Opinion and Order
Plaintiffs Joon Young Chul Kim (“Young Chul Kim”) and Kee
June
Kim
(“June
Kim”),
along
with
three
of
their
former
coworkers, sue their former employer Capital Dental Technology
Laboratory, Inc., d/b/a LSK 121 (“LSK 121”) and former manager
Luke Kahng (“Kahng”) for violations of the Fair Labor Standards
Act (“FLSA”), 29 U.S.C. § 201 et seq., and the Illinois Minimum
Wage Law (“IMWL”), 820 ILCS § 105/1 et seq. Specifically, they
allege that defendants failed to provide overtime compensation
for hours worked in excess of forty hours in a workweek. Before
me is defendants’ motion for partial summary judgment, which
seeks to limit certain plaintiffs’ claims according to the FLSA
and the IMWL statutes of limitations; to resolve which overtime
compensation
method
applies
to
plaintiffs’
claims;
and
to
resolve in their favor the claims asserted by two plaintiffs—
June Kim and Christian Djurickovic (“Djurickovic”)—on the ground
that these employees fall within the FLSA’s executive employee
exemption for overtime purposes. For the reasons that follow, I
deny defendants’ motion.
I.
The
following
facts
are
undisputed
except
where
noted.
Plaintiffs are five former employees of defendant LSK 121, a
dental
prosthetics
Kahng
and
plaintiffs
laboratory
located
performed
in
owned
Naperville,
laboratory
and
managed
Illinois.
technician
by
At
work
defendant
LSK
in
121,
several
different capacities and departments. Plaintiffs Young Chul Kim
and Michelle Minjung Ko (“Ko”) were ceramists. Plaintiffs June
Kim
and
Marc
Jaehyung
Cho
(“Cho”)
worked
in
the
wax-metal
department, and plaintiff Djurickovic performed computer-aided
design
(“CAD”)
allegations
work.
likewise
Defendants
suggest,
that
assert,
all
five
and
plaintiffs’
former
employees
were paid a set salary every two weeks during the course of
their employment.1 Plaintiffs claim that they regularly worked
more than forty hours in a workweek and that defendants failed
1
As discussed below, this allegation is at odds with certain
evidence in the record, including evidence of deductions applied
to plaintiffs’ paychecks. It also conflicts with evidence
suggesting that plaintiff Cho might have been paid on an hourly
basis for a period in 2014. Paystubs attached to plaintiffs’
opposition brief indicate Cho’s 2014 hourly rate, but this
evidence alone does not definitively establish that he was paid
on an hourly basis. See Pls.’ Opp., Exh. E at 2-3.
2
to pay them overtime compensation for these additional hours
worked.
Defendants contend that plaintiffs June Kim and Djurickovic
were supervisors who fell within the FLSA’s overtime exemption
for executive employees. Defendants point to a job description
that purports to identify June Kim’s position as supervisory and
exempt. June Kim Dep., Exh. 14. June Kim testified that he had
never seen this document before his deposition. June Kim Dep. at
77-78.
Defendants
employees,
also
including
cite
signed
plaintiff
Cho,
statements
stating
from
that
two
June
Kim
supervised five technicians in the wax-metal department. Defs.’
L.R. 56.1 Stmt., Exh. 7. Additionally, the record shows that
June Kim participated in performance reviews of three wax-metal
department employees in 2009 and 2010, and defendants assert
that he signed vacation requests for employees in the wax-metal
department. June Kim Dep. at 56-59, 62-68, Exhs. 5-13.
Plaintiff
defendant
LSK
Djurickovic
121’s
CAD
was
the
most
department
when
senior
he
employee
worked
in
there.
Djurickovic Dep. at 50-51. In the CAD department, Djurickovic
worked with three other employees, whom he trained, assisted,
and
corrected.
Id.
at
52-53,
57.
After
Djurickovic
stopped
working for LSK 121, he applied for a lab manager position with
another company. Id. at 28-29; Defs.’ L.R. 56.1 Stmt., Exh. 8.
In his application, Djurickovic identified his position at LSK
3
121 as “CAD/CAM Composite Manager.” Defs.’ L.R. 56.1 Stmt., Exh.
8.
Plaintiff Young Chul Kim filed the original complaint on
July 1, 2014. Plaintiffs amended their complaint on October 10,
2014, adding June Kim as a named plaintiff. Opt-in plaintiffs
Cho, Ko, and Djurickovic filed their consent-to-join forms with
the court on June 11, 2015. Defendants filed the present motion
for partial summary judgment on July 17, 2017, seeking to narrow
the issues in advance of trial.
II.
Summary
judgment
demonstrates
that
is
“there
appropriate
is
no
genuine
when
the
dispute
evidence
as
to
any
material fact and [that] the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a); see Anderson v. Liberty
Lobby,
Inc.,
477
U.S.
242,
247
(1986).
“The
underlying
substantive law governs whether a factual dispute is material,”
and a dispute is “genuine” for the purposes of Rule 56 when “the
evidence is such that a reasonable jury could return a verdict
for the nonmoving party.” Carroll v. Lynch, 698 F.3d 561, 564
(7th Cir. 2012).
The moving party bears the initial burden of informing the
court
of
portions
the
of
basis
the
for
evidence
its
motion
that
and
of
demonstrate
identifying
an
absence
the
of
a
genuine dispute. Celotex Corp. v. Catrett, 477 U.S. 317, 323
4
(1986). If “the moving party puts forth evidence showing the
absence of a genuine dispute of material fact, the burden shifts
to the non-moving party to provide evidence of specific facts
creating a genuine dispute.” Carroll, 698 F.3d at 564. Where
material facts are disputed, courts must “view the facts and
draw reasonable inferences in the light most favorable” to the
nonmoving party. Scott v. Harris, 550 U.S. 372, 378 (2007).
In this case, defendants move for partial summary judgment
on
three
distinct
issues.
First,
they
argue
that
they
are
entitled to summary judgment on plaintiffs Cho and Djurickovic’s
claims accrued before June 11, 2012, and plaintiff June Kim’s
claims accrued before October 10, 2011. In defendants’ view,
these claims are barred by the FLSA and the IMWL’s three-year
statutes
of
limitations.
Second,
defendants
seek
summary
judgment as to the proper method for calculating any overtime
damages.
scheme
(“FWW”)
Defendants
they
for
have
contend
employed,
calculating
that,
the
based
on
fluctuating
overtime
should
the
compensation
workweek
method
apply—permitting
overtime to be paid at 50 percent of the employees’ regular rate
rather than 150 percent. Finally, defendants urge me to grant
summary judgment in their favor on the claims of June Kim and
Djurickovic on the basis that they are exempt employees not
entitled to overtime pay under the FLSA.
5
A. Statute of Limitations
The default limitations period for an unpaid overtime claim
brought under the FLSA is two years2 from the date that the cause
of action accrued—i.e., from the date that the overtime payment
became
due.
Co., 821
29
F.2d
U.S.C.
261,
§
271
255(a); see
(5th
Halferty
Cir.),
v.
Pulse
Drug
on
other
modified
grounds, 826 F.2d 2 (5th Cir. 1987) (per curiam). For willful
violations of the FLSA’s overtime provisions, the limitations
period extends to three years. 29 U.S.C. § 255(a).
Generally,
the limitations period stops running on a plaintiff’s claims
once he files his complaint or joins an existing lawsuit. 29
U.S.C. § 256(a); see Robinson v. Doe, 272 F.3d 921, 922 (7th
Cir.
2001)
(“The
statute
of
limitations
in
a
suit
based
on
federal law...stops running when the complaint is filed.”). In
FLSA
collective
actions,
potential
opt-in
plaintiffs
do
not
become parties to a suit until they file written consent with
the court. Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 75
(2013) (citing 29 U.S.C. § 216(b)). The statute of limitations
therefore continues to run on opt-in plaintiffs’ claims until
they
give
their
consent
to
join
the
suit.
29
U.S.C.
§
256(b); Davis v. Vanguard Home Care, LLC, No. 16-CV-7277, 2016
WL 7049069, at *2 (N.D. Ill. Dec. 5, 2016). Because the statute
2
The standard limitations period for IMWL claims is three years.
820 ILCS § 105/12(a).
6
of limitations is an affirmative defense,3 Hodgson v. Humphries,
454 F.2d 1279, 1284 (10th Cir. 1972); Braddock v. Madison Cty.,
34 F. Supp. 2d 1098, 1112 (S.D. Ind. 1998), it is defendants’
burden
to
establish
that
plaintiffs’
claims
are
barred
as
untimely.4
Defendants urge the application of the default rules and
seek summary judgment on all claims that fall outside the threeyear limitations period. Specifically, they assert that because
plaintiff June Kim did not join the suit until October 10, 2014,
any of his overtime claims that accrued before October 10, 2011
are time-barred. Likewise, defendants argue that plaintiffs Cho
and Djurickovic, who both filed their consent forms on June 11,
2015, cannot seek overtime claims that accrued before June 11,
2012. Because the dates on which these plaintiffs joined the
suit are undisputed, defendants have met their initial burden of
demonstrating that June Kim’s claims before October 10, 2011,
3
I note that defendants have not amended their answers to
include this affirmative defense as required by Fed. R. Civ. P.
8(c). LSK 121 Answer [ECF No. 13] at 15-16; Kahng Answer [ECF
No. 14] at 16-17; see Brown v. Presstime Graphics, Inc., No.
2:13-CV-425-WTL-DKL, 2016 WL 6067885, at *2 (S.D. Ind. Oct. 17,
2016). Because the parties have not briefed this issue, and
because I deny defendants’ motion for summary judgment for other
reasons, I will not determine whether defendants have waived the
statute of limitations defense at this time.
4
This is not to say that defendants carry the burden as to
willfulness. It is plaintiffs’ burden to prove at trial that
defendants’ violations were willful in order to trigger the
FLSA’s three-year, rather than two-year, statute of limitations.
McLaughlin v. Richland Shoe Co., 486 U.S. 128, 135 (1988);
Bankston v. State of Ill., 60 F.3d 1249, 1253 (7th Cir. 1995).
7
and
Cho
and
Djurickovic’s
claims
before
shifts
to
June
11,
2012,
are
presumptively time-barred.
The
burden
therefore
plaintiffs
to
identify
evidence to overcome this presumption. Carroll, 698 F.3d at 564.
In this context, plaintiffs must identify evidence from which a
reasonable jury could conclude that an exception to the default
limitations period applies. See Cortez v. Medina’s Landscaping,
Inc., No. 00-cv-6320, 2002 WL 31175471, *2 (N.D. Ill. Sept. 30,
2002). Plaintiffs contend that the statute of limitations must
be tolled because defendants failed to post and keep posted
required materials concerning employees’ FLSA rights. According
to federal regulations, employers with any employees covered by
the FLSA must “post and keep posted a notice explaining the Act,
as prescribed by the Wage and Hour Division, in conspicuous
places in every establishment where such employees are employed
so as to permit them to observe readily a copy.” 29 C.F.R. §
516.4.
Along
with
their
response
brief,
plaintiffs
submit
declarations from all five employees stating that they never saw
“any poster regarding minimum wage or overtime pay posted inside
LSK’s facility” during their employment there. See, e.g., Ko
Decl. ¶ 3; Djurickovic Decl. ¶ 3. Plaintiffs argue that because
they
never
saw
the
required
labor
poster
in
defendants’
facility, and because defendants have not otherwise demonstrated
that plaintiffs had acquired general knowledge of their FLSA
8
rights, the limitations period must be tolled for the period
during which they were unaware of their rights.
In support of this argument, plaintiffs rely on two cases—
Chavez v. Don Stoltzner Mason Contractor, Inc., No. 10 C 264,
2010 WL 1417029 (N.D. Ill. Apr. 5, 2010), and Cruz v. Maypa, 773
F.3d
138
(4th
construction
against
Cir.
workers
their
2014).
brought
former
In Chavez,
FLSA
employer.
a
claims
2010
group
for
WL
of
unpaid
1417029,
hourly
overtime
at
*1.
The
defendants moved to dismiss on multiple grounds, including that
the plaintiffs’ claims were “barred or at least limited by the
applicable
statute
of
limitations.” Id. at
*2.
Judge
Aspen
denied the motion because the plaintiffs had alleged that the
defendants failed to post notice as required by 29 C.F.R. §
516.4. Id. at *5. Because the employer had not made a showing
that
the
plaintiffs
otherwise
acquired
general
knowledge
of
their FLSA rights, Judge Aspen concluded that the defendants’
effort to dismiss the plaintiffs’ claims as untimely failed. Id.
In Cruz, the Fourth Circuit recognized a similar tolling
exception to the FLSA’s limitations period. The plaintiff in
that
case
brought
FLSA
and
other
claims
against
her
former
employers five years after she left their employ. The district
court
dismissed
the
claims
as
time-barred.
Reversing
the
dismissal, the Fourth Circuit held that the plaintiff’s FLSA
claims could be “timely if she received actual notice of her
9
rights within three years” of filing suit. Id. at 148. Noting
that the FLSA “inflicts [no] statutory penalties for failure to
comply with the notice requirements,” the circuit court reasoned
that “absent a tolling rule, employers would have no incentive
to
post
notice
since
they
could
hide
the
fact
of
their
violations from employees until any relevant claims expired.”
Cruz, 773 F.3d at 147. Because the factual record, which only
included the complaint, did not indicate when the employee had
actual knowledge of her FLSA rights, the court reversed and
remanded.
Defendants LSK 121 and Kahng argue in their reply brief
that
plaintiffs’
because
these
reliance
cases
were
on
Chavez
decided
on
and
Cruz
motions
to
is
misplaced
dismiss
and
because plaintiffs here did not allege in their complaint that
defendants failed to post the FLSA notice. Defendants’ latter
argument
is
not
well-taken.
It
is
well-established
that
“a
complaint need not anticipate or overcome affirmative defenses,
such as the statute of limitations.” Sidney Hillman Health Ctr.
of Rochester v. Abbott Labs., Inc., 782 F.3d 922, 928 (7th Cir.
2015).
While
the
court
in Chavez found
the
failure-to-post
allegation useful to its analysis, it does not follow that,
without such an allegation, a plaintiff cannot assert a tolling
argument.
10
And while it is true that Cruz and Chavez were resolved at
the
pleadings
tolling
may
stage,
be
the
analysis
appropriate
when
in
the
both
underscores
facts
reveal
that
that
a
plaintiff was unaware of her rights for a period of time after
her claim accrued. Accordingly, these cases support the argument
that a genuine dispute over when plaintiffs became aware of
their rights precludes summary judgment in defendants’ favor on
the ground that their claims were untimely.
Cortez v. Medina’s Landscaping, Inc., No. 00-cv-6320, 2002
WL 31175471 (N.D. Ill. Sept. 30, 2002), is also instructive.
In Cortez, an opt-in plaintiff filed his consent to join the
suit after the limitations period on his claims had expired. At
summary
judgment,
plaintiff’s
plaintiff
claims
the
were
responded
because
the
employer
notice.
Judge
summary
judgment
that
had
Gottschall
and
defendants
established
presumptively
the
statute
failed
denied
instead
to
the
granted
that
time-barred,
of
post
motion
plaintiff’s
the
tolled
required
defendants’
the
but
limitations
the
the
FLSA
for
cross-
motion because the record demonstrated that the employer had not
made the required posting and that the plaintiff did not acquire
“general awareness of his rights under the FLSA” until the month
before filing his consent to join the suit. 2002 WL 31175471, at
*6.
11
As
noted
above,
plaintiffs
offer
declarations
from
each
individual plaintiff indicating that he or she never saw any
labor posters in defendants’ facility. See, e.g., Ko Decl. ¶ 3;
Djurickovic
Decl.
¶
3.
plaintiffs’
“self-serving
In
reply,
defendants
declarations,”
but
complain
of
provide
no
they
evidence that 29 C.F.R. § 516.4’s notice-posting requirement was
satisfied.5 A reasonable jury could conclude from this evidence
that the required labor posters were not properly displayed and
that the tolling rule articulated in Cortez, Cruz, and Chavez
applies.6
B. Fluctuating Workweek
The
FLSA
and
the
IMWL
require
employers
to
compensate
covered employees for any hours worked in excess of forty hours
per workweek at an overtime rate not less than one and one-half
times their regular rate of pay. 29 U.S.C. § 207(a)(1); 820 ILCS
§
105/4a(1);
29
C.F.R.
§
778.107.
When
an
employee
is
compensated on an hourly rate basis, calculating her overtime
5
Defendants note that plaintiffs have not explained why they
believe the statute of limitations should be tolled to October
13, 2013. Plaintiffs’ unexplained inclusion of this date is
certainly peculiar. However, plaintiffs are not seeking summary
judgment on the tolling issue, so it is unnecessary to determine
which date would be appropriate for tolling purposes before the
applicability of tolling has even been conclusively determined.
For present purposes, it is enough that a reasonable jury could
find that tolling was appropriate.
6
Because the IMWL contains a similar notice-posting requirement,
and plaintiffs declare that they never saw “any poster regarding
minimum wage or overtime pay posted inside LSK’s facility,”
Djurickovic Decl. ¶ 3, I deny defendants’ motion for summary
judgment with respect to plaintiffs’ IMWL claims also.
12
rate is often straightforward. If the employee usually earns $10
an hour, she makes $15 for each hour of overtime she works
because these extra hours must be compensated at 150 percent of
her regular rate of pay.
Overtime
calculation
becomes
more
complicated
when
considering other compensation schemes. Neither the FLSA nor the
IMWL requires employers to compensate employees on an hourly
rate basis. 29 C.F.R. § 778.109; see 56 ILAC § 210.430. If they
so choose, employers may pay their workers on a piece-rate,
salary, day-rate, commission, or other basis. Id. Under each of
these
compensation
schemes,
however,
overtime
premiums
must
still be paid based on an employees’ regular rate of pay for an
hour’s
work.
“keystone”
29
of
the
C.F.R.
§
FLSA’s
778.109.
overtime
The
regular
provisions—is
rate—the
calculated
according to the requirements in 29 U.S.C. § 207(e). UrnikisNegro v. Am. Family Prop. Servs., 616 F.3d 665, 673 (7th Cir.
2010). In most cases, employers must pay employees 150 percent
of their regular rate of pay just as in the example above. But
the FLSA and the IMWL do permit some alternative methods for
calculating
overtime
under
certain
conditions.
One
such
alternative is the fluctuating workweek (“FWW”) method, which
defendants insist is operative here.
The FWW method permits employers to pay half-time, rather
than
time-and-a-half,
overtime
to
13
certain
salaried
employees
whose hours of work fluctuate from week to week. See 29 C.F.R. §
778.114(a); 56 ILAC § 210.430(f); see also Condo v. Sysco Corp.,
1 F.3d 599, 601–02 (7th Cir. 1993); Heder v. City of Two Rivers,
295 F.3d 777, 779–80 (7th Cir. 2002). The basic understanding
for this alternative calculation is that the employee’s salary
is fixed and is meant to serve as straight-time pay for whatever
hours he works in a given workweek. The employee’s regular rate
of
pay
fluctuates
with
the
hours
he
works
because
it
is
determined by dividing the employee’s fixed salary by the actual
hours he works in a particular week. See Urnikis-Negro, 616 F.3d
at 683. Because the employee’s salary is intended to cover all
straight-time pay, regardless of his actual hours worked, the
employer need only pay the fifty percent premium for all hours
worked over forty. 29 C.F.R. § 778.114(a); 56 ILAC § 210.430(f).
Thus, if an employee earning $500 every week works fifty hours,
his regular rate of pay is $10 an hour. Under the FWW method he
would be paid a $5 overtime premium for each of the ten hours he
worked over forty. His total compensation would be $550 for that
hypothetical week.
It
is
not
difficult
to
see
how
the
FWW
method
often
benefits employers. See Urnikis-Negro, 616 F.3d at 682-84. It
makes sense then that employers are permitted to use the FWW
method only in certain circumstances. For the FWW method to
apply, the following conditions must be met:
14
(1) The employee's work hours must fluctuate from week
to week;
(2)
The
employee
must
receive
a
fixed
(excepting overtime premiums) that does not
according to hours worked;
salary
change
(3) There must be a clear mutual understanding between
the employee and employer that the employee's fixed
salary represents all straight-time pay for all hours
worked each workweek, “whatever their number, rather
than for working 40 hours or some other fixed weekly
work period”; and
(4) The employee’s fixed salary must compensate him at
no less than the minimum wage for all hours worked.
29
C.F.R.
§
778.114;
see
Urnikis-Negro,
616
F.3d
at
680-81
(citing Overnight Motor Transp. Co. v. Missel, 316 U.S. 572,
580-81 (1942)); Heder, 295 F.3d at 779–80; Gallardo v. Scott
Byron & Co., No. 12-CV-7202, 2014 WL 126085, at *11 (N.D. Ill.
Jan. 14, 2014); 56 ILAC § 210.430(f).
Defendants
contend
that,
because
plaintiffs
were
paid
a
regular salary every two weeks that generally did not fluctuate
based
on
the
hours
they
worked,
defendants
are
entitled
to
summary judgment on the matter of the FWW method’s application.7
In support, defendants offer paystubs and deposition transcripts
showing
the
frequency
and
method
with
which
plaintiffs
were
paid. Plaintiffs counter that defendants have not established
7
Defendants cite Samson v. Apollo Res., Inc., 242 F.3d 629, 636
(5th Cir. 2001) for the proposition that plaintiffs have the
burden at trial of proving that the employer improperly applied
the FWW method. Without deciding whether this out-of-circuit
holding applies to this case, I note that this would not relieve
defendants of their initial burden as the moving party to show
that they are entitled to summary judgment on the application of
the FWW method. Celotex, 477 U.S. at 323.
15
that plaintiffs’ biweekly salaries were fixed because LSK 121
made deductions when plaintiffs worked fewer than forty hours.
Additionally,
mutual
plaintiffs
understanding
dispute
that
LSK
that
121
there
existed
employees’
a
biweekly
clear
salary
would compensate them for all straight-time hours worked.
I agree that plaintiffs have raised a triable dispute as to
how their overtime should be calculated. For the FWW method to
apply,
plaintiffs’
salary
must
not
be
“diminished
even
if
[their] number of hours falls below 40, nor [can plaintiffs be]
expected to make [hours] up in the future.” Heder, 295 F.3d at
779; see also 29 C.F.R. § 778.114(c) (instructing that the FWW
method “may not be used unless...the employer pays the salary
even though the workweek is one in which a full schedule of
hours is not worked.”). Several of plaintiffs’ paystubs show
that
they
absences
were
docked
caused
by
the
pay
for
partial-day
employer’s
lack
of
absences
work.
and
See,
for
e.g.,
Djurickovic Dep. at 76-77, 79, 87, Exh. 4 at LSK800, LSK809;
Pls.’ Opp., Exh. D at LSK111 [June Kim paystubs]. Other paystubs
show deductions for eight or sixteen hours of pay labeled “No
Pay,” presumably for full-day absences. See, e.g., Young Chul
Kim
8
Dep.
Exh.
2
at
LSK28;
Ko
Dep.
Exh.
4
at
LSK1458-59.8
The only plaintiff whose paystubs do not contain salary
deductions is Cho. As plaintiffs argue, however, defendants’ own
payroll records suggest that Cho may have been paid hourly for
at least part of the period for which he claims he is owed
overtime. See Pls.’ Opp., Exh. E at 2-3. Whether there was a
16
Defendants make no effort at all to explain these deductions.
Nor
do
they
the
“bonuses”
paychecks,
plaintiffs’
address
and
which
reflected
at
least
in
one
several
plaintiff
explained was for work he performed on Saturdays. Young Chul Kim
Dep. at 23-25. In view of this evidence, defendants cannot make
the requisite summary judgment showing that plaintiffs were paid
fixed salaries, regardless of the hours worked in a week, and
that a reasonable jury could not find otherwise. See Heder, 295
F.3d at 779-80; 29 C.F.R. § 778.114(c).9
Moreover, the undisputed facts do not reveal a clear mutual
understanding
constituted
between
their
the
parties
straight-time
pay
that
for
plaintiffs’
any
and
all
salary
hours
worked. See Heder, 295 F.3d at 779; 29 C.F.R. § 778.114(a).
“Section 778.114 does not require that an employee understand
the precise details of how his employer calculates his overtime
pay
under
the
FWW
formula...but
as
the
Seventh
Circuit
has
clear mutual understanding about the FWW method’s application is
also in dispute. Summary judgment regarding Cho’s overtime
calculation is therefore not appropriate.
9
Defendants emphasize plaintiffs’ allegation in the amended
complaint that they were paid a “fixed amount per week
regardless of the number of hours they worked in a day or...a
workweek.” Am. Compl. at ¶ 50. As discussed, much of the
evidence suggests that this was not actually the case, and,
because defendants refer to the complaint only in their reply
brief, plaintiffs did not have an opportunity to explain the
contradiction. Arguments not raised until a reply brief are
waived. See United States v. Turner, 203 F.3d 1010, 1019 (7th
Cir. 2000). Even if plaintiffs are held to their contradictory
allegation, however, there are additional issues, including
whether a clear mutual understanding existed, that preclude
summary judgment.
17
explained, it does require ‘a clear mutual understanding that
the base salary rate constitutes straight time for any overtime
worked.’” Gallardo, 2014 WL 126085, at *11 (quoting Heder, 295
F.3d at 780); see also Urnikis-Negro, 616 F.3d at 667.
Defendants
judgment
argue
evidence
understanding,”
employees’
payment,
to
but
paystubs,
and
short
that
they
support
the
that
only
which
“have
there
evidence
show
excerpts
provided
of
the
the
was
a
they
amount
ample
clear
offer
and
summary
mutual
is
frequency
deposition
the
of
transcripts
introducing the paystubs. See L.R. 56.1 Stmt. ¶¶ 3, 9, 12, 15,
24. In essence, defendants attempt to demonstrate that there was
a meeting of the minds by showing that most of the plaintiffs’
paychecks were for the same amount. But, as plaintiffs have
asserted,
their
plaintiffs’
compensation
deposition
was
testimony
not
always
suggests
fixed.
that
Moreover,
plaintiffs’
understanding of their compensation was less than clear. For
example, plaintiff June Kim testified that he was always an
hourly
employee
while
working
at
LSK
121,
and
he
cited
his
hourly rates as he remembered them. June Kim Dep. at 18-19. And
yet
in
another
part
of
his
testimony,
he
agreed
with
the
examiner that he was paid the same salary regardless of hours
worked. Id. at 42, 46. Plaintiff Young Chul Kim testified that
his position at LSK 121 was hourly, but also noted that he was
not told how many hours to work. Young Chul Kim Dep. at 11, 36.
18
Plaintiff Cho recalled defendant Kahng describing Cho’s position
as salaried, but Cho explained that he was actually “paid by the
hour.” Cho Dep. at 12. Plaintiffs’ clear confusion about how
they
were
paid
attenuates
defendants’
argument
that
a
clear
mutual understanding existed between the parties. See Gallardo,
2014
WL
126085,
at
*13
(finding
that
plaintiffs’
deposition
testimony about their understanding of their pay rate undermined
the
defendants’
“argument
that
they
clearly
understood
that
their base salaries compensated them...for all hours worked,”
even though a human resources representative also averred that
she explained the FWW method to the plaintiffs). Although an
agreement
can
be
inferred
from
the
parties’
conduct,
see
Urnikis-Negro, 616 F.3d at 681 n.8, paystubs alone will not
establish
the
absence
testimony
suggesting
of
that
a
genuine
no
such
dispute
when
agreement
there
is
existed.
See
remain
with
Gallardo, 2014 WL 126085, at *13.
Because
genuine
disputes
of
material
fact
respect to the FWW method’s application, summary judgment is not
warranted.
C. Executive Exemption
As detailed above, the FLSA requires employers to pay its
employees overtime premiums for hours worked in excess of forty
hours. There are, however, certain classes of workers who are
exempted from the FLSA’s coverage. See 29 U.S.C. §§ 207, 213.
19
Under section 213(a)(1), “any employee employed in a bona fide
executive, administrative, or professional capacity” is exempt
from the FLSA’s overtime requirements. 29 U.S.C. § 213(a)(1).
For these executive, administrative, and professional exemptions
to apply, the Department of Labor’s regulations require that a
potentially exempt employee be paid on a salary basis, that the
employee’s salary meets a certain threshold level, and that the
employee
performs
certain
enumerated
job
duties,
which
demonstrate that his or her position is of the character that
the
statute
541.200,
intended
541.300
to
(2004).
exempt.
It
is
See
the
29
C.F.R.
§§
employer’s
541.100,
burden
to
demonstrate that an employee is exempt. Schaefer-LaRose v. Eli
Lilly
&
Co.,
679
F.3d
560,
571
(7th
Cir.
2012);
Thomas
v.
Speedway SuperAmerica, LLC, 506 F.3d 496, 501 (6th Cir. 2007)
(“FLSA overtime exemptions are affirmative defenses on which the
employer
has
exemptions
limited
to
the
are
burden
“narrowly
applications
of
proof...”).
drawn”
that
are
against
The
FLSA
employers
“plainly
and
overtime
and
are
unmistakably
within their terms and spirit.” Id. (omitting internal quotation
marks and citations);
see also Desmond v. PNGI Charles Town
Gaming, L.L.C., 564 F.3d 688, 692 (4th Cir. 2009); Davis v.
Mountaire Farms, Inc., 453 F.3d 554, 556 (3d Cir. 2006); Webster
v. Pub. Sch. Employees of Washington, Inc., 247 F.3d 910, 914
(9th Cir. 2001).
20
Defendants argue that plaintiffs June Kim and Djurickovic
are
overtime-exempt
541.100(a)
(2004),10
executive
a
bona
employees.
fide
Under
executive
29
C.F.R.
employee
is
§
an
employee:
(1) Compensated on a salary basis at a rate not less
than $455 per week;
(2) Whose primary duty is management of the enterprise
in which the employee is employed or of a customarily
recognized department or subdivision thereof;
(3) Who customarily and regularly directs the work of
two or more other employees; and
(4) Who 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.
To
establish
that
an
employee
falls
under
the
executive
exemption, an employer must demonstrate that each of these four
conditions is met. Davis, 453 F.3d at 557; Barreto v. Davie
Marketplace, LLC, 331 F. App'x 672, 678 (11th Cir. 2009); Hundt
v. DirectSat USA, LLC, 294 F.R.D. 101, 110 (N.D. Ill. 2013).
Determining the applicability of overtime exemptions requires
courts to conduct a fact-intensive, individualized inquiry of an
employee’s job duties and responsibilities. Schaefer-LaRose, 679
F.3d at 572; Morgan v. Family Dollar Stores, Inc., 551 F.3d
1233, 1269 (11th Cir. 2008). Summary judgment is appropriate
10
I cite the version of 29 C.F.R. § 541.100 that was effective
at the time of plaintiffs’ employment. A new version of this
rule was set to take effect on December 1, 2016, but its
implementation and enforcement has been enjoined. See Nevada v.
U.S. Dep't of Labor, 218 F. Supp. 3d 520, 534 (E.D. Tex. 2016).
21
only
could
where
find
an
employer
the
demonstrates
employee
in
that
no
reasonable
to
be
non-exempt.
question
jury
See
Anderson, 477 U.S. at 248; Barreto, 331 F. App'x at 678; Bothell
v. Phase Metrics, Inc., 299 F.3d 1120, 1129-30 (9th Cir. 2002).
Defendants contend that plaintiffs June Kim and Djurickovic
meet all four criteria. According to defendants, both employees
were paid on a salary basis at rates above the salary threshold.
June Kim, they argue, was primarily responsible for LSK 121’s
wax-metal
department
as
evidenced
by
his
disputed
job
description and signed statements of two wax-metal employees.
Defendants argue that the requirement that June Kim customarily
direct the work of at least two other employees is satisfied by
his
involvement
in
conducting
performance
reviews
of
other
employees and his approval of vacation leave requests. Finally,
defendants
argue
distributing,
and
that
June
evaluating
Kim’s
role
wax-metal
in
department
monitoring,
employees’
work demonstrates that he had “an enormous amount of control and
influence
employees.”
over
the
Defs.’
hiring,
Memo.
at
firing
10.
and
promotions
Defendants
do
not
of
his
provide
additional cites to the record to support this proposition.
In support of Djurickovic being exempt, defendants offer
only a few scattered references to the record. They essentially
contend that because Djurickovic was the most senior employee in
the CAD department, took responsibility for the work product
22
that came out of the department, and once represented in an
employment application that he had served as a manager at LSK
121, his primary duty was the management of the CAD department.
To satisfy the supervision element of the executive exemption,
defendants
rely
on
Djurickovic’s
deposition
testimony
about
training other employees in the CAD department, correcting their
mistakes, and answering their questions. From these facts alone,
defendants argue that there is no dispute of material fact that
Djurickovic satisfies the requisite criteria.
Defendants have not carried their burden with respect to
either
employee.
Although
plaintiffs
identify
multiple
shortcomings in defendants’ evidence,11 I need not examine all of
them
because
defendants
plainly
fail
to
show
that
either
employee played a role in making decisions to hire, fire, and
promote other LSK 121 employees. Defendants do not provide any
evidence
11
in
their
Local
Rule
56.1
statement
showing
that
In their opposition brief, plaintiffs argue that June Kim and
Djurickovic were not truly paid on a salary basis because they
were docked pay for partial-day absences and for absences caused
by the employer’s needs. Djurickovic Dep. 76-77, 79, 87, Exh. 4;
Pls.’ Opp., Exh. 4; see 29 C.F.R. § 541.602(a),(b)(1) (2004)
(“[A]n exempt employee must receive the full salary for any week
in which the employee performs any work without regard to the
number of days or hours worked....An employee is not paid on a
salary basis if deductions from the employee's predetermined
compensation are made for absences occasioned by the employer or
by the operating requirements of the business.”). Plaintiffs
also contend that, because defendants have not provided evidence
of the amount of time June Kim and Djurickovic spent on exempt
managerial tasks, they cannot meet the primary duty requirement
of 29 C.F.R. § 541.100(a)(2), as defined in 29 C.F.R. § 541.700.
23
Djurickovic and June Kim ever made hiring, firing or promotion
decisions.
With
respect
to
Djurickovic,
defendants
seem
to
overlook the requirement entirely, and the only evidence in the
record on the subject is Djurickovic’s denial that he had any
role in these sorts of decisions.12
As for June Kim, none of the documents or testimony in the
record—including the performance review documents, the disputed
job
description,
the
wax-metal
employee
statements,
and
the
vacation request forms he signed—indicate that he was ever asked
to
or
ever
did
recommendations.
deposition
provide
Moreover,
whether
he
any
hiring,
when
ever
had
June
the
firing,
Kim
was
or
promotion
asked
opportunity
to
at
his
recommend
people for hire, he responded that he had not. June Kim Dep. at
32-34.
To establish that plaintiffs June Kim and Djurickovic were
exempt from overtime pay under the executive exemption, it is
defendants’ burden to show that all four conditions set out at
29 C.F.R. § 541.100(a) are satisfied. Because they fail to put
forth
evidence
demonstrating
that
June
Kim
and
Djurickovic
played a role in hiring and firing decisions, defendants have
not
12
met
this
burden.
Accordingly,
they
are
not
entitled
to
When asked whether defendants gave him authority to hire new
people for the CAD department, Djurickovic responded: “I wish I
had that authority. I wouldn’t have hired – or made the choices
that [Kahng]’s made. Actually I had – I had no choice in it at
all.” Djurickovic Dep. at 59.
24
summary
judgment
with
respect
to
the
executive
exemption’s
applicability. See Hundt, 294 F.R.D. at 110; Bucaro v. Forest
Pres. Dist. of Cook Cty., Ill., No. 06-cv-6006, 2009 WL 765373,
at *7 (N.D. Ill. Mar. 23, 2009).
III.
For the foregoing reasons, defendants’ motion for partial
summary judgment is denied.
ENTER ORDER:
Dated: October 2, 2017
Elaine E. Bucklo
United States District Judge
25
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