Torrenegra v. Grameen America Inc. et al
Filing
57
ORDER granting in part and denying in part 51 Motion for Summary Judgment; denying 53 Motion for Summary Judgment. For the reasons set forth in the attached Memorandum and Order, summary judgment is GRANTED in favor of Grameen America, NY, Inc. S ummary is also GRANTED to Grameen America, Inc., on those FLSA claims deriving from Plaintiffs work as a TCM/CM, but DENIED with respect to Plaintiffs NYLL claims deriving from his work as a TCM/CM, and FLSA and NYLL claims deriving from his work as an SS. Plaintiffs motion for summary judgment is DENIED. Ordered by Magistrate Judge Ramon E. Reyes, Jr on 4/19/2017. (Naidich, Zachary)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
_____________________
No 15-cv-3153 (RER)
_____________________
DONALDO A. TORRENEGRA,
Plaintiff,
VERSUS
GRAMEEN AMERICA, INC. AND GRAMEEN AMERICA NY, INC.,
Defendants.
___________________
Memorandum & Order
April 19, 2017
___________________
RAMON E. REYES, JR., U.S.M.J.:
evidence that he worked in excess of 40 hours
per week; (2) Plaintiff presented no evidence
that GANY was his employer during the
relevant time period; and (3) Plaintiff is an
exempt employee under either the
administrative exemption, the outside
salesman exemption, or a combined
exemption. (Dkt. No. 51-1 (Defendants’
Memorandum in Support of Summary
Judgment (“Df. Br.”)) at 13, 24-26, 30). For
the reasons set forth herein, Defendants’
motion is GRANTED in part and DENIED in
part. Plaintiff’s motion is DENIED in its
entirety.
Donaldo A. Torrenegra (“Plaintiff”)
commenced this action against Grameen
America, Inc., (“Grameen America”) and
Grameen America NY, Inc. (“GANY”)
(collectively “Defendants”) alleging failure
to pay overtime wages as required under the
Fair Labor Standards Act (the “FLSA”), 29
U.S.C. § 207, and New York Labor Law §
651 (“NYLL”). (Dkt. No. 1). Plaintiff now
moves for partial summary judgment,
pursuant to Fed. R. Civ. P. 56, requesting that
this Court strike Defendants’ seventh
affirmative defense, which claims Plaintiff is
an exempt employee not entitled to overtime
pay.
(Dkt.
No.
53-1
(Plaintiff’s
Memorandum in Support of Summary
Judgment (“Pl. Br.”) at 1). Defendants cross
move for summary judgment on the grounds
that: (1) Plaintiff failed to present sufficient
BACKGROUND
The Grameen Bank of Bangladesh
(the “Grameen Bank”) is an internationally
1
recognized micro-finance institution that
provides small dollar loans and other
financial
services
to
impoverished
Bangladeshi women. (Dkt. No. 53-2
(Plaintiff’s Local Civil Rule 56.1 Statement
(“Pl. R. 56.1”)) ¶ 3; Dkt. No. 54-2
(Defendants’
Counterstatement
of
Undisputed Material Facts (“Dfs. 56.1
Counter”)) ¶ 3). Following its creation by Dr.
Muhammed Yunus, the Grameen Bank
pioneered new methods of directing capital to
individuals long excluded from the formal
economy, earning Dr. Yunus a Nobel Prize.
(Pl. R. 56.1 ¶ 3; Dkt. No. 51-16 (Declaration
of Andrea Jung (“Jung Decl.”)) ¶ 2, Ex. AC). Grameen America, a non-profit
organization also founded by Dr. Yunus,
opened its first New York branch in Jackson
Heights, Queens in early 2008. (Pl. R. 56.1 ¶
5; Dfs. 56.1 Counter ¶ 5). GANY was
subsequently formed in mid-2010. (Dkt. No.
51-13 (Juffa Decl. 1 Ex J - NYS Dep’t of
State Entity Information)).
No. 51-6 (Declaration of Laura B. Juffa
“Juffa Decl. 2”) Ex C - Deposition of
Donaldo A. Torrenegra (“Torrenegra”))
27:14-29:4). The parties dispute whether this
transfer constituted a demotion. (Dfs. 56.1
Counter ¶ 85).
I.
Grameen
Model
America’s
Lending
Grameen America applies the
Grameen Bank’s micro-finance model to low
income women in the United States. (Pl. R.
56.1 ¶ 5; Dfs. 56.1 Counter ¶ 5). Consistent
with its mission, Grameen America
“provides financial services, financial
training and loans to a targeted population of
impoverished individuals, especially poor
immigrant women, living below the poverty
line[.]” (Pl. R. 56.1 ¶ 2; Dfs. 56.1 Counter ¶
2). According to Andrea Jung, Grameen
America’s President and CEO, the
organization’s mission includes: (1)
“help[ing] its clients achieve opportunities
for
entrepreneurship
through
microloans…[(2)] creat[ing] a culture of
savings
and
individual
financial
responsibility; (3) improv[ing] its borrowers
credit scores to allow [them] to participate in
the mainstream American economy; and (4)
provid[ing] financial education[.]” (Jung
Decl. ¶3).
Plaintiff worked at Grameen
America’s Jackson Heights branch from
December 2008, through early January 2015.
(Pl. R. 56.1 ¶¶ 75, 77; Dfs. 56.1 Counter ¶¶
75, 77). He was initially employed as a
Trainee Center Manager (“TCM”), before
being promoted to Center Manager (“CM”)
in December 2009. (Pl. R. 56.1 ¶¶ 78, 80;
Dfs. 56.1 Counter ¶¶ 78, 80). In 2010 he was
briefly designated as a Second Signatory
(“SS”), before returning to his CM position
in 2011. (Pl. R. 56.1 ¶¶ 82, 84; Dfs. 56.1
Counter ¶¶ 82, 84). At some point in
February or March of 2014 Plaintiff was
again reclassified, this time being transferred
to the audit team, before his ultimate
termination on January 9, 2015. (Pl. R. 56.1
¶¶ 84-86; Dfs. 56.1 Counter ¶¶ 84-86; Dkt.
To facilitate this mission, Grameen
America recruits members from the local
community who receive training, are formed
into groups and then centers, and ultimately
become borrowers. Throughout this process,
CMs act as the primary point of contact
between Grameen America and its
members. 1 (Pl. R. 56.1 ¶¶ 95-96; Dfs. 56.1
Counter ¶¶ 95-96). According to Plaintiff,
1
TCMs perform the same function as CMs, but receive
additional training and maintain fewer members. (Pl.
R. 56.1 ¶ 61; Dfs. 56.1 Counter ¶ 61). SSs also fulfill
CM duties but are additionally responsible for a
variety of other “duties at the branch office.” (Pl. R.
56.1 ¶ 64; Dfs. 56.1 Counter ¶ 64). Due to these extra
duties, SSs maintain even fewer members than TCMs.
(Pl. R. 56.1 ¶ 65; Dfs. 56.1 Counter ¶ 65).
2
CM duties must be carried out in accordance
with Grameen America’s “strict criteria,
rules, and procedures”, and CMs are required
to follow “specific guidelines” from which
they may not deviate. (Pl. R. 56.1 ¶¶ 14-15,
98; see generally Dkt. No. 53-14
(Declaration of Justin M. Reilly (“Reilly
Decl.”) Ex. K - Grameen America Manual);
Torrenegra 187:25-188:12). Defendants
dispute this claim, arguing that “recruiting
Grameen’s members is unique to each Center
Manager”, that the assessment of who to
recruit is “made by the Center Manager and
is based on his or her independent discretion
and judgment”, and that Grameen America
guidelines are either minimal or more
analogous to proposals (Dfs. 56.1 Counter ¶¶
14-15; Dkt. No. 51-8 (Juffa Decl. Ex E Deposition of Alethia Mendez (“Mendez”))
18:2-12, 48:24-49:13). As detailed below,
Plaintiff’s
own
testimony
supports
Defendants’ argument.
A.
where he might find women to approach.
(Torrenegra 30:11-20). He also placed a
poster in his church lunch room. (Torrenegra
30:11-20). Once a potential member was
identified, he would explain the program and
assess their interest. (Torrenegra 33:8-17).
These conversations could last anywhere
from one hour to ninety minutes. (Torrenegra
33:18-25). The degree of freedom Plaintiff
exercised is disputed. Defendants’ cite
Plaintiff’s own testimony to support the
argument that CMs are free to decide where
and how to recruit new members.
(Torrenegra 38:24-39:3; Ortega Decl. ¶ 7).
Plaintiff, by contrast, argues that CMs are
required to follow Grameen America
procedures. (Pl. R. 56.1 ¶¶ 14-15, 98;
Grameen America Manual; Torrenegra
187:25-188:12; Dfs. 56.1 Counter (Disputing
these claims)). At his deposition, Plaintiff
testified that Grameen America provided
minimal training, no formal script, and
limited marketing material. (Torrenegra
33:7-11, 34:1-9; Dkt. No. 51-23 (Grameen
America Training Documents)). He did not
suggest Grameen America instructed him to
recruit from specific locations or at specific
times.
Recruitment
CMs are responsible for identifying
and recruiting new members for Grameen
America. (Pl. R. 56.1 ¶¶ 95-96; Dfs. 56.1
Counter ¶¶ 95-96). Members are recruited via
direct outreach, with CMs approaching
potential members in the community and
engaging
in
direct,
face-to-face,
conversation. (Torrenegra 31:21-24). The
CM explains the Grameen America model,
answers questions, and assesses whether the
individual would make a suitable member.
(Df. R. 56.1 ¶ 19; Torrenegra 187:25188:18). The CM must also assess the
individual’s poverty level to ensure they fall
within
Grameen
America’s
target
demographic. (Dkt. No. 51-12 (Center
Manager Designation) at 2).
B.
Training & Center Formation
Once recruited, potential members
are organized into groups. (Pl. R. 56.1 ¶ 1617; Dfs. 56.1 Counter ¶¶ 16-17). Grameen
America requires five members per group.
(Pl. R. 56.1 ¶ 16-17; Dfs. 56.1 Counter ¶¶ 1617 (stating that “the Grameen methodology
proposes…5 Members” but “[s]ome Groups
have less than 5 members.”)). At this point,
the CM leads the group through five days of
Continuous Group Training. (Pl. R. 56.1 ¶ 19;
Dfs. 56.1 Counter ¶ 19). The subject matter
of each day’s training is proscribed by
Grameen America, and includes discussions
on topics including, but not limited to: (1)
Grameen America’s objectives; (2) criteria
In describing recruitment, Plaintiff
testified that he would visit various small
businesses, he particularly liked hair salons,
3
for membership; (3) the importance of
financial discipline; (4) the socio-economic
role of group centers; (5) loan products and
interest rates; (6) loan proposal procedures;
(7) savings products; (8) keeping accounts
for loan and savings transactions; and (9)
loan utilization. (Grameen America Manual
at 8-10). Each day the CM also collects
money from each potential member, which is
deposited in savings accounts the CM opens
for prospective members at a third party
institution. (Grameen America Manual at 8;
Torrenegra 41:20-25). There is no indication
that CMs followed a set script or were
provided with detailed guidance on how to
approach each topic.
C.
Center Meetings & Loans
Recognized groups join together to
form centers, which hold weekly meetings
attended by their CM. (Pl. R. 56.1 ¶¶ 24, 26;
Dfs. 56.1 Counter ¶¶ 24-26). According to
Defendants, the CM is responsible for
providing ongoing educational and business
advice, receiving loan requests, collecting
loan
payments,
and
facilitating
communication between members. (Dkt. No.
51-2 (Defendants’ Local Civil Rule 56.1
Statement (“Dfs. R. 56.1”)) ¶¶ 26, 30-31;
Juffa Decl. Ex F - Deposition Transcript of
Andrea Jung (“Jung”) ¶¶ 15-17). The CM
also continues to collect money for deposit in
member’s savings accounts and assess loan
utilization. (Torrenegra 73:10-13; Ex. Q Rules and procedures for GAI Operations ¶
6.5). Plaintiff disputes these facts as
misrepresentations of testimony seeking to
inflate the scope of the CM role. (Dkt. No.
51-29 (Plaintiff’s Counterstatement of
Undisputed Facts (“Pl. 56.1 Counter”)) ¶¶ 26,
30-31).
According to Plaintiff, as training
progressed he would visit prospective
members homes to assess whether they fit the
Grameen America model and if the
information on their application, relating to
income and business plans, was accurate. (Pl.
R. 56.1 ¶ 20; Dfs. 56.1 Counter ¶ 20;
Torrenegra 34:22-25) (“Then I have to visit
their houses or if they have a different
business. I have to make sure that whatever
they’re telling us is true.”)).
New York City branch offices offer
borrowers a basic loan. (Pl. R. 56.1 ¶ 29; Dfs.
56.1 Counter ¶ 29). To receive a loan,
members must attend all center meetings. (Pl.
R. 56.1 ¶ 27; Dfs. 56.1 Counter ¶ 27). Loan
applications are presented at center meetings,
and all center members must recommend
making the loan. (Pl. R. 56.1 ¶¶ 27, 41; Dfs.
56.1 Counter ¶¶ 27, 41). Provided the loan
criteria is met, members may apply for
subsequent loans by following the same
procedure. (Pl. R. 56.1 ¶¶ 36, 38; Dfs. 56.1
Counter ¶¶ 36, 38). Grameen America
dictates the maximum size of first, second,
and third loans, (Pl. R. 56.1 ¶¶ 32-33; Dfs.
56.1 Counter ¶¶ 32-33 (disputing the size of
the maximum loan)). According to Plaintiff,
the CM can recommend reducing the size of
a loan. (Pl. R. 56.1 ¶ 42; Dfs. 56.1 Counter ¶
42 (stating that the CM can also recommend
Once training is completed, the group
must be formally recognized. (Pl. R. 56.1 ¶
21; Dfs. 56.1 Counter ¶ 21). This requires a
Grameen America Branch Manager (“Branch
Manager”) to conduct a Group Recognition
Test (“GRT”), where prospective members
must demonstrate what they have learned
during training. (Pl. R. 56.1 ¶¶ 21, 23; Dfs.
56.1 Counter ¶ 21, 23; Dkt No. 54-1 Juffa
Decl. Ex. Q (Rules and procedures for GAI
Operations (“Grameen Rules”) ¶¶ 5.1-5.4)).
The CM is not permitted to conduct a GRT.
(Pl. R. 56.1 ¶ 22; Dfs. 56.1 Counter ¶ 22).
4
increasing the size of a loan)). Defendants
claim that the CM must review the loan
proposal, recommend the loan amount, and
sign the proposal before it is presented to the
Branch Manager. (Df. R. 56.1 ¶¶ 27-28; Pl.
56.1 Counter ¶¶ 27-28 (stating the CM must
sign the loan proposal but denying this
constitutes a recommendation); Torrenegra
72:7-9). Ultimately the loan must be
approved by a Branch Manager, not the CM.
(Pl. R. 56.1 ¶ 44; Dfs. 56.1 Counter ¶ 44).
II.
DISCUSSION
A party seeking summary judgment
bears the burden of establishing that “there is
no genuine dispute as to any material fact and
[it is] entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a); see also Goenaga v.
March of Dimes Birth Defects Found., 51
F.3d 14, 18 (2d Cir. 1995). The movant may
satisfy this burden by presenting undisputed
evidence or, where the nonmovant “will bear
the ultimate burden of proof at trial[, by]
point[ing] to an absence of evidence to
support an essential element of the
nonmoving party’s claim.” Goenaga, 51 F.3d
at 18; see also Celotex Corp. v. Catrett, 477
U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d
265 (1986). The burden then shifts to the
nonmoving party to present evidence of a
genuine dispute of material fact that will call
the movant’s right to judgment into question.
See United States v. Rem, 38 F.3d 634, 643
(2d Cir. 1994). This requires the nonmovant
to present actual evidence such as
“depositions,
documents…or
other
materials[.]” Fed. R. Civ. P. 56(c)(1)(A); see
also Celotex Corp., 477 U.S. at 324. If the
evidence, viewed in the light most favorable
to the nonmoving party, is such that a “jury
could reasonably find for the [nonmovant,]”
the motion must be denied. See Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 252, 106
S.Ct. 2505, 91 L.Ed.2d 202 (1986).
Additional Responsibilities
In addition to managing members,
TCMs, CMs, and SSs may also be
responsible for certain office tasks. The
parties agree that CMs recorded “collection
sheet information into a loan ledger.” (Df. R.
56.1 ¶ 37; Pl. 56.1 Counter ¶ 37). According
to Defendants, in addition to maintaining
transaction
records
CMs
physically
distributed checks to borrowers. (Df. Br. at 910).
SSs
have
greater
office
responsibilities. Defendants claim that SSs
keep daily transaction accounts, prepare
monthly, bi-annual, and annual financial
statements, and review TCM/CM account
entries and deposits. (Df. R. 56.1 ¶¶ 43-45
Ex. D - Deposition Testimony of Nayroby
Sena 148:17-20). Plaintiff denies this,
claiming that Branch Managers are
responsible for the branch’s accounting. (Pl.
R. 56.1 Counterstatement ¶ 43). Defendants
further claim that “an SS’s responsibilities
include: maintaining accurate daily accounts
for all monetary transactions within a
branch[,]” yet another claim Plaintiff asserts
is inaccurate. (Df. R. 56.1 ¶ 43; Pl. 56.1
Counter. ¶ 43).
I.
Overtime Eligibility
To maintain a claim for unpaid
overtime under the FLSA and NYLL,
Plaintiff must prove that he worked in excess
of forty hours per week while employed by
the Defendants. 2 29 US.C. § 207(a); NYLL §
651. Defendants argue that: (1) Plaintiff has
failed to meet his burden of proof regarding
the number of hours worked; and (2) GANY
2
The FLSA contains additional requirements not
disputed here.
5
¶¶ 90, 92; Dfs. 56.1 Counter ¶¶ 90, 92). As
such, Plaintiff’s burden at this stage is
minimal. Plaintiff testified that he generally
worked between 11 and 13 hours per day. (Pl.
R. 56.1 ¶¶ 88-89). Defendants argue that
Plaintiff’s evidence does not create a
“reasonable inference” because his testimony
was vague. (Df. Br. at 26-27; Dfs. 56.1
Counter ¶¶ 88-89). Plaintiff’s testimony
reflected wide variations on his working
hours. (Torrenegra 35:12-17; 76:11-78:23).
He was also unable to recall the number of
members or centers he was responsible at
various times. (Torrenegra 40:13-21; 76:1179:21). Absent such information, Defendants
argue, there is no basis for determining the
number of hours Plaintiff actually worked.
was never Plaintiff’s employer. (Df. Br. at 20,
30). The undisputed facts establish that
Plaintiff has met his burden with regard to the
hours requirement but not with regard to the
employer requirement.
A.
Average Hours Worked
Employees who work in excess of
forty hours per week must receive overtime
pay. 29 US.C. § 207(a); NYLL § 651. It is the
plaintiff’s burden to prove how many hours
they worked per week. See Hosking v. New
World Mortg., Inc., 570 Fed.Appx. 28, 31 (2d
Cir. 2014) (summary order). If the defendant
employer fails to maintain adequate time logs
or records, however, this burden may be
satisfied with minimal evidence such as the
plaintiff’s own testimony. See id. This
testimony may be based entirely on the
plaintiff’s best memory, even if it is
imprecise. See Kuebel v. Black & Decker,
Inc., 643 F.3d 352, 362 (2d Cir. 2011).
However, the plaintiff must still “produce[]
sufficient evidence to show the amount and
extent of the work as a matter of just and
reasonable inference.” Hosking, 570
Fed.Appx. at 31 (Internal Quotations
Omitted). The plaintiff must also show “that
the employer had actual or constructive
knowledge of that work.” Kuebel, 643 F.3d at
362. The burden then shifts to the defendant
employer to prove no overtime violation
occurred, either through direct evidence or
“evidence to negative the reasonableness of
the inference to be drawn from the
employee’s evidence.” Anderson v. Mt.
Clemens Pottery Co., 328 U.S. 680, 688, 66
S.Ct. 1187, 90 L.Ed. 1515 (1946).
Despite the vagueness of Plaintiff’s
testimony, it is sufficient to create a genuine
dispute of fact as to the hours he worked. To
perform his job, Plaintiff had to meet with
community members whenever and
wherever they were available. This would
naturally result in variations in his schedule.
Defendants attempt to negate the
reasonableness of Plaintiff’s claims with
evidence that Plaintiff did not need to work
in excess of 40 hours per week and that other
CMs regularly completed their work in less
time. (Ortega Decl. ¶¶ 10, 13; Mendez Decl.
¶¶11-12). The fact that other employees
claim to have worked fewer hours at best
represents a dispute of material fact, which
affords Defendants no basis on which to seek
summary judgment. Nor is there an issue of
constructive notice. Plaintiff testified that he
complained about his hours to management.
(Torrenengra 148:24-149:9, 152:24-153:2).
As such, Defendants’ motion for summary
judgment on this issue is denied.
During the course of his employment,
Plaintiff primarily worked outside the office
and had no set work schedule. (Pl. R. 56.1 ¶
87; Dfs. 56.1 Counter ¶ 87). He was never
required to punch in or out of work, or
otherwise record his work hours. (Pl. R. 56.1
B.
GANY Employment
Defendants admit that Grameen
America was Plaintiff’s employer within the
6
These exemptions are incorporated into
NYLL. NYLL § 651(6); see also Reiseck v.
Universal Commc’ns of Miami, Inc., 591
F.3d 101, 104 (2d Cir. 2010). Whether an
employee falls within an exemption is a
mixed question of law and fact. See Paganas
v. Total Maint. Sol., LLC, --F.Supp.3d--, 15CV-5424, 2016 WL 7048034, *5 (E.D.N.Y.
Dec. 5, 2016).
meaning of the statutes. (Df. Br. at 30).
However, they contend that Plaintiff has
failed to offer evidence that GANY was also
his employer. The existence of an
employer/employee relationship is assessed
based on “economic reality,” not “technical
concepts” or labels. Irizarry v. Catsimatidis,
722 F.3d 99, 104 (2d Cir. 2013). The plaintiff
bears the burden of establishing this
relationship. See Mahoney v. Amekk Corp.,
14 Civ. 4131 (ENV) (VMS), 2016 WL
6585810, at * 10 (E.D.N.Y. Sept. 30, 2016).
The employer “bears the burden of
proving that its employees fall within [an]
exemption.” The employee’s “job title alone
is insufficient” to meet this burden, 29 C.F.R.
§ 541.2, and courts must look to the
employee’s actual duties, see Gold v. New
York Life Ins. Co, 730 F.3d 137, 145 (2d Cir.
2013). Due to the FLSA’s remedial nature,
“[e]xemptions for the FLSA’s requirements
‘are to be narrowly construed against the
employers seeking to assert them and their
application limited to those establishments
plainly and unmistakably within their terms
and spirit.’” Davis v. J.P. Morgan Chase &
Co., 587 F.3d 529, 531 (2d Cir. 2009)
(quoting Arnold v. Ben Kanowsky, Inc., 361
U.S. 388, 392, 80 S.Ct. 453, 3 L.Ed.2d 393
(1960)); see also Reiseck, 591 F.3d at 104.
Plaintiff has failed to satisfy his
burden. Plaintiff presents no evidence of the
relationship between either himself and
GANY or Grameen America and GANY.
The most substantive piece of information
presented is that GANY was formed in 2010,
almost two years after Plaintiff began
working for Grameen America. At no point
does Plaintiff state what work, if any, he
performed for GANY. Throughout his
deposition Plaintiff consistently refers to his
employer as Grameen or Grameen America,
but never GANY. Plaintiff further states that
he was paid exclusively by Grameen
America. Based on these facts, and the
absence of conflicting evidence in the record,
I conclude that Plaintiff has not meet his
statutory burden of showing that GANY was
his employer. As such, the claim against
GANY must be dismissed.
II.
Employees are commonly called
upon to perform a wide range of tasks, some
of which are within an exemption and some
of which are not. The employee’s primary
duty is determinative of whether the
administrative
or
outside
salesman
exemption applies. 29 C.F.R. §§ 541.200,
541.500.
Overtime Wage Exemptions
Under the FLSA, employers are not
required to pay overtime to “any employee
employed
in
a
bona
fide…administrative…capacity…or in the
capacity of outside salesman[.]” 29 U.S.C. §
213(a)(1). Grameen America argues that
Plaintiff is exempt from the FLSA’s overtime
requirements as either an administrative
employee, an outside salesman, or under a
combined exemption. (Df. Br. at 13, 24-25).
An employee’s primary duty is “the
principal, main, major or most important duty
that the employee performs.” 29 C.F.R. §
541.700(a). Several factors help delineate
between primary and ancillary duties,
including “the relative importance of the
exempt duties as compared with other types
of duties [and] the amount of time spent
7
performing exempt work.” 29 C.F.R. §
541.700(a).
Designation at 2). While acknowledging
these target numbers, Grameen America
claims they are only one of several factors
used to determine promotion and retention.
(Df. R. 56.1 ¶ 21). Even crediting Grameen
America’s argument, it is clear that member
recruitment and loan repayment were key
factors in any determination. This fact further
reinforces the argument that Plaintiff’s
primary duty was selling loans.
As a TCM and CM, Plaintiff’s
primary duty was either selling loans or
acting as a community organizer. 3 Based on
the facts presented, a reasonable jury could
conclude that Plaintiff’s primary duty was
selling Grameen America’s single product,
the basic loan. Many of the tasks Plaintiff
performed are directly related to selling this
product, including recruiting potential
borrowers and facilitating loan applications.
This suggests that selling loans was a
priority. It further suggests considerable time
was dedicated to each sale, as much as an
hour and a half pitching each potential
borrower just to start the process. The relative
importance and time spent facilitating new
loans is consistent with a finding that this was
Plaintiff’s primary duty.
Based on the same facts, however, a
jury might also conclude that Plaintiff’s
primary duty was to act as a community
organizer. While loan repayment rates are a
factor in promotion, the primary factor
appears to be member recruitment and
retention. Such recruitment, while essential
for generating loans, is also essential for
community organizing. This target could also
evidence Grameen America’s prioritization
of the number of community members
engaged, educated, and organized.
Grameen America’s retention and
promotion policies reinforce this view.
According to Plaintiff, promotion and
retention was based exclusively on the
number of members a CM recruited and
retained. After being hired, a TCM was given
one year to reach 225 members. (Pl. R. 56.1
¶ 52; Dfs. 56.1 Counter ¶ 52). If the TCM was
successful, they were expected to reach 400
members, and could be subject to demotion if
their numbers dropped back below 225
members. (Pl. R. 56.1 ¶ 59; Dfs. 56.1 Counter
(admitting a target of 400 members but
denying that failure to reach this goal might
result in demotion)). These targets are
reflected in Grameen America’s employment
documents, which also establish target loan
repayment rates of 95%. (Center Manager
Community organizing may have
been a more important and time consuming
task. Plaintiff spent considerable time
recruiting members, but he also spent large
amounts of time training potential members
and facilitating center meetings. In support of
this view, Defendants have provided
affidavits from former CMs stating that their
primary duty was to act as a community
organizer or educator. (Ortega Decl. ¶ 4 (“My
work at Grameen goes beyond recruiting
borrowers and collecting loans, it is about
bringing a community together and out of
poverty.”); Mendez Decl. ¶ 5 (“The core
responsibilities of the TCM and CM roles is
that of a teacher.”)). This is consistent with
3
Plaintiff’s primary duty may also have been a
combination of these duties. Under 29 C.F.R. §
541.708, the so called combined exemption,
“[e]mployees who perform a combination of exempt
duties” may still be exempt. This exemption applies
where some of the employee’s duties fall under one
exemption and other duties fall under another. Id.
Combined, these must still represent the employee’s
primary duty. See Callari v. Blackman Plumbing
Supply, Inc., 998 F.Supp.2d 261, 276-77 (E.D.N.Y.
2014). This is merely an alternative means of
satisfying the primary duty test. See Kadden v.
VisuaLex, LLC, 910 F.Supp.2d 523, 537 (S.D.N.Y.
2012).
8
15(a) for leave to amend the defendant’s
answer.” Anthony v. City of N.Y., 339 F.3d
129, 138 n.5 (2d Cir. 2003).
their argument that the purpose of member
recruitment was not traditional lending but
rather community organizing and education.
B.
Regardless of whether Plaintiff’s
primary duty as a TCM and CM was selling
loans or acting as a community organizer, he
falls within one of the exemptions, or a
combination of both.
A.
The FLSA exempts “any employee
[employed] in the capacity of outside
salesman[.]” 29 U.S.C. § 213(a)(1). This
exemption applies to “any employee: (1)
Whose primary duty is (i) making sales…, or
(ii) obtaining orders or contracts for services
or for the use of facilities for which a
consideration will be paid by the client or
customer, and (2) Who is customarily and
regularly engaged away from the employer’s
place…of business in performing such
primary duty.” (a). NYLL applies
functionally the same definition. See Gold,
730 F.3d at 145. The outside salesman
exemption extends to promotional work
intended to increase the employee’s own
sales. See 29 C.F.R. § 541.503(a)
(“Promotional work that is actually
performed incidental to and in conjunction
with an employee’s own outside sales or
solicitations is exempt work.”). In applying
this exemption, commonly considered factors
include: (1) if the employee is paid a
commission; (2) how much supervision is
exercised over the employee; (3) how much
time is spent working outside the office; (4)
if the employee independently solicits new
clients; and (5) whether the work is
unsuitable to an hourly wage. See Flood v.
Just Energy Mktg. Corp., 7:15-cv-2012
(KBF), 2017 WL 280820, at *4 (S.D.N.Y.
Jan. 20, 2017); see also Kinney v. Artist &
Brand Agency LLC, No. 13cv8864 (LAK)
(DF), 2015 WL 10714080, at *12 (S.D.N.Y.
Nov. 25, 2015).
TCM & CM’s Primary Duty
As Selling Loans
If Plaintiff’s primary duty was selling
Grameen America loans, his work falls
within the outside salesman exemption.
1.
The Outside Salesman
Exemption
Defendants have not
waived this exemption
As an initial matter, there is a
question as to whether Defendants waived
this exemption by failing to raise it in their
pleadings. In answering a complaint,
defendants “must affirmatively state any
avoidance or affirmative defense[.]”
Fed.R.Civ.P. 8(c). While Defendants did not
expressly raise the outside salesman
exemption in their pleadings, their answer is
sufficiently broad to encompass the defense.
(Dkt. No. 13 ¶¶ 94, 95, 104). To the extent
the answer does encompass this exemption,
this Court interprets Defendants motion for
summary judgment as containing an implicit
motion to amend the pleadings.
Pursuant to Rule 15(a)(2), a “court
has discretion, when a party omits a defense,
to nevertheless allow the defense at any time
‘when justice so requires.’” Trs. of ALALithographic Pension Plan v. Crestwood
Printing Corp., 127 F.Supp.2d 475, 478-79
(S.D.N.Y. 2001) (quoting Fed.R.Civ.P.
15(a)).
Further,
a
“district
court
may…construe a motion for summary
judgment as a motion pursuant to [Rule]
Of these factors the most important
are the first and last: payment of commissions
and suitability of the work to an hourly wage.
9
The amount of time Plaintiff actually
spent outside the office is not clearly
established. However, if Plaintiff’s primary
duty was selling loans he would have worked
primarily outside of the office, satisfying the
third factor. Plaintiff independently solicited
new clients on a one-on-one basis with only
minimal direct supervision. By Plaintiff’s
own admission, he was not required to punch
in or out of work and did not have clearly set
hours. He was also free to determine where to
approach potential members. It was only after
potential members were organized into a
prospective group that more senior staff
became involved in Plaintiff’s outside sales
work. These undisputed facts satisfy the
second and fourth factors. Based on this, if
Plaintiff’s primary duty was selling loans he
is an exempt outside salesman.
Application of the outside salesman
exemption should be limited to jobs within
the meaning and spirit of the FLSA. See
Davis, 587 F.3d at 531. The outside salesman
“exemption is premised on the belief that
exempt employees typically earn[] salaries
well above the minimum wage and enjoy[]
other benefits that set them apart from the
nonexempt workers entitled to overtime
pay.” Christopher v. SmithKline Beecham
Corp., 567 U.S. 142, 132 S.Ct. 2156,
2173,183 L.Ed.2d 153 (2012) (internal
quotations omitted). Suitability to hourly pay
is similarly significant because where
standardized
working
hours
are
impracticable, and work cannot be spread
among multiple employees, the job creation
goals of the FLSA are not served by
enforcement of the overtime wage
requirements. See SmithKline Beecham
Corp., 132 S.Ct. at 2173.
B.
Here, application of these two factors
yields conflicting results. It is undisputed that
Plaintiff was not paid a commission or
performance bonus. It is also clear that
Plaintiff’s salary, ranging from $24,000 to
$33,000, was not “well above the minimum
wage.” SmithKline Beecham Corp., 132 S.Ct.
at 2173. This suggests finding against
application of the exemption. However,
Plaintiff’s work was ill suited to hourly pay
and could not easily be transferred to other
employees once Plaintiff reached a forty hour
cap. Plaintiff’s work schedule varied from
day to day, based on the time and location of
center meetings and the prospect of recruiting
new members. Grameen America’s model
depends on having a single CM follow
members from initial contact to recruitment,
and through training to borrowing. These
tasks could not be easily transferred to other
employees. Because these factors suggest
different outcomes, the remaining factors
will be determinative.
TCM & CM’s Primary Duty
As Community Organizer
If Plaintiff’s primary duty was as a
community organizer, his work falls within
the administrative exemption.
The
FLSA’s
overtime
pay
requirement does not apply to bona fide
administrative employees. 29 U.S.C. §
213(a)(1). This exemption only applies to
employees who are: “(1) [c]ompensated on a
salary…basis…not less than $455 per
week…; (2) [w]hose primary duty is the
performance of office or non-manual work
directly related to the management or general
business operations of the employer or the
employer’s customers; and (3) [w]hose
primary duty includes the exercise of
discretion and independent judgment with
respect to matters of significance.” 29 C.F.R.
§ 541.200(a).
10
1.
2.14(c)(4)(ii)(d); see also D’Amato v. Five
Star Reporting Inc., 80 F.Supp.3d 395, 415
(E.D.N.Y. 2015). Prior to July 24, 2009
NYLL’s administrative exemption only
applied to individuals paid a salary not less
than $536.10 per week. 12 NYCRR 1422.14(c)(4)(ii)(d). Between July 2009 and
December 2014, the minimum weekly salary
increased to $543.75 and then $600. Id. After
December 31, 2014, the minimum weekly
salary was further increased to $656.25.
Base Salary
The
FLSA’s
administrative
exemption only applies to employees who
receive a base salary in excess of a $455 per
week. 29 C.F.R. § 541.200(a). An employee
receives a base salary when he is paid a
predetermined amount, at predetermined
intervals, “not subject to deductions based on
the quality or quantity of the work
performed.” Krumholz v. Village of
Northport, 873 F.Supp.2d 481, 487
(E.D.N.Y. 2012); see also 29 C.F.R.
541.602(a). The undisputed facts establish
that Plaintiff received a base salary.
Plaintiff’s salary was determined on a yearly
basis and directly reflected his job title and
length of employment. As a TCM, he
received a salary of $24,000 per year. (Pl. R.
56.1 ¶¶ 78-79; Dfs. 56.1 Counter ¶¶ 78-79).
Following his promotion to CM, Plaintiff
initially earned $30,000 per year. (Pl. R. 56.1
¶¶ 80-81; Dfs. 56.1 Counter ¶¶ 80-81). This
salary was increased annually. (Pl. R. 56.1 ¶
124; Dfs. 56.1 Counter ¶ 124). In 2010, when
Plaintiff became an SS, his salary was
reduced to $30,000 per year. (Pl. R. 56.1 ¶¶
82-83; Dfs. 56.1 Counter ¶¶ 82-83). There is
no indication that Plaintiff’s salary was ever
reduced on the basis of quality or quantity of
his work as a TCM or CM.
Prior to December 2009, Plaintiff was
a TCM earning $24,000 per year, or $461.54
per week. During this period Plaintiff’s salary
was too low to qualify for the outside
salesman exemption. As a CM and SS,
Plaintiff’s salary ranged between $30,000
and $33,000 per year, or $576.92 and$634.62
per week. Because the record is silent as to
when Plaintiff’s salary moved within this
range, Defendants have not met their burden
of establishing his eligibility for this
exemption.
2.
Work Directly Related to
General Business Operations
More contentious is the question of
whether Plaintiff “perform[ed] work directly
related to assisting with the running or
servicing of the business, as distinguished,
for example, from work on a manufacturing
production line or selling a product in a retail
or service establishment.” 29 C.F.R. §
541.201(a). In a considering this question, the
Second Circuit has reasoned that employees
must fall within one of two categories.
Employees either “belong[] in the
administrative category, which falls squarely
within the administrative exemption, or as
Under the FLSA, an employee’s base
salary must exceed $455 per week to qualify
for the administrative exemption. 29 C.F.R. §
541.200(a). As a TCM, Plaintiff was paid
$24,000 per year, the lowest salary he
received during the course of his
employment. Even at his lowest salary,
Plaintiff earned in excess of $455 per week.
As such, the first element of the
administrative exemption is satisfied.
NYLL adopts the same definition of
“base salary,” but imposes a higher minimum
weekly
salary.
12
NYCRR
142-
11
production/sales work, which does not.” 4
Davis, 587 F.3d at 531-32 (emphasis added);
see also Kadden v. Visual Lex, LLC, 910
F.Supp.2d 523, 535 (S.D.N.Y. 2012)
(distinguishing between production and
sales). While no hard and fast rule applies, the
purpose of an employee’s work may be
instructive in drawing this distinction. Where
the purpose of an employee’s work is to
facilitate the running of the business, it may
properly be classified as administrative. See
D’Amato, 80 F.Supp.3d at 416. By contrast,
work that generates the business’ primary
output is classified as production. Id. The
term “production” is not limited to physical
goods, extending to those intangibles that
constitute an organization’s primary output.
See Davis, 587 F.3d at 532.
the FLSA, while an employee encouraging an
increase in sales generally among all
customers is an administrative employee for
the purposes of the FLSA.”). This framework
draws a distinction between “day-to-day
sales activities [and] more substantial
advisory duties” such as advising clients on
available products or guiding the overall
business. Davis 587 F.3d at 534. Within the
financial services industry, employees satisfy
“the administrative exemption if their duties
include work such as collecting and
analyzing information regarding the
customer’s income, assets, investments or
debts; determining which financial products
best meet the customer’s needs and financial
circumstances; advising the customer
regarding the advantages and disadvantages
of different financial products; and
marketing, servicing or promoting the
employer’s financial products.” 29 C.F.R. §
541.203(b).
Plaintiff argues he sold loans, and that
this was strictly production work outside the
administrative exemption. (Pl. Br. at 17-18).
There is no need to consider whether selling
Grameen America loans qualifies as
production work. If Plaintiff is correct, his
employment can be analyzed under the
outside salesman exemption. Only if Plaintiff
was primarily a community organizer he will
satisfy the second element of the
administrative exemption.
If Plaintiff is primarily a community
organizer, his work will involve facilitating
the sale of loans, not through selling an
individual product but by attracting members
generally. In addition to actually attracting
members, Plaintiff is responsible for
assessing their financial status, providing
training, advising on loan proposals, and
ensuring loans are properly utilized. CMs
have also testified to providing general
business and financial advice and facilitating
communication between members. The value
and success of these activities cannot be
easily quantified and consistent with a job
facilitating the general mission of Grameen
America.
Where an employee’s work involves
an element of sales, the Second Circuit
distinguishes between activities intended to
attract individual sales - production/sales
work - and activities for the purpose of
increasing sales generally - administrative
work. See Reiseck, 591 F.3d at 107 (“[A]n
employee making specific sales to individual
customers is a salesperson for the purposes of
4
Defendants argue that courts in this Circuit have
begun moving away from the administrative v.
production/sales analysis, due to the difficulty of
application outside traditional manufacturing
industries. (Df. Opp. at 2). “The Second Circuit has
stated that district courts may continue to use [this
distinction] if courts find application of the
administrative/production dichotomy useful.” Savage
v. Unite Here, No. 05 Civ. 10812 (LTS)(DCF), 2008
WL 1790402, at *7 (S.D.N.Y. Apr. 17, 2008). I find
the distinction useful in this case and so apply it.
12
Thus, the exercise of discretion exists where
the employee can make independent
decisions without “immediate direction or
supervision.” 29 C.F.R. § 541.202(c). The
fact that these decisions are ultimately
reviewed at a higher level does not destroy
this independence. 29 C.F.R. § 541.202(c).
However minor discretion over the
application of well-established procedures is
insufficient. See In re Novartis Wage and
Hour Litlg., 611 F.3d 141, 156 (2d Cir.
2010). The employee’s discretion must be
exercised “with respect to matters of
significance.” 29 C.F.R. § 541.200(a)(3). A
matter’s significance reflects “the level of
importance or consequence of the work
performed.” 29 C.F.R. § 541.202(a). The
regulations provide a non-exhaustive list of
factors to consider:
Plaintiff argues that Grameen
America did measure his work quantitatively,
by mandating that he manage a certain
number of members at each level. Where
performance is measured on the basis of
output, it is suggestive of production work.
See Davis, 587 F.3d at 534 (“While being
able to quantify a worker’s productivity in
literal numbers of items produced is not a
requirement of being engaged in production
work, it illustrates the concerns that
motivated the FLSA.”). However, as
previously discussed if Plaintiff’s work was
truly pure sales he would fall within the
outside salesman exemption. If Plaintiff’s
primary duty was organizing members of the
community, Grameen America’s targets
appear based on level of actual activity, not
concrete output. Such a finding is consistent
with prior cases that have found community
organizers within the administrative
exemption. See Savage v. Unite Here, No. 05
Civ. 10812 (LTS)(DCF), 2008 WL 1790402,
at *2-4 (S.D.N.Y. Apr. 17, 2008); see also
Krupinski v. Laborers Eastern Region Org.
Fund., No. 15-cv-982 (RJS), 2016 WL
5800473, * 7-9 (S.D.N.Y. Sept. 30, 2016)
(finding community organizing on behalf of
a labor union satisfied the second element of
the administrative exemption).
3.
“whether the employee has authority
to formulate, affect, interpret, or
implement management policies or
operating practices; whether the
employee
carries
out
major
assignments in conducting the
operations of the business; whether
the employee performs work that
affects business operations to a
substantial degree…; whether the
employee has authority to commit the
employer in matters that have
significant financial impact; whether
the employee has authority to waive
or deviate from established policies
and procedures without prior
approval; whether the employee has
authority to negotiate and bind the
company on significant matters;
whether the employee provides
consultation or expert advice to
management; whether the employee
is involved in planning long- shortterm business objectives; whether the
employee investigates and resolves
matters of significance on behalf of
Exercise of Discretion and
Independent Judgment
In addition to the nature of the work
performed, the administrative exemption
requires that the employee’s “primary duty
includes the exercise of discretion and
independent judgment with respect to matters
of significance.” 29 C.F.R. § 541.200(a)(3).
“In general, the exercise of discretion and
independent
judgment
involves
the
comparison and the evaluation of possible
courses of conduct, and acting or making a
decision after the various possibilities have
been considered.” 29 C.F.R. § 541.202(a).
13
community organizer, he falls within the
administrative exemption.
management; and whether the
employee represents the company in
handling complaints, arbitrating
disputes or resolving grievances.”
C.
29 C.F.R. § 541.202(b).
SS Designation
Once he was designated an SS,
Plaintiff’s primary duty changed and the facts
are insufficient to establish if an exemption
applies.
Plaintiff argues that he applied well
established policies and procedures, and
exercised little to no actual discretion. (Pl.
Opp. at 15). However, his own testimony
demonstrates that Plaintiff regularly
performed his community outreach and
organization work without direct supervision
and with only minimal guidance. Plaintiff
testified that he had discretion over when and
where to recruit new members, and that he
did so without a script or substantial
marketing material. In this respect, Plaintiff
had “authority to…implement…operating
practices.” 29 C.F.R. § 541.202(b). Plaintiff
further exercised discretion by examining
potential member’s homes to assess
eligibility and in recommending loan
reductions. The fact that a Branch Manager
conducted GRT and final loan approval
speaks to eventual oversight, but does not
eliminate Plaintiff’s use of discretion. 29
C.F.R. § 541.202(c).
During the brief period Plaintiff spent
as an SS, he spent considerably more time
working in the office. The precise nature of
Plaintiff’s responsibilities as an SS is
disputed. What is not in dispute is that
transitioning from a CM to an SS required
Plaintiff to reduce the total number of
members managed by half, from 400 to 200.
This suggests a significant change in his
responsibilities, requiring him to focus on
new and as yet ill-defined tasks. Based on the
magnitude of this change, it seems likely that
his new responsibilities became Plaintiff’s
primary duty.
Because the precise nature of
Plaintiff’s work as an SS remains disputed, a
determination at this stage of litigation is
inappropriate. As such, both Plaintiff’s and
Defendants’ motions are denied as they
pertain to Plaintiff’s work as an SS.
This discretion was used in regard to
matters of significance. Plaintiff’s discretion
impacted who became members and what
size loan they received. This work affected
Grameen America’s “business operations to
a substantial degree.” 29 C.F.R. §
541.202(b).
Plaintiff
also
“provide[d]…advice
to
management”
regarding whether loans should be issued and
how much should be distributed. 29 C.F.R. §
541.202(b). Finally, Plaintiff investigated the
use of loan proceeds by borrowers. These
facts all speak to the use of discretion in
regard to matters of significance. As such, if
Plaintiff’s primary duty was to act as a
CONCLUSION
For the reasons stated above,
summary judgment is GRANTED to GANY
in respect to all claims. Summary is also
GRANTED to Grameen America on those
FLSA claims deriving from Plaintiff’s work
as a TCM/CM, but DENIED with respect to
Plaintiff’s NYLL claims deriving from his
work as a TCM/CM and FLSA and NYLL
claims deriving from his work as an SS.
Plaintiff’s motion for summary judgment is
DENIED in its entirety.
14
SO ORDERED.
Dated: April 19, 2017
Brooklyn, New York
Ramon E. Reyes, Jr.
RAMON E. REYES, JR.
United States Magistrate Judge
15
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