Labor & Employment Law

Trial Tactic Of Introducing Exemption Defense Disallowed: A Valuable Lesson For Employers

By Mark Tabakman

I have often preached that the administrative exemption is the toughest one to prove.  It is even more difficult when that exemption defense is not raised either in the Answer or early on in a case, because it might be deemed lost or waived.  That is precisely what has happened to the employer in a case entitled Diaz v. Jaguar Restaurant Group LLC.  In that case, the Court of Appeals for the Eleventh Circuit reversed the trial court which had allowed the raising of the defense very late in the case.

The Court of Appeals held that the employer could not use this affirmative defense because it was not included in the Answer and, significantly, the employer never sought to amend the Answer to include the defense before the trial commenced.  The lower court had found that since the plaintiff had injected the issue into the case through her testimony, the defense was permissible and the court granted the defendant company's motion to amend its Answer to conform to the evidence.

The plaintiff had worked as a bookkeeper, which would normally be a non-exempt position which would not meet the administrative exemption test because the employee did not exercise discretion and independent judgment.  She also performed other job duties, such as opening bank accounts and working the cash register and more, also non-exempt duties.

She filed an overtime action, to which the Company raised five affirmative defenses, but not the exemption defense.  The only instances in which Jaguar raised the defense was in a joint pretrial stipulation and joint jury instructions; the plaintiff's counsel, however, objected both times to the potential inclusion of this defense.  The Circuit Court stated that 'if there ever there were a classic case of waiver, this is it.'  The Opinion emphasized that the company 'repeatedly waived the administrative exemption defense by failing to plead the defense in its Answer and by failing to move to amend its answer before trial.'

This is dangerous for employers, but could have been easily prevented.  In any case involving an 'office' worker suing for overtime, all that the employer-defendant need do in the Answer is assert that the employee 'is exempt under 29 USC 213(a) of the Fair Labor Standards Act' and the corresponding state statute if another Count of the Complaint references state law.  With that done, the defense is raised and the interest at stake protected.

Sounds simple?  It is.
 

Full post as published by Wage & Hour - Development & Highlights on December 22, 2010 (boomark / email).