United States: 6th Circuit Confirms ‘Fair Reading' Standard For All Overtime Exemptions


Ensuring correct employee classification for purposes of compliance with wage and hour laws is one of the most daunting challenges employers face. Classification criteria such as being engaged in "management" and use of discretion and independent judgment can be subjective, and it's often difficult to predict how a court would weigh in if an exempt classification is challenged. Take note of this recent decision from the U.S. 6th Circuit Court of Appeals (whose rulings apply to all Tennessee employers), which provides some helpful language to support exempt classifications.

This case involved two individuals who served as "battalion chiefs" in the City of Battle Creek Fire Department. The battalion chief role served as second-in-command to the fire chief. The job duties for the battalion chief position included supervising rank-and-file firefighters, creating daily and weekly work plans, administering disciplinary actions, inspecting and maintaining equipment, coordinating duties at the scene of fires, and various administrative tasks. While the battalion chiefs didn't have hiring and firing authority, they did conduct performance evaluations that affected pay and advancement decisions. The city classified the battalion chiefs as exempt employees, meaning they weren't entitled to overtime pay under the Fair Labor Standards Act (FLSA).

Battalion chiefs were required to be "on standby" while off duty and were expected to report to fire scenes if needed. Although they received extra pay for actually working outside their regularly scheduled hours, they didn't receive pay just for being on standby. Some battalion chiefs claimed they were so restricted during periods of being on standby, they should be paid for the time. As exempt employees, however, they wouldn't be entitled to any extra pay under the FLSA. They therefore also challenged their exempt status. They filed a lawsuit against the city alleging they had been misclassified and were entitled to overtime pay, including for the standby time.

The case was tried in a bench trial (meaning, without a jury). The parties presented testimony from various city personnel, including current and former chiefs and battalion chiefs. The trial court concluded the battalion chiefs were correctly classified as exempt from the FLSA's overtime requirements under both the executive and administrative exemptions and thus weren't entitled to be paid for standby time. They appealed to the 6th Circuit, claiming the trial court got it wrong and their job duties didn't support exempt status.

Appeals Court's Ruling

The appeals court reminded the parties of the general rule that a trial court has the right to make decisions regarding which evidence or testimony is most persuasive and that its decisions will be overturned only if clearly erroneous. The 6th Circuit then stated the basic rules under the FLSA ââ,¬â€¢ namely, employees are entitled to be paid at one and one-half times their regular pay rate for all hours over 40 in a workweek, unless the employer can prove an exemption applies. It also reminded everyone that until recently, applicable legal precedent from the 6th Circuit held that FLSA exemptions must be "narrowly construed." In other words, until recently, it could be very difficult for an employer to prove an employee's exempt status in the 6th Circuit.

The Supreme Court of the United States (SCOTUS) seemed to change course on the issue, however, in its 2018 decision in Encino Motorcars, LLC v. Navarro, in which it ruled that rather than narrowly construing exemptions, courts should instead apply a "fair reading" to exemptions. Following the SCOTUS's lead, the trial court in this case had applied a "fair reading" standard in finding the battalion chiefs were correctly classified as exempt employees.

The battalion chiefs argued the trial court got it wrong because Encino was about the salesperson exemption under the FLSA, so the Court's statements in Encino shouldn't be applied to a case involving the executive and administrative exemptions. The 6th Circuit disagreed, stating that even if the "fair reading" language in Encino was mere "dicta" (meaning just editorializing by the court and not determinative of case outcome), it should still be followed unless intervening decisions had cast doubt on the analysis. There haven't been any intervening decisions from SCOTUS, so the trial court was correct in relying on Encino, including the "fair reading" language, in determining the exempt status of the employees in this case.

The 6th Circuit reviewed the testimony presented at trial, acknowledging that some of it didn't support exempt status. For instance, the executive exemption requires the employee's primary duty to be that of "management of the enterprise," but some witnesses testified that the battalion chiefs' primary job duty was to be firefighters, with their supervisory and administrative duties being minimal or arising only in certain situations. Other witnesses testified the battalion chiefs were truly "in charge" and even referred to themselves as "management" in internal memoranda. The 6th Circuit held the trial court was entitled to weigh the evidence and determine which testimony it found more persuasive, and there was no "clear error" in the trial court's ruling in favor of the city even though not all the evidence in the record supported the city's position.

The 6th Circuit also commented on the requirement under the FLSA executive exemption that an exempt employee's input into hiring and firing decisions be given "particular weight." The battalion chiefs argued they didn't have independent authority to hire, fire, or suspend personnel and testified regarding incidents in which their recommendations on personnel matters weren't taken by their superiors. There was also testimony, however, that the chiefs "specifically requested" the battalion chiefs' input on "almost all" personnel decisions and that their input was given due consideration even if it wasn't always determinative. In addition, there was evidence the battalion chiefs played a "significant role" in hiring decisions and administered virtually all discipline short of suspension and termination.

The 6th Circuit held that an employer doesn't have to show a supervisor's recommendations are followed on all occasions to establish the supervisor's input is given "particular weight" with respect to hiring and firing decisions. Again, it found the trial court hadn't committed "clear error" in siding with the city. At the end of the day, the 6th Circuit affirmed the trial court's decision, concluding the battalion chiefs had been correctly classified as exempt and weren't owed any overtime. Holt et al. v. City of Battle Creek,  No 18-1981 (6th Circuit).

Bottom Line

When SCOTUS issued its ruling in Encino last year, commentators wondered whether courts would apply the more expansive "fair reading" language for exemptions in cases not involving the salesperson exemption. In the 6th Circuit, at least, it's now clear the broader and more lenient interpretation of exempt status will be applied to all exemptions. That's obviously great news for employers seeking to use or defend exempt classifications.

Keep in mind, however, that despite the recent helpful language from SCOTUS and the 6th Circuit regarding exempt classifications, exemptions are still exceptions to the rule that overtime is owed. You still have the burden of proving exempt status. If you intend to treat certain positions or job categories as exempt from overtime, be sure you have conducted an analysis taking into account the particular pay and duties criteria for the exemption you are relying on, and be prepared to state the grounds for your classification decisions and process if challenged. When in doubt about your personnel's classification status, it's always best to consult with an experienced employment attorney.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions