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Haywood v. North American Van Lines

July 31, 1997




Appeal from the United States District Court for the Northern District of Indiana, Fort Wayne Division. No. 95 C 325 William C. Lee, Chief Judge.

Before EASTERBROOK, RIPPLE and MANION, Circuit Judges.

RIPPLE, Circuit Judge.



Dorothy Haywood filed a complaint in the district court alleging that North American Van Lines, her employer, had violated the Fair Labor Standards Act ("FLSA"), 29 U.S.C. sec.sec. 201 et seq., by failing to pay her overtime compensation. North American filed an answer in which it contended that it was not obligated to pay Ms. Haywood any overtime because she was a salaried exempt employee. North American subsequently filed a motion for summary judgment, which the district court granted. For the reasons set forth in the following opinion, we affirm the judgment of the district court.


A. Facts

Ms. Haywood has been employed by North American since 1972. North American is in the business of shipping household goods for consumers relocating within the United States or Canada. Since 1991 Ms. Haywood has worked as a Consumer Service Coordinator ("CSC") and is responsible for trying to resolve billing, damage to cargo and delay claims with North American's customers. The CSC's primary role is to ensure quality service to North American's customers and to prevent the customer's dissatisfaction with some aspect of his move from escalating into litigation. The CSC is the sole contact person between North American and its customers with respect to these claims. CSCs spend a majority of their time adjusting claims and negotiating with customers to try to settle their claims.

Ms. Haywood's complaint states that she is paid bi-weekly and receives an annual salary of $28,000. As a CSC, Ms. Haywood alleges, she generally works 45 to 50 hours per week, but has not received overtime pay for hours worked in excess of 40 per week. Also, roughly four times a year, CSCs are required to work on Saturday, in addition to their weekly schedules. On those occasions, employees are expected to work their shift or to find a qualified replacement to fill in. If an employee does neither, he is disciplined; he receives either a written or verbal reprimand. North American does not, however, adjust such employee's paycheck to account for these lost hours. An employee unable to work on a scheduled Saturday may need to "trade" Saturdays with another employee or to provide a monetary incentive to another employee to work his shift. This tradition of having "to pay your replacement" was one established by the workers themselves, but it has been going on for some time, and the company knows of the practice. Ms. Haywood is not able to work her Saturday shifts. Instead, she pays another CSC to cover for her.

Ms. Haywood filed this suit in the district court. She contends that she is not an exempt salaried employee under the FLSA and therefore is entitled to overtime compensation for the hours in excess of 40 that North American has required her to work. North American, in response, filed a motion for summary judgment. It submitted that Ms. Haywood is not entitled to any overtime because she is an exempt employee.

B. District Court Proceedings

The district court applied the "short test" *fn1 to determine whether Ms. Haywood is exempt from the FLSA's usual requirement that an employer pay an employee overtime for the hours worked in excess of 40 hours per week. See 29 C.F.R. sec.sec. 541.2, 541.214. First, the district court concluded that, as a matter of law, Ms. Haywood was paid on a salary basis for purposes of the FLSA. The court, analogizing Ms. Haywood's work to that of an insurance claims adjuster, also determined that Ms. Haywood's work fell within the category of administrative work and was directly related to North American's general business operations. Finally, the court concluded that, in resolving customer problems and negotiating with customers over the size of a settlement, Ms. Haywood's duties included the exercise of discretion and independent judgment and that she was not unduly circumscribed by North American's CSC guidelines. Because her work for North American met the three criteria of the short test, the district court concluded, she is exempt from the FLSA and is not entitled to overtime compensation. Consequently, the district court granted North American's motion for summary judgment.


We review de novo the district court's grant of summary judgment. Bahl v. Royal Indem. Co., 115 F.3d 1283, 1289 (7th Cir. 1997). We examine the record in the most favorable light to the non-moving party and draw all reasonable inferences in such party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). If, considered in this light, the record "could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial," and the motion for summary judgment should ...

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