Federal appeals court upholds decision that F.W. Webb Co. wrongly exempted inside sales representatives from overtime pay

Date of action:August 1, 2024

Type of action:Opinion affirming summary judgment

Employer: F.W. Webb Co.

Bedford, MA

Background: After an investigation by the U.S. Department of Labor's Wage and Hour Division, the department's Office of the Solicitorfiled suit in July 2020 against F.W. Webb Co., a wholesale distributor of plumbing, heating, cooling and other products, in the U.S. District Court for the District of Massachusetts. The department alleged, among other things, that Webb violated the Fair Labor Standards Actby treating its inside sales representatives as exempt administrative employees and failing to pay them overtime premiums for their hours worked over 40 hours in a workweek. The department also alleged the employer failed to keep adequate and accurate records of hours worked.

In June 2023, the district court granted summary judgmentin favor of the department on the exemption issue, as well as the department's overtime and recordkeeping claims. In August 2023, the district court entered a consent judgment and stay order that preserved Webb's right to appeal the district court's summary judgment decision on the administrative exemption and resolved all other outstanding issues in the case. Webb appealed the summary judgment decision to the U.S. Court of Appeals for the 1st Circuit in September 2023.

Resolution:On Aug. 1, 2024, the 1st Circuit affirmed the district court's summary judgment decision, agreeing that Webb's inside sales representatives are not exempt administrative employees under the FLSA. The appeals court concluded the affected employees' primary duty was to perform Webb's business function of making wholesale sales of Webb's products and thus they could not be considered administrative employees. The 1st Circuit said the affected employees' "primary duties are not 'administrative' in any sense of the word." Webb then petitioned the 1st Circuit to rehear the case en banc, which the 1st Circuit denied on Sept. 4, 2024.Webb has deposited approximately $4.2 million in back wages with the district court that the department will distribute to the more than 700 employees affected by this case in the event that Webb does not seek any further appellate review.

Court: U.S. Court of Appeals for the First Circuit

Docket Number:23-1793

Quote:"This decision solidifies the law in the 1st Circuit governing when employees may be administratively exempt from the Fair Labor Standards Act's minimum wage and overtime protections," said Regional Solicitor Maia S. Fisher in Boston. "Through this case and our litigation in the Unitilcase, we have successfully obtained decisions clarifying the 1st Circuit law regarding the FLSA's administrative exemption. The department will continue to use its resources for broad impact by bringing cases such as these that can improve the law in service of the department's mission."

"Employers should know that the U.S. Department of Labor takes very seriously the incorrect classification of employees as exempt from the Fair Labor Standards Act's wage requirements because such actions deny employees the wages to which they have a legal right," said Wage and Hour Division Regional Administrator Mark Watson Jr. in Philadelphia.

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