Jones, et al v. NO Regional Physician Hosp

United States Court of Appeals
for the Fifth Circuit

No. 19-31027

Bill Jones, on behalf of himself and all others
similarly situated; Jennifer Branch, on behalf of
herself and all others similarly situated; Laura
Romero, on behalf of herself and all others similarly
situated; Melissa Breaux; Ivette M. Perez; Nicole
Crowder,

Plaintiffs—Appellants,

versus

New Orleans Regional Physician Hospital
Organization, Incorporated, doing business as Peoples
Health Network,

Defendant—Appellee.

Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:17-CV-8817

Before Higginbotham, Jones, and Higginson, Circuit Judges.
Edith H. Jones, Circuit Judge:
The Appellants are former white-collar employees of Appellee
Peoples Health Network who filed suit for themselves and others alleging
violations of the Fair Labor Standards Act. Appealing the district court’s
United States Court of Appeals
Fifth Circuit
FILED
December 3, 2020

Lyle W. Cayce
Clerk
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summary judgment in favor of the employer, they contend principally that
their job duties did not fall within an administrative employee exemption to
the statute. See 29 C.F.R. Sec. 541.200(a). Upon careful review of the
arguments and relevant portions of the record, we AFFIRM.
I. BACKGROUND
The Plaintiffs filed a purported collective action
1
under the FLSA
against their former employer, New Orleans Regional Physician Hospital
Organization, L.L.C. (“Peoples Health”). Peoples Health is a managed care
company that offers a Medicare Advantage Plan insurance product to eligible
individuals. The Plaintiffs claim that Peoples Health intentionally
misclassified them as “salaried” and “exempt” to avoid paying overtime
wages. Peoples Health contends that each Plaintiff was administratively
exempt from the FLSA’s overtime requirements.
An employee qualifies as administratively exempt if three facts can be
shown. First, the employee must be compensated on a salary or fee basis at
a rate that exceeds an amount set by regulation. Second, the employee’s
primary job duties must involve the performance of office or non-manual
work directly related to the management or general business operations of
the employer or its customers. Finally, the employee’s primary job duties
must include exercising discretion and independent judgment with respect
to matters of significance. 29 C.F.R. § 541.200(a).
The six Plaintiffs held three different job titles in two departments at
Peoples Health: four were Contracting Specialists, one was an Operations
Specialist, and one was a Pharmacy Part D Specialist.

1
Although the district court “conditionally certified” the case as a collective
action, only six plaintiffs remain.
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Four Plaintiffs were Contracting Specialists who were responsible for
signing up physicians and hospital-based providers who wished to join
Peoples Health’s network. They worked within the Network Development
Department, which is responsible for establishing and maintaining Peoples
Health’s network of healthcare providers for plan members. Their core
function was to recruit healthcare providers, with a focus on the providers
executing contracts.
The Operations Specialist was responsible for working on projects
designed to improve operational processes and efficiencies. Although the
Plaintiffs recognize that the scope of this position included a broad range of
activities, they assert that actual execution required consistent direction from
more senior leaders.
The Pharmacy Part D Specialist worked within the Pharmacy
Department, which handles payments to pharmacies for filling members’
prescriptions. The Pharmacy Part D Specialist’s responsibilities included:
preparing documentation for Centers for Medicare and Medicaid Services
(“CMS”) audits; reviewing claims and prescription drug events (“PDEs”);
and analyzing and researching compliance issues. Although the Plaintiffs
agree with these general statements of responsibility, they claim that the
actual tasks performed were ministerial.
After discovery, the district court granted Peoples Health’s motion
for summary judgment and found the Plaintiffs administratively exempt from
the FLSA’s overtime requirement. The Plaintiffs timely appealed.
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II. DISCUSSION
This court reviews a grant of summary judgment de novo, applying the
same standard as the district court. Summary judgment is warranted if “the
pleadings, the discovery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact and that the movant
is entitled to judgment as a matter of law.” Depree v. Saunders, 588 F.3d 282,
286 (5th Cir. 2009) (internal citations omitted); see F
ED. R. CIV. P. 56. A
dispute about a material fact is “genuine” if the evidence is such that a
reasonable jury could return a verdict for the non-moving party. TIG Ins. Co.
v. Sedgwick James, 276 F.3d 754, 759 (5th Cir. 2002) (citation omitted). The
court views all facts and evidence in the light most favorable to the non-
movant. Johnson v. Diversicare Afton Oaks, LLC, 597 F.3d 673, 675 (5th Cir.
2010).
In a non-jury case, such as this one, “a district court has somewhat
greater discretion to consider what weight it will accord the evidence.” In re
Placid Oil Co., 932 F.2d 394, 397 (5th Cir. 1991). The district court “has the
limited discretion to decide that the same evidence, presented to him or her
as a trier of fact in a plenary trial, could not possibly lead to a different result.”
Jones v. United States, 936 F.3d 318, 321–22 (5th Cir. 2019) (internal
quotations omitted).
The Plaintiffs take issue with each aspect of the district court’s
adverse conclusions as to each factor necessary to the FLSA administrative
exemption. They also contend that the court erroneously imbedded findings
of disputed facts in its summary judgment analysis. We address each of these
contentions.
A. Salary Basis
At the first step of the administrative exemption analysis, see
29 C.F.R. § 541.200(a), the Plaintiffs assert that Peoples Health did not
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compensate them on a salary basis, but instead treated them like hourly
employees. We disagree.
The district court had ample support from the record to conclude that
the Plaintiffs were salaried employees. First, the Plaintiffs do not contest that
Peoples Health paid them enough to far surpass the regulation’s minimum
weekly wage requirement. These six employees’ annual salaries ranged from
about $56,000 to over $68,000. Every year, Peoples Health’s human
resources department reviewed and certified each employee’s job
description to ensure accuracy and that the employee qualified as FLSA
exempt. The record contains no evidence that any Plaintiff complained of
his or her job duties or exempt status during his or her employment.
Additionally, two of the Plaintiffs testified that they understood that they
would receive the same, fixed amount of pay each week regardless of their
hours worked.
The Plaintiffs point to three types of evidence showing they were
treated like hourly employees despite Peoples Health’s official designation:
payroll records, testimony from senior managers, and Peoples Health’s
failure to follow timekeeping practices. Each argument fails.
First, payroll records supposedly show instances in which the salary
of two Plaintiffs was docked in half-day increments. They argue that
employers may only dock pay for exempt employees in full day increments
(the “no pay-docking rule”). 29 C.F.R. § 541.602(b)(1). But they do not
refute evidence that in each instance a deduction was expressly permitted
notwithstanding the no pay-docking rule. Specifically, the half-day
reductions occurred when the Plaintiffs were either about to leave
employment or on leave pursuant to the Family and Medical Leave Act
(“FMLA”). The relevant regulations explicitly permit partial payments to
exempt employees for time worked in the last week of employment and
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during periods where leave is taken under the FMLA.
2
29 C.F.R.
§§ 541.602(b)(6)–(7).
Second, the Plaintiffs claim that statements from three senior
managers support their claim that Peoples Health actually paid them as
hourly employees. In fact, these managers only expressed the belief that
exempt employees had to use time off (e.g., vacation time) if they worked
under forty hours in a week. This testimony simply does not help the
Plaintiffs. As the district court observed, the FMLA (1) does not prohibit an
employer from requiring its employees to track their attendance at work;
(2) does not prohibit an employer from requiring a forty-hour workweek from
a salaried employee; (3) allows for deductions from pay when a salaried
employee does not work a forty-hour week so long as those deductions are
not for absences of less than a day; and (4) allows an employer to require
employees to make up missed time for a partial day or otherwise use
appropriate leave when not working a full day. See Cowart v. Ingalls Shipbldg.,
Inc., 213 F.3d 261, 265 (5th Cir. 2000).
Third, the Plaintiffs argue that Peoples Health violated its written
timekeeping policy by not permitting salaried employees to record time in
excess of forty hours per week. Even if this were true, it is not evidence that
the relevant employees were not treated as exempt, salaried employees.

2
Even if Peoples Health did not perfectly comply with the regulations in these
instances—and we see no evidence that they did not—the examples provided are
insufficient to show an actual practice of improper deductions. When determining whether
an actual practice of improper deductions exists, the relevant regulation regards both the
number of improper deductions and the time period in which they were made as relevant
considerations. 29 CFR § 541.603.
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B. Relationship to Management or Business Operations
The second requirement of the administrative exemption is that the
employees’ primary job duties must directly relate to the management or
general business operations of Peoples Health or its customers. See 29 C.F.R.
§ 541.201. Like the district court, we hold this condition was satisfied.
“The term ‘primary duty’ means the principal, main, major or most
important duty that the employee performs.” 29 C.F.R. § 541.700(a). This
does not mean, however, that exempt employees must spend more than fifty
percent of their time performing exempt work. 29 C.F.R. § 541.700(b).
“The phrase ‘directly related to the management or general business
operations’ refers to the type of work performed by the employee. To meet
this requirement, an employee must perform work directly related to
assisting with the running or servicing of the business, as distinguished, for
example, from working on a manufacturing production line or selling a
product in a retail or service establishment.” 29 C.F.R. § 541.201(a).
1. Contracting Specialists
The undisputed duties of Contracting Specialists primarily involve
recruiting and contracting service providers for the network. The Plaintiffs
argue that the district court erred in three ways in analyzing the Contracting
Specialists’ primary job duties. We disagree.
First, they attempt to analogize the role of the Contracting Specialist
in Peoples Health’s business model to an employee on a manufacturing
production line or in retail sales. See Dewan v. M-I, LLC, 858 F.3d 331, 337
(5th Cir. 2017) (recognizing that the administrative exemption applies to
employees involved with “administering the business affairs of the
enterprise, not with producing the commodity of the business” (quotations
omitted)). But the Contracting Specialists did not write, produce, or sell
Peoples Health’s product: insurance policies. See Cheatham v. Allstate Ins.
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Co., 465 F.3d 578, 585 (5th Cir. 2006) (“An insurance company’s product is
its policies, and Appellants’ duties did not include writing and selling
insurance.”). Instead, their role was supporting and servicing the company’s
business operations by maintaining and enlarging its provider network.
Second, the Plaintiffs assert that the Contracting Specialists’ duties
do not fall within the officially or traditionally recognized categories of
general business operations. See 29 C.F.R. § 541.201(b). But these
regulatory categories are illustrative, not exhaustive. Further, as the district
court recognized, the job duties of Contracting Specialists include activities
comparable to the listed categories of advertising, marketing, and research.
Third, the Plaintiffs claim that the district court conflated the
position’s essentiality with its relation to business operations. This mistake,
they argue, means that any employee meets the “directly related” standard
because almost any type of employee is arguably essential. The Plaintiffs’
argument is an uncharitable reading of the district court opinion, which
explicitly recognized, as do we, that the work of Contracting Specialists was
both “directly related to the general business operations of Peoples Health”
and “essential” to these operations.
2. Operations Specialist
The Plaintiffs contend that the Operations Specialist’s job duties do
not directly relate to the general operations of Peoples Health. This
argument has no merit. Those job duties included (1) understanding new
products and processes, (2) establishing project timelines, (3) coordinating
activities for new and continuing projects, (4) serving as liaison between
departments and documenting processes, (5) observing department
processes and brainstorming potential improvements, and (6) dispensing
advice to managers on how to improve department processes or workflows.
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These job duties directly relate to the general business operations of Peoples
Health.
3. Pharmacy Part D Specialist
The Pharmacy Part D Specialist also easily meets the requirements
under this step of the analysis. Her job duties were to “prepare
documentation for CMS audits, review claims [and] PDE’s as well as analyze
[and] research outlying issues with regards to continual compliance,” and to
“perform all tasks within CMS guidelines, claims processing guidelines,
company policies, and state/federal regulatory requirements.” On their face,
these duties directly relate to the general business operations of Peoples
Health. In addition, as the district court noted, the job duties of the Pharmacy
Part D Specialist are comparable to several illustrative categories listed in the
relevant regulation, including auditing, insurance, quality control, and legal
and regulatory compliance.
C. Exercising Discretion and Independent Judgment with Respect to
Matters of Significance
Whether the Plaintiffs’ primary job duties included “the exercise of
discretion and independent judgment with respect to matters of
significance” is the third factor in the administrative exemption. 29 C.F.R.
§ 541.202(a). To assist in making this determination, 29 C.F.R. § 541.202(b)
lists several non-exhaustive considerations. Importantly, “employees can
exercise discretion and independent judgment even if their decisions or
recommendations are reviewed at a higher level.” 29 C.F.R. § 541.202(c).
Thus, an employee need not exercise final decision-making authority to fulfill
the regulation’s standard. Lott v. Howard Wilson Chrysler-Plymouth, Inc.,
203 F.3d 326, 331 (5th Cir. 2000). The employee does, however, need to
exercise more discretion “than the use of skill in applying well-established
techniques, procedures or specific standards described in manuals or other
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sources.” 29 C.F.R. § 541.202(e). The district court rejected Plaintiffs’
arguments that each of their positions lacks sufficient discretion and
independent judgment.
1. Contracting Specialists
The Contracting Specialists’ primary job duties included the exercise
of discretion and independent judgment with respect to matters of
significance. As one of the Plaintiffs explained, his job as a Contracting
Specialist included building relationships, explaining why prospective
members should join the network, and implementing a “thoughtful well-
planned strategy.” The Plaintiffs do not meaningfully disagree that their
work included identifying, communicating and networking with, and
recruiting providers. These duties required the exercise of discretion and
independent judgment regarding the significant, even essential, matter of
maintaining Peoples Health’s provider network.
Nevertheless, the Plaintiffs assert that Contracting Specialists did not
exercise discretion and independent judgment. Specifically, they argue that:
(1) Supervisors identified market needs and final decisions were made by the
Contract Committee; (2) Contracting Specialists had no independent
authority to resolve issues with service providers; (3) Contracting Specialists
used contract templates provided and approved by the legal department;
(4) Contracting Specialists lacked discretion to develop individualized sales
pitches; and (5) Contracting Specialists had no independent authority to
manage projects.
3
As the relevant regulation makes clear, these arguments

3
Note, however, that a close review of the record shows evidence of more
responsibility than the Plaintiffs suggest. For instance, one of the Plaintiffs admits to
researching companies’ provider information and working to determine additional
information about hospital groups. And one of the supervisors stated that the Contracting
Specialists “could dictate of [sic] how things are going to flow.”
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are unavailing: “The decisions made as a result of the exercise of discretion
and independent judgment may consist of recommendations for action rather
than the actual taking of action. The fact that an employee’s decision may be
subject to review and that upon occasion the decisions are revised or reversed
after review does not mean that the employee is not exercising discretion and
independent judgment.” 29 C.F.R. § 541.202(c). We further agree with the
district court that the Contracting Specialists meet the requirements under
this step of the analysis even though they “did not have the final authority to
negotiate and execute a binding contract.”
2. Operations Specialist
The evidence confirms that the Operations Specialist was essentially
an internal consultant within Peoples Health and acted with enough
discretion and independent judgment to satisfy this step of the analysis.
4
The
Plaintiffs acknowledge that the Operations Specialist’s role included working
on productivity improvements, developing and documenting policies and
procedures, and reviewing regulatory specialist guides and converting them
into processes for other departments. Notably, the regulation specifically
references a management consultant to illustrate job duties that lack final
authority but nevertheless involve discretion and independent judgment.
29 C.F.R. § 541.202(c).

4
The Operations Specialist described her own role as “assessing need, making
recommendations to change current processes or creating new processes, creating
strategies to remediate need, and executing approved strategies under the direction of
[various managers].” A supervisor also spoke highly of her, claiming she was “a real key
person on developing” an important project who “would probably be making some very
good recommendations” and “presenting her work.”
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3. Pharmacy Part D Specialist
The Pharmacy Part D Specialist also meets the requirements at this
step of the analysis. Her job duties were indisputably important, and she
acknowledged her own exceptional performance and limited supervision.
She described her job responsibilities as including problem solving, data
analysis, and maintaining the integrity of data. And she certainly acted
independently when reviewing CMS rejections and resolving PDEs. The
district court correctly concluded that the Pharmacy Part D Specialist
exercised discretion and independent judgment with respect to matters of
significance.
D. District Court’s Standard of Review
Having concluded de novo that the evidence creates no genuine issue
of material fact and thus supports the district court’s grant of summary
judgment, we also conclude that the district court applied the correct
standard of review.
The district court recites the preponderance of the evidence standard
eight times in its decision. The Plaintiffs construe this to mean that the
district court did not apply the summary judgment standard. But the court
made clear in its conclusion that it was applying the summary judgment
standard to Peoples Health’s burden of proving the administrative
exemption by a preponderance of the evidence. The Plaintiffs conceded at
oral argument that, if the case were remanded for a bench trial, they would
have no additional evidence to present to the judge that the district court has
not already considered and found wanting. Based on the evidence already
presented, to the extent that it “could support more than one inference,” the
district court has already concluded that it “could not possibly lead to a
different result” at trial.
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The Plaintiffs imply that the district court “fell into serious error” by
referring in its decision to evidence presented in one Plaintiff’s separate
retaliation case against Peoples Health. But the Plaintiffs do not explain why,
beyond their mere assertion of impropriety, this is a serious error.
5
More
important, the record in this case, which was cited throughout the district
court opinion, independently establishes the facts necessary to grant
summary judgment to Peoples Health.
III. CONCLUSION
Based on the foregoing, we AFFIRM the district court’s grant of
summary judgment to Peoples Health.

5
They do not claim, for example, that information from the retaliation case would
be inadmissible at trial.
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