Karson v. American College ( 1999 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
LINDA M. KARSON,
Plaintiff-Appellant,
v.
AMERICAN COLLEGE OF CARDIOLOGY,
No. 96-1680
a District of Columbia Corporation,
Defendant-Appellee.
NATIONAL EMPLOYMENT LAWYERS
ASSOCIATION,
Amicus Curiae.
Appeal from the United States District Court
for the District of Maryland, at Greenbelt.
Catherine C. Blake, District Judge.
(CA-94-3416-CCB)
Argued: April 7, 1997
Decided: October 18, 1999
Before WIDENER, Circuit Judge, PHILLIPS, Senior Circuit Judge,
and DOUMAR, Senior United States District Judge for the Eastern
District of Virginia, sitting by designation.
_________________________________________________________________
Affirmed by unpublished per curiam opinion.
_________________________________________________________________
COUNSEL
ARGUED: Stephen Michael Nassau, O'TOOLE, ROTHWELL,
NASSAU & STEINBACH, Washington, D.C., for Appellant.
Thomas Collier Mugavero, MONTEDONICO, HAMILTON & ALT-
MAN, P.C., Washington, D.C., for Appellee. Nils George Peterson,
Arlington, Virginia, for Amicus Curiae. ON BRIEF: Jeffrey Brian
O'Toole, O'TOOLE, ROTHWELL, NASSAU & STEINBACH,
Washington, D.C., for Appellant. William John Hickey, MONTE-
DONICO, HAMILTON & ALTMAN, P.C., Washington, D.C., for
Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
Plaintiff Linda Karson appeals the district court's grant of sum-
mary judgment in favor of the defendant, the American College of
Cardiology, based on the court's determination that Miss Karson was
a salaried employee and therefore was not entitled to overtime pay
under the Fair Labor Standards Act. The court also found there was
no valid claim for breach of contract. We affirm.
Miss Karson was employed by the American College of Cardiol-
ogy (the College) to oversee its annual meeting. She had authority to
discipline, hire and fire a staff of 10 persons who reported directly to
her. She was paid a yearly salary which increased from $55,000.00
in 1989 when she was hired to $70,000.00 at the time of her dismissal
in 1994. The College does not contest that Miss Karson often worked
in excess of the required 37.5 hours per week. She was not paid for
overtime and her biweekly paychecks did not vary in relation to the
number of hours worked. She could, at her supervisor's discretion,
receive compensatory time for overtime. Accrued annual leave, sick
leave, or compensatory time was reduced by partial day absences as
well as full day absences. Miss Karson was dismissed on March 25,
1994. After her dismissal, Miss Karson was compensated for all
unused accumulated annual leave, which amount was reduced by
partial-day absences.
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Miss Karson first claims that she was fired in contravention of con-
tractual rights established by the College's employee handbook. The
handbook in effect at the time of Miss Karson's dismissal stated
explicitly, at about the center of the first page of text, in bold print
that "[t]his manual is not a contract and oral statements made about
this handbook are not binding." The handbook also stated that the pol-
icies in the manual were subject to change at the discretion of the
management.
We agree with the district court that the provisions cited by Miss
Karson are guidelines and are not mandatory procedures. Considering
the handbook as a whole, we find nothing in its provisions that sug-
gests that the policies and statements in the handbook established a
contractual relationship contrary to the disclaimer. See Castiglione v.
John Hopkins Hospital, 517 A.2d 786, 792 (Md.App. 1986). We are
thus of opinion the claim for breach of contract based on the
employee handbook is without merit.
The Fair Labor Standards Act, 29 U.S.C. § 207(a)(1), requires that
an employee be paid time and a half for work over forty hours a
week. The Act exempts from the requirement, however, those persons
"employed in a bona fide executive, administrative, or professional
capacity." 29 U.S.C. § 213(a)(1).
The employer has the burden of persuasion to show the facts
required for an exemption. Clark v. J.M. Benson Co., 789 F.2d 282,
286 (4th Cir. 1986). To establish an exemption in the case at hand,
the College had to show that Miss Karson's duties were sufficiently
managerial and that she was paid on a salary basis. 29 C.F.R.
§ 541.1(f). Miss Karson conceded that she met the duties test, but
challenges the district court's finding that she was a salaried
employee.
An employee is paid on a salaried basis if he "regularly receives
each pay period . . . a predetermined amount constituting all or part
of his compensation, which amount is not subject to reduction
because of variations in the equality or quantity of the work per-
formed." 29 C.F.R. § 541.118(a). The regulations allow salary deduc-
tions for absences of a day or more, but not for less than a day. 29
C.F.R. § 541.118(a)(2) and (3). The regulations also allow salary
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deductions for "infractions of safety rules of major significance." 29
C.F.R. § 541.118(a)(5).
Miss Karson claims that she is not exempt from the Act for pur-
poses of receiving overtime pay based on the following: (1) her vaca-
tion and sick leave were reduced for partial day absences; (2) her
compensation after her dismissal for accumulated annual leave was
reduced because of deductions for partial day absences; (3) written
policies of the College subjected her to a reduction in pay if she took
a partial day at a time when she had no accumulated sick leave; (4)
she was entitled to compensatory leave based on the amount of over-
time worked; and (5) the employment policies of the College sub-
jected her to the possibility of penalties for minor disciplinary
infractions.
Regarding the first two claims, the relevant regulations distinguish
compensation or salary regularly received each pay period from com-
pensation for accrued benefits such as paid leave. The Department
states that while the employer may not deduct salary for partial day
absences under 29 C.F.R. § 541.118(a)(2) and (3), the employer may
require an employee to substitute paid leave for partial day absences
without losing the exemption. Administrative Letter Ruling: Depart-
ment of Labor, Wage and Hour Division, July 17, 1987. This interpre-
tation is not plainly erroneous or inconsistent with the regulation, and
is therefore controlling. Auer v. Robbins, 519 U.S. 452, 461 (1997).
The next question is whether Miss Karson was subject to other
reductions in pay which would defeat her exempt status as a salaried
employee. Miss Karson first claims that she would be subject to a
reduction in pay in the event that she was absent because of sickness
at a time when she had no accumulated sick leave. She bases this
claim on the following provision in the employee handbook:
11. Sick leave will accrue without limit but it may not be
used prior to its accrual.
Miss Karson, however, never used any sick leave prior to the time
it accrued, so she had lost nothing because of Provision 11 in the
handbook.
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She argues, however, that there is a possibility of an improper
deduction if she became sick and had to use sick leave prior to the
time it accrued, although the provision in the handbook does not spe-
cifically require such. Donald Jablonski, the Executive Vice President
of the employer, testified, however, which was noted by the district
court, that Miss Karson would be advanced leave if she had exhausted
all of her accumulated leave and became sick while in that situation.
He testified that she would have been paid. That being true, she would
have suffered no loss in pay and an improper deduction in pay would
not have occurred. Jablonski's testimony was uncontradicted, and the
district court concluded that Miss Karson would not have been subject
to a decrease in pay on that account.
In Auer v. Robbins, the Court affirmed the judgment of the court
of appeals, the opinion underlying which had provided that "[t]he
mere possibility of an employee deduction in pay does not defeat an
employee's salaried status." 519 U.S. 452, 460. This holding of the
Court is consistent with its reasoning on page 461 of Auer approving
a policy of the Secretary that absent actual deductions in pay, which
did not occur here, "a clear and particularized policy--one which
`effectively communicates that deductions will be made in specified
situations'" is required. No such clear and particularized policy is
present here.
We are thus of opinion this assignment of error is without merit.
The employer from time to time, in the discretion of a supervisor,
awarded compensatory time off in recognition of good performance
or long hours by salaried employees. The pay of the employees was
not affected. We agree with the district court that this is not sufficient
to defeat the executive exemption for Miss Karson.
Finally, Miss Karson claims that the handbook policies on tardiness
subjected her to a reduction in pay based on the provision stating that
"[u]nexcused absences or tardiness will render the employee subject
to disciplinary action." There is no clear and particularized policy for
loss of pay for minor disciplinary infractions. Her claim is that this
leaves her potentially subject to a reduction in pay for a minor disci-
plinary infraction. She does not claim that she has ever been disci-
plined or that her pay has ever been cut. She also has not shown that
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there is any policy of the employer with respect to reducing pay for
minor disciplinary infractions. The facts in this case are certainly no
more favorable to Miss Karson than the facts were to the plaintiffs in
Auer, and are probably less favorable. The Auer Court affirmed the
finding of exempt status of those employees on this account, and we
follow that case.
The judgment of the district court is accordingly
AFFIRMED.
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