Su v. F.W. Webb Co.

677 F.Supp.3d 7

Julie A. SU, Acting Secretary of Labor, United States Department of Labor, Plaintiff, v. F.W. WEBB COMPANY, Defendant.

Civil Action No. 20-CV-11450-AK

United States District Court, D. Massachusetts

Signed June 16, 2023

Scott M. Miller, Mark A. Pedulla, U.S. Department of Labor Office of the Solicitor, Boston, MA, for Plaintiff.

Gary M. Feldman, Gary S. Matsko, Robert M. Kaitz, Courtney Simmons, Lawrence J. Casey, Michelle Cassorla, Davis, Malm & D'Agostine, P.C., Boston, MA, for Defendant.

MEMORANDUM AND ORDER

A. KELLEY, District Judge

Plaintiff Julie Su, the Acting Secretary of the United States Department of Labor ("the "Secretary"), brings this action against Defendant F.W. Webb Company ("Webb") pursuant to the Fair Labor Standards Act of 1938 (the "FLSA"), as amended, 29 U.S.C. § 201 et seq., asserting three claims for (1) misclassifying its Inside Sales Representatives ("ISRs") as exempt from overtime pay; (2) failing to maintain records of the hours each of their non-exempt employees worked; and (3) unlawfully retaliating against employees by dissuading them from speaking freely to the Secretary's investigators. [Dkt. 1 at ¶¶ 61-67]. The Secretary has moved for partial summary judgment on its overtime, recordkeeping, and retaliation claims. [Dkt. 63]. Webb has also moved for partial summary judgment as to the Secretary's retaliation claim. [Dkt. 60].

For the following reasons, the Secretary's motion for summary judgement [Dkt. 63] is GRANTED IN PART on the following issues: (1) Webb's ISRs are not administratively exempt under the FLSA; (2) Webb failed to pay its ISRs the premium required by the FLSA for all overtime hours worked from August 4, 2018 to present; and (3) Webb violated the recordkeeping requirements of the FLSA. The Secretary and Webb's motion for summary judgment [Dkt. 60; Dkt. 63] are both DENIED on the issue of whether Webb violated the anti-retaliation requirements of the FLSA.

I. FACTUAL BACKGROUND

In evaluating both motions for summary judgment, the Court relies upon the Secretary's statement of material facts in favor of its motion for partial summary judgment [Dkt. 65], Webb's response to those facts [Dkt. 68], and the Secretary's reply to Webb's response [Dkt 73]. It additionally incorporates Webb's statement of material facts in support of its motion for partial summary judgment [Dkt. 62] and the Secretary's response thereto [Dkt. 71]. Those facts admitted by each party are presumed true and those facts denied by each party, or raised only in rebuttal, are considered contested.

Webb is a wholesale company that sells plumbing, heating, cooling, PVF (pipes, valves, and fittings), industrial products, and related fixtures and equipment. [Dkt. 65, Secretary of Labor's Statement of Material Facts ("Pl.'s SMF"), at ¶ 2]. Webb's principal business is making wholesale sales of those products to contractors in various industries, government organizations, institutions such as universities and hospitals, industrial buyers, and other customers who work in construction, building maintenance, and infrastructure. [Id. at ¶ 5]. Webb generates its revenue from employees who directly sell the products to customers in the positions of inside sales, outside sales, and counter sales. [Id. at ¶¶ 7-8]. Robert Mucciarone is Webb's Chief Operating Officer and manages Webb's overall operations. [Id. at ¶ 12]. Ruth Martin is Webb's Senior Vice President of Human Resources and manages Webb's human resources department. [Id. at ¶ 13]. Webb's principal office is in Bedford, Massachusetts, but it operates over 100 storefront locations across nine different states including Massachusetts, Connecticut, Rhode Island, New Hampshire, Vermont, Maine, New York, New Jersey, and Pennsylvania. [Id. at ¶¶ 1, 4].

A. Inside Sales Representatives

During the relevant period, Webb employed over 600 ISRs across nine states, more than the number of its outside salespersons or counter salespersons. [Id. at ¶¶ 14, 19]. Throughout that time, Webb classified its ISRs as exempt administrative employees for the purposes of the FLSA. [Id. at ¶ 15]. Webb generates revenue from its ISRs through the sales transactions that they complete with customers. [Id. at ¶ 16]. Despite working in various product areas, Webb considers its ISRs to have the same position and basic duties. [Id. at ¶ 18]. ISRs report to the general manager in charge of the store where they work, and in some stores, they may report to an inside sales manager in addition to the store's general manager. [Id. at ¶ 20]. During the relevant period, at least some of Webb's ISRs worked more than 40 hours in at least some workweeks but were not paid the FLSA overtime premium for those additional hours. [Id. at ¶¶ 21-22].

It is uncontested that the ISRs interact directly with Webb's customers throughout the sales transaction process, beginning with the customer's initial contact with an ISR and ending with the delivery of products that the customer purchases. [Id. at ¶¶ 25-26, 28]. Webb has used two versions of the job description for an ISR during the relevant period. [Id. at ¶ 33]. Job postings for open ISR positions are reviewed and approved by Webb's management, including by Ruth Martin in human resources, before they are distributed to potential candidates. [Id. at ¶ 35]. One previous job description stated that "[p]revious sales experience [is] preferred." [Id. at ¶ 39]. A job posting for an ISR in March 2019, which is representative of other job postings for the role, described the responsibilities as being to:

• process and maintain customer orders;

• create transfers between various F.W. Webb locations;

• attain specialty material through the use of purchase orders;

• meet and exceed sales and gp goals;

• effectively handle customer service issues;

• schedule and manage customer deliveries;

• produce bids for customer approval;

• manage credits to F.W. Webb standards; and

• other duties as assigned.

[Id. at ¶ 40]. ISRs do not work in any of the following areas: marketing, accounting, accounts receivable, data governance, e-commerce, human resources, IT, or accounts payable. [Id. at ¶ 29].

Webb's ISRs spend a minority of their time providing quotes on a specified parts list, unlike its counter salespeople who primarily provide quotes and conduct sales transactions with customers in stores. [Dkt. 68, Defendant's Additional Disputed Material Facts ("Def.'s ADMF") at ¶¶ 76-77]. Webb's counter salespeople are paid hourly and have no authority to deviate from Webb's pricing matrix. [Id. at ¶¶ 77, 79].

Webb views the unique role its ISRs play as part of what distinguishes it from its competition. [Id. at ¶ 81]. The company expects its ISRs to possess the knowledge and expertise in their respective areas in order to advise their customers on the best solutions for their needs. [Id.]. Unlike counter salespeople, ISRs work closely with customers on specific projects where the customer may not know the specific parts or items they need to meet their goals. [Id. at ¶ 87]. Another distinguishing factor is that while counter salespeople are bound by Webb's pricing matrix and have no authority to deviate from it, ISRs do have discretion and authority on pricing and can go outside of the matrix's parameters. [Id. at ¶ 79, 103].

While Webb hopes that its ISRs' interactions with customers will lead to a sale, even if they do not, Webb views the services its ISRs provide as promoting and preserving relationships with customers so that they will continue to do business with Webb. [Id. at ¶ 83]. The ISRs are "Webb's eyes and ears on the marketplace." [Id.]. ISRs are generally given the specifications and blueprints for a project, and then are asked to provide a quote for all the products needed to meet the specifications for that project based on Webb's inventory, items available in alternative places, and alternative products which could meet the requested specifications. [Id. at ¶ 89]. In addition to finding products, ISRs work with Webb's customers on designs, application selection, and specification changes. [Id. at ¶ 91]. When a customer needs a product that Webb does not stock, the ISRs will source the product based on their understanding of the customer's needs and the products on the market. [Id. at ¶ 94].

Customers often consult with ISRs when preparing bids for projects to submit in response to a "Request for Proposal (RFP)." [Id. at ¶ 95]. In these instances, ISRs help increase the competitiveness of those bids by helping to obtain a better price on the materials needed. [Id.]. ISRs also support Webb's outside salespersons by addressing technical questions and providing information about the appropriateness of particular products. [Id. at ¶ 98]. After an order is made, ISRs help track Webb's inventory, follow up on shipping status, interact with third-party manufacturers if necessary, and address customer concerns and complaints. [Id. at ¶ 102]. In addition to these duties, ISRs provide general managers with information about competitors for the development of marketing strategies. [Id. at ¶ 99].

ISRs receive annual performance appraisals from Webb, which are documented on a standard form. [Pl.'s SMF at ¶ 43]. These are completed or approved by the general manager who supervises a particular ISR. [Id. at ¶ 44]. The performance appraisal is divided into Section A, which looks to "Key Responsibilities," and Section B, which looks to "Behavioral Responsibilities" and "Opportunities for Growth." [Id. at ¶ 47]. The manager performing the appraisal for the ISR assigns a rating based on the software metrics that Webb utilizes to track the activities of the ISRs during the sales process. [Id. at ¶¶ 46, 48].

The Section A ratings are based on "Sales and GP Budget," "Bid & Bid Follow-Up," "Open Orders," and "Communication." [Id.]. For "Sales and GP Budget," the ISRs are rated based on their overall sales and profits for the given year as compared to the sales and profits that Webb...