Hardesty v. Kroger Co.

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION - CINCINNATI

HARDESTY, et al., : Case No. 1:16-cv-298

Plaintiffs, Judge Matthew W. McFarland

v

THE KROGER CO., et al.,

Defendants.

ORDER DENYING IN PART AND GRANTING IN PART PARTIAL MOTION FOR

SUMMARY JUDGMENT (Doc. 76)

This case is before the Court on Plaintiffs’ partial motion for summary judgment

(Doc. 76). Plaintiffs Joseph Hardesty, Madeline Hickey, Derek Chipman, and the 24

collective action members they represent (collectively, “Plaintiffs”) seek summary

judgment on two issues: (1) the liability of Defendants The Kroger Co., and Kroger G.O.,

LLC (jointly, “Kroger”) under the Fair Labor Standards Act, 29 U.S.C. 8§ 201 et seq.

(FLSA), and the Ohio Minimum Fair Wage Standards Act, R.C. 4111.01 et seq. (QMFWSA),;

and (2) the failure of Kroger’s “good faith” affirmative defense to the FLSA’s imposition

of liquidated damages.

FACTS

Plaintiffs work or worked as recruiters at Kroger’s Center of Recruiting Excellence

(CoRE). Kroger developed CoRE as a recruiting operation to hire new employees for its

grocery stores. As recruiters, Plaintiffs reviewed candidate applications, made phone

calls to applicants (called “phone screens”), and scheduled applicants for in-store

interviews. Each recruiter was a “part of a dedicated recruiting team providing

[Kroger’s] grocery retail stores with best-fit candidates for hourly store positions.” (Doc.

50-6 at Page ID 1998.) CoRE’s general manager, Buck Moffett, explained that the “best-

fit criteria” included a candidate’s availability, assessment results, ability to interact well

with customers, and ability to meet the essential functions of the position they were

interviewing for. (Doc. 46, Moffett Dep. at 52, Page ID 1769.)

Moffett made the decision to classify CoRE recruiters as exempt under the FLSA,

meaning that they would not receive overtime pay for working more than 40 hours per

week. (Id. at 31, 48-49, Page ID 1764, 1768.) He based that decision on the recruiters’

ability to use their discretion to determine how to apply the best-fit criteria, to assess

whether any given candidate would represent Kroger well, to evaluate candidates for

other positions or other stores, to represent Kroger at recruiting events, and to

recommend improvements to the recruiting process. (Id. at 63, Page ID 1772.) He

discussed the matter with Kroger’s human resources team. (Id. at 33, Page ID 1764.) But

he did not consult any regulations or applicable law himself. (Id. at 46, Page ID 1768.)

Recruiters used different approaches when reviewing candidate applications.

Some would call every new applicant. (Doc. 35, Hardesty Dep. at 85, Page ID 398.)

Others would review the application a little more closely before calling, prioritizing

applicants based on their availability or certifications. (Doc. 37, Hickey Dep, at 87, Page

ID 514.) Still others would be even more selective, such that “it was often the case that

[the recruiter] didn’t need to contact all of the applicants who submitted applications and

met certain basic qualifications.” (Doc. 62-6, Keenan Dec. {| 7, Page ID 3857.) For instance,

Aiden Keenan “used the applicant’s previous work experience, volunteer experience,

assessment score, etc. to judge which applicants were the best, and I contacted them and

not the others. I certainly didn’t need anyone’s input or approval to decide which

qualified applicants to contact and which not to.” (Id.) So the degree of review put into

the applications before a phone screen varied from recruiter to recruiter.

Once they were on the phone with job candidates, the recruiters used a phone

script to guide their discussions. (Doc. 40, Schiff Dep. at 126, Page ID 885.) The script

changed periodically, based in part on feedback from recruiters who “felt we could

enhance the questions further.” (Id. at 128, Page ID 887.) It covered introductions,

starting pay, and the candidate’s interest in the position and availability. The recruiters

were supposed to read the script word-for-word. But they were also expected to “own

the experience,” “say the script in a way that reflects [their] personality,” and “sound

conversational.” (Doc. 50-15 at Page ID 2146.)

In addition to following the phone script, the recruiters had to ask three pre-

written screening questions:

1. What is it about working at (Banner Name) that interests you the most?

2. As a (Position Title), what specific things would you do or say in order to

provide friendly customer service to our customers?

3. Can you tell me about a work or academic related experience that you are most

proud of?

(Id. at 2150.) The screening questions were “streamlined to make so they apply to all

applicants.” (Id.) Recruiters were instructed to “listen to the candidate as if [they] are a

customer in the store.” (Id.) The corporate paperwork they received also made it clear

that “Recruiters make the decision” as to whether the candidate was a “quality fit for the

position.” (Id.) And, if the recruiter declined an applicant, there was a script for that, too.

Some recruiters stuck closely to the script with little to no deviation. Kelly

Rutledge, for her part, never asked probing questions beyond the three on the script. She

“had the understanding that [she] was to ask the three questions in the script.” (Doc. 41,

Rutledge Dep. at 67, Page ID 1057.) Amanda Gayhart complained that she was “simply

asked to recite a script like a robot and if the person had a pulse, [she] was asked to move

them forward to the interview process.” (Doc. 78-7, Page ID 4547.)

But for other recruiters, the script did not dictate every aspect of their interaction

with the applicants. For instance, Erica Brown “could and did tweak the way [she]

conducted the interview.” (Doc. 62-5, Brown Dec. § 5, Page ID 3852.) She would adjust

her questions “to better suit the candidate.” (Id.) Another recruiter, Courtney Strosnider,

followed the script closely when she first started out, but as she became more

comfortable, she “moved away from the script and instead went with the flow of the

conversation.” (Doc. 62-7, Strosnider Dec. § 4, Page ID 3861.) She stated that “[e]very

interview was different, and Kroger gave me the discretion to conduct telephone

interviews how I saw fit.” (Id.) And, as recruiter Katelyn Davis pointed out, “[i]t was up

to the recruiter to assess the [applicant’s] answer; there was no answer key.” (Doc. 62-4,

Davis Dec. 4 8, Page ID 3848.) So she would ask “probing follow-up questions (that did

not appear on any script) when [she] determined it would be necessary or helpful in

assessing a candidate.” (Id.)

When deciding whether to schedule an interview with the store, recruiters varied

as to what sort of candidate passed muster. Some had low standards. One recruiter felt

that a candidate was a best-fit “[p]retty much if the candidate wouldn’t cuss during the

phone interview.” (Doc. 61, Taske Dep. at 34, Page ID 3762.) Another would simply ask

the applicant’s name and whether they could go to the store at a specific time. If the

answer was yes, “you set up the interview.” (Doc. 45, Ward Dep. at 38, Page ID 1745.)

Other recruiters required more. Corbin Hom looked for indicators of good

customer service. Enthusiasm and detailed “customer-oriented answers” went a long

way for him; one-word answers, and other simple answers like being on time, did not.

(Doc. 39, Hom Dep. at 24-25, Page ID 724.) He made the decision of whether an answer

was good enough for an in-store interview, without anyone else’s review. (Id. at 26, Page

ID 725.) Shawn Scott favored customer service too. Since they were finding applicants

for customer service positions, Scott “wanted to assess whether the person would be able

to provide friendly customer service.” (Id.) Although Kroger provided the scripted

questions, Scott testified that “it was completely up to me to assess the candidate’s

answers to my questions and whether the candidate did well enough to be scheduled for

an in-store interview.” (Doc. 62-5, Scott Dec. § 6, Page ID 3839.) And, for Eric Shrider,

the phone screen was make-it-or-break-it for job candidates. He “regularly decline[d]

candidates whose applications (and assessment scores) were stronger than other

candidates [he] passed along, based on the quality of the phone screen | had with them.

[Shrider] sent people to the store with zeroes on their assessments, and [he] also declined

people with great assessments.” (Doc. 62-3, Shrider Dec. J 11, Page ID 3844-45.)

The record also contains evidence that some recruiters maintained contact with

the stores. The stores gave them feedback on candidates the recruiters had sent. Davis

testified that these communications helped recruiters “better understand a store’s specific

needs when necessary, and to calibrate and customize [the recruiters’] approach as

needed.” (Doc. 62-4, Davis Dec. | 9, Page ID 3849.) “[T]he frequency and nature of these

communications varied by division and by recruiter, but it was an important aspect of

the job.” (Id.)

ANALYSIS

Summary judgment is appropriate if, after examining the record and drawing all

inferences in a light most favorable to the non-moving party, there is no genuine issue as

to any material fact and the moving party is entitled to judgment as a matter of law. Lutz

v. Huntington Bancshares, Inc., 815 F.3d 988, 992 (6th Cir. 2016). Plaintiffs seek summary

judgment on two issues: (1) Kroger’s liability under the FLSA and the OMFWSA and (2)

the applicability of Kroger’s “good faith” affirmative defense.

I. Kroger’s liability under the FLSA and OMFWSA

The first issue pertains to Kroger’s liability under the FLSA and the OMFWSA.

The OMFWSA operates “in the manner and methods” of the FLSA. R.C. 4111.03(A).

Since the Ohio law parallels the FLSA, courts routinely analyze both claims together

under the FLSA framework. Hurt v. Commerce Energy, Inc., 973 F.3d 509, No. 18-4058,

2020 WL 5105145, at *4 (6th Cir. Aug. 31, 2020). The Court will follow the Sixth Circuit's

lead and focus on the federal claim.

Kroger’s liability hinges on whether the recruiters fit into the FLSA’s

“administrative exemption.” The FLSA requires employers to pay employees overtime,

at a rate of at least one and one-half times their regular rate of pay, when they work more

than forty hours per week. 29 U.S.C. § 207(a)(1). But if employees work in a “bona fide”

administrative capacity, they are exempt from the FLSA’s overtime requirements. 29

U.S.C. § 213(a)(1). The operative regulation defines an “employee employed in a bona

fide administrative capacity” this way:

(1) The employee is compensated on a salary or fee basis at a raise of at least

$455 per week;

(2) The employee’s “primary duty is the performance of office or non-

manual work directly related to the management or general business

operations of the employer or the employer's customers;” and

(3) The employee’s “primary duty includes the exercise of discretion and

independent judgment with respect to matters of significance.”

29 C.F.R. § 541.200(a).

If all these elements apply, then the administrative exemption relieves employers

of the obligation to pay their employees overtime. Martin v. Indiana Michigan Power Co.,

381 F.3d 574, 578 (6th Cir. 2004). The employer bears the burden of proof to show, by a

preponderance of the evidence, that the employees satisfy each element of the

administrative exemption. Id.

This case shows that the employer bears that burden of proof even when it is the

non-moving party. Usually it is the employer who moves for summary judgment on the

administrative exemption. But in cases involving cross motions for summary judgment,

the Sixth Circuit has indicated that the burden of proving the administrative exemption

by a preponderance of the evidence remains with the employer even when defending

against summary judgment. See, e.g., Lutz v. Huntington Bancshares, Inc., 815 F.3d 988, 992

(6th Cir. 2016); Martin, 381 F.3d at 578; Douglas v. Argo-Tech Corp., 113 F.3d 67, 70 (6th Cir.

1997). Consequently, the employees are entitled to summary judgment unless the

employer can present evidence creating a genuine issue of material fact as to whether the

employees meet each of the three elements of the administrative exemption. Martin, 381

F.3d at 578. If the employer cannot satisfy that burden, then the employees are entitled

to summary judgment. Id. And, though courts used to construe the exemption narrowly

against the employer, the Supreme Court recently clarified that courts are to give FLSA

exemptions a fair, rather than a narrow, interpretation. Encino Motorcars, LLC v. Navarro,

138 S. Ct. 1134, 1142 (2018); Sec'y of Labor v. Timberline S., LLC, 925 F.3d 838, 850 (6th Cir.

2019).

Neither side disputes that the employees were paid at least $455 per week. But

they disagree on elements two and three.

A. The Recruiters’ Primary Duty

The first question pertains to the recruiters’ primary duty. To fall within the

administrative exemption, the recruiters’ “primary duty” must be “directly related to the

management or general business operations of the employer or the employer's

customers” and include “the exercise of discretion and independent judgment with

respect to matters of significance.” 29 C.F.R. § 541.200(a). “Primary duty” means “the

principal, main, major or most important duty that the employee performs.” 29 C.F.R. §

541.700(a). Determining what an employee’s duties are, and whether they are covered

by the administrative exemption, are fact-intensive inquiries. Perry, 876 F.3d at 200.

“Determination of an employee's primary duty must be based on all the facts in a

particular case, with the major emphasis on the character of the employee's job as a

whole.” 29 C.F.R. § 541.700(a). A non-exhaustive list of factors to consider includes (1)

the relative importance of the exempt duties as compared with other types of duties; (2)

the amount of time spent performing exempt work; and (3) the employee's relative

freedom from direct supervision. Id.

Plaintiffs argue that their primary duties are the “mundane” tasks of reviewing

applications to make sure they met the minimum qualifications, conducting phone

screens, and scheduling applicants for in-store interviews. A CoRE Process Overview

document identifies that the recruiters’ three main duties are (1) reviewing candidates’

applications, (2) phone screening candidates and scheduling interviews, and (3)

forwarding candidates to store specific job requisitions. (Doc. 50-12 at Page ID 2034.)

Kroger views Plaintiffs’ duties in broader terms. Kroger does not deny that the

Plaintiffs’ primary duties are the three tasks Plaintiffs identify, but in its view, the

Plaintiffs’ primary job duty is to identify and select best-fit candidates for in-store

positions at Kroger’s supermarkets. They accomplish this duty by performing several

tasks, including the three tasks Plaintiffs identity — but with a more focused effort to find

the best-fit candidates—as well as the following: directly communicating with hiring

managers regarding candidates; developing novel approaches to solving various

recruiting-related problems; and improving upon various practices related to recruiting.

(Doc. 81 at Page ID 4794.)

These two views of the recruiters’ primary duty are reconcilable. Kroger does not

deny that the recruiters’ job is to assess applicants based on their applications and the

phone screens and schedule the applicants (or not) for in-store interviews. Earlier in these

proceedings, this Court has found that the record shows that “Plaintiffs have similar job

descriptions and training, and that they spent most, if not all, of their time performing

the same primary duties: (1) reviewing applications, (2) conducting phone screens, and

(3) scheduling applicants for in-store interviews.” Hardesty v. Kroger Co., No. 1:16-CV-

298, 2018 WL 4680801, at *6 (S.D. Ohio Sept. 28, 2018). Now at the summary judgment

stage, the Court finds that the depositions and declarations establish that that three-step

process constitutes the principal and most important purpose of the recruiters’

employment at CoRE. See 29 C.F.R. § 541.700(a). The recruiters performed those tasks

unsupervised. (E.g., Doc. 39, Hom Dep. at 26, Page ID 725.) And, viewing both sides’

evidence, the relative importance of those three tasks outweighed the importance of

additional responsibilities some recruiters took on. See 29 C.F.R. § 541.700(a).

Kroger characterizes these three duties as carrying more significance than

Plaintiffs would admit, and attempts to include other responsibilities on top of those.

And it’s true that the operative regulation provides that the major emphasis should be on

the character of the employees’ job as a whole. 29 C.F.R. § 541.700(a). But it also provides

that the primary duty is the main or most important duty an employee performs. Id.

Plaintiffs may indeed communicate with hiring managers, develop novel solutions to

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recruiting problems, and improve recruiting practices. But the record shows that the

relative importance of those duties, and the time they spend performing them, is not as

significant as their three main obligations. So the Court finds that the three-part process

of reviewing applications, making phone screens, and scheduling interviews constitutes

the recruiters’ primary duty for the purpose of determining whether the administrative

exemption applies.

B. Office or Non-Manual Work Directly Related to Management or General

Business Operations

The next question is whether the recruiters’ primary duty is “directly related to

the management or general business operations of the employer or the employer's

customers.” 29 C.F.R. § 541.200(a)(2). “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).

On this record, Plaintiffs cannot show as a matter of law that their primary duty

did not directly relate to the general business operations of the employer or the

employer’s customers. The general business operations of Kroger and CoRE, fairly

construed, require staff. The recruiters channeled job applicants to Kroger stores so that

Kroger could staff its stores. A genuine question of material fact thus prevents this Court

from finding that there is no direct relationship between the recruiters’ primary duty and

the general business operation of the employer. 29 C.F.R. § 541.200(a)(2).

11

Resisting this conclusion, Plaintiffs invoke the administrative-production

dichotomy — under which a production employee does not qualify for the administrative

exemption—and claim their work is more productive than administrative. In their view,

their work is the production of slates of qualified applicants to local Kroger stores. This

position does not persuade.

Under the administrative-production dichotomy, production employees generate

the product or service the business offers to the public, and do not qualify for the

administrative exemption. Foster v. Nationwide Mut. Ins. Co., 710 F.3d 640, 644 (6th Cir.

2013). But not all work falls into one category or the other, so the dichotomy does not

apply to every case. Id. And, when employees perform work that is “‘ancillary to an

employer's principal production activity,’ those employees are administrative.” Renfro v.

Indiana Michigan Power Co.,370 F.3d 512, 518 (6th Cir. 2004) (quoting Martin v. Cooper Elec.

Supp. Co., 940 F.2d 896, 904 (3d Cir. 1991).

Here, Plaintiffs concede that Kroger’s primary production work is selling

groceries. (Doc. 76 at 35, Page ID 4385.) Their work pertains to supplying Kroger’s stores

with job candidates who will perform the principal production activity of selling

groceries. A genuine question of material fact thus arises as to whether the recruiters

perform administrative, ancillary, or production work, precluding summary judgment

in Plaintiff's favor.

C. Exercise of Discretion and Independent Judgment on Matters of

Significance

12

To be exempt under the administrative exemption, an employee’s work must also

include “the exercise of discretion and independent judgment with respect to matters of

significance.” 29 C.F.R. § 541.200(a)(3). “The exercise of discretion and independent

judgment must be more than the use of skill in applying well-established techniques,

procedures or specific standards described in manuals or other sources.” 29 C.F.R. §

541.202(e). Rather, exercising discretion and independent judgment “involves the

comparison and the evaluation of possible courses of conduct, and acting or making a

decision after the various possibilities have been considered.” 29 C.F.R. § 541.202(a). An

employee who exercises discretion and independent judgment “has authority to make an

independent choice, free from immediate direction or supervision . . . even if their

decisions or recommendations are reviewed at a higher level.” 29 C.F.R. § 541.202(c).

Plaintiffs advance several arguments in attempting to persuade the Court that they

do not exercise discretion or independent judgment in their jobs. The Court will address

them in turn.

1. The recruiters are not like the personnel clerks in 29 C.F.R. § 541.203(e)

Plaintiffs attempt to draw a parallel between themselves and the personnel clerks

described in 29 C.F.R. § 541.203(e). That regulation discusses the differences between

human resources managers (who generally meet the duties requirements for the

administrative exemption) and personnel clerks (who generally do not). Personnel clerks

who screen applicants to obtain information about their minimum qualifications —

qualifications that exempt human resources managers usually set—typically reject any

13

applicants who do not meet minimum standards for ajob opening. 29 C.F.R. § 541.203(e).

Plaintiffs claim they are like the personnel clerks.

The Sixth Circuit has affirmed that determining whether the administrative

exemption covers an employee’s primary duties is a fact-intensive inquiry. Perry v.

Randstad General Partner (US) LLC, 876 F.3d 191, 200 (6th Cir. 2017). As such, the Court

must carefully analyze the facts of this case against the regulatory guidance and avoid

drawing analogies the facts do not permit.

This Court cannot find that the recruiters here are like the non-exempt personnel

clerks in 29 C.F.R. § 541.203(e). Whether a recruiter exercises discretion and independent

judgment depends on whether they exercise selectivity in matching candidates with the

requirements of a job opening, as opposed to referring several prospects who generally

meet the minimum qualifications. Andrade v. Aerotek, Inc., 700 F. Supp. 2d 738, 747 (D.

Md. 2010) (quoting U.S. Dep’t of Labor, Wage & Hour Div., Opinion Letter, 2005 WL

3308616 (Oct. 25, 2005)). The personnel clerks in § 541.203(e) do little more than cross-

reference a candidate’s profile with the company’s minimum qualifications. So they do

not provide an accurate analogy for recruiters that do more, like the recruiters here.

An example from another district court is more apt. In Andrade, another case

involving recruiters, the court noted that the recruiter “did not screen solely for minimum

qualifications, but often sent candidates to her Account Managers whose personalities

made them a good fit, even when their qualifications were not as impressive as others.”

Id. at 747. The Andrade recruiter did not just screen applicants and send prospects to her

client. She also, among other things, “determined whether they were a good fit based on

14

her knowledge of the clients’ personality.” Id. The Sixth Circuit picked up on Andrade’s

reasoning in Perry v. Randstad General Partner (US) LLC, 876 F.3d 191, 200 (6th Cir. 2017).

In Perry, the court found that “matching candidates to clients based on fit— meaning

subjective criteria such as the match between a candidate’s personality and a client's

corporate culture—as opposed to objective criteria such as years of experience or test

scores, involves meaningful discretion and independent judgment.” Id. at 208.

Like the Andrade recruiter, the recruiters here made closer evaluations than simple

qualification checks. Eric Shrider frequently declined candidates based on the phone

conversation he had with them, even though they were stronger on paper than other

candidates he selected for interviews. (Doc. 62-3, Shrider Dec. J 11, Page ID 3844-45.)

Shawn Scott testified that “it was completely up to me to assess the candidate’s answers

to my questions and whether the candidate did well enough to be scheduled for an in-

store interview.” (Doc. 62-5, Scott Dec. J 6, Page ID 3839.) Aiden Keenan’s approach was

so selective that it was “often the case that [Keenan] didn’t need to contact all of the

applicants who . . . met certain basic qualifications.” (Doc. 62-6, Keenan Dec. {| 7, Page

ID 3857.) The corporate documents themselves instructed the recruiters that the deciding

factor was not whether a candidate satisfied minimum requirements, but the recruiters

themselves. (Doc. 50-15 at 6, Page ID 2150.)

Accordingly, based on the facts here, these recruiters were significantly different

from the non-exempt personnel clerks described in 29 C.F.R. § 541.203(e). The record

clearly shows that they matched candidates based on fit—specifically, a match between

LS

the candidate’s personality and the client’s work culture. This application of subjective

criteria “involves meaningful discretion and independent judgment.” Perry, 876 at 208.

2. The Department of Labor opinion letters do not support Plaintiffs’

position

In 1982, the Department of Labor stated that an employee who simply applies his

or her knowledge in following prescribed procedures, or who determines whether

specified standards are met, does not exercise discretion and independent judgment. U.S.

Dep’t of Labor, Wage & Hour Div., Opinion Letter, 1982 DOLWH LEXIS 28, *3 (Oct. 4,

1982). See also U.S. Dep’t of Labor, Wage & Hour Div., Opinion Letter, 2005 WL 3308616

(Oct. 25, 2005). Plaintiffs argue that they simply apply their knowledge in following

Kroger’s prescribed procedures, determine whether minimum standards are met, and

refer candidates to the real decisionmakers. So, in Plaintiff's view, they do not exercise

discretion or independent judgment under the DOL’s standard.

The record does not support Plaintiffs’ portrait of their work. Although Kroger

did expect the recruiters to strictly follow some policies, the recruiters did more than

simply confirm minimum standards and schedule candidates for interviews without any

input from their own judgment. The question is not whether there were strict procedures,

but whether there was room for discretion and independent judgment within those

procedures. “To determine whether an employee, constrained by guidelines and

procedures, actually exercises any discretion or independent judgment,” courts consider

“whether those guidelines and procedures contemplate independent judgment calls or

16

allow for deviations.” Renfro v. Indiana Michigan Power Co., 497 F.3d 573, 577 (6th Cir.

2007).

In Renfro, the employees argued that, because the employer had rigid procedures

for how the employees were supposed to do their work, they were simply applying skills,

not exercising discretion and independent judgment. The court rejected that position.

The employees worked without constant supervision and the procedures permitted them

to use their discretion and independent judgment. “Channeling discretion through a

manual on procedure writing does not eliminate the existence of that discretion.” Id. The

employees had to follow the guideline, and the guideline laid out procedures — but it did

not lay out “an encyclopedia of strict requirements” or “answer substantive questions”

that might arise during their work. Id. And, record evidence showed “two different

[employees] may solve the same problem two different ways, even though both solutions

are equally effective.” Id.

The recruiters in this case are like the technical writers in Renfro. They work

without constant supervision. (E.g., Doc. 39, Hom Dep. at 26, Page ID 725.) They vary in

their methods to reviewing a candidate application before deciding whether to conduct

a phone screen for a particular candidate. (Compare, e.g., Doc. 45, Ward Dep. at 38, Page

ID 1745, with, e.g., Doc. 39, Hom Dep. at 24-25, Page ID 724.) In other words, they may

compare and evaluate possible courses of conduct and make an independent choice

without immediate direction or supervision. See 29 C.F.R. § 541.202(a - c). And, though

Kroger has provided a script and certain words that the recruiters must use verbatim,

Kroger also expected them to “own the experience” and “say the script in a way that

17

reflects [their] personality.” (Doc. 50-15 at Page ID 2146.) So the phone screens clearly

contemplated independent judgment. Renfro, 497 F.3d at 577.

It may be true that, since the recruiters were required to read the script verbatim,

the script itself does not actually allow for deviations. But there was more to the phone

screens than the script. Recruiters were instructed to “answer all candidate’s questions

first.” (Doc. 50-15 at 4, Page ID 2148.) Some recruiters chose not to ask probing questions

in response to things the job candidates said. But others did. (Doc. 62-4, Davis Dec. { 8,

Page ID 3848.) And this was clearly allowed. After asking the three scripted questions,

recruiters were instructed that they “[could] ask for clarifying questions if more

information is needed.” (Doc. 50-15 at 6, Page ID 2150.) But most importantly, it was the

recruiters’ independent judgment that decided whether the candidate was a “quality fit

for the position.” (Id) As corporate documents issued to recruiters made clear,

“Recruiters make the decision” of whether a candidate is a quality fit. (Id.) Given

Kroger’s expectation that recruiters make the call of whether a candidate is deserving of

an in-store interview, the prescribed procedures clearly contemplated independent

judgment calls and allowed for discretion. See Renfro, 497 F.3d at 577.

3. The recruiters worked on matters of significance

The next question is whether the recruiters’ judgment calls and discretionary

decisions relate to “matters of significance.” See 29 C.F.R. 541.700(a)(3). The term

“matters of significance” refers to “the level of importance or consequence of the work

performed.” 29 C.F.R. § 541.202(a). The work itself must be of substantial importance.

In assessing the importance of the work, the Court looks to the work itself, not the

18

potential consequences if the employee fails to do the job properly. 29 C.F.R. § 541.202(f);

Lutz v. Huntington Bancshares, Inc., 815 F.3d 988, 997 (6th Cir. 2016).

The facts here show that the recruiters worked on matters of significance. Donald

Moffett, general manager of CoRE, testified that part of the job required them to “make

sure that we were scheduling enough interviews at the stores .. . to be able to hire enough

folks to keep the stores staffed.” (Doc. 46, Moffett Dep. at 60, Page ID 1771.) CoRE

supported several aspects of the stores’ needs, including the grocery retail divisions, new

store openings, pharmacy operation, manufacturing, and the general office. (Id. at 24,

Page ID 1762.) CoRE provided prospective staff for the store and the stores require staff

to operate. So the recruiters worked on matters of significance.

* *

There are genuine issues of material fact with respect to two of the three elements

of the administrative exemption. For that reason, the Court DENIES summary judgment

on the issue of Kroger’s liability under the FLSA and OMFWSA.

II. “Good faith” affirmative defense

Plaintiffs also argue that Kroger’s good faith affirmative defense to the FLSA’s

imposition of liquidated damages fails as a matter of law. They claim that Kroger has not

met its burden under 29 U.S.C. § 260 of establishing that it acted in good faith and with

reasonable grounds to classify Plaintiffs as exempt.

“To prove that it acted in good faith, an employer ‘must show that [it] took

affirmative steps to ascertain the Act's requirements, but nonetheless violated its

provisions.” Martin v. Indiana Michigan Power Co., 381 F.3d 574, 584-85 (6th Cir. 2004)

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(quoting Martin v. Cooper Elec. Supply Co., 940 F.2d 896, 909 (3d Cir. 1991)). “This burden

on the employer is substantial and requires ‘proof that [the employer's] failure to obey

the statute was both in good faith and predicated upon such reasonable grounds that it

would be unfair to impose upon [it] more than a compensatory verdict.’” Elwell v. Univ.

Hosps. Home Care Servs., 276 F.3d 832, 840 (6th Cir. 2002) (quoting McClanahan v.

Mathews, 440 F.2d 320, 322 (6th Cir. 1971)). “Good faith” means more than merely not

willfully misclassifying the employee. Id. “The employer has an affirmative duty to

ascertain and meet the FLSA's requirements, and an employer who negligently

misclassifies an employee as exempt is not acting in good faith.” Id.

During Moffett’s deposition, Plaintiffs’ counsel asked Moffett a series of questions

about what went into his decision to classify recruiters as exempt. This relevant exchange

took place:

Counsel: Did you, yourself, consult any regulations or any applicable

law regarding whether or not the recruiters at CoRE should

be treated as exempt or non-exempt from the Fair Labor

Standards Act or applicable state law when making the

determination of whether or not they would be treated as

exempt?

Moffett: No.

(Doc. 46, Moffett Dep. at 46, Page ID 1768.) Plaintiffs’ counsel asked other questions

pertaining to the same issue, but counsel for Kroger objected based on privilege. Later,

as Plaintiffs point out, Kroger stipulated it would not rely on consultations with legal

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counsel in support of its good faith defense under 29 U.S.C. § 260, through this response

to an interrogatory: “Kroger affirmatively states that it is not relying on advice of counsel

to support its good-faith defense and will not put on evidence concerning advice of

counsel in this matter.” (Doc. 78-6 at Page ID 4539.)

Plaintiffs argue that, on such a record, Kroger cannot show that it acted in good

faith and with reasonable grounds for believing that its actions complied with the FLSA.

In response, Kroger claims that Moffett made the decision to classify recruiters as exempt

based on consultations with human resources and his understanding that recruiters

would be using their discretion in finding best-fit candidates for Kroger positions.

Plaintiffs are correct. Although the Sixth Circuit has observed that “caselaw

usually cites discussions with attorneys or government officials as evidence of good

faith,” Sec'y of Labor v. Timberline S., LLC, 925 F.3d 838, 857 (6th Cir. 2019), Kroger cites no

authority showing that the circuit has extended that reasoning to consultations with

human resources. Kroger is not relying on its consultations with legal counsel to support

its good faith defense and Moffett admitted that he had not made any inquiries into what

the FLSA required for workers to be classified as exempt. So—without more—his

“understanding” that the recruiters would be exercising discretion was not an

understanding informed by law. This is not enough for Kroger to prove its “substantial

burden to prove both good faith and reasonable grounds for the incorrect classification,”

id., if indeed a factfinder finds that Kroger’s classification was incorrect.

Accordingly, since Kroger enters nothing in the record showing that it took the

affirmative steps necessary to ascertain the FLSA’s requirements, Plaintiff is entitled to

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summary judgment on the failure of Kroger’s good faith defense. Martin, 381 F.3d at 584.

CONCLUSION

Based on the reasons above, the Court orders as follows:

(1) DENIES summary judgment with respect to Kroger’s liability under the FLSA

and OMFWSA;

(2) GRANTS summary judgment in Plaintiff's favor with respect to the failure of

Kroger’s good faith affirmative defense.

IT IS SO ORDERED.

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

JUDGE MATTHEW W. McFARLAND

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