Those who follow developments in wage and hour class actions know that challenges to the exempt status of assistant managers are quite common. Such cases often hinge on a detailed analysis of the actual job duties performed—with the plaintiffs claiming that the entire class performed little or no managerial work and the employer claiming that management was the primary duty of the position.  A recent decision from a federal court in New York involving this issue is likely to have a significant impact on similar cases going forward.

On March 29, 2017, a District Judge in the Southern District of New York rejected a motion for Rule 23 certification and decertified an FLSA collective based largely on the plaintiffs’ own varying accounts of their management responsibilities.  Scott v. Chipotle Mexican Grill, Inc.  was brought by seven current and former Chipotle “apprentices” from six different states (along with 516 opt-in plaintiffs).  The apprentice role is akin to that of an assistant manager.  Plaintiffs occupied that position while being groomed for the position of general manger. As expected, plaintiffs alleged that they performed little to no managerial work and were improperly classified as exempt.  Chipotle argued that the apprentices were exempt under the executive exemption, the administrative exemption, or both.

Chipotle had one job description for the apprentice position at issue, which applied nationwide. Discovery also revealed that Chipotle had previously conducted an internal audit of the apprentice position and concluded that it was properly classified as exempt and should be nationwide because apprentices at all locations had the “same responsibilities.”

Deposition testimony elicited from both the named plaintiffs and several of the opt-ins suggested that, in practice, responsibilities were not so uniform. Generally speaking, apprentices at stores with higher sales volumes had greater managerial responsibilities, whereas some apprentices at lower volume locations indicated otherwise.  For example, some plaintiffs testified that they had almost no say in hiring decisions, while others testified that they routinely made hiring recommendations that were ultimately followed.

Despite finding that the requirements for Rule 23(a) certification were met, the court emphasized that because plaintiffs’ sought certification under Rule 23(b)(3) they also had to establish predominance and superiority. The court found that both of those elements were lacking.

The court emphasized the “disparate accounts from [a]pprentices” when addressing both elements and appeared to find the testimony of one opt-in plaintiff who had worked as an apprentice at two different locations especially persuasive. She testified that at one location she worked under a general manager who “limited her leadership responsibilities.”  In the other location, however, there was no general manager and she “made all the decisions for the restaurant.”  This testimony, which the court deemed indicative of disparities in responsibilities depending on location, led the court to conclude that individualized inquiries would be necessary to determine whether each apprentice was exempt—or, in other words, that individual issues would inevitably predominate.

The court also emphasized that the various state law claims asserted by plaintiffs were not identical. Two of the states involved (Colorado and Washington) had strict percentage limitations governing how much time an employee can spend on non-exempt work while still qualifying for an exemption—and even those limitations were different.  The court denied the plaintiffs’ motion for class certification.

But the court did not stop there. For many of the same reasons, the case was also deemed unfit for resolution as a collective action under the FLSA—and the court granted Chipotle’s motion to decertify the 516-person collective.  Any other decision, the court observed, “would reduce Section 216(b)’s requirement that plaintiffs be ‘similarly situated’ to a mere requirement that plaintiffs share an employer, a job title, and a professed entitlement to additional wages.”

Class certification or decertification is typically the most critical juncture in the case. The Chipotle decision is a significant arrow in the quiver of employers defending class and collective actions involving a diverse set of workers whose responsibilities differ appreciably.