The Sophisticated Employer Blog

I recently served as an arbitrator over an interesting wage claim involving exemptions and uncompensated overtime pay.

I was impressed by how clearly the attorneys presented their respective cases. I had everything I needed to make a ruling based on the evidence presented. I actually ruled in favor of the employee, finding his position had been misclassified as exempt and that he was owed unpaid overtime. But, in my case, the employer lost not because of poor lawyering, but because the facts simply were not in its favor. 

That is not the case in Ahmed v Halo Medical Group, PLLC. Perhaps worse is that the lower court made a ruling against the employee as a matter of law without any evidence to support that ruling. Let’s look at why the Michigan Court of Appeals reversed that ruling and sent the case flying back for further proceedings.

Asma Ahmed was the “Technical Director of Cardiovascular Sonography” for Halo Medical Group (Halo). It sounds impressive but, as you already know, titles are not determinative. Ahmed claims she should have been paid hourly and received overtime.

According to Ahmed, she worked all day seeing patients, without the “state mandated” 30-minute lunch break and other breaks, and she was required to clock out every day at 6 p.m. but forced to stay for up to five more hours writing reports without any overtime pay. When she eventually complained to the practice manager that she needed a break, Ahmed was told if she took one, she would be fired. Ahmed took one and guess what happened the next day.  

First, let’s just take one thing off the table. There are no “state mandated” 30-minute lunches or breaks required, unless the employee is a minor (or perhaps as an accommodation under the Americans with Disabilities Act). Literally, an employer could work an employee for 10 hours straight without any breaks and require its employees to wear Depends. Of course, the employer won’t be able to keep any employees, so this is not done. But you get the point.  

So, was Ahmed properly classified as exempt under state (and federal) wage laws? In lieu of filing an answer to the complaint, Halo filed a motion to have the case dismissed, as a matter of law, arguing that Ahmed was not entitled to overtime because she was “an at-will employee who was rightfully terminated and was not protected by the [Michigan Improved Workforce Opportunity Wage Act].”

You remember that law, right? It’s the one that started off in 2018 as a voter initiative called the Workforce Opportunity Wage Act that significantly increased the minimum wage over time and phased out the tip credit by 2024, that was then replaced by a lame duck session of the Michigan Legislature making it far more favorable for employers (now calling it “Improved”) and eventually landing before the state Supreme Court to see if the process was constitutional. We know the Legislature won because the law retained “Improved” in its title.

Where was I.  Oh yeah, Halo argued that Ahmed’s overtime claim failed under the act because it “exempts employees ‘employed in a bona fide executive, administrative, or professional capacity.’” Ahmed “as the ‘Director of Cardiovascular Sonography’ is not entitled to overtime pay because this qualified as an ‘executive/professional capacity.’” Okay then. Game over, Halo wins. The court bought it. Pack up and go home. Whaaaaat?

According to the appellate court, Halo did not attach any evidence to its motion to establish Ahmed’s role, her job duties, the requirements for the position, etc.  Nothing. Zip. In response to the motion, Ahmed argued that she was a “technician” (not professional exemption) and not a director (not executive exemption).

In its reply brief, for the first time, Halo argued Ahmed was exempt under the administrative exemption. Of course, the appellate court caught this one. You can’t raise new arguments in the reply brief because under the court rules the party opposing the dismissal wouldn’t have a chance to rebut them.

The appellate court noted initially that Ahmed can’t be an executive employee because she did not supervise any other employees. Strike one. In addition, the parties never even addressed for the lower court whether Ahmed made enough money each week to qualify for any exemption. She did, but that wasn’t the point. Strike two.

Finally, the appellate court ran through the qualifications for the professional exemption and the administrative exemption (which was argued too late by Halo) and noted that there was a complete lack of evidence presented to argue in favor of either exemption. Strike three!  Now, game over.

While noting that Ahmed may very well be exempt, the “circuit court could not make this conclusion as a matter of law on the record before it.” Thus, the case was remanded for further proceedings.

I don’t know who the judge was, but my first thought was what a dream judge for an employer to draw. Just state your position and the employee’s case is dismissed. The law according to Orr. I like it! Has a ring to it. But, if you can’t hang on to the victory, what’s the point?  

Remember, you must always apply the duties test for each exemption. When all things are equal, the employer bears the burden of proof establishing the employee is exempt and it would lose. It’s better to play it safe than fast and lose with the exemption rules because it will cost you double (the amount plus liquidated damages in the same amount) and the attorneys’ fees (yours and the employee’s) can far exceed the overtime wages you would have paid if you had properly classified the employee from the start.