Michael L. Schaefer v. Indiana Michigan Power Company, d/b/a AMERICAN ELECTRIC POWER

1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2004 FED App. 0050P (6th Cir.)
File Name: 04a0050p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
MICHAEL L. SCHAEFER,
Plaintiff-Appellant,
v.
INDIANA MICHIGAN POWER
COMPANY, d/b/a AMERICAN
ELECTRIC POWER,
Defendant-Appellee.
X
-
-
-
->
,
-
-
-
-
-
N
No. 02-1401
Appeal from the United States District Court
for the Western District of Michigan at Grand Rapids.
No. 00-00559—Gordon J. Quist, District Judge.
Argued: September 18, 2003
Decided and Filed: February 13, 2004
Before: SUHRHEINRICH, COLE, and ROGERS, Circuit
Judges.
_________________
COUNSEL
ARGUED: Stephen D. Turner, LAW, WEATHERS &
RICHARDSON, Grand Rapids, Michigan, for Appellant.
Joseph J. Vogan, VARNUM, RIDDERING, SCHMIDT &
2 Schaefer v. Indiana Mich. Power Co. No. 02-1401
HOWLETT, Grand Rapids, Michigan, for Appellee.
ON BRIEF: Stephen D. Turner, Gregory N. Longworth,
LAW, WEATHERS & RICHARDSON, Grand Rapids,
Michigan, for Appellant. Joseph J. Vogan, Peter Smit,
Elizabeth Wells Skaggs, VARNUM, RIDDERING,
SCHMIDT & HOWLETT, Grand Rapids, Michigan, for
Appellee.
COLE, J., delivered the opinion of the court.
SUHRHEINRICH, J. (pp. 19-21), delivered a separate
concurring opinion. ROGERS, (p. 22), delivered a separate
dissenting opinion.
_________________
OPINION
_________________
R. GUY COLE, JR., Circuit Judge. Plaintiff-Appellant
Michael L. Schaefer appeals the district court’s grant of
summary judgment in favor of his employer, Indiana
Michigan Power Company, d/b/a American Electric Power
(“AEP”), and the denial of his motion for summary judgment,
in this action alleging that AEP violated the Fair Labor
Standards Act (the “FLSA”), 29 U.S.C. §§ 201-219, by
failing to pay Plaintiff for overtime work at one-and-a-half
times his normal hourly rate as required by 29 U.S.C.
§ 207(a)(1). The central issue on appeal is whether the
district court erred in granting summary judgment in favor of
AEP based on its conclusion that Plaintiff’s position as an
environmental specialist at AEP is properly classified as
exempt under the administrative exemption of the FLSA. For
the following reasons, we REVERSE the decision of the
district court granting summary judgment to AEP and
REMAND for further proceedings.

-- 1 of 11 --

No. 02-1401 Schaefer v. Indiana Mich. Power Co. 3
I. BACKGROUND
Indiana Michigan Power Company, doing business as
American Electric Power (“AEP”), operates the Cook Nuclear
Plant (“Cook”) in Bridgman, Michigan, where Plaintiff-
Appellant Michael L. Schaefer is employed. AEP produces
electricity at Cook through nuclear reaction. Schaefer began
his employment at Cook as a “radiation protection technician,
junior,” in 1987. Through promotion and company
reorganization, Schaefer has subsequently held the positions
of radiation protection technician, engineering technologist,
radioactive material specialist, and environmental specialist.
Schaefer is a “qualified shipping specialist” under Department
of Transportation regulations. Although Schaefer, who is
paid a yearly salary, has worked in positions classified as
exempt from FLSA overtime requirements by AEP since
1988, he nonetheless received time-and-a-half overtime pay
for hours in excess of forty hours in a given workweek until
1997. Beginning in 1997, AEP began to pay only straight
overtime under its exempt-overtime plan, and in 1999 the
plan was changed so that overtime generally did not begin
until after 45 hours were worked in a given workweek.
The parties disagree regarding the nature of Schaefer’s
daily activities. AEP argues that Schaefer “has overall
responsibility for the waste disposal program.” AEP points
out that Schaefer has responsibility for various activities in
addition to actual shipping, such as writing and revising
procedures, preparing position papers, investigating corrective
actions, and surveying other nuclear facilities as to how they
deal with radioactive waste. In support of its position, AEP
primarily relies on AEP’s written job description for the
position of environmental specialist; the testimony of
Schaefer’s supervisor, Jeffrey H. Long; various job
performance reviews; and Schaefer’s own resume. These
sources generally portray Schaefer as a white-collar employee
who performs his job independently; makes recommendations
regarding various aspects of the shipping process; has an
important role in assuring AEP’s compliance with various
4 Schaefer v. Indiana Mich. Power Co. No. 02-1401
federal and state regulations and primary responsibility for
developing procedures to implement these regulations; and
supervises the manual tasks involved in shipping radioactive
materials.
Schaefer’s deposition testimony presents a different picture
of his day-to-day activities. He claims that eighty percent of
his time is spent on tasks related to actual shipments of
radioactive materials and waste. These tasks include setting
up the shipment with the transporter and the waste
management facility; determining the type and method of
packaging to be used; preparing shipping documents such as
manifests; and inspecting packaging containers, trucks, load
bracings, and truck signage. Schaefer claims that he does not
often exercise discretion or independent judgment when
working on shipments because the work is tightly governed
by federal regulations and company procedures. He
acknowledges that some of his other tasks sometimes require
the exercise of discretion and independent judgment, but he
maintains that he performs such tasks much less frequently
than AEP indicates and that the exercises of discretion are
much more limited than AEP contends. Finally, Schaefer
disputes AEP’s job description and performance reviews: He
testified in his deposition that those documents cover
activities that he does not actually perform and do not
accurately reflect his day-to-day responsibilities. He also
claims that he embellished his own resume to include more
responsibility and authority than he actually exercises.
II. DISCUSSION
A. Standard of Review
This Court reviews de novo a district court’s grant of
summary judgment. Stephenson v. Allstate Ins. Co., 328 F.3d
822, 826 (6th Cir. 2003). Summary judgment is appropriate
if, 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

-- 2 of 11 --

No. 02-1401 Schaefer v. Indiana Mich. Power Co. 5
to judgment as a matter of law. Fed.R.Civ.P. 56(c); Agristor
Fin. Corp. v. Van Sickle, 967 F.2d 233, 236 (6th Cir. 1992).
B. The Fair Labor Standards Act and the
Administrative Exemption
The Fair Labor Standards Act requires employers to pay
their employees time-and-a-half for work performed in excess
of forty hours per week. 29 U.S.C. § 207(a)(1). The FLSA,
however, exempts employers from this requirement with
respect to individuals “employed in a bona fide executive,
administrative, or professional capacity.” 29 U.S.C.
§ 213(a)(1). “This exemption is to be ‘narrowly construed
against the employers seeking to assert [it],’” Douglas v.
Argo-Tech Corp., 113 F.3d 67, 70 (6th Cir. 1997) (quoting
Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960)), and
the employer bears not only the burden of proof, but also the
burden on each element of the claimed exemption. Arnold,
361 U.S. at 392.
To prove that Schaefer is a bona fide administrative
employee under the applicable Department of Labor (“DOL”)
regulations (described as the “short test”), AEP must
demonstrate that: (1) the employee is “compensated on a
salary or fee basis at a rate of not less than $250 per week”;
(2) the employee’s “primary duty consists of . . . [t]he
performance of office or nonmanual work directly related to
management policies or general business operations of his
employer or his employer’s customers”; and (3) the
employee’s primary duty “includes work requiring exercise
of discretion and independent judgment.” 29 C.F.R.
§§ 541.2, 541.214.
1. Salary Basis
AEP must first establish that it pays Schaefer on a salary or
fee basis. 29 C.F.R. § 541.2(e)(2); Douglas, 113 F.3d at 70.
DOL regulations provide that an employee is paid on a salary
basis “if under his employment agreement he regularly
6 Schaefer v. Indiana Mich. Power Co. No. 02-1401
receives each pay period on a weekly, or less frequent basis,
a predetermined amount constituting all or part of his
compensation, which amount is not subject to reduction
because of variations in the quality or quantity of the work
performed.” 29 C.F.R. § 541.118(a).
Although Schaefer is paid a yearly salary, he argues that
AEP does not treat him as a salaried employee because he
must account for at least forty hours of work each week on his
time sheet and must make up partial-day absences by either
working extra hours on another day or using part of a vacation
day. Exempt status, however, is only affected by monetary
deductions for work absences and not by non-monetary
deductions from fringe benefits such as personal or sick time.
See Haywood v. N. Am. Van Lines, Inc., 121 F.3d 1066, 1070
(7th Cir. 1997). Schaefer has presented no evidence to
contradict AEP’s showing that it does not dock employees’
pay for partial-day absences. Moreover, Schaefer admitted in
his deposition that he has never been docked pay for partial-
day absences. Accordingly, the district court correctly
concluded that AEP satisfied its burden of showing that
Schaefer was paid on a salary basis.
2. Office or Nonmanual Work Directly Related to
Management Policies or General Business
Operations of the Employer
Next, AEP must show the absence of a material factual
dispute over whether Schaefer’s “primary duty” consists of
the “performance of office or nonmanual work directly related
to management policies or general business operations of his
employer or his employer’s customers.” 29 C.F.R.
§§ 541.2(a)(1), (e)(2), 541.214. Accordingly, we must first
analyze Schaefer’s “primary duty.” We focus on evidence
regarding the actual day-to-day activities of the employee
rather than more general job descriptions contained in
resumes, position descriptions, and performance evaluations.
Ale v. Tennessee Valley Authority, 269 F.3d 680, 688-89 (6th
Cir. 2001). Neither the job description that Schaefer wrote

-- 3 of 11 --

No. 02-1401 Schaefer v. Indiana Mich. Power Co. 7
1Two of AEP’s experts’ reports and Long’s deposition provide three
alternative breakdowns of Schaefer’s time. It is not clear from the record
whether this indicates disagreement with Schaefer’s breakdown, or merely
a focus on a different period of time. Cook was offline for approximately
three years, roughly between 1998 and 2000. T hat is, the nuclear reactors
were shut down but the plant remanded op en while work was done on the
reactors. As a result of the increased work on the reactors, the number of
contaminated items – protective clothing, tools, replaced parts – requiring
for his resume nor Schaefer’s failure to dispute AEP’s
position descriptions or performance evaluations prior to this
lawsuit preclude him from arguing that his day-to-day
activities differ from those described in these documents –
such actions merely raise credibility questions for the
factfinder. Indeed, we have recognized that “resumes may
not provide the most accurate picture of an employee’s job
because resumes are typically ‘designed to enhance the
employee[’]s duties and responsibilities in order to obtain a
job.’” Id. at 689 n.2. Here, the deposition testimony appears
to provide a more detailed window into Schaefer’s day-to-day
activities.
Schaefer’s tasks can be grouped into two categories:
(1) tasks relating to actual, specific shipments of radioactive
materials and waste, and (2) tasks relating to the maintenance
of the waste disposal program as a whole. The DOL
regulations provide that “[i]n the ordinary case it may be
taken as a good rule of thumb that primary duty means the
major part, or over 50 percent, of the employee’s time.” 29
C.F.R. §§ 541.103, 541.206(b). Schaefer contends that he
spends roughly eighty percent of his time dealing with the
preparation of shipments and the remaining twenty percent of
his time on other tasks – some of which may also relate to
preparation of specific shipments – including condition
reports, procedural revisions, and position papers. Because
we view the evidence in the light most favorable to Schaefer,
we accept his contention that he spends the majority of his
time working on actual shipments of radioactive materials and
waste.1
8 Schaefer v. Indiana Mich. Power Co. No. 02-1401
shipment also greatly increased, so the focus of Schaefer’s job shifted
more firmly to shipping during that time. This lawsuit, filed on July 31,
2000, cove rs conduct dating b ack to July 31 , 199 8 or, if willfulness is
found, July 31, 1997.
W e offer no opinion on whether our result would be the same if
actual shipments became a substantially less significant part of Schaefer’s
job; presumably at some point the “primary job duty” would shift to
maintenance of the program.
“Time alone, however, is not the sole test . . . .” 29 C.F.R.
§§ 541.103, 541.206(b). A job duty that occupies less than
fifty percent of the employee’s time can still be the primary
duty if that duty is of principal importance to the employer or
if the other duties performed are collateral to that duty. Rutlin
v. Prime Succession, Inc., 220 F.3d 737, 742 (6th Cir. 2000).
Yet AEP has not argued that Schaefer’s non-shipping tasks
are more important than shipping or that shipping is merely
collateral to these tasks. AEP argues only that these other
tasks are “equally important” to shipping. Even if AEP had
submitted evidence sufficient to support this proposition, the
contention is not sufficient to trump the fifty-percent “rule of
thumb” set forth in 29 C.F.R. § 541.103.
a. Nonmanual
To meet the exemption such that AEP need not pay him
time-and-a-half for overtime, Schaefer’s primary duty must
consist of “nonmanual work directly related to management
policies or general business operations.” Although an exempt
employee can perform some manual work without losing
exempt status, “if the employee performs so much manual
work (other than office work) that he cannot be said to be
basically a ‘white-collar’ employee he does not qualify for
exemption as a bona fide administrative employee . . . .”
29 C.F.R. § 541.203(a).
The evidence, viewed in the light most favorable to
Schaefer, supports his contention that he spends some of his
time performing manual tasks outside the office but this

-- 4 of 11 --

No. 02-1401 Schaefer v. Indiana Mich. Power Co. 9
amount of time is not so much that he no longer qualifies for
the exemption. Schaefer admits that for the past few years he
has spent fifty percent of his time at his desk and that he
currently spends greater than eighty percent of his time at his
desk. Even when he is away from his desk, he does not spend
all of his time on manual tasks. Although Schaefer spends
some of this time inspecting trucks, examining load bracings,
inspecting shipping containers, and examining shipping
labels, these “inspection” tasks – even if not performed at his
desk – are nonetheless not manual tasks. Schaefer performs
manual tasks when he actually picks up a hammer to brace a
load or installs or tightens a strap. Accordingly, Schaefer
does not spend so much of his time on these manual tasks so
as to fall outside exempt status.
b. Directly Related to Management Policies or General
Business Operations
To qualify for the exemption, Schaefer’s primary duty must
also be “directly related to management policies or general
business operations of the employer or the employer’s
customers.” 29 C.F.R. § 541.214. This provision, in addition
to describing the types of activities performed by an exempt
employee, “limits the exemption to persons who perform
work of substantial importance to the management or
operation of the business of his employer or his employer’s
customers.” 29 C.F.R. § 541.214(a).
AEP urges us to conclude that Schaefer is an administrative
employee simply because he is not involved in the direct
production of electricity. 29 C.F.R. § 541.205(a) does
distinguish administrative work from production work, and a
number of courts have applied an administrative versus
production analysis, sometimes referred to as the
administrative/production dichotomy, to the issue. See, e.g.,
Dalheim v. KDFW-TV, 918 F.2d 1220 (5th Cir. 1990). AEP
argues that Schaefer does not fall on the “production” side of
this so-called dichotomy because “the Appellant is overseeing
the shipment of radioactive waste in a company that is not in
10 Schaefer v. Indiana Mich. Power Co. No. 02-1401
the business of shipping radioactive waste, but instead is in
the business of producing electricity.” Appellee’s Brief at 40.
According to AEP, since Schaefer’s work is collateral to the
production of electricity, he is therefore doing administrative
work. We reject this contention.
Work related to waste disposal is not necessarily
“administrative” work as that term is commonly understood.
The very nature of AEP’s business at Cook – the production
of electricity by nuclear reaction – entails very complex waste
issues that require types of employees that a more traditional
factory would not require. Such employees do unique work
which, although not part of production proper, is also not
“administrative” or part of “servicing the business.” The
problem posed by the dichotomy is not limited to waste. For
example, Long testified that the employees who wear
protective clothing and work in areas of active contamination
are not production workers: “I guess if – if you want to say
direct production of electricity, I would think of – of the
operators. The majority of these people [who wear the
protective gear] are probably in maintenance.” J.A. 126.
As this case indicates, the administrative versus production
analysis does not fit all cases. The analogy – like various
other parts of the interpretive regulations – is only useful to
the extent that it is a helpful analogy in the case at hand, that
is, to the extent it elucidates the phrase “work directly related
to the management policies or general business operations.”
Bothell v. Phase Metrics, Inc., 299 F.3d 1120, 1126 (9th Cir.
2002); see also Shaw v. Prentice Hall Computer Publ’g, Inc.,
151 F.3d 640, 644 (7th Cir. 1998) (noting that the
administrative/production dichotomy is to be used only to the
extent that it is a helpful analogy in the case at hand). This
dispute must therefore be resolved using other analytical tools
set out in the regulations for resolving this question.
29 C.F.R. § 541.205(b) provides further guidance on the
“types” of work that are administrative: “The administrative
operations of the business include the work performed by so-

-- 5 of 11 --

No. 02-1401 Schaefer v. Indiana Mich. Power Co. 11
called white-collar employees engaged in ‘servicing’ a
business as, for example, advising the management, planning,
negotiating, representing the company, purchasing, promoting
sales, and business research and control.” We cannot
conclude, without more from the employer, that shipping
radioactive materials is in the same category as “advising the
management, planning, negotiating, representing the
company, purchasing, promoting sales, and business research
and control.” The fact that some shipments are unique or
challenging does not convert them into “servicing the
business” or make them “directly related to management
policies or general business operations.” An inquiry into
whether the work is of a routine nature is relevant for
determining whether the administrative work is of
“substantial importance” to the employer – not whether the
work is actually of an administrative nature.
Where Schaefer is asked to do benchmarking or make
recommendations regarding how AEP should deal with an
unusual shipment, those aspects of the task might qualify but
they do not suffice to change the nature of the actual shipping
work and are too infrequent by either party’s account to form
the basis for finding that Schaefer’s “primary job duty
consists of . . . work directly related to management policies
or general business operations.” Similarly, some of
Schaefer’s other tasks – for example, writing or updating
procedures and preparing an annual scaling factor report –
appear to meet the “directly related” requirement, but they are
not part of Schaefer’s primary job duty. See supra. Because
Schaefer’s primary job duty is not “directly related,” we need
not address whether it is of substantial importance to AEP.
Thus, genuine issues of material fact exist as to whether
Schaefer’s primary duty is “directly related to management
policies or general business operations of the employer or the
employer’s customers.”
12 Schaefer v. Indiana Mich. Power Co. No. 02-1401
3. Discretion and Independent Judgment
Even if AEP could meet its burden in proving that
Schaefer’s primary duty consists of the “performance of
office or nonmanual work directly related to management
policies or general business operations of his employer or his
employer’s customers,” AEP must also prove that Schaefer
customarily and regularly exercised discretion and
independent judgment in the performance of his primary duty.
29 C.F.R. §§ 541.2(e)(2), 541.214(a); Douglas v. Argo-Tech
Corporation, 113 F.3d 67, 72 (6th Cir. 1997). AEP has
argued that the “short test” requires only occasional exercises
of discretion and independent judgment rather than
“customary and regular” exercises. Yet Douglas, in which we
articulated the “customarily and regularly” requirement, is
binding on this panel. See Moltan Co. v. Eagle-Picher
Industries, Inc., 55 F.3d 1171, 1176 (6th Cir. 1995) (“We
cannot overturn the prior published decision of another panel
and are therefore bound by these previous decisions.”). In
any event, if we were to accept AEP’s contention, then any
minimal amount of discretion would satisfy this prong and
nonexempt employees given as examples in the regulations,
such as bank tellers and book keepers, would potentially be
swept into the exemption upon performance of an occasional
discretionary task.
There are genuine issues of material fact regarding the
extent to which Schaefer actually exercises discretion and
independent judgment. According to 29 C.F.R. § 541.207(a):
“In general, the exercise of 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.” The
regulations also distinguish the exercise of discretion and
independent judgment from use of skill or application of
knowledge:
Perhaps the most frequent cause of misapplication of the
term “discretion and independent judgment” is the failure

-- 6 of 11 --

No. 02-1401 Schaefer v. Indiana Mich. Power Co. 13
to distinguish it from the use of skill in various respects.
An employee who merely applies his knowledge in
following prescribed procedures or determining which
procedure to follow, or who determines whether
specified standards are met or whether an object falls into
one or another of a number of definite grades, classes, or
other categories, with or without the use of testing or
measuring devices, is not exercising discretion and
independent judgment within the meaning of § 541.2.
This is true even if there is some leeway in reaching a
conclusion, as when an acceptable standard includes a
range or a tolerance above or below a specific standard.
29 C.F.R. §541.207(c)(2).
Schaefer contends that his shipping-related tasks do not
require the exercise of discretion or independent judgment
within the meaning of the regulations. Specifically, Schaefer
argues that many of his tasks are so heavily regulated by DOT
regulations, Nuclear Regulatory Commission regulations,
state regulations, and company procedures, that his primary
duty requires little or no exercise of discretion or independent
judgment. The district court rejected this argument on the
ground that “it could apply to almost anyone in the nuclear
power industry.” Schaefer v. Ind. Mich. Power Co., 197
F.Supp.2d 935, 948 (W.D. Mich. 2002). We disagree with
the district court’s analysis. Each person in the industry,
including Schaefer, must be individually examined in order to
determine whether he or she actually exercises discretion and
independent judgment. The fact that the industry is heavily
regulated may indeed mean that a facility like Cook may
employ fewer individuals who actually exercise discretion.
Cook employs a different type of employee – those who can
follow regulations – than it would have to employ in the
absence of the regulations – that is, those who could make the
kinds of decision made by those who write the various
regulations. The very purpose of such detailed regulations
and procedures is to create conformity which has the practical
effect of minimizing discretion. We must, therefore, examine
14 Schaefer v. Indiana Mich. Power Co. No. 02-1401
2Vaughn v. Watkins M otor Lines, Inc., 291 F.3d 9 00 (6th Cir. 2002),
is inapp osite because it involves the M otor Carriers Act (“MC A”)
exemption from the FLSA. The MCA allows the Secretary of
Transportation to regulate the hours of loaders. In Vaughn, the Court
found that blocking freight and loading it high and tight met the MCA
“judgment and d iscretion” req uirement. Id. at 904 . “Judgment and
whether Schaefer, constrained by regulations, actually
exercises discretion and independent judgment. See Ale, 269
F.3d at 687.
AEP also argues that there are gaps in the regulations that
Schaefer must “bridge” using his discretion and independent
judgment. AEP offers several examples of “decisions” or
“judgments” made by Schaefer when applying the
regulations, yet each only entails the application of skill or
knowledge rather than the exercise of discretion or
independent judgment. It is not enough to merely latch on to
words like “decision,” “recommendation,” “judgment,” or
“determine” in the procedures and in Schaefer’s deposition
testimony. Cf. Ale, 269 F.3d at 691 (“The words ‘in charge’
are not a magical incantation that render an employee a bona
fide executive regardless of his actual duties.”).
Indeed, the term “exercise of discretion and independent
judgment” as it appears in the regulations has a specific
meaning which excludes “the use of skill” and the application
of “knowledge in following prescribed procedures or
determining which procedure to follow, or . . . determin[ing]
whether specified standards are met or whether an object falls
into one or another of a number of definite grades, classes, or
other categories.” Many of AEP’s examples either are of
simple decisions that do not require the exercise of discretion
within this definition or involve procedures that provide more
guidance than AEP implies. For example, a material either
does or does not have a specific activity level of less than 70
Bq/gram (0.002 :Ci/gram) for purposes of determining what
shipping procedures will govern. Likewise, blocking and
bracing a load is an exercise of skill rather than discretion.2

-- 7 of 11 --

No. 02-1401 Schaefer v. Indiana Mich. Power Co. 15
discretion” under the regulations for the MCA does not, however, appear
to have the specific and specialized meaning of “discretion and
independent judgment” under the administrative exem ption – particularly
the exclusion o f “application o f skill.”
AEP additionally argues that there are times when a package
could be classified in more than one shipping category under
the regulations. Long, however, testified that Cook had a
preferred method of selecting the least restrictive
classification, and AEP has presented no evidence that
Schaefer exercised his discretion and diverged from the
preferred method.
Nor is the mere fact that Schaefer has extensive knowledge
of the regulations sufficient to turn their application into
exercises discretion and independent judgment. 29 C.F.R.
§ 541.207(c)(3) specifically states that “[o]ften, after
continued reference to written standards, or through
experience, the employee acquires sufficient knowledge so
that reference to written standards is unnecessary. The
substitution of the employee’s memory for the manual of
standards does not convert the character of the work
performed to work requiring the exercise of discretion and
independent judgment.” Rather, Schaefer “merely applies his
knowledge in following proscribed procedures or determining
which procedures to follow” and “determines whether
specified standards are met.” 29 C.F.R. § 541.207(c)(1).
AEP has not demonstrated that these shipping tasks require
Schaefer to exercise discretion and independent judgment for
purposes of summary judgment. We therefore make no
determination whether decisions made related to these types
of tasks would be “with respect to matters of significance.”
29 C.F.R. § 541.207(a).
To the extent that AEP does point to some tasks that
undisputedly require the exercise of discretion, AEP has
failed to establish the extent to which Schaefer completes
these tasks as part of his primary duty and thus fails to meet
16 Schaefer v. Indiana Mich. Power Co. No. 02-1401
its burden of establishing that Schaefer “customarily and
regularly” exercises discretion and independent judgment.
Specifically, some benchmarking and the completion of some
of the condition reports are probably also part of Schaefer’s
primary job duty. There is insufficient evidence of record,
however, to determine how often he performed them as part
of his primary job duty or how often they required him to
exercise discretion or independent judgment. Schaefer spends
less than one percent of his time on benchmaking, which
involves calling various facilities and talking to an employee
with a near corresponding position to his own about how that
facility handles a particular issue. Schaefer then narrows the
options based on what is feasible at Cook, presenting these
options to his supervisor, sometimes with a recommendation
about the option he prefers. Of the one percent of his time
that Schaefer spends on benchmarking, only a portion of this
time relates to his primary duty, such as when he performs
benchmarking to ascertain how to ship an unusual piece of
waste – for example, a large block of concrete. Other times,
the benchmarking relates to secondary duties – for example,
justifying a current practice or researching a specific issue
such as when he was asked to look into different ways
companies estimated the amount of tritium found in waste
because AEP was concerned that they were over-estimating
the amount. The record does not reveal what amount of the
total one percent of time Schaefer spent on benchmarking
relates to his primary duty.
Likewise, AEP has not established that Schaefer exercises
discretion with sufficient frequency while completing
condition reports as part of his primary duty. Schaefer spends
ten to twenty percent of his time on condition reports,
“depending on the ebb and flow of them.” J.A. 95.
According to Schaefer’s deposition, condition reports are part
of AEP’s “corrective action program.” J.A. 427. According
to Long, “[a] condition report is – what we call something
adverse to quality; a problem.” J.A. 122. These problems
“[m]ay be small; may be large.” Id. All employees – exempt
and nonexempt – participate in this program. J.A. 427.

-- 8 of 11 --

No. 02-1401 Schaefer v. Indiana Mich. Power Co. 17
Schaefer testified that condition reports have parts: “condition
identification, condition evaluation, the proposed actions and
actual actions that have been performed.” J.A. 241. Schaefer
admits that some analysis is required when he is assigned the
“condition evaluation” section. Id. He testified that he
performs condition evaluation “[r]arely to infrequently. . . .
maybe onto the infrequently side.” Id. Other times he comes
in where the specific action is to be performed in which case
“there’s no analysis required, there’s no determination to be
made, other than just perform that task, perform the action
that was proposed.” Id. Some condition reports no doubt
have required that Schaefer exercise discretion and
independent judgment. We have insufficient information,
however, on how often that might have occurred and, of the
times it occurred, how often it related to an actual shipment
as opposed to a secondary task.
Most of AEP’s argument that Schaefer customarily and
regularly exercises discretion and independent judgment is
based upon tasks that are not part of Schaefer primary job
duty, many of which Schaefer has completed infrequently or
even only once. We need not consider whether Schaefer
exercises discretion when completing secondary tasks.
29 C.F.R. § 541.214(a). AEP has not met its burden of
demonstrating that the undisputed facts show that Schaefer
customarily and regularly exercises discretion and
independent judgment.
III. CONCLUSION
Here, where the employer bears the burden of proving an
exemption that is to be construed narrowly against the
employer, AEP has not demonstrated that no reasonable trier
of fact could find that Schaefer’s primary duty does not
consist of work “directly related to management policies or
general business operations of his employer” or that Schaefer
does not exercise sufficient discretion and independent
judgment to meet the exemption when the facts are viewed in
the light most favorable to Schaefer. Issues of material fact
18 Schaefer v. Indiana Mich. Power Co. No. 02-1401
persist and it must be left to a trier of fact to weigh the
credibility of Schaefer’s characterization of his day-to-day
duties with that of AEP. Accordingly, we REVERSE the
decision of the district court granting summary judgment to
AEP and REMAND for further proceedings.

-- 9 of 11 --

No. 02-1401 Schaefer v. Indiana Mich. Power Co. 19
______________________
CONCURRENCE
______________________
SUHRHEINRICH, Circuit Judge, concurring. I concur in
Judge Cole’s analysis. I write separately simply to indicate
my belief that we can decide this issue as a matter of law in
favor of Plaintiff-Appellant Schaefer. I would therefore grant
Plaintiff’s motion for summary judgment and deny AEP’s.
The decision of whether an employee is exempt from the
FLSA’s overtime compensation provisions under 29 U.S.C.
§ 213(a)(1) is primarily a fact question. Lott v. Howard
Wilson Chrysler-Plymouth, Inc., 203 F.3d 326, 330 (5th Cir.
2000); see also Ale v. Tennessee Valley Auth., 269 F.3d 680,
688-89, 691 (6th Cir. 2002) (stating that the DOL regulations
indicate that courts must look to specific fact in determining
whether an employee is exempted for overtime provisions,
citing 29 C.F.R. § 541.103, 207(b)). However, the ultimate
decision of whether the employee is exempt from the
overtime compensation provision, § 207(a)(1), is a question
of law. Ale, 269 F.3d at 691; Lott, 203 F.3d at 331.
In my view, AEP has, at a minimum, failed to create a
genuine issue of fact on the question of whether Schaefer’s
primary duty “includes work requiring exercise of discretion
and independent judgment.” 29 C.F.R. § 541.1(e)(2); 29
C.F.R. § 541.214(a). As the majority points out in its
analysis, AEP failed to demonstrate (as part of its burden in
response to Schaefer’s motion for summary judgment) that
the “decisions” and “judgments” made by Schaefer when
applying DOT regulations, require use of his discretion or
judgment distinct from the application of skill or knowledge.
That is, AEP’s examples of “judgments” made by Schaefer
when applying the regulations entail only the application of
his skill or knowledge.
20 Schaefer v. Indiana Mich. Power Co. No. 02-1401
Many skilled people, like electricians, nurses, and other
skilled professionals and tradesmen, make all kinds of
discretionary decisions in carrying out their skill, profession
or trade, but that is not the kind of discretion envisioned by
the short test. Indeed, the applicable regulation, explicitly
makes this distinction. See Ale, 269 F.3d at 685 (stating that
“section 541.207(c) distinguishes the exercise of discretion
and independent judgement from the use of skill in applying
techniques, procedures, or specific standards”).
Perhaps the most frequent cause of misapplication of the
term “discretion and independent judgement” is the
failure to distinguish it from the use of skill in various
respects. An employee who merely applies his
knowledge in the following prescribed procedures or
determining which procedures follow, or who determines
whether specified standards are met . . . is not exercising
discretion and independent judgement within the
meaning of § 514.2. This is true even if there is some
leeway in reaching a conclusion, as when an acceptable
standard includes a range or tolerance above or below a
specific standard.
29 C.F.R. § 541.207(c)(1) (2003). Schaefer’s own testimony
reflects that the decisions he makes are applications of his
skill or knowledge as an environmental specialist in following
proscribed procedures or determining which procedures to
follow. See 29 C.F.R. § 541.207(c)(1). The district court did
not consider this subsection (c)(1) in its analysis.
Furthermore, as the majority holds, of those tasks that
indisputedly require Schaefer to exercise discretion, “AEP has
failed to establish the extent to which Schaefer completes
these tasks as part of his primary duty.” Maj. Op., ante, at
15. Nor did AEP establish that Schaefer exercises discretion
with sufficient frequency while completing condition reports
as part of his primary duty. Thus, AEP has failed to meet its
burden of establishing that Schaefer “customarily and
regularly” exercises discretion and independent judgment.

-- 10 of 11 --

No. 02-1401 Schaefer v. Indiana Mich. Power Co. 21
Having failed to meet its burden of showing that the
employee meets every aspect of the definition for an exempt
employee, see Arnold v. Ben Kanowsky, Inc., 361 U.S. 388,
392 (1960) (holding that employer bears burden of proof, on
each and every element of the claimed exemption); see
generally Corning Glass Works v. Brennan, 417 U.S. 188,
196-97 (1974) (application of an exception under the FLSA
is a matter of affirmative defense, and the employer has the
burden of proof), summary judgment for Schaefer is
appropriate. I would therefore remand to the district court
with instructions to enter summary judgment in favor of
Schaefer.
22 Schaefer v. Indiana Mich. Power Co. No. 02-1401
______________
DISSENT
______________
ROGERS, Circuit Judge, dissenting. Essentially for the
reasons given in Judge Quist's careful opinion below, 197
F.Supp.2d 935, I would affirm the judgment of the district
court.

-- 11 of 11 --