Orton v. Johnny's Lunch Franchise, LLC, No. 10-2044 (6th Cir. 2012)
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Plaintiff began working for JLF in 2007 at an annual salary of $125,000. He alleges that JLF ceased paying him about a year later because of cash flow problems, but he did not stop working. A few weeks later the entire executive staff was formally laid off. Plaintiff sued under the Fair Labor Standards Act, 29 U.S.C. 201, and various state laws. The district court dismissed the FLSA claim on the ground that plaintiff was an exempt salaried employee, rejecting an argument that withholding compensation for several months converted the position to an hourly position. The Sixth Circuit reversed, holding that plaintiff adequately pleaded a claim under the FLSA, based on new regulations. Employment agreements are no longer the starting point for whether an employee is paid on a salary basis; the question is what compensation plaintiff actually received.The burden should have been on the employer to prove the exemption.
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