OPINION AND ORDER
ZATKOFF, Chief Judge.
This matter is before the Court on Plaintiffs' Motion for Court Facilitation of Notice to Potential Plaintiffs. Defendant GMAC Mortgage Corporation has responded. The Court finds that the facts and legal arguments are adequately presented in the parties' papers and the decision process would not be significantly aided by oral argument. Therefore, pursuant to E.D. MICH. LR 7.1(e)(2), it is hereby ORDERED that the motion be resolved on the briefs submitted. For the reasons set forth below, Plaintiffs' Motion is DENIED.
This is an action for overtime compensation brought pursuant to the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. §§ 201-219, (hereinafter "FLSA"). Plaintiffs are Nathaniel J. Olivo and Lola
Plaintiffs' responsibilities as loan officers were to originate residential real estate, mortgage, and home equity loans for GMAC. The terms and conditions of Plaintiffs' employment were set forth in Residential Loan Originator Employment and Compensation Agreements executed by Plaintiffs, (hereinafter "Employment and Compensation Agreement"). See Plaintiffs' Motion Ex. 9 & 10. GMAC loan officers are paid on a pure commission basis pursuant to schedules set forth in the loan officer's Employment and Compensation Agreements. Under this commission-based pay structure, a loan officer's compensation is based on his or her actual production, measured by the value of that loan officer's mortgage loan closings. In order to provide compensation to beginning loan officers while they are still developing contacts and while GMAC is processing submitted loan applications, (i.e., while the loan officer's first loans are "in the pipeline"), however, GMAC pays loan officers on a salaried basis during the first three months of the loan officer's employment.
On July 3, 2003, Plaintiffs filed the instant Complaint. With their Complaint, Plaintiffs allege that while employed by Defendant, they routinely worked in excess of forty hours a week, but that Defendant failed to pay Plaintiffs, (and all other similarly situated GMAC loan officers), time and one-half their regular rates of pay for those hours worked in excess of forty hours a week. Plaintiffs allege that this practice violates 29 U.S.C. §§ 207(a) & 215(a). In essence, Plaintiffs allege that Defendant's failure to pay overtime pay to those loan officers that work in excess of forty hours a week violates the Fair Labor Standards Act. In addition, Plaintiffs seek to proceed as a collective action, and to have all similarly situated GMAC loan officers added as plaintiffs pursuant to the "opt in" provision of the FLSA. See 29 U.S.C. § 216(b).
On October 29, 2003, this Court held a Scheduling Conference. At that time, the Court indicated that it would provide an initial period of time whereby the parties would conduct discovery as to whether this action should proceed as a "collective action" pursuant to 29 U.S.C. § 216(b). Following this initial period of discovery, Plaintiffs would submit a motion based upon whether they sought to proceed as a "collective action," and based upon whether they sought Court facilitation of notice of the action to "similarly situated" putative plaintiffs. On January 5, 2004, Plaintiffs filed their Motion for Court Facilitation of Notice to Potential Plaintiffs, and on February 4, 2004, Defendant filed a response opposing Plaintiffs' Motion.
With their Motion, Plaintiffs ask that the Court (1) grant their request to proceed as a collective action pursuant to 29 U.S.C. § 216(b); (2) grant their request for Court facilitation of notice to the putative class of plaintiffs; (3) order the Defendant to produce an alphabetized list of present and former loan officers employed by Defendant since February 1, 2001; and (4) approve Plaintiffs' proposed Notice to Potential Plaintiffs and Consent to Join. Defendant opposes Plaintiffs' Motion in its entirety.
With their Complaint, Plaintiffs allege that Defendant has a policy of not paying
§ 216. Penalties
. . . . .
(b) Damages; right of action; attorney's fees and costs; termination of right of action, ... An action to recover [for violations of 29 U.S.C. §§ 206, 207 or 215(a)(3)] may be maintained against any employer (including a public agency) in any Federal or State court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated. No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought.
See 29 U.S.C. § 216(b).
Pursuant to § 216(b), Plaintiffs may maintain a collective action on behalf of themselves "and other employees similarly situated[,]" but for any "similarly situated" employee to be bound by a judgment, they must have filed a written consent with this Court. See § 216(b); Sims v. Parke Davis & Co., 334 F.Supp. 774, 780-81 (E.D.Mich.1971), aff'd, 453 F.2d 1259 (6th Cir.1971). In other words, a collective action under § 216(b) is a representative action, but in order for the named Plaintiffs to represent the interests of "similarly situated" employees, the "similarly situated" employees must "opt in" to the proceedings. See Clougherty v. James Vernor Co., 187 F.2d 288, 290 (6th Cir.1951) ("[U]under the Fair Labor Standards Act the plaintiff has no right without specific authorization to represent an employee not joined as a plaintiff."). If the Court authorizes a "collective action" under § 216(b), then in its discretion, this Court may authorize the notification of putative "class" members of the pendency of the collective action. See Hoffmann-La Roche v. Sperling, 493 U.S. 165, 110 S.Ct. 482, 107 L.Ed.2d 480 (1989); Woods v. New York Life Ins. Co., 686 F.2d 578, 580 (7th Cir.1982) ("[Section 216(b)] authorizes a representative action; and this authorization surely must carry with it a right in the representative plaintiff to notify the people he would like to represent that he has brought a suit, and a power in the district court to place appropriate conditions on the exercise of that right."). The issues before the Court are whether it should authorize a § 216(b) action in this case, and if so, whether it should exercise its discretion and facilitate notice to putative "class" plaintiffs.
In order to proceed as a "collective action" pursuant to § 216(b), Plaintiffs must demonstrate that they are "similarly situated" to the employees they seek to notify of this suit. In order to determine whether the Plaintiff has made this showing, the Court adopts the "two-stage class certification method." See Lusardi v. Xerox Corp., 118 F.R.D. 351 (D.N.J.1987). See also Hipp v. Liberty Nat'l Life Ins. Co., 252 F.3d 1208 (11th Cir.2001) ("The two-tiered approach to certification of § 216(b) opt-in classes... appears to be an effective tool ... and we suggest that district courts in this circuit adopt it in future cases."). See generally Mooney v. Aramco Services Co., 54 F.3d 1207 (5th Cir.1995) (discussing two different approaches to § 216(b) "certification.").
Under the first step of the two-stage method, the Court determines whether
Defendant opposes Plaintiffs' Motion, and present three arguments in opposition. First, Defendant argues that Plaintiffs are not similarly situated to other GMAC loan officers, and that Plaintiffs do not meet the "similarly situated" requirement of § 216(b). Second, Defendant argues that under the standard used by the Court, Plaintiffs should not be allowed to proceed as a collective action since they are unable to make a "modest factual showing" that a policy of the Defendant's violated the law. Specifically, Defendant argues that it is exempt from complying with the overtime compensation requirement of § 207(a)(1) because its loan officers are "outside salesmen" within the meaning of § 213(a)(1). And third, Defendant argues that the proposed class is unmanageable. Specifically, since Defendant primarily relies upon the "outside salesman" exemption, the Court must make a fact intensive inquiry to determine whether each and every potential plaintiff falls within that exemption. Depending upon the number of loan officers that elect to opt in to the proceedings, such a determination would be incredibly time consuming, and, as a matter of sound case management, would weigh against a finding that a manageable class exists.
For the reasons set forth below, the Court concludes that Plaintiffs have not met their burden, and that Plaintiffs' factual showing has failed to demonstrate that the Defendant's failure to pay overtime violates 29 U.S.C. §§ 207(a) or 215(a), even under the lenient standard applied by the Court.
Defendant claims that its loan officers, including Plaintiffs, are exempt from the FLSA's overtime requirement under the outside salesman exemption described in 29 U.S.C. § 213(a)(1). Section 213(a)(1) provides that the overtime requirement of § 207(a) does not apply to "any employee employed ... in the capacity of outside salesman...." 29 U.S.C. § 213(a)(1). The Code of Federal Regulations provides that the term "outside salesman" means any employee
(a) Who is employed for the purpose of and who is customarily and regularly engaged away from his employer's place or places of business in:
(1) Making sales within the meaning [29 U.S.C. § 203(k)], or
(2) Obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and
(b) Whose hours of work of a nature other than that described in paragraph (a)(1) or (2) of this section do not exceed 20 percent of the hours worked in the workweek by nonexempt employees of the employer: Provided, That work performed incidental to and in conjunction
29 C.F.R. § 541.5. In simple terms, in order to qualify for the outside salesman exemption, an employee must spend a significant amount of his or her work-time engaging in sales related activities away from his or her employer's place of business. See 26 A.L.R. Fed. 941 § 2a (1976). The outside sales exemption derives from the incompatibility of the overtime requirements of the FLSA with the individual character of an outside salesman. See, e.g., Jewel Tea Co. v. Williams, 118 F.2d 202, 208 (10th Cir.1941) ("To apply hourly standards primarily devised for an employee on a fixed hourly wage is incompatible with the individual character of the work of an outside salesman."). In this Circuit, FLSA exemptions are narrowly construed, and an employer attempting to rely upon an exemption must demonstrate that it applies by "plain and affirmative evidence." See Ale v. TVA, 269 F.3d 680, 691 n. 4 (6th Cir.2001). See also Wirtz v. Atlanta Life Ins. Co., 311 F.2d 646, 648 (6th Cir.1963); Hodgson v. Klages Coal & Ice Co., 435 F.2d 377, 382 (6th Cir.1970).
Courts have considered several factors when determining whether an employee is an outside salesman. Courts have considered whether the employee: (1) must solicit new business; (2) receives sales training; (3) was hired and denominated as a salesman; (4) was paid on a commission basis; (5) was required to meet minimum production standards; and (6) was subject to direct or constant supervision. See Hodgson v. Krispy Kreme Doughnut Co., 346 F.Supp. 1102 (D.N.C.1972); Fields v. AOL Time Warner, Inc., 261 F.Supp.2d 971, 974 (W.D.Tenn.2003).
In the present case, there is no question that GMAC loan officers are primarily engaged in sales. At the time they execute their Employment and Compensation Agreement, GMAC loan officers are made aware (1) that they are joining a "sales force," see, e.g., Olivo Employment and Compensation Agreement Ex. C; Plaintiffs' Motion Ex. 9; (2) that they are paid commission solely based upon their individual production, see, e.g., Olivo Employment and Compensation Agreement Ex. A; Plaintiffs' Motion Ex. 9; and (3) that from time to time they may be able to participate in a sales incentive program sponsored by their employer. See, e.g., Olivo Employment and Compensation Agreement ¶ 4; Plaintiffs' Motion Ex. 9. Furthermore, as a loan originator, it is a GMAC loan officer's job to solicit new business, although loan officers have a considerable amount of flexibility to configure their workday. Accordingly, the Court finds that GMAC loan officers are primarily engaged in sales. The only issue is whether GMAC loan officers are regularly engaged in "outside" sales, as opposed to "inside" sales, as required by 29 C.F.R. § 541.5. See also 29 C.F.R. § 541.502.
Defendant argues that its loan officers meet the "outside" sales requirement because its loan officers work primarily outside of the office to solicit prospective borrowers and referral services. See Defendant's Response Br. p. 1. See also Levine Decl. ¶ 8; Defendant's Motion Ex. B ("GMAC expects its Loan Officers to spend most of their work time outside of the office generating sales and making new sales contacts."). Defendant indicates that it relies upon its loan officers to "`sell' by contacting prospects, making and maintaining contacts with referral sources ... and using their ... talents and skills to create new sales opportunities." See Levine Decl. ¶ 3; Defendant's Motion Ex. B. For additional support, Defendant has submitted the Declarations of several loan officers, which indicate that GMAC loan officers spend a substantial
Since the Court finds that, generally, the outside sales exemption contained in 29 U.S.C. § 213(a)(1) applies to Defendant's loan officers, the Court concludes that Plaintiffs are unable to demonstrate that they, and the potential plaintiffs, were "victims of a common policy or plan that violated the law," and, therefore, that Plaintiffs have filed to demonstrate that they are "similarly situated" to other GMAC loan officers within the meaning of 29 U.S.C. § 216(b). Flores, 289 F.Supp.2d at 1045. In essence, Defendant has demonstrated that the overtime requirements of the FLSA are incompatible with the individual character of the work of its loan officers. See Jewel Tea, 118 F.2d at 208. Plaintiffs' Motion should be DENIED.
Accordingly, and as set forth above, IT IS HEREBY ORDERED that Plaintiffs Olivo and Hopcraft's Motion for Court Facilitation of Notice to Potential Plaintiffs is DENIED in its entirety.
IT IS SO ORDERED.