Monthly Archives: July 2009

9th Cir.: Managers Of Business Are “Employers” Within Meaning Of FLSA, Subject To FLSA Liability; Bankruptcy Of The Underlying Corporation Does Not Affect This Liability Where Individual (Not Corporate Pledged) Assets Sought

Boucher v. Shaw

Three former employees of the Castaways Hotel, Casino and Bowling Center (the Castaways) and their local union sued the Castaways’ individual managers for unpaid wages under state and federal law. The district court dismissed the plaintiffs’ claims. This appeal raised several issues, most significantly whether the Castaways’ individual managers can be held liable for unpaid wages under Nevada law and/or the Fair Labor Standards Act (FLSA). The state court held that individual managers cannot be held liable as “employers,” and therefore that claim was properly dismissed by the district court. The Ninth Circuit holds that such managers can be held liable, and therefore reversed and remanded the FLSA claim to the district court.

“The Castaways filed for Chapter 11 bankruptcy protection on June 26, 2003. The individual plaintiffs were discharged in January 2004, when the Castaways was operating as the debtor-in-possession. On February 10, 2004, after the plaintiffs were discharged, the Chapter 11 petition was converted to a Chapter 7 liquidation, and the Castaways ceased operations. The individual plaintiffs, Ardith Ballard, Thelma Boucher and Joseph Kennedy III, filed suit in Nevada state court seeking to recover unpaid wages for themselves and for a class of Castaways employees. Ballard alleges that she has not been paid for the last pay period that she worked at the Castaways. Boucher alleges that she was not paid for the final pay period until two weeks after her employment was terminated. All three individual plaintiffs allege that they have not been paid their accrued vacation and holiday pay. Culinary Workers Union, Local 226 (Local 226 or the union) seeks to recover wages that were withheld as dues from the paychecks of Thelma Boucher and other employees. The plaintiffs assert claims under Chapter 608 of the Nevada Revised Statutes and the FLSA, 29 U.S.C. § 206(a).

The defendants are three Castaways’ managers. Dan Shaw was the Chairman and Chief Executive Officer of the Castaways at the time the plaintiffs were discharged. Michael Villamor was responsible for handling labor and employment matters at the Castaways. And James Van Woerkom was the Castaways’ Chief Financial Officer. Shaw had a 70 percent ownership in the Castaways, and Villamor had a 30 percent ownership interest. The plaintiffs allege that each defendant had custody or control over the “plaintiffs, their employment, or their place of employment at the time that the wages were due.”

The plaintiffs filed this lawsuit in Nevada state court on October 14, 2004. On December 21, 2004, Defendant Shaw removed the case to the United States District Court for the District of Nevada and filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Villamor and Van Woerkom separately filed motions to dismiss, alleging the same grounds for dismissal as Shaw. The district court granted the defendants’ motions and dismissed all of the plaintiffs’ claims. Boucher v. Shaw, No. CV-S-04-1738-PMP (PAL) (D.Nev. Jan. 25, 2005); Boucher v. Shaw, No. CV-S-04-1738-PMP (PAL) (D.Nev. Feb. 18, 2005); Boucher v. Shaw, No. CV-S-04-1738-PMP (PAL) (D.Nev. Apr. 11, 2005). The district court concluded that the defendants were not “employers” under Nevada law, Local 226 lacks standing to bring a claim under Nevada law and the plaintiffs cannot maintain a cause of action under the Fair Labor Standards Act against the defendants. Boucher v. Shaw, No. CV-S-04-1738-PMP (PAL), slip op. at 1-2 (D.Nev. Jan. 25, 2005). The plaintiffs challenge each of these conclusions on appeal. We certified the state law question to the Nevada Supreme Court, and stayed the case pending its resolution. The Nevada Supreme Court has answered the state law question, and we incorporate that court’s reasoning into our decision.”

After discussing the holding of Nevada’s Supreme Court, upon referral of the issue from the Ninth Circuit, that Nevada State law does not consider individuals liable for wage law violations of the corporation as “employers,” the Court considered the same issue under the FLSA, and whether such individuals can be liable as employers, despite the bankrupt status of the underlying corporate employer.

“In the case at bar, Ballard has alleged that Defendant Villamor was responsible for handling labor and employment matters at the Castaways; Defendant Shaw was chairman and chief executive officer of the Castaways; and Defendant Van Woerkom was the Castaways’ chief financial officer and had responsibility for supervision and oversight of the Castaways’ cash management. The plaintiff also alleges that Shaw held a 70 percent ownership interest in the Castaways, Villemor held a 30 percent ownership interest and all three defendants had “control and custody of the plaintiff class, their employment, and their place of employment.” ( See Complaint ¶¶ 9-11.) Accepting these allegations of material fact as true, Ballard’s claim withstands a motion to dismiss. See Simon, 546 F.3d at 664.

The defendants do not challenge their status as employers under the FLSA. Rather, they argue that any duty they had to pay wages to Castaways’ employees ended with the conversion of the Castaways’ Chapter 11 bankruptcy proceeding into a Chapter 7 liquidation. The defendants cite no authority for this proposition, but state merely that “[a]ny action under the FLSA is properly directed to the Chapter 7 Trustee and not Shaw, Villamor or Van Woerkom.” (Appellees’ Br. at 14.) Ballard responds that the case was not converted to a Chapter 7 proceeding until February 10, 2004, at least eleven days after she was fired, so that even if the duty to pay wages ceased upon the conversion of the case, the managers were liable up until that point. In supplemental briefing ordered by the court, the defendants do not dispute that the bankruptcy was converted to a Chapter 7 on February 10. Yet they assert that the Castaways “had ceased its operations altogether at the time that Ballard’s wage claim accrued,” which appears to mean that although Ballard is owed wages for the final pay period prior to when the Castaways ceased operating on January 29, her paycheck was not due to be issued to her until afterwards. Ballard argues to the contrary, citing Nev.Rev.Stat. § 608.020, for the proposition that wages and compensation earned and unpaid at the time of discharge are to be paid immediately. We agree. Moreover, the defendants’ subsequent argument that Ballard’s FLSA claim should fail because her wage claim has already been satisfied in the bankruptcy proceeding raises a question of fact not properly resolved on a motion to dismiss.

As a more general matter, we cannot see how it makes a difference one way or the other whether the Castaways was in Chapter 11 or Chapter 7. The Castaways is not a defendant, and the defendants are not debtors. The defendants perhaps assume that the automatic stay or other injunctive power of the bankruptcy court has some effect on the plaintiff’s claim, but they have not shown how that would be.

Section 362 of the Bankruptcy Code embodies the automatic stay, which immediately applies when a debtor files a bankruptcy petition and is designed to preclude a variety of post-petition actions-both judicial and non-judicial-against the debtor or affecting property of the estate. See 11 U.S.C. § 362(a). The automatic stay is fundamental to bankruptcy law. It ensures that claims against the debtor will be brought in one place, the bankruptcy court. The stay protects the debtor by giving it room to breathe and, thereby, hopefully to reorganize. The stay also protects creditors as a group from any one creditor who might otherwise seek to obtain payment on its claims to the others’ detriment. See, e.g., Chugach Forest Prods., Inc. v. Northern Stevedoring & Handling Corp., 23 F.3d 241, 243 (9th Cir.1994) (quoting Hillis Motors, Inc. v. Hawaii Auto. Dealers’ Ass’n, 997 F.2d 581, 585 (9th Cir.1993)).

As a general rule, the automatic stay protects only the debtor, property of the debtor or property of the estate. See 11 U.S.C. §§ 362(a); 541(a) (defining property of the estate); Advanced Ribbons and Office Prods., Inc. v. U.S. Interstate Distrib., Inc., 125 B.R. 259, 263 (9th Cir.BAP1991) (citation omitted); see also Chugach, 23 F.3d at 246. The stay “does not protect non-debtor parties or their property. Thus, section 362(a) does not stay actions against guarantors, sureties, corporate affiliates, or other non-debtor parties liable on the debts of the debtor.” Chugach, 23 F.3d at 246 (citations omitted). We have refused to extend the automatic stay to enjoin claims against a contractor-debtor’s surety, even though a surety bond guarantees the contractor-debtor’s performance. See In re Lockard, 884 F.2d 1171, 1178-79 (9th Cir.1989). In Lockard, we reasoned that extending the stay was inappropriate because the surety, not the contractor-debtor, puts its property directly at risk of liability to creditors in the event of nonpayment by the contractor-debtor, and therefore a surety bond is not property of the bankruptcy estate. Id. at 1178. We found that this was the case even though allowing a claim against the surety would trigger the surety’s right to recourse against the debtor. Id. Similarly, the automatic stay does not protect the property of parties such as officers of the debtor, even if the property in question is stock in the debtor corporation, and even if that stock has been pledged as security for the debtor’s liability. Advanced Ribbons, 125 B.R. at 263.

We have never addressed the question whether a company’s bankruptcy affects the liability of its individual managers under the FLSA. But our case law regarding guarantors, sureties and other non-debtor parties who are liable for the debts of the debtor leaves no doubt about the answer: the Castaways bankruptcy has no effect on the claims against the individual managers at issue here.

This is, in fact, an easier case than our precedent cited supra . Here, the plaintiff’s claim does not seek to reach property of the managers that has been pledged to secure the Castaways’ debt, or that would otherwise impact property of the estate. The individual managers generally are not liable for debts of the debtor, and even if they were, the plaintiff’s statutory claim against the individual managers is unrelated to any of the Castaways’ debts. Nor does the plaintiff seek damages based on an insurance policy held by the debtor. Cf. A.H. Robins Co., Inc. v. Piccinin, 788 F.2d 994, 998-1004 (4th Cir.1986). The plaintiff’s claim is not being used as an alternative route to recoup property of the estate, and therefore cannot be said to be “related to” the bankruptcy proceeding, such that it would be swept into the bankruptcy court’s jurisdiction under 28 U.S.C. § 1334(b). See Celotex v. Edwards, 514 U.S. 300, 307-08, 115 S.Ct. 1493, 131 L.Ed.2d 403 (1995). Neither party has alleged that the estate would be diminished by any judgment in favor of the plaintiff, nor is there any indication in the record that the Castaways would be required to indemnify the individual managers for legal expenses or any judgment against them in this case. Cf. In re Minoco Group of Cos., 799 F.2d 517, 518 (9th Cir.1986) (affirming bankruptcy court’s finding that insurance policy cancellation was automatically stayed because of its impact on debtor’s obligation to indemnify officers and directors). However, if the liability of the non-debtor party were to affect the property of the bankruptcy estate, such as by a requirement that the debtor indemnify the non-debtor or by payment of the liability from a director’s and officer’s insurance policy, it may be necessary for the plaintiff in such a case to proceed against the non-debtor party through bankruptcy proceedings. See id.; A.H. Robins Co., 788 F.2d at 1007-08.

In this case, the parties have not raised any claims that this suit would affect the bankruptcy estate, so we need not reach this question.

To the contrary, the managers are independently liable under the FLSA, and the automatic stay has no effect on that liability. The defendants in their supplementary briefing repeatedly assert that they were unable to find any authority in support of this proposition. We have found at least two cases holding that individual managers can be held liable under the FLSA even after the corporation has filed for bankruptcy. See Donovan v. Agnew, 712 F.2d 1509, 1511, 1514 (1st Cir.1983) (finding managers of bankrupt corporation individually liable under FLSA and noting, “The overwhelming weight of authority is that a corporate officer with operational control of a corporation’s covered enterprise is an employer along with the corporation, jointly and severally liable under the FLSA for unpaid wages.”); Chung v. New Silver Palace, 246 F.Supp.2d 220, 226 (S.D.N.Y.2002) (“The automatic stay … affects only [the debtor]; it does not apply to plaintiff’s [FLSA] claims against the [debtor]‘s non-debtor co-defendants.”).

The district court correctly held that the plaintiffs could not state a claim against the managers for unpaid wages under Nevada law, and therefore correctly dismissed that claim, making the issue of the union’s standing moot. However, the plaintiffs have adequately stated a claim under the FLSA.”

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D.Mass.: Skycaps’ State Law Claims Preempted By Airline Deregulation Act Of 1978 (ADA)

Travers v. JetBlue Airways Corp.

Skycaps, who assist airline passengers with the curbside check-in of their luggage, receive most of their compensation in the form of tips paid by the passengers. The plaintiffs, past and present skycaps for JetBlue Airways Corporation (“JetBlue”), accuse the airline of diverting tip revenue to itself by its imposition of a $2 fee assessed for each bag checked at the curbside (the “curbside check-in fee”). According to the plaintiffs, passengers erroneously believe the $2 fee goes directly to the skycaps because it is cash only, physically collected by the skycaps, and in an amount typically (that is, historically) given as a tip. The plaintiffs allege that the curbside check-in fee has caused their compensation to decrease dramatically because few passengers give a tip in addition to the $2 fee.

The amended complaint asserted claims under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, the Massachusetts Minimum Wage Law, Mass. Gen. Laws ch. 151, §§ 1, 7, the Massachusetts Tips Law, Mass. Gen. Laws ch. 149, § 152A, and state common law claims for tortious interference with contractual and/or advantageous relations and unjust enrichment/quantum meruit. JetBlue has moved to dismiss all state law claims as expressly preempted by the Airline Deregulation Act of 1978 (“ADA”), 49 U.S.C. § 41713(b) (1), or impliedly preempted by the Federal Aviation Act (“FAA”), 49 U.S.C. § 49191 et seq. Alternatively, JetBlue moves to dismiss the tortious interference and unjust enrichment claims for failure to state a claim.

The Court discussed preemption under the ADA in general stating, “All preemption challenges “ultimately turn[ ] on congressional intent,” Good v. Altria Group, Inc., 501 F.3d 29, 33 (1st Cir.2007), and the “primary indicator of intent is the text of the congressional act claimed to have the preemptive effect,” id. at 34.

The ADA’s preemption provision states: “[A] State … may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier….” 49 U.S.C. § 41713(b)(1) (emphasis added). Relying on the words “related to,” the Supreme Court has emphasized that the ADA expresses a broad preemptive purpose. Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384 (1992); see Altria Group, Inc. v. Good, 129 S.Ct. 538, 547 (2008) (recognizing the “unusual breadth of the ADA’s preemption provision”). State law claims are “related to” an airline’s prices, routes, or services, and thus preempted, if the state law either, on its face, “explicitly refers to” or, in application, has a “significant effect” on an airline’s prices, routes, or services. Buck v. Am. Airlines, Inc., 476 F.3d 29, 34 (1st Cir.2007); United Parcel Serv., Inc. v. Flores-Galarza, 318 F.3d 323, 335 (1st Cir.2003). On the other hand, state law claims having only a “tenuous, remote, or peripheral” relationship to an airline’s prices, routes, or services are not preempted. Morales, 504 U.S. at 390. Evaluation of this relationship centers “on the effect that the state law has on airline operations,” not on “the state’s purpose for enacting the law.” N.H. Motor Transp. Ass’n v. Rowe, 448 F.3d 66, 78 (1st Cir.2006) (emphasis in original).”

Turning to the facts in the case before it, the Court said, “[t]he question here, therefore, boils down to this: Are the plaintiffs’ state law claims “related to” JetBlue’s prices, routes, or services? The answer seems obvious. The plaintiffs seek to impose liability under the Massachusetts statutory and common law claims for JetBlue’s action in setting (and collecting) a price for a service provided to its customers. To avoid liability under the state claims, JetBlue would have to alter its decisions about its price and services. Potential liability under the state claims, therefore, is a means by which the State effectively regulates JetBlue’s price and service with respect to curbside check-in.

The plaintiffs’ own argument necessarily acknowledges that their claims “relate to” JetBlue’s price for the curbside baggage check-in. They claim not to challenge the existence of JetBlue’s curbside check-in fee, but only the manner in which the fee is collected (i.e., cash-only, by the skycaps, and in an amount typically given as a tip). Two alternatives, which preserve skycap tip income, are proposed by the plaintiffs: JetBlue could charge the $2 fee either when passengers purchase their tickets or during self-check-in, and then list the charges as “baggage handling fees” on the passengers’ receipts. (See Pls.’ Opp’n to Def. JetBlue Airways Corp.’s Mot. to Dismiss 10 n.8.) To propose these two alternatives is to implicitly acknowledge that their state law claims are a vehicle for regulating JetBlue’s assessment and collection of a fee for the curbside check-in service. The question, however, is not whether such regulation would be beneficial or desirable, but whether it is permitted in light of the ADA’s broad preemption of any state regulation of an airline’s “prices” or “services.”

Furthermore, any argument that the state law claims here have no more than a “tenuous, remote, or peripheral” relationship to JetBlue’s prices or services is belied by the plaintiffs’ own complaint. They seek not only money damages for past wrongs, but also injunctive relief “ordering Defendants to cease their violations of the law.”(Am.Compl.10.) Whether indirectly, by threat of liability for money damages, or directly, by injunctive order, the plaintiffs’ broader goal is to compel JetBlue to change its practices with respect to the imposition and collection of the curbside check-in fee. That relationship to JetBlue’s prices and services is not “tenuous, remote, or peripheral.

In sum, the ADA preempts the plaintiffs’ state law claims. The defendant’s Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6) ( dkt. no. 46) is GRANTED. Counts II-V of the amended complaint are dismissed as against JetBlue.”

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11th Cir.: Bus Drivers Exempt From FLSA Under Motor Carrier (MCA) Exemption; Bus Company’s Airport-to-Seaport Shuttle Routes Shared A Practical Continuity Of Movement Due To Interstate Travel Of Cruise Line Customers Shuttled

Walters v. American Coach Lines Of Miami, Inc.

This appeal required the Court to determine whether Appellants, who are all current or former bus drivers for American Coach Lines of Miami (“ACLM”), were subject to a provision in the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et seq., exempting from the FLSA’s overtime requirements any employees who fall under the jurisdiction of the Secretary of Transportation under the Motor Carrier Act (“MCA”). The district court found Appellants to be eligible for this “motor carrier” exemption and therefore granted the portion of ACLM’s motion for summary judgment addressing Appellants’ claims for overtime wages. After reviewing the record and the parties’ briefs and hearing oral argument, we AFFIRM the grant of summary judgment.

The Court stated the relevant facts to its inquiry as follows:

“ACLM is a private motor carrier providing for-hire ground transportation for passengers that holds itself out to be an “interstate” motor carrier. It is licensed with the United States Department of Transportation (“DOT”), holds all the authorizations from the Federal Motor Carrier Safety Administration (“FMCSA”) necessary to be an interstate passenger motor carrier, and has been issued a DOT number. Since 2004, federal transportation agencies have audited ACLM at least twice, on at least one occasion in combination with Florida authorities. ACLM also requires its drivers to meet DOT safety standards, which Florida has adopted as well. See
Fla. Stat. § 316.302. ACLM does not pay its drivers overtime wages.

ACLM primarily provides transportation within the state of Florida, though some of its business is between Florida and other states. Much of ACLM’s revenue comes from shuttling cruise ship passengers between the Miami and Fort Lauderdale airports and local hotels and cruise ship ports. Since September 2006, ACLM has had a written contract to be the sole provider of such transportation for Royal Caribbean Cruise Lines (“Royal Caribbean”) during daytime hours. ACLM asserts that between April 2006 and December 2007 it transported more than 500,000 Royal Caribbean passengers, trips that resulted in over $4.4 million in revenues. Appellants contend that there is no proof that ACLM provided such transport prior to September 2006, though they appear not to dispute the total revenue figure. In addition to this written arrangement with Royal Caribbean, ACLM maintains that it earned over $700,000 from earlier informal agreements to provide similar shuttle transportation for Costa Cruises and Princess Cruises. Appellants likewise dispute the existence of such arrangements.

Under ACLM’s contract with Royal Caribbean, it provides ground transportation for passengers who book vacation packages through travel agents or Royal Caribbean. For those passengers, ground transportation is included as part of the overall package and is not priced or itemized separately. Passengers who do not pre-purchase ground transportation can request shuttle service when they arrive at the airport or cruise ship terminal, which will then be charged to that passenger’s Royal Caribbean account.  Under the agreement, Royal Caribbean provides ACLM with weekly manifests listing the expected time, date, and number of passengers for each shuttle trip. Royal Caribbean employees greet passengers on arrival, contact ACLM when a bus is required, and collect vouchers from passengers before they board the bus. Royal Caribbean does not keep the vouchers nor does it give them to ACLM; rather, it gives ACLM a “load slip” with a head count for each trip. ACLM then uses these load slips to invoice Royal Caribbean for the trips. The agreement stated that ACLM would receive payment only if a passenger actually boarded the bus, with Royal Caribbean deciding whether to pay based on a per-person or per-bus rate. FN2 As a result, ACLM receives all of its payments from Royal Caribbean, rather than the passengers.

In addition to these local shuttle services, ACLM also provided other forms of in-state and out-of-state motor coach transportation, including driving shuttle bus routes at the University of Miami. Between 2004 and 2007, ACLM drivers made at least 148 trips that involved out-of-state travel, some for as long as 90 days. Both parties agree that approximately $1.7 million, or 4.06% of ACLM’s total revenue during that period, came from these out-of-state trips and that about 19% of its drivers made such trips. There appear to have been 75 ACLM drivers who made out-of-state trips during the time frame, which constitutes 19.08% of the 393 drivers employed by ACLM for that period.FN5 Nine of the 63 Appellants (14.29%) made out-of-state trips for ACLM, and Appellants spent less than 286 days on such trips during the period in question. ACLM does not keep records of how many trips its drivers make on a daily or annual basis, and there is no solid evidence regarding how many overall trips ACLM drivers made between 2004 and 2007 nor of what percentage of those trips involved out-of-state travel. One ACLM executive agreed that 10,000 total trips a year would be a reasonable estimate. He stated that, if this estimate were correct, then around 100 of those trips would involve out-of-state travel, which would mean that approximately 1% of ACLM’s total trips were out of state.”

After finding that the Defendant was a “motor carrier” the Court turned its inquiry to that of whether Plaintiffs were covered by the MCA. “Courts are ‘guided by practical considerations’ in determining whether an employee’s activities would be part of interstate commerce for purposes of the FLSA. Marshall v. Victoria Transp. Co., Inc., 603 F.2d 1122, 1123 (5th Cir.1979) (quotation marks and citation omitted). “When persons or goods move from a point of origin in one state to a point of destination in another, the fact that a part of that journey consists of transportation by an independent agency solely within the boundaries of one state does not make that portion of the trip any less interstate in character.”United States v. Yellow Cab Co., 332 U.S. 218, 228, 67 S.Ct. 1560, 1566, 91 L.Ed. 2010 (1947), overruled on other grounds by Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984). As a result, purely intrastate transportation can constitute part of interstate commerce if it is part of a “continuous stream of interstate travel.” Chao v. First Class Coach Co., Inc., 214 F.Supp.2d. 1263, 1272 (M.D.Fla.2001). For this to be the case, there must be a “practical continuity of movement” between the intrastate segment and the overall interstate flow. Walling v. Jacksonville Paper Co., 317 U.S. 564, 568, 63 S.Ct. 332, 335, 87 L.Ed. 460 (1943); see also Bilyou v. Dutchess Beer Distribs., Inc., 300 F.3d 217, 223 (2d Cir.2002) (applying this standard in analyzing applicability of motor carrier exemption).

In Marshall, we addressed a city bus service in Brownsville, Texas, which often transported people who had walked across the Mexican border before boarding the bus. See Marshall, 603 F.2d at 1123-24. We characterized the transportation of people making international journeys as “a regular, recurring and substantial part” of the bus drivers’ overall workload. Id. at 1125. Because the drivers’ work thereby was “entwined with a continuous stream of international travel,” we concluded that the drivers were engaged in interstate commerce, even though their routes were solely intrastate. Id. The Supreme Court reached a similar conclusion in United States v. Capital Transit Co., 338 U.S. 286, 70 S.Ct. 115, 94 L.Ed. 93 (1949). That case involved a bus service that drove routes within the District of Columbia that took commuters to locations where they then could board buses bound for Virginia. See id. at 288, 70 S.Ct. at 116. The Court found that the Interstate Commerce Commission (“ICC”) had regulatory authority under the MCA over those intra-district bus routes because they were “part of a continuous stream of interstate transportation” and thus formed “an integral part of an interstate movement.” Id. at 290, 70 S.Ct. at 117.

These cases indicate that ACLM’s airport-to-seaport routes would come under the Secretary’s MCA jurisdiction. Its shuttle trips share a practical continuity of movement with the interstate or international travel of the cruise lines and their passengers, just as the Brownsville bus routes did for their riders’ cross-border journeys. For cruise ship passengers arriving at the airport or seaport, ACLM’s shuttle rides would be part of the continuous stream of interstate travel that is their cruise vacation. The Royal Caribbean patrons in particular would have no reason to have any alternate view since the fee for the shuttle ride would either be bundled as part of their cruise vacation package or would be included on the bill for their Royal Caribbean shipboard account.”

The Court shot down each of Plaintiffs arguments that they were not subject to the MCA. The Court said: (1) application of the MCA did not require travel in interstate trips; (2) the incidental-to-air exemption was inapplicable; and (3) Defendants were not required to have a “through-ticketing” arrangement with the cruise line to argue that the passengers were all moving in the continuity of interstate commerce.

Therefore, the Court found that under the circumstances, the bus drivers were not entitled to the benefits of the FLSA, because they were exempt under the Motor Carrier Act (MCA) exemption to the FLSA.

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5th Cir.: FLSA Does Not Require Employer To Reimburse H-2B Visa Workers’ Recruitment, Transportation or Visa Expenses, Absent Showing of “Kick-Back” To Recruiter

CASTELLANOS-CONTRERAS v. DECATUR HOTELS LLC

The aftermath of Hurricane Katrina required New Orleans hotelier Decatur Hotels, L.L.C. (“Decatur”) to look to foreign sources of labor. A group of these employees (collectively, the “guest workers”), who held H-2B visas while working for Decatur, contend that Decatur violated the Fair Labor Standards Act (“FLSA”) by paying them less than minimum wage, free and clear, when Decatur refused to reimburse them for recruitment, transportation, and visa expenses that they incurred before relocating to the United States to work for Decatur.

Decatur filed a motion to dismiss and/or for summary judgment, and the guest workers filed a cross-motion for summary judgment. The district court denied Decatur’s motion, granted the guest workers’ motion in part, and certified its order for interlocutory appeal. A motions panel of this court authorized Decatur to file an interlocutory appeal. In this interlocutory appeal under 28 U.S.C. § 1292(b), Decatur raised three issues of first impression for this court: whether, under the FLSA, an employer must reimburse guest workers for (1) recruitment expenses, (2) transportation expenses, or (3) visa expenses, which the guest workers incurred before relocating to the employer’s location. The 5th Circuit held that the FLSA does not require an employer to reimburse any of these expenses, and reversed the district court’s order, and rendered judgment in favor of Decatur. The Court discussed each of the three reimbursement claims (recruitment costs, transportation and visa expenses) and found that none created a FLSA obligation on behalf of the employer.

“The guest workers contend that they are entitled to reimbursement because, under 29 U.S.C. § 203(m), the expenses they incurred are de facto deductions from cash wages received for their first week of work, leaving a balance owed them by Decatur. In other words, they liken these expenses (in an inverse way) to employer-furnished “facilities,” such as room and board, which the employer may deduct from an employee’s wages; only here, the guest workers contend that Decatur must reimburse them for expenses that they incurred before their first workweek began.

Section 203(m) defines wages as cash or “the reasonable cost … to the employer of furnishing [the] employee with board, lodging, or other facilities, if such board, lodging, or other facilities are customarily furnished by such employer to his employees.” (Emphasis added.) The provision’s plain language thus permits employers flexibility in the method of paying employees. This section of the FLSA, contrary to the guest workers’ suggestion, does not impose liability upon employers for expenses that employees incur. See Donovan v. Miller Props., Inc., 711 F.2d 49, 50 (5th Cir.1983) (per curiam) (“[S]ection 3(m) of the Fair Labor Standards Act, 29 U.S.C. § 203(m), … allows an employer to credit toward its obligation to pay the minimum wage ‘the reasonable cost … of furnishing [an] employee with board, lodging, or other facilities’ ….”) (emphasis added). Section 203(m) provides no ground for Decatur to have violated the FLSA by refusing to reimburse the guest workers for recruitment, transportation, and visa expenses that they incurred.

We thus turn to the argument that Decatur’s failure to pay these pre-employment expenses encumbered the guest workers’ wages, so that Decatur did not pay the wages “finally and unconditionally or ‘free and clear’ “:

Whether in cash or in facilities, “wages” cannot be considered to have been paid by the employer and received by the employee unless they are paid finally and unconditionally or “free and clear.” The wage requirements of the Act will not be met where the employee “kicks-back” directly or indirectly to the employer or to another person for the employer’s benefit the whole or part of the wage delivered to the employee. This is true whether the “kick-back” is made in cash or in other than cash. For example, if it is a requirement of the employer that the employee must provide tools of the trade which will be used in or are specifically required for the performance of the employer’s particular work, there would be a violation of the Act in any workweek when the cost of such tools purchased by the employee cuts into the minimum or overtime wages required to be paid him under the Act.
29 C.F.R. § 531.35.

The above-quoted regulation does not define when an employee-incurred expense constitutes a kick-back. Our precedents, however, clarify that an employer-imposed condition of employment is a kick-back if it “tend[s] to shift part of the employer’s business expense to the employees.” Mayhue’s Super Liquor Stores, Inc. v. Hodgson, 464 F.2d 1196, 1199 (5th Cir.1972).

We now consider whether, under 29 C.F.R. § 531.35, the guest workers are entitled to reimbursement of their recruitment, transportation, or visa expenses.

We begin with the visa expenses. Although § 531.35 does not specifically address employers’ obligation to reimburse guest workers for these expenses, other regulations clarify that employee-paid expenses to obtain H-2B visas more properly belong to the guest worker than to the employer. See
22 C.F.R. §§ 40.1( l )(1) (requiring nonimmigrant visa applicants, such as the guest workers here, to submit processing fees when they apply for visas). The expense of applying to become a sponsoring employer of H-2B employees, by contrast, more properly belongs to the employer. See
8 C.F.R. §§ 103.7(a), 103.7(b)(1), 214.2(h)(2)(i)(A) (requiring, collectively, that a U.S. employer submit certain forms and filing fees to become an H-2B visa sponsor). These regulations, which assign H-2B visa processing fees to visa applicants and H-2B sponsorship-application fees to employers, show that requiring the guest workers to bear the visa expenses at issue did not tend to shift part of Decatur’s business expense to the guest workers. We hold that Decatur has no FLSA responsibility to reimburse the guest workers for the visa expenses that the employees incurred.

We next consider the transportation expenses. For many years, the Department of Labor interpreted the FLSA and its implementing regulations as requiring employers to bear guest workers’ inbound transportation expenses. See Wage & Hour Div. Op. Ltr., 1990 DOLWH LEXIS 1, at *3 (June 27, 1990) (“Under the FLSA, it has always been the position of the Department of Labor that no deduction, that cuts into the minium wage, may be made for transportation of workers from the point of hire and return to that point…. [S]uch transportation costs [are] primarily for the benefit of the employer.”). The agency, however, has called this interpretation into question. See Labor Certification Process and Enforcement for Temporary Employment in Occupations Other Than Agriculture or Registered Nursing in the United States (H-2B Workers), and Other Technical Changes, 73 Fed.Reg. 78020, 78041 (Dec. 19, 2008) (“[T]he cost[ ] of relocation to the site of the job opportunity generally is not an ‘incident’ of an H-2B worker’s employment within the meaning of 29 CFR 531.32, and is not primarily for the benefit of the H-2B employer.”); Withdrawal of Interpretation of the Fair Labor Standards Act Concerning Relocation Expenses Incurred by H-2A and H-2B Workers, 74 Fed.Reg. 13261, 13262 (Mar. 26, 2009) (“DOL believes that this issue warrants further review. Consequently … DOL withdraws the [December 19, 2008,] FLSA interpretation … for further consideration and the interpretation may not be relied upon as a statement of agency policy ….” (footnote omitted)); see also De Luna-Guerrero v. N.C. Grower’s Ass’n, 338 F.Supp.2d 649, 659 (E.D.N.C.2004) (“[T]he issue [of an employer's liability for transportation expenses] has been under review by the DOL…. DOL’s policy regarding de facto deductions [of transportation expenses] is anything but clear.”); Rivera v. Brickman Group, Ltd., 2008 U.S. Dist. LEXIS 1167, at *37-39 (E.D.Pa. Jan. 7, 2008) (“The DeLuna-Guerrero court refused to rely on the opinion letters because it believed the Department of Labor’s position to be too unclear. I agree, and in so doing, I note that the Department of Labor’s position is not merely unclear, but untenable. * * * Given the apparent (and now more than thirteen-year-old) incoherence at the Department of Labor with regard to this issue, I am not persuaded that I should accord the older opinion letters any significant weight [under Auer v. Robbins, 519 U.S. 452 (1997), or Skidmore v. Swift & Co., 323 U.S. 134 (1944) ].”).

We agree with the Rivera court that Auer deference to the DOL’s older interpretation seems inappropriate. Furthermore, inasmuch as the DOL never fully explained why it adopted that interpretation in the first place, we agree with the Eleventh Circuit that Skidmore deference seems inappropriate. See Arriaga v. Fla. Pac. Farms, 305 F.3d 1228, 1239 (11th Cir.2002) ( “Because of this lack of explanation, it is impossible to weigh the ‘validity of its reasoning’ or the ‘thoroughness [ ] in its consideration.’ ” (quoting Skidmore, 323 U.S. at 140) (alteration in original)). Relying on case law that defers to the interpretation similarly seems inappropriate, and thus we can accord no weight to the guest workers’ cited authorities such as Marshall v. Glassboro Service Ass’n, 1979 U.S. Dist. LEXIS 9053, at *6 (D.N.J. Oct. 19, 1979); and Torreblanca v. Naas Foods, Inc., 1980 U.S. Dist. LEXIS 13893, at *13 (N.D.Ind. Feb. 25, 1980).

As is the case with visa expenses, the regulation addressing employer kick-backs does not specify whether an H-2B guest worker’s inbound transportation expenses belong more properly to the employer or to the guest worker. Other statutory and regulatory provisions may guide this determination.

Two provisions have some relevance. Under the Immigration and Nationality Act, an H-2B guest worker’s outbound transportation expenses sometimes belong to the employer. See 8 U.S.C. § 1184(c)(5)(A).FN4 Under U.S. Citizenship and Immigration Service regulations, an H-2A agricultural guest worker’s inbound transportation expenses sometimes belong to the employer. See 20 C.F.R. § 655.102(b)(5)(i). No provision, however, requires an employer to bear an H-2B guest worker’s inbound transportation expenses. We find silence in this context indicative that Congress most likely did not intend for the employer to bear H-2B guest workers’ inbound transportation expenses.FN5

The guest workers do cite two cases which, without relying on the DOL’s now-unclear FLSA interpretation, hold that employers must bear guest workers’ inbound transportation expenses. See Arriaga, 305 F.3d at 1244 (11th Cir.2002); Rivera, 2008 U.S. Dist. LEXIS 1167, at *42-44. Arriaga involves H-2A guest workers. It holds that employers must bear guest workers’ inbound transportation expenses because the expenses are “incident of and necessary to” the guest workers’ employment. See 305 F.3d at 1241-44. We find Arriaga distinguishable insofar as its analysis derives from the case’s H-2A, as opposed to H-2B, origins. Arriaga also is distinguishable because its “incident of and necessary to” standard originates from 29 C.F.R. § 531.32 instead of § 531.35. Section 531.32 implements 29 U.S.C. § 203(m); and, as we have said, our Donovan precedent from 1983 informs us that, under Fifth Circuit law, § 203(m) imposes no obligation on employers to bear employee-incurred expenses. We will not follow Arriaga.

Rivera essentially does follow Arriaga, albeit in the H-2B context. Rivera quotes 29 C.F.R. § 531.35 at length, 2008 U.S. Dist. LEXIS 1167, at *36-37, but ultimately decides the issue of transportation expenses under 29 U.S.C. § 203(m): “point-of-hire transportation is primarily for the employer’s benefit, both because it is dissimilar to lodging and board, and because the expense arises out of Brickman’s decision actively to recruit workers in foreign countries.” Id. at *43. We do not necessarily agree with Rivera that Arriaga ‘s reasoning extends so readily from H-2A guest workers to H-2B guest workers. In any event, Donovan forecloses us from following Rivera ‘ s § 203(m)-based analysis. Just as we will not follow Arriaga, we will not follow Rivera.

On the authorities before us, we hold that the FLSA does not obligate Decatur to reimburse its guest workers for their inbound transportation expenses.FN6

Finally, we consider whether the FLSA obligates Decatur to reimburse its guest workers for the expenses that they incurred with foreign recruitment companies. The FLSA’s provisions do not require reimbursement of these employee-incurred expenses. See
29 U.S.C. § 201 et seq. Neither do the FLSA’s implementing regulations-unless the expenses were “kick-backs” to Decatur. See 29 C.F.R. § 531.35.

We hold that the recruitment expenses were not kick-backs within the meaning of § 531.35. The expenses differed in all fundamental characteristics from the expenses that our court has labeled kick-backs. See Mayhue’s Super Liquor Stores, Inc. v. Hodgson, 464 F.2d 1196, 1199 (5th Cir.1972) (deduction from cashiers’ wages to pay for every shortage in employer cash-register accounts, regardless of the reason for the shortage); Brennan v. Veterans Cleaning Serv., Inc., 482 F.2d 1362, 1370 (5th Cir.1973) (employee’s wage deduction in favor of employer to recover the cost of a wrecked company truck). The expenses were not treated as an employer obligation by custom or practice of Decatur’s industry. In sum, there is no basis in custom, practice, or law to include the recruitment expenses as part of Decatur’s business expense.

Our attention, however, has been brought to two relatively new regulations that for the first time address unscrupulous practices in recruiting workers to participate in the H-2B visa program. Effective January 18, 2009, the Department of Labor requires an employer seeking H-2B labor certification to attest that “[t]he employer has contractually forbidden any foreign labor contractor or recruiter whom the employer engages in international recruitment of H-2B workers to seek or receive payments from prospective employees, except as provided for in DHS regulations at 8 CFR 214.2(h)(5)(xi)(A).” 20 C.F.R. § 655.22(g)(2). Also effective January 18, 2009, the Department of Homeland Security forbids an employer, employer’s agent, recruiter, or similar employment service from collecting any “job placement fee or other compensation (either direct or indirect)” from a foreign worker as a condition of an H-2B job offer or as a condition of H-2B employment. 8 C.F.R. § 214.2(h)(6)(i)(B).FN7 These regulations ultimately may influence whether H-2B employers will reimburse the recruitment expenses of future guest workers, but they do not affect Decatur’s obligations here. See, e.g., Sierra Med. Ctr. v. Sullivan, 902 F.2d 388, 392 (5th Cir.1997) (“Generally, courts will not apply regulations retroactively unless their language so requires.”); 20 C.F.R. § 655.5 (indicating, by creating a transition period for implementing the Department of Labor’s January 2009 changes to 20 C.F.R. part 655, that the changes do not apply retroactively); 73 Fed.Reg. 78103, 78127-30 (Dec. 19, 2008) (giving no indication that the Department of Labor’s January 2009 changes to 8 C.F.R. part 214 apply retroactively). Furthermore, because the regulations for the first time forbid an H-2B employer from permitting guest workers to bear such recruitment expenses, they strongly suggest that the guest workers’ recruitment expenses incurred long before the regulations became effective were not part of Decatur’s business expense.

Finally, our conclusion is not disturbed by the one case that the guest workers cite holding recruitment expenses can be part of an employer’s business expense. See Rivera, 2008 U.S. Dist. LEXIS 1167, at *47-*50. The employer there, Brickman, required guest workers to hire a particular recruitment company, which charged them fees. See id. at *48-*49. Because the employer required the guest workers to use the recruitment company, the court concluded “that fees associated with Brickman-designated workers’ representatives [we]re costs ‘primarily for the benefit of the employer,’ and that Brickman, therefore, was not allowed to pass those costs along [to the guest workers] to the extent that doing so reduced their wages below the FLSA minimum.” Id. at *50.

Assuming the correctness and continued validity of that case’s reasoning, the case is distinguishable. Here, there is no evidence that Decatur even knew about the foreign recruitment companies, much less that the companies charged a fee to the guest workers as a condition of receiving an offer of employment. Decatur paid Pickering $300 per job position filled, which itself was in the nature of an employer-paid recruitment fee. Although the record does show that the guest workers knew of no other way to obtain employment with Decatur, the record also shows that Decatur did not require, or approve, any guest worker to pay any sum to anyone as a condition of an H-2B job offer or as a condition of H-2B employment.

For all of the foregoing reasons, we hold that the FLSA does not obligate Decatur to reimburse the guest workers for their recruitment expenses.

In sum, we hold that Decatur incurred no FLSA liability to reimburse its guest workers for the recruitment fees, transportation costs, or visa fees that they incurred to work in the United States. We REVERSE the summary judgment, RENDER judgment in favor of Decatur, and REMAND for entry of same.”

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NPR Asks Whether Friday’s Minimum Wage Increase Will Mean More Money Or Fewer Jobs?

The following was excerpted from NPR.org.  To read the full article go to NPR.org.

“This Friday, the federal minimum wage will rise to $7.25 an hour, up from $6.55.

Conservative economists are worried that the government-mandated raise will force small businesses to lay off workers. They note that the job market has deteriorated since Congress approved the 10.7 percent pay raise two years ago. In the summer of 2007, the U.S. unemployment rate was running at about 4.7 percent. Today, it is 9.5 percent. Mandating higher wages could force some employers to cut jobs, the argument goes.

But liberal economists say this summer is the perfect time for a wage hike: It will put more money into the pockets of people who need it most. Fatter paychecks will stimulate spending and help the economy, they say. Kai Filion, a policy analyst for the Economic Policy Institute, a left-leaning research group, says this wage hike will generate $5.5 billion in consumer spending over the next 12 months.”

To read the full article go to NPR.org.

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N.D.Cal.: Internal Complaint Regarding Sick Leave Not Protected From Retaliation Under 29 U.S.C. § 215(a)(3), Because Sick Leave Not Covered By The FLSA

Byrd v. California Superior Court, County of Marin

Among the issues before the Court, was whether a request for sick leave, and alleged retaliation resulting therefrom is protected under section 215 of the FLSA, the anti-retaliation provision.  Finding that it is not, the Court explained,

Defendant argues that section 215 of the FLSA is inapplicable to this case because plaintiff’s internal complaint concerned sick leave, for which there is no provision in the FLSA. Section 215(a)(3) provides that it is unlawful “[t]o discharge or in any manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this act.”29 U.S.C. § 215(a)(3).

The FLSA covers wage and hour violations and is intended as a “remedial statute.” Lambert v. Ackerley, 180 F.3d 997,1007 (9th Cir.1990). FLSA must “not be interpreted or applied in a narrow, grudging manner.” Id. at 1003,citing Tenn. Coal, Iron & R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 597 (1944).Section 215 was enacted to ensure that employees who lodge complaints could do so free of fear of economic retaliation. Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288, 292-93 (1960).

The internal complaint at issue concerned allegations of harassment and discrimination in response to plaintiff’s taking sick leave. Sick leave is not explicitly covered under the FLSA. FLSA cases concern, by and large, monetary compensation, or other compensation only insofar as it can be translated into monetary compensation. See, e.g., Lambert, 180 F.3d at 1010 (concerning overtime compensation); Acton v. City of Columbia, 436 F.3d 969 (8th Cir.2006) (holding that sick leave “buy back” monies should be included in employee’s regular rate of pay under FLSA) reh’g denied; cf. Featsent v. City of Youngstown, 70 F.2d 1456 (6th Cir.1995) (holding that sick leave “buy back” monies should not be included in an employee’s regular rate of pay under FLSA). From the available cases, interference with the sick leave claim alleged here does not “relate to” the FLSA. Accordingly, harassment and discrimination as a result of taking sick leave would also not be “related to” the FLSA.

Based on the complaint as filed, the court does not believe that plaintiff can allege any facts that would bring her internal complaint concerning harassment and discrimination in response to her taking sick leave within the purview of section 215. Even if plaintiff’s internal complaint could be construed to be a complaint about “interference with” sick leave, which was not alleged until after she filed her instant complaint (see Compl. ¶ 38), such allegations are still not under or related to the FLSA. Accordingly, the Superior Court’s motion to dismiss plaintiff’s thirteenth cause of action is GRANTED without leave to amend.”

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W.D.Pa.: Although FLSA Does Not Provide Coverage For Work Performed In Foreign Countries, Pennsylvania Wage And Collection Act (PMWA) Does

Truman v. DeWolff, Boberg & Associates, Inc.

Plaintiff commenced this action against Defendant alleging violations of section 16(b) of the Fair Labor Standards Act of 1938 (“FLSA”) 29 U.S.C. 216(b); the Pennsylvania Minimum Wage Act of 1968 (“PMWA”) 43 P.S. §§ 333.101-333.115; and the Pennsylvania Wage Collection Act of 1961, 43 Pa. Cons.Stat. Ann. §§ 260.1-260.45. Before the Court is Defendant’s motion for Partial Summary Judgment seeking dismissal of Mr. Truman’s claim that he is due overtime pay under the FLSA for the period of time he worked outside of the United States. Defnedant filed a Reply to Mr. Truman’s Response arguing for the first time that Mr. Truman was also not entitled to overtime payments under the PMWA for the period of time he worked in foreign countries. Thereafter, Plaintiff filed a Sur-Reply opposing the imposition of Partial Summary Judgment to his PMWA claim. The Court denied the motion for Partial Summary Judgment with regards to the PMWA claim.

After discussing the statutory basis for granting Defendant’s Motion regarding the FLSA and the foreign work, the Court turned to Plaintiff’s claims for the same work under the PMWA, stating, “[t]he Pennsylvania Minimum Wage Act guarantees that employees will be paid one and one-half times their regular rate for any overtime worked. 43 P.S. § 333.104(c). Exemptions to this statutory provision are recorded in 43 P.S. § 333.105. Unlike the FLSA, the PMWA does not contain an explicit exemption for work performed outside of the United States. However, the PMWA has been construed to extend its protections to employees who work outside of Pennsylvania. Friedrich v. U.S. Computer Systems, Inc., 1996 WL 32888 (E.D.Pa. Jan.22, 1996). In Friedrich the Court permitted the PMWA to apply to Pennsylvania-based employees who perform work in states outside of Pennsylvania. 1996 WL 32888, at *8-9. Allowing employees who perform work outside of Pennsylvania to benefit from the PMWA is in accord with the PMWA’s Declaration of Policy. 43 P.S. § 333.101 (“Employes employed in such occupations are not as a class on a level of equality in bargaining with their employers in regard to minimum fair wage standards … wages in such occupations are often found to bear no relation to the fair value of the services rendered”). Thus, there is nothing within the PMWA that restricts the benefits of the PMWA to work performed within the United States.

The FLSA does not preempt state minimum wage acts from offering greater protection to state employees than does the FLSA. For example, the FLSA states that, “[n]o provision of this Act … or of any order thereunder shall excuse noncompliance with any Federal or State law or municipal ordinance establishing a minimum wage higher than the minimum wage established under this Act.”29 U.S.C. § 218(a). Additionally, several courts have found that explicit FLSA exemptions do not preempt state laws from offering state employees greater protections than FLSA. See e.g., Pacific Merchant Shipping Ass’n v. Aubry, 918 F.2d 1409, 1417 (9th Cir.1990) (“We hold that [29 U.S.C.] section 213(b)(6) does not preempt California from applying the state’s overtime pay laws to FLSA-exempt seamen working off the California coast.”); Pennsylvania Dept. of Labor and Industry v. Whipple, 1989 WL 407328, at *3 (Pa.Com.Pl., 1989) (Overtime exemptions under FLSA “do not affect coverage under Pennsylvania Minimum Wage Act”); Ploufe v. Farm & Ranch Equip. Co., 174 Mont. 313, 320, 570 P.2d 1106 (Mont.1977) (holding that FLSA did not preempt Montana from regulating overtime and wages under the Montana Minimum Wages and Hours Act). In light of the FLSA’s explicit recognition that states may offer greater protections to its employees than the FLSA, we are reluctant to find an unstated foreign-work exemption in the PMWA based solely on the fact that the FLSA contains such an exemption. Baum v. Astrazeneca LP, 605 F.Supp.2d 669, 674 (W.D.Pa.2009) (finding that “[b]ecause the FLSA is a remedial act, the exemptions are typically narrowly construed”).

In Williams v. W.V.A. Transit Co., 472 F.2d 1258 (D.C.Cir.1972), the Court of Appeals for the District of Columbia found that the District of Columbia Minimum Wage Act was not limited by an explicit FLSA exemption:

[A]n employee does not lose his status of being employed in the District merely because he receives an assignment, for a relatively short period, that calls on him to spend all his time for that period at some location outside the District. Otherwise, that status would be lost or suspended through relatively isolated or occasional employment outside the District, and from the common sense of the matter we conclude that this is not the legislative intent. 472 F.2d at 1265-1266. As in Williams, we find that, although there is an applicable FLSA exemption, we cannot find an implied foreign work exemption in the PMWA to remove coverage from Pennsylvania residents who have been given assignments outside of Pennsylvania. If the Pennsylvania legislature had wanted to exempt foreign work from the PMWA it could have expressly included that exemption within the PMWA. See Friedrich, 1996 WL 32888, at *5 (“The Pennsylvania legislature enacted the PMWA to protect those employees who do not benefit from federal protection [under the FLSA].”) Our conclusion is in accord with the FLSA and its regulations that permit state laws to offer greater protections than the FLSA. See29 U.S.C. 218(a) (Section 218“expressly contemplates that workers covered by state law as well as FLSA shall have any additional benefits provided by the state law higher minimum wages; or lower maximum work week.” Williams, 472 F.2d at 1261);29 C.F.R. § 778.5 (“[n]othing in the act, the regulations or the interpretations announced by the Administrator should be taken to override or nullify the provisions” of state and local laws.)

In support of its argument that the FLSA and PMWA should have an identical analysis, DBA relies on Paul v. UPMC Health Sys., C.A. No. 06-1565, 2009 WL 699943 (W.D.Pa. Mar.10, 2009). In Paul, the defendant argued that the plaintiff was properly classified as an administrative employee and was therefore exempt from the overtime requirements under both the FLSA or the PMWA. The Paul Court noted that the “administrative exemptions” set forth in both the FLSA and PMWA are identical, and therefore only analyzed “the applicability of the administrative exemption to plaintiff’s FLSA claim,” noting that “the same analysis, however, also applies to plaintiff’s PMWA claim.” 2009 WL 699943, at *8, n. 1. The Paul Court applied an identical analysis only because both Acts contain express administrative exemptions. The Paul case does not address the circumstance when the FLSA contains an explicit exemption and the PMWA contains no corresponding exemption.

DBA’s reliance on Mitchell v. Abercrombie & Fitch, No. C2-04-306, 2005 WL 1159412 (S.D.Ohio May 17, 2005) is also misplaced. The Mitchell case concerned application of the Ohio Minimum Fair Wage Standards Act to a plaintiff who not only did all of his work outside of Ohio, but also did not reside in Ohio. The Mitchell Court found that the Ohio legislature did not intend the Act to apply to workers, “who perform no work within the territorial limits of the State of Ohio [and that] the Commerce Clause of the United States Constitution prohibits Ohio from regulating the working conditions of a non-resident who performs work and earns wages outside of the state.” 2005 WL 1159412, at *3 (emphasis added). The Mitchell Court also noted that there was “no claim that [plaintiff] ever worked for even a brief period of time in Ohio, which would change the analysis as to the applicability of Ohio law to his employment relationship.” 2005 WL 1159412, at *4. Here, there is no dispute that Mr. Truman is a Pennsylvania-based employee.

The employer has the burden of proof of to show that an employee fits into an exemption. Baum, 605 F.Supp.2d at 674. Mr. Truman has conceded that work he performed outside of the United States is not protected by the FLSA, and thus we will grant DBA’s motion in this respect. However, DBA has failed to show that Mr. Truman is an exempt employee under the PMWA for the work performed in England and Canada. Nothing within the language of the statute implies that work performed in a foreign country by a Pennsylvania resident does not deserve the same protections as work performed within Pennsylvania by the same resident and for the same company. Accordingly, we will deny the motion for partial summary judgment with regards to the PMWA claim.”

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