11th Cir.: Absent Judgment in Plaintiff’s Favor, Offer Did Not Moot FLSA Claims; Mandatory Attorney’s Fees Due

Wolff v Royal American Management, Inc.

Following an order approving the settlement between the parties and an award of attorneys’ fees and costs to the plaintiff, as the prevailing party, the defendant appealed arguing that their tender of damages to plaintiff in exchange for a general release mooted the claims. Rejecting this assertion, the Eleventh Circuit affirmed the order below and held that an FLSA defendant cannot moot a claim for unpaid wages, absent an offer of judgment in favor of the plaintiff.

Summarizing the relevant facts and procedural history, the Eleventh Circuit explained:

The relevant background is this. After filing a complaint alleging FLSA violations, Wolff calculated that RAM had failed to pay her $1800 in overtime wages. Liquidated damages under the FLSA in the same amount brought her total itemized damages claim to $3600. In December 2011, RAM tendered $3600 to plaintiff through her attorney, and moved to dismiss the complaint; Wolff’s counsel returned the check. In December 2012, RAM offered to settle the case for $5000, but Wolff’s counsel claimed that he never submitted the offer to Wolff because it was never put into writing. Nevertheless, in February 2012, Wolff received a 1099 form reflecting a payment of $3600, and called RAM to determine the reason for the 1099. RAM informed Wolff for the first time of the prior tender to her counsel, and Wolff said she wanted to settle the case. Wolff then met with RAM, signed a general release and took the $3600 check. Thereafter, the parties moved the court to determine whether the payment and release rendered the action moot, stripping Wolff of attorneys’ fees on the ground that there was no judgment in the case to indicate that Wolff was the prevailing party. The district court ultimately approved the settlement as reasonable, even though the parties reached the settlement without the participation of Wolff’s counsel. The district court further found that the settlement had not mooted the lawsuit, and later awarded Wolff’s counsel $61,810.44 in fees and costs. This timely appeal follows.

Discussing recent FLSA jurisprudence regarding mandatory fees and the ability (or lack thereof) of a defendant to moot a claim for same, the Court explained:

Under the FLSA,

Any employer who violates the provisions of section 206 or section 207 of this title shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages …. The court in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney’s fee to be paid by the defendant, and costs of the action.

29 U.S.C. § 216(b). We have said that because the FLSA seeks to protect employees from “inequalities in bargaining power between employers and employees,” Congress had made its provisions mandatory. Lynn’s Food Stores, Inc. v. U.S. Dep’t. of Labor, 679 F.2d 1350, 1352 (11th Cir.1982). Thus, “FLSA rights cannot be abridged by contract or otherwise waived because this would nullify the purposes of the statute and thwart the legislative policies it was designed to effectuate.” Id. (quotation omitted). We’ve also held that “[t]he FLSA plainly requires that the plaintiff receive a judgment in his favor to be entitled to attorney’s fees and costs.” Dionne v. Floormasters Enters., Inc., 667 F.3d 1199, 1205 (11th Cir.2012).

The Supreme Court, considering the fee-shifting provisions in “[n]umerous federal statutes [that] allow courts to award attorney’s fees and costs to the ‘prevailing party,’ ” has recognized that a plaintiff is a prevailing party only when she obtains either (1) a judgment on the merits, or (2) a settlement agreement “enforced through a consent decree.” Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t. of Health & Human Res., 532 U.S. 598, 603–604 (2001), superseded by statute on other grounds, Open Government Act of 2007, Pub.L. No. 110–175, 121 Stat. 2524. The Buckhannon Court reasoned that a prevailing party needs a judgment or consent decree to prove that there has been an “alteration in the legal relationship of the parties.” Id. at 605. Thus, in the absence of a judgment on the merits, to be a prevailing party, the FLSA plaintiff needs a stipulated or consent judgment or its “functional equivalent” from the district court evincing the court’s determination that the settlement “is a fair and reasonable res[o]lution of a bona fide dispute over FLSA provisions.” Lynn’s Food Stores, 679 F.2d at 1355;
American Disability Ass’n, Inc. v. Chmielarz, 289 F.3d 1315, 1317, 1320 (11th Cir.2002) (holding that the district court’s approval of the terms of a settlement coupled with its explicit retention of jurisdiction are the functional equivalent of a consent decree, which renders the settlement a “judicially sanctioned change in the legal relationship of the parties” for purposes of the “prevailing party” determination necessary for attorneys’ fees).

In Dionne, we held that an employer, who denied liability for nonpayment for overtime work, did not need to pay attorneys’ fees and costs under the FLSA if the employer tendered the full amount of overtime pay claimed by an employee, and the employee conceded that “the claim for overtime should be dismissed as moot.” 667 F.3d at 1200. In other words, we concluded that Dionne was not a prevailing party under the FLSA because in granting the defendant’s motion to dismiss for lack of subject matter jurisdiction, the district court did not award a judgment to the plaintiff. Notably, however, we expressly limited our holding, emphasizing on rehearing that:

Our decision in this matter addresses a very narrow question: whether an employee who conceded that his claim should be dismissed before trial as moot, when the full amount of back pay was tendered, was a prevailing party entitled to statutory attorney’s fees under § 216(b). It should not be construed as authorizing the denial of attorney’s fees, requested by an employee, solely because an employer tendered the full amount of back pay owing to an employee, prior to the time a jury has returned its verdict, or the trial court has entered judgment on the merits of the claim.

Id. at 1206 n. 5 (emphasis added).

Thereafter, in Zinni, we held that a settlement offer for the full amount of statutory damages requested under the Fair Debt Collection Practices Act (“FDCPA”), without an accompanying offer of judgment, did not offer full relief to an FDCPA plaintiff and therefore did not render the plaintiff’s claim moot. 692 F.3d at 1167–68. Zinni involved three cases that were consolidated on appeal: in each case, the debt collector offered to settle for $1,001, an amount exceeding by $1 the maximum statutory damages available to an individual plaintiff under the FDCPA, as well as an unspecified amount of attorneys’ fees and costs. Id. at 1164–66. None of the plaintiffs accepted the settlement offers. Id. The district court granted the defendants’ motions to dismiss for lack of jurisdiction because the offers left the plaintiffs with “no remaining stake” in the litigation. Id. at 1164.

On appeal, we reversed, holding that “the failure of [the debt collectors] to offer judgment prevented the mooting of [the plaintiffs'] FDCPA claims.” Id. at 1168. We said that a settlement offer for the “full relief requested” means “the full amount of damages plus a judgment.” Id. at 1166–67. The court explained that judgment is important to a plaintiff because it is enforceable by the district court, whereas a settlement offer without an offer of judgment is “a mere promise to pay” which, if broken, required the plaintiff to sue for breach of contract in state court. Id. at 1167–68 (quoting from and relying on Simmons v. United Mortg. & Loan Inv., LLC, 634 F.3d 754, 766 (4th Cir.2011) (FLSA overtime case)). We also noted that “even if the [settlement] check had been tendered [to the plaintiff], that fact would not change our ultimate conclusion.” Id. at 1164 n. 5. In fact, we said that even if the plaintiff accepted the offer, without an offer of judgment, full relief had not been offered. Id. at 1167 n. 8 (“The issue of whether the offer was accepted or rejected, while argued by the parties, is not relevant to our analysis because Appellees never offered full relief.”).

Applying these principles to the case at bar, the Eleventh Circuit concluded that absent an offer of judgment in plaintiff’s favor, the defendant could not and did not moot the plaintiff’s claims, not withstanding the plaintiff’s acceptance of the monies tendered:

Here, RAM’s settlement offer to Wolff did not include an offer of judgment in Wolff’s favor and against RAM. Rather, Wolff signed a release providing that she “acknowledge[d] receipt of [the $3600] check as full and complete satisfaction of any monies owed to [Wolff] from Royal American.” As a result, under Zinni—which expressly relied on a FLSA case from the Fourth Circuit—we are compelled to conclude that RAM’s offer did not constitute full relief of Wolff’s FLSA claim. We recognize that in Zinni, the plaintiff did not accept the settlement check, but here, Wolff accepted the check and signed a release. However, Zinni made clear that so long as a settlement agreement does not include an offer of judgment against a defendant (and it did not in this case), whether a plaintiff accepted the settlement makes no difference. Thus, RAM’s settlement with Wolff did not moot her FLSA claim, and she was entitled to seek attorneys’ fees and costs from RAM.

Rejecting the defendant’s contention that the Supreme Court’s recent decision in Genesis required a different result, the court stated:

RAM argues that the Supreme Court’s recent decision in Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523 (2013), requires a different result. There, the Supreme Court held that a “collective action” brought under the FLSA—wherein an employee brings an action to recover damages for FLSA violations on behalf of himself and other “similarly situated” employees—became non justiciable when the lone plaintiff’s individual claim became moot. Id. at 1526. However, Genesis involved a settlement offer that included an offer of judgment-unlike the offer here, and unlike the one in Zinni. See id. at 1527 (“When petitioners answered the complaint, they simultaneously served upon respondent an offer of judgment under Federal Rule of Civil Procedure 68.”). What’s more, Genesis explicitly said that it was “assum[ing], without deciding, that [an employer's] Rule 68 offer mooted [an employee's] individual claim.” See id. at 1529; see also id. n. 4 (“[W]e do not resolve the question whether a Rule 68 offer that fully satisfies the plaintiff’s claims is sufficient by itself to moot the action.”). Accordingly, Genesis is not directly on point, and expressly does not answer the question before us.

Affirming the district court’s award of attorneys fees to plaintiff, the Court reasoned:

We also find unavailing RAM’s claim that the district court abused its discretion in awarding the fees in this case. As for RAM’s claim that Wolff was not a prevailing party for purposes of obtaining FLSA attorneys’ fees, we are unpersuaded. As we’ve said, to be entitled to fees under the FLSA, a plaintiff must “receive a judgment in [her] favor.” Dionne, 667 F.3d at 1205. Here, the district court plainly found that the settlement—which RAM admits included the full amount of back pay as well as an equal amount for liquidated damages—was reasonable, and by doing so, the district court entered a judgment in Wolff’s favor. See Lynn’s Food Stores, 679 F.2d at 1355;
Chmielarz, 289 F.3d at 1317, 1320. RAM provides us with no reason to depart from Lynn, which directs a district court to enter a judgment after “scrutinizing” for fairness a proposed settlement entered into between the employee and the employer in an action brought for back wages under the FLSA. Id. at 1353. Further, unlike in Thomas v. State of La., 534 F.2d 613, 615 (5th Cir.1976), it is unclear in this case whether Wolff received “everything to which [she was] entitled under the FLSA at the time the agreement [wa]s reached,” since the district court found that the parties did not intend the settlement agreement to preclude attorneys’ fees under the FLSA.

As for RAM’s claim that it was denied due process when the district court entered the judgment, the record shows that RAM was given an opportunity to respond to Wolff’s motions on this matter, and that RAM expressly made arguments regarding its liability in its papers before the district court. Nor has RAM shown, based on the record of this case—including the record of attorney and party conduct on both sides—that the district court abused its considerable discretion in granting attorneys’ fees using the lodestar analysis. This is especially true given that in cases like this one where attorney fees are allowed to the prevailing party by federal statute, the compensable fees include time spent litigating both the entitlement to and amount of fees incurred; i.e. “fees for litigating fees.” Thompson v. Pharmacy Corp. of Am., Inc., 334 F.3d 1242, 1245 (11th Cir.2003) (statutory fees for civil rights litigants includes “fees for litigating fees”). Accordingly, we affirm.

Click Wolff v Royal American Management, Inc. to read the entire unpublished Per Curiam Opinion.

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N.D.Ga.: Where Weekly Compensation of RNs and PTs Not Guaranteed and Comprised of Fees Per Visit as Well as Other Pay Based on Time Worked, Not “Salary” or “Fee Basis;” Clinicians Entitled to Overtime

Rindfleisch v Gentiva Health Services, Inc

As discussed here, this case was before the court on the parties’ respective cross-motions for summary judgment. Plaintiffs, registered nurses (RNs) and physical therapists (PTs)(collectively “clinicians”), paid in part by-the-visit to defendant’s patient’s homes asserted that they were entitled to unpaid overtime under the FLSA. Defendant contended that plaintiffs were exempt from overtime pursuant to the so-called “professional exemption.” Granting the plaintiffs’ motion and denying that of the defendant, the court held that the plaintiffs did not qualify for such exemption, because they were not paid on a “salary basis” or “fee basis,” a requisite element for application of the exemption.

Describing the pay policy at issue, the court stated:

Gentiva provides home healthcare services to patients throughout the United States[Doc. No. 508, 1].1 To provide these services, Gentiva employs registered nurses and physical or occupational therapists to provide in-home healthcare to Gentiva’s patients (collectively “Clinicians”) [Doc. No. 508, 1]. Since December of 2008, Gentiva pays the majority of its Clinicians on a pay per-visit plan (the “PPV Plan”) [Doc. No. 586, 4–5].2 Under the PPV Plan, Clinicians are paid a set fee for a “routine visit” to a patient’s home (“visit fees”) [Doc. No. 586, 14]. These visit fees do not vary based on the time it takes Clinicians to complete a specific in-home visit [id. at 15]. In addition, Clinicians under the PPV Plan are also paid on what Gentiva describes as a “flat rate” for non-visit related work (“non-visit fees”) [id. at 19]. In setting the amount of non-visit fees, Gentiva factors in the amount of time it takes Clinicians to perform a specific non-visit related activity [id.].

Gentiva maintains that the PPV Plan constitutes a “fee basis” payment under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. [id. at 14]. Therefore, Gentiva classifies all of its Clinicians compensated under the PPV Plan as professional employees exempt from overtime compensation under the FLSA [id. at 10].

The court framed the issue before it as follows: 

In summary, the only issue for the Court to determine at this stage of the litigation process is whether or not the PPV Plan is unlawful under the FLSA.

After explaining the elements required for the application of the professional exemption, and noting that here it was undisputed that plaintiffs me the duties prong of the exemption, the court addressed whether or not the defendant’s pay scheme was a “fee basis” or “salary basis” within the meaning of the applicable regulation:

The DOL regulations state that, in order to satisfy the salary basis test, a professional employee can be paid “on a fee basis, as defined in § 541.605.” 29 C.F.R. § 541.600(a). Section 541.605 states an employee can be paid on a “fee basis” that satisfies the salary basis test if “the employee is paid an agreed sum for a single job regardless of the time required for its completion.” 29 C.F.R. § 541.605(a). Subsection (b) of section 541.605 states that, in order for a particular fee payment to satisfy the salary basis test, “the amount paid to the employee will be tested by determining the time worked on the job and whether the fee payment is at a rate that would amount to at least $455 per week if the employee worked 40 hours.” 29 C.F.R. § 541.605(b).

In the alternative, the DOL regulations, under section 541.604, allow an employee exempt from overtime pay to receive “extra” compensation that does not satisfy the salary basis test. Specifically, section 541.604 allows two forms of “extra” payment, articulated respectively in subsections (a) and (b). Anani v. CVS RX Servs., Inc., 788 F.Supp.2d 55, 66 (E.D.N.Y.2011). Subsection (a) of section 541.604 allows an employee to receive “additional compensation,” that does not satisfy the salary basis test, “based on hours worked for work beyond the normal workweek.” 29 C.F.R. § 541.604(a). Subsection (b) allows an employee to receive payment on an hourly, daily, or shift basis without losing the overtime exemption, so long as he is guaranteed weekly payment of at least $455 and there is a “reasonable relationship” between the guaranteed weekly payment and the employee’s usual weekly earnings. 29 C.F.R. § 541.604(b).

Summarizing the parties’ respective positions, the court explained:

In its motion for partial summary judgment, Plaintiffs argue that the PPV Plan, because the non-visit fees vary based on the amount of time it takes a Clinician to complete a non-visit activity, violates the salary basis test. Therefore, Plaintiffs argue the PPV Plan violates the FLSA and, as a result, that they are owed overtime compensation. In its response to Plaintiffs’ motion, as well as in its own motion for partial summary judgment on the lawfulness of its fee payments, Gentiva asserts the following two arguments: 1. Pursuant to subsection (b) of section § 541.605, the non-visit fees can vary based on the time it takes Clinicians to complete a non-visit activity and still satisfy the salary basis test; and 2. Even if Gentiva’s non-visit fees improperly consider time, Gentiva’s visit fees properly satisfy the salary basis test and, therefore, the non-visit fees constitute “extra” payments under section 541.604. The Court will discuss each of Gentiva’s arguments below.

The court rejected both of the defendant’s arguments in this regard. First, the court concluded that the defendant’s payment of non-visit fees did not satisfy the salary basis test under 29 C.F.R. § 541.605, because they were variable and depended on the amount of time a clinician spent on non-appointment activities:

Subsection (a) of § 541.605 clearly states that a fee for an activity, in order to satisfy the salary basis test, cannot be based on “the time required for [the activity's] completion.” 29 C.F.R. § 541.605(a). Subsection (a) further states that “[p]ayments based on the number of hours or days worked and not on the accomplishment of a given single task are not considered payments on a fee basis.” Id. Based on this clear and unambiguous language, a “fee” that varies based on the amount of time it takes to complete a specific activity does not satisfy the DOL regulation’s salary basis test. See Bread Political Action Comm. v. Fed. Election Comm’n, 455 U .S. 577, 580 (1982) (stating that, in the absence of clearly expressed legislative intention, the plain language of a statute controls its construction and must be considered conclusive); see also Evenson v. Hartford Life & Annuity Ins. Co., 244 F.R.D. 666, 667 (M.D.Fla.2007) (“As a general rule of interpretation, the plain meaning of a regulation governs.”).

Gentiva argues that subsection (b) of § 541.605 allows it to alter the amount of its non-visit fees based on the time it takes Clinicians to complete a non-visit activity. Subsection (b) of § 541.605 provides that, in order for a fee to satisfy the salary basis test, the fee must “amount to at least $455 per week if the employee worked 40 hours.” 29 C.F.R. § 541.605(b). To illustrate this point, subsection (b) provides the following example: “[t]hus, an artist paid $250 for a picture that took 20 hours to complete meets the minimum salary requirement for exemption since earnings at this rate would yield the artist $500 if 40 hours were worked.” Id. Based on this language, Gentiva argues that subsection (b) allows an employer to alter the amount of a fee based on the time it takes an employee to complete a specific activity, so long as the fee is not set on a straight hourly basis.

In essence, Gentiva argues that it can consider the amount of time it takes Clinicians to perform certain non-visit activities prospectively, thereby allowing its non-visit fees to vary based on time. Specifically, Gentiva argues that its non-visit fees factor in time “for the purpose of accommodating the clinician for missed visits that she would have otherwise performed” [Doc. No. 512–1, 25]. In support of this argument, Gentiva provides the following example:

in accordance with one of its conversion charts, Gentiva may pay a visit rate equivalent of $30 for a training that lasted 45 minutes and a rate of $60, equivalent to two visits, for a different training that lasted 3 hours. If, however, Gentiva simply set a flat rate for all trainings at the visit rate equivalent of $30, the training that took 3 hours would not qualify as a bona fide fee ($30 ÷ 3=$10 an hour or $400 over a 40–hour work week)

[id. at 54]. In comparison, Plaintiffs argue that subsection (b) of § 541.605 “describes how to evaluate the payments after the job is completed to determine whether the clinician has been compensated sufficiently to meet the exemption or is instead overtime eligible” [Doc. No. 584, 13]. In summary, Gentiva argues that subsection (b) is in place to allow an employer, in setting a fee for a specific activity, to vary the fee based on the amount of time it takes to complete said activity before it is complete. In contrast to Gentiva’s position, Plaintiffs argue subsection (b) is in place for the purpose of determining if a set fee satisfies the $455/40 hour requirement after the specific activity is complete.

The 2003 version of the fee basis regulation, former 29 C.F.R. § 541.313, is persuasive authority on this point. In the preamble to rule 29 C.F.R. § 541.605, the Department of Labor (the “DOL”) states that “[p]roposed section 541.605 simplified the fee basis provision in the current rule, but made no substantive change.” Dep’t of Labor, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, 69 Fed.Reg. 22122, 22184 (Apr. 23, 2004). Based on the lack of substantive change, it can be inferred that 29 C.F.R. § 541.605 is consistent with the language of former 29 C.F.R. § 541.313. See Belt v. Emcare, Inc., 444 F.3d 403, 414 (5th Cir.2006) (“The amendments effectively adopted § 541.314 after notice and comment, without substantive change, [ ] thereby tending to show that the text of § 541.3(e) does not contradict the former § 541.314.”).

Former 29 C.F.R. § 541.313 provides that “[t]he adequacy of a fee payment … can ordinarily be determined only after the time worked on the job has been determined.” 29 C.F.R. § 541.313(c) (2003) (emphasis added). To illustrate this point, 29 C.F.R. § 541.313 provides the following example:

An illustrator is assigned the illustration of a pamphlet at a fee of $150. When the job is completed, it is determined that the employee worked 60 hours. If the employee worked 40 hours at this rate, the employee would have earned only $100. The fee payment of $150 for work which required 60 hours to complete therefore does not meet the requirement of payment at a rate of $170 per week and the employee must be considered nonexempt.

29 C.F.R. § 541.313(d)(3) (2003). Based on this language, the Court agrees with Plaintiffs that 29 C.F.R. § 541.605(b) articulates how to determine a fee for a specific activity satisfies the salary basis test after the activity is completed. Therefore, 29 C.F.R. § 541.605(b) does not authorize an employer to prospectively alter a fee based on the amount of time it takes an employee to perform a specific work activity.

Without question, Gentiva’s non-visit fees vary based on the amount of time it takes Clinicians to complete a specific non-visit activity. Therefore, the non-visit fees violate the clear language of 29 C.F.R. § 541.605(a), which specifies a fee only satisfies the salary basis test when it is “an agreed sum for a single job regardless of the time required for its completion.” Subsection (b) of 29 C.F.R. § 541.605 merely provides a basis for determining whether or not a fee for a specific activity satisfies the salary basis test after the activity is complete. Therefore, Gentiva cannot rely on subsection (b) as justification for varying its non-visit fees based on the amount of time it takes Clinicians to complete a non-visit activity. Such a reading of subsection (b) would completely contradict and negate the clear and unambiguous language of subsection (a). Therefore, Gentiva’s non-visit fees do not satisfy the salary basis test under 29 C.F.R. § 541.605.

The court also rejected the defendant’s alternative argument that the non-visit fees constituted an “extra” payment under 29 C.F.R. § 541.604:

Section 541.604 provides that “[a]n employer may provide an exempt employee with additional compensation without losing the exemption or violating the salary basis requirement, if the employment arrangement also includes a guarantee of at least the minimum weekly-required amount [$455] paid on a salary basis.” 29 C.F.R. § 541.604(a). Gentiva argues that, because its visit fees satisfy the salary basis test, its non-visit fees constitute extra payments under section 541.604. The Court does not find this argument persuasive under either subsection (a) or subsection (b) of section 541.604.

Subsection (a) of section 541.604 allows an exempt employee to receive “extra” payment as “additional compensation … paid on any basis (e.g., flat sum, bonus payment, straight-time hourly amount, time and one-half or any other basis), and may include paid time off.” Id. However, such “extra” or “additional” compensation is only available under subsection (a) for “extra” or “additional” work, meaning “hours worked for work beyond the normal workweek.” Id. Under subsection (a), “beyond the normal workweek” signifies hours worked in excess of forty. See Anani, 788 F.Supp.2d at 67 (stating “common sense as well as the purpose of the FLSA supports the interpretation that the words ‘the normal workweek’ clearly contemplate a forty (40) hour workweek because the FLSA itself generally establishes the right to overtime for hours worked in excess of forty (40) hours.”) (internal quotation marks, alterations and citation omitted).

Here, Gentiva does not designate non-visit activities as additional work only performed after Clinicians have completed forty hours of in-home visits [Doc. No. 586, 34–35]. Instead, in the weeks non-visit activities are performed, non-visit fees are a part of the Clinicians’ compensation for a normal forty hour workweek. Therefore, non-visit fees are not a form of compensation separate from the Clinicians’ forty hour workweek, but are instead a part of the Clinicians’ compensation for a forty hour workweek that includes non-visit activities. Because non-visit activities, and by extension the non-visit fees, are not designated as separate from the Clinicians’ normal workweek, it is irrelevant that Gentiva’s visit fees satisfy the salary basis test. The visit fees do not encompass the complete form of payment for a Clinicians’ normal workweek and, therefore, do not justify payment of the non-visit fees which do not satisfy the salary basis test. As a result, the non-visit fees cannot be considered “extra” payment under subsection (a) of 29 C.F.R. § 541.604.

Subsection (a) of 29 C.F.R. § 541.604 does not allow an employee to receive two forms of payment, with one form failing to satisfy the fee basis test, for two forms of activities completed as part of an employee’s forty hour workweek. An additional form of payment that does not satisfy the salary basis test can only be awarded for work outside of an employee’s normal workweek. As Gentiva’s non-visit fees are a part of the Clinicians’ compensation for a normal workweek that includes non-visit activities, they do not constitute an “extra” payment under subsection (a) of section 541.604.

 Subsection (b) of section 541.604 allows an employer to pay its employee on an hourly, daily or shift basis without negating the overtime exemption “if the employment arrangement also includes a guarantee of at least the minimum weekly required amount paid on a salary basis [$455] regardless of the number of hours, days or shifts worked, and a reasonable relationship exists between the guaranteed amount and the amount actually earned.” 29 C.F.R. § 541 .604 (emphasis added). In summary, subsection (b) allows an employee to be paid on an hourly, daily, or shift basis without losing the overtime exemption, so long as the “reasonable relationship” test is met. Anani, 788 F.Supp.2d at 62. Subsection (b) provides that “[t]he reasonable relationship test will be met if the weekly guarantee is roughly equivalent to the employee’s usual earnings at the assigned hourly, daily or shift rate for the employee’s normal scheduled workweek.” 29 C.F.R. § 541.604(b).

Perhaps most significantly, the court noted that the defendant apparently conceded that there was no guarantee that the clinicians would receive at least $455.00 per week, regardless of the characterization of the non-visit fees:

In its reply brief regarding its motion for summary judgment on the lawfulness of its fee payments, Gentiva appears to concede that the visit fees do not guarantee Clinicians paid under the PPV Plan even $455 in a given week [Doc. No. 617, 24–25]. Based on this concession, Gentiva argues that “fee-based employees need not be guaranteed pay of at least $455 per week to be eligible for extras under section 541.604, they only need to be guaranteed fees that pay them at a rate that would result in at least $455 if they were to work a full 40–hour week performing those fee-compensated tasks” [id. at 25]. This argument, when applied to Clinicians and their usual weekly earnings, supports the very form of payment scheme that the reasonable relationship test of subsection (b) is attempting to guard against…

Here, Gentiva argues in favor of a compensation framework, without even establishing a set amount of “guaranteed” weekly payment, that allows an even greater discrepancy between the Clinicians’ normal weekly earnings and their “guaranteed” weekly payment. Specifically, Gentiva argues that Clinicians can receive one visit fee in a given week and still meet the guarantee requirement of subsection (b), so long as that single fee satisfies the fee basis test under section 541.605. However, under that scenario, Clinicians would have to receive an amount of non-visit fees that is significantly greater than the amount received from the one visit fee. For example, Gentiva asserts “the more productive opt-in clinicians in this action were able to earn more than $150,000 per year, and one plaintiff earned over $240,000″ [Doc. No. 512–1, 15].11 To earn this amount of compensation in a given year, Clinicians have to receive a weekly amount of earnings that greatly exceeds $455, let alone an undetermined amount that is less than $455. Therefore, under the compensation framework put forth by Gentiva, Clinicians’ “guaranteed” payment is an illusion, having no reasonable relationship to the amount of pay that Clinicians usually receive in a given week. See Dep’t of Labor, 69 Fed.Reg. at 22184 (stating “if an employee is compensated on an hourly basis, or on a shift basis, there must be a reasonable relationship between the amount guaranteed per week and the amount the employee typically earns per week. Thus, if a nurse whose actual compensation is determined on a shift or hourly basis usually earns $1,200 per week, the amount guaranteed must be roughly equivalent to $1,200; the employer could not guarantee such an employee only the minimum salary required by the regulation.”). Therefore, Gentiva’s non-visit fees do not constitute an “extra” payment under subsection (b) of 29 C.F.R. § 541.604.

Thus, the court held that the defendant’s payment plan failed to satisfy the salary or fee basis requirement and thus the professional exemption was inapplicable to the plaintiffs.

Click Rindfleisch v. Gentive Health Services, Inc to read the entire Order.

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S.D.Fla.: Contractor Engaged in Heavy-Duty Cleaning of Airplanes Not Air-Carrier Exempt Under Railway Labor Act (RLA)

Roca v Alphatech Aviation Services, Inc.

In this case, an employee sued his employer, a company that provided heavy-duty cleaning of airplanes, alleging failure to pay overtime in violation of the Fair Labor Standards Act (FLSA). The case was before the court on the defendant cleaning company’s motion for summary judgment. Specifically, the defendant asserted that it was entitled to the air-carrier exemption under the Railway Labor Act (RLA), because its work involved cleaning airplanes pursuant to contracts with air carriers covered that were covered by the exemption. The court disagreed and denied the defendant’s motion.

Describing the facts relevant to its inquiry, the court explained:

Alphatech specializes in heavy-duty cleaning of airplanes operated by commercial and freight airlines. In addition to cleaning airplane interiors and exteriors, Alphatech personnel replace components, perform light maintenance, preventive maintenance, and carry out related servicing of the aircraft. D.E. 22–1. As explained by Plaintiff, Alphatech employees “leave the plane clean; all the bathrooms, the galleys, everything, seats, carpeting[,] …. leave like the shell of the plane.” D.E. 25–1, at 13:13–16. In other words, cleaning is performed when an aircraft’s cabin is completely disassembled. D.E. 24–1, at 24:25. This work is primarily performed at the Miami International Airport complex, in a facility owned by AAR Aircraft Services (“AAR”), though Alphatech’s administrative work is performed out of its own office space adjacent to the airport. D.E. 22–1, at 35:3–6.

Alphatech does work for various air carriers, maintaining a separate contractual relationship with each. See D.E. 26–4. The work performed for each air carrier is executed in accordance with that air carrier’s maintenance manual. D.E. 24–1, at 9:12–14. Each air carrier specifies the manner in which it desires for its planes to be cleaned. Id. at 17:17–18. Alphatech employees sometimes work on the same exact model plane for two different air carriers and nevertheless perform their assignments differently, in accordance with each air carrier’s manual for that air craft. Id. at 17:19–22. The air carriers separately contract with AAR to inspect and certify the work that Alphatech performs. Id. at 15:10–13, 16:15–19. AAR “professors” are also responsible for administering the air carrier-specific training that Alphatech personnel must receive before servicing an aircraft. The air carrier representatives “walk [through the plane], they turn around, and they leave.” D.E. 15:9–10. Defendant Brullo testified that he could not remember the names of any air carrier supervisors because they change all the time, coming and going with the particular aircrafts that Alphatech personnel service. D.E. 23–1, at 29:19–22.

Giving an overview of the air-carrier exemption, and concluding that the defendant could not satisfy its burden to demonstrate the applicability of same, the court stated:

The question presented by this Motion is whether Plaintiff is an “employee of a carrier by air” for purposes of the FLSA’s air carrier exemption. Under the FLSA, employers are required to pay their employees at overtime rates for work in excess of 40 hours per week. See
29 U.S.C. § 207. However, certain classes of employers are exempt from this overtime requirement. Thus, the air carrier exemption removes from coverage “any employee of a carrier by air subject to the provisions of Title II of the Railway Labor Act.” Id. § 213(b)(3). Title II of the Railway Labor Act (“RLA”), in turn, covers “every common carrier by air …, and every air pilot or other person who performs any work as an employee or subordinate official of such carrier or carriers, subject to its or their continuing authority to supervise and direct the manner of rendition of his service.” 45 U.S.C. § 181.

Defendants have failed to show that Plaintiff is exempt from overtime coverage. The application of an exemption under the FLSA is an affirmative defense on which the employer has the burden of proof. Corning Glass Works v. Brennan, 417 U.S. 188, 196–97, 94 S.Ct. 2223, 41 L.Ed.2d 1 (1974). The Eleventh Circuit has found that Title II of the RLA “is certainly unambiguous” in scope, Valdivieso v. Atlas Air, 305 F.3d 1283, 1287 (11th Cir.2002), yet Defendants urge the Court to find that Plaintiff qualifies as an air-carrier employee under a two-pronged conjunctive test promulgated by the National Mediation Board (“NMB”)2 in cases where the employer does not itself fly aircraft. Plaintiff no more satisfies this two-part test than she does the plain text of the subject exemption. Under the NMB’s two-pronged conjunctive test, an employee is covered by the air-carrier exemption if: (1) the nature of the work is that traditionally performed by employees of air carriers (the “function” test); and (2) the employer is directly or indirectly owned or controlled by or under common control with an air carrier (the “control” test). Verrett v. The Sabre Grp., 70 F.Supp.2d 1277, 1281 (N.D.Okla.1999). Both prongs must be satisfied in order for the RLA exemption to apply. Here, neither prong is satisfied.

Discussing each prong in more detail, and finding that defendant here could satisfy neither prong, the court reasoned:

1. Function Test

Defendants have not shown that the work performed by Alphatech employees is of the sort traditionally performed by air-carrier employees. Indeed, Defendants’ own witnesses have severely undercut their position. Mr. Pichardo testified that the air carriers hire outside contractors to perform the sort of heavy-duty cleaning work performed by Alphatech. When Alphatech works on an aircraft, it does so for an extended period of time, rather than between scheduled flights. In fact, Alphatech’s witnesses repeatedly clarified at deposition that the company’s work is not at all akin to the rapid cabin cleanup performed by air carrier personnel between flights. Indeed, Defendants have not presented any evidence tending to show that the work performed by Alphatech is ever performed by air-carrier employees, let alone that it is “traditionally” performed by those workers.

The RLA’s definition of a “carrier” sheds additional light on what should be considered work traditionally performed by carrier employees. Under the RLA, the term “carrier” includes actual carriers as well as “any company … which operates any equipment or facilities or performs any service (other than trucking service) in connection with the transportation, receipt, delivery, elevation, transfer in transit, refrigeration or icing, storage, and handling of property transported.” 45 U.S.C. § 151. The focus, then, tends to be on companies performing the auxiliary functions of loading, unloading, and shipping to and from carriers’ depots and terminals for the ultimate transportation of whatever is being carried in interstate commerce.

What Defendants have presented in their defense are NMB decisions purporting to hold that aircraft cleaning is a function traditionally performed by air-carrier employees. The Court finds these non-precedential decisions to be distinguishable and otherwise unpersuasive.3 Defendants also rely on Moyano v. Professional Contractors Services, Inc., No. 1:07–cv–22411 (S.D.Fla. Mar. 7, 2008), a case involving mechanic contractors. Moyano offers little analysis under either prong, but does rely on the NMB’s analysis in In re Empire Auto Center, Inc., 33 NMB 3, 2005 WL 3089356 (Oct. 13, 2005). In that case, the employees also worked for an independent contractor and performed their tasks according to maintenance manuals provided by the air-carrier clients. 2005 WL 3089356, at *6. However, Empire’s chief financial officer testified that Empire employees performed maintenance work identical to maintenance work performed by aircraft employees employed by commercial air carriers. Alphatech’s owner, by contrast, acknowledges that the work performed by Alphatech is traditionally contracted out by the air carriers. Moreover, the nature of the work at issue in Empire does not at all appear to be similar to the work Plaintiff performed while at Alphatech. Empire’s employees all fell into one of four categories: exhibit air frame and power plant mechanic; non-destructive test technician; aircraft sheet metal technician; and aircraft avionics and electrical mechanic. Id. at 10. These maintenance and repair operations are similar to the work at issue in Moyano, but not similar to the work performed by Plaintiff. The Court finds that Defendants have failed to show that Plaintiff satisfies the function prong of the NMB test.

2. Control Test

Defendants’ argument that Alphatech’s air carrier clients indirectly control the company’s operations would convert most independent contractors into “carriers” for purposes of the RLA, so long as their clients are air carriers. But entering into a contractual relationship, while perhaps necessary, is certainly not sufficient to satisfy the control test. Courts find that carriers control a contractor’s employees “[w]here the carrier controls the details of the day-to-day process by which the contractor provides services—for example, the number of employees assigned to particular tasks, the employees’ attire, the length of their shifts, and the methods they use in their work.” Cunningham v. Elec. Data Sys. Corp., No. 06–3530, 15 Wage & Hour Cas.2d (BNA) 1891, 2010 WL 1223084, at *6 (S.D.N.Y. Mar.31, 2010) (citing In re Ogden Aviation Serv., 23 NBM 98, 104 (Feb. 5, 1996)). Defendants insist that the air carriers have ultimate control over Alphatech employees because they have an absolute say over the means by which their aircrafts are cleaned, and because individual Alphatech employees must be approved to work on each given aircraft. But Defendants’ deposition testimony establishes that the air carriers have absolutely no control over what Alphatech pays its employees, when and how they are promoted or given pay raises, which shifts they work, how many hours they work per shift, or how many employees are scheduled to work on an aircraft at once.

Meticulous work instructions and prior approval of an independent contractors’ employees will not convert those employees into a carrier’s employees for RLA purposes. See Dobbs Houses, Inc. v. N .L.R.B., 443 F.2d 1066, 1070 (6th Cir.1971). In Dobbs Houses, the court found that while an airline caterer was “engaged in a business which requires it to please some very meticulous and demanding customers, that fact alone does not establish their ‘control directly or indirectly’ of it or its employees.” Id. at 1072. In so finding, the Sixth Circuit distinguished the case of a catering company employed by a rail carrier under circumstances more indicative of “control.” It found that control was exercised in that case because: the catering company could not do any work for any other client except by the carrier’s explicit permission; the carrier reimbursed the caterer for the total cost of its workers’ wages; the carrier had the explicit right to discharge the caterer’s employees; and the catering employees were directly subject to the carrier’s supervision. Id. at 1071. None of those factors were present in the Dobbs Houses case, and none are present here.

Thus, the court held that the defendant was not an exempt air-carrier and denied the defendant’s motion for summary judgment. Subsequently, the plaintiff moved for partial summary judgment regarding the same issue, and the court granted the motion for virtually identical reasons as stated here.

Click Roca v. Alphatech Aviation Services, Inc. to read the entire Opinion and Order on [Defendant's Motion for] Summary Judgment. Click Roca v. Alphatech Aviation Services, Inc. to read the Order on [Plaintiff's Motion for Partial] Summary Judgment.

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8th Cir.: Unauthorized Aliens May Sue Under the FLSA to Recover Damages for Work Performed

Lucas v. Jerusalem Cafe, LLC

Following a jury verdict, in favor of the plaintiff-employees, the defendant-employer appealed. As discussed here, the defendant-employer contended that plaintiffs, undocumented (or “illegal”) aliens lacked standing under the FLSA to assert a claim for unpaid wages. Reasoning that unauthorized aliens fit within the definition, scope and purpose of the FLSA, the Eighth Circuit affirmed the jury’s verdict in favor of the workers, and held that undocumented aliens are entitled to the FLSA’s protections regarding work already performed.

Discussing judicial precedent the Eighth Circuit explained:

The only circuit court to address the question directly, see Patel v. Quality Inn S., 846 F.2d 700 (11th Cir.1988); numerous district courts, including the one in this case; and the Secretary of Labor (Secretary) all agree: employers who unlawfully hire unauthorized aliens must otherwise comply with federal employment laws. The employers’ argument to the contrary rests on a legal theory as flawed today as it was in 1931 when jurors convicted Al Capone of failing to pay taxes on illicit income. As Justice Oliver Wendell Holmes explained in United States v. Sullivan, 274 U.S. 259, 263, 47 S.Ct. 607, 71 L.Ed. 1037 (1927), there is no “reason why the fact that a business is unlawful should exempt it from paying the taxes that if lawful it would have to pay.” Here, too, there is no “reason why the fact that” the employers unlawfully hired the workers “should exempt” them “from paying the” wages “that if lawful” they “would have to pay.” Id. “Certainly there is no reason for treating” the employers “more leniently.” Rutkin v. United States, 343 U.S. 130, 137, 72 S.Ct. 571, 96 L.Ed. 833 (1952). Like the Eleventh Circuit, we hold that aliens, authorized to work or not, may recover unpaid and underpaid wages under the FLSA. See Patel, 846 F.2d at 706 (“[U]ndocumented workers are ‘employees’ within the meaning of the FLSA and … such workers can bring an action under the act for unpaid wages and liquidated damages.”).

The court then went on to analyze the plain language of the FLSA:

Because this case is one of statutory interpretation, our “starting point … is the existing statutory text.” Lamie v. U.S. Tr., 540 U.S. 526, 534, 124 S.Ct. 1023, 157 L.Ed.2d 1024 (2004). As to minimum wages, the text of the FLSA states “[e]very employer shall pay to each of his employees who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce, wages at the [minimum wage rate].” 29 U.S.C. § 206(a) (emphasis added). The FLSA’s overtime wage scheme is more complex, but the crux is simple: “[n]o employer shall employ any of his employees … for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.” Id. § 207(a)(1).

The FLSA’s sweeping definitions of “employer” and “employee” unambiguously encompass unauthorized aliens:

(d) “Employer” includes any person acting directly or indirectly in the interest of an employer in relation to an employee and includes a public agency, but does not include any labor organization (other than when acting as an employer) or anyone acting in the capacity of officer or agent of such labor organization.

(e)(1) [With certain statutorily defined exceptions], the term “employee” means any individual employed by an employer.

….

(g) “Employ” includes to suffer or permit to work.

29 U.S.C. § 203(d), (e)(1), (g) (emphasis added). During debate over the FLSA, then-Senator Hugo Black (who, shortly before his elevation to the Supreme Court, sponsored the bill that ultimately became the FLSA) called the FLSA’s “definition of employee … the broadest definition that has ever been included in any one act.” 81 Cong. Rec. 7656–57 (1937).

Importantly, Congress showed elsewhere in the statute that it “knows how to” limit this broad definition “when it means to,” City of Milwaukee v. Illinois & Michigan, 451 U.S. 304, 329 n. 22, 101 S.Ct. 1784, 68 L.Ed.2d 114 (1981), and it did not do so with respect to unauthorized aliens. See 29 U.S.C. § 203(e). The FLSA contains detailed limitations for certain governmental employees, see id. § 203(e)(2); family members engaged in agricultural work, see id. § 203(e)(3); state, local, and interstate governmental volunteers, see id. § 203(e)(4); and “individuals who volunteer their services solely for humanitarian purposes to private non-profit food banks and who receive from the food banks groceries,” id. § 203(e)(5). Nowhere in this list do we see any indication Congress meant to exclude unauthorized aliens from the FLSA’s broad application to “any individual” whom an employer “suffer[s] or permit[s] to work.” Id. § 203(e)(1), (g).

As the Supreme Court has long emphasized, “where, as here, the statute’s language is plain, ‘the sole function of the courts is to enforce it according to its terms.’ ” United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989) (quoting Caminetti v. United States, 242 U.S. 470, 485, 37 S.Ct. 192, 61 L.Ed. 442 (1917)). Because the FLSA by its plain terms protects aliens working without authorization, the employers’ argument must fail unless the employers can point to a different statutory basis for limiting “the broadest definition that has ever been included in any one act,” 81 Cong. Rec. at 7657.

Rejecting the defendant’s argument that the IRCA and Hoffman Plastic supported a conclusion that such workers were not entitled to the FLSA’s statutory protections, the court reasoned:

The employers point to the Supreme Court’s decision in Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137, 122 S.Ct. 1275, 152 L.Ed.2d 271 (2002), for the proposition that the IRCA implicitly amended the FLSA to exclude unauthorized aliens. The employers misread Hoffman, ignore the relevant agency’s reasonable interpretations of the FLSA and the IRCA, and “ascribe to Congress an intent at variance with the purpose[s] of th[e] statute [s],” Wyandotte Transp. Co. v. United States, 389 U.S. 191, 200, 88 S.Ct. 379, 19 L.Ed.2d 407 (1967).

In Hoffman, the Supreme Court held that unauthorized aliens may not receive backpay after being terminated for engaging in union activities protected by the National Labor Relations Act (NLRA), 29 U.S.C. §§ 151169. See Hoffman, 535 U.S. at 151–52, 122 S.Ct. 1275. The issue in Hoffman was not, as the employers seem to think, whether the NLRA’s broad definitions of “employer” and “employee,” see 29 U.S.C. § 152, excluded unauthorized aliens from all protection by the National Labor Relations Board (NLRB). See Hoffman, 535 U.S. at 142–43, 122 S.Ct. 1275. Rather, the question in Hoffman was whether the NLRB’s remedial power extended far enough to “allow it to award backpay to an illegal alien for years of work not performed.” Id. at 149, 122 S.Ct. 1275 (emphasis added). Far from concluding the NLRA did not protect unauthorized aliens for work actually performed, the Hoffman court—after considering Congress’s intervening enactment of the IRCA—reaffirmed its earlier holding in Sure–Tan, Inc. v. NLRB, 467 U.S. 883, 104 S.Ct. 2803, 81 L.Ed.2d 732 (1984), that the NLRA applies to the actual employment of unauthorized aliens. See Hoffman, 535 U.S. at 151–52, 122 S.Ct. 1275;Sure–Tan, 467 U.S. at 893–94, 104 S.Ct. 2803.

Not only is our reading of Hoffman consistent with the overwhelming majority of post-Hoffman decisions by courts at every level, but “[n]o circuit court has reached a contrary conclusion,” Agri Processor Co. v. NLRB, 514 F.3d 1, 5–6 (D.C.Cir.2008). In Madeira v. Affordable Hous. Found., Inc., 469 F.3d 219 (2d Cir.2006), the Second Circuit explained:

[A]n order requiring an employer to pay his undocumented workers the minimum wages prescribed by the [FLSA] for labor actually and already performed…. does not … condone that violation or continue it. It merely ensures that the employer does not take advantage of the violation by availing himself of the benefit of undocumented workers’ past labor without paying for it in accordance with minimum FLSA standards.

Id. at 243. Interpreting an analogous definition of “employee” in Agri Processor, the D.C. Circuit found “absolutely no evidence that in passing IRCA Congress intended to repeal the NLRA to the extent its definition of ‘employee’ include[d] undocumented aliens.” Agri Processor, 514 F.3d at 5.

The court also noted that the Eleventh Circuit had recently reiterated the undocumented aliens were protected by the FLSA, further supporting its conclusion regarding same:

Shortly after our court heard argument in this case, the Eleventh Circuit reaffirmed its decision in Patel “that undocumented aliens may recover their unpaid wages under the FLSA.” Lamonica v. Safe Hurricane Shutters, Inc., 711 F.3d 1299, 1306 (11th Cir.2013). Rejecting arguments similar to those advanced by the employers here, the Eleventh Circuit concluded “the IRCA does not express Congress’s clear and manifest intent to exclude undocumented aliens from the protection of the FLSA.” Id. at 1308.

The court found further support in the fact that the DOL has long taken the position that undocumented aliens are covered under the FLSA:

As the Secretary explains, there is no conflict between the FLSA and the IRCA. Both statutes work in tandem to discourage employers from hiring unauthorized workers by “assur[ing] that the wages and employment of lawful residents are not adversely affected by the competition of illegal alien employees who are not subject to the standard terms of employment,” Sure–Tan, 467 U.S. at 893, 104 S.Ct. 2803.

The Department of Labor’s position that the FLSA applies to aliens without employment authorization is longstanding and consistent. In 1942, just four years after the FLSA’s passage, the Department of Labor’s “Wage and Hour Administrator opined that alien prisoners of war were covered by the [FLSA] and therefore were entitled to be paid the minimum wage.” Patel, 846 F.2d at 703. Since then, in case after case, the Department of Labor has taken the same position it takes here.

In the Secretary’s amicus brief filed in this case, the Secretary explains that applying the FLSA to unauthorized aliens “is essential to achieving the purposes of the FLSA to protect workers from substandard working conditions, to reduce unfair competition for law-abiding employers, and to spread work and thereby reduce unemployment by requiring employers to pay overtime compensation.” Given the Department’s decades-long consistency and the Secretary’s “specialized experience and broader investigations and information” in these matters, we think the Secretary’s position is persuasive and merits Skidmore deference—to the extent there is any statutory ambiguity. Skidmore v. Swift & Co., 323 U.S. 134, 139, 65 S.Ct. 161, 89 L.Ed. 124 (1944); see also Godinez–Arroyo v. Mukasey, 540 F.3d 848, 850 (8th Cir.2008).

Finally the court recognized Congressional intent also supported its conclusion:

We agree with the Secretary’s position, independent of any deference to the Department of Labor’s expertise, because Congress’s purposes in enacting the FLSA and the IRCA are in harmony. The IRCA unambiguously prohibits hiring unauthorized aliens, and the FLSA unambiguously requires that any unauthorized aliens—hired in violation of federal immigration law—be paid minimum and overtime wages. The IRCA and FLSA together promote dignified employment conditions for those working in this country, regardless of immigration status, while firmly discouraging the employment of individuals who lack work authorization. “If an employer realizes that there will be no advantage under the” FLSA “in preferring [unauthorized] aliens to legal resident workers, any incentive to hire such … aliens is correspondingly lessened.” Sure–Tan, 467 U.S. at 893, 104 S.Ct. 2803. Exempting unauthorized aliens from the FLSA would frustrate the purposes of the IRCA, for unauthorized workers’ “acceptance … of jobs on substandard terms as to wages and working conditions can seriously depress wage scales and working conditions of citizens and legally admitted aliens.” De Canas v. Bica, 424 U.S. 351, 356–57, 96 S.Ct. 933, 47 L.Ed.2d 43 (1976).

Holding employers who violate federal immigration law and federal employment law liable for both violations advances the purpose of federal immigration policy by “offset[ting] what is perhaps the most attractive feature of [unauthorized] workers—their willingness to work for less than the minimum wage.” Patel, 846 F.2d at 704. For this reason, prohibiting employers from hiring unauthorized aliens is in harmony with requiring employers—including those who break immigration laws by hiring unauthorized workers—to provide fair working conditions and wages. Both (1) the legislative history of the IRCA, which we reference “for those who find legislative history useful,” United States v. Tinklenberg, 563 U.S. ––––, ––––, 131 S.Ct. 2007, 2015, 179 L.Ed.2d 1080 (2011), and (2) “our steadfast canons of statutory construction,” United States v. Johnson, 703 F.3d 464, 468 (8th Cir.2013), confirm this point.

First, the House Committee on Education and Labor’s report on the IRCA explained Congress did

not intend that any provision of [the IRCA] would limit the powers of State or Federal labor standards agencies such as … the Wage and Hour Division of the Department of Labor … to remedy unfair practices committed against undocumented employees for exercising their rights before such agencies or for engaging in activities protected by these agencies. To do otherwise would be counter-productive of our intent to limit the hiring of undocumented employees and the depressing effect on working conditions caused by their employment.

H.R.Rep. No. 99–682(II), at 1 (1986), reprinted in 1986 U.S.C.C.A.N. 5757, 5758 (emphasis added). When Congress passed the IRCA, at least the authors of this report expected the FLSA would continue to protect unauthorized aliens from substandard working conditions and wages.

Second, § 111(d) of the IRCA “authorized to be appropriated, … such sums as may be necessary to the Department of Labor for enforcement activities of the Wage and Hour Division … in order to deter the employment of unauthorized aliens and remove the economic incentive for employers to exploit and use such aliens.Pub.L. No. 99–603, § 111(d), 100 Stat. 3359, 3381 (1986). Presuming, as the employers do, that the IRCA impliedly exempts unauthorized aliens from the protections of the FLSA would render this section “mere surplusage,” Marbury v. Madison, 5 U.S. (1 Cranch) 137, 174, 2 L.Ed. 60 (1803). No “sums” would “be necessary” to enforce the FLSA as to unauthorized aliens if the FLSA did not apply to their employment. § 111(d), 100 Stat. at 3381. A reading that turns an entire subsection into a meaningless aside “is inadmissible, unless the words require it.” Marbury, 5 U.S. (1 Cranch) at 174. The IRCA’s words do not require it, so “the presumption against surplusage [is] decisive.” Johnson, 703 F.3d at 468.

As such, the court held that “unauthorized aliens may sue under the FLSA, 29 U.S.C. §§ 206(a), 207(a), 216(b), to recover statutory damages for work actually performed.”

Click Lucas v. Jerusalem Cafe, LLC to read the entire opinion.  Click DOL Amicus Brief to read the Secretary of Labor’s Amicus Curiae Brief, submitted in support of the Plaintiffs-Appellees.

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DOL Announces Final Rule Extending Minimum Wage and Overtime Pay to Home Health Workers

In an announcement that has long been awaited by workers advocates and those in the home health industry as well, today the United States Department of Labor (DOL) announced a final rule, to go into effect on January 1, 2015, which extends the FLSA’s minimum wage and overtime protections to home health aides that perform typical CNA tasks in the homes of the aged and infirm.  In an email blast, the DOL reported:

The U.S. Department of Labor’s Wage and Hour Division announced a final rule today extending the Fair Labor Standards Act’s minimum wage and overtime protections to most of the nation’s direct care workers who provide essential home care assistance to elderly people and people with illnesses, injuries, or disabilities. This change, effective January 1, 2015, ensures that nearly two million workers – such as home health aides, personal care aides, and certified nursing assistants – will have the same basic protections already provided to most U.S. workers. It will help ensure that individuals and families who rely on the assistance of direct care workers have access to consistent and high quality care from a stable and increasingly professional workforce.

Among other things, the final rule overrules the 2007 holding of the Supreme Court in Long Island Care at Home, Ltd. v. Coke, and requires 3rd party employers such as staffing agencies to pay companions and home health workers overtime under the FLSA when they work in excess of 40 hours per week.

The New York Times provides a pretty good synopsis of the changes to the Companionship Exemption, provided by the final rule:

Under the new rule, any home care aides hired through home care companies or other third-party agencies cannot be exempt from minimum wage and overtime coverage. The exemptions for aides who mainly provide “companionship services” — defined as fellowship and protection for an elderly person or person with an illness, injury or disability who requires assistance — are limited to the individual, family or household using the services.

If an aide or companion provides “care” that exceeds 20 percent of the total hours she works each week, then the worker is to receive minimum wage and overtime protections.

The new rule defines care as assisting with the activities of daily living, like dressing, grooming, feeding or bathing, and assisting with “instrumental activities of daily living,” like meal preparation, driving, light housework, managing finances and assisting with the physical taking of medications.

The companionship exemption will not apply if the aide or companion provides medically related services that are typically performed by trained personnel, like nurses or certified nursing assistants.

Live-in domestic service workers who reside in the employer’s home and are employed by an individual, family or household are exempt from overtime pay, although they must be paid at least the federal minimum wage for all hours worked.

Click Final Rule to read the published rule, or U.S. News and Report to read an article discussing the announcement.

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What Defines Commercial Motor Vehicles (CMVs) for Application of MCA Exemption Under Technical Corrections Act (TCA)? Courts Disagree

Two recent cases—one from the Eighth Circuit and one from a District court within the Ninth Circuit—continue to demonstrate that when it comes to application of the Motor Carrier Act’s exemption to the FLSA, for employees who drive commercial motor vehicles (CMVs) in interstate commerce, courts continue to be confused. Within days of the Eighth Circuit’s holding that it is the Gross Vehicle Weight Rating (GVWR) dictates whether a motor vehicle weighs 10,000 pounds or more, and thus reaches the threshold to be considered a CMV, a court in the District of Idaho held that the actual weight when loaded and not the GVWR dictates the weight for purposes of application of the MCA under the Technical Corrections Act (TCA). Both cases are discussed below.

8th Cir.: GVWR, Not Actual Weight, Is the Appropriate Criterion for Determining if the TCA Applies

McCall v. Disabled American Veterans

Initially, the Eighth Circuit discussed the historical background of the TCA, with respect to the MCA and SAFETEA-LU, the amendment that preceded the TCA:

Under the FLSA, “[e]mployees engaged in interstate commerce” are to be paid “one and one-half times” their regular salary rates for all work performed in excess of 40 hours per week. 29 U.S.C. § 207(a)(1). However, under the MCAE, the overtime-pay provision of § 207 does not apply to “any employee with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service pursuant to the provisions of section 31502 of Title 49.” 29 U.S.C. § 213(b)(1). “The Secretary of Transportation may prescribe … maximum hours of service of employees of … motor carrier[s] and … motor private carrier[s].” 49 U.S.C. § 31502(b)(1) and (2). As relevant here, “motor private carrier” is a person “transporting property by motor vehicle when … the property is being transported for sale, lease, rent, or bailment or to further a commercial enterprise .” 49 U.S.C. § 13102(15)(C).

In 2005, the SAFETEA–LU amended the definition of “motor private carrier” to mean “a person, other than a motor carrier, transporting property by commercial motor vehicle (as defined in section 31132).” 49 U.S.C. § 13102(15) (2005) (emphasis added). Section 31132 defines a “commercial motor vehicle” as one which “has a gross vehicle weight rating or gross vehicle weight of at least 10,001 pounds, whichever is greater.” 49 U.S.C. § 31132(1). Therefore, following enactment of the SAFETEA–LU, the overtime-pay provision of § 207 began to apply to drivers of vehicles with a GVWR less than 10,001 pounds.

Reasoning that the TCA did not do away with SAFETEA-LU’s measure of 10,000 pounds by using the GVWR, the court explained:

In 2008, the TCA deleted the § 13102(15) reference to a “commercial motor vehicle (as defined in section 31132)” and inserted the more generic language “motor vehicle,” which is its current form. 49 U.S.C. § 13102(15) (2008). Section 306 of the TCA also extended FLSA overtime protections to “covered employees,” defined as individuals who are employed as motor private carriers, “who perform[ ] duties on motor vehicles weighing 10,000 pounds or less.” (Emphasis added). Pub.L. 110–244, Title III, § 306, 122 Stat. 1572, 1621 (2008). In the Bulletin, the Department of Labor’s Wage and Hour Division stated that it “will continue to use the gross vehicle weight rating2 (GVWR) or gross combined vehicle weight rating in the event that the vehicle is pulling a trailer” to determine if a vehicle is one “weighing 10,000 pounds” or less. Therefore, the overtime-pay provision of § 207 applies to vehicles with a GVWR of 10,000 pounds or less. We accord appropriate deference to this interpretation of the FLSA by the Secretary of Labor. See Donovan v. Bereuter’s, Inc., 704 F.2d 1034, 1036 (8th Cir.1983) ( “[T]he Secretary[ of Labor]‘s interpretations are entitled to considerable weight.”).

McCall argues that he was a covered employee with overtime rights under the FLSA because the trucks that he operated actually weighed less than 10,000 pounds despite having GVWRs greater than 10,000 pounds. Upon review, we agree with the district court that GVWR, not actual weight, is the appropriate criterion for determining if the TCA applies to place a driver’s wage regulation under the FSLA rather than the Transportation Secretary. McCall operated trucks with GVWRs in excess of 10,000 pounds. He is not entitled to overtime under the FSLA.

Click McCall v. Disabled American Veterans to read the entire Opinion.

D.Idaho: Actual Weight, Not GVWR Determinative of Whether Vehicle Qualifies as CMV Under TCA

Garcia v. Western Waste Services, Inc.

In the second case, a court within the District of Idaho examined the identical issue and reached the opposite conclusion. That is the Idaho court held that the same regulation relied upon by the Eighth Circuit was not entitled to deference, because the statute at issue, the TCA, unambiguously eliminated SAFETEA-LU’s prior definition of a CMV (utilizing the GVWR) for vehicles not pulling a trailer. As such, the Garcia court held that the actual weight of the vehicle and not the GVWR dictates whether a vehicle is a CMV within the jurisdiction of the Secretary of Transportation (and whether the MCA applies).

Framing the issue, the court explained:

Garcia asserts that he is a “covered employee” under the TCA small vehicle exception due to his work as a mechanic and/or driver. To qualify for overtime pay as a mechanic, Garcia must show that: (1) he was a mechanic for a DOT-regulated motor carrier, (2) his work affected, in part, the safety of vehicles weighing 10,000 pounds or less, and (3) that the vehicles were in transportation in interstate commerce. Pub.L. No. 110–244, § 306(c). It is undisputed that Garcia worked as a mechanic for Western Waste, and that Western Waste is a DOT-regulated motor carrier. It is also clear that Garcia’s work affected the safety of all of Western Waste’s vehicles, which all travel in interstate commerce. Molitor Aff., ¶¶ 13–16, Dkt. 33–4. The main questions at issue are whether any of Western Waste’s vehicles weigh 10,000 pounds or less, and whether Garcia’s work on any such vehicles is sufficient to qualify him for the TCA exception.

Reasoning that the actual weight of the vehicle and not the hypothetical GVWR governs whether a vehicle meets the definition of a CMV under the TCA, the court explained:

(1) Vehicle Weight

The issue is how do you weigh a truck? Garcia asserts that Western Waste’s fleet has a number of service vehicles that weigh less than 10,000 pounds. Western Waste has 5 service vehicles that are used to transport portable toilets, run errands, and do service on other trucks and equipment. When the parties weighed three of Western Waste’s service vehicles on June 13, 2012, the actual weight of each vehicle, without a trailer, was less than 10,000 pounds. Thorne Aff., Dkt. 37–2. However, Western Waste argues that actual weight is not the appropriate measure of vehicle weight under the TCA. Instead, the GVWR or GCWR should be used. Western Waste points out that all of its service vehicles are equipped to pull, and regularly pull, a 5,740 pound trailer. Additionally, Western Waste states that there are several other trailers of unknown weight that the service vehicles regularly pull. Accordingly, Western Waste argues that all of its service vehicles have GCWRs that exceed 10,000 pounds.

The TCA does not specify how vehicle weight is to be determined. As mentioned above, SAFETEA–LU specifically provided that the GVWR or GCWR was used to determine vehicle weight. 49 C.F.R. § 390.5. The TCA dropped any reference to GVWR or GCWR, and simply refers to “motor vehicles weighing 10,000 pounds or less.” Thus, Congress appears to have abandoned the GVWR and GCWR standard for determining availability of the exemption.

After Congress passed the TCA, the Department of Labor (“DOL”) issued Field Assistance Bulletin No.2010–2 (“the Bulletin”) to explain its interpretation of the TCA. Specifically, the Bulletin announced that the Wage and Hour Division “will continue to use the [GVWR] or [GCWR] in the event that the vehicle is pulling a trailer” to determine vehicle weight. Id. This raises the question of whether the Bulletin’s interpretation of the TCA is entitled to deference.

After a discussion of the types of deference that a court owes to administrative regulations of that administrations own regulations, the court rejected DOL’s interpretation of the TCA, and held that the regulation at issue (defining the weight of a CMV) was unambiguous:

Under these standards, the Court concludes’ that the DOL’s interpretation of the TCA is not entitled to deference. It is not an attempt to interpret its own ambiguous regulation, and therefore is not entitled to deference under Auer. Additionally, it is not entitled to Chevron deference. When Congress enacted the TCA, it had the language of the SAFETEA–LU before it, and chose not to rely upon GVWR or GCWR to measure a vehicle’s weight for purposes of the TCA exception. In the Court’s view, the language in the TCA is not ambiguous. Therefore, the DOL’s interpretation, which is contrary to the plain language of the statute, is not warranted.

Moreover, the DOL Bulletin is not persuasive and runs afoul of the charge that the TCA exception be construed broadly. The DOL offers no explanation as to why it will continue to use GVWR or GCWR, despite the clear language of the statute not adopting that standard. Furthermore, using GVWR or GCWR narrows the number of employees covered by the TCA exception. Such a reading does not allow the Court to construe the TCA exception “to apply to the furthest reaches consistent with Congressional direction.” Klem, 208 F.3d at 1089. Therefore, in absence of any guidance from Congress and “a specific definition in the TCA, the ordinary meaning of ‘weight’ controls.” Glanville v. Dupar, Inc., CIV.A. H–08–2537, 2009 WL 3255292, *8 (S.D.Tex. Sept. 25, 2009).

Even under the ordinary meaning of weight, however, the weights of a truck and trailer which are commonly used together should be combined. Id. (holding that because the plaintiffs “operated vehicles, truck and trailer combined, with an actual weight of greater than 10,000 pounds,” the TCA was inapplicable). When Western Waste’s service vehicles are combined with the trailer, they exceed 10,000 pounds. However, there are unresolved factual questions as to whether all of the service trucks actually pull the trailer. Garcia contends that only one of the service trucks pulled the trailer during his employment. Garcia Decl., ¶ 4, Dkt. 37–1. Garcia’s allegations raise doubt as to whether all of the trucks should have a weight rating combined with the trailer. If vehicles # 25 and # 27 do not pull the trailer, as Garcia asserts, then they will have an actual weight and GVWR under 10,000 pounds. Thus disputed issues of fact remain.

Click Garcia v. Western Waste Services, Inc. to read the entire Memorandum Decision and Order.

Although not discussed here, the courts also fell on opposite sides of the “mixed fleet” question. For anyone facing this issue—whether an employee who drives both CMVs and non-CMVs for his or her employer within the same week—you would be well-advised to read these opinions on that issue as well.

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D.Mass.: Where 10% of Business Comprised of Sales of Automobiles, Defendant Not “Primarily Engaged in the Business of Selling Such Vehicles”

Carroca v. All Star Enterprises and Collision Center Inc.

Although not often the subject of litigation, pursuant to 29 U.S.C. § 213(10)(a), certain employees of automobile dealerships are exempt from the FLSA’s overtime requirements. Specifically, that statute exempts from overtime:

any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements, if he is employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles or implements to ultimate purchasers…

In this case, the court was called upon, in part, to decide whether defendant—90% of its business was the repair of automobiles, with the remaining 10% of the business comprised of the sale of automobiles—qualified as such an automobile dealership. The court held, as a matter of law, that such a business does not qualify for the exemption.

The court reasoned:

All Star admits that Carroca was employed as an auto body repairman. D. 19 ¶ 5; D. 23 ¶ 5. Assuming without deciding that an auto body repairman is a “salesman, partsman, or mechanic,” the next question, which the parties dispute, is whether Carroca was “employed by a nonmanufacturing establishment primarily engaged in the business of selling [automobiles, trucks, or farm implements] to ultimate purchasers.” The Department of Labor has issued 29 C.F.R. § 779.372, which defines what it means to be “primarily engaged” in said business. According to the regulation, “[a]s applied to the establishment, primarily engaged means that over half of the establishments [sic] annual dollar volume of sales made or business done must come from sales of the enumerated vehicles.” Id.; see Donovan v. Bereuter’s, Inc., 704 F.2d 1034, 1036–37 (8th Cir.1983) (construing “the legislative history as indicating that Congress intended the exemption to be narrowly applied and was not designed to exempt those dealers who engage in the retail sales of automobiles to a limited degree”).

Here, as All Star acknowledges, D. 22 at 2, All Star has the burden of proof with respect to the applicability of the exemption. Hines v. State Room Inc., 665 F.3d 235, 240 (1st Cir.2011). Here, All Star has not met that burden where All Star admits that only “approximately ten percent” of All Star’s business constitutes automobile sales. Pl. Stmt. of Facts, D. 19 ¶ 2; Def. Resp., D. 23 ¶ 2; see Def. Resp. to Interrog. ¶ 5 (stating that “vehicle sales constitute approximately 10% of the business of Allstar; approximately 90% of the business consists of vehicle repair”). Thus, All Star is incorrect that it falls within the FLSA overtime exemption under 29 U.S.C. § 213. Accordingly, the exemption does not apply to All Star and it is bound by the overtime provisions under 29 U.S.C. § 207.

Click Carroca v. All Star Enterprises and Collision Center Inc. to read the entire Memorandum and Order.

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