Tag Archives: Exemptions

D.Idaho: “Sales Representative” Who Educated Retailers, But Did Not “Sell” To Customers, Not Subject To Outside Sales Exemption Under FLSA

Burling v. Real Stone Source, LLC

The case was before the Court on the parties’ respective motions for summary judgment on exemption issues. The Court agreed with Plaintiff that he was not subject to the outside sales exemption, and further held that issues of fact precluded a finding regarding the applicability of the administrative exemption. Here, we discuss only the portion of the decision pertaining to the outside sales exemption.

The Court first recited the relevant facts, “Mr. Burling, was employed as a sales representative from March 15, 2006 to November 29, 2007 by Defendant Real Stone Source, LLC, d/b/a Rox Pro. Real Stone is a distributor of Rox Pro products which is a natural modular stone system used in construction. (Dkt. No. 28,Dkt. No. 27-3, p. 37). Real Stone products are distributed exclusively through a network of local dealers from whom the ultimate consumer buys the product. (Dkt. No. 26, Ex. E). Mr. Burling was hired as a Real Stone sales representative for a seven state area comprised of Washington, Oregon, Idaho, Montana, Wyoming, Utah, and Colorado. Mr. Burling was tasked with contacting existing and potential local dealers and pitching Real Stone’s products to them. For prospective local dealers, Mr. Burling’s pitch was in an effort to get them interested in serving as a local dealer of Real Stone products. Once interested, Real Stone would determine whether the prospective dealer met its qualifications and, if so, approve them as a local dealer. For existing dealers, Mr. Burling continued to educate them on Real Stone Products and also aided them in selling Real Stone products through various efforts including promotions and outreach to consumers.”

Agreeing with Plaintiff, and the cases holding that the outside sales exemption can only apply where an employee makes actual sales, the Court said, “This Court finds the cases cited by Mr. Burling to be the correct analysis to apply here. See Kuzinski v. Schering Corp., 604 F.Supp.2d 385 (D.Conn. March 30, 2009). Although the California District Court cases cited by Real Stone discuss the FLSA, they were applying California Labor Law. Notably, the Barnick court recognized that there is a distinction between the FLSA and California Labor Law. There, the court stated that the employee’s argument that he was only promoting, not selling, because he never received commitments from the physicians was “likely a correct application of the distinction between promotion and sales laid down by the Department of Labor and several federal courts with regard to the FLSA” but that it did not apply to the California Labor Law. Barnick, 522 F.Supp.2d at 1264.FN2Where, as here, the case does not raise claims of California Labor Law but, instead, the FLSA, the analysis from cases applying the FLSA are more appropriately used. As such the Court will first consider whether Mr. Burling made sales as defined by the FLSA. See Kuzinski v. Schering Corp., 604 F.Supp.2d 385 (D.Conn. March 30, 2009).”

The Court adopted the reasoning of several of the pharmaceutical sales representative cases, stating, “[t]he Court finds Real Stone has failed its burden of demonstrating that, as a matter of law, Mr. Burling was an exempt outside salesperson. The facts in the record demonstrate that Mr. Burling did not make any sales. The Court rejects Real Stone’s theory that its sales representatives were a part of every sale in their territory. (Dkt. No. 27-3, pp. 109-111), (Dkt. No. 27-4, pp. 24, 51-52), (Dkt. No. 31-2, p. 103). Mr. Burling’s job was to create a network of local dealers, educate the local dealers and contractors about the product, and bolster consumer desire to purchase the product from the local dealers who in turn bought from Real Stone. (Dkt. No. 27-3, pp. 94-96). This is consistent in the depositions of both Mr. Burling and Mr. Motarex as well as Real Stone’s “Sales Philosophy and Market Strategy” document. (Dkt. No. 26-2, Ex. E), (Dkt. No. 27-3, pp. 96-111, Motarex Depo.), (Dkt. No. 27-3, pp. 54-66, Burling Depo.). Both Mr. Burling and Mr. Motarex testified that Real Stone sales representatives were hired to establish a network of dealers in their territory, provide sales support to those dealers by promoting the products and educating the consumers, and engaging in further advanced marketing strategies to “create buzz” for the products and increase consumer purchases from the dealers. (Dkt. No. 26-2, Ex. E). In sum, to “generate” and/or “drive” sales to the local dealers. (Dkt. No. 27-3, pp. 25-28), (Dkt. No. 31-2, pp. 93, 95-96).”

Ultimately, the Court concluded, “[b]ecause the facts here do not demonstrate that Mr. Burling actually made sales, the Court finds the outside salesperson exemption does not apply. Instead the facts show that Mr. Burling’s primary duty was to promote and market the Real Stone brand in such a way so as to create a network of local dealers in his territory and to bolster a market for the products such that consumers were continually buying the products from the local dealers. Accordingly, the Court will grant Mr. Burling’s motion for partial summary judgment on this point.”

Although not discussed at length here, the Court also analyzed the applicability of the claimed administrative exemption, before ultimately deciding issues of fact precluded a finding one way or another.

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M.D.Fla.: Question Of Fact For Jury Whether “Field Coordinator” For Cable Company, Who Managed Subcontractors, Administratively Exempt; Summary Judgment Denied

Driggers v. Cable Television Intsallation & Service, Inc.

This case was before the Court on Defendant’s Motion seeking summary judgment finding that Plaintiff was subject to the Administrative Exemption of the FLSA. Reviewing the evidence in the light most favorable to the Plaintiff, as the non-moving party, the Court denied Defendant’s Motion.

The Court assumed the following facts, as averred by Plaintiff:

“Plaintiff was employed by CTIS, a cable and internet installation services provider. He began his employment in dispatch and then became a cable installer (“Subcontractor”) for two to three years. Subcontractors are independent contractors required to use their own equipment and tools in their installation work as well as provide their own insurance. In May 2005, Plaintiff began working as a Field Coordinator, later called a Field Advisor, and continued in this position until he was terminated in May 2008.

As Field Coordinator, Plaintiff was assigned a hub, which was a geographical area based on zip code. Each morning, he handed out work assignments to subcontractors in his hub, making the assignments based on the time of the scheduled work and, when the workload permitted, on subcontractor ability and experience. Plaintiff also reviewed and entered subcontractor paperwork, which included checking billing documents to assure they were filled out in compliance with the standards of CTIS and its customer Bright House. He adjusted billing codes to comply with the job specifications and billing rules, often seeking guidance from Bright House.

Plaintiff was responsible for informing the subcontractors in his hub of changes to job specifications put out by Bright House and CTIS. He sometimes explained what the changes meant and suggested approaches to performing the job to the new specifications. If a subcontractor had a problem with an installation, Plaintiff would try to help the subcontractor figure out how to make the job comply with specifications, and if he could not, he would contact Bright House for further instructions. Plaintiff did not have the authority to deviate from job specifications without first consulting Bright House.

In the afternoons Plaintiff performed inspections. He had the authority to inspect installations of his choice to ensure compliance with job specifications. The number of these quality control inspections varied based upon Plaintiff’s workload in the office and number of damage inspections assigned by Bright House. If his quality control inspection revealed deviations from specifications, Plaintiff would have the installation subcontractor fix the problem to meet job specifications or assign another subcontractor to do so. Occasionally Plaintiff performed the repair work himself When customers had complaints about installations, they contacted Bright House or CTIS who in turn would contact Plaintiff, instructing him to inspect the damage. Plaintiff performed these inspections to determine if the subcontractor was responsible for the damage. If the subcontractor made a mistake that caused the damage, the subcontractor and his insurance were responsible. If the damage was caused by the subcontractor following specifications, Plaintiff would contact CTIS for approval of a repair or assign another subcontractor to handle the issue. If the subcontractor was not responsible for the damage, Plaintiff would not offer repairs and the customer would have to contact CTIS to take the claim further.”

The Court noted, “[i]n their filings, both parties state that Plaintiff satisfies the first and second prongs of the administrative exemption. Defendant has described Plaintiff’s primary duty as quality assurance, including assigning work orders, communicating changes in job specifications, checking subcontractor paperwork for compliance with policy, and ensuring subcontractor installations met specifications and quality standards. For the purposes of summary judgment, Plaintiff has agreed to this description and its satisfying the second prong. Plaintiff challenges only the use of discretion and independent judgment with respect to matters of significance in the performance of Plaintiffs primary duty as required in the third prong.”

Although the Court agreed with Defendant, that a jury could find that, since 4 or the 10 tests for independent judgment and discretion laid out in the CFR were satisfied, it was a question of fact of the jury whether Plaintiff met the requisite independent judgment and discretion element of the Administrative Exemption. Thus, the Court denied summary judgment stating, “[t]he undisputed facts allow a jury to reasonably find that Plaintiff has met some or none of the factors to be considered for the applicability of the third prong of the administrative exemption. The jury could determine that Plaintiffs use of skill and experience in the performance of his primary duty and his limited leeway in decisions do not allow him to qualify under the administrative exemption. Cotton v. HFS-USA, Inc., No. 8:08-cv-251-T-33TGW, 2009 WL 1396351 (M.D.Fla. May 18, 2009) (summary judgment order) (finding an employee who performed quality control inspections through comparison to standards and who assigned subcontractor work and repairs without direct supervision did not exercise discretion and independent judgment because most of his decisions were based on experience in the industry, well-established standards, and the use of common sense, and because he sought approval for deviations from specifications and frequently spoke with his superiors). The motion for summary judgment is therefore denied.”

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S.D.Fla.: Defendant’s Generalized Affirmative Defenses Struck; FLSA Plaintiff Entitled To Attorneys’ Fees If Prevails

Romero v. Southern Waste Systems, LLC

This case was before the Court pursuant to Plaintiffs Motion to Strike Defendant’s Affirmative Defenses to Plaintiff’s Complaint. Plaintiff moved to strike several affirmative defenses, including a generalized reference to all “white collar” exemptions, a generalized exemption that the Plaintiff was paid pursuant to the parties’ “agreement,” set-off (alleging no facts to support same), and a claim that Plaintiff was not entitled to prevailing attorneys’ fees under the FLSA. Additionally, the Answer had a request for Defendant’s attorney fees without basis. The Court struck all the affirmative defenses, which were the subject of the opinion, some with leave to re-plead and other without.

Addressing each of the Defendant’s disputed affirmative defenses, the Court stated, “Defendant’s Third Affirmative Defense claims that Plaintiff was exempt from overtime compensation pursuant to the 29 U.S.C. § 213(a) (1) exemption to the FLSA. Plaintiff complains that this affirmative defense fails to allege any facts that would put Plaintiff on notice of the basis of Defendant’s claim. This provision encompasses the executive exemption, the administrative exemption, the outside sales exception, the learned professional exemption and the creative professional exemption. Defendant has agreed to amend his defense to state that Plaintiff was exempt pursuant to the executive and/or administrative exemption pursuant to 29 U.S.C. § 216(b). Leave to amend is granted.

The Court notes that 29 U.S.C. § 216(b) prescribes damages under the FLSA and is unrelated to the exemptions to the FLSA. When Defendant amends this affirmative defense, the Court instructs Defendant to be clear regarding the provision of the FLSA that forms the basis for the claimed exemption(s).”

The Seventh Affirmative Defense alleges that Defendant paid Plaintiff “all monies owed per the agreement between them.”Plaintiff takes this defense to be a restatement of the defense of accord and satisfaction. This defense is not appropriate under the FLSA because an individual cannot waive entitlement to FLSA benefits. See Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 707, 65 S.Ct. 895, 902 (1945) (“No one can doubt but that to allow waiver of statutory wages by agreement would nullify the purposes of the [FLSA].”). Defendant clarifies that the agreement to which the Seventh Affirmative Defense refers is the agreement that Plaintiff would be paid a salary. The Court requests that Defendant clarify this affirmative defense to make it clear that the “agreement” to which it refers is merely the “agreement” that Plaintiff would receive a salary.

The Tenth Affirmative Defense states that “Defendant is entitled to a credit/set-off for any compensation paid to Plaintiff to which he was not otherwise entitled to the extent such credits/set-off are permissible under the FLSA.”Plaintiff claims that this defense is conclusory in that it fails to allege any facts in support of any sort of set-off. Certain set-off defenses are allowable under the FLSA. Brennan v. Heard, 491 F.2d 1, 4 (5th Cir.1974), for instance, permits district courts to apply a set-off where the set-off would not reduce a plaintiff’s wages to an amount below the statutory minimum. Not all set-offs are permissible, however. This Court has previously ruled that “amounts loaned by an employer to an employee””cannot be applied to offset unpaid wages [under the FLSA].” Morrison, 434 F.Supp.2d at 1322 (citing Donovan v. Pointon, 717 F.2d 1320, 1323 (10th Cir.1983)).See also Hutton v. Grumpie’s Pizza & Subs, Inc., Case No. 07-81228-CIV-MIDDLEBROOKS, 2008 WL 1995091, *4 (S.D.Fla. May 7, 2008) (holding that a set-off defense for money employee allegedly stole from employer was inappropriate in FLSA). The Tenth Affirmative Defense does not state what, if any, compensation Plaintiff received to which he was not otherwise entitled, much less the nature of this compensation. The Tenth Affirmative Defense is stricken, but Defendant shall have leave to amend same.

The Sixteenth Affirmative Defense states that “[t]he Complaint fails to state a claim against [Defendant] upon which attorneys’ fees or costs can be awarded.”The FLSA provides that the Court “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). The Sixteenth Affirmative Defense is stricken without leave to amend.

Defendant also requests attorneys’ fees pursuant to 28 U.S.C. § 1927, which provides for awards of attorney’s fees where

[a]ny attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.

There is no allegation of such conduct in the Answer. Accordingly, the request for fees pursuant to 28 U.S.C. § 1927 is stricken, but with leave to amend.”

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D.Mass.: Motor Carrier Act (MCA) Exemption Not Fleet-wide For Drivers Of Vehicles Less Than 10,000 Pounds, Where Defendant Not Overwhelmingly Commercial Carrier

Brooks v. Halsted Communications, Ltd.

This case was before the Court on cross motions for partial summary judgment filed by the parties with respect to the fleet-wide applicability of the Motor Carrier Act (MCA), to the entire putative class, Defendants’ employees who drove vehicles weighing less than 10,000 pounds, prior to August. The Court framed the issue as “whether, for the period following SAFETEA-LU but prior to the enactment of the TCA, Defendants have carried their burden of showing that the MCA exemption applied to employees who exclusively operated light vehicles.” Whereas Defendants asserted, as a “commercial carrier” all of its drivers were/are exempt, Plaintiffs cited to well-established law that only those individual drivers coming within the MCA’s definition could be potentially exempt. The Court agreed with Plaintiffs entering a detailed Order discussing the issue, and denying Defendants’ motion for summary judgment:

“Plaintiffs are technicians employed by Defendant Halsted Communications, Ltd. (“Halsted, Ltd.”). Defendants are Halsted Ltd.; Halsted Communications, LLC; and Kirk Halsted. The heart of the issue is whether, for a certain period of time, Defendants were obliged to pay Plaintiffs time and a half for overtime as required by the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et seq., and Mass. Gen. Laws ch. 151, §§ 1A and 1B, or were freed from any such obligation by virtue of an exemption set forth in the Motor Carrier Act (“MCA”), 29 U.S.C. § 213(b)(1) and adopted by Massachusetts, Mass. Gen. Laws ch. 151, § 1A(8). The maze-like weave between the FLSA requirement and the MCA exemption has evolved through three different federal statutory enactments and has generated a modest burst of conflicting decisional law. The parties’ cross motions seek contrasting interpretations of the law.”

Reciting the relevant facts the Court said, “[e]ach Plaintiff was employed as a technician by Halsted Ltd. at some point between August 10, 2005 and the present. A technician’s job responsibilities included driving vehicles between work sites in connection with the activation, installation and service of satellite television equipment. Not a single plaintiff ever drove a vehicle that weighed more than 10,000 pounds. Indeed, at the relevant time, less than one percent of Halsted Ltd.’s entire fleet comprised vehicles weighing over 10,000 pounds. Since March 13, 2007, Defendant Halsted Ltd. has been a motor carrier registered with the United State Department of Transportation (“USDOT”) based on its operation of one or more vehicles weighing over 10,000 pounds.”

The Court discussed the differing case law at length, “As noted, the question of whether a “hybrid” motor carrier-i .e., one with drivers operating vehicles weighing both above and below 10,000 pounds-was obliged to pay FLSA overtime to its drivers of lighter vehicles before June 6, 2008 has produced conflicting answers. The weight of district court authority (no appellate decision has as yet appeared), however, strongly favors Plaintiffs. Cases supporting Plaintiffs’ position include Hernandez v. Brink’s, Inc., No. 08-20717-CIV, 2009 U.S. Dist. LEXIS 2726 (S.D.Fla. Jan. 15, 2009) (ruling that mixed fleets containing both commercial and non-commercial vehicles should be treated for FLSA purposes as two separate sub-fleets); Tews v. Renzenberger, Inc., 592 F.Supp.2d 1331, 1346 (D.Kan.2009) (rejecting argument that “the mere presence of commercial motor vehicles in [a] fleet renders all employee-drivers exempt under the MCA exemption”); Vidinliev v. Carey International Inc., 581 F.Supp.2d 1281 (N.D .Ga.2008) (denying summary judgment regarding the applicability of the MCA exemption for claims arising after August 10, 2005 where the defendant operated a mixed fleet of commercial and noncommercial motor vehicles); Kautsch v. Premier Communications, 502 F.Supp.2d 1007 (W.D.Mo.2007) (ruling that the MCA exemption did not apply to the plaintiffs’ claims after August 10, 2005 because they did not operate commercial motor vehicles). Cases supporting Defendants include Collins v. Heritage Wine Cellars, Ltd., No. 07-CV1246, 2008 U.S. Dist. LEXIS 104555 (N.D.Ill.Dec. 29, 2008) and Tidd v. Adecco USA, Inc., No. 07-11214-GAO, 2008 U.S. Dist. LEXIS 69825 (D .Mass. Sept. 17, 2008).”

With its detailed analysis of the issue the Court concluded, “the court will side with Plaintiffs here and will hold that Defendants did not enjoy the exemption and Plaintiffs were entitled to overtime pay during the pertinent time period… a contrary ruling would lead to the absurd result that an employer with 1,000 employees all driving vehicles weighing less than 10,000 pounds would be able rid itself of any obligation to pay FLSA overtime to these otherwise covered employees simply by buying one vehicle weighing over 10,000 pounds and assigning one employee to drive it occasionally across state lines. It is a crazy world, but we can hope that it is not yet that crazy.”

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W.D.Va.: “Assistant Manager” At Auto Parts Store Not Administrative Exempt; Damages To Be Calculated At Time And A Half Not Half-time

Brown v. Nipper Auto Parts and Supplies, Inc.

The case was before the Court on cross motions for summary judgment pertaining to whether Plaintiff was exempt from the FLSA’s overtime provisions under the FLSA. Additionally, Plaintiff moved for summary judgment on the issues of willfulness (3 year statute, as well as liquidated damages), and for a finding that the method under which his overtime should be calculated was the default time and a half method. As discussed below, the Court found Plaintiff nonexempt and further held that his damages were due to be calculated based on time and a half and not the fluctuating workweek’s half-time formula.

Addressing the exemption issue first, the Court noted, “Brown’s primary duties were sales and other non-exempt work, not running or servicing; the business. Nipper Auto attempts to characterize Brown’s duties as procurement and quality control, exempt activities; but since his activities generally concerned ordering auto parts based on customers’ requests, these duties are more aptly described as sales, a non-exempt activity. Roger Nipper has indicated no significant managerial decisions or changes that he has made during Brown’s tenure at Nipper Auto in which Brown had input. Indeed, Nipper Auto’s music section, where Brown is purported to have had primary authority, existed before Brown’s hiring and has continued to exist after his termination. Finally, Brown’s intermittent supervision of Shultz fails to show that his primary duty was an exempt activity.” Therefore, the Court found Brown nonexempt.

Later in the decision, the Court addressed the issue of calculating Plaintiff’s damages: “Nipper Auto argues that if Brown is entitled to overtime compensation, it should be calculated using the fluctuating workweek method of payment (the “FWW”), under which an employee’s overtime pay rate is half his regular pay rate. Brown argues that the FWW should not apply and that his overtime compensation rate should be one and one-half times his regular rate. The court agrees with Brown.

Generally, the rate for overtime compensation is one and one-half times the regular rate of pay, 29 U.S.C. § 207(a)(1), but when the FWW method applies, the rate for overtime compensation is one-half the regular pay. 29 C.F.R. § 778.114(a) (2003); Knight v. Morris, 693 F.Supp. 439, 445 (W.D.Va.1988). The FWW method is not an exception to the normal method of computing overtime compensation under the FLSA, “[i]t merely provides an alternative means by which an employer can determine its employees’ regular and overtime rate of pay.” Flood v. New Hanover County, 125 F.3d 249, 252 (4th Cir.1997). The employer must satisfy five conditions in order to take advantage of the FWW calculation: (1) the employee’s hours must fluctuate from week to week, (2) the employee must receive a fixed salary, (3) the salary must meet the minimum wage standards, (4) the employee and the employer must have a clear mutual understanding that the salary (not including overtime premiums) is fixed regardless of the number of hours the employee works, and (5) the employee must receive overtime compensation for hours worked in excess of forty hours, not less than the one-half rate of pay. Id.; 29 C.F.R. § 778.114(a). Though the first three FWW requirements are established, the court finds that the FWW method does not apply because Nipper Auto cannot fulfill the fourth and fifth requirements.

Under the fourth requirement, the parties must have a clear mutual understanding that “the fixed salary is to be compensation for all straight time hours worked, whether few or many.” Mayhew, 125 F.3d at 219. The burden is on the employer to show the existence of a clear mutual understanding. Monahan v. County of Chesterfield, 95 F.3d 1263, 1275 n. 12 (4th Cir.1996). If the employer believed the employee was exempt from overtime compensation, “then it was not possible … to have had a clear mutual understanding … that [the employee] was subject to [a] calculation method applicable only to non-exempt employees who are entitled to overtime compensation.” Cowan v. Treetop Enter., 163 F.Supp.2d 930, 942 (M.D.Tenn.2001); (quoting Rainey v. Am. Forest & Paper Ass’n Inc., 26 F.Supp.2d 82, 102 (D.D.C.1998)).

Nipper Auto cannot establish the fourth requirement because its principal argument is that Brown is an FLSA-exempt employee not entitled to any overtime compensation; in the alternative, Nipper Auto argues that the parties had an implied understanding with Brown regarding his salary and overtime compensation. If Nipper Auto believed Brown was exempt, the requisite clear mutual understanding for the application of the FWW method could not have existed. Rainey, 26 F.Supp.2d at 102. Both parties understood that Brown would receive no additional salary no matter how many hours he worked in a given week, but § 778.114(a) specifies that the fixed salary does not include overtime premiums. The court finds that, because Nipper Auto believed Brown was an FLSA-exempt employee, it has failed to create a material issue of fact as to the clear mutual understanding required to apply the FWW method.

In addition to this clear mutual understanding, under the fifth FWW requirement, the employer must also demonstrate that the employee has actually received some form of overtime compensation. See Cowan, 163 F.Supp.2d at 941 (“Moreover, to comply 29 C.F.R. Section 778.114 requires a contemporaneous payment of the half-time premium for an employer to avail itself of the fluctuating workweek provision.”). Indeed, the Fourth Circuit has applied the FWW method only when the employee has received contemporaneous payment for overtime. See generally Flood, 125 F.3d at 252 (applying the FWW where the employer contemporaneously provided some form of overtime compensation); Griffin, 142 F.3d at 715 (same); Mayhew, 125 F.3d at 218 (same). It is undisputed that Nipper Auto did not pay Brown any overtime compensation during his employment. Because no form of overtime compensation was provided, Nipper Auto cannot apply the FWW method retroactively. Flood, 125 F.3d at 249; Griffin, 142 F.3d at 716. The court finds that Nipper Auto’s evidence is insufficient to allow a reasonable jury to conclude that Brown is subject to the FWW method of compensation; therefore, Brown’s overtime pay rate is one and one-half times his regular rate of pay. The court grants Brown’s motion for summary judgment on this matter.”

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D.Mass.: SAFETEA-LU Does Not Apply Retroactively To Bar Claims Of Employees Who Drive Vehicles Of Less Than 10,001 Lbs.

Benoit v. Tri-Wire Engineering Solutions, Inc.

The parties filed cross-motions for partial summary judgment on the issue of the applicability of the Motor Carrier Act (“MCA”) exemption as a defense to Plaintiffs’ complaint which seeks to recover unpaid overtime from August 10, 2005, to the present. The issue was the retroactive applicability of the SAFETEA-LU Technical Corrections Act of 2008 (“SAFETEA-LU”).  Addressing numerous arguments from both Plaintiffs and Defendants, the Court concluded that SAFETEA-LU does not apply retroactively.

Plaintiff filed the instant complaint on December 11, 2007, and since then at least 125 additional technicians have filed consent-to-sue forms. On or about June 5, 2008, the court granted Plaintiffs’ motion for preliminary recognition of this case as a FLSA collective action and established a discovery schedule. Coincidentally, on the very next day, June 6, 2008, the FLSA was amended in a manner potentially applicable here, i.e., it called into question whether a long-standing overtime exemption for employers of light-weight vehicle drivers-the MCA exemption-should retroactively apply to August 10, 2005. Accordingly, on October 15, 2008, the court entered a new scheduling order which allowed the parties to file cross-motions for partial summary judgment addressing that issue. The motions were filed and the court heard oral argument on March 26, 2009. In deciding in Plaintiffs favor the Court discussed the nature of the SAFETEA-LU amendments and their affect on the FLSA and the MCA:

“On August 10, 2005, however, Congress passed the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (hereinafter “the SAFETEA-LU”).Pub.L. No. 109-59, 119 Stat. 1747 (2005). Among other things, the SAFETEA-LU narrowed the definition of a “motor carrier” to include only “person[s] providing commercial motor vehicle (as defined in section 31132) transportation for compensation.”49 U.S.C. § 13102(14) (emphasis added). In turn, the “commercial motor vehicle” definition required that the vehicle have “a gross vehicle weight rating or gross vehicle weight of at least 10,001 pounds, whichever is greater.”49 U.S.C. 31132(1) (emphasis added). The practical effect of this amendment-i.e., the narrowing of the MCA exemption to include only operators of motor vehicles weighing more than 10,000 pounds-was that qualified employees who operated light-weight vehicles were entitled, apparently for the first time, to overtime pay under the FLSA.

On June 6, 2008, however, the SAFETEA-LU was enacted. Pub.L. No. 110-244, 122 Stat. 1572 (2008). Among other things, the SAFETEA-LU, in section 305, re-amended the definition of “motor carrier” by striking the word “commercial” and, hence, restoring the definition to its pre-SAFETEA-LU state. Id. § 305(c), 122 Stat. at 1620. The effective date of this part of the SAFETEA-LU, however, is a bit unclear. Accordingly, the court focuses its analysis on the question of whether section 305 applies retroactively to August 10, 2005.

Defendant argued that section 305 of the SAFETEA-LU is an amendment “to the SAFETEA-LU” and that, according to subsection (b) of section 121, it should apply retroactively beginning August 10, 2005. As Plaintiffs argued, however, a close look at the text of section 305 reveals that it is not an amendment to the SAFETEA-LU. Rather, it is an amendment to a portion the United States Code that was created by the ICC Termination Act of 1995. See generally Vidinliev, 581 F.Supp.2d at 1288-90.

Perhaps more importantly for purposes of statutory construction, the court agrees with the following point made in Vidinliev: “If the definition of motor carrier in section 305 applies retroactively, then the one-year defense in section 306 is nothing more than surplusage.” Id. Or, put another way, “applying section 305 retroactively would violate the rule that a statute should be ‘interpreted so that no words shall be discarded as meaningless, redundant, or mere surplusage.’ ” Id. (quoting United States v. Canals-Jimenez, 943 F.2d 1284, 1286 (11th Cir.1991)). See also Wood v. Spencer, 487 F.3d 1, 7 (1st Cir.2007) (”It is common ground that all words and provisions of statutes are intended to have meaning and are to be given effect.”) (citation, alteration and internal quotation marks omitted). Other courts have come to this very conclusion, i.e., “to suggest that the court interpret § 121 in a way that renders the safe harbor in § 306 a nullity is at odds with basic rules of statutory construction.” Tews, 592 F.Supp.2d at 1349 n. 8 (citing Mountain States Tel. & Tel. Co. v. Pueblo of Santa Ana, 472 U.S. 237, 249 (1985)).See, e.g., Villegas, 2008 WL 5137321, at *21 n. 9 (”As this Court must presume that [all the] words of statutes are intended to have meaning, the Court will conclude that § 305 does not apply retroactively, and § 306 provides a one-year defense to liability.”); Veliz, 2008 WL 4911238, at * 6 (”For the one-year defense in Section [306(c) ] to have any relevance, Section 305(b) cannot apply retroactively.”).See also Hernandez v. Brink’s, Inc., 2009 WL 113406, at *7 (adopting reasoning of Vidinliev ); Loyd, 2008 WL 5211022, at *8 (following reasoning of both Vidinliev and Veliz );Horn v. Digital Cable & Communications, Inc., No. 1:06 CV 325, slip op. at 8-10 (N .D.Ohio Nov. 18, 2008) (following Vidinliev to hold that “Section 306 of the [TCA] undermines retroactivity finding”). And the Supreme Court recently reiterated, “one of the most basic interpretive canons [is] that ‘a statute should be construed so that effect is given to all of its provisions, so that no part will be inoperative or superfluous, void or insignificant.’ ” Corley v. United States, — U.S. —-, 2009 WL 901513, at *8 (Apr. 6, 2009) (quoting Hibbs v. Winn, 542 U.S. 88, 101 (2004)). In this court’s view as well, Plaintiffs’ section 306 surplusage argument cinches the result in their favor.”

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4th Cir.: Racing Track Employees Not Subject To The Administrative Exemption; Work Not “Directly Related To The Management Of General Business Operations”

Desmond v. PNGI Charles Town Gaming, L.L.C.

The case was before the Court on appeal. Previously the lower Court had awarded the employer Summary Judgment finding that all of the Plaintiff’s were exempt under the FLSA’s Administrative Exemption. The 4th Circuit disagreed and reversed.

“Charles Town Gaming operates a casino and live horse racing facility in Charles Town, West Virginia. The Former Employees worked for Charles Town Gaming in a non-supervisory position denominated as “Miscellaneous Racing Official,” which we will refer to as “Racing Official.” In the performance of their work duties, each of the Former Employees assisted in various tasks associated with Charles Town Gaming’s staging of live horse races. In the morning and on non-race work days, Racing Officials assist with clerical duties in the secretaries’ office, including noting rider changes, putting together the next day’s racing program, and completing racing entries for the following day. Racing Officials, including the Former Employees, rotated work in four roles: Placing Judge, Paddock Judge, Horse Identifier, and Clerk of Scales during horse races. A Placing Judge “observ[es] races from start to finish and determine[s] the final outcome using a viper computer system and photo finish systems … The Paddock Judge observ[es] the horses in the paddock prior to the running of a race, [ ] ensure[s] the horses are wearing the proper equipment for racing [and that] a responsible trainer or groom is in the paddock to saddle the horse and prepare it for the race. The Paddock Judge is also involved in seeing that a published workout is in the program or announced if [it is] not available by press time. The Horse Identifier is “responsible for foal papers, Coggins test results, and tattoos insuring the correct horse is running in any given race. The [Horse] Identifier goes to the paddock at race time and checks each horse’s tattoo.” J.A. 69, 152, 215; see also
W. Va.Code R. § 178-1-20 (2009). The Clerk of Scales “works in the jockeys’ room prior to and after each horse race and verifies each jockey’s presence and licensure, [as well as the jockey’s weight] before and after each race….”

Finding that Plaintiff’s duties did not fulfill either the 2nd prong of the administrative exemption. “directly related to the management of general business operations,” the Court explained:

“In contrast to the duties of these exempt employees in Shockeley, West, and Darveau, the Former Employees’ work was not directly related to the general business operations of Charles Town Gaming. During the horse races, Racing Officials fulfilled one of several roles, which required them to observe and examine the horses, the jockeys, the trainers or grooms, the relevant paperwork for the horses, the order of finish for the race, or the paperwork associated with any subsequent claims. Racing Officials have no supervisory responsibility and do not develop, review, evaluate, or recommend Charles Town Gaming’s business policies or strategies with regard to the horse races. Simply put, the Former Employees’ work did not entail the administration of-the “running or servicing of”-Charles Town Gaming’s business of staging live horse races. The Former Employees were not part of “the management” of Charles Town Gaming and did not run or service the “general business operations.” While serving as a Placing Judge, Paddock Judge, or performing similar duties is important to the operation of the racing business of Charles Town Gaming, those positions are unrelated to management or the general business functions of the company.

Instead, a Racing Official’s work consisted of tasks somewhat similar to those performed “on a manufacturing production line or selling a product in a retail or service establishment.” Cf.
29 C.F.R. § 541.201(a). Although the administrative-production dichotomy is an imperfect analytical tool in a service-oriented employment context, it is still a useful construct. Other Circuit Courts of Appeal have adopted and modified its logic to less traditional “production” situations:

[A]pplying the administrative-production dichotomy is not as simple as drawing the line between white-collar and blue-collar workers. On the contrary, non-manufacturing employees can be considered “production” employees in those instances where their job is to generate (i.e., “produce”) the very product or service that the employer’s business offers to the public. See, e.g., Reich v. New York, 3 F.3d 581, 587-89 (2d Cir.1993) (police investigators conduct or “produce” criminal investigations); Dalheim v. KDFW-TV, 928 F.2d 1220, 1230-31 (5th Cir.1990) (television station’s producers, directors, and assignment editors “produced” newscast, and were thus non-exempt).
Reich v. John Alden Life Ins. Co., 126 F.3d 1, 9 (1st Cir.1997).

As relevant here, Charles Town Gaming “produces” live horse races. The position of Racing Official consists of “the day-to-day carrying out of [Charles Town Gaming’s] affairs” to the public, a production-side role. See Bratt v. County of Los Angeles, 912 F .2d 1066, 1070 (9th Cir.1990), cited with approval in Shockley, 997 F.2d at 29. Because a Racing Official’s duties are not directly related to the general business operations of Charles Town Gaming, the position does not satisfy the requirements for the administrative exemption under the FLSA.”

Note, the Court declined to determine whether the “independent judgment and discretion” requirement of the 3rd prong was met, after having decided that Plaintiff’s work was not “directly related to the management of general business operations” although it is likely that they would have found that prong to have been lacking as well.

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