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.”
Dixon v. City of Forks
This case was before the Court on Defendant’s motion to exclude Plaintiff’s proposed expert testimony, from 2 separate experts. The Court denied the motion, after applying FRE 702’s requirements for expert testimony.
The primary claims in this case brought under the FLSA and Washington’s Minimum Wage Act (MWA) were based on Defendants’ alleged failure to compensate Plaintiff for off-shift/overtime care and maintenance of his police dog while employed as a police officer for the City of Forks.
Plaintiff identified two expert witnesses and submitted the expert witness reports for Deputy John Munson and Steve Grasser.
“Deputy Munson proposes to testify that 60 minutes per day is a reasonable amount of time for Plaintiff to have spent working with police canine during Plaintiff’s off-shift hours. He also proposes to testify that the time spent by Plaintiff in off-shift training, grooming, feeding, and exercising his canine was reasonable and necessary. Deputy Munson’s testimony is based on his experience and training as a professional canine handler, as well as his discussions with Plaintiff as to Plaintiff’s off-shift time commitments caring for and maintaining his canine, Robyn.
Defendant objects to the testimony of Deputy Munson on the basis that (1) it provides a legal opinion, (2) it is speculative and (3) it forces the City to defend two claims and will confuse and mislead the jury.
Plaintiff’s expert witness Steve Grasser is a certified public accountant. Mr. Grasser proposes to testify regarding the Plaintiff’s average hourly overtime rate of pay during the relevant period of time that Plaintiff was employed as a canine officer with the City of Forks. Grasser’s opinions are derived from an analysis of the City of Forks’ payroll history reports from the relevant time period.
Defendant objects to this testimony as (1) it encompasses common knowledge, (2) it is speculative and (3) it will confuse, not assist the trier of fact.”
Holding first, that the proposed testimony of Munson, the expert dog handler, was admissible, the Court explained, “Plaintiff and Defendant dispute the justification for overtime and the amount of overtime hours necessary for the maintenance and care of the canine. Although the testimony is directed at determining an ultimate issue, its purpose is to assist the trier of fact to understand the evidence to determine a fact at issue. The reasonableness of the alleged overtime is an issue of fact for the jury. Caring for and maintaining a dog, especially a police dog, is not within the common knowledge of a lay person. Albanese v. Bergen County, N.J., 991 F.Supp. 410, 424 (D.N.J.1997). In addition, Plaintiff’s’ expert serves to negative the reasonableness of the argument of Defendant, that off-shift care and maintenance was not required or was de minimus in nature. See Albanese, at 424.Thus, the Court finds that Plaintiff’s expert Deputy Munson’s testimony is not a legal conclusion.
Not is the proposed testimony speculative. Deputy Munson’s testimony is based, in part, on his discussions with Plaintiff as to what he did off-shift in the care and maintenance of his canine. Accordingly, the proposed testimony is not based on speculation, but on the first-hand information provided by Plaintiff and Mr. Munson’s expertise as a professional canine handler.
The Court also rejects Defendant’s “two claims” argument. The expert’s opinion as to what is reasonable in the care of a police canine and the reasonableness of the time expended for the care of the police canine does not constitute unfair prejudice; nor will not mislead or confuse the jury. Plaintiff is required to establish the activity for which overtime compensation is sought constitutes “work” and that such work must be actually compensable; the quantum of time claimed by plaintiff must not be de minimis, and must be reasonable in relation to the principal activity. Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 688, 693 (1946). The expert testimony provides a factual basis for a jury determination of reasonableness of the overtime work that may be established by Plaintiff at trial.
The testimony of Plaintiff’s expert Deputy John Munson is admissible.”
In allowing the proposed testimony of Plaintiff’s expert accountant the Court noted, “Mr. Grasser’s testimony as to Officer Dixon’s rate of overtime pay is not based on speculation, but on an analysis of the City’s records. Nor is the testimony prejudicial. His testimony merely goes to a rate of overtime pay. Whether Mr. Dixon worked these hours (60 minutes daily) is not an issue that Mr. Grasser’s testimony addresses.
Mr Grasser’s opinions are properly based on the payroll evidence and his accounting expertise in analyzing and synthesizing this payroll data. The testimony will assist the trier of fact in comprehending factual issues beyond the scope of understanding of the average person. The testimony is neither based on speculation or confusing or prejudicial.
The testimony of Plaintiff’s expert Deputy Steve Grasser is admissible.”
Click here to read the full Federal Rules of Evidence 702.
Cruz v. Dollar Tree Stores, Inc.
Pursuant to Federal Rule of Civil Procedure 23, Plaintiffs move for an order certifying the following class: “All persons who were employed by Dollar Tree Stores, Inc. as California retail Store Managers at any time on or after December 12, 2004.” Starting the class period from December 12, 2004, ensures that any eventual awards to Dollar Tree Store Managers (“SMs”) in this case will not overlap with the awards that resulted from a previous settlement. Plaintiffs alleged the class consists of at least 655 members. Defendant contended that the number is likely to be less, and that there are currently 273 SMs in California.
Of note, was the Court’s analysis of the Predominance and Superiority requirements under Rule 23. The Court stated:
“Because all of Dollar Tree’s California SMs are required to perform a common set of tasks, Dollar Tree’s reliance on Sepulveda v. Wal-Mart Stores, Inc., is misplaced. 237 F.R.D. 229 (C.D.Cal.2006) rev’d in part, aff’d in part, 275 Fed. Appx. 672 (9th Cir.2008). In that case, the court found that individual questions predominate over common issues because of the “voluminous evidence that there actually was a great deal of variance in AM [Assistant Manager] duties … AM duties varied based on the characteristics of the store, its workforce, and the surrounding community.” Sepulveda, 237 F.R.D. at 249. Here, by contrast, Dollar Tree requires its SMs to certify every week that they spend most of their time performing a finite number of duties. Also, the class size in this case is considerably smaller than in Sepulveda, where there were approximately 2750 putative class members. Id. at 242.
Dollar Tree presents evidence suggesting variations in how SMs go about performing those tasks. For example, Dollar Tree submits a detailed comparison of twenty-five California stores showing they vary considerably in size, number of different products available for SMs to order, sales, and average monthly payroll hours. Dollar Tree filed a document showing the differing roles and experiences of California SMs. Dollar Tree submitted twenty SM declarations to show that SMs have substantially different day-to-day experiences and duties. Dollar Tree contrasts the deposition testimony of the Plaintiffs with the testimony of other SMs to show they perform their jobs in different ways. Dollar Tree also submits deposition testimony of SMs to show they have considerable autonomy and discretion in fulfilling their tasks and responsibilities.
Despite this evidence of variation, Dollar Tree does not, and cannot, deny that all California SMs are required to spend a majority of their time performing a set of seventeen tasks. See Tierno v. Rite Aid Corp., No. 05-2520, 2006 WL 2535056, at *9 (N.D.Cal. Aug. 31, 2006) (noting that Rite Aid’s self-audits and study, which were designed to show variations in how store managers performed specified tasks, also counted as concession “that a single set of tasks is applicable to all Store Managers”). For example, while one SM declares that he spent only thirty minutes per week preparing employee schedules, and another SM declares he spent four hours per week preparing employee schedules, this comparison also shows that both SMs spent time every week engaged in one of the common duties on the Payroll Certification, namely, “[ s] chedul[ ing] and assign[ ing] work to store personnel.” While one SM declares that he spent five hours per week hiring new employees, and another SM spent only thirty minutes per week on hiring, hiring is also one of the common duties on the Payroll Certification. This Court can resolve the question of whether SMs who spend most of their time performing these seventeen duties are exempt from California’s overtime laws. This question is a common one for all California SMs. There is therefore a clear justification for handling this dispute on a representative rather than an individual basis.
The Court notes the irony of relying on Dollar Tree’s certification process to find that the case is suitable for class-wide treatment, when Dollar Tree implemented that process after its earlier settlement, and precisely in order to ensure that its SMs were properly classified. Those certifications certainly support Dollar Tree’s contention that it is not liable for improperly classifying SMs. SMs will have to explain why they consistently certified “yes” on the Payroll Certifications if in fact they were spending most of their time stocking shelves and cashiering. However, that liability question is not presently before the Court, and a class certification motion is not an occasion to “advance [to] a decision on the merits.” See Moore v. Hughes Helicopters, Inc., 708 F.2d 475, 480 (9th Cir.1983). Here, the question is whether common issues predominate, and the fact that all California SMs share the same job description, which requires them to spend most of their time performing tasks on a list consisting of seventeen duties, supports the conclusion that they do.
Plaintiffs’ evidence of Dollar Tree’s standardized practices and procedures provides further evidence in support of the contention that common issues predominate. Dollar Tree’s training program for SMs is standardized throughout California. Dollar Tree’s SM training program for new hires lasts eight weeks, and its SM training program for assistant managers who are being promoted lasts four weeks. The corporate office in Virginia develops the written materials for the training program. Dollar Tree does not formally retrain SMs when they are transferred to other stores. SMs are given the same training, irrespective of which store they might be assigned to down the road.
SMs use common tools in performing their duties at Dollar Tree. SMs have online access to “plan-o-guides” which recommend, but do not require, that a certain kind of merchandise be displayed in a particular location. SMs can also access information and bulletins online via “Dollar Tree Central.” Using Dollar Tree Central, SMs can access newsletters, merchandising suggestions, forms, policies, and information relating to benefits. All store managers in California use a computer application called “COMPASS” to create schedules for their staff. Dollar Tree maintains an auto replenishment system which automatically generates orders for some products. Store managers are also encouraged to use a playbook, which provides information on ordering, scheduling, and basic general information about Dollar Tree.
Dollar Tree relies on Jimenez v. Domino’s Pizza, 238 F.R.D. 241 (C.D.Cal.2006), but the Court finds that the case is distinguishable. In Jimenez, the Court was not confronted with evidence of standardized policies and practices. 238 at 251-53. Where, as here, there is evidence that the duties of the job are defined by standardized procedures and policies, district courts have routinely certified classes of employees challenging their classification as exempt, despite arguments about individualized differences in job performance. See, e.g., Krzesniak v. Cendant Corp., No. 05-05156, 2007 WL 1795703, at *3 (N.D.Cal. Jun. 20, 2007) (branch managers at car rental chain); Alba v. Papa John’s USA, Inc., No. 05-7487, 2007 WL 953849, at *1 (C.D.Cal. Feb. 7, 2007) (store managers at pizza delivery chain); Whiteway v. FedEx Kinko’s Office and Print Services, Inc., No. 05-2320, 2006 WL 2642528, at *1 (N.D.Cal. Sep. 14, 2006) (managers at shipping and print services retail chain); Tierno, 2006 WL 2535056, at *5-10 (N.D.Cal. Aug. 31, 2006) (store managers at drug store chain). The Court finds that Plaintiffs have satisfied the prerequisite of predominance.”
The Saipan Tribune is reporting that “[t]he federal minimum wage will increase for employees in American Samoa and the Commonwealth of the Northern Mariana Islands, effective May 25 and May 26 respectively.
With the increase, the new minimum wage rates in American Samoa, which vary by industry, will range from $4.18 for garment manufacturing to $5.59 for certain types of shipping and transportation.”
To read the full story go to the Saipan Tribune’s Website.
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.”
D.Me.: Oral Complaint To Employer Is “Protected Activity” Sufficient To Trigger The Anti-Retaliation Provisions of 29 U.S.C. § 215(a)
Gosselin v. Boralex Livermore Falls, LP
This case was before the Court on Defendants’ Motion for Summary Judgment with respect to Plaintiff’s 2 count complaint. The second count of Plaintiff’s complaint sought damages as a result of Defendants’ alleged violation of the anti-retaliation provisions of the FLSA, commonly referred to as Section 215. Following 1st Circuit law, the Court held that Plaintiff’s informal oral complaints to a supervisor constituted sufficient “statutorily protected activity” to withstand Defendants’ Motion.
The Court addressed each element of a retaliation claim, stating, “[i]n order to establish a retaliation claim under the FLSA, the plaintiff must show that (1) he engaged in statutorily protected activity and (2) his employer thereafter subjected him to an adverse employment action, (3) as a reprisal for having engaged in the protected activity. Blackie v. State of Maine, 75 F.3d 716, 722 (1st Cir.1996). Here, the defendants contend that the plaintiff did not ‘file[ ] any complaint.’
The evidence in the summary judgment record about the plaintiff’s statement to Ettinger on July 31, 2006, is as follows: On July 31, 2006, the plaintiff left the control room to look for Wranosky to complain about what Morrell had told the plaintiff that Wranosky had said about how employees should record their working time. When the plaintiff instead saw Ettinger, he told Ettinger that he had heard that Wranosky had decided to restrict the amount of time that employees could put on their timesheets for shift turnover. He told Ettinger that he thought that the Department of Labor had previously found that Boralex had “violated employees’ rights when it prevented them from reporting all of the time they worked during shift turnover on their timesheets,” and that he planned to call the Department of Labor if this practice continued.
The defendants focus on the facts that the plaintiff was complaining about ‘a hearsay statement made by another person for which he had no first-hand knowledge and that he [had] never attempted to confirm,’ that the plaintiff “has admitted that Mr. Wranosky has never told [the plaintiff] that he was not to record all time worked, that the plaintiff ‘admitted that Mr. Wranosky has never instructed him to underreport his time,’ and that the plaintiff never pursued this issue between July 31, 2006, and his promotion to shift supervisor in 2007.
But, none of these facts negates the possibility that the plaintiff filed a complaint within the terms of the FLSA when he spoke to Ettinger on July 31, 2006. The First Circuit has held that an internal complaint, made only to the employer, is sufficient to constitute the filing of a complaint under the FLSA. Valerio v. Putnam Assoc., Inc., 173 F.3d 35, 41 (1st Cir.1999). In that case, the First Circuit expressly reserved ruling on the question whether a “wholly oral” complaint would qualify, id. at 42 n. 4, but I find persuasive the reasoning of the court in Skelton v. American Intercontinental University Online, 382 F.Supp.2d 1068, 1076 (N.D.Ill.2005), and cases cited therein, that conclude that an oral complaint is sufficient based upon the broad, remedial purposes of the FLSA.
Therefore, the Court concluded that “[t]he plaintiff has offered evidence that he told a supervisor that his employer was violating the FLSA and that, if the violation continued, he would report it to the Department of Labor. This is sufficient to demonstrate that he engaged in protected activity under the FLSA.”
M.D.Fla.: “Field Supervisor” For Company Performing Finishing Services For Residential Builders Not Subject To Administrative Exemption
Cotten v. HFS-USA, Inc.
This case was before the Court on Defendant’s motion for summary judgment, alleging that Plaintiff, a “Field Supervisor,” for a construction “finishing” company, was exempt from the overtime provisions of FLSA under the “administrative exemption.” After reviewing the elements of the Administrative Exemption, the Court found that Plaintiff was not Administratively Exempt, because his primary duty was not directly related to the management of general business operations of Defendant, and because he did not exercise the requisite independent judgment or discretion with regard to matters of significance.
Addressing the “related to management of general business operations” prong first, the Court stated, “[b]ased on the undisputed evidence before the Court, it cannot be said that Cotten’s primary duties as a field supervisor were directly related to the management or general business operations of HFS. Although it can be said that Cotten “managed” certain assigned installation sites, his duties were concerned with ensuring that the installers received their work orders, retrieved the correct materials from the warehouse, and completed the installation job as specified in the contract and the work order and in compliance with specified standards. Cotten was not responsible for negotiating or executing contracts, creating work orders, or developing the applicable standards….
Cotten’s job duties are precisely the type that have been found to be consistent with production rather than administration. For example, in Sack v. Miami Helicopter Service, Inc., a court in the Southern District of Florida determined that an employee’s duties of opening work orders, planning repair work, ordering required materials, directing mechanics as to what work to perform, determining whether certain parts complied with F.A.A. standards, and directing repair or replacement of parts that failed inspection did not qualify as administrative tasks related to operation of the business. 986 F.Supp. 1456, 1470-71 (S.D.Fla.1997). The court found that these activities were an integral part of the production of the business and therefore did not directly relate to management policies or general business operations. Id.”
Next, the Court analyzed the “discretion or independent judgment” prong of the Administrative Exemption, stating, “Cotten spent much of his time performing inspections, which took place at all phases of the installation process. These inspections were conducted according to pre-established industry standards or the terms of the particular contract. (Id. at 5). Cotten had no specialized training and simply compared what he saw at the job site with the standards he had previously been directed to conform with. (Id.). He filled out forms documenting the inspection results, and spoke with builders or his supervisors when defects were noted.(Id.). These routine inspection duties did not require the exercise of significant discretion or independent judgment…
Of course, Cotten’s duties were not limited to inspections. If an installation was not completed properly or on time, Cotten was responsible for bringing the job into compliance, either by directing the original installer to make the necessary repairs or, on rare occasions, by retaining a second installer to do the necessary work. Although Crowder has attested that field supervisors were free to assign “the installers of their choice” to a particular job, this is not entirely true. HFS maintained a list of qualified installers that field supervisors were required to use. (Id.). Cotten has sworn that he never used an installer that was not on the approved list.”
Therefore, the Court concluded, “[u]pon due consideration of the record evidence regarding Cotten’s work activities, the Court concludes that Cotten’s primary duties at HFS did not involve the exercise of discretion and independent judgment with respect to matters of significance. As previously discussed, cases considering employees with very similar duties to Cotten have declined to apply the administrative exemption.”
The Plaintiff in this case is represented by Andrew Frisch. If you believe that you have been similarly misclassified as exempt under the FLSA, and wrongly denied overtime, call 1-888-OVERTIME or go to EMAIL CONSULTATION for a free consultation with Andrew Frisch today.
As published on Tricities.com, the Bristol Herald Courier is reporting that “Sprint has paid nearly $259,429 in back wages and a $120,000 fine after a federal labor investigation revealed the telecommunications giant did not pay overtime to 1,013 workers from its Bristol call center at 134 Commerce Court.
The U.S. Department of Labor investigation focused on the roughly nine minutes before the start of shifts between July 2005 and June 2007. During that time, employees review company e-mails and download computer applications, labor spokeswoman Leni Fortson said.”
To read the full article regarding Sprint’s payment to call center workers go to Tricities.com
Call centers of companies of all sizes frequently violate wage and hour laws, by failing to pay customer service employees for all time worked. If you believe your call center employer of former call center employer has failed to pay you for all hours worked, call us at 1-888-OVERTIME or go to http://www.overtimeadvocate.com/2.html for a free consultation today.
Godoy v. Restaurant Opportunity Center of New York, Inc.
Plaintiffs, brought suit against Defendants Restaurant Opportunity Center of New York, Inc. (“ROC-NY”), 417 Restaurant LLC a/k/a ROC N.Y. Restaurant LLC d/b/a Colors, ROC-NY Worker Owner Restaurant, LLC a/k/a RWOR, Saru Jayaraman, and Grace Gilbert, as President of ROC-NY (“Defendants”), alleging breach of contract, fraud, and violations of the federal Fair Labor Standards Act (“FLSA”), 28 U.S.C. § 216(b), and New York State Labor Law. Plaintiffs, former restaurant workers and members of Defendant not-for-profit corporation ROC-NY, alleged that Defendants broke their agreement with Plaintiffs that Plaintiffs would gain equity in and employment at the “worker-owned” restaurant they helped ROC-NY to create in exchange for the hundreds of hours that Plaintiffs contributed to that effort. Plaintiffs sought through this action damages and injunctive relief in the form of their promised shareholder status in and employment at the restaurant, now known as “Colors,” back pay for the work they performed on behalf of ROC-NY during the period of 2002-2005 and the wages they did not earn because they were not employed at the restaurant once it opened, and costs and attorneys’ fees in prosecuting this action. Defendants moved to dismiss Plaintiffs’ First Amended Complaint in its entirety, pursuant to Fed.R.Civ.P. 12(b)(6). In granting Defendants’ Motion, the Court discussed the unique situation under which the Plaintiffs worked for and with the co-op, applying the various economic reality tests to determine that they were not “employed” by Defendants, and therefore dismissing the Complaint.
Several Plaintiffs became members of Defendant ROC-NY in August 2002. Several months later, ROC-NY began seeking grants to launch what was described as a “cooperatively owned restaurant” which would be run by-workers displaced after the September 11 terrorist attacks, and a “Cooperative Committee” of ROC-NY was created to direct that effort. Several Plaintiffs were initial members of the Cooperative Committee. Other Plaintiffs joined ROC-NY and the Cooperative Committee in around 2003, and one Plaintiff joined in around 2004. All of the Plaintiffs joined the Cooperative Committee when they joined ROC-NY, and many served on the Committee’s Board of Directors at various times.
Significantly, the Court noted, “[ha]ving surveyed the various economic reality tests and factors applied by the courts, this Court finds lacking any standard applicable to the question presented by the particular facts of this case-that is, whether workers laboring for and together with a not-for-profit corporation to develop a business that they would co-own are employees of that corporation for purposes of the FLSA. Instead, the Court finds company with the Tenth Circuit in its decision in Wheeler v. Hurdman, 825 F.2d 257 (10th Cir.1987). In that case, the Circuit considered whether a general partner of an accounting firm was an “employee” of that firm for purposes of a FLSA action. After reviewing the traditional “economic reality” factors employed by the courts, the Court noted the “absence … of any coherent standard of ‘economic reality’ for supposed application to partners” in a business, and concluded that “the specific independent contractor/employee factors … are largely useless in a general partnership context.” Id. at 271-72. The Court explained that while “[t]he focal point in deciding whether an individual is an employee” under the “economic realities” jurisprudence, “is whether the individual is economically dependent on the business to which he renders service … or is, as a matter of economic fact, in business for himself,”
Consideration of the factors used by the Tenth Circuit in Wheeler to assess the economic reality presented by a partnership supports the absence of an employer-employee relationship in this instance. See Wheeler, 825 F.2d at 274-75. Like partners at a firm. Plaintiffs, as putative co-owners of the business they were working to create, “assume[d] the risks of loss and liabilities” of the venture, and had a real opportunity to share in its profits upon success. Plaintiffs’ hours of “sweat-equity” represented their “capital” contribution to the business, and one that “would earn [Plaintiffs] equity in the RWOR” as “sweat equity converted to cash equivalent in stock.” While Plaintiffs’ “right to share in management” once the restaurant opened is not specifically alleged in the Complaint, the Court notes that Plaintiffs were members of the Board of Directors of the Cooperative Committee tasked with the management of the restaurant’s planning and development phase. Taken together, the balance of these “economic realities” weighs against the existence of an employment relationship in this case. As Plaintiffs and Defendants were at all relevant times putative co-owners of the restaurant they were working to create, the Court finds that Plaintiffs were not, as a matter of economic reality, the employees of Defendants. As such. Plaintiffs have no claims under the FLSA, see Alamo, 471 U.S. at 296-97, and Defendants’ Motion to Dismiss these claims is GRANTED.”
This unfortunate result, seems unavoidable given the fact that the Plaintiffs were technically “owners” of the business for which they worked, and it is likely that the decision will have limited application in future cases.
6th Cir.: Effect Of Impermissible Deductions On Exempt Status; Under Old Regs “Significant Likelihood” Standard All Weeks Rendered Non-Exempt; Under New Regs Only Weeks Where Impermissible Deductions Actually Occurred
Baden-Winterwood v. Life Time Fitness, Inc.
In this case, the 6th Circuit addressed a common issue raised in mis-classification cases: the effect of a compensation plan which makes impermissible deductions to otherwise exempt employees, whose exemptions require they be paid on a “salary basis.”
On July 10, 2007, the district court granted in part Plaintiffs’ motion for summary judgment, finding “that the deductions from the salaries of eight Plaintiffs were deductions resulting from ‘variations in the quality or quantity of the work performed,’ in violation of the salary-basis test.”Baden-Winterwood v. Life Time Fitness, No. 2:06-CV-99, 2007 U.S. Dist. LEXIS 49777, at *42 (S.D.Ohio July 10, 2007) (quoting 29 C.F.R. § 541.602(a)). However, the district court limited Plaintiffs’ recovery to overtime pay for the three pay periods in 2005-the periods ending November 9, November 23, and December 9-during which Life Time Fitness took actual deductions from Plaintiffs’ salaries. Id. The court dismissed all other claims for overtime pay, including, in their entirety, the claims of the ten Plaintiffs who appealed.
The issue before the Court was whether Plaintiffs’ compensation plans satisfy the salary-basis test. Prior to August 23, 2004, the salary-basis test, as defined by regulation, provided:
“An employee will be considered to be paid “on a salary basis” within the meaning of the regulations if under his employment agreement he regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of his compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed. 29 C.F.R. § 541.118(a) (1973). In August 2004, the DOL updated the regulations defining the salary-basis test. The new regulation states: An employee will be considered to be paid on a “salary basis” within the meaning of these regulations if the employee regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee’s compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed. 29 C.F.R. § 541.602(a) (effective August 23, 2004). Under both versions, Life Time Fitness bears the burden of proving that Plaintiffs were paid: (1) a predetermined amount, which (2) was not subject to reduction (3) based on quality or quantity of work performed. Notably, however, rather than include the term “employment agreement,” the updated regulations focus on pay received. Compare29 C.F.R. §§ 541.118(a), 541.602(a).”
Significantly, the Court explained, “[f]or our purposes, the salary-basis test has two interpretations of the phrase ‘subject to,’ both of which are relevant here. In 1997, in Auer v. Robbins, 519 U.S. 452 (1997), the Supreme Court adopted the interpretation offered by the Secretary of Labor that the salary-basis test denies exempt status “if there is either an actual practice of making … deductions [based on variations in quality or quantity of work performed] or an employment policy that creates a ‘significant likelihood’ of such deductions.” Id. at 461. Specifically, the Auer Court held
‘The Secretary’s approach rejects a wooden requirement of actual deductions, but in their absence it requires a clear and particularized policy-one which “effectively communicates” that deductions will be made in specified circumstances. This avoids the imposition of massive and unanticipated overtime liability … in situations in which a vague or broadly worded policy is nominally applicable to a whole range of personnel but is not “significantly likely” to be invoked against salaried employees.’
Thus, under Auer, an employee is not paid on a salary basis if (1) there is an actual practice of salary deductions or if (2) an employee is compensated under a policy that clearly communicates a significant likelihood of deductions. Id.
Following Auer, on March 31, 2003, the DOL provided published notice on a proposed set of new FLSA regulations. See Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, 68 Fed.Reg. 15,560 (Mar. 31, 2003). After a 90-day comment period, the DOL revised and released its final regulations, defining the exemptions under the FLSA. See Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, 69 Fed.Reg. 22,122 (Apr. 23, 2004). The new regulations became effective on August 23, 2004. Id.
Under the new regulations, the Secretary of Labor reinterpreted the salary-basis test. Life Time Fitness argues that the DOL specifically eliminated the “policy” part of the Auer test, whereby a “significant likelihood” of improper deductions was sufficient to cause an employee to lose his or her FLSA exemption. The new regulations (” § 541.603“) provide that “[a]n actual practice of making improper deductions demonstrates that the employer did not intend to pay employees on a salary basis.” 29 C.F.R. § 541.603(a). Moreover, Life Time Fitness argues that the new regulations limit the scope of recovery by providing that “[i]f the facts demonstrate that the employer has an actual practice of making improper deductions, the exemption is lost during the time period in which the improper deductions were made for the employees in the same job classification working for the same managers responsible for the actual improper deductions.” 29 C.F.R. § 541.603(b).
In its comments, the DOL explains that while the new rule represents a departure from the Secretary’s position in Auer,”[t]he ‘significant likelihood’ test is not found in the FLSA itself or anywhere in the existing Part 541 regulations. Moreover, nothing in Auer prohibits the [DOL] from making changes to the salary[-]basis regulations after appropriate notice and comment rulemaking.” Defining and Delimiting the Exemptions, 69 Fed.Reg. at 22,180. The DOL stated its reasoning behind the changes:
Any other approach, on the one hand, would provide a windfall to employees who have not even arguably been harmed by a “policy” that a manager has never applied and may never intend to apply, but on the other hand, would fail to recognize that some employees may reasonably believe that they would be subject to the same types of impermissible deductions made from the pay of similarly situated employees.
Under the Auer test, the Court, found that Defendants’ policy whereby deductions would be made (although they were not in practice violated the salary basis requirements) violated the salary basis test, explaining:
The district court erred in concluding that there was not enough evidence to suggest Life Time Fitness intended to enforce its permissive policy. The Auer subject-to-reduction test requires only a “clear and particularized policy-one which ‘effectively communicates’ that deductions will be made in specified circumstances.” 519 U.S. at 461. The test does not require a formulaic set of “magic words” indicating that the test is mandatory. If employers can avoid overtime liability by crafting payment policies with permissive (may ) language instead of mandatory (will ) language, then the purposes of the FLSA would clearly be frustrated. Rather, as set out by this Court in Takacs and Whisman, Auer’s test is better satisfied by a policy that demonstrates that deductions are “more than a mere theoretical possibility” and that “permit[s] disciplinary or other deductions in pay ‘as a practical matter.’ ” 246 F.3d at 781
Here, Life Time Fitness’s pre-August 23, 2004 compensation plan subjected employees’ pay to reductions under the Auer test. The compensation plan at issue does more than create a theoretical possibility of deduction; instead it plainly lays out a policy under which Life Time Fitness would make future deductions. Therefore, under the old regs, the Court found the Plaintiffs were non-exempt for all weeks within the relevant statute of limitations period.
However, since the current regulations require an actual violation, the Court held that the otherwise exempt employees were only stripped of their exempt status, and thus entitled to overtime for the 3 weeks when the pay practice was actually used to reduce their “salary.” In all other weeks, the Court found the salary basis test met, and thus found that, aside from three weeks where actual reduction were made, the Plaintiffs remained exempt, notwithstanding the three weeks where deductions were actually made.”