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Home » Affirmative Defenses » S.D.Ohio: Employer Cannot Avoid Imposition of Liquidated Damages Based on Claimed Reliance on PEO

S.D.Ohio: Employer Cannot Avoid Imposition of Liquidated Damages Based on Claimed Reliance on PEO

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Andrew Frisch

Parks v. Central USA Wireless, LLC

This case was before the court on the parties’ cross-motions for summary judgment following what appears to be an aborted settlement.  As discussed here, plaintiffs sought summary judgment imposing liquidated damages on defendants, and contended that defendants had failed to demonstrate the requisite good faith.

After discussing the well-defined standards regarding an employer’s burden to show “good faith” to avoid an otherwise mandatory imposition of liquidated damages, the court discussed the evidence proffered by defendants:

Defendants assert as “a possible claim of good faith and reasonable grounds” the fact that Central USA Wireless relied on the aforementioned third-party professional employment organization, HUMACare, “to take care of Central’s payroll and employee administrative obligations.” (Doc. 29 at PageID 1091).

Regarding Plaintiffs’ compensation, Chris Hildebrant testified:

A: I didn’t. John, as I said, went to Michigan, Huffman, had conversations
with [Plaintiffs], and told me what they agreed upon.
Q: Did you do any analysis as to whether what they agreed upon was in
compliance with the Fair Labor Standards Act?
A: No.
Q: Did you ask anybody else to do any analysis?
A: We submitted documentations to our PEO company, and we didn’t think
anything else about it.
Q: What does PEO company mean?
A: Professional Employment Organization.
Q: Did you ask your attorneys to look into whether or not the compensation
structure was in compliance with the –
Mr. Ash: Objection. I’ll allow the question to be answered just the
way you asked, obviously the content of the question from the very beginning.
Mr. Kimble: Sure.
Mr. Ash: Go ahead.
The Witness: No.
(Doc. 15-3, Hildebrant Dep. at PageID 255–56 (39:10–40:7)).

The court held that “[t]his evidence falls far short of creating a question of material fact or meeting the ‘substantial’ burden Defendants shoulder to prove ‘both good faith and reasonable grounds’ for a failure to pay overtime.”

Elaborating, the court explained:

Hildebrant made no special inquiry to HUMACare or legal counsel about whether Plaintiffs were exempt employees. See generally id. at 857 (caselaw usually cites discussion with attorneys or government officials or sometimes accountants as evidence of good faith). Rather, he “didn’t think anything else about it.” This statement concedes negligence, which “is sufficient to support an award of liquidated damages.” Fulkerson v. Yaskawa America, Inc., No. 3:13-cv-130, 2015 WL 6408120 at *2 (S.D. Ohio Oct. 23, 2015) (citing Martin, 381 F.3d at 584).

Thus, the court held that the plaintiffs were entitled to liquidated damages.

Click Parks v. Central USA Wireless, LLC to read the entire Order.

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