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N.D.Cal.: Damages In A Salary Misclassification Case Must Be Calculated At Time And A Half; Fluctuating Workweek Not Applicable Without “Clear Mutual Understanding” And/Or Contemporaneous Payments Of Overtime
Russell v. Wells Fargo and Co.
This case was before the Court on the parties’ partial Cross Motions for Summary Judgment, regarding the methodology to be applied to determine damages where, as here, an employee is misclassified and paid solely their weekly salary, despite the fact they work overtime hours. The Plaintiffs asserted that they were due the default time and a half (1.5x) under the FLSA, but the Defendant argued that Plaintiffs’ damages should be calculated under the exception to the default rule, referred to as the Fluctuating Workweek (FWW), whereby they would receive so-called half-time in lieu of time and a half. In a detailed well-reasoned decision, the Court agreed with the Plaintiffs, and determined that Plaintiffs were due time and a half for all overtime hours worked, because Defendant could not meet several of the elements required for the application of the FWW.
The Court framed the following 3 issues for resolution on the Motions:
“1. Whether it is possible to have the required “clear mutual understanding” necessary to compute damages by the fluctuating workweek method (FWW method) in an exempt/non-exempt misclassification case;
2. Whether the concurrent payment of overtime pay is a required element to compute unpaid overtime by the FWW method, such that the FWW method of overtime calculation cannot be used in an exempt/non-exempt misclassification case; and
3. Whether damages (if any) on the FLSA overtime claim of an opt-in plaintiff who resides in California or Connecticut can be computed by the FWW method.”
Denying Defendant’s Motion seeking to apply the FWW, and granting Plaintiffs’ Motion to apply the time and a half default standard, for calculating Plaintiffs’ damages, the Court explained:
“Defendants argue that the FWW method can be used to calculate overtime pay retroactively for the purposes of determining damages in an exempt misclassification case. They assert that the FWW method is available when the employer and employee have a clear mutual understanding that a fixed salary will compensate the employee for all hours worked in a week, including those in excess of the FLSA’s forty-hour maximum, even if the “understanding” is based on the employer’s erroneous premise that the employee is exempt and thus not entitled to overtime pay. Defendants’ argument is untenable. The FWW method cannot be used to calculate overtime pay retroactively in a misclassification case.
As noted above, section 778.114 contains legal prerequisites, which employers must first satisfy to use the discounted overtime rate available through the FWW method. These prerequisites include (1) a clear mutual understanding that a fixed salary will be paid for fluctuating hours, apart from overtime premiums; and (2) the contemporaneous payment of overtime premiums.
When an employee is not exempt and is paid a fixed salary for fluctuating hours, the employer can satisfy these prerequisites. The employer and employee must have a clear mutual understanding of the fixed salary which, by law, must include an understanding that an overtime premium will be paid for any hours worked over the forty-hour-per-week maximum. Because both parties understand that overtime hours will be compensated, overtime pay would be provided contemporaneously.
When an employee is treated as exempt from being paid for overtime work, there is neither a clear mutual understanding that overtime will be paid nor a contemporaneous payment of overtime. Thus, when an employee is erroneously classified as exempt and illegally not being paid overtime, neither of these legal prerequisites for use of the FWW method is satisfied.
First, an effective clear mutual understanding is absent in misclassification cases. Defendants assert that an employer could have a clear mutual understanding with its employees that the employees would be paid a flat weekly rate for fluctuating hours, including those hours worked in excess of forty, and would not receive overtime pay. Defendants essentially argue that misclassified employees have implicitly agreed not to receive their FLSA entitlement to overtime pay. This would be illegal. Employees cannot agree to waive their right to overtime pay. See Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 739-40 (1981).
Second, because the employees were erroneously classified as exempt, overtime compensation was not provided contemporaneously. Employers cannot satisfy this requirement, after having been found to violate section 207, by claiming that they had intended to pay overtime; such an after-the-fact provision of overtime compensation was rejected by the Supreme Court in Overnight Motor. See 316 U .S. at 581 (rejecting the employer’s attempt to use FWW method where there was “no provision for additional pay in the event the hours worked required minimum compensation greater than the fixed wage”). As stated above, 29 C.F.R. § 778.114(c) requires contemporaneous overtime pay: the FWW method cannot be used “where all the facts indicate that an employee is being paid for his overtime hours at a rate no greater than that which he receives for nonovertime hours.” 29 C.F.R. § 778.114(c). In a misclassification case, because employees have not been paid overtime premiums, they are compensated for those hours worked more than forty at a rate not greater than the regular rate.
If Defendants’ position were adopted, an employer, after being held liable for FLSA violations, would be able unilaterally to choose to pay employees their unpaid overtime premium under the more employer-friendly of the two calculation methods. Given the remedial purpose of the FLSA, it would be incongruous to allow employees, who have been illegally deprived of overtime pay, to be shortchanged further by an employer who opts for the discount accommodation intended for a different situation.
In making its decision here, the Court is “mindful of the directive that the [FLSA] is to be liberally construed to apply to the furthest reaches consistent with Congressional direction.” Klem v. County of Santa Clara, 208 F.3d 1085, 1089 (9th Cir.2000) (quoting Biggs v. Wilson, 1 F.3d 1537, 1539 (9th Cir.1993)) (quotation marks and alterations omitted).
The Ninth Circuit has not directly addressed the question of whether the FWW method may be used retroactively to compensate employees who have been misclassified as exempt.FN4 In Oliver v.. Mercy Medical Center, the court concluded that the FWW method could not be used to calculate liquidated damages pursuant to 29 U.S .C. § 216, in part because the plaintiff-employee and the defendant-employer did not agree to a fixed salary covering all hours worked in a week. See 695 F.2d 379, 381 (9th Cir.1982). Oliver confirms that an employer and employee must, at the least, agree to a fixed salary for fluctuating hours. But its holding does not address whether the FWW method can be applied retrospectively to calculate overtime pay in a misclassification case. To the extent the holding is silent on this point, there is no binding Ninth Circuit precedent.
In Bailey v. County of Georgetown, 94 F.3d 152 (4th Cir.1996), non-exempt employees challenged their employer’s use of the FWW method to calculate their overtime pay. Instead of compensating overtime at the time-and-a-half rate, the employer opted for the FWW method and paid a one-half time premium based on fluctuating hours. Id. at 153-54. The employees claimed that this was improper, arguing that the FWW method could only apply if it was shown that they “clearly understood the manner in which their overtime pay was being calculated under the plan.” Id. at 154. The court disagreed. The Fourth Circuit determined that neither the plain language of the FLSA nor section 778.114 required an understanding on how overtime would be calculated; according to the court, all that section 778.114 requires is a clear mutual understanding of a fixed salary for fluctuating hours. Id. at 156-57. The court provided no additional analysis. And because the case involved non-exempt employees who were paid overtime, the court had no occasion to address whether contemporaneous overtime pay was a requirement.
Thus, Bailey did not address remedial payment to misclassified employees. Nonetheless, the First and Tenth Circuits applied its rule to misclassification cases. See, e.g., Clements v. Serco, Inc., 530 F.3d 1224 (10th Cir.2008); Valerio v. Putnam Associates, 173 F.3d 35 (1st Cir.1999). In Clements and Valerio, the courts held that the FWW method can be used to calculate overtime pay retroactively. But Clements and Valerio merely cite Bailey. Neither provides a substantive analysis or explains why Bailey should apply in the misclassification context. See Clements, 530 F.3d at 1230; Valerio, 173 F.3d at 40. The Fourth Circuit similarly applied Bailey’s interpretation of section 778.114 in the misclassification context without analysis. See Roy v. County of Lexington, South Carolina, 141 F.3d 533, 547 (4th Cir.1998). In Blackmon v. Brookshire Grocery Company, the Fifth Circuit applied the FWW method in a misclassification case. 835 F.2d 1135, 1138 (5th Cir.1988). Blackmon, like the other cases above, offers no explanation. See 835 F.2d at 1138-39.
District courts outside these circuits have held that the FWW method cannot be used in misclassification cases. In Rainey v. American Forest & Paper Association, the court analyzed section 778.114 and found that its requirements include a clear mutual understanding that the employee is entitled to overtime compensation and contemporaneous payment of overtime premiums. 26 F.Supp.2d 82, 99-102 (D.D.C.1998); see also Hunter v. Sprint Corp., 453 F.Supp.2d 44, 58-62 (D.D.C.2006) (discussing application of the FWW method in a misclassification case). Other courts have rejected the use of the FWW method in misclassification cases because there is no contemporaneous payment of overtime compensation in such cases. See, e.g., Cowan v. Treetop Enters., 163 F.Supp.2d 930, 941 (M.D.Tenn.2001) (citing Rainey ); Scott v. OTS Inc., 2006 WL 870369, *12 (N.D.Ga.) (citing Rainey ).
Defendants reject many of the other cases cited by Plaintiffs because “they are not in the exemption misclassification context.” Defs.’ Reply at 12. However, Bailey, the case relied upon by most of the cases cited by Defendants, was likewise not in the exemption misclassification context. Thus, Defendants’ argument undermines their reliance on Valerio, Clements and Roy. Accordingly, the Court does not follow Bailey and its progeny: Bailey is not on point, and the cases that rely on it are not persuasive.
The Court is similarly unpersuaded by the DOL’s January 14 letter. Generally, courts must defer to the expertise of an agency in interpreting statutes that Congress charged to administer. See Cent. Ariz. Water Conservation Dist. v. EPA, 990 F.2d 1531, 1539-40 (9th Cir.1993) (citing Chevron U.S.A., Inc. v. Nat’l Res. Def. Council, 467 U.S. 837 (1984)). However, opinion letters do not warrant such deference; under Skidmore v. Swift, 323 U.S. 134, 140 (1944), they are to be accorded respect, not deference. An opinion letter is entitled to respect to the extent that it has the “power to persuade.” See Christensen v. Harris County, 529 U.S. 576, 587 (2000).
The opinion letter does not explain why the FWW method should be applied retrospectively, despite the plain language of the DOL’s long-standing interpretation of the FLSA contained in § 778.114. The letter relies solely upon Clements and Valerio to explain the DOL’s new position, and it goes no further to detail why the DOL was departing from its forty-year-old interpretation. Given the DOL’s significant change in course, this explanation is insufficient. Further, the DOL’s prior abandoned effort to revise § 778.114(a) through notice-and-comment rulemaking, and the timing of the opinion letter’s release-less than one week before a change in the administration-detract from its persuasiveness. Deferring to the letter “would permit the agency, under the guise of interpreting a regulation, to create de facto a new regulation.” Christensen, 529 U.S. at 588. The DOL cannot use the letter to make a substantive regulatory change that would have the force of law. See id. at 587. The letter lacks thoroughness in its explanation and consistency with the DOL’s earlier FLSA interpretation. The Court is not persuaded by it. See id. (citing Skidmore, 323 U.S. at 140).
Thus, the background and policy of the FLSA, the Supreme Court’s decision in Overnight Motor and the DOL’s 1968 interpretive rules demonstrate that the FWW method cannot be used to calculate overtime pay retroactively for the purposes of determining damages under the FLSA in a misclassification case. Section 778.114, which the DOL promulgated in light of Overnight Motor, provides legal prerequisites that cannot be satisfied in a misclassification case.
CONCLUSION
For the foregoing reasons, the Court interprets § 778.114 to restrict application of the FWW method to calculate overtime pay to situations where (1) there is a clear mutual understanding between an employer and employee that the employee will be paid a fixed salary for fluctuating weekly hours but nonetheless receive overtime premiums and (2) overtime is compensated contemporaneously. The Court therefore DENIES Defendants’ motion for partial summary judgment and GRANTS Plaintiffs’ cross-motion for partial summary judgment on the first and second stipulated legal issues. Based upon these holdings, the Court need not decide the third stipulated issue. Accordingly, the Court DENIES as moot Defendants’ and Plaintiffs’ motions for partial summary judgment on the third stipulated legal issue.”
2d. Cir.: Employee Is Not Professionally Exempt Unless His Work Requires Knowledge Customarily Acquired After A Prolonged Course Of Specialized, Intellectual Instruction And Study
Young v. Cooper Cameron Corp.
The U.S. District Court for the Southern District of New York held on summary judgment that, as a matter of law, plaintiff, a “Product Design Specialist,” was not subject to the “professional exemption” to the overtime requirements of the Fair Labor Standards Act. Defendant appealed and the Second Circuit affirmed, holding that an employee is not an exempt professional unless his work requires knowledge that is customarily acquired after a prolonged course of specialized, intellectual instruction and study.
Describing the relevant facts and the holding below, the Court stated, “Young is a high school graduate. He enrolled in some courses at various universities, but did not obtain a degree. Before he was hired by Cameron, he worked for 20 years in the engineering field as a draftsman, detailer, and designer. He was a member of the American Society of Mechanical Engineers, a membership that required the recommendation of three engineers. For three of the 20 years, Young worked with what are known as hydraulic power units (“HPUs”).
In the spring of 2001, Young applied for a job with Cameron, and he was offered the position of Mechanical Designer in the HPU group. This position paid an hourly wage of $26 and was classified as non-exempt under the FLSA. Young, seeking higher pay, declined.
Soon after, Young met again with Cameron. This time, Cameron offered to hire him as a PDS II-a position that Cameron had determined, through multiple internal and external analyses, was exempt from the FLSA’s overtime provisions. This job paid an annual salary of $62,000 (an effective hourly wage of $29.81). Applicants were required to have twelve years of relevant experience; but no particular kind or amount of education was required, and no PDS II had a college degree. Young accepted Cameron’s offer on July 23, 2001, understanding that the position was exempt from the FLSA’s overtime provisions. For his three-year tenure at Cameron, Young worked as a PDS II in the HPU group.
HPUs contain fluid under pressure for use in connection with oil drilling rigs. They are large and complex, and they are subject to a variety of industry standards, codes, and government specifications. Young was the principal person in charge of drafting plans for HPUs. This work required depth of knowledge and experience, and entailed considerable responsibility and discretion. For example, Young assimilated layers and types of specifications into a safe, functional, and serviceable design that met consumer demands, engineering requirements, and industry standards. Young personally selected various structural components of the HPU and modified certain specifications to account for new technology. In these ways, Young operated at the center of both the conceptual and physical processes of HPU creation and development.
On August 2, 2004, after losing his job in a reduction-in-force, Young sued Cameron in federal court, alleging that Cameron had improperly and willfully classified him as an exempt professional. The district court, adopting a report and recommendation from the magistrate judge (Gorenstein, M.J.), granted partial summary judgment to Young on the exemption issue. The court held as a matter of law that the work of a PDS II is ‘not of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study.’ ”
Affirming the lower Court’s Order finding Plaintiff not subject to the professional exemption, the Court stated:
“The typical symbol of the professional training and the best prima facie evidence of its possession is, of course, the appropriate academic degree, and in these professions an advanced academic degree is a standard (if not universal) prerequisite.” 29 C.F.R. § 541.301(e)(1). So it is not the case that “anyone employed in the field of … engineering … will qualify for exemption as a professional employee by virtue of such employment.” Id. § 541.308(a). At the same time, “the exemption of [an] individual depends upon his duties and other qualifications.” Id. “The field of ‘engineering’ has many persons with ‘engineer’ titles, who are not professional engineers, as well as many who are trained in the engineering profession, but are actually working as trainees, junior engineers, or draftsmen.” Id. § 541.308(b). Thus “technical specialists must be more than highly skilled technicians” to be eligible for the professional exemption. Id. § 541.301(e)(2); see also id. (“The professional person … attains his status after a prolonged course of specialized intellectual instruction and study.”).
As the Secretary interprets the regulations, a three-part test determines whether an employee has the type of knowledge sufficient to qualify as an exempt professional. First, the employee’s “knowledge must be of an advanced type … generally speaking, it must be knowledge which cannot be attained at the high school level.” 29 C.F.R. § 541.301(b). Second, the knowledge must be in a field of science or learning. Id. § 541.301(c). Third, the knowledge “must be customarily acquired by a prolonged course of specialized intellectual instruction and study.” Id. § 541.301(d). The word “customarily” is key:
The word ‘customarily’ implies that in the vast majority of cases the specific academic training is a prerequisite for entrance into the profession. It makes the exemption available to the occasional lawyer who has not gone to law school, or the occasional chemist who is not the possessor of a degree in chemistry, etc., but it does not include the members of such quasi-professions as journalism in which the bulk of the employees have acquired their skill by experience rather than by any formal specialized training. Id.
It is uncontested that the job of a PDS II requires no formal advanced education. The issue is whether a position can be exempt notwithstanding the lack of an educational requirement, if the duties actually performed require knowledge of an advanced type in a field of science or learning. Cameron argues for a stand-alone “duties test” independent from any educational considerations. Young argues, and the district court held, that if advanced and specialized education is not customarily required, the exemption cannot apply, regardless of the employee’s duties.
We agree with Young and the district court. The regulations state that a professional is someone “[w]hose primary duty consists of the performance of [w]ork requiring knowledge of an advance type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study. 29 C.F.R. § 541.3(a)(1) (emphasis added). As noted above, “customarily” in this context makes the exemption applicable to the rare individual who, unlike the vast majority of others in the profession, lacks the formal educational training and degree. But where most or all employees in a particular job lack advanced education and instruction, the exemption is inapplicable: hence, the Secretary’s interpretation advising that “members of such quasi-professions as journalism in which the bulk of the employees have acquired their skill by experience rather than by any formal specialized training” are not properly considered exempt professionals. See 29 C.F.R. § 541.301(d).
We therefore hold that an employee is not an exempt professional unless his work requires knowledge that is customarily acquired after a prolonged course of specialized, intellectual instruction and study. If a job does not require knowledge customarily acquired by an advanced educational degree-as for example when many employees in the position have no more than a high school diploma-then, regardless of the duties performed, the employee is not an exempt professional under the FLSA.
With these principles in mind, it is clear that Young is not exempt. The undisputed evidence is that the PDS II position required no advanced educational training or instruction and that, in fact, no PDS II had more than a high school education.
Two sister courts have issued persuasive opinions on this subject. In Vela v. City of Houston, 276 F.3d 659, 675 (5th Cir.2001), the only decisive factors were education and discretion (the exercise of professional judgment on the job). On that basis, the court distinguished emergency medical technicians and paramedics (who are not required to have college degrees) from nurses and athletic trainers (who are so required). Id. (explaining that EMTs and paramedics are not exempt professionals because they “lack the educational background to satisfy the education prong of the Learned Professional exemption”).
In Fife v. Harmon, 171 F.3d 1173, 1177 (8th Cir.1999), the minimum qualifications for the plaintiffs’ position as Airfield Operation Specialists were “a Bachelor’s degree in aviation management or a directly related field, or four years of full-time experience in aviation administration, or an equivalent combination of experience and education.” The court held the exemption inapplicable: “This is advanced knowledge from a general academic education and from an apprenticeship, not from a prolonged course of specialized intellectual instruction.” Id. (internal quotation marks omitted). The court did not separately consider the nature of the plaintiffs’ duties.
Other cases similarly tie the exemption analysis to the academic requirements of the position at issue. See, e.g., Reich v. Wyoming, 993 F.2d 739, 743 (10th Cir.1993) (concluding that game wardens are subject to the professional exemption because they must have a degree in wildlife management, biology, or a similar field); Dybach v. Fla. Dep’t of Corr., 942 F.2d 1562, 1566 (11th Cir.1991) (“Dybach’s position [as a probation officer] did not rise to the level of a section 213(a)(1) [exempt] professional because it did not require a college or an advanced degree in any specialized field of knowledge.”).
Finally, the case law advanced by Cameron is neither binding on this Court nor inconsistent with our conclusion. Some of these cases either misapply (or ignore altogether) the requirement that the plaintiff’s knowledge be of the type customarily acquired by a prolonged course of advanced intellectual study. See Debejian v. Atl. Testing Labs., Ltd., 64 F.Supp.2d 85, 88 (N.D.N.Y.1999); Stevins v. Provident Constr. Co., No. 04-15189, 137 Fed.Appx. 198, 199 (11th Cir. Apr. 18, 2005). Another case cited by Cameron provides minimal justification for its holding. See Dingwall v. Friedman Fisher Assocs., P.C., 3 F.Supp.2d 215, 218 (N.D.N.Y.1998) (holding, without explanation, that designing electrical systems is “clearly an area requiring advanced knowledge in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study”).
On the basis of the foregoing, we conclude that, as a matter of law, Young was not an exempt professional because he did not do work which required knowledge customarily acquired by a prolonged course of advanced intellectual study.”
Therefore, the Court affirmed the lower Court’s ruling that Plaintiff, who lacked a prolonged course of specialized, intellectual instruction and study, was not professionally exempt.
E.D.La.: Notwithstanding The Use Of A 212 Hour Month In Collective Bargaining Agreement (CBA), City Failed To Provide Adequate Proof It Adopted A 28-day Work Period As Required For § 207(k) Exemption
Miley v. City of Bogalusa
Fire suppression and prevention employees of the City of Bogalusa (the City) filed a complaint against the City to recover overtime, liquidated damages, and attorney’s fees, pursuant to the FLSA. The firefighters work a three-day cycle (one day on duty and two days off), their pay schedule is bi-monthly on the fifteenth and last day of the month, and the pay periods vary in length. The City pays a flat 12 hours of overtime pay monthly. The firefighters alleged that they routinely work in excess of the basic overtime threshold of 40 hours in a workweek. They sought overtime pay at the rate of one and one-half times the regular rate of pay for all hours worked in excess of 40 hours in a workweek. Alternatively, assuming that a seven-day work cycle has been adopted by the City, the plaintiffs alleged that they are entitled to full overtime for all hours worked beyond 60 hours in a work week. The threshold issue before the Court was whether the City had properly adopted a 28-day work period as required to assert their exemption under § 207(k). As discussed below, the Court held they had not.
Discussing the 207(k) exemption, the Court stated, “[t]here is no dispute that the City is eligible for the exemption under § 207(k) as a local government that provides vital public services. The parties agree that there are no disputed issues of material fact, and the question is whether the City adopted the seven day or 28-day work period to qualify for the exemption.
The plaintiffs contend that the City has not opted for the overtime exemption under § 207(k), and the regular overtime provisions of § 207(a) apply, requiring an employer to pay overtime compensation at a rate of one and one half times the regular rate after the employee has worked more than 40 hours in a week. Moreover, the plaintiffs contend that the City provided no statement or announcement that it has adopted any seven to 28-day period. The plaintiffs agree that the adoption of a particular work period necessary to come under the exemption of § 207(k) does not have to be formal or express if the City can demonstrate adoption by its actions. See Singer v. City of Waco, Tex., 324 F.3d at 819 (a municipality can establish a particular work period by demonstrating that it actually pays its fire fighters in accordance with the longer work period).
The City argues that it set out a 28-day work period, as evidenced by the reference to an hourly scale based on 212 hours per month, when negotiating the collective bargaining agreement. It further argues that it paid its firefighters through a formula in accordance with the collective bargaining agreement for the past twenty years.
The Bogalusa Professional Firefighters Association-Local No. 687-AFL-CIO entered a collective bargaining agreement with the City on April 19, 1989. Article IV addresses the “Hours of Work” for firefighters as follows:
The normal working hours shall be twenty-four hours on and forty-eight hours off and shifts shall be arranged and working assignments made in accordance with this schedule. As these working hours which were requested by the Union and have been in effect for a number of years result in at least one out of every three work weeks being in excess of the sixty hours provided by law, the Union, on behalf of its members, does hereby waive any overtime pay for any hours of work in excess of sixty hours per calendar week resulting from this working schedule and have requested each employee to personally execute a waiver of overtime to this extent. However, any firefighter called back to work other than pursuant to a regular shift shall be paid overtime at the rate of one and one-half times his usual salary to be determined by reducing his average monthly salary to an hourly scale, based on 212 hours per month and to include State Supplementary Pay; all in addition to his regular monthly salary.
Dale Branch, the City attorney, represented the City in negotiating the collective bargaining agreement. He opined that the City had adopted the 28-day work period by its payroll-calculation practice for the past 20 years, and that the formula used to calculate overtime pay was designed to comply with the FSLA and its state counterpart, Louisiana Revised Statute 33:1994, based on a 28-day work period. Def. exh. C at 43, 49. He admitted that he does not know the origin of the formula, nor when it was implemented, and that he knows of no other document or other indication of the adoption of a work period by the City.
Patty Sandifer, a City payroll computer operator, testified in her deposition that Bogalusa firefighters work 240 hours a month, consisting of ten, twenty-four hour shifts. On the 15th of the month, firefighters are paid for 120.01 hours. At the end of the month, the firefighters receive regular pay and additional compensation for setup, shift differential, overtime, and contract overtime.
In order to calculate overtime pay, Sandifer applies a formula, which the City has used for over 20 years. Sandifer begins with the firefighter’s base salary from a salary schedule and adds a state monthly supplement to obtain a monthly salary. The monthly salary is divided by 212 to provide the monthly rate per hour. Sandifer then subtracts the hourly state supplemental from the monthly rate to obtain the base hourly rate. The base hourly rate is used to calculate any overtime payment that is due. The base hourly rate is multiplied by 2880, which represents the firefighter’s annual hours (12 x 240). The resulting amount is the annual overtime salary. Sandifer has no idea where the number 212 originated other than that it is the monthly hours used for figuring overtime.
In this case, the City has provided no statement or announcement that it has adopted a 28-day work period for § 207(k) purposes. The firefighters worked a three-day cycle of 24 hours on and 48 hours off and were paid twice a month. The use of 212 hours referenced in the collective bargaining agreement to calculate the overtime without more is insufficient to establish a 28-day work period. Further, the 212 reference is contained in a sentence which applies to “any firefighter called back to work other than pursuant to a regular shift” and is not applicable to the overtime hours at issue. Accordingly, the City has not carried its burden of proving it adopted a 28-day work period.
Alternatively, the City argues that it is entitled to an exemption using the seven-day work period. In support of the argument, the City relies on the testimony of its experts, Don Strobel and Karen Clampitt that firefighter are entitled to overtime only after 53 hours a week, even if a work period is not adopted under § 207(k), because the Department of Labor does not require that the City “revert back to a 40-hour work week.”
The plaintiffs filed a motion in limine to exclude the testimony of Don Strobel and Karen K. Clampitt, pursuant to Federal Rules of Evidence 702 and 704. They argue that the expert opinions are impermissible legal conclusions that there is no violation of the FLSA and do not assist the court in determining the facts.
Federal Rules of Evidence 702 and 704 govern the admissibility of expert testimony. Rule 702 provides:
If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.
Rule 704 provides:
Opinion on Ultimate Issue
(a) Except as provided in subdivision (b), testimony in the form of an opinion or inference otherwise admissible is not objectionable because it embraces an ultimate issue to be decided by the trier of fact.
(b) No expert witness testifying with respect to the mental state or condition of a defendant in a criminal case may state an opinion or inference as to whether the defendant did or did not have the mental state or condition constituting an element of the crime charged or of a defense thereto. Such ultimate issues are matters for the trier of fact alone.
The motion in limine to exclude the testimony is denied, and the court will consider the expert testimony offered by the City.
The experts opine that the Department of Labor takes the position that, if someone is engaged in firefighting and they meet the duty test, then they can only go down to the 53 hours a week without compliance with the § 207(k) exemption. They opine that firefighters would be entitled to overtime after 53 hours, not 40 hours, even if they “had never heard” of § 207(k).
The experts base their opinion on their experience in the Department of Labor, but do not explain the basis of their opinion or present documents, cases, opinion letters, or regulations upon which they rely. When asked in the deposition to point to a regulation that provides for a default to 53 hours if the City does not establish an exemption, Strobel stated that he did not think it appeared in the regulations, the field office handbook, or an internal document. Clampitt stated in her deposition that she did not rely on any regulation, but just her “working knowledge of the law.”
The opinions of the experts do not establish that the City is entitled to a “default” work period of seven days. Other than the opinion of the experts, the City offers no evidence to carry its burden of establishing that it adopted a seven-day work period.
Accordingly, the City has not carried its burden of establishing that it qualifies for the exemption by adopting either a seven or 28-day work period. Therefore, the City is not entitled to the partial overtime exemption under § 207(k). The case will proceed to trial on the issues whether the terms of the collective bargaining agreement limiting overtime to twelve hours a month should be enforced; what, if any, amount the firefighters are owed as overtime compensation; whether the City is entitled to a set off for overtime that it has paid; and whether the City acted in good faith in its payment of overtime.
Accordingly, there are no disputed issues of material fact, and the plaintiffs are entitled to judgment as a matter of law. The plaintiffs’ motion for summary judgment is granted, and the City’s cross-motion for summary judgment is denied.”
Tyson Foods Found In Violation Of Fair Labor Standards Act In Donning And Doffing Suit, Reuters Reports
Reuters is reporting that “Tyson Foods Inc., one of the nation’s largest poultry producers, has been found in violation of the Fair Labor Standards Act (FLSA) at its Blountsville, Ala., facility. The jury’s verdict in federal court in Birmingham resulted from a lawsuit filed by the U.S. Department of Labor against the company…
The Department of Labor’s lawsuit was filed in the U.S. District Court for the Northern District of Alabama. The federal department alleged that Tyson Foods did not keep accurate records and failed to pay production line employees for the time they spend donning and doffing safety and sanitary gear, and performing other related work activities. The violations cover the period from the year 2000 to the present and affect approximately 3,000 current and former workers at the plant.
The initial investigation began in April 2000 as part of the department’s Wage and Hour Division’s poultry enforcement initiative. The Labor Department filed the district court complaint in May 2002 following the company’s failure to comply with the law and to pay back wages. The first jury trial, which began in February 2009, ended in a mistrial. The Labor Department chose to pursue a second trial in August 2009 to secure a ruling that Tyson was failing to compensate its employees lawfully.”
To read the full story go to Reuters’ website.
M.D.Tenn.: Police Officers Who Allegedly Arrested Employees In Retaliation For Informal Unpaid Wage Complaints Are Properly Defendants In A 29 U.S.C. § 215(a) Case
Montano-Perez v. Durrett Cheese Sales, Inc.
Defendant, a local Police Department, sued for their alleged role in retaliating against Plaintiffs, in cooperation with Plaintiffs’ employer filed a Motion to Dismiss the FLSA Retaliation claims asserted against it. For the reasons discussed below, the Court denied the Police Department’s motion.
The Court cited the following extensive facts as relevant to its inquiry:
“The plaintiffs are Latino immigrants who moved to the Manchester, Tennessee, area from impoverished regions of Mexico. The plaintiffs speak either Mixteco, an indigenous Mexican language, or Spanish as their primary language. Shanna Ramirez was a supervisor with Durrett Cheese during the relevant time period, and she recruited and hired members of the Mixteco community in Manchester to work in non-supervisory positions with Durrett Cheese. Mostly all of the non-supervisory positions in the Durrett Cheese factory were filled by Latino workers of Mexican descent. The plaintiffs were hired by Durrett Cheese at various points in the late 2006 to late 2007 time period. After being hired, the plaintiffs performed various jobs in the factory, including “in-line” jobs slicing, packaging, and processing cheese for sale. At the time of hire, the plaintiffs understood that Durrett Cheese would pay them on a weekly basis at an hourly rate between approximately $6.00 and $6.75 per hour.
The plaintiffs’ employment with Durrett Cheese was problematic. The plaintiffs’ direct supervisor, Ms. Ramirez, frequently made offensive and potentially humiliating comments to the plaintiffs about their race, national origin, intelligence, language, and customs, among other things. Durrett Cheese also frequently failed to timely pay the plaintiffs at the applicable federal minimum wage. These problems persisted before and after Durrett Cheese’s August 2007 bankruptcy filing.
Indeed, in many workweeks in August, September, and October 2007, Durrett Cheese grossly underpaid the plaintiffs. In some workweeks during this time period, the plaintiffs were not paid at all, and some plaintiffs worked for more than a month during this time period without being paid. The plaintiffs regularly requested their unpaid wages during this period, often approaching Ramirez in groups to inquire about their pay. Acting through Ramirez, Durrett Cheese either postponed pay days or simply refused to pay the plaintiffs for the work they had performed. Ramirez convinced the plaintiffs to continue working by telling them that they would not receive their back pay if they quit, and that they would receive more back pay if they worked at higher production levels.
The tension over pay and working conditions came to a head in October 2007. On Friday, October 19, 2007, the plaintiffs made repeated requests to Ramirez for several weeks of back pay. Ramirez informed the plaintiffs that they would not be paid until the following Monday. On hearing this news, the plaintiffs met to plan a collective action to protest the continued non-payment of wages.
The following Monday, October 22, 2007, during the usual mid-morning break, the plaintiffs assembled in the Durrett Cheese break room and again requested their overdue pay from Ramirez. The plaintiffs were told by Ramirez that no checks would be distributed until defendant Durrett arrived, and, until that time, the plaintiffs could either return to work or leave for good (and risk never receiving their back pay). The plaintiffs refused to return to work, stating that they would only do so when they received their wages. In response, Ramirez fired the plaintiffs and ordered them off company property. The plaintiffs informed Ramirez that they would not leave the break room until they received their wages.
As the plaintiffs continued to wait in the break room, Ramirez conferred with Ron Girts, another supervisor at Durrett Cheese, and defendant Durrett. Defendant Durrett ordered Girts and Ramirez to call the Coffee County Sheriff’s Department. Officer-defendants Jones, Partin, and Barker responded to the call and headed to the Durrett Cheese factory. When the officers arrived, Ramirez, Girts, and the plaintiffs informed the officers that management and the employees were engaged in a dispute over unpaid wages. The officers noted the nature of the dispute in their incident report.
The plaintiffs allege that, at this point, the officers with the Coffee County Sheriff’s Department and the supervisors employed by Durrett Cheese began working together to defeat the plaintiffs’ wage complaints. For instance, a supervisor, either Ramirez or Girts, informed the officers that the plaintiffs were undocumented immigrants and should, therefore, be reported to Immigration and Customs Enforcement (ICE). The officers were also provided with paperwork from Durrett Cheese to assist in reporting the plaintiffs.
The officers told the plaintiffs that, if they did not leave the Durrett Cheese premises, they would be arrested and taken to the Coffee County jail. After the plaintiffs expressed their intent to remain in the break room, the officers arrested the plaintiffs and transported them, via Sheriff’s Department van, to the Coffee County jail. The officers’ supervisors, defendants Freeman and Graves, were advised of the situation as it unfolded and approved of the arrests. During the arrests, the officers, along with Ramirez, laughed at the plaintiffs, referred to the plaintiffs’ race and national origin, and made statements about sending the plaintiffs “back to Mexico.” In total, the entire work stoppage incident lasted less than two hours, and, at all times, it was peaceful and entirely confined to the Durrett Cheese break room.
At the Coffee County jail, the plaintiffs were booked on charges of trespassing and were detained. Over the course of the day on October 22, the plaintiffs were separated from their families and kept in the dark about what would happen to them. The plaintiffs slept on mattresses in a crowded jail cell and were denied free access to restroom facilities. The next day, October 23, the Coffee County District Attorney dropped all charges against the plaintiffs.
The plaintiffs allege that, while they were detained, defendants Graves and Freeman consulted with supervisors at Durrett Cheese as to how to proceed, in light of the ongoing labor dispute between Durrett Cheese and the plaintiffs. Durrett Cheese and defendant Graves agreed that, regardless of the charges being dropped, the plaintiffs would remain at the Coffee County jail and that the plaintiffs would be reported to ICE. Shortly after this conversation, defendant Freeman contacted ICE to report the plaintiffs as suspected undocumented immigrants. On October 24, agents from ICE arrived at the Coffee County jail, and, at the behest of the County Defendants, transported the plaintiffs to a detention center in Nashville, Tennessee, where the plaintiffs, very fearful of what would happen to them and their families, were interrogated for several hours before their attorney was able to secure their release.”
Finding the Plaintiffs’ 215 claim of FLSA Retaliation to be a viable one, at this stage in the litigation, the Court explained:
“As noted above, the plaintiffs allege that the County Defendants violated Section 215(a)(3) of the FLSA. In relevant part, that provision states: “it shall be unlawful for any person to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or caused to be instituted any proceeding under or related to this chapter.” 29 U.S.C. § 215(a) (3). The Sixth Circuit has consistently interpreted an informal complaint to management regarding working conditions to constitute a “filed complaint” under Section 215(a)(3). Moore v. Freeman, 355 F.3d 558, 562 (6th 2004); EEOC v. Romeo Community Schools, 976 F.2d 985, 989 (6th Cir.1992). While there does not appear to be a wealth of law on this subject from the Sixth Circuit, it appears clear that, given the broad language of this provision, entities other than an individual’s employer can violate the FLSA. See e.g. Centeno-Bernuy v. Perry, 302 F.Supp.2d 128, 135 (W.D.N.Y.2003); Meek v. United States, 136 F.2d 679, 679-80 (6th Cir.1943).
In asserting that the plaintiffs’ FLSA claim should be dismissed as to them, the County Defendants argue that the plaintiffs’ Complaint does not establish the prima facie case for retaliation under the FLSA, and, even if it did, the claim could not survive the well-known McDonnell Douglas burden-shifting analysis that is typically applied in employment discrimination and retaliation suits, including claims brought under the FLSA. (Docket No. 46 at 4, citing Williams v. GM., 187 F.3d 553, 568 (6th Cir.1999)).
This is not a proper argument at this stage in the proceedings. In employment discrimination and retaliation suits, the plaintiff is not required, at the pleading stage, to demonstrate a prima facie case or to survive McDonnell Douglas burden shifting. See Swierkiewicz, 534 U.S. at 508; EEOC v. FPM Group, Ltd., 2009 WL 3088808, *6 (E.D.Tenn. Sept.28, 2009). Rather, as discussed above, in order to survive a motion to dismiss, the plaintiff’s Complaint need only outline a “facially plausible” claim for relief.
The plaintiffs have met that burden here. Again, the language of the FLSA provision at issue is very broad, prohibiting “any person” from “discriminat [ing]” against “any employee,” because that employee has filed a covered workplace complaint. 29 U.S.C. § 215(a)(3). Further, the County Defendants recognize that retaliatory reporting of an employee to immigration authorities could constitute “discrimination” under this provision. (Docket No. 46 at 6; see also Singh v. Jutla, 214 F.Supp.2d 1056, 1062 (N.D.Cal.2002) (denying motion to dismiss FLSA retaliation claims where allegations centered on an employer’s reporting of the employee to immigration authorities in retaliation for FLSA protected conduct); Dunlop v. Carriage Carpet Co., 548 F.2d 139, 147 (6th Cir.1977) (equating FLSA discrimination to “black listing” and other actions that prevent an employee from gaining future employment.)
Providing significant factual support, the plaintiffs have alleged that the County Defendants, working in concert with the Durrent Defendants, arrested the plaintiffs and then reported the plaintiffs to ICE because of the plaintiffs’ complaints about pay. While the County Defendants claim that the plaintiffs have only alleged a racial or ethnic animus as motivation for the defendants’ conduct here, that is simply not the case. (Docket No. 46 at 6.) The Complaint contains numerous allegations, backed by factual support, that the County Defendants reported the plaintiffs to ICE, at least in part, because the plaintiffs had made a complaint about pay.
The plaintiffs allege that, shortly after the officers arrived at the break room, they were advised that this was a dispute about pay. Then, “Ramirez and/or Girts supplied Defendants Jones, Partin, and Barker with paperwork to assist the Coffee County Defendants in reporting Plaintiffs to ICE.” (Docket No. 1 at 15.) There is no indication from the Complaint that Jones, Partin and Barker attempted to mediate or resolve the labor dispute; rather, it is clear from the Complaint that, throughout the entire process, the County Defendants simply imposed the will of the Durrett Defendants, which was to permanently remove the plaintiffs from the premises (and, perhaps, the country) because the plaintiffs had complained about pay. Indeed, the Complaint alleges that, after the charges were dropped, defendant Graves “consult[ed] with the Durrett Defendants and with full awareness that he was unlawfully intervening in a labor dispute, defendant Graves instructed defendant Freeman to call ICE to report Plaintiffs as suspected undocumented immigrants. Defendant Freeman did so on or about October 22 or October 23, 2007.” (Id. at 16.)
Clearly, accepting the plaintiffs’ allegations as true and drawing all reasonable inferences in the plaintiffs’ favor, the plaintiffs have sufficiently alleged that the County Defendants violated the FLSA. The plaintiffs allege, with specific factual support, that, in response to the plaintiffs’ complaint about pay, the County Defendants not only had the plaintiffs arrested but worked in concert with the Durrett Defendants to have the plaintiffs reported to ICE. As to this claim, the County Defendants’ Motion to Dismiss, which is premised on the notion that the FLSA claim lacks factual support, will be denied.“
9th Cir.: Different Regular Hourly Rates For Same Work On Different Shifts Does Not Violate FLSA; No Evidence That Defendant Is Attempting To Avoid Paying Overtime Wages
Parth v. Pomona Valley Hosp. Medical Center
A nurse brought collective action against hospital, alleging that hospital violated the Fair Labor Standards Act (FLSA) by creating a pay plan that paid nurses working 12-hour shifts a lower base hourly rate than nurses working 8-hour shifts. The United States District Court for the Central District of California, Margaret M. Morrow, J., granted summary judgment to hospital, and nurse appealed. The Ninth Circuit affirmed, holding that: “[w]hen an employer changes its shift schedule to accommodate its employees’ scheduling desires, the mere fact that pay rates changed, between the old and new scheduling schemes in an attempt to keep overall pay revenue-neutral, does not establish a violation of the Fair Labor Standards Act’s (“FLSA’s”) overtime pay requirements.” At issue was Defendant’s pay policy whereby they paid nurses working a 12 hour shift lower base hourly pay than those working 8 hour shifts.
Analyzing the issue, the Court stated, “[Plaintiff] argues that PVHMC violated the FLSA by creating a pay plan that pays nurses working 12-hour shifts a lower base hourly rate than nurses who work 8-hour shifts. In support of her argument, Parth contends that: (A) PVHMC cannot reduce the base pay for nurses working the 12-hour shift, (B) the 12-hour base pay rate is an “artifice” designed to avoid the FLSA’s overtime and maximum hours requirements, and (C) PVHMC cannot justify the base hourly pay rate differences between the 8-hour and 12-hour shifts, because nurses working both shifts perform the same job duties.
Parth asserts that PVHMC’s pay plan violates the FLSA, because it was designed to “make overtime payments cost neutral,” and that such a scheme is lawful only when implemented “before the employer was subject to the FLSA.” We disagree. The 12-hour shift scheduling practice was first initiated at the nurses’ request. The 12-hour shift scheduling practice was then memorialized in a collective bargaining agreement as a result of negotiations between Local 121 and PVHMC (again initiated at the nurses’ request). The parties do not dispute that the wages paid under the pay plan are more than the minimum wages under federal law. We find no reason to invalidate the agreement between the parties. There is no justification in the law and no public policy rationale for doing so. Parth also failed to cite (either before the district court or on appeal) any authority to suggest that a voluntary base rate wage reduction made in exchange for a 12-hour shift schedule was unlawful.
The FLSA requires employers to pay employees, who work more than 40 hours in a work week, one and a half times the employees’ “regular rate” of pay. 29 U.S.C. § 207(a)(1). The Supreme Court interprets “regular rate” to mean “the hourly rate actually paid the employee for the normal, non-overtime workweek for which he is employed.” Walling v. Youngerman-Reynolds Hardwood Co., Inc., 325 U.S. 419, 424 (1945). Congress’s purpose in enacting the FLSA “was to protect all covered workers from substandard wages and oppressive working hours.” Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S. 728, 739, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981). See also Adair v. City of Kirkland, 185 F.3d 1055, 1059 (9th Cir.1999). Under the FLSA, employers and employees are generally “free to establish [the] regular [non-overtime] rate at any point and in any manner they see fit,” “[a]s long as the minimum hourly rates established by Section 6 [of the FLSA] are respected.” Youngerman-Reynolds, 325 U.S. at 424. Though our Circuit has never been asked to determine whether an employer subject to the FLSA may alter the “regular rate” of pay in order to provide employees a schedule they desire, we conclude that such an arrangement does not contravene the FLSA’s purpose.
Soon after Congress enacted the FLSA, but before it became effective, many employers altered their compensation schemes-by lowering base hourly rates-to ensure that they paid employees the same overall wages after complying with the FLSA’s overtime requirements. See, e.g., Walling v. A.H. Belo Corp., 316 U.S. 624, 628-30, 62 S.Ct. 1223, 86 L.Ed. 1716 (1942). In Belo, the Supreme Court examined these compensation practices and held that, even when the employer’s purpose in lowering hourly base rates “was to permit as far as possible the payment of the same total weekly wage after the [FLSA] as before…. [N]othing in the [FLSA] bars an employer from contracting with his employees to pay them the same wages that they received previously, so long as the new rate equals or exceeds the minimum required by the [FLSA].” Id. at 630.
The Eleventh Circuit followed Belo’s holding in a case involving a municipal employer. See Wethington v. City of Montgomery, 935 F.2d 222 (11th Cir.1991). “When passed in 1938, the FLSA did not apply to any state or local employers.” Id. (citing Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528, 533, 105 S.Ct. 1005, 83 L.Ed.2d 1016 (1985)). Congress expanded the FLSA’s definition of “employer” in 1974 to include municipalities. In Garcia, the Supreme Court reversed its previously-established precedent and held that state and local governments could be liable for FLSA violations. Wethington, 935 F.2d at 224-25. Given the potential for sudden liability, Congress delayed application of the FLSA to municipal employers until April 15, 1986. Id. At 225 (citing Fair Labor Standards Amendments of 1985, Pub.L. No. 99-150, § 2(c), 99 Stat. 787, 788). Accordingly, municipal employers such as the City of Montgomery (the “City”) became subject to the FLSA as of April 15, 1986.
In Wethington, the City endeavored to create and implement a “budget-neutral” plan that would ensure FLSA compliance before April 15, 1986. Wethington, 935 F.2d at 225. Prior to Garcia, the City paid its fire fighters on a salary basis, which covered “a cycle of three pay periods, each involving varied hours over 14 days: one 104-hour period, one 112-hour period, and one 120-hour period. For this 42-day, 336-hour cycle, a typical fire fighter would receive $2,208.45. The actual working time within these periods consisted of rotations of duty in which the fire fighters worked 24 hours, were off duty for 48 hours, worked another 24 hours, and so on.” Id. This scheme did not provide for overtime, so in June 1985, the City adopted a new hourly wage scale to comply with the FLSA. Id.
The City determined that under the FLSA, 316 of the 336 hours in the 42-day cycle would be considered regular hours, while 20 would be considered overtime. Id. In order to create a new, yet “budget-neutral,” pay plan that incorporated time-and-a-half overtime pay, the City, “for the purpose of calculation, increased the [20] overtime hours by 50%. [It] then took the fictitious total hours of 346 (316 regular plus 30 adjusted overtime) and divided them into the fire fighters’ total pay for that period to produce a per-hour wage of $6.3828.” Id. The revised system ensured that City fire fighters would work the same hours and shifts as before, but would receive $6.3828 per hour for 316 regular hours, and $9.5742 ($6.3828 multiplied by 1.5 as required by the FLSA) per hour for 20 hours of overtime, totaling $2,208.4488. Id. “Therefore the total salary and total hours did not change. The payment system and the equivalent hourly rates of pay, however, did change. Under the prior, salary system, the converted hourly rate amounted to $6.57. Under the revised system, the effective rate was decreased to $6.38.” Id. The fire fighters sued the City, making an argument similar to Parth’s.
Citing Belo, the Eleventh Circuit held that, if a new pay plan “actually employed is valid under the [FLSA], the fact that the regular rate adopted prior to the [FLSA’s] effective date produces a total pay no greater than the total pay under a prior system is not enough to establish a violation of the FLSA.” Id. at 229. The court “read the Belo language to support the City’s argument that it is not a violation of the [FLSA] to reduce, prior to the effective date of the [FLSA], the hourly rate paid employees in order to avoid greater payments upon application of the FLSA.” Id.
We recognize that the Belo and Wethington cases dealt with employers creating cost-neutral pay plans that lowered employees’ base hourly rates before becoming subject to the FLSA. However, there is no Supreme Court or Ninth Circuit case that says whether an employer can or cannot do so while subject to the FLSA. Courts around the country have dealt with similar matters, with conflicting results. Compare, e.g., Conner v. Celanese, Ltd., 428 F.Supp.2d 628, 637 (S.D.Tex.2006) (holding that “an employer can comply with the FLSA by reducing the ‘regular’ wage paid to its employees and pay overtime at one and one-half times the reduced regular rate such that the total pay to the employees remains the same”), with Rhodes v. Bedford County, Tenn., 734 F.Supp. 289, 292 (E.D.Tenn.1990) (“The court is of the opinion that defendant’s implementation of [a revised pay plan similar to PVHMC’s] constitutes a scheme intended to avoid the overtime requirements of § 7. [Even though it] result[ed] in the workers being paid the same amount for the same number of hours worked both before and after the changeover. This was accomplished by artificially altering plaintiffs’ ‘regular rate.’ ”).
Because this is a case of first impression for us, we agree with the district court’s approach and use Supreme Court precedent on pre-FLSA pay plan alterations for guidance on how to proceed under the facts before us. In Belo, 316 U.S. at 630, the Supreme Court stated that “nothing in the [FLSA] bars an employer from contracting with his employees to pay them the same wages that they received previously, so long as the new rate equals or exceeds the minimum rate required by the FLSA.” Further, Youngerman-Reynolds, 325 U.S. at 424, states that “[a]s long as the minimum hourly rates established by Section 6 [of the FLSA] are respected, the employer and employee are free to establish this regular rate at any point and in any matter they see fit.” The PVHMC pay plan conforms with this precedent.
Additionally, we look to the purpose of the FLSA, which is “to ensure that each [covered] employee … would receive ‘[a] fair day’s pay for a fair day’s work’ and would be protected from the evil of ‘overwork’ as well as ‘under-pay.’ “ Williamson v. Gen. Dynamics Corp., 208 F.3d 1144, 1150 (9th Cir.2000) (quoting Barrentine, 450 U.S. at 739). The pay practice sought by PVHMC’s nurses, and agreed to by Parth, Local 121, and PVHMC, ensures that employees who work beyond eight hours in a day receive time-and-a-half for their efforts. It also ensures that employees who work more than twelve hours in a day receive “double-time” pay. We therefore conclude that the pay practice protects employees from the evils of overwork and underpay, and properly incentivizes PVHMC from overworking its nurses.
Accordingly, we conclude that the arrangement between Parth and PVHMC does not violate the FLSA, because it is not prohibited under the statute, and it does not contravene the FLSA’s purpose. Parth cannot cite any relevant case law to support her argument that PVHMC cannot respond to its employees’ requests for an alternative work schedule by adopting the sought-after schedule and paying the employees the same wages they received under the less-desirable schedule. To us, PVHMC’s actions seem perfectly reasonable, were requested by the nurses (who work the schedules), and are the result of a bargained-for exchange between the hospital administration and Local 121.
Parth also argues that the 12-hour shift pay plan is essentially an artifice to avoid paying overtime. The district court examined this argument. It noted that Parth could cite “no authority for the proposition that these facts show the 12-hour rate was a subterfuge that violated the FLSA.” We agree.
Parth’s argument hinges on two issues: first, whether PVHMC’s pay plan contravenes the FLSA’s purpose; second, whether the revised “regular rate” is unrealistic and artificial.
Employers cannot lawfully avoid the FLSA’s overtime provisions “by setting an artificially low hourly rate upon which overtime pay is to be based and making up the additional compensation due to employees by other means.” 29 C.F.R. § 778.500(a). The FLSA also prohibits employers from adopting “split-day” plans in which the employee’s hours are arbitrarily divided in such a way as to avoid overtime payments. Walling v. Helmerich & Payne, Inc., 323 U.S. 37, 40, 65 S.Ct. 11, 89 L.Ed. 29 (1944); 29 C.F.R. § 778.501. Both types of plans work in a manner so that employees do not earn overtime compensation, regardless of how many hours they worked.
An employee’s “regular rate” of pay is “the hourly rate actually paid the employee for the normal, non-overtime workweek for which [s]he is employed.” Youngerman-Reynolds, 325 U.S. at 424. See also United States v. Rosen-wasser, 323 U.S. 360, 363-64, 65 S.Ct. 295, 89 L.Ed. 301 (1945) (holding that “Section 7(a) [of the FLSA] refers to a ‘regular rate’ which we have defined to mean ‘the hourly rate actually paid for the normal, non-overtime workweek.’ “ (quoting Helmerich & Payne, Inc., 323 U.S. at 40)). PVHMC’s regular rate for 12-hour shift nurses is the rate it pays for the first eight hours of a 12-hour shift. The pay plan does not fall under either of the prohibited categories discussed above.
Parth contends that PVHMC’s regular rate for nurses working the 12-hour shift is artificial, and therefore unlawful, relying on Youngerman-Reynolds to support her argument. Youngerman-Reynolds holds that employers cannot skirt the FLSA’s requirements by creating a new payment scheme and corresponding lower regular rate that does not reflect the economic reality of the employees’ work. Youngerman-Reynolds, 325 U.S. at 425. In Youngerman-Reynolds, an employer paid its employees a piece rate determined by the number of boards they ricked and stacked. Id. at 420-21. When generating the new hourly rate from which it would base overtime compensation under the FLSA, the employer created an arbitrary per-hour piece rate that did not reflect the actual rate at which its employees stacked and ricked wood. Id. at 421-23. The Supreme Court held that the scheme violated Congress’s goals in enacting the FLSA-“inducing the employer to reduce the hours of work and to employ more [workers],” and “compensating the employees for the burden of a long work-week.” Id. at 423-24.
PVHMC’s plan, however, does not impinge on Congress’s goals. It provides employees more scheduling flexibility, allows them to spend less time commuting to work (because they spend fewer days at work), and ensures that PVHMC does not retain an incentive to ask the nurses to work longer hours.
Parth also asserts that the regular rate is “unrealistic” and “artificial,” in violation of the Supreme Court’s admonition in Helmerich & Payne, Inc., 323 U.S. at 42, that a regular rate cannot be derived “in a wholly unrealistic and artificial manner.” See also Adams v. Dep’t of Juvenile Justice of New York, 143 F.3d 61, 67-68 (2d Cir.1998) (stating that the regular rate may not be set in a “wholly unrealistic and artificial manner” that does not reflect actual practice). The Department of Labor has provided regulations to guide employers who wish to ensure their regular rates are not deemed artificial or unrealistic. See 29 C.F.R. § 778.500(a) (“[T]he overtime provisions of the act cannot be avoided by setting an artificially low hourly rate upon which overtime pay is to be based and making up the additional compensation due to employees by other means”). Parth produced no evidence to show that the regular rates memorialized in the CBA were artificially low, or that PVHMC was attempting to set rates in a manner that would relieve it of the obligation to pay time-and-a-half whenever an employee worked more than eight hours in a day.
Moreover, Parth and the other nurses are paid overtime under the PVHMC plan. Their overtime wages are calculated according to the standards set forth in 29 C.F.R. § 778.115 and the CBA. Parth appears to take issue with the manner by which her “regular pay” is calculated, and basically argues that instead of using the weighted average method of determining the regular rate, PVHMC should be required to use the “average blended rate” of pay. The “average blended rate” is the total pay worked by a nurse in a 12-hour shift, divided by 12. To the extent Parth’s argument is that average blended rate calculation is the only permissible “regular rate” of pay under the FLSA, we reject it. The weighted average method of calculation is not prohibited by the FLSA, and has been upheld by other circuits. See, e.g., Gorman, 488 F.3d at 596 (“This Court has already validated the weighted average method of determining the regular rate, which we described as ‘properly calculated by adding all of the wages payable for the hours worked at the applicable shift rates and dividing by the total number of hours worked.’) (quoting Brock v. Wila-mowsky, 833 F.2d 11, 14 (2d Cir.1987)).
The district court noted that “Parth proffer[ed] no argument or support for the proposition that the regular rate for the 12-hour [nurses] was not properly determined, or that overtime pay was not properly calculated using the pay rates set out in the CBA.” On appeal, Parth does not challenge the calculation of the overtime rate, except to say that the regular rate upon which it is based is impermissible. Accordingly, we conclude that Parth has not presented any evidence or convincing authority to suggest that PVHMC’s pay plan contravenes Congress’s goals in enacting the FLSA or is an artifice to avoid paying overtime.
Parth also argues that PVHMC’s pay plan is unlawful, because nurses working both the 8-hour and 12-hour shifts perform the same work, but are paid at different rates. We find no authority that suggests employees cannot be paid different rates for different shifts, and Parth fails to present any authority to the contrary. We do, however, find ample authority from other circuits that supports PVHMC’s argument that workers working different shifts may be paid different rates. See, e.g., Gorman, 488 F.3d at 595-97; Conner, 428 F.Supp.2d at 636-37; Allen v. Bd. of Pub. Educ., 495 F.3d 1306, 1312-13 (11th Cir.2007).
Parth derives her sole support for this argument from 29 C.F.R. § 778.316, which prohibits employers from setting one hourly rate for the first 40 hours of work and a lower hourly rate for statutory overtime hours. See 29 C.F.R. § 778.316. The regulation does not, however, speak to the circumstances present in this case. 29 C .F.R. § 778.316 makes no reference to whether employees working one shift over another may or may not be paid a different wage. Parth has therefore failed to meet her burden to show that this scheme is unlawful.”
Accordingly, the Ninth Circuit affirmed the district court’s decision to grant Defendant summary judgment.
D.Minn.: Defendant’s Request To Distribute Post-Notice Memorandum To Opt-ins Denied; Risk That Opt-ins Would Be Discouraged From Exercising FLSA Rights Outweighs Defendant’s Interests
Ahle v. Veracity Research Co.
Following the Court’s Order granting Notice, Defendant sought to send out a memorandum to all putative class members reminding them that they may not divulge trade secrets (without outlining what those trade secrets were). Plaintiff objected and Defendant’s filed a Motion to send the memorandum out. Finding that the chilling effect outweighed the probative value, if any, of such memorandum, the Court denied Defendant’s Motion.
The Court initially described the procedural history up until the point of the Motion and the contents of the memorandum Defendant sought to distribute.
“Veracity is a private investigative firm that specializes in insurance defense investigations. The Plaintiffs are current or former employees of Veracity, who work, or worked, as private investigators, and who claim that Veracity has violated the Fair Labor Standards Act, Title 29 U.S.C. §§ 201–219 (“FLSA”), by failing to pay them for certain hours that they had allegedly worked. Veracity denies any violation of the FLSA, and filed Counterclaims against certain of the Plaintiffs, including claims that those Plaintiffs had misappropriated confidential information, and trade secrets. In an Order dated July 28, 2009, the District Court, the Honorable Ann D. Montgomery presiding, granted the Plaintiffs’ Motion to Dismiss Veracity’s claims, on jurisdictional grounds, that those Plaintiffs had misappropriated Veracity’s confidential information, and trade secrets. See, Memorandum Opinion and Order dated July 28, 2009, Docket No. 67.
Veracity now seeks leave of the Court to distribute the following memorandum to those of its employees who elect to opt-into this collective action:
We understand that you recently elected to become a party plaintiff in this wage and hour lawsuit. We respect your decision and assure you that you will not be retaliated against in any way by [Veracity] because of your involvement in this case.
However, we want to remind you that, like all [Veracity] employees, you have a duty not to share or disclose any of our trade secrets or other confidential information outside of the Company except as authorized by [Veracity]. This includes any company property, whether in tangible or electronic form. Although we have no desire to interfere with your participation in this lawsuit, it does not relieve you of your obligations as a [Veracity] employee, including to protect our trade secrets and other confidential information.
Please let me know if you have any questions concerning this Memorandum or our policies prohibiting the nondisclosure and nonmisappropriation of [Veracity’s] confidential information and property, as reflected in our Employee Manual and your Agreement with [Veracity].
Before distributing the memorandum to opt-ins, counsel for Veracity requested permission to do so from counsel for the Plaintiffs, who objected to the distribution, and urged that Veracity seek Court approval.
Without the knowledge of its counsel, on August 6, 2009, Veracity sent a copy of the memorandum, authored by Veracity’s Chief Executive Officer, to a current employee who had opted into the lawsuit, and followed that transmission with a personal email to the employee which directed that he confirm that he received, understood, and would comply, with the terms of that memorandum. According to the Plaintiffs, Veracity sent the memorandum to that employee “within 20 minutes” of the employee’s election to opt-into the case. See, Plaintiffs’ Memorandum in Opposition, Docket No 93 (“Pl’s Memo.”), at p. 4 of 8; see also, Sokolowski Aff., supra at p. 4 of 6. After counsel for the Plaintiffs reiterated their opposition to the distribution of the memorandum, Veracity filed their Motion for Court approval to do so.”
Veracity contends that the memorandum is “neither threatening, coercive, nor misleading, and Plaintiffs fail to explain why they object to it,” see, Veracity’s Memorandum in Support, Docket No. 89 (“Veracity’s Memo.”), at p. 1 of 6, and believes that, as the employer of those opt-ins who are current employees, Veracity is doing no more than reminding those employees of their obligation to maintain the secrecy of Veracity’s confidential information, and trade secrets. Id. at p. 1-2 of 6 (“The memo, which [Veracity] believed to be appropriate and benign, was intended to remind employees of their obligation not to disclose trade secrets or other confidential information.”). Accordingly, Veracity requests an Order that permits “it to distribute the memorandum to any future opt-in plaintiffs who are current employees of [Veracity] at the time they opt in to the lawsuit.” Id.
Addressing the competing interests, the Court noted, ” ‘Because of the potential for abuse, a district court has both the duty and the broad authority to exercise control over a class action and to enter appropriate orders governing the conduct of counsel and the parties.’ Gulf Oil Co. v. Bernard, 452 U.S. 89, 100 (1981). “But this discretion is not unlimited, and indeed is bounded by the relevant provisions of the Federal Rules.” Id., citing Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974). “Before entry of such an order, there must be a clear record and specific findings that reflect a weighing of the need for a limitation and the potential interference with the rights of the parties.” Great Rivers Cooperative of Southeastern Iowa v. Farmland Industries, Inc., 59 F.3d 764, 766 (8th Cir.1995), citing Gulf Oil Co. v. Bernard, supra at 101.
‘In addition, such a weighing-identifying the potential abuses being addressed-should result in a carefully drawn order that limits speech as little as possible, consistent with the rights of the parties under the circumstances.’ Id., quoting Gulf Oil Co. v. Bernard, at 102. ‘Nevertheless, a limited restriction-such as precluding a defendant from soliciting class members to opt out of the litigation-will sometimes be justified.’ Id., quoting Manual for Complex Litigation, Second, at § 30.24 at p. 232, citing, in turn, Kleiner v. First Nat’l Bank of Atlanta, 751 F.3d 1193 (11th Cir.1985). While the foregoing authorities specifically address class action proceedings, the same principles have been extended to collective actions, such as this one. See, Hoffman-La Roche Inc. v. Sperling, 493 U.S. 165, 170-71 (1989). In Hoffman-La Roche, the Court specifically recognized that the benefits of the collective form of litigation “depend on employees receiving accurate and timely notice concerning the pendency of the collective action, so that they can make informed decisions about whether to participate.” Id. at 170.
We do not suggest that there is anything misleading in the contents of Veracity’s proposed memorandum. Rather, we have concern that the memorandum, which will only be sent to Veracity’s current employees who opt-into the collective action, will unnecessarily highlight Veracity’s close attention to that employee’s election to participate in this proceeding. Perhaps, in and of itself, such a highlighting could prove to be innocent, we find no logical nexus between joining this collective action, and any derivative motivation to impermissibly share Veracity’s confidential information, or trade secrets. Instead, we are left with the distinct impression that the transmission of the memorandum-only to opt-ins-is intended to not-so-subtly influence the opt-in, as to his choice to engage in this lawsuit, by assuring him or her that Veracity’s management will be more closely scrutinizing that employee’s demeanor and conduct, than other similarly-situated employees who have not joined the suit.
The opt-ins do no wrong in joining this collective action; they are simply exercising their rights under a statute that Congress enacted to assure that they were fairly compensated for the hours that they worked for Veracity, or for any other employer. If that joinder warrants a cautionary, that the opt-in should not seek to steal Veracity’s property, whether tangible or electronic, the connection escapes us. Nor are we able to clearly understand Veracity’s asserted business purpose for the advisory. While we certainly accept that Veracity is engaged in a sensitive business, and could be exposed to penalties if the information its investigators gather is improperly disclosed in such a way as to violate State or Federal statutes, or Veracity’s contracts with third-parties, we are unable to perceive why joining this lawsuit potentiates toward any such violations. Veracity, and the Plaintiffs, have entered a Protective Order that preserves the confidentiality of information that has been so labeled by one party or the other. Counsel for the Plaintiffs need not request, even if they were so unprofessionally motivated to do so, information from the opt-ins which is otherwise available from Veracity.
Nor is it clear what Veracity characterizes as confidential, or as a trade secret. Surely that characterization could not encompass evidence, if any there be, that Veracity’s policies and practices violate the provisions of the FLSA, and yet, that inference may not be fully understood by the opt-ins who are warned not to communicate some undefined information to persons outside of Veracity. The Confidentiality Agreements between Veracity, and its investigators, have not been presented for our review, but we have grave difficulty in conceiving why “information about other employees” could be considered confidential. See, Veracity’s Memo., supra at p. 5 of 6 (“[Veracity’s] employees have access to confidential information and trade secrets, including clients lists and information about other employees.”). While the confidences of Veracity’s client lists would surely be proprietary, we are unable to fathom why that information would be a subject of inquiry, by the Plaintiffs’ counsel, in an FLSA action.
In our considered view, Veracity’s memorandum unfairly chills the opt-ins’ Sixth Amendment right of access to the Courts, as well as their entitlement to consult with legal counsel, concerning their FLSA claims, without fear of retribution arising from some notion that the information that they are disclosing will subject them to discipline, or other legal action, predicated upon a breach of a Confidentiality Agreement. Moreover, we are unable to perceive any reason for the opt-ins to be disclosing information that would compromise a confidence, or a trade secret. As we have noted, the issues raised in this action pertain to wages, and hours worked; they do not involve matters of confidence or trade secret, and Veracity has failed to explain why it should fear such disclosures, much less why it believes that counsel for the Plaintiffs would be interested in any such information.
Given these considerations, and the entirety of the Record that the parties have presented for our consideration, we find that Veracity should be allowed to exercise its free speech right to communicate with its employees on matters as significant as the preservation of confidential information, and trade secrets. In order to preserve that right, without trammeling upon the opt-in’s right of access to the Courts, any communication from Veracity, on this subject, should be transmitted to all of its employees, who signed a Confidentiality Agreement, and not just to the opt-ins. In this fashion, the rights of both sides are appropriately weighed and protected. While our ruling will require that the memorandum be modestly reworded, if Veracity truly has a concern that its employees, or some subclass of them, will improperly disclose its trade secrets, or confidential information, then a cautionary advisory to its workforce will further its interest in preserving the integrity of such information, without sacrificing the opt-ins’ rights under the FLSA. As we did at the Hearing, we suggest that the memorandum be generic in form and content, and not be connected to this litigation. If a suitable memorandum evades the parties, they may jointly contact this Court for assistance.”
Thus, the Court denied the Defendant’s Motion for an Order Approving the Distribution of a Memorandum to Opt-ins.
6 Construction Companies Accused Of Using Race-based Pay Scale: Whites At Top, Latinos Rock Bottom, Daily News Reports
The Daily News is reporting that, “[s]ix construction companies are accused in a new state lawsuit of paying their employees according to their race – with whites at the top and Latinos at the bottom.
The suit filed by [New York] state Attorney General Andrew Cuomo on Thursday says the companies cheated lower-paid minority workers out of $4 million in wages and overtime.
All six firms are controlled by Michael Mahoney, a contractor exposed by the Daily News last year after workers said his companies provided them with black market federal safety certificates.
Mahoney’s companies paid white workers an average hourly rate of $25, while paying African-Americans $18 and Latinos and Brazilians only $15 an hour for the same work, the suit charges.
Since 2002, the companies short-changed dozens of employes at at least 10 construction sites, Cuomo charged.
Some workers were cheated of as much as $600 a month, according to Cuomo.”
Iowa Wal-Mart Wage Suit Settled For $11M, Quad City Times Reports
The Quad City Times is reporting that, “[a] class-action lawsuit filed eight years ago in Clinton County accusing Wal-Mart of intimidating employees into working overtime without pay has been settled, with the company agreeing to pay $11 million. The lawsuit was filed in June 2001 by Sally Mussmann and Taylor Vogue, two former employees of the Wal-Mart store in Clinton.”
The article stated that, “[t]he lawsuit alleged that Wal-Mart gave its employees tasks that were impossible to complete during their scheduled work hours, then intimidated them into working extra hours without pay to complete their assignments.”
To read the entire article go to the Quad City Times website.
5th Cir.: Cable Installers Are Employees, Not Independent Contractors; Summary Judgment For Employer Reversed
Cromwell v. Driftwood Elec. Contractors, Inc.
The trial court in this case previously granted the Defendant-employer summary judgment finding that the Plaintiff-employee-cable installers were independent contractors and not employees. The 5th Circuit reversed on appeal, finding that although it’s a close call, Plaintiffs were employees, thus entitled to the protections of the FLSA.
The Court cited the following facts as relevant to its inquiry:
“[Plaintiffs] provided cable splicing services for Driftwood for approximately eleven months, and were required to work twelve-hour days, thirteen days on and one day off. They were paid a fixed hourly wage for their work. BellSouth was Driftwood’s customer on the restoration project. AT & T appears to have had nothing to do with the facts of this case. Cromwell and Bankston reported to BellSouth’s location every morning to receive their assignments, unless they had not completed their jobs from the prior workday, in which case they were permitted to check in by phone. Cromwell and Bankston were given prints describing the type of work that needed to be performed for each assignment and were instructed by BellSouth supervisors to follow certain general specifications. Driftwood and BellSouth representatives checked on the progress of work, but did not train Cromwell and Benson or control the details of how they performed their assigned jobs.
Cromwell and Bankston provided their own trucks, testing equipment, connection equipment, insulation equipment, and hand tools, totaling over $50,000 for Cromwell and approximately $16,000 for Bankston, while BellSouth supplied materials such as closures and cables. Cromwell and Bankston were responsible for their own vehicle liability insurance and employment taxes, but Driftwood provided workers’ compensation insurance and liability insurance for Cromwell and Bankston’s work.”
Applying the relevant law, the Court stated, “[t]o determine if a worker qualifies as an employee under the FLSA, we focus on whether, as a matter of economic reality, the worker is economically dependent upon the alleged employer or is instead in business for himself. Hopkins v. Cornerstone Am., 545 F.3d 338, 343 (5th Cir.2008). To aid in that inquiry, we consider five non-exhaustive factors: (1) the degree of control exercised by the alleged employer; (2) the extent of the relative investments of the worker and the alleged employer; (3) the degree to which the worker’s opportunity for profit or loss is determined by the alleged employer; (4) the skill and initiative required in performing the job; and (5) the permanency of the relationship. Id. No single factor is determinative. Id. The ultimate conclusion that an individual is an employee within the meaning of the FLSA is a legal, and not a factual, determination. Brock v. Mr. W Fireworks, Inc., 814 F.2d 1042, 1045 (5th Cir.1987); see also Beliz v. W.H. McLeod & Sons Packing Co., 765 F.2d 1317, 1327 & n. 24 (5th Cir.1985) (citing and reconciling cases). Therefore, “we review the determination that [plaintiffs] were not employees as we review any determination of law,” which is de novo. Donovan v. American Airlines, Inc., 686 F.2d 267, 270 n. 4 (5th Cir.1982). Because there are no disputes of material fact, we also conclude that the district court was correct to resolve the matter on summary judgment.
The defendants-appellees argue that the facts of this case are similar to those in Carrell v. Sunland Const., Inc., in which we held that a group of welders were independent contractors under the FLSA. 998 F.2d 330 (5th Cir.1993). In Carrell, we noted that several facts weighed in favor of employee status, including that the defendant dictated the welders’ schedule, paid them a fixed hourly rate, and assigned them to specific work crews. Id. at 334. However, we held that the welders were independent contractors because the welders’ relationship with the defendant was on a project-by-project basis; the welders worked from job to job and from company to company; the average number of weeks that each welder worked for the defendant each year was relatively low, ranging from three to sixteen weeks; the welders worked while aware that the defendant classified them as independent contractors, and many of them classified themselves as self-employed; the welders were highly skilled; the defendant had no control over the methods or details of the welding work; the welders performed only welding services; the welders supplied their own welding equipment; and the welders’ investments in their welding machines, trucks, and tools averaged $15,000 per welder. Id.
In Carrell, we distinguished our prior decision in Robicheaux v. Radcliff Material, Inc., 697 F.2d 662 (5th Cir.1983), in which we held that a group of welders were employees under the FLSA, on the grounds that the welders in Robicheaux worked a substantial period of time exclusively with the defendant in that case, ranging from ten months to three years; the welding in Robicheaux required only “moderate” skill; the defendant in Robicheaux told the welders how long a welding assignment should take; the welders in Robicheaux spent only fifty percent of their time welding, and the remaining time cleaning and performing semi-skilled mechanical work; and the defendant in Robicheaux provided the welders with “steady reliable work over a substantial period of time.” Carrell, 998 F.2d at 334 (citing Robicheaux, 697 F.2d at 667). The welders in Robicheaux had signed a contract with the defendant in that case describing themselves as independent contractors; furnished their own welding equipment, in which they had invested from five to seven thousand dollars each; provided their own insurance and workers’ compensation coverage; invoiced the defendant on their own business letterheads, filed federal income tax returns on IRS forms as self-employed individuals, and received a higher hourly wage than did other welders employed by the defendant who did not furnish their own equipment and who were considered by the company to be employees. Robicheaux, 697 F.2d at 665.
The facts of this case lie somewhere between those of Carrell and Robicheaux. Similar to the facts in Carrell, the plaintiffs in this suit are highly skilled and perform only services requiring the use of those skills, the defendants here did not control the details of how the plaintiffs performed their assigned jobs, and the plaintiffs provided their own trucks, equipment, and tools, in which they had invested substantial sums. However, there are some significant dissimilarities between the facts in the instant case and the facts in Carrell, such that the facts of this case are not as readily distinguishable from those in Robicheaux. The plaintiffs in this case worked full-time exclusively for the defendants for approximately eleven months, within the time range that the Robicheaux welders had worked for the defendant in that case. The plaintiffs in this case did not have the same temporary, project-by-project, on-again-off-again relationship with their purported employers as the plaintiffs in Carrell did with their purported employer. The defendants-appellees argue that Cromwell and Bankston’s work-restoring damaged telecommunications lines along the Mississippi Gulf Coast in the wake of Hurricane Katrina-was by nature temporary, but “courts must make allowances for those operational characteristics that are unique or intrinsic to the particular business or industry, and to the workers they employ.” Brock v. Mr. W Fireworks, Inc., 814 F.2d 1042, 1054 (5th Cir.1987) (“[W]hen an industry is seasonal, the proper test for determining permanency of the relationship is not whether the alleged employees returned from season to season, but whether the alleged employees worked for the entire operative period of a particular season.”). Thus, the temporary nature of the emergency restoration work does not weigh against employee status.
It is common in FLSA cases that “there are facts pointing in both directions” regarding the issue of employee status, see Herman v. Express Sixty-Minutes Delivery Serv., Inc., 161 F.3d 299, 305 (1998) (quoting Carrell, 998 F.2d at 334), but the facts in this case truly appear to be nearly in equipoise. However, on balance, we believe that, as a matter of economic reality, Cromwell and Bankston were economically dependant upon Driftwood and BellSouth, and were not in business for themselves. The facts of this case simply appear closer to those in Robicheaux than in Carrell. The most significant difference between the facts in those cases, in terms of the economic reality of whether the plaintiffs were economically dependant upon the alleged employer, was that the Robicheaux welders worked on a steady and reliable basis over a substantial period of time exclusively with the defendant, ranging from ten months to three years, whereas the Carrell welders had a project-by-project, on-again-off-again relationship with the defendant, with the average number of weeks that each welder worked for the defendant each year being relatively low, ranging from three to sixteen weeks. Similar to the Robicheaux welders, Cromwell and Bankston worked on a steady and reliable basis over a substantial period of time-approximately eleven months-exclusively for their purported employers. The permanency and extent of this relationship, coupled with Driftwood and BellSouth’s complete control over Cromwell and Bankston’s schedule and pay, had the effect of severely limiting any opportunity for profit or loss by Cromwell and Bankston. Although it does not appear that Cromwell and Bankston were actually prohibited from taking other jobs while working for Driftwood and BellSouth, as a practical matter the work schedule establish by Driftwood and BellSouth precluded significant extra work. Also, the fact that Driftwood and BellSouth provided Cromwell and Bankston with their work assignments limited the need for Cromwell and Bankston to demonstrate initiative in performing their jobs. See Carrell, 998 F.2d at 333 (“As for the initiative required, a Welder’s success depended on his ability to find consistent work by moving from job to job and from company to company. But once on a job, a Welder’s initiative was limited to decisions regarding his welding equipment and the details of his welding work.”). Although there are facts that clearly weigh in favor of independent contractor status, notably that Cromwell and Bankston controlled the details of how they performed their work, were not closely supervised, invested a relatively substantial amount in their trucks, equipment, and tools, and used a high level of skill in performing their work, these facts are not sufficient to establish, as a matter of economic reality, that Cromwell and Bankston were in business for themselves during the relevant time period. The judgment of the district court is VACATED, and this case is REMANDED to the district court for proceedings consistent with this opinion.”
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