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S.D.Fla.: Telephone Calls, Faxes, Mailings And Other Regular Communications With Out Of State Vendors And Customers Does Not Constitute “Engaging In Interstate Commerce”

March 26, 2009 11:17 am / Leave a comment

Dent v. Giaimo

Plaintiff filed this lawsuit under the Fair Labor Standards Act (FLSA). Starting on July 8, 2006, plaintiff worked as a medical assistant for defendant. Her duties included checking patients in and out of their appointments, verifying insurance coverage, answering the phone, filing, faxing and other clerical duties. She alleges that she often worked over forty hours per week. She also alleges that defendant’s annual gross sales volume exceeds $500,000.00. At issue in this case is whether defendant engaged in interstate commerce.

In another bewildering decision, the District Courts of Florida continue to narrow the scope of the FLSA’s coverage, contra to the Department of Labor’s enforcement policies and virtually all other Circuit and District Courts.

Discussing Enterprise Coverage first, the Court stated:

“As an initial matter, plaintiff cites cases that hold that the second prong of the enterprise coverage test is determinative. She argues that since defendant conceded that his business grossed at least $500,000 per year that this Court should simply deny the motion in its entirety and rely exclusively on the second prong of the test. This Court disagrees. Simply because some judges have recognized that business with annual gross sales volume exceeding $500,000 often also engage in interstate commerce, does not mean that all such business are engaged in interstate commerce. The statute requires that a business meet both prongs of the test before jurisdiction rests in the federal courts.

This Court now turns to the first prong of the test and holds that plaintiff failed to show that defendant had two or more employees regularly and recurrently engaged in commerce, or had two or more employees regularly and recurrently handling, selling, or otherwise working on goods or materials that were moved in or produced for commerce by any person. Plaintiff averred that she was engaged in interstate commerce through long distance phone calls and facsimiles as well as processing patient’s credit card payments. She says that while employed, defendant and an office manager, Ms. Erb, were also employed. Plaintiff, however, did not state that defendant or Ms. Erb engaged in the same type of alleged interstate activity. Plaintiff then states that the company periodically hired other full time employees who engaged in the same activity as plaintiff. Plaintiff, however, failed to provide the frequency with which defendant employed others to engage in the same type of office work that plaintiff alleges she preformed. Moreover, plaintiff failed to allege what percentage of that employee’s time was spent performing the alleged interstate activity.”

Next the Court turned to the issue of whether the Plaintiff was subject to the Individual Coverage of the FLSA:

“In support of a possible claim for individual coverage, plaintiff averred that about 70% of defendant’s patients are not Florida residents, that she regularly used the telephone, internet and facsimile machine to contact out of state insurance companies, and that she processed patients’ credit card payments.

In regards to the fact that some of defendant’s patients were not full time Florida residents, this Court finds the ultimate-consumer doctrine instructive. That doctrine states that goods are no longer in the stream of commerce once obtained by the ultimate consumer thereof. 29 U.S.C. § 203(I); Thorne, at 1267. This Court holds that although some patients may have been residents of other states, defendant was not engaged in interstate commerce if his contact with those patients was primarily local. Defendant averred that he only works within Florida. Defendant is licensed in Florida and other states but his license is “inactive” everywhere except Florida. There is no evidence to suggest that defendant solicited business from patients while they were out of state or that any contact with out of state patients was regular or recurrent.

This Court also holds that plaintiff’s use of the telephone or facsimile machines to make long distance phone calls or use of the internet and credit cards is insufficient to establish jurisdiction. To be considered “engaged in interstate commerce” a business must use a credit card specifically to transact business in interstate commerce. Here, defendant has submitted sufficient evidence to show that his practice is a local enterprise “and the items used in the business proliferated this goal of local service.” Polycarpe v. E & S Landscaping Servs, Inc., 572 F.Supp.2d 1318, 1321-22 (S.D.Fla.2008). This also appears to be the case in regards to internet usage. Pierre C. Bien-Aime v. Nanak’s Landscaping, Inc., 2008 WL 3892160 (S.D.Fla. August 12, 2008). “The fact that the Defendant Company provided services of an exclusively local nature is dispositive. Polycarpe at 1322.

In regards to telephone and facsimile usage, although plaintiff averred that her job duties included contacting out of state insurance companies she did not allege how much of her time was spent conducting these activities. It could be that defendant or Ms. Erb conducted the majority of those activities and that plaintiff only occasionally contacted out of state insurance companies.”

The Court held that Plaintiff failed to show that she regularly and recurrently engaged in interstate commerce.

Defense and Plaintiff attorney’s alike, who regularly handle FLSA cases are scratching their heads with this decision, which, on its face, found issues of fact which should have led to a denial of Defendant’s Summary Judgment Motion.  Nonetheless, the Court, pointing out all the factual issues, seemingly applied both an incorrect Summary Judgment standard, and an incorrect reading of the FLSA’s coverage provisions (both Enterprise and Individual) and dismissed what appears to be a perfectly valid case, at least at the Summary Judgment stage.

Of additional concern, a review of the docket reveals that the Court ignored well-settled law and refused to allow the Plaintiff (non-movant) time to conduct limited discovery on the issue of coverage, prior to ruling on Defendant’s Motion, which was filed at the inception of the lawsuit and prior to any discovery.

7th Cir.: In Order To Pay Proper “Comp Time” Under 553.25(d), A Worker Proposes A Date And Time For Leave. In The Absence Of Undue Disruption The Employer Must Grant Such Leave Or Violate 207(o)

March 26, 2009 10:48 am / Leave a comment

Heitmann v. City of Chicago, Ill.

State and local governments are entitled to offer compensatory time off in lieu of overtime pay, if employees agree to this procedure. 29 U.S.C. § 207( o ). See Christensen v. Harris County, 529 U.S. 576 (2000). With the assent of the police officers’ union, Chicago has implemented a comp-time program. In this suit, some of the officers who have accumulated credits under the program contend that Chicago has made the leave too hard to use. A magistrate judge, presiding by the parties’ consent, agreed with plaintiffs and entered a detailed injunction specifying how Chicago must handle all future applications for compensatory leave. 2007 U.S. Dist. Lexis 67684 (N.D.Ill. Sept. 11, 2007) (decision on merits); 2008 U.S. Dist. Lexis 12983 (N.D.Ill. Feb. 21, 2008) (injunction).

The parties’ dispute concerns the effect of § 207( o )(5):

An employee of a public agency which is a State, political subdivision of a State, or an interstate governmental agency-

(A) who has accrued compensatory time off authorized to be provided under paragraph (1), and

(B) who has requested the use of such compensatory time,

shall be permitted by the employee’s employer to use such time within a reasonable period after making the request if the use of the compensatory time does not unduly disrupt the operations of the public agency.
Plaintiffs say that a need to consider “undue disruption” supposes a particular time, so that employees are entitled to leave on a date and time of their own choosing, unless this would mean that too few police officers remained available for service. Chicago reads the language to mean that the Police Department, rather than the officer, gets to name the date and time for leave. Officers may submit requests; all the Department need do is offer some leave within a “reasonable time” of the request. The only effective restraint, in the City’s view, is that officers may not accumulate more than 480 hours of leave. Compensatory time is granted whenever an officer works more than 171 hours in any 28-day period. (Ninety minutes of comp time are awarded for each extra hour worked.) Once any given officer accumulates more than 480 hours, future overtime must be paid in cash. As long as it keeps the balance below 480 hours per officer, the City submits, it gets to call the shots about when the leave may be used.

After the parties collected extensive evidence, the magistrate judge found it undisputed that the Police Department does not have any policy about how and when leave may be used; decisions are left to each watch commander or shift supervisor. Most commanders or supervisors, most of the time, grant or reject applications for leave on a specific day without giving reasons. They do not attempt to get a substitute for a person who wants time off; instead they ask whether the shift or unit still would have enough personnel if leave were granted and no other change were made. If an application is granted, the supervisor or commander may or may not give the officer the date and time requested. If the application is denied, it is not put in a queue for use at the next time when leave would not “unduly disrupt” operations; instead the application is returned to the officer, who is told to apply again-but without any guidance about when leave could be made available without undue disruption. The Department does not keep records of requests for compensatory leave, so we do not know how often officers get to take time off on the dates they request, or even how many times they must apply (on average) to have any leave granted.

The magistrate judge concluded that these informal procedures fail to ensure that each worker gets to use leave within a reasonable time, and do no ensure that officers get their choice of dates for leave unless undue disruption would ensue.  He issued an injunction to supply the rules he thought needed.  The 7th Circuit determined that the Magistrate below made a misstep by ordering injunctive rather than monetary relief.

The 7th Circuit agreed, holding, “[u]nder § 553.25(d), a worker proposes a date and time for leave. The employer decides whether time off then would cause undue disruption, and if it would the employer has a reasonable time to grant leave on some other date. On Chicago’s view, the employee cannot ask for a particular date or time, but only for some leave; and if any time off within a reasonable time after the request would cause undue disruption, then the employee must wait longer-must wait, by definition, for an un reasonable time. That can’t be right. Chicago’s view produces an implausible relation between the “reasonable time” and “undue disruption” clauses. The regulation makes sense when specifying that the employer must ask whether leave on the date and time requested would produce undue disruption, and only if the answer is yes may the employer defer the leave-and then only for a “reasonable time.””

Noting that their were amendments to 553.25(d) pending which may change the outcome of the case, the Court stated, “[b]ecause § 207( o )(5) is ambiguous, the agency enjoys leeway in crafting regulations. Last year the Department of Labor proposed to amend 29 C.F.R. § 553.25(c) and (d) so that employees could no longer designate the date and time for leave. 73 Fed.Reg. 43654, 43660-62, 43668 (July 28, 2008). That rulemaking remains open, however. As long as the current version of § 553.25 remains in force, the plaintiffs are entitled to prevail.”

Labor Agency Is Failing Workers, Report Says

March 26, 2009 1:41 am / Leave a comment

Steven Greenhouse reports in today’s New York Times that the Wage and Hour Division of the Department of Labor is severely lacking when it comes to its enforcement responsibilities:

“The federal agency charged with enforcing minimum wage, overtime and many other labor laws is failing in that role, leaving millions of workers vulnerable, Congressional auditors have found.

In a report scheduled to be released Wednesday, the Government Accountability Office found that the agency, the Labor Department’s Wage and Hour Division, had mishandled 9 of the 10 cases brought by a team of undercover agents posing as aggrieved workers.

In one case, the division failed to investigate a complaint that under-age children in Modesto, Calif., were working during school hours at a meatpacking plant with dangerous machinery, the G.A.O., the nonpartisan auditing arm of Congress, found.

When an undercover agent posing as a dishwasher called four times to complain about not being paid overtime for 19 weeks, the division’s office in Miami failed to return his calls for four months, and when it did, the report said, an official told him it would take 8 to 10 months to begin investigating his case.”

To read the entire article go to http://www.nytimes.com/2009/03/25/washington/25wage.html?hp#

D.Kan.: Punitive Damages Unavailable In Equal Pay Act (EPA) Retaliation Claim

March 23, 2009 11:05 am / Leave a comment

Allen v. Garden City Co-op, Inc.

Plaintiff moved to compel the individual Defendant’s financial information, claiming that it was relevant to her claim for punitive damages arising under her Equal Pay Act (EPA) claim. In denying the Motion to compel, the Court addressed the issue of damages available to a Plaintiff in a retaliation claim under the EPA, FLSA and/or ADEA:

“In its most simple terms, the Equal Pay Act makes it illegal for an employer to pay members of the opposite sex different wages for the same work. The Act is codified at 29 U.S.C. § 206(d), making it part of the Fair Labor Standards Act, 29 U.S.C. § 201, et seq.

At least one court in this District has discussed the issue of punitive damages under the FLSA, noting with favor that other Circuits have “held that the FLSA’s enforcement provisions … do not permit a plaintiff to recover mental distress or punitive damages of this type.” Goico v. Boeing Co., 347 F.Supp.2d 986, 995 (citing Goldstein v. Manhattan Industries, Inc., 758 F.2d 1435, 1446 (11th Cir.1985)).

In Goico, the issue before the Court was whether punitive damages are allowable for claims of discrimination and retaliation under the Age Discrimination in Employment Act (“ADEA”). The Court observed that “[t]he enforcement provisions of the ADEA, which were patterned after the Fair Labor Standards Act (FLSA), state in part that the ADEA shall be enforced in accordance with the provisions of the FLSA …” 347 F.Supp.2d at 994. The Court continued by noting that the ADEA’s enforcement provisions state that “any violation of the ADEA shall be deemed a violation of the FLSA …”Id.Although Goico is an ADEA case, it specifically discusses whether punitive damages are allowable under the FLSA because of the ADEA’s reliance on that Act’s enforcement provisions. Thus, the Goico court’s discussion of punitive damages under the ADEA is clearly applicable to the present analysis of punitive damages under the Equal Pay Act/FLSA.

The Goico court also discussed the Seventh Circuit’s exception to this rule, which allows punitive damages in retaliation claims brought under the FLSA. Id., at 996 (discussing Travis v. Gary Comm. Mental Health Center, 921 F.2d 108 (7th Cir.1990)).  The Travis opinion discusses the effect of the 1977 amendment to the FLSA, “which added language essentially identical to the ‘appropriate legal relief’ provision of the ADEA …” Goico, 347 F.Supp.2d at 996 (citing Travis, 921 F.2d at 111-12. According to the Seventh Circuit, “[a]ppropriate legal relief includes damages,” and the 1977 Amendment to the FLSA “does away with the old limitations” under which damages are allowable “without establishing new ones.” Travis, 921 F.2d at 112. Therefore, according to Travis, punitive damages “are appropriate” under the FLSA “for intentional torts such as retaliatory discharge.”Id.

As stated previously, Plaintiff seeks punitive damages through her Equal Pay Act retaliation claim.

In Goico, Senior District Judge Wesley Brown analyzed the Travis exception and unequivocally stated that there is no support for “the view that Congress intended to single out retaliation claims under the FLSA (or ADEA) for potentially far greater recovery than it allowed with respect to virtually all other types of employment discrimination claims.” 347 D.Kan. at 997. Goico continued, holding that “that the Travis exception for retaliation claims is not well-founded, and is not a persuasive basis for abandoning the long-standing rule that damages for mental distress and punitive damages are not available on claims under the ADEA.”Id.

Because the recovery available under the ADEA is analogous to that allowed under the FLSA, the Court believes that this language from Goico is applicable to the Equal Pay Act issue currently pending before the Court.  The Court thus finds that Plaintiff has failed to establish that her punitive damage claim under Count I is not spurious. Therefore the court cannot allow discovery to proceed relating to Defendant McClelland’s financial worth at this time.  However, in the event the assigned trial judge in this case rules that Plaintiff is entitled to seek punitive damages on her FLSA retaliation claim, Plaintiff may renew her motion to compel.”

S.D.N.Y.: General Release Signed Following DOL Audit, Not Supervised By DOL, Not A Valid Waiver Of FLSA Rights

March 22, 2009 3:01 pm / Leave a comment

Wright v. Brae Burn Country Club, Inc.

Plaintiffs brought suit under the FLSA for alleged unpaid overtime wages. Defendants moved to dismiss Plaintiff’s complaint on several grounds. Since, all parties submitted proof outside of the four corners of the pleadings, the Court addressed the Motion as one for summary judgment. While dismissing the New York State Labor Law claims based on a valid waiver, the Court denied the portion of Defendants’ Motion seeking Judgment on Plaintiffs’ FLSA claims.

Describing the pertinent facts, the Court stated: “[a]t some point during or after plaintiffs’ employment with the Club, the United States Department of Labor (the “DOL”) conducted a wage and hour audit of the Club and determined that additional compensation was due employees. Wright was found to have been entitled to an additional $119.10, and a check for that amount, minus applicable taxes, was sent to Wright in May 2008. Plaintiffs do not dispute that Wright received a check from the Club in May 2008.”

Defendants claimed Wright waived his FLSA and NYLL claims by executing the General Release signed in the settlement of his prior claim against the Club. While Wright agreed that he had been “paid in full” by the Club in the Release and agreed to waive any “wage hour” claims he might have against defendants, courts have held that individuals’ rights under the FLSA are non-waivable, except in certain circumstances. See Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 706-07 (1945); Simel v. JP Morgan Chase, No. 05 Civ. 9750(GBD), 2007 WL 809689, at *4 (S.D.N.Y. March 19, 2007); Le v. SITA Information Networking Computing USA, Inc., No. 07 Civ. 86(JS) (MLO), 2008 WL 724155, at *1 (E.D.N.Y. March 13, 2008). The exceptions include situations where the waiver or release of FLSA rights is given as part of a settlement supervised by a court or the Secretary of Labor. Simel, 2007 WL 809689, at *4.

Here, although Wright signed the General Release in settlement of his prior claim against the Club, the Release was not executed as part of a court or DOL-supervised settlement. Accordingly, the Court held that Wright cannot be deemed to have waived his rights under the FLSA.

N.D.Ill.: Duties Listed On Resume Do Not Meet FLSA Defendants’ Burden On Exemption, In Light Of Testimony Regarding Actual Duties Performed

March 21, 2009 2:29 pm / Leave a comment

Boring v. World Gym – Bishop, Inc.

Defendants moved for Summary Judgment alleging, among other things, that Plaintiff was administratively exempt under the FLSA, and therefore not entitled to overtime compensation, regardless of whether she worked in excess of 40 hours per week or not. In support of their Motion, the Defendant relied on Plaintiff’s resume (created subsequent to the employment at issue) in which she stated her duties worked, while employed by Defendants. Since, the testimony of actual duties performed largely differed from the resume duties, the Court denied Defendants’ Motion for Summary Judgment on the exemption issue stating:

“Defendants rely on a description of Boring’s job duties as they appear on her resume. Her resume lists her positions at World Gym as “Accounts Payable, Secretary, Office Manager.” A sampling of the responsibilities listed includes: “Managed 8 full-time employees,” “Customer Service,” “Assisted company comptroller in budgeting, locating and reducing company losses,” “Security and overseeing of repairs,” “Revised and produced Employee Handbook,” “Coordinated resolution of internal theft,” “Assisted in creating slogans and artwork for advertising and sales events,” and “Recommended changes that increased the monthly collections of bad debt by the outside collection company.”The appropriate inquiry, though, is into Boring’s actual job duties and not into what she lists on her resume. Boring denies that she actually performed office manager duties, managed 8 full time employees at World Gym, or actually determined any revisions to be made in the Employee Handbook. Based on the testimony in the record, a reasonable finder of fact could conclude that Boring’s job description as listed on her resume is incompatible with the actual work she performed. Both Al and Barbara described Boring’s primary duties as letter writing and issuing checks.

A reasonable finder of fact could conclude that Boring’s primary duty at World Gym was not directly related to management policies or general business operations and that her work did not include any meaningful exercise of discretion or independent judgment. Accordingly, Defendants have not met their burden of proof that Boring fits within the administrative exemption to the FLSA, and their motion for summary judgment on this claim must be denied.”

Although not groundbreaking, this decision is notable, because it speaks to an issue widely raised by Defendants in FLSA cases, that actual duties are trumped by resume or job description. It is clear from this decision, as many others have previously stated, the inquiry of importance in determining the applicability of an exemption are the actual duties performed, rather than some paper description of same.

N.D.Ill.: FLSA Defendant May Not Assert Counterclaim Against Plaintiff On Theory Of Indemnification

March 19, 2009 1:37 am / Leave a comment

Villareal v. El Chile, Inc.

The Corporate and Individual Defendants filed answers and affirmative defenses to the Third Amended Complaint, and both sets of defendants filed the same two counterclaims. The first counterclaim, the “indemnity counterclaim,” was brought against plaintiffs Rosa Camarena, Jorge Garcia, Tomas Jacinto, Javier Jimenez, Bernardo Linares, Marco Ocampo, and Pedro Magos. Defendants alleged that those seven plaintiffs were employed in “bona fide executive and administrative capacities” and “exercised control over hirings and firings, work schedules, … and the number of hours worked by Plaintiffs,” and thus their “actions … provide the factual basis for vicarious liability of [defendants] as alleged in the Third Amended Complaint.” The Defendants claimed that those plaintiffs owed defendants implied indemnity under Illinois law should plaintiffs prevail on any claim brought under the Third Amended Complaint.

Citing the unanimous holdings of Circuit Court’s to have taken up the issue previously, the Court dismissed Defendants’ counterclaim stating:

While the Seventh Circuit has not yet addressed the issue, other courts of appeals have rejected claims seeking indemnity or contribution for FLSA liability. See, e.g., LeCompte v. Chrysler Credit Corp., 780 F.2d 1260, 1264 (5th Cir.1986) (affirming dismissal of employer’s cross-claim against supervisory personnel for indemnity of plaintiffs’ claims under FLSA, and stating, “No cause of action for indemnity by an employer against its employees who violate the Act appears in the statute, nor in forty years of its existence has the Act been construed to incorporate such a theory.”) Defendants have not presented, and this court’s research has not disclosed, any decision by a federal court to date recognizing a claim for indemnity or contribution by an employer against an employee in the employee’s action under the FLSA.

In LeCompte, the Fifth Circuit stated that the district court had properly dismissed the indemnity claim notwithstanding the employer’s evidence that the supervisory personnel regularly ignored the employer’s policy prohibiting unauthorized overtime. Id. at 1264. The court explained that a claim for indemnity would frustrate Congress’ purpose in enacting the FLSA, since an employer who believed that any violation of the statute’s overtime or minimum wage provisions could be recovered from its employees would have a diminished incentive to comply with the statute. Id. at 1264. “To engraft an indemnity action upon this otherwise comprehensive federal statute would run afoul of the Supremacy Clause of the Constitution, would undermine employers’ incentive to abide by the Act, and would differentiate among employees entitled to receive overtime compensation in a way which does not otherwise exist in the statute.” Id. The court also rejected the application of state-law indemnity principles, stating that creating a state-law-based indemnity remedy on behalf of employers would not serve the purpose of national minimum standards and would diminish employer incentive to comply with the FLSA, as well as deprive the supervisory employees of the overtime compensation to which they are entitled under the FLSA. Id.

The other courts of appeals that have considered the issue have agreed with the Fifth Circuit’s decision in LeCompte. See Lyle v. Food Lion, 954 F.2d 984, 987 (4th Cir.1992) (affirming dismissal of employer’s counterclaim and third-party complaint for indemnity against plaintiff-supervisor for plaintiffs’ FLSA claims); Martin v. Gingerbread House, Inc., 977 F.2d 1405, 1408 (10th Cir.1992) (holding employer’s third-party complaint seeking indemnity from employee for alleged FLSA violations was preempted); Herman v. RSR Sec. Services Ltd., 172 F.3d 132, 144 (2d Cir.1999) (affirming dismissal of corporation chairman’s claims for contribution and indemnification against his co-owner and corporation’s manager and vice president).

Therefore, the Court dismissed Defendants’ counterclaim seeking indemnification from Plaintiffs.

C.D.Cal.: Housekeepers Aboard Foreign-Flagged Ships Not Covered By FLSA

March 17, 2009 11:11 pm / 1 Comment on C.D.Cal.: Housekeepers Aboard Foreign-Flagged Ships Not Covered By FLSA

Priyanto v. M/S Amsterdam

Plaintiffs were on-board housekeeping staff on foreign-flagged cruiseships. After a discussing the fact that Plaintiffs were likely not “seaman” within the meaning of the FLSA and therefore not “seaman” exempt, the Court granted Defendants Motion for Summary Judgment, holding that the FLSA does not apply to Plaintiffs’ work aboard foreign-flagged ships at sea, stating, “[e]ven if the Plaintiffs are not excluded from the protection of the FLSA based on what kind of work they do, they may be excluded based on where they do it.”

There is a general presumption against the extraterritorial application of federal statutes, and the FLSA is no exception. In the instant case, this presumption is strengthened by “the well-established rule of international law that the law of the flag state ordinarily governs the internal affairs of a ship.” McCulloch v. Sociedad Nacional de Marineros de Honduras, 372 U.S. 10, 20, 83 S.Ct. 671, 9 L.Ed.2d 547 (1963). While general statutes apply to foreign-flag vessels located in United States territory, “absent a clear statement of congressional intent, general statutes may not apply to foreign-flag vessels insofar as they regulate matters that involve only the internal order and discipline of the vessel, rather than the peace of the port.” Spector v. Norwegian Cruise Line Ltd., 545 U.S. 119, 130, 125 S.Ct. 2169, 162 L.Ed.2d 97 (2005).

The Supreme Court has consistently held employment relations on a ship to be such “internal affairs.” See Spector, 545 U.S. at 130-31 (discussing “internal affairs” doctrine); E.E.O.C. v. Arabian American Oil Co., 499 U.S. 244, 111 S.Ct. 1227, 113 L.Ed.2d 274 (1991) (holding that, in absence of clear statement, Title VII (subsequently amended) did not apply to American citizen employees on ships at sea); McCulloch, 372 U.S. 10, 83 S.Ct. 671, 9 L.Ed.2d 547 (holding labor relations to be “internal affairs” and thus National Labor Relations Act does not apply to employees on foreign ship at sea); Benz v. Compania Naviera Hidalgo, S.A., 353 U.S. 138, 77 S.Ct. 699, 1 L.Ed.2d 709 (1957) (holding “internal affairs” limitation bars application of Labor Management Relations Act to ship at sea). In accordance with this case law, employment relations between foreign citizens and their employers on foreign-flagged ships lie within a ship’s “internal affairs.” Therefore, the FLSA could only apply to Plaintiffs if there were a “clear statement of congressional intent” suggesting as much.

Such a clear statement is lacking. Indeed, the text of the FLSA suggests that it does not apply to Plaintiffs insofar as the work they performed was outside the United States. The statute contains a specific provision barring its application to:

any employee whose services during the workweek are performed in a workplace within a foreign country or within territory under the jurisdiction of the United States other than the following: a State of the United States; the District of Columbia; PuertoRico; the Virgin Islands; outer Continental Shelf lands defined in the Outer Continental Shelf Lands Act (ch. 345, 67 Stat. 462) [43 U.S.C. § 1331 et seq.]; American Samoa; Guam; Wake Island; Eniwetok Atoll; Kwajalein Atoll; and Johnston Island

29 U.S.C. § 213(f). As the Third Circuit has noted, the services of maritime workers are generally “not rendered within the United States or one of the enumerated territories” under this provision. Cruz v. Chesapeake Shipping Inc., 932 F.2d 218, 226 (3d Cir.1991). The court there noted the “exclusion of ships flying foreign flags was presumably to avoid interference in the delicate field of international relations by imposing domestic labor law on foreign ships employing foreign nationals at foreign wages.” 932 F.2d at 231.

It was undisputed that Plaintiffs worked solely on foreign-flagged ships, and their work was performed at sea. Therefore, the Court held that the FLSA could not be applied to them without interfering with the internal afffairs of a foreign-flagged ship. In light of the lack of a clear statement of Congressional intent to do so, the Court found the overtime provision of the FLSA did not apply to Plaintiffs, and thus Plaintiffs could not recover unpaid overtime wages under the Seaman’s Wage Act.

D.S.C.: “Salaried” Accountant May Be Hourly After All; Question of Fact For Jury

March 15, 2009 12:41 pm / Leave a comment

Holladay v. Burch, Oxner, Seale Co., CPA’s, PA

In this FLSA case, the parties cross-moved for summary judgment, regarding the applicability of the professional exemption. It was not disputed that Plaintiff was an accountant, who performed exempt duties. The sole issue before the Court was whether Plaintiff received at least $455.00 per week on a salary basis.

Plaintiff stated that the amount she was paid was based on an hourly rate computed by dividing the total estimated compensation by 2300, the expected hours worked per year. She took the position in her brief that the firm’s pay scheme was based on an expectation that she would work 44.23 hours per week (based on 2300 hours divided by 52 weeks) and that her guaranteed wages compute to 32.31 hours per week (for 2006).

The parties did not dispute that the Plaintiff was working in a professional capacity and that she received at least $455 per week in compensation.  However, the Plaintiff contended that her status as an exempt salaried employee was lost as a matter of law since her pay was in fact calculated on an hourly basis and that her guaranteed pay did not bear a reasonable relationship to her actual earnings for her normal workweek as set forth in 29 C.F.R. 541.604(b).  Defendant contended that the Plaintiff retained her exempt status as a matter of law and that her method of pay placed her under subsection (a) of 541.604.

In denying both parties’ motions for summary judgment, after a lengthy discussion of the issue presented—hourly vs. salary basis – the Court determined it was a question of fact whether the guaranteed salary amount paid to the plaintiff was for forty (40) hours (the normal workweek) or for only 32.31 hours (for example, in 2006) as the plaintiff suggests. The Court further explained, If the jury determined the guaranteed salary amount was for a normal workweek (i.e., 40 hours) then the defendant would not have lost the exemption and the plaintiff could not recover. However, if the jury determined the guaranteed amount was in fact for fewer hours than a normal workweek of forty (40) hours, such as 32.31 hours as Plaintiff contends for 2006, then the exemption is lost and the plaintiff would be entitled to damages. The jury would determine the number of overtime hours, the hourly rate of pay for each period, as well as wilfulness. The Court would then make the mathematical calculations. After reviewing the record submitted, the Court is simply unable to make a ruling as a matter of law for either party on the issue of whether the plaintiff is an exempt employee without additional factual findings. See, e.g., Archuleta v. Wal-Mart Stores, Inc., 543 F.3d 1226, 1236 (10th Cir.2008); Davis v. Lenox Hill Hospital, 2004 WL 1926087 (S.D.N.Y.2004).

N.D.Cal.: Former DOL Wage and Hour Investigator Struck As Expert Because Cannot Testify As A “Legal Expert”

March 12, 2009 1:36 am / Leave a comment

Valladon v. City of Oakland

Defendant sought to use a former DOL Wage and Hour Investigator as their expert to defend this FLSA claim. While working at the Department of Labor (“DOL”), Ms. Kramer gained expertise on Department of Labor regulations and federal case law interpreting FLSA.

She applied this expertise in her report and arrives at the following conclusion:

‘[I]t is my opinion that the City’s compensation practices with regard to donning and doffing of uniforms and equipment and the maintenance of uniforms and equipment, as well as its practices with regard to the use of compensatory time of, fully comply with the FLSA.’  Ms. Kramer also opined that if the Court nonetheless found that the Defendant’s practices violate FLSA, (1) those violations are not willful, so a two-year statute of limitations applies and (2) that the City is not liable for liquidated damages because it acted in good faith with a reasonable belief that its practices were lawful. Ms. Kramer reached these conclusions by analyzing DOL regulations and federal cases interpreting FLSA and determining whether the policies at issue here violate those laws. That is, she applied the facts of this case to the law. For example, after interpreting the text of FLSA, the DOL’s regulation concerning the “continuous workday rule,” two Supreme Court cases, a DOL advisory opinion, and the DOL’s “Wage and Hour Division’s Field Operations Handbook,” Ms. Kramer 2 concluded, ‘Thus, applying DOL’s interpretation of the FLSA and the agency’s own regulations, the time [p]laintiffs spent donning and doffing uniforms and equipment is not compensable because the City permits donning and doffing at home.’

Ms. Kramer used a similar method to reach her opinions about the statute of limitations and the reasonableness of the Defendant’s policies. She even opines that a particular district court reached the “incorrect” legal conclusion about whether a city must compensate its employees for the time spent donning and doffing uniforms.

Finding that, “Ms. Kramer’s “expert report” reads like a legal brief,” the Court found that because “[r]esolving doubtful questions of law is the distinct and exclusive province of the trial judge,” Nationwide, 523 F.3d at 1058 (citation omitted), Ms. Kramer’s report must be stricken. The Court reasoned that “her area of expertise is the law. She therefore purports not to “assist the trier of fact to understand the evidence or to determine a fact in issue,” but to help the jury understand the law itself. This is not permissible.

The Court further clarified its holding saying, “[h]ad Ms. Kramer offered opinions moored to the facts of this case, such opinions would not have been inadmissible merely because they included reference to legal terms or regulations. See, e.g., Hangarter v. Provident Life and Acc. Ins. Co., 373 F.3d 998, 1017 (9th Cir.2004) (citation omitted) (“[A] witness may properly be called upon to aid the jury in understanding the facts in evidence even though reference to those facts is couched in legal terms.”). However, Ms. Kramer’s report as drafted, and hence her anticipated testimony, was effectively a surrogate for legal instructions to the jury. This is not allowable.

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