Home » Posts tagged 'Overtime Law' (Page 12)
Tag Archives: Overtime Law
DOL to Issue Notice of Proposed Rulemaking to Amend the Companionship and Live-In Worker Regulations
The DOL announced yesterday that it would be issuing proposed amended rules regarding companionship and live-in workers’ eligibility for overtime under the FLSA. A preview of the announcement from the DOL’s website explains:
“While Congress expanded protections to “domestic service” workers in 1974, these Amendments also created a limited exemption from both the minimum wage and overtime pay requirements of the Act for casual babysitters and companions for the aged and infirm, and created an exemption from the overtime pay requirement only for live-in domestic workers.
Although the regulations governing exemptions have been substantially unchanged since they were promulgated in 1975, the in-home care industry has undergone a dramatic transformation. There has been a growing demand for long-term in-home care, and as a result the in-home care services industry has grown substantially. However, the earnings of in-home care employees remain among the lowest in the service industry, impeding efforts to improve both jobs and care. Moreover, the workers that are employed by in-home care staffing agencies are not the workers that Congress envisioned when it enacted the companionship exemption (i.e., neighbors performing elder sitting), but instead are professional caregivers entitled to FLSA protections. In view of these changes, the Department believes it is appropriate to reconsider whether the scope of the regulations are now too broad and not in harmony with Congressional intent.
Proposed Changes to the Companionship and Live-In Worker Regulations
On December 15, 2011 the Department announced that it will publish a Notice of Proposed Rulemaking (NPRM) to revise the companionship and live-in worker regulations for two important purposes:
- To more clearly define the tasks that may be performed by an exempt companion
- To limit the companionship exemption to companions employed only by the family or household using the services. Third party employers, such as in-home care staffing agencies, could not claim the exemption, even if the employee is jointly employed by the third party and the family or household.
Although the Office of Management and Budget (OMB) has reviewed and approved the attached Notice of Proposed Rulemaking (NPRM), the document has not yet been published in the Federal Register. The NPRM that appears in the Federal Register will specify the dates of the public comment period and may contain minor formatting differences in accordance with Office of the Federal Register publication requirements. The OMB-approved version is being provided as a convenience to the public and this website will be updated with the Federal Register’s published version when it becomes available.”
Among other things, the proposed rule would overrule the 2007 holding of the Supreme Court in Long Island Care at Home, Ltd. v. Coke, and require 3rd party employers such as staffing agencies to pay companions and home health workers overtime under the FLSA when they work in excess of 40 hours per week.
Click Notice of Proposed Rulemaking to read more.
N.D.Cal.: Defendant’s Motion to Compel Depositions of 3 Named Plaintiffs and 25 Opt-ins in Venue Where Case Pending Denied Due to Financial Concerns
Gee v. Suntrust Mortg., Inc.
This case was before the court on the defendant’s motion to compel the three named plaintiffs and twenty-five opt-in plaintiffs who live in twenty-five different cities across the country to appear for depositions in San Francisco or in three other cities of its choice. The defendant argued that the deponents were required to appear in San Francisco, which is where the FLSA putative collective action was filed, because they have not established good cause for appearing elsewhere. Prior to its motion, the defendant offered to take the depositions either in San Francisco or in three other cities it claims would be more convenient to the deponents. The plaintiffs had offered to produce the deponents in 14 different cities, or alternatively suggested that the depositions be taken by video conference. Plaintiffs opposed the motion, arguing that traveling to any of the cities selected by the defendant would be financially burdensome for them, and that requiring them to do so despite this burden would contradict the purpose of joining a collective action brought under the FLSA. Holding that the financial concerns expressed by the plaintiffs constituted good cause for excusing the deponents from traveling to the cities selected by the defendant for the depositions, the court denied the defendant’s motion.
Addressing the parties contentions, the court reasoned:
“One of the chief advantages of opting into a collective action, such as the one brought by Plaintiffs, is that it “lower[s] individual costs to vindicate rights by the pooling of resources.” Hoffmann–La Roche Inc. v. Sperling, 493 U.S. 165, 179, 110 S.Ct. 482, 107 L.Ed.2d 480 (1989). Here, this advantage would be significantly reduced or even eliminated if the proposed deponents are required to travel hundreds of miles for their depositions. See, e.g., Bransfield v. Source Broadband Services, LLC, 255 F.R.D. 447, 450 (W.D.Tenn.2008) (rejecting defendants’ argument that opt-in plaintiffs in FLSA collective action must be required to appear for depositions in the forum where action was filed because doing so “would cancel much of the benefit gained by joining in the collective action” and because “the forum was chosen for [the opt-in plaintiffs]”). The Court is not persuaded by Suntrust’s interpretation of the case law cited by Plaintiffs, but even when taking its interpretation at face value, this case meets the criteria for excusing the deponents from appearing in the cities selected by Suntrust, as Suntrust has made no showing that the issues to be covered in the depositions are sufficiently complex to require in-person depositions.
Likewise, Suntrust’s argument that conducting the depositions via videoconference would be detrimental to its ability to question and observe the deponents is unconvincing. Parties routinely conduct depositions via videoconference, and courts encourage the same, because doing so minimizes travel costs and “permits the jury to make credibility evaluations not available when a transcript is read by another.” Fanelli v. Centenary College, 211 F.R.D. 268, 270 (D.N.J.2002) (citations omitted); see also Guillen v. Bank of America Corp., No. 10–cv–05825, 2011 WL 3939690, at *1 (N.D.Cal. August 31, 2011) (“A desire to save money constitutes good cause to depose out-of-state witnesses via telephone or remote means”). Accordingly, Suntrust’s motion is denied.”
Click Gee v. Suntrust Mortg., Inc. to read the entire Order Denying Motion to Compel.
M.D.Tenn.: Contractual Limitation of FLSA Claims to One Year SOL Unenforceable; Provision Severed and Arb Agreement Enforced
Pruiett v. West End Restaurants, LLC
Before the court in this putative collective action were the defendants’ motion to dismiss and remand the case to arbitration, as well as plaintiffs’ motion to conditionally certify the case as a collective action. As discussed here, the court held that the provision within the arbitration agreement purporting to reduce the applicable statute of limitations to one year (from either two or three years) was unenforceable. However, because the court further held that the unenforceable provision was severable, it severed the statute of limitations provision and otherwise held the arbitration agreement to be enforceable. Thus, it remanded the case to arbitration after striking the unenforceable provision.
After reviewing a history of applicable case law and determining that the enforceability of the provision in question was an issue of first impression, the court reasoned that allowing an employer to contractually shorten the statute of limitations applicable to FLSA claims would unduly abridge the statutory rights granted under the FLSA. The court explained:
“The FLSA requires employers to pay their employees a statutory minimum wage and to pay overtime compensation at a rate not less than one and one-half times the employees’ regular rate of pay. 29 U.S.C. §§ 206 and 207 (2011). An employer who fails to comply with these provisions is liable for the unlawfully withheld compensation, as well as an additional equal amount of liquidated damages. Id. at § 216(b). These damages, including liquidated damages, are compensatory. Elwell v. Univ. Hosp. Home Care Servs., 276 F.3d 832, 840 (6th Cir.2002).
A plaintiff seeking to recover under the FLSA must file the claim within two years of accrual of the cause of action, or within three years of accrual for a willful violation. 29 U.S.C. § 255(a) (2011). Each paycheck that fails to include required wages constitutes a separate statutory violation. See Archer v. Sullivan Cnty., Nos. 95–5214, 95–5215, 129 F.3d 1263, 1997 WL 720406, at *2 (6th Cir.1997). The plaintiff may recover compensatory damages under § 216(b) as far back as the statute of limitations will reach—that is, the plaintiff may recover up to two years of compensatory damages if the violation was not willful, and up to three years of compensatory damages if the violation was willful, dating back from the date of the complaint. See, e.g., Campbell v. Kelly, No. 3:09–cv–435, 2011 WL 3862019, at *10 (S.D.Ohio Aug.31, 2011) (finding that, where plaintiff filed FLSA claims on November 16, 2009, the plaintiff could seek relief dating back to November 17, 2007 for a non-willful violation, or back to November 17, 2006 for a willful violation); Sisk v. Sara Lee Corp., 590 F.Supp.2d 1001, 1004 (W.D.Tenn.2008) (finding that where plaintiff filed FLSA claims on May 7, 2007, the “relevant time period” for willful violations began on May 7, 2004); Herman v. Palo Grp. Foster Home, Inc., 976 F.Supp. 696, 700, 705–06 (W.D.Mich.1997) (finding that defendant willfully violated FLSA and awarding back wages and liquidated damages for period of three years prior to filing of complaint), aff’d, 183 F.3d 468 (6th Cir.1999) (upholding damages award). Thus, under the FLSA, a plaintiff’s substantive right to full compensation is determined by the statute of limitations. As a consequence, unlike the federal statutory claims at issue in Morrison, Daimler–Chrysler, and Ray, shortening the statute of limitations for an FLSA claim necessarily precludes a successful plaintiff from receiving full compensatory recovery under the statute.
Indeed, BrickTop’s does not dispute that enforcing the contractual limitations provision would limit the Plaintiffs to one year of compensatory damages recovery, even though the FLSA entitles Plaintiffs to more. Thus, Defendants concede that the provision prevents plaintiffs from recovering the “full panoply” of compensatory remedies to which the FLSA entitles them. That is not a permissible result. Plaintiffs’ substantive right to full compensation under the FLSA may not be bargained away. Accordingly, the contractual limitations provision is unenforceable as to FLSA claims.
In reaching this holding, the court has undertaken the necessary statute-specific analysis that neither the Boaz court nor the Wineman court conducted. In Wineman, which was issued before the U.S. Supreme Court decision in Penn Plaza limited Barrentine to its facts, the district court found that a six-month contractual limitations provision in an employment agreement was not enforceable as to FLSA claims. Wineman, 352 F.Supp.2d at 821–23. The defendant had argued, as BrickTop’s does here, that waiver of the FLSA statute of limitations constituted waiver of a procedural right, not a substantive right. Id. at 922. The court rejected this argument, reasoning that, “in light of the public policy implications, … that is a distinction without a difference.” Id. In support of this reasoning, the court relied on Barrentine for the proposition that even FLSA procedural rights, including the right to the judicial forum, could not be abridged, compromised, or waived by private agreement. Id. at 823. Thus, the court characterized the shortened limitations period as “a compromise of employees’ rights under the FLSA” in violation of public policy. Id. at 822–23. It did not analyze whether the shortened statute of limitations affected FLSA remedies, likely based on its assumption that Barrentine rendered that inquiry irrelevant.
In Boaz, the district court enforced a six-month contractual limitation on FLSA claims, but, like Wineman, did not analyze whether that limitation affected FLSA remedies. In Boaz, the plaintiff had asserted claims under Title VII for race and gender discrimination, as well as FLSA claims for pay discrimination and failure to pay overtime compensation. Id. at 932. At the summary judgment stage, the plaintiff, relying on Wineman, contended that her FLSA claims were not time-barred by a six-month limitations provision in her employment agreement. The court declined to follow Wineman, reasoning that the subsequent Penn Plaza decision limited Barrentine to its facts, and found that federal statutory procedural rights may be abridged. Id. The court observed that several courts had found that limitations provisions were enforceable as to other federal statutes, including discrimination claims under § 1981, ERISA claims, and FMLA claims. Id. at 933. It is also noted that, as a general matter, statutes of limitations are procedural, not substantive. Id. However, without any analysis specific to the FLSA, the court summarily concluded that the FLSA statute of limitations is procedural and, therefore, waivable.
Thus, although Boaz and Wineman reached differing conclusions about the enforceability of a contractual limitation on FLSA claims, neither reached the crucial inquiry presented here. In particular, the reasoning in Boaz is flawed for two reasons. First, the Boaz court misinterpreted Penn Plaza, which merely held that statutory claims may be arbitrated, but did not address whether the statute of limitations for any federal statute—let alone the FLSA—constituted a waivable right. Second, the court should not have concluded that the FLSA statute of limitations was purely “procedural” without assessing whether enforcing a shortened limitation on FLSA claims prevented successful plaintiffs from vindicating their substantive right to full compensation.”
Click Pruiett v. West End Restaurants, LLC to read the entire Memorandum and Order.
U.S.S.C.: Court Grants Certiorari to PSRs on Appeal of 9th Circuit Decision Holding Pharma Reps Exempt Under the FLSA’s Outside Sales Exemption
Christopher v. SmithKline Beecham Corp.
In a case with far sweeping ramifications for the pharmaceutical industry and its employees, the Supreme Court has granted certiorari to revisit the Ninth Circuit’s decision that held pharmaceutical representatives (pharma reps) to be exempt under the FLSA’s outside sales exemption, and therefore, entitled to overtime. The Supreme Court has granted Plaintiff’s Petition for Cert, and therefore the issue remains largely unresolved. In a decision discussed here, the Second Circuit had previously held that the pharma reps were non-exempt, notwithstanding the pharmaceutical companies’ arguments that they were outside sales and/or administrative exempt. While, the Third Circuit agreed that pharma reps were not outside salespeople because they did not complete any sales, in several cases, it has reached the conclusion that pharma reps are exempt under the administrative exemption. Most recently, the Ninth Circuit held that, notwithstanding the fact that pharma reps cannot and do not consummate sales, their promotional activities are close enough to render them exempt under the outside sales exemption. The Supreme Court has now granted cert in the Ninth Circuit case to potentially resolve the issue.
The Department of Labor had submitted an Amicus Brief in support of the employees in both the Second and Ninth Circuit cases. While the Second Circuit relied on the DOL’s Brief in large part, reaching its conclusion that the pharma reps are non-exempt, the Ninth Circuit rejected the arguments in the Brief. Now, the stage is set for the Supreme Court to resolve the conflict between the circuits once and for all.
The 2 certified issues the Supreme Court is set to hear are:
(1) Whether deference is owed to the Secretary of Labor’s interpretation of the Fair Labor Standards Act’s outside sales exemption and related regulations; and (2) whether the Fair Labor Standards Act’s outside sales exemption applies to pharmaceutical sales representatives.
Visit the scotusblog to read the full decision below as well as the parties’ briefings to date in Christopher v. SmithKline Beecham Corp.
W.D.Tex.: Plaintiffs Retained Right to Open and Close at Trial; Defendants’ Attempt to Shift Burden With Admissions on the Eve of Trial Denied
Ransom v. M. Patel Enters, Inc.
This case was before the court on the Defendants’ Motion to Open and Close Evidence and Case. Apparently seeking to gain the tactical advantage of addressing the jury first and last (opening and closing), normally reserved for the plaintiff in a typical case, the defendants sought leave just prior to trial to file a third amended complaint. If granted, defendants’ motion would have permitted them to admit the plaintiffs’ prima facie case (i.e. that they worked uncompensated overtime), and rendered the issue of whether plaintiffs were exempt the sole issue at trial. The plaintiffs refused to accept defendants stipulations regarding their prima facie case, instead preferring to retain the right to open and close the case. Largely due to the fact defendants’ filed their motion on the eve of trial, the court denied defendants’ motion.
Denying defendants’ motion(s), the court reasoned:
“This presents the Court with an atypical controversy—and one which the Court could not find case law discussing: the Plaintiffs oppose the Defendants’ motion to admit facts proving a portion of the Plaintiffs’ case, facts that the Plaintiffs have the burden of proving at trial. Defendants argue that the Plaintiffs’ refusal to agree to the amendment demonstrates that they are trying to unnecessarily prolong the evidence solely to hold on to the right to open and close.
The deadline to amend pleadings passed months ago. Therefore, the Defendants must demonstrate good cause to obtain leave to amend. Meaux Surface Prot., Inc. v. Fogleman, 607 F.3d 161, 167 (5th Cir.2010). “Four factors are relevant to good cause: (1) the explanation for the failure to timely move for leave to amend; (2) the importance of the amendment; (3) potential prejudice in allowing the amendment; and (4) the availability of a continuance to cure such prejudice.” Id. As the Defendants admit, this is a strategic move. They want to present their evidence first. Obtaining a strategic advantage is not good cause for leave to amend. Had the Defendants wished to obtain this advantage, they should have admitted these facts early in the case, instead of contesting them until the final pretrial conference. The Plaintiffs note that they spent time and money gathering evidence on both their prima facie case and on the issue of the individual defendants’ status as “employers” under the FLSA. Therefore, the Court DENIES Defendants’ Motion for Leave to File Third Amended Original Answer (Clerk’s Doc. No. 135).
That still leaves the order of proof. The Defendants argue that, regardless of whether the Plaintiffs accept the stipulations they have offered, the Defendants bear the burden of proof on the primary issue at trial, whether the Plaintiffs were exempt employees under the FLSA. Because the Defendants bear the burden of proof on that issue, they contend that they should present their evidence first.
It appears that there are three primary issues for trial: (1) whether the Plaintiffs can demonstrate a prima facie case under the FLSA (on which there appears to be little or no controversy); (2) whether the Plaintiffs were exempt employees under the FLSA; and (3) whether the Defendants failed to pay overtime “willfully.” The Plaintiffs bear the burden of proof on the first and last of these three items, and the Defendants on the second. As the Defendants note, the bulk of the evidence at trial will no doubt relate to the issue on which they bear the burden of proof. This does not mean that the Defendants should automatically be permitted to open and close, however. The Plaintiffs were the parties who were forced to take the initiative to file this lawsuit, the Defendants have vigorously defended it, and only in the last few days have they sought the right to open and close the evidence. Rule 16 makes it clear that these issues should be raised early in the case, not late. See FED. R. CIV. P. 16(c)(2)(A), (D), (N) and (P) (directing courts at the pretrial conference to address, among other things, “formulating and simplifying the issues,” “avoiding unnecessary proof and cumulative evidence,” “ordering the presentation of evidence early in the trial on a manageable issue that might, on the evidence, be the basis for a judgment,” and “facilitating in other ways the just, speedy, and inexpensive disposition of the action”).
The Court has wide discretion on these matters. Moreau v. Oppenheim, 663 F.2d 1300, 1311 (5th Cir.1981) (“The matter of a court’s allocation of the right to open and close … does not go to the merits of a controversy and has long not been the subject of writ of error, even when coupled with the denial of requested party realignment.”) (citing Day v. Woodworth, 54 U.S. 363, 370, 13 How. 363, 14 L.Ed. 181 (1851)). On balance, considering all of the above, the Court believes that it is appropriate to leave the order of proof as is, so that the Plaintiffs shall open and close. Accordingly, the Court DENIES the Defendants’ Motion to Open and Close Evidence and Case (Clerk’s Doc. No. 128).”
Click Ransom v. M. Patel Enters, Inc. to read the entire Order.
D.Nev.: Defendant Compelled to Produce Time and Pay Records Maintained by Third-Party Payroll Company, Notwithstanding Objection That They Did Not “Possess” Same
Kiser v. Pride Communications, Inc.
This case was before the court on plaintiff’s motion to compel the production of discovery related his wages and hours. As discussed here, the defendants objected to such discovery. Defendants’ primary objection was that it did not have actual possession of the discovery sought. Rather, defendants maintained that they should not be responsible to produce the discovery, because it was in the possession of their third-party payroll vendor. The court rejected defendants’ contention and ordered the production of the discovery.
Overruling defendants’ objection regarding physical custody of the discovery sought, the court explained:
“Defendants’ objection based on their assertion that they do not possess the requested documents or electronically kept data because “a third-party vendor … process[ed][the] payroll” is overruled. Pursuant to Fed.R.Civ.P. 34, documents sought in discovery motions must be within the “possession, custody, or control” of the party upon whom the request is served. However, the “phrase ‘possession, custody, or control’ is disjunctive and only one of the numerated requirements need be met.” Soto v. City of Concord, 162 F.R.D. 603, 619 (N.D.Cal.1995)(quoting Cumis Ins. Society, Inc. v. South–Coast Bank, 610 F.Supp. 193, 196 (N.D.Ind.1985). Therefore, “actual possession” is not required. Soto, 162 F.R.D. at 619. Rather, a “party may be ordered to produce a document in the possession of a non-party entity if that party has a legal right to obtain the document or has control over the entity who is in possession of the document.” Id (internal citation omitted).
Here, the fact that defendants do not actually possess the documents does not matter. As admitted to in their response (# 28–1 Exhibit B) and their opposition (# 29), the defendants requested and ordered the third-party payroll vendor, Southwest Payroll Service, Inc., to perform the acts of processing and maintaining the payroll and the accompanying records. Thus, it is “inconceivable” that the defendants lack the ability to request and obtain such records from Southwest Payroll Service, Inc. Id. at 620 (holding that when a third-party physician performed evaluations on officers at the request of the defendant, “it seems inconceivable that the [defendant] lacks the ability to obtain such evaluations upon demand .”). Therefore, the court finds that such records are in Pride’s control, and should be disclosed in response to the plaintiffs’ request. Id. at 619 (finding that the “term ‘control’ includes the legal right of the producing party to obtain documents from other sources on demand)(emphasis added)(internal citations omitted); See also Japan Halan Co. v. Great Lakes Chem. Corp., 155 F.R.D. 626, 627 (N.D.Ind.1993)(holding that close business relationships constituted control of documents held by a third-party.).
Accordingly, and for good cause shown,
IT IS ORDERED that plaintiffs Anthony Kiser et al’s Motion To Compel The Production Of Documents (# 28) is GRANTED.
IT IS FURTHER ORDERED that defendants Pride Communications, Inc. et al shall produce the requested documents, in any and all available forms, on or before November 30, 2011.”
As more and more employers, small and large, continue to rely on third-party payroll vendors, this will likely be a decision with wide-felt impact in wage and hour circles. Especially in cases involving so-called ESI (Electronically Stored Information)- where the employer transmits data to a payroll service like ADP or Paychex and retains little or none of the required records itself, this decision seems to say that anything the payroll company has, the defendant will be deemed to “have” as well.
Click Kiser v. Pride Communications, Inc. to read the entire Order.
M.D.Fla.: Approval of Settlement Agreement That Hinged on Results of Lie Detector Test Denied
Brooke v. Administrative Maintenance Services, LLC
Generally, we post cases here that feature issues that are likely to come up in other cases. Other times we post cases simply because they involve interesting fact patterns or scenarios. This case falls in the latter category. Here, the case was before the court on the parties’ joint motion to approve their settlement. However, this was no ordinary settlement. Instead, based on concerns pertaining to plaintiff’s credibility, regarding the number of improperly compensated overtime hours claimed by plaintiff, and the defendants’ assertions that they were due various offsets based on unrelated transactions between the parties, the parties entered into a unique settlement agreement, following mediation.
In order to resolve the various issues, largely involving the credibility of the parties, the parties agreed that the plaintiff would submit to a lie detector case, the results of which would dictate what, if any, amounts of damages plaintiff would recover under the settlement.
As described by the court:
“The parties… agreed that Mr. Brooke will be asked, in a format crafted by the operator of the lie detector, whether he worked five, ten, and, finally, fifteen hours per week, on average, of overtime. If the operator concludes Mr. Brooke worked no overtime, Mr. Brooke will dismiss his case and reimburse the Defendants one-half of the lie detector administrator’s fee to the Defendants. If the operator concludes Mr. Brooke did work overtime in the brackets described above, he will be paid the greatest number of average weekly overtime he credibly answers about, per week, times $12.00 (one-half his base rate of $12.00 per hour and an equal amount in liquidated damages), times the eighty one weeks he was employed by the Defendants. If the result is inconclusive, the Defendants will pay a total of $10,000.00, including fees and costs.”
While the court noted the settlement might be fair, depending on the amounts ultimately payable to plaintiff under the agreement, the court declined to approve the settlement citing the contingency nature of the settlement and the fact that it was unclear how much plaintiff would receive. The court reasoned:
“The Court does not quarrel with the parties’ contention that this approach is quicker and cheaper than a jury. The same can be said, however, as dueling and coin flips. The standard is not whether a resolution is quick and cheap, but whether it is fair and reasonable. There is no showing here that conditioning an award based on the ability to pass a lie detector test is either of those things.
To be clear, the Court is not finding that settlement in the amounts suggested would not be fair. If the parties had presented an agreement for Defendant to pay $10,000, for example, the Court could evaluate that sum in view of all of the pertinent considerations supporting a settlement, and could issue a recommendation on same. As long as there was an agreement as to an amount rationally related to the claim, and the Court found the settlement to be voluntary and objectively fair and reasonable, it would not matter if the actual numbers were reached via lie detector test, rock-paper-scissors, or drawing straws. Here, however, the parties are not asking the Court to approve a settlement—they are asking the Court to approve a method of reaching a settlement. This is beyond the scope of the fairness finding duties set forth in Lynn’s Food.
For these reasons, it is respectfully recommended that the Court deny the motion, without prejudice to renewal, if appropriate, upon clarification of the status of the corporate Defendants and upon a presentation of terms that are consistent with the principles discussed herein.”
Click Brooke v. Administrative Maintenance Services, LLC to read the entire Report and Recommendation, which was ultimately adopted in full by the presiding District Court Judge.
S.D.Fla.: “Gross Volume of Sales” For Purposes of Determining Enterprise Coverage Does Not Include Unrealized Revenue Attributable to Coupons or Discounts
Marckenson v. LAL Peker, LLC
Anyone who has been following for the last few years knows that the issue of “enterprise coverage,” relatively dormant for decades, has been hotly litigated throughout the Southern and Middle Districts of Florida-2 hotbeds of FLSA litigation- in recent years. In another recent decision weighing in on the issue, Judge Michael Moore in the S.D.Fla. was asked to decide whether the $500,000 annual gross sales requirement must take into account unrealized sales/revenues attributable to coupons or discounts a business gives to its customers. Specifically, here it was undisputed that the defendant-employer recorded actual sales of less than $500,000.00 per year during the relevant years. However, when discounts and coupons (unrealized revenue) were factored in, its sales rose above the $500,000.00 threshold. The defendants moved for summary judgment asserting that they were not a “covered enterprise” under the FLSA. The court agreed and granted the defendants summary judgment.
Discussing the issue, the court stated:
“The issue before the Court is whether “gross volume of sales made or business done” as used in 29 U.S.C. § 203(s)(1)(A) incorporates unrealized revenue attributable to coupons or discounts provided to customers. Interpretations of the FLSA are determined ultimately by the Court. See Mitchell v. Zachry, 362 U.S. 310, 80 S.Ct. 739, 4 L.Ed.2d 753 (1960); Kirschbaum v. Walling, 316 U.S. 517, 62 S.Ct. 1116, 86 L.Ed. 1638 (1942); see also 29 C.F.R. § 779.8 (2011). In interpreting the FLSA, the Court may rely on official interpretations of the FLSA promulgated by the Department of Labor. Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944) (“[T]he rulings, interpretations and opinions of the Administrator under [the FLSA], while not controlling upon the courts by reason of their authority, do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance.”); Dade Cnty. Fla. v. Alvarez, 124 F.3d 1380, 1385 (11th Cir.1997). Title 29 C.F.R. § 779.259 provides helpful guidance in interpreting “gross volume of sales made or business done”:
The gross volume of sales made or business done means the gross dollar volume (not limited to income) derived from all sales and business transactions including, for example, gross receipts from service, credit, or other similar charges. Credits for goods returned or exchanged and rebates and discounts, and the like, are not ordinarily included in the annual gross volume of sales or business…. Gross volume is measured by the price paid by the purchaser for the property or service sold to him …
29 C.F.R. § 779.259 (2011) (emphasis added). When a coupon or discount is provided to a customer free of consideration, a true price reduction occurs, and the new price paid by the customer represents the sale amount. This is consistent with the Department of Labor’s view that “gross volume of sales” is measured by the price actually “paid by the purchaser for the property or service sold to him.” Id. Consequently, having found this interpretation reasonable, this Court adopts a view of “gross volume of sales made or business done” that excludes lost revenue attributable to coupons or discounts provided to customers.
In light of this interpretation, it is clear that enterprise coverage does not apply to Defendants. Excluding approximately $103,000 in discounts provided to customers from Plaintiff’s FY 2010 gross sales calculation, Defendants “gross volume of sales made or business done” falls well short of the $500,000 threshold required by 29 U.S.C. § 203(s)(1)(A). This is substantiated by the tax forms submitted on behalf of Defendants for fiscal years 2009 and 2010. Moreover, Plaintiffs alleged personal knowledge that Defendants’ weekly sales revenues “averaged above $8,000.00 per week and on occasions exceeded $11,000.00,” is insufficient to create a genuine issue of material fact in light of Plaintiff’s implicit acceptance and overt reliance on Defendants’ monthly sales reports from August 2009 through April 2011. Even discounting Plaintiffs acceptance of Defendants’ monthly sales reports, Plaintiffs’ alleged personal knowledge in no way conflicts with the amount of income reported by Defendants. Without any further specificity as to how much revenue Defendants’ collected, or without any articulation by Plaintiff as to how often and for what duration he closed Defendants’ register, Plaintiff’s assertion does not amount to more than a conclusory allegation. Thus, summary judgment on the issue of enterprise coverage is awarded in favor of Defendants.”
Click Marckenson v. LAL Peker, LLC to read the entire Order.
W.D.Pa.: Following Denial of Class Cert as Incompatible With 216(b) Collective Action, Plaintiffs’ Motion to Dismiss State Law Claims to Re-File in State Court Granted
Bell v. Citizens Financial Group, Inc.
Although all circuit courts that have taken up the issue have held that so-called hybrid wage and hour cases- comprised of both opt-in collective actions (FLSA) and opt-out class action (state wage and hour law)- are permissible, some courts within the Third Circuit continue to hold otherwise. As a result, not surprisingly, defendant-employers in such cases continue fighting the class action components of such cases on “inherent incompatibility” grounds. Such was the case here, where the court had previously conditionally certified the FLSA claims, but denied plaintiffs related motion for class certification of Pennsylvania Minimum Wage Act (“PMWA”) claims on compatibility grounds. However, in what may become a frequently cited case going forward, the plaintiffs took the logical next step and asked the court to dismiss the PMWA claims so they could re-file them in state court alone, where there would be no issue of compatibility. Not surprisingly, the defendants then threw up their arms, essentially arguing that the plaintiffs should not be able to bring their class claims in federal court and therefore not be able to proceed as a class in any venue. The court rejected the defendants argument, permitting the voluntary dismissal of the state law claims to be pursued separately in state court.
After reviewing the applicable standards under Rule 41, the court granted plaintiffs’ motion for voluntary dismissal of the PMWA claims. The court reasoned:
“Here, defendants have already filed an answer and do not stipulate to the dismissal. Therefore, the court must weigh the equities and decide whether to enter an order of dismissal. Defendants do not assert, and the court cannot ascertain, that they would suffer any plain legal prejudice as a result of dismissal of Watson’s claims. Watson’s intent to re-file a PMWA claim in state court is not plain prejudice. Pouls, 1993 WL 308645, at *1.
Upon weighing the factors set forth in Pouls, we conclude that it is appropriate to grant Watson’s motion to voluntarily dismiss her case. Defendants are not prejudiced by their efforts and expenses in this litigation, because other opt-in plaintiffs remain and the instant suit will continue. Defendants have failed to identify any efforts or expenses unique to Watson. Similarly, the progression of the litigation and Watson’s diligence in moving for dismissal are not determinative factors, due to the ongoing nature of the collective action suit. Consideration of the final factor, the duplicative or excessive expense of subsequent litigation, yields some possibility of prejudice to defendants. If Watson does file a PMWA case in state court and if defendants successfully remove it to federal court, defendants might incur some duplicative expenses in future federal court litigation on issues of claim incompatibility. However, at this time, such expenses are highly speculative. Therefore, we do not find plain prejudice to defendants based on duplicative expenses.
Accordingly, because there is no plain legal prejudice and because the equities weigh in favor of dismissal, we will grant plaintiff Watson’s motion to dismiss her claims without prejudice to her right to refile these claims in state court. An appropriate order follows.”
With the issue of permissibility of so-called hybrids up at the Third Circuit right now it will be interesting to see if this decision gains legs in its trial courts. For now however it is safe to say that defendants in so-called hybrid cases should be careful what they wish for in seeking dismissal of state classes, because two is not always better than one.
Click Bell v. Citizens Financial Group, Inc. to read the entire Memorandum and Order.
5th Cir.: Weight of Pickup and Trailer Combined to Calculate Gross Vehicle Weight (Whether 10,001 LBs) Under MCA Exemption
Albanil v. Coast 2 Coast, Inc.
Following an award of summary judgment to the defendants in this case plaintiffs appealed. Specifically, the court below determined that plaintiffs were exempt from the FLSA’s overtime provisions, pursuant to the so-called Motor Vehicle Act (MCA) exemption. As discussed here, the plaintiffs disputed the methodology used to calculate the gross vehicle weight of the vehicles they drove for defendants and subsequently, whether same qualified as “commercial motor vehicles” under the motor carrier act. Affirming the court below, the Fifth Circuit held that the weight of both the pickup truck hauling the trailer and the trailer itself must be considered together in calculating the gross vehicle weight. Here, since the weight of the vehicle, when added to the trailer was over 10,000 pounds (and the nature of plaintiffs’ interstate driving was undisputed), the Fifth Circuit affirmed the holding below.
Discussing this issue the Fifth Circuit reasoned:
“The first issue on appeal is whether the Motor Carrier Act (“MCA”) exemption to the FLSA’s overtime requirements applies. Appellants challenge the district court’s conclusion that it does. This issue involves determining whether C2C operated “commercial motor vehicles” during the relevant time period. A “commercial motor vehicle” is defined by statute as a “self-propelled or towed vehicle used on the highways in interstate commerce to transport passengers or property, if the vehicle has a gross vehicle weight rating or gross vehicle weight of at least 10,001 pounds, whichever is greater” or meets certain other criteria not relevant here. The parties dispute whether the weight of the pickup truck and the trailer may be combined to reach the 10,001 pound threshold, as stated in a Department of Transportation regulation, or whether the use of the disjunctive “or” in the statutory definition requires them to be considered separately. We hold that the district court correctly combined the weights of the pickup and trailer to conclude that the MCA exemption applies, and that summary judgment was appropriate on Plaintiffs’ overtime claims.”
Also addressed in the opinion, but not discussed here at length, the Fifth Circuit reversed the trial court’s sua sponte order granting defendants summary judgment on plaintiffs’ minimum wage allegation– an issue no party briefed in their papers. The appellate court reasoned that such a sua sponte order denied plaintiffs the fair opportunity to address the issues.
Click Albanil v. Coast 2 Coast, Inc. to read the entire Opinion.
Overtime Law Blog 