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10th Cir.: Award of Liquidated Damages Under FLSA Does Not Preclude Award of Similar Penalties Under Colorado Law (CWCA)
Following the entry of judgment on his behalf on both his FLSA and Colorado wage and hour claims, plaintiff appealed the district court’s judgment. Specifically, plaintiff appealed the district court’s holding that an award of liquidated damages under the FLSA precluded an award of penalties under the CWCA. Whereas the district court had held that plaintiff was entitled to an award of one or both because awarding both would have constituted a double recovery, the Tenth Circuit disagreed. Rather, the Tenth Circuit held that because liquidated damages under the FLSA and penalties under the CWCA serve different purposes, an employee who prevails on claim under both statutes may be awarded both liquidated damages and penalties.
Framing the issue before it, the Tenth Circuit explained:
The court then stated that “these claims give rise to similar and, at least partially, overlapping damages.” Aplt. App. at 15. The court cited Mason v. Oklahoma Turnpike Authority, 115 F.3d 1442, 1459 (10th Cir. 1997) (quoting U.S. Indus., Inc. v. Touche Ross & Co., 854 F.2d 1223, 1259 (10th Cir. 1988)), overruled on other grounds by TW Telecom Holdings Inc. v. Carolina Internet Ltd., 661 F.3d 495 (10th Cir. 2011), for the principle that “‘[i]f a federal claim and a state claim arise from the same operative facts, and seek identical relief, an award of damages under both theories will constitute double recovery.'” Then without evaluating the nature of relief available under FLSA and CWCA, the court further concluded that Mr. Evans could “recover damages only on the statute which provides the greatest relief.” Aplt. App. at 15.
Without explaining why it believed CWCA provided greater relief than FLSA, the district court awarded Mr. Evans $7,248.75 in compensatory damages for unpaid wages under CWCA. Further, after finding that Mr. Evans had made a proper, written demand for payment under CWCA and that the defendants had willfully failed to pay the owed wages, the district court also awarded Mr. Evans a penalty under CWCA of 175% of the unpaid wages: $12,685.31. See Colo. Rev. Stat. § 8-4-109(3). Although noting that Mr. Evans had provided no support for his prejudgment-interest claim, the court nevertheless exercised its discretion and [*4] awarded prejudgment interest—solely on the compensatory damages—in the amount of $1077.18, together with postjudgment interest. In addition, it ruled that Mr. Evans was entitled to his attorney fees and costs.
In reaching its holding that liquidated damages under the FLSA and penalties under the CWCA are not mutually exclusive, the Tenth Circuit differentiated the reasons underlying both types of damages, and explained:
On appeal, Mr. Evans contends that he is entitled to FLSA liquidated damages in addition to the CWCA penalty because the two monetary awards serve different purposes. More specifically, he contends that FLSA liquidated damages are meant to compensate employees wrongly unpaid their wages, but that the CWCA penalty is meant to punish employers that wrongly fail to pay their employees’ earned wages. We agree with Mr. Evans’s position.
In addition to requiring employers to pay wages owed, FLSA authorizes the imposition of an equal amount as liquidated damages unless “the employer shows both that he acted in good faith and that he had reasonable grounds for believing that his actions did not violate the Act.” Doty v. Elias, 733 F.2d 720, 725-26 (10th Cir. 1984); see also 29 U.S.C. §§ 216(b), 260. Liquidated damages awarded under FLSA are compensatory rather than punitive. Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 707 (1945). In other words, [*5] they “‘are not a penalty exacted by the law, but rather compensation to the employee occasioned by the delay in receiving wages due caused by the employer’s violation of the FLSA.'” Jordan v. U.S. Postal Serv., 379 F.3d 1196, 1202 (10th Cir. 2004) (quoting Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132, 142 (2d Cir. 1999)); see also Renfro v. City of Emporia, 948 F.2d 1529, 1540 (10th Cir. 1991) (“The purpose for the award of liquidated damages is ‘the reality that the retention of a workman’s pay may well result in damages too obscure and difficult of proof for estimate other than by liquidated damages.'” (quoting Laffey v. Northwest Airlines, Inc., 567 F.2d 429, 463 (D.C. Cir. 1976))).
The relief available under FLSA and CWCA does partially overlap because both laws allow employees to recover unpaid wages as compensatory damages. And Mr. Evans concedes that he can recover his unpaid wages only once. But, as discussed above, FLSA allows for additional compensatory damages as liquidated damages. In contrast, CWCA imposes a penalty on an employer who receives an employee’s written demand for payment and fails to make payment within fourteen days, and it increases the penalty if the employer’s failure to pay is willful. See Graham v. Zurich Am. Ins. Co., 296 P.3d 347, 349-50 (Colo. App. 2012). No Tenth Circuit case directly addresses whether these damages duplicate one another.
Other jurisdictions have concluded that an award of both a state statutory penalty and FLSA liquidated damages does not constitute a double [*6] recovery. See, e.g., Mathis v. Housing Auth., 242 F. Supp. 2d 777, 790 (D. Or. 2002) (“[A]n award of the penalty under [the state law] and an award of liquidated damages under the FLSA do not constitute a double recovery.”); Morales v. Cancun Charlie’s Rest., No. 3:07-cv-1836 (CFD), 2010 WL 7865081, at *9 (D. Conn. Nov. 23, 2010) (unpublished) (allowing recovery of liquidated damages under both FLSA and state law because the provisions “serve different purposes—the FLSA damages are compensatory and the [state law] damages serve a punitive purpose”); Do Yea Kim v. 167 Nail Plaza, No. 05 CV 8560 (GBD), 2008 WL 2676598, at *3 (S.D.N.Y. July 7, 2008) (unpublished) (“New York Labor Law provides separately for liquidated damages in overtime compensation claims, in addition to federal liquidated damages.”). We agree with the rationale of these cases.
We note further that, like FLSA liquidated damages, prejudgment interest also is meant “‘to compensate the wronged party for being deprived of the monetary value of his loss from the time of the loss to the payment of the judgment.'” Greene v. Safeway Stores, Inc., 210 F.3d 1237, 1247 (10th Cir. 2000) (quoting Suiter v. Mitchell Motor Coach Sales, Inc., 151 F.3d 1275, 1288 (10th Cir. 1998)). It follows that “a party may not recover both liquidated damages and prejudgment interest under the FLSA.” Doty, 733 F.2d at 726. Thus, on remand, if the district court awards FLSA liquidated damages it must vacate its award of prejudgment interest. See Dep’t of Labor v. City of Sapulpa, 30 F.3d 1285, 1290 (10th Cir. 1994) (“If the district court finds that liquidated damages should be awarded it must vacate [*7] its award of prejudgment interest, because it is settled that such interest may not be awarded in addition to liquidated damages.”).
Therefore, we remand to the district court to recalculate the amount of damages in light of our determination that it is permissible for the court to award both FLSA liquidated damages and a CWCA penalty. If the court awards FLSA liquidated damages, it must vacate the award of prejudgment interest.
While this decision is limited in application to cases in which employees make claims simultaneously under the FLSA and CWCA, it’s application and reasoning can certainly be applied to other so-called “hybrid” cases in which FLSA claims are paired with state wage and hour law claims.
Click Evans v. Loveland Auto. Invs. to read the entire decision.
10th Cir.: Employee Who Performed Work Afterhours for Employer Through His Separate Company Held to be Independent Contractor for Afterhours Work
Barlow v. C.R. England, Inc.
Following an order granting the defendant summary judgment, the plaintiff appealed. As discussed here, the issue before the Tenth Circuit regarding the plaintiff’s FLSA claim, was whether he was properly deemed to be an independent contractor for janitorial work her performed for his employer afterhours, while the same employer deemed him to be an employee for security work he performed during the day. In a decision lacking much by way of reasoning, the Tenth Circuit affirmed the decision of the court below and held that the defendant’s dual classification for the two different types of duties performed was valid.
The Tenth Circuit laid out the pertinent facts as follows:
In February 2005, Barlow began working as a part-time security guard at a Denver maintenance yard operated by England, a large trucking company. Barlow patrolled England’s grounds for about thirty hours a week, from 6:30 P.M. to 5:00 or 6:00 A.M. Friday through Sunday nights. Most of the yard was fenced in, accessible through an automatic overhead gate. Barlow also performed maintenance and ground work to try to reach 40 hours of work per week.
After Barlow had been at England for about a year and a half, he asked the facility’s site manager, John Smith, for extra work. Smith, who had initially hired Barlow, was not satisfied with England’s janitorial contractor at that time, so he asked England’s personnel department about having Barlow take over. Smith was told he could not allow Barlow to work any more hours because the company would have to pay overtime.
To get around this, Smith suggested Barlow create a company England could contract with. Barlow formed E & W Janitorial & Maintenance Services, LLC. Beginning in February 2007, Barlow cleaned for England on Mondays, Wednesdays, and Saturdays, pursuant to an oral agreement with Smith. On a few occasions, his girlfriend, a co-owner of E & W, filled in. England provided his cleaning supplies, but did not require Barlow clean in any particular order. England, the only company for which E & W worked, paid $400 a month for E & W’s services.
Without much reasoning regarding this portion of the plaintiff’s claim, the court held:
We also agree with the district court’s decision to grant summary judgment against Barlow regarding his FLSA claims. Barlow argues that he performed his janitorial work as an employee under the FLSA, and that he was therefore entitled to overtime pay. But applying the “economic realities” test of employee status, we conclude that Barlow was not a statutory employee for purposes of the FLSA.
The “economic realities” test seeks to look past technical, common-law concepts of the master and servant relationship to determine whether, as a matter of economic reality, a worker is dependent on a given employer. Baker v. Flint Engineering & Const . Co., 137 F.3d 1436, 1440 (10th Cir.1998). “The focal point in deciding whether an individual is an employee is whether the individual is economically dependent on the business to which he renders service, or is, as a matter of economic fact, in business for himself.” Doty v. Elias, 733 F.2d 720, 722–23 (10th Cir.1984) (emphasis added) (citations omitted). “In applying the economic reality test, courts generally look at (1) the degree of control exerted by the alleged employer over the worker; (2) the worker’s opportunity for profit or loss; (3) the worker’s investment in the business; (4) the permanence of the working relationship; (5) the degree of skill required to perform the work; and (6) the extent to which the work is an integral part of the alleged employer’s business.” Baker, 137 F.3d at 1440. It also “includes inquiries into whether the alleged employer has the power to hire and fire employees, supervises and controls employee work schedules or conditions of employment, determines the rate and method of payment, and maintains employment records.” Id. “None of the factors alone is dispositive; instead, the court must employ a totality-of-the-circumstances approach.” Id.
Some factors favor Barlow, while other factors favor C.R. England, but, ultimately, we agree with the district court that Barlow was an independent contractor. Barlow and his partner created a licensed, limited liability company in order to provide janitorial services. Cf. Rutherford Food Corp. v. McComb, 331 U .S. 722, 730 (1947) (classifying as employees speciality group of production line workers in part because “[t]he group had no business organization that could or did shift as a unit from one slaughter-house to another”). Barlow kept records for the company, opened a separate bank account, and filed a corporate tax return. The district court also noted Barlow had the “freedom to decide how to accomplish” his tasks, even if the company reviewed the ultimate work product. 816 F.Supp.2d at 1107. Indeed, little in the case indicates the relationship between Barlow and C.R. England materially differed from one the company would have with any other cleaning service except for the fact Barlow also happened to otherwise be an employee. This suggests Barlow was in business for himself as a janitor, and we therefore affirm the district court’s decision to grant summary judgment.
Click Barlow v. C.R. England, Inc. to read the entire decision.
10th Cir.: Jury Instruction That Employer Bore Burden of Proving Exemption “Plainly and Unmistakably” Was in Error
Lederman v. Frontier Fire Protection, Inc.
Following a jury verdict in favor of the plaintiff-employee in a misclassification case, the defendant appealed. At issue was one jury instruction that the plaintiff had requested and which the trial court had given, instructing the jurors that:
An employer seeking an exemption from the overtime requirements of the FLSA bears the burden of proving that the particular employee fits plainly and unmistakably within the terms of the claimed exemption.
While the court acknowledged that the Tenth Circuit had regularly used the “plainly and unmistakably” language for decades, it ultimately held that such language is only applicable to statutory construction in the context of issues of law (i.e. decisions made by the court such as those on summary judgment motions) and not apply to issues of fact (i.e. decisions made by the jury or fact-finder). The court further clarified that the burden of proof on a defendant-employer raising an exemption defense under the FLSA is simply a preponderance of the evidence. Moreover, because the court held that the instruction had prejudiced the defendant, the court reversed the judgment in favor of the plaintiff and remanded the case back to the trial court for a new trial.
After sifting through three decades worth of Tenth Circuit jurisprudence, the court explained:
[a]ll of our other cases employing this phrase have done so in addressing legal rather than factual issues… In sum then, just as some courts have mistakenly viewed “clear and affirmative evidence” as a heightened evidentiary standard, the same is true with the phrase “plainly and unmistakably.” When our prior cases employing this phrase are read as a whole, they do not establish a heightened evidentiary requirement on employers seeking to prove an FLSA exemption. Instead, the ordinary burden of proof—preponderance of the evidence—controls the jury’s evaluation of whether the facts establish an exemption to the FLSA.
Click Lederman v. Frontier Fire Protection, Inc. to read the entire Decision.
Stransky v. HealthONE of Denver, Inc.
This case was before the court on the plaintiffs’ Motion to Toll the Statute of Limitations, which was filed simultaneously with the plaintiffs’ motion for conditional certification of the case as a collective action. In granting the plaintiffs motion (in part) and tolling the statute of limitations as of the date on which the plaintiffs sought conditional certification, the court looked to the both the procedural realities of the opt-in provisions of 216(b) and the remedial purpose behind the FLSA. Significantly, the court noted that there would be no prejudice to the defendant in granting such tolling while the potential plaintiffs would be significantly prejudiced by the continued expiration of their respective statutes of limitations if the tolling were not granted.
After discussing cases from around the country that have granted equitable tolling under similar circumstances, largely based upon the amount of time that it took for the court to rule upon a plaintiff’s pending motion for conditional certification, because same is in the interests of justice, the court honed in on the policy supporting such decisions:
In the case of a collective FLSA action, a least one district court in the Tenth Circuit has explained that the unique circumstances of a collective action “is not only significant but justifies tolling the limitations period [ ] for the FLSA putative class until the court authorizes the provision of notice to putative class members or issues an order denying the provision of notice.” In re Bank of America Wage and Hour Emp’t Litig., No. 10–MDL–2138, 2010 WL 4180530 (D.Kan. Oct.20, 2010). In making that equitable tolling determination, the court in In re Bank of America utilized a flexible standard, where a court considers five factors in determining whether to equitably toll a statute of limitations: (1) lack of notice of the filing requirement; (2) lack of constructive knowledge of the filing requirement; (3) diligence in pursuing one’s rights; (4) absence of prejudice to the defendant; and (5) the plaintiff’s reasonableness in remaining ignorant of the particular legal requirement. Id. (citing Graham–Humphreys, 209 F.3d at 561).
Plaintiffs argue that the statue of limitations should be equitably tolled here in the interest of justice in order to protect the Opt-in Plaintiffs’ diminishing claims. The Court agrees. Although early notice to Opt-in Plaintiffs in a collective action such as this is favored, such notice was not possible here as Defendant is in sole possession of the names and last known physical addresses of all potential Opt-in Plaintiffs. As such, allowing Opt-in Plaintiffs’ claims to diminish or expire due to circumstances beyond their direct control would be particularly unjust. The Tenth Circuit has also recognized the possible need for equitable tolling under such conditions. See Gray v. Phillips Petroleum Co., 858 F.2d 610, 616 (10th Cir.1988) (tolling statute of limitations where plaintiffs were lulled into inaction and defendant did not show that any “significant prejudice” would result from allowing plaintiffs to proceed; defendant was “fully apprised” of the plaintiffs’ claims). Moreover, Defendant will not be prejudiced by such equitable tolling. See Baden–Winterwood, 484 F.Supp.2d at 828–29 (defendant not prejudiced because it “had full knowledge that the named Plaintiff brought the suit as a collective action on the date of the filing” and “was fully aware of its scope of potential liability.”). Indeed, Defendant fails to claim it would be prejudiced in any manner, let alone prejudiced unduly, were this Court to toll the applicable limitations period. Thus, having considered the particular facts of this case, the Court finds that the interests of justice are best served by tolling the statute of limitations for the Opt-in Plaintiffs in this case.
However, while the court granted the plaintiffs motion, it declined to toll the statute of limitations back to the date of the filing of the original complaint. Instead, the court held the appropriate date to begin tolling was the date on which the plaintiffs filed their motion for conditional certification.
Click Stransky v. HealthONE of Denver, Inc. to read the entire Corrected Order Granting in Part Plaintiffs’ Motion to Toll the Statute of Limitations.
10th Cir.: FLSA Defendant Who Simultaneously Relied Upon and Rejected Advice of Counsel Committed Willful Violation of FLSA; 3 Year SOL Applied
Mumby v. Pure Energy Services (USA), Inc.
Following an award of summary judgment to the plaintiffs, which held that defendant’s violation of the Fair Labor Standards Act (FLSA) was willful, for both liquidated damages and statute of limitations purposes, the defendant appealed. The crux of defendant’s argument on appeal was that, due to partial reliance on attorney advice, it was entitled to reject portions of the attorney’s advice that were not relevant to its inquiry of the attorney, without a finding that its FLSA violations were willful. The lower court disagreed and granted plaintiffs summary judgment, holding that a three (3), rather than two (2) year statute of limitations was applicable, due to defendant’s willful violation of the FLSA. The Tenth Circuit agreed and affirmed.
Explaining the issue the Tenth Circuit stated: “[t]he thrust of Pure Energy’s argument is that it should be allowed to both rely on and disregard advice of counsel in order to avoid a three-year statute of limitations and liquidated damages.”
Laying out the general law regarding attorney consults as a defense to willfulness in cases brought under the FLSA, the court stated:
“Although consultation with an attorney may help prove that an employer lacked willfulness, such a consultation is, by itself, insufficient to require a finding in favor of the employer. The court’s operative inquiry focuses on the employer’s diligence in the face of a statutory obligation, not on the employer’s mere knowledge of relevant law. See McGlaughlin, 486 U.S. at 134-35; see also Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 129-30 (1985) (airline did not recklessly disregard the Age Discrimination in Employment Act where it sought legal advice, negotiated with union representatives, and then finally implemented a new retirement policy). We have also stated the inverse in our unpublished decisions: that failure to consult with a lawyer is equally insufficient to prove recklessness. See Fowler v. Incor, 279 F. App’x 590, 602 (10th Cir.2008). These principles are consistent with similar “advice-of-counsel” rules in other contexts. See, e.g., United States v. Wenger, 427 F.3d 840, 853 (10th Cir.2005) (in the securities fraud context, “[g]ood faith reliance on counsel … is merely one factor a jury may consider when determining whether a defendant acted willfully”); Takecare Corp. v. Takecare of Oklahoma, Inc., 889 F.2d 955, 957 (10th Cir.1989) (in a trademark infringement action, absent a showing of other factors, “counsel’s advice alone will not shield the actor from the consequences of his act”) (internal quotation marks omitted).”
Rejecting the defendant’s argument, the court explained:
“In 2005, after one year of U.S. operations, Pure Energy began transferring management of its U.S. operations from Canada to the United States. When it transferred payroll functions to its new domestic management team, it hired a new manager, Cindy Rucker, to run payroll operations in compliance with U.S. labor standards. At the time of her hiring, Ms. Rucker was aware of the FLSA, but she was unfamiliar with day rates. When she expressed concerns about the company’s compensation policy, Pure Energy’s management referred Ms. Rucker to a Colorado attorney, Paul Hurcomb.
In January 2006, after speaking with Ms. Rucker and reviewing some of Pure Energy’s employment offer letters, Mr. Hurcomb advised Ms. Rucker that Pure Energy’s day rate policy complied with the FLSA so long as the company itemized regular and overtime rates and did not have its field employees work more than twelve hours per day. Mr. Hurcomb also discussed with Ms. Rucker that any weekly hours over forty had to be paid as overtime, regardless of the day rate. Mr. Hurcomb did not perform any legal research regarding day rates or the FLSA. Although he essentially stated the forty-hour overtime requirement correctly, his other advice was incorrect.
After receiving Mr. Hurcomb’s advice, Ms. Rucker confirmed with management that Pure Energy was paying its employees correctly so long as it broke down the day rate into regular and overtime hourly rates and did not exceed twelve-hour shifts. However, until it changed its compensation policies in late 2007 to finally comply with the FLSA, Pure Energy continued to underpay its field employees for overtime. Field employees also continued to occasionally work more than twelve hours per day without additional compensation, in violation of Mr. Hurcomb’s advice…
In sum, Mr. Hurcomb and Ms. Rucker discussed day rates, but they also discussed the weekly overtime requirement for employees working more than forty hours per week. Mr. Hurcomb further advised-and Ms. Rucker communicated to her counterparts within the company-that employees must not work more than twelve hours per day. Yet, Pure Energy made no real changes to its compensation policy, nor did it investigate whether its employees were working shifts longer than twelve hours. Indeed, without tracking the number of hours worked by each field employee, it was virtually impossible for Pure Energy to determine whether it was complying with Mr. Hurcomb’s advice, let alone the requirements imposed under the FLSA. It is of no consequence that Mr. Hurcomb’s advice proved incorrect. Pure Energy did not rely in good faith on its counsel’s advice, and thus cannot raise an advice-of-counsel defense.
Pure Energy argues that its purpose in seeking Mr. Hurcomb’s advice was to determine the legality of its day rate policy, and with respect to this narrow issue it acted in good faith on Mr. Hurcomb’s advice. However, an employer may not selectively listen to and then, in good faith, rely upon only one of many issues discussed simply because it sought discrete legal advice on one potential FLSA violation and viewed all other advice as irrelevant to its original, limited inquiry.
In this case, it does not matter if Ms. Rucker’s intent was only to narrowly inquire about Pure Energy’s compliance with the FLSA’s day rate requirements and not to inquire about the FLSA’s weekly overtime requirement. The discussion between Mr. Hurcomb and Ms. Rucker essentially put Pure Energy on notice that it must pay weekly overtime for each hour over forty.
Pure Energy failed to compensate Plaintiffs for weekly overtime despite being put on notice. It applied its compensation policy in reckless disregard of FLSA requirements, and is therefore subject to the three-year statute of limitations for damages.”