Scott v. Antero Resources Corp.
Filing
212
ORDER Granting 205 Defendant Antero Resources Corporation's Second Amended Motion for Summary Judgment. Denying as moot 206 Plaintiffs' Motion for Partial Summary Judgment. Denying as moot 138 Defendant's Motion for Decertification. Entered by Judge William J. Martinez on 5/20/2021.(afran)
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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 17-cv-0693-WJM-SKC
VINCENT SCOTT, Individually and on Behalf of All Others Similarly Situated,
Plaintiffs,
v.
ANTERO RESOURCES CORP.,
Defendant.
ORDER GRANTING DEFENDANT ANTERO RESOURCES CORPORATION’S
SECOND AMENDED MOTION FOR SUMMARY JUDGMENT, AND DENYING AS
MOOT PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT AND
DEFENDANT’S MOTION FOR DECERTIFICATION
Plaintiff Vincent Scott brings this action individually and on behalf of all others
similarly situated (collectively, “Plaintiffs”) against Defendant Antero Resources Corp.
(“Antero”) for alleged violations of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§
201 et seq. (ECF No. 1.) Scott claims that he and others similarly situated were
misclassified as independent contractors and therefore unlawfully denied overtime
wages. (Id.)
Before the Court are Antero’s Second Amended Motion for Summary Judgment
(“Motion for Summary Judgment”) (ECF No. 205), Plaintiffs’ Motion for Partial Summary
Judgment (“Motion for Partial Summary Judgment”) (ECF No. 206), and Antero’s Motion
for Decertification (ECF No. 138). For the reasons explained below, the Motion for
Summary Judgment is granted, and the remaining motions are denied as moot.
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I. STANDARD OF REVIEW
Summary judgment is warranted under Federal Rule of Civil Procedure 56 “if the
movant shows that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248–50 (1986). A fact is “material” if, under the
relevant substantive law, it is essential to proper disposition of the claim. Wright v.
Abbott Labs., Inc., 259 F.3d 1226, 1231–32 (10th Cir. 2001). An issue is “genuine” if
the evidence is such that it might lead a reasonable trier of fact to return a verdict for the
nonmoving party. Allen v. Muskogee, 119 F.3d 837, 839 (10th Cir. 1997).
In analyzing a motion for summary judgment, a court must view the evidence and
all reasonable inferences therefrom in the light most favorable to the nonmoving party.
Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). In addition, the
Court must resolve factual ambiguities against the moving party, thus favoring the right
to a trial. See Houston v. Nat’l Gen. Ins. Co., 817 F.2d 83, 85 (10th Cir. 1987).
II. BACKGROUND
A.
Factual Allegations 1
Antero is a Colorado-based oil and natural gas company engaged in the
exploration, development, and production of natural gas and oil properties in West
Virginia and Ohio. (ECF No. 205 at 7.) Plaintiffs worked for Antero as drilling
1
The following factual summary is based on the parties’ briefs on the Motion for
Summary Judgment, the Motion for Partial Summary Judgment, and documents submitted in
support thereof. These facts are undisputed unless attributed to a party or source. All citations
to docketed materials are to the page number in the CM/ECF header, which sometimes differs
from a document’s internal pagination.
2
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consultants and were classified by Antero as independent contractors and, accordingly,
were not paid overtime compensation. (ECF No. 182 at 1.)
Antero paid Plaintiffs a day rate of at least $1,000 for a total of at least $200,000
per calendar year. (ECF No. 205 at 19 ¶ 34.) Further, Antero states that it paid
Plaintiffs in regular intervals. (ECF No. 205 at 19 ¶ 35.) The Master Consulting
Services Agreements, signed by Plaintiffs, provide that Plaintiffs were to be paid within
30 days of Antero’s receipt of an invoice. (ECF No. 181-1 at 2.) One plaintiff, Virgil
Gaither, testified that he was paid once a month and always received payment in a
given month. (ECF No. 180-5 at 9.) According to Antero, it paid Plaintiffs a guaranteed
amount of no less than $1,000 per day for each hitch. 2 (ECF No. 205 at 22 ¶ 36.) In
addition, Antero states that Plaintiffs typically worked at indoor desks, and did not
perform manual labor. (ECF No. 205 at 22 ¶ 37; ECF No. 180-5 at 7.)
Plaintiffs agree that Antero paid them a day rate of at least $1,000 per day for
each hitch. 3 (ECF No. 207 at 9 ¶ 34.) While Plaintiffs contest that Antero paid them in
regular intervals, they provide no evidence to support their contention. 4 (ECF No. 207
2
Plaintiffs decided whether to provide services to Antero on a hitch by hitch basis. (ECF
No. 209 at 15.) Each hitch was two weeks in length.
3
As Antero points out in its Response to Movant’s Material Facts, Plaintiffs’ Statement of
Material Facts in its Motion for Partial Summary Judgment contains numerous improper legal
conclusions that Antero could not admit or deny. (See, e.g., ECF No. 210 at 9 ¶ 3, at 10 ¶¶ 5–6,
at 11 ¶¶ 9–10.)
4
Plaintiffs instead state that Antero did not pay them a salary but instead paid them a
day rate. (ECF No. 207 at 15 ¶ 6.) Plaintiffs state that they billed Antero for each day worked
and could not bill for—and were not paid for—days they did not work. (Id.) These statements,
however, do not refute the fact that Plaintiffs were compensated in regular intervals, with
Gaither testifying he was paid once a month. (ECF No. 205 at 22 ¶ 35.) Plaintiffs’ statement is
more properly characterized as a legal argument, as opposed to a statement of fact. Antero
does not contest that it paid Plaintiffs a day rate or that Plaintiffs were not paid for days they did
not work.
3
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at 10 ¶ 35.) Instead, Plaintiffs reiterate the fact that Antero paid Plaintiffs a day rate for
each day worked, and dispute the notion that Antero paid them any guaranteed weekly
compensation or paid them using any predetermined or fixed “regular intervals.” (Id.)
Further, Plaintiffs state that Antero did not pay them any compensation if they did not
work during a week. (ECF No. 206 at 7 ¶ 8.) Plaintiffs contest Antero’s statement that
they typically worked at desks and performed no manual labor, but only to the extent
that they state “Drilling Consultants worked on location at the rig site, including on the
rig floor or cement truck, in addition to monitoring drilling in a trailer known as the
‘shack’ or ‘bump out office.’” (ECF No. 207 at 10 ¶ 37.)
B.
Procedural History
On March 17, 2017, Plaintiffs filed the Collective Action Complaint (“Complaint”).
(ECF No. 1.) They allege that Antero knowingly, willfully, or in reckless disregard of
their rights, violated Section 7 of the FLSA, 29 U.S.C. § 207, by employing employees in
an enterprise engaged in commerce or in the production of goods for commerce within
the meaning of the FLSA for workweeks longer than 40 hours without compensating
them for their employment in excess of 40 hours per week at rates no less than 1.5
times the regular rates for which they were employed. (Id. ¶¶ 53–54.) Plaintiffs filed the
Complaint on behalf of a putative class of similarly situated employees consisting of:
Current and former Drilling Consultants employed by, or
working on behalf of, Antero Resources Corp. during the
past three years who were classified as independent
contractors and paid a day-rate.
(Id. ¶ 8.)
On May 10, 2017, Antero filed its Answer. (ECF No. 18.) On February 26, 2018,
the Court granted Plaintiffs’ Motion for Conditional Certification, conditionally certifying
4
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this action as a collective action under 29 U.S.C. § 216(b), with the eligible collective
action members defined as “all current and former Drilling Consultants who worked for
Antero Resources Corp., who were classified as independent contractors and paid a
day-rate, at any time from February 26, 2015 to present.” (ECF No. 39 (emphasis in
original).)
On March 30, 2020, Antero filed its Motion for Decertification, which is fully
briefed. (ECF Nos. 138, 158, and 163.) Antero argues the Court should decertify the
collective and dismiss the claims of the opt-in Plaintiffs because the claims at issue are
wholly individualized.
On May 7, 2021, Antero filed its Motion for Summary Judgment, which is fully
briefed. 5 (ECF Nos. 205, 207, and 209.) Antero argues that summary judgment in its
favor is warranted because Plaintiffs were correctly classified as independent
contractors, or alternatively, because even if Plaintiffs are found to be employees, they
are exempt from overtime under FLSA’s highly compensated employee or
administrative employee exemptions. Additionally, Antero argues it acted in good faith
and did not willfully misclassify Plaintiffs or recklessly disregard the law.
On May 7, 2021, Plaintiffs filed their Motion for Partial Summary Judgment, which
is fully briefed. (ECF Nos. 206, 208, and 210.) Plaintiffs request partial summary
judgment on three of Antero’s affirmative defenses, including the exemption defenses,
good faith defense, and estoppel defense.
Thus, all motions are ripe for review.
5
The Court has directed the parties to amend their original motions for summary
judgment and partial summary judgment for various non-substantive reasons. (ECF Nos. 179,
204.) For expediency, the Court solely refers to the most recent versions of these motions in
this Order.
5
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III. FLSA REGULATIONS
Antero argues that even if Plaintiffs are employees, they “fall squarely” within the
FLSA’s highly compensated and administrative exemptions to overtime pay. 6 (ECF No.
210 at 23.)
Under the FLSA “any employee employed in a bona fide executive,
administrative, or professional capacity . . . (as such terms are defined and delimited
from time to time by regulations of the Secretary [of Labor] . . .)” are exempt from the
FLSA’s overtime pay requirements. 29 U.S.C. § 213(a)(1). Some highly-compensated
employees are also exempt from the FLSA requirements. 29 C.F.R § 541.601.
An employee is considered a “highly compensated,” and thus exempt from
overtime, if the individual earns more than $100,000 in total compensation per year and
performs administrative duties, as opposed to manual labor; he is not entitled to
overtime under this exemption as long as he performs at least one or more duties
typical of an exempt employee and is paid at least $455 per week on a “salary basis.”
See 29 C.F.R. § 541.601. “A high level of compensation is a strong indicator of an
employee’s exempt status, thus eliminating the need for a detailed analysis of the
employee’s job duties.” Id. § 541.601(c).
Under the FLSA’s “administrative” exemption in effect during the relevant time
period, an employee’s primary duty must involve work directly related to general
business operations or management and customarily and regularly involve the use of
6
The U.S. Department of Labor raised the thresholds for the highly compensated
employee exemption and the administrative exemption, and those changes went into effect on
January 1, 2020. However, like the parties, the Court relies on the original regulations
promulgated in 2004 that were in effect during all relevant periods of time when Plaintiffs worked
for Antero. (See ECF No. 205 at 35 n.5.)
6
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discretion and independent judgment with respect to matters of significance, and the
employee must be paid at least $455 per week on a “salary basis.” See 29 C.F.R. §
541.200.
The FLSA defines “salary basis” as follows:
An employee will be considered to be paid on a “salary
basis” within the meaning of this part if the employee
regularly receives each pay period on a weekly, or less
frequent basis, a predetermined amount constituting all or
part of the employee’s compensation, which amount is not
subject to reduction because of variations in the quality or
quantity of the work performed.
...
[A]n exempt employee must receive the full salary for any
week in which the employee performs any work without
regard to the number of days or hours worked. Exempt
employees need not be paid for any workweek in which they
perform no work.
29 C.F.R. § 541.602(a).
Finally, under the “reasonable relationship”7 requirement,
an exempt employee’s earnings may be computed on an
hourly, a daily or a shift basis, without losing the exemption
or violating the salary basis requirement, if the employment
arrangement also includes a guarantee of at least the
minimum weekly required amount paid on a salary basis
regardless of the number of hours, days or shifts worked,
and a reasonable relationship exists between the
guaranteed amount and the amount actually earned.
29 C.F.R. § 541.604(b).
IV. ANALYSIS
The Tenth Circuit has observed that “Congress enacted the FLSA in order to
7
As the Court will discuss below, the parties dispute whether the reasonable relationship
requirement applies in this case.
7
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protect all covered workers from substandard wages and oppressive working hours,
labor conditions [that are] detrimental to the maintenance of the minimum standard of
living necessary for health, efficiency and general well-being of workers.” Ellis v. J.R.’s
Country Stores, Inc., 779 F.3d 1184, 1187 (10th Cir. 2015) (internal quotation marks
omitted) (quoting Barrentine v. Arkansas–Best Freight Sys., Inc., 450 U.S. 728, 739
(1981) (alteration in original) (quoting 29 U.S.C. § 202(a)); see also Chavez v. City of
Albuquerque, 630 F.3d 1300, 1304 (10th Cir. 2011) (“The purpose of FLSA overtime is
‘to compensate those who labored in excess of the statutory maximum number of hours
for the wear and tear of extra work and to spread employment through inducing
employers to shorten hours because of the pressure of extra cost.’” (quoting Bay Ridge
Operating Co. v. Aaron, 334 U.S. 446, 460 (1948))). “The FLSA effectuates this
purpose by ‘generally requir[ing] an employer to pay its employees at a rate of one and
one-half times their regular rate of pay for any time worked in excess of forty hours in a
given workweek.’” Id. (quoting Archuleta v. Wal–Mart Stores, Inc., 543 F.3d 1226, 1228
(10th Cir. 2008). Thus, “the statute provides for overtime pay in specified
circumstances.” Id. (citing 29 U.S.C. § 207(a)(2)).
A plaintiff alleging a violation of the overtime requirement bears the burden of
proving by a preponderance of the evidence that: (1) he was in an employment
relationship with the defendant, (2) he was engaged in activities within the coverage of
the FLSA, (3) he worked over forty hours within a workweek without overtime
compensation, and (4) he is owed a definite amount of compensation. 29 U.S.C. §
207(a)(1). Accordingly, if an employee satisfies his burden of proving that his employer
is violating the FLSA, he may be entitled to recover unpaid overtime compensation and
8
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liquidated damages. See Ellis, 779 F.3d at 1187 (citing 29 U.S.C. § 216(b)). However,
there are exemptions to the overtime requirement, and relevant to this case are the
exemptions for employees who are highly compensated or employed in an
administrative capacity. See 29 U.S.C. § 213(a)(1); 29 C.F.R. §§ 541.200, 541.601.
The burden of proving an exemption is on the employer. See Hagadorn v. M.F. Smith &
Assocs., Inc., 1999 WL 68403, at *2 (10th Cir. 1999). The Supreme Court has stated
that “Because the FLSA gives no ‘textual indication’ that its exemptions should be
construed narrowly, ‘there is no reason to give them anything other than a fair (rather
than a ‘narrow’) interpretation.’” Encino Motorcars, LLC v. Navarro, 138 S. Ct. 1134,
1142 (2018) (citation omitted).
As an initial matter, the Court notes that neither party cites any binding Tenth
Circuit authority to guide the Court in its analysis of the core issue in this case: whether
a sufficiently large day rate paid to Plaintiffs can satisfy the salary basis requirement
under the FLSA. Instead, both parties rely primarily on authority from the Fifth Circuit,
and to a lesser degree, cases from other circuits and district courts (the vast majority of
which are outside the Tenth Circuit). Thus, the Court engages with the non-binding
authority discussed and analyzed by the parties.
A.
FLSA Overtime Exemptions Apply to Plaintiffs
The Court assumes arguendo that Plaintiffs are Antero’s employees, as opposed
to independent contractors. 8 Thus, the remaining question is whether Plaintiffs fall
8
Although for the purposes of this Order the Court assumes Plaintiffs are Antero’s
employees, the Court notes that Antero presents strong evidence that Plaintiffs were correctly
classified as independent contractors. Further, the Court notes that in responding to Antero’s
Motion for Summary Judgment, Plaintiffs completely ignored a highly persuasive Fifth Circuit
opinion which concerns very similar facts and circumstances as this case, Parrish v. Premier
Directional Drilling, L.P., 917 F.3d 369 (5th Cir. 2019). However, because the Court decides
9
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within the FLSA’s highly compensated or administrative exemptions for overtime pay.
For the following reasons, the Court concludes they do. 9
As an initial matter, the Court notes that in the argument section of their brief
devoted to refuting Antero’s exemptions defense, Plaintiffs do not contest that their
salary level, duties, or independent judgment and discretion meet the exemptions. (See
ECF No. 207 at 43–48; ECF No. 209 at 17.) Moreover, in an earlier Motion for Partial
Summary Judgment, which the Court denied without prejudice (ECF No. 75), Plaintiffs
stated, “At this stage, Plaintiffs do not contest the duties and salary-level elements of
Antero’s executive, administrative, professional, and highly compensated employee
exemption defenses.” (ECF No. 58 at 14.) Instead, as the Court discusses below,
Plaintiffs focus their argument on whether Antero paid them on a salary basis and
whether the reasonable relationship test applies and has been met. Under these
circumstances, the Court finds that Plaintiffs have conceded these points, and the Court
need not discuss them further. 10
In its Motion for Summary Judgment, Antero argues that even if the Court finds
that Plaintiffs are its employees, they are nevertheless exempt from overtime under the
FLSA’s highly compensated and/or administrative exemptions. (ECF No. 205 at 34.)
Specifically, Antero emphasizes that Plaintiffs were typically paid $1,400 or more for any
this case on alternate grounds, it will not rule on whether Plaintiffs are properly classified as
independent contractors.
9
The parties do not distinguish their arguments between the highly compensated and
administrative employee exemptions. Thus, the Court discusses these issues primarily in the
context of the highly compensated employee exemption.
10
Nonetheless, the Court has considered whether Plaintiffs’ salary, duties, and
independent judgment and discretion meet the requirements of the exemptions, and based on
the evidence Antero cites (ECF No. 205 at 27) and the lack of an argument in opposition from
Plaintiffs, it concludes they do.
10
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day in which they worked, and at the very least $1,000 per day. (Id. at 37.) As such,
according to Antero, “Plaintiffs were guaranteed at least $1,000 in any week in which
they performed any work in any single day.” (Id. (citing Antero’s Statement of Facts ¶
34).) Plaintiffs do not dispute that they were paid in excess of $100,000 per year; for
instance, in 2014, most Plaintiffs earned between $250,000 and $350,000. (Id.) Antero
highlights that typically, Plaintiffs earned $250,000–$450,000 per year for approximately
26 weeks of work. (ECF No. 209 at 17.)
Moreover, Plaintiffs testified that if they started a two-week hitch, they completed
it, “effectively guaranteeing their pay for any two-week period in which they performed
any work.” (ECF No. 205 at 34 (citing Antero’s Statement of Facts ¶ 36).) Finally,
Plaintiffs were paid once per month in regular intervals. (Id. (citing Antero’s Statement
of Facts ¶ 35).) Based on the foregoing, because Plaintiffs were guaranteed at least
one day’s rate—a predetermined amount of more than $1,000—in any week in which he
performed any work, and because that day rate far exceeds the FLSA’s statutory
minimum, Antero contends that Plaintiffs meet the salary basis test as a matter of law.
(Id. at 38.)
In response, and in their Motion for Partial Summary Judgment, Plaintiffs argue
the opposite, namely, that a day rate (no matter how high in number) can never meet
the salary basis requirement because a “weekly, not daily guarantee is required.” (ECF
No. 207 at 46 (citing Hewitt v. Helix Energy Sols. Grp., Inc., 983 F.3d 789, 793–94 (5th
Cir. 2020) (Hewitt II), reh’g en banc granted, opinion vacated, 989 F.3d 418 (5th Cir.
2021); U.S. Dep’t of Labor, Wage & Hour Div., Opinion Letter, FLSA2003-5, 2003 WL
23374601, at *4–5 (July 9, 2003) (“Payment on an hourly [or daily] basis without an
11
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operative salary guarantee does not qualify as a ‘salary basis’ . . . within the meaning of
the regulations.”).) According to Plaintiffs, a day rate, by definition, compensates a
worker based on the number of days worked and constitutes a daily—as opposed to
weekly—guarantee. (Id.) Because Antero only paid Plaintiffs for the days that they
worked, Plaintiffs argue that Antero cannot show that the employment arrangement
guarantees a weekly minimum salary, regardless of the number of days worked. (Id. at
47.) According to Plaintiffs, they received a predetermined amount on a daily basis, not
on a weekly, or less frequent basis. (Id.)
For support, Plaintiffs heavily rely on Hewitt II, in which the Fifth Circuit found that
a day rate is the “very opposite” of an amount that is paid regardless of the number of
days worked. Hewitt II, 983 F.3d at 794. Under the majority opinion, in order for an
employee to qualify as “salaried,” a weekly, not daily, guarantee is required. See id. at
793–94. Hewitt II also concluded that the reasonable relationship test applies in the
context of the highly compensated employee exemption, which the Court will discuss
below, see infra Part IV.B. However, Hewitt II contains a forceful dissenting opinion,
advocating Antero’s position here, namely, that a comparably highly compensated
employee in the oil industry is exempt from overtime, and that the reasonable
relationship requirement does not apply in the context of a highly compensated
exemption. See Hewitt II, 983 F.3d at 802–09.
Importantly, the Court notes that on March 9, 2021, the Fifth Circuit granted the
petition for rehearing en banc in Hewitt II. 11 See Hewitt v. Helix Energy Sols. Grp., Inc.,
11
In their response to the Motion for Summary Judgment, Plaintiffs accuse Antero of
relying on arguments from the withdrawn Fifth Circuit decision in Faludi v. U.S. Shale Sols.,
L.L.C., 936 F.3d 215 (5th Cir. 2019). (ECF No. 207 at 44.) This statement is incorrect. Antero
does not rely on this opinion because it was withdrawn. (ECF No. 209 at 18.) However, the
12
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989 F.3d 418 (5th Cir. 2021). Thus, the primary authority on which Plaintiffs rely has
been vacated.
In any event, the Court finds the reasoning of the majority opinion in Hewitt II
unconvincing, and instead finds the decisions of other courts, particularly the district
court opinion in Faludi v. U.S. Shale Sols. LLC, 2017 WL 5969261, at *10 (S.D. Tex.
Nov. 30, 2017), aff’d in part, vacated in part, remanded sub nom. Faludi v. U.S. Shale
Sols., L.L.C., 936 F.3d 215 (5th Cir. 2019), as revised (Aug. 22, 2019), opinion
withdrawn and superseded, 950 F.3d 269 (5th Cir. 2020), and aff’d in part, vacated in
part, remanded sub nom. Faludi v. U.S. Shale Sols., L.L.C., 950 F.3d 269 (5th Cir.
2020), and the subsequent Fifth Circuit opinions issued in the case, are correctly
decided. Although the Court is keenly aware that the Fifth Circuit’s opinion in Faludi,
which discussed with approval the district court’s determination that the highly
compensated employee was exempt from overtime, was subsequently withdrawn, the
Court nonetheless finds its analysis highly persuasive and applicable to the facts of this
case. 12
For the following reasons, the Court finds that the salary basis requirement is met
in this case. As in Faludi, Plaintiffs contend that the guaranteed day rate of at least
$1,000 does not satisfy the salary basis requirement because it is not calculated on a
weekly or less frequent basis. See Faludi, 936 F.3d at 219. The Court disagrees,
Court views this opinion as having significant persuasive value and will discuss and treat it
accordingly.
12
The Court’s position on this matter is reinforced by the fact that in its final opinion in
Faludi, the Fifth Circuit stated that “we think U.S. Shale’s arguments are well-taken as to why
Faludi fits within the highly compensated employee exemption to the FLSA,” even though the
Fifth Circuit determined it “need not reach that issue given that Faludi is an independent
contractor not covered by the FLSA’s requirements.” Faludi, 950 F.3d at 275.
13
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finding that the text of the regulation favors Antero. Plaintiffs were compensated on a
salary basis because their day rate guaranteed them $1,000 for every day that they
worked and thus, perforce, they would receive more than the minimum of $455 per
week for any week in which they performed any work. See Faludi, 2017 WL 5969261,
at *9. If Plaintiffs worked for even one hour in a given week, they were guaranteed
$1,000, which far exceeds the regulatory minimum of $455 per week. Moreover, as the
Fifth Circuit explained in Faludi, the text of the regulation only provides that Plaintiffs
must have “regularly received each pay period on a weekly, or less frequent basis, a
predetermined amount.” Faludi, 936 F.3d at 220 (alterations omitted, emphasis in
original). The evidence demonstrates that Plaintiffs received their compensation
monthly, which by definition is a less frequent than weekly basis. Thus, Plaintiffs
regularly received a predetermined amount of compensation on a less frequent than
weekly basis in accordance with 29 C.F.R. § 541.602(a). Id. at 220.
Although Hewitt II has been vacated, to be reheard en banc, the dissenting
opinion authored by the Honorable Jacques L. Wiener, Jr., merits attention. Similar to
Plaintiffs here, the plaintiff in Hewitt II made $963 per day for every day that he worked,
regardless of the number of hours per day he worked, and his salary totaled more than
$200,000 per year. See Hewitt II, 983 F.3d at 802 (dissenting, J. Wiener). According to
Judge Wiener, “[c]ommon sense dictates that [the plaintiff] was a ‘highly compensated
employee,’ and a very high one indeed.” Id. at 803. The dissent observed that Hewitt’s
bi-weekly pay clearly and indisputably satisfied the salary basis test, as he received a
paycheck every two weeks (a less frequent basis), and his $963 day rate was
“predetermined” because before performing any work, he knew the amount he would be
14
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paid for each day, regardless of how few or how many hours he worked. Id. at 805. In
addition, the dissent noted that Hewitt could have significant variations in the quantity of
days and hours he worked, but his guaranteed daily minimum would not vary. Id.
Importantly, the dissent explains how in its view Hewitt could be exempt in light of
the requirement of the salary basis test that “an exempt employee must receive the full
salary for any week in which the employee performs any work without regard to the
number of days or hours worked.” Id. (emphasis in original). Plaintiffs here make the
same argument. (ECF No. 206 at 25.) Although the majority concluded that Hewitt was
paid with regard to the number of days worked, to the dissent—and to this Court—such
a conclusion constitutes a “flawed reading of the regulation.” Id. Like Plaintiffs here, “[i]f
Hewitt performed any work—even for just one hour—he was paid his fully daily rate.”
Id. Accordingly, Hewitt was paid at least $963 for each day and every week he
worked—even if he worked only one hour—without regard to the number of days or
hours worked. Id. As such, the dissent found Hewitt “clearly met the requirements of
29 C.F.R. § 541.602(a).” Id. Thus, Judge Wiener concluded that common sense
dictates that such a highly compensated employee as Hewitt was not entitled to
overtime. Id. at 803.
It is true that other courts have taken the opposite position. See Goodly v.
Check-6, Inc., 2018 WL 5091901, at *7 (N.D. Okla. Oct. 18, 2018) (noting that courts
have taken differing views on the legal merits of whether a sufficiently large day rate can
satisfy the salary basis requirement but finding it need not reach the merits of the issue);
McQueen v. Chevron Corp., 2018 WL 1989937, at *1 (N.D. Cal. Apr. 3, 2018) (rejecting
argument that day rate exceeding $1,000 satisfied salary-basis requirement),
15
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reconsideration denied, 2018 WL 2552248, at *1 (May 9, 2018); Snead v. EOG Res.,
Inc., 2018 WL 1151138, at *2–3 (W.D. Tex. Feb. 13, 2018) (granting employees’
summary judgment on exemption defenses because the employer’s day-rate
compensation plan did not satisfy the salary basis test); Keen v. DXP Enters., Inc., 2016
WL 3253895, at *5 (W.D. Tex. June 6, 2016) (granting summary judgment on
exemption defenses because a day-rate “is not pay on a salary basis as is required”).
However, the Court nonetheless finds the reasoning of the dissent in Hewitt II
persuasive, not only on analytical grounds, but also on a policy level. If the Court
reached the opposite conclusion, employers would have to pay highly skilled, highly
compensated individuals like Plaintiffs substantially high overtime wages. See Hewitt II,
983 F.3d at 808–09. As Antero asserts, such an outcome would be inconsistent with
Congress’s “intent . . . to protect certain groups of the population from substandard
wages and excessive hours which endangered the national health and well-being and
the free flow of goods in interstate commerce.” Brooklyn Sav. Bank v. O’Neil, 324 U.S.
697, 706 (1945). Under these circumstances, therefore, the Court finds that Antero has
met the salary basis test.
B.
Reasonable Relationship Test Does Not Apply Here
Plaintiffs argue that Antero cannot show its day-rate plan satisfies the reasonable
relationship requirement, which mandates that the salary guarantee must bear a
reasonable relationship between the guaranteed amount and the amount actually
earned. (ECF No. 207 at 47.) However, the Court agrees with Antero (ECF No. 209 at
20–21) and numerous other courts that the reasonable relationship requirement does
not apply in the context of the highly compensated employee exemption.
As Antero underscores, the majority in Faludi, the dissent in Hewitt II, and the
16
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First and Second Circuits have all rejected the applicability of the reasonable
relationship test to highly compensated employees. See Faludi, 936 F.3d at 220
(finding that 29 C.F.R. § 541.604(b) does not apply to employees who meet the
requirements of the highly compensated employee exemption set out in 29 C.F.R. §§
541.600, 541.601, and 541.602); see also Hewitt II, 983 F.3d at 803 (Ҥ 541.601 is
devoid of any reference to § 541.604(b); it states only that the total annual
compensation must include at least $684 per week paid on a salary . . . basis as set
forth in § 541.602”) (alterations and quotation marks omitted); Litz v. St. Consulting
Grp., Inc., 772 F.3d 1, 5 (1st Cir. 2014) (same); Anani v. CVS RX Servs., Inc., 730 F.3d
146, 149 (2d Cir. 2013) (same). Because the Court has found that Plaintiffs meet these
requirements—specifically, because their $1,000 day rate guarantees them at least
$455 per week and they regularly received that predetermined amount on a weekly or
less frequent basis—they are exempt from the FLSA’s overtime requirements as highly
compensated employees, and the Court need not apply the reasonable relationship
test.
Therefore, because the Court finds that Plaintiffs fall within the highly
compensated employee exemption of the FLSA, they are not entitled to overtime
compensation, and the Court will grant summary judgment in favor of Antero. 13
V. CONCLUSION
For the reasons set forth above, the Court ORDERS:
1.
Defendant Antero Resources Corporation’s Second Amended Motion for
13
Because the Court’s analysis of whether Plaintiffs fall under the FLSA’s exemptions is
case-dispositive, the Court will not address the other arguments raised in Antero’s Motion for
Summary Judgment or Plaintiffs’ Motion for Partial Summary Judgment.
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Summary Judgment (ECF No. 205) is GRANTED;
2.
Plaintiffs’ Amended Motion for Partial Summary Judgment is (ECF No. 206) is
DENIED as moot;
3.
Defendant’s Motion for Decertification (ECF No. 138) is DENIED as moot;
4.
Judgment shall enter in favor of Defendant and against Plaintiffs;
5.
Defendant shall have its costs upon compliance with D.C.COLO.LCivR 54.1; and
6.
The Clerk shall terminate this action.
Dated this 20th day of May, 2021.
BY THE COURT:
______________________
William J. Martinez
United States District Judge
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