Melamphy v. Abundant Life home Health Agency, Inc.
Filing
109
MEMORANDUM AND OPINION regarding bench trial conducted July 12, 2017. The Plaintiffs are directed to submit a proposed form of final judgment within 14 days. The Clerk of Court is directed to close this case and terminate any pending motions. Signed by Judge Elizabeth A. Kovachevich on 8/2/2017. (EJJ)
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UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
MARCIE MALAMPHY, and others,
similarly situated,
Plaintiff,
Case No: 8:16-cv-327-T-17TGW
v.
ABUNDANT LIFE HOME HEALTH
AGENCY, LLC and NELY NIDA
VILLAVENCIO, an individual,
Defendants.
ORDER
This action to recover damages for violations of the Fair Labor Standards Act, 29
U.S.C. §§ 201, et seq. (the "FLSA") was tried before the Court on July 12, 2017.
According to the pretrial order, "the sole factual dispute concerning unpaid overtime
compensation [was] the regular rate of pay for opt-in plaintiff Carol Dorry." (Doc. No. 88,
at~
3). "[T]he two other issues remaining to be tried in the case [were] the applicable
statute of limitations and whether defendants have a good faith defense to liquidated
damages under the FLSA." (Doc. No. 88,
at~ 4).
Having considered the parties' positions
and the evidence introduced and admitted at trial, the Court makes the following findings
of facts and conclusions of law 1 in accordance with Federal Rule of Civil Procedure
52(a)(1):
To the extent any findings of fact may constitute conclusions of law, or vice versa, they
are adopted as such.
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I.
Findings of Fact2
A.
The Parties
1.
Defendant Abundant Life Home Health Agency, LLC ("Abundant Life") is
a Florida limited liability company that provides home health care nursing services to
patients living in the Tampa Bay area.
2.
Defendant Nely Nida Villavicencio ("Villavicencio") is the president of
Abundant Life, which she founded in 2007.
3.
Abundant Life currently employs approximately 86 home health care nurses
and administrative staff.
4.
The Plaintiffs ("Plaintiffs") are all former or current home health care nurses
employed by Abundant Life.
8.
The Formation of Abundant Life and the Department of Labor Audit
5.
Villavicencio's education and background is in nursing with a particular
focus on treating juvenile patients.
6.
Villavicencio does not possess any legal training or expertise, and she did
not hire an attorney or business consultant to advise her regarding the legality of her
employment and compensation structure when she founded Abundant Life.
7.
Instead, Villavicencio conducted her own independent legal research
regarding the requirements of the FLSA and other applicable laws affecting her business.
8.
Villavicencio's efforts in this regard ultimately proved deficient, as the
Department of Labor conducted an audit in 2013 that resulted in a determination that
Prior to trial, the parties stipulated to various threshold matters in their Joint Pre-Trial
Statement (Doc. No. 78) (the "Joint Pre-Trial Statement"), which are specifically
incorporated herein by reference.
2
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Abundant Life had failed to pay overtime in accordance with the FLSA.
9.
As a result of the unfavorable audit, Abundant Life was required to repay
$11,788.61 in unpaid overtime compensation to eight employees; however, no liquidated
damages were assessed by the Department of Labor.
10.
Following the audit, a representative of the Department of Labor (identified
as Inspector Sharon Knighton) attempted to demonstrate how Abundant Life could
restructure its employment and compensation structure to comply with the FLSA.
11.
In so doing, Inspector Knighton purportedly represented that Abundant Life
could lower employees' hourly rates of pay so long as the "regular rate" was not a "false
rate" that changed every week.
C.
Abundant Life's Revised Employment and Compensation Structure
12.
Following the conclusion of the Department of Labor audit, Abundant Life
determined that it could not afford to pay its employees a combination of regular and
overtime pay that exceeded its Medicaid reimbursement rate of $24.45/hour.
13.
Consistent with that determination, Abundant Life assigned its employees
new "regular rates" of pay that would not result in the payment of overtime compensation
in excess of $24.45/hr.
14.
In practice, however, Abundant Life began paying its employees at different
rates of pay depending on whether they worked in excess of 40 hours per week.
15.
For instance, during weeks in which employees would work more than 40
hours per week, their non-overtime "regular rates" of pay would be reduced downwards
so that their overtime rates of pay would not exceed $24.45/hr.
16.
Contrastingly, during weeks in which employees did not work more than 40
hours per week, their non-overtime "regular rates" would be adjusted upwards to hourly
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rates commensurate with the employees' salary expectations.
17.
Ostensibly, these upward adjustments to employees' non-overtime rates of
pay were made pursuant to a discretionary, performance-based bonus system
administered by Villavicencio; however, in actuality, Abundant Life had a longstanding
policy of paying employees the same hourly rate regardless of whether they worked 40
or more hours per week.
18.
Simply put, during weeks when employees worked overtime, their hourly
rates would be adjusted downwards such that they would earn the same hourly rate that
they received during non-overtime pay periods. Conversely, if an employee worked less
than 40 hours per week, she would not be paid at the reduced overtime rate, but rather
at a higher "regular rate" actually commensurate with her salary expectations.
19.
While Abundant Life and Villavicencio claim they believed the foregoing pay
scheme was legal, they took no independent action to confirm whether they were in
compliance with the FLSA, such as by hiring outside legal counsel or seeking written or
verbal guidance from the Department of Labor.
II.
Conclusions of Law
20.
This Court has jurisdiction pursuant to 29 U.S.C. § 216(b) and 28 U.S.C. §
21.
Under Section 207 of the FLSA, "no employer shall employ any of his
1337.
employees ... for a workweek longer than forty hours unless such employee receives
compensation for his employment in excess of the hours above specified at a rate not
less than one and one-half times the regular rate at which he is employed." 29 U.S.C. §
207(a)(1).
To determine whether an employer violated the FLSA's overtime wage
requirement, the Court must calculate the employee's "regular rate" of pay, and determine
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whether the employee received one and one-half that "regular rate" for work in excess of
forty hours per week. Courts interpret "regular rate" to mean "the hourly rate actually paid
the employee for the normal, non-overtime workweek for which he is employed." Parth v.
Pomona Valley Hosp. Med. Center, 630 F.3d 794, 799 (9th Cir. 2010).
22.
Under the FLSA, parties may generally establish the "regular rate" at any
point and in any manner they see fit, so long as the employer otherwise complies with
applicable minimum wage requirements.· Id.
However, employers may not decrease
employees' hourly rate based on the number of hours worked, set the hourly rate for
overtime at a rate lower than the regular rate especially when the overtime work is
identical to that performed during regular hours, or set the hourly rate for regular work
lower during weeks when overtime is worked. Id. at 803-04. Thus, to calculate the true
"regular rate" of pay received by an employee, courts must "look beyond that which the
parties have purported to do, and find the hourly rate actually paid for the normal, nonovertime workweek." Mata v. Caring for You Home Health, Inc., 94 F.Supp.3d 867, 875
(S.D. Tex. 2015) (emphasis in original).
23.
Section 216(b) of the FLSA provides that "[a]ny employer who violates the
provisions of section ... 207 of this title shall be liable to the ... employees affected in
the amount of their ... unpaid overtime compensation ... and in an additional equal
amount as liquidated damages." 29 U.S.C. § 216(b). "The court in such actions shall, in
addition to any judgment awarded to the ... plaintiffs, allow a reasonable attorney's fee
to be paid by the defendant, and costs of the action." 29 U.S.C. § 216(b).
24.
Section 260 of the FLSA, however, provides employers who violate the
FLSA with a limited defense to claims for liquidated damages. Section 260 states, in
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pertinent part, that
In any action . . . to recover unpaid minimum wages, unpaid overtime
compensation, or liquidated damages, under the [FLSA], if the employer
shows to the satisfaction of the court that the act or omission giving rise to
such action was in good faith and that he had reasonable grounds for
believing that his act or omission was not a violation of the [FLSA], the court
may, in its sound discretion, award no liquidated damages or award any
amount thereof not to exceed the amount specified in section 216 of [the
FLSA].
29 U.S.C. § 260. Section 260 of the FLSA has subjective and objective components.
Fuentes v. CAI Intern., Inc., 728 F.Supp.2d 1347, 1357 (S.D. Fla. 2010). "To establish
subjective good faith, the burden of proof is on the employer to show that it had an honest
intention to ascertain what the [FLSA] requires and to act in accordance with it." Id.
"Objective good faith means the employer had reasonable grounds for believing its
conduct comported with the FLSA." Friedman v. South Fla. Psychiatric Assocs., Inc., 139
F.App'x 183, 185-86 (11th Cir. 2005).
25.
The FLSA also has either a two or three year statute of limitations
depending on whether (or not) the defendant willfully violated the FLSA. See 29 U.S.C. §
255(a) (stating that an action under Section 207 of the FLSA must be "commenced within
two years after the cause of action accrued ... except that a cause of action arising out
of a willful violation may be commenced within three years after the cause of action
accrued."). "To establish that the violation of the [FLSA] was willful in order to extend the
limitations period, the employee must prove by a preponderance of the evidence that his
employer either knew that its conduct was prohibited by the statute or showed reckless
disregard about whether it was." Alvarez Perez v. Sanford-Orlando Kennel Club, Inc., 515
F.3d 1150, 1162-63 (11th Cir. 2008). 'The Code of Federal Regulations defines reckless
disregard as the 'failure to make adequate inquiry into whether conduct is in compliance
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with the Act."' Id. at 1163.
Ill.
Application of Law to Facts
A.
Calculation of Unpaid Overtime Compensation
26.
In its summary judgment order (Doc. No. 74), the Court determined that the
Defendants failed to pay seven of the nine opt-in Plaintiffs overtime based on the following
"regular rates" of pay:
Diane Lorch - $16.00
Emma Adkins - $18.00
Nancy Vincent- $20.00
Linda Brooks - $20.00
Carol Ann Dorry- $17.00
Chrystal Ivey- $16.00
Charles McFarland - $16.00
(Doc. No. 74, at 5).
27.
Moreover, at trial the parties stipulated to the following "regular rates" of pay
for the remaining opt-in Plaintiffs:
Marcie Melamphy- $17.00
Ragna Esajas - $16.50
(Doc. No. 78, at 17).
28.
The parties further stipulated that the following opt-in Plaintiffs are owed
unpaid overtime compensation as set forth below:
Marcie Melamphy - $3, 152.05
Ragna Esajas - $5,285.36
Diane Lorch - $6,779.28
Emma Adkins - $1,662.75
Linda Brooks - $820.00
Chrystal Ivey - $320.00
Nancy Vincent - $7,926.70
Charles McFarland - $3,730.00
(Doc. No. 78, at 17).
29.
In light of the foregoing, at trial the qnly area of disagreement regarding the
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amount of unpaid overtime compensation related to the "regular rate" of pay for Plaintiff
Carol Ann Dorry. 3 According to the Defendants, Ms. Dorry agreed to a "regular rate" of
$15.69/hr pursuant to her "Wage Agreement" with Abundant Life. (Doc. No. 73-9). Ms.
Dorry, on the other hand, contends that her "regular rate" was $17.00, as reflected by the
amounts she was paid during the non-overtime pay periods ending October 16, 2015 and,
November 13, 2015. (Doc. No. 59-6, at 9-10; 13-14).
30.
Upon review, the Court agrees with Ms. Dorry that her "regular rate" of pay
was $17.00. Based upon the evidenced adduced at trial, Ms. Dorry only earned less than
$17.00/hour during weeks in which she worked more than 40 hours. See, e.g., (Doc. No.
59-6, at 11-12) (showing that Ms. Dorry earned $15.69/hr for non-overtime hours worked
during the pay period ending October 30, 2015, during which she worked a total of 102
hours). Since an employee cannot bargain away her rights under the FLSA, see Herman
v. City of St. Petersburg, Fla. Police Dept., 131 F.Supp.23 1329, 1332 (M.D. Fla. 2001),
the Defendants were required to pay Ms. Dorry overtime based on her "regular rate" of
$17.00/hr. Accordingly, Ms. Dorry is owed $2,843.25 in unpaid overtime based upon the
undisputed calculation attached as Exhibit "E" to the Joint Pre-Trial Statement.
B.
Defendants' Good Faith and Statute of Limitations Defenses
31.
At trial, the parties other areas of contention related to whether (1) the
Defendants are entitled to a good faith defense under Section 260 of the FLSA, and (2)
the Defendants' actions were willful for purposes of calculating the applicable statute of
As noted in the summary judgment order, the Court already determined that Ms. Dorry
was not paid overtime at her "regular rate" of $17.00/hr while she worked for the
Defendants. (Doc. No. 74, at 5-6). Nevertheless, out of an abundance of caution, the
Court will consider the issue anew for purposes of making its findings of fact and
conclusions of law.
3
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limitations under Section 255 of the FLSA.
32.
Upon review, the Court concludes that the Defendants failed to make an
objectively adequate inquiry into whether their pay scheme complied with the FLSA. To
the contrary, despite having been audited by the Department of Labor and found to have
violated the FLSA, the Defendants did not seek any independent guidance regarding
whether their revised pay scheme complied with the FLSA.
Instead, the Defendants
simply repeated the same ill-advised behavior that resulted in the unfavorable
Department of Labor audit in the first instance, i.e. attempting to ascertain for themselves
whether their pay scheme complied with the FLSA.
33.
Moreover, from a subjective standpoint, the Court does not find the
Defendants' testimony regarding their interactions with Inspector Knighton to be credible.
The Defendants neither subpoenaed Inspector Knighton to appear and testify at triaJ, nor
obtained a declaration, affidavit, or other form of written verification regarding Inspector
Knighton's alleged representations. Thus, the Court affords the Defendants' testimony
regarding their subjective good faith intention to comply with the FLSA little weight and,
instead, concludes that the Defendants post-audit pay scheme was a continuation of their
longstanding policy of "not paying overtime."
34.
Since the Defendants have failed to carry their burden of proof under the
subjective and objective components of Section 260 of the FLSA, they are not entitled to
a good faith defense in this case. Moreover, for the same reasons, the Plaintiffs have
successfully demonstrated that the three year statute of limitations applies to their claims
under Section 255 of the FLSA.
35.
Consistent with the foregoing findings of fact and conclusions of law, and
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pursuant to the undisputed calculation of damages attached to the Pre-Trial Statement,
the Defendants are liable to the Plaintiffs as follows:
Plaintiff:
Unpaid Overtime:
Marcie Melamphy
Ragna Esajas
Diane Lorch
Carole Ann Dorry
Emma Adkins
Linda Brooks
Crystal Ivey
Nancy Vincent
Charles McFarland
All Plaintiffs
$3, 152.05
$5,285.36
$6,779.28
$2,843.25
$1,662.75
$820.00
$320.00
$7,926.70
$3,730.00
$32,519.39
IV.
Liquidated
Damages:
$3,152.05
$5,285.36
$6,779.28
$2,843.25
$1,662.75
$820.00
$320.00
$7,926.70
$3,730.00
$32,519.39
Total:
$6,304.10
$10,570.72
$13,558.56
$5,686.50
$3,325.50
$1,640.00
$640.00
$15,853.40
$7,460.00
$65,038.78
Conclusion
Accordingly, it is
ORDERED that the Plaintiffs are directed to submit a proposed form of final
judgment consistent with the terms of this order within 14 days.
It is further ORDERED that any motion for attorney's fees and costs shall be filed
in accordance with the Federal Rules of Civil Procedure.
It is further ORDERED that the Clerk of Court is directed to CLOSE this case and
TERMINATE any pending motions.
DONE and ORDERED in Chambers, in Tampa, Florida this 2nd day of August,
2017.
Copies furnished to:
Counsel of Record
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