Dyal et al v. Pirtano Construction, Inc., et al
Filing
146
MEMORANDUM Opinion and Order: For the foregoing reasons, the Court grants Defendants' motion for summary judgment (R. 103 ) on Counts I and IV, and denies Defendants' motion for summary judgment on the applicability of the Section 7(i) exemption relevant to Counts II and III. Plaintiffs' summary judgment motion (R. 106 ) is denied. Signed by the Honorable Thomas M. Durkin on 3/27/2018. Mailed notice. (ym, )
IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
JOSHUA DYAL, CHRISTOPHER POPP,
JASON PANICO, RICHARD WEBER,
ROBERT WEICHMANN, DEAN ZERVAS,
AND MARCOS CAMPOS,
Plaintiffs,
vs.
PIRTANO CONSTRUCTION, INC.,
INSTALLATION PROFESSIONALS, L.L.C.,
MIKE PIRAINO, JOE PANTANO, JACK HORN, AND
MIKE MOREAU,
Defendants.
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No. 12 C 9687
Judge Thomas M. Durkin
MEMORANDUM OPINION AND ORDER
Defendant PirTano Construction, Inc. has a contract with Comcast Cable to
provide cable installation work to Comcast customers. It provides those services
through a separate entity and operating division called Installation Professionals,
LLC. Plaintiffs were employed by Installation Professionals between 2010 and 2013
as cable installation technicians. Plaintiffs allege that PirTano, Installation
Professionals, and various principals of those two companies, 1 processed deductions
from their wages in violation of the Illinois Wage Payment and Collection Act
(“IWPCA”) (Count I), and failed to pay overtime as required by the Illinois
Minimum Wage Law (“IMWL”) (Count II) and the Fair Labor Standards Act
Defendant Jack Horn is employed as the treasurer for PirTano and owns
one-third of that company. Defendants Mike Piraino and Joseph Pantano own the
other two-thirds. R. 123, Resp. to Plaintiffs’ Statement of Material Facts (“PSMF”),
¶ 9.
1
(“FLSA”) (Count III). A fourth count of the amended complaint alleges violations of
the Uniformed Services Employment and Reemployment Rights Act (“USERRA”) on
behalf of Plaintiff Dyal only. The parties have filed cross-motions for summary
judgment. For the reasons that follow, Defendants’ motion is denied in part and
granted in part and Plaintiffs’ cross-motion is denied.
LEGAL STANDARD
Summary judgment is appropriate “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 Celotex Corp. v. Catrett, 477 U.S. 317,
322–23 (1986). The Court considers the entire evidentiary record and must view all
of the evidence and draw all reasonable inferences from that evidence in the light
most favorable to the nonmovant. Ball v. Kotter, 723 F.3d 813, 821 (7th Cir. 2013).
To defeat summary judgment, a nonmovant must produce more than “a mere
scintilla of evidence” and come forward with “specific facts showing that there is a
genuine issue for trial.” Harris N.A. v. Hershey, 711 F.3d 794, 798 (7th Cir. 2013).
Ultimately, summary judgment is warranted only if a reasonable jury could not
return a verdict for the nonmovant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986).
BACKGROUND
Plaintiffs worked for Installation Professionals as “installation technicians”
at various points between 2010 and 2012. 2 Installment Professionals is an operating
The Court acknowledges Plaintiffs’ position that all of the named
Defendants are liable as their “joint employer.” The Court will refer to Installment
2
2
division of PirTano, which has a contract with Comcast to install and service cable
television, internet, and telephone services for Comcast. R. 123, Resp. to Plaintiffs’
Statement of Material Facts (“PSMF”), ¶¶ 7, 9. When Comcast needs installation
services, it generates work orders and conveys them to Installment Professionals.
The technicians who work for Installment Professionals receive a route each
morning when they report to work consisting of three to eight Comcast work orders.
Id. at ¶ 21. Each work order describes the work needed to be done, the customer’s
name, address, and contact number, and the time frames when the technician needs
to arrive at the customer’s location. Id. The technicians are then dispatched to the
addresses on their route to complete the work. The number of stops or jobs each
technician receives each day varies on the day’s workload, the type of job, and the
technician’s skillset. Id. at ¶ 23. At the end of the day, the technicians turn in a
worksheet showing the jobs they completed and what work was done for each job.
The worksheets are reviewed by Michael Pocasangre, PirTano’s office manager, who
compares the work listed as having been completed with Comcast records. Id. at ¶¶
27–29. The manager then totals up the allowable tasks and the information is
recorded and conveyed to Comcast, which then pays PirTano for the work done by
the technicians. The technicians, in turn, get paid a set amount per task. The set
amounts are listed on a rate sheet, which is applied to the worksheets. R. 123, Resp.
to PSMF, ¶ 31.
Professionals as Plaintiffs’ employer in this background section, and reserve
resolution of the legal dispute over joint employment until later in this opinion.
3
The amounts technicians are paid for each item of service varies based on
the value of that service, but the technicians generally receive 40%-60% of the
amount Comcast paid for the service. For example, a technician would earn $38.74
for a “G-6 CDV & HSD Installation (Sep. Trip)” and Comcast was invoiced $80.74,
which means the technician earned about 48% of what Comcast was invoiced for
that service. If the technician installed an “F-3b Additional Outlet (New)(Same
Trip),” it had a value of $10.17 and Comcast was invoiced $18.35, so the technician
received about 55% of the amount billed to Comcast for that service. R. 128, Resp. to
Defendants’ Statement of Additional Facts (“DSAF”), ¶ 30. The amounts owed to the
technician for each task listed on the worksheets are totaled up, and the technician
is paid accordingly. Thus, the technicians’ pay was based on what they billed no
matter how many hours they worked. R. 123, Resp. to PSMF, ¶ 35.
ANALYSIS
Both parties filed motions for summary judgment. Defendants argue
summary judgment in their favor is appropriate in the following respects: (1) on
Plaintiffs’ overtime wage claims under the FLSA and the IMWL, because those
claims are barred by the “retail or service establishment” exemption of the FLSA, 29
U.S.C. § 207(i) (hereinafter “Section 7(i)”); (2) on the three-year FLSA statute of
limitations, because the evidence is insufficient to show willfulness; (3) on Plaintiffs’
IWPCA claim, because the undisputed evidence shows that all payroll deductions
were made in compliance with that statute; and (4) on Plaintiff Dyal’s USERRA
claim, because it is based on conclusory allegations unsupported by the evidence.
4
Plaintiffs’ summary judgment motion focuses on the overtime wage claims
under the FLSA and the IMWL. Specifically, Plaintiffs argue that the 7(i)
exemption does not apply because they were not paid based on commission, and
that as a result, Defendants failed to pay them overtime wages required by the
FLSA. Plaintiffs also argue that the Defendants are their joint employers and that
they willfully violated the FLSA, extending the limitations period from two years to
three years. Plaintiffs did not make any arguments as to the IWPCA or the
USERRA claims in their affirmative summary judgment motion. Because the
majority of the parties’ briefings focus on the FLSA and the IMWL, the Court will
begin there.
I.
FLSA AND IMWL (COUNTS II AND III)
A. THE SECTION 7(i) EXEMPTION
The FLSA and the IMWL generally require that employees be paid one and
one-half times their hourly wage for every hour worked in excess of forty hours per
workweek. See 29 U.S.C. § 207(a)(1); 820 ILCS 105/4a(1). Section 7(i) of the FLSA
exempts employers from complying with that overtime requirement if they employ
(1) employees of a retail or service establishment; (2) the regular rate of pay of such
employees is in excess of one and one-half times the minimum hourly rate; and
(3) more than half of the employees’ compensation for a representative period
represents commissions on goods or services. 29 U.S.C. § 207(i). The IMWL likewise
exempts from overtime coverage “[a]ny commissioned employee as described in
5
paragraph (i) of Section 7 of the [FLSA] and rules and regulations promulgated
thereunder.” 820 ILCS 105/4a(2)(F).
Importantly, Section 7(i)’s exemption from the FLSA’s minimum wage
requirements “should not be interpreted so broadly that it renders the statutory
remedy ineffectual or easily evaded.” Yi v. Sterling Collision Ctrs., 480 F.3d 505,
508 (7th Cir. 2007). Exemptions under the FLSA are to be narrowly construed
against the employers seeking to assert them. See Lederman v. Frontier Fire
Protection, Inc., 685 F.3d 1151, 1157 (10th Cir. 2012). As a practical matter, this
means that a close case will be resolved against applying the exemption. Yi, 480
F.3d at 508 (“principle of narrow interpretation of exemptions is a tie breaker”
(citing Mechmet v. Four Seasons Hotels, Ltd., 825 F.2d 1173, 1177 (7th Cir. 1987))).
Assuming Plaintiffs work more than 40 hours per week, for Defendants to be
entitled to summary judgment on Plaintiffs’ IMWL and FSLA claims based on
Section 7(i), it must be clear from the undisputed facts that: (1) Installment
Professionals is a “retail or service establishment”; (2) Plaintiffs’ regular rate of pay
is at least one and one-half times the minimum wage; and (3) more than half of
Plaintiffs’ compensation for the representative period is from commissions. See
Alvarado v. Corporate Cleaning Serv., Inc., 782 F.3d 365, 366 (7th Cir. 2015). The
exemption must also be in accordance with the FLSA’s concerns about the welfare
of employees. Id. at 371. The Court will address each of these required showings in
turn.
6
1.
IS INSTALLMENT PROFESSIONALS A RETAIL OR
SERVICE ESTABLISHMENT? 3
Whether Installment Professionals “is a retail or service establishment is a
matter of statutory construction and is thus a question of law to be determined by
the [c]ourt.” Reynolds v. Wyndham Vacation Resorts, Inc., 2016 WL 362620, at *5
(D.S.C. Jan. 29, 2016). In Alvarado¸ the Seventh Circuit decided that a company
that provided window washing services was a “retail or service establishment”
using a straightforward analysis based on the language of the statute:
[T]o prevail CCS must show . . . that the company is a
retail or service establishment, terms not defined in the
statute. A “retail establishment” sounds like a store,
which CCS is not; “service establishment” is much
broader. CCS is selling a service, not goods, and that as
we’ve seen is supportive of the exemption. . . .
As a service establishment CCS meets the “retail or
service establishment” requirement in section 207(i). If
that weren’t enough (though it is), CCS is probably best
described as a retail service establishment.
782 F.3d at 369 (emphasis in original). 4
Defendants argue that, by failing to discuss the first required Section 7(i)
element, Plaintiffs had conceded it was met. R. 131 at 6; R. 122 at 4–8. Defendants
ask the Court to find that Plaintiffs have waived the right to contest whether
Installment Professionals is a “retail or service establishment.” See R. 141 at 2–4.
Although Plaintiffs failed to address the issue in response to Defendants’ opening
summary judgment brief, they addressed it in reply to Defendants’ opposition to
Plaintiffs’ brief. Regardless, the burden is on Defendants to show there are no
disputed issues of fact entitling them to the exemption, see Yi, 480 F.3d at 507, and
Plaintiffs addressed the other requirements for an exemption under Section 7(i), all
of which if accepted would defeat Defendants’ summary judgment motion.
Moreover, the Court does not perceive that Plaintiffs obtained any unfair advantage
by avoiding the issue until their reply brief, even if that was their intention. The
Court declines to find a waiver and will base its decision on the merits instead.
3
7
Under the Seventh Circuit’s analysis, Installment Professionals easily
satisfies the “retail or service establishment” prong of the Section 7(i) exemption.
Installment Professionals sells cable installation services and therefore is a “service
establishment.” Plaintiffs argue otherwise, purporting to rely on a part of the
Alvarado opinion addressing whether the window washing company was a “retail
service establishment” because it sold its services directly to the customer without
the use of any middleman. The problem with Plaintiffs’ reliance on this
distinguishing fact in Alvarado is that the language of Section 7(i) is in the
alternative; that is, the employer must be “a retail or service establishment.” If the
discussion in Alvarado is taken at face value, the alternative language in the
statute is to be read literally and nothing more than being a service establishment,
retail or wholesale, 5 is required. See Alvarado, 782 F.3d at 369 (before addressing
Previously, courts relied on a Department of Labor regulation to determine
whether an establishment was a retail or service establishment for purposes of the
FLSA exemption. In Alvarado, 782 F.3d at 371, the Seventh Circuit called into
question the applicability of the regulation and the associated, outdated list of
establishments lacking a ‘retail concept’ under 29 C.F.R. § 779.317.
4
The DOL has determined that “the term ‘service establishment’ is to be
understood to mean a ‘retail service establishment[ ].’” Kelly v. A1 Technology, 2010
WL 1541585, at *11 (S.D.N.Y. April 12, 2010) (emphasis added). Under the
regulations, a wholesale service establishment does not satisfy the exemption
because it is not selling services “of the type contemplated in the Act,” 29 C.F.R.
§ 779.314. “[T]he term ‘retail’ is to be interpreted, in the context of the congressional
purposes and objectives[,] . . . to refer to ‘the traditional local retail or service
establishment.’” Kelly, 2010 WL 1541585, at *11 (quoting 29 C.F.R. § 779.315); 29
C.F.R. § 779.318 (“Typically a retail or service establishment is one which sells
goods or services to the general public. It serves the everyday needs of the
community in which it is located. The retail or service establishment performs a
function in the business organization of the Nation which is at the very end of the
stream of distribution, disposing in small quantities of the products and skills of
such organization and does not take part in the manufacturing process.”); In
5
8
whether the defendant was a “retail service establishment,” stating that being a
“service establishment” by itself was “enough”).
Plaintiffs argue this case is different and the requirements set forth in
Alvarado are not met because Installation Professionals, through PirTano,
contracted with Comcast to provide cable installation
services to Comcast customers. . . . PirTano/Installation
Professionals billed Comcast for the work done by its
technicians. Then Comcast billed its customers, the
ultimate customers. Based upon Judge Posner’s reasoning
and
holdings
in
Alvarado,
PirTano/Installation
Professionals were wholesalers, as their services were
resold by Comcast to the actual user.
R. 135 at 5–6. But Plaintiffs admit that Installation Professionals provides cable
and internet products and services directly to the end user. 6 The customer receiving
the goods and services is at the end of the stream of distribution and there is no
reselling by that customer of the cable or internet products and services. The fact
that Installation Professionals provides the installation services to the end-user in
its role as Comcast’s subcontractor does not alter the analysis. Numerous courts
have held that providing services directly to the end user, even through
Alvarado, the court characterized the window washing company as a “retail” service
establishment because “[i]t sells its window-cleaning services to building owners
and managers; they are the ultimate customers; they do not resell the window
cleaning, and therefore CCS is not a wholesaler.” 82 F.3d at 369.
See R. 124, Resp. to DSMF, ¶ 45 (admitting that “Installation Professionals,
LLC does not take any part in the manufacturing process and the goods and
services Installation Professionals, LLC provides to the end user customer are in
small quantities, such that necessary products were carried in Plaintiffs’ pick-up
trucks, and the products and services were not for resale and the products were
deactivated if taken out of the customer’s house.”); Id., ¶ 46 (admitting that
“Installation Professionals, LLC provides cable, internet and phone products and
services to the general public to support the comfort and convenience of the end
user customer’s daily living and such products and services are not for resale.”).
6
9
subcontractors, qualifies as a “retail or service establishment.” See In re Directech
Sw., Inc., 2009 WL 10663104, * 10 (E.D. La. Nov. 19, 2009) (concluding that the fact
that one entity, DirecTV, solicits and accepts payment from the customers and then
pays another entity, DirecTech, for the installation work technicians perform for the
satellite customers—the end users—did not make DirecTech’s sale of services a sale
for resale); see also Johnson v. Wave Comm Gr LLC, 4 F. Supp. 3d 423, 435–36
(N.D.N.Y. 2014) (holding that cable installation company was not “reselling”
services of Time Warner to Time Warner’s customers and rejecting the argument
that the cable installation company was a wholesaler); Jones v. Tucker
Communications, Inc., 2013 WL 6072966 at *6 (M.D. Ga., Nov. 18, 2013) (defendant
Tucker Communications provided cable, internet, and telephone repair and
installation services for customers of Charter Communications; holding that
Tucker’s services were not being resold); Owopetu v. Nationwide CATV Auditing
Servs., Inc., 2011 WL 4433159, at *6 (D. Vt. Sept. 21, 2011) (defendant, whose
business was to install and maintain telecommunications hardware in customers’
homes for Time Warner Cable and service Time Warner’s customers directly was
not providing services for resale and satisfied the “retail and service establishment”
prong of the FLSA exemption). As the majority of courts that have considered this
issue in the context of the cable/television installation industry have held, the Court
agrees that Installation Professionals is a service or retail establishment within the
meaning of the FLSA. 7
7
See Amponsah v. DirecTV, LLC, 2017 WL 4544621, at *11–12 (N.D. Ga. Oct.
10
2.
WAS PLAINTIFFS’ REGULAR RATE OF PAY AT
LEAST ONE AND ONE-HALF TIMES THE MINIMUM
WAGE?
The second requirement for the Section 7(i) exemption is that the employee’s
regular rate of pay is at least one and one-half times the minimum wage. This
requirement is explained in 29 C.F.R. § 779.419(b) as follows:
The meaning of the “regular rate” of pay under the Act is
well established. As explained by the Supreme Court of
the United States, it is “the hourly rate actually paid the
employee for the normal, nonovertime workweek for
which he is employed” and “by its very nature must
reflect all payments which the parties have agreed shall
be received regularly during the workweek, exclusive of
overtime payments.” (Walling v. Youngerman-Reynolds
Hardwood Co., 325 U.S. 419.) It is a rate per hour,
computed for the particular workweek by a mathematical
computation in which hours worked are divided into
straight-time earnings for such hours to obtain the
statutory regular rate (Overnight Motor Co. v. Missel, 316
U.S. 572). By definition (Act, section 7(e), the “regular
rate” as used in section 7 of the Act includes “all
remuneration paid to, or on behalf of, the employee”
except payments expressly excluded by the seven
numbered clauses of section 7(e). . . . The requirement of
section 7(i) with respect to the “regular rate” of pay of an
employee who may come within the exemption which it
provides is a simple one: “the regular rate of pay of such
employee,” when employed “for a workweek in excess of
the applicable workweek specified” in section 7(a), must
be “in excess of one and one-half times the minimum
hourly rate applicable to him under section 6.” The
employee’s “regular rate” of pay must be computed, in
accordance with the principles discussed above, on the
4, 2017) (concluding that the evidence showed that DirecTV had a retail concept);
Battle v. DirecTV, LLC, 2017 WL 4076205, at *7 (N.D. Ala. Sept. 14, 2017) (finding
as a matter of law that DirecTV is a retail or service establishment); Arnold v.
DirecTV, LLC, 2017 WL 1196428, at *9 (E.D. Mo. Mar. 31, 2017) (“the Court is
satisfied that DirecTV meets the ‘retail or service establishment’ prong of the 7(i)
exemption as it has been understood and applied in the cases”).
11
basis of his hours of work in that particular workweek
and the employee’s compensation attributable to such
hours. The hourly rate thus obtained must be compared
with the applicable minimum rate of pay of the particular
employee under the provisions of section 6 of the Act. If
the latter rate is $1.60 an hour, for example, then the
employee’s regular rate must be more than $2.40 an hour
if the exemption is to apply.
29 C.F.R. § 779.419(b).
According to Defendants, at all times relevant, the minimum hourly rate
applicable under Section 206 of the FLSA was $7.25 per hour. R. 104 at 10 (citing
29 U.S.C. § 206(a)). To satisfy the second prong of the exemption, Defendants must
show that Plaintiffs received an hourly equivalent exceeding $10.87. Defendants
present evidence that, on average, Plaintiffs earned an hourly equivalent amount
well over the $10.88 per hour threshold (ranging from $14.11 to $21.62 per hour),
and annual compensation for Plaintiffs ranged from $38,272 to $55,273. Id. 8 While
Defendants admit that “there were a few weeks where the $10.88 threshold was not
met,” they argue that “these almost all occurred outside the applicable limitations
Defendants cite to the evidentiary material supportive of their argument in
paragraphs 31 through 38 of their Local Rule 56.1(a)(3) fact statement. See R. 105.
Plaintiffs give the same response to each of those paragraphs that fails to expressly
deny the facts stated by Defendants and fails to cite to any specific record evidence.
R. 124, Resp. to Defendants’ Statement of Material Facts (“DSMF”), ¶¶ 31–38.
Plaintiffs’ responses do not comply with Local Rule 56.1(a). See Ammons v. Aramark
Uniform Servs., Inc., 368 F.3d 809, 817–18 (7th Cir. 2004); Malec v. Sanford, 191
F.R.D. 581, 583 (N.D. Ill. 2000) (“[S]pecific reference” [in Local Rule 56.1(b)(3)(B)]
means including proper . . . citations to exact pieces of the record that support the
factual contention contained in the paragraph . . . District courts are not obliged in
our adversary system to scour the record looking for factual disputes. Factual
allegations not properly supported by citation to the record are nullities.”). Because
Plaintiffs have failed to properly controvert paragraphs 31 through 38 of
Defendants’ Local Rule 56.1(a)(3) statement, those paragraphs are deemed
admitted.
8
12
period” and “the record evidence reflects these were extremely minor discrepancies
that have no material consequence under the law.” Id.
Plaintiffs’ reply brief in support of their cross-motion for summary judgment
concedes that they were usually paid more than $10.88 per hour. See R. 135 at 3–4
(“All that Plaintiffs have admitted is that their ‘regular rate’ usually exceeded
$10.88 per hour.”). Given Plaintiffs’ admission in their reply brief, the only disputed
issue on this prong of the Section 7(i) exemption is a legal one—whether the de
minimis doctrine applies to the relatively few weeks in which Defendants concede
that Plaintiffs were not paid at least 1½ times the applicable federal minimum
wage. See R. 104 at 10 (citing Mitchell v. JCG Indus., Inc., 745 F.3d 837, 841–46
(7th Cir. 2014) (recognizing the de minimis doctrine and that the court does not
provide a remedy for small and insignificant harms)).
Plaintiffs’ only argument against application of the de minimis doctrine is
that Defendants have failed to maintain proper paycheck and paystub information
as required by federal and state law, and that therefore “there is no important data
to determine whether the underpaid weeks were ‘trifles.’” R. 126 at 8. By this
argument Plaintiffs apparently concede the applicability of the de minimis doctrine
to the current situation, and only take issue with whether the factual predicate for
application of that doctrine has been established. Neither party cites to 29 C.F.R.
§ 778.104, pursuant to which “each workweek stands alone such that an employee
who works 30 hours one week and 50 hours the next would be entitled to overtime
compensation the second week even though the average between the two weeks is
13
40 hours per week.” Roeder v. Directv, Inc., 2017 WL 151401, at *32 (N.D. Iowa Jan.
13, 2017).
The Act takes a single workweek as its standard and does
not permit averaging of hours over 2 or more weeks. Thus,
if an employee works 30 hours one week and 50 hours the
next, he must receive overtime compensation for the
overtime hours worked beyond the applicable maximum
in the second week, even though the average number of
hours worked in the 2 weeks is 40. This is true regardless
of whether the employee works on a standard or swingshift schedule and regardless of whether he is paid on a
daily, weekly, biweekly, monthly or other basis. The rule
is also applicable to pieceworkers and employees paid on a
commission basis. It is therefore necessary to determine
the hours worked and the compensation earned by
pieceworkers and commission employees on a weekly
basis.
29 C.F.R. § 778.104; see Johnson, 4 F. Supp. 3d at 445 (holding that estimated hours
provided by the plaintiffs in interrogatory answers could not be used to determine
compensation because the regular rate of pay had to be calculated on a weekly
basis). Defendants have offered no argument for why this regulation does not apply
or should not be followed. 9
Neither side has cited to this regulation. Instead, Defendants rely on
Walton v. United Consumers Club, Inc., 786 F.2d 303 (7th Cir. 1986), where the
Seventh Circuit said the following:
9
Although United has divided Simons’s total compensation
by her total hours, there was no need to break both down
week by week. Commission salesmen have fluctuating
hours and income, and it is unlikely that Congress meant
to require employers to pay overtime in the lean weeks
when the fat weeks more than make up. Other cases have
used periods as long as a year to establish average wages.
Id. at 307. There is no discussion in Walton of 29 C.F.R. § 778.104. As neither party
has provided any guidance on how to interpret the view expressed by the court in
14
Mitchell and the cases on which it relies for the de minimis doctrine
determined what was compensable working time for purposes of calculating the
number of hours an employee worked each week. See Mitchell, 745 F.3d at 843.
Defendants cite no relevant authority that applies the same doctrine to override the
weekly computation requirement of 29 C.F.R. § 778.104. Under that regulation,
Defendants can rely on the Section 7(i) exemption only for the weeks in which they
have not conceded that Plaintiffs did not earn the equivalent of $10.88 per hour.
As for the other weeks in question, Plaintiffs’ concession ends the matter.
Plaintiffs attempt to defeat summary judgment by arguing Defendants failed to
keep adequate records of the total hours worked. The Eleventh Circuit reversed the
district court’s entry of summary judgment on that issue in Klinedinst v. Swift
Investments, Inc., 260 F.3d 1251(11th Cir. 2001), because neither party kept records
of the number of hours worked, and thus it was impossible to calculate the
plaintiff’s “regular rate” to compute his overtime compensation. Id. at 1257.
But Plaintiffs make little more than a perfunctory argument on this point,
and, as previously noted, they failed to properly support their indirect denial of
Defendants’ fact statements that provide the basis for finding that Defendants
satisfied this element of the Section 7(i) exemption in all but a few of the potentially
relevant weeks. See Roeder, 2017 WL 151401, at *31 (where “plaintiffs’ own
testimony establishes they were paid more than one and one-half times the
applicable minimum wage,” court holds that “DIRECTV has met its burden of
Walton that “fat weeks” can make up for “lean weeks” in light of 29 C.F.R.
§ 778.104, the Court will follow the clear language of the regulation.
15
showing that plaintiffs’ regular rate of pay was above one and one-half times the
minimum wage”). The Court is not required either to make Plaintiffs’ undeveloped
legal arguments for them, see Northbound Group, Inc., v. Norvax, Inc., 5 F. Supp.3d
956, 973–74 (N.D. Ill. 2013), citing United States v. Hook, 471 F.3d 766, 775 (7th
Cir. 2006), or sift through the record to ferret out the evidence that may exist to
support those arguments, see Roeder, 2017 WL 151401, at *32 (rejecting plaintiffs’
attempt to avoid summary judgment by arguing “that their weekly compensation
estimates do not account for chargebacks or unreimbursed business expenses,”
because they had “not pointed to any evidence that deducting those items would
reduce their rates of pay, as calculated on a weekly basis, below one and one-half
times the minimum wage”). Accordingly, there is no disputed issue of fact regarding
whether Plaintiffs were paid at least one and one half the minimum wage for weeks
in Defendants’ spreadsheets showing an average rate of pay of at least $10.88 per
hour.
3.
WAS MORE THAN HALF
COMMISSIONS?
OF
PLAINTIFFS’ PAY
Plaintiffs contend that technicians are piece-rate workers, while Defendants
argue they are employees paid by commission. The distinction is important because
“employees paid by commission are exempt from the FLSA’s overtime provision,
while employees paid on a piece-rate basis are not.” See Alvarado v. Corp. Cleaning
Serv., Inc., 2013 WL 6184044, at *6 (N.D. Ill. Nov. 18, 2013) (comparing 29 U.S.C.
§ 207(i), with 29 U.S.C. § 207(g)). In a piece-rate system, a worker is paid by the
item produced by him—a scarf, for example. In a commission system a worker is
16
paid by the sale—so if he works for a shoe store he is paid a specified amount per
pair of shoes that he sells. A scarf worker is paid for making scarves even if they
have not been sold, while the shoe salesman is paid only when he makes a sale.
Alvarado, 782 F.3d at 367. The FLSA defines neither “piece-rate” nor “commission.”
Commission based compensation systems are properly exempt from the
FLSA because the exemption ensures employees are not paid more through
overtime pay when they have not actually worked more hours over the course of the
year than an average employee. The Seventh Circuit explained the rationale of the
exemption in Alvarado:
Suppose the hourly wage in two separate businesses is an
identical $15. In one business the work is steady and the
worker works 2000 hours a year ($15 per hour x 40 hours
x 50 weeks = $30,000). There is no overtime, so no
requirement of time and a half pay ($22.50) per overtime
hour. In the other business the worker also works 2000
hours a year, but he does no work at all for 10 weeks of
the year and in the remaining 40 weeks (we’re assuming
that both workers take a two-week unpaid vacation) he
works 50 hours a week. Were he entitled to overtime for
10 hours each week for the 40 weeks he works, his total
wages for the year would be $15 per hour x 40 hours (=
$600) + $22.50 x 10 hours (= $225), a total of $825 a week,
which times 40 weeks equals $33,000. In this example,
both workers work the same number of hours a year, at
the same job, but the one who works irregular hours is
paid 10 percent more. That doesn’t make any sense. The
anomaly, which we said in Yi is “the rationale for the
commission exemption from the FLSA’s overtime
provision,” Yi v. Sterling Collision Centers, Inc.,
supra, 480 F.3d at 508, is avoided by recognizing that the
second set of workers, corresponding to our window
washers, are commission workers and therefore have no
statutory entitlement to overtime pay.
17
Alvarado at 369. Thus, an employee working about 2,000 hours a year is working an
average amount and is not entitled to overtime pay—the equivalent of 40 hours a
week with two weeks of annual vacation—regardless of whether he spends a few
weeks in Mexico and works 70 hours a week the remainder of the year. See also Yi,
480 F.3d at 510. In Yi, the court found a commission system existed where an auto
body shop calculated the number of hours typically required to perform a given task
(“booked hours”) and multiplied that number by a dollar figure. A team of
mechanics would be assigned a task and each worker would keep track of their
actual hours spent on the assignment. Once the laborers completed the job, the auto
body shop calculated their compensation by multiplying (1) the number of booked
hours for the task by (2) the ratio of the team member’s actual hours worked to the
total hours worked by the team by (3) that employee’s wage rate, which was based
on his or her skill level. 480 F.3d at 509. In considering whether the auto
mechanics’ compensation scheme was a commission system, the Yi court found the
fact that compensation was based on efficiency important:
[T]he faster the team works, the more it earns per
number of hours, since its commission is based not on the
total number of hours it puts in on a job but on the
number of booked hours times each team member’s
[personal rate based on his or her skill level]. That is how
commissions work: they are decoupled from actual time
worked.
Id. The Yi court also found that a bona fide commission is one where “the relation
[between income and hours worked] is unlikely to be a regular one.” Id. at 508.
Likewise in Alvarado, upon receiving a window-washing order, the company
18
assigned “points” to the job based on its perceived difficulty. The company
compensated the window-washer by multiplying the number of points the washer
worked by an hourly rate specific to that worker. Alvarado, 782 F.3d at 367.
Accordingly, the faster a window-washer worked, the more points he could
accumulate and thus increase compensation for that pay period. The Seventh
Circuit stressed that the work involved irregular hours was an important
consideration in the determination of a commission system. Id. at 368.
Here too, Defendants assign a certain number of “points” to each job—
through the use of a rate sheet that determines how much the employee receives
per task. R. 123, Resp. to PSMF, ¶ 27. Plaintiffs receive a portion of the amount the
customer pays, usually between 40% to 60% of the customer’s costs. R. 128, Resp. to
DSAF, ¶ 30. On its face, the system looks identical to the systems in Yi and
Alvarado—Plaintiffs get paid the same amount regardless of whether the task takes
them one hour or seven. But Plaintiffs argue they were not paid on a commission
system because they were given no incentive to work efficiently because of two
practices unique to their employment. First, Plaintiffs were required to arrive at
customers’ residences within a promised block of time, leading to hours of
“downtime” each week. Second, Plaintiffs allege they were told to do work for
customers for free and had services that they had completed written off by
supervisors if they did not match the work orders given by Comcast. R. 126 at 9–10.
These practices led to Plaintiffs working well over the 2,000 hours prescribed by Yi
and Alvarado, in violation of the FLSA’s overtime purposes.
19
There is no bright-line rule to determine whether a compensation system is
commission based. Instead, the Seventh Circuit in Yi and Alvarado focused on a
number of factors. First, it noted that a bona fide commission is usually a
percentage or proportion of the ultimate price passed on to the consumer. See Yi,
480 F.3d at 508. Second, a bona fide commission is decoupled from actual time
worked, so that there is an incentive for the employee to work more efficiently and
effectively. Id. at 509. Third, the type of work is such that its “peculiar conditions”
do not lend the work to a standard eight-hour work day. Alvarado, 782 F.3d at 368.
Rather, the work is driven by customer demand and other circumstances outside
the employee’s control. Id. at 368 (for example, window washers cannot work in
certain weather conditions and residential building managers do not allow work to
be completed during times that would disturb residents). 10 Finally, the court in both
cases analyzed the purpose of the FLSA to ensure that the exemption did not
“render[] the statutory remedy ineffectual or easily evaded.” Yi at 508. The Court
analyzes each factor now.
1. PERCENTAGE-BASED PAYMENTS
Courts in other circuits, relying on the Seventh Circuit in Yi, have likewise
applied these factors. See Owopetu v. Nationwide CATV Auditing Servs., Inc., 2011
WL 883703, at *4 (D. Vt. Mar. 11, 2011) (“In practice, courts have generally
concluded that there are three components to a commission-based compensation
scheme: (1) the employee’s compensation must be tied to customer demand or the
quantity of sales; (2) the compensation plan must provide performance-based
incentives for the employee to increase his or her income; and (3) there must be
proportionality between the value of the goods or services sold, and the rate paid to
the employee.”) (internal citations to Yi and cases citing Yi omitted); see also
Johnson, 4 F. Supp. 3d at 442.
10
20
It is undisputed that Plaintiffs received a percentage of an amount paid by
Comcast for the work performed. R. 128, Resp. to DSAF, ¶ 30. 11 This points to a
commission plan. Yi, 480 F.3d at 508. Even if work sheets were sometimes changed
to remove tasks that technicians in fact performed or if technicians were told to do
work for free to keep a customer, those are common practices of commission systems
that do not make a compensation structure necessarily piece-rate. In Alvarado, for
example, there was evidence that the employer made adjustments to the price of
services because of competition or a desire to keep good relations with customers.
Alvarado, 782 F.3d at 367. The court specifically noted that adjustments made to
the percentage of the price—such as adding the costs of permits and equipment
rentals, rounding the price to the nearest $25 increment, and reducing the price
because of competition or a desire to maintain good relations with customers—
caused the percentage of the price attributable to window washers’ compensation to
vary, but did not invalidate the compensation system as a commission system. Id. at
367–368. The overwhelming evidence suggests Plaintiffs were paid a percentage for
the work performed.
2. PERFORMANCE-BASED INCENTIVES
It is also undisputed that Plaintiffs were not paid based on hours worked, but
rather on the services performed. See R. 107, PSMF, ¶ 27 (“The technicians are paid
Plaintiffs’ contradictory earlier efforts to dispute that evidence, see R. 124,
Resp. to DSMF, ¶¶ 24, 26, are not supported by specific references to the record and
the Court should deem those statements admitted. However, because the Plaintiffs
admit the evidence in later pleadings, the Court relies on the undisputed
contentions in the cited paragraph.
11
21
based on the work they do at a customer site based on rate sheets that are provided
by Comcast. They are not actually paid per hour.”); R. 123, Resp. to PSMF, ¶ 27
(“Defendants admit [Plaintiffs] are paid based on the work they do at a customer
site based on incentive rates associated with each item of work and Plaintiffs were
not actually paid per hour.”).
But the parties have differing views on whether Plaintiffs were incentivized
to work faster and more efficiently. For example, Defendants allege Plaintiffs had
the ability to perform custom and additional work for customers, which resulted in
more work and pay. See R. 105, DSMF, ¶ 23 (“Installation Technicians, including
Plaintiffs, could (and did) offer and arrange to provide additional products and
services to customers while onsite at the customer location.”). Plaintiffs dispute
these assertions, arguing instead that they were not permitted to upsell products
and that if they did, the billing office would change the billing sheet to the original
order so that the technician did not receive additional pay for additional work. See
R. 124, Resp. to DSMF, ¶ 23; R. 128, Resp. to DSAF, ¶ 32.
Both sides cite to PirTano’s office manager’s testimony in support, but that
testimony is unclear. See R. 105-23, Pocasangre Dep. at 7:7–10 (the responsible
PirTano manager compared the technician’s worksheets with “a report Comcast
provides to us”); id., Pocasangre Dep. at 12:16–24 (“Q. . . . How do you know when to
circle something and how do you know when to cross something out? A. Through the
information provided from Comcast. For every job, they will give us a list of what
should be — what was done at that house basically. And so I take this sheet and
22
look at that and match it up with what Comcast said, and then that’s how I
appropriately bill it.”) (emphasis added). Defendants also cite the testimony of
Plaintiffs’ supervisor, Brian Mortensen, but his testimony is also unclear. See
R.105-22, Mortensen Dep. at 32:8–16 (“Q. When you got billing sheets then at the
end of the day, how was Comcast billed for the work that was done? A. Comcast
isn’t really billed for the work that’s done until the technician closed out the job. If
the job is billed and says he ran five outlets, if that’s what Comcast’s billing system
reflects, then that’s essentially what we get paid and I would transfer that to the
technician.”). Despite this ambiguity, however, Pocasangre admitted that, if the
technician lists a task as having been done that was not part of Comcast’s work
order, the manager crosses the item out, and the technician does not get paid for it.
R 123, Resp. to PSMF, ¶ 28. Defendants admit Plaintiff Weichmann testified that
occasionally numbers were changed on billing sheets and gave the example of
changing the number of outlets installed from three to two. R. 123, Resp. to PSMF,
¶ 28.
Plaintiffs also argue that there were “[m]any weeks” when they “had 10 to 15
hours down time where [they] [were] required to sit and wait in a customer’s
driveway because the customer was not home when [they] arrived to do the job.
There were also instances where [they] finished a job and the next one didn’t start
for several hours so [they] [were] told to sit in the truck and wait for the next job.”
R. 107-35, ¶ 15; see also R. 107-36, ¶ 15; R. 107-37, ¶ 15; R. 105-2, Weichmann Dep.
at 79–81. They were not paid for these periods of downtime.
23
Defendants do not dispute that Plaintiffs had periods of downtime, and
instead argue Plaintiffs could pick up additional assignments or go home. See R.
105, DSMF, ¶ 22 (“During these down periods Plaintiffs could spend the time as
desired, including seeking out other assignments, going home, running errands or
just sitting in the truck doing as they wished, such as playing on the phone, or
talking with other Technicians.”); R. 125, DSAF, ¶ 31 (“Technicians that completed
work early could be assigned additional work or had the opportunity to assist other
Technicians running behind to receive additional pay.”). But Plaintiffs present
evidence that picking up additional tasks in those periods of downtime was often
impractical. R. 107-14, Weichmann Dep. at 78:3–9 (“Q. And you are saying that’s
rare? A. To be done at 2:00, yes. Q. Well, I’m not seeing the harm in having the 5:00
to 7:00. You already are going to be picking up other work? A. I don’t think I’m
going to be picking up other work in between there.”). Plaintiff Weichmann also
testified he was prohibited from going home because he had a company truck. R.
107-14, Weichmann Dep. at 79:14–20 (“No. You had a company truck and their gas.
You weren’t supposed to, you know, just drive around. You couldn’t go home and
come back out, unless you called for permission, and you were by your house, but
that was very rare that I would be by my house. So it was down, dead time,
sitting.”). Finally, Plaintiff Weichmann testified he often experienced periods of
downtime because no other technicians were available to pick up later shifts—when
he asked his supervisors to remove a later shift off his route (causing a long break),
24
his supervisors would often tell him there was no one else out there so he had to
stay on. R. 107-14, Weichmann Dep. at 80:3–14.
It is true that courts have found commission based systems exist with similar
compensation structures paid to cable installers. However, in those cases, there was
no dispute that the compensation scheme incentivized employees to work faster. In
Johnson, 4 F. Supp. 3d 423, for instance, the technicians could “contact Wave Comm
and request additional work orders” when they finished their normal work
assignments, thereby earning more money. Id. at 443. In Moore v. Advanced Cable
Contractors, Inc., 2013 WL 3991966 (N.D.Ga. Aug. 1, 2013), the technicianplaintiffs’ “own deposition testimony state[d] that there were ample opportunities
for technicians to get additional work if they completed their scheduled
appointments ahead of time.” Id. at *5. Technicians were even “paid extra if they
sold customers upgraded service packages or hardware not on their scheduled workorders.” Id. See also Jones, 2013 WL 6072966 at *1–2 (technicians could pick up
additional jobs during the day by entering “available” on their PDAs and could sell
Charter products and service, a contracted amount of which would be paid directly
to them); Owopetu v. Nationwide CATV Auditing Services, Inc., 2011 WL 883703 at
*5 (D. Vt., March 11, 2011) (undisputed that the faster a technician completed one
work order, the sooner he could complete the next one and earn forty-five percent of
the rate). But here there is no undisputed evidence that Plaintiffs “had the
opportunity to earn additional income by working faster and completing more
25
tasks,” Johnson at 443, or that technicians had the “opportunity to pick up
additional jobs during the day.” Jones, 2013 WL 6072966 at *10.
There is thus a genuine issue of material fact as to whether Plaintiffs were
given performance-based incentives that actually decoupled hours worked from
wages. As a result, Defendants have not met their burden in showing this factor.
3. IRREGULAR HOURS
The Alvarado court found the existence of irregular hours to be the most
telling aspect of a commission based system. Alvarado, 782 F.3d at 368. The
Seventh Circuit there noted that the hours were so irregular for the window
washers that most would spend the winter in Mexico because work was sparse, but
would work enough hours to make up that time in non-winter months to average
2,000 hours a year.
Here, there is no genuine dispute that Plaintiffs worked irregular hours
based on customer demand. See R. 123, Resp. to PSMF, ¶ 23 (admitting number of
stops or jobs Plaintiffs did in a given day depended on the workload); ¶ 36
(admitting hours fluctuated day to day and that Plaintiffs often worked into the
evening hours); R. 124, Resp. to DSMF, ¶ 20 (admitting Plaintiffs did not work
standard shifts and their end time for the day varied). Defendants have met their
burden on this factor.
4. PURPOSE OF THE FLSA
But the Court’s inquiry cannot stop there, because the irregular hours
Plaintiffs endured do not mimic the irregular hours found to be appropriate of an
26
overtime exemption in Alvarado and Yi. The Seventh Circuit in those cases
emphasized the drastic irregularity of hours usually endured by commission based
employees, but in both cases the workers’ annualized hours amounted to a normal
year—approximately 2,000 hours. 12 Here, however, the undisputed evidence showed
irregular hours, but also constant and steady work—Plaintiff Weichmann testified
there were some busy seasons, but that the work was generally steady. R. 105-2,
Weichmann Dep. at 49:1–5 (“Q. Was there a busy season when you worked at
PirTano? A. Some busier than others. It was generally busy. College, you know,
starting would be a busy season, things of that nature.”).
What further differentiates this case from Yi and Alvarado is the number of
hours worked by Plaintiffs. Defendants presented evidence that Plaintiffs worked
well in excess of 2,000 hours a year. See R. 125, DSAF, ¶ 3 (Plaintiff Weichmann
worked 2,470 and 2,429 hours in 2010 and 2011, respectively); ¶ 5 (Plaintiff Zervas
worked 2,345 and 2,637 hours in 2010 and 2011, respectively); ¶ 8 (Plaintiff Popp
worked 2,204 and 2,502 hours in 2010 and 2011, respectively); ¶ 10 (Plaintiff Panico
See also, Yi, 480 F.3d at 508 (“The essence of a commission is that it bases
compensation on sales, for example a percentage of the sales price, as when a real
estate broker receives as his compensation a percentage of the price at which the
property he brokers is sold. Although his income is likely to be influenced by the
number of hours a week that he works, the relation is unlikely to be a regular one.
In one week business may be slow; he may make no sales and thus have no income
for that week. The next week business may pick up and by working overtime that
week he may be able to make up the income he lost because of slack business the
previous week. Over a year his hours of work may be similar to those of regular
hourly employees. So if he had to be paid overtime, his annual income would be
higher than theirs even though he hadn’t worked more hours over the course of the
year than they had. We take this to be the rationale for the commission exemption
from the FLSA’s overtime provision.”).
12
27
worked 2,436 hours in 2011); ¶ 14 (Plaintiff Weber worked 2,585 hours in 2011); ¶
16 (Plaintiff Campos worked 2,898 hours in 2012). This leads the Court to question
whether the compensation structure used by Defendants furthers the purpose of the
FLSA regarding the overtime pay requirements.
The FLSA has three primary purposes—to spread work to reduce
unemployment, to discourage (by increasing the cost to the employer) a degree of
overtime that might impair workers’ health or safety, and to increase the welfare of
low-paid workers. Yi, 480 F.3d at 510; Alvarado, 782 F.3d at 371. In Alvarado, the
court found that overtime pay would not further the purpose of spreading work to
reduce unemployment because the plaintiffs there had not shown that they were
working more than 2,000 hours on average. Alvarado at 371. Here, however, the
evidence indicates the Plaintiffs were working well in excess of the 2,000 hour
benchmark. But even the extreme amount of hours Plaintiffs worked can be
ameliorated if the system was truly a commission based system that incentivized
Plaintiffs to work more efficiently. That Defendants had an abundance of work does
not affect whether the system is commission based. See Alvarado, 2013 WL
6184044, at *7. If the system was not commission based, however, then the purpose
of the FLSA would not be met by granting Defendants the exemption. 13 In that
The remaining purposes of the FLSA are not implicated here. There was no
evidence presented that the amount of hours worked by Plaintiffs was causing
workplace injuries due to fatigue, nor does common sense indicate there would be
injuries—installing cable lines inside of consumers’ homes is far less dangerous
than window washing. Finally, Plaintiffs are not low-wage workers—their yearly
income ranged between $38,272 and $55,273. R. 105, DSMF, ¶ 31; see Alvarado at
13
28
case, employees would be better served by either overtime pay or Defendants hiring
additional employees. The jury’s determination of whether the structure provided
incentives to employees to work more efficiently will thus answer whether the
system was in fact commission based and whether the purposes of the FLSA are
furthered through the exemption.
Because there is a genuine dispute of material fact as to whether the
compensation structure incentivized Plaintiffs to work more efficiently, and thus it
is disputed whether the system was commission based, Defendants’ summary
judgment motion on the Section 7(i) exemption is denied.
B. FLSA STATUTE OF LIMITATIONS
Defendants next argue that the applicable statute of limitations under the
FLSA is two years because Plaintiffs cannot show any willful violations. “[T]he
statute of limitations for FLSA violations is two years unless the violation was
willful, in which case the limitations period is three years.” Howard v. City of
Springfield, Ill., 274 F.3d 1141, 1144 (7th Cir. 2001) (citing 29 U.S.C. § 255(a)). “The
plaintiff bears the burden of establishing willfulness for purposes of the statute of
limitations.” Caraballo v. City of Chicago, 969 F. Supp. 2d 1008, 1024 (N.D. Ill.
2013). “[A]n employer’s mere negligence or a good faith—but incorrect—belief that
they were in compliance with the FLSA, are not sufficient to rise to the level of a
willful violation.” Difilippo v. Barclays Capital, Inc., 552 F. Supp. 2d 417, 425
(S.D.N.Y. 2008). “Furthermore, an employer has not willfully violated the FLSA if it
371 (noting the annual pay of the window washers was between $40,000 and
$60,000).
29
acts reasonably in determining its legal obligation.” Pignataro v. Port Authority of
N.Y. and N.J., 593 F.3d 265, 273 (3d Cir. 2010) (citing McLaughlin v. Richland
Shoe Co., 486 U.S. 128, 135 n. 13 (1988)). To establish willfulness, Plaintiffs must
show that Defendants “either knew [they were] violating the Act or [were]
indifferent to whether [they were] violating it or not (and therefore “reckless”).’”
Caraballo, 969 F. Supp. 2d at 1024–25 (quoting E.E.O.C. v. Madison Cmty. Unit
School Dist. No. 12, 818 F.2d 577, 585 (7th Cir. 1987)); see also McLaughlin v.
Richland Shoe Co., 486 U.S. 128, 133 (1988) (violations under the FLSA are willful
if the employer “knew or showed reckless disregard for the matter of whether its
conduct was prohibited by the statute”).
Although whether an employer has acted willfully is a question of fact,
Plaintiffs must present sufficient evidence of willfulness to survive summary
judgment. Pignataro, 593 F.3d at 273 (affirming district court’s summary judgment
finding that employer’s violation of the FLSA was not willful). Defendants argue
that Plaintiffs cannot present any evidence of willfulness. Plaintiffs, on the other
hand, cite to evidence showing that PirTano and Installation Professionals were
investigated by the U.S. Department of Labor. While Defendants argue the
investigation and its results are irrelevant, R. 123, Resp. to PSMF, ¶¶ 46–50, the
Court cannot make that determination on summary judgment. The documents cited
by Plaintiffs support their argument that the investigation disclosed that
Defendants’ employees were subject to the requirements of the FLSA, that
Defendants were informed of past violations of the FLSA, and that Defendants
30
“agreed to comply fully with all the provisions of the FLSA in the future.” Id. This
evidence thus appears to be relevant to and probative of the willfulness question.
See, e.g., Chao v. A-One Med. Servs., Inc., 346 F.3d 908, 919 (9th Cir. 2003) (“The
fact that A-One previously had run-ins with the Labor Department certainly put AOne and Black on notice of other potential FLSA requirements.”). Nor can the Court
find for Plaintiffs on the issue. They argue the fact of the investigation alone is
sufficient to find willfulness based on Donovan v. Sabine Irrigation Co., 695 F.2d
190 (5th Cir. 1983). But Donovan relied on a Fifth Circuit standard of willfulness
that was later rejected by McLaughlin, 486 U.S. at 133 (rejecting a standard for
willfulness that only requires a plaintiff to show the defendant knew the FLSA “was
in the picture”), and thus is insufficient to find for Plaintiffs. Defendants’ summary
judgment motion as to whether the two-year statute of limitations applies is denied.
C. PLAINTIFFS’ SUMMARY JUDGMENT MOTION
Because the Court held that a reasonable jury could find that Defendants are
not entitled to the overtime exemption, Plaintiffs’ claim for overtime wages is still
alive. Plaintiffs seek summary judgment that they have proven the elements of
their claim (although final judgment will have to await a jury decision on the
exemption question). To prevail on their FLSA claim, Plaintiffs must prove that: (1)
they worked overtime without compensation; and (2) their employer knew or should
have known of the overtime work. See Kellar v. Summit Seating, Inc., 664 F.3d 169,
173, 177 (7th Cir. 2011); see also 820 ILCS 105/4a (“[N]o employer shall employ any
of his employees for a workweek of more than 40 hours unless such employee
31
receives compensation for his employment in excess of the hours above specified at a
rate not less than 1 1/2 times the regular rate at which he is employed.”).
1. HOURS AND WAGES
The crux of Plaintiffs’ argument is that Defendants failed to pay Plaintiffs for
certain time periods worked—including for 6:30am early start times, unused lunch
breaks, and downtime between jobs—under the guise of paying them under a
commission based system. Accordingly, if a jury finds that the compensation system
at issue was commission based, Plaintiffs’ exact hours worked are irrelevant
because Plaintiffs have conceded that they were paid at least the hourly wage
required to meet the Section 7(i) exemption. See Section I.A.2. If a jury does not find
the system was commission based, however, then Plaintiffs were entitled to be paid
an hourly wage and overtime pay for any weeks worked in excess of 40 hours. 14
Determining whether Plaintiffs worked over 40 hours in each given week
should be a relatively easy task. However, Plaintiffs argue that Defendants failed to
maintain records of Plaintiffs’ lunch breaks and downtime, R. 118 at 7, and thus
they should be allowed to submit documentation as to their correct hours worked, or
in the absence of documentation, rely on their own recollection. See R. 118 at 6. But
Plaintiffs present no evidence that Defendants failed to maintain accurate records.
Instead, Defendants presented evidence that although they did not keep exact
physical paystubs, they maintained the information used to generate those
The Court will reserve determination of the correct hourly wage and
overtime payment until after a jury has decided whether Defendants are entitled to
rely on the Section 7(i) exemption and the correct amount of hours worked by
Plaintiffs each week.
14
32
paystubs through spreadsheets created weekly in the regular course of business. R.
105-1, Horn Dep. at 56:21–24, 57:1–2; R. 105-3, Stahulak Decl. at ¶¶ 6, 13. In fact,
the spreadsheets are based on information provided by Plaintiffs—Plaintiffs filled
out daily worksheets to identify all products and services completed for the day and
the total hours worked each day. R. 105, DSMF, ¶ 27. The daily worksheets
included their start and stop time for the day. R. 124, Resp. to DSMF, ¶ 29; R. 107,
PSMF, ¶ 41. The hours worked were reflected on Plaintiffs’ paystubs. But the hours
did not affect their pay, because—at least according to Defendants—they were paid
through a commission system. R. 124, Resp. to DSMF, ¶ 24, 29. Accordingly,
Defendants generally maintained accurate hourly information, and the Court will
rely on those billing sheets for the start and end times of Plaintiffs’ hours
calculation. As to the remaining time, Plaintiffs allege Defendants did not keep
track of early start times, unused lunch breaks, and downtime. 15 The Court will
address each time period individually.
First, there is a genuine dispute of fact as to whether the billing sheets
reflected accurate start times. 16 In Plaintiffs’ Statement of Material Facts, Plaintiffs
Plaintiffs make a passing argument that the early start times and the
downtime was compensable as “integral” to Plaintiffs’ principal activities. R. 118 at
7. Defendants do not address this argument, and instead argue that Plaintiffs were
not paid hourly but rather under a commission system compliant with the Section
7(i) exemption. See R. 122 at 12. The Court will assume that the time periods
Plaintiffs address will be included in any hours calculations as time worked if
Defendants are not entitled to the exemption, and a jury finds they were improperly
excluded from the billing sheets.
15
Plaintiffs generally rely on the billing sheets produced by Defendants, but
include an hour and a half to each day in their hours calculations. See R. 107-39,
107-40, Pl. Exs. MM and NN. Although adding this time to each day is likely very
16
33
offer declarations of each of the Plaintiffs for the proposition that their supervisors
told them to write a start time of 7:00am rather than 6:30am on their billing sheets.
See R. 107, PSMF, ¶ 19. But those declarations are directly contradicted by Plaintiff
Weichmann’s deposition testimony—Plaintiff Weichmann indicated the start time
was always 6:30am, but that occasionally he was late, so he would change his start
time to 7:00am. R. 105-2, Weichmann Dep. at 66:4–14. Plaintiff Weichmann did not
testify that his supervisors changed his start time on the billing sheets or told him
to change his start time. See generally, id. Plaintiffs’ supervisor, Brian Mortensen,
also testified that Plaintiffs either had a 6:30am start time or a 7:00am start time,
and either would be reflected on the daily time sheets. See R. 105-22, Mortensen
Dep. at 68:16–69:10. Accordingly, it will be up to the jury to decide whether the
billing sheets accurately reflected Plaintiffs’ start time.
Second, Plaintiffs argue that they consistently worked through their lunch
breaks but that those hours were not included in their daily time sheets. This is not
supported by the record. Plaintiffs offer no evidence to show that “one-half hour to
one hour of time was deducted from the technician’s daily billing sheet for lunch
breaks which they did not get or take, but worked through.” R. 118 at 8. Plaintiffs
do present evidence that they often worked through lunch, R. 105-2, Weichmann
Dep. at 22:19–21, and that “most often time was deducted” from their daily billing
sheets for lunches they did not get to take, R. 107-32, Campos Decl. at ¶ 12. But
Plaintiffs fail to present any evidence that these hours were deducted on a daily
generous to the Plaintiffs, the Court finds there is a dispute of fact as to the amount
of time that should be added.
34
basis or that they worked through lunch on a daily basis. And, the record evidence
shows that Plaintiffs did not consistently work through lunch—Plaintiffs admit
there were weeks that they had “10 to 15 hours down time” in which “they were
required to sit and wait in a customer’s driveway” or they were told “to sit in the
truck and wait for the next job.” R. 107, PSMF, ¶ 107. Surely Plaintiffs found time
to take a lunch break during these periods. Even if there were days when Plaintiffs
worked through their lunch breaks, the evidence does not support adding an hour of
time worked to each day. The jury will need to determine whether lunch hours were
excluded from the hourly information provided by Plaintiffs and if they were, the
approximate amount of days that Plaintiffs’ unused lunch breaks were incorrectly
deducted from their daily billing sheets.
Finally, Plaintiffs argue they were not paid for their downtime between jobs.
But Plaintiffs admit that start and end stop times for each day were included in the
daily worksheets. R. 123, Resp. to PSMF, ¶ 42. Any downtime would have fallen
within those start and stop times. Accordingly, these hours will already be included
in any overtime calculation based on the daily billing sheets.
Plaintiffs’ summary judgment motion asking the Court to find that they
should have been paid hourly and that there is no genuine dispute that the above
time periods were not included in hours calculations is denied.
2. JOINT EMPLOYMENT
The FLSA mandates that to maintain a claim for overtime compensation, an
employer-employee relationship must exist. Ash v. Anderson Merchandisers, LLC,
35
799 F.3d 957, 961–62 (8th Cir. 2015). An “[e]mployer” includes “any person acting
directly or indirectly in the interest of an employer in relation to an employee.” 29
U.S.C. § 203(d). “A single individual may stand in relation of an employee to two or
more employers at the same time under the [FLSA] . . . since there is nothing in the
act which prevents an individual employed by one employer from also entering into
an employment relationship with a different employer.” 29 C.F.R. § 791.2(a). If the
facts show that an employee is jointly employed, then his work for the entire
workweek is considered as one employment under the FLSA. Id. “In this event, all
joint employers are responsible, both individually and jointly, for compliance with
the applicable provisions of the [FLSA], including overtime provisions, with respect
to the entire employment for the particular workweek.” Id.
Plaintiffs argue they are entitled to summary judgment on the issue that
they were employed jointly by Defendants and that Defendants are thus jointly and
severally liable for Plaintiffs’ damages. 17 For Plaintiffs’ argument to succeed, the
Court must determine that the only reasonable conclusion to be drawn from the
undisputed evidence is that these defendants are joint employers. “The jointemployment analysis turns—as does any assessment of a putative employment
relationship—on the totality of the circumstances, with a particular focus on the
control exercised by the alleged employer over a person’s working conditions.”
Plaintiffs argue all Defendants except Mike Moreau are their joint
employers. Plaintiffs point to no evidence in their summary judgment briefings that
the individual Defendants Piraino, Pantano, and Horn are their joint employers,
but the Court will address the argument as if made to all Defendants. It is unclear
to the Court what liability Moreau faces—or how he even belongs in the case—
without an argument that he is a joint employer.
17
36
Bridge v. New Holland Logansport, Inc., 815 F.3d 356, 363 (7th Cir. 2016); see
Moldenhauer v. Tazewell-Pekin Consol. Commc’ns Ctr., 536 F.3d 640, 644 (7th Cir.
2008) (“For a joint-employer relationship to exist, each alleged employer must
exercise control over the working conditions of the employee.”).
No simple or rigid test exists that allows a court to determine conclusively
when such control is present in any given case. Flecha v. Metal Sys., LLC, 2017 WL
4621634, at *3 (W.D. Wis. Oct. 16, 2017). But in Moldenhauer, 536 F.3d at 644, the
Seventh Circuit identified several relevant factors to consider in assessing an
alleged employer’s level of control over a worker for purposes of the FLSA, including
whether the purported employer (1) had the power to hire and fire employees;
(2) supervised and controlled employee work schedules or conditions of payments;
(3) determined the rate and method of payment; and (4) maintained employment
records. Although the Moldenhauer court cautioned against a view that “these are
the only relevant factors, or even the most important,” it suggested them as a
helpful guide in applying an otherwise nebulous standard for employer “control.” Id.
Neither party has attempted to present argument or evidence regarding the
relevant factors for deciding the control issue. Instead, both parties rely primarily
on the conclusory assertion that PirTano either was or was not Plaintiffs’ joint
employer. 18 Indeed, Defendants assert that they do not understand the relevance of
Plaintiffs’ joint employer argument. See R. 122 at 16 (“Defendants are not clear
Defendants cite to Horn testimony, R. 123, ¶ 18, which contains only a bare
denial. R. 102-1, Horn Dep. at 11:19–23 (“Q. By whom were they employed? A.
Installations Professionals. Q. Did they have any employment relationship with
PirTano Construction? A. No.”).
18
37
about the relevance of the argument with respect to Plaintiffs’ Motion for Summary
Judgment. Even if Plaintiffs are correct regarding joint employer status, it does not
impact the amount of unpaid wages, if any, Plaintiffs could receive.”). Of course, a
finding that PirTano is a joint employer would establish a basis for Plaintiffs’
recovery directly against PirTano, as opposed to recovery only through Installation
Professionals. Defendants appear not to be concerned with the prospect of joint and
several liability, repeatedly pointing out that Plaintiffs in all events would be
limited to a single recovery. It would seem by this indifference that PirTano views
itself as indistinguishable from Installation Professionals, which tends to support
Plaintiffs’ argument. But the Court cannot say that Defendants have waived any
defense they might otherwise raise to joint employer status. The only question,
therefore, is whether Plaintiffs are entitled to summary judgment in their favor on
the issue. See Fed. R. Civ. P. 56 (a) (a party may move for summary judgment on a
claim or defense, or any part of a claim or defense). Plaintiffs cite to evidence that
shows only that the PirTano name frequently was associated with Plaintiffs’
employment. See, e.g., R. 107, PSMF, ¶ 13 (PirTano leases the vehicles the
technicians drive and various paperwork sometimes referred to the technician’s
employer as PirTano); R. 105-1, Horn Dep. at 95:18–20 (testifying that installation
technicians were assigned a “PirTano tech number”). To the extent that these facts
have any relevance to the joint employer issue, they are insufficient to establish
joint employment exists as a matter of law.
38
Plaintiffs’ sole argument appears to be that “[t]he interchangeability of the
two companies renders them both employers of Plaintiffs.” R. 118 at 4. But this is
not the test. Instead, the test turns on the issue of control as shown by the factors
cited by the Seventh Circuit in Moldenhauer. Plaintiffs’ failure to make any legal
argument regarding these factors with citation to appropriate evidence in the record
precludes the Court from granting summary judgment in their favor on this issue.
Accordingly, the joint employer issue will be reserved for trial.
3. DAMAGES AND ATTORNEY’S FEES
Finally, Plaintiffs argue they are entitled to liquidated damages—or
alternatively prejudgment interest—because “Defendant Jack Horn knew he was
violating the [FLSA]” and attorney’s fees. R. 107 at 14–15. As discussed earlier in
this opinion, whether Defendants violated the FLSA and whether that violation was
willful is to be determined by the jury. Damages, if necessary, will be addressed
after those findings have been made.
II.
IWPCA (COUNT I) AND USERRA (COUNT IV)
The Court next turns to Defendants’ summary judgment motion on Plaintiffs’
remaining claims—those based on the Illinois Wage Payment and Collection Act
and the Uniformed Services Employment and Reemployment Rights Act.
A. IWPCA
In Count I, Plaintiffs allege Defendants violated the IWPCA by improperly
deducting wages from Plaintiffs’ pay. R. 46, Am. Compl. ¶ 65. 19 Defendants argue
Plaintiffs also allege that Defendants violated the IWPCA because they
failed to compensate Plaintiffs for the actual time they worked each week. R. 46,
19
39
Plaintiffs’ deduction claim fails as a matter of law because Plaintiffs provided
written consent for each payroll deduction that was processed. Plaintiffs did not
respond to Defendants’ argument. Accordingly, they have abandoned their claim.
See Basta v. Am. Hotel Register Co., 872 F. Supp. 2d 694, 704 (N.D. Ill. 2012)
(granting summary judgment on counts not addressed in summary judgment
briefings). Regardless, the Court will also address the issue on the merits.
The IWPCA governs the payment of wages to employees and the deductions
that an employer can make from an employee’s paycheck. It provides in relevant
part that wage deductions are not permitted unless “made with the express consent
of the employee, given freely at the time the deduction is made.” 820 ILCS 115/9.
Defendants presented evidence that Plaintiffs were permitted to review all proposed
deductions, and sign authorization forms before deductions were processed. R. 105,
DSMF, ¶¶ 48–54. The record evidence also shows it was Defendants’ regular
practice to receive written consent from employees to make deductions. R. 124,
Resp. to DSMF, ¶ 54 (admitting it was Installation Professionals’ custom and
practice to require Plaintiffs to sign the written payroll deduction form and that
Plaintiffs signed off on the deduction requests). Plaintiffs do not dispute these facts,
and instead make an undeveloped response to Defendants’ Statement of Material
Facts that the authorizations were not freely given. See R. 124, Resp. to DSMF, ¶¶
50–52. But the evidence Plaintiffs cite indicates consent was not required and could
Am. Compl. ¶ 66. Although it is unclear whether this allegation is merely incidental
to the deduction violation, neither side addresses it on summary judgment. The
Court will not address nor rule on that issue here.
40
be freely given—Plaintiff Weichmann testified that individuals could, and did,
refuse to sign the forms. R. 105-2, Weichmann Dep. at 110:12–22. There is no
genuine dispute of fact that Plaintiffs provided written consent for each payroll
deduction that was to be processed in accordance with the IWPCA. Defendants’
summary judgment motion on the deduction claim is granted.
B. USERRA
Plaintiff Dyal is a member of the Army Reserves who took military leave for
trainings multiple times during the course of his employment. In Count IV,
Plaintiffs allege that Defendants fired him because of his participation in the Army
Reserves, and that his termination violated USERRA because it was made without
just cause after his return from military training duty. R. 46, Am. Compl., ¶¶ 106,
107.
USERRA provides employees in the military protection for up to 180 days
against discharge without cause if their most recent period of service was more than
30 days. 20 C.F.R. § 1002.247. Defendants present evidence that Plaintiff Dyal did
not serve in the military for a period exceeding 30 days in the 180 days prior to his
termination—evidence that Plaintiffs admit. R. 124, Resp. to DSMF, ¶ 62. Plaintiffs
also fail to present any evidence that Plaintiff Dyal was terminated because of his
participation in the Army Reserves, and instead admit he was terminated for
insubordination, R. 124, Resp. to DSMF, ¶ 56. Finally, as on the IWCPA claim,
Plaintiffs fail to address the issue in response to Defendants’ motion for summary
judgment. Defendants’ summary judgment motion is granted.
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CONCLUSION
For the foregoing reasons, the Court grants Defendants’ motion for summary
judgment (R. 103) on Counts I and IV, and denies Defendants’ motion for summary
judgment on the applicability of the Section 7(i) exemption relevant to Counts II
and III. Plaintiffs’ summary judgment motion (R. 106) is denied.
ENTERED:
Honorable Thomas M. Durkin
United States District Judge
Dated: March 27, 2018
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