McDonald et al v. Kellogg Company
Filing
290
MEMORANDUM AND ORDER denying 262 Plaintiffs' Motion for Summary Judgment; denying 266 Defendant's Motion for Summary Judgment. Signed by District Judge John W. Lungstrum on 12/13/2011. (ses)
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF KANSAS
Joseph L. McDonald, Mavis A.
McDonald and Lyndon Ellis,
Plaintiffs,
v.
Case No. 08-2473-JWL
Kellogg Company,
Defendant.
MEMORANDUM & ORDER
Plaintiffs, individually and on behalf of others similarly situated, filed this wage and hour
suit against defendant alleging violations of the overtime provisions of the Fair Labor Standards
Act (FLSA), 29 U.S.C. § 201 et seq. Specifically, plaintiffs, all current or former hourly
production employees at defendant’s bakery facility in Kansas City, Kansas, allege that
defendant failed to compensate them for time spent performing activities such as donning and
doffing required uniforms and gear; gathering required materials, tools and equipment; and postdonning and pre-doffing walking to and from work stations. The parties stipulated to conditional
certification and notice to the putative collective class–a class that now is comprised of
approximately 385 plaintiffs.
The parties also agreed to a bifurcated discovery process limiting the first stage of
discovery to issues relating to the applicability of section 203(o) of the FLSA and, if necessary,
a second-phase of merits-based discovery, including the issue of damages. After the close of the
first phase of discovery, the parties cross-moved for summary judgment on the applicability of
section 203(o). In a prior memorandum and order, this court held that section 203(o) barred
plaintiffs’ claims for compensation for time spent donning and doffing company-issued uniforms
and personal protective equipment. The court further held, however, that section 203(o) did not
preclude plaintiffs’ claims for compensation for “walking time” (and any other time within the
continuous workday) on the grounds that activities such as donning and doffing that are noncompensable by virtue of section 203(o) may nonetheless constitute principal activities for
purposes of the continuous workday rule. Thus, if plaintiffs were to demonstrate that their
donning and doffing activities constitute principal activities sufficient to start the continuous
workday, then they would be entitled to compensation for their post-donning and pre-doffing
time under the continuous workday rule subject to a determination of whether such time is de
minimis–an issue that defendant expressly reserved for the second-phase of discovery and
summary judgment briefing.1
The second phase of discovery has now closed and this matter is now before the court on
the parties’ motions for summary judgment. Both parties move for summary judgment on the
issue of whether defendant’s employees are permitted to change clothes at home (as urged by
1
In its memorandum and order, the court initially concluded that, as a matter of law,
plaintiffs’ donning and doffing activities are integral and indispensable to plaintiffs’ principal
work activities such that those donning and doffing activities triggered the continuous
workday rule. On defendant’s motion for reconsideration, the court vacated that portion of
its order on the grounds that the ruling was premature in light of the fact that the parties had
agreed to limit their initial summary judgment briefs to the applicability of section 203(o)
(although both parties’ briefs went beyond that issue).
2
defendant) or whether they are required to change clothes on the premises (as urged by
plaintiffs). Defendant contends that because its employees are not required to change clothes
on the premises and are free to change clothes at home, changing clothes cannot constitute a
principal activity sufficient to trigger the continuous workday rule (and, accordingly, plaintiffs’
walking time is non-compensable).
Plaintiffs argue that because the undisputed facts
demonstrate that defendant’s employees are not permitted to change clothes at home and are
required to change clothes on the premises, plaintiffs’ clothes-changing is a principal activity
sufficient to trigger the continuous workday rule such that plaintiffs’ walking time is
compensable.
Defendant also contends that they are entitled to summary judgment on all claims because
plaintiffs in the bakery only work 7 hours and 10 minutes per day (in light of two 25-minute paid
breaks that plaintiffs receive) such that, under the best case scenario for plaintiffs, plaintiffs’
walking time claims do not implicate the FLSA’s minimum wage or overtime provisions in any
respect. Finally, defendant moves for summary judgment on all claims on the grounds that the
amount of time at issue here is de minimis. Aside from defendant’s complete defenses to
liability, defendant moves for partial summary judgment on the grounds it has established a §
259(a) defense to liability for all violations occurring prior to June 16, 2010–the date when the
United States Department of Labor reversed prior Opinion Letters on which defendant alleges
it had relied in good faith in maintaining the pay practices challenged here. For these same
reasons, defendant contends that it acted at all times in good faith and did not knowingly or
3
recklessly violate the FLSA in determining how to compensate plaintiffs such that plaintiffs are
not entitled to recover liquidated damages and plaintiffs’ claims are subject to a two-year statute
of limitations.
Plaintiffs, in addition to issues outlined above, move for summary judgment on
defendant’s purported time-clock “rounding” policy which, plaintiffs assert, violates the FLSA
as a matter of law.
I.
Facts
Since 2001, defendant Kellogg Company has owned and operated a bakery facility in
Kansas City, Kansas. Prior to that time, the facility was owned and operated by the Keebler
Company. At all times pertinent to this lawsuit, hourly production employees at the bakery
facility have been represented by Local 184-L Retail, Wholesale & Department Store Union.
Named plaintiffs Joseph McDonald, Mavis McDonald and Lyndon Ellis are all hourly
production employees at the bakery facility in Kansas City, Kansas.
Hourly production employees at the facility are required to wear a company-issued
uniform consisting of a shirt, pants and shoes. The parties vigorously dispute whether employees
are permitted to change into and out of their uniforms at home or whether they are required to
change at the bakery. Additional facts relating to this issue are related below. In any event, while
certain employees, at least on occasion, have worn uniforms to and from work, it is undisputed
that the majority of employees change into their uniforms in the locker rooms at the facility,
4
where Kellogg maintains clean uniforms for its employees in each employee’s locker. In
addition to the company-issued uniform, all hourly production employees are required to wear
certain company-issued accessories, including hair nets, ear plugs and safety glasses. If
applicable, employees are also required to wear beard guards. Hair nets, ear plugs and beard
guards are maintained in dispensers just outside the locker rooms and just outside work areas so
that employees typically obtain these items after leaving the locker room while walking to their
work areas. Safety glasses are typically maintained in employees’ lockers. A handful of other
items are maintained in employees’ lockers but are not common to all employees, such as bump
caps and various tools used by employees in certain departments.
Prior to the start of each shift, hourly production employees are required to “clock in” at
his or her designated work area utilizing employee time clocks that are located outside each work
area. Employees, however, are not compensated beginning at the time they “clock in.” Rather,
defendant pays its hourly production employees on a “gang time” or “shift time” basis. Thus,
if the morning shift begins at 6:00a.m., then the employees working the morning shift are paid
beginning at 6:00am regardless of whether an individual employee clocked in at 5:52a.m. or 6:03
a.m. Thus, hourly production employees are not compensated for many activities that occur
prior to the start of their actual shift time, such as time spent changing into uniforms (which the
court has held is not compensable by virtue of section 203(o)); walking from the locker rooms
to the production floor; and obtaining tools maintained on the production floor.
At the end of the employees’ shifts, employees remove and return whatever gear and tools
5
they have obtained from their work areas and, as employees walk back to the locker rooms, they
place their ear plugs, hair nets and beard guards in bins designated for those soiled items. Once
the employees reach the locker rooms (assuming they change out of their uniforms at work), they
change out of their uniforms and leave their safety glasses and any other items (e.g., bump cap,
scraper) in their lockers. Again, because defendant pays its hourly production employees on a
“shift time” basis, these employees are not compensated for the time spent after the end of a
shift, including time spent returning tools obtained on the production floor; walking to the locker
rooms; as well as the legally non-compensable time for changing out of uniforms.
II.
Summary Judgment Standard
Summary judgment is appropriate if the moving party demonstrates that there is “no
genuine issue as to any material fact” and that it is “entitled to a judgment as a matter of law.”
Fed. R. Civ. P. 56(a).2 In applying this standard, the court views the evidence and make
inferences in the light most favorable to the non-movant. Kerber v. Qwest Group Life Ins. Plan,
647 F.3d 950, 959 (10th Cir. 2011). A dispute is genuine if “the evidence is such that a
reasonable jury could return a verdict for the nonmoving party” on the issue. Id. (quoting
2
The legal standard does not change if the parties file cross-motions for summary
judgment. Each party has the burden of establishing the lack of a genuine issue of material
fact and entitlement to judgment as a matter of law. Atlantic Richfield Co. v. Farm Cr. Bank,
226 F.3d 1138, 1148 (10th Cir.2000).
6
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). Although the court views the
evidence and draws reasonable inferences therefrom in the light most favorable to the
nonmoving party, “the nonmoving party must present more than a scintilla of evidence in favor
of his position.” Id. (quoting Ford v. Pryor, 552 F.3d 1174, 1177–78 (10th Cir. 2008)).
III.
Whether Clothes-Changing is a Principal Activity
As noted earlier, the court has previously held that section 203(o) barred plaintiffs’ claims
for compensation for time spent donning and doffing company-issued uniforms and personal
protective equipment. Nonetheless, plaintiffs’ donning and doffing activities remain highly
significant in this case because plaintiffs’ remaining claims for compensation hinge in large part
on whether plaintiffs can establish that their donning and doffing activities constitute principal
activities for purposes of the continuous workday rule. For if plaintiffs can demonstrate that
their donning and doffing activities constitute principal activities sufficient to start the
continuous workday, then they are entitled to compensation for their post-donning and predoffing time pursuant to the continuous workday rule (subject to a determination of whether such
time is de minimis).
Generally, the FLSA requires that employees be paid a minimum wage and paid at an
overtime rate for hours worked in excess of forty in a workweek. Salazar v. Butterball, LLC,
644 F.3d 1130, 1135 (10th Cir. 2011). The statute does not define “work” or “workweek,” and
the Supreme Court’s early FLSA decisions interpreted those terms broadly. Id. (citing IBP, Inc.
7
v. Alvarez, 546 U.S. 21, 25 (2005)). In Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680,
690–91 (1946), the Supreme Court held that the “workweek” included “all time during which
an employee is necessarily required to be on the employer’s premises, on duty or at a prescribed
workplace.” Id. In 1947, one year after the Mt. Clemens decision, Congress enacted the
Portal–to–Portal Act to shield employers from expansive judicial decisions that, in Congress’s
view, had interpreted the FLSA “in disregard of long-established customs, practices, and
contracts between employers and employees, thereby creating wholly unexpected liabilities.”
See id. (quoting 29 U.S.C. § 251(a)).
The Portal–to–Portal Act provides that employers cannot be liable under the FLSA for
failure to compensate time an employee spends performing activities that are preliminary or
postliminary to “the principal activity or activities which such employee is required to perform.”
29 U.S.C. § 254(a). The Supreme Court has interpreted this provision to mean that activities
performed prior or subsequent to a regular work shift are compensable if they are “an integral
and indispensable part of the principal activities for which covered workmen are employed.”
Salazar, 644 F.3d at 1135 (quoting Steiner v. Mitchell, 350 U.S. 247, 256 (1956)). Indeed, as
the Supreme Court has clarified, any activity that is integral and indispensable to a principal
activity is itself a principal activity under the Portal-to-Portal Act. Smith v. Aztec Well Serv. Co.,
462 F.3d 1274, 1287 (quoting IBP, 546 U.S. at 37). Thus, if donning and doffing is an integral
and indispensable activity, any post-donning and pre-doffing walking time (i.e., between locker
rooms and production areas) would be compensable under the Portal–to–Portal Act. Salazar,
8
644 F.3d at 1135 (citing IBP, 546 U.S. at 36).
Defendant asserts that plaintiffs’ donning and doffing activities as a matter of law cannot
constitute principal activities because defendant undisputedly permits its employees to don and
doff their uniforms at home. According to defendant, the fact that employees have the option
of changing at home means that their clothes-changing activities cannot be principal activities.
Plaintiffs, on the other hand, assert that the undisputed facts demonstrate that plaintiffs are
required to change clothes at the bakery, thus requiring the court to conclude that plaintiffs’
donning and doffing activities constitute principal activities sufficient to start the continuous
workday. As will be explained, genuine issues of material fact exist as to whether employees
may change clothes at home or whether they are required to change clothes at the bakery. Thus,
even assuming that the court agreed with the parties that this fact was dispositive of whether
plaintiffs’ donning and doffing activities constitute principal activities for purposes of the
continuous workday rule,3 the court, on this record, cannot decide whether plaintiffs’ clothes-
3
In support of its argument that permitting employees to change at home ensures that
such clothes changing is not a principal activity, defendant relies primarily on a May 31,
2006 advisory memorandum issued by the Department of Labor opining that changing into
required gear is not a principal activity if employees have the option of changing into that
gear at home. The same memo supports plaintiffs’ suggestion that clothes-changing is
necessarily a principal activity when the employer requires that clothes-changing take place
on the premises. Because it is not required to do so in analyzing the parties’ motions, the
court declines to decide at this juncture whether location in and of itself is the controlling
test. See Bamonte v. City of Mesa, 598 F.3d 1217 (9th Cir. 2010) (adopting bright-line
“location rule” that controls whether donning and doffing are principal activities). As will be
explained, however, the court believes that the location issue is an important consideration in
the principal activity analysis.
9
changing in the context of this case is a principal activity.
Defendant contends that the undisputed facts demonstrate that its employees have the
option of changing clothes at home and are free to do so at any time.4 The record does not
support this contention. Indeed, defendant’s own evidence suggests that defendant if not
requires then strongly encourages employees to change clothes on the premises. Mark LaFond,
defendant’s Human Resources Manager at the Kansas City, Kansas bakery since 2000 testified
that defendant’s “practice” is that “employees do not wear their uniforms home” although that
practice is not a “hard and fast policy.” The testimony of various employees submitted by
defendant further indicates that defendant’s practice was that employees should not change
clothes at home. Employee Akeela Williams testified that she “snuck” out wearing her uniform
on occasion, but stopped doing that after defendant held a staff meeting in which management
indicated that “people were going to get written up for wearing their uniforms home.” Employee
Susan Voyles testified that during the summer of 2010 or 2009 the guards stationed at the plant
entrance were stopping employees who were attempting to leave in their uniforms and were
advising those employees that they were not allowed to wear their uniforms outside the plant.
Employee Edward Dewayne Fry testified that he attended a work meeting in the last two years
4
The court notes that defendant has not endeavored to explain whether it means that
employees are wearing only the required shirt, pants and shoes to and from work or whether
it means to suggest that employees are also wearing required accessories to and from work as
well, such as bump caps, ear plugs, hair nets and safety glasses. Because they have not
explained what exactly its employees are wearing to and from work, it has not addressed
whether and to what extent any distinction is significant in the principal activity analysis.
10
during which management advised employees that they were not permitted to wear uniforms
home. Finally, employee George Brecht, an employee on the third shift, testified that at some
point during 2009 a member of management began writing down the names of third-shift
employees who were wearing their uniforms home and that he “took that seriously” and did not
wear his uniform home after that point. Based on this evidence alone, a reasonable jury could
conclude defendant does not permit its employees to change clothes at home and defendant’s
summary judgment motion must be denied.
In any event, plaintiffs’ evidence further demonstrates that summary judgment in favor
of defendant is not appropriate. In response to defendant’s motion and in support of their own
motion, plaintiffs have submitted an excerpt from defendant’s employee handbook (or, as
defendant calls it, defendant’s Employee Safety Handbook) which specifically states that
“Uniforms are provided to employees and must remain captive within the bakery. This means
uniforms will be kept on-premises and employees will change into uniforms upon arrival to work
and change out of uniforms when work is completed each day.” Defendant concedes that the
handbook in which this policy appears has been in use since 2009 but contends that, in reality,
there is no such policy. Plaintiffs have also submitted a document produced by defendant during
discovery that is dated November 23, 2010 and has as its subject “Good Manufacturing
Practices” for the Kansas City bakery. This document states “Company-approved and issued
clothing (e.g., smocks, uniforms, etc.) including footwear will not be worn outside the facility
grounds.” Again, defendant does not dispute that it issued this statement in November 2010, but
11
contends that in reality there is no such policy. It is undisputed, however, that there is no written
policy stating that employees are permitted to wear their uniforms home.
That having been said, a reasonable jury might also conclude that defendant does permit
its employees to change clothes at home and, for that reason, the court also denies plaintiffs’
motion for summary judgment. Significantly, there is no evidence that any employees have ever
been disciplined in any way for wearing uniforms to or from home. Defendant has also
produced evidence suggesting that, while it has not formally issued a policy that permits
employees to wear uniforms to and from home, it has attempted to “spread the word” that
employees are free to take their uniforms home. For example, Mary Thomas, defendant’s
Employee Relations Manager at the Kansas City bakery, testified that if employees ask her, she
tells them that they may wear their uniforms home and may wear their uniforms to work.
For the foregoing reasons, the record does not permit the court to conclude, as a matter
of law, that defendant does or does not permit its employees to change clothes at home. Thus,
even assuming that the court, as urged by defendant, agreed that clothes changing can never be
a principal activity when employees are permitted to change clothes at home, the court could not
conclude at this juncture that clothes changing in the context of this case is not a principal
activity. Similarly, even assuming that the court agreed, as urged by plaintiffs, that clothes
changing necessarily is a principal activity when employees are required to change clothes on
the premises, the court could not conclude that clothes changing here is a principal activity.
Nonetheless, the court is comfortable that whether employees are permitted to change
12
clothes at home or whether they are required to change clothes on the premises is an important
factor to be considered in the overall analysis of whether clothes changing is a principal activity.
See DeKeyser v. Thyssenkrupp Waupaca, Inc., 747 F. Supp.2d 1043, 1053-54 (E.D. Wis. 2010)
(collecting authorities regarding how location of donning and doffing affects compensability
analysis). For this reason, the court rejects the parties’ suggestions that the court–even if it finds
disputed factual issues on the nature of defendant’s uniform policy–can render a determination
on whether plaintiffs’ clothes changing is a principal activity. For if the jury concludes that
employees are permitted to don and doff at home, then that conclusion may well affect the
analysis of whether clothes changing is a principal activity. Similarly, if the jury concludes that
employees are not permitted to don and doff at home but are required to don and doff at the
plant, then that conclusion also bears on the principal activity analysis. Both motions, then, must
be denied on this issue. See id. at 1053-54 (denying motion for summary judgment on principal
activity issue where factual issues existed as to whether employer required employees to change
clothes on the premises or whether they were free to change at home).
IV.
Whether Plaintiffs “Worked” in Excess of 40 Hours for Purposes of the FLSA
Defendant also contends that they are entitled to summary judgment on all claims because
plaintiffs in the bakery only work 7 hours and 10 minutes per 8-hour shift (in light of two 25minute paid breaks that plaintiffs receive) and typically work 5 shifts per week such that, under
the best case scenario for plaintiffs, the amount of time at issue in this case does not implicate
13
the FLSA’s minimum wage or overtime provisions in any respect. According to defendant,
because plaintiffs are only performing 7 hours and 10 minutes of compensable work each day
(or 35 hours and 50 minutes of compensable work per work week), they would still be well
under the FLSA’s 40-hour threshold even considering the additional time at issue here
Plaintiffs contend in response that the fact that defendant has agreed in the collective
bargaining agreement to treat the 25-minute paid breaks as “time worked” for purposes of
calculating overtime within the Bakery is dispositive and requires that the paid breaks count
toward the 40-hour FLSA threshold (thereby eliminating the 50-minute “cushion” relied upon
by defendant). Defendant then criticizes plaintiff for not responding to the “substance” of
defendant’s argument (and for failing to come forward with evidence that plaintiffs actually
performed “work” for more than 40 hours each week) and accuses plaintiff of “mixing applies
and oranges” because, according to defendant, what the collective bargaining agreement
provides and what the FLSA requires are “two entirely separate matters.”
In fact, plaintiffs’ argument is supported by a regulation implemented by the Department
of Labor that appears to be directly on point and entirely ignored by defendant. Indeed, under
the pertinent regulations, the FLSA requires that when the parties have expressly agreed to treat
paid breaks as “hours worked,” then those hours must be included in wage and overtime
calculations for purposes of the FLSA:
In some cases an agreement provides for compensation for hours spent in
certain types of activities which would not be regarded as working time under the
Act if no compensation were provided. Preliminary and postliminary activities
and time spent in eating meals between working hours fall in this category. The
14
agreement of the parties to provide compensation for such hours may or may not
convert them into hours worked, depending on whether or not it appears from all
the pertinent facts that the parties have agreed to treat such time as hours worked.
. . . [T]he agreement of the parties will be respected, if reasonable.
(a) Parties have agreed to treat time as hours worked. Where the parties
have reasonably agreed to include as hours worked time devoted to activities of
the type described above, payments for such hours will not have the mathematical
effect of increasing or decreasing the regular rate of an employee if the hours are
compensated at the same rate as other working hours. The requirements of section
7(a) of the Act will be considered to be met where overtime compensation at one
and one-half times such rate is paid for the hours so compensated in the workweek
which are in excess of the statutory maximum.
29 C.F.R. § 778.320; Nelson v. Waste Management of Alameda County, Inc., 33 Fed. Appx. 273,
273 (9th Cir. 2002) (meal periods treated as hours worked must be included in wage and
overtime calculations under FLSA); see also Chavez v. City of Albuquerque, 13 WH Cases 2d
419 (D.N.M. 2008) (section 778.320 indicates that when an employer agrees to treat a lunch
break as “hours worked,” then the agreement will be respected and the hours will be treated as
hours worked under the FLSA; contrasting agreement to count as “hours worked” paid vacation
time and concluding that such an agreement will not bind an employer to count those hours
towards the statutory overtime threshold). Because defendant has not adequately addressed the
effect of its agreement to treat the 25-minute paid breaks as “hours worked,” it has not shown
that it is entitled to summary judgment on this issue.
V.
Defendant’s De Minimis Defense
Defendant maintains that the time plaintiffs spend walking to and from the time clock,
15
even if otherwise compensable, cannot be included in calculating hours worked in a week
because the amount of time spent walking “is so ‘insubstantial and insignificant’ that it ought
not to be included in the work week.” See Reich v. Monfort, Inc., 144 F.3d 1329, 1333 (10th Cir.
1998) (quoting Anderson v. Mount Clemens Pottery Co., 328 U.S. 680, 693 (1946)). As the
Circuit explained in Monfort, “a few seconds or minutes of work beyond the scheduled working
hours . . . may be disregarded. Split-second absurdities are not justified.. . . . It is only when an
employee is required to give up a substantial measure of his time and effort that compensable
working time is involved.” Id. (quoting Mount Clemens, 328 U.S. at 692). By way of
background, plaintiffs’ expert opines that the average time Bakery workers spend walking to and
from the time clock is 4 minutes and 47 seconds and the longest time a worker spends walking
to and from the time clock is 8 minutes and 8 seconds. In support of its motion for summary
judgment, then, defendant directs the court to numerous cases (notably, none from the Tenth
Circuit or even within the Tenth Circuit) essentially holding that “anything under 10 minutes is
de minimis as a matter of law.”
The motion is denied. As highlighted by plaintiffs in their response, the Tenth Circuit
has never adopted a bright-line “10 minute” rule and instead applies the test adopted by the Ninth
Circuit in Lindlow v. United States, 738 F.2d 1057 (9th Cir. 1984). See id. Under Lindlow, the
first step is to determine “the amount of daily time spent on the additional work.” Id. & n.1
(quoting Lindlow, 738 F.2d at 1062). Once the amount of daily time is determined, the court
looks to three factors to determine whether that time is de minimis: “(1) the practical
16
administrative difficulty of recording the additional time; (2) the size of the claim in the
aggregate; and (3) whether the claimants performed the work on a regular basis.” Id. at 1333-34
& n.1 (quoting Lindow, 738 F.2d at 1062-63). Here, the court need not address these three
factors because defendant has not shown for summary judgment purposes that it has accurately
calculated “the amount of daily time spent on the additional work” as required under the initial
step of Lindlow.
While defendant argues that plaintiffs spend between roughly 5 and 8 minutes each day
walking to and from the time clock, defendants do not address in any respect the additional
amount of time spent by plaintiffs during the work day on other activities that plaintiffs allege
are compensable activities. Specifically, defendant has not addressed whether and to what extent
it must include in its calculations the time plaintiffs spend after clocking in but before their “shift
time” or “gang time” pay starts during which they allegedly gather required tools and other
equipment for their specific job duties. Defendant does not compensate its workers for this time
and such time would not be included in the “walking time” measured by the parties’ experts.
Similarly, at the end of their paid shift time, defendant’s Bakery workers spend additional time
returning tools and equipment that they obtained prior to the start of their shifts but prior to the
time when they clock out. Workers are not compensated for this time and it also is not included
in the “walking time” measured by the parties’ experts. Significantly, even after plaintiffs
highlight this additional time in their response brief, defendant declined to address this additional
time in any respect in its reply brief. Defendant, then, has not shown that it is entitled to
17
summary judgment on the de minimis defense.
VI.
Defendant’s § 259(a) Defense
Defendant contends that it is entirely shielded from liability for plaintiffs’ claims (at least
through June 16, 2010) because it relied in good faith on DOL opinion letters in deciding not to
compensate its workers for donning, doffing and related walking time. Under the Portal to
Portal Act, “no employer shall be subject to liability or punishment . . . under the [FLSA] . . . if
he pleads and proves that the act or omission complained of was in good faith in conformity with
and in reliance on any written administrative regulation, order, ruling, approval or interpretation
of the [Administrator of the DOL’s Wage and Hour Division] . . . .” Archuleta v. Wal-Mart
Stores, Inc., 543 F.3d 1226, 1231 n.7 (10th Cir. 2008) (quoting 29 U.S.C. § 259(a)). Thus, to
show that it is entitled to be insulated from liability under 259, defendant must show that it acted
(1) in good faith; (2) in conformity with; and (3) in reliance on the DOL’s opinion letters. See
Alvarez v. IBP, Inc., 339 F.3d 894, 907 (9th Cir. 2003).5
According to defendant, it was named as a defendant in a February 2004 lawsuit
stemming from its pay practices at its Lancaster, Pennsylvania plant, including its failure to pay
plant employees for donning, doffing and related walking time. In light of that case, defendant
asked its in-house counsel, in February 2004, to provide advice as to the continuation of
5
The DOL considers its Opinion Letters to constitute “rulings” for purposes of §
259(a). See 29 C.F.R. §790.17(d).
18
defendant’s long-standing practice of not compensating employees for donning, doffing and
related walking time. Defendant’s counsel concluded that its pay practices were consistent with
§ 203(o) and that defendant need not change those practices. Once the lawsuit was dismissed
in March 2005, defendant’s in-house counsel met with defendant’s Director of Labor Relations
and again advised that its pay practices did not need to be changed. At that time, defendant’s
in-house counsel shared a copy of the June 6, 2002 DOL Opinion Letter which, in a shift from
its prior position narrowly interpreting “clothes” for purposes of § 203(o) to exclude personal
protective equipment (PPE), broadly interpreted “clothes” to include PPE. According to an
affidavit filed by defendant’s in-house counsel, he relied upon the 2002 Opinion Letter and his
earlier research to advise defendant in March 2005 that it need not change its pay practices.
Defendant next asserts simply that
in May 2007, the DOL Administrator issued another Opinion Letter. Apart from
declaring that employers ‘may continue to rely on the [June 6, 2002] letter for
practices outside states within the jurisdiction of the Ninth Circuit,’ the
Administrator explained that ‘activities covered by § 3(o) cannot be considered
principal activities and do not start the workday. Walking time after a § 3(o)
activity is therefore not compensable, unless it is preceded by a principal activity.’
Wage & Hour Div., U.S. Dep’t of Labor, Opinion Letter, 2007 WL 2066454, at
2 (May 14, 2007).
According to the affidavit of defendant’s in-house counsel, when the May 2007 Opinion Letter
was issued, a discussion ensued about whether defendant needed to revisit its pay practices and,
because the Opinion Letter was consistent with defendant’s practices, defendant again concluded
that it did not need to change its practices. Based on these facts, defendant contends that its
19
compensation practices have been “entirely consistent” with prior DOL pronouncements6 and
highlights that another district court has found that defendant relied in good faith on the May
2007 DOL Opinion Letter.
Defendant’s motion on this issue is denied because defendant’s evidence does not
demonstrate, as a matter of law, that defendant relied in good faith on the DOL Opinion Letters
in connection with implementing or maintaining the compensation practices at issue in this case.7
To begin, defendant’s argument ignores certain damages sought by plaintiffs in this case–for
time spent after “clocking in” but before the start of “gang time” or “shift time” pay. Plaintiffs
allege that during this time they are gathering required equipment or tools and otherwise
readying themselves to begin a shift. As noted by plaintiffs in the pretrial order, they seek to be
compensated for all time during the “continuous workday.” Nothing in the Opinion Letters
allegedly relied on by defendant touches on the issue of whether defendant should be
compensating its employees for the time spent by plaintiffs after clocking-in but before the start
of gang time pay and defendant does not address any analysis it may have undertaken concerning
whether to compensate employees for that time.
6
On June 16, 2010, the DOL issued an Opinion Letter changing its interpretation of
“clothes” under § 203(o) yet again, reverting back to its narrow interpretation that excludes
PPE from that definition and further concluding that clothes changing covered by § 203(o)
may be considered a principal activity for purposes of the continuous workday rule.
7
Because the court denies the motion on the merits, it declines to address plaintiff’s
alternative argument that the motion should be denied based on defendant’s failure to
disclose defendant’s in-house counsel as a witness until after the deadline for disclosing
witnesses had expired.
20
With respect to defendant’s decision not to compensate employees for donning, doffing
and related walking time, defendant’s evidence demonstrates that the 2002 and 2007 DOL
Opinion Letters supported the practices already firmly in place at defendant’s Kansas City plant.
But defendant’s evidence suggests that its in-house counsel did not review the 2002 Opinion
Letter himself or with anyone in management until 2005, long after the 2004 decision was made
to continue defendant’s long-standing pay practices. Thus, while the 2002 Opinion Letter may
have reinforced defendant’s earlier decision to continue to not pay its employees for donning and
doffing and related walking time, it cannot be said on this record that defendant relied on that
Opinion Letter in reaching that decision. Moreover, and perhaps more significantly, the 2002
Opinion Letter focused solely on the meaning of “clothes” for purposes of § 203(o)–an issue that
this court has resolved in favor of defendant. The 2002 Opinion Letter did not purport to address
the compensability of post-donning or pre-doffing walking time. Thus, even if defendant could
show that it relied in good faith on the 2002 Opinion Letter, it has not shown how that Opinion
Letter would insulate it from plaintiff’s walking time claims.
While the 2007 Opinion Letter addressed post-donning and pre-doffing walking time, and
concluded that such time would not be compensable if the donning and doffing activities were
§ 203(o) activities, defendant nonetheless has not shown that it relied in good faith on that
Opinion Letter. As noted, defendant had determined not to pay its employees for donning,
doffing or related walking time long before the issuance of the 2007 Opinion Letter. Thus, while
the issuance of the 2007 Opinion Letter was favorable to defendant in the sense that defendant
21
was not required to revisit or change its pay practices in light of the Opinion Letter, it cannot be
said as a matter of law that defendant relied on that Opinion Letter or even that it was influenced
by that Opinion Letter in deciding not to pay its employees for walking time. Moreover,
although defendant contends that the 2007 Opinion Letter shields it from liability until June 16,
2010–when the DOL reversed its position and stated that § 203(o) clothes changing may be a
principal activity–defendant does not address whether it analyzed or considered the clear weight
of authority that, prior to June 16, 2010, had rejected the DOL’s position. See 29 C.F.R. §
790.15(a) (employer seeking benefit of defense must show it had no knowledge of circumstances
“which ought to put him upon inquiry”). Indeed, by the time the DOL reversed its position in
June 2010, it acknowledged that its 2007 Opinion Letter was contrary to the clear weight of
authority and that the majority of district courts had rejected the Opinion Letter.
Finally, the cases relied upon by defendant in which the district court concluded that the
defendant had relied in good faith on the DOL’s Opinion Letters are distinguishable from the
facts here. In Sisk v. Sara Lee Corp., 590 F. Supp. 2d 1001, 1012-13 (W.D. Tenn. 2008), the
district court’s good faith conclusion was based in large part on the fact that the
defendant–despite the 2002 Opinion Letter stating that certain pre- and post-shift activities were
not compensable–continued to pay its employees for an additional 10 minutes per shift for those
activities. In Franklin v. Kellogg Co., 2009 WL 6093442, at * (W.D. Tenn. 2009), the district
court did not analyze whether Kellogg had actually relied on the 2007 Opinion Letter; rather, it
analyzed Kellogg’s reliance on the 2002 Opinion Letter. As noted above, even if defendant
22
relied on the 2002 Opinion Letter, defendant has not shown how such reliance insulates it from
the specific claims in this case.
For the foregoing reasons, the court denies defendant’s motion for summary judgment on
its § 259(a) defense.
VII.
Liquidated Damages and the Applicable Statute of Limitations
The FLSA provides that an employer who violates the Act by failing to pay compensable
wages is ordinarily liable for the unpaid wages and an additional equal amount as liquidated
damages. 29 U.S.C. § 216(b). To avoid such damages, the employer must show “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].” 29 U.S.C. § 260. Good faith is a “subjective test that requires ‘the employer have an
honest intention to ascertain and follow the dictates of [the FLSA].’” Fowler v. Incor, 279
Fed.Appx. 590, 599–600 (10th Cir. 2008) (quoting Dep’t of Labor v. City of Sapulpa, 30 F.3d
1285, 1289 (10th Cir. 1994)). Reasonableness “imposes an objective standard by which to judge
the employer’s behavior.” Id. at 600 (quotation omitted). Only in those instances where the
court finds that the employer meets this burden, it may, “in its sound discretion,” deny liquidated
damages. Id. (quoting Pabst v. Okla. Gas & Elec. Co., 228 F.3d 1128, 1136 (10th Cir. 2000)).
Moreover, a two-year statute of limitations applies to an action for unpaid wages under
the FLSA, except where an employer acts willfully, which extends the limitations period to three
23
years. 29 U.S.C. § 255(a). The employee bears the burden of proving that the employer acted
willfully. McLaughlin v. Richland Shoe Co., 486 U.S. 128, 135 (1988). For purposes of the
statute of limitations, “willful” means “the employer either knew or showed reckless disregard
for the matter of whether its conduct was prohibited by [the FLSA].” Id. at 133.
Defendant seeks a ruling from the court that, as a matter of law, it acted in good faith and
without willfulness with respect to the alleged FLSA violations at issue in this case. Defendant
relies on the same evidence to support its argument that it acted in good faith as it does to
support its argument that it acted without willfulness. According to defendant, at all times it
reasonably attempted to determine its obligations under the FLSA amidst conflicting judicial
standards and a lack of clarity as to the requirements of the FLSA. In response, plaintiffs assert
that summary judgment is inappropriate on the issues of good faith and willfulness because the
evidence shows that defendant did not rely on case law, DOL Opinion Letters, or the advice of
counsel in formulating its compensation practices–many years ago, it simply decided not to pay
its employees for time spent throughout the continuous workday and, as luck would have it, the
DOL, after the fact, turned out Opinion Letters that conformed with defendant’s approach.
The court believes that the issues of good faith and willfulness, at least in the context of
this case, must be resolved at trial. Defendant has simply not addressed the issues of good faith
and willfulness with any particular focus as to plaintiffs’ remaining claims in this lawsuit. While
defendant relates its efforts to “get it right” with respect to donning and doffing activities (again,
claims that the court has resolved in defendant’s favor), defendant devotes very little of its brief
24
to the analysis, if any, that it undertook with respect to walking time in the plant and does not
mention in any respect plaintiffs’ claims relating to time spent after clocking in but before the
start of gang time pay. It would be premature, then, to resolve these issues at this juncture when
defendant has not sufficiently marshaled the evidence to focus squarely on the claims here.8
VIII. Rounding Policy
Finally, plaintiffs move for summary judgment on defendant’s purported time-clock
“rounding” policy which, plaintiffs assert, violates the FLSA as a matter of law. As described
by plaintiffs, defendant’s policy permits employees to clock in up to 10 minutes prior to the start
of a shift but defendant then “rounds” that time away entirely by paying employees on a “gang
time” or “shift time” basis. Plaintiffs concede that time clock rounding is generally permitted
under applicable FLSA regulations but maintain that defendant’s policy is unlawful under the
regulations because it consistently results in a failure to pay employees for time worked. The
regulation relied upon by plaintiffs states as follows:
“Rounding” practices. It has been found that in some industries,
particularly where time clocks are used, there has been the practice
for many years of recording the employees’ starting time and
stopping time to the nearest 5 minutes, or to the nearest one-tenth
8
Even the primary case relied upon by defendant supports the court’s conclusion that
these issues cannot be resolved at this juncture. According to defendant, the court should
follow the reasoning of the district court in Perez v. Mountaire Farms, Inc., 610 F. Supp.2d
499 (D. Md. 2009), aff’d in part, vacated in part, 650 F.3d 350 (4th Cir. 2011). In that case,
however, the district court found that the defendant acted in good faith and without
willfulness after a one-week bench trial on compensability issues. Id. at 502.
25
or quarter of an hour. Presumably, this arrangement averages out
so that the employees are fully compensated for all the time they
actually work. For enforcement purposes this practice of computing
working time will be accepted, provided that it is used in such a
manner that it will not result, over a period of time, in failure to
compensate the employees properly for all the time they have
actually worked.
29 C.F.R. § 785.48(b).
The motion is denied as plaintiffs have not shown that defendant’s policy is, in fact, a
rounding policy. Indeed, the undisputed facts indicate that defendant utilizes time clocks in the
work place solely for attendance purposes and not, as required by the regulation, for “computing
working time.” It may be that plaintiffs are entitled to compensation for the time they spend
gathering tools and equipment after they clock in and before “gang time” pay starts (i.e., the time
that plaintiffs contend is “rounded” away), but plaintiffs have not shown for summary judgment
purposes that defendant’s failure to compensate for this time violates the regulation concerning
“rounding” practices.
IT IS THEREFORE ORDERED BY THE COURT THAT plaintiffs’ motion for
summary judgment (doc. 262) is denied; and defendant’s motion for summary judgment (doc.
266) is denied.
IT IS SO ORDERED.
26
Dated this 13th day of December, 2011, at Kansas City, Kansas.
s/ John W. Lungstrum
John W. Lungstrum
United States District Judge
27
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