Allen et al v. Entergy Louisiana, LLC
Filing
158
ORDER AND REASONS denying 67 , 78 Motions for Summary Judgment on the issue of the classification of Plaintiffs; granting in part 68 , 80 Motions for Summary Judgment on the issue of the application of the fluctuating work week method; gran ting Defendant's 73 Motion for Summary Judgment on the issue of bonus offsets; denying Plaintiffs' 66 Motion for Summary Judgment on the issue of bonus offsets; denying 121 Motion in Limine. Signed by Judge Jane Triche Milazzo. (ecm)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
STEPHEN ALLEN ET AL.
CIVIL ACTION
VERSUS
NO: 11-1571
ENTERGY OPERATIONS INC.
SECTION: “H”(1)
ORDER AND REASONS
Before the Court are Cross-Motions for Summary Judgment on the issue
of the classification of Plaintiffs (Docs. 67, 78), on the issue of the application
of the fluctuating work week method (Docs. 68, 80), and on the issue of bonus
offsets (Docs. 66, 73). In addition, this Court considers Plaintiffs Motion in
Limine (Doc. 121). For the following reasons, the Cross-Motions for Summary
Judgment on the issue of classification are DENIED. Defendant’s Motions for
Summary Judgment on the issue of the application of the fluctuating work
week method is GRANTED IN PART, and Plaintiffs’ is GRANTED IN PART.
Defendant’s Motion for Summary Judgment on the issue of bonus offsets is
GRANTED, and Plaintiffs’ is DENIED. Finally, Plaintiffs’ Motion in Limine is
DENIED.
1
BACKGROUND
This is a multi-plaintiff action under the Fair Labor Standards Act
(“FLSA”) in which Plaintiffs allege that Defendant failed to compensate them
for overtime hours worked. Plaintiffs are or were employed by Defendant
Entergy Operations, Inc. and all held positions as “Security Shift Supervisors”
(“SSS”) at the Waterford 3 nuclear plant in Killona, Louisiana (the “Plant”).
Plaintiffs contend that prior to 2009, security services at the Plant were
outsourced to a company that paid Plaintiffs an hourly wage and overtime. In
2009, Defendant opted to move security forces in-house and transformed those
positions into exempt, salaried positions that were not entitled to overtime.
Plaintiffs allege that they are entitled to overtime payment under FLSA,
while Defendant contends that Plaintiffs are exempted as administrative
employees.
In cross-motions for summary judgment, each party asks for
judgment in its favor on the issue of Plaintiffs’ classification. In addition, both
parties have filed motions for summary judgment on issues relevant to the
calculation of overtime compensation if Plaintiffs are deemed to have been
misclassified.
Specifically, the parties disagree on the application of the
fluctuating workweek method to calculate overtime payments and whether
bonuses received by the SSSs as part of the Management Incentive Program
should be offset against any overtime due. This Court will address each issue
in turn.
LEGAL STANDARD
Summary judgment is appropriate "if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with affidavits, if
2
any, show that there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law." 1 A genuine issue
of fact exists only "if the evidence is such that a reasonable jury could return a
verdict for the nonmoving party." 2
In determining whether the movant is entitled to summary judgment,
the Court views facts in the light most favorable to the non-movant and draws
all reasonable inferences in his favor. 3 "If the moving party meets the initial
burden of showing that there is no genuine issue of material fact, the burden
shifts to the non-moving party to produce evidence or designate specific facts
showing the existence of a genuine issue for trial." 4 Summary judgment is
appropriate if the non-movant "fails to make a showing sufficient to establish
the existence of an element essential to that party’s case." 5 "In response to a
properly supported motion for summary judgment, the non-movant must
identify specific evidence in the record and articulate the manner in which that
evidence supports that party’s claim, and such evidence must be sufficient to
sustain a finding in favor of the non-movant on all issues as to which the nonmovant would bear the burden of proof at trial." 6 "We do not . . . in the absence
of any proof, assume that the nonmoving party could or would prove the
Fed. R. Civ. P. 56(c) (2012).
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
3 Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528, 532 (5th Cir. 1997).
4 Engstrom v. First Nat’l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995).
5 Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).
6 John v. Deep E. Tex. Reg. Narcotics Trafficking Task Force, 379 F.3d 293, 301 (5th
Cir. 2004) (internal citations omitted).
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1
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necessary facts." 7 Additionally, "[t]he mere argued existence of a factual
dispute will not defeat an otherwise properly supported motion." 8
LAW AND ANALYSIS
I.
Classification
At the outset, the parties dispute whether Plaintiffs should have been paid
overtime payments in their positions as SSSs at the Plant. “Under the FLSA,
employers must pay overtime compensation to covered employees who work
more than forty hours a week.” 9 However, pursuant to section 13(a)(1) of the
FLSA, executive, administrative, and professional employees are exempt from
this general rule. 10 “An employer claiming an exemption bears the burden of
proving its exempt status, and exemptions are to be narrowly construed
against the employer.” 11
Defendant argues that Plaintiffs are exempt from overtime payment
because they are employees “employed in a bona fide administrative capacity.”
Plaintiffs rebut that they are first responders and thus excluded from overtime
exemption under the terms of FLSA. Both parties have filed Motions for
Summary Judgment on this issue.
FLSA states that:
The term “employee employed in a bona fide administrative
capacity” in section 13(a)(1) of the Act shall mean any employee:
Badon v. R J R Nabisco, Inc., 224 F.3d 382, 394 (5th Cir. 2000) (quoting Little v.
Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)).
8 Boudreaux v. Banctec, Inc., 366 F. Supp. 2d 425, 430 (E.D. La. 2005).
9 Cleveland v. City of Elmendorf, Tex., 388 F.3d 522, 526 (5th Cir. 2004).
10 29 U.S.C. § 213; Moore v. Hannon Food Serv., Inc., 317 F.3d 489, 492 (5th Cir.
2003).
11 Cleveland, 388 F.3d at 526.
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7
(1) Compensated on a salary or fee basis at a rate of not less than
$455 per week . . ., exclusive of board, lodging or other facilities;
(2) Whose primary duty is the performance of office or non-manual
work directly related to the management or general business
operations of the employer or the employer's customers; and
(3) Whose primary duty includes the exercise of discretion and
independent judgment with respect to matters of significance. 12
Accordingly, employees fall under the administrative exemption if their jobs
meet those three elements. This Court will consider each element in turn.
A. Weekly Salary
Plaintiffs do not dispute that they received the requisite $455 weekly salary
required to meet the first prong of the administrative capacity exception.
B. Primary Duty
The final requirements of the administrative capacity exception involve the
primary duty of the SSS position. Defendant must show that the “primary
duty” of the SSS position is the “performance of office or non-manual work
directly related to the management or general business operations of the
employer or the employer's customers” and “includes the exercise of discretion
and independent judgment with respect to matters of significance.” 13
Plaintiffs argue that they do not qualify for a FLSA exemption because they
should be classified as “first responders” under FLSA. FLSA states that first
responders are excluded from being categorized as exempt from overtime. 14
29 C.F.R. § 541.200.
29 C.F.R. § 541.200.
14 29 C.F.R. § 541.3(b)(1).
12
13
5
Specifically, it states that first responders “do not qualify as exempt
administrative employees because their primary duty is not the performance
of work directly related to the management or general business operations of
the employer or the employer's customers as required.” 15
FLSA provides guidance regarding the interpretation of the term “primary
duty,” stating that:
(a) To qualify for exemption under this part, an employee's
“primary duty” must be the performance of exempt work. The
term “primary duty” means the principal, main, major or most
important duty that the employee performs. Determination of
an employee's primary duty must be based on all the facts in a
particular case, with the major emphasis on the character of the
employee's job as a whole. Factors to consider when
determining the primary duty of an employee include, but are
not limited to, the relative importance of the exempt duties as
compared with other types of duties; the amount of time spent
performing exempt work; the employee's relative freedom from
direct supervision; and the relationship between the employee's
salary and the wages paid to other employees for the kind of
nonexempt work performed by the employee.
(b) The amount of time spent performing exempt work can be a
useful guide in determining whether exempt work is the
primary duty of an employee. Thus, employees who spend more
than 50 percent of their time performing exempt work will
generally satisfy the primary duty requirement. Time alone,
however, is not the sole test, and nothing in this section
requires that exempt employees spend more than 50 percent of
their time performing exempt work. Employees who do not
spend more than 50 percent of their time performing exempt
duties may nonetheless meet the primary duty requirement if
the other factors support such a conclusion. 16
15
16
29 C.F.R. § 541.3(b)(3).
29 C.F.R. § 541.700.
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This Court must also consider the amount of discretion with which Plaintiffs
are allowed to perform their duties. FLSA defines the discretion requirement
as follows:
In general, the exercise of discretion and independent judgment
involves the comparison and the evaluation of possible courses of
conduct, and acting or making a decision after the various
possibilities have been considered. The term “matters of
significance” refers to the level of importance or consequence of the
work performed. 17
Accordingly, this Court will consider each of these requirements in light of the
facts of this case.
i.
Relevant Facts
In order to determine the primary duty and level of discretion of the SSS
position, this Court must take a closer look at what the position entails. The
structure of the security staff at the Plant as is follows: The staff is led by a
Security Manager, followed by a Security Superintendent. Next, several
Security Operations Supervisors (“SOS”) oversee the SSSs. Finally, the SSSs
oversee the security officers.
The security officers are hourly employees responsible for staffing access
points in the Plant, searching vehicles and persons, patrolling, and providing
support in an emergency.
The SSSs are responsible for monitoring and
supervising the security officers. Both the security officers and the SSSs work
12-hour day or night shifts. The security force at the Plant is organized into
four teams, each include about five or six SSSs and twenty security officers.
17
29 C.F.R. § 541.202.
7
The teams rotate twelve-hour shifts, with one team present at all times, day
or night. The Security Manager, Security Superintendent, and SOSs work day
shifts Monday through Thursday with no set night hours.
The SSSs may hold one of several positions, including Central Alarm
Station (“CAS”), Secondary Alarm Station “(SAS”), Security Owner Controlled
Area (“SOCA”), Response Team Leader (“RTL”), and Protected Area
Supervisors/Field Supervisors (“PAS”). Prior to 2012, an SSS would work
exclusively in one of these positions. After this litigation began, the SSSs
began rotating between the stations and now work at each position for an equal
amount of time. The SSSs are also often asked to fill in for security officers
who are unable to come to work. In addition, they are asked to fill-in as
security officers during lock-outs at other nuclear facilities.
The CAS, SAS, and SOCA positions require the SSSs to man alarm
stations and monitor the Plant through video surveillance feed at varying
locations throughout the Plant. They are responsible for assessing an alarm
and deciding what action, if any, should be taken. They are also responsible
for scheduling and prioritizing requests for security throughout the Plant.
Defendant alleges that, prior to the implementation of the SOCA position,
there was a Lead CAS/SAS position that was responsible for reviewing
paperwork, preparing reports, and overseeing the CAS and SAS stations.
The RTL position is the shift leader of the security officers. It leads roll
call, checks qualifications, inventories weapons and ammunition, and monitors
personnel at various posts. The PAS position assists the RTL in scheduling
personnel, monitoring security officers at their post, managing equipment, and
ensuring policies are properly implemented.
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ii.
Plaintiffs’ Argument
Plaintiffs allege that the SSS position, in conjunction with the security
officers, are the first line of defense for the Plant. They allege that they are a
uniformed, armed security force whose primary duty is the defense of the
Plant. Both groups are trained in emergency response, weaponry, and bomb
searches.
They are instructed on proper responses to emergency situations.
Plaintiffs support their argument that the primary duty of the SSSs is that of
a first responder by citing to certain regulations of the Nuclear Regulatory
Commission (“NRC”), which require Defendant to staff the Plant with armed
responders tasked with the prevention of “radiological sabotage.”
The
regulations require that the security personnel not be assigned other duties
that could interfere with their response and states that their primary duty is
to respond to prevent or delay the theft of nuclear material or “radiological
sabotage.”
Plaintiffs also point to the job descriptions of the varying positions
available to the SSSs to show that their primary duty is not administrative.
Plaintiffs point out that the primary duty of the CAS/SAS and SOCA positions
is to monitor the Plant through continuous surveillance and that an SSS
performing this duty is not permitted to leave his or her station until relieved
by another person. Plaintiffs also argue that, although this position requires
the SSS to decide how to respond to an alarm and to dispatch security forces,
the SSS has little discretion in doing so. Plaintiffs note that the decisions the
SSS makes are highly determined by procedures provided by Entergy and NRC
regulations.
9
In addition, Plaintiffs point out that although the RTL position plays
more of an administrative role than the other SSS positions, every decision
made in that role is likewise based on policies and procedures provided by
Entergy and NRC regulations. In addition, although each SSS is tasked with
checking the qualifications of the security officers assigned to him or her,
Plaintiffs allege that no such assignments were made until after the filing of
this litigation.
Finally, Plaintiffs point out that they are often asked to fill in for security
officers and that during an emergency event at the Plant they would have the
same defense responsibilities as the security officers.
Plaintiffs submit
evidence that it was at least a weekly occurrence for a SSS to fill-in for a
security officer—a position that is paid hourly and eligible for overtime
payment. In addition, the Security Manager stated that the converse is also
true—the security officers were sometimes asked to fill in for SSSs that were
unable to come to work.
iii.
Defendant’s Argument
Defendant paints a substantially different picture of the SSS role at the
Plant. It argues that the primary duty of the SSS position is supervisory. It
states that the SSS is the highest ranking security member on site on all
weekends and nights and plays an important role in monitoring, supervising,
and directing the security officers. Defendant alleges that Plaintiffs perform a
“host of administrative duties, including scheduling, preparing reports,
approving overtime and vacation[,] . . . [and] monitoring the Security Officer’s
qualifications.” It argues that each SSS is responsible for supervising its direct
reports and approving of their time entries and qualifications.
10
Defendant alleges that the RTL position provides administrative and
managerial oversight for each shift and performs substantial paperwork. It
states that the CAS/SAS and SOCA positions are the primary points of contract
at the Plant for departments in need of security for certain projects. The SSSs
working in that capacity are tasked with scheduling and prioritizing projects
that have requested security. Defendant alleges that these positions also have
discretion in deciding how to react to alarms—whether to clear it, dispatch a
security officer, or direct a security response. Defendant states that the SOCA
position also prepares reports on events that occur during his shift, including
disciplinary write-ups of security officers. Defendant argues that while
protecting the Plant is the primary goal of the SSSs, their primary duty is to
supervise, and therefore, they should be exempt from the FLSA overtime
requirement.
As evidenced by the starkly different summaries given by each party in
this case, this Court holds that there are material issues of fact regarding what
the primary duty of the SSS position entails and what level of discretion, if
any, it can utilize in performing those duties. The parties disagree on the
amount of time spent doing administrative tasks versus manual tasks, as well
as the amount of discretion allowed. Plaintiffs allege that the SSSs merely
follow predetermined procedures, while Defendant attests that Plaintiffs have
broad discretion in performing their duties. Plaintiffs rebut that Defendant
exaggerates their administrative role and that the tasks identified by
Defendant are rarely performed or take little time to perform. For example,
the parties disagree over what the CAS/SAS position actually entails.
Plaintiffs argue the CAS/SAS position solely monitors surveillance; Defendant
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argues that it is the central point of contact for security through which
scheduling, supervising, and dispatching of officers is performed. The question
of the “determination as to whether an employee is exempt under the FLSA is
primarily a question of fact.” 18 Although this Court is inclined to find that
Plaintiffs have been misclassified, 19 it declines to make such a determination
on summary judgment, particularly in light of the significant factual disputes
evident by the parties’ motions.
Accordingly, the Motions for Summary
Judgment on the issue of the Plaintiffs’ classification are denied.
II.
Fluctuating Work Week
In the event that Plaintiffs are determined at trial to have been
misclassified, this Court will address the alternative issues on which the
parties have moved for summary judgment. First, Defendant asks this Court
to find that if Plaintiffs were misclassified, the fluctuating work week (“FWW”)
method applies to calculate overtime pay. Plaintiffs ask this Court to find that
it does not. “The FWW is an employment arrangement in which an employee
receives a fixed weekly pay for a fluctuating work schedule with a varying
number of hours worked each week.” 20 “Unlike in the standard method, this
employee has already been compensated straight time for all hours worked,
Dalheim v. KDFW-TV, 918 F.2d 1220, 1226 (5th Cir. 1990) (internal quotations
and alterations omitted).
19 See Banford v. Entergy Nuclear Operations, Inc., 74 F.Supp.3d 658, 660 (D. Vt.
Feb. 11, 2015).
20 Black v. SettlePou, P.C., 732 F.3d 492, 496 (5th Cir. 2013).
18
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and so overtime is determined by multiplying all hours over 40 in that
workweek by only one half the regular rate for that particular week.” 21
The FWW method of calculating overtime premiums in a
misclassification case is appropriate when the employer and the
employee have agreed that the employee will be paid a fixed
weekly wage to work fluctuating hours. . . . The question of
whether an employer and employee agreed to a fixed weekly wage
for fluctuating hours is a question of fact. . . . The parties' initial
understanding of the employment arrangement as well as the
parties' conduct during the period of employment must both be
taken into account in determining whether the parties agreed that
the employee would receive a fixed salary as compensation for all
hours worked in a week, even though the number of hours may
vary each week. 22
The Fifth Circuit has held that in order to determine if the FWW method
applies, the Court must decide whether “the employer and the employee have
agreed that the employee will be paid a fixed weekly wage to work fluctuating
hours.” 23
Defendant contends that, after its security force was moved in-house,
each of the Plaintiffs interviewed and received a formal offer to work as an
SSS. It contends that at that time the Security Manager, Scott Anders, met
with each of the Plaintiffs individually, reviewed the offer letter, explained the
salary and Management Incentive Program (“MIP”), and told them they would
no longer receive overtime payment. Defendant alleges that fifteen of the
nineteen remaining Plaintiffs 24 admitted in their deposition that they
Ramos v. Al-Bataineh, No. 11-0380, 2013 WL 10372446, at *6 (S.D. Tex. Nov. 1,
2013) aff'd, 599 F. App'x 548 (5th Cir. 2015).
22 Id.
23 Black v. SettlePou, P.C., 732 F.3d 492, 498 (5th Cir. 2013).
24 Two of the Plaintiffs have reached a settlement with Defendant.
13
21
understood that they would be paid a fixed salary to work fluctuating hours. 25
Defendant’s Motion details the admissions of each Plaintiff and contends that
these admissions are all that is required for the application of the FWW
method.
Plaintiffs rebut that they understood the SSS position to require a 36/48
hour biweekly schedule with minimal overtime. They allege, however, that
after joining Entergy they were subjected to abusive, unreasonable overtime
and were required to be on-call on their days off. They contend that the FWW
method should not be applied to calculate overtime because there was no
mutual understanding between Plaintiffs and Defendant regarding the
requirements of the SSS position.
In Ranson v. M. Patel Enterprises, the Fifth Circuit reversed the lower
court, holding that the FWW method should be applied because the plaintiffs,
managers at a Party City, had agreed to a set salary for fluctuating hours. 26
In making this determination, the court relied on testimony from the plaintiffs
in which they admitted that they understood that they would receive a fixed
salary and would work a “minimum of 55 hours” per week. 27 The plaintiffs
also admitted understanding that their hours would fluctuate from week to
week and that they would work a “flexible schedule.” 28 The court stated that
the FWW method should be used when testimony shows that the “employees
Ransom v. M. Patel Enterprises, Inc., 734 F.3d 377, 383 (5th Cir. 2013).
Id.
27 Id.
28 Id.
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25
26
knew their hours would fluctuate and that their salary would not increase or
decrease with those fluctuations.” 29
The understanding of the plaintiffs in Ranson is not unlike the
understanding of Plaintiffs here.
Defendant has provided excerpts of
testimony from fifteen of the nineteen remaining Plaintiffs in which they admit
to understanding that they would work a schedule that fluctuated between 36
and 48 hours each week. They also admit to understanding that they would
not receive additional overtime payments for hours worked in excess of 40
hours per week. This understanding fits squarely within the requirements
necessary for the application of the FWW method. The testimony provided by
Defendant reveals that it and the fifteen Plaintiffs agreed that they would be
paid a fixed wage for fluctuating hours. It is clear that the parties intended for
Plaintiffs’ overtime payment to be built into their fixed salary and thus the
FWW method is appropriate. It appears that Plaintiffs’ primary complaint is
not that they were asked to work overtime—but that the overtime was
excessive. The reasonableness of the hours worked, however, is not an element
in applying the FWW method
Defendant’s motion also discussed the applicability of the FWW
calculation to the remaining four Plaintiffs who testified that they did not
understand that they would not receive overtime pay when they accepted the
SSS position. Defendant contends that the testimony of these four plaintiffs is
not credible in light of documentary evidence and the testimony of the other
29
Id.
15
plaintiffs. This Court will address the testimony of each of the remaining
Plaintiffs in turn.
i.
Stephen Allen
At his deposition, Plaintiff Stephen Allen testified that he understood
that he would work a 36/48 hour biweekly schedule for a salary. He stated,
however, that he did not understand that he would not also receive overtime
payment for hours worked in excess of 40. He also testified that after receiving
his first paycheck he approached Mr. Anders regarding the lack of overtime
payment, and Mr. Anders explained that he would not be receiving overtime.
Mr. Allen alleges that, at this point, he understood that he would be receiving
only a fixed salary for fluctuating hours. Mr. Anders testified, and other
Plaintiffs have confirmed, however, that he relayed to each Plaintiff that they
would not be receiving overtime payments at the time that they accepted the
position. These contradicting statements are a material issue of fact, which
this Court is not prepared to resolve. Accordingly, this Court declines to grant
summary judgment to either party on the issue of whether the FWW method
should be used in calculating Mr. Allen’s overtime compensation if he is
determined to have been misclassified.
ii.
Ernest Brown
Next, Plaintiff Ernest Brown testified that he understood that he would
be receiving a salary and that he would be working a fluctuating 36/48
biweekly schedule. He also testified, however, that he believed he would be
compensated for the hours worked over 40 by receiving “a day off or something
like that.” The Fifth Circuit requires only that there was an understanding
that the employee would receive a fixed salary for a fluctuating schedule. The
16
fact that Mr. Brown believed he might receive some other non-monetary
benefit is inapposite. Accordingly, this Court holds that the FWW method
should be utilized in calculating overtime compensation if he is found to have
been misclassified.
iii.
Anthony Smith
Next, Plaintiff Anthony Smith testified that, although no one told him
he would receive overtime payments, he assumed he would because Mr. Anders
informed him that “nothing was going to change” when Entergy moved its
security operations in-house. He alleges, therefore, that he understood that he
would be working a 36/48 biweekly schedule but believed he would still be paid
on an hourly basis. He testified that after receiving his first and second
paychecks, he understood that he would not be receiving overtime. This
testimony obviously contradicts that of Mr. Anders, and therefore, this Court
declines to resolve this issue of fact. Accordingly, this Court denies summary
judgment to both parties on the issue of whether the FWW method applies to
Mr. Smith.
iv.
Picola Williams
Finally, Plaintiff Picola Williams testified that she understood she would
be working a fluctuating schedule for a salary, however, she did not
understand that she would not also receive additional compensation for hours
worked in excess of 40. She also testified, however, that no one told her she
would be receiving overtime but that she just assumed that nothing would
change when Entergy moved its security force in-house. She did not inquire
as to overtime payment until after beginning the job with Entergy. This is
counter to Mr. Ander’s testimony in which he states that he communicated to
17
each Plaintiff that they would no longer be receiving overtime payment.
Accordingly, there is a material issue of fact as to whether Ms. Williams
understood she would be receiving a fixed salary for a fluctuating schedule.
Accordingly, this Court declines to award summary judgment on this issue to
either party.
In conclusion, this Court grants summary judgment to Defendant on the
issue of the application of the FWW method to the calculation of overtime
compensation for all Plaintiffs except Stephen Allen, Anthony Smith, and
Picola Williams. Although the Court finds it highly unlikely that Mr. Anders
conveyed a different message to the remaining three Plaintiffs and that they
were not aware that they would not be receiving overtime, the Court declines
to grant summary judgment on the issue of whether the FWW method applies
to those Plaintiffs in light of the material issues of fact identified.
III.
Bonus Offset
The parties next dispute whether any bonuses received by Plaintiffs
under the MIP should be offset against any overtime compensation that is
deemed to be owed. The MIP is Defendant’s incentive bonus program, which
is available only to certain management-level employees. Defendant contends
that it should be permitted to offset any amounts paid to Plaintiffs under the
MIP against any overtime compensation that it owes. Plaintiffs argue that the
bonuses awarded under the MIP were discretionary, and FLSA does not allow
offsets or credits for bonuses awarded on a discretionary basis. Defendant
rebuts that, if Plaintiffs were misclassified, then they were not eligible to
18
receive bonuses under the MIP, and thus, the bonuses were given in error and
should be offset. This Court will consider each argument in turn.
Plaintiffs contend, and Defendant does not dispute, that the MIP
payments were discretionary, subject to many factors, not guaranteed by
working overtime, and not awarded annually. Plaintiffs argue that under
FLSA, an employer can only receive credits to offset unpaid overtime for (1)
regular wages previously paid to the employer and (2) “extra compensation.” 30
FLSA specifically defines “extra compensation” and that definition does not
include discretionary bonuses not based on the number of hours worked.
Indeed, FLSA expressly states that neither “extra compensation” nor “regular
wages” includes sums paid if “both the fact that payment is to be made and the
amount of the payment are determined at the sole discretion of the
employer.” 31 Plaintiffs argue that therefore Defendant is not entitled to offset
the MIP payments to Plaintiffs against any unpaid overtime compensation
that may be owed to them.
This Court holds, however, that Plaintiffs’ argument fails to recognize an
important distinction. The FLSA provisions cited by Plaintiffs do not address
payments that were made in error. Indeed, even the cases cited by Plaintiffs
are easily distinguishable because they do not involve plaintiffs who received
payments to which they were not entitled. 32 As Defendant argues, if Plaintiffs
29 U.S.C. § 207.
Id.
32 See Brock v. Two R Drilling Co., 772 F.2d 1199 (5th Cir. 1985) on reh'g, 789 F.2d
1177 (5th Cir. 1986) (discussing incentive for working certain overtime); Duplessis v. Delta
Gas, Inc., 640 F. Supp. 891, 897 (E.D. La. 1986) (discussing payments for non-productive
time such as sick days and bonuses); Martin v. PepsiAmericas, Inc., 628 F.3d 738, 742 (5th
Cir. 2010) (discussing severance payment); Brennan v. Heard, 491 F.2d 1, 3 (5th Cir. 1974)
19
30
31
are deemed to have been misclassified then they were not entitled to MIP
payments and thus those bonuses were received erroneously. Plaintiffs were
only eligible for MIP payments because they were classified as exempt
management employees, who were not eligible for overtime compensation. The
MIP program expressly requires that MIP bonuses be returned if employees
receive overtime compensation. 33
Louisiana Civil Code article 2299 states that “[a] person who has
received a payment or a thing not owed to him is bound to restore it to the
person from whom he received it.” 34 The Civil Code further states that:
Compensation takes place by operation of law when two persons
owe to each other sums of money or quantities of fungible things
identical in kind, and these sums or quantities are liquidated and
presently due. In such a case, compensation extinguishes both
obligations to the extent of the lesser amount. 35
Accordingly, pursuant to Louisiana law, if the MIP payments to Plaintiffs were
made in error, they must be returned. The set-off of that amount and any
amount owed to Plaintiffs in unpaid overtime will then occur by operation of
law.
At least one other court has previously reached such a conclusion in the
FLSA context. In Monroe Firefighters Assn v. City of Monroe, the defendant,
the City of Monroe, filed a counterclaim in an unpaid overtime FLSA action
(disallowing set-off “against the amount due in back pay for the value of goods, including
gas and supplies from the company store, furnished by [employer] to his employees”).
33 See Doc. 73-2.
34 La. Civ. Code. art. 2299.
35 La. Civ. Code. art. 1893.
20
against it alleging that the firefighter-plaintiffs had been overpaid for years
due to miscalculations. 36 Defendant alleged that it was owed this money as
payment of a thing not due under Louisiana law. 37 The overpayments included
unearned overtime payment, an additional 2% longevity payment, and
additional half-time pay. 38 Analyzing Fifth Circuit precedent, the district
court in the Western District of Louisiana held that “state law may permit setoffs from amounts due to FLSA plaintiffs.” 39 The court relied on Louisiana Civil
Code article 2299 to hold that the defendant was entitled to set-off for overtime
compensation owed to an individual plaintiff of any unearned payment made
to that individual plaintiff. 40
This Court follows that analysis in this case. To allow Plaintiffs to
recover overtime payments and retain MIP payments to which they would not
have been entitled would be inequitable at best. FLSA is intended to make
plaintiffs whole and avoid a windfall. 41 Failure to offset the erroneous bonuses
against any overtime due would result in a windfall to Plaintiffs, and summary
judgment is therefore granted in Defendant’s favor. This Court holds that
Monroe Firefighters Ass'n v. City of Monroe, No. 06-CV-1092, 2009 WL 916272, at
*1 (W.D. La. Mar. 31, 2009).
37 Id.
38 Id.
39 Id. at 12.
40 Id. at 13.
41 See Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 707 n.18 (1945) (stating that FLSA
was implemented to protect employees working at the minimum wage.); Lupien v. City of
Marlborough, 387 F.3d 83, 90 (1st Cir. 2004) (stating that FLSA is designed to make
employees whole, not award “a windfall.”); see also Stephens v. C.I.T. Group/Equip. Fin., Inc.,
955 F.2d 1023, 1028 (5th Cir. 1992) (“Courts uniformly offset interim earnings from back pay
awards in order to make the plaintiff whole, yet avoid windfall awards.”).
36
21
Defendant is entitled to offset amounts paid to any Plaintiff in MIP bonuses
against the amount owed to that Plaintiff in overtime.
IV.
Plaintiffs’ Motion in Limine
Finally, Plaintiffs have asked this Court to preclude Defendant from
introducing evidence of its entitlement to an offset of MIP bonuses because of
its failure to file a counterclaim for the repayment of these amounts. Plaintiffs
correctly state that Defendant did not bring a counterclaim for the
reimbursement of MIP bonuses but rather included its argument for setoff as
an affirmative defense. Plaintiffs point out that the defendant in Monroe
Firefighters, on which Defendant relies, brought a counterclaim for repayment
of certain inadvertent overpayments. Plaintiffs allege that Defendant’s failure
to bring a counterclaim here should prevent it from proceeding with this
argument or entering evidence in its support.
This Court disagrees. As Defendant points out, it “has not made an
independent claim for relief: it has asserted a claim that exists if and only if
Plaintiffs are determined to have been misclassified. . . . If the Plaintiffs are
found to have been properly classified, [Defendant’s] offset defense would be
moot.” This Court does not read Defendant’s arguments regarding bonus offset
to attempt to assert a counterclaim.
argument as an affirmative defense.
Defendant properly included this
Indeed, Plaintiffs’ distinction is one
without a difference as set-off “takes place by operation of law.” 42 In addition,
this motion is mooted by this Court’s prior holding that Defendant is entitled
to bonus offsets. Accordingly, Plaintiffs’ Motion in Limine is denied.
42
La. Civ. Code. art. 1893.
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CONCLUSION
For the foregoing reasons, the Cross-Motions for Summary Judgment on
the issue of the classification are DENIED. Defendant’s Motions for Summary
Judgment on the issue of the application of the fluctuating work week method
is GRANTED IN PART, and Plaintiffs’ is GRANTED IN PART.
Finally,
Defendant’s Motion for Summary Judgment on the issue of bonus offsets is
GRANTED, and Plaintiffs’ is DENIED. Plaintiffs’ Motion in Limine is
DENIED.
Further, pursuant to 28 U.S.C. 1292(b), this Court declares the issue of
whether Defendant is entitled to bonus offsets ripe for an interlocutory appeal.
This Court finds that this issue is one to which there could be substantial
grounds for difference of opinion and the resolution of which will advance
settlement of this matter.
New Orleans, Louisiana this 16th day of February, 2016.
____________________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE
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