Lindsay et al v. Clear Wireless LLC et al

Filing 282

ORDER denying #138 Motion for Summary Judgment (Written Opinion). Signed by Senior Judge David S. Doty on 7/18/2014. (PJM)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 13-834(DSD/FLN)
Kenneth Lindsay and Jesse Owens,
individually and on behalf of
other similarly situated individuals,
Plaintiffs,
ORDER

v.
Clear Wireless LLC and Workforce
Logic LLC, d/b/a Workforce Logic,
a Zero Chaos Company, and APA
Workforce Solutions, LLC d/b/a
Zero Chaos,
Defendants.

Eric D. Satre, Esq., Jarvis C. Jones, Esq. and Jones,
Satre & Weimer, 7900 Xerxes Avenue South, Suite 820,
Bloomington, MN 55431, counsel for plaintiffs.
Mary L. Knoblauch, Esq. and Anthony, Ostlund, Baer &
Louwagie, P.A., 90 South Seventh Street, Suite 3600,
Minneapolis, MN 55402 and Joyce Ackerbaum Cox, Esq. and
Baker & Hostetler LLP, 200 South Orange Avenue, Suite
2300 Sun Trust Center, Orlando, FL 32801, counsel for
defendants.

This matter is before the court upon the motion for summary
judgment by defendant Workforce Logic, LLC (Workforce). Based on a
review of the file, record and proceedings herein, and for the
following reasons, the court denies the motion.

BACKGROUND
This

wage-and-hour

dispute

arises

out

of

the

employment

relationship between named plaintiffs Kenneth Lindsay and Jesse

Owens (collectively, plaintiffs) and defendants Clear Wireless LLC
(Clear Wireless) and Workforce (collectively, defendants).1
Plaintiffs allege that defendants failed to comply with the
overtime wage provisions of the Fair Labor Standards Act (FLSA).
Plaintiffs were hired through Workforce, a staffing company, to
work for Clear Wireless selling 4G broadband Internet products.2
See Am. Compl. ¶ 26.

Workforce and Clear Wireless operated under

a Professional Services Agreement, providing that Workforce would
“onboard”

individuals

interviewed.

that

Clear

Wireless

had

recruited

and

See Cox Decl., Ex. A, ECF No. 68; Stephens Decl., ECF

No. 140, at ¶ 5.

“Onboarding” involved having such individuals

complete initial hire paperwork pursuant to a Temporary Employment
Agreement (Employment Agreement) via telephone and e-mail.
Stephens Decl., ECF No. 140, at ¶ 5.

See

Plaintiffs allege that,

during their employment, they were required to perform tasks off-

1

On May 19, 2014, the magistrate judge granted plaintiffs’
motion to amend the complaint to include Workforce Solutions, doing
business as Zero Chaos, as a defendant. See ECF No. 223. On July
14, 2014, the magistrate judge granted plaintiffs’ motion to file
a second amended complaint adding defendants Gary D. Nelson
Associates, Inc. (GDNA), ABE Services, LLC, doing business as
Workforce Logic (ABE) and Clearwireless Corporation (Clear). See
ECF No. 281.
To date, the final version of the second amended
complaint has not been filed.
2

Pursuant to an equity purchase agreement executed on January
5, 2012, APC Workforce Solutions, doing business as ZeroChaos,
became the owner of Workforce, which had acquired the Clear
Wireless account from GDNA pursuant to a separate corporate asset
transfer agreement executed the previous day. See Goin Decl., ECF
No. 141, at ¶¶ 2-8.
2

the-clock, such that they were not paid overtime wages to which
they were entitled.

See Am. Compl. ¶¶ 61-68.

Specifically,

plaintiffs allege that defendants maintained a time-clock system
that did not allow the entry of overtime hours and required
employees to work such hours.
On April 9, 2013, plaintiffs filed suit individually and on
behalf of similarly-situated individuals, alleging that defendants
failed to pay overtime compensation in violation of the FLSA.3
Workforce moves for summary judgment.

DISCUSSION
I.

Standard of Review
“The court shall grant summary judgment 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 Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
A fact is material only when its resolution affects the outcome of
the case.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986). A dispute is genuine if the evidence is such that it could
cause a reasonable jury to return a verdict for either party.

See

id. at 252.

3

Plaintiffs originally asserted an FLSA minimum wage claim.
On May 29, 2014, the court adopted the magistrate judge’s report
and recommendation and dismissed the minimum wage claim. See ECF
No. 234.
3

On a motion for summary judgment, the court views all evidence
and inferences in a light most favorable to the nonmoving party.
See id. at 255.

The nonmoving party, however, may not rest upon

mere denials or allegations in the pleadings but must set forth
specific facts sufficient to raise a genuine issue for trial.
Celotex, 477 U.S. at 324.

See

A party asserting that a genuine dispute

exists — or cannot exist — about a material fact must cite
“particular parts of materials in the record.”
56(c)(1)(A).

Fed. R. Civ. P.

If a plaintiff cannot support each essential element

of a claim, the court must grant summary judgment because a
complete

failure

of

proof

regarding

an

necessarily renders all other facts immaterial.

essential

element

Celotex, 477 U.S.

at 322-23.
II.

Fair Labor Standards Act
“An

employer

can

be

held

liable

under

the

FLSA

for

unauthorized, unpaid overtime when the employer had actual or
constructive notice that employees were working off-the-clock.”
Brennan v.

Qwest

1586721, at

*4

Commc’ns Int’l,

(D.

Minn.

June

4,

Inc., No. 07-2024,
2009)

(citations

2009

WL

omitted).

Workforce argues that summary judgment is warranted because it
(1) was not an “employer” under the FLSA and (2) had no knowledge
of any overtime work.

4

A.

Employment Relationship

Workforce

first

argues

that

it

is

not

plaintiffs within the meaning of the FLSA.4

an

employer

of

The FLSA provides,

subject to certain exceptions, that:
no employer shall employ any of his employees
who in any workweek is engaged in commerce or
in the production of goods for commerce, ...
for a workweek longer than forty hours unless
such employee receives compensation for his
employment in excess of the hours above
specified at a rate not less than one and onehalf times the regular rate at which he is
employed.
29 U.S.C. § 207(a)(1).

The FLSA defines “employer” as “any person

acting directly or indirectly in the interest of an employer in
relation to an employee.”

Id. § 203(d).

Further, a joint

employment relationship may exist when “the employee performs work
which simultaneously benefits two or more employers,” including
when “one employer is acting directly or indirectly in the interest
of the other employer (or employers) in relation to the employee.”

4

Workforce also argues that it is entitled to summary
judgment because Lindsay was never employed by Workforce.
Specifically, Workforce argues that Lindsay’s employment ended in
late December 2011, and Workforce commenced ownership of the Clear
Wireless Account on January 5, 2012. See Goin Decl., ECF No. 141,
¶ 8.
The court concludes, however, that a genuine issue of
material fact remains concerning the corporate structures of the
entities and the timeline of their operation.
See id. ¶ 4
(purporting to attest without personal knowledge to the timeline of
relevant corporate structures); see also Jones Aff., Ex. 10, ECF
No. 161 (January 12, 2012, email from “Workforce Logic” to Lindsay
addressed to “WorkforceLogic Employee”).
But see Lindsay Dep.
391:2-5.
Such lack of clarity in the record renders summary
judgment premature on the basis of Lindsay’s timeline of employment
or the relevant corporate structures.
5

29 C.F.R. § 791.2(b); see id. § 791.2(a) (describing a joint
employer as one whose employment of an employee “is not completely
disassociated from employment by the other employer(s)”).
To determine whether an employment relationship exists, the
court looks to the “economic reality of the arrangement.” Blair v.
Wills, 420 F.3d 823, 829 (8th Cir. 2005) (citation omitted).

In

determining the economic reality, the court considers
(1) the degree of control over the manner in
which the work is performed; (2) the worker’s
opportunity for profit or loss depending on
his managerial skill; (3) the worker’s
investment in equipment or materials, or his
employment of helpers; (4) whether the service
rendered requires a special skill; (5) the
degree
[of]
permanence
of
the
working
relationship; and (6) whether the service
rendered is an integral part of the employer’s
business.
Catani v. Chiodi, No. 00-1559, 2001 WL 920025, at *3 (D. Minn. Aug.
13, 2001) (citations omitted).

In evaluating whether a joint

employment relationship exists, however, the court engages in a
more limited analysis of the economic realities. Specifically, the
court “tend[s] to narrow the inquiry and ask[s] whether the alleged
employer: (1) had the power to hire and fire the employees;
(2) supervised and controlled employee work schedules or conditions
of employment; (3) determined the rate and method of payment; and
(4) maintained employment records.”

Id. at *6 (citation omitted).

“[I]t is the totality of the circumstances, and not any one factor,
which determines whether a worker is the employee of a particular

6

alleged employer.”

Id. at *3 (citation and internal quotation

marks omitted).
Here, both Clear Wireless and Workforce were involved in the
hiring and firing of employees under the Employment Agreement.
See, e.g., Jones Aff., Ex. 5, ECF No. 43, at PL3019 (“[Workforce]
hereby employs Employee ....

Employee’s employment and assignment

to work at [Clear Wireless] is at-will and may be terminated at any
time with or without cause and with or without prior notice by
Employee,

[Workforce],

or

[Clear

Wireless].”).

Further,

the

Employment Agreement contains provisions detailing various terms
and

conditions

of

confidentiality,

employment,

provision

of

including
materials

benefits,

related

expenses,

to employees’

workspaces and compliance with both Workforce and Clear Wireless
policies.

See,

e.g.,

id.

at

PL3019-30.

Such

contractual

provisions are no doubt relevant to employees’ conditions of
employment.
Workforce

argues

that

Clear

Wireless

determined

each

individual’s position, assigned work locations, fixed hourly rates
of pay and disseminated weekly schedules, and that Workforce had no
involvement in determining the rate or method of payment.
Employment

Agreement,

however,

provides

for

a

direct

The

deposit

arrangement between employees and Workforce and includes a schedule
of commissions that applied “[i]n addition to [employees’] hourly
rate.”

Jones Aff., Ex. 5, ECF No. 43, at PL3024, 3032.

7

Further,

pursuant

to

the

Employment

Agreement,

employees

“accept[]

employment by [Workforce] at a wage of $10.00 per hour,” and the
attached commission schedule provides that “[c]ommissions will be
paid out monthly, based upon approval by [Workforce’s] client
[Clear Wireless].”

See id. at PL3019, 3025.

Thus, the roles of

Workforce and Clear Wireless with regard to rates and method of
payment

appear

proceedings.

interrelated,

at

least

at

this

stage

of

the

Finally, it is undisputed that Workforce provided

employees with group health and dental insurance coverage, as well
as optional life insurance coverage and necessarily maintained
records as part of such role.

See Linsday Decl., ECF No. 45, at ¶

12; Jones Aff., Ex. 5, ECF No. 43, at PL 3031.
the

totality

of

the

circumstances,

there

As a result, under
remains

a

material

question of fact as to whether Workforce was a joint employer, and
summary judgment on that basis is not warranted.5
B.

Knowledge

Workforce next argues that plaintiffs fail to demonstrate that
it had actual or constructive knowledge of the unpaid overtime.
“[I]f an employer has no actual or constructive knowledge of
overtime work and the employee fails to notify the employer or
deliberately prevents the employer from learning of the overtime
work, no violation has occurred.”

5

Brennan v. Quest Comm’ns Int’l,

Because the court concludes that summary judgment is not
warranted, it need not consider whether Workforce was an “employer”
rather than a “joint employer.”
8

Inc., 727 F. Supp. 2d 751, 755 (D. Minn. 2010) (citation omitted).
A court “need only inquire whether the circumstances ... were such
that the employer either had knowledge [of overtime hours being
worked] or else had the opportunity through reasonable diligence to
acquire knowledge.” Reich v. Dep’t of Conservation & Natural Res.,
28 F.3d 1076, 1082 (11th Cir. 1994) (alterations in original)
(citations

and

internal

quotation

marks

omitted),

cited

with

approval by Reich v. Stewart, 121 F.3d 400, 407 (8th Cir. 1997).
Plaintiffs respond that the time-clock system used to record
employees’ hours was designed and administered, at least in part,
by Workforce.

See, e.g., Lindsay Decl., ECF No. 45, at ¶ 16.

Further, plaintiffs argue that the system did not allow them to
input any “pay codes” other than “lunch” or “regular,” such that
overtime hours could not be properly recorded. See Jones Aff., Ex.
25, ECF No. 161, at WL00012; but see id. Ex. 23, at PL32 (providing
for entry of overtime hours).

Moreover, plaintiffs argue that

Workforce knew or should have known that the ability to input only
“lunch” or “regular” time meant that overtime hours were being
worked but not compensated because it knew that Clear Wireless had
classified employees as overtime-eligible. See Goodrich Decl. ¶ 5.
Workforce

responds

that

plaintiffs

“were

independently

responsible for accurately recording their working time, including
overtime hours” in the time-clock system, and that the system
allowed such input.

See Goodrich Decl. ¶¶ 8-10.

9

Specifically,

Workforce argues that the “pay codes” were not as restrictive as
plaintiffs argue and that employees in fact could enter overtime
hours as “regular” hours worked.
¶ 4.

See Faigle Decl., ECF No. 176, at

Thus, the functionality of the time-clock system and whether

Workforce - by virtue of the limitations of its system6 and its
knowledge of the overtime eligibility of its employees - had reason
to know of unpaid overtime, remain as unresolved questions of
material fact, particularly given the recent docket activity and
ongoing discovery.

See, e.g., Jones Aff., Ex. 4, ECF No. 239

(including individual with Workforce e-mail address in e-mail chain
about employees’ input of hours); id. Ex. 5.

“[S]ummary judgment

is not appropriate when there are unresolved fact issues regarding
the employer’s actual or constructive knowledge.”
Supp. 2d at 759 (citation omitted).

Brennan, 727 F.

As a result, summary judgment

is not warranted at this stage in the proceedings.

6

The court further notes the lack of clarity regarding which
corporate entity operated the time-clock system. Compare BurnsRichie Decl., ECF No. 93, at ¶ 9 (“I record my work time using
Workforce Logic’s timekeeping system ....”), with Foster Decl., ECF
No. 94, at ¶ 10 (“I record my work time using Clearwire’s
timekeeping system, on Zerochaos.com ....”), and Pfeil Decl., ECF
No. 95, at ¶ 8 (“I record my work time using Workforce Logic’s
timekeeping system on the ZeroChaos website ....”). Such confusion
is compounded by the lack of consistency in referring to the name
of the time-keeping system used. Compare Faigle Decl., ECF No. 89,
at ¶ 3 (referring to “ZC Web” system), with Goodrich Decl., ECF No.
92, at ¶¶ 8-9 (referring to “iClock” system).
10

CONCLUSION
Accordingly, IT IS HEREBY ORDERED that defendant Workforce’s
motion for summary judgment [ECF No. 138] is denied.
Dated:

July 18, 2014
s/David S. Doty
David S. Doty, Judge
United States District Court

11