Serrano v. Republic Services, Inc.
FINDINGS OF FACT AND CONCLUSIONS OF LAW REGARDING LIABILITY PHASE OF BIFURCATED TRIAL.(Signed by Judge Nelva Gonzales Ramos) Parties notified.(mserpa, 2)
Case 2:14-cv-00077 Document 238 Filed in TXSD on 06/12/17 Page 1 of 42
United States District Court
Southern District of Texas
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION
MAURO SERRANO III, et al,
REPUBLIC SERVICES, INC., et al,
June 12, 2017
David J. Bradley, Clerk
§ CIVIL ACTION NO. 2:14-CV-77
FINDINGS OF FACT AND CONCLUSIONS OF LAW
REGARDING LIABILITY PHASE OF BIFURCATED TRIAL
Plaintiffs filed this collective action for unpaid wages and overtime premium
pursuant to the Fair Labor Standards Act (FLSA) against their employers, Republic
Services, Inc., BFI Waste Services of Texas, L.P., Republic Waste Services of Texas,
Ltd., and Allied Waste Services, Inc. (jointly Republic).
The parties agreed to a
bifurcated bench trial of this matter in which the first phase would cover liability issues.
The Court tried that phase on April 25 to 27, 2017.
The liability issues are:
Whether there was an agreement or understanding
between Plaintiffs and Republic that the piece rate by
which they were paid compensated Plaintiffs for both
production and non-production work;
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Whether the FLSA requires that the employer and
employee come to an agreement or understanding
regarding compensation for non-production time;
Whether Plaintiffs’ on-the-clock work was unpaid
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Whether Republic violated the maximum hour
overtime provision by paying an incorrect regular rate
for the first 40 hours in a workweek and, therefore, an
incorrect overtime premium for all hours worked over
40 in a workweek;
Whether Republic acted in good faith so as to avoid
Whether any FLSA violation was willful so as to
extend the statute of limitations to three years; and
Whether the collective action should be decertified.
The Court issues the following as its findings of fact and conclusions of law and DENIES
Defendants’ Motion for Judgment on Partial Findings (D.E. 230).
The Work and Method of Driver Compensation
A Driver’s Typical Day. Plaintiffs are Roll-Off Drivers1 in Republic’s industrial
division. In a typical day, they clock in upon arrival at Republic’s yard by 5:00 a.m. On
some days, they are required to attend safety, OSHA, or training meetings. Bradley, D.E.
234, p. 68. Those meetings are held approximately two or three times a month for fifteen
to twenty minutes each.
Bradley, D.E. 234, p. 69.
They then check in with the
dispatchers and get route sheets that list their tasks for the day, which they are ordinarily
free to accomplish in any order they choose. Those tasks include any combination of:
(a) delivering a box to a new customer; (b) dropping an empty box and hauling an
existing customer’s filled box to the landfill and dumping it, taking the now-empty box to
the next customer and repeating the process; (c) hauling an existing customer’s box to the
The position name is descriptive of rolling a trash container onto a truck and then, after dumping the trash, rolling
it back off. Chapa, D.E. 233, p. 123.
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landfill and dumping it, and then returning the same box to that same customer; and (d)
hauling a box, dumping it, and taking the box back to Republic for a terminating
customer. The assignments are unpredictable and are revised daily such that the drivers
do not have regular routes that they service exclusively; each driver may be assigned to
any customer on a given day. They average about 6-8 hauls per day when circumstances
The dispatcher also provides an activity sheet (for logging certain events of the
day), along with truck assignments, a fuel card, and keys. The drivers then conduct
Department of Transportation (DOT) mandated pre-trip inspections of their vehicles and
retrieve any necessary trash boxes before heading out to their first customers. If all goes
smoothly, the driver picks up a full trash box, hauls it to the landfill, gets the haul
weighed, dumps the trash from the box into the landfill, gets a ticket evidencing
completion of that dump, then proceeds to the next task. The drivers refer to this as a
“bump and dump.”
It is not unusual, however, for drivers to encounter impediments to completing the
bump-and-dumps. Sometimes a box would be overflowing with trash or have trash
stacked unevenly such that the driver has to reposition the load for safe hauling.
Climbing on top of the box and redistributing the trash for safe transport can take about
twenty to thirty minutes. Rincon, D.E. 234, p. 126. The drivers also testified to frequent
blockages, in which something under the customer’s control blocks their access to the
box they are to pick up. When these customer service issues arise, which happens two to
three times a day on average, the drivers have to alert dispatch so that dispatch can
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contact the customer to resolve the issue.
See generally, Baca, D.E. 234, p. 205;
Sanchez, D.E. 234, p. 232.
Republic’s dispatchers who testified confirmed this. The drivers stated that it
could take fifteen to thirty minutes on average to resolve those problems. Serrano, D.E.
234, p. 87; Rincon, D.E. 234, p. 127; Benavides, D.E. 234, p. 167; Sanchez, D.E. 234, p.
232 (one might be real quick and the other take “like forever,” twenty-five to thirty
minutes). Dispatcher Theresa Ortiz testified that it would take three to five minutes.
Ortiz, D.E. 234, pp. 23-24. The Court FINDS that the dispatcher’s call takes three to five
minutes, but that the customer’s resolution of the issue—removing that which blocks the
trash container pickup—generally takes fifteen to twenty-five minutes.
Occasionally, there are boxes in need of repair and the drivers have to find ways to
keep the doors shut or replace missing tarps to cover the load so that the trash does not fly
out in route to the landfill. Sometimes, the drivers cannot make the haul safe and they
lose that haul. Rincon, D.E. 234, p. 126. If Republic agrees, the driver may still be paid
for a “dry run.” And if a load was picked up too late to go to the landfill, then that (or
another) driver will have to start the next day by dumping that load before proceeding
with his route. All of these circumstances cause delays, making the drivers’ day longer
and impairing their ability to complete all of the hauls on their routes.
Drivers are also frustrated by Republic’s poor stock of empty boxes because they
lose time in search of the right sized box in sufficient condition to deliver to a customer
on their route. If the box is in stock at the yard, it takes ten to fifteen minutes to load it on
the truck. Serrano, D.E. 234, p. 92. Sometimes—on average two to three times a
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week—they are required to search more than one yard to find an acceptable box, which
can extend the time an additional twenty to twenty-five minutes for drive time and ten to
fifteen minutes for search and load. Serrano, D.E. 234, p. 92; Rincon, D.E. 234, p. 130;
Benavides, D.E. 234, p. 171; Sanchez, D.E. 234, p. 233 (looking for boxes takes about 45
minutes). And the trucks can have mechanical breakdowns and flat tires. In those
situations, the drivers have to wait for a Republic mechanic to arrive and repair the truck
before they can continue their routes. Last, the drivers complained that there can be
extensive wait times at the landfill, particularly in bad weather, sometimes exceeding an
hour in which all they can do is wait in line.
Prisons and the ExxonMobile, Oxy, NRG Energy, and similar facilities have
elaborate security clearance procedures by which the driver and the truck have to be
cleared. The driver might have to wait in line to enter the inspection area; park the truck
and open its hood; go inside the facility, surrender his wallet, and go through a personal
safety check; then, after getting clearance, obtain an escort; drive very slowly and attend
to the pick-up of the container; return through the same inspection area and have the
truck re-inspected; and retrieve his wallet before exiting, all of which adds fifteen to
thirty minutes on each side of the container pick-up. Serrano, D.E. 234, pp. 93-95;
Rincon, D.E. 234, pp. 154-55.
At the end of the day, the drivers return to the Republic yard, fuel up their truck
(sometimes having to wait in line to do so), park it, and conduct a DOT-mandated post-
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trip inspection.2 They fill out any additional DOT paperwork, such as duty logs when
their work day exceeded 12 hours, and complete their route and activity sheets. They
then check out with dispatch, turning in their fuel card and keys and wait for the
dispatcher to review the paperwork to ensure that it is complete. Then the drivers clock
out. This procedure takes, on average, forty-five minutes to an hour each day. Rincon,
D.E. 234, pp. 132-33; Sanchez, D.E. 234, pp. 234-35 (post-trip activities normally take
about 30 minutes; bad days can add another 20 minutes).
The drivers’ testimony regarding the nature of the work and the typical delays that
frequently impair their ability to complete their bump-and-dump tasks was
uncontroverted, if not corroborated, by Republic witnesses.
The Pay Structure Disclosed to Drivers.
Likewise, the manner in which
Republic compensated the drivers is largely uncontroverted. Republic formulated a
series of rates that it calls “Roll Off and Longhaul Commission Zones.” Plaintiffs’
Exhibit 13 (DEF 000273, 00281). In FLSA terms, these are “piece rates.” See generally,
29 U.S.C. § 207(g). The confidential table of rates lists the amount that Republic will
pay the driver for each haul. It is undisputed that this table was the only information
provided to the drivers regarding Republic’s pay plan when they were hired. Republic
told the drivers that they were hired to work only on this commission basis.
None of Republic’s management witnesses were involved in the original
formulation of the zone/commission pay rates and they did not know how they had been
Fueling ordinarily takes ten to fifteen minutes. Serrano, D.E. 234, pp. 89-90. With one of the newer trucks that
requires a fuel additive, the fueling process can take twenty to twenty-five minutes. Rincon, D.E. 234, p. 133.
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calculated, other than that they appear to be based upon the distance of the customers’
boxes to the landfill or to Republic’s yard. See Map, Defendant’s Exhibit 35;3 see also
Chapa, D.E. 233, pp. 54, 167-68; Bradley, D.E. 234, p. 45 (zones are from the office);
D.E. 230, p. 3 (Defendants reciting that zone rates are based on distance to landfill).
Plaintiffs acknowledged that Republic did not agree to pay additional monies for nonproduction time or make any representations to that effect. Serrano, D.E. 234, p. 99;
Benavides, D.E. 234, p. 190. However, Plaintiffs provided a number of route and activity
sheets detailing down time. Plaintiffs’ Exhibit 43.
Examples of uncompensated non-production time included arriving to find a
customer who did not want the haul that day, a customer’s location that included twenty
minutes after arrival to get to the box and another twenty minutes to get the box off the
property, sixty-five minutes from arrival to loading of a box at a ranch, thirty-five
minutes for a flat tire, finding a container that was damaged with spray painting, ninetyfive minutes having to return to the yard to replace a missing tarp, and twenty minutes
spent closing a door on the container. Id. The fact that these obstacles to efficiency exist
and are confronted on a daily basis was undisputed and even corroborated by the
dispatchers who testified.
Additional Provisions of the Pay Plan. Republic maintains a pay plan with
provisions in addition to the zone commission rate sheet. The content of the full pay plan
None of the witnesses could authenticate the map, pinpoint when it was created or what it meant, but it was part
of Republic’s records from which it enforced its rate structure. Bradley, D.E. 234, pp. 45-46.
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is not shared with drivers.4 And it is not always followed. For instance, the pay plan
calls for the payment of the zone rate for dry runs—where the driver gets to the customer
but, for some reason, the container cannot be hauled. That dry run payment would not be
made if there was a nearby customer that the driver could move on to. Serrano, D.E. 234,
pp. 112-13; Baca, D.E. 234, pp. 210-11.
The plan also states that day rates5 apply to Roll-Off Drivers, but only if they
make no hauls.6 Republic’s General Manager, Robert Bradley (Bradley) testified that,
contrary to the letter of this plan, day rates were used even when a driver made hauls if
the day rate exceeded the alternative zone commissions that had been earned by those
hauls. Bradley, D.E. 234, p. 61. Also, contrary to the letter of the plan, Bradley testified
that when drivers had completed some hauls, their day rate would be supplemented with
a small amount per haul rather than the regular zone rate. Bradley, D.E. 234, p. 42.
Bradley reasoned that a day rate compensated a driver for all hours worked.
Therefore, if a driver received the greater of the day rate or his piece rate commissions
(earned despite having obstacles to completing a route), either method of compensation
necessarily paid the driver for all hours worked.
In this manner, even if a truck
breakdown kept the driver from making hauls all or part of a day, he was still paid for all
of his time. Thus, without ever having disclosed the existence or amount of a day rate to
the drivers prior to them beginning work, Bradley contends that Republic’s safety net of
Chapa, D.E. 233, p. 162 (does not know of any disclosure other than zone rates and pay sheets).
The day rates vary by location and type of truck. Bradley, D.E. 234, p. 55.
“If driver does not get any commissions and works that day, he will be paid high day rate.” Id. (DEF 000267,
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the prescribed day rate (or a greater piece rate) fully compensated a driver who normally
worked only on a commission or piece rate basis.
To compare the standard zone rate potential earnings to the day rate, the Court
looked at the average zone rate7 and multiplied it by seven hauls.8 The day rates9 were,
on average, roughly 38% of what could be earned by completed hauls. By the third haul,
using the average rate, the daily rate would be exceeded. So by Republic’s logic,
obstacles that prevent four out of seven hauls do not require separate compensation.
This theory appears to be put in practice by Republic’s policy of not providing any
day rate in addition to hauls unless the driver’s down time exceeds four hours. Chapa,
D.E. 233, p. 110. Jose Rincon testified that he had never seen a day rate applied where
there was excessive down time caused by a mechanical breakdown or other significant
loss of ability to make hauls. Rene Sanchez once turned in a route sheet showing 4.5
hours of down time. He was paid the zone commission rate for the two hauls he managed
to make because they rendered a greater amount of pay than the alternative day rate
would have. Sanchez testified that he had been instructed to write down all down time.
He did so, but never saw any additional compensation for it.
Republic contends that the drivers agreed to this arrangement despite never being
advised of the terms of the full pay plan and its day rate (original or as applied). When a
day rate was paid, it appeared on the corresponding pay stub. Republic relies on the
Plaintiffs’ Exhibit 13 (DEF 000281).
Chapa testified that, on a smooth day, drivers could make six to eight hauls. Chapa, D.E. 233, p. 122. See also,
Serrano, D.E. 234, p. 120; Ricon, D.E. 234, p. 127 (six to seven hauls in town, four out-of-town).
Plaintiffs’ Exhibit 13 (DEF 000278).
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drivers’ continued work after each pay period to demonstrate actual or constructive
knowledge of how they had been paid.
Bradley testified that the only reason to clock driver hours was to keep track of
overtime. In this manner, Republic has equated the overtime premium triggered by hours
over 40 in a workweek as compensation for the down time, straight time hours within the
initial 40 hours. Pursuant to this logic, a driver might work 30 hours of production time
and 11 hours of non-production time in a week, triggering one overtime hour. Republic’s
assertion is that one hour’s fifty percent overtime premium pay is deemed to compensate
for the ten hours of straight time worked but not productive toward a zone rate. Republic
supplied no authority for conflating straight time pay and overtime premiums.
Contrasting Pay Structures. Republic’s Operations Manager, Elbert “Dennis”
Chapa, testified to the history of driver pay at the Corpus Christi facility. He stated that,
during the time that BFI owned the business, Roll-Off Drivers were paid a day rate plus
$4.00 per haul. After Allied acquired BFI, they were paid a day rate or a day rate plus a
per haul amount. It was only after Republic took over that Roll-Off Drivers lost the day
rate component of their pay, but instead worked for the incentive/zone/commission rates.
Roll-Off Drivers and Long-Haul Drivers handle similar loads and work for the
same zone rates. However, the Long-Haul Drivers also receive a day rate along with the
zone rates. Bradley, D.E. 234, p. 56. Chapa and Bradley testified that they received this
combination rate because their routes included more drive time, the loads were heavier
and transport was slower, and they were limited in the number of hauls they could
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complete in a day—their pay was supplemented for impediments to production. Chapa,
D.E. 233, p. 61; Bradley, D.E. 234, p. 56.
Internal Confusion. On May 20, 2013, Sally Scordato, a Division Human
Resources Manager for Republic, sent an email to Chapa asking for the Corpus Christi
pay plan. “Specifically, I need to know your zone pays, day rates for RO drivers,
downtime pay, help pay, landfill wait time pay etc.” Plaintiffs’ Exhibit 71. Chapa
responded, in part, “We do not pay downtime or landfill wait time unless Supervisor
approves or has efficient reasons to authorize increase.” Id. Responding to her next
email, Chapa wrote,
In what situation would a supervisor approve downtime pay .
. . and what would that rate be? Depending on the downtime
if driver goes down more than 4 hours and there’s not an
available truck, driver will get his day rate which avg.118.00
per day plus his completed hauls.
Id. Scordato then forwarded the email thread to General Manager Bradley, saying,
I guess I am still confused on the downtime and landfill wait
time pay. In my previous divisions, drivers were paid wait
time and downtime much sooner than 4 hours. Doesn’t the
downtime and wait time affect the drivers’ overall pay since
they more than likely will not get as many hauls due to
something that was not within their control? Have we ever
paid downtime less than 4 hours?
Id. There is no response to this inquiry or clarification in the record.
Republic’s Senior Corporate Counsel, Kim Bullerdick, testified that in late 2012
or early 2013, he was advised by outside counsel experienced in wage and hour law about
piece rates in California.
He was advised that California law required a specific
agreement with respect to the amount to be paid for non-production time.
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discussion, Bullerdick testified, gave him the impression that California law was different
from the requirements of the FLSA in that respect. D.E. 235, pp. 28-29, 31. So he
believed that the FLSA does not require an agreement or understanding with respect to
compensation for non-production time and no Texas law contradicted that.
Bullerdick admitted that the specific question of the FLSA requirements was not
addressed expressly. It was only implied. He testified that he did not seek any legal
opinion on whether the Corpus Christi pay plan complied with the FLSA and did not
recall ever seeing the pay plan prior to this lawsuit being filed. D.E. 235, pp. 38, 41. He
was not aware of whether anyone at Republic ever sought or obtained an opinion
regarding the Corpus Christi pay plan prior to settling the Rodriguez10 case in San
Antonio. And when an opinion was sought, it was clear that the lawyers did not have the
full parameters of how the Corpus Christi area drivers were actually being paid, as
opposed to what was set out in the pay plan. See Plaintiffs’ Exhibit 32.
Questions About Non-Production Time. The drivers testified that no one ever
explained to them that zone rates included any non-production time. Rincon, D. E. 234,
pp. 123-24; Baca, D.E. 234, pp. 202-03. They consider their pay, based on what they
have to do to earn it, to include bump-and-dump time—what it takes to get a landfill
ticket on which the zone rate is earned. Serrano, D.E. 234, pp. 83-84, 107; Rincon, D.E.
234, p. 127; Baca, D.E. 234, pp. 221-22; Sanchez, D.E. 234, pp. 224-25. So when they
Rodriguez v. Republic Servs., Inc., No. SA-13-CV-20-XR, 2013 WL 5656129 (W.D. Tex. Oct. 15, 2013)
(denying defendants’ motion for reconsideration and granting plaintiffs’ motion for summary judgment); Rodriguez
v. Republic Servs., Inc., No. SA-13-CV-20-XR, 2013 WL 4054707 (W.D. Tex. Aug. 12, 2013) (denying defendants’
motion for summary judgment).
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encountered a lot of down time, they would complain to their supervisor and would be
told, “I’ll take care of you,” “Talk to Dennis,” or they would be ignored.11
Jose Baca testified that he complained to Supervisor Larry Kelly and was told to
ask Dennis. He had meetings with Dennis Chapa and got no resolution of the issue.
Then he had an encounter with Bradley at the recycling center and asked about down
time compensation. Bradley indicated that he knew they did not get extra pay for down
time but did not offer any explanations for how the zone rates were supposed to
compensate for that. Baca complained that they could pick up two boxes a block apart
and have a smooth two-hour trip to the landfill for one and a delayed five-hour trip for
the other, but get paid no more than they did for the two-hour job. Baca, D.E. 234, pp.
Andrew Benavidez testified that he asked two supervisors about getting paid extra
compensation for hauls from refineries because of the additional time it takes to get in
and out of those facilities. But he did not get clear answers about how he was supposed
to be paid for that additional time. Rene Sanchez asked Supervisor Larry Kelly, who
responded, “Talk to the man,” meaning Dennis Chapa. He also asked Supervisor Ray
Medrano, who said “Write it down,” referencing the route sheet. But the time written
down did not bring extra compensation.
Serrano, D.E. 234, pp. 84, 105 (complained about landfill waits, container inventory, meetings, paperwork,
customer service and can blockage-type issues and Supervisor Larry Kelly told him he would take care of Serrano);
Rincon, D.E. 234, pp. 147-48 (Larry Kelly said he would take care of them for time spent with mechanical
breakdowns), 155-56 (Rincon complained to his supervisor about the excessive security clearance time for certain
hauls); Benavides, D.E. 234, pp. 163 (talked to Larry and Ray about excessive time at security clearance and was
told to talk to Dennis), 193-95 (mentioned excessive wait time and Larry told him “I’ll take care of you”); Baca,
D.E. 234, p. 208 (was told they would take care of him or directed him to talk to Dennis); Sanchez, D.E. 234,
pp.227-28 (spoke with Larry Kelly and Ray Medrano and was referred to Dennis Chapa or told to write it down).
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The FLSA Requires an Agreement
Relying primarily upon 29 C.F.R. § 778.318, Plaintiffs contend that the FLSA
requires that there be an agreement between the employer and employee with respect to
compensation for non-productive time when the employer uses a piece rate pay structure.
Republic contends that the FLSA does not require an agreement regarding payment for
non-productive time and that the Department of Labor (DOL) interpretations embodied in
§ 778.318 are neither regulations nor binding.
These competing positions each have their place in an FLSA analysis. It is true
that, despite § 778.318, the FLSA does not require an employer to pay a certain amount
for non-production time in straight-time calculations. See DOL Opinion Letter, 1981
DOLWH LEXIS 10 (July 14, 1981). These “gap time” claims are not cognizable under
the FLSA. Karna v. BP Corp. North America, Inc., 11 F. Supp. 3d 809, 817 (S.D. Tex.
2014); The statute does not provide a cause of action for straight-time pay unless, and to
the extent that, it falls below the minimum wage. Plaintiffs do not seek straight time
The statement in § 778.318(a) that such non-production time must be counted and
paid for has only two purposes: (1) to ensure that all time worked is paid at a rate of at
least the minimum wage; and (2) to ensure that all time worked counts toward the
maximum hours/overtime requirements. Those two purposes are satisfied by Republic’s
pay structure. The Court rejects any suggestion that Plaintiffs seek or would be entitled
to damages for straight-time pay in an FLSA gap claim.
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Where § 778.318 does come into play here is with respect to determining the
regular rate for purposes of calculating overtime compensation.12 While dividing all
compensation paid by all hours worked may yield the correct regular hourly rate for most
pay schemes, the FLSA requires special handling where piece rates apply. Without any
definition of the number of hours included in a piece rate, the mathematical conversion to
an hourly rate is uncertain and vulnerable to the dangers of detrimental labor conditions
that the FLSA was intended to remedy. See generally, 29 U.S.C. § 202(a) (congressional
finding and declaration of policy).
Joe Burkel highlighted the dilemma of piece rates requiring some agreement when
he responded to the question whether a pre-trip inspection is non-production time:
"Q Okay, so pre-trip would be -- is that -- what is that, where does
"A It depends on -- I don't mean to answer this way, but it kind of
depends on who you answer – who you ask that question. You
know, in my mind that's part of the -- part of running a route.
"Q Okay, all right. What about post-trip?
"A Same answer.
"A It could be considered, you know, non-productive because it's
not actually running a route but, you know, depends on -- I don't -you know, it could be included in the incentive pay rate or it could –
you know, most of the time it is as being, you know, part of the
Computation of the overtime rate under the FLSA requires that the Court first determine Plaintiffs' regular rate of
pay. The regular rate must be expressed in terms of an hourly rate, regardless of the methodology by which the
employee is paid. 29 C.F.R. § 778.109.
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Burkel, D.E. 234, pp. 33-34. Bullerdick also testified to the confusing concept of nonproduction time: “Q: So do you understand what non-production time is? A: Yes and
no. I think it’s a very difficult term to put your arms around, but I understand the general
concept.” Bullerdick, D.E. 235, p. 45.
Thus the statute and its DOL interpretations of piece rate pay structures are
infused with requirements for agreements or understandings between the employer and
employee as to what exactly the piece rate is intended to cover. This is rooted in the
terms of the FLSA and is not just a DOL interpretation. The maximum hour provision of
the FLSA reads:
(g) Employment at piece rates
No employer shall be deemed to have violated subsection (a)
of this section [time-and-a-half overtime pay requirement] by
employing any employee for a workweek in excess of the
maximum workweek applicable to such employee under such
subsection if, pursuant to an agreement or understanding
arrived at between the employer and the employee before
performance of the work, the amount paid to the employee
for the number of hours worked by him in such workweek in
excess of the maximum workweek applicable to such
employee under such subsection—
(1) in the case of an employee employed at piece rates,
is computed at piece rates not less than one and onehalf times the bona fide piece rates applicable to the
same work when performed during nonovertime hours;
(2) in the case of an employee performing two or more
kinds of work for which different hourly or piece rates
have been established, is computed at rates not less
than one and one-half times such bona fide rates
applicable to the same work when performed during
nonovertime hours; or
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(3) is computed at a rate not less than one and one-half
times the rate established by such agreement or
understanding as the basic rate to be used in
computing overtime compensation thereunder:
Provided, That the rate so established shall be
authorized by regulation by the Administrator as being
substantially equivalent to the average hourly
earnings of the employee, exclusive of overtime
premiums, in the particular work over a representative
period of time;
and if (i) the employee's average hourly earnings for the
workweek exclusive of payments described in paragraphs (1)
through (7) of subsection (e) of this section are not less than
the minimum hourly rate required by applicable law, and (ii)
extra overtime compensation is properly computed and paid
on other forms of additional pay required to be included in
computing the regular rate.
29 U.S.C. § 207(g) (emphasis added). The Court reads this provision as requiring, when
an employee works at a piece rate, some agreement or understanding regarding what the
piece rate covers—and an overtime rate that does not fall below one and one-half times
the resulting regular rate.
The first option, § 207(g)(1), appears to apply to an agreement or understanding in
which a single piece rate covers all hours worked. The second, § 207(g)(2), applies when
multiple piece or hourly rates are used in combination. The third, § 207(g)(3), allows the
employer and employee to specify a regular rate separate and apart from any piece or
hourly rate, to serve as the regular rate for the time-and-a-half calculation—so long as it
is consistent with a methodology approved by the DOL as approximating an actual
hourly rate for the work done.
Each of these options requires “an agreement or
understanding arrived at between the employer and the employee before performance of
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the work.” 29 U.S.C. § 207(g). In other words, the difficulty of quantifying an hourly
rate when an employee is paid by the piece requires that the employer and employee
anticipate inevitable delays and come to an agreement regarding how (not if) that nonproduction time work is to be paid.
The DOL interpretations are consistent with, and expand upon, those concepts in
29 C.F.R. § 778.318.
The minimum wage is enforced by requiring that all time
compensated by a piece rate, whether productive or non-productive, be counted and paid
for—regardless of any agreement to the contrary. § 778.318(a). In other words, piece
rates cannot be used to omit non-production time from the maximum hour requirement or
to allow the inclusion of non-production time to bring the hourly rate below the FLSA
minimum wage. Because there is no question regarding when the drivers clock in and
clock out and what they do in-between, straight time—in one form or another—must be
paid for all time the employee works on the clock.
The calculation of the regular rate for non-productive time is, by default, the same
rate as paid for productive time absent an agreement for a lesser rate (but never less than
minimum wage). § 778.318(b). The parties are permitted to agree that the piece rate is
sufficient and intended to compensate the employee for all hours worked, whether
productive or non-productive. “If this is the agreement of the parties, the regular rate of
the pieceworker will be the rate determined by dividing the total piecework earnings by
the total hours worked (both productive and nonproductive) in the workweek.”
§ 778.318(c) (emphasis added).
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The statutory language is compelling in requiring an agreement whenever
overtime has to be calculated on a piece rate pay structure. The statute does not expressly
address how the Court should arrive at a regular rate in the absence of an agreement. But
it invites the Administrator to assist. 29 U.S.C. § 207(g)(3). That is a reference to the
Administrator of the Wage and Hour Division of the Department of Labor. 29 U.S.C.
§ 204. The DOL interpretations13 in § 778.318 fill that void by making it clear that,
without any agreement regarding compensation for non-production time, the full piece
rate, undiluted by that non-production time, applies.
While not binding with the full force of law or entitled to full Chevron14 deference,
the Court finds the administrative interpretations consistent with the language and intent
of the statute and invited by its terms.15 As the Supreme Court stated in the context of
another FLSA case:
We consider that the rulings, interpretations and opinions of
the Administrator under this Act, while not controlling upon
the courts by reason of their authority, do constitute a body of
experience and informed judgment to which courts and
litigants may properly resort for guidance. The weight of
Part 778 of Volume 29 of the Code of Federal Regulations are interpretations rather than regulations.
This part 778 constitutes the official interpretation of the Department of Labor with respect to the meaning and
application of the maximum hours and overtime pay requirements contained in section 7 of the Act. It is the
purpose of this bulletin to make available in one place the interpretations of these provisions which will guide
the Secretary of Labor and the Administrator in the performance of their duties under the Act unless and until
they are otherwise directed by authoritative decisions of the courts or conclude, upon reexamination of an
interpretation, that it is incorrect. These official interpretations are issued by the Administrator on the advice of
the Solicitor of Labor, as authorized by the Secretary.
29 C.F.R. § 778.1.
Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 844 (1984).
“The interpretations of the law contained in this part 778 are official interpretations which may be relied upon as
provided in section 10 of the Portal-to-Portal Act of 1947 (61 Stat. 84). 29 C.F.R. § 778.4; see also, 29 U.S.C. §§
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such a judgment in a particular case will depend upon the
thoroughness evident in its consideration, the validity of its
reasoning, its consistency with earlier and later
pronouncements, and all those factors which give it power to
persuade, if lacking power to control.
Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944). The Court HOLDS that § 778.318 is
entitled to significant weight in this dispute.
The Court CONCLUDES that Republic is not permitted to derive its regular rate
for purposes of calculating the overtime premium by dividing its piece rate compensation
by all hours worked including non-production time in the absence of “an agreement or
understanding [to that effect] arrived at between the employer and the employee before
performance of the work.” 29 U.S.C. § 207(g). The Court further CONCLUDES that, if
there is no agreement, the regular rate is the total piece rate compensation divided only by
the number of production hours used to earn that compensation.
The Parties Did Not Agree to a Pay Structure
Employees suing for unpaid overtime compensation under the FLSA must
generally prove their claim with definite and certain evidence. Reeves v. Int’l Tel. & Tel.
Co., 616 F.2d 1342, 1351 (5th Cir. 1980), implicit overruling on other grounds
recognized in Heidtman v. Cnty. of El Paso, 171 F.3d 1038, 1042 n. 4 (5th Cir. 1999). In
order to agree to a pay structure, the parties had to have a meeting of the minds regarding
the nature of non-production time.
Republic’s witnesses have testified to five
inconsistent positions on this matter: (1) there is no non-production time in the waste
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hauling business;16 (2) the only non-production time is sick leave or annual leave;17 (3)
Republic does not compensate for down time;18 (4) non-production time is compensated
by day rates that are applied for down time over four hours in a day or when production
does not exceed the day rate;19 and (5) all non-production time is included in, and
compensated by, the zone rates.20 Republic could not quantify how much non-production
time was included in a zone rate. Bradley, D.E. 234, p. 48.
As demonstrated above, Republic did not share all of the terms of the pay plan
with the drivers and it was not fully explained to them.21 Its pay plan did not expressly
address non-production time. And Republic did not apply the pay plan terms as written.
Moreover, as Plaintiffs argued, it is disingenuous for Republic to argue that they had an
agreement with their employees with respect to the treatment of non-production time
when they had no consistent position on it. Bradley denied ever meeting with drivers and
explaining the zone rate’s inclusion of any non-production time. Bradley, D.E. 234, p.
48. The drivers testified that they had not entered into any agreement regarding the
manner in which non-production time was to be compensated. Rincon, D.E. 234, p. 137.
And when the drivers complained, they were not told that their down time was
included in the zone rates or contingent day rates. Instead, they were told to write it
Chapa, D.E. 233, pp. 155-56 (he had never heard the term non-production time prior to his deposition in this
case); Bradley, D.E. 234, p. 43, 73.
Chapa, D.E. 233, p. 156; Bradley, D.E. 234, p. 70.
Chapa, D.E. 233, pp. 113, 168.
Bradley, D.E. 234, p. 81.
Chapa, D.E. 233, p. 113; Bradley, D.E. 234, pp. 46-47, 66-67.
Serrano, D.E. 234, pp. 83 (understanding that only the bump-and-dump was included in zone rate), 117-18 (no
one ever explained non-production time); Rincon, D.E. 234, p. 123; Benavides, D.E. 234, p. 162.
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down, that their supervisor would take care of them, or that they should discuss it with
management. Each instruction implied a promise of additional compensation or at least a
matter that was up for negotiation rather than a pay structure that was set and agreed to.
In defense, Republic argued that, if an agreement was required, Plaintiffs—in
fact—agreed because: (1) they were provided with the zone rate sheet prior to starting
work as Roll-Off Drivers; and (2) they continued to work as Roll-Off Drivers after being
paid on a piece rate or day rate basis for all hours worked, as reflected in their weekly pay
stubs. The Court disagrees. Such an approach fails to account for the inconsistency
The cases upon which Republic relies work against it. The opinions acknowledge
that an agreement based on notice and acceptance evidenced by continued employment
requires clear and consistent disclosure of the terms of that agreement. “To prove notice,
the employer ‘must prove that he unequivocally notified the employee of definite changes
in employment terms.’ ‘[T]he employee must know the nature of the changes and the
certainty of their imposition.’ ” Lindsey v. DynCorp Int'l, L.L.C., 385 F. App'x 414, 416
(5th Cir. 2010) (per curiam) (quoting Hathaway v. Gen. Mills, Inc., 711 S.W.2d 227, 229
The Hathaway opinion observed that the employer equivocated in discussing the
terms of the employment relationship sought to be imposed, rendering those alleged
Hathaway testified that Berkley told him to discuss the
changes with Duncan. Hathaway further testified that
Duncan, Hathaway's superior, told him that Duncan would
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take care of the problem. Further, General Mills sent
Hathaway a letter containing the new rates, and Duncan again
told Hathaway not to worry and that Duncan would take care
of it. These conflicting signals from General Mills' managers
make unequivocal notification a jury question.
Hathaway, supra at 229; see also, Moran v. Ceiling Fans Direct, Inc., 239 F. App'x 931,
936 (5th Cir. 2007) (per curiam) (finding employer inconsistency preclusive of implying
an agreement from continued employment, citing Hathaway). Plaintiffs here testified to
very similar equivocation.
The Court FINDS that Plaintiffs and Republic did not enter into an agreement or
have a mutual understanding regarding compensation for non-production time or the
regular rate to be used in calculating the overtime premium.
Plaintiffs Worked Some Non-Productive Hours
An employer must compensate an employee for all “principal activities”
performed during the day. See 29 U.S.C. § 254(a)(2); Colindres v. QuietFlex Mfg., 427
F. Supp. 2d 737, 753 (S.D. Tex. 2006) (Rosenthal, J.). Compensable principal activities
include those activities “performed as part of the regular work of the employees in the
ordinary course of business” and “performed at the employer's behest and for the benefit
of the business.” Dunlop v. City Elec., Inc., 527 F.2d 394, 401 (5th Cir. 1976) (taking a
broad view of the concept of “principal activities”).
At issue here are the following tasks:
completion of DOT paperwork;
administrative matters, including safety, OSHA, and training meetings22; driving from the
Republic objected to Plaintiffs inclusion of safety meetings in their non-productive time, arguing that Plaintiffs
failed to identify such meetings in their Advisory (D.E. 202). The Court finds that the claims set forth in the Joint
Pretrial Order (D.E. 220) include safety meetings. Republic’s objection is overruled.
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yard to the first customer and returning from the last landfill dump or customer delivery
to the yard; waiting for customers to remove items blocking access to containers;
resolving overflowing trash, damaged containers, missing tarps, and other customer
complaints; getting through customer security clearances; searching for empty containers
to deliver to customers; truck breakdowns; and excessive wait time at landfills. There is
no question that these tasks qualify as part of the principal activities of the drivers’ work
and must be included in driver compensation. See Mitchell v. Mitchell Truck Line, Inc.,
286 F.2d 721, 725 (5th Cir. 1961) (considering a driver’s principal activities to include
checking and fueling the trucks, driving them from the yard to the contractor's plant,
waiting in line to be loaded and unloaded, returning to the yard from the last jobsite, and
cleaning and refueling the trucks after the end of the workday).
Principal activities—normal and necessary components of the job—can be
productive or non-productive. Either way, the hours must be counted and paid for. And,
in the absence of an agreement, a piece rate will cover only production time. 29 C.F.R. §
778.318. So the question for the Court as the trier of fact is whether any of the categories
of time Plaintiffs have questioned should be considered productive and included within
the zone rates. Republic’s testimony was not helpful on that issue as no witness claimed
to know how the zone rates were formulated, other than to state that they varied based on
distance to the landfill. Chapa, D.E. 233, p. 53; Bradley, D.E. 234, p. 44.
Plaintiffs argue that Republic’s piece rate applies only to the bump-and-dump aspect of
their work—in which they pick up the container, haul it to the landfill, weigh it, dump it,
and get a landfill ticket that proves completion of those tasks. They assert that they are
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paid only on the basis of those tickets and any other time spent is non-production time.
But that viewpoint is too narrow.
Non-Haul Driving. Plaintiff’s position excludes the time driving (1) from the
yard to the first customer destination and (2) from the last customer destination or landfill
to the yard. None of the hauls can be completed without getting the trucks on the road
and there is no suggestion that any driver thought the truck would be parked overnight
anywhere but in Republic’s yard. This time may not produce a specific piece, but is a
necessary component of the activity, conceptually pro-rated across the day’s piece rate
production. Thus the Court FINDS that the to-and-from time that the trucks are on the
road outside Republic’s yard in the normal course of running a route is production time.
Truck Breakdowns. The Court agrees with Plaintiffs that time lost to a truck’s
mechanical breakdown or flat tire is non-production time related to Republic’s
responsibility to maintain its fleet in working order. Consequently, the Court FINDS that
down time due to a truck’s need for repair is not included in the zone rates. Thus, the
regular rate required for calculating the overtime premium has been improperly diluted
with those non-production hours.
Searching for Stock.
Plaintiffs complain that some assignments involve
delivering a particular sized box to a customer, but that suitable boxes can be unavailable
for ready loading. So drivers lose time searching for a box, even having to travel to a
different yard where the box may or may not be found. This represents a separate task
attributable to poor stock management on the part of Republic and it unduly prolongs the
amount of time it takes for a driver to complete the customer delivery. The Court FINDS
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that stock searches are not included in the zone rates and have diluted the regular rate
used for calculating the overtime premium.
DOT Paperwork, Inspections, and Meetings.
While the pre- and post-trip
inspections, duty logs, and meetings regarding safety, OSHA requirements, or general job
training may be a necessary part of running a commercial fleet, nothing about those tasks
contributes to the effort to actually pick up, haul, and dump trash on a route. Thus the
Court FINDS that these administrative tasks are not included in the zone rates and have
diluted the regular rate used for calculating the overtime premium. The specific amount
of time devoted to these tasks is subject to proof in the damages phase of this trial. See
generally, averages twenty to thirty minutes. Chapa, D.E. 233 (administrative tasks
average twenty to twenty-five minutes), p. 66; Benavides, D.E. 234, p. 164; Baca, D.E.
234, p. 203. For three or four months prior to trial, huddle meetings were conducted
every day. But by trial they had been discontinued. Benavides, D.E. 234, pp. 165-66.
Security Clearance. Certain customers, primarily prisons and refineries or other
manufacturing plants, have extensive, time-consuming security clearance procedures that
prevent the drivers from completing hauls within the amount of time ordinarily associated
with hauls from the same zones. Because of the amount of additional time spent on such
customers, and because, according to Republic, variances in zone rates are associated
only with distance to the landfill rather than complexity of customer needs, the Court
FINDS that the time delay attributable to security clearances is non-productive time that
has not been compensated through the zone rates, diluting the regular rate used for
calculating the overtime premium.
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Fueling, Landfill Wait Time, and Customer Issues. The remaining complaints
all relate to tasks that are so frequent, regular, or predictable as to be, at least in part,
ordinary components of trash hauling routes. While Plaintiffs rightly complain about
container blockages, overflowing boxes, damaged containers, and missing tarps, their
testimony that this occurs two or three times daily indicates that it is also reasonably
foreseeable albeit randomly encountered. “[Y]ou pretty much do come to expect it.”
Benavides, D.E. 234, p. 178. Thus the Court is not inclined to find these matters—
categorically—to be non-production time.
However, matters that unduly prolong
completion of the piece beyond the ordinarily foreseeable handling of a route do
represent non-production down time.
Thus excessive lines at the fueling station,
excessive wait time at the landfill, and excessive time waiting for dispatchers to resolve
customer issues or having to engage in additional tasks to resolve customer issues, must
be treated as non-productive time diluting the regular rate used to calculate the overtime
The Court FINDS that this work—to the extent that it is excessive—is nonproductive. The Court defers to the damages phase of trial to determine the amount of
time that is excessive and non-productive.
Conclusion. Plaintiffs offered evidence of instances in which they experienced
down time due to mechanical breakdowns and flat tires; DOT paperwork, inspections,
and attending meetings; stock searching; security clearances; and excessive wait times or
diversions associated with refueling, landfill lines, and customer issues. They have thus
demonstrated that at least some of the hours constitute unpaid non-production time and
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were improperly included in the regular rate calculation, improperly reducing the
overtime premium paid.
Plaintiffs provided an estimate of the amount of time
represented by these issues. However, the Court declines to fully quantify the amount of
non-production time incurred in this phase of the trial.
For liability purposes, it is sufficient to show that there has been an FLSA
violation that affects the amount of the employees’ overtime pay. The Court FINDS that
Plaintiffs were not paid any amount of straight-time pay for non-productive time on the
clock. That straight-time claim is not recoverable as a gap claim for any of the first 40
hours worked in a workweek. However, those uncompensated non-production hours
were used improperly when determining the regular rate. When that artificially low
regular rate was used to calculate overtime pay, the overtime hours were not paid the full
time-and-a-half in violation of 29 U.S.C. § 207.
Liquidated Damages and Good Faith
Violation of the maximum hours provision, 29 U.S.C. § 207, permits the
assessment of damages for the amount of unpaid overtime compensation earned. 29
U.S.C. § 216(b). The statute also provides for compensatory damages in the form of
liquidated damages (doubling the overtime award), along with attorney’s fees, and costs.
Under the FLSA,
Any employer who violates the provisions of section 206 or
section 207 of this title shall be liable to the employee or
employees affected in the amount of their unpaid minimum
wages, or their unpaid overtime compensation, as the case
may be, and in an additional equal amount as liquidated
damages. . . . The court in such action shall, in addition to
any judgment awarded to the plaintiff or plaintiffs, allow a
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reasonable attorney's fee to be paid by the defendant, and
costs of the action.
29 U.S.C.A. § 216(b) (emphasis added). The Portal-to-Portal Pay Act amended the
FLSA and provided a good faith defense to the award of liquidated damages:
[I]f the employer shows to the satisfaction of the court that the act or
omission giving rise to such action was in good faith and that he had
reasonable grounds for believing that his act or omission was not a
violation of the Fair Labor Standards Act of 1938, as amended, the
court may, in its sound discretion, award no liquidated damages or
award any amount thereof not to exceed the amount specified in
section 216 of this title.
29 U.S.C.A. § 260 (emphasis added). Republic claims to have acted in good faith so as
to avoid the assessment of the FLSA’s liquidated damages.
Good Faith Standard. There are subjective and objective components to the
employer’s substantial burden of showing good faith. E.g., Mireles v. FrioFoods, Inc.,
899 F.2d 1407, 1415 (5th Cir. 1990). On the issue of subjective good faith, the employer
must demonstrate that it “had an honest intention to ascertain what the Act requires and
to act in accordance with it.” Brantley v. Inspectorate Am. Corp., 821 F. Supp. 2d 879,
895 (S.D. Tex. 2011) (quoting Dybach v. State of Fla. Dept. of Corr., 942 F.2d 1562,
1566 (11th Cir. 1991)). The employer’s conclusion that it was in compliance with the
FLSA must also be objectively reasonable. Brock v. El Paso Nat. Gas Co., 826 F.2d 369,
371 (5th Cir. 1987). Thus, good faith may be found where the employer violated the
FLSA “under a mistaken, although reasonable belief, that its acts were in conformity with
the law.” See Martinez v. Food City, Inc., 658 F.2d 369, 376 (5th Cir. 1981).
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“[G]ood faith requires some duty to investigate potential liability under the
FLSA.” Barcellona v. Tiffany English Pub, Inc., 597 F.2d 464, 468-69 (5th Cir. 1979)
(rejecting ignorance, alone, as a good faith defense). Reliance on the advice of counsel or
consultation with the Department of Labor can establish good faith and a lack of
willfulness. Lee v. Coahoma Cnty., Miss., 937 F.2d 220, 227 (5th Cir. 1991) (good faith
and reasonableness findings affirmed, despite flawed implementation of a plan that had
been formulated on expert advice).
Evidence Regarding Good Faith. The evidence reflects that the zone rate-only
Roll-Off Driver pay structure is an anomaly—historically, corporately, geographically,
and divisionally. Historically, Chapa testified that Roll-Off Drivers were paid a day rate
plus a small per haul rate at all times that he worked in the facility—prior to the advent of
the current pay structure. Chapa, D.E. 233, pp. 48-51. Corporately, the zone rate
structure was not in effect when BFI and Allied were in control. Chapa, D.E. 233, pp.
49-51. It was applied only when Republic took over the facility. Id. Geographically, the
Corpus Christi facility was the only division within Republic using this pay structure,
causing confusion in its own Human Resources Department. Scordato email, Plaintiffs’
Exhibit 71. And divisionally, only the Roll-Off Drivers in the Corpus Christi facility
were paid this way, contrary to the pay plan terms applicable to Long-Haul, Residential,
and Commercial Drivers.
Notably, Long-Haul Drivers who handled similar loads were paid a day rate in
addition to the zone rate to compensate them for extra driving time and fewer hauls.
Bradley, D.E. 234, p. 52. Republic has not explained why the same rationale does not
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apply to Roll Off Drivers when they have extra down time and cannot make as many
hauls. While Republic did pay day rates on occasion for down time when the driver had
managed to complete a few hauls, the day rate did not apply unless (a) their down time
exceeded four hours and (b) their earned zone rates did not exceed their day rate. If the
day rate applied, the per-haul compensation was greatly reduced from the standard zone
rates. Chapa, D.E. 233, p. 110; Medrano, D.E. 233, pp. 185, 197. In contrast, the LongHaul Drivers were paid the full zone rate in addition to the full day rate—all day, every
day. Plaintiffs’ Exhibit 13; Chapa, D.E. 233, pp. 57-58; Bradley, D.E. 234, p. 56.
Given the dramatic departure represented by the Roll-Off Driver pay structure, one
would expect that Republic would have sought and obtained an appropriate legal opinion
that the pay scheme satisfied the FLSA as the good faith defense requires. However,
Republic did not do so. Their claim to good faith is based upon their impression that they
did not need any agreement regarding the treatment of non-production time from their
employees under federal law. According to Republic’s Senior Corporate Counsel, Kim
Bullerdick, that impression was derived from a legal opinion not offered into evidence
that California law did require an employer to identify non-production time and establish
a wage for it, but that California law differed from federal law in that regard.
Bullerdick admitted that Republic had not sought a legal opinion on federal law
with respect to that issue of piece rates and non-production time. Bullerdick, D.E. 235,
pp. 31-32. Republic exhibited interest regarding the lawfulness of the Corpus Christi pay
plan after it settled the Rodriguez case in San Antonio, Texas. Bullerdick, D.E. 235, pp.
34-35. But the opinion that it sought and obtained only addressed whether the Corpus
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Christi pay plan was the same or similar to the Rodriguez plaintiffs’ pay structure.
Plaintiffs’ Exhibit 32. Outside counsel concluded that the pay plans were different, but
did not opine that the Corpus Christi pay plan was lawful. Republic did not seek an
opinion on the Corpus Christi structure before this case was filed. Bullerdick, D.E. 235,
Good Faith Not Shown. Republic did not satisfy its burden of proof. There is no
evidence that it undertook to ascertain its FLSA compliance before imposing an entirely
new pay structure on its Roll-Off Drivers. They made no attempt to determine whether
the piece rate-only plan triggered the requirement of an agreement or understanding
under the FLSA. They disregarded the specialized treatment of piece rate plans and nonproduction time for purposes of determining the regular rate. The testimony that a legal
opinion on California law gave them an impression of compliance with federal law is not
sufficient to demonstrate an affirmative effort to comply.
Instead, the California requirements should have made Republic aware of the issue
of non-production time and should have given Republic pause and a desire to ensure that
any difference between California law and the FLSA was sufficient to make the zone
rates lawful. Considering the lack of evidence as to what non-production time was built
into the zone rates, the Court can only conclude that it was done without regard to the
need to properly account for that potential non-productive time. The Court FINDS that
Republic is not entitled to a good faith defense to liquidated damages.
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Willfulness and the Statute of Limitations
The statute of limitations, and thus the amount of recoverable compensatory
damages, can be expanded pursuant to the Portal-to-Portal Pay Act amendments to the
FLSA. “[E]very such action shall be forever barred unless commenced within two years
after the cause of action accrued, except that a cause of action arising out of a willful
violation may be commenced within three years after the cause of action accrued.” 29
U.S.C.A. § 255 (emphasis added). Plaintiffs claim that Republic acted willfully.
Willfulness Standard. Plaintiffs bear the burden of proof to show the employer’s
willfulness. McLaughlin v. Richland Shoe Co., 486 U.S. 128, 135 (1988). A violation is
“willful” if “the employer either knew or showed reckless disregard for the matter of
whether its conduct was prohibited by the statute.” Id. at 133. An employer who makes
a “good-faith but incorrect assumption that a pay plan complied with the FLSA” does not
commit a willful violation, even if the decision was unreasonable or negligent. See
McLaughlin at 134-35 & n.13.
Willfulness Not Proven. The way that Republic paid its Roll-Off Drivers would
have been lawful had Republic reached an agreement or understanding with its
employees regarding the way their pay was calculated. Employers can lawfully seek an
agreement whereby the piece rate is deemed to cover all hours worked, including nonproduction time. In that event, the manner in which Republic tracked all hours worked
and calculated both the regular rate and the overtime premium would have been precisely
as required by the FLSA. With the addition of the safety net of the day rate applied to
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excessive down time, Republic’s pay complied with the minimum wage and maximum
While Plaintiffs demonstrated that Republic violated the FLSA’s treatment of
piece-work pay, they did not prove that Republic was actually aware of the requirement
of an agreement. And while there is good reason for that requirement, it is not a
prominent feature of the statute or the regulations such that all employers should have
constructive knowledge of it. Ignorance is no excuse for a violation of the statute, but it
does fall short of actual knowledge or reckless disregard required to find the violation
The Court FINDS that Republic made an incorrect or negligent—but not willful—
assumption that the FLSA did not require Republic to get affirmative employee consent
to the treatment of non-production time in connection with its piece rates.
The Court Does Not Decertify this Case as a Collective Action
The Fifth Circuit has not set a legal standard for collective-action certification,
recognizing both the Lusardi23 and the Rule 23 class action approaches. Mooney v.
Aramco Servs. Co., 54 F.3d 1207, 1216 (5th Cir.1995), overruled on other grounds,
Desert Palace, Inc. v. Costa, 539 U.S. 90 (2003). The parties have agreed that the FLSA
collective action issues of this case should be governed by the Lusardi approach and they
have briefed the certification question as whether plaintiffs are similarly situated under
Lusardi v. Xerox Corp., 118 F.R.D. 351 (D.N.J.1987), mandamus granted in part, appeal dismissed, Lusardi v.
Lechner, 855 F.2d 1062 (3rd Cir.1988), vacated in part, modified in part, and remanded, Lusardi v. Xerox Corp.,
122 F.R.D. 463 (D.N.J.1988), aff'd in part, appeal dismissed, Lusardi v. Xerox Corp., 975 F.2d 964 (3rd Cir.1992).
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that standard. Joint Pretrial Order, D.E. 220, p. 20; Motion for Judgment on Partial
Findings, D.E. 230, p. 14.
Plaintiffs Properly Conditionally Certified the Case. Republic now challenges
whether Plaintiffs ever certified their current non-production claims as a collective action
because those claims fully emerged only after the first stage in the Lusardi analysis. D.E.
230, pp. 13-14. On July 29, 2014, United States Magistrate Judge Jason B. Libby granted
Plaintiffs’ motion for conditional certification of this matter as a collective action—a
matter that Republic did not oppose. D.E. 41; 160, pp. 2-3. That Order does not limit
certification to any particular issue, but is rather concerned with the employees being in a
substantially similar position with respect to their FLSA challenges. It is a case-wide
On January 3, 2017, this Court entered its Order recognizing that Plaintiffs’ nonproduction time issue was stated within a liberal reading of Plaintiffs’ complaint and was
not subject to summary judgment or being stricken. D.E. 158. Plaintiffs then filed their
Third Amended Complaint more fully setting out their claim regarding non-production
time. D.E. 159.
While Republic filed a motion to strike (D.E. 160) and a motion for summary
judgment (D.E. 162), neither motion sought to decertify the collective action. Rather,
Republic argued that allowing Plaintiffs to bring the claims would be a surprise and
prejudicial because the claims emerged after the close of discovery, with a trial date
looming. D.E. 160, p. 10. Yet Republic did not file a motion for continuance for this
reason, despite the Court’s demonstrated willingness to accommodate the parties. See
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Scheduling Orders, D.E. 21, 111, 112, 120, 130, 147, 157, 193. And in its motion for
summary judgment on the claim, Republic merely reserved the right to seek
decertification. D.E. 162, p. 3 n.3.
On April 19, 2017, the Court granted, over Republic’s objection, Plaintiffs’
motion to dismiss from this action all employees except the Roll-Off Drivers employed at
the Corpus Christi facility. The remaining named Plaintiffs and opt-in Plaintiffs are
clearly subject to the exact same pay structure. D.E. 216. Plaintiffs’ claim regarding
non-production time is properly subject to collective action treatment as the remaining
named Plaintiffs and opt-in Plaintiffs were subjected to the same pay policy. The Court
HOLDS that the conditional certification order encompassed all of Plaintiffs’ claims,
however they may have evolved, and that proceeding as a collective action is appropriate
because Plaintiffs and opt-in Plaintiffs are similarly situated according to the liberal test
for conditional certification.
Republic Did Not Properly Seek Decertification. The FLSA, while providing
for a collective action procedure, does not spell out the details for how collective actions
are certified. The Lusardi approach sets out the stages of certification, but does not
establish deadlines for conditional certification, the opt-in deadline, or the consideration
of decertification. One court described the practice regarding the decertification decision
The second tier occurs when all putative class members have
filed their consents to opt into the collective action and
further discovery has taken place to support the plaintiffs
assertions that the defendant violated the FLSA and the
matter is ready for trial. At this stage, “ ‘the court will again
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make a certification decision based on the ‘similarly situated’
standard, but will require a higher level of proof than was
necessary at the first stage for conditional certification.' ”
While the court uses a significantly higher standard to analyze
the similarly situated issue at the decertification stage, it is not
necessary for putative class members to be identical. “If the
conditional group of plaintiffs does not meet this standard at
the second stage, the group is decertified, the opt-in
plaintiffs are dismissed without prejudice and any remaining
plaintiffs are permitted to move onto the trial stage of
litigation.” The burden stays with the plaintiff at each stage
to demonstrate that other employees are similarly situated.
Prise v. Alderwoods Grp., Inc., 817 F. Supp. 2d 651, 670–71 (W.D. Pa. 2011) (citations
omitted; emphasis added).
The time for seeking decertification is after the opt-in deadline, after discovery,
but before trial. Rather than seek decertification when it should have done so (at the time
of its dispositive motions), Republic reserved its right to make a challenge. D.E. 162, p.
3 n.3. In the joint pretrial order, Republic complained about proceeding as a collective
action, but did not file a motion to decertify or request a ruling on that issue. D.E. 220, p.
Republic allowed Plaintiffs to try the case as a collective action and then waited until
after Plaintiffs rested to move for decertification. D.E. 234, p. 195 (expressly questioning
Benavides as a representative plaintiff prosecuting a collective action); Oral Motion, D.E.
235, p. 5; Written Motion, D.E. 230.
The reason that decertification must be raised prior to trial is because of the result
that would obtain otherwise. Republic’s motion requests decertification after Plaintiffs
have rested and, in the next breath, it requests dismissal with prejudice of the claims of
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named Plaintiffs who did not testify.24 D.E. 230. If the case is retroactively decertified,
those who relied on the collective nature of the action and allowed other Plaintiffs to
represent them will have made a fatal error. If the Court were to grant the motion, those
named Plaintiffs would lose their claims by default. The Court FINDS that Republic’s
motion to decertify the class, raised after Plaintiffs have rested their case, was not timely
filed and the request was waived. The Court declines to find any procedural infirmity in
proceeding as a collective action and DENIES the motion to decertify.
Substantive Decertification. At the decertification stage of the Lusardi approach,
the trial court’s task is to determine whether the opt-in plaintiffs are similarly situated to
the named plaintiffs—not just based on their affidavit testimony, but based on evidence
developed during the case proceedings. Mooney, supra at 1213 & n.7. Three factors are
relevant to this determination: “(1) the disparate factual and employment settings of the
individual plaintiffs; (2) the various defenses available to defendant which appear to be
individual to each plaintiff; and (3) fairness and procedural considerations.”
Republic seeks dismissal of any named Plaintiff who did not testify. This request only applies if the collective
action is decertified. For instance, Republic cites Taylor v. C.I.R., 271 F. App'x 414, 415 (5th Cir. 2008) and
McDaniel v. Lee, No. CIV. A. 97-3862, 1999 WL 39552 (E.D. La. Jan. 27, 1999) for the propriety of dismissing a
case for failure to appear. Both of those cases involved individual claims, not collective actions, in which no
plaintiff appeared for trial. In Taylor, no attorney appeared, either. Republic offers nothing to relate the dismissals
upon default in those cases to a failure of one of many named plaintiffs in a collective action failing to appear. In a
collective action, any named plaintiff may prosecute the case for all members of the class, whether named or opt-in.
29 U.S.C. 216(b).
Republic also cites two FLSA cases for their dismissal proposition: Fraser v. Patrick O'Connor & Assocs., L.P.,
No. 4:11-CV-03890, 2016 WL 4159753, at *4 (S.D. Tex. Aug. 4, 2016) and Rodriguez v. Mech. Tech. Servs., Inc.,
No. A-12-CV-710-DAE, 2015 WL 12551071 (W.D. Tex. May 8, 2015). But neither applies. Both involved
dismissals for failure to participate in discovery or otherwise prosecute the case in any meaningful way. Plaintiffs’
counsel in Fraser even withdrew because the plaintiffs had been nonresponsive. The respective courts dismissed the
cases against those plaintiffs because lesser sanctions would have been ineffective. Plaintiffs’ deference to other
Plaintiffs to prosecute the case as a collective action does not illustrate any failure to provide meaningful
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(drawing on three of the four factors identified in Lusardi, 118 F.R.D. at 359 (using one
additional factor applicable to ADEA cases)).
Republic contends that the Roll-Off Drivers are not similarly situated because they
work alone and do not monitor the work of other Roll-Off Drivers so as to be able to
opine as to what circumstances of non-production time they encounter. See D.E. 234, pp.
195-99 (questioning Plaintiff Benavides’ personal knowledge of other drivers’ issues).
But the question is not whether Plaintiffs all have the same exact work day. The question
is whether they are all subjected to a common policy, plan, or practice—the same factual
and employment settings. Vanzzini v. Action Meat Distribs., 995 F. Supp. 2d 703, 722-23
(S.D. Tex. 2014). It is clear that all of the Roll-Off Drivers are subjected to a pay plan
that was not fully disclosed to them, did not clearly define whether or how nonproduction time was to be paid, and was applied equally to them as written and as
Plaintiffs testified in a consistent manner regarding (1) uncompensated down time
for mechanical issues (depending upon the age and maintenance of the truck); (2)
excessive landfill wait times, often correlated with bad weather; (3) delays on routes
caused by customer-related difficulties in getting and loading their trash containers; (4)
delays attributable to locating containers to deliver to customers; (5) administrative time
for inspecting vehicles, attending meetings, and checking in and out with dispatch; (6)
fueling time; (7) expecting excessive down time to be compensated in addition to zone
rates; (8) being given conflicting messages regarding the viability of these complaints;
and (9) never seeing any part of the pay plan other than the zone rates. The Roll-Off
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Drivers would observe each other as they checked in at Republic’s yard by the appointed
time, waited in line for dispatch, attended meetings, and waited in line for fueling and at
the landfill. Baca, D.E. 234, p. 226.
The tasks and equipment assigned to the Plaintiffs varied from day to day, such
that any driver could be assigned any customer and any truck and no specific number of
hauls was guaranteed. Serrano, D.E. 234, p. 101. They generally testified that they faced
the same types of issues, delays, and down time. They also testified consistently about
not having agreed to either the way non-production time should be compensated or was
compensated. They challenged their supervisors, wrote down the time in protest on their
route and activity sheets, and expected additional compensation. Plaintiffs testified to
being subjected to a common policy, plan, or practice—despite the variations of routes
and equipment from one day to another. Those variations go to the magnitude of the
effect of the common decision on individual drivers rather than undermining the fact that
it was a common policy, plan, or practice that affected them all. Variations in the
quantity of time lost as uncompensated goes to damages, not liability.
Republic complains that Plaintiffs did not have a single definition of nonproduction time and “did not know what their haul/zone pay covered.” D.E. 230, p. 14.
But that does not defeat their collective action complaint. Rather, that is the reason for
their FLSA claim—the lack of an agreement of what constituted non-production time and
how it was paid. 29 U.S.C. § 207(g). They are all similarly situated in not having been
informed of what Republic deemed non-production time, if any, and hence how they
were to be compensated for it.
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Their common issues predominate over individual
Case 2:14-cv-00077 Document 238 Filed in TXSD on 06/12/17 Page 41 of 42
damage calculations. Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1045 (2016)
(applying Rule 23 class action certification in FLSA case and finding that variations in
individual damages do not prevent certification). Thus there is every reason to maintain
this case as a collective action. The Court DENIES the motion for judgment on partial
findings (D.E. 230) with respect to Republic’s request to decertify the collective action as
to Roll-Off Drivers.
Long-Haul Drivers. The Court DENIES Republic’s request to dismiss the three
identified Long-Haul Drivers from this case. While they work as Long-Haul Drivers,
Republic has also employed them as Roll-Off Drivers and Plaintiffs have represented that
they are participating only in their Roll-Off Driver capacity. The Court allows them to
participate only in their Roll-Off Driver capacity.
For the reasons set out above, the Court:
HOLDS that Republic was required to have an agreement or
understanding with respect to the payment of non-production time when
it paid its Roll-Off Drivers solely on a piece rate basis;
FINDS that Republic and Plaintiffs did not have an agreement or
understanding with respect to the payment of non-production time for
FINDS that the following work represents production time:
o Non-haul driving (to the first customer and from the last
FINDS that the following work represents non-production time:
o Truck breakdowns (such as mechanical failures and flat tires in
the fleet Republic maintains);
o Stock searches (in which drivers have to find boxes in Republic’s
inventory to deliver to customers);
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o Administrative time: DOT paperwork, pre- and post-trip vehicle
inspections, meetings, and standing in line to check in or out with
o Security clearance delays.
FINDS that the following work represents non-production time only
o Fueling the trucks;
o Landfill wait time;
o Customer delays (such as blocked cans, overloaded boxes,
unevenly loaded boxes, and boxes needing to be fixed or have
FINDS that Republic’s inclusion of non-production hours in its
calculation of the regular rate resulted in an amount less than required
by the FLSA for the regular rate and the amount to be used for the
HOLDS that Republic’s payment on the basis of piece rates without an
agreement or understanding with respect to the treatment of nonproduction time violated the FLSA, 29 U.S.C. § 207(g);
FINDS that Republic did not satisfy its burden to show good faith for
the purpose of eliminating or mitigating liquidated damages;
FINDS that Plaintiffs did not satisfy their burden to show that Republic
acted willfully so as to extend the statute of limitations to three years;
DENIES Republic’s motion for judgment on partial findings (D.E. 230),
DENYING Republic’s request to decertify the collective action;
ORDERS the parties to mediate the question of damages within 60
ORDERS the parties to appear for a status conference on August 18,
2017 at 9:00 a.m. to address scheduling the damages portion of this
bifurcated trial, if necessary.
ORDERED this 12th day of June, 2017.
NELVA GONZALES RAMOS
UNITED STATES DISTRICT JUDGE
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