Bourne v. Trio Equip Rental & Services LLC et al
ORDER ON MOTION FOR PARTIAL SUMMARY JUDGMENT granting in part and denying in part 42 Motion for Partial Summary Judgment.(Signed by Judge Nelva Gonzales Ramos) Parties notified.(mserpa, 2)
United States District Court
Southern District of Texas
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION
JEREMY BOURNE, et al,
TRIO EQUIP RENTAL & SERVICES
LLC, et al,
December 19, 2016
David J. Bradley, Clerk
§ CIVIL ACTION NO. 2:15-CV-312
ORDER ON MOTION
FOR PARTIAL SUMMARY JUDGMENT
Plaintiff Jeremy Bourne, individually and on behalf of others similarly situated,
filed this action under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq.
against his employer, Defendant Trio Equipment Rental & Services, LLC (Trio), along
with Defendants Vince Haigood, Danny Haigood, and Wylie Haigood (jointly Haigoods),
alleging failure to pay required overtime compensation. Before the Court is Plaintiffs’
Motion for Partial Summary Judgment (D.E. 42), seeking summary judgment that
Defendants failed to pay overtime, triggering compensatory actual damages, and that they
did so willfully, triggering liability for additional liquidated damages.
Defendants filed their Response (D.E. 45) claiming that the bonus payments they
made to their employees are to be treated as overtime premiums and that they consulted
their independent accountant to ensure that they were in compliance with the FLSA
before proceeding with this payment methodology. Plaintiffs filed a Reply (D.E. 46).
For the reasons set out below, the motion is GRANTED IN PART and DENIED IN
A. Liability for Overtime Pay
1. Burden of Proof
It is undisputed that Plaintiffs are entitled to overtime compensation in that they
are not exempt from the overtime provision of the FLSA. D.E. 7, p. 11, ¶ 41; D.E. 8, p.
11, ¶ 41 (Defendants do not claim any exemption). See generally, 29 U.S.C. § 207(a)
(overtime requirement, § 213 (exemptions). To prevail in an action to recover damages
for unpaid overtime compensation, it is the plaintiff’s burden to demonstrate: “(1) that
there existed an employer-employee relationship during the unpaid overtime periods
claimed; (2) that the employee engaged in activities within the coverage of the FLSA; (3)
that the employer violated the FLSA's overtime wage requirements; and (4) the amount
of overtime compensation due.” Johnson v. Heckmann Water Res. (CVR), Inc., 758 F.3d
627, 630 (5th Cir. 2014). The first two issues are undisputed as to both Trio and the
Haigoods. The fourth issue is expressly reserved for trial.
2. Standard of Review
The only question for the Court to determine with respect to liability for actual
compensatory damages is whether the employees received time-and-a-half of their
regular rate of pay for all hours worked over 40 in a workweek. 29 U.S.C. § 207(a)(1).
This is a question of mixed fact and law for the Court. Barrentine v. Arkansas-Best
Freight Sys., Inc., 450 U.S. 728, 743 (1981) (describing issues such as the regular rate of
pay and workweek as complex mixed questions of fact and law).1 That is because “The
keystone of Section 7(a) is the regular rate of compensation. On that depends the amount
of overtime payments which are necessary to effectuate the statutory purposes. The
proper determination of that rate is therefore of prime importance.”
Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 424 (1945).
The treatment of the regular rate as a question for the Court is derived from the
need for the Court to look beyond what the parties have purported to do in order to
prevent artificial end-runs around the FLSA’s remedial provisions.
[T]he freedom of contract does not include the right to
compute the regular rate in a wholly unrealistic and artificial
manner so as to negate the statutory purposes. Even when
wages exceed the minimum prescribed by Congress, the
parties to the contract must respect the statutory policy of
requiring the employer to pay one and one-half times the
regular hourly rate for all hours actually worked in excess of
40. Any other conclusion in this case would exalt ingenuity
over reality and would open the door to insidious disregard of
the rights protected by the Act.
Walling v. Helmerich & Payne, 323 U.S. 37, 42 (1944). “Courts have often disregarded
an employer's assertions of an overtime payment system and have found that a fixed
weekly wage covered all working hours indiscriminately.” Nunn's Battery & Elec. Co. v.
Goldberg, 298 F.2d 516, 519 (5th Cir. 1962).
The undisputed evidence is that the employees, who are oilfield workers, were
paid a salary, together with a bonus of $100 to $150 and a per diem of $15, depending
Olibas v. Barclay, 838 F.3d 442, 451 (5th Cir. 2016) (describing the number of hours worked as a question of fact
for the jury and the regular rate and calculation of overtime premium due to be questions of law for the court).
upon where they were assigned to work. If assigned to the shop or yard, they worked
five to ten hours a day and received only the salary. If assigned to a well site out in the
field, they worked 12 to 16 or more hours a day and received the salary, bonus, and per
The employees reported their shifts or days worked to Defendants without
reference to any actual hours until Defendants’ pay practices changed on or about June
Plaintiffs contend that they were paid no overtime under that pay scheme—that the
bonuses were a non-discretionary part of their regular pay. See Trio’s Responses to
Requests for Admission, D.E. 42-4, p. 10 (request 31). The amount was determined not
on the basis of specific hours worked but as an industry standard for a base rate in the
competition to attract workers. See Danny Haigood Deposition, D.E. 42-3, pp. 9-10
(internal pp. 33-34). Plaintiffs further note that their pay stubs make no mention of actual
hours worked. At best, Defendants assert that, through Danny Haigood, they had an
apparently unspoken subjective intent that the bonuses constituted overtime.
4. Liability for Overtime Pay - Conclusion
The pay methodology at issue here raises a single dispositive question for the
Court: Does the standard bonus paid with every shift worked in the field (and no shift
worked in the shop or yard) constitute a portion of regular pay or is it overtime pay? The
Court HOLDS that the bonuses constitute a part of regular pay. Defendants are liable
under 29 U.S.C. § 207(a) for failure to pay overtime premiums for all hours worked over
40 in a workweek.
Defendants’ bonus payments were made regularly on the basis of longer oilfield
shifts worked. Bonuses were paid on a per-shift basis, whether or not the employee
worked more than 40 hours in a workweek. Likewise, they were not paid in connection
with yard or shop shifts, regardless of whether the employee worked more than 40 hours
in a workweek. And the payment of additional compensation with the performance of
shifts routinely lasting four or more hours longer than the shifts in the shop or yard is
consistent with a concept of payment of straight-time.
Nothing in their nature compels the conclusion that bonuses could only represent
overtime compensation. There is no evidence of an agreement between the parties to
treat the bonus payments as overtime rather than as payment of straight-time for the
additional hours expected to be worked for the shifts out in the field. Most telling, there
is no evidence that Defendants considered the actual hours worked when computing the
Because the bonus payments constitute a portion of straight-time pay, they are to
be included in the calculation of “regular pay” pursuant to 29 C.F.R. § 778.109. No part
of the bonus payments may be arbitrarily treated as overtime pay. It is undisputed that
the per diems were expense reimbursements that do not count as regular pay or as
overtime pay. See 29 U.S.C. § 207(e)(2); 29 C.F.R. § 778.217(a). Therefore, Plaintiffs
are entitled to overtime equivalent to an additional half-time premium over the regular
rate already paid, for all hours worked over 40. The overtime premium is based on a
regular rate that includes all salary and bonus payments for the workweek divided by all
hours actually worked in the workweek. 29 C.F.R. §§ 778.109, 778.111.
B. Willfulness and the 3-Year Statute of Limitations
1. Burden of Proof
Plaintiffs bear the burden of proving willfulness. See Cox v. Brookshire Grocery
Co., 919 F.2d 354, 356 (5th Cir.1990). A willful violation of the FLSA changes the
statute of limitation from two years to three years, permitting Plaintiffs to recover
damages for unpaid overtime and liquidated damages going back three years in time. 29
U.S.C. § 255(a). The Supreme Court has adopted the standard of willfulness set out in
Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 128 (1985) for FLSA cases.
McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988). “[A] violation is “willful”
if “the employer either knew or showed reckless disregard for the matter of whether its
conduct was prohibited.” Thurston, supra. Plaintiffs do not contend that Defendants
actually knew that their bonus plan violated FLSA overtime requirements.
question is whether they adopted that plan in reckless disregard of FLSA.
2. Standard of Review
Whether a violation is willful is a question of fact reserved for the finder of fact.
See Ikossi–Anastasiou v. Bd. of Supervisors of La. State Univ., 579 F.3d 546, 552 (5th
Cir. 2009); Reich v. Tiller Helicopter Servs., Inc., 8 F.3d 1018, 1036 (5th Cir. 1993).
Plaintiffs seek partial summary judgment on this issue as a matter of law on the basis that
there is no disputed issue of material fact for the jury. See Fed. R. Civ. P. 56.
Willful behavior requires more than simply unreasonable conduct. McLaughlin,
486 U.S. at 135 n.13 (1988). Neither is negligent conduct sufficient. Mireles v. Frio
Foods, Inc., 899 F.2d 1407, 1416 (5th Cir. 1990). And an employer's failure to obtain
legal advice regarding FLSA compliance does not itself establish willfulness. Id. To be
entitled to summary judgment on this issue, Plaintiffs must demonstrate that there is no
question but that Defendants acted with reckless disregard—that their conduct rises to a
level that indicates they were willing to take a real risk that their pay scheme violated the
Danny Haigood admitted in his deposition that he always knew that his workers
were entitled to overtime, but he never did any research into whether he was paying
overtime correctly with the bonus structure. He states that it was his intention that the
bonuses would suffice as overtime payment, noting that the bonuses were paid only for
the longer shifts associated with field work. It was only when he changed accountants in
March or April of 2015, that the new accountant suggested that he move to an hourly rate
payment scheme with actual calculation of overtime hours and pay premium. D.E. 42-3,
pp. 8 (internal p. 26), 12 (internal p. 42).
In his affidavit, Danny Haigood testifies that he consulted his outside accountant
on the overtime issue. But it does not state which accountant or at what time. Thus it
does not controvert his deposition testimony that he first inquired into the FLSA
compliance issue when his new accountant brought it up in the spring of 2015. See
generally, D.E. 45-1.
4. Wilfullness – Conclusion
Plaintiffs argue that Defendants did not consult with the Department of Labor
regarding their claimed use of the bonus payments as a substitute for the overtime
premiums due. Rather than seek compliance with the FLSA, they sought only to match
the expectations of their employees—as shown by industry standards in competing for a
workforce. While Defendants claim to have consulted an accountant, Danny Haigood’s
deposition testimony indicates that the consultation happened only in the spring of 2015.
A genuine issue of material fact precludes summary judgment “if the evidence is
such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The Court FINDS that Plaintiffs’
evidence is sufficient to submit the question of Defendants’ willfulness to the jury but
that their evidence is not conclusive under summary judgment requirements.
For the reasons set out above, the Court GRANTS IN PART Plaintiffs’ motion for
partial summary judgment (D.E. 42) with respect to Defendants’ liability for failure to
pay overtime. The motion is DENIED IN PART with respect to the question of whether
Defendants acted willfully.
ORDERED this 19th day of December, 2016.
NELVA GONZALES RAMOS
UNITED STATES DISTRICT JUDGE
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