Nieddu v. Life Time Fitness, Inc. et al
Filing
51
OPINION AND ORDER granting 43 Motion for Summary Judgment.(Signed by Judge Melinda Harmon) Parties notified.(rhawkins, 4)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
PIER NIEDDU,
§
§
Plaintiff,
§
§
VS.
§
§
LIFETIME FITNESS, INC., LTF
§
CLUB MANAGEMENT COMPANY, LLC, LTF
§
CMBS MANAGING MEMBER, INC., AND §
LTF CLUB OPERATIONS COMPANY,
§
§
Defendants.
§
CIVIL ACTION H-12-2726
OPINION AND ORDER
Pending before the Court in the above referenced action,
grounded in the Fair Labor Standards Act of 1938 (the “FLSA”), 29
U.S.C. §§ 201-219, and seeking to recover unpaid minimum wage for
all hours worked and overtime for hours worked in excess of 40
hours per week under 29 U.S. C. §§ 206(a) and 207(a),1
1
Section 206(a)(1), addressing Minimum Wage, provides in
relevant part,
(a) Employees engaged in commerce
employer shall pay to each of his
workweek is engaged in commerce .
an enterprise engaged in commerce
following rates:
. . . . Every
employees who in any
. . or is employed in
. . . wages at the
(1) except as otherwise provided in this
section, not less than(A) $5.85 an hour, beginning on the
60th day after May 25, 2007;
(B) $6.55 an hour, beginning 12
months after that 60th day; and
(c) $7.25 an hour, beginning 24
months after that 60th day.
-1-
is
Defendants Life Time Fitness, Inc., LTF Club Management Company,
LLC, and LTF Club Operations, Inc.’s (collectively, “LTF’s”)2
motion for summary judgment (instrument #43).
In an Opinion and Order dated September 9, 2013 (#42), the
Court
denied
Plaintiff
Pier
Nieddu’s
(“Nieddu’s”)
motion
for
conditional certification (#33) of a revised class comprised of
LTF’s current and former commission-paid hair stylists employed at
the Houston, Texas CityCentre location from September 11, 2009 to
the present.
Nieddu now proceeds individually on his claims
against LTF.
Standard of Review
Summary judgment under Federal Rule of Civil Procedure 56(c)
is appropriate when, viewing the evidence in the light most
Section 207(a), addressing Maximum Hours, provides, “Except
as otherwise provided in this section, no employer shall employ
any of his employees who in any workweek is engaged in commerce .
. . or is employed in an enterprise engaged in 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 one-half times the
regular rate at which he is employed.”
Where an employer is found liable for failure to pay
the specified minimum hourly wage or overtime under §§ 206 and/or
207, the employer must pay the successful plaintiff employees the
amount of unpaid minimum wages or unpaid overtime compensation,
liquidated damages in an amount equal to their awards for minimum
wage and overtime payments under 29 U.S.C. § 216, and reasonable
expenses and attorney’s fees. Jones v. Supermedia, Inc., 281
F.R.D. 282, 286-87 (N.D. Tex. 2012).
2
LTF CMBS Managing Member, Inc. was dismissed on 3/06/13
(#32), pursuant to a joint motion from Plaintiff and the other
Defendants (#31).
-2-
favorable
to
the
nonmovant,
the
court
determines
that
“the
pleadings, depositions, answers to interrogatories and admissions
on file, together with the affidavits, show that there is no
genuine issue as to any material fact and that the moving party is
entitled to judgment as a matter of law.”
A dispute of material
fact is “genuine” if the evidence would allow a reasonable jury to
find in favor of the nonmovant.
Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986).
Initially the movant bears the burden of identifying those
portions of the pleadings and discovery in the record that it finds
demonstrate the absence of a genuine issue of material fact on
which movant bears the burden of proof at trial; a “complete
failure of proof concerning an essential element of the nonmoving
party’s case necessarily renders all other facts immaterial.”
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Lujan v.
National Wildlife Federation, 497 U.S. 871, 885 (1990); Edwards v.
Your Credit, Inc., 148 F.3d 427, 431 (5th Cir. 1998).
If the movant meets its burden and points out an absence of
evidence to prove an essential element of the nonmovant’s case on
which the nonmovant bears the burden of proof at trial, the
nonmovant must then present competent summary judgment evidence to
support the essential elements of its claim and to demonstrate that
there is a genuine issue of material fact for trial.
National
Ass’n of Gov’t Employees v. City Pub. Serv. Board, 40 F.3d 698, 712
-3-
(5th Cir. 1994).
“[A] complete failure of proof concerning an
essential element of the nonmoving party’s case renders all other
facts immaterial.”
not
rely
merely
Celotex, 477 U.S. at 323.
on
allegations,
denials
The nonmovant may
in
a
pleading
or
unsubstantiated assertions that a fact issue exists, but must set
forth specific facts showing the existence of a genuine issue of
material fact concerning every element of its cause(s) of action.
Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir.
1998).
Conclusory
allegations
preclude summary judgment.
unsupported
by
evidence
will
not
National Ass’n of Gov’t Employees v.
City Pub. Serv. Board, 40 F.3d at 713; Eason v. Thaler, 73 F.3d
1322, 1325 (5th Cir. 1996).
“‘[T]he mere existence of some alleged
factual dispute between the parties will not defeat an otherwise
properly supported motion for summary judgment . . . .’”
State
Farm Life Ins. Co. v. Gutterman, 896 F.2d 116, 118 (5th Cir. 1990),
quoting Anderson v. Liberty Lobby, Inc.. 477 U.S. 242, 247-48
(1986).
“Nor is the ‘mere scintilla of evidence’ sufficient;
‘there must be evidence on which the jury could reasonably find for
the plaintiff.’”
Fifth
Circuit
Id., quoting Liberty Lobby, 477 U.S. at 252. The
requires
probative evidence.’”
the
nonmovant
to
submit
“‘significant
Id., quoting In re Municipal Bond Reporting
Antitrust Litig., 672 F.2d 436, 440 (5th Cir. 1978), and citing
Fischbach & Moore, Inc. v. Cajun Electric Power Co-Op., 799 F.2d
-4-
194, 197 (5th Cir. 1986).
“If the evidence is merely colorable,
or
probative,
is
not
significantly
summary
judgment
may
be
Thomas v. Barton Lodge II, Ltd., 174 F.3d 636, 644 (5th
granted.”
Cir. 1999), citing Celotex, 477 U.S.
at 322, and Liberty Lobby,
477 U.S. at 249-50.
Allegations in a plaintiff’s complaint are not evidence.
Wallace
v.
Texas
Tech
Univ.,
80
F.3d
1042,
1047
(5th
Cir.
1996)(“[P]leadings are not summary judgment evidence.”); Johnston
v. City of Houston, Tex., 14 F.3d 1056, 1060 (5th Cir. 1995)(for the
party opposing the motion for summary judgment, “only evidence-–not
argument, not facts in the complaint--will satisfy’ the burden.”),
citing Solo Serve Corp. v. Westown Assoc., 929 F.2d 160, 164 (5th
Cir. 1991).
The nonmovant must “go beyond the pleadings and by
[his] own affidavits, or by depositions, answers to interrogatories
and admissions on file, designate specific facts showing that there
is a genuine issue of material fact for trial.”
Giles v. General
Elec. Co., 245 F.3d 474, 493 (5th Cir. 2001), citing Celotex, 477
U.S. at 324.
The court must consider all evidence and draw all inferences
from
the
nonmovant.
factual
record
in
the
light
most
favorable
to
the
Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S.
574, 587 (1986); National Ass’n of Gov’t Employees v. City Pub.
Serv. Board, 40 F.3d at 712-13.
Relevant Law
-5-
Title 29 U.S.C. § 207(a) prohibits any employer from employing
any of its covered employees for a work week that is longer than
forty hours unless that employee is paid compensation for his work
at least one and a half times the regular rate for all overtime
hours.
If the employer violates this provision, he is liable to
the employee for the overtime wage and an additional equal amount
as liquidated damages, while the court may also award reasonable
attorney’s fees and costs to the plaintiff employee under 29 U.S.C.
§ 216(b).
Nevertheless if the employer lacks any knowledge that
the employee is working overtime and the employee fails to inform
the employer that he is or prevents the employer from gaining
knowledge
of
the
overtime
work,
the
employer’s
failure
compensate for the overtime work does not violate § 207.
to
Von
Friewalde v. Boeing Aerospace Operations, Inc., 339 Fed. Appx. 448,
at *4 (5th Cir. Aug. 4, 2009), citing Newton v. City of Henderson,
47 F.3d 746, 748 (5th Cir. 1995), citing Forrester v. Roth’s I.G.A.
Foodliner, Inc., 646 F.2d 413, 414 (9th Cir. 1981).
To recover compensation for overtime work, the plaintiff bears
the burden of proving he performed the work for which he was not
properly paid.
Harvill v. Westward Communications, LLC, 433 F.3d
428, 441 (5th Cir. 2005).
The employee must show that he was
“employed” during the time for which he seeks compensation.
Newton, 47 F.3d at 748.
To demonstrate that he was employed, he
must show that the employer had either actual or constructive
-6-
knowledge that the employee was working overtime.
339 Fed. Appx. at 455.
Von Friewalde,
“Constructive knowledge exists if ‘by
exercising reasonable diligence’ an employer would become aware
that an employee is working overtime.”
Id.
The plaintiff must
produce enough “evidence to show the amount and extent of that work
as a matter of just and reasonable inference.”
Harvill, 433 F.3d
at 441, citing Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680,
686-88 (1946)(“[A]n employee has carried out his burden if he
proves that he has in fact performed work for which he was
improperly compensated and if he produces sufficient evidence to
show the amount and extent of that work as a matter of just and
reasonable inference.”), superseded by statute, Portal-to-Portal
Act of 1947, 29 U.S.C. § 216(b), on other grounds as stated in
Carter v. Panama Canal Co., 463 F.3d 1289, 1293 (D. D. Cir. 1972).
The evidence of the hours worked does not have to be “perfectly
accurate,” but must provide “a sufficient basis to calculate the
number of hours worked . . . . “
Marshall v. Mammas Fried Chicken,
Inc., 590 F.2d 598, 599 (5th Cir. 1979)(per curiam), citing Hodgson
v. Jones, 434 F.2d 1061, 1062 (5th Cir. 1970).
“If the employer’s
records are ‘proper and accurate,’ the employee may rely on these
. . . .”
Rosales v. Lore, 149 Fed. Appx. 248, 255 (Aug. 19, 2005),
citing Mt. Clemens Pottery, 328 U.S. at 687.
“‘An employer who is armed with [knowledge that an employee
is working overtime] cannot stand idly by and allow an employee to
-7-
perform overtime work without proper compensation, even if the
employee does not make a claim for overtime compensation.’”
Newton,
47
F.3d
at
748,
quoting
Forrester
v.
Roth’s
Foodliner, Inc., 646 F.2d 413, 414 (9th Cir. 1981).
I.G.A.
As noted,
moreover, if the “‘employee fails to notify the employer or
deliberately prevents the employer from acquiring knowledge of the
overtime work, the employer’s failure to pay for the overtime hours
is not a violation of § 207.’”
Id., quoting id.; in accord,
Harvill v. Westward Communications, LLC, 433 F.3d 428, 441 (5th Cir.
2005).
In Forrester, the Ninth Circuit affirmed the district court’s
grant of summary judgment to the employer because the employee
turned in time sheets that failed to report overtime hours and the
employee failed to demonstrate that the employer should have known
that the employee worked more hours than those claimed on the time
sheets.
Id.
In Newton, 47 F.3d at 749, the Fifth Circuit cites its opinion
in Brumbelow v. Quality Mills, Inc., 462 F.2d 1324, 1327 (5th Cir.
1972), in which it upheld a judgment in favor of an employer and
estopped a home-working employee from seeking extra compensation
because she had worked more hours than she claimed in her time
sheets.
She actually reported fewer hours than she worked because
the company required employees to assemble a certain minimum number
of electric light pull cords in an eight-hour day, she could not
-8-
complete that number within the time limit and was therefore afraid
of losing her job.
Id. at 1325.
She subsequently sued her
employer for unpaid minimum wages and overtime pay, plus liquidated
damages and attorney’s fees.
Id.
The panel found that the
employer was dependent on the employee to correctly report the
number of hours worked.
it
was
the
employer’s
Id. at 1326.
duty
to
The employee argued that the
keep
and
maintain
records
of
compensation, including overtime, and that the employer could not
transfer that duty to the employee.
Rejecting her argument, the
panel opined,
The fact that the employer utilizes a minimum required
production is not alone enough to impose liability to an
industrial homeworker who, in order to maintain her job,
understates the number of hours worked. The regulations
recognize that piece rates are permissible subject to
attainment of the hourly minimum wage.
There is no
evidence that this employer’s norm was not being achieved
by workers in general or that the employer otherwise knew
or should have known that it was not achievable by
workers in general or this worker in particular. There
was no evidence that the employer required the entry of
false reports of hours worked, but rather appellant
concedes that no supervisory person, including Baker, the
one-man management for the company, ever told her to do
so. There is no evidence that the company in any manner
encouraged workers to falsely report (unless we were to
infer an illegal or improper encouragement from the mere
existence of a norm, which we decline to do), and no
evidence that it knew or should have known that
appellant, unable to perform up to the employer’s
standard, was giving false information to conceal that
fact in order to hold onto her job.
Id.
The panel concluded that the district court correctly granted
a directed verdict on the grounds that the appellant was estopped
from seeking to recover more compensation and could not profit from
-9-
her own wrongful act in providing false data to her employer.
In Newton a police officer sued his employer, the City of
Henderson (“the City”), for overtime compensation under 29 U.S.C.
§ 207 for the period when he was assigned to the federal Drug
Enforcement Agency’s (“DEA’s”) Task Force, from October 1987September 30, 1991, under an agreement between the City and the
DEA.
During that time the City was Newton’s employer and was in
charge of establishing salary and benefits, including overtime,
while the DEA controlled Newton’s day-to-day activities and duties.
The City’s personnel policy mandated that all police department
employees had to obtain approval before working overtime.
Id.
Newton conceded that he was not authorized to work overtime before
March 7, 1990, and that subsequently, he was authorized to work
only
approximately 12.5 hours overtime per two-week pay period.
Newton did ask his Police Department supervisors for permission to
work more overtime, but each time he was denied on the grounds that
the County could not afford the additional pay. Id. at 747-48.
Morever, the City required an employee seeking overtime to report
those hours within 72 hours of the time worked.
Id. at 748.
After
Newton resigned in September 1991, he submitted a separate time
report to the DEA for the overtime hours that he is claiming in
this suit.
After a bench trial the district court found that Newton was
employed by the City during the period for which he was claiming
-10-
excess overtime, that the City had not shown that it acted in good
faith reliance that its actions were lawful, and that the City was
liable for a “continuing violation.”
47 F.3d at 747.
It awarded
the Newton overtime compensation back to August 1988 and liquidated
damages.
The City appealed.
On appeal Newton contended that his City supervisors knew he
was working excess overtime hours because he orally reported his
activities to them each day.
Id. at 748.
Although he did not tell
them the number of hours he put in each day, he argues that since
he was an undercover agent, they knew he had to work outside
regularly scheduled hours, as the two supervisors attested.
Both
supervisors, however, and Newton’s DEA supervisor testified that
they assumed Newton was taking time off, i.e., “flex time,” to
compensate, so that he was not exceeding his authorized hours per
pay period.
Id.
While his DEA supervisor never expressly told
Newton to work overtime, Newton testified that this supervisor told
him to “to go out and do the job.”
Id.
One of Newton’s City
police supervisors was Police Chief Randall Freeman, who also sat
on the Board of Directors of the Task Force and had access to the
352 forms Newton filled out and submitted in applying for the
overtime hours from the DEA.
Id.
Chief Freeman testified that he
never saw these forms and that the board never discussed Newton’s
overtime at board meetings.
The district court had determined that such access by the
-11-
police chief, who was also the City Manager at the time, to
information
about
the
activities
of
the
Task
Force
imputed
constructive knowledge to the City about the overtime that Newton
was working.
The Fifth Circuit disagreed and held that “as a
matter of law such ‘access’ to information does not constitute
constructive knowledge that Newton was working overtime.”
47 F.3d
at 749. The City has specific procedures for obtaining payment for
overtime, which Newton ignored. The panel opined,
If we were to hold that the City had constructive
knowledge that Newton was working overtime because
Freeman had the ability to investigate whether or not
Newton was truthfully filling out the City’s payroll
forms, we would essentially be stating that the City did
not have the right to require an employee to adhere to
its procedures for claiming overtime.
The fact that
Freeman had access to the Task Force’s activities means
that perhaps he could have known that Newton was working
overtime hours, but the question here is whether he
should have known. In light of the fact that Freemen
explicitly ordered Newton not to work overtime and in
light of the fact that Newton admits that he never
demanded payment for overtime already worked, it is clear
that access to information regarding the Task Force’s
activities, standing alone, is insufficient to support
the conclusion that the City should have known that
Newton was working overtime.
Id. at 749.
“Every employer subject to any provisions of this Act . . .
shall make, keep, and preserve such records of the person employed
by him and of wages, hours, and other conditions and practices of
employment maintained by him . . .
.” 29 U.S.C. § 211(c).
To
recover overtime compensation for hours worked where the employer
failed to keep adequate records, the plaintiff must show that he
-12-
“‘performed work for which he was not properly compensated.’”
Von
Friewald, 339 Fed. Appx at 455 (5th Cir. Aug. 4, 2009), citing
Anderson
v.
Mt.
Clemens
Pottery
Co.,
328
U.S.
680,
686-87
(1946)(“[A]n employee has carried out his burden if he proves that
he
has
in
fact
performed
work
for
which
he
was
improperly
compensated and if he produces sufficient evidence to show the
amount and extent of that work as a matter of just and reasonable
inference.”), superseded by statute, Portal-to-Portal Act of 1947,
29 U.S.C. § 216(b), on other grounds as stated in Carter v. Panama
Canal Co., 463 F.3d 1289, 1293 (D. D. Cir. 1972).
In Mt. Clemens
Pottery Co., the Supreme Court opined,
Due regard must be given to the fact that it is the
employer who has the duty under § 11(c) of the Act to
keep proper records of wages, hours, and other conditions
and practices of employment and who is in position to
know and to produce the most probative facts concerning
the nature and amount of work performed.
Employees
seldom keep such records themselves; even if they do, the
records may be and frequently are untrustworthy. It is
in this setting that a proper fair standard must be
erected for the employee to meet in carrying out his
burden of proof.
When the employer has kept proper and accurate
records, the employee may easily discharge his burden by
securing the production of these records. But when the
employer’s records are inaccurate or inadequate and the
employee cannot offer convincing substitutes, a more
difficult problem arises.
The solution is not to
penalize the employee by denying him any recovery on the
ground that he is unable to prove the precise extent of
uncompensated work. Such a result would place a premium
on an employer’s failure to keep proper records in
conformity with his statutory duty; it would allow the
employer to keep the benefits of the employee’s labors
without paying due compensation as contemplated by the
Fair Labor Standards Act. In such a situation, we hold
that an employee has carried his burden if he proves that
-13-
he has in fact performed work for which he was improperly
compensated and if he produces sufficient evidence to
show the amount and extent of that work as a matter of
just and reasonable inference. The burden then shifts to
the employer to come forward with evidence of the precise
amount of work performed or with evidence to negative the
reasonableness of the inference to be drawn from the
employee’s evidence. If the employer fails to produce
such evidence, the court may award damages to the
employee, even though the results be only approximate.
Mt. Clements Pottery Co., 328 U.S. at 687-88.
If the defendant
fails
the
to
rebut
the
plaintiff’s
evidence,
plaintiff’s
recollection and estimates of hours are presumed to be correct.
Id. at 687-88.
LTF’s Motion for Summary Judgment (#43)
LTF moves for summary judgment on the grounds that Nieddu
fails to allege facts to support his claims for unpaid minimum wage
and/or overtime, or any other purported improper payment by LTF
that Nieddu claims violated the FLSA.
LTF asserts that Nieddu’s
claims are based largely on his unproven allegation that one
supervisor, Francisco Fuentes (“Fuentes”), told him that as a
commissioned hair stylist employee of LTF, Nieddu did not have to
report his time worked.
Nieddu’s Dep. at 88-90.
Despite the fact
that Nieddu reported to six different supervisors in the course of
his employment by LTF from April 20, 2010 to March 18, 2012, he
could not remember any supervisor other than Fuentes that allegedly
told Nieddu the he did not have to report his work time.
Id.
LTF
objects that Nieddu’s claim is not viable because Nieddu’s decision
not to report all the hours he worked is contrary to LTF’s clear
-14-
policies mandating accurate timekeeping and receipt of proper
compensation for all hours worked by commissioned employees, who
are all trained that they must be aware of and comply with these
policies.
There is no dispute that LTF mandates that its commissioned
employers must accurately report and receive adequate compensation
of all hours that they worked, as expressly indicated in LTF’s
employment policies and in LTF’s training of employees.
Weber Affid. at ¶ 4.
#43-4,
Clocking in and out of the Company’s
timekeeping system is a specific requirement of the job.
Evidence
demonstrates that commissioned employees are authorized to track
their
own
hours
and
are
responsible
for
self-reporting
all
compensable work time, and if they fail to do so, they may be
subject
to
employment.
discipline,
possibly
even
termination
of
their
LTF insists that Nieddu’s conscious decision not to
accurately report all the hours he worked violates LTF’s policies
and cannot, as a matter of law, impose liability on LTF for
violating Section 7(i)3 of the FLSA.
In Wood v. Mid-America
3
Section 7(i), 29 U.S.C. § 107(i)(“Employment by retail or
service establishment”), provides an exemption from the FLSA’s
overtime provisions:
No employer shall be deemed to have violated subsection
(a) of this section by employing any employee of a retail
or service establishment for a workweek in excess of the
applicable workweek specified therein, if (1) the regular
rate of pay of such employee is in excess of one and onehalf times the minimum hourly rate applicable to him
under section 206 of this title, and (2) more than half
-15-
Management Corp., 192 Fed. Appx. 378, 381 (6th Cir. Aug. 1, 2006),
the Sixth Circuit opined,
At the end of the day, an employee must show that
the employer knew or should have known that he was
working overtime or, better yet, he should report the
overtime hours himself. Either way, the employee bears
some responsibility for proper implementation of the
FLSA’s overtime provisions. An employer cannot satisfy
an obligation that it has no reason to think exists. An
employee cannot undermine his employer’s efforts to
comply with the FLSA by consciously omitting overtime
hours for which he knew he could be paid.
See also Davis v. Food Lion, 792 F.2d 1274 (4th Cir. 1986)(Because
the evidence showed that the employer did not know and should not
have known of the manager’s overtime work, the employer was not
liable to the manager for overtime compensation.); in accord,
Newton, 47 F.3d at 748-49 (where employer has no reason to know
his compensation for a representative period (not less
than one month) represents commissions on goods or
services. In determining the proportion of compensation
representing commissions, all earnings resulting from the
application of a bona fide commission rate shall be
deemed commissions on goods or services without regard to
whether the computed commissions exceed the draw or
guarantee.
Regarding certain record-keeping requirements related to the
§ 7(i) exemption, 29 C.F.R. § 516.16 provides in part, “With
respect to each employee of a retail or service establishment
exempt from the overtime pay requirements of the Act pursuant to
the provisions of section 7(i), employers shall maintain and
preserve payroll and other records containing all information and
data required by § 516.2(a) except paragraphs (a)(6),(8),(9), and
(11) . . . .”
Exemptions are narrowly construed under the statute and the
employer bears the burden to prove an exemption applies. Cheatham
v. Allstate Ins. Co., 465 F.3d 78, 584 (5th Cir. 2006); Vela v. City
of Houston, 276 F.3d 659, 666 (5th Cir. 2001).
-16-
that an employee is working overtime, the employer is not liable
for failure to pay overtime), and Am. Fed. of State, County and
Mun. Employees v. La. ex rel. Dept. of Health and Hospitals, Nos.
Civ. A. 90-4389 and 91-0857, 2001 WL 19999, at *11-14 (E.D. La.
2001). LTF insists that it had no actual or constructive knowledge
of Plaintiff’s claimed off-the-clock work.
LTF charges that Nieddu is manufacturing a meritless claim in
alleging that LTF violated the FLSA in its application of “Shop
Charges” as part of its commission calculation for hair stylists’
salon services for regular-hour compensation.
In its previous
Opinion and Order, 977 F. Supp. 2d at 704, the Court wrote,
“Shop Charges” are not unlawful deductions from wages.
They are deducted from the price of each service before
a Stylist’s Service Commission is calculated.
Shop
Charges are meant to cover a range of costs involved in
providing various salon services to customers, e.g., the
cost of using salon products and linens, and they vary
with the particular service. Furthermore Shop Charges
are not a deduction from the hair stylists’ earned wages;
instead they are automatically calculated at the point of
sale and are deducted from service charges (through the
SpaBiz or ShortCuts Point-of-Sale systems) before the
calculation of Service Commissions. [citations omitted]
See also #43-3, Shiffman Affid. ¶ 10.
LTF now argues that Nieddu
makes no allegations, no less submits any evidence, showing why
Shop Charges allegedly violate the FLSA.
As noted, Shop Charges
applicable to each service are automatically calculated when the
sale occurs and are deducted from service charges before Service
Commissions are calculated.
meaning
of
“commission”
Although case law addressing the
under
-17-
the
FLSA’s
retail-commission
exception is sparse,4 those decisions that do exist hold that
employers are not required to pay commissions strictly based on a
percentage of the total cost to the consumer to satisfy § 7(i)’s
definition of “commission.”
See, e.g., Parker v. Nutrisystem,
Inc., 620 F.3d 274, 283 (3d Cir. 2010)(declining to require that a
commission under § 7(i) be strictly based on a percentage of the
end cost to the consumer”); Yi v. Sterling Collision Centers, 480
F.3d 505, 509-10 (7th Cir. 2007)(a commission can be based on the
full price of the good or service sold or on only part of the
price--such as the price of the labor that goes into the good or
service for example).
LTF argues that Nieddu fails to assert viable claims for
alleged minimum wage and/or overtime violations of the FLSA.
The
undisputed evidence shows that LTF implemented various policies,
procedures, and systems to accurately track commissioned hair
stylists’ hours, calculate commissions due, and identify draws
where needed, and thereby to satisfy § 7(i).
Nieddu fails to
provide proof of any corporate decision, policy or plan by LTF that
kept him from accurately recording his time or from being properly
paid under § 7(i).
He does not claim that the KRONOS system kept
him from accurately reporting his hours worked or that LTF’s
SpaBiz, ShortCuts, or Workday systems failed to correctly calculate
4
(11
th
See Klinedinst v. Swift Invs., Inc., 260 F.3d 1251, 1254
Cir. 2001).
-18-
commissions or draws due to him, or that he was disciplined in any
way when he did accurately report all hours worked.
He does not
dispute that he self-reported his own payroll time.
He does not
contend that LTF knew of and suffered or permitted any “off the
clock” hours.
All he alleges is that a single supervisor told him
not to worry about clocking in or clocking out because he was a
commissioned employee.
These bare, unsupported allegations cannot
defeat summary judgment.
Nieddu asserts that LTF failed to comply with the FLSA’s
record-keeping requirements by neglecting to maintain accurate time
records.
LTF contends that Nieddu is ignoring the fact that
Nieddu’s own actions impeded LTF’s efforts to meet its recordkeeping obligations.
For the purposes of this summary judgment motion only, LTF
assumes the correctness of Plaintiff’s version of the facts.
LTF
argues that based on the undisputed evidence here, Nieddu has
failed to raise a material fact issue on any of his claims, and
therefore LTF should be granted summary judgment.
It summarizes
the following as such facts.
Pier Nieddu is a hair stylist who was formerly employed by the
LTF facility in Town & Country, Houston, Texas, from approximately
April 20, 2010 to March 15, 2012.
Douglas R. Christensen Affid.,
Ex. A to #43, Dep. of Pier Nieddu, 15:4-18, 37:6-14 & Exs. 3 and
10.
-19-
LTF is a nationwide chain of health and fitness facilities
under the control of the corporate office of Lifetime Fitness,
Inc., located in Minnesota, and holds itself out to the general
public as a “single enterprise,”5 each entity liable for the
violations of the others.
LTF runs each location identically with
the same kind of facility and service, sharing employees, having
common management, pooling resources, and having common ownership
and operating from the same corporate headquarters, having the same
operating name, advertising together on the same website, and using
the same business model.
LTF operates approximately 105 Lifetime
Fitness locations in twenty-one states and twenty-six major cities
and employs approximately 20,000 employees nationwide. LTF employs
hair stylists at all of its locations.
5
Alternatively, states the
“The minimum wage and overtime provisions of the FLSA
apply to employees of ‘an enterprise engaged in commerce or in
the production of goods for commerce.’” Donovan v. Grim Hotel
Co., 747 F.2d 966, 969 (5th Cir. 1984), quoting §§ 206 and 207).
The FLSA defines “enterprise” in part as “the related activities
performed (either through unified operation or common control) by
any person or persons for a common business purpose, and includes
all such activities whether performed in one or more
establishments or by one or more corporate or other organization
units including departments of an establishment operated through
leasing arrangements.” 29 U.S.C. § 203(r)(1). Section 203(s)
restricts the definition to “an enterprise whose annual gross
volume sales made or business done is not less than $500,000.”
The three main elements of a statutory enterprise, which must be
shown to establish that two entities functioned as a single
enterprise, are related activities, unified operation or common
control, and common business purpose.”
Orozco v. Plackis,
F. Supp. 2d
, 2013 WL 3306844, at *5 (W.D. Tex. June 13,
2013), citing Brennan v. Arnheim & Neely, Inc., 410 U.S. 512, 518
(1973), and Reich v. Bay, Inc., 23 F.3d 110, 114 (5th Cir. 1994).
-20-
Complaint, the LTF entities operate as joint employers.6
6
The FLSA defines an “employer” very broadly as “any person
acting directly or indirectly in the interest of an employer in
relation to an employee.” 29 U.S.C. § 203(d). To determine if
an individual or an entity is an “employer” under the statute,
applying an “economic reality” test, a court should examine
whether he or it “‘(1) possessed the power to hire and fire
employees; (2) supervised or controlled employee work schedules
or conditions of employment; (3) determined the rate or method of
payment; and (4) maintained employee records.” Gray v. Powers,
673 F.3d 352, 355 (5th Cir. 2012), quoting Williams v. Henagen,
For a prima facie case under
595 F.3d 610, 620 (5th Cir. 2010).
the FLSA, the employee bears the burden of demonstrating the
existence of an employer-employee relationship by a preponderance
of the evidence. Artis v. Asberry, Civ. A. No. G-10-323, 2012 WL
5031196, at *3 (S.D. Tex. Oct. 16, 2012). Whether a person or an
entity is an “employer” under the statute is a question of law.
Beliz v. W.H. McLeod & Sons Packing Co., 765 F.2d 1317, 1327 (5th
Cir. 1985).
There can be multiple employers under the FLSA and 29 C.F.R.
§ 791.2(a)(“A determination of whether the employment by the
employers is to be considered joint employment or separate and
distinct employment for purposes of the act depends upon all the
facts in the particular case. . . . . [I]f the facts establish
that the employee is employed jointly by two or more employers,
i.e., that employment by one employer is not completely
disassociated from employment by the other employer(s), all of
the employee’s work for all of the joint employers during the
workweek is considered as one employment for purposes of the act.
In this event, all joint employers are responsible, both
individually and jointly, for compliance with all the applicable
provisions of the act, including the overtime provisions, with
respect to the entire employment for the particular workweek.”).
Under 29 C.F.R. § 791.2(b),
Where the employee performs work which simultaneously
benefits two or more employers, or works for two or
more employers at different times during the workweek,
a joint employment relationship generally will be
considered to exist in situations such as:
(1) Where there is an arrangement between the
employers to share the employee’s services,
as, for example, to interchange employees; or
(2) Where one employer is acting directly or
-21-
Specifically Nieddu complains that LTF violated the FLSA by
(a) failing to pay at least the minimum wage for hours worked in a
workweek where no overtime was worked (29 U.S.C. §§ 206(a) and
207(a)7); (b) failing to pay at least one and one-half times the
minimum wage for every hour worked during weeks where the hair
stylist worked over forty hours in a workweek; (c) not maintaining
the required records8 to comply with the commissioned employee FLSA
indirectly in the interest of the other
employer (or employers) in relation to the
employee; or
(3) Where the employers are not completely
disassociated with respect to the employment
of a particular employee, and may be deemed
to share control of the employee, directly or
indirectly, by reason of the fact that one
employer controls, is controlled by, or is
under common control with the other employer.
7
Where an employer is found liable for failure to pay the
specified minimum hourly wage or overtime under §§ 206 and/or
207, the employer must pay the successful plaintiff employees the
amount of unpaid minimum wages or unpaid overtime compensation,
liquidated damages in an amount equal to their awards for minimum
wage and overtime payments under 29 U.S.C. § 216, and reasonable
expenses and attorney’s fees. Jones v. Supermedia, Inc., 281
F.R.D. 282, 286-87 (N.D. Tex. 2012).
8
Under 29 U.S.C. § 211(c) in relevant part,
Every employer subject to any provision of this chapter
or of any order issued under this chapter shall make,
keep, and preserve such records of the persons employed
by him and of the wages, hours, and other conditions
and practices of employment maintained by him, and
shall preserve such records for such periods of time,
and shall make such reports therefrom to the
Administrator as he shall prescribe by regulation or
order as necessary or appropriate for the enforcement
of the provisions of this chapter or the regulations or
-22-
exemption (section 7(i)); and (d) by passing on business expenses
(e.g., for shampoo, hair coloring products, etc.) to its hair
stylists, resulting in a denial of minimum wage and/or of overtime
at the federally mandated premium rate for overtime worked.
LTF classifies its hair stylist employees as “Apprentices “ or
“Stylists.”
Liza Shiffman Affid. ¶¶ 5-7, Ex. 3 to #43; Alexandra
Yanez Affid. ¶ 8, Ex. 1 to #43.
Apprentices are generally hair
stylists beginning their employment by a period of training and
development.
The
purpose
of
the
Apprentice
program
is
for
Apprentices to gain on-the-job experience and to build a client
base.
Shiffman Affid. at ¶5.
non-exempt
basis
for
all
Apprentices are paid on an hourly,
time
they
spend
on
work-related
activities, including any overtime premium due under federal or
state law.
Id.
In addition Apprentices, as well as Stylists, can
receive sales commissions on salon products and other retail goods
that they sell to customers, and commissions resulting because of
their
work
are
awarded
even
if
the
actual
completed on days when they are not at work.
transactions
are
Thus the company’s
records may reflect compensation to an Apprentice or Stylist for
days when he or she was not at work.
Id. at ¶ 6.
The amount of
the sales commission depends on the sales volume and the commission
orders therein. . . . .
-23-
plan.9
Id.
LTF maintains that Nieddu was properly compensated for all the
hours that he self-reported while he was an Apprentice from April
20, 2010 to July 31, 2010.
Christensen Affid. Ex. C at 3.
Nieddu
has not claimed that he did not report any hours or was improperly
paid during this Apprenticeship term.
After an Apprentice successfully completes his Apprentice
term, in compliance with Section 7(i)’s exemption requirements, he
becomes a Stylist and is paid mainly on a commission basis.
Christensen Affid. Ex. C at ¶¶ 7-8.
In addition to the sales
commission discussed above, Stylists receive commissions on a
portion of the price charged to their clients for all salon
services that the Stylists provide.
client
varies
with
the
The price charged to the
particular
individual Stylist’s service rate.
service
provided
and
the
Once the individual Stylist’s
service rate is determined, “Shop Charges” and any applicable
promotional or other discounts are deducted from the price of the
service in question.
of
this
final
Service Commissions are then calculated off
service
Commission
rate
is
Schedule.”
charge.
based
on
Id.
the
The
particular
Id. at ¶ 11.
9
individual
Service
Stylist’s
“Pay
For example, LTF observes that in 2012, sales commissions
were calculated at 15% of the product retail sale priced for
total sales per client of $7.00 to $13.99, and at a rate of 18%
for total sales per client of $14 or more. #43 at p.4.
-24-
In addition to sales commissions and service commissions,
during the period that Nieddu worked in Texas, Stylists also
received an hourly rate of $10.88 (or one and a half times the
minimum-wage rate) for the time they spent in training sessions and
meetings, including travel time.
LTF designed its reporting and compensation policies and
practices to ensure that it complied with the FLSA’s section 7(i),
which requires that to qualify as exempt from the FLSA overtime
provisions, a commissioned employee’s earnings for a given pay
period must be at least one and a half times the minimum hourly
rate
applicable
to
him
and
more
than
half
represents commissions on goods or services.
See also 29 C.F.R. § 516(2)(a)(6)(ii).
his
compensation
29 U.S.C. § 207(i).
When a Stylist’s earnings
for a pay period do not equal at least one and a half times the
applicable minimum wage for the number of hours worked, the Stylist
receives a “draw” or “minimum wage adjustment,” i.e., “a payment
which, along with any commissions earned during the pay period in
question, will render the employee’s pay equal to the applicable
minimum rate multiplied by the hours worked in the pay period,
minus
any
available
tip
credit
authorized
under
federal
and
applicable state law.” #43-4, Shiffman Affid. ¶ 12. In Houston at
Nieddu’s location, that minimum rate for a section 7(i) exemption
was $10.88 per hour.
Id.
LTF‘s Timekeeping policy requires hourly and commissioned
-25-
employees to accurately and completely record all hours worked in
LTF’s electronic timekeeping system, KRONOS.
Weber Affid., Ex. 4, ¶ 6.
Id.
#43-4, Brianna
It states clearly that each hourly and
commissioned employee is responsible for accurate recordkeeping of
all the time he or she has worked, including all hours that
employees actually spent on job-related duties and any paid breaks
in accordance with applicable law, in order to accurately calculate
pay and benefits.
#43-4, Weber Affid. ¶¶ 5-8 and Ex. A.
If for
any reason changes or corrections need to be made on the time
reports in KRONOS, the employee must inform his Department head.
If he forgets to punch in or out as required under the Timekeeping
policy, he must immediately fill out a KRONOS Missed Punch form and
give it to his Department Head to process.
Under LTF’s “KRONOS Missed Punches/Editing Punches” policy,
Department Heads must at least every other day review the time
records that their individual employees have directly reported to
KRONOS for any potential errors or inadequacies.
#43-4, Weber
Affid., ¶ 10 & Ex. B. The Department Head a/k/a supervisor (#43-1,
Yanez Affid. at ¶¶ 4,7) must have a properly completed KRONOS
Exception Sheet from the employee before the Department Head
can
edit any employee’s punches; if the Department Head edits the
employee’s punches without the Exception Sheet, he is subject to
discipline, up to and including termination.
Id.
Under the
Timekeeping policy, employees who alter or falsify their records or
-26-
otherwise do not provide accurate timekeeping information are also
subject to discipline up to and including termination.
and Ex. A.
Id. at ¶ 11
LTF’s “Accuracy of Company Records” also requires that
employees make sure that all data included in LTF records are
complete and accurate or the employee is subject to discipline, up
to and including termination.
Id. & Ex. C.
Furthermore, LTF
reminds various employees now and then, for instance when their
weekly hours averages fall below the minimum required to maintain
various
employee
timekeeping.
benefits,
about
the
importance
of
accurate
Id. at ¶ 12 & Ex. D.
In addition, in its Stylist Position Description, LTF has made
accurate recordkeeping a specific requirement for the Stylist job.
#43-1, Yanez Affid. at ¶ 5 & Ex. A (hair stylist’s responsibilities
include “punches in and out of Kronos” and “adheres to company
policies and procedures.”).
In his deposition, Nieddu stated that
he did not dispute that the policies discussed supra correctly
state LTF’s expectations about time reporting.
Pl.’s Dep., 90:4-
16; 109:12-19.
LTF uses this reported data to make sure that commissioned
Stylists receive the correct payment under section 7(i).
#43-3,
Shiffman Affid. at ¶¶ 13-14. The hours reported to KRONOS are sent
to a program called Workday, along with commission data gathered by
another electronic program called SpaBiz (its predecessor program
was called ShortCuts), which are Spa Point-of-Sale systems. Id. at
-27-
¶ 13. The Workday system then automatically calculates whether any
of the commissioned stylists must be paid a draw for the particular
pay period being reviewed.
LTF maintains that during Nieddu’s tenure as a commissioned
Stylist, Nieddu was properly paid based on his self-reported hours
worked in accord with LTF’s policies and practices.
#43-2,
Christensen Affid. Exs. D-G; #42 (Sept. 30 Opinion and Order at p.
40.
Nieddu, in spite of LTF’s unequivocal policies, states that
because Francisco Fuentes told Nieddu that as a commissioned
employee, he did not need to worry about reporting his hours
worked, he did not record all the hours that he spent on workrelated activity.
Plaintiff’s Dep., 88-90; 60:11-61:22; 90:4-16;
96:1-97:16; 109:12-20.
Yet he continued to clock in and out of
work during the times when he reported to Fuentes, suggesting that
he did not believe that Fuentes’ comment negated LTF’s clear
policies regarding time keeping and demonstrating that he knew how
to use the KRONOS system to report his hours worked.
Given
Nieddu’s erratic reporting record, it appears that he did not
follow any set practice, but randomly chose not to satisfy his
reporting obligations.
See #43-2, Christensen Affid., Ex. D; #43-
1, Yanez Affid., ¶ 7.
Nieddu claims that his supervisors knew or should have known
that he was working off the clock.
-28-
Pl.’s Dep., 92:18-23 (claiming
unidentified employees at the front desk knew he worked off-theclock hours).
But Nieddu admitted during his deposition that LTF
supervisors are restricted in their ability to track work hours and
related hours recorded for each individual hair stylist from one
day to the next.
Id. at 103:4-104:25 (conceding his supervisor’s
“weren’t tracking any one” on a day-to-day basis because they were
“in and out” of the salon area and frequently distracted by matters
that needed to be resolved). Moreover hair stylists’ schedules and
duties varied from day to day, sometimes dramatically, as decided
by the Department Head, based on business need (developing clients,
educating clients on products, services and treatments, cleaning,
administrative tasks, and safety concerns, or even off-the-clock
down time), stylists’ productivity levels, etc.
Affid. at ¶¶ 4,7.
#43-1; Yanez
When Nieddu was asked during his deposition how
his supervisors would know if he was punched in or punched out, he
responded, “They wouldn’t know it. . . . . Because they didn’t have
time to look[] for this and that.”
81:4-82:11.
In Brumbelow v. Quality Mills, Inc., 462 F.2d 1324, 1327 (5th
Cir. 1972), the Fifth Circuit held that as employee is estopped
from asserting that he worked more hours than those reported in his
time sheet unless “the employer knew or had reason to believe that
the reported information was inaccurate.”
So, therefore, should
Nieddu be estopped from claiming minimum wage and/or overtime
violations here because LTF had reasonable time-reporting policies
-29-
and procedures in place and had no actual or constructive knowledge
that Nieddu deliberately chose not to follow them, argues LTF.
See, e.g., White v. Baptist Memorial Health Care Corp., 699 F.3d
869, 876 (6th Cir. 2012)(“Under the FLSA, if an employer establishes
a reasonable process for an employee to report uncompensated work
time, the employer is not liable for non-payment if the employee
fails
to
follow
the
established
process.”)(affirming
summary
judgment in favor of hospital on nurse’s claim for unpaid time for
meal
breaks
where
the
hospital
had
established
a
system
to
compensate employees for missed meal breaks, but the nurse failed
to report her time via the hospital’s established procedure.”),
cert. denied, 134 S. Ct. 296 (2013).
In order to receive his
proper pay, Plaintiff had to record all hours that he worked.
Nieddu has provided no evidence showing that he was prevented
from using LTF’s clear policies prohibiting off-the-clock work and
falsification of time records.
LTF was entitled to rely on Nieddu
to comply with LTF’s timekeeping policies and to assume that he was
not falsifying his time worked.
See Von Friewalde v. Boeing
Aerospace Ops., Inc., 339 Fed. Appx. 448, at *8 (5th Cir. Aug. 4,
2009)(“[A]n employee has a duty to notify his employer when he is
working extra hours. . . . .[W]e have expressly rejected the notion
that an employer does not have the right to require an employee to
adhere
to
its
procedures
for
claiming
overtime.
[citations
omitted])”, citing Newton v. City of Henderson, 47 F.3d 746, 748-50
-30-
(5th Cir. 1995)(rejecting claim for alleged unpaid overtime where
defendant “established specific procedures to be followed in order
to receive payment for overtime,” and plaintiff “ignored the
procedures.”).
In accord Millington v. Morrow County Bd. of
Comm’rs, No. 2:06-cv-347, 2007 WL 2908817, at *10 (S.D. Ohio Oct.
4, 2007)(“[I]t was reasonable for the employer to rely on the time
sheets submitted by the employee for payroll purposes where there
is no evidence that the employer encouraged workers to falsely
report their hours.”); Forrester v. Roth’s I.G.A. Foodliner, Inc.,
646 F.2d 413, 414 (9th Cir. 1981)(affirming summary judgment for
the employer where employee turned in time sheets that did not
include overtime hours and did not show that the employer should
have known that the employee worked more hours than those claimed
on his time sheet, emphasizing that “where an employer has no
knowledge that an employee is engaging in overtime work and the
employee fails to notify the employer . . . the employer’s failure
to pay for the overtime hours is not a violation of § 207.”); White
v. Baptist Memorial, 699 F.3d at 876 (“Under the FLSA, if an
employer establishes a reasonable process for an employee to report
uncompensated work time the employer is not liable for non-payment
if the employee fails to follow the established process.
When an
employee fails to follow reasonable time reporting procedures she
prevents the employer from knowing its obligation to compensate the
employee and thwarts the employer’s ability to comply with the
-31-
FLSA.[citations omitted]”).
Nieddu’s Response in Opposition (#46)
Nieddu insists that LTF must show that it accurately tracked
its employees’ work hours and cannot argue that its employees bear
the burden of keeping such records nor shift its duty to its
employees to keep accurate records of their work hours in violation
of the FLSA, 29 U.S.C. § 211(c).
Caserta v. Home Lines Agency,
Inc., 273 F.2d 943, 946 (2d Cir. 1959)(“The obligation [to pay
overtime under the FLSA] is the employer’s and it is absolute.
He
cannot discharge it by attempting to transfer his statutory burdens
of accurate record keeping, 29 U.S.C. § 211(c), and of appropriate
payments to the employee.
The employer at its peril . . . had to
keep track of the amount of overtime worked by those of its
employees . . . . [citation omitted]”).10
See also Goldberg v.
Cockrell, 303 F.2d 811, 812 n.1 (5th Cir. 1963)(“‘[W]hile there is
nothing to prevent an employer from delegating to his employees the
10
In its reply (#47 at pp. 2-3), LTF insists that in relying
on this 50-year-old case, Nieddu ignores the Fifth Circuit’s long
standing rule that employees are estopped from claiming that they
worked more hours than those reported in their time sheets unless
the employer knew or had reason to believe that the reported
information was inaccurate, a rule consistent with the holding of
White v. Baptist Memorial. See, e.g,. Newton v. City of
Henderson, 47 F.3d at 748-49; Brumbelow, 462 F.2d at 1327
(employees are estopped from claiming that they worked more hours
than they reported unless “the employer knew or had reason to
believe that the reported information was inaccurate.”).
Employees may not impede their employer’s ability to comply with
the FLSA by disregarding the employer’s clear policies for
overtime pay.
-32-
duty of keeping a record of their hours, the employer does so at
his peril.
He cannot escape the record keeping provisions of the
Act by delegating that duty to his employees.’”).
LTF failed to
track hours worked by Nieddu and therefore failed to compensate him
pursuant to § 7(i) and or the FLSA’s minimum wage requirement.
Nieddu contends that LTF’s system failed because Department
Head Fuentes instructed Nieddu not to log in his hours worked
because commissioned hair stylists did not have to.
As LTF’s
corporate representative Liza Shiffman testified, department heads
are responsible for ensuring that employees’ hours are logged
correctly; thus Fuentes is responsible for the denial of Nieddu’s
wages.
#46-2,
Ex.
B,
Liza
Shiffman
Deposition,
90:17-23.
Fuentes’s failure to comply with FLSA is a fact, not an allegation,
and it exposes LTF to liability.
Plaintiff intentionally violated
LTF’s clock-in, clock-out policy, yet LTF has not shown any
evidence of any disciplinary action taken against Nieddu for his
failure.
In contrast Fuentes, who was mainly responsible for the
failure to track Nieddu’s working hours, was terminated along with
other managers who were charged with overseeing Nieddu throughout
his employment at LTF.
Nieddu insists LTF had actual notice that he performed work
off-the-clock.
LTF supervisors saw him arrive a work most of the
time and were aware he was present. Sometime Nieddu would check in
with his supervisor when he arrived.
-33-
LTF managers came in and out
of Nieddu’s workplace and saw him.
Fuentes had actual knowledge
that Nieddu was working but Fuentes failed to track Nieddu’s work
hours and submit the necessary paperwork for LTF to compensate
Nieddu for off-the-clock work.
Since LTF’s managers, including
Fuentes, are agents of LTF, LTF has exposure to liability under the
FLSA based on their conduct.
Moreover, argues Nieddu, LTF had constructive knowledge that
Plaintiff performed work off-the-clock, but ignored “red flags”
(e.g., pay period documentation evidencing that Nieddu was working
but not receiving compensation, Exhibits D-O11) that indicated the
systematic breakdown of LTF’s compensation system or off-the-clock
problem.
LTF simply passed its obligation to keep its employee’s
time worked to its employees, “stuck its head in the sand,” and
ignored the problem.
Thus LTF’s time records are inaccurate.
LTF
had numerous records in its possession that if it had done even a
little due diligence it would have learned of Plaintiff’s off-theclock work.
Under the Mt. Clemens Pottery test, Nieddu can prove
his damages by “just and reasonable inference.”
328 U.S. at 687
See also id. at 388 (“The employer cannot be heard to complain that
11
For example, Exhibit D is Nieddu’s Pay stub and time card
for the pay period of January 1-January 15, 2011. It shows zero
hours worked, but commissions from service generating revenue for
which Plaintiff had to perform an actual service, such as hair
coloring or cutting. Another document (Ex. D, Bates stamped
LTF00000401-LTF00000405) available to LTF management called
“Schedules from Shortcuts” shows that Nieddu was at minimum
scheduled to provide twenty services to clients during this pay
period.
-34-
the damages lack the exactness and precision of measurement that
would be possible had he kept records in accordance with the
[FLSA]. . . . Nor is such a result to be condemned by the rule that
precludes the recovery of certain and speculative damages.”);
Ventura v. Bebo Foods, Inc., 738 F. Supp. 2d 8, 13 (D.D.C.
2010)(“When
assessing
damages
under
the
Mt.
Clemens
Pottery
standard, a court may draw inferences from oral testimony, sworn
declarations,
and
whatever
relevant
documentary
evidence
a
plaintiff is able to provide.”); Beliz v. W.H. McLeod & Sons
Packing Co., 765 F.2d 1317, 1330 (5th Cir. 1985)(holding that where
the employer failed to keep records of work performed, workers’
“admittedly inexact or approximate evidence” was sufficient to meet
their burden of showing that they performed work not properly
compensated for a prima facie case; if the employee makes a
credible showing, the burden then shifts to the employer to come
forward with evidence to negate the reasonableness of the inference
and “the employer cannot be heard to complain that the damages lack
the exactness and precision of measurement that would be possible
had he kept records in accordance with the requirements of” the
Act).
In Exhibit D, the pay period where Plaintiff received gross
pay of $388.58 and worked an average of 54 hours each week would
result in a sub minimum hourly wage rate in violation of the FLSA’s
§ 7(i) exemption, which requires that a commission-paid employee
receive one and a half time his hourly rate for every hour worked
-35-
when working overtime in a particular week.12
actual
and/or
properly
constructive
compensated
notice
because
LTF
that
kept
Furthermore, LTF had
Nieddu
track
was
of
not
the
being
specific
service(s) performed by each of its hair stylists per customer so
it could assess Shop Charges.
Ex. P.
The law imposes on LTF a
duty to conduct due diligence; had LTF satisfied that duty, insists
Nieddu, it would have discovered this documentation which showed
constructively
what
it
actually
knew,
i.e,
that
Nieddu
was
performing work which LTF’s time-keeping system was not capturing.
Nieddu also contends that by establishing a policy that
depended on the department heads to oversee the entry of work
hours, LTF prevented Nieddu from recording his hours accurately
since he knew that his efforts would be futile and that even if his
working was observed by his department head, that department head
would refuse to track Nieddu’s hours properly.
Nieddu further
charges that Fuentes instructed him and prevented him from using
LTF’s time-keeping system.
LTF has argued that where employees sign off on or enter
inaccurate information on their timesheets, Mt. Clemens Pottery
does not apply. Nieddu disagrees. FLSA rights cannot be waived by
12
$388.58/54 = $7.20, which is lower that the federally
mandated minimum wage rate of $7.25. If one assumes Nieddu
received $194.29 each of the two weeks in that pay period, his
hourly rate would be $3.60 ($194/54). Both methods of
calculating result in a figure that is noncompliant with FLSA’s §
7(i) exemption.
-36-
contract or agreement. Barrentine v. Arkansas-Best Freight System,
Inc., 450 U.S. 728, 740-44 (1981).
Moreover, “once an employer
knows or has reason to know that an employee is working overtime,
it cannot deny compensation simply because the employee failed to
properly record or claim his overtime hours. Accordingly, the fact
that an employee is required to submit his own timesheets does not
necessarily preclude him from invoking [Mt. Clemens Pottery’s
lenient “just and reasonable inference”] standard where those
records appear to be incomplete or inaccurate.”
Kuebel v. Black &
Decker, Inc., 643 F.3d 352, 363 (2d Cir. 2011).
Moreover, “where
the employee’s falsifications were carried out at the instruction
of the employer or the employer’s agents, the employer cannot be
exonerated by the fact that the employee physically entered the
erroneous hours into the timesheets.”
Id.
Nieddu also asserts
that Nieddu’s failure to complain to LTF about timekeeping or
payment failures bars recovery or utilization of the Mt. Clemens
Pottery test.
Even where the employee willingly rejects the
protections of the FLSA, those protections remain in effect.
Tony
and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290
(1985).
LTF’s Reply (#47)
In arguing that LTF had both actual and constructive knowledge
that Nieddu was working overtime hours, Nieddu fails to address the
undisputed
evidence,
including
-37-
his
own
testimony,
that
his
supervisors were unable to track employee hours, no less know if
and when he was working hours beyond his regularly scheduled
shifts.
Moreover, Nieddu has not alleged facts showing that LTF
knew or should have known about Nieddu’s unrecorded work time. Nor
does Nieddu address LTF’s contention that it had no duty to
investigate Nieddu’s time records where there was no indication
that Nieddu was working beyond normal hours.
In a final effort to manufacture a factual dispute, LTF
contends that Nieddu grossly mischaracterizes the evidence. He now
asserts that Fuentes prevented him from following LTF’s unambiguous
time reporting procedures by threatening him with termination.
Plaintiff’s own deposition testimony shows that, at most, Fuentes
told him “not to worry” about clocking in or out because he was a
commissioned employee, certainly not a mandate not to report his
work hours. This language does not threaten potential discharge or
otherwise
threaten
reporting his time.
something
that
would
dissuade
Nieddu
from
Nieddu’s testimony also demonstrates that he
was fully aware that LTF’s policies clearly and unambiguously
stated that commissioned employees must record all hours worked to
ensure they receive proper payment under the FLSA.
Nieddu’s time
records indicate that he clocked in and out of work during the
period that he reported to Fuentes, reflecting that he knew he
should.
No reasonable jury could conclude that LTF prevented or
discouraged Nieddu from correctly reporting his work hours.
-38-
LTF contends that the issue here is not whether Nieddu can
prove how many overtime hours he worked, but whether LTF knew or
should have known that Nieddu was working unrecorded hours and
whether LTF satisfied the exemption requirements of the FLSA’s
section 7(i).
LTF insists what Nieddu tries to pass off as “fact”
is wholly unsupported by credible evidence and that his overview is
“a confusing conglomeration of legal conclusions, argument, and
inaccurate and unsubstantiated assertions that have no reasonable
foundation in the record evidence.”
#47 at p. 4.
LTF asserts that the undisputed evidence demonstrates that
Nieddu must be estopped from claiming minimum wage and/or overtime
violations under the laws.
#43 at pp. 6-10, 19-25.
LTF had
established reasonable time-reporting policies and procedures, and
Nieddu has failed to show that LTF had actual or constructive
knowledge that Nieddu deliberately chose not to follow those
policies and procedures.
699 F.3d at 878.
allegations
as
Id., citing White v. Baptist Memorial,
Nieddu’s effort to characterize his factual
legal
conclusions,
which
do
not
comply
with
mandatory authority controlling the issues here, should not be
permitted.
To the extent that LTF has a burden to ensure that no
uncompensated overtime was allowed, the evidence demonstrates that
in addition to establishing time recording policies and training
its employees that they must comply with them, LTF adopted the
-39-
KRONOS Missed Punches/Editing Punches policy requiring Department
Heads to review the time records of their individual direct reports
at least every other day for errors or inaccuracies.
Weber Affid.
¶ 10 and Ex. B; Christensen Affid. Ex. E (showing that LTF’s
Department Heads did review and sign off on Nieddu’s time records).
LTF also created a procedure for employees to correct reported
errors and inaccuracies by filling out a KRONOS Exception Sheet and
giving it to their Department Head.
Weber Affid. ¶ 10 & Ex. B.
There is also evidence that LTF from time to time sent notices to
employees reminding them of the importance of accurately and
completely recording all time worked.
Id., at ¶¶ 1-12 & Ex. D.
The evidence further proves that LTF put those policies into
practice.
The record undermines any claim that Fuentes or any other
Department Head ever threatened Nieddu with termination if he
recorded his work hours or that Nieddu was otherwise prevented from
reporting his time worked.
As noted his own deposition testimony
was that only Fuentes, out of the six different supervisors he had
during his tenure, allegedly told him “not to worry” about clocking
in and clocking out because he was a commissioned employee. #43-2,
Ex. A,
pp. 88-90.
Nieddu admits that he knew LTF’s policies
unambiguously required employees to record all hours worked to
ensure that they receive proper payment under the FLSA. #43 at pp.
609.
LTF has summarized the terms regarding its time recording
-40-
expectations in its initial brief, #43 at pp. 24 & 25, which
Plaintiff did not dispute (#43-2, Ex. A, Pl.’s Dep. 90:4-16;
109:12-19).
In addition, proper timekeeping was an express,
specific requirement of Plaintiff’s Stylist job. #43, Ex. 1, Yanez
Affid. at ¶ 5 and Ex. A (LTF’s Stylist Position Description lists
“[p]unches in and out of Kronos” and “[a]dheres to company policies
and procedures” as specific requirements).
Nieddu’s own time
records undermine Nieddu’s allegation that he thought he would be
terminated if he disobeyed Fuentes’ purported
record his time:
mandate that he not
Nieddu continued to clock in and out of work
during the period that he reported to Fuentes.
#43 and pp. 10-12.
His time records as a whole show that he did not follow any set
pattern
or
practice
of
time
keeping
no
matter
who
was
his
Department Head at the time.
Although Nieddu asserts that “Fuentes intentionally failed to
track Plaintiff’s work hours” (#46 at p. 7), as if Fuentes had a
responsibility to do so, the undisputed evidence shows this claim
is
untrue.
Nieddu
cited
the
affidavit
of
LTF’s
Corporate
Representative, Liza Shiffman, stating that Fuentes “dropped the
ball” in tracking Nieddu’s work hours (#46-2, Ex. B at 110:10-23).
In actuality Fuentes was not responsible for tracking and recording
Nieddu’s work hours; on the other hand Fuentes did have a duty
under LTF’s “KRONOS Missed Punches/Editing Punches” policy to
review and approve the time cards of those whom he supervised (#43
-41-
at p. 8), but he failed to do so in Nieddu’s case (Shiffman Dep. at
109:20-110:23).
In that failure to approve Nieddu’s time cards,
and thus Nieddu’s pay, for that period, Fuentes did not even look
at Nieddu’s time sheets for the pay periods and therefore could not
have gained any actual knowledge that Plaintiff worked hours that
he did not report.
knowledge
that
he
Nieddu also claims that LTF had actual
worked
“off-the-clock”
because
(1)
his
supervisors saw him arrive at work most of the time, (2) they were
“well aware he was present at work,” (3) Nieddu would sometimes
“check in with his supervisor” when he arrived at work, and (4) his
supervisors saw him perform work when they came in and out of his
work area.
LTF points to its initial brief, which set out
substantial, undisputed evidence that demonstrates that Nieddu’s
supervisors were severely limited in their ability to track any
hair stylist’s work and related hours on a day-to-day basis.
Nieddu’s deposition testimony also provides evidence that his
supervisors were not tracking such activities, were frequently
distracted, and generally did not work the same hours as he did.
Nieddu’s Dep., #43-2, Ex. A.
Moreover he recognized that even if
his supervisors could have observed the work performed by each hair
stylist each day, they would have had no means of knowing if a
stylist was on or off the clock while performing work-related
tasks.
Id.
at 81:4-92:11.
Thus Nieddu’s conclusory and/or
speculative claim that LTF had actual knowledge fails.
-42-
So does Nieddu’s claim that LTF had constructive knowledge
that Nieddu worked unreported hours based on his appointment
schedules and his time records, which he characterizes as “red
flags” alerting LTF to his overtime work.
LTF has shown that it
had no duty to investigate and/or evaluate Nieddu’s time records,
appointment
schedules,
work
schedules
and
other
documents
to
determine whether Nieddu was reporting his overtime performance
when there was no indication elsewhere that he was working beyond
normal hours.
#43 at pp. 19-26.
In its Opinion and Order of
September 30, this Court pointed out, “The Fifth Circuit has held
that where an employer requires employees to complete time sheets,
the employer has no reason to investigate whether the employees are
filling them out when there is no reason to suspect they are not.
#42 at p. 12, citing Newton, 47 F.3d at 749 (holding that as a
matter of law access to information about all the activities of an
employee
does
not
constitute
constructive
knowledge
that
the
employee was working overtime.).
In sum, LTF claims that it is entitled to summary judgment on
all claims that Nieddu has asserted against LTF.
Court’s Decision
After careful review of the briefs, the summary judgment
evidence and the law, the Court concurs with LTF that it is
entitled to summary judgment on all Nieddu’s claims under 29 U.S.C.
§§ 206(a) and 207(a) against it.
-43-
The evidence establishes that Nieddu was paid minimum wage for
each regular hour he worked because, as a matter of law, LTF’s
deductions for Shop Charges before the calculation of commissions
were lawful.
Parker v. Nutrisystem, Inc., 620 F.3d at 283; Yi, 480
F.3d at 509-10.
As for overtime compensation, Nieddu has failed to show that
LTF had actual or constructive knowledge that Nieddu was working
extra hours or hours overtime or that Nieddu had failed to report
these
hours
as
required
by
LTF’s
numerous
policies
and
requirements. Nieddu not only failed to prove that he worked hours
for which he was not paid and of which LTF has no adequate record
because Nieddu prevented LTF from maintaining accurate records of
Nieddu’s work hours by failing to report them in violations of
LTF’s clear policies, of which Nieddu knew because he sometimes
complied with them, but he has not shown that LTF knew or should
have known, i.e., had actual or constructive knowledge, that Nieddu
did so.
There is no showing that LTF had actual knowledge that
Nieddu was not reporting overtime hours.
Moreover Nieddu did not
establish constructive knowledge based on his argument that LTF had
access to other records about him.
Newton, 47 F.3d at 749 (holding
that as a matter of law access to information about all the
activities
of
an
employee
does
not
constitute
knowledge that the employee was working overtime.).
had
established
specific
procedures
-44-
for
constructive
Because LTF
claiming
overtime
compensation, even though Nieddu at times ignored them, LTF had a
right to rely on them.
Van Friewald, 339 Fed.
Appx. at *8;
Newton, 47 F.3d at 748-50. Therefore LTF’s failure pay any claimed
overtime compensation for hours allegedly worked in excess of forty
hours per week did not violate the FLSA.
Von Friewalde, 47 F.3d at
748; Newton, 47 F.3d at 748.
Accordingly, the Court
ORDERS
GRANTED.
that
LTF’s
motion
for
summary
judgment
(#43)
is
A final judgment will issue by separate order.
SIGNED at Houston, Texas, this
12th
day of
August , 2014.
___________________________
MELINDA HARMON
UNITED STATES DISTRICT JUDGE
-45-
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