Hanson et al v. Camin Cargo Control, Inc.
Filing
158
ORDER granting in part and denying in part 119 Motion for Summary Judgment; granting 126 Motion for Partial Summary Judgment; granting 127 Motion for Partial Summary Judgment; granting 128 Motion for Partial Summary Judgment and denying 139 Cross-motion on Calculation of Damages. A final status conference will be set within 60 days. (Signed by Magistrate Judge Stephen Wm Smith) Parties notified.(jmarchand, 4)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
J AMES R. H ANSON, R ONALD JONES,
AND L UIS E. F ERNANDEZ, ON B EHALF OF
T HEMSELVES AND A LL O THERS S IMILARLY
S ITUATED,
Plaintiffs,
vs.
C AMIN C ARGO C ONTROL, INC.,
Defendant.
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C IVIL A CTION H-13-0027
SUMMARY JUDGMENT OPINION AND ORDER
This Fair Labor Standards Act case is before the court on the parties' cross-motions
for summary judgment. The motions have been fully briefed and were argued at a hearing
on February 18, 2015. For reasons explained below, defendants' motion (Dkt. 119) is denied
in part and granted in part; plaintiffs' motion regarding inspectors (Dkt. 126) is granted;
plaintiffs' cross-motion on calculation of damages (Dkt. 139) is denied; plaintiffs' motion
regarding dispatchers is granted (Dkt. 128); and plaintiffs' motion regarding the good faith
defense (Dkt. 127) is granted.
BACKGROUND 1
Defendant Camin Cargo Control, Inc. is an oil and petrochemicals inspection
company with over 30 locations, operating in more than 15 countries throughout the
Americas and the Caribbean. Camin employs inspectors to collect samples and gauge the
1
The following facts are undisputed unless otherwise noted.
quality of petroleum, crude oil, and distillate product shipments to ensure they meet customer
requirements. Until recently, inspectors generally worked a six-day on, three-day off schedule
-- i.e., they were available to receive assignments for six consecutive days and then off duty
for three days. At times relevant to this case,2 inspectors received a bi-weekly salary, plus
extra payments for (1) a car allowance and mileage; (2) meals; and (3) offshore duty. Camin
paid inspectors overtime according to the fluctuating work week method set forth in 29
C.F.R. § 778.114(a). Camin did not include the extra payments when calculating the
inspectors' regular rate of pay.
Camin also employs inspector coordinators, or dispatchers.3 The dispatchers
coordinate the inspection and testing operations by, among other things, assigning inspectors
to jobs as needed. Camin classifies the dispatchers as exempt employees not entitled to
overtime pursuant to the FLSA's administrative and executive exemptions. Plaintiffs contend
that the dispatchers' primary duties do not qualify them for either exemption.
The parties have filed cross-motions for summary judgment as to the fluctuating
workweek method of paying inspectors and the exemptions for dispatchers. Plaintiffs also
move for summary judgment on Camin's affirmative defense of good faith.4
2
Camin made significant changes to its pay practices in December 2012. See Dkt. 126-10.
3
Defendants call this position "inspector coordinator," while plaintiffs use the term
"dispatcher." The court uses "dispatcher" to avoid confusion with the position of inspector,
and for brevity.
4
Camin also moved for summary judgment as to the claims of 22 plaintiffs who were also
plaintiffs in the case Brumley v. Camin Cargo Control, Inc., No. Civ. A. 08-1798, 2010 WL
2
SUMMARY JUDGMENT STANDARDS
Summary judgment is appropriate if no genuine issues of material fact exist,
and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c).
The party moving for summary judgment has the initial burden to prove there are no
genuine issues of material fact for trial. Provident Life & Accident Ins. Co. v. Goel,
274 F.3d 984, 991 (5th Cir. 2001). Dispute about a material fact is “genuine” if the
evidence could lead a reasonable jury to find for the nonmoving party. In re
Segerstrom, 247 F.3d 218, 223 (5th Cir. 2001). “An issue is material if its resolution
could affect the outcome of the action.” Terrebonne Parish Sch. Bd. v. Columbia Gulf
Transmission Co., 290 F.3d 303, 310 (5th Cir. 2002).
A summary judgment movant who bears the burden of proof on a claim must establish
each element of the claim as a matter of law. Fontenot v. Upjohn Co., 780 F.2d 1190, 1194
(5th Cir. 1986). If the movant meets this burden, “the nonmovant must go beyond the
pleadings and designate specific facts showing that there is a genuine issue for trial.”
Littlefield v. Forney Indep. Sch. Dist., 268 F.3d 275, 282 (5th Cir. 2001) (quoting Tubacex,
Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995)).
If the evidence presented to rebut the summary judgment is not significantly probative,
1644066 (D.N.J. Apr. 22, 2010) (Dkt. 119), and moved the court to take judicial notice of
documents on file in that case (Dkt. 144). Those motions are granted based on the agreement
of counsel stated on the record at the hearing. The claims of 11 plaintiffs no longer employed
by Camin as of May 2, 2012 are dismissed. The claims of the remaining 11 plaintiffs who
participated in Brumley are limited to damages incurred after May 2, 2012.
3
summary judgment should be granted. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50
(1986). In determining whether a genuine issue of material fact exists, the court views the
evidence and draws inferences in the light most favorable to the nonmoving party. Id. at 255.
ANALYSIS
1.
Inspectors
The FLSA is a remedial statute that requires employers to pay non-exempt employees
overtime at an hourly rate "not less than one and one-half time the regular rate at which he
is employed." 29 U.S.C. § 207(a). The employee bears the burden to prove all the elements
of his overtime claim, including a claim that the employer improperly applied the so-called
fluctuating workweek method of payment. See Samson v. Apollo Resources, Inc., 242 F.3d
629, 636 (5th Cir. 2001).
To resolve any unpaid overtime claim, it is necessary first of all to determine the
employee’s “regular rate” of pay. This key term is not defined in the statute. The Supreme
Court early on declared that it means “pay by the week, to be reduced by some method of
computation to hourly rates.” Overnight Motor Transp. Co. v. Missel, 316 U.S. 572, 579
(1942). The Missel Court also declared that, as a general rule, “[w]age divided by hours
equals regular rate.” Id. at 580 n.16. In line with that guidance, the Department of Labor has
issued interpretive bulletins setting out the principles for computing the regular rate of pay.
Their basic formula is an elaboration of the Missel rule:
The regular hourly rate of pay of an employee is determined by dividing his
total remuneration for employment (except statutory exclusions) in any
4
workweek by the total number of hours actually worked by him in that
workweek for which such compensation was paid.
29 C.F.R. § 778.109.
The parties dispute both the numerator (“total remuneration”) and the denominator
(“hours actually worked”) of the regular rate formula as it applies to the inspectors. Camin
contends that certain extra payments in addition to the bi-weekly salary should not be
considered as part of his wages for that workweek. On the other hand, plaintiffs contend that
only non-overtime hours (i.e., 40) should be counted in the divisor, rather than all hours
actually worked that week. For reasons explained below, both contentions are rejected.
a.
Wages v. Reimbursement
Camin contends that the extra payments for offshore duty, car allowance, mileage, and
meals are reimbursements for expenses; plaintiffs contend they are wages. According to the
DOL,
Where an employee incurs expenses on his employer's behalf or where he is
required to expend sums solely by reason of action taken for the convenience
of his employer, [this section] is applicable to reimbursement of such
expenses. Payments made by the employer to cover such expenses are not
included in the employee's regular rate (if the amount of the reimbursement
reasonably approximates the expenses incurred). Such payment is not
compensation for service rendered by the employees during any hours worked
in the work week.
29 C.F.R. § 778.217(a). Thus, the key issues are (1) whether the payment is solely for the
benefit or convenience of the employer, and (2) whether the payment reasonably
approximates actual expenses. Any amount in excess of actual or reasonably approximate
5
expenses must be included in the regular rate. 29 C.F.R. § 778.217(c).
Offshore duty pay. Inspectors on offshore assignment were paid $75.00 per day,
unless the vessel was in harbor, in which case the rate was $30.5 Inspectors were required to
stay on an offshore vessel as long as necessary to complete the assignment, which could be
a matter of hours or days. According to CEO Claudio Camin, the offshore payment was
intended to reimburse inspectors for hygiene products, medication, food, water, soap, and
small gifts.6 Camin argues that this type of payment was primarily for the employer's benefit
because the employee would need these items when away from home.
But, as plaintiffs point out, these items would be needed by an employee no matter
where he was stationed, onshore or offshore. Nor is there any reason to believe that an
offshore assignment would cause the employee to spend more on hygiene products and soap
than normal. Even a former manager of Camin's Pasadena branch conceded that offshore pay
could not reasonably be called an expense reimbursement, and that it was more properly
characterized as compensation for employee inconvenience.7 The Court concurs. This type
of payment more closely resembles a "shift differential" than a reimbursement for expenses
incurred solely for the employer’s benefit. See, Ayers v. SGS Control Servs., No. Civ. A. 039077, 2007 WL 646326 *10 (S.D.N.Y. Feb. 27, 2007); Adeva v. Intertek USA, Inc., No. Civ.
5
Dkt. 140-4 at 22; Dkt. 140-23.
6
Dkt. 137-15.
7
Dkt. 126-7 at 22.
6
A. 09-1096, 2010 WL 97991 *2 (D.N.J. Jan. 11, 2010). In addition, Camin has offered no
competent evidence the offshore payment reasonably approximates the inspectors' actual
expenses.8 In contrast, plaintiffs have presented evidence that inspectors incurred no
expenses at all when working offshore.9 The court concludes the offshore duty pay
constitutes wages that must be included in the regular rate of pay for purposes of overtime.
Car allowance and mileage. There is no dispute that driving was required as part of
an inspector's everyday job. Inspectors were "required to own and maintain a vehicle, in good
working order in order to complete their necessary job functions." 10 Camin paid inspectors
a car allowance of $175 (Gulf Coast) or $184 (East Coast) per pay period.11 The car
allowance appeared on every bi-weekly pay check whether the inspectors worked during the
pay period or not and without the need to submit any evidence of their expenses.12 In
addition, Camin paid what it termed a "mileage reimbursement." From 2010 until 2012, Gulf
Coast inspectors received $10.00 per job, and East Coast inspectors received $9.00 per job.13
Beginning in 2012, Camin instituted a system (called FIT) that paid inspectors an amount
8
For this proposition, Camin cites Claudio Camin's deposition (Dkt. 137 at 18). But the
deposition excerpt cited does not say that actual expenses reasonably approximated $75.00
per day. See Dkt. 137-16 at 2. Indeed, $75.00 would buy a lot of soap and toothpaste.
9
Dkt. 126-7 at 22; Dkt. 126-17; Dkt. 126-18; Dkt. 126-19.
10
Dkt. 137-9 at 13; Dkt. 137-11 at 5.
11
Dkt. 137-4 at 10.
12
Dkt. 126-6 at 31; Dkt. 137-4 at 10.
13
Dkt. 126-7 at 17-18.
7
based on the distance between the office and the terminal where the job was located.14
Car and mileage payments may in some cases constitute a reimbursement that does
not affect an employee's regular wage rate. See Berry v. Excel Group, Inc., 288 F.3d 252, 254
(5th Cir. 2002) (per diem was legitimate, reasonable reimbursement of travel expense when
worker was required to work 100 miles from home). However, a payment that compensates
an employee for his regular commute is primarily for the employee's own benefit and
constitutes wages. See Howe v. Hoffman-Curtis Partners Ltd., No. Civ. A. H-03-4298, 2005
WL 6443877 at *2 (S.D. Tex. July 6, 2005).
Unlike the plaintiff in Berry, Camin did not make the car and mileage payments to
compensate inspectors because they were required to work far from home. Inspectors were
paid the same amount whether they traveled from home directly to a terminal and back home,
or from terminal to terminal, without stopping at the branch office.15 While Camin may not
have specifically intended the payments to compensate inspectors for their regular, daily
commutes to and from work, that was the practical effect.
Plaintiffs have submitted the expert opinion of David Breshears that from 2010-2012
Camin reimbursed plaintiffs on average $2.315 per mile. Breshears's opinion is based on the
combination mileage payment and car allowance.16 Plaintiffs have also submitted the expert
14
Dkt. 126-6 at 16-17.
15
Dkt. 126-6 at 65; Dkt. 126-7 at 20; Dkt. 126-11 at 16-17.
16
Dkt. 126-12.
8
opinion of Robert B. Speakman, Jr. that a reasonable reimbursement rate for work related
mileage for 2010-2012 is between 16.5¢ and 24¢ per mile.17 It does not appear that Camin
has analyzed its mileage compensation system to determine whether it reasonably
approximated the number of miles inspectors actually drove or their cost per mile.18
However, in July 2012, Laura Stasik, an in-house Camin lawyer, researched IRS regulations,
a AAA driving cost analysis, as well as a few other sources. She prepared a memorandum
concluding that the car allowance " is reasonably proportionate to the expenses incurred with
vehicle ownership in furtherance of the employer's business."19 The memorandum
specifically cited the AAA analysis of annual costs, which takes into account "fuel,
maintenance, tires, insurance, license, registration, taxes, depreciation, and financing costs."
This after-the-fact memorandum, which is Camin's only evidence of proportionality,
is too conclusory to be probative. For one thing, it assumes proportionality based merely on
the observation that Camin's payments were below AAA's estimated average cost of
ownership. No effort was made to determine what percentage of the vehicle’s total costs are
reasonably attributed to work versus personal use. Camin claims that the wear and tear on
17
Dkt. 126-13.
18
See Dkt. 137-9 at 5. Ms. Stasik testified that inspectors drove approximately 20,000 miles
per year for work (Dkt. 137-9 at 4), and a Corpus Christie manager, Kimberly Holloway,
testified that inspectors drove approximately 25,000-30,000 miles per year (Dkt. 137-12 at
3). But both opinions are based on hearsay and are inadmissible. Even taking that evidence
into consideration, Camin has not created a fact issue as to whether the mileage payment was
a reasonable approximation of an inspector's actual expenses.
19
Dkt. 137-9 at 13-14.
9
a vehicle exceeds that of the average commuter,20 but no supporting numbers are shown.
Finally, the AAA analysis includes things (such as fuel) that were covered separately by the
mileage payment.
The court concludes that the car allowance and mileage payments were not
reimbursements based on a reasonable approximation of actual expenses, and therefore
should have been included in the inspectors' regular rate of pay.
Meal allowance. Inspectors working at least 8 hours were paid a $7.00 meal
allowance, plus an extra $7.00 for each additional 4 hours, up to a cap of $21.00 per day. The
record is clear that this payment is based upon and varies with the number of hours worked.
Plaintiffs argue, based on Gagnon v. United Technisource, Inc., 607 F.3d 1036, 1041-42 (5th
Cir. 2010), that any per diem that varies with the amount of hours worked, as here, is part of
the regular rate of pay in its entirety. In Gagnon, the Fifth Circuit held that an employer
violated the FLSA by paying a skilled worker $5.50 per hour "straight time" and an
additional per diem of $12.50-$13.50 per hour. This holding is consistent with DOL
guidelines expressed in its Field Operation Handbook : "[I]f the amount of the per diem or
other subsistence payment is based upon and thus varies with the number of hours worked
per day or week, such payments are part of the regular rate in their entirety." 21
Gagnon portrayed a blatant attempt by an employer to artificially lower an employee's
20
See, e.g., Dkt. 137-13 at 2.
21
Gagnon, 607 F.3d at 1041 n.6 (quoting DOL Field Operation Handbook).
10
regular rate of pay by shifting salary to a per diem. The meal allowance is not so blatant.
Nonetheless, it does increase an employee's pay based on 4-hour increments not directly
correlated with meal times. While neither Gagnon nor the DOL regulations create a per se
rule against reimbursement for meals, the payment here is based only on hours and not actual
expenses. The allowance was automatic, and neither receipts nor requests for reimbursement
were necessary. Camin argues that this payment was primarily for its own benefit because
it sometimes required inspectors to work over 8 hours and miss a meal at home. But
inspectors were not likely missing another meal 4 hours later, and another meal 4 hours after
that.
Camin also presents no evidence that the meal allowance approximated inspectors'
actual expenses. Camin in essence asks the court to take judicial notice that $7.00 reasonably
approximates the cost of a fast food meal.22 But absent evidence that inspectors regularly
bought fast food meals after eight hours of work this fact is meaningless. The court
concludes that the meal allowance must be included in the inspectors' regular rate of pay.
Because these extra payments were improperly excluded from the regular rate
calculation, Camin's overtime payments to inspectors necessarily fell short of the amounts
legally due under the FLSA. We now turn to the second part of the regular rate calculation.
b.
The Regular Hourly Rate
Camin paid inspectors for overtime based on the fluctuating workweek method
22
See Dkt. 119 at 29 ("The $7 payment is facially reasonable").
11
described in 29 C.F.R. § 778.114. Plaintiffs contend that, due to the extra payments discussed
above, an inspector's actual salary varied from week to week and therefore fails to satisfy the
“fixed salary” criterion which the fluctuating workweek method allegedly requires. Other
courts have held that extra payments of this sort are inconsistent with the use of the
fluctuating workweek method of paying overtime. See, Ayers v. SGS Control Servs., No. Civ.
A. 03-9077, 2007 WL 646326 *10 (S.D.N.Y. Feb. 27, 2007) ("any plaintiff who received sea
pay or day-off pay did not have 'fixed' weekly straight time pay, in violation of 29 C.F.R.
§ 778.114(a)”); Adeva v. Intertek USA, Inc., No. Civ. A. 09-1096, 2010 WL 97991 *2 (D.N.J.
Jan. 11, 2010); O'Brien v. Town of Agawam, 350 F.3d 279, 289 (1st Cir. 2003). Although the
Fifth Circuit has not yet addressed this precise question, this court will assume for purposes
of these motions that the extra payments in addition to the set salary render the provisions of
§778.114 inapplicable to the inspectors.
The crux of plaintiffs’ argument is that Camin has “violated” the requirements of §
778.114, thereby triggering the FLSA's "default" method of regular rate calculation –
dividing total wages by 40 hours instead of by hours actually worked.23 There are two flaws
in this argument.
First, the terminology of “violation” is problematic here. Although some courts do
speak of “violating” the fluctuating workweek standard, the term is misleading because no
23
The court declines to give preclusive effect to the decision in Brumley v. Camin Cargo
Control, Inc., No. Civ. A. 08-1798, 2010 WL 1644066 (D.N.J. Apr. 22, 2010). Brumley did
not involve entirely identical plaintiffs or issues.
12
employer is obligated to compensate its employees using this (or any other) particular pay
arrangement. “The Act does not require employers to compensate employees on an hourly
rate basis; their earnings may be determined on a piece-rate, salary, commission, or other
basis, but in such case the overtime compensation due to employees must be computed on
the basis of the hourly rate derived therefrom.” 29 C.F.R. § 778.109. The regulations provide
several examples of the proper method of determining the regular hourly rate in particular
instances, and § 778.114 is merely one of those examples. If the employer’s compensation
scheme does not fit the scenario described in § 778.114, then that section does not apply by
its own terms. But it does not follow that there has been a “violation” of § 778.114, any more
than there has been a “violation” of the piece rate method (§ 778.111), or the day rate method
(§ 778.112), or the deferred commission method (§778.119). Those types of pay
arrangements are simply inapplicable by their own terms, just like the fluctuating workweek.
So, we must turn elsewhere to compute the regular rate.
Plaintiffs argue that the inapplicability of § 778.114 necessarily requires the use of a
so-called “default” method of using 40 hours to determine the regular rate. But nothing in the
statute or the DOL regulations mention such a default rule, as this court explained at length
in Givens v. Will Do, Inc. Houston, 2012 WL 1597309 (S.D. Tex. 2012).24 The traditional
method of computing the regular rate, as succinctly put by the Supreme Court in Missel, is
24
The court recognizes that other district courts in other circuits have used the term, albeit
without any source in the statutory text or regulations. See, e.g., Ayers v. SGS Control Servs,
Inc., No. 03Civ9078, 2007 WL 3171342 at *3 (S.D.N.Y. Oct. 9, 2007); Yourman v. Dinkins,
865 F.Supp. 154, 164-65 (S.D.N.Y. 1994); Brumley, 2010 WL 1644066 at *7.
13
“wage divided by hours equals regular rate.” 361 U.S. at 580 n.16. This is reflected in 29
C.F.R. § 778.109, which instructs that as a general rule the regular rate “is determined by
dividing [the employee’s] total remuneration . . . by the total number of hours actually
worked by him in that workweek for which such compensation was paid.” The same principle
is restated in the general regulation pertaining to salaried employees, 29 C.F.R. § 778.113.
According to that regulation, if an employee is employed on a weekly salary basis, the regular
hourly rate is computed by "dividing the salary by the number of hours which the salary is
intended to compensate." § 778.113(a) (emphasis added). Nothing in this or any other
regulation requires the regular rate calculation for salaried employees to be based on nonovertime hours. Instead, the key to the calculation is a question of fact: did the parties intend
the salary to cover all hours worked in a given week, or only some lesser number of hours,
such as 40? In other words, the divisor in the regular rate calculation hinges on the parties’
intent. We turn now to that question.
Camin has presented evidence that the inspectors' base salary was intended to
compensate all hours, whether more or less than 40, worked in a week.25 All plaintiffs signed
25
The court sustains Camin's objection (Dkt. 145) to plaintiffs' reliance on the deposition
testimony of Marion Shtyrkalo, Camin's Controller, for the proposition that Camin has
admitted that 40 is the proper denominator (Dkt. 139 at 39). Management gave Shtyrkalo a
formula to use to perform a damages calculation for purposes of this lawsuit, and specifically
for settlement. Dkt. 140-26 at 61,67-68; Dkt. 145-1 at 3. The testimony does not meet any
standard for a judicial admission under Rule 801(d)(2). Shtyrkalo had nothing to do with
setting payroll policies. Dkt. 140-26 at 17, 21, 29. He was not a Rule 30(b)(6) deponent. In
sum, his testimony is not evidence of how many hours the total remuneration paid to
inspectors was intended to cover.
14
Camin's "Inspector Compensation Policy Fixed Salary for Fluctuating Hours," which
contains the following statements:
Since an Inspector's hours of work will fluctuate from week to week, Camin
Cargo Control, Inc. ("Camin Cargo") pays each of its inspectors on a fixed
salary basis. Each Inspector's fixed salary is set at the start of the Inspector's
employment and also when this policy is updated; however, an individual
Inspector's fixed salary may be reviewed from time to time. Camin Cargo
compensates its Inspectors for all hours worked in a workweek in accordance
with the 'fixed salary for fluctuating hours' standard under 29 C.F.R. § 778.114
(see copy attached).
***
***
***
"Fixed Salary" – Inspectors are compensated with a fixed salary for fluctuating
hours which means that they receive the fixed salary (apart from overtime
premiums) for all hours worked each workweek, whatever their number.
Inspectors do not work a fixed schedule. An Inspector's fixed salary is his
regular weekly compensation for ALL the hours he works in a given week
without regard to how many hours he works in the workweek.26
Plaintiffs cite the depositions of Mark Pond, branch manager of Camin's Pasadena
branch, and Christopher Taylor, branch manager of Camin's Thorofare, New Jersey branch.
Pond testified that when Camin converted the pay for inspectors working at the Pasadena
branch from a fluctuating work week to an hourly basis, Camin arrived at an hourly rate by
dividing the biweekly salary by 80. Counsel asked "I take it that's because his salary was
intended to compensate him for 80 hours?" Pond responded "yes."27 However, Pond
apparently was referring to Camin's intent at the time of the conversion, which was late 2012
26
E.g., Dkt. 121-1 at 17-24 (emphasis in original).
27
Dkt. 140-4 at 12-13.
15
or early 2013. Pond also testified that prior to the conversion Camin paid inspectors by the
fluctuating work week, inspectors were given the fluctuating workweek paper to sign, and
he explained to them how the fluctuating workweek method worked.28
Christopher Taylor testified that when an inspector worked on what was supposed to
be a day off, he was paid time and a half, calculated by "tak[ing] their annual salary,
divid[ing] it by 52 weeks, 40 hours a week and get[ting] an hourly rate."29 But upon further
questioning he admitted "I don't know exactly that's their calculation to come up with the
hours. That's just off of -- I'm just assuming." 30
Given the signed agreements expressly acknowledging the understanding that
inspectors' salaries were intended to cover the total number of hours worked, no matter how
few or many, plaintiffs' evidence is insufficient to create a genuine issue of material fact on
the issue.
In sum, to convert an inspector's salary to a regular hourly rate for purposes of
calculating overtime, the numerator is the inspector's base salary plus offshore pay, car
allowance and mileage payments, and meal allowances; the denominator is the number of
hours the inspector worked in the given week.
For each hour of overtime worked in a given week, an employee is entitled to one and
28
Id. at 12-13, 35.
29
Dkt. 140-24 at 49.
30
Id. at 51.
16
one-half times his regular rate of pay for that workweek. 29 U.S.C. § 207(a). Because the
inspectors have already received straight-time pay for all hours worked, based on the factual
findings above, they are entitled only to additional half-time pay for each overtime hour.
Moreover, because the inspectors have received some overtime pay (erroneously calculated)
for those overtime hours, those amounts should be deducted from the half-time premium,
in order to arrive at the final amount of unpaid overtime due.
2.
Dispatchers
Camin contends that dispatchers, whom it calls inspector coordinators, are covered
by the FLSA's executive and administrative exemptions. Camin bears the burden to prove
the dispatchers are exempt from the FLSA's overtime requirements. Samson v. Apollo
Resources, Inc., 242 F.3d 629, 636 (5th Cir. 2001).
a.
Executive exemption
In order to establish that the dispatchers meet the executive exemption, Camin must
show: (1) they were compensated on a salary basis at a rate of not less than $455 per week;
(2) their primary duty is management of the enterprise in which the employee is employed
or of a customarily recognized department or subdivision thereof; (3) they customarily and
regularly direct the work of two or more other employees; and (4) they have the authority to
hire or fire other employees or whose suggestions and recommendations as to the hiring,
firing, advancement, promotion, or any other change of status of other employees are given
particular weight. 29 C.F.R. § 541.100(a). Plaintiffs contest the second, third and fourth
17
elements. The fourth element is dispositive.
Camin argues that dispatchers "had the authority to, and did in fact, discipline
inspectors for performance deficiencies, and on many occasions 'effectively recommended
discipline.'"31 But Camin's argument overstates the testimony of the workers cited. None of
the evidence cited by Camin suggests that a dispatcher's recommendation as to the "hiring,
firing, advancement, promotion, or any other change of status of other employees" was given
"particular weight." In fact, although there is some evidence that a dispatcher reviewed
inspectors' paperwork and occasionally "wrote up" an inspector,32 there is no evidence of any
instance in which a dispatcher had a role in a hiring, firing, promotion or disciplinary
decision.33 Based on the record, no reasonable trier of fact could conclude that dispatchers
meet the executive exemption of the FLSA and plaintiffs' are entitled to summary judgment
on this issue.
b.
Administrative exemption
The overtime provisions of the FLSA do not apply to "any employee employed in a
bona fide executive, administrative, or professional capacity." 29 U.S.C. § 213(a)(1). In order
to qualify for this exemption, the employee must (1) be compensated at a salary of at least
$455 per week, (2) have a primary duty of performing office or non-manual work directly
31
Dkt 136 at 12.
32
Dkt. 136-7 at 3; Dkt. 136-6 at 4.
33
While not dispositive, this is consistent with the job description, which does not mention
such a role. Dkt. 136-3 at 8.
18
related to the management or general business operations of the employer or the employer's
customers, and (3) have a primary duty that includes the exercise of discretion and
independent judgment with respect to matters of significance. 29 C.F.R. § 541.200(a).
Plaintiffs dispute the second and third elements. The court focuses on the second element.
An employee's primary duty is "the principal, main, major or most important duty that
the employee performs." 29 C.F.R. § 700(a).
Factors to consider when determining the primary duty of an employee
include, but are not limited to, the relative importance of the exempt duties as
compared with other types of duties; the amount of time spent performing
exempt work; the employee's relative freedom from direct supervision; and the
relationship between the employee's salary and the wages paid to other
employees for the kind of nonexempt work performed by the employee.
Id. The court looks to the aspect of the employee's job that is "of principal value to the
employer, not the collateral tasks that she may also perform even if they consume more than
half her time." Dalheim v. KDFW-TV, 918 F.2d 1220, 1227 (5th Cir. 1990).
Duties that relate to "general business operations" are those that every business must
undertake, not those specifically related to what service or product the business provides.
The regulations explain that work directly related to management or general
business operations includes work in the following “functional areas”: tax;
finance; accounting; budgeting; auditing; insurance; quality control;
purchasing; procurement; advertising; marketing; research; safety and health;
personnel management; human resources; employee benefits; labor relations;
public relations, government relations; computer network, internet and
database administration; legal and regulatory compliance; and similar
activities.
Alvarez v. Key Transp. Serv. Corp., 541 F. Supp. 2d 1308, 1313 (S.D. Fla. 2008) (citing 29
19
C.F.R. § 541.201(b)).
The evidence supports a finding that the primary duty of dispatchers was to dispatch
inspectors to customer locations.34 While there is some evidence that dispatchers performed
various other tasks, this evidence does not support a finding that any of those ancillary tasks
were a dispatcher's primary duty. Moreover, the ancillary tasks identified (such as checking
paperwork to make sure inspectors were not making mistakes) relate to producing the
services that Camin exists to provide, not the business affairs of the enterprise.35 See
Dalheim, 918 F.2d at 1230.
The court concludes that plaintiffs are entitled to summary judgment that dispatchers
are not exempt from the FLSA's overtime provisions.
3.
Good faith 36
If an employee proves that his employer violated the FLSA, he is entitled to liquidated
damages. Bernard v. IBP, Inc., 154 F.3d 259, 267 (5th Cir. 1998); 29 U.S.C. § 216(b). To
avoid liquidated damages, the employer bears the substantial burden of proving it acted with
good faith and had reasonable grounds for believing its actions did not violate the FLSA.
Singer v. City of Waco, 324 F.3d 813, 823 (5th Cir. 2003); 29 U.S.C. § 260. Good faith
requires a duty to investigate potential liability under the FLSA. Barcellona v. Tiffany
34
Dkt. 128-1; Dkt. 128-2; Dkt. 128-3; Dkt. 128-4 at 23.
35
See Dkt. 136 at 5-7 and evidence cited therein.
36
Plaintiffs have alleged that Camin willfully violated the FLSA. Plaintiffs are not moving for
summary judgment as to willfulness.
20
English Pub, Inc., 597 F.2d 464, 468-69 (5th Cir. 1979).
Plaintiff contends that it is entitled to summary judgment on this affirmative defense
because Camin (1) failed to include incentive payments in inspectors' regular rate of pay even
after Brumley; (2) failed to investigate whether the incentive payments were based on a
reasonable approximation of the inspectors' expenses; (3) implemented its incentive payment
program inconsistently with its own policies for expense reimbursement; and (4) was
previously investigated for classifying inspectors as exempt employees.
Camin has not met its burden to show it acted in good faith or had reasonable grounds
to believe it was in compliance with the FLSA. The only analysis performed on any of the
pay issues raised here related to the car allowance. Even that was superficial in that it failed
to take into consideration the mileage reimbursement or to adequately investigate inspectors'
actual expenses. Furthermore, while Brumley did not involve issues identical to those in
dispute here, it should have put Camin on notice of the need to reevaluate the way it paid
inspectors.37 Moreover, there is no evidence that Camin performed any investigation or made
an informed decision to treat dispatchers as exempt employees. Because the court has
determined that Camin violated the overtime requirements of the FLSA, plaintiffs are entitled
to liquidated damages.
37
See Dkt. 126-6 at 9 (Claudio Camin. Dep.) (Q: What is your understanding as to what
happened in the Brumley lawsuit? A: That we were sued because we were -- we didn't
consider certain payments into the fixed salary.).
21
CONCLUSION AND ORDER
For the reasons stated above, defendants' motion (Dkt. 119) is denied in part and
granted in part; plaintiffs' motion regarding inspectors (Dkt. 126) is granted; plaintiffs' crossmotion on calculation of damages (Dkt. 139) is denied; plaintiffs' motion regarding
dispatchers is granted (Dkt. 128); and plaintiffs' motion regarding the good faith defense
(Dkt. 127) is granted.
A final status conference will be set within 60 days.
Signed at Houston, Texas on April 16, 2015.
22
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