Escobar et al vs. Rental Xpress, LLC, et.al.

Filing 51

ORDER GRANTING 37 Motion for Partial Summary Judgment. Signed by Judge Xavier Rodriguez. (wg)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
MARCUS ESCOBAR, ET AL.,

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Plaintiffs,
v.
RENTAL XPRESS, LLC, ET AL.,
Defendants.

Civil Action No. SA-14-CV-267-XR

ORDER
On this day the Court considered Plaintiffs’ Motion for Partial Summary Judgment
(docket no. 37). For the following reasons, the Court GRANTS Plaintiffs’ motion for partial
summary judgment.
I.

Background

Plaintiffs bring this Fair Labor Standards Act (FLSA) suit on behalf of themselves and all
other similarly situated employees pursuant to the “collective action” provisions of 29 U.S.C.
§ 216(b). Plaintiffs were employed as service technicians for Defendants Rental Xpress, LLC,
Janie Middleton and Kenneth “Shea” Middleton. Defendant Rental Xpress is an oilfield services
company providing field equipment in the oil and gas industry. Defendants Janie Middleton and
Shea Middleton own Rental Xpress.
The Court conditionally certified a class of Rental Xpress service technicians in Texas on
August 25, 2014.1 Docket no. 15. Defendants paid service technicians, including Plaintiffs, on a
bi-weekly salary basis. Docket no. 48-1 at 11. Plaintiffs allege they, as service technicians,
1

Defendants have not moved to decertify the collective class. See WRIGHT & MILLER § 1807 Collective Actions
Under the Fair Labor Standards Act, 7B Fed. Prac. & Proc. Civ. § 1807 (3d ed.); Docket no. 15 (outlining the
Court’s two-step approach to class certification: conditional certification in the early stage, and permitting a motion
for decertification of the collective action by defendants once they have more information after discovery).

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worked in excess of forty hours per week without proper overtime compensation in violation of
the FLSA. Nineteen service technicians have joined the collective action.
Plaintiffs filed a motion for partial summary judgment on January 15, 2015 asking for
summary judgment on two issues: 1) that Defendants cannot use 29 U.S.C. § 207(f), commonly
referred to as a “Belo plan,” as an affirmative defense in this action; and 2) that Shea Middleton
is an “employer” under the FLSA. Docket no. 37. Defendants initially did not respond to the
summary judgment motion. However, Defendants did file a motion to compel arbitration of six
individuals who joined the collective action. Docket no. 41. Plaintiffs responded to the motion
to compel on February 6, 2015. Docket no. 43.
The Court held a hearing on all pending motions on February 19, 2015. See docket no.
42. At the hearing, Defendants explained they intended to respond to the motion for summary
judgment but required two months for proper discovery on the Belo plan issue. Plaintiffs did not
oppose such discovery, so the Court granted the two months. Docket no. 46. In addition,
Defendants withdrew their motion to compel arbitration and informed the Court they would not
contest that Shea Middleton is an employer within the meaning of the FLSA. See docket no. 46.
The Court mooted the motion to compel and will grant summary judgment on the employer
issue.
On April 17, 2015, Defendants responded to the motion for summary judgment, arguing
they had a valid Belo plan with the Plaintiffs and there are issues of material fact on all of the
elements needed to establish a Belo plan, which requires the issue to survive Plaintiffs’ motion
for summary judgment. Docket no. 48. Plaintiffs replied providing additional evidence obtained
after January 15, 2015. Docket no. 49. Defendants filed a sur-reply objecting, and moving to

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strike, the evidence obtained after the date the summary judgment motion was filed or for failure
to authenticate. Docket no. 50.2
A. Relevant Undisputed Facts
It is undisputed that: 1) Plaintiffs were service technicians at Rental Xpress at times
relevant to this action; 2) Rental Xpress is an employer under the FLSA, and Shea Middleton is
an owner for FLSA purposes; and 3) Plaintiffs worked over forty hours in at least some weeks.
B. Disputed Material Facts
Defendants’ response to the partial motion for summary judgment identifies four
different issues of fact that they assert are disputed and relevant to this motion. Docket no 48 at
1-2. First, they offer testimony that service technicians’ hours were “sporadic,” reaching as low
as 20 hours per week, Docket no. 48-1 at 10, to refute evidence presented that their hours never
dropped below forty. Second, Defendants offer evidence that supervisors told newly hired
service technicians, including Plaintiffs, that they would be paid “40 hours regular time and 20
hours of overtime,” docket no. 48-1 at 35, 47-48, and an agreement was made establishing their
pay and hours, id. at 63, 64, to dispute evidence presented by Plaintiffs that the parties never
entered a bona fide contract regarding their hours and wages. Third, Defendants offer testimony
that they had procedures in place to prevent service technicians from working sixty hours per
week, docket nos. 48-2 at 47-48 and 48-5 at 39, and that Shea Middleton personally ensured that
such work not occur except on rare occasions, id. at 42, 61-62, 127-28, to conflict with testimony
that Rental Xpress service technicians frequently worked more than 60 hours per week. Last,
Defendants present evidence that they kept records of service technicians’ hours on a “big
board,” docket no. 48-4 at 32, tracked the trucks used by service technicians on a GPS system,
2

Without ruling on Defendants’ objections, which appear to have some merit, especially regarding the failure to
authenticate, the Court has not used evidence presented in Plaintiffs’ Reply, as it is not needed to decide the outcome
of this motion.

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docket nos. 48-1 at 40 and 48-3 at 108, and kept notes of the employees’ whereabouts and hours
after they reported to supervisors, see, e.g., docket nos. 48-2 at 19 and 48-3 at 6-8, to refute
Plaintiffs’ statements that Defendants did not keep records of the hours service technicians
worked.
II.

Legal Standard

A court shall grant summary judgment if the movant shows that there is no genuine issue
of any material fact and the movant is entitled to judgment as a matter of law. FED. R. CIV. P.
56(a). To establish that there is no genuine dispute over any material fact, the movant must
submit evidence that negates the existence of some material element of the nonmoving party=s
claim or defense. Lavespere v. Niagra Machine & Tool Works, Inc., 910 F.2d 167, 178 (5th Cir.
1990), cert. denied, 510 U.S. 859 (1993). If the crucial issue is one for which the nonmoving
party will bear the burden of proof at trial, the movant can merely point out that the evidence in
the record is insufficient to support an essential element of the nonmovant=s claim or defense. Id.
In order for a court to conclude that there are no genuine issues of material fact, the court
must be satisfied that no reasonable trier of fact could have found for the nonmovant, or, put
differently, that the evidence favoring the nonmovant is insufficient to enable a reasonable jury
to return a verdict for the nonmovant. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250
n.4 (1986); Lavespere, 910 F.2d at 178. The court must draw reasonable inferences and construe
evidence in favor of the nonmoving party. Tolan v. Cotton, 134 S. Ct. 1861, 1863 (2014);
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Although the
evidence is viewed in the light most favorable to the nonmoving party, a nonmovant may not
rely on “conclusory allegations, unsubstantiated assertions, or only a scintilla of evidence” to
create a genuine issue of material fact sufficient to survive summary judgment. Freeman v. Tex.

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Dep't of Criminal Justice, 369 F.3d 854, 860 (5th Cir. 2004). The court also considers “evidence
supporting the moving party that is uncontradicted and unimpeached.” Reeves v. Sanderson
Plumbing Prods., Inc., 530 U.S. 133, 151 (2000).
III.

Analysis

A. Summary Judgment: Belo Plan under FLSA Section 7(f)
Section 7(a)(1) of the FLSA requires employers to pay all employees at least “one and
one-half times the regular” pay rate for hours worked over forty in a workweek. 29 U.S.C.
§ 207(a)(1); Singer v. City of Waco, 324 F.3d 813, 818 (5th Cir. 2003).

“The purposes of the

overtime requirement are two-fold: 1) to spread employment by placing financial pressure on the
employer to hire additional workers rather than employ the same number of workers for longer
hours; and 2) to compensate employees who do work ‘overtime’ for the burden of having to do
so.” Donovan v. Brown Equip. & Serv. Tools, Inc., 666 F.2d 148, 152 (5th Cir. 1982) (citing
Walling, 323 U.S. at 40). Section 207(f) creates an exception to the general § 7(a) overtime
payment requirement for contracts (or “Belo plans”) with employees who have irregular work
weeks, i.e. whose hours worked per week necessarily fluctuate above and below the forty-hour
cut-off. 29 U.S.C. § 207(f). Exceptions to the FLSA are “narrowly construed against the
employer asserting them.” Donovan, 666 F.2d at 153 (citing Arnold v. Ben Kanowsky, Inc., 361
U.S. 388, 392 (1960)).
Section 7(f) establishes four elements that must be met for the Belo plan exception to
apply to an employee: 1) “the duties of the employee must necessitate irregular hours of work;”
2) “the employee must be employed pursuant to a bona fide individual contract or collective
bargaining agreement;” 3) “that contract must specif[y] a regular rate of pay for hours up to
forty and one and one-half times that rate for hours over forty;” and 4) “the contract must

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provide a weekly pay guarantee for not more than sixty hours, based on the specified rates.”
Donovan, 666 F.2d at 153 (citing 29 U.S.C. § 207(f)(1) and (2)) (internal citations and quotations
omitted); see also Mohammadi v. Nwabuisi, 990 F. Supp. 2d 723, 745 (W.D. Tex. 2014)
reversed in part on other grounds by Mohammadi v. Nwabuisi, No. 14-50115, 2015 WL
1323150, at *1 (5th Cir. Mar. 25, 2015).
Plaintiffs and all other service technicians were non-exempt under the FLSA at all
relevant times to this case, as Defendants admit they were to be paid as non-exempt employees
(i.e. one and one-half times their base rate for overtime hours). See docket no. 37 ex. 1 at ¶ 1719. Defendants argue they did not need to pay overtime to Plaintiffs because a proper Belo plan
was in place. Given the undisputed facts and construing all fact disputes in the light most
favorable to Defendants, the Court concludes Defendants cannot properly assert a valid Belo
plan as a defense in this case because any reasonable juror would conclude: 1) Plaintiffs did not
work irregular hours, 2) there was not “specified a regular rate” of pay for hours up to forty and
one and one-half times that rate for hours over forty; and, thus 3) there was not a contract that
provided “a weekly pay guarantee for not more than sixty hours, based on the specified rates,”
because there was not a specified regular rate on which a guaranteed weekly salary could have
been based.
1. Irregular Hours
“For hours to be considered irregular within the meaning of section 7(f), they must, in a
significant number of weeks, fluctuate both below forty hours per week as well as above, and the
fluctuations below forty must result from work requirements, not vacations, holidays, illness or
reasons personal to the employee.” Donovan, 666 F.2d at 154 (citing several cases and a U.S.
Department of Labor interpretation; finding an employee working fewer than forty hours in 6.9%

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of weeks not a “significant number of weeks” within the meaning of the statute to qualify as
irregular); Crenshaw v. Quarles Drilling Corp., 798 F.2d 1345, 1349 (10th Cir. 1986)
disapproved of on other grounds by McLaughlin v. Richland Shoe Co., 486 U.S. 128, 108 S. Ct.
1677, 100 L. Ed. 2d 115 (1988) (working fewer than forty hours in eight of 119 weeks, or 6.7%,
is “not sufficient to satisfy the requirement of “irregular hours” in the § 207(f) exception and thus
this employment agreement is not a Belo” plan).
Plaintiffs argue “the hours of the Plaintiffs, opt-ins, and other service technicians did not
fluctuate above and below forty each week.” Docket no. 37 at 9. “Rather, these employees’
hours always exceeded forty per work week.” Id. (citing Plaintiff Marcus Escobar’s affidavit,
docket no. 37-1 at ¶¶ 1 and 4, Plaintiff Nicolas Gamez’s affidavit, docket no. 37-2 at ¶¶ 1 and 4,
and Plaintiff Pedro Estrada’s affidavit, docket no. 37-4 at ¶¶ 1 and 3, for this proposition). All
three men state they “always worked more than sixty hours . . . .” In his deposition, Escobar
testified he always worked over forty hours per week, barring illness, with a maximum of eighty
hours, docket no. 48-4 at 40, and Mario Zuniga testified he worked between 60 and 80 hours per
week when he was employed as a service technician, docket no. 48-6 at 23-24. Gamez testified
he always worked more than forty hours, “70-plus” if he included travel time. Docket no. 48-7
at 21-22.
Defendants argue that Plaintiffs’ hours did fluctuate above and below the required fortyhour per week threshold, claiming there is a legitimate question of fact as to this issue. They
base this argument on Shea Middleton’s deposition, where he stated, “Our hours are already
sporadic . . . because you might work 20 hours this week but then you might work, you know, 60
hours the following week.” Docket no. 48-1 at 22. “Especially when they are new and [service
technicians] don’t know anything for the first six months, they are going to be back and forth

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with hours.” Id. at 79. Defendants also appear to argue, though never directly, that Plaintiffs are
including non-compensable hours like travel time in their hours calculation when they assert they
never worked less than forty hours per week. Docket no. 48 at 18-19.
The Court finds that the evidence offered by Defendants to show irregular hours is not
sufficient to raise a genuine issue of fact, as it is composed only of generalized statements, and
even those generalized statements are refuted by Middleton’s own testimony. Middleton’s
statements actually stand for the proposition that these Plaintiffs’ hours did not fluctuate below
forty hours per week in a significant number of weeks, if at all. Middleton called the service
technicians’ hours “sporadic” and kept around “50, 60 hours a week.” Docket no. 48-1 at 10.
Middleton stated new service technicians work less than experienced ones, and then said “the
first two or three months they are going to be working 40 hours a week, maybe 50 tops.” Id. at
80.

Middleton agreed the service technicians worked overtime “most weeks” and that he

“hoped” they would. Id. at 87. When looking at the GPS records for the trucks used by the
service technicians, which Middleton said “shows a lot” about service technicians’ hours,
Middleton plainly stated “the last few months of these plaintiffs . . . worked 40 or 50 hours a
week.” Id. at 40.
Shane Dennis, a supervisor of service technicians at Rental Xpress, when asked “if the
[service technicians] were not going to have a sick day or a vacation day, would they always
work over 40 hours a week?” responded “that’s a yes and no.” After a brief recess, Dennis was
asked what that answer meant, and he stated
“sometimes they would work over 40, but that . . . varied.
Sometimes you might have one . . . one . . . one employee that
might work over. Sometimes [] you know, you wouldn’t have any .
. . But we didn’t keep track of hours . . . the only hours we really
kept track of was how long they were out . . . in the field. If they
were out ten hours, 15 hours, 16 hours.”
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Docket no. 48-3 at 6-7.
Construing the evidence in the light most favorable to Defendants, the Court finds no
reasonable juror could conclude that Plaintiffs’ and other service technicians’ at Rental Xpress
hours were irregular such that they dipped below forty in a significant number of weeks because
the uncontroverted evidence in the record shows these service technicians worked, and were
expected to work, over forty hours per week without fluctuation. The owner of the company
stated their hours were kept at 50 to 60 hours per week. When shown the limited records for the
Plaintiffs in this case, the owner noted that they never worked less than forty hours.3 When
asked if service technicians worked overtime the owner said he “would hope so.” One of the
company’s supervisors apparently confirmed that the service technicians worked over forty
hours per week unless they were sick or took vacation. The service technicians’ hours at Rental
Xpress did not “fluctuate” above and below 40 such that a valid Belo plan exception could
apply.4 See Donovan, 666 F.2d at 154; Condo v. Sysco Corp., 1 F.3d 599, 602 (7th Cir. 1993)
(holding when a plaintiff’s “overtime hours fluctuated, but his regular hours did not: he always
worked at least forty hours each week” § 207(f) does not provide an exception to the FLSA);
Mohammadi v. Nwabuisi, 990 F. Supp. 2d at 746 (holding an employee’s hours that were
sporadic, but averaged 58 per week, and when no other evidence was presented of fluctuation,
the employee’s hours did not fluctuate above and below 40 enough to support a valid Belo plan).
Having shown Defendants fail as a matter of law on one of the four mandatory elements
set out in the exception to the FLSA general overtime payment requirement in § 207(f),
3

Middleton never qualified this hour calculation or expectation as including non-compensable travel time, rendering
Defendants indirect argument in their brief unconvincing and does not create a genuine issue of fact.
4
The Court is not convinced by Defendants’ arguments that the Plaintiffs’ testimony should be completely
disregarded because they are “interested” parties or were disciplined for troubling behavior. Given the opportunity,
Defendants present no competent evidence to refute claims that Plaintiffs always worked more than forty hours per
week, and often many more. Plaintiffs’ testimony, and Rental Xpress representatives’ statements affirming
Plaintiffs’ testimony, is the only competent evidence on the issue, so there is no genuine issue of fact.

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Plaintiffs’ motion for partial summary judgment is granted and Defendants are precluded from
using a Belo plan defense in this case.5
2. Regular Rate of Pay
A valid Belo plan must clearly establish “regular rate of pay” for the first 40 hours of
work to be performed, and one and a half times that rate of pay for the remaining 20 hours of
work. According to the Fifth Circuit, “section 7(f) . . . requires that the employee contract
‘specify a regular rate of pay’ and the weekly guarantee be ‘based on the rates so specified’ . . .
Although nowhere expressly stated in the statute, we think it a matter of fair implication that the
‘regular rate of pay’ required to be specified by section 7(f) must be the actual ‘regular rate’ at
which an employee is employed as determined under Section 7(e).” Donovan, 666 F.2d at 154.
The Supreme Court has held “regular rate” means “the hourly rate actually paid for the normal,
non-overtime workweek.” Walling, 1944, 323 U.S. at 40. A Belo plan must be based upon a
specified, non-varying “regular rate of pay.”

Id.

The Belo plan exception is “limited to

agreements which contain a ‘provision for a guaranteed weekly wage with a stipulation of an
hourly rate,’ and that other types of agreement . . . cannot, by their terms, determine what is the
‘regular rate’ named in the Act. That ‘regular rate,’ . . . is an ‘actual fact.’” Aaron v. Bay Ridge
Operating Co., 162 F.2d 665, 668 (2d Cir. 1947) modified, 334 U.S. 446 (1948) (citing Madison
Avenue Company v. Asselta, 67 S. Ct. 1178, 1184 (1947)).
The rate can be calculated by some specified formula. Asselta, 67 S. Ct. at 1181 (“A
wage plan is not rendered invalid simply because instead of stating directly an hourly rate of pay
5

Because Defendants have not moved to decertify the class, or argued or presented any evidence that Escobar,
Gamez and Zuniga’s experience with hour fluctuation is not representative of the collective Plaintiffs, the Court
grants summary judgment on this issue for all opt-in Plaintiffs in this case. See Brennan v. Gen. Motors Acceptance
Corp., 482 F.2d 825, 829 (5th Cir. 1973) (based on testimony from less than half the opt-in plaintiffs and an
investigator the court “might well have concluded that plaintiff had established a prima facie case that all thirtyseven employees had worked unreported hours”). The Court grants summary judgment without regard to additional
evidence from different opt-in Plaintiffs presented in Plaintiffs’ reply brief (docket no. 49).

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in an amount consistent with the statutory requirements, the parties have seen fit to stipulate a
weekly wage inclusive of regular and overtime compensation for a workweek in excess of 40
hours and have provided a formula whereby the appropriate hourly rate may be derived
therefrom.”). The rate or formula cannot be set unilaterally by the employer. See Brennan v.
Elmer's Disposal Serv., Inc., 510 F.2d 84, 87 (9th Cir. 1975) (the FLSA “does not allow [an
employer] to designate unilaterally what the ‘regular rate’ will be, then, on the basis of that
designation, pay employees a predetermined sum for up to fift[y] hours per work week and one
and one-half the designated rate for all hours worked in excess of fifty”).
There is no “specified regular rate of pay” in this case. Defendants have provided no
summary judgment evidence that any service technician at Rental Xpress had a “regular rate of
pay.” Shea Middleton stated repeatedly in his deposition the Plaintiffs were paid at least
minimum wage. See, e.g., docket no. 48-1 at 63-64 and 79-80. He never articulated a specific
regular rate of pay for any of the Plaintiffs or any service technician. Without a regular rate of
pay, there is no rate of pay for overtime to be calculated.
In an attempt to salvage their position, Defendants argue in their response to the motion
for summary judgment that, when analyzing two of Plaintiffs’ paychecks, each was paid a
“regular rate” that exceeded minimum wage. One of Marcus Escobar’s paystubs notes he was
“deducted 2 sick days . . . 88.33 x 2 = 176.66.” Docket no. 37-5 at 2 and 5. Elsewhere, Escobar
stated he received $1,150 per two-week period ($575/week) in July 2012; $1,250 ($625/week)
for one two-week period in May, 2013; and $1,325 ($662.50/week) for another two week period
in December, 2013. Docket no. 48-4 at 22-24. One of Nicolas Gamez’s paystubs indicated he
was “suspended May 27-29,” which led to a note of “Minus $260.01” on the stub. Docket no.
37-6 at 11.

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Minimum wage for the relevant time was $7.25. Defendants argue “A pay rate of
$575/week equates to over $8.00 per hour for the first 40 hours ($8.00 x 40 = $320) plus 20
hours at $12.00 ([$8.00 x 1.5 = $12] x 20 = $240). $320 + $240 = $560. Therefore Escobar was
paid well over minimum wage plus time-and-half when he was first hired.” Docket no. 48 at 8.
Further, Defendants argue, “for Marcus Escobar, $88.33 per day divided by 8 hours is a regular
rate of just more than $8.00, which exceeds minimum wage, plus 2 hours at regular rate times 1
½ equates to just above $12.00 per hour (8 x $8 = $64; 2 x $12 = $24; $64 + $24 = $88).”
Docket no. 48 at 12. Similarly, Defendants argue, “for Nicolas Gamez, $260.01 divided by 3
days is $86.67 per day, which equates to a regular rate of just above $7.85 for 8 hours and time
and a half at just above $11.78,” an amount that exceeds minimum wage.
Defendants appear to be arguing that they had a valid Belo plan with a specified regular
rate because, based on their bi-weekly salaries, it is possible to calculate a regular rate of pay per
hour for all service technicians’ that would have exceeded minimum wage. See docket no. 48 at
8 and 12. Defendants also claim that all new employees are told, by a supervisor, about the
method of payment in Rental Xpress’s system; forty hours per week at regular pay and one and
one-half times that rate for twenty hours. Id.6 But Defendants fail to argue, or cite to any
evidence in the record that shows, that each service technician in fact had a specific regular pay
rate. Paying “at least minimum wage” is not a “specified rate” within the meaning of § 207(f).
Defendants’ argument and math attempting to establish a regular rate is a post hoc
calculation and rationalization. Middleton may have met his goal of having a base salary above
minimum wage in some instances. But the record contains no evidence that anyone, Defendant
or Plaintiff, performed the calculations for a regular rate made in the brief or knew a “specified
regular rate” at the relevant time in this case (i.e., the three years prior to the filing of this case),
6

Citing Middleton’s deposition, despite him lacking first-hand knowledge of hiring conversations.

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nor does it indicate a specified rate of pay was stated by any Defendant or agreed to by any of the
Plaintiffs in this case. Instead, Defendants appear to have set bi-weekly salaries without using a
pre-determined “regular rate” for the first 40 hours, from which a one and one-half times
calculation for the next 20 hours could have been made. At most, the specified rate was set
“unilaterally,” and after the fact, which is not permitted for a valid Belo plan. Brennan, 510 F.2d
at 87 (the FLSA does not allow an employer to designate the regular rate “unilaterally”).
Defendants have only established that they could have set the regular rate of pay at the minimum
wage or above to create a Belo plan, not that the rate was set beforehand or agreed to by the
parties.
In their sur-reply,7 Defendants rely on Asselta to argue they have a bi-weekly wage
inclusive of regular and overtime compensation “instead of stating directly an hourly rate of
pay.” Docket no. 50 at 4 (citing 67 S. Ct. at 1181). Defendants, however, ignore the last portion
of the sentence, which reads in full “A wage plan is not rendered invalid simply because instead
of stating directly an hourly rate of pay in an amount consistent with the statutory requirements,
the parties have seen fit to stipulate a weekly wage inclusive of regular and overtime
compensation for a workweek in excess of 40 hours and have provided a formula whereby the
appropriate hourly rate may be derived therefrom.” Asselta, 67 S. Ct. at 1181 (emphasis added).
There is no evidence Defendants provided a formula to Plaintiffs to derive an appropriate hourly
rate, now or beforehand and thus have failed to specify a regular rate. See Adams v. Dep't of
Juvenile Justice of City of New York, 143 F.3d 61, 69 (2d Cir. 1998) (an example of a specific
contract provision that might properly set out a formula is: “The hourly rates for those regularly

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The sur-reply improperly objects to the specified rate point as only being mentioned in Plaintiffs’ reply in violation
of FRCP 56. Plaintiffs raised this issue clearly in the original motion. Docket no. 37 at 8 (“Plaintiffs each received
a fixed bi-weekly salary regardless of the number of hours they worked with no mention of what their hourly rate or
overtime rates would be.”).

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employed more than forty (40) hours per week shall be determined by dividing their weekly
earnings by the number of hours employed plus one-half the number of hours actually employed
in excess of forty (40) hours”) (quoting Asselta).
By not setting a specified regular rate or specifically setting a formula to calculate one,
Defendants’ arrangement with Plaintiffs is not one the Belo plan exception in § 207(f) intends to
protect. Employers are only protected by the Belo plan exception to the FLSA if they “specify a
regular rate of pay” and a “weekly guarantee . . . based on the rates so specified.” Donovan, 666
F.2d at 154 (citing § 207(f)). Exceptions to the FLSA like § 207(f) are narrowly construed
against employers like Rental Xpress and Middleton to further the goals of the FLSA; protecting
workers, spreading employment instead of consolidating hours in fewer workers, and
compensating employees for the burden of working overtime. See Donovan, 666 F.2d at 152
(citing Walling, 323 U.S. at 40)). As the Defendants present no evidence that they specified a
regular rate of pay before-the-fact that was made known to the service technicians at the time
they were hired, the Court finds that there is no genuine issue of material fact that Defendants
failed to establish they had a valid Belo plan as a matter of law, as they did not have agreements
specifying a regular rate or setting a formula with Plaintiffs in this case.
Lastly, because there was not a contract that specified a regular rate for the service
technicians, Defendants also did not have a valid Belo plan in place with Plaintiffs for “a weekly
pay guarantee for not more than sixty hours, based on the specified rates.” See § 207(f).
Without a specified rate to base payment on, Defendants cannot meet the fourth criteria for a
Belo plan, either.

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IV.

Conclusion

For all of the above stated reasons, the Court GRANTS Plaintiffs’ motion for partial
summary judgment (docket no. 37). Defendants may not use § 207(f)’s Belo plan affirmative
defense and Defendant Shea Middleton is an employer for the purposes of the FLSA.
It is so ORDERED.
SIGNED this 26th day of May, 2015.

XAVIER RODRIGUEZ
UNITED STATES DISTRICT JUDGE

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