Opinion
Civil Action No: 04-170 Section: "J"(4).
May 11, 2005
ORDER AND REASONS
Before the Court is the Motion for Partial Summary Judgement as to Liability, filed by plaintiffs. Rec. Doc. 74. Defendants oppose the motion. For the reasons which follow, the Court finds that the motion should be granted solely with respect to Dale Francis' employer status, and in all other respects must be denied.
BACKGROUND
Plaintiffs are current and former employees of defendant Francis Services, Inc., d/b/a Francis Torque Services ("Francis"). They allege that they were denied overtime payments due to them by Francis as a result of two Francis policies: failing to pay time and a half for hours worked in excess of 40 hours per week; and, when paying overtime, calculating time and a half on an inaccurate base pay that did not reflect true base wages because it did not include amounts described as "discretionary bonuses" which were in fact part of regular pay. Complaint, ¶ 12. The Court conditionally certified a collective class comprised of all current and former employees of Francis Services Inc. and/or Francis Torque Services who were paid on an hourly basis at any time between January 15, 2001 to present, and who worked, at any time therein, over 40 hours per week without being paid time and a half for the hours worked over 40 per week; or, who were paid overtime for hours worked over 40, but whose overtime was calculated on a base rate which did not include regularly paid "discretionary bonuses."
Notice was sent to potential class members, and approximately 30 plaintiffs have opted in. Plaintiffs now move for summary judgment on liability seeking a ruling on the following:
1.) that plaintiffs are entitled to have their bonus pay included in the their regular rate of pay for the purpose of calculating overtime;
2.) that plaintiffs are entitled to overtime for all hours over 40 worked in a week;
3.) that plaintiffs are entitled to a three-year prescriptive period rather than a two-year period because their cause of action arises from a willful violation of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. ("FLSA");
4.) that plaintiffs are entitled to a liquidated damages under 29 U.S.C. § 216(b), since defendants cannot prove that they were acting in good faith when they allegedly violated the FLSA; and
5.) that Dale Francis is an "employer" under the FLSA. As set forth below, the Court finds that only this last issue is amenable to summary judgment at this juncture.
ANALYSIS
1. Inclusion of bonus pay in overtime calculationUnder the FLSA, employers must compensate their employees for all work in excess of forty hours per week at a rate of one and half times their regular rate of pay. 29 U.S.C. § 207(a). The regular rate of pay includes all remuneration for employment paid to employees with a few limited exceptions, including discretionary bonuses, that is, "[s]ums paid in recognition of services performed during a given period if . . . both the fact that payment is to be made and the amount of the payment are determined at the sole discretion of the employer at or near the end of the period and not pursuant to any prior contract. . . ." 29 U.S.C. § 207(e).
In this case, the parties disagree on whether a portion of the employees' remuneration was in the form of discretionary bonuses, so as to permit their exclusion from the regular rate of pay when calculating overtime.
The parties do not dispute that a bonus plan existed, and that hourly premiums were paid on top of plaintiffs' regular hourly rate based upon the type of work they were doing or where the job site was located. Plaintiffs received a $2.00 to $4.00 per hour premium for work that was performed offshore, considered ultra-hazardous, required travel in the employee's personal vehicle, or was required to be performed at a customer's facility. Plaintiffs maintain that there was no discretion regarding the payment of the hourly premiums, and that they were contracted for in advance. For instance, plaintiffs argue that if an employee worked offshore, he automatically received an hourly premium on top of his base rate, which was termed a performance bonus but was actually an offshore shift differential.
Defendants counter that the payments, while consistently made, were nonetheless subject to discretion. In support of this argument they have submitted the deposition testimony of two plaintiffs who acknowledge that the payments could be and were withheld at their supervisor's discretion. See, Depo. of Troy Autin, Rec. Doc. 77, Exh. A, 62-63. For instance, Troy Autin testified that it was within his supervisor's discretion not to give a bonus if the supervisor felt his performance was lacking, and that this had occurred to him. Id. Similarly, Kevin Pozzo testified that there were no "cut and dried" criteria for the payment of bonuses, and stated explicitly that they were discretionary. See, Depo. of Kevin Pozzo, Rec. Doc. 77, Exh. 23, 79.
While the Court's initial impression is that the greater weight of the evidence presented suggests that the hourly premiums at issue were probably shift differentials rather than true discretionary bonuses, on summary judgment, "the district court is not to weigh the evidence or make credibility choices." Berry v. Armstrong Rubber Co., 989 F.2d 822, 824 (5th Cir. 1993) (citations omitted). "If a genuine issue of material fact exists, the Court must deny a motion for summary judgment, even if it believes one side over the other." Fletcher v. City of New Orleans, 1997 WL 244554 *5 (E.D. La. Mar. 13, 1997) (citingBerry). In this case, defendants have identified through plaintiffs' deposition testimony a factual issue on the question of whether or not the payments in question were discretionary or not, and thus while it is a close call, summary judgment cannot be granted. 2. Overtime for hours worked in excess of 40 per week
The general requirement stated above that employees must be paid "time and a half" for hours worked over 40 in a week is not in dispute. 29 U.S.C. § 207(a)(1). However, in this case, the parties disagree on whether some of the hours worked over 40 qualify as compensable time. Because the employees often worked at sites remote from their homes, most notably offshore, there were certain periods of standby time during which plaintiffs were required to remain on-site but for which they were not compensated, for instance, between offshore shifts. Plaintiffs contend that all standby time, even time spent sleeping, is compensable, and further, when such time brings an employee's weekly hours worked to over 40, it must be compensated for at the overtime rate.
It is well-established that 29 U.S.C. § 207(a)(1) covers more than the time an employee actually spends working, such as time waiting to work, or standby time. Skidmore v. Swift Co., 323 U.S. 134, 137 (1944). Whether an employee's standby or waiting time is compensable depends upon how the idle time is spent.Mireles v. Frio Foods, Inc., 899 F.2d 1407 (5th Cir. 1990). The Fifth Circuit has adopted the "predominant benefit test" used by most circuit courts to determine whether an employee's standby time is compensable. Bernard v. IBP, Inc. of Nebraska, 154 F.3d 259, 265 n. 16 (5th Cir. 1998). Under this test, the fact-finder must determine whether the standby period "is used predominantly or primarily for the benefit of the employer or for the benefit of the employee." Id. This is obviously a fact-intensive inquiry, that revolves around questions of the duration of wait time, what the employee is allowed to do during the wait time, whether the parties had any agreements concerning the wait time, etc. See, e.g., Mireles, 899 F.2d at 1412. For this reason, the inquiry is ordinarily considered a fact question to be resolved by the trier of fact after hearing all of the evidence. Id.; see also, Skidmore v. Swift, 323 U.S. at 136-37.
The Fifth Circuit has recognized that in certain instances, where material facts are not in dispute, the question may be resolved on summary judgment. Bright v. Houston Northwest Med. Ctr. Survivor, Inc., 934 F.2d 671, 674-75 n. 5 (5th Cir. 1991) (en banc).
In this case, plaintiffs seek a blanket ruling that their downtime, even when it was spent sleeping, was compensable. Plainly, this cannot be determined without reference to specific facts which have not been submitted to the Court, concerning things like the length of the standby time, what employees were permitted to do during standby time, and so forth. No evidence on these points has been submitted, so summary judgment must be denied. 3. Three-year prescriptive period
Plaintiffs also contend that defendants' violations of the FLSA were willful and are thus subject to a two-year rather than three-year statute of limitations. See 29 U.S.C. § 255(a). "Under the FLSA, a violation is `willful' if the employer either `knew or showed reckless disregard for . . . whether its conduct was prohibited by the statute.'" Singer v. City of Waco, Tex., 324 F.3d 813, 821 (5th Cir. 2003) (quoting McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988) (other citations omitted)).
Plaintiffs attempt to establish willfulness on the part of Dale Francis by urging the Court to discredit Francis' testimony that he believed that the laws allegedly violated did not apply to the Francis Services workplace. Defendants, in contrast, contend that Francis had an implied agreement with certain employees that their non-work time would not be compensable, and thus no violation, willful or otherwise, could have occurred. As previously noted, the Court cannot resolve credibility issues on summary judgment. Berry, 989 F.2d at 824. Likewise, the disagreement as to material facts makes summary judgment impossible. Thus, plaintiffs' motion must be denied on this point. 4. Liquidated damages
By its terms, an employer who violates the FLSA is liable for the unpaid wages and "an additional equal amount as liquidated damages." 29 U.S.C. § 216. However, Title 29, section 260 qualifies this automatic award of liquidated damages, by providing that "if the employer shows to the satisfaction of the court that the act or omission giving rise to such action was in good faith and that he had reasonable grounds for believing that his act or omission was not a violation of the [FLSA], the court may, in its sound discretion, award no liquidated damages or award any amount thereof not to exceed the amount specified in § 16 of this title."
Plaintiffs herein contend that defendants were not in good faith in committing the alleged violations, and thus that summary judgment decreeing that they are entitled to liquidated damages is in order. However, just as the Court cannot conclude defendants committed a willful violation, the Court cannot conclude as a matter of law that the defendants were not in good faith. Accordingly, summary judgment on this point is not appropriate.
5. Dale Francis is an employer for purposes of the FLSA
Under the FLSA, an employer is broadly defined as "[a]ny person acting directly or indirectly in the interest of an employer in relation to an employee." 29 U.S.C. § 203(d). Determining employer status under this definition "is not circumscribed by formalistic labels or common-law notions of the employment relationship." Donovan v. Sabine Irrigation Co., Inc., 695 F.2d 190, 194 (5th Cir. 1983) (citing Bartels v. Birmingham, 332 U.S. 126 (1947). Rather, the analysis focuses "upon the totality of the circumstances, underscoring the economic realities of the irrigation workers' employment. Id. (citations omitted). And in considering employer status, as always, "the FLSA must be liberally construed to effectuate Congress' remedial intent." Id.
Neither the FLSA nor jurisprudence requires stock ownership in a corporate employer for a finding of employer status where other forms of control of the employment relationship are present.Id. at 195. "No one factor is dispositive; rather, it is incumbent upon the courts to transcend traditional concepts of the employer-employee relationship and assess the economic realities presented by the facts of each case." Id. (citingGoldberg v. Whitaker House Cooperative, 366 U.S. 28 (1961)). Thus, section § 203(d) encompasses "an individual who, though lacking a possessory interest in the `employer' corporation, effectively dominates its administration or otherwise acts, or has the power to act, on behalf of the corporation vis-a-vis its employees." Id. at 194-95. Even an individual who lacks authority to direct a company's activities is accountable for FLSA violations if he has "independently exercised control over the work situation." Id. at 195; see also, Lee v. Coahoma County, 937 F.2d 220, 226 (5th Cir. 1991) (An employer includes "individuals with managerial responsibilities and substantial control over the terms and conditions of the [employee's] work."); Reich v. Circle C. Investments, Inc., 998 F.2d 324 (5th Cir. 1993).
Dale Francis qualifies as an employer under this broad definition. Although he no Longer has a direct ownership interest in the business, as discussed above, that is not dispositive. In fact, he previously had 100% ownership in the company before he transferred it to his wife, solely for the purpose of attaining "minority ownership" status. Depo. of Dale Francis, Rec. Doc. 77, Exh. 26, at 10-11. Francis still runs the company on a day-to-day basis, and participates in hiring and firing decisions, as well as setting pay rates and making job classifications. Id. at 11-15. Francis is responsible for setting pay policies (id. at 46), and for assuring that the company complied with all state and federal wage laws. Id. at 75-76.
On this record, the Court finds that Dale Francis easily fits within the liberal definition of "employer" for purposes of the FLSA, and plaintiffs are entitled to summary judgment on this point. Accordingly,
IT IS ORDERED that plaintiffs' Motion for Partial Summary Judgment as to Liability, Rec. Doc. 74, should be and is hereby GRANTED in part, and Dale Frances is deemed an employer for purposes of the Fair Labor Standards Act. In all other respects, the motion is DENIED.