BARRY S. SELTZER, United States Chief Magistrate Judge.
THIS CAUSE came before the Court for trial upon the consent of the parties (DE 20, DE 21). For the reasons set forth more fully herein, the Court will enter judgment in favor of Plaintiff Mario E. Bautista Hernandez and against Defendant Tadala's Nursery, Inc.
On July 18, 2012, Mario E. Bautista Hernandez ("Plaintiff") filed a two-count Amended Complaint for Damages, Declaratory Relief, Injunctive Relief, Costs of Litigation and Attorney's Fees ("Amended Complaint") (DE 17) against Tadala's Nursery, Inc. ("Defendant"). On August 1, 2012, Defendant filed an Answer and Affirmative Defenses ("Answer") (DE 18), denying the material allegations of the Amended Complaint. Thereafter, the parties litigated, and the Court decided, several pretrial motions.
The parties appeared for trial on May 6, 2014. Before commencing, the parties stipulated to the dismissal of Count I of the (two-count) Amended Complaint, which alleged violations of the Migrant and Seasonal Agricultural Worker Protection Act, 29 U.S.C. §§ 1801 et seq. ("AWPA").
The matter is now ripe for decision.
Defendant is a wholesale nursery that produces and sells ornamental landscape plants at three Florida locations — Southwest Ranches, Sebring, and Fort Pierce. (DE 70). From 2009 to 2011, Defendant's annual gross sale revenues were $4 to $5 million per year. Id. at 3; Pradilla Test. at 87 (DE 80). Defendant's operations were overseen by its Vice President, Daniel Pradilla, and by its General Manager, Sebastian Gomez; each is an educated business professional, having earned a Master of Business Administration ("MBA"). Pradilla Test. at 86 (DE 80); Pradilla Test. at 16 (DE.81). Among Defendant's many employees were three drivers
Plaintiff was hired by Defendant to perform nursery work; he commenced employment on July 24, 2009, and remained employed through December 7, 2011. When he applied for employment, Plaintiff presented a Resident Alien card and a Social Security card in the name "Mario Bautista." Def.'s Exs. 2, 4. On a Form 1-9 ("Employment Eligibility Verification"), he represented that he was a lawful permanent resident, and on a Form W-4 ("Employee's Withholding Allowance Certificate") he claimed 10 allowances, as had been suggested to him by Defendant's office staff. Pl.'s Test. at 50 (DE 80); Def.'s Exs. 1, 2, 4. Plaintiff, however, was neither legally present nor authorized to work in the United States; nor was he entitled to the 10 allowances he claimed on his W-4. Pl.'s Test. at 24 (DE 80).
After later being informed by a governmental agency that Plaintiff and several other employees had utilized false Social Security numbers, Pradilla instructed the employees to remedy the problem if they wished to retain their employment. According to Plaintiff, Pradilla specifically instructed him to change his name. Id. at 25-26. Thereafter, Plaintiff produced a new Employment Eligibility Verification form, Social Security card, and Permanent Resident Card — all in the name "Miguel Ortiz" — and he again claimed 10 allowances on a revised W-4, this time under the name "Ortiz." See id. at 26-27; Def.'s Exs. 5, 7, 8. On this occasion too, the information provided by Plaintiff was false. See id. at 27. Yet, Defendant never availed itself of the federal government's free "E-Verify" program to confirm the accuracy of Plaintiff's representations. Pradilla Test. at 24-25 (DE 81). Thereafter, Defendant utilized either "Miguel Ortiz" or "Mario" when paying Plaintiff. Pl's Exs. 6, 7.
Throughout the course of his employment, Plaintiff worked primarily on an hourly basis, and Defendant recorded those hours. Pl.'s Ex. 1. Many weeks, Plaintiff performed additional work on a piece-rate basis; Defendant, however, failed to record those piece-work hours. Pl.'s Test. at 28-29 (DE 80); Pl.'s Ex. 1. At trial, Plaintiff testified that when he did perform piece-work, he did so 1 day per week from 7:00 a.m. to 5:00 p.m., that is, for 10 hours. At 5:00 p.m., he would transition to hourly labor, loading pots onto trucks for delivery to customers. Pl.'s Test. at 28-29 (DE 80). In response, Pradilla testified not to the number of hours Plaintiff devoted to piece-work labor, but to the approximate number of pieces — 1-gallon and 3-gallon pots — he believed a nursery laborer could complete within a given time frame. He opined that a nursery laborer could fill 100 3-gallon pots in 30 to 45 minutes and 500 1-gallon pots in 60 minutes. Pradilla Test. at 10 (DE 81).
Defendant maintained two record-keeping systems for its payroll: one (Quick-Books) program to record and report employee
Defendant compensated Plaintiff by issuing two types of checks. For the first 40 hours Plaintiff worked each week, Defendant made its payroll checks payable to Plaintiff — "Mario Bautista" and, later, "Miguel Ortiz." Pl's Exs. 2, 4, 6, 8. But when Plaintiff worked in excess of 40 hours, Defendant made its payroll checks payable to a third party, who, in turn, would distribute shares of the check to Plaintiff and to other workers. Pl.'s Ex. 3, 5, 8. By way of example, for the week of January 22 to January 28, 2010, Defendant issued a check payable to "Jose Rojo" in the amount of $623.13. The paystub showed that of this $623.13 payment, $134.13 was due Plaintiff and the remainder was due three other employees. Defendant never reported this compensation to governmental authorities; nor did Defendant withhold or remit any taxes from this compensation. Pl's Exs. 3, 5, 8; Arenas Test. 67-68 (DE 80). And according to Defendant's own accountant, Defendant never advised him that it had been paying employee overtime by way of a tax-free group check. Wald Dep. at 8.
Defendant's two-track record-keeping system, therefore, not only enabled it to conceal from governmental authorities the full amount of employee wages and the corresponding tax obligations, but it also effectively concealed the company's failure to pay enhanced rates for overtime labor. Like its practice of not paying enhanced overtime rates, Defendant's practice of maintaining two sets of payroll records is a long-standing one; it has not changed since the company's inception (in the late 1980's). Pradilla acknowledged that Defendant never sought to determine — through legal counsel or through the Department of Labor — whether its overtime compensation and tax withholding practices
Plaintiff represented that Defendant had failed to produce either its QuickBooks data or its Excel spreadsheets. Accordingly, to reconstruct his earnings record, Plaintiff could offer only his own testimony and the payroll excerpts he had acquired from Defendant. Pl.'s Ex. 1. These payroll excerpts contain an entry — "Total Hours" — that reflects the number of hours Plaintiff devoted each week to hourly labor; they do not, however, reflect the number of hours devoted to piece-work labor, as Defendant failed to record that time. Pl.'s Ex. 1: Pl.'s Test. at 29 (DE 80). The payroll excerpts also contain an entry — "Botes" — showing the number of 3-gallon and 1-gallon pots that Plaintiff filled during those weeks in which he performed piece-work labor. In addition, the payroll excerpts contain an entry — "Hrs" — showing the compensation Plaintiff received each week for hourly labor in excess of 40 hours, and another entry — "Total a Pagar" — showing the aggregate compensation Plaintiff received for hourly labor in excess of 40 hours and, when applicable, piece-work labor.
Defendant argues that Plaintiff is not entitled to any relief because he procured and maintained his employment through fraudulent representations. Defendant further argues that it is not subject to the requirements of the FLSA because it did not operate in interstate commerce. Defendant acknowledges that if the FLSA were to apply and if Plaintiff were not foreclosed from recovering, it would be liable for unpaid overtime for those weeks in which Plaintiff performed hourly labor only. But for almost all weeks in which Plaintiff performed both piece-work and hourly labor, Defendant maintains that it did not violate the FLSA overtime provisions. Defendant explains that in such weeks its piece-work rates more than adequately compensated Plaintiff for any overtime compensation he may have been due. Further, Defendant argues that even if it had violated the FLSA's overtime compensation requirements, the operative limitations period is two years, not three, as its violations were not "willful." Finally, Defendant argues that it is not liable for liquidated damages because it held a "good faith" belief that it was complying with the law.
As to each argument, the Court concludes otherwise.
Defendant argues that Plaintiff cannot recover under the FLSA because he fraudulently procured and maintained his employment. That Plaintiff made false representations and provided false documentation to secure and later retain his employment is not disputed. That Defendant was misled or induced to rely on those false representations in hiring and retaining Plaintiff is not plausible.
When Plaintiff first applied, Defendant chose not to avail itself of the E-Verify system to confirm Plaintiffs information. Defendant's office staff even advised Plaintiff to enter an excessive number of allowances — 10 — on his W-4. When Pradilla was later advised by a government agency that the Social Security numbers provided by Plaintiff and several other employees were false, he advised Plaintiff to change his name. When Plaintiff returned with new residency and Social Security cards —
Yet, even if Defendant had genuinely been deceived into hiring and later retaining Plaintiff, the Eleventh Circuit instructs that recovery under the FLSA would not be foreclosed. In Lamonica v. Safe Hurricane Shutters, Inc., 711 F.3d 1299 (11th Cir.2013), Augustin Milan was among several employees of Safe Hurricane Shutters who had filed suit to recover unpaid overtime wages under the FLSA. Milan prevailed at trial and was awarded unpaid overtime and liquidated damages. Id. at 1305. On appeal to the Eleventh Circuit, Safe Hurricane Shutters argued that the in pari delicto doctrine barred Milan's FLSA recovery. Id. at 1306. The doctrine of in pari delicto provides that "a plaintiff who has participated in wrongdoing may not recover damages resulting from the wrongdoing." Id. In this instance, the employer argued that the doctrine foreclosed Milan's FLSA recovery because he was an undocumented alien who had not been authorized to work in the United States, because he had applied to work under a false Social Security number, and because he had failed to accurately report his income to the IRS. Id.
The Eleventh Circuit rejected Safe Hurricane Shutter's argument that because it would not have hired Milan absent his use of a false Social Security number he is barred from recovering. The court first observed that Milan's ability to recover unpaid wages under the FLSA does not rest upon his immigration status; the court noted that it had previously held that undocumented aliens are "employees" who may recover unpaid wages under the FLSA. Id. at 1306 (citation omitted). The court then set forth the limitations of the in pari delicto defense, explaining that it could "bar recovery under a federal statute only where (1) the plaintiff bears at least substantially equal responsibility for the violations he seeks to redress, and (2) preclusion of the suit would not substantially interfere with the statute's policy goals." Id. at 1308. The court did not need to reach the second prong (and determine whether the in pari delicto doctrine is consistent with the policies underlying the FLSA), as it determined that the first prong had not been satisfied. Id. at 1308. To satisfy the first prong, Safe Hurricane Shutters would have had to show that Milan was "an active, voluntary participant in the unlawful activity that is the subject of the suit" — the overtime payment practices. Id. at 1308 (citations omitted) (emphasis in original). Because Milan did not participate in Safe Hurricane Shutters' decision whether to pay overtime wages in accordance with the FLSA, the in pari delicto doctrine does not bar his recovery, notwithstanding his use of a false Social Security number to secure the employment and his other violations of law.
Here, Plaintiff's wrongdoing mirrors that of Milan. Plaintiff was an undocumented alien who had provided a false Social Security number in securing his employment and who made other false representations (as to his withholding allowances) to avoid his tax obligations. Hence, even if Plaintiff had genuinely misled Defendant — a proposition rejected by this Court — Plaintiff would still be entitled to the protections of the FLSA because he did not participate in determining Defendant's overtime compensation practices,
Defendant argues that it is not subject to the overtime compensation requirements of the FLSA. The statute requires "employers who meet its preconditions ... to provide overtime pay where workers exceed forty hours per week." Polycarpe v. E & S Landscaping Serv. Inc., 616 F.3d 1217, 1220 (11th Cir.2010) (citing 29 U.S.C. § 207(a) (overtime pay)). To recover overtime pay, however, an employee must first establish he is protected by the FLSA based on either individual employee coverage or employer enterprise coverage. Josendis v. Wall to Wall Residence Repairs, Inc., 662 F.3d 1292, 1298-99 (11th Cir. 2011). Where an enterprise is covered, all its employees are entitled to FLSA protection. But where an enterprise is not covered, individual employees may still be entitled to FLSA protections.
"An employee is subject to individual coverage if he is directly and regularly `engaged in' interstate commerce." Josendis, 662 F.3d at 1315 (emphasis in original) (citing Thorne v. All Restoration Servs. Inc., 448 F.3d 1264, 1266 (11th Cir.2006)). As the Eleventh Circuit has explained:
Thorne, 448 F.3d at 1266 (citations omitted).
Plaintiff worked in the planting, cultivating, and harvesting operations of Defendant's open-air plant nursery. Plaintiff, therefore, neither worked for an instrumentality of interstate commerce nor regularly used instrumentalities of interstate commerce in his work. Accordingly, he cannot avail himself of individual FLSA coverage.
For an employer to be subject to enterprise coverage under the FLSA, an employee must show that he was "`employed in an enterprise engaged in commerce or in the production of goods for commerce.'" Josendis, 662 F.3d at 1298-1299 (citing 29 U.S.C. § 207(a)(1)). An "[e]nterprise engaged in commerce or in the production of goods for commerce" is one that:
29 U.S.C. § 203(s)(1)(A)(i)-(ii) (emphasis added).
Although the FLSA does not define "materials," the Eleventh Circuit has stated that "[w]hether an item counts as "materials" will depend on two things." Polycarpe, 616 F.3d at 1225. First, a court must determine "whether, in the context of its use, the item fits within the ordinary definition of `materials' under the FLSA." Id. at 1225-26 (emphasis in original). The Eleventh Circuit defines "materials," as used in the FLSA, as "tools or other articles necessary for doing or making something." Id. at 1226. Second, a court must determine "whether the item is being used commercially in the employer's business." Id. at 1226. To be used commercially in the employer's business, the "materials" "must have a significant connection with the employer's commercial activity; the business may not just somehow internally and incidentally consume the item." Id.
To illustrate the difference between "goods" and "materials," the Eleventh Circuit has offered the following example:
Id.
Defendant would have this Court conclude that its employees did not handle or work on goods or materials that had been moved in commerce. It argues that its nursery business is located exclusively within the confines of the state of Florida and that it services only in-state customers. It further argues that its business is limited to growing and selling native plants and trees; no seeds are purchased, and the plants and small trees are grown in Florida soil and transplanted to Florida soils. The facts and the law, however, yield a different conclusion.
It is undisputed that Defendant employed three truck drivers and acquired several trucks to deliver its plants to customers and to transport plants and related items both within and among its three Florida locations. It is also undisputed that Defendant's Ford truck — if not all of its trucks
Here, Defendant's business is to grow and sell plants. Because Defendant's employees used the trucks to deliver plants to customers and to transport plants and related items among the company's three locations, the trucks are "materials"; they are tools or articles used by Defendant in the performance of its nursery business.
In sum, Defendant's Ford truck not only qualifies as a "material" that has traveled in interstate commerce, but it also has a significant connection to Defendant's commercial activity, such that it triggers enterprise coverage under the FLSA. Plaintiff, therefore, is entitled to the protections of the FLSA, notwithstanding his illegal presence in the United States and his providing false information and documentation to secure and maintain his employment. See Patel v. Quality Inn South, 846 F.2d 700, 706 (11th Cir.1988); Martinez v. Mecca Farms, Inc., 213 F.R.D. 601, 604-05 (S.D.Fla.2002).
Defendant concedes that it did not pay Plaintiff an overtime premium (of one-half the regular rate) for those weeks in which he performed hourly labor only. But Defendant contends that for those weeks in which Plaintiff performed both hourly labor and piece-work labor, its compensation rates for piece-work resulted in Plaintiff's receiving wages that exceeded any required overtime premium. Defendant's argument, however, is not supported by the facts.
The FLSA requires that employers pay their employees (at least) one and a half times the "regular rate" for any work in excess of 40 hours per week. 29 U.S.C. § 207(a)(1) (prohibiting "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"). When a covered employee is not paid the overtime wage, the FLSA provides a private cause of action against the employer for unpaid wages. 29 U.S.C. § 216(b); Josendis, 662 F.3d at 1298. Significantly, however, the law does not require that an employee be compensated solely on an hourly rate; an employee may also be compensated on a "piece-rate, salary, commission, or other basis," provided that "the overtime compensation due to [the] employee[] must be computed on the basis of the hourly rate derived therefrom." 29 C.F.R. § 778.109(2013).
The "regular rate" is the basis for any overtime computation. The regular hourly rate is determined by dividing an employee's
But when an employee works at two or more rates — here, performing both hourly and piece-work labor — calculating the "regular rate" is more complex; it is a weighted average of the rates. According to the Code of Federal Regulations:
29 C.F.R. § 778.115: see also 29 C.F.R. § 778.111 (stating that "[w]hen an employee is employed on a piece-rate basis, the regular hourly rate of pay is computed by adding together total earnings for the workweek from piece rates and ... other hours worked," the sum of which "is then divided by the number of hours worked in the week for which such compensation was paid"). Stated differently, "[w]hen an employee works part of the week at hourly and part at piece rates, the rule has been that the employer must compute the employee's regular rate by dividing total wages earned by total hours worked under both rates." Guide to Employment Law and Regulations, "How to Compute Overtime" § 13.32.
Once this "regular rate" is determined for the employee performing both hourly and piece-work labor, the overtime premium, again, is simply one-half the "regular rate." See 29 U.S.C. § 207(a) and 29 C.F.R. § 778.107 (requiring that overtime be paid at "rate not less than one and onehalf times the regular rate"); see also 29 C.F.R. § 778.111(a) ("For overtime work the pieceworker is entitled to be paid, ... one-half this regular rate of pay multiplied by the number of hours worked in excess of 40 in the week."). To illustrate:
Guide to Employment Law and Regulations, § 13.32.
Not only does the law provide guidance for calculating the "regular rate" (and, hence, the overtime premium) for an employee performing both hourly labor and piece-rate labor, but it also provides guidance — a burden-shifting framework — for ascertaining the number of hours worked where the employer has failed to keep adequate records. See Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 66 S.Ct. 1187, 90 L.Ed. 1515 (1946). To recover under the FLSA, an employee must initially show that the statute was violated and produce evidence to show the nature and extent of the work performed as a matter of just and reasonable inference. See Id. at 687, 66 S.Ct. 1187. Where an employer has kept complete and accurate records as required by the FLSA, the
Lamonica, 711 F.3d at 1315 (emphasis added). Employees, therefore, may recover even though the amount may be uncertain and the damages difficult to calculate. Washington v. Miller, 721 F.2d 797, 803 (11th Cir.1983) (farmworker employees met their prima facie burden for recovery under the FLSA despite the fact that "[t]estimony as to the hours worked varied widely and was often confused and contradictory"); Reeves v. Int'l Tel. & Tel. Corp., 616 F.2d 1342, 1352 (5th Cir.1980)
Here, Defendant failed to record the number of hours devoted to piece-work labor. Although Plaintiff did not keep records of his own, he did offer testimony concerning the number of hours he devoted to piece-work. The Court credits Plaintiff's testimony that when he did perform piece-work, he did so 1 day per week from 7:00 a.m. to 5:00 p.m., that is, for 10 hours. At 5:00 p.m., he would transition to hourly labor, loading pots onto trucks for delivery to customers. Pl.'s Test. at 29 (DE 80). The Court recognizes that the number of piece-work units produced varied by week and that the 10-hours to which Plaintiff testified lacks mathematical precision. Nonetheless, the Court concludes that 10 hours is a fair and reasonable approximation of his piece-work labor.
By contrast, the Court declines to credit the testimony of Pradilla as to the rates at which he believes laborers generally can perform piece-work. Pradilla did not testify as to the rate — let alone the "precise" rate, Lamonica, 711 F.3d at 1315 — at which Plaintiff performed piecework. Nor
For those weeks in which Plaintiff performed only hourly labor, the Court can readily calculate any overtime wages due. The payroll excerpts show the total number of hours worked ("Total Hours") such weeks, and they show the amount actually paid for those hours in excess of 40 ("Hrs") at his base rate of $7.25. As the payroll excerpts reflect, Defendant paid Plaintiff at his base rate — straighttime — for each hour worked, whether or not the weekly total exceeded 40 hours. Because Plaintiff was entitled to an overtime premium of one-half the base or "regular rate" for each overtime hour worked, the unpaid overtime to which he is entitled can be computed by multiplying the overtime premium by any hours worked in excess of 40. From this amount, payroll taxes must then be withheld.
Defendant has acknowledged that it did not pay Plaintiff an overtime premium of one-half his "regular rate" in those weeks he worked more than 40 hours and performed hourly labor only. See 29 C.F.R. § 778.110. By way of example, during the week of July 31 to August 6, 2009, Plaintiff performed exclusively hourly labor for 60.5 hours at a base or "regular rate" of $7.25, for which he was paid $438.63. Pl.'s Exs. 1 and 9; DE 86-1. For each hour that he worked beyond 40, Plaintiff should have been paid an overtime premium equal to one-half the "regular rate" of $7.25 ($7.25 × .5), that is, a premium of $3.63 per hour. Accordingly, for his 20.5 overtime hours, Plaintiff should have received an additional $74.42 of overtime pay ($3.63 overtime premium x 20.5 overtime hours = $74.42 unpaid overtime). Given the 2009 payroll tax rate of 7.65%, see 26 U.S.C. § 3101(a)(b), payroll taxes of $5.69 must be withheld ($74.42 unpaid overtime × .0765 payroll tax rate = $5.69 payroll tax) from the unpaid overtime due Plaintiff.
For the weeks in which Plaintiff performed both hourly and piece-work labor ("hybrid weeks"), the overtime computations require a more detailed analysis of the payroll excerpts:
Contrary to Defendant's contention, it failed to adequately compensate Plaintiff for the hybrid weeks. By way of example, for the week of January 29 to February 4, 2010, Plaintiff worked a total of 64.5 hours-54.5 hours of hourly labor and an additional 10 hours credited for piece-work labor. Pl.'s Exs. 1, 8, and 9; DE 86-1. Plaintiff was paid a total of $464.23 ($290 base pay + $174.23 overtime) for both hourly labor and piece-work labor. Pl's Ex. 1; DE 86-1. Plaintiff's "regular rate" of pay, therefore, was $7.20 per hour ($464.23 compensation / 64.5 hours worked = $7.20 per hour), and his overtime premium (extra half rate) was $3.60 per hour ($7.20 regular rate × 0.5 = $3.60). Because Plaintiff worked 24.5 hours of overtime, he is due unpaid overtime of $88.17 ($3.60 premium × 24.5 overtime hours = $88.17 unpaid overtime). Given a 2010 payroll tax rate of 7.65%, see 26 U.S.C. § 3101(a)-(b), a payroll tax of $6.74 ($88.17 unpaid overtime × .0765 payroll tax rate = $6.74 payroll tax) must be withheld from the unpaid overtime due Plaintiff. Plaintiff, therefore, is due wages of $81.42 ($88.17 unpaid overtime-$6.75 payroll tax = $81.42) for the week of January 29 to February 4, 2010 (DE 86-1).
Plaintiff's Revised Summary Damages Chart (DE 86-1) details the overtime computations for each week of Plaintiff's employment, including those hybrid weeks in which he performed both hourly labor and piece-work labor.
Defendant submits that any unpaid overtime computation be limited to the two-year period preceding the filing of the Complaint. It argues that the applicable limitations period is two years — not three — as any FLSA violation it may have
A "willful" violation of the FLSA enlarges the limitations period from two to three years. 29 U.S.C. § 255(a) (stating that a cause of action under the FLSA "may be commenced within two years after the cause of action accrued, ... except that a cause of action arising out of a willful violation may be commenced within three years after the cause of action accrued"). A "willful" employer is one who "knew or showed reckless disregard for the matter of whether its conduct was prohibited by the [FLSA]." See McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133, 108 S.Ct. 1677, 100 L.Ed.2d 115 (1988). "`[R]eckless disregard' [i]s the `failure to make adequate inquiry into whether conduct is in compliance with the [FLSA].'" See Morgan v. Family Dollar Stores Inc., 551 F.3d 1233, 1280 (11th Cir. 2008); 29 C.F.R. § 578.3(c)(3) (stating that "an employer's conduct shall be deemed to be in reckless disregard of the requirements of the Act ... if the employer should have inquired further into whether its conduct was in compliance with the Act, and failed to make adequate further inquiry").
The Court concludes that Defendant's failure to comply with the FLSA overtime provisions was "willful." Defendant is a multi-million dollar enterprise whose Vice-President (Pradilla) and General Manager (Gomez) both hold an M.B.A.; they are educated and well-informed managers of a successful enterprise. Yet, Defendant's long-standing practice was not to pay its employees at enhanced rates for overtime labor. Pradilla indicated that it never occurred to him to inquire into the lawfulness of Defendant's overtime compensation because he relied on past practice. Pradilla Test. at 87-89 (DE 80). He added that in 2007 — many years after Defendant's compensation practices had been implemented — a friend in the industry told him that he had secured a ruling exempting his own business from the requirements of the FLSA; Pradilla disclosed nothing more about the friend's business or about the details of the reported exemption. Significantly, Pradilla never inquired of the United States Department of Labor nor (prior to this litigation) did he seek legal counsel concerning the company's overtime obligations under the FLSA. Further evidencing Defendant's willfulness was its practice of not only maintaining separate records for overtime work but also failing to report to the government the wages paid for such work (at non-enhanced rates) and to remit any associated taxes. At best, Defendant acted in "reckless disregard" of the FLSA, as it failed to make an adequate inquiry — indeed, any inquiry — into whether its practices comported with the overtime provisions of the FLSA. At worst, Defendant knew that its compensation practices violated the FLSA, as it employed a twotrack record keeping system that effectively concealed material information from the government.
Because Defendant's practices were "willful," the Court concludes that this action is governed by the three-year limitations period. As the initial Complaint (DE 1) was filed on June 1, 2012 — and the Amended Complaint (DE 17) on July 18, 2012 — the extended limitations period commenced before the July 24, 2009 start of Plaintiffs employment. Accordingly, Defendant is liable for each FLSA violation committed during the term of Plaintiffs employment — July 24, 2009, to December 7, 2011.
Finally, Defendant argues that it should not be required to pay a liquidated
The FLSA provides that an employer "shall be liable to the employee or employees affected in the amount of ... their unpaid overtime compensation ... and in an additional equal amount as liquidated damages." 29 U.S.C. § 216(b). Although unpaid overtime wages must always be awarded, the court retains the discretion to withhold an award of liquidated damages where it finds that the employer has acted in "good faith." 29 U.S.C. § 260 (stating that in action to recover liquidated damages under the FLSA, "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"). Absent an affirmative showing of "good faith," however, liquidated damages are mandatory. Dybach v. Fla. Dep't of Corr., 942 F.2d 1562, 1566-67 (11th Cir.1991).
The employer's burden of showing "good faith" has been characterized as "plain and substantial." Barcellona v. Tiffany Eng. Pub, Inc., 597 F.2d 464, 468 (5th Cir.1979). The employer must prove both subjective and objective "good faith," that is, (1) that its actions were taken in a "good faith" belief that they did not violate the law and (2) that it had reasonable grounds for believing that its actions were not in violation of the law. See 29 U.S.C. § 260; 29 C.F.R. § 790.22(b); Rodriguez v. Farm Stores Grocery, Inc., 518 F.3d 1259, 1272 (11th Cir.2008). Failure to establish either of those elements precludes a finding of "good faith." Id. Yet, even where the employer is able to establish both elements, any reduction or elimination of a liquidated damages award remains discretionary with the Court. 29 C.F.R. § 790.22(b) (stating that "the court is permitted, but is not required, in its sound discretion to reduce or eliminate the liquidated damages which would otherwise be required").
Here, Defendant cannot establish either element of the "good faith" standard. Defendant failed to take any meaningful steps to determine whether it was obligated to pay overtime wages under the FLSA; it chose instead to rely on past practice — the way things have always been done — and an isolated 2007 comment from an industry friend who reportedly stated that he was exempted from FLSA coverage. See Barfield v. N.Y. City Health & Hosp. Corp., 537 F.3d 132, 150-51 (2d Cir. 2008) (stating that good faith not shown where employer failed to take "active steps to ascertain the dictates of the FLSA and act to comply with them"). Defendant cannot shield itself from a liquidated damages award by its deliberate failure to learn whether it was obligated to pay enhanced overtime rates, undoubtedly one of the most critical aspects of employee compensation. See Washington, 721 F.2d at 804 (employer may not "rely on ignorance alone" to avoid liquidated damages). Furthermore, Defendant's payroll and recordkeeping practices — paying employee overtime through third-party checks, concealing that compensation from the government, and failing to withhold and remit associated taxes — belie Defendant's contention that it had acted in a "good faith" belief that it was not violating the law. The Court, therefore, concludes that Plaintiff is entitled to recover not only his unpaid overtime compensation (minus payroll tax withholding), but also an additional equal amount as liquidated damages.
The Court concludes that Plaintiffs wrongdoing in this matter does not foreclose
Finally, pursuant to 29 U.S.C. § 216(b), the Count concludes that Defendant is liable for the costs of this action and for an award of reasonable attorney's fees, exclusive of any fees and costs attributable exclusively to the dismissed AWPA claim.
Id.
