XAVIER RODRIGUEZ, UNITED STATES DISTRICT JUDGE.
On this date, the Court considered Plaintiffs' motion for partial summary judgment on the inapplicability of the Motor Carrier Act exemption (Docket No. 160); Defendants' cross motion for partial summary judgment — Motor Carrier Act exemption (Docket No. 172); Plaintiffs' motion for partial summary judgment on the inapplicability of the Fluctuating Workweek Method of calculating damages (Docket No. 167); Defendants' cross motion for summary judgment on the FWW half-time multiplier as the proper method for calculating overtime (Docket No. 175); Plaintiffs' motion for partial summary judgment regarding the employer status of Malcolm H. Sneed (Docket No. 171); Defendants' cross-motion for summary judgment regarding the employer status of Malcolm Sneed (Docket No. 174); Defendants' motion for summary judgment regarding the employer status of Linda Sneed (Docket No. 174); and the various responses and replies.
When a party moves for summary judgment, the reviewing court shall grant the motion "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). All reasonable doubts on questions of fact must be resolved in favor of the party opposing summary judgment. Evans v. City of Houston, 246 F.3d 344, 348 (5th Cir.2001) (citation omitted).
Plaintiffs bring this suit as a collective action under the Fair Labor Standards Act, 29 U.S.C. §§ 201, et seq. S-3 Pump Service, Inc. provides products and services in the oil and gas industry in various states. Linda Sneed and Malcolm Sneed are the owners of the business. Plaintiffs claim they were improperly classified as exempt employees and not properly paid for any overtime hours they worked. Plaintiffs sought and this Court certified a class of former and current employees classified as Pump Supervisors (or Field Operators/Supervisors) in Texas, Ohio, Louisiana, Mississippi and North Dakota. Plaintiffs sought and this Court also certified a class of former and current employees classified as Pump Assistants (or Field
In the alternative, Defendants argue that if the MCA exemption is not applicable, the Court should determine that any overtime pay should be calculated by using the fluctuating workweek multiplier of only one-half of the regular rate of pay. Plaintiffs argue that as a matter of law overtime pay should be calculated using the one and one-half times the regular rate of pay multiplier.
Section 207 of the FLSA requires an employer to pay overtime compensation to any employee working more than forty hours in a workweek. See 29 U.S.C. § 207(a)(1); Singer v. City of Waco, 324 F.3d 813, 818 (5th Cir.2003).
Under the Motor Carrier Act exemption, the provisions of 29 U.S.C. § 207, however, do not apply "with respect to — (1) any employee with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service pursuant to the provisions of section 31502 of Title 49...." 29 U.S.C. § 213.
Section 31502 provides that the DOT "may prescribe requirements for ... qualifications and maximum hours of service of employees of, and standards of equipment of, a motor private carrier, when needed to promote safety of operation." 49 U.S.C. § 31502(b)(2).
Allen v. Coil Tubing Servs., L.L.C., 755 F.3d 279, 283 (5th Cir.2014).
On August 10, 2005, the Safe, Accountable, Flexible, Efficient Transportation Equity Act ("SAFETEA-LU") went into effect. SAFETEA-LU changed the definitions of "motor carrier" and "private motor carrier." See 49 U.S.C. § 31132. "Thus, this amendment restricted the Secretary's regulatory authority — and thereby also narrowed the MCA exemption to the FLSA's overtime requirements — to only those motor carriers and private motor carriers who operated "commercial motor vehicles (as defined in section 31132)." Albanil v. Coast 2 Coast, Inc., 444 Fed.Appx. 788, 794 (5th Cir. 2011).
On June 6, 2008, Congress passed the SAFETEA-LU Technical Corrections Act ("TCA"). Section 305 of the TCA replaced "commercial motor vehicle" in the definitions of motor carrier and motor private carrier with "motor vehicle," essentially returning the Secretary of Transportation's authority to its pre-SAFETEA-LU scope. Albanil, 444 Fed.Appx. at 795. Section 306 of the TCA also addressed application of the FLSA's overtime requirements going forward.
Accordingly, a "covered" employee, that is, one eligible for overtime wages, means:
SAFETEA-LU TECHNICAL CORRECTIONS ACT OF 2008, PL 110-244, June 6, 2008, 122 Stat 1572.
Plaintiffs argue that they "routinely and on at least a weekly basis ... drove Ford F-250 pickup trucks [or similar vehicles] for trips to and from well sites, and for trips to, from, and between different states without any trailer attached to or towed by the Ford-250." Plaintiffs concede that on a few occasions they also drove commercial motor vehicles with gross vehicle weight ratings of more than 10,000 pounds
Defendants argue that there is no evidence that Plaintiffs drove vehicles weighing less than 10,000 pounds.
"Exemptions under the FLSA are construed narrowly against the employer, and the employer bears the burden to establish a claimed exemption." Allen v. Coil Tubing Servs., L.L.C., 755 F.3d 279, 283 (5th Cir.2014). Accordingly, an employer has the burden of establishing the applicability of the MCA exemption, including the effect of the TCA amendments.
The Court begins with how weight should be defined (motor vehicles weighing 10,000 pounds or less). Defendants argue that "actual" weight should be used. According to Defendants this means the actual weight of any vehicle being driven, including passengers and any tools loaded onto the vehicle and the weight of any trailer and equipment being pulled by the vehicle.
The Department of Labor's Wage and Hour Division states that it "will continue to use the gross vehicle weight rating (GVWR) or gross combined vehicle weight rating in the event that the vehicle is pulling a trailer. The GVWR is found on the vehicle, usually on a plate on the door jamb." See Department of Labor, Wage & Hour Division, Field Assistance Bulletin No. 2010-2.
The DOL has further opined that "TCA section 306(a) extends FLSA section 7 overtime requirements to employees covered by TCA section 306(c), notwithstanding FLSA section 13(b)(1). This means the overtime pay requirements apply to an employee of a motor carrier or motor private carrier in any workweek in which the employee works, `in whole or in part', as a driver, driver's helper, loader or mechanic affecting the safety of operation of small vehicles on public highways in interstate or foreign commerce.... The phrase `in whole or in part' included in the statute means an employee who performs such duties involving small vehicles for the entire week or part of the week must receive overtime pay for hours worked over 40 in that workweek. The changes made by TCA thus extend FLSA overtime protection to some employees even when such employees are also subject to the authority of the Secretary of Transportation to set maximum hours of service."
This Court acknowledges that other courts have reached a differing opinion on the issue of whether actual weight or GVWR controls. Some courts have refused to provide any form of deference to the DOL and its decision to use GVWR, and have concluded that actual weight is the correct measure. See e.g. Garcia v. W. Waste Servs., Inc., 969 F.Supp.2d 1252, 1258-59 (D.Idaho 2013) ("The TCA does not specify how vehicle weight is to be determined.... The TCA dropped any reference to GVWR or GCWR, and simply refers to `motor vehicles weighing 10,000 pounds or less.' Thus, Congress appears to have abandoned the GVWR and GCWR standard for determining availability of the exemption. After Congress passed the TCA, the Department of Labor ("DOL") issued Field Assistance Bulletin No. 2010-2 (`the Bulletin') to explain its interpretation of the TCA. Specifically, the Bulletin announced that the Wage and Hour Division `will continue to use the [GVWR] or [GCWR] in the event that the vehicle is pulling a trailer' to determine vehicle weight. Id. This raises the question of whether the Bulletin's interpretation of the TCA is entitled to deference.... In the Court's view, the language in the TCA is not ambiguous. Therefore, the DOL's interpretation,
The "actual weight" measurement does have an "ordinary meaning" appeal. The practical difficulty, however, in using this definition is that employers would be required to weigh trucks and loaded trailers on a regular basis to ensure that they may benefit from the exemption.
This Court will provide deference to the DOL's interpretation. See also McCall v. Disabled Am. Veterans, 723 F.3d 962, 966 (8th Cir.2013). Accordingly, this Court will apply gross vehicle weight rating (GVWR) or gross combined vehicle weight rating in the event that the vehicle is pulling a trailer.
Although it appears that most Plaintiffs did the majority of their work within a state and did not generally cross state lines, most cases "make clear that trips within a single state are made in interstate commerce when they are part of `a practical continuity of movement of the goods' in interstate commerce." Abel v. S. Shuttle Servs., Inc., 631 F.3d 1210, 1215 (11th Cir.2011); see also Allen v. Coil Tubing Servs., L.L.C., 755 F.3d 279, 283 (5th Cir.2014) ("The MCA defines interstate commerce as commerce `between a place in ... a State and a place in another State.' 49 U.S.C. § 13501(1)(A). However, this definition `has not been applied literally by the courts. In fact, we have defined it as the actual transport of goods across state lines or the intrastate transport of goods in the flow of interstate commerce.'"). Plaintiffs have established competent summary judgment evidence that they drove F-250 pickup trucks with no trailers attached on a weekly basis delivering supplies that "flow" in interstate commerce to job sites.
A similar argument was considered (and rejected) by the Southern District of Texas in Aikins v. Warrior Energy Servs. Corp., No. 6:13-CV-54, 2015 WL 1221255 (S.D.Tex. Mar. 17, 2015). In relevant part, that Court stated:
Aikins v. Warrior Energy Servs. Corp., 2015 WL 1221255, at *5. This Court agrees with the reasoning and analysis in Aikins and accordingly rejects Defendants' argument in this case. See also McMaster v. E. Armored Servs., Inc., 780 F.3d 167, 170, fn. 4 (3d Cir.2015) ("Whatever `in part' means, it is certainly satisfied by McMaster, who spent 49% of her days on vehicles less than 10,000 pounds.").
Any employee driving certain vehicles less than 10,000 pounds must be paid overtime for any hours they work in a week over 40. A "covered employee" means an individual (1) who is employed by a motor carrier or motor private carrier
Given the above "in whole or in part" language, it is the employer's burden to demonstrate that the employees exclusively drove vehicles greater than 10,000 pounds during a workweek. Defendants have failed to make any such showing and Plaintiffs' summary judgment evidence refutes this argument. See e.g. Garcia v. W. Waste Servs., Inc., 969 F.Supp.2d 1252, 1260 (D.Idaho 2013); see also, e.g., Bedoya v. Aventura Limousine & Transp. Service, Inc., 2012 WL 3962935, *4 (S.D. Fla. Sept. 11, 2012) (employees are entitled to overtime pay under the FLSA `if more than a de minimis portion of the Plaintiff's work' is done with vehicles weighing 10,000 pounds or less); Mayan v. Rydbom Exp., Inc., 2009 WL 3152136, *9 (E.D.Pa. Sept. 30, 2009) ("The employee may still qualify for overtime even if part of his or her duties involve commercial motor vehicles."); Byers v. Care Transp. Inc., No. 13-CV-15174,
"Sometimes an employer will pay a nonexempt employee a fixed weekly wage, with the understanding that the salary is to compensate the employee for all hours worked during any workweek." 1 Wage and Hour Law § 9:9 (emphasis added). In this case the employees were improperly classified at the onset as exempt.
Even in cases, however, where employees were misclassified as exempt, the Fifth Circuit has determined that the proper rate of overtime pay is the half-rate if the employer and employee have agreed on a fixed salary for varying hours. See Blackmon v. Brookshire Grocery Co., 835 F.2d 1135, 1138 (5th Cir.1988). See also 29 C.F.R. § 778.114.
Plaintiffs argue they did not receive a "fixed salary." Instead, they argue they received substantial, repeated, non-discretionary bonuses. Plaintiffs also argue that there was no mutual understanding between the parties that payment was a fixed salary to work fluctuating hours. Plaintiffs argue (but as detailed below provide no competent summary judgment evidence) that they understood their salary as compensation for forty hours in a one-week period or eighty hours in a two-week period, and that they would also receive bonuses each day based upon pumping and completion of a pump report.
Defendants argue that it is "common knowledge in the oil and gas industry" that receiving a fixed salary necessarily means fixed salary for fluctuating hours. Defendants also rely upon employee handbook sections that informed pump employees that hours are frequently adjusted. Finally, Defendants assert that no plaintiffs ever complained about the fixed salary arrangement.
In the Fifth Circuit, 29 C.F.R. § 778.114 is not used to support a retroactive overtime calculation in misclassification cases. Black v. SettlePou, P.C., 732 F.3d 492, 498 (5th Cir.2013) (citing Ransom v. M. Patel Enterprises, Inc., 734 F.3d 377, 385 (5th Cir.2013)). Instead, courts in the Fifth Circuit must adhere to Overnight Motor Transp. Co. v. Missel, 316 U.S. 572, 62 S.Ct. 1216, 86 L.Ed. 1682 (1942) and Blackmon v. Brookshire Grocery Co., 835 F.2d 1135 (5th Cir.1988), "as the appropriate basis for using the FWW method to calculate the overtime premiums due to the employee in misclassification cases." Black, 732 F.3d at 498.
"The FWW method of calculating overtime premiums in a misclassification case is appropriate when the employer and the employee have agreed that the employee will be paid a fixed weekly wage to work fluctuating hours." Id. Generally, the "question of whether an employer and employee agreed to a fixed weekly wage for fluctuating hours is a question of fact." Black, 732 F.3d at 498. "As directed by Missel, the FWW method may only be applied to calculate overtime premiums
The competent summary judgment evidence in this case demonstrates there was a clear mutual understanding that S-3 was paying its employees a fixed salary regardless of the number of hours worked.
Defendants' cross-motion for summary judgment is granted. Plaintiffs' motion for partial summary judgment on this issue is denied. The employee has the burden of proving that the employer failed to administer the FWW method correctly. See Switzer v. Wachovia Corp., No. Civ. A. H-11-1604, 2012 WL 3685978, at *2 (S.D.Tex. Aug. 24, 2012) (citing Samson v. Apollo Resources, Inc., 242 F.3d 629, 636 (5th Cir.2001)). Defendants' non-discretionary bonuses were based on pumping, not on the number of hours worked. See Switzer v. Wachovia Corp., No. Civ. A. H-11-1604, 2012 WL 3685978, at *2 (S.D.Tex. Aug. 24, 2012). Accordingly, the pumping bonus did not alter the fixed salary understanding and the FWW method applies (i.e. half-rate for overtime hours), but the pump bonus must be totaled in with the salary to determine the regular rate on which overtime pay must be based. See 29 C.F.R. § 778.208.
Plaintiffs seek summary judgment establishing that Malcolm Sneed is an employer under the FLSA and accordingly
"`Employer'" includes any person acting directly or indirectly in the interest of an employer in relation to an employee and includes a public agency, but does not include any labor organization (other than when acting as an employer) or anyone acting in the capacity of officer or agent of such labor organization." 29 U.S.C. § 203(d).
"Person" means an individual, partnership, association, corporation, business trust, legal representative, or any organized group of persons. 29 U.S.C. § 203(a).
"The Supreme Court has termed the Act's employer definition `expansive' and has held that `managerial responsibilities' and `substantial control of the terms and conditions of the [employer's] work' create statutory employer status." Donovan v. Grim Hotel Co., 747 F.2d 966, 971-72 (5th Cir.1984) (citing Falk v. Brennan, 414 U.S. 190, 195, 94 S.Ct. 427, 38 L.Ed.2d 406 (1973)). "The overwhelming weight of authority is that a corporate officer with operational control of a corporation's covered enterprise is an employer along with the corporation, jointly and severally liable under the FLSA for unpaid wages." Grim Hotel Co., 747 F.2d at 971-72 (citing Donovan v. Agnew, 712 F.2d 1509, 1511 (1st Cir.1983)).
Mr. Sneed testified that for approximately ten years he has served as the chief executive officer for S-3. He drafted the employee handbook, safety manual, and "everything that a business owner has to put together." He makes the decisions on how much to pay employees based on daily market conditions. Mr. Sneed personally made the decision to pay the employees in this case on a salaried basis.
Defendants argue that Mr. Sneed should not be held personally liable for any damages in this case because he does not handle the payroll, and he only directly supervises four persons (two vice presidents of administration, the chief financial officer, and the president of operations). Defendants further argue that job interviews and hiring are done by others (either the operations manager or human resources personnel).
The Fifth Circuit uses the "economic reality" test to evaluate whether there is an employer/employee relationship. Gray v. Powers, 673 F.3d 352, 354 (5th Cir.2012). "In so doing, [courts must] adhere to the firmly-established guidon that the FLSA must be liberally construed to effectuate Congress' remedial intent." Donovan v. Sabine Irrigation Co., 695 F.2d 190, 194 (5th Cir.1983) (citing Donovan v. Janitorial Services, Inc., 672 F.2d 528 (5th Cir. 1982)).
"To determine whether an individual or entity is an employer, the court considers whether the alleged employer: `(1) possessed the power to hire and fire employees; (2) supervised or controlled employee work schedules or conditions of employment; (3) determined the rate or method of payment; and (4) maintained employee records.'" Gray, 673 F.3d at 355 (quoting Williams v. Henagan, 595 F.3d 610, 615 (5th Cir.2010)).
Defendants oppose Plaintiffs' motion as premature because discovery is still ongoing. Alternatively, they argue that Linda Sneed's name appears on organizational charts as co-CEO. Defendants, however, have presented competent summary judgment evidence that although Ms. Sneed is co-owner of the business, her status as co-CEO reflects the marital relationship and her joint financial interest in the company. Ms. Sneed works as Mr. Sneed's executive secretary, works part-time, and has not played any active operational control since 2011. Defendant's motion on this issue is granted. To the extent that Plaintiffs have implicitly moved for a continuance in their response (no explicit motion was made), any such motion is denied. Plaintiffs have had ample time to explore this issue in the discovery that has been conducted.
For the reasons stated above, Plaintiffs' motion for partial summary judgment on the inapplicability of the Motor Carrier Act exemption (Docket No. 160) is granted; Defendants' cross motion for partial summary judgment — Motor Carrier Act exemption (Docket No. 172) is denied; Plaintiffs' motion for partial summary judgment on the inapplicability of the Fluctuating Workweek method of calculating damages (Docket No. 167) is denied; and Defendants' cross motion for summary judgment on the FWW half-time multiplier as the proper method for calculating overtime (Docket No. 175) is granted. Plaintiffs' motion for partial summary judgment regarding the employer status of Malcolm H. Sneed (Docket No. 171) is granted; Defendants' cross-motion for summary judgment regarding the employer status of Malcolm Sneed) (Docket No. 174) is denied;
Defendants argue that their modified pickup trucks, including the usual tools and equipment loaded onto the pickup truck or trailer weighed in excess of 10,000 pounds.