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United States Department of Labor v. Fire & Safety Investigation Consulting Services, LLC

United States District Court, N.D. West Virginia

May 3, 2018

UNITED STATES DEPARTMENT OF LABOR, Plaintiff,
v.
FIRE & SAFETY INVESTIGATION CONSULTING SERVICES, LLC; and CHRISTOPHER HARRIS, Individually and as Owner of Fire & Safety Investigation Consulting Services, LLC, Defendants.

         MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART THE UNITED STATES DEPARTMENT OF LABOR'S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 51], DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47], AND DENYING DEFENDANTS' MOTION FOR ATTORNEY FEES [DKT. NO. 49]

          IRENE M. KEELEY UNITED STATES DISTRICT JUDGE.

         In this case, the United States Department of Labor (“DOL”) alleges that the defendants, Fire & Safety Investigation Consulting Services, LLC (“Fire & Safety”), and Christopher Harris (“Harris”), violated the provisions of the Fair Labor Standards Act (“FLSA” or “the Act”) by failing properly to pay their employees overtime compensation. The defendants deny these allegations, contending that they permissibly paid their employees a fixed rate for a set amount of overtime, and often paid their employees in excess of what the Act requires.

         Pending are the parties' competing motions for summary judgment. For the reasons that follow, the Court GRANTS in part and DENIES in part the DOL's motion (Dkt. No. 51), and DENIES the defendants' motion (Dkt. No. 47).

         I. FACTUAL AND PROCEDURAL BACKGROUND

         Harris received his master's degree in safety management from West Virginia University in 2001, and holds a number of certifications in the safety and fire investigation industries (Dkt. No. 52-3 at 13-14). After garnering experience as a fire investigator and firefighter, Harris founded Fire & Safety in Bridgeport, West Virginia, in 2008 (Dkt. Nos. 52-1 at 2; 52-3 at 15-20). Fire & Safety provided fire investigation and security guard services in the oil and gas industry for several years. Then, around 2013, it began to employ environmental site safety consultants (Dkt. No. 52-3 at 23), to provide “onsite safety and environmental consulting services for the oil and gas industry” in West Virginia and Pennsylvania (Dkt. No. 52-1 at 3).

         Consultants could be assigned to several phases of an oil and gas operation, “such as drilling, hydraulic fracturing, coil tubing, WSU, drill out, construction, midstream, production etc., based on their knowledge and experience” (Dkt. No. 52-2 at 3). For each phase, a consultant conducted site safety inspection and hazard identification, as well as job safety analysis review and coaching. Id. Consultants were also involved in environmental monitoring, accident investigation, and the documentation of daily events. Id. at 3-4. As described by Harris, Fire & Safety provided consultants to oil and gas operators to “observe, document and report” whether contractors were “in compliance with recommended safety practices” (Dkt. No. 52-3 at 25).

         From December 23, 2014, through December 6, 2016, consultants were regularly scheduled to work on the basis of what is known in the oil and gas industry as a “hitch.” See id. at 38-39. More particularly, Fire & Safety assigned the consultants to work 12 hours per day for 14 consecutive days, to be followed by 14 consecutive days off. This schedule resulted in an 84-hour workweek and a total of 168 hours during every two-week hitch (Dkt. No. 52-2 at 8). Although Fire & Safety initially paid all of its employees primarily on the basis of straight time and overtime rates, it eventually transitioned to a payment scheme and paid consultants on the basis of a “hitch rate” (Dkt. No. 52-5 at 32). In fact, a number of employment offer letters issued by Fire & Safety from 2014 through 2016 communicated the prospective employee's rate of pay as a fixed amount per hitch (Dkt. No. 52-4 at 2-24).[1]

         If a consultant worked less than a full 168-hour hitch, Fire & Safety adjusted the employee's pay pursuant to a “blended rate.” To calculate the consultant's blended rate, the company divided his hitch rate by 168, the total number of hours normally worked in a hitch. If a consultant did not work exactly 168 hours in a hitch, his pay would be determined by multiplying the number of hours he actually worked by his blended rate (Dkt. No. 52-5 at 44-50). For instance, a consultant usually paid $5, 000 per hitch would have a blended hourly rate of $29.76. If that particular consultant worked only 6 days of a 14-day hitch, he was paid $2, 142.72. Id. at 51-52.

         In October 2015, an anonymous consultant complained to the DOL Wage & Hour Division that Fire & Safety was violating the FLSA by failing to pay overtime (Dkt. No. 47-9). Wage & Hour Investigator Karen Mathes (“Mathes”) was assigned to the case on December 11, 2015, and first met with the defendants on January 21, 2016, to review records and ensure their compliance with the Act (Dkt. No. 52-8 at 52-53, 175). Ultimately, Mathes determined that Fire & Safety had failed to pay proper overtime and keep accurate records, and calculated back wages due in the amount of $855, 684.16. Id. at 176. Although Fire & Safety agreed to take corrective action in the future, it refused to pay the back wages. In a Compliance Action Report dated January 26, 2017, Mathes recommended that the DOL litigate the case. Id. at 175-77.

         The DOL filed the pending complaint against Fire & Safety and Harris on February 22, 2017 (Dkt. No. 1). Although, as the defendants have noted, the DOL's complaint is not a model of clarity, the upshot of its allegations is that the defendants improperly paid the consultants the same hourly rate for overtime work that it paid them for regular work. Id. at 3-5. In support of this allegation, the DOL attached to the complaint “Schedule A, ” which listed 68 employees who allegedly had not been paid proper overtime wages. Id. at 8-9. As relief, the DOL sought back wages, liquidated damages, and an injunction. Id. at 6-7.

         Following discovery, the parties filed motions for summary judgment, which are now fully briefed and ripe for review (Dkt. Nos. 47; 51). In addition, the defendants have moved for attorney's fees and costs, and have filed an objection to the DOL's Revised Schedule A (Dkt. Nos. 49; 60; 66).

         II. LEGAL FRAMEWORK

         The FLSA was enacted “to protect all covered workers from substandard wages and oppressive working hours” by requiring a minimum wage and limiting the number of “hours an employee may work without receiving overtime compensation.” Trejo v. Ryman Hospitality Props., Inc., 795 F.3d 442, 446 (4th Cir. 2015) (quoting Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 739 (1981)). As relevant to this action, the Act provides:

[N]o employer shall employ any of his employees who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce, for 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.

29 U.S.C. § 207(a)(1).

         An “employer” is “any person acting directly or indirectly in the interest of an employer in relation to an employee, ” and an “employee” is “any individual employed by an employer.” Id. § 203(d), (e)(1). The Act defines an “enterprise” as “the related activities performed (either through unified operation or common control) by any person or persons for a common business purpose.” Id. § 203(r)(1). An enterprise is subject to the FLSA if it is “engaged in commerce or in the production of goods for commerce, ” which means that it “has employees engaged in commerce or in the production of goods for commerce, or that [it] has employees handling, selling or otherwise working on goods or materials that have been moved in or produced for commerce by any person, ” and “is an enterprise whose annual gross volume of sales made or business done is not less than $500, 000.” Id. § 203(s)(1)(A).

         There is no dispute that the employees of Fire & Safety are covered by the FSLA. In their answer, the defendants admitted that Fire & Safety is an “enterprise” subject to the provisions of the FLSA (Dkt. No. 15 at 2). They have further admitted that their “employees regularly use goods and supplies from out of state, such as company owned vehicles, company owned laptops, phones, tools, safety gear, pens, pencils, and paper, ” and that Fire & Safety's “gross volume of sales made or business done was not less than $500, 000 for each of the years 2013, 2014, 2015 and 2016" (Dkt. No. 52-1 at 3).

         Nor do the defendants dispute that Harris himself qualifies as an “employer” subject to liability under the Act. To effectuate the remedial purpose of the FSLA, the Fourth Circuit broadly construes the meaning of its terms. See Schultz v. Capital Int'l Sec., Inc., 466 F.3d 298, 304 (4th Cir. 2006). During the relevant time, Harris was the 100% owner of Fire & Safety; was responsible for hiring, directing work, and controlling the schedules of certain employees; determined the rate and method of pay for employees; and was responsible, in part, for assigning, scheduling, and supervising work (Dkt. Nos. 15 at 2; 52-1 at 3-4; 52-2 at 12). This is more than sufficient to satisfy the definition of an “employer” under the Act. Accord Hugler v. Dominion Granite & Marble, LLC, No. 1:17CV229, 2017 WL 2671300, at *3 (E.D. Va. June 21, 2017). Therefore, the Court concludes that Harris is an employer within the meaning of the Act.

         III. DISCUSSION

         A. Objection to Revised Schedule A

         On February 22, 2018, the DOL filed Revised Schedule A, which contains three additional employees, Thomas Archer, Dwayne Clements, and Christopher Oliverio. According to the DOL, “[i]nformation received subsequent to the filing of the Secretary's complaint has revealed that these three employees of the Defendants are owed back wages for violations of the [FLSA] as alleged in the complaint in addition to the employees identified in the original Schedule A” (Dkt. No. 60 at 1). The defendants have objected to the DOL's addition of the three employees, arguing that, by filing Revised Schedule A, the DOL has essentially amended the complaint after motions for summary judgment have been filed (Dkt. No. 66).

         The allegations in the original complaint, however, were not confined to those employees specifically listed in Schedule A. In addition to referencing “certain present and former employees listed in the attached Schedule A, ” the complaint indicated that back wages and liquidated damages may be due for “certain present and former employees presently unknown” (Dkt. No. 1 at 6). Therefore, there has been no attempt by the DOL to amend its complaint by filing a Revised Schedule A, and the Court OVERRULES the defendants' objection (Dkt. No. 60).

         B. Motions for Summary Judgment

         Both the DOL and the defendants have moved for summary judgment. Summary judgment is appropriate where the “depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials” establish 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), (c)(1)(A). When ruling on a motion for summary judgment, the Court reviews all the evidence “in the light most favorable” to the nonmoving party. Providence Square Associates, LLC v. G.D.F., Inc., 211 F.3d 846, 850 (4th Cir. 2000). The Court must avoid weighing the evidence or determining its truth and limit its inquiry solely to a determination of whether genuine issues of triable fact exist. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).

         The moving party bears the initial burden of informing the Court of the basis for the motion and of establishing the nonexistence of genuine issues of fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has made the necessary showing, the non-moving party “must set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 256 (internal quotation marks and citation omitted). The “mere existence of a scintilla of evidence” favoring the non-moving party will not prevent the entry of summary judgment; the evidence must be such that a rational trier of fact could reasonably find for the nonmoving party. Id. at 248-52.

         1. Whether the Defendants Violated the FLSA by Failing to Pay Their Employees an Overtime Premium.

         The parties each contend that they are entitled to summary judgment regarding the question of whether the defendants violated the FLSA by failing to pay the consultants overtime compensation. The DOL insists that Fire & Safety failed to pay overtime because it “paid employees the same hourly rate for every hour they worked, regardless of whether they worked fewer than 40 hours in a workweek or more than 40 hours” (Dkt. No. 52 at 12). The defendants contend that they properly paid a fixed rate per hitch, which was based on both straight time and overtime wages, and actually overpaid the consultants when utilizing the blended rate (Dkt. No. 47-1).

         a. Evidence That the Defendants Complied with the FSLA by Using a Fixed Rate.

         As discussed, the FLSA requires employers to pay their employees an overtime premium of one and one-half times the “regular rate” for hours worked in excess of 40 during any given week. 29 U.S.C. § 207(a)(1). “That requirement was meant ‘to spread employment by placing financial pressure on the employer' and ‘to compensate employees for the burden of a workweek in excess of the hours fixed in the Act.'” Calderon v. GEICO Gen. Ins. Co., 809 F.3d 111, 121 (4th Cir. 2015) (quoting Walling v. Helmerich & Payne, Inc., 323 U.S. 37, 40 (1944)).

         The Act does not “impose upon the almost infinite variety of employment situations a single, rigid form of wage agreement, ” but the agreement must contemplate a “regular rate” and overtime pay in compliance with the Act. 149 Madison Ave. Corp. v. Asselta, 331 U.S. 199, 203-04 (1947). To that end, ...


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