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Acosta v. Team Environmental LLC

United States District Court, S.D. West Virginia

January 29, 2019



          John T. Copenhaver, Jr. Senior United States District Judge

         Pending in this case, in which the defendant Team Environmental, LLC (“Team”) is accused of failing to abide by the overtime provisions of the Fair Labor Standards Act (“FLSA”), are two motions in limine. The plaintiff Secretary of Labor (“Secretary”) has filed a motion to bar Team from excluding certain employee compensation (e.g., payment for days not worked due to inclement weather) from the calculation of the employees' regular rate of pay (which, if lowered, would correspondingly lower any overtime compensation owed). The defendant Team has filed a motion to permit it to receive credit for payments made to employees for non-compensable time (e.g., payment for days not worked due to inclement weather) against any overtime compensation owed.

         In an order entered December 29, 2017, the court granted the Secretary's motion for partial summary judgment that Team failed to pay overtime compensation in violation of section 7 of the FLSA (29 U.S.C. § 207). Accordingly, each of these motions concerns the amount of damages owed, which is to be determined at trial.

         The motions deal with two types of payments: payments on days when Team's employees could not work due to inclement weather (“weather days”); and payments for non-work days when Team's employees received pay because they were guaranteed a certain number of paid days per week but were not required to work all of those days (“guaranteed days”). Accordingly, the two main issues here are: first, whether payment for weather days and guaranteed days not worked should be included or excluded from the regular rate when calculating overtime due; and second, whether, if either of those payments is included in the regular rate, the payment may be credited towards the amount of overtime due.

         I. Calculating the regular rate

         Turning first to the calculation of the regular rate (on the basis of which the overtime is determined), the plaintiff contends that pay for both weather days and guaranteed days should be included in the regular rate; the defendant claims they should be excluded.

         Section 207 mandates that employers pay employees at one and one-half times their “regular rate” for hours worked over forty in each workweek. 29 U.S.C. § 207(a)(1). If an employer violates this section, it is liable for the amount of overtime compensation owed, calculated pursuant to the regular rate, and if applicable, liquidated damages.[1] 29 U.S.C. § 216 (b).

         Where, as here, the employees are paid a flat day-rate, the regular rate is determined by totaling all the sums received in the workweek and dividing that amount by the total hours actually worked. See 29 C.F.R. § 778.112. Section 207(e) of the FLSA instructs that “all remuneration for employment paid to, or on behalf of, the employee, ” shall be included in the regular rate, aside from eight enumerated exceptions, only one of which appears to be applicable here (§207(e)(2)). The employer bears the burden of establishing that an exception to an FLSA requirement applies. See Lee v. Vance Exec. Prot., Inc., 7 Fed.Appx. 160, 164 (4th Cir. 2001), see also Smiley v. E.I. Dupont De Nemours & Co., 839 F.3d 325, 330 (3d Cir. 2016).

         The United States Supreme Court recently rejected the principle that “exemptions” to the FLSA (i.e., employees not covered) should be narrowly construed, holding that, because the FLSA “gives no ‘textual indication' that its exemptions should be construed narrowly, ‘there is no reason to give [them] anything other than a fair (rather than a ‘narrow') interpretation.'” Encino Motorcars, LLC v. Navarro, 138 S.Ct. 1134, 1142 (2018) (quoting A. Scalia & B. Garner, Reading Law 363 (2012)). The Court was addressing § 213 exemptions but did not explicitly limit its holding to that section. The Secretary contends that “[i]t is well-settled that the holding in Encino Motorcars is limited to the exemptions set forth in Section 213 of the FLSA[, ]” yet provides no authority so stating. Indeed, the case cited by the Secretary on this point, Flood v. Just Energy Mktg. Corp., 904 F.3d 219 (2nd Cir. 2018), does not address the scope of Encino Motorcars, nor has the court found any case directly addressing the issue. Compare, e.g., McKinnon v. City of Merced, No. 118CV01124LJOSAB, 2018 WL 6601900, at *3 (E.D. Cal. Dec. 17, 2018) (applying the Encino Motorcars “fair reading” directive to § 207(e)), to Berry v. Best Transportation, Inc., No. 4:16-CV-00473-JAR, 2018 WL 6830097, at *8 (E.D. Mo. Dec. 27, 2018) (“[Encino Motorcars] focuses entirely on exemptions and makes no mention of exceptions.”). Here, the court finds that either reading of the FLSA yields the same result, and accordingly does not decide whether Encino Motorcars requires § 207(e) exceptions to be given a “fair, ” rather than a “narrow, ” interpretation.

         The defendant Team intends to present evidence that guaranteed days and weather days fall under the statutory exception set forth in § 207(e)(2), which states:

As used in this section the “regular rate” at which an employee is employed shall be deemed to include all remuneration for employment paid to, or on behalf of, the employee, but shall not be deemed to include--
. . .
(2) payments made for occasional periods when no work is performed due to vacation, holiday, illness, failure of the employer to provide sufficient work, or other similar cause; reasonable payments for traveling expenses, or other expenses, incurred by an employee in the furtherance of his employer's interests and properly reimbursable by the employer; and other similar payments to an employee which are not made as compensation for his hours of employment[.]

         (emphasis added).

         The Department of Labor's implementing regulations, 29 CFR § 778, provide guidance on how to interpret § 207(e)(2). See Desmond v. PNGI Charles Town Gaming, L.L.C., 630 F.3d 351, 357 n.2 (4th Cir. 2011) (finding that Skidmore, rather than Chevron, deference applies to 29 CFR § 778 because it was not promulgated in accordance with notice and comment rulemaking: “interpretive bulletins ‘while not controlling upon the courts by reason of their authority, do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance.'”) (quoting Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944)). 29 CFR § 778.218 states, in pertinent part:

         This provision of section 7(e)(2) deals with the type of absences which are infrequent or sporadic or unpredictable. It has no relation to regular “absences” such as lunch periods nor to regularly scheduled days of rest. . . . The term holiday . . . does not refer to days of rest given to ...

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