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Another Victory For the Employee on the Way to Calculate Overtime Under the Fluctuating Workweek

In Martin v. Southern Premier Contractors, Inc., Judge Story denied the defendant’s motion for summary judgment on FLSA coverage, the executive exemption, and the fluctuating workweek method of calculating overtime compensation. The defendant, Southern Premier Contractors, Inc. (“SPC”) contended that the FLSA did not apply because as a new company, SPC did not reach the $500,000.00 threshold requirement until after operating for a full year.  The defendant further argued that if the FLSA did apply, plaintiff was exempt under the executive exemption and that if the plaintiff should be awarded overtime compensation, the fluctuating workweek method of calculating overtime compensation should apply.

The plaintiff, Ruphard Hugh Martin, Jr., worked for Southern Premier Contractors, Inc. (“SPC”).  SPC is a utility contractor and repairs and replaces pipes for Gwinnett County.  Mr. Martin’s job duties were “hotly disputed” by the parties.  SPC argued that the plaintiff was employed in an executive capacity and that his primary job duties were the management of SPC’s departments and the supervision of its employees.  The plaintiff argued that he was an ordinary laborer whose work primarily consisted of hard manual labor and non-managerial tasks and that he spent approximately ninety-five percent of his work time landscaping, performing construction work, operating tractors and backhoes, driving trucks, and repairing stormwater pipes.

A.        ENTERPRISE COVERAGE

SPC sought summary judgment for hours worked by the plaintiff prior to April 1, 2010, arguing that it was not covered by the FLSA until the start of 2010 because its annualized revenue was less than $500,000.00 until that point.   SPC started operations in the second quarter of 2009, and its annualized gross sales volume did not reach $500,000 until the second quarter of 2010.  The court agreed with the Plaintiff that issues of fact precluded the court from finding that SPC was not subject to the FLSA until the second quarter of 2010.  The regulations acknowledge that while a new business may not be able to compute its annual dollar volume on the basis of a twelve-month period, “in many cases it is readily apparent that the enterprise or establishment will or will not have the requisite annual dollar volume specific in the Act.”  Certain businesses, like large department stores or supermarkets, will from the outset clearly meet the $500,000.00 requirement.  When this is not clear from the outset, business receipts from the first quarter of operation will be taken as representative of annual dollar volume for determining FLSA obligations for the weeks in the following quarter.  29 C.F.R. § 779.269.  Similarly, gross receipts of the new business for completed quarter year periods are also representative of the annual dollar volume in applying the annual volume tests of the FLSA.  Id.

SPC presented undisputed evidence that it did not earn $500,000.00 until the second quarter of 2010 and argued that the court should use the “look-back” method provided for in 29 C.F.R. § 779.269.  The plaintiff argued that it was clear from the outset that SPC would satisfy the annual dollar volume test and pointed to deposition testimony from Michael Massy, one of SPC’s two owners.  Mr. Massey testified that SPC was always covered by the FLSA and confirmed non-managerial employees received overtime pay the entire time SPC operated as a business.  The court agreed with Plaintiff that issues of fact precluded the court from finding SPC was not subject to the FLSA and denied summary judgment to SPC.

B.         EXECUTIVE EXEMPTION OF THE FLSA

SPC also moved for summary judgment on the plaintiff’s overtime claim on the basis of the executive exemption of the FLSA.   As the employer, SPC bears the burden of establishing the executive affirmative defense.  Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1269 (11th Cir. 2008).  Under the executive exemption, an employee is exempt from the FLSA’s overtime requirement if the employee:

(1) is compensated on a salary basis at a rate of not less than $455 per week;

(2) has a primary duty of management of the enterprise in which the employee is employed or of  a customarily recognized department or subdivision thereof;

(3) customarily and regularly directs the work of two or more other employees; and

(4) has the authority to hire and fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other

employees are given particular weight.

29 C.F.R. § 541.100(a). 

The court again denied the employer’s motion for summary judgment on this issue, finding that factual issues precluded it from ruling as a matter of law that the plaintiff’s primary duty was management.  The determination of the primary duty is necessarily fact-intensive, and the court found that a reasonable jury could conclude plaintiff’s primary duty was not management.  The plaintiff presented evidence that he spent between eighty to ninety-five percent of his work time performing manual labor and non-managerial tasks including hauling gravel, operating backhoes and tractors, shoveling dirt, spreading straw, laying sod, and operating a one-hundred-pound CCTV camera.  The plaintiff also presented evidence that Massey, not the plaintiff, made all of the major managerial decisions and that the plaintiff was also subject to Massey’s direct supervision.  For example, the plaintiff presented evidence Massey was on the job site with plaintiff ninety-five percent of the time, and the plaintiff was only responsible for supervising employees in Massey’s absence.  It was also undisputed that the plaintiff never hired or fired any employee.  Accordingly, the court could not grant summary judgment to SPC.

C.         MEASURE OF DAMAGES- FLUCTUATING WORKWEEK

SPC also moved for the court to find that, should the court not dismiss the FLSA claim, the plaintiff’s measure of damages should be half-time his hourly rate of pay, based on 29 C.F.R. §778.114(a), not time-and-a-half.  As noted by the court at the start of the order, Section 7(a)(1) of the FLSA provides that no employer shall employ any employees for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specific 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 employee’s regular rate of pay is a question of fact and is calculated by dividing the weekly salary by the number of hours which the salary is intended to compensate.

The court also denied summary judgment for SPC on this issue, finding SPC failed to present any evidence regarding the number of hours Plaintiff’s salary was intended to compensate.  The court questioned, “Was Plaintiff’s salary intended to compensate him for a forty-hour work week?  A fifty-hour workweek?  Or for all hours worked in a given workweek, regardless of the number?”  As there was no evidence in the record regarding the number of hours Plaintiff’s salary was intended to compensate, the court could not rule as a matter of law that Plaintiff’s overtime compensation should be calculated on a half-time basis.  In a footnote, the court also agreed that section 778.114(a) is not the proper analytical framework for calculating damages on a half-time basis when the case involves a non-exempt employee compensated for fluctuating work hours at a fixed weekly wage.  Accordingly, the court denied the defendant’s motion for summary judgment.

Author: Abigail J. Larimer, Esq.

 

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