Petroski v. H&R Block Enters., LLC

• Decision Date: 02 May 2014
• Docket Number: No. 13–2076.,13–2076.
• Court: U.S. Court of Appeals — Eighth Circuit
• Parties: Barbara PETROSKI; Cathy Camden; Carla Collins; Stacey Oyer, individually and as representatives of the Rule 23 and 29 U.S.C. Section 216(b) classes certified by the U.S. District Court, Plaintiffs–Appellants v. H & R BLOCK ENTERPRISES, LLC; H & R Block Eastern Enterprises, Inc.; Does 1–50, Defendants–Appellees.

750 F.3d 976

Barbara PETROSKI; Cathy Camden; Carla Collins; Stacey Oyer, individually and as representatives of the Rule 23 and 29 U.S.C. Section 216(b) classes certified by the U.S. District Court, Plaintiffs–Appellants

v.H & R BLOCK ENTERPRISES, LLC; H & R Block Eastern Enterprises, Inc.; Does 1–50, Defendants–Appellees.

No. 13–2076.

United States Court of Appeals,

Eighth Circuit.

Submitted: March 11, 2014.

Filed: May 2, 2014.

Todd M. McGuire, argued, Kansas City, MO, for Appellant.

George Allan Hanson, on the brief, Kansas City, MO, for Appellant.

Adam Joseph Karr, argued, Newport Beach, CA, for Appellee.

Julianne P. Story, on the brief, Kansas City, MO, Adam P. KohSweeney, on the brief, San Francisco, CA, Framroze M. Virjee, on the brief, Los Angeles, CA, for Appellee.

Before WOLLMAN, MURPHY, and GRUENDER, Circuit Judges.

WOLLMAN, Circuit Judge.

The plaintiffs filed suit against H & R Block, Inc., H & R Block Enterprises LLC, and H & R Block Eastern Enterprises, Inc. (collectively, H & R Block), alleging that the Fair Labor Standards Act (FLSA) requires H & R Block to compensate tax professionals for the time spent completing twenty-four hours of rehire training. The district court ¹ held that the tax professionals were not employees under the FLSA and thus were not entitled to compensation. The plaintiffs appeal from the grant of summary judgment in favor of H & R Block. We affirm.

I.

H & R Block is a tax preparation service provider. It employs tax professionals who are primarily responsible for preparing tax returns for H & R Block's clients. The tax season begins in late December or early January and lasts until mid-April. H & R Block refers to the time of year that is not tax season as the “off-season” or the “pre-season.” Due to the seasonal nature of the tax services industry, H & R Block requires the majority of its workforce only during the tax season.

A tax professional employed by H & R Block who seeks to work at H & R Block the following tax season must complete an employment application and participate in an interview. If hired to work the following tax season, the tax professional submits an I–9 Form regarding employment eligibility and enters into an employment agreement. The employment agreement sets forth the term of employment, which typically lasts only for the duration of the tax season. After the period set forth in the employment agreement ends, the tax professional is under no obligation to return to H & R Block for the following tax season, and H & R Block is under no obligation to hire the tax professional to work for H & R Block in the future. During the off-season, tax professionals are eligible to collect unemployment, and many work other jobs. From 2008 to 2012, H & R Block rehired approximately 268,804 of the tax professionals and did not rehire approximately 20,357.

H & R Block requires current and former tax professionals to complete certain training to be eligible for rehire for the following tax season. The company handbooks explain that tax professionals must complete continuing professional education (CPE) to be eligible for rehire, but that meeting the CPE requirement is not a guarantee of future employment with H & R Block. During the time period at issue in this litigation, H & R Block required tax professionals to complete twenty-four hours of CPE.

Tax professionals are able to meet the rehire training requirement by taking courses offered by H & R Block or by taking courses offered by any other qualified provider. H & R Block offers both live and web-based courses on various topics, including adjustments, property income, corporations, estate planning strategies, investment income, and itemized deductions. Although some of the courses refer to its internal systems and software programs, most of the courses H & R Block offers are purchased from Commerce Clearing House, an entity unrelated to H & R Block. None of the courses entail working on actual client tax returns or meeting with actual clients. H & R Block charges twenty dollars for access to the courses it offers, and a tax professionalmay take as many courses as he or she likes.

H & R Block does not compensate tax professionals for the time they spend meeting the rehire training requirement. Prior to 2012, H & R Block did not communicate in writing to the tax professionals that they would not be paid for the CPE time, nor did it obtain written acknowledgment from the tax professionals that there would be no compensation for the rehire training. During the time period at issue in this litigation, no federal regulation required tax professionals to complete continuing education courses to prepare tax returns.

This lawsuit began as three separate actions. Named plaintiffs Barbara Petroski and Cathy Camden filed a purported collective action under the FLSA in the Western District of Missouri. Thereafter, two related cases were voluntarily transferred from federal district courts in California and New York to the Western District of Missouri, where the district court granted the parties' joint motion to consolidate. The district court conditionally certified a FLSA collective action pursuant to 29 U.S.C. § 216(b), which consisted of persons who: (1) were currently or previously employed by H & R Block as tax professionals; (2) were not paid for the time spent completing mandatory rehire training after a tax season in order to be eligible to prepare returns for the next tax season; and (3) completed any of the required training on or after April 15, 2007.² Eligible tax professionals were required to opt in to the FLSA collective action.

As set forth above, the district court granted summary judgment in favor of H & R Block. The court rejected the plaintiffs' argument that their employment continued from one tax season to the next, instead concluding that the plaintiffs were trainees and not employees when they completed the twenty-four hours of rehire training. “[A]s trainees, Plaintiffs are not entitled to be compensated for their time spent at rehire training under the FLSA or California and New York law.” D. Ct. Order of Apr. 8, 2013, at 17.

II.

We review de novo the district court's grant of summary judgment, viewing the evidence and the inferences that may be reasonably drawn from the evidence in the light most favorable to the nonmoving party. Rakes v. Life Investors Ins. Co. of Am., 582 F.3d 886, 893 (8th Cir.2009). Summary judgment is appropriate if there are no genuine disputes of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a).

The FLSA requires that covered employees be paid at least minimum wage for hours worked. See29 U.S.C. § 201 et seq. It defines “employee” as “any individual employed by an employer” and defines “employ” as to “suffer or permit to work.” Id. § 203(e)(1), (g). “Whether or not an individual is an ‘employee’ within the meaning of the FLSA is a legal determination rather than a factual one.” Donovan v. Trans World Airlines, Inc., 726 F.2d 415, 417 (8th Cir.1984) (per curiam).

A.

The plaintiffs argue that the district court applied the wrong legal framework to determine whether the tax professionals were employees. They contend that the district court should have considered whether their employment with H & R Block continued from one tax season to the next. They argue that “workers can retain their ‘employee’ status during the interval between the completion of one period of employment and the commencement of another if, as a factual matter, they are customarily continued in their employment with recognition of their preferential claims to their jobs.” Appellants' Br. 29. According to the plaintiffs, the district court should have applied the following two cases, which were brought under the National Labor Relations Act (NLRA): NLRB v. Waterman S.S. Corp., 309 U.S. 206, 60 S.Ct. 493, 84 L.Ed. 704 (1940), and NLRB v. Labor Ready, Inc., 253 F.3d 195 (4th Cir.2001).

“[I]n determining who are ‘employees' under the [FLSA], common law employee categories or employer-employee classifications under other statutes are not of controlling significance.” Walling v. Portland Terminal Co., 330 U.S. 148, 150, 67 S.Ct. 639, 91 L.Ed. 809 (1947); see also Powell v. U.S. Cartridge Co., 339 U.S. 497, 528, 70 S.Ct. 755, 94 L.Ed. 1017 (1950) (“Our decisions have made one thing clear about the Fair Labor Standards Act: its applicability is not fixed by labels that parties may attach to their relationship nor by common law categories nor by classifications under other statutes.”). While we recognize that the NLRA and the FLSA were enacted as part of the same remedial social legislation, see Rutherford Food Corp. v. McComb, 331 U.S. 722, 723, 67 S.Ct. 1473, 91 L.Ed. 1772 (1947), we find Waterman and Labor Ready to be distinguishable and decline to apply them to this case.³

In Waterman, the Supreme Court held that the employer violated the NLRA when it replaced the crews of the ships “Bienville” and “Fairland” with crews affiliated with a different labor union. The employer had laid up the ships for drydocking and repairs for less than a month. 309 U.S. at 209, 60 S.Ct. 493. According to the employer, the crews' tenure of employment ended when the ships were laid up, the wages were paid, and the men had signed statutory articles, which released all claims for wages for the past voyage. Id. at 211, 60 S.Ct. 493. The Supreme Court decided, as a factual matter, that “a seaman's tenure and relationship to his ship and employer are not terminated by the mere expiration of articles when his ship lays up in dry dock or for repairs.” Id. at 218, 60 S.Ct. 493. In Labor Ready, the United States Court of Appeals for the Fourth Circuit invalidated the employment agency's policy of barring union solicitation by its incumbent temporary workers. 253 F.3d at 201. In doing so, it applied Waterman and rejected the employment agency's argument that “the employment...