Boutell v. Craftmaster Painting, LLC

• Decision Date: 11 December 2018
• Docket Number: 17-cv-317-bbc
• Parties: ANTHONY BOUTELL, BRIAN STOUT, SHANE MORN and ROGER ANDERSON, on behalf of themselves and all others similarly situated, Plaintiffs, v. CRAFTMASTER PAINTING, LLC, Defendant.
• Court: U.S. District Court — Western District of Wisconsin

ANTHONY BOUTELL, BRIAN STOUT, SHANE MORN and ROGER ANDERSON,on behalf of themselves and all others similarly situated, Plaintiffs, v. CRAFTMASTER PAINTING, LLC, Defendant.

17-cv-317-bbc

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WISCONSIN

December 11, 2018

OPINION AND ORDER

Plaintiffs Anthony Boutell, Brian Stout, Shane Morn and Roger Anderson are former employees of defendant Craftmaster Painting, LLC, a company that performs painting and related work both within and outside Wisconsin. Plaintiffs contend that several of defendant's wage practices violated the Fair Labor Standards Act, 29 U.S.C. § 201-219, and Wisconsin's wage law, Wis. Stat. § 109.01-109.13. Specifically, plaintiffs contend that defendant erroneously permitted employees to bank overtime hours, incorrectly calculated weekly overtime based on the lowest rate earned during a week rather than the average weekly regular rate, failed to treat their travel time to and from jobsites as hours worked for which they were owed compensation, failed to compensate employees for work performed at the shop, failed to use the average blended rate to compute overtime time and improperly excluded 401(k) contributions (both those compelled from their employees and matching employer 401(k) contributions) when determining the prevailing wage and overtime pay rates. This case is proceeding as a collective action under the FLSA and a class action under Rule 23 with respect to plaintiffs' state law claims.

Now before the court is plaintiffs' motion for partial summary judgment as to liability on several issues. Dkt. #58. I am granting the motion in part and denying it in part as set forth below.

OPINION

Plaintiffs have moved for summary judgment with respect to the following issues:

(1) defendant violated the FLSA and Wisconsin law by permitting plaintiffs to "bank" overtime hours earned in a week and "cash in" the hours at a later time when plaintiffs worked fewer than 40 hours in a week;

(2) defendant violated the FLSA and Wisconsin law by calculating overtime rates by using the lowest wage rate plaintiffs earned in a workweek, rather than using the "regular rate" of pay for the workweek;

(3) defendant cannot offset overtime it owes under the FLSA or Wisconsin law with overtime it paid already;

(4) defendant cannot rely on the exemption under 29 U.S.C. § 207(g)(2) and must use the blended average rate when calculating regular rate of pay for overtime purposes;

(5) defendant violated the FLSA and Wisconsin law by failing to count paid travel hours and hours worked at the shop to determine whether plaintiffs worked 40 hours during any given week;

(6) defendant violated Wisconsin law by claiming a credit for plaintiffs' 401(k) contributions and defendant's matching 401(k) contributions when computing plaintiffs' prevailing wage rate;

(7) defendant violated the FLSA and Wisconsin law by failing to include plaintiffs' prevailing wage 401(k) contributions and defendant's matching 401(k) contributions when calculating plaintiffs' overtime premiums for overtime prevailing wage work;(8) plaintiffs are entitled to recover liquidated damages on all of defendant's violations of the FLSA;

(9) plaintiffs are entitled to a three-year statute of limitations as to certain of their FLSA claims; and

(10) plaintiffs are entitled to recover civil penalties under Wis. Stat. § 109.11(2)(a) as to all of their claims under Wisconsin law.

I address each of plaintiffs' arguments and defendant's responses below.

A. Permitting Employees to Bank Overtime Hours

Defendant generally pays employees weekly. During 2015-2017, defendant permitted employees who worked more than 40 hours in a week to "bank" their overtime hours rather than be paid an overtime premium for the week in which they worked the overtime hours. An employee with banked overtime hours could later "cash in" the banked hours in a week in which the employee worked fewer than 40 hours. Under this practice, employees received regular pay rates for banked hours instead of overtime premium rates.

Defendant concedes that it now understands that its "banking practice" violated the FLSA, 29 U.S.C. § 207(a), and Wisconsin law, Wis. Stat. § 109.03(1). Dft.'s Br., dkt. 65, at 2. Accordingly, plaintiffs are entitled to summary judgment with respect to liability on this claim. Defendant no longer permits employees to bank overtime hours and has repaid employees for all banked hours. However, defendant repaid some of the banked hours at straight time rates instead of overtime rates. Therefore, defendant agrees that it needs to calculate the overtime premium due for those hours. The amount defendant owes for banked overtime hours remains to be determined at trial.

B. Calculating Overtime Rates Based on Lowest Rate Earned

Plaintiffs' hourly pay depended on the type and location of the project on which they performed work. Plaintiffs earned a "base rate" for many jobs. If plaintiffs worked on a Walmart, Aldis or Culver's project, they earned one dollar above their base rate. If they worked on a "prevailing wage" public works project, they earned a higher prevailing wage rate. In a given workweek, plaintiffs may have worked on several different projects with different wage rates.

Plaintiffs also received travel pay, depending on the job. Generally, defendant did not pay plaintiffs travel pay for jobs that were less than one hour away. Defendant paid plaintiffs for one-way travel if the job was between one and two hours away and paid plaintiffs travel pay for both ways if the job was two or more hours away. In a given week, the travel pay rate would likely be the lowest pay rate plaintiffs earned.

Between 2014 and 2017, defendant calculated overtime pay based on the lowest rate an employee earned during the workweek, regardless whether the overtime hours were incurred at a site subject to a base rate, dollar bonus or a prevailing wage rate. If an employee earned travel time in a given week, defendant calculated the employee's overtime based on the travel hours. For example, during the week of May 15 to 21, 2016, plaintiff Stout worked 57.75 hours and received 17.75 hours of overtime pay. Stout worked 7.5 of the overtime hours at a "prevailing wage" site, but defendant calculated Stout's entire overtime pay based on "base wage" work he had performed earlier in the week when his work was at a non-prevailing wage job.

Defendant concedes that it calculated overtime pay improperly by paying overtime based on the lowest rate worked, rather than the "regular rate," as required by FLSA, 29 U.S.C. § 207(a), and Wisconsin law, Wis. Admin. Code DWD § 274.03 and § 290.05. Dft.'s Br., dkt. #65, at 2. Accordingly, plaintiffs are entitled to summary judgment as to liability on this claim. Remaining for trial is a determination of the additional amount defendant owes plaintiffs for overtime paid at the incorrect rate.

C. Offsets for Overtime Paid Previously

Defendant makes clear it concedes that it must pay plaintiffs additional overtime at the rate set in 29 U.S.C. § 207(a) and Wis. Admin. Code DWD § 274.03 for any work performed after 40 hours in a week. The parties disagree about whether defendant may offset the amount of overtime it owes with overtime compensation it already paid at incorrect rates. Plaintiff seeks a ruling that defendant is not entitled to any offset for overtime previously paid, while defendant argues that an offset is appropriate.

Under the FLSA, 29 U.S.C. § 207(h)(2), an employer may credit certain overtime payments already made to employees against overtime payments owed to the employees. In particular, an employer may credit "extra compensation provided by a premium rate paid for certain hours worked by the employee in any day or workweek because such hours are hours worked in excess of eight in a day or in excess of the maximum workweek applicable to such employee." 29 U.S.C. § 207(e)(5). Defendant argues that under this provision, it is entitled to offset overtime owed in a given week with overtime already paid for hoursworked in the same week.

Plaintiffs' arguments as to why defendant is not entitled to any offset are unpersuasive. Plaintiffs suggest that defendant is seeking to offset overtime owed with overtime it paid on a daily basis, which would not be permitted under the FLSA. Plts.' Br., dkt. #59, at 9. But both parties appear to agree that defendant calculated overtime on a weekly basis, not a daily basis. Nor, as plaintiffs suggest, is defendant attempting to offset overtime it owes for a particular week with overtime or other premiums paid in another week or arguing that plaintiffs worked fewer than 40 hours in other weeks. Plaintiffs have identified no reason why defendant is not entitled to offset overtime wages owed in a given week with overtime wages already paid in the same week.

Therefore, I conclude that defendant is entitled to offset overtime owed in any given week so long as it can prove that it already paid some overtime premiums for hours worked in excess of 40 in that week. Specifically, defendant is entitled under 29 U.S.C. § 207(e)(5) to recalculate the overtime owed for each work week and pay the difference between what was paid in overtime premiums already and what is determined to be owed.

D. Availability of Exemption Method under 29 U.S.C. § 207(g)(2)

Plaintiffs also seek a ruling that defendant must calculate overtime by using the "regular rate" under 29 U.S.C. § 207(a)(1) and Wis. Admin. Code DWD § 274.03, and cannot calculate overtime pay by using the exemption method set out in 29 U.S.C. § 207(g)(2). Under § 207(g)(2), an employer who satisfies certain requirements can calculatethe overtime rate by using the straight time rate an employee earned for the type of work performed during overtime hours, as opposed to using the "regular rate" set forth in § 207(a)(1). Plaintiffs argue that defendants' practices do not satisfy the requirements for relying on the exception under § 207(g)(2), because, among...