Endecott v. Commercial Floorworks, Inc.
| Decision Date | 12 October 2018 |
| Docket Number | Case No. 16-2190-JWB |
| Parties | ERIC ENDECOTT, Plaintiff, v. COMMERCIAL FLOORWORKS, INC. and JAMES PEDERSON, Defendants. |
| Court | U.S. District Court — District of Kansas |
This case comes before the court on Plaintiff Eric Endecott's motion for partial summary judgment (Doc. 72) and Defendants Commercial Floorworks, Inc. ("CF") and James Pederson's motion for summary judgment (Doc. 74). The motions have been fully briefed and are ripe for decision. Plaintiff's motion is GRANTED IN PART AND DENIED IN PART and Defendants' motion is GRANTED IN PART AND DENIED IN PART for the reasons herein.
Plaintiff was employed by CF beginning in January 2006. CF is engaged in the sale of floor coverings and CF's customers are primarily contractors. (Doc. 73 at 3.) Defendant Pederson is the owner and President of CF. Plaintiff worked in CF's Lawrence office as a salesmanager. Plaintiff was the only employee responsible for sales in the Lawrence office and, at times, the Lawrence office would include a support person who worked for Plaintiff. Plaintiff's job duties included "looking for new business, estimating jobs, providing proposals for jobs, customer relations, selling, negotiating material costs, working with installers, and managing the jobs that he sold, including billing and collections." (Doc. 77, Exh. A at 3.) Plaintiff also ordered materials, tracked orders, coordinated shipments and deliveries, staged materials, did flooring layouts and managed contracts. (Doc. 73 at 3-4.) The parties dispute the amount of time Plaintiff spent in the Lawrence office performing his work and also dispute whether Plaintiff conducted sales while in the office or at another location. (See Docs. 73 at 4-5; 78 at 2-3; 80 at 9; 82 at 2.)
Plaintiff's compensation structure was not in writing but he was paid by commissions which were accrued in Plaintiff's commission account. Plaintiff received weekly draws and other occasional draws from his account until July 2015. Plaintiff did not receive any overtime compensation and his hours worked were not recorded. (Doc. 73 at 5-6.) CF calculated Plaintiff's commissions by using the following formula: "Commission = (Gross Profit [Sales Income - Costs of Goods Sold] times Commission percentage) less Division Expenses plus Prior year carryover less Account Receivable Adjustment." (Doc. 77, Exh. A at 3.) Division expenses include an expense called the "payroll tax expense," which is a deduction for CF's share of "Social Security, Medicare and Kansas and Federal unemployment tax paid for that Sales Manager." (Doc. 77, Exh. A at 9.) Pederson directed the deductions for the payroll taxes. (Docs. 73 at 8; 78 at 5.) Plaintiff was aware of the payroll tax deduction from his commission.
Brenda Foster was the office manager and controller of CF. Foster does all the bookkeeping for CF, including payroll and calculating sales commissions. (Doc. 73 at 2.) Fostertestified that she considered Plaintiff exempt from overtime because he was a "salesman and he was a highly compensated employee." (Foster Dep. 42:23-24, Doc. 75, Exh. 3.)
In 2008, Plaintiff's commission percentage was 32%. The commission percentage was later reduced to 30% in 2009 or 2010. Pederson and Plaintiff had a conversation regarding the change in commission rate. Plaintiff contends that his rate was to remain at 32%. Defendants dispute this fact. Effective April 13, 2010, Plaintiff received a draw of $2,000 per week. Defendants contend that the $2,000 amount was guaranteed. Plaintiff disputes that the weekly draw was guaranteed although he does not dispute the fact that CF would not recapture amounts paid. (Docs. 78 at 7; 83 at 2.) Pederson testified that their agreement (Pederson Dep. 25:01-05, Doc. 75, Exh. 5.) In April 2014, Plaintiff received his commission report for years 2006-2013, which shows the calculation of the commission payable. The report states that the commission percentage for 2010 and beyond was 30%. (Doc. 77, Exh. A at 3-4; Doc. 75, Exh. 17.)
CF paid Plaintiff the following wages in the years at issue: $130,875.00 in 2012, $112,025.00 in 2013, $122,600.00 in 2014 and $58,804.40 in 2015. Plaintiff traveled tens of thousands of miles for his job: in 2013, Plaintiff reported 53,000 miles for work; in 2014, Plaintiff reported 47,600 miles for work; and in 2015, Plaintiff reported 27,600 miles for work and 17,300 miles commuting. CF advanced vehicle expenses to Plaintiff and those expenses were later deducted in the formula calculating Plaintiff's commission. (Docs. 77, Exh. A at 5; 80 at 5.)
In 2013 and early 2014, Plaintiff received three checks: $35,411 from Country Ceramics, LLC; $9,414.50 from J & J Industries Inc.; and $5,000 from Joplin Floor Designs, Inc. Plaintiffwas also issued 1099s for the payments. The payment from Country Ceramics was a specifier fee. A specifier fee can be paid by a manufacturer after a company would specify a manufacturer's product for a project but would ultimately lose the bid on the project to a competitor. (Doc. 78 at 10.) CF did not have a written policy pertaining to specifier fees. (Doc. 73 at 9.) After Plaintiff received the specifier fee from Country Ceramics, he kicked back $7,375.00 to Joe Dineen with J&J Industries. Plaintiff contends that the fees were gifts. The Joplin payment originally came from a specifier fee which was shared with Plaintiff. Plaintiff did not inform CF of these payments. Defendants dispute that the payments from J&J and Joplin were gifts. (Docs. 73 at 8-9; 78 at 5.) Plaintiff testified that he could have been terminated for moonlighting due to the payments. (Plaintiff's Dep. 271:07-14, Doc. 78, Exh. 1.) CF learned of the payments during this litigation.
In January 2014, Plaintiff's wife filed for divorce. As a result, Plaintiff's performance suffered. CF began receiving complaints from customers regarding Plaintiff's performance. CF lost customers due to Plaintiff's performance. Pederson and Foster spoke on multiple occasions regarding Plaintiff's performance, lack of responsiveness and customer complaints. Those conversations included the possible termination of Plaintiff's employment. Plaintiff and Pederson also had discussions regarding the problems with his division and complaints that CF had received. Foster also contacted the Kansas Department of Labor in the spring of 2015 regarding Plaintiff's potential termination. In March 2015, Pederson spoke with Plaintiff about his job duties and instructed him to focus on the current projects and to stop pursuing new sales. (Doc. 77, Exh. A at 6-7.)
In 2014, CF was awarded a contract that involved the rebuilding of Joplin High School. Prior to being awarded the contract, Plaintiff had contacted Duane Hukill of Joplin Floor Designbecause of Hukill's relationships with vendors in the area. Plaintiff then negotiated a $100,000 flat fee for Hukill. Plaintiff contends that he and Pederson discussed the flat fee and that Pederson had agreed to treat the fee as a job cost. Defendants dispute that Pederson or CF agreed to treat the fee as a job cost. Ultimately, CF credited the entire $100,000 fee against Plaintiff's commission for the contract. Had it been treated as a job cost; Plaintiff's commission would have been significantly higher. (Docs. 77, Exh. A. at 9-10; 80 at 8, 10-11; 82 at 2.)
Plaintiff received his final weekly draw on July 15, 2015. Pederson testified that he stopped paying Plaintiff because his division was upside down and there was "literally no money in our agreement to continue paying him for future commissions...." (Pederson Dep. 37:04-17, Doc. 75, Exh. 5.) For the week of July 13 to 19, Plaintiff was paid the rate of $20.11 per hour for performing installation work on a CF job. Plaintiff did not receive any compensation from CF after the payment for the installation work. CF did not keep records of the hours Plaintiff worked. Plaintiff contends that he worked, on average, 60 hours per week between January 2013 and September 25, 2015. Defendants dispute this and state that Plaintiff did not work more than 40 hours per week as there were several complaints regarding his failure to perform work during this time period. (Doc. 78 at 3-4.)
Between July 15 and September 25, 2015, Plaintiff stated that he worked approximately 30-35 hours per week, but also worked weeks in that time period of more than 50 hours. (Doc. 75, Exh. 23 at 4.) Defendants dispute that Plaintiff was working those hours between July 15 and September 25, 2015. (Doc. 78 at 3.) Pederson and Foster testified that Plaintiff performed minimal work after July 12, 2015. (Doc. 77, Exh. A at 8.) Plaintiff testified that he worked "very little" in September 2015. (Doc. 78 at 7.)
On July 23, 2015, Foster provided Plaintiff with his commission report. On July 30, Plaintiff complained about his 30% commission rate. (Doc. 75, Exh. 18.) On August 25, Plaintiff's attorney sent a letter to CF. The letter raised several complaints, including the lack of wages, failure to pay overtime, errors on commission calculations, improperly deducted payroll taxes, and an erroneous commission percentage. (Doc. 75, Exh. 16.) Upon receipt of the letter, Pederson testified that he was disappointed in Plaintiff and wondered why Plaintiff "would want to do this and take away the opportunity that he had." (Pederson Dep. 154:16-21, Doc. 75, Exh. 5.)
Plaintiff's employment was terminated on September 25, 2015. After his termination, in July 2016, CF prepared a commission spreadsheet which shows that the total commissions payable to Plaintiff was $9,857.51, although that amount has not been dispersed to Plaintiff. (Doc. 73, Exh. 7.) Defendants dispute that the spreadsheet is a final calculation of Plaintiff's commissions.
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