Johnson v. Wave Comm GR LLC

Citation4 F.Supp.3d 423
Decision Date14 March 2014
Docket NumberNo. 6:10–CV–346.,6:10–CV–346.
PartiesBrett JOHNSON, on behalf of himself and all others similarly situated, Plaintiff, v. WAVE COMM GR LLC; Robert Guillerault, individually; and Richard Ruzzo, individually, Defendants.
CourtU.S. District Court — Northern District of New York

4 F.Supp.3d 423

Brett JOHNSON, on behalf of himself and all others similarly situated, Plaintiff,
v.
WAVE COMM GR LLC; Robert Guillerault, individually; and Richard Ruzzo, individually, Defendants.

No. 6:10–CV–346.

United States District Court,
N.D. New York.

Signed March 14, 2014.


[4 F.Supp.3d 427]


Nichols Kaster PLLP, of Counsel, Paul J. Lukas, Esq., Timothy C. Selander, Esq., Minneapolis, MN, Thomas & Solomon LLP, of Counsel, J. Nelson Thomas, Esq., Patrick J. Solomon, Esq., Justin M. Cordello, Esq., Rochester, NY, for Plaintiff.

Girvin & Ferlazzo, PC, of Counsel, Scott P. Quesnel, Esq., Patrick J. Fitzgerald, III, Esq., Albany, NY, for Defendants.


MEMORANDUM–DECISION and ORDER

DAVID N. HURD, District Judge.
TABLE OF CONTENTS

INTRODUCTION

428


FACTUAL BACKGROUND

428

The Parties

428

Compensation Plan A

429

New York State Department of Labor Investigation

429

Compensation Plan B

430


PROCEDURAL HISTORY

430


DISCUSSION

431

Summary Judgment Standard

431

Statute of Limitations

432

The “Retail or Service Establishment” Exemption to the FLSA

433

“Retail or Service Establishment”

434

Services for Resale

434

Recognition as Retail in Industry

436

Retail Concept

436

Recognition as Retail

440

Commissions

441

Regular Rate of Pay Equal to or Exceeding One and One–Half Times the Minimum Wage

444

FLSA Class

445

April 2006 to September 27, 2009

445

September 28, 2009 to March 2010

445

NYLL Class

446

Conclusion as to Exemption

446

Compensation Plan B

446

Plan B's Weighted Halftime Formula

446

Unreported Hours

448

Individual Liability of Guillerault and Ruzzo

449

Unjust Enrichment

451


CONCLUSION

452

[4 F.Supp.3d 428]


I. INTRODUCTION

Brett Johnson (“plaintiff”) brings this action on behalf of himself and all others similarly situated against Wave Comm GR LLC (“Wave Comm”), and its two owners, Robert Guillerault (“Guillerault”) and Richard Ruzzo (“Ruzzo”) (collectively “defendants”) alleging violations of the Fair Labor Standards Act, as amended, 29 U.S.C. §§ 201–219 (“FLSA”) and New York Labor Law (“NYLL”), N.Y. Lab. Law §§ 190–191. Plaintiff claims Wave Comm failed to properly compensate Wave Comm installation technicians (“installers”) for overtime work. Defendants deny any violations of the FLSA or NYLL and counterclaim for unjust enrichment.

Defendants filed a motion for summary judgment pursuant to Federal Rule of Civil Procedure (“Rule ____”) 56. Plaintiff opposed, and defendants replied. On the same day, plaintiff filed a motion for partial summary judgment. Defendants opposed, and plaintiff replied. Oral argument was heard on April 19, 2013 in Utica, New York.1 Decision was reserved.

II. FACTUAL BACKGROUNDA. The Parties

Wave Comm, a New York corporation with an office in Utica, enters into contracts with cable television providers to perform installation and maintenance services for residential, commercial, and governmental customers in the surrounding area. Guillerault and Ruzzo are the sole owners of Wave Comm, and each possess a one-half interest in the business. They exercise joint financial control over the business and also make decisions regarding the hiring and firing of employees, compensation policies, and work schedules.

During the relevant time, Wave Comm's primary client was Time Warner Cable (“Time Warner”). Wave Comm's contract with Time Warner accounted for more than 75% of its revenue and was obtained through a reverse bidding process. Wave

[4 F.Supp.3d 429]

Comm employed installers whose duty it was to perform installation, maintenance, and construction services on cable television, internet, and telephone equipment for Time Warner subscribers.2 The parties agree that Wave Comm installers had the same basic duties, but disagree that installers had the same work schedules. Johnson was an installer for Wave Comm from June 2008 to July 2010.

Time Warner directed Wave Comm to provide installation and maintenance services to Time Warner subscribers via work orders. Installers would receive new work orders each day.3 After the work was completed, Time Warner compensated Wave Comm according to a rate schedule for each individual type of service performed. Wave Comm then paid its installers. During the time period at issue in this lawsuit (April 2006 to April 2011), Wave Comm utilized two distinct compensation plans for paying its installers.4

B. Compensation Plan A

From April 2006 through March 2010, Wave Comm classified installers as exempt from the overtime pay requirements of federal and state law and paid them for each discrete item of work they performed, based on the rates Wave Comm negotiated with Time Warner, without regard for the amount of time spent doing the work. The amount paid to each installer was based on the installation activity and the installer's “Tech Rate.” Tech Rates were determined by installers' prior experience, longevity with Wave Comm, proficiency, and regular evaluations of their overall work performance.

From April 2006 through April 2009, Wave Comm used a Tech Rate schedule that employed seven different Tech Rates, ranging from the lowest of “Probationary Technician” to the highest of “Tech Supervisor,” with five intermediate Tech Rates between those two rates. From approximately January 1, 2009 until April 2011, Wave Comm expanded the Tech Rate schedule to include ten intermediate Tech Rates between the “Probationary Technician” and the “Tech Supervisor” rates.

Wave Comm did not track the number of hours its installers worked each day or each week. Guillerault Aff., Jan. 25, 2013, ¶¶ 24, 25, ECF No. 124–12. Instead, at the end of each day, installers would add up their daily installation activities and report them to Wave Comm by email.

C. New York State Department of Labor Investigation

In September 2009, the New York State Department of Labor (“NYDOL”) began an investigation into how Wave Comm paid its installers. Specifically, NYDOL investigated Wave Comm's failure to track its installers' work hours and failure to pay installers overtime wages when they worked more than forty hours in a work week. At this time, Wave Comm directed installers to start accurately and completely recording their work hours beginning on September 28, 2009. Ultimately, NYDOL withdrew its investigation of Wave Comm's overtime pay practices to allow the issue to be decided in this case. However, in March 2010, Wave Comm reclassified its installers as non-exempt from overtime

[4 F.Supp.3d 430]

payments and instituted a “weighted halftime” compensation plan, referred to as Compensation Plan B (“Plan B”).

The investigation also revealed that Wave Comm made deductions from installers' pay to cover the cost of tools that installers needed to perform their job duties. Essentially, installers were required to provide their own tools but often could not afford to purchase them outright. To facilitate the purchase of tools, Wave Comm purchased the tools and allowed installers to pay for the tools on an installment basis without interest through regular payroll deductions. Once the full value of the tools was deducted, Wave Comm ceased making deductions and the installer was allowed to keep the tools. NYDOL determined that these payroll deductions constituted an actionable violation of the NYLL. In May 2011, defendants executed a stipulation with NYDOL wherein Wave Comm agreed to pay NYDOL $147,478.61 for the wage deductions they made from 2005 to 2010. The installers received payments from NYDOL reimbursing them for the unlawful wage deductions made by Wave Comm. The installers are still in possession of the tools.

D. Compensation Plan B

In March 2010, following the NYDOL investigation, Wave Comm implemented Plan B, a “weighted halftime” compensation plan, which included the following three components: (1) hourly earnings, (2) a performance incentive, and (3) weighted halftime (overtime). First, hourly earnings were determined by multiplying an installer's total number of reported work hours by their hourly Tech Rate. Second, each installer was eligible for a performance incentive, which was additional compensation that could be earned by performing high quality work quickly. The determination of whether an installer earned a performance incentive was made on a week-to-week basis as follows: Wave Comm determined the total value of the installer's work based on the prior piece rate compensation plan; if the installer's hourly earnings exceeded the total value of the piece work under the piece rate compensation plan, no additional compensation was provided; but, if the installer's hourly earnings did not exceed the total value of the work under the piece rate compensation plan, the installer received additional compensation equal to the difference between his hourly earnings and the total value of the piece work. Third, regardless of whether an installer received a performance incentive, any installer who reported that he worked more than forty hours in a work week received additional compensation referred to as weighted halftime. Weighted halftime was calculated by taking the installer's total earnings, including hourly earnings plus performance incentives, and dividing that total amount by the installer's reported hours of work during that pay period. That figure was then divided in half and multiplied by the number of hours worked by the installer over forty in that pay period to determine the amount of weighted halftime owed.

Plan B was in place from approximately March 2010 through April 2011, when Wave Comm began compensating installers under Compensation Plan C, a “points-based” system which includes a premium payment for the calculated value of overtime work. Plan C is not at issue in this lawsuit.

III. PROCEDURAL HISTORY

Plaintiff brought this collective and class action lawsuit in March 2010 to recover unpaid overtime wages under the FLSA and the NYLL.

In July 2011, plaintiff's unopposed motion for conditional certification of the

[4 F.Supp.3d 431]

FLSA class pursuant to 29 U.S.C. § 216(b) was granted. See ECF No. 59. Notice of...

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