Julie A. Su v. EM Protective Servs.
| Decision Date | 31 March 2023 |
| Docket Number | 3:19-cv-00700 |
| Parties | JULIE A. SU, Acting Secretary of Labor, United States Department of Labor,[1] Plaintiff, v. EM PROTECTIVE SERVICES LLC and ERIK MAASIKAS, Defendant. |
| Court | U.S. District Court — Middle District of Tennessee |
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Pursuant to Fed.R.Civ.P. 52(a)(1), the Court makes the following findings of fact and conclusions of law.
Plaintiff as Acting Secretary of Labor for the United States Department of Labor, filed this action against EM Protective Services LLC and Erik Maasikas for violations of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq. The Secretary seeks overtime and minimum-wage back wages, as well as liquidated damages and a permanent injunction against future violations. (Doc. Nos. 1, 31).
EM Protective Services LLC (“EM”) provides private security and traffic control services to third parties. The Secretary asserts that EM misclassified its workers as independent contractors and failed to pay overtime and minimum wages as required by the FLSA. The workers for whom the Secretary seeks back wages generally fall into two categories: (1) workers who provided security and traffic control services in the Nashville, Tennessee metropolitan area (“Local Workers”); and (2) workers who provided security services in Puerto Rico after Hurricane Maria in 2017 (“Puerto Rico Workers”). On summary judgment, the Court determined that the Puerto Rico Workers were employees of Defendants during the relevant time period. (See Memorandum and Order, Doc. Nos. 56, 57).
The issues remaining for trial included: (1) the appropriate classification of the Local Workers; (2) whether Defendants are liable for overtime and/or minimum-wage back wages and in what amount; (3) if Defendants owe back wages, whether they are liable for liquidated damages; (4) whether Defendants violated the record keeping requirements of 29 U.S.C. §§ 211(c) and 215(a)(5) and 29 C.F.R. § 516; and (5) if Defendants violated the FLSA, whether those violations were willful. The Secretary also seeks a permanent injunction enjoining Defendants from violating 29 U.S.C. §§ 206, 207, 211(c), 215(a)(2), and 215(a)(5).
The claims were tried without a jury on July 5-8, 2022. Following the trial the Court ordered the parties to submit proposed findings of fact and conclusions of law addressing: (1) classification of Defendants' Nashville workers; (2) willfulness; (3) liquidated damages; and (4) wage calculations for the Puerto Rico employees. (Doc. No. 79). Because the Court's ruling on these issues affects the damages calculation with regard to the Nashville workers, the Court directed the parties not to include proposed wage calculations for these workers. (Doc. No. 79).
Now before the Court are the parties' proposed findings of fact and conclusions of law (Doc. Nos. 86, 87-1), which the Court has considered together with the trial record.[2]
EM was started by Erik Maasikas in 2010. (Vol. II at 129). EM provides traffic control and security services to third parties on a contract basis. EM's business is divided approximately 50/50 between security and traffic control, though the precise ratio varies depending on the season. (Id. at 11-12). As relevant to this case, EM's work is broadly divided into work performed in the Nashville metropolitan area, which includes security and traffic control, and security work performed in Puerto Rico following Hurricane Maria in 2017.
EM classifies all of its workers as independent contractors. (Vol. II at 15). Workers are paid either a flat hourly or daily rate. (Id. at 15, 29, 126-27). None of the workers are paid overtime. (Id. at 15). Maasikas based the business model, including the decision to classify the workers as independent contractors, on his experience moonlighting as a contract security officer while employed by the Metropolitan Nashville Police Department. (Id. at 132-133). He testified that he “just did the norm of Nashville” and did not consult any professionals regarding his decision to classify his workers as independent contractors. (Id. at 17). Defendants claim that until contacted by the Department of Labor regarding the issues raised in this case, no one had ever questioned the independent worker classification or requested overtime pay. Maasikas stated that he believed his operations were regulatorily compliant. (Id. at 150). Neither EM's accountant nor the Internal Revenue Service (“IRS”), which performed an audit before 2017, suggested otherwise. (Id.; Vol. IV at 18, 32).
At trial, the parties offered the testimony of ten people who have worked for EM in the Nashville, Tennessee area performing security and traffic control work for EM clients: Mark Chapman, Christopher Trail, John Armstrong, Wesley Argo, Craig Curtis, Claude Daniel Gentry, Alfredo Lopez, Russell Bradshaw, Gary Stewart, and William Guthoerl. (See Vol I, Vol. II, Vol III).
EM's work in the Nashville, Tennessee area includes both security and traffic control services. Unless they are uniformed police officers, persons performing traffic control must be certified, and those performing security work must be licensed. (Vol. II at 19). Licensure as a security guard requires an 8-hour class for unarmed guards and a 16-hour class for armed guards. (Id. at 20-21). A security guard's sole duty is to serve as a “visual deterrent.” (Id. at 22-23). The manager of a particular location determines where the security guard should stand to provide the requisite visual deterrent. (Id.). Minimal equipment is required for the security jobs - armed security guards provide their own firearm and all security guards must wear clothing to distinguish themselves as security. (Id. at 22).
Generally, security guards are not supervised by EM. (Vol. I at 68). However, on occasion, EM is contracted to provide security services for large events, such as the NFL Draft or the Music City Barbecue Festival. (Vol. II at 24). For these large events, EM may provide up to 40 workers. In these instances, one of the workers supervises and coordinates the others. (Id. at 25).
Traffic control workers must be certified flaggers. To be a certified flagger, the worker must complete a four-hour course or be a police officer. (Id. at 26). The tasks of a traffic control worker vary by the job. Sometimes the work is as simple as monitoring a road or sidewalk closure to make sure people do not drive or walk in the closed area. (Id. at 26-27). If a lane is closed on a road otherwise open to traffic, two workers will work together to regulate traffic. (Id.). Other jobs require lane or road closures during specified period due to blasting with explosives. (Vol. I at 177). Larger jobs could include as many as ten workers. (Vol. II at 28). In those instances, the workers work together as a team and the construction company or whoever is overseeing the job will direct the workers where to go. (Id.).
Traffic control workers are required to wear a high visibility shirt, long pants, and closed toe shoes. (Vol. I at 27, 39). Some traffic control workers have their own signs and cones, but if they do not, EM will provide them. (Vol. II at 28).
Some jobs, primarily traffic control jobs, also require vehicles. Maasikas invested about $500,000 on a fleet of vehicles - including fifteen trucks and ten police-style vehicles. (Vol. II at 60-61). While most of the vehicles are used by workers for EM-contracted jobs, the fleet includes a “military hummer” that Maasikas says is usually parked at Nashville Shores for advertisement, not used for work. (Id. at 65). He bought it because it was just “cool to have.” (Id. at 65). All of the vehicles are insured and maintained by EM. (Id. at 69).
William Guthoerl explained that, if requested by a client, vehicles were dispatched for specific jobs. (Vol. III at 234). For example, a client might request one vehicle and two flaggers. (Id.). Vehicles were equipped to fulfill the specific needs of the client - this might include a truck equipped with signs and cones or a marked vehicle with lights to meet specific Tennessee Department of Transportation (“TDOT”) requirements. (Id. at 235-236).
Workers testified that they either used or regularly saw others using EM vehicles on the job. Mark Chapman suggested that the use of EM vehicles was a regular occurrence. (Vol. I at 24-25). “If you were doing a traffic job that required a vehicle, you would have a vehicle to drive that day.” (Id. at 24). Chapman would generally keep the vehicle for the duration of the job, which could be a week, two weeks, or six months. (Id. at 25-26). Similarly, John Armstrong and Craig Curtis testified they frequently use EM vehicles. Armstrong said he regularly uses an EM-owned 2017 Ford F150 truck with directional arrows and lights and has kept the truck at his house for two years. (Vol. I at 124-26). Craig Curtis stated that he has used an EM vehicle every day for the last five years and he always keeps the vehicle at his house. (Id. at 195-96).
Other workers used vehicles less frequently. Alfredo Lopez and Russell Bradshaw used EM vehicles, but not often. (Vol. III at 154, 171). Russell Bradshaw testified that he “rarely” used EM vehicles - usually only when his own vehicle was in the shop. (Vol. III at 171).
Christopher Trail stated he would occasionally use EM vehicles for traffic control work depending on the job. (Id. at 75-76). For example, if a job required an advance warning vehicle with lights, he would pick up an appropriate vehicle from EM to use on the job. (Id.). Sometimes “not often at all,” if the job site needed a vehicle for more than just...
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