McLaughlin v. Stineco, Inc.

• Decision Date: 30 June 1988
• Docket Number: No. 86-573-CIV-ORL-19.,86-573-CIV-ORL-19.
• Citation: 697 F. Supp. 436
• Parties: Ann McLAUGHLIN, Secretary of Labor, U.S. Department of Labor, Plaintiff, v. STINECO, INC., Steven E. Stines and James A. Courtney, Jr., Defendants.
• Court: U.S. District Court — Middle District of Florida

697 F. Supp. 436

Ann McLAUGHLIN, Secretary of Labor, U.S. Department of Labor, Plaintiff, v. STINECO, INC., Steven E. Stines and James A. Courtney, Jr., Defendants.

No. 86-573-CIV-ORL-19.

United States District Court, M.D. Florida, Orlando Division.

June 30, 1988.

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Patricia J. Craft, U.S. Dept. of Labor, Atlanta, Ga., for plaintiff.

Sam E. Murrell, Jr., Steven E. Stines, and James A. Courtney, Orlando, Fla., for defendants.

ORDER

FAWSETT, District Judge.

This cause came before the Court as trier of fact for trial beginning January 7, 1988. This action is brought by the Secretary of Labor¹ to enforce the provisions of the Fair Labor Standards Act of 1938 (the "FLSA"), as amended, 29 U.S.C. § 201 et seq., seeking injunctive relief pursuant to section 17 of the FLSA, 29 U.S.C. § 217. More specifically, Plaintiff seeks a restitutionary injunction against the withholding of back pay and interest by the Defendants, and a prospective injunction against violations of the FLSA by the Defendants.²

The Court finds that the Defendants violated section 6 of the FLSA, 29 U.S.C. § 206, by failing to pay wages to certain employees for work performed. Defendants further violated the overtime compensation provisions of section 7, 29 U.S.C. § 207, by paying straight time wages to hourly workers who worked over 40 hours in a week and by paying certain non-exempt employees salaries for all hours worked which did not yield compensation at one and one-half times such employees' regular rates of pay for overtime hours in excess of forty hours worked in a work week. Defendants violated the record-keeping provisions of section 11(c), 29 U.S. C. § 211(c), and 29 C.F.R. § 516 by failing to make, keep and preserve records of the persons employed and of the wages, hours and other conditions and practices of employment maintained by Defendants. Finally, Defendants violated section 12(c), 29 U.S.C. § 212(c), and 29 C.F.R. §§ 570.67 and 570.35 by employing minors under the age of 18 years in a particularly hazardous occupation involving roofing, and by employing a minor under the age of 16 years during hours not permitted by such regulation.

After consideration of the evidence presented at trial, the stipulations of the parties, and the balance of the record herein the Court concludes that it has jurisdiction of the matter and therefore enters its Findings of Fact and Conclusions of Law pursuant to Federal Rule of Civil Procedure 52, as follows:

FINDINGS OF FACT

In accordance with the admitted facts contained in the Pretrial Stipulation³, Defendant Stineco, Inc. ("Stineco") was a corporation with its principal place of business in Orange County, Florida and was engaged as a framing contractor in the construction of single and multi-family housing.⁴ Stineco commenced business on April 29, 1985 and issued 10,000 shares of its stock, 5,000 to Defendant Steven E. Stines ("Stines") and 5,000 to Defendant James A. Courtney, Jr. ("Courtney"). Stines and Courtney remained equal shareholders throughout the duration of Stineco's existence,⁵ with Courtney acting as its president and Stines acting as its secretary-treasurer. At all times material to this case, Stines and Courtney had through their positions with Stineco the authority to hire and fire employees, set pay rates of employees, determine the number of employees, determine the duty of employees, grant pay raises, and determine which records of the employees of Stineco would be kept and maintained. Stines and Courtney exercised this authority.

Furthermore, during the period from January 1, 1984 through April 29, 1985 Stines, doing business in Orange County, Florida, engaged as a proprietor and framing contractor in the construction of single and multi-family housing. At such times, Stines had the authority to hire and fire employees, set pay rates of employees, determine the number of employees, determine the duty of employees, grant pay raises, and determine which records of his employees would be kept and maintained. Stines exercised this authority.

The evidence of record establishes that prior to the incorporation of Stineco, Stines hired persons to perform work in his construction crews and often personally served as foreman of such crews. With the incorporation of Stineco the Defendants hired foremen who hired crew members on behalf of the Defendants and directed the work of the Defendants' crews. After the incorporation, the foremen and crew members were paid for work performed, if at all, in cash or by Stineco company checks, always in gross amounts with no deductions withheld.

The evidence was overwhelming that Defendants Stines, Courtney and Stineco did not make payment to their employees for all wages due. This was confirmed by the testimony of such witnesses as Kevin Robert Kennedy, Greg Allen Bear, Allen C. Lane, Jr., Justin Pasag, Terry Gilliard, Keith Beaudoin, Juan Crispin, Christopher Laurence Musch, Robert C. Staats, Robert Norman Herring and Gerald Saunders. These men testified as to the lack of payment of wages to themselves and to coworkers in their crew. Robert C. Staats and Gerald Saunders also testified to the receipt of bad checks from Stineco.

The employees of the Defendants testified that their usual work day began between 7:00 and 7:30 a.m. and lasted until 4:00 to 4:30 p.m. with one-half hour for lunch. The workers testified that they worked from one to three Saturdays per month for one-half to one whole day on Saturday, making the average work week between 48 to 55 hours per week. Several employees of Defendants testified that they and their co-workers were not paid for time and one-half for their hours of work which exceeded forty hours per week.⁶

No records of any defendant with reference to hours of work and wages paid were produced at the trial. In particular, Armando Brana, Compliance Specialist, U.S. Department of Labor, Wage and Hour Division, testified that when he requested these records, Defendants Courtney and Stines refused to produce any records for themselves or for the Defendant corporation concerning employees and wages paid.

Defendants engaged minors to work on their construction projects in a manner which violated FLSA. In particular, Greg Allen Bear testified that he was born August 23, 1967, and while he was 17 years of age he worked from July of 1985 until September of 1985 as an employee of Defendant Stineco on the roofs of two and three story apartment complexes, and on sidings and scaffoldings as well as overhang soffits. He also testified that he worked on the tarpaper and flashing around the chimneys on these multi-story buildings. Additionally, Justin Pasag testified that he was born December 22, 1969, and that while he was 15 years of age, he was hired by the Defendant Stineco and worked on the roof of a two-story building.

Defendants raise as a defense that their former employees who testified in this case were independent contractors hired by Stineco, Inc. to perform a particular phase of a job. Defendants deny that such witnesses were ever employees of themselves or the Defendant corporation.

The Court finds that the facts surrounding the alleged employment relationship do not indicate independent contractor status.⁷ For instance, various employees testified that they did not receive greater profit if they did a faster or better job and that they reported to work as a member of a crew, looking to their crew leader or foreman to tell them when to report to work and when to leave. They worked as members of the crew, or as foreman of a crew, to complete various carpentry phases of the development on which the Defendants had agreed to act as subcontractor. The majority of these employees did not carry liability insurance, did not have occupational licenses, carried no worker's compensation, and took limited tools such as a pouch, hammer, saw, and T-square, to the job. They did not bring to the job site larger tools required in their work, and the larger tools were provided by Defendants. The employees made little investment in their equipment and had no investment in any facilities. No social security deductions or other deductions were withheld from their paychecks. These workers had a day to day relationship with the Defendants, generally did not do piece work and were not paid at a piece rate by Defendants on the work in question.⁸ None of Defendants' foremen and crew members were hired at a given dollar amount for completion of a specific job or project. They had no control over the order and time to complete a project and depended for their income on their work as employees of Defendants. Their work was manual labor, not managerial work. They did not sign any agreement purporting to make them independent contractors.

Although the checks issued by Stineco to its employees designated that they were for "contract labor", the testimony in this case conclusively refutes this characterization. In particular, Kevin Robert Kennedy, Billy A. Lane, Terry Gilliard, Keith Beaudoin, Juan Crispin, Jeff Lebo, Christopher Lawrence Musch, Robert Norman Herring and Gerald Saunders specifically denied that they or members of their crew with whom they were familiar acted as independent contractors with Defendants in the work they performed as employees of Defendants.

Samuel M. Coniglio, III, Vice-President of Construction of Del American Properties, Inc. from 1983 until approximately six months prior to the trial, testified that his former employer had four contracts with Stineco, Inc. to perform carpentry work on four projects, Hidden Creek, Hidden Springs, Hidden Village and Sun Beach Club, the latter being located in New Smyrna Beach. After ascertaining that Stineco had not paid its employees, Coniglio had a meeting with Defendant Stines to ascertain why payments had not been made by Stineco to its employees after Stineco received payment from Del American Properties for...