Rukavitsyn v. Sokolov Dental Labs., Inc.
| Decision Date | 27 July 2012 |
| Docket Number | Case No. 2:12-cv-02253-JAR |
| Parties | SERGEI RUKAVITSYN, ET AL., Plaintiffs, v. SOKOLOV DENTAL LABORATORIES, INC., Defendant. |
| Court | U.S. District Court — District of Kansas |
Plaintiffs Sergei Rukavitsyn, Yuriy Usenko, and Roman Isakov, individually and on behalf of all those similarly situated, filed this removal action against Defendant Sokolov Dental Laboratories, Inc., alleging claims under the Fair Labor Standards Act ("FLSA"),1 the Kansas Wage Payment Act ("KWPA"),2 and Kansas common law claims for breach of contract and quantum meruit. This matter comes before the Court on Defendant's Motion to Dismiss Counts II, III, and IV of Plaintiffs' Complaint (Doc. 8) pursuant to Fed. R. Civ. P. 12(b)(6). For the reasons stated below, the Court denies Defendant's motion on Count II, the KWPA claim, and grants the motion on Counts III and IV, the common law claims.
The following facts are alleged in Plaintiffs' Petition (Doc. 4-2) and taken in the light most favorable to Plaintiffs. Prior to this action, Plaintiffs were employed as dental lab technicians for Defendant, a Kansas corporation subject to the provisions of the FLSA. Duringtheir employment for Defendant, Plaintiffs regularly performed work in excess of forty hours per week, and, in addition, sometimes performed "off-the-clock" work for which they did not receive an hourly wage. Though Defendant knew or should have known Plaintiffs were performing such work and that such work was compensable under the FLSA, Defendant did not compensate Plaintiffs for their off-the-clock work and refused to compensate Plaintiffs at one and one-half times their regular rate of pay for hours worked in excess of forty hours per week. Plaintiffs do not specify their regular rate of pay, but claim that they entered into employment agreements under which they were to be paid at an hourly rate, and that Defendant's advertisements in Russian newspapers indicate a compensation rate of ten dollars per hour for dental lab technicians. Further, Plaintiffs assert that their regular rate of pay includes non-discretionary bonus payments for meeting and exceeding certain production goals.
Plaintiffs allege in Count I of their Petition that Defendant's refusal to compensate Plaintiffs at the proper overtime rate constitutes a willful violation of the FLSA, 29 U.S.C. § 207(a)(1). In addition, Plaintiffs contend that Defendant failed to pay "all wages due" to Plaintiffs under the KWPA, K.S.A. § 44-314 (Count II); breached its employment agreements to pay Plaintiffs for all time worked on Defendant's behalf (Count III); and accepted the benefit of Plaintiffs' labor without full compensation, such that it would be inequitable for Defendant to retain the benefit without payment of its value (Count IV). Defendant moves to dismiss Plaintiffs' KWPA, breach of contract, and quantum meruit claims for failure to state claims for which relief may be granted.
To survive a motion to dismiss, a complaint must present factual allegations, assumed tobe true, that "raise a right to relief above the speculative level" and must contain "enough facts to state a claim to relief that is plausible on its face."3 Under this standard, "the mere metaphysical possibility that some plaintiff could prove some set of facts in support of the pleaded claims is insufficient; the complaint must give the court reason to believe that this plaintiff has a reasonable likelihood of mustering factual support for these claims."4 As the Supreme Court recently explained, 5 Additionally, "[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."6
The KWPA states that "[e]very employer shall pay all wages due to the employees of the employer at least once during each calendar month."7 The statute defines "wages" as "compensation for labor or services rendered by an employee, whether the amount is determined on a time, task, piece, commission or other basis less authorized withholding and deductions."8 When an employer willfully fails to pay an employee his or her "wages due," the employer isliable for both the wages due and a penalty in an amount up to 100% of the unpaid wages.9 10 While there are several ways for plaintiffs to independently establish an amount of "wages due" under the KWPA, courts in the District of Kansas have held that plaintiffs may rely on the FLSA — which requires employees to be paid at an overtime rate of "one and one-half times [their] regular rate" of pay11 — to form the legal basis for KWPA claims.12
Defendant's motion to dismiss first argues that Plaintiffs do not allege a withholding of "wages due" under the KWPA. In Defendant's view, the KWPA distinguishes between wage withholdings and improper wage calculations. According to Defendant, "The plain language of the Act makes clear that it seeks to protect employees from wrongful deductions to, and withholding of, earned wages"; the KWPA is not "a vehicle for challenging the substantive validity or fairness of an underlying earned wage calculation."13 Because "Plaintiffs do not contend that their wages were withheld, but rather, contend that the FLSA required that their wages should have been higher," Defendant urges that Plaintiffs do not state a claim for reliefunder the KWPA.14
The Court disagrees. Plaintiffs' Petition makes clear that they seek remuneration for compensation Defendant is required by law to pay, but has not paid.15 Such unpaid compensation is a subset of "all wages due" to Plaintiffs under the KWPA.16 The statute does not require the Court to draw a distinction between withheld wages and wages that are not paid as a result of an unlawful overtime wage calculation; when an employer wrongfully fails to pay any amount of compensation to which its employees are entitled, the employer withholds wages in violation of the KWPA's simple and unambiguous requirement that employees be paid "all wages" owed them.17
Accordingly, federal district courts applying Kansas law have allowed KWPA claims for overtime wages in cases similar to this one.18 In Tarcha v. Rockhurst Continuing Education Center, the court allowed the plaintiffs to sue for overtime wages due under the KWPA, even though the claim necessarily involved an overtime wage calculation determined by the FLSA.19 The court credited the argument that "employers are to pay 'all wages' regardless of how thosewages are calculated."20 Likewise, the court in Veale v. Sprint Corp. rejected the argument that a plaintiff cannot bring an action under the KWPA for overtime compensation based on overtime wages determined by the FLSA.21
Defendant's argument that the calculation of an unlawfully low overtime wage rate does not result in a withholding of "wages due" relies on the assumption that employees have not earned wages at the higher overtime rate required by law; in other words, that further wages are not due. Indeed, Defendant contends that Plaintiffs agreed to be paid a salary of 400 dollars per week, and that Plaintiffs were not entitled to wages beyond that, regardless of the number of hours worked.22 Defendant's assumption, however, is belied by the Kansas Supreme Court's decision in Elkins v. Showcase, Inc.
Elkins involved a tip pooling system for compensating employees of the defendant restaurant.23 The tip pooling system was found to violate a provision of the FLSA because the system diverted too much of the plaintiff's tips into the tip pool.24 When the plaintiff sued to recover wages due under the KWPA, the defendant argued that the plaintiff had agreed to the tip pooling system in place, and that the plaintiff's wages were not deemed to be "earned" until theplaintiff had fulfilled his conditions under the employment agreement.25 Thus, the defendant viewed disbursement of the plaintiff's wages in accordance with the employment agreement as a "condition precedent" to plaintiff's entitlement to his wages; because the plaintiff's wages were not "earned" until they were paid out, the defendant could not be deemed to have withheld wages due.26
The court rejected this argument, reasoning that the tip pooling system was subject to the FLSA, under which the plaintiff acquired an interest in the tip pool as soon as he received tips that would be diverted into the pool. The plaintiff therefore earned a right to wages from the tip pool before his wages were paid out.27 Moreover, the court noted that an employment agreement does not control the rights of the parties if the agreement is contrary to law.28
The reasoning in Elkins applies in this case. Plaintiffs allege that Defendant is subject to the overtime compensation provisions of the FLSA,29 which require that employees be paid at one and one-half times their regular rate for all work performed in excess of forty hours per week.30 Thus, federal law entitles Plaintiffs to an increased rate of pay for their work at the moment they begin performing work in excess of forty hours per week.31 Therefore, if Plaintiffs' allegations are true, Defendant has withheld a portion of wages that Plaintiffs have lawfullyearned.32 Further, any employment agreement abrogating Plaintiffs' right to an increased rate of pay for overtime work is contrary to federal law, rendering such an agreement invalid.33 For the...
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