Scalia v. Beleco, Inc.
| Decision Date | 19 July 2021 |
| Docket Number | Case No. 20-cv-10044-DJC |
| Citation | 549 F.Supp.3d 208 |
| Parties | Eugene SCALIA, Secretary of Labor, United States Department of Labor, Plaintiff, v. BELECO, INC. d/b/a Pizza Peddler; Conco, Inc. d/b/a Pizza Peddler; and Petro Belezos, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
Robert P. Nessen, Mark A. Pedulla, U.S. Department of Labor Office of the Solicitor, Boston, MA, for Plaintiff.
Stephen T. David, Law Offices of Stephen T. David P.C., Dedham, MA, for Defendants.
Plaintiff Eugene Scalia, Secretary of the United States Department of Labor ("the Secretary") filed this lawsuit against Defendants Beleco, Inc. ("Beleco") and Conco, Inc. ("Conco"), and their owner and officer, Petro Belezos ("Belezos") (collectively, "Defendants") alleging Defendants failed to pay overtime compensation and federal minimum wages to employees, pursuant to the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201, et seq. D. 1. The Secretary has moved for summary judgment. D. 33. For the reasons stated below, the Court ALLOWS the motion.
The Court grants summary judgment where there is no genuine dispute as to any material fact and the undisputed facts demonstrate that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). "A fact is material if it carries with it the potential to affect the outcome of the suit under applicable law." Santiago–Ramos v. Centennial P.R. Wireless Corp., 217 F.3d 46, 52 (1st Cir. 2000). The movant bears the burden of demonstrating the absence of a genuine issue of material fact. Carmona v. Toledo, 215 F.3d 124, 132 (1st Cir. 2000) ; see Celotex v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the movant meets its burden, the non-moving party may not rest on the allegations or denials in its pleadings, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), but must come forward with specific admissible facts showing that there is a genuine issue for trial. Borges ex rel. S.M.B.W. v. Serrano–Isern, 605 F.3d 1, 5 (1st Cir. 2010). The Court "view[s] the record in the light most favorable to the nonmovant, drawing reasonable inferences in his favor." Noonan v. Staples, Inc., 556 F.3d 20, 25 (1st Cir. 2009).
The following facts are drawn from the Secretary's statement of material facts. D. 35.1
Beleco and Conco, both companies in Massachusetts, operate restaurants. D. 35 ¶¶ 2-5. Belezos owns and is the corporate officer for both companies. Id. ¶ 6. The Wage and Hour Division of the United States Department of Labor (the "Wage and Hour Division" or the "Division") investigated Beleco and Belezos for the period from July 30, 2016 to July 29, 2018 (the "Beleco Investigation"). Id. ¶ 15. The Division concluded from the Beleco investigation that Beleco owed $68,672.43 in overtime pay to ten employees and an equal amount in liquidated damages. Id. ¶ 17. The Division also investigated Conco and Belezos for the period from August 26, 2016 to August 25, 2018 (the "Conco Investigation"), id. ¶18, and discovered that Conco owed $58,210 in overtime pay to four employees and an equal amount in liquidated damages, id. ¶ 20, and $26,970 in minimum wage back wages to a single employee and an equal amount in liquidated damages, id. ¶ 21.
Defendants did not compensate Nicos Kontis ("Kontis"), one of their employees, in any form from August 26, 2016 to August 25, 2018. Id. ¶ 22. Kontis worked 60 hours per week during the period covered by the Conco investigation. Id. ¶ 23. The Division calculated the total minimum wage back wages due to Kontis by applying the applicable federal minimum wage of $7.25 to each of the first 40 hours of work Kontis performed each workweek, id. ¶ 24, and concluded the total amount Conco and Belezos owe Kontis in minimum wage back wages is $26,970, and an equal amount in liquidated damages, for a total of $53,940, id. ¶ 25.
Various employees worked more than 40 hours per week, ranging from 44 to 65 hours per week, and were not paid one and one-half times their regular rate of pay for hours worked over 40 in a workweek. Id. ¶¶ 26-28. The Division calculated that Defendants owe their employees a total of $126,882.43 in overtime back wages and an equal amount in liquidated damages, for a total of $253,764.86 for the periods covered by the Beleco and Conco Investigations. Id. ¶ 29. To calculate the overtime back wages, the Division performed calculations on a workweek-by-workweek basis. Id. ¶ 30. For employees who were paid a lump sum, the Division first divided the amount paid by Defendants in compensation to each employee for the workweek by the hours Defendants stated their employees worked. Id. ¶ 31. The Division utilized Beleco and Conco employee Wage and Hour Forms, WH-55s, to determine the lump sum paid to each employee. Id. ¶¶ 32-33. By dividing the lump sum amount Defendants paid each employee for a workweek by the hours Defendants stated their employees worked, the Division determined the regular rate of pay for each employee for that work week. Id. ¶ 34. The Division also used the Massachusetts state minimum wage in effect at the time as the regular rate of pay for tipped employees in an overtime work week if Defendants took a tip credit for said employees.
Id. For non-tipped employees who were paid a lump sum and whose rate of pay fell below the Massachusetts state minimum wage in effect, the Division used the state minimum wage in effect at the time as the employee's regular rate of pay in an overtime workweek. Id. The Division then multiplied one-half each employee's regular rate of pay by the number of hours worked over 40—in accord with the hours worked admitted by Defendants—to obtain the half-time overtime premium owed to each employee for that work week. Id. ¶ 35. For non-tipped employees whose rate of pay fell below the Massachusetts state minimum wage in effect during an overtime work week, the Division additionally calculated back wages owed in an amount equal to the difference between the applicable regular rate in effect and the rate paid to the employee by multiplying that difference by the employee's total work hours. Id.
To calculate the overtime back wages due to Kontis, the Division used the Massachusetts state minimum wage in effect at the time as Kontis's regular rate of pay for the hours Defendants admitted Kontis worked over 40 hours in a work week. Id. ¶ 39. To assess the overtime wages owed to Kontis, the Division multiplied the admitted hours Kontis worked over 40 hours in a workweek by 1.5 times his regular rate in effect at the time. Id. The Division also brought Kontis's non-overtime rate up to the Massachusetts state minimum wage in effect at the time by multiplying the first 40 hours of his work by the difference between the applicable regular rate in effect and the federal minimum wage. Id.
Utilizing these methods, the Division calculated Defendants owe employees overtime back wages ranging from $436.36 to $43,590.00 in unpaid overtime premiums. Id. ¶ 40.
Prior to the Beleco and Conco Investigations, Defendants were aware of the requirement to pay employees one and one-half times their regular rates of pay for hours worked over 40 in a workweek, id. ¶ 41, but took no actions to determine if they complied with the overtime and record keeping provisions of the FLSA. Id. ¶ 42. Defendants produced no evidence that they took affirmative steps to determine whether their pay practices with respect to Kontis satisfied minimum wage requirements. Id. ¶ 43. Defendants also failed to keep an accurate record of the hours worked per day for at least one of their employees, id. ¶ 44, failed to keep an accurate record of the total hours worked per week for at least one of their employees, id. ¶ 45, and failed to keep an accurate record of the cash wages paid to at least one of the employees, id. ¶ 46.
The Secretary instituted this action on January 10, 2020, D. 1, and has now moved for summary judgment, D. 33. The Court heard the parties on the pending motion and took the matter under advisement. D. 38.
The Secretary seeks summary judgment on overtime and minimum wage violations. D. 34 at 2. The FLSA requires an employer to compensate its employees "not less than one and one-half times the regular rate at which [the employee] is employed" for each hour worked in excess of 40 hours per workweek unless those employees are exempt. 29 U.S.C. §§ 207(a)(1), 213. "A claim for unpaid overtime wages must demonstrate that the plaintiffs were employed ‘for a workweek longer than forty hours’ and that any hours worked in excess of forty per week were not compensated ‘at a rate not less than one and one-half times the regular rate.’ " Manning v. Boston Med. Ctr. Corp., 725 F.3d 34, 43-44 (1st Cir. 2013) (quoting 29 U.S.C. § 207(a)(1) ). Pursuant to the FLSA, for Defendants to be liable, the Secretary must prove both that an employee incurred unpaid overtime work and that Defendants "had actual or constructive knowledge that [the employee] was working overtime." Prime Communications, Inc. v. Sylvester, 34 Mass. App. Ct. 708, 709, 712, 615 N.E.2d 600 (1993). The knowledge inquiry "requires an assessment of what the employer knew or should have known and is to be made in view of the employer's ‘duty ... to inquire into the conditions prevailing in his business.’ " Vitali v. Reit Mgmt. & Rsch., LLC, 88 Mass. App. Ct. 99, 103, 36 N.E.3d 64 (2015) (quoting Gulf King Shrimp Co. v. Wirtz, 407 F.2d 508, 512 (5th Cir. 1969) ). "In reviewing the extent of an employer's awareness, a court ‘need only inquire whether the circumstances ... were such that the...
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