Schnepf v. Bros. Auto Salvage Yard, Inc.
| Decision Date | 10 February 2012 |
| Docket Number | 1:10-cv-0316-TAB-JMS |
| Parties | BRIAN M. SCHNEPF, Plaintiff, v. BROTHERS AUTO SALVAGE YARD, INC. d/b/a BROTHERS AUTO PARTS, Defendant. |
| Court | U.S. District Court — Southern District of Indiana |
The Court held a bench trial in this matter on November 7, 2011. The Court received evidence and heard argument, and took the matter under advisement. The Court also provided the parties an opportunity to submit proposed findings of fact and conclusions of law, which they did. Based on the foregoing, the Court issues the findings of fact and conclusions of law below.
1. Plaintiff Brian Schnepf was employed by Defendant Brothers Auto Salvage Yard, Inc. d/b/a Brothers Auto Parts as an inside salesman from October 2007 to February 2010. [Tr. at 16:12-17:1; Docket No. 1, ¶ 13; Docket No. 13, ¶ 13.]
2. The principal activity of Brothers' business is the sale of auto parts. [Tr. at 54:11-24.]
3. At all times relevant to this action, Brothers was an enterprise within the meaning of Section 3(r) of the Fair Labor Standards Act, 29 U.S.C. § 203(r). [Docket No. 1, ¶ 10; Docket No. 13, ¶ 10.]
4. At all times relevant to this action, Brothers was an enterprise engaged in commerce or in the production of goods for commerce within the meaning of Section 3(s)(1) of the Fair LaborStandards Act, 29 U.S.C. § 203(s)(1), in that the enterprise had employees engaged in commerce or in the production of goods for commerce, or employees handling, selling or otherwise working on goods or materials that have been moved in or produced for commerce by any person and the enterprise has had and has an annual gross volume of sales made or business done of not less than $500,000. [Docket No. 1, ¶ 11; Docket No. 13, ¶ 11.]
5. At all times relevant to this action, Schnepf was an employee "engaged in commerce or in the production of goods for commerce." [Docket No. 1, ¶ 12; Docket No. 13, ¶ 12.]
6. Schnepf's primary job duties included answering the telephone, looking up used auto parts for customers, ordering used auto parts for customers, and quoting prices to customers. Additionally, Schnepf sometimes performed work on Brothers' computers. [Tr. at 17:4-8.]
7. Schnepf never left the premises of Brothers in order to make a sale. [Tr. at 17:17-19; Tr. at 48:9-49:4.]
8. Although Schnepf had some latitude when it came to negotiating prices, Brothers provided guidelines that the inside salespeople were required to follow, and Schnepf sought permission from management in the event he wished to depart from the guidelines, i.e. retail prices, established by Brothers. [Tr. at 41:9-43:8; Tr. at 55:3-56:3; Tr. at 61:5-17.]
9. Schnepf was paid a salary throughout the course of his employment with Brothers. [Tr. at 18:12-14; Tr. at 95:8-23.]
10. Schnepf's starting salary was $450 per week. [Tr. at 17:20-24.]
11. After one week of employment, Schnepf received a raise of $100 per week. [Tr. at 105:1-21.]
12. Schnepf received another $100 per week raise in February 2008. [Id.] 13. Schnepf received another $100 per week raise in May 2009. [Id.]
14. Brothers hired and scheduled Schnepf to work a fixed number of hours per week: Monday through Friday from 8 a.m. to 5 p.m. and every other Saturday from 9 a.m. to 1 p.m. [Tr. at 18:15-22; Tr. at 45:22-46:3.]
15. Approximately half way through his employment, Schnepf's work schedule changed from being scheduled to work every other Saturday to being scheduled to work every third Saturday. Schnepf's Monday through Friday schedule did not change. [Tr. at 18:23-19:8.]
16. Other than on two or three occasions when he received an uninterrupted thirty to sixty minute lunch break, Schnepf did not receive uninterrupted lunch breaks while working for Brothers. [Tr. at 19:10-20:15; Tr. at 33:2-14; Tr. at 46:7-19.]
17. Schnepf generally began his workday between 7:45 a.m. and 8 a.m. [Tr. at 21:13-19; Tr. at 66:9-12; Tr. at 72:24-73:2.]
18. Schnepf worked between fifteen and thirty minutes per day following his regularly scheduled shift. [Tr. at 20:16-21:6; Tr. at 33:20-21; Tr. 63:17-64:11.]
19. Schnepf worked an additional three hours per month after his regularly scheduled shift installing updates and doing repairs on Brothers' computers. [Tr. at 21:5-12; Tr. at 33:15-18.]
20. Schnepf was never paid any compensation by Brothers for the overtime hours he worked. [Tr. at 21:23-24; Trial Ex. 1.]
21. William Barnard, Brothers' controller, received training with respect to the Fair Labor Standards Act during his employment with Brothers. [Tr. at 115:16-18.]
22. Barnard is unaware of any efforts undertaken by Brothers to determine if itsemployees were being properly compensated and is unaware of any reviews being conducted of the duties of an inside salesperson to determine whether employees were being properly compensated. [Tr. at 115:3-15; Tr. at 116:7-11.]
23. According to Barnard, Brothers' position is that inside salespersons is an exempt position pursuant to the administrative exemption because inside salespersons had the ability to negotiate prices with suppliers and customers. [Tr. at 116:15-117:3.]
24. Whenever Schnepf was working, an owner, manager, and/or keyholder was present at the facility or aware of Schnepf's presence at the facility. [Tr. at 22:14-24:10; Tr. at 32:9-18.]
25. At all times relevant to this action, Schnepf was an "employee" within the meaning of the Employee Retirement Income Security Act, 29 U.S.C. § 1002(6). [Docket No. 1, j 6; Docket No. 13, ¶ 6.]
26. Brothers is an "employer" within the meaning of 29 U.S.C. § 1002(5). [Docket No. 1, ¶ 7; Docket No. 13, ¶ 7.]
27. At all times relevant to this action, Brothers was a "fiduciary" as that term is defined by 29 U.S.C. §1002(21). [Docket No. 1, ¶ 9; Docket No. 13, ¶ 9.]
28. At the time of his hiring, Schnepf was informed he would be eligible to obtain health insurance through Brothers after ninety days of employment. [Tr. at 24:11-25:2; Tr. at 58:9-16.]
29. While Schnepf discussed the possibility of obtaining health insurance and participating in Brothers' 401(k) program with Brothers' vice president, Jeremiah Johnson, and Barnard after the 90-day grace period [Tr. at 25-28], Schnepf ultimately did not elect to participate in Brothers' health insurance or 401(k) programs. [See Tr. at 26; Tr. at 28:17-19;Tr. at 36, 121; Tr. at 94, 99-104.]
30. Instead, Schnepf obtained health insurance through his wife's employer in 2009. [Tr. at 36:1-8, 121:5-6.]
31. The health insurance offered by Brothers would have cost Schnepf $12,000 a year to insure his family. [Tr. at 99-104.]
32. During Schnepf's employment at Brothers, Taylor Chambers, Schnepf's wife's daughter from a former relationship, was admitted to a hospital for medical treatment. [Tr. at 28, 34.] Chambers incurred $40,417.90 in medical bills during the time Schnepf was employed with Brothers.
33. Chambers is neither Schnepf's biological nor adopted child, and Schnepf has no legal obligation to provide health insurance to Chambers or otherwise pay her medical expenses. [Tr. at 34-35.]
34. All medical bills associated with Chambers' hospitalization were directed solely to Christina Schnepf. [Id.]
35. Chambers' biological father is legally obligated to pay child support and provide health insurance to Chambers, although the biological father did not provide health insurance at the time of Chambers' hospitalization. [Tr. at 36:12-17; Tr. at 121:2-25; Tr. at 129:3-7.]
36. Some of Chambers' hospital bills have been paid by the state of Indiana through Hoosier Healthwise. [Tr. at 38:13-17, 39:12-17.]
1. FLSA applies to Schnepf's claim against Brothers. [Docket No. 1, ¶¶ 10-12; Docket No. 13, ¶¶ 10-12.]
2. The FLSA requires employers to pay their employees time-and-a-half for work performed in excess of forty hours per week. 29 U.S.C. § 207(a)(1); Johnson v. Hix Wrecker Serv., Inc., 651 F.3d 658, 660 (7th Cir. 2011).
3. The FLSA exempts employers from this requirement with respect to individuals "employed in a bona fide executive, administrative, professional capacity." 29 U.S.C. § 213(a)(1).
4. Coverage under the FLSA is to be liberally construed in favor of the employee and its exemptions narrowly applied against the employer. Johnson v. Hix Wrecker Serv., Inc., 651 F.3d 658, 660 (7th Cir. 2011). Thus, the employer bears the burden of establishing a particular exemption by "preponderance of the evidence." Yi v. Sterling Collision Ctrs., Inc., 480 F.3d 505, 507 (7th Cir. 2007).
5. An employee is considered a bona fide administrative employee if he is compensated at a rate not less than $455 per week, his primary work duty is "the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers," and his primary duty "includes the exercise of discretion and independent judgment with respect to matters of significance." 29 C.F.R. § 541.200.
6. Brothers presented no evidence that Schnepf performed any administrative-typejob duties, as opposed to making specific sales to individual customers. The phrase "directly related to the management or general business operations" means that the type of work performed by the employee is "directly related to assisting with the running or servicing of the business, as distinguished, for example, from working on a manufacturing production line or selling a product in a retail or service establishment." 29 C.F.R. § 541.201(a). In Martin v. Cooper Electric Supply Co., 940 F.2d 896 (3d Cir. 1991), cert. denied, 503 U.S. 936 (1992), the Third Circuit examined the status of inside salespersons who sold electrical products. The court found that these inside salespersons were "production" workers who did not qualify for the administrative exemption because the company's primary business purpose was to sell...
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