United States Department of Labor v. Fire & Safety Investigation Consulting Services, LLC, 020819 FED4, 18-1632
|Opinion Judge:||WYNN, CIRCUIT JUDGE.|
|Party Name:||UNITED STATES DEPARTMENT OF LABOR; R. ALEXANDER ACOSTA, Secretary of Labor, Plaintiffs - Appellees, v. FIRE & SAFETY INVESTIGATION CONSULTING SERVICES, LLC; CHRISTOPHER HARRIS, Individually and as Owner of Fire & Safety Investigation Consulting Services LLC, Defendants - Appellants.|
|Attorney:||Joseph Lawrence Amos, Jr., MILLER & AMOS ATTORNEYS AT LAW, Charleston, West Virginia, for Appellants. Rachel Goldberg, UNITED STATES DEPARTMENT OF LABOR, Washington, D.C., for Appellees. Karen H. Miller, MILLER & AMOS ATTORNEYS AT LAW, Charleston, West Virginia, for Appellants. Kate S. O'Scannlai...|
|Judge Panel:||Before GREGORY, Chief Judge, WYNN and THACKER, Circuit Judges.|
|Case Date:||February 08, 2019|
|Court:||United States Courts of Appeals, Court of Appeals for the Fourth Circuit|
Argued: December 12, 2018
Appeal from the United States District Court for the Northern District of West Virginia, at Clarksburg. Irene M. Keeley, District Judge. (1:17-cv-00025-IMK)
Joseph Lawrence Amos, Jr., MILLER & AMOS ATTORNEYS AT LAW, Charleston, West Virginia, for Appellants.
Rachel Goldberg, UNITED STATES DEPARTMENT OF LABOR, Washington, D.C., for Appellees.
Karen H. Miller, MILLER & AMOS ATTORNEYS AT LAW, Charleston, West Virginia, for Appellants.
Kate S. O'Scannlain, Solicitor of Labor, Jennifer S. Brand, Associate Solicitor, Paul L. Frieden, Counsel for Appellate Litigation, Office of the Solicitor, UNITED STATES DEPARTMENT OF LABOR, Washington, D.C., for Appellees.
Before GREGORY, Chief Judge, WYNN and THACKER, Circuit Judges.
WYNN, CIRCUIT JUDGE.
Fire & Safety Investigation Consulting Services, LLC, ("Fire & Safety") and Christopher Harris ("Harris"), the owner of Fire & Safety, appeal the district court's determination that Fire & Safety violated the Fair Labor Standards Act ("FLSA") by failing to pay certain employees proper overtime compensation. At issue is whether Fire & Safety's payment system violated the FLSA by failing to pay for overtime. The district court held that the payment system violated the FLSA because it used a blended rate that functioned as the actual hourly rate for all hours worked, regardless of whether those hours were overtime or non-overtime. We agree and therefore, affirm.
In 2008, Harris founded Fire & Safety,  which provides fire investigation and security guard services to the company's clients in the oil and gas industry. In 2013, Fire & Safety began employing individuals ("Consultants") to provide onsite safety and environmental consulting services in West Virginia and Pennsylvania. Between December 23, 2014, and December 6, 2016, Consultants were regularly scheduled to work what is known in the industry as a "hitch." J.A. 1266. Consultants assigned to a "hitch" worked 12 hours per day for 14 consecutive days, followed by 14 consecutive days off, resulting in a total of 168 hours worked during a full "hitch." Consultants sometimes worked a full, 168-hour hitch, and sometimes fewer than the full 168 hours.
Fire & Safety initially paid the Consultants on an hourly basis-a regular rate for the first 40 hours worked in a workweek, and then overtime at one and one-half times their regular rate for hours worked over 40 per workweek. Fire & Safety later transitioned to a different payment system based on a "hitch rate." Under that system, if the Consultants worked the full two-week hitch of 168 hours, or 84 hours per workweek, Fire & Safety paid a fixed sum that allegedly reflected a regular rate and an overtime rate-i.e., the regular rate for the first 40 hours a Consultant worked in a particular week and one-and-a-half times the regular rate for the next 44 hours the Consultant worked during the week. If the Consultants worked less than a full 168-hour hitch over the two-week period, Fire & Safety adjusted the employee's pay using a "blended rate." Fire & Safety calculated the blended rate by dividing the Consultant's fixed hitch rate by 168 (the total number of hours worked in a normal hitch) and then multiplying that hourly blended rate by the number of hours actually worked by the Consultant to obtain the Consultant's pay for that two-week period.
A hypothetical example of a Consultant working at a purported regular rate of $10/hour illustrates this payment scheme. Under Fire & Safety's description of the hitch payment structure, the Consultant's fixed rate for a full 168-hour hitch would allegedly be based on 80 hours of non-overtime (at $10/hour), for a total of $800, and 88 hours of overtime (at $15/hour), for a total of $1, 320, for a combined total of $2, 120. If the Consultant worked the full two-week, 168-hour hitch, he was paid $2, 120-his hitch rate. However, if the Consultant worked, say, only 48 hours of the hitch, he was paid using the blended rate, obtained by dividing $2, 120 by 168 hours; in our example, that results in a blended rate of $12.62 (rounded to the nearest cent). For 48 hours of work, the Consultant would then be paid $12.62 times 48, for a total of $605.76.
In October 2015, an anonymous Consultant complained to the Department of Labor's Wage & Hour Division that Fire & Safety was violating the FLSA by failing to pay overtime. A Wage & Hour Investigator assigned to the case ultimately determined that Fire & Safety had failed to pay proper overtime and keep accurate records and calculated that Fire & Safety owed significant back wages. At the end of the investigation, Fire & Safety, without admitting liability or agreeing to pay damages, ceased use of the hitch rate payment scheme.
On February 22, 2017, the Department of Labor filed a complaint against Fire & Safety, alleging that Fire & Safety violated the FLSA by employing the Consultants for workweeks longer than 40 hours per week without overtime compensation. The Department of Labor also alleged that Fire & Safety violated the FLSA by failing to make and maintain adequate and accurate records of hours worked by the Consultants. The Department of Labor sought back wages, liquidated damages, and an injunction.
Following discovery, both parties filed motions for summary judgment. On May 3, 2018, the district court granted in part and denied in part the Department of Labor's motion for summary judgment and denied Fire & Safety's motion for summary judgment. The district court concluded that Fire & Safety violated the FLSA's overtime requirement by failing to pay the Consultants an overtime premium for their overtime hours. The district court also concluded that Fire & Safety failed to keep proper records, including records of the hours worked by each Consultant each day, in violation of the FLSA. The district court denied the Department of Labor's request for injunctive relief but granted $817, 902.11 in back wages and $817, 902.11 in liquidated damages, for a total damages amount of $1, 635, 804.22. Fire & Safety timely appealed the district court's decision.
We "review the district court's grant of summary judgment de novo." Morrison v. Cty. of Fairfax, 826 F.3d 758, 765 (4th Cir. 2016) (citation omitted). A court may award summary judgment only when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a).
The FLSA is "best understood as the 'minimum wage/maximum hour law.'" Trejo v. Ryman Hosp. Props., Inc., 795 F.3d 442, 446 (4th Cir. 2015). Congress enacted the FLSA "to protect all covered workers from substandard wages and oppressive working hours." Id. (quoting Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 739 (1981)).
As part of its overtime protections, the FLSA requires that covered employers pay their employees "at a rate not less than one and one-half times the regular rate at which [they are] employed" for any hours worked in excess of 40 hours per workweek. 29 U.S.C. § 207(a)(1). The "regular rate" includes "all remuneration for employment paid to" the employee, apart from eight categories of payment not at issue here. 29 U.S.C. § 207(e); see also Flood v. New Hanover Cty., 125 F.3d 249, 251 (4th Cir. 1997) ("The employee's 'regular rate' is the hourly rate that the employer pays the employee for the normal, nonovertime forty-hour workweek.") (quoting Walling v. Helmerich & Payne, Inc., 323 U.S. 37, 40 (1944)). The FLSA's overtime requirement "was intended to spread employment by placing...
To continue readingFREE SIGN UP