Walsh v. All Temporaries Midwest, Inc., 17-cv-3330 (JNE/TNL)

CourtUnited States District Courts. 8th Circuit. United States District Court of Minnesota
Writing for the CourtJOAN N. ERICKSEN United States District Judge
PartiesMartin J. Walsh, Secretary of Labor, United States Department of Labor, [1] Plaintiff, v. All Temporaries Midwest, Inc., a Minnesota corporation, and Mark Liveringhouse, an individual, Defendants.
Docket Number17-cv-3330 (JNE/TNL)
Decision Date30 July 2021

Martin J. Walsh, Secretary of Labor, United States Department of Labor, [1] Plaintiff,
v.

All Temporaries Midwest, Inc., a Minnesota corporation, and Mark Liveringhouse, an individual, Defendants.

No. 17-cv-3330 (JNE/TNL)

United States District Court, D. Minnesota

July 30, 2021


David James Tanury and Margaret A. Sewell, U.S. Department of Labor, Office of the Solicitor, (for Plaintiff); and Mark Liveringhouse, (pro se Defendant).

REPORT AND RECOMMENDATION

JOAN N. ERICKSEN United States District Judge

I. INTRODUCTION

This matter is before the Court, United States Magistrate Judge Tony N. Leung, on the Secretary of Labor's Motion for Adjudication of Civil Contempt. (ECF No. 12.) This matter has been referred to the undersigned for a Report and Recommendation to the Honorable Joan N. Ericksen, District Judge for the United States District Court for the District of Minnesota, pursuant to 28 U.S.C. § 636 and D. Minn. LR 72.1. (See also ECF No. 41 (referring the motion to the undersigned).)

The Court held an evidentiary hearing on the motion on June 1, 2021. (ECF No. 60.) David J. Tanury of the United States Department of Labor (“DOL”), Office of the Solicitor, appeared on behalf of the Secretary of Labor (“Secretary” or “Plaintiff”). Defendant Mark Liveringhouse (“Liveringhouse”) appeared pro se. Defendant All Temporaries Midwest, Inc. (“All Temporaries”) failed to appear.[2]

The Court heard testimony from Investigator LeeAnn Wolf, of the DOL's Wage and Hour Division, and Liveringhouse. The Secretary offered and the Court received into evidence 10 exhibits: Plaintiff's Exhibit 1, WH-55 Wage Transcription and Computation sheets, filed previously as ECF No. 13-4; Plaintiff's Exhibit 2, Declaration of Wage and Hour Investigator LeeAnn Wolf, filed previously as ECF No. 13-3; Plaintiff's Exhibit 3, Nancy Cassell Back Wages Detail; Plaintiff's Exhibit 4, Nancy Cassell Original Pay Data; Plaintiff's Exhibit 5, Nancy Cassell Weekly Payroll Report; Plaintiff's Exhibit 6, Anthony Alonzi Original Pay Data; Plaintiff's Exhibit 7, Anthony Alonzi Weekly Payroll Report; Plaintiff's Exhibit 8, Nancy Cassell Pay Data Excerpt, filed previously as ECF No. 37-1; Plaintiff's Exhibit 9, List of “Overtime Allowed Employees”; and Plaintiff's Exhibit 10, All Temporaries Midwest Advertisement for Employment. Liveringhouse offered and the Court received into evidence four exhibits: Defendant's Exhibit 1, Nancy Cassells [sic] Payroll History; Defendant's Exhibit 2, Anthony Alonzi Timecards; Defendant's Exhibit 3, Anthony Alonzi Shifts; and Defendant's Exhibit 4, Nancy Cassell's Timecards.[3] At the conclusion of the hearing, the parties agreed, and the Court ordered that each party file and serve proposed findings of fact and conclusions of law. These were filed on June 25, 2021. (ECF Nos. 65-67.) The motion was then taken under advisement.

Based upon the record, memoranda, and proceedings herein, IT IS HEREBY RECOMMENDED that the Motion be GRANTED.

II. FINDINGS OF FACT

Based upon the file and documents contained therein, along with the testimony and exhibits presented, the undersigned Magistrate Judge makes the following findings.

A. The Defendants

All Temporaries is and has been a corporation with an office and place of business at 4200 Central Avenue Northeast, Minneapolis, Minnesota 55418. (Pl's Ex. 2 (“Wolf Decl.”) ¶ 7.) At all relevant times, All Temporaries has been engaged in the business of providing temporary nurse staffing to long-term care centers in Minnesota. (Id.; see Tr.[4]17:16-18:5.) All Temporaries pays their employees directly and they are paid according to the hours that they work. (Tr. 18:7-15.)

Liveringhouse is, and at all relevant times has been, the owner of All Temporaries. (Wolf Decl. ¶ 8; Tr. 127:13-15.) He periodically performs work at All Temporaries' Minneapolis address. (Wolf Decl. ¶ 8.) Liveringhouse is involved in the daily operations and management of All Temporaries and is directly responsible for the pay practices at All Temporaries. (Id.; see also Tr. 17:6-13, 131:10-14, 145:17-146:19.)

All Temporaries' annual dollar revenue was $2, 875, 573.00 in 2018; $2, 527, 799.00 in 2017, and $2, 991, 229.00 in 2016. (Wolf Decl. ¶ 9; see also Tr. 18:19-21.) Employees of All Temporaries handle goods that have moved in commerce, such as Quill office paper, manufactured in Lincoln, Illinois. (Wolf Decl. ¶ 9; see also Tr. 19:8-13.) As such, All Temporaries is and has been a covered enterprise under the FLSA. (Wolf Decl. ¶ 9.)

B. The Consent Judgment

On July 26, 2017, the Secretary filed a Complaint against Defendants to enjoin them from violating provisions of Sections 7, 11, and 15 of the Fair Labor Standards Act of 1938, as Amended (“the FLSA”), and to recover unpaid overtime compensation owed to Defendants' employees. (Compl. at 1, ECF No. 1 (citing 29 U.S.C. § 201 et seq.).) The Secretary alleged that Defendants violated provisions of Sections 7 and 15(a)(2) of the FLSA for failing to pay the overtime premium for hours worked over 48 hours in a workweek; and violated provisions of Sections 11 and 15(a)(5) by failing to make, keep, and preserve accurate employee records from June 9, 2014 through June 8, 2016. (Id. at 3-4.)

On October 11, 2017, Defendants agreed to the entry of a Consent Judgement in this case. (ECF No. 7.) Defendants agreed to pay back pay and liquidated damages to current and former employees as part of their agreement with the Secretary. (Id. at 1, 3-5.) Defendants, their officers, agents, servants, and employees, as well as those persons in active concert or participation with Defendants, were all permanently enjoined from violating the overtime and recordkeeping provisions of the FLSA. (Id. at 2-3.) Liveringhouse is aware of the Consent Judgment and knows that pursuant to the Judgement he was ordered to comply with the overtime and recordkeeping provisions of the FLSA. (Tr. 143:18-144:1.)

C. Wolf's Investigation

Investigator LeeAnn Wolf (“Investigator Wolf”) is a Wage and Hour Investigator with the DOL's Wage and Hour Division. (Tr. 12:8-10.) She started working at the DOL in January of 2013. (Id. 12:22-23, 14:20-22.) She has worked in the Minneapolis office since September of 2016, and prior to that worked in the DOL's Des Moines office. (Id. 12:15-21.) As part of her duties, Investigator Wolf investigates employers to determine their compliance with federal laws such as the FLSA. (Id. 13:1-4.) Investigator Wolf conducts approximately 20 investigations per year, and the majority of those investigations are FLSA investigations. (Id. 14:16-15:3.) The Court finds that Ms. Wolf was a credible witness.

Investigator Wolf began her investigation of Defendants in late September 2019. (Id. 15:17-19.) Her investigation included contacting the employer, requesting records, an initial conference with the employer, a review of records, interviews, and a final conference with the employer. (See Id. 15:22-16:6.) During the initial conference in November 2019, Investigator Wolf met with All Temporaries' office manager in a conference room at the location of All Temporaries, and Liveringhouse appeared by phone from Florida. (Id. 16:16-17:2.) During this initial meeting, Liveringhouse explained that while employees were typically not allowed to work overtime, certain employees were allowed to do so under a separate agreement. (See Id. 19:18-20:1.) In these instances, there was a negotiated lower rate of pay for certain hours, and if those hours were not available, Defendants made a payment to the employee for travel expenses. (Id.) This was in contrast to the standard wage rates offered to other employees - $20 per hour for a Certified Nursing Assistant (“CNA”), $34 per hour for a Licensed Nurse Practitioner (“LPN”), and $44 per hour for a registered nurse (“RN”). (See Id. 72:7-9.)

Investigator Wolf received raw payroll data from Liveringhouse in order to review compliance with the overtime provisions of the FLSA. (See. e.g., id. 20:9-16, 25:12-19.) These payroll records were from July 16, 2017 through October 20, 2019. (Id. 65:5-8.) Investigator Wolf used this data to compute a regular rate for employees and calculate overtime due to certain employees pursuant to the FLSA. (See Pl.'s Exs. 1, 3-8.) The investigation showed that Defendants have not been compliant with the FLSA's overtime and recordkeeping provisions or the Consent Judgement. At the closing conference with Defendants in February 2020, Liveringhouse told Investigator Wolf that he disagreed with the findings of the investigation and maintained that he was in compliance with the FLSA pursuant to 29 U.S.C. § 207(e). (Tr. 63:5-18.)

D. The “Mileage” Scheme

For the relevant time period, Defendants kept a list of employees that were allowed to work overtime. (See Pl.'s Ex. 9.) Defendants sometimes paid these employees extra compensation labeled as “mileage” on their payroll records. (See Pl.'s Ex. 5; see also Pl.'s Exs. 1, 4.) These “mileage” payments are not included as extra compensation on the employees' W-2s, and Defendants do not pay payroll taxes on this compensation. (Tr. 149:25-150:7.) Nor do Defendants include this extra compensation in the employees' regular rate for purposes of calculating overtime. (See Pl.'s Ex. 1.) Defendants continued to utilize this “mileage” scheme up to and as of the date of the evidentiary hearing. (Tr. 151:7-15.)

There is no evidence that the “mileage” payments were for mileage or other travel expenses. (Id. 27:25-28:12.) When the “mileage” payment is added to the gross pay and divided by the total hours worked, it almost always results in the regular rate of pay advertised for employees, which is also the regular rate of similarly situated employees that do not regularly work overtime. (Id. 30:6-10, 39:5-20, 40:14-18; see also Pl.'s Exs. 1, 10.) Defendants purposefully used the “mileage” payment to get to or very close to the...

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