Yourman v. Dinkins, 91 Civ. 2197 (LAP).

• Decision Date: 07 October 1994
• Docket Number: No. 91 Civ. 2197 (LAP).,91 Civ. 2197 (LAP).
• Citation: 865 F. Supp. 154
• Parties: Harold YOURMAN, et al., Plaintiffs, v. David N. DINKINS, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

865 F. Supp. 154

Harold YOURMAN, et al., Plaintiffs, v. David N. DINKINS, et al., Defendants.

No. 91 Civ. 2197 (LAP).

United States District Court, S.D. New York.

October 7, 1994.

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Joan Stern Kiok, by Robert N. Felix, New York City, for plaintiffs.

Paul A. Crotty, Corp. Counsel, City of New York, by Marilyn Richter, Patricia B. Miller, New York City, for defendants.

OPINION & ORDER

PRESKA, District Judge:

Plaintiffs are employees of the City of New York (the "City"), the New York City Health and Hospitals Corporation (the "HHC"), and the Board of Education of the City School District of the City of New York (the "BOE") who have been designated as managerial employees by their respective employers. They bring this action pursuant to the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201-219, seeking unpaid overtime compensation at time-and-one-half their regular rate of pay for all hours worked in excess of forty hours each week. See 29 U.S.C. § 216(b).¹

In a previous opinion, I granted plaintiffs' motion for summary judgment against defendants holding them liable under FLSA for failing to pay overtime compensation as required by the statute. 826 F.Supp. 736 (1993). In that opinion, I also directed the parties to address issues related to calculating the proper amount of damages, and it is those matters which are discussed herein. Specifically, I now consider the parties' cross-motions for summary judgment on the issues of (a) whether plaintiffs' back overtime claims should be retroactive to a date three years prior to the filing of their individual consents pursuant to the Portal-to-Portal Act, 29 U.S.C. § 255(a); (b) whether plaintiffs are entitled to liquidated damages pursuant to 29 U.S.C. § 216(b); (c) whether plaintiffs are entitled to have their back overtime compensation calculated pursuant to 29 C.F.R. § 778.113 or 29 C.F.R. § 778.114; and (d) whether plaintiffs are entitled to additional straight time pay for non-overtime hours worked in weeks during which they worked in excess of 40 hours.

Background

The reader is referred to my previous opinion for a detailed recitation of the facts. See 826 F.Supp. at 737-740. For present purposes, it will suffice to recall that defendants' main contention in opposition to liability under FLSA was that plaintiffs are "employed in a bona fide executive, administrative, or professional" capacity and therefore excluded from the statute's overtime requirements. See 29 U.S.C. § 213(a)(1). Plaintiffs argued that they did not fall within the exclusion because they were not compensated on a salary basis, as required by the applicable regulation. See 29 C.F.R. §§ 541.1-.3. After reviewing the time and leave policies maintained by defendants' for their employees, 826 F.Supp. at 739, I agreed with plaintiffs that they could not be considered salaried employees and were thus not excluded from FLSA coverage. Id. at 744.

As defined by Department of Labor regulations, a salaried employee is one whose compensation is "not subject to reduction because of variations in the quality or quantity of the work performed," except as provided in the regulations. 29 C.F.R. 541.118(a). Several aspects of defendants' time and leave policies led me to conclude that plaintiffs did not work under such conditions:

• plaintiffs were subject to disciplinary penalties, including suspensions without pay of one to four days or deductions from accrued leave time, for infractions of safety rules of less than major significance. See 29 C.F.R. 541.118(a)(5);

• plaintiffs were subject to deductions from compensation for absence from work to appear at court proceedings in which they, or one of their relatives, had a personal interest. See 29 C.F.R. 541.118(a)(4); and

• plaintiffs were subject to deductions from compensation for absence from work due to military service. See Id.

In addition, I noted that the fact that plaintiffs were subject to "part-day docking" for personal absences of less than one day's duration was inconsistent with salaried status under FLSA, although I did not rely on this factor in holding defendants liable.²

Discussion

I. The Applicability of a Three-Year Statute of Limitations to Plaintiffs' Claims

The first damages issue concerns the statute of limitations to be applied to plaintiffs' claims. The Portal-to-Portal Act, 29 U.S.C. § 255(a), provides a two-tiered statute of limitations for FLSA actions. For ordinary violations, the statute of limitations is two years; for willful violations, a three year limitations period applies. Plaintiffs, not surprisingly, contend that defendants acted willfully, thus triggering the three year statute.

In McLaughlin v. Richland Shoe Co., 486 U.S. 128, 108 S.Ct. 1677, 100 L.Ed.2d 115 (1988), the Supreme Court considered the meaning of "willful," as that term is used in § 255(a). Justice Stevens, writing for the majority, initially observed that Congress' decision to adopt a two-tiered statute of limitations for FLSA actions signified an intent "to draw a significant distinction between ordinary and willful violations." Id. at 132, 108 S.Ct. at 1681. The Court then rejected the petitioner's argument that this congressional mandate could be satisfied by construing "willful" broadly to include violations by those who act knowing only that their conduct is governed generally by FLSA. Noting that the ordinary usage of "willful" excludes merely negligent conduct, the majority instead defined the term to require either knowledge that one's conduct violates FLSA or reckless disregard of the question. Id. at 133, 108 S.Ct. at 1681. The majority further refined this standard by observing that, while reasonable conduct could never be deemed willful, unreasonable conduct was not willful per se.³ Id. at 135 n. 13, 108 S.Ct. at 1682 n. 13. Finally, the Court made clear that it is the plaintiff's burden in a FLSA action to prove willfulness on the part of the employer.⁴ Id. at 135, 108 S.Ct. at 1682.

Applying the McLaughlin standard to the facts at hand, plaintiffs correctly observe that Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528, 105 S.Ct. 1005, 83 L.Ed.2d 1016 (1985), put defendants on notice that FLSA's overtime requirements applied to employees of state and local governments. Defendants have acknowledged their contemporaneous awareness of this decision. Thus, as early as 1985, defendants must be considered to have known that their employees had to be paid overtime wages for hours worked in excess of forty each week, unless the employees fit within FLSA's "executive, administrative, or professional" exemption. The only way this exemption could have applied is if the plaintiffs were salaried employees under 29 C.F.R. § 541.118. Consequently, the crux of the willfulness question in this case is whether defendants knew, or recklessly failed to know, that plaintiffs were not salaried employees. Plaintiffs say "yes" on both counts.

A. Recklessness

With respect to recklessness, plaintiffs are clearly wrong. The Second Circuit has twice applied the knowing-or-reckless standard in deciding whether a defendant had acted willfully in violating FLSA. In Brock v. Wilamowsky, 833 F.2d at 18, the Court found a defendant's violations recklessly willful after noting that defendant had acted "without taking any steps whatever to determine the lawfulness of its conduct." The next year, in Brock v. Superior Care, Inc., 840 F.2d 1054, 1062 (1988), the Court again cited a defendant for "reckless disregard" upon finding that it had been notified by a DOL compliance officer that its practices could be in violation of FLSA and had failed to heed the officer's advice to seek a formal opinion letter from DOL.

Defendants here by no means acted so egregiously. Very soon after learning of Garcia, defendants began efforts to insure that their labor practices complied with FLSA requirements by establishing the City-wide Fair Labor Standards Act Committee. The Committee's purpose was to bring the City into compliance with the newly applicable requirements of FLSA. Its members were representatives of the City's Law Department, Department of Personnel, Office of Labor Relations, and Office of Management and Budget.

During 1985 and 1986, the Committee made substantial efforts to ascertain the implications of FLSA for the City, which are detailed in the uncontested affidavit of Howard Green, dated May 7, 1993. The Law Department was asked to prepare opinions concerning various issues relating to FLSA compliance. Outside counsel was retained to advise on the specific issue of which City employees could be treated as exempt under FLSA. The Committee also made efforts itself to properly determine which employees were exempt. These efforts included reviewing the duties of every job title in the City service, as well as the job description for each title. Additionally, City officials consulted with DOL officials about whether the City's time and leave policies would prevent City employees subject to those policies from being salaried workers under FLSA. The DOL officials indicated that they did not think that was the case, though defendants never endeavored to secure a formal opinion to that effect.

The Supreme Court has found efforts comparable to those exerted by defendants here sufficient to avoid a finding of recklessness. See Trans World Airlines Inc. v. Thurston, 469 U.S. 111, 128-130, 105 S.Ct. 613, 625-26, 83 L.Ed.2d 523 (1985) (violation of Age Discrimination in Employment Act not willful where defendant consulted with counsel, met with employees, and devised a plan for compliance).⁵ See also Aaron v. City of Wichita, No. 90-1536-PFK, 1993 WL 93337 (D.Kan. Mar. 9, 1993) (violation of FLSA not willful where defendant city had established FLSA compliance review committee, consulted outside counsel, and consulted DOL). As a matter of law, therefore, I find that defendants' FLSA violations cannot be labeled willful on that...