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Tillis v. Southern Floor Covering, Inc.

United States District Court, S.D. Mississippi, Northern Division

September 24, 2018

MELVIN TILLIS ET AL., PLAINTIFFS
v.
SOUTHERN FLOOR COVERING, INC., ET AL DEFENDANTS

          OPINION AND ORDER

          HENRY T. WINGATE UNITED STATES DISTRICT JUDGE.

         BEFORE THIS COURT is Plaintiffs' Motion for Partial Summary Judgment [doc. no. 53]. Defendants oppose this motion. Having considered the pleadings, the attachments thereto, the relevant authorities, as well as oral arguments presented by the parties, the Court finds the motion is well taken and should be granted.

         I. FACTS AND PROCEDURAL HISTORY

         This is a wage-and-hour case brought under the Fair Labor Standards Act.[1]The Plaintiffs herein are Melvin Tillis, Nicholas Boykin, Teona Rockingham, Aaron Williams, Marcellus Grant, Jason Weaver and Chase McKnight. Carpet and flooring installers, these plaintiffs bring this civil lawsuit seeking alleged unpaid overtime compensation against their former employers, namely Southern Floor Covering, Inc., Steven Keith and Jeff Matthews, who are in the carpet and flooring installation business.

         Defendant Southern Floor Covering, Inc., is partially owned by Defendant Jeff Mathews, who is also the President. The other owners are Carolyn Presley and Angel Mathews. [doc. No. 54]. Jeff Matthews is responsible for the company's operations, including billing, business decisions, employee compensation decisions, and assigning work tasks to employees. Mathews Dep. [doc. no. 53-2 at 11:23-12:12; 19:1-20:22; 73:22-74:4]. As admitted in its Amended Answer [doc. No. 36 ¶ 13] Southern Floor Covering earns over $500, 000 per year in gross receipts, the threshold amount for defining an enterprise engaged in commerce under the FLSA.[2]

         Plaintiffs filed their Amended Complaint [doc. no. 35] on February 19, 2017. Plaintiffs claim that in violation of the Fair Labor Standards Act, 29 U.S.C. § 201 et. Seq, Defendants failed to compensate them at the required rate for overtime under 29 U.S.C. § 207(a)(1)[3] when they worked more than forty hours in a week. Plaintiffs also contend that the Defendants failed to maintain adequate work records as required by 29 C.F.R. Part 516, [4] and that the Defendants did not act in good faith in committing these violations, a circumstance which exposes them to the penalties of 29 U.S.C. § 216 (b). That section provides that for violation of the overtime provisions of §207 of the FLSA, the employer shall be liable to the employees affected in the amount of their unpaid overtime compensation and in an additional equal amount as liquidated damages. Section 216(b) also allows for a reasonable attorney's fee and costs of the action to be awarded to successful plaintiffs.

         Plaintiff Teona Rockingham also alleges that Defendants retaliated against him in contravention of the provisions of 29 U.S.C. §215(a)(3)[5] and Hagan v. Echostar Satellite, LLC, 529 F.3d 617, 625-27 (5th Cir. 2008). Rockingham contends that the Defendants terminated him, or otherwise refused to assign work to him, because of his complaints about these alleged violations. This retaliation claim, however, is not a part of this motion for partial summary judgment, but is reserved for the decision of the trier of fact.

         A. A TYPICAL WORK DAY

         Plaintiffs' workday begins when they arrive at the warehouse in Pearl, Mississippi. “When installers arrive for work in the morning they are given a service order that tells them where to go that day to perform their job.” [53-6, Mot. for Partial S. J., Exh. 6, Interrogatory Answer #3.] They then load the work vans, and drive to the first worksite. After completing the assigned work, they call back to the office to ask whether more jobs need to be done that day. If so, they would travel to that job site. If no additional jobs are scheduled, they would drive back to the warehouse and unload all the scrap and other waste material out of the vans, Once the work day ends, they would go home. [53-2, Mot. for Partial S. J., Exh. 2, Def. Dep. at 48]. Sometimes the work was local, and sometimes the jobs were out of state. [53-2, Mot. for Partial S. J., Exh. 2, Def. Dep. at 74-75].

         B. BACKGROUND HISTORY

         Defendants hired their first employee around 1994. [53-2, Mot. for Partial S. J., Exh. 2, Def. Dep. 9:20 - 10:3]. From that date until around 2004, Defendants treated these employees as “independent contractors.” [53-2, Mot. for Partial S. J., Exh. 2, Def. Dep. 12-14]. The year 2004 brought an unsettling development. The Mississippi Unemployment Commission held that Defendants had misclassified these employees as independent contractors. [53-2, Mot. for Partial S. J., Exh. 2, Def. Dep. 13:5-24]. Since 2004, Defendants have had to recognize the carpet installers and helpers as “employees.” Commensurate with this new designation, Defendants had to pay them a “salary.” [53-2, Mot. for Partial S. J., Exh. 2, Def. Dep. 19:1-3].

         Another dilemma later plagued the Defendants, erupting relative to Defendants' handling of company records concerning hours worked and overtime paid. Defendant Mathews testified that he believed he did not have to track hours and pay overtime for his flooring installation employees. The alleged source of his mistaken belief, he says, was based on a conversation with his accountant, Aaron Johnson.[6] The accountant allegedly had had told him that “a supervising crew leader making a salary of $455 a week did not have to be paid an additional amount for overtime.” [59-2, Opp. to Mot. for Partial S. J., Exh 2.] Defendant Mathews, however, testified that he thought this advice was more expansive; he testified in his deposition that he understood the accountant to be saying that any employee could be exempt so long as “the company paid a salary of at least $455 a week, ” [59-1, Op. to Mot. for Partial S. J., Exh 1], and that “you don't have to keep up with their time.” [53-2, Mot. for Partial S. J., Exh. 2, Def. Dep. 19:12-20:14, 59:7-12].

         The FLSA generally requires employers to pay nonexempt employees overtime pay at one and one-half times their regular rate for all hours worked in excess of 40 per week. 29 U.S.C. §207(a)(1). Congress however, has permitted some exceptions, such as the exemption for certain commissioned retail employees, as found in 29 U.S.C. § 207(i).

         Initially, when faced with the accusations herein, defendants relied upon an exception provided for employers for exempt salaried employees. Defendants have abandoned that “exempt salaried employee” defense. At present, they look to the “commission” exemption to overtime under §207(i). That section provides that an employee who is an employee of “a retail or service establishment, ” may be exempt from overtime pay if: (1) the regular rate of pay of such employee is in excess of one and one-half times the minimum hourly wage, and more than half of his compensation in a month is from commissions on goods or services. 29 U.S.C. § 207(i). The Section 207(i) exemption “was enacted to relieve an employer from the obligation of paying overtime compensation to certain employees of a retail or service establishment paid wholly or in greater part on the basis of commissions.” 29 C.F.R. § 779.414.

         While the Defendants herein contend that these plaintiffs were paid based on a commission rate, they made no notation on the payroll records that the company was treating the employees as exempt commission employees. [53-9, 53-2, Mot. for Partial S. J., Exh. 9 at 1-4; Exh. 2, Def. Dep. 60:6-22; see also Id. at 21, 22, 23.] Nor did Defendants guarantee employees that they would receive at least the statutory rate under the commission exemption of $10.88 per hour (one and one-half times the minimum wage of $7.25. [53-2, Mot. for Partial S. J., Exh. 2, Def. Dep. 38:7-18].

         With the exception of the forklift operators - who received overtime pay -Defendants did not “ever track hours . . . for any employee, ” and Defendant Mathews testified that “I was not keeping up with time.” [53-2, Mot. for Partial S. J., Exh. 2, Def. Dep. 15:5-12; 59:7-20].

         In an affidavit by Defendant Mathews, he states that the “salary” he paid Plaintiffs was actually “a guarantee of $480 a week or a commission, whichever [i]s greater.” [doc. 59-1]. He attests that the “commission” is a fixed percentage of the labor charge paid by the customer. He further states that the guarantee “is for a 5-day work week. The guarantee is reduced by $96 for each day that an employee does not work during the week.” Attached to Mathew's affidavit is a spreadsheet entitled “Summary of Plaintiff's Payroll Records, ” which purports to list the commission and guaranteed base for each employee in each week. The Summary does not provide an explanation of how the commission figures were derived, however. This is especially confusing since the figures listed on the Summary do not comport with the figures listed on the payroll records provided by the Defendants.

         One such example occurred for the week of October 2, 2015. Defendants' “Summary” shows that Plaintiff Boykin worked five days the week ending October 2, 2015 [doc. no. 59-1 at p. 3], and would therefore have had a guaranteed base of $480. Since Boykin's commission only totaled $151.34 for that week [doc. 53-9 at p. 6], he should have been paid the base amount of $480, according to the policy stated by Mathews in his affidavit; yet Boykin was paid $500 for that week.

         For the week of October 22, 2015, Defendants' Summary shows Plaintiff Boykin with a “base” of $384 for working four days and a commission of $448.13 [doc. no. 53-9 at p. 8]. There are two problems here. First, those same payroll records provided by the Defendants show that Boykin actually worked five days that week, not four; so he should have had a guaranteed base of $480. Secondly, Boykin's pay for that week was neither the $384 base for four days, nor the $480 base for five days, nor the $448.13 in ostensible commission; instead, Boykin was paid $460 for that week, for which no explanation is readily discernible. The company's records reveal that the employees' pay fluctuated, seemingly at random, from week to week.

         On April 19, 2016, Plaintiffs filed the present lawsuit, alleging violations of the overtime provisions of the Fair Labor Standards Act. They alleged that they had worked more than 40 hours per week in a number of weeks, and that they had not been paid overtime. Defendants have admitted[7] that Plaintiffs worked more than 40 hours in some weeks - though the exact time worked and the number of such weeks is contested - and that they have not paid overtime rates for such time.

         In addition, in response to this lawsuit, Defendants have now abandoned their theory that these employees were exempt under the “salary” exemptions to the FLSA, and in this litigation have argued instead that the employees are “commission” employees exempt from overtime under Section 7(i) of the Act. [59, Opp. to Mot. for Partial S. J.] Section 7 (i), remember, provides that “commissioned” retail employees are exempt from overtime pay if the following conditions are met: (1) the regular pay of such employee is in excess of one and one-half times the minimum wage; and (2) more than half of the employee's compensation represents commissions on goods or services.

         Following discovery, on August 31, 2017, Plaintiffs filed a Motion for Partial Summary Judgment accompanied by nine exhibits reflecting work records, pay records and deposition testimony [doc. no. 53]. On October 3, 2017, Defendants filed a six-page Memorandum Brief in opposition to Plaintiffs' motion, and did not address the attached work and pay records. In support of their Response in Opposition, Defendants provided only two affidavits, one of which included the previously-mentioned, “Summary of Plaintiffs' Payroll records” [doc. no. 59-1].

         II. SUMMARY JUDGMENT STANDARD

         Rule 56(a) of the Federal Rules of Civil Procedure provides that “A party may move for summary judgment, identifying each claim or defense - or the part of each claim or defense - on which summary judgment is sought. The court shall grant summary judgment if 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. The court should state on the record the reasons for granting or denying the motion.” FED. R. CIV. P. 56(a). The United States Supreme Court has held that this rule "mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a sufficient showing to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

         The party moving for summary judgment bears the initial responsibility of informing the district court of the basis for its motion and identifying those portions of the record in the case which it believes demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. Once this showing is met, the burden falls on the non-movant to “set forth specific facts showing that there is a genuine issue for trial.” U.S. v. Lawrence, 276 F.3d 193, 197 (5th Cir. 2001). While the Court views the evidence in a light most favorable to the non-movant, see Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528, 533 (5th Cir.1997), in order to avoid summary judgment, the non-movant must go beyond the pleadings and come forward with specific facts indicating a genuine issue for trial, see Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). If the defendant makes no response to an issue in a summary judgment motion, the district court must look at the summary judgment evidence to determine whether judgment is appropriate. See John v. State of La. (Bd. of Trs. for State Colls., & Univs.), 757 F.2d 698, 709 (5th Cir. 1985) (summary judgment cannot be supported solely on the ground that the non-movant failed to respond to the motion).

         III. DISCUSSION

         A. Plaintiffs' motion seeks partial summary judgment as to seven specific matters. As was evident from the opposition - and as further clarified at oral argument - five of the claims and/or defenses on which Plaintiffs sought summary judgment were unopposed, specifically:

(1) Plaintiffs are employees under the FLSA, and both Defendant Southern Floor Covering and Defendant Jeff Mathews are employers under the FLSA, and therefore jointly and severally liable.
(2) Defendants violated the FLSA's regulations requiring them to keep records and track time worked.
(3) Under the FLSA, travel time and wait time is part of working time, which is compensable.
(4) Plaintiffs worked more than 40 hours in some weeks.
(5) Defendants lack any defense under 29 U.S.C. ยง 259, regarding reliance on ...

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