907 F.3d 215
5th Cir.2018Background
- Saybolt paid two groups of inspectors: non-FWW inspectors under standard time-and-a-half overtime, and FWW inspectors under the fluctuating workweek (FWW) method who also received weekly incentives (day-off, offshore, holiday pay).
- Saybolt included those incentive payments in the weekly remuneration used to compute the FWW "regular rate." Plaintiffs claimed those incentives made the salary not a "fixed salary" and thus invalidated use of the FWW method.
- Plaintiffs (112 opt-ins) sued under the FLSA alleging improper use of FWW and willful violations; district court granted partial summary judgment for plaintiffs on liability, awarded damages and liquidated damages, and treated Saybolt as estopped from contesting the plaintiffs’ damages model.
- Saybolt had sought advice from outside counsel who described the law as unsettled; DOL had proposed regulatory changes favorable to Saybolt but later issued a final rule in 2011 stating incentives are incompatible with the FWW method.
- The Fifth Circuit affirmed liability and non-willfulness, reversed the district court’s application of judicial estoppel, vacated the liquidated-damages award for reconsideration, and remanded for recalculation of damages under the correct methodology.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Validity of Saybolt's use of FWW (fixed-salary requirement) | Incentive payments varied weekly and thus destroyed a "fixed salary," so FWW was invalid. | Regulations don't expressly prohibit additional incentive payments; including incentives in the regular rate preserves overtime protections. | FWW invalid: incentive payments made weekly straight-time pay variable, disqualifying FWW. |
| 2) Willfulness (statute of limitations extension) | Saybolt's continued use after adverse authority and lawsuits shows willfulness. | Saybolt relied on counsel, unsettled law, and DOL proposed rule—conduct was not knowing or reckless. | No willfulness: evidence shows reliance on advice and unsettled law; plaintiffs failed to raise genuine issue. |
| 3) Judicial estoppel on damages methodology | Saybolt should be estopped from contesting plaintiffs’ damages model because of earlier positions. | Saybolt’s earlier comparator argument was not plainly inconsistent with later FWW-based damages argument and the court previously rejected the comparator model. | Reversed: district court abused discretion applying judicial estoppel; Saybolt may challenge damages model. |
| 4) Proper damages formula and liquidated damages | Use a 40-hour divisor and time-and-a-half multiplier (plaintiffs’ model) to compute unpaid overtime; liquidated damages awarded equal to actual damages. | Regular rate should divide total weekly pay by hours actually worked (no 40-hour default); because FWW was invalid, multiplier should be time-and-a-half, but divisor must include all hours; or alternatively, compute using non-FWW comparators or FWW weekly wage with one-half multiplier (concurring view). | Regular rate must divide total remuneration by hours actually worked (no hypothetical 40-hr divisor). Because FWW prerequisites were not met, plaintiffs are owed time-and-a-half (1.5× regular rate) for overtime. District court damages calculation reversed and remanded; liquidated-damages award vacated for reconsideration. |
Key Cases Cited
- O'Brien v. Town of Agawam, 350 F.3d 279 (1st Cir.) (time-based premium pay in addition to a fixed weekly salary invalidated FWW)
- Singer v. City of Waco, 324 F.3d 813 (5th Cir.) (regular-rate divisor must include all hours actually worked even where FWW inapplicable)
- McLaughlin v. Richland Shoe Co., 486 U.S. 128 (U.S.) (willfulness standard: employer knew or showed reckless disregard)
- Overnight Motor Transp. Co. v. Missel, 316 U.S. 572 (U.S.) (regular rate = weekly wage divided by hours)
- Lalli v. General Nutrition Centers, Inc., 814 F.3d 1 (1st Cir.) (distinguishes time-based bonuses from performance-based bonuses; commissions do not invalidate FWW)