56 F.4th 409
6th Cir.2022Background
- KDE Equine, owned/managed by trainer Steve Asmussen, runs large thoroughbred training operations across multiple states and employed ~120–150 staff, including grooms and hotwalkers.
- Hotwalkers and grooms worked daily, with hotwalkers averaging ~44.25 hours/week and grooms ~48.5–52.5 hours/week; employees were paid salaries plus small lump-sum amounts for extra tasks.
- KDE’s timesheets were incomplete or inaccurate, making exact hours worked indeterminable.
- The DOL sued under the FLSA for minimum-wage, overtime, and recordkeeping violations; the district court found for the DOL on overtime and some recordkeeping claims but granted summary judgment to KDE on willfulness and liquidated damages.
- On appeal the Sixth Circuit affirmed liability on the overtime claims, but vacated summary judgment on willfulness/liquidated damages and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether KDE’s pay plans complied with FLSA § 7 (overtime) | KDE’s salaried payment scheme failed to provide proper overtime; DOL sought back wages | KDE asserted three alternative compliance theories: fixed overtime premium under 29 C.F.R. § 778.309, Fluctuating Work Week, or lump-sum payments for extras | Affirmed for DOL — district court correctly rejected all three theories because employees’ hours fluctuated, time records were unreliable, and lump-sums did not fit the narrow FOH exception |
| Whether KDE’s violations were willful (affecting liquidated damages and 3‑year SOL) | DOL: KDE was previously investigated and enjoined, paid unpaid wages, gave assurances, and then exhibited recordkeeping/manipulation suggestive of concealment — supporting willfulness | KDE: implemented remedial steps (expert retained, timesheets, postings) and acted in good faith | Reversed KDE summary judgment on willfulness — genuine factual disputes exist about notice, record manipulation, and simulated compliance; remanded for further proceedings |
Key Cases Cited
- Beaven v. U.S. Dep’t of Justice, 622 F.3d 540 (6th Cir. 2010) (standard of review—bench-trial legal conclusions de novo and factual findings for clear error)
- Acosta v. Min & Kim, Inc., 919 F.3d 361 (6th Cir. 2019) (salary and nonhourly pay do not exempt employees from regular-rate overtime calculations)
- U.S. Dep’t of Labor v. Fire & Safety Investigation Consulting Servs., LLC, 915 F.3d 277 (4th Cir. 2019) (29 C.F.R. § 778.309 applies only when employees work a fixed number of overtime hours)
- Hall v. Plastipak Holdings, Inc., 726 F. App’x 318 (6th Cir. 2018) (Fluctuating Work Week requires accurate hour-tracking to compute overtime)
- Dole v. Elliot Travel & Tours, Inc., 942 F.2d 962 (6th Cir. 1991) (prior violations, payment of unpaid wages, and assurances of compliance support finding of willfulness)
- Herman v. Palo Group Foster Home, Inc., 183 F.3d 468 (6th Cir. 1999) (reiterating that prior findings of violation plus assurances can establish actual notice and willfulness)
- McLaughlin v. Richland Shoe Co., 486 U.S. 128 (1988) (two-year statute of limitations for ordinary FLSA violations; three years for willful violations)
- Sec’y of Labor v. Timberline South, LLC, 925 F.3d 838 (6th Cir. 2019) (summary judgment standard as applied in DOL enforcement actions)
- Harrison v. Rockne’s Inc., 274 F. Supp. 3d 706 (N.D. Ohio 2017) (DOL Field Operations Handbook is persuasive, not binding, guidance on lump-sum overtime treatment)