925 F.3d 838
6th Cir.2019Background
- Timberline South, LLC is a Michigan timber-harvesting company whose employees use trucks and heavy logging equipment manufactured outside Michigan; all business operations occurred in Michigan.
- The Secretary of Labor sued Timberline and its director alleging violations of the FLSA overtime and recordkeeping provisions for work from 2013–2017.
- Timberline paid employees by daily, hourly, or piece (cord) rates, often failed to keep hours records for non-hourly employees, and did not pay overtime.
- The district court granted summary judgment for the Secretary, finding enterprise coverage under the FLSA handling clause, rejecting the Motor Carrier Act (MCA) exemption for drivers, and awarding $439,437.42 in back pay plus equal liquidated damages.
- On appeal the Sixth Circuit affirmed liability (enterprise coverage and no MCA exemption) but vacated the damages award because the district court wrongly included ordinary home-to-work commute time and bona fide meal periods as compensable hours in calculating overtime.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Timberline is an "enterprise engaged in commerce" under the FLSA handling clause | Secretary: employees regularly handle logging equipment that was moved/produced in interstate commerce, so enterprise coverage attaches | Timberline: only timber (intrastate) is handled; equipment is "goods" and Timberline is ultimate consumer so excluded | Affirmed — equipment qualifies as "materials" (tools/articles necessary to perform work) and was previously moved/produced in commerce, so handling clause covers Timberline |
| Whether drivers/helpers are exempt under the Motor Carrier Act (MCA) exemption | Secretary: drivers did not engage in interstate commerce; exemption does not apply | Timberline: drivers had DOT numbers, CDLs, and argued a practical continuity to interstate commerce via mills | Affirmed — exemption does not apply; drivers did not cross state lines nor showed practical continuity in interstate movement |
| Whether district court properly included paid home-to-work commute and bona fide meal periods in overtime calculations under the Portal-to-Portal Act | Secretary: employer custom of paying such time meant it should be counted in Portal-to-Portal analysis | Timberline: Portal-to-Portal Act requires excluding ordinary commute and bona fide meal periods; district court erred | Reversed on damages — ordinary commute and bona fide meal periods that would not be "work" under FLSA must be excluded from overtime calculations; remanded for recalculation |
| Whether liquidated damages are discretionary because Timberline acted in good faith | Secretary: liquidated damages mandatory absent employer proving good faith and reasonable grounds | Timberline: relied on accountant/advice re: exemptions and paid above industry averages, so acted in good faith | District court correctly awarded liquidated damages; on remand amount must be recalculated once unpaid overtime is corrected (defendants failed to meet heavy good-faith burden) |
Key Cases Cited
- Polycarpe v. E & S Landscaping Serv., Inc., 616 F.3d 1217 (11th Cir. 2010) (defines "materials" as tools/apparatus necessary to do work and requires significant connection to employer's business)
- Donovan v. Pointon, 717 F.2d 1320 (10th Cir. 1983) (use of machinery that moved in interstate commerce can establish FLSA coverage)
- Brock v. Hamad, 867 F.2d 804 (4th Cir. 1989) (handling goods that moved in interstate commerce can bring local businesses within FLSA)
- Kuebel v. Black & Decker Inc., 643 F.3d 352 (2d Cir. 2011) (ordinary home-to-work travel is not compensable worktime under FLSA)
- Elwell v. Univ. Hosps. Home Care Servs., 276 F.3d 832 (6th Cir. 2002) (employer must take affirmative steps to ascertain FLSA requirements to prove good faith for liquidated-damages defense)