Sharp v. CGG Land (U.S.) Inc.
2016 U.S. App. LEXIS 19933
10th Cir.2016Background
- CGG Land employed hourly seismic-mapping workers who were required to travel and live away from home for 4–8 week stints, returning home between assignments.
- While working away from home, CGG paid employees a $35 daily per diem for meals (including travel days); parties stipulated $35 was a reasonable meal allowance.
- CGG excluded the $35 per diem from employees’ FLSA "regular rate" when calculating overtime pay.
- Employees sued as a collective action claiming CGG undervalued the regular rate by excluding the per diem, seeking summary judgment; the district court granted summary judgment to CGG.
- On appeal, Employees argued the per diem is not an exempt travel expense for (a) travel days when no work was performed and (b) on-site work days because employees were not "traveling over the road."
- The Tenth Circuit considered whether 29 U.S.C. § 207(e)(2)’s exception for travel/living expenses away from home permitted excluding the meal per diem from the regular rate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the $35 per diem for meals paid while employees were away from home must be included in the FLSA regular rate | Per diem is not an exempt travel/living expense and must be included in the regular rate | Per diem reimburses travel-related living expenses incurred in furtherance of employer’s interests and is exempt under § 207(e)(2) | Excluded: per diem is a reimbursable travel/living expense and need not be included in the regular rate |
| Whether per diem is excluded on travel days when employees did not perform work | Per diem on pure travel days is not exempt because no work occurred | Travel days are part of being "away from home"; meal costs are living expenses incurred for employer’s benefit | Excluded: travel days fall within travel/living expense exemption |
| Whether per diem is excluded for days spent working at the remote site (not in transit) | Once at the site employees are not "traveling over the road," so meals aren’t travel expenses | “Traveling” should be read as being away from home; living expenses while away are exempt regardless of momentary transit status | Excluded: ‘‘traveling’’ read broadly; being away from home suffices for exemption |
| Whether per diem was effectively disguised compensation tied to hours worked | Per diem here was a fixed, reasonable reimbursement and not tied to hours; employees stipulated reasonableness | CGG’s per diem was not tied to hours and parties stipulated its reasonableness, precluding a compensation-characterization | Excluded: stipulation and fixed nature defeat claim it was disguised hourly compensation |
Key Cases Cited
- Chavez v. City of Albuquerque, 630 F.3d 1300 (10th Cir.) (explains purpose of FLSA overtime and regular rate importance)
- McBride v. Peak Wellness Ctr., Inc., 688 F.3d 698 (10th Cir.) (DOL opinion letters afford weight interpreting agency regulations)
- Albers v. Bd. of Cty. Comm’rs of Jefferson Cty., Colo., 771 F.3d 697 (10th Cir.) (regular-rate determination is central to FLSA overtime calculations)
- Bay Ridge Operating Co. v. Aaron, 334 U.S. 446 (U.S.) (background on FLSA overtime purpose)
- Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419 (U.S.) (regular rate definition and importance)
- Newman v. Advanced Tech. Innovation Corp., 749 F.3d 33 (1st Cir.) (per diem tied to hours cannot be excluded from regular rate)
- Gagnon v. United Technisource, Inc., 607 F.3d 1036 (5th Cir.) (per diem linked to hours worked is not an exempt reimbursement)
- In re Wal-Mart Stores, Inc., Fair Labor Standards Act Litig., 395 F.3d 1177 (10th Cir.) (treatment of DOL opinion letters and regulatory interpretation)