45 F.4th 833
5th Cir.2022Background
- HD and Associates (HDA) subcontracted with Cox to install/repair residential cable/phone services in Louisiana; job assignments and tracking were managed by Cox’s CX Connect platform.
- Technicians were paid by a points-per-job system: Cox paid HDA $4/point; HDA paid technicians $1.80/point (HDA vehicle) or $2.05/point (own vehicle).
- Plaintiffs (technicians) filed a collective FLSA action alleging unpaid overtime for hours over 40/week during 2018–2019.
- The district court granted summary judgment for HDA, ruling the technicians and HDA were not covered by the FLSA and, alternatively, that the technicians qualified for the bona fide commission and Motor Carrier Act (MCA) exemptions.
- On appeal the Fifth Circuit held technicians are individually covered by the FLSA (work on phone/internet instrumentalities) but affirmed summary judgment because the technicians are exempt under the bona fide commission exemption; the court did not resolve enterprise coverage or the MCA exemption.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| FLSA coverage (individual) | Technicians engaged in commerce via work on phone/internet equipment and instrumentalities. | HDA: work was local in Louisiana and not covered. | Technicians are individually covered — work on instrumentalities of interstate commerce. |
| Enterprise coverage (alternate) | HDA is an enterprise engaged in commerce so overtime applies. | HDA disputed enterprise coverage. | Court declined to decide (individual coverage sufficient); district court had not developed record. |
| Waiver of bona fide commission defense | Taylor: HDA failed to plead the exemption specifically and waived it. | HDA: exemption was raised in time and plaintiffs had notice; not waived. | Defense not waived; plaintiffs were on notice and not prejudiced. |
| Bona fide commission exemption (§207(i)) application | Points system is not a commission (payments tied to customer demand/no true decoupling from hours). | Points-per-job decouples pay from time, incentivizes efficiency; functions as a commission. | Payment is a bona fide commission (points per job decouple time from pay; industry-wide practice); exemption applies, so no overtime owed. |
Key Cases Cited
- Mitchell v. H.B. Zachry Co., 362 U.S. 310 (1960) (discusses enterprise vs. individual coverage concepts under the FLSA)
- Sobrino v. Med. Ctr. Visitor’s Lodge, Inc., 474 F.3d 828 (5th Cir. 2007) (adopts the practical test for individual coverage in interstate commerce cases)
- Thorne v. All Restoration Servs., Inc., 448 F.3d 1264 (11th Cir. 2006) (employees working on instrumentalities of interstate commerce are individually covered)
- Alvarado v. Corp. Cleaning Servs., Inc., 782 F.3d 365 (7th Cir. 2015) (points-per-job payment can constitute a commission where pay is decoupled from time)
- Yi v. Sterling Collision Ctrs., Inc., 480 F.3d 505 (7th Cir. 2007) (framework for analyzing whether pay qualifies as a commission)
- Parker v. NutriSystem, Inc., 620 F.3d 274 (3d Cir. 2010) (factors for determining bona fide commission under §207(i))
- Woodfield v. Bowman, 193 F.3d 354 (5th Cir. 1999) (Rule 8(c) pleading and waiver principles for affirmative defenses)