United States Department of Labor v. Westside Drywall, Inc.
3:15-cv-02411
D. Or.Mar 14, 2017Background
- Westside Drywall, Inc. (Oregon employer) and its president Mohsen Salem employed piece-rate, hourly, and salaried workers; DOL investigated from Jan 2012–Sep 2015 for unpaid overtime and recordkeeping failures.
- DOL sued (Dec 28, 2015) alleging willful, repeated FLSA violations (29 U.S.C. §§ 207, 211, 215) and seeks back wages and liquidated damages for ~100 employees (amount in controversy > $800,000).
- Defendants moved for summary judgment on all claims, arguing (inter alia) no FLSA violations, statute-of-limitations bars, travel time not compensable, and Salem not individually liable.
- Evidence submitted: DOL employee declarations (hours, instructions not to record overtime, required warehouse check-ins, unpaid travel between sites) and DOL surveillance; Defendants submitted payroll records and a secretary’s declaration asserting overtime was paid.
- District Court found genuine disputes of material fact on (1) unpaid overtime for piece-rate workers, (2) failure to maintain accurate records, (3) compensable travel time between warehouse and job sites / between job sites, and (4) Salem’s status as an employer.
- Court granted summary judgment only on the statute-of-limitations legal ruling: DOL may recover only for violations on or after Dec 28, 2012 unless it proves the violations were willful (which would invoke a three-year limitations period). Equitable tolling was denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Defendants fail to pay overtime to piece-rate employees? | DOL: employees routinely worked >40 hrs, were told not to record overtime, and were not paid additional compensation. | Defs: payroll records show overtime was paid to piece-rate employees. | Denied summary judgment for Defs — genuine dispute of material fact. |
| Did Defendants fail to maintain/produce accurate records as required by FLSA? | DOL: employees instructed to record ≤8 hrs/day; timecards were inaccurate; records incomplete. | Defs: produced payroll and employment records to DOL during investigation. | Denied summary judgment for Defs — genuine dispute of material fact. |
| What statute of limitations governs DOL’s back-pay claims (2 vs 3 years) / equitable tolling? | DOL: violations were willful and/or Defs concealed conduct; equitable tolling applies. | Defs: claims outside 2- or 3-year limits should be barred; no concealment. | GRANTED in part: Court rejects equitable tolling; three-year period applies only if DOL proves willfulness; otherwise DOL cannot recover for violations before Dec 28, 2012. |
| Are travel times (warehouse↔jobsite and between jobs) compensable and included in back-pay calc? | DOL: employees required to report to warehouse, perform work-related tasks there, and were unpaid for travel between warehouse and sites and between sites. | Defs: travel from home and some warehouse travel not compensable; piece rates accounted for travel and timecards reflect paid travel. | Denied summary judgment for Defs — genuine dispute of material fact on compensable travel time. |
| Is Mohsen Salem individually liable as an "employer" under the FLSA? | DOL: Salem exercised economic and supervisory control (owner, hiring authority, site visits, salary-setting); thus personally liable. | Defs: Salem was a figurehead without hiring/firing or payroll control and lacked pecuniary control. | Denied summary judgment for Defs — genuine dispute of material fact on Salem’s employer status. |
Key Cases Cited
- Washington Mut. Ins. v. United States, 636 F.3d 1207 (9th Cir.) (summary-judgment standard discussion)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S.) (moving party’s burden on summary judgment)
- Anderson v. Liberty Lobby, 477 U.S. 242 (U.S.) (genuine dispute standard for summary judgment)
- McLaughlin v. Richland Shoe Co., 486 U.S. 128 (U.S.) (willfulness standard under FLSA — knowing or reckless disregard)
- Chao v. A-One Med. Servs. Inc., 346 F.3d 908 (9th Cir.) (employee statements supporting willfulness)
- Alvarez v. IBP, Inc., 339 F.3d 894 (9th Cir.) (willfulness requires knowing or reckless disregard)
- Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054 (9th Cir.) (reasonable jury standard on genuine disputes)