Almanzar v. C & I Associates, Inc.Almanzar v. C & I Associates, Inc.
OPINION & ORDER
Defendants 0 & I Associates and C & I Telecommunications (“Associates” and “Telecom,” respectively) are cable installation and servicing companies. They employ technicians such as plaintiffs to install and repair cable boxes, internet routers, modems, and other telecommunication equipment at the homes of customers of Cablevision, an internet and cable television service provider. Plaintiffs, who were paid by the completed task rather than by the hour, contend that they have not received the minimum wage and overtime pay mandated by the Fair Labor Standards Act (“FLSA”),
In August of 2014 the Court conditionally certified this litigation as a collective action pursuant to the FLSA. Forty-five individuals are plaintiffs in this action. Following discovery proceedings, plaintiffs have now moved for summary judgment solely on the question of defendants’ liability; defendants respond primarily that the FLSA exempts them from being obligated to pay overtime, see
I. Background
Plaintiffs install and repair telecommunications equipment for customers of Ca-blevision, which is the primary client of both Associates and Telecom. (Pis.’ Local Civil Rule 56.1 Statement of Undisputed Facts (“Pis.’ 56.1”) ¶¶ 1-2, Dkt. 122; Defs.’ Local Civil Rule 56.1 Statement of Undisputed Facts (“Defs,’ 56.1”) ¶¶ 1-2, Dkt. No. 1Q8.)
There is no dispute regarding how Associates functioned. Cablevision issued work orders to individual technicians based on a schedule of the technicians’ availability that Associates had provided to Cablevision in advance. (Pis.’ 56.1 ¶ 29; Defs.’ 56.1 ¶ 29.) Technicians arrived at Associates’ warehouse between 7:00 AM and 9:00 AM in staggered shifts. (Pis.’ 56.1 ¶ 33; Defs.’ 56.1 ¶ 33.) The technicians had no set end-time to their workday, but rather ended when they had completed their assigned work orders. (Dep.' of Nelson Izquierdo
The parties dispute the exact length of the technicians’ workdays and how many days the technicians worked. Although Po-lonio testified that a typical workweek was five days at eight hours per day, (Dep. of Androke Polonio dated Dec. 16, 2014 at 14:18-19, Ex. 29 to Ureña Affirmation Dkt. No. 115), several plaintiffs testified that they typically worked six or seven days per week. (See, e.g., Dep. of Juan Diaz dated Nov. 21, 2014 at 40:11-12, Ex. 22 to Ureña Affirmation Dkt. No. 115; Dep. of Jorge Done dated Dec. 4, 2014 at 28:12-17, Ex. 5 to Ureña Affirmation Dkt. No. 132.) Numerous plaintiffs reported working more than 40 hours in various weeks. (See, e.g., Ex. 1 to Affirmation of Felix Corporan dated March 10, 2015, Dkt. No. 120.)
In addition to spending time completing customer service orders and driving to customer residences, several plaintiffs testified that they were required to spend substantial time at Associates’ warehouse both in the morning — before’ driving to their work assignments — and evening — after completing their customer service orders. (Pis.’ 56.1 ¶ 42, 45-46; Defs.’ 56.1 ¶ 42, 45-46.) In the morning, the technicians checked in, received their work orders, and retrieved necessary equipment before heading to their assignments. (Pis.’ 56.1 ¶¶ 42; Defs.’ 56.1 ¶¶ 42.) The parties dispute how much time was expended in these activities; it was either less than, or more than, thirty minutes. (Pis.’ 56.1 ¶ 43; Defs.’ 56.1 ¶ 43.) In the evening, technicians had to return old or unused equipment and complete paperwork for 20-30 minutes. (Pis.’ 56.1 ¶¶ 45-46, 49, 53; Defs.’ 56.1 ¶¶ 45-46, 49, 53.)
As noted above, defendants paid the technicians “a straight ‘piece rate’ ” based on each task completed “regardless of hours worked.” (Pis.’ 56.1 ¶ 54-56; Defs.’ 56.1 ¶ 54-56; Dep. of Maria Giannini dated March 13, 2014 at 28:3-6, Ex. 28 to Ureña Affirmation Dkt. No. 115.)
II. Discussion
A. Legal Standard
Summary judgment is appropriate if there are no genuine issues of material fact and plaintiffs are entitled to judgment as a matter of law.
B. Overtime
To establish plaintiffs’ FLSA overtime claims, plaintiffs must demonstrate (1) that they are “employees’ ”; that defendants are “employers”; and that Associates and Telecom “engaged in commerce” as the FLSA defines those terms, and (2) that they worked in excess of 40 hours in the relevant work week.
However, there is evidence in this record that at least some of the Telecom technicians worked more than 40 hours per week. Maria Giannini, for instance, conceded that a typical workday for Tele-com’s technicians began around 7:30 AM or 8:00 AM and ended by 5:00 PM. (Maria Giannini Dep. at 34:4-6.) Plaintiff Jorge Done, who worked for both Telecom and Associates, testified that he worked six days a week at both companies. (Done Dep. at 22:12-16, 28:15-18.) Even assuming that Done arrived at work for the later 8:00 AM shift, a typical week for him would be 54 hours. Other evidence shows that Telecom only gave its technicians one day off. (Ex. 2 to Reply Affirmation of David Ureña dated May 11, 2015, Dkt. No. 116.) Numerous Telecom technicians reported that they worked more than forty hours in a given workweek. (Ex. 6 to Ure-ña Reply Affirmation) Any disputes defendants have with the precise arithmetic of hours for each plaintiff is for determination at trial, not on this motion.
Defendants’, prime defense, however, is not that no plaintiff worked in excess of 40 hours per week. Rather, defendants argue that the FLSA exempts them from paying overtime altogether pursuant to the FLSA’s “retail or service establishment” exemption,
No employer shall be deemed to have violated subsection (a) of this section [requiring overtime pay] by employing any employee of a retail or service establishment for a workweek in excess of the applicable workweek specified therein, if (1) the regular rate of pay of such employee is in excess of one and one-half times the minimum hourly rate applicable to him under section 206 of this title, and (2) more than half his compensation for a representative period (not less than one month) represents commissions on goods or services. In determining the proportion of compensation representing commissions, all earnings resulting from the application of a bona fide commission rate shall be deemed commissions on goods or services without regard to whether the computed commissions exceed the draw or guarantee.
Courts have universally subdivided this statutoiy mouthful into three distinct elements that defendants must satisfy in order to invoke successfully the exemption. Defendants must prove that: (1) Associates and Telecom are “retail or service establishment[s]”; (2) the technicians’ “regular rate of pay exceeded one and one-half times the minimum hourly rate;” and (3) more than half of the technicians’ “corm pensation for a representative period (not less than one month) represented commissions on goods or services.” See e.g., Schwind v. EW & Assocs., Inc.,
To avoid summary judgment, defendants need only point to evidence from which a factfinder could reasonably conclude that each of the exemption’s elements are satisfied. On that standard, sufficient evidence exists to support the first and third elements. First, numerous courts have found businesses that are essentially identical to defendants to be “service establishments” and plaintiffs offer no persuasive arguments as to why those courts are wrong. See, e.g., Johnson v. Wave Comm GR LLC,
However, this record lacks any evidence whatsoever that defendants’ payment scheme is based on “commission”; thus, defendants have failed to sustain
Although the FLSA fails to define “commission,”' courts have consistently concluded that “commission” schemes share three distinct but interrelated features:
(1) the employee’s compensation must be tied to customer demand or the quantity of sales; (2) the compensation plan must provide performance-based incentives for the employee to increase his or her income; and (3) there must be proportionality between the value of the goods or services sold and the rate paid to the employee.
Johnson,
Although plaintiffs contend that the record supports none of the abovementioned factors, there is record evidence that the technicians’ compensation is tied to customer demand. (See, e.g., Decl. of Nelson Izquierdo ¶4 dated April 27, 2015, Dkt. No. 110; Polonio. Dep. at 57:7-14; Ex. 7 to Ureña Reply Affirmation.) Defendants also point to evidence that compensation was proportional to the value of services sold, which is the third factor. (See, e.g., Izquier-do Dep. at 90:5-91:6.)
The crux of this case, then, is whether defendants can show that their compensation plan provided “performance-based incentives” for the technicians • to increase their income. Johnson,
Instead, undisputed facts show that no technician received additional payment as a reward for completing her work more efficiently. Work assignments were not assigned based on a technician’s speed or efficiency. Cablevision assigned work in advance based on the specific hours that a technician was available each day. (Izquier-do Dep. at 34:2-10; Polonio Dep. at 54:22-55:2; Pis.’ 56.1 ¶¶ 29-31; Defs.’ 56.1 ¶29-31.) The more hours that a technician agreed in advance to work, the more tasks she would be assigned.
Even when Associates had extra work to dole out, that extra work was not given as a reward for speed or efficiency. (See, e.g., Polonio Dep. at 56:18-57:3; Izquierdo Dep. at 58:4-59:7, 174:3-16.) There were times, for instance, when Cablevision had more service orders than available technicians could handle. (Izquierdo Dep. at 58:4-59:7, 174:3-10; Polonio Dep. at 56:18-57:3.) To fulfill these orders, Izquierdo would either ask technicians to work extra days or would hire extra technicians. (Izquierdo Dep. at 58:4-59:7,174:3-10.) Polonio did the same: He would ask available technicians to “start earlier” or would ask technicians if “they want to work” on their off days. (Polonio Dep. at 56:23-57:3.) Once again, the more hours a technician agreed to work, the more tasks he or she would be assigned and the more money that technician made. Defendants’ system thus did not decouple hours worked from wages earned. See Owopetu I,
Defendants’ failure to provide any evidence of the relevant performance-based incentives is stark when juxtaposed with evidence presented in similar but distinguishable cases. In Moore v. Advanced Cable Contractors, Inc., No. 12-cv-115,
It is true that some cases “have-found commissions to exist- based upon an employee’s incentive merely to work faster.” Owopetu I,
C. Minimum Wage & Gap Time
Plaintiffs also claim that they are entitled to summary judgment on the grounds that defendants failed to pay minimum wage for the morning time the technicians spent in the warehouse as well as the evening time spent there. The morning time was spent checking in, receiving work orders, and gathering necessary equipment before driving to a customer’s residence; the evening time was spent, returning equipment and filling out paperwork after the technician completed her last work order. This Court must therefore address whether the morning wait time and evening return time are compensable at all. See
The U.S. Supreme Court recently addressed that very issue in Integrity Staffing Solutions v. Busk, - U.S. -,
The U.S. Supreme Court rejected their claim, however, holding that time is com-pensable under the FLSA only if the activity at issué “is integral and indispensable to the principal activities that an employee is employed to perform”; that is, “one with which the employee cannot dispense if he is to perform his principal activities.” Id. at 517. Employees are not entitled to compensation for any “activities which are preliminary to or postliminary to” an employee’s “principal activities.”
Here, plaintiffs argue that two different time periods are compensable: the morning wait time and the evening return time. Defendants concede that the morning time is compensable, and the Court agrees. It is undisputed that the technicians would not be able to service C'ablevision customers without picking up necessary equipment and obtaining work orders each morning.
The time that plaintiffs spend in the evening returning equipment and completing paperwork is different. Plaintiffs are employed to install, maintain, and upgrade cable systems for Cablevision customers, (Pis.’ 56.1 ¶ 2; Defs,’ 56.1 ¶ 2), not to return equipment to a warehouse or to fill out paperwork. The tasks completed during the evening return time are thus not principal activities. Busk,
Still, this court’s determination — and the parties’ agreement — that the technicians’ morning wait time is compensable does not necessarily entitle plaintiffs to any additional FLSA damages, because the FLSA mandates only that an employee is paid an average minimum wage. See Lundy,
New Jersey and New York labor laws, however, ultimately may be more helpful to plaintiffs in this regard than the FLSA. Unlike the FLSA, those state laws allow “gap time claims” in which an employee seeks to be paid her regular hourly rate for previously uncompensated time. See Lundy,
As with the FLSA minimum wage claims, the amount of damages to which plaintiffs are entitled, if any, awaits trial. There is evidence in this record that plaintiffs are entitled to nothing on their gap time claims because plaintiffs may have received all the compensation for which they bargained. (See Izquierdo Dep. at 127:13-129:2.) Plaintiffs provide substantial evidence to the contrary. (See e.g., Dep. of Cesar Almanzar dated Nov. 18, 2014 at 76:6-16, Ex. 18 to Ureña Affirmation Dkt. No. 115.) These issues of material fact prevent the Court from granting judgment to plaintiffs on their state gap time claims.
D. New York Labor Law Violations
Plaintiffs also seek summary judgment that Associates and its managers are liable for three violations of the New York Labor Law. The first claimed violation, supported by testimonial evidence, is that Associates unlawfully deducted the value of lost or damaged equipment from the technicians’ wages. (See Affirmation of Juan Ogando ¶¶ 1-2, Dkt. No. 128; See also Dep. Of Juan de la Cruz dated Nov. 18, 2014 at 41:11-15, Ex. 16 to Ureña Affirmation Dkt. No. 115.) The New York Labor Law does not permit any such deductions. See NYLL § 193(l)(a)-(b); Karic v. Major Automotive Companies, Inc.,
As to the final two violations, defendants fail to argue they in fact complied with the relevant provisions of New York Labor Law. First, defendants do not dispute that they violated
E. Defendants’ Mens Rea
Finally, plaintiffs seek summary judgment on the issue of defendants’ mens rea. If an employer “willfully” violated the FLSA, that employer is liable for three— not two — years of violations. Hart v. Rick’s Cabaret Int’l, Inc.,
Plaintiffs point to tjiree facts that, they say, establish that defendants acted willfully and without good faith. First, they note that defendants were on notice of the wage violations from two prior suits technicians brought against them and a New Jersey Department of Lab.or investigation that resulted in Telecom paying New Jersey a fíne. (Pis.’ 56.1 ¶¶ 72-75; Defs.’ 56.1 ¶¶ 72-75.) Second, they contend that defendants erased timeclock records and improperly recorded the,technicians’ hours. (Plfs.’ 56.1 ¶ 41; Defs.’ 56.1 ¶ 41.) Third, .they contend that defendants ignored their attorneys’ proposals to change the technicians’ compensation system to ensure its legality.
Although a reasonable factfinder could infer bad faith or willfulness from these facts, defendants have presented additional facts that support more benign inferences. Regarding the lawsuits, each case settled early in the litigation, and Associates never admitted liability. (Defs.’ 56.1 ¶ 103,) As in this case, Associates there asserted that the retail or service establishment exemption applied.
Plaintiffs’ last argument — that defendants willfully ignored their attorneys’ advice to change the compensation scheme— is similarly unavailing at this stage of the litigation. Evidence suggests that defendants did, in fact, change their pay structure to ensure that it would qualify as a “commission” under the retail or service establishment exemption. (Izquierdo Dep. 93:9-23.) That this change did not suffice, see Part II-B, supra, does not require a finding that defendants acted in bad faith or willfully violated the FLSA.
In sum, defendants have presented a sufficient counter-narrative to forestall summary judgment on the issues of willfulness and bad faith.
III. Conclusion
The Court grants in part and denies in part plaintiffs’ motion for summary judgment as follows: (1) summary judgment' is granted to plaintiffs on their claim that defendants are liable for any week they failed to pay appropriate overtime because plaintiffs are not exempt as retail or service establishments from having to pay overtime; (2) summary judgment is denied as to plaintiffs’ minimum wage claims (although all parties and the Court agree that the morning wait time is compensable) and state law gap time claims; (3) summary judgment is granted to plaintiffs on. the ground that defendants are liable for any violations that may be proven at trial of NYLL
SO ORDERED:
Notes
. Most plaintiffs worked for Associates, which is headquartered in the Bronx; at least two plaintiffs worked for Telecom, which was based in New Jersey until it ceased operations in 2014. (Pis.’ 56.1 ¶¶ 4-7, 9-10; Defs.’ 56.1 ¶¶ 4-7, 9-10.)
. The elements of plaintiffs’ state overtime claims are essentially the same. See Zheng v. Liberty Apparel Co. Inc.,
. Defendants contend in a footnote that plaintiffs’ New York Labor Law claims cannot be raised by any of the opt-in plaintiffs because this case is only brought as a collective action pursuant to the FLSA and not as a class action pursuant to
. The liquidated damages standard is different for violations of New York Labor Law that occurred prior to 2009. For violations prior to 2009, a 25 percent award of liquidated damages is available if plaintiffs show that defendants acted "willfully.” Hart,