Through a lengthy opinion issued in Lamonica, et al. v. Safe Hurricane Shutters, Inc., the Eleventh Circuit has affirmed that undocumented workers are entitled to recovery of unpaid overtime under the FLSA. Case No. 11-15743 (March 6, 2013). In addition, the court provided guidance on the issue of individual liability under the FLSA, affirming that corporate “supervisors,” (that are not officers of the corporate entity) may be individually liable for FLSA violations to the extent such employees assume operational control. The court also determined that the district court did not err by instructing the jury that it could, but was not required to apply the fluctuating work week (“FWW”) method of calculating damages. In finding that the jury was free to determine the applicability of the FWW, the court opined that the FWW is not the only or even default method for calculating damages when an employee is paid on a salary basis. The components of the court's holding, which are addressed in greater detail below, may have significant implications for employers going forward, particularly in the form of expanded individual FLSA liability and the employee's capacity to reach a jury on the issue of the FWW.
Undocumented Workers' Entitlement to Unpaid Wages
The Appellants argued that the Supreme Court's opinion in Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137, 148-52 (2002), effectively overruled the 11th Circuit's prior opinion in Patel v. Quality Inn S., in which the court held that undocumented workers are “employees” under the FLSA who may recover unpaid wages. In finding that the Hoffman decision does not disturb the 11th Circuit's holding in Quality Inn, the court reasoned that Hoffman addressed an employee's entitlement to back-pay (for work the employee had not performed but would have but for an employer's unfair labor practices) under the National Labor Relations Act, and not an employee's right to unpaid wages under the FLSA, for work the employee had already completed. In distinguishing Hoffman from Lamonica, the 11th Circuit opined that “an FLSA plaintiff “is not attempting to recover back pay for being unlawfully deprived of a job” that he could never have lawfully performed.” Lamonica, at 8. (quoting Quality Inn, 846 F.2d at 705). ““Rather, he simply seeks to recover wages and overtime for work already performed.”” Id. (quoting Quality Inn, 846 F.2d at 705). Absent a Supreme Court opinion clearly precluding an undocumented workers right to unpaid wages under the FLSA, the Lamonicadecision clearly puts to rest the issue of whether such workers are entitled to relief under the FLSA in the 11th Circuit.
Individual FLSA Liability
In affirming that certain “supervisors” may be held liable under the FLSA, the court noted that the FLSA's “broad definition of “employer” does not purport in any way to limit individual liability to officers of the entity. The court went on to conclude that its “primary concern is the supervisor's role in causing the FLSA violation, and it is possible for a supervisor to exercise enough control to play a substantial role in causing the violation,” even while working part-time. In sum, the court's holding on the issue of individual liability highlights the broad scope of employer status under the FLSA, which should provide additional guidance on district courts' analysis of the issue going forward.
Fluctuating Work Week
In a win for employees, the Eleventh Circuit held that the fluctuating workweek is not the default method for calculating damages in misclassification cases. In so holding, the court noted that where an employee is paid solely on a weekly or salary basis, the number of hours the employee's pay is intended to compensate – not the number of hours he actually worked, is the divisor for determining the employee's regular rate of pay. The Court further held that the jury was appropriately instructed on the law when the jury was told that “The regular rate for a week is determined by dividing the first 40 hours worked into the total wages paid for those 40 hours. The overtime rate then would be one-and-a-half of that rate and would be owing for each hour in excess of 40 hours worked during that workweek.” It also stated that not instructing the jury on the fluctuating workweek was not error, as the FWW method of calculation is subsumed by the jury instruction provided in the case. As employees are typically hired for a salary that is intended to compensate them for 40 hours, it appears that the issue of applying the FWW in misclassification cases is being put to rest in the Eleventh Circuit.
The Eleventh Circuit appears to be following a line of recent and well-reasoned decisions that have rejected the idea that the appropriate method of calculating damages in a misclassification case is by dividing the salary by all hours worked, and providing “half-time”. See e.g. Ransom v. M. Patel Enters., Inc., 2011 U.S. Dist. LEXIS 126130, 28-29 (W.D. Tex. 2011) (Holding that the “clear mutual understanding” and “contemporaneous payment” requirements of the FWW cannot be met in a misclassification case); Zulewski v. Hershey Co., 2013 U.S. Dist. LEXIS 23448 (N.D. Cal. 2013) (“When an employee is erroneously classified as exempt and illegally being deprived of overtime pay, neither the fourth nor fifth legal prerequisites for use of the FWW method is satisfied. The parties do not have a “clear, mutual understanding” that a fixed salary will be paid for “fluctuating hours, apart from overtime premiums” because the parties have not contemplated overtime pay”); Blotzer v. L-3 Communs. Corp., 2012 U.S. Dist. LEXIS 173126 (D. Ariz. 2012) (contemporaneous payment and mutual understanding requirements of FWW cannot be met in misclassification cases); Hasan v. GPM Investments, LLC, 2012 U.S. Dist. LEXIS 121048 (Conn. 2012)(FWW never appropriate in misclassification case, as parties never had agreement to pay overtime hours and set salary for all hours worked is an illegal contract); Martin v. Southern Premier Contractors, Inc., 2013 U.S. Dist. LEXIS 30017 (N.D.Ga. 2013)(proper analytic framework for calculating damages is not on a half-time basis).
The Lamonica holding will, or should limit district courts' discretion to grant summary judgment on the FWW issue, at a minimum, where disputed facts remain regarding the intention of the parties. Consequently, it would appear that the court's holding in this case will enhance FLSA plaintiffs' ability to reach a jury on the issue of the FWW, and, in turn, provide such employees with greater leverage in excluding the application of the FWW in negotiated settlements and trial.