18th Annual Workplace Class Action Report - 2022 Edition

Annual Workplace Class Action Litigation Report: 2022 Edition 245 the record showed a genuine factual dispute material to determining whether Defendant’s alleged violations of the FLSA were in good faith. Accordingly, the Court denied Plaintiffs’ motions. Hobbs, et al. v. Evo, Inc., 2021 U.S. App. LEXIS 22274 (5th Cir. July 27, 2021). Plaintiffs, a group of field engineers, brought a wage & hour collective action seeking unpaid overtime wages and liquidated damages for willful violation violations of the FLSA. Throughout Plaintiffs’ employment, Defendant treated field engineers as exempt from the FLSA’s overtime requirements. Plaintiffs’ employment contracts indicated that their compensation consisted of an annual salary and eligibility for certain bonuses. Defendant offered downhole video camera services to clients in the oil and gas industry that allowed them to view and diagnose what had gone awry down the borehole. The District Court found that genuine issues of material fact remained concerning Plaintiffs’ exempt status and it denied Defendants’ motion for summary judgment on that basis. Ultimately, the District Court rejected Defendant’s contentions that field engineers were exempt as highly-compensated, administrative, or sales employees, and ultimately concluded after a bench trial that Defendant had violated the FLSA by failing to pay Plaintiffs overtime for their work hours in excess of 40 per workweek. On the parties’ cross appeals, Defendants argued that the District Court erred in its determination that the field engineers were non-exempt employees and that Defendant’s failure to pay field engineers overtime violated the FLSA. On appeal Defendants contended that three Plaintiffs – Hobbs, Lee, and Jones – were highly compensated employees exempt from the FLSA’s overtime requirements. To qualify for the highly compensated employee exemption, Defendant was required to show that the field engineers: (i) were annually compensated at least $100,000; (2) customarily and regularly performed any one or more of the exempt duties or responsibilities of an executive, administrative, or professional employee; and (iii) had within his or her primary duties the performance of office or non-manual work. Moreover, Defendants asserted Plaintiffs failed to offer adequate evidence of the wages owed. Plaintiffs also challenged the District Court’s rulings on damages and attorneys’ fees, including that Plaintiffs had a fluctuating workweek limiting them to half-time overtime wages, and that the attorneys’ fee award for Plaintiffs should be reduced for pursuing meritless arguments. The Fifth Circuit held that District Court properly determined that Plaintiffs were not exempt, as there was ample basis in the record for concluding that Plaintiffs’ monitoring and annotating video footage did not require them to evaluate possible courses of conduct or make decisions after considering various possibilities. Thus, the Fifth Circuit agreed that the field engineers’ work was production-related in that they provided Defendants’ service and compiled the final video product through their filming and annotating. The Fifth Circuit also held that the District Court did not err when it determined that Plaintiffs evidence was adequate to create a reasonable inference regarding the number of overtime hours they worked. Because field engineers were treated as exempt, the Fifth Circuit opined that they did not closely track their work hours. Instead, for most of their tenures, field engineers were directed to record twelve-hour days when they worked at a client’s well site and eight-hour days when they stayed in the shop, during which they were repairing or cleaning tools and completing job paper work. Further, the Fifth Circuit rejected each of Plaintiffs’ challenges on appeal. The Fifth Circuit found that the fact that Plaintiffs’ earnings fluctuated from week to week proved nothing absent evidence that the change in hours caused the variation. Finally, the Fifth Circuit held that the District Court did not err or abuse its discretion in awarding attorneys’ fees, as well as when it applied a downward adjustment of attorneys’ fees based on Plaintiffs’ pursuit of the larger damages multiplier. For these reasons, the Fifth Circuit affirmed the District Court’s post-trial rulings on liability, damages, and attorneys’ fees. Johnson, et al. v. Mattress Warehouse, Inc., 2021 U.S. Dist. LEXIS 176104 (E.D. Penn. Sept. 16, 2021). Plaintiff, a retail salesperson, filed a collective and class action alleging that Defendant misclassified salespersons as exempt employees and thereby failed to pay them overtime compensation in violation of the FLSA and the Pennsylvania Minimum Wage Act (“PMWA”). Defendant filed a motion for summary judgment on the grounds that Plaintiff was subject to the commissioned retail sales employees exemption and thus not entitled to overtime pay under either statute. At the outset, the Court noted that the FLSA instructs that an employee is exempt under the commissioned retail sales employee exemption if: (i) their "regular rate of pay" was "in excess of one and one-half times the . . . minimum hourly rate," and (ii) "more than half" of their "compensation for a representative period (not less than one month) represents commissions on goods. Id . at *8. Further, when determining what proportion of compensation consists of commissions, "all earnings resulting from the application of a bona fide commission rate shall be deemed commissions . . . without regard to whether the computed commissions exceed the draw or guarantee." Id . Defendant argued that the undisputed material