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Acosta v. Mountain Masonry, Inc.

United States District Court, W.D. Virginia, Abingdon Division

January 2, 2018



          James P. Jones United States District Judge.

         Karen M. Barefield, Office of the Regional Solicitor, U.S. Department of Labor, Arlington, Virginia, for Plaintiff'; John M. Lamie, Browning Lamie & Gifford, PC, Abingdon, Virginia, for Defendants Mountain Masonry, Inc., and Billy Cook, as President and Individually.

         In this Fair Labor Standards Act case, the defendants are in default and the court has received evidence as to the amount of a default judgment. The defendants have objected to the amount of back wages to be paid and to certain aspects of injunctive relief requested by the Secretary of Labor ("Secretary"). For the reasons set forth in this Opinion, . I will sustain in part and overrule in part the defendants' objections.


         In accordance with Federal Rule of Civil Procedure 52(a), and based on my opportunity to assess the credibility of the witnesses, the following are my findings of fact, based on the evidence presented at an evidentiary hearing held on the plaintiffs request for a default judgment.

         Dawn Young, a Labor and Hour Investigator with the Department of Labor, visited the offices of defendant-employer Mountain Masonry, Inc. ("Mountain Masonry") in January 2016 to review payroll documents, time records, and other records of the business! A complaint from an employee to the Department of Labor prompted Young's investigation. Young had sent a letter to Mountain Masonry in advance of the meeting notifying Mountain Masonry of when she would be visiting and the reason for her visit, and listing documents she wished to review. She had also communicated with codefendant Billy Cook, the owner of Mountain Masonry, before her visit, and he had sent her some records to review.

         During her visit, Young reviewed boxes of pay stubs. The pay stubs contained descriptions of work performed and listed deductions. She was also shown a separate box of pay stubs that contained no descriptive information regarding the purpose of the payments. Cook told Young that those pay stubs represented reimbursements for travel expenses or per diem payments. No deductions had been taken from those payments. Prior to reviewing the separate box of pay stubs, Young asked Cook why there were no overtime payments noted on the payroll documents. Cook replied that his employees did not work much overtime.

         Employees told Young that Mountain Masonry had a practice of issuing two separate paychecks per pay period. The first check represented payment for 40 hours per week, with appropriate deductions withheld. The second check represented payment at the regular hourly rate for any hours worked in excess of 40 hours, plus three dollars per hour for each hour that the employee worked at a distant job site. Cook told Young that this additional three-dollars-per-hour payment was a "per diem" or travel bonus. Employees reported to Young that their hours worked had been tracked accurately by the foremen at their job sites.

         Young's investigation revealed that 112 employees had been paid at their regular pay rate for hours worked in excess of 40 hours per week. These employees were not paid 150% of their regular wage for overtime hours as the law required. Young used the pay stubs provided by the defendants to calculate the amount of back wages the defendants owed to the workers as a result of the failure to pay a 50% premium on overtime hours. Per Department of Labor policy, she did not include back wages for employees who were owed less than $20. Young calculated that the defendants owed workers $98, 198.11 in back wages incurred from October 28, 2013 through June 26, 2016.

         At some point during the investigation, Young learned what the second set of paychecks represented and directed Cook to stop paying employees in the above-described fashion. Following that directive, Mountain Masonry continued to issue two sets of paychecks, but the second set of paychecks no longer indicated what portion of the payment was for overtime hours and what portion was for the so-called per diem. Young used the hourly rates from the regular pay stubs to calculate the amounts from the second pay stubs that represented payment for hours worked in excess of 40 per week. By October 2016, Mountain Masonry had come into compliance with the law and was no longer issuing separate paychecks or paying workers their standard hourly rates for overtime hours.

         Young did not deduct the per diem payment amounts from the amount of back wages owed because she concluded that the per diem payments were not intended as compensation for hours worked. Rather, based on representations by Cook and employees, the per diem payments were intended to cover incidental expenses incurred by employees due to the fact that they were working at sites far from home. Mountain Masonry paid for the workers' hotel accommodations while they were working at distant sites, but it did not pay for their meals.

         Michael White, a former employee of Mountain Masonry, testified on behalf of the Secretary. White worked for Mountain Masonry for approximately a year in 2015. He was paid his normal hourly rate for all hours worked and was not paid a 50% premium on hours worked over 40 per week. He was paid with two separate paychecks, as described above. He had previously worked for Cook 10 to 12 years earlier, and Cook had not paid him an overtime premium at that time. The defendants never paid White back wages for overtime hours he worked in 2015. He did receive a bonus of three dollars per hour when he was working at remote sites. He understood that this payment was intended to Compensate him for travel expenses, like meals away from home. He did not receive the per diem amount when working at sites closer to home. White explained that he agreed to perform extra work at his normal hourly rate because he needed the money.

         Cook testified that he did not force employees to work overtime but allowed them to decide how many hours they wanted to work. The employees understood that they would not receive a 50% premium on overtime hours. Cook testified that he treated overtime hours as independent contractor labor, even though he treated the same workers as employees for their regular 40 hours of work each week. When working at a remote job site, each worker received an additional four hours of pay to compensate for driving time, regardless of the actual time it took them to travel to and from the job site.

         Cook no longer allows workers to work more than 40 hours per week. He has retained the services of an accounting firm to ...

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