UNITED STATES DEPARTMENT OF LABOR; R. ALEXANDER ACOSTA, Secretary of Labor, Plaintiffs - Appellees,
FIRE & SAFETY INVESTIGATION CONSULTING SERVICES, LLC; CHRISTOPHER HARRIS, Individually and as Owner of Fire & Safety Investigation Consulting Services LLC, Defendants - Appellants.
Argued: December 12, 2018
from the United States District Court for the Northern
District of West Virginia, at Clarksburg. Irene M. Keeley,
District Judge. (1:17-cv-00025-IMK)
Lawrence Amos, Jr., MILLER & AMOS ATTORNEYS AT LAW,
Charleston, West Virginia, for Appellants.
Goldberg, UNITED STATES DEPARTMENT OF LABOR, Washington,
D.C., for Appellees.
H. Miller, MILLER & AMOS ATTORNEYS AT LAW, Charleston,
West Virginia, for Appellants.
S. O'Scannlain, Solicitor of Labor, Jennifer S. Brand,
Associate Solicitor, Paul L. Frieden, Counsel for Appellate
Litigation, Office of the Solicitor, UNITED STATES DEPARTMENT
OF LABOR, Washington, D.C., for Appellees.
GREGORY, Chief Judge, WYNN and THACKER, Circuit Judges.
& Safety Investigation Consulting Services, LLC,
("Fire & Safety") and Christopher Harris
("Harris"), the owner of Fire & Safety, appeal
the district court's determination that Fire & Safety
violated the Fair Labor Standards Act ("FLSA") by
failing to pay certain employees proper overtime
compensation. At issue is whether Fire & Safety's
payment system violated the FLSA by failing to pay for
overtime. The district court held that the payment system
violated the FLSA because it used a blended rate that
functioned as the actual hourly rate for all hours worked,
regardless of whether those hours were overtime or
non-overtime. We agree and therefore, affirm.
2008, Harris founded Fire & Safety,  which provides
fire investigation and security guard services to the
company's clients in the oil and gas industry. In 2013,
Fire & Safety began employing individuals
("Consultants") to provide onsite safety and
environmental consulting services in West Virginia and
Pennsylvania. Between December 23, 2014, and December 6,
2016, Consultants were regularly scheduled to work what is
known in the industry as a "hitch." J.A. 1266.
Consultants assigned to a "hitch" worked 12 hours
per day for 14 consecutive days, followed by 14 consecutive
days off, resulting in a total of 168 hours worked during a
full "hitch." Consultants sometimes worked a full,
168-hour hitch, and sometimes fewer than the full 168 hours.
& Safety initially paid the Consultants on an hourly
basis-a regular rate for the first 40 hours worked in a
workweek, and then overtime at one and one-half times their
regular rate for hours worked over 40 per workweek. Fire
& Safety later transitioned to a different payment system
based on a "hitch rate." Under that system, if the
Consultants worked the full two-week hitch of 168 hours, or
84 hours per workweek, Fire & Safety paid a fixed sum
that allegedly reflected a regular rate and an overtime
rate-i.e., the regular rate for the first 40 hours a
Consultant worked in a particular week and one-and-a-half
times the regular rate for the next 44 hours the Consultant
worked during the week. If the Consultants worked
less than a full 168-hour hitch over the two-week
period, Fire & Safety adjusted the employee's pay
using a "blended rate." Fire & Safety
calculated the blended rate by dividing the Consultant's
fixed hitch rate by 168 (the total number of hours worked in
a normal hitch) and then multiplying that hourly blended rate
by the number of hours actually worked by the Consultant to
obtain the Consultant's pay for that two-week period.
hypothetical example of a Consultant working at a purported
regular rate of $10/hour illustrates this payment scheme.
Under Fire & Safety's description of the hitch
payment structure, the Consultant's fixed rate for a full
168-hour hitch would allegedly be based on 80 hours of
non-overtime (at $10/hour), for a total of $800, and 88 hours
of overtime (at $15/hour), for a total of $1, 320, for a
combined total of $2, 120. If the Consultant worked the full
two-week, 168-hour hitch, he was paid $2, 120-his hitch rate.
However, if the Consultant worked, say, only 48 hours of the
hitch, he was paid using the blended rate, obtained by
dividing $2, 120 by 168 hours; in our example, that results
in a blended rate of $12.62 (rounded to the nearest cent).
For 48 hours of work, the Consultant would then be paid
$12.62 times 48, for a total of $605.76.
October 2015, an anonymous Consultant complained to the
Department of Labor's Wage & Hour Division that Fire
& Safety was violating the FLSA by failing to pay
overtime. A Wage & Hour Investigator assigned to the case
ultimately determined that Fire & Safety had failed to
pay proper overtime and keep accurate records and calculated
that Fire & Safety owed significant back wages. At the
end of the investigation, Fire & Safety, without
admitting liability or agreeing to pay damages, ceased use of
the hitch rate payment scheme.
February 22, 2017, the Department of Labor filed a complaint
against Fire & Safety, alleging that Fire & Safety
violated the FLSA by employing the Consultants for workweeks
longer than 40 hours per week without overtime compensation.
The Department of Labor also alleged that Fire & Safety
violated the FLSA by failing to make and maintain adequate
and accurate records of hours worked by the Consultants. The
Department of Labor sought back wages, liquidated damages,
and an injunction.
discovery, both parties filed motions for summary judgment.
On May 3, 2018, the district court granted in part and denied
in part the Department of Labor's motion for summary
judgment and denied Fire & Safety's motion for
summary judgment. The district court concluded that Fire
& Safety violated the FLSA's overtime requirement by
failing to pay the Consultants an overtime premium for their
overtime hours. The district court also concluded that Fire
& Safety failed to keep proper records, including records
of the hours worked by each Consultant each day, in violation
of the FLSA. The district court denied the Department of
Labor's request for injunctive relief but granted $817,
902.11 in back wages and $817, 902.11 in liquidated damages,
for a total damages amount of $1, 635, 804.22. Fire &
Safety timely appealed the district court's decision.
"review the district court's grant of summary
judgment de novo." Morrison v. Cty. of Fairfax,
826 F.3d 758, 765 (4th Cir. 2016) (citation omitted). A court
may award summary judgment only when "the movant shows
that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law."
FLSA is "best understood as the 'minimum
wage/maximum hour law.'" Trejo v. Ryman Hosp.
Props., Inc., 795 F.3d 442, 446 (4th Cir. 2015).
Congress enacted the FLSA "to protect all covered
workers from substandard wages and oppressive working
hours." Id. (quoting Barrentine v.
Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 739
of its overtime protections, the FLSA requires that covered
employers pay their employees "at a rate not less than
one and one-half times the regular rate at which [they are]
employed" for any hours worked in excess of 40 hours per
workweek. 29 U.S.C. § 207(a)(1). The "regular
rate" includes "all remuneration for employment
paid to" the employee, apart from eight categories of
payment not at issue here. 29 U.S.C. § 207(e); see
also Flood v. New Hanover Cty., 125 F.3d 249, 251 (4th
Cir. 1997) ("The employee's 'regular rate'
is the hourly rate that the employer pays the employee for
the normal, nonovertime forty-hour workweek.") (quoting
Walling v. Helmerich & Payne, Inc., 323 U.S. 37,
40 (1944)). The FLSA's overtime requirement "was
intended to spread employment by placing financial pressure
on the employer and to compensate employees for the burden of
a workweek in excess of the hours fixed in the Act."
Calderon v. GEICO Gen. Ins. Co., 809 F.3d 111, 121
(4th Cir. 2015) (quoting Helmerich & Payne, 323
U.S. at 40) (internal quotation marks omitted).
determine whether Fire & Safety's payment scheme
violated the FLSA, we must first decide what constitutes the
"regular rate" of compensation actually paid to the
Consultants, as that rate establishes the proper overtime
compensation due. 29 U.S.C. § 207(a)(1); Walling v.
Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 424
(1945) (describing the "regular rate" as the
"keystone" of Section 207(a)(1)). The regular rate
is "the hourly rate that the employer pays the employee
for the normal, non-overtime forty-hour workweek."
Flood, 125 F.3d at 251 (citation omitted). When
determining the regular rate, courts are "required to
look beyond that which the parties have purported to
do," as the regular rate is an "actual fact."
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