Wages & Hours

B. Parties’ Contentions

Plaintiffs seek an order granting summary judgment as to liability, contending that:

1. Defendants willfully violated the minimum wage provisions of FLSA by failing to pay Gaxiola and the FLSA class members the minimum wage established in 29 U.S.C. § 206(a)(1) when compensation on a piece-rate basis resulted in pay less than the minimum wage.

A. Coverage by the FLSA

The FLSA is a remedial statute designed to “eliminate substandard labor conditions” in the United States. It was enacted to protect workers who lack sufficient bargaining power to secure a subsistence wage. Under the FLSA, an employer is required to pay each employee wages at or above the minimum wage rate for the hours worked during each workweek. The FLSA applies to all employees for whom there is not a specific exemption. H-2B workers are not specifically exempt; therefore, they are protected by the provisions of the FLSA.

B. Failure to Pay Minimum Wage when Piece-Rate Compensation was Less than Minimum Wage

Employers must pay minimum wage for all hours worked. Thus, workers paid on a piece-rate basis are entitled to the minimum wage rate when the piece-rate compensation does not reach the minimum wage.

Plaintiffs seek summary judgment as to defendants’ liability on their claim that workers paid on a piece-rate basis did not receive minimum wage for all hours worked as required by the FLSA. The court agrees that summary judgment is appropriate because there are no contested issues of fact with regard to defendants’ liability for failing to pay their employees compensated on a piece-rate basis at least minimum wage during some periods.

Defendants had a production standard in place during the 2005, 2006 and 2007 seasons in which crab pickers were required to pick 3.5 pounds of crab per hour. No one was ever fired for failing to meet the production standard. Yet the evidence shows there were times that defendants paid employees by the pound, even if that pay did not rise to the level of minimum wage. For example, Gaxiola’s pay stub from July 11, 2007, shows that she worked 34.4 hours and received gross pay of $164.35. There is a handwritten notation of 86 ½ on the pay stub, which purportedly is the number of pounds of crab picked by Gaxiola that week. Multiplying that number by the agreed-upon piece-rate of $1.90 per pound equals the $164.35 gross pay received by Gaxiola that week. However, $164.35 for 34.4 hours of work is only $4.78 per hour.

When questioned about defendants’ practices, Ms. Midyette admitted that defendants did not always comply with the FLSA’s minimum wage requirement. Ms. Midyette stated: “If you’re-if you’re trying to get me to say that once in awhile they weren’t paid their full thing, yes.” “If you’re-If I-are there incidents where they may not have made production, and got paid by production instead of hours.”

Based on the pay stubs presented to the court as well as Midyette’s own deposition testimony, the court finds that defendants violated the FLSA at times by failing to pay workers minimum wage when their piece-rate compensation was less than minimum wage. The court therefore grants plaintiffs’ motion for summary judgment as to defendants’ liability on this issue. The court makes no findings as to plaintiffs’ damages at this time.

D. Willfulness

Defendants move for summary judgment as to plaintiffs’ FLSA claims arising prior to August 1, 2006. Defendants contend there is no genuine issue of material fact that any alleged violations were not willful and these claims are therefore barred by the statute of limitations.

The statute of limitations for claims under the FLSA is two years, unless plaintiffs can prove that defendants acted willfully. If willfulness is shown, then the statute of limitations is increased to three years. Plaintiffs bear the burden of proving that defendants’ acts or omissions were “willful” within the meaning of the FLSA. An employer’s violation of the FLSA is willful if the employer either “knew or showed reckless disregard for the matter of whether its conduct was prohibited by” the FLSA. Unreasonable or negligent conduct is not enough to constitute “willful” conduct.

1. Piece-rate violations

Defendants knew about their obligation to pay the minimum wage to all of their employees. Defendants additionally knew that when they paid their employees on a piece-rate basis they would be required to pay them additional wages if their piece-rate compensation was not at least equal to minimum wage. Plaintiff argues that despite knowledge of their obligations under the FLSA, defendants knowingly and intentionally failed to pay plaintiff and members of the FLSA class who were compensated on a piece-rate basis at least minimum wage on several occasions. This court agrees. In her deposition, defendant Midyette admits that she understood that she was required to pay at least minimum wage for the hours worked, even if she was in the practice of paying on a piece-rate. She also admits that she did not always follow what she knew to be the law. Therefore, as to plaintiffs’ claim that defendants violated the FLSA by paying a straight piece-rate wage, this court finds those violations to be willful under the FLSA.

E. Good Faith Defense

The Portal-to-Portal Act of 1947, 29 U.S.C. §§ 251 et seq., includes three employer defenses that may apply even if the employer is found to be in violation of the FLSA: Section 9, which provides a defense based on employer acts or omissions that occurred before the effective date of the Portal-to-Portal Act; Section 10, which provides a bar to liability if the employer can prove good faith as defined therein; and, Section 11, which allows the court, in its discretion, to refuse to award liquidated damages to a prevailing plaintiff under certain circumstances.

Section 10 of the Portal-to-Portal Act, the good-faith defense to the FLSA, provides, in pertinent part, as follows:

1. In any action or proceeding based on any act or omission on or after May 14, 1947, no employer shall be subject to any liability or punishment for or on account of the failure of the employer to pay minimum wages or overtime compensation under the Fair Labor Standards Act of 1938, as amended if he pleads and proves that the act or omission complained of was in good faith in conformity with and in reliance on any written administrative regulation, order, ruling, approval, or interpretation, of the USDOL, or any administrative practice or enforcement policy of USDOL with respect to the class of employers to which he belonged. Such a defense, if established, shall be a bar to the action or proceeding, notwithstanding that after such act or omission, such administrative regulation, order, ruling, approval, interpretation, practice, or enforcement policy is modified or rescinded or is determined by judicial authority to be invalid or of no legal effect.

To avail itself of this defense, an employer must prove that it actually relied upon an administrative regulation, order, ruling, approval, interpretation, enforcement policy or practice. In deciding whether defendants have proven good faith, the court must look at (1) the particular “agency action” upon which the defendants relied; (2) whether defendants can show actual reliance; and, (3) whether defendants acted in good faith, both objectively and subjectively.

Defendants attempt to make an argument, albeit a weak one, that they should be entitled to the good faith defense, relying on basically the same evidence used to argue that their actions were not willful. Merely participating in the H-2B program for several years and assuming you were in compliance because the government never told you otherwise is not sufficient to meet the heavy burden required to take advantage of the good faith defense. Therefore, defendants’ motion for summary judgment as to the good faith defense is DENIED.

A. Tracking East Penn Employees’ Time

East Penn maintains two sets of time records for each of their employees. The first is what East Penn deems “actual” time (or “Actl” as appears on some time sheets). Per East Penn policy, all employees are required to swipe in and out using a card-scanning system located in the plant to which they are assigned. Employees are required to swipe in no more than 14 minutes before the start of their shift and 14 minutes after the end of their paid shift. The time clock system records these swipe times to the minute, which are then preserved in East Penn’s “mainframe.”

The second set of time records is for “adjusted” time. Adjusted time corresponds to the employees’ scheduled shift times and does not show the 1-14 minutes before and after shifts. Both the actual and adjusted time entries appear on an employee’s Payroll Transaction Edit List.East Penn does not pay for “actual” time—that is, the recorded between the swipes. Instead, East Penn pays employees based on “adjusted” time—the length of their scheduled production shift—which is paid out in 15-minute increments. Some employees swipe in when their shift time officially starts so there is no discrepancy between “actual” and “adjusted” time.

The parties dispute the import of time clocks and East Penn’s requirement that employees clock in and out no more than 14 minutes from the start and end of their shifts. East Penn maintains that the time clock policy is used only as an attendance tool to ensure that employees are in the plant for their full shift, not to mark the official beginning or ending of the continuous workday as a means to calculate pay. The Secretary contends that the “14-minute rule” is probative of East Penn’s knowledge that its employees required more than the time East Penn has allotted to complete pre- and post-shift activities.

B. East Penn’s Pay Policies for Donning and Doffing

There are two pertinent East Penn policies governing beginning and end-of-day activities. East Penn’s Time Clock and Pay Procedures, effective as of 1998, require that each employee be at her or his workstation at shift starting time. In 2003, East Penn formalized a five-minute “grace period” for compensable start-of-shift clothes changing (the 2003 Company Uniform Policy). Under this policy, “for pay purposes,” employees have five minutes after the start of their shift to report to their workstation.

In 2016, in response to an employee complaint, East Penn increased its paid shower and end-of-shift clothes changing time in all plants to ten minutes (the 2016 Personal Protective Equipment/Uniform/Shower Policy). Since then, if an employee works in an area that requires a uniform, the following policy applies:

1. Employees are expected to be at their designated workstations wearing their uniform and other PPE (Personal Protection Equipment) at the start of their shift. For pay purposes, employees will be granted a five-minute grace period after the start of the shift to report to their workstation for the purpose of donning uniforms. Employees may be granted longer clean up time in departments or under certain circumstances when approved by Plant Management of Supervisor.

2. Employees will be granted a 10-minute shower time which includes walking distance to the locker room, doffing the uniform and showering.

C. Time Spent by Uniformed Employees on Pre and Post Shift Activities

The time that East Penn employees spend donning, doffing, and showering is compensable. The parties dispute whether the employees performed this compensable work outside of their eight-hour shift times.

During discovery, East Penn stated that its pertinent personnel are aware that some employees don their uniforms prior to the start of their shift and that some employees arrive at their workstations prior to the start of their shift. In support of its motion for summary judgment, East Penn submitted some 650 employee declarations. Employees attest to the time they arrive at work and their pre- and post-shift routine, including estimating the amount of time for each. Of those, roughly 200 employees acknowledged that the grace period exists, and of that subset, some of them stated that they make use of the grace period some portion of the time. Other employees declare that they acquire and don their uniform prior to the shift start.

To support its claim that employees were expected or made to work off the clock, the Secretary submitted the results of a time study conducted by his expert, Dr. Robert G. Radwin. Dr. Radwin conducted what is known as a “did-take” study that measures the actual time employees spent to perform given tasks. Of the 29 plants within the Lyon Station complex, he selected a subset of eight plants to study. Within those eight plants, he and his research team ultimately observed the pre-shift activities of 370 randomly selected employees who were required to wear uniforms and PPE and post-shift activities of 131 employees who were likewise required to wear uniforms and shower. Doc. No. 174 at 9.

To determine when uniformed employees begin their pre-shift activities, Dr. Radwin measured the time between their “first touch”—i.e., when they acquired their uniform or PPE item—and compared that time to their shift start time. Dr. Radwin concluded that, for those uniformed employees, the 370 uniformed employees performed their “first touch” approximately 15.6 minutes before their shift time started. As for measuring the time to complete end-of-shift activities, Dr. Radwin recorded the time that uniformed employees left the production floor and the time of their last touch. Dr. Radwin did not compare the results of his study to the amount of time East Penn’s pay policies operate to compensate an employee.

East Penn admits that Dr. Radwin’s “own subjects acquired and donned their uniform either entirely or partially on paid time, i.e., during East Penn’s grace period.”

A. Uncontested Issues

Of the 11 grounds raised by the Secretary, East Penn does not dispute two of them: it admits (1) that it is a covered enterprise engaged in commerce or in the production of goods for commerce under the FLSA, and (2) that the donning and doffing activities at issue are considered “integral and indispensable” within the meaning of Steiner v. Mitchell. Accordingly, the Court grants summary judgment in the Secretary’s favor as to these two undisputed issues.

B. Correct Measurement of Compensable Time

The Secretary moves for summary judgment as to the activities that start and stop the “continuous workday.” The “continuous workday rule” defines the “workday” as “the period between the commencement and completion on the same workday of an employee’s principal activity or activities.” The Supreme Court held that “principal activity or activities embraces all activities which are an integral and indispensable part of the principal activities.” Although East Penn admits that donning, doffing, and showering are integral and indispensable activities, it does not agree that it is obligated to pay for all time between the start and stop of the continuous workday (excluding meal breaks or off-duty breaks).

As has been previewed in prior memoranda throughout this litigation, the parties vigorously dispute the correct measure of the continuous workday. The Secretary asks the Court to find, as a matter of law, that East Penn must record and pay their uniformed employees for the actual time it takes to don and doff a uniform and shower. East Penn asserts that it must compensate its employees only for time reasonably spent donning, doffing, and showering. East Penn admits that it does not record and has not recorded and does not pay for the actual time spent on the indisputably compensable activities. But it contends that the 15 minutes of compensable time it applies to its employees (i.e., the five-minute grace period at the start, and the ten minutes at the end of the day) is reasonable and sufficient.

As a matter of legal principle, the Court cannot adopt East Penn’s position. The Court reaches this conclusion having reviewed relevant case law, as well as the Department of Labor’s rulings, opinions, and interpretations. Collectively, these sources support the Secretary’s interpretation as a matter of precedent, pragmatism, and, of no small moment, achieving the purpose of the FLSA.

Although the Supreme Court in Alvarez did not reach the issue of the correct method of measurement, it unequivocally held that the continuous workday rule requires that employees be compensated for all time spent during the continuous workday. Nothing in the Court’s opinion suggests that “all” is interchangeable or otherwise synonymous with “reasonable.”

At first glance, the circuit courts of appeals that have addressed the correct measure appear to be split between an actual and reasonable time standard. Absent binding precedent from the Third Circuit Court of Appeals on this issue, this Court may look to other circuits for helpful guidance. The Ninth and Tenth Circuit Court of Appeals appear to adopt a reasonable time standard, while the Second and Sixth Circuits have endorsed an actual time requirement. But partitioning in this way is overly reductive. That is because no circuit court has endorsed the reasonable time standard after Alvarez was issued.

Moreover, when those courts that have endorsed a reasonable time standard, it was in the context of fashioning a damages award when there were no records of actual compensable time worked. The circuit “split” disappears when one considers the difference between liability and damages. In Alvarez v. IBP, the Ninth Circuit affirmed the district court’s decision to calculate compensable time on the “basis of a reasonable time” as “within the district court’s discretion.” Although the Tenth Circuit in Reich v. IBP, Inc discussed a reasonable time measure for calculating back pay damages, the resulting permanent injunction obligated the defendant to “implement recordkeeping practices sufficient to record the time spent by each employee in performing pre-shift and post-shift activities found to be compensable under the Act.” So put, the Tenth Circuit was not endorsing an employer’s own “reasonable” calculation of work in perpetuity.

Within this Circuit, East Penn interprets Lugo v. Farmer’s Pride Inc to “embrace” a reasonable time standard. It is true that Lugo permitted the defendant’s expert to present evidence “to assist the jury in determining the reasonable amount of time that Defendant’s employees spend on certain activities at the poultry production plant, including donning, doffing, sanitizing, washing, and walking.” But finding that the expert’s methodology is admissible for consideration is not a ruling on the proper standard for measuring time worked.

In each of these cases, the courts relied on reasonable estimations as a proxy to reconstruct the amount of time the employees spent because there were no time records. It does not absolve an employer of its obligations under the FLSA to record and compensate for actual time. 29 U.S.C. § 211(c).

Indeed, recent donning and doffing cases have held actual time is the appropriate standard because it more faithfully adheres to precedent and the statutory purposes of the FLSA.

East Penn seizes on certain language in Mt. Clemens that comments on the unfairness and impracticality of compensating employees who take “roundabout journeys to their workstation for purely personal reasons.” East Penn’s argument is pragmatic and, for that reason, tempting. But it is not legally sound. Theoretically, a worker could arrive well in advance of his shift, don his uniform—thereby initiating the continuous workday—then lounge about for some extended amount of time, and claim compensation for that leisure time. The Court is certainly mindful of this possibility. To the extent East Penn is fearful of excess idling, it can implement policies to manage the work performed during the continuous workday. But speculation that an intrepid, self-indulgent employee might take advantage of the legal standard cannot support prophylactically chiseling wages.

Beyond persuasive jurisprudence, the Court can also consider the Secretary of Labor’s and the Wage and Hour Division’s rulings, opinions, and interpretations as they “constitute a body of experienced and informed judgment.”

Support for the actual time standard appears in Department of Labor regulations, including one that East Penn relies on. Although 29 C.F.R. § 785.48(a) does not obligate an employer to use time clocks, for those that do—like East Penn— the regulation discourages discrepancies between clock records and “actual hours worked.” That is because gaps in those time values “raise a doubt as to the accuracy of the records of the hours actually worked.”

In what has pre-occupied much of the parties’ post-summary judgment briefing here, the parties have submitted dueling notices of supplemental authority from prior DOL interpretations and guidance. Each side claims they are providing the clean, unambiguous answer. The Court cannot agree. The stacks of briefing on competing interpretations alone suggest the answer is not so obvious. So, the Court gives minimal probative value to these “authorities.”

The Secretary cites to a 2001 Opinion Letter from the Wage and Hour Division, which it argues establishes the DOL’s endorsement of actual time. In response to whether an employer could permissibly pay all employees based on an average amount of time that all employees work, the DOL responded that “company must record and pay for each employee’s actual hours of work, including compensable time spent putting on, taking off and cleaning his or her protective equipment, clothing or gear.”

East Penn relies on the DOL’s Wage and Hour Division Field Operations Handbook for what it contends supports a reasonable time standard. Courts have found that the Handbook lacks the force of law and is not entitled to deference under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). However, the Handbook may be considered to the extent it offers persuasive guidance. Skidmore v. Swift & Co., 323 U.S. 134 (1944).

The Handbook authorizes employers to “set up a formula by which employees are allowed given amounts of time to perform clothes changing and washup activities, provided the time set is reasonable in relation to the actual time required to perform such activities.” To the extent the Court considers the Handbook, it is at most of little relevance. That is because the cited provision applies where a collective bargaining agreement governs but is silent whether clothes changing and wash-up time should be included in hours worked. CBAs are a means of ordering a labor relationship between employer and employees through the private law. Here, there is no CBA for East Penn employees.

But even if a CBA were in place, East Penn relies on version of the FOH from 1996. The later-in-time 2001 Opinion Letter from the DOL states that a company must record and pay for actual hours of work.

Finally, the Supreme Court has consistently held that the FLSA should be liberally construed in favor of employees. The actual time standard effectuates this employee-centric policy goal, incentivizing employers to comply with the FLSA’s record-keeping requirements while guaranteeing that employees are appropriately compensated.

Accordingly, the Court grants summary judgment in the Secretary’s favor on this point. It is improper as a matter of law for East Penn to pay an estimated amount of time for compensable pre- and post-shift activities, as they are properly part of the continuous workday. To the extent that the concept of “reasonableness” permeates this case, it is limited to the calculation of damages once liability is established.

D. Whether East Penn Violated the FLSA Overtime Requirements

The Secretary also moves for a finding that East Penn violated the FLSA’s overtime provision by failing to compensate its uniformed employees for the actual time spent donning, doffing, and showering. In other words, the Court must find that no reasonable jury could find that East Penn did not fully compensate its uniformed employees for the actual time spent on these activities.

Even though the Court found that East Penn’s records are inadequate, the Secretary has the burden of proving that the employees have actually performed work for which they were improperly compensated.

East Penn does not dispute that it does not compensate for actual time spent on these activities. That is because East Penn maintains that it pays for what it deems a “reasonable” amount of time as part of the shift time. East Penn’s undisputed pay policy for uniformed (non-continuous operations) employees provides for five minutes of donning time, should the employee use the “grace period,” and ten minutes of doffing and showering time— independent of whether it takes employees more or less than this allotted amount of time. But, in opposing summary judgment as to its liability, East Penn argues that the Secretary has failed to show that the employees’ claims exceed the time already compensated.

In support of its motion, the Secretary relies on (1) East Penn’s admissions, (2) employee declarations that East Penn gathered and submitted, (3) time study data from Dr. Radwin, and (4) East Penn’s time clock records showing the swipe in and out time.

First, the Secretary relies on East Penn’s own admissions that its pay practices violate the FLSA’s overtime provision. In its responses to requests for admission and deposition testimony from managers, East Penn admits that it is aware that “some employees chose to don required PPE before their scheduled shift starting time, that”some employees chose to shower after their schedule shift time,” and that management observed employees arriving at their workstation prior to their shift time. It is undisputed that East Penn employees are paid for their scheduled eight-hour shift time. So, if an employee dons his uniform prior to the start of his shift—an activity that East Penn does not dispute is compensable work—East Penn admittedly does not compensate for that time.

East Penn responds that not all employees don uniforms and PPE prior to the start of their shift, opting instead to use the grace period, nor are they required to. But it undisputed that East Penn’s Time Clock and Pay Procedures require that each employee be at his workstation at shift starting time. East Penn does not square this seeming inconsistency. Rather, it relies on employee declarations that acknowledge the existence of the grace period and their use of it. Because the correct legal standard is payment for “actual” work, the existence of the five-minute grace period—whether illusory as the Secretary contends or fully in effect as East Penn urges—does not change the analysis. If an employee acquires and dons his uniform prior to the start of his shift, that employee has “suffered” work and is legally entitled to compensation.

Second, the Secretary points to the roughly 650 declarations from East Penn employees that the company gathered and submitted as evidence that its employees routinely used more than five minutes for donning activities. East Penn does not dispute the authenticity or contents of the hundreds of these declarations.

The Secretary maintains that overtime violations appear on the face of the declarations that East Penn produced. Certain employee declarants attest to the grace period but take more than the allotted five minutes.

East Penn responds that the declarants also state that they “believe that they have been properly and fully compensated for all straight time and overtime hours associated with their regular production work as well as their donning/doffing activities before and after their regularly scheduled shift time.” So, East Penn maintains, the employees themselves undermine the Secretary’s case. The Court is not so convinced for two reasons. First, to the extent East Penn questions the reliability of the time estimates, such a challenge does not raise a genuine dispute of material fact. That is because East Penn does not dispute the fact the employees have stated that they don their uniforms and PPE prior to the start of their shift. It is this admission of work performed out-side of the compensable eight-hour shift that the Secretary relies on to establish liability.

Second, at summary judgment, the Court avoids credibility determinations as to the declarants’ beliefs. To the extent the declarations contain evidence that is unfavorable to East Penn’s case, that evidence can nevertheless be construed against East Penn. That is because East Penn is the party proponent of the evidence and because it is clear that the formats of the declarations, which each follow the same format, were prepared by counsel.

On the basis of East Penn’s admissions and its own declarations—the contents of which East Penn does not dispute—the Court finds that the Secretary has established that East Penn’s pay practices violate the FLSA’s overtime provisions as to its uniformed non-continuous operations employees. Although the Court finds East Penn has admitted liability as to this subgroup of employees, that is not the end of the inquiry. Rather, this ruling is separate and distinct from determining whether East Penn can assert a de minimis defense that may reduce or eliminate any damages.

The Secretary also offers Dr. Radwin’s time study as representative evidence to establish that employees donned, doffed, and showered outside of their paid shift times. As for end-of-shift activities, Dr. Radwin calculated that, for the 125 uniformed employees he studied, 11 minutes passed between leaving the production floor and completing their last activity. East Penn does not dispute that he reported an 11-minute average, to the extent he documented his observations. But it notes that this figure does not account for the ten minutes of paid time (and 20 minutes for continuous operations employees) that its employees are allotted at the end of a shift. Indeed, Dr. Radwin testified that he did not calculate a measure of uncompensated time and acknowledged that some number of his subjects were compensated—in whole or in part—for those activities measured.

As to pre-shift activities, of the 370 uniformed employees he chose to study, Dr. Radwin estimated that, on average, they began their workday roughly 16 minutes before shift started. East Penn does not dispute that this is the figure Dr. Radwin reported. But it again criticizes the reliability of this assertion, including whether the employees’ activity actually is “integral and indispensable” —hence, compensable—so as to start the continuous workday.

East Penn has launched numerous challenges to Dr. Radwin’s methodology and calculations, including his admitted extrapolating the estimated one-plant average to all plants and employees, the reliability of his methodology. The Court has already found that these attacks go to the weight of his testimony—“vulnerable as it may very well be”—and not to its admissibility.

The Court already found that the task of evaluating Dr. Radwin’s methodology and the import of his findings should go to the jury. Indeed, a reasonable jury could very well discredit or give little weight to this expert’s sampling testimony, including whether it is “representative,” and whether it measured compensable activities. The Court declines to step into the jury’s shoes and conduct the weighting itself as a matter of law on the papers. Moreover, the Court finds that Dr. Radwin’s estimations arguably go to any damages determination at trial.

E. East Penn’s Time Clock Records as Minimum Amount of Uncompensated Time

The Secretary also moves for summary judgment on a finding that East Penn’s swipe in and out time clock records constitute the “indisputable” minimum measure of overtime hours worked. According to the Secretary, the amount of time between punch time and shift time is time that East Penn knowingly “shaved off.” So doing, the Secretary seeks to use these records as a proxy for uncompensated time.

The parties dispute whether the punch records are probative of anything that would establish liability. East Penn contends that its “14-minute rule” serves only as an attendance policy and is common throughout the manufacturing industry, including being used by the employer in Mt. Clemens. The Supreme Court found there that “the time clocks do not necessarily record the actual time worked by employees.” Nor are time clocks controlling when “the employee is required to be on the premises or on duty at a different time or where the payroll or other facts indicate that work starts at an earlier or later period.

The Secretary argues that the time clock data is the best evidence of the minimum amount of uncompensated time that East Penn owes its uniformed employees. He bases this claim on certain of East Penn’s own employees’ declarations that describe performing their donning and doffing activities contemporaneous with clocking in and out, as well as Dr. Radwin’s observations that, on average, employees in his time study swiped in after their first donning activity.

The fundamental problem with the Secretary’s hopscotch to damages, as East Penn notes, is that the Secretary has not carried his burden yet to establish liability as to the 10,000-some employees he purports to represent. Although the Court finds that the Secretary has established that he succeeds on liability as to non-continuous operations uniformed employees, he seeks overtime damages for many other categories of employees for which he has certainly not adduced representative evidence.

Moreover, the Secretary’s argument presupposes that employees contemporaneously clock-in with performing their first and last principal activity. East Penn does not admit this fact. Although the Secretary cites to certain employee declarations attesting to this fact, other declarants state that they clock in, attend to non-compensable work, then retrieve and don their uniform. East Penn has raised at least a factual issue to show that it does not have to compensate for all “recorded” time between the punches because employees began their compensable workday after clocking in.

The Secretary’s claim is also complicated by the findings of its own time study expert. Dr. Radwin estimated that, on average, the employees he studied swiped their timecard 1.2 minutes after they had completed their last clothes-changing activity. Even accepting the Secretary’s premise that the time swipes are any sort of proxy, it is undisputed that the time swipe records on average overestimate the amount of compensable work for post-shift activities. Accordingly, the Court cannot find that the record “indisputably” establishes that the actual clock swipe records are the minimum amount of time worked for purposes of establishing damages.

To be sure, the Court’s decision on this point does not preclude, nor should it be taken as precluding or otherwise limiting, the Secretary from submitting the actual clock records at trial to try to establish his claim for damages.

F. East Penn’s de minimis Defense

Preliminary and postliminary activities that are deemed integral and indispensable are theoretically compensable although they may not be automatically so. The de minimis doctrine provides a “limiting principle to compensation for trivial calculable quantities of work.” The Secretary moves for summary judgment to foreclose East Penn from presenting a de minimis defense at trial. According to the Secretary, East Penn has failed to establish that it satisfies the requirements of 29 C.F.R. § 785.47. At summary judgment, the Secretary must show that no reasonable jury could find that the amount of compensation is not de minimis.

In evaluating a de minimis defense, the Third Circuit Court of Appeals has held the following factors be considered: “(1) the practical administrative difficulty of recording the additional time; (2) the aggregate amount of compensable time; and (3) the regularity of the additional work.” The line between compensable and de minimis time is fact-specific and the defense necessarily applies on a case-by-case basis. Indeed, the Court is not aware of any court within this Circuit that has granted summary judgment to an FLSA plaintiff to prevent a defendant from asserting a de minimis defense at trial. (The Secretary, to his advocate-nature credit, located two out-of-circuit decisions.)

As a threshold matter, there is no genuine dispute of fact that East Penn’s employees regularly don, doff, and shower as part of their work. East Penn required all employees to wear PPE and required its uniformed employees to be fully dressed in their uniform and boots prior to entering the production floor. East Penn points out that its employees may perform their donning and doffing activities differently each day. But the order in which an employee opts to don his uniform and PPE on a particular day does not rebut a finding that the activities are performed on a regular basis.

The Secretary submits that whatever practical administrative challenges inherent in measuring the time worked are minimized by the fact that East Penn already uses time clocks and requires employees to swipe in and out. The mere existence of the time clocks, according to the Secretary, establishes that East Penn could—but chooses not to—promulgate a policy that pays based on actual swipe times.

According to East Penn, the Secretary’s proposal that East Penn simply install more time clocks and implement new policies governing clocking in and out cannot be considered at summary judgment because it derives from the Secretary’s descriptions of other battery manufacturing plants. Although these third-party practices are not in evidence in this case, the Court rejects that East Penn’s claim that it cannot consider whether East Penn can theoretically add more clocks to its production floors. East Penn controls how and where it places time clocks as well as the policies governing swiping in and out. Moreover, East Penn’s timekeeping system permits it to accurately record increments of time to the minute. So, the system that East Penn already has in place rebuts the notion of administrative difficulties it may face in accurately tracking the actual amount of time spent on pre- and post-shift compensable work.

But East Penn’s more compelling argument is that the focus of this factor is not on the employer’s theoretical technological capability. Rather, the proper inquiry is whether there is wide variation in the amount of time spent on pre- and post-shift activities among East Penn’s uniformed and PPE-wearing employees. The fact of variation is corroborated by Dr. Radwin’s measurements. For example, he reported a range of zero minutes to greater than 51 minutes reflecting the time between the employees starting their pre-shift activities and their shift. Neither party expressly addresses how much of this pre-shift time was spent on actual compensable work. And despite the breath-taking volumes of briefing and exhibits, “the court is not obliged to scour the record to find evidence that will support a party’s claims.”

That said, the Court has reviewed the contents of employee declarations that include estimates of the amount of time to don a uniform and walk to their workstations. Without weighing the credibility of these declarants, the Court notes a pattern among employees who attest to spending between three and nine minutes on these activities. So, within Dr. Radwin’s own limited study, there are swaths of time spent on non-compensable activities (i.e., time spent in the break room, cafeteria, or “smoke shack”). At a minimum, East Penn has raised a genuine issue of fact as to the practical feasibility of precisely recording time for purposes of payroll that separates out compensable from social and non-compensable activities.

As for the aggregate amount of compensable time involved, the Court finds that genuine disputes preclude granting summary judgment to the Secretary. As a threshold matter, the amount of time that employees don, doff, and shower each day is a disputed issue. The parties’ time-study experts employed different methodologies to calculate the amount of time employees spent performing their pre and post-shift activities. And the Court has permitted each party to introduce evidence of both methodologies and findings. Even crediting the results of Dr. Radwin’s study, East Penn submits that the results support a finding that any left-over uncompensated time for post-shift work is de minimis.

In particular, Dr. Radwin estimated an average of 11 minutes and a median 10.8 minutes for end-of-shift clothes changing and showering. It is undisputed that East Penn’s policy (since 2016) provides for ten minutes of paid time for these activities. Accepting the validity of Dr. Radwin’s calculations —which East Penn does not—a rational trier of fact could find that the remainder of uncompensated time according to Dr. Radwin at the end of the shift is on average a single minute. Although the Secretary may dispute whether employees are actually afforded the full ten minutes (i.e., if they are not timely released from their workstations), that dispute also supports the Court’s finding that summary judgment is inappropriate. As for the 15.6 minutes that Dr. Radwin estimated for pre-shift activities, East Penn contests the validity of this finding. And because the Court has already determined that East Penn can make its arguments challenging the time study, it is inappropriate to treat these figures as established, particularly when it is the Secretary’s burden here on summary judgment.

Notwithstanding the Court’s finding that regularity of the work has been established, factual issues prevent the Court from granting summary judgment as to this claim. The Court finds a genuine issue of material fact remains as to the size of the aggregate claim as well as whether East Penn can practically record the time spent, given the variation of time needed in the record. The Court finds that East Penn may present a de minimis defense at trial, which will be a critical factual issue for the jury to resolve.

A. Plaintiffs’ sleep time is not compensable because it was time spent waiting to be engaged.

To determine if on-call time is compensable under the FLSA, the critical question is whether “the time is spent predominantly for the employer’s benefit or the employee’s.” Employees must be compensated if they are “engaged to wait,” but an employer is not required to pay an employee who is merely “waiting to be engaged.”

To make this determination, courts examine several factors, including: the agreement of the parties, the nature and frequency of the services provided in relation to the time spent waiting, where the plaintiff is waiting, whether the employee may carry a beeper or leave home, the employee’s ability to switch on-call shifts, and whether the employee actually engaged in personal activities during on-call time. See 29 C.F.R. § 785.14. “The test is not whether the employee has substantially the same flexibility or freedom she would have if not on call.” Rather, the relevant inquiry is “whether employees may actually engage in personal activities during on call shifts.” This issue may be answered as a matter of law, or if the facts are unclear, may be answered at trial.

This Court is satisfied that this issue may be resolved as a matter of law because Plaintiffs’ time sleeping was clearly time spent “waiting to be engaged.” The undisputed record in this case shows that when Plaintiffs clocked out at night, they remained at the Delmarva residences and either slept, watched television, read, or engaged in other personal activities. If they were awakened by a resident during this time, they were instructed to clock back in while attending to the situation in order to be paid for the time spent working.

Plaintiffs assert that they were engaged to wait because they did not have complete freedom to leave and would be terminated if they did leave. However, as explained above, the relevant inquiry is not whether Plaintiffs had the freedom to leave, but whether they had the freedom to engage in personal activities during this time. Indeed, the Fourth Circuit has concluded that eating, sleeping, and watching television at night are just the types of personal activities that constitute “uninterrupted personal pursuits.” In Myers, the Fourth Circuit found that “Caretakers” who were required to live at a park 24 hours per day to respond to infrequent emergencies were not entitled to compensation for such “uninterrupted personal pursuits.” The Court further noted that there was “no indication that interruptions of private pursuits were frequent enough to render such time work time, that is, time spent predominantly for the benefit of the employer.”

In this case, all five Plaintiffs likewise testified that they were only infrequently awakened to assist residents during the night. Plaintiff Thomas testified that “it didn’t happen often.” Plaintiff Carr also testified that she did not always clock in when she was awakened because she “didn’t see the use to clock in for 10 minutes.” Such infrequent disruption does not create a genuine dispute of fact as to whether Plaintiffs should be compensated for this time. This Court has previously granted summary judgment in favor of the employer when the employee had to reside and remain on an island but “was not so restricted that she could not use her on-call time for personal activities.”

In addition, while the Plaintiffs assert that their sleeping arrangements were less than satisfactory, it is undisputed that Plaintiffs all had their own private rooms at the Delmarva residences, with a bed, lighting, and sometimes a television, closet, chair, and additional furniture. In addition, all of the homes had at least one bathroom, a kitchen, and a living space.

The fact that, at some of the homes, Plaintiffs did not have dressers or closets to store their belongings or that Plaintiff Justice slept on a sofa instead of a bed for a 6-month period does not raise a genuine dispute of material fact as to whether this time was spent waiting to be engaged. In fact, 29 C.F.R. § 785.14 makes no mention of “adequate” sleeping facilities. Rather, this language comes from 29 C.F.R. § 785.22, which Plaintiffs do not assert in this case.

Moreover, all of the Plaintiffs testified that, even during their working hours, they often had down time to watch television, use social media, make personal telephone calls, play games, read, or just relax. In addition, Plaintiffs Thomas and Carr both testified that the homes contained all of the furnishings and amenities one would find in a private house. Considering all of the circumstances and nature of the employment agreement, which Plaintiffs acknowledged did not compensate them for their time spent sleeping, the Court finds that, as a matter of law, Plaintiffs’ overnight time was time during which they were waiting to be engaged, time that was not compensable under the FLSA. Accordingly, summary judgment on Plaintiffs’ FLSA claim is appropriate in favor of the Defendants.

B. The Court need not apply 29 C.F.R. § 785.23.

As the party seeking the benefit of Section 785.23, Defendants bear the burden of establishing its application and that the employment agreement with Plaintiffs was reasonable. Plaintiffs argue that Defendants have failed to meet all of the requirements of 29 C.F.R. § 785.23 because Plaintiffs did not reside in Delmarva’s residences for an extended period of time. Plaintiffs specifically contend that Defendants failed to provide them with adequate sleeping quarters and did not provide them with periods of complete freedom. However, the record shows that the Plaintiffs and Defendants had a reasonable employment agreement under which Plaintiffs resided at Delmarva residences for one week at a time, Plaintiffs were provided adequate sleeping accommodations and periods of complete freedom, and Plaintiffs and Defendants agreed that sleep time would not be compensated.

Plaintiffs contend that they did not reside at Delmarva’s residences for an extended period of time because “they did not remain on Delmarva’s premises for five consecutive nights in a single workweek.” While the United States Court of Appeals for the Fourth Circuit has not specifically addressed what constitutes “extended periods of time” under 29 C.F.R. § 785.23, there is a split of authority among other circuits.

In Beaston, the employees worked at a residential school for seven-day shifts that began at 3:00 p.m. on a Friday and ended at 8:30 a.m. the following Friday. The Third Circuit affirmed the District Court’s finding that because the employees “spend seven consecutive days and nights on campus, they reside there for an extended period of time.” Under this interpretation, Plaintiffs in this case would meet the “extended period of time” requirement because they also spent seven consecutive nights in Delmarva’s residences.

In Giguere, the plaintiffs similarly worked seven days on, seven days off from Thursday through Thursday, while their employer’s workweek was Sunday through Sunday. However, the First Circuit affirmed the District Court’s finding that the employer had not met the “extended periods of time” requirement under 29 C.F.R. § 785.23 based on a 1988 Department of Labor Enforcement Policy (“1988 DOL Policy”). The 1988 DOL Policy “stated that an employee meets the extended-periods-of-time standard when he ‘resides on the premises for a period of at least 120 hours in a workweek,’” and “defined workweek’ as ‘seven consecutive 24-hour periods,’ citing 29 C.F.R. § 778.105 which provides that once the employer has established when the workweek begins, the workweek’s span ‘remains fixed regardless of the schedule of hours worked by the employee.’” The Court explained that because the employer had established a workweek of Sunday to Sunday, and the employees worked Thursday to Thursday, then the employees could not be found to have resided on the employers’ premises for “extended periods of time,” as contemplated by 29 C.F.R. § 785.23.

Under the First Circuit’s interpretation of the regulation, Plaintiffs in this case would not have resided on the Defendants’ premises for an extended period of time, or at least 120 hours in the employer’s workweek, because the Defendants’ workweek was defined as Monday through Sunday, and Plaintiffs’ sleep shifts were Thursday through Thursday.

This Court is not persuaded that the First Circuit’s understanding of “extended periods of time” based on the employer’s workweek is the correct interpretation. While the First Circuit noted that the 1988 DOL Policy has not been superseded and is still used by the DOL, there is additional guidance by the DOL that suggests that “extended periods of time” is not defined by the employer’s workweek under 29 C.F.R. § 778.105. For example, in a 2014 Opinion Letter, the DOL defined “extended periods of time” as “to work and sleep there for five days a week (120 hours or more) or five consecutive days or nights (regardless of the total number of hours),” without reference to the employer’s workweek or 29 C.F.R. § 778.105. Similarly, in a 2016 DOL Field Assistance Bulletin, “extended periods of time” was defined as “working and sleeping there for five days a week (120 hours or more) or five consecutive days or nights (regardless of the total number of hours),” without reference to an employer’s workweek or 29 C.F.R. § 778.105. This varying guidance shows that the DOL has not clearly established what constitutes the requisite period of time to determine whether employees reside on their employer’s premises for “extended periods of time.” Consequently, this Court is not inclined to adopt the First Circuit’s understanding without more definitive guidance from the DOL or the Fourth Circuit.

In any event, the circuit split on this issue is not dispositive here in light of the separate and independent basis for this Court’s decision. Accordingly, because this Court found that Plaintiffs’ time spent sleeping is not compensable on a separate basis, this Court need not resolve whether Plaintiffs resided on Defendants’ premises for “extended periods of time” as required by 29 C.F.R. § 785.23.

A. Legal Standard

“The FLSA was designed to protect workers and ensure that they are not subjected to working conditions ‘detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being.’” Specifically, the FLSA sets a minimum hourly wage, a maximum number of weekly work hours, and overtime wage requirements. “Under the FLSA, a plaintiff may bring a ‘collective action’ for his or her FLSA claims,” which allows employees “to sue on behalf of themselves and other employees who are ‘similarly situated.’”

An employee who brings a claim for unpaid minimum or overtime wages “has the burden of proving that he performed work for which he was not properly compensated. The remedial nature of the FLSA and the great public policy which it embodies, however, militate against making that burden an impossible hurdle for the employee.” When the employer “has kept proper records of wages, hours and other conditions and practices of employment,” as required by the FLSA, the employee can obtain these records in discovery and utilize such records to satisfy his or her burden of proof.

When the employer fails to keep or produce such records, however, an employee will satisfy his initial burden “if he proves that he has in fact performed work for which he was improperly compensated and if he produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.” “An employee’s burden to produce sufficient evidence is low and can be met by that employee’s recollection alone.” If the employee satisfies this initial burden, “the burden then shifts to the employer to come forward with evidence of the precise amount of work performed or with evidence to negative the reasonableness of the inference to be drawn from the employee’s evidence.” “If the employer fails to produce such evidence, the court may then award damages to the employee, even though the result be only approximate.”

Generally, because the FLSA contains a two-year statute of limitations, a plaintiff may recover lost wages from two years before the filing of the suit. 29 U.S.C. § 255(a). If the employer’s violation of the FLSA is willful, however, a plaintiff can recover damages dating back to three years before the filing of the suit. An employer who violates the FLSA is generally liable for the unpaid minimum or overtime wages and “an additional equal amount as liquidated damages.”

B. The Parties’ Arguments

Before examining the merits of the parties’ dispute as to the FLSA claim, the Court briefly summarizes their main arguments on this claim. At base, Plaintiffs’ complaint alleges that Defendant did not pay overtime as required under the law. Specifically, Plaintiffs contend that they worked at least ninety-one hours per week, and thus should have been paid their regular rate of pay for the first forty hours, and one-and-a-half times their regular rate of pay for the remaining fifty-one hours. Plaintiffs also allege that their sleep breaks were frequently interrupted by their clients’ needs, and that this time worked was not compensated. Because Plaintiffs were unable to have at least five hours of uninterrupted sleep per night, and because there was no agreement between Plaintiffs and CareOne to exclude interrupted sleep time, they claim that they should have been paid for the entire eight-hour rest period. Additionally, although the complaint does not allege that Defendant improperly deducted excessive amounts for food and lodging provided to Plaintiffs, that has become a central focus of the parties’ summary judgment briefing. Based on these allegations, Plaintiffs claim that Defendant has committed a willful violation of the FLSA.

Defendant moves for summary judgment on Plaintiffs’ FLSA claim. In short, Defendant contends that he accurately calculated and paid Plaintiffs’ wages and overtime such that he did not violate the FLSA at all, much less willfully. Specifically, he argues that he appropriately credited against Plaintiffs’ wages the value of food and housing provided to Plaintiffs; that Plaintiffs did not tell him that their sleep was being interrupted, so he could not act on those issues; and, accordingly, that he properly calculated Plaintiffs’ pay. Defendant thus contends that there are no genuine issues of material fact, and that he is entitled to judgment as a matter of law.

C. Wage & Overtime Calculation

The Court begins with Defendant’s contention that he properly calculated Plaintiffs’ overtime pay, and finds genuine disputes of material fact that preclude summary judgment in Defendant’s favor. “To establish liability under the FLSA on a claim for unpaid overtime, a plaintiff must prove that he performed work for which he was not properly compensated, and that the employer had actual or constructive knowledge of that work.” Thus, Plaintiffs’ FLSA claim presents two issues for the Court to consider at the summary judgment stage: first, whether Plaintiffs were properly compensated for overtime hours it is undisputed that they worked; and second, whether Plaintiffs are entitled to compensation for overtime hours it is disputed that they worked. For the reasons that follow, the Court finds genuine disputes of material fact as to both issues.

1. Pay for Undisputed Hours

First, it is undisputed that Plaintiffs worked more than forty hours per week and were entitled to overtime compensation. Specifically, the undisputed facts are that Plaintiffs typically worked at least thirteen hours per day for seven days per week, for a total of at least ninety-one hours per week. Plaintiffs contend that their daily wage of $140.00 did not reflect proper overtime compensation, whereas Defendant contends that Plaintiffs’ biweekly wage of $1960.00 reflected proper overtime compensation. Relevant here, the minimum wage for any occupation in Connecticut, which the parties do not dispute applies here, was $10.10 per hour in 2017 and 2018, then increased to $11.00 per hour in 2019. In addition, both the FLSA and CMWA require employers to pay a rate of “one and one-half times the regular rate at which the employee] is employed” for each hour in excess of forty hours during a workweek. 29 U.S.C. § 207(a)(1). Although an employer need not compensate employees on an hourly basis, overtime compensation “must be computed on the basis of the hourly rate derived” from whatever basis on which the employees are compensated. 29 C.F.R. § 778.109.

Thus, in order to calculate how much overtime wages were owed to Plaintiffs and whether Defendant properly compensated them, the Court must “first determine the ‘regular rate’ received by plaintiffs.” “Although the FLSA does not expressly define ‘regular rate’ of pay, the Supreme Court has determined that it is ‘the hourly rate actually paid the employee for the normal, non-overtime workweek for which he is employed.’” If the employer pays the employee on an hourly basis, then the regular rate is simply the hourly rate. On the other hand, if the employer pays the employee on some other basis, such as a daily or weekly rate, then the regular rate “is the hourly rate as calculated by dividing the total sum received in a workweek by the total number of hours actually worked that week.”

Plaintiffs contend that Defendant calculated their wages as a flat per-day fee and did not pay them overtime. Defendant counters that Plaintiffs were not paid a flat fee but, rather, wages that accurately took into account overtime and credits for food and lodging. As explained below, genuine issues of material fact remain as to whether Defendant properly calculated Plaintiffs’ regular rate of pay as well as the overtime they were due for the hours that it is undisputed they worked. Thus, Defendant’s summary judgment motion cannot succeed.

a. Flat Rate

Beginning with Plaintiffs’ argument regarding their regular rate of pay, Plaintiffs each submitted affidavits stating that they were paid a “flat rate of pay of $140 per day.” M. Mmolawa admitted at a deposition, however, that she did not understand the meaning of the word “flat” as it was used in her affidavit, and T. Mmolawa testified that Defendant had never used the word “flat” in describing the pay system to him. While a plaintiff’s statements alone are generally not sufficient to create a disputed fact to survive summary judgment, here, Plaintiffs contend that basic mathematics supports their argument that they were paid $140.00 as a flat rate per day, given that pay of $980.00 per week divided by seven days equals $140.00 as a flat rate per day. Plaintiffs further point to documents entitled “Staff Pay Record” submitted by Defendant, which appear to be the closest thing to paystubs Defendant created for Plaintiffs. Plaintiffs claim that these records evince that Defendant did not separate out “straight” time from overtime and, thus, that Defendant did not in fact pay the required overtime. Indeed, the Staff Pay Record documents consist simply of two columns, “paydates” and “amount” for the corresponding paydate; the documents do not further break down what portion of the “amount” paid on a particular payday was regular time or overtime, suggesting that Defendant did not in fact separate out these categories of pay and, therefore, did not appropriately pay overtime. Plaintiffs have also submitted a more traditional paystub Defendant provided to another former employee of CareOne who is not a party to this action, as circumstantial evidence that Defendant did not properly pay Plaintiffs overtime. The traditional paystub, Plaintiffs argue, contains fields for rate, hours, and amount, unlike the Staff Pay Record Defendant created for Plaintiffs here; Plaintiffs thus argue that Defendant was capable of producing detailed paystubs that separate out straight time and overtime, and his failure to do so for Plaintiffs demonstrates he did not properly pay them for overtime. Defendant claims he was unable to produce these more traditional paystubs for Plaintiffs because they were undocumented workers without Social Security numbers, and his payroll company thus would not process payroll for these individuals.

In order to fully consider Plaintiffs’ argument, the Court must first address Defendant’s response. Defendant argues that, even in the absence of paystubs or more detailed payroll records, he properly calculated and paid overtime to Plaintiffs. In particular, he claims he appropriately calculated credit for housing and food provided to Plaintiffs, which, in turn, renders his wage calculations compliant with the FLSA’s overtime requirement. The Court therefore considers this argument next.

b. Food and Housing Credit

The FLSA permits an employer to take a wage credit for a live-in employee’s food and housing, subject to certain conditions. 29 U.S.C. § 203(m)(1). Specifically, the statute defines “wage” to include “the reasonable cost to the employer of furnishing such employee with board, lodging, or other facilities, if customarily furnished by such employer to his employees.” Consistent with its statutory mandate, the DOL has promulgated regulations permitting an employer to credit “the actual cost or fair value of furnishing lodging, whichever is less,” if such cost or value is different from the prescribed maximum credit, provided that the employer “keeps, maintains, and preserves the records on which they rely to justify such different cost figures.” 29 C.F.R. §§ 516.27(a), 552.100(b), 552.100(d). The records must “include itemized accounts showing the nature and amount of any expenditures entering into the computation of the reasonable cost.” 29 C.F.R. § 516.27(a)(1).

The DOL regulations provide that, if an employer of a live-in domestic service employee fails to maintain these itemized records, the maximum § 203(m) credit the employer may claim is “seven and one-half times the statutory minimum hourly wage for each week” housing is furnished. 29 C.F.R. § 552.100(d). For purposes of this regulation, the federal minimum hourly wage applies. Because the statutory federal minimum wage has been $7.25 per hour during the relevant time, 29 U.S.C. § 206(a)(1)(C), the maximum housing credit an employer who fails to maintain adequate records may claim is seven and one-half times that amount per week, which equals $54.38 per week for lodging. In addition, an employer may credit a certain amount for meals provided to the employee, which Plaintiffs compute at a maximum of $76.16 per week if the employer does not keep records justifying different meal costs. See 29 C.F.R. § 552.100(c). In total, then, in the absence of records justifying different costs, an employer may credit a maximum of $130.54 per week for both housing and food.

As noted above, here Defendant’s records indicate that he credited Plaintiffs’ wages with weekly food and housing expenses that ranged between $300 and $470 per week. Defendant’s documents supporting the present motion do not place beyond genuine dispute that he properly recorded the actual cost or fair market value of the food and housing credited to Plaintiffs’ wages. Indeed, Defendant’s own argument raises disputes as to how he calculated the food and housing credit. With respect to his client Ann, he represented that he examined her bills when calculating the food and housing credit, but he later argued that he did not have a way of obtaining the clients’ bills directly to calculate the actual costs because the clients contracted for the services through DSS rather than CareOne. Moreover, to the extent that Defendant calculated this weekly food and housing credit by relying on the actual cost or fair market value of those expenses, he did not submit evidence of that actual cost or fair market value in support of his motion to substantiate his calculations. Nor did he submit evidence indicating that he confirmed which calculation, the actual cost or the fair market value, was less, as required by the DOL regulations. 29 C.F.R. §§ 552.100(c), 552.100(d) (permitting the employer to credit “the actual cost or fair market value” of furnishing food and lodging, “whichever is less”).

The regulations and case law make clear that the burden to demonstrate proper calculation of the § 203(m) credit is on the employer, not the employee. Here, a reasonable jury could find that Defendant failed to maintain the records required by the DOL regulations to justify use of an amount beyond the otherwise maximum credit allowed by 29 C.F.R. § 552.100(d). Although there are few cases in the Second Circuit addressing this issue, courts in other circuits have held that an employer is not entitled to a § 203(m) credit greater than the regulatory maximum if they fail to meet the recordkeeping requirements to justify the greater credit.

Defendant has not proved as a matter of law that he kept sufficient records, such that he was entitled to claim more than the otherwise applicable regulatory maximum. If a jury were to find that Defendant failed to maintain adequate records to substantiate his § 203(m) credit, he would not be entitled to such credit. Thus, this genuine dispute is material to Defendant’s liability under the FLSA, and the Court denies his motion for summary judgment regarding the food and housing credit.

Returning to Plaintiffs’ argument, particularly in light of the absence of itemized paystubs and records concerning the calculation of the food and housing credit, the Court cannot resolve the factual dispute regarding the calculation of Plaintiffs’ wages with respect to the overtime they undisputedly worked. Indeed, despite significant searching in the record, the Court is unable to discern exactly what hourly amounts Defendant claims Plaintiffs earned as their regular and overtime rates of pay. Because a reasonable jury viewing this record could find either Plaintiffs’ or Defendant’s view of the facts to be accurate, the Court is not in a position to determine what Plaintiffs’ regular rate was. Consequently, the Court cannot ascertain if Plaintiffs’ overtime wages were properly calculated with respect to the overtime hours Plaintiffs undisputedly worked, and summary judgment on that issue is not warranted.

2. Pay for Disputed Hours

In addition, the parties disagree about whether Plaintiffs were entitled to overtime compensation for sleep time that was interrupted by their clients’ overnight needs. The Court characterizes these hours as disputed because the parties do not agree that they were hours worked by Plaintiffs.   The legal framework for compensation of sleep time is as follows. In general, the FLSA requires compensation for “work,” which includes “time spent performing activities predominantly for the benefit of the employer.” “While the FLSA itself is silent as to whether sleep time is compensable time, the DOL has promulgated interpretive rules addressing that exact issue.” “When an employee is on duty for a shift of less than twenty-four hours, but is allowed to sleep during his shift, 29 C.F.R. § 785.21 regards him as ‘working even though he is permitted to sleep when not busy.’” “So long as he is ‘required to be on duty,’ ‘the time is worktime.’”   When the employee’s shift is twenty-four hours or more, he and his employer “may agree to exclude a bona fide regularly scheduled sleeping period of not more than 8 hours from hours worked,” but only if “adequate sleeping facilities are furnished by the employer and the employee can usually enjoy an uninterrupted night’s sleep.” 29 C.F.R. § 785.22(a). If the employee “cannot get at least 5 hours’ sleep during the scheduled period the entire time is working time.” 29 C.F.R. § 785.22(b).   The parties dispute various aspects of the sleep time issue, including whether Plaintiffs had sleep interruptions and whether Defendant knew about these alleged interruptions. All three named Plaintiffs claim to have experienced interruptions to their sleep time because of their clients’ needs. Modise’s client, Ann, routinely woke up several times during the night and required assistance. T. Mmolawa’s client, Haddad, woke up four or five times per night. M. Mmolawa’s client, Geraldine, did not experience routine sleep difficulties, but M. Mmolawa attests that Geraldine traveled to the emergency room overnight approximately twice per month and required M. Mmolawa’s assistance during those nights. Plaintiffs further claim that because there was no appropriate place to record these interruptions in Defendant’s timekeeping system, they did not record them in writing, but they told Defendant about them.

Defendant contends, by contrast, that Plaintiffs did not tell him about sleep interruptions. Defendant further argues that it was inherent in the nature of Plaintiffs’ job, which was coded under DSS Procedure Code 1023z, and from CareOne’s employee handbook and conversations Plaintiffs had with Defendant, that they could work only thirteen hours per day, a schedule that would accommodate eight hours for sleep and three hours for meal and rest breaks. From the parties’ conflicting recitations of facts alone, it is clear that there are genuine disputes concerning, at least, whether Plaintiffs experienced sleep interruptions and whether Defendant knew about these interruptions. These issues are material to Defendant’s alleged liability, as explained further below.

The factual dispute over whether Defendant knew that Plaintiffs were working overtime due to interruptions to their sleep, and were not compensated for such work, must go to the jury. Critically, the Second Circuit has held that “an employer’s duty under the FLSA to maintain accurate records of its employees’ hours is non-delegable.” To that end, “once an employer knows or has reason to know that an employee is working overtime, it cannot deny compensation even where the employee fails to claim overtime hours.” As another court in this circuit has explained, if the employer “does not wish that such overtime work be performed, it is the employer who ‘has a duty to make every effort to prevent its performance.’ The key issue is therefore whether there is evidence in the record showing the defendant had actual or constructive knowledge that the plaintiff engaged in uncompensated overtime work, regardless of whether the plaintiff followed the employer’s policy about recording overtime.” Whether an employer had actual or constructive knowledge of uncompensated overtime work “is an issue of fact.”

Here, there is evidence from which a reasonable jury could infer that Defendant knew Plaintiffs were working uncompensated overtime hours, notwithstanding Plaintiffs’ failure to record the hours. Essentially, the parties’ dispute over whether Plaintiffs informed Defendant of the interruptions to their sleep turns on a credibility assessment, which is not properly conducted by the Court at summary judgment. Plaintiffs’ assertions as to what Defendant knew are sufficient for their claims of uncompensated interruptions to sleep time to survive the summary judgment stage.

Further, genuine issues of material fact exist as to whether Defendant entered into any agreement(s) with Plaintiffs to exclude sleep time from their pay. Defendant concedes that Plaintiffs did not sign an express written agreement with CareOne to exclude sleep time from their compensable hours. He contends, however, that he and Plaintiffs entered into an oral agreement to exclude sleep time by virtue of their employment with CareOne. Specifically, he contends that the employee handbook, informed Plaintiffs that they were “to work no more than 13 hours” per day. Defendant explained that he told Plaintiffs that, by continuing their employment with CareOne, they were “agreeing” to “work no more than 13 hours” per day. In effect, Defendant appears to contend that he had an “implied agreement” to exclude sleep time from Plaintiffs’ compensable hours. See 29 C.F.R. § 785.22(a). There are, however, numerous questions of fact material to the compensability of Plaintiffs’ sleep time.

For example, at least one court in this district has denied summary judgment because it found disputed questions of fact as to “exactly what documents and interactions even comprised the parties’ agreement, whether it was express or implied.” Similarly, the Court cannot grant summary judgment here given that it is far from clear if the parties had any kind of agreement to exclude sleep time and, if so, what the terms of that agreement were.

In addition, the DOL regulations permit an agreement to exclude sleep time only if the employee “can usually enjoy an uninterrupted night’s sleep,” and only if they can get “at least 5 hours’ sleep during the scheduled period.” 29 C.F.R. §§ 785.22(a), (b). Modise’s and T. Mmolawa’s recitations of their clients’ typical sleep schedules raise genuine disputes as to whether they were usually able to enjoy a period of five hours of uninterrupted sleep. Similarly, although M. Mmolawa’s interruptions to her sleep appear to have been less frequent, they constituted entire nights she spent attending to her client in the emergency room without sleeping at all. Thus, there are genuine disputes as to whether the sleep periods were bona fide and regularly scheduled as required under the DOL regulations.

In sum, the Court finds genuine disputes of material fact regarding Plaintiffs’ overtime compensation, with respect to both the overtime work they indisputably performed and the alleged work they performed during sleep periods, and thus summary judgment is improper at this stage. The Court thus denies Defendant’s motion for summary judgment with respect to Plaintiffs’ overtime compensation claim under the FLSA.

Defendant Tyler’s ExecuTime Software:

Defendant Tyler is the largest company in the United States providing software and technology services to public sector agencies like local and state governments. In June 2016, Tyler acquired the software company ExecuTime. Tyler has described ExecuTime as follows:

ExecuTime™ is a leading time and attendance solution that empowers employees via self-service functionalities and allows supervisors to closely manage overtime, job costing, and labor data through reduced expenses. ExecuTime time assists organizations with the most complex time and seamlessly integrates with payroll software solutions.

The ExecuTime software that government customers purchase generally consists of “time and attendance” and/or “advanced scheduling” modules. The more basic time and attendance software is focused on clocking in, clocking out, requesting time off, or checking a time card. Advance scheduling affords clients “more robust scheduling capabilities” such as a “wheel offering” that allows supervisors to post open shifts on a wheel that employees can sign up for or a “trade board” that allows employees to swap shifts themselves.

Process for Purchasing and Implementing ExecuTime:

Typically, after a government customer decides to purchase ExecuTime software, it consults with a Tyler sales representative, who creates a contract, which is later reviewed by Tyler’s legal department. During this process, the client determines what type of contract to purchase—daily, hourly, milestone, or paid in full, for example. The customer also consults with the Tyler sales representative to determine what additional features to include in the contract, such as whether it wants the “advance scheduling” module, and how many physical timeclocks will be included. Another purchase decision the customer may make in conjunction with the sales representative is whether to purchase a “mobile module” which allows user access though a general web browser on a desktop or mobile phone. At this contracting stage, the customer and sales representative may also discuss “funded development” which occurs when a customer wants to add something to the software that does not yet exist, and the contract provides for the customer to fund it.

After these decisions have been made and a contract has been signed, the sales representative sends the contract to a team at ExecuTime that includes the director of ExecuTime, a “manager of implementation,” and a different “manager of implementation and support.” After this team of individuals reviews the contract at issue, it assigns resources to the project, specifically a project team consisting of a project manager and an implementation consultant. The project manager is the supervisor of the implementation consultant. When a project manager is assigned to a project, she first reviews the contract to understand whether the contract is daily or hourly, what hardware will be provided (such as how many physical timeclocks), where the hardware will be installed, and other details provided by the contract. The project manager then sends a welcome packet and schedules a date with for the installation of the software done by a “deployment team.”

In addition, the project manager drafts a “project plan” for the implementation, which includes project objectives, as well as a checklist and deadlines for user training and integration. This project plan and timeline also lays out dates and details for trainings, including whether training will be inperson or remote and when the eventual “go live” date will be. “Going live” occurs after all of the user training is completed and the customer has successfully completed “parallel testing,” which involves using both ExecuTime and any previous time-tracking method at the same time to ensure that the ExecuTime software was accurately reflecting time and attendance. After the “go live” date, the customer uses only ExecuTime for clocking in, clocking out, requesting time off, and other functions.

In addition to this project plan, the project manager also works with the customer to complete a questionnaire and a solution design. These two documents include information concerning the customer’s existing time and attendance policies, such as whether the locality/agency uses comp time. These documents also indicate whether a customer will have weekly or biweekly check-in calls with the implementation consultant.

After the project manager has completed these initial aspects of the implementation process, there is a “handoff” to the implementation consultant. This handoff typically takes the form of a phone call where the project manager introduces the customer to the implementation consultant and they all discuss next steps. After the “handoff,” the project manager supervises the implementation consultant in her duties.

Ms. Greene’s Role as an Implementation Consultant:

Plaintiff Suzanne Greene was employed by ExecuTime beginning in February 2016 but became employed by Tyler when Tyler acquired ExecuTime in June 2016. During Ms. Greene’s first six months with ExecuTime, before the acquisition, she was employed as a “project manager,” working with the advanced scheduling software primarily used in local police and fire departments. In this capacity, Ms. Greene’s duties involved “building schedules,” which did not involve programming the software but instead meant, in part, setting configurations so that the correct schedules would populate in the software for the local departments.

Shortly after ExecuTime was acquired by Tyler, Ms. Greene’s title was changed to “implementation consultant.” Around this time, Ms. Greene stopped working on the advance scheduling software and switched over to work on the time and attendance side. Tyler’s job description for the implementation consultant role states in relevant part:

The Implementation Consultant is responsible for delivering high quality knowledge training to clients allowing them to use Tyler software products efficiently and effectively to achieve daily operations. The incumbent consults and partners with clients to gain a comprehensive understanding of workflow, business/technical requirements and needs to ensure that the knowledge transfer addresses clients’ needs. The Consultant ensures that the transition to Tyler software is completed according to predetermined timelines and establishes a positive baseline for the new relationship between the client site and Tyler Technologies.

Broadly speaking, as an implementation consultant, Ms. Greene’s job duties consisted of preparing for and training the employees of Tyler’s government customers on how to use its ExecuTime time and pay software. In this capacity, she reported to a supervisor that had the title of project manager. Ms. Greene typically communicated with her project manager daily by phone or email, and often several times a day. Ms. Greene explained that, during her employment, the number of implementation consultants working with ExecuTime software at any given time fluctuated but that there were never more than ten and at one point there were fewer than four. As of October 2019, Tyler employed eight implementation consultants working with ExecuTime software.

As described above, any contract with a government customer would go through the sales team, the legal team, the ExecuTime director team, and then a project manager before the “handoff” to the implementation consultant, Ms. Greene. Once Ms. Greene received the “handoff,” she would review the questionnaire and solution design that the project manager put together with the client in order to do a “generic setup” of the ExecuTime application. Reviewing these documents allowed Ms. Greene to determine which preferences she should turn on in the application: for example, if a customer used comp time, she could go into the preferences and check a box to allow them to actually use comp time. After reviewing these materials and completing the generic setup, Ms. Greene would conduct the trainings, beginning with a “power user training.” Power user trainings are the trainings with the “higher-ups” like the local government’s project manager, or the head of their payroll, possibly the HR manager. This training was sometimes done on-site and sometimes remotely, depending on what the client and project manager discussed.

For most of Ms. Greene’s employment, when power training was done on-site, it lasted for three full days from 8:00 a.m. to 5:00 p.m. In contrast, the remote power training was only a single day for 3 to 3.5 hours; however, near the end of Ms. Greene’s employment, it was spread out into 3 separate trainings of 3 hours each, for a total of 9 hours. During these power user trainings, Ms. Greene would walk through the different aspects of the software and its functionalities and the power users were essentially watching Ms. Greene show them where everything is located. An example of Ms. Greene conducting a remote power user training is attached to Plaintiff’s Motion for Partial Summary Judgment. The video shows Plaintiff sharing her screen with the power users, and showing them where certain functions are located in the software related to system administrator settings and also walking through the process for a fictional employee, “Joe Hourly,” clocking in and out, and requesting time off for vacation or sick leave.

During this training, the power users asked questions to clarify the software’s offerings and capabilities and where they could find certain functions.

After the power user training was completed, Ms. Greene would conduct training with “super users” which were supervisors in the local government and “end users” which were the everyday local employees. Ms. Greene did not ask questions of the super users or end users during training. Sometimes, a city or department would split the in-person and remote training and do some training (say, for power users) in person but then conduct super user and end user training remotely. After the end user and super user trainings, the “parallel testing” occurs, which, as described above, involves the end and super users utilizing both the previous time-tracking method and ExecuTime software at the same time to ensure that the ExecuTime software is accurate. After this testing is successfully completed, the customer “goes live.” After that point, Ms. Greene no longer has involvement, as the customer is passed to Tyler’s technical support team.

Throughout the implementation process —after the handoff to Ms. Greene and before the customer is passed to the support team — Ms. Greene would ensure that the customer followed the checklist deadlines in the project plan that was created by the Tyler project manager. Ms. Greene did not set any deadlines but she had to be aware of them. Also throughout, Ms. Greene would have weekly or bi-weekly calls with the client to go over progress. Sometimes during these calls, or at other times, Ms. Greene would engage in “troubleshooting” when the software was not functioning properly: for example, if overtime was not properly populating. For something like overtime failing to populate, Ms. Greene could fix the problem by adjusting the preferences “on the back end”, however, if the problem was technical, Ms. Greene would escalate the problem to her project manager and then it would go to the support team. Ms. Greene declares that she was reprimanded on the single occasion when she attempted to send a ticket to the support group directly without going through her project manager first.

Typically, Ms. Greene dealt with multiple implementation projects at once, and managed her workload to ensure that the deadlines in multiple concurrent project plans were met. She handled between 5 and 20 projects at a time. She spent approximately 30-40 percent of her work time conducting ExecuTime training sessions with customers and 30-40 percent of her time preparing for ExecuTime training sessions. She spent about 20 percent of her time on weekly or bi-weekly check-in calls with customers, and helped with troubleshooting throughout. Ms. Greene performed her implementation consultant duties from either her home or at a client site.

During her employment, Ms. Greene received a salary of between $45,000 and $48,500 per year. She was paid bi-weekly. At no point in her employment did she supervise anyone or have the authority to hire or fire any other employee. Tyler classified Ms. Greene as exempt under the FLSA in part based on advice of outside legal counsel. Tyler was sued in a putative collective action in 2008 for alleged misclassification and overtime violations with respect to implementation consultants. That case settled after full briefing on summary judgment but before the court ruled. Plaintiff ultimately resigned her employment with Tyler after taking leave in spring 2019. A source of some contention, Ms. Greene’s post-Tyler resume reads:

Employer: Tyler Technologies

chapter-title: Implementation Consultant

Duration: February 2016 — Present Job Duties

• Manage multiple client implementations simultaneously, while meeting all project plan deadlines.

• Build, lead and direct project teams to meet project objectives

• Strong leadership and delegation skills

• Set clear expectations and goals for project teams. Track progress against timeline, milestones and budget, revise as needed

• Hold regularly scheduled meetings with the client to ensure that milestones are met

• Provide software application training using a variety of delivery methods including web-based and on-site training

• Coordinate new customer implementations, providing effective training to maximize use the software

• Excellent communication (written and oral) and interpersonal skills

• Effective at engaging with people from all backgrounds and work industries

Plaintiff Greene filed this action on March 26, 2019 asserting a single claim for failure to pay overtime pursuant to 29 U.S.C. §§ 207 and 215(a)(2), alleging that Tyler’s failure to pay her time-and-a-half for overtime hours worked was not done in good faith within the meaning of 29 U.S.C. § 260.

A. The FLSA’s Administrative Exemption

The Parties vigorously dispute whether Ms. Greene was an administrative employee exempt from the FLSA based on her position as an implementation consultant, tasked with training Tyler’s government customers on how to use the ExecuTime software.

In order for the FLSA’s administrative exemption to apply, Tyler must prove that: (1) Ms. Greene was compensated on a salary basis at a rate of not less than $455 per week;(n.10 in opinion) Since Ms. Greene’s employment with Tyler, the DOL has increased the salary basis threshold to $684 per week (which works out to be $35,568 per year). Plaintiff does not dispute that she was paid a salary of $45,000 to $48,500 per year and therefore meets the first criteria of the administrative exemption.

(2) Ms. Greene’s primary duty consisted of the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and (3) Ms. Greene’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. 29 C.F.R. § 541.200(a). Whether an employee falls under the administrative exemption is a highly fact-intensive inquiry that depends on the particular circumstances of each case. See 29 C.F.R. § 541.700 (a) (providing that the “determination of an employee’s primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee’s job as a whole”); 29 C.F.R. § 541.202(b) (providing that “the phrase ‘discretion and independent judgment’ must be applied in the light of all the facts involved in the particular employment situation in which the question arises”). As a job title is of little use for exemption purposes, courts look to the tests articulated by the Department of Labor’s (“DOL”) regulations under the FLSA in assessing the applicability of the FLSA’s statutory exemptions.

The regulations define the term “primary duty” as “the principal, main, major or most important duty that the employee performs.” 29 C.F.R. § 541.700(a). Factors to consider when determining the primary duty of an employee include (1) the relative importance of the exempt duties as compared with other types of duties; (2) the amount of time spent performing exempt work; (3) the employee’s relative freedom from direct supervision; and (4) the relationship between the employee’s salary and the wages paid to other employees for the kind of nonexempt work performed by the employee. While the amount of time spent performing exempt work can be a useful guide in determining whether exempt work is the primary duty of an employee, it is not dispositive of the primary duty issue. See 29 C.F.R. § 541.700(b) (noting that “employees who spend more than 50 percent of their time performing exempt work will generally satisfy the primary duty requirement” and that “employees who do not spend more than 50 percent of their time performing exempt duties may nonetheless meet the primary duty requirement if the other factors support such a conclusion”).

It is undisputed that Ms. Greene meets the salary requirement of the administrative exemption. However, the Parties dispute (1) whether Ms. Greene’s primary duties involved work directly related to the management or general business operations of Tyler or its customers, and (2) whether her primary duties involved the exercise of discretion and independent judgment with respect to matters of significance. Tyler must prove both by clear and affirmative evidence for the exemption to apply.

i. Primary duty consisting of the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers

Tyler argues that, as an implementation consultant, Ms. Greene performed work directly related to both the “servicing of Tyler’s business: delivering software to the public sector” and “to the servicing of the business of Tyler’s clients.” Ms. Greene argues that she did not perform work directly related to the management or general business operations of Tyler or its customers, as her work with respect to Tyler was production work, and as her work with Tyler’s government customers consisted of “presenting canned software presentations that she did not herself create” and thus “simply acting as a conduit for information about how ExecuTime software works does not constitute work directly related to the general business operations of Tyler’s local government clients.”

Per DOL regulations, to meet the requirement that an employee perform work “directly related to the management or general business operations,” an employee “must perform work directly related to assisting with the running or servicing of the business, as distinguished, for example, from working on a manufacturing production line or selling a product in a retail or service establishment.” 29 C.F.R. § 541.201(a) (emphasis added). The regulations provide examples of work that is “directly related to management or general business operations,” as follows:

2. Work directly related to management or general business operations includes, but is not limited to, work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations, government relations; computer network, internet and database administration; legal and regulatory compliance; and similar activities.

The exemption “relates to employees whose work involves servicing the business itself—employees who can be described as staff rather than line employees.” U.S. DOL, Wage & Hour Div., Opinion Letter, 2010 WL 1822423, at *2 (Mar. 24, 2010).

Courts addressing the issue of whether an employee engages in work “directly related to management or general business operations” often find the “production versus administrative” dichotomy helpful. This concept is intended to “distinguish between work related to the goods and services which constitute the business’ marketplace offerings and work which contributes to running the business itself.” And while the administrative-production distinction may be an “imperfect analytical tool” in a service-oriented employment context, employees “can be considered ‘production’ employees in those instances where their job is to generate (i.e., ‘produce’) the very product or service that the employer’s business offers to the public.”

Keeping this framework in mind, the Court first addresses Tyler’s passing argument that Ms. Greene performed work directly related to Tyler’s business operations. In support, Tyler argues that Ms. Greene serviced Tyler’s business by “taking the software developed and licensed by other Tyler resources and deploying it for the clients assigned to her.”

Plaintiff first asks the Court to disregard this argument, as Defendant never “put Plaintiff on notice of the argument in discovery.” During discovery, Plaintiff asked Tyler to “identify each exemption that you contend were applicable to Plaintiff and Describe in detail the factual basis for such contentions” In response, Tyler stated that Plaintiff was subject to the administrative exemption because “her primary duty involved the performance of office or non-manual work directly related to the general business operations of Tyler’s customers” Accordingly, Ms. Greene argues that Tyler should not now be permitted to argue that Ms. Greene’s work was directly related to Tyler’s general business operations since it did not disclose that theory previously. In addition, Ms. Greene argues that Tyler cannot show that her work was directly related to its management or general operations because, under the “administrative-production dichotomy,” her work was clearly production work not subject to the exemption.

Tyler does not respond to Plaintiff’s argument in justification of its interrogatory response or to substantively argue that Plaintiff worked directly on Tyler’s general business operations. As a result, Tyler appears to have conceded this point. Yet, even absent any such concession, Tyler has not carried its burden of showing by “clear and affirmative evidence” that Ms. Greene’s work was directly related to Tyler’s management or general business operations.

Ms. Greene was undisputedly not part of Tyler’s management: she had no supervisory responsibility and could not hire or fire any other employees, and she reported to a supervisor that she checked in with daily or multiple times a day. Moreover, under the production-administrative dichotomy described above, Ms. Greene’s work was clearly production rather than administrative. There is no evidence in the record that Ms. Greene’s duties involved any aspect of running Tyler’s business, formulating policy, negotiating contracts, or the like. The service Ms. Greene provided to Tyler’s government customers — implementation and training on ExecuTime software — was, according to Tyler’s corporate representative, always provided to customers purchasing the ExecuTime software. It is therefore clear that the ExecuTime training was an “output of the business.”

Tyler’s contention that Ms. Greene’s work was “critical” to its own business operations because her failure to perform would “leave Tyler vulnerable” and at reputational risk is an argument that could be applied to nearly any employee in any workplace and is legally without merit. Whether or not an employee is indispensable is insufficient to prove that her primary duties are administrative. In sum, Tyler does not seriously appear to rely on this argument, for good reason. The uncontroverted evidence shows that Ms. Greene did not perform work directly related to Tyler’s general business operations.

Tyler next and principally argues that Ms. Greene’s work was directly related to servicing the general business operations of Tyler’s clients. According to Tyler, because Ms. Greene “led the deployment of ExecuTime software based on the client’s policies and procedures, trained clients on the software, and helped troubleshoot issues,” she was an “adviser or consultant on the ExecuTime software for Tyler’s clients.” Plaintiff responds that:

Plaintiff Greene did not consult municipal governments about how to compensate their employees or how to track their time. Rather, she assisted them in teaching them how to use their new time and pay software and how to configure its functionalities—a fancy way of saying “changing the settings.” How the customers used the software was based on their own needs, which were determined long before Plaintiff ever became involved. Simply acting as a conduit for information about how ExecuTime software works does not even arguably constitute the “general business operations” of Tyler’s local government clients.

On the issue of whether an employee is subject to the administrative exemption based on work related to their employer’s customers, the DOL regulations provide:

3. An employee may qualify for the administrative exemption if the employee’s primary duty is the performance of work directly related to the management or general business operations of the employer’s customers. Thus, for example, employees acting as advisers or consultants to their employer’s clients or customers (as tax experts or financial consults, for example) may be exempt.

29 C.F.R. § 541.201(c). Courts interpreting this subsection have explained that “while the regulations provide that ‘servicing’ a business may be administrative, ‘advising the management’ as used in subsection (c) is directed at advice on matters that involve policy determinations, i.e., how a business should be run or run more efficiently, not merely providing information in the course of the customer’s daily business operation.”

Here, Tyler’s customers are not other businesses with private financial incentives but local and state governments. The Wage & Hour Division of the DOL recently explained that there is “scarce authority regarding what constitutes the general business operations of a government.” However, it is often more useful to ask whether the job duties involve, “on the one hand, the day-to-day carrying out of the government’s functions or, on the other, running the government (or a component of the government) itself or determining its overall course and policies.”

Accordingly, regardless of the details of the general business operations of Tyler’s particular government customers, a reasonable jury could not find that Ms. Greene primary duties involved advising those government customers on matters involving running a component of the government or determining the overall course and policies of the government. Indeed, there is no record evidence that Ms. Greene advised any government customer, for example, how to run their personnel department, what benefits to offer (comp time, overtime, vacation time), or even what software to use to administer their time and attendance policies. As characterized by Tyler, Ms. Greene’s role was entirely distinct from that of a tax adviser or financial consultant who may direct a customer on matters of policy determination about how to better or more efficiently run their business operation or how to comply with particular regulations (an example Defendant cites in its reply at 7).

The DOL regulations identify the following areas as connected to general business operations of a business: tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations, government relations; computer network, internet and database administration; legal and regulatory compliance; and similar activities. 29 C.F.R. § 541.201(b). Of these categories, the only ones Tyler even suggests are implicated here are “quality control” and “database administration.” But Defendant does not provide any explanation or theory, let alone record evidence, to show how or when Plaintiff advised any government customer in either capacity. In contrast, Plaintiff argues, and the uncontroverted record supports, that Ms. Greene did not advise government customers how to set up, modify, test or secure their government databases; how to program, design, or modify software; what software or functionalities to buy; or how to update or reconfigure the software to function more efficiently. The decision of what software to buy was made in collaboration with a Tyler sales representative and a product owner. After a customer had decided to purchase ExecuTime software, Ms. Greene did not advise it on what ExecuTime features or functionalities to purchase — such as whether to have advanced scheduling or a milestone contract, or how many timeclocks to have as those decisions too were made prior to her involvement and in conjunction with a Tyler sales representative.

The Parties agree that the majority of Plaintiff’s work time was spent conducting trainings and preparing to conduct trainings. With respect to her time actually conducting the trainings with power users, super users, and end users, the Wage & Hour Division has instructed that providing routine education by way of “delivering educational lectures, materials, and presentations would be day-to-day work and would be nonexempt.” And while Tyler makes much of Plaintiff’s time spent reviewing client information, such as the questionnaire, and familiarizing herself with their policies, such review time certainly doesn’t meet the standard of advising a government customer on its general business operations as contemplated by 29 C.F.R. § 541.201(c).

Tyler’s attempt to dress up Ms. Greene’s duties is no substitute for evidence of the actual duties she performed. In this vein, Tyler’s reliance on Ms. Greene’s title of “implementation consultant” is misplaced. “A job title alone is insufficient to establish the exempt status of an employee. The exempt or nonexempt status of any particular employee must be determined on the basis of whether the employee’s salary and duties meet the requirements of the regulations in this part.” 29 C.F.R. § 541.2.

Similarly, Tyler’s heavy-handed reliance on Ms. Greene’s post-employment resume, which is framed at a high level of generality, first is not evidence of the actual duties she performed as an implementation consultant, as numerous courts have explained. Second, the duties as described in Ms. Greene’s resume do not indicate that her work was in any way directly related to the general business operations of Tyler’s customers. “Directing project teams to meet project objectives,” (which were in fact undisputedly pre-determined), “setting clear expectations for project teams,” or “holding regular meetings with clients to ensure that milestones are met” in no way establishes that Ms. Greene guided local policy or procedure, or ran/serviced the government customer’s operations, or advised in any capacity listed in 29 C.F.R. § 541.201(b).

Defendant’s argument that Ms. Greene’s work of “troubleshooting” for the government customers renders her exempt is not supported by the DOL regulations, the legal authority, or the facts. The Wage & Hour Division has explained that IT support work, such as work involving “installing, configuring, testing, and troubleshooting computer applications, networks and hardware” does not qualify for the administrative exemption under Section 13(a)(1) of the FLSA. Here, not only did Plaintiff spend a minimal amount of time “troubleshooting” but she undisputedly did not have a role creating or managing computer systems, did not repair computer systems, and did not do work involving any programming expertise. In fact, she explicitly stated that she was not able to do such technical work:

Q: But in terms of what your responsibility was to, quote, unquote, build the schedule, are you actually programming the software or what is it that you’re doing?

A: No, I’m not very technical, so when it comes to, like, programming and things in depth on the technical side, I did not handle any of that.

Instead, Ms. Greene was able to fix straightforward problems related to the software’s functionality, like overtime not populating, by something as “simple” as fixing the preferences on the back end. (Greene Dep. p. 135:11-17.) If a problem was at all technical, a ticket would be sent to the support team to handle it.

Also misplaced is Defendant’s reliance on Plaintiff’s alleged indispensable role in allowing local government customers to schedule and pay their employees. By Defendant’s logic, nearly any employee would be rendered exempt as indispensable in some manner or other, for example, a store clerk indispensable because a customer could not make a purchase without their involvement.

Tyler’s cited cases in support all involve employees directly engaged in advising the policies and operations of their employer or its relevant customers and are therefore inapplicable to the facts of this case. In Verkuilen v. MediaBank, LLC, 646 F.3d 979 (7th Cir. 2011) the plaintiff was an account manager for a media company who worked with clients (companies) to determine their specific advertising needs and customize the advertising products accordingly, as follows:

Identifying customers’ needs, translating them into specifications to be implemented by the developers, assisting the customers in implementing the solutions — in the words of the employer’s chief operating officer, account managers are expected to ‘go out, understand the customers’ requirements, build specifications, understand the competency level of our customers. Then they will build functional and technical specifications and turn it over to developers who will then build the software, checking in with the account manager, making sure what they are building is ultimately what the customer wanted.

Here, there is no evidence that Ms. Greene built any specifications or customizations or advised in any capacity related to the development of new software. She did not interact with anyone who engineered software. All of the decisions about what functionalities a local government preferred were made prior to Ms. Greene’s involvement and she was not in a powerful intermediary role, as described in Verkuilen.

In Brooks v. Healthcare-Iq, Inc., 2019 WL 497693 (M.D. Fla. Feb. 8, 2019), the plaintiff, who was primarily a training and development manager, performed a “complete redesign” of the complex medical software training curriculum and also “managed the curriculum design.” He testified that he “completely redesigned the approach that was taken in the curriculum,” and either designed teaching modules himself or gave instructions to his colleague/assistant to do so, without any approval from higher-ups. Here, Ms. Greene’s duties did not involve the design or redesign of any software, she certainly did not have anyone at a lower level or in another department design modules or training materials at her request, and she did not approve any other employee’s expense reports, as in Brooks.

For the reasons above, Tyler has not met its burden of demonstrating that Ms. Greene’s primary duties were directly related to the management or general business operations of Tyler or of its local government customers under the applicable legal standard and as contemplated by 29 C.F.R. § 541.200. A reasonable jury could not find otherwise. In contrast, Plaintiff has met her burden in establishing that the exemption is not applicable under the present facts as construed in the light most favorable to Tyler. Therefore, the Court finds that Ms. Greene did not fall within the administrative exemption and summary judgment in favor of Plaintiff is appropriate. For good measure, however, the Court addresses the third prong of the administrative exemption test below.

ii. Primary duties consisting of the exercise of discretion and independent judgment with respect to matters of significance

Tyler argues that Ms. Greene exercised discretion and independent judgment because she made recommendations to and worked directly with the government customer with little supervision. Further, when troubleshooting, she had to “evaluate issues presented, escalate issues as appropriate and ensure they were resolved to the client’s satisfaction.” On the flipside, Ms. Greene argues that her duties of ExecuTime instruction and troubleshooting existed within “constrained and pre-established parameters that did not permit any real discretion with respect to matters of significance, much less as a primary duty,” and that no factfinder could conclude otherwise based on the applicable regulations and law.

In order to qualify as an exempt administrative employee, the DOL’s regulations provide:

in general, the exercise of discretion and independent judgment involves the comparison and the evaluations of possible courses of conduct, and acting or making a decision after the various possibilities have been considered. The term “matters of significance” refers to the level of importance or consequence of the work performed.

29 C.F.R. § 541.202(a). Factors to consider in determining whether the “discretion and independent judgment” criteria is satisfied include, but are not limited to: (1) whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices; (2) whether the employee carries out major assignments in conducting the operations of the business; (3) whether the employee performs work that affects business operations to a substantial degree, even if the employee’s assignments are related to operation of a particular segment of the business; (4) whether the employee has authority to commit the employer in matters that have significant financial impact; (5) whether the employee has authority to waive or deviate from established policies and procedures without prior approval; (6) whether the employee has authority to negotiate and bind the company on significant matters; (7) whether the employee provides consultation or expert advice to management; (8) whether the employee is involved in planning long- or short-term business objectives; (9) whether the employee investigates and resolves matters of significance on behalf of management; and (10) whether the employee represents the company in handling complaints, arbitrating disputes or resolving grievances.

Although the “exercise of discretion and independent judgment implies that the employee has authority to make an independent choice, free from immediate direction or supervision employees can exercise discretion and independent judgment even if their decisions or recommendations are reviewed at a higher level. Thus, the term ‘discretion and independent judgment’ does not require that the decisions made by an employee have a finality that goes with unlimited authority and a complete absence of review The decisions made as a result of the exercise of discretion and independent judgment may consist of recommendations for action rather than the actual taking of action.” The regulations further provide that the “exercise of discretion and independent judgment must be more than the use of skill in applying well-established techniques, procedures or specific standards described in manuals or other sources.” It “does not include clerical or secretarial work, recording or tabulating data, or performing other mechanical, repetitive, recurrent or routine work.” Finally, “an employee does not exercise discretion and judgment in matters of significance merely because the employer will experience financial losses if the employee fails to properly perform his or her job.”

The Court turns first to Plaintiff’s “troubleshooting” work as the law is abundantly clear on this front. The Wage & Hour Division has clearly articulated that IT support work, including troubleshooting computer applications, networks, and hardware and ensuring that computer equipment or a computer application is “working properly according to the specifications designed by others” are examples of work that “lacks the requisite exercise of discretion and independent judgment within the meaning of the administrative exemption.”

Likewise unavailing is Tyler’s contention that Ms. Greene exercised discretion in determining whether to escalate a troubleshooting question to the support team. Not only does the record indicate that Ms. Greene had to go through her supervisor before a ticket could be sent to the support team but moreover, an employee does not exercise discretion by following prescribed procedures.

Next, Tyler’s argument that Plaintiff exercised discretion because she coordinated and prioritized her own schedule also does not meet the requirements of 29 C.F.R. § 541.202(a). It is insufficient to show discretion on matters of significance only through evidence that an employee makes decisions regarding “when and where to do different tasks, as well as the manner in which to perform them.” Such decisions assuredly do not meet the standard for “matters of significance” which generally includes “responsibilities dealing with matters of broad scope and significant detail that have a profound effect on the employer’s business,” such as: “matters that have significant financial impact, negotiating and binding the company on significant matters; and planning long- or short-term business objectives.”

Tyler next argues that Ms. Greene exercised discretion and independent judgment because, for each project she worked on, she “assessed client protocols and procedures, managed competing client deadlines and priorities, and created custom training agendas based on client feedback.” Not only is this characterization devoid of any specifics and unsupported by record evidence, but it is not indicative of any duties emblematic of discretion and independent judgment in matters of significance: that is, actions that “involve the comparison and the evaluations of possible courses of conduct, and acting or making a decision after the various possibilities have been considered.”

Tyler admits that Ms. Greene herself had no involvement in making decisions to set deadlines for the projects she was involved in. Tyler’s suggestion that Ms. Greene herself made decisions to delay “go live” dates finds no support in the record and nevertheless is not a matter of significance.

As a result, the evidence before the Court indicates that any decision-making capacity Ms. Greene held was a matter of following prescribed procedures, and that it was her supervisor who had to make any substantive change to a customer’s project plan or timeline. Under the applicable legal authority, this does not constitute the exercise of discretion, let alone in matters of significance.

Likewise, Tyler’s position that Ms. Greene had the “discretion to make recommendations” to its government customers that “shaped the course and trajectory of any given implementation” is inconsistent with the record evidence. Ms. Greene declared that she “never made any recommendations to Tyler customers about the possibility of purchasing additional hours”; “the decision whether a customer would have in-person trainings or remote trainings was made before I was brought in on a project”; “at no point in my employment did I ever recommend that a customer have me come back on-site for additional training”; she “never made any recommendations to customers about making any changes to their payroll practices”; she “cannot recall a single instance of ever making a recommendation to a customer about purchasing timeclocks that would be the job of Tyler salespeople,”; and she “never made any recommendations to customers on how to manage their information databases”. Ms. Greene’s deposition also indicates that she never recommended to a client that they needed more training hours, and instead, if the client was getting low on their pre-allotted hours, she would merely indicate that to the project manager. Tyler has identified no instances where Ms. Greene made any recommendations to a government customer in contravention of her sworn testimony, let alone shown that making such recommendations on matters of significance was a primary duty of her job.

Tyler’s cited legal authority, previously discussed, does not persuade otherwise, as the facts in those cases are inapposite. The plaintiff in Brooks testified that he had discretion to develop training materials and pedagogic examples without the approval or supervision of anyone at headquarters and had the authority to supervise another employee who assisted him in these tasks. The court in Carbaugh, found that the plaintiff exercised discretion in consulting with client businesses on new product ideas and enhancements, approving new product versions and fixes, and developing cost savings to increase profit revenue for customers. In Cruz v. Lawson Software, Inc., the plaintiffs testified to almost “nonexistent supervision,” as they did not communicate on a regular basis with supervisors, and also made decisions in connection with configuring software for specific clients, upgrading software, adding new features, developing the interface, converting data, and more.

Finally, Tyler stresses that Plaintiff’s work was done at home or the customer’s site as confirmation of her independent judgment and discretion. Tyler has pointed to no regulation or guidance making this distinction as indicative of independent decision-making on matters of significance on its own, without other persuasive indicators of such discretion. In the increasingly technological (and currently, pandemic-ridden) waters in which we swim, working remotely and separate from other employees and supervisors is not unusual, and companies have developed ways to track employee time while not physically on the premises, as Tyler well knows. The location of Ms. Greene’s work alone is insufficient to show that she exercised independent judgment on matters of significance.

As detailed thoroughly herein, Tyler has not supplied the Court with any concrete evidence to create a genuine fact issue on whether Ms. Greene exercised discretion and independent judgment in matters of significance as a primary function of her job as implementation consultant. Plaintiff Greene, however, has shown, based on the facts construed in Tyler’s favor, that she did not hold primary duties that included the exercise of independent judgment. For this separate reason, the Court concludes that Ms. Greene is not subject to the administrative exemption and summary judgment for Plaintiff on this issue is warranted.