Ongoing activity by the Department of Labor (DOL) regarding overtime regulations, coupled with recent federal court decisions regarding compliance with the Fair Labor Standards Act (FLSA), have raised the level of attention to wage payment issues — and have increased the risk of employer liability — to new heights. A recent decision by the 5th U.S. Circuit Court of Appeals provides a clear illustration of the type of action that triggers that risk. Miles v. HSC-Hopson Services Company, Incorporated, 5th Cir., No. 14-11237 (September 8, 2015).

Donald Miles, a plumber, brought an action under the FLSA against his employer, HSC-Hopson Services Company (“HSC”). In that lawsuit, Miles claimed that he was not paid for all of the time that he spent at work, and that overtime wages were owed to him. He premised that claim on the facts that:

  • even though the workday began at 8:00 a.m., he was directed to appear at work at 7:30 a.m. to load his truck and receive his first assignment of the day, but was not paid for that 30 minute block of time; and
  • he was not paid for time worked after finishing the last assignment of the day, during which he was required to return and unload the same truck and lock everything up.

The FLSA requires employers to pay to non-exempt employees (which typically includes plumbers) at least one and one-half times the employees’ regular hourly wage for every hour worked in excess of 40 in a week. The Act further requires employers to keep track of and document fully the work-time spent by employees.

Miles’ case was tried to a jury and included testimony from HSC’s owner, Hopson, that not only did HSC not pay for the before-or-after work assignments time, but that if Hopson disagreed with a time indicated on a timecard, he would direct his office manager to change the card, or he would change it himself.

Importantly, Hopson testified that while he did not seek the advice of counsel or contact the DOL for direction or advice on his actions, he visited an “e-law” website to assure himself that those actions were compliant with the FLSA.

A jury reacted by finding in Miles’ favor, and awarding to him actual damages/lost wages in the amount of $16,132.50, with an equal amount in liquidated damages for “willful” violation of the FLSA.

On appeal, Hopson argued that the imposition of liquidated damages was “not fair,” because rather than willfully violating the FLSA, he had acted in “good faith reliance” on the DOL’s regulations regarding overtime payment, based upon his reading of the “e-law” site.

The Fifth Circuit disagreed, citing the language of the FLSA that a violation is willful “if the employer either knew or showed reckless disregard for . . . whether its conduct was prohibited by the statute.” The combination of Hopson’s reliance on an “e-law” site, rather than on legal advice geared to his specific situation, coupled with his arbitrary reduction of and non-payment for work times, led to this adverse decision.

This case adds to the already lengthy list of reasons that employers should work closely with human resource personnel and legal advisors to assure compliance with and awareness of laws related to wage payments to employees, especially in light of the pending revision to the regulations related to the calculation of overtime payments.