Danny Flores et al v. City of San Gabriel et al, No. 2:2012cv04884 - Document 37 (C.D. Cal. 2013)

Court Description: ORDER GRANTING DEFENDANTS MOTION FOR PARTIAL SUMMARY JUDGMENT 20 AND GRANTING IN PART PLAINTIFFS MOTION FOR PARTIAL SUMMARY JUDGMENT 23 by Judge Jesus G. Bernal: (see document image for further details). For the reasons set forth above, the Co urt GRANTS Defendants Motion for Partial Summary Judgment and GRANTS IN PART Plaintiffs Motion for Partial Summary Judgment. The Court directs the parties to submit further briefing addressing the issue of liquidated damages. Plaintiffs may file a supplemental brief on the issue, due by September 18, 2013. Defendant may file an opposition by September 25, 2013. (ad)

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Danny Flores et al v. City of San Gabriel et al Doc. 37 1 O 2 3 4 UNITED STATES DISTRICT COURT 5 CENTRAL DISTRICT OF CALIFORNIA 6 7 8 9 10 11 12 DANNY FLORES, ROBERT BARADA, KEVIN WATSON, VY VAN, RAY LARA, DANE WOOLWINE, RIKIMARU NAKAMURA, CHRISTOPHER WENZEL, CRUZ HERNANDEZ, SHANNON CASILLAS, JAMES JUST, RENE LOPEZ, GILBERT LEE, STEVE RODRIGUES, and ENRIQUE DEANDA, 13 Plaintiffs, 14 15 16 17 v. CITY OF SAN GABRIEL, and DOES 1 THROUGH 10, inclusive, 18 Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. CV 12-04884 JGB (JCGx) ORDER GRANTING DEFENDANT’S MOTION FOR PARTIAL SUMMARY JUDGMENT AND GRANTING IN PART PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT 19 20 21 Before the Court is the Motion for Summary 22 Judgment, or in the alternative, Partial Summary 23 Judgment filed by Defendant City of San Gabriel on May 24 13, 2013. 25 Plaintiffs’ Motion for Partial Summary Judgment filed 26 on May 13, 2013. 27 papers timely filed and the arguments presented at the (Doc. No. 20.) Also before the Court is (Doc. No. 23.) After considering the 28 1 Dockets.Justia.com 1 August 19, 2013 hearing, the Court GRANTS Defendant’s 2 Motion for Partial Summary Judgment and GRANTS IN PART 3 Plaintiffs’ Motion for Partial Summary Judgment. 4 Court directs the parties to submit further briefing 5 addressing the issue of liquidated damages. The 6 7 I. BACKGROUND 8 9 A. Procedural Background 10 11 Plaintiffs Danny Flores, Robert Barada, Kevin 12 Watson, Vy van, Ray Lara, Dane Woolwine, Rikimaru 13 Nakamura, Christopher Wenzel, Cruz Hernandez, Shannon 14 Casillas, James Just, Rene Lopez, Gilbert Lee, Steve 15 Rodrigues, and Enrique Deanda (collectively, 16 “Plaintiffs”) filed their Complaint on June 4, 2012. 17 (Doc. No. 1.) Defendant City of San Gabriel 18 (“Defendant”) filed its Answer on June 26, 2012. 19 No. 5.) (Doc. 20 21 Defendant filed its Motion for Summary Judgment, or 22 in the alternative, Partial Summary Judgment, on May 23 13, 2013. 24 its Motion, Defendant filed: 25 26 (“Def. Mot.,” Doc. No. 20.) In support of Separate Statement of Uncontroverted Facts and Conclusions of Law (“Def. SUF,” Doc. No. 22-1); 27 28 2 1 Declaration of Rayna Ospino (“Ospino Mot. 2 Decl.,” Exh. 1 to Defendant’s Appendix of 3 Evidentiary Support (“Def. Mot. Appendix”), 4 Doc. No. 21); 5 Exh. 2 to Def. Mot. Appendix); 6 7 Declaration of Linda Tang (“Tang Mot. Decl.,” Excerpts from City of San Gabriel Resolution 8 No. 02-12, adopted January 7, 2013 (“Resolution 9 No. 02-12,” Exh. A to Def. Mot. Appendix); 10 Excerpts from the City of San Gabriel Salary, 11 Compensation and Benefit Policy Manual, dated 12 July 3, 2010 (“Policy Manual,” Exh. B to Def. 13 Mot. Appendix); and 14 Excerpts from the Memorandum of Understanding 15 between the City of San Gabriel and the San 16 Gabriel Police Officers’ Association for 2005- 17 2007, signed August 2, 2005 (“Mot. MOU,” Exh. C 18 to Def. Mot. Appendix). 19 20 On June 10, 2013, Plaintiffs filed their Opposition 21 to Defendant’s Motion. 22 Plaintiffs filed the following documents in support of 23 their Opposition: 24 (“Pl. Opp.,” Doc. No. 27.) Declaration of Joseph N. Bolander (“Bolander 25 Opp. Decl.,” Doc. No. 27-1) attaching Exhibits 26 A-B; and 27 28 3 1 Statement of Genuine Disputes of Material Fact (“Pl. SGD,” Doc. No. 27-2). 2 3 4 Defendant filed its Reply on June 24, 2013. (“Def. 5 Reply,” Doc. No. 31.) In support of its Reply, 6 Defendant also filed its Objections to Plaintiffs’ 7 Evidence. (“Def. Reply Obj.,” Doc. No. 32.) 8 9 Plaintiffs filed their Motion for Partial Summary 10 Judgment on May 13, 2013. 11 In support of their Motion, Plaintiffs also filed the 12 following: 13 Declaration of Joseph N. Bolander (“Bolander Mot. Decl.,” Doc. No. 23-2); 14 15 (“Pl. Mot.,” Doc. No. 23.) Statement of Uncontroverted Facts and 16 Conclusions of Law (“Pl. SUF,” Doc. No. 23-3); 17 and 18 Request for Judicial Notice (“RJN,” Doc. No. 23-4).1 19 20 21 On June 10, 2013, Defendant filed its Opposition to 22 Plaintiffs’ Motion. (“Def. Opp.,” Doc. No. 26.) 23 Defendant filed the following documents in support of 24 its Opposition: 25 26 27 28 1 Since the Court does not rely on the district court’s order in Rob Morris v. City of Santa Maria, LA CV 12-04989 JAK (FFMx) to reach its decision, it does not take judicial notice of that document. 4 1 (“Def. SGD,” Doc. No. 26-2); 2 3 Statement of Genuine Disputes of Material Fact Declaration of Rayna Ospino (“Ospino Opp. 4 Decl.,” Exh. 1 to Defendant’s Appendix of 5 Evidentiary Support in Opposition to 6 Plaintiffs’ Motion (“Def. Opp. Appendix”), Doc. 7 No. 26-1); 8 Exh. 2 to Def. Opp. Appendix); 9 10 Declaration of Alex Y. Wong (“Wong Decl.,” Exh. 4 to Def. Opp. Appendix); 13 14 Declaration of Marcella Marlowe (“Marlowe Decl.,” Exh. 3 to Def. Opp. Appendix); 11 12 Declaration of Linda Tang (“Tang Opp. Decl.,” Excerpts from the Memorandum of Understanding 15 Between City of San Gabriel and the San Gabriel 16 Police Officers’ Association for 2005-2007, 17 signed August 2, 2005 (“Opp. MOU,” Exh. C to 18 Def. Opp. Appendix); and 19 Proposed Joint Stipulation of Fact (“Joint Stipulation,” Exh. D to Def. Opp. Appendix). 20 21 22 Plaintiffs filed their Reply on June 24, 2013. 23 (“Pl. Reply,” Doc. No. 29.) 24 following documents in support of their Reply: 25 26 Plaintiffs filed the Response to Defendant’s Statement of Genuine Issues (“Pl. Resp.,” Doc. No. 28); and 27 28 5 1 Objections to Defendant’s Evidence Offered in 2 Support of Defendant’s Opposition (“Pl. Reply 3 Obj.,” Doc. No. 30.) 4 5 B. Complaint 6 7 In their Complaint, Plaintiffs allege that they are 8 employed as police officers in the City of San Gabriel 9 Police Department. (Compl., ¶¶ 3-17.) The City of San 10 Gabriel and the San Gabriel Police Officers Association 11 entered into the Memorandum of Understanding (“MOU”) 12 that allowed officers to choose a health insurance cash 13 out option. 14 Plaintiffs are entitled to receive cash back payments 15 for any unused portion of their medical benefits. 16 (Compl., ¶ 20.) (Compl., ¶ 19.) Pursuant to the MOU, 17 18 Plaintiffs have been exercising their option to 19 receive the cash back payment for the unused portion of 20 their medical benefits. 21 Defendant does not apply the cash back portions of 22 Plaintiffs’ unused medical benefits to their regular 23 rate of pay. 24 Plaintiffs received for overtime hours worked did not 25 include the cash back portions of Plaintiffs’ unused 26 medical benefits. 27 Defendant failed to pay Plaintiffs for overtime (Compl., ¶ 23.) (Compl., ¶ 24.) However, Therefore, the rate (Compl., ¶ 25.) 28 6 As a result, 1 compensation at one and a half times their regular rate 2 of pay. (Compl., ¶ 26.) 3 4 Plaintiffs’ cause of action arises under the Fair 5 Labor Standards Act “FLSA”, 29 U.S.C. § 207, et seq. 6 Plaintiffs request an award of liquidated damages in a 7 sum equal to the amount of the unpaid compensation 8 pursuant to 29 U.S.C. § 216(d) and recovery of 9 reasonable attorney fees and costs pursuant to 29 10 U.S.C. § 216(b). (Compl., ¶¶ 31-32.) 11 12 C. Parties’ Requests for Relief 13 Defendant filed its Motion for Summary Judgment 14 15 16 asserting the following: Defendant is entitled to summary judgment on 17 the ground that payments made in lieu of 18 benefits to employees are excluded under 29 19 U.S.C. § 207(e)(2) or, alternatively, under 29 20 U.S.C. § 207(e)(4). 21 Alternatively, Defendant is entitled to partial 22 summary judgment on the ground that it 23 implemented a partial overtime exemption 24 pursuant to 29 U.S.C. § 207(k). 25 26 Plaintiffs filed their Motion asserting that they 27 are entitled to partial summary judgment on the 28 following grounds: 7 1 Defendant cannot meet its burden of 2 demonstrating that payments made in lieu of 3 benefits are excluded under section 207(e)(4) 4 since these payments are not made to a trustee 5 or third person; 6 Each Plaintiff’s total monthly benefit 7 allowance should be included in the regular 8 rate of pay calculation because Defendant’s 9 plan does not qualify as a “bona fide” plan 10 pursuant to section 207(e)(4); 11 12 Plaintiffs are entitled to an award of liquidated damages; and 13 14 Plaintiffs are entitled to a three-year statute of limitation. 15 16 D. Summary of Court’s Ruling: 17 18 19 20 For the reasons set forth below, the Court finds the following: Defendant’s payments to Plaintiffs made in lieu 21 of benefits are not excludable under section 22 207(e)(2) from the regular rate calculation; 23 24 25 26 The payments made in lieu of benefits are also not excludable under section 207(e)(4); To the extent that Defendant makes contributions under the Plan to third parties, 27 28 8 1 these contributions are excludable under 29 2 U.S.C. § 207(e)(4); 3 Plaintiffs’ claims are governed by a two-year 4 statute of limitations under 29 U.S.C. § 5 255(a); 6 Defendant is liable to Plaintiffs for FLSA 7 overtime only to the extent that Plaintiffs 8 worked in excess of 86 hours in a 14-day work 9 period since Defendant implemented a partial 10 overtime exemption pursuant to section 207(k); 11 and 12 Before the Court decides the issue of 13 liquidated damages, the Court directs the 14 parties to submit further briefing addressing 15 the issue. 16 II. LEGAL STANDARD2 17 18 19 Federal Rule of Civil Procedure 56 empowers the 20 Court to enter summary judgment on factually 21 unsupported claims or defenses, and thereby “secure the 22 just, speedy and inexpensive determination of every 23 action.” 24 (1986). 25 “pleadings, depositions, answers to interrogatories, Celotex Corp. v. Catrett, 477 U.S. 317, 325 Summary judgment is appropriate if the 26 27 2 Unless otherwise noted, all references to “Rule” refer to the Federal Rules of Civil Procedure. 28 9 1 and admissions on file, together with the affidavits, 2 if any, show that there is no genuine issue as to any 3 material fact and that the moving party is entitled to 4 judgment as a matter of law.” 5 A fact is material when it affects the outcome of the 6 case. 7 248 (1986); Freeman v. Arpaio, 125 F.3d 732, 735 (9th 8 Cir. 1997). Fed. R. Civ. P. 56(c). Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 9 10 The party moving for summary judgment bears the 11 initial burden of establishing an absence of a genuine 12 issue of material fact. 13 This burden may be satisfied by either (1) presenting 14 evidence to negate an essential element of the non- 15 moving party's case; or (2) showing that the non-moving 16 party has failed to sufficiently establish an essential 17 element to the non-moving party's case. 18 Where the party moving for summary judgment does not 19 bear the burden of proof at trial, it may show that no 20 genuine issue of material fact exists by demonstrating 21 that “there is an absence of evidence to support the 22 non-moving party's case.” 23 party is not required to produce evidence showing the 24 absence of a genuine issue of material fact, nor is it 25 required to offer evidence negating the non-moving 26 party's claim. 27 U.S. 871, 885 (1990); United Steelworkers v. Phelps 28 Dodge Corp., 865 F.2d 1539, 1542 (9th Cir. 1989). Celotex, 477 U.S. at 323. Id. at 325. Id. at 322-23. The moving Lujan v. National Wildlife Fed'n, 497 10 1 2 However, where the moving party bears the burden of 3 proof at trial, the moving party must present 4 compelling evidence in order to obtain summary judgment 5 in its favor. 6 Property at 8110 E. Mohave, 229 F. Supp. 2d 1046, 1047 7 (S.D. Cal. 2002) (citing Torres Vargas v. Santiago 8 Cummings, 149 F.3d 29, 35 (1st Cir. 1998) (“The party 9 who has the burden of proof on a dispositive issue United States v. One Residential 10 cannot attain summary judgment unless the evidence that 11 he provides on that issue is conclusive.”)). 12 to meet this burden results in denial of the motion and 13 the Court need not consider the non-moving party's 14 evidence. 15 229 F. Supp. 2d at 1048. Failure One Residential Property at 8110 E. Mohave, 16 17 Once the moving party meets the requirements of 18 Rule 56, the burden shifts to the party resisting the 19 motion, who “must set forth specific facts showing that 20 there is a genuine issue for trial.” 21 U.S. at 256. 22 burden by showing “some metaphysical doubt as to the 23 material facts.” 24 Zenith Radio Corp., 475 U.S. 574, 586 (1986). 25 United States Supreme Court has held that “[t]he mere 26 existence of a scintilla of evidence in support of the 27 non-moving party's position is not sufficient.” 28 Anderson, 477 U.S. at 252. Anderson, 477 The non-moving party does not meet this Matsushita Elec. Indus. Co., Ltd. v. The Genuine factual issues must 11 1 exist that “can be resolved only by a finder of fact 2 because they may reasonably be resolved in favor of 3 either party.” 4 judgment motion, the Court must examine all the 5 evidence in the light most favorable to the non-moving 6 party. 7 engage in credibility determinations, weighing of 8 evidence, or drawing of legitimate inferences from the 9 facts; these functions are for the jury. Id. at 250. When ruling on a summary Celotex, 477 U.S. at 325. The Court cannot Anderson, 477 10 U.S. at 255. Without specific facts to support the 11 conclusion, a bald assertion of the “ultimate fact” is 12 insufficient. 13 986, 990-91 (9th Cir. 1991). See Schneider v. TRW, Inc., 938 F.2d 14 15 Cross-motions for summary judgment do not 16 necessarily permit the judge to render judgment in 17 favor of one side or the other. 18 512 F.2d 109, 112 (9th Cir. 1975). 19 consider each motion separately “on its own merits” to 20 determine whether any genuine issue of material fact 21 exists. 22 Riverside Two, 249 F.3d 1132, 1136 (9th Cir. 2001). 23 When evaluating cross-motions for summary judgment, the 24 court must analyze whether the record demonstrates the 25 existence of genuine issues of material fact, both in 26 cases where both parties assert that no material 27 factual issues exist, as well as where the parties Starsky v. Williams, The Court must Fair Hous. Council of Riverside Cnty., Inc. v. 28 12 1 dispute the facts. 2 Cnty., 249 F.3d at 1136 (citation omitted). See Fair Hous. Council of Riverside 3 III. DISCUSSION 4 5 6 A. Evidentiary Objections 7 8 9 All of Defendant’s objections to Plaintiffs’ evidence filed in support of Plaintiffs’ Opposition to 10 Defendant’s Motion are on grounds of relevance under 11 Federal Rule of Evidence 402. 12 Doc. No. 32.) 13 evidence offered to show that Defendant did not have 14 actual knowledge that its actions constituted 15 violations of the FLSA, in part, on the ground that it 16 constituted an improper legal conclusion. 17 Reply Obj.,” Doc. No. 30.) 18 the ground that it is irrelevant, speculative, and/or 19 argumentative, or that it constitutes an improper legal 20 conclusion are all duplicative of the summary judgment 21 standard itself" and are thus "redundant" and 22 unnecessary to consider here. 23 Univ. of California, 433 F. Supp. 2d 1110, 1119 (E.D. 24 Cal. 2006); see Anderson, 477 U.S. at 248 ("Factual 25 disputes that are irrelevant or unnecessary will not be 26 counted."). 27 the parties’ relevance objections or objections as to 28 improper legal conclusions. (See “Def. Reply Obj.,” Plaintiffs also object to Defendant’s (See “Pl. "Objections to evidence on Burch v. Regents of Thus, the Court does not rule on any of 13 1 2 Plaintiffs also object to Defendant’s evidence 3 regarding Defendant’s lack of actual knowledge on the 4 ground that such evidence constituted improper lay 5 opinion in violation of Federal Rule of Evidence 701. 6 (See “Pl. Reply Obj.,” Doc. No. 30.) 7 between lay and expert witness testimony is that lay 8 testimony results from a process of reasoning familiar 9 in everyday life, while expert testimony results from a “The distinction 10 process of reasoning which can be mastered only by 11 specialists in the field.” 12 Appx. 848, 851 (9th Cir. 2009) (internal citations and 13 quotations omitted). 14 upon scientific, technical, or other specialized 15 knowledge, its admissibility must be determined by 16 reference to Rule 702, not Rule 701.” 17 413 F.3d 201, 215 (2nd Cir. 2005) (internal citations 18 and quotations omitted); see also, S.E.C. v. Sabhlok, 19 495 Fed. Appx. 786, 787 (9th Cir. 2012) (citing Fed. R. 20 Evid. 701(c)) (“Rule 701(c) of the Federal Rules of 21 Evidence forbids only lay opinion testimony that is 22 ‘based on scientific, technical, or other specialized 23 knowledge within the scope of Rule 702.’”). 24 Marlowe’s statements in her declaration are rationally 25 based on her perception and knowledge of the absence of 26 any prior complaints as to the regular rate 27 calculation. 28 Appendix, ¶¶ 5-8.) U.S. v. Corona, 359 Fed. “If the opinion rests in any way U.S. v. Garcia, Marcella (“Marlowe Decl.,” Exh. 3 to Def. Opp. Given her position as the Human 14 1 Resources Director and the top manager in the Human 2 Resources Office, Ms. Marlowe would have known of any 3 issues or complaints regarding the regular rate 4 calculation. 5 opinion qualifies as a lay opinion. 6 Court OVERRULES Plaintiffs’ objections as Ms. Marlowe’s 7 statement to the extent that they object to her 8 statement as an improper lay opinion. (Id., ¶ 7.) Therefore, Ms. Marlowe’s Accordingly, the 9 10 B. Uncontroverted Facts 11 12 Both sides cite facts that are not relevant to 13 resolution of the motions. To the extent certain facts 14 are not mentioned in this Order, the Court has not 15 relied on them in reaching its decision. 16 finds the following material facts are supported 17 adequately by admissible evidence and are 18 uncontroverted. 19 controversy" for the purposes of this Motion. 20 3; see generally Fed. R. Civ. P. 56. The Court They are "admitted to exist without L.R. 56- 21 22 1. The Work Period and Overtime 23 24 Plaintiffs are employed as full-time police 25 officers by Defendant and are members of the San 26 Gabriel Police Officers’ Association (“POA”), a 27 collective bargaining unit. 28 SGD, ¶¶ 1-2; Def. SUF, ¶ 5; Pl. SGD, ¶ 5.) (Pl. SUF, ¶¶ 1-2; Def. 15 At all 1 times during their employment, Plaintiffs have been 2 “non-exempt” hourly employees. 3 SGD, ¶ 3.) (Pl. SUF, ¶ 3; Def. 4 5 Since 1994, Defendant has utilized a 14-day work 6 period for calculation of overtime for sworn law 7 enforcement personnel. 8 Since 2003, Defendant’s adoption of the 14-day law 9 enforcement work period has been memorialized in (Def. SUF, ¶ 1; Pl. SGD, ¶ 1.) 10 various City resolutions and documents. (Def. SUF, ¶ 11 2; Pl. SGD, ¶ 2.) 12 time Police Department personnel in a “bi-weekly” 13 period is 80 hours. 14 Article 10 of the 2005-2007 Memorandum of understanding 15 (“MOU”) between Defendant and POA defines overtime as 16 “all hours worked over (80) in the two (2) week pay 17 period of employees.” 18 Accordingly, Defendant calculated and paid overtime 19 based upon hours worked over 80 in the 14-day period. 20 (Def. SUF, ¶ 7; Pl. SGD, ¶ 7.) 21 2005-2007 MOU’s definition of overtime in its Salary, 22 Compensation and Benefits Policy Manual. 23 9; Pl. SGD, ¶ 9.) 24 the 2005-2007 MOU has not been incorporated into 25 subsequent MOUs, Defendant’s practice of calculating 26 and paying overtime based upon the 80 hour/14-day 27 period has not changed. 28 ¶¶ 8, 10.) The number of hours worked by full- (Def. SUF, ¶ 3-4; Pl. SGD, ¶ 3-4.) (Def. SUF, ¶ 6; Pl. SGD, ¶ 6.) Defendant restated the (Def. SUF, ¶ Although the overtime language in (Def. SUF, ¶¶ 8, 10; Pl. SGD, The 14-day payroll period in use by 16 1 Defendant coincides with the 14-day work period for 2 sworn law enforcement personnel. 3 SGD, ¶ 11.) (Def. SUF, ¶ 11; Pl. 4 5 Defendant requires Plaintiffs to record their hours 6 worked, including any overtime hours, on bi-weekly, 14- 7 day “Time and Attendance Reports” which indicate they 8 cover a two-week, 14-day work period. 9 Pl. SGD, ¶ 12.) (Def. SUF, ¶ 12; Defendant assigns certain police 10 officers to a 3/12 schedule under which each employee 11 was assigned three 12-hour shifts one week and four 12- 12 hour shifts in the other, resulting in a total of 84 13 hours worked. 14 the 3/12 schedule was first implemented, Defendant 15 credited each employee with 4 hours of compensatory 16 time off in each payroll period to compensate for the 17 84 hours worked in the two-week period. 18 14; Pl. SGD, ¶ 14.) (Def. SUF, ¶ 13; Pl. SGD, ¶ 13.) When (Def. SUF, ¶ 19 20 Subsequently, pursuant to the 2005-2007 MOU, the 21 City and the POA agreed that employees assigned to a 22 3/12 schedule would be credited with four hours of 23 compensatory time at time and a half for the four 24 regularly scheduled hours worked over 80 during each 25 work period. 26 According to Defendant’s current practice, for officers 27 assigned a 3/12 schedule, hours worked in excess of 84 28 regularly scheduled hours may either be paid out or (Def. SUF, ¶ 15; Pl. SGD, ¶ 15.) 17 1 credited as compensatory time at time and one half at 2 the discretion of the employee. 3 SGD, ¶ 16.) 4 hours worked over 80 are paid out, or compensatory time 5 is credited, at time and one half. 6 Pl. SGD, ¶ 17.) (Def. SUF, ¶ 16; Pl. For employees working other schedules, (Def. SUF, ¶ 17; 7 8 2. Flexible Benefit Plan 9 10 In August of 1993, Defendant adopted a Flexible 11 Benefit Plan (“Plan”) for purposes of providing 12 benefits to employees. 13 ¶¶ 18, 24.) Pursuant to the Plan, Defendant makes a set 14 and fixed Employer Contribution on behalf of employees 15 on an annual basis pursuant to City Council resolution. 16 (Def. SUF, ¶ 19; Pl. SGD, ¶ 19.) 17 Contribution is converted into Cafeteria Plan Benefit 18 Dollars which are then made available to employees for 19 purchase of select benefits. 20 ¶ 20.) 21 is applied toward dental and vision insurance for the 22 employee. 23 employee may then elect one or more additional 24 benefits. (Def. SUF, ¶¶ 18, 24; Pl. SGD, The Employer (Def. SUF, ¶ 20; Pl. SGD, A portion of the Cafeteria Plan Benefit Dollars (Def. SUF, ¶ 21; Pl. SGD, ¶ 21.) The (Def. SUF, ¶ 22; Pl. SGD, ¶ 22.) 25 26 Upon providing proof of alternative medical 27 coverage, the employee may opt out of enrollment in 28 medical coverage under the Plan. 18 (Def. SUF, ¶ 23; Pl. 1 SGD, ¶ 23.) 2 alternate medical coverage the option to waive medical 3 coverage offered by Defendant and receive any unused 4 portion of their monthly benefit allowance as taxable 5 income on their paycheck. 6 7.) 7 have not been applied toward the purchase of available 8 benefits, any excess amounts are paid to the employee 9 as taxable income in lieu of benefits. 10 The Plan gives employees who have (Pl. SUF, ¶ 7; Def. SGD, ¶ Likewise, if any of the Employer Contributions (Def. SUF, ¶ 25; Pl. SGD, ¶ 25.) 11 Employees who elect to receive some or all of their 12 13 monthly benefit allowance in cash3 receive two direct 14 payments per month that appear as a designated line 15 item on their paychecks. 16 13.) 17 Plan are not made to a trustee or third person on 18 behalf of the employee. 19 14.) 20 state withholding taxes, Medicare taxes, and 21 garnishment. (Pl. SUF, ¶ 13; Def. SGD, ¶ Cash payments made to employees pursuant to the (Pl. SUF, ¶ 14; Def. SGD, ¶ The cash value received is subject to federal and (Pl. SUF, ¶ 16; Def. SGD, ¶ 16.) 22 23 24 25 26 27 28 3 The term “cash payments,” as used by the parties, refers to the unused portion of the monthly benefit allowance that employees receive as taxable income on their paychecks. Employees do not receive these payments in the form of cash. Rather, the payments appear as a designated line item on the employees’ paychecks every pay period. (Pl. SUF, ¶ 13; Def. SGD, ¶ 13.) 19 1 The Employer Contribution to the Plan in a given 2 pay period is fixed and does not vary based upon the 3 number of hours an employee works. 4 Pl. SGD, ¶ 26.) 5 receive back as cash from the Plan each month is also 6 fixed, and is based upon the extent of the employee’s 7 utilization of available benefits. 8 Pl. SGD, ¶ 28.) 9 receive as cash in lieu of benefits is not contingent (Def. SUF, ¶ 26; The excess amount an employee may (Def. SUF, ¶ 28; Therefore, the amount an employee may 10 upon the number of hours worked or the employee’s 11 productivity. (Def. SUF, ¶¶ 29-30; Pl. SGD, ¶¶ 29-30.) 12 In 2009, direct cash payments to employees as cash 13 14 in lieu of benefits amounted to 46.725% of total Plan 15 contributions. 16 2010, direct cash payments to employees made in lieu of 17 benefits totaled 42.842% of total Plan contributions. 18 (Pl. SUF, ¶ 22; Def. SGD, ¶ 22.) 19 payments to employees made in lieu of benefits made up 20 43.934% of total Plan contributions. 21 Def. SGD, ¶ 24.) 22 employees made in lieu of benefits made up 45.179% of 23 total Plan contributions. 24 26.) (Pl. SUF, ¶ 20; Def. SGD, ¶ 20.) In In 2011, direct cash (Pl. SUF, ¶ 24; In 2012, direct cash payments to (Pl. SUF, ¶ 26; Def. SGD, ¶ 25 26 Since at least 2003, Defendant has not included the 27 value of cash payments made in lieu of benefits in the 28 calculation of the recipient’s FLSA regular rate of 20 1 pay. 2 Defendant include the entire monthly benefit allowance 3 amount in the calculation of each individual employee’s 4 FLSA regular rate of pay. 5 29.) 6 whether or not these payments are properly excludable 7 from the FLSA regular rate calculation. 8 28; Def. SGD, ¶ 28.) 9 review of its Plan to ascertain what percentage of (Pl. SUF, ¶ 27; Def. SGD, ¶ 27.) Neither does (Pl. SUF, ¶ 29; Def. SGD, ¶ Defendant has not conducted an inquiry into (Pl. SUF, ¶ Defendant did not conduct a 10 total Plan contributions are paid out in cash to 11 employees prior to the filing of this lawsuit. 12 SUF, ¶ 30; Def. SGD, ¶ 30.) (Pl. 13 14 Over the years, Defendant regularly met with the 15 POA to discuss issues of concern regarding wages and 16 compensation of employees, including overtime pay.4 17 (Def. SGD, ¶ 17; Pl. Resp., ¶ 17.) 18 meetings and discussions between Defendant and the POA, 19 at no time prior to the filing of this action did 20 either the POA or employees ever raise Defendant’s 21 failure to include in the FLSA regular rate the amounts Despite these 22 4 23 24 25 26 27 28 Defendant claims that by meeting with the POA, Defendant, by extension, met with each of the Plaintiffs. (Def. SGD, ¶ 17.) Defendant’s cited evidence does not provide support to Defendant’s statement. (See Marlowe Decl., Exh. 3 to Def. Opp. Appendix, ¶ 5.) Plaintiffs oppose Defendant’s statement but do not cite to any supporting evidence to the contrary. (Pl. Resp., ¶ 17.) The dispute as to whether meeting with the POA is by extension meeting with each of the Plaintiffs is immaterial as it has no bearing on the issues now before the Court. 21 1 contributed into the Plan, including cash payments to 2 employees in lieu of benefits. 3 Resp., ¶ 19.) (Def. SGD, ¶ 19; Pl. 4 Plaintiffs are paid overtime compensation pursuant 5 6 to their labor agreement with Defendant for all hours 7 worked in excess of eighty hours in a two-week work 8 period. 9 each received cash payments in lieu of benefits at some (Pl. SUF, ¶ 31; Def. SGD, ¶ 31.) Plaintiffs 10 point in time between June 1, 2009 and June 1, 2012. 11 (Pl. SUF, ¶ 32; Def. SGD, ¶ 32.) 12 3. 13 Section 207(k) Exemption 14 Defendant’s Salary, Compensation and Benefits 15 16 Policy (“Policy”) expressly states that firefighters 17 employed by Defendant are subject to the 207(k) 18 exemption, but it makes no reference to the 207(k) 19 exemption as it pertains to police officers.5 20 ¶ 46; Exh. B to Bolander Opp. Decl., Exh. 3 to 21 Deposition of Linda Tang (“Tang Depo.”) at 10-13, 29- 22 31.) 23 firefighters are subject to 7(k) partial overtime 24 exemption, the Policy does not mention 7(k) exemption 25 or the FLSA in describing overtime threshold for police 26 27 28 (Pl. SGD, While the Policy explicitly provides that 5 Defendant does not dispute the facts relating to the absence of reference to the 207(k) exemption as it pertains to police officers. Rather, Defendant objects to the evidence as irrelevant. (Def. Reply Obj.) 22 1 officers. 2 Exh. 3 to Tang Depo. at 30-31.) 3 documents cited by Defendant as evidencing the election 4 of 207(k) exemption state that police officers are 5 subject to the 207(k) exemption. 6 Resolution No. 02-12, Exh. A to Def. Mot. Appendix at 7 7-8; Mot. MOU, Exh. C to Def. Mot. Appendix at 3.) (Pl. SGD, ¶ 47; Exh. B to Bolander Decl., None of the other (Pl. SGD, ¶ 48; 8 9 C. Exclusion of Payments under 29 U.S.C. § 207(e)(2) 10 11 Under the FLSA, employees working overtime must be 12 compensated “at a rate not less than one and one-half 13 times the regular rate at which he is employed.” 14 U.S.C. § 207(a)(1). 15 whether Defendant’s exclusion of payments made pursuant 16 to the Flexible Benefit Plan (“Plan”) from the regular 17 rate calculation, which results in a lower calculation 18 of overtime pay, violates the FLSA. 19 argues that its exclusion of these payments is proper 20 under section 207(e)(2) since the payments are not made 21 as compensation for hours worked, but rather represent 22 fixed payments to employees for opting out of certain 23 benefits provided by Defendant. 29 The main issue before the Court is Defendant first (Def. Mot. at 10-13.) 24 25 The employer bears the burden of establishing that 26 a payment is exempt under the FLSA. 27 Works, Inc. v. Wirtz, 383 U.S. 190, 209 (1966). 28 exemptions are to be narrowly construed against . . . 23 Idaho Sheet Metal “FLSA 1 employers and are to be withheld except as to persons 2 plainly and unmistakably within their terms and 3 spirit.” Klem v. Cnty. Of Santa Clara, Cal., 208 F.3d 4 1085, 1089 (9th Cir. 2000) (internal citations and 5 quotations omitted). 6 1. 7 Ninth Circuit Case Law 8 Defendant argues that payments to employees made in 9 10 lieu of benefits under the Plan are not made as 11 compensation for the hours of employment under the 12 final clause of section 207(e)(2). 13 13.) 14 “regular rate” (Def. Mot. at 10- Title 29 U.S.C. § 207(e)(2) excludes from the 15 [P]ayments made for occasional periods when no 16 work is performed due to vacation, holiday, 17 illness, failure of the employer to provide 18 sufficient work, or other similar cause; 19 reasonable payments for traveling expenses, or 20 other expenses, incurred by an employee in the 21 furtherance of his employer’s interests and 22 properly reimbursable by the employer; and 23 other similar payments to an employee which are 24 not made as compensation for his hours of 25 employment . . . 26 29 U.S.C. § 207(e)(2) (emphasis added). 27 Circuit has not addressed whether payments made to 28 employees out of flexible benefit plans must be 24 The Ninth 1 included in an employee’s regular rate for purposes of 2 the FLSA. 3 have addressed whether other payments and benefits are 4 excluded from the regular rate calculation, none has 5 addressed the application of section 207(e)(2) to 6 payments made under flexible benefit plans. While other district courts in California 7 The Ninth Circuit addressed the issue of whether 8 9 “supplemental payments, designed to bring the wage of a 10 partially disabled worker up to his or her 11 predisability wage level,” should be included in the 12 regular rate of pay used to calculate overtime in Local 13 246 Util. Workers Union of Am. v. S. Cal. Edison Co., 14 83 F.3d 292, 294 (9th Cir. 1996) (“Local 246”). 15 court held that the employer “must include these 16 supplemental payments in the regular rate used to 17 calculate overtime.” 18 the employer in Local 246 argued that the supplemental 19 payments were not compensation for hours worked since 20 they were not tied to specific working hours. 21 295. Id. at 296. The Like Defendant here, Id. at 22 23 The Ninth Circuit held that “[t]he key point is 24 that the pay or salary is compensation for work, and 25 the regular rate therefore must be calculated by 26 dividing all compensation paid for a particular week by 27 the number of hours worked in that week.” 28 (citing 29 C.F.R. § 778.109). Id. at 295 The Court added that “it 25 1 makes no difference whether the supplemental payments 2 are tied to a regular weekly wage or regular hourly 3 wage.”6 Id. 4 5 Following the reasoning in Local 246, the Court 6 finds Defendant’s payments made in lieu of benefits 7 under the Plan constitute compensation for service even 8 if they are not tied to a regular weekly or hourly 9 wage. Local 246 noted that “pay or salary that is paid 10 by the week or longer period is still counted in 11 calculating the regular hourly rate.” Local 246, 83 12 F.3d at 295 (citing 29 C.F.R. § 778.109). 13 employees electing to receive some or the entire 14 monthly benefit allowance in cash receive two cash 15 payments per month which appear on their paychecks and 16 are subject to federal and state taxes. 17 13, 16; Def. SGD, ¶¶ 13, 16.) 18 receive these payments periodically and the payments 19 are subject to taxes, they are remuneration for work 20 performed and therefore must be included in the regular 21 rate of pay used in calculating overtime.7 22 23 24 Here, (Pl. SUF, ¶¶ Since the employees See Retail 6 The Seventh Circuit in Reich v. Interstate Brands Corp., 57 F.3d 574, 577 (7th Cir. 1995) reiterated that section 207(e)(2) “cannot possibly exclude every payment that is not measured by the number of hours spent at work.” Id. at 577. 25 In Minizza v. Stone Container Corp. Corrugated Container Div. East Plant, 842 F.2d 1456 (3rd Cir. 1988), the Third Circuit concluded that two lump sum payments made pursuant to the terms of a collective 7 26 27 28 (continued . . .) 26 1 Indus. Leaders Ass’n v. Fielder, 475 F.3d 180, 193 (4th 2 Cir. 2007) (“Healthcare benefits are a part of the 3 total package of employee compensation an employer 4 gives in consideration for an employee’s services.”). 5 As the Local 246 Court noted, the fact that these 6 payments are not tied to specific hours worked has no 7 bearing on the characterization of the payment as 8 compensation for work. 9 (citing Reich v. Interstate Brands Corp., 57 F.3d 574, Local 246, 83 F.3d at 295 n.2 10 577 (7th Cir. 1995), cert. denied, 516 U.S. 1042 (1996) 11 (“Even if payments to employees are not measured by the 12 number of hours spent at work, that fact alone does not 13 qualify them for exclusion under section 207(e)(2).”)). 14 15 16 ( . . . continued) 17 18 19 20 21 22 23 24 25 26 27 bargaining agreement were excluded from regular rate calculations under section 207(e)(2) because they “were nothing more or less than an inducement by the employers to the employees to ratify the agreement on the terms proposed by the employers.” Id. at 1457, 1462. The Court finds the Third Circuit decision in Minizza inapposite to the instant case. Here, Defendant adopted the Plan for the purpose of providing benefits to its employees. (Def. SUF, ¶¶ 18, 24; Pl. SGD, ¶¶ 18, 24.) The cash payments here are taxed as wages. (Pl. SUF, ¶ 16; Def. SGD, ¶ 16.) Unlike the lump sum payments in Minizza payable once a year for two consecutive years, the cash payments made in lieu of benefits here are made on a bi-weekly basis and appear on the employees’ paychecks. (Pl. SUF, ¶ 13; Def. SGD, ¶ 13.) 28 27 1 Defendant argues that payments made in lieu of 2 benefits are analogous to compensation for lunch 3 periods that are excludable under section 207(e)(2). 4 (Def. Mot. at 11-12.) 5 Corp., 370 F.3d 901, 909 (9th Cir. 2004), the Ninth 6 Circuit held that payments for lunch periods were 7 excluded from calculation of the regular rate under 8 section 207(e)(2). 9 parties treated the lunch period as non-working time. In Ballaris v. Wacher Siltronic The court recognized that the 10 Ballaris, 370 F.3d at 909. Therefore, the court held 11 that these payments “constituted an additional benefit 12 for employees and not compensation for hours worked.” 13 Id. at 909. 14 15 The facts in Ballaris are distinguishable from 16 those before the Court. While the parties in Ballaris 17 agreed that the lunch period constituted non-working 18 time, there is no evidence here that employees receive 19 the benefit payments or cash in lieu of benefits for 20 time spent not working. 21 statutory language of section 207(e)(2) highlights the 22 distinction. 23 regular rate payments that are similar to “payments 24 made for occasional periods when no work is performed 25 due to vacation, holiday, illness, failure of the 26 employer to provide sufficient work . . .” 27 207(e)(2). 28 time off due to illness, lunch periods constitute time An examination of the Section 207(e)(2) excludes from the 29 U.S.C. § Just like vacation periods, holidays, and 28 1 when no work is performed. 2 made in lieu of benefits under the Plan are not 3 analogous to non-working periods enumerated in section 4 207(e)(2) since they are not payments made for a period 5 where no work is performed.8 On the other hand, payments 6 7 Rather, payments made in lieu of benefits are more 8 analogous to the reimbursements at issue in Adoma v. 9 Univ. of Phoenix, Inc., 779 F. Supp. 2d 1126 (E.D. Cal. 10 2011). At issue in Adoma were tuition benefits paid to 11 employees and their dependents for courses taken at the 12 defendant university and other subsidiary institutions 13 (internal program) and non-subsidiary institutions 14 (external program). Adoma, 779 F. Supp. 2d at 1128-29. 15 16 17 18 19 20 21 22 23 24 25 26 27 Defendant argues that the payments here are analogous to buy backs of unused benefits. (Def. Mot. at 13.) Defendant relies in part on Chavez v. City of Albuquerque, 630 F.3d 1300 (10th Cir. 2011), where the Tenth Circuit distinguished between buy backs of vacation days and sick days and held that while sick leave buy-backs must be included in the regular rate, vacation leave buy-backs were excludable under section 207(e)(2). Id. at 1309-1310. In Chavez, the court focused on the burden or benefit to the employer resulting from use of sick days and vacation days. Id. at 1309-1310. Here, by contrast, the burden on Defendant does not vary depending on employee’s use of benefits under the Plan since Defendant’s contribution on behalf of employees is set and fixed on an annual basis. (Def. SUF, ¶ 19; Pl. SGD, ¶ 19.) Therefore, the Chavez Court’s reasoning is not instructive on the issue before the Court. 8 28 29 1 The court held that since “the tuition benefit is not a 2 payment made for a period where no work is performed,” 3 it had to analyze whether the payment is similar to 4 “reasonable payments for traveling expenses, or other 5 expenses, incurred by the employee in the furtherance 6 of his employer’s interests and properly reimbursable 7 to the employer” under section 207(e)(2). 8 discussing the Department of Labor’s regulations and 9 1994 Opinion Letter, the court reasoned that “[o]ne Id. After 10 determines whether a payment is compensation for work 11 by considering whether the benefit primarily benefits 12 the employee or the employer.” 13 held that the internal benefit was not excludable from 14 the regular rate of pay since the benefit to the 15 employee outweighed that to the employer.9 Id. at 1137. The court Id. at 1138. 16 17 As in Adoma, there is no evidence here that 18 Defendant made cash payments in lieu of benefits for 19 periods where no work is performed. 20 amount an employee may receive back as cash from the 21 Plan is based on the extent of the employee’s 22 utilization of available benefits. 23 Pl. SGD, ¶ 28.) 24 under section 207(e)(2) only if they are similar to Rather, the excess (Def. SUF, ¶ 28; Therefore, the payments are excludable 25 9 26 27 28 The court in Adoma held that there was insufficient evidence concerning the external tuition benefit, and it declined to determine whether the external benefit primarily benefits the employer or the employee. Adoma, 779 F. Supp. 2d at 1139. 30 1 payments made for “traveling expenses, or other 2 expenses, incurred by an employee in furtherance of his 3 employer’s interests . . .” 4 is uncontroverted that Defendant adopted the Plan to 5 provide benefits to its employees. 6 24; Pl. SGD, ¶ 18, 24.) 7 Defendant also derives a benefit from the Plan by 8 having healthier employees that are more productive, 9 cash payments to employees clearly benefit them more 29 U.S.C. ¶ 207(e)(2). It (Def. SUF, ¶ 18, Even though one can argue that 10 than their employer. Accordingly the Court finds, 11 based on the uncontroverted facts, that payments made 12 in lieu of benefits under the Plan are not excludable 13 from the regular rate of pay since they are not similar 14 to the examples enumerated in section 207(e)(2) 15 relating to non-working hours or expenses incurred for 16 the benefit of the employer. 17 18 2. Policy Considerations 19 20 Defendant argues that public policy favors 21 exclusion of the cash-in-lieu of benefits payments from 22 calculation of the regular rate. 23 Defendant contends that if these cash payments are not 24 excluded, “employers will be less likely to allow 25 employees to receive the surplus as cash in order to 26 avoid an increase in overtime liability and paying more 27 in benefits than intended.” 28 contends that the interpretation deeming the cash (Id.) 31 (Def. Mot. at 13.) Thus, Defendant 1 payments exempt from inclusion in the regular rate 2 under section 207(e)(2) is the interpretation that most 3 favors the employees. (Id.) 4 5 “FLSA exemptions are to be narrowly construed 6 against . . . employers and are to be withheld except 7 as to persons plainly and unmistakably within their 8 terms and spirit.” Klem v. Cnty. Of Santa Clara, Cal., 9 208 F.3d 1085, 1089 (9th Cir. 2000) (internal citations 10 and quotations omitted). Thus, the FLSA is construed 11 liberally in favor of employees. 12 Los Angeles, 420 F.3d 981, 988 (9th Cir. 2005). 13 Interpreting section 207(e)(2) to exclude cash payments 14 made in lieu of benefits would favor the employer 15 rather than the employee since it results in a lower 16 calculation of overtime pay. 17 excluding the cash payments from the regular rate 18 calculation benefits the employer who does not have to 19 pay the increased overtime rate. 20 a compelling argument, a narrow construction of the 21 FLSA exemptions compels a finding that cash payments 22 are not excludable under section 207(e)(2). 23 though this interpretation of section 207(e)(2) results 24 in an increase in overtime liability, an increase in 25 costs cannot be the basis for exclusion of cash 26 payments from regular rate calculation. Cleveland v. City of On the other hand, 27 28 32 While Defendant makes Even 1 Narrowly construing the FLSA exemptions and in 2 light of Ninth Circuit precedent, the Court holds that 3 cash payments made in lieu of benefits under the Plan 4 are not excludable under section 207(e)(2) from 5 calculation of the regular rate. 6 7 D. Exclusion under § 207(e)(4) 8 9 Plaintiffs contend that they are entitled to 10 partial summary judgment on the basis that Defendant’s 11 direct cash payments made in lieu of benefits cannot be 12 excluded from the regular rate under 29 U.S.C. § 13 207(e)(4). 14 contend that the value of all individual Plan 15 contributions must be included in the regular rate 16 since the Plan is not a “bona fide” plan under section 17 207(e)(4). 18 that even if the direct payments are not excludable 19 under section 207(e)(2), the payments are excludable 20 under section 207(e)(4) as interpreted in 29 C.F.R. § 21 778.215. (Pl. Mot. at 11-15.) (Pl. Mot. at 18-20.) Plaintiffs also Defendant counters (Def. Mot. at 17-20.) 22 23 24 1. Exclusion of Direct Cash-in-lieu of Benefits Payments 25 26 Title 29 U.S.C. § 207(e)(4) excludes from the 27 regular rate of pay “contributions irrevocably made by 28 an employer to a trustee or third person pursuant to a 33 1 bona fide plan for providing old-age, retirement, life, 2 accident, or health insurance or similar benefits for 3 employees.” 4 statutory provisions, courts “first look to the 5 language of the statute to determine whether it has a 6 plain meaning.” 7 569 F.3d 946, 951 (9th Cir. 2009) (citation omitted). 8 Courts should presume that the “legislature says in a 9 statute what it means and means in a statute what it 29 U.S.C. § 207(e)(4). In construing Satterfield v. Simon & Schuster, Inc., 10 says there.” Id. (internal citations and quotations 11 omitted). 12 statutory text, and ends there as well if the text is 13 unambiguous.” 14 omitted). “Thus, [a court’s] inquiry begins with the Id. (internal citations and quotations 15 16 In Local 246, the court found that “there is no 17 indication that any of the supplemental payments to the 18 employees consisted of contributions made by [the 19 employer] irrevocably to a trust.” 20 at 296. 21 “deals with contributions by the employer, not payments 22 to the employee.” 23 employer failed to show that any part of its 24 supplemental payments to the employees was made 25 irrevocably to a trust, section 207(e)(4) did not deem 26 the supplemental payments excludable from the regular 27 rate calculation. Local 246, 83 F.3d The court emphasized that section 207(e)(4) Id. The Court held that since the Id. 28 34 1 Based on the plain language of section 207(e)(4), 2 an employer’s contribution may be excluded from 3 calculation of the regular rate if the employer 4 irrevocably makes the contribution to a trustee or 5 third person. 6 Local 246, it is undisputed that Defendant made all the 7 cash-in-lieu of benefits payments directly to 8 Plaintiffs rather than a trustee or third party.10 9 SUF, ¶¶ 13-14; Def. SGD, ¶¶ 13-14.) 29 U.S.C. § 207(e)(4). Here, as in (Pl. Defendant does not 10 argue that any part of the payment to Plaintiffs 11 consisted of payments Defendant made irrevocably to a 12 trust or third party. 13 207(e)(4) is unambiguous as to the requirement that the 14 contribution be made to a third party or trustee, the 15 Court finds it unnecessary to resort to the Department Since the language of section 16 17 18 19 20 21 22 23 24 25 26 27 10 Defendant argues that Local 246 is distinguishable from the present case since the court found that the contributions in Local 246 were not excludable under section 207(e)(2). (Def. Opp. at 910.) However, as discussed above, the Court finds that Defendant’s cash payments are also not excludable under section 207(e)(2). More importantly, the court’s discussion of section 207(e)(4) in Local 246 is independent of its holding regarding the applicability of section 207(e)(2). See Local 246, 83 F.3d at 29596. Since sections 207(e)(2) and (e)(4) offer alternative grounds for the exclusion of certain payments from calculation of the regular rate, and the court held that the supplemental payments did not qualify for exclusion under section 207(e)(2), the Court had to analyze whether the payments can be excluded pursuant to section 207(e)(4). Contrary to what Defendant argues, Local 246’s discussion of section 207(e)(4) is not dicta. 28 35 1 of Labor’s interpretation as to that requirement.11 2 Therefore, Defendant’s cash payments to Plaintiffs made 3 in lieu of benefits are not excluded under the plain 4 language of section 207(e)(4) and must be included in 5 the calculation of the regular rate. 6 7 2. Exclusion of the Entire Value of the Monthly Benefits Allowance 8 9 10 Plaintiffs next argue that the entire value of the 11 monthly benefit allowance should be included in the 12 regular rate of pay because Defendant’s Plan does not 13 qualify as a bona fide plan under section 207(e)(4). 14 (Pl. Mot. at 18-21.) 15 the plain meaning of the term, Defendant’s Plan is a 16 bona fide plan, and Defendant’s contributions are 17 exempt under section 207(e)(4). 18 Defendant urges the Court to disregard the language of 19 the Department of Labor’s (“DOL”) interpretive 20 bulletin, 29 C.F.R. § 778.215, and a subsequent DOL 21 opinion letter, dated July 2, 2003 (“2003 Opinion 22 Letter”) because the language of section 207(e) is 23 unambiguous, and these two interpretive documents are Defendant responds that, under (Def. Opp. at 8-10.) 24 11 25 26 27 28 Even though the Court does not rely on the Department of Labor’s interpretation of section 207(e)(4), the Court notes that 29 C.F.R. § 778.215 reiterates the requirement that payments can only be excluded under section 207(e)(4) if they are made to a trustee or third person. See 29 C.F.R. § 778.215(a)(4). 36 1 inconsistent with one another.12 2 The Court will first address whether the DOL’s 3 interpretations in section 778.215 and the 2003 Opinion 4 Letter conflict with each other or conflict with the 5 language of section 207(e)(4). 6 address whether Defendant’s contribution into the Plan 7 is excludable under section 207(e)(4). (Def. Opp. at 10-14.) The Court will then 8 a. 9 Department of Labor’s Interpretations 10 11 As stated above, section 207(e)(4) excludes from 12 “regular rate” any “contributions irrevocably made by 13 an employer to a trustee or third person pursuant to a 14 bona fide plan for providing old-age, retirement, life, 15 accident, or health insurance or similar benefits for 16 employees.” 17 the statutory language, a payment can only be excluded 18 under subsection (e)(4) if (1) it is made to a trustee 19 or third person, and (2) it is made pursuant to a bona 20 fide plan. 21 a dictionary definition of the term “bona fide” as one 22 that is “1. Made in good faith; without fraud or 23 24 25 26 27 28 29 U.S.C. § 207(e)(4). See Id. Therefore, under Defendant urges the Court to adopt 12 Defendant advances conflicting arguments with regards to the applicability of 29 C.F.R. § 778.215. In its Opposition to Plaintiffs’ Motion, Defendant argues that the Court should not consider section 778.215 since it is not persuasive and conflicts with the 2003 Opinion Letter. (Def. Opp. at 10-14.) On the other hand, Defendant relies on section 778.215 in its Motion for Summary Judgment to argue that its cash payments made in lieu of benefits are exempt under section 207(e)(4). (Def. Mot. at 17-20.) 37 1 deceit. 2. Sincere; genuine.” 2 However, it is unclear from the statutory language 3 whether Congress used the term “bona fide” in its 4 ordinary meaning or as a term of art. 5 statutory ambiguity, the Court examines 29 C.F.R. § 6 778.215(a)(5) for guidance. 7 for Human Development, Inc., 233 F.3d 175, 185 (3rd 8 Cir. 2000). (Def. Opp. at 8.) In light of the See Madison v. Resources 9 10 Title 29 C.F.R. § 778.215(a) enumerates certain 11 conditions for the exclusion of an employer’s 12 contribution from the regular rate of pay under section 13 207(e)(4). Section 778.215(a)(5) provides: 14 [I]f a plan otherwise qualified as a bona fide 15 benefit plan under section 7(e)(4) of the Act, 16 it will still be regarded as a bona fide plan 17 even though it provides, as an incidental part 18 thereof, for the payment to an employee in cash 19 of all or part of the amount standing to his 20 credit . . .(iii) during the course of his 21 employment under circumstances specified in the 22 plan and not inconsistent with the general 23 purposes of the plan to provide the benefits 24 described in section 7(e)(4) of the Act. 25 29 C.F.R. 778.215(a)(5). The 2003 Opinion Letter 26 provides that a cafeteria plan may qualify as a bona 27 fide benefits plan for purposes of section 7(e)(4) if: 28 “(1) no more than 20% of the employer’s contribution is 38 1 paid out in cash; and (2) the cash is paid under 2 circumstances that are consistent with the plan’s 3 overall primary purpose of providing benefits.” Dep’t 4 of Labor Op. Letter, 2003 WL 23374600, at *3 (July 2, 5 2003). 6 7 Section 778.215(a)(5) is not a formal 8 administrative regulation; rather, it is “an 9 interpretive guideline, issued on the advice of the 10 Solicitor of Labor and authorized by the Secretary, not 11 an official regulation promulgated after notice-and- 12 comment rule making.” 13 (citing 29 C.F.R. § 778.1).13 14 Opinion Letter is an informal agency interpretation. 15 Madison, 233 F.3d at 186. 16 not entitled to deference under Chevron U.S.A., v. 17 Natural Resources Defense Council, Inc., 467 U.S. 837 Madison, 233 F.3d at 185-86 Likewise, the 2003 As such, these documents are 18 19 20 21 22 23 24 25 26 27 13 29 C.F.R. § 778.1 provides: This part 778 constitutes the official interpretation of the Department of Labor with respect to the meaning and application of the maximum hours and overtime pay requirements contained in section 7 of the Act. It is the purpose of this bulletin to make available in one place the interpretations of these provisions which will guide the Secretary of Labor and the Administrator in the performance of their duties under the Act unless and until they are otherwise directed by authoritative decisions of the courts or conclude, upon reexamination of an interpretation, that it is incorrect. These official interpretations are issued by the Administrator on the advice of the Solicitor of Labor, as authorized by the Secretary. 28 39 1 (1984).14 2 “entitled to respect” under Skidmore v. Swift, 323 U.S. 3 134 (1944), “but only to the extent they have the 4 ‘power to persuade.’” Rather, the agency interpretations are Christensen, 529 U.S. at 587. 5 6 In Skidmore, the Court explained: 7 [R]ulings, interpretations and opinions of the 8 Administrator under this Act, while not 9 controlling upon the courts by reason of their 10 authority, do constitute a body of experience 11 and informed judgment to which courts and 12 litigants may properly resort for guidance. 13 The weight of such a judgment in a particular 14 case will depend upon the thoroughness evident 15 in its consideration, the validity of its 16 reasoning, its consistency with earlier and 17 later pronouncements, and all those factors 18 which give it power to persuade, if lacking 19 power to control. 20 Skidmore, 323 U.S. at 140. 21 agency interpretation cannot run contrary to Congress’s 22 intent as reflected in a statute’s plain language and 23 purpose.” “To be persuasive, an Madison, 233 F.3d at 187. 24 25 14 26 27 28 In Chevron, the Supreme Court held that a court “must give effect to an agency’s regulation containing a reasonable interpretation of an ambiguous statute.” Christensen v. Harris Cnty., 529 U.S. 576, 586 (2000) (citing Chevron, 467 U.S. at 842-44). 40 1 In its Motion for Summary Judgment, Defendant 2 contends that its cash-in-lieu of benefits payments 3 “generally satisfy the criteria for exclusion” under 4 section 207(e)(4) and 29 C.F.R. § 778.215. 5 at 18.) 6 administers its own Flexible Benefit Plan should not 7 operate to the City’s detriment.” (Def. Mot. Defendant argues that the fact that it “self- (Def. Mot. at 19.) 8 9 The Court finds 29 C.F.R. § 778.215(a)(5) 10 persuasive. Section 778.215(a)(5) clarifies that an 11 otherwise bona fide benefit plan under section 12 207(e)(4) remains bona fide even if an employee 13 receives as payment all or a portion of the amount 14 standing to his credit. 15 The language of section 778.215(a)(5) does not run 16 contrary to section 207(e)(4). 17 not read section 778.215(a)(5) to eliminate the 18 requirement of section 207(e)(4) that a contribution 19 must be made to a trustee or third person. 20 778.215(a)(5) only states that a plan can still be 21 considered a bona fide plan even if the employer makes 22 direct cash payments to the employee. 23 778.215(a)(5). 24 for the proposition that those direct cash payments— 25 even if made pursuant to a bona fide plan—may be 26 excludable under section 207(e)(4). 27 778.215 does not eliminate the requirements set forth 28 in section 207(e)(4). 29 C.F.R. § 778.215(a)(5). However, the Court does Section 29 C.F.R. § Section 778.215(a)(5) does not stand 41 Therefore section 1 2 On the other hand, the Court finds the 2003 Opinion 3 Letter unpersuasive and does not resort to it for 4 guidance. 5 Administrator stated that a plan may qualify as a bona 6 fide benefits plan under section 207(e)(4) if “(1) no 7 more than 20% of the employer’s contribution is paid 8 out in cash; and (2) the cash is paid under 9 circumstances that are consistent with the plan’s In the 2003 Opinion Letter, the 10 overall primary purpose of providing benefits.” Dep’t 11 of Labor Op. Letter, 2003 WL 23374600, at *3. 12 Defendant argues that the 20% maximum requirement is 13 inconsistent with the language of section 778.215 14 stating that a plan is still a bona fide benefits plan 15 even if the plan provides for the payment to an 16 employee of “all or a part of the amount standing to 17 his credit.” 18 778.215(a)(5) (emphasis added). 19 Under section 778.215(a)(5), a plan allowing an 20 employee to receive up to 100% of the contribution in 21 cash could still be a bona fide plan. 22 778.215(a)(5). 23 ceases to be bona fide one when more than 20% of total 24 plan contributions constitute payments to employees. 25 Dep’t of Labor Op. Letter, 2003 WL 23374600, at *3. 26 Therefore, the 2003 Opinion Letter is not inconsistent 27 with section 778.215. 28 an employee to receive up to 100% of the contribution (Def. Opp. at 14); 29 C.F.R. § The Court disagrees. 29 C.F.R. § Under the 2003 Opinion Letter, a plan In other words, a plan allowing 42 1 can still be a bona fide plan, so long as the total 2 cash payments to the employees do not exceed 20% of 3 total plan contributions. 4 that the 20% ceiling set forth in the 2003 Opinion 5 Letter does not conflict with the language of section 6 778.215(a)(5). Therefore, the Court finds 7 8 9 The Court, however, finds the 2003 Opinion Letter unpersuasive for a different reason. There, the 10 Administrator adopted the 20% limitation from prior 11 opinion letters. Dep’t of Labor Op. Letter, 2003 WL 12 23374600, at *2. According to the Opinion Letter, the 13 20% cap “historically has been applied on an employee- 14 by-employee basis.” 15 any employee to receive more than 20% of the amount 16 standing to his or her credit in cash, the plan would 17 fail to qualify as bona fide.” 18 in the 2003 Opinion Letter adopted the 20% test to 19 apply on a plan-wide basis rather than employee-by- 20 employee basis. 21 interpretation does not run contrary to the language of 22 section 778.215, the historical background on which the 23 interpretation is based proves inconsistent with 24 section 778.215. 25 employee-by-employee basis, the prior opinion letters 26 ran contrary to the language of section 778.215(a)(5), 27 which provides that a plan may still qualify as a bona 28 fide plan even if an employee receives a portion or all Id. Id. Therefore, “if a plan allowed Id. The Administrator While the Administrator’s By applying the 20% cap on an 43 1 of the contribution as payment. 2 778.215(a)(5). 3 discuss the rationale for adopting the same 20% figure 4 to apply as a limitation on a plan-wide basis. 5 the Administrator simply stated, “[w]e continue to 6 believe that this 20% cap is an appropriate method for 7 assessing whether any cash payments are an incidental 8 part of a bona fide benefits plan under 9 778.215(a)(5)(iii).” 29 C.F.R. § Moreover, the Administrator failed to Rather, Dep’t of Labor Op. Letter, 2003 10 WL 23374600, at *2. Neither did the Administrator 11 discuss the reasoning behind the DOL’s historical 12 adoption of the 20% cap in prior opinion letters. 13 Accordingly, under Skidmore, the Court finds the 2003 14 Opinion Letter unpersuasive since the Administrator 15 fails to provide any reasoning for adopting the 20% cap 16 on a plan-wide basis. 17 b. 18 Qualification as a Bona Fide Plan 19 20 Plaintiffs argue that since the Plan is not a bona 21 fide plan, the entire value of each Plaintiff’s monthly 22 benefit allowance should be included in the regular 23 rate. 24 Plaintiffs’ argument rests on the premise that 25 Defendant has paid more than 20% of the total Plan 26 Contributions to employees over the last four years. 27 (Id.) 28 adopt the 20% limitation as a test for determining (Pl. Mot. at 18-21.) The majority of However, as stated above, the Court does not 44 1 whether the Plan is a bona fide one since it finds the 2 2003 Opinion Letter unpersuasive. 3 discussed above, since Defendant makes cash payments in 4 lieu of benefits directly to employees, rather than a 5 trustee or third party, the cash payment cannot be 6 excluded under section 207(e)(4). In addition, as 7 8 Based on the uncontroverted facts, the Court finds 9 that Defendant’s Flexible Benefit Program qualifies as 10 a bona fide plan. Under section 778.215(a)(2), the 11 primary purpose of the Plan is to provide health 12 insurance benefits to the employees. 13 20, 24; Pl. SGD, ¶¶ 18, 20, 24.) 14 contribution is converted into Cafeteria Plan Benefit 15 Dollars that can be used by the employees to purchase 16 dental and vision insurance. 17 SGD, ¶¶ 20-21.) 18 more additional benefits to purchase under the Plan. 19 (Def. SUF, ¶ 22; Pl. SGD, ¶ 22.) 20 Defendant’s policy that an employee may opt out of 21 enrollment in medical coverage under the Plan only 22 after providing proof of alternative medical coverage 23 demonstrates that the primary purpose of the Plan is to 24 provide health benefits to the employees. 25 23; Pl. SGD, ¶ 23.) 26 majority of contributions into the Plan are used for 27 the purchase of benefits rather than dispensed as 28 direct cash payments. (Def. SUF, ¶¶ 18, Defendant’s (Def. SUF, ¶¶ 20-21; Pl. The employee may then elect one or In addition, (Def. SUF, ¶ Between 2009 and 2012, the (See Pl. SUF, ¶¶ 20, 22, 24, 26; 45 1 Def. SGD, ¶¶ 20, 22, 24, 26.) 2 for direct cash payment to employees, as discussed 3 above, the Plan may still qualify as a bona fide plan 4 under section 778.215(a)(5). 5 Court finds that Defendant’s Plan is a bona fide plan, 6 and to the extent that Defendant makes these 7 contributions to third parties, the Court finds these 8 contributions excludable under 29 U.S.C. § 207(e)(4). While the Plan allows Based on these facts, the 9 10 E. Statute of Limitations 11 12 Plaintiffs content that since Defendant’s violation 13 was willful, a three-year statute of limitations, 14 rather than the two-year statute of limitations set 15 forth in title 29 U.S.C. § 255(a), applies. 16 at 23-24.) 17 three year statute of limitations applies for causes of 18 action “arising out of a willful violation.” 19 § 255(a). 20 that employer “either knew or showed reckless disregard 21 for the matter of whether its conduct was prohibited by 22 the statute.” 23 128, 133 (1988). 24 more than negligence, and “a completely good-faith but 25 incorrect assumption that a pay plan complied with the 26 FLSA” does not render a violation willful. (Pl. Mot. Title 29 U.S.C. § 255(a) provides that a 29 U.S.C. An employer willfully violates the FLSA if McLaughlin v. Richard Shoe Co., 486 U.S. A finding of willfulness requires 27 28 46 Id. at 135. 1 The Court finds that Defendant’s violation of the 2 FLSA was not willful, and therefore, Plaintiffs’ FLSA 3 claim is governed by a two-year statute of limitations. 4 As discussed above, section 207 enumerates alternative 5 grounds for exclusion of payments from calculation of 6 regular rate of pay. 7 the language of section 207(e)(4) clearly makes 8 excludable payments made pursuant to a bona fide plan 9 only if made to a trustee or third parties, the See 29 U.S.C. § 207(e). While 10 language of section 207(e)(2) does not afford such a 11 clear interpretation. 12 Circuit has not addressed the issue of whether cash 13 payments made in lieu of benefits is excludable under 14 section 207(e)(2). 15 207(e)(2) is ambiguous and there is no published 16 decision analyzing whether cash payments made in lieu 17 of benefits must be included in regular rate of pay 18 under that subsection, the Court concludes that 19 Defendant’s violation was not willful. 20 Gateway Press, Inc., 13 F.3d 685, 703 (3rd Cir. 1994) 21 (upholding the district court’s conclusion that actions 22 were not willful since the case presented “close 23 questions of law and fact” and “a case of first 24 impression with respect to one of the governing 25 exemptions”). 26 Plaintiffs’ claims are governed by a two-year statute 27 of limitations under 29 U.S.C. § 255(a). As discussed above, the Ninth Since the language of section See Reich v. Accordingly, the Court holds that 28 47 1 F. Adoption of Partial Overtime Exemption 2 3 Title 29 U.S.C. § 207(a)(1) provides that the 4 overtime limit is forty hours per week; an employee 5 working in excess of forty hours per week must receive 6 compensation at a rate at least one-and-a-half times 7 the regular rate of pay. 8 Section 207(k) “offers a limited exemption from the 9 overtime limit to public employers of law enforcement 29 U.S.C. § 207(a)(1). 10 personnel or firefighters.” Adair v. City of Kirkland, 11 185 F.3d 1055, 1059 (9th Cir. 1999) (citing 29 U.S.C. § 12 207(k)). 13 limit slightly and it gives the employer greater 14 flexibility to select the work period over which the 15 overtime limit will be calculated.” 16 C.F.R. § 553.230). 17 the employer selects a seven-day work period, overtime 18 begins to accrue after forty-three hours, and if an 19 employer selects an eight-day work period, overtime 20 begins to accrue after forty-nine hours.” 21 29 C.F.R. § 553.230). “The ‘7(k) exemption’ increases the overtime Id. (citing 29 “Under the [DOL] regulations, if Id. (citing 22 23 There is no dispute that Defendant is eligible for 24 a section 7(k) exemption. Plaintiffs are employed as 25 full-time police officers by Defendant. 26 1-2; Def. SGD, ¶¶ 1-2.) 27 adopted such an exemption. 28 burden of showing that it qualifies for a section 7(k) (Pl. SUF, ¶¶ The issue is whether Defendant “[Defendant] bears the 48 1 exemption.” 2 citations omitted). 3 that it established a 7(k) work period and that the 4 7(k) work period was ‘regularly recurring.’” 5 C.F.R. § 553.224 (“As used in section 7(k), the term 6 ‘work period’ refers to any established and regularly 7 recurring period of work . . .”). 8 adopted a Section 7(k) exemption is an ultimate fact 9 that may be decided on summary judgment if the Adair, 185 F.3d at 1060 (internal “Generally, the employer must show Id.; 29 “Whether an employer 10 underlying specific facts are undisputed.” Farris v. 11 Cnty. Of Riverside, 667 F. Supp. 2d 1151, 1157 (C.D. 12 Cal. 2009); Adair, 185 F.3d at 1060 (“Whether an 13 employer meets this burden is normally a question of 14 fact.”). 15 16 Here, the undisputed underlying facts establish 17 that Defendant adopted a 7(k) work period and that the 18 7(k) period was regularly recurring. 19 utilized a 14-day work period for calculation of 20 overtime for law enforcement personnel since 1994, and 21 the number of hours worked by full-time police 22 department personnel in a bi-weekly period is 80 hours. 23 (Def. SUF, ¶¶ 1, 3-4; Pl. SGD, ¶¶ 1, 3-4.) 24 addition, Article 10 of the 2005-2007 MOU between 25 Defendant and POA defines overtime as “all hours worked 26 over (80) in the two (2) week pay period of employees.” 27 (Def. SUF, ¶ 6; Pl. SGD, ¶ 6.) 28 the language of the 2005-2007 MOU establishes a 14-day Defendant has In The Court finds that 49 1 work period under Section 7(k) since it specifically 2 identifies a two week “pay period” with overtime 3 defined as hours worked over 80 hours per period. 4 Farris, 667 F. Supp. 2d 1151. 5 that definition of overtime in its Salary, Compensation 6 and Benefits Policy Manual. 7 While the overtime language in the 2005-2007 MOU has 8 not been incorporated into subsequent memoranda of 9 understanding, Defendant still maintains the practice See Defendant also included (Def. SUF, ¶ 9; SGD, ¶ 9.) 10 of calculating and paying overtime based on the 80- 11 hour/14-day pay period. 12 ¶¶ 8, 10.) 13 a more generous overtime policy than the one set forth 14 in section 207(k) does not negate its adoption of the 15 7(k) exemption. 16 972 F.2d 1145, 1154 (10th Cir. 1992) (“There is no 17 basis for concluding that, once an employer has opted 18 for the subsection (k) framework, the employer may only 19 pay overtime for hours worked beyond the legal maximum 20 permitted at the regular wage.”). (Def. SUF, ¶¶ 8, 10; Pl. SGD, In addition, Defendant’s implementation of See Lamon v. City of Shawnee, Kan., 21 22 Defendant’s scheduling and recording practices also 23 support the finding that Defendant established a 7(k) 24 work period that is regularly recurring. 25 assigns certain police officers to a 3/12 schedule 26 under which each employee was assigned three 12-hour 27 shifts one week and four 12-hour shifts in the other, 28 resulting a total of 84 working hours. 50 Defendant (Def. SUF, ¶ 1 13, Pl. SGD, ¶ 13.) 2 implemented, Defendant credited each employee with 4 3 hours of compensatory time off in each payroll period 4 to compensate for the 84 hours. 5 SGD, ¶ 14.) 6 employees assigned to a 3/12 schedule would be credited 7 with four hours of compensatory time at time and a half 8 for the four hours worked over 80 during each work 9 period. When that schedule was first (Def. SUF, ¶ 14; Pl. Subsequently, pursuant to the MOU, (SUF, ¶ 15; Pl. SGD, ¶ 15.) Therefore, 10 Defendant’s adoption of a 3/12 schedule demonstrates 11 that Defendant adopted a regularly recurring 14-day 12 work period that is used to calculate overtime hours 13 worked. 14 period that coincides with the 14-day work period for 15 law enforcement personnel. 16 11.) 17 hours worked on a bi-weekly, 14-day “Time and 18 Attendance Reports” which indicate that they cover a 19 two-week, 14-day work period, evidencing a work period 20 that is regularly recurring. 21 ¶ 12.) 22 Defendant adopted a 14-day work period that was 23 regularly recurring. In addition, Defendant uses a 14-day payroll (Def. SUF, ¶ 11; Pl. SGD, ¶ Defendant requires Plaintiffs to record their (Def. SUF, ¶ 12; Pl. SGD, The Court finds that these facts show that 24 25 Plaintiffs argue that Defendant has not presented 26 any evidence that it elected and implemented a 7(k) 27 exemption since none of the documents cited by 28 Defendant make any mention of the 7(k) exemption’s 51 1 application to police officers. 2 Plaintiffs contend there is evidence to show that 3 Defendant elected not to adopt the 7(k) exemption with 4 respect to police officers since Defendant explicitly 5 adopted a 7(k) exemption for firefighters in other 6 portions of the Compensation Manual. 7 disagrees. (Pl. Opp. at 23.) (Id.) The Court 8 9 In Adair, the Ninth Circuit held that the employer 10 “established a 7(k) exemption when it specified the 11 work period in the [collective bargaining agreement] 12 and when it actually followed this period in practice.” 13 Adair, 185 F.3d at 1061. 14 agreement language stated, “for purposes of complying 15 with the Fair Labor Standards Act, the Patrol Division 16 work period shall be eight days and the Detective 17 Division seven days.” 18 that the employer met its burden since it 19 “affirmatively adopted a work period . . . and it 20 followed that period in practice.” 21 Plaintiffs argue that Adair is distinguishable from the 22 facts here since Defendant did not provide any evidence 23 showing that it adopted a work period for purposes of 24 complying with the FLSA. 25 it is true that Defendant does not expressly mention 26 the FLSA in its documents relating to wages of law 27 enforcement personnel, that fact alone is not 28 dispositive of the issue. The collective bargaining Id. at 1060. The court held Id. at 1062. (Pl. Opp. at 23-24.) 52 While 1 2 As the court in Farris noted, “[a] public 3 pronouncement requirement is absent from Adair.” 4 Farris, 667 F. Supp. 2d at 1158. 5 Philadelphia, 864 F. Supp. 466, 476 (E.D. Pa. 1994), 6 the court held that while the “‘establishment’ of a 7 7(k) work period may be manifested by an appropriate 8 public declaration of intent to adopt a work period of 9 between 7 and 28 days . . . a public employer may In McGrath v. City of 10 establish a 7(k) work period even without making a 11 public declaration, so long as its employees actually 12 work a regularly recurring cycle of between 7 and 28 13 days.” 14 section 207(k) focuses on “the establishment of the 15 schedule rather than the exemption.” 16 San Diego, 2007 WL 4146696, at *12 (S.D. Cal. Nov. 9, 17 2007). 18 that it was adopting a section 7(k) exemption with 19 respect to law enforcement personnel, the undisputed 20 facts, as discussed above, demonstrate that Defendant 21 has adopted a 7(k) work period that is regularly 22 recurring. 23 mentioned the 7(k) exemption for firefighters and 24 failed to make such a reference for law enforcement 25 personnel does not change the result. 26 WL 4146696, at *12 (“There is no suggestion in the 27 language of Section 7(k) that an employer must 28 affirmatively invoke the exemption.”). McGrath, 864 F. Supp. at 476. Therefore, Abbe v. City of Here, while Defendant did not explicitly state The fact that Defendant explicitly 53 See Abbe, 2007 As a result, 1 there is no triable issue of fact as to whether 2 Defendant established a 7(k) exemption. 3 Defendant is liable to Plaintiffs for FLSA overtime 4 only to the extent that Plaintiffs worked in excess of 5 86 hours in a 14-day work period. 6 553.230. Accordingly, See 29 C.F.R. § 7 8 G. Liquidated Damages Award 9 Before the Court decides the issue of liquidated 10 11 damages, the Court directs the parties to submit 12 further briefing addressing the issue. 13 file a supplemental brief on the issue of liquidated 14 damages, due by September 18, 2013. 15 an opposition by September 25, 2013. 16 liquidated damages will stand submitted as of September 17 25, 2013. 18 19 20 / / / 21 22 23 24 25 26 27 28 54 Plaintiffs may Defendant may file The issue of 1 CONCLUSION 2 3 4 5 6 7 8 9 10 For the reasons set forth above, the Court GRANTS Defendant’s Motion for Partial Summary Judgment and GRANTS IN PART Plaintiffs’ Motion for Partial Summary Judgment. The Court directs the parties to submit further briefing addressing the issue of liquidated damages. Plaintiffs may file a supplemental brief on the issue, due by September 18, 2013. Defendant may file an opposition by September 25, 2013. 11 12 13 14 Dated: 8/29/13 ____________________________ Jesus G. Bernal 15 16 United States District Judge 17 18 19 20 21 22 23 24 25 26 27 28 55

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