MOSS v. CRAWFORD COMPANY

FRANCIS X. CAIAZZA, U.S. Magistrate Judge.

In this Memorandum Opinion, the court will consider a series of Motions for Summary Judgment filed by the plaintiffs at documents number 226, 227 and 264. It will also consider Crawford Company's (Crawford) Cross Motion for Summary Judgment which was filed concurrently with its response to the plaintiff's motions at document number 285.

In their motion filed at document number 226 the plaintiffs argue that they are entitled to a judgment as a matter of law with respect to the non-exempt status of the class members. Their motions filed at documents number 227 and 264 reiterate the exemption argument and also raise issues which relate to the statute of limitations defense and the issue of equitable tolling. Likewise, the cross motion and response filed by Crawford at document number 285 focuses on exemption and statute of limitations issues.

The class certified in this lawsuit consists of employees who were both core and non-core members of Crawford. Prior to September 1993, core members received a monthly draw of $200.00. ( See Op. dated September 21, 2000 at 6 and 7.) However, in September 1993, Crawford began to guarantee CAT adjusters a payment of $250.00 per week if they earned less than that amount on a project. (Id.) Non-core members differ from core members in that they are assigned to projects on an as-needed basis and did not receive a draw. (Id.) Crawford's participation in the Ashland oil spill project concluded in 1991, and, with the exception of some CAT adjusters who worked outside of Alaska through 1993, the majority of Crawford's involvement in the Exxon Valdez oil spill project was also completed in 1991. (Id.)

In their Motion for Summary Judgment the plaintiffs argue that they are not subject to the administrative exemption because they were not compensated on a salary basis. Under the Fair Labor Standards Act (ELSA) employees in a bona fide executive, administrative or professional capacity are exempt from the statute's overtime compensation requirements. 29 U.S.C.A. § 213(a)(1). However, "an employee will nor be exempt from the overtime pay requirements of the ELSA unless the employer affirmatively shows that the employee fits all the exemption's requirements." Gillott v. Powerex, Inc., 904 F. Supp. 422, 446-7 (W.D. Pa. 1995). In order to resolve questions of this sort the regulations promulgated by the Secretary of Labor include a short and long test to determine whether an employee qualifies for the administrative exemption. ( See Devlin v. City of Philadelphia, No. Civ. A. 92-3214, 1993 WL 246095, (E.D. Pa. June 30, 1993)). The short test for the administrative exemption consists of a duties element and a salary basis element. See Auer v. Robbins, 519 U.S. 905, 908 (1997). The duties element relates to the question of whether the employee performs office or non-manual work that directly relates to the employer's general business operation and requires the exercise of discretion and independent judgment. 29 C.F.R. § 541.2 (2). The salary basis element requires an employee to receive compensation on a salary or fee basis in the sum of $250.00 or more per week. Because the record appears to establish that the core and non-core plaintiffs' compensation met or exceeded the $250.00 per week requirement of the salary basis test while they were employed on the Ashland and Exxon Valdez projects, the court generally considered the short test to be appropriate. ( See Op. dated September 21, 2000 at 28.) However, none of the court's prior opinions specifically analyzed the question of whether the plaintiffs compensation was a salary under 29 C.F.R. § 541.118. The parties' motion presently before the court requires a more detailed analysis of this issue. ( See Doc. No. 226 at ¶ 14; Doc. No. 228 at 3; Doc. No. 265 at 3; and Doc. No. 286 at 150.)

Section 541.118(a) states:

An employee will be considered to be paid "on a salary basis" within the meaning of the regulations if under his employment agreement he regularly receives each pay period on a weekly or less frequent basis, a predetermined amount constituting all or part of his compensation, which amount is not subject to reduction because of variations in the quantity or quality of work performed.

29 C.F.R. § 541.118. Crawford assigned both core and non-core members to the Ashland and Exxon Valdez projects, and billed its clients for their work at various hourly rates. Crawford then paid the plaintiffs a 50% "commission" that was based upon the amount billed to the client. Therefore, the plaintiffs' compensation, which was a function of the number of hours they worked, was not predetermined at the time they commenced their work on either project.

In Brock v. Claridge Hotel and Casino, 846 F.2d 180 (3d Cir. 1988), the United States Court of Appeals for the Third Circuit (Court of Appeals) defined a salaried employee as one who "decides . . . how much a particular task is worth, measured by the number of hours he devotes to it." Brock, 846 E.2d at 184. In contrast, as to hourly employees, the court stated that the employer decides "the worth of a particular task, when he determines the amount to pay the employee performing it." Id. Because the plaintiffs' compensation depended upon the number of hours they worked and was tied to different billing rates which were set for their tasks, their commission is not a salary under the Court of Appeal's rationale in Brock.

In September 1993, Crawford began to provide its CAT adjusters with a guaranteed payment of $250.00 per week when they received less than that amount in total commissions. As recognized by United States District Judge Forrester in Edmund v. Crawford Company, Inc., this guaranteed payment met the regulation's salary basis test. See Edmund v. Crawford Company. Inc., Civ. A. No. 1:95-CV-1310-JOF (N.D. GA Atlanta Div. March 31, 1997). However, the Ashland project and the majority of the Exxon Valdez project were both completed before Crawford instituted the guaranteed weekly payments in September 1993. Accordingly, only those assignments in the Exxon Valdez project that were performed after September 1993 meet the salary basis test.

Next, in their response to the Plaintiffs' motion Crawford asserts that the opinion of the court in Kermith Sonnier v. Crawford Company, Civ. A. No. 94-1755 (W.D. Pa. Jan. 28, 1997) aff'd No. 97-3096 (3d Cir. October 29, 1997, cert. denied 523 U.S. 1107 (1998)) held that the payment of commissions to the Plaintiff met the salary basis test. The court disagrees with Crawford's interpretation of Sonnier. AlthoughSonnier vaguely states that the plaintiff was compensated in excess of $250.00 per week, it did not expressly publish any conclusions of law which related to the salary basis test and focused instead on the duties basis test of the administrative exemption. Moreover, Sonnier did not analyze the provisions of 29 C.F.R. § 541.118 or Brock. The court's present analysis factors into its findings both the regulation and the relevant rationale of the Court of Appeals to conclude here that the commission paid to the Plaintiffs represented hourly compensation. Accordingly, because the Plaintiffs do not meet the salary basis test they are not exempt from the FLSA's overtime compensation requirements but only for that period of time before Crawford instituted its practice of making guaranteed weekly payments in September 1993.

The Plaintiffs' Motion for Summary Judgment is granted in that respect.

Under 29 U.S.C.A. § 255(a), a cause of action may be commenced three years after it accrued if it arises from a willful violation of the statute. In Sonnier, the court made the following specific conclusions of law:

[The Plaintiff's] overtime pay pursuant to the ELSA is not barred by the applicable statute of limitations because it was tolled due to the failure of Crawford to properly display the notices advising employees, including [the plaintiff], of their minimum wage and overtime pay rights pursuant to 29 C.F.R. § 516.4.

Crawford's failure to post the required notices tolled the running of any period of limitations. Bonham v. Dresser Industries, Inc., 569 F.2d 187, 193 (3d Cir. 1977); Kamens v. Summit Stainless, Inc., 586 F. Supp. 324 (E.D. Pa. 1984).

Those findings, through which the court explicitly concluded that the statute of limitations was tolled by Crawford's failure to post the ELSA notices, were affirmed by the Court of Appeals. The Memorandum Opinion filed on September 14, 1999, included a lengthy discussion of the tolling issue and determined that principles of non-mutual collateral estoppel precluded its relitigation. On this basis, the court concluded as a matter of law that the plaintiffs' claims were not barred by the statute of limitations. The court subsequently clarified the Memorandum Opinion by confirming that non-mutual collateral estoppel principles did not preclude the statute of limitations defense from being applied to either: (1) events that occurred after September 21, 1993, which was the last date of the time period evaluated in Sonnier, or (2) the opt-in plaintiffs' knowledge of their rights under the ELSA.

The motions presently before the court all seek a judgment as a matter of law on issues involving the effect which the plaintiffs' individual knowledge of their ELSA rights may have on the potential tolling of the statute of limitations. The resolution of this issue requires factual and credibility determinations that the court can not resolve through a Motion for Summary Judgment.

Accordingly, the court denies both the plaintiffs' Motions for Summary Judgment and the defendant's Cross Motion for Summary Judgment as those motions relate to the statute of limitations issue.