the FLSA.” In fact, defendants argue, Naylor was actually overcompensated for his overtime
hours.

In general, the Fair Labor Standards Act requires employers to pay an overtime rate of
time and a half, or 150 percent, for all hours worked in excess of forty hours a week. See 29
U.S.C. § 207(a); Demos v. City of Indianapolis, 302 F.3d 698, 701 (7th Cir. 2002). The
Department of Labor, however, provides employers alternative methods for calculating overtime.
pay to suit various employment needs while still complying with the FLSA, such as the
fluctuating workweek method under 29 C.F.R. § 778.114. See Samson v. Apollo Res., Inc., 242
F.3d 629, 633 (Sth Cir. 2001). In addition, employees who work in an executive, administrative,
or professional capacity are exempt from the FLSA’s overtime requirements. See 29 U.S.C.

§ 213(a)(1); Demos, 302 F.3d at 701.

The defendants contend that because Naylor was a project engineer, he is exempt from
overtime pay under the FLSA under § 213(a)(1). This argument is distinctly at odds with the
undisputed facts of this case and defendants’ legal arguments. Indeed, the parties recognize that
the relevant issue for purposes of this summary judgment is whether Naylor was paid under the
“fluctuating workweek method” or “Regulation 114.” See 29 C.F.R. § 778.114. The
defendants’ position is that if Regulation 114 applies, Counts I, IV, VI, and VII can be ruled on
as a matter of law because Naylor was paid for his overtime in compliance with the FLSA. On

the other hand, Naylor argues that Regulation 114 does not apply and that he is entitled to time

? Defendants did not move for summary judgment as to Count V based on the mistaken
belief that Count V was subject to a pending motion to dismiss at the time defendants filed their
motion for summary judgment on March 17, 2003. However, this court denied the defendants’
motion to dismiss Count V of the First Amended Complaint on January 7, 2003, over two months
before the defendants filed their motion for summary judgment.

4



IV. CONCLUSION
For the foregoing reasons, Defendants’ Motion for Summary Judgment (R. 38-1] is

denied in its entirety.

ENTER:

Darel M Yoaning

Blanche M. Manning
United States District Court Judge

DATE: January 5, 2004


pull out hours if he thought they were “inappropriate,” such as travel time when an employee is
waiting in an airport. DePaul explained that when discussing overtime pay with Naylor, he
stated: “If you’re going to tell me that you’re going to perform three days work in two by
staying longer and getting it done, I’ll pay you for the additional hours if they’re real.” Naylor’s
overtime pay rate was calculated by taking his annual pay and dividing it by 2080 hours, which
is the number of working hours in the average year.
n. SUMMARY JUDGMENT STANDARD

Summary judgment is proper when the “pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue of any material fact and that the moving party is entitled to a judgment as a matter
of law.” See Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The court
must evaluate the admissible evidence supporting the summary judgment motion in a light most
favorable to the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255
(1986). However, the party opposing summary judgment “may not rest upon the mere
allegations or denials of the adverse party’s pleading”; but rather, must respond with “specific
facts showing that there is a genuine issue for trial.” See Fed. R. Civ. P. 56(e); Celotex, 477 U.S.
at 322.
Il. DISCUSSION

Naylor brings this action based on the defendants’ failure to pay him the proper amount
of overtime pay while he worked for DAI. The defendants move for summary judgment as to

Counts I, IV, VI, and VII because they argue that they paid Naylor overtime in compliance with


and a half pay for the overtime hours he worked pursuant to 29 U.S.C. § 207(a)(1).

Under Regulation 114, an employee who works a fluctuating workweek, that is, an
employee who is paid a fixed salary regardless of how many hours he works per week, must be
paid at least 50 percent of his base rate for his overtime hours. See Heder v. City of Two Rivers,
Wisconsin, 295 F.3d 777, 779 (7th Cir. 2002). On the other hand, an employee working a
variable workweek, which involves a work schedule that may call for more or less time at work,
must be paid time and a half for overtime hours. See id. To calculate an employee’s pay
pursuant to the fluctuating workweek method, the following conditions must be met: (1) the
employee’s hours must fluctuate from week to week; (2) the employee must receive a fixed
salary that remains the same regardless of the number of hours worked per week; (3) the fixed
salary must be sufficient to provide compensation at a regular rate not less than the legal
minimum wage; (4) the employee must receive at least 50 percent of his regular hourly pay for
all overtime hours worked; and (5) the employer and the employee must have a clear mutual
understanding that the employee will be paid under the fluctuating workweek method. See
Condo v. Sysco Corp., 1 F.3d 599, 601-02 (7th Cir. 1993); see also Heder, 295 F.3d at 779.

The defendants contend that all of these requirements have been satisfied, and thus the
fluctuating workweek method has been triggered. Indeed, it is undisputed that Naylor’s hours
fluctuated from week to week depending upon the project. Further, it is undisputed that Naylor
received a fixed salary regardless of the number of hours that he worked per week and was paid
over the legal minimum wage. Naylor, however, challenges the fourth and fifth conditions — that
there was no clear mutual understanding that he would be paid under the fluctuating workweek
method and that the defendants did not calculate his overtime pay according to Regulation 114.

The court first addresses Naylor’s argument that the defendants did not calculate his

5


~

Minute Order For (06/97)

United States District Court, Northern District of Ilinois

Name of Assigned Jud i Judge if Otber
oe Magee Judge Blanche M. Manning “than Axignd Sudse
CASE NUMBER OL C 4253 DATE January 5, 2004
CASE Naylor v. DAI Environmental, Inc.
TITLE

[In the following box (a) indicate the party fi

the motjon, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the motion being presented.) it

‘ily

MOTION: aT
tel
DOCKET ENTRY: ATL
(1) Oo Filed motion of [ use listing in “Motion” box above.]
(2) Oo Brief in support of motion due
@) a Answer brief to motion due___. Reply to answer briefdue___.
(4) Oo Ruling/Hearing on setfor___—_ att
(5) oO Status hearing{held/continued to] [set for/re-set for]on__sset for at
(6) o Pretrial conference[held/continued to] [set for/re-set for]on___—ssetfor__-—— at.
(7) Oo Trial[set for/re-set for]on___—at
(8) oa [Bench/Jury trial] [Hearing] held/continued toa.
(9) ia} This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OFRCP4(m) (General Rule 21 OFRCP41(aX1) [ FRCP41(a)(2).

(10) M@ [Other docket entry] Defendants’ Motion for Summary Judgment [R. 38-1] is denied in its
entirety. Enter Memorandum and Order.

(1) a [For further detail see memorandum and order attached to original minute order.]

No notices required, advised in open court. :

No notices required. ue of:
wv | Notices mailed by judge's staff. Jan

Notified counsel by telephone. date docteted

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Mail AO 450 form. graisia sf S

Copy to judge/magistrate judge. 4 unos day

; - NYE TU dato muited notice
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overtime in accordance with Regulation 114. Under Regulation 114, to calculate overtime pay
an employee’s regular hourly pay is calculated by dividing the employee’s weekly salary by the
total number of hours that he actually worked in a particular workweek. See 29 C.F.R.

§ 778.114(a),; Condo, 1 F.3d at 601-02. Consequently, under the mathematical payment
structure provided under this method, the more an employee works, the less he or she is paid for
each additional hour of overtime. See 29 C.F.R. § 778.114(b); see also Monahan v. County of
Chseterfield, Va., 95 F.3d 1263, 1280 (4th Cir. 1996).

Here, Naylor’s overtime pay was not calculated on a fluctuating basis pursuant to
Regulation 114, but was a fixed amount calculated by taking Naylor’s annual salary and dividing
it by 2080, the total number of working hours in an average year. Further, the fluctuating
workweek method requires compensating an employee “for aif overtime hours worked at a rate
not less than on-half his regular rate of pay.” See 29 C.F.R.§ 778.114(a) (emphasis added).
Although defendants argue that Naylor was overcompensated for his overtime work, it is
undisputed that DePaul testified that he would compensate for overtime when an employee was
working overtime on a “fairly routine basis” and that he would pull out hours if he thought they
were “inappropriate” or if they were not “real.” Therefore, DAI was not using the fluctuating
workweek method under Regulation 114 when compensating Naylor for his overtime work
because defendants did not compensate him for all of his overtime hours.

The court need not decide whether there was a “clear mutual understanding” between the
parties that the fluctuating workweek method would be used to calculate Naylor’s overtime pay
because the defendants have not satisfied all the required conditions of Regulation 114. See

Condo, 1 F.3d at 601-02. Accordingly, the court denies defendants’ motion for summary

judgment.


IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHER DISTRICT OF ILLINOIS D
EASTERN DIVISION OCKE: TED
YAN 0 6 2004
BRIAN NAYLOR, )
)
Plaintiff, )
) Case No. 01 C 4253
v. )
) Judge Blanche M. Manning
DAI ENVIRONMENTAL, INC, )
and THOMAS DEPAUL, )
)
Defendants. )
_)

MEMORANDUM OPINION AND ORDER

Plaintiff Brian Naylor brings this action against DAI Environmental, Inc. (“DAT”), his
former employer, and Thomas DePaul, DAI’s president and owner, seeking unpaid overtime
compensation under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et. seq., and
Illinois law. Before the court is defendants’ motion for summary judgment pursuant to Federal
Rule of Civil Procedure 56 as to Counts I, IV, VI, and VII of the First Amended Complaint. For
the reasons discussed below, the court denies defendants’ motion for summary judgment in its
entirety.
1. BACKGROUND’

DAT is an environmental consulting and remediation firm that studies and monitors

contaminated sites, designs cleanup remedies, and oversees and implements those remedies.

' The facts in the Background section are derived from the parties’ Local Rule 56.1
statements and other pleadings. The facts in the parties’ statements that are not controverted are
deemed admitted. See Smith v. Lamz, 321 F.3d 660, 683 (7th Cir. 2003), Facts that Naylor objected
to but did not deny are also deemed admitted, See McGuire v. United Parcel Serv., 152 F.3d 673,
679 (7th Cir. 1998). Finally, responses that do not cite to specific references to the affidavits, parts of
the record, and other supporting materials are subject to the court’s discretion as to their admission.
See Brasic v. Heinemann’s Inc., 121 F.3d 281, 284 (7th Cir. 1997).


Naylor began working part-time at DAI in September of 1991. He started full-time employment
in January 1992, which he continued until he left DAT in April of 2001. At all relevant times,
DePaul was the president and owner of DAI. Naylor’s duties included, among other things, the
installation, maintenance, repair, and operation of DAI’s remediation equipment, taking
readings, and collecting and preparing samples. As such, Naylor spent most of his time out in
the field and not in his office.

Starting on October 1, 1991, Naylor began earning a $30,000 annual base salary. On
January 1, 1992, Naylor received a raise to $35,000 a year base salary. By the time he left DAI
in April of 2001, Naylor was earning $61,000 per year. Because Naylor worked off site, the
hours he worked each week varied depending on the work assignment. Naylor received a
paycheck once a month based on his annual salary even if he worked less than forty hours a
week.

DAI uses a computer program called “Timeslips” to record employees’ time. An
employee's time is entered into the database when the employee types it in, calls it in, or has
someone else type it in. Because Naylor often worked off site, he generally faxed or called in
his time which someone else then submitted into the system. Although all time was reported,
including time not billed to a client, Naylor contends that the “Timeslips” system is not accurate
because unbillable or overtime hours could be deleted or pulled before the data interfaces into
the main system. Naylor also contends that he was not paid for all of the overtime hours he
reported,

In the mid-1990s, DePaul told Naylor that he would be paid overtime for any hours that
he worked in excess of forty hours a week. DePaul testified that he would pay overtime when an
employee was working extra hours on a “fairly routine basis,” however, he would sometimes

2