Opinion ID: 1711038
Heading Depth: 1
Heading Rank: 7

Heading: prima facie case and lack of proof of exception

Text: In the present case, it is undisputed that Stiles Service Center did not keep proper and accurate employment records as required by the FLSA. The timecards recording the employees' hours were actually blank receipts on which the employees themselves recorded their hours. Stiles Service Center maintained neither a timeclock or similar device nor independent contemporaneous records of employee hours. Therefore, the district court correctly found that only the lesser burden of showing the amount and extent of uncompensated overtime work by just and reasonable inference applied to Kreus in this case. Furthermore, the district court correctly found that Kreus met his burden of proof and that the burden shifted to the defendants to disprove the inference of unpaid overtime compensation. Kreus introduced his timecards and paychecks, which indicated that he worked overtime hours on a regular basis, and from which a just and reasonable inference could be drawn that his regular rate was $6 per hour, and later $6.25 per hour. When divided by the number of hours worked, every paycheck that Kreus received represented a pay rate of either $6 per hour, or later $6.25 per hour. These facts meet the standard definition of regular rate, i.e., total remuneration per workweek divided by the number of hours worked in that week, as set forth in the regulations enacted pursuant to the FLSA. See 29 C.F.R. § 778.109. The burden of establishing an exception or exclusion from this standard calculation rests on the employer, and such employer must affirmatively plead and prove an exception. Corning Glass Works v. Brennan, 417 U.S. 188, 94 S.Ct. 2223, 41 L.Ed.2d 1 (1974); McLaughlin v. McGee Bros. Co., Inc., 681 F.Supp. 1117 (W.D.N.C.1988). In the present case, the defendants failed to both plead and prove that any amount received per hour over $5 fit within an exception to the regular rate calculation. Therefore, Kreus presented a prima facie case for overtime compensation under the FLSA, as the facts indicate that his regular rate was actually $6 per hour, and subsequently $6.25 per hour, rather than the $5 per hour figure used by the department to calculate overtime compensation owed. As Kreus presented a prima facie case, it was error for the district court to grant the defendants' motion for directed verdict. After shifting the burden of proof to the employer in this case, the district court seemed to hold that any amount paid to Kreus above $5 per hour was excludable from the regular rate computation under 29 U.S.C. § 207(e)(3) as a discretionary bonus. In their answer to Kreus' amended petition, the defendants failed to raise any recognized exceptions to the regular rate calculation as affirmative defenses. While the defendants raised the affirmative defense of accord and satisfaction, this defense is not recognized under the FLSA. See § 207(e). Therefore, the district court erred in holding the amounts paid over $5 per hour to be excludable from the regular rate computation. Furthermore, the defendants failed to establish that the amounts delineated as bonus pay met the requirements of a discretionary bonus under the FLSA. Under the regulations issued in conjunction with the FLSA, for a bonus to be excluded as discretionary, both the fact of payment and the amount of payment must be determined at the sole discretion of the employer. 29 C.F.R. § 778.211(b) (1991). The amount of the bonus must be determined by the employer without relation to a prior contract, agreement, or promise. Id. A promise in advance to pay a bonus causes the bonus to lose its discretionary character and to be included in the calculation of regular rate. Id. Furthermore, the regulations specifically state any bonus which is promised to employees upon hiring ... would not be excluded from the regular rate .... § 778.211(c). Section 778.211(b) gives the following examples of nondiscretionary bonuses, or bonuses paid pursuant to a promise: Thus, if an employer announces to his employees in January that he intends to pay them a bonus in June, he has thereby abandoned his discretion regarding the fact of payment by promising a bonus to his employees.... Similarly, an employer who promises to sales employees that they will receive a monthly bonus computed on the basis of allocating 1 cent for each item sold whenever, is his discretion, the financial condition of the firm warrants such payments, has abandoned discretion with regard to the amount of the bonus though not with regard to the fact of payment. In the present case, Stiles admitted at trial that he told Kreus that he would see to it that he [Kreus] averaged $6 per hour. Pursuant to the regulations, this constituted a prior agreement or promise to pay Kreus a bonus at a set amount, making any bonus amount paid nondiscretionary under the meaning of the FLSA. Consequently, the district court improperly excluded amounts over $5 per hour as discretionary bonuses. Additionally, the amounts paid over $5 per hour do not meet the requirements of any of the other exceptions set forth in the FLSA. Again, the defendants did not affirmatively plead any other exceptions. These amounts would not qualify as excludable gifts under the FLSA because they were paid pursuant to an agreement between the parties, and the amount given was directly dependent on the amount of hours worked. Furthermore, there is no evidence the payments were for a retirement plan, for idle time, or for premium pay as defined by the FLSA. See 29 C.F.R. §§ 778.201 to 778.207, and 778.212 to 778.224 (1991). Therefore, the amounts paid over $5 per hour should not have been excluded from the regular rate calculation, and Kreus' regular rate under the FLSA was $6 per hour and $6.25 per hour for the respective periods. The trial court clearly erred when it found that the agreed rate of pay was not $6 per hour. Kreus worked a total of 484 hours for which overtime compensation was owed. He was paid $6 of the $9 overtime rate for these hours. Thus, $1,452 was owed for his overtime hours. Subtracting the $299 in back overtime already paid, Kreus is entitled to $1,153 plus an equal amount as liquidated damages.