Opinion ID: 2140651
Heading Depth: 3
Heading Rank: 2

Heading: Bases for Civil Penalties Award

Text: Farmers also argues that the district court's award of civil penalties was inconsistent with the jury's special verdict. The MFLSA states that civil penalties may be awarded for repeated or willful violations of the Act. Minn.Stat. § 177.27, subd. 7. The district court imposed civil penalties in this case based on two violations: (1) Farmers' misclassification of the claims representatives as exempt from the MFLSA and (2) Farmers' failure to maintain records required by the MFLSA. Having determined that misclassification does not constitute a violation of the MFLSA, we conclude that the district court erred in basing the award of civil penalties on Farmers' misclassification of the claims representatives as exempt. Civil penalties are fitting, however, for the recordkeeping violations, notwithstanding the lack of compensatory damages. The statute specifically provides that civil penalties may be assessed for repeated or willful violations of any section of the MFLSA. See Minn.Stat. § 177.27, subd. 7. The failure of an employer to maintain records is an obstacle for employees like the plaintiffs here trying to pursue claims for unpaid overtime compensation. When employers do not maintain the required records, it becomes difficult for employees to meet their burden of proof with respect to compensatory damages. We next address the amount of the civil penalty. If an employer is found to have repeatedly or willfully violated the Act, the employer shall be subject to a civil penalty of up to $1,000 for each violation for each employee. Minn.Stat. § 177.27, subd. 7. The two statutory factors relevant to determining the amount of a civil penalty are the size of the employer's business and the gravity of the violation. Id. In addressing the size of Farmers' business, the district court described Farmers as a large, national, sophisticated employer that collected between $3 and $4 billion in premiums annually. In addressing the gravity of the violations, the court based its award, in part, on a finding that the claims representatives worked very long hours, routinely in excess of 48 hours per week. The court also found that Farmers misclassified employees for at least 12,870 pay periods and more than 120,000 work days. Based on these findings, the court concluded that a significant civil penalty was warranted. The district court imposed a civil penalty of $500 per employee, per pay period worked during the class period. Farmers asserts that the district court's finding regarding the overtime hours worked by the plaintiffs is an improper basis for calculating civil penalties because the finding is inconsistent with the jury's special verdict. We agree. While the jury was not asked how many hours per week the claims representatives worked, the jury was asked what amount of money would compensate the claims representatives for the overtime hours they worked, to which the jury answered 0. As a predicate to determining the amount of compensatory damages owed, the jury would necessarily have to consider how many hours, if any, over 48 hours per week the claims representatives worked. Since the jury found that the claims representatives were not entitled to any compensatory damages, the district court's finding that the claims representatives routinely worked in excess of 48 hours is inconsistent with the jury's special verdict and cannot stand under Onvoy. Thus, although a civil penalty is appropriate in this case, we remand to the district court to reconsider the amount of the civil penalty without using the misclassification violation or the overtime hours worked by the claims representatives as bases for the award.