Hornady v. Outokumpu Stainless USA
Hornady v. Outokumpu Stainless USA
2020 WL 12833589 (S.D. Ala. 2020)
March 10, 2020
Nelson, Katherine P., United States Magistrate Judge
Summary
The court ordered the Defendant to produce information related to the timeframe from which the criteria for determining incentive bonuses was drawn, as it is relevant to determining the employees' regular rate of pay for overtime purposes. However, the court sustained the Defendant's objections to providing specifics on how a particular bonus was calculated. The Defendant must provide this information within 21 days, unless the parties agree to a later date.
Additional Decisions
William Heath HORNADY, Christopher Miller and Takendric Stewart, individually and on behalf of all other similarly situated, Plaintiffs,
v.
OUTOKUMPU STAINLESS USA, LLC, Defendant
v.
OUTOKUMPU STAINLESS USA, LLC, Defendant
CIVIL ACTION NO. 18-00317-JB-N
United States District Court, S.D. Alabama, Southern Division
Signed March 10, 2020
Counsel
Ian David Rosenthal, Holston Vaughan & Rosenthal LLC, Patrick H. Sims, Cabaniss, Johnston, Gardner, Dumas & O'Neal, Mobile, AL, for Plaintiffs William Heath Hornady, Christopher Miller, Takendric Stewart.Ian David Rosenthal, Holston Vaughan & Rosenthal LLC, Mobile, AL, for Plaintiffs Lafayette Wilson, Brian Moore.
Jennifer F. Swain, Charles A. Powell, IV, Littler Mendelson, P.C., Devin Clarke Dolive, Ronald W. Flowers, Jr., Burr & Forman, LLP, Birmingham, AL, Gavin S. Appleby, Pro Hac Vice, Littler Mendelson, Atlanta, GA, H. William Wasden, Burr Forman, Mobile, AL, Sinead Daly, Pro Hac Vice, Littler Mendelson, Miami, FL, for Defendant.
Nelson, Katherine P., United States Magistrate Judge
ORDER
*1 This action came before the undersigned Magistrate Judge for a discovery conference on the record with counsel for the parties on March 6, 2020. There, the undersigned withheld ruling on whether the Defendant would be required to respond to the Plaintiffs’ Request for Production 5 in their First Set of Requests for Production (“RFP 5”) to allow the parties to submit briefs on the issue, which they have done (see Docs. 180, 181).
“Section 7(e) of the [Fair Labor Standards] Act requires the inclusion in the regular rate of all remuneration for employment except eight specified types of payments. Among these excludable payments are discretionary bonuses, gifts and payments in the nature of gifts on special occasions, contributions by the employer to certain welfare plans and payments made by the employer pursuant to certain profit-sharing, thrift and savings plans ... Bonuses which do not qualify for exclusion from the regular rate as one of these types must be totaled in with other earnings to determine the regular rate on which overtime pay must be based. Bonus payments are payments made in addition to the regular earnings of an employee.” 29 C.F.R. § 778.208. “The term ‘bonus’ is properly applied to a sum which is paid as an addition to total wages usually because of extra effort of one kind or another, or as a reward for loyal service or as a gift. The term is improperly applied if it is used to designate a portion of regular wages which the employee is entitled to receive under his regular wage contract.” Id. § 778.502(a). “The general rule may be stated that wherever the employee is guaranteed a fixed or determinable sum as his wages each week, no part of this sum is a true bonus and the rules for determining overtime due on bonuses do not apply.” Id. § 778.502(e).
“In some instances the contract or plan for the payment of a bonus may also provide for the simultaneous payment of overtime compensation due on the bonus. For example, a contract made prior to the performance of services may provide for the payment of additional compensation in the way of a bonus at the rate of 10 percent of the employee's straight-time earnings, and 10 percent of his overtime earnings. In such instances, of course, payments according to the contract will satisfy in full the overtime provisions of the Act and no recomputation will be required. This is not true, however, where this form of payment is used as a device to evade the overtime requirements of the Act rather than to provide actual overtime compensation ...” Id. § 778.210.
The parties agree that the Defendant used percentage-based “incentive bonuses,” awarded if certain targets were met, to compensate its employees. RFP 5 states as follows:
Produce the underlying data (and make available such programs which will enable review of that data) which was used to evaluate whether bonuses were awarded each month, and in what amounts. As non-exclusive examples, (i) if Defendant contends that production numbers were a criteria, then the documents and data showing the time frame (start date and time to end date and time) of production that was counted; (ii) if Defendant contends that safety incidents were a criteria, then the documents and data showing the time frame (start date and time to end date and time) that counted; (iii) if Defendant contends that quality control was a criteria, then the documents and data showing the time frame that was measured, and what was measured. Note, to the extent this information can be fully and accurately provided through documents, printouts, or images of electronic data, production of those items may be an acceptable substitute for production electronic data files so long as the underlying electronic data files are preserved and available to substantiate the completeness and accuracy of the produced documents.
*2 The undersigned agrees with the Plaintiffs that information concerning the timeframe from which the criteria that determined each bonus payment were drawn is relevant and, considering the potential amount of damages at stake, not disproportional to the needs of the case. As the FLSA regulations explain,
[n]o difficulty arises in computing overtime compensation if the bonus covers only one weekly pay period. The amount of the bonus is merely added to the other earnings of the employee (except statutory exclusions) and the total divided by total hours worked. Under many bonus plans, however, calculations of the bonus may necessarily be deferred over a period of time longer than a workweek. In such a case the employer may disregard the bonus in computing the regular hourly rate until such time as the amount of the bonus can be ascertained. Until that is done he may pay compensation for overtime at one and one-half times the hourly rate paid by the employee, exclusive of the bonus. When the amount of the bonus can be ascertained, it must be apportioned back over the workweeks of the period during which it may be said to have been earned. The employee must then receive an additional amount of compensation for each workweek that he worked overtime during the period equal to one-half of the hourly rate of pay allocable to the bonus for that week multiplied by the number of statutory overtime hours worked during the week.
29 C.F.R. § 778.209(a) (emphasis added).[1] Here, the Plaintiffs are entitled to discover information from which they can reasonably ascertain the timeframe from which the criteria underlying each incentive bonus award was drawn, so that it can be “apportioned back over the workweeks of the period during which it may be said to have been earned.”
The undersigned agrees with the Defendant, however, that, to the extent RFP 5 otherwise seeks “the underlying data ... which was used to evaluate whether bonuses were awarded each month, and in what amounts[,]” such information is not relevant to their claims. The Plaintiffs have demonstrated that the amounts of the bonuses, and the timeframe from which the criteria determining each bonus was drawn, are relevant to allow them to determine the back overtime which they allege they are owed. Otherwise, however, the Plaintiffs have failed to convince the undersigned that the specifics of how a particular bonus award was calculated is relevant to determining to determining employees’ “regular rate” of pay for purposes of calculating overtime compensation.
*3 In accordance with the foregoing analysis, the Defendant's objections to RFP 5 are SUSTAINED in part and OVERRULED in part, in that the Defendant is ORDERED to produce material responsive to RFP 5 only to the extent it concerns the timeframe from which the criteria underlying each incentive bonus awarded during the time period relevant to the claims in this action was drawn. The Defendant must serve the Plaintiffs with this material no later than 21 days from the date of entry of this order, unless the Plaintiffs agree to a later date.
DONE and ORDERED this the 10th day of March 2020.
Footnotes
Additionally, “[i]f it is impossible to allocate the bonus among the workweeks of the period in proportion to the amount of the bonus actually earned each week, some other reasonable and equitable method of allocation must be adopted. For example, it may be reasonable and equitable to assume that the employee earned an equal amount of bonus each week of the period to which the bonus relates, and if the facts support this assumption additional compensation for each overtime week of the period may be computed and paid in an amount equal to one-half of the average hourly increase in pay resulting from bonus allocated to the week, multiplied by the number of statutory overtime hours worked in that week. Or, if there are facts which make it inappropriate to assume equal bonus earnings for each workweek, it may be reasonable and equitable to assume that the employee earned an equal amount of bonus each hour of the pay period and the resultant hourly increase may be determined by dividing the total bonus by the number of hours worked by the employee during the period for which it is paid. The additional compensation due for the overtime workweeks in the period may then be computed by multiplying the total number of statutory overtime hours worked in each such workweek during the period by one-half this hourly increase. 29 C.F.R. § 778.209(b).