Paul Mendel v. City of Gibraltar

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 13a0232p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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PAUL MENDEL,
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Plaintiff-Appellant,
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No. 12-1231
v.
,
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Defendant-Appellee. -
CITY OF GIBRALTAR,
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Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 2:11-cv-10496—Victoria A. Roberts, District Judge.
Argued: May 21, 2013
Decided and Filed: August 15, 2013
Before: BATCHELDER, Chief Judge; MERRITT and KETHLEDGE, Circuit
Judges.
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COUNSEL
ARGUED: L. Rodger Webb, L. RODGER WEBB, P.C., Southfield, Michigan, for
Appellant. Cassandra L. Booms, LOGAN, HUCHLA & WYCOFF, P.C., Riverview,
Michigan, for Appellee. Rachel Goldberg, UNITED STATES DEPARTMENT OF
LABOR, Washington, D.C., for Amicus Curiae. ON BRIEF: L. Rodger Webb, L.
RODGER WEBB, P.C., Southfield, Michigan, for Appellant. Cassandra L. Booms,
LOGAN, HUCHLA & WYCOFF, P.C., Riverview, Michigan, for Appellee. Rachel
Goldberg, UNITED STATES DEPARTMENT OF LABOR, Washington, D.C., for
Amicus Curiae.
BATCHELDER, C.J., delivered the opinion of the court, in which MERRITT,
J., joined. KETHLEDGE, J. (pp. 11–12), delivered a separate dissenting opinion.
1
No. 12-1231 Mendel v. City of Gibraltar Page 2
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OPINION
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ALICE M. BATCHELDER, Chief Judge. This case presents the question of
whether purportedly volunteer firefighters who receive a substantial hourly wage for
responding to calls whenever they choose to do so are “employees” or “volunteers” for
purposes of the Fair Labor Standards Act (“FLSA”) and Family Medical Leave Act
(“FMLA”). Plaintiff-Appellant Paul Mendel was employed by Defendant-Appellee City
of Gibraltar (“the City”) as a dispatcher in the City’s police department. After Mendel’s
employment was terminated, he sued the City for allegedly violating his rights under the
FMLA. The City moved for summary judgment, arguing that it did not employ the
requisite number of employees for application of the FMLA because its volunteer
firefighters were not employees for purposes of the FMLA. The district court agreed
with the City and granted its motion for summary judgment. Because we conclude that
the Gibraltar firefighters are in fact “employees” within the meaning of the FLSA and
FMLA, we REVERSE the judgment of the district court and remand for further
proceedings.
I.
The facts relevant to this appeal do not concern Mendel or the story surrounding
his termination. Rather, the facts pertinent to the issue before us concern the City’s
“volunteer” firefighters and the nature of their responsibilities and of their relationship
to the City.1
1
In the course of this appeal, we previously remanded the case to the district court to determine
whether the firefighters should be joined as a party to these proceedings pursuant to Fed. R. Civ. P.
19(a)(1)(B)(i). On remand, the President of the Gibraltar Volunteer Firemen’s Association filed an
affidavit with the district court, stating that the Association had met and voted to refrain from being
included in the present lawsuit. Thereafter, the parties jointly stipulated that this Court could accord
complete relief among the existing parties, and that the Association did not claim an interest in this action
that might leave it subject to a substantial risk of incurring inconsistent obligations. Accordingly, the
district court entered an order stating that an evidentiary hearing was unnecessary. In light of these
circumstances, we now proceed to address the merits of the issue raised in this appeal with the parties
presently before us.
No. 12-1231 Mendel v. City of Gibraltar Page 3
At the time Mendel was terminated from his position as a police dispatcher, the
City employed forty-one employees excluding its “volunteer” firefighters. According
to the City Fire Chief’s estimate, the City typically had between twenty-five and thirty
volunteer firefighters. The volunteer firefighters of Gibraltar must complete training on
their own time without compensation.2 While they are not required to respond to any
emergency call, they are paid $15 per hour for the time they do spend responding to a
call or maintaining equipment. They do not work set shifts or staff a fire station; they
maintain other employment and have no consistent schedule working as volunteer
firefighters.
The firefighters generally receive a Form–1099 MISC from the City. They do
not receive health insurance, sick or vacation time, social security benefits, or premium
pay. The City does have an employment application for the firefighters, and it
apparently keeps a personnel file for each firefighter. A volunteer firefighter may be
promoted or discharged.
Mendel introduced evidence below of what several other local communities pay
their full-time firefighters. According to his wife’s affidavit, she and Mendel discovered
that certain other communities in the area pay hourly wages ranging from approximately
$14 to $17 per hour. Also, the City pays its own part-time Fire Chief $20,000 per year,
and the Chief testified in his deposition that he “tr[ies] to work 20 hours per week at the
[Gibraltar] fire station.” Based on this information, the Secretary of Labor notes in her
amicus brief3 that if one assumes the Fire Chief works fifty-two weeks per year, he
effectively earns $19.23 per hour.
The City moved for summary judgment below, arguing that Mendel was not an
“eligible employee” under the FMLA. The City contended that the volunteer firefighters
were not employees of the City, and that therefore the City did not employ fifty or more
employees, as required under the FMLA’s definition of “eligible employee.” See 29
2
Apparently, the City reimburses the firefighters’ “tuition costs” for training and testing, but does
not pay wages for the time the firefighters spend training and testing.
3
The Secretary of Labor filed an amicus brief in support of Mendel on appeal.
No. 12-1231 Mendel v. City of Gibraltar Page 4
U.S.C. § 2611(2)(B)(ii). The district court agreed and granted summary judgment for
the City. Mendel now appeals.
II.
“We review a district court’s grant of summary judgment de novo.” Smith v.
Perkins Bd. of Educ., 708 F.3d 821, 825 (6th Cir. 2013). A moving party is entitled to
summary judgment “if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). In determining whether this standard is met, “[w]e view the evidence, all facts,
and any inferences that may be drawn from the facts in the light most favorable to the
nonmoving party.” Walton v. Ford Motor Co., 424 F.3d 481, 485 (6th Cir. 2005) (citing
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). There
appears to be no significant factual dispute relevant to the issue before us. The question
of whether an individual is an “employee” within the meaning of the FLSA is a question
of law. See Fegley v. Higgins, 19 F.3d 1126, 1132 (6th Cir. 1994).
A plaintiff bringing an interference claim under the FMLA4 has the burden to
prove that:
(1) he was an eligible employee; (2) the defendant was an employer as
defined under the FMLA; (3) the employee was entitled to leave under
the FMLA; (4) the employee gave the employer notice of his intention
to take leave; and (5) the employer denied the employee FMLA benefits
to which he was entitled.
Walton, 424 F.3d at 485. The only element at issue in this appeal is the first—whether
Mendel was an “eligible employee” within the meaning of the FMLA.5
4
There are “[t]wo distinct theories for recovery on FMLA claims.” Arban v. West Pub. Corp.,
345 F.3d 390, 400 (6th Cir. 2003). First, there is an “entitlement” or “interference” theory based on a
violation of 29 U.S.C. § 2615(a)(1) or § 2614(a)(1). Id. at 400–01. Second, there is a “retaliation” or
“discrimination” theory based on a violation of § 2615(a)(2). Id. at 401. Mendel has brought a claim
under the entitlement/interference theory.
5
The City acknowledges that it is an employer as defined by the FMLA, since all public agencies
are considered employers under that Act. See 29 U.S.C. § 2611(4); 29 C.F.R. § 825.108.
No. 12-1231 Mendel v. City of Gibraltar Page 5
The FMLA defines the term “eligible employee” in 29 U.S.C. § 2611(2). This
case centers on one specific exclusion in that section: “The term ‘eligible employee’
does not include . . . any employee of an employer who is employed at a worksite at
which such employer employs less than 50 employees if the total number of employees
employed by that employer within 75 miles of that worksite is less than 50.”
§ 2611(2)(B). In this case, if the “volunteer” firefighters are “employees” of the City,
then the City employs fifty or more employees, and Mendel is an “eligible employee”
under the FMLA. However, if the firefighters are not “employees” of the City within
the meaning of the FMLA, then the City employs less than fifty employees, and Mendel
is not an eligible employee under the FMLA.
To answer the question of whether reputedly “volunteer” firefighters fall within
the scope of the FMLA’s definition of an “employee,” we must turn to the section of the
FLSA that addresses this issue. See 29 U.S.C. § 2611(3) (providing that for purposes
of the FMLA, the terms “employ” and “employee” have the same meaning as given in
29 U.S.C. § 203(e) and (g), the definitions section of the FLSA). The FLSA generally
defines “employee” as “any individual employed by an employer.” 29 U.S.C.
§ 203(e)(1). In a slightly more illuminating vein, it defines “employ” as “to suffer or
permit to work.” § 203(g). Noting the “striking breadth” of the FLSA’s expansive
definition of “employ,” the Supreme Court has stated that this definition “stretches the
meaning of ‘employee’ to cover some parties who might not qualify as such under a
strict application of traditional agency law principles.” Nationwide Mut. Ins. Co. v.
Darden, 503 U.S. 318, 326 (1992) (distinguishing the scope of “employee” under
ERISA as not being as broad as it is under the FLSA); see also Walling v. Portland
Terminal Co., 330 U.S. 148, 150–51 (1947) (“[I]n determining who are ‘employees’
under the [FLSA], common law employee categories or employer-employee
classifications under other statutes are not of controlling significance. This Act contains
its own definitions, comprehensive enough to require its application to many persons and
working relationships, which prior to this Act, were not deemed to fall within an
employer-employee category.” (citation omitted)). The high Court “has consistently
construed the Act liberally to apply to the furthest reaches consistent with congressional
No. 12-1231 Mendel v. City of Gibraltar Page 6
direction.” Tony & Susan Alamo Found. v. Sec’y of Labor, 471 U.S. 290, 296 (1985)
(internal quotation marks omitted).
The Supreme Court has adopted an “economic reality” test to determine whether
an individual is an employee under the FLSA. See, e.g., id. at 301. Under the Court’s
long-standing FLSA jurisprudence, “the determination of the relationship does not
depend on . . . isolated factors but rather upon the circumstances of the whole activity.”
Rutherford Food Corp. v. McComb, 331 U.S. 722, 730 (1947). “The issue of the
employment relationship does not lend itself to a precise test, but is to be determined on
a case-by-case basis upon the circumstances of the whole business activity.” Donovan
v. Brandel, 736 F.2d 1114, 1116 (6th Cir. 1984).
Here, it appears that the Gibraltar firefighters fall within the FLSA’s broad
definition of employee. The firefighters are suffered or permitted to work, see 29 U.S.C.
§ 203(g), and they even receive substantial wages for their work.6
This is not the end of our analysis, however. In 1986, Congress amended the
FLSA to clarify that individuals who volunteer to perform services for a public agency
are not employees under the Act. Section 203(e) now includes the following provision:
The term “employee” does not include any individual who volunteers to
perform services for a public agency which is a State, a political
subdivision of a State, or an interstate governmental agency, if—
(i) the individual receives no compensation or is paid expenses,
reasonable benefits, or a nominal fee to perform the services for which
the individual volunteered; and
(ii) such services are not the same type of services which the individual
is employed to perform for such public agency.
6
In concluding that the firefighters were not “employees” within the meaning of the FLSA, the
district court emphasized the lack of control exercised by the City over the firefighters. While we
recognize the importance of control as one of the factors under the general economic reality test, we cannot
agree that the lack of control in this case is sufficient to overcome the fact that the firefighters are paid
substantial wages for performing work as permitted by the City. Indeed, we are mindful of the Supreme
Court’s observation that the FLSA’s broad definition of “employ” “stretches the meaning of ‘employee’
to cover some parties who might not qualify as such under a strict application of traditional agency law
principles.” Nationwide Mut. Ins. Co., 503 U.S. at 326. The fact that the firefighters are not only
“suffer[ed] or permit[ted] to work,” see 29 U.S.C. § 203(g), but are also paid substantial wages for their
work, means that they certainly fall within the broad scope of the FLSA’s general definition of employees.
No. 12-1231 Mendel v. City of Gibraltar Page 7
29 U.S.C. § 203(e)(4)(A).
Thus, the question becomes whether the Gibraltar firefighters fall within this
exception to the FLSA’s generally broad definition of “employee.” Specifically, the
question before us is whether the wages paid to the firefighters constitute
“compensation” or merely a “nominal fee.” If the hourly wages are compensation, then
the firefighters are employees under the FLSA. Conversely, if the wages are merely a
nominal fee, then the firefighters are volunteers expressly excluded from the FLSA’s
definition of employee.
The official regulations provide guidance at this juncture. The regulations define
“volunteer” as “[a]n individual who performs hours of service for a public agency for
civic, charitable, or humanitarian reasons, without promise, expectation or receipt of
compensation for services rendered.” 29 C.F.R. § 553.101(a); see also 29 C.F.R.
§ 553.104(a) (employing similar language). The regulations proceed to recognize,
“Volunteers may be paid expenses, reasonable benefits, a nominal fee, or any
combination thereof, for their service without losing their status as volunteers.”
29 C.F.R. § 553.106(a). The specific provision addressing nominal fees provides, in
part, “A nominal fee is not a substitute for compensation and must not be tied to
productivity. However, this does not preclude the payment of a nominal amount on a
‘per call’ or similar basis to volunteer firefighters.” 29 C.F.R. § 553.106(e). Finally, the
regulations caution, “Whether the furnishing of expenses, benefits, or fees would result
in individuals’ losing their status as volunteers under the FLSA can only be determined
by examining the total amount of payments made (expenses, benefits, fees) in the
context of the economic realities of the particular situation.” 29 C.F.R. § 553.106(f).
In the context of the economic realities of this particular situation, we hold that
the hourly wages paid to the Gibraltar firefighters are not nominal fees, but are
compensation under the FLSA. The firefighters do not receive “a nominal amount on
a ‘per call’ or similar basis.” 29 C.F.R. § 553.106(e). Rather, they render services with
the promise, expectation, and receipt of substantial compensation. See 29 C.F.R.
§§ 553.101(a), 553.104(a). Each time a firefighter responds to a call, he knows he will
No. 12-1231 Mendel v. City of Gibraltar Page 8
receive compensation at a particular hourly rate—which happens to be substantially
similar to the hourly rates paid to full-time employed firefighters in some of the
neighboring areas. Essentially, the Gibraltar firefighters are paid a regular wage for
whatever time they choose to spend responding to calls. These substantial hourly wages
simply do not qualify as nominal fees. Cf. Purdham v. Fairfax Cnty. Sch. Bd., 637 F.3d
421, 433–34 (4th Cir. 2011) (holding that a School Board’s payment of a fixed stipend
to a golf coach was a nominal fee where: (1) the stipend amount did not change based
on either how much time and effort the coach expended on coaching activities or how
successful the team was; and (2) the approximate hourly rate to which the coach’s
stipend could be converted was only a fraction (less than ¼) of the hourly wage he
received as a full-time security assistant employed by the School Board).
Notably, the Supreme Court has held that those who “work in contemplation of
compensation” are “employees” within the meaning of the FLSA, even though they may
view themselves as “volunteers.” Tony & Susan Alamo Found., 471 U.S. at 300–02,
306. Despite the fact that the Gibraltar firefighters are referred to as “volunteers,” the
inescapable fact nevertheless remains that they “work in contemplation of
compensation.” Thus, the Gibraltar firefighters are “employees” and not “volunteers”
within the meaning of the FLSA. See Krause v. Cherry Hill Fire Dist. 13, 969 F. Supp.
270, 277 (D.N.J. 1997) (“In view of the fact that the plaintiffs [firefighters] both
expected and received hourly compensation, in an amount greater than a ‘nominal’ fee,
it is clear that plaintiffs were not volunteers . . . .”).
One final issue requires comment. The parties dispute the applicability of
29 U.S.C. § 203(y) to this case. The district court found § 203(y) relevant and used it
in its analysis. However, § 203(y) does not support the City’s position. That subsection
reads:
“Employee in fire protection activities” means an employee, including
a firefighter, paramedic, emergency medical technician, rescue worker,
ambulance personnel, or hazardous materials worker, who—
(1) is trained in fire suppression, has the legal authority and
responsibility to engage in fire suppression, and is employed by a fire
department of a municipality, county, fire district, or State; and
No. 12-1231 Mendel v. City of Gibraltar Page 9
(2) is engaged in the prevention, control, and extinguishment of fires or
response to emergency situations where life, property, or the
environment is at risk.
29 U.S.C. § 203(y). The phrase “employee in fire protection activities” appears in
§ 207(k), which prescribes a special rule for calculating when overtime pay is required
for employees in fire protection activities or employees in law enforcement activities.7
We fail to see how § 203(y) can fairly be interpreted to require anyone
performing firefighting services to fit within its definition in order to fall within the
scope of the FLSA in general. Rather, Congress has simply explained that for those
employed firefighters who have “the legal authority and responsibility” to put out fires,
a different standard applies for calculating their entitlement to overtime pay, due to the
nature of their work. This makes perfect sense. However, it is a non sequitur to claim
that any type of firefighter who fails to fit the definition of an “employee in fire
protection activities” in § 203(y) cannot be considered an “employee” under the broad
understanding of that term for any other purpose under the FLSA. This would mean that
unless a firefighter has a legal duty to respond to emergency calls, he could never be
considered an “employee” under the FLSA in general, even if he were paid wages equal
to—or even greater than—what a career firefighter would be paid. This is not a fair
reading of the statutory scheme of the FLSA.
The role of § 203(y) is to define a particular class of firefighters who are treated
somewhat differently from ordinary employees for purposes of § 207. The statute for
determining whether firefighters qualify as employees or volunteers under the FLSA in
general is § 203(e)(4). If § 203(y) sets the standard for whether firefighters are to be
considered employees under the FLSA as a whole, this renders § 203(e)(4) inapplicable
and irrelevant to firefighters. However, this is not what the regulations contemplate. See
29 C.F.R. §§ 553.104(b), 553.106(e). Section 203(y) simply does not apply to this case.
7
The term also appears in § 213(b)(20), which provides that § 207 does not apply to “any
employee of a public agency who in any workweek is employed in fire protection activities . . . if the
public agency employs during the workweek less than 5 employees in fire protection . . . activities.”
No. 12-1231 Mendel v. City of Gibraltar Page 10
III.
The fact that the FLSA’s categories of “employee” and “volunteer” do not
necessarily match the common use of those terms or popular perception in general has
required us to reach a result in this case that is admittedly somewhat counter-intuitive.
However, under the relevant authority and the facts of this case, we are constrained to
hold that, simply put, the substantial wages paid to these firefighters constitute
compensation, not nominal fees, which makes the Gibraltar firefighters employees, not
volunteers, for purposes of the FLSA and FMLA.8 Accordingly, we REVERSE the
district court’s grant of summary judgment for the City and remand for further
proceedings.
8
We deem it unnecessary on the facts of this case to address the validity of the Department of
Labor’s proposed “twenty-percent test” for determining whether a given payment constitutes compensation
or a nominal fee.
No. 12-1231 Mendel v. City of Gibraltar Page 11
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DISSENT
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KETHLEDGE, Circuit Judge, dissenting. The outcome of this case turns upon
whether the City of Gibraltar’s firefighters are “employees” under the Family and
Medical Leave Act. The Act defines the term “employee” by incorporating the
definition found in § 203(e) of the Fair Labor Standards Act. 29 U.S.C. § 2611(3). That
section unhelpfully defines “employee” to mean “any individual employed by an
employer.” Id. § 203(e)(1). Section 203(e) further provides that “employee” does not
include “any individual who volunteers to perform services for a public agency[.]” Id.
§ 203(e)(4)(A).
Volunteer status precludes employee status under the Leave Act; but that
someone is not a volunteer does not necessarily mean they are an employee. Some types
of workers fall into neither category, such as independent contractors, prisoners, and
residential assistants in college dorms. See Donovan v. Brandel, 736 F.2d 1114 (6th Cir.
1984); Harker v. State Use Indus., 990 F.2d 131 (4th Cir. 1993); Marshall v. Regis Educ.
Corp., 666 F.2d 1324 (10th Cir. 1981). Thus we must ask two questions here: first,
whether the firefighters are volunteers under § 203(e)(4)(A); and second, if not, whether
they meet the definition of employees under § 203(e)(1).
To qualify as a volunteer, the firefighters cannot receive “compensation,” but
they can receive a “nominal fee.” 29 U.S.C. § 203(e)(4)(A). In deciding whether a fee
is nominal, the Department of Labor’s regulations require that we “examin[e] the total
amount of payments made . . . in the context of the economic realities of the particular
situation.” 29 C.F.R. § 553.106(f). Here, the firefighters receive a fee of $15 for each
hour that they actually respond to fires. Whether that fee is nominal is a close call, but
for two reasons I think it is.
In determining whether a fee is nominal, we must consider the value of the
service at issue. Fifteen dollars per hour might not be a nominal fee for a fast-food
worker, but for a surgeon who provides her services to some charitable organization, it
No. 12-1231 Mendel v. City of Gibraltar Page 12
surely would be. Here, the firefighters provide a service of significant value—indeed,
they routinely risk their own lives while protecting the lives and property of others.
Second, as a practical matter, the firefighters receive considerably less than
$15 per hour for their time in that role. The firefighters must complete 152 hours of
training, pass an examination, and then complete an additional 73 hours of training each
year. The City does not pay the firefighters for any of this time. Thus, even when just
the annual training is taken into account, the average firefighter receives approximately
$8.67 per hour, which is little more than minimum wage. Amortize in the front-end
training, and a McDonald’s employee receives more than these public servants do. I
would therefore hold that the firefighters are what the City says they are: volunteers.
But in any event the firefighters are not employees. As noted above, the statute
defines “employee” as “any individual employed by an employer.” 29 U.S.C.
§ 203(e)(1). The statute also defines the term “employ” to mean “to suffer or permit to
work[.]” Id. § 203(g). Putting these definitions together, an employee is an individual
whom an employer “suffer[s] or permit[s] to work.”
The firefighters do not satisfy this definition. Shortly after Congress passed the
Fair Labor Standards Act, the Supreme Court interpreted the term “work”—as used in
§ 203(g)—to mean “physical or mental exertion” that is “controlled or required by the
employer[.]” Tenn. Coal, Iron & R.R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 598
(1944) (emphasis added). Here, the City neither controls nor requires the firefighters’
efforts. The first firefighter to respond to a fire typically controls the scene; the City
does not send anyone to supervise them. And the City does not require a firefighter to
respond to any fires in the first place. Indeed a firefighter could go for years without
responding to a single fire—and the City would not discipline him.
Persons that need a Family and Medical Leave Act are presumably persons who
need leave not to show up for work. That description does not apply to the City of
Gibraltar’s firefighters. I respectfully dissent.