DocketNumber: Case No. 18-CV-321-JPS
Citation Numbers: 344 F. Supp. 3d 1005
Judges: Stadtmueller
Filed Date: 9/25/2018
Status: Precedential
Modified Date: 10/18/2024
Plaintiff John Weninger ("Weninger") filed this action on March 2, 2018, alleging violations of the Fair Labor Standards Act ("FLSA"),
1. BACKGROUND
The basic facts are undisputed. General Mills manufactures consumer food products. It operates nearly thirty production facilities across the country, including one in Milwaukee, Wisconsin, where Weninger worked. He was employed as a Training Coordinator, which is a non-exempt, hourly position for FLSA purposes.
In addition to their regular, hourly rates of pay, General Mills employees like Weninger received lump sum payments referred to as "Wage Incentive Bonuses." The bonus was determined annually and *1008paid out in two separate payments, one in December and one in July. The Wage Incentive Bonus is calculated according to a formula established by General Mills and known to its non-exempt employees, including Weninger, in order to encourage or reward their rapid, safe, consistent, and efficient work performance. If a General Mills employee is an active, full-time employee at the time the Wage Incentive Bonus is made, he or she is entitled to receive it. The formula takes into account the employee's work performance, the production facility's performance, the safety and reliability of the facility, and other performance metrics.
The result of the Wage Incentive Bonus formula is a percentage. That percentage is multiplied by the employee's "eligible earnings" (a term used by General Mills, not the FLSA), including regular (or "straight") pay, overtime pay, and holiday pay combined. The product of that calculation is the total Wage Incentive Bonus for the year, which, as noted above, is paid in two installments. The Wage Incentive Bonus was not included in Weninger's or other employees' regular rates of pay when determining overtime compensation, for reasons that will be explored below.
Many General Mills employees enjoy another bonus, called the "Lump Sum Merit Bonus." According to General Mills, the bonus has no relation to employee productivity and is only used to adjust employee compensation based on prevailing market rates for similar work. (Docket # 32 at 8). Like the Wage Incentive Bonus, the Lump Sum Merit Bonus is calculated by applying a fixed percentage to the employee's eligible earnings-his straight time, overtime, and holiday pay combined. For instance, in 2016 eligible employees received a Lump Sum Merit Bonus of 1% of their eligible earnings. (Docket # 24 ¶¶ 3-4).
2. ANALYSIS
2.1 General Mills' Compensation Structure
Conditional certification of a collective action is distinct from the procedure normally applied to class litigation under Federal Rule of Civil Procedure 23. Woods v. N.Y. Life Ins. Co. ,
On the face of the complaint, Weninger appears to satisfy this lenient standard. He alleges that he and other hourly, non-exempt employees at General Mills' production facilities were subject to its unlawful practice of failing to include the Wage Incentive Bonus, a non-discretionary form of remuneration, in their regular rates of pay for purposes of determining overtime compensation. See (Docket # 1 ¶ 46).
Non-discretionary bonuses must normally be recomputed into an employee's regular rate before calculating his overtime compensation.
General Mills says this is how its Wage Incentive Bonus works. (Docket # 22 at 11). Weninger disagrees, arguing that the Wage Incentive Bonus is calculated based on what General Mills calls "eligible earnings," a sum that includes pay for straight time, overtime, and holidays, but excludes other portions of an employee's "total earnings," such as the Lump Sum Merit Bonus, in contravention of Section 778.210. (Docket # 29 at 7-8).
The FLSA requires that an employee be compensated with overtime pay "at a rate not less than one and one-half times" the employee's regular rate for hours worked in excess of forty in a week.
Weninger's argument relies on the premise that the phrase "total earnings" in Section 778.210 is equivalent to the phrase "regular rate" used in Section 207. Some courts have found that "total earnings" encompasses merely straight time and overtime, while others hold that the phrase includes all remuneration for employment, including non-discretionary bonuses, just like an employee's regular rate. Compare White v. Publix Super Markets, Inc. , No. 3:14-cv-1189,
The parties dispute how the Lump Sum Merit Bonus should be categorized and how it was treated by General Mills.
Because percentage bonuses are legally permissible, this position has some facial appeal. Yet it should be remembered that percentage bonuses are only tolerated because they are mathematically equivalent to recomputing the bonus into the employee's regular rate. As General Mills emphasizes, a percentage bonus "is not an exclusion from regular rate requirements; rather, it acknowledges that certain types of agreements simultaneously pay both straight time and overtime ." (Docket # 32 at 11) (emphasis in original). However, allowing two percentage bonuses to exist side-by-side means that the arithmetic does not work out in this way.
Take some example figures: an employee earns $10 per hour, works 10 regular hours and 5 overtime hours, and enjoys a Wage Incentive Bonus of 10% and a Lump *1011Sum Merit Bonus of 5%. In the absence of the bonuses, the employee's compensation is $175. If each bonus is calculated as a percentage of $175, then all three numbers are added together, the result is $201.25. If the Lump Sum Merit Bonus is recomputed into the employee's regular rate before the Wage Incentive Bonus is applied, that gives a regular rate of $10.50 per hour. The employee's compensation before the Wage Incentive Bonus is applied would be $183.75, and with the Wage Incentive Bonus added, the total compensation becomes $202.13. Thus, it appears that awarding two percentage bonuses lacks the mathematical equivalence as when one is awarded, which is what Section 778.210 contemplates.
The Court's arithmetic reveals a potential flaw in General Mills' compensation structure. However, there remain avenues for the company to justify the use of the Wage Incentive and Lump Sum Merit Bonuses, including proof that the Lump Sum Merit Bonus is exempt from inclusion in an employee's regular rate. As Weninger points out in his response to General Mills' summary judgment motion, little discovery has been done on the Lump Sum Merit Bonus. That discovery will likely be critical to assessing the validity of his FLSA claim.
For that reason, the Court will grant Weninger's request for relief under Federal Rule of Civil Procedure 56(d), which permits the Court to defer ruling upon or simply deny a motion for summary judgment when the non-movant shows that essential facts are not presently available for its opposition. Fed. R. Civ. P. 56(d). Weninger has shown, through existing discovery requests and responses, as well as the affidavit of his counsel, that discovery concerning the Lump Sum Merit Bonus is incomplete. General Mills says that no further discovery is needed, given its explanation of the purpose of the bonus and the legal justification therefor, (Docket # 32 at 2-4), but as should be clear from the discussion above, the story of the bonus has critical gaps which additional discovery should fill.
Most notably, General Mills' own "compensation analyst," Ella Jaehnig ("Jaehnig"), avers that the Lump Sum Merit Bonus is paid upon a "competitive rate review of Production Employee salaries to determine whether the salaries it pays are consistent with the external market." (Docket # 34 ¶ 2). That sounds like a bonus "which [is] announced to employees to induce them...to remain with the firm," which the DOL says must be "regarded as part of the regular rate of pay."
The Court will, therefore, deny General Mills' motion for partial summary judgment without prejudice. For the same reasons, the Court finds it appropriate to grant conditional certification of Weninger's *1012proposed collective action. In light of the need to provide a notice and opt-in period for putative class members, the Court will issue an amended trial scheduling order that accommodates such a period while giving the parties an opportunity for further dispositive and final certification motion practice after the opt-in period expires.
2.2 Collective Action Scope and Notice
The Court has found General Mills' overarching legal argument to be without merit, at least on the present state of the record and the posture of the case. By the same token, Weninger has satisfied the Court, for purposes of conditional certification, that he is similarly situated to other potential members of the collective action with respect to his Wage Incentive Bonus claim. Jirak ,
To start, Weninger proposes the following definition for the collective action:
All current and former hourly paid, non-exempt Production Employees who were employed by Defendant at any of its production facilities in the United States between March 2, 2015 and March 2, 2018 and who received a "wage incentive bonus" that was not included in their regular rate(s) of pay for overtime compensation purposes in workweeks when said employees worked in excess of forty (40) hours during the representative time period for which the "wage incentive bonus" covered.
(Docket # 17 at 1). Weninger asks the Court to authorize the notice for putative class members he prepared and attached to his motion. Id. at 14; (Docket # 16-1).
He proposes a 45-day opt-in period, after which he will seek full certification of the collective action. (Docket # 17 at 15). To facilitate notice to putative class members, he requests that General Mills be ordered to provide his counsel with the names and last known address of all such persons within ten days, so that the notice may be sent to them by mail. Id. at 13. For those whose mailed notice is returned unsent, he asserts that General Mills should provide telephone numbers, email addresses, and dates of birth, to help counsel locate those individuals. Id. Finally, Weninger requests that the Court direct General Mills to post his proffered notice conspicuously at its production facilities during the opt-in period, in the areas where it posts other legally required notices. Id. at 13-14.
*1013General Mills offers several counterarguments. First, it claims that only the Milwaukee production facility utilized the Wage Incentive Bonus Weninger describes. (Docket # 20 at 3-6). Some of its facilities had different hourly incentive programs, as the programs were administered locally. Id. Some of these programs considered similar factors on a general level, such as multiplying eligible earnings by a percentage derived from site productivity, but the particulars of each plan differed. Id. Further, some incentive programs were arranged through collective bargaining agreements for facilities where the workforce was unionized. Id. Still other facilities had no such program at all or were closed during the relevant period. Id. This diversity persisted from at least the start of the class period, March 2, 2015, until May 31, 2017, when General Mills adopted a uniform bonus plan. Id. Weninger had left the company in early May 2017, prior to the institution of this new plan. Id.
Given the discrepancies in bonus structures across production facilities, General Mills says that Weninger has not established that a sufficient number of other General Mills workers are similarly situated to him as a factual matter. Id. at 15-18. Weninger counters that the proposed collective action definition excludes anyone who did not receive a wage incentive bonus, which helps alleviate concerns of overbreadth. (Docket # 28 at 8). Moreover, the existence of different formulae and criteria for wage incentive bonuses at different facilities is, according to Weninger, a question about calculating damages, not a question about whether General Mills' compensation structure was lawful. Id. at 9. The key, in Weninger's view, is that wage incentive bonuses were not recomputed into employees' regular rates for overtime purposes or were not calculated using the employees' total earnings. Id. at 9-10.
In this vein, General Mills faults Weninger's evidentiary submissions as conclusory and insufficient to establish that others were similarly situated to him. (Docket # 20 at 15-18). The Court disagrees. While Weninger's own testimony is somewhat vague as to whether other nonexempt employees at the Milwaukee facility enjoyed similar bonuses, see Boyd v. Alutiiq Global Solutions, LLC , No. 11-cv-0753,
Second, General Mills argues that Weninger needed to, but did not, provide evidence that other employees desire to opt in to the litigation. (Docket # 20 at 18-19). Weninger did not respond to this argument, but the argument is without merit in any event, as the purpose of providing evidence of other interested class members is to assure the Court that they exist. Davis v. Charoen Pokphand (USA), Inc. ,
*1014Given the broad allegations of unlawful bonus practices across General Mills facilities, the Court is reasonably confident that putative members exist and would be interested in the litigation.
Third, General Mills disputes Weninger's proposed notification procedures. It resists giving out very personal identifying contact information or personnel data for those whose mailed notice is returned. (Docket # 20 at 19-20). The Court agrees that providing the telephone numbers, email addresses, and birthdates of these persons is overly intrusive, at least at this time. Between first-class mailing and posting the notice in production facilities, sufficient initial efforts will have been made. See Castillo v. P & R Enter., Inc. ,
Fourth, General Mills asks the Court to order Weninger to pay for a third party to administer the notice and receive and file opt-in forms. (Docket # 20 at 21). The Court finds that third-party administration is unnecessary in this case. While the appointment of an administrator is useful in cases where there are deep divides between the parties and their counsel, see Cannon ,
Fifth, General Mills chafes at the request to post the notice at its facilities, citing the usual effectiveness of mail and its First Amendment right not to advocate for the litigation. (Docket # 20 at 22-23). The Court finds that posting at General Mills' facilities is appropriate. The Code of Federal Regulations already requires the company to post a notice of employees' FLSA rights "in conspicuous places in every establishment where such employees are employed so as to permit them to observe readily a copy."
Finally, General Mills contends that the notice must include a line informing putative class members that they have a right to consult any attorney they choose, not only Weninger's counsel. (Docket # 20 at 22-23). Weninger did not contest the proposed amendment to the notice, (Docket # 28 at 10), so the Court will sustain General Mills' objection in this regard, Tolentino v. C & J Spec-Rent Servs. Inc. ,
3. CONCLUSION
For the reasons stated above, the Court is obliged to deny General Mills' motion for partial summary judgment on Weninger's FLSA claim. Weninger's motion for conditional certification of his proposed FLSA collective action will be granted, and an amended trial scheduling order will be issued to accommodate the need for a notice and opt-in period. Further, the Court will summarize its findings as to the form and manner of notice below.
Accordingly,
IT IS ORDERED that Defendant's motion for partial summary judgment (Docket # 21) be and the same is hereby DENIED without prejudice ;
IT IS FURTHER ORDERED Plaintiff's motion for conditional certification of his FLSA collective action (Docket # 16) be and the same is hereby GRANTED in part as stated herein; and
IT IS FURTHER ORDERED that the following protocols will govern the notice and opt-in period to be scheduled in the amended trial scheduling order issued contemporaneously with this Order:
(1) Plaintiff shall amend his proposed notice in conformity with the Court's instructions herein and provide copies to Defendant's counsel for posting.
(2) Defendant shall produce to Plaintiff's counsel, within ten (10) days of the date of this Order, the names and last known addresses of all putative collective action members. Plaintiff shall thereafter promptly send the notice to these individuals by first-class U.S. mail.
(3) Defendant shall post the notice conspicuously in its U.S. production facilities, in the areas where it posts other legally required notices, during the opt-in period.
(4) Plaintiff's counsel shall promptly file with the Court any opt-in notices it receives from putative collective action members.
(5) During the notice and opt-in period, the parties may engage in further discovery, including discovery relevant to the final certification of the collective action.
The complaint broadly alleges a failure to include "non-discretionary compensation, such as bonuses, commissions, incentives, and/or other rewards" in employees' regular rates. (Docket # 1 ¶ 59). The motion for conditional certification, however, limits the claim to one bonus only, the Wage Incentive Bonus. (Docket # 17 at 1).
Weninger challenges the validity of
In his reply in support of his motion for conditional certification, Weninger posited that General Mills also improperly excluded a "perfect attendance" bonus from his regular rate of pay, in addition to the Lump Sum Merit Bonus. (Docket # 28 at 7). An attendance bonus undoubtedly should be included in an employee's regular rate.
General Mills also contends that Weninger has had sufficient time to perform the needed discovery, but at the same time it admits that it produced his pay records only two weeks before filing its motion for partial summary judgment. (Docket # 32 at 3). Likewise, it identified Jaehnig as the most knowledgeable person on this topic at that time. Id. at 4. Because of this, the Court does not discern a lack of diligence in Weninger's failure to obtain the discovery he now seeks prior to the filing of General Mills' motion. See H-D U.S.A., LLC v. SunFrog, LLC ,
For two reasons, the Court is obliged to grant conditional certification at this time without permitting additional development of the record so as to answer the legal questions posed by General Mills' motion for summary judgment. First, the class or non-class status of an action should generally be determined early in the case, before a merits ruling. See Premier Elec. Constr. Co. v. Nat'l Elec. Contractors Ass'n, Inc. ,