United States District Court, D. Connecticut
OPINION AND ORDER RE: PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT (DOC. 56)
Geoffrey W. Crawford, Judge
Plaintiffs Jorge Morales Velasquez ("Morales") and Wilder Gonzalez ("Gonzalez") bring this action against Defendants U.S. 1 Farm Market, Inc. and Sangwook Chen ("Chen"), alleging minimum wage and overtime violations under both the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., and the Connecticut Minimum Wage Act (CMWA), Conn. Gen. Stat. §31-58 et seq. (Doc. 14 at 5.) Plaintiffs seek summary judgment as to their FLSA and CMWA claims, damages for unpaid minimum wage and overtime, and a separate award of liquidated damages under both the FLSA and CMWA. The court heard argument on Plaintiffs' Motion on February 18, 2016. For the reasons discussed below, Plaintiffs' Motion for Summary Judgment (Doc. 56) is GRANTED in part and DENIED in part.
I. Undisputed Facts
Defendants U.S. 1 Farm Market, Inc. and Sangwook Chen operate a grocery store, U.S. 1 Farm Market ("Farm Market"), in New Haven, Connecticut. Farm Market has out-of-state bank accounts and accountants, and buys and sells goods, including produce and meat, which travel in interstate commerce. During the relevant time period, the store had gross annual sales in excess of$500, 000.
Chen is the president of U.S. 1 Farm Market, Inc. He owns 50% of its common stock and holds himself out to be Farm Market's owner. Farm Market is a "mom and pop" type of operation and all of its corporate officers and managers are, with one exception, members of Chen's family. (Doc. 56-2 at ¶¶ 10-11; Doc. 64 at ¶¶ 10-11.) Chen's wife, Ken Hwa Ko, owns the other 50% of U.S. 1 Farm Market, Inc.'s common stock and is the corporation's vice president. Ko does not have an active managerial role in the business. Chen, as owner and President of Farm Market, hired the other family members to work as store managers.
Chen fixed the hours of Farm Market's operation to be the same as those established by his predecessor. Chen posted notices when the store was hiring new workers. He shared the power to hire new employees with both his daughter and daughter-in-law. He played a role in determining employee pay.
Morales began working at Farm Market in July 2011. He worked as a butcher in the store's meat section. Morales worked six days a week. He worked from 8:00 a.m. to 8:00 p.m. for five days, and from 8:00 a.m. to 6:00 p.m. on one day, for a total of seventy hours per week. Morales took a half-hour unpaid lunch each workday, resulting in sixty-seven compensable work hours per week. At the start of his employment, Morales was paid $400 per week. After about three months, he asked Chen for higher pay and received a raise of $20 per week. After three more months, Morales asked Chen for another raise and received an additional $25 per week, for a total weekly pay of $445. Approximately one year and four months after Morales first began working at Farm Market, he again requested a raise from Chen and was told he would receive another $20 raise in six months. Thereafter, Chen did not meet Morales's pay demands and Morales decided to seek employment elsewhere. His last day of work at Farm Market was April 17, 2013.
Gonzalez started working as a produce clerk in Farm Market on or about January 9, 2012. He worked six days a week. Gonzalez also worked from 8:00 a.m. to 8:00 p.m. for five days, and from 8:00 a.m. to 6:00 p.m. on one day, for a total of seventy hours per week. Gonzalez took a half-hour unpaid lunch break every day, resulting in sixty-seven compensable work hours per week. Like Morales, Gonzalez was paid $400 per week at the start of his employment with Farm Market. In August 2012, he asked Chen for higher pay. From September 2012 to March 23, 2013, Gonzalez was paid $420 per week. Thereafter, Gonzalez again asked Chen for a wage increase. For the following two weeks, Gonzalez was paid $440 per week, During the first week of April 2013, Gonzalez again approached Chen and asked for another raise. Gonzalez did not receive a pay increase and April 6, 2013 was the last day he worked at Farm Market.
During the entirety of their respective employments with Farm Market, both Plaintiffs were paid flat weekly rates. Their weekly wages did not vary depending on how many hours they worked. Plaintiffs were also not paid an overtime premium for working hours in excess of forty in a week. Plaintiffs were paid in cash and entirely "off the books." Chen helped make the decision to not report their salaries in Farm Market's corporate income tax returns. Farm Market kept no records whatsoever regarding Plaintiffs' employment.
II. Disputed Facts
The parties dispute how many hours Chen worked in Farm Market each day. Plaintiffs allege he was there every day from mid-afternoon until closing. (Doc. 56-2 at ¶ 19.) Defendants submit that Chen was rarely there because he was in poor health during much of Plaintiffs' employment. (Doc. 64 at ¶19; Doc. 64-2 at 10-11, 26.) On the days that he would go to Farm Market, Defendants allege that he would only stay for two or three hours. (Doc. 64-2 at 10-11.)
The parties also disagree about the extent of Chen's managerial role at Farm Market. Plaintiffs contend that Chen "monitored employees at [Farm Market], directed them in their daily tasks, assigned new tasks, and enforced their work schedule." (Doc. 56-2 at ¶ 20.) Defendants dispute these claims, contending that because of Chen's health, his children acted "on behalf of [him] as the secretary and managers." (Doc. 64 at ¶ 20; Doc. 64-1 at 15.)
The parties also dispute Chen's reaction to each Plaintiffs' final raise request. Morales contends that when he complained about Chen not raising his wages as promised, Chen told him he was crazy and could either continue working for $445 per week or find new employment. (Doc. 56-2 at ¶¶ 33-34.) Defendants dispute this claim and allege that Chen offered to increase Morales's pay to $470/week during their last wage conversation. (Doc. 64 at ¶¶ 33-34; Doc. 64-2 at 30-31.) Similarly, Gonzalez contends that during his final raise conversation with Chen, Chen angrily refused to higher his pay and told him that if he wanted more money he should look for another job. (Doc. 56-2 at ¶¶ 44-45.) During that conversation, Gonzalez also alleges that Chen asked, "Why do all the fucking Guatemalan guys only think about money?" (Id. at ¶ 45.) Chen denies having made these statements. (Doc. 64 at ¶ 45; Doc. 64-2 at 31-32.)
I. Summary Judgment Standard
A party is entitled to summary judgment when it 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). "Material facts" are those that, under the applicable substantive law, "might affect the outcome of the suit." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute over a "material fact" is "genuine" only if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. "[A]ll ambiguities must be resolved and all inferences drawn in favor of the party against whom summary judgment is sought." Gallo v. Prudential Residential Servs., Ltd. P'ship, 22 F.3d 1219, 1223 (2d Cir. 1994) (citation omitted).
Summary judgment is appropriate "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing Fed.R.Civ.P. 56(c)). While "the burden is upon the moving party to demonstrate that no genuine issue respecting any material fact exists, " the moving party "may obtain summary judgment by showing that little or no evidence may be found in support of the nonmoving party's case." Gallo, 22 F.3d at 1223-24 (citations omitted). This is because "[w]hen no rational jury could find in favor of the nonmoving party because the evidence to support its case is so slight, there is no genuine issue of material fact and a grant of summary judgment is proper." Id. at 1224 (citation omitted).
A party opposing a properly pleaded summary judgment motion "may not rest upon mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256 (citations omitted); see Wolinsky v. Standard Oil of Conn., Inc., 712 F.Supp.2d 46, 51 (D. Conn. 2010) (nonmoving party may only defeat summary judgment by "com[ing] forth with specific facts, supported by non-conclusory, admissible evidence, that demonstrate the existence of a dispute of material fact" (citations omitted)). If the nomnovant offers evidence that "is merely colorable, or is not significantly probative, summary judgment maybe granted." Anderson, 477 U.S. at 249-50 (citations omitted).
II. FLSA Claims Against Farm Market
The FLSA obligates the provision of minimum wage and overtime to employees who "are employed by an enterprise that is engaged in interstate commerce or in the production of goods for interstate commerce." Marin v. JMP Restoration Corp., No. 09-CV-1384 (CBA)(WP), 2012 WL 4369748, at *3 (E.D.N.Y. Aug. 24, 2012) (citing 29 U.S.C. § 207(a)(1)); see 29 U.S.C. § 206(a). At all times relevant to the Complaint, the minimum wage under the FLS A was $7.25 an hour. See 29 U.S.C. § 206(a)(1). As for overtime, "[i]n general, the FLSA provides that an employee who works more than forty hours in a given week is entitled to compensation at 'one and one-half times the regular rate at which he is employed."' Costello v. Home Depot USA, Inc., 944 F.Supp.2d 199, 202 (D. Conn. 2013) (quoting 29 U.S.C. § 207(a)).
A. Farm Market was an Enterprise Engaged in Interstate Commerce
"Commerce" as defined under the FLSA means "trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof." 29 U.S.C. § 203(b). An "enterprise engaged in commerce or in the production of goods for commerce" is one that "has employees engaged in commerce or in the production of goods for commerce, or that has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person, " and whose annual gross volume of sales equals or exceeds $500, 000. Id. at §§ 203(s)(l)(A)(i)-(ii).
It is undisputed that Farm Market was an enterprise engaged in interstate commerce or in the production of goods for commerce.
B. Farm Market was Plaintiffs' Employer Under the FLSA
The FLSA defines an "employee" as "any individual employed by an employer, " and an "employer" as "any person acting directly or indirectly in the interest of an employer in relation to an employee, " 29 U.S.C. §§ 203(d), (e)(1). The Act defines "employ" as "to suffer or permit to work." Id. at § 203(g).
It is undisputed that Plaintiffs were employees of Farm Market for purposes of the FLSA and that Farm Market was their employer under the FLSA.
C. Farm Market Did Not Provide Plaintiffs With Minimum Wage and Overtime Compensation, as Required
In FLSA actions for unpaid minimum wage and overtime compensation, the employee generally bears "the burden of proving that he performed work for which he was not properly compensated." Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 686-87 (1946), superseded by statute on other grounds. However, where an employer fails to keep proper employment records, as required, see 29 U.S.C. § 211(c), a burden-shifting framework applies. See Mt. Clemens, 328 U.S. at 687-88. Under the Aft. Clemens framework, "where the employer's records are inaccurate or inadequate" as to an employee's "wages, hours and other conditions and practices of employment, " then "an employee has carried out his burden if he proves that he has in fact performed work for which he was improperly compensated and if he produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference." Id. at 687. Once the employee has met his initial burden, the burden:
[S]hifts to the employer to come forward with evidence of the precise amount of work performed or with evidence to negative the reasonableness of the inference to be drawn from the employee's evidence. If the employer fails to produce such evidence, the court may then award damages to the employee, even though the result be only approximate.
Id. at 687-88 (citation omitted). Defendants admit that they kept no records whatsoever regarding Plaintiffs' employment. Therefore, the Mt. Clemens framework applies to Plaintiffs' claims.
Plaintiffs have met their initial burden under this framework. The Second Circuit has held that this burden "is not high, " and that "it is well settled . .. that it is possible for a plaintiff to meet this burden through estimates based on his own recollection." Knebel v. Black & Decker Inc., 643 F.3d 352, 362 (2d Cir. 2011) (citations omitted); see Mt. Clemens, 328 U.S. at 687 (remedial nature of FLSA militates against making employee's burden an "impossible hurdle"). Plaintiffs have provided deposition testimony and sworn declarations indicating the number of hours they worked and the amount of compensation they received. Both have testified that they worked six days a week for a total of 67 compensable hours. Morales testified that he was paid $400 per week for his first three months of employment; $420 per week for the next three months; and $445 per week for his last fifteen months. Gonzalez declared that he was paid $400 per week for his first thirty-four weeks of employment; $420 per week for the next twenty-nine weeks; and $440 per week for the last two weeks. Therefore Morales's highest hourly rate was $6.64 ($445 divided by 67 hours), and Gonzalez's highest hourly rate was $6.57 ($440 divided by 67 hours). Both of these rates are below the federal minimum wage. Additionally, both Plaintiffs testified that they did not receive an overtime premium for weekly hours worked in excess of forty. Accordingly, Plaintiffs have made out their prima facie case that Defendants violated the minimum wage and overtime provisions of the FLSA.
Under Mt. Clemens, the burden now shifts to Defendants to produce evidence that either shows "the precise amount of work performed" or "negative[s] the reasonableness of the inference to be drawn from the employee's evidence, " 328 U.S. at 687-88. Here, however, Defendants have not offered any such evidence, as they do not dispute Plaintiffs' claims regarding the amount of wages paid or the amount of hours worked. Nor do Defendants dispute that Plaintiffs made less than $7.25 an hour and did not receive overtime compensation for hours worked in excess of forty. Rather, they admit that Plaintiffs "were paid fixed salaries regardless of the amount of time they worked, " (Doc. 64 at 4), and argue that Plaintiffs were exempt from the FLSA's protections because they were paid on this salary basis. But this defense is insufficient to defeat Plaintiffs' motion for several reasons.
First, as noted by Plaintiffs, exemptions are affirmative defenses that must be specifically pleaded. See Corning Glass Works v. Brennan, 417 U.S. 188, 196-97 (1974) (“[T]he application of an exemption under the [FLSA] is a matter of affirmative defense on which the employer has the burden of proof") (citations omitted). Defendants have neither referenced a specific exemption nor sufficiently pled such a defense. Second, Defendants misunderstand the "salary basis" test codified at 29 C.F.R. § 541.602. The salary basis test is a component of certain exemptions to the FLSA, not an exemption in and of itself If an employee's primary duty is not the type of work specifically exempted under the Act, the salary basis test is not applicable. Here, Plaintiffs held the positions of butcher and produce clerk. These jobs do not fall within any recognized FLSA exemption. See 29 U.S.C. § 213. Third, even if Plaintiffs' job duties were of the type exempted under the Act, they would not be exempted simply because they were paid on a ...