Lady Gaga Wage Saga Continues

In O’Neill v. Mermaid Touring Inc. (SDNY 11-9128 Sept. 10, 2013), the court granted defendants’ motion for summary judgment in part, and denied it in part.

The decision is instructive on various issues in the wage/hour context, including the geographic limitations of the Labor Law, the extent to which “on call” time is compensable, and the proper application of the “fluctuating workweek” methodology of overtime computation.

The Facts, Briefly

Plaintiff alleges that Lady Gaga and her touring company failed to pay per proper wages, including overtime, under the Fair Labor Standards Act and the New York Labor Law. She claims (generally) that she was paid $75,000 per year to be “on call” for Gaga (for most of her employment) “24/7”.  No time records were kept.

Plaintiff’s “job duties” can be gleaned from Gaga’s testimony regarding the time requirements of the job:

 

You don’t get a schedule. You don’t get a schedule that is like you punch in and you can play fucking Tetris at your desk for four hours and then you punch out at the end of the day. This is when I need you, you’re available.

Defendants sought summary judgment on three points, namely, that:

  1. Plaintiff is not entitled to overtime compensation under the Labor Law for hours she worked outside of New York;
  2. Plaintiff’s alleged “on call” time is not compensable; and
  3. Any overtime compensation due plaintiff should be calculated at half-time, rather than at time-and-a-half.

Extraterritorial Effect

As to point 1, the court applied the “settled rule of statutory interpretation that unless expressly stated otherwise, no legislation is presumed to be intended to operate outside the territorial jurisdiction of the state enacting it.”

Since the laws under which plaintiff asserts her claims – 12 NYCRR § 142-2.2 and Labor Law § 198(1-a) – “contain no clear statement of intended extraterritorial effect”, the court ruled for defendants on this issue.

Plaintiff’s domicile and residence were irrelevant, since “the crucial issue is where the employee is ‘laboring,’ not where he or she is domiciled.”

“On Call” Time

Defendants argued that plaintiff may not recover for “on call” time when she was able to engage in activities of her choice while “on call”.

The court first noted the Second Circuit’s definition of “work” as

exertion or loss of an employee’s time that is (1) controlled or required by an employer, (2) pursued necessarily and primarily for the employer’s benefit, and (3) if performed outside the scheduled work time, an integral and indispensable part of the employee’s principal activities.

The court then discussed the legal principles governing when “on call” time is compensable under the FLSA:

Work need not be performed during scheduled on-duty hours for an employee to receive compensation. Where the work conducted during disputed overtime hours is the same as an employee’s regularly scheduled activities, then those overtime hours are necessarily compensable. Moreover, even idle time may be considered work if it is predominantly for the employer’s benefit. [A]n employer, if he chooses, may hire a man to do nothing, or to do nothing but wait for something to happen[.]  [W]orking time is not limited to the hours spent in active productive labor, but includes time given by the employee to the employer even though part of the time may be spent in idleness. …

Time spent away from the employer’s premises under conditions that are so circumscribed that they restrict the employee from effectively using the time for personal pursuits constitutes compensable hours of work. However, where employees on call are not confined to their homes or to any particular place, but may come and go as they please, provided that they leave word where they may be reached, the hours spent ‘on call’ are not considered as hours worked.

To avoid liability for on-call hours, an employer must definitely tell the employee in advance that he may leave the job and that he will not have to commence work until a definitely specified hour has arrived. Whether the time during which an employee can leave the job is long enough to enable him to use the time effectively for his own purposes depends upon all the facts and circumstances of the case.  When periods of inactivity are unpredictable and usually of short duration, and the employee is unable to use the time effectively for his own purpose, then the employee is “engaged to wait,” and the inactive time constitutes “work” time under the FLSA – even if the employee is allowed to leave the premises or the job site during such periods of inactivity.

Courts have consistently held that “on-call” time can constitute work and is compensable under the FLSA where an employer restricts an employee’s ability to use time freely for the employee’s own benefit.

The court held that plaintiff’s “on call” time could potentially qualify as “work” (and hence for overtime compensation), but that questions of fact precluded any determination concerning how much of plaintiff’s “on call” time constituted “work”. Specifically, there was conflicting evidence as to whether plaintiff was able to use time “on call” for personal use.

While there was evidence that, for example, Gaga and plaintiff slept in the same bed and that plaintiff was required to satisfy any demand that Gaga might have during the night, there was a jury question as to how much of plaintiff’s time was “so circumscribed” by Gaga that plaintiff was “effectively using the time for personal pursuits.”

Amount of Overtime Compensation – Fluctuating Workweek

Defendants relied on the “fluctuating workweek” (FWW) methodology of overtime compensation set forth in 29 C.F.R. § 778.114(a) to support their argument that since plaintiff received a $75,000 salary, she is only entitled to an overtime premium of half-time, rather than the typical time-and-a-half, for hours in excess of 40 per week.

The court noted that neither the Second Circuit, nor any Southern District court, has opined on whether the FWW methodology “may be applied retroactively to determine the measure of overtime damages for employees – such as [plaintiff] – who have been misclassified as exempt.”

Initially the court concluded that defendants did not establish the “factual predicate” for applying the FWW method.  Here, there is a factual dispute as to whether plaintiff “worked fluctuating hours from week-to-week, or was instead required to be available to [Gaga] ’24/7.'” Therefore, the court was unable to rule as a matter of law that the FWW methodology applied in this case.

The court agreed with decisions finding that the FWW methodology is “not applicable to calculation of overtime damages where an employee has been misclassified.”  It reasoned:

Here, as presumably in all misclassification cases, there was no contemporaneous payment of overtime compensation, nor was there a clear mutual understanding between the parties that the fixed salary is compensation (apart from overtime premiums) for the hours worked each workweek.  [I]n every misclassification case, there was an understanding – at least on the part of the employer – that the employee was not entitled to overtime compensation.

It therefore concluded that the FWW methodology “was never intended to be applied retroactively to calculate overtime compensation damages for a misclassified employee and may not properly be used for that purpose.”

The court ultimately declined to award summary judgment to defendants:

Given the material issues of fact concerning whether or not [plaintiff] had a fluctuating work schedule, the absence of authority in this Circuit as to the proper measure of overtime damages for a misclassified employee, and the split of opinion in the federal courts outside New York as to the proper measure of overtime damages for a misclassified employee, this Court will not grant summary judgment on this issue absent a factual finding from the jury as to whether [plaintiff’]’s employment involved fluctuating hours or instead was “24/7,” as she has maintained.

Trial in the case is set to begin November 4, 2013.

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