Preview
1 BLUMENTHAL NORDREHAUG BHOWMIK DE BLOUW L L P
Norman B. Blumenthal (State Bar #068687)
2 Kyle R. Nordrehaug (State Bar #205975)
Aparajit Bhowmik (State Bar #248066)
3 Victoria B. Rivapalacio (State Bar #275115)
2255 Calle Clara
4 La Jolla, CA 92037
Telephone: (858)551-1223
5 Facsimile: (858) 551-1232
6 Attomeys for Plaintiff
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10 SUPERIOR COURT OF T H E STATE OF CALIFORNIA
11 IN AND F O R T H E C O U N T Y O F S A C R A M E N T O
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13
ANDREA SPEARS, an individual, on behalf CaseNo. 34-2017-00210560-CU-OE-GDS
14 of herself and on behalf of all persons
similarly situated. CLASS ACTION
15
16 Plainfiff DECLARATION OF APARAJIT BHOWMIK IN
SUPPORT OF PLAINTIFF ANDREA SPEARS'S
17 vs. OPPOSITION TO DEFENDANT'S MOTION
FOR SUMMARY JUDGMENT
18 HEALTH NET OF CALIFORNIA, INC., a
Califomia Corporation; and Does 1 through
19 50, Inclusive,
Telephone Appearance
iY FAX
20 Defendants.
Reservafion No. 2313007
21
TOMAS R. ARANA, on behalf of himself, Hearing Date: April 26, 2018
22 all others similarly situated, Hearing Time: 9:00 a.m.
Judge: Hon. Steven H. Rodda
23 Plainfiff Dept.: 54
24 vs. Action Filed: April 5,2017
25 HEALTH NET OF CALIFORNIA, INC., a
Califomia corporation; and DOES 1 through
26 50, inclusive.
27 Defendants.
28
DECL AJB ISO OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
CASE No. 34-2017-00210560
1
2 DECLARATION OF APARAJIT BHOWMIK
3 I , APARAJIT BHOWMIK, declare as follows:
4 1. I am an attomey at law duly licensed to pracfice before all of the courts of the State of
5 Califomia. I am a partner with the law firm of Blumenthal Nordrehaug Bhowmik De Blouw LLP, attomeys
6 of record for Plaintiff Andrea Spears. I have personal knowledge of the facts set forth herein, and if called
7 as a witness, could and would tesfify competenfiy thereto.
8 2. The payments Plainfiff contends should have been included in her regular rate payments
9 appear on Plaintiffs paystub as MedFlxWave. A tme and correct copy of one of these paystubs with this
10 kind of payment is attached hereto as Exhibit 1 and at page HNCA000078 the payment can be seen in the
11 amount of $20. Defendant's motion is not claiming that the "DenFlxElct" payment should have been
12 excluded from the regular rate. This payment is shown at HNCA000078 in the amount of $7.54.
13 3. A tme and correct copy of the portion ofthe Ninth Circuit's decision in Flores vs. City of
14 San Gabriel is attached hereto for the Court's convenience as Exhibit 2 with the highlight and underline
15 added as to the secfion regarding whether cash in lieu ofbenefits should be included in the regular rate.
16 4. A tme and correct copy of the 2011-2015 Summary Plan Description is attached hereto as
17 Exhibit 3 for the Court's convenience. This is the same document attached as Exhibit "J" to the Declaration
of Debbie Colia filed by Defendant.
19 5. A tme and correct copy ofthe 2016 Summary Plan Description is attached hereto as Exhibit
20 4 for the Court's convenience. This is the same document attached as Exhibit "K" to the Declaration of
21 Debbie Colia filed by Defendant.
22 I declare under penalty of perjury under the laws ofthe State of Califomia and the United States that
23 the foregoing is tme and correct. Executed at La Jolla, Califomia on April 10, 2018.
24
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26 A.J. Bhowmik
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PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
2 CASE No. 34-2017-00210560
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EXHIBIT NO. L
f^'\ •
Horns Add tb FavqHies Sigh out
View Self Service Paydheck
Andrea Spears
Nat Pay: •41.B50.73
Company::
Health Malof Carifomia. Inc Pay BeglnDate: IKtiSIZOiS
AddrcBs:
Pay^ind Oate: .0^26/2015
t1971. FoundaBbniRtace
Checkbato; 07/i>2/2Qi$
Health Nat Payroll Ceritw
Rancho Gdrdova. CA,SS870 yiEw.a; PHferentiPavcheeh
General
Name: AndiBa J S|»are: Business Uiilt. . FHS 01:
;Etnpipye« ID: oasieo Pay-©roup: Gan Reautar.Assodatss
Address: 8567 NewMolJntain Way ' Departnfetit: 5a.5fl2.-4P,01r«.Cust;Svc Cmrd
Sacrarhento, CA 9S828 Loaatlon: Ranicbo CfltdOTarliloai Sun Cente
PftyRaie;: »2.5{«).qq Ahhual
Tax Data
-
Fed Marital Status! Exempt. . c j t t . M a r N Status; SInglei or lyiarrted wtth ftvo or mors fncp
Fed Atlonances: 7 .CA;AiIawadces: 3
Fed-Add! Percent; D.oiia CALAddl PeicaAt: ojxa
Fed Addl Arhbunt $o.oa CA Addl Amount::
Payclieck SummaiY
Gross eoniing?! total Tsjcfi^l . Totflj-Qfiducllonsl fiafPay
Current 1,7S8;01 • 1,7!t9.B4 188:81 1^50;78
Earnings Taxes , 1
Pay Begin- 1 Piy End DWrljptlbn | Aniouiit
Osscrfp'ttDn 1 Hours 1 Rataj
.Date Ipkte
FadWithholdng
Reg ME 60.00'iS,62600D 1:250,00
F6tiMEDI£& 25.37
OVBiUme 1 20,50 -23.4375i00 480.47
NdOASDI/EE 108.47
MedFlxWave 20.00
bAWilhhaldng 49.93
tDeuFlxElct .yM
CA.OASp«EE 15.74!
Total: 198.91
Total: 1P0.5C! 1,758.01
B^bre-Tax deductions Altqr lex. Deduotfoqa ' ] Emidoyer Pakt Ben^Jite
bescriplibrt f. Amqurit PitasrtptioTi Amount DMcilp'tlpn
Denial 8;37 3.S4
Baste ura 1,74;
mo 043^
STD 3.64'
m 3(38'
' Taxatile
Total: 8.^7 Total: Totab ize3^
jyet;P^ Dl^^ribyU^
payment%pff • IP^cheeKtlumbar ].Ai:eouiitTyp,e fjCcouirt Nwiiier ] Amount
DirectOeppsIt 3282276 CKeeWng 79342390 1,550:73
HNCA000078
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EXHIBIT NO. 2.
Sk Caution
As of: Februaiy 12, 2018 7:21,PM Z
Flores v. City of San Gabriel
United States Court of Appeals for the Ninth Circuit
February 10, 2016, Argued and Submitted, Pasadena, Cahfomia; June 2, 2016, Filed
Nos. 14-56421,14-56514
Reporter
824 F.3d 890 *; 2016 U.S. App.,LEXIS 10018 **; 166 Lab. Cas. (eCH).P36,448; 26 Wage & Hour Cas. 2d (BNA)
914
faith, requirements, complied, hours worked,
DANNY FLORES; ROBERT BARADA; KEVIN
designation, provides, qualify, summary judgment,
WATSON; VY VAN; RAY LARA; DANE
WOOL WINE; RUCIMARU N A K A M U R A ; violations, unused, opinion letter
CHRISTOPHER WENZEL; SHANNON
CASILLAS; JAMES JUST; STEVE
Case Summary
RODRIGUES; ENRIQUE DEANDA, Plaintiffs-
Appellees/Cross-Appellants, and CRUZ Overview
HERNANDEZ, Plaintiff-Appellee, and GILBERT
LEE; RENE LOPEZ, Plaintiffs, v. CITY OF SAN HOLDINGS: [1]-A city's cash-in-lieu of benefits
GABRIEL, Defendant-Appellant/Cross-Appellee. payments to police officers were not properly
excluded from the calculation of the regular rate of
Subsequent History: US Sijpreme Court certiorari pay under 29 aSCS. ? 207'{e)(2} because the
denied by San Gabriel v. Flores. 2017 U. S. LEXIS pajThent was compensation for work; [2]-The cash-
3062 rU.S, Mavis. 2017) in-lieu of benefits payments were also not properly
excluded frprn the calculation ofthe regular rate of
Prior History: [**1] Appeal from the United pay under ^ 207(e)(4) because the city paid the
States District Court for the Central District of unused benefits directly to its employees and not to
California. D.C. No. 2:12-cv-04884-JGB- JCG, a trustee or third person; [3]-'rhe city satisfied the
Jesus G. Bemal, District Judge, Presiding. criteria for application of the ^ 207(k) exeinption by
adopting an eighty-hour/fourteen-day work period
for its law enforcement officers and by paying
Flores v. City of San Gabriel. 969 F. Supp. 2d
overtime in accordance with that period since 1994;
1158. 2013 as Dist. LEXIS 124122 (CD. Cal:
[4]-Plaintiffs Avere entitled to liquidated damages
2013)
under 29 US.C.S. $ 260 because the, city failed to
Disposition: AFFIRMED IN PART, REVERSED demonstrate that it attempted to comply with the
IN PART, AND REMANDED. FLSA in good faith.
Outcome
Core Terms
Jiidgment affirmed in part, reversed in part, and
benefits, regular rate, exerhption, overtime, cash-in- case remanded.
lieu, employees, work period, ^yillful, statute of
limitations, liquidated damages, calculation, bona LexisNexis® Headnoties
f\de, benefit plan, properly excluded, contributions.
Flexible, partial, district court, third party, good
AJ BHOWMIK
Page 2 of 19
824 E.3d 890, *890; 2016.U.S. App. LEXlS 1.0018, **1
FLSA has a two-year statute of limitations for
claims unless the employer's violation was
Business & Corporate Compliance > ... > Wage "willfiil," in which case the statute of limitations is
& Hour Laws > Scope & extended to three years. 29 U.S.C^S. ^ 255(a)• An
Definitions > Overtime & Work Periods employer who violates the FLSA's overtime
provisions is liable in the amount of the erhployee's
Labor & Employment Law > ... > Scope & unpaid oyertime compensation, in addition to an
Definitions > Exemptions > Emergency equal iamoiint in liquidated damages. 29 i7.5.CiS'. §
Personnel 216(b)• The FLSA provides a defense to liquidated
damages for an employer who establishes that it
Labor & Employment Law > Wage &. Hour
acted in good faith and had reasonable groimds to
Laws > Scope & Definitions > Regular Rate
believe that its actions did not violate the FLSA- 29
HNIX^^ Scope & Coverage, Overtime & Work U:S.CS $.260.
Periods
Under the Fair Labor Standards Act ( F L S A ) , 29 Civil Prbcedure > ... > Summary
U^S^C.S^ fl? 201-19. an employer must pay its .Tudgment > Motions for Summary
employees premium overtime compensation of one Judgrnent > Cross Motions;
and one-half tirries the regular rate of payment fbr
any hours worked in excess of forty in a seven-day Civil Procedure > Judgments > Summary
work week. The "regular rate" is defined as all. Judgment > Entitlement as Matter of Law
remuneration for employment paid to, or on behalf
of, the employee, subject, to a number of exclusions Civil Procedure > Appeals > Summary
set forth in the Act! 29 U.S^C.S. $. 207(e)^ The Judgment Review > Standards of Review
FLSA also provides a limited exemption fiom the
oyertime limit to public employers of law ///VifAl Motions for Summary Judgment,
enforcement persoimel orfirefighters.29 U^S^C^S^ f Cross Motions
.207(k). The partial overtime exemption in f 207(k)
The court of appeals reviews a grant of summary
increases the overtime limit slightly and it gives the
judgment or partial summary judgment de novo,
employer greater flexibility tb select the work
applying the same standard of review as the district
period over which the overtiine limit will be
court under Fed. R^ C;v. P. 56. Under Rule 56, a
calculated.
court shall grant summaiiy jiidgrherit i f the movant
shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment
Labor & Employment Law > Wage & Hour as a niaitter of law. Fed. R. Civ. P 56(a). When the
Laws > Remedies > Private Suits parties file cross-motions for summary judgment,
the cbiirt reviews each separately, giving the non-
Labor & Employment Law > Wage & Hour movant for each motion the benefit of all
Laws > Statute of. LirnitatiOhs reasonable inferences.
HN2[ii\ Remedies, Pi-ivate Suits
The Fair Labor Standards Act (FLSA), 29US.C,S Evidence > Burdens of Proof > Ailocatibri
201-19, provides a private cause of action for
employees to seek unpaid wagtjs o\ved to them Labor & Employrnent Law > Wage & Hoiir
imder its provisions. 29 U.S,C^S^ § 216(b). The Laws > Scope & Definitions > Exemptions
AJ BHOWMIK
Page 3. of 19
824 F.3d 890, *890; 2016 U.S. App. LEXIS 10018, **1
ffiW[i&] Burdens of Proof, Allocation under 2P U.S^C.S. f 207(e)(2) arid are thus.properly
excluded under that subsection—amounts paid tp
The Fair Labor Standards Act ( F L S A ) , 29 lj.S:C.S an ernployee for the rental of her vehiclis; loans or
fl? 201-J9, is construed liberally in favor of advances made to the employee; and the cost to the
employees; exemptions are to be narrowly employer of conveniences fiimished to the
construed against the .employers seeking to assert ehiployee such as parking space, restrobms;
diem, Tlie employer bears the burden of lockers, on-the-job medical care and recreational
estabiishihg that it qualifies for an exemption under facilities, f 778.224(b)• Under $ 778:224(a), a
the Act, A court will not find a FLSA exemption payment: may not be excludedfi^omthe regular rate
applicable except in contexts plainly and of pay pursuant to f 207(e)(2) i f it is gerierally
tinihistakably within the given exeniptiori's terms understood as compensation for work, even though
and spirit. the payment is not directly tied to specific hours
worked by an employee. And indeed, the examples
given in f 778.224(d) of payments: that were hot
Labbr & Ernploymeht Law > Wage & Hour intended to be excluded under the "other similar
Laws > Scope & Definitions > Regular Rate payments" clause, such as bonuses or rborri and
board, are cbriimonly conisidered to be
HN5[;k] Scope & Deflnitions, Regular Rate compensation even though such payments do not
fluctuate in accordance with particular hours
29 U.SC.S f 207(e)(2) excludes from the regular
worked by an employee.
rate of pay payments made for occasional periods
when no work is performed due to vacation,
holiday, illness, failure of the employer to provide
sufficient work, or other similar cause; reasonable Labor & Employment Law > Wage & Hour
payrnerits for traveling expenses, or otiier expenses, Laws > Scope & Definitions > Regular Rate
incurred by an employee in the fiirtherance of his
HN8[±] Scope & Definitions, Regular Rate
employer's interests and properly reimbursable by
the employer; and other similar payments to an The question of whether a particular payment falls
employee'which are not made as compensation for within the "other similar payments" clause does not
his hours of employment. tum on whether the payment is tied to an hourly
wage, but instead turns bn whether the payment is a
form of compensation for performing work. Indeed,
Labor & Employment Law > Wage & Hour even if payments to employees are not measured by
Laws > Scope & Definitions > Reguljar Rate the number of hours; spent at work, that fact alone
does not qualify them for exclusion under 29
HN6[iS'\ Scope & Definitions, Regular Rate U.S.CS $ 207(e)(2).
See 2P CF,R: $ 778.224(a).
Labor & Employment Law > Wage & Hour
Laws > Scope & Definitions > Regular Rate
Labor & Employmeht.Law > Wage & Hour
Laws > Scope &; Definitions > Regular Rate HN9[&.] Scope & Definitions, Regular Rate
^ffiV7[i] Scope & Definitions, Regular Rate Consistent with precedent and the :Department of
^ . , , v~ Labor's inteipretation, the inquiry is fociised bn
29 C.FR^ f 77g.224 provides three exainples: bf , ^, • , i. . • j
~~ ~ , . ,, whether, a given payrhent is properly characterized
payments that constitute other similar payments
AJ BHOWMIK
Page 4 of 19
824 ;F.3d 890, *890; 2016:U.S. App. LEXIS 10018, **1
as compensation, regardless of whether the instead of the benefits under the plan: Provided,
payment is specifically tied to the hours an however- That if a plan otherwise qualified as a
employee works, when determining whether that bona fide benefit plan under section 7(e)(4) ofthe
payment falls under 29 U.S.CS. f 107(e)(2)'% FLSA, it will still be regarded as a bona fide plan
"other similar payments" clause. even though it provides, as an incidental part
thereof, for the payment to an employee in cash of
all or a part of tlie amount standing to his credit
Labor & Employment Law > Wage & Hour during the course of his ernployment under
Laws > Scope &,Defihitioiis > Regular Rate circumstances specified in the plan and not
inconsistent with the general purposes of llie plan to
H N 1 0 \ ^ Scope & Definitions, Regular Rate prbvide the benefits described in section 7(e)(4) of
the FLSA- f 778.215(a)(5).
29 U.S.C.S^ f 207(e)(4). excludes from the regular,
rate of pay contributions irrevocably made by an
erhployer to a trustee or third person pursuant tb a Administrative Law > Judicial
bona fide plan for providing old-age, retirement, Review > Standards of Review > Deference to
life, accident, or health insurance or similar benefits
Agency Statutory Interpretation
for employees.
Administrative Law > Judicial
Review > Standards of Review > Rule
Governments > Legislation Interpretation
HNJ_l[&] Governments, Legislation fl7V75[i] Standards of Review, Deference to
Agency Statutory Interpretation
Where a statute's language is plain, the sole
function of the courts is to enforce it according to Like the Department of Labor's interpretative
its terms, because courts must presume that a bulletins, opinion letters are "entitled to respect"
legislature says in a statute what it means and under Skidmore only to the extent that the agency's
means in a statute what it says there. interpretation has the "power to persuade." Under
Skidmore, whether an agency's interpretation is
accorded deference will depend upon the
Labor & Employment Law > Wage & Hour thoroughness evident in its consideration, the
Laws > Scope & Definitions > Regular Rate validity of its reasoning, its consistency with earlier
and later pronouncements, and all those factors
HNI2\±.] Scope & Definitions, Regular Rate which give it power to persuade, i f lacking power
to cbntrol.
Under 29 US^CS $ 207(e)(4), payments made to a
trustee or third party pursuant to a bona fide plan
for providing old-age, retireirient, life, accident, or
Business & Gprporate Compliance > > Wage
health insurance or similar benefits or employees
& Hour Laws > Scope &
may be excluded fi-om the regular, rate of pay. The
Definitions > Oyertime & Work,Periods
statute does not define the term "bona fide plan."
The Department of Labor's interpretation of that: Evidence > Burdens of Proof > Allocation
term is set forth at 29 CF.R. f 778.215. The plan
must not giye an employee the option to receive Labor :& Employment Law > ... > Scope &
any part of the employer's contribtitions in cash Definitions > Exemptions > Emergency
AJ BHOWMIK
Page 5 of 19
824 F.3d 890, *890; 2016 U.S. App. LEXIS 10018, **1
Personnel HN16[ii] Scope & Coverage, Overtime & Work
Periods
Labor & Employment Law > Wage & Hour
Laws > Scope & Definitions > R,egular Rate
An employer need not establish the exemption
under 29 U . S C S $ 207(k) thrbugh public
.HNI4\&\ Scope & Coverage, Oyertime & Work declaration.
Periods
The employer bears the burden of establishing that
Labor & Employment
it: qualifies for the exemption. Generally, the
employer must show that it established a 29 Law > ... > Remedies > Damages > Backpay
US^CS $.207(k) work period and. that the 207(k)
work period was regularly recurring. 2 9 _ C F R ^ Labor & Employment
553:224. Whether an employer meets this burden is Law > ... > Remediesr> Damages > Liquidated
normally a question bf fact. Damages
HNI Tf A ] Damages, Backpay
Business & Corporate Compliance > ... > Wage An employer whO'violates the Fair Labor Standards
«fe Hour Laws > Scope & Act (FLSA), 29 U.S.CS. $$ 201-19, shall be liable
Definitions > Overtime & Work Periods to the employee or employees affected in the
amount of their unpaid minimum \yages, or their
Labor & Employment Law > ... > Scbpe & unpaid overtime compensatibn, as the case may be,
Definitions > Exernptions > Emergency and in an additional equal, amount as liquidated
Personnel damages. 29 U.S.CS §. 216(b). However, i f the
employer shbws that it acted in "good faith" and
Labor & Employment Law > Wage & Hour that it had "reasonable grounds" to believe that its
Laws > Scope Definitions > Regular Rate actions did not violate the FLSA, the court may, in
its sound discretion, award nb liquidated damages
HNJUi^] Scope «& Coverage, Overtime & Work
or award any amount thereof not to exceed the
Periods
amount specified in 29 U.SCS. § 216. $ 260. To
avail itself of this defense, the employer must
An emplbyer need not expressly identify 29
establish that it had an honest intention to ascertain
US.CS. $ 207(k) when establishing a ^ 207(k)
and follow the dictates bf the Act and that it had
work period in order to; qualify for the exemption.
reasonable grounds for believing that its conduct
coniplied with the FLSA. I f an employer fails to
satisfy its burden under ^ 260, an award pf
Business & Corporate Compliance > ... > Wage
liquidated damages is mandatory;: Whether the
& Hour Laws > Scope &
employer acted in gOOd faith and whether it had
Definitions > G.vertime & Wbrk.Periods
objectively reasonable igrouhds for its action are
mixed questions of fact and law. 29 C^F.R. ^
Labor & Employment Law > ... > Scbjpe &
790.22(c). Questibns iiivolvihg the application of
Definitions > Exemptions > Emergency
legal principles: to established facts are reviewed de
Personnel
novb.
Labor & Empiloyment Law > Wage & Hour
Laws > Scbpe & Definitions > Regular Rate
Labor & Employment:
AJ BHOWMIK
Page.G.of 19
824 F.3d 890, *890; 2016.U.S. App. LEXIS 10018, **|
Law > ... > Remedies > Damages > Liquidated SUMMARY'
Damages
Liabor Law
HN18[^] Damages, Liquidated Damages
On an appeal and a cross-appeal, the panel affirmed
An employer, who failed tp take: the. steps necessary in part and reversed in part the district coiut's
to ensure its practices complied with'the Fair Labor summary judgment partially in favor of the
Standards Act, 29 U.SC:S. $$ 201-19, aind who plaintiffs in ah action under the Fair Labor
offers no evidence tP show that it actively Standards Act, alleging that the City of San Gabriel
endeavored tb ensure such compliance has not failed to include payments of unused portions of
satisfied 29 U.SCS <^ 2<)Q's heavy burden. police officers' benefits allowances when
calculating their regular rate of pay, resulting in a
lower overtime rate and a consequent
Labor & Employment Law > Wage & Hour underpayment of oyertime compensation.
Laws > Statute of Limitations
The disfrict court agreed witii the plaintiffs that the
HN19[A] Wage & Hour Laws, Statute of City's cash-in-lieu of benefits paymerits were not
Limitations properly excluded firom its calculation of the
regular rate of pay, except to the extent that the
Pursuant to 29 U.S.CS: $ 255(a), the two-year City made payments to trustees or third parties. The
statute of limitations for actions under the Fair district court held that die plaintiffs were restricted
Labor Standards Act (FLSA), 29 U.S.CS $$ 201- tp a twpryear statute of limitations because the
19, may be extended to three years i f an employer's City's violation was [**2] not willfiil. The district
violation is deemed "willful.'' A violation is willfiil court also found that the City qualified for a partial
if the employer knew or showed reckless disregard overtime exemption, limiting its liability for
fpr the matter of whether its conduct was prohibited overtime to hours worked in excess of 86 in a 14-
by the FLSA. An employer need not violate the day work period.
statute kno\yingly for its violation to be considered
"willfiil" under i? 255(a), although merely negligent The panel held that the City's payment of unused
conduct will not suffice. The tlireei-year statute bf benefits must be included in the regular rate of pay
limitations may be applied where an employer and thus in the calculation of the overtime rate for
disregarded the very possibility that it \yas violating its police officers. The panel held that the City's
the statute, althbugh a court will riot presume that violation of the Act was willful because it took no
conduct was willfiil in the absence of evidence. aiffirmative steps to ensure that its initial
Like its determination regarding liquidated designation of its benefits payments complied with
damages, a district court's determination of the Act and failed to establish that it acted in good
willfiilness under i?' 255(d) is a mixed question of faith. Accordingly, the plaintiffs were entitled to a
fa:ct arid law, with de nbvo review of the district three-year statute of limitations and liquidated
court's applicatipn of the law to established facts. damages for the City's violations. The panel also
An employer's violation of the FLSA is "willfiil" concluded, however, that the City had demonstrated
when it is on notice of its FLSA requirements, yet that it qualified for- the partial overtime exemption
takes no affirmative actipn to assure compliance under $ 207(k) 6f the Act, limiting its damages for
with thein. the overtime violations.
Summary:
**Tliis.siinihiafy .constitutes no pajl of tlie opinion ofthe court. It has
been prepared by court stafl for the convenience of the reader.
AJ BHOWMIK
Page 7 of 19
824 F.3d 890, *890; 2016 U.S. App. LEXIS 10018, **2
Judge Owens,, joined by Judge Trott, wrote that he The Plaintiffs, asserted that the City's violation of
concurred fiiHy ijti the majority's opinion but the FLSA was "willfiil," entitling them to a tiiree-
believes that the court's willfiilness casislaw is off year statute of limitations fbr violations of the Act,
track. and sought to recover their unpaid overtime
compensation and liquidated damages.
Counsel: Brian P. Walter (argued) and Alex Y.
Wpngi Liebert Cassidy Whitmore, Los Angeles, The City claimed that its cash-iri-lieu of benefits
California, fbr DefendantTAppellant/Cross- payments were properly excluded from the
Appellee. [**3] Plaintiffs' regular rate of pay pursuant to two pf the
Joseph N. Bolander (argued), Brandi L. Harper, and Act's statutory exclusions and argued that it
Christopher L. Gaspardj Gaspard Castillo Harper, qualified for a partial overtime exeinption under ^
APC,. Ontairio, Califbrriia, for Plaintiffs- 207(k); which allows public agencies employing
Appellees/Cross-Appellants. firefighters or law enforcement officers to designate
an altemative work period for purposes of
Judges: Before: Stephen S. Trott; Andre M . determining overtime: Tlie City denied tliat any
Davis*, and John B. Owens, Circuit Judges. viblatibn of the FLSA was willfiil and that the
Opinibn by Judge Davis: OWENS, Circuit Judge, Plaintiffs were entitled to hquidated damages.
with whom TROTT, Circuit Judge, joins,
For the reasons that follow, we conclude that the
cbncurrihg:
City's payment pf unused benefits must be included
Opinion by: AndreM. Davis in the regular rate of pay and thus in the calculation
of the oyertime rate for its police officers as well.
Opinion And because the City took no affirmative steps to
ensure that its initial designation of its benefits
payments complied with the FLSA and failed tp
1*894] DAVIS, Circuit Judge: establish that it acted in good faith in excluding
those [**5] payments fi-om its regular rate of pay,
Plaintiffs-Appellees and Cross-Appellants Danny the; Plaintiffs are entitled to a three-year statute pf
Flores, Robert Barada, Kevin Watson, Vy Van, Ray limitatiPhs and liquidated damages for the City's
Lara, Dane Woolwine, Rikimaru Nakamura, violations. We also conclude, however, that the
Christopher Wenzel, Shannon Casillas, James Just, City has demonstrated that if qualifies for the
Steve Rodrigues, and Enrique Deanda and Plaintiff- partial overtime exemption under .$ 207(k) of the
Appellee Cruz Hernandez (collectively, [*895] Act:, limiting its damages for the pyertime violations
"Plaintiffs") are current or former police officers alleged here.
employed by the City of San Gabriel, Califomia
("City"). The Plaintiffs brought suit against die City
for violations of this Fair Labor Standards Act I. BACKGROUND
("FLSA"), 29 U.S:C. $$ 201-19, alleging that the
City failed to ineliide payments of unused portions
of the Plaintiffs' benefits allowances when A. Statutory background
calculating their regular rate of pay, resulting in a
lower overtime rate and a cbhsequerit HN.1\W\ Under the FLSA, an employer must pay
underpayment [**4] of overtime compensatipn. its employees premium overtiine compensation of
one arid bne-haif tiiries the regular rate bf payment
for any hours worked in excess of forty in a seyen-
* Tlie.Honorable Andre .M. Davis, Senior'eiicuit Judge for tlie U.S. day work week. Cleveland v: City of Los Angeles.
Couit of Appeals for the Fourth Circuit, sitting by designation;
AJ BHOWMIK
Page 8 of 19
824 F;.3d 890, *895; 2016 U.S. App. LEXIS 10018, **5
420 F.3d 981. 984-85 (9th Cir 2005) (citing ^ that the employee has alternate medical coverage,
207^^)). The "regular rate" is defined as "all such as througli a spouse: I f an employee elects to
remuneration for eriiployment paid to, or on behalf forgo medical benefits because she has altemate
of, the employee," subject to a number of coverage, [**7] she may receive the unused
exclusions set forth in the Act. $ 207(e). The FLSA portion of her benefits allotment as a cash pajanent
alsb provides "a liriiited exemption frbrii the added lo her regular paycheck.
overtime limit to public employers of law
eriforcemerit persbririel or firefighters." Adair v. In 2009, an employee who declined medical
City of Kirkland. 185 F:3d 1055. 1059 (9th Cir. coverage received a paymerit:of,$l,036.75 in lieu of
1999) (citing $ 207(k)\ The partial oyertime benefits each month. This amount has increased
exemption iri $ 207(k) "increases the bvertirrie liriiit each year, so that einployees who declined medical
slightly and it giyes the employer greater flexibility coverage received $1,112.28 in 2010, $1,186.28 in
to select the work period over which the overtime 2011, and $1,304.95 in 2012, This payment appears
limit: vyill bc' calculated." Id. at 1060 (citation as a designated line iterri bri an eriiplbyee's
omitted). paycheck and is subject to federal and state
withholding taxes. Medicare taxes, and
//A^2[Y] The FLSA provides a private cause of gamishment:
action for employees to seek unpaid wages [**6]
In 2009, the City paid $2,389,468.73 to or on
bwed to them under its provisions. § 216(6).. The
behalf of its employees pursuant to its Flexible
Act has a two-year statute of limitations for claims
Benefits Plan, and it paid $1,116,485.77 of that
unless the employer's violation was "willful," in
which case the statute of limitations is extended to amount, or 46.725% bf total plan contributions, to
three years. ^ 255(a). An employer whp viplates the einployees for unused benefits. While the exact
FLSA's overtime provisions is liable in the amount figures vary each year, the percentage of the total
of the employee's unpaid overtime compensation, plan contributioris that the City pays to employees
in addition to an equal amount in liquidated for unused benefits has remained somewhat
dariiages. § 216(b). The Act provides a defense to consistent. In 2010, the City paid $1,086,202.56 to
liquidated damages for an employer who employees for unused benefits, reflecting 42.842%
establishes that it acted in good faith and had of total plan contributions; in 2011, $1,138,074T3,
reasonable [*896] grounds to beheve that its br 43.934% bf total plan contributions; and in 2012,
actions did not violate the FLSA. ^ 260. $1,213,880.70, or 45.179% of total plan
contributions.
At sbriie time [**8] prior to 2003, the City
B. Factual and procedural background
designated its cash-in-lieu of benefits paynaents as
"benefits" that were excluded fioiri its calculation
of a recipient's reguliar rate of pay, and,
1. Flexible Benefits Plan
accordingly, has nol included the value of the
The City provides a Flexible Benefits Plan to its payments in its calculation of employees' regular
employees under \yhich the City fiirnishes a rate pf pay. The City has npt revisited its
designated monetary arnpunt tp each employee for designation since that time.
the purchase of iriedical, vision, and dental benefits.
All employees are required to use a portion of these
funds to purchase yisipn and dental benefits, An 2. Calculation of overtime
employee riiay decline tb use the remainder of these
Since at least 1994, the City's police officers have
fimds to purchase medicial benefits only upon proof
been paid overtirrie when; they have worked more
AJ BHOWMIK
Page 9 of 19
824 F.3d 890, *896; 2016:U.S. App. LEXIS 10018, **8
than eighty hours in a fourteen-day work period. (^'Flores IF).
Since at;least 2003, the City's eighty-hour/fourteen-
day work period has beenriiemoriaUzedin several The City timely appealed the district [**id] coiirt's
documents. A 2003 City resplutipri conceming the mlings conceming the exclusion of the cash-in-lieu
"work week" states that police officers work eighty of benefits payments from the regular rate of pay.
hours in a bi-weekly period. This same eighty- The Plaintiffs cross-appealed, challenging the
hour/fourteen-day work period was restated in the district court's, mlings; that the payments qualified
City's Salary, Compensation and Benefit Policy for exclusion under the Act if made to a tiustee or a
Manual, dated July 3, .20l0, and in the 2005-2007 third party, that the City quahfied for a § 207(k)
Memorandum of Understanding between the City partial overtime exemption, that the applicable
and the police officers' collective bargainirig unit. statute of liriiitatioris was two years, arid that the
Because the City's cash-in-lieu of benefits: Plaintiffs were not entitied to liquidated damages.
payments are excluded firom its calculation of an
officer's regular rate of pay, the benefits payriierits;
XL STAPrt)ARD OF R E V I E W
are not incorporated into the City's
calculatibn [**9] of the bfficer's overtime rate. H N 3 ^ ' \ We review a grant of summary judgment
or partial summary judgment de novo, applying the
saine standard of review as the district court under
3. Litigaition between the parties
Federal Rule of Civil Procedure 56. Adair, 185
The Plaintiffs instituted this suit against the City in F:3d at 1059; Local 246 Utility Workers Union of
2012. Following discovery, both parties moved fbr Am. V. S Cal. Edison Co. 83 F.3d 292. 294 n.l
partial svimmary judgrnent pn the Plaintiffs' claims. (9th Cir. 1996). Under Rule 56, a court "shall grant
The district court agreed with the Plaintiffs that the summary judgment if the movant shows that there
City's cash-in-lieu of benefits payments w
Preview
1 BLUMENTHAL NORDREHAUG BHOWMIK DE BLOUW L L P Norman B. Blumenthal (State Bar #068687) 2 Kyle R. Nordrehaug (State Bar #205975) Aparajit Bhowmik (State Bar #248066) 3 Victoria B. Rivapalacio (State Bar #275115) 2255 Calle Clara 4 La Jolla, CA 92037 Telephone: (858)551-1223 5 Facsimile: (858) 551-1232 6 Attomeys for Plaintiff 7 8 9 10 SUPERIOR COURT OF T H E STATE OF CALIFORNIA 11 IN AND F O R T H E C O U N T Y O F S A C R A M E N T O 12 13 ANDREA SPEARS, an individual, on behalf CaseNo. 34-2017-00210560-CU-OE-GDS 14 of herself and on behalf of all persons similarly situated. CLASS ACTION 15 16 Plainfiff DECLARATION OF APARAJIT BHOWMIK IN SUPPORT OF PLAINTIFF ANDREA SPEARS'S 17 vs. OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY JUDGMENT 18 HEALTH NET OF CALIFORNIA, INC., a Califomia Corporation; and Does 1 through 19 50, Inclusive, Telephone Appearance iY FAX 20 Defendants. Reservafion No. 2313007 21 TOMAS R. ARANA, on behalf of himself, Hearing Date: April 26, 2018 22 all others similarly situated, Hearing Time: 9:00 a.m. Judge: Hon. Steven H. Rodda 23 Plainfiff Dept.: 54 24 vs. Action Filed: April 5,2017 25 HEALTH NET OF CALIFORNIA, INC., a Califomia corporation; and DOES 1 through 26 50, inclusive. 27 Defendants. 28 DECL AJB ISO OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION CASE No. 34-2017-00210560 1 2 DECLARATION OF APARAJIT BHOWMIK 3 I , APARAJIT BHOWMIK, declare as follows: 4 1. I am an attomey at law duly licensed to pracfice before all of the courts of the State of 5 Califomia. I am a partner with the law firm of Blumenthal Nordrehaug Bhowmik De Blouw LLP, attomeys 6 of record for Plaintiff Andrea Spears. I have personal knowledge of the facts set forth herein, and if called 7 as a witness, could and would tesfify competenfiy thereto. 8 2. The payments Plainfiff contends should have been included in her regular rate payments 9 appear on Plaintiffs paystub as MedFlxWave. A tme and correct copy of one of these paystubs with this 10 kind of payment is attached hereto as Exhibit 1 and at page HNCA000078 the payment can be seen in the 11 amount of $20. Defendant's motion is not claiming that the "DenFlxElct" payment should have been 12 excluded from the regular rate. This payment is shown at HNCA000078 in the amount of $7.54. 13 3. A tme and correct copy of the portion ofthe Ninth Circuit's decision in Flores vs. City of 14 San Gabriel is attached hereto for the Court's convenience as Exhibit 2 with the highlight and underline 15 added as to the secfion regarding whether cash in lieu ofbenefits should be included in the regular rate. 16 4. A tme and correct copy of the 2011-2015 Summary Plan Description is attached hereto as 17 Exhibit 3 for the Court's convenience. This is the same document attached as Exhibit "J" to the Declaration of Debbie Colia filed by Defendant. 19 5. A tme and correct copy ofthe 2016 Summary Plan Description is attached hereto as Exhibit 20 4 for the Court's convenience. This is the same document attached as Exhibit "K" to the Declaration of 21 Debbie Colia filed by Defendant. 22 I declare under penalty of perjury under the laws ofthe State of Califomia and the United States that 23 the foregoing is tme and correct. Executed at La Jolla, Califomia on April 10, 2018. 24 25 26 A.J. Bhowmik 27 28 PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION 2 CASE No. 34-2017-00210560 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 EXHIBIT NO. L f^'\ • Horns Add tb FavqHies Sigh out View Self Service Paydheck Andrea Spears Nat Pay: •41.B50.73 Company:: Health Malof Carifomia. Inc Pay BeglnDate: IKtiSIZOiS AddrcBs: Pay^ind Oate: .0^26/2015 t1971. FoundaBbniRtace Checkbato; 07/i>2/2Qi$ Health Nat Payroll Ceritw Rancho Gdrdova. CA,SS870 yiEw.a; PHferentiPavcheeh General Name: AndiBa J S|»are: Business Uiilt. . FHS 01: ;Etnpipye« ID: oasieo Pay-©roup: Gan Reautar.Assodatss Address: 8567 NewMolJntain Way ' Departnfetit: 5a.5fl2.-4P,01r«.Cust;Svc Cmrd Sacrarhento, CA 9S828 Loaatlon: Ranicbo CfltdOTarliloai Sun Cente PftyRaie;: »2.5{«).qq Ahhual Tax Data - Fed Marital Status! Exempt. . c j t t . M a r N Status; SInglei or lyiarrted wtth ftvo or mors fncp Fed Atlonances: 7 .CA;AiIawadces: 3 Fed-Add! Percent; D.oiia CALAddl PeicaAt: ojxa Fed Addl Arhbunt $o.oa CA Addl Amount:: Payclieck SummaiY Gross eoniing?! total Tsjcfi^l . Totflj-Qfiducllonsl fiafPay Current 1,7S8;01 • 1,7!t9.B4 188:81 1^50;78 Earnings Taxes , 1 Pay Begin- 1 Piy End DWrljptlbn | Aniouiit Osscrfp'ttDn 1 Hours 1 Rataj .Date Ipkte FadWithholdng Reg ME 60.00'iS,62600D 1:250,00 F6tiMEDI£& 25.37 OVBiUme 1 20,50 -23.4375i00 480.47 NdOASDI/EE 108.47 MedFlxWave 20.00 bAWilhhaldng 49.93 tDeuFlxElct .yM CA.OASp«EE 15.74! Total: 198.91 Total: 1P0.5C! 1,758.01 B^bre-Tax deductions Altqr lex. Deduotfoqa ' ] Emidoyer Pakt Ben^Jite bescriplibrt f. Amqurit PitasrtptioTi Amount DMcilp'tlpn Denial 8;37 3.S4 Baste ura 1,74; mo 043^ STD 3.64' m 3(38' ' Taxatile Total: 8.^7 Total: Totab ize3^ jyet;P^ Dl^^ribyU^ payment%pff • IP^cheeKtlumbar ].Ai:eouiitTyp,e fjCcouirt Nwiiier ] Amount DirectOeppsIt 3282276 CKeeWng 79342390 1,550:73 HNCA000078 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 EXHIBIT NO. 2. Sk Caution As of: Februaiy 12, 2018 7:21,PM Z Flores v. City of San Gabriel United States Court of Appeals for the Ninth Circuit February 10, 2016, Argued and Submitted, Pasadena, Cahfomia; June 2, 2016, Filed Nos. 14-56421,14-56514 Reporter 824 F.3d 890 *; 2016 U.S. App.,LEXIS 10018 **; 166 Lab. Cas. (eCH).P36,448; 26 Wage & Hour Cas. 2d (BNA) 914 faith, requirements, complied, hours worked, DANNY FLORES; ROBERT BARADA; KEVIN designation, provides, qualify, summary judgment, WATSON; VY VAN; RAY LARA; DANE WOOL WINE; RUCIMARU N A K A M U R A ; violations, unused, opinion letter CHRISTOPHER WENZEL; SHANNON CASILLAS; JAMES JUST; STEVE Case Summary RODRIGUES; ENRIQUE DEANDA, Plaintiffs- Appellees/Cross-Appellants, and CRUZ Overview HERNANDEZ, Plaintiff-Appellee, and GILBERT LEE; RENE LOPEZ, Plaintiffs, v. CITY OF SAN HOLDINGS: [1]-A city's cash-in-lieu of benefits GABRIEL, Defendant-Appellant/Cross-Appellee. payments to police officers were not properly excluded from the calculation of the regular rate of Subsequent History: US Sijpreme Court certiorari pay under 29 aSCS. ? 207'{e)(2} because the denied by San Gabriel v. Flores. 2017 U. S. LEXIS pajThent was compensation for work; [2]-The cash- 3062 rU.S, Mavis. 2017) in-lieu of benefits payments were also not properly excluded frprn the calculation ofthe regular rate of Prior History: [**1] Appeal from the United pay under ^ 207(e)(4) because the city paid the States District Court for the Central District of unused benefits directly to its employees and not to California. D.C. No. 2:12-cv-04884-JGB- JCG, a trustee or third person; [3]-'rhe city satisfied the Jesus G. Bemal, District Judge, Presiding. criteria for application of the ^ 207(k) exeinption by adopting an eighty-hour/fourteen-day work period for its law enforcement officers and by paying Flores v. City of San Gabriel. 969 F. Supp. 2d overtime in accordance with that period since 1994; 1158. 2013 as Dist. LEXIS 124122 (CD. Cal: [4]-Plaintiffs Avere entitled to liquidated damages 2013) under 29 US.C.S. $ 260 because the, city failed to Disposition: AFFIRMED IN PART, REVERSED demonstrate that it attempted to comply with the IN PART, AND REMANDED. FLSA in good faith. Outcome Core Terms Jiidgment affirmed in part, reversed in part, and benefits, regular rate, exerhption, overtime, cash-in- case remanded. lieu, employees, work period, ^yillful, statute of limitations, liquidated damages, calculation, bona LexisNexis® Headnoties f\de, benefit plan, properly excluded, contributions. Flexible, partial, district court, third party, good AJ BHOWMIK Page 2 of 19 824 E.3d 890, *890; 2016.U.S. App. LEXlS 1.0018, **1 FLSA has a two-year statute of limitations for claims unless the employer's violation was Business & Corporate Compliance > ... > Wage "willfiil," in which case the statute of limitations is & Hour Laws > Scope & extended to three years. 29 U.S.C^S. ^ 255(a)• An Definitions > Overtime & Work Periods employer who violates the FLSA's overtime provisions is liable in the amount of the erhployee's Labor & Employment Law > ... > Scope & unpaid oyertime compensation, in addition to an Definitions > Exemptions > Emergency equal iamoiint in liquidated damages. 29 i7.5.CiS'. § Personnel 216(b)• The FLSA provides a defense to liquidated damages for an employer who establishes that it Labor & Employment Law > Wage &. Hour acted in good faith and had reasonable groimds to Laws > Scope & Definitions > Regular Rate believe that its actions did not violate the FLSA- 29 HNIX^^ Scope & Coverage, Overtime & Work U:S.CS $.260. Periods Under the Fair Labor Standards Act ( F L S A ) , 29 Civil Prbcedure > ... > Summary U^S^C.S^ fl? 201-19. an employer must pay its .Tudgment > Motions for Summary employees premium overtime compensation of one Judgrnent > Cross Motions; and one-half tirries the regular rate of payment fbr any hours worked in excess of forty in a seven-day Civil Procedure > Judgments > Summary work week. The "regular rate" is defined as all. Judgment > Entitlement as Matter of Law remuneration for employment paid to, or on behalf of, the employee, subject, to a number of exclusions Civil Procedure > Appeals > Summary set forth in the Act! 29 U.S^C.S. $. 207(e)^ The Judgment Review > Standards of Review FLSA also provides a limited exemption fiom the oyertime limit to public employers of law ///VifAl Motions for Summary Judgment, enforcement persoimel orfirefighters.29 U^S^C^S^ f Cross Motions .207(k). The partial overtime exemption in f 207(k) The court of appeals reviews a grant of summary increases the overtime limit slightly and it gives the judgment or partial summary judgment de novo, employer greater flexibility tb select the work applying the same standard of review as the district period over which the overtiine limit will be court under Fed. R^ C;v. P. 56. Under Rule 56, a calculated. court shall grant summaiiy jiidgrherit i f the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment Labor & Employment Law > Wage & Hour as a niaitter of law. Fed. R. Civ. P 56(a). When the Laws > Remedies > Private Suits parties file cross-motions for summary judgment, the cbiirt reviews each separately, giving the non- Labor & Employment Law > Wage & Hour movant for each motion the benefit of all Laws > Statute of. LirnitatiOhs reasonable inferences. HN2[ii\ Remedies, Pi-ivate Suits The Fair Labor Standards Act (FLSA), 29US.C,S Evidence > Burdens of Proof > Ailocatibri 201-19, provides a private cause of action for employees to seek unpaid wagtjs o\ved to them Labor & Employrnent Law > Wage & Hoiir imder its provisions. 29 U.S,C^S^ § 216(b). The Laws > Scope & Definitions > Exemptions AJ BHOWMIK Page 3. of 19 824 F.3d 890, *890; 2016 U.S. App. LEXIS 10018, **1 ffiW[i&] Burdens of Proof, Allocation under 2P U.S^C.S. f 207(e)(2) arid are thus.properly excluded under that subsection—amounts paid tp The Fair Labor Standards Act ( F L S A ) , 29 lj.S:C.S an ernployee for the rental of her vehiclis; loans or fl? 201-J9, is construed liberally in favor of advances made to the employee; and the cost to the employees; exemptions are to be narrowly employer of conveniences fiimished to the construed against the .employers seeking to assert ehiployee such as parking space, restrobms; diem, Tlie employer bears the burden of lockers, on-the-job medical care and recreational estabiishihg that it qualifies for an exemption under facilities, f 778.224(b)• Under $ 778:224(a), a the Act, A court will not find a FLSA exemption payment: may not be excludedfi^omthe regular rate applicable except in contexts plainly and of pay pursuant to f 207(e)(2) i f it is gerierally tinihistakably within the given exeniptiori's terms understood as compensation for work, even though and spirit. the payment is not directly tied to specific hours worked by an employee. And indeed, the examples given in f 778.224(d) of payments: that were hot Labbr & Ernploymeht Law > Wage & Hour intended to be excluded under the "other similar Laws > Scope & Definitions > Regular Rate payments" clause, such as bonuses or rborri and board, are cbriimonly conisidered to be HN5[;k] Scope & Deflnitions, Regular Rate compensation even though such payments do not fluctuate in accordance with particular hours 29 U.SC.S f 207(e)(2) excludes from the regular worked by an employee. rate of pay payments made for occasional periods when no work is performed due to vacation, holiday, illness, failure of the employer to provide sufficient work, or other similar cause; reasonable Labor & Employment Law > Wage & Hour payrnerits for traveling expenses, or otiier expenses, Laws > Scope & Definitions > Regular Rate incurred by an employee in the fiirtherance of his HN8[±] Scope & Definitions, Regular Rate employer's interests and properly reimbursable by the employer; and other similar payments to an The question of whether a particular payment falls employee'which are not made as compensation for within the "other similar payments" clause does not his hours of employment. tum on whether the payment is tied to an hourly wage, but instead turns bn whether the payment is a form of compensation for performing work. Indeed, Labor & Employment Law > Wage & Hour even if payments to employees are not measured by Laws > Scope & Definitions > Reguljar Rate the number of hours; spent at work, that fact alone does not qualify them for exclusion under 29 HN6[iS'\ Scope & Definitions, Regular Rate U.S.CS $ 207(e)(2). See 2P CF,R: $ 778.224(a). Labor & Employment Law > Wage & Hour Laws > Scope & Definitions > Regular Rate Labor & Employmeht.Law > Wage & Hour Laws > Scope &; Definitions > Regular Rate HN9[&.] Scope & Definitions, Regular Rate ^ffiV7[i] Scope & Definitions, Regular Rate Consistent with precedent and the :Department of ^ . , , v~ Labor's inteipretation, the inquiry is fociised bn 29 C.FR^ f 77g.224 provides three exainples: bf , ^, • , i. . • j ~~ ~ , . ,, whether, a given payrhent is properly characterized payments that constitute other similar payments AJ BHOWMIK Page 4 of 19 824 ;F.3d 890, *890; 2016:U.S. App. LEXIS 10018, **1 as compensation, regardless of whether the instead of the benefits under the plan: Provided, payment is specifically tied to the hours an however- That if a plan otherwise qualified as a employee works, when determining whether that bona fide benefit plan under section 7(e)(4) ofthe payment falls under 29 U.S.CS. f 107(e)(2)'% FLSA, it will still be regarded as a bona fide plan "other similar payments" clause. even though it provides, as an incidental part thereof, for the payment to an employee in cash of all or a part of tlie amount standing to his credit Labor & Employment Law > Wage & Hour during the course of his ernployment under Laws > Scope &,Defihitioiis > Regular Rate circumstances specified in the plan and not inconsistent with the general purposes of llie plan to H N 1 0 \ ^ Scope & Definitions, Regular Rate prbvide the benefits described in section 7(e)(4) of the FLSA- f 778.215(a)(5). 29 U.S.C.S^ f 207(e)(4). excludes from the regular, rate of pay contributions irrevocably made by an erhployer to a trustee or third person pursuant tb a Administrative Law > Judicial bona fide plan for providing old-age, retirement, Review > Standards of Review > Deference to life, accident, or health insurance or similar benefits Agency Statutory Interpretation for employees. Administrative Law > Judicial Review > Standards of Review > Rule Governments > Legislation Interpretation HNJ_l[&] Governments, Legislation fl7V75[i] Standards of Review, Deference to Agency Statutory Interpretation Where a statute's language is plain, the sole function of the courts is to enforce it according to Like the Department of Labor's interpretative its terms, because courts must presume that a bulletins, opinion letters are "entitled to respect" legislature says in a statute what it means and under Skidmore only to the extent that the agency's means in a statute what it says there. interpretation has the "power to persuade." Under Skidmore, whether an agency's interpretation is accorded deference will depend upon the Labor & Employment Law > Wage & Hour thoroughness evident in its consideration, the Laws > Scope & Definitions > Regular Rate validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors HNI2\±.] Scope & Definitions, Regular Rate which give it power to persuade, i f lacking power to cbntrol. Under 29 US^CS $ 207(e)(4), payments made to a trustee or third party pursuant to a bona fide plan for providing old-age, retireirient, life, accident, or Business & Gprporate Compliance > > Wage health insurance or similar benefits or employees & Hour Laws > Scope & may be excluded fi-om the regular, rate of pay. The Definitions > Oyertime & Work,Periods statute does not define the term "bona fide plan." The Department of Labor's interpretation of that: Evidence > Burdens of Proof > Allocation term is set forth at 29 CF.R. f 778.215. The plan must not giye an employee the option to receive Labor :& Employment Law > ... > Scope & any part of the employer's contribtitions in cash Definitions > Exemptions > Emergency AJ BHOWMIK Page 5 of 19 824 F.3d 890, *890; 2016 U.S. App. LEXIS 10018, **1 Personnel HN16[ii] Scope & Coverage, Overtime & Work Periods Labor & Employment Law > Wage & Hour Laws > Scope & Definitions > R,egular Rate An employer need not establish the exemption under 29 U . S C S $ 207(k) thrbugh public .HNI4\&\ Scope & Coverage, Oyertime & Work declaration. Periods The employer bears the burden of establishing that Labor & Employment it: qualifies for the exemption. Generally, the employer must show that it established a 29 Law > ... > Remedies > Damages > Backpay US^CS $.207(k) work period and. that the 207(k) work period was regularly recurring. 2 9 _ C F R ^ Labor & Employment 553:224. Whether an employer meets this burden is Law > ... > Remediesr> Damages > Liquidated normally a question bf fact. Damages HNI Tf A ] Damages, Backpay Business & Corporate Compliance > ... > Wage An employer whO'violates the Fair Labor Standards «fe Hour Laws > Scope & Act (FLSA), 29 U.S.CS. $$ 201-19, shall be liable Definitions > Overtime & Work Periods to the employee or employees affected in the amount of their unpaid minimum \yages, or their Labor & Employment Law > ... > Scbpe & unpaid overtime compensatibn, as the case may be, Definitions > Exernptions > Emergency and in an additional equal, amount as liquidated Personnel damages. 29 U.S.CS §. 216(b). However, i f the employer shbws that it acted in "good faith" and Labor & Employment Law > Wage & Hour that it had "reasonable grounds" to believe that its Laws > Scope Definitions > Regular Rate actions did not violate the FLSA, the court may, in its sound discretion, award nb liquidated damages HNJUi^] Scope «& Coverage, Overtime & Work or award any amount thereof not to exceed the Periods amount specified in 29 U.SCS. § 216. $ 260. To avail itself of this defense, the employer must An emplbyer need not expressly identify 29 establish that it had an honest intention to ascertain US.CS. $ 207(k) when establishing a ^ 207(k) and follow the dictates bf the Act and that it had work period in order to; qualify for the exemption. reasonable grounds for believing that its conduct coniplied with the FLSA. I f an employer fails to satisfy its burden under ^ 260, an award pf Business & Corporate Compliance > ... > Wage liquidated damages is mandatory;: Whether the & Hour Laws > Scope & employer acted in gOOd faith and whether it had Definitions > G.vertime & Wbrk.Periods objectively reasonable igrouhds for its action are mixed questions of fact and law. 29 C^F.R. ^ Labor & Employment Law > ... > Scbjpe & 790.22(c). Questibns iiivolvihg the application of Definitions > Exemptions > Emergency legal principles: to established facts are reviewed de Personnel novb. Labor & Empiloyment Law > Wage & Hour Laws > Scbpe & Definitions > Regular Rate Labor & Employment: AJ BHOWMIK Page.G.of 19 824 F.3d 890, *890; 2016.U.S. App. LEXIS 10018, **| Law > ... > Remedies > Damages > Liquidated SUMMARY' Damages Liabor Law HN18[^] Damages, Liquidated Damages On an appeal and a cross-appeal, the panel affirmed An employer, who failed tp take: the. steps necessary in part and reversed in part the district coiut's to ensure its practices complied with'the Fair Labor summary judgment partially in favor of the Standards Act, 29 U.SC:S. $$ 201-19, aind who plaintiffs in ah action under the Fair Labor offers no evidence tP show that it actively Standards Act, alleging that the City of San Gabriel endeavored tb ensure such compliance has not failed to include payments of unused portions of satisfied 29 U.SCS <^ 2<)Q's heavy burden. police officers' benefits allowances when calculating their regular rate of pay, resulting in a lower overtime rate and a consequent Labor & Employment Law > Wage & Hour underpayment of oyertime compensation. Laws > Statute of Limitations The disfrict court agreed witii the plaintiffs that the HN19[A] Wage & Hour Laws, Statute of City's cash-in-lieu of benefits paymerits were not Limitations properly excluded firom its calculation of the regular rate of pay, except to the extent that the Pursuant to 29 U.S.CS: $ 255(a), the two-year City made payments to trustees or third parties. The statute of limitations for actions under the Fair district court held that die plaintiffs were restricted Labor Standards Act (FLSA), 29 U.S.CS $$ 201- tp a twpryear statute of limitations because the 19, may be extended to three years i f an employer's City's violation was [**2] not willfiil. The district violation is deemed "willful.'' A violation is willfiil court also found that the City qualified for a partial if the employer knew or showed reckless disregard overtime exemption, limiting its liability for fpr the matter of whether its conduct was prohibited overtime to hours worked in excess of 86 in a 14- by the FLSA. An employer need not violate the day work period. statute kno\yingly for its violation to be considered "willfiil" under i? 255(a), although merely negligent The panel held that the City's payment of unused conduct will not suffice. The tlireei-year statute bf benefits must be included in the regular rate of pay limitations may be applied where an employer and thus in the calculation of the overtime rate for disregarded the very possibility that it \yas violating its police officers. The panel held that the City's the statute, althbugh a court will riot presume that violation of the Act was willful because it took no conduct was willfiil in the absence of evidence. aiffirmative steps to ensure that its initial Like its determination regarding liquidated designation of its benefits payments complied with damages, a district court's determination of the Act and failed to establish that it acted in good willfiilness under i?' 255(d) is a mixed question of faith. Accordingly, the plaintiffs were entitled to a fa:ct arid law, with de nbvo review of the district three-year statute of limitations and liquidated court's applicatipn of the law to established facts. damages for the City's violations. The panel also An employer's violation of the FLSA is "willfiil" concluded, however, that the City had demonstrated when it is on notice of its FLSA requirements, yet that it qualified for- the partial overtime exemption takes no affirmative actipn to assure compliance under $ 207(k) 6f the Act, limiting its damages for with thein. the overtime violations. Summary: **Tliis.siinihiafy .constitutes no pajl of tlie opinion ofthe court. It has been prepared by court stafl for the convenience of the reader. AJ BHOWMIK Page 7 of 19 824 F.3d 890, *890; 2016 U.S. App. LEXIS 10018, **2 Judge Owens,, joined by Judge Trott, wrote that he The Plaintiffs, asserted that the City's violation of concurred fiiHy ijti the majority's opinion but the FLSA was "willfiil," entitling them to a tiiree- believes that the court's willfiilness casislaw is off year statute of limitations fbr violations of the Act, track. and sought to recover their unpaid overtime compensation and liquidated damages. Counsel: Brian P. Walter (argued) and Alex Y. Wpngi Liebert Cassidy Whitmore, Los Angeles, The City claimed that its cash-iri-lieu of benefits California, fbr DefendantTAppellant/Cross- payments were properly excluded from the Appellee. [**3] Plaintiffs' regular rate of pay pursuant to two pf the Joseph N. Bolander (argued), Brandi L. Harper, and Act's statutory exclusions and argued that it Christopher L. Gaspardj Gaspard Castillo Harper, qualified for a partial overtime exeinption under ^ APC,. Ontairio, Califbrriia, for Plaintiffs- 207(k); which allows public agencies employing Appellees/Cross-Appellants. firefighters or law enforcement officers to designate an altemative work period for purposes of Judges: Before: Stephen S. Trott; Andre M . determining overtime: Tlie City denied tliat any Davis*, and John B. Owens, Circuit Judges. viblatibn of the FLSA was willfiil and that the Opinibn by Judge Davis: OWENS, Circuit Judge, Plaintiffs were entitled to hquidated damages. with whom TROTT, Circuit Judge, joins, For the reasons that follow, we conclude that the cbncurrihg: City's payment pf unused benefits must be included Opinion by: AndreM. Davis in the regular rate of pay and thus in the calculation of the oyertime rate for its police officers as well. Opinion And because the City took no affirmative steps to ensure that its initial designation of its benefits payments complied with the FLSA and failed tp 1*894] DAVIS, Circuit Judge: establish that it acted in good faith in excluding those [**5] payments fi-om its regular rate of pay, Plaintiffs-Appellees and Cross-Appellants Danny the; Plaintiffs are entitled to a three-year statute pf Flores, Robert Barada, Kevin Watson, Vy Van, Ray limitatiPhs and liquidated damages for the City's Lara, Dane Woolwine, Rikimaru Nakamura, violations. We also conclude, however, that the Christopher Wenzel, Shannon Casillas, James Just, City has demonstrated that if qualifies for the Steve Rodrigues, and Enrique Deanda and Plaintiff- partial overtime exemption under .$ 207(k) of the Appellee Cruz Hernandez (collectively, [*895] Act:, limiting its damages for the pyertime violations "Plaintiffs") are current or former police officers alleged here. employed by the City of San Gabriel, Califomia ("City"). The Plaintiffs brought suit against die City for violations of this Fair Labor Standards Act I. BACKGROUND ("FLSA"), 29 U.S:C. $$ 201-19, alleging that the City failed to ineliide payments of unused portions of the Plaintiffs' benefits allowances when A. Statutory background calculating their regular rate of pay, resulting in a lower overtime rate and a cbhsequerit HN.1\W\ Under the FLSA, an employer must pay underpayment [**4] of overtime compensatipn. its employees premium overtiine compensation of one arid bne-haif tiiries the regular rate bf payment for any hours worked in excess of forty in a seyen- * Tlie.Honorable Andre .M. Davis, Senior'eiicuit Judge for tlie U.S. day work week. Cleveland v: City of Los Angeles. Couit of Appeals for the Fourth Circuit, sitting by designation; AJ BHOWMIK Page 8 of 19 824 F;.3d 890, *895; 2016 U.S. App. LEXIS 10018, **5 420 F.3d 981. 984-85 (9th Cir 2005) (citing ^ that the employee has alternate medical coverage, 207^^)). The "regular rate" is defined as "all such as througli a spouse: I f an employee elects to remuneration for eriiployment paid to, or on behalf forgo medical benefits because she has altemate of, the employee," subject to a number of coverage, [**7] she may receive the unused exclusions set forth in the Act. $ 207(e). The FLSA portion of her benefits allotment as a cash pajanent alsb provides "a liriiited exemption frbrii the added lo her regular paycheck. overtime limit to public employers of law eriforcemerit persbririel or firefighters." Adair v. In 2009, an employee who declined medical City of Kirkland. 185 F:3d 1055. 1059 (9th Cir. coverage received a paymerit:of,$l,036.75 in lieu of 1999) (citing $ 207(k)\ The partial oyertime benefits each month. This amount has increased exemption iri $ 207(k) "increases the bvertirrie liriiit each year, so that einployees who declined medical slightly and it giyes the employer greater flexibility coverage received $1,112.28 in 2010, $1,186.28 in to select the work period over which the overtime 2011, and $1,304.95 in 2012, This payment appears limit: vyill bc' calculated." Id. at 1060 (citation as a designated line iterri bri an eriiplbyee's omitted). paycheck and is subject to federal and state withholding taxes. Medicare taxes, and //A^2[Y] The FLSA provides a private cause of gamishment: action for employees to seek unpaid wages [**6] In 2009, the City paid $2,389,468.73 to or on bwed to them under its provisions. § 216(6).. The behalf of its employees pursuant to its Flexible Act has a two-year statute of limitations for claims Benefits Plan, and it paid $1,116,485.77 of that unless the employer's violation was "willful," in which case the statute of limitations is extended to amount, or 46.725% bf total plan contributions, to three years. ^ 255(a). An employer whp viplates the einployees for unused benefits. While the exact FLSA's overtime provisions is liable in the amount figures vary each year, the percentage of the total of the employee's unpaid overtime compensation, plan contributioris that the City pays to employees in addition to an equal amount in liquidated for unused benefits has remained somewhat dariiages. § 216(b). The Act provides a defense to consistent. In 2010, the City paid $1,086,202.56 to liquidated damages for an employer who employees for unused benefits, reflecting 42.842% establishes that it acted in good faith and had of total plan contributions; in 2011, $1,138,074T3, reasonable [*896] grounds to beheve that its br 43.934% bf total plan contributions; and in 2012, actions did not violate the FLSA. ^ 260. $1,213,880.70, or 45.179% of total plan contributions. At sbriie time [**8] prior to 2003, the City B. Factual and procedural background designated its cash-in-lieu of benefits paynaents as "benefits" that were excluded fioiri its calculation of a recipient's reguliar rate of pay, and, 1. Flexible Benefits Plan accordingly, has nol included the value of the The City provides a Flexible Benefits Plan to its payments in its calculation of employees' regular employees under \yhich the City fiirnishes a rate pf pay. The City has npt revisited its designated monetary arnpunt tp each employee for designation since that time. the purchase of iriedical, vision, and dental benefits. All employees are required to use a portion of these funds to purchase yisipn and dental benefits, An 2. Calculation of overtime employee riiay decline tb use the remainder of these Since at least 1994, the City's police officers have fimds to purchase medicial benefits only upon proof been paid overtirrie when; they have worked more AJ BHOWMIK Page 9 of 19 824 F.3d 890, *896; 2016:U.S. App. LEXIS 10018, **8 than eighty hours in a fourteen-day work period. (^'Flores IF). Since at;least 2003, the City's eighty-hour/fourteen- day work period has beenriiemoriaUzedin several The City timely appealed the district [**id] coiirt's documents. A 2003 City resplutipri conceming the mlings conceming the exclusion of the cash-in-lieu "work week" states that police officers work eighty of benefits payments from the regular rate of pay. hours in a bi-weekly period. This same eighty- The Plaintiffs cross-appealed, challenging the hour/fourteen-day work period was restated in the district court's, mlings; that the payments qualified City's Salary, Compensation and Benefit Policy for exclusion under the Act if made to a tiustee or a Manual, dated July 3, .20l0, and in the 2005-2007 third party, that the City quahfied for a § 207(k) Memorandum of Understanding between the City partial overtime exemption, that the applicable and the police officers' collective bargainirig unit. statute of liriiitatioris was two years, arid that the Because the City's cash-in-lieu of benefits: Plaintiffs were not entitied to liquidated damages. payments are excluded firom its calculation of an officer's regular rate of pay, the benefits payriierits; XL STAPrt)ARD OF R E V I E W are not incorporated into the City's calculatibn [**9] of the bfficer's overtime rate. H N 3 ^ ' \ We review a grant of summary judgment or partial summary judgment de novo, applying the saine standard of review as the district court under 3. Litigaition between the parties Federal Rule of Civil Procedure 56. Adair, 185 The Plaintiffs instituted this suit against the City in F:3d at 1059; Local 246 Utility Workers Union of 2012. Following discovery, both parties moved fbr Am. V. S Cal. Edison Co. 83 F.3d 292. 294 n.l partial svimmary judgrnent pn the Plaintiffs' claims. (9th Cir. 1996). Under Rule 56, a court "shall grant The district court agreed with the Plaintiffs that the summary judgment if the movant shows that there City's cash-in-lieu of benefits payments w