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BLUMENTHAL NORDREHAUG BHOWMIK DE BLOUW LLP f .^^Dnp?9
Norman B. Blumenthal (State Bar #068687) „. ""^^^tD
Kyle R. Nordrehaug (State Bar #205975) ^019 J/H' / p n,
Aparajit Bhowmik (State Bar #248066) ' nl \: pn
Piya Mukherjee (State Bar #274217) " -'^.^^^'0,? cow,.,
Victoria B. Rivapalacio (State Bar #275115) "-^liHly QF SA}^'^:^UFGPPU
2255 Calle Clara "^''^^'^^HJo
La Jolla, CA 92037
Telephone: (858)551-1223
Facsimile: (858) 551-1232
Attorneys for Plaintiff
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SUPERIOR COURT OF T H E STATE OF CALIFORNIA
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IN AND FOR T H E COUNTY OF SACRAMENTO
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ANDREA SPEARS, an individual, on behalf Case No. 34-2017-00210560-CU-OE-GDS
13 of herself and on behalf of all persons
similarly situated. CLASS ACTION
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15 Plaintiff, DECLARATION OF APARAJIT BHOWMIK IN
SUPPORT OF PLAINTIFF ANDREA SPEARS'S
16 OPPOSITION TO DEFENDANT'S RENEWED
vs.
MOTION FOR SUMMARY ADJUDICATION
17 HEALTH NET OF CALIFORNIA, INC., a
Caiifomia Corporation; and Does 1 through
18 50, Inclusive,
Telephone Appearance
19 Defendants.
Reservation No. 2380178
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TOMAS R. ARANA, on behalf of himself, Hearing Date: February 4, 2019
21 all others similarly situated. Hearing Time: 9:00 a.m.
Dept.: 54
22 Plaintiff,
Action Filed: April 5,2017
23 vs.
24 HEALTH NET OF CALIFORNIA, INC., a
Caiifomia corporation; and DOES 1 through
25 50, inclusive.
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Defendants.
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DECL AJB ISO OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
CASE No. 34-2017-00210560
1 DECLARATION OF APARAJIT BHOWMIK
2 I, APARAJIT BHOWMIK, declare as follows:
3 1. 1 am an attomey at law duly licensed to practice before all of the courts of the State of
4 Caiifomia. I am a partner with the law firm of Blumenthal Nordrehaug Bhowmik De Blouw LLP, attomeys
5 of record for Plaintiff Andrea Spears. 1 have personal knowledge of the facts set forth herein, and if called
6 as a witness, could and would testify competently thereto.
7 2. The payments Plaintiff contends should have been included in her regular rate payments
8 appear on Plaintiffs paystub as MedFlxWave. A true and correct copy of one of these paystubs with this
9 kind of payment is attached hereto as Exhibit 1 and at page HNCA000078 the payment can be seen in the
10 amount of $20. Defendant's motion is not claiming that the "DenFlxElct" payment should have been
excluded from the regular rate. This payment is shown at HNCA000078 in the amount of $7.54.
12 3. A true and correct copy of the portion of the Ninth Circuit's decision in Flores vs. City of
13 San Gabriel is attached hereto for the Court's convenience as Exhibit 2 with the highlight and underline
14 added as to the section regarding whether cash in lieu of benefits should be included in the regular rate.
15 4. A true and correct copy of the 2011 -2015 Summary Plan Description is attached hereto as
16 Exhibit 3 for the Court's convenience. This is the same document attached as Exhibit "J"to the Declaration
17 of Debbie Colia filed by Defendant.
18 5. A true and correct copy of the 2016 Summary Plan Description is attached hereto as Exhibit
19 4 for the Court's convenience. This is the same document attached as Exhibit "K" to the Declaration of
20 Debbie Colia filed by Defendant.
21 6. True and correct copies of excerpts from the deposition of Defendant's declarant, Debbie
-22- -Colia, are^attached hereto as Exhibit 5.
23 7. True and correct copies of excerpts from the deposition of "Person Most Knowledgeable,
24 are attached hereto as Exhibit 6.
25 8. True and correct copies of excerpts from the deposition of Defendant's declarant, Diane
26 Rodes, are attached hereto as Exhibit 7.
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DECL AJB ISO OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
CASE No. 34-2017-00210560
1 9. A true and correct copy of a declaration from Debbie Colia provided in support of
2 Defendant's original motion for summary adjudication is attached hereto as Exhibit 8.
3 10. A true and correct copy of a declaration from Diane Rodes provided in support of
4 Defendant's original motion for summary adjudication is attached hereto as Exhibit 9.
5 11. True and correct copies of excerpts from the deposition of Defendant's declarant, Kelly
6 Sarabia, are attached hereto as Exhibit 10.
7 I declare under penalty of perjury under the laws of the State of Caiifomia and the United States that
8 the foregoing is true and correct. Executed at La Jolla, Caiifomia on January 18, 2019.
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11 A.J. Bhowmik
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DECL AJB ISO OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
CASE No. 34-2017-00210560
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DECL AJB ISO OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
CASE No. 34-2017-00210560
Hoitw Md te FsvqHIes Slgniaiil
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View Self Service Payt^^heck
Andrea Spears
Met Pay: $1,550.73
Company::
HesiSi (>fatof Canfomia. Inc PayBeglDiDate: .0S/1»?01S
Address:
Pay End 0 ^ . OafSSeoif
tWI-f^undatiiniiPtece
Chackbate; 07/b2/20'i5
HeaStfi ttei PayroB Ceritar
Ranicho Gcudbva. CA, 65870 View a DHifefent PavcHecfc
Geaeral
tlanie: Andma J Spaare Buslheas Unit; . pHsoi;
Emptpyae ID: oasieo Payelroup: Oan Regulaf Associates
AUUiusb: SSS7 New Moijrdaih may- ' DspartmeAt:
Sac(airieflto,<:;A9S82B Lpcatlpn> Baiii*o(5bntfciva'11031 Sun Conte
PayRaie:. $32,S0d.W AnhU^
Tax Data
F e d Marital Statiicsi Exempt, . cA.MarN Status; SInglSt or Married with two or more Ifico
Fed Aihinances: T CA AiHowattces: 3
Fed Adcfl Percent.' ti.aoa C A Adffi P a n e n t OMoa
FedAddlAmDunt: $aoo CAAddlArnoont: $0,00
PaychcffiK Stimmaiy^^ _ . _ ^] ^.^
flat Pay
Pu'nent 1,7S8.qi- 1.749^4 1B8:ai 837 1^S0;73
Earnings
OssorfpMon
Pay Begin 1 Pay End
Date loate
j Hourej P^tsj' Ampuntj DVsCtlptlaii 1 Aiiiount 1
rad\A/!llihpl(AiB
S0.OO nS,8260D0 . 1;2S0.00
PediitlEpeE 25J7
•^
Ovar^a 1 20.50 23.437500 480,47
^OASDI/EE 108,47
20.00
DenFlxElct 7J54
CA.QASbl/EE
"4S.33
15.74- 1
Total; 198.9i:
1 "
Total: 100.5Q i,rsju)i
1 •
Bi^Ora-Tex Reductions After T ^ Deductions Emfitoyar Paid Benefits
Desctiplion f. Ameuirt Beaert^tion 1 Amount Deaaipiion | Ainaunt
Denial 8:37 3.54
Basic Ufe 1.74
AtH) 0j3
STD 3.64
LTD I
I
.Totat 8:37 Total: .
• Taxalile
Tolab 12,83.
I
I
PaymentTryRff • "fpaychecft Munber |AccountTyip.e lA^ceui^Nujnber ] Amount
IXrectOeposIt 3282276 7B342390 1,SSp;73
HNCA000078
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DECL AJB ISO OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
CASE No. 34-2017-00210560
Calltioii
Afl of: February 12,2018 7:21 PM Z;
Flores V. Ckv ofSan Gabtiel
United States Court of AppealsforiftB Nmdi Circuit
F e b m ^ 10,2016j Argued an4 Subniitti^, Pasadena, California; Jiine 2, 2016, Filed
Nos. 14^56421,14-56514
Reporter
824 F.3d 890 2016 U.S. Apjt. LEXIS lOOlS 166 Lab. Cas. (CCH) P36,448; 26 Wage & Hour Ca*. 2d (BNA)
914
faith, reqidrenients, complied, hours worked,
DANNY FLORES; ROBERT BARADA; KEVIN
designation^ provides^ qualify, summary judgment,
WATSON; VY VAN; RAY LARA; DANE
viblatibas, imtised, opinion Iietter
WOOL WINE; RDCIMARU NAKAMURA;
CHRISTOPHER WENZBL; SHANNON
CASnXAS; JAMES JUST; STEVE Case Sqmmjtry
RODRIGUES; ENRIQUE DEANDA, Plaintiffs-
V^pellBBSt'GrossT-AppBllants, and CRUZ Overview
m K M m D E Z , Plainfili;.Appellee, and ©IIBERT
LEE; RENE LOPEZ, Plaintiffs, v. CITY OF SAN HOLDINGS: [1]-A city's cash-iQ-.lieu of benefits
GABRIELvDefendantrAppellant/Cross-Appellee.. payments to police officers were not properly
excli^edftom.die calcol^on of tbef^regular rate of
Slibse4|ii£nt History: US Supreme Court, certiorari pay under 29 U,S.CLS: 2Q7fej ... > Wage "willflil," in which case the: st^te of limitations is
& Hour Laws > Scope & extended to three years. 29MS:C.S. ^ 235/a>. An
Definition^ > Overtime & Work Periods employer who violates t^ FLSA's overtime
provisions is liable in the amount of thejemployee's
Labor & Employment Law > ... > Scope & luipaid oyertimB^ contpraisation, in addition to an
Definitions > Exemptions > Emergency sqaai amount in liquidated damages. JP U.S:CJS. §
Personnel 2i6(b). Th&FL^ provides a defense to liquidated
damages for an employ^' who establishes that it
Labor & EmploymentEaw > Wage & Hour
acted in good faith and had reasonable pounds to
Laws > Scope & Definitions Regular Rate
befie^re that its actions did not^plate the FESA. 29
HPfJfiS Scope & Coverage, Overtime & Work:
Peiidds
Under the Fair Labor Standards Act ^LSA), 29 Civil procedure > ... > Summary
U:S.C.S, ^§ 201-J9, an employer must pay its Judgment > Motions for Summary;
employees premimn overtime compensation of one Judgment > Cross Motions
and one-haif tunes the regular rate of payment for
any hours wPtked in excess of forty m a seven-day Civil Proeedure > Judgments > Summary
work week. The "regular rate" is defined as all Judgment > Entitlement as Matter of Law
remimeratibn for employment paid to, or on behalf
of,^e employee, subject to a ngmber of exclusions Civil Procedure > Appeals > Summary
set forth in the Act 29 U.S.CX 267(e). The Judgment Review > Standards of Review
FLSA also provides a limited exemption fiom the
overtime limit to public enaployers of law flft^rAl MiDtions for Summary Judgment,
enforcement personnel orfirefighters.29 U:S.C.S. 4 Cross Motions
207(k). The partial overtime exemption in ^, 207{k)
The court of appeals reviews a grant of summary
increases the overtime limit slightly and it gives the
judgment or partial summary jud^ent de novo,
employe greater flexibihty to select the work
applying the same standard of review as the district
period over which the overtime limit will be
court under Fe^: R. Civ.. P. 56. Under Rule 56, a
calculated.
Court shall grant summary judgment if the movant
showji that diere is no genuine dispute as to any
rdaterial fact ahd the movant is entitled to judgment
Labor & Einployment Law > Wage & Hour as a matter of law. Fed. R Civ. P. 56(a). When the
Laws > Remedies > Private Suits parties file cross-motions for summary judgment,
-thercourt-reviews-each-s^aratelyrgiving-the-nQn»-
Labor &- Employrtient Law > Wage & Hour movant for each motion the benefit of all
Laws > Statute of Limitations reasonable inferences.
HN2\it\ Remedies, Private Suits
The Fair Labor Standards Act (FLSA), 29 US. CiS. Evidence > Burdensof Proof > Allocation
201-19, provides a private cause of action for
employees to s^efc unpaid wages owed to them Labor & Emplojment Law > Wage & Horn:
imder its provisions. 29 tJ.S.CS. § 216(b). The Laws > Scope &• Definitions > Exemptions
AJ BHOWMIK
Page 3 of 19
824 F3d 890.:'890; 2016 U;S« App. LEXIS 10018, **1
SN4[A.} Bardens of Proof, Allocation under 29 U.S.C.S. $ 207(^eH2) and are thuspfoperly
excluded under that :subsection—amounts paid to
The Fair Labor Standards Act CFLSA), 29 U.S..C:S.an employee for the irental of her vehicle; loans or
201-19, is construed liberally in favor of advances made to die epiployee; and the cost to the
eiiiployees; exemptions are to be naitbwly employer of conveniences fiimish^ to the
construed against the eniplpyeiTS s;eeking to assert employee such as packing space, restrooms,
them. The employer bears the burden of Ipckersj on-the-job medical care and recreational
establishing: that it qualifies for an exemption under fecilities. ^ 778.224m. Under 778.224/dL a
the^ Apt. A court will iiot. flhd a FLSA exemption payment may not be excludedfiomthe; regular; tate
^plicable except in contexts plainly and of pay pwsuant to ^ 207(e) f2) if it is generally
Unmistakably within the given exemption's: terms understood as compeiisation for woik, even thou^
and spirit. tbe ti^yment is not directly tied to ^ecific hoars
worked by an employee. And indeed,, the examples
givoa in ^ 778:224(0) of payments that Were not
Laibor & Employment La:w > Wage & Hour iQt^ded tp b& excluded under the "other similar
Laws > Scope & Defitutions > Regular Rate payments" clause^ such as boniises or toom and
bo£ird, are commonly considered to be
/T/VSTAT Scope & Definitions, Regular Rale co;rnpensation even though such payments do not
fiuctuate in accordance wilh particular hours
2^ U.S C J . S 207m f2) excludes from the regular worfced by an employee.
rate of pay payments made for occasiprial periods
when no work is perfbimed due to vacation,
hcdiday, illness, failure of the employer to provide
Labor & Employment. Law > Wage & Hour
sufBcient work, or other similar caiise; reasonable
Laws > Scope & Definitions > Regular Rate
payments for traveling expenses, or other expenses,:
incurred by an employee in the furtherance of his H m \ ^ Scope & Defiuftlons, Regular Rate
employer's taterests and properly reimbursable by
the employer; and other similar payments to an The question of whether a particular payment falls
employee which ore not made as compensation for within the"other similar payments" clause does not
his hours of employment. turn on TK^ether Has payment is tied to an hourly
wage, bi^ instead turns on whedier the payment is a
form of compensation for performing work, hideed,
Labor & Employment; Law > Wage & Hour even if payments to employees are not meastiied by
Laws > Scope & Defioitions > Regular Rate the number of hours spent at work, that fact alone
does not quali^ them for exclusion uitder 29
HN6\icl Scope & Definitions, Regular Rate U.S.C.Si$207(e>(2).
Labor & Employment Law > Wage & Honir
Laws > Scope,& Definitions > Regular Rate
Laibor & Employment Law > Wage & Hour
Laws > Scope & Definitions >;Regular Rate, giVPlAl Scope& Definitions^ Regular Rate
HN7\dL\ Scope & Definitioiis, Regular Rate Consistent with precedent and the Department of
Labor's interpretation, the inquiry is focused on
29 C F . R 778.224 provides three examples of
whether a given payment is properly characterized
payments that constitute "other similar payments"
AJ BHOWMIK
Page 4 of 19
824 F-3d t9&i. •890; 2016 U.S. A p p . L ^ S 10018. *•!
as compensation, regardless of v^ether the instead of the benefits under die plan: Provided,
payment is specifically tied to die hours an however^ That if a plan otherwise qoalified as a
employee Works, when determining whether that bonafide:benefit plan undet section 7(eX4) of the
payment fells under 29 US.CIS $ 207(e)(2)'rs FLSA, it win still be regarded as a bona fide plan
"other similar payments'* clause. even though it provides^ as an incidental part
thereof for die payment to m employee in cash of
all or a part of the amornit standing to his credit
Labor & Empiloymerit Law > Wage & Hour during the course of his employment under
Law* > Scope & Definitions > Regular Rate circUrnstances specified in the plan and not
inconsistent with the general purposes of the plan to
giViOrAl Scope & Definitions, Regnlar Rate provide the benefits described in section 7(e)(4) of
die FLSA. i 778.2ma)(5).
29 :U.S.C.S 4 207M(4) excludesfi^omthe regular
rate of pay con^butions irrevocably made by an
empldyer tb a trustee or third persbn pursuant to a
Administrative Law > Judicial
boiia fide plan for providing old-age, retiretnent,
Review > Standards of Review > Deference to
life, accident, or health insurance or siinilar benefits
Agency Stamtory Interpretation
for employees.
Administrative Law > Judicial
Review;>'Standafds of Review > Rule
Governments > Legislation Interpretation
B N l I f A l Govemments, Legislation ffiV/3fAl Standards of Review, Deference to
Agency Statntpry 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 bidletins^ opinion letters are "entided to respect"
legislature says m a statute what it means and under Skiikttore only to the extent that the agency's
means in a statute -what it ^ys there. interpretation has the "power to persuade;" Under
Sliidmore,. whether an agency's interpretatibn is
accorded deference will depend upon the
Labor & Etnployment Law > Wage & Hour thoroug^ess evident in its consideration,, the
Laws > Scope & Definitions > Regular Rate validity of its reasoning, its coiisistency with earlier
and later pronouncements, and all those factors
HNI2l±A Scope & Definitions, Regular Rate ^hich give it power to perjsuade, if lacking power
to control.
Under 29 U:S:C.S. <, g 207(e)(4), payments made to a
_tmstee_orLthitd-party-_ptttsiiant-to-a-bCHia-fide_plan_
for providing old-age, retirement, life, accident, or
Business & Corporate Compliance > ... > Wage
health insurance or similar beiiefits or employees
& Hour LaWs > Scope &
may be excludedfromthe regular rate of pay. The
Defiiiitibns > Overtime & Work Periods
statute does not define the term "bonafideplan."
The Department of Labor's tnteipretatipn of that Evidence > Burdens of Proof > Allocation
tenn is set forth at 29 CF.R. 1778.215, The plan
must not give an employee the option to receive Labor & Empibyment Law > ... > Scope &
any part of the employer's contributions in cash Definitions > Exemptions > Etnergency
AJ BHOWMIK
Page s of 19
824 F;3d 890;: *890; 2016 U.S, A|»p. LEXIS 10018* •*]
Personnel UNl tnA} Scope & Coverage, Overtime & Work
Periods
Labor & Employment Law > Wage & Hour
Laws > Scope & Definitions > Regular RateAn employer need not establish the exemption
under 29 U:SLQS: f 2Q7(k) through public
HNf4[i£l Scope & Coverage, Overtime «& Work declaration.
Periods
The employer bears the burden of estabhshing. that
Lalxir & Employment
it qualifies for the exemption. Generally, the
employer must show that it established a 2£ Law > ... > Remedies > Damages > Backpay
U.S.CS. ^2Q7m vioAi period andfliatdie ^207(k)
work period was regulatly reacurring. 29 C.F.R: 4 Ltdior & Employment
553.224. Whether an employer meets this burden is Law >... > Remedies > Damages > Liquidated
normally a question of fact. es
ffiVlTEfel Damages, Backpay
Business & Corporate Compliance > ... > Wage An employer \yho violates the Fair Labor Standards
& Hour Laws > Scope & Act (FLSA), 29 iLSd& 4420U19. shall be liable
Deftnitibns > Overtime & WbrkiPeitibds to the employee: Or employees affected in the
amount of their unpaid minimum wages, or their
Labor & Employment Law >... > Scope & unpaid overtime compensation, as the case may be,
Definitions > Exemptions > Emergency and in an additional equal amount as liquidated
Personnel damages. 29 U.S.C.S. § 216(b). However, if die
employer shows diat it acted in "good faith" and
Labor & Employment Law > Wage & Hour that it had "reasonable grounds" to believe diat its
Laws > Scope & Definitions > Regular Rate actions did not violate the FLSA, the court may, in
its sound discreticMOi, award no liqiiidated damages
£GVJ5fAl Scope & Coverage, Overtime & Work pr award any amount thereof not to exceed the
Periods amount specifiwi' in 29 U.S.C.S. §. 216. ^ 260. Tb
avail itself of this defense, the entployer must
An employer ne«I not expressly identify 29
establish diat it had an honest intention to ascertain
UJS^CS 207(k) when establishing a ^ 207^)
andfollowdie dictates of the Act and that it had
work period in order to qualifyforthe exemption.
reasonable grounds for believing that its conduct
comphed with the FLSA. If an employer fails tb
saltisfy its burden under ^ 260. an aWard bf
Business & Corporate Compliance > ... > Wage
liquidated damages is mandatory. Whether die
& Hotir Laws > Scppe &
-empioyer^-acted--in-good-€aith^and-whether-it-had-
Definitions > Overtime & Work Periods
objectively reasonable grounds for its action are
Labor & Employment Law > ... > Scope & mixed questions of feet and law. 29 C.F.R. 4
Definitions > Exemptions > Einergeney 790.22(c). Questions involving the application bf
Personnel legal principles tp establishedfectsare reviewed de
novo.
Labor & Employment .Law > Wage & Hour
Laws > Scope & Definitions > Regular Rate
Laltor & Employment
AJ BHOWMIK
Page 6;6f 19
824 E:3d 890, •890; 2016 U.S: App. LEXIS 10018, • • I
Law >... > Remedies > Damages > Liquidated SUMMARY"
Damages
Labilr Law
flZVJgrAl Damages, Liquidated Damages
On an appeal and a cross-appeal, the fjanel affiled
An employer who failed to take the^ steps necessary in part and reversed in part the district court's
to ensure its practices complied with the Fair Labor summary judgment partially in favor of the
Standards Act, 29 K5; C& ^ 20J-19, and Who plaintiffs in an action under the Fair Labor
offers no evidence to show that it actively Standards Act, sdleging that the City of San Gabriel
endeavored tb ensure siich compliance has not faded to include payments Of unused poitiotiS of
satisfiedJP K^.CS. $ 26ffs heavy burden. police officers' benefits dlow^nces when
calculating their regular rate of pay, resultii^ in a
lower overtime rate and a consequent
Labor & Employment Law > Wage iS: Hour underpayment of overtime compensatipn.
Laws > Statute ofXimitatibns
The district court agreed with the plaintiffs that the
SSV19[SCi] Wage & Hoar Laws, Statute of City's cash-in-Ueu of benefits payments wece not
Limitations properly excluded from its calculation bf the
regtdar rate of pay, except to the extent that the
Pursuant to 29 US.C.S. $ 25S(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 the plaintiffs w^e restricted
Labor Standanls Act (FLSA), 29i U:SG.S. 4^ 201- to a two-ye^ statute of limitations because the
may be extended to three years if an employe's City's vi'olation was [**2I not Willfid. The district
violation is deemed "willfid." A violation is will&l court also foimd that the City cpalifiedfora partial
if the emploji^er knew or showed reckless disregard oyerdine exemption, limiting its liability for
for the matter pf whether its conduct-was prohibited overtime to hours Worked in excess of S6 in a 14-
by the FLSA. An employer need not violate the day work period.
statute knowingly for its violation to be considered,
"willfid" under ^ 255(a), although merely negligent The panel held that the City's payment of unused
conduct will not sirfiice. The thfee^year statute of benefits mixst be included in the regular rate of pay
lirnitations may be applied where an employer and thus in the calculation of the overtime rate for
disregarded the very possibilify that it was violating: its poUce officers. Hie panel held diat the City's
the statute, although a court will not presume diat violation of the Act was wiU&l because it took no
conduct was willflil in the absi^ce of evidence. affirmative steps to ensure that its mitial
Like its determination regarding liquidated designation of its benefits payments complied with
damages, a district court's determination bf the Act ahd failed to establish that it acted in good
wdlfiilness under ^ 255{a} is a mixed question of faith. Accordingly, the plaintiffs: were entided to a
-fact-aiuHawrwith-de-novo-review-of-the-(£strict -three-year—statute—of—linutations—and—UqiUdated-
court'^s application of die law to established facts. damages for the City's viblationS. The panel also
An employer's violation of the FLSA ^ "wiMfid" concluded, however, that the Cifyhad dernonstiated
When it is on notice qf its FLSA reqtiirements, yet that it qualified for the partial overtime exemption
takes no afGrmative action to assure compliance under 207fk) of the Act^ limititig its damages for
with them. the overtime violations.
Sumntary:
**This summaiy <»iistitu;teB lio pait of tfie opinion of the court. It baa
been prepared by coiuf stafTfor the convenience of the reader.
AJ BHOWMIK
Page 7 of 19
824 KSd 890, •890; 2016 U.S. App; LEXIS 10018, **2
Judge Owens, joined by judge Trott, wrote diat he The Plaintiffs asserted that die City's violatipn of
concurred fiiUy in the majority's opinion but the FLSA was "willfbU" entitling diem to a three-
believes that the court's willfulness caselaW is bff" year statute o f limitations for violations of the- Act,
track. and sought, tp recoyesr their ui^aid overtime
compensation and liquidated damages.
Counsel: Brian P. Walter (argued) and Alex Y.
Wor^, Liebert Cassidy Whitinpre, Los Angeles, The Cit^ claimed that its cash-in-heii of benefits
Caiifomia, for Defondant-Appellant/Cross- payments were properly excluded from the
Appellee. [**3J Plaintiffs' regtdar rate of pay pursuant to two bf the
Act's statutory exclusions and argued that it
Jos^h N. Bolander (argued), Brandi L. Haiperr and
qualified for a partial bvertime exemption under i
Christopher L. Gaspard, Gaspard CastUlo Harper,
207(kk which allpws; public agencies employing
APC; Ontario;, California, for Piaintiffs-
Appellees/Cross^Appellants. firefighte£s or law enforcement officers to designate
an alternative wprk period for purposi^ pf
Judges: Before: Stephen S. Trotti Andre M> determihing pvertune. The City denied diat any
Davis*, and.John B. Owens, Circuit Judges. violation of the FLSA was wiOiul and that the
Opinion by Judge Davis; OWENS, Circuit Jildge, Plaintiffs Were entided to liquidated damages.
with; whom TROTT, Circuit Judge, jprns,
concurring. Fbr the reasons that follow, we conclude that the;
Cify's payment of unused benefits must be included
Opinion by: Andie M. Davis in the regular rate of pay and thus in the caltiidation
of the overtime rate for its police officers as weU.
ion And because the City took no affirmative steps to
ensure diat its initial designation of its benefits
payments cotnplied vvith the FLSA and failed to
[*894] DAVIS, Circuit Judge: establish that it acted in good faith ih exclui^g
thpse [**5] payments from its regular rate of pay,
PlaintLEfe-Appellees and Cross-Appellants Daimy the Plaintiff are entitled to a threeryear statute of
Flores, Robert Barada, Kevin Watson^ Vy Van, Ray limitatibmi^ and liquidated damages for the City's
Lara^ Dane Woolwine, Rikimaru Nakamura, yiOlaticHis. We also conclude, h;owey?r, that the
Christbpher Wenzelj, Shannon CaSiUas, James Just, City has demonstrated that it qualifies for the
Steve Rodrigues, and Enrique Deand^: and Plaintiff- partial Overtime exemption under $ 2071^) of the
Appellee Cruz Hemandez (collectively, [*895] Act, limiting its damages for the overtime yiotatipns
"Pla;intiffs") are cmrerit or fonner police officers alleged here.
employed by the City of San Gabriel. Califotiiia
("City"). The Plaintiffe brought suit against die City
for violations of the Fair Labor Standards Act 1. BACKGROUND
-mrSA^>r-2j?-£;:.y.e^g^-2QJ-^-m-aIlcgine-thal-die-
City failed to include payments of umised portions
of the Plaintiffs* benefits allowances when A. Statutory background
calculating dieir regular rate of pay, resulting in a
lower overtime: rate and a consequent fl?Vi[Y| Undo: the FLSA, an employer must pay
imdetpayment {**4] of overtime compensation. its employees premium, overtitne cpmper^tipn of
one and one^half times the regjular rate of payment
for any hours worked in excess of forty in a sevens
' The.Honprable Aadre M. Davis, Senior Ciaaul Judge far'die U.S. day work week. Cleveland y:^ City of Los Anseles,
Court of Appeals for the Fotiith Circuit, sitting by designation.
AJ BHOWMIK
Page 8 of 19
834 F:3d 890i •895; 2016 U.S. App. LEXIS 10018, **5
420 F.3d 981. 984-85 (9ih Cir. 2005k (citing f that the eniplbyee has alternate medical coverage,
2Q7(a)). The "regular rate" is defined as "all such as through a spouse. If an employee elects to
remunerationforemployment paid' to, or on behalf forgo medical benefits because she has alternate
of, the employee^" siibject to a numbasr of Coverage; [**7| she may receive the imused
exclu^ons setforthiii the Act. $ 207(0). The ELSA portion of her benefits allotment as a cash payment
also provides "a limited exemption from the added to her regular paycheck.
pyertime limit tp pubb'c employers of law
enforceinent peisoimel or firefi^terS." Adair v. In 2009, an employee who declined medicai
Citv of Kmand. 185 F 3 d K m . 1059 (9ih Gtr: coverage received a payment of $ l,t)36..75 in lieu of
1999) (citing g 207(k)\ The partial overtime benefits each month. This amount has increased
exemption ia 4207(k) "increases the; overtime liinit each year, so that employees who declined medical
shghdy and it gives the employer gceater flexibility coverage received $1,112.28 in 2010, $1,186.28: in
to select the work period over wliich the overtime 2011, and $1,304.95 in 2012, This paynaent appears
limit; will be calculated" Id. at i06(> (citation as a designated line item on an employee's
omitted). paycheck and is sid>ject to federal and state
withholding taxeSj Medicare taxes^ and
flSVilTl The FLSA provides a private causEe of gatnishment
action for employees to- sedc unpaid wages
In 2009i die City paid $2,389,468.73 to or on
owed to them under its provisions. § 116(b). The
behalf of its employees pursuant to its Flexible
Act has a two-year statute of limitationsc for claims
Benefits Pl^, and it paid $1,116,485.77 of diat
urdess the employer's violation was '-willfid^-' in
amount, or 46.725% of total plan contributions, to
which case the statute of limitations is ^tended to
employees for unused benefits. While the exact
three years. $ 255(ah An ernployer who violates the
figures vary each year, die percentage of the total
FLSA's overtime provisions is liable in the amount
plan contributibns that the City pays to employees
of the employee's impaid overtime comperisation,
for unused benefits has remained somewhat
in addition to an equal amount in Hquidated
consistent. In 2010, die City paid $1,086,202.56 to
damages. § 216(b). The Act provides a defense to
employe!^ for unused benefits, refiecting 42.842%
liquidated damages for an employer who
of total, plan contributions; in 2011, $1,138,074.13,
establishes that it acted in good faith and had
or 43.934% of total plan contributions; and in 2012,
reasonable [*89^ grounds to believe that its
$1,213,880.70, or 45.179% of total plan
actions did not violate the FLSA- $260.
contributions.
At some time [*'^S] prior to 2003, the City
B. Factual and procedural background
designated its casli-in-Ueu of benefits payments as
"benefits" that Were excluded from its calculatibn
of a redpient's regular rate of pay, and,
1. Flexible Benefits Plan
-aecoidingiy,_has—not—included—the—vaiue-of—the-
The City provides a Flexible Benefits Plan to its payments in its calculatibn of ernployees' regidar
employees under which the City furnishes a rate of pay. The City has not revisited its
designated monetary amount to each employee fbr designation since diat time.
the purckase of medical, vision, and dental benefits.
AH employees are required to use a portion of these
funds to purchase vision and dental benefits. An 2. Calculation of overtime
employee may decline to use the remainder of diese
Since at least 1994, the City's police officers; have
funds to purchase medical benefits only upon proof
been paid overtime When they have worked more
AJ BHOWMIK
Page 9 of 15
824 F.3d 890, •896; 2016 U.S. App. EEXIS 10018, **S
than eighty hours in a fourteen-day work period. CFlor^sIT'l
Sinces ai least 2003, die (City's eighty-hovir/fourteen-
day work period has been memorialized in several The City timely appealed the district [**l6i: court's
documents. A 2003 City resolution concerning, the rulings concerning ihs exclusion of die cash-in-lieu
"work week" states that police officers work eighty of benefits^ payments from the regular rate of pay.
hours i i i a bi-Weekly period. This same eighty- The Plaintifis ;crosa-appealed, challenging the
hour/fQUrteen-day work period was restated in the district court's ndin^ that the paymems qualified
City's Salary, Compensation: and Benefit Policy for exclusion under the Act if made to a trustee or a
Manual, dated July 3, 2010, and in die 2005-2007 third party, diat the City qualified for a § 2Q7(k)
Memoranduin pf Utiderstantfing between the City partial overtime exemption^ tliat the a^Ucable
and the poUce officers' collective: bargaining unit statute of limitations was two years, and' diat the
Because die City's eash-in-lieu of benefits Plaintiff were not entided to liquidated damages.
payments are excluded from its calculation of an
Officer'is regidar rate of pay, the benefits payments
are not incorporated hitp the City's STANDARD OF REVIEW
calculation [**9] of the officer's overtime rate.
fly^l?! We review a grant of s%immary judgment
or partial summary judgment de novoy applying the
same: standard of review as the district court under
3. Litigation between the parties
Federal Rule-of GfwV Procedure 56. Adairi. 185
The Plaintiffs instituted this suit against the City in F.3d at 1059: Locdl 246 Utility Workers Union of
20l2. Following discbVery, both parties moved fbr Am. v. S Cal. Edison Co.. 83 F.3d 292. 294 n.l
partial summaory judgment on the Plaint
Preview
BLUMENTHAL NORDREHAUG BHOWMIK DE BLOUW LLP f .^^Dnp?9 Norman B. Blumenthal (State Bar #068687) „. ""^^^tD Kyle R. Nordrehaug (State Bar #205975) ^019 J/H' / p n, Aparajit Bhowmik (State Bar #248066) ' nl \: pn Piya Mukherjee (State Bar #274217) " -'^.^^^'0,? cow,., Victoria B. Rivapalacio (State Bar #275115) "-^liHly QF SA}^'^:^UFGPPU 2255 Calle Clara "^''^^'^^HJo La Jolla, CA 92037 Telephone: (858)551-1223 Facsimile: (858) 551-1232 Attorneys for Plaintiff 8 9 SUPERIOR COURT OF T H E STATE OF CALIFORNIA 10 IN AND FOR T H E COUNTY OF SACRAMENTO 12 ANDREA SPEARS, an individual, on behalf Case No. 34-2017-00210560-CU-OE-GDS 13 of herself and on behalf of all persons similarly situated. CLASS ACTION 14 15 Plaintiff, DECLARATION OF APARAJIT BHOWMIK IN SUPPORT OF PLAINTIFF ANDREA SPEARS'S 16 OPPOSITION TO DEFENDANT'S RENEWED vs. MOTION FOR SUMMARY ADJUDICATION 17 HEALTH NET OF CALIFORNIA, INC., a Caiifomia Corporation; and Does 1 through 18 50, Inclusive, Telephone Appearance 19 Defendants. Reservation No. 2380178 20 TOMAS R. ARANA, on behalf of himself, Hearing Date: February 4, 2019 21 all others similarly situated. Hearing Time: 9:00 a.m. Dept.: 54 22 Plaintiff, Action Filed: April 5,2017 23 vs. 24 HEALTH NET OF CALIFORNIA, INC., a Caiifomia corporation; and DOES 1 through 25 50, inclusive. 26 Defendants. 27 28 DECL AJB ISO OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION CASE No. 34-2017-00210560 1 DECLARATION OF APARAJIT BHOWMIK 2 I, APARAJIT BHOWMIK, declare as follows: 3 1. 1 am an attomey at law duly licensed to practice before all of the courts of the State of 4 Caiifomia. I am a partner with the law firm of Blumenthal Nordrehaug Bhowmik De Blouw LLP, attomeys 5 of record for Plaintiff Andrea Spears. 1 have personal knowledge of the facts set forth herein, and if called 6 as a witness, could and would testify competently thereto. 7 2. The payments Plaintiff contends should have been included in her regular rate payments 8 appear on Plaintiffs paystub as MedFlxWave. A true and correct copy of one of these paystubs with this 9 kind of payment is attached hereto as Exhibit 1 and at page HNCA000078 the payment can be seen in the 10 amount of $20. Defendant's motion is not claiming that the "DenFlxElct" payment should have been excluded from the regular rate. This payment is shown at HNCA000078 in the amount of $7.54. 12 3. A true and correct copy of the portion of the Ninth Circuit's decision in Flores vs. City of 13 San Gabriel is attached hereto for the Court's convenience as Exhibit 2 with the highlight and underline 14 added as to the section regarding whether cash in lieu of benefits should be included in the regular rate. 15 4. A true and correct copy of the 2011 -2015 Summary Plan Description is attached hereto as 16 Exhibit 3 for the Court's convenience. This is the same document attached as Exhibit "J"to the Declaration 17 of Debbie Colia filed by Defendant. 18 5. A true and correct copy of the 2016 Summary Plan Description is attached hereto as Exhibit 19 4 for the Court's convenience. This is the same document attached as Exhibit "K" to the Declaration of 20 Debbie Colia filed by Defendant. 21 6. True and correct copies of excerpts from the deposition of Defendant's declarant, Debbie -22- -Colia, are^attached hereto as Exhibit 5. 23 7. True and correct copies of excerpts from the deposition of "Person Most Knowledgeable, 24 are attached hereto as Exhibit 6. 25 8. True and correct copies of excerpts from the deposition of Defendant's declarant, Diane 26 Rodes, are attached hereto as Exhibit 7. 27 28 DECL AJB ISO OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION CASE No. 34-2017-00210560 1 9. A true and correct copy of a declaration from Debbie Colia provided in support of 2 Defendant's original motion for summary adjudication is attached hereto as Exhibit 8. 3 10. A true and correct copy of a declaration from Diane Rodes provided in support of 4 Defendant's original motion for summary adjudication is attached hereto as Exhibit 9. 5 11. True and correct copies of excerpts from the deposition of Defendant's declarant, Kelly 6 Sarabia, are attached hereto as Exhibit 10. 7 I declare under penalty of perjury under the laws of the State of Caiifomia and the United States that 8 the foregoing is true and correct. Executed at La Jolla, Caiifomia on January 18, 2019. 9 10 11 A.J. Bhowmik 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DECL AJB ISO OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION 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 XXHTBTTl 24 25 26 27 28 DECL AJB ISO OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION CASE No. 34-2017-00210560 Hoitw Md te FsvqHIes Slgniaiil 1 View Self Service Payt^^heck Andrea Spears Met Pay: $1,550.73 Company:: HesiSi (>fatof Canfomia. Inc PayBeglDiDate: .0S/1»?01S Address: Pay End 0 ^ . OafSSeoif tWI-f^undatiiniiPtece Chackbate; 07/b2/20'i5 HeaStfi ttei PayroB Ceritar Ranicho Gcudbva. CA, 65870 View a DHifefent PavcHecfc Geaeral tlanie: Andma J Spaare Buslheas Unit; . pHsoi; Emptpyae ID: oasieo Payelroup: Oan Regulaf Associates AUUiusb: SSS7 New Moijrdaih may- ' DspartmeAt: Sac(airieflto,<:;A9S82B Lpcatlpn> Baiii*o(5bntfciva'11031 Sun Conte PayRaie:. $32,S0d.W AnhU^ Tax Data F e d Marital Statiicsi Exempt, . cA.MarN Status; SInglSt or Married with two or more Ifico Fed Aihinances: T CA AiHowattces: 3 Fed Adcfl Percent.' ti.aoa C A Adffi P a n e n t OMoa FedAddlAmDunt: $aoo CAAddlArnoont: $0,00 PaychcffiK Stimmaiy^^ _ . _ ^] ^.^ flat Pay Pu'nent 1,7S8.qi- 1.749^4 1B8:ai 837 1^S0;73 Earnings OssorfpMon Pay Begin 1 Pay End Date loate j Hourej P^tsj' Ampuntj DVsCtlptlaii 1 Aiiiount 1 rad\A/!llihpl(AiB S0.OO nS,8260D0 . 1;2S0.00 PediitlEpeE 25J7 •^ Ovar^a 1 20.50 23.437500 480,47 ^OASDI/EE 108,47 20.00 DenFlxElct 7J54 CA.QASbl/EE "4S.33 15.74- 1 Total; 198.9i: 1 " Total: 100.5Q i,rsju)i 1 • Bi^Ora-Tex Reductions After T ^ Deductions Emfitoyar Paid Benefits Desctiplion f. Ameuirt Beaert^tion 1 Amount Deaaipiion | Ainaunt Denial 8:37 3.54 Basic Ufe 1.74 AtH) 0j3 STD 3.64 LTD I I .Totat 8:37 Total: . • Taxalile Tolab 12,83. I I PaymentTryRff • "fpaychecft Munber |AccountTyip.e lA^ceui^Nujnber ] Amount IXrectOeposIt 3282276 7B342390 1,SSp;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 EXHIBIT 2 24 25 26 27 28 DECL AJB ISO OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION CASE No. 34-2017-00210560 Calltioii Afl of: February 12,2018 7:21 PM Z; Flores V. Ckv ofSan Gabtiel United States Court of AppealsforiftB Nmdi Circuit F e b m ^ 10,2016j Argued an4 Subniitti^, Pasadena, California; Jiine 2, 2016, Filed Nos. 14^56421,14-56514 Reporter 824 F.3d 890 2016 U.S. Apjt. LEXIS lOOlS 166 Lab. Cas. (CCH) P36,448; 26 Wage & Hour Ca*. 2d (BNA) 914 faith, reqidrenients, complied, hours worked, DANNY FLORES; ROBERT BARADA; KEVIN designation^ provides^ qualify, summary judgment, WATSON; VY VAN; RAY LARA; DANE viblatibas, imtised, opinion Iietter WOOL WINE; RDCIMARU NAKAMURA; CHRISTOPHER WENZBL; SHANNON CASnXAS; JAMES JUST; STEVE Case Sqmmjtry RODRIGUES; ENRIQUE DEANDA, Plaintiffs- V^pellBBSt'GrossT-AppBllants, and CRUZ Overview m K M m D E Z , Plainfili;.Appellee, and ©IIBERT LEE; RENE LOPEZ, Plaintiffs, v. CITY OF SAN HOLDINGS: [1]-A city's cash-iQ-.lieu of benefits GABRIELvDefendantrAppellant/Cross-Appellee.. payments to police officers were not properly excli^edftom.die calcol^on of tbef^regular rate of Slibse4|ii£nt History: US Supreme Court, certiorari pay under 29 U,S.CLS: 2Q7fej ... > Wage "willflil," in which case the: st^te of limitations is & Hour Laws > Scope & extended to three years. 29MS:C.S. ^ 235/a>. An Definition^ > Overtime & Work Periods employer who violates t^ FLSA's overtime provisions is liable in the amount of thejemployee's Labor & Employment Law > ... > Scope & luipaid oyertimB^ contpraisation, in addition to an Definitions > Exemptions > Emergency sqaai amount in liquidated damages. JP U.S:CJS. § Personnel 2i6(b). Th&FL^ provides a defense to liquidated damages for an employ^' who establishes that it Labor & EmploymentEaw > Wage & Hour acted in good faith and had reasonable pounds to Laws > Scope & Definitions Regular Rate befie^re that its actions did not^plate the FESA. 29 HPfJfiS Scope & Coverage, Overtime & Work: Peiidds Under the Fair Labor Standards Act ^LSA), 29 Civil procedure > ... > Summary U:S.C.S, ^§ 201-J9, an employer must pay its Judgment > Motions for Summary; employees premimn overtime compensation of one Judgment > Cross Motions and one-haif tunes the regular rate of payment for any hours wPtked in excess of forty m a seven-day Civil Proeedure > Judgments > Summary work week. The "regular rate" is defined as all Judgment > Entitlement as Matter of Law remimeratibn for employment paid to, or on behalf of,^e employee, subject to a ngmber of exclusions Civil Procedure > Appeals > Summary set forth in the Act 29 U.S.CX 267(e). The Judgment Review > Standards of Review FLSA also provides a limited exemption fiom the overtime limit to public enaployers of law flft^rAl MiDtions for Summary Judgment, enforcement personnel orfirefighters.29 U:S.C.S. 4 Cross Motions 207(k). The partial overtime exemption in ^, 207{k) The court of appeals reviews a grant of summary increases the overtime limit slightly and it gives the judgment or partial summary jud^ent de novo, employe greater flexibihty to select the work applying the same standard of review as the district period over which the overtime limit will be court under Fe^: R. Civ.. P. 56. Under Rule 56, a calculated. Court shall grant summary judgment if the movant showji that diere is no genuine dispute as to any rdaterial fact ahd the movant is entitled to judgment Labor & Einployment Law > Wage & Hour as a matter of law. Fed. R Civ. P. 56(a). When the Laws > Remedies > Private Suits parties file cross-motions for summary judgment, -thercourt-reviews-each-s^aratelyrgiving-the-nQn»- Labor &- Employrtient Law > Wage & Hour movant for each motion the benefit of all Laws > Statute of Limitations reasonable inferences. HN2\it\ Remedies, Private Suits The Fair Labor Standards Act (FLSA), 29 US. CiS. Evidence > Burdensof Proof > Allocation 201-19, provides a private cause of action for employees to s^efc unpaid wages owed to them Labor & Emplojment Law > Wage & Horn: imder its provisions. 29 tJ.S.CS. § 216(b). The Laws > Scope &• Definitions > Exemptions AJ BHOWMIK Page 3 of 19 824 F3d 890.:'890; 2016 U;S« App. LEXIS 10018, **1 SN4[A.} Bardens of Proof, Allocation under 29 U.S.C.S. $ 207(^eH2) and are thuspfoperly excluded under that :subsection—amounts paid to The Fair Labor Standards Act CFLSA), 29 U.S..C:S.an employee for the irental of her vehicle; loans or 201-19, is construed liberally in favor of advances made to die epiployee; and the cost to the eiiiployees; exemptions are to be naitbwly employer of conveniences fiimish^ to the construed against the eniplpyeiTS s;eeking to assert employee such as packing space, restrooms, them. The employer bears the burden of Ipckersj on-the-job medical care and recreational establishing: that it qualifies for an exemption under fecilities. ^ 778.224m. Under 778.224/dL a the^ Apt. A court will iiot. flhd a FLSA exemption payment may not be excludedfiomthe; regular; tate ^plicable except in contexts plainly and of pay pwsuant to ^ 207(e) f2) if it is generally Unmistakably within the given exemption's: terms understood as compeiisation for woik, even thou^ and spirit. tbe ti^yment is not directly tied to ^ecific hoars worked by an employee. And indeed,, the examples givoa in ^ 778:224(0) of payments that Were not Laibor & Employment La:w > Wage & Hour iQt^ded tp b& excluded under the "other similar Laws > Scope & Defitutions > Regular Rate payments" clause^ such as boniises or toom and bo£ird, are commonly considered to be /T/VSTAT Scope & Definitions, Regular Rale co;rnpensation even though such payments do not fiuctuate in accordance wilh particular hours 2^ U.S C J . S 207m f2) excludes from the regular worfced by an employee. rate of pay payments made for occasiprial periods when no work is perfbimed due to vacation, hcdiday, illness, failure of the employer to provide Labor & Employment. Law > Wage & Hour sufBcient work, or other similar caiise; reasonable Laws > Scope & Definitions > Regular Rate payments for traveling expenses, or other expenses,: incurred by an employee in the furtherance of his H m \ ^ Scope & Defiuftlons, Regular Rate employer's taterests and properly reimbursable by the employer; and other similar payments to an The question of whether a particular payment falls employee which ore not made as compensation for within the"other similar payments" clause does not his hours of employment. turn on TK^ether Has payment is tied to an hourly wage, bi^ instead turns on whedier the payment is a form of compensation for performing work, hideed, Labor & Employment; Law > Wage & Hour even if payments to employees are not meastiied by Laws > Scope & Defioitions > Regular Rate the number of hours spent at work, that fact alone does not quali^ them for exclusion uitder 29 HN6\icl Scope & Definitions, Regular Rate U.S.C.Si$207(e>(2). Labor & Employment Law > Wage & Honir Laws > Scope,& Definitions > Regular Rate Laibor & Employment Law > Wage & Hour Laws > Scope & Definitions >;Regular Rate, giVPlAl Scope& Definitions^ Regular Rate HN7\dL\ Scope & Definitioiis, Regular Rate Consistent with precedent and the Department of Labor's interpretation, the inquiry is focused on 29 C F . R 778.224 provides three examples of whether a given payment is properly characterized payments that constitute "other similar payments" AJ BHOWMIK Page 4 of 19 824 F-3d t9&i. •890; 2016 U.S. A p p . L ^ S 10018. *•! as compensation, regardless of v^ether the instead of the benefits under die plan: Provided, payment is specifically tied to die hours an however^ That if a plan otherwise qoalified as a employee Works, when determining whether that bonafide:benefit plan undet section 7(eX4) of the payment fells under 29 US.CIS $ 207(e)(2)'rs FLSA, it win still be regarded as a bona fide plan "other similar payments'* clause. even though it provides^ as an incidental part thereof for die payment to m employee in cash of all or a part of the amornit standing to his credit Labor & Empiloymerit Law > Wage & Hour during the course of his employment under Law* > Scope & Definitions > Regular Rate circUrnstances specified in the plan and not inconsistent with the general purposes of the plan to giViOrAl Scope & Definitions, Regnlar Rate provide the benefits described in section 7(e)(4) of die FLSA. i 778.2ma)(5). 29 :U.S.C.S 4 207M(4) excludesfi^omthe regular rate of pay con^butions irrevocably made by an empldyer tb a trustee or third persbn pursuant to a Administrative Law > Judicial boiia fide plan for providing old-age, retiretnent, Review > Standards of Review > Deference to life, accident, or health insurance or siinilar benefits Agency Stamtory Interpretation for employees. Administrative Law > Judicial Review;>'Standafds of Review > Rule Governments > Legislation Interpretation B N l I f A l Govemments, Legislation ffiV/3fAl Standards of Review, Deference to Agency Statntpry 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 bidletins^ opinion letters are "entided to respect" legislature says m a statute what it means and under Skiikttore only to the extent that the agency's means in a statute -what it ^ys there. interpretation has the "power to persuade;" Under Sliidmore,. whether an agency's interpretatibn is accorded deference will depend upon the Labor & Etnployment Law > Wage & Hour thoroug^ess evident in its consideration,, the Laws > Scope & Definitions > Regular Rate validity of its reasoning, its coiisistency with earlier and later pronouncements, and all those factors HNI2l±A Scope & Definitions, Regular Rate ^hich give it power to perjsuade, if lacking power to control. Under 29 U:S:C.S. <, g 207(e)(4), payments made to a _tmstee_orLthitd-party-_ptttsiiant-to-a-bCHia-fide_plan_ for providing old-age, retirement, life, accident, or Business & Corporate Compliance > ... > Wage health insurance or similar beiiefits or employees & Hour LaWs > Scope & may be excludedfromthe regular rate of pay. The Defiiiitibns > Overtime & Work Periods statute does not define the term "bonafideplan." The Department of Labor's tnteipretatipn of that Evidence > Burdens of Proof > Allocation tenn is set forth at 29 CF.R. 1778.215, The plan must not give an employee the option to receive Labor & Empibyment Law > ... > Scope & any part of the employer's contributions in cash Definitions > Exemptions > Etnergency AJ BHOWMIK Page s of 19 824 F;3d 890;: *890; 2016 U.S, A|»p. LEXIS 10018* •*] Personnel UNl tnA} Scope & Coverage, Overtime & Work Periods Labor & Employment Law > Wage & Hour Laws > Scope & Definitions > Regular RateAn employer need not establish the exemption under 29 U:SLQS: f 2Q7(k) through public HNf4[i£l Scope & Coverage, Overtime «& Work declaration. Periods The employer bears the burden of estabhshing. that Lalxir & Employment it qualifies for the exemption. Generally, the employer must show that it established a 2£ Law > ... > Remedies > Damages > Backpay U.S.CS. ^2Q7m vioAi period andfliatdie ^207(k) work period was regulatly reacurring. 29 C.F.R: 4 Ltdior & Employment 553.224. Whether an employer meets this burden is Law >... > Remedies > Damages > Liquidated normally a question of fact. es ffiVlTEfel Damages, Backpay Business & Corporate Compliance > ... > Wage An employer \yho violates the Fair Labor Standards & Hour Laws > Scope & Act (FLSA), 29 iLSd& 4420U19. shall be liable Deftnitibns > Overtime & WbrkiPeitibds to the employee: Or employees affected in the amount of their unpaid minimum wages, or their Labor & Employment Law >... > Scope & unpaid overtime compensation, as the case may be, Definitions > Exemptions > Emergency and in an additional equal amount as liquidated Personnel damages. 29 U.S.C.S. § 216(b). However, if die employer shows diat it acted in "good faith" and Labor & Employment Law > Wage & Hour that it had "reasonable grounds" to believe diat its Laws > Scope & Definitions > Regular Rate actions did not violate the FLSA, the court may, in its sound discreticMOi, award no liqiiidated damages £GVJ5fAl Scope & Coverage, Overtime & Work pr award any amount thereof not to exceed the Periods amount specifiwi' in 29 U.S.C.S. §. 216. ^ 260. Tb avail itself of this defense, the entployer must An employer ne«I not expressly identify 29 establish diat it had an honest intention to ascertain UJS^CS 207(k) when establishing a ^ 207^) andfollowdie dictates of the Act and that it had work period in order to qualifyforthe exemption. reasonable grounds for believing that its conduct comphed with the FLSA. If an employer fails tb saltisfy its burden under ^ 260. an aWard bf Business & Corporate Compliance > ... > Wage liquidated damages is mandatory. Whether die & Hotir Laws > Scppe & -empioyer^-acted--in-good-€aith^and-whether-it-had- Definitions > Overtime & Work Periods objectively reasonable grounds for its action are Labor & Employment Law > ... > Scope & mixed questions of feet and law. 29 C.F.R. 4 Definitions > Exemptions > Einergeney 790.22(c). Questions involving the application bf Personnel legal principles tp establishedfectsare reviewed de novo. Labor & Employment .Law > Wage & Hour Laws > Scope & Definitions > Regular Rate Laltor & Employment AJ BHOWMIK Page 6;6f 19 824 E:3d 890, •890; 2016 U.S: App. LEXIS 10018, • • I Law >... > Remedies > Damages > Liquidated SUMMARY" Damages Labilr Law flZVJgrAl Damages, Liquidated Damages On an appeal and a cross-appeal, the fjanel affiled An employer who failed to take the^ steps necessary in part and reversed in part the district court's to ensure its practices complied with the Fair Labor summary judgment partially in favor of the Standards Act, 29 K5; C& ^ 20J-19, and Who plaintiffs in an action under the Fair Labor offers no evidence to show that it actively Standards Act, sdleging that the City of San Gabriel endeavored tb ensure siich compliance has not faded to include payments Of unused poitiotiS of satisfiedJP K^.CS. $ 26ffs heavy burden. police officers' benefits dlow^nces when calculating their regular rate of pay, resultii^ in a lower overtime rate and a consequent Labor & Employment Law > Wage iS: Hour underpayment of overtime compensatipn. Laws > Statute ofXimitatibns The district court agreed with the plaintiffs that the SSV19[SCi] Wage & Hoar Laws, Statute of City's cash-in-Ueu of benefits payments wece not Limitations properly excluded from its calculation bf the regtdar rate of pay, except to the extent that the Pursuant to 29 US.C.S. $ 25S(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 the plaintiffs w^e restricted Labor Standanls Act (FLSA), 29i U:SG.S. 4^ 201- to a two-ye^ statute of limitations because the may be extended to three years if an employe's City's vi'olation was [**2I not Willfid. The district violation is deemed "willfid." A violation is will&l court also foimd that the City cpalifiedfora partial if the emploji^er knew or showed reckless disregard oyerdine exemption, limiting its liability for for the matter pf whether its conduct-was prohibited overtime to hours Worked in excess of S6 in a 14- by the FLSA. An employer need not violate the day work period. statute knowingly for its violation to be considered, "willfid" under ^ 255(a), although merely negligent The panel held that the City's payment of unused conduct will not sirfiice. The thfee^year statute of benefits mixst be included in the regular rate of pay lirnitations may be applied where an employer and thus in the calculation of the overtime rate for disregarded the very possibilify that it was violating: its poUce officers. Hie panel held diat the City's the statute, although a court will not presume diat violation of the Act was wiU&l because it took no conduct was willflil in the absi^ce of evidence. affirmative steps to ensure that its mitial Like its determination regarding liquidated designation of its benefits payments complied with damages, a district court's determination bf the Act ahd failed to establish that it acted in good wdlfiilness under ^ 255{a} is a mixed question of faith. Accordingly, the plaintiffs: were entided to a -fact-aiuHawrwith-de-novo-review-of-the-(£strict -three-year—statute—of—linutations—and—UqiUdated- court'^s application of die law to established facts. damages for the City's viblationS. The panel also An employer's violation of the FLSA ^ "wiMfid" concluded, however, that the Cifyhad dernonstiated When it is on notice qf its FLSA reqtiirements, yet that it qualified for the partial overtime exemption takes no afGrmative action to assure compliance under 207fk) of the Act^ limititig its damages for with them. the overtime violations. Sumntary: **This summaiy <»iistitu;teB lio pait of tfie opinion of the court. It baa been prepared by coiuf stafTfor the convenience of the reader. AJ BHOWMIK Page 7 of 19 824 KSd 890, •890; 2016 U.S. App; LEXIS 10018, **2 Judge Owens, joined by judge Trott, wrote diat he The Plaintiffs asserted that die City's violatipn of concurred fiiUy in the majority's opinion but the FLSA was "willfbU" entitling diem to a three- believes that the court's willfulness caselaW is bff" year statute o f limitations for violations of the- Act, track. and sought, tp recoyesr their ui^aid overtime compensation and liquidated damages. Counsel: Brian P. Walter (argued) and Alex Y. Wor^, Liebert Cassidy Whitinpre, Los Angeles, The Cit^ claimed that its cash-in-heii of benefits Caiifomia, for Defondant-Appellant/Cross- payments were properly excluded from the Appellee. [**3J Plaintiffs' regtdar rate of pay pursuant to two bf the Act's statutory exclusions and argued that it Jos^h N. Bolander (argued), Brandi L. Haiperr and qualified for a partial bvertime exemption under i Christopher L. Gaspard, Gaspard CastUlo Harper, 207(kk which allpws; public agencies employing APC; Ontario;, California, for Piaintiffs- Appellees/Cross^Appellants. firefighte£s or law enforcement officers to designate an alternative wprk period for purposi^ pf Judges: Before: Stephen S. Trotti Andre M> determihing pvertune. The City denied diat any Davis*, and.John B. Owens, Circuit Judges. violation of the FLSA was wiOiul and that the Opinion by Judge Davis; OWENS, Circuit Jildge, Plaintiffs Were entided to liquidated damages. with; whom TROTT, Circuit Judge, jprns, concurring. Fbr the reasons that follow, we conclude that the; Cify's payment of unused benefits must be included Opinion by: Andie M. Davis in the regular rate of pay and thus in the caltiidation of the overtime rate for its police officers as weU. ion And because the City took no affirmative steps to ensure diat its initial designation of its benefits payments cotnplied vvith the FLSA and failed to [*894] DAVIS, Circuit Judge: establish that it acted in good faith ih exclui^g thpse [**5] payments from its regular rate of pay, PlaintLEfe-Appellees and Cross-Appellants Daimy the Plaintiff are entitled to a threeryear statute of Flores, Robert Barada, Kevin Watson^ Vy Van, Ray limitatibmi^ and liquidated damages for the City's Lara^ Dane Woolwine, Rikimaru Nakamura, yiOlaticHis. We also conclude, h;owey?r, that the Christbpher Wenzelj, Shannon CaSiUas, James Just, City has demonstrated that it qualifies for the Steve Rodrigues, and Enrique Deand^: and Plaintiff- partial Overtime exemption under $ 2071^) of the Appellee Cruz Hemandez (collectively, [*895] Act, limiting its damages for the overtime yiotatipns "Pla;intiffs") are cmrerit or fonner police officers alleged here. employed by the City of San Gabriel. Califotiiia ("City"). The Plaintiffe brought suit against die City for violations of the Fair Labor Standards Act 1. BACKGROUND -mrSA^>r-2j?-£;:.y.e^g^-2QJ-^-m-aIlcgine-thal-die- City failed to include payments of umised portions of the Plaintiffs* benefits allowances when A. Statutory background calculating dieir regular rate of pay, resulting in a lower overtime: rate and a consequent fl?Vi[Y| Undo: the FLSA, an employer must pay imdetpayment {**4] of overtime compensation. its employees premium, overtitne cpmper^tipn of one and one^half times the regjular rate of payment for any hours worked in excess of forty in a sevens ' The.Honprable Aadre M. Davis, Senior Ciaaul Judge far'die U.S. day work week. Cleveland y:^ City of Los Anseles, Court of Appeals for the Fotiith Circuit, sitting by designation. AJ BHOWMIK Page 8 of 19 834 F:3d 890i •895; 2016 U.S. App. LEXIS 10018, **5 420 F.3d 981. 984-85 (9ih Cir. 2005k (citing f that the eniplbyee has alternate medical coverage, 2Q7(a)). The "regular rate" is defined as "all such as through a spouse. If an employee elects to remunerationforemployment paid' to, or on behalf forgo medical benefits because she has alternate of, the employee^" siibject to a numbasr of Coverage; [**7| she may receive the imused exclu^ons setforthiii the Act. $ 207(0). The ELSA portion of her benefits allotment as a cash payment also provides "a limited exemption from the added to her regular paycheck. pyertime limit tp pubb'c employers of law enforceinent peisoimel or firefi^terS." Adair v. In 2009, an employee who declined medicai Citv of Kmand. 185 F 3 d K m . 1059 (9ih Gtr: coverage received a payment of $ l,t)36..75 in lieu of 1999) (citing g 207(k)\ The partial overtime benefits each month. This amount has increased exemption ia 4207(k) "increases the; overtime liinit each year, so that employees who declined medical shghdy and it gives the employer gceater flexibility coverage received $1,112.28 in 2010, $1,186.28: in to select the work period over wliich the overtime 2011, and $1,304.95 in 2012, This paynaent appears limit; will be calculated" Id. at i06(> (citation as a designated line item on an employee's omitted). paycheck and is sid>ject to federal and state withholding taxeSj Medicare taxes^ and flSVilTl The FLSA provides a private causEe of gatnishment action for employees to- sedc unpaid wages In 2009i die City paid $2,389,468.73 to or on owed to them under its provisions. § 116(b). The behalf of its employees pursuant to its Flexible Act has a two-year statute of limitationsc for claims Benefits Pl^, and it paid $1,116,485.77 of diat urdess the employer's violation was '-willfid^-' in amount, or 46.725% of total plan contributions, to which case the statute of limitations is ^tended to employees for unused benefits. While the exact three years. $ 255(ah An ernployer who violates the figures vary each year, die percentage of the total FLSA's overtime provisions is liable in the amount plan contributibns that the City pays to employees of the employee's impaid overtime comperisation, for unused benefits has remained somewhat in addition to an equal amount in Hquidated consistent. In 2010, die City paid $1,086,202.56 to damages. § 216(b). The Act provides a defense to employe!^ for unused benefits, refiecting 42.842% liquidated damages for an employer who of total, plan contributions; in 2011, $1,138,074.13, establishes that it acted in good faith and had or 43.934% of total plan contributions; and in 2012, reasonable [*89^ grounds to believe that its $1,213,880.70, or 45.179% of total plan actions did not violate the FLSA- $260. contributions. At some time [*'^S] prior to 2003, the City B. Factual and procedural background designated its casli-in-Ueu of benefits payments as "benefits" that Were excluded from its calculatibn of a redpient's regular rate of pay, and, 1. Flexible Benefits Plan -aecoidingiy,_has—not—included—the—vaiue-of—the- The City provides a Flexible Benefits Plan to its payments in its calculatibn of ernployees' regidar employees under which the City furnishes a rate of pay. The City has not revisited its designated monetary amount to each employee fbr designation since diat time. the purckase of medical, vision, and dental benefits. AH employees are required to use a portion of these funds to purchase vision and dental benefits. An 2. Calculation of overtime employee may decline to use the remainder of diese Since at least 1994, the City's police officers; have funds to purchase medical benefits only upon proof been paid overtime When they have worked more AJ BHOWMIK Page 9 of 15 824 F.3d 890, •896; 2016 U.S. App. EEXIS 10018, **S than eighty hours in a fourteen-day work period. CFlor^sIT'l Sinces ai least 2003, die (City's eighty-hovir/fourteen- day work period has been memorialized in several The City timely appealed the district [**l6i: court's documents. A 2003 City resolution concerning, the rulings concerning ihs exclusion of die cash-in-lieu "work week" states that police officers work eighty of benefits^ payments from the regular rate of pay. hours i i i a bi-Weekly period. This same eighty- The Plaintifis ;crosa-appealed, challenging the hour/fQUrteen-day work period was restated in the district court's ndin^ that the paymems qualified City's Salary, Compensation: and Benefit Policy for exclusion under the Act if made to a trustee or a Manual, dated July 3, 2010, and in die 2005-2007 third party, diat the City qualified for a § 2Q7(k) Memoranduin pf Utiderstantfing between the City partial overtime exemption^ tliat the a^Ucable and the poUce officers' collective: bargaining unit statute of limitations was two years, and' diat the Because die City's eash-in-lieu of benefits Plaintiff were not entided to liquidated damages. payments are excluded from its calculation of an Officer'is regidar rate of pay, the benefits payments are not incorporated hitp the City's STANDARD OF REVIEW calculation [**9] of the officer's overtime rate. fly^l?! We review a grant of s%immary judgment or partial summary judgment de novoy applying the same: standard of review as the district court under 3. Litigation between the parties Federal Rule-of GfwV Procedure 56. Adairi. 185 The Plaintiffs instituted this suit against the City in F.3d at 1059: Locdl 246 Utility Workers Union of 20l2. Following discbVery, both parties moved fbr Am. v. S Cal. Edison Co.. 83 F.3d 292. 294 n.l partial summaory judgment on the Plaint