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Home / Courts / 4th Circuit / Labor & Employment – FLSA Violation – Overtime Pay – Gaming Officials

Labor & Employment – FLSA Violation – Overtime Pay – Gaming Officials

Desmond v. PNGI Charles Town Gaming LLC. (Lawyers Weekly No. 11-01-0076, 15 pp.) (Dever, D.J.) No. 09-2189, Jan. 14, 2011; USDC at Martinsburg, W.Va. (Bailey, J.) 4th Cir. Click here for the full text of the opinion.

Holding: Former employees who worked as gaming officials at a West Virginia gaming establishment are not entitled to a recalculation of their overtime pay award, as the 4th Circuit upholds the calculation used by the district court to give them 150 percent of their regular rate for hours worked over 40 per week; but the 4th Circuit reverses summary judgment holding that employer’s FLSA violation was willful, and remands for a trial on the issue of willfulness.

Three former employees appeal from an award of unpaid overtime compensation in their case under the Fair Labor Standards Acts against their former employer, PNGI Charles Town Gaming, L.L.C., d/b/a Charles Town Races & Slots. The former employees dispute how the district court computed unpaid overtime compensation under the FLSA.

Charles Town Gaming cross-appeals and disputes the district court’s decision to grant summary judgment to the former employees as to whether Charles Town Gaming’s FLSA violation was willful. We affirm the district court’s method of computing unpaid overtime compensation, vacate the district court’s judgment as to willfulness, and remand for a trial on the issue of willfulness.

The district court determined the rate at which the overtime hours calculated by employer should be compensated by first applying Overnight Motor Transp. Co. v. Missel, 316 U.S. 572 (1942), to determine the regular rate. The district court then examined whether the appropriate overtime premium was 50 percent or 150 percent of that regular rate for all hours worked over 40. The district court calculated the unpaid overtime compensation under 29 U.S.C. § 216(b) by using a 50-percent premium. The court based its decision not on 29 C.F.R. § 778.114, but rather upon the logic of Overnight Motor and general principles of compensatory damages.

In addition to decisions from our sister circuits, the Department of Labor also has approved using a 50 percent overtime premium to calculate unpaid overtime compensation in a mistaken exemption classification case.

Here, the district court did not apply 29 C.F.R. § 778.114 to this mistaken exemption classification case. Rather, the district court relied on the logical implications of Overnight Motor to calculate unpaid overtime compensations under 29 U.S.C. § 216(b). The court found there was an agreement that the fixed weekly salary covered all hours worked.

The district court then reasoned that Overnight Motor‘s regular rate determination implies the previously paid weekly salary covers the base compensation for all hours worked. The district court concluded it need only award 50 percent of the regular rate to provide the employer their unpaid overtime compensation under § 216(b).

We affirm the district court judgment about how to calculate unpaid overtime compensation under § 216(b), but reverse summary judgment for employer on the issue of willfulness.

In its first summary judgment order, the district court observed that employer’s personnel testified that the FLSA designation on the job descriptions was created by a computer program, the designation was a typographical error, and the error was then mistakenly carried forward to the job description in later revisions.

Employer also contends that its erroneous exemption classification of the former employees as subject to the administrative exemption was not reckless, in that the district court initially upheld the classification in this case and required a published 4th Circuit opinion to clarify that the positions were not exempt. A genuine issue of material fact exists as to willfulness.

Affirmed in part, vacated in part and remanded.


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