Acosta v. Austin Electric Services LLC

          ORDER

          Honorable Roslyn O. Silver Senior United States District Judge

         Plaintiff Secretary of Labor (“the Secretary”) alleges Defendants Austin Electric Services LLC and Toby Thomas, Austin Electric's president (collectively, “Defendants”), failed to pay employees overtime compensation and to keep employee records, in violation of the Fair Labor Standards Act (“FLSA”). Before the Court are cross-motions for summary judgment (Doc. 111) and summary adjudication (Doc. 114) on the same issue: Whether Defendant Toby Thomas is an “employer, ” therefore individually liable, under the FLSA.

         BACKGROUND

         Austin Electric is a residential electrical contractor based in Arizona.^[1] (Docs. 115 at 1:25-26; 126 at 1:21.) Its employees do electrical work on houses in the area. Toby Thomas founded Austin Electric in 1997.^[2] (Docs. 115 at 2:4-5; 126 at 2:7.) In 2011, during the economic downturn, Thomas approached Scott Tonn and Don Tapia about a potential equity purchase of the company. (Doc. 115-1 at 9:25-10:2.) Tonn and Tapia both purchased shares: From 2013 through 2016, Tonn held majority ownership and Tapia held minority ownership of Austin Electric. (Doc. 115-1 at 9:4-20). Thomas was minority owner of Austin Electric from 2013 through 2016, as his ownership interest ranged from 20 to 30 percent. In 2013 and 2014, Thomas' ownership interest was 20 percent. In 2015 and 2016, Thomas' ownership interest was 30 percent. (Doc. 115-1 at 8:9-19.) Tonn and Tapia are both inactive owners and play no role in the operations of the company. (Doc. 115-1 at 9:18-20.)

         Thomas is the president of Austin Electric. (Doc. 115-1 at 7:16-17.) Joe Church is Vice President of Operations at Austin Electric and reports directly to Thomas. (Doc. 115-1 at 10:21-25; 11:23-24.) The parties do not state whether Austin Electric has a Board of Directors; nor do they state the existence of a CEO, CFO, or any other possible corporate officers. According to Thomas's deposition testimony, Austin Electric employs office workers, warehouse workers, and field workers. Approximately 15 employees work in the office. (Doc. 115-1 at 99:6-9.) They include, among others, a scheduling manager, safety manager, estimator, and hiring manager. (Doc. 115-1 at 99- 100.) Jennifer Thomas, Toby Thomas's wife, also works in the office in accounts payable. (Doc. 115-1 at 100:21-22.) Austin Electric employs approximately eight warehouse workers who staff the warehouse where field workers go and pick up their supplies. (Doc. 115-1 at 97:11-22.) The majority of Austin Electric's employees are field workers. Field workers are paid either by the hour or by the piece (each task they complete). Thomas testified that in 2013, there were approximately 100-150 hourly workers and 80-100 pieceworkers. (Doc. 115-1 at 91:3-92:9.)

         Church's role as Vice President of Operations is to run the day-to-day operations, including scheduling, office production, and contracts. Church also oversees the fleet, personnel, and safety at the company. (Doc. 115-1 at 11:17-22.) Church began working at Austin Electric in 2003. (Doc. 115-1 at 191:2-3.) The parties dispute over who hired Church: Thomas testified that he hired Church while Church stated he was hired by Robert de Markowitz.^[3] (Doc. 115-1 at 11:3-4; 191:4.) Thomas promoted Church to Vice President of Operations in 2014. (Doc. 115-1 at 11:8-13.) Currently, Thomas sets the salary for Church. (Doc. 115-1 at 12:4-5.)

         Below Church is Rodolfo Becerra, Austin Electric's Field Operations Manager. Thomas hired Becerra in early 2005. Thomas also promoted Becerra to his current position in 2007. (Doc. 112-1 at 28:22 - 29:5.) As Field Operations Manager, Becerra oversees Austin Electric's field employees alongside Church. (Doc. 112-1 at 31:9-15.) For example, Becerra and Church handle employee discipline. (Doc. 112-1 at 49:9-12.) Becerra and Church also determine the vehicle reimbursement rate for employees who use their own vehicles for work. (Doc. 112-1 at 20:16-21.) Becerra manages approximately 20-25 field managers, who manage assistant field managers and the field workers in turn. (Doc. 115-1 at 94-96.) Becerra reported to Thomas “years ago” and now reports to Church. Church sets Becerra's current salary. In the event of Church's absence, however, Becerra goes to Thomas for decisions. (Doc. 115-1 at 12:23-13:22.)

         As President of Austin Electric, Thomas has the power to hire and fire employees, although he has not exercised this authority in the last six or seven years. (Doc. 115-1 at 20:15-16; 174:6-7.) Thomas also has the authority to set employees' pay rate but testified he does not set or know the current pay rate, although he does know the formula used to calculate the pay rate. (Doc. 115-1 at 16:6-9.) Austin Electric pays pieceworkers a rate based on the livable square footage of the house they wire. (Doc. 115-1 at 16:21- 17:8.) An informal committee determines the rate per square footage paid to pieceworkers. (Doc. 115-1 at 17:18-19.) Church testified the pay-rate-setting process involves himself, Becerra, estimator Jeremy Forgia, and Thomas. Church and Becerra “come up with what [they] think is a fair rate” and then show it to Thomas and Forgia for review. (Doc. 115-1 at 208:24-209:5.) Church further testified the four members “all agree whether or not we can afford that rate. If we say yes, then we change the rate.” (Doc. 115-1 at 209:3-5.) Church also stated he “won't change the piece value rate without discussing it first with Mr. Thomas, but ultimately [Thomas] is probably going to defer to [Church's] decision.” (Doc. 115-1 at 209:22-25.) Although Church indicated he believes he is entitled to set pay rate without Thomas, he consults Thomas before making the decision “out of respect” for Thomas. (Doc. 115-1 at 210:5-6.) Importantly, nowhere in the depositions or motion papers do Defendants dispute the accuracy of Church's testimony. Rather, they appear to argue it is significant that Thomas does not know the current pay rate but “simply confirms that Austin Electric can afford a rate change determined by Mr. Church and Mr. Becerra.” (Doc. 125 at 5.) Additionally, Thomas testified he decides the method of payment (cash or check) and whether employees receive benefits. (Doc. 115-1 at 18:21-19:17.)

         Prior to 2013, Thomas made the decision to treat pieceworkers as independent contractors rather than employees. (Doc. 115 at 3:24-25.) Sometime around 2013, Thomas decided to reclassify independent contractors as employees. Thomas testified that he began maintaining employment records for pieceworkers around this time. (Doc. 115-1 at 21:11-15.) During the reclassification, Thomas personally researched the correct method of calculating wages for pieceworkers-by “convert[ing] the piece rate into the number of hours they worked.” (Doc. 115-1 at 177:21-178:18.) Thomas admitted that although Austin Electric had inadvertently applied the incorrect calculation for a few weeks, Thomas remedied the situation by working with his payroll staff to implement the correct calculation method. (Doc. 180:22-181:4.)

         Thomas has the authority to set pieceworkers' work schedule but apparently does not exercise this authority. Thomas's testimony indicates that “nobody in the company sets schedules over the piece employers” and it is “entirely up to the pieceworkers when or if they want to work.” (Doc 115-1 at 173:14-17.) The Secretary disputes this statement, noting that scheduling manager Jose Ballesteros testified that Austin Electric determines when to assign pieceworkers to do electrical work and how many of them are required for each particular job. (Doc. 128-1 at 4:11-20.)

         LEGAL STANDARD

         Summary judgment is proper where “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Material facts are those that “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute of material fact is only genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. In reviewing a motion for summary judgment, all evidence must be construed in the light most favorable to the non-moving party.

         Here, both parties move for summary judgment on the same issue. “[W]hen simultaneous cross-motions for summary judgment on the same claim are before the court, the court must consider the appropriate evidentiary material identified and submitted in support of both motions, and in opposition to both motions, before ruling on each of them.” Tulalip Tribes of Wash. v. Wash., 783 F.3d 1151 (9th ...