Kuebel v. Black & Decker Inc.

Citations: 643 F.3d 352; 17 Wage & Hour Cas.2d (BNA) 1025; 2011 U.S. App. LEXIS 9448; 2011 WL 1677737Docket: 10-2273

Court: Court of Appeals for the Second Circuit; May 5, 2011; Federal Appellate Court

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Greg Kuebel, on behalf of himself and similarly situated employees, appeals a summary judgment from the U.S. District Court for the Western District of New York in his case against Black & Decker (B&D) regarding unpaid wages under the Fair Labor Standards Act and New York Labor Law. Kuebel claims that B&D owes compensation for: (1) commute time between his home and job sites, and (2) overtime hours worked but not recorded, as well as alleging retaliation for his complaints about unpaid overtime.

The appeals court affirms the district court's decision on the commute time claims, indicating that Kuebel's claims are without merit. However, it finds that genuine issues of material fact exist regarding his off-the-clock claims, suggesting potential validity in Kuebel’s assertion of unpaid overtime. The court leaves the decision on whether Kuebel can reassert his abandoned retaliation claims to the district court, referencing recent Supreme Court guidance.

Kuebel worked as a Retail Specialist for B&D from September 2006 to June 2007, managing product merchandising at assigned Home Depot stores without reporting to a central office, using his home as a base. Retail Specialists were required to record their in-store hours using company-issued PDAs, which Kuebel synced with B&D’s server approximately five to six times a week, typically in the evening. The case is affirmed in part, vacated in part, and remanded for further proceedings.

Kuebel engaged in various administrative tasks at his home office, such as managing company emails, checking voicemails, printing sales reports, organizing materials, creating display signs, completing online training, and handling personal vehicle logistics. B&D estimated these tasks would typically take Retail Specialists about thirty minutes daily; however, Kuebel reported needing thirty minutes to an hour each day, split between morning and evening sessions. B&D maintained that completing these tasks at home was not mandatory and allowed for flexible timing, yet they required Retail Specialists to log their home work hours and compensated them for that time.

In 2004, B&D developed a commute time compensation policy based on legal counsel's advice referencing a 1999 Department of Labor opinion. This policy deemed one hour of commuting as non-compensable while allowing payment for any travel exceeding that duration. Kuebel, for instance, received compensation for three out of five hours when his commute totaled 5 hours, based on this policy. 

B&D enforced time reporting policies requiring accurate timesheets from Retail Specialists, emphasizing the need for honest and complete records in a January 2007 communication. While there was no formal prohibition against reporting overtime, B&D operated under the premise that Retail Specialists could complete all required tasks within a 40-hour workweek, expecting them to effectively manage their time accordingly.

Kuebel claims he regularly worked overtime beyond the standard forty hours per week but did not record this overtime on his timesheets, except for one instance. Instead, he adjusted his recorded hours, particularly on Fridays, to ensure his timesheets reflected only forty hours. He estimated that 50% of his timesheets were inaccurate under his first supervisor, Uzo Idigo, and 90% under his second supervisor, Scott Davolt. Kuebel contends he falsified his timesheets because his supervisors instructed him not to exceed forty hours. He recalled that at monthly meetings, supervisors explicitly told employees to limit their time entries to forty hours weekly. Kuebel reported a personal conversation with Davolt in February 2007, where Davolt reinforced this directive and indicated that overtime could not be afforded. Kuebel also raised concerns about his uncompensated overtime to Davolt multiple times in May 2007, receiving evasive responses. B&D disputes that Kuebel was instructed to falsify timesheets, citing performance issues and suspicions regarding Kuebel working for another employer while employed by B&D. Kuebel was ultimately terminated in June 2007 for poor performance, dishonesty, and falsifying records. Following his dismissal, Kuebel filed a lawsuit against B&D under the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL). In March 2008, he sought conditional certification for an FLSA collective action, which B&D partially agreed to, leading to 130 employees joining the action.

B&D successfully moved for partial summary judgment, with the district court ruling in Kuebel v. Black & Decker that B&D's policy of compensating commute time only beyond one hour was compliant with the Fair Labor Standards Act (FLSA). The court determined that Kuebel's administrative tasks performed at home did not make his entire commute compensable, as they were not 'integral and indispensable' to his primary job functions. Additionally, B&D established a good-faith defense for liability under 29 U.S.C. 259(a) based on a Department of Labor opinion letter, and since there was no evidence of willfulness regarding any FLSA violation, a two-year statute of limitations applied. Kuebel's request for further discovery on good faith and willfulness was denied. Following this, B&D sought to notify 130 opt-in plaintiffs of the dismissal of collective action claims, which Kuebel opposed while also requesting supplemental notice for putative plaintiffs regarding off-the-clock claims. In 2010, the district court granted B&D summary judgment on Kuebel’s remaining claims, concluding that Kuebel failed to demonstrate a genuine issue of material fact regarding off-the-clock claims and did not provide evidence of willfulness, thus affirming a two-year statute of limitations and ruling out liquidated damages under the New York Labor Law. The court dismissed Kuebel's retaliation claims due to lack of defense in his brief and deemed the pending notice motions moot, concluding Kuebel’s case with prejudice. Kuebel appealed both the 2009 and 2010 summary judgment rulings. The court emphasized that summary judgment is warranted only when no genuine dispute of material fact exists, and Kuebel's argument that his commute time should be fully compensated based on a 'continuous workday' theory was rejected, as the court found that not all commute time could be compensated under the FLSA.

The Fair Labor Standards Act (FLSA) guarantees compensation for all work engaged in by covered employees, but it does not specifically define what constitutes compensable work. The Portal-to-Portal Act of 1947 narrowed the FLSA's coverage by excluding certain activities from compensation, specifically: (1) travel to and from the work location and (2) preliminary or postliminary activities that occur before or after principal job activities. However, activities that are "integral and indispensable" to principal activities remain compensable, regardless of when they occur. The Department of Labor's "continuous workday rule" defines the workday as the period from the start to the end of an employee's principal activities, requiring that time between these activities be counted as hours worked.

In Kuebel’s case, even if the administrative tasks he performed at home were deemed integral to his job, they do not affect the compensability of his driving time. The Portal-to-Portal Act does not impose liability on employers for certain activities but maintains earlier definitions of compensable work. Generally, ordinary home-to-job-site travel is not considered compensable work time, a principle upheld for decades in regulatory guidance. Thus, Kuebel's administrative work at home does not render his commute compensable, similar to how personal time, such as sleep or meals, is treated.

29 C.F.R. 785.16 outlines that employees are not considered to be working during periods when they are completely relieved from duty and can use their time effectively for personal purposes. This principle was applied in cases such as Rutti v. Lojack Corp., where the Ninth Circuit ruled that a technician’s commute was not compensable despite uploading data at home, as he had the flexibility to do so at any time within a specified window. Similarly, in Ahle v. Veracity Research Co., the court found that private investigators' time spent commuting did not count as work hours, regardless of their pre- and post-surveillance activities. In the current case, Kuebel had the flexibility to manage his daily administrative tasks, such as checking emails and syncing his PDA, and there was no requirement for him to perform these tasks immediately before or after his commutes. He could choose to complete these tasks at various times throughout his day. Therefore, the time spent commuting, which is considered ordinary travel, does not qualify for compensation under the FLSA. The court affirmed the summary judgment in favor of B&D regarding Kuebel's commute time claims and noted that this ruling does not affect the compensability of travel between different work sites during the day. The court also found that Kuebel’s claims for unpaid overtime, which he did not report, warranted further examination, indicating that the district court erred in granting summary judgment on those claims.

To establish liability for unpaid overtime under the Fair Labor Standards Act (FLSA), a plaintiff must demonstrate that they performed work for which they were not compensated and that the employer had actual or constructive knowledge of that work. The extent of proof required regarding the amount of uncompensated work—essentially the damages—necessary to survive summary judgment is disputed. The appropriate standard, as articulated in Anderson v. Mt. Clemens Pottery Co., requires that the plaintiff provide sufficient evidence to infer the amount and extent of the unpaid work reasonably. In Anderson, a prior ruling denied recovery due to insufficient ascertainment of uncompensated work, but the Supreme Court reversed, stating that if an employer maintains accurate records, the employee can easily meet their burden. However, if the employer's records are inadequate, the employee should not be penalized for inability to provide precise evidence of unpaid work. Instead, the employee must prove they performed work for which they were not compensated and provide adequate evidence for a reasonable inference of the amount of that work. If the employee meets this burden, the onus shifts to the employer to provide evidence to counter the employee's claims. Failure by the employer to do so allows the court to award damages, even if only approximate. This lenient standard allows for estimates based on the employee's recollection, reflecting the remedial purpose of the FLSA.

The district court ruled that Kuebel was not entitled to the lenient burden of proof articulated in Anderson v. Mt. Clemens Pottery Co. due to his admission of falsifying his timesheets, labeling any inaccuracies as "self-created." Consequently, Kuebel was required to prove his off-the-clock work with specificity. The court concluded that Kuebel could not accurately demonstrate his damages, warranting summary judgment against him. However, this reasoning was challenged on several grounds. 

Under the Fair Labor Standards Act (FLSA), the employer holds a non-delegable duty to maintain accurate records of employee hours worked. The court noted that an employee cannot be precluded from claiming overtime based solely on their inaccurate timesheets, particularly if the employer is aware of or should be aware of the overtime worked. Kuebel's case was further complicated by his assertion that he falsified his timesheets under direction from his managers, who discouraged accurate reporting of overtime hours. 

The appellate view emphasized that Kuebel's testimony should be credited during summary judgment, as it suggested that employer pressure led to the inaccuracies. This implies that the inaccuracies were not solely Kuebel's responsibility, and therefore he should be allowed the benefit of the "just and reasonable inference" standard from Anderson. The decision to deny this standard would undermine the FLSA’s remedial objectives, allowing employers to manipulate time reporting practices while avoiding liability for unpaid overtime.

The district court granted summary judgment, concluding that Kuebel did not raise a genuine factual issue regarding B&D's actual or constructive knowledge of his off-the-clock work. This decision was disputed, with the argument that Kuebel met his burden under the Anderson standard by providing sufficient evidence for a jury to reasonably infer the amount of uncompensated work he performed. Kuebel claimed he averaged one to five hours of unpaid overtime weekly and explained how he manipulated his hours to avoid exceeding forty hours per week. While acknowledging some inconsistencies in Kuebel's testimony regarding his time falsification—specifically, discrepancies between his percentage estimates of falsified timesheets and his claims of average weekly overtime—these inconsistencies were deemed minor and appropriate for jury evaluation rather than grounds for summary judgment.

The district court also cited evidence negating Kuebel's claims, including B&D’s policies on accurate time recording, Kuebel’s own time records, and low in-store hour reports. However, it was emphasized that the determination of Kuebel's uncompensated work should be made at trial, and the Anderson test primarily concerns the reasonableness of calculating damages after proving a violation of the Fair Labor Standards Act (FLSA). The court concluded that Kuebel's estimates, even with inconsistencies, should not prevent a jury from considering his claims.

B&D's evidence does not justify summary judgment due to 17 factual and credibility questions that warrant a trial. Although B&D has policies for accurate timekeeping, Kuebel's testimony about being instructed not to record all hours undermines the validity of these policies. Kuebel's timesheets lacking overtime entries do not resolve the key issue of whether he worked overtime without recording it at his managers' direction. Additionally, Kuebel's reported hours and the condition of his stores indicate that he may have worked less than forty hours, raising further factual questions.

Regarding Kuebel's off-the-clock claims, he must demonstrate that B&D had actual or constructive knowledge of his unpaid work. Kuebel's testimony about informing his supervisor of his work hours establishes a genuine issue of material fact, despite the district court’s skepticism due to the lack of a formal complaint through B&D’s hotline.

The district court ruled that Kuebel did not show that B&D’s alleged nonpayment of overtime was willful, applying a two-year statute of limitations for his FLSA claims. However, this decision is vacated as Kuebel has raised factual questions about B&D's willfulness. A willful violation extends the statute of limitations to three years, contingent on B&D’s knowledge or reckless disregard regarding compliance with the FLSA. The record suggests B&D was aware that Retail Specialists could exceed forty hours. The court also notes that it need not address Kuebel’s argument about the dismissal of opt-in plaintiffs, as further proceedings on the off-the-clock claims are forthcoming. Kuebel challenges the exclusion of his expert report regarding willfulness, arguing it was improperly dismissed as containing legal conclusions.

The district court's decision to exclude the report was not deemed an abuse of discretion. Evidence indicating that Kuebel’s managers advised him to finish work without recording overtime could lead a jury to reasonably conclude that B&D willfully violated the Fair Labor Standards Act (FLSA). Therefore, the issue of willfulness regarding the FLSA statute of limitations is appropriate for trial. Additionally, the court found that the determination on liquidated damages under the New York Labor Law (NYLL) was premature. Under the applicable NYLL provision, Kuebel could receive liquidated damages equal to 25% of unpaid wages if B&D’s actions were willful, and the NYLL’s willfulness standard is similar to that of the FLSA. Consequently, whether Kuebel can recover liquidated damages under the NYLL should also be decided at trial. The conclusion affirms the district court's summary judgment for B&D regarding commute time claims, vacates the summary judgment on off-the-clock claims, and remands the case for further proceedings.