Regions Security Services, Inc. has lost its appeal in a Fair Labor Standards Act (FLSA) case, with the Eleventh Circuit Court of Appeals upholding a lower court’s decision in favor of former employee David Thompson. The court found that Regions improperly manipulated Thompson’s pay rate to avoid paying overtime. The company also failed to overturn the award of attorney’s fees to Thompson.
Background of the Case
David Thompson worked as a security guard for Regions Security Services from 2015 to 2020. Initially, he was paid $13.00 per hour and received overtime at a rate of $19.50 per hour. In 2019, Regions offered Thompson a new arrangement: working at least 60 hours per week for a reduced wage of $11.15 per hour, with overtime at $16.73 per hour. This change was implemented when Regions scheduled him for significant overtime. When the overtime work stopped in July 2020, Thompson’s wage returned to $13.00 per hour.
The Lawsuit and Initial Ruling
Thompson sued Regions, alleging that the company violated the FLSA by lowering his regular pay rate to avoid paying proper overtime. He argued that the reduction was an attempt to circumvent the law.
The district court initially granted judgment on the pleadings for Regions, but the Eleventh Circuit Court of Appeals later vacated and remanded the case. The appellate court found that Thompson had plausibly alleged that Regions had manipulated his hourly rate to avoid paying overtime. The court clarified that while employers can reduce an employee’s non-overtime rate, it cannot be justified solely by the length of the workweek.
On remand, the district court granted summary judgment in favor of Thompson, finding that Regions had not provided evidence to justify the pay reduction based on factors other than the number of hours worked.
Offer of Judgment and Attorney’s Fees
After the district court’s summary judgment, Regions made an Offer of Judgment under Rule 68(c), offering Thompson $5,650.82 to settle the wage claims and liquidated damages. The offer stated that it was not an admission of liability and that Regions retained the right to appeal the court’s liability determination. It also stated that Thompson could seek attorney’s fees and costs. Thompson accepted the offer, and the district court entered a final judgment in his favor for the offered amount. The court determined that the settlement was “fair and reasonable” and retained jurisdiction to determine Thompson’s attorney’s fees and costs.
Thompson then filed a motion for attorney’s fees and non-taxable costs. The district court referred the matter to a magistrate judge, who recommended awarding Thompson reasonable attorney’s fees as a “prevailing party.” The magistrate judge calculated a lodestar figure of $94,627.50 for attorney’s fees. The district court overruled Regions’ objections and adopted the fee award. Regions then appealed the attorney’s fees award, which was consolidated with the merits appeal.
Appellate Court’s Decision
The Eleventh Circuit Court of Appeals affirmed the district court’s decisions.
Jurisdiction and Mootness
The court first addressed the issue of its appellate jurisdiction. It determined that it had jurisdiction to hear the appeal, despite Regions’s acceptance of the Rule 68 offer of judgment. The court noted that the offer specifically preserved Regions’s right to appeal the liability determination, and that the company had obtained a stay of execution of the judgment pending appeal. This meant that the case was not moot, as Regions’s success on appeal would affect the underlying settlement and judgment.
Overtime Violation
The appellate court then addressed the merits of the FLSA claim. It reiterated its prior holding in the case, stating that a reduction in an employee’s non-overtime hourly wage must be justified by factors other than the number of hours the employee worked. The court found that Regions had reduced Thompson’s pay solely based on the length of his workweek, which violated the FLSA’s overtime provisions.
The court rejected Regions’s argument that the reduced rate was the result of a freely negotiated contract. The court emphasized that employees cannot contract away their FLSA rights.
Attorney’s Fees and Costs
The court also upheld the district court’s award of attorney’s fees and mediation costs.
Prevailing Party Status
The court found that Thompson was a “prevailing party” because he had received a court-ordered change in the legal relationship between the parties. The Rule 68 judgment, which awarded Thompson monetary damages and was based on a judicial ruling on the merits of liability, represented a judicially sanctioned change in the relationship. The fact that the judgment was subject to appeal, and a stay of execution, did not negate this.
Reasonableness of Fees
The court also found that the attorney’s fees awarded were reasonable. Regions argued that the fees should be reduced because of the billing practices of Thompson’s attorneys and because Thompson did not succeed in recovering damages for non-overtime wages. The court rejected these arguments, finding that the district court had reasonably determined the hours and rates, and that the non-overtime damages were based on the same facts as the successful overtime claim.
Mediation Costs
Finally, the court affirmed the award of mediation costs, finding that they were a reasonable expense under the FLSA.
Conclusion
The Eleventh Circuit Court of Appeals affirmed the district court’s grant of summary judgment in favor of Thompson on the FLSA claim. It also affirmed the award of attorney’s fees and mediation costs.