Free Response to Motion - District Court of Colorado - Colorado

Case 1:03-cv-02485-MSK-PAC

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IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION
DUANE McCLAIN and

ALESIA MILES,
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Plaintiffs,
vs.
CIVIL ACTION FILE NO. 1:05-CV-0416-TWT

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HEARTLAND HOME FINANCE,

INC. ,
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Defendant.

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13 Rule 30(b)(6) Deposition of THOMAS E. 14 BECK, taken on behalf of the Plaintiff, pursuant to
15 the stipulations contained herein, before Lori Roy, 16 RPR, CCR No. B-2278, at Suite 1100, 1180 West 17 Peachtree Street, Atlanta, Georgia, on Wednesday, 1 8 Au g u s t 1 7, 2 0 0 5 , co mm en c i n gat the h 0 u r 0 f 1 1 : 2 0

19 a.m.
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23 Shugart & Bishop

24 Suite 300, Building 27

Certified Court Reporters
1640 Powers Ferry Road

25 Marietta, Georgia 30067

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seven years?

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A Yes.
Q Are you a vice president of a certain
division?

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A I'm head of the legal department. Q Are you a lawyer, also?

A I am.

Q You've been designated by the company
as a 30 (b) (6) deponent that has answers to my

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questions about investigations, other lawsui ts,
things like that. Would you agree that you would
be a person that would have that sort of knowledge?

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A Yes.
Q You heard me asking Mr. Flynn about
Department of Labor investigations into Heartland
Home Finance, correct?

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A Yes.
Q I asked him -- in his last
deposition he stated there was a Department of

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Labor investigation in Dayton, Ohio, that concluded

around June of 2002. Do you recall that

investigation?

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AYe s , I do.
Q Was it your understanding that that
investigation included allegations of minimum wage

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complaint, and they were investigating it.

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Q Was it your understanding that they
concluded for the Dayton, Ohio, location that some
loan officers did not receive minimum wage?

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A Yes.
Q Do you recall what time period that
was for that they investigated?

A I think it was January 1, 2000
through December 31, 2001, a two-year per iod.

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Q That was there during the time frame
where Heartland compensated its loan officers on a

strictly commissions basis. There were no draws;
is that correct?

A That's correct, there were no draws
at that time. It was strictly commission.

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Q And was it your understanding that
there were, in fact, loan officers who were not
paid minimum wage as a resul t of that type of

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compensation plan?

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A That's correct.
Q And Heartland was involved in paying
the loan officers from Dayton, Ohio, so that they
were, in fact, paid the minimum wage for that time

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frame?

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A That's correct.

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1 Q Was it your understanding that since ~~8
2 there were minimum wage violations at the Dayton,

3 Ohio, office that there could be violations at
4 other offices that Heartland had across the
5 country, that they were paid the same way as the

7 A Yes.

6 Dayton, Ohio, loan officers, right?

8 Q Are you aware of the company doing
9 any investigation on a nationwide scale or an
10 audi t, for example, to determine whether or not

11 other employees were paid minimum wage besides the

12 Dayton, Ohio, folks?

13 A Yes, we did do some investigation
14 because at that time there were two other DOL cases

15 that had arose -- arisen during this period in

16 time.
1 7 Q Wha t did the company do?

18 A Well , what we did was we determined
19 that irrespective of the issue of whether loan
20 officers were exempt or nonexempt, we thought it
21 was a prudent policy to adopt a $500 draw, and we

22 did so in July of 2002 effective for all of our

23 offices.

24 We also at that time instituted a
25 time sheet policy which we had not had prior to

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1 that time in which the individual loan officers

2 would record their hours on their own and then
3 initial it for the day, including time that they
4 left the office on a noncompany business, such as 5 lunch or for any extended period of time other than

6 a short break. And we communicated that to the
7 field through our -- initially, through a
8 conference call wi th our regional managers, and

9 then it was followed up by the individual contact
10 wi th the managers and, of course, then communicated

11 to the loan officers and what we expected in return

12 for, you know, giving $500 per pay period. We
13 wanted an honest 40-hour week. And so that is how
14 it was instituted in response to the DOL and

15 expectations that we wanted to create in the field.

16 Q You said that you made it clear that
17 you wanted an honest 40-hour week. Did you make it
18 clear tha t you didn't want them working beyond 40

19 hours per week?

20 A Yes.
21 Q How so?
22 A Told them that they couldn't work
23 over 40 hours of week without specific approval
24 from a regional manager and up.

25 Q Going back to this Dayton, Ohio,

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pay them their backpay when it discovered that
there were these minimum wage violations?
MR. CARR:

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Obj ect to the form of the

question.
You can answer.
THE WITNESS:

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I don't know the answer

to that question.

BY MS FISHER:

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Q You don't recall any conversations
wi th anyone higher up in the company about whether

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or not the company should pay all the other
employees who were denied minimum wage during that
time frame?

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MR. CARR: Obj ection to the form of

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the question. Assumes facts not in

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evidence.
THE WITNESS: The only thing I'm
aware of is the discussion of what we should
do in the future, and that led to this

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policy.
BY MS. FISHER:

Q You also mentioned the Aurora,
Colorado, investigation. That concluded sometime
around September of 2003; is that correct?

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A Yeah, I believe that is correct,

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September 2003.

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Q And in that investigation there were
allegations of minimum wage violations as well; is
that right?

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A That's correct.
Q And the Department of Labor came in
and found there were, in fact, these minimum wage

violations?

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A Yes. In short answers, yes. Q These were just localized
investigations, right?

A Yes, that's correct.
Q Did they just look at that one branch
say, for example, Aurora, Colorado, or did they look at all of Colorado, or is that the only branch
in Colorado?

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A We only had -- at that time we only
had one branch in Colorado. From time to time it
might have been divided into two branch offices,

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but they were all at this physical location. I
don't recall at that time whether we had one or two

managers. I think we had at one time two managers

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there at least. So it would have been over
different regimes.

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Q These investigations into Dayton,

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Ohio, and Aurora, Colorado, were just specific to

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those branches, right?

A Yes, that's correct.
Q There was also an investigation in
St. Louis, Missouri, that was around mid September

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of 2003. Does that sound accurate to you?

A Mid September of 2003? Tha tis
probably more like when it concluded as opposed to
what period of time it covered.

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Q You recall that investigation,
though?
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Yes, I do.

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Q Was it your understanding that that
involved an overtime claim allegation and a minimum
wage violation allegation?

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A Yes, it does. As a matter of fact,
all three investigations invol ved minimum wage and

overtime.

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Q And during that investigation, the
Department of Labor found that there were minimum
wage violations wi th respect to the St. Louis

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office, right?

A That's correct.
Q Was that based on -- what time frame
were they looking at when they were looking for

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1 these violations?

2 A St. Louis is the one that dragged on
3 an inordinate amount of time because the
4 investigator kind of just dropped the ball and it

5 just laid in limbo for a long time. And then she

6 got heat from her manager. So I'm struggling. I
7 think it was -- July of 2001 through July of 2003

8 is my you know, I am going to have to look

9 exactly to make sure. But I believe it is
10 straddled, our policy change of $500 draw, roughly

11 50/50 on each side, and that was a two-year look.

12 Q So did they find violations prior to
13 the July of 2002 change and after the July of 2002

14 change?

15 A Actually, they found the
16 violation, and my recollection was for the prior
17 to July of 2002. They found minimum wage, and they

18 found an overtime violation wi th respect to that. 19 But after July of 2002, I don't think they found
20 overtime, and there might have been some small

21 amount of minimum wage. I just -- I don't clearly
22 recall each individual study they did on each loan

23 officer to come up with it.

24 Q Do you have documentation that would
25 show if they found minimum wage violations after

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1 Ju 1 Y 0 f 2 0 0 3 - - 0 r Ju 1 y 2 0 02 ? I am so r r y .

2 A July of 2002? I would have to review
3 the records to see exactly what they found.

4 Q You had this change of the
5 compensation plan in July of 2002. Prior to that,
6 i t was jus t a c omm is s ion, and aft e r t hat i t was a

7 draw against commissions, right?

8 A That's correct.

9 Q Do you recall the Department of Labor
10 finding any problems with the draw against
11 commis sions not meeting minimum wage standards?

12 A No. As a matter of fact, they said
13 it did comply from their standpoint.

14 Q They told you that specifically?

15 A Yes.

16 Q Was there any discussion as to
17 whether or not loan officers were working if
18 loan officers were working overtime if that type of

19 compensation plan complied with the minimum wage

20 laws?

21 A You know, I'm not sure because I did
22 not discuss everything with the investigator 23 because at that time we drew in counsel. My role
24 was typically to generate and provide the necessary

25 information to them, and I believe I had Ice Miller

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-- I think they were involved in all three

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investigations. So I'm not quite sure what all of
their communications were.

Q So you weren't involved in any
communications where the Department of Labor

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disclosed what their concerns were with your draw
against commi ssions compensation plan as i t relates

to minimum wage violations?

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A Well, I know what was said to me, and
what was said to me was that that plan was fine,
tha tit covered the 5. 15 an hour.

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Q You weren't part of any discussions
wi th the Department of Labor about when that plan might violate minimum wage laws? For example, if an employee worked 45 hours per week and didn't recei ve any commi s s ions, if the $ 500 would viola te the minimum wage laws. Did you have any of those t yp e s of conversations with the DOL?

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A No, I don't believe I was invol ved in
those type of discussions.

Q Have you ever had those types of
discussions with anyone in management at Heartland

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Home Finance?

A Yes.
Q Who did you have those conversations

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1 wi th?

2 A I had it wi th the two owners.
3 Q Who are they?
4 A Jay Dunsing and Don Flynn.

5 Q What was that conversation? 6 A The conversation had to do with the
7 DOL's posi tion that this was going to be treated as

8 a nonexempt posi tion from their standpoint, and

9 discussion went along the lines of, well, the
10 industry is not doing that, Tom, why do we have to

11 do it? And I said, in my opinion, the best thing
12 to do was just act like from a payroll standpoint 1 3 that they are nonexempt. And we then evolved into

14 the $500 draw and the 40-hour week as a means to

15 protect ourselves and insure we were in

16 compliance. And that was the whole philosophy and
17 attitude on going to the $500 draw.

18 Q Did you understand at that time if a
19 loan officer was, for example, working 45 hours a

20 week and only making the $500 draw, that that could
21 violate minimum wage laws if that was happening and

22 that's why you restricted it to 40 hours?

23 A Yeah, we were conscious of the fact
24 that $500 would more than cover the 5.15 given the

25 normal working... Yeah.

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1 Q You were conscious of the fact that
3 week, you could get into minimum wage violations

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2 if loan officers were working more than 40 hours a

4 with that $500 draw?

5 MR. CARR: Obj ection to the form of

6 the question. 7 THE WITNESS: No. Actually, we
8 calculated that there was sufficient cushion

9 to allow for probably another four hours

10 with respect to minimum wage. 5.15 times.
11 BY MS. FISHER:

12 Q You have had conversations where you
13 figured that someone could work up to 44 hours per 14 week and still be working minimum wage with this

15 $500 draw?

16 A Yes.
17 Q So you understood that hours beyond
18 that, if they were worked, could be in violation of

19 the minimum wage laws?

20 A Yes, assuming that they were truly
21 nonexempt.

22 Q Sure. Were you aware that --or are
23 you aware that certain employees were working more

24 than 40 hours per week?

25 A During what time period?