Free Proposed Findings of Fact - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 03-CV-2474-WYD-PAC CHARLOTTE SCHNEIDER and DEAN WYMER, Plaintiffs, v. LANDVEST CORPORATION, a Kansas corporation, And DAVID MASON, individually Defendants.

Findings of Fact and Conclusions of Law

A trial to the Court of the above captioned matter was held on September 26 28, 2005. After considering the testimony of the witnesses, the exhibits submitted, and the arguments of counsel, the Court enters the following findings of fact and conclusions of law: Findings of Fact

1.

The Defendant, Landvest Corporation, (hereafter Landvest) is a Kansas

Corporation which manages over 2 million square feet of self-storage space consisting of over 20,000 units. The 50-plus facilities managed by Landvest Corporation are self storage facilities located in Colorado, Kansas, Louisiana, Missouri, New Mexico, Ohio and Texas.

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2.

Landvest's corporate headquarters are located in Wichita, Kansas. All

corporate decision-making with respect general corporate policies and procedures, procedures concerning operation of facilities, personnel policies and pay practices, including compliance with the federal Fair Labor Standards Act, occurs in Wichita, Kansas where David Mason's office is located. 3. Substantial interstate activity is engaged in by agents of the corporation at

all levels. Corporate managers frequently travel interstate to supervise facilities, resident managers frequently communicate with corporate headquarters by phone, fax, mail and Internet. Payroll is processed in Kansas and distributed by mail or direct deposit to employees or banks in other states. Landvest has annual gross sales in excess of $500,000.00. 4. At all times relevant to the Complaint, Defendant David Mason was a 50%

owner of the company, and an officer of the Defendant Corporation (Vice President). He formulated, or contributed to the formulation of, most corporate personnel and pay policies, including compliance with the federal Fair Labor Standards Act. He also had final decision-making authority over tthe management of the business of Landvest. 5. On December 20, 1998 an employee of Landvest, Don Wooldridge, made

a complaint to the United States Department of Labor alleging that Landvest was not keeping accurate records of hours worked by employees; that it required employees to record 22 hours a week regardless of the number of hours worked; and was not paying overtime. Ex. 071-0004,0005. 28. 6. The Landvest's attorneys Husch and Eppenberger responded to the

United States Department of Labor by letter on March 11, 1999. Ex. 69, p. 6. Through

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its attorneys, Landvest represented to the United States Department of Labor that resident managers never worked more than 40 hours a week and offered to produce timesheets to prove that they only worked 22 hours a week. 7. Landvest did not begin paying overtime to resident managers until April,

1999. Ex. 0011-0002. Prior to that time it classified resident managers as exempt, salaried employees and did not pay overtime. Ex. 0009-0008. Landvest denies that the change from exempt to nonexempt status was the result of any event. Rather, it claims that the change resulted from a "periodic review" of personnel and pay practices. Ex. 0009-0008, 0009-0009. 8. The Plaintiff, Charlotte Schneider, applied for employment with

Landvest on or about March 27, 2002, and began working at the storage facility located at 10601 Iliff, Aurora, Colorado, on April 10, 2002, as a resident manager. 9. The Plaintiff, Dean Wymer, applied for employment with the Landvest

on or about March 27, 2002, and also began working at the storage facility located at 10601 Iliff, Aurora, Colorado, on April 20, 2002, as a resident manager. 10. 11. The Plaintiffs are married to each other. Prior to their employment with Landvest, the Plaintiffs resided near

Edgemont, South Dakota. Plaintiff Charlotte Schneider was not working at the time she applied for employment with Landvest. She had previously worked as an accounts receivable clerk, a motel manager, and a manager of an apartment complex. She had also worked as an assistant manager in a convenience store. 12. Plaintiff Dean Wymer had previously owned businesses, including a

pawn shop and a sound business. He had worked as a musician, a motel manager, -3-

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and a manager of an apartment complex. 13. At the time they were hired by Landvest, Plaintiffs owned their home

near Edgement, South Dakota. 14. In March of 2002, Charlotte Schneider saw an on-line classified

advertisement in the Denver Post for a Landvest resident manager. 15. In response to the advertisement, Plaintiffs called Landvest and spoke to

John Cramer, a Landvest regional manager. Cramer asked them to fax their resumes to him. 16. During Charlotte Schneider's first telephone conversation with Cramer, he

told her the job involved 4 hours of work a day and that they would live on site. 17. At Cramer's request, Plaintiffs traveled to Denver two or three days after the first telephone conversation with Cramer. They met Cramer at a restaurant and spent approximately one hour with him. He again mentioned 4 hours a day of work per person, and said that at times there would be additional hours. He also told them that they would be paid for extra hours, but said nothing about 35 hours of work a week. 18. Cramer then told them that a final decision would be made in the future concerning their employment and that he would contact them in a day or two. 19. Plaintiffs returned to South Dakota and were notified shortly thereafter

that they were hired. They were asked to begin work on April 1, 2002. 20. Plaintiffs were later notified by Cramer that there was a problem with the

apartment they were to occupy and were told to report to duty on April 10,2002. 21. In reliance, in part, upon the representations of Cramer, Plaintiffs moved

to Denver with their belongings and listed their South Dakota home for sale. Their -4-

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home was subsequently sold. 22. Plaintiffs were hired by Landvest to manage a self storage facility at 10601

East Iliff, Aurora, Colorado. They worked at the Iliff facility until they terminated their employment on April 4, 2003. 23. On the 10tth of April, 2002, when Plaintiffs reported for training as

instructed, Cramer presented them with an employment contract. Ex. A4. Plaintiffs read and signed the contract. A second employment agreement was entered into between the parties on July 23, 2002. Ex. A5. 24. Before signing the contract, Cramer reviewed the contract (Ex. A4) with

the Plaintiffs. During that conversation Cramer did not say anything inconsistent with his earlier representations that they would each work 22 hours per week. He said nothing about each Plaintiff working 35 hours per week. During either the first meeting in the coffee shop, or on April 10, 2002, Cramer stated that if additional work was required, it would be paid at an overtime rate. He specifically referred to work on days off, and gave an example of a relief manager not being available to work. He also said that when circumstances arose after business hours, they would be paid for "overtime." 25. The form of the contract (Ex. 4) had undergone several revisions since it

was first used by Landvest in 1993. See Ex. 68. The contract was written, rewritten, or revised by the Landvest attorneys, Husch & Eppenberger, LLC. 26. The contract states in part: In performance of the duties described herein, Employees shall not work more than a combined total of 70 hours per week. The employees shall work approximately 44 hours per week but may be called upon to work additional hours as needed. -5-

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27.

The contract is ambiguous as to whether: (1) 44 hours or 22 hours was

expected of each employee; (2) how hours over 22 would be compensated; and (3) because it refers to the compensation as "full compensation for performance of duties hereunder. . . " (¶ 4) but leaves hanging whether the "duties hereunder" refer to the 44 or 22 hours of work, as described in ¶ 5, or to something else. 28 29. The statement is also contradicted by the reference to overtime in ¶ 7. The language is contradictory by stating on the one hand that

"Employees shall not work more than a combined total of 70 hours per week" and on the other hand that employees are expected to work 44 hours per week. Nor does the reference to 44 hour per week differentiate whether that is combined total for two employees or an individual total of hours for each employee. 30. The contract does not indicate that the contracting parties are agreeing to

work 70 hours per week. It contains a prohibition against working more than 70 hours. 31. The ambiguities contained in the Landvest contract were created, in part

by, the decision of Landvest to use one contract for two employees. Given the contract's vague and ambiguous language on this issue, it does not unambiguously identify how many hours each employee was to work, or even the range of hours expected of each employee. 32. It would have been a simple drafting task to disclose that each

employee was "agreeing to work between 22 and 35 hours a week for a fixed salary of $10,800.00", if that had been the intention of the employer, Landvest. 33. The ambiguous paragraph 5 (Exhibit A4) served the business

purposes of Landvest by allowing supervisors to tell potential employees that they -6-

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would be working 4 hours a day or 22 hours a week. 34. Circumstances surrounding the execution of the contract which are

relevant to its interpretation are: a. Cramer's representation to the Plaintiffs that they would work 22 hours a week; Cramer's representation that additional work beyond that discussed (22 hours a week) would be required and that the work would be compensated; and The illegality of the hourly rate resulting from Defendants' interpretation (44 hours per week for $207.70) - an hourly rate below the minimum wage.

b.

c.

35.

Plaintiffs received three days of training at the Iliff site (April 10-12,

2002) from Judi French, a resident manager. Cramer was present for part but not all of the training. At the end of the first day of training Plaintiffs had each worked a full 8 hour day. They were instructed by Judi French to record only 4 hours each on their time sheet. 36. The following day they were again instructed to record 4 hours of work

although they had each worked a full day . When questioned by Charlotte Schneider about this practice Cramer told her that "that was just the way it was." 37. On April 10, 2002, John Cramer told the Plaintiffs that they both had to

be at the facility, although not in the office, during office hours (10:00 a.m.-6:00 p.m. Monday through Friday and 9:00 a.m. - 5:00 p.m.), unless they were running workrelated errands. 38. Judi French also told the Plaintiffs that they each needed to be present

on the Landvest premises during office hours. -7-

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39.

At the end of the next week - the Plaintiffs' first full week of work -

Charlotte recorded on the time sheet the actual hours she and Dean had worked. She recorded in excess of 40 for each of them. She was then told by Cramer to create a new time sheet which only showed 22 hours of work a week for each plaintiff. He explained that she would not be paid unless she completed the time sheet as instructed. He also told her at that time that she was "salaried." She then asked Cramer why they were required to complete a time sheet and was told that it was a company requirement. 40. Initially Plaintiffs accepted that they were working more hours than

represented by Cramer because the site was run down and because they were new to the job. 41. Plaintiffs were supervised until the fall of 2002 by John Cramer, a

regional manager. 42. Cramer was authorized by Landvest to review time sheets of resident

managers and approve overtime within parameters set by Landvest's overtime policy. Specifically, he could only approve overtime that was pre-approved or overtime required by emergencies. Only time worked outside of the 44 hour per week "office hours" could be submitted as overtime according to Landvest policy. 43. David Mason had final authority over whether overtime would be paid.

He authorized payroll clerks to alter time sheets to delete overtime hours submitted by resident managers that did not conform to Landvest's overtime policy. 44. Landvest never had a written overtime policy. David Mason was closely

involved in the implementation of the unwritten overtime policy, intervening in pay -8-

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matters involving compensation to individuals for hours recorded on their timesheets. 45. Cramer was authorized by Landvest to train resident managers in the

record keeping practices of Landvest, including how Landvest wanted time sheets filled out. 46. Cramer instructed the Plaintiffs that they could record overtime on their

time sheets that fell within the Landvest parameters, otherwise they were to record no more than 22 hours a week each. 47. The training provided to Charlotte Schneider and Dean Wymer

concerning recording of hours worked was consistent with Landvest's policies. 48. Cramer was authorized by Landvest to supervise the Plaintiffs, including

interpreting for the Plaintiffs Landvest's expectation that they "devote their entire time, attention and energies to the business of the employer." Ex. A4, p. 2 ("Extent of Services"). 49. Cramer communicated to plaintiffs that they could not work at other

part-time employment by saying such things as: "David wouldn't like it." 50. The tasks Plaintiffs were required to complete included: staffing the

office 40 or 44 hours a week; direct leasing to new tenants; contact with potential tenants; promoting rental space; answering phones; distributing pamphlets; helping tenants "solve problems"; resolving complaints; handling "local books"; recording information about tenants and units; accepting rental payments; reminding tenants to make payments by phone and written correspondence; maintaining the complex in "good condition and good order"; keeping premises swept and clean; cleaning units; locking out delinquent tenants; collecting payments from locked out tenants; reopening -9-

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locked units; conducting regular surveillance of the entire property; monitoring tenants activities; monitoring gates and computerized security systems; monitoring lights and the perimeter of the property; phoning police or fire in case of emergency; representing the company to the public; preparing days-end, week-end and month-end and other reports; and transmitting them to the home office. Exs. 80068-0018, 0019. 51. On several occasions, early in her employment, Schneider recorded

more than 22 hours on her time sheets for work she had performed outside regular office hours. Even when the extra hours were approved by her regional manager they were crossed off by a payroll clerk of Landvest and not paid. Exs. A0001-0005, 0016, 0018,0022, 0027. 52. The Plaintiffs complied with instructions of Landvest to only record 4

hours per day of work, for all work performed during regular working hours (10:00 a.m. Monday- Friday and 9:00 a.m. to 5:00 p.m. on Saturday). Initially, they recorded time spent working after closing on paperwork or for a late customer. Payment for this time was denied. Exs. A0001-0023, A0001-0021. Time recorded and submitted by the Plaintiff for training a relief manager was denied. Ex. A0001-0029. Time spent working in place of a resident manager was paid. Ex. A0001-0029. Plaintiffs stopped recording time on their time sheets which they believed would not be paid by Landvest because they believed submitting the time would be futile. 53. It was Landvest's management expectation that one person be in the

office during office hours. This was evidenced by: a. The site inspection report form which asks whether the manager was in the office; -10-

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b.

Landvest managers expected the telephone to be answered during office hours. Cordless phones were not provided prior to April, 2003 and the phone could not be answered from inside the apartment; Landvest managers asked resident managers to remove bells from their desks; and Landvest managers required that doors between offices and apartments be closed. Landvest resident managers were typically married couples

c.

d.

54.

without children at home. 55. Most couples fulfilled their duties by having the wife staff the

office during regular business hours and the husband perform maintenance and security work and show units to prospective tenants. 56. Staffing the office during regular business hours required either 40 or 44

hours of work per week depending on whether the site was required to be open on Sunday. Ex. A4, p. 7. 57. Landvest managers, including John Cramer, Neil Murray and David

Mason, knew that resident managers such as the Van Kirks, the Adolphsons and the Plaintiffs were working more than 40 hours per week. They knew this because managers Murray and Cramer had managed sites and knew the amount of work that needed to be preformed. All managers knew that the wives were staffing the offices during regular business hours and that routine duties needed to be performed outside business hours. 58. Landvest paid the Plaintiffs and other managers for time they spent

performing pre-approved and emergency tasks outside office hours at the overtime rate -11-

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of $14.16 per hour. The overtime rate was calculated by multiplying $9.44 x 1 ½ . $415.39 (the biweekly rate) divided by 44 hours (the number of hours recorded for a two week period) is $9.44. 59. Payment for hours worked outside business hours at an overtime rate

evidences knowledge by management that resident managers were regularly working 40 or more hours during business hours 60. The Plaintiffs were following the instructions of supervisors when they

filled out time cards reporting only 22 hours of regular work per week. 61. There was substantial evidence that Defendant's management knew

that the resident managers' time sheets falsely reported 22 regular hours of work each week no matter how many hours the employees had actually worked, including: a. The complaint of Wooldridge in 1998, that he was instructed to record no more that 22 hours of regular work each week and that he was working more than 40 ours per week, provided notice to David Mason that the practice of falsely reporting hours existed. Ex. 71. b. The uniformity of thousands of time sheets turned in by resident managers recording 4 hours of work per day per resident manager provided notice to David Mason that the times sheets did not record actual hours worked. c. It is not plausible that employees working under different regional managers would consistently record exactly 4 hours per day of work or 22 regular hours unless they were instructed to do so by supervisors. It is not plausible that a uniform company wide practice of recording only 4 hours per day of work would exist unless regional managers had been told by management to instruct resident managers to record their time in this manner. d. John Cramer's initial written statement to the Dept of Labor (Ex. A 29:17) stated that " All employees in this region were told that they should record no more than 22 hours per person per week on the payroll records and that anything beyond that must be approved by the Regional Manager." -12-

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e. Defendant has taken the position in this litigation that Plaintiffs' regular rate of pay was $5.94 per hour, a rate reflecting a claim that Plaintiffs worked at least 35 hours per week not the 22 falsely recorded on their time sheets. 62. Landvest management knew that resident managers were creating false

time records when they filled out time sheets recording 22 hours of work. 63. Landvest never recorded a regular hourly rate of pay for the Plaintiffs

in the pay records of Landvest or on the paychecks or pay stubs provided to the Plaintiffs. 64. Landvest never recorded an overtime rate of pay for the Plaintiffs

in the pay records of Landvest or on the paycheck or pay stub provided to the Plaintiffs. 65. Landvest never included the value of housing in the overtime rate

used for the Plaintiffs. 66. David Mason formulated and implemented pay practices for Landvest,

including compliance with the federal Fair Labor Standards Act. He personally formulated or approved the the practice of recording 22 hours of regular work per week regardless of the number of hours actually worked, and the practice of disallowing and not paying recorded hours, as well as the practice of failing to record hourly rates, overtime rates and the number of hours actually worked by managers each week. 67. Plaintiffs regular rate of pay was $9.44 per hour. This is evidenced by: a. The letter dated May 22, 2003 written by the lawyer Michael Gillespie for Landvest to the Colorado Department of Labor which admits the regular hourly rate of pay was $9.44/hour. Ex. 00010004 ¶ 3. Plaintiffs' regular rate of pay for a two week period was $415.39. 415.39 divided by 44 (the number of regular hours recorded on the time sheets for a two week period) is $9.44. -13-

b.

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c.

Defendants have taken inconsistent positions in this litigation concerning the regular rate of pay of the Plaintiffs. At times the Defendants have claimed that the time sheets are accurate and that the Plaintiffs only worked 22 hours a week. In the Final Pretrial Order , Defendants claimed they believed the time sheets accurately recorded the number of hours worked by the Plaintiffs. ("Plaintiffs were instructed and entrusted with recording all hours worked."). Id. at 4. At other times Defendants have argued that the Plaintiffs regular rate hourly rate fluctuated from week to week. Ex. 0006-0004. At other times they have claimed that Plaintiffs hourly rate was $5.94/ per hour. Defendant Landvest failed to record Plaintiffs hourly rate as required by

68.

law and failed to disclose to the Plaintiffs how the overtime pay was calculated. Landvest's records do not record a fluctuating regular rate of pay. Landvests records record a fixed salary for the Plaintiffs and a fixed number of regular hours worked, 22 hours per week. 69. Schneider worked 4 week days per week from 10:00 a.m. until 6:00

p.m. and Saturdays from 9:00 a.m. until 5:00 p.m. In addition, from November, 2002March 2003, she worked four hours on every Sunday except one. Schneider worked between two and three hours every week after 6:00 p.m. preparing end-of-day, end-ofweek, and end-of-month reports. She devoted time after office hours dealing with tenants who had been locked out of their units, potential tenants who were seeking to lease units, preparing late notices to be mailed to tenants, and performing other tasks for the employer. While the amount of work performed cannot be established with precision, allowing 2 ½ hours per week for preparation of end-of-day, end-of-week, and end-of-month reports is fair to the employee and employer. Allowing one hour per week to the employee for other tasks as described above is fair to the employee and employer. Schneider was paid at her regular rate for 22 hours per week. She should -14-

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have been paid for an additional 18 hours per week at her regular rate of 9.44 per hour. For 32 weeks she should have been paid for an additional 3 ½ hours of work at $17.12 per hour and for 18 weeks she should have been paid for an additional 7 ½ hours of work at $17.12 per hour. 70. The tasks described in paragraph 69 were not paid by the employer. 71. Dean Wymer regularly worked 36 hours per week during usual office hours. On Sundays, when the office was required to be open (November to March, 2003), he worked an additional 4 hours per week performing maintenance, dealing with tenants, cleaning the office and grounds, and performing other work which benefitted the employer. Throughout his employment, Wymer regularly performed work, such as, security checks outside regular hours. At least one security check was performed each day outside regular office hours, usually before he went to bed. More than 50% of the time he performed another security check between 12:00 a.m. and 1:00 a.m. A security check usually took approximately 30 minutes. He devoted time after office hours dealing with tenants who had been locked out of their units, dealing with difficult tenants who were behaving inappropriately on the property, watering the lawn during the night, and performing other tasks for the employer. While the amount of work performed cannot be established with precision, allowing 4 ½ hours per week for security work, and one hour per week for other work, such as, dealing with tenants and monitoring the facility, is fair to the employee and employer. 72. 73. The tasks described in ¶ 71 were not paid by the employer. Wymer was paid at his regular rate for 22 hours per week. He should

have been paid for an additional 18 hours per week at his regular rate of 9.44 per -15-

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hour. For 32 weeks he should have been paid for an additional 1 ½ hours of work at $17.12 per hour, and for 18 weeks he should have been paid for an additional 5 ½ hours of work at $17.12 per hour. 74. The Defendant used a regular rate to calculate an overtime rate which did not include $2,250.00 per year for lodging. Including the value of lodging in the regular rate yields a correct overtime rate of $17.12 per hour. In 2002 Plaintiff Schneider was paid for 80.5 hours of overtime at the incorrect rate. In 2003 she was paid for 7 hours of overtime at the incorrect rate. In 2002 Plaintiff Dean Wymer was paid for 26 hours of overtime at the incorrect rate. In 2003 he was paid for 9 hours at the incorrect rate. Ex. A-3. 75. Landvest entered into an agreement with its employees, including

Plaintiffs, to pay them nothing for hours worked between 22 and 44 per week. Conclusions of Law 1. At all times relevant to the Complaint the Defendant corporation was an

"enterprise engaged in commerce" within the meaning of the federal Fair Labor Standards Act. 29 U.S.C. §§ 203(b) & (s). 2. As a covered enterprise Landvest was required to comply with the

minimum wage, overtime and record keeping requirements of the federal Fair Labor Standards Act of 1938. 29 U.S.C. §§ 201-219. 3. David Mason acted directly or indirectly in the interest of the employer in

relation to the Plaintiffs by formulating or implementing the overtime policies of Landvest including the record keeping policies of Landvest and was therefor an employer within the meaning of the Act. 29 U.S.C. § 203(d). -16-

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4.

The Plaintiffs were nonexempt employees under the Act. Admitted

Response to Interrogatory No. 1 Exhibit 0007-0009. 5. The Fair Labor Standards Act is remedial legislation which should be

broadly interpreted to advance its humanitarian purposes. Schoenhals v. Cockrum, 647 F.2d 1080, 1081 (10th Cir. 1981); Welding v. Bios Corp., 353 F.3d 1214,1218 (10th Cir. 2004); Shultz v. Mistletoe Express Service, Inc., 434 F.2d 1267, 1270 (10th Cir. 1970). The Act should be interpreted "broadly with reference to underlying economic realities" Id. 6. The legislative purpose in enacting the Fair Labor Standards Act was to

eliminate working conditions "detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers." 29 U.S.C. § 202. 7. The interpretive regulations of the United States Department of Labor

are entitled to deference when Congress has not directly addressed the interpretation of the Act. See Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 843, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984). 8. The Act requires employers to make and preserve records of "wages,

hours and other conditions" of the employment. 29 U.S.C. § 211(c). The specific records to be maintained include records of the employee's regular hourly rate of pay for any workweek in which any overtime is due, hours worked each workday, and total hours worked each work week. 29 C.F.R. 516.2. The record keeping requirements are integral to the Act. Without accurate records of hours worked and the regular hourly rate of pay the premium pay requirements for hours over 40 can be easily avoided. -17-

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9.

Landvest violated the record keeping requirements of the Act by failing

to accurately record all hours worked and by failing to record the regular hourly rate of pay. 10. An employer must pay a nonexempt employee for all hours worked over

forty in a single work week at a rate of not less than one and one half times the employee's regular rate of pay. 29 U.S.C. § 207. 11. Work not requested but suffered or permitted is work time. An employee

who voluntarily stays at the end of his shift to finish assigned tasks or correct errors is working. If the employer knows or has reason to believe that he is continuing to work, the time is working time. Handler v. Thrasher, 191 F. 2d 120 (10th Cir. 1951)(paraphrasing 29 C.F.R. 785.11). 12. When an accurate record of hours worked does not exist, the employee

meets his burden of proof when he: . . . show(s) that he performed overtime work for which he was not properly compensated and to show the extent and amount of such work as a matter of just and reasonable inference. When the employee proves that he did in fact perform overtime work for which he was not properly compensated and provides sufficient evidence to show the extent and amount of such work as a matter of just and reasonable inference, the burden shifts to the employer to come forward with evidence of the precise amount of work performed . . . And if the employer fails to produce such evidence it is the duty of the court to enter judgment for the employee even though the amount be only a reasonable approximation.

Mitchell v. Caldwell, 249 F.2d 10, 11 (10th Cir. 1957); Wirtz v. Lieb a/b/a AAA Exterminators, 366 F.2d 412, 414 (10th Cir. 1966). 13. In this case the Plaintiffs met their burden of proof by testifying to tasks -18-

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they performed outside of usual office hours, how often they performed the task and how long it usually took to perform the task. The employer presented no evidence precise enough to meet its burden of proof. 14. The Fair Labor Standards Act does not directly address the issue

of how a court should treat uncompensated non overtime hours worked during a week when some overtime is worked. 29 U.S.C. §§ 201-219. 15. The agency interpretive regulations, which require payment for all

non overtime hours at the regular rate ( 29 C.F.R. §§ 778.315; 316 & 317), are a reasonable interpretation of the statute because they discourage employers from devising schemes to lower employees' overall pay by taking back in uncompensated hours pay mandated for overtime work. The regulations further the humanitarian purposes of the Act, to discourage over forty hours of work in a single work week. The requirements of the Act could be avoided if an employer was permitted to work an employee without pay for part of the workweek thus lowering the effective overtime premium. The regulations are not unreasonable and should be applied in this case. 16. Because the Act does not directly address the issue of non payment for

non overtime hours and because the Secretary's interpretation is reasonable and furthers the legislative intent, the Court in this case will follow the interpretive regulations requiring payment at the regular hourly rate for all non overtime hours. 29 C.F.R. 778.315. 17. Landvest's agreement with its resident managers was not an agreement

for a bona fide salary. Lanvest managers were required to work no fewer than 22 hours per week but received no additional compensation for hours over 22. -19-

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18.

The contract (A4) entered into between the Plaintiffs and Landvest was

ambiguous concerning the number of hours of work the employees were to perform and the pay for hours over 22. Parol evidence is admissible to determine the intention of the parties. John Cramer represented to the Plaintiffs that they would work 4 hours a day and 22 hours a week. The practice of the employer of recording only 22 hours of work is strong evidence that the intention of the parties was that the $415.39 biweekly compensation was intended to be compensation for 22 hours of work per week. Therefore the effective regular rate of pay was $9.44 per hour. 19. The pay arrangement offered was an illegal agreement to pay nothing for

hours worked between 22 and 44. 29 C.F.R. 778.317. Such an agreement is ineffective to impair the employee's right to overtime pay under the Act. 20. Similarly an agreement, or employer policy in this case, to refuse to pay

for overtime which hasn't been pre authorized is illegal and of no effect when the employee is suffered or permitted to work. 29 C.F.R. 778.316. The rule that only emergency work would be paid is similarly illegal and ineffective. The employer knew or should have known that the employees were performing overtime work, such as completing reports and performing security checks. The employer permitted and in some cases required that the work be performed. The employer cannot avoid liability for overtime compensation by "prohibiting" the work or classifying it as non-emergency work. 21. The doctrine of estoppel is not properly applied in this case to prevent

the recovery of wages. The outcome of a FLSA case does not turn on the hours recorded by the employee when the employer knew or should have known that -20-

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overtime was being worked. See Hallemeier v. Schnuck Mkts.,1994 U.S. Dist. LEXIS 5751(D. Kan 1994). Where the employee has not concealed the work performed from the employer the doctrine of estoppel should not be applied in an overtime case to bar recovery. Abel v. Department of Corrections, 1995 U.S. Dist. LEXIS 13565 (D. Kan. 1995). "Estoppel arises where one party, by its words or actions, misrepresents a fact, and the other party reasonably relies upon such representations to its detriment." United Services Automobile Association v. Royal-Globe Insurance Co., 511 F.2d 1094, 1097 (10th Cir. 1975). The doctrine has no application here because the employer required the misrepresentation of hours worked.

Entered this _______day of September, 2005.

By_____________________________ Wiley Y. Daniel United States District Court Judge

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