District of Kansas Denies Decertification Motion

In Charbonneau v. Mortgage Lenders of America, LLC, et al., No. 2:18-CV-02062, 2021 WL 84171 (D. Kan. Jan. 11, 2021), U.S. District Judge Holly Teeter of the District of Kansas denied the defendants’ motion to decertify plaintiff’s unpaid overtime claims under the Fair Labor Standards Act (“FLSA”).  Charbonneau, 2021 WL 84171, at *1.  In denying the defendants’ motion to decertify, the Court stressed the shortcomings of the defendant’s policies and procedures regarding hours worked and overtime compensation.     

Factual Background

Defendant Mortgage Lenders of America (“MLOA”) is a mortgage-lending company located in Overland Park, Kansas. Charbonneau, 2021 WL 84171, at *1.  MLOA’s employees include Loan Officers, Team Leads, and Directors. Id.  MLOA employed the named plaintiff Beau Charbonneau as a Loan Officer for a period of time and for a period of time as a Team Lead. Id. 

The two groups of employees at issue in this case were Loan Officers and Team Leads. Charbonneau, 2021 WL 84171, at *1.

Loan Officers

MLOA classified Loan Officers as non-exempt. Charbonneau, 2021 WL 84171, at *1.  Loan Officers job duties included, among other things, originating mortgage loans, conducting borrower interviews, following up on lead submissions and recording activity into the contact management system, processing inbound and outbound calls through the company phone system, educating borrowers on the loan process and assisting them in identifying the appropriate loan, and collecting borrowers’ financial/credit information. Id. at *1-2. 

Plaintiffs asserted Loan Officers regularly performed off-the-clock work on their cell phones and email while out of the office. Charbonneau, 2021 WL 84171, at *2.  Plaintiffs further alleged MLOA encouraged such off-the-clock work through various emails and communications to Loan Officers, MLOA did not allow Loan Officers to report such time, an MLOA did not have a policy or mechanism in place for employees to report such time worked. Id. at *3. 

Team Leads

Unlike Loan Officers, MLOA classified Team Leads as exempt and did not pay them any overtime. Charbonneau, 2021 WL 84171, at *3.  Team Leads worked under a uniform job description that required them to perform the duties of a Loan Officer, plus other tasks, including but not limited to training team members on sales organizational techniques including CRM, phone systems, and other resources available to ensure success. Id.  Plaintiffs alleged Team Leads were misclassified as exempt and routinely worked more than 40 hours per week but MLOA did not record their work hours. Id. 

Procedural Background

On December 6, 2018, the Court conditionally certified two classes of employees under the FLSA: (1) Loan Officers; and (2) Team Leads. Charbonneau, 2021 WL 84171, at *1.  After the notice period ended, a total of 167 Team Leads and Loan Officers opted-in to join the lawsuit. Id. 

The plaintiffs moved for partial summary judgment as to the Team Leads collective, contending the Team Leads were not exempt from overtime.  On September 14, 2020, the Court granted plaintiffs’ motion for partial summary judgment on defendants’ purported FLSA exemption defenses as to Team Leads because MLOA failed to pay the Team Leads on either a salary or fee basis. Id. at *3.  Thereafter, the defendants moved to decertify. 

Legal Analysis

At this stage, the Court stated that its “overriding question” to decide was whether or not the named plaintiffs and opt-in plaintiffs are “similarly situated” for purposes of 29 U.S.C. § 216(b). Id.  In resolving this overriding question, courts are required to review several factors, including (1) any disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to defendant that appear to be individual to each plaintiff; and (3) fairness and procedural considerations. Id.       

The Court concluded the Loan Officers are similarly situated. Charbonneau, 2021 WL 84171, at *4-8.  Defendants contended disparate evidence exists regarding whether Loan Officers were directed to work off the clock, whether they worked off the clock, and whether they reported any such alleged overtime pursuant to MLOA’s policies and procedures. Id. at *5. 

However, the Court, found in favor of plaintiffs and against decertification for three primary reasons:

(1) there is evidence MLOA directed and expected all Loan Officers to work off the clock while out of the office on their phones and email;

(2) this off-the-clock work resulted in unpaid overtime hours because all Loan Officers worked more than 40 hours in at least some weeks; and

(3) MLOA did not allow or have a mechanism for Loan Officers to report off-the-clock time. Id. at *5-6.

Given the Court’s finding on summary judgment as to Team Leads, the Court also concluded the Team Leads are similarly situated. Charbonneau, 2021 WL 84171, at *4.  The Court reasoned that the defendants did not identify any disparate factual and employment settings of individual Team Leads—that is, the Team Leads all had the same job titles, job descriptions, and job duties. Id.  The Court also held the Team Leads were all subject to the same FLSA-violating policy—misclassification. Id.

Takeaway

Charbonneau offers a lesson to employers regarding the importance of creating and implementing consistent workplace policies and procedures for paying employees and tracking their hours worked.  Charbonneau demonstrates that employers run a significant risk when they do not have proper policies in place regarding clocking in or out or proper policies regarding reporting hours worked and overtime.

This case is another example showing consultation with experienced legal counsel is necessary when attempting to navigate the tricky waters of FLSA compliance.