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Henderson v. Pieratt's, Inc.

United States District Court, E.D. Kentucky, Central Division, Lexington

April 29, 2019

HERMAN HENDERSON, Plaintiff,
v.
PIERATT'S, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          JOSEPH M. HOOD SENIOR U.S. DISTRICT JUDGE.

         The Plaintiff, Herman Henderson (“Henderson”) was an employee of Defendant, Pieratt's, Inc. (“Pieratt's”), from March 7, 2012 to June 26, 2017 at Pieratt's Warehouse and Delivery facility on Palumbo Drive in Lexington, Kentucky. Henderson claims that throughout the course of his employment, he did not receive any additional compensation for hours he worked in excess of forty (40) per week and further alleges that he was routinely subjected to unlawful withholdings from his wages. Henderson has since resigned his employment with Pieratt's.

         On August 25, 2017, Henderson filed this action in Fayette Circuit Court, alleging claims that Pieratt's alleged actions violatee the Fair Labor Standards Act of 1938 (“FLSA”), 29 U.S.C. §§ 201 et seq., and the Kentucky Wage and Hour Act (“KWHA”), KRS Chapter 337. [DE 1-1]. On September 18, 2017, Pieratt's removed the action to the Eastern District of Kentucky. [DE 1].

         The parties have each now moved for partial summary judgment. [DE 14, 16]. Pieratt's moved for partial summary judgment on the issue of liability on Henderson's first cause of action under the FLSA. [DE 14]. Henderson moved for partial summary judgment on the issue of Pieratt's alleged liability under both the FLSA and the KWHA. [DE 16]. The parties have responded in opposition to the applicable motions. [DE 23, 26]. Additionally, the parties have replied in support of their motions or the time to reply has expired. [DE 29]. As a result, this matter is ripe for review and consideration and all pending motions for summary judgment will be consolidated in this memorandum opinion and order.

         For the reasons that follow, Pieratt's motion for partial summary judgment [DE 14] is DENIED and Henderson's partial motion for summary judgment [DE 16] is DENIED.

         I. Factual and Procedural Background

         Plaintiff, Herman Henderson, is a resident of Fayette County, Kentucky, who was employed with Defendant, Pieratt's Inc. from March 7, 2012 to June 26, 2017. [DE 1-1 at 2-3, PageID #5-6; DE 5 at 2, 4, PageID #32, 34; DE 16-25 at 2-3, PageID #259; DE 26 at 1-2, PageID #327]. Pieratt's is a Kentucky corporation with its principal place of business in Lexington, Kentucky. [DE 1-1 at 3, PageID #36, DE 16-25 at 1, PageID #258, DE 26 at 1, PageID #357]. Pieratt's maintains business operations at several locations including (1) the Mount Tabor Showroom and Service Center in Lexington, Kentucky, (2) the Nicholasville Road Showroom, in Lexington, Kentucky, (3) the Richmond Center Showroom in Richmond, Kentucky, (4), the Clearance Center Outlet, located at 2375 Palumbo Drive, Lexington, KY, and (5) the Warehouse and Delivery facility, located at 2395 Palumbo Drive, Lexington, Kentucky. [DE 16-3, DE 16-25 at 2, PageID #259, DE 26 at 1, PageID #327].

         Henderson was hired to work in Pieratts Warehouse and delivery facility on or about February 29, 2012. [DE 1-1 at 2-3, PageID #5-6; DE 5 at 2, 4, PageID #32, 34; DE 16-4, 16-5, DE 16-25 at 2, PageID 259, DE 26 at 1, PageID #327]. After several months, Henderson was promoted to “delivery helper.” [DE 16-4 at 15-16, DE 16-25 at 2, PageID 259, DE 26 at 1, PageID #327]. Until December 31, 2012, Henderson was compensated on a straight hourly basis. [DE 16-25 at 3, PageID 260; DE 26 at 2, PageID #328]. Around December 2012, Henderson was promoted to the position of delivery crew chief. [DE 16-25 at 3, PageID 260; DE 26 at 2, PageID #328]. Henderson held the position of crew chief at the Palumbo drive warehouse until his resignation on June 26, 2017. [DE 1-1 at 3, PageID #6; DE 5 at 4, PageID #34; DE 16-13; DE 16-25 at 5, PageID #262; DE 26 at 2, PageID #328].

         As crew chief, Henderson's duties included the coordination and execution of delivery services for Pieratt's. [DE 1-1 at 3, PageID #6; DE 5 at 4, PageID #34]. In particular, Henderson made customer deliveries, as well as inspecting merchandise at the Warehouse prior to making deliveries, coordinating deliveries with customers, and driving the delivery truck. [DE 1-1 at 3, PageID #6; DE 5 at 4, PageID #34; DE 16-25 at 2, PageID 259; DE 26 at 2, PageID #328]. When making deliveries, Henderson and a coworker would drive the truck to customer residences throughout Fayette County and surrounding areas to deliver appliances and furniture. [Id]. While Pieratt's does not concede that Henderson “regularly” worked in excess of forty (40) hours per week, it does acknowledges that Henderson “did work more than 40 hours per week on occasion.” [DE 1-1 at 4-5, PageID #7-8; DE 5 at 5, PageID #35].

         Around the time of his promotion to crew chief in December 2012, Pieratt's implemented a new compensation scheme for delivery personnel which utilized hourly rates, commission payments, and bonus wages, which are reflected in Pieratt's Compensation Program Overview. [[DE 1-1 at 5, PageID 35; DE 16-9; DE 16-25 at 3, PageID 260; DE 26 at 2, PageID #328]. Pieratt's calculates employee earnings within two timeframes: (1) a regular pay period consisting of two workweeks; and (2) a bonus period that measures employee production over a four-week period - i.e., two consecutive regular pay periods.

         For a crew chief's regular wages, Pieratt's pays the greater of the employee's calculated hourly wages or calculated commissions. [DE 16-9; DE 16-25 at 3, PageID 260; DE 26 at 2, PageID #328]. Pieratt's calculates a crew chief's hourly wages by multiplying the employee's hourly rate by the total hours worked in every fourteen (14) day period. [DE 16-9; DE 16-25 at 3, PageID 260; DE 26 at 2, PageID #328].

         Each delivery employee is assigned a designated hourly rate and Pieratt's tracks the amount of hours worked by an employee each work week. [Id.]. For example, during the pay period covering January 25, 2016 to February 6, 2016, Henderson was recorded as working a total of 99.37 hours for the entire period: 56:94 for the first week, and 42.43 hours for the second. Henderson's designated hourly rate during this period $13.63 per hour. [DE 1-1 at 5-6, PageID #8-9; DE 5 at 5, PageID #35].

         A Pieratt's delivery operations employee's daily commission is made up by combining, among other things, the volume and mileage accrued by an employee. [DE 1-1 at 6, PageID #9; DE 5 at 5, PageID #35]. In particular, Pieratt's calculates commissions according to (a) the total volume of merchandise delivered multiplied by a factor of 0.0095; (b) the total mileage driven multiplied by a factor of 0.12; (c) a predetermined flat rate for exchanges and services pickups based on distance travelled; and (d) any holiday or sick pay calculated at a full day of hourly wages. [DE 16-9, 16-25 at 3, PageID #260, DE 26 at 8, PageID #328]. Pieratt's totals each employee's commission at that end of each two week pay period. [DE 1-1 at 6, PageID #9; DE 5 at 5, PageID #35].

         Pieratt's compensation scheme also included a “Performance and Safety Bonus” to be paid every two pay periods (every four weeks), consisting of 10% of the employee's total commissions during the four-week period. [DE 1-1 at 7, PageID #10; DE 5 at 6, PageID #36; 16-8, 16-9, 16-25 at 3, PageID 260; DE 26 at 2, PageID #328].

         However, in its description of delivery bonuses, Pieratt's states that such compensation “may be reduced by 50% if the associate is required to be paid hourly versus commission. This will be at the sole discretion of the general manager who will take into account both levels of business and performance levels of the other delivery teams.” [DE 16-8]. Pieratt's policy also states that such bonuses may be reduced for:

(a) Return trips caused by crew errors;
(b) Damages to merchandise, customer property, or company property;
(c) Customer complaints or driving complaints;
(d) Failures to conduct proper truck maintenance;
(e) Service calls;
(f) Safety violations; and
(g) Disciplinary action.

[DE 16-8].

         With respect to overtime, Pieratt's compensation scheme does not mention calculation or payment of overtime compensation to employees holding the crew chief position. [DE 16-8; DE 16-9; DE 16-25 at 4, PageID #261; DE 26 at 2, PageID #328]. However, the Pieratt's employee handbooks provide that associates compensated on an hourly basis will be paid time-and-a-half for hours worked over 40 in a week. [DE 16-10; DE 16-11; DE 16-25 at 4, PageID # 261, DE 26 at 2, PageID #328]. Pieratt's Handbook also states that commissioned associates are not compensated with overtime pay. [DE 16-10; DE 16-11; DE 16-25 at 4, PageID #261; DE 26 at 2, PageID # 328].

         Pieratt's does not dispute that Henderson was compensated according to these policies from December 31, 2012 until his resignation on June 30, 2017. [DE 16-12; DE 16-13; DE 16-25 at 5, PageID #262; DE 26 at 2, PageID #328]. Nor does Pieratt's dispute that from December 31, 2012 to June 30, 2017 that Henderson's hourly rate was $12.99 and that his hourly rate thereafter increased to $13.63. [DE 14; DE 15; DE 16-25 at 5, PageID# 262; DE 26 at 2, PageID #328].

         Henderson complains that “[t]hroughout the entire course of [his] employment, from about March 7, 2012 to about June 26, 2017, [he] did not receive any additional compensation for hours he worked in excess of forty (40) per week, and was routinely subjected to prohibited withholdings of his wages.” [DE 1-1 at 9, PageID #12]. Pieratt's does not dispute that Henderson never received overtime pay at one-and-a-half times his regular rate for any hours worked in excess of 40 per week. [DE 16-25 at 5, PageID #262; DE 26-2, PageID #328]. Henderson resigned on June 26, 2017. [DE 1-1 at 3, PageID #6; DE 5 at 4, PageID #34; DE 16-13; DE 16-25 at 5, PageID #262; DE 26 at 2, PageID #328].

         On August 25, 2017, Henderson filed his Complaint [DE 1-1] in Fayette Circuit Court and Pieratt's subsequently removed this action to federal court pursuant to 28 U.S.C. §§ 1441 and 1446. [DE 1]. Henderson alleges that Pieratt's violated the 29 U.S.C. § 207 of the Fair Labor Standards Act of 1938(“FLSA”), 29 U.S.C. §§ 201 et seq., as well as KRS 337.060 and 377.285 of the Kentucky Wage and Hour Act (“KWHA”), KRS Chapter 337, by ...


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