IN THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
No. 02-35158
ELAINE L. CHAO,
Secretary of Labor,
U.S. Department of Labor,
Plaintiff-Appellee,
v.
A-ONE MEDICAL SERVICES, INC., a
corporation,
ALTERNATIVE REHABILITATION HOME HEALTHCARE,
INC.,
a corporation, LORRAINE BLACK, an individual and
HANAHN KORMAN, an individual,
Defendants-Appellants.
On Appeal from the United States District
Court
for the Western District of Washington
BRIEF FOR THE SECRETARY OF LABOR
EUGENE
SCALIA
Solicitor of
Labor
STEVEN
J. MANDEL
Associate
Solicitor
PAUL L.
FRIEDEN
Appellate
Counsel
LOIS R.
ZUCKERMAN
Attorney
U.S.
Department of Labor
Suite
N-2716
200
Constitution Avenue, N.W.
Washington,
D.C. 20210
(202)
693-5555
TABLE OF CONTENTS
STATEMENT
OF JURISDICTION
STATEMENT
OF THE ISSUES
STATEMENT
OF THE CASE
A.
Nature of the Case and Course of
Proceedings
B.
Statement of Facts
1.
The Operation of A-One and
Alternative
2.
Wage Violations
3.
Prior Investigations
4.
Action to Enforce Non-Competition Agreements
SUMMARY OF ARGUMENT
ARGUMENT
I.
The District Correctly Concluded
That Alternative Performed The Same
Activities As A-One Under The Common
Control Of A-One And Its President
Lorraine
Black For A Common Business
Purpose and Thereby Constituted
A
Single Covered "Enterprise"
Within
The Meaning of Section 3(r) Of
The
FLSA
A. Standard of Review
B.
The District Court Properly
Concluded That A-One And
Alternative Constituted A
Single "Enterprise" Within The
Meaning Of Section 3(r) Of The
FLSA
FLS
II.
The District Court Correctly Concluded
That A-One and Alternative Are "Joint
Employers" And That The Hours
Worked
For Both Entities Must Be Aggregated
To Determine Compliance With The Overtime
Requirements
Of The FLSA
A. Standard of Review
A.
Standard of Review
B.
The District Court Correctly
Concluded That A-One
And
Alternative Are "Joint
Employers"
Under The FLSA
III. The
District Court Properly Determined
That By Failing To Pay Overtime As
Joint Employers Defendants Willfully
Violated The FLSA And Were Therefore
Subject To A Three-Year Statute of
Limitations
Limitations.
A. Standard of
Review
B.
The District Court Properly
Awarded Back Wages For Three
Years' Unpaid Overtime Based
On Willful Violations Of The
FLSA By A-One And Alternative,
Who, Despite Being Joint
Employers, Failed To Aggregate
The Number Of Hours Worked In
A Work Week By The Employees of
Both Companies
Both Companies.
IV.
The District Court's Award of
Liquidated Damages Was Proper
Because the Companies Failed To
Meet Their Substantial Burden To
Show That They Acted In Good Faith
And In An Objectively Reasonable
Manner In Connection With
Their
Overtime
Violations
Overtime Violations.
A. Standard of
Review
B.
The District Court Correctly
Awarded Liquidated Damages
V.
The District Court Properly Rejected
Defendants’ Affirmative Defense That
Res Judicata Barred Recovery By
Former Employees Yarbrough And
Millard Based On Their Small Claims
Court Counterclaims For Overime
Compensation Filed Subsequent to
A-One's Suits To Enforce Non-
Competition Agreements
A.
Standard of Review
B.
Res Judicata Does Not Bar The
Secretary’s Overtime Claims
Against Any Employees Of
A-One
And Alternative
CONCLUSION
CERTIFICATE
OF SERVICE
CERTIFICATE
OF COMPLIANCE
STATEMENT
OF RELATED CASES
And AlternativeCONCLUSION
ADDENDUM
TABLE OF AUTHORITIES
Cases
Adcock v.
Chrysler Corporation, 166 F.3d 1290 (9th Cir.),
cert. denied,
528 U.S. 816
(1999)
Baker v.
Delta Airlines, Inc., 6 F.3d 632 (9th Cir. 1993)
Baldwin v.
Trailer Inns, Inc., 266 F.3d 1104 (9th Cir.
2001)
Bechtel
Petroleum, Inc. v. Webster, 636 F.Supp. 486 (N.D Cal.
1984)
Bechtel
Petroleum, Inc. v. Webster, 796 F.2d 252 (9th Cir. 1986)
Blonder-Tongue Laboratories, Inc. v. University of Ill.
Found., 402 U.S. 313 (1971)
Bonnette
v. California Health & Welfare Agency, 704 F.2d 1465 (9th Cir.
1983)
Bratt v.
County of Los Angeles, 902 F.2d 1066 (9th Cir.
1990)
Brennan v.
Arnheim & Neely, Inc., 410 U.S. 512
(1973)
Brennan v.
Plaza Shoe Store, Inc., 522 F.2d 843 (8th Cir. 1975)
Brooklyn
Savings Bank v. O'Neil, 324 U.S. 698
(1945)
Cabrera v.
City of Huntington Park, 159 F.3d 374 (9th Cir. 1998)
Collins v.
Lobdill, 188 F. 3d 1124 (9th Cir. 1999), cert. denied
sub nom,
Collins v. Spokane Valley Fire Protection
District No. 1, 529 U.S. 1107 (2000)
Dole v.
Elliot Travel & Tours, Inc., 942 F.2d 962 (6th Cir. 1991)
Dole v.
Odd Fellows Home Endowment Board, 912 F.2d 689 (4th Cir. 1990)
Donovan v.
Agnew,
712 F.2d 1509 (1st Cir. 1983)
Donovan v.
Crisostomo, 689 F.2d 869 (9th Cir. 1982)
Donovan v.
Grim Hotel Co., 747 F.2d 966 (5th Cir. 1984), cert. denied
sub nom,
Grim Hotel v. Brock, 471 U.S. 1124 (1985)
Donovan v.
Scoles, 652 F.2d 16 (9th Cir. 1981), cert. denied, 455 U.S.
920 (1982)
Falk v.
Brennan, 414 U.S. 190 (1973)
Goldberg
v. Whitaker House Co-operative, Inc. 366 U.S. 28 (1961)
Herman v.
RSR Security Services Ltd., 172 F.3d 132 (2d Cir.
1999)
Hodgson v.
Cactus Craft of Arizona, 481 F.2d 464 (9th Cir. 1973)
Lea v.
Republic Airlines, Inc., 903 F.2d 624 (9th Cir. 1990)
Leisek v.
Brightwood Corp., 278 F.3d 895 (9th Cir. 2002)
Local 246
Utility Workers Union of America v.
Southern California
Edison Co.,
83 F.3d 292 (9th Cir. 1996)
Lopez v.
Smith,
203 F.3d 1122 (9th Cir. 2000) (en banc)
Martin v.
Cooper Elec. Supply Co., 940 F.2d 896 (3rd Cir.
1991), cert. denied,
503 U.S. 936
(1992)
Martin v.
Selker Brothers, Inc., 949 F.2d 1286 (3rd Cir.
1991)
McLaughlin
v. Richland Shoe Co., 486 U.S. 128
(1988)
Nationwide
Mutual Inc. Co. v. Darden, 503 U.S. 318
(1992)
Patel v.
Wargo,
803 F.2d 632 (11th Cir. 1986)
Real v.
Driscoll Strawberry Associates, Inc., 603 F.2d 748 (9th Cir.
1979)
Reich v.
Southern New England Telecommunications Corp., 121 F.3d 58
(2d Cir. 1977)
Reich v.
State of New York, 3 F.3d 581 (2d Cir. 1993),
cert. denied, 510 U.S.
1163 (1994)
Reich v.
Waldbaum, Inc., 52 F.3d 35 (2d Cir. 1995)
Rutherford
Food Corp. v. McComb, 331 U.S. 722
(1947)
Rykoff v.
United States, 40 F.3d 305 (9th Cir. 1994)
Secretary
of Labor v. Fitzsimmons, 805 F.2d 682 (7th Cir. 1986)
SEIU,
Local 102 v. County of San Diego, 60 F.3d 1346 (9th Cir.
1995), cert. denied,
516 U.S. 1072
(1996)
Sidhu v.
Fletco Co., Inc., 279 F.3d 896 (9th Cir. 2002)
Skidmore
v. Swift, 323 U.S. 134 (1944)
Torres-Lopez v. May, 111 F.3d 633 (9th Cir. 1997)
United
States v. Mead, 533 U.S. 218 (2001)
United
States v. Rosenwasser, 323 U.S. 360
(1945)
Walton v.
United Consumers Club, Inc., 786 F.2d 303 (7th Cir.
1986)
Wirtz v.
Savannah Bank & Trust Co., 362 F.2d 857 (5th Cir.
1996)
Zorich v.
Long Beach Fire Department and Ambulance Service, 118 F.3d 682
(9th Cir.
1997)
Statutes and
Regulations
28 U.S.C. 1291
28 U.S.C. 1331
28 U.S.C. 1345
Fair
Labor Standards Act,
29 U.S.C. 203(b)
29 U.S.C. 203(d)
29 U.S.C. 203 (e)
(1)
29 U.S.C. 203 (g)
29 U.S.C. 203 (r)
29 U.S.C. 203 (r)
(1)
29 U.S.C. 203 (s) (1) (A)
(ii)
29 U.S.C. 206
29 U.S.C. 207
29 U.S.C. 207 (o)
29 U.S.C. 207 (a)
(1)
29 U.S.C. 211 (c)
29 U.S.C.
215(a)(2)
29 U.S.C.
215(a)(5)
29 U.S.C. 216(b)
29 U.S.C. 216(c)
29 U.S.C.
217
29 U.S.C.
260
Portal-to-Portal Act,
29 U.S.C. 251 et
seq.
29 U.S.C. 255(a)
Code of
Federal Regulations
29 C.F.R.
Part 553
29 C.F.R.
779.201
29 C.F.R.
779.202
29 C.F.R.
779.206
29 C.F.R.
779.213
29 C.F.R.
779.221
29 C.F.R.
779.226 - 232
29 C.F.R.
779.229
29 C.F.R.
779.233(b)
29 C.F.R.
779.9
29 C.F.R. 791.1
29 C.F.R. 791.2
29 C.F.R. 791.2(a)
29 C.F.R. 791.2(b)
29 C.F.R. 791.2(b)(1)
29 C.F.R. 791.2(b)(2)
29 C.F.R.
791.2(b)(3)
Miscellaneous
Ninth Circuit Rule
28-2.2
Fed. R. App. P.
4(a)(1)(B)
Fed. R. Civ. P.
56(c)
S. Rep. No. 145, 87th Cong., 1st
Sess., reprinted in [1961] U.S.C.C.A.N. 1620, 1660
S. Rep. No. 1487, 92nd Cong., 2d
Sess., reprinted in, [1966] U.S.C.C.A.N. 3002, 3009
IN THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
No. 02-35158
ELAINE L. CHAO,
Secretary of Labor,
U.S. Department of Labor,
Plaintiff-Appellee,
v.
A-ONE MEDICAL SERVICES, INC., a
corporation,
ALTERNATIVE REHABILITATION HOME HEALTHCARE,
INC.,
a corporation, LORRAINE BLACK, an individual and
HANAHN KORMAN, an individual,
Defendants-Appellants.
On Appeal from the United States District
Court
for the Western District of Washington
BRIEF FOR THE SECRETARY OF LABOR
The Secretary of Labor
("Secretary") agrees with the statement of jurisdiction contained in
Appellants' brief, pursuant to Circuit Rule 28-2.2. In the interest of completeness,
the Secretary states the following. The district court had subject
matter jurisdiction over this case pursuant to sections 16(c) and 17 of
the Fair Labor Standards Act ("FLSA" or "Act"), 29 U.S.C. 216(c) and 29
U.S.C. 217, and pursuant to 28 U.S.C. 1331 (federal question jurisdiction)
and 28 U.S.C. 1345 (vesting jurisdiction in the district courts over suits
commenced by an agency or officer of the United States). Appellants filed a timely notice
of appeal on January 31, 2002 of the district court's final judgment
entered on December 4, 2001.
See Fed. R. App. P. 4(a)(1)(B). This Court has jurisdiction
pursuant to 28 U.S.C. 1291.
1. Whether the
district court correctly concluded that A-One Medical Services, Inc. and
Alternative Rehabilitation Home Healthcare, Inc., which were both engaged
in the home health care business and were commonly controlled for a common
business purpose, constituted a single "enterprise" covered by the
FLSA.
2. Whether the
district court correctly concluded that A-One and Alternative, which were
jointly managed and shared office space, clients, and employees, were
"joint employers" who must aggregate the hours worked by their employees
for purposes of paying overtime under the
Act.
3. Whether the
district court correctly concluded that A-One and Alternative willfully
violated the FLSA by failing to pay overtime to eight employees when the
combined hours the employees worked for A-One and Alternative exceeded
forty hours in a work week.
4. Whether the
district court correctly awarded liquidated damages based on the
employers’ failure to meet their substantial burden to show that they
acted in good faith and in an objectively reasonable manner in failing to
comply with the overtime provisions of the
FLSA.
5. Whether the
district court correctly concluded that res judicata principles did not
foreclose the award of back wages for overtime to two former employees in
this action brought by the Secretary by virtue of Appellants' contention
that those employees previously counterclaimed for overtime compensation
as part of an action Appellants had brought against the employees in
county court.
STATEMENT OF THE CASE
A. Nature of the Case and Course of
Proceedings
On
March 13, 2001, the Secretary filed a complaint (District Court Civil
Docket (“D.”) 1; Appellants’ Record Excerpts ("RE") 35), alleging that
A-One Medical Services, Inc. ("A-One") and Alternative Rehabilitation Home
Healthcare, Inc. ("Alternative"), both of which placed nurses to provide
home health services, and Lorraine Black, president/owner of A-One, and
Hanahn Korman, owner of Alternative, willfully violated the overtime and
recordkeeping requirements of the FLSA. See 29 U.S.C. 207, 211(c),
215(a)(2), 215(a)(5). The
Secretary sought unpaid overtime compensation and an equal amount in
liquidated damages on behalf of eight employees, and a permanent
injunction to enjoin Defendants from committing future violations of the
Act. See 29 U.S.C.
216(c), 217.
The
Secretary and Defendants filed motions for summary judgment (D. 22, D.
47). Exhibits and
declarations filed with the motions and responses set forth the undisputed
facts in this case.
See Appellee’s Supplementary Record Excerpts (“SRE”) 3-104;
RE 46-134. On November 28,
2001, the district court denied the motion for summary judgment filed by
the Defendants and granted the motion for summary judgment filed by the
Secretary on all issues except for the issuance of a prospective
injunction. D. 57, RE
7-24. The district court
concluded that Defendants, covered as a single enterprise and liable as
joint employers, willfully violated the overtime provisions of the FLSA,
and ordered that they pay $7,294.85 in back wages and an equal amount in
liquidated damages.
Id. Judgment
was entered on December 4, 2001.
D. 58, RE 25.
Defendants' timely notice of appeal followed. RE 1.
B. Statement of Facts
1. The Operation of A-One and
Alternative
Defendants A-One and
Alternative are engaged in the business of employing nurses and nurse's
aides to provide home health services. RE 8, 12; SRE 44-45, 94. Home health care services provided
by A-One and Alternative include nursing care, physical therapy,
occupational therapy, speech therapy, and medical social work. Id.; RE 48; SRE 3. The nurses employed by A-One and
Alternative administered drugs and medications and utilized equipment that
were produced and or manufactured outside the State of Washington.
A-One and Alternative
are Washington corporations separately incorporated on different dates and
owned by Lorraine Black and Hanahn Korman, respectively. RE 8, 48, 50 (Black Declaration at
¶¶s 2, 18), 132, 134. Black
has been the sole stockholder, president, vice president, and secretary of
A-One since she incorporated the company in 1988. SRE 42-43. The annual dollar value of A-One's
business exceeded $1,800,000.00 for the years 1998, 1999 and 2000. RE 11-12; SRE 12. The annual dollar value of
Alternative's business did not exceed $500,000.00 for each of those
years. RE 12, 53.
A-One and Alternative
maintained separate licenses to provide home health care services in
different counties in Washington, separate tax identification numbers,
separate employee records including time sheets, nursing forms, rates of
pay, and reimbursement rates; they filed separate corporate documents and
tax returns; and they issued separate pay checks. RE 13, 50 (Black Declar. at ¶19),
114; SRE 23, 34-35. The pay
period for A-One was from Saturday to Friday and the pay period for
Alternative was from Thursday to Wednesday every two weeks. SRE 23.
In 1996, Black entered
into negotiations to purchase the stock of Alternative because
Alternative's Certificate of Need, which was extremely difficult to
obtain,
could enable A-One to provide Medicare services in certain counties of the
Puget Sound area. RE 8; RE 49
(Black Declar. at ¶10); SRE 46, 75.
Alternative, however, needed to obtain Medicare certification
before the purchase took place and A-One could make use of Alternative's
valuable Certificate of Need.
SRE 56. Therefore,
Black agreed to help Alternative obtain its Medicare certification while
Korman resolved the company's debts.
RE 8-9, 49 (Black Declar. at ¶11); SRE 53.
To facilitate the
Medicare certification, Black agreed to allow, with the patients'
permission, the transfer of A-One patients to Alternative to enable
Alternative to have "an adequate census for [Medicare certification]
survey purposes." RE 50
(Black Declar. at ¶14); SRE 60-63; see SRE 37. During this time, Korman managed
the care of private patients and Black admitted Medicare patients in her
name and oversaw those patients' care and charts in order to pass the
survey to obtain Medicare certification. SRE 55-56, 61-62, 68. A-One assisted Korman with
staffing and supervision of Alternative's patient care. SRE 57.
In 1998, Korman and
Black agreed to an amendment to the sales agreement for the purchase of
Alternative by A-One, which left Korman with authority over the care of
one Alternative patient, and held A-One responsible for services rendered
by Alternative after March 1, 1998.
RE 126; see SRE 71-72, 80-82. Korman worked for A-One
between March and April 1998 while providing case management for one of
Alternative's clients. SRE
99-100. Korman's only
function, after April 1998, was to represent Alternative in court,
depositions, and legal matters until the sale of the company, although she
remained the sole owner and president of Alternative. RE 126-127; SRE 86-91.
Beginning in March or
April 1998, A-One oversaw and managed the clinical operations of
Alternative pursuant to the agreement resulting from mediation over the
contract for A-One's purchase of Alternative. RE 13; RE 50 (Black Declar. at
¶18); SRE 71-73, 80-82, 88.
A-One's management duties over Alternative involved "mak[ing] sure
that everything runs smoothly . . . everything that's involved in managing
her company." RE 109. Specifically, A-One oversaw the
patient care of Alternative, supervised Alternative's employees,
contracted for accounting services for Alternative, contracted with
vendors for Alternative, answered Alternative's telephones at the office
it shared with A-One, and oversaw the paperwork necessary to comply with
government requirements. RE
15, 109. Black also prepared
the policy and procedure manual for Alternative. SRE 55.
Black told the
"scheduler" for A-One -- Donita Iverson -- that her services were being
contracted out to Alternative, and Iverson took direction from Korman for
six months until Korman "disappeared" and Black supervised all the work of
the scheduler for the two companies.
SRE 34. The scheduler
shared by the two companies scheduled employees to work for both
companies, which included scheduling care for patients who had been
transferred from one company to the other. RE 14-15; SRE 35-37.
When a patient was
transferred from one company to another, the families of the transferred
patients were told that A-One was going to eventually purchase
Alternative, in order to reassure patients that their care arrangements
would not change. SRE
54-56. Some of the transfers
were made by A-One to ensure that the government surveyors who reviewed
patient charts as part of the process by which Alternative was to obtain
Medicare certification would not see clients who did not have Medicare
needs on Alternative's charts.
SRE 52, 55, 61-63, 68, 70-71, 85.
To preserve continuity
of care of patients transferred between A-One and Alternative, nurse
employees were given the choice of transferring with the transferred
patients or declining the patient assignment once the transfer was
made. RE 50 (Black Declar. at
¶15). This policy was
consistent with "the longstanding practice of A-One to allow its employees
to accept or decline a patient assignment." Id. at ¶16. While there was no formal
arrangement between the companies to share employees, the employees of
both companies were offered patient assignments to the other company that
they could accept or decline.
RE 13; RE 51 (Black Declar. ¶22). The scheduler would coordinate the
assignments so that a nurse could work some hours during the week for an
A-One client and other hours for an Alternative client while providing
continuity of care for both patients. RE 114. A nurse who worked for A-One and
then worked for Alternative would fill out an application packet for
Alternative prior to being put on that payroll. Id. A nurse who worked for Alternative
and then began working for A-One was required to fill out separate
paperwork, including an employment contract for A-One. SRE
27.
For example, an A-One
patient who Becky Lockard had cared for since July 1998 was transferred to
Alternative. See SRE
23. A-One had paid
Lockard overtime for all hours she worked over 40 hours a week after she
took on this patient. When
the patient was switched from being an A-One client to being a client of
Alternative in February 1999, however, Lockard did not receive overtime
pay for caring for this patient because she was told that she "was
technically working for two different companies." Id. Lockard discussed the matter with
Black, who "explained that there were two separate companies with separate
payrolls and an employee had to work over 40 hours a week at each company
to receive pay at the overtime rate." Id. Lockard stated that she had "the
same pay and the same supervisor whether I was working for A-One or for
Alternative Rehab."
Id.; RE 14.
While she saw patients for both companies, she received one pay
check from A-One, and even when she received a separate check from
Alternative for her work for that company, Black signed that check. Id.
Lockard was directed
to change all references on the transferred patient's chart from "A-One"
to "Alternative" by either cutting off the top of a document with A-One
letterhead or covering the smaller references to A-One with Alternative
address stickers. SRE 24; see
SRE 67-68. At the request of
a caller from A-One on or around February 2, 1999, Rebecca Goodrich, a
case manager with the Department of Social and Health Services of the
State of Washington ("DSHS"), recorded the patient transfer by filling out
a Contract Request Form, dated February 2, 1999: "A-One- changing name to
Alternative Rehabilitation Home Health Care" for a child client. RE 14; SRE 16, 18-20, 9. On December 4, 2000, Black wrote
to Goodrich, on Alternative stationary, as "Administrator" of Alternative,
describing the care the patient needed and referring to the patient as
"our most fragile client." RE
13; SRE 8.
Kathleen Yarbrough was
hired by Korman to work as a nurse for Alternative, and began working in
April 1998 under Korman's supervision for an hourly rate of $20. SRE 26-27. Before filling out separate
paperwork to work for A-One in June 1998, she was assigned a second
patient for Alternative, but Black demanded that she reimburse Alternative
for the difference between the $20 hourly rate that Alternative paid and
the $17.50 rate that A-One paid.
Id. By this
time, Black and another employee were supervising Yarbrough's work for
Alternative patients. SRE
28. Yarbrough noticed
sometime in 1998 that Black was signing the checks she received from
Alternative. SRE 27, 77-78.
During the summer of
1998, Yarbrough worked for patients of Alternative and A-One and expressed
concern to the scheduler and to Black that she was not getting paid
overtime. Black responded to
her complaints by telling her what a great nurse she was and telling her
to "count her blessings." SRE
26-27. She told Yarbrough
repeatedly that "she would go broke if she had to pay the nurses who
worked on the state-pay cases for the overtime." SRE 29. Black also told Yarbrough that
vacation time would only accrue after she worked for both A-One and
Alternative.
Id.
On occasion, Black
delegated her management authority over A-One and Alternative. SRE 1. For example, on May 5, 2000, Black
executed a 30-day transfer of daily management authority for "A-One
Services, Inc., A-One Home Health Services, Inc. [a sister corporation to
A-One servicing Medicare patients], and Alternative Home Healthcare, Inc."
to Diane Kelly, RN, and Anita Drammeh, a scheduler, "to make any and all
necessary decisions regarding patient care, interaction with the State and
its various agencies, staffing of the corporations and any other concerns
which may arise," other than the right or authority to sign checks on
behalf of the corporation.
Id.
Both corporations
operated at the same address.
RE 8. "For
cost-savings," Black "agreed to allow Alternative to occupy space in the
office building" she owned: 3114 Oakes Avenue, Everett, Washington. RE 50 (Black Declar. at ¶17). The sign at the building read
"A-One." SRE 28. Lorraine Black signed and filed a
form with the Secretary of State officially changing Alternative's address
for its Registered Agent to 3114 Oakes Avenue, the same address as that
for A-One's Registered Agent.
RE 14, 46-47; SRE 2.
An employee of both
companies, Angela Goshorn, generated the payroll for Alternative under
Black's ultimate supervision.
SRE 48. Before Ms.
Goshorn, another employee of both companies, Lisa Rhoddie, generated the
payroll for Alternative under the supervision of Judy's Tax and Accounting
service. SRE 48-49. Even though checks were generated
by two different accountants on two different bank accounts, payroll
checks from A-One and Alternative were mailed in one envelope. RE 14; SRE 29. Alternative paid A-One for its
management duties until early 2000, when it lacked the revenue to do
so. RE 51 (Black Declar. at
¶20); SRE 72.
2. Wage Violations
In April 1999, Karen
Ann Murphy, an investigator with the Wage Hour Division of the U.S.
Department of Labor, began an investigation into the compliance of A-One
with the FLSA. RE 9; SRE
11. Black told Murphy that
her daughter handled the payroll for A-One and referred Murphy to Judy's
Bookkeeping to gain access to Alternative's payroll records. SRE 12. That firm referred the
investigator back to A-One where Alternative's payroll records had been
forwarded. SRE 13. A-One payrolls and Alternative
payrolls were reviewed on site at the offices the companies shared, during
which time Murphy tracked
each employee's hours and wages by work week and performed the wage
computations. Id.
When the hours worked
per week for both companies were combined, eight employees -- Marcie
Angst, Susan Hewes, Becky Lockard, Ila Millard, Kathleen Peterson, Carlie
Raff, Lin Renfro, and Kathleen Yarbrough -- were found not to have been
paid overtime in accordance with section 7 of the FLSA, 29 U.S.C.
207(a)(1), which requires employees to be paid at least one and one-half
times their regular rate of pay for each hour worked over forty hours in a
work week. SRE 13; see RE
77-85 (Form WH-56 Summaries of Unpaid Wages); SRE 39-40 (complete Form
WH-56 for Kathleen Yarbrough).
3. Prior Investigations
The Wage and Hour Division of the Department of Labor conducted two
investigations of A-One prior to initiating the investigation that
culminated in the filing of this lawsuit. In 1991, Wage-Hour found that
A-One owed back wages of $9,873.00 to 46 employees for overtime pay
violations of the FLSA, which were paid. In 1994, Wage and Hour found that
A-One owed back wages of $8,054.69 to 45 employees for allowing
compensatory time in lieu of paying overtime to these employees, which
again were paid. And in 1994,
Wage and Hour also assessed civil money penalties against A-One for its
willful and repeated violations; A-One paid penalties in the amount of
$1,200. SRE 12. Lorraine Black signed the 1994
settlement document and agreed individually and on behalf of A-One to
comply with the FLSA in the future.
SRE 11-12.
4. Action To Enforce Non-Competition
Agreements
