RICKY WHITEHEAD, on behalf of himself and all other similarly situated persons, Plaintiff v. SPARROW ENTERPRISE, INC., d/b/a LABOR FINDERS, Defendant
Case Details
- Citation
- 167 N.C. App. 178
- Judge(s)
- Judges BRYANT and LEVINSON concur.
- Procedural Posture — the stage the case had reached
- appeal
- State
- North Carolina
- Circuit
- 4th Circuit
Related Laws
No specific laws identified for this ruling.
Claim Types
Outcome
The court affirmed summary judgment for the temporary employment agency (defendant), holding that wage deductions for optional van transportation complied with North Carolina wage-and-hour law and that employees were not entitled to compensation for waiting and travel time.
Excerpt
RICKY WHITEHEAD, on behalf of himself and all other similarly situated persons, Plaintiff v. SPARROW ENTERPRISE, INC., d/b/a LABOR FINDERS, Defendant No. COA04-208 (Filed 7 December 2004) 1. Jurisdiction— North Carolina Wage and Hour Act — no exemption for temporary employment agency The trial court did not err by concluding that defendant temporary employment agency is not exempt from the jurisdiction of the North Carolina Wage and Hour Act, because plaintiffs claims arise from N.C.G.S. §§ 95-25.6 and 95-25.8 which address wage payment and withholding of wages respectively. 2. Employer and Employee— wage withholding — transportation deduction — specific authorization A de novo review revealed that the trial court did not err by granting summary judgment in favor of defendant temporary employment agency based on defendant withholding class members’ wages to pay for an optional transportation service to and from job sites, because: (1) defendant’s house rules comply with the requirements of N.C.G.S. § 95-25.8(2)(a) as a specific authorization even though there is a range given for the dollar amount since it is sufficiently narrow to provide adequate notice to the class members, the deductions for transportation expenses are not automatic and are conditioned upon the class members specifically requesting use of the van pool each morning, and class members receive frequent and sufficient notice of the cost to use defendant’s van pool; (2) defendant’s house rules satisfy the formatting and content requirements under N.C. Admin. Code tit. 13, r. 12.0305(b) since the authorization form is written, signed by the class members on or before the payday for the pay period from which the deduction is made, includes the date signed, and states the reason for the deduction; and (3) the optional transportation service offered to the class members is not an incident of nor is it necessary to the employment, and it does not matter that the trip is between defendant’s home office and the job sites. 3. Employer and Employee— wage withholding — waiting and traveling to work A de novo review revealed that the trial court did not err by granting summary judgment in favor of defendant temporary employment agency based on class members not being entitled to compensation under N.C.G.S. § 95-25.6 for time spent waiting for and traveling on defendant’s optional transportation service, because: (1) plaintiff testified that defendant never told him that hours worked included wait time or travel time to and from the job site, and the employment contract does not provide for the compensation the class members seek; (2) the class members’ wait or travel time is not a principal activity requiring compensation, but instead is preliminary and postliminary activity since the class members’ idle time either before or after the workday is personal; and (3) the receipt of general protective equipment does not make travel time compensable under 29 C.F.R. § 785.38. Appeal by plaintiff from order entered 21 November 2003 by Judge Donald W. Stephens in Wake County Superior Court. Heard in the Court of Appeals 14 October 2004. Law Offices of Robert J. Willis, by Robert J. Willis, for plaintiff - appellant. Richardson, Patrick, Westbrook & Brickman, LLC, by James L. Ward, Jr., and Rogers Townsend & Thomas, PC., by Paul M. Platte, for defendant-appellee. TYSON, Judge. Ricky Whitehead (“plaintiff’) on behalf of those similarly situated (collectively, “the class members”) appeal from entry of summary judgment in favor of Sparrow Enterprise, Inc. (“defendant”) after the trial court found no violations of the North Carolina Wage and Hour Act (“the NCWHA”), N.C. Gen. Stat. § 95-25.1 et seq. (2003)). We affirm. I. Background Defendant is a temporary employment agency that hires individuals on a daily basis for casual labor. Defendant markets and provides the temporary labor to businesses that periodically need additional workers. Defendant’s hiring policy is structured on a first come first serve basis. Individuals seeking work must arrive at defendant’s office early in order to be considered available for employment. At their first hiring, the class members are required to sign the “House Rules.” The “House Rules” discloses defendant’s hiring process, the details and rules of employment, hours of operation, the hourly wage, hours worked, and standard deductions which include optional transportation expenses. Plaintiff signed the “House Rules” on 2 January 2001. Upon arrival in the morning, the class members write their names on a sign-in sheet and wait for an assignment of available jobs. The “House Rules” specifically states such time is not compensable, “Hours worked and pay are determined from the time the worker starts working at the customer’s establishment And (sic) ends when the work is completed at the customer’s establishment.” While waiting, the class members often eat breakfast, read a newspaper, watch television, talk, or sleep. The class members who are offered work are called to the assignment desk and provided a description of the job and pay. If they accept the position, they are asked whether they have transportation available. If they do not, the class members will ride with either a fellow employee or in defendant’s van. The cost to the class members is $1.00 each way. The “House Rules” explains the transportation program and cost to the participant. After receiving work assignments, defendant provides general safety equipment like hard hats, boots, and gloves to those employees who would need them. The class members either wait for the van pool or secure their own transportation to the job site. They are allowed to do whatever they want during this period, so long as they arrive at the job site on time. Those who select defendant’s van pool are not given any instructions about the job during the ride. Plaintiffs have the option to be paid at the end of the workday or at a later time. On 12 June 2002, plaintiff, acting on behalf of himself and the class members, filed a class action complaint under Rule 23 of the North Carolina Rules of Civil Procedure asserting two claims. First, plaintiff argued the wage deductions for the communal transportation were illegal under N.C. Gen. Stat. § 95-25.8. Second, plaintiff argued employees who elect to use the optional transportation should be paid for time spent while both waiting for the van and riding to and from the job sites under N.C. Gen. Stat. § 95-25.6. Plaintiff sought redress solely under the NCWHA. Defendant answered on 16 January 2003. Defendant filed a Motion for Summary Judgment on 16 September 2003. It asserted: (1) plaintiff agreed to both situations by signing enforceable contracts; (2) defendant is exempt from the jurisdiction of the NCWHA; and (3) plaintiff is not an adequate class representative to allow the class action to proceed. On 21 November 2003, the trial court found the “material facts regarding these claims are not in significant dispute [and] [t]he issue ... is whether or not the undisputed material facts of record establish a violation of the Wage and Hour Act.” The trial court held plaintiff made no showing of a violation of the NCWHA and granted defendant’s motion for summary judgment on both claims. Plaintiff appeals. II. Issues The issues on appeal are whether: (1) defendant is exempt from the jurisdiction of the NCWHA; (2) the trial court properly granted summary judgment in favor of defendant on the class members’ transportation deduction claim; and (3) the trial court erred in granting summary judgment in favor of defendant on the class members’ time spent both waiting and traveling claim. III. Federal Statutes. Regulations, and Cases as Guidance We note at the outset that the issues before us arise from employment and labor law, a substantive area monopolized by federal statutes, regulations, and case law. Plaintiff’s claims are based on the NCWHA, N.C. Gen. Stat. § 95-25:1 et. seq. The NCWHA is modeled after the Federal Fair Labor Standards Act (“the FLSA”), 29 U.S.C. § 201 et seq. Laborers’ Int’l Union of North America, AFL-CIO v. Case Farms, Inc., 127 N.C. App. 312, 314, 488 S.E.2d 632, 634 (1997). The North Carolina Administrative Code (“the Code”) states that “judicial and administrative interpretations and rulings established under [] federal law” may serve as a guide for interpreting North Carolina laws when our Legislature has adopted provisions of the FLSA. N.C. Admin. Code tit. 13, r. 12.0103 (June 2004). We are not bound by decisions of Federal circuit courts other than those of the United States Court of Appeals for the Fourth Circuit arising from North Carolina law. Haynes v. State, 16 N.C. App. 407, 409-10, 192 S.E.2d 95, 97 (1972) (citing State v. Barber, 278 N.C. 268, 179 S.E.2d 404 (1971)). IV. Standard of Review We review a trial court’s entry of summary judgment de novo. Shroyer v. County of Mecklenburg, 154 N.C. App. 163, 167, 571 S.E.2d 849, 851 (2002) (citing Falk Integrated Tech., Inc. v. Stack, 132 N.C. App. 807, 809, 513 S.E.2d 572, 574 (1999)). Under de novo review, a reviewing court considers the matter anew, and it may substitute its own judgment for that of the trial court. Mann Media, Inc. v. Randolph Cty. Planning Bd., 356 N.C. 1, 13, 565 S.E.2d 9, 17 (2002) (citation omitted). A grant of summary judgment is proper when: “(1) the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact; and (2) the moving party is entitled to judgment as a matter of law.” Von Viczay v. Thoms, 140 N.C. App. 737, 738, 538 S.E.2d 629, 630 (2000) (quotation omitted), affdper curiam, 353 N.C. 445, 545 S.E.2d 210 (2001). The moving party has the burden of showing there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Garner v. Rentenbach Constructors, Inc., 350 N.C. 567, 572, 515 S.E.2d 438, 441 (1999). Both this Court and the trial court must view the evidence in the light most favorable to the non-moving party and all inferences from that evidence must be drawn against the moving party and in favor of the non-moving party. Id. After a review of the record and hearing the parties’ oral arguments, we conclude no genuine issues of material fact exist. We review the trial court’s conclusions of law. V. Exemption from the NCWHA Defendant asserts, as an enterprise engaged in interstate commerce, its relationships with the class members are covered by the FLSA and not within the jurisdiction of the NCWHA. We disagree. N.C. Gen. Stat. § 95-25.14(a) (2003) provides exemptions to employers from the NCWHA in limited circumstances, which states: The provisions of G.S. 95-25.3 (Minimum Wage), G.S. 95-25.4 (Overtime), and G.S. 95-25.5 (Youth Employment), and the provisions of G.S. 95-25.15(b) (Record Keeping) as they relate to these exemptions, do not apply to: (1) Any person employed in an enterprise engaged in commerce or in the production of goods for commerce as defined in the Fair Labor Standards Act.... Plaintiff’s claims arise from N.C. Gen. Stat. §§ 95-25.6 and 95-25.8 which address Wage Payment and Withholding of Wages respectively. The statute defendant relies upon for exemption does not cover either section of the NCWHA. Defendant’s argument is overruled. VI. Transportation Deduction Claim Plaintiff asserts defendant failed to comply with the North Carolina statutes and the Code, which provide when and how employers may deduct wages from employees’ paychecks. We disagree. A. Specific Authorization of Wage Withholding N.C. Gen. Stat. § 95-25.1 et seq. comprise the NCWHA. N.C. Gen. Stat. § 95-25.8 (2003) addresses wage withholding, which states: An employer may withhold or divert any portion of an employee’s wages when: (1) The employer is required or empowered to do so by State or federal law, or (2) The employer has a written authorization from the employee which is signed on or before the payday for the pay period from which the deduction is to be made indicating the reason for the deduction. Two types of authorization are permitted: (a) When the amount or rate of the proposed deduction is known and agreed upon in advance, the authorization shall specify the dollar amount or percentage of wages which shall be deducted from one or more paychecks, provided that if the deduction is for the convenience of the employee, the employee shall be given a reasonable opportunity to withdraw the authorization; (b) When the amount of the proposed deduction is not known and agreed upon in advance, the authorization need not specify a dollar amount which can be deducted from one or more paychecks, provided that the employee receives advance notice of the specific amount of any proposed deduction and is given a reasonable opportunity to withdraw the authorization before the deduction is made. The statute offers employers two options of written authorization to deduct wages. First, N.C. Gen. Stat. § 95-25.8(2)(a) addresses deductions of a “known” sum of money, a specific authorization. N.C. Admin. Code tit. 13, r. 12.0305 (June 2004). Employees who agree to specific authorizations must receive from their employers an opportunity to withdraw the authorization before the deduction is made, “if the deduction is for the convenience of the employee ....” N.C. Gen. Stat. § 95-25.8(2)(a). Second, N.C. Gen. Stat. § 95-25.8(2)(b) refers to a blanket authorization, one made for an unknown amount of money. N.C. Admin. Code tit. 13, r. 12.0305. Before a deduction may be completed under a blanket authorization, the employee must receive notice of the specific amount and a reasonable opportunity to withdraw the authorization. N.C. Gen. Stat. § 95-25.8(2)(b). The Code further requires valid wage deduction authorizations by employees to be: (1) written; (2) signed by the employee on or before the payday for the pay period for which the deduction is made; (3) show the date of signing by the employee; and (4) state the reason for the deduction. N.C. Admin. Code tit. 13, r. 12.0305(b). If the authorization is specific, the dollar amount or percentage of wages withheld must be provided. Id. Before an employer may deduct wages under a blanket authorization, it must first provide the employee: (1) advance notice of the specific amount of the proposed deduction; (2) a reasonable opportunity of at least three calendar days from the employer’s notice of the amount to withdraw the authorization. N.C. Admin. Code tit. 13, r. 12.0305(d). Each employee hired by defendant must read and sign defendant’s form, the “House Rules.” It includes the following language: Anyone choosing to accept transportation from Labor Finders, to one of our job sites, will be charged no less than .50 to and .50 from and no more than $1.00 to and $1.00 from the job site. Worker understands that this offer of transportation is for the worker’s benefit and if worker chooses to accept transportation, worker authorizes Labor Finders to deduct the cost of that transportation in both overtime and non-overtime weeks. This provision qualifies as a specific authorization under N.C. Gen. Stat. § 95-25.8(2)(a). The optional transportation service offered by defendant and its associated cost is explained. Although a range is given for the dollar amount, we hold it is sufficiently narrow to provide adequate notice to the class members. We further note the deductions for transportation expenses are not automatic. They are conditioned upon the class members specifically requesting use of the van pool each morning. Only then are wages withheld. The class members receive frequent and sufficient notice of the cost to use defendant’s van pool. We hold the “House Rules” complies with the requirements of N.C. Gen. Stat. § 95-25.8(2)(a) as a specific authorization. Finally, the “House Rules” satisfies the Code’s formatting and content- requirements. The authorization form is written, signed by the class members on or before the payday for the pay period from which the deduction is made, includes the date signed, and states the reason for the deduction. N.C. Admin. Code tit. 13, r. 12.0305(b). We hold that defendant’s “House Rules” form and wage deduction procedure complies with N.C. Gen. Stat. § 95-25.8 and N.C. Admin. Code tit. 13, r. 12.0305. This portion of plaintiff’s assignment of error is overruled. B. Incident of and Necessary to Employment Plaintiff contends the optional transportation services offered by defendant to its employees benefit defendant and are considered neither wages nor deductible. We disagree. Employers may “count as wages the reasonable cost ‘of furnishing [an] employee with board, lodging, or other facilities, if such board, lodging, or other facilities are customarily furnished by such employer to his employees.’ ” Arriaga v. Florida Pacific Farms, L.L.C., 305 F.3d 1228, 1236 (2002) (quoting 29 U.S.C. § 203(m)). The employer may deduct the reasonable cost from the employee’s paycheck, even if the net amount falls below the minimum wage. 29 C.F.R. § 531.27 (2004). The United States Department of Labor (“USDOL”) defines “other facilities” as: Meals furnished at company restaurants or cafeterias or by hospitals, hotels, or restaurants to their employees; meals, dormitory rooms, and tuition furnished by a college to its student employees; housing furnished for dwelling purposes; general merchandise furnished at company stores and commissaries (including articles of food, clothing, and household effects); fuel (including coal, .kerosene, firewood, and lumber slabs), electricity, water, and gas furnished for the noncommercial personal use of the employee; transportation furnished employees between their homes and work where the travel time does not constitute hours worked compensable under the Act and the transportation is not an incident of and necessary to the employment. 29 C.F.R. § 531.32(a) (2004) (emphasis supplied). If the “facilities” are primarily for the benefit of the employer, the cost may not be included in computing wages and the employer must “reimburse the expense up to the point the FLSA minimum wage provisions have been met.” Arriaga, 305 F.3d at 1241-42; 29 C.F.R. § 531.3(d)(1) (2004). The issue here is whether the optional transportation service offered to the class members is “an incident of and necessary to the employment” and primarily for the benefit of defendant. 29 C.F.R. § 531.32(a). Plaintiff cites Arriaga as persuasive authority to show the optional transportation service was “an incident of and necessary to” defendant’s business and primarily for defendant’s own benefit. 305 F.3d at 1228. There, domestic agricultural employers hired nonimmi-grant aliens from Mexico as farm laborers to work on a seasonal basis. Id. at 1232. Laborers who passed the interview process paid for their own passage to the United States, visa costs, and various recruiting fees. Id. at 1234. After deducting these expenses from wages earned, the net income fell below the statutory minimum wage. Id. at 1231-32. The Eleventh Circuit held the transportation costs were “an incident of and necessary to the employment” and the employers must reimburse the laborers for expenses paid in coming to the employment. Id. at 1242. The court noted the determining factor was the transportation costs were “an inevitable and inescapable consequence of having foreign .. . workers employed in the United States.” Id. The court carefully distinguished that situation from one where an employer “hires from its locale.” Id. Further, the court distinguished between costs “arising from the employment itself and those that would arise in the course of ordinary life” by interpreting “other facilities” as meaning “employment-related costs . . . that would arise as a normal living expense.” Id. at 1242-43. We find Arriaga persuasive, but not as plaintiff argues. The paramount distinction between the facts
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