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Sec'y United States DOL v. Bristol Excavating, Inc.

United States Court of Appeals for the Third Circuit

September 11, 2018, Argued; August 20, 2019, Filed

No. 17-3663

Opinion

OPINION OF THE COURT

 [*127]  JORDAN, Circuit Judge.

This case presents a matter of first impression: whether, within the meaning of the Fair Labor Standards Act (the "FLSA" or "Act"), 29 U.S.C. § 203 et. seq., an employer must treat bonuses provided by third parties as "remuneration for employment" when calculating employees' overtime rate of pay.

] Under the FLSA's overtime provisions, id. § 207, employers must pay employees one-and-a-half times their "regular rate" of pay for all hours worked above a forty-hour work week. 29 U.S.C. § 207(a). "[R]egular rate" is defined as including "all remuneration for employment paid to, or on behalf of, the [**2]  employee," subject to eight enumerated exemptions. Id. § 207(e)(1)-(8) [*128]  . But "remuneration for employment" is not defined in the overtime provisions or elsewhere in the Act.

The Department of Labor, despite decades of enforcing the FLSA, has only recently discovered in that 80-year-old statute a basis for asserting that employers are bound to include bonuses from third parties in the regular rate of pay when calculating overtime pay, regardless of what the employer and employee may have agreed. This case thus asks us whether the expectations of employers and employees are made irrelevant by a novel statutory interpretation and a new enforcement strategy by the Department of Labor.

The District Court, agreeing with the position of the Department of Labor, concluded that the incentive bonuses at issue here must be included in the regular rate of pay because they are remuneration for employment and do not qualify for any of the statutory exemptions. We disagree that all incentive bonuses provided by third parties are necessarily "remuneration for employment" under the Act and therefore properly included in the regular rate of pay when calculating overtime pay. Instead, we hold that ] incentive bonuses provided [**3]  by third parties may or may not be remuneration for employment, depending on the understanding of the employer and employee. In this case, the factual record does not support a finding that all of the incentive bonuses were necessarily remuneration for employment. We will therefore affirm in part, vacate in part, and remand in part for further proceedings.

I. BACKGROUND

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935 F.3d 122 *; 2019 U.S. App. LEXIS 24767 **; 170 Lab. Cas. (CCH) P36,729; 2019 WL 3926937

SECRETARY UNITED STATES DEPARTMENT OF LABOR v. BRISTOL EXCAVATING, INC.; CALVIN BRISTOL, Individually and as owner of Bristol Excavating, Inc., Appellants

Prior History:  [**1] On Appeal from the United States District Court for the Middle District of Pennsylvania. (D.C. No. 4-16-cv-01512). Magistrate Judge: Hon. Karoline Mehalchick.

Acosta v. Bristol Excavating, Inc., 297 F. Supp. 3d 523, 2017 U.S. Dist. LEXIS 184076 (M.D. Pa., Nov. 7, 2017)

CORE TERMS

employees, remuneration, bonuses, bonus, regular rate, third party, third-party, overtime, qualifies, calculating, tips, parties, employer and employee, earn, statutory exemption, summary judgment, district court, employment agreement, labor cost, Contracts, regularly, drilling, driver, costs, sites, facilitation, provisions, regular, specific requirement, exemption

Business & Corporate Compliance, Wage & Hour Laws, Scope & Definitions, Overtime & Work Periods, Labor & Employment Law, Regular Rate, Civil Procedure, Appeals, Standards of Review, De Novo Review, Governments, Legislation, Interpretation, Summary Judgment Review, Standards of Review, Judgments, Summary Judgment, Evidentiary Considerations, Burdens of Proof, Movant Persuasion & Proof, Evidence, Allocation