Sharp v. CGG Land (U.S.) , 840 F.3d 1211 ( 2016 )

FILED
United States Court of Appeals
PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS November 4, 2016
Elisabeth A. Shumaker
FOR THE TENTH CIRCUIT Clerk of Court
_________________________________
R. DANE SHARP, individually and on
behalf of all similarly situated employees;
ALEJANDRO ESPINOZA; MARIANO
ESPINOZA, JR.; CORDIUS HICKMON;
GABRIEL J. GALVAN; SEYDINA
SYLLA; JORDAN PHOTBAUPHA;
JUAN R. ROMERO; TODD M.
DELANCEY; WILLIAM SIMON
SEWANDO; DIANE K. STERK; COREY No. 15-5113
D. SANDERS; EULOGIO SOLANO
MARTINEZ; BARRY COLLINS, JR.;
ELIAS DAVILA; EDGAR TREBOTICH;
JOHN WASHAM; ALEJANDRO
MONCADA; RODOLFO RAMIREZ;
GARY WYATT; DERON SCOTT;
EMILIO RUBIO; RALPH WILSON;
JOHNATHON NUNNERY; DEXTER
THOMPSON; WILLIAM WILSON;
JERRY ANDERSON; DIETRICH
JACKSON; GERMAINE WILSON;
LANDRIX JACKSON; GILBERTO
BONILLA; SANTIAGO BONILLA;
RICHARD FARR; TIMOTHY GARCIA;
JESUS RODRIQUEZ; JUAN ESTRADA;
AMBROCIO ROSALES; SEFERINO
SALDANA; RAMON MORENO;
ANTONIO MORA-ARMAGA;
JEREMIAH HART; DONNELL HARRIS;
JORGE CAMPOS; TAYLOR ELLIS;
ALFONSO CARDOZA, JR.; JOE L.
RUFFIN; RATHEAL BATEASTE; JOSE
A. MARTINEZ; DONALD GUIDRY;
OLJUWAN TOBIAS; KOUA XIONG;
HELIO S. RODRIQUEZ; CARLOS
TORRES; JOSEPH TILDEN; JUAN M.
URBINAF; ISMAEL MENDOZA, JR.;
OCTAVIO MENDOZA; JEFFREY
DOUGLAS; LEONARD JOHNSON;
ALEJANDRO MONCADA; TODD
TOUCHET; DANIEL WETHERBY;
SANTIAGO CANALES; LARRY
WILSON; ROBERT L. JEFFERSON, JR.;
OSCAR WILLIAMS; TERRY WHITE;
JIREH L. MONROE, SR.; JUAN
CARRILLO; DONNTEL DION BAILEY;
JUAN HERNANDEZ; WAYNE BURNS;
JEREMY FRAZIER; KEVIN
RESENDEZ; GREGORY PENATZER;
NORBERTO HERNANDEZ; DARYL
SMITH; JAMES WALKER; MATEOS
GARCIA; DARRICK WEATHERSBY;
JARED LEGGETT; CALEB
WEATHERSPOON; CHARLIE LEE, JR.;
MARCUS PRICE; DAMION WALKER;
LEBRODERICK JONES, SR.;
ROLANDO BATES; SHON M.
PHILLIPS; SHAWN BROWN; ERIC L.
BURROUGHS; JOSE CARDENAS;
PABLO CAVALLERO; TRAMAINE
CHAPMAN; FRANCISCO DIAZ; PAUL
DUTCHOVER; MARTIN GARZA; JOSE
G. GOMEZ; JOHN L. GRANGER;
LEKEITH HANDY, SR.; ROBERT
HOAGLIN; MICHAEL HOLMES;
KALUNA KOVIN; DARIUS LEBLANC;
DARYL MCCRAY; DENNIS R. MILLS;
J. MARK MORGAN; JOSE ALBERTO
NAVAEZ; DAVID PEREZ; ARTURO
RAMIREZ; ARDELL ROBINSON, JR.;
ARTURO SAENZ, JR.; KHAMMALA
SY; RAYMOND A. THIELE; ROBERT
VAN DEN BRINK; SOUTHEP
VONGKHAMCHAN; DAOKHAM
XAYSY; BASSIROU M. BAYE;
JALANTE M. BROWN; NOBLE
CAMPBELL; PAO X CHANG; ANDRES
B. CORTEZ; CHRISTOPHER
DEMARTIN; SHAWN DICKERSON;
EDDIE GONZALEZ; LUIS R. GARCIA;
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ERIC HAND; KUNTA HICKMON;
GEORGE HUNT; RODERICK
JEFFERSON; TONY JENKINS;
CHARLES JOHNSON; SOUKHY
KEOMANIVONG; PHRA MANIDONE;
NIKITA MINOR; JORGE L. NARVAEZ;
PHETSOMONE NAVONGSA; PHO
NGEUNE; RICKY V. NORRIS, JR.;
ARTHUR L. NUNNERY; DERRICK
POPE; JESUS S. RODRIGUEZ; JOHN
RODRIGUEZ; ROBERT A. SMITH;
GEORGE STINSON; NICK STINSON;
SOULIVANH SYLAPHET; MARQUS
TURNER; BRUCE WILLIAMS;
EDWARD D. BAITY; EDGAR CERDA;
MONTREAL CHAPMAN; RUSSELL
CHAPMAN; JOSEF DEBLANC;
DESMOND DENNIS; JORGE FRANCO;
BRYAN GODINEZ; EDSON
GONZALEZ; VICTOR GUTIERREZ;
TRAVIS GREGORY HAMMONDS;
ROGELIO HERNANDEZ; SHAWN L.
JACKSON; TYRONE D. JACKSON;
ALAN ROY JOHNSON, SR.; SERGIO
JUAREZ; KONGVIENG KHAMMALA;
LESLIE R. LIPPERT; CHRISTOPHER A
MARTIN; CERGIO MARTINEZ; JAIME
MARTINEZ; ARTHUR MENDOZA;
JUSTIN MERILLAT; JOHN
NICKERSON, JR.; MANUEL ORTIZ;
BRANDON S. PARRISH; DAMIAN
SMITH; BOUBACAR MBERRY SYLLA;
CARL TOTI; JULIO VELASQUEZ;
EDDIE LEE WHITE, JR.; JOSEH
DEBLANC; BRYAN GODINEZ; CESAR
O. CANIZALES; EMILIO DELACRUZ;
DAVID DELLAR; ELEAZOR
GUTIERREZ; DIONDRICK HURST;
BARTHELEMY KASSI; JIM
KEOMORAKOTH; ARMANDO LOYA;
MARY OLZWESKI; TEVIN L.
PITTINGER; MARA PRIESTELY;
BOUNLEUTH RASAVONGSY;
3
FRANCISCO JAVIER RIOS-FAVELA;
PAPA ROBINSON; JOSEPH RYALS;
CHRISTOPHER SMITH; ANTHONY
WEEKS; ROBERT BYERS; SEAN
ALLISON; JOSE LAZARO YANES;
ALAN ROY JOHNSON, SR.; OCTAVIO
ESPARZA ALVAREZ; RODERRICK
BROWN; RONALD O. BATES; JASON
T. ENGLE; HARRY L. MCGHEE, JR.;
FREDDIE L. RUFFIN; JESUS E. OJEDA,
JR.; FRED E. TRUEBLOOD; JOSE F.
SCOTT; URSULA SPRING WEEKLY, as
executor for son Jordan Kyle Gatte;
FRANCISCO CONTRERAS
HERNANDEZ; BERMARDO
ZACARIAS; JUAN M. ESPARAZA;
JULIO C. FERRUFINO; FREDERICK M.
FELTON; EDUARDO A. PEREZ, JR.;
JAMES LORELL DOWNS; JOE LEWIS
MARS; LUIS BENETIZ, SR.; CHAD A.
KNIEPER; DERECK J. SMITH; JOSE
ANGEL GUEVERA-GOMEZ;
SENGKHAM MANIVONG; JAIME
MEDINA; OMERO GARCIA, JR.;
OMAR AGUIRRE; SITTHISAK
MEUANGKHOT,
Plaintiffs - Appellants,
v.
CGG LAND (U.S.) INC.,
Defendant - Appellee.
_________________________________
Appeal from the United States District Court
for the Northern District of Oklahoma
(D.C. No. 4:14-CV-00614-CVE-TLW)
_________________________________
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J. Vince Hightower, Law Offices of J. Vince Hightower, Tusla, Oklahoma, for Plaintiffs-
Appellants.
Laurence E. Stuart, Stuart PC, Houston, Texas (Hollie Leanne Reiminger, Stuart PC,
Houston, Texas, with him on the brief), for Defendant-Appellee.
_________________________________
Before KELLY, PHILLIPS, and MORITZ, Circuit Judges.
_________________________________
PHILLIPS, Circuit Judge.
_________________________________
CGG Land (U.S.) Inc.’s employees (Employees) brought this collective action
alleging violations of the Fair Labor Standards Act (FLSA). The FLSA generally
requires employers to compensate overtime hours at one and one-half times the
employee’s “regular rate” of pay. See 29 U.S.C. § 207(a)(1) (2012). Employees claim
that CGG violated the FLSA by not including in their regular rates reimbursement
payments for $35 of daily meal expenses while working away from home. Thus,
Employees claim that CGG undervalued their pay in calculating their overtime
compensation. We hold that 29 U.S.C. § 207(e)(2) exempts such payments from the
regular rate as travel expenses incurred in furtherance of the employer’s interest. We
affirm the district court’s grant of summary judgment in favor of CGG.
BACKGROUND
The Parties stipulated to the following undisputed facts. Employees are former
hourly employees of CGG. CGG provides seismic-mapping services at remote
locations throughout the United States. To reach the remote locations, CGG required
its employees to travel away from home and stay in hotels near remote job sites for
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four-to-eight-week intervals. Employees then returned home for about two-to-four-
week intervals before again traveling to remote locations.
Employees often worked more than forty hours per week while at the remote
locations, and CGG paid them overtime based on Employees’ regular rates of pay.
When CGG’s employees worked away from home, CGG also provided them a $35
per diem for meals, including on days spent traveling to and from the remote job
locations. In the district court, the Parties stipulated that $35 “was a reasonable
amount for meal expenses incurred by the Plaintiffs while living and working on
CGG Land business at work locations away from their home locations.” Appellant’s
App. vol. I at 64. CGG didn’t pay the $35 when employees worked from their home
locations or when food was provided at the remote locations.
In determining Employees’ regular rates of pay, CGG didn’t include the daily
$35 payments. Contesting this calculation method, Employees filed a collective
action against CGG asserting that CGG violated the FLSA by calculating their
overtime pay on undervalued regular rates of pay. After stipulating to material facts
in the district court, the Parties each sought summary judgment. The district court
granted summary judgment for CGG, agreeing with CGG that the $35 payments were
exempt from the regular rates of pay under 29 U.S.C. § 207(e)(2).
On appeal, Employees argue that the district court erred in treating the $35
payments as exempt travel expenses under § 207(e)(2). First, Employees claim that
travel expenses are not exempt for days when they traveled to or from remote job
sites because they didn’t do any work for CGG on those days. And second,
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Employees claim that the $35 payments remained not exempt for all days they
worked at the remote job site because for those days they were no longer traveling
over the road. In addition, Employees claim that CGG has waived all defenses except
its claim that the $35 payments are exempt under § 207(e)(2).1
STANDARD OF REVIEW
“We review the district court’s summary judgment decision de novo, applying
the same standard as the district court.” McBride v. Peak Wellness Ctr., Inc., 688
F.3d 698, 703 (10th Cir. 2012) (internal quotation marks omitted). Under this
standard, summary judgment is appropriate “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). Here, the Parties stipulated to the material facts
in the district court, so the sole issue is whether those facts justify granting CGG
summary judgment.
DISCUSSION
“The purpose of FLSA overtime is ‘to compensate those who labored in excess
of the statutory maximum number of hours for the wear and tear of extra work and to
spread employment through inducing employers to shorten hours because of the
pressure of extra cost.’” Chavez v. City of Albuquerque, 630 F.3d 1300, 1304 (10th
Cir. 2011) (quoting Bay Ridge Operating Co. v. Aaron, 334 U.S. 446, 460 (1948)).
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Because we affirm the district court’s grant of summary judgment in favor of
CGG, Employees’ argument that CGG waived its other affirmative defenses is moot
and we refrain from addressing that argument.
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An employer must compensate overtime hours “at a rate not less than one and one-
half times the regular rate at which [the employee] is employed.” 29 U.S.C. §
207(a)(1). “‘The proper determination of that [regular] rate is therefore of prime
importance’ in calculating the amount of overtime wages due.” Albers v. Bd. of Cty.
Comm’rs of Jefferson Cty., Colo., 771 F.3d 697, 704–05 (10th Cir. 2014) (quoting
Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 424 (1945)).
The first step in resolving this FLSA dispute is to determine Employees’ regular
rates. Chavez, 630 F.3d at 1304. The regular rate “shall be deemed to include all
remuneration for employment paid to, or on behalf of, the employee,” subject to eight
exceptions. 29 U.S.C. § 207(e). One exception exempts “reasonable payments for
traveling expenses, or other expenses, incurred by an employee in the furtherance of his
employer's interests and properly reimbursable by the employer; and other similar
payments to an employee which are not made as compensation for his hours of
employment.” Id. § 207(e)(2). This exception applies “[w]here an employee incurs
expenses on his employer’s behalf or where he is required to expend sums solely by
reason of action taken for the convenience of his employer.” 29 C.F.R. § 778.217(a)
(2016). For instance, this exception includes the “reasonably approximate amount
expended by an employee, who is traveling ‘over the road’ on his employer’s business,
for . . . living expenses away from home . . . .” Id. § 778.217(b)(3).
Here, the Parties stipulated that CGG’s $35 payments were reasonable amounts to
compensate Employees for their approximate meal expenses while away from home.
Further, they agree that CGG’s employees received the $35 payments only when CGG
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required them to work away from home. Employees traveled away from home because
CGG required them to do so. So the issue is whether the $35 reimbursement for meals is
a living expense away from home.
While conceding that living expenses are exempt from the regular rate, Employees
argue that the phrase “living expenses” doesn’t include the cost of food. But the
Department of Labor (DOL) has rejected this argument, concluding that “the phrase
‘living expenses’ includes the cost of food, and the necessity of eating meals away from
home is an additional expense that the employee incurs for the employer’s benefit.”
Wage and Hour Division Opinion Letter, FLSA 2004-3 (May 13, 2004); see McBride,
688 F.3d at 705 (“Given their provenance and legal effect, [DOL] opinion letters are
entitled to great weight when they interpret the DOL’s own (ambiguous) regulations.”
(internal quotation marks omitted) (quoting In re Wal-Mart Stores, Inc., Fair Labor
Standards Act Litig., 395 F.3d 1177, 1184 (10th Cir. 2005))). We agree with the DOL
that the cost of food away from home is an additional expense that the employee incurs
while traveling for the employer’s benefit and is thus exempt as a living expense.
Despite this, Employees argue that they were no longer “traveling over the road”
once they reached their remote job site, so the $35 cannot be excluded. We agree with the
district court that “this is a hyper-literal interpretation of the term ‘traveling.’”
Appellant’s App. vol. I at 192. The term “traveling” includes more than the time spent in
transit to or from the remote job site. See Wage and Hour Division Opinion Letter, FLSA
2004-3 (May 13, 2004) (explaining that all meals would be excluded as living expenses
away from home when an employee travels for work). Instead, we must read “traveling”
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more broadly as time “away from home,” not just time in transit. 29 C.F.R. §
778.217(b)(3). So the proper focus under section 778.217(b)(3) is whether the $35
payments are for reimbursement of travel expenses incurred in furtherance of the
employer’s interests—not whether the employee is in transit at any given moment when
the employee has traveled to a remote job site requiring that the employee be away from
home during mealtimes. See 29 U.S.C. § 207(e).
Finally, despite stipulating that the $35 per diem payment is a reasonable meal
allowance, Employees still suggest that CGG paid the $35 as part of a scheme to set an
artificially low hourly pay rate to underpay overtime pay. Employees’ stipulation defeats
this argument.
And Employees’ cited cases on this issue are easily distinguishable—they involve
instances where employers tied per diem payments to the amount of hours that employees
worked. For example, in Newman v. Advanced Tech. Innovation Corp., 749 F.3d 33, 39
(1st Cir. 2014) and Gagnon v. United Technisource, Inc., 607 F.3d 1036, 1042 (5th Cir.
2010), the courts disallowed employers from excluding per diem payments from
employees’ regular rates when the per diem payments depended on the number of hours
worked. See 29 U.S.C. § 207(e)(2) (exempting expenses “incurred by an employee in the
furtherance of his employer’s interests and properly reimbursable by the employer” but
not excluding payments made “as compensation for his hours of employment”). In
contrast, here, Employees do not receive higher per diem payments after working longer
hours. And it bears repeating that the Parties stipulated that the payments were reasonable
payments for meals.
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Here, Employees traveled to remote job sites away from home to perform lengthy
work stints for CGG. While away from home, Employees incurred meal expenses while
serving CGG as employees and while furthering CGG’s interests. For all the reasons
stated, these travel expenses are exempt under 29 U.S.C. § 207(e)(2).
CONCLUSION
The district court’s decision granting summary judgment in favor of CGG is
AFFIRMED.
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