Court Rules that Defendants Made No Good Faith Attempt to Comply With FLSA, Now Owe $512,290.26 to 33 Employees For Unpaid Overtime

On December 17, 2014, Oregon District Court Judge Marco A. Hernandez issued the Court’s Findings of Fact and Conclusions of Law in Perez v. Oak Grove Cinemas, Inc. et al., after conducting a four-day bench trial in October 2014, ordering the defendants to pay $256,145.13 for unpaid overtime wages owed plus another $256,145.13 in liquidated damages.

The Plaintiff in the case was U.S. Secretary of Labor Thomas E. Perez, and Defendants were several companies owned by David Emami including a movie theater and a property management company. Employees were general-purpose construction and maintenance workers who performed various tasks at the companies’ several locations.

Noting that Mr. Emami “has been associated with at least thirty-three different business entities in Oregon” and “…is familiar with wage and hour laws including minimum wage law and overtime exemptions for movie theater employees,” the Court concluded that he had intentionally avoided the requirements of the Fair Labor Standards Act by setting up an elaborate system for paying his employees. Under this system, administered by Emami’s wife Diana Emami, employees kept track of their work hours on two separate time cards each day, and were issued two separate corresponding checks for each pay period. One of these checks would be from Oak Grove Cinemas (OGC), and this check, calculated by Diana Emami using Quick Books software, would include withholdings and deductions as typical for a regular W-2 employee. The other check would be issued by a different entity, one of the Barrington companies, and the same employees were classified as independent contractors for those additional hours.

These two distinct systems for calculating employees’ pay were not based on any difference in the nature or location of their work. The Emamis’ explanation for this convoluted system was that the employees had requested to be treated as independent contractors, so they accommodated this request by classifying them as such for some hours. The Court rejected this explanation, finding that the classification of these workers as independent contractors failed to meet any of the relevant Boucher criteria–they had minimal control over their work, they had no opportunity for profit or loss based on their skill, they did not invest in equipment, their services required no special skills, they had a permanent dependent relationship to their employer, and their work was an integral part of their employer’s business. Supporting the more obvious and likely reason was one employee’s testimony that Mr. Emami himself had told him that the reason he received two separate checks each pay period was that he “…did not want more than 40 hours per week on the OGC payroll.” It was an elaborate scheme to avoid paying overtime to workers who often worked more than sixty hours per week.

This case is a testament to the value of legwork by law office support staff. The Defendants claimed to have lost nearly all of their records of employee work hours in a flood, and were able to produce only a few limited records. Although the law allows the Court to estimate the number of hours each employee worked, this estimate must be “derived as a matter of just and reasonable inference” from some set of data, and the records produced in this case almost certainly would not have been enough to support such an estimate. Judge Hernandez explicitly stated that testimonial evidence about the number of hours worked would not have been sufficient, so the case might have fizzled out, but for the efforts of Claire Barba, paralegal for the plaintiff, who reviewed more than 1,800 pages of Bank records and used them to generate estimates of the hours each employee had worked. The Court found this methodology sufficiently accurate and complete, especially as it produced results similar to those of the Defendant’s method of calculating time for the periods for which complete time cards were produced.

The Court also found that the plaintiff was entitled to a permanent injunction against the defendants, since “the evidence established Defendants’ intentional disregard for the law, threats of retaliatory action by David Emami, willfulness and a lack of good faith, and a questionable commitment to future compliance.”

If you believe your employer has failed to pay you minimum wage or overtime pay in violation of the Fair Labor Standards Act, please contact The Harman Firm, LLP.