Opinion
No. CV04-4001456S
July 14, 2006
MEMORANDUM OF DECISION
The plaintiff in this action, Earl F. Lloyd, was employed by the defendant Holyoke Tire and Auto Service, Inc. (Holyoke) as the manager of its service center located in Waterbury, Connecticut from March 31, 2003 through December 12, 2003. The defendant Peter Kearing is the president, treasurer and sole stockholder of Holyoke, a Massachusetts for Profit Corporation whose principal office is located in Holyoke, Mass. Holyoke owns and operates five tire and auto repair centers, four are located in Massachusetts and the Waterbury store. The plaintiff was recruited personally by Mr. Kearing to manage the Waterbury store, which did business under the trade name Waterbury Tire and Auto. The plaintiff and Mr. Kearing had previously worked together at a similar business owned by the Goodyear Corporation and had known each other for approximately twenty-five years. The plaintiff commenced this action on October 12, 2004 claiming that subsequent to the termination of his employment with Holyoke he was due compensation for unpaid overtime, vacation pay and compensation days which the defendants refused to pay. The plaintiff's second amended complaint dated June 3, 2006, contained four counts. The first count is for unpaid overtime wages and compensation days from the defendant Holyoke under Connecticut General Statutes § 31-72. The second count claims a breach of a contract for unpaid vacation pay against Holyoke. The third count is for unpaid overtime pay and compensation pay against Mr. Kearing personally as the employer under § 31-72. The fourth count is a breach of contract claim for unpaid vacation pay as to the defendant Kearing personally. It should be noted at the outset that the plaintiff voluntarily terminated his employment with Holyoke.
The parties presented three issues to the court, 1) was the plaintiff an exempt employee under Connecticut General Statutes § 31-53(f) and thus exempt from the overtime pay requirements of Connecticut General Statutes § 31-76b and § 31-76c, 2) what vacation pay, if any, the plaintiff was entitled to, as of the date of his termination, and 3) what pay, if any, he was due for compensation days. The plaintiff is also asking the court to award double damages, reasonable attorneys fees and costs pursuant to § 31-72.
As to first issue, the plaintiff concedes he was an exempt employee from March 31, 2003 until September 20, 2003. Thereafter, the plaintiff contends, that as a result of two memos sent to him by Mr. Kearing, the first one dated September 18, 2003 and the second dated September 20, 2003, he was no longer an exempt employee and thus entitled to overtime pay. Section 31-58(f) of the General Statutes excludes from the definition of "employee" for the purposes of the Department of Labor overtime wage regulations "an individual employed in a bone fide executive, administrative or professional capacity as defined in the regulations of the labor commissioner." Section 30-60-14 of the department of Labor Regulations, defines an employee in a bona fide executive capacity as follows: (a) For the purposes of section 31-58(f) of the general statutes, as amended, "employee employed in a bona fide executive capacity" means any employee (1) whose primary duty consists of the management of the enterprise in which he is employed or of a customarily recognized department or subdivision thereof; and (2) who customarily and regularly directs the work of two or more employees therein; and (3) who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring and firing and as to the advancement and promotion or any other change of status of other employees will be given particular weight; and (4) who customarily and regularly exercise discretionary powers; and (5) who does not devote more than 20 percent, or, in the case of an employee of a retail or service establishment who does not devote as much as 40 percent, of his hours of work in the workweek to activities which are not directly and closely related to the performance of the work described in subdivisions (1) to (4), inclusive, of this section; provided this subdivision shall not apply in the case of an employee who owns at least 20 percent interest in the enterprise in which he is employed; and (6) who is compensated for his services on a salary basis of not less than four hundred dollars per week. Section 30-60-15 of the regulations defines an employee in a bona fide administrative capacity as: (a) For the purposes of said section 30-58(f) "employee employed in a bona fide administrative capacity" means any employee: (1) whose primary duty consists of either: (A) The performance of office or non manual work directly related to management policies or general business operations of his employer or his employer's customers, or, (B) the performance of functions in the administration of a school system or educational establishment or institution, or of a department or subdivision thereof, in work directly related to the academic instruction or training carried on therein; and (2) who customarily and regularly exercises discretion and independent judgment; and (3) who regularly and directly assists a proprietor, or an employee employed in a bona fide executive or administrative capacity, as such terms are defined in section 31-60-14 and 31-60-15, or (B) who performs only general supervision work along specialized or technical lines requiring special training experience or knowledge, and who executes under only general supervision special assignments and tasks; and (4) who does not devote more than 20 percent, or, in the case of an employee of a retail or service establishment who does not devote as much as 40 per cent, of his hours worked in the workweek to activities which are not directly and closely related to the performance of the work described in subdivisions (1) to (3), inclusive, of this section; and (5)(A) who is compensated for his services on a salary of fee basis at a rate of not less than four hundred dollars per week.
Plaintiff's Exhibit 5 is the September 18, 2003 memo and Defendant's C is the September 20, 2003 follow-up memo.
The parties agree that the plaintiff's salary was $1,280.00 per week and he was expected to work a minimum of fifty-six hours per week, Monday through Friday, he was not required to work on Saturdays. The Waterbury store was open from 7:00 a.m. to 5:00 p.m., Mondays through Fridays and from 7:00 a.m. to 3:00 p.m. on Saturdays. Mr. Lloyd testified that he typically arrived at the store about 6:30 a.m. and left between 6:30 and 7:00 p.m. after completing the day's paperwork.
It is the plaintiff's position that the second memo dated September 20, 2003, stripped him of all the authority inherent in his manager's position and that he became a nonexempt employee and thus, entitled to overtime wages from September 20, 2003, until the date he voluntarily terminated employment on December 11, 2003. The defendant's position is that Mr. Lloyd was at all times an exempt employee, that he was the store manager, that his authority, duties and responsibilities were never changed and the sole purpose of both memos was to only clarify what they expected of him.
Defense Exhibit C a handwritten follow-up memo dated Sept. 20, 2003.
The primary factor in the determination of whether a person is employed in a bona fide administrative capacity, and thus exempt from overtime compensation, is the nature of his or her duties. Shell Oil Co. v. Ricciuti, 147 Conn. 277, 285-86, 160 A.2d 257 (1960). This is determined by looking at the facts on a case-by-case basis. The court in this case after a review of the evidence presented, the testimony of the parties and the applicable law, finds the plaintiff, Mr. Lloyd was at all times herein an exempt employee. The determining factors in the court's mind being, he at all times held the title of manager, he never punched a time clock or kept track of his hours, he had a private office, he attended managers' meetings (and in fact attended one on December 10, 2003, the day before he terminated his employment), he was allowed to set work hours of the employees and approve time off for his employees, he advertised managers specials on a sign located in front of the business, he signed off on the hourly time sheets for his employees which were sent to payroll, he took applications, interviewed prospective employees and had input into the hiring and firing of employees, he authorized cash payouts to vendors, he set prices and resolved disputes with customers when a complaint was made, he purchased parts as need for repairs and purchased the stock which was kept on hand, he never requested to be relieved of his duties as manager, nor did he relinquish his title, he continued to accept his salary as manager and never requested overtime pay (though the plaintiff did testify he was not aware he might qualify for it until sometime after he quit the job). Specifically as to regulation 30-60-14, the court finds, 1) the plaintiff's primary duty consisted of management of the store, 2) he customarily and regularly directed the work of two or more employees, 3) he had authority to hire and fire employees or had input into the same, 4) he regularly exercised discretionary powers, 5) he has not proven to the court's satisfaction that more than 40 percent of his time was not devoted to his managerial responsibilities, and finally 6) his salary was more than the four hundred dollar threshold. The only questionable violation of the regulations is number five, the 40 percent rule. The only evidence presented on this was the plaintiff's own testimony that after the second memo, he regularly spent more than 40 percent of his work week in the garage "turning wrenches as it was described." The court finds this testimony alone insufficient to prove a violation of this provision in light of all the documentary evidence bearing his signature. The same findings pertain to section 30-60-15 of the regulations. The court finds the plaintiff's duties did not change after the September 18 and 20, 2003 memos and any perception to the contrary weas an overreaction by the plaintiff. The evidence shows the plaintiff continued to perform the same functions from September 20, 2003 until the date of his termination. For the aforesaid reasons, the court finds the plaintiff was an exempt employee and is not entitled to any overtime pay.
Defendant's exhibit E a list of the work hours for employees of Waterbury Tire for May 2003 through December 6, 2003, signed off as approved by Earl Lloyd.
Defendant's Exhibit F copies of paid outs approved by the plaintiff from August 2003 through December 2003, totaling $3,579.09.
The next issue presented is the question of vacation pay. The plaintiff testified that when he discussed employment with Mr. Kearing, he informed Mr. Kearing that he would only consider leaving his present position if his compensation would remain the same including three weeks vacation. Mr. Kearing testified that he did promise to match what the plaintiff was earning as an inducement to come work for him but did not specifically recall a conversation about vacation pay. The court finds the plaintiff was promised three weeks vacation and that since he did not take any vacation during the nine-month period he was employed, he is entitled to 75 percent of fifteen days, or 11.25 days of vacation pay at $256.00 per day (his salary of $1,280 divided by five days equals $256.00 per day) which equals $2,880.00. The plaintiff is awarded $2,880.00 in vacation pay.
The third issue is what compensation pay, if any, is due the plaintiff. The parties agree that Mr. Lloyd was not expected to work Saturdays. The parties further agree that an agreement was made that if he worked Saturdays during the busy months of July, August and November, he would be compensated with an equal amount of days off during the week. As evidenced by defendant's Exhibit A, a calendar kept by the plaintiff in his office, he worked the following Saturdays in 2003, July 5, 12, 19, 26, August 2, Sept. 20 and November 8, 15, 22, and 29th for a total of ten days. Defendant's exhibit A also establishes that the plaintiff used 5 of these days, those being August 12, August 26, October 3, October 27 and December 8. The court finds pursuant to the agreement of the parties that the plaintiff is due five days pay at a rate of $256.00 per day for a total of $1,280.00. The plaintiff acknowledges, however, that he did receive a final check for $640.00 after leaving his employment. Mr. Kearing testified this is what he believed the plaintiff was due for the compensation days. The court awards the plaintiff $640.00 in compensation pay.
The next issue is whether the court should award pursuant to § 31-72 twice the amount of the wages owed along with a reasonable attorneys fee. "Wage" as defined by § 31-58(I) means compensation due to an employee by reason of his employment. The court finds that unpaid vacation and compensation time constitute wages.
C.G.S. 31-72, reads in part, "When an employer fails to pay an employee wages in accordance with sections 31-71a to 31-71i, inclusive, such employee may recover, in a civil action, twice the full amount of such wages, with costs along with a reasonable attorney's fees as may be allowed by the court."
Although the statutory language does not require evidence of bad faith, arbitrariness or unreasonableness, cases interpreting and applying this statute have required such evidence. Sansone v. Clifford, 219 Conn. 217, 229, 592 A.2d 931 (1991) ("[i]n an action for wages brought pursuant to General Statutes § 31-72, awards for double damages and attorneys fees are inappropriate in the absence of the trial court's finding of bad faith, arbitrariness or unreasonableness" [internal quotation marks omitted]). Since the terms bad faith, arbitrariness or unreasonableness, are not defined in the statute, the court must look to the facts of the individual case to determine if the actions of the employer constitute such actions. The court finds in this case the actions of the employer in not paying the vacation and compensation pay to be arbitrary and unreasonable. It was clear from the evidence that one of the inducements for the plaintiff to leave his employment and to come to work for Holyoke was the promise of three weeks vacation. The court finds it unreasonable for the defendants to expect the plaintiff to work the hours he did without any expectation of compensation in the form of vacation pay and compensation time. The court finds the failure to pay the vacation pay was an arbitrary and unreasonable decision based on the facts of this case. In addition there was an acknowledged agreement to pay compensation days. The court finds the defendants arbitrarily and unreasonably decided to only pay the plaintiff for 32 hours of compensation time (which was shown as four eight-hour days on the defendant's last paycheck) when they knew he was due five full days of compensation pay. The defendants were well aware that the plaintiff was not working eight-hour days. The original employment agreement called for a five-day, 56-hour work week. Based on the court's finding that the defendant's failure to pay vacation and compensation to be arbitrary and unreasonable, the court awards the plaintiff double damages pursuant to § 31-72. This computes to $5,760 in unpaid vacation pay and $1,280.00 in unpaid compensation time for a total of $7,160.00.
The plaintiff also claims reasonable attorneys fees as allowed by § 31-72. The plaintiff's attorney submitted an invoice in the amount of $23,125.00 for attorney fees exclusive of two days of trial based on ninety-two and one-half hours of work at a rate of $250.00 per hour. The trial in this matter lasted almost two full trial days. The court, after review of the court file, the invoice submitted by the plaintiff's attorney and noting the complexity of the trial issues, finds a reasonable attorneys fees to be $10,000.00.
The last issue for the court is whether or not Mr. Kearing should be held personably responsible for the monies due the plaintiff. It is the plaintiff's position that the court should pierce the corporate veil and hold him personally liable. The court based on our Supreme Court's decision in Butler v. Hartford Technical Institute, Inc., 243 Conn. 454, 704 A.2d 222 (1997), does not need to delve into the law of when the corporate veil may be pierced. In Butler, supra, at page 458, the court upheld the finding of the trial court that, where an individual is the president, treasurer, sole stockholder and the person in charge who is solely responsible for all decisions in regard to wages that person is the employer under the definition of "employer" pursuant to § 31-72. The court finds that Mr. Kearing fits the definition of an employer in § 31-72, since he was the president, treasurer, sole stockholder and CEO of Holyoke and in his words "a hands on owner," the court finds him personally liable to the plaintiff.
The court awards the plaintiff damages as follows:
1. On counts one and three of the complaint, the court finds in favor of the plaintiff against both defendants on the claim of unpaid compensation time only and awards damages of $1,280.00.
2. On counts two and four of the complaint, the court finds in favor of the plaintiff as to both defendants and awards damages of $5,760.00.
3. The court awards the plaintiff reasonable attorneys fees in the amount of $10,000.00.
4. The court awards the plaintiff costs as taxed by the clerk.