Perez v. Special Police Force Corp. et al

MOTION for Summary Judgment

D.P.R.April 6, 2017

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO ------------------------------------------------------------------------- EDWARD C. HUGLER1, Acting Secretary of Labor, : Civil Action File No. United States Department of Labor : 15-1506 (GAG) Plaintiff, : v. : SPECIAL POLICE FORCE CORP.; HECTOR RIVERA ORTIZ; and FREDDY DE JESUS, : Defendants. : ------------------------------------------------------------------------- PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Plaintiff Edward C. Hugler, Acting Secretary of Labor, United States Department of Labor, (“the Secretary”) respectfully moves pursuant to Federal Rules of Civil Procedure 7 and 56 for summary judgment against Defendants Special Police Force Corp. and Hector Rivera Ortiz (collectively, “Defendants”) finding that Defendants violated sections 6, 7, 11(c), 15(a)(2) and 15(a)(5) of the Fair Labor Standards Act of 1938, as amended, (29 U.S.C. § 201, et seq.) (“the Act”) and finding that Defendants are liable for unpaid minimum wage and overtime compensation in the total amount of $156,612.41 as well as an equal amount of liquidated damages. The Secretary also seeks an injunction issued pursuant section 17 of the Act permanently enjoining and restraining the Defendants, their agents, employees and all persons acting in their behalf and interest from violating the provisions of sections 6, 7, 11(c), 15(a)(2) and 15(a)(5) of the Act and, in the event liquidated damages are not awarded, an injunction issued pursuant section 17 of the Act restraining Defendants, their agents, employees and all persons acting in 1 Pursuant to Rule 25(d) of the Federal Rules of Civil Procedure, Acting Secretary of Labor Edward C. Hugler is automatically substituted for Plaintiff Thomas E. Perez. Case 3:15-cv-01506-GAG Document 55 Filed 04/06/17 Page 1 of 2 2 their behalf and interest from continuing to withhold the payment of unpaid minimum wage and overtime compensation found due Defendants’ employees and prejudgment interest computed at the underpayment rate established by the Secretary of Treasury pursuant to 26 U.S.C. § 6621. DATED: April 6, 2017 Respectfully submitted, New York, New York NICHOLAS C. GEALE Acting Solicitor of Labor JEFFREY S. ROGOFF Regional Solicitor By: /s/ Susan B. Jacobs Senior Trial Attorney Government Attorney No. G02316 Attorneys for EDWARD C. HUGLER, Acting Secretary of Labor, Plaintiff U.S. Department of Labor 201 Varick Street, Room 983 New York, NY 10014 Tel. 646-264-3664 NY-SOL-ECF@dol.gov; jacobs.susan@dol.gov Case 3:15-cv-01506-GAG Document 55 Filed 04/06/17 Page 2 of 2 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO ------------------------------------------------------------------------- EDWARD C. HUGLER1, Acting Secretary of Labor, : Civil Action File No. United States Department of Labor : 15-1506 (GAG) Plaintiff, : v. : SPECIAL POLICE FORCE CORP.; HECTOR RIVERA ORTIZ; and FREDDY DE JESUS, : Defendants. : ------------------------------------------------------------------------- NOTICE OF MOTION FOR SUMMARY JUDGMENT PLEASE TAKE NOTICE that Plaintiff Edward C. Hugler, Acting Secretary of Labor, (the “Secretary”) by the undersigned attorneys, upon the accompanying memorandum of law in support of this motion, Rule 56 statement, and Declarations of Susan Jacobs and Myrta Negron- Quiles, respectfully moves this Court for summary judgment pursuant to Rules 7 and 56 of the Federal Rules of Civil Procedure against Defendants Special Police Force Corp. and Hector Rivera Ortiz (collectively “Defendants”). WHEREFORE, the Secretary respectfully requests this Court grant his Motion for Summary Judgment against Defendants finding that: (1) Defendants are jointly and severally liable for Defendants’ violations of the Fair Labor Standards Act of 1938, as amended (29 U.S.C. § 201, et seq.) (“the Act”); (2) Defendants violated sections 6 and 15(a)(2) of the Act by failing to pay minimum wage to certain employees; (3) Defendants violated sections 7 and 15(a)(2) of the Act by failing to pay proper overtime compensation to employees; (4) Defendants violated sections 11(c) and 15(a)(5) of the Act by failing to make, keep and preserve certain records of 1 Pursuant to Rule 25(d) of the Federal Rules of Civil Procedure, Acting Secretary of Labor Edward C. Hugler is automatically substituted for Plaintiff Thomas E. Perez. Case 3:15-cv-01506-GAG Document 55-1 Filed 04/06/17 Page 1 of 2 2 employees’ wages and hours worked; (5) Defendants owe $156,612.41 in unpaid minimum wage and overtime compensation for 198 employees, plus an equal amount of liquidated damages for a total of $313,224.82; (6) In the event liquidated damages are not awarded, an injunction should be issued pursuant section 17 of the Act restraining Defendants from continuing to withhold the payment of unpaid minimum wage and overtime compensation in the amount of $156,612.41 and prejudgment interest computed at the underpayment rate established by the Secretary of Treasury pursuant to 26 U.S.C. § 6621; and (7) Defendants are permanently enjoined pursuant section 17 of the Act from violating the provisions of sections 6, 7, 11(c), 15(a)(2) and 15(a)(5) of the Act. DATED: April 6, 2017 Respectfully submitted, New York, New York NICHOLAS C. GEALE Acting Solicitor of Labor JEFFREY S. ROGOFF Regional Solicitor By: /s/ Susan B. Jacobs Senior Trial Attorney Government Attorney No. G02316 Attorneys for EDWARD C. HUGLER, Acting Secretary of Labor, Plaintiff U.S. Department of Labor 201 Varick Street, Room 983 New York, NY 10014 Tel. 646-264-3664 NY-SOL-ECF@dol.gov; jacobs.susan@dol.gov Case 3:15-cv-01506-GAG Document 55-1 Filed 04/06/17 Page 2 of 2 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO ------------------------------------------------------------------------- EDWARD C. HUGLER, Acting Secretary of Labor, : Civil Action File No. United States Department of Labor : 15-1506 (GAG) Plaintiff, : v. : SPECIAL POLICE FORCE CORP.; HECTOR RIVERA ORTIZ; and FREDDY DE JESUS, : Defendants. : ------------------------------------------------------------------------- MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT NICHOLAS C. GEALE Acting Solicitor of Labor JEFFREY S. ROGOFF Regional Solicitor SUSAN B. JACOBS Senior Trial Attorney Government Attorney No. G02316 Attorneys for EDWARD C. HUGLER, Acting Secretary of Labor, Plaintiff U.S. Department of Labor 201 Varick Street, Room 983 New York, NY 10014 Tel. 646-264-3664 Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 1 of 26 i TABLE OF CONTENTS TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ii PRELIMINARY STATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 STATEMENT OF FACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 ARGUMENT . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 I. THE SUMMARY JUDGMENT STANDARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 II. THE COURT HAS SUBJECT MATTER JURISDICTION OVER THIS ACTION. . . . 4 III. DEFENDANTS VIOLATED THE OVERTIME and MINIMUM WAGE PROVISIONS OF THE ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 A. The Security Guards are Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 B. Defendants Failed to Pay Overtime Premiums.. . . . . . . . . . . . . . . . . . . . . . . . . . . .6 C. Defendants Failed to Pay the Minimum Wage. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 IV. DEFENDANTS VIOLATED THE ACT’S RECORDKEEPING REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . .9 V. DEFENDANTS OWE EMPLOYEES UNPAID MINIMUM WAGE AND OVERTIME COMPENSATION .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 A. Overtime Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 B. Minimum Wage Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 VI. HECTOR RIVERA ORTIZ IS AN EMPLOYER UNDER THE ACT and JOINTLY AND SEVERALLY LIABLE FOR THE VIOLATIONS . . . . . . . . . . . . . . . . . . . . .13 VII. LIQUIDATED DAMAGES SHOULD BE AWARDED . . . . . . . . . . . . . . . . . . . . . 16 VIII. THE COURT SHOULD ISSUE AN INJUNCTION AGAINST FUTURE VIOLATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 2 of 26 ii TABLE OF AUTHORITIES CASES Anderson v. Liberty Lobby, Inc., 477 U.S 242 (1986). ................................................................... 4 Arriaga v. Florida Pacific Farms, LLC, 305 F.3d 1228 (11th Cir. 2002) ...................................... 8 Baystate Alternative Staffing, Inc. v. Herman, 163 F.3d 668 (1st Cir. 1998) ............... 6, 13, 14, 15 Brock v. Big Bear Market No. 3, 825 F.2d 1381 (9th Cir. 1987) .................................................. 19 Brooklyn Savings Bank v. O'Neill, 324 U.S. 697 (1945) .............................................................. 17 Carroll v. Xerox Corp., 294 F.3d 231 (1st Cir. 2002) .................................................................... 4 Chao v. Hotel Oasis, Inc., 493 F.3d 26 (1st Cir. 2007) .......................................................... 13, 16 Donovan v. Agnew, 712 F.2d 1509 (1st Cir. 1983)................................................................. 14, 15 Donovan v. Sovereign Sec., Ltd., 726 F.2d 55 (2d Cir. 1984) ...................................................... 18 Franchise Tax Board of California v. Construction Laborers Vacation Trust for S. Cal., 463 U.S. 1 (1983) ............................................................................................................................ 5 Herman v. Hector I. Nieves Transp., Inc., 91 F.Supp.2d 435 (D.P.R. 2000) ................... 16, 18, 19 Herman v. Hogar Praderas De Amor, Inc., 130 F. Supp. 2d 257 (D.P.R. 2001) ................... 16, 17 Herman v. RSR Sec. Services Ltd., 172 F.3d 132 (2d Cir. 1999)............................................ 14, 16 Irizarry v. Catsimatidis, 722 F.3d 99 (2d Cir. 2013) .................................................................... 14 LeBlanc v. Great American Ins. Co., 6 F.3d 836 (1st Cir. 1993) ................................................... 4 Manning v. Boston Medical Center Corp., 725 F.3d 34 (1st Cir. 2013) .......................... 13, 14, 15 Martin v. Coventry Fire Dist., 981 F.2d 1358 (1st Cir. 1992) ...................................................... 19 Martin v. Funtime, Inc., 963 F.2d 110 (6th Cir. 1992) ................................................................. 19 McFeeley v. Jackson Street Entertainment, LLC, 825 F.3d 235 (4th Cir. 2016) ............................ 6 Newman v. Advanced Technology Innovation Corp., 749 F.3d 33 (1st Cir. 2014) ........................ 6 Perez v. Lorraine Enterprises, Inc., 769 F.3d 23 (1st Cir. 2014) ........................................... 3, 4, 7 Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 3 of 26 iii Pignataro v. Port Authority of New York and New Jersey, 593 F.3d 265 (3d Cir. 2010) ............ 18 Ramos-Barrientos v. Bland, 661 F.3d 587 (11th Cir. 2011) ........................................................... 9 Reich v. Newspapers of New England, Inc., 44 F.3d 1060 (1st Cir. 1995)................................... 18 Reich v. Petroleum Sales, Inc., 30 F.3d 654 (6th Cir. 1994) ........................................................ 19 Reich v. Southern New England Telecommunications Corp., 121 F.3d 58 (2d Cir. 1997) .......... 17 Secretary of Labor v. Daylight Dairy Products, Inc., 779 F.2d 784 (1st Cir. 1985) .................... 18 Sensing v. Outback Steakhouse of Florida, LLC, 575 F.3d 145 (1st Cir. 2009) ............................. 4 Serrano-Cruz v. DFI Puerto Rico, Inc., 109 F.3d 23 (1st Cir. 1997) ............................................. 4 Solis v. Min Fang Yang, 345 F. App’x. 35, 2009 WL 2017906 (6th Cir. 2009) .................... 16, 17 Tyson Foods, Inc. v. Bouaphakeo,136 S.Ct. 1036 (2016) .............................................................. 6 Weil v. Metal Techs., Inc., No. 2:15-CV-00016, 2016 WL 286396 (S.D. Ind. Jan. 25, 2016) ....... 8 STATUTES 26 U.S.C. § 6621 ........................................................................................................................... 21 28 U.S.C. § 1331 ............................................................................................................................. 4 28 U.S.C. § 1345 ............................................................................................................................. 5 29 U.S.C. § 201 ............................................................................................................................... 1 29 U.S.C. § 203(d) ........................................................................................................................ 13 29 U.S.C. § 203(e) .......................................................................................................................... 6 29 U.S.C. § 203(g) .......................................................................................................................... 6 29 U.S.C. § 203(m) ......................................................................................................................... 8 29 U.S.C. § 206 ............................................................................................................................... 6 29 U.S.C. § 206(a) .......................................................................................................................... 7 29 U.S.C. § 206(a)(1)(C) ................................................................................................................ 7 Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 4 of 26 iv 29 U.S.C. § 207 ............................................................................................................................... 6 29 U.S.C. § 207(a)(1) ...................................................................................................................... 6 29 U.S.C. § 211(c) .......................................................................................................................... 9 29 U.S.C. § 216(c) .................................................................................................................... 5, 16 29 U.S.C. § 217 ......................................................................................................................... 5, 17 29 U.S.C. § 255(a) .................................................................................................................... 3, 12 29 U.S.C. § 260 ............................................................................................................................. 16 RULES Fed. R. Civ. P. 56(a) ....................................................................................................................... 3 Fed. R. Civ. P. 25(d) ....................................................................................................................... 1 REGULATIONS 29 C.F.R. § 516.2(a)(2) ................................................................................................................. 10 29 C.F.R. § 516.2(a)(7) ............................................................................................................... 6, 9 29 C.F.R. § 516.2(a)(8) ............................................................................................................. 9, 10 29 C.F.R. § 531.3(d)(1) ................................................................................................................... 8 29 C.F.R. § 531.3(d)(2)(iii) ............................................................................................................. 8 29 C.F.R. § 531.32(c)...................................................................................................................... 8 29 C.F.R. § 531.36(b) ..................................................................................................................... 9 29 C.F.R. § 531.37(a)...................................................................................................................... 9 29 C.F.R. §778.105 ......................................................................................................................... 6 29 C.F.R. § 778.107 ........................................................................................................................ 6 29 C.F.R. § 778.110(a).................................................................................................................. 11 Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 5 of 26 1 PRELIMINARY STATEMENT Plaintiff Edward C. Hugler, Acting Secretary of Labor1, (“the Secretary”) hereby submits this memorandum of law in support of his motion for summary judgment against Defendants Special Police Force Corp. and Hector Rivera Ortiz2 (collectively “Defendants”) pursuant to Rule 56 of the Federal Rules of Civil Procedure. Summary judgment should be granted as there is no dispute that Defendants violated the minimum wage, overtime and record keeping provisions of the Fair Labor Standards Act of 1938, as amended (29 U.S.C. § 201, et seq.) (“the Act”), and Defendants have no defense for their failure to compensate their employees in accordance with the Act. Specifically, the following material facts are undisputed: (1) Defendants admit that they failed to pay the proper overtime rate when employees worked more than forty hours in a single workweek; (2) Defendants admit that they made deductions from certain employees’ wages for the cost of uniforms that reduced their regular hourly rate of pay below the required rate of $7.25; (3) Defendants admit that they failed to keep records of the total amount of hours worked and straight time wages paid for each workweek; and (4) Defendant Rivera is individually liable for the violations alleged in the Complaint. The unpaid minimum wage and overtime amounts to $156,612.41 in back wages plus an equal amount in liquidated damages owed to 198 employees. The Secretary also moves for summary judgment on the Secretary’s request for a prospective injunction against future violations of sections 6, 7, 11(c), 15(a)(2) and 15(a)(5) of the Act. 1 Pursuant to Rule 25(d) of the Federal Rules of Civil Procedure, Edward C. Hugler, Acting Secretary of Labor, is automatically substituted for Plaintiff Thomas E. Perez. 2 The Secretary is not moving for summary judgment against Defendant Freddy De Jesus. Because he failed to comply with the Court’s February 1 and 17, 2016 Orders (Docket Nos. 45, 46), the Secretary will move separately for default against Mr. De Jesus. Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 6 of 26 2 STATEMENT OF FACTS In 2007 or 2008, Defendant Rivera met a licensed detective named Eric Resto who proposed they start a security guard company together. See Secretary of Labor’s Rule 56 Statement (“Pl.’s 56”) ¶ 7. Defendant Rivera agreed to put up all the money to start the business and he incorporated Special Police Force Corp. (“SPF”) in the Commonwealth of Puerto Rico on January 7, 2009. Pl.’s 56 ¶¶ 8-9; Declaration of Susan Jacobs (“Jacobs Decl.”) Ex. 10. From January 7, 2009 through February 28, 2015, SPF operated as a security guard company with its office located in Guaynabo, Puerto Rico. Pl.’s 56 ¶¶ 1, 9, 27. Defendant Rivera is the President and sole owner/shareholder of SPF. Id. ¶ 12. Jonathan Andujar Mendez and Defendant Freddy DeJesus were hired to work as supervisors of the security guard employees and to help manage the business. Id. ¶¶ 31, 33. Defendants’ employees worked as security guards at various client posts in Puerto Rico. Id. ¶¶ 5, 34. Every workday, the security guards signed in at their posts when their shifts started and signed out when they left for the day on attendance sheets. Id. ¶¶ 39, 40. At the end of every pay period, Mr. Andujar and Mr. DeJesus picked up the attendance sheets from the client posts and brought them to SPF’s office. Id. ¶ 41. The hours worked shown on the attendance sheets were then totaled and Defendants generated employees’ paychecks based on those total hours. Id. ¶¶ 42-44. Defendants admit that although employees worked more than 40 hours in many workweeks, Defendants did not pay them any overtime compensation. Id. ¶¶ 36, 51. In addition, Defendants have admitted that they took deductions from employees’ wages to pay for the cost of required uniforms. Id. ¶¶ 53-55. These deductions often reduced the employees’ hourly wages below the required statutory minimum wage of $7.25 per hour. Id. ¶¶ 56-57; Declaration of Myrta Negron-Quiles (“Negron Decl.) ¶ 30. Lastly, Defendants did not Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 7 of 26 3 keep records of the total amount of hours worked by employees and straight time wages paid to employees each workweek and failed to maintain accurate records of employees’ addresses. Pl.’s 56 ¶¶ 48-49, 58; Negron Decl. ¶ 16, Ex. 1; Declaration of Susan Jacobs (“Jacobs Decl.”) Ex. 2 ¶ 31. On June 30, 2014, Wage and Hour Investigator Myrta Negron-Quiles (“WHI Negron”) initiated an investigation into Defendants’ pay and record keeping practices. Negron Decl. ¶ 6. During her initial meeting with Mr. Rivera on July 1, 2014, WHI Negron advised him that they were required to pay employees time and one-half their regular rate of pay when they worked more than forty hours in a workweek. Id. ¶ 23. Despite being advised that their pay practices violated the Act, Defendants continued to pay employees their regular hourly rate for all hours worked until SPF ceased operations in February 2015. Id.; Pl.’s 56 ¶ 51. As of result of the violations detailed above, the Secretary filed the Complaint alleging that Defendants violated the minimum wage, overtime and record keeping provisions of the Act on April 29, 2015.3 Jacobs Decl. Ex. 1. ARGUMENT I. THE SUMMARY JUDGMENT STANDARD In this case, Defendants cannot overcome their burden to show that Plaintiff is not entitled to summary judgment. “The court shall grant summary judgment 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); See Perez v. Lorraine Enterprises, Inc., 769 F.3d 23, 29 (1st Cir. 2014). Summary judgment is only appropriate where “the pleadings, depositions, 3 The Complaint in this action was filed on April 29, 2015. Jacobs Decl. Ex. 1. Pursuant to 29 U.S.C. § 255(a), the period covered by the Complaint is April 29, 2013 through present. Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 8 of 26 4 answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Sensing v. Outback Steakhouse of Florida, LLC, 575 F.3d 145, 152 (1st Cir. 2009) (quoting Carroll v. Xerox Corp., 294 F.3d 231, 236 (1st Cir. 2002)); Serrano-Cruz v. DFI Puerto Rico, Inc., 109 F.3d 23, 25 (1st Cir. 1997). “A ‘genuine’ issue is one on which the evidence would enable a reasonable jury to find the fact in favor of either party.” Lorraine Enterprises, Inc., 769 F.3d at 29. “A ‘material’ fact is one that is relevant in the sense that it has the capacity to change the outcome of the jury’s determination.” Id. at 29. “The nonmoving party must establish a trial-worthy issue presenting ‘enough competent evidence to enable a finding favorable to the nonmoving party.’” Serrano-Cruz 109 F.3d at 25 [citing LeBlanc v. Great American Ins. Co., 6 F.3d 836, 842 (1st Cir. 1993) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)]. Competent evidence is “evidence that is sufficiently probative of an issue that a factfinder could resolve that issue in favor of the nonmoving party based on that evidence.” Lorraine Enterprises, Inc., 769 F.3d at 30; see also Liberty Lobby, Inc., 477 U.S. at 249-50. With respect to issues for which the nonmoving party has the burden of proof at trial, “that party may not simply rely on the absence of evidence but, rather, must point to definite and competent evidence showing the existence of a genuine issue of material fact.” Lorraine Enterprises, Inc., 769 F.3d at 29-30; see also Sensing, 575 F.3d at 152. II. THE COURT HAS SUBJECT MATTER JURISDICTION OVER THIS ACTION Without providing any support, Defendants denied in their Answers to the Complaint that the United States District Court has subject matter jurisdiction over this matter. Jacobs Decl. Exs. 1 ¶ 2; 2 ¶¶ 2, 39; 3 ¶¶ 2, 39. 28 U.S.C. § 1331 provides that “[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 9 of 26 5 United States.” As the Secretary’s Complaint specifically states that a federal law (the Act) creates a cause of action, it is clear that this Court has subject matter jurisdiction over this matter. Jacobs Decl. Ex. 1 ¶ 1. See Franchise Tax Board of California v. Construction Laborers Vacation Trust for S. Cal., 463 U.S. 1, 27-28 (1983). In addition, 28 U.S.C. § 1345 provides that “[e]xcept as otherwise provided by Act of Congress, the district courts shall have original jurisdiction of all civil actions, suits or proceedings commenced by the United States, or by any agency or officer thereof expressly authorized to sue by Act of Congress.” Section 16(c) of the Act gives the Secretary the authority to bring an action “in any court of competent jurisdiction” to recover unpaid minimum wage and overtime wages as well as an equal amount of liquidated damages. 29 U.S.C. § 216(c). Furthermore, the Complaint seeks relief under section 17 of the Act which provides, “[t]he district courts…shall have jurisdiction, for cause shown, to restrain violations of section 215 of this title….” 29 U.S.C. § 217. Therefore, there is no question that this Court has subject matter jurisdiction over this action. III. DEFENDANTS VIOLATED THE OVERTIME and MINIMUM WAGE PROVISIONS OF THE ACT It is undisputed that Defendants violated the minimum wage and overtime provisions of the Act by deducting the cost of employees’ required uniforms and by failing to pay overtime premiums. As Defendants admit, they paid straight time for all hours worked. A. The Security Guards are Employees There is no dispute that the security guards were Defendants’ employees. Indeed, Defendants admit that they erroneously misclassified and paid the guards as independent contractors. Pl.’s 56 ¶ 50. They further admit that the security guards were employees, not independent contractors. Id. ¶¶ 4, 5, 50. Accordingly, Defendants were required to pay these Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 10 of 26 6 employees in accordance with the Act. See McFeeley v. Jackson Street Entertainment, LLC, 825 F.3d 235, 244 (4th Cir. 2016). The Act requires employers to compensate their employees for all hours worked each week at no less than the minimum wage rate and for hours worked in excess of 40 at one and one-half times their regular rate. 29 U.S.C. §§ 206, 207. Defendants purported to classify their employees as independent contractors, with no deductions taken for federal income taxes, and therefore outside the protections of the Act. Negron Decl. Exs. 1, 5-9. However, there is no dispute that the security guards are employees within the meaning of the Act. See 29 U.S.C. §§ 203(e), (g). Defendants hired the security guards and set their pay. Pl.’s 56 ¶ 33, 38. They assigned them their working hours and to their posts. Id. ¶ 34. It is clear that, as a matter of economic reality, the security guards were Defendants’ employees. Baystate Alternative Staffing, Inc. v. Herman, 163 F.3d 668, 675 (1st Cir. 1998). B. Defendants Failed to Pay Overtime Premiums It is also undisputed that Defendants failed to pay employees proper overtime compensation. Defendants admit that during the period covered by the Complaint, they paid employees at their regular rate of pay, with no additional overtime premium, for all hours worked over forty in a workweek. Pl.’s 56 ¶¶ 36, 51. Section 7 of the Act requires employers to compensate their employees for each hour that they work over forty (40) in a single workweek at a premium rate of not less than one and one-half times the regular rate at which they are employed. 29 U.S.C. § 207(a)(1); 29 C.F.R. § 778.107; see Tyson Foods, Inc. v. Bouaphakeo, 136 S.Ct. 1036, 1042 (2016); Newman v. Advanced Technology Innovation Corp., 749 F.3d 33, 36 (1st Cir. 2014). A “workweek” is defined as “any fixed and regularly recurring period of 7 consecutive workdays.” 29 C.F.R. §§ 516.2(a)(7), 778.105. Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 11 of 26 7 Defendants’ payroll spreadsheets clearly show that all of their security guard employees were only paid their straight-time regular hourly rate for all hours worked. Id. ¶ 37; Negron Decl. ¶ 15, Exs. 1, 5-9. For example, the payroll spreadsheet for the pay period covering May 16 through 31, 2013 shows twenty-four (24) employees working more than 100 hours during the 15-day pay period and only being paid their regular hourly rate (usually $7.25 or $8.00 per hour) for all hours worked.4 Pl.’s 56 ¶ 38; Negron Decl. Ex. 1, pp. 1-4. In addition, the payroll spreadsheet for the pay period November 18 through December 1, 2014 shows twenty-seven (27) employees working more than 40 hours in a single workweek, but still being paid their regular hourly rate for all hours worked. Negron Decl. Ex. 1, pp. 17-18, 20-22. Therefore, the Secretary is entitled to summary judgment on his claim that Defendants violated sections 7 and 15(a)(2) of the Act. Jacobs Decl. Ex. 1 ¶¶ 27-29, 35. C. Defendants Failed to Pay the Minimum Wage There is also no dispute that Defendants took impermissible deductions from certain employees’ wages that reduced their hourly wage below the required minimum wage. Defendant SPF admits that it required the security guards to wear specific uniforms and that it took deductions from employees’ wages to cover the cost.5 Pl.’s 56 ¶¶ 53-55. The Act prohibits employers from paying employees less than the applicable minimum wage. 29 U.S.C. § 206(a). See Lorraine Enterprises, Inc., 769 F.3d at 27. The required minimum wage here is $7.25 an hour. 29 U.S.C. § 206(a)(1)(C). 4 During the period of April 29, 2013 through July 14, 2014, Defendants paid employees on a semi- monthly basis. Employees were paid twice a month, on the 15th day of each month and on the last day of each month. Pl.’s 56 ¶ 47. 5 The deductions for uniforms are reflected on Defendants’ payroll spreadsheets in the “Others” column. Negron Decl. ¶¶ 30, 32, Ex. 1 pp. 1, 2, 4, 6, 9. Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 12 of 26 8 Pursuant to section 3(m) of the Act, the term “wage” paid to an employee can include the reasonable cost to the employer of furnishing the employee with “other facilities.” 29 U.S.C. § 203(m). However, the cost of furnishing “facilities” that are primarily for the benefit or convenience of the employer is not recognized as reasonable and may not be included in computing wages. 29 C.F.R. §§ 531.3(d)(1), 531.32(c). The cost of uniforms is a “facility” found “to be primarily for the benefit of convenience of the employer . . . . where the nature of the business requires the employee to wear a uniform.” 29 C.F.R. § 531.3(d)(2)(iii); see Arriaga v. Florida Pacific Farms, LLC, 305 F.3d 1228, 1243-44 (11th Cir. 2002) (noting that charges for rental uniforms, when required by the employment, is primarily for the benefit of the employer). It is clear that uniforms for security guards are for the employer’s benefit. See, e.g., U.S. Department of Labor Wage and Hour Division’s Fields Operations Handbook (“FOH”) § 30c12(f). FOH § 30c12(f)(1) defines a uniform as follows: a. If an employer merely prescribes a general type of ordinary basic street clothing to be worn while working and permits variations in details of dress, the garments chosen by the employees would not be considered to be uniforms. b. On the other hand, where the employer does prescribe a specific type and style of clothing to be worn at work, e.g. where a restaurant or hotel requires a tuxedo or a skirt and blouse or jacket of a specific or distinctive style, color, or quality, such clothing would be considered uniforms. c. Other examples would include uniforms required to be worn by guards, cleaning and culinary personnel, and hospital and nursing home personnel. https://www.dol.gov/whd/FOH/FOH_Ch30.pdf (emphasis added). Courts have found this definition to be persuasive. See, e.g., Weil v. Metal Techs., Inc., No. 2:15-CV-00016-JMS-DKL, 2016 WL 286396, at *8 (S.D. Ind. Jan. 25, 2016). Security guard uniforms serve the purpose to identify guards and distinguish them from members of the public. Here, the uniforms that SPF required consisted of a shirt and badge that Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 13 of 26 9 identified the employees as SPF guards, and advertised the name of the company. Pl.’s 56 ¶ 53. Accordingly, their cost cannot reduce an employee’s wage below the minimum required by law. 29 C.F.R. §§ 531.36(b), 531.37(a); Negron Decl. Ex. 10. “Employers must reimburse employees for their expenditures on facilities that primarily benefit the employer to the extent that these expenditures reduce employee pay below the minimum wage.” Ramos-Barrientos v. Bland, 661 F.3d 587, 596 (11th Cir. 2011). The deductions for the cost of uniforms reduced many employees’ hourly wage below $7.25. Pl.’s 56 ¶¶ 56-57; Negron Decl. ¶ 30. Defendant SPF admits that by taking a deduction for the cost of uniforms, it reduced employees’ wages below the required statutory minimum wage rate and violated sections 6 and 15(a)(2) of the Act. Pl.’s 56 ¶¶ 56-57. A total of $3,652.07 should be reimbursed to the affected employees. See section V.B. infra. Therefore, the Secretary is entitled to summary judgment on his claim that Defendants violated sections 6 and 15(a)(2) of the Act. Jacobs Decl. Ex. 1 ¶¶ 23, 25, 33. IV. DEFENDANTS VIOLATED THE ACT’S RECORDKEEPING REQUIREMENTS It is further undisputed that Defendants violated section 11(c) of the Act by failing to make, keep and preserve certain records of employees’ wages, hours, and other conditions and practices of employment. 29 U.S.C. § 211(c). 29 C.F.R. Part 516 sets forth the records that employers are required to make, keep and preserve. 29 C.F.R. § 516.2(a)(7) requires that an employer keep records of the total hours worked by employees each seven day workweek and 29 C.F.R. § 516.2(a)(8) requires that an employer keep records of the total daily or weekly straight- time wages due for hours worked during the workday or workweek. From April 29, 2013 through July 14, 2014, Defendants paid employees on a semi- monthly basis, on the fifteenth and last days of every month. Pl.’s 56 ¶ 47; Negron Ex. 1, pp. 1- Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 14 of 26 10 11. During that period of time, Defendants’ payroll spreadsheets only show the total amount of hours worked and the total wages paid for the entire 15 day pay period. Pl.’s 56 ¶ 48; Negron Decl. ¶ 16, Ex. 1, pp. 1-11. The records do not show the total hours worked or the straight-time wages paid for each seven day workweek as required by the regulations. After July 15, 2014, Defendants began paying their employees every two weeks, after WHI Negron recommended they change to a bi-weekly pay period during the initial meeting held on July 1, 2014. Pl.’s 56 ¶ 49; Negron Decl. ¶ 23. However, while the payroll spreadsheets after July 15, 2014 show the total amount of hours worked each seven day workweek, they do not indicate the total daily or weekly straight-time wages due for hours worked during the workday or workweek as required by 29 C.F.R. § 516.2(a)(8). The spreadsheets only show the total wages paid for the entire two-week pay period. Negron Decl. Ex. 1, pp. 12-22. Lastly, Defendant SPF admits that it did not maintain accurate records of employees’ home addresses as required by 29 C.F.R. § 516.2(a)(2). Pl.’s 56 ¶ 58; Jacobs Decl. Ex. 2 ¶ 31. Therefore, as there is no genuine issue of fact, the Secretary is entitled to summary judgment on his claim that Defendants violated sections 11(c) and 15(a)(5) of the Act. Jacobs Decl. Ex. 1 ¶¶ 31, 37. V. DEFENDANTS OWE EMPLOYEES UNPAID MINIMUM WAGE AND OVERTIME COMPENSATION As there is no dispute that Defendants violated the minimum wage and overtime provisions of the Act, back wages are owed as a result. The Secretary’s back wage computations are based solely on Defendants’ own time and pay records and are therefore undisputedly accurate. Defendants have failed to offer any evidence to contradict the Secretary’s back wage computations. Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 15 of 26 11 A. Overtime Computations As set forth in section III.B. supra, Defendants admit that they failed to pay their employees the required premium rate of one and one-half times their regular rate of pay when they worked over 40 hours in a single workweek (“overtime hours”) in violation of section 7 of the Act. Defendants admit that all employees were paid their regular rate of pay for all hours worked. Pl.’s 56 ¶ 36, 51. Accordingly, the employees are due “half-time” amounts calculated by multiplying one-half their regular rate by the amount of overtime hours worked. 29 C.F.R. § 778.110(a). As the Defendants’ payroll spreadsheets and attendance records show all the hours worked by employees and the hourly rate paid to each employee, WHI Negron computed unpaid overtime compensation using their records. Negron Decl. ¶¶ 13-14, 17-22, 24-28. For each employee, WHI Negron first determined the number of overtime hours worked each workweek. Id. ¶¶ 17-18, 24, Ex. 3. Then, she multiplied the amount of overtime hours worked in each workweek by one-half the employee’s regular hourly rate of pay. Id. ¶¶ 19-22, 24-28, Ex. 4. For example, SPF’s payroll spreadsheets show that Carlos Bravo Reyes worked 108 total hours during the period of April 16 - 30, 2014. Id. ¶ 21, Ex. 6. Of those total hours, she determined that 88 were regular hours, therefore leaving 20 hours of overtime.6 Id. WHI Negron then multiplied the 20 overtime hours by $4.00, which is one-half of Mr. Bravo’s regular rate of $8.00 per hour, to come up with $80 unpaid overtime for that pay period. Id. Ex. 4 p. 17. 6 During the period of April 29, 2013 through July 14, 2014, Defendants paid employees twice a month on a semi-monthly basis, on the 15th day of each month and on the final day of each month. Depending on the day of the week the first day of the month fell on, a semi-monthly period could contain 10, 11, or 12 workdays. To determine the total amount of hours worked each seven-day workweek, WHI Negron performed an analysis to determine the total workdays and maximum straight-time regular hours for each semi-monthly pay period. Negron Decl. ¶¶ 16-17, Ex. 3. For example, during the period of April 16 - 30, 2014 there were a total of 11 workdays. 11 workdays multiplied by 8 hours = 88 maximum straight- time regular hours that pay period. Any hours over 88 in that pay period were considered overtime hours. Id. ¶¶ 17-18, 21, Ex. 3. Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 16 of 26 12 Similarly, SPF’s payroll spreadsheets for pay period October 7 - 20, 2014 show that Fernando Acosta Alago worked 60 hours the workweek of October 7 - 13, 2014 and 60 hours the workweek of October 14 - 20, 2014. Id. ¶ 25, Ex. 8.7 Mr. Acosta was paid $8.00 per hour for all 120 hours worked that bi-weekly pay period. Id. WHI Negron calculated unpaid overtime for Mr. Acosta for both workweeks by subtracting 60 total hours worked - 40 straight-time hours to determine he worked 20 overtime hours. Id. ¶ 25. She then multiplied the 20 overtime hours by $4.00, one-half Mr. Acosta’s regular rate of $8.00, to come up with $80.00 of unpaid overtime due each workweek of that pay period. Id. ¶ 25, Ex. 4, p. 7. Therefore, because there is no genuine dispute over the hours worked and rates of pay, as a matter of law, the Secretary is entitled to summary judgment on his overtime claim in the amount of $152,960.34 for 191 employees for the period of April 29, 2013 through December 1, 2014.8 Id. ¶ 29, Ex. 4, p. 101. B. Minimum Wage Computations Furthermore, as set forth is section III.C. supra, it is undisputed that Defendants violated section 6(a) of the Act by taking deductions from certain employees’ wages for the cost of required uniforms that reduced their hourly rate to less than $7.25. Pl.’s 56 ¶¶ 53-54. The Defendants’ payroll spreadsheets show all the impermissible deductions taken for the cost of uniforms in the “Others” column. Negron Decl. ¶ 30, Ex. 1, pp. 1, 2, 4, 6, 9. For example, the “Others” column of the payroll spreadsheet for the period of February 1 through 15, 2014 shows 7 After July 15, 2014, Defendants paid employees on a bi-weekly basis, every two weeks, but continued to fail to pay employees any overtime pay when they worked more than 40 hours in a workweek. Negron Decl. ¶ 23, Ex. 1, pp. 12-22. 8 Pursuant to 29 U.S.C. § 255(a), the Secretary is entitled to recover back wages for a period starting on April 29, 2013. Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 17 of 26 13 that the following employees had deductions taken for uniforms: (1) Augustin Gallardo - $75.00; (2) Antonil Morales - $25.00; (3) Ariane Cruz Rosario - $50.00; and (4) Carlos Esquilin - $25.00. Negron Decl. Ex. 1, p. 6. All four of these employees were paid $7.25 per hour, therefore these deductions for uniforms lowered their regular rate of pay below the statutorily minimum. Id. WHI Negron computed unpaid minimum compensation for each affected employee by adding up all of the deductions shown on Defendants’ payroll spreadsheets in the “Others” column for the costs of uniforms.9 Id. ¶ 32-33, Exs. 1, pp. 1, 2, 4, 6, 9. Therefore, because there is no genuine dispute over the impermissible deductions for uniforms, as a matter of law, the Secretary is entitled to summary judgment on his minimum wage claim in the amount of $3,652.07 for 56 employees for the period of April 29, 2013 through December 1, 2014. Id. ¶ 34, Ex. 4, p. 101. VI. HECTOR RIVERA ORTIZ IS AN EMPLOYER UNDER THE ACT and JOINTLY AND SEVERALLY LIABLE FOR THE VIOLATIONS The undisputed facts show that Defendant Hector Rivera Ortiz took an active role in overseeing SPF, was involved in the decisions that led to the violations in this matter and therefore is an employer under the Act. Section 3(d) of the Act broadly defines an “employer” as “any person acting directly or indirectly in the interest of an employer in relation to an employee….” 29 U.S.C. § 203(d); see, e.g., Manning v. Boston Medical Center Corp., 725 F.3d 34, 47 (1st Cir. 2013); Chao v. Hotel Oasis, Inc., 493 F.3d 26, 33 (1st Cir. 2007); Baystate Alternative Staffing, Inc., 163 F.3d at 675. In determining whether to hold an individual personally liable for violations of the Act, the First 9 On September 16, 2014, Defendants gave WHI Negron a spreadsheet indicating that they had reimbursed certain employees for some of the deductions for uniforms. Negron Decl. Ex. 11. Upon receipt of the spreadsheet, she adjusted the back wage computations accordingly to credit Defendants for the reimbursements. Id. ¶ 33. Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 18 of 26 14 Circuit applies an “economic reality” analysis. Baystate Alternative Staffing, Inc., 163 F.3d at 677; Donovan v. Agnew, 712 F.2d 1509, 1510 (1st Cir. 1983). The First Circuit has deemed the following elements relevant to the personal liability determination: (1) significant ownership interest; (2) operational control of significant aspects the corporation’s day to day functions, including compensation of employees; and (3) the fact that the individual personally made decisions to continue operating the business despite financial adversity and the company’s inability to fulfill its statutory obligations to employees. Baystate Alternative Staffing, Inc., 163 F.3d at 677-78; see also Agnew, 712 F.2d at 1511-4. It is undisputed that during the entire period covered by the Complaint, Defendant Rivera was the sole owner and President of Special Police Force. Pl.’s 56 ¶¶ 12-13. In January 2009, Mr. Rivera agreed to start SPF with Eric Resto, a licensed detective. Id. ¶¶ 7-8. Mr. Rivera invested all the money to start the company and signed and filed the incorporation paperwork with the Commonwealth of Puerto Rico. Id. ¶¶ 8-11.10 He also invested additional money into the company whenever it was having cash-flow issues. Id. ¶ 20. The First Circuit has identified ownership of the corporation as highly probative of an individual’s employer status. Manning, 725 F.3d at 48; Baystate Alternative Staffing, Inc., 163 F.3d at 678. Although Mr. Rivera did not run the day-to-day operations of SPF, he was the only individual authorized to sign checks drawn on SPF’s bank accounts. Pl.’s 56 ¶ 16. His electronic signature was on all paychecks given to employees. Id. ¶ 17. See Irizarry v. Catsimatidis, 722 F.3d 99, 115 (2d Cir. 2013); Herman v. RSR Sec. Services Ltd., 172 F.3d 132, 140 (2d Cir. 1999) (holding that a key question in determining individual employer status is whether the individual had the authority to sign paychecks throughout the relevant period). Mr. 10 Mr. Rivera’s half-brother, Javier Ortiz Ortiz, signed a corporate resolution as “Secretary” of SPF, but was not involved in the corporation other than to sign official documents. Pl.’s 56 ¶ 14. Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 19 of 26 15 Rivera was in SPF’s office whenever the payroll was processed and would help total the hours worked by employees from client posts’ attendance records. Id. ¶¶ 18-19, 42. Therefore, he was aware of the hours worked by employees. Further, Mr. Rivera signed written proposals that were given to prospective clients. Id. ¶ 15. Mr. Rivera oversaw SPF’s administrative personnel after Mr. Resto died in August 2014 until SPF ceased operations on February 28, 2015. Id. ¶¶ 25-26. He made the decision for SPF to cease operations in January 2015 because it was losing clients and could not continue to operate without a licensed detective. Id. ¶¶ 27-28. He used his authority to pay himself $5,987 from SPF’s bank account on May 5, 2015, after he had been informed by the Wage and Hour Division that minimum wage and overtime back wages were found due to employees.11 Id. ¶¶ 29, 32; Negron Decl. ¶¶ 37-38; Jacobs Decl. Ex. 19. Most importantly, Mr. Rivera, along with Jose Andujar Mendez, manager, and Jose Torres, accountant, made the decision in 2012 to start retaining one week of wages from each employee to help with SPF’s cash flow deficits. Pl.’s 56 ¶¶ 21, 52; Negron Decl. ¶ 10. Defendants did not pay the withheld wages to employees until sometime in 2013 and some employees had to wait one year to eighteen (18) months to receive their “retained” wages. Pl.’s 56 ¶¶ 22-23. This “retention” policy continued until July 2014, after Defendants first met with WHI Myrta Negron-Quiles. Id. ¶ 24; Negron Decl. ¶¶ 7-10. Because Mr. Rivera made the business decision that caused SPF to undercompensate employees and “to prefer the payment of other obligations and/or the retention of profits,” he should be held personally liable for violations of the Act and the payment of back wages. Manning, 725 F.3d at 48; see also Baystate Alternative Staffing, Inc., 163 F.3d at 678; Agnew, 712 F.2d at 1514 (holding that 11 On May 5, 2015, Mr. Rivera also signed checks to Mr. Torres in the amount of $4,978 and to Mr. Andujar in the amount of $5,978 for the “liquidation” of SPF. Pl.’s 56 ¶¶ 30-31; Jacobs Decl. Ex. 19. Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 20 of 26 16 corporate officers with significant ownership interest who made decisions to continue operations despite financial adversity during the period of nonpayment were employers within the meaning of the Act and personally liable for back wages). Based on the undisputed facts and as a matter of law, Defendant Rivera is an employer pursuant to section 3(d) of the Act. Therefore, the Secretary is entitled to summary judgment against Defendant Rivera holding him individually liable for violations of the Act as well as unpaid minimum wage, overtime compensation and liquidated damages. VII. LIQUIDATED DAMAGES SHOULD BE AWARDED The Secretary is entitled to an award of liquidated damages in an amount equal to the total amount of unpaid minimum wage and overtime compensation. 29 U.S.C. § 216(c); Hotel Oasis, Inc., 496 F.3d at 35. The burden is on the employer to show that liquidated damages should not be awarded. 29 U.S.C. § 260. “The only way an employer can escape liquidated damages is to ‘show[ ] to the satisfaction of the court’ that it acted in good faith and had reasonable grounds for believing that its acts did not violate the FLSA.” Hotel Oasis, Inc., 496 F.3d at 35 (quoting 29 U.S.C. § 260); see also Herman v. Hogar Praderas De Amor, Inc., 130 F. Supp. 2d 257, 267 (D.P.R. 2001); Herman v. Hector I. Nieves Transp., Inc., 91 F.Supp.2d 435, 449 (D.P.R. 2000), aff’d, 244 F.3d 32 (1st Cir. 2001). The burden of establishing good faith for an employer is “substantial.” Hogar Praderas De Amor, Inc., 130 F. Supp. 2d at 267. Liquidated damages are not a penalty or punishment, they are to compensate an employee whose wages have been delayed due to an employer’s violation of the Act. See Solis v. Min Fang Yang, 345 F. App’x. 35, 38, 2009 WL 2017906, at *2 (6th Cir. 2009) (per curiam); RSR Sec. Servs. Ltd., 172 F.3d at 142. The purpose of liquidated damages is “not penal in its nature but constitutes compensation for the retention of a workman’s pay which might result in damages too obscure and Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 21 of 26 17 difficult of proof other than by liquidated damages.” Brooklyn Savings Bank v. O'Neill, 324 U.S. 697, 707 (1945) (citation omitted). To demonstrate good faith, the employer must show that it took affirmative steps to ascertain the Act’s requirements, but nonetheless violated its provisions. See Hogar Praderas De Amor, Inc., 130 F. Supp. 2d at 267; Min Fang Yang, 345 F. App’x at 39, 2009 WL 2017906 at *3; see also Reich v. Southern New England Telecommunications Corp., 121 F.3d 58, 71 (2d Cir. 1997) (good faith requires taking active steps to learn about the specific requirements of the Act and then actually complying with them). In this case, Defendants cannot establish that they acted in good faith. They admit that they took no steps to learn about the requirements of the Act. Pl.’s 56 ¶ 59. That admission alone dooms any good faith defense. Furthermore, Defendants were notified by WHI Negron that their practice of paying straight- time for hours all worked over forty in a workweek violated the overtime requirements of the Act on July 1, 2014. Negron Decl. ¶ 23. Regardless, they continued this pay practice for more than six months even after being informed it violated the Act and after being advised as to how to pay their employees properly. Pl.’s 56 ¶¶ 49, 51; Negron Decl. ¶ 23. Defendants continued their violative pay practice until SPF ceased operations in February 2015. Pl.’s 56 ¶ 51; Negron Decl. ¶ 23, Ex. 1, pp. 12-22. Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 22 of 26 18 The Defendants cannot meet their burden that they acted in good faith and the Secretary is therefore entitled to liquidated damages in an equal amount of the back wages being awarded. Jacobs Decl. Ex. 1 ¶¶ 34, 36. 12 VIII. THE COURT SHOULD ISSUE AN INJUNCTION AGAINST FUTURE VIOLATIONS This Court should enter an injunction enjoining Defendants from violating the minimum wage, overtime and recordkeeping provisions of the Act in the future.13 Defendants have shown a willingness to continue violating the law even after being informed of the requirements of the law and having no defense. Although SPF is no longer operating, Defendant Rivera continues to operate a substantially similar company that engages in the same business of providing security guard services. Pl.’s 56 ¶¶ 60, 62-63. Section 17 of the Act gives trial courts the discretion to enjoin future violations of the Act. 29 U.S.C. § 217. Reich v. Newspapers of New England, Inc., 44 F.3d 1060, 1081 (1st Cir. 1995); Hector I. Nieves Transp., Inc. 91 F. Supp. 2d at 449. In exercising its discretion, the Court should “weigh the finding of the violation … against the factors that indicate the violations are not likely to recur, ‘such as intent to comply, extraordinary efforts to prevent recurrence, absence of repetitive violations, and absence of bad faith.’” Newspapers of New England, Inc., 12 In the event that liquidated damages are not awarded, an injunction should be issued pursuant to section 17 of the Act restraining Defendants from withholding unpaid minimum wage and overtime compensation found due and prejudgment interest. Several courts have held that prejudgment interest for back pay awards under the Act is mandatory or should be presumed to be appropriate. See Secretary of Labor v. Daylight Dairy Products, Inc., 779 F.2d 784, 789-90 (1st Cir. 1985); Hogar Praderas De Amor, Inc., 130 F. Supp. 2d at 268; Pignataro v. Port Authority of New York and New Jersey, 593 F.3d 265, 273-74 (3d Cir. 2010); Donovan v. Sovereign Sec., Ltd., 726 F.2d 55, 57-58 (2d Cir. 1984). The back wages in this case go back to April 29, 2013. Pl.’s 56 ¶ 35; Negron Decl. ¶¶ 15, 29, 34; Jacobs Decl. Ex. 1. If liquidated damages are not awarded to the affected employees, the only way to compensate them for the long delay in receiving their rightful wages is prejudgment interest. 13 Although SPF has ceased operations, it is still listed as an active corporation on the Government of Puerto Rico’s Registry of Corporations and Entities. See https://prcorpfiling.f1hst.com/CorpInfo/CorporationInfo.aspx?c=185730-111 Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 23 of 26 19 44 F.3d at 1081 (quoting Martin v. Coventry Fire Dist., 981 F.2d 1358, 1362 (1st Cir. 1992)). In deciding whether to issue an injunction, the court should consider that “the Secretary vindicates a public, and not a private, right in seeking an injunction.” Hector I. Nieves Transp., Inc. 91 F. Supp. 2d at 449; see also Brock v. Big Bear Market No. 3, 825 F.2d 1381, 1383 (9th Cir. 1987). Prospective injunctions under the Act serve a remedial, not punitive purpose: The purpose of issuing an injunction against future violations is to effectuate general compliance with the Congressional policy of abolishing substandard labor conditions by preventing recurring future violations. Prospective injunctions are essential because the cost of noncompliance is placed on the employer, which lessens the responsibility of the Wage and Hour Division in investigating instances of non- compliance. The imposition of an injunction is not punitive, nor does it impose a hardship on the employer ‘since it requires him to do what the Act requires anyway - to comply with the law.’ Reich v. Petroleum Sales, Inc., 30 F.3d 654, 656 (6th Cir. 1994) (quoting Martin v. Funtime, Inc., 963 F.2d 110, 113-14 (6th Cir. 1992)); see also Hector I. Nieves Transp., Inc. 91 F. Supp. 2d at 450. The Court should also “balance the light burden the injunction would impose of the employer against the heavy administrative and investigative responsibilities which non-issuance would place on the Department of Labor.” Hector I. Nieves Transp., Inc. 91 F. Supp. 2d at 450. In determining whether to issue an injunction, a court should consider (1) the previous conduct of the employer; (2) the current conduct of the employer; and (3) the dependability of the employer’s promises for future compliance. Petroleum Sales, Inc., 30 F.3d at 657; Big Bear Market No. 3, 825 F.2d at 1383; Hector I Nieves Transport, Inc., 91 F. Supp. 2d at 450. In this case, Defendants were first informed by the WHI Negron on July 1, 2014 that they were in violation of the overtime requirements of the Act. Negron Decl. ¶ 23. However, they continued to their practice of paying only straight time to employees when they worked more than forty hours a week even after being informed of the violation and advised how to comply Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 24 of 26 20 with the Act. Pl.’s 56 ¶¶ 49, 51; Negron Decl. ¶ 23. The overtime and record keeping violations continued unabated until SPF ceased operations in February 2015. Pl.’s 56 ¶ 51; Negron Decl. ¶ 23, Ex. 1, pp. 12-22. Although SPF ceased operations in February 2015, Defendant Rivera currently owns and operates another security guard firm called Security Police Force Corp. Pl.’s 56 ¶¶ 60, 62-63. He is the sole owner of Security Police Force. Id. ¶ 63. Security Police Force was incorporated on January 15, 2015 and is located in the same building where SPF had its office. Id. ¶¶ 61, 66. Defendant De Jesus is the President of Security Police Force. Id. ¶ 68.14 Many of Defendants’ employees went to work for Security Police Force after SPF closed. Id. ¶ 70. Defendant Rivera admits that he started Security Police Force as a direct result of the Wage and Hour investigation of SPF. Id. ¶¶ 64-65. Therefore, in order to ensure that Defendants comply in the future with sections 6, 7, 11(c), 15(a)(2) and 15(a)(5) of the Act, a prospective injunction against future violations is necessary and should be issued by this Court. CONCLUSION WHEREFORE, for the reasons stated above, the Secretary requests the following relief: 1. Summary judgment be entered against Defendants for violating sections 6, 7, 11(c), 15(a)(2) and 15(a)(5) of the Act; 2. An injunction permanently restraining Defendants, their officers, agents, employees and those persons in active concert or participation from violating sections 6, 7, 11(c), 15(a)(2) and 15(a)(5) under section 17 of the Act; 14 In addition, Jonathan Andujar Mendez, former manager of SPC, currently works for Security Police Force and José Torres, former accountant for SPC, is currently the Treasurer of Security Police Force. Pl.’s 56 ¶¶ 67, 69. Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 25 of 26 21 3. An Order finding Defendants jointly and severally liable for unpaid minimum wage and overtime compensation in the amount of $156,612.41 to the affected employees and an equal amount as liquidated damages be awarded, for a total of $313,224.82; 4. In the event liquidated damages are not awarded, an injunction pursuant to section 17 of the Act permanently restraining Defendants from withholding $156,612.41 in unpaid minimum wage and overtime compensation and prejudgment interest computed at the underpayment rate established by the Secretary of Treasury pursuant to 26 U.S.C. § 6621; and 5. Any other relief as may be necessary and appropriate. DATED: April 6, 2017 Respectfully submitted, New York, New York NICHOLAS C. GEALE Acting Solicitor of Labor JEFFREY S. ROGOFF Regional Solicitor By: /s/ Susan B. Jacobs SUSAN B. JACOBS Senior Trial Attorney Government Attorney No. G02316 Attorneys for EDWARD C. HUGLER, Acting Secretary of Labor, Plaintiff U.S. Department of Labor 201 Varick Street, Room 983 New York, NY 10014 Tel. 646-264-3664 NY-SOL-ECF@dol.gov; jacobs.susan@dol.gov Case 3:15-cv-01506-GAG Document 55-2 Filed 04/06/17 Page 26 of 26 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO ------------------------------------------------------------------------- EDWARD C. HUGLER1, Acting Secretary of Labor, : Civil Action File No. United States Department of Labor : 15-1506 (GAG) Plaintiff, : v. : SPECIAL POLICE FORCE CORP.; HECTOR RIVERA ORTIZ; and FREDDY DE JESUS, : Defendants. : ------------------------------------------------------------------------- SECRETARY OF LABOR’S RULE 56 STATEMENT IN SUPPORT OF PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Plaintiff, Edward C. Hugler, Acting Secretary of Labor, United States Department of Labor (“the Secretary”), in support of his Motion for Summary Judgment seeking relief for violations of sections 6, 7, 11(c), 15(a)(2) and 15(a)(5) of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201, et seq. (“the Act”), respectfully submits the following statement of material facts pursuant to Local Rule 56 setting forth those facts for which there is no genuine issue to be tried.2 JURISDICTION AND VENUE 1. Defendants Special Police Force Corp. (“Special Police Force”) and Hector Rivera Ortiz (“Rivera”) (collectively “Defendants”) admit that Special Police Force is a corporation duly organized under the laws of the Commonwealth of Puerto Rico having had its principal office and place of business at Urb. Luis Munoz Rivera, Calle Acuarela 3-A, 1 Pursuant to Rule 25(d) of the Federal Rules of Civil Procedure, Edward C. Hugler, Acting Secretary of Labor, is automatically substituted for Plaintiff Thomas E. Perez. 2 Unless otherwise noted, the facts herein refer to the time period from April 29, 2013 through February 28, 2015. Case 3:15-cv-01506-GAG Document 55-3 Filed 04/06/17 Page 1 of 11 2 Guaynabo, Puerto Rico, 00969, where it was engaged in the business of providing security services. Declaration of Susan Jacobs (“Jacobs Decl.”) Exs. 1 ¶ 4, 2 ¶ 4, 3 ¶ 4. 2. Defendant Rivera resided in Puerto Rico during the period covered by the Complaint. Id. Ex. 5 Rivera Dep. 5:10-13, 8:18-10:17 (hereafter “Rivera Dep.”). 3. Defendants do not dispute that venue is proper in the United States District Court for the District of Puerto Rico because a substantial part of the events or omissions giving rise to the claims herein occurred in this District. Id. Exs. 1 ¶ 3, 2 ¶ 3, 3 ¶ 3. DEFENDANTS ARE EMPLOYERS 4. Defendants do not dispute that Special Police Force has regulated the employment of all persons employed by the corporation, acted directly and indirectly in the corporation’s interest in relation to the employees, and was thus an employer of its employees within the meaning of section 3(d) of the Act during the period covered by the Complaint. Id. Exs. 1 ¶ 5, 2 ¶ 5, 3 ¶ 5. 5. Defendants admit that Special Police Force employed employees as security guards in the activities of an enterprise engaged in commerce or in the production of goods for commerce, including the employment of employees that handled, sold, or otherwise worked on goods or materials that had been moved in or produced for commerce by any person, such as firearms and vehicles. Id. Exs. 1 ¶ 11, 2 ¶ 11, 3 ¶ 11. 6. Defendants admit that Special Police Force had an annual gross volume of sales made or business done in an amount not less than $500,000 for the period covered by the Complaint. Id. Exs. 1 ¶ 12, 2 ¶ 12, 3 ¶ 12. 7. In either 2007 or 2008, Defendant Rivera met Eric Resto, a licensed detective, and he suggested they start a security guard company together. Rivera Dep. 11:7-12:4, 17:9-17. Case 3:15-cv-01506-GAG Document 55-3 Filed 04/06/17 Page 2 of 11 3 8. Defendant Rivera “loved” Mr. Resto’s idea and agreed to invest all of the money to start Special Police Force. Rivera Dep. 11:17-19, 12:8-13, 12:23-25. 9. On January 7, 2009, Defendant Rivera signed and filed a “Certificate of Incorporation” with the Commonwealth of Puerto Rico incorporating Special Police Force Corp. Rivera Dep. 13:1-7, 13:13-16, 13:20-22, 14:25-15-1; Jacobs Decl. Ex. 10. 10. Defendant Rivera read the Certificate of Incorporation for Special Police Force before he signed it. Rivera Dep. 16:1-2. 11. The Certificate of Incorporation for Special Police Force identifies Defendant Rivera as the “Resident Agent in charge of said office.” Rivera Dep. 13:23-14:2; Jacobs Decl. Ex. 10, p. 1. 12. During the period covered by the Complaint, Defendant Rivera was the President and sole owner/shareholder of Special Police Force. Rivera Dep. 16:3-10; Jacobs Decl. Ex. 7, Interrog. Resp. 5(a); Ex. 9, Interrog. Resp. 1, 6, 7(b); Ex. 11. 13. On August 27, 2012, Defendant Rivera signed a corporate resolution as President and Treasurer of Special Police Force that certified that he was the owner and sole shareholder of the corporation “for all intents of relevant and legal purposes.” Rivera Dep. 20:7-20, 22:17-23:2; Jacobs Decl. Ex. 11. 14. Defendant Rivera’s half-brother, Javier Ortiz Ortiz, signed the corporate resolution as “Secretary” of Special Police Force, but Mr. Ortiz performed no work for the corporation other than to sign documents. Rivera Dep. 21:4-9, 21:21-22:1; Jacobs Decl. Ex. 11. 15. Defendant Rivera signed written proposals that were given to prospective clients of Special Police Force. Rivera Dep. 25:3-10; Jacobs Decl. Ex. 12. Case 3:15-cv-01506-GAG Document 55-3 Filed 04/06/17 Page 3 of 11 4 16. Defendant Rivera was the only individual authorized to sign checks for Special Police Force. Rivera Dep. 26:10-14, 26:18-25, 31:19-32:7, 36:1-8, 38:6-14; Jacobs Decl. Exs. 13, 14. 17. All paychecks given to employees contain Defendant Rivera’s electronic signature. Rivera Dep. 43:24-44:4; Jacobs Decl. Exs. 15, 16 Torres Dep. (hereafter “Torres Dep.”) 30:18-20. 18. Defendant Rivera was in the Special Police Force office whenever the payroll was processed. Torres Dep. 17:11-15, 18:1-5. 19. Defendant Rivera would help total the hours worked by employees when the payroll was done. Jacobs Decl. Ex. 17 Andujar Dep. 39:15-18 (hereafter “Andujar Dep.”) 20. Defendant Rivera invested additional money into Special Police Force whenever the company was having cash flow issues and the company would later reimburse him. Rivera Dep. 52:23-5. 21. In 2012, Defendant Rivera, along with Jose Andujar and Jose Torres, met and made the decision to “retain” one week of wages from each employee to help with Special Police Force’s cash flow deficits. Torres Dep. 31:9-32:17, 33:24-34:14, 35:1-18. 22. Wages withheld from employees did not start to be reimbursed to them until sometime in 2013. Torres Dep. 35:10-18. 23. Some employees had to wait one year to eighteen months before being reimbursed their “retained” wages. Torres Dep. 36:6-11. 24. The policy of retaining wages continued until the Wage and Hour Division investigation began in July 2014. Torres Dep. 34:21-24. 25. Eric Resto passed away in August 2014. Rivera Dep. 42:15-16. Case 3:15-cv-01506-GAG Document 55-3 Filed 04/06/17 Page 4 of 11 5 26. After Mr. Resto passed away, Defendant Rivera took over responsibility of overseeing all administrative personnel. Jacobs Decl. Ex. 9, Interrog. Resp. 2, 4, 6, 9. 27. On January 20, 2015, Defendant Rivera prepared and signed a letter to clients informing them that Special Police Force was ceasing operations on February 28, 2015. Jacobs Decl. Ex. 18; Rivera Dep. 65:14-66:17. 28. Defendant Rivera made the decision for Special Police Force to cease operations because the company was losing clients and could not continue to operate without a licensed detective. Rivera Dep. 65:5-7, 72:4-10, 75:15-76:24. 29. On May 5, 2015, Defendant Rivera received a payout of $5,978 after the “liquidation” of Special Police Force. Jacobs Decl. Ex. 19; Rivera Dep. 68:23-69:5. 30. On May 5, 2015 Jose Torres, accountant for Special Police Force, received a payment of $4,978 after the “liquidation” of Special Police Force. Torres Dep. 10:14-19, 38:9- 39:4; Jacobs Decl. Ex. 19. 31. On May 5, 2015, Jonathan Andujar Mendez, manager for Special Police Force, received a payment of $5,978 after the “liquidation” of Special Police Force. Andujar Dep. 15:3- 10, 54:9-55:4, Rivera Dep. 69:9-14; Jacobs Decl. Ex. 17. 32. Defendant Rivera represented Special Police Force Corp. at all of the meetings held with the Wage and Hour Division on July 1, August 12, September 15, 19 and December 5, 2014. Declaration of Myrta Negron-Quiles (“Negron Decl.”) ¶¶ 7, 36. 33. Defendants admit that Defendant De Jesus was a supervisor of the security guards working for Special Police Force and helped run the day-to-day operations during the period covered by the complaint. Jacobs Decl. Exs. 1 ¶ 8, 4 ¶¶ 8, 17, 19; Rivera Dep. 40:14-23, 42:19-22, 43:3-11, 43:17-20; Andujar Dep. 17:20-18:3, 19:23-25; Torres Dep. 20:9-16. Case 3:15-cv-01506-GAG Document 55-3 Filed 04/06/17 Page 5 of 11 6 34. Mr. Andujar and Mr. DeJesus assigned the security guards to their posts and scheduled their hours. Rivera Dep. 43:6-11, 43:17-20; Andujar Dep. 19:23-25. DEFENDANTS’ RECORDKEEPING AND PAY PRACTICES 35. The U.S. Department of Labor, Wage and Hour Division began its investigation of Defendants under the Act in late June 2014. Negron Decl. ¶¶ 5-6. Wage and Hour Investigator Myrta Negron-Quiles (“WHI Negron”) determined that Defendants violated the overtime requirements of the Act during the period of April 29, 2013 through December 1, 2014 by failing to pay their security guard employees wages at time and one-half of their regular rate of pay for hours worked in excess of forty (40) in a workweek. Negron Decl. ¶ 15, Exs. 1, 5-9. 36. Defendants admit that they compensated their employees at their regular rate of pay, with no additional overtime premium, for all hours worked in excess of forty hours in a workweek. Jacobs Decl. Exs. 1 ¶¶ 26-27, 2 ¶ 27; Andujar Dep. 44:24-45:6, 48:9-11, 51:10-16; Torres Dep. 28:3-5. 37. Defendants’ payroll spreadsheets show that all of their employees were paid their regular hourly rate for all hours worked. Negron Decl. ¶ 15, Exs. 1, 5-9. 38. Defendants admit that they set employees’ regular hourly rates ranging from $7.25 to $8.00 per hour. Andujar Dep. 30:9-13; Jacobs Decl. Exs. 1 ¶ 21, 2 ¶ 21; Negron Decl. Ex. 1. 39. Defendants kept track of hours worked by the security guards on sign-in attendance sheets that were located at all of the client posts where the employees worked. Andujar Dep. 39:2-7; Negron Decl. Ex. 2. 40. Every workday, Defendants’ employees signed in when their shifts started and signed out when they left for the day. Andujar Dep. 37:16-20; Negron Decl. Ex. 2. Case 3:15-cv-01506-GAG Document 55-3 Filed 04/06/17 Page 6 of 11 7 41. At the end of every semi-monthly or bi-weekly pay period, the sign-in attendance sheets would be picked up by Defendant De Jesus or Mr. Andujar and brought back to the office. Andujar Dep. 39:2-10. 42. The employee hours written on the sign-in attendance sheets were then totaled by Defendant De Jesus, Mr. Andujar and/or Defendant Rivera. Andujar Dep. 39:11-18. 43. The total hours worked by employees in the pay period were written on scraps of paper that were given to Defendants’ accountant José Torres. Andujar Dep. 39:11-18, 39:19-21; Torres Dep. 26:16-23; Negron Decl. Ex. 2, pp. 1, 5, 8, 11, 15, 17. 44. Mr. Torres would then enter the total hours worked in that pay period from the scrap papers to a payroll spreadsheet on the computer, which he would use to generate paychecks for employees. Andujar Dep. 39:22-40:4; Torres Dep. 17:14-15, 23:3-6, 23:10-13, 26:11-23, 27:11-23, 29:16-22; Negron Decl. Ex. 1; Jacobs Decl. Ex. 15. 45. The payroll spreadsheets contained: (1) employees’ names listed in a column titled “Contratista O Empleado”; (2) workweek dates; (3) hourly rates of pay (“RPH”); (4) total hours worked each semi-monthly or bi-weekly pay period listed in a column titled “Horas”; (5) gross wages paid (“Gross”); (6) various deductions taken listed in columns titled “SS,” “Others,” “Rentencion Sem,” “Disc.” and “ITW 7%”; and (7) net wages paid (“Net”). Torres Dep. 23:18- 20, 25:8-19, 26:11-15, 27:24-28:2; Negron Decl. ¶ 9, Ex. 1. 46. The sign-in attendance sheets and payroll spreadsheets are the only time and pay records the Defendants have for their security guard employees. Andujar Dep. 40:16-25; Torres Dep. 29:12-15; Negron Decl. Exs. 1, 2. 47. During the period of April 29, 2013 through July 14, 2014, Defendants paid employees on a semi-monthly basis. Employees were paid twice a month, on the 15th day of Case 3:15-cv-01506-GAG Document 55-3 Filed 04/06/17 Page 7 of 11 8 each month and on the last day of each month. Torres Dep. 21:19-20; Negron Decl. ¶ 16; Jacobs Decl. Ex. 2 ¶ 57. 48. During the period of April 29, 2013 through July 14, 2014, Defendants’ payroll spreadsheets only indicated the total number of hours worked and the total wages paid for the 15- day pay period. Negron Decl. ¶ 16, Ex. 1, pp. 1-11. 49. After WHI Negron advised Defendants to pay their employees every two weeks (bi-weekly) instead of semi-monthly in order to make determining and calculating overtime easier, Defendants started paying employees every two weeks after July 15, 2014. Torres Dep. 21:21-22:2; Negron Decl. ¶ 23, Ex. 1 pp. 12-22. 50. Defendant Special Police Force admits that it erroneously misclassified its security guard employees as independent contractors. Jacobs Decl. Exs. 1 ¶ 22, 2 ¶¶ 22, 59-60; Andujar Dep. 44:18-23, 45:7-9. 51. Defendants continued to pay employees their regular rate of pay for all hours worked even after WHI Negron told informed them on July 1, 2014 that they were required to pay employees overtime for hours worked over 40 in a workweek. Andujar Dep. 51:10-16; Torres Dep. 28:3-10; Negron Decl. ¶¶ 15, 23; Ex. 1, pp. 12-22. 52. The one week’s worth of wages retained by Defendants was entered on the payroll spreadsheets under the column titled “Retencion Sem.” Jacobs Decl. Exs. 1 ¶ 24, 2 ¶ 24; Negron Decl. ¶ 10, Ex. 1. 53. Defendants admit that their employees employed as security guards were required to wear uniforms consisting of a shirt and badge identifying SPF. Rivera Dep. 56:21-57:3, 57:16-17; Jacobs Decl. Exs. 1 ¶ 16, 2 ¶ 16. Case 3:15-cv-01506-GAG Document 55-3 Filed 04/06/17 Page 8 of 11 9 54. Defendants admit that they deducted money from employees’ wages to cover the cost of the required uniforms in order to ensure that the uniforms were returned if employees quit or were fired. Rivera Dep. 57:6-24. 55. Defendants would only return the money deducted from employees’ wages for the cost of uniforms if the employees returned the uniforms at the end of their employment. Rivera Dep. 57:16-22; Andujar Dep. 45:15-17. 56. Defendant Special Police Force admits to taking deductions from employees’ wages to pay for the cost of uniforms resulting in hourly wages that fell wage below the required minimum wage of $7.25 an hour. Andujar Dep. 45:10-12; Jacobs Decl. Exs. 1 ¶ 23, 2 ¶ 23. 57. Defendant Special Police Force admits that through its practice of deducting money for uniforms from employees’ wages, it violated sections 6 and 15(a)(2) of the Act and that it is liable for any unpaid minimum wages and an equal amount of liquidated damages under section 16(c) of the Act. Jacobs Decl. Exs. 1 ¶¶ 33-34, 2 ¶¶ 33-34. 58. Defendant SPF admits that it failed to maintain employees’ addresses. Jacobs Decl. Ex. 2 ¶ 31. 59. Defendants admit that they took no steps to learn about the requirements of the Act. Jacobs Decl. Exs. 6 ¶ 12, 7 ¶ 12, 8 ¶ 18, 9 ¶ 18. Case 3:15-cv-01506-GAG Document 55-3 Filed 04/06/17 Page 9 of 11 10 RELATIONSHIP BETWEEN SPECIAL POLICE FORCE CORP. AND SECURITY POLICE FORCE CORP. 60. On December 22, 2014, Defendant Rivera signed a Certificate of Incorporation for Security Police Force Corp. Rivera Dep. 82:13-83:8; Jacobs Decl. Ex. 20, pp. 3-6. 61. Security Police Force Corp. was registered as a corporation by Puerto Rico on January 15, 2015. Jacobs Decl. Ex. 20, pp. 1-2. 62. The Certificate of Incorporation states that Security Police Force Corp. will “provide security services to homes, commerce and industry to protect life and property.” Id. Ex. 20, p. 4. 63. Defendant Rivera is the sole owner of Security Police Force Corp. Rivera Dep. 73:16-21, 74:4-11. 64. In order for Defendant Special Police Force to renew its documents to continue to operate as a security guard company in Puerto Rico, it needed a licensed detective as a principal officer. Rivera Dep. 72:4-17. 65. Security Police Force Corp. was started as a new company by Defendant Rivera because no licensed detective was willing to join Defendant Special Police Force as an officer because of its issues with the Wage and Hour investigation. Rivera Dep. 75:18-24. 66. The office of Security Police Force Corp. is located in the same building where Defendant Special Police Force had its office. Rivera Dep. 81:17-82:1. 67. Jonathan Andujar Mendez, former general manager for Defendant Special Police Force, has been working for Security Police Force Corp. since Special Police Force ceased operations. Andujar Dep. 55:19-56:6, 58:4-16, 58:20-59:25; Jacobs Decl. Ex. 7 ¶¶ 5(c), 8-9; Ex. 9 ¶¶ 10-11. Case 3:15-cv-01506-GAG Document 55-3 Filed 04/06/17 Page 10 of 11 11 68. Defendant De Jesus, former supervisor for Defendant Special Police Force, is the President of Security Police Force Corp. Rivera Dep. 74:17-18; Andujar Dep. 56:20; Jacobs Decl. Exs. 2 ¶¶ 8-9, 3 ¶ 8-9, 7 ¶ 5(d). 69. José Torres, former accountant for Defendant Special Police Force, is the Treasurer of Security Police Force Corp. Torres Dep. 39:5-12. 70. Many of Defendants’ employees went to work for Security Police Force Corp. after Defendant Special Police Force ceased operations. Andujar Dep. 57:6-8; Torres Dep. 39:13-24. DATED: April 6, 2017 Respectfully submitted, New York, New York NICHOLAS C. GEALE Acting Solicitor of Labor JEFFREY S. ROGOFF Regional Solicitor By: /s/ Susan B. Jacobs Senior Trial Attorney Government Attorney No. G02316 Attorneys for EDWARD C. HUGLER, Acting Secretary of Labor, Plaintiff U.S. Department of Labor 201 Varick Street, Room 983 New York, NY 10014 Tel. 646-264-3664 NY-SOL-ECF@dol.gov; jacobs.susan@dol.gov Case 3:15-cv-01506-GAG Document 55-3 Filed 04/06/17 Page 11 of 11 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO ------------------------------------------------------------------------- EDWARD C. HUGLER1, Acting Secretary of Labor, : Civil Action File No. United States Department of Labor : 15-1506 (GAG) Plaintiff, : v. : SPECIAL POLICE FORCE CORP.; HECTOR RIVERA ORTIZ; and FREDDY DE JESUS, : Defendants. : ------------------------------------------------------------------------- CERTIFICATE OF SERVICE I HEREBY CERTIFY: that on April 6, 2017, I uploaded the PLAINTIFF’S NOTICE OF MOTION FOR SUMMARY JUDGMENT, MOTION FOR SUMMARY JUDGMENT, RULE 56 STATEMENT, MEMORANDUM OF LAW, DECLARATION OF MYTRA NEGRON-QUILES and DECLARATION OF SUSAN JACOBS to the CM/ECF system which will send notification of such filing to Jesus Santiago Malavet, Esq., counsel for Defendant Special Police Force Corp., and Benjamin Guzman, Esq., counsel for Defendant Hector Rivera Ortiz. In addition, service on Defendant Freddy De Jesus was made on April 6, 2017 by enclosing a true copy of same in a securely sealed United States Government postage-free, franked envelope addressed as follows: Freddy De Jesus PMB 101, P.O. Box 6017 Carolina, PR 00984-6017 Executed on April 6, 2017 /s/ Susan B. Jacobs SUSAN B. JACOBS 1 Pursuant to Rule 25(d) of the Federal Rules of Civil Procedure, Edward C. Hugler, Acting Secretary of Labor, is automatically substituted for Plaintiff Thomas E. Perez. Case 3:15-cv-01506-GAG Document 55-4 Filed 04/06/17 Page 1 of 1