Case 1:12-cv-00697-BAH Document 177 Filed 09/29/15 Page 1 of 43
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
FREDDY PAZ PEREZ, et al.,
Plaintiffs,
Civil Case No.: 12-697 (BAH)
Judge: Beryl A. Howell
v.
C.R. CALDERON CONSTRUCTION, INC., et al.,
Defendants.
PLAINTIFFS’ PROPOSED CONCLUSIONS OF LAW
INTRODUCTION
Plaintiffs bring claims against Defendants, C.R. Calderon Construction, Inc. (“CRC”),
Carlos Calderon, Ana Calderon, Travelers Casualty and Surety Company of America
(“Travelers”), Jacinto Construction, Inc. (“JCI”) and Jacinto Cespedes for violations of the
District of Columbia Wage Payment and Collection Law, D.C. Code § 32-1301, et. seq.
(“DCWPCL”); the District of Columbia Minimum Wage Revision Act, D.C. Code § 32-1001, et.
seq. (“DCMWRA”); and the Fair Labor Standards Act of 1938, 29 U.S.C. § 201, et seq.
(“FLSA”), although Plaintiffs concede that JCI and Cespedes have no liability under the FLSA.
All Defendants were clearly Plaintiffs’ employers under all three statutes, with the
exception of JCI and Cespedes who are not Plaintiffs’ employers under the FLSA. JCI was
Plaintiffs’ employer, as it hired them, paid them and gave them some instructions on the job site.
Cespedes was an employer because he was President of JCI, an owner and officer, and he was
personally responsible for paying the Plaintiffs and giving them instructions on the job site. CRC,
which was owned and operated by Ana and Carlos Calderon (“the Calderon Defendants”) was
also a joint employer of Plaintiffs. CRC created a subcontracting relationship between itself and a
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severely undercapitalized JCI whereby CRC used that relationship to do what it could not have
done had it hired the laborers directly – pay less than half of Plaintiffs’ federally-mandated
wages. CRC procured its labor through two fixed price contracts which allowed CRC to dictate
the amount of labor and its price, resulting in JCI and the laborers receiving only a fraction of
what they were due. In so doing, CRC virtually guaranteed that it would receive a 50 percent
discount on the labor and that JCI would be unable to pay the majority of the laborers’ federallymandated wages. See Reyes v. Remington Hybrid Seed Company, Inc., 495 F.3d 403, 409 (7th
Cir. 2007) (a contractor that hires an undercapitalized subcontractor to supply labor is a joint
employer under the FLSA). Moreover, application of the six-factor test in Zheng v. Liberty
Apparel Co., Inc., 355 F.3d 61, 69 (2d Cir. 2003), demonstrates that subcontracting relationship
between CRC and JCI did not have an independent purpose, but was a clever means of evading
FLSA, DCWPCL, DCMWRA. Moreover, CRC acted like an employer: it controlled the wages
paid to Plaintiffs; it controlled and limited the pool of funds used to pay the laborers’ wages; and
it determined their hours and the number of workers present on the job site. Carlos Calderon even
promised to pay Plaintiffs and urged them to continue working, a clear indication that CRC did
employ them.
Carlos and Ana Calderon were employers of Plaintiffs because they were both owners,
officers and directors of CRC, and were significantly involved in CRC’s operations. In fact, both
had operational control over the subcontracts with a severely undercapitalized JCI, the sole
means of paying Plaintiffs and the vehicle used to commit the wage violations. Carlos Calderon
established the terms of the subcontracts, while Ana Calderon controlled and limited the
payments to JCI. Ana and Carlos Calderon then used their operational control over the
subcontracts and their leverage over JCI, which had incurred massive debt and had become
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insolvent, by advising Cespedes to unlawfully reduce wage rates of the Carpenters and to hire
undocumented aliens and pay them less than the federally-mandated wages, which Cespedes had
no choice but to follow.
In addition, if CRC is found to be a joint employer and held liable for Plaintiffs’ damages,
Travelers is also liable for not only their back wages, but also liquidated damages and attorney’s
fees and costs. Travelers’ bond used very broad language: it “inure[d] to the benefit” any workers
supplying labor on the Project.
Finally, Plaintiffs are entitled to damages. To date, Plaintiffs still have not received the
$100,014.54 payment from the Department of Labor (“DOL”) pursuant to a June 2015 settlement
with CRC and the general contractor, Whiting-Turner., For the purposes of this case, however, it
is assumed that this amount has been paid. For their violations of the DCWPCL, the Defendants
are jointly and severally liable for remaining unpaid wages of $55,587.06 ($155,601.60 $100,014.54) and liquidated damages equal to the full unpaid wages -- $155,601.60. For their
violations of the DCMWRA, the Defendants are jointly and severally liable for liquidated
damages equal to the amount of unpaid minimum wages -- $34,575.75, and liquidated damages
for unpaid overtime wages (under either the DCMWRA or the FLSA) -- $12,266.70. In total,
Defendants are jointly and severally liable for $258,031.11.
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I.
CRC 1 JOINTLY EMPLOYED PLAINTIFFS UNDER THE ECONOMIC
REALITY TEST.2
A.
THE FLSA, THE DCMWRA AND THE DCWPCL ARE WRITTEN
BROADLY TO PIERCE THROUGH CONTRACTUAL RELATIONSHIPS
THAT LACK AN INDEPENDENT PURPOSE, BUT ARE MERELY A
MEANS TO EVADE THESE STATUTORY MANDATES.
In order to combat clever evasion of the FLSA, the statute defines the term “employer”
extremely broadly. An entity “employs” an individual under the FLSA if it “suffer[s] or
permit[s]” that individual to work. 29 U.S.C. § 203(g). This definition is of “striking breadth” and
“stretches the meaning of ‘employee’ to cover some parties who might not qualify as such under
a strict application of traditional agency law principles.” Nationwide Mut. Ins. Co. v. Darden, 503
U.S. 318, 326 (1992) (citing Rutherford Food Corp. v. McComb, 331 U.S. 722, 728 (1947)); see
also Zheng v. Liberty Apparel Co., Inc., 355 F.3d 61, 69 (2d Cir. 2003). “[I]t encompasses
“working relationships, which prior to [the FLSA], were not deemed to fall within an employeremployee category.” Id. (quoting Walling v. Portland Terminal Co., 330 U.S. 148, 150–51
(1947)). Courts apply an “economic reality” test to determine whether a given defendant is an
employer. Goldberg v. Whitaker House Coop, Inc., 366 U.S. 28, 33 (1961). To this end, a court
must consider the totality of the circumstances, factors appropriate to the situation and no one
factor standing alone is dispositive. Barfield v. New York City Health and Hospitals Corp., 537
F.3d 132, 143 (2d Cir. 2008). However, the factors should not be applied mechanically, because
they “offer[] a way to think about the subject and not an algorithm.” Reyes, 495 F.3d at 408.
1
CRC has stipulated that at all relevant times it was an “Enterprise Engaged in Commerce” pursuant to 29
U.S.C. § 203 (s)(1), because it had: (1) employees handling, selling or otherwise working on goods or materials that
have been moved in or produced for commerce; and (2) a gross volume of sales made or business done of not less
than $500,000.00 (exclusive or excise taxes at the retail level that are separately stated). JE14.
2
The determinations of whether a person or entity is an employer under the FLSA, the DCWPCL, and the
DCMWRA are the same because all three employ the same operative language. Thompson v. Linda And A., Inc.,
779 F.Supp.2d 139, 146 (D.D.C. 2011).
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B.
WHEN THE DIRECT EMPLOYER IS A SUBCONTRACTOR OF THE
PUTATIVE JOINT EMPLOYER, A COURT MUST LOOK BEYOND THE
FOUR-FACTOR TEST.
Use of contractual relationships to evade wage and hour laws and exploit low income
workers – as CRC had done in this case – has been a long-standing and ever-pervasive problem
in many industries. As a U.S. House of Representatives Committee investigation found, as early
as 1992, “[a] company which reduces its labor cost through use of illegitimate contractors can
readily underbid legitimate competitors.” H.R. Rep. No. 1053, 102nd Cong., 2nd Sess. 1992,
1992 WL 353996 (1992); see also Catherine Ruckelshaus, Labor’s Wage War, 35 Fordham Urb.
L.J. 373, 379-380 (2008) (outsourcing employees to labor intermediaries such as temporary or
leasing firms allows companies to dodge responsibility for complying with wage and hour laws).
In industries where such subcontracting is common, underpayments are widespread. See
Matthew Finkin, From Weight Checking to Wage Checking: Arming Workers To Combat Wage
Theft, 90 Ind. L.J. 851, 853-854 (2015); Shirley Lung, Exploiting the Joint Employer Doctrine:
Providing a Break for Sweatshop Garment Workers, 34 Loy. U. Chi. L. J. 291, 296-299 (2003);
see also Browning-Ferris Industries of California, Inc., 362 NLRB No. 186, slip op. at 15, 19-21
(August 27, 2015) (the National Labor Relations Board adopted a broader standard to establish a
joint employer relationship, based on the fact that “procurement of employees through staffing
and subcontracting arrangements . . . has increased steadily since” 1984).
To address this problem, the federal courts have developed a framework for determining
whether a person or entity that contracts for labor (rather than hiring it directly) is a joint
employer. That framework is different from the traditional four-factor direct control test, which
asks whether the putative joint employer hired and fired the workers, supervised and controlled
their work schedules or conditions of employment, determined the rate and method of payment,
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and maintained employment records. See, e.g., Carter v. Duchess Community College, 735 F.2d
8 (2d Cir. 1984); Bonnette v. Cal. Health & Welfare Agency, 704 F.2d 1465, 1470 (9th Cir.
1983). In contractor-subcontractor situations, though, the broad definition of FLSA demands the
application of a different framework, one which will answer the fundamental question of
whether the contractor/subcontractor relationship has a substantial independent economic
purpose – potentially placing the contractor outside the definition of employer – or whether the
relationship is merely a “subterfuge” to avoid the contractor’s obligations under the FLSA –
placing the contractor squarely within the definition.
As early as 1947, the Supreme Court made it clear that in a contractor/subcontractor
scenario like the one in this case, the four-factor direct control test is inadequate because it does
fully explore the economic realities of exploitive labor practices that are present in
contractor/subcontractor relationships. Rutherford held that a slaughterhouse jointly employed
workers who de-boned meat, despite the fact that the slaughterhouse’s subcontractor hired and
fired them, set their hours, determined the rate and method of payment and maintained their
employment records. 331 U.S. at 726. In reaching this conclusion, the Court applied a fivefactor functional control test, asking: (1) whether the work was part of an integrated unit of
production; (2) whether the work could pass from one boning supervisor to another without
material changes; (3) whether the work premises and equipment were those of the
slaughterhouse; (4) whether the boners were part of a single business organization that could
move as a unit from one slaughterhouse to another; and (5) whether the slaughterhouse closely
monitored the boners’ performance and productivity. Id. at 729-30. To ascertain whether such a
relationship is designed to evade the FLSA, the fact finder must apply these factors.
In Zheng v. Liberty Apparel Co., Inc., which relied almost entirely on Rutherford, the
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Second Circuit drove this point home, finding the trial court’s failure to apply the Rutherford
approach to be reversible error. 3 The Zheng Court directed the trial court to apply the five
Rutherford factors and one additional factor -- whether the purported joint employees worked
exclusively or predominantly for the putative joint employer. Zheng, 355 F.3d at 64. In Zheng, a
contractor hired subcontractors to assemble garments according to the contractor’s specifications
and it employed quality control personnel to monitor the laborers’ work. Id. at 65. The district
court found as a matter of law that the contractor was not a joint employer based on the four
direct control factors from Carter and Bonnette. Id. The Second Circuit reversed4 because the
trial court did not apply the Rutherford factors: “the four-part test employed by the District Court
is unduly narrow, as it focuses solely on the formal right to control the physical performance of
another’s work.” Id. at 69.
The Zheng court ordered the trial court to apply – at a minimum – six factors to ascertain
whether the contractor/subcontractor relationship had a “substantial, independent economic
purpose” or was “most likely a subterfuge meant to evade the FLSA or other labor laws.” Id. The
court stated that the Zheng factors – which include the five Rutherford factors and one additional
factor – are: (1) “whether a putative joint employer’s premises and equipment are used by its
putative joint employees,” id.; (2) “whether the putative joint employees are part of a business
organization that shifts as a unit from one putative joint employer to another,” id.; (3) “the extent
to which plaintiffs performed a line-job that is integral to the putative joint employer's process of
3
Two Circuits – the Ninth and Eleventh – have held that the failure to apply the functional approach to
joint employer liability in the contractor/subcontractor context was both reversible error and legal error. LopezTorres v. May, 111 F.3d 633, 639-644 (9th Cir. 1997) (reversing trial court for failing to consider indirect or
functional control factors and finding contractor to be joint employer as a matter of law); Antenor v. D & S Farms,
88 F.3d 925 (11th Cir. 1996) (reversing trial court’s grant of summary judgment, applying expansive 8-factor test
and finding contractor to be joint employer as a matter of law).
4
On remand, the jury found that Liberty was a joint employer. See Zheng v. Liberty Apparel Co., Inc., 617
F.3d 182 (2d Cir. 2010).
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production,” id. at 73; (4) “whether responsibility under the contracts could pass from one
subcontractor to another without material changes,” id. at 74; (5) “the degree to which the
defendants supervise the plaintiffs' work,” id.; and (6) “whether the purported joint employees
worked exclusively or predominantly for the putative joint employer,” id. at 75.
In contractor/subcontractor situations, such as the one in this case, the majority of courts
have either followed Zheng or applied the same broader functional control test to ascertain joint
employer liability.5 See Ivanov v. Sunset Pools Management Inc., 567 F.Supp.2d 189, 194-195
(D.D.C. 2008) (applying Zheng factors and stating that it is inappropriate under some
circumstances for courts to restrict themselves to the four-factor Bonnette test).
C.
WHEN THE CONTRACTOR HIRES AN UNDERCAPITALIZED
SUBCONTRACTOR TO PROVIDE A READY SUPPLY OF LABOR, THIS
FACTOR IS DISPOSITIVE OF A JOINT EMPLOYER RELATIONSHIP.
The Seventh Circuit has added another factor to the joint employer analysis, one that,
when present, trumps all other considerations. In Reyes v. Remington Hybrid Seed Company,
Inc., the Seventh Circuit held that a contractor that hired an undercapitalized subcontractor to
supply labor was, as a matter of law, a putative joint employer under the FLSA and the Migrant
and Seasonal Agricultural Workers Protection Act (“AWPA”). 6 495 F.3d 403, 409 (7th Cir.
2007). The contractor in Reyes hired a subcontractor that alone hired, fired, set the hours and
5
See also In re Enterprise Rent-A-Car Wage & Hour Employment Practices Litig., 683 F.3d 462, 467 (3d
Cir. 2012) (citing Zheng with approval); Schultz v. Capital Int’l Sec., Inc., 466 F.3d 298, 306-07 & n.2 (4th Cir.
2006) (acknowledging the appropriateness of applying the Zheng factors in a contractor/subcontractor situation, but
finding it unnecessary to do so when the undisputed facts showed a joint employer relationship); Lopez-Torres v.
May, 111 F.3d at 639-644 (employing expansive 8-factor test in contractor/subcontractor situation); Antenor v. D &
S Farms, 88 F.3d at 932-938 (in contractor/subcontractor situation, applying expansive 8-factor test); Zampos v.
W&E Communications, Inc., 970 F.Supp.2d 794, 805 (N.D. Ill. 2013) (citing Zheng and applying its’ functional
control test); Mendoza v. Essential Quality Contr., Inc., 691 F.Supp.2d 680 (E.D. La. 2010) (denying motion to
dismiss claims against general contractor, citing Zheng with approval and applying the five Rutherford factors).
6
Both the FLSA (29 U.S.C. § 203 (1)) and the AWPA (29 U.S.C. § 1802 (2)), have the same definition of
“employer” and are interpreted the same. See Reyes, 495 F.3d at 405; Torres-Lopez v. May, 111 F.3d at 639;
Antenor v. D&S Farms, 88 F.3d at 929; De Leon-Granados v. Eller & Sons Trees, Inc., 581 F.Supp.2d 1295, 1303
& n.4 (N.D. Ga. 2008).
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wages of the workers, and supervised them. Id. at 405. Despite this, Judge Easterbrook found
that, because the subcontractor was undercapitalized, holding the contractor liable as a joint
employer was essential to ensure that the workers were protected in a manner consistent with
FLSA’s broad and remedial definition of employer. Id. at 409. One other court has indicated its
approval of this rationale and to the knowledge of the undersigned, no court has rejected it. See
Hall v. DirectTV, LLC, No. 14–2355, 2015 WL 4064692 at *2 (D.Md. June 30, 2015) (Motz, J.)
(“Of course, if the entities that were part of the Network Provider System were undercapitalized
and merely charades created by DIRECTV that followed every suggestion and payment decision
made by DIRECTV, that would show, perhaps conclusively, DIRECTV’s joint employer
status.”) (Exh. A.)
In Reyes, Judge Easterbrook reasoned that “[i]f an independent contractor is a solvent
business, then the workers are protected by that contractor's incentive to follow the law (for
violations could cripple the business) and his ability to pay damages if he does not.” Id. at 408.
But, “when a contractor has no business or personal wealth at risk, he may be tempted to stiff the
workers . . . and then treating the principal firm as a separate employer is essential to ensure that
the workers' rights are honored.” Id. Under these circumstances, that is when imposing joint
employer liability “matter[s] most.” Id. at 409.
This rule – that contractors who hire undercapitalized subcontractors are automatically
joint employers of the subcontractor’s workers – would not disrupt the contracting industry. The
rule does not increase a law-abiding contractors’ costs, but simply discourages them from hiring
subcontractors which underbid projects and stiff workers: “If everyone abides by the law, treating
a firm such as Remington as a joint employer will not increase its costs” because the
subcontractor “must pay any labor contractor enough to cover the workers’ legal entitlements.”
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Id. It is “[o]nly when it hires a fly-by-night operator . . . that [the contractor] is exposed to the risk
of liability on top of the amount it has agreed to pay the contractor.” Id. Further, this rule does not
impose an unfair hardship on contractors because they have three ways to avoid the risk of
liability: (1) deal only with other substantial and appropriately capitalized businesses; (2)
withhold enough money from the subcontractor to ensure that its workers are paid in full; or (3)
require the subcontractor to post a payment bond. Id. When a contractor fails to take any of these
three measures, it must be deemed a joint employer for the purposes of the wage laws because the
inevitable result is that workers will not be paid.
D.
CRC AND THE CALDERONS ARE JOINT EMPLOYERS OF PLAINTIFFS
BECAUSE: (1) JCI WAS UNDERCAPITALIZED AND WHOLLY
DEPENDENT ON CRC TO COVER THE COST OF THE LABOR; AND (2)
CRC HAD NO LEGITIMATE INDEPENDENT ECONOMIC PURPOSE IN
HIRING JCI EXCEPT TO AVOID PAYING FEDERALLY-MANDATED
WAGES.
CRC is a joint employer under Zheng and Reyes because JCI was undercapitalized and
because CRC used the subcontractor relationship to evade liability for the Plaintiffs’ wages. As
in Reyes, the Calderon Defendants not only hired an undercapitalized subcontractor, they went
much further, using that relationship to squeeze JCI and force it to pay far less than the required
wages. CRC entered into two fixed price subcontracts with JCI which allowed CRC to dictate the
amount of labor and its price, resulting in JCI and the laborers receiving only a fraction of the
wages due. In hiring an underfunded subcontractor through fixed-price contracts, CRC virtually
guaranteed that it would receive a 50 percent discount on the labor and that JCI would be unable
to pay the majority of the laborers’ federally-mandated wages. Unless CRC – which caused and
benefited from JCI’s inevitable and calculated default – is found to be a joint employer, the
laborers are unprotected and have no effective means of being made whole. Reyes, 495 F.3d at
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408.
When it was hired by CRC, JCI was so severely undercapitalized that it was in no
position to bear the astronomical labor costs and thus, wholly dependent on the payment stream
it received from CRC. JCI had very few assets, no office7 and was a labor only business. (PFF8,
¶¶ 19, Col. 1-3, 24, Col. 1-3, 25, Col. 1.) From JCI’s inception to April 7, 2011 – just before JCI
began work on the Project – JCI had earned gross receipts of only $29,880.00. (PFF ¶ 24, Col. 13.) Between 2010 and 2011, the value of JCI’s assets never exceeded $7,072.00, which included
tools, a vehicle and equipment. (PFF ¶¶ 24, 25, Col. 1.) Given its financial straits, when JCI
received payment from CRC, it passed it along to the workers by writing checks. If JCI did not
receive enough from CRC to pay the workers, then they were either shorted or not paid at all, a
predicament which Cespedes repeatedly conveyed to both Ana and Carlos Calderon since midJuly, 2011. (PFF, ¶¶ 19-24, 61, 65-67.) In fact, there was never any way that JCI would be able
to afford the cost of the labor that CRC required it to provide. The cost of JCI’s labor on the
Project was substantial -- $381,470.98 (excluding the value of Cespedes’ time). The $165,039.29
which CRC paid JCI was short of JCI’s labor costs by $216,431.69. (PPF ¶¶ 2, 67a, Col. 2.) The
actual cost of JCI’s labor was a full $157,497.00 more than JCI’s total cash receipts in 2011
($223,974.00). (PFF ¶ 68, Col. 1.)
CRC’s hiring of JCI was suspicious for another reason: It did not make economic sense,
unless the Calderon Defendants planned to use the subcontracting relationship to underpay the
workers. As Judge Easterbrook pointed out in Reyes, supra, a solvent subcontractor would not
undertake any job unless the contractor agreed to pay an amount sufficient to cover all of the
7
Although JCI may have used the office of its accountant Oropeza & Associates for meetings. (PFF ¶ 25,
Col. 1-3.)
8
References to “PFF” are to the final version of the Proposed Findings of Fact of the parties, Dkt. 174.
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subcontractor’s costs (including labor) and an extra amount as profit. Id. at 409. There was no
independent economic reason (and CRC did not articulate one because neither Ana or Carlos
Calderon testified at trial) why CRC hired a subcontractor, when providing labor for construction
projects was a major part of CRC’s business, and it employed or could employ workers with the
skills necessary to perform the work. (PFF ¶¶ 2, 5, Col. 1, 7, Col. 1-3, 28, 29, 31, 124.) CRC in
fact hired its own workers to finish the job after JCI left. (PFF ¶ 90.) By subcontracting the work
to JCI, CRC was, in theory, passing a large part of the profit to another entity. If CRC planned to
abide by the law and pay the laborers in full, it would have been more cost effective and
profitable for CRC to hire the workers directly. It is obvious that Carlos and Ana Calderon never
planned to ensure that the workers were paid in full, as they took no steps to ensure that it
occurred and in fact, took steps that inevitably led to non-payment.
The evidence demonstrates that the Calderon Defendants hired undercapitalized JCI, at
least knowing of the strong likelihood that JCI would commit substantial wage violations for
which they believed that CRC, as a contractor, could escape liability. Carlos and Ana Calderon
were not new to the construction industry and they had the know-how to manipulate Cespedes
and JCI to their own ends. By 2011, they had owned and operated CRC for 19 years; Carlos
Calderon had 28 years of construction experience; and CRC had been a contractor on federal
construction projects for four years. (PFF ¶¶ 14a-14j, Col. 1-3.) Carlos Calderon knew that the
cost of labor on the Project would be substantial, as he had the experience to assess the costs and
he entered into a contract to perform CRC’s scope of work (including supplying materials) for
the substantial sum of $923,639.00. (PFF ¶ 4, Col. 1-3.)
Other facts and circumstances demonstrate that Carlos and Ana Calderon acted
purposefully and intentionally. Cespedes’ financial straits and desperation for work made him an
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easy target for the Calderon Defendants; Cespedes and three other carpenters began work when
Carlos Calderon asked him to, without a written contract or a promise of any type concerning
compensation. (PFF ¶¶ 33-34.) Also, Carlos Calderon informed him that he only needed four
workers on the job – Cespedes and three other Carpenters – a deceptive representation of
gargantuan proportions. (PFF ¶¶ 33, 34.) Having convinced Cespedes to accept fixed price
subcontracts, which left the Calderon Defendants with the power to dictate the amount of labor,
they knowingly placed JCI in an untenable position – the labor costs were increasing by the day,
JCI could not keep up with them and it was headed for massive debt and default.9 (PFF ¶¶ 4851.)
Moreover, Ana Calderon used her operational control over the subcontracts by paying
JCI less than it was entitled, thereby reducing the meager funds that were available to pay the
workers. She did so by directing Sanz to underreport the progress of JCI’s work by 20 percent.
(PFF ¶¶ 91, Col. 1-3; TR10 at 116-17.) This necessarily meant that JCI would receive progress
payments which were reduced by 20 percent, causing JCI to have 20 percent less money to pay
the workers, which directly affected the amount that they were paid. (PFF ¶ 91, Col. 1-3; JE21.)
The reduction in the amount JCI received – 20 percent or more – is evident from the fact that JCI
completed 90 percent of the work, but was only paid for completing 65 percent11 of it. (TR at
164, 219, 384-86.). Significantly, neither Carlos nor Ana Calderon chose to refute this evidence,
as neither one testified at trial.
9
For example, the number of laborers on the job at one time grew to 10 by mid-July, to 16 by mid-August
and finally to 17 by mid-September, producing costs that were far beyond CRC’s payments to JCI and JCI’s ability
to pay. (PFF ¶¶ 56, 63, Col. 2, 65-67, Col. 1.)
10
References to “TR” are to the transcript of the trial in this case.
11
The original contract price for the two subcontracts was $230,499.10 plus change orders and the overtime
differential. (PFF ¶¶ 8, 9; JE23; JE24.) CRC’s progress payments to JCI on the subcontracts, after excluding
$16,000 of payments on change orders and overtime, totaled $149,039.29, only about 65 percent of the original
price of the subcontracts. (PFF ¶¶ 104, Col. 2, 120d, Col. 2.)
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Having driven JCI into an ever increasing debt, CRC – acting through Carlos and Ana
Calderon – then used its leverage to convince Cespedes to pay wages below the federallymandated rates, an action which was unlawful. (PFF ¶¶ 71-74, 88.) Given the massive debt he
was accruing, Cespedes had no choice but to take Carlos and Ana Calderon’s advice and lower
the wages he was paying, even though he knew the wage rates were below the federallymandated level. (PFF ¶ 88.) The Calderon Defendants accomplished this in the following ways:
(1) when Cespedes complained that he could not afford to pay his workers, Carlos and Ana
Calderon advised him to reduce the rates of some carpenters to the skilled labor level, which
Cespedes did; and (2) Carlos Calderon told Cespedes to hire undocumented aliens and pay them
less than the federally mandated wages, which Cespedes also did. (PFF ¶¶ 55, Col. 1, 69-74, Col.
1, 78, Col. 1-2, 79-88, Col. 1.)
The Calderon Defendants cannot be permitted to misuse a subcontractor relationship as
an indirect means of exploiting the laborers and violating the law. They must be joint employers
of JCI’s workers because they hired an undercapitalized subcontractor at a fixed price, because
they had the power to dictate the amount of labor, and because the money paid to JCI was far
less than the cost of the labor.
Such a ruling would not affect the construction industry in a negative way; the effects
would only be positive for several reasons. First, such a ruling would discourage contractors like
CRC from underbidding contracts to win them unscrupulously and then making up for their
impending losses by hiring undercapitalized subcontractors, who will work for less and
inevitably stiff workers. Second, the rule would allow workers to recover wages from contractors
that hire severely undercapitalized subcontractors, so that workers are protected. Third,
responsible contractors would not be affected and costs would not increase. As Judge
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Easterbrook explained in Reyes, supra, responsible contractors hire established and fully
capitalized subcontractors that have an incentive to comply with wage laws and will accordingly
place bids that cover their costs and allow for profit. Reyes, 495 F.3d at 409. Additionally,
legitimate contractors are free to hire small businesses and still avoid liability for unpaid wages
by requiring minimally capitalized subcontractors to post payment bonds or holding back
sufficient funds to pay the workers should the subcontractor default.
The temporal impact of such a rule, if this Court were to adopt it, would also be limited,
as the DCWPCL has since been amended (the amendment is effective February 26, 2015 and
prospective only) to hold general contractors vicariously liable for the non-payment or
underpayment of wages by subcontractors. See D.C. Code § 32-1303 (5) (“When the employer is
a subcontractor alleged to have failed to pay an employee any wages earned, the subcontractor
and the general contractor shall be jointly and severally liable to the subcontractor's employees
for violations of this chapter. . .”).
Therefore, under the principles of Reyes, supra, the Calderon Defendants are the joint
employers of Plaintiffs.
E.
ALTERNATIVELY, A MORE MECHANICAL APPLICATION OF THE
RUTHERFORD AND ZHENG FACTORS DEMONSTRATES THAT CRC
IS A JOINT EMPLOYER OF PLAINTIFFS BECAUSE THE
SUBCONTRACTS HAD NO INDEPENDENT ECONOMIC PURPOSE,
BUT WERE A CLEVER MEANS OF EVADING THE WAGE AND HOUR
LAWS.
Application of the Zheng and Rutherford factors confirms what is obvious – CRC’s
contractual relationship with JCI had no independent economic purpose, but was simply a clever
means of evading the FLSA, DCWPCL and DCMWRA.
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1.
CRC CONTROLLED THE DAILY LOCATION OF THE
PLAINTIFFS’ WORK ON THE PROJECT AND PROVIDED THE
MATERIALS THEY USED IN THEIR WORK.
The first Zheng factor is whether a putative employer’s premises and equipment are used
by its putative joint employees. The Zheng Court noted that “the shared use of premises and
equipment may support the inference that a putative employer has functional control over the
plaintiffs’ work.” Zheng, 355 F.3d at 72. Here, the location of the Project was the courthouse
building, owned not by CRC or JCI, but by the District of Columbia. (PFF ¶ 1.) Each day, CRC
dictated where on the worksite the workers would work and what work they would perform on a
given day. (PFF ¶¶ 92-98, 100.) CRC, therefore, determined where Plaintiffs performed their
work, even if the nature of the construction business is such that a contractor like CRC does not
own the worksites. Additionally, it is undisputed that CRC provided equipment such as lifts,
scaffolds, ladders as well as all of the material the workers used. (PFF ¶¶ 114-16.) CRC’s control
over the workers and its ownership of the equipment and materials are simple and clear indicators
that JCI and Plaintiffs operated as an integrated part of CRC’s business, rather than a separate
entity.
2.
JCI WAS A NEW COMPANY DURING THE RELEVANT TIME
PERIOD, AND CALDERON WAS ITS PRIMARY CLIENT.
The second factor is whether the Plaintiffs are part of a business organization that shifts as
a unit from one putative joint employer to another. The Zheng Court noted that this factor is
relevant:
because a subcontractor that seeks business from a variety of contractors is
less likely to be part of a subterfuge arrangement than a subcontractor that
serves a single client. Although neither shared premises nor the absence of a
broad client base is anything close to a perfect proxy for joint employment
(because they are both perfectly consistent with a legitimate subcontracting
relationship), the factfinder can use these readily verifiable facts as a starting
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point in uncovering the economic realities of a business relationship.
Zheng, 355 F.3d at 72.
The Plaintiffs were not part of a business organization that shifted as a unit from one
putative employer to another. Here, JCI was a small, newly-formed company – founded in
October, 2010; it had no office, very few assets and was a labor only business. (PFF ¶¶ 18, Col.
1, 18a, Col. 2, 20-25, Col. 1.) CRC was its primary client, as Cespedes devoted most of this time,
to the Project, working alongside of Plaintiffs each day that they worked. (PFF ¶¶ 24a, Col. 2, 68;
JE12 at 111-13, 115-18, 122, 125-26, 128, 149-50, 165-82.) With the exception of Jose Lenin
Rocha Quiroz, Luis Rocha and Peter Soto, none of the Plaintiffs were employed by JCI in 2010
or 2011, other than on the Project. (PFF ¶ 47.) More fundamentally, JCI’s reliance on CRC was
so substantial that when it did not receive sufficient funds from CRC, JCI simply could not pay
its workers. (PFF ¶¶ 18a, Col. 1, 20-25, Col. 1, 56, Col. 1, 57-68 Col. 1.)
Therefore, the Plaintiffs were not part of a business organization that shifted from one
putative employer to another and this factor weighs heavily in Plaintiffs’ favor.
3.
PLAINTIFFS’ WORK WAS NOT ONLY AN ESSENTIAL
ELEMENT IN CRC’S BUSINESS, BUT THE VERY CORE OF
CRC’s LABOR ROLE IN THE CONSTRUCTION PROJECT.
The third factor is whether the workers performed a line job that is integral to CRC’s
process of production. This factor weighs heavily in favor of Plaintiffs because, as far as CRC
was concerned, the employees supplied by JCI were the very core of its operation on the Project.
The Zheng Court interpreted this factor as an attempt to determine whether the work at issue was
more like “piecework on a producer’s premises that requires minimal training or equipment, and
which constitutes an essential step in the producer’s integrated manufacturing process” or,
“work that is not part of an integrated production unit, that is not performed on a predictable
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schedule, and that requires specialized skills or expensive technology.” Zheng, 355 F.3d at 73.
Under this analysis, the more that a certain type of work is an essential step in CRC’s integrated
manufacturing process, the greater the likelihood that Plaintiffs are employees of CRC.
Though the work at issue here is construction, not manufacturing, this factor is no less
appropriate, relevant or material to the issue of whether Plaintiffs are jointly employed by CRC.
Plaintiffs’ work was not only an essential step in CRC’s construction process, it was nearly 100
percent of CRC’s labor role in the Project. (PFF ¶ 7, Col. 1-3.) Prior to Plaintiffs leaving the job,
CRC employed only Sanz, the workers supplied by JCI, and one other worker to perform touch
ups. (PFF ¶¶ 1, 7, Col. 1-3; PE8.) Plaintiffs and the other workers employed by JCI installed
drywall and performed related construction work that CRC was contractually obligated to
complete. (PFF ¶¶ 1, 7, Col. 1-3.) CRC supplied large equipment such as ladders, scaffolds and
lifts and the materials the Plaintiffs used; CRC’s foreman oversaw their work every day. (PFF ¶
114-16.) Their work was not discrete and separate from CRC’s business, which was
construction; it was not “highly specialized,” but routine carpentry work. (PFF ¶¶ 94-100, Col.
1.) See Brock v. Superior Care, Inc., 840 F.2d 1054, 1060 (2d. Cir. 1988) (“The nurses in the
present case possess technical skills but nothing in the record reveals that they used these skills
in any independent way.”).
The Whiting-Turner subcontract was worth $929,639.00 to CRC, and Plaintiffs are the
men who performed the labor at the heart of that agreement. (PFF ¶ 4.) Just as nurses are “the
most integral part” of a health-care-personnel-referral business, Brock, 840 F.2d at 1059, and
exotic dancers are obviously integral to a nightclub, Thompson, 779 F.Supp.2d at 150, the
Plaintiffs were integral to CRC’s construction business, as they performed the vast majority of
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CRC’s scope of labor on the Project. Thus, this factor weighs heavily in the Plaintiffs’ favor.
4.
PLAINTIFFS
COULD
HAVE
CONTINUED
THEIR
EMPLOYMENT RELATIONSHIP WITH CALDERON EVEN
AFTER CESPEDES WALKED OFF THE JOB.
The fourth factor is whether responsibility under the subcontracts could pass from one
subcontractor to another without material changes. The Rutherford Court noted that even when
the workers’ supervisor left and another supervisor replaced him, the workers continued to do the
same work in the same location, which weighed in favor of joint employment. Rutherford, 331
U.S. at 730 (“Viewed in this way, the workers did a specialty job on the [defendant plant’s]
production line.”). In this case, Cespedes left the job site after Carlos Calderon told him to leave.
(PFF ¶ 123, Col. 1, 3.) When this occurred, both CRC and Plaintiffs understood that they could
continue working on the Project. (PFF ¶¶ 122, Col.3, 123, Col. 1, 3; PE5 at 57, 59.) The other
workers, including all Plaintiffs, decided on their own volition to leave the Project when
Cespedes did. But the fact that leaving was their decision to make underscores the point that their
work on the Project was not tied primarily to Cespedes or JCI, but to CRC. (PFF ¶ 122, Col. 1-3.)
Additionally, Plaintiffs’ employment on the Project could have continued seamlessly with or
without Cespedes or JCI, as the majority of their supervision and scheduling came directly or
indirectly from CRC’s Sanz, making Cespedes an largely irrelevant middle man. (PFF ¶¶ 46, 93100, Col. 1-3.) In fact, Carlos Calderon met with the workers, urged them to work and offered to
pay their unpaid wages, establishing that the relationship could have continued regardless of
whether Cespedes was present. (PFF ¶¶ 118-120.)
These facts mirror those in Rutherford. As in Rutherford, any responsibility that JCI had
for supervision could have easily passed from JCI or Cespedes to Sanz or CRC with no change in
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the relationship between CRC and the workers; in fact, CRC hired replacement workers directly
after firing JCI. (PFF ¶ 124.) Therefore, any responsibility that JCI or Cespedes had could easily
have passed to CRC or to some other subcontractor, which weighs in favor of CRC as a joint
employer.
5.
CRC EXERCISED A HIGH DEGREE OF SUPERVISION OVER
PLAINTIFFS’ WORK.
The fifth factor is the degree of supervision that CRC had over Plaintiffs’ work. See
Godlewska, 916 F.Supp.2d at 264 (“[T]he inquiry under this factor is ‘largely the same’ as the
inquiry under the second Carter factor.”) (quoting Jean-Louis v. Metro. Cable Communications,
Inc., 838 F.Supp.2d 111, 126 n.7 (S.D.N.Y. 2011)). CRC shared responsibility with Cespedes for
supervising Plaintiffs, but exercised supervisory control all aspects of Plaintiffs’ employment in
the following ways: (1) CRC decided whether the Plaintiffs worked on weekends and the number
of Plaintiffs that were needed at the worksite each day (PFF ¶¶ 49-51, 53-54, 56); (2) Sanz spent
most of his day supervising JCI’s workers in the following ways: he told them where to go in the
site and what work to do; he explained how the work needed to be done and answered questions
about it; he monitored the quality of the work and ordered the workers to correct mistakes; he
reassigned workers who were not performing optimally or with sufficient speed (PFF ¶¶ 92-102);
(3) on two or three occasions, Sanz took several of JCI’s workers to an offsite location to perform
work unconnected with the Project (PFF ¶ 103, Col. 1) and on 27 occasions, Sanz took some of
JCI’s workers to other parts of the Project to perform work outside the scope of JCI’s contract
with CRC. (PFF ¶¶ 104-08, Col. 1, 3.)
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CRC’s extensive control and supervision of JCI’s workers and its use of them for matters
outside the scope of JCI’s subcontracts with CRC, tips the scale heavily in the direction of joint
employment.
6.
PLAINTIFFS WORKED PREDOMINANTLY FOR CRC WHILE
JOINTLY EMPLOYED BY JCI.
The Plaintiffs worked predominantly for CRC during the course of the Project. JCI was a
small labor-only company that had insufficient capital to employ Plaintiffs or others
independently. (PFF ¶¶ 18a, Col. 2, 24, Col. 1-3, 24-25, Col. 1.) With the exception of three
Plaintiffs, no other Plaintiff performed any work for JCI in 2010 or 2011 outside of their work for
the Project. (PFF ¶ 47.) In addition, only a few workers worked for JCI on other projects during
the time JCI performed work on the Project. (JE12 at 111-13, 115-18, 122, 125-26, 128, 149-50,
165-82.) Accordingly, Plaintiffs worked predominantly for CRC while employed by JCI.
7.
CRC ENGAGED IN A SUBTERFUGE WHEN IT HIRED JCI AS
SUBCONTRACTOR ON THE PROJECT.
The ultimate objective of the Zheng test is to determine whether CRC had engaged in
subterfuge to avoid liability under the FLSA or other wage statutes. See Zheng, 355 F.3d at 72,
73, 74 (applying the test factors to determine whether the putative employer engaged in
subterfuge). Ultimately, whatever factors are considered under the economic reality test, CRC is
liable as Plaintiffs’ employer for the wage violations at issue because CRC had control over those
violations. “Courts have found that a determination of whether an individual is liable under the
FLSA depends not upon whether the individual controlled every aspect of the employees’
conduct, but upon whether the individual had control over the alleged FLSA violation.” Villareal
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v. El Chile, Inc., 776 F.Supp.2d 778, 785 (N.D.Ill. 2011) (citing Donovan v. Grim Hotel Co., 747
F.2d 966, 972 (5th Cir. 1984).12
CRC’s actions demonstrate its use of JCI as a subcontractor was simply a means of
avoiding the payment of Plaintiffs’ federally-mandated wages, at the expense of JCI and
ultimately the Plaintiffs. CRC did this by entering into two fixed price subcontracts with JCI for a
price substantially less than the labor cost, reserving for itself the power to dictate the number of
workers that came to the jobsite and whether they worked overtime, inevitably leading to the
unlawful non-payment of wages.
Therefore, CRC used its contract with JCI as a subterfuge for avoiding liability under the
statutes at issue in this case.
F.
ALTERNATIVELY, EACH OF THE FOUR FACTORS IN THE BONNETTE
TEST WEIGHS IN FAVOR OF CRC BEING PLAINTIFFS’ EMPLOYER.
CRC is a joint employer even under the more restrictive Bonnette test. “The [four-factor]
Bonnette test considers whether a putative employer: “(1) had the power to hire and fire the
employees, (2) supervised and controlled employee work schedules or conditions of employment,
(3) determined the rate and method of payment, and (4) maintained employment records.”
Carter, 735 F.2d at 12 (borrowing factors from Bonnette v. Cal. Health & Welfare Agency, 704
F.2d at 1470). When taken as a whole, the four-factor Bonnette test demonstrates that CRC
exercised a high degree of formal control over all aspects of Plaintiffs’ employment (financial,
12
See Dole v. Simpson, 784 F.Supp. 538, 545 (S.D.Ind. 1991) (“[T]his is really a question of duty: Based
upon their control over decisions causing the violations of the [FLSA], which persons had a duty as a statutory
employer not to violate the Act?”); see also Riordan v. Kempiners, 831 F.2d 690, 694 (7th Cir. 1987) (holding that
an individual may be held liable as an employer in an FLSA action “provided the defendant had supervisory
authority over the complaining employee and was responsible in whole or in part for the alleged violation”);
Freemon v. Foley, 911 F.Supp. 326, 331 (N.D.Ill. 1995) (concluding that “even if a defendant does not exercise
exclusive control over all the day-to-day affairs of the employer, so long as he or she possess control over the aspect
of employment alleged to have been violated, the FLSA will apply to that individual”) (emphasis added).
22
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supervisory, and administrative), and then used this power to violate Plaintiffs’ statutory rights to
their wages.
1. FACTOR 1: CRC HAD THE POWER TO HIRE AND FIRE
JCI’S WORKERS
As for the first factor, CRC had the power to hire and fire Plaintiffs. Sanz, CRC’s
foreman, testified that he had the power to terminate JCI’s workers. (PFF ¶ 75, Col. 1, 3.) While
the Calderon Defendants dispute this fact, they do not do so effectively. Sanz clearly testified that
he had the power to fire JCI’s employees; he added that if the workers violated the rules of the
project that he had the authority to fire them, but he did not testify that this was the only
circumstance when he could terminate their employment. (PFF ¶ 75, Col. 3.) Significantly,
Carlos Calderon would have knowledge of whether Sanz had this authority; however, he failed to
provide any testimony on this point, leaving Sanz’s testimony unrefuted.
CRC also possessed de facto authority to hire and fire JCI’s workers. The power to
request or reject a particular worker is, de facto, the power to hire and fire. See Watson v. Graves,
909 F.2d 1549, 1555 (5th Cir. 1990) (holding a putative employer had the power to hire and fire
because he “not only determined which [worker] would work for him, but also when, how
frequently, how long, and on what projects the [worker] would work, as well as what specific
functions the [worker] would perform”). Calderon and his foreman Sanz made the primary hiring
decisions - determining the number of workers who would work each day on Cespedes’ crew, the
skills they must have, where they would work, whether they needed to be reassigned, whether
they would work on weekends and what they would do – while leaving the direct hiring to
Cespedes. (PFF ¶¶ 92-102; 103, Col. 1, 104-08, Col. 1, 3.) As a result of the directives from
Carlos Calderon and Sanz, directives that were independent of Whiting Turner’s wishes, the
23
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number of workers employed by JCI increased from three to 17. (PFF ¶¶ 48, Col. 3, 56, Col. 1,
3.) CRC also made de facto hiring decisions; Carlos Calderon recommended that Cespedes hire
four undocumented aliens with the added recommendation that Cespedes pay them less than the
federally-mandated wages, which Cespedes did. (PFF ¶¶ 55, Col. 1, 69-74, Col. 1.)
For these reasons, CRC had the actual authority to terminate the Plaintiffs and the de facto
power to hire and fire Plaintiffs.
2. FACTOR 2: CRC SUPERVISED AND CONTROLLED
EMPLOYEE WORK SCHEDULES, THE MANNER IN WHICH
WORK WAS PERFORMED, THE CONDITIONS OF THEIR
EMPLOYMENT, AND THE WORK THAT THEY DID.
The degree of supervision “is the most relevant factor in determining whether a purported
joint employer exercises functional control over plaintiffs.” Godlewska v. HDA, 916 F.Supp.2d
246, 264 (E.D.N.Y. 2013) (citations omitted). This factor weighs heavily in favor of finding that
CRC employed Plaintiffs. Even under the more conservative common law test adopted by the
NLRB, factors which tilt in favor of joint employer relationship include control by the contractor
over: (1) “the number of workers to be supplied”; (2) the “scheduling” of the workers; and (3)
whether they work “overtime.” Browning-Ferris Industries of California, Inc., supra, slip op. at
19.
CRC’s supervision of the Plaintiffs was both constant and extensive: CRC decided
whether the Plaintiffs worked on weekends and the number of Plaintiffs that were needed at the
worksite each day (PFF ¶¶ 49-51, 53-54, 56). More importantly, Sanz spent most of his day
supervising JCI’s workers. He did so in the following ways: he told them where to go in the site
and what work to do; he explained how the work needed to be done and answered questions
about it; he monitored the quality of Plaintiffs’ work and ordered them to correct mistakes; he
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reassigned workers who were not performing optimally or with sufficient speed (PFF ¶¶ 92-102);
on two or three occasions, Sanz took several of JCI’s workers to an offsite location to perform
work unconnected with the Project (PFF ¶ 103, Col. 1) and on 27 occasions, Sanz took some of
JCI’s workers to other parts of the Project to perform work outside the scope of JCI’s contract
with CRC (PFF ¶¶ 104-08, Col. 1, 3).
This frequent, thorough, and detailed supervision is more than enough to establish that
CRC supervised Plaintiffs. In Morrison, for example, despite the trial court’s finding that the
defendant’s review of the plaintiff’s weekly to-do lists and activity summaries was “infrequent
supervision,” Morrison, 253 F.3d at 11, the D.C. Circuit held that “[s]upervision need not be
frequent under the economic reality test.” Id. at 11-12; see also Brock v. Superior Care, Inc., 840
F.2d 1054, 1060 (2d Cir. 1988) (holding that a supervisor’s infrequent visits of “only once or
twice a month” were sufficient to show that it “unequivocally expressed the right to supervise the
… work.”); Thompson, 779 F.Supp.2d at 148 (finding that dancers were employees of nightclub
rather than independent contractors under FLSA because it “exercised a significant degree of
control over the plaintiffs' work” by requiring its exotic dancers to sign in when they arrived at
work, to follow a posted schedule, and to follow certain rules regarding profanity and drug use).
Therefore, application of the primary factor – supervision and control of working
conditions – weighs heavily in favor of the Plaintiffs.
3. FACTOR 3: CRC DETERMINED THE RATE AND METHOD
OF PAYMENT.
Application of this third factor weighs heavily in favor of Plaintiffs because the Calderon
Defendants controlled the rates and methods of paying JCI’s workers, both directly and
indirectly. While the federally-mandated rates of pay were set by the Department of Labor
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(“DOL”), the Calderon Defendants used the subcontracting relationship to alter those rates and
reduce the cost they paid for labor to a level below the federally-mandated rates. Having
convinced Cespedes to accept a fixed price which left the Calderon Defendants with the power to
dictate the amount of labor, the Calderon Defendants knowingly placed JCI in an untenable
position: JCI would not be able to pay the wages, would go into debt and would eventually
default. The Calderon Defendants had the power to dictate the number of workers on the job and
they did so, increasing the number of JCI workers on the job site substantially over time. (PFF ¶¶
48-51.) The number grew to 10 by mid-July, to 16 by mid-August and finally to 17 by midSeptember, producing costs that were far beyond CRC’s payments to JCI and JCI’s ability to pay
(PFF ¶¶ 56, 63, Col. 2, 65-67, Col. 1). Ana Calderon used her operational control over
subcontract payments to lessen the pool of money available to pay Plaintiffs by underpaying JCI.
See Argument, supra, Part I.D.
Having driven JCI into an ever increasing debt, the Calderon Defendants then used their
leverage to convince Cespedes to pay wages below the federally-mandated rates. (PFF ¶¶ 71-74,
88.) Given the massive debt he was accruing, Cespedes had no choice but to take Carlos and Ana
Calderon’s advice and lower the wages he was paying, even though he knew the wage rates were
below the federally-mandated level. (PFF ¶ 88.) The Calderon Defendants accomplished this in
the following ways: (1) when Cespedes complained that he could not afford to pay his workers,
Carlos and Ana Calderon advised him to reduce the rates of some carpenters to the skilled labor
level, which Cespedes did; and (2) Carlos Calderon told Cespedes to hire undocumented aliens
and pay them less than the federally mandated wages, which Cespedes also did. (PFF ¶¶ 55, Col.
1, 69-74, Col. 1, 78, Col. 1-2, 79-88, Col. 1.) Additionally, Ana Calderon forced Cespedes to
pay JCI’s workers holiday pay for Memorial Day, when they were not otherwise entitled to it.
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(PFF ¶¶ 76-77.).
Therefore, this factor weighs heavily in favor of Plaintiffs because CRC set Plaintiffs’
wages and after setting them, attempted to manipulate them further.
4. FACTOR
4:
CRC
MAINTAINED
EMPLOYMENT RECORDS.
PLAINTIFFS’
Finally, CRC maintained the records of Plaintiffs’ employment. (PFF ¶¶ 109-10.) CRC
recorded the hours that Plaintiffs worked on the Project, drafted and maintained Contractors
Daily Work Reports and Certified Payroll records. (PFF ¶¶ 109-10.) Collectively, these two sets
of documents contained the most critical information about Plaintiffs employment – the regular
hours they worked, the overtime hours they worked, their wage rates and the amount of pay they
received. Therefore, it is indisputable that CRC maintained employment records pertaining to
Plaintiffs.
G.
CONCLUSION – JOINT EMPLOYER ANALYSIS.
In short, whether this Court applies the principles of Reyes, the Zheng factors or the
Bonnette test, the result is the same. The Calderon defendants are joint employers of JCI’s
workers generally and the Plaintiffs specifically.
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II.
JCI WAS PLAINTIFFS’ EMPLOYER WITHIN THE MEANING OF THE
DCWPCL AND THE DCMWRA
Plaintiffs concede that JCI is not liable for violations of the FLSA. However, there should
be no dispute that JCI was Plaintiffs’ employer within the meaning of the DCWPCL and the
DCMWRA. JCI had a direct contractual relationship with Plaintiffs; JCI hired them, brought
them to the worksite, paid them, deducted withholdings from their paychecks, placed funds in a
pension plan for them and maintained their employment records. (PFF ¶¶ 34-35, 1st Stip. ¶ 4;
JE10.) As such, JCI was an employer of Plaintiffs within the meaning of the DCWPCL and
DCMWRA.
III.
JACINTO CESPEDES, CARLOS CALDERON AND ANA CALDERON WERE
PLAINTIFFS’ EMPLOYERS.
A.
GOVERNING LEGAL PRINCIPLES.
The overwhelming weight of authority is that corporate officers and/or owners are
employers under the FLSA (and therefore the DCPCWA and DCMWRA) when they engage in
some operational control over the corporate employer. Ruffin v. New Destination, 800 F.Supp.2d
262, 269 (D.D.C. 2011) (citations omitted; see also Lamonica v. Safe Hurricane Sutters, Inc., 711
F.3d 1299, 1310 (11th Cir. 2013) (same); Perez v. Sanford-Orlando Kennel Club, Inc, 515 F.3d
1150, 1160 (11th Cir. 2008) (same); Lambert v. Ackerley, 180 F.3d 997, 1012 (9th Cir. 1999)
(same); Dole v. Elliott Travel & Tours, Inc., 942 F.2d 962, 965-66 (6th Cir. 1991) (same);
Donovan v. Sabine Irrigation, Co., 695 F.2d 190, 194 (5th Cir. 1983) (same); Donovan v. Agnew,
712 F.2d 1509, 1511 (1st Cir. 1983) (same); Ross v. Wolf Fire Protection, Inc., 799 F.Supp.2d
518, 525 n. 11 (D. Md. 2011) (same). Moreover, some circuits have found ownership to be a
“highly probative” factor in the calculus, because owners are likely to have some direct or
indirect control over whether FLSA violations occur. See, e.g., Manning v. Boston Medical
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Center Corp., 725 F.3d 34, 48 (1st Cir. 2013) (“We have similarly identified an ownership stake
as highly probative of an individual’s employer status . . . as it suggests a high level of
dominance over the company’s operations”); Baystate Alternative Staffing, Inc., v. Herman, 163
F.3d 668, 678 (1st Cir. 1998) (same). Because the company’s profits also inure directly to an
owner, that individual employs the worker in a very concrete and literal sense. Dole, 942 F.2d at
966. In this regard, “the case law’s emphasis on ownership and financial control is sensible
because these factors suggest a strong degree of authority over the corporation’s finances and, as
a corollary, the ability to ‘caus[e] the corporation to undercompensate employees and to prefer
the payment of other obligations and/or retention of profits.’” Manning v. Boston Medical Center,
Corp., 725 F.3d at 48 (quoting Baystate, 163 F.3d at 678).
One other circuit, which has taken a more conservative approach, has held that corporate
officers and/or owners are subject to individual liability under the FLSA when they are involved
in management of matters that affect the terms and conditions of the worker’s employment. See
Irizarry v. Catsimatidis, 722 F.3d 99, 109 (2d Cir. 2013) (In order to be an employer under the
FLSA, an owner or officer “must possess control over a company’s actual ‘operations’ in a
manner that relates to a plaintiff’s employment” – i.e. “some degree of involvement in a company
in a manner that affects employment-related factors such as workplace conditions and operations,
personnel or compensation. . .”).
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B.
CESPEDES WAS PLAINTIFFS’ EMPLOYER WITHIN THE MEANING
OF THE DCPCWA AND DCMWRA.
Cespedes bore all of the attributes of an employer, as he was an owner who was involved
in all significant details related to JCI’s operations. Cespedes founded JCI and was a 50 percent
owner, with his wife. (PFF ¶ 18.) Cespedes also demonstrated through his actions that he had
operational control over JCI. For example, Cespedes did the following operationally: he signed
the two contracts between CRC and JCI, binding JCI to their terms (PFF ¶¶ 18, 36, Col. 1-2, 41;
JE3; JE4.); he hired Plaintiffs, discussed their wage rates with them, even though he did not set
them, and brought Plaintiffs to the worksite (PFF ¶¶ 34-35, 56, 129; 2nd Stip. ¶ 1.); he hired an
accounting firm, Oropeza, to handle JCI’s payroll and pension plan and prepare the Certified
Payroll Records, which he signed (PFF ¶¶ 20, Col. 2, 111, JE10; JE13, JE34); he signed Plaintiffs
paychecks (PE2; PE3); and he worked alongside Plaintiffs on the Project and occasionally
relayed work instructions from Sanz to Plaintiffs (PFF ¶ 46). For these reasons, Cespedes was
Plaintiffs’ employer.
C.
CARLOS AND ANA CALDERON WERE PLAINTIFFS’ EMPLOYERS
BECAUSE THEY WERE BOTH OWNERS AND OFFICERS, BOTH HAD
OPERATIONAL CONTROL OVER CORPORATE OPERATIONS AND
FINANCES AND BOTH EXERCISED CONTROL OVER THE
SUBCONTRACT WITH JCI WHICH WAS THE VEHICLE FOR THE
WAGE VIOLATIONS.
Carlos and Ana Calderon were also Plaintiffs’ employers within the meaning of the
FLSA, DCPCWA and DCMWRA. They were both owners, officers and directors, and were
significantly involved in the financial and business operations of CRC. Ana Calderon was Vice
President of CRC and held the controlling interest in it – 51 percent; Carlos Calderon was the
President and held a 49 percent interest in the company; and they were the only directors of CRC.
(PFF ¶¶ 14a, 14d, 14f.) Ana Calderon had significant operational control over matters related to
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CRC’s operations and finances: she had no supervisor; she was authorized to sign checks and
enter into agreements on behalf CRC; and she was responsible for signing Certified Payroll
records for employees hired directly by CRC, for paying those employees and for paying and
overseeing the payment of subcontractors, including decisions related to progress payments,
reporting of progress and whether and to what extent a subcontractor should be paid. (PFF ¶¶ 14f,
14g, 14h, 14i, 91, JE19; JE23; PE8.) Carlos Calderon similarly had authority to sign checks and
enter into agreements on behalf of CRC; he had responsibility for classification of workers; he
supervised Sanz, who was the foreman; he signed contracts and subcontracts, traveled to work
sites, communicated with general contractors and negotiated and/or set contract terms. (PFF ¶¶
14c, 14e, 14g, 36, 37, 38, 41, 48, 49, 51, 92, 116, 119-20; JE2; JE3; JE4.) As such Ana and
Carlos Calderon were Plaintiffs’ employers within the meaning of the FLSA, the DCWPCL and
the DCMWRA.
More importantly Carlos and Ana Calderon both had and exercised operational control
over the subcontracts with JCI – the very vehicle used to commit the violations of the FLSA,
DCWPCL and DCMWRA. Carlos Calderon did so by setting the inequitable subcontract terms,
offering them to a desperate undercapitalized subcontractor who could not afford a bond, which
then permitted CRC get away with paying rock-bottom prices for labor and which inevitably led
to JCI’s financial collapse and inability to pay the wages. (PFF ¶¶ 36, 38, Col. 1-3, 49-51; JE3;
JE4.) While Carlos Calderon put the wheels in motion by entering into the two subcontracts, Ana
Calderon exerted operational control over the workers’ wages by controlling and limiting CRC’s
payments to JCI – paying only 65 percent of the amount of the subcontracts, when in fact JCI
completed 90 percent of the work. Given that JCI was undercapitalized and not bonded, the
payment stream from CRC was JCI’s sole means of paying the workers and the actions of Ana
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and Carlos Calderon ensured that the workers would be severely underpaid. See Argument,
supra, Part I.D. Ana and Carlos Calderon further used their operational control to unlawfully
effect the reduction in the rates that were paid to some of the workers. Id.
Therefore, Ana and Carlos Calderon were the joint employers of the Plaintiffs.
IV.
TRAVELERS’ LIABILITY EXTENDS
ATTORNEY’S FEES AND COSTS.
TO
LIQUIDATED
DAMAGES,
Travelers has argued previously that it is not liable for liquidated damages under its
payment bond. Dkt. 139, Response of Travelers to June 29, 2015 Minute Order on the Impact of
the Calderon Settlement with the U.S. Department of Labor. The Plaintiffs have briefed this
issue prior to trial, and repeat their arguments only briefly here. Dkt. 145, Plaintiffs’
Consolidated Response to the June 29, 2015 Minute Order on Impact of Settlement and
Responses of Calderon and Travelers to the Same Minute Order.
Claims on a surety bond are generally governed by contract principles. See Hartford
Financial Services Group, Inc. v. Hand, 30 A.3d 180, 186-87 (D.C. 2011); Dyer v. Bilaal, 983
A.2d 349, 354–55 (D.C. 2009). A surety bond must also be liberally construed against the drafter
and in favor of the beneficiaries, in this case the Plaintiffs. Goldberg, Marchesano, Kohlman,
Inc. v. Old Republic Sur. Co., 727 A.2d 858, 861 n. 1 (D.C. 1999). It is also well-established that
the liability of a surety is co-extensive with that of its principal (CRC). Johnson v. Taylor, 73
F.Supp. 537, 538 (D.D.C. 1947) (“The liability of the surety is … to answer for his principal’s
fraud, or other wrongful or negligent act. The liability of the principal and the surety is
coextensive.”).
Given these rules of construction, the very broad language of the bond at issue in this
case logically requires the imposition of statutory damages, including liquidated damages and
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attorneys’ fees. The language of the bond reads that it “shall inure to the benefit of all persons
supplying labor, . . . or services in the performance of the said Contract, as well as to the Obligee
[Whiting-Turner], and that such persons may maintain independent actions on this Bond, in their
own names.” (JE5 at 983.)(emphasis added).
This language is extremely broad and contains no exclusions or limitations. It contains no
specific language on liquidated damages and/or attorney’s fees. But read in the context of the
agreement between CRC and WT, the language of the bond leads to the conclusion that it covers
attorney’s fees and liquidated damages. That contract requires that CRC supply all labor on the
project, comply with all federal and state labor laws, and indemnify Whiting-Turner for any
monetary penalties resulting from legal violations on the project. (JE2 at SC2.) Significantly,
Whiting-Turner, as the general contractor on a DBA project, faces direct liability for unpaid
wages and attorneys’ fees under the DBA. CWHSSA, 40 U.S.C. §§ 3701 (b)(1) and 3702 (c);
Cobra Construction Co., Inc. v. United States, 14 Cl. Ct. 523, 527-28 (1988). Whiting-Turner
agreed to this as part of its contract with the government. (JE1, Ex.5, at 1.) As the Obligee, if
Whiting-Turner can make a claim on the bond for CRC and JCI’s violations, it can by extension
claim on the bond for liquidated damages and attorneys’ fees. Accordingly, the Plaintiffs, as the
individuals seeking these wages, can also make such a claim on the bond.
Further, although the precise language used by this bond has yet to be interpreted by D.C.
courts, similarly expansive provisions have been interpreted so as to allow recovery of attorneys’
fees against a surety. The D.C. Court of Appeals found in Sundown, Inc. v. Canal Square Assocs.
that a surety was required to pay attorneys’ fees where the bond contained an “all expenses”
provision, even though attorneys’ fees were not expressly mentioned. 390 A.2d 421, 432 (D.C.
1978) (“[W]e find more persuasive and more logical the cases permitting recovery of attorneys’
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fees under an ‘all expenses’ provision when, as here, a party has been compelled to perform
another’s obligations and no restrictions have been placed on how that performance is to be
accomplished.”); see also Grandview v. Hudson, 377 F.2d 694, 697-98 (8th Cir. 1967) (“[T]he
City, is entitled to recover from the indemnitors, as a part of its damages, reasonable attorney
fees ... This is so even though the indemnity agreement does not specifically include or mention
‘attorney fees’.”).
The expansive language of this bond, combined with the rules of construction and
applicable D.C. case law, make clear that Travelers’ bond with CRC covers not only all unpaid
wages, but liquidated damages and attorneys’ fees as well. Should the Court find CRC liable
under the DCWPCL, DCMWRA, or the FLSA as a joint employer, it should extend this liability
in full to Travelers.
V.
PLAINTIFFS’ DAMAGES UNDER THE FLSA, DCWPCL AND DCMWRA
The Plaintiffs’ claims are under the 2011 versions of the DCWPCL, the DCMWRA and
the FLSA. The Plaintiffs seek recovery under the DCWPCL and either the DCMWRA or, in the
alternative, the FLSA. Specifically, Plaintiffs seek damages as follows:
a)
Remaining unpaid wages owed under the DCWPCL after the DOL payment
($55,587.06);
b)
Liquidated damages for the full amount of unpaid wages existing as of December
5, 2011, under the DCWPCL ($155,601.60);
c)
Liquidated damages for violations of the minimum wage provisions of the
DCMWRA ($8.25 per hour) under the liquidated damages provision of the DCMWRA
($34,575.75);
d)
Liquidated damages for violations of the overtime provisions of the FLSA and the
DCMWRA under the liquidated damage provisions of the FLSA and the DCWRA ($12,266.70);
e)
Total owed: $258,031.11.
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The Plaintiffs have created a spreadsheet, attached as Exhibit B and based solely on
amounts listed in Plaintiffs’ and JCI’s Joint Exhibit 15 (“PJ15”) introduced at trial, listing the
amounts for each individual Plaintiff for points (a)-(d) above. Each section, and the justification
for Plaintiffs’ entitlement to said section, is explained below.
A.
PLAINTIFFS’ DAMAGES UNDER THE DCWPCL
The Plaintiffs are owed remaining unpaid wages, liquidated damages under the
DCWPCL. The DCWPCL provisions in effect at the time the Complaint in this case was filed
stated that “Whenever an employee (not having a written contract of employment for a period in
excess of 30 days) quits or resigns, the employer shall pay the employee's wages due upon the
next regular payday or within 7 days from the date of quitting or resigning, whichever is earlier.”
D.C. Code § 32-1303 (2) (2011).
The following facts have been established by Plaintiffs: their work for Defendants ended
on November 15, 2011, when they left the job site because they were not being paid (PFF ¶ 122;
PE15; 1st Stip. ¶ 4.b); none of the Defendants paid all wages owed to the Plaintiffs upon the next
regular payday or within seven days from the date of their resignation, whichever was earlier (1st
Stip. ¶ 4; PE15; PJ15); Plaintiffs were owed wages more than seven days after they left the
Project (1st Stip. ¶ 4); and, in fact, it has been almost four years since Plaintiffs’ work on the
Project ended and they still have not been paid any portion of the unpaid wages they are seeking
in this case (see below).
As of the filing of these proposed conclusions of law, the Plaintiffs have still not been
paid any of the wages owed as listed in column N of PJ15. For all of the Plaintiffs, this amount
totals $155,601.60. (PJ15 at 6.) The U.S. DOL reached a settlement with C.R. Calderon and
Whiting-Turner in June 2015, in which Whiting Turner paid $150,000.00 to the DOL for
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resolution of the claims of all workers hired by JCI. (CT18; CT17.) This amount includes unpaid
wages for several non-Plaintiff workers. (CT17 at 4.) Subtracting the amounts owed to nonPlaintiff workers from the amount paid by Whiting-Turner, the Plaintiffs are supposed to receive
$100,014.54 from the DOL. At the time of the filing of these proposed conclusions of law, none
of the Plaintiffs have received funds from the DOL. Once the Plaintiffs receive funds from the
DOL, they will still be owed a total of $55,587.06 in unpaid wages alone. (CT17 at 4; PJ15.)
The individual amounts owed to each Plaintiff are set forth in Exhibit B.
Under the DCWPCL, the Plaintiffs are also owed liquidated damages of an amount equal
to the full unpaid wages amount, or $155,601.60. (PJ15 at 6.) The Plaintiffs’ entitlement to this
full amount is explained below. The provision of the DCWPCL in effect at the time the Plaintiffs
performed their work and at the time the Complaint in this case was filed stated that “If an
employer fails to pay an employee wages earned as required under paragraph[] (2) of this
section, such employer shall pay, or be additionally liable to, the employee, as liquidated
damages, 10 per centum of the unpaid wages for each working day during which such failure
shall continue after the day upon which payment is hereunder required, or an amount equal to the
unpaid wages, whichever is smaller.” D.C. Code § 32-1303 (2011) (emphasis added). The award
of liquidated damages under the § 1303 (4) is mandatory, as it contains no good faith exception.
Ventura v. Bebo Foods, Inc., 738 F.Supp.2d 8, 22 (2010).
The effect of this provision was to create a mandatory liquidated damages award13 in an
amount equal to the unpaid wages amount after, at most, approximately 10 work days of non13
The DCWPCL allows an employer to avoid the liquidated damages penalty entirely if it can show that a
bona fide dispute existed as to the amount of wages owed, and that the undisputed amount owed was timely paid.
D.C. Code 32-1304 (2011). Although no D.C. court has defined a “bona fide dispute” under section 1304, Maryland
courts faced with a nearly identical provision in Maryland's wage payment law have provided persuasive guidance.
Md. Code Ann., Lab. & Empl. § 3-507.2; Admiral Mortg., Inc. v. Cooper, 745 A.2d 1026, 1031 (2000) (“[B]ona
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payment. This is because the law requires payment within seven calendar days of resignation,
and the penalties provision adds liquidated damages of 10 percent per working day of nonpayment, until the amount reaches 100 percent of the unpaid wages, or 10 working days from the
date of non-payment. The date of non-payment is 7 calendar days after the employee separates
from employment; if the seven-day period is added to the 10-working-day period, assuming there
are no holidays and assuming two calendar days would be non-working days (weekends), the
employer has about 19 calendar days from the date the employee separates to make the payment.
Once that deadline passes, with only one exception which is not applicable here, the employer is
absolutely liable for an amount of liquidated damages equal to the amount of back pay owed.
The Defendants are jointly and severally liable the liquidated damages sum of
$155,601.60. None of those wages were paid within the 19-day grace period in the statute. As of
December 5, 2011, 19 days past the Plaintiffs’ last day, Plaintiffs were owed the full amount of
the wages indicated on PJ15, Column N. Thus, Plaintiffs are collectively owed $155,601.60 in
liquidated damages and individually owed liquidated damage sums in the amounts set forth in
Column N of PJ15. (PJ15.)
Under the DCWPCL, Plaintiffs are therefore owed remaining unpaid wages and
liquidated damages for the full amount of any wages they were owed as of December 5, 2011.
The total owed under the DCWPCL is as follows: $55,587.06 (remaining back wages after DOL
payment, which has not yet occurred) + $155,601.60 (liquidated damages) = $211,188.66.
fide dispute is a legitimate dispute over the validity of the claim or the amount that is owing.”); Peters v. Early
Healthcare Giver, 97 A.3d 621, 627 (2014) (“[E]mployer [must have] a good faith basis for refusing an employee's
claim for unpaid wages.”). Defendants claim to dispute the amounts owed, but have failed to provide a good faith
basis or an alternative calculation of unpaid wages, nor have they timely paid the undisputed amount. Simply put,
the Defendants cannot meet the elements of section 1304 so as to avoid paying the mandatory liquidated damages.
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B.
LIQUIDATED DAMAGES FOR VIOLATIONS OF THE MINIMUM
WAGE PROVISIONS OF THE DCMWRA AND OVERTIME
PROVISIONS OF THE FLSA OR THE DCMWRA.
The Plaintiffs are also making an additional claim for liquidated damages under the
DCMWRA for the Defendants’ violations of the minimum wage provisions and for liquidated
damages under the FLSA and the DCMWRA for overtime violations. Plaintiffs acknowledge
that because they seek to recover full unpaid wages under the DCWPCL, they are not be able to
also recover minimum wages under the DCMWRA or the FLSA for those same unpaid hours.
However, Plaintiffs should be permitted to recover liquidated damages available under both the
DCWPCL and the DCMWRA (or the FLSA) because these statutes serve fundamentally
different purposes. See, e.g., Pleitez v. Carney, 594 F. Supp. 2d 47, 50-52 (D.D.C. 2009)
(permitting recovery of liquidated damages under DCWPCL and DCMWRA in same case); Yu
G. Ke v. Saigon Grill, Inc., 595 F. Supp. 2d 240, 262 (S.D.N.Y. 2008) (“[P]revailing plaintiff
who can justify both federal liquidated damages [under FLSA] and state-law [wage collection]
damages should be eligible to recover both, since they also ‘serve fundamentally different
purposes.’”) (quoting Do Yea Kim v. 167 Nail Plaza, No. 05-CV-8560, 2008 U.S. Dist. LEXIS
52004, 2008 WL 2676598, *2-4 (S.D.N.Y. July 7, 2008)); Mathis v. Hous. Auth., 242 F. Supp.
2d 777, (D. Or. 2002) (“Liquidated damages under the FLSA are the equivalent of prejudgment
interest under Oregon law, not the equivalent of the penalty under ORS 652.150 [Oregon’s wage
payment and collection statute]. ... With respect to the penalty under ORS 652.150 for a willful
violation, the equivalent damages under the FLSA are additional wages due to the extended
statute of limitations. Awarding Mathis the penalty under Oregon law and liquidated damages
under the FLSA is no more a double recovery than awarding prejudgment interest and punitive
damages.”); see also Davis v. Maxim Integrated Prods., 57 F. Supp. 2d 1056, 1059 (D. Or. 1999)
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(“[P]enalties for failure to pay back wages and penalties for failure to pay overtime seek to
remedy two distinct wrongs, thus justifying the imposition of one penalty for each violation.”);
Smith v. Batchelor, 832 P.2d 467, 472 (Utah 1992) (“[W]e hold that the FLSA does not preempt
the Utah Payment of Wages Act. In withholding Smith's back wages and failing to pay him time
and a half for overtime, Movie Buffs violated two separate laws: one state and one federal. It
therefore must bear the consequences of each.”); Johnson v. Roma II - Waterford LLC, 346 Wis.
2d 612, 634 (Ct. App. 2013) (remanding to the trial court to consider liquidated damages under
both the FLSA and Wis. Stat. § 109.03, the Wisconsin wage payment and collection statute).
The DCWPCL addresses how wages are to be paid to workers, while the DCMWRA (and
the FLSA) address the “why”: minimum wages and overtime protections provide a basic
standard of living and protect workers from exploitation through long weekly hours. Compare 70
Stat. 976 (1956) (“An Act to provide for the payment and collection of wages in the District of
Columbia”) with D.C. Code § 32-1001 (2011) (“The Council of the District of Columbia finds
that persons employed in the District of Columbia should be paid at wages sufficient to provide
adequate maintenance and to protect health.”) and 29 U.S.C. § 202(a) (“The Congress hereby
finds that the existence … of labor conditions detrimental to the maintenance of the minimum
standard of living necessary for health, efficiency, and general well-being of workers …”). As
the DCWPCL and the DCMWRA serve different purposes, the Plaintiffs should be able to
collect statutory penalties from two different classes of statutory sources – the DCWPCL on one
hand, and the DCMWRA or the FLSA, on the other.14
14
The Plaintiffs acknowledge that the DCMWRA and FLSA serve the same purpose, and therefore they
should not be able to collect damages under both of those statutes.
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1.
MINIMUM WAGES.
Employers must pay all non-exempt employees the applicable minimum wage, which
throughout 2011 was $8.25 per hour. D.C. Code § 32-1003(2) (“[A]s of January 1, 2006, the
minimum wage required to be paid to any employee by any employer in the District of Columbia
shall be $7 an hour, or the minimum wage set by the United States government pursuant to the
Fair Labor Standards Act, plus $ 1, whichever is greater.”) (emphasis added); see also 29 U.S.C.
§ 206(b) (2011) (listing $7.25 as the minimum wage under the Fair Labor Standards Act).
In this case, the Plaintiffs were each paid $26.38 per hour, as well as a $7.00 per hour
fringe benefit pension payment, for a total of $33.38 per hour. (JE3.) The straight and overtime
wages owed to Plaintiffs individually and collectively are set forth in PJ15. (PJ15.) For each hour
that went unpaid in each week, the Plaintiffs should have been paid at least $8.25 per hour, the
applicable DCMWRA minimum wage rate at the time. To determine how many regular hours
went unpaid, and hence how much in liquidated damages was owed for unpaid minimum wages,
it was necessary to perform some calculations – the number of straight hours that Plaintiffs
worked for which they received no wages multiplied by $8.25 per hour. The product equaled the
amount of liquidated damages due for Defendants’ DCMWRA minimum wage violations. For
all of the Plaintiffs, that amount totals $34,575.75. The individual amounts are set forth in
Exhibit B.
2.
OVERTIME WAGES.
The second requirement of the DCMWRA is to pay overtime, “time-and-a-half,” to nonexempt employees for all hours worked over 40 per workweek. D.C. Code § 32-1003(c) (2011)
(“No employer shall employ any employee for a workweek that is longer than 40 hours, unless
the employee receives compensation for employment in excess of 40 hours at a rate not less than
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1 1/2 times the regular rate at which the employee is employed.”). The Plaintiffs’ overtime rate
in this case was $39.57 per hour. (PFF ¶ 5.) The total amount of unpaid overtime hours is listed
in Exhibit B, in the third column of the second table for each Plaintiff. This amount was taken
directly from, or calculated using15, the unpaid overtime hours from PJ15. (PJ15.) This amount
was then multiplied by Plaintiffs’ overtime wage of $39.57 to get the amount of overtime wages
due for each Plaintiff. The amount of overtime wages to which the Plaintiffs are collectively
entitled is $12,266.70. (Exh. B at 13.)
3.
LIQUIDATED DAMAGES.
For both unpaid regular and overtime hours, under the DCMWRA the Plaintiffs are
entitled to not only the applicable minimum wage and overtime wages, respectively, but also
liquidated damages in an amount equal to both the unpaid minimum wage amounts and unpaid
overtime. The standard for imposing liquidated damages on an employer that fails to comply
with the minimum wage and overtime laws is the same under the DCMWRA and the FLSA,
which permit collection of liquidated damages in an equal amount to the unpaid minimum wage
and/or overtime if the employer’s violation is without objective good faith. Compare D.C. Code
§ 32-1012 (a) (2011) with 29 U.S.C. § 216 (b). The burden of proving that liquidated damages
should be disallowed rests on the employer, who can avoid the imposition of liquidated damages
entirely if it can show to the satisfaction of the court that its failure to pay minimum wages was
not willful, described by the statute as “in good faith and that the employer had reasonable
grounds for the belief that the act or omission was not a violation of this subchapter.” See D.C.
15
More specifically, column N of PJ15 lists only a total unpaid wages amount, so for weeks when overtime was
worked, the amount in column N was divided by $39.57 to obtain the unpaid overtime hours for that week. In weeks
when that quotient was greater than the amount of overtime actually worked, all overtime hours therefore went
unpaid. In those weeks, the remaining amount after subtracting the unpaid overtime amount was for regular hours,
and was therefore divided by $33.38. That quotient was added to the unpaid regular hours for that week.
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Code § 32-1012 (a); Ayala v. Tito Contractors, Inc., 82 F.Supp.3d 279, 285 (D.D.C. 2015). The
presumption in favor of awarding liquidated damages is strong and a good faith defense requires
an affirmative showing of a genuine attempt to ascertain what the law requires, not simply a
demonstration of the absence of bad faith. Ayala, 82 F.Supp.3d at 285.
In this case, there was no evidence whatsoever that any of the Defendants – CRC, JCI,
Ana Calderon, Carlos Calderon or Cespedes – that they were complying with the law. Indeed, all
evidence was to the contrary. Carlos Calderon, Ana Calderon and Cespedes, the principals of
CRC and JCI, were fully cognizant of the requirement that overtime be paid. (JE10; PE5 at 48;
PE7 at 32; PE8.) As for minimum wages, none of the principals of CRC or JCI gave any
testimony about being aware of not being aware of the requirement that they comply with the
minimum wage laws and therefore failed to meet their burden of proving that a liquidated
damage award under the DCMWRA or the FLSA was not appropriate. Even if they had
presented such evidence, a strong presumption exists in favor of liquidated damages in the
context of the DCMWRA and the FLSA.
Thus, Plaintiffs are entitled to $46,842.45 in liquidated damages for minimum wage and
overtime violations under the DCMWRA. The individual amounts are set forth in Exhibit B.
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CONCLUSION
For these reasons this Court should do the following: (1) find that CRC, Carlos and Ana
Calderon are joint employers of Plaintiffs within the meaning of the DCWPCL, the DCMWRA
and the FLSA and find them liable for any violations and damages; (2) find that JCI and
Cespedes were Plaintiffs’ employers within the meaning the DCWPCL and the DCMWRA; (3)
issue a ruling that Travelers is liable for any judgment against CRC (a) for unpaid wages, (b)
liquidated damages and (c) attorney’s fees and costs; and (4) enter judgment against CRC, Ana
Calderon, Carlos Calderon, JCI, Cespedes and Travelers for $258,031.11.
Respectfully submitted,
/s/Omar Vincent Melehy___________
Omar Vincent Melehy, Esq.
DC Bar No.: 415849
/s/Robert Porter__________________
Robert Porter, Esq.
DC Bar No.: 973835
MELEHY & ASSOCIATES LLC
8403 Colesville Road Suite 610
Silver Spring, Maryland 20910
Phone: (301) 587-6364
Fax: (301) 587-6308
Email: ovmelehy@melehylaw.com
/s/Andrew Hass________________
Andrew Hass, Esq.
DC Bar No.: 1010034
Employment Justice Center
1413 K Street, NW, 5th Floor
Washington, DC 20005
T: 202.828.9675 x116
DD: 202.645.6356
F: 202.828.9190
ahass@dcejc.org
Attorneys for Plaintiffs
43