United States District Court, E.D. Missouri, Southeastern Division
TYRAL TINSLEY on behalf of himself and all others similarly situated, Plaintiffs,
COVENANT CARE SERVICES, LLC, et al., Defendants.
MEMORANDUM AND ORDER
CRITES-LEONI UNITED STATES MAGISTRATE JUDGE.
matter is before the Court on Defendants' Motion for
Summary Judgment (Doc. 72) and Plaintiffs' Cross Motion
for Partial Summary Judgment as to Liability and Liquidated
Damages (Doc. 116).
comprise a group of current and former employees who worked
for Defendant Covenant Care Services, LLC. (“Covenant
Care”), an agency that offers in-home care, adult day
care for disabled adults, and other services. Plaintiff
represents a group of Independent Support Living Aides and
Lead Independent Support Living Aides (“ISL
Aides”), who provide in-home care services to
Defendants' clients. ISL Aides are paid an hourly wage. ISL
services are provided at the clients' residences, which
can include up to two other disabled roommates in a single
Third Amended Complaint alleges that Defendants failed to
properly pay Plaintiffs and all other similarly situated
employees overtime compensation at a rate of not less than
one-and-one-half times the regular rate of pay for work
performed in excess of forty hours per week, in violation of
the Fair Labor Standards Act (AFLSA@), 29 U.S.C. § 2010
et seq., and Missouri law. Plaintiffs bring the
following three claims: (1) failure to pay overtime wages to
non-exempt employees in violation of the FLSA (Count I); (2)
failure to pay overtime wages in violation of Missouri
Revised Statute ' 290.500, et seq. (Count II);
and (3) Missouri common law claims for quantum meruit/unjust
enrichment for Defendants' failure to pay overtime (Count
III). Plaintiffs seek to recover their back pay, individually
and on behalf of the proposed class. They also seek
admit that they were paid “straight time” for all
hours worked; they argue that they were not paid one and
one-half times their regular rate of pay for hours worked
beyond forty per week. Defendants classified ISL Aides as
exempt employees pursuant to the “companionship
exemption” of the FLSA, and they were paid the same
hourly rate for all hours worked regardless of the number of
March 27, 2015, the Court granted Plaintiffs' Unopposed
Motion for Conditional Certification pursuant to 29 U.S.C.
§ 216(b). Seventeen individuals filed opt-in consents to
join this lawsuit as party plaintiffs, although some opt-in
Plaintiffs have elected to withdraw or have otherwise been
dismissed from the lawsuit. On February 2, 2016, the Court
granted Plaintiffs' Motion for Class Certification. (Doc.
99.) The Court also granted Plaintiffs' Request to
Continue Defendants' Motion for Summary Judgment pursuant
to Rule 56(d), and stayed Defendants' Motion for Summary
Judgment as to Defendants' defenses of exemption and good
faith. A new briefing schedule was issued. Defendants'
Motion for Summary Judgment is now fully briefed, and
Plaintiffs have filed a cross Motion for Partial Summary
Judgment as to Liability and Liquidated Damages, which is
also fully briefed.
Motion for Summary Judgment
A. Summary Judgment Standard
to Federal Rule of Civil Procedure 56(a), a district court
may grant a motion for summary judgment if all of the
information before the court demonstrates that “there
is no genuine issue as to any material fact and the moving
party is entitled to judgment as a matter of law.”
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
The burden is on the moving party. City of Mt. Pleasant,
Iowa v. Associated Elec. Co-op. Inc., 838 F.2d 268, 273
(8th Cir. 1988). After the moving party discharges this
burden, the nonmoving party must do more than show there is
doubt as to the facts. Matsushita Elec. Industrial Co. v.
Zenith Radio Corp., 475 U.S. 574, 586 (1986). Instead,
the nonmoving party must set forth specific facts showing
there is sufficient evidence in his favor to allow a jury to
return a verdict for him. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 249 (1986); Celotex, 477
U.S. at 324.
ruling on a motion for summary judgment, the court must
review the facts in a light most favorable to the party
opposing the motion and give that party the benefit of any
inferences that logically can be drawn from those facts.
Matsushita, 475 U.S. at 587; Woods v.
DaimlerChrysler Corp., 409 F.3d 984, 990 (8th Cir.
2005). The Court may not “weigh the evidence in the
summary judgment record, decide credibility questions, or
determine the truth of any factual issue.”
Kampouris v. St. Louis Symphony Soc., 210 F.3d 845,
847 (8th Cir. 2000). Finally, the court must resolve all
conflicts of evidence in favor of the nonmoving party.
Robert Johnson Grain Co. v. Chemical Interchange
Co., 541 F.2d 207, 210 (8th Cir. 1976).
argue that the Court should dismiss Plaintiffs' claims
because Plaintiffs were properly classified as exempt
employees under the FLSA. Defendants further argue that they
have made a good faith effort to comply with the FLSA and
that Plaintiffs' claims for a willful violation and
liquidated damages therefore fail as a matter of law.
their Response and Cross Motion for Partial Summary Judgment,
Plaintiffs first argue that Defendants have waived the
argument that ISL Aides are exempt from overtime compensation
by not formally pleading this claim as an affirmative
defense. Plaintiffs next contend that ISL Aides are not
exempt from overtime requirements because they do not qualify
for the companionship exemption for the following reasons:
(1) Defendants' clients do not reside in “private
homes”; and (2) Plaintiffs' job duties do not fall
within the exemption. Plaintiffs further argue that
Defendants cannot establish that they acted in good faith in
classifying ISL Aides as exempt from overtime compensation.
Plaintiffs thus request that the Court deny Defendants'
Motion for Summary Judgment, and grant Plaintiffs' cross
motion as to both liability and liquidated damages under both
state and federal law.
previously noted, Plaintiffs argue as a preliminary matter
that Defendants have waived their argument that ISL Aides are
exempt from overtime compensation by failing to formally
plead this claim. Plaintiffs, citing Magana v. Northern
Mariana Islands, 107 F.3d 1436 (9th Cir. 1997), argue
that all exemptions under the FLSA are affirmative defenses
that must be pled with specificity.
contend that they properly pled the exemption defense in
their Answer to the Third Amended Complaint. They argue that
Plaintiffs' assertion to the contrary is not well taken,
as Plaintiffs have been on notice of the companionship
exemption. The undersigned agrees.
Magana, the defendant employer raised an exemption
argument for the first time in their motion for summary
judgment. 107 F.3d at 1445. The plaintiff employee argued
that defendants' exemption argument was an affirmative
defense that was not raised in the initial responsive
pleading and was, therefore, waived. Id. The Ninth
Circuit held that the district court erred in granting
summary judgment for Defendants “without determining
whether their delay in raising the affirmative defense
prejudiced Magana.” Id. at 1446. The Court
stated that the “district court should make this
determination on remand.” Id.
Defendants did not specifically raise the exemption argument
as an affirmative defense. Defendants, however, stated as
follows in their Answer to Plaintiffs' Third Amended
Defendants admit that the FLSA requires non-exempt covered
employees to be compensated at a rate of not less than one
and one-half the regular rate of pay for work performed in
excess of forty hours in a workweek. Defendants deny that
Plaintiff and all others similarly situated are non-exempt
(Doc. 83, at & 40.) Defendants made the same statement in
response to Plaintiffs' First Amended Complaint and
Second Amended Complaint. (Doc. 19, at & 38; Doc. 46, at
& 40.) Other courts have found similar statements
sufficient to satisfy pleading requirements when no prejudice
resulted. See, e.g. Salaka v. Live Music Tutor,
Inc., No. 614CV1154ORL40DAB, 2016 WL 639366, at * 8
(M.D. Fla. Jan. 27, 2016) (“While it would be more
appropriate for Defendants to have raised the issue via
affirmative defense, it is not fatal here in view
of…the absence of any prejudice”) (citing
Bergquist v. Fid. Info. Servs., Inc., 399 F.Supp.2d
1320, 1324-26 (M.D. Fla. 2005)).
importantly, Plaintiffs have suffered no prejudice due to
Defendants' failure to raise the exemption issue as an
affirmative defense. Defendants point out that Plaintiffs
have been on notice of the companionship exemption since
early 2015, pursuant to Covenant Care's deposition
testimony and interrogatory responses noting that it
classified ISL Aides as exempt. Defendants also note that
Plaintiffs requested that the Court extend discovery
deadlines so they could address the companionship exemption.
The Court stayed Defendants' Motion for Summary Judgment
as to Defendants' defenses of exemption and good faith to
allow Plaintiffs to obtain discovery on this issue. (Doc.
99.) Further, the undersigned recalls that the attorneys for
both parties informed the Court at the Rule 16 conference
on August 5, 2014, that the ultimate issue in this case
was whether the companionship exemption applied. Thus, any
claim by Plaintiffs of prejudice resulting from
Defendants' failure to explicitly plead the companionship
exemption as an affirmative defense is disingenuous, and the
issue of whether Plaintiffs are exempt is properly before the
Court. Defendants, out of an abundance of caution, have moved
to amend their Answer to the Third Amended Complaint to
explicitly plead the companionship exemption (Doc. 124-1 at
11), and the Court will grant this motion (Doc. 124).
Application of the Companionship Exemption
FLSA requires employers to pay all covered employees at least
time and one-half for all hours worked in excess of forty
hours. 29 U.S .C. § 207(a)(1). The FLSA provides several
exceptions to its general requirement that an employee
receive overtime and minimum wages for all hours worked.
Pursuant to § 213(a)(15) of the Act, the minimum wage
and overtime provisions do not apply to “any employee
employed in domestic service employment to provide
companionship services for individuals who (because of age or
infirmity) are unable to care for themselves (as such terms
are defined and delimited by regulations of the
Secretary).” (Emphasis added.) Congress enacted this
exemption to “enable guardians of the elderly and
disabled to financially afford to have their wards cared for
in their own private homes as opposed to institutionalizing
them.” Welding v. Bios Corp., 353 F.3d 1214,
1217 (10th Cir. 2004) (quoting Lott v. Rigby, 746
F.Supp. 1084, 1087 (N.D.Ga. 1990)). “Exemptions to the
FLSA are ‘narrowly construed in order to further
Congress' goal of providing broad federal employment
protection.'” Fezard v. United Cerebral Palsy
of Cent. Ark., 809 F.3d 1006, 1010 (8th Cir. 2016)
(quoting Spinden v. GS Roofing Products Co., 94 F.3d
421, 426 (8th Cir. 1996)). Defendants bear “the burden
of ‘prov[ing] that this exemption applies by
demonstrating that [its] employees fit plainly and
unmistakably within the exemption's terms and
to January 1, 2015, the United States Department of Labor
(“DOL”) defined the phrase “domestic
service employment” as “services of a household
nature performed by an employee in or about a private home
(permanent or temporary) of the person by whom he or she is
employed.” 29 C.F.R. § 552.3. The regulation also
provides a non-exhaustive list of examples, including cooks,
butlers, valets, maids, nurses, and chauffeurs, among others.
Id. Section 552.101 further provides that the
physical form of the residence does not determine whether it
is a private home. The statute provides that “[a]
separate and distinct dwelling maintained by an individual or
a family in an apartment house, condominium or hotel may
constitute a private home, ” even though they are
commercial in form and operation. Id. at '
552.101(a)-(b). Similarly, those who work in structures
resembling private homes, but are “primarily rooming or
boarding houses are not considered domestic service
employees.” Id. at ' 552.101(b).
parties in this matter disagree on two important points.
First, Plaintiffs claim they did not work in “private
homes” as defined under the companionship exemption.
Second, Plaintiffs claim that their job responsibilities as
ISL Aides do not meet the definition of “domestic
service employees.” Defendants disagree with both of
History related to the Companionship Care Overtime
history related to the overtime exemption for companionship
care is instructive in examining the issues in this case. The
regulations that were applicable during the relevant
time-frame for this lawsuit, approximately March 10, 2009
through December 31, 2014, allowed third party employers of
employees who provided companionship care in a private home
to avoid paying overtime for any hours worked by such
employees in excess of forty hours per week. Effective
January 1, 2015, the Department of Labor promulgated new
regulations that removed the overtime pay exemption for
“third party employers of employees engaged in
companionship services” by directing that the employers
are not allowed to “avail themselves of the minimum
wage and overtime exemption. . .” 29 C.F.R. '
552.109(a)(2015). On August 21, 2015, the District of
Columbia Circuit Court of appeals affirmed the new regulation
in Home Care Ass'n of Am. v. Weil, 799 F.3d
1084, 1089 (D.C.Cir. 2015) and the Supreme Court later denied
a writ of certiorari, 135 S.Ct. 2506 (Jun. 27, 2016).
Home Care Ass'n of Am. v. Weil, the D.C. Circuit
provided background concerning the FLSA's overtime
exemption for companionship caregivers (or domestic service
employees) and described an issue in that case, which is
similar to the instant case. That segment of the decision is
set forth below:
The Fair Labor Standard Act's protections include the
guarantees of a minimum wage and overtime pay. The statute,
though, has long exempted certain categories of
“domestic service” workers (workers providing
services in a household) from one or both of those
protections. The exemptions include one for persons who
provide “companionship services” and another for
persons who live in the home where they work. This case
concerns the scope of the exemptions for domestic-service
workers providing either companionship services or live-in
care for the elderly, ill, or disabled. In particular, are
those exemptions from the Act's protect-tions limited to
persons hired directly by home care recipients and their
families? Or do they also encompass employees of third-party
agencies who are assigned to provide care in a home?
Until recently, the Department of Labor interpreted the
statutory exemptions for companionship services and live-in
workers to include employees of third-party providers. The
Department instituted that interpretation at a time when the
provision of professional care primarily took place outside
the home in institutions such as hospitals and nursing homes.
Individuals who provided services within the home, on the
other hand, largely played the role of an “elder
sitter, ” giving basic help with daily functions as an
Since the time the Department initially adopted that
approach, the provision of residential care has undergone a
marked transformation. The growing demand for long-term home
care services and the rising cost of traditional
institutional care have fundamentally changed the nature of
the home care industry. Individuals with significant care
needs increasingly receive services in their homes rather
than in institutional settings. And correspondingly,
residential care increasingly is provided by profess-sionals
employed by third-party agencies rather than by workers hired
directly by care recipients and their families.
In response to those developments, the Department recently
adopted regulations reversing its position on whether the
FLSA's companionship-services and live-in worker
exemptions should reach employees of third-party agencies who
are assigned to provide care in a home. The new regulations
remove those employees from the exemptions and bring them
within the Act's minimum-wage and overtime protections.
The regulations thus give those employees the same FLSA
protections afforded to their counterparts who provide
largely the same services in an institutional setting.
Home Care Ass'n of Am., 799 F.3d at 1086-87.
the history and development of the home care industry, it is
fair and reasonable for the exemption to benefit home care
recipients and their families when the families directly hire
domestic service workers; the result is that the ordinary
family will not also incur the financial burden of overtime
pay. See Welding, 353 F.3d at 1217. On the other
hand, it would not be fair for an in-home care agency that
generates profit from the overtime work of its
employees to benefit from the exemption without paying
overtime to its employees.
January 7, 2015, Covenant Care Service's RN Director,
Rebecca Reagan, notified employees that, in accord with the
new regulation, Covenant Care would begin paying
“in-home care aides” overtime for hours worked in
excess of forty hours in a week. The letter also emphasized
that any “overtime must be authorized by a direct
supervisor or on call personnel.” (Doc. 61-10 at 1.) As
previously stated, the new regulation went into effect after
the filing of the instant lawsuit.
Facts Relevant to the “Private Home”
Care provides in-home care services for disabled individuals
needing certain forms of assistance. As previously noted,
Covenant Care is an ISL provider through the Missouri
Department of Mental Health (“DMH”). Covenant
Care employs ISL Aides to provide the majority of the
direct-care services in the ISL clients' residences. As
to the homes in which ISL clients reside, the Missouri
Division of Developmental Disabilities (DD) offers “A
Guide for Individuals and Families to Understand the Division
of Developmental Disabilities” Housing Initiative
entitled “It's My Home!” (Doc. 121-1.) The
mission of the Initiative “is to develop quality,
affordable, accessible housing for people with disabilities
in safe locations where they can access support services,
transportation, employment, and recreation throughout their
lifespan.” (Doc. 121-1 at 2.) Another page in the Guide
In the past you had to live in a hospital, nursing home or
with a large group of other people in order to get help with
the supports you needed. Today you can live in the community
with everyone else and get supports designed just for you!
Id. at 13. The Guide even offers considerations for
the disabled individual when selecting the location of their
home such as whether a bus line, shopping malls and grocery
stores, or family and friends, their work place, or
“fun things to do” are close to the home?
Id. at 15.
with the DD Housing Initiative, ISL services are provided in
the disabled individual's (“client”)
residence, which can include the client living alone, living
with his or her family, or living with up to two other
disabled roommates. To qualify as a provider of ISL services
with the DMH, those services must be provided to individuals
that live in homes of their choice, with no more than four
individuals sharing a residence, and the residence must be
owned or leased by at least one of the individuals (or the
individual's family member or legal guardian) receiving
services. Covenant Care began providing ISL services in the
Fall of 2010. (Doc. 113-4 at 5, Depo. of Rebecca Reagan; Doc.
113-9 at 10, Depo. of Chris Reagan.)
parties have identified only one plaintiff who worked in the
home of a Covenant Care ISL client who owns their home. (Doc.
73 at 27; see also Doc. 76-5 at 19, Depo. of
Claudette McCarter.) The majority of Covenant Care clients
lease properties from eleven different individuals or
entities. Covenant Care does not operate any group homes.
Prior to January 1, 2015, Covenant Care was owned by
Defendant Warren Reagan and Defendant Rebecca Reagan; they
are husband and wife. Defendant Chris Reagan, son of Warren
and Rebecca Reagan, was an employee with significant
management and control of Covenant Care prior to January 1,
2015. The business is primarily managed by Defendants Rebecca
and Chris Reagan.
the entities leasing homes to ISL clients include ABC Realty
and BKC Properties. BKC Properties, LLC, was formed by
Defendant Warren Reagan on February 4, 2004. The company
reportedly invests in real estate and as of December 22,
2015, owned 55 properties. (Doc. 113-5 at 2, Depo. of Chris
Reagan on behalf of BKC Properties, LLC.) Defendant Warren
Reagan was the sole owner of BKC Properties in 2004; Rebecca
Reagan was added as a member in 2005 or 2006. Id.
ABC Realty is a limited liability company owned and operated
by Defendant Chris Reagan and his wife, Brandee Reagan.