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Speer v. Cerner Corp.

United States District Court, W.D. Missouri, Western Division

March 17, 2017

FRED SPEER and MIKE MCGUIRK, individually and on behalf of a class of all others similarly situated, Plaintiffs,
v.
CERNER CORPORATION, Defendant.

          ORDER

          Fernando J. Gaitan, Jr. United States District Judge.

         Pending before the Court are (1) Cerner Corporation's Motion for Partial Summary Judgment on Plaintiffs' Federal and State Late-Overtime Claims (Doc. No. 189); and (2) Plaintiffs' Motion to File Surreply to Address New Arguments in Cerner's Reply in Support of Motion for Partial Summary Judgment on Federal and State Late-Overtime Claims (Doc. No. 223). As an initial point, the Court will DENY plaintiffs' motion for leave to file a surreply (Doc. No. 223), as the Court finds that plaintiffs adequately controverted the relevant facts and arguments in their original suggestions in opposition. Furthermore, defendant's request for oral argument in its reply to Doc. No. 189 is DENIED.

         I. Background

         Plaintiffs, Frederic Speer and Michael McGuirk, individually and on behalf of themselves and others similarly situated, bring a two-count complaint against Defendant, Cerner Corporation (“Cerner”), alleging that Defendant violated the Fair Labor Standards Act (“FLSA” or “Act”) and the Missouri Minimum Wage Law (“MMWL”). Cerner employed both Plaintiffs Speer and McGuirk as Service Center Analysists/System Support Analysts (“Desktop Support Staff”) at its operation, Tiger Institute for Health Innovation in Columbia, Missouri. In their Complaint, Plaintiffs allege that Cerner improperly calculated their overtime compensation by using a fluctuating workweek (“FWW”) method, which contemplates dividing employees' fixed earnings by the number of hours they worked in a given week to arrive at a regular rate and then adding one-half time (50%) of the regular rate as overtime for all hours over forty. Plaintiffs also complain that Cerner failed to include all remuneration when calculating the regular rate of pay for its employees, and such failure resulted in overtime compensation of less than even the reduced FWW one-half (50%) overtime compensation rate. Furthermore, according to Plaintiffs, even this inadequate overtime compensation was systematically paid late. Plaintiffs claim that as a result of these violations Cerner denied them, as FLSA non-exempt employees, proper and timely overtime pay in violation of FLSA. Doc. No. 39, ¶ 23.

         On March 30, 2016, the Court granted plaintiffs' motion for conditional certification of a collective action in part. See Doc. No. 165. On September 27, 2016, the Court granted plaintiffs' motion to certify a Rule 23 class. See Doc. No. 215. Among the classes certified was “All non-exempt persons employed by Cerner in Missouri, at any time since March 5, 2012 through the final judgment in this matter, whose overtime compensation was not paid on the next regular payday for the period in which the overtime work was performed (“Late Payment of Overtime Class”). Doc. No. 215, p. 23. Defendant Cerner moves for summary judgment as to both the state and federal late-overtime claims because: (1) according to Cerner, the FLSA does not prohibit the reasonable and consistent pay schedule under which Cerner paid a portion of its non-exempt employees their overtime; (2) under the FLSA, Cerner paid all overtime “as soon as practicable” after it issued regular pay; (3) and, according to Cerner, under Missouri law, no statute permits a private right of action for the conduct alleged in this case.

         II. Statement of Facts

         Plaintiffs allege that Cerner made bi-weekly salary payments to them for two weeks of work in the week following those weeks. This means Plaintiffs received their salary payments for weeks 1 and 2 in week 3, their salary payments for weeks 3 and 4 in week 5, and so forth. During plaintiffs' employment, however, Cerner calculated and paid overtime to Salaried Non-Exempt (“SNE”) employees in the subsequent payroll, such that overtime earned during weeks 1 and 2 would be paid in the week 5 payroll. Plaintiffs note, however, that in the summer of 2014 (after the filing of this lawsuit), Cerner changed its payroll processes, such that SNE employees were paid their overtime in the same pay period in which it was earned. Plaintiffs complain that prior to the summer of 2014, Cerner made untimely overtime payments violating the FLSA and the Missouri Minimum Wage Law (“MMWL”). Cerner's own HR documents from the relevant time period notify United States associates that “Overtime is always one pay period behind.” (Exh. 2, filed under seal; Exh. 3, at SPEERD00001233, filed under seal).

         As of February 2015, Cerner employed SNE employees in greater than 120 different business units and in eighteen states across the country. During the period 2012 to January 2016, Cerner had anywhere between 500 and 800 SNE employees at a given time. During the period 2012 to January 2016, Cerner had anywhere between 400 and 1, 600 hourly employees at a given time. Cerner asserts it pays its SNE employees pursuant to the fluctuating workweek (“FWW”) method of pay, and according to the FWW method of pay, SNE employees are required to be paid an additional 50% premium for each overtime hour worked beyond forty hours per week. The parties dispute whether Cerner complied with the FWW method of pay.

         Cerner maintains a deadline of 11:59 p.m. on Saturday evening for the weekly submission of timesheets by its employees. The pay period ends at midnight. However, plaintiffs testified that their managers told them during their employment that the deadline was flexible, and it was acceptable to submit time sheets by the following Monday or Tuesday. Further, prior to this lawsuit being filed, Cerner did not begin calculating SNE employees' overtime each pay period until Thursday following the close of the two-week pay period, five days after the pay period ended.

         Cerner operates on a bi-weekly payroll schedule and has established its payday as the Friday following the close of each two-week pay period. To be included in the upcoming Friday paycheck, all time must have been entered, pay amounts must have been calculated and reconciled, and payroll information must have been submitted to the bank with payroll instructions by close of business Tuesday-two business days after the close of the pay period. As SNE employees, Plaintiffs received their full weekly salaries in their regular paycheck, regardless of the number of hours they worked and regardless of whether they submitted their timesheets by the midnight-Saturday deadline. Plaintiffs and all SNE employees received their full salaries, even if they missed the time submission deadline, because their weekly salary was always the same for each work week, regardless of the number of hours worked. As a result, information could be quickly processed, reconciled, and submitted to the bank for payment of Plaintiffs' full base salary by the Tuesday after the close of the pay period. However, if Plaintiffs or any other SNE employee recorded overtime hours on their timesheets, Cerner was required to determine Plaintiffs' “regular rate” of pay for each week in order to calculate, process, and issue payment of the proper amount of overtime compensation. Under the FWW method of calculating overtime, the regular rate varies based upon the types of additional compensation received[1] and the number of overtime hours recorded and submitted by Plaintiffs on their timesheets.

         Cerner asserts it was not possible to calculate Plaintiffs' (and other SNE employees') overtime compensation by the bank's Tuesday deadline based on Cerner's staff and the tools available to it during the relevant time period. Plaintiffs, however, dispute this fact, given that the calculation is simple math, and Cerner has admitted it only takes approximately 16-23 hours to calculate and process SNE Employee's payroll each pay period. (Richardson Depo., Exh. 1, at 176:1-22; 179:17-180:20). Plaintiffs further note that Cerner, a company with billions in annual revenue and more than 16, 500 U.S.-based employees, chose to staff its payroll department with just four people. (Richardson Depo., Exh. 1, at 151:9-18). Furthermore, after Plaintiffs filed this lawsuit in March 2014, Cerner created a computer program called Time Tool, which it implemented in the summer 2014, and began paying SNE employees' overtime wages on the next pay day following the close of the pay period in which it was earned, which plaintiffs argue demonstrates that timely payment was reasonably possible. (Richardson Depo., Exh. 1, at 150:9-151:7).

         Instead of calculating the SNE employees' overtime compensation by the bank's Tuesday deadline, Cerner made calculations for all hourly employees' overtime, and submitted both hourly employees' overtime and regular pay information, as well as SNE employees' base pay information to the bank for payment. Following that process, Cerner calculated and submitted SNE employees' overtime information for payment the Friday after the close of the next two-week pay period. Defendant Cerner asserts that staggering only the SNE overtime payroll limited the impact within the Cerner employee population (Ex. C, Richardson Depo. at 160:8-161:11); plaintiff, however, argues that by claiming it was attempting to limit the impact, Cerner shows it was aware that its late overtime payment practice legally impacted its SNE employees.

         Defendant Cerner also claims that the SNE employees, including named plaintiffs, frequently submitted their timesheets late. However, plaintiffs respond that with their overtime being a pay period behind, SNE employees had no incentive to submit their timesheets by the purported Saturday deadline.

         III. ...


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