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Rebischke v. Tile Shop, LLC

United States District Court, D. Minnesota

January 26, 2015

David Rebischke, individually and on behalf of all other similarly situated individuals, Plaintiff,
v.
The Tile Shop, LLC, Defendant.

Rowdy B. Meeks, Rowdy Meeks Legal Group LLC, J. Derek Braziel, Lee & Braziel, LLP and Michele R. Fisher and Paul J. Lukas, Nichols Kaster, Counsel for Plaintiffs.

Joseph M. Sokolowski, Lindsay Sokolowski and Krista A.P. Hatcher, Fredrikson & Byron, P.A., Counsel for Defendant.

MEMORANDUM OF LAW & ORDER

MICHAEL J. DAVIS, Chief District Judge.

I. Introduction

This matter is before the Court upon Plaintiff's Motion for Conditional Class Certification pursuant to the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq. Plaintiff seeks to represent a class of Store Managers employed by Defendant The Tile Shop, LLC, that were not paid overtime premiums pursuant to FLSA.

Defendant operates approximately 80-90 stores nationwide which sell tile and related materials and accessories. (Doc. No. 1 (Complaint ¶ 1).) Its headquarters are located in Plymouth, Minnesota. (Doc. No. 16 (Answer at ¶ 1).)

Plaintiff was hired as a Material Handler, Warehouse Manager, and Sales Associate. From October 2003 through January 2013, he was a Store Manager in four different stores. (Comp. ¶ 4.) Plaintiff and five other Store Managers have opted into this case. (Plaintiff Ex. C (Declarations of Opt-In Store Managers.) These Stores Managers, between them, worked in 15 different stores in at least five different states. (Id.) Plaintiff asserts the declarations from the opt-in Store Managers provide a colorable basis in support of his claim that Defendant's pay plan and salary deduction policy are implemented nationwide and that all Store Managers are similarly situated.

Plaintiff asserts that Defendant generally employs one Store Manager per store. (Answer ¶ 14.) The Store Manager's primary duty is to manage their assigned store. Each Store Manager is paid a salary, bonus and commissions on sales. (Answer ¶ 15; Plaintiff Ex. C ¶ 6; Plaintiff Ex. D (Store Manager Salary Plan Example).) As Store Managers frequently talked with each other, they were aware that Defendant paid them in the same manner. (See Plaintiff Ex. C ¶¶ 4-6.)

Plaintiff asserts that Store Managers routinely work over 40 hours per week; frequently they work 50 hours per week and on occasion, work 70 hours per week, yet they receive no overtime pay. (Comp. ¶ 16; See Plaintiff Ex. C ¶ 7.)

Defendant must pay its Store Managers on a salary basis in order for them to be exempt from FLSA's overtime requirements. See Berscheid v. Northwest Respiratory Serv., No. 09-3392, 2011 WL 1084749 (D. Minn. Mar. 21, 2011); 29 CFR § 541.602(a). Plaintiff asserts that the Store Managers are not paid on a salary basis as evidenced by the fact that Defendant told its Store Managers that their pay would be reduced based upon their performance and the performance of their store. (See Plaintiff Ex. C ¶¶ 8-10).) This policy is evidenced in a writing. (Plaintiff Ex. E (Tile Shop Senior Mgmt. Email at 2 "If I believe you could have done more than what you finish with, I "WILL" hit you with everything... If that wipes out your bonus, so be it... if it takes form your salary... so be it").)

Plaintiff further asserts that Defendant did make deductions pursuant to this policy. (See Plaintiff Ex. C ¶ 9.) Defendant also made deductions that it placed on the "Bonus" line, but which were actually salary deductions as the Store Manager had not been paid a bonus during such pay period. (Id. ¶ 10.) Plaintiff argues that Defendant loses any exemption from overtime payments for Store Managers because Defendant actually made improper deductions from Store Manager compensation pursuant to its own articulated policy. See 29 CFR § 541.603(a).

Defendant asserts that its Store Managers are paid between $70, 000 and $250, 000 per year. (Behrman Aff. ¶ 4.) Their compensation has three components: 1) base salary; 2) commissions and spiffs; and 3) bonuses. (Id.) Because of commissions and bonuses, a Store Manager's paycheck will vary. (Id.) Bonuses are paid based on various factors, including a negative store performance. (Id. ¶ 5.) A negative bonus amount may be offset against other compensation a Store Manager earns, such as commissions and spiffs. (Id.) A negative bonus is never offset against a fixed salary. (Id.)

Defendant's Human Resources ("HR") personnel accumulates all components of a Store Manager's salary, imports it into the payroll system and reviews it for accuracy and compliance with the FLSA. (Id. ¶ 6.) Defendant asserts that although Regional Sales Managers are responsible for calculating their Store Managers' bonuses, and submitting that information to HR, HR, not the Regional Sales Managers, determines the amount of each Store Manager's compensation every pay period. (Id.) HR is responsible for auditing the compensation of Store Managers to ensure that no deductions from salary occur. (Id.)

Defendant asserts that Regional Sales Managers have no control of, or review the Defendant's payroll process and do not establish guidelines or policies for payroll administration. (Id. ¶ 7.) If an improper salary ...


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