United States District Court, N.D. Illinois, Eastern Division
EDUARDO TOMEO, JERARDO CHAGOYA, JORGE A. RODRIGUEZ, and TAKEO OSHIMA, on behalf of themselves and all other similarly situated persons, Plaintiffs,
W&E COMMUNICATIONS, INC., and JORGE CHIRINOS, Defendants.
MEMORANDUM OPINION AND ORDER
Tomeo, Jerardo Chagoya, Jorge Rodriguez, and Takeo Oshima
brought this collective action against W&E Communications,
Inc. and Jorge Chirinos, alleging that W&E's payroll
policies and practices violate the Fair Labor Standards Act
(“FLSA”), 29 U.S.C. § 201 et seq.
Doc. 30. Plaintiffs further allege, only on behalf of
themselves, violations of the Illinois Minimum Wage Law
(“IMWL”), 820 ILCS 105/1 et seq., and
the Illinois Wage Payment and Collection Act
(“IWPCA”), 820 ILCS 115/1 et seq.
Earlier in the case, the court conditionally certified the
FLSA collective and authorized notice to employees who were
similarly situated to Plaintiffs. Docs. 55-56. Defendants
later filed a motion to decertify the collective, Doc. 99,
which the court denied without prejudice in an oral ruling,
before the court are Plaintiffs' summary judgment motion,
Doc. 96; Plaintiffs' motion to strike Defendants'
declarations, Doc. 120; and Defendants' motion to strike
Plaintiffs' Local Rule 56.1 objections and for leave to
amend their Local Rule 56.1 materials, Doc. 132.
Plaintiffs' motion to strike is denied, Defendants'
motion to strike and for leave to amend is denied as moot,
and Plaintiffs' summary judgment motion is granted in
part and denied in part.
following facts are set forth as favorably to Defendants, the
non-movants, as the record and Local Rule 56.1 permit.
See Hanners v. Trent, 674 F.3d 683, 691 (7th Cir.
2012). On summary judgment, the court must assume the truth
of those facts, but does not vouch for them. See Arroyo
v. Volvo Grp. N. Am., 805 F.3d 278, 281 (7th Cir. 2015).
Timekeeping and Compensation Practices
worked as service technicians for W&E at various points
between 2010 and 2014. Doc. 109 at ¶ 1. Tomeo's,
Rodriguez's, and Oshima's jobs entailed installing
and servicing cable television, phone, and Internet
connections at commercial and residential locations in
Illinois. Id. at ¶¶ 1, 3, 7. Chagoya did
only residential installations. Id. at ¶¶
relevant times, Jorge Chirinos (“Jorge”) was
W&E's Secretary. Id. at ¶ 4. He had the
authority to: (1) hire and fire employees; (2) direct and
supervise their work; (3) handle W&E's payroll accounts;
and (4) make other decisions concerning employee
compensation. Ibid. He was the person designated to
receive notice under W&E's contracts, and he initialed
and signed all contracts as “President” of W&E.
Id. at ¶ 14. At times, Jorge acted as W&E's
Operations Director and was in charge of its finances.
Id. at ¶ 4.
parties dispute the typical working hours for W&E
technicians. Plaintiffs assert that they were required to
arrive at work between 6:30 a.m. and 7:15 a.m. in order to
attend meetings, receive trainings, or pick up equipment.
Doc. 98 at ¶ 8. They further assert that, after leaving
their last on-site jobs at the end of the work day, they
often had to return to the W&E warehouse to drop off
equipment. Id. at ¶ 10. Defendants deny some of
these assertions, saying that W&E employees were required to
arrive by 6:30 a.m. only on certain days and that they were
allowed to return equipment the following morning. Doc. 109
at ¶¶ 8, 10 (citing Doc. 109-2 at ¶ 17). They
do not dispute, however, that on some days Plaintiffs had to
visit the warehouse to start the day to pick up and/or drop
off equipment. Ibid. Insofar as the parties'
versions of the facts conflict, the court accepts
assert that their busy schedules typically prevented them
from taking an uninterrupted lunch hour. Doc. 98 at ¶ 9.
Defendants dispute this, pointing to evidence that W&E had a
policy requiring technicians to take lunch if they worked
over six hours and that no technician ever complained about
being unable to do so. Doc. 109 at ¶ 9 (citing Doc.
109-5 at ¶¶ 10-11). Technically, the parties'
dueling narratives are consistent-W&E could have had a
mandatory lunch policy but, as a practical matter, employees
could rarely have had time to break from work. But on summary
judgment, all reasonable inferences must be drawn in the
non-movant's favor, and it is reasonable to infer that if
W&E required employees to take lunch hours and nobody
complained about their not being able to do so, their work
schedules allowed it.
required technicians to record their hours accurately, and
failure to do so was grounds for termination. Id. at
¶ 12. During Plaintiffs' tenure, W&E tracked
employees' hours several different ways. Technicians were
always required to sign in on paper at the warehouse.
Id. at ¶ 15; Doc. 109-2 at ¶ 11. From May
2013 to December 2013, they also were required to clock in
using a fingerprint machine. Doc. 109 at ¶ 16; Doc.
109-2 at ¶ 13. In December 2013, W&E implemented
PenguinData's mobile sign-in process, through which
Plaintiffs could electronically clock in and out of work
using their mobile devices. Doc. 109 at ¶ 17. W&E
utilized a separate system called TechNet for technicians to
log in and out when they started and finished an on-site
assignment. Id. at ¶¶ 18-20.
December 2013, W&E paid Plaintiffs only for time spent in
training and the time they logged while on-site at customer
job locations, as tracked in TechNet. Id. at ¶
30; Doc. 98-6 at 284-285. (The parties dispute whether
training time was compensated, Doc. 109 at ¶ 30, but
Defendants' position that it was finds support in the
record and thus is credited, Doc. 98-6 at 284-85.) Plaintiffs
were not compensated for the time spent at the warehouse
picking up and returning equipment. Doc. 98-5 at 234-235;
Doc. 109 at ¶¶ 8, 10, 25, 30; Doc. 109-2 at ¶
February 2013 onward, Sandra Chirinos (“Sandra”)
tended to W&E's payroll. Doc. 109 at ¶ 26. Each
week, she manually altered employee time records based on an
audit, which consisted of: (1) checking each technician's
timesheet history; (2) comparing the hours reported by each
technician with the time frames recorded in W&E's system
for each job that the technician completed; and (3)
reconciling each audit against the hours paid by W&E's
client. Ibid. To account for the required lunch
breaks, Sandra would automatically deduct one hour from an
employee's daily total if that employee had worked more
than six hours. Id. at ¶ 43. Sandra avers that
when she adjusted a technician's hours, she typically
verified (either with the technician, the dispatcher, or a
manager) that those were the actual hours worked. Doc. 98-5
at 245-247. Plaintiffs, by contrast, assert that Sandra did
not verify a technician's actual hours before finalizing
his or her timesheet. Doc. 109 at ¶ 27. That is
plausible; on many occasions, Sandra's audits
conveniently resulted in eliminating all of an employee's
overtime wages. Id. at ¶ 28. For instance,
James Babbit initially logged 59.44 hours for the week of
March 2, 2014; Tomeo logged 54.86 hours for the week of
February 16, 2014; and Rayard Herron 57.19 hours for the week
of January 19, 2014. Ibid. For each of these weeks,
Sandra reduced their hours to 40.00. Ibid. But at
this stage of the case, when credibility disputes must be
resolved in Defendants' favor, the court must accept
Sandra's account of how she conducted the audits.
employee handbook provided that “employees must
accurately record all work time on a daily basis unless not
possible.” Doc. 122 at ¶ 52. Nonetheless,
technicians often failed to clock in at W&E's warehouse
(through any of the available systems). Doc. 109 at ¶
21; Doc. 98-6 at 696-702. W&E never suspended or terminated
an employee for not logging his hours properly, though it
reprimanded technicians for failing to do so. Doc. 109 at
¶ 22; Doc. 98-6 at 697; Doc. 109-5 at ¶ 8. The
employee handbook further provided that “[i]f an
employee notices an error or discrepancy in his/her paycheck
or deposit, the employee should immediately notify his/her
supervisor or Human Resources Representative, ” Doc.
122 at ¶ 51, and that “[i]f any improper
deductions are found to have been made, W&E Communications
Inc. will reimburse the employee for those improper pay
deductions, ” id. at ¶ 55.
assert that W&E told technicians they were paid “by the
job” and that, as a result, they never appreciated the
importance of accurately tracking their hours. Doc. 98 at
¶¶ 44-45 (citing, e.g., Doc. 98-5 at
338-339, pp. 64-65; Doc. 98-6 at 119-120, pp. 63-65). But
Plaintiffs' weekly pay sheets expressly stated that
employees were compensated in part by “their set hourly
rate.” Doc. 109 at ¶ 35; see also id. at
¶ 41. Moreover, Tomeo testified that he knew that he was
paid both by the job and by the hour. Doc. 98-6 at 19-20, pp.
72-75. Given this, and drawing all reasonable inferences in
Defendants' favor, the court cannot conclude on summary
judgment that employees were told they were paid only
“by the job.” Nonetheless, Defendants
acknowledge, and the court therefore accepts as true, that at
least some Plaintiffs failed to accurately track their own
hours because they (mistakenly) believed they were paid by
the job. Doc. 109 at ¶ 45.
relevant times, W&E compensated Plaintiffs on a weekly basis
in accordance with PenguinData's “production bonus
pay method.” Id. at ¶¶ 24, 31. Under
that method, a technician's total compensation was
divided into two components: base pay and bonus pay.
Id. at ¶ 31. Base pay was calculated by
multiplying a technician's set hourly pay rate by the
number of hours worked. Ibid. If a technician worked
more than forty hours in a given week, he received
one-and-a-half of his hourly rate for all hours worked in
excess of forty. Ibid. Base pay was guaranteed and
not subject to any deductions. Ibid. The hourly rate
paid to Plaintiffs was the Illinois minimum wage.
Id. at ¶ 41.
bonus pay was more complex-and, as shown below, how it was
computed changed over time. W&E assigned a dollar value to
each type of job performed by technicians. Id. at
¶ 36. Those values could be adjusted based on a
technician's performance in a given week. Id. at
¶ 39; Doc. 98-5 at 203-204. Multiplying the rate for
each task by the quantity of those tasks performed (and then
summing those amounts across different tasks) yielded a
technician's total production for the week. Id.
at ¶ 31. For example, if a technician conducted five
service calls and one installation, and the technician's
rate for each service call was $100 while the rate for each
installation was $75, then the total would be $575. The
parties call this figure different names. Compare
Doc. 97 at 7-8 (“Gross Production”), and
Doc. 98 at ¶ 36 (“Jobcodes-Gross
Production”), with Doc. 112 at 13
(“total production” or “net jobcode
production”). To avoid confusion, this opinion
henceforth will use the term “Gross Jobcode
Gross Jobcode Production was determined, the technician's
total base pay (including overtime) was then subtracted
arrive at the production bonus, Doc. 109 at ¶ 31-in
essence making the production bonus the amount earned in
excess of base pay. The production bonus was then divided by
the hours worked to provide an hourly production bonus rate.
Ibid. Finally, the hourly bonus rate was applied to
a technician's hours in the same way that the base pay
hourly rate was; that is, the technician received the bonus
rate for the first forty hours of work, and one-and-a-half
times the bonus rate for each hour he worked in excess of
forty. Ibid. This total bonus pay was then added to
the technician's total base pay to calculate final
a hypothetical example of how the production bonus pay method
worked. A technician works fifty hours in a given week. Her
hourly rate is ten dollars. Accordingly, her base pay for the
week is $400 for the first forty hours of work and $150 for
the ten overtime hours, for a total of $550. Based on the
number and types of jobs she completed that week, her Gross
Jobcode Production is $1000. Her production bonus for that
week is $450, the difference between her Gross Jobcode
Production and her base pay. That production bonus is then
divided by the fifty hours she worked, yielding a bonus
hourly pay rate of $9. She then receives $360 in bonus pay
for her first forty hours (forty multiplied by $9) and $135
for her ten hours of overtime (ten multiplied by $13.50), for
a total of $495 in bonus pay. Her gross pay is the sum of her
base pay ($550) and her bonus pay ($495), for a total of
$1045. The following charts summarize the employee's
hypothetical pay sheet:
1: Calculating Base Pay
$10.00 / hr
$15.00 / hr
Total Base Pay
2: Calculating Gross Jobcode Production
Gross Jobcode Production
$100.00 per job
$250.00 per job
Gross Jobcode Production
3: Calculating Production Bonus Pay Rate
(Gross Jobcode Production) - $550.00 (Total Base Pay) =
$450.00 (Production Bonus)
(Production Bonus) ÷ 50 hours = $9.00 per hour (Bonus
4: Calculating Bonus Pay
$9.00 / hr
$13.50 / hr
Total Bonus Pay
5: Calculating Total Compensation
(Total Base Pay) $495.00 (Total Bonus Pay) = $1045 (Total
additional points concerning the PenguinData production bonus
pay method warrant discussion.
at some point in the process, W&E could reduce a
technician's pay for poor performance-for instance, if he
lost a piece of equipment or failed to complete a job.
Although the parties agree that these financial penalties
were taken out of the employee's Gross Jobcode Production
prior to calculating the production bonus, Doc. 109 at ¶
31, the employees' pay sheets show that the deductions
were actually made from final gross pay, Doc. 98-6 at
706-723. For purposes of this motion, that distinction is of
no consequence-all that matters is that, at some point during
the calculation of pay, deductions occasionally were made to
penalize employees. Sandra avers that W&E obtained written
consent forms from Plaintiffs authorizing W&E to make those
deductions. Doc. 109 at ¶ 49; Doc. 109-5 at ¶¶
21-22. But her declaration states that she could not locate
the authorization forms. Doc. 109-5 at ¶ 22. Those two
statements are not inconsistent; therefore, the court credits
both of them.
in April 2013, W&E changed how it calculated the Gross
Jobcode Production value. Doc. 98-7 at 27; Doc. 109 at
¶¶ 36-38. Rather than assigning dollar values to
each job type, W&E began assigning points. Doc. 98-7 at 27;
Doc. 109 at ¶ 37. The sum of those points was multiplied
by a dollar figure to yield Gross Jobcode Production. Doc.
98-7 at 27; Doc. 109 at ¶¶ 38-39. The dollar figure
was determined by the employee's performance grade for
the week. Doc. 109 at ¶ 39. If the employee received a
Grade A, the dollar value per point would be $1.45; for Grade
B, $1.25; for Grade C, $1.18; and for Grade D, $0.92.
Ibid. Defendants assert that W&E used this method of
calculating the Gross Jobcode Production for certain
residential technicians only from June 2013 to October 2014,
but they support that assertion by citing paragraphs 6-8 and
exhibits B-D of Sandra's October 22, 2015 declaration,
id. at ¶ 36, and those paragraphs and exhibits
do not exist, Doc. 109-11. The court therefore rejects
Defendants' assertion regarding the duration of this
Defendants go to great lengths in their Local Rule
56.1(b)(3)(B) response to distinguish among certain
categories of technicians-residential vs. commercial, senior
vs. junior, bonus-eligible vs. non-bonus-eligible-with the
implication that not all technicians were paid under the
production bonus pay method. Doc. 109 at ¶¶ 1, 7,
9, 15, 36-39. But Defendants' summary judgment brief
admits that Plaintiffs were paid under that system. Doc. 112
at 8 (“Plaintiffs' weekly wages are determined
using a system called the PenguinData production bonus pay
method.”). What is more, Plaintiffs' timesheets all
indicate that they were compensated using the production
bonus pay method. Doc. 98-6 at 706-726. It follows that
Plaintiffs indisputably were paid according to that method.
assert that W&E implemented the production bonus pay method
without any inquiry into whether it violated the law. Doc. 98
at ¶ 32. But Jorge avers that Michael Enters,
PenguinData's chief operating officer, and Jeremy Peck,
PenguinData's president, assured him in 2008 that they
had years of experience dealing with labor laws and that the
production bonus pay method was the industry standard and
legally compliant. Doc. 109-2 at ¶¶ 7-8. Moreover,
PenguinData CFO Scott Craine told W&E that the production
bonus pay method complied with the FLSA. Doc. 109 at ¶
34; Doc. 98-7 at 2-13. On summary judgment, the court must
accept Jorge's averments. Plaintiffs cite an internal
email written by Craine, which said that “W&E may not
even understand how they pay their techs, ” as evidence
that W&E did not adequately comprehend how the system worked.
Doc. 109 at ¶ 33. Defendants do not dispute that Craine
said that, but they correctly note that his statement does
not suffice to indisputably establish that W&E did not, in
fact, understand how the system worked. Ibid.
Plaintiffs' Motion to Strike Defendants' December 15,
Local Rule 56.1(b)(3)(B) response and Local Rule
56.1(b)(3)(C) statement of additional facts extensively cite
the December 15, 2015 declarations of Jorge, Sandra, and
William Perez, another W&E higher-up. Doc. 109. Plaintiffs
move to strike ...