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Overtime Pay Collective Action Fails to Overcome Federal Exemption

Mar 13, 2023

An employee collective action of field technicians in the oil and gas industry lost at jury trial on claims they did not receive overtime while working at least 84 hours a week over a three-year period.

During a trial that concluded March 10, defense counsel with the Munsch Hardt Kopf & Harr firm successfully argued the plaintiffs in the collective action were exempted from federal law addressing overtime pay because they were primarily administrative employees.

The week-long trial took place before U.S. District Judge David Counts of the Western District of Texas-Midland/Odessa Division.

The collective class claimed to represent workers in Texas, Colorado, New Mexico and Pennsylvania. The lead plaintiff, Dean Keating, worked for defendant Flowco Production Solutions in Texas and New Mexico in the three years preceding the filing of the lawsuit in May 2020.

Flowco serves North American oil and gas basins by specializing in well production optimization through the design and installation of custom artificial lift systems using gas and plunger lift techniques.

“Plaintiffs and the putative class members worked seven days a week for weeks at a time. Plaintiff and the putative class members worked at least 12 hours per day and on many days more hours than 12,” the complaint stated.

Keating and other plaintiff members are gas lift field technicians. They claimed their primary job duties involved manual labor tasks in the oil field, installing gas lift valves on production and competition rigs at various locations.

The plaintiffs claimed they were responsible for various non-discretionary tasks that were routine and did not require the exercise of independent judgment or discretion. Those distinctions were essential to prove in order to avoid the federal exemption to overtime pay.

Munsch Hardt shareholders Dan Pipitone and Kelly Koster, with assistance from associate Deryck Van Alstyne, persuaded the jury otherwise.

To meet the overtime exemption, three criteria are considered. The employee must be compensated on a salary or fee basis at a rate not less than $684 per week; the primary duty must be the performance of office or non-manual work directly related to management or general business operations; the primary duty must include the exercise of discretion and independent judgment with respect to matters of significance.

The jury verdict said it was true Flowco failed to pay overtime, however, the jury also said “by a preponderance of the evidence” the employee class was exempt from the overtime requirement under the administrative employee exemption.

“This verdict signifies the administrative exemption is still alive and well, and more importantly, is available for use when formulating compensation structures,” Pipitone said.

The plaintiffs well aware of the fact that it was Flowco policy to treat them as overtime-exempted workers and filed the lawsuit challenge a salary-plus-bonus pay structure.

“Employees have been victimized by this pattern, practice, and policy which is in willful violation of the FLSA. The class members do not qualify for any exemption and performed job duties typically associated with non-exempt employees,” the complaint asserted.

After the verdict, Flowco CEO Charles Jones said, “This decision will help other business owners in the oil and gas industry, as it shows the salary-plus-bonus pay structure is permissible. The Munsch Hardt team really drove it home, and the jury ultimately returned the correct verdict.”

Judge Counts entered a take-nothing final judgment, ordering Flowco recover its costs from the plaintiffs.

The plaintiff class was represented by Chris R. Miltenberger of The Law Office of Chris R. Miltenberger in Southlake. Miltenberger did not respond to a request for comment.

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