Claims brought by former employees of an oilfield services company who alleged they were wrongly denied overtime pay totaling as much as $2.1 million were recently rejected by a federal jury in Midland that found Flowco Production Solutions had not violated the Fair Labor Standards Act.
The jury began hearing testimony in U.S. District Judge David Counts’ courtroom March 6, and both sides rested the following day. After about 90 minutes of deliberation, the jury returned its verdict in favor of Flowco March 8, according to court documents.
Dan Pipitone of Munsch Hardt Kopf & Harr, who represented Flowco, said while the plaintiffs didn’t ask the jury for specific damages during closing arguments, the last demand for damages at mediation prior to trial was for $2.1 million. Pipitone said this case followed the general rule he’s learned through 40 years of experience and 150 jury trials.
“Usually, you can tell at the end of plaintiffs’ cross whether you have won or not, and this was no exception,” he said. “Frankly, what happened is Kelly [Koster] and I made the decision after the plaintiff rested, we decided to rest as well.”
On Tuesday, Chris R. Miltenberger, who represented Dan Keating and the other plaintiffs who brought the claims in May 2020, told The Lawbook no decisions had yet been made about whether to appeal the jury’s verdict.
Flowco had argued, and the jury seemingly agreed, that Flowco had not violated the FLSA because Keating and the other plaintiffs — who alleged they were working 80 to 100 hours a week without overtime — were considered administrative employees, despite the fact that they did work in the oil field.
To qualify for the administrative employee exemption, a company must show that the employee makes at least $684 a week, that the majority of their job involves non-manual labor, and that the employee is required to exercise discretion and make independent judgments in the course of their work.
Pipitone said the plaintiffs here were making $130,000 to $180,000 annually and were not part of a rig crew doing any manual labor.
“The fact of the matter is, as the industry has become more technologically advanced, these oilfield service company employees have exchanged wrenches for computers,” he said. “That’s the type of work that these guys are doing.”
Flowco is a company that provides products and technology to oil and gas drilling companies to help improve the flow of oil and gas in a well.
“This was a victory in that you don’t typically consider someone out in the field as administratively exempt,” Koster said. “The limitations of the exemption are truly narrow … commonly these are people who work in an office.”
One fact Pipitone and Koster cited that possibly helped sway the jury in their favor was the discovery that one plaintiff who left Flowco and filed suit two weeks later soon signed on with a new company that compensated him in the same way Flowco had. Pipitone and Koster said that cut against the credibility of the argument that the pay structure was illegal.
“In this industry, when employers are sued there’s an inclination to lean on the highly compensated employee exemption,” Koster said. “The administrative exemption is not your first choice. So, this verdict is really great news — there’s another exemption available.”
On Feb. 22 the U.S. Supreme Court issued its opinion in Helix Energy Solutions Group v. Michael Hewitt, a case that asked the court to decide whether Hewitt, a Helix employee, was entitled to overtime pay under the FLSA.
Helix had argued that as a highly compensated employee who earned more than $200,000 annually, Hewitt was exempt from overtime. But Justice Elena Kagan, writing for the 6-3 majority, explained that because Hewitt wasn’t paid on a salary basis, but on a daily rate, he was therefore entitled to overtime.
“The question here is whether a high-earning employee is compensated on a ‘salary basis’ when his paycheck is based solely on a daily rate — so that he receives a certain amount if he works one day in a week, twice as much for two days, three times as much for three, and so on,” she wrote. “We hold that such an employee is not paid on a salary basis, and thus is entitled to overtime pay.”
Judge Counts entered final judgment in favor of Flowco March 9.
Flowco is also represented by Deryck Van Alstyne of Munsch Hardt Kopf & Harr.
The case number is 7:20-cv-00122.