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Perez v. Owl: Eleventh Circuit Rules on Wage and Overtime Disputes
In Perez v. Owl, Inc., the Eleventh Circuit examined claims brought by drivers alleging wage misclassification and unpaid overtime. The case focused on whether wage standards under the Service Contract Act (SCA) could influence employment contracts and Fair Labor Standards Act (FLSA) overtime calculations.
Background of the Case
Owl, Inc., a transportation company under contract with the Department of Veterans Affairs (VA), employed drivers to transport veterans. These drivers alleged that Owl misclassified their job roles under the SCA, resulting in lower hourly pay rates than federally mandated. The Department of Labor (DOL) had classified the drivers as shuttle bus drivers, entitled to approximately $15 per hour, but Owl had paid them at the lower taxi driver rate of $11 per hour.
The plaintiffs, a class of drivers, filed a lawsuit seeking back pay under Florida breach of contract law and unpaid overtime wages under the FLSA. The drivers argued that their hourly pay should reflect the higher SCA wage determination, which would also increase their overtime pay calculation under the FLSA.
Key Legal Issues
- Breach of Contract Claim
The drivers argued that their employment contracts implicitly incorporated the SCA wage determination, obliging Owl to pay the federally mandated higher rate. Owl contended that the SCA applies only to contracts between employers and the federal government, not to private employment agreements.
The district court granted summary judgment for Owl, ruling that the employment contracts did not incorporate the SCA wage requirements. The Eleventh Circuit affirmed this decision, emphasizing that the SCA does not create a private right of action and applies to government contracts, not to the employer-employee relationship.
- FLSA Overtime Claim
The drivers also sought overtime pay based on the higher SCA wage rate. Owl argued that overtime damages should be calculated using the rate actually paid, not the SCA’s prevailing wage.
The district court limited overtime damages to 1.5 times the rate Owl paid its drivers. However, the Eleventh Circuit reversed this decision, finding that the FLSA requires overtime calculations to use the lawful regular rate, which in this case should align with the DOL’s determination under the SCA. The appellate court reasoned that the FLSA and SCA could coexist without conflict and that the SCA’s prevailing wage determination directly informed the lawful regular rate under the FLSA.
Court’s Findings and Conclusion
The Eleventh Circuit upheld the dismissal of the breach of contract claim but reversed the district court’s decision limiting FLSA overtime damages. The case was remanded to recalculate overtime pay based on the DOL-determined shuttle bus driver rate.
The Perez v. Owl, Inc. case underscores the interplay between federal wage laws and private employment agreements. Employers subject to the SCA should carefully review their wage classifications and compliance with both SCA and FLSA requirements.
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