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Field engineers who operated video equipment at oil well sites were not exempt from overtime wages

By Ronald Miller, J.D.

Field engineers were not exempt highly compensated, administrative, or sales employees, so the employer violated the FLSA by failing to pay them overtime for hours worked in excess of 40 per week.

Field engineers for an oil field services company, who operated video equipment at oil well sites, were not exempt from the overtime provisions of the FLSA because of the highly compensated employee (HCE) exemption or the administrative exemption, ruled the Fifth Circuit. When filming or preparing to film, the field engineers followed guidelines provided by the employer, so the district court was within its discretion in finding that they were not regularly making discretionary decisions outside of the employer’s established guidelines and procedures. Further, the district court did not err when it determined that the employees’ evidence was adequate to create a reasonable inference regarding the number of overtime hours they worked (Hobbs v. EVO Inc., July 27, 2021, Higginbotham, P.).

The employer, EVO, provides video camera services to clients in the oil and gas industry to enable them to view and diagnose what has gone awry down the borehole interrupting a well’s productivity. The employees, who worked as field engineers for the employer, drove long distances, often on short notice, to provide the employer’s camera services at clients’ well sites. At the well site, field engineers were often the employer’s only representative to the client.

Job duties. While onsite, field engineers interacted with and took direction from the client’s representative, the “company man.” They also interacted with wireline operators, who helped to lower the camera into the well. Field engineers would operate the camera from inside a wireline truck and direct the wireline operator on the speed of the camera’s descent. “After a job was complete, the field engineers would give EVO’s customers a thumb drive that contained downhole video, the job log and individual pictures requested by the customer.”

Field engineers were not licensed engineers or petroleum engineers, and none of the employees had engineering degrees. Throughout the employees’ employment, EVO treated field engineers as exempt from the FLSA’s overtime requirements. Their compensation consisted of an annual salary and eligibility for certain bonuses. For most of their tenures, the field engineers were directed to record 12-hour days when they worked at a client’s well site and eight-hour days when they stayed in the shop.

Overtime claim. In March 2016, the field engineers filed a putative collective action seeking unpaid overtime wages and liquidated damages for willful violation of the FLSA. The district court found genuine disputes concerning the employees’ exempt status and allowed their overtime claims to proceed to trial. Ultimately, the district court rejected the employer’s contentions that the field engineers were exempt highly-compensated, administrative, or sales employees, and concluded that it violated the FLSA by failing to pay the employees overtime for hours worked in excess of 40 per week. But it declined to award liquidated damages because the violations were not willful. The district court also awarded $240,588 in attorneys’ fees and $24,768 in costs.

Highly compensated employees. On appeal, the employer contended that the field engineers were highly compensated employees exempt from the FLSA’s overtime requirements per 29 C.F.R. § 541.601, and regularly performed at least one exempt administrative duty as defined by 29 C.F.R. § 541.200. It was sufficient for the employer to show that the field engineers satisfied either element of the administrative exemption: their jobs entailed (1) “non-manual work directly related to the management or general business operations of the employer or the employer’s customers,” and (2) “the exercise of discretion and independent judgment with respect to matters of significance.” Moreover, the court looks to those duties a field engineer customarily and regularly performs, instead of looking only to their primary duty.

Independent judgment. As an initial matter, the appeals court observed that the parties did not dispute that the field engineers satisfied the compensation element of the HCE exemption. The employer argued that field engineers regularly exercised discretion and independent judgment. Specifically, it argued that their decisions regarding the camera’s setup and configuration of well equipment based on well conditions meet this standard.

However, the district court found that when filming or preparing to film a well, “the field engineers follow guidelines provided by EVO for operating those tools and were also provided with a maintenance schedule and operations manual.”

When it came to how much video a field engineer captured or the portions of the well to be filmed, the record indicated that field engineers took direction from the company man. Moreover, field engineers needed approval from their managers to deviate from EVO’s field work policies. Thus, the district court was within its discretion in finding that the field engineers were not regularly making discretionary decisions outside of EVO’s established guidelines and procedures.

Exercise of discretion. Additionally, the appeals court found that the district court had ample basis for concluding that field engineers’ monitoring and annotating video footage did not require them to evaluate possible courses of conduct or make decisions after considering various possibilities. Thus, the purported interpretive or analytic responsibilities asserted by the employer did not entail the customary or regular exercise of judgment or discretion.

Management or business operations. The employer also failed in its contention that the responsibilities of field engineers related directly to the management or business operations of EVO and its customers. To satisfy this prong, the employer asserted that the employees’ duties included quality control. However, the appeals court found evidence of quality-control-related duties was thin. Rather, it found that the employer conflated field engineers’ efforts to produce usable images with a responsibility to oversee the general quality of EVO’s business. It was not evident that field engineers performed exempt quality control duties. Consequently, field engineers’ duties did not satisfy either prong of the administrative exemption.

Because administrative duties were the employer’s only basis for claiming the HCE exemption, the failure to show either type of administrative responsibility meant it failed to show that the employees were covered by the HCE exemption.

Administrative exemption. For similar reasons, the employer could not prevail on its more ambitious theory that each field engineer was exempt as an administrative employee under 29 C.F.R. § 541.200. Evidence regarding field engineers’ duties did not establish that their primary duty was “office or non-manual work directly related to the management or general business operations” and entailed “the exercise of discretion and independent judgment with respect to matters of significance.” Thus, the district court did not err when it determined that the administrative exemption did not apply.

Overtime wages. Further, the district court did not err when it determined that the employees’ evidence was adequate to create a reasonable inference regarding the number of overtime hours they worked. The appeals court disagreed with the employer’s argument that because the employees’ timesheets had no relation to the actual hours they worked, they were incapable of creating the necessary reasonable inference.

Here, the employer failed to keep accurate time records for the employees. Rather, it instructed field engineers “to write the same number of hours on their time sheets regardless of whether they worked more or less than those hours on a given day. The basic issue was how to calculate damages fairly when precise accuracy is not practicable because an employer’s time records are inaccurate, incomplete, or both.

The appeals court concluded that a reasonable inference was available that the time entries reflected in the employees’ time sheets were at least a reasonable approximation of the time that they would spend working either at a wellsite or the employer’s shop. Fifth Circuit precedent allows the district court to rely on a record-based estimate.

Accordingly, the appeals court affirmed the district court’s post-trial rulings on liability, damages, and attorneys’ fees.