A class of more than 80 personal trainers seeking a jury trial in federal court against Gold's Texas Holdings Group Inc. over alleged unpaid overtime wages recently scored a legal victory in the civil case.
Judge David Ezra's order in the case, Daniel Casanova et. al v. Gold's Texas Holdings Group Inc., was filed in the Western District of Texas Court on March 23 and put the litigation on track for a possible jury trial. That 27-page order, which granted the plaintiff's motion for partial summary judgment and denied Gold's Texas' motion for summary judgment, can be read at the bottom of this page.
The complaint filed by the plaintiffs in December 2013 alleged that Gold's Texas, a franchisee group of Gold's Gym International, misclassifies its personal trainers as exempt from the Fair Labor Standards Act of 1938 (FLSA). At issue is whether payments received by the trainers constituted commission under 29 U.S.C. 207(i), a provision in the FLSA. Gold's Texas denied it violated any provisions of the FLSA in an answer filed to the complaint in February 2014.
The class is seeking a jury trial to award actual and liquidated damages for the unpaid overtime wages under the FLSA, liquidated damages as provided by the FLSA, reasonable attorney's fees under the FLSA, pre-judgment and post-judgment interest as provided by law, all costs of court and any other entitled relief.
A motion for summary judgment is put before a judge when a party, Gold's Texas in this case, believes there is not a genuine dispute as to any material fact and believes it is entitled to judgment as a matter of law, according to the Federal Rules of Civil Procedure. A motion for partial summary judgment, when granted, narrows the scope of litigation by determining certain material facts are not genuinely in dispute and can precipitate settlements, according to the American Bar Association's Pretrial Practice and Discovery.
Ezra concluded in the order that Gold's Texas "may not, as a matter of law, defend against alleged violations of the FLSA at trial by claiming the exemption set forth in 29 U.S.C. 207(i) because the instant compensation scheme is not a bona fide commission."
Attorneys for the plaintiffs allege that more than half of the compensation that trainers received did not represent commissions on goods or services, according to the complaint. Instead, Gold's Texas allegedly paid the plaintiffs and other personal trainers a piece rate for each unit of personal training provided. The plaintiffs allege there is a direct correlation between the number of hours worked and the amount they were compensated, which disqualifies the piece rate from being a commission, according to the complaint.
When Casanova complained to Gold's Gym about not receiving overtime pay, the company allegedly informed him that he was exempt under 29 U.S.C. 207(i), according to the complaint. Casanova earned over $90,000 in 2012, according to the order.
Ezra's order detailed the two ways Gold's Texas compensates its trainers. Trainers are assigned to perform a variety of tasks that include assisting gym members, re-racking weights, completing administrative work, selling training sessions to members and conducting orientations for new members during a certain number of floor hours per week, according to the order. Primary compensation for the trainer comes from conducting sessions with members, and the trainer receives a percentage of the price charged to the member for each session actually conducted, according to the order. The percentage varies based on certifications and specialties the trainer holds, according to the order.
Ezra explained in the order: "…the undisputed evidence establishes that trainers were paid a percentage of the fee paid for the session. This fact would seem to indicate the existence of a bona fide commission compensation scheme. However, trainers were not paid the percentage upon negotiating and executing a sale, but only upon spending an hour with the client during the actual training session. Accordingly, there was no way for trainers to work more effectively or efficiently—trainers were only able to earn their percentage by working an hour-long session with a client. Therefore, the compensation system was not decoupled from time. Instead, a one-to-one correlation existed between the hours a trainer worked and his or her compensation. Such a compensation system reflects nothing more than an hourly wage, where the employee's rate of pay changes based upon his or her qualifications. This is not a commission."
Ezra's order is below: