The Colorado Springs Gazette

10th Circuit reverses $39,000 jury award


The federal appeals court based in Denver overturned a jury’s award of $39,000 to an oilfield worker because the trial judge instructed jurors to reach their verdict based on a regulation that was irrelevant to the case.

Mark Wilson sued his employer, Schlumberger Technology Corp., alleging the company deliberately failed to pay him overtime as required under the Fair Labor Standards Act. Although Wilson did earn in excess of $100,000 for several years, his compensation was a product of a low base salary, plus several types of bonuses for work performed.

Federal law exempts certain salaried workers from receiving overtime, but jurors concluded after a 2020 trial that

Schlumberger had not actually paid Wilson on a “salary basis.” They reached their decision after U.S. District Court Senior Judge R. Brooke Jackson instructed them to look at the relationship between Wilson’s base pay and his total compensation and determine if it was reasonable.

However, a three-judge panel of the 10th U.S. Circuit Court of Appeals ruled that Jackson incorrectly informed jurors about their task.

“The evidence at trial showed that Mr. Wilson received a fixed bi-weekly base salary and additional compensation,” wrote Judge Timothy M. Tymkovich in the panel’s Sept. 11 opinion. Under federal regulations, the presence of a salary eliminated any need to examine the relationship to Wilson’s total pay.

“Because the instruction caused the jury to find in Mr. Wilson’s favor, we vacate the judgment and remand for a new trial,” Tymkovich added.

The Fair Labor Standards Act contains overtime exemptions for certain salaried employees. Under one section of the regulations, if employers pay their worker a salary — at least $455 per week at the time of Wilson’s lawsuit — they can provide additional compensation, such as bonuses or hourly rates, without triggering the obligation to pay overtime. A salesperson receiving commissions would qualify.

Under another section, employers are also off the hook for paying overtime if their workers are paid a guaranteed amount based on hours, days or shifts worked. An employee can receive additional compensation without becoming eligible for overtime, as long as the added amounts have a “reasonable relationship” to the guaranteed minimum.

Wilson argued that Schlumberger was engaged in a “ruse” to avoid paying him overtime by setting his salary so low that the overwhelming majority of his compensation came from time-based or shift-based work. Therefore, he was effectively earning a day rate and the company should have to prove there was a reasonable relationship between his guaranteed pay and his total pay.

The parties could not agree on a jury instruction, so it fell to Jackson to make a decision. He opted to direct jurors to find whether a reasonable relationship existed between Wilson’s salary and the rest of his compensation, although Jackson berated Wilson’s attorney for being unable to cite any prior court case supporting the instruction.

“I don’t have time to wait for you to try to find authority that probably should have been on the tip of your tongue,” he said. “You understand that if you’re wrong, this will be a reversal of any judgment you get.”

Based on the instruction, jurors awarded $39,129 in withheld overtime pay to Wilson. Schlumberger asked Jackson to override the verdict, arguing the company should prevail based solely on the regulation that applied to salaried employees like Wilson. Jackson disagreed, noting the evidence showed Wilson was “primarily compensated” on a daily rate.

The company appealed to the 10th Circuit, claiming Jackson improperly cobbled together a jury instruction from a portion of the regulations that did not apply to Wilson as a salaried worker.

“Isn’t that the issue, whether this is true salary?” asked Judge Harris L Hartz during oral arguments last year. “The guy’s making $100,000 a year and the salary is $25,000.”

Schlumberger’s lawyer countered that companies can structure compensation programs differently, but as long as the minimum salary is present, the overtime exemption is valid.

The 10th Circuit panel concluded Schlumberger was correct, and Wilson’s salary — however small — caused him to fall under the overtime exemption, even with the other forms of time-based or shift-based compensation he received. It overturned the jury’s verdict.

However, the panel did not find that Schlumberger was entitled to prevail outright. Wilson’s jury did not address the other factors required to find him exempt from overtime, specifically whether his primary duties were “office or non-manual,” and whether he exercised “discretion and independent judgment” in his tasks.

“At trial, the parties presented conflicting evidence,” Tymkovich wrote. Consequently, a new jury would need to examine the additional criteria.





The Gazette, Colorado Springs