A recent breach of contract and overtime pay case which was decided by the Tennessee Court of Appeals, Taylor v. Del-Nat Tire, provides some excellent insight and knowledge as to two legal issues that are prevalent in many employer/employee situations. It also provides insight on one other issue: How a case might progress through the Tennessee civil judicial system.
First, the case emphasizes the point that, regardless of what might seem fair, if you want to prevail in a breach of contract case, you had better be able to prove that there was a contract. Second, the case reminds us that, where an employee brings a case under the Fair Labor Standards Act (“FLSA”) for unpaid overtime, he or she must, with certain pretty rare exceptions, prove that he or she worked more than forty hours in a workweek (the key concept being the workweek and not Sunday or holiday work). Third, for litigants faced with an adverse verdict from a trial court, the case evidences that trial courts can misconstrue even basic law with straightforward facts.
Here are the salient facts of the case:
• Employee worked for Employer for about 13 months as a Technology Specialist
• Employee resigned and went to work for another company
• Employee then filed a lawsuit against Employer claiming that he was entitled to: (1) Overtime pay under the FLSA; and (2) to be reimbursed for $9,000 which he had personally paid for educational courses that related to his work
• As support for his contention that he was entitled to be reimbursed for the courses, Employee relied upon a letter of employment that stated: “Also, your Learning Plan is part of our offer, as you demonstrate the competency to complete those tasks you will receive a $500.00 salary increase.”
• As support for his contention that he was entitled to be reimbursed for the courses, Employee also relied upon the “IT Department Learning Plan” which was a document provided by Employer that broadly listed technology skills
• Some of the skills listed in the Learning Plan were part of Employee’s job description, though he had not had the training to obtain those skills
Breach of Contract Holding
Both the general sessions court, where the case was originally filed, and the trial court held in Employee’s favor on the issue of the reimbursement for the educational courses. The Employee testified that he “understood” that he was required to take the necessary courses to achieve the skills set forth in the Employer’s Learning Plan, and that his supervisor did not inform him that he would not be reimbursed for the courses when he told his supervisor that he was taking them.
The Employer pointed to its Employee Handbook which made it clear that, if an employee wanted to be reimbursed for educational classes, advance approval was required. Moreover, the Handbook stated that the maximum any employee would be reimbursed for educational courses was $2,500.00 per year.
In finding for the Employee, the trial court stated that the letter to the Employee set forth a “training component.” The Court of Appeals made short work (very short) of the trial court’s decision on the breach of contract claim. To the Court of Appeals, it was “cut and dry” (which it was): There were no contract terms whatsoever that required the Employer to reimburse the Employee for the courses. What the trial court had done, apparently, was decided the case on what it viewed as an issue of fairness.
A court cannot create a contract where none existed, and it cannot ignore basic contract law so it can do what it believes to be fair. With all due respect to the trial court in this case, it appears that it did just that.
Overtime Pay Holding
The Employee’s contention that he was owed overtime pay under the FLSA was based on his having worked Sundays, holidays and for more than eight hours on various days. The trial court found that, during the Employee’s employment with Employer (a 13 month period), he had worked 173 hours over forty hours times the total number of weeks worked, and was, therefore, entitled to overtime pay of about $5,000.00.
The Court of Appeals reversed the trial court’s decision. As pointed out by the Court of Appeals, the FLSA does not generally require an employer to pay overtime for hours in excess of eight per day, or for work on Saturdays, Sundays or holidays. For purposes of the FLSA, the determinative factor is the cumulative number of hours worked in a workweek, not the number of hours worked on any given day (much less the number worked during a 13 month period as was the case in this case).