There have been a host of wage hour cases in the energy industry and I have often commented upon these. Many concern misclassification issues and another example of this phenomenon has arisen where a class of pipeline inspectors has requested that a federal court approve a settlement amounting to more than $2,000,000 where the theory of the plaintiffs was that the employer misclassified the workers as exempt under the Fair Labor Standards Act. The case is entitled Ganci v. MBF Inspection Services Inc. and was filed in federal court in the Southern District of Ohio.

The Company supplied inspection services for energy companies, e.g. gas and oil. There were 120 employees covered in the settlement, which was urged by both sides as a proper resolution of the case. The employees claimed they worked, on average, sixty (60) hours per week. The parties, in their brief, stated that “wage and hour trials are complex, expensive, and unpredictable. Absent this settlement, payment would be uncertain, and would take dramatically longer. Such expense, uncertainty, and complexity strongly favor approval of the settlement.” The lawyers will walk away with almost $750,000 in fees.

The matter had been conditionally certified under the FLSA in 2016 and as a Rule 23 class in 2017. The US Magistrate Judge granted preliminary approval to the settlement a few months ago. The parties believed final approval was warranted. The parties have exchanged and reviewed thousands of pages of documents and the case itself has been going on for more than four years.

The Takeaway

The simple reality is that inspection work is never going to be exempt work. It does not matter how skilled or knowledgeable the inspectors are, as this work will never meet the “discretion and independent judgment” element of the administrative exemption, which is (in all likelihood) the only exemption applicable. Given what would have likely happened at trial, the $2,000,000 was a good settlement.

If that can be believed…