Unpaid overtime piecework compensation under the New Mexico Minimum Wage Act

New Mexico has an overtime statute that offers additional remedies above and beyond those of the federal overtime law known as the FLSA.  It also has a special exemption, which employers sometimes attempt to use to get out of overtime claims.  One recent case illustrates this exemption.  The plaintiff, Jaime Armijo, worked as a pick-up and delivery driver for FedEx. Armijo v. FedEX Ground Package System, Inc., No. 1:17-cv-00440-RB-KK (D. NM, August 6, 2019). The plaintiff alleged that she was misclassified as an independent contractor and argues she was entitled to overtime payments under the New Mexico Minimum Wage Act (“NMMWA”) for all hours she was required to work. Id. FedEX alleged that she was paid per package and per stop on her route, not by the hour, and thus was not an employee because this compensation methods falls under the NMMWA “piecework” exception. Id. The plaintiff sought to have the lawsuit certified as a collective action, which is still pending before the court. Id. The defendant moved for summary judgment on the plaintiff’s NMMWA claim arguing that even if the plaintiff could prove that she should be classified as an employee under the economic realities test, her overtime claim would be precluded because she is excluded from NMMWA’s protections by an exception for employees who are compensated on a piecework basis. Id. 

Summary judgment is appropriate when the court, viewing the record in light most favorable to the nonmoving party, determines “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also Garrison v. Gambro, Inc., 428 F.3d 933, 935 (10th Cir. 2005). NMMWA “generally requires employers to pay overtime to employees who work more than 40 hours per week.” Casias, 2013 WL 12091857, at *5 (citing N.M. Stat. Ann. § 50-4-22(D)). However, the NMMWA explicitly excludes “salespersons or employees compensated upon piecework, flat rate schedules or commission basis . . .” from its definition of “employees” covered by the Act. See N.M. Stat. Ann. § 50-4-21(C)(5). The NMMWA does not define the terms “piecework,” “flat rate,” or “commission,” nor has the New Mexico Supreme Court addressed what types of payment systems fall under these exempted categories. New Mexico ex rel. State Labor Comm’r v. Goodwill Indus., 478 P.2d 543, 545 (N.M. 1970)).

FedEx argued that their per stop, package, and mile payment system fell under the piecework exception so the plaintiff’s overtime claim must fail. The plaintiff argued that the term “piecework” does not qualify as piecework as her job duties required additional requirements that FedEX imposes on individuals like the plaintiff. The Court relied on Olivo v. Crawford Chevrolet, Inc. (Olivo I), 799 F. Supp. 2d 1237, 1239 (D.N.M. 2011), which found that the “plaintiffs earned a predetermined wage per each job assignment[,]” so they were “compensated by the job, and thus . . . paid on a ‘piecework’ basis.” Id. at 1242. However, Judge Black opined that the time plaintiffs were forced to wait at the shop between jobs constituted “work” because they were not able to effectively use that time for their own purposes and it was to their employers’ benefit to have “workers at their disposal when jobs ar[ose].” Id. Following a bench trial, Judge Black confirmed that the plaintiffs had been paid on a piecework basis and were thus exempt from the protections of the NMMWA.

On the other hand, in Corman v. JWS of N.M., Inc., 356 F. Supp. 3d 1148, 1203 (D.N.M. 2018), Judge Browning not only opined that Olivo was based on a flawed and insufficient analysis, but he also constructed narrow definitions of the terms “commission,” “flat rate,” and “piecework” that have never been employed before in this District or by the Tenth Circuit. Judge Browning ultimately granted the defendant’s motion for summary judgment, finding that JWS paid the plaintiffs on a commission basis since they worked irregular hours and were paid a proportional rate per sale that was decoupled from their actual hours worked. Id. at 1193-1200. The plaintiffs were thus exempt from the NMMWA due their commission-based pay. Corman did not involve a “piecework” compensation system because the Court was persuaded that ‘piecework’ means payment for production, disassociated from sales. Id. at 1204. 

In the present case, the Court found that Ms. Armijo was required to spend approximately 3.5 unproductive hours per week waiting to depart the terminal as well as 3.5 hours per week conducting post-route administrative tasks. Thus, she spent about 7 hours each week engaging in activities that she was not compensated for on a piecework basis. The Court found that a majority of her work was still compensated on a piecework basis, and thus the Court found that she was still “unmistakably” paid on a piecework basis. However, the fact that the plaintiff was not compensated on a piecework basis is simply de minims and does not alter the fact that the vast majority of her earnings accrue through piecework payments. 

According to the Court, her time spent in FedEx quarterly meetings, waiting to depart the terminal each morning, and completing administrative tasks at the end of the day simply does not suggest anywhere near a significant enough departure from her otherwise piecework compensation structure to create a material issue of fact for trial. New Mexico, however, has a uniquely broad statutory exemption in the NMMWA that excludes all workers who earn their income on a piecework basis from state overtime protections. Rather than simply mirroring the FLSA’s exemption for commission pay, “[t]he New Mexico Legislature instead chose to enact an exemption broader than the FLSA’s” when it chose to exempt workers compensated under commission, flat rate, and piecework structures from the NMMWA. Corman, 356 F. Supp. 3d at 1207. As such, FedEX has met its burden showing that the plaintiff is unmistakably such an employee because individuals who are compensated upon a piecework basis are not considered employees under the NMMWA, so the plaintiff’s claim must fail.  As such, summary judgment was granted in the employer’s favor.  

Josh Borsellino is licensed by the State Bar of Texas and is an experienced overtime attorney who understands the rights and regulations of overtime laws. He offers free consultations and can be reached at 817.908.9861 or 432.242.7118. 

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