Facts

In October 2010, several former mortgage loan officers who worked for Prospect Mortgage LLC filed a collective action against Prospect alleging Prospect failed to pay them overtime and minimum wages under the Fair Labor Standards Act in the U.S. District Court for the Eastern District of California. Plaintiffs in that case alleged that Prospect misclassified them as exempt employees under the FLSA, and therefore improperly failed to pay them the minimum wage and overtime. Plaintiff Ronald Hantz opted-in to the collective action in January 2012.

In 2013, the collective action was decertified. Hantz then brought suit against Prospect alleging the same FLSA violations in the U.S. District Court for the Eastern District of Virginia.

PLAINTIFF'S CONTENTIONS:
Hantz argued that he had been misclassified as an exempt employee and had not been paid minimum wage and overtime under the FLSA. Hantz argued that he was not an outside salesperson, because he performed the majority of his work at Prospect's office.

DEFENDANT'S CONTENTIONS:
Prospect moved for summary judgment, arguing Hantz was an outside salesperson. Hantz's primary job duty was to sell mortgage products away from Prospect's office. Hantz testified at his deposition that he engaged in activities outside of the office, including meeting with realtors, distributing flyers, conducting workshops, visiting open houses, and meeting with referral sources. This activity was sufficient to meet the threshold set forth by the Department of Labor that an employee who engages in sales and sales-related activity outside the office "one to two hours a day, one to two times a week" is customarily and regularly engaged away from the employer's place of business, and is subject to the outside sales exemption. As such, Hantz was properly classified as an outside salesperson, exempt from FLSA's overtime and minimum wage requirements.

Prospect also argued that Hantz's claims were time-barred because Hantz produced no evidence that Prospect engaged in any willful violations of the FLSA, which would entitle him to the benefit of a three- year statute of limitations, as opposed to the FLSA's default two-year statute of limitations. Prospect claimed it reasonably expected Hantz to be outside of the office engaging in sales activities. Prospect claimed it appropriately relied on the Department of Labor's guidance in classifying Hantz as an exempt, outside salesperson.

Result

The court granted Prospect's motion for summary judgment. The court held that Hantz produced no evidence that Prospect engaged in a willful violation of the FLSA, and therefore Hantz's claims were time barred under the default two-year limitations period. The court further held that Prospect properly classified Hantz as an outside salesperson, exempt from the minimum wage and overtime requirements of the FLSA based on the undisputed evidence regarding the extent of his outside sales activities.