The Tenth Circuit Court of Appeals issued its opinion in Sharp v. CGG Land (USA), Inc. on Friday, November 4, 2016.
CGG is a company that provides seismic mapping services at remote locations throughout the United States. CGG employees are required to travel away from home for several weeks to the remote locations. Generally, employees travel for four-to-eight week intervals, then return home for two-to-four week intervals before returning to the field. While traveling, CGG provides a $35 per diem for meals, except when food is provided. A group of employees filed suit against CGG, arguing CGG violated the Fair Labor Standards Act (FLSA) by not including in their regular reimbursement rates the $35 per diem for food during travel periods.
After stipulating to material facts in district court, including that $35 was a reasonable amount for daily meals, each party moved for summary judgment. The district court granted summary judgment to CGG. The district court agreed with CGG that the per diem payments were exempt travel expenses under 29 U.S.C. § 207(e)(2). The employees appealed.
On appeal, the employees argued the payments were not exempt for days when they traveled to and from remote job sites, because they did not do any work on those days. Employees further claimed the payments were not exempt for days they spent at the job sites because they were no longer traveling over the road. Employees also claimed CGG waived all defenses except its claim that the payments were exempt under § 207(e)(2). The Tenth Circuit rejected each contention in turn.
The Tenth Circuit noted that the Department of Labor rejected the argument that food costs may not be included as “living expenses.” The Tenth Circuit agreed with the DOL that the cost of food is an expense the employee incurs for the employer’s benefit and therefore is an exempt living expense. Employees argued they were not “traveling over the road” once they reached the job site, but the Tenth Circuit characterized this as a hyper-literal construction of the word “traveling.” The Tenth Circuit read “traveling” as all time away from home, not just time in transit. Employees also suggested CGG paid the $35 as part of a scheme to set an artificially low hourly pay rate to underpay overtime pay. The Tenth Circuit found the parties’ stipulation that the $35 per diem was reasonable defeated this argument.
The Tenth Circuit affirmed the district court’s grant of summary judgment to CGG.