US appeals court will not reconsider FLSA exemption ruling

The US Fifth Circuit of appeals said on Thursday September 30th said that workers who used cranes attached to boats to load equipment onto offshore oil rigs were not “seamen” exempt from overtime pay under federal wage law.

The full 5th US Circuit Court of Appeals voted 15-2 to deny en banc review to Louisiana-based All Coast and reinstated a three-judge panel’s unanimous February ruling. That lower court decision said that the workers were engaged in industrial activities that had no bearing on the operation or navigation of liftboats – self-propelled supply vessels with three column-like legs which can be quickly lowered to the sea floor, thus raising the vessel out of the water.

Former All Coast employee William Adams claimed that he and other liftboat workers were misclassified as seamen exempt from the Fair Labor Standards Act, and as a result were deprived of overtime pay unlawfully.

The filings asserted that workers such as Adams spent up to 90% of their time operating cranes rather than servicing the boats.

Circuit Judges Edith Jones and Jennifer Elrod dissented from the denial of en banc review, saying the panel decision “threatens uncertainty throughout the maritime industry” and said that this marked the second time in a month that the 5th Circuit had misapplied FLSA exemptions.

Curt Hesse of Moore & Associates, who represents Adams, said the suggestion that the decision could upend the industry was untrue.

“As we pointed out in the briefs, there was actual evidence in the record … that other liftboat companies in fact pay overtime to their workers,” Hesse said. “This decision levels the playing field.”

In a 2016 lawsuit overseen by a Louisiana federal court, Adams claimed that the various job titles All Coast gave to liftboat workers, such as mates, deckhands, and seamen, concealed their true jobs as crane operators. Since they were not seamen involved primarily in servicing ships, they should have been paid overtime, Adams said.

US District Judge Jane Milazzo in Lafayette, Louisiana disagreed. She granted a summary judgment to All Coast in 2019. Citing 5th Circuit precedent, she said the services provided by the workers aided “in the operation of such vessel as a means of transportation,” and that this made them seamen.

But the 5th Circuit panel in the February ruling said that, while the workers “acted as a normal nautical crew” when a boat was on the move, the loading and unloading duties they primarily performed had no connection to liftboat operation.

The court remanded the case back to Milazzo to determine whether the plaintiffs qualified for the FLSA exemption on other grounds.

The dissenting judges who voted for en banc review said on Thursday that, even when liftboats were jacked up and not in motion, the crew members performed quintessential seaman’s work such as standing lookout, checking engines and cleaning. One dissenting judge observed that “without the cranes, the liftboat serves no transportive purpose”, implying that the cranes were an inherent part of the ship, so that the operators of the crane were an inherent part of the ship’s crew, and were therefore seamen.

Smith said the panel had adopted too narrow a view of the FLSA exemption and ignored the US Supreme Court’s holding in the 2018 case Encino Motorcars LLC v. Navarro that exemptions from the law must be given a “fair reading.”

The 5th Circuit, Smith said, made the same mistake in its September 9th en banc ruling in Hewitt v Helix Energy Solutions Group Inc, which said a management-level oil rig worker who earned $200,000 a year must be paid overtime because he was compensated at a daily rate and thus not FLSA exempt.

The case is Adams v. All Coast LLC, 5th U.S. Circuit Court of Appeals, No. 19-30907.