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On December 15, 2015, the U.S. District Court for the Eastern District of Texas granted conditional certification in Smale v. AR Trinity Credit Services, LLC, Case No. 4:14-cv-00774, for commission-paid workers who sold credit repair services by phone. In this credit coach overtime lawsuit, the workers said they routinely worked more than forty hours a week without overtime pay. The court rejected each of the defendants’ arguments against certification. Jack Siegel served as lead counsel for the workers.
Judge Ron Clark signed the Order Regarding Conditional Class Certification on December 15, 2015. The defendants were AR Trinity Credit Services, LLC (“Trinity Credit”), a credit repair and restoration company, and an individual defendant the order describes as its founder. The named plaintiff worked as a credit coach. He said his main duty was to make cold calls to sell Trinity Credit’s credit repair program.
Seven other employees signed affidavits describing the same pay practices. The court held that these affidavits were enough at this early stage. It found a reasonable basis to believe that other affected workers existed. It also found that those workers were similarly situated and wanted to join the case.
The order uses the word “class,” but the group is an FLSA collective. In close paraphrase, the collective the court conditionally certified in 2015 included workers who met four conditions:
The court approved the notice and consent form attached to the order. The defendants had fourteen days to give the workers’ lawyers, under oath, the names, last known addresses, email addresses, and phone numbers of potential plaintiffs. The workers had asked for three days, but the court found that too burdensome. The notice was to be mailed or emailed by January 29, 2016.
The defendants wanted a thirty-day window to join. The court overruled that objection and allowed sixty days from mailing, finding that a sixty-day period was not unreasonable. It also overruled the defendants’ objection to posting the notice at Trinity Credit’s place of business. The defendants had argued that posting would disrupt the workplace.
The workers described the pressure behind their long hours. The named plaintiff said he was expected to close at least fifteen “deals” a month or face discipline. He said that meant working from 8:00 am to 6:00 pm, usually without a meal break, plus two Saturdays a month. He also said he did about eight more hours of tasks at home each week.
If he missed the fifteen-deal goal, he said, he was told to work every Saturday the next month. In total, he estimated that he worked at least sixty hours each week. The other affiants said they also worked more than forty hours a week without overtime pay. They also said their sales bonuses were never counted in a regular rate of pay for overtime purposes.
The defendants raised a long list of objections, and the court turned each one down. It held that the workers did not have to give an overtime formula or point to a written policy.
The defendants also argued that each worker’s hours would need a separate review. The court noted that the same would be true in almost any FLSA collective action. Arguments about conflicting facts and the retail or service establishment exception went to the merits. The court said those belonged in a summary judgment motion, not at the notice stage.
This ruling was a preliminary step. It did not find that Trinity Credit broke the law or that any worker was owed money.
The workers sued under the Fair Labor Standards Act (FLSA) for unpaid overtime and, for some periods, unpaid minimum wage. The court described the policy at issue as the alleged practice of requiring employees to work more than forty hours a week, including on-the-clock and off-the-clock work, without overtime pay, to meet sales goals.
As general information, FLSA overtime is one and one-half times the regular rate for hours over forty in a workweek, unless an exemption applies. Being paid by commission does not by itself make a worker exempt. Bonuses promised for hitting sales goals generally must be included in the regular rate used to figure overtime.
The defendants pointed to the retail or service establishment exemption, 29 U.S.C. § 207(i). As general information, the employer must show that the worker was employed by a retail or service establishment and that the worker’s regular rate was more than one and one-half times the minimum wage. More than half of the worker’s pay over a representative period must also have come from commissions. The court did not decide whether the exemption applied.
The court applied, at the time of this 2015 order, the two-stage approach that, according to the order, most federal courts used, including the Eastern District of Texas. At the notice stage, it used a lenient standard that required only substantial allegations of a single decision, policy, or plan. Learn more about how conditional certification works.
Some federal appeals courts have since changed this approach — the Fifth Circuit in Swales v. KLLM Transport Services (2021) and the Sixth Circuit in Clark v. A&L Homecare & Training Center (2023). Swales now governs federal courts in Texas, Louisiana and Mississippi.
The court also limited notice to three years before the original complaint was filed on November 25, 2014. It declined to decide at the notice stage whether any violation was willful.
This page describes a 2015 court order. The time to join that collective was set by the court in that case. If you have worked in a similar role, the Siegel Law Group can evaluate your own claims.
Did you sell credit repair or similar services by phone? Were you paid commissions, with or without bonuses, and expected to work past forty hours to hit sales goals? A lawyer can review how you were paid. The notice attached to this order described the job as a commissioned salesperson, also called a “Credit Coach/Consultant/Navigator.”
Contact the Siegel Law Group for a free consultation.
Related rulings: Fustos v. White Jacobs, another 2015 Texas case for commission-paid credit repair salespeople, and Dickens v. J.G. Wentworth, another Eastern District of Texas case over commission pay.
Usually, yes. Under the FLSA, commission pay alone does not make a salesperson exempt from overtime. A phone salesperson who works more than forty hours in a week is generally owed time and a half unless the employer proves a specific exemption applies. The employer has the burden to prove each part of that exemption.
It is an FLSA exemption, 29 U.S.C. § 207(i), for some commission-paid workers. The employer must show the worker was employed by a retail or service establishment and earned a regular rate above one and one-half times the minimum wage. More than half of the worker’s pay over a representative period must also have come from commissions. If any part is missing, this exemption does not apply.
Generally, yes. Bonuses an employer promises for closing a set number of deals are usually part of the regular rate under the FLSA. The overtime premium is then figured from that bonus-boosted rate. Leaving promised sales bonuses out of the regular rate can shortchange a worker’s overtime pay, even when some overtime was paid.
It can. Under Department of Labor rules, work an employer suffers or permits counts as hours worked, even if done at home and outside the set schedule. The key question is whether the employer knew or had reason to believe the work was being done. Keep your own notes of extra calls, follow-ups, and paperwork done from home.
A credit coach usually gets two years after each short paycheck to bring an FLSA overtime claim, and three for a willful violation. In a collective action, the date that counts for a coach’s claim is generally the date that coach’s own signed consent form is filed in the case. Waiting can let the oldest weeks of pay fall outside that window. Read more about the FLSA statute of limitations.
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Siegel Law Group PLLC concentrates in unpaid overtime cases under the FLSA and state wage laws. The firm has filed more than 100 federal overtime cases, obtained 50+ class and collective certifications in 20 federal judicial districts across 15 states, and recovered more than $100 million for workers. It has never represented an employer in a wage case. Free consultation. Contingency fee: we advance case costs, and they are repaid from any recovery. No recovery, no fee and no costs. Phone: (214) 790-4454 | Email: [email protected]
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