2015 midwinter treatise supplement: the fair labor standards act

2015
MIDWINTER
TREATISE SUPPLEMENT:
THE FAIR LABOR STANDARDS ACT
Presented by:
American Bar Association
Section of Labor and Employment Law
Fair Labor Standards Act Subcommittee
February 25-27, 2015
Lawrence Peikes, Co-Chair
Wiggin and Dana LLP
[email protected]
Michele R. Fisher, Co-Chair
Nichols Kaster, PLLP
[email protected]
Ryan A. Hagerty, Co-Chair
Asher, Gittler & D’Alba, Ltd.
[email protected]
Preface
This report, which covers the period June 1, 2013 to May 31, 2014, serves as the 2015
report of the Fair Labor Standards Act Subcommittee. The FLSA Midwinter Reports are
primary resources for the drafting of the annual supplements to the ABA/BNA FLSA
Treatise.
As is outlined in detail below in the table of contents, the structure of this report follows
that of the Treatise and its 2014 Cumulative Supplement.
ii Acknowledgement
The Subcommittee's Chairpersons Lawrence Peikes, Michele R. Fisher and Ryan A.
Hagerty acknowledge with great appreciation the following authors and editors:
Syma Ahmad
Michael A. Alaimo
Bill Allen
Joshua Alloy
Jennifer Marciano Amato
Michael Amster
Christian Antkowiak
Brittany Bachman Skemp
Alex Baggio
Rebekah L. Bailey (Editor)
Tracey Barbaree
Paul R. Barsness
Scot Bernstein
Paul L. Bittner (Editor)
Richard W. Black
Emily D. Blaiss
David Blanchard
Matthew Bobb
Andrew D. Bobrek
Nieves Bolanos
Robert A. Boonin (Editor)
Brittany Boren
David Borgen (Sr. Editor)
James N. Boudreau
J. Derek Braziel (Sr. Editor)
Megan I. Brennan
Hon. Frank E. Brown
Jason T. Brown
Lance Brown
William J. Cantrell
Victor O. Cardwell
Richard W. Castleton
Eve H. Cervantes (Sr. Editor)
Michael T. Chin
Denise M. Clark
A. Craig Cleland
Brett Coburn
Joel M. Cohn (Sr. Editor)
Terese Marie Connolly
Jac A. Cotiguala
Alan Crone
Craig S. Curwood
Christine Daskas
Rebecca Davies
Todd A. Dawson
Paul DeCamp (Editor)
Bob DeRose
Aashish Y. Desai (Editor)
Reena I. Desai
Matthew S. Disbrow
Eugene J. Droder III
Douglas H. Duerr
Glenn A. Duhl
Sacha Dyson
Tami A. Earnhart
Gillian Watson Egan
Susan Nadler Eisenberg (Sr. Editor)
Susan E. Ellingstad (Editor)
Daniel Field
John W. Fischer
Michele R. Fisher (Editor-in-Chief)
Brandi B. Frederick
Randy Freking
Robert Fried
Craig S. Friedman
Debra Friedman
Robert F. Friedman
Ty Frankel
Charles Frohman
Aundrea Gamble Holt
Ryan A. Glasgow
Peter J. Glennon
Andrew S. Goldberg
Maritza I. Gomez Fernandez
Melinda Gordon
Gregg Greenberg
Keith D. Greenberg
Ryan A. Hagerty (Editor-in-Chief)
George A. Hanson (Sr. Editor)
Emily Paige Harbison
Dan Hartsfield
Douglas A. Hass
Richard Hayber
C. Andrew Head
Darla Hill
John S. Ho (Editor)
iii Laura L. Ho (Editor)
Elissa Hobfoll
Howard B. Hoffman
Raymond Hogge, Jr.
John Holleman
Diana Hoover
Sundeep Hora
Sara DeForge Hough
Zach P. Hutton
James Jackson
Todd Jackson (Editor)
Larry Johnson
Colleen Johnston
Benjamin R. Jones
Molly Jones
Laura M. Jordan
Daniel Katz
Aaron D. Kaufmann (Sr. Editor)
Ellen C. Kearns (Sr. Editor)
Jennifer Keating
David Kern
Jeff Kerr
Jonathan A. Keselenko (Editor)
Troy Kessler
Michael J. Killeen (Editor)
Allen S. Kinzer
Moyenda Knapp
Jared Kronenberg
Andrew Lah
Matthew W. Lampe
Wayne D. Landsverk
Eric Langeland
Elizabeth C. Lawrence (Sr. Editor)
Jay P. Lechner (Editor)
Michelle Lee
Meagan C. LeGear
Bradford A. LeHew
Rachel Lev
David Lichter
Jennifer Liu
Eric Lloyd (Editor)
David Long-Daniels
Xochitl Lopez
David Lowe
Jason Lowell
Kathy Speaker MacNett
Erin L. Malone (Editor)
Jason C. Marsili
Brian D. Massatt
David E. Mastagni
John L. Mays
Bernard R. Mazaheri (Editor)
Meghaan McElroy
Dennis M. McClelland (Editor-in-Chief)
Gregory K. McGillivary (Sr. Editor)
Michael S. McIntosh
Kevin T. Miller
T. Matthew Miller
Brandt Milstein
Philip C. Monrad
Alexandra Mora
Lawrence Morales II
Dale J. Morgado
Elizabeth C. Morris (Editor)
Lauren Munselle
Matthew J. Murray
Katherine Daughtrey Neff
Jason Nickerson
Claude Nicolas
Nick Norris
Karen O’Connor
Laura E. O'Donnell
Brian O’Keefe
Nathan J. Oleson (Sr. Editor)
Greg Oltmanns
Thomas Padgett
Christopher M. Pardo (Editor)
Cristina Parra Herrera (Asst. Editor)
Laura Pasqualone
Rick Paul
J. Day Peake III
Lawrence Peikes (Editor-in-Chief)
David P. Pogrel (Editor)
David A. Prather
Michael J. Puma (Editor)
Rich Quintilone
Felicia R. Reid (Editor)
Charles (Chad) E. Reis, IV
Forrest T. Rhodes
Joanna S. Rich
Bob Riordan
Nantiya Ruan (Editor)
Allan Rubin
Reed L. Russell (Sr. Editor)
Maureen A. Salas (Editor)
Bethany C. Salvatore
Karla E. Sanchez (Editor)
Brian Schaffer
Richard D. Schramm
Lisa (Lee) A. Schreter (Editor)
Ashlea Schwartz
Kelly M. Scindian
iv Derek P. Scott (Editor)
Scott Segal
Tim C. Selander (Editor)
Daniel Sheran
W.V. Bernie Siebert (Editor)
Salvador P. Simao (Editor)
Bonnie M. Smith
Lawrence D. Smith
Patrick J. Solomon
Angelo Spinola
Dane Steffenson
Alexandra M. Steinberg
Alex Stevens
Luke A. Suchyta
Naomi Sunshine
Justin M. Swartz (Editor)
Michael Sweeney
Stephanie L. Sweitzer
J. Nelson Thomas (Sr. Editor)
Lauren Timmons
Jon Tostrud
Juno Turner
Pamela Walker
Joshua B. Waxman (Editor)
Martine T. Wells
Douglas M. Werman (Editor)
Howard M. Wexler
Julie Wilensky
David T. Wiley
Christopher L. Williams
Jennifer Williams
Ryan Winters
Susan A. Wuchinich
Phil Zipin
v Table of Contents
Main
Volume
CHAPTER 1:
A BRIEF HISTORY OF THE FAIR LABOR
STANDARDS ACT .............................................
Supplement
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I. Overview ............................................................................
1-2
II. Pre-FLSA Legislation .........................................................
1-4
A. Federal Activity ............................................................
1-4
1. Eight-Hour Laws....................................................
1-4
2. The Seaman’s Act .................................................
1-5
3. The Davis-Bacon Act ............................................
1-6
4. The Motor Carrier Act............................................
1-7
5. The Merchant Marine Act ......................................
1-7
6. The Walsh-Healey Act ..........................................
1-7
7. The National Industrial Recovery Act
Scheme .................................................................
1-8
B. State Activity ................................................................
1-9
1. State Minimum Wage Laws ..................................
1-9
III. Enactment of the Fair Labor Standards Act .......................
1-11
IV. Significant Amendments to the FLSA
Through 1974 .....................................................................
1-16
A. The Portal-to-Portal Act of 1947 ..................................
1-16
1. Compensable Activity ...........................................
1-19
2. Compromise of Claims and Liquidated
Damages ...............................................................
1-20
3. Class Actions ........................................................
1-21
4. Statute of Limitations ............................................
1-21
5. Reliance on Administrative Rulings ......................
1-22
B. The 1961, 1966, and 1972 Amendments ....................
1-22
C. The Equal Pay and Age Discrimination
in Employment Acts .....................................................
1-26
D. The 1974 Amendments ...............................................
1-26
1. National League of Cities v. Usery ........................
1-28
2. Garcia v. San Antonio Metropolitan Transit
Authority ................................................................
1-28
V. Later Legislative Developments .........................................
1-29
A. The 1977 Amendments ...............................................
1-29
B. The 1978 Amendment Concerning Military Commissaries 1-30
C. The 1985 Amendments Concerning Public
Employees ...................................................................
1-30
D. The 1989 Amendments ...............................................
1-31
E. The Congressional Accountability Act
of 1995 .........................................................................
1-32
F. The 1996 Small Business Job Protection Act ..............
1-33
G. Federal Civil Penalties Inflation Adjustment
Act ...............................................................................
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H. The 1996 Compactors and Balers Safety
Standards Modernization Act ......................................
I. The 1998 Drive for Teen Employment Act ..................
J. The Amy Somers Volunteers at Food
Banks Act ....................................................................
K. The 1998 Labor Department
Appropriations Act .......................................................
L. The 1999 Amendments Concerning Partial Overtime
Exemption for Fire and Law
Enforcement Personnel ...............................................
M. The Worker Economic Opportunity Act
of 2000 .........................................................................
N. The Consolidated Appropriations Act
of 2004 .........................................................................
O. The 2004 District of Columbia Omnibus
Authorization Act .........................................................
P. The SAFETEA-LU .......................................................
Q. The 2007 Amendments Concerning
Minimum Wage ............................................................
R. The 2008 Amendments Regarding DOL
Penalties ......................................................................
S. Break Time for Nursing Mothers
[New Topic]..................................................................
CHAPTER 2:
OPERATIONS AND FUNCTIONS OF THE
DEPARTMENT OF LABOR ................................
I. Overview ............................................................................
II. Organization of the Department of Labor ...........................
A. Introduction ..................................................................
B. Secretary of Labor .......................................................
C. Solicitor’s Office ...........................................................
D. Wage and Hour Administrator .....................................
III. Regulations, Interpretations, and Opinions ........................
A. Deference Standards ...................................................
1. Deference Under Skidmore ..................................
2. Deference Under Chevron ....................................
3. Auer Deference .....................................................
4. The Mead Clarification ..........................................
B. Deference as Applied to Actions
of the DOL ...................................................................
1. Regulations and Interpretations ............................
2. Opinion Letters/Administrator
Interpretations [Amended Heading] ......................
a. Administrator Interpretation
No. 2010-1 [New Topic] ..................................
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COVERAGE........................................................
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I. Overview ............................................................................
II. The Employer-Employee Relationship ...............................
A. “Suffer or Permit to Work” ............................................
B. The Economic Reality Test..........................................
C. Employee or Independent Contractor..........................
1. General Principles .................................................
a. Control ............................................................
b. Investment ......................................................
c. Opportunity for Profit and Loss .......................
d. Permanency ...................................................
e. Specialized Skill ..............................................
f. “Integral Part of Employer’s
Operation” .......................................................
g. Other Factors ..................................................
2. Illustrative Cases ...................................................
a. Cases Finding Employee Status ....................
b. Cases Finding No Employee Status ...............
D. Joint Employers ...........................................................
1. DOL Activity ..........................................................
a. Regulations .....................................................
b. Wage and Hour Opinion Letters .....................
2. The Migrant and Seasonal Agricultural
Worker Protection Act ...........................................
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b. Administrator Interpretation No. 2010-2
[New Topic] ...........................................................
3. Amicus Briefs ........................................................
4. Field Operations Handbook (FOH) .......................
5. Wage and Hour Field Assistance
Bulletins.................................................................
6. Results of Field Investigations [New Topic] ..........
7. Other DOL Materials
[Renumbered Section] ..........................................
8. Department of Labor Web Site
[Renumbered Section] ..........................................
IV. Other Functions of the Department of Labor .....................
A. Conducting Studies .....................................................
B. Reports ........................................................................
C. Reporting on the Impact of Minimum Wage
Rates in American Samoa and Northern
Mariana Islands ...........................................................
D. Issuing Certificates for Special Employment Situations
E. Legislative Recommendations.....................................
CHAPTER 3:
viii Midwinter
Report
3. Court Decisions Addressing the Joint Employment
Doctrine .................................................................
E. Individuals (e.g., Corporate Officers,
Managers, Supervisors, Consultants, etc.)
Who Are “Employers” ..................................................
F. Volunteers ...................................................................
G. Trainees .......................................................................
H. Patient-Workers ...........................................................
I. Prison Labor ................................................................
J. Undocumented Workers ..............................................
K. Clergy ..........................................................................
III. Individual Coverage ...........................................................
A. General Principles .......................................................
B. “Engaged in Commerce” .............................................
1. Work Related to the Actual Movement
of Commerce.........................................................
2. Regular Use of the Channels
of Commerce.........................................................
3. Work Related to the Instrumentalities
of Commerce.........................................................
C. “Engaged in the Production of Goods” ........................
1. “Production”...........................................................
2. “Goods” .................................................................
3. Whether Goods Are Produced
“for Commerce” .....................................................
4. “Closely Related” and “Directly
Essential” ..............................................................
5. Employees of Independent Suppliers ...................
IV. Enterprise Coverage ..........................................................
A. General Principles .......................................................
B. Requirements of Section 3(r).......................................
1. “Related Activities” ................................................
a. Same or Similar ..............................................
b. Auxiliary Activities ...........................................
c. Vertical Activities ............................................
d. Other Activities That May Be Part
of the Enterprise .............................................
2. “Common Business Purpose” ...............................
3. “Unified Operation” or “Common
Control” .................................................................
a. “Unified Operation” .........................................
b. “Common Control” ..........................................
4. Leased Departments .............................................
5. Exceptions From the Section 3(r)
Definition of “Enterprise” .......................................
a. Retail or Service Franchises ...........................
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Main
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b. Independent Contractors Performing
Work “for” an Enterprise .................................
c. Establishments Whose Only
Regular Employees Are Owners
and Immediate Family Members ....................
C. Requirements of Section 3(s) ......................................
1. Section 3(s)(1)(A)(i)—Engagement
in Commerce .........................................................
a. The “Handling” Standard
of Enterprise Coverage ...................................
2. Section 3(s)(1)(A)(ii)—The Business
Dollar Volume Test................................................
a. General Principles ..........................................
b. Gross Receipts ...............................................
c. Exclusions From Gross Receipts ...................
d. Computing Annual Volume of Sales
or Business—The “Rolling Quarter”
Method ............................................................
e. New Business Coverage ................................
f. Grandfather Coverage ....................................
g. Conglomerate Coverage Rules ......................
3. Section 3(s)(1)(B)—Engagement in the
Operation of a Hospital, Institution, or School
[New Topic] ...........................................................
V. Geographic Limits of Coverage .........................................
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WHITE-COLLAR EXEMPTIONS ........................
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I. Overview ............................................................................
II. The 2004 Amendments to the White-Collar
Regulations ........................................................................
III. Legal Principles That Govern Analysis
of Exemptions ....................................................................
IV. General Principles That Apply to White-Collar Exemptions
A. Background .................................................................
B. Compensation Form and Amount................................
C. “Highly Compensated” Employees ..............................
D. Trainees .......................................................................
E. Primary Duty ................................................................
F. “Directly and Closely Related” .....................................
G. Combination Exemption ..............................................
V. The Salary Basis Test ........................................................
A. Background .................................................................
B. Requirements of the Salary Basis Test .......................
1. Salary Basis Test Generally ..................................
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2. Relationship Between Salary and Hours
Worked ..................................................................
C. Permissible Deductions (“Exceptions”
to the No-Deduction Principle).....................................
1. Personal Absences of a Day or More ...................
2. Deductions From Salary for Absences
of a Day or More Due to Sickness
or Disability............................................................
3. Disciplinary Deductions .........................................
a. Deductions in the Form of Penalties
Imposed for Violations of Safety
Rules of Major Significance ............................
b. Disciplinary Suspensions for
Violations of Work Rules ................................
4. Initial and Terminal Weeks
of Employment ......................................................
5. Absences for Leave Under the Family
and Medical Leave Act ..........................................
6. Deductions From Leave Accounts ........................
D. Impermissible Deductions From
an Employee’s Salary ..................................................
1. Absences Occasioned by the Employer ...............
2. Absences Due to Jury Duty, Attendance
as a Witness, or Temporary Military
Leave ....................................................................
3. Absences of Less Than One Day .........................
E. Effect of Improper Deductions .....................................
1. Generally ...............................................................
2. Effect of Deduction Made on Status
of Other Employees ..............................................
3. “Window of Correction” and “Safe
Harbor” ..................................................................
F. Fee Basis Alternative for Professional
and Administrative Exemptions ...................................
VI. The Executive Exemption ..................................................
A. Management Duties ....................................................
B. Primary Duty of Managing ...........................................
C. “The Enterprise” or “a Customarily
Recognized Department or Subdivision”
Thereof ........................................................................
D. “Customarily and Regularly Direct the
Work of Two or More Other Employees” .....................
E. Authority With Respect to Personnel
Matters “Are Given Particular Weight” .........................
F. Business Owners .........................................................
G. Working Foremen ........................................................
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VII.The Administrative Exemption .................................................
A. “Office or Non-Manual Work” .......................................
B. “Directly Related to Management or
General Business Operations” ....................................
C. “Discretion and Independent Judgment” .....................
D. “Educational Establishments” ......................................
E. Regulatory Application of Principles to
Specific Job Categories ...............................................
1. Insurance Claims Adjusters
—29 C.F.R. §541.203(a) .......................................
2. Financial Services Industry Employees—
29 C.F.R. §541.203(b) ..........................................
3. Team Leaders—29 C.F.R. §541.203(c) ................
4. Executive Assistants—29 C.F.R.
§541.203(d) ...........................................................
5. Human Resources Personnel
—29 C.F.R. §541.203(e) .......................................
6. Purchasing Agents—29 C.F.R.
§541.203(f) ............................................................
7. Inspectors—29 C.F.R. §541.203(g) ......................
8. Examiners/Graders—29 C.F.R.
§541.203(h) ...........................................................
9. Buyers—29 C.F.R. §541.203(i) .............................
10. Investigators—29 C.F.R. §541.203(j) ...................
F. Other Examples of Positions That Have
Been Found to Be Exempt or Nonexempt ...................
VIII. The Professional Exemption ..............................................
A. Learned Professional...................................................
1. “Work Requiring Advanced Knowledge” ...............
2. “Consistent Exercise of Discretion
and Judgment” ......................................................
3. “Field of Science or Learning” ...............................
4. “Customarily Acquired by a Prolonged
Course of Specialized Intellectual
Instruction” ............................................................
B. Creative Professional ..................................................
C. Teachers ......................................................................
IX. Computer Employees ........................................................
X. The Outside Sales Exemption ...........................................
A. “Making Sales”.............................................................
B. Tasks Incidental to Sales Activities .............................
C. “Away From the Employer’s Place
or Places of Business” .................................................
D. Promotion Work ...........................................................
E. Drivers Who Sell ..........................................................
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CHAPTER 5:
OTHER STATUTORY EXEMPTIONS ................
I. Overview ............................................................................
II. Section 13(a) Exemptions From the Minimum
Wage and Overtime Requirements of the Act ...................
A. Amusement, Recreational, and Similar
Employees ...................................................................
B. Employees Engaged in Fishing
or Operations on Aquatic Products..............................
C. Limited Circulation Newspaper Employees .................
D. Switchboard Operators Employed
by Small Public Telephone Companies .......................
E. Seamen on Non-American Vessels.............................
F. Casual-Basis Babysitters and Domestic Companionship
Service Providers ........................................................
1. Casual Babysitters ................................................
2. Domestic Companionship Service
Providers ...............................................................
a. Coverage ........................................................
b. Companionship Services ................................
(i.)
Private Home .......................................
(ii.)
Nature of the Services .........................
(iii.) Trained Personnel ...............................
III. Section 13(b) Exemptions From the Overtime Requirements
of the Act ............................................................................
A. Employees Covered Under the Motor
Carrier Act ...................................................................
1. SAFETEA-LU ........................................................
2. Requirements for the Section 13(b)(1) Exemption
a. Carriers Subject to the Power
of the Secretary of Transportation ..................
b. Employees Engaged in Activities
Directly Affecting Safety .................................
(i.)
Drivers .................................................
(ii.)
Drivers’ Helpers ...................................
(iii.) Loaders ................................................
(iv.) Mechanics ............................................
c. Transportation in Interstate
Commerce ......................................................
(i.)
“Interstate Commerce” Under
the MCA ...............................................
(ii.)
Transportation From One
State to Another ...................................
(iii.) Intrastate Transportation ......................
B. Railroad Employees ....................................................
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C. Air Transportation Employees .....................................
D. Employees Employed as Seamen Under
Section 13(b)(6) ...........................................................
1. “Seaman” ..............................................................
2. “Vessel” .................................................................
E. Announcers, News Editors, or Chief
Engineers of Certain Radio or Television
Stations ........................................................................
F. Certain Employees of Automobile, Truck,
or Farm Implement Dealers; Salespersons
of Trailers, Boats, and Aircraft .....................................
G. Local Delivery Drivers ..................................................
H. Taxicab Drivers ............................................................
I. Domestic Servants Who Reside
in a Household .............................................................
J. Husbands and Wives Who Serve as House
Parents ........................................................................
K. Motion Picture Theater Employees .............................
L. Employees of Amusement or Recreational
Establishments Located in a National Park,
National Forest, or on Land in the National
Wildlife Refuge System ...............................................
IV. Section 7 Exemptions From the Overtime Requirements
of the Act ............................................................................
A. Section 7(b) Exemptions Relating
to Collective Bargaining Agreements
That Meet Certain Criteria ...........................................
B. Section 7(b) Exemptions as Applicable
to a Distributor of Petroleum Products.........................
1. Scope of the Exemption ........................................
2. The “Enterprise” ....................................................
3. “Independently Owned and Controlled
Local Enterprise” ...................................................
4. Sales Made Within the State .................................
5. Sales Made to Other Bulk
Distributors ............................................................
6. Compensation Requirements
of the Section 7(b)(3) Exemption ..........................
C. Section 7(i)—Certain Commissioned
Employees of Retail and Service
Establishments ............................................................
1. “Retail or Service Establishment” ..........................
a. Financial Services ..........................................
b. Cleaning and Repair Services ........................
c. Institutions of Learning ...................................
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d. Salespersons of Timeshares ..........................
2. Compensation Requirements ...............................
a. Commission Payment Required .....................
b. “Representative Period” ..................................
D. Employees Engaged on a Charter Basis
for Local Passenger Carriers .......................................
V. Section 13(d) Exemption From
Minimum Wage, Overtime, and Child
Labor Requirements ..........................................................
A. Newspaper Delivery ....................................................
VI. Section 13(f) Exemption From Minimum
Wage, Overtime, Recordkeeping,
and Child Labor Requirements ..........................................
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AGRICULTURAL EXEMPTIONS........................
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I. Overview ............................................................................
II. General Scope of Agriculture .............................................
A. Introduction ..................................................................
B. “Primary” Agriculture ....................................................
1. Farming in All Its Branches ...................................
2. Cultivation and Tillage of the Soil ..........................
3. Dairying .................................................................
4. Agricultural or Horticultural
Commodities .........................................................
5. Raising Livestock, Bees, Fur-Bearing
Animals, or Poultry ................................................
C. “Secondary” Agriculture ...............................................
1. Practices Performed “by a Farmer” .......................
2. Practices Performed “on a Farm” ..........................
3. “Such Farming Operations” of the
Farmer...................................................................
4. “Such Farming Operations” on the
Farm ......................................................................
5. Performance of the Practice “as an
Incident to or in Conjunction With”
Farming Operations ..............................................
6. Practices Enumerated in Section 3(f) ...................
a. Preparation for Market ....................................
b. Specified Delivery Operations ........................
7. Transportation Operations Not
Enumerated in Section 3(f) ...................................
8. Other Unlisted Practices That May Be
Within Section 3(f) .................................................
D. Specific Situations .......................................................
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1. Forestry or Lumbering Operations ........................
2. Nursery and Landscaping Operations ..................
3. Hatchery Operations .............................................
E. Examples of Functions as “Agricultural”
or “Nonagricultural” Work ............................................
III. Section 13(a)(6) Exemption From the Act’s
Minimum Wage and Overtime Requirements ....................
A. Basic Conditions ..........................................................
B. Section 13(a)(6) as Applied .........................................
1. Small Farms Exemption (“Man-Days”) ..................
2. Immediate Family Exemption
(Family Farms) ......................................................
3. Local Hand-Harvest Laborer
Exemption .............................................................
a. Hand-Harvest Laborers ..................................
b. Piece-Rate Basis ............................................
c. Operations Recognized as Paid
on a Piece-Rate Basis ....................................
d. Local Hand-Harvest Laborers .........................
e. The Thirteen-Week Provision .........................
4. Migrant Hand-Harvest Laborers Under Seventeen
Years of Age .........................................................
a. Nonlocal Minors ..............................................
b. Minors Sixteen Years of Age or
Under ..............................................................
c. Employed on the Same Farm as
Parent or Person Standing in Place
of Parent .........................................................
5. Range Production of Livestock
Exemption .............................................................
IV. Section 13(b) Exemptions From the Overtime Requirements
of the Act ............................................................................
A. Outside Buyers of Certain Agricultural
Products ......................................................................
B. Agricultural Workers and Those Employed
in Operating or Maintaining Irrigation
Systems for Agricultural Purposes ..............................
C. Employment in Agriculture and Livestock
Auction Operations by a Farmer..................................
D. Employment by Small Country Elevators
Within the Area of Production ......................................
E. Processing Maple Sap Into Sugar or Syrup ................
F. Intrastate Transportation of Fruits
and Vegetables and Fruit and Vegetable
Harvesters ...................................................................
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G. Small-Scale Forestry or Lumbering
Operations ...................................................................
V. Section 13(d) Exemption From the Minimum
Wage, Overtime, and Child Labor
Requirements .....................................................................
A. Employment of Homeworkers in Making
Wreaths .......................................................................
VI. Fourteen-Workweek Limitation on Exemption
From Overtime Requirements ............................................
A. Activities Exempt Under Section 13(h) ........................
1. Cotton....................................................................
2. Sugar Cane ...........................................................
3. Sugar Beets ..........................................................
B. Activities Exempt Under Section 13(i) .........................
C. Activities Exempt Under Section 13(j) .........................
D. Employees Engaged in the Tobacco
Industry ........................................................................
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SPECIAL CERTIFICATES ..................................
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I. Overview ............................................................................
II. Full-Time Students .............................................................
A. Retail and Service Establishments ..............................
B. Agriculture ...................................................................
C. Educational Institutions ................................................
III. Student-Learners ...............................................................
IV. Apprentices ........................................................................
V. Learners .............................................................................
VI. Disabled Workers ...............................................................
VII. Messengers .......................................................................
VIII. Student-Workers ................................................................
IX. Certificate Annulment or Withdrawal ..................................
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CHAPTER 7:
CHAPTER 8:
DETERMINING COMPENSABLE HOURS
WORKED ............................................................
I. Overview ............................................................................
II. Historical Context of the Term “Hours
Worked” .............................................................................
A. Judicial Construction of “Hours Worked” .....................
B. The Portal-to-Portal Act ...............................................
C. Supreme Court Cases .................................................
D. Department of Labor Activity .......................................
III. Principles for Determining “Hours Worked” .......................
A. Definition of “Employ” ..................................................
B. Effect of Custom, Contract, or Agreement ...................
Supplement
xvii C. Continuous Workday Rule ...........................................
D. Section 3(o) of the FLSA .............................................
1. “Custom or Practice” .............................................
2. “Clothing”...............................................................
3. “Washing” ..............................................................
IV. Application of Principles .....................................................
A. “Suffer or Permit to Work” ............................................
1. Knowledge ............................................................
2. Work Performed Away From the Job Site .............
3. Duty of Management .............................................
B. Waiting Time ................................................................
1. On Duty .................................................................
2. Off Duty .................................................................
3. On-Call Time .........................................................
a. Appellate Cases Finding That
On-Call Time Is Compensable .......................
b. Appellate Cases Finding That On-Call
Time Is Not Compensable ..............................
C. Rest and Meal Periods ................................................
1. Rest Periods..........................................................
2. Meal Periods .........................................................
a. Appellate Cases Finding That a Meal
Period Is Compensable ..................................
b. Appellate Cases Finding That a Meal
Period Is Not Compensable ............................
c. Wage and Hour Division Opinion
Letters .............................................................
D. Sleeping Time and Certain Other Activities .................
1. Duty Period of Less Than 24 Hours ......................
2. Duty Period of 24 Hours or More ..........................
3. Employee Residing on Employer’s
Premises or Working at Home ..............................
E. Preparatory and Concluding Activities .........................
1. Steiner and King Packing Company .....................
2. Donning and Doffing .............................................
3. Preparing Equipment ............................................
4. Transporting Tools and Equipment .......................
5. Security Screening ................................................
6. Change of Shifts....................................................
7. Other Preliminary/Postliminary
Activities ................................................................
F. Lectures, Meetings, and Training Programs ................
1. Involuntary Attendance .........................................
2. “Directly Related to” Employee’s Job ....................
3. Independent Training ............................................
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MINIMUM WAGE REQUIREMENTS ..................
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I. Overview ............................................................................
II. Payment of the Minimum Wage .........................................
A. “Free and Clear” Payments .........................................
B. Time of Payment .........................................................
C. Payment Must Be in Cash or Negotiable
Instruments ..................................................................
1. Direct Deposit Permitted .......................................
2. Scrip, Tokens, Coupons, and Similar
Devices Not Permitted ..........................................
III. Non-Cash Wages Under Section 3(m)—
“Board, Lodging or Other Facilities” ...................................
A. “Customarily Furnished” to the Employee ...................
1. “Voluntary and Uncoerced” ...................................
2. “Customarily Furnished” ........................................
B. “Board, Lodging or Other Facilities”.............................
1. Meals.....................................................................
2. Lodging .................................................................
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4. Apprenticeship Training ........................................
G. Travel Time ..................................................................
1. Preliminary and Postliminary Travel .....................
2. Emergency or Call-Back Situations ......................
3. Overnight Travel....................................................
4. Special One-Day Trips ..........................................
5. Travel “All in a Day’s Work”...................................
6. Private Automobile and Employer
Vehicle Use ...........................................................
H. Other Situations ...........................................................
1. Adjusting Grievances ............................................
2. Medical Attention...................................................
3. Civic and Charitable Work.....................................
4. Suggestion Systems .............................................
5. Bidding for Work Schedules
or Vacation Leave [New Topic] .............................
V. Recording Working Time ...................................................
A. Rounding-Off Practices ...............................................
B. The De Minimis Doctrine .............................................
1. General Concept ...................................................
2. Application of the De Minimis Doctrine .................
a. The Lindow Factors ........................................
b. Aggregation ....................................................
c. Cases Finding Time De Minimis .....................
d. Cases Finding Time Not De Minimis ..............
CHAPTER 9:
xix Midwinter
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Main
Volume
3. “Other Facilities” ....................................................
a. General Merchandise .....................................
b. Fuel, Electricity, Water, and Gas ....................
c. Transportation ................................................
d. Educational Costs ...........................................
4. Items Primarily for Benefit or Convenience
of Employer Are Not Facilities ...............................
C. Determining “Reasonable Cost” ..................................
1. General Determination ..........................................
2. Procedure for Administrator
Determination of “Reasonable Cost” .....................
3. Procedure for Determining “Fair Value” ................
D. Effect of Collective Bargaining Agreements ................
IV. Payment of Wages to Tipped Employees ..........................
A. Historical Background of the Tip Credit .......................
B. Current Statutory Provisions Regarding
Tipped Employees .......................................................
C. General Characteristics of Tips ...................................
D. Compulsory Charges for Service Are
Not Tips .......................................................................
E. “More Than $30 a Month in Tips” ................................
F. Dual Jobs .....................................................................
G. “Customarily and Regularly” ........................................
H. Tip Pooling ...................................................................
I. Request for Review of Tip Credits ...............................
J. Overtime Payments .....................................................
K. Deductions From Tips .................................................
V. Calculating the Minimum Wage .........................................
A. Averaging Earnings Over the Workweek .....................
B. Monthly Salaries ..........................................................
C. Commission Payments ................................................
1. Commission Paid on a Weekly Basis ...................
2. Monthly and Longer Commission
Period ....................................................................
D. Piece Rates .................................................................
1. Nonproductive Activities ........................................
2. Average Earnings of Beginners ............................
VI. Deductions From Wages ...................................................
A. Amounts Deducted for Taxes ......................................
B. Payments to Third Persons Pursuant
to Court Orders ............................................................
C. Payments to Employee’s Assignees ...........................
D. Shortages ....................................................................
E. Other Debts to the Employer .......................................
1. Unearned Vacation ...............................................
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2. Training Costs .......................................................
F. Uniforms and Uniform Cleaning ..................................
1. What Is a Uniform? ...............................................
2. Paying for the Uniform ..........................................
3. Caring for the Uniform ...........................................
VII. Special Minimum Wage Requirements ..............................
A. Employees Working Under Special
Certificates ...................................................................
B. Employees Under Age 20 Paid
an Opportunity Wage ...................................................
CHAPTER 10: DETERMINING OVERTIME
COMPENSATION ...............................................
I. Overview ............................................................................
II. General Principles ..............................................................
III. The “Workweek” Concept ..................................................
A. Determining the Workweek .........................................
B. Alternative Work Schedules ........................................
C. Overtime Must Be Paid on the Regular
Payday .........................................................................
D. Prepayment Plans .......................................................
IV. The “Regular Rate” ............................................................
A. Regular Rate Includes “All Remuneration” ..................
B. Statutory Exclusions From the Regular
Rate and Payments Creditable
to Overtime ..................................................................
1. Extra Compensation Paid for Overtime
Work—Sections 7(e)(5)–(7) ..................................
a. Premium Pay for Work in Excess
of the Daily or Weekly Standard—
Section 7(e)(5) ................................................
b. Premium Pay for Work on Saturdays, Sundays,
and Other Special Days—Section 7(e)(6) ......
c. “Clock Pattern” Premium Pay—
Section 7(e)(7) ................................................
d. Other Types of Premium Pay
Distinguished ..................................................
e. Premium Pay Creditable to Overtime
Under Section 7(h) .........................................
2. Discretionary Bonuses, Prizes,
and Awards—Section 7(e)(3)(a) ...........................
a. Discretionary Versus
Nondiscretionary .............................................
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b. Prizes, Contest Awards, and
Suggestion Systems .......................................
c. Nondiscretionary Bonuses
Determined and Paid by Others .....................
d. Nondiscretionary Bonuses That
Include Overtime ............................................
3. Gifts, Christmas, and Special Occasion Bonuses—
Section 7(e)(1) ......................................................
4. Profit-Sharing or Trust or Thrift
or Savings Plans—Section 7(e)(3)(b) ...................
5. Stock Option Grants—Section 7(e)(8) ..................
6. Benefit Plan Contributions—
Section 7(e)(4) ......................................................
a. Cafeteria Plans ...............................................
7. Payments Made When No Work
Is Performed—Section 7(e)(2) ..............................
8. Reimbursement for Work-Related
Expenses—Section 7(e)(2) ...................................
9. “Other Similar Payments”—Section
7(e)(2) ...................................................................
a. Show-Up, Call-back, and Short
Call Pay ..........................................................
b. Pay for Other Nonproductive Hours ...............
10. Talent Fees in the Radio and Television Industry—
Section 7(e)(3)(c) ..................................................
C. Calculating Regular Rate and Overtime
Under Various Methods of Payment............................
1. Payment of Wages Based on an Hourly
Rate.......................................................................
a. Employees Paid at One Hourly Rate ..............
b. Employees Paid at Two or More
Hourly Rates ...................................................
2. Payment of Wages Based on a
Nonhourly Rate .....................................................
a. Piece Rates Generally ....................................
b. Piece Rate with Hourly Guarantee .................
c. Day Rates and Job Rates ...............................
d. Salaried Employees—Generally .....................
e. Salaried Employees—Fluctuating
Workweek Method ..........................................
(i.)
Salary Basis of Payment ......................
(ii.)
Salary Exceeds Minimum Wage ..........
(iii.) “Clear Mutual Understanding” ..............
(iv.) Fluctuating Hours .................................
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Availability of Fluctuation Workweek
Method for Calculating Damages in
Misclassification Cases [New Topic] ....
f. Commission Employees .................................
(i.)
Paid on a Workweek Basis ..................
(ii.)
Deferred Payments ..............................
(iii.) Delayed Credits and Debits .................
g. Bonuses ..........................................................
h. “Task” Basis of Payment ................................
(i.)
Payment for Tasks Regardless
of Actual Hours Worked .......................
(ii.)
Computing Overtime Pay for Employees
Compensated on a Task Basis ............
i. Tipped Employees [New Topic] ......................
V. Special Problems Concerning the Regular
Rate ...................................................................................
A. Change in the Beginning of the Workweek .................
B. Retroactive Pay Increases ...........................................
C. Deductions From Wages .............................................
1. Deductions for Lodging, Meals,
and Other Facilities ...............................................
2. Deductions for Items Other Than
Facilities ................................................................
3. Deductions Authorized by the Employee
or Required by Law ...............................................
4. Salary Reductions in Short Workweeks ................
5. Deductions for Disciplinary Reasons ....................
D. Lump Sum Attributed to Overtime ...............................
1. The Overtime Rate Is an Hourly Rate ...................
2. Fixed Sum—Constant Amount
of Overtime............................................................
3. Fixed Sum—Varying Amounts
of Overtime............................................................
4. Flat Rate for a Special Job Performed
in Overtime Hours .................................................
E. Reduction in the Workweek Schedule
With No Change in Pay ...............................................
1. Reducing the Fixed Workweek for Which
a Salary Is Paid .....................................................
2. Effect if the Salary Is for a Variable
Workweek .............................................................
3. Reduction of the Regular Overtime
Workweek Without Reduction
of Take-Home Pay ................................................
4. Temporary or Sporadic Reduction
in Schedule ...........................................................
Supplement
Midwinter
Report
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F. Gap Time .....................................................................
VI. Exceptions From the Regular Rate Principles ...................
A. Using Basic Rates for Regular Rates ..........................
1. Requirements for a Basic Rate .............................
2. Methods for Calculating Basic Rates ....................
a. Averaging Salary ............................................
b. Averaging Earnings for a Period
Other Than a Workweek .................................
c. Averaging Earnings for Each Type
of Work ...........................................................
d. Regular Rate Minus Certain Meals .................
e. Regular Rate Minus Incidentals ......................
f. Average Earnings for the Year
or Quarter Year Preceding
the Current Quarter ........................................
3. Rates Authorized on Application ...........................
4. Computation of Overtime Pay ...............................
B. Belo-Type Wage Contracts .........................................
1. Statutory Exception Provided by
Section 7(f) ............................................................
2. Detailed Requirements of a Belo Plan ..................
a. Irregular Hours Required ................................
b. Bona Fide Agreement Required .....................
c. Specified Regular Rate ...................................
d. Provisions for Overtime Pay ...........................
e. Guarantee of Weekly Salary ...........................
f. Approval of Section 7(f) Contracts ..................
C. Computing Overtime Pay With the Rate
Applicable to the Type of Work Performed
in Overtime Hours ........................................................
1. General Requirements of Section 7(g) .................
2. Piecework..............................................................
3. Hourly Workers Employed at Two
or More Rates .......................................................
4. Hour-for-Hour Offset .............................................
VII. Examples of Pay Plans That Circumvent
the Act ................................................................................
VIII. Special Overtime Provisions ..............................................
A. Veterans’ Subsistence Allowance ...............................
B. Hospital and Residential Care
Establishments ............................................................
C. Employees Receiving Remedial Education .................
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CHAPTER 11: GOVERNMENT EMPLOYMENT ........................
11-1
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xxiv 136
I. Overview ............................................................................
II. Coverage Issues ................................................................
A. Definitions ....................................................................
B. Exclusions ...................................................................
1. Elected Officials ....................................................
2. Personal Staff of Elected Officials .........................
a. Court Employees ............................................
b. Law Enforcement Employees .........................
3. Policy-Making Appointees .....................................
4. Legal Advisors.......................................................
5. Employees of State and Local
Government Legislative Bodies ............................
6. Tribal Employees ..................................................
C. Volunteers ...................................................................
1. Definition of “Volunteer” ........................................
2. Receipt of Expenses, Reasonable
Benefits, or a Nominal Fee ...................................
3. Employment by the Same Public
Agency ..................................................................
4. Mutual Aid Agreements .........................................
5. Private Individuals as Volunteers
for Public Agencies ...............................................
III. Exemptions From Overtime Requirements
in the Public Sector ............................................................
A. Section 7(o)—Compensatory Time .............................
1. Prior Agreement or Understanding .......................
2. Representative of Employees ...............................
3. Rate of Accrual......................................................
4. Maximum Accrual..................................................
5. Conditions for Using or Cashing Out
Comp Time............................................................
a. “Reasonable Period” .......................................
b. “Unduly Disrupt” ..............................................
6. Effect of Comp Time on the Regular
Rate for Overtime Compensation .........................
7. Records to Be Kept of Compensatory
Time ......................................................................
B. Section 7(p)(1)—Special Detail Work ..........................
C. Section 7(p)(2)—Occasional or Sporadic
Employment.................................................................
1. Statutory Provision ................................................
2. Provisions in the Regulations ................................
a. “Occasional or Sporadic” ................................
b. “Different Capacity” .........................................
D. Section 7(p)(3)—Substitution ......................................
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E. Training Time ...............................................................
IV. FLSA Exemptions in the Public Sector ..............................
A. The White-Collar Exemptions ......................................
1. Executive Employees ............................................
2. Administrative Employees .....................................
3. Professional Employees .......................................
4. Public Sector Employees ......................................
5. Issues Under the Salary Basis Test ......................
B. Recreational Establishment Exemption .......................
C. Federal Criminal Investigator Exemption .....................
D. Domestic Service Employee Exemptions ....................
1. Section 13(a)(15) of the FLSA ..............................
2. Section 13(b)(21) of the FLSA ..............................
E. Transportation Employee Exemptions .........................
1. Section 7(n) of the FLSA .......................................
2. Section 13(b) of the FLSA .....................................
a. Section 13(b)(1) ..............................................
b. Section 13(b)(2) ..............................................
V. Special Provisions That Apply to Fire
Protection and Law Enforcement Employees
of Public Agencies .............................................................
A. Small Department Exemption ......................................
B. The Section 7(k) Exemption ........................................
C. Compensable Hours of Work Rules ............................
1. Sleep Time ............................................................
2. Meal Time .............................................................
3. Early Relief ............................................................
4. Animal Care ..........................................................
VI. Determining Whether Employees Are
Employed in Fire Protection or Law
Enforcement Activities .......................................................
A. Fire Protection Activities ..............................................
1. Effect of Section 3(y) on Regulations ....................
2. Medical Personnel Trained in Fire
Suppression ..........................................................
B. Law Enforcement Activities .........................................
C. Public Agency Employees Engaged
in Both Fire Protection and Law
Enforcement Activities .................................................
D. Trainees .......................................................................
VII. The Federal Sector ............................................................
A. White-Collar Exemptions .............................................
1. Executive Exemption ............................................
2. Administrative Exemption .....................................
3. Professional Exemption ........................................
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4. Other OPM Regulations Regarding
Exempt Status .......................................................
B. Compensable Hours of Work Rules ............................
1. Compensability Under the OPM
Regulations ...........................................................
2. Preliminary and Postliminary Activities .................
3. Sleep Time ............................................................
C. Calculation of Overtime Pay ........................................
D. Compensatory Time ....................................................
E. The Portal-to-Portal Act Good Faith
Defense .......................................................................
F. Liquidated Damages and Willfulness ..........................
G. Other Issues in the Federal Sector ..............................
1. Cases Addressing the Impact
of Other Laws ........................................................
2. Cases Addressing the Impact
of Collective Bargaining Agreements ....................
VIII. Application to Congressional Employees ...........................
A. Coverage .....................................................................
B. Office of Compliance ...................................................
1. Rules .....................................................................
2. The Board’s Regulations .......................................
3. Compensatory Time Regulations ..........................
4. Child Labor ............................................................
C. Study Regarding Government Accountability
Office, Government Printing Office,
and Library of Congress ..............................................
D. Administrative and Judicial Dispute
Resolution Procedures ................................................
IX. Unique Constitutional Defenses .........................................
A. The Tenth Amendment ................................................
B. The Eleventh Amendment ...........................................
1. Cases Granting Eleventh Amendment
Immunity................................................................
2. Cases Rejecting Eleventh Amendment
Immunity................................................................
a. Political Subdivisions and Other
Entities Within States ......................................
b. State Employees Sued in Their
Individual Capacities .......................................
Supplement
Midwinter
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CHAPTER 12: CHILD LABOR ....................................................
12-1
12-1
—
I. Overview ............................................................................
II. Precursors to the FLSA ......................................................
12-3
12-5
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xxvii Main
Volume
III.
IV.
V.
VI.
A. The Keating-Owen Law ...............................................
12-6
B. The Child Labor Tax Law ............................................
12-8
C. Attempts to Amend the Constitution ............................
12-9
D. The National Industrial Recovery Act ..........................
12-9
Passage of the FLSA ......................................................... 12-11
Child Labor Amendments .................................................. 12-14
A. 1946 ............................................................................. 12-14
B. 1949 ............................................................................. 12-14
C. 1957–1960 ................................................................... 12-15
D. 1961 ............................................................................. 12-16
E. 1966 ............................................................................. 12-16
F. 1974 ............................................................................. 12-16
G. 1977 ............................................................................. 12-17
H. 1990 ............................................................................. 12-17
I. 1996 ............................................................................. 12-17
J. 1998 ............................................................................. 12-18
K. 2004 ............................................................................. 12-18
L. 2008 ............................................................................. 12-19
Coverage ........................................................................... 12-19
A. “Oppressive Child Labor”............................................. 12-21
B. Section 12(a): The “Hot Goods”
Restriction .................................................................... 12-21
C. Section 12(c): The “Direct Prohibition” ........................ 12-23
D. Joint and Separate Applicability
of Sections 12(a) and 12(c) ......................................... 12-24
Work Restrictions by Age and Occupation ........................ 12-25
A. Nonagricultural Occupations ....................................... 12-26
1. Minors Under Age 18 ............................................ 12-26
a. Generally ........................................................ 12-26
b. The Hazardous Orders ................................... 12-27
c. Further Discussion of Selected
Hazardous Orders .......................................... 12-31
(i.)
HO 2: Motor Vehicle Driver
and Outside Helper .............................. 12-31
(ii.)
HO 5: Operating Power-Driven
Woodworking Machines ....................... 12-35
(iii.) HO 7: Operating Power-Driven Hoisting
Apparatus ............................................ 12-36
(iv.) HO 10: Operating Power-Driven
Meat-Processing Machines, Slaughtering,
Meat Packing or Processing,
or Rendering ........................................ 12-37
(v.)
HO 11: Operating Bakery
Machines ............................................. 12-39
xxviii Supplement
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(vi.)
VII.
VIII.
IX.
X.
XI.
HO 12: Operating
Paper-Product Machines .....................
(vii.) HO 16: Roofing Operations .................
d. Exemptions from the Hazardous
Order Prohibitions ...........................................
(i.)
Apprenticeship Exemption ...................
(ii.)
Student-Learner Exemption .................
2. Minors Under Age 16 ............................................
a. Hours Restrictions ..........................................
b. Prohibited Employment ..................................
c. Permissible Employment ................................
(i.)
Generally .............................................
(ii.)
Approved Work Experience
and Career Exploration Program .........
(iii.) Permitted Work Under DOL
Enforcement Position ...........................
3. Minors Under Age 14 ............................................
B. Agricultural Occupations ..............................................
1. Minors Under Age 16 ............................................
a. The Hazardous Occupations ..........................
b. Student-Learners ............................................
2. Minors Under Age 14 ............................................
3. Minors Under Age 12: “Tiny Tots” .........................
Specific Statutory Exemptions Involving
Child Labor .........................................................................
A. Nonagricultural Employment Exemptions....................
1. Actors and Performers—Section
13(c)(3)..................................................................
2. Newspaper Delivery—Section 13(d) .....................
3. Parental Employment—Section 3(l)(1) .................
B. Agricultural Exemption .................................................
Certificates of Age ..............................................................
Interaction of Federal and State Law .................................
“Hot Goods” Ban ................................................................
Enforcement .......................................................................
A. Injunctive Relief ...........................................................
B. Civil Money Penalties ..................................................
1. Administrative Law Judge Proceedings Contesting
Civil Money Penalties for Child Labor Violations ..
2. Review by the Administrative Review
Board.....................................................................
C. Criminal Prosecution ...................................................
D. No Private Remedy .....................................................
Main
Volume
CHAPTER 13: HOMEWORK ......................................................
xxix Main
Volume
I. Overview ............................................................................
II. Historical Background ........................................................
A. State Regulation ..........................................................
B. Federal Regulation ......................................................
III. Enactment of the FLSA ......................................................
A. The Ban in Seven Industries .......................................
B. Attempted Removal of the Ban
in the Knitted Outerwear Industry ................................
C. Replacement of the Reinstated Ban
in the Knitted Outerwear Industry
with a Certification System ..........................................
D. Extension of the Certification System
and Other Enforcement Mechanisms
to the Remaining Industries; Retention
of the Ban in Hazardous Jobs in Jewelry
and Women’s Apparel .................................................
E. Unsuccessful Attempt to Extend
the Certification System and Other
Enforcement Mechanisms to the
Women’s Apparel Industry ..........................................
IV. Exemption Certificates that Apply to the
Elderly, Disabled, or Those Responsible
for the Care of an Invalid ....................................................
V. The Certification System and Related
Enforcement Mechanisms .................................................
A. The Information Application .........................................
B. Employer Assurances ..................................................
C. Bonding Requirements ................................................
D. Special Recordkeeping Requirements ........................
E. Investigation ................................................................
F. Denial or Revocation of the Certificate ........................
1. State Prohibition ....................................................
2. Piecework..............................................................
3. Unpaid Violations, Likelihood
of Violations, Investigations,
and Other Proceedings .........................................
4. Child Labor Violations ...........................................
5. Back Wages or Civil Money Penalties ..................
6. Obstruction or Failure to Cooperate ......................
7. Discrimination or Retaliation .................................
G. Civil Money Penalties ..................................................
H. Injunction Proceedings ................................................
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CHAPTER 14: HOT GOODS PROVISIONS...............................
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I. Overview ............................................................................
II. The Original Hot Goods Language ....................................
III. Historical Background ........................................................
A. The Child Labor Act of 1916 ........................................
B. Legislative History of the Hot Goods
Provisions ....................................................................
C. Constitutionality of the Section 15(a)
Hot Goods Prohibition—the Darby Decision ...............
IV. Definitions Used in the Hot Goods Provisions ...................
A. Terms Found in the Hot Goods Ban
of Section 12(a) ...........................................................
1. “Producer, Manufacturer, or Dealer” .....................
2. “Ship” or “Deliver for Shipment”
in Commerce .........................................................
3. “Goods” .................................................................
4. “Produced” ............................................................
5. “Establishment Situated in the
United States” .......................................................
6. “In or About” ..........................................................
7. Removal ................................................................
B. “Any Person” Under the Hot Goods Ban
of Section 15(a)(1) .......................................................
1. Secured Creditors .................................................
2. Debtors in Bankruptcy ...........................................
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VI.
VII.
VIII.
IX.
Administrative Procedures That Apply
to Denial, Refusal to Renew, or Revocation
of a Certificate and to Assessment
of Civil Money Penalties ..............................................
1. Notice of Determination.........................................
2. Request for Hearing and Alternative
Proceedings ..........................................................
3. Referral to Administrative Law Judge ...................
4. Review by the Secretary .......................................
5. Judicial Review .....................................................
Homework Outside of Women’s Apparel
and the Six Other Regulated Industries .............................
Enforcement Issues ...........................................................
Working From Home ..........................................................
Independent Contractor Versus Employee ........................
A. McComb v. Homeworkers’ Handicraft
Cooperative .................................................................
B. Goldberg v. Whitaker House Cooperative ...................
C. Donovan v. DialAmerica Marketing .............................
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xxxi Main
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3. Owner, Manager, President ..................................
V. Statutory Exemptions From the Prohibition
Against Interstate Shipment of Hot Goods .........................
A. The Common Carrier Exemption .................................
B. The Good Faith Purchaser Exemption ........................
1. Introduction ...........................................................
2. Legislative History .................................................
3. Written Assurance From the Producer ..................
4. “Acquired in Good Faith for Value
Without Notice”......................................................
5. Litigation Under the Good Faith
Purchaser Exemption ............................................
a. Good Faith Effort to Comply ...........................
b. Violations Occurring After Purchase ...............
VI. Enforcement of the Hot Goods Ban ...................................
A. Injunction Proceedings ................................................
B. Dissolution of a Hot Goods Injunction .........................
C. Contempt of a Hot Goods Injunction ...........................
VII. Reliance on the Hot Goods Provisions
in Civil Actions Not Seeking a Hot Goods
Remedy ..............................................................................
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I. Overview ............................................................................
II. Parties ................................................................................
A. Plaintiffs .......................................................................
1. “Any Employee”.....................................................
2. Former Employees ................................................
3. Spouses, Family Members, and Friends
of Employees ........................................................
4. Applicants for Employment ...................................
5. Undocumented Workers .......................................
B. Defendants ..................................................................
1. “Any Person” .........................................................
2. Individuals .............................................................
3. Labor Unions .........................................................
4. Government Agencies ..........................................
III. Protected Activities Under Section 15(a)(3) .......................
A. Refusing to Return a Back Pay Award ........................
B. Contacting the Department of Labor ...........................
C. Filing Any Complaint [Amended
Heading—Formerly “Internal
Workplace Complaints”] ..............................................
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CHAPTER 16: RECORDKEEPING ............................................
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I. Overview ............................................................................
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V.
VI.
VII.
VIII.
IX.
1. Cases Holding That a Formal Complaint
Is Not Required .....................................................
2. Cases Holding That a Formal Complaint
Is Required ............................................................
D. “Good Faith” Requirement ...........................................
E. Employer’s Mistaken Belief That a Complaint
Has Been Filed ............................................................
F. Testimony ....................................................................
G. Complaints by Managers and Human
Resource Personnel [New Topic] ................................
Prohibited Conduct Under Section 15(a)(3) .......................
A. Constructive Discharge ...............................................
B. Harassing Acts at Work ...............................................
C. Postemployment Acts ..................................................
D. Retaliatory Lawsuits ....................................................
Prima Facie Case and Burden of Proof .............................
Defenses and Other Responses ........................................
A. Statute of Limitations ...................................................
B. Good Faith ...................................................................
C. Waiver and Release ....................................................
D. Claim Preclusion [New Topic]......................................
Remedies ...........................................................................
A. Reinstatement and Other Injunctive
Remedies ....................................................................
1. Reinstatement .......................................................
2. Reinstatement Pending a Trial
on the Merits .........................................................
3. Other Injunctive Relief [New Topic] .......................
B. Monetary Damages .....................................................
1. Back Pay ...............................................................
2. Front Pay...............................................................
3. Liquidated Damages .............................................
4. Compensatory and Punitive Damages .................
a. Compensatory Damages ................................
b. Punitive Damages ..........................................
5. Interest ..................................................................
a. Prejudgment Interest ......................................
b. Postjudgment Interest .....................................
C. Attorneys’ Fees and Costs ..........................................
Preemption of Wrongful Discharge Actions .......................
Retaliation – Release of FLSA Retaliation Claims
[New Topic] ........................................................................
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Volume
II. Requirements Generally Applicable
to Employers of Workers Subject to
the FLSA’s Minimum Wage or Minimum
Wage and Overtime Pay Requirements ............................
A. Form of Records and Recordkeeping
Systems .......................................................................
B. Items Required ............................................................
1. Required Information ............................................
2. Retroactive Payments ...........................................
3. Fixed Schedules....................................................
C. Preservation of Records ..............................................
1. Three-Year Retention............................................
2. Two-Year Retention ..............................................
3. Place for Keeping Records ...................................
4. Recomputation and Reports at the
DOL’s Request ......................................................
D. Petition for Exceptions .................................................
E. Posting of Notices ........................................................
III. Records Pertaining to Employees Subject
to Exemptions Under the FLSA .........................................
A. Bona Fide Executive, Administrative,
and Professional Employees and Outside
Sales Employees Who Are Exempt Under
Section 13(a)(1) ...........................................................
B. Employees Who Are Exempt From
Minimum Wage and Overtime Pay
Requirements Under Specific Provisions
of Section 13(a) or 13(d)..............................................
C. Employees Who Are Exempt From
Overtime Pay Requirements Under
Specific Provisions of Section 13(b) ............................
D. Livestock Auction Employees Who Are
Exempt From Overtime Pay Requirements
Under Section 13(b)(13) ..............................................
E. Country Elevator Employees Who Are
Exempt From Overtime Pay Requirements
Under Section 13(b)(14) ..............................................
F. Local Delivery Drivers Who Are Exempt
From Overtime Pay Requirements
Pursuant to Section 13(b)(11) .....................................
G. Commission Employees of a Retail
or Service Establishment Who Are
Covered by Section 7(i) ...............................................
H. Seamen Who Are Exempt From
Overtime Pay Requirements Pursuant
to Section 13(b)(6) .......................................................
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Workers Who Are Employed in Certain
Tobacco, Cotton, Sugar Cane, or Sugar Beet
Services and Are Partially Exempt From
Overtime Pay Requirements Pursuant
to Sections 7(m), 13(h), 13(i), or 13(j) ......................... 16-23
J. Employees Under Certain Collective
Bargaining Agreements Who Are Partially
Exempt From Overtime Pay Requirements
Under Section 7(b)(1) or 7(b)(2) .................................. 16-23
K. Bulk Petroleum Employees Who Are
Partially Exempt From Overtime Pay
Requirements Pursuant to Section 7(b)(3) .................. 16-24
L. Employees Who Engage in Charter
Activities Pursuant to Section 7(n)............................... 16-25
M. Employees of Hospitals and Residential
Care Facilities Who Are Compensated
for Overtime Work on the Basis
of a 14-Day Work Period Pursuant
to Section 7(j) .............................................................. 16-25
N. Workers Who Are Employed Under
Section 7(f) Belo Contracts .......................................... 16-26
O. Employees Who Are Paid for Overtime
on the Basis of “Applicable” Rates Provided
in Section 7(g)(1) or 7(g)(2) ......................................... 16-27
P. Employees Paid for Overtime at Premium
Rates Computed on a “Basic” Rate
Authorized in Accordance With
Section 7(g)(3) ............................................................. 16-28
Q. Employees of Private Entities That Operate Amusement or
Recreational Establishments Located in National Parks,
National Forests, or on Land in the National Wildlife
Refuge System ............................................................ 16-29
R. Learners, Apprentices, Messengers,
Students, or Disabled Workers Employed
Under Special Certificates as Provided
in Section 14 ................................................................ 16-30
S. Workers Who Are Employed in Agriculture
Pursuant to Sections 13(a)(6) or 13(b)(12).................. 16-31
T. Employees Who Receive Remedial
Education Pursuant to Section 7(q) ............................. 16-33
IV. Other Special Recordkeeping Requirements ..................... 16-34
A. Tipped Employees ....................................................... 16-34
B. Industrial Homeworkers ............................................... 16-34
C. Deductions for Board, Lodging, or Other
Facilities ....................................................................... 16-36
V. Violation of Recordkeeping Requirements ......................... 16-38
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CHAPTER 17: DEPARTMENT OF LABOR ENFORCEMENT
AND REMEDIES ..........................................................................
I. Overview ............................................................................
II. DOL Investigations and Other Compliance
Actions ...............................................................................
A. Basis of the Investigation .............................................
1. Complaint ..............................................................
a. “Worst-First” Basis ..........................................
b. Conciliation .....................................................
c. Geographic Scope ..........................................
2. Department-Initiated Investigations ......................
B. Conducting Investigations ...........................................
1. Initial Interview With the Employer ........................
2. Issues in the Investigation .....................................
3. Inspection of Records ...........................................
4. Employee Interviews .............................................
a. Discovery of DOL Material
[New Topic] ......................................................
(i.) Generally [New Topic]................................
(ii.) Discovery of Information
From Informers [New Topic] .....................
(a.) The Informer’s Privilege
[New Topic].......................................
(b.) Applicability of the Work Product
Doctrine to Informer Statements
[New Topic].......................................
(c.) Witness Statements
[New Topic].......................................
(iii.) Attempting to Prevent Employee
Interviews [New Topic] .............................
C. Voluntary Compliance .................................................
1. Promises of Future Compliance
and Back Wages ...................................................
2. Installment Payments ............................................
3. Request for Waiver of Statute
of Limitations .........................................................
D. If Voluntary Compliance Is Not Achieved ....................
E. Subpoenas Issued by the DOL ....................................
1. Statutory Basis of DOL’s Subpoena
Power ....................................................................
2. Procedure and Practice ........................................
3. Scope ....................................................................
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III. Civil Money Penalties .........................................................
A. Assessment of Civil Money Penalties..........................
1. Repeated or Willful Minimum Wage
or Overtime Violations and Child Labor Violations
a. Assessment ....................................................
b. Exceptions ......................................................
2. Homework Violations ............................................
B. Administrative Law Judge Proceedings
When Civil Money Penalties Are Contested ................
1. Repeated or Willful Minimum Wage
or Overtime Violations and Child Labor
Violations...............................................................
2. Homework Violations ............................................
C. Appeals to the Secretary .............................................
1. Repeated or Willful Minimum Wage
or Overtime Violations and Child Labor Violations
2. Homework Violations ............................................
D. Judicial Review of Civil Money Penalties ....................
1. Generally ...............................................................
2. Venue ....................................................................
3. Scope of Review ...................................................
4. Time for Review ....................................................
E. Other Administrative Actions .......................................
F. Double Jeopardy and Civil Money Penalties ...............
IV. Actions for Injunctive Relief ................................................
A. Generally .....................................................................
1. Who Can Bring a Section 17 Injunction
Action ....................................................................
2. The Subject of a Section 17 Injunction
Must Be an Employer ............................................
3. Conduct Subject to Injunction Actions ..................
B. Prospective Injunctions ................................................
1. General Standards for Issuance ...........................
2. Recordkeeping Violations .....................................
3. Child Labor Violations ...........................................
4. Hot Goods Violations ............................................
5. Retaliation Violations ............................................
6. Homework Violations ............................................
C. Restitutionary Injunctions ............................................
1. Nature and Purpose ..............................................
2. Factors ..................................................................
3. Actions on Behalf of Group or Class
of Employees ........................................................
4. Statute of Limitations ............................................
5. Interest ..................................................................
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a. Prejudgment Interest ......................................
b. Postjudgment Interest .....................................
c. Computation and Rate ....................................
D. Temporary Restraining Orders
and Preliminary Injunctions .........................................
1. Authority to Seek Preliminary Relief .....................
2. Proof and Procedure .............................................
3. Hot Goods Cases ..................................................
E. Duration of Injunctions .................................................
F. Motions to Modify or Vacate ........................................
G. Contempt .....................................................................
1. Civil Contempt .......................................................
a. The Prima Facie Case and
Applicable Defenses .......................................
b. Statute of Limitations ......................................
c. Remedies .......................................................
2. Criminal Contempt ................................................
V. DOL Actions for Back Wages ............................................
A. Secretary of Labor’s Right to Bring Action
for Back Wages ...........................................................
B. Preclusive Effect of Secretary’s Back Pay
Lawsuit or Intervention ................................................
C. Right to a Jury Trial Under Section 16(c) ....................
D. Defendants ..................................................................
E. Calculation of Money Damages...................................
F. Disposition of Unclaimed Back Wages ........................
G. Liquidated Damages Available
to the Secretary Under Section 16(c) ..........................
VI. Criminal Proceedings .........................................................
A. Nature of Offenses ......................................................
1. The Willfulness Standard ......................................
2. Course of Conduct ................................................
B. Defendants ..................................................................
1. Corporations..........................................................
2. Owners, Stockholders, Directors,
Managers, and Others ..........................................
C. Procedure ....................................................................
D. Punishments Available ................................................
1. First Offenses ........................................................
2. Second and Subsequent Offenses .......................
E. Statute of Limitations ...................................................
F. Other Defenses ...........................................................
VII. Evidentiary Issues in Actions Brought by the DOL
[New Topic] ........................................................................
A. Informant Privilege [New Topic]...................................
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CHAPTER 18: LITIGATION ISSUES ..........................................
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I. Overview ............................................................................
II. Jurisdiction .........................................................................
A. Generally .....................................................................
B. Federal Courts .............................................................
1. Original Jurisdiction ...............................................
2. Supplemental Jurisdiction .....................................
C. State Courts .................................................................
D. Arbitration ....................................................................
1. Individual Arbitration Agreements .........................
a. Form and Scope of Individual
Arbitration Agreements ...................................
b. Enforceability of Arbitration
Agreement ......................................................
c. Arbitration of Collective Action
Claims .............................................................
2. Collectively Bargained Arbitration
Procedures ............................................................
a. Generally ........................................................
b. Effect of Labor Management Relations
Act on FLSA Suit [New Topic] ........................
c. Effect of Prior Grievance Arbitration
on Subsequent FLSA Suit
[Renumbered Section] ....................................
III. Venue .................................................................................
A. Generally .....................................................................
B. Removal From State to Federal Court.........................
C. Consolidation and Transfer .........................................
1. Section 1404 Transfer and Forum
Non Conveniens ...................................................
2. Section 1407 Consolidation and Transfer .............
3. The “First to File” Rule ..........................................
IV. Parties ................................................................................
A. Standing ......................................................................
1. Actions by Private Plaintiffs ...................................
2. Actions by Unions .................................................
3. Preclusion of Private Party Claims
Following Enforcement Action
by Secretary ..........................................................
4. Actions by Other Interested Parties ......................
a. Actions by Interested Parties Under
the Declaratory Judgment Act ........................
b. Actions by Interested Parties Under
the Administrative Procedure Act ...................
18-5
18-7
18-7
18-8
18-8
18-9
18-10
18-10
18-10
—
18-7
—
18-7
18-7
18-7
—
18-8
18-8
—
170
—
—
—
—
—
170
170
18-11
18-8
170
18-13
18-8
172
18-15
18-11
175
18-16
18-16
18-11
18-11
178
—
—
18-12
—
18-18
18-20
18-20
18-21
18-21
18-14
18-14
18-14
—
18-15
—
181
181
—
181
18-21
18-23
18-24
18-24
18-24
18-25
18-25
18-15
18-16
—
18-16
—
—
—
181
—
182
184
184
184
—
18-26
18-28
—
—
—
—
18-28
—
—
18-33
—
—
xxxix B. Joinder of Parties .........................................................
C. Intervention ..................................................................
1. Intervention by Parties Plaintiff .............................
2. Intervention by Parties Defendant .........................
D. Joint Employment and Individual
Defendants ..................................................................
E. Successors ..................................................................
1. Bona Fide Successor Requirement ......................
2. Requirement of Notice of Potential
Liability ..................................................................
3. Requirement of Predecessor’s Inability
to Provide Relief ....................................................
V. Affirmative Defenses ..........................................................
A. Generally: Exemptions, Deductions,
and Credits ..................................................................
B. Statute of Limitations ...................................................
1. Generally ...............................................................
2. Willful and Nonwillful Violations ............................
a. Willfulness Standard .......................................
b. Determination of Willfulness
by Judge or Jury .............................................
3. Commencement of Action .....................................
4. Accrual of Limitations Period ................................
5. Equitable Tolling and Equitable
Estoppel ................................................................
C. Laches .........................................................................
D. Good Faith Defenses...................................................
1. Section 10: Actions Taken in Good Faith,
in Conformity With, and in Reliance
on Written Rulings or Enforcement
Policies of the Administrator..................................
a. General Nature of the Defense .......................
b. “In Good Faith” ...............................................
c. “In Actual Conformity With” .............................
d. “In Reliance On” .............................................
e. “Any Written Administrative
Regulation, Order, Ruling, Approval,
or Interpretation” .............................................
f. “Or an Administrative Practice or Enforcement
Policy” .............................................................
g. “An Agency of the United States” ...................
xl Main
Volume
Supplement
Midwinter
Report
18-36
18-37
18-37
18-38
18-16
—
—
—
—
—
—
—
18-39
18-40
18-42
18-16
18-17
—
185
187
189
18-44
—
—
18-44
18-45
—
18-18
—
189
18-45
18-49
18-49
18-51
18-51
18-18
18-19
18-19
18-19
18-19
—
190
190
190
191
18-56
18-57
18-59
18-23
—
18-23
192
—
193
18-62
18-65
18-66
18-24
18-25
18-25
193
—
193
18-67
18-67
18-73
18-76
18-77
18-25
18-25
18-26
18-26
18-27
193
—
—
—
—
18-79
18-27
193
18-84
18-86
—
18-27
—
—
Main
Volume
2. Section 11: Actions Taken in Good Faith
and With Reasonable Grounds for
Believing They Were Not in Violation
of the Act ............................................................... 18-89
a. General Nature of the Defense ....................... 18-89
b. Burden of Proof .............................................. 18-91
c. Judicial Findings Required ............................. 18-94
d. Subjective Good Faith .................................... 18-97
e. Reasonable Grounds to Believe Not
in Violation of the Act ...................................... 18-101
f. Effect of a Jury Verdict on Willfulness
for Statute of Limitations Purposes
on a Judge’s Discretion Under
Section 11 ....................................................... 18-114
g. Amount of Liquidated Damages
Awarded ......................................................... 18-119
3. Waiver of Attorney-Client Privilege ....................... 18-120
E. Estoppel....................................................................... 18-121
1. Estoppel Based on Failure to Disclose
FLSA Claims in Bankruptcy .................................. 18-122
2. Estoppel Based on Employee’s Failure
to Claim Overtime ................................................. 18-122
3. Collective Bargaining, Custom,
and Practice .......................................................... 18-126
F. Mootness ..................................................................... 18-129
G. Claim and Issue Preclusion ......................................... 18-131
H. Bankruptcy ................................................................... 18-133
VI. Burden of Proof .................................................................. 18-135
A. Burden of Proof Generally ........................................... 18-135
B. Proving the Prima Facie Wage Case .......................... 18-136
C. Proving the Number of Hours Worked ......................... 18-139
1. Generally ............................................................... 18-139
2. Inadequate or Inaccurate Records ........................ 18-140
D. Proving Exemptions and Other Defenses ................... 18-143
E. Proving Good Faith and Willfulness ............................ 18-146
F. Standards of Review on Appeal .................................. 18-146
G. Representative Testimony ........................................... 18-148
VII. Damages ............................................................................ 18-148
A. Damages Generally: Integration of State
and Federal Damages ................................................. 18-148
B. Monetary Damages ..................................................... 18-149
1. Actions for Back Wages and Overtime ................. 18-149
a. Computation: Generally .................................. 18-149
b. Computation: Salaried Employees Misclassified
as Exempt ....................................................... 18-150
xli Supplement
Midwinter
Report
18-27
—
—
—
18-27
194
—
194
—
—
18-28
194
—
195
—
—
18-30
—
—
195
18-31
196
18-31
198
18-31
18-32
18-32
—
18-33
18-33
18-33
18-30
—
18-34
18-35
—
—
—
18-37
—
198
199
200
200
—
201
201
201
—
—
202
—
—
203
—
18-37
18-37
—
204
204
204
—
18-37
204
Main
Volume
Computation: Calculation of Back
Pay Where Employer’s Records
Are Inadequate ...............................................
d. Deductions and Setoffs ..................................
e. Unclaimed Back Wages .................................
2. Liquidated Damages .............................................
a. Availability .......................................................
b. Computation ...................................................
3. Interest ..................................................................
a. Prejudgment Interest ......................................
b. Postjudgment Interest .....................................
C. Attorneys’ Fees and Costs ..........................................
1. Generally ...............................................................
2. Specific Factors That Affect Attorneys’
Fee Awards ...........................................................
a. Prevailing Plaintiff Requirement .....................
b. Hensley v. Eckerhart and the
Fee-Shifting Standard .....................................
c. Attorneys’ Fees for Non-FLSA
Claims Made in FLSA Litigation .....................
d. Attorneys’ Fees for Appellate Work ................
e. Calculating “Reasonable” Attorneys’
Fees ................................................................
(i.)
Calculating the Lodestar
Figure ...................................................
(ii.)
Adjusting the Lodestar
Amount—the 12-Factor Test ...............
f. Effects of Contingent Fee
Arrangements and Offers
of Judgment ....................................................
g. Appellate Review ............................................
D. Costs ...........................................................................
VIII. Settlement, Waiver, and Release ......................................
A. Compromise, Settlement, Waiver,
and Release: Generally ...............................................
B. Private Settlement, Waiver, and Releases ..................
C. DOL-Supervised Settlements ......................................
D. Judicially-Approved Consent Decrees .........................
Supplement
Midwinter
Report
18-155
18-158
18-158
18-160
18-160
18-162
18-163
18-164
18-169
18-170
18-170
18-39
18-39
—
18-40
18-40
—
18-40
18-40
—
18-41
18-41
—
—
—
206
206
—
—
—
—
207
208
18-176
18-176
18-42
18-42
209
—
18-178
—
—
18-180
18-181
18-42
18-43
—
—
18-182
18-43
209
18-183
18-44
210
18-188
18-46
212
18-193
18-196
18-197
18-199
18-48
—
18-49
18-50
—
—
213
213
18-199
18-200
18-203
18-206
—
18-50
18-52
18-52
213
216
218
219
c.
CHAPTER 19: COLLECTIVE ACTIONS....................................
19-1
19-1
220
I. Overview ............................................................................
II. Procedural Requirements of Section 16(b) ........................
A. The Opt-In Versus Opt-Out Requirement ....................
B. The Consent Requirement ..........................................
1. Scope and Use of Consent Form ..........................
19-5
19-7
19-7
19-8
19-11
—
19-6
—
19-6
19-7
—
220
222
223
224
xlii III.
IV.
V.
VI.
2. Form of Consent ...................................................
C. Impact of DOL Actions for Back Wages
on Collective Actions ...................................................
Overview of the Two-Stage Process Used
to Determine if a Collective Action May
Proceed to Trial ..................................................................
Stage I: Standard for Determining Whether
Conditional Certification Should Be Granted .....................
A. Standard Applied During Stage I .................................
B. Scope of Discovery Prior to Conditional Certification ..
1. Cases Denying Discovery .....................................
a. Cases Explicitly Denying Discovery ...............
b. Cases Granting Notice and Noting
No Need to Await Discovery ...........................
2. Cases Granting Discovery ....................................
3. Cases Addressing Whether Discovery
of Names and Addresses of Potential
Opt-In Plaintiffs Is Appropriate in
Advance of Conditional Certification .....................
C. Issues Courts Have Considered in
Determining Whether to Grant
Conditional Certification ...............................................
1. Geographical Scope .............................................
2. Variance in Job Duties ..........................................
3. Individualized Allegations or Defenses .................
4. Interest in Joining the Action .................................
5. Similar Practices or Policies ..................................
6. Addressing “Dispositive Issues” Prior
to Conditional Certification ....................................
7. The Time Period of Employment ..........................
8. Certification Against Multiple Employers ...............
9. Prior Publicity About the Lawsuit ..........................
D. Misclassification Cases ...............................................
1. Cases Granting Conditional Certification
in Misclassification Cases .....................................
2. Cases Denying Conditional Certification
in Misclassification Cases .....................................
E. Off-the-Clock Cases ....................................................
1. Pre-Shift and Post-Shift Cases .............................
2. Uncompensated Work During Meal
Break Time ............................................................
3. Rounding Cases....................................................
Authority to Facilitate Notice:
Hoffmann-La Roche, Inc. v. Sperling .................................
Form of Court-Ordered Notice ...........................................
xliii Main
Volume
Supplement
Midwinter
Report
19-12
19-7
—
19-13
—
—
19-15
19-7
226
19-18
19-18
19-27
19-29
19-29
19-8
19-8
19-16
19-19
19-19
244
244
271
271
—
19-30
19-31
—
19-20
272
272
19-33
19-20
273
19-35
19-35
19-38
19-41
19-43
19-47
19-21
19-21
19-25
19-31
19-34
19-36
275
275
282
290
301
305
19-49
19-52
19-53
19-54
19-55
19-42
19-43
19-43
—
19-45
320
—
322
—
325
19-55
19-45
330
19-58
19-59
19-62
19-48
19-49
19-51
337
339
347
19-68
19-71
19-54
19-57
352
358
19-73
19-76
—
19-57
358
361
VII.
VIII.
IX.
X.
XI.
A. Notice Content .............................................................
1. Inclusion of the Employer’s Defenses ...................
2. Obligations of the Opt-In Plaintiffs .......................
3. Contested Issues ..................................................
4. Judicial Neutrality .................................................
5. Consent Form Issues ...........................................
6. Contact Information ..............................................
B. Scope and Method of Providing Notice .......................
1. Temporal Scope of the Limitations
Period ....................................................................
2. Equitable Tolling....................................................
3. Temporal Scope for Notice Period ........................
C. Method of Providing Notice .........................................
Contact With Collective Action Members ...........................
A. Contact by Plaintiffs and Their Counsel ......................
B. Contact by Defendants and Their Counsel..................
Case Management Issues .................................................
A. Scope of Discovery From Opt-In Plaintiffs ...................
B. Bifurcation of Liability and Damages ...........................
C. Test Plaintiffs ...............................................................
Management of Multiple Collective Actions .......................
A. Multidistrict Transfer ....................................................
1. FLSA Cases Transferred Under
Section 1407 .........................................................
2. FLSA Cases Not Transferred Under
Section 1407 .........................................................
B. Alternatives to Section 1407 Transfer .........................
C. Section 1407 Common Issues Standard
Versus the Section 16(b) Collective Action
Standard ......................................................................
D. Notice and Opting In/Out of an MDL Case ..................
E. The First-to-File Rule ...................................................
F. Stays and Injunctions ..................................................
Pre-Trial Disposition of Cases ...........................................
A. Offers of Judgment to Collective Action
Plaintiffs and Opt-Ins ...................................................
B. Summary Adjudication of Opt-In
Plaintiff Claims .............................................................
C. Issue Preclusion in Multiple Collective
Actions .........................................................................
Stage II: The Standard for Deciding Motions
to Decertify Collective Actions ...........................................
A. Introduction ..................................................................
B. Disparate Factual and Employment
Settings of the Plaintiffs ...............................................
1. Misclassification Claims ........................................
2. Off-the-Clock Claims .............................................
xliv 19-78
19-80
19-81
19-82
19-85
19-86
19-88
19-90
19-57
19-59
—
19-60
19-63
19-64
19-65
19-66
361
363
363
366
369
371
373
377
19-90
19-92
19-95
19-97
19-103
19-104
19-113
19-117
19-117
19-123
19-127
19-129
19-129
19-66
19-67
19-70
19-72
19-78
19-78
19-80
19-83
19-83
19-85
—
19-85
19-85
378
384
393
398
406
406
406
410
410
412
—
413
413
19-131
19-85
413
19-132
19-132
19-86
19-86
413
—
19-133
19-134
19-136
19-138
19-139
—
—
19-87
—
19-89
—
—
413
415
417
19-139
19-89
417
19-145
19-92
422
19-146
19-93
—
19-149
19-149
19-93
19-93
422
422
19-154
19-157
19-160
19-94
19-97
19-99
425
428
432
Main
Volume
C. Individualized Defenses............................................... 19-163
D. Fairness and Procedural Considerations .................... 19-166
E. Appeal of Section 16(b) Decertification
[New Topic]..................................................................
—
XII. Intervention if Conditional Certification
Action Is Denied ................................................................. 19-169
XIII. Trial .................................................................................... 19-171
A. Representative Testimony and Evidence .................... 19-172
B. Use of Expert Witnesses ............................................. 19-177
C. Order and Presentation of Proof.................................. 19-183
XIV. Attorneys’ Fees, Costs, and Expenses
in Collective Actions ........................................................... 19-187
A. Attorneys’ Fees in Collective Actions
Litigated to Judgment .................................................. 19-188
B. Attorneys’ Fees in Settlement of Collective
Actions ......................................................................... 19-188
1. Common Fund .................................................... 19-190
2. Common Fund and Lodestar Cross
Check .................................................................. 19-193
3. Blend of Common Fund and Lodestar ................ 19-194
C. Issues Unique to Fee Determinations
in Collective Actions .................................................. 19-194
D. Costs and Expenses ................................................. 19-195
1. Fee-Shifting Awards of Costs and
Expenses to Prevailing Plaintiffs ......................... 19-195
2. Awards of Costs and Expenses in
Common Fund Cases ......................................... 19-196
3. Awards of Costs to a Prevailing
Defendant ........................................................... 19-197
XV. Settlement Issues in Collective Actions ........................... 19-197
A. Settlement of FLSA Claims ....................................... 19-197
B. Settlement of Class Actions Versus
Collective Actions ...................................................... 19-199
C. Determining Whether a Collective Action Settlement Is
the Product of a Bona Fide Dispute .......................... 19-201
D. Determining Whether a Collective Action Settlement Is
“Fair and Reasonable” ............................................... 19-202
E. Settlement Issues for Collective Actions ................... 19-204
1. “Incentive” Payments to Named
Plaintiff ................................................................ 19-204
2. Reversionary Settlements ................................... 19-205
3. Filing the Settlement Under Seal ........................ 19-206
4. Severability Clauses ........................................... 19-207
XVI. Appellate Issues for Collective Actions ............................ 19-207
XVII. Arbitration of Collective Actions ....................................... 19-209
xlv Supplement
19-101
19-105
—
Midwinter
Report
436
440
445
—
19-109
19-109
19-109
—
446
446
446
447
—
19-110
447
—
448
19-110
—
448
452
19-110
19-110
456
458
19-111
19-111
459
460
—
—
—
—
19-111
19-112
19-112
—
461
461
19-112
465
19-113
466
19-113
19-114
467
473
19-114
—
19-114
—
19-114
19-116
473
477
—
—
—
478
Main
Volume
A. Enforceability of Collective or Class
Action Waivers ..........................................................
B. Interpretation of Arbitration
Agreements That Are “Silent”
Regarding Class Actions ...........................................
C. Opt-Out Collective Actions ........................................
D. Conditional Certification When Putative
Class Members May Be Subject
to Arbitration Agreement ...........................................
CHAPTER 20: “HYBRID” FLSA/STATE LAW CLASS
ACTIONS ............................................................
I. Overview ............................................................................
A. Introduction ..................................................................
B. Why Hybrid Actions? ...................................................
II. Legal Challenges to Hybrid Actions ...................................
A. “Incompatibility” ...........................................................
B. Rules Enabling Act ......................................................
III. Federal Jurisdiction Over the State Law
Claims in Hybrid Actions ....................................................
A. Diversity Jurisdiction Under the Class
Action Fairness Act ......................................................
B. Supplemental Jurisdiction Under
28 U.S.C. §1367 ..........................................................
1. The Supplemental Jurisdiction Statute .................
2. Whether Supplemental Jurisdiction
Is Authorized .........................................................
a. No Federal Statute “Expressly”
Precludes Jurisdiction .....................................
b. Whether the State Law Claims
Are So Related to the FLSA Claims
That They Form Part of the “Same
Case or Controversy” .....................................
c. Whether Supplemental Jurisdiction
Extends to Individuals Who Do Not
Opt In to the FLSA Action ...............................
3. Whether the Court Should Decline
to Exercise Supplemental Jurisdiction ..................
a. Novel or Complex Issues of State
Law .................................................................
(i.)
Cases Declining Jurisdiction ................
(ii.)
Cases Retaining Jurisdiction ...............
b. Substantial Predominance of State
Law Claims .....................................................
(i.)
Cases Declining Jurisdiction ................
xlvi Supplement
Midwinter
Report
19-211
19-117
478
19-213
19-215
19-120
—
483
—
19-217
19-122
484
20-1
20-1
485
20-2
20-2
20-4
20-7
20-7
20-14
20-3
20-3
20-4
20-5
20-5
20-11
—
—
—
—
—
—
20-17
20-12
485
20-17
20-12
—
20-18
20-19
20-12
20-12
485
—
20-20
20-13
485
20-20
20-13
—
20-21
20-13
485
20-24
—
20-27
20-14
485
20-29
20-29
20-31
20-15
20-15
20-15
—
—
485
20-32
20-33
20-16
20-16
—
—
—
(ii.)
Cases Retaining Jurisdiction ...............
c. Dismissal of the FLSA Claims ........................
d. “Exceptional Circumstances”/
“Compelling Reasons” ....................................
(i.)
“Conflict” Between Opt-In
Actions and Opt-Out Actions ...............
(ii.)
Manageability .......................................
(iii.) Class Member Confusion ....................
IV. Standing to Prosecute the State Law Claims
in Hybrid Actions ................................................................
V. Rule 23 Class Certification in Hybrid Actions .....................
A. Numerosity/Impracticability of Joinder .........................
B. Superiority ...................................................................
1. Availability of an Opt-In Action
for the FLSA Claims ..............................................
2. Considerations Relating to Supplemental
Jurisdiction and Congressional Intent ...................
3. Class Member Confusion ......................................
4. Manageability [New Topic] ....................................
C. Common Questions and Predominance
of Common Questions [New Topic] ............................
xlvii Main
Volume
Supplement
Midwinter
Report
20-37
20-40
20-17
20-21
—
—
20-41
20-21
486
20-41
20-43
20-43
20-21
20-23
20-24
486
—
—
20-44
20-46
20-46
20-47
20-25
20-25
20-25
20-26
—
486
486
486
20-48
20-26
486
20-50
20-51
—
20-29
20-30
20-31
—
486
—
—
20-31
—
Chapter 2
OPERATIONS AND FUNCTIONS OF THE
DEPARTMENT OF LABOR
III.
Regulations, Interpretations, and Opinions
A.
Deference Standards
1. Deference Under Skidmore
In Flores v. City of San Gabriel,1 a California district court granted partial
summary judgment to both the plaintiffs and defendants on issues related to whether
certain cash payments made in lieu of payments for qualified benefits were part of the
regular rate. The court applied Skidmore deference to both 29. C.F.R. § 778.215(a)(5),
which enumerates certain conditions for the exclusion of an employer’s contribution
from the regular rate of pay, and a 2003 Opinion Letter,2 which creates a 20 percent cap
on the amount of benefits that could be paid in cash contributions, finding both to be
agency interpretations entitled to respect to the extent they had the power to persuade.
The court concluded that the regulation was persuasive, while finding the 2003 Opinion
Letter to be unpersuasive. The court declined to rely on the opinion letter for guidance
because the letter failed to provide any reasoning for adopting the 20 percent cap.
2. Deference Under Chevron
In Cesarz v. Wynn Las Vegas, LLC,3 casino dealers claimed the defendant
violated the FLSA by requiring tips to be shared with ineligible employees. Granting the
defendant’s motion to dismiss, the court agreed with a recent decision in Oregon
Restaurant & Lodging v. Solis.4 There, the district court of Oregon struck down
amendments made in 2011 to 29 C.F.R. § 531.54, the regulation dealing with an
employer’s tip pool credit. While the court in that matter found that the DOL had the
authority to issue the challenged regulation, the court held that it was bound to find that
under Chevron, there was no room for agency discretion to read section 3(m) of the
FLSA to permit the 2011 amendments because the Court of Appeals in Cumbie v.
Woody Woo, Inc.,5 had clearly held that Congress only intended, via section 203(m), to
1
969 F. Supp. 2d 1158 (C.D. Cal. 2013).
WH Op. Ltr. FLSA 2003-4, 2003 WL 23374600 (July 2, 2003).
3
2014 WL 117579 (D. Nev. Jan. 10, 2014).
4
__ F.Supp.2d ___, 2013 WL 2468298 (D. Or. 2013).
5
596 F.3d 577 (9th Cir. 2010).
2
1 limit the use of tip pools by an employer who took a tip credit to satisfy minimum wage
requirements.
In Stephenson v. All Resort Coach, Inc.,6 bus drivers argued that they had a
property right in all tips, and that their employer violated section 203(m) of the FLSA by
retaining a percentage of their tips. The employer filed a motion for partial summary
judgment arguing that because it never took a tip credit, there was no violation of
section 203(m). The plaintiffs cited to the recently amended regulation, 29 C.F.R.
§ 531.52, which states that “[t]ips are the property of the employee whether or not the
employer has taken a tip credit under section 3(m) of the FLSA.” The court, analyzing
the regulation under Chevron, held that the regulation was invalid and refused to apply
Chevron deference. The court explained that the plain language of section 203(m)
allows employers to either pay the full minimum wage free and clear or take a tip credit
and comply with the conditions imposed by section 203(m), including allowing
employees to retain all tips. The regulation, by requiring that employees retain all tips,
eliminated this choice by employers, and thus contradicted the unambiguous intent of
Congress when it enacted section 203(m). Accordingly, the court held that the bus
drivers were not entitled to retain all of their tips and granted partial summary judgment
for the employer.
B. Deference as Applied to Actions of the DOL
1. Regulations and Interpretations
In Oregon Restaurant & Lodging v. Solis,7 the plaintiff challenged new
regulations issued by the DOL under 29 C.F.R. §§ 531.52, 531.34 and 531.59, which
generally made tips the property of the employee and thus subject to tip pooling
requirements regardless of whether an employer took a tip credit. In granting the
plaintiff’s motion for summary judgment, the court held that the Ninth Circuit in Cumbie
v. Woody Woo, Inc.,8 squarely held that Congress intended only to limit the use of tips
by an employer when a tip credit is taken. Therefore, Woody Woo is controlling and the
new regulations are invalid under Chevron step one, which asks whether Congress has
directly spoken to the precise question at issue, and, if so, requires that a court give
effect to the unambiguously expressed intent of Congress.
In Mortgage Banks Ass’n v. Harris,9 the plaintiff, a banking trade association,
sought a declaratory judgment to void the DOL’s 2010 Administrator Interpretation
(“AI”), which revised a 2006 opinion letter finding mortgage loan officers exempt. The
plaintiff asserted that the DOL violated the Administrative Procedure Act’s (“APA”)
requirements when it issued the AI without providing a notice-and-comment period. In
reversing summary judgment for the DOL, the D.C. Circuit held that the DOL was
6
2013 WL 4519781 (D. Utah 2013).
948 F. Supp. 2d 1217 (D. Or. 2013).
8
596 F.3d 577, 579-80 (9th Cir. 2010).
9
720 F.3d 966 (D.C. Cir. 2013).
7
2 required to comply with the required notice and comment rulemaking procedures. The
court followed its Alaska Hunter line of cases, which held when an agency has given its
regulation a definitive interpretation and later significantly revises that interpretation, the
agency has in effect amended its rule, something it may not accomplish without notice
and comment. The court reaffirmed that in challenging substantially revised regulations,
the regulated community is not necessarily required to show “substantial and justified
reliance” on the prior rule. Rather, reliance is but one factor courts must consider in
assessing whether an agency interpretation qualifies as definitive or authoritative; here
the AI was definitive and therefore subject to APA requirements.
5. Wage and Hour Field Assistance Bulletins
In Glatt v. Fox Searchlight Pictures, Inc.,10 unpaid interns brought an action for
back wages. In granting summary judgment for the plaintiffs on the issue of employment
status, the New York district court held that DOL Fact Sheet #71 – which includes a
non-exhaustive list of six factors to determine if an internship may be unpaid – is entitled
to deference as it was promulgated by the agency charged with administrating the FLSA
and is a reasonable application.
10
2013 WL 2495140 (S.D.N.Y. Aug. 26, 2013) on reconsideration in part, 2013 WL 4834428
(S.D.N.Y. Aug. 26, 2013) and motion to certify appeal granted, 2013 WL 5405696 (S.D.N.Y. Sept. 17,
2013).
3 Chapter 3
COVERAGE II.
The Employer-Employee Relationship
A. “Suffer or Permit to Work”
The plaintiffs in Garcia-Celestino v. Consolidated Citrus Ltd. Partnership11
brought a collective action in Florida under the FLSA, the Migrant and Seasonal
Agricultural Worker Protection Act (AWPA); and Florida's minimum wage law for unpaid
minimum wages and for failing to reimburse the plaintiffs for their transportation,
subsistence, and work visa costs. The plaintiffs were migrant and seasonal agricultural
laborers hired to pick fruit during several harvest seasons. One defendant was a large
citrus grower who hired farm contractors (a second defendant) to furnish citrus picking
workers.12 The plaintiffs were compensated on a piece-rate basis based on the number
of tubs of fruit harvested. In order to record compensable work time, the farm contractor
was required to utilize an electronic timekeeping system owned and maintained by the
citrus grower.13 The district court denied summary judgment as to the citrus grower
defendant on the issue of co-employment under both the FLSA and the AWPA. The
court ruled that triable issues of fact remained under either the FLSA's "suffer or permit
to work" standard or the common law agency principles standard put forth by the
Eleventh Circuit appeals court. Specifically, the court found material factual issues
related to the citrus grower's power to determine the plaintiffs' pay rates or methods of
payment as well as the citrus grower's relative investment in equipment and facilities
used in harvesting operations.14 B. The Economic Reality Test
In Lopez v. Pio Pio NYC, Inc.,15 New York City restaurant employees brought suit
on behalf of themselves and similarly situated employees, alleging employers’ failure to
pay the minimum wage, overtime wages, wages for off-the-clock work and spread of
hours wages. The defendants, nine corporate entities and two individuals that own,
operate and/or manage the restaurants, moved to dismiss claims against six of the
corporate entities and one of the individuals, arguing that they were not “employers” of
the plaintiffs. In upholding claims against the individual movant-defendants under the
11
2014 WL 103434 (M.D. Fla. Jan. 10, 2014). Id. at *1-2. 13
Id. at *2. 14
Id. at *4. 15
2014 WL 1979930 (S.D.N.Y. May 15, 2014). 12
4 economic reality test, the district court cited a 2013 Second Circuit case16 which stated
that an alleged employer must have “some degree of individual involvement . . . that
affects employment-related factors such as workplace conditions and operations,
personnel, or compensation.” The court held that the plaintiffs’ allegations here – that
the individual movant-defendants set wage policies, had the authority to alter employee
terms of employment, ensured proper food preparation and handled employee
complaints – demonstrated the requisite formal or functional control over the plaintiffs
for her to be considered their employer under the test. Further, in also upholding claims
against the six corporate entities, the court held under the single integrated enterprise
theory that the entities were operationally interrelated enough to be considered a single
integrated employer of the plaintiffs. Examining factors cited in a 2013 decision17 in the
same venue, the court found the entities’ interrelation of operations, centralized control
of labor relations and common management, ownership and financial control sufficiently
supported that conclusion.
The plaintiffs in Landaeta v. New York and Presbyterian Hospital, Inc.18 provided
language interpretation services for the defendant hospital in regard to non-English
speaking patients. They claimed that they were improperly classified as independent
contractors. The district court, in denying defendant’s motion for summary judgment on
plaintiffs’ FLSA unpaid wage and overtime claims, held that the plaintiffs established a
genuine issue of material fact in regard to their misclassification claims based on
evidence that plaintiffs were, as a practical matter, completely reliant on the defendant
hospital for work, and that they did not have any true investment in their own
businesses or opportunity for actual profit and loss. The court furthermore placed
emphasis on evidence that the defendant hospital penalized interpreters who declined
assignments, distributed patient satisfaction surveys to evaluate each interpreter’s
performance, and suspended at least one interpreter based on her interaction with a
patient. Additionally, the court rejected the defendant’s argument that plaintiffs were
judicially estopped from challenging their status by the fact that they filed tax returns
claiming to be independent contractors. In Chapman v. ASUI Healthcare and Development Center,19 the Fifth Circuit
affirmed summary judgment, and a bench-trial verdict, for two Texas caregivers seeking
overtime compensation under the FLSA. The plaintiffs were hired as independent
contractors, signed contracts acknowledging this status, and worked as caregivers in
group homes for individuals with mental disabilities. The court agreed with the district
court, however, that plaintiffs were employees under the economic reality test.
According to the court, while there was a lack of direct supervision, the defendant hired
the plaintiffs, assigned their location, set their schedule and pay, and controlled “all the
16
Irizarry v. Catsimatidis, 722 F. 3d 99, 109 (2d Cir. 2013). Perez v. Westchester Foreign Autos, Inc., 2013 WL 749497, *7 (S.D.N.Y. Feb. 28, 2013). 18
2014 WL 836991 (S.D.N.Y. Mar. 4, 2014). 19
2014 WL 351868 (5th Cir. Feb. 3, 2014). 17
5 meaningful aspects of the employment relationship.”20 The plaintiffs worked for the
defendant for multiple years, during which there were no capital investments beyond the
uniform and no opportunity for profit (or risk of loss)—traditional signs of employee
status. In Robles v. RFJD Holding Co., Inc.,21 the plaintiff demanded recovery of unpaid
minimum and overtime wages based on a willful violation of the FLSA. The defendant
company moved for summary judgment on the basis that the plaintiffs were all
independent cleaning contractors, either in business for themselves or through
subcontracted entities. The Florida district court determined, after examining a number
of independent contractor factors, that the plaintiffs were, in fact, employees under the
“economic realities” test. However, the court also determined that the use of the
independent contractor defense theory was sufficient to defeat any argument of bad
faith, and overcome the three year statute of limitations, applicable to willful violations of
the FLSA. The court granted the plaintiffs’ motions with regard to employee status and
application of the FLSA, but rejected the same motion with regard to the desired three
year statute of limitations for willful violations. Sandles v. Wright22 was an action by a campground host, seeking overtime pay,
against the operator of the campground. Asserting that the plaintiff was not an
employee but an independent contractor, the defendant moved for judgment on the
pleadings, or alternatively for summary judgment. The district court found that plaintiff’s
job did not require high skill or initiative and that the defendant directed the plaintiff’s
work. Because the plaintiff was economically dependent upon the defendant, and was
not in business for herself, the district court ruled that the plaintiff was an employee. The
defendant also claimed the campground was not covered by the FLSA. The district
court found that, because the campground received calls and reservations from
campers throughout the country, the plaintiff had shown the defendant was engaged in
interstate commerce. The court accordingly declined to grant the defendant’s motion. In Wherley v. Schellsmidt,23 a car detailing business was sued by an audio
equipment installer, who sought overtime pay and damages for retaliatory firing. The
plaintiff moved for partial summary judgment, arguing that the evidence conclusively
proved his status as an employee, not an independent contractor. The district court
observed factual disputes involving at least three factors under the economic realities
test. Regarding control, the defendant presented evidence that the plaintiff controlled
aspects of his schedule, and that the plaintiff did not need to call in absences.
Regarding the relative investments of the business and worker, the plaintiff had bought
tools worth more than $10,000, which were a depreciable tax asset. Regarding the
degree and influence of the business on the worker’s opportunity for profit or loss, the
20
Id. at *1. 21
2013 WL 2422625 (S.D. Fla. June 3, 2013). 2013 WL 5497788 (E.D. Tex. Oct. 3, 2013). 23
2013 WL 5744335 (N.D. Tex. Oct. 23, 2013). 22
6 plaintiff claimed that he was “expected” to work 50 to 55 hours a week, whereas the
defendant asserted that the plaintiff could and did work on his own projects during
regular business hours. In light of these disputes, the court denied summary judgment. In Ho v. Sim Enterprises, Inc.,24 garment factory workers sued the factory and
two of its managers for overtime and minimum wage violations. During a bench trial, the
managers argued they were not employers under the FLSA. To resolve this question,
the district court applied a four-factor test from the Second Circuit decision in Carter v.
Dutchess Community College,25 considering whether the managers (1) had the power
to hire and fire employees, (2) supervised and controlled work schedules and conditions
of employment, (3) determined the rate and method of payment, and (4) maintained
employment records. In its findings, the court determined that the managers hired the plaintiffs. The
managers supervised the plaintiffs’ work schedules and work conditions, controlling
matters such as the timing of shifts, the pace of the work, and the duration of breaks.
The managers also paid the plaintiffs and endorsed the plaintiffs’ paychecks. One of the
managers also determined the method of payment, requiring that the plaintiffs be paid
on a per-garment basis. On these findings, the court concluded that the managers were
employers. The court further rejected the managers’ argument they were acting at the
direction of other individuals, and added that even if that was so, it did not affect their
status as employers under the FLSA. In Scantland v. Jeffry Knight, Inc.,26 cable technicians brought an action against a
cable installation firm for overtime and minimum wage violations. In proceedings below,
the district court granted the defendant’s motion for summary judgment, holding that the
plaintiffs were employees instead of independent contractors. Applying a six-factor
economic realities test, the appeals court found significant evidence of control, based on
evidence that the defendant set pay and established schedules, as well as disciplining
the plaintiffs for substandard work. By comparison, the court found weak evidence that
the plaintiffs used specialized skills or invested in their own equipment. For these
reasons, the court reversed summary judgment and remanded for further proceedings. In De Luna-Lopez v. A Lawn and Landcare Servs. Co., LLC,27 former employees
alleged several violations under the FLSA, seeking overtime wages against their former
employer. The defendants argued that the plaintiffs were independent contractors,
rather than employees covered under the FLSA. Using the five factors identified in
Usery v. Pilgrim Equipment Co., Inc.,28 a district court in Texas found that the plaintiffs
were economically dependent on the defendants and not in business for themselves,
their economic statuses were inseparable from the significant control exercised by the
24
2014 WL 1998237 (S.D.N.Y. May 14, 2014). 735 F.2d 8 (2d Cir. 1984). 26
721 F.3d 1308 (11th Cir. 2013). 27
2013 WL 4504767 (N.D. Tex. July 29, 2013). 28
527 F.2d 1308, 1311 (5th Cir. 1976). 25
7 defendants, and that the defendants held the contracts with customers. Further, the
defendants instructed the plaintiffs when and where they would work, supplied the
"tools, equipment and materials" used, and were wage earning employees, whose
hours of work and rates of pay (and therefore opportunity for profit) were set by the
defendants. In Doe I v. Four Brothers Pizza, Inc.,29 a group of current and former manual
laborers who worked in the defendants’ pizza shops filed a class complaint alleging
violations of the FLSA’s and New York State’s minimum wage and overtime provisions.
The plaintiffs requested leave to file a second amended complaint, which pleaded a joint
employer theory of liability against individual and corporate defendants operating a
chain of restaurants in various locations in New York. The defendants opposed the
request to leave because it argued that the second amended complaint failed to
establish the court’s jurisdiction under the FLSA. The court granted the plaintiffs’
request in part because it found that the complaint’s allegations that the corporate
defendants operated the restaurants in a unified fashion for a common business
purpose with respect to employee staffing, and the individual defendants supervised the
employees and made decisions about workplace duties, hours, and pay, among others,
satisfied the economic realities test and pleaded an employment relationship for FLSA
jurisdiction purposes.30 In Cruthis v. Vision's,31 the plaintiffs alleged several violations under the FLSA
against their former employer, including an individual defendant, who argued that he
was not an employer under the FLSA. The parties disputed material issues of fact as to
whether the plaintiffs were employees under the FLSA, using the six factors examined
in Harrell v. Diamond A Entertainment, Inc.:32 (i) the degree of control exercised by the
alleged employer over the business operations, (ii) the relative investments of the
alleged employer and employee, (iii) the degree to which the employee’s opportunity for
profit and loss is determined by the employer, (iv) the skill and initiative required in
performing the job, (v) the permanency of the relationship, and (vi) the degree to which
the alleged employee’s tasks are integral to the employer’s business. As such, the
district court in Arkansas was precluded from granting the parties' summary judgment
motions on this issue. In Bobbitt v. Broadband Interactive, Inc.,33 the plaintiffs, “Collections/Disconnect
Technicians” for a cable service provider, alleged that the defendant misclassified them
as independent contractors. The plaintiffs filed a motion to compel documents related to
the defendant’s “capital investment, risk capital, expenses, and overall investment in its
29
2013 WL 6083414 (S.D.N.Y. Nov. 19, 2013). Id. at *7–8. 31
2014 WL 282028 (E.D. Ark. Jan. 24, 2014). 32
992 F. Supp. 1343, 1348 (M.D. Fla.1997). 33
2013 WL 2449495 (M.D. Fla. June 5, 2013). 30
8 business.”34 They contended that the information was relevant and discoverable
because “one of the factors considered in the economic realities test is the extent of the
relative investments of the worker and the alleged employer.” The defendant opposed
the motion, arguing that this factor “focuses solely on the workers’ investment in
equipment or materials,” not the alleged employer’s investment. A magistrate judge in
Florida denied the motion without addressing the parties’ contentions. The district court,
however, sustained objections to the magistrate’s ruling, holding that the relative
investment of both the plaintiff and defendant was a factor in the economic realities test.
It explained, “The alleged employee’s investment cannot be considered in a vacuum;
the alleged employee’s investment needs to be compared to the alleged employer’s
investment in order to determine whether this factor shows the alleged employee’s
economic dependence on the alleged employer.”35 In Bobbitt v. Broadband Interactive, Inc.,36 cable technicians responsible for
collection of equipment and money and disconnection of services brought minimum
wage and overtime claims under the FLSA and Florida’s constitution, alleging that they
had been misclassified as independent contractors. In ruling on cross-motions for
summary judgment, the district court found that the services provided by the technicians
were an integral part of the defendant's business, given that approximately 84 percent
of the defendant's annual gross revenues in the state were derived from those
services.37 However, the district court denied both parties' summary judgment motions
because genuine issues of material fact existed regarding each of the remaining five
factors of the economic realities test as applied in the Eleventh Circuit.38 The court also
ruled that, for the purposes of trial, the fact that the plaintiffs classified themselves as
independent contractors and deducted business expenses was irrelevant to the issue of
whether the plaintiffs were employees or independent contractors.39 In Calderon v. J. Younes Construction LLC,40 a group of construction workers
brought overtime claims against their employer, and two plaintiffs further alleged
unlawful retaliation as a result of their participation in the overtime action. The defendant
contested the claims on the grounds that the workers were independent contractors
rather than employees protected under the FLSA.41 To appropriately classify the
workers, the district court in Illinois adopted the Seventh Circuit’s “economic reality” test
for determining the “nature of the working relationship.”42 Under the economic reality
test, the court considered factors such as: (1) the nature and degree of the employer’s
34
Id. at *1. 35
Id. at *2. 36
2013 WL 5720329 (M.D. Fla. Oct. 21, 2013). Id. at *11. 38
Id. 39
Id. 40
2013 WL 3199985 (N.D. Ill. June 23, 2013). 41
Id. at *5. 42
Id. at *6 (citing Sec’y of Labor v. Lauritzen, 885 F.2d 1529, 1534–35 (7th Cir. 1987)). 37
9 control over the manner of work performed, (2) the worker’s opportunity for profit or loss
depending on skill, (3) the worker’s investment in equipment, materials, or workers
required for the task, (4) whether the service provided requires special skill, (5) the
permanency and duration of the relationship, and (6) the extent to which the service is
integral to the employer’s business.43 In granting relief for the plaintiffs, the court held
the construction workers to be “employees” under the FLSA because they: (1) received
work assignments from the employer and its foremen, (2) were paid a fixed wage, (3)
used equipment and materials owned by the employer, (4) performed basic and
relatively unskilled construction work, (5) worked exclusively for the defendant in excess
of 40 hours per week, and (6) were necessary to the employer’s performance of its
basic business functions.44 Butler v. PP&G, Inc.45 involved an exotic dancer who sued an adult club for
failure to pay minimum wage. The plaintiff moved for partial summary judgment, arguing
that the defendant misclassified her as an independent contractor. The district court
concluded that the plaintiff was an employee as a matter of law. Regarding control, the
defendant did not impose any behavioral guidelines, indicating that the plaintiff need
only comply with state adult entertainment laws. But the defendant controlled the club
and imposed sanctions for failure to abide by club practices. Regarding other factors,
the court found nominal evidence regarding the defendant’s opportunity for profit or
loss, no significant investment in equipment, and no particular degree of skill. The court
specifically found that the plaintiff’s assent to the independent-contractor label was
immaterial. The plaintiff in Castro v. Sevilla Properties, LLC46 brought a claim against his
former employer to obtain unpaid overtime wages and a declaration of his rights under
the FLSA. The defendants, owners of a residential complex, moved for summary
judgment, arguing in part that the plaintiff, who was a former security guard, was not an
“employee” within the meaning of the FLSA, but instead was an independent contractor.
The court looked to the economic reality test in its analysis of whether the plaintiff was
an employee or a contractor. The court stated that the economic reality test requires the
court to “look past the labels the parties apply to their relationship”47 and instead
consider the relationship between the parties and the extent to which the plaintiff is
economically dependent upon defendants. The court described its inquiry under the test
as “fact-intensive” and “holistic.”48 The court looked to six factors to guide its analysis:
(1) the nature and degree of the alleged employer’s control as to the matter in which the
work is to be performed; (2) the alleged employee’s opportunity for profit or loss
depending upon his managerial skill; (3) the alleged employee’s investment in
43
Id. 44
Id. 45
2013 WL 5964476 (D. Md. Nov. 7, 2013). 2013 WL 6858393 (S.D. Fla. Dec. 30, 2013). 47
Id. at *2. 48
Id. 46
10 equipment or materials required for his task, or his employment of workers; (4) whether
the service rendered requires a special skill; (5) the degree of permanency and duration
of the working relationship; and (6) the extent to which the service rendered is an
integral part of the alleged employer’s business.49 Under its analysis, the court
determined that the plaintiff had provided sufficient evidence to create an issue of fact
with regard to whether he was entitled to protection under the FLSA definition of
employee and thus denied the defendants’ motion for summary judgment.50 C. Employee or Independent Contractor
In Petroski v. H&R Block Enterprises, LLC,51 the appellate court affirmed the
district court’s grant of summary judgment in favor of the defendant tax service
preparation provider and against the plaintiffs tax professionals, finding that they were
not employees pursuant to the FLSA and therefore not entitled to receive wages for the
time that they spent completing rehiring training and that the district court engaged in
the correct inquiry in reaching its decision. During tax season, the defendant tax service
hired tax professionals, who provided an I-9 form to substantiate their employment
eligibility and entered into an employment agreement with the tax service. The
employment agreement covered the length of the tax season. After the tax season
ended, the tax professionals were permitted to work other jobs or collect unemployment
and there was no obligation for the tax service to rehire the tax professional or for the
tax professional to work for the tax service. Prior to the next tax season, the tax service
required the tax professionals to complete continuing professional education courses
through the tax service or any other qualified service provider. The tax service did not
pay the tax professionals for the time spent taking the classes and did not guarantee
rehire to the tax professionals who took the classes. The tax professionals had to
complete the retraining courses, complete an application, interview, and then be offered
a job prior to rehire. The dispute arose as three separate matters but a class was
certified under the FLSA for persons who 1) had previously and were currently working
for the tax preparation service as tax professionals; 2) were not paid for completing the
training; and 3) completed the training before April 15, 2007. The FLSA mandates that
covered employees be paid at least minimum wage for the hours that they worked.52
Pursuant to section 203(e)(1), (g) of the FLSA, an “employee” is “an individual
employed by an employer” and “employ” means to “suffer or permit work.”53 Whether
someone is an employee under the FLSA is a legal determination, not a factual one.54
The appellate court found that the district court properly considered whether the tax
professionals were employees or trainees.
49
Id. at *3. 50
Id. at *2. 51
52
53
54
750 F.3d 976 (8th Cir. 2014). Id. at 978. Id. Id. 11 The appellate court relied on the Supreme Court decision in Walling v. Portland
Terminal Company55 in which the Court held that prospective railroad yard brakemen
who completed training engaged in “work for their own advantage on the premises of
another” were not “suffer[ed] or permit[ted] to work.”56 Relying on the Court’s decision,
the appellate court concluded that the tax service did not receive any immediate benefit
from the rehire training; that the tax professionals did not do work for the service’s
clients during the retraining; that the training did not expedite the service’s business;
and that the tax professionals did not supplant any tax service employees during the
retraining period. In holding that the tax professionals were not employees, the
appellate court further relied on six criteria set forth in the Wage and Hour Division Field
Operations Handbook issued by the Wage-Hour Administrator Department of Labor to
determine whether persons are employees or trainees: whether the training is akin to
that provided in a vocational school; whether the training is for the trainees’ benefit;
whether the trainees supplant regular workers; whether the employer receives an
immediate advantage from the trainees’ activities; whether the trainees are entitled to
receive a job at the end of the training; and whether the trainees and employees
understand that the trainees are not required to be paid wages for the training.57
In Viar-Robinson v. Dudley Beauty Salon,58 a licensed nail technician brought
suit against a beauty salon and its owner alleging, inter alia, violations of the FLSA. The
parties had an oral agreement whereby the plaintiff would work at the salon in exchange
for 75 percent of the proceeds of her work. The plaintiff encountered frequent problems
in receiving payment under the arrangement. The defendants’ checks often bounced,
and the plaintiff’s commission was repeatedly reduced—eventually settling at an even
split between the parties. Later, the owner packed away the plaintiff’s possessions in
boxes and trash cans after the plaintiff refused to pay a fixed rent for her work station.
On motion for summary judgment, a district court in Maryland employed the six-factor
economic reality test set forth in United States v. Silk59 to determine that the plaintiff was
independent contractor, and therefore not entitled to protection under the FLSA. The
court found the degree of control exercised by the defendant over the plaintiff to be
minimal because she set her own hours, did her own advertising, and was
unsupervised. The court also found the plaintiff’s opportunity for profit or loss to be
dependent on her own managerial skill because she set her own hours and prices.
Other factors weighing against the plaintiff include the fact that she purchased her own
equipment and supplies, that the work she performed required a license from the state,
the short nature of the parties’ working relationship, and that the plaintiff’s work was not
integral to the business of the salon, which primarily concerned hair care. Upon review
of these factors, the court granted summary judgment on the FLSA claim for the
defendants. 55
330 U.S. 148, 67 S. Ct. 639 (1947). Id. at 152. 57
750 F.3d at 982. 58
2013 WL 6388646 (D. Md. Dec. 5, 2013). 59
331 U.S. 704, 715 (1947). 56
12 In Werner v. Bell Family Medical Center Inc.,60 a certified ultrasound technician
sued a family medical practice claiming he was an employee - not an independent
contractor. He sought overtime, plus damages for defamation and retaliatory firing. After
a jury trial, the plaintiff lost his motion for judgment as a matter of law or new trial. The
Sixth Circuit, in an opinion marked not for publication, affirmed the district court’s
decision and held that a reasonable jury could have determined that the plaintiff was an
independent contractor. The economic reality test was applied. Evidence revealed that
plaintiff had discretion on how to perform ultrasounds, market his services, and he was
able to increase his working hours as opportunity arose. He was also paid what he
asked for, i.e. $40 per hour (more than market rate for an employee in this position).
Finally, he prepared his income tax returns as an independent contractor and believed
some tax advantage existed in this arrangement. In Trahan v. Honghua America, LLC,61 the Texas district court denied a summary
judgment motion contending the plaintiffs were independent contractors. The plaintiffs,
welders for defendant Honghua America, a company that builds oil rigs, contended
defendant failed to provide overtime compensation. The defendant claimed they were
independent contractors hired on an as needed basis, and required to obtain their own
equipment and insurance. In holding that fact issues precluded the court from deciding
whether plaintiffs were employees or independent contractors, the court followed the
Fifth Circuit’s five-part test. The test includes the degree of control or independence in
the economic relationship, each worker’s individual investment compared to that of the
employer, the worker’s opportunity for profit or loss, whether the worker’s skill and
initiative is indicative of independent contractor status, and the permanency of the
relationship. The conflicting evidence on these factors prevented summary judgment.
The court also rejected the defendant’s claim of the highly compensated employee
exemption noting that the requirement to compensate on a salary basis was at odds
with defendant’s other positions.
1. General Principles
In Sellers v. Royal Bank of Canada,62 a financial consultant sued the bank for
violations under the FLSA and other laws resulting from being misclassified as an
independent contractor. The district court applied a five-factor economic realities test
when granting the bank’s motion for summary judgment on the FLSA count.63 The first
factor, degree of control exercised by defendants, favored the bank where the
consultant worked at his own convenience.64 The bank’s expectation that he keep
regular business hours failed to establish control where the people he needed to
interact with kept such hours. The second factor, plaintiff’s opportunity for profit or loss
60
529 F. App’x 541 (6th Cir. 2013). 2013 WL 2617894, at *12 (S.D. Tex. June 10, 2013). 62
2014 WL 104682 (S.D.N.Y. Jan. 8, 2014). 63
Id. at *5. 64
Id. at *6. 61
13 and his investment in the business, favored the bank where the consultant
simultaneously provided services to another bank.65 The fact that one contract required
most of his time did not render him unable to accept other employment.66 The third
factor, degree of skill and independent initiative required to perform the work, did not
weigh against independent contractor status even where regular bank employees had
comparable skill and level of experience.67 The fourth factor, permanence or duration of
the working relationship, did not weigh against independent contractor status where the
work spanning three years resulted from many short-term contracts of three-months or
less.68 The court found that the fifth factor, the extent to which the work was an integral
part of the employer’s business, favored independent contractor status where the
consultant was not an integral part of the business.69 The court found that the
consultant’s work was interchangeable with other experienced banker’s work. The court
also found that independent contractor status was supported where the contractor was
paid by invoice rather than payroll and admitted independent contractor status on tax
forms.70 In Calderon v. J. Younes Construction LLC,71 a group of construction workers
brought overtime claims against their employer, and two plaintiffs further alleged
unlawful retaliation as a result of their participation in the overtime action. The defendant
contested the claims on the grounds that the workers were independent contractors
rather than “employees” protected under the FLSA.72 At the outset, the court in Illinois
noted that FLSA definitions are “broad and comprehensive in order to accomplish the
remedial purposes of the Act.”73 Accordingly, the court held the employer’s “subjective
beliefs” and “labels they claim to have attached to the workers” were not determinative
of employee status.74 In Yilmaz v. Mann,75 an experienced web designer brought minimum wage and
overtime claims against a marketing and graphic design firm and its managing member.
A federal district court in Florida denied the plaintiff’s motion for summary judgment,
concluding that the plaintiff had not shown that he was an employee rather than an
independent contractor. The plaintiff worked as the president of the firm and “had broad
discretion to bill as many hours, for whatever service, at whatever price, he chose.”76 He
65
Id. 66
Id. at *7. 67
Id. 68
Id. at *8. 69
Id. 70
Id. at *8-9. 71
2013 WL 3199985 (N.D. Ill. June 23, 2013). Id. at *5. 73
Id. (citing Sec’y of Labor v. Lauritzen, 885 F.2d 1529, 1534 (7th Cir. 1987)). 74
Id. 75
2014 WL 1018006 (S.D. Fla. Mar. 17, 2014). 76
Id. at *4. 72
14 generated all of the defendant’s revenue, performed all of the defendant’s client
servicing, and was to be paid 50 percent of all revenue generated by the firm. The
defendant provided “little more than guidance” to the plaintiff regarding how to operate
the firm.77 The defendant owned some of the firm’s clients, but the plaintiff procured
others. The relationship was terminable by either party at any time. The court looked to
the “economic reality” of the working relationship, analyzed the six factors used in the
Eleventh Circuit to guide that inquiry, and concluded that four of those factors weighed
in favor of independent contractor status: (1) the nature and degree of the alleged
employer’s control; (2) the alleged employee’s opportunity for profit or loss; (3) whether
the service rendered requires a special skill; and (4) the permanency and duration of the
working relationship. The court held that there was insufficient evidence for a fifth factor,
the alleged employee’s investment in equipment or materials, to weigh in favor of either
side, and the sixth factor, the extent to which the service rendered is an integral part of
the alleged employer’s business, weighed in favor of employee status. In balancing the
factors, the court concluded that the plaintiff had failed to show he was entitled to
summary judgment, because only one factor weighed toward employee status and all
the others weighed evenly or toward independent contractor status. Butler v. PP&G, Inc.78 involved an exotic dancer who sued an adult club for
failure to pay minimum wage. The plaintiff moved for partial summary judgment, arguing
that the defendant misclassified her as an independent contractor. The district court
concluded that the plaintiff was an employee as a matter of law. Regarding control, the
defendant did not impose any behavioral guidelines, indicating that the plaintiff need
only comply with state adult entertainment laws. But the defendant controlled the club
and imposed sanctions for failure to abide by club practices. Regarding other factors,
the court found nominal evidence regarding the defendant’s opportunity for profit or
loss, no significant investment in equipment, and no particular degree of skill. The court
specifically found that the plaintiff’s assent to the independent-contractor label was
immaterial. The plaintiff in Castro v. Sevilla Properties, LLC79 brought a claim against his
former employer to obtain unpaid overtime wages and a declaration of his rights under
the FLSA. The defendants, owners of a residential complex, moved for summary
judgment, arguing in part that the plaintiff, who was a former security guard, was not an
“employee” within the meaning of the FLSA, but instead was an independent contractor.
In using the economic reality test to analyze the relationship between the plaintiff and
defendant, the court considered both whether the plaintiff was employed as a traditional
employee and the extent to which the plaintiff was economically dependent upon the
defendants. The court looked to six factors to guide its analysis: (1) the nature and
degree of the alleged employer’s control as to the matter in which the work is to be
performed; (2) the alleged employee’s opportunity for profit or loss depending upon his
77
Id. 78
79
2013 WL 5964476 (D. Md. Nov. 7, 2013). 2013 WL 6858393 (S.D. Fla. Dec. 30, 2013). 15 managerial skill; (3) the alleged employee’s investment in equipment or materials
required for his task, or his employment of workers; (4) whether the service rendered
requires a special skill; (5) the degree of permanency and duration of the working
relationship; and (6) the extent to which the service rendered is an integral part of the
alleged employer’s business.80 In its analysis, the court placed significant emphasis on the amount of control the
defendant had over the plaintiff’s work-related activity. Specifically, the court considered
evidence that plaintiff was instructed to perform particular tasks and was instructed to
be present at particular times. Additionally, the plaintiff was compensated with a flat
hourly rate, giving him no opportunity for profit or loss based on his managerial skills.
The court also considered that the plaintiff had worked continuously for the defendants
for “a substantial, unbroken period” of three years and had little to no opportunity to
work for other employers.81 Finally, the court considered the plaintiff’s testimony that he
feared losing his job if he asked for too much from the defendants, as evidence of the
plaintiff’s dependence on the defendant. The court determined that despite the
defendants’ argument that certain aspects of their relationship indicated the plaintiff was
an independent contractor, such as providing his own equipment, specialized skill,
leeway in the performance of his day-today duties, the plaintiff had produced sufficient
evidence to find that he was an employee and economically dependent upon defendant.
Because there existed an issue of fact under the economic reality test, the court denied
the defendants’ motion for summary judgment.82 In White v. 14051 Manchester Inc.,83 former restaurant employees filed a
collective action against the defendant and its corporate officers for alleged violations of
the FLSA’s tip credit provision. Analyzing the issue using the Supreme Court’s
economic realties test and Eight Circuit precedent, the district court in Missouri granted
plaintiffs’ motion for summary judgment on individual liability because the two corporate
officers signed the plaintiffs’ checks, one of the defendant officers was in charge of
human resources and legal matters while the other participated in the decision to
promote an employee and determine how they were paid.84
a. Control
In Chapman v. ASUI Healthcare and Development Center,85 the Fifth Circuit
affirmed summary judgment, and a bench-trial verdict, for two caregivers seeking
overtime compensation under the FLSA. The plaintiffs were hired as independent
contractors, signed contracts acknowledging this status, and worked as caregivers in
group homes for individuals with mental disabilities. The Fifth Circuit agreed that the
80
Id. at *3. 81
Id. 82
Id. at *4. 83
2014 WL 1091707 (E.D. Mo. May 30, 2014).
Id. at *22–24.
85
2014 WL 351868 (5th Cir. Feb. 3, 2014). 84
16 plaintiffs were employees under the economic reality test that, in part, considers degree
of control. According to the court, while there was a lack of direct supervision, the
defendant hired the plaintiffs, assigned their location, set their schedule and pay, and
controlled “all the meaningful aspects of the employment relationship.”86 In De Luna-Lopez v. A Lawn and Landcare Services Co., LLC,87 former
employees alleged several violations under the FLSA, seeking overtime wages against
their former employer. The defendants, a landscaping company and its owner, argued
that the plaintiffs were independent contractors, rather than employees covered under
the FLSA. Using the five factors identified in Usery v. Pilgrim Equipment Co., Inc.,88 a
district court in Texas found that the plaintiffs were economically dependent on the
defendants and not in business for themselves, their economic statuses were
inseparable from the significant control exercised by the defendants, and that the
defendants held the contracts with customers. Further, the defendants instructed the
plaintiffs when and where they would work, supplied the "tools, equipment and
materials" used, and were wage earning employees, whose hours of work and rates of
pay (and therefore opportunity for profit) were set by the defendants. In Brown v. BCG Attorney Search,89 the plaintiff brought a claim under the FLSA
against an employment recruiting business for which she had written law firm profiles for
publication on the company's website. On a motion for summary judgment before a
district court in Illinois, the defendant argued that it was not liable because the plaintiff
was an independent contractor rather than an employee. Applying the Seventh Circuit's
economic realities test, under which the employer's right to control is the most important
factor, the district court granted the defendant's motion. The court found that the
defendant maintained only "minimal control" over the plaintiff, noting that the plaintiff
"maintained a great deal of freedom in choosing her working hours and was free to work
out of any location of her choosing."90 b. Investment
In Chapman v. ASUI Healthcare and Development Center,91 discussed in
subsection (a) above, the Fifth Circuit affirmed summary judgment, and a bench-trial
verdict, for two caregivers seeking overtime compensation under the FLSA. The Fifth
Circuit agreed that the plaintiffs were employees under the economic realities test that,
in part, considers investment in facilities. Despite working for the defendant for multiple
years, the plaintiffs’ investment of a uniform was comparatively less than the
86
Id. at *1. 87
2013 WL 4504767 (N.D. Tex. July 29, 2013). 527 F.2d 1308, 1311 (5th Cir.1976). 89
2013 WL 6096932 (N.D. Ill. Nov. 20, 2013). 90
Id. at *2. 91
2014 WL 351868 (5th Cir. Feb. 3, 2014). 88
17 investments by the defendant, which operated caregiving facilities, contracted with the
state, and staffed a central office.92 c. Opportunity for Profit and Loss
In Chapman v. ASUI Healthcare and Development Center,93 discussed in
subsection (a)-(b) above, the Fifth Circuit affirmed summary judgment, and a bench-trial
verdict, for two caregivers seeking overtime compensation under the FLSA. The Fifth
Circuit agreed that the plaintiffs were employees under the economic reality test that, in
part, considers opportunities for profit or loss. Despite working for the defendant for
multiple years, there was no risk of loss and no opportunity for profit beyond their hourly
wage.94 d. Permanency
In Chapman v. ASUI Healthcare and Development Center,95 discussed in
subsection (a)-(c) above, the Fifth Circuit affirmed summary judgment, and a bench-trial
verdict, for two caregivers seeking overtime compensation under the FLSA. The Fifth
Circuit agreed that the plaintiffs were employees under the economic reality test that, in
part, considers permanency of relation. Although one plaintiff had two short gaps of
employment, both worked for the defendant for multiple years.96
2. Illustrative Cases
a. Cases Finding Employee Status
In Harris v. Skokie Maid and Cleaning Service,97 the plaintiff, the DOL, alleged
that between 2008 and 2011 the defendants, a cleaning service and its owner, failed to
pay 75 of their employees who worked as maids minimum wage and adequate overtime
pay. The defendants claimed that the maids were not employees but were independent
contractors. A district court in Illinois granted the plaintiff’s motion for summary judgment
and determined that the individuals were employees and not independent contractors
despite the fact that they signed an “Independent Contractor Contract” and an
“Independent Contractor Application” where the individuals agreed that they were not
employees of the defendants. Specifically, the court found that: (i) the defendants
exerted a great deal of control over the maids as they were responsible for scheduling
the maids’ services for clients, took care of the maids’ transportation, deducted the cost
of any object they may have broken while working, withheld two weeks of pay as a form
of a security deposit, and provided specific procedures on how to clean; (ii) the maids
92
Id. at *1. 93
2014 WL 351868 (5th Cir. Feb. 3, 2014). Id. at *1. 95
2014 WL 351868 (5th Cir. Feb. 3, 2014). 96
Id. at *1. 97
2013 WL 3506149 (N.D. Ill. July 11, 2013). 94
18 did not have an opportunity for profit or loss as they were paid a fixed amount for each
job; (iii) the maids were not required to bring anything to the worksite except
themselves, did not have any insurance, did not bring their own cleaning supplies, and
could not employ other workers to complete their tasks; (iv) there was no special skill
required to complete the maids’ tasks; (v) the maids worked exclusively for the
defendants and signed a non-compete agreement; and (vi) the maids completed work
for the company that was the core part of the business. In Perez v. Howes,98 the Secretary of Labor brought an action on behalf of
cucumber harvesters who worked on a farm. The defendant owned the farm. The
Secretary asserted claims for unpaid minimum wage and failure to maintain adequate
time records, and moved for summary judgment as to these claims. The farm owner
moved for summary judgment on the grounds that the harvesters were independent
contractors, and not employees, under the FLSA. A district court in Michigan applied the
economic realities test and granted the Secretary’s motion, while denying the farm
owner’s motion, concluding that the harvesters were employees under the FLSA. The
court found that most factors of the economic realities test favored employment status.
Specifically, the court found that cucumber harvesting did not require a high degree of
skill; that workers’ capital investment was minimal; the workers did not carry a risk of
profit or loss; and that the workers’ services were integral to the farm’s business. In Calderon v. J. Younes Construction LLC,99 a group of construction workers
brought overtime claims against their employer, and two plaintiffs further alleged
unlawful retaliation as a result of their participation in the overtime action. The
defendant, the individual owner of the construction company, contested the claims on
the grounds that the workers were independent contractors rather than employees.
After conducting a bench trial, a district court in Illinois ruled in favor of the plaintiffs,
finding that the employer’s “subjective beliefs” were not determinative of employee
status. The court applied factors from the Seventh Circuit’s economic realities test
including: (1) the nature and degree of the employer’s control over the manner of work
performed; (2) the worker’s opportunity for profit or loss depending on skill; (3) the
worker’s investment in equipment, materials, or workers required for the task, (4)
whether the service provided require special skill; (5) the permanency and duration of
the relationship; and (6) the extent to which the service is integral to the employer’s
business. In granting relief for the plaintiffs, the court held that the construction workers
were statutory employees because they: (1) received work assignments from the
employer and its foremen; (2) were paid a fixed wage; (3) used equipment and
materials owned by the employer; (4) performed basic and relatively unskilled
construction work; (5) worked exclusively for the defendant in excess of 40 hours per
week; and (6) were necessary to the employer’s performance of its basic business
functions. 98
99
2014 WL 1028878 (W.D. Mich. Mar. 17, 2014). 2013 WL 3199985 (N.D. Ill. June 23, 2013). 19 In Stevenson v. Great American Dream, Inc.,100 dancers sought damages
against a nightclub for violating minimum wage and overtime requirements under the
FLSA. A district court in Georgia granted the dancers’ motion for partial summary
judgment holding that they were employees under the FLSA. The court applied a sixfactor test to determine whether the dancers were employees finding: (1) that even
though the dancers set their own schedules, the nightclub exerted more control since it
set policies and procedures for dancer conduct, as well as dress and music selection;
(2) the nightclub had more opportunity for profit or loss where it bore overhead costs
and controlled marketing, club location, atmosphere, food and alcohol; (3) the
nightclub’s investment in personnel and equipment far exceeded the dancers’
investments in clothing, hair-styling and make-up; (4) that taking off clothes and dancing
provocatively were not the kind of special skills typically associated with independent
contractor status under the FLSA; (5) the fact that the dancers were transient and could
work at other clubs or jobs failed to distinguish them from other employees covered
under the FLSA; and (6) the dancers performed the most important job at the nightclub. In Gordilis v. Ocean Drive Limousines, Inc.,101 an FLSA action for unpaid wages,
drivers moved for summary judgment against defendants, a driving services company
and its operators, arguing that the drivers were employees under the FLSA and not
independent contractors. A district court in Florida entered summary judgment for the
plaintiffs, explaining that the "economic reality of all the circumstances" controls and that
the parties' intention is irrelevant. The court applied the Eleventh Circuit's eight-factor
test, in which no one factor is determinative: (1) nature and degree of control of workers;
(2) degree of supervision, direct or indirect, of work; (3) right, directly or indirectly, to
hire, fire, or modify employment conditions of workers; (4) power to set pay rates or
methods of payment; (5) preparation of payroll and payment of wages; (6) ownership of
facilities where work occurs; (7) workers' performance of specialty job integral to the
business; and (8) investment in equipment and facilities. According to the court, all of
those factors go to what it termed the "core question”: is the putative employee
economically dependent on the putative employer? Applying those factors, the court
found that the analysis weighed heavily in favor of an employment relationship. The
defendants controlled the operation; the plaintiffs did not set their own schedules; the
plaintiffs' income was dependent on their driving the routes given to them by
defendants; no unique skills were required for the plaintiffs' positions; and the plaintiffs
had no ownership stake in the facilities or investment in equipment. In reaching its
conclusion, the court specifically held that the independent contractor label that the
parties used to define their relationship was irrelevant. In Hart v. Rick's Cabaret International, Inc.,102 exotic dancers brought a collective
action against their employer, an adult entertainment club owner, and two corporate
parents alleging minimum wage and overtime violations under the FLSA. The plaintiffs
100
2013 WL 6880921 (N.D. Ga. Dec. 31, 2013). 2014 WL 2214289 (S.D. Fla. May 28, 2014). 102
967 F. Supp. 2d 901 (S.D.N.Y. 2013). 101
20 argued that they were employees and not independent contractors. A district court in
New York analyzed the case using the Second Circuit’s five-factor economics realities
test. The court added that no single factor of the test is dispositive and it is inherently
case-specific. The court held that the dancers were employees, adding that nearly all
courts that have addressed this issue have found an employment relationship between
nightclubs and dancers. Applying the economic realities test, the court found that the
defendants exerted significant control over the plaintiffs including restricting the
plaintiffs’ personal activities while on duty, guidelines on performing, and the imposition
of fines for failure to comply. The court found that the defendants set the club’s location,
the aesthetics, décor, and other operational and labor costs. The court found that no
previous experience was required to be a dancer, no formal dance training was
required, and that “hustling” to cultivate customers was not a skill. The court found that
while plaintiffs were not prohibited from working at other locations, this factor was given
modest weight given that this is very common in a variety of industries without defeating
a finding of an employment relationship (e.g., waiter, ushers, and bartenders). In Arena v. Plandome Taxi, Inc.,103 a driver brought various claims under the
FLSA and New York labor law against a defendant transportation services company.
The defendant moved for summary judgment arguing, in part, that the plaintiff was not
an employee of the defendant company. A district court in New York applied the
economic realities test to determine if the plaintiff was an employee or independent
contractor. In applying this test, the court considered five factors articulated by the
Second Circuit in Brock v. Superior Care, Inc.104 as well as three additional factors. The
Brock factors included: 1) the degree of control exercised by the employer over the
worker; 2) the worker’s opportunity for profit or loss and investment in the business; 3)
the degree of skill and independent initiative required to perform the work; 4) the
permanence or duration of the working relationship; and 5) the extent to which the work
is an integral part of the employer’s business. The court additionally considered: 6) the
defendant’s maintenance of employment records; 7) the use of the employer’s
equipment for work, and 8) whether the worker worked exclusively for the employer.
Applying these factors, the court found: 1) while the plaintiff was not required to work a
particular schedule, the defendant exerted control over the plaintiff by directing hours of
work, requiring daily trip logs, and prohibiting the plaintiff from taking a break or leaving
work without authorization; 2) the plaintiff was denied the opportunity for profit or loss by
the defendant’s prohibition of personal solicitation of customers and routing payments
for work through the plaintiff; 3) the plaintiff did not need any special initiative to obtain
passengers hiring the defendant for its services; 4) the working relationship did provide
evidence of independence; 5) taxi drivers were integral to the operation of the
defendant’s business, though the plaintiff as an individual driver was not; 6) the plaintiff
may have been required to keep daily records of his work and receipts; 7) the defendant
provided the plaintiff with a taxicab as the critical piece of equipment in his work; and 8)
the plaintiff may have been prohibited from working for other taxi companies. Based on
103
104
2014 WL 1427907 (E.D.N.Y. Apr. 14, 2014). 840 F.2d 1054 (2d Cir. 1988). 21 the contested evidence, the court dismissed the defendant’s motion for summary
judgment, finding that there was a triable issue of fact as to whether the driver was
statutory employee. In Butler v. PP&G, Inc.,105 a former exotic dancer brought a claim for back pay
under the FLSA against the owner and operator of the nightclub where she formerly
worked. The plaintiff claimed that she was misclassified as an independent contractor
rather than an employee. The defendant argued that because the plaintiff elected to
become an independent contractor and not an employee, the plaintiff was not entitled to
back pay under the FLSA.106 Under the economic realities test, a district court in
Maryland found that the plaintiff was an employee and not an independent contractor,
despite her election as an independent contractor when she began working for the
defendant. Although the court found that the plaintiff’s freedom to determine when and
where she worked indicated she was an independent contractor, the remainder of the
evidence ultimately weighed in favor of the plaintiff’s status as an employee. The court
determined that the defendant’s significant control over the atmosphere, clientele, and
operation of the club indicated the significance of the plaintiff’s economic dependence
on the defendant. Specifically, the court noted that the defendant’s control over the flow
of customers into the night club, and the plaintiff’s dependence on those customers for
income, tipped the scale in favor of economic dependence. Additionally, the court found
that because the plaintiff made little investment in the club, had no involvement with the
profits or losses, needed no specialized skill, and was integral to the operation of the
night club, she was entitled to protection under the FLSA as an employee of the night
club.107 b. Cases Finding No Employee Status In Moba v. Total Transportation Services, Inc.,108 a district court in Washington
granted summary judgment to the defendant freight transportation service company in a
lawsuit brought by the plaintiffs independently owned trucking operators alleging
violations under the FLSA. In determining whether the plaintiffs were employees, the
district court relied on six factors articulated by the Ninth Circuit: 1) the degree of the
putative employer’s “right to control the manner in which the work is to be performed”; 2)
the potential “employee’s opportunity for profit or loss depending on his managerial
skill”; 3) the claimed “employee’s investment in equipment or materials required for his
task, or his employment of helpers”; 4) whether the job “requires a special skill”; 5) how
permanent “the working relationship” is; and 6) whether the service that was performed
is “an integral part of the alleged employer’s business.”109 The court noted that no single
factor was determinative, but rather, resolution depended on the total circumstances
105
2013 WL 5964476 (D. Md. Nov. 7, 2013). Id. at *1. 107
Id. at *6. 108
2014 U.S. Dist. LEXIS 58854 (W.D. Wash. Apr. 25, 2014). 109
Id. at *11–12 (citing Donovan v. Sureway Cleaners, 665 F.2d 1368, 1370 (9th Cir. 1981)). 106
22 and the economic reality of whether the individual was dependent on the alleged
employer. In reaching the conclusion that the plaintiffs were independent contractors,
the court decided the six factors as follows: 1) the terms and conditions of the
agreement between the plaintiffs and the defendant implied that the plaintiffs were
independent contractors; 2) the plaintiffs did not receive a salary or set commission, but
rather their pay varied depending on the job performed; 3) the plaintiffs drove their own
vehicles, supplied their own tools and instruments, fully paid all expenses and
compensation to their employees, drivers, and sub-contractors, and could hire their own
employees; 4) the service that the drivers performed required significant skill, which
suggested that they were independent contractors; 5) the plaintiffs and defendant
entered into a one year contract that the parties could agree to renew, either party could
terminate the contract with one day’s written notice, and there was no exclusivity; and 6)
the drivers were in business for themselves rather than being dependent on the
defendant’s business, including making their own schedules, working for other
companies, refusing offered jobs, and they owned, maintained, serviced, and insured
their own vehicles without reimbursement from the defendant. In Keller v. Miri Microsystems, LLC,110 an installer of satellite internet services
brought FLSA overtime claims against a limited liability company, alleging that the
company had misclassified him as an independent contractor. The defendant company
was an installation “middleman” for a nationwide internet service provider,
subcontracting out the installation jobs to installers who agreed to perform installations
in certain geographic areas at specified times. The defendant brought a motion for
summary judgment, asking a district court in Michigan to find that the plaintiff had been
properly classified as an independent contractor. The court noted that previous
decisions have been split on the issue of proper classification of internet and cable
installers. The court then applied the six-factor test used by the Sixth Circuit for such
questions: “1) the permanency of the relationship between the parties; 2) the degree of
skill required for the rendering of the services; 3) the worker’s investment in equipment
or materials for the task; 4) the worker’s opportunity for profit or loss, depending upon
his skill; 5) the degree of the alleged employer’s right to control the manner in which
work is performed; and 6) whether the service rendered is an integral part of the alleged
employer’s business.”111 The court found that factors one through five weighed in favor
of independent contractor status, because the plaintiff did not have an exclusive working
relationship with the defendant; had specialized technical training; provided his own
vehicle and equipment; had a great deal of control over the timing, manner, and
geographical area of his assignments, as well as freedom to accept or reject any
assignment; and he maintained the ability to control his profit by determining the jobs he
accepted. The court found that the sixth factor weighed in favor of employee status,
because installation services were integral to the defendant’s business. However, the
110
111
2014 WL 1118446 (E.D. Mich. Mar. 20, 2014). Id. at *5. 23 court held that this factor, standing alone, would not support a jury finding of employee
status, and thus, granted the defendant’s motion for summary judgment.112 In Arena v. Delux Transportation Services, Inc.,113 a taxi driver brought various
claims under the FLSA against a transportation company in the business of leasing
taxis to drivers on a day-to-day basis. The defendant company moved for summary
judgment on the grounds that the plaintiff was not employed by the defendant. In
considering the defendants’ motion, a district court in New York applied the “economic
reality” test to determine whether the plaintiff was an “employee,” specifically applying
five factors articulated by the Second Circuit in Brock v. Superior Care, Inc.114 The five
factors are: 1) the degree of control exercised by the employer over the worker; 2) the
worker’s opportunity for profit or loss and investment in the business; 3) the degree of
skill and independent initiative required to perform the work; 4) the permanence or
duration of the working relationship; and 5) the extent to which the work is an integral
part of the employer’s business. Applying these factors, the court found: 1) the
defendant did not exert significant control over the plaintiff because he could set his own
schedule, was not managed or supervised on a regular basis, and was free to accept or
decline dispatched calls; 2) the plaintiff had sufficient opportunity for profit or loss
because the defendant did not pay the plaintiff any compensation, and the plaintiff kept
all fares in connection with the use of the leased vehicle; 3) the skill set of a taxi driver
under the circumstances favored against employee status; 4) the temporary nature of
the vehicle lease agreements that could be created and terminated easily favored
against employment; and 5) because the plaintiff was easily replaceable and
interchangeable with other drivers, he was not considered an integral part of the
defendant’s business. Based on its application of the above factors, the court found no
employer-employee relationship and granted the defendant’s motion for summary
judgment. D. Joint Employers
2. The Migrant and Seasonal Agricultural Worker Protection Act
In Perez v. Howes,115 the Secretary of Labor brought an action on behalf of
cucumber harvesters who worked on a farm. The defendant was an individual owner of
the farm. The Secretary moved for summary judgment under the Migrant and Seasonal
Agricultural Worker Protection Act on the grounds that the employer provided
substandard housing for the cucumber harvesters. The individual defendant did not
dispute the housing violations, but argued that he was not liable because he did not own
or control the property where the harvesters resided, which was at a location separate
from the farm where the harvesters worked. A district court in Michigan concluded that
112
Id. at *10. 113
2014 WL 794300 (E.D.N.Y. Feb. 26, 2014). 840 F.2d 1054 (2d Cir. 1988). 115
2014 WL 1028878 (W.D. Mich. Mar. 17, 2014). 114
24 the farm owner was liable for the violations because he had authority to “oversee,
manage, superintend, or administer” the residence through an authorized agent.116
Specifically, the owner had authority to prepare the property for the workers and to
make repairs once the workers arrived, and he performed these activities within the
scope of his employment with the farm. The plaintiffs in Garcia-Celestino v. Consolidated Citrus Limited Partnership117
brought a collective action under the FLSA; the Migrant and Seasonal Agricultural
Worker Protection Act (AWPA); Florida's minimum wage law for unpaid minimum
wages; and a claim for failing to reimburse the plaintiffs for their transportation,
subsistence, and work visa costs. The plaintiffs were migrant and seasonal agricultural
laborers hired to pick fruit during several harvest seasons. One defendant was a large
citrus grower who hired farm contractors (a second defendant) to furnish citrus picking
workers.118 The plaintiffs were compensated on a piece-rate basis based on the number
of tubs of fruit harvested. In order to record compensable work time, the farm contractor
was required to utilize an electronic timekeeping system owned and maintained by the
citrus grower.119 A district court in Florida denied summary judgment as to the citrus
grower defendant on the issue of co-employment under both the FLSA and the AWPA.
The court ruled that triable issues of fact remained under either the FLSA's "suffer or
permit to work" standard or the common law agency principles standard put forth by the
Eleventh Circuit. Specifically, the court found material factual issues related to the citrus
grower's power to determine the plaintiffs' pay rates or methods of payment, as well as
the citrus grower's relative investment in equipment and facilities used in harvesting
operations.120 3. Court Decisions Addressing the Joint Employment Doctrine
In Garcia-Celestino v. Ruiz Harvesting, Inc.,121 a citrus grower contracted to hire
migrant and seasonal agricultural laborers from a farm labor contractor. The laborers
sued both the labor contractor and citrus grower seeking unpaid minimum wages under
the FLSA and the Florida constitution for allegedly requiring the laborers to kick back
their supplemental wages. The parties cross-moved for summary judgment on the issue
of whether the citrus grower was a joint employer with the contractor. A district court in
Florida concluded that it was unable to make a final determination on the issue, and
therefore denied both motions. In making its determination, the court applied the
following eight-factor test established in Aimable v. Long and Scott Farms:122 (1) the
nature and degree of control over the workers; (2) the degree of direct and indirect
116
Id. at *11 (citing 29 C.F.R. § 500.130). 2014 WL 103434 (M.D. Fla. Jan. 10, 2014). 118
Id. at *1-2. 119
Id. at *2. 120
Id. at *4. 121
2013 WL 3816730 (M.D. Fla. July 22, 2013). 122
20 F.3d 434, 438 (11th Cir. 1994). 117
25 supervision over the plaintiffs’ work; (3) the putative employer’s authority to directly or
indirectly hire, fire or modify the workers’ employment conditions; (4) the putative
employer’s power to determine the workers’ pay rates or methods of payments; (5) the
putative employer’s preparation of payroll and payment of the workers’ wages; (6)
whether the work was performed on the putative employer’s premises; (7) whether the
plaintiffs’ work was integral to the putative employer’s business; and (8) the putative
employer’s investment in equipment and facilities. Some factors favored the plaintiffs,
some favored the defendant grower, and others the court did not have enough
information to assess. For example, the plaintiffs worked exclusively on the citrus
grower’s premises, the work was essential to the citrus grower’s business, and the
citrus grower was found to have supervised the workers by conducting quality
inspections of the laborer’s work and directing incoming laborers to specific groves,
which favored the plaintiffs. At the same time, the citrus grower did not issue the
plaintiffs’ payroll checks, the labor contractor had “near exclusive authority” to hire and
fire workers and to dictate the laborer’s working hours, and the grower’s “general
agricultural decisions” such as directing the workers to specific groves were not
indicative of control, which favored the defendant grower. Finally, the court did not have
enough information on the remaining factors of the test to make an assessment. In Teri v. Spinelli,123 debt collection agents brought overtime claims under the
FLSA and New York labor law against a debt collection agency “OMS” and its attorney
in a district court of New York. Applying the economic realities test, the court granted
plaintiffs’ motion for summary judgment finding the lawyer and OMS were joint
employers. Spinelli operated his law firm as a sole proprietorship while acting as
counsel for OMS. Spinelli shared bookkeepers with OMS and simultaneously employed
51 OMS collections agents to perform work for him related to OMS collections. The
court held Spinelli personally liable for overtime pay after the plaintiffs amended their
complaint to add him as a defendant. In Thompson v. Real Estate Mortgage Network,124 the Third Circuit reversed a
district court of New Jersey's dismissal of overtime claims against a successor employer
and held that the successor company and its owners or officers constitute “joint
employers.” The plaintiff, a mortgage underwriter, was hired by defendant Security
Atlantic but trained by a purported sister company, defendant “REMN.” The plaintiff
alleged she was misclassified as exempt and brought claims against both companies as
joint employers. Vacating the district court’s decision, the Third Circuit found allegations
that the two companies shared authority over hiring and firing practices and that
employees of Security Atlantic were abruptly integrated into REMN’s business when
Security Atlantic became defunct were sufficient to find successor liability. The court
also allowed claims to proceed against two individuals with authority over operations
and compensation. 123
124
980 F. Supp. 2d 366 (E.D.N.Y. 2013). 748 F.3d 142 (3d Cir. 2014). 26 In Yapan v. Marvin Holding Co.,125 two press operators brought overtime claims
against multiple related entities and their owner, alleging that the defendants divided the
plaintiffs’ hours among the related entities to evade paying overtime, and that the
defendants failed to credit the plaintiffs for all hours worked. The plaintiffs did the same
work for each entity, were supervised by the same owner regardless of which company
they worked for, and submitted evidence that during weeks in which they worked more
than 40 hours, some of their time was designated as work for related entities. After the
defendants did not respond to the plaintiffs’ motion for summary judgment, a district
court in Illinois assumed the plaintiffs’ asserted facts were true and granted them
summary judgment. The court held that the defendants were the plaintiffs’ joint
employers, because each defendant “exercised control over plaintiffs[’] working
conditions.”126 In Hugee v. SJC Group, Inc.,127 a security officer at various retail locations
brought a putative class action against NESCTC and its subcontractor SJC, for
uncompensated overtime, violating the “spread of hours” regulations mandated by the
New York labor laws, failing to provide weekly wage statements and annual notices,
and unjust enrichment by misclassifying him as a private contractor. A district court in
New York held that NESCTC was not a joint employer and granted its motion to
dismiss. In determining that NESCTC was not a joint employer, the court considered the
“economic reality” of the purported employment relationship and whether NESCTC had
“functional control” over the plaintiff. Considering ten factors from two cases the court
found that only one factor -- whether the plaintiff worked exclusively or predominantly for
the purported joint employer -- weighed in favor of finding NESCTC jointly employed the
plaintiff. The court reasoned that while NESCTC did oversee the plaintiff’s timesheets
and make visits to his worksite, this was for quality control and compliance purposes.
SJC, on the other hand, “had and exercised the exclusive power to hire, fire, assign,
supervise, set Plaintiff’s rate of pay, and pay his wages.” Thus, NESCTC did not qualify
as a joint-employer for FLSA purposes. In Almaraz v. Vision Drywall & Paint, LLC,128 the plaintiffs, employees of a
construction subcontractor, sought to hold general contractors liable for the
subcontractor’s failure to pay them minimum wages and overtime compensation on
various construction projects. The plaintiffs and general contractors filed cross motions
for summary judgment. A district court in Nevada granted the general contractors’
motion for summary judgment, holding that “[c]onsidering the totality of the
circumstances and the economic reality of the relationship . . . the General Contractor
Defendants are not Plaintiffs’ joint employers.”129 Although the general contractors’
contracts with the subcontractor gave them the right to reduce or cancel the scope of
125
2014 WL 242839 (N.D. Ill. Jan. 22, 2014). Id. at *3. 127
2013 WL 4399226 (S.D.N.Y. Aug. 14, 2013). 128
2014 WL 2003188 (D. Nev. May 15, 2014). 129
Id. at *15. 126
27 work, and the general contractors “exercised some measure of indirect control over
Plaintiffs’ work schedules and conditions of employment,” the subcontractor “exerted
day-to-day control over Plaintiffs’ work schedules and conditions of employment,
including giving Plaintiffs assignments and checking Plaintiff’s work.”130 Therefore, the
court determined that “no genuine issue of material fact remains that the General
Contractor Defendants are not Plaintiffs’ joint employers.”131 In Doe I v. Four Brothers Pizza, Inc.,132 a group of current and former manual
laborers who worked in the defendants’ pizza shops filed a class complaint alleging
violations of the FLSA and New York’s minimum wage and overtime provisions. The
plaintiffs requested leave to file a second amended complaint, which pleaded a jointemployer theory of liability against individual and corporate defendants operating a
chain of restaurants in various locations in New York. The defendants opposed the
request for leave because they argued that the second amended complaint failed to
establish the court’s jurisdiction under the FLSA. A district court in New York granted
the plaintiffs’ request, in part, because it found that the allegations that the corporate
defendants operated the restaurants in a unified fashion for a common business
purpose with respect to employee staffing, and the individual defendants supervised the
employees and made decisions about workplace duties, hours, and pay, among others,
satisfied the economic realities test. Thus, the plaintiffs pled sufficient facts supporting
an inference of a joint-employer relationship for FLSA jurisdiction purposes.133 In Wilson v. GoWaiter Franchise Holdings, LLC,134 two food delivery drivers
brought suit to recover unpaid minimum wages, liquidated damages, and costs and
fees, alleging that their compensation structure, which was based on flat fees for each
delivery they completed, did not satisfy the minimum wage law. A district court in
Georgia granted the drivers’ motion to amend their complaint to add the franchisor of
their employer as a defendant on a joint enterprise theory of liability. The court also
denied the defendant’s motion to dismiss and conditionally certified a collective action.
The drivers originally sued the franchise holdings company that operated the two
franchise locations where they worked, but sought to amend the complaint to add as a
defendant the franchisor after conceding that the franchise holding company did not
generate sufficient annual revenue to be covered by the FLSA. The franchisor was in
the business of selling a restaurant business marketing model (GoWaiter) that facilitated
the delivery of food from a variety of local restaurants to customers through a common
website. The original defendant franchise holding company was a distinct entity but
shared the same principal place of business and central office facilities and operated
with the same personnel as the franchisor. The franchise holding company existed
specifically to take over the management and operations of franchises in a territory until
130
Id. 131
Id. 132
2013 WL 6083414 (S.D.N.Y. Nov. 19, 2013). Id. at *7–8. 134
2014 WL 1092307 (N.D. Ga. Mar. 18, 2014). 133
28 that territory could be sold or transferred to a new owner.
The court held that the plaintiffs could successfully plead that the franchisor was
their joint employer, explaining that “[w]hile it is true that franchise operations do not
generally meet the requirements for inclusion, the FLSA does not categorically exclude
franchise relationships from joint enterprise coverage.”135 The court held that the
plaintiffs successfully pleaded a joint enterprise theory by alleging that: (1) the
franchisee and franchisor performed “related activities” because, among other things,
they shared the same ultimate business purpose of selling GoWaiter franchises and the
franchise holding company acted to enhance the public image of the franchisor by
providing services to customers and preventing gaps in services; (2) the franchisee and
franchisor had “unified operation or common control” because they shared the same
founder, owner, president, and two of three managing members, and were controlled by
the same individual; and (3) the franchisee and franchisor shared “a common business
purpose,” because they shared the same end goal of selling GoWaiter franchises.136
The court rejected the defendant’s arguments that the franchisee’s ultimate objective
was selling food while the franchisor’s was to sell franchises. In Carrillo v. Schneider Logistics Trans-Loading and Distribution, Inc.,137 the
plaintiffs, a putative class, asserted claims under the FLSA, the California Labor Code,
the Unfair Competition Law (“UCL”), and the common law for unpaid wages, failure to
keep proper employment records, and related violations. In the present action, Walmart,
a defendant added in the third amended complaint, filed a motion for partial summary
judgment, challenging its liability as an alleged joint employer under the FLSA and
California law. Walmart owned multiple warehouse facilities and contracted with the
defendant, Schneider Logistics Trans-Loading and Distribution, Inc. (“SLTD”), to
operate its warehouse that was the site of the alleged violations. In turn, SLTD hired
subcontractors (“Premier” and “Impact”) to provide loading and unloading work. In
determining whether Walmart could be held liable as a joint employer, a district court in
California analyzed 12 factors from two controlling cases, noting that “ownership or
control of the premises of employment is a key consideration in determining joint
employer liability.”138 The court found, in part, that Walmart exerted extensive oversight
over the workers’ schedules and productivity levels; it indirectly influenced the
employees rate of pay; it owned the warehouses and equipment used by the
employees; and the employees’ services were integral to Walmart’s operations -- all
facts supporting joint-employer status. While other facts weighed against this status,
such as Walmart not overseeing employee records and that Premier and Impact’s
employees provided services to other clients, the court, nonetheless denied Walmart’s
motion for summary judgment. 135
Id. at *3. 136
Id. at *4. 137
2014 WL 183956 (C.D. Cal. Jan. 14, 2014). Id. at *10. 138
29 E. Individuals (e.g., Corporate Officers, Managers, Supervisors,
Consultants, etc.) Who Are “Employers” In Rikard v. U.S. Auto Protection, LLC,139 automotive call center employees
brought claims under the FLSA and Missouri law. The individual defendants were
officers and members of the business, with authority to hire and fire, set pay practice
decisions and overall operational functions of the entities. The defendants offered no
opposition to the plaintiff’s summary judgment motion on the employer issue; the court
granted the plaintiff’s motion. In Orquiza v. Walldesign, Inc.,140 two individual defendants, an owner/founder
and a vice president of the defendant company, obtained summary judgment dismissal
in a lawsuit in which the plaintiffs claimed FLSA violations. Using the economic realties
test, the district court determined that the individual defendants did not hire or fire the
plaintiffs; the individual defendants did not supervise or control the plaintiffs’ work; the
plaintiffs’ supervisors and/or crew managers, and not the individual defendants, set their
rate and manner of pay; and the individual defendants did not maintain the plaintiffs’
employment files. In Irizarry v. Castimatidis,141 employees of a supermarket chain brought overtime,
misclassification, reduction of hours, and retaliation claims under the FLSA and the New
York Labor Law, sought to hold the company’s individual CEO personally, as well as the
corporate employer, liable for damages. The CEO appealed the New York district
court’s summary judgment ruling, which held that the CEO was an “employer” under the
FLSA. Applying the economic realities test, the Second Circuit found that, in addition to
the four factors discussed in Carter v. Dutchess Community College142, the question of
an individual corporate officer’s FLSA liability raised the issue of (1) the scope of that
individual’s “operational control” over the company; and (2) the extent to which the
individual actually exercises his or her power over employees.143 It held that, in order to
be an “employer” under the FLSA, an individual defendant must possess control over a
company’s operations “in a manner that relates a plaintiff’s employment.”144 Evidence
that the individual “makes corporate decisions having nothing to do with an employee’s
function” does not satisfy this factor.145
139
2013 WL 5298460 (E.D. Mo. Oct. 17, 2013).
2013 WL 3027765 (D. Nev. June 14, 2013). 141
722 F.3d 99 (2d Cir. 2013). 142
735 F.2d 8 (2d Cir. 1984). In Carter the court examined “whether the employer (1) had the
power to hire and fire the employees, (2) supervised and controlled employee work schedules or
conditions of employment, (3) determined the rate and method of payment, and (4) maintained
employment records.” 143
Irizarry, 722 F.3d at 106. 144
Id. at 109. 145
Id. 140
30 The court noted that this formulation established a higher standard for individual
liability than for corporate employer status, but justified this by observing that the
concern of preventing “a business entity from causing workers to engage in work
without the protections of the statute,” was “not as pressing” when there is a company,
in addition to the individual defendant, that is “undisputedly the plaintiff’s employer.”146
With regard to the second issue, the court did not determine the extent to which the
individual defendant must have exercised its power over employees, but noted that “the
manifestation of,” or at least “a clear delineation” of this power is an important factor in
the economic realities test. Because the CEO in this case possessed ultimate
responsibility for wages, supervised managerial employees, and exercised occasional
authority over operations in individual stores, the Second Circuit held him liable as an
employer.147
In Hill v. Walker,148 an employee sued her supervisor, Walker, individually and in
her capacity as an employee of the Arkansas Department of Human Services, alleging
that her supervisor violated the FMLA and FLSA by refusing to grant the plaintiff certain
leave time that she had requested and by failing to pay her for accrued leave time. The
Eighth Circuit held that the supervisor was not an “employer” under the FLSA. While the
plaintiff alleged that her supervisor had the authority to fire her, the plaintiff did not plead
that her supervisor controlled her compensation or made the decision not to pay her for
accrued compensatory time.149 The court stated that, to be an “employer” under the
FLSA, “at a minimum, . . . an individual employee must be ‘responsible in whole or part
for the alleged violation’ to incur individual liability.”150 The appeals court agreed with the
district court that “[t]he mere fact that Walker’s termination of Hill eventually resulted in
Hill failing to receive payment for compensatory time from [the Department] did not, by
itself, make Walker the person responsible for the State’s failure to pay for any
compensatory time allegedly owed to Hill.” Thus the FLSA claim against Walker was
properly dismissed.151 In White v. NTC Transportation, Inc.,152 drivers of non-emergency medical
patients sued the co-owners of a transportation company, along with the corporation
itself, for failure to pay overtime. The plaintiffs moved for partial summary judgment,
asking the court to rule that the two co-owners were employers under the FLSA. The
district court for Mississippi held that one of the two co-owners was indeed an employer
under the FLSA, while the other may be an employer, but there remained factual
disputes preventing such a ruling. The district court explained that to determine whether
146
Id. at 110. 147
Id. at 111–117. 148
737 F.3d 1209 (8th Cir. 2013). Id. at 1216. 150
Id. at 1216 (citing Riordan v. Kempiners, 831 F.2d 690, 694 (7th Cir. 1987)). 151
Id. at 1216. 152
2013 WL 5430512 (N.D. Miss. Sept. 27, 2013). 149
31 an individual is an employer, it considers whether the individual (1) possessed the
power to hire and fire, (2) supervised and controlled work schedules or conditions of
employment, (3) determined the rate and method of pay, and (3) maintained
employment records. The CEO (who owned 51 percent of the company) had the power
to hire and fire, affected the conditions of employment, and developed some of the
wage and hour policies at issue, whereas there was a genuine dispute of material fact
as to whether the minority owner, who functioned mostly in a clerical role, was in a
position of control over the employees. In Alladin v. Paramount Management, LLC,153 an administrative employee
brought suit alleging race discrimination and unpaid overtime against her employer, a
currency-trading company, and the individual owner of the company.154 The district
court granted summary judgment in favor of the employee, holding that the owner was
an employer.155 While recognizing that “a person may not be held individually liable for a
company’s FLSA violations simply because he was an executive of that company[,]” the
record demonstrated that the owner had “the power to control the workers in
question.156 The individual admitted in deposition that he oversaw all business
operations, handled human resource issues, and in his answer to the complaint,
admitted that he was the employee’s supervisor, that he had the power to determine her
wages, and that he had established her work schedules and rates of pay.157 In Branum v. Richardson,158 former credit union employees brought claims for
overtime against the credit union and against the CEO and members of the Board of
Directors individually. The district court granted the defendants' motion for summary
judgment as to the individual defendants and dismissed those claims, finding that the
plaintiffs could not establish that the individual defendants should be considered
employers under the four-factor economic reality test applied in the Fifth Circuit to
determine whether an individual is "sufficiently involved in the day-to-day operation of
the company and its employees."159 As to the board members, the court noted that the
plaintiffs' evidence showed that they acted collectively, and failed to show that any of
the board members had the authority individually to control the terms of the plaintiffs'
employment.160 As for the CEO, the plaintiffs presented evidence that she had the
power to fire employees, but did not present evidence to meet any of the remaining
three relevant factors, i.e., whether the CEO supervised or controlled employee work
153
2013 WL 4526002 (S.D.N.Y. Aug. 27, 2013). Id. at *1. 155
Id. at *7. 156
Id. at *4. 157
Id. 158
2014 WL 795080 (S.D. Miss. Feb. 27, 2014). 159
Id. at *3. 160
Id. at *3-6. 154
32 schedules or conditions of employment, determined the rate or method of payment or
maintained employee records.161 In Aaron v. Summit Health and Rehabilitation, LLC,162 hourly nursing home
employees sued the nursing home entities that employed them and an owner and
officer of the nursing homes. The employees claimed that the defendants failed to pay
them overtime compensation in compliance with the FLSA. The defendants filed a
motion to dismiss, arguing among other things that the claims against the owner/officer
should be dismissed because the complaint failed to allege facts establishing that he
was an “employer” under the FLSA. In denying the motion to dismiss on this issue, the
Arkansas district court noted that a corporate officer “with operational control of the
corporation’s day-to-day functions is an employer as defined by the FLSA.”163 The
district court also noted that, under the “active management test,” a corporate officer
“may be included in the definition of ‘employer’ if he hires the supervisors and home
office workforce and if the wages of the corporation’s employees are subject to his
control, if only in varying degrees.”164 Applying these tests to the plaintiffs’ complaint,
the district court held that the complaint stated a plausible claim that the owner/officer
was an employer under the FLSA.165 Among other things, the court noted that the
complaint alleged that the owner/officer managed and controlled the nursing homes and
made “all critical decisions regarding staffing, budgets, and census.”166 The court held
that these allegations were sufficient to state a claim against the owner/officer for
purposes of surviving a Rule 12(b)(6) motion to dismiss. In Chen v. Zhang,167 a waiter brought an action to recover unpaid overtime
compensation against several defendants doing business as “Andy’s Restaurant.” Mr.
Chen alleged that Bai Qiang Su, the executive chef, was also his employer and
therefore individually liable to him under the FLSA. The defendants brought a motion for
summary judgment on the basis that Su was not Chen’s employer as defined under the
FLSA. Chen alleged that Su had the power to hire and fire him and oversaw his work.
The defendants countered that Su’s name does not appear on any stock certificates
and, therefore, he was not an employer under the FLSA. The court denied the
defendants’ motion for summary judgment stating that “a thin record that merely
demonstrates non-ownership does not foreclose the possibility that Su is an employer.” In Manning v. Boston Medical Center Corp.,168 putative collective and class
actions were filed by current and former hospital employees against their employer, the
161
Id. at *3, 7. 162
2014 WL 1095921 (W.D. Ark. Mar. 19, 2014). Id. at *2. 164
Id. 165
Id. 166
Id. 167
2013 WL 6728138 (E.D.N.Y. Dec. 23, 2013). 168
725 F.3d 34 (1st Cir. 2013). 163
33 former CEO, and the former Human Resources Director. The First Circuit held that
claims against the CEO were viable because the amended complaint alleged the CEO
had “substantial authority” over policy and wages, as well as involvement with union
negotiations and hiring decisions. This is the kind of “operation and control” necessary
to establish individual liability. The appellate court, however, affirmed the dismissal of
the claims against the Human Resources Director stating that involvement in
employment records and payroll was not enough to impute individual liability. In Gomez v. Faulkner,169 former hospital employees filed an action under the
FLSA not only against the hospital and its parent company, but also against the CEO
and CFO of the hospital and the parent company. The plaintiffs subsequently filed a
motion for summary judgment against the CFO of the hospital, claiming that he was an
employer within the meaning of the FLSA. The court denied the plaintiffs’ motion, finding
no evidence that the CFO had operational control of significant aspects of the hospital's
day-to-day operations, and no evidence that the CFO had knowledge that the hospital
would be unable to satisfy its obligations under the FLSA.
In Arteaga v. Lynch,170 a group of former employees of a plastics manufacturing
company brought claims for unpaid wages against the business owner and the owner’s
brother, Michael Lynch, who assisted with managing the business and strategic
planning. The plaintiffs moved for summary judgment against Lynch. The court
considered it highly probative that Lynch had the ability to bring about violations under
the FLSA. Finding that Lynch gave instructions to employees to work without pay and
that Lynch had influence and involvement in payroll issues, the court concluded that
Lynch was an employer for purposes of the FLSA. 171 F.
Volunteers In Palar v. Blackhawk Bancorporation, Inc.,172 the plaintiff, a junior loan officer,
sought to recover overtime wages from the bank for the time he spent volunteering as a
high school baseball coach for a local high school. The district court determined that the
plaintiff was not an employee of the bank while he was coaching and, thus, was not
entitled to overtime compensation for the time he spent coaching. The court considered
the totality of the circumstances, including that the bank did not coerce plaintiff into
coaching and, although the bank encouraged his community involvement and
accommodated his schedule, there was no reasonable expectation that the bank would
compensate the plaintiff for coaching and that the plaintiff’s coaching had nothing to do
with banking, other than an incidental reputational boost. Thus, the court granted
summary judgment in favor of the bank. 169
2013 WL 4478700 (D. Ariz. Aug. 19, 2013). 2013 WL 5408580 (N.D. Ill. Sept. 26, 2013) 171
Id. at *12. 172
2013 WL 5366124 (C.D. Ill. Sept. 25, 2013). 170
34 In an unpublished decision issued in Padilla v. American Federation of State,
County and Municipal Employees, Council 18,173 the Tenth Circuit affirmed the district
court’s grant of summary judgment to the defendant union, holding, as a matter of law,
that the plaintiff was not an employee under the FLSA or New Mexico Minimum Wage
Act (“NMMWA”). Rather, the plaintiff was a volunteer. The plaintiff had been the
president of the defendant non-profit labor organization. In addition, the plaintiff held fulltime employment with a county water authority. The plaintiff performed his duties for the
labor union during his working hours for the water authority and during the weekends.
Pursuant to the labor union’s lost time policy, which allowed its officers to be paid for
uncompensated time from their employment to perform work for the labor union, the
plaintiff submitted reimbursement requests and received payments for his work as
president. The plaintiff was expelled from the labor union after its international judicial
panel determined that the plaintiff had submitted reimbursement requests to the labor
union for work that he performed for the labor union while he did not take leave without
compensation from the water authority. The plaintiff was ordered to make restitution to
the labor union. The plaintiff sued, alleging violations of the FLSA and NMMWA, and
arguing that he was an employee of the labor union. In determining that the plaintiff was
not an employee, but rather, a volunteer, the court found that the plaintiff was not
“economically dependent on Council 18 and did not receive wages for his services.”174
In addition, the court found that Council 18 “did not exert control over” the plaintiff, the
plaintiff’s schedule, or the time that he spent on his duties as union president. It also did
not hire or fire him.175 G. Trainees
In Schumann v. Collier Anesthesia, P.A.,176 a group of former student registered
nurse anesthetists (SRNAs) who had worked as unpaid student interns while enrolled in
the defendant college’s master’s degree clinical training program asserted claims
against the college for minimum wage and overtime compensation under the FLSA. The
parties cross-moved for summary judgment. Applying the DOL’s six-factor test, the
district court granted summary judgment in favor of the defendant college, concluding
that the overarching “economic realities” established that the SRNAs were trainees not
entitled to compensation under the FLSA. The plaintiffs in Glatt v. Fox Searchlight Pictures Inc.,177 filed a putative class
under the FLSA on behalf of unpaid interns who worked on the production of certain
films or at one of the defendant’s corporate offices. The plaintiffs filed a motion for
summary judgment arguing they were employees under the FLSA and should not have
173
551 F. App’x 941 (10th Cir. 2014). Id. at 943. 175
Id. at 943-44. 176
2014 WL 2158505 (M.D. Fla. May 23, 2014). 177
293 F.R.D. 516, 522 (S.D.N.Y. 2013) on reconsideration in part, 2013 WL 4834428 (S.D.N.Y.
Aug. 26, 2013) and motion to certify appeal granted, 2013 WL 5405696 (S.D.N.Y. Sept. 17, 2013). 174
35 been classified under the trainee exception. The New York federal district court, absent
Second Circuit authority, noted that some circuit courts utilize the DOL’s six-factor test
while other circuits utilize a primary benefits test that weighs the benefits to the intern
against the benefits to the engaging entity. The court chose to use the six-factor test,
stating the DOL’s fact sheet was entitled to deference. Applying the six factors, the court
held the plaintiffs were improperly classified as trainees. Specifically, the court ruled that
(i) the employers were the primary beneficiaries of the plaintiffs’ work in that the benefits
the plaintiffs received were merely incidental to working in the office like any other
employee, (ii) the plaintiffs performed work that would have otherwise been performed
by a paid employee, and (iii) the employers obtained an immediate advantage from the
plaintiffs’ work, even though the plaintiffs were beginners. In Nance v. May Trucking Co.,178 two former truck drivers brought claims for
unpaid minimum wages for time spent in a company-mandated orientation. The
employer countered that these individuals were not employees at the time of the
orientation. In granting the employer’s motion for summary judgment on the plaintiffs’
minimum wage claims, the district court ruled that compensability of this time centered
on whether the defendant "suffered or permitted plaintiffs to work during orientation."179
The orientation consisted of learning how to safely operate a truck and undergoing
required qualification tests such as drug testing, physical testing, and road testing. The
plaintiffs did not perform any trucking duties, and no company employees were
displaced during the orientation. Based on these facts, the court concluded that the
plaintiffs were not employees of the defendant during orientation because the defendant
did not receive any immediate advantage as a result of the plaintiffs' participation at
orientation.180
J. Undocumented Workers
In Lucas v. Jerusalem Cafe, LLC,181 six undocumented cafe workers brought suit
under the FLSA alleging failure to pay straight time and overtime wages. The
defendants, the cafe, its manager and its owner, appealed the district court’s award of
back pay, liquidated damages and legal fees, claiming that the FLSA did not apply
where an employer hired undocumented workers. In affirming the district court, the
Eighth Circuit Court held that the FLSA covered employers who hire undocumented
workers because the FLSA’s definition of “employee” is broad and “unambiguously
encompass[es] unauthorized aliens . . .”182 178
2014 WL 199136 (D. Or. Jan. 15, 2014). Id. at *3. 180
Id. at *5. The court also considered both the six-factor test created by the DOL and the primary
beneficiary test favored by the appellate court and ruled that the distinction was one of form over
substance because both tests were rooted in the Supreme Court's decision in Walling v. Portland
Terminal Co., 330 U.S. 148, 67 S. Ct. 639 (1947). See id. 181 721 F.3d 927 (8th Cir. 2013). 182
Id. at 934. 179
36 III.
Individual Coverage
In Hernandez v. Art Deco Supermarket,183 the plaintiff, a butcher, sued the
defendants, two grocery stores and the plaintiff’s supervisor, for overtime wages. The
district court for the Southern District of Florida denied the defendants’ motion to
dismiss, which alleged that the plaintiff had insufficiently pled individual liability against
his supervisor. The court found that individual liability was sufficiently pled because the
plaintiff’s complaint claimed that the supervisor was “a corporate officer and/or owner
and/or manager of the Defendant Limited Liability Companies who ran the day-to-day
operations of the Defendant Limited Liability Companies for the relevant time period and
was responsible for paying plaintiff’s wages for the relevant time period and controlled
plaintiff’s work and schedule.”184 The district court found that, as pled, this allegation
satisfied the plaintiff’s burden of alleging that the individual officer was “involved in the
day-to-day operation or ha[d] some direct responsibility for the supervision of the
employee.”185 In Centeno v. I & C Earthmovers Corp.,186 former employees brought suit against
the president and vice president of their former employer, a construction company,
seeking overtime wages under the FLSA. The district court for the Southern District of
Florida found that the individual defendants, as corporate officers, exercised significant
control over the day-to-day operations of the company to be individually liable. In
making its finding, the court noted that the president and vice president were involved
with payroll, including recording employees’ hours on a daily basis, issued warnings to
employees, and gave instructions concerning projects. The court held that the
defendants were the plaintiffs' employers under the FLSA.187 In Lopez-Santiago v. Coconut Thai Grill,188 three restaurant employees brought
suit under the FLSA on behalf of themselves and similarly situated employees, alleging
unpaid overtime wages. The defendants, a restaurant and its owner/manager, moved to
dismiss the plaintiffs’ allegations under the individual coverage theory. In granting the
defendants’ motion to dismiss, the district court held that the plaintiffs failed to provide
sufficient factual support to establish that they were employees engaged in the
production of goods for commerce. Applying the Fifth Circuit’s practical test, the court
examined whether the work of the employees was “so directly and vitally related to the
functioning of an instrumentality or facility of interstate commerce as to be, in practical
effect, a part of it, rather than isolated local activity.”189 The court found that the
plaintiffs’ claims relied merely upon a recitation of the elements of individual coverage,
183 2013 WL 5532828 (S.D. Fla. Oct. 4, 2013). Id. at *3. 185 Id. 186 970 F. Supp. 2d 1280 (S.D. Fla. 2013). 187
Id. at 1296. 188 2014 WL 840052 (N.D. Tex. Mar. 4, 2014). 189
Id. at *2. 184 37 conclusory allegations and the plaintiffs’ job titles. The court found the plaintiffs
described their work but, critically, failed to demonstrate “how the work engage[d]
plaintiffs in interstate commerce.”190
B. “Engaged in Commerce”
In Dean v. Pacific Bellweather, LLC,191 the plaintiff, a restaurant cook sued her
former employer alleging that the employer paid her below minimum wage and failed to
pay her overtime pay in violation of the FLSA. On summary judgment, the district court
found that although the plaintiff regularly used the internet as part of her job to develop
and download recipes, her job did not involve the actual movement of commerce such
as buying or selling goods online. Thus, the court found that the plaintiff was not
engaged in commerce. 1. Work Related to the Actual Movement of Commerce
In Pino v. Painted to Perfection Corp.,192 the plaintiff, a boat painter, sought
overtime pay under the FLSA against his employer, a boat company. In affirming the
trial court’s entry of summary judgment in favor of the defendant, the Eleventh Circuit
found that the painter’s work did not constitute work in the actual movement of
commerce even though some of the yachts he painted had foreign registries and
traveled abroad. The court held that the painter was not entitled to coverage under the
FLSA because he could not show that his job duties, which were purely intrastate in
nature, caused him to participate in the actual movement of persons or things in
interstate commerce.193 3. Work Related to the Instrumentalities of Commerce
In Seijo v. Casa Salsa, Inc.,194 the plaintiff, a dance instructor at an independent
dance studio, alleged unpaid overtime wages against the dance studio and its owners.
In their motion for summary judgment, the defendants contended that the plaintiff could
not satisfy the jurisdictional prerequisite of interstate commerce to establish coverage
under the FLSA. The district court agreed. While some of the plaintiff’s students were
from other states, all of plaintiff’s lessons were taught at the local studio. The plaintiff’s
appearance in instructional videos, which were posted on the studio’s website and
viewed by its clients in other states were also insufficient to show her engagement in
interstate commerce. The district court noted that individual coverage concerns only the
time and character of the employees’ work activities rather than the employers’
business activities. The court held that the plaintiff failed to introduce any evidence
showing the time spent in filming the videos and any work post-filming. Accordingly,
190
Id. 191 996 F. Supp. 2d 1044 (D.N. Mar. Is. 2014). 563 F. App’x 764 (11th Cir. 2014). 193 Id. at 767. 194 2013 WL 6184969 (S.D. Fla. Nov. 25, 2013). 192 38 summary judgment as to the FLSA overtime claim was warranted. C. “Engaged in the Production of Goods”
In Dean v. Pacific Bellweather, LLC,195 a restaurant cook sued her former
employer alleging that the employer paid her below minimum wage and failed to pay her
overtime pay in violation of the FLSA. The plaintiff was a restaurant cook who
developed recipes by downloading them from the internet. Granting the defendant’s
motion for summary judgment, the court found that her job did not involve the
movement of commerce, nor did she engage in the production of goods for commerce.
Although the plaintiff argued that her meals were eaten by international travelers, the
court held that her meals were all created and consumed in Saipan, the location of the
restaurant, without a legitimate expectation of foreign use. The court also noted that the
food was not produced for commerce.196 IV.
Enterprise Coverage
A. General Principles
In Vig v. All Care Dental, P.C.,197 the plaintiff asserted claims for minimum wage
and overtime pay against the defendants, a dentist and dental practice. The plaintiff
alleged that, while he was married to the individual defendant, he worked at the dental
practice without being paid regular or overtime compensation. The plaintiff asserted
enterprise coverage as a basis for his FLSA claims, but failed to introduce any evidence
showing that the employer was an enterprise whose annual gross volume of sales was
not less than $500,000. Accordingly, a district court in Georgia granted the defendants’
motion for judgment as a matter of law, finding that the plaintiff failed to introduce
sufficient evidence showing that he was an employee covered under the FLSA. In Villafana v. Feeding South Florida, Inc.,198 the plaintiff asserted claims for back
pay under the FLSA against a nonprofit corporation, which provided groceries to a
network of other nonprofits. The plaintiff alleged that, while she was working as a sorter
in the defendant’s facility, she was not compensated for all of her work. The defendant
moved to dismiss, asserting that the plaintiff did not sufficiently allege enterprise
coverage under the FLSA. The defendant contended that, because it was a nonprofit
organization, it did not meet the definition of “enterprise” found in 29 U.S.C. § 203(r),
which requires that the enterprise act with common business purpose. Noting that “their
nonprofit status does not necessarily exempt them from enterprise coverage,” the
Florida district court examined whether “the enterprise is primarily engaged in
competition in the public with ordinary commercial activities” to determine whether the
195 996 F. Supp. 2d 1044 (D.N. Mar. Is. 2014). Id. at 1052. 197 2013 WL 5219311 (N.D. Ga. Sept. 16, 2013). 198 2013 WL 2646729 (S.D. Fla. June 12, 2013). 196 39 defendant met the “common business purpose” requirement.199 The court found
particularly important the plaintiff’s claims that the defendant bid on pallets of food and
that it charged a fee for its donations. The court reasoned that the payment of
substandard wages would allow the defendant the very type of unfair advantage in
bidding with other organizations that the FLSA was enacted to prevent. The court also
noted that other courts have often considered whether a nonprofit charged for its
services in determining the organization’s commercial activities. Taken together, the
court ruled that these allegations plausibly showed that the defendant was engaged in
ordinary commercial activities, so as to entitle the plaintiff to enterprise coverage. The
court therefore denied the defendant’s motion to dismiss with respect to the plaintiff’s
FLSA claim.
C. Requirements of Section 3(s)
In Gaviria v. Columbus Bakery, Inc.,200 a baker and baker’s assistant alleged
unpaid minimum wages and overtime pay. The defendants filed for summary judgment
on the grounds that the plaintiffs could not establish enterprise coverage. The district
court denied the motion. The court found that the plaintiffs raised a genuine dispute of
fact as to the first prong of the enterprise coverage analysis -- whether the poppy seeds
and sesame seeds they handled were moved or produced in interstate commerce. In
doing so, the court relied on the plaintiffs’ evidence that the poppy seeds were
commercially grown out of state and that it was illegal to commercially produce sesame
seeds in the United States. On the second prong of enterprise coverage, the court also
found a triable issue of fact as to whether the bakery’s gross annual sales satisfied the
statutory $500,000 threshold for enterprise coverage based on the plaintiffs’ estimates
of the defendants’ earnings being inconsistent with the tax returns defendants
submitted. Although the court specifically declined to rule as matter of law on whether
tax returns are dispositive for purposes of establishing the second prong of enterprise
coverage, it found that on the facts before it, the plaintiffs raised an issue of fact as to
the veracity of the bakery’s tax returns and therefore denied defendants’ motion for
summary judgment. In Gaviria v. Maldonado Brothers, Inc.,201 an employee sued the defendant, an
automobile-cleaning company and the owner/operator alleging unpaid minimum wages
and overtime. The district court denied the defendants’ motion to dismiss the complaint
for failure to state a claim, concluding that the plaintiff had adequately pled the elements
of enterprise coverage under the FLSA. The court found that the plaintiff’s allegations
concerning the defendants’ estimated revenue satisfied the pleading standard because
of the lack of information available to the plaintiff regarding the defendants’ annual
revenue. The court also concluded that the pleading provided fair notice as to how
enterprise coverage applied by alleging that the defendants purchased equipment and
199 Id. at *3. 200 201
2013 WL 6008495 (D.N.J. Nov. 12, 2013). 2013 WL 33366653 (S.D. Fla. July 2, 2013). 40 products that were manufactured out of state. In reaching this conclusion, the court
adopted the pleading standard established in an earlier case, Perez v. Muab, Inc.202
Under this standard, a plaintiff must plead how the defendants are engaged in
commerce, i.e. that the materials used moved through interstate commerce, but need
not provide specific details as to how exactly those materials moved through interstate
commerce, such as details about exactly which products or equipment were
manufactured out of state or where they were manufactured. In Lee v. Kim,203 two superintendents of an apartment complex filed claims for
minimum wage and overtime pay in the district court of New York against the
defendants, the building owners. After a bench trial, the defendants moved for judgment
on the grounds that the plaintiffs were not covered by the FLSA because the employer
was not an “enterprise engaged in commerce.” The court found that under section 3(s)
of the FLSA an enterprise engaged in commerce must have at least two or more
employees. Because the plaintiffs could not show that the employer had at least two
employees at any given time during the relevant period, the court granted the
defendants’ motion.204 1. Section 3(s)(1)(A)(i)—Engagement in Commerce
In Centeno v. I & C Earthmovers Corp.,205 former employees alleged that their
employer failed to pay them overtime pay and filed a motion for summary judgment on
the issue of enterprise coverage under the FLSA. In considering the motion, the district
court in Florida considered that the defendant provided general contractor services for
construction projects, specifically for building roadways and highways, and that the
materials used by its employees included excavators, loaders, and bulldozers, which
were manufactured outside of Florida. The court held that these tools were considered
materials that travelled in interstate commerce, triggering enterprise coverage under the
FLSA. The court, thus, held that the plaintiffs were entitled to summary judgment on the
issue of enterprise coverage. In Alvarez v. Michael Anthony George Construction Corp.,206 the plaintiffs alleged
that their employers, several landscaping and construction companies, failed to pay
them overtime compensation in violation of the FLSA and moved for summary judgment
against the defendants. A district court in New York denied the motion on the ground
that the plaintiffs failed to present any evidence that the defendants were engaged in
interstate commerce or in the production of goods for interstate commerce.207 While te
plaintiffs alleged in the complaint that the defendants engaged in interstate commerce,
202
2011 WL 854818 (S.D. Fla. March 7, 2011).
2013 WL 4522581 (E.D.N.Y. Aug. 27, 2013). 204 Id. at *4. 205 970 F. Supp. 2d 1280 (S.D. Fla. 2013). 206 2014 WL 1679063 (E.D.N.Y. Apr. 29, 2014). 207 Id. at *3-4. 203 41 the court held that “allegations alone are insufficient to establish individual or enterprise
coverage.”208 a. The “Handling” Standard of Enterprise Coverage
In Castro v. Sevilla Properties, LLC,209 the plaintiff, a security guard, alleged that
the defendants, owners of a residential complex, failed to pay him overtime. The
defendants moved for summary judgment, arguing in part that the plaintiff could not
establish liability under the FLSA because the plaintiff could not establish the interstate
commerce requirement. The court found no merit in the defendants’ argument, relying
on the plaintiff’s evidence that employees handled materials that had moved in
interstate commerce. Specifically, the court noted that the plaintiff claimed that his
flashlight, uniform, and cell phone were not only vital to his duties on the job, but the
flashlight and uniform were also “marked as being of foreign origin.”210 The plaintiff also
provided evidence that his cell phone was produced by a foreign corporation. The court
determined that the facts alleged by the plaintiff allowed the court to make a reasonable
inference that the defendants’ employees “handled materials that had moved in
interstate commerce.”211 2. Section 3(s)(1)(A)(ii)—The Business Dollar Volume Test
In Lopez-Santiago v. Coconut Thai Grill,212 three restaurant employees brought
suit under the FLSA on behalf of themselves and similarly situated employees, alleging
unpaid overtime wages. The defendants, a restaurant and its owner/manager, moved to
dismiss the plaintiffs’ enterprise liability theory. In its decision, the district court for the
Northern District of Texas examined whether the FLSA’s dollar volume test is a
jurisdictional prerequisite “or merely an element of [the] plaintiffs’ claim.” The court held
that the dollar volume test is merely an element of the plaintiff’s claim, not a
jurisdictional issue.213 In Gonzales v. Gans Israel Pre-School,214 the plaintiffs brought wage and hour
claims against a preschool, a rabbi, and a corporation. The plaintiffs obtained notices of
default against all defendants and subsequently moved for default judgments. A
magistrate judge recommended that the corporation be dismissed from the action
because the plaintiffs failed to adequately plead that the defendants had equal to or
greater than $500,000 in annual gross business as required under the FLSA. The
district court adopted the recommendation. The magistrate judge found, and the district
208 Id. at *4. 209 2013 WL 6858393 (S.D. Fla. Dec. 30, 2013). Id. at *5. 211 Id. 212 2014 WL 840052 (N.D. Tex. Mar. 4, 2014). 213 Id. at *2-3. 214 2014 WL 1011070 (E.D.N.Y. Mar. 14, 2014). 210 42 court agreed, that the complaint merely recited the legal standard, but alleged no
specific facts to meet the $500,000 requirement.
b. Gross Receipts
In Pan v. Wei Plumbing,215 three plaintiffs, assistant plumbers who installed gas,
sprinklers, and fire safety stems, alleged that the defendant, a plumbing company, failed
to pay them minimum wages and overtime pay. On summary judgment, the district court
rejected the defendant’s argument that the company was not an enterprise engaged in
interstate commerce because its gross annual revenues did not exceed $500,000.00.216
The court found that even though it was the plaintiffs’ burden to establish that the
defendant earned the minimum annual revenue to qualify for FLSA coverage, because
the defendant failed to keep copies of invoices, receipts, bank records, records of work
completed, and time records, the plaintiffs were not required to show the defendant’s
exact revenue.217 The court nevertheless held that there was ambiguity in the record
from which a trier of fact could conclude that the defendants exceeded the statutory
threshold for most of the years in question, making summary judgment inappropriate.218 In Arilus v. Diemmanuele,219 lawn maintenance employees brought unpaid
overtime claims against two companies, a nursery and a lawn service, both owned by
the defendant. The district court granted summary judgment for the defendant because
the combined annual sales of the companies for the years in dispute were less than the
minimum $500,000 in gross receipts required under the FLSA. The district and circuit
courts both presumed the companies were joint employers. The employees alleged that
the employers paid some employees in cash and that these payments should be
counted towards the gross receipts minimum. The Eleventh Circuit agreed with the
district court that the unreported cash payments did not constitute gross receipts that
determine employer’s annual sales or business. The court also held that evidence of
occasional cash payments received from customers was also not enough evidence to
allow a jury to infer that the employers underreported their gross receipts by the
amounts needed to bring them to the $500,000 threshold. Because the employees did
not raise a genuine issue of material fact about the employers’ revenues, the court
affirmed the summary judgment grant for the owner. 215 2013 WL 6053496 (S.D.N.Y. Nov. 13, 2013). Id. at *6. 217 Id. at *12. 218 Id. at *13. 219 522 F. App’x 881 (11th Cir. 2013). 216 43 Chapter 4
WHITE-COLLAR EXEMPTIONS
IV.
General Principles That Apply to White-Collar Exemptions
C. “Highly Compensated” Employees
In McCoy v. North Slope Borough,220 a group of former and current pilots, lead
pilots and coordinators in the defendant's Department of Search and Rescue brought an
action alleging they were improperly classified as exempt. The plaintiffs, who generally
worked a two weeks on/two weeks off rotation, claimed they worked 168 hours per
week when they were on duty. The parties filed cross-motions for summary judgment.
The defendant asserted that the plaintiffs were exempt under the learned professional
exemption, the highly compensated employee exemption and the administrative
exemption. When analyzing the highly compensated employee exemption, a district
court in Alaska first considered whether the value of the paid leave that the employees
cashed out should be included in the total annual compensation required for the
exemption. The defendant's policy provided employees with paid leave that accrued
based on hours worked. The employees could not use leave while off-duty, but could
cash out their leave as long they maintained a minimum required balance. The court
held that the cashed-out leave was nondiscretionary direct compensation, as opposed
to a fringe benefit, because it was paid directly to the employees, reported as income on
the employees' W-2 and had to be paid by the employer when requested. The court
determined, therefore, that the cashed-out leave should be included in the wages
required for the highly compensated employee exemption. The court then turned its
attention to the duties required for the highly compensated employee exemption.
Focusing on the job duties of the administrative exemption, the court found that flying an
airplane is not manual labor, but rather entails highly technical decision making that
requires extensive and specialized training. The court next found that, even though
there were manuals, the pilots, particularly in emergency situations while flying, would
need to carefully exercise independent judgment without supervision. The court noted,
without discussion, that flying a search and rescue plane is clearly a matter of
significance. Accordingly, the pilot plaintiffs who earned $100,000 or more in a year
were exempt as highly compensated employees. The court came to the same
conclusion when reviewing the duties of the coordinator. The coordinator performed
non-manual tasks related to the management or general business operations of the
defendant—including coordinating and making decisions about the searches,
administering a grant (and purchasing equipment with grant funds), and managing a
220
2013 WL 4510780 (D. Alaska Aug. 26, 2013).
44 personal locator beacon program. Accordingly, the coordinators who earned at least
$100,000 were exempt.
In Anani v. CVS RX Services, Inc.,221 the Second Circuit affirmed summary
judgment for the defendant on the plaintiff’s claim for unpaid overtime under the FLSA,
finding that the plaintiff was exempt under the highly-compensated employee
exemption. The defendant employer paid the plaintiff, a pharmacist, a guaranteed base
salary for a 44-hour work week. The employer also paid the plaintiff additional
compensation for hours worked in excess of 44 hours according to an hourly
compensation rate. Because of the number of additional hours worked each week by
the plaintiff, his total compensation during the time period relevant to his FLSA claim
exceeded $100,000. The plaintiff argued that the highly-compensated employee
exemption in 29 C.F.R. § 541.601 did not apply to him because his compensation did
not satisfy the requirements of 29 C.F.R. § 541.604. According to that provision, an
exempt employee’s earnings may be computed on an hourly, daily, or shift basis,
without violating the salary basis requirement, if the employee also receives a minimum
guaranteed weekly amount (paid on a salary basis) and a reasonable relationship exists
between the guaranteed amount and the amount actually earned. The plaintiff argued
that his total earnings substantially exceeded his guaranteed salary, making the
relationship between the two amounts unreasonable. The court rejected the plaintiff’s
arguments, holding that an employee who meets the requirements of 29 C.F.R. §
541.601 does not also have to meet the requirements of 29 C.F.R. § 541.604 to qualify
for the highly-compensated employee exemption. In reaching this conclusion, the court
interpreted 29 C.F.R. § 541.601 and 29 C.F.R. § 541.604 as dealing with different
groups of employees who receive a “minimum guarantee plus extras,” stating, “[t]he first
exemption deals with those employees who earn over $100,000 annually while the
second exemption deals with employees whose guarantee with extras totals less than
$100,000 annually.”
In Litz v. Saint Consulting Group, Inc.,222 certain “project managers” providing
lobbying and political campaign services sued their firm, and its owners, for overtime
compensation under the FLSA. The defendants asserted that the plaintiffs were exempt
from the FLSA’s overtime provisions under the highly compensated employee
exemption. More specifically, while the plaintiffs’ compensation was primarily based on
the number of hours worked and billed to the firm’s clients, every project manager
received a guaranteed floor of at least $1,000 per week, even if the project manager
billed zero hours in a particular week. Moreover, during the periods in question, the
plaintiffs earned well over $100,000 a year. The Massachusetts district court granted
summary judgment in the defendants’ favor. Under the applicable regulation, there is a
two-part test to qualify for the “highly compensated” employee exemption: (1) the
employee must customarily and regularly perform any one or more of the exempt duties
of an executive, administrative, or professional employee; and (2) the employee must
221
222
730 F.3d 146 (2d Cir. 2013).
2013 WL 5205868 (D. Mass. Sept. 13, 2013).
45 earn at least $100,000 in “total annual compensation.” Further, the court noted that the
regulation indicates the “total annual compensation” must include at least $455 per
week paid on a salary or fee basis, but may also include commissions, nondiscretionary
bonuses, and other nondiscretionary compensation earned during a 52-week period.
The parties agreed that the plaintiffs met the duties portion of the test. Further, the court
found that the $1,000 per week guaranteed payment met the minimum salary- or feebasis requirement of the test. The court also reasoned that, although the remaining
portion of the plaintiffs’ compensation was based on hours, it was more akin to a
commission because it was based on hours billed, and not hours actually worked.
Likewise, because compensation was based on hours billed (and not hours worked),
the court held that the “reasonable relationship” between the guaranteed weekly base
and total compensation, as required under 29 C.F.R. § 541.604(b), did not apply.
Accordingly, the court held that the plaintiffs were exempt “highly compensated”
employees and were not entitled to overtime compensation.
V.
The Salary Basis Test
In Lawrence v. Ameri-Tech Property Management, Inc.,223 the plaintiff property
manager sued the defendant condominium association for alleged minimum wage and
overtime violations. The defendant moved for summary judgment on the overtime claim
based on the FLSA’s administrative exemption. The district court denied the motion
because there was a disputed issue of fact as to whether the plaintiff was guaranteed a
salary of $455 per week. The court reasoned that the plaintiff was paid a base salary of
$300 per week, plus weekly commissions. While the weekly commissions had brought
the plaintiff above the $455 threshold during every week in the relevant time period,
there was no guarantee in this regard. The court recognized that “[e]mployers can meet
the salary basis test by paying salary plus commissions only if ‘the employment
arrangement also includes a guarantee of at least the minimum weekly-required
amount.’”224
B. Requirements of the Salary Basis Test
1. Salary Basis Test Generally
In Bass v City of Jackson, Mississippi,225 two former district fire chiefs sued the
City of Jackson for overtime, claiming they were non-exempt employees. Both plaintiffs
had been paid a salary and had performed exempt duties. However, they contended
they were not paid on a salary basis because (1) the City had adopted a policy that
could have reduced their pay based on the quantity of hours worked; and (2) the City’s
disciplinary policy against the fire fighters being absent without official leave raised the
likelihood of disciplinary suspensions of less than a full week. The Fifth Circuit affirmed
the district court’s conclusion that there had been no substantial likelihood of salary
223
2013 WL 3729200 (M.D. Fla. July 12, 2013).
Id. at *3 (emphasis in original).
225
540 F. App’x 300 (5th Cir. 2013).
224
46 reduction or improper suspension, since the district chiefs were never subject to the
potentially offending policies and therefore the salary basis test was satisfied.
In McGowen v. Four Directions Development Corp.,226 a former Business Program
Coordinator alleged that she had not been paid on a salary basis where the defendant
calculated her pay using an hourly rate, multiplied by 40 hours every week. If the
plaintiff worked less than 40 hours, the defendant required the plaintiff, pursuant to a
policy that applied to both exempt and non-exempt employees, to use “comp time” or a
paid leave bank to cover hours not worked. “Comp time” accrued when an employee
worked more than 40 hours in a workweek. A district court in Maine, granting summary
judgment to the defendant, found that, because the defendant did not make any actual
deductions from the plaintiff’s pay, the salary basis test had been met. The court
rejected the plaintiff’s argument that the “intent” to deduct from pay resulted in a loss of
the salary basis.
C. Permissible Deductions (“Exceptions” to the No Deduction Principle)
In Miller v. Team Go Figure, L.L.P.,227 three former employees asserted FLSA
overtime claims against a company that manufactured and sold cheerleading uniforms.
The parties filed cross-motions for summary judgment, all of which were denied by the
Texas district court. One of the plaintiffs, Miller, had $7,400 deducted from her checks,
and submitted the check stubs as evidence that she was not exempt because she failed
the salary basis test. Miller provided evidence that the defendant took the deductions to
settle a debt her husband owed to the company, and that she had protested the
deductions but had been told "if she didn't like it, she could leave." The defendant,
claiming the deductions had been reimbursed, produced a satisfaction of a $1200
judgment in a separate case. The defendant further alleged that the issue had already
been dispensed with in small claims court and thus was barred by the doctrine of res
judicata. The court denied defendant’s summary judgment motion and held that the
defendant failed to prove that Miller met the salary basis test. The defendant proffered
no evidence that the deductions were proper. Further, the defendant's proffer of a
$1200 satisfaction of judgment without further explanation, in response to evidence of a
total $7400 deduction, did not satisfy the court that it was subject to the FLSA safe
harbor provisions and that the deductions had been fully reimbursed. Further, as to the
res judicata issue, the defendant provided no evidence that the overtime claims had
even been heard in the small claims court.
E. Effect of Improper Deductions
1. Generally
226
227
2014 WL 916366 (D. Me. Mar. 10, 2014).
2014 WL 1909354 (N.D. Tex. May 13, 2014).
47 In Ellis v. J.R.'s Country Stores, Inc.,228 the plaintiff, a general store manager,
who was classified as exempt, was required to work 50 hours during the workweek
pursuant to defendant’s “Store Manager Base Pay Plan.” Once during her employment
she was paid less than her predetermined salary as a result of her inability to work 50
hours that week. After the plaintiff resigned and provided notice of the allegedly
improper deduction, the defendant reimbursed her. The plaintiff asserted that the
defendant violated the “salary basis test” and brought a claim under the FLSA. The
court found that the defendant only reduced the plaintiff’s pay one time even though she
worked less than the minimum hours per week required on thirteen different occasions
and had a handbook containing a policy prohibiting such deductions; thus, it concluded
that, under the totality of the circumstances, the plaintiff failed to show that the
defendant did not intend to pay her on a salary basis. Additionally, because the
deduction was isolated and the plaintiff was reimbursed, the defendant was protected
under the FLSA’s “window of correction” defense. Accordingly, the court granted the
defendant’s motion for summary judgment and denied as moot the plaintiff’s motion to
certify conditionally a collective action.
F. Fee Basis Alternative for Professional and Administrative Exemptions
In Cook v. Carestar, Inc.,229 former case managers who provided home and
community-based services to chronically disabled individuals challenged their “learned
professional” exempt classification. The Ohio district court granted the plaintiffs’ motion
for summary judgment, concluding that the plaintiffs were not paid on a salary or fee
basis. Cases were assigned points corresponding to one of three levels of needed care.
Each case manager was assigned a dollar value per point based on various criteria,
including their education and experience. The defendants paid case managers a fixed
amount per pay period, calculated by multiplying the case manager’s unique dollar
value by the total number of assigned case points. Citing the Sixth Circuit’s decision in
Fazekas v. Cleveland Clinic Foundation Health Care Ventures, Inc.,230 the defendants
argued that the compensation system satisfied the “fee basis” requirements. The court
disagreed. In Fazekas, the “service” nurses provided was a home health visit, and
nurses were paid for each visit regardless of the length of the visit. The plaintiffs, on the
other hand, were not paid a set amount per discrete service, such as a visit. Instead,
they performed a variety of different services that might include a visit, and were paid
based on the points assigned to the client rather than each discrete service provided.
In Rindfleisch v. Gentiva Health Services, Inc.,231 in-home healthcare providers
brought suit under the FLSA seeking overtime wages, claiming they had been
misclassified as exempt under the FLSA’s professional exemption. The plaintiffs
conceded that their positions as registered nurses and physical and occupational
therapists met the duties test of the professional exemption, but they claimed their
228
2013 WL 3661665 (D. Colo. July 12, 2013).
2013 WL 5477148 (S.D. Ohio Sept. 16, 2013).
230
204 F.3d 673 (6th Cir. 2000).
231
962 F. Supp. 2d 1310 (N.D. Ga. 2013).
229
48 employer failed to pay them on a salary/fee basis. More specifically, they claimed that
the “non-visit fees” they received (i.e., flat rate fees for non-visit related work) in addition
to their “visit fees” were improper under the salary/fee basis test because the non-visit
fees account for the amount of time it took them to complete their non-visit activities.
The defendant-employer argued that the non-visit fees were consistent with a salary/fee
basis because (1) pursuant to subsection 29 C.F.R. § 541.605(b), the non-visit fees
could vary based on the time it takes to complete a task and still satisfy the fee/salary
basis requirement and (2) the non-visit fees were permissible “extra” payments under
29 C.F.R. § 541.604(a) and (b). The Georgia district court rejected both of the
employer’s arguments, denied the employer’s motion for summary judgment, and
granted the plaintiffs’ motion for summary judgment.
With respect to the employer’s § 541.605(b) argument, the court ruled that
nothing in that section diminished § 541.605(a)’s clear language specifying that a fee
only satisfies the salary basis test when it is an agreed sum for a single job regardless
of the time required for its completion. Instead, the court interpreted § 541.605(b) to
merely provide a means of determining on a retroactive basis whether or not the fee for
a specific activity satisfies the salary basis test after the activity is complete. In other
words, § 541.605(b) was not intended to permit an employer to prospectively set a fee
based on the amount of time it would take to complete a particular task, but it instead
was to be used on a backwards-looking basis to ensure that the fees the employer paid
in a particular workweek satisfied the salary basis requirement for that week. With
respect to the employer’s § 541.604 arguments, the district court held that the non-visit
fees were not extras under either subparts (a) or (b) of § 541.604. Specifically, §
541.604(a) was inapplicable because it only permits extra payments to be made for
work occurring outside the normal, 40-hour workweek, whereas the non-visit fees were
paid for work that typically occurred during the plaintiffs’ normal workweek. Similarly, §
541.604(b) was inapplicable because the plaintiffs were not guaranteed a weekly
amount of at least $455 and there was no relationship between the guaranteed amount
and the amount the plaintiffs actually earned, both of which are required under §
541.604(b).
In a subsequent decision,232 the court denied the employer’s motion for
modification of the summary judgment decision, but clarified its prior ruling in one
important respect. Specifically, with respect to 29 C.F.R. § 541.604(a), the district court
held that a payment for time worked that is in addition to fee basis payments “is only
considered ‘extra’ compensation under subsection (a) if said payment concerns time
worked beyond the normal 40 hour workweek.” In other words, the court made clear
that an employer may not pay fee basis employees by the hour for work that occurs
during the normal workweek.
VI.
The Executive Exemption
232
Rindfleisch v. Gentiva Health Servs., Inc., 2013 WL 8541675 (N.D. Ga. Nov. 4, 2013).
49 In King v. Stevenson Beer Distributing Co.,233 the plaintiff brought an action
against his employer, a wholesale beer distributor, alleging failure to pay overtime in
violation of the FLSA. The defendant contended that the plaintiff was covered by the
executive exemption. The plaintiff served as a team leader and claimed he was not a
manager. The district court found that the record contained adequate evidence to show
that the plaintiff’s primary duty was management of a subdivision of the sales
department, that he customarily and regularly directed the work of more than two
employees, and that his recommendations about discipline, hiring, and firing or
employees were given particular weight. In response to the summary judgment motion,
the plaintiff emphasized the management activities listed in the regulations that he did
not perform. The district court found that the plaintiff failed to identify any nonmanagerial work that he performed and therefore, failed to put forth evidence to create
an issue of material fact.
B. Primary Duty of Managing
In In re Family Dollar FLSA Litigation,234 multiple retail store managers brought
overtime claims against their employer alleging that they were misclassified as exempt
executive employees. The managers were responsible for various managerial activities,
such as interviewing and screening potential employees, training employees, assigning
schedules and apportioning work, directing and supervising employees’ work,
maintaining bank deposits and financial records, controlling and staying within allocated
payroll budgets, as well as being responsible for the safety and security of the store. In
granting the employers’ multiple motions for summary judgment, a district court in North
Carolina concluded that the managers’ primary duty was the management of the stores,
even if they spent up to 90–95 percent of their time performing non-managerial duties,
because the managers performed their nonexempt tasks in the context of their overall
responsibilities to ensure the store’s profitability. The court also concluded that the
managers’ managerial duties were more important than the nonexempt work they
performed because they were critical to the operation of the stores. The court noted that
the managers were relatively free from supervision because their supervisors, district
managers, rarely visited the stores. Additionally, the managers earned more than the
other employees of the stores, and had the ability to directly influence their own
compensation through bonuses that depended on the profitability of the stores. The
court also determined that the managers exercised daily discretion in the performance
233
2014 WL 1315655 (S.D. Tex. Mar. 27, 2014).
2013 WL 3878174 (W.D.N.C. July 26, 2013); 2013 WL 3353899 (W.D.N.C. July 3, 2013);
2013 WL 3819605 (W.D.N.C. July 23, 2013); 2014 WL 1302037 (W.D.N.C. Mar. 28, 2014); 2014 WL
1302367 (W.D.N.C. Jan. 23, 2014); 2014 WL 1384576 (W.D.N.C. Apr. 9, 2014); 2014 WL 1384597
(W.D.N.C. Apr. 8, 2014); 2014 WL 202584 (W.D.N.C. Jan. 16, 2014); 2014 WL 294422 (W.D.N.C. Jan.
24, 2014); 2014 WL 309466 (W.D.N.C. Jan. 28, 2014); 2014 WL 441010 (W.D.N.C. Feb. 4, 2014); 2014
WL 442133 (W.D.N.C. Feb. 4, 2014); 2014 WL 525521 (W.D.N.C. Feb. 7, 2014); 998 F. Supp. 2d 440
(W.D.N.C. 2014); 2014 WL 692976 (W.D.N.C. Feb. 21, 2014); 2014 WL 695279 (W.D.N.C. Feb. 24,
2014); 2014 WL 949905 (W.D.N.C. March 11, 2014).
234
50 of their duties by delegating tasks to various employees, thus choosing what duties they
would perform.
In Roop v. Wrecker & Storage of Brevard Inc.,235 a dispatcher working for a
towing and tractor trailer company sued for overtime compensation and overcame the
defendant’s motion for summary judgment, in that a question of fact existed as to
whether the plaintiff’s primary duty met the duties test of the exemption, as the plaintiff
argued that he was mostly dispatching tow trucks whereas the employer argued he
exercised substantial managerial duties, trained and supervised drivers, and comanaged the business.
In Luksza v. TJX Companies, Inc.,236 two former shift supervisors at the
defendant’s distribution facility brought claims for uncompensated overtime alleging they
were misclassified as exempt managers. The plaintiffs admitted that several full-time
employees reported to them and that they also evaluated those employees’ job
performance. The employer moved for summary judgment based on the executive
exemption. The plaintiffs argued they were not exempt because “they only mechanically
enforced defendant’s excessively detailed decision tree of a ‘personal excellence
program’ and ‘engineered standards.’” The Nevada district court granted the employer’s
motion for summary judgment on the executive exemption because the plaintiffs’ “actual
duties,” which included investigating employee complaints, directing and overseeing
their work, and ensuring they were properly trained, were managerial. The employer’s
guidelines or policies for administering employee oversight or discipline did not mean
the plaintiffs were not managers.
In McCall v. First Tennessee Bank National Assoc.,237 a former operations
manager filed suit asserting that the bank employer failed to pay her overtime as
required by the FLSA. In granting the bank’s motion for summary judgment, a district
court in Tennessee concluded that the employee was properly classified as an exempt
executive. Specifically, it held that management was a primary duty of the operations
manager even though the bank had strict policies and procedures that afforded little to
no discretion; the employee lacked the authority to manage the tellers and to hire, fire,
or change policy; and the employee spent the “vast majority” of her time performing
non-managerial tasks. The court noted that the employee’s non-managerial functions
could have been performed by the other employees on duty, but the same was not true
for the managerial functions. The operations manager was the only employee who
participated in all of the interviews of applicants and her recommendations for
applicants were followed. It was irrelevant that only a few interviews were conducted.
The operations manager also was responsible for attending management meetings and
disseminating the information to the tellers. She also was paid 32 to 42 percent more
than the tellers. Furthermore, the operations manager evaluated the performance of the
235
2013 WL 5929032 (M.D. Fla. Nov 1, 2013).
2014 WL 321066 (D. Nev. Jan. 28, 2014).
237
2014 WL 2159007 (M.D. Tenn. May 23, 2014).
236
51 tellers and her own performance evaluation was based, in part, on how the tellers
performed and the branch’s overall audit scores. The tellers, on the other hand, were
only responsible for their individual performance. The operations manager also
approved a balance shortage and was tasked with creating the schedule for a period of
time. Additionally, her direct supervisor did not have an office at the branch and spent
the majority of his time at another branch of the bank, which rendered the operations
manager relatively free of supervision. Thus, even if the management duties could have
been performed by the branch manager, they were performed by the operations
manager in this instance because the branch manager was not present. As a result, the
court found that management was a primary duty of the operations manager. Indeed, it
noted that the employee was responsible for essential daily operations that could only
be performed by her, and, without her performance of these tasks, the branch would not
have been able to function.
In Little v. Belle Tire Distributors Inc.,238 the plaintiff was an assistant manager at
several of the defendant’s tire stores, and alleged that the defendant misclassified him
as an exempt employee. The defendant moved for summary judgment on the grounds
that the plaintiff qualified for the FLSA’s executive exemption. The plaintiff maintained
that his primary duty was sales and that his involvement in managerial tasks was
peripheral and ordinarily under the store manager’s supervision. The defendant, on the
other hand, claimed that his duties were primarily managerial. In analyzing whether the
plaintiff’s primary duty was management, the district court in Michigan emphasized that
it would consider the substance of the duties performed more so than the time spent
performing them, especially when an employee’s management and non-management
functions may not be clearly severable. In holding that the plaintiff was covered under
the executive exemption, the district court determined that even accepting the plaintiff’s
estimate that he spent 80-90 percent of his time on sales work, he admitted that he
performed this work while simultaneously performing his management tasks. Further,
other undisputed evidence supported the court’s determination that the plaintiff’s
primary duty was management, such as the fact that the plaintiff worked a substantial
amount of time without a store manager present, regularly closed and opened the store
and spent entire weekends solely in charge of the store, routinely performed
management duties while the store manager was present, interviewed job candidates
and made hiring recommendations, and trained employees.
In Amash v. Home Depot U.S.A., Inc.,239 a district court in New York granted
summary judgment and found, as a matter of law, that a former merchandising assistant
store manager was exempt from overtime under the FLSA’s executive exemption. The
plaintiff conceded that she satisfied three of the four prongs of the executive exemption,
because she met the salary basis test, she customarily and regularly directed the work
of two or more employees, and her recommendations as to an employee’s change of
status were given particular weight by her store managers, but she contested whether
238
239
2013 WL 6328849 (E.D. Mich. Dec. 5, 2013).
2014 WL 1795160 (N.D.N.Y. May 5, 2014).
52 her primary duty was management of the enterprise or a customarily recognized
department or subdivision. Working with entirely uncontested facts, the district court
looked at four factors to determine the plaintiff’s primary duty, all of which weighed in
favor of her exempt status. First, the plaintiff’s most important duties were managerial in
nature, including coaching and training subordinates and other supervisors, making
recommendations as to hiring and firing and promotions, scheduling and directing
employees’ work, disciplining employees, and managing the store’s inventory. Second,
the plaintiff admitted to spending between 64 and 84 percent of her time each week
performing these managerial tasks, and did not identify any specific non-exempt duties
that she regularly performed. Third, the plaintiff was relatively free from direct
supervisory control because, although she did not have final approval over significant
management decisions, she frequently made meaningful recommendations that were
accepted by store management. Fourth, the plaintiff was paid more than her
subordinates in weekly wages (and on an hourly basis), and also received additional
stock options that were not available to non-exempt employees.
In Reyes v. Snowcap Creamery, Inc.,240 a former kitchen employee brought
federal and state overtime claims, alleging his restaurant-employer improperly classified
him as exempt under the executive exemption. The plaintiff was the employer’s “right
hand man” in the kitchen and was partially responsible for recruiting, training,
scheduling, food and supply ordering, and menu creation. The employer argued, among
other things, that the plaintiff qualified for the executive exemption because his primary
duty was managing the kitchen and its employees. By contrast, the plaintiff presented
evidence that his primary duty was serving as a line cook, and that he spent only a
small part of his workday performing managerial activities. The court denied both
parties’ motions for summary judgment, concluding that the employer failed to satisfy its
burden regarding an “important factor”: the employer did not provide any analysis
showing the amount of time the plaintiff spent on managerial activities versus serving as
a line cook.
In Martinez v. Refinery Terminal Fire Co.,241 current and former firefighting
services employees brought an action against their employer, the Refinery Terminal
Fire Company (“RTFC”) for back wages, alleging violations of the minimum wage and
overtime provisions of the FLSA. The district court granted the defendant’s motion for
partial summary judgment on the ground that the RTFC captains were exempt from
overtime pay under the executive exemption, finding that the primary duty of the RTFC
captains qualified as “management” under 29 C.F.R. § 541.02, because, inter alia, they
“direct[] operations at emergency sites until a chief arrives . . . train employees, direct
their work, maintain records, appraise employees’ work, handle some complaints and
grievances, plan work at the station and apportion it among employees, research
equipment needs, recommend purchases, and oversee and enforce safety rules.”
240
241
2013 WL 4229835 (D. Colo. Aug. 14, 2013).
2014 WL 582981 (S.D. Tex. Feb. 13, 2014).
53 In Marzuq v. Cadete Enterprises, Inc.,242 two former managers of local Dunkin’
Donuts franchises brought an action against the corporate owners and operators of the
franchises and their president for, inter alia, overtime wages. The defendants moved for
summary judgment, which was referred to a Magistrate Judge who recommended that
the motion be denied. The district court, on review, granted the defendants’ motion as to
the FLSA claims on the ground that the plaintiffs were exempt from overtime pay
because they were employed in a “bona fide executive” capacity. Specifically, the court
found “management” to be the plaintiffs’ primary duty because they “were at all times ‘in
charge’ of their respective stores,” despite spending a significant amount of time serving
customers. For example, the plaintiffs “scheduled employees, assigned work, spoke
with customers, trained employees, and performed various recordkeeping duties.”
Importantly, the court found that even though the plaintiffs spent much of their time
serving customers like hourly employees, they were still managing the store, even while
performing such tasks. Accordingly, the plaintiffs were not disqualified from the
executive exemption under the FLSA.
In Martin v. Yokohama Tire Corp.,243 a former employee brought an action
against his former employer alleging that, inter alia, the defendant failed to pay overtime
wages in violation of the FLSA. The district court granted partial summary judgment in
favor of the defendant, finding that the plaintiff was an exempt executive employee.
Specifically, the plaintiff’s primary duty was management because he spent “the vast
majority of his time . . . in management-type functions,” such as directing the work of
hourly employees, ensuring equipment was operational, training new employees, and
conducting safety drills. Further, the plaintiff acknowledged that his collective bargaining
agreement prohibited him from performing non-management, production work.
C. “The Enterprise” or “a Customarily Recognized Department or
Subdivision” Thereof
In McCall v. First Tennessee Bank National Assoc.,244 a former bank operations
manager who oversaw bank tellers asserted that the bank failed to pay her overtime. In
granting the bank’s motion for summary judgment and finding that the employee was an
exempt executive, a district court in Tennessee determined that the bank tellers were a
“customarily recognized department or subdivision.”245 The court explained that the
tellers were separate and apart from the other employees in the bank and performed
different tasks than those performed by the other employees. Likewise, the other
employees did not perform the duties of the tellers. Thus, the tellers were a separate
division because they were “a permanent operation at the . . . branch with a continuing
242
2013 WL 5437034 (D. Mass. Sept. 25, 2013).
2013 WL 6002344 (W.D. Va. Nov. 12, 2013).
244
2014 WL 2159007 (M.D. Tenn. May 23, 2014).
245
Id. at *9.
243
54 function that only included certain employees at the bank.”246 As a result, this factor
supported the conclusion that the employee met the executive exemption.
D. “Customarily and Regularly Direct the Work of Two or More Other
Employees”
In McCall v. First Tennessee Bank National Assoc.,247 a former bank operations
manager asserted that that the bank failed to pay her overtime. In granting the bank’s
motion for summary judgment and finding that the employee was an exempt executive,
a district court in Tennessee found that the operations manager customarily and
regularly supervised two or more employees, even though the operations manager
argued that these employee knew how to do their jobs and therefore required no
direction. The court concluded that the employee’s primary duty was management of
the teller operations division and that the operations manager performed multiple
managerial duties, including providing the tellers with additional information she learned
in management meetings. In addition, the court noted that the operations manager’s
performance of her management duties was more important than her performance of
non-managerial duties. Finally, the court concluded that the fact one of the tellers was
on medical leave for two months did not invalidate the executive exemption. The teller
was still employed and under the operations manager’s direction. In addition, as
explained by the court, “even a strict reading of the regulation does not foreclose the
possibility that [the operations manager] customarily and regularly directed the work of
two or more other employees in the three year period at issue, notwithstanding [the
teller’s] absence.”
In Reyes v. Snowcap Creamery, Inc.,248 a former kitchen employee brought
federal and state overtime claims, alleging his restaurant-employer improperly classified
him as exempt under the executive exemption. The plaintiff was the employer’s “right
hand man” in the kitchen and was partially responsible for recruiting, training, and
scheduling kitchen employees. The employer contended that the plaintiff qualified for
the executive exemption because, inter alia, he regularly and customarily supervised
more than two full time employees. In denying both parties’ motions for summary
judgment, the court determined that reasonable minds could disagree whether the
plaintiff actually supervised certain of his coworkers. While the employer presented
evidence that the plaintiff directed other employees, the plaintiff also presented
evidence that he was simply a senior line cook and “did not ‘supervise’ many of his
coworkers.”
E. Authority With Respect to Personnel Matters “Are Given Particular
Weight”
246
Id.
2014 WL 2159007 (M.D. Tenn. May 23, 2014).
248
2013 WL 4229835 (D. Colo. Aug. 14, 2013).
247
55 In Madden v. Lumber One Home Center, Inc.,249 three employees of a small
lumberyard brought claims for uncompensated overtime alleging they were
misclassified as exempt executives. Two of the plaintiffs were hired to work in shipping
and receiving and also assisted retail customers. The third plaintiff worked mostly in
retail but occasionally loaded trucks and gave truck drivers directions for deliveries. At
trial, a jury found in favor of the lumberyard against all three plaintiffs. The district court
judge overturned the verdict, finding the defendant failed to prove it gave particular
weight to the plaintiffs’ hiring and firing recommendations. The Eighth Circuit affirmed
the district court’s judgment as to the two shipping and receiving employees but
reversed as to the retail employee. When asked at trial whether the first two employees
had ever provided hiring or firing recommendations, the lumberyard owner could only
refer to his general policy that he asked all employees for input on potential hires but
could not specify whether either of the two employees had given recommendations.
When asked about the third employee, however, the lumberyard owner could recall one
specific instance in which the third employee provided feedback about a potential new
hire, saying: “[I]f he would have said, no, we don’t want him, he would not have been
there.” Because there was evidence regarding at least one personnel decision that a
jury could have credited to conclude the retail employee provided recommendations that
were given particular weight, the district court erred by overturning the jury’s verdict that
the retail employee was an exempt executive.
In Luksza v. TJX Companies, Inc.,250 two former shift supervisors at the
defendant’s distribution facility brought claims for uncompensated overtime alleging they
were misclassified as exempt managers. The plaintiffs admitted that several full-time
employees reported to them and that they also evaluated those employees’ job
performance. The employer moved for summary judgment based on the executive
exemption. One plaintiff admitted that her responsibilities included recommending the
retention or termination of temporary employees and that she could not recount how
often her superiors relied on her recommendations. The other plaintiff admitted that on
one occasion she had terminated a full-time employee, although it was more likely that
she recommended such and her supervisors approved. The Nevada district court
entered summary judgment for the defendant because the plaintiffs’ superiors gave
particular weight to the plaintiffs’ recommendations whether to terminate or retain either
temporary or full-time employees.
In Lozano v. Burlington Coat Factory of Alabama, LLC,251 an assistant store
manager brought a claim for uncompensated overtime. Although the plaintiff
recommended applicants for hire and also gave recommendations for promotion, her
suggestions were never accepted. The plaintiff argued that she was not a bona fide
executive and thus not an exempt executive. The employer moved for summary
judgment. A magistrate judge recommended denial of the motion because there was a
249
745 F.3d 899 (8th Cir. 2014).
2014 WL 321066 (D. Nev. Jan. 28, 2014).
251
2013 WL 5519517 (N.D. Ala. Sept. 30, 2013).
250
56 disputed issue of fact as to whether the plaintiff’s hiring and firing recommendations
were given particular weight. A district court in Alabama rejected the magistrate judge’s
recommendation and entered summary judgment in the employer’s favor. Although
higher management disagreed with her recommendations, no one disputed that the
plaintiff “participated, as her job duties required, in the hiring, promoting, and disciplining
of employees on numerous occasions during her brief tenure” with the employer. The
district court reasoned that management’s rejection of an employee’s recommendations
does not prevent the application of the executive exemption when the other two factors
for proving the employee’s authority over personnel matters were satisfied.
In McCall v. First Tennessee Bank National Assoc.,252 a former bank operations
manager asserted that that the bank failed to pay her overtime. In granting the bank’s
motion for summary judgment and finding that the employee was an exempt executive,
a district court in Tennessee found the operations manager’s recommendations
regarding employment decisions were followed and given weight, which further
supported the exemption. In particular, the operations manager made a joint
recommendation with the branch manager to hire two applicants and to demote an
employee to a part-time position. The court noted that the operations manager actively
participated in staff decisions and her recommendations were given significant weight
by the decision maker, even though she did not make the ultimate decision. Thus, this
factor supported the finding that the operations manager was properly classified as an
exempt employee.
In Bacon v. Eaton Corp.,253 former industrial supervisors brought unpaid overtime
claims against the employer based on their alleged misclassification as exempt
executives. The district court found the employees to be exempt and granted summary
judgment to the employer. The sole issue on appeal before the Sixth Circuit was
whether the supervisors had significant influence over employees’ change of status.
The supervisors argued that their personnel recommendations were disregarded and
rejected, that they were not trained to conduct interviews, and that their job descriptions
did not include decision-making regarding personnel. The employer argued that the
supervisors had indirect but significant influence over changes of status through the
employer’s progressive discipline system. The court, reversing the district court
decision, found that there was a material factual dispute regarding whether the
supervisors’ recommendations were given sufficient weight by the employer, as there
was evidence that the employer removed disciplinary actions issued by the supervisors
from employee files, undermining the employer’s claim of a progressive disciplinary
system.
In Martinez v. Refinery Terminal Fire Co.,254 current and former firefighting
services employees brought an action against their employer (“RTFC”) for back wages,
252
2014 WL 2159007 (M.D. Tenn. May 23, 2014).
565 F. App’x 437 (6th Cir. 2014).
254
2014 WL 582981 (S.D. Tex. Feb. 13, 2014).
253
57 alleging violations of the minimum wage and overtime provisions of the FLSA. The
district court granted the defendant’s motion for partial summary judgment on the
ground that the RTFC captains were exempt from overtime pay under the executive
exemption. Specifically, the court found that the defendant satisfied its burden of
establishing that RTFC captains’ suggestions and recommendations concerning the
advancement, promotion, or other changes of status of employees “are given particular
weight.” For example, the recommendations of the RTFC captains were “always
considered and heavily relied upon in making the decision to promote an employee,”
and were “considered necessary for promotion and advancement.”
In Marzuq v. Cadete Enterprises, Inc.,255 two former managers of local Dunkin’
Donuts franchises brought an action for, inter alia, overtime wages. The defendants
moved for summary judgment, which was referred to a Magistrate Judge who
recommended that the motion be denied. The district court, on review, granted the
defendants’ motion as to the FLSA claims on the ground that the plaintiffs were
employed in a “bona fide executive” capacity. In particular, the court found that it was
“undisputed that plaintiffs interviewed potential new hires, and made hiring and firing
recommendations to their district manager.” One plaintiff testified that his
recommendations to fire certain employees were always followed when he felt strongly
about the recommendation. Further, the court found there were no disputed facts to
show that the plaintiffs’ recommendations as to certain personnel actions were not given
particular weight. Accordingly, the court held that the plaintiffs were employed in a bona
fide executive capacity and, as such, were exempt from receiving overtime pay.
In Martin v. Yokohama Tire Corp.,256 the court found that the plaintiff’s testimony
that his opinions were not always followed by upper management was insufficient to
create a genuine dispute of material fact as to whether his recommendations were given
particular weight. The plaintiff testified that his recommendation to fire an employee was
given significant weight on one occasion and that he regularly made recommendations
about whether to retain probationary employees. Accordingly, the court held that the
plaintiff was an exempt “executive” under the FLSA.
VII. The Administrative Exemption
In King v. Stevenson Beer Distributing Co.,257 the plaintiff brought an action
against his employer, a wholesale beer distributor, alleging failure to pay overtime in
violation of the FLSA. The defendant contended that the plaintiff was exempt under the
administrative exemption as well as other exemptions. The district court for Texas found
that the plaintiff’s primary duty was supervising his sales team, not performing office or
non-manual work directly related to management policies or general business
operations. Further, the court noted that although the plaintiff was a “team leader,” his
255
2013 WL 5437034 (D. Mass. Sept. 25, 2013).
2013 WL 6002344 (W.D. Va. Nov. 12, 2013).
257
2014 WL 1315655 (S.D. Tex. Mar. 27, 2014).
256
58 team had an ongoing responsibility to the company to distribute its products—not
complete “major projects” and was rarely, if ever, able to exercise any discretion or
independent judgment with respect to matters of significance. In light of these facts, the
court found that the defendants failed to meet their burden to show that the employee
was exempt under the administrative exemption.
A. “Office or Non-Manual Work”
In Rincon v. American Federation of State, County & Municipal Employees,258 a
union organizer sued her former employer, a labor union, claiming she had been
misclassified as exempt and thus improperly denied overtime compensation. The
defendant-union claimed the organizer was exempt under the administrative exemption.
In granting summary judgment for the employer and ruling that the union organizer was
exempt under the administrative exemption, the California district court ruled that the
organizer’s duties involved “office or non-manual work,” as required under the
administrative exemption. Even though the organizer did not typically work in an office,
that fact alone did not convert her work into non-manual work. Instead, the district court
clarified that “fieldwork is not necessarily ‘manual’ work.” The court then analyzed the
examples of manual work provided in 29 C.F.R. § 541.3(a) and held that the organizer’s
work “is of a very different type than the work that the regulations characterize as
‘manual’ in nature.” Based on this comparison, the court concluded that organizing
workers to join a labor union was not manual work.
In Self v. Meritage Homes Corp.,259 a Texas district court granted the defendant’s
motion for summary judgment based on the administrative exemption. The plaintiffs, as
construction managers, conceded that they met the first requirement under the
exemption, that the employee must be “[c]ompensated on a salary or fee basis at a rate
not less than $455 per week.” However, the plaintiffs disputed that the two “primary
duty” requirements to be classified as administrative employees applied to them. The
plaintiffs were primarily responsible for managing subcontractors performing work on
the homes as well as managing warranty work on purchased homes and dealing with
home purchasers during construction. They also performed work involving budgeting,
forecasting, inventory management, and customer relations. Although the plaintiffs did
engage in manual work such as cleaning up homes and moving materials, none of the
plaintiffs testified to spending more than 50 percent of their time performing these
activities. Based on the plaintiffs’ descriptions of their work, the court concluded that a
construction manager’s primary duty was non-manual work, and they were therefore
properly classified as administrative employees.
B. “Directly Related to Management or General Business Operations”
258
259
2013 WL 4389460 (N.D. Cal. Aug. 13, 2013).
2014 WL 2171468 (S.D. Tex. May 23, 2014).
59 In Scarpinato v. East Hampton Point Management Corp.,260 the plaintiff restaurant
general manager alleged that the defendants, a restaurant operator and its principals,
had, inter alia, violated the FLSA by failing to pay her for overtime work. The defendants
moved for summary judgment on the grounds that the plaintiff was an exempt
administrative employee. The magistrate judge issued a report and recommendation,
which was adopted by the district court, recommending that summary judgment be
granted to the defendants. The magistrate judge noted that the question of whether the
plaintiff primarily engaged in the performance of office or non-manual work was not in
dispute, and found that, on the basis of the defendants’ essentially uncontroverted
showing of the plaintiff’s authority to hire and fire employees, to write checks of up to
$5,000 as well as other legal and financial documents on behalf of the restaurant, to
select items for the restaurant’s menu, to arrange for advertising, and to produce
budgets and financial reports for the restaurant, that the plaintiff’s work had directly
related to the management or general business operations of the employer or the
employer's customers. The magistrate judge further determined that her primary duty
included the exercise of considerable and often unfettered judgment in managing the
restaurant.
In Wade v. Werner Trucking Co.,261 current and former fleet managers and fleet
coordinators for a trucking company brought FLSA claims against the defendant. The
parties filed cross motions for summary judgment on the administrative and executive
exemptions. Analyzing the line of cases analyzing the exempt status of dispatchers, the
district court in Ohio concluded that if the plaintiffs were exercising discretion and
independent judgment as fleet managers, they were doing so “with respect to matters of
significance,” based this on the fact that plaintiffs oversaw between 300 to 400 drivers,
and the costs of the driver, the trucks, and the value of the loads they oversaw reflected
a high “level of importance or consequence of the work performed.”262 Ultimately, the
court found that the administrative exemption applied to six of the ten plaintiffs because
all six plaintiffs’ duties went beyond communicating with drivers and tracking trucks, and
because they were engaged in non-manual office work directly related to management
or general business operations, as their duties related to quality control, safety,
personnel management, and legal and regulatory compliance.
In Klein v. Torrey Point Group, LLC,263 the employee brought an action alleging
that his former employer failed to make required overtime payments in violation of the
FLSA and state law. The district court for New York found there were material issues of
fact precluding summary judgment with respect to the “primary duty” prong of the
administrative exemption. The defendant argued that the plaintiff’s primary duties
included tasks related to vendor relations, customer communications and support, and
order logistics. The plaintiff argued that he simply provided dedicated sales support to a
260
2013 WL 5202656 (E.D.N.Y. Sept. 13, 2013).
2014 WL 1091707 (S.D. Ohio Mar. 18, 2014).
262
Id. at *15.
263
2013 WL 5761401 (S.D.N.Y. Oct. 23, 2013).
261
60 single outside salesperson and did not devote any significant portion of his time to nonsales activities. The court held that neither party had demonstrated the absence of
material factual disputes and denied summary judgment for both parties.
In Arasimowicz v. All Panel Systems, LLC,264 the plaintiff, who held the job title of
“Project Detailer/Fabrication Shop Coordinator,” sued his former employers, alleging
that they misclassified him as exempt and failed to pay him overtime in violation of the
FLSA. The plaintiff moved for summary judgment on whether he qualified for the
administrative exemption. The Connecticut district court granted the plaintiff’s motion,
finding that the plaintiff was not employed in a bona fide administrative capacity. The
court reached this conclusion based on the plaintiff’s failure to meet the second prong of
the administrative exemption. The court determined that the plaintiff did not perform
work directly related to the management or general business operations of the
defendants. Rather, the court found that the plaintiff’s primary duty—the production of
drawings for panels to be manufactured by one of the defendants—constituted
production, and not administrative, work, as it was directly related to the production of
the good or service that was the primary output of the defendant as opposed to general
administrative work applicable to the running of any business. In reaching this
conclusion, the district court relied on precedent from the Second Circuit regarding the
distinction between employment “belonging in the administrative category, which falls
squarely within the administrative exception, [and] production/sales work, which does
not.”
In Antiskay v. Contemporary Graphics & Bindery Inc.,265 the plaintiff, a production
planner, sued the defendant, a one-stop graphic design and printing company, for
recovery of overtime wages under the FLSA. In granting the defendant employer’s
motion for summary judgment, the New Jersey district court found that the defendant
had satisfied all three prongs of the administrative exemption and, thus, that the plaintiff
was exempt from the overtime requirements of the FLSA. With respect to prong two—
whether the plaintiff’s duties were directly related to the management or general
business operations of the employer—although the plaintiff completed a small amount
of manual work and performed the duties of a sales representative for some of his
accounts, the court held that there was no evidence that the plaintiff was actually
responsible for any of the hands-on responsibilities of manufacturing the final product.
Instead, the plaintiff’s duties in converting estimates to initiate the production process,
approving proofs prior to commencement of manufacturing, responding to customer
calls and requests, and monitoring the overall progress of products as they moved
through different departments constituted the type of work that “serviced and assisted”
in the employer’s core business. In coming to this conclusion, the court clarified that the
administration/production dichotomy is but one piece of the larger inquiry. Because the
plaintiff’s duties did not squarely fall on the production side of the line, the
administration/production dichotomy was not determinative.
264
265
948 F. Supp. 2d 211 (D. Conn. 2013).
2013 WL 6858950 (D.N.J. Dec. 26, 2013).
61 In Self v. Meritage Homes Corp.,266 a Texas district court granted the defendant’s
motion for summary judgment based on the administrative exemption. The plaintiffs,
construction managers, disputed that the two “primary duty” requirements to be
classified as administrative employees applied to them. The court disagreed, noting that
the defendant’s primary business was the construction of new homes. The plaintiffs’
deposition testimony showed that they managed purchasing materials, submitted
construction documents, performed quality control, and worked with subcontractors.
Other work regarding customer relations and satisfaction involved scheduling meetings
and performing customer walkthroughs. The court therefore found that the plaintiffs’
work was directly related to the defendant’s general business operations as it primarily
involved non-manual work related to monitoring and constructing new homes.
In Rincon v. American Federation of State, County, & Municipal Employees,267 a
union organizer sued her former employer, a labor union, claiming she had been
misclassified as exempt and thus improperly denied overtime compensation. The
defendant-union claimed the organizer was exempt under the administrative exemption.
In granting summary judgment for the employer, the California district court ruled that
the organizer’s duties directly related to the labor union’s general business operations,
as required under the administrative exemption. In analyzing this element of the
administrative exemption, the court first noted its view that the traditional
“administrative/production dichotomy” was not useful outside of the manufacturing
context. Instead, the district court decided that the better focus was on whether the
employee “performed work directly related to assisting with the running or servicing of
[the union]’s business.” The court noted that, as an organizer, the plaintiff’s primary duty
was to represent and promote the union and increase its membership and bargaining
strength. Because the plaintiff promoted the union and increased its membership base,
the court held that the plaintiff’s duties directly related to running and servicing the
union’s business.
In Adams v. BSI Management Systems America, Inc.,268 the plaintiff, a former
Supply Chain Security Program Manager, appealed a district court’s order granting
summary judgment for defendant employer (“BSI”) on her claim for overtime
compensation under the FLSA. The Eleventh Circuit affirmed. Although the plaintiff had
asserted that she was merely “work(ing) on the ‘production end’ of the business,” the
court found that, by her own testimony, the plaintiff spent a great deal of time in running
a project including creating project tasks, putting together a plan, etc. Moreover, the
independent judgment criterion was satisfied in that she had designed the plan for the
project and had taken the lead in organizing and managing the projects.
In Johnson v. Donna C. Haley, M.D., P.C.,269 two front office employees of a
medical practice commenced an action seeking overtime arguing they should not be
266
2014 WL 2171468 (S.D. Tex. May 23, 2014).
2013 WL 4389460 (N.D. Cal. Aug. 13, 2013).
268
523 F. App’x 658 (11th Cir. 2013).
269
2013 WL 2445164 (N.D. Ga. June 5, 2013).
267
62 classified as exempt administrative employees. The two plaintiffs performed tasks such
as answering phones, scheduling patients, and entering billing codes. The court
examined whether the plaintiffs’ primary duty was the performance of office or nonmanual work directly related to the management or general business operations of the
employer or the employer's customers in accordance with 29 C.F.R. § 541.200 and
whether the plaintiffs exercised discretion and judgment in accordance with 29 C.F.R. §
541.202(c). After examining the plaintiffs’ physical location in the medical practice and
their specific duties, the court concluded that the evidence showed that the plaintiffs’
work affected the business operations of the medical practice to a substantial degree,
as defined under 29 C.F.R. § 541.202(b).
In Little v. Belle Tire Distributors, Inc.,270 the plaintiff, an assistant manager at
several of the defendant’s tire stores, alleged that the defendant misclassified him as an
exempt employee, failing to pay him overtime compensation under the FLSA. The
defendant moved for summary judgment on the ground that the plaintiff qualified for the
administrative exemption. Although the plaintiff performed sales duties, the district court
in Michigan determined that he simultaneously performed non-manual work directly
related to the defendant’s general operations, such as creating records of the
defendant’s customer complaints, inventory, purchase orders, and work orders, etc.
Thus, the defendant met its burden on the “directly related to management or business
operations” prong of the administrative exemption at summary judgment.
C. “Discretion and Independent Judgment”
In Sethi v. Narod,271 the plaintiff, a former Director of Management Information
Systems, brought an action alleging failure to pay overtime compensation and violation
of record-keeping requirements. The defendant claimed it was not obligated to pay the
plaintiff overtime because the plaintiff was exempt as a computer employee, an
administrative employee, or a professional employee. The parties cross-moved for
summary judgment. The defendant alleged the plaintiff met the requirements of the
administrative exemption, but the plaintiff argued that he did not have discretion as to
his assignments or when and how to complete them. The district court denied summary
judgment, holding that there were issues of material fact as to whether or not the
plaintiff satisfied the requirements of the administrative employee exemption.
In McGowen v. Four Directions Development Corp.,272 a former Business
Program Coordinator alleged that the defendant failed to pay her overtime and
misclassified her as an exempt employee. The defendant, a non-profit organization
formed to provide affordable housing and economic development services to tribal
members, filed a motion for summary judgment, arguing that the plaintiff met the
administrative exemption. With regard to discretion and independent judgment, the
270
2013 WL 6328849 (E.D. Mich. Dec. 5, 2013).
974 F. Supp. 2d 162 (E.D.N.Y. 2013).
272
2014 WL 916366 (D. Me. Mar. 10, 2014).
271
63 defendant claimed that the plaintiff assisted clients in selecting financial
services/products (including an assessment of their needs) and in developing business
plans and training. The plaintiff denied that she exercised discretion and independent
judgment, claiming that her supervisor made most decisions, including the decision on
the financial products that would meet their clients' needs. A district court in Maine,
granting summary judgment to the defendant, determined that the plaintiff met the
duties requirements for the administrative exemption. As to discretion and independent
judgment, the court noted that the job description, which the plaintiff acknowledged was
accurate, described work that included a high level of discretion and judgment, including
“identifying and developing new markets and expanding lending opportunities,”
“maintaining close contact and providing ongoing support” with tribal business owners,
and “maintaining rigorous risk management of business loan portfolio to assure
repayment.” The fact that the plaintiff’s decisions were subject to the review of her
supervisor did not eliminate the discretion and independent judgment.
In DiBlasi v. Liberty Mutual Group Inc.,273 the plaintiff, a Senior Product Analyst,
alleged, among other claims, that the defendant insurance company misclassified her
as exempt from the minimum wage and overtime requirements of the FLSA and the
Massachusetts Wage Law. The plaintiff alleged that she was non-exempt because she
had no responsibility for initiating inquiries or analysis, and had no authority to make
decisions relating to products, marketing, or any other aspect of defendant’s business.
The Massachusetts district court disagreed and granted summary judgment in favor of
the defendant. In holding that the defendant properly classified the plaintiff as exempt
under the administrative exemption, the court focused primarily on the extent to which
the plaintiff exercised discretion and independent judgment in performing her job. The
court observed that as a Senior Product Analyst, the plaintiff was expected to “research
and analyze the competitive landscape for personal insurance products in her assigned
states and make recommendations regarding whether and how [the defendant] should
respond to trend in those markets.” The record also reflected that the plaintiff was
expected to not only identify trends but to analyze the causes of the trends in making
her recommendations, and to ensure both that the defendant achieved strong results in
the states for which she was responsible and that its products remained competitive.
The court also looked to job expectations and duties identified in plaintiff’s annual
performance reviews in observing that the plaintiff was responsible for formulating and
recommending pricing solutions, assisting in developing and successfully integrating an
annual business plan, in addition to identifying problems and developing actionable
solutions and taking actions to maintain compliance with changing regulations. In
holding that the position held by the plaintiff was properly classified as exempt under the
administrative exemption, the court held exercising “discretion and independent
judgment with respect to matters of significance” implied “authority to make an
independent choice” which encompasses even “decisions or recommendations
reviewed at a higher level.”274 Moreover, though the record also reflected that the
273
274
2014 WL 1331056 (D. Mass. Apr. 3, 2014).
Id. at *7.
64 plaintiff failed to adequately perform the requirements of her position, the court
observed that her failure to perform exempt duties did not did not have the effect of
converting the position to a non-exempt one.
In Antiskay v. Contemporary Graphics & Bindery Inc.,275 the plaintiff, a production
planner, sued the defendant, a one-stop graphic design and printing company, for
recovery of overtime wages under the FLSA. In granting the defendant employer’s
motion for summary judgment, the New Jersey district court found that the defendant
had satisfied all three prongs of the administrative exemption and, thus, that the plaintiff
was exempt from the overtime requirements of the FLSA. The court found that the
plaintiff’s primary duty included the exercise of discretion and independent judgment,
reasoning that the plaintiff’s exclusive role in deciding on the layout for products, the
plaintiff’s requisitioning of new materials for projects he was overseeing, and the
plaintiff’s handling of customer complaints were all evidence that he exercised discretion
and independent judgment.
In Klein v. Torrey Point Group, LLC,276 the employee brought an action alleging
that the former employer failed to make required overtime payments in violation of the
FLSA and state law. The defendant alleged that the plaintiff was covered under the
administrative exemption. The court found that the fact that the plaintiff's independence
was subject to “checks and balances” did not, as the regulations plainly indicate,
automatically render his employment duties insufficiently independent for § 541.202
purposes. The district court held that the key factors illustrating that an employee
possessed the requisite independence to satisfy the administrative exemption included
“an employee's discretion to set her own schedule and to tailor communications to a
client's individual needs.” Therefore, the district court found that the plaintiff exercised
sufficient discretion and independent judgment in his employment to satisfy the
administrative exemption’s requirements.
In Rincon v. American Federation of State, County, & Municipal Employees,277 a
union organizer sued her former employer, a labor union, claiming she had been
misclassified as exempt and thus improperly denied overtime compensation. The
defendant-union claimed the organizer was exempt under the administrative exemption.
In granting summary judgment for the employer and ruling that the union organizer was
exempt under the administrative exemption, the California district court determined that
the organizer’s duties involved the exercise of discretion and independent judgment with
respect to matters of significance. The court noted that the organizer’s job involved
assessing worker interest, identifying leaders for employee organizing committees, and
determining what kind of campaign to run at a particular location, and it concluded that
each of these tasks satisfies the discretion and independent judgment requirement of
the administrative exemption. The fact that the organizer’s discretion and judgment
275
2013 WL 6858950 (D.N.J. Dec. 26, 2013).
2013 WL 5761401 (S.D.N.Y. Oct. 23, 2013).
277
2013 WL 4389460 (N.D. Cal. Aug. 13, 2013).
276
65 typically took the form of recommendations for action, rather than actual action, did not
diminish her exercise of discretion and judgment. Neither did the fact that the
organizer’s recommendations typically required supervisor approval. Moreover, the
court found that the discretion and independent judgment the organizer exercised
related to matters of significance “because the consequence of her ability to perform her
work successfully – organizing unrepresented workers to choose [the union] – could
hardly be more significant to her employer.”
In Johnson v. Donna C. Haley, M.D., P.C.,278 two front office employees of a
medical practice commenced an action seeking overtime. The court granted summary
judgment in favor of the defendant, concluding that the plaintiffs exercised independent
judgment and discretion in their duties at the medical practice because both employees
had the ability to implement and interpret the policies of the medical practice. The
plaintiffs also implemented insurance policies of the medical practice by rejecting
patients with certain insurance plans. Additionally, the plaintiffs had the ability to bind
the company financially because they often submitted bills directly to insurance
companies without verifying the bills with anyone else in the medical practice. Finally,
the plaintiffs represented the medical practice in handling customer complaints and
customer communication generally, handling insurance companies' refusals to pay,
consulting with pharmacies on prescription refills and in consulting with various
specialists concerning patient referrals.
In Little v. Belle Tire Distributors, Inc.,279 the plaintiff, an assistant manager at
several of the defendant’s tire stores, alleged that the defendant misclassified him as an
exempt employee, failing to pay him overtime compensation under the FLSA. The
defendant moved for summary judgment on the ground that the plaintiff qualified for the
FLSA’s administrative exemption. As to the “discretion and independent judgment”
prong of the administrative exemption, the district court in Michigan determined that the
defendant met its burden on summary judgment because the plaintiff exercised
discretion and independent judgment on significant matters, such as hiring and firing
employees, employee training, resolving customer complaints, and negotiating price
adjustments with customers. The district court further determined that the plaintiff
admitted to regularly using his own discretion in determining what product or service to
sell to the customer in the first place.
E. Regulatory Application of Principles to Specific Job Categories
1. Insurance Claims Adjusters—29 C.F.R. §541.203(a)
In Locke v. American Bankers Insurance Co. of Florida,280 a group of property
insurance adjusters asserted claims under the FLSA, alleging that their employer
278
2013 WL 2445164 (N.D. Ga. June 5, 2013).
2013 WL 6328849 (E.D. Mich. Dec. 5, 2013).
280
2014 WL 2091346 (E.D. Cal. May 19, 2014).
279
66 improperly classified them and similarly situated employees as exempt from the
overtime laws. The defendant filed a motion for summary judgment, arguing that the
plaintiffs were properly classified as exempt administrative employees. The only issue in
dispute regarding the application of the administrative exemption was whether the
plaintiffs’ primary duty included the exercise of discretion and independent judgment.
The California district court, citing the DOL regulation specifically addressing insurance
claims adjusters, granted the defendant’s motion for summary judgment and dismissed
the plaintiffs’ FLSA claims. In doing so, the court rejected the plaintiffs’ argument that
the defendant’s multiple policies and guidelines, as well as the required use of
estimating software, tightly controlled their work and provided them with little or no
discretion and independent judgment. Instead, the court found that, the “test is whether
[the plaintiffs] do in fact exercise such discretion and judgment regardless of how
detailed and regimented the path may be for getting to the point where they can and do
exercise that discretion and judgment.” Applying the facts to the applicable regulations,
the court found that the plaintiffs had the “ultimate responsibility to gather the facts and
put them all together and either determine or make a recommendation as to most every
aspect of the claims process.” The court held that the plaintiffs [were] “engaged in the
exact kind of activities § 541.203(a) indicate are indicative of an adjuster who qualifies
for the administrative exemption.
In Estrada v. Maguire Insurance Agency, Inc.,281 the plaintiff, an insurance claims
examiner who was usually tasked with fairly simple, low-cost automobile insurance
claims, alleged that he did not qualify for the administrative exemption under the FLSA.
The parties filed cross-motions for summary judgment, and the plaintiff moved for
conditional certification. The plaintiff argued that he did not meet the second prong of
the administrative exemption test because he was a production employee. The court
rejected this argument, noting that the relevant regulations supported the conclusion
that claims examiners generally perform administrative duties instead of working in a
manufacturing or production capacity. Granting summary judgment to defendant, the
court observed that every circuit court to consider the issue had concluded that claims
examiners perform tasks that meet the second prong of the administrative exemption.
Citing the plaintiff’s deposition testimony, the court found that there was significant
collaboration between the plaintiff and management, which supported a finding that the
plaintiff’s primary duty was the performance of work directly related to the management
or general business operations. The court also concluded that the plaintiff met the third
prong of the test because he and the other claims examiners employed by the
defendant exercised significant discretion and independent judgment. For example,
plaintiff interviewed insureds and witnesses, reviewed pictures of damaged vehicles to
make his decisions, considered the facts to make sure that estimates were reasonable,
assessed whether coverage would extend to a particular claim, made recommendations
to his supervisor about coverage, apportioned liability in comparative negligence
jurisdictions, altered reserve levels, and had the authority to settle claims that were
under $10,000 without supervisor approval. The court concluded that, as a matter of
281
2014 WL 795996 (E.D. Pa. Feb. 28, 2014).
67 law, these duties required the exercise of discretion and independent judgment
regarding matters of significance.
2. Financial Services Industry Employees—29 C.F.R. §541.203(b)
In Blanchar v. Standard Insurance Co.,282 a director tasked with advising
salespeople, delivering presentations and recommending business opportunities with
regard to particular retirement plans brought overtime claims against his employer. The
defendant employer argued that the plaintiff was a bona fide administrative employee
exempt from overtime requirements under the FLSA. While there was no dispute that
the plaintiff’s compensation exceeded that required for the “administrative exemption,”
the plaintiff “denie[d] that his primary duty [was] the performance of work directly related
to the management or general business operations of the employer and that his primary
duty include[d] the exercise of discretion and independent judgment with respect to
matters of significance.” In affirming the district court’s grant of summary judgment for
the employer, the Seventh Circuit relied on analogous circuit court cases applying the
exemption to pharmaceutical sales representatives and marketing professionals. The
court held that advising salespeople toward a goal of promoting general sales
“satisf[ies] the ‘directly related’ prong of the administrative exemption.” Similarly, the
court held that “promoting sales, advising sales staff, and fielding questions” require an
exercise of discretion sufficient to satisfy the administrative exemption even where the
employee “lacked final decision-making authority.”
VIII. The Professional Exemption
In Oberc v. BP PLC,283 the plaintiff, a licensed and practicing attorney in Michigan
was hired for document review by a firm working on BP’s Deepwater Horizon document
review project. The plaintiff was discharged after six weeks. The plaintiff claimed that
because he was not a salaried employee and his primary duty did not require advanced
knowledge, he was not an exempt professional. The Texas district court stated that
because the DOL’s regulations “make clear that the salary and primary duty
requirements . . . are not applicable to attorneys engaged in the practice of law,” the
plaintiff’s arguments were irrelevant. The court stated that “[a]ttorneys engaged in
document review must assess the relevance and responsiveness of each document,
along with any privilege issues presented.” During his employment, the plaintiff
determined whether documents were responsive to requests, determined what
information needed to be redacted and reviewed documents for privileged information.
The court stated the task is no less “legal” simply because it is routine or performed
under guidelines, and found the plaintiff was engaged in the practice of law and
therefore exempt from overtime pay requirements.
A. Learned Professional
282
283
736 F.3d 753 (7th Cir. 2013).
2013 WL 6007211 (S.D. Tex. Nov. 13, 2013).
68 In McCoy v. North Slope Borough,284 a group of former and current pilots, lead
pilots and coordinators in the defendant’s Department of Search and Rescue brought an
action alleging that they were improperly classified as exempt and that they were owed
overtime. The parties filed cross motions for summary judgment. The defendant
asserted, inter alia, that the plaintiffs were exempt under the learned professional
exemption. A district court in Alaska considered whether the certificate or license that
the pilots must have is customarily acquired by a prolonged course of specialized
intellectual instruction. The court found that, while the pilots may have received
prolonged, specialized training to obtain the certificate, the training was not intellectual
in nature, such as that required for an academic degree.
In Sethi v. Narod,285 a former Director of Management Information Systems
brought an action against his employer alleging failure to pay overtime compensation
and violation of record-keeping requirements. The defendant asserted that the plaintiff
was exempt as a computer employee, an administrative employee, or a professional
employee. The parties cross-moved for summary judgment. The defendant argued that
the learned professional exemption applied because the plaintiff’s work required an
advanced degree. However, the exemption is restricted to professions where
specialized academic training is a standard prerequisite for entry. The district court in
New York held that the plaintiff was not an exempt professional because the plaintiff’s
job did not require knowledge customarily acquired by an advanced educational degree.
The court reasoned that there was no evidence that the plaintiff’s computer-related
certifications were a result of a prolonged course of specialized intellectual instruction.
Furthermore, the plaintiff’s job description required a degree in Computer Science or
possession of equivalent experience, showing no degree was actually mandated for the
job.
1. “Work Requiring Advanced Knowledge”
In Rosenberg v. Renal Advantage, Inc.,286 a registered dietician brought a
putative class and collective action against her employer (“RAI”) for overtime wages
under federal and state wage and hour laws. RAI, which operates clinics providing
dialysis services to patients with end-stage kidney disease, moved for summary
judgment under the FLSA professional exemption. According to RAI, the plaintiff’s
primary duty was the performance of work requiring advanced knowledge in a field of
science or learning customarily acquired by a prolonged course of specialized
intellectual instruction. In granting the motion for summary judgment, the court noted
that the plaintiff’s admissions demonstrated that she exercised significant discretion and
judgment in her duties. Further, the court rejected the plaintiff’s arguments that the
professional exemption does not apply to occupations where employees acquire their
284
2013 WL 4510780 (D. Alaska Aug. 26, 2013).
974 F. Supp. 2d 162 (E.D.N.Y. 2013).
286
2014 WL 1652580 (S.D. Cal. Apr. 24, 2014).
285
69 skill by experience rather than by advanced specialized instruction. According to the
court, the regulations expressly contemplate that an employee may acquire the requisite
“advance knowledge” via a combination of sources.
C. Teachers
In Tongring v. Bronx Community College of the City University of New York
System,287 a district court in New York dismissed a college adjunct professor’s FLSA
claim. The plaintiff was hired as an adjunct professor to teach two mathematics classes
at Bronx Community College in 2010. He alleged that he was not compensated for all of
the hours he was required to work in violation of the FLSA and New York Labor Law.
The College moved to dismiss. Although the College was an “educational
establishment” pursuant to 29 C.F.R. § 541.303, the plaintiff contended that the
exemption did not apply because he was not compensated on a salary basis in an
amount greater than $455 per week. However, the court observed that the salary
threshold did not apply to those employees “with a primary duty of teaching, tutoring,
instructing or lecturing in the activity of imparting knowledge” while employed at an
education establishment. Accordingly, the court granted the College’s motion to dismiss
the FLSA claim.
IX.
Computer Employees
In Jones v. Judge Technical Services Inc.,288 the plaintiffs alleged that the
defendant IT staffing company misclassified them as exempt computer professionals.
The defendant maintained certain pay structures for employees it deemed exempt
under the computer-employee exemption. First, under the “Professional Day”
agreement, an employee “will not be paid for more than eight hours in a day, unless that
employee works more than ten hours in a day. If the employee works more than ten
hours in a day and the manager approves, the employee will be entitled to be paid an
additional fee for services provided after the 11th hour.” Second, under the
“Professional Week” plan, employees received a set hourly rate for every hour worked
up to 40 hours per week, and received no additional compensation for hours worked in
excess of 40 hours per week. The defendant filed a motion for partial summary
judgment as to the exemption, arguing that the plaintiffs were compensated at a rate of
at least $27.63 an hour because the plaintiffs were always paid an average hourly wage
of $27.63 or more every workweek. The court, denying summary judgment, found that
the computer exemption requirement to pay at least $27.63 for every hour worked was
not met because employees were paid nothing for certain hours over 40 in a workweek.
The court held that the $27.63 is not a minimum wage under § 206, and, thus, the
“average” minimum hourly pay does not apply. Rather, the § 207 goal of deterring long
hours requires an examination of each and every hour worked and paid.
287
288
2014 WL 463616 (S.D.N.Y. Feb. 4, 2014).
2013 WL 5777159 (E.D. Pa. Oct. 25, 2013).
70 In Olorode v. Streamingedge, Inc.,289 the plaintiff alleged that he had been
improperly classified as an exempt computer systems analyst under the FLSA and New
York law. The court, on summary judgment, found that the plaintiff’s work satisfied the
primary duty test set out by the DOL regulations. The plaintiff’s challenge to the
exemption was premised on his factual allegation that he spent one-third of his time
performing work of non-exempt Help Desk employees. However, the plaintiff testified
that his role was critical to the employer’s functionality. The court also gave substantial
weight to his multiple technical certifications. In this context, the court concluded, for
purposes of summary judgment, that the majority of his time was consistent with the
exemption.
In Sethi v. Narod,290 a former Director of Management Information Systems
brought an action against his employer alleging failure to pay overtime compensation
and violation of record-keeping requirements. The defendant asserted that the plaintiff
was exempt as a computer employee. The parties cross-moved for summary judgment.
The district court in New York denied summary judgment, holding that there were issues
of material fact as to whether or not the plaintiff fell within the computer employee
exemption. These included the nature and complexity of the plaintiff’s responsibilities,
which were heavily disputed. The plaintiff alleged that his job was merely “desktop
support,” whereas the defendant argued the plaintiff’s responsibilities were more
involved. Further, the court found that although technical credentials and certifications
like the plaintiff’s were relevant to assess an employee’s qualification for the exemption,
it was not clear that the plaintiff’s certifications were necessary to obtain the job or
utilized in his work.
In Karna v. BP Corp., North America, Inc.,291 a computer programmer who
stipulated that he was paid an hourly rate not less than $27.63 per hour, challenged his
exempt classification on the ground that he only spent minimal time performing exempt
tasks. However, the plaintiff’s job as liaison between the defendant and the computer
services provider required possession and application of high levels of technical
knowledge which a jury could find satisfied the exemption’s duty criteria. Further, the
duties listed in the job posting are presumed to be the primary duty and they also satisfy
the duties criteria regardless of time spent performing them. The jury’s verdict in favor of
the defendant was therefore upheld.
X.
The Outside Sales Exemption
In King v. Stevenson Beer Distributing Co.,292 the plaintiff brought an action
against his employer, a wholesale beer distributor, alleging failure to pay overtime in
violation of the FLSA. The defendant alleged that the plaintiff was exempt under the
outsides sales exemption. The district court found that there was no evidence that
289
2014 WL 1689039 (S.D.N.Y. Apr. 29, 2014).
974 F. Supp. 2d 162 (E.D.N.Y. 2013).
291
2014 WL1314616, (S.D. Tex. Mar. 31, 2014).
292
2014 WL 1315655 (S.D. Tex. Mar. 27, 2014).
290
71 plaintiff’s primary function was to solicit orders from retailers, he had no authority to
negotiate prices with the retailers and did not receive commissions nor was his
compensation affected by sales in any way. Therefore, the court held that the
defendants failed to meet their burden to show that the plaintiff was covered by the
outside sales exemption.
In Killion v. KeHE Food Distributors, Inc.,293 sales representatives brought suit for
overtime pay with the employer defending on the basis of the outside sales exemption.
On defendant’s summary judgment motion, it was conceded that the plaintiffs typically
left their homes in the morning and drove to stores they were scheduled to visit that day.
At the stores, they cleaned, straightened up the products in the assigned shelf space,
stocked shelves from inventory and ordered additional product. They were
compensated solely on commission for sales made. The court determined that if an
employer made sales functions the employee’s primary duty then the promotional work,
such as arranging shelves, is exempt. The external indicia – working away from the
defendant’s office with little day-to-day supervision, hiring due to sales experience,
occasional solicitation of new sales, attendance at sales meetings, and compensation
by commission – further supported that defendant proved the outside sales exemption.
C. “Away From the Employer’s Place or Places of Business”
In Cougill v. Prospect Mortgage, LLC,294 a mortgage loan officer brought an FLSA
action, alleging that the defendant failed to pay overtime compensation. The defendant
employer moved for summary judgment and argued that, as an “outside salesperson,”
the plaintiff was exempt from the FLSA’s overtime requirements. It was undisputed that
the plaintiff’s primary duty was making sales as required to satisfy the first prong of the
“outside sales” exemption. The parties, however, contested the second prong of the
exemption — whether the plaintiff was “customarily or regularly” engaged in sales
activities away from the office. In denying the defendant’s motion for summary
judgment, the district court found that “[t]he degree to which Plaintiff was away from the
office conducting sales activities, which lies at the core of the second prong’s inquiry, is
not sufficiently clear.” Although the plaintiff’s deposition testimony indicated that she
spent approximately fifteen to twenty hours per week engaged in outside sales
activities, the court emphasized other deposition testimony stating that her only regular
outside activities were attending an open house twice per month for four to five hours,
an annual trade show for five to six hours, and a monthly realtor lunch for one hour.
In Dixon v. Prospect Mortgage, LLC,295 a mortgage loan officer brought an FLSA
action, alleging that the defendant failed to pay overtime compensation. The defendant
employer moved for summary judgment and argued that, as an “outside salesperson,”
the plaintiff was exempt from the FLSA’s overtime requirements. It was undisputed that
293
2013 WL 5566615 (N.D. Ohio Oct. 9, 2013).
2014 WL 130940 (E.D. Va. Jan. 14, 2014).
295
2014 WL 130942 (E.D. Va. Jan. 14, 2014).
294
72 the plaintiff’s primary duty was making sales as was required to satisfy the first prong of
the exemption; the parties, however, contested the second prong of the exemption —
whether the plaintiff was “customarily or regularly” engaged in sales activities away from
the office. In granting the defendant’s motion for summary judgment, the district court
relied upon the plaintiff’s deposition testimony, which established that she spent
approximately half of her time each week outside of the office in order to contact referral
sources. She attended seminars, trade shows, met with financial planners and realtors,
and gave presentations, all of which “constitute[d] her only sales activities and
generated a significant portion of her business.” The court rejected the plaintiff’s
argument that such activities should be disregarded because they were directed at
referral sources rather than borrowers, and also rejected as overly narrow her
interpretation of the exemption as requiring evidence that she made sales to borrowers
at his or her home or place of business.
In Hantz v. Prospect Mortgage, LLC,296 a mortgage loan officer brought an FLSA
action, alleging that the defendant owed overtime compensation. The defendant
employer moved for summary judgment and argued that, as an “outside salesperson,”
the plaintiff was exempt from the FLSA’s overtime requirements. In granting the
defendant’s motion for summary judgment, the district court found, based on the
plaintiff’s deposition testimony, sufficient sales related activity outside the office to
qualify the plaintiff for the exemption. This activity included meeting with realtors,
distributing fliers, attending open houses for networking purposes, and giving seminars.
Conceding that the plaintiff also spent a considerable amount of time working in-office,
the court remarked that its conclusion was driven by the nature, rather than the amount,
of the time spent outside the office.
In Hartman v. Prospect Mortgage, LLC,297 a mortgage loan officer brought an
FLSA action, alleging that the defendant owed her overtime compensation. The
defendant employer moved for summary judgment and argued that, as an “outside
salesperson,” the plaintiff was exempt from the FLSA’s overtime requirements. The
court found that there was ample evidence to establish that the plaintiff’s primary duty
was making sales, but that the record was “less definitive” as to the second prong of the
exemption — whether the plaintiff was “customarily or regularly” engaged in sales
activities away from the office. Nonetheless, in granting the defendant’s motion for
summary judgment, the district court concluded that the plaintiff’s deposition testimony
established that she engaged in sales activities away from the defendant’s office on a
regular basis. That testimony indicated that the plaintiff worked approximately 25 to 30
percent of each week outside of the office making contacts to generate business. This
included attending open houses, auctions, closings, settlements, and chamber of
commerce meetings. The court rejected the plaintiff’s argument that her activities should
be disregarded because outside promotional work must only be considered when
connected to outside sales, and also rejected as overly narrow her interpretation of the
296
297
2014 WL 463019 (E.D. Va. Feb. 5, 2014).
2014 WL 55339 (E.D. Va. Jan. 7, 2014).
73 exemption as requiring evidence that she made sales to borrowers at his or her home or
place of business.
In Lipnicki v. Meritage Homes Corp.,298 plaintiffs were former home salespeople
who alleged that the defendants denied them overtime pay and minimum wages in
violation of the FLSA. The defendants asserted that the plaintiffs were exempt under the
outside sales exemption, and the parties cross-moved for summary judgment on the
defendants’ exemption defense. The plaintiffs sold new homes in the defendants’
communities and were assigned sales offices located in model homes within the
developments. The issue was whether the plaintiffs were customarily and regularly
engaged away from the employer’s place of business under the outside sales
exemption; specifically, whether they met the “outside sales” exemption when some of
their time was “inside” (in the model home sales office) and some was “outside” (on the
lots or other locations outside the sales office). The plaintiffs did not dispute that the
time spent on the lots—time that they say was minimal—counted as “outside sales”
time. In interpreting two DOL Opinion Letters analyzing the outside sales exemption in
the model home context, the district court in Texas gleaned that the standard the DOL
“seem[s] to announce, with a more qualitative than quantitative focus on the outside
activity, is that the exemption applies when most or ‘virtually all of the indispensable
components of the sales efforts are concentrated in the outside period.’” The district
court denied both motions for summary judgment.
E. Drivers Who Sell
In Meza v. Intelligent Mexican Marketing., Inc.,299 the Fifth Circuit affirmed a
district court's summary judgment ruling in favor of the defendant employer, against an
outside salesman’s suit for minimum wage and overtime compensation under the FLSA.
The plaintiff salesman argued that because he delivered the products he sold to
convenience store clients and stocked them on shelves, and spent about two hours
each day at the employer's warehouse dealing with loading and unloading of the
products in his truck, he was a deliveryman not subject to the outside sales exemption.
The Fifth Circuit disagreed, holding that his delivery duties were incidental to his duties
as a salesman, and that the majority of factors weighed in favor of his exempt status. In
coming to this conclusion, the court reviewed the regulations promulgated by the DOL
to help distinguish deliverymen from outside salespeople, as well as precedent from the
circuit. The salesman plaintiff was the only sales contact between the employer
company and its convenience store clients, the job was advertised as a sales job and
the plaintiff presented himself for it because of his sales experience, he attended weekly
sales meetings in which he was given sales tips and told of incentives and prizes for
high sales, and was paid a (small) base salary plus commission based on the volume of
products sold. He also called on new prospects to generate new sales, and had the
authority to negotiate the sale of new inventory to existing clients, and to negotiate for
298
299
2014 WL 923524 (S.D. Tex. Feb. 13, 2014).
720 F.3d 577 (5th Cir. 2013).
74 better product placement on their shelves. Although he did stock shelves and deliver
product, the Fifth Circuit noted that such activities were in furtherance of his own sales
efforts. Finally, though the plaintiff argued that he had such a large number of clients on
his route that he was left little time after re-stocking to actually perform sales activities,
and further that his effective hourly rate was below minimum wage, the Fifth Circuit was
unmoved. Noting that there was no way to eliminate the possibility that the plaintiff's low
compensation was due to his poor salesmanship, and that the regulations favored the
employer, the Fifth Circuit affirmed the district court's grant of summary judgment.
75 Chapter 5
OTHER STATUTORY EXEMPTIONS
II.
Section 13(a) Exemptions From the Minimum Wage and Overtime
Requirements of the Act
A. Amusement, Recreational, and Similar Employees
In Mann v. Falk,300 the Eleventh Circuit considered whether the defendant, a
recreational vehicle park located in Florida, was a “recreational establishment” exempt
from paying overtime compensation under the FLSA. The defendant made 92 percent
of its annual revenue from renting lots, with the remainder coming primarily from sales
of recreational vehicles. Only 10 percent of the lots were occupied permanently.
During the plaintiff’s employment as a maintenance employee, the defendant provided
recreational activities, including golf outings, to the residents; however, most of the
income generated from those activities went to a host committee, not the defendants.
In affirming the district court’s decision that the defendant was not a recreational
establishment, the Eleventh Circuit determined that through application of the “major
income source” standard, providing amusement or entertainment to its customers was
not the defendant’s principal activity. Instead, based on income, the defendant’s
principal activity was leasing lots and selling vehicles. While the defendant might have
promoted recreation, and in some cases provided it, this was ancillary to the principal
business.
In Chen v. Major League Baseball,301 an unpaid volunteer who worked during the
week of the 2013 Baseball All Star Game brought minimum wage claims under the
FLSA and New York law. The district court in New York granted the defendants’ motion
to dismiss, concluding that the pleadings established that the plaintiff was exempt from
the FLSA’s minimum-wage requirements because he worked for an “amusement or
recreational establishment.”302 During All Star week, the plaintiff worked three shifts at
“FanFest”—a sports theme park with video games, baseball clinics, music, and other
activities—located at the Javits Center in New York City. The plaintiff argued that the
exemption did not apply because he was employed by Major League Baseball, which
operated for more than seven months each year. According to the court, the
“amusement or recreational establishment” exemption applied because FanFest was a
sports event and theme park, both of which are identified in the legislative history of the
exemption. The event also took place in a discrete location, and over a discrete time
300
523 F. App’x 549 (11th Cir. 2013).
2014 WL 1230006 (S.D.N.Y. Mar. 25, 2014).
302
See 29 U.S.C. § 213(a)(3). The defendants also argued that the plaintiff was not an
“employee” under the FLSA because he worked as a volunteer, but the court did not reach this issue.
301
76 period of less than seven months. Major League Baseball’s alleged control over the
event was irrelevant, according to the court, because the exemption criteria applies to
the establishment rather than the enterprise that may control the establishment.303
Thus, the court held, an individual employed by an enterprise in existence for more than
seven months can nonetheless be exempt from the FLSA’s minimum-wage
requirements if the individual works at a physically distinct location (establishment)
controlled by the enterprise for less than seven months.304
F. Casual-Basis Babysitters and Domestic Companionship Service
Providers
2. Domestic Companionship Service Providers
b. Companionship Services
(i.)
Private Home
In Chapman v. ASUI Healthcare and Development Center,305 the Fifth Circuit
affirmed summary judgment, and a bench-trial verdict, for two caregivers seeking
overtime compensation under the FLSA. The plaintiffs were hired as independent
contractors, signed contracts acknowledging this status, and worked as caregivers in
group homes for individuals with mental disabilities. The group homes were leased by
the employer, with three clients residing in each home. The Fifth Circuit agreed that
plaintiffs were employees under the economic reality test.306 The court rejected the
argument that the “companionship services” exemption applied because, it reasoned,
the group homes in which the plaintiffs worked were not private homes but rather were
maintained primarily to facilitate the provision of assistive services: the clients did reside
in these homes, but they did so to receive services and would not likely have lived in the
homes otherwise.307
III.
Section 13(b) Exemptions From the Overtime Requirements of the Act
A. Employees Covered Under the Motor Carrier Act
1. SAFETEA-LU
In Garcia v. Western Waste Services, Inc.,308 a mechanic filed an FLSA overtime
claim against his former employer, a waste transportation company, alleging he was
improperly classified as exempt under the Motor Carrier Act exemption. His primary job
303
Chen, 2014 WL 1230006, at *7.
Id. at *8.
305
562 F. App’x 182 (5th Cir. 2014).
306
Id. at 184–85.
307
Id. at 185–86.
308
969 F. Supp. 2d 1252 (D. Idaho 2013).
304
77 duties were to repair trash collection trucks and other heavy equipment. The parties
filed cross motions for summary judgment, seeking a ruling on whether the plaintiff
satisfied the “covered” employee exception to the Motor Carrier Act exemption created
by the SAFETEA–LU Technical Corrections Act (“TCA”) of 2008, Pub. L. No. 110–244,
so as to qualify for FLSA overtime. A covered employee entitled to overtime under the
TCA is one whose work “in whole or in part” affects the safety of operation of “motor
vehicles weighing 10,000 pounds or less.” To determine this issue, the Idaho district
court examined and resolved two issues. The first issue was how to determine vehicle
weight. The plaintiff argued that it was the vehicle’s actual weight without a trailer; the
employer argued it was the “gross vehicle weight rating” (“GVWR”) or “gross
combination weight rating (“GCWR”). GVWR and GCWR are the references used in
SAFETEA-LU in defining “commercial motor vehicle,” and according to the DOL
enforcement position on the TCA, are the appropriate measures for determining vehicle
weight. The court refused to give deference to the DOL’s interpretation of the TCA, and
instead held that the appropriate measure was the actual weight of the truck and the
trailer combined.309 The second issue was to what extent work with a “mixed fleet”
rendered the employee a “covered” employee entitled to overtime. The court noted the
split among district courts, with the majority view being that employees who work on a
mixed fleet of vehicles—both large commercial vehicles over 10,000 pounds and small
vehicles under that weight—do not qualify as “covered” employees under the TCA if
they spend more than a de minimis amount of time working on large commercial
vehicles. The minority view, which the court found more persuasive and adopted, is
that an employee is a “covered” employee entitled to overtime under the TCA if the
employee spends more than a de minimis amount of time working on small vehicles of
10,000 pounds or less. In ruling that summary judgment was inappropriate, the court
determined there remained factual disputes over whether the fleet was actually mixed,
because it was unclear whether all service trucks pulled trailers, and if it was a mixed
fleet, whether the amount of time the plaintiff worked on small vehicles was de
minimis.310
McCall v. Disabled American Veterans311 examined how to determine vehicle
weight and adopted the DOL’s interpretation that gross vehicle weight rating (“GVWR”)
is the appropriate measure. The plaintiff was a truck driver who claimed unpaid
overtime and who operated a truck with an actual weight of less than 10,000 pounds,
but a gross vehicle weight rating of greater than 10,000 pounds. The employer filed a
motion for summary judgment based on the Motor Carrier Act exemption, which was
granted. The Eighth Circuit affirmed the trial court’s judgment, concluding that the FLSA
was inapplicable because the exemption applied to the plaintiff. The court noted that
prior to August 2005, this exemption did not depend on the weight of the vehicle.
However, in 2005, Congress enacted SAFETEA-LU, which, in pertinent part, limited the
exemption to employees who operate commercial motor vehicles with a gross vehicle
309
Id. at 1259.
Id. at 1261.
311
723 F.3d 962 (8th Cir. 2013).
310
78 weight rating or gross combined weight rating, whichever is greater, of more than
10,000 pounds. In 2008, SAFETEA-LU was amended by the SAFETEA-LU Technical
Corrections (“TCA”) to remove the word “commercial” from the statute and clarify that
the overtime provisions of the FLSA apply to employees who operate “a motor vehicle
‘weighing 10,000 pounds or less.’” After the TCA was enacted in 2008, the DOL issued
a bulletin explaining that it will continue to use the gross vehicle weight rating to
determine if the vehicle is one weighing 10,000 pounds or less as provided in the TCA.
The Eighth Circuit accorded the DOL’s interpretation deference and concluded that the
appropriate measure was the gross vehicle weight rating, not the actual weight, for
determining the applicability of the overtime exemption. The Eighth Circuit commented
that the use of the gross vehicle weight rating is “an objective and predictable standard
for determining whether the [Motor Carrier Act exemption] applies.”312
2. Requirements for the Section 13(b)(1) Exemption
a. Carriers Subject to the Power of the Secretary of Transportation
In Almy v. Kickert School Bus Line, Inc.,313 the Seventh Circuit unanimously
upheld an Illinois district court’s decision that a school bus driver who transported
students across state lines as part of his regular route falls within the FLSA’s “motorcarrier” exemption to overtime. The court agreed with prior decisions from the Second,
Third, Fifth and Eleventh Circuits that the exclusive authority to set maximum hours for
“motor carriers” is vested in the Secretary of Transportation by the Motor Carrier Act’s
safety regulations and that this exclusive authority covers anyone paid to transport
passengers across state lines, including school bus drivers.314 Specifically, the Seventh
Circuit disagreed with an earlier Illinois district court decision315 and rejected the
plaintiff’s argument that language elsewhere in the Motor Carrier Act specifying that the
Secretary lacks jurisdiction over “a motor vehicle transporting only school children and
teachers to or from school” applies more broadly to exclude school bus drivers from the
Act altogether. Rather, that particular provision applies only to the economic regulations
subtitle of the Act, and not to the safety regulations subtitle—which vests exclusive
jurisdiction to set maximum hours to the Secretary and exempts drivers like the plaintiff
from the FLSA’s overtime requirements.
c. Transportation in Interstate Commerce
(iii.) Intrastate Transportation
312
Id. at 966.
722 F.3d 1069 (7th Cir. 2013).
314
Id. at 1072 (citing Walters v. Am. Coach Lines of Miami, Inc., 575 F.3d 1221, 1233 (11th Cir.
2009); Bilyou v. Dutchess Beer Distribs., Inc., 300 F.3d 217, 225–26 (2d Cir. 2002); Friedrich v. U.S.
Computer Servs., 974 F.2d 409, 413 (3d Cir. 1992); Klitzke v. Steiner, 110 F.3d 1465, 1468–69 (9th Cir.
1997)).
315
Id. (citing Mielke v. Laidlaw Transit, Inc., 102 F. Supp. 2d 988, 992 (N.D. Ill. 2000)).
313
79 In Margulies v. Tri-County Metropolitan Transportation District of Oregon,316 an
Oregon district court considered whether bus and train operators who never crossed
state lines in performance of their duties for their employer, a regional transit system in
the Portland, Oregon metropolitan area, were exempt under the FLSA’s motor carrier
exemption. The employer had a ticketing arrangement with the transit system in the
Vancouver, Washington area, which obligated both systems to honor the other’s
specified fares. In 2011 and in subsequent years, the plaintiffs’ employer determined
that it carried over 10,000 customers of the Vancouver system per week. The named
plaintiffs in the purported collective action, in contrast, testified that they either never or
very rarely carried Vancouver system passengers. The court, on a motion for summary
judgment, first held that the employer’s contractual through-ticketing arrangement with
the Vancouver system was sufficient to show that its transport was part of the
continuous stream of interstate commerce. The court next addressed whether the bus
drivers and train operators were engaged in an activity that directly affects safety of the
carrier in interstate commerce. Noting that some employees might satisfy this
requirement and be exempt whereas others might not, the court examined the evidence
to determine whether bus drivers and/or rail operators might reasonably be expected to
transport an interstate passenger. Although there was more interstate-passenger traffic
on some routes than on others, the ticketing agreement with the Vancouver system that
allowed interstate passengers to go anywhere within the employer’s system meant that
bus drivers and rail operators had a reasonable expectation of transporting interstate
passengers, and thus as a group, the class met the requirements of the exemption.
In Roberts v. Trimac Transportation Services (Western), Inc.,317 a truck driver
brought suit in a California district court for unpaid overtime under federal and state law.
The plaintiff transported nitrogen and argon gas locally and did not cross state lines.
Much of this gas was produced in California, but some argon was shipped to the
employer’s California facility from Arizona. Both parties moved for summary judgment
on the employer’s defense that the plaintiff qualified for the motor carrier exemption. To
establish the motor carrier exemption the plaintiff must be shown to either (1) have
transported goods in the “practical continuity of movement” in interstate commerce such
that the transport was simply one leg of a continuous interstate movement, or (2)
reasonably could be expected to transport goods across state borders. The focus was
therefore on whether the plaintiff’s local argon gas deliveries were properly
characterized as the last leg of interstate argon shipments. The plaintiff argued that
they could not be because at the time of shipment from Arizona, the gas was not
destined for a specific customer, and thus failed to meet the ICC’s so-called “Petroleum
Products test.”318 The court rejected this argument, and instead examined all of the
facts and circumstances relating to the shippers’ intent at the time of shipment to
determine whether the plaintiff’s deliveries were simply the last leg of a continuous
interstate shipment. The fact that when the argon shipped from Arizona arrived in
316
2013 WL 5596040 (D. Or. Oct. 10, 2013).
2013 WL 5442388 (N.D. Cal. Sept. 30, 2013).
318
Id. at *3.
317
80 California it was stored and commingled with argon produced in California established
that the interstate shipment ended before the plaintiff delivered the argon locally. Lastly,
the court found that the plaintiff could not have been reasonably expected to cross state
lines. Although the employer had drivers who transported gas across state lines, it did
not indiscriminately or randomly assign interstate trips among all the drivers. The court
granted the plaintiff’s motion for summary judgment and denied the defendant’s crossmotion for summary judgment.
C. Air Transportation Employees
In Roca v. Alphatech Aviation Services,319 a district court in Florida ruled on crossmotions for summary judgment that the plaintiff was not exempt from overtime under the
FLSA’s air carrier employee exemption. The plaintiff claimed that during her
employment, the employer failed to pay her overtime for hours worked in excess of 40
hours per week. The employer provided heavy-duty cleaning services for airplanes
operated by commercial and freight airlines. The plaintiff’s duties included assigning
cleaners to work specific parts of an aircraft interior, checking their work, and presenting
the work to employer’s clients. The employer itself was not owned by an air carrier, but
its clients were. The FLSA removes from coverage “any employee of a carrier by air
subject to the provisions of Title II of the Railway Labor Act (“RLA”).” Title II of the RLA
covers “every common carrier by air . . . and every pilot or other person who performs
any work as an employee or subordinate official of such carrier or carriers . . . .”
Employers that are not themselves air carriers are subject to Title II of the RLA if they
can prove: 1) the nature of the work performed by their employees is traditionally
performed by employees of air carriers (function prong); and 2) the employer is directly
or indirectly owned or controlled by an air carrier (control prong). As to the function
prong, the court found that the work was not akin to the rapid cabin cleanup performed
by air carrier personnel between flights and cited evidence that air carriers hire outside
contractors to perform heavy-duty cleaning work. It also rejected the employer’s
argument that the responsibility of air carriers for maintenance under federal aviation
regulations meant that heavy duty cleaning was traditionally performed by air carriers
themselves. As to the control prong, the court held that an independent contractor
relationship between the carrier and the service provider generally will not meet the
“control” test of the RLA. Instead, to exert the requisite control, the air carrier must
dictate what employees are paid, what shifts and hours they work, and/or how many
employees are scheduled to work at a given time. There was no evidence of any such
control. As a result, the employer had failed to raise a material issue of fact as to the
exemption, and partial summary judgment was granted to the plaintiff.
F. Certain Employees of Automobile, Truck, or Farm Implement Dealers;
Salespersons of Trailers, Boats, and Aircraft
319
961 F. Supp. 2d 1234 (S.D. Fla. 2013).
81 In Henriquez v. Total Bike, LLC,320 a motorcycle service and repair technician
brought an FLSA claim against his employer, alleging that he had improperly been
denied overtime due to his misclassification as an exempt employee. The Florida
district court granted the employer’s summary judgment motion, which was based on
both the FLSA’s mechanics exemption and the retail commissioned employee
exemption. Under the mechanics exemption, employees are not entitled to overtime
where they work as mechanics and are “primarily engaged in servicing automobiles,
trucks, or farm implements” and are employed by “a nonmanufacturing establishment
primarily engaged in the business of selling such vehicles or implements to ultimate
purchasers.”321 The plaintiff argued that this exemption did not apply to him because
the vehicles on which he worked were “motorcycles,” not “automobiles.” Rejecting the
plaintiff’s argument, the Florida district court held that “motorcycles” fall within the
broader definition of “automobiles” and, therefore, the mechanics exemption applied.
The court also went on to address the plaintiff’s argument that the retail commissioned
employee exemption was inapplicable to him because he was not paid under a bona
fide commission plan.322 The defendant had a flat rate “billed hours” pay system, where
employees were assigned an hourly rate based on their skill level, which was multiplied
by the total number of billed hours spent on a given job. The district court held that this
pay system qualified as a bona fide commission plan.
H. Taxicab Drivers
In Kim v. SUK, Inc.,323 the town car driver employee sued the defendant
limousine service in New York district court, alleging that it failed to pay overtime under
the FLSA. In its motion for summary judgment, the defendant claimed the employee
was exempt from the FLSA under the taxicab exemption. The district court recognized
that the defendant operated a business which could be seen as a taxicab business
because it took passengers to whatever destination they requested, did not operate on
fixed routes, and did not take multiple fares at the same time. However, unlike a taxicab,
the defendant did not have a metered fare and maintained contracts with repeat
customers. Further, the defendant was licensed by the New York City Taxi and
Limousine Commission, not a Taxi Medallion, and admitted that it was rare for the
drivers to cruise for fares. Therefore, the court found the taxi exemption did not apply
and denied the defendant’s summary judgment motion.
In McKinney v. Med Group Transportation LLC,324 employee drivers who
provided non-emergency transportation for clients traveling to and from medical
320
2013 WL 6834656 (S.D. Fla. Dec. 23, 2013).
29 U.S.C. § 213(b)(10)(A).
322
29 U.S.C. § 207(I).
323
2014 WL 842646 (S.D.N.Y. Mar. 4, 2014).
324
988 F. Supp. 2d 993 (E.D. Wis. 2013).
321
82 appointments sued their employer in a class action under the FLSA.325 The suit,
brought in a Wisconsin district court, alleged inter alia that the drivers had not been paid
overtime for hours worked over 40 in a week. After class certification, the drivers filed a
motion for summary judgment. In opposition, the defendant argued that the drivers fell
under the taxicab exemption from the FLSA. The court looked to the definition of a
"taxicab business" in Chapter 24(h) of the DOL Field Operations Handbook, which
specifically excludes companies that have "contracts for recurrent transportation." The
defendant brought some evidence that other traditional taxi companies accept contracts
from third parties to provide subsidized rides to certain customers. Nevertheless, the
court found it significant that third party contracts amounted to 25 percent or less of the
taxicab companies' business, while 95 to 98 percent of the defendant's business came
from third party contracts. Following Wisconsin district court precedent,326 the court
also distinguished the plaintiff drivers from traditional taxicab drivers because they were
not licensed under Wisconsin state laws for taxi drivers, did not cruise for passengers,
were generally not free to pick up unscheduled passengers, had no vacancy light or
taximeter, and frequently picked up multiple individuals for the ride (rather than traveling
directly from pickup to desired location "at the convenience of the customer"). Noting
that the exemptions are to be narrowly construed, the court ruled in the drivers' favor on
overtime liability.
In Arena v. Plandome Taxi, Inc.,327 a driver brought various claims under the
FLSA and New York Labor Law against a defendant transportation services company,
including a claim for unpaid overtime. The defendant moved for summary judgment on
the FLSA overtime claim on the grounds that 29 U.S.C. § 213(b)(17) provides an
overtime exemption applicable to “any driver employed by an employer engaged in the
business of operating taxicabs.” The district court looked to legislative history to
determine whether Congress specifically intended to exempt “for-hire” drivers like the
plaintiff who could not cruise the streets to pick up passengers but rather were
dispatched by the employer. Finding no specific intent from applicable legislative
history, the court relied on the Department of Labor’s definition of the phrase “business
of operating taxicabs”328 and found the defendant in fact engaged in this business
because it did not have fixed routes or contracts for recurrent transportation, and
additionally maintained taxi stands at a local railroad station and on a local road. The
court therefore found the plaintiff exempt from the FLSA’s overtime provisions.
IV.
Section 7 Exemptions From the Overtime Requirements of the Act
C. Section 7(i)—Certain Commissioned Employees of Retail and Service
Establishments
325
They also named an individual executive of the company as a defendant, and included claims
under Wisconsin state law. No significant distinctions were made between the two defendants, or the
federal and state law, so they are excluded from this summary.
326
Herman v. Brewah Cab, Inc., 992 F. Supp. 1054 (E.D. Wis. 1998).
327
2014 WL 1427907 (E.D.N.Y. Apr. 14, 2014).
328
Dep’t of Labor, Field Operations Handbook, ch. 24 § 24h01 (1999).
83 2. Compensation Requirements
a. Commission Payment Required
In Alvarado v. Corporate Cleaning Service, Inc.,329 a group of current and former
window washers brought suit for overtime pay under the FLSA and the Illinois Minimum
Wage Law (“IMWL”) alleging that they were paid on a piece rate basis for their work, as
opposed to a commission basis so as to disqualify them from the retail commissioned
employee exemption. The plaintiffs were paid pursuant to a point system that assigned
points for each window washing job, and each employee was then paid at his or her
union rate multiplied by the total points allocated to him or her. The plaintiffs were
generally able to finish a job in fewer hours than the number of points assigned to the
job, but sometimes jobs took longer to complete than the number of assigned points.
Client-buildings were charged based on the number of points assigned to the job.
Following a bench trial, a district court in Illinois found that the plaintiffs were exempt
from overtime because they were compensated on a commission basis within the
meaning of section 207(i) of the FLSA and the IMWL. The district court recognized that
neither “piece rate” nor “commissions” are defined in the FLSA and that the two
concepts are often difficult to distinguish. The court therefore followed the Seventh
Circuit’s decision in Yi v. Sterling Collision Centers, Inc.,330 which explained that the
essence of commissions is that they are based on sales and unrelated to actual time
worked; a pieceworker’s pay is also unrelated to actual time worked, but it does not
directly depend on sales. The district court concluded that even though the window
washers’ pay was described in company documents as “piece rate” or “piecework,” in
fact the pay system was more akin to commission. This was because the plaintiffs’ pay
was dependent on sales, which in turn was highly variable and dependent on
customers’ needs and weather, the plaintiffs were only paid when sales were made, and
their compensation was divorced from actual hours worked.
329
330
2013 WL 6184044 (N.D. Ill. Nov. 18, 2013).
480 F.3d 505 (7th Cir. 2007).
84 Chapter 6
AGRICULTURAL EXEMPTIONS
II.
General Scope of Agriculture
D. Specific Situations
2. Nursery and Landscaping Operations
In Mayorga v. Deleon’s Bromeliads, Inc.,331 employees of a grower and
wholesaler of orchids and bromeliads alleged that they were entitled to unpaid overtime
compensation. The defendant moved for summary judgment on the ground that the
plaintiffs were covered by the agricultural exemption. In granting the employer’s motion,
a Florida district court found that over 99% of the work performed by the defendant’s
employees satisfied the exemption under established Eleventh Circuit precedent. The
court also found that less than 1% of the defendant’s business consisted of the
company’s purchasing plants from other nurseries (a non-exempt activity) when
production shortfalls occurred. However, the court applied the de minimis doctrine to
conclude that this small amount of non-exempt work did not affect the defendant’s
ability to claim the exemption. The court noted that although the Eleventh Circuit has not
yet decided this issue, several other courts have found that where a small percentage of
an otherwise exempt business’s sales come from purchases from other companies, and
those purchases are made to cover production shortfalls, that business is still entitled to
the agricultural exemption. The court concluded that the defendant’s minimal purchase
of brokered plants was not a separate or independent activity or business from the
defendant’s agricultural production, and the agricultural exemption therefore applied.332
In Castillo v. Groundlevel, Inc.,333 the plaintiffs were employed by the defendant
to perform “restoration activities, including reforestation, wetland restoration and land
management activities.”334 The plaintiffs alleged that the defendant failed to pay
overtime compensation. The defendant moved to dismiss the overtime claim on the
ground that the plaintiffs were exempt from overtime under the section 213(b)(12)
agricultural exemption. A Florida district court denied the motion to dismiss, noting the
complaint did not contain allegations that the plaintiffs worked in farming or for a farmer,
a necessary requirement for the exemption to apply. The court held the plaintiffs’ duties
331
2014 WL 1330755 (S.D. Fla. Mar. 31, 2014).
Id. at *6.
333
2013 WL 5499611 (M.D. Fla. Oct. 1, 2013).
334
Id. at *1.
332
85 of reforesting and restoring non-farming land by planting trees did not constitute
“agriculture” under the FLSA.335
335
Id. at *3.
86 Chapter 8
DETERMINING COMPENSABLE HOURS WORKED II.
Historical Context of the Term “Hours Worked”
B. The Portal-to-Portal Act
In Harris v. Reliable Reports Inc.,336 the plaintiff, a field reporting specialist, sued
the defendant for failure pay to him, and a putative class, overtime wages. The
defendant filed a motion to dismiss, pursuant to Rule 12(b)(6) of the Federal Rules of
Civil Procedure, claiming that it was not required to compensate the plaintiff and
putative class members for “commute time” spent driving from their homes to their first
inspection sites, and returning from their final inspection sites to their homes. An Indiana
district court denied the defendant’s motion, finding that the lead plaintiff alleged
sufficient facts to state a plausible claim that his travel time to his first appointment and
from his last appointment to his home were compensable under the “continuous work
day rule,” which provides that the time between an employee’s first principal activity and
the completion of her last principal activity must be included in the computation of hours
worked. In so ruling, the court declined to resolve the defendant’s argument that the
continuous work day rule did not apply because its field reporting specialists had the
flexibility in deciding when to complete their daily administrative responsibilities, such
that they were not obligated to finish them before their first inspection, as this inquiry
raised a question of fact.
In Harvey v. AB Electrolux,337 the plaintiffs, former employees of a laundry
appliances plant, sued their former employer for failing to compensate them for time
spent donning personal protective equipment (“PPE”), walking to their workstations after
donning PPE, and washing their gloves and arm guards at home. The plaintiffs brought
claims under both the FLSA and the Iowa Wage Payment and Collections Act. Both the
plaintiffs and the defendant moved for partial summary judgment. After concluding that
the time the plaintiffs spent donning PPE was not compensable under § 203(o), the
Iowa district court turned to the question of whether the plaintiffs’ time spent walking to
their workstations after donning the PPE was nonetheless compensable. The defendant
argued that this walking time was not compensable under the Portal-to-Portal Act. In
response, the plaintiffs pointed to a June 16, 2010 DOL opinion letter concluding that an
activity excluded from the workday under § 203(o) can nonetheless constitute a
principal activity. According to this reasoning, even if time spent donning the PPE was
not compensable under § 203(o), such activity could still trigger the continuous work
336
337
2014 WL 931070 (N.D. Ind. Mar. 10, 2014). 2014 WL 1696134 (N.D. Iowa Mar. 28, 2014). 87 day rule, rendering the time spent walking to one’s worksite compensable. Consistent
with the Eighth, Fourth, Tenth and Ninth Circuits, but unlike the Eleventh Circuit, the
court declined to follow the opinion letter. The court’s conclusion placed significance on
the DOL’s repeated alteration of its interpretation of § 203(o). Thus, because the court
found that donning PPE was not a principal activity, the court concluded that the Portalto-Portal Act’s travel time exemption applied and the time spent walking to the plaintiffs’
workstations after donning PPE was not compensable. The court granted the
defendant’s motion for partial summary judgment on this point.
III.
Principles for Determining “Hours Worked”
D. Section 3(o) of the FLSA
1. “Custom or Practice”
In Harvey v. AB Electrolux,338 the plaintiffs, former employees at the defendant’s
laundry appliances plant, sued their former employer for failing to compensate them for
time spent donning personal protective equipment (“PPE”), walking to their workstations
after donning PPE, and washing their gloves and arm guards at home. The plaintiffs
brought claims under both the FLSA and the Iowa Wage Payment and Collections Act.
Both the plaintiffs and the defendants moved for partial summary judgment. The plant
where the plaintiffs worked was unionized and had been covered by collective
bargaining agreements for 50 years. The plant’s consistent practice was not to pay
employees for time spent donning PPE, and, the collective bargaining agreement
(“CBA”) contained no reference to donning or doffing PPE, clothes changing or PPE
maintenance. Moreover, no grievance had ever been filed seeking payment for time
spent donning PPE. After concluding that the PPE at issue constituted “clothes” under §
203(o), the Iowa district court analyzed whether, as the defendant argued, the tacit
agreement not to compensate employees for time changing clothes constituted a
“custom or practice” under the collective bargaining agreement in order to satisfy §
203(o), or whether, as the plaintiffs argued, the payment for time spent changing clothes
must have been expressly raised and abandoned during CBA negotiations for § 203(o)
to apply. Although the Eighth Circuit had not addressed the meaning of “custom or
practice” under § 203(o), following other circuit courts, the court found that the plaintiffs’
interpretation of § 203(o) was too narrow, essentially reading “custom or practice” out of
§ 203(o). Thus, the court concluded that the employer’s custom or practice of not paying
employees for donning PPE was an implied CBA term based on the bargaining unit’s
prolonged period of acquiescence. The court thus granted the defendant’s motion for
partial summary judgment on this point.
2. “Clothing”
338
2014 WL 1696134 (N.D. Iowa Mar. 28, 2014). 88 In Harvey v. AB Electrolux,339 the plaintiffs, former employees at the defendant’s
laundry appliances plant, sued their former employer for failing to compensate them for
time spent donning personal protective equipment (“PPE”), walking to their workstations
after donning PPE, and washing their gloves and arm guards at home. The plaintiffs
brought claims under both the FLSA and the Iowa Wage Payment and Collections Act.
Both the plaintiffs and the defendants moved for partial summary judgment. The plant
where the plaintiffs worked was unionized and had been covered by a collective
bargaining agreement (“CBA”) for 50 years. Consequently, the defendant argued that §
203(o) barred the donning claim. To determine whether § 203(o) applied, the Iowa
district court initially looked at whether the PPE constituted “clothes.” The PPE
consisted of gloves, arm guards, aprons, earplugs and safety glasses. Based on
Supreme Court guidance, the court found that the gloves, armguards and aprons fell
within § 203(o)’s definition of “clothes,” whereas the earplugs and safety glasses fell
outside that definition. Next, the court determined that donning the clothes required
considerably more time than donning the items that did not constitute “clothes.”
Accordingly, the court found that because the vast majority of time was spent donning
“clothes,” the entire period spent donning the PPE qualified as time changing clothes for
purposes of § 203(o). After finding that there was a custom or practice of not
compensating this time, the court granted the defendant’s motion for partial summary
judgment on the donning claim.
3. “Washing”
In Harvey v. AB Electrolux,340 the plaintiffs, former employees at the defendant’s
laundry appliances plant, sued their former employer for failing to compensate them for
time spent donning personal protective equipment (“PPE”), walking to their workstations
after donning PPE, and washing their gloves and arm guards at home. The plaintiffs
brought claims under both the FLSA and the Iowa Wage Payment and Collections Act.
Both the plaintiffs and the defendants moved for partial summary judgment. Although
there was a collective bargaining agreement, the Iowa district court recognized that the
term “washing” in § 203(o) has not been applied to the washing of clothes. Thus, the
court analyzed whether the plaintiffs’ washing of their gloves and arm guards
constituted a preliminary or postliminary activity that was “an integral and indispensable
part of the principal activities” and, thus, compensable. To evaluate this issue, the court
considered: (1) whether the defendant required the washing; (2) whether the washing
was necessary for the plaintiffs to perform their job duties; and (3) whether the washing
primarily benefitted the defendant. First, the defendant did not require the washing but,
rather, provided the plaintiffs the option of having these items washed through an
employer-provided cleaning service. Second, because the court found that the plaintiffs
could perform their jobs without regard to the cleanliness of their gloves and arm guards
(as evidenced by the differences in the frequency of cleaning among the plaintiffs), the
court concluded that the washing was not necessary for the plaintiffs to perform their job
339
340
2014 WL 1696134 (N.D. Iowa Mar. 28, 2014). Id. 89 duties. Finally, because the court did not find a correlation between the cleanliness of
their gloves and arm guards and the plaintiffs’ job duties, the court found that the
cleaning of these items did not benefit the defendant. Therefore, the court found that the
defendant did not have to compensate the plaintiffs for their time spent washing gloves
or arm guards, and granted the defendant’s partial summary judgment motion.
IV.
Application of Principles
A. “Suffer or Permit to Work”
1. Knowledge
In Wold v. Taher, Inc.,341 a food service cashier brought suit against her former
employer for overtime under the FLSA stemming from alleged off the clock work, among
other claims. The plaintiff claimed that she regularly worked more hours than what was
recorded on her timesheet and, to avoid criticism from upper management regarding
overtime, she and her supervisor would “figure out ways to record her hours to avoid
scrutiny.”342 The employer moved for summary judgment, demonstrating that it had paid
the plaintiff for all the overtime she recorded and arguing that it had neither actual nor
constructive knowledge of the unrecorded hours she claimed to have worked. The
district court denied the defendant’s motion, citing several factual issues that precluded
summary judgment. In addition to the plaintiff’s testimony that her supervisor was aware
that her timekeeping was inaccurate, the court pointed to the supervisor’s actual
knowledge that the plaintiff regularly failed to follow the employer’s timekeeping policy
by recording her working hours at the end of each pay period instead of daily as the
policy required.
In Hinterberger v. Catholic Health System,343 the New York district court ruled on
competing motions filed by the plaintiffs and the defendants after conditionally certifying
a class of hourly registered nurses, charge nurses, staff nurses, licensed practical
nurses and respiratory therapists at eleven hospitals, adult homes, and nursing homes
owned by the Catholic Health System (“CHS”) defendants. The case primarily turned on
CHS’s Time and Attendance policy, which required employees to accurately report all
time worked while at the same time automatically deducting a 30 minute meal period for
all employees working a six hour or longer shift. The plaintiffs moved for summary
judgment, arguing that CHS’s automatic meal break deduction policy violated the FLSA
and the New York Labor Law (“NYLL”), and also asked that the NYLL claim be certified
under Rule 23 and that an FLSA class be finally certified. The defendants moved for
summary judgment on certain NYLL claims and moved for decertification of the FLSA
collective action. The court granted the defendants’ motions and denied the plaintiffs’
341
2014 WL 811484 (D.S.D. Mar. 3, 2014). Id. at *8. 343
2014 WL 1278919 (W.D.N.Y. Mar. 27, 2014). 342
90 motions. The court rejected the plaintiffs’ proffer of survey data demonstrating that some
nurses missed meal breaks since there was no evidence showing that they were not
compensated for their time. The court also held that the defendants’ policies and
practices, standing alone, did not demonstrate actual or constructive knowledge of
unpaid work. In addition, the court rejected the plaintiffs’ arguments as insufficient,
including a supposed lack of evidence that employees reported, and received pay for,
interrupted meal periods, and that the lack of a uniform reporting mechanism should
have put the defendants on notice that compensable time would go unreported. The
court also ruled that declarations from putative class members attesting to work
performed during meal periods were insufficient to carry the plaintiffs’ burden on
summary judgment since there was no evidence that the defendants had knowledge of
the uncompensated work. In addition, the court rejected the plaintiffs’ argument that the
defendant had a legal duty to monitor the work place to ensure that employees were
compensated for all work performed. The court also found that a NYLL Rule 23 class
should not be certified, and decertified the FLSA class because the plaintiffs conceded
that CHS’s official policies complied with the FLSA and because they had not identified
any uniform system-wide policy or practice.
In Mohammadi v. Nwabuisi,344 a nurse sued her former employer, an in-home
healthcare provider, alleging overtime and minimum wage violations. The plaintiff
claimed that she worked beyond her regularly scheduled hours during the week and
that she worked approximately five to six hours each weekend on marketing events for
her employer, as well as scheduling or performing provider service visits. Despite the
employer’s written policy prohibiting overtime work without prior written approval, and
the employer’s testimony that it was unaware of the plaintiff’s work, the district court
found that the employer knew or should have known of the work. Ruling in favor of the
plaintiff, a Texas district court imputed knowledge of overtime work to the employer
because, in part, the employer received timecards, indicating that the employee was
clocking more than 40 hours per week. The district court found this knowledge to satisfy
the definition of “employ” under section 203(g) of the FLSA such that the work was
compensable even though the plaintiff had not received written authorization.
In Gulick v. City of Pittston,345 the plaintiff, who worked as a zoning officer, code
enforcement officer, and administrative assistant, sued the defendant municipality for
failure to pay overtime. The defendant filed a motion for summary judgment, claiming
that it did not have actual or constructive knowledge that the plaintiff worked overtime
for which he was not compensated. The defendant claimed that it had a policy requiring
written authorization for working overtime, and that the plaintiff never requested written
authorization or gave notice to the defendant of the hours he worked. The court found
that there was an issue of fact because the plaintiff verbally requested overtime to a
councilman, and informed his supervisor that he needed to show up for work early to
issue construction permits.
344
345
990 F. Supp. 2d 723 (W.D. Tex. 2014). 2014 WL 201099 (M.D. Pa. Jan. 17, 2014). 91 In Gordon v. Kaleida Health,346 health care workers filed a class action complaint
alleging that a health care network’s application of several different timekeeping policies
at its facilities violated federal and state laws. Pursuant to the defendant’s policies, meal
periods were automatically deducted and employees were only paid for work performed
during them when such work was affirmatively reported. The plaintiffs moved for partial
summary judgment on their meal period claims under the FLSA and the New York
Labor Law (“NYLL”), claiming that the defendant had actual or constructive knowledge
that they performed work throughout or during some portion of their meal periods, but
were not paid for their work pursuant to company policy. A district court in New York
denied the plaintiffs’ motion for partial summary judgment.347 The court recognized that
automatic meal deduction policies, and an employer requiring employees to report time
worked during an unpaid meal period, are not per se unlawful.348 The court held that the
defendant raised material issues of fact as to whether it knew or should have known
that the plaintiffs were performing unpaid work because the defendant instructed
employees to report time worked during meal periods and implemented procedures for
reporting work performed during meal periods. The defendant did not have a duty to
make every effort to monitor, audit, or otherwise discover whether employees were
accurately reporting all time worked. Finally, disputed evidence concerning whether
managers observed the plaintiffs working during meal periods raised an issue of fact
with respect to whether the defendant had actual or constructive knowledge that the
plaintiffs performed uncompensated work meal periods.
In Gaines v. K-Five Construction Corp.,349 the plaintiff, a semi-dump truck driver,
brought an unpaid overtime claim against the defendant, a highway paving contractor,
for uncompensated pre-shift time spent inspecting his truck.350 The plaintiff claimed that
the defendant had actual or constructive knowledge of his uncompensated time
because he wrote “pre-trip,” followed by a time that was 15 minutes before his shift
started, at the bottom of his daily time sheets on days when he arrived 15 minutes early
to inspect his truck.351 In addition, a supervisor testified that the plaintiff always arrived
before his shift began, and there was additional evidence that the plaintiff’s supervisors
socialized near his truck before the plaintiff’s shift began. The defendant did not contest
that it had knowledge that the plaintiff arrived at work before his shift began. Instead, the
346
299 F.R.D. 380 (W.D.N.Y. 2014). Id. at 391–98. 348
Besides the plaintiffs’ partial motion for summary judgment, the court also decided the
plaintiffs’ motion for class certification for two classes of claims under the NYLL and the defendant’s
motion for partial summary judgment on several of the plaintiffs’ NYLL claims, arguing that the plaintiffs
were exempt. Gordon, 299 F.R.D. at 383–85. Although it had previously conditionally certified a limited
class under the FLSA, the court denied the plaintiffs’ motion for class certification for several of the
plaintiffs’ NYLL claims. Id. at 398–407. The court granted the defendant’s motion for partial summary
judgment, finding the plaintiffs were exempt from certain wage and overtime under the NYLL. Id. at 387–
91. 349
742 F.3d 256 (7th Cir. 2014). 350
Id. at 259. 351
Id. at 270–71. 347
92 defendant argued it had no knowledge that the plaintiff performed any work before the
start of his shift. A district court in Illinois granted the defendant’s motion for summary
judgment on the plaintiff’s overtime claim, and the plaintiff appealed to the Seventh
Circuit. On appeal, the Seventh Circuit considered whether the plaintiff presented a
genuine issue of material fact as to whether the defendant knew that he performed work
before his shift began. In affirming summary judgment, the appellate court concluded
that the defendant was not obligated to pay the plaintiff for work it had no reason to
know about. There was no evidence that the defendant’s employees actually witnessed
the plaintiff engaged in work before his scheduled start time, or that the plaintiff’s early
arrivals at work indicated that he was working. The fact that supervisors were aware
that the plaintiff arrived at work early did not create an issue of fact because it was
typical for employees to socialize before starting work. The Seventh Circuit also held
that the plaintiff’s notations on his time sheets did not put the defendant on notice
because the notations were ambiguous and were unlikely to have been reviewed during
payroll processing. Finally, the court held that the plaintiff failed to establish an issue of
fact regarding actual or constructive knowledge because the defendant built pre-trip
inspection time into each driver’s shift, and the plaintiff failed to establish a legitimate
reason why he would have performed his inspections prior to the start of his shift.
3. Duty of Management
In Maldonado v. Alta Healthcare Group, Inc.,352 the plaintiff, who was a live-in
care staff member at an assisted living facility, brought an action against her employer
under the FLSA, alleging she was owed overtime for work that she performed during the
night shifts. As a live-in staff member, the plaintiff often was scheduled for night shifts
(in addition to day shifts). During the night shifts, the plaintiff was expected to sleep, but
also expected to respond to any resident issues that arose during the night. The plaintiff
testified that her sleep was interrupted by patient needs on several occasions, and that
she would take notes about these incidents in a “Resident Observation Log” and that
she would call the owner of the company. The owner, however, testified that he did not
recall receiving calls from the plaintiff about these incidents, and he did not review the
“Resident Observation Logs” until he prepared for his deposition in the litigation. The
parties filed cross-motions for summary judgment. In granting the plaintiff’s motion for
summary judgment as to unpaid overtime, the district court concluded that the employer
had constructive knowledge of her overtime work with the “Resident Observation Logs”
(which the employer was required to maintain by law), and that the employer could have
discovered her overtime work with reasonable diligence. The district court further found
that the owner breached his duty to inquire into the conditions prevailing in his business,
and the employer could not simply plead ignorance as to actual work occurring during
night shifts.
352
2014 WL 1661265 (M.D. Fla. Mar. 26, 2014). 93 In Oyarzo v. Tuolumne Fire District,353 a former firefighter brought an FLSA
action against his employer, claiming unpaid overtime for off-the-clock work (and in the
same lawsuit, he and another firefighter brought an assortment of other employmentrelated claims against the employer). The employer argued that it did not know about
the plaintiff’s off-the-clock hours, as it relies on its employees to accurately record all
hours worked. In denying the employer’s motion for summary judgment, the district
court relied on the plaintiff’s evidence that members of the employer's board of directors
had knowledge that he was working additional hours. Specifically, members of the
board recalled conversations with the plaintiff that he was working “all the time” and he
was “there 24/7,” and that this was “going to burn him out really fast.” The district court
ruled that an employer is responsible for compensating employees for hours for which
the employer has knowledge and also for hours that “reasonable diligence would have
revealed that the employee was not being paid for that overtime.” Based on the
plaintiff’s conversations with board members, the district court concluded that the
employer could have acquired knowledge of the plaintiff's unpaid overtime hours with
reasonable diligence. Therefore, the court found that the plaintiff presented sufficient
evidence on his FLSA claim to survive summary judgment.
B. Waiting Time
1. On Duty
In Gordilis v. Ocean Drive Limousines, Inc.,354 an FLSA action for unpaid wages,
the plaintiffs moved for summary judgment on their claim that they were entitled to
compensation for time spent waiting to receive work assignments. The only evidence
the plaintiffs advanced in support of their motion was their assertion that the defendants
did not give them work assignments upon their return to the defendant’s premises. They
argued that, as a result, they were required to wait for lengthy periods between jobs and
could not leave the premises. However, the defendants submitted evidence that some
plaintiffs did not have to wait for work, and others were given work when they
complained about waiting. The exact time that any plaintiff had to wait was never
established. Additionally, the plaintiffs submitted no evidence that they were not
permitted to take meal or rest breaks off the defendants’ premises. The court concluded
that there were genuine issues of fact regarding plaintiffs' free time and their degree of
independence during that time. As a result, the plaintiffs’ motion for summary judgment
was denied.
3. On-Call Time
In Muan v. Vitug,355 the plaintiff, who worked at a residential care facility with his
wife, brought an FLSA lawsuit against his employer, claiming unpaid wages for time
353
955 F. Supp. 2d 1038 (E.D. Cal. 2013). 2014 WL 2214289 (S.D. Fla. May 28, 2014). 355
2014 WL 1410209 (N.D. Cal. Apr. 11, 2014). 354
94 spent working at the facility. The plaintiff and his wife were the only two employees at
the facility, which was home to seven mentally disabled individuals. Because the facility
provided full services, an employee was required to be at the care home 24 hours a
days. Either plaintiff or his wife spent the vast majority of the time in question on the
premises. The owners of the facility argued that plaintiff and his wife resided on the
property and had agreed to an arrangement under which the owners were only required
to pay plaintiff for eight hours of work each day. The plaintiff, however, contended that
he did not reside on the premises and did not agree to any such arrangement. Instead,
the plaintiff argued that he was not allowed to leave the premises, and, therefore, he
was entitled to payment for every hour he was at the facility, including the time during
which he was asleep. At a bench trial, a California district court found that the plaintiff
was entitled to full payment for all time spent on-call, as the plaintiff was not permitted to
leave the premises during his on-call hours, and the parties did not have an agreement
to deduct sleep time.
In Watson v. Surf-Frac Wellhead Equipment Company,356 hourly employees of
the defendant brought overtime claims under the FLSA stemming from, among other
things, uncompensated time spent on-call. The employer moved for partial summary
judgment, seeking a ruling that its on-call policy did not result in compensable work. The
employer’s on-call policy required only that the employee (i) be accessible by cell
phone, (ii) not be under the influence of drugs or alcohol, and (iii) be within reasonable
proximity to work. The plaintiffs did not dispute the description of the policy, but pointed
out that it applied to all employees on a continuous (i.e. 24-hours per day / 7-days per
week) basis. The court denied the employer’s motion. Though it acknowledged that the
Eighth Circuit had previously held a similar policy did not result in compensable work,357
the court distinguished that case and was unwilling to extend it. Because of the history
of call-outs and the fact that the employees were “always” subject to being on-call,358
the court found that factual disputes existed as to whether the policy was so restrictive
as to result in compensable work.
In Jones-Turner v. Yellow Enterprise Systems, LLC,359 ambulance drivers and
dispatch operators brought claims for uncompensated meal breaks. The employer did
not have set meal break periods, but, instead, required employees to eat lunch during
their free time in between ambulance runs. The employer then automatically deducted
30 minutes of paid work time per shift. The plaintiffs argued that the meal breaks were
compensable time because they were required to remain on call throughout the breaks.
In granting the defendant’s motion for summary judgment, the district court found that
employee meal breaks are not compensable merely because the employee is required
to remain on call. Instead, the court held that the plaintiffs must show that they were
either engaged in the performance of substantial duties during their lunch break, or that
356
2013 WL 5524122 (E.D. Ark. Oct. 3, 2013). Id. (citing Reimer v. Champion Healthcare Corp., 258 F.3d 720, 725 (8th Cir. 2001)). 358
Id. at *4. 359
2014 WL 1320008 (W.D. Ky. Mar. 31, 2014). 357
95 the time spent on break was predominantly for the benefit of the employer. While the
plaintiffs argued that these tests were satisfied because the employer promulgated strict
regulations regarding how employees were permitted to spend their lunch break, the
court concluded that the plaintiffs failed to demonstrate that the regulations remained
applicable during meal breaks.
In Sperry v. Securitas Security Services, USA, Inc.,360 a security guard claimed
she was underpaid and not paid for meal and rest breaks under California and federal
law. The employer filed for summary judgment.
The security guard worked 12 and 24-hour shifts. For her 24-hour shifts, she was
paid for 20 hours, and the remaining four hours was considered sleep or down time.
During this four-hour period, the employee was allowed to do as she wished, but was
required to respond to emergencies within two minutes. For the time responding to the
emergencies, she was paid double time.
Under 29 U.S.C. § 203(o) of the FLSA, if the employee is “engaged to wait,” the
time is compensable, but if the employee is “waiting to be engaged,” the time is not
compensable. The two most important factors are 1) the extent to which the employee
is free to engage in personal activities, and 2) whether there are agreements between
the parties. The security guard was required to remain on the premises where the work
was being performed and was required to respond to an emergency within two minutes;
thus, her ability to engage in personal activities was limited. The employee signed an
agreement that the four-hour period would not be compensable; however, while such an
agreement weighed in the employer’s favor, it is not controlling.
The district court looked to 29 C.F.R. § 785.22, which the court noted was not
binding. Section 785.22 provides that when an employee is on duty 24 hours or more,
the employee and employer can agree to a non-compensable period of not more than
eight hours for sleep; however, the regulation is only applicable when the employee has
an opportunity of a minimum of five hours of uninterrupted sleep. Since the security
guard did not have the opportunity to have five hours of uninterrupted sleep, summary
judgment was denied on the employer’s claim that the four hours was not compensable.
C. Rest and Meal Periods
1. Rest Periods
In Hayes v. Greektown Casino, LLC,361 former security officers claimed that their
employer violated the FLSA by not compensating them for time spent attending pre-shift
roll calls and collecting and returning equipment before and after their shifts. The
plaintiffs moved for conditional class certification. The defendant moved for summary
judgment based on the affirmative defense of “set-off.” The undisputed facts
demonstrated that the plaintiffs received paid breaks that exceeded the amount of
360
361
2014 WL 1664916 (N.D. Cal. Apr. 25, 2014). 2014 WL 1308839 (E.D. Mich. Mar. 31, 2014). 96 uncompensated time for which the plaintiffs claimed they should have been paid. Before
deciding whether to recognize the set-off defense, however, the Michigan district court
analyzed whether the breaks were compensable. The parties agreed that the Sixth
Circuit standard for determining whether employees are entitled to compensation for
breaks of 30 minutes or longer is whether the “employee can pursue his or her mealtime
adequately and comfortably, is not engaged in the performance of any substantial
duties, and does not spend time predominantly for the employer’s benefit.”362 The
defendants argued that the breaks received by the plaintiffs met this standard. The
plaintiffs responded by noting that the employer expected the security officers to
respond to radio calls during the break, required them to remain within a half-mile
radius, and mandated that they obtain permission from a supervisor to leave the
premises. On this record, the court found that there were disputed issues of fact as to
the extent of the plaintiffs’ freedom during breaks. Consequently, the defendant’s
summary judgment motion was denied and the court did not reach the set-off question
(other than to note in dicta that the argument was well taken). The court also denied the
plaintiffs’ motion to conditionally certify a class, finding that in the event that the court
found that the break time could offset the uncompensated work time, the putative class
members would likely change based on which individuals could establish that their
breaks were interfered with to enough of a degree such that their breaks were primarily
for their employer’s benefit.
2. Meal Periods
b. Appellate Cases Finding That a Meal Period Is Not Compensable
In Jones-Turner v. Yellow Enterprise Systems, LLC,363 ambulance drivers and
dispatch operators brought claims for uncompensated meal breaks. The employer did
not have set meal break periods, but, instead, required employees to eat lunch during
their free time in between ambulance runs. The employer then automatically deducted
30 minutes of paid work time per shift. If an employee was unable to take a meal break,
he or she was required to submit a “missed lunch slip,” after which time management
determined whether the employee should be compensated. Regardless of the “missed
lunch slips,” the employer also kept a daily “crew log” which reflected whether the
employee took a meal break during his or her shift. The plaintiffs argued that the
defendant’s policy of requiring “missed lunch slips” was unreasonable and that the
defendant had an affirmative obligation to cross check the “missed lunch slips” against
the “crew logs.” Since the defendant failed to do so, the plaintiffs claimed that they
should be compensated for all meal breaks they were unable to take during times of
above-average call volume. In granting the defendant’s motion for summary judgment,
the district court found that because employees previously submitted accurate “missed
lunch slips,” the employer had no reason to know of any missed lunches on days when
no slips were submitted. The court was not persuaded that the employer was required
362
363
Id. at *4 (quoting Hill v. United States, 751 F.2d 810, 814 (6th Cir. 1984)). 2014 WL 1320008 (W.D. Ky. Mar. 31, 2014). 97 to “cross check” the slips against the crew logs, holding that the employer was only
required to establish a reasonable process for employees to report uncompensated
work time and that the “missed lunch slip” policy met this test. Thus, the employer was
not required to pay employees if they failed to follow the process.
In Naylor v. Securigard, Inc.,364 a group of security guards brought an FLSA
lawsuit against their employer, alleging unpaid overtime for meal breaks. During each
shift, the plaintiffs were provided with two, unpaid 30-minute meal breaks, and they had
the discretion to either use both meal breaks concurrently or separately throughout their
workday. The plaintiffs were required to leave their security post during each meal
period; however, they had to drive to one of the employer’s six locations within the
Naval Air Station's premises to take their meal breaks. Moreover, the plaintiffs were
required to wear their weapons, uniforms, bullet proof vests, and gun belts during meal
breaks. The plaintiffs alleged that the employer violated the FLSA by not compensating
them for the time spent driving to one of the six locations for their meal breaks, as
required by the employer. According to the plaintiffs, this driving time deprived the
plaintiffs of their full 30-minute meal break. The employer filed a motion for summary
judgment, and the court granted summary judgment in favor of the employer. The
district court found that the driving time was not compensable work time, as the plaintiffs
were completely relieved of their duties during meal breaks, their meal breaks were not
interrupted by work demands, the driving requirement was not a job duty, and the
plaintiffs were allowed sufficient time to eat. The district court also found that the driving
time was too insubstantial to be compensable. In applying the “predominant benefit
test,” the district court held that the driving requirement was not “predominantly” for the
benefit of the employer, but rather it was for the benefit of the employees. Accordingly,
the district court granted summary judgment in favor of the employer.
In Babcock v. Butler County,365 prison corrections officers sued their prison
employer for uncompensated meal breaks. The officers received a one-hour meal break
during each shift but were paid for only 45 minutes of the break. The officers alleged
that because they were required to remain within the prison, in uniform, and on-call
during their breaks, the meal period predominantly benefitted the employer and was
therefore not a bona fide meal period that could be non-compensable under 29 C.F.R. §
785.19. In granting the defendant’s motion to dismiss, the court recognized that
although the text of the applicable regulation requires that an employee be “completely
relieved from duty” for a meal period to be non-compensable, most courts resolving the
compensability question by applying the “predominant benefits test” and determine
whether employees use meal periods primarily for their own benefit or for the benefit of
their employer.366 Applying this test, the court ruled the employer did not predominately
benefit from the meal period simply because the officers could not leave the prison
building and had to remain uniformed and on-call, particularly considering that the
364
2014 WL 1882442 (S.D. Miss. May 12, 2014). 2014 WL 688122 (W.D. Pa. Feb. 21, 2014). 366
Id. at *4–5. 365
98 officers could generally pass their breaks at their leisure anywhere within the premises
they so desired.367 Accordingly, the employer’s policy of compensating for only 45
minutes of the one-hour meal period complied with the regulation, and the remaining 15
minutes was non-compensable.368
In Castaneda v. JBS USA, LLC,369 employees of a beef processing plant alleged
that because the time required to don and doff work clothing and equipment drastically
shortened their allotted 30-minute lunch break, the lunch break did not qualify as a noncompensable bona fide meal period under 29 C.F.R. § 785.19. In granting the
employer’s motion to dismiss on reconsideration of a previous order, the court relied on
three bases to conclude that the lunch break was an uncompensable bona fide meal
period. First, the court noted that the employees’ collective bargaining agreement
(“CBA”) provided for a non-compensable 30-minute lunch break.370 The court reasoned
that if the union, which had intervened in the case, wanted to dispute the lunch-break
provision in the CBA, it easily could have done so in subsequent bargaining because it
knew of the donning and doffing procedures at issue.371 The court also noted that its
deferring to the CBA’s terms tracked the Supreme Court’s language in Sandifer v.
United States Steel Corp. suggesting that issues of compensation related to donning
and doffing and other routine procedures are best left to the collective-bargaining
process rather than to fact-intensive judicial inquiry.372 Second, the court ruled that
under the “predominant benefits test,” which requires courts to determine whether
employees use meal periods primarily for their own benefit or for the benefit of their
employer, the donning and doffing procedures were mutually beneficial to both
parties.373 Third, the court found that the time spent donning and doffing was de minimis
and therefore non-compensable.374
D. Sleeping Time and Certain Other Activities
2. Duty Period of 24 Hours or More
In Galloway v. George Junior Republic,375 the plaintiff, a counselor for the
defendant youth residential treatment facility, claimed he was not compensated for his
sleep time because he was required to use inadequate sleep facilities provided by the
defendant. The plaintiff signed an agreement with the defendant providing that he would
be provided with two unpaid eight-hour sleep periods if he worked 52 hour on-duty
367
Id. at *8–9. 368
Id. at *10. 369
2014 WL 1796707 (D. Colo. May 6, 2014). Id. at *2. 371
Id. 372
Id. at *3 (citing Sandifer v. U.S. Steel Corp., 134 S. Ct. 870 (2014)). 373
Id. 374
Id. at *4–5. 375
2013 WL 5307584 (W.D. Pa. Sept. 19, 2013). 370
99 periods.376 The defendant provided the plaintiff with a private bedroom furnished with a
bed and an attached private bathroom.377 However, the plaintiff claimed that he never
received eight hours of uninterrupted sleep during each sleep period due to the heat,
noise, smell and clutter in the rooms, and thus that he should have been paid for some
or all of the two eight-hour sleep periods. In granting the defendant’s motion for
summary judgment, a district court in Pennsylvania concluded that the sleeping facilities
were adequate; that the heat, noise, smell and clutter amounted to minor annoyances
that did not prevent the plaintiff from getting at least six hours of uninterrupted sleep
each night; that the nature of the plaintiff's job did not require him to be ready for
frequent nighttime interruptions (in fact, he was completely relieved of duties); and that
the plaintiff did not argue or present evidence that he was told not to turn in overtime for
any sleep interruptions.378
In Sperry v. Securitas Security Services, USA, Inc.,379 a security guard claimed
she was underpaid and not paid for meal and rest breaks under California and federal
law. The employer filed for summary judgment. The security guard worked 12 and 24hour shifts. For her 24-hour shifts she was paid for 20 hours, and the remaining four
hours was considered sleep or down time. During this four-hour period, the employee
was allowed to do as she wished, but was required to respond to emergencies within
two minutes. For the time responding to the emergencies, she was paid double time.
Under 29 U.S.C. § 203(o) of the FLSA, if the employee is “engage to wait,” the
time is compensable, but if the employee is “waiting to be engaged,” the time is not
compensable. The two most important factors are 1) the extent to which the employee
is free to engage in personal activities, and 2) whether there are agreements between
the parties. The security guard was required to remain on the premises where the work
was being performed and was required to respond to an emergency within two minutes;
thus she was limited to engage in personal activities. The employee signed an
agreement that the four-hour period would not be compensable; however, while such an
agreement weighed in the employer’s favor, it is not controlling. The district court also
looked to 29 C.F.R. § 785.22, which the court noted was not binding. Section 785.22
allows that when an employee is on duty 24 hours or more, the employee and employer
can agree to a non-compensable period of not more than eight hours for sleep;
however, the regulation is only applicable when the employee has an opportunity of a
minimum of five hours of uninterrupted sleep. Since the security guard did not have the
opportunity to have five hours of uninterrupted sleep, summary judgment was denied on
the employer’s claim that the four hours was not compensable.
3. Employee Residing on Employer’s Premises or Working at Home
376
Id. at *1–2. 377
Id. at *2. 378
Id. at *10–15. 379
2014 WL 1664916 (N.D. Cal. Apr. 25, 2014). 100 In Hassinger v. Sun Way Enterprises, Inc.,380 the plaintiff, an employee of a
convenience store and gas station, filed a lawsuit alleging that his employer failed to
properly pay minimum wage and overtime. The plaintiff, who lived at the convenience
store pursuant to an agreement with the defendant, often ate meals with the family of
the store’s owner and was permitted to eat any food stocked in the store. The plaintiff
was paid in cash and the defendant did not keep records of the hours that he worked for
the first several years of his employment. The parties filed cross motions for summary
judgment, with the defendant arguing that the parties reached a “reasonable
agreement” regarding the plaintiff’s compensation within the purview of 29 C.F.R. §
785.23 and that the compensation agreement should thus be accepted. The defendant
also argued that, pursuant to 29 C.F.R. § 531.27(b), the reasonable cost of the plaintiff’s
board, lodging and other facilities furnished should be considered when assessing the
defendant’s compliance with the FLSA’s minimum wage and overtime requirements.
The court denied the defendant’s motion for summary judgment because of a factual
dispute concerning the number of hours that the plaintiff worked and because the
defendant provided no evidence of the value of the lodging and the meals the plaintiff
received. The court held that 29 C.F.R. § 785.23 related to the calculation of the hours
worked by an employee, rather than the applicability of the FLSA’s overtime provisions.
E. Preparatory and Concluding Activities
2. Donning and Doffing
In Mitchell v. JCG Industries, Inc.,381 employees at a poultry processing plant
brought an action against their employer, seeking overtime under the FLSA for time
spent donning and doffing their required sanitary gear before and after their meal
breaks, which included a sterilized jacket, plastic apron, cut-resistant gloves, plastic
sleeves, earplugs, and a hairnet. The employees argued that the donning and doffing
time is work time in excess of their regular 40-hour workweek. The employees claimed
they spent 10-15 minutes during the 30-minute meal break donning and doffing;
however, the employer claimed the time was more like two or three minutes. The district
court granted summary judgment in favor of the employer. The Seventh Circuit affirmed
summary judgment in favor of the employer. The Seventh Circuit noted that the court
staff bought the clothes at issue, and they videotaped themselves donning and doffing
the gear to see how long it could take the employees to don and doff similar gear. The
videotape revealed that the average time it took to remove the clothes was 15 seconds
and the average time to put the clothes on was 95 seconds, which was a total of 110
seconds (less than two minutes). The Seventh Circuit cautioned that the videotaped
experiment was not evidence, but rather information that confirmed the common sense
intuition that donning and doffing a few simple pieces of clothes and equipment did not
take half of the employees’ 30-minute meal break. The Seventh Circuit held that the
380
381
2013 WL 6175816 (M.D. Fla. Nov. 22, 2013). 745 F.3d 837 (7th Cir. 2014). 101 time spent changing was de minimis, and therefore, the plaintiffs were not entitled to
compensation for that time.
In DeKeyser v. Thyssenkrupp Waupaca, Inc.,382 foundry workers brought
overtime claims for uncompensated time spent showering and changing clothes at the
employer’s facility. The employer trains its employees about the hazards of the work
environment, including those associated with certain chemicals and dust to which some
workers are exposed, and recommends (but does not require) that employees shower
and remove their uniforms and Personal Protective Equipment on-site. The district court
concluded that showering and changing clothes did not constitute compensable “work”
under the FLSA, because these activities are neither required by law or by the
employer. In addition, the district court concluded the activities were not required by “the
nature of the work,” drawing a negative inference from the fact that OSHA had
promulgated a standard for hazardous material exposure that did not mandate changing
clothes and showering after work. The Seventh Circuit reversed, holding that the district
court erred in drawing a negative inference from the absence of an OSHA standard
requiring foundry workers to shower and change on-site. The Seventh Circuit further
concluded that the district court had ignored factual evidence and expert testimony
offered to establish the compensability of the time under the FLSA.383
In Abadeer v. Tyson Foods, Inc.,384 meat processing plant employees sued their
employer for uncompensated doffing and donning time at the beginning and end of their
meal periods. The employees received an uncompensated 30-minute meal period each
shift but were required to spend several minutes of that period doffing and donning their
uniforms, sanitizing, and waiting before ultimately taking their break. The employees
moved for partial summary judgment, arguing that the employer was liable under the
FLSA for compensable work performed at the “bookends” of the meal period.385 In a
previous memorandum arising out the same litigation,386 the trial court had held that
time spent on such activities occurring at the beginning and end of the workday was
compensable under the FLSA. The court therefore granted the employees’ partial
motion for summary judgment, concluding that the employees’ “bookend” theory was
legally cognizable and the time spent on these activities before and after the meal
period was also compensable.387
In Abadeer v. Tyson Foods, Inc.,388 meat processing plant employees sued for
uncompensated donning and doffing time at the beginning and end of the workday. The
382
735 F.3d 568 (7th Cir. 2013) The Seventh Circuit also admonished that courts cannot avoid discovery or expert testimony
merely because such discovery or testimony may be costly, time consuming or difficult to understand. 384
2014 WL 1404836 (M.D. Tenn. Apr. 10, 2014). 385
Id. at *1. 386
Abadeer v. Tyson Foods, Inc., 975 F. Supp. 2d 890, 906 (M.D. Tenn. 2013). 387
Abadeer, 2014 WL 1404836, at *6, *13. (M.D. Tenn. Apr. 10, 2014). 388
975 F. Supp. 2d 890 (M.D. Tenn. 2013). 383
102 plant required the workers to put on frocks and other clothing and engage in an
extensive sanitizing regimen before arriving at their work stations; there was a similarly
extensive regimen after the end of their shifts. The employees challenged the
employer’s policy of failing to compensate them for these pre-shift or post-shift
activities.389 The court granted the employees’ motion for partial summary judgment,
finding that the donning and doffing time was primarily for the employer’s benefit, and
was “integral and indispensable part[s] of the principal activities” for which the
employees were employed because these activities were required by the employer and
necessary for the employees to accomplish their work.390
In Harvey v. AB Electrolux,391 the plaintiffs, former employees at the defendant’s
laundry appliances plant, sued their former employer for failing to compensate them for
time spent donning personal protective equipment (“PPE”), walking to their workstations
after donning PPE, and washing their gloves and arm guards at home. The plaintiffs
brought claims under both the FLSA and the Iowa Wage Payment and Collections Act.
Both the plaintiffs and the defendants moved for partial summary judgment. The plant
where the plaintiffs worked was unionized and had been covered by a collective
bargaining agreement (“CBA”) for 50 years. The plant’s consistent practice was not to
pay employees for time spent donning PPE, and the collective bargaining agreement
contained no reference to donning or doffing PPE, clothes changing or PPE
maintenance. However, although the applicable bargaining unit had filed hundreds of
grievances during the relevant time period, no grievance had ever been filed seeking
payment for time spent donning PPE. Based on these facts, the defendant argued that
the donning claims were barred by § 203(o). The Iowa district court agreed. First, the
court determined that the PPE, consisting of gloves, arm guards, aprons, ear plugs and
safety glasses, constituted “clothes.” Based on Supreme Court guidance, the court
found that the gloves, arm guards and aprons fell within § 203(o)’s definition of
“clothes,” whereas the earplugs and safety glasses did not. Next, the court determined
that donning the clothes required considerably more time than donning the non-clothing
items. Accordingly, the court found that because the vast majority of time was spent
donning “clothes,” the entire period spent donning the PPE qualified as time spent
changing clothes for purposes of § 203(o). Next, the court concluded that the
defendant’s “custom or practice” of not paying employees for donning PPE was an
implied CBA term based on the bargaining unit’s prolonged period of acquiescence.
Thus, the court agreed that § 203(o) barred the donning claim and granted the
defendant’s motion for partial summary judgment.
In Sandifer v. United States Steel Corp.,392 steelworkers brought a collective
action overtime claim for uncompensated pre- and post-shift time for donning and
doffing protective gear that the workers were required to wear because of hazards of
389
Id. at 899. 390
Id. at 902–04 (quoting IBP, Inc. v. Alvarez, 546 U.S. 21, 29–30 (2005)). 2014 WL 1696134 (N.D. Iowa Mar. 28, 2014) 392
134 S. Ct. 870, 187 L.Ed. 2d. 729 (2014). 391
103 the job. The employer contended that the time was not compensable under its collective
bargaining agreement with the steelworkers’ union. 29 U.S.C. § 203(o) provides that
parties can collectively bargain over whether “time spent in changing clothes . . . at the
beginning or end of each workday” must be compensated. The district court granted
summary judgment in holding that the donning and doffing constituted “changing
clothes” under § 203(o) and to the extent that other items could not be considered
“clothes,” the time spent on donning and doffing these items was de minimis and not
compensable. The Seventh Circuit affirmed.
The United States Supreme Court subsequently affirmed the decision. The Court
interpreted the common meaning of “changing clothes” in arriving at its decision.
“Clothes” “denotes items that are both designed and used to cover the body and are
commonly regarded as articles of dress.” The Court noted that 29 U.S.C. § 203(o)
makes it clear that “clothes” can be articles that are integral to the job, and for which
there would be no requirement to pay compensation for donning and doffing those
items. The Court noted that the word “changing” does not necessarily mean taking off
and replacing, but could include altering one’s attire so that adding additional items of
clothing may come within the statutory definition. Thus, the donning and doffing of
protective gear would come within the statutory definition of 29 U.S.C. § 203(o).
However, the Court thought that the time spent with safety glasses and earplugs should
not be considered under the de minimis doctrine, but that the time spent on the relative
activities should be viewed as a whole, and if the vast majority of time was spent
donning and doffing “clothes,” the time spent putting on other items for the entire period
should qualify under 29 U.S.C. § 203(o). With respect to the respirators, the Court
deferred to the district court when it noted that respirators “are kept and put on as
needed in job locations” which would make the time spent donning and doffing them
part of the regular workday and not within the applicability of 29 U.S.C. § 203(o).
7. Other Preliminary/Postliminary Activities
In Hall v. Guardsmark, LLC,393 the plaintiffs, who worked as security guards,
sued the defendant for failure to pay overtime wages allegedly earned while washing
their uniforms off the defendant’s premises. The defendant filed a motion for summary
judgment, claiming that time spent washing uniforms was not compensable under the
FLSA because it was neither a preliminary nor a postliminary activity. In opposition, the
plaintiffs argued that they were required to wear uniforms as part of their job, that the
uniforms had to be washed, and that they should thus be paid for that time. The court
granted summary judgment, holding that the defendant was not liable because it did not
require the plaintiffs to wash their uniforms at the workplace, and thus, this activity was
not integral or indispensable to the plaintiffs’ principal activity.
F. Lectures, Meetings, and Training Programs
393
2013 WL 4855328 (W.D. Pa. Sept. 11, 2013). 104 In Nance v. May Trucking Co.,394 two truck drivers brought an FLSA lawsuit
against their former employer, claiming unpaid wages for time spent at orientation. The
employer argued that they were not entitled to compensation for time spent at
orientation because they were not employees at that time. The parties filed crossmotions for summary judgment. In granting the employer’s motion for summary
judgment as to the issue of orientation pay, the district court reasoned that the plaintiffs
were not employees under the FLSA. In making its decision, the district court
considered these two factors: (1) whether the employer received an “immediate
advantage from the plaintiffs’ work at the orientation; and (2) whether there was an
express or implied agreement for compensation. The district court found that the
plaintiffs did not haul any loads for the employer and the employer’s regular employees
were not displaced during orientation, and that there was no agreement that the
plaintiffs would be paid for time at orientation. In light of these facts, the district court
found that the employer did not receive any immediate advantage as a result of the
plaintiffs’ attendance at orientation, and thus, the plaintiffs were not entitled to
compensation for time spent at orientation.
1. Involuntary Attendance
In Misewicz v. City of Memphis, Tennessee,395 a group of firefighters brought an
FLSA action against their employer (the City of Memphis), seeking overtime
compensation for hours spent attending training for their paramedic certification, as
required by the City. The parties filed renewed cross-motions for summary judgment on
the issue of liability. The district court granted the City’s motion for summary judgment
based on the exception under 29 C.F.R. § 553.226(b)(1) in that paramedic training was
“required by law for certification of public and private sector employees within a
particular governmental jurisdiction.” The district court found that the plaintiffs were
subject to the City’s policy requiring paramedic training for all employees hired after
October 29, 2007, and that the plaintiffs (other than the plaintiffs who were terminated or
resigned for failure to complete the training) performed work as paramedics during the
normal course of their duties as firefighters. Although the firefighters argued, in part, that
Tennessee law does not require firefighters to be certified as paramedics, the district
court found that they were not simply hired to be firefighters, but rather, they were hired
to perform work as both firefighters and paramedics (and that they, in fact, performed
both types of work).
G. Travel Time
1. Preliminary and Postliminary Travel
In Colella v. City of New York,396 tradesmen employed by the Building and
394
2014 WL 199136 (D. Or. Jan. 15, 2014). 2013 WL 6780532 (W.D. Tenn. Dec. 19, 2013). 396
986 F. Supp. 2d 320 (S.D.N.Y. 2013). 395
105 Maintenance Division (“BMD”) of the Fire Department of New York (“FDNY”) brought
suit for unpaid overtime, seeking compensation under the FLSA for time spent: (1)
driving their equipment-filled FDNY utility vehicles between their homes and work
locations, (2) en route to either worksites or their homes ensuring the security of the
tools, materials and equipment in their vehicles, (3) inspecting their vehicles each
morning and after they returned home from work, and (4) receiving or returning calls or
pages from their supervisors regarding work assignments. The FDNY had a policy
wherein employees had the option of using the FDNY vehicle to travel to and from the
worksite; if they chose to do so, they acknowledged that such travel was noncompensable. The district court ruled that the Portal-to-Portal Act and the Employer
Commuter Flexibility Act (“ECFA”) expressly exempted the commuting time from the
FLSA. The court concluded that transporting equipment in the FDNY vehicles was not
an integral part of the plaintiffs’ jobs because they were tradesmen,397 not truck drivers;
and that the ECFA expressly exempted the commute time because they were using the
vehicles to travel within the normal commuting area. The court also rejected the
plaintiffs’ arguments that they should be compensated for the commute time because
they were subject to the FDNY’s strict rules when operating the vehicles or because
they claimed to drive difficult and dangerous vehicles not normally used for commuting.
Finally, the Court concluded that the remainder of the activities claimed by the plaintiffs
were incidental to their commutes, de minimis, and thus not compensable.
In Perkins v. Rogers Group, Inc.,398 a dump truck driver filed suit against his
former employer alleging that he was wrongfully discharged for complaining about
nonpayment of wages for his travel time in violation of the FLSA and state common law.
With respect to his FLSA claim for travel time wages, the plaintiff alleged that he should
have been paid for the hours that he was transported in the employer’s van to a work
site in Jamestown, Tennessee.399 The employer furnished a van as a courtesy for dump
truck drivers who wanted to ride to work instead of driving their personal vehicles
because of the cost of gas and other expenses associated with the use of their own
vehicles. No employee was forced to ride in the van and the employer did not consider
the plaintiff to be “on the job” until he reached the work site. The district court found that
under the Portal-to-Portal Act,400 the plaintiff was not entitled to pay for his travel to a job
site and granted the employer’s motion for summary judgment on the travel
compensation claim.401 The plaintiff was not forced to ride in the van and admitted that
he would not be entitled to travel time pay if he had driven his own vehicle to the work
site.402 Moreover, the plaintiff did not perform any work for the employer before or during
the trips to and from the work site and did not receive any instructions or other
397
Carpenters, electricians and cement masons. 2013 WL 6119076 (E.D. Tenn. Nov. 21, 2013). 399
Id. at *7. 400
29 U.S.C. § 254(a)(1). 401
Id. at *8. Under the Portal-to-Portal Act, “employees are entitled to compensation that is a
principal activity of the employee.” Id. 402
Id. 398
106 information before boarding the van that “was integral or indispensable to his work
driving a dump truck in Jamestown.”403 Therefore, the court concluded that the plaintiff
had presented no evidence that his travel time to and from the work site in the
employer’s van was a principal activity of the employee that was compensable under
the FLSA.404
3. Overnight Travel
In Bassett v. Tennessee Valley Authority,405 a federal district court in Kentucky,
following numerous decisions in other courts and consistent with a significant number of
secondary legal sources, found that cable technicians that sometimes traveled outside
of their normal 10-hour work period were not entitled to overtime compensation for
those hours under the FLSA. The court issued this ruling upon a request by the parties
to clarify certain legal issues that were holding up settlement negotiations. The
technicians argued that the language in 29 C.F.R. § 785.39, stating that “the Divisions
will not consider as work that time spent in travel away from home or outside regular
working hours as a passenger on [a] . . . boat, train or automobile,” implied that the DOL
considered any time spent as a driver compensable work time.406 The district court
rejected this contention, finding that § 785.39 explicitly excludes any time spent
traveling away from home, on work days and non-work days, that occurs outside the
hours the employees regularly work on work days. In reaching this decision, the district
court determined that the purpose of the statement that travel time is not compensable if
an employee is riding on a common carrier is an exception to the general rule that travel
time during working hours is always compensable; it does not create a different rule that
an employee must be compensated for travel in which he drives himself during nonworking hours.407
H. Other Situations
3. Civic and Charitable Work
In Palar v. Blackhawk Bancorporation, Inc.,408 the plaintiff, a junior loan officer of
a bank, sought to recover overtime wages from the bank for the time he spent
volunteering as a high school baseball coach for a local high school. After the bank
moved for summary judgment, the district court determined that the bank had no
obligation to pay the plaintiff for the time he spent coaching because the plaintiff was not
an employee of the bank during the time he spent coaching. The court noted that there
was no reasonable expectation that the bank would compensate the plaintiff for
403
Id. 404
Id. 405
2013 WL 2902821 (W.D. Ky. 2013). Id. at *7–8. 407
Id. at *10–11. 408
2013 WL 5366124 (C.D. Ill. Sept. 25, 2013). 406
107 coaching and that the plaintiff’s coaching had nothing to do with banking, other than
providing the bank with an incidental reputational boost. The court recognized that the
bank allowed the plaintiff to leave work early to coach, without losing any pay or
vacation time. However, the court declined to find that the bank’s policies encouraging
volunteerism required the bank to pay the plaintiff for the time he spent coaching. Thus,
the court granted summary judgment in favor of the bank.
V.
Recording Working Time
In Watson v. Surf-Frac Wellhead Equipment Company,409 hourly employees of
the defendant brought overtime claims under the FLSA stemming from the alleged
unauthorized deductions from wages. The employer moved for partial summary
judgment, which the court denied. Citing frequent instances where the employer’s
timekeeping systems had malfunctioned, and examples where the defendant had failed
to pay the employees for all of the time they had reported, the district court found that a
reasonable jury could conclude that the employer’s timekeeping system did not
accurately reflect the actual hours worked by the plaintiffs and that the employer took
unauthorized deductions.
In Solis v. Cascom, Inc.,410 an Ohio district court determined whether cable
installers were entitled to back wages under the FLSA after a prior determination that
they were employees and not independent contractors. The employer kept no record of
hours worked. The DOL prepared a wage calculation and used the hours testified to by
the installers at the liability phase of the trial, and made a calculation as to wages
earned for regular time and overtime. For those installers who did not testify, the DOL
made a calculation based upon averages given by the installers who did testify. The
employer and owner disputed the calculations presented by the DOL, but in providing
alternative calculations, the employer and owner relied on evidence that lacked
foundation. In adopting the DOL’s calculations, the district court noted that denying
damages to the installer based upon an inexact calculation would be a perversion of
justice, and ordered the employer and owner to pay damages based upon the Secretary
of Labor’s calculations, plus liquidated damages.
B. The De Minimis Doctrine
2. Application of the De Minimis Doctrine
d. Cases Finding Time Not De Minimis
In Rikard v. U.S. Auto Protection, LLC,411 the plaintiffs, sales representatives,
sought to recover unpaid overtime wages under the FLSA from their employer, a call
409
2013 WL 5524122 (E.D. Ark. Oct. 3, 2013). 2013 WL 4537109 (S.D. Ohio Aug. 27, 2013). 411
2013 WL 5671342 (E.D. Mo. Oct. 17, 2013). 410
108 center operator. The plaintiffs claimed that they frequently worked in excess of 40 hours
a week because they were often required to work before and after their designated
shifts, through some lunch periods, and on certain Saturdays. The defendant filed an
answer raising several affirmative defenses, including that the plaintiffs’ claims were
barred because the time periods for which they were claiming entitlement to overtime
pay fell within the de minimis doctrine, which allows employers to disregard otherwise
compensable work when only a few seconds or minutes of work beyond the scheduled
hours were in dispute. The plaintiffs moved for summary judgment. The district court
determined that the employers had not satisfied their burden of showing the exception’s
applicability. The court determined that the exception applied only where there were
uncertain and indefinite periods of time of a short duration and where the failure to count
such time was due to considerations justified by industrial realities. The employers had
admitted that the work time could be tracked and that there were no periods of time for
which they could not track. Thus, the court determined that the employers had not
established that the de minimis exception applied and granted summary judgment in
favor of the plaintiffs as to that issue.
In Jones v. C&D Technologies, Inc.,412 the parties disputed the amount of time
spent traveling between Beginning Boundary Activities (walking from the locker room to
pick up safety gear, walking to the time punch card area, punching the time card,
walking to the work area, and donning safety gear) and Ending Boundary Activities
(doffing safety gear, walking from the work area to the time card area, punching the time
card, walking to the wash out room to return and vacuum safety gear, and walking to
the locker room to begin doffing and washing), and whether such time should be
deemed de minimis. To determine whether this time was de minimis (and thus, noncompensable), the Indiana district court looked at: (1) the amount of time spent on the
extra work, (2) the practical administrative difficulties of recording additional time, (3) the
regularity with which the additional work was performed, and (4) the aggregate amount
of compensable time. The Indiana district court found, based on evidence presented by
both parties, that the amount of travel time was likely somewhere between 3.43 and
8.343 minutes. The court concluded that even accepting the lower figure the time could
not be considered de minimis because the defendant did not present any evidence
demonstrating the difficulties of recording the time.
412
2014 WL 1233390 (S.D. Ind. Mar. 25, 2014). 109 Chapter 9
MINIMUM WAGE REQUIREMENTS
II.
Payment of the Minimum Wage
A. “Free and Clear” Payments
In Rivera v. Peri & Sons Farms, Inc.,413 farmworkers admitted to work in the
United States through the H-2A program timely appealed the Nevada district court’s
granting of the defendant farm’s motion to dismiss the plaintiffs’ FLSA suit for unpaid
minimum wages under a “kick-back” theory. The plaintiffs alleged that the defendant
failed to reimburse them for pre-employment expenses they incurred that were primarily
for the benefit of the defendant and that the expenses reduced their first week of wages
below minimum wage. The expenses included inbound travel and immigration fees. The
defendant argued that the FLSA did not apply because if it did, it would make the H-2A
requirements repetitive. After analyzing the DOL’s H2A program regulatory
interpretation, the Ninth Circuit held that the defendant was subject to the FLSA
reimbursement regulations. Under the FLSA, an employer is required to pay the federal
minimum wage, and minimum wage is not satisfied unless the compensation is free and
clear. Reversing the district court, the appellate court found that the plaintiffs qualified
for FLSA reimbursement during their first week of employment for their inbound travel
and immigration expenses if the plaintiffs’ earnings fell below minimum wage.
In Williams v. Secure Resource Communication Corp.,414 a security guard sued
under the FLSA for minimum wage violations after the defendant deducted a security
guard license fee from his paycheck. The plaintiff was paid only $4.00 after the fee
deduction because he was fired when he fell asleep on the job after his first four hours
of work. The district court adopted the magistrate’s report and held that the deduction
for the licensing fee violated 29 C.F.R. § 531.25 because the wages were not paid “free
and clear” where the deduction was primarily for the employer’s benefit and not the
employee’s.415 The court reasoned that the fee arose out of employment, not ordinary
life, and was therefore for the employer’s benefit.
III.
Non-Cash Wages Under Section 3(m)— “Board, Lodging or Other Facilities”
B. “Board, Lodging or Other Facilities”
2. Lodging
413
735 F.3d 892 (9th Cir. 2013).
2013 WL 4828578 (S.D.N.Y. Sept. 10, 2013).
415
Id. at *5–6.
414
110 In Perez v. Pacific Ohana Hostel Corp.,416 the Secretary of Labor brought claims
against hostel owners for failure to pay minimum wage and overtime pay to hostel
guests who worked to pay for their lodging. The defendants deducted the cost of
lodging from the guest employees’ wages. The defendants claimed that the reasonable
cost of the lodgings was the rate that the guest employees initially agreed to pay for
their lodgings, not the actual cost of providing the lodgings and, alternatively, that any
liability for unpaid wages was less than what the DOL calculated. The defendants filed a
summary judgment motion, which the Hawaii district court denied, finding that disputes
of material fact existed as to the reasonableness of the defendants’ costs. Specifically,
the court noted that 29 C.F.R. § 531.3(a) and (b) limit the wage credit for lodging to
reasonable costs, which means not more than the actual cost to the employer, and that
the employer has the burden of proving its reasonable costs. The court found that the
defendants failed to submit evidence to substantiate their costs, other than providing
lists of the hostels’ monthly expenses by category.417
3. “Other Facilities”
c. Transportation
In Rivera v. Peri & Sons Farms, Inc.,418 farmworkers admitted to work in the
United States through the H-2A program timely appealed the Nevada district court’s
dismissal of the plaintiff’s FLSA suit for unpaid minimum wage under a “kick-back”
theory. The plaintiffs alleged that the defendant farm failed to reimburse them for preemployment expenses they incurred that were primarily for the benefit of the defendant
and that the expenses reduced their first week of wages below minimum wage. The
expenses included inbound transportation. Under the FLSA, an employer may charge
its employees for the reasonable cost of providing them “board, lodging, or other
facilities.”419 The Ninth Circuit reversed the district court’s decision and found that the
farmworkers qualified for FLSA reimbursement. Therefore, the defendant should have
reimbursed the plaintiffs during their first week of work for any inbound transportation
expenses if the expenses lowered the plaintiffs’ earnings below minimum wage.
4. Items Primarily for Benefit or Convenience of Employer Are Not
Facilities
In Rivera v. Peri & Sons Farms, Inc.,420 farmworkers admitted to work in the
United States through the H-2A program timely appealed the Nevada district court’s
dismissal of the plaintiff’s FLSA suit for unpaid minimum wage under a “kick-back”
theory. The plaintiffs alleged that the defendant farm failed to reimburse them for preemployment expenses they incurred that were primarily for the benefit of the defendant
416
2013 WL 6862684 (D. Haw. Dec. 27, 2013).
Id. at *5.
418
735 F.3d 892 (9th Cir. 2013).
419
29 U.S.C. § 203(m).
420
735 F.3d 892 (9th Cir. 2013).
417
111 and that the expenses reduced their first week of wages below minimum wage. The
expenses included inbound travel and immigrations fees. The court found that the
identity of the primary beneficiary of the expenses was ambiguous under the H-2A
regulatory standard and therefore deferred to the DOL’s interpretation. Under the DOL’s
interpretation, an H-2A employer covered by the FLSA was expected to reimburse
employees for inbound transportation if the cost would bring the employees’ wages
below minimum wage. Immigration and recruitment expenses had been interpreted as
necessary for workers and primarily for the benefit of the employers; therefore,
employers are required to reimburse employees for immigration and recruitment costs
in the first workweek if the costs reduce the employee’s wages below the minimum
wage. The Ninth Circuit found that the district court erred in ruling that the defendant
was not required to reimburse its employees during the first week of work for inbound
travel and immigration expenses where such expenses lowered their compensation
below the minimum wage.
IV.
Payment of Wages to Tipped Employees
B. Current Statutory Provisions Regarding Tipped Employees
In Oregon Restaurant & Lodging v. Solis,421 on cross motions for summary
judgment, the district court in Oregon granted summary judgment to the plaintiff
restaurant association on its challenge of the DOL’s “tip pooling” regulations of 2011,
namely 29 C.F.R., §§ 531.52, 531.34 and 531.59. The regulations prohibited employers
from contracting with their tipped employees to include non-tipped employees (i.e., back
of the house cooks and dishwashers) in the tip pool. The issue before the district court
was whether the court should give Chevron deference to the 2011 regulations. The
district court held that Congress directly spoke “to the precise question at issue” and
therefore refused to give deference to the regulations. In doing so, the court relied upon
the Ninth Circuit’s decision in Cumbie v. Woody Woo, Inc.,422 which found the FLSA’s
section 203(m) standard to be “clear and unambiguous: It imposes conditions on
employers that take a tip credit but does not impose a freestanding requirement
pertaining to all tipped employees.”423 The court noted, as the Cumbie court did, that
Congress could have articulated a general principle that tips are the property of the
employee without reference to the tip credit, but chose not to do so. The court declined
to read section 203(m) “in such a way as to render its reference to the tip credit, as well
as its conditional language and structure, superfluous.”424 Accordingly, the court
granted the plaintiff’s summary judgment motion, holding the regulations at issue
invalid.
421
948 F. Supp. 2d 1217 (D. Or. 2013).
596 F.3d 577, 579-80 (9th Cir. 2010).
423
948 F. Supp. 2d at 1224.
424
Id. at 1220 (quoting Cumbie, 596 F.3d at 581)).
422
112 In Ring v. Sokolove,425 a bartender alleged that the restaurant employer violated
the FLSA by failing to adequately inform him of the “tip credit” taken against minimum
wage as required by federal and state law. When the plaintiff was hired for the position,
he was informed that he would be paid “$2.63 per hour plus tips.” However, it was never
communicated to the plaintiff that the defendants would be obligated to make up the
difference between the hourly pay and the state minimum wage if the plaintiff’s weekly
earnings fell short. Under section 203(m) of the FLSA, an employer can allocate an
employee’s tips to satisfy minimum wage if (1) the employer informs the tipped
employee of the “tip credit” provision and (2) the tipped employee retains all the tips the
employee receives. If an employer fails to meet the two requirements, the employer
must pay the employee the full minimum wage. An employer does not need to explain
the “tip credit”; however, the employee must be informed of the “tip credit.” Here, the
district court found that the plaintiff’s affidavit disputed the defendants’ claim of proper
notice of the tip credit provision. Therefore, the court denied the defendants’ motion for
summary judgment.
In Stephenson v. All Resort Coach, Inc.,426 bus drivers argued that they had a
property right in all tips, and that their employer violated section 203(m) of the FLSA by
retaining a percentage of their tips. The employer filed a motion for partial summary
judgment, arguing that because it paid the bus drivers above the minimum wage and it
had never taken a tip credit, there was no section 203(m) violation. The bus drivers
cited to the recently amended regulation, 29 C.F.R. § 531.52, which states that “[t]ips
are the property of the employee whether or not the employer has taken a tip credit
under section 3(m) of the FLSA.” The court, analyzing the regulation under Chevron,
held that the regulation was invalid and refused to apply Chevron deference. The court
explained that the plain language of section 203(m) allows employers to either pay the
full minimum wage free and clear of any conditions, or take a tip credit and comply with
the conditions imposed by section 203(m), including allowing employees to retain all
tips. By requiring that employees retain all tips, the regulation eliminated this choice by
employers, and thus contradicted the unambiguous intent of Congress when it enacted
section 203(m). Accordingly, the court held that the bus drivers were not entitled to
retain all of their tips, and granted partial summary judgment for the employer.
C. General Characteristics of Tips
In Stephenson v. All Resort Coach, Inc.,427 bus drivers argued that they had a
property right in all tips, and that their employer violated section 203(m) of the FLSA by
retaining a percentage of their tips. The employer filed a motion for partial summary
judgment, arguing that because it paid the bus drivers above the minimum wage and it
had never taken a tip credit, there was no section 203(m) violation. The bus drivers
cited to the recently amended regulation, 29 C.F.R. § 531.52, which states that “[t]ips
are the property of the employee whether or not the employer has taken a tip credit
425
2014 WL 1117859 (D. Mass. Mar. 18, 2014).
2013 WL 4519781 (D. Utah Aug. 26, 2013).
427
2013 WL 4519781 (D. Utah Aug. 26, 2013).
426
113 under section 3(m) of the FLSA.” The court, analyzing the regulation under Chevron,
held that the regulation was invalid and refused to apply Chevron deference. The court
explained that the plain language of section 203(m) allows employers to either pay the
full minimum wage free and clear of any conditions, or take a tip credit and comply with
the conditions imposed by section 203(m), including allowing employees to retain all
tips. By requiring that employees retain all tips, the regulation eliminated this choice by
employers, and thus contradicted the unambiguous intent of Congress when it enacted
section 203(m). Accordingly, the court held that the bus drivers were not entitled to
retain all of their tips, and granted partial summary judgment for the employer.
D. Compulsory Charges for Service Are Not Tips
In Maldonado v. BTB Events & Celebrations,428 food delivery workers alleged
that an 11 percent surcharge on delivery orders placed over the phone was a gratuity
they were entitled to receive in full. The defendants retained a portion of the surcharge
for various administrative and business expenses, while distributing the remainder to
the drivers and crediting that amount against their statutory minimum-wage obligations.
Beginning in 2007, the invoices changed from denoting the charge as a “service
charge,” to referring to it as a “processing surcharge” subject to a sales tax. On the
receipt, there was also a blank line where a customer could denote a gratuity.
Approximately 75 percent of the time, the customer added a gratuity, which was
distributed 100 percent to the drivers. In finding that the 11 percent surcharge was not a
gratuity, the New York district court noted that the charge was mandatory and was used
to cover certain business expenses. Although the district court noted that where a
mandatory charge is reasonably understood to be a gratuity, it could not be
misappropriated from the employee, here, the evidence showed that there was a
separate line for gratuities and the charge was “above the line” and subject to sales tax.
The district court was not persuaded by the argument that the defendants’ failure to
include a clear statement that the charge was not a gratuity would reasonably result in
customers believing the charge was a gratuity.
In Hart v. Rick's Cabaret International, Inc.,429 exotic dancers brought a collective
action alleging that the adult entertainment club owner and two corporate parents
violated the FLSA and New York Labor Law. The plaintiffs alleged that they were
entitled to minimum wage protections under the FLSA, among other state law wage
violations. The defendants argued that compulsory fees charged to patrons and paid to
the plaintiffs should be counted towards their statutory obligations. The defendants
calculated wage payments based on redemption of tickets called “dance dollars.” Based
on the redemption values, the defendants alleged that the plaintiffs were paid an
average of approximately $23.00 per hour. The plaintiffs argued that the fees
constituted tips and therefore were not attributable to the minimum wage obligations
under the FLSA because the redeemed coupons were not recorded in the gross
428
429
990 F. Supp. 2d 382 (S.D.N.Y. 2013).
967 F. Supp. 2d 901 (S.D.N.Y. 2013).
114 receipts of the defendants. The district court in New York agreed with the plaintiffs,
holding that under applicable regulations, redemption of “dance dollars” did not
constitute a service charge because they were not recorded in the gross receipts and
were not distributed by the employer. In addition, the court stated that allowing an
employer to meet its statutory obligations by making customers pay employees directly
would interfere with the goals of the FLSA and give rise to other problems including tax
and proof problems. The court also analyzed other factors considered in past case law,
including the method of distributing the payment, the customer’s understanding of the
payment, the employer’s inclusion of the payment in its gross receipts, whether the
payment was made by a customer who has received a personal service, whether the
payment is made voluntarily in an amount and to a person designated by the customer,
whether the tip is regarded as the employee’s property, the method of distributing the
payment, and the customer’s understanding of the payment. Upon reviewing all relevant
factors, the court concluded that the performance fees were not considered service
charges and were not attributable to the defendants’ minimum wage statutory
obligations.
F. Dual Jobs
In Porter v. West Side Restaurant, LLC,430 a server sued the restaurant where she
worked, alleging that she was not informed of the restaurant's tip credit and that its tip
pool policy was invalid. The district court in Kansas denied the defendant’s motion for
summary judgment and conditionally certified the case as a collective action. The
servers performed expediting functions in addition to serving food, and, at times, the
defendant assigned a single server to be the expediter for an entire shift. The restaurant
used a tip pool for servers and expediters, in a set formula that was applied to calculate
the amount of money that the servers must pay the expediters. The plaintiff challenged
the tip pool only for those shifts where a server acted as expediter for the entire shift.
The issue for the court was whether the expediter duties at the restaurant were tip
producing. The court rejected the defendant’s argument that case law precedent
supported a finding that the expediter position is a tipped occupation, holding that the
determination is a fact-specific inquiry. The court went on to find a fact question as to
the degree of customer interaction the expediter job entailed, noting the parties’
disagreement as to whether the expediters delivered food to tables or remained in the
back of the house. The court found that the plaintiff substantially alleged that the
restaurant had a policy of taking a tip credit with respect to all hours worked by servers,
even when they worked full shifts as expediters, and granted the plaintiff’s request for
conditional certification and notice.
G. “Customarily and Regularly”
430
2014 WL 1642152 (D. Kan. Apr. 24, 2014).
115 In Schear v. Food Scope America, Inc.,431 plaintiff restaurant workers alleged on
behalf of a class of captains, servers, bussers, runners, bartenders, and barbacks that
defendant restaurants and corporate officers had wrongly included sushi chefs,
stocker/bussers, and expeditor/runners (who the plaintiffs alleged to be non-service
employees) in a tip pool, had permitted event coordinators to receive a portion of
mandatory service charges collected for private parties, and had failed to pay the
plaintiffs overtime in violation of the FLSA and New York Labor Law. The plaintiffs
subsequently moved for conditional collective certification on their FLSA claims under
29 U.S.C. § 216(b) and for class certification on their New York Labor Law claims under
Federal Rule of Civil Procedure 23, while the defendants cross-moved for summary
judgment.432 In their motion for summary judgment, the defendants argued that it was
entitled to utilize the tip credit as permitted under FLSA section 203(m) and section 196d of the New York Labor Law because it had not required the plaintiffs to share their tips
with employees who do not regularly and customarily receive tips, including those
employees who are managers or who do not provide direct customer service.433 The
district court in New York first determined that the similarities between the FLSA and the
New York Labor Law on this issue were sufficient such that it was appropriate to
analyze the issue conjunctively under the two statutes. The court then determined that
issues of material fact remained as to whether sushi chefs, stockers, and expediters
were employees who regularly and customarily had received tips, including whether
they had more than a de minimis interaction with customers as a part of their
employment and whether they were ordinarily engaged in providing direct customer
service.434 The court also granted summary judgment to the defendants on whether the
event coordinators were eligible to receive tips, finding that their direct interactions with
customers in the course of booking, planning, and servicing private parties was
sufficient to demonstrate their ordinary engagement in providing direct customer
service.435
In Stewart v. Cus Nashville, LLC,436 a class of bartenders brought suit against
their employer, claiming that the employer’s tip pool policy violated the FLSA.
Specifically, the plaintiffs argued that it was improper to include security guards in the
pooling arrangement because the security guards do not “customarily and regularly
receive tips.” The defendants countered that security guards sufficiently interacted with
customers making them employees who “customarily and regularly receive tips.” The
district court in Tennessee held a three-day bench trial and, agreeing with the
defendants, found that “[w]hile it is undisputed that their primary duty is to protect the
[bartenders] and customers, security guards are expected to, and do, in fact, play a
prominent role in enhancing the customer experience.” The court noted that the security
guards, among other activities, dance with customers, participate in games with
431
297 F.R.D. 114 (S.D.N.Y. 2014).
Id. at 120-21.
433
Id. at 131.
434
Id. at 132.
435
Id. at 133.
436
2013 WL 4039975 (M.D. Tenn. Aug. 8, 2013).
432
116 customers, and take pictures with customers. Accordingly, the court held that the
security guards were tipped employees eligible to participate in the tip pool with the
bartenders.
In White v. 14051 Manchester Inc.,437 former restaurant employees filed a
collective action against defendants for violations of the FLSA’s tip credit provision. The
plaintiffs moved for summary judgment on liability of defendants’ use of the tip credit
allowance, arguing that the tip-receiving employees were required to pool tips with
employees who do not “customarily and regularly receive tips.” The defendants
countered that the tip-receiving employees were not required to pool their tips with
those who did not “customarily and regularly receive tips,” thus asserting the affirmative
defense of voluntariness. In denying the plaintiffs’ motion for summary judgment on
liability, the district court in Missouri first relied on Kilgore v. Outback Steakhouse of
Florida, Inc.,438 and determined that there is no per se violation of the tip credit
allowance where employees who “customarily and regularly receive tips” do not receive
those tips directly from the customer. The court then found that where there was
conflicting evidence on whether the employees were forced to pool tips with those who
did not directly receive tips, the question should be submitted to a jury.
H. Tip Pooling
In Stewart v. Cus Nashville, LLC,439 a class of bartenders brought suit against
their employer, claiming that the employer’s tip pool policy violated the FLSA.
Specifically, the plaintiffs argued that it was improper to include security guards in the
pooling arrangement because the security guards do not “customarily and regularly
receive tips.” The defendants countered that security guards sufficiently interacted with
customers making them employees who “customarily and regularly receive tips.” The
district court in Tennessee held a three-day bench trial and, agreeing with the
defendants, found that “[w]hile it is undisputed that their primary duty is to protect the
[bartenders] and customers, security guards are expected to, and do, in fact, play a
prominent role in enhancing the customer experience.” The court noted that the security
guards, among other activities, dance with customers, participate in games with
customers, and take pictures with customers. Accordingly, the court held that the
security guards were tipped employees eligible to participate in the tip pool with the
bartenders.
In Schear v. Food Scope America, Inc.,440 plaintiff restaurant workers alleged on
behalf of a class of captains, servers, bussers, runners, bartenders, and barbacks that
defendant restaurants and corporate officers had wrongly included sushi chefs,
stocker/bussers, and expeditor/runners (who the plaintiffs alleged to be non-service
437
301 F.R.D. 368 (E.D. Mo. 2014).
160 F.3d 294, 301 (6th Cir. 1998).
439
2013 WL 4039975 (M.D. Tenn. Aug. 8, 2013).
440
297 F.R.D. 114 (S.D.N.Y. 2014).
438
117 employees) in a tip pool, had permitted event coordinators to receive a portion of
mandatory service charges collected for private parties, and had failed to pay the
plaintiffs overtime in violation of the FLSA and New York Labor Law. The plaintiffs
subsequently moved for conditional collective certification on their FLSA claims under
29 U.S.C. § 216(b) and for class certification on their New York Labor Law claims under
Federal Rule of Civil Procedure 23, while the defendants cross-moved for summary
judgment.441 In their motion for summary judgment, the defendants argued that they
was entitled to utilize the tip credit as permitted under FLSA section 203(m) and section
196-d of the New York Labor Law because it had not required the plaintiffs to share
their tips with employees who do not regularly and customarily receive tips, including
those employees who are managers or who do not provide direct customer service.442
The district court in New York first determined that the similarities between the FLSA
and the New York Labor Law on this issue were sufficient such that it was appropriate
to analyze the issue conjunctively under the two statutes. The court then determined
that issues of material fact remained as to whether sushi chefs, stockers, and
expediters were employees who regularly and customarily had received tips, including
whether they had more than a de minimis interaction with customers as a part of their
employment and whether they were ordinarily engaged in providing direct customer
service.443 The court also granted summary judgment to the defendants on whether the
event coordinators were eligible to receive tips, finding that their direct interactions with
customers in the course of booking, planning, and servicing private parties was
sufficient to demonstrate their ordinary engagement in providing direct customer
service.444
In Porter v. West Side Restaurant, LLC,445 a server sued the restaurant where
she worked alleging that she was not informed of the restaurant's tip credit and that its
tip pool policy was invalid. The Kansas district court denied the defendant’s motion for
summary judgment and conditionally certified the case as a collective action. The
servers performed expediting functions in addition to serving food, and at times
assigned a single server to be the expediter for an entire shift. The restaurant used a tip
pool for servers and expediters, in a set formula that was applied to calculate the
amount of money that the servers must pay the expediters. Addressing the FLSA’s tippooling notice requirement,446 the court found that the plaintiff’s previous experience in
the restaurant business was insufficient to provide notice. The defendant failed to carry
its burden of proof that the language in the required minimum wage poster provided
notice of the tip credit because the poster language was not included in the
uncontroverted facts. The court also stated that information conveyed through a coworker is sufficient notice under the statute. On the issue of whether the expediter
duties at the restaurant were tip producing, the court rejected the defendant’s argument
441
Id. at 120-21.
Id. at 131.
443
Id. at 132.
444
Id. at 133.
445
2014 WL 1642152 (D. Kan. Apr. 24, 2014).
446
29 U.S.C. § 203(m).
442
118 that case law precedent supported a finding that the expediter position is a tipped
occupation, holding that the determination is a fact-specific inquiry. The court went on to
find a fact question as to the degree of customer interaction the expediter job entailed,
noting the parties’ disagreement as to whether the expediters delivered food to tables or
remained in the back of the house. The court found that the plaintiff substantially alleged
that the restaurant had a policy of taking a tip credit with respect to all hours worked by
servers, even when they worked full shifts as expediters, and granted the plaintiff’s
request for conditional certification and notice.
The plaintiffs in Cesarz v. Wynn Las Vegas, LLC,447 employed as casino dealers,
brought a collective action against the defendants for failure to pay minimum wage
pursuant to the FLSA’s tip-credit provision, section 203(m). The defendants required the
plaintiffs to submit their tips for redistribution among other employees who did not
customarily receive tips. The plaintiffs alleged that the redistribution of tips was unlawful,
even though the defendants paid the employees an hourly rate that exceeded the
minimum wage, relying on the DOL’s 2011 regulation amendments to sections 531.32
and 531.34, which state that tips are the property of the employee whether or not a tip
credit is taken by the employer and that tip pooling cannot include employees who do
not regularly receive tips. Granting the defendants’ motion to dismiss, the Nevada
district court noted that section 203(m) only limits tip pooling by employers who claim a
tip credit to satisfy minimum wage requirements and held the defendant’s use of tip
pooling was not a violation of the statute where it did not claim a tip credit.448
In White v. 14051 Manchester Inc.,449 former restaurant employees filed a
collective action against defendants for violations of the FLSA’s tip credit provision. The
plaintiffs moved for summary judgment on liability of the defendants’ use of the tip credit
allowance, arguing that the tip-receiving employees were required to pool tips with
employees who do not “customarily and regularly receive tips.” The defendants
countered that the tip-receiving employees were not required to pool their tips with
those who did not “customarily and regularly receive tips,” thus asserting the affirmative
defense of voluntariness. In denying the plaintiffs’ motion for summary judgment on
liability, the district court in Missouri first relied on Kilgore v. Outback Steakhouse of
Florida, Inc.450 and determined that there is no per se violation of the tip credit
allowance where employees who “customarily and regularly receive tips” do not receive
those tips directly from the customer. The court then found that where there was
conflicting evidence on whether the employees were forced to pool tips with those who
did not directly receive tips, the question should be submitted to a jury.
K. Deductions From Tips
447
2014 WL 117579 (D. Nev. Jan. 10, 2014).
Id. at *3.
449
301 F.R.D. 368 (E.D. Mo. 2014).
450
160 F.3d 294, 301 (6th Cir. 1998).
448
119 In Hart v. Rick's Cabaret International, Inc.,451 exotic dancers brought a collective
action alleging that the adult entertainment club owner and two corporate parents
violated the FLSA and New York Labor Law (NYLL). The plaintiffs alleged that they
were entitled to minimum wage protections under the FLSA, among other state law
wage allegations. After discovery, the parties submitted a joint stipulated facts and filed
cross motions for summary judgment. The defendants argued, among other things, that
they were entitled to a tip credit reducing its statutory wage obligations. The court
rejected this argument, stating that in order to take advantage of the tip credit, the
defendants were required to inform the tipped employees of the statutory requirements
relating to the tip credit and all tips received by such employees must be retained by the
employee, except in limited circumstances. The court found that the defendants failed to
inform the plaintiffs that performance fees would be used as a tip credit, treated the
plaintiffs as independent contractors, and did not pay the plaintiffs a regular wage or
salary. The court rejected the defendants’ motion for summary judgment seeking to take
advantage of the tip credit to reduce its statutory wage obligations.
451
967 F. Supp. 2d 901 (S.D.N.Y. 2013).
120 Chapter 10
DETERMINING OVERTIME COMPENSATION
III.
The “Workweek” Concept
C. Overtime Must Be Paid on the Regular Payday
In Davis v. Unified School District No. 500,452 the plaintiff, a custodian, filed suit
against his employer school district, alleging, in addition to claims of employment
discrimination and retaliation, that his employer twice delayed the payment of overtime
wages to him in violation of the FLSA. The defendants required employees like the
plaintiff, who held head custodian and custodian positions during the time period
relevant to his FLSA claims, to receive approval to work overtime from a supervisor and
to report overtime work on a time sheet.453 To the extent that an overtime time sheet
was submitted no later than two days after the end of a pay period, the defendants’
policy was to pay the overtime wages on the employee’s next regularly scheduled
paycheck. However, if an employee submitted an overtime time sheet more than two
days after the conclusion of a pay period, the defendants’ policy was to pay the
overtime wages in the paycheck that it issued after the next regularly scheduled
paycheck.454 The plaintiff alleged that the defendants twice delayed the payment of
overtime wages to him by more than a month after submission of the applicable
overtime time sheets and that such delay violated the FLSA. Granting the defendants’
motion for summary judgment on the FLSA claim, the Court held that the defendants did
not delay payment of overtime pay in violation of the FLSA.455 In so holding, the court
reasoned that while the FLSA does not specifically address when overtime pay must be
paid, a DOL interpretive bulletin456 took the position that “payment may not be delayed
for a period longer than is reasonably necessary for the employer to compute and
arrange for payment of the amount due and in no event may payment be delayed
beyond the next pay day after such computation can be made.” The court determined
this was a reasonable construction of the FLSA.457 Thus, the district court found that the
defendants did not violate the FLSA by taking up to an estimated 30 days to pay
overtime wages, as per their payroll policy, because such delay was not unreasonable
452
2013 WL 4401855 (D. Kan. Aug. 15, 2013).
Id. at *3.
454
Id.
455
Id. at *7.
456
29 C.F.R. § 778.106.
457
2013 WL 4401855 at *7.
453
121 or longer than necessary to compute the plaintiff’s due compensation, and the
payments were made as soon as practicable after the regularly scheduled payday.458
D. Prepayment Plans
In Goulas v. LaGreca,459 the plaintiff, a drilling employee, filed an FLSA overtime
claim against his former employer, a drilling company, alleging that he was improperly
classified as exempt under the FLSA and was not paid overtime for all hours worked.
The plaintiff was paid a set salary of $65,535 per year, which was based on a 68 or 68.5
workweek. The district court granted the defendant’s motion for summary judgment,
holding that it need not decide whether the plaintiff was properly classified an exempt
employee because, even if he was not an exempt employee, he received adequate
compensation for all overtime hours worked. This ruling was based on a finding that of
the 14 weeks in which the plaintiff worked overtime, he worked fewer than 68 or 68.5
hours in each of the immediately preceding weeks. The court stated that although an
employer should generally pay overtime in the same work period during which an
employee performs overtime work, an employer is allowed to pay overtime in advance.
In other words, an employer is allowed to pre-pay overtime and the court may offset the
overpayments paid in some work periods against the shortfall in other periods. The
court also noted that this arrangement is particularly fitting for cases in which the
employees regularly work overtime.
IV.
The “Regular Rate”
A. Regular Rate Includes “All Remuneration”
In Albers v. Board of County Commissioners of Jefferson County,460 the plaintiff
brought suit on behalf of himself and other current and former non-exempt employees of
the Jefferson County Sheriff’s Office alleging that they were entitled to unpaid wages for
overtime worked and liquidated damages. The plaintiffs alleged that in the course of
being recruited, Sheriff Mink had made statements to the effect that a new wage rates
schedule would be implemented. While the new schedule had been published and was
known, the court found that Sherriff Mink alone did not have the ability to implement this
increase, this power instead resided in the Board of County Commissioners that had not
likewise promised the increase. Although the rates actually paid in years 2010, 2011,
and 2012 were different than those promised by Sherriff Mink in the new Pay
Schedules, the district court held that “[a]n employee’s continuous employment is
evidence of an implied agreement with the pay system of the employer.” Continuing to
work meant the employees recognized the lower rate of pay and, as such, the plaintiffs
458
Id.
2013 WL 2477030 (E.D. La. June 7, 2013), aff'd sub nom., Goulas v. LaGreca Servs., Inc.,
557 F. App'x 337 (5th Cir. 2014).
460
2014 WL 128062 (D. Colo. Jan 13, 2014).
459
122 had failed to state a claim. As a result, the district court granted the Rule 12(b)(6)
motion and dismissed the case.
B. Statutory Exclusions From the Regular Rate and Payments Creditable
to Overtime
1. Extra Compensation Paid for Overtime Work—Sections 7(e)(5)–(7)
e. Premium Pay Creditable to Overtime Under Section 7(h)
In Caraballo v. City of Chicago,461 the plaintiff paramedics accused the defendant
of neglecting to pay time-and-a-half for hours worked over 40 and failing to correctly
calculate their regular rate of pay. The plaintiffs’ compensation structure, including
overtime premiums, was governed by a collective bargaining agreement (“CBA”). They
received an annual salary paid in 24 equal payments and were scheduled for 24-hours
or 48-hours every week. During weeks the plaintiffs were scheduled 48-hours, they
received an additional payment for the eight hours beyond 40 equaling half their
straight-time hourly rate. The plaintiffs received overtime pay at one-and-a-half times
their straight-time hourly rate if they worked overtime outside their scheduled shift,
regardless of whether their regular schedule was a 24-hour or 48-hour week. The CBA
also provided for additional payments to the plaintiffs that were not included in the
regular rate. Two of the additional payments were automatically paid to the plaintiffs,
including one as an allowance for uniform maintenance, while five additional payments
were conditioned on the plaintiffs fulfilling certain conditions, such as performing certain
duties during their shift. The parties cross-moved for summary judgment on whether to
include the additional payments in calculating the regular rate for FLSA overtime
purposes, whether the fluctuating workweek applied, and whether the defendant was
entitled to overtime credits to offset FLSA overtime liability. The district court held the
defendant’s premium payment of one-and-a-half times the regular rate for overtime
outside the plaintiffs’ regular-scheduled shifts was entitled to be offset. The court did,
however, limit the offset to credit for the half-time portion of the premium pay and
restricted use of the credit to weeks where the plaintiffs earned FLSA overtime and
received the premium pay.
In Jones v. C&D Technologies,462 the plaintiff manufacturing employees disputed
whether the defendant manufacturer was entitled to offset premium payments provided
for shift differentials, which was a premium rate paid for hours worked in excess of eight
per day and hours worked on the sixth or seventh day of the workweek even when the
employees worked fewer than 40 hours per workweek. In analyzing this issue, the
district court identified paragraphs five and six of 29 U.S.C. § 207(h)(2), which relate, in
pertinent part, to extra compensation provided by a premium rate paid for “certain hours
worked by the employee in any day or workweek because such hours are hours worked
461
462
969 F. Supp. 2d 1008 (N.D. Ill. 2013).
2014 WL 1233390 (S.D. Ind. Mar. 25, 2014).
123 in excess of eight in a day . . .” or for “work by the employee on . . . the sixth or seventh
day of the workweek, where such premium rate is not less than one and one-half times
the rate established in good faith for like work performed in nonovertime hours on other
days.” Because section 7(h) of the FLSA states that the extra compensation provided by
these types of premium payments may be credited toward overtime compensation due
under section 7(a) for work in excess of the applicable maximum hours standard, the
court granted summary judgment in favor of the defendant for those plaintiffs it could
demonstrate met the requirements of 29 U.S.C. § 207(h)(2).
In Bassett v. Tennessee Valley Authority,463 a federal district court in Kentucky
held that cable technicians are not entitled to gap time compensation for hours worked
up to 40 in one week. The court issued this ruling upon a request by the parties to clarify
certain legal issues that were holding up settlement negotiations. The plaintiff
technicians sought gap time for hours that were allegedly worked but not paid. The
district court noted that only violations of the FLSA’s minimum-wage or maximum-hours
provisions constitute “prohibited acts” under the FLSA, and, therefore, no claim exists
for gap time under federal law. Furthermore, the court held that the cable company may
be entitled to offset any “premium” wage it paid employees in excess of the FLSA’s
requirements, including higher overtime rates than time and one-half. The court stated,
however, that the cable company bore the burden of proving that such premium
payments were made and that premium payments may only offset owed wages in the
period in which the premium payments were made.
In Stiller v. Costco Wholesale Corp.,464 the plaintiff wholesale retailer employees
alleged their employer violated the FLSA by not paying them for off-the-clock time
during closing procedures. The employer argued that its overtime liability should be
offset by extra compensation it paid to the plaintiffs on Sundays and holidays, and the
district court agreed. Granting partial summary judgment, the court held that premium
credits can cumulatively offset overtime liability. Following this determination, the case
was transferred to another district court judge, and the plaintiffs asked for
reconsideration on this issue. The new judge determined that it was proper to revisit the
earlier order and subsequently held in favor of the plaintiffs. He noted that the majority
rule allows premium credits to offset only overtime liability incurred during the workweek
in which the premiums were paid. Further, he observed that the minority approach used
by the first judge is “supported only by a couple of district court cases in
Massachusetts,” and undermines the purpose of the FLSA. Accordingly, the court held
that the FLSA prohibits employers from applying premium credits to cumulatively offset
overtime liability. Rather, premium credits may only apply on a workweek-by-workweek
basis. The court denied the employer’s motion for summary judgment.
6. Benefit Plan Contributions—Section 7(e)(4)
463
464
2013 WL 2902821 (W.D. Ky. 2013).
2013 WL 5417134 (S.D. Cal. Sept. 26, 2013).
124 In Flores v. City of San Gabriel,465 the trial court granted partial summary
judgment in favor of each side on issues relating to calculation of overtime payments
resulting from the employer’s failure to include certain cash payments made in lieu of
payments for qualified benefits in the regular rate. The plaintiffs were police officers for
the defendant city who were covered under a CBA providing that overtime hours above
four per two-week pay period were payable as either compensatory time or wages at
the employee’s discretion. The employer also provided a fixed monthly contribution for
each officer to a flexible benefit plan, and permitted officers who did not “spend” all of
that contribution for cafeteria benefits, including those who opted out of medical benefits
due to having alternative coverage, to receive any remaining contributions as taxable
cash payments. During the relevant years, between 42 and 47 percent of the benefit
contributions were paid out as elective cash payments. The city did not include these
cash payments in the regular rate in calculating overtime payments. The issues in the
case were whether the city was required to do so, and if so, whether it was liable for
liquidated damages. The plaintiffs contended that the entire amount contributed to the
benefit plan had to be included in the regular rate because the employer did not meet
the benefit plan exemption in section 7(e)(4),466 citing the DOL guidance in 29 C.F.R. §
778.215(a)(5) and a 2003 Opinion Letter.467 The court rejected the opinion letter’s
limitation on elective cash payments of 20% of plan-wide contributions. Instead, the
court accepted the language in the guidance in § 778.215(a)(5)(iii) that a plan could still
be considered a bona fide plan if it permitted cash payments to an employee “during the
course of his employment under circumstances specified in the plan and not
inconsistent with the general purposes of the plan to provide benefits . . . .” Thus, the
court rejected the plaintiffs’ contention that none of the contributions could be excluded
from the regular rate calculation. However, the court held that only the contributions
payable to third parties for benefits, and not those made directly to the employees, were
excludable from the regular rate. 8. Reimbursement for Work-Related Expenses—Section 7(e)(2)
In Newman v. Advanced Technology Innovation Corp.,468 two former engineering
employees hired to work at a plant in Virginia through a recruiter with whom they signed
a consulting agreement sued the recruiter for excluding part of their regular hourly wage
when calculating the rate for overtime seeking additional overtime wages. The
employees were required to be away from their homes to work (one lived in West
Virginia and the other in California) and claimed the employer wrongly labeled part of
their regular hourly wage a “per diem” despite the fact that the per diem pay was based
on the number of hours worked. The district court granted summary judgment to the
employer but the First Circuit reversed and remanded for entry of partial summary
judgment to the plaintiffs as to liability. The First Circuit looked to the DOL’s Wage and
465
969 F. Supp. 2d 1158 (C.D. Cal. 2013).
29 U.S.C. § 207(e)(4).
467
FLSA 2003-4, 2003 WL 23374600 (July 2, 2003).
468
749 F.3d 33 (1st Cir. 2014).
466
125 Hour Division’s Field Operations Handbook (“Handbook”) for guidance. The court noted
some tension in the Handbook as it approved of reducing a per diem for one half a
day’s work, but opined the per diem is part of the regular rate of pay if based on and
varies with hours worked in a week or a day. The court concluded that the method of
calculating the per diem should use days as the measuring unit, not hours. When the
court compared the company’s explanation of the calculation of the per diem, it found
that because the employer used hours worked, not days, as a calculating factor, it
impermissibly ran afoul of the Handbook’s guidance.
In Mundell v. DBA/DMC Mining Services Corp.,469 the court denied the employer
defendant’s motion to dismiss and ordered a factual inquiry into whether a modest per
diem travel expense paid to the employee plaintiff should be included in the regular rate
for calculating overtime pay. The plaintiff traveled from home to various distant job sites
for the defendant. The defendant reimbursed the plaintiff for his travel and related
expenses at a daily rate of $75. According to the DOL regulations, 29 C.F.R. § 778.217,
a reasonable payment made by an employer to an employee as reimbursement for
work-related expenses, such as a per diem for travel and living expenses, may be
excluded from the employee’s regular rate of pay. Payments made by the employer to
the employee to cover expenses incurred in furtherance of the employer’s interest are
not included in the employee’s regular rate if the amount of the reimbursement
reasonably approximates the expenses incurred. For the same locality in which the
plaintiff traveled and worked for the defendant, the U.S. General Services
Administration had established a per diem rate of $88, and the Internal Revenue
Service had set the amount of per diem that would be excluded from taxation as wages
at $142 per day. The defendant argued that there could be no dispute that the lower per
diem it paid to the plaintiff was a reasonable approximation of his actual expenses. The
plaintiff argued, however, that many of his travel expenses were attributed to
presumably non-compensable home-to-work travel time and therefore personal
expenses that should not be considered for reimbursement. He maintained that the per
diem he received from the defendant did not bear a reasonable relationship to his actual
work-related expenses and should be included in the regular rate for his overtime pay
calculation. The district court, rejecting the recommendation of the magistrate judge,
generally agreed with the plaintiff. The court found that the amounts of the GSA and IRS
per diem payments could not alone establish the reasonableness of the defendant’s
comparable yet lower per diem. Instead, the court emphasized that “[t]he
reasonableness of the per diem payments is a fact based inquiry set forth on a case-bycase basis.”
9. “Other Similar Payments”—Section 7(e)(2)
In Flores v. City of San Gabriel,470 the trial court granted partial summary
judgment in favor of each side on issues relating to calculation of overtime payments
469
470
2013 WL 5675575 (M.D. Pa. Oct. 17, 2013).
969 F. Supp. 2d 1158 (C.D. Cal. 2013).
126 resulting from the employer’s failure to include certain cash payments made in lieu of
payments for qualified benefits in the regular rate. The plaintiffs were police officers for
the defendant city who were covered under a collective bargaining agreement which
provided that overtime hours above four per two-week pay period were payable as
either compensatory time or wages at the employee’s discretion. The employer also
provided a fixed monthly contribution for each officer to a flexible benefit plan, and
permitted officers who did not “spend” all of that contribution for cafeteria benefits,
including those who opted out of medical benefits due to having alternative coverage, to
receive any remaining contributions as taxable cash payments. During the relevant
years, between 42 and 47 percent of the benefit contributions were paid out as elective
cash payments. The city did not include these cash payments in the regular rate of
officers in calculating overtime payments. The issues in the case were whether the
employer was required to do so, and if so, whether it was liable for liquidated damages.
The city contended that the elective cash payments were excludable under the section
7(e)(2)471 exclusion as “other similar payments to an employee which are not made as
compensation for his hours of employment . . . .” The court held that since the payments
were made as compensation for work, it made no difference whether they were tied to a
regular weekly or hourly wage. The regular, periodic nature of the payments and the
fact that they were subject to taxes demonstrated that they were remuneration for work
performed, and not excludable under section 7(e)(2).
b. Pay for Other Nonproductive Hours
In Caraballo v. City of Chicago,472 the plaintiff paramedics sued the defendant for
failure to pay overtime properly, claiming it failed to pay time-and-a-half for hours
worked over 40 and failed to correctly calculate their regular rate of pay. The plaintiffs’
compensation structure, including overtime premiums, was governed by a collective
bargaining agreement (“CBA”). They received an annual salary paid in 24 equal
payments and were scheduled for 24-hours or 48-hours every week. During weeks the
plaintiffs were scheduled 48-hours, they received an additional payment for the eight
hours beyond 40 equaling half their straight-time hourly rate. The plaintiffs received
overtime pay at one-and-a-half times their straight-time hourly rate if they worked
overtime outside their scheduled shift, regardless of whether their regular schedule was
a 24-hour or 48-hour week. The CBA also provided for additional payments to the
plaintiffs that were not included in the regular rate. Two of the additional payments were
automatically paid to the plaintiffs, including one as an allowance for uniform
maintenance, while five additional payments were conditioned on the plaintiffs fulfilling
certain conditions, such as performing certain duties during their shift. The parties
cross-moved for summary judgment on whether to include the additional payments in
calculating the regular rate for FLSA overtime purposes, whether the fluctuating
workweek applied, and whether the defendant was entitled to overtime credits to offset
FLSA overtime liability. The district court held most of the additional payments should
471
472
29 U.S.C. § 207(e)(2).
969 F. Supp. 2d 1008 (N.D. Ill. 2013).
127 have been included when calculating the plaintiffs’ regular rate of pay. The court
disagreed with the defendant’s argument that the additional payments were similar to
holiday pay or traveling expenses, instead analogizing them to nondiscretionary
bonuses since the defendant had to pay the additional payments if the plaintiffs satisfied
the conditions.473 The one exception the court found was the payment for uniform
maintenance, noting the uniform payment may be excluded from the regular rate under
section 207(e). On this issue, the court found a question of fact precluded summary
judgment since it was unclear whether the uniform maintenance payment actually or
approximately equaled the amount the plaintiffs spent maintaining their uniforms.
C. Calculating Regular Rate and Overtime Under Various Methods of
Payment
1. Payment of Wages Based on an Hourly Rate
b. Employees Paid at Two or More Hourly Rates
In Rodriguez v. Republic Services,474 the district court held that the defendant’s
compensation plan did not satisfy the standard necessary to apply “two or more rates”
to the employees’ work because the employees were not doing “different kinds of work”
when those supposed rates were being applied. The court affirmed that the plaintiffs
should have been paid overtime wages on the sixth day worked at the same rate
calculated for the tasks performed from Monday through Friday, not on some other
hourly rate.
2. Payment of Wages Based on a Nonhourly Rate
a. Piece Rates Generally
In Rodriguez v. Republic Services,475 plaintiff residential route drivers for a waste
company sued the defendant employer, a waste services company, for allegedly failing
to compensate them at the proper rate of pay. The district court denied the defendant’s
motion for summary judgment. At issue was whether the defendant’s policy of paying
their garbage collector employees day rates from Monday to Friday and an hourly rate
on the weekend violated the FLSA. The plaintiffs were paid under a hybrid
compensation plan that included a daily rate of $120.00 from Monday to Friday.
Occasionally, the plaintiffs worked on weekends. The plaintiffs performed exactly the
same work on weekends they performed during weekdays. On weekends, the
defendants paid the plaintiffs $15 per hour instead of paying them the $120.00 daily rate
they were paid on weekdays. Additionally, the defendants paid the plaintiffs incentive
payments of $10.00 for each day worked, including both the regularly scheduled day
473
Id. at 1016–18.
2013 WL 5656129 (W.D. Tex. Oct. 15, 2013).
475
2013 WL 4054707 (W.D. Tex. Aug. 12, 2013).
474
128 and the sixth day. When taking into account the $60 incentive payments, the plaintiffs’
weekly hours were over 50. The court ruled that the defendant’s compensation plan
violated the FLSA, as the plaintiffs should have been paid overtime wages on the sixth
day at the same rate calculated for the tasks performed from Monday to Friday, not on
another hourly rate. The defendant did not satisfy the standard necessary to apply “two
or more rates” to the employees’ work because the employees were not doing “different
kinds of work” when those supposed rates were being applied.
b. Piece Rate with Hourly Guarantee
In Johnson v. Wave Comm GR LLC,476 plaintiff cable installation technicians
brought a collective and class action against their employer, a communications
company, and its two owners for overtime violations under the FLSA and New York
Labor Law (NYLL). In addition to allegations that the defendants failed to properly
compensate them for overtime work, the plaintiffs alleged that the defendant’s weighted
halftime formula violated the law as well. On summary judgment, the district court noted
that, under the defendants’ weighted halftime formula, an employee who performed
work quickly, and thus would have earned more based on the previous piece rate
compensation system, was paid a performance incentive based on the difference
between the amount they were paid according to their hourly wage and the amount they
would have earned under the prior piece rate compensation plan. This bonus was
included in the calculation of premium overtime wages for each pay period in which the
weighted halftime compensation plan was utilized – hence the term “weighted” to
convey the fact that the value of overtime wages was calculated by including all income
earned as required under the DOL’s definition of regular rate in the regulations. Thus,
the district court held that the company’s formula for weighted halftime compensation
did not violate either the FLSA or the NYLL.
d. Salaried Employees—Generally
In Bao Yi Yang v. Shanghai Gourmet, LLC,477 three former restaurant employees
sought damages for the restaurant owner’s failure to pay overtime wages under the
FLSA and California law. In the first trial, the district court in California found for the
employees on all claims. On appeal, the Ninth Circuit affirmed in part, reversed in part,
and remanded. The Ninth Circuit found the district court erred by relying on the
employees’ pay stubs to determine their rates of pay and how many hours they worked.
The court remanded to determine the overtime pay due under the FLSA and California
law. The district court held a second bench trial and made new findings of fact and
conclusions of law. Each employee was paid a guaranteed monthly wage and paid no
rent as he lived in a dormitory provided by the employer and was provided meals. The
court determined that each employee worked six days per week and more than eight
hours per day for the periods in question, and calculated an average hours worked per
476
477
2014 WL 988510 (N.D.N.Y. Mar. 14, 2014).
2014 WL 2211617 (N.D. Cal. May 28, 2014).
129 week for each employee. The court rejected the employer’s argument that the employee
pay stubs were accurate because the employees did not agree to the hourly rates listed
on the pay stubs prior to the work actually being performed. To determine the
employee’s hourly rate under the FLSA, the court combined the value of the room and
board provided plus the guaranteed salary to determine the monthly salary and then
multiplied it by 12 to determine the annual salary. The court divided the annual salary by
52 weeks and then further divided it by the average total hours worked per week to
calculate the hourly rate for purposes of determining overtime pay.
e. Salaried Employees—Fluctuating Workweek Method
In McCoy v. North Slope Borough,478 the plaintiffs, a group of former and current
pilots, lead pilots and coordinators in the defendant's Department of Search and Rescue
brought an action alleging they were improperly classified as exempt. During the
relevant period, the plaintiffs generally worked “a two weeks on”/”two weeks off” rotation
and were paid a fixed salary. The plaintiffs claimed they worked 168 hours per week
when they were on duty. As an alternative to its exemption defense, the defendant
argued that any overtime should be calculated using the fluctuating work week method.
The plaintiffs contended that the fluctuating work week calculation could not be used
because the defendant did not pay overtime concurrently with the fixed salary. The
district court held that the fluctuating work week method cannot be applied in a
misclassification case. More specifically, the court found that there was no
"contemporaneous provision for overtime" in addition to the fixed salary, and no clear
mutual understanding that the fixed salary was intended to compensate for all hours
worked apart from overtime premiums. Accordingly, the court denied summary
judgment for the defendant on the fluctuating work week method of calculating overtime.
In Ransom v. M. Patel Enterprises, Inc.,479 after a jury verdict finding that the
defendant retail chain misclassified the plaintiff managers as exempt executives, the
defendant appealed the district court’s computation of overtime damages. The
magistrate judge rejected the fluctuating workweek method, finding that the employer
had agreed to pay the employees for 55 hours of work per week. The Fifth Circuit
reversed and remanded for recalculation. The appellate court held that the calculation of
unpaid overtime is a mixed question of law and fact. The number of hours that the
plaintiffs' fixed salary was intended to compensate (the basis for determining the regular
rate of pay) is a question of fact, and the appropriate methodology to determine the
amount owed is a question of law. There was no written agreement regarding the
number of hours the plaintiffs were required to work. The Court of Appeals relied on
testimony and time records to establish the parties’ understanding that the plaintiffs’
salary was intended to cover 50 to 55 hours or more per week, thus it was intended to
cover all hours worked. Pursuant to the Supreme Court’s decision in Overnight Motor
478
479
2013 WL 4510780 (D. Ala. Aug. 26, 2013).
734 F.3d 377 (5th Cir. 2013).
130 Transportation Co. v. Missel,480 there is no requirement of a written agreement that an
employee’s pay is intended to cover all hours worked in order to apply the fluctuating
workweek. The court also noted that the Fifth Circuit affirmed the fluctuating workweek
approach in Blackmon v. Brookshire Grocery Co.,481 and it was error for the district
court not to follow the appellate court’s precedent. The court analogized the facts to the
Seventh Circuit’s opinion from Urnikis–Negro v. American Family Property Services482
to find that the parties’ understanding and the employees’ actual fluctuating hours
established that they were to be paid a fixed sum for the total hours worked each week.
Finally, the court held that the employer’s failure to ensure the employees were paid
minimum wage did not foreclose the application of the fluctuating workweek
methodology. Under Blackmon, in any such instances, the employees were entitled to
payment of the minimum wage, which would serve as the regular rate of pay for
purposes of computing overtime.
In O'Neill v. Mermaid Touring, Inc.,483 the plaintiff, Lady Gaga’s former personal
assistant, sued defendant Lady Gaga and her company claiming she was not paid
overtime pay for hours worked in excess of forty per week. The defendants sought
summary judgment on their claims that the plaintiff’s on-call time was not compensable
and that any overtime pay should be calculated as half-time based on the fluctuating
work week (“FWW”) approach.484 The plaintiff was paid an annual salary and no time
records were kept. The defendants conceded the plaintiff was misclassified as exempt
and was due some amount of overtime pay. The plaintiff claimed she was expected to
work or be on-call “24/7” and should be entitled to compensation 24 hours of each day.
The defendant agreed there was no schedule, and the plaintiff was expected to work
whenever the defendant needed her, but disputed that the “on call” time was
compensable. The plaintiff was expected to be available at all hours of the day or night
and while on tour, the plaintiff regularly slept in the same bed with the defendant who
would routinely wake up the plaintiff in the middle of the night to take care of the
defendant’s needs. The court concluded there was a dispute of material fact as to
whether the plaintiff’s “on-call” time was compensable.485 Moreover, because the court
determined there was a factual dispute as to whether the plaintiff worked fluctuating
hours or was required to be available to the defendant “24/7”, the court refused to apply
the FWW methodology. Finally, although the Second Circuit had not decided the issue,
the district court agreed with the circuits and district courts finding the DOL’s FWW
bulletin486 is inapplicable to a misclassified employee’s damages calculation, and
refused to grant summary judgment as to the proper measure of overtime damages
without a factual finding as to whether the plaintiff worked fluctuating hours or was a
“24/7” employee.
480
316 U.S. 572 (1942).
835 F.2d 1135 (5th Cir. 1988).
482
616 F.3d 665 (7th Cir. 2010).
483
968 F. Supp. 2d 572 (S.D.N.Y. 2013).
484
See 29 C.F.R. § 778.114(a).
485
See 29 C.F.R. § 553.221(c).
486
29 C.F.R. § 778.114.
481
131 (i.)
Salary Basis of Payment
In Caraballo v. City of Chicago,487 the plaintiff paramedics sued the defendant for
failure to pay overtime properly, claiming it failed to pay time-and-a-half for hours
worked over 40 and failed to correctly calculate their regular rate of pay. The plaintiffs’
compensation structure, including overtime premiums, was governed by a collective
bargaining agreement (“CBA”). They received an annual salary paid in 24 equal
payments and were scheduled for 24-hours or 48-hours every week. During weeks the
plaintiffs were scheduled 48-hours, they received an additional payment for the eight
hours beyond 40 equaling half their straight-time hourly rate. The plaintiffs received
overtime pay at one-and-a-half times their straight-time hourly rate if they worked
overtime outside their scheduled shift, regardless of whether their regular schedule was
a 24-hour or 48-hour week. The CBA also provided for additional payments to the
plaintiffs that were not included in the regular rate. Two of the additional payments were
automatically paid to the plaintiffs, including one as an allowance for uniform
maintenance, while five additional payments were conditioned on the plaintiffs fulfilling
certain conditions, such as performing certain duties during their shift. The parties
cross-moved for summary judgment on whether to include the additional payments in
calculating the regular rate for FLSA overtime purposes, whether the fluctuating
workweek applied, and whether the defendant was entitled to overtime credits to offset
FLSA overtime liability. The district court held the fluctuating workweek did not apply
since the plaintiffs did not receive a fixed salary. The plaintiffs’ pay varied by whether
they worked 24-hours a week or 48-hours a week, whether they worked overtime
outside of their regular shift, and whether they received additional payments that were
conditioned on duties performed during their shift. (iii.) “Clear Mutual Understanding”
In Caraballo v. City of Chicago,488 the plaintiff paramedics sued the defendant for
failure to pay overtime properly, claiming it failed pay time-and-a-half for hours worked
over 40 and failed to correctly calculate their regular rate of pay. The plaintiffs’
compensation structure, including overtime premiums, was governed by a collective
bargaining agreement (“CBA”). They received an annual salary paid in 24 equal
payments and were scheduled for 24-hours or 48-hours every week. During weeks the
plaintiffs were scheduled 48-hours, they received an additional payment for the eight
hours beyond 40 equaling half their straight-time hourly rate. The plaintiffs received
overtime pay at one-and-a-half times their straight-time hourly rate if they worked
overtime outside their scheduled shift, regardless of whether their regular schedule was
a 24-hour or 48-hour week. The CBA also provided for additional payments to the
plaintiffs that were not included in the regular rate. Two of the additional payments were
automatically paid to the plaintiffs, including one as an allowance for uniform
maintenance, while five additional payments were conditioned on the plaintiffs fulfilling
487
488
969 F. Supp. 2d 1008 (N.D. Ill. 2013).
969 F. Supp. 2d 1008 (N.D. Ill. 2013).
132 certain conditions, such as performing certain duties during their shift. The parties
cross-moved for summary judgment on whether to include the additional payments in
calculating the regular rate for FLSA overtime purposes, whether the fluctuating
workweek applied, and whether the defendant was entitled to overtime credits to offset
FLSA overtime liability. The district court held the fluctuating workweek inapplicable
since the parties did not have a clear mutual understanding. Noting that the CBA did not
mention using the fluctuating workweek, the court found the fact that the plaintiffs
understood that they were being paid one rate for hours above 40 and another for hours
above 48 was not a clear mutual understanding that the fluctuating workweek would
apply, particularly since the CBA stated the defendant would pay overtime at one-and-ahalf the regular rate.
In Gallardo v. Scott Byron & Co.,489 the district court denied the defendant snow
removal company’s motion for summary judgment as to overtime claims brought by the
plaintiffs, two salaried, non-exempt supervisors from the defendant’s property
improvement division. Both supervisors were paid on a fluctuating workweek basis. The
supervisors were paid $650 a week plus an overtime premium equaling or exceeding
half of their effective hourly rate for hours over 40 per week. The issue in the case was
whether there was a “clear mutual understanding” between the employer and employee
that the weekly salary was intended to compensate the employees at their base rate for
all hours worked during the week. The employer’s evidence indicated that the
supervisors were advised at the time of hire that the $650 per week was their base
salary for all hours worked. The employees, however, testified in their depositions that
they understood the $650 per week to be their compensation for 40 hours per week.
Their position was strengthened by the way their compensation was represented on
their paychecks, which reflected an hourly rate of $16.25 per hour, which would have
represented a 40 hour per week schedule. Their pay stubs also listed an additional pay
rate of $18 per hour, which was not consistent with the employer’s evidence regarding
the fluctuating workweek. The court concluded that this evidence, taken together, left a
material issue of fact as to whether a clear mutual understanding existed as defined in
29 C.F.R. §778.114(a). Accordingly, the district court denied summary judgment.
In Black v. Settlepou, P.C.,490 the Fifth Circuit reversed a Texas federal district
court’s finding that a plaintiff paralegal and her defendant law-firm employer agreed that
she would be compensated under the fluctuating workweek method. The defendant
employer argued that the paralegal had agreed to this form of compensation both upon
her hiring and through her continued acceptance of paychecks. The jury found that the
defendant had willfully violated the FLSA by misclassifying the employee as overtime
exempt and that she was owed 274 hours of overtime pay. Following the jury verdict,
the defendant argued that the district court should award only 50 percent of the regular
rate of pay for hours worked over 40 per week because the employee had agreed to be
paid pursuant to the fluctuating workweek method. The district court agreed and
489
490
2014 WL 126085 (N.D. Ill. Jan. 14, 2014).
732 F.3d 492 (5th Cir. 2013).
133 awarded compensatory damages in the amount of 274 times one-half the regular hourly
rate. The appellate court held that the district court’s finding on the fluctuating workweek
and award of damages was clearly erroneous because the paralegal did not agree to be
compensated in this manner. In making this determination, the appellate court relied on
the testimony of the defendant’s human resources director that she was unaware of any
fluctuating-workweek arrangement with the paralegal, as well as a firm partner’s
testimony that a full-time schedule was 37.5 hours per week. The court also noted that
the paralegal had lodged both verbal and written complaints each and every pay period
in which she was not compensated for overtime hours worked.491
f. Commission Employees
(ii.) Deferred Payments
In Morse v. Equity Lifestyle Properties, Inc.,492 the overtime claims of the plaintiff,
an RV resort salesperson, were not mooted by a settlement offer (not an offer of
judgment) of the defendant RV community, where the offer failed to provide complete
relief. In denying the defendant’s motion to dismiss, the district court held that the
defendant had improperly calculated overtime premiums due for commission earnings,
erroneously relying upon 29 C.F.R. § 778.120 to avoid conducting a week-by-week
analysis, as such regulation only applies “[i]f it is not possible or practicable to allocate
the commission among the workweeks of the period in proportion to the amount of
commission actually earned or reasonably presumed to be earned each week.”
Because the defendant kept records showing the specific week in which the plaintiff
earned commissions, it was possible to allocate the commission among workweeks,
and the alternative methods permitted in § 778.120 were not available.
V.
Special Problems Concerning the Regular Rate
F. Gap Time
In Bassett v. Tennessee Valley Authority,493 a district court held that the plaintiff
cable technicians are not entitled to gap time compensation against the defendant
Tennessee Valley Authority for hours worked up to 40 in one week. The court issued
this ruling upon a request by the parties to clarify certain legal issues that were holding
up settlement negotiations. The technicians sought gap time for hours that were
allegedly worked but not paid. The district court noted that only violations of the FLSA’s
minimum-wage or maximum-hours provisions constitute “prohibited acts” under the
FLSA, and, therefore, no claim exists for gap time under federal law.
491
Id. at 496–501.
2014 WL 1764927 (S.D. Ind. Apr. 30, 2014).
493
2013 WL 2902821 (W.D. Ky. 2013).
492
134 In Nakahata v. New York-Presbyterian Healthcare System, Inc.,494 the plaintiff
healthcare workers brought FLSA and comparable New York state law claims against
the defendant healthcare system employers alleging, inter alia, a failure to pay for “gap
time.” The Second Circuit reaffirmed its earlier decision in Lundy v. Catholic Health
System of Long Island Inc.,495 and held that the FLSA does not provide a cause of
action for unpaid gap time in overtime weeks, granting the defendant employer’s motion
to dismiss for failure to adequately plead a viable cause of action. Gap time claims are
those in which the employee has not worked 40 hours in a given week but seeks
recovery of unpaid time worked, or in which an employee has worked over 40 hours in a
given week but seeks recovery for unpaid work under 40 hours. In Nakahata, the court
followed and reaffirmed Lundy, dismissing the “gap time” claims, explaining that “[t]he
FLSA statute requires payment of minimum wages and overtime wages only; therefore,
the FLSA is unavailing where wages do not rise above the overtime threshold. The
FLSA is unavailing even when an employee works over 40 hours per week and claims
gap-time wages for those hours worked under 40 per week, unless the wages fall below
the minimum threshold. This is because the statutory language simply does not
contemplate a claim for wages other than minimum or overtime wages.”
494
495
723 F.3d 192 (2d Cir. 2013).
711 F.3d 106 (2d Cir. 2013).
135 Chapter 11
GOVERNMENT EMPLOYMENT
II.
Coverage Issues
C. Volunteers
2. Receipt of Expenses, Reasonable Benefits, or a Nominal Fee
In Mendel v. City of Gibraltar,496 the plaintiff was a dispatcher who sued his
employer alleging a violation of his FMLA rights. The district court granted summary
judgment for the city-employer, ruling that it did not employ a sufficient number of
people to be subject to the FMLA and finding that the city's volunteer firefighters were
not “employees.” The Sixth Circuit reversed the district court, finding that the volunteer
firefighters are “employees” within the meaning of both the FMLA and FLSA because of
payments that they received for answering fire calls. The firefighters were not required
to respond to emergency calls, but if they did, they were paid $15 per hour for the time
they spent responding. Because the firefighters’ hourly wage was commensurate with
that paid to employees in nearby fire stations, the court determined that it was not a
nominal fee.
IV.
FLSA Exemptions in the Public Sector
A. The White-Collar Exemptions
4. Public Sector Employees
In Benavides v. City of Austin,497 field commanders in the emergency medical
services (EMS) department brought suit for a failure to pay overtime against their
employer, the City of Austin. The city asserted that the employees were exempt under
the executive and administrative exemptions of the FLSA and were not entitled to
overtime. A jury found that the city failed to prove that plaintiffs were paid on a salary
basis. The jury also found, however, that the primary job duty of the field commanders
was management of EMS; that the field commanders had the authority to make
suggestions as to hiring, firing and promotion; and that those suggestions are given
particular weight. The jury also found that the field commanders’ primary duty included
the exercise of discretion and independent judgment with respect to matters of
significance and that their primary duty was office or non-manual work. Both parties
496
497
727 F.3d 565 (6th Cir. 2013).
2013 WL 3197636 (W.D. Tex. June 20, 2013).
136 filed post-verdict motions seeking judgment as a matter of law. A Texas district court
denied the defendant’s motion regarding the salary basis test. The district court also
addressed the plaintiffs’ motion, ruling that there are significant differences between
field commanders and their nonexempt subordinates. For example, field commanders
drive a command vehicle and do not ride on the ambulance. Field commanders may
take themselves out of service, while their nonexempt subordinates must always be
ready to respond. Field commanders also spend considerable time traveling between
stations to check on and observe their crews. The district court determined that while
the field commanders’ first responder duties are significant, the jury heard ample
evidence that field commanders engage in management activities, as they are defined
by the regulation.
5. Issues Under the Salary Basis Test
In Bozzo v. City of Gilroy,498 division chiefs of a fire department brought an action
against the City of Gilroy seeking unpaid overtime wages. The plaintiffs claimed that the
city’s furlough plan caused the plaintiffs to lose their exempt status under the FLSA. The
plan, which was negotiated with the plaintiffs’ bargaining unit, provided for a 9.23
percent reduction in pay for employees in exchange for a bank of paid leave time,
labeled “furlough time.” The city moved for summary judgment, relying on section
541.710(b), and arguing that the furlough plan was a deduction due to a budget-related
furlough that did not interrupt the salary status of employees. The California district
court – noting that there is little guidance in interpreting section 541.710(b) – ruled for
the city. In so ruling, the court noted that the regulation could potentially be read as
entitling employees to overtime in weeks where they elected to take one of their
designated furlough days. Relying on legislative history, the court found that where the
employee’s pay does not vary due to the quantity of work performed in a particular time
period, section 541.710(b) has no effect, and therefore plaintiffs did not lose their
exempt status and were not entitled to overtime pay in the weeks where they took a
furlough day.
In Cannon v. District of Columbia,499 retired police officers asserted minimum
wage and overtime violations against their employer, the District of Columbia. The
District of Columbia has a law which prohibits employees from collecting both a pension
and a salary from the District at the same time. After retirement, plaintiffs were re-hired
and for a period of time collected both their pension and new salary. When the District
discovered the violation, it began reducing the plaintiffs’ salaries by the amount of their
pension. For some employees, this practice resulted in the plaintiff receiving little or no
pay. The plaintiffs brought suit, alleging that this practice violated the minimum wage
provisions of the FLSA. The District claimed that the plaintiffs were exempt from the
FLSA under one of the white-collar exemptions. In deciding plaintiffs’ motion for
summary judgment, the District of Columbia Circuit reversed the district court, and
498
499
2013 WL 5591935 (N.D. Cal. Oct. 10, 2013).
717 F.3d 200 (D.C. Cir. 2013).
137 found that plaintiffs’ pension benefits could not be counted as compensation, and that
therefore the plaintiffs did not receive $455 per week in compensation for purposes of
the salary basis test. As such, the court found that the District had violated the FLSA
and remanded the issue to the district court for a computation of damages.
In Coniff v. Vermont,500 employees of the State of Vermont brought suit alleging
overtime violations. Both parties filed cross-motions for summary judgment regarding
whether plaintiffs were paid on a salary basis. Although noting that the motions were
made moot by the court’s decision on jurisdictional issues, the court analyzed, in dicta,
whether the State had properly deducted partial day absences. Applying the “public
accountability” exception, the court noted that the Second Circuit has not interpreted
this provision. The district court, applying the prevailing view, read the regulation to
require the State to prove that it maintains a precise accounting of employee hours for
reasons other than calculating salary. Noting that the burden on the State to prove the
“public accountability” exception is low, the court found that the State met it here in part
due to laws meant to ensure that public employees devote appropriate time to the
duties of their office.
V.
Special Provisions That Apply to Fire Protection and Law Enforcement
Employees of Public Agencies
A. Small Department Exemption
In Visco v. Aiken County,501 firefighters brought suit against their employer
alleging overtime violations under the FLSA and state law. The court ruled that the
County employed fewer than five individuals in fire protection activities and, therefore, it
was exempt from the FLSA's overtime requirements.
VI.
Determining Whether Employees Are Employed in Fire Protection or Law
Enforcement Activities
A. Fire Protection Activities
In Haro v. City of Los Angeles,502 the Ninth Circuit affirmed the district court in
determining that the plaintiff fire dispatchers did not engage in "fire protection activities."
The court found that “fire suppression” occurs at the scene of a fire itself, and because
plaintiff dispatchers do not respond to the scene of fires, they do not engage in fire
suppression under the plain meaning of section 203(y), 29 U.S.C. § 203(y). The court
further noted that while dispatchers may be trained fire fighters, their job does not
require them to be trained in fire suppression.
VII. The Federal Sector
500
2013 WL 5429428 (D. Vt. Sept. 30, 2013).
974 F. Supp. 2d 908 (D.S.C. 2013).
502
745 F.3d 1249 (9th Cir. 2014).
501
138 D. Compensatory Time
In Abbey v. United States,503 air traffic controllers alleged that the Federal
Aviation Administration's unique personnel system failed to properly compensate them
for overtime work because it paid them in compensatory time and credit hours which
carried no monetary value. The United States Court of Federal Claims granted the
employees’ motion for summary judgment, determining that the agency’s personnel
policies were contrary to the FLSA. On appeal, the circuit court concluded that certain
provisions of title 5 permitted the FAA to implement a personnel system for its
employees which conflicts with the FLSA, but that if the FAA wished to take advantage
of those exceptions to the FLSA, they must fully comply with the provisions of title 5 that
allow for compensatory time and which placed limits on credit hour accrual and provided
for pay for those hours. The Federal Circuit remanded the case to determine whether
the system designed and applied by the FAA complied with the FLSA exemptions set
forth in title 5.
G. Other Issues in the Federal Sector
1. Cases Addressing the Impact of Other Laws
In Abbey v. United States,504 air traffic controllers alleged that the Federal
Aviation Administration's unique personnel system failed to properly compensate them
under the FLSA for overtime work because it paid them in compensatory time and credit
hours which carried no monetary value. On appeal, the FAA argued that the Court of
Federal Claims lacked jurisdiction under the Tucker Act to decide issues under the
FLSA. The FAA argued that the Supreme Court's decision in United States v. Bormes505
provided that statutes that provide their own detailed remedial scheme, including
identifying the courts in which a statute may be enforced, divested the Court of Claims
and the Federal Circuit of jurisdiction. Relying on settled precedent, the Federal Circuit
found that the broad language under section 16(b) of the FLSA providing that a case
may be brought "in any Federal or State court of competent jurisdiction" did not specify
a particular court in which to bring suits, and therefore the Bormes decision did not alter
the Court of Claims’s jurisdiction under the Tucker Act to hear FLSA cases.
IX.
Unique Constitutional Defenses
B. The Eleventh Amendment
1. Cases Granting Eleventh Amendment Immunity
503
745 F.3d 1363 (Fed. Cir. 2014).
745 F.3d 1363 (Fed. Cir. 2014).
505
__ U.S. __, 133 S.Ct. 12 (2012).
504
139 In Coniff v. Vermont,506 employees of the State of Vermont, brought suit against
the State alleging overtime violations. The court held that it was without jurisdiction
based on the State's Eleventh Amendment immunity. Specifically, the court held that the
State had not waived its immunity simply because it removed the case from state court
to the federal district court nor because it had previously promised not to raise the
defense. Further, the court noted that the State is allowed to change its litigation
strategy, and added that the State’s failure to assert sovereign immunity earlier in the
litigation, despite many invitations to do so, did not constitute a waiver.
2. Cases Rejecting Eleventh Amendment Immunity
In Hill v. Watson,507 the plaintiff, an intern working for the Athletic Department of
Chicago State University (CSU), brought suit against the defendants — CSU’s
President, CSU’s Athletic Director, and a supervisor in the Athletic Department — in
their individual capacities, alleging that they unlawfully failed to pay him for his work.
The district court denied the defendant’s motion to dismiss on sovereign immunity
grounds, finding that the State of Illinois had waived its sovereign immunity by statute.
b. State Employees Sued in Their Individual Capacities
In Henley v. Simpson,508 former highway patrol K-9 officers filed an action
alleging overtime violations against the Commissioner of the Mississippi Department of
Public Safety and the Director of the Mississippi Highway Patrol in both their official and
individual capacities. The district court granted the defendants’ motion to dismiss on
sovereign immunity grounds as it related to claims in the parties’ official capacities, but
allowed the FLSA claims to continue against the parties in their individual capacities.
The defendants then pursued an interlocutory appeal. The Fifth Circuit Court of Appeals
determined that the State was the real party in interest, as any payments of wages
owed must ultimately come from the State treasury, and that the defendants were
entitled to dismissal on 11th Amendment sovereign-immunity grounds.
506
2013 WL 5429428 (D. Vt. Sept. 30, 2013).
2014 WL 440371 (N.D. Ill. Feb. 4, 2014).
508
527 F. App’x 303 (5th Cir. 2013) (per curiam).
507
140 Chapter 15
RETALIATION
III.
Protected Activities Under Section 15(a)(3)
In Russell v. Kloeckner Metals, Corp.,509 the plaintiff, a machine operator,
claimed that he was fired by his manufacturer employer in retaliation for his complaints
to the human resources department after he and other hourly, non-exempt employees
were required to attend a plant meeting off the clock. The FLSA states that it is unlawful
for any person to discharge or in any other manner discriminate against any employee
because that employee has filed a complaint.510 To establish a prima facie case of
retaliation, an employee must prove that he engaged in protected activity under the
FLSA; that his exercise of the protected right was known by the employer; that as a
result, the employer took an adverse employment action against the employee; and that
there was a causal connection between the protected activity and the adverse
employment action.511 If the employee establishes a prima facie case, the burden then
shifts to the employer to set forth a legitimate, non-retaliatory reason for the adverse
employment action.512 If the employer carries that burden, then the employee must
prove that the employer’s proffered reason was not the true reason, but merely a pretext
for retaliation.513 The district court held that the plaintiff’s alleged protected activity
raised a question of fact that was not appropriate for summary judgment, and, in so
holding, denied defendant’s motion.
C. Internal Workplace Complaints
1. Cases Holding That a Formal Complaint Is Not Required
In Hill v. Herbert Roofing & Insulation, Inc.,514 the plaintiff, a roofing employee,
filed suit against his former employer, a roofing company, asserting a claim for
retaliatory discharge in violation of the FLSA and the Michigan Minimum Wage Act. The
defendant moved for summary judgment on the grounds that the plaintiff had not stated
a prima facie claim of retaliatory discharge and, further, had not demonstrated that the
defendant’s proffered reason for the termination was pretextual. According to the
plaintiff, he asked management on multiple occasions over the course of several
months whether he was entitled to overtime and each time he was told “no.” The plaintiff
509
2014 WL 1515527 (M.D. Tenn. Apr. 18, 2014).
See 29 U.S.C. § 215(a)(3).
511
See Adair v. Charter County of Wayne, 452 F.3d 482, 489 (6th Cir. 2006).
512
Id.
513
Id.
514
2014 WL 1377587 (E.D. Mich. Apr. 8, 2014).
510
141 further alleged that he was ultimately terminated following a conversation with the
defendant’s owner in which he again asked about receiving overtime pay. In its motion
for summary judgment, the defendant argued that the plaintiff’s inquiries into the
company’s overtime pay practices did not rise to the level of protected activity under the
FLSA and, therefore, the plaintiff had failed to plead a prima facie claim of retaliatory
discharge. A Michigan district court rejected this argument, holding that although the
plaintiff “did not make any formal, written complaints,” his inquiries were sufficient to
constitute protected activity under the FLSA. Ultimately, however, the court granted the
defendant’s motion for summary judgment, holding that the plaintiff had failed to submit
sufficient evidence to establish that the defendant’s proffered reason for his termination
was mere pretext. The defendant relied on evidence establishing a poor record of work
(i.e., tardiness and missed work shifts) and the plaintiff’s on-the-job use of foul
language.
In Russell v. Kloeckner Metals, Corp.,515 the plaintiff, a machine operator,
claimed that he was fired by his manufacturer employer in retaliation for his complaints
to the human resources department after he and other hourly, non-exempt employees
were required to attend a plant meeting off the clock. The employer asserted that the
plaintiff failed to provide it with adequate notice that an FLSA complaint had been
lodged, and that plaintiff’s call to the human resources department constituted an
inquiry, not a complaint. According to the Supreme Court, a complaint is filed when a
reasonable, objective person would have understood the employee to have put the
employer on notice that the employee is asserting statutory rights under the FLSA.516
The notice does not have to be in writing, but must be sufficiently clear and detailed for
a reasonable employer to understand it, in both content and context, as an assertion of
rights protected by the FLSA.517 Since the court found that issues of fact existed as to
whether the plaintiff’s comments could be construed as complaints, it denied summary
judgment.
In Barquin v Monty’s Sunset, LLC,518 the plaintiffs, a group of restaurant
employees, sued their employer-restaurant alleging that they were fired for asserting
their rights to minimum wage and overtime compensation under the FLSA. The
plaintiffs, however, did not allege any minimum wage or overtime violations. Moreover,
none of the alleged complaints to management were in writing; rather, each plaintiff had
allegedly complained orally to the employer. The employer moved for summary
judgment. In considering the employer’s motion, the Florida district court relied on the
Supreme Court’s decision in Kasten v. Saint-Gobain Performance Plastics Corp.519 in
analyzing the sufficiency of the oral complaints: “To fall within the scope of the antiretaliation provision, a complaint must be sufficiently clear and detailed for a reasonable
employer to understand it, in light of both content and context, as an assertion of rights
515
2014 WL 1515527 (M.D. Tenn. Apr. 18, 2014).
Kasten v. Saint-Gobain Perf. Plastics Corp., 131 S. Ct. 1325, 1335 (2011).
517
Id.
518
975 F. Supp. 2d 1309 (S.D. Fla. 2013).
519
131 S. Ct. 1325, 1329 (2011).
516
142 protected by the statute and a call for their protection.”520 The district court noted that to
establish an FLSA retaliation claim it is essential that the complaint make the employer
aware of an FLSA grievance -- general work grievances would not give rise to FLSA
anti-retaliation actions. The court thus framed the question, as to the first prong of a
retaliatory discharge cause of action, as follows: Were the plaintiffs’ complaints
sufficient, in both content and context, to put the defendant on notice that FLSA
protection was being invoked? The employee complaints concerned high credit card
fees and high tip-outs; the method of compensation; and the fact that their paystubs
reflected tips, but not hourly wages.521 In addition to the complaints themselves, the
court also considered the work context in which the alleged complaints were made: the
FLSA poster was prominently displayed; the employer’s handbook advised each
employee that overtime was paid for hours worked over 40; only two employees had, in
fact, worked any overtime; and those two employees had performed minimal overtime
for no more than a two-week period. In light of these facts, the court granted summary
judgment because “under these circumstances, a reasonable employer would not
understand an employee to be asserting FLSA violations when complaints are lodged
about credit card fees, tip outs or the manner of compensation.”522
In Richard v. Carson Tahoe Regional Healthcare,523 the plaintiff, a charge nurse,
brought a retaliation claim against her former employer, a healthcare provider. The
plaintiff claimed the employer terminated her because she made internal complaints
about uncompensated break time. The internal complaints consisted of discussions with
other charge nurses and her supervisor in the two years preceding her termination. In
granting the employer’s motion for summary judgment, the court held that FLSA
protected complaints must specifically concern the FLSA and must be directly
communicated to the employer.524
In Murray v. Mary Glynn Homes, Inc.,525 the court held that an employee’s oral
complaint to her employer about excessive work hours was sufficient to establish a
claim for retaliation under the FLSA. The plaintiff, an aide for the employer’s customers,
sued alleging that the defendant employer, a provider of aides to residences of the
developmentally disabled, constructively discharged her. The plaintiff, who was paid
according to a flat shift rate, complained orally to the defendant that she should not be
required to work twenty-four hour shifts. The defendant argued that the plaintiff’s
complaint was inadequate to state a retaliation claim because she complained only
about the number of hours she was required to work, not the amount she was paid.
The district court disagreed. The court quoted the standard from the Supreme Court’s
decision in Kasten v. Saint-Gobain Performance Plastics Corp.: “To fall within the scope
of the antiretaliation provision, a complaint must be sufficiently clear and detailed for a
520
Id at 1335.
975 F. Supp. 2d at 1313.
522
Id. at 1314.
523
2014 WL 775259 (D. Nev. Feb. 25, 2014).
524
Id. at *2-3.
525
2013 WL 4054595 (N.D. Ohio Aug. 12, 2013).
521
143 reasonable employer to understand it, in light of both content and context, as an
assertion of rights protected by the statute and a call for their protection.”526 The district
court concluded that “[a]lthough Ms. Murray did not specifically complain about the
amount she was being paid, her complaint, in light of content and context, should have
put a reasonable employer on notice that she was invoking the protection of the
statute.”527
In Perkins v. Rogers Group, Inc.,528 the plaintiff, a dump truck driver, filed suit
against the defendant, his former employer, alleging that he was wrongfully discharged
for complaining about nonpayment of wages for his travel time in violation of the FLSA
and state common law. Specifically, when the plaintiff was called into his immediate
supervisor’s office to correct two inconsistent daily driver’s log entries, he allegedly
stated that “he was mad” because he was not getting paid for riding the employer’s van
to the work site.529 The plaintiff subsequently failed to report to work or to contact the
employer. The employer’s policy was to consider an employee who did not call or report
to work for three consecutive days to have voluntarily quit employment with the
company. In granting the employer’s motion for summary judgment on the plaintiff’s
wrongful/retaliatory discharge claim, a Tennessee district court found that the plaintiff’s
oral complaint did “not meet the degree of formality required to invoke the FLSA’s antiretaliation provision.”530 The complaint was only a general complaint about not being
paid for travel time and did not specifically invoke the FLSA.531 Further, the plaintiff
admitted that he never reported or complained about not being paid for travel time to the
employer’s “AlertLine” or to any state or federal agency.532 In light of both the content
and context of the plaintiff’s complaint, the court concluded that it was not sufficiently
clear and detailed for the employer to understand it as “an assertion of rights protected
by the FLSA and a call for its protection.”533 Therefore, the plaintiff failed to establish
that he engaged in protected activity under the FLSA.
2. Cases Holding That a Formal Complaint Is Required
In McCoy v. Morningside at Home,534 the plaintiff, a former home health aide,
brought an action against her employer, an elderly home care service agency, and its
parent company, alleging, among other claims, that the defendants retaliated against
her in violation of the FLSA because she complained about unpaid wages. The plaintiff
alleged that she was terminated after she called her employer from a patient's home
and complained about pay that was missing from her paycheck. The defendants filed for
526
131 S. Ct. 1325 (2011).
2013 WL 4054595 at *4.
528
2013 WL 6119076 (E.D. Tenn. Nov. 21, 2013).
529
Id. at *9–10.
530
Id. at *10.
531
Id.
532
Id.
533
Id.
534
2014 WL 737364 (S.D. N.Y. Feb. 25, 2014).
527
144 summary judgment. The district court, following a the Second Circuit’s decision in
Lambert535 and other decisions by district courts in the Second Circuit, determined that,
to be protected activity under the FLSA, a plaintiff must make an official complaint to a
governmental agency, not just the employer. Accordingly, because the plaintiff only
complained to her employer, she did not engage in protected activity under the FLSA
according to the Second Circuit, and the court granted summary judgment to the
defendants.536
In Landaeta v. New York and Presbyterian Hospital, Inc.,537 the plaintiffs provided
language interpretation services on behalf of non-English speaking patients for the
defendant hospital. The defendant eliminated its use of interpreter services after one of
the plaintiffs complained verbally to a manager that she was a “de facto employee.”
The New York district court dismissed the plaintiffs’ subsequent FLSA retaliation claims
on the basis that the verbal complaint did not specifically pertain to overtime or
minimum wage requirements. Moreover, applying Lambert v. Genesee Hospital,538 the
court held that a verbal complaint directed internally to a company manager, rather than
to a governmental entity, is insufficient to support an FLSA retaliation claim. The district
court acknowledged the Supreme Court’s holding in Kasten v. Saint–Gobain
Performance Plastics Corp.539 that oral complaints are protected under the FLSA’s antiretaliation provision; however, the court noted that the Kasten court declined to address
whether the FLSA’s anti-retaliation provision can apply to internal complaints (as
opposed to those made to governmental entities). On that basis, the court found that
Lambert remained controlling.
In Eschmann v. White Plains Crane Service, Inc.,540 the plaintiff, who was hired
as a helper, brought suit under the FLSA and the New York Labor Law against the
defendant, a crane service, for failure to pay proper overtime wages and retaliation. The
plaintiff testified that he complained to several coworkers and his employer about not
receiving overtime pay for the work he performed on-site.541 It was undisputed that he
did not complain about his overtime wages to any governmental agency.542 The plaintiff
asserted that he was terminated in retaliation for his complaints.543 The defendants
moved for partial summary judgment, arguing in part that the plaintiff’s internal
complaints did not qualify as “protected activity” under the FLSA’s anti-retaliation
provision, section 215(a)(3).544 The court noted that in Kasten v. Saint-Gobain
535
Lambert v. Genesee Hosp., 10 F.3d 46, 55 (2d Cir. 1993), abrogated on other grounds by
Kasten v. Saint-Gobain Performance Plastics Corp., 131 S. Ct. 1325, 1336 (2011).
536
McCoy, 2014 WL 737364, at * 9.
537
2014 WL 836991 (S.D.N.Y. Mar. 4, 2014).
538
10 F.3d 46 (2d Cir. 1993).
539
131 S. Ct. 1325 (2011).
540
2014 WL 1224247, at *1 (E.D.N.Y. Mar. 24, 2014).
541
Id. at *2.
542
Id.
543
Id.
544
Id. at *10.
145 Performance Plastics Corp.,545 the Supreme Court held that this provision protects oral
as well as written complaints.546 It explained that, in a case pre-dating Kasten, Lambert
v. Genesee Hosp.,547 the Second Circuit held that this provision only protected formal,
written complaints “but does not encompass complaints made to a supervisor.”548 The
court determined, consistent with “[v]irtually every district court case in this circuit that
has considered the issue,” that Kasten only abrogated Lambert with respect to the issue
of oral complaints, but it held that the rule that internal complaints are not protected
activity remains controlling precedent.549 Accordingly, the court granted the defendants’
motion as to the plaintiff’s FLSA retaliation claim.550
D. “Good Faith” Requirement
In Zalinskie v. Rosner Law Offices, P.C.,551 the plaintiff, an assistant bookkeeper
at a law office, was terminated from the defendant law firm. After being counseled for
numerous performance issues and attending a firm-wide meeting about the
enforcement of attendance and tardiness policies, the plaintiff was late to work by six
minutes and the law firm notified her that they were going to dock her salary.552 In
response, the plaintiff contended that she told the employer that it was illegal to dock
her pay when they never compensated her for overtime hours.553 The managing lawyer
asked the plaintiff where she obtained that information and the plaintiff responded that
she got it from the “Department of Labor.”554 In holding that the plaintiff had satisfied her
burden of demonstrating a prima facie case, the district court observed that a “plaintiff in
a retaliation action is not required to show her employer actually violated the FLSA; a
plaintiff’s good faith belief that her employer is in violation is sufficient.”555
In Barquin v Monty’s Sunset, LLC,556 the plaintiffs, a group of restaurant
employees, sued their employer restaurant, alleging that they were fired for asserting
their rights to minimum wage and overtime compensation under FLSA. The plaintiffs,
however, did not allege any minimum wage or overtime violations. Moreover, none of
the alleged complaints to management were in writing; rather each plaintiff had
allegedly complained orally to the employer. In considering the employer’s motion for
summary judgment, the Florida district court relied on the Supreme Court’s decision in
Kasten v Saint-Gobain Performance Plastics Corp.557 In addition to its analysis under
545
131 S. Ct. 1325, 1329 (2011).
Id.
547
10 F.3d 46, 55 (2d Cir.1993).
548
Id. (quoting Lambert, 10 F.3d at 55).
549
Id. at *11.
550
Id.
551
2014 WL 956022 (D.N.J. March 12, 2014)
552
Id. at *2
553
Id.
554
Id.
555
Id. at *6.
556
975 F. Supp. 2d 1309 (S.D. Fla. 2013).
557
131 S. Ct. 1325, 1329 (2011).
546
146 Kasten, the district court considered the applicable good faith and reasonableness
standard, and stated it as follows: “Even if an employer has the requisite notice, a
complaint will only trigger FLSA protection if the employee lodges his complaint i) in
good faith and ii) with an objectively reasonable belief that the employer’s conduct is
unlawful.”558 The plaintiffs in this case knew that they were being paid over $4 above the
applicable minimum wage, so their minimum wage claims were not objectively
reasonable and their retaliation claims were untenable.
In Little v. Technical Specialty Products, LLC,559 the plaintiff alleged that the
defendant employers fired him in violation of the retaliation provisions of the FLSA. The
jury agreed and awarded back pay. The defendants moved for judgment as a matter of
law on, among other things, grounds that the plaintiff did not have a good faith belief
that he engaged in protected activity. The district court noted that the plaintiff does not
need to prove that an actual violation of the FLSA occurred, only that he had a good
faith belief that the FLSA might be violated, but the district court also noted that the Fifth
Circuit had not yet decided whether a good faith belief is required for an FLSA
complaint.560 Nonetheless, the district court determined that, at trial, the plaintiff
presented evidence from which a reasonable jury could have concluded that the plaintiff
had a good faith belief that the FLSA was violated. Specifically, the plaintiff testified that
(1) he was aware that there were federal laws that applied to overtime and that he
thought the defendants’ overtime policy was illegal, (2) he believed the defendants
owed him for driving time because he drove a company truck and carried company
equipment to job sites, (3) the defendants previously paid him overtime for his drive time
and was still paying him at this regular rate for the driving time, and (4) he consulted an
attorney about the legality of the pay policy, and signed the defendants’ notice of the
new pay policy with the words “agreed to its contents” struck out.
IV.
Prohibited Conduct Under Section 15(a)(3)
A. Constructive Discharge
In Murray v. Mary Glynn Homes, Inc.,561 an Ohio district court decided that the
former employee plaintiff had a viable claim for constructive discharge in violation of the
anti-retaliation provision of the FLSA based on an oral complaint she made to her
supervisor. The plaintiff, an aide to defendant’s customers, sued alleging that the
defendant employer, a provider of aides to the residences of the developmentally
disabled, constructively discharged her. After she complained about excessively long
work shifts, the defendant employer scheduled her for fewer shifts (reducing her pay),
and then assigned her to go to a home where she had not been scheduled and required
her to clean out a refrigerator that had been without power for four days. The plaintiff
quit. The district court, rejecting the defendant’s motion for summary judgment, decided
558
975 F. Supp. 2d at 1314.
2013 WL 5755333 (E.D. Tex. Oct. 23, 2013).
560
Id. at *2.
561
2013 WL 4054595 (N.D. Ohio Aug. 12, 2013).
559
147 that these facts were sufficient to raise a fact issue as to whether a constructive
discharge occurred.
In Vallejo v. Northeast Independent School District,562 the plaintiff, a 26-year
school district employee, reported discrepancies in the amount of overtime reflected on
his paychecks to a senior payroll manager of the defendant school district in 2011. After
looking into his complaint, the manager found that plaintiff’s supervisor had been
making corrections to his electronic timecards for at least three years, allegedly based
on a misunderstanding that the district’s policy did not allow employees to be
compensated for unapproved overtime. After an internal audit, the district reimbursed all
employees for the amounts reflected on the electronic timecards, but provided only
$32.78 to the plaintiff, which he promptly disputed. The day after the plaintiff first
complained to the senior payroll manager, the plaintiff’s supervisor reprimanded him for
tardiness and poor work performance. After a staff meeting a few days later, his
supervisor demanded to know why the plaintiff “went over his head” and failed to follow
the “chain of command” by complaining directly to the payroll manager. The plaintiff
alleged that the supervisor then began assigning him more jobs to perform without help
or sufficient time to do them. After the plaintiff initiated a vulgar exchange with the
supervisor about constantly checking up on his work, the school district discharged the
plaintiff for insubordination. After his discharge, the plaintiff filed a claim for unpaid
overtime and retaliation under the FLSA. The school district moved for summary
judgment, claiming that the plaintiff’s own testimony without any documentary evidence
was insufficient evidence of an FLSA violation. The court observed that the school
district had similarly provided inadequate documentation and explanations for its
conclusion that $32.78 was all it owed, particularly in light of evidence from the district’s
own witnesses about the extent and duration of improper deductions. In light of the
district’s prompt investigation and audit, the court found that the plaintiff had not proven
that the FLSA violations were willful. The court also granted the district’s motion for
summary judgment on the retaliation claim, noting that the district had discharged other
employees for similar vulgar conduct in the past. Furthermore, the plaintiff had agreed in
his deposition that he would still have been working for the school district if not for his
vulgar outburst, which “negate[d] the existence of a pretextual reason for his forced
resignation.”
B. Harassing Acts at Work
In Visco v. Aiken County, South Carolina,563 the plaintiff firefighters brought a
collective action against the defendant county alleging retaliation for engaging in
protected FLSA activities. The district court granted the defendant’s motion for summary
judgment on the overtime claims.564 The court also found that one plaintiff alleging
retaliation failed to make out a prima facie case because, although he was demoted and
562
2013 WL 3050484 (W.D. Tex. June 17, 2013).
974 F. Supp. 2d 908 (D.S.C. 2013).
564
Id. at 926.
563
148 issued a written warning, he did not suffer an adverse employment action where there
was no change in his pay or job title.565 In D’Arpa v. Runway Towing Corp.,566 the plaintiffs, tow truck drivers,
dispatchers, and a secretary and office assistant, brought a class and collective action
asserting claims under the FLSA and New York Labor Law (“NYLL”) for minimum wage
overtime violations, as well as alleged retaliation under the FLSA. The plaintiffs moved
for summary judgment on their overtime, minimum wage and retaliation claims.567 The
defendants, a New York corporation (as well as the company’s President and
Operations Manager) operated a fleet of 18 tow trucks and provided road service to
disabled vehicles. The plaintiffs alleged that the defendants failed to pay them overtime
for all hours worked over 40 in a week based on a 40-hour week, only paid overtime if
an individual worked more than 12 hours in one day and, even then, only paid them $10
per hour for overtime (as opposed to one and one-half times the regular rate). The
plaintiffs further alleged that defendants failed to provide them wage statements, and
issued IRS Form W-2s only to employees who were compensated by check, and not
those they paid in cash. With respect to their FLSA retaliation claim, the plaintiffs
alleged that the defendants retaliated against three plaintiffs by “improperly” issuing IRS
Form 1099s to them weeks after they filed the lawsuit after having failed to issue IRS
W-2 forms to them in the past. Specifically, the plaintiffs alleged that the defendants did
so in an effort to force the three plaintiffs to explain and resolve “1099 issues with
Internal Revenue Service.”568 The district court denied the plaintiffs’ motion for summary
judgment on the retaliation claim, holding that the defendants’ issuance of 1099 forms to
the plaintiffs did not, by itself, constitute an adverse employment action given that
businesses are required to “classify those who work for them as employees or
independent contractors, and, based on these classifications, they must issue and file
the appropriate tax forms.”569 Though the plaintiffs argued that the issuance of the 1099
forms constituted an adverse employment action because they believed the forms to be
“improperly” issued, the court found that, given the plaintiffs’ claim in the case that the
defendant improperly classified them as independent contractors rather than
employees, the issuance of the 1099 forms could as easily have been an effort by
defendants “to favorably position themselves in this litigation, rather than a form of
retaliation.”570
In Zas v. Canada Dry Bottling Co. of New York, L.P.,571 the plaintiffs, a group of
current and former drivers, sued the defendant-employer, a bottling distributor, alleging
that they were improperly classified as independent contractors, rather than as non 565
Id.
2013 WL 3010810 (E.D.N.Y. June 18, 2013).
567
Id. at *15.
568
Id.
569
Id.at *15–16.
570
Id. at *16.
571
2013 WL 3285143 (D.N.J. June 27, 2013).
566
149 exempt employees, and as such, were owed overtime under the FLSA.572 After the
plaintiffs were reclassified as employees, the employees sought leave to amend and
add a retaliation claim.573 The district court held that an allegation that an employer’s
reduction in an existing commission structure, together with allegedly improper salaries
and unpaid overtime, could possibly state a claim for retaliation under the FLSA, but
whether that is “an adverse employment action is for another day.”574 Accordingly, the
district court permitted the plaintiffs to amend their complaint to add the retaliation claim.
In Hassinger v. Sun Way Enterprises, Inc.,575 the plaintiff, a convenience store
employee, filed a lawsuit alleging that the defendants, a convenience store and its
owner, failed to properly pay him minimum wage and overtime, allegedly failed to keep
proper records of hours worked, and paid employees cash. The plaintiff amended his
complaint several months after filing to add a count for retaliation, alleging that the
defendant reduced the number of hours plaintiff worked as a result of the lawsuit. The
parties disputed the number of hours plaintiff worked. The parties filed cross-motions for
summary judgment. To establish an adverse employment action for retaliation
purposes, the plaintiff made several allegations. The plaintiff alleged that the defendants
(1) made false accusations to plaintiff’s probation officer, (2) locked him in the building,
(3) turned on a surveillance camera at plaintiff’s sleeping area, (3) removed a curtain
that plaintiff had hung for privacy, (4) locked plaintiff out of the building (requiring him to
sleep in a shed), and (5) threatened to fire plaintiff after plaintiff filed the lawsuit. While
the court held that none of these facts constituted material adverse employment actions,
the court found that plaintiff’s claim that the defendants reduced the plaintiff’s work
hours after the lawsuit was filed amounted to an adverse action. Because the
defendants denied this was true, the court found the question to be a material issue of
fact and denied the defendants’ motion for summary judgment.
In Vallejo v. Northeast Independent School District,576 the plaintiff, a 26-year
school district employee, reported discrepancies in the amount of overtime reflected on
his paychecks to a senior payroll manager in 2011. After looking into his complaint, the
manager found that plaintiff’s supervisor had been making corrections to his electronic
timecards for at least three years, allegedly based on a misunderstanding that the
district’s policy did not allow employees to be compensated for unapproved overtime.
After an internal audit, the district reimbursed all employees for the amounts reflected
on the electronic timecards, but provided only $32.78 to the plaintiff, which he promptly
disputed. The day after the plaintiff first complained to the senior payroll manager, the
plaintiff’s supervisor reprimanded him for tardiness and poor work performance. After a
staff meeting a few days later, his supervisor demanded to know why the plaintiff “went
over his head” and failed to follow the “chain of command” by complaining directly to the
payroll manager. The plaintiff alleged that the supervisor then began assigning him
572
Id. at *1.
Id. at *2.
574
Id. at *6-7.
575
2013 WL 6175816 (M.D. Fla. Nov. 22, 2013).
576
2013 WL 3050484 (W.D. Tex. June 17, 2013).
573
150 more jobs to perform without help or sufficient time to do them. After the plaintiff initiated
a vulgar exchange with the supervisor about constantly checking up on his work, the
school district terminated the plaintiff for insubordination. After his discharge, the plaintiff
filed a claim for unpaid overtime and retaliation under the FLSA. The school district
moved for summary judgment, claiming that the plaintiff’s own testimony without any
documentary evidence was insufficient evidence of an FLSA violation. The court
observed that the school district had similarly provided inadequate documentation and
explanations for its conclusion that $32.78 was all it owed, particularly in light of
evidence from the district’s own witnesses about the extent and duration of improper
deductions. In light of the district’s prompt investigation and audit, the court found that
the plaintiff had not proven that the FLSA violations were willful. The court also granted
the district’s motion for summary judgment on the retaliation claim, noting that the
district had discharged other employees for similar vulgar conduct in the past.
Furthermore, the plaintiff had agreed in his deposition that he would still have been
working for the school district if not for his vulgar outburst, which “negate[d] the
existence of a pretextual reason for his forced resignation.” C. Postemployment Acts
In Graves v. Deutsche Bank Securities, Inc.,577 the plaintiff, a directing manager,
filed a lawsuit alleging discrimination and retaliation under the ADEA and the New York
Human Rights Law, and retaliation under the FLSA, against his employer. The Second
Circuit affirmed the district court’s dismissal of the plaintiff’s complaint on all counts. As
to the FLSA retaliation claim, the Second Circuit held that the plaintiff failed to establish
a causal relationship between a protected activity and adverse employment action
because “his termination preceded his complaints of discrimination.”578
D. Retaliatory Lawsuits
In Jones v. Judge Technical Services, Inc.,579 the plaintiff filed a collective action
against the defendant for its alleged failure to pay overtime. The plaintiff was a senior
project manager for one of the defendant’s clients and the defendant was a staffing
company that places individuals with specialized technical knowledge into temporary
employment positions. In response to the suit, the defendant raised the computeremployee exemption. Further, the defendant filed counterclaims against plaintiff for
alleged fraud and conversion (among other things); contending that plaintiff overreported the amount of time he worked for the defendant’s client in an effort to extract
additional compensation from the defendant. The plaintiff argued that the defendant’s
counterclaims constituted retaliation against the plaintiff for filing the FLSA suit. A
Pennsylvania district court denied the defendant’s summary judgment motion on
plaintiff’s claim of retaliation because it found a temporal connection of only 11 weeks
577
548 F. App’x 654 (2d Cir. 2013).
Id. at 656 (emphasis in original).
579
2013 WL 5777159 (E.D. Pa. Oct. 25, 2013).
578
151 between the filing of the plaintiff’s FLSA complaint and the defendant’s counterclaims. It
applied the McDonnell Douglas three-factor analysis, requiring (1) the filing of a
complaint, (2) an adverse employment action of baseless counterclaims for fraud and
conversion, and (3) a causal connection between the first two. The court held that the
defendant’s counterclaims raised material issues of facts as to the reason for admitted
over-reporting of time (whether employer instructed it be done) and whether the
employer suffered an injury as a result of overbilling. Thus, to the extent the fraud and
conversion counterclaims were proved baseless, such a finding would satisfy the
adverse employment action necessary to establish unlawful retaliation under the FLSA.
In Yaw Adu Poku v. BeavEx, Inc.,580 the plaintiffs, two couriers, sued their
employer, a courier company, for unpaid wages, and the defendant counterclaimed
based on an indemnity clause in the plaintiffs’ employment contracts. The plaintiff
couriers sought to dismiss the counterclaim under Rule 12(b)(6), and sought leave to
amend their complaint to add a retaliation claim under 29 U.S.C. § 215(a)(3) based on
the counterclaim.581 The court, dismissing the counterclaim for failing to state a claim,
agreed with plaintiff couriers that the statutory anti-retaliation provision applied to action
taken in retaliation for “any” complaint, even if success of plaintiffs’ wage claims was
unknown.582 The court permitted amendment to add the retaliation claim because the
defendant could not persuade the court that success on the retaliation claim was nearly
impossible.
V.
Prima Facie Case and Burden of Proof
In Zalinskie v. Rosner Law Offices, P.C.,583 the plaintiff, an assistant bookkeeper at a
law office, was terminated from the defendant law firm. After being counseled for
numerous performance issues and attending a firm-wide meeting about the
enforcement of attendance and tardiness policies, the plaintiff was late to work by six
minutes. In response, the law firm notified her that they were going to dock her
salary.584 In a meeting to discuss her insubordinate attitude, the worker claimed that it
was illegal to dock her pay when the firm never compensated her for overtime.585 The
managing lawyer, Rosner, asked the worker where she obtained this information and
she responded that she received it from the “Department of Labor.”586 Rosner then
informed her that she could leave if she did not want to be there.587 Subsequently, the
law firm manager asked the worker for proof of the wage violation, and the worker also
claimed that Rosner asked her for the website where she obtained the information. The
580
2013 WL 5937414 (D.N.J. Nov. 1, 2013). Id. at *4.
582
Id.
583
2014 WL 956022 (D.N.J. Mar. 12, 2014).
584
Id. at *2.
585
Id. at *3.
586
Id.
587
Id.
581
152 plaintiff again responded, the Department of Labor.588 Two days later, an investigator
from the New Jersey Department of Labor made an unannounced visit to the law
office.589 Four days later, Rosner and the law office manager presented the worker with
a paystub reflecting docked pay, and that the disciplinary docking of her pay was
lawful.590 Two days later, the worker was fired, allegedly for various performance
deficiencies.591 The district court denied the employer’s motion for summary
judgment.592 Observing that oral complaints may constitute protected activity under the
FLSA where they are sufficiently clear and detailed to demonstrate that an employee is
asserting rights protected by the FLSA, the court reasoned that the multiple oral
statements regarding her allegation that docking her pay was illegal was sufficient, at
the summary judgment stage, to constitute protected activity.593 The court further
reasoned that the timing of the termination, “almost contemporaneous” with written and
oral complaints and the investigator’s visit, was sufficient – standing alone – to
demonstrate prima facie causation.594 The relatively short time between the complaints
and the termination was “unusually suggestive” and sufficient to create an inference of
causation.595
In Hill v. Herbert Roofing & Insulation, Inc.,596 the plaintiff, a roofing employee,
filed suit against his former employer, a roofing company, asserting a claim for
retaliatory discharge in violation of the FLSA and the Michigan Minimum Wage Act. The
defendant moved for summary judgment on the grounds that the plaintiff had not stated
a prima facie claim of retaliatory discharge and, further, had not demonstrated that the
defendant’s proffered reason for the termination was pretextual. In ruling on the
defendant’s motion, the court first set forth the elements of a prima facie FLSA
retaliation claim: (1) the employee engaged in a protected activity, (2) the employer was
aware of the protected activity, (3) the employer took an adverse action against the
employee, and (4) there was a causal connection between the protected activity and the
adverse employment action.597 The court proceeded to find that informal, internal
complaints made by the plaintiff to management constituted protected activity and that
the defendant was aware of said activity. While there was no dispute that the plaintiff
suffered an adverse employment action when he was fired, the defendant argued that
the plaintiff had failed to establish a causal connection between his termination and his
alleged protected activity. The district court disagreed, holding that the short temporal
proximity between the plaintiff’s complaints to management regarding overtime pay and
his termination was sufficient to establish causation. Ultimately, however, the court
588
Id.
Id.
590
Id.
591
Id.
592
Id. at *8.
593
Id.
594
Id. at *7.
595
Id. at *8.
596
2014 WL 1377587 (E.D. Mich. Apr. 8, 2014).
597
Id. at *3.
589
153 granted the defendant’s motion for summary judgment, holding that the plaintiff had
failed to submit sufficient evidence to establish that the defendant’s proffered reason for
his termination (i.e., poor work record due to tardiness, unexcused absences and use of
foul language) was mere pretext.
In Galarza v. Akal Security, Inc.,598 the plaintiffs, court security officers at the
Orlando federal courthouse, sued defendant, a private contractor with the U.S. Marshals
Service, for FLSA retaliation. The trial court granted partial judgment to the defendant
on the plaintiffs’ claim of retaliation for ostensibly making internal complaints regarding
not receiving proper overtime payments. The district court concluded that the plaintiffs
had failed to demonstrate that the decision-makers were aware of the protected activity
the plaintiffs allegedly engaged in. The plaintiffs’ direct supervisor had utilized an
improper compensatory time system, which resulted in them not getting paid all
overtime hours accrued within a pay period. During an investigation conducted by their
next level supervisor regarding an unrelated series of acts of misconduct by the
plaintiffs and other coworkers, plaintiffs told him about the compensatory time system.
The next level supervisor reported his investigatory findings to the human relations
manager, which included admissions by the plaintiffs that they had engaged in some of
the alleged misconduct. The human relations manager suspended both employees, but
the suspension of one was converted to a termination when the client, the United States
Marshal Service, rejected one of the plaintiffs for continued employment. Applying the
three-part test for a prima facie case of retaliation, the court found insufficient evidence
to raise a material issue of fact as to causation because there was no evidence that the
decision-maker was aware of the protected activity. It is undisputed that the human
resources director did not talk to the plaintiffs, and that the report she received
regarding the investigation into misconduct did not include any mention of complaints
about compensatory time. Additionally, while plaintiffs mentioned the compensatory
time issue to the next level supervisor, the evidence was insufficient to establish that the
supervisor was aware that they were actually complaining about the compensatory time
to the extent that their statements in the investigation constituted a protected activity.
Because the plaintiffs failed to demonstrate that they had made complaints that the
employer’s decision-making personnel were aware of, they failed to establish a prima
facie case.
In Little v. Technical Specialty Products, LLC,599 plaintiff employee alleged that
the defendant employers fired him in violation of the retaliation provisions of the FLSA.
Following a jury finding of retaliation and award of back pay, the defendants moved for
judgment as a matter of law. One issue the district court considered was whether the
Supreme Court’s decision in University of Texas Southwestern Medical Center v.
Nassar, 133 S. Ct. 2517 (2013), in which the Court held that Title VII retaliation claims
must be analyzed under the “but-for” causation standard, impacted the jury’s verdict.600
598
2014 WL 707204 (M.D. Fla. Feb. 24, 2014). 2013 WL 5755333 (E.D. Tex. Oct. 23, 2013).
600
Id. at *3.
599
154 The plaintiff argued that the Nassar decision confirmed the causation standard for Title
VII retaliation cases, and did not impact the already established “but-for” causation
standard under FLSA retaliation cases in the Fifth Circuit. The district court agreed. The
defendants also argued that the jury instruction regarding the plaintiff’s burden was
erroneous. The instructions at issue provided that the plaintiff must prove that the
defendants’ decision to discharge him was “based in part on” knowledge of the plaintiff’s
protected activity, and that the jury may infer that the defendants discharged the plaintiff
“because” he was engaged in the protected activity if it did not believe the defendants’
reasons for termination.601 The district court held that the phrases “based in part on” and
“because” is consistent with the but-for causation standard and consistent with Fifth
Circuit and Supreme Court precedent.602 Accordingly, the defendants’ motion for
judgment as a matter of law was denied.
In Ray v. Geo Group Inc.,603 the plaintiff, a correctional counselor, brought a
retaliation claim against his former employer. The employer terminated plaintiff after he
admittedly threatened to kill a coworker in violation of corporate policy. The plaintiff
claimed the employer’s true motivation for his termination was his history of FLSA
protected activity. The Fifth Circuit affirmed the district court’s entry of summary
judgment in favor of the employer. Applying the McDonnell Douglas burden-shifting
framework, the court held that the plaintiff failed to meet his burden of establishing
pretext.604 The plaintiff produced no evidence linking his two-year-old FLSA claim to his
termination where he admitted to the conduct.
In Schemkes v. Jacob Transportation Services, LLC,605 the plaintiff, a limousine
driver, alleged that defendants, a transportation company and named individuals,
terminated his employment as a result of his filing a lawsuit alleging violations of the
FLSA. The defendants moved for summary judgment, arguing that they had learned in
the course of the plaintiff’s first FLSA lawsuit that he had made material
misrepresentations in his initial application for employment, which, according to the
defendants, had been the basis for the termination of his employment. The Nevada
district court found that the material misrepresentations constituted legitimate reasons
for the defendants’ termination of the plaintiff’s employment, and, further, that the
termination was unrelated to plaintiff’s initial FLSA suit.606 After determining that the
plaintiff had not provided any evidence to demonstrate that the defendants’ explanation
for the termination was merely pretextual, the court granted the defendants’ motion for
summary judgment.607
601
Id. at *5.
Id.
603
547 F. App’x 443 (5th Cir. 2013) (per curiam).
604
Id. at 445-46.
605
2014 WL 825947 (D. Nev. Mar. 3, 2014).
606
Id. at *5.
607
Id. at *5-6.
602
155 In Levan v. Sears, Roebuck & Co.,608 plaintiff sales associates were discharged
for violations of company policy less than two months after they complained about the
defendant retailer’s pay practices. The plaintiffs each asserted retaliation claims under
the FLSA, Tennessee common law/public policy, and the Tennessee Public Protection
Act. In support of these claims, the plaintiffs primarily relied upon the close temporal
proximity between their complaints and their discharges, and testimony from coworkers
that the store manager appeared to have been angered by their complaints. For
purposes of the plaintiffs’ FLSA retaliation claims, the court considered plaintiffs’
evidence under a “but-for” causation standard proposed by the defendant. Applying this
standard, the court found that plaintiffs’ evidence was sufficient to create a genuine
issue of material fact in regard to whether plaintiffs’ policy violations would have resulted
in their discharge in the absence of their prior complaints.
In Perez v. Acme Universal, Inc.,609 the Secretary of Labor brought suit on behalf
of construction workers for alleged failure to pay minimum wage and overtime as well as
failure to maintain adequate records. The Secretary also alleged that the employer
retaliated against employees who spoke to the Secretary and that the employer
obstructed the Secretary’s investigation. The employer moved to dismiss the retaliation
claim pursuant to Rule 12(b)(6) on the grounds that the Secretary failed to sufficiently
allege each element of the claim. The district court denied the employer’s motion to
dismiss. As to the element of protected activity, the court concluded that speaking and
cooperating with the Secretary constituted a protected activity under Kasten v. SaintGobain Performance Plastics Corp.610 The court reasoned that in Kasten, the Supreme
Court cited a decision in which the comparable retaliation provision of the National
Labor Relations Act was interpreted to protect employees who file charges or give
testimony under that statute. The court likewise found that the Secretary had sufficiently
alleged an adverse employment action. Specifically, the Secretary alleged that the
employer threatened the employees with discharge and forfeiture of security deposits;
contacting immigration authorities; contacting prospective employers to tell them not to
hire the construction workers; and threatening employees not to cooperate with the
Secretary.
In Graves v. Deutsche Bank Securities, Inc.,611 the plaintiff, a directing manager,
filed a lawsuit alleging discrimination and retaliation under the ADEA and the New York
Human Rights Law, and retaliation under the FLSA, against his employer. The Second
Circuit affirmed the district court’s dismissal of the plaintiff employee’s complaint on all
counts. As to the FLSA retaliation claim, the Second Circuit noted that the McDonnell
Douglas burden shifting analysis applies to FLSA retaliation claims, and that all of the
retaliation claims failed to establish a causal relationship between a protected activity
and adverse employment action because the protected activity – an oral complaint –
608
984 F. Supp. 2d 855 (E.D. Tenn. 2013).
2014 WL 1378241 (D. Guam Apr. 8, 2014).
610
Id. at *3 (citing Kasten, 131 S. Ct. 1325 (2011)).
611
548 F. App’x 654 (2d Cir. 2013).
609
156 occurred after the adverse employment action (i.e., termination). The Second Circuit
also held that there was no evidence that the failure to provide him with transitional
benefits or a severance or bonus upon termination constituted post-termination adverse
employment actions.
In Travers v. Flight Services & Systems Inc.,612 the plaintiff, a skycap for the
defendant, sued the defendant employer, an airline service provider, who provided
services to airlines. In April 2008, he and ten other skycaps asserted FLSA minimum
wage claims on behalf of a putative class against defendant and one of its customer
airlines. The plaintiff was the leader of the suit, encouraging others to join and
coordinating with counsel. According to his former supervisor, after the suit was filed,
the defendant’s CEO “expressly and repeatedly demanded that [the employee] be fired”
and that supervisors talk him into dropping the lawsuit. During the pendency of the 2008
case, supervisors received a complaint from a passenger that the plaintiff had solicited
a tip in violation of company policy. The plaintiff was suspended pending investigation
and then fired. The plaintiff filed a second suit against the defendant at that time,
claiming that he was fired in retaliation for the first FLSA suit. The district court granted
summary judgment for defendant; however, the First Circuit reversed, finding that a jury
could have found retaliatory animus in a company’s decision based upon the
defendant’s CEO’s allegedly “strongly held and repeatedly voiced wishes” that the
plaintiff be fired. Accordingly, the First Circuit held that a reasonable jury could infer that
knowledge of the CEO’s directive spread to other managers, including the decisionmakers who terminated the plaintiff, despite “the record contain[ing] no testimony or
document[ation] chronicling any communication regarding [plaintiff] between [the CEO
or plaintiff’s previous supervisor] and those who made the decision to fire” plaintiff.613
The First Circuit held that, “as the record now stands, there remains a genuine dispute
as to whether the people who decided to fire [plaintiff] acted with awareness of the
CEO’s desire to retaliate and, if so, whether [plaintiff] would have been fired anyway.”614
Accordingly, the First Circuit vacated the grant of summary judgment and remanded the
case for further proceedings.
VII. Remedies
A. Reinstatement and Other Injunctive Remedies
In Brackett v. St. Louis Board of Police Commissioners,615 the plaintiff, a District
Sergeant alleged that he suffered unlawful retaliation due to his participation in a
collective action against the defendant Board of Police Commissioners.616 The plaintiff
claimed he was repeatedly denied a promotion despite his personal qualifications and
612
737 F.3d 144 (1st Cir. 2013).
Id. at 146-47.
614
Id. at 150.
615
2014 WL 2442140 (E.D. Mo. May 30, 2014).
616
Id. at *1.
613
157 departmental orders to the contrary.617 The district court denied the plaintiff’s motion for
a preliminary and permanent injunction on the grounds that remedies available under
the FLSA provide complete relief where the plaintiff prevails on the merits.618
Accordingly, the court held that the plaintiff could not demonstrate the irreparable harm
required for injunctive relief because the statutory remedies of promotion and back pay
would suffice to make him whole should he prevail at trial.619
In Palma v. Metro PCS Wireless, Inc.,620 the plaintiffs, account service
representatives (ASRs) for the defendant broadband services company, brought an
unpaid overtime action under the FLSA and New York law. The plaintiffs sought
injunctive relief against alleged retaliatory actions that impacted prosecution of the case
and participation in the case by potential class members, including an injunction against
retaliation, a corrective notice to the class, and specific rights to interview all ASRs the
employer had met with concerning the case. The court, affirming the decision of the
assigned Magistrate Judge, denied the requested relief, in part, on the basis that the
underlying FLSA complaint did not include a retaliation count and the plaintiffs failed to
amend their complaint to do so. As such, no injunction could issue where the complaint
itself did not otherwise link the alleged conduct to an actionable cause of action. In
addition to defects in the pleading, the court found that the plaintiff’s allegations of
specific improper employer conduct were factually insufficient. The allegation that she
had been reassigned to a high crime area was without proof that the reassigned area
was indeed a “high crime” one and omitted the fact that the re-assignment never took
effect. Other allegations, concerning expenses audited and supervisory “ride alongs”
were “non-issues” as either work related or, in one audit example, resolved in the
plaintiff’s favor by the employer. The plaintiff also alleged that, with respect to other
ASRs, the employer met with them to persuade them not to participate in the class.
Here again, the plaintiff provided “scant” information of the content of those meetings,
and in light of employer-provided evidence that allegedly FLSA compliant procedures
were used in conducting the meetings (details were not provided in the decision),
existing district authority permitted them.
B. Monetary Damages
In Little v. Technical Specialty Products LLC.,621 the plaintiff, an hourly-paid oil rig
field service technician, filed suit against his employer, alleging, among other things,
that the defendant discharged him in retaliation for his complaints about the defendant’s
overtime policy. The plaintiff sought an award of back pay, front pay, and liquidated
damages. After a jury trial, in which the jury returned a verdict finding that the defendant
had fired the plaintiff in violation of the FLSA622 and awarded the plaintiff $105,366.25 in
617
Id. at *1-2.
Id. at *2.
619
Id.
620
2013 WL 5179989 (M.D. Fla. Sept. 13, 2013).
621
2013 WL 5755363 (E.D. Tex. Oct. 23, 2013). 622
See 29 U.S.C. § 215(a)(3).
618
158 back pay, the Texas district court requested additional briefing on the remaining issues
of front pay and liquidated damages. Following briefing on these issues, the court held
that, while reinstatement is a preferable remedy to front pay, courts may award front pay
where reinstatement is not feasible.623 The court further held that courts may consider
several non-exclusive factors in determining the appropriate award of front pay,
including: the length of the plaintiff’s employment with the defendant; the permanency of
the position the plaintiff held; the nature of the plaintiff’s work; the plaintiff’s age and
physical condition; the possibility of the consolidation of jobs; and any other nondiscriminatory factors that could have impacted the employment relationship.624 The
court also noted that front pay may be wholly denied where the plaintiff does not take
reasonable steps to mitigate damages and find substantially equivalent employment.625
Based on the facts of the case, the court ultimately held that an award of front pay was
not appropriate. The court explained that reinstatement was not feasible given the
animosity between the parties.626 However, an award of front pay was not warranted
because the plaintiff had only been employed for six months, was having significant
performance problems, and failed to show that he engaged in reasonable efforts to find
alternative employment after his employment was terminated by the defendant.627
3. Liquidated Damages
In Little v. Technical Specialty Products LLC.,628 an hourly-paid oil rig field
service technician filed suit against his employer, alleging, among other things, that the
defendant discharged him in retaliation for his complaints about the defendant’s
overtime policy. The plaintiff sought an award of back pay, front pay, and liquidated
damages. After a jury trial, in which the jury returned a verdict finding that the defendant
had fired the plaintiff in violation of the FLSA and awarded the plaintiff $105,366.25 in
back pay, the district court requested additional briefing on the remaining issues of front
pay and liquidated damages. Following briefing on these issues, the court awarded the
plaintiff $105,366.25 in liquidated damages, an amount equal to the jury’s back pay
award. In doing so, the court held that an award of liquidated damages is not mandatory
in an FLSA retaliation case.629 Instead, liquidated damages in an FLSA retaliation case
are discretionary, “requiring a finding that any relief is appropriate to effectuate the
purposes of the retaliation section and the law.”630 Nonetheless, the court awarded
liquidated damages to the plaintiff because the defendant failed to show that it acted in
good faith to comply with the law. Among other things, the court noted that there was no
623
2013 WL 5755363, at *10.
Id. at *11.
625
Id. at *13.
626
Id. at *10.
627
Id. at *13-15.
628
2013 WL 5755363 (E.D. Tex. Oct. 23, 2013). 629
Id. at *4-5.
630
Id. at *4.
624
159 evidence that the defendant consulted with an attorney or did any research whatsoever
into what the FLSA requires as far as terminating an employee.631
4. Compensatory and Punitive Damages
a. Compensatory Damages
In Adams v. Cedar Hill Independent School District,632 the plaintiff, a former
police officer, brought suit against his former employer, Cedar Hill Independent School
District. The plaintiff alleged that he was discriminated against during his employment,
terminated for discriminatory reasons, and that the defendant failed to consider him,
again for discriminatory reasons when he reapplied. The plaintiff sued, alleging violation
of a number of statutes, both federal and state.633 He also claimed he was retaliated
against and terminated in violation of the FLSA, and requested punitive damages based
on the alleged FLSA violations. The court noted sua sponte that there was no separate
action under the FLSA for termination; rather, an action for termination had to be joined
with an action of retaliation. The court therefore dismissed this action but allowed the
plaintiff leave to replead the retaliation claim but not the termination. The court then
considered whether a plaintiff can recover punitive damages under the FLSA. In so
doing, the court noted that the issue was whether section 216(b)’s provision allowing
“such legal or equitable relief” included damages for non-pecuniary relief. While some
circuit courts had allowed it, others had not, and the Fifth Circuit had not ruled on the
issue. The court did note that the Fifth Circuit had interpreted the FLSA and the Age
Discrimination in Employment Act (ADEA) consistently and the ADEA did not recognize
compensatory damages for non-pecuniary losses. Accordingly, the court dismissed the
claim for compensatory damages for non-pecuniary losses. However, the court also
said that if plaintiff could demonstrate that such relief was available elsewhere, the court
would reconsider its holding.
b. Punitive Damages
In Adams v. Cedar Hill Independent School District,634 the plaintiff, a former
police officer, brought suit against his former employer, Cedar Hill Independent School
District. The plaintiff alleged that he was discriminated against during his employment,
terminated for discriminatory reasons, and that the defendant failed to consider him,
again for discriminatory reasons when he reapplied. The plaintiff sued, alleging violation
631
Id. at *8-9.
2014 WL 66488 (N.D. Tex. Jan. 8, 2014). 633
The plaintiff raised claims under the Age Discrimination in Employment Act of 1967 (ADEA) 29
U.S.C. § 621 et. seq., Title VII of the Civil Rights Act of 1964 (Title VII), 42 U.S.C. § 2000 et seq., the
Texas Commission on Human Rights ACT (TCHRA), Tex. Labor Code Ann. § 21.001 et seq., the Fair
Labor Standards Act of 1938 (FLSA), 29 U.S.C. § 201 et seq., and mental abuse and defamation under
Texas Common Law.
634
2014 WL 66488 (N.D. Tex. Jan. 8, 2014). 632
160 of a number of statutes, both federal and state.635 He also claimed he was retaliated
against and terminated in violation of the FLSA, and requested punitive damages based
on the alleged violations of the FLSA. The court noted sua sponte that there was no
separate action under the FLSA for termination; rather, an action for termination had to
be joined with an action of retaliation. The court therefore dismissed this action but
granted plaintiff leave to replead the retaliation claim but not the termination. The court
then considered whether a plaintiff can recover punitive damages under the FLSA. In so
doing, the court noted that the issue was whether section 216(b)’s provision allowing
“such legal or equitable relief” included damages for non-pecuniary relief. While some
circuit courts had allowed it, others had not, and the Fifth Circuit had not ruled on the
issue. The court did note that the Fifth Circuit had interpreted the FLSA and the Age
Discrimination in Employment Act (ADEA) consistently and the ADEA did not recognize
punitive damages for non-pecuniary actions. Accordingly, the court dismissed the claim
for punitive damages. However, the court also said that if plaintiff could demonstrate
that such relief was available elsewhere, the court would reconsider its holding.
VIII.
Preemption of Wrongful Discharge Actions
In Visco v. Aiken County, South Carolina,636 the plaintiff firefighters brought a
collective action against the defendant county under the FLSA, and alleged retaliation
for engaging in protected FLSA activities. The district court granted the defendant’s
motion for summary judgment on the overtime claims on the ground that the defendant,
as a public agency employing less than five individuals in fire protection services, was
exempt from the provisions of the FLSA. Nonetheless, the court determined that
although the FLSA’s wage and hour provisions were inapplicable to the plaintiffs, its
anti-retaliation provisions were nonetheless applicable.637 While the Fourth Circuit had
not reached that issue, the district court found persuasive decisions from other courts
(including the Fifth Circuit, Northern District of Alabama and Southern District of Florida)
that the exemption of plaintiffs from the protections of the FLSA did not preclude them
from bringing claims under the FLSA’s anti-retaliation provision.638 In Mould v. NJG Food Service Inc.,639 the plaintiff, a restaurant server, brought a
putative hybrid action alleging tip pooling, minimum wage and state wage retention
claims, among others, against his employer. Within two months of filing his complaint,
and within days of being observed telling co-workers about his lawsuit, the plaintiff was
suspended and subsequently fired. He timely moved to amend his complaint to add a
635
The plaintiff raised claims under the Age Discrimination in Employment Act of 1967 (ADEA) 29
U.S.C. § 621 et. seq., Title VII of the Civil Rights Act of 1964 (Title VII), 42 U.S.C. § 2000 et seq., the
Texas Commission on Human Rights ACT (TCHRA), Tex. Labor Code Ann. § 21.001 et seq., the Fair
Labor Standards Act of 1938 (FLSA), 29 U.S.C. § 201 et seq., and mental abuse and defamation under
Texas Common Law.
636
974 F. Supp. 2d 908 (D.S.C. 2013).
637
Id. at 926.
638
Id. at 925-26.
639
2013 WL 4506134 (D. Md. Aug. 21, 2013).
161 claim alleging FLSA retaliation and a state “abusive discharge” tort claim, based on his
assertion of violations of state and federal minimum wage laws. The court granted his
motion to amend to add the FLSA retaliation count, finding that he met the requirements
of Rule 15(a). As to the plaintiff’s state law tort claim of abusive discharge, the court
denied the motion to amend on the ground that the plaintiff “ha[d] an available statutory
remedy, i.e., suit under the FLSA’s anti-retaliation provision, that addresses the same
conduct asserted as the basis for his tort claim of abusive discharge.”640
IX.
[Retaliation – Release of FLSA Retaliation Claims – New Heading]
In Hernandez v. Iron Container, LLC,641 the plaintiff filed a complaint for failure to
pay minimum wage and overtime against his employer, which the parties settled with
court approval. A few months later, the defendant terminated the plaintiff’s employment,
leading the plaintiff to file a second lawsuit, this time claiming retaliatory discharge.
Following mediation, the parties reached an agreement to settle the retaliatory
discharge claim and the district court subsequently entered an order requiring the
parties to submit certain information so that the court could evaluate the settlement’s
fairness. Rather than provide the requested information, the parties filed a joint notice
of voluntary dismissal under Rule 41 of the Federal Rules of Civil Procedure, and
argued that the court need not approve the settlement because it involved an FLSA
retaliatory discharge claim, not an FLSA wage claim. Citing district court decisions from
Florida and Kansas, the district court ultimately agreed with the parties and held that
“Lynn’s Food and the FLSA do not compel the Court to approve the fairness of an FLSA
retaliatory discharge settlement, provided that the terms of that settlement do not
‘contaminate’ or affect the settlement of the FLSA wage claim.”642
640
Id. at *3.
2014 WL 633848 (S.D. Fla. Feb. 18, 2014).
642
Id. at *2 (emphasis in original).
641
162 Chapter 16
RECORDKEEPING
II.
Requirements Generally Applicable to Employers of Workers Subject to the
FLSA’s Minimum Wage or Minimum Wage and Overtime Pay Requirements
A. Form of Records and Recordkeeping Systems
In Perez v. Howes,643 the Secretary of Labor brought an action for back wages
on behalf of cucumber harvesters. The Secretary asserted, among other things, claims
for the failure to maintain adequate time records and moved for summary judgment to
obtain an injunction requiring the owner to comply with the FLSA’s recordkeeping
requirements. The defendant admitted that it did not keep records of hours worked
each work day. Instead, it asked each worker on a weekly basis how many hours they
worked the previous week and calculated their hourly earnings accordingly. Based on
these facts, the court concluded that the defendant violated the FLSA’s recordkeeping
requirement.
IV.
Other Special Recordkeeping Requirements
In Barraza v Pardo,644 a live-in housekeeper brought suit alleging that she was
paid less than the minimum wage and further argued that the defendants failed to keep
accurate records of hours worked. The district court denied defendants’ summary
judgment motion due to a factual dispute as to the hours actually worked, but rejected
the plaintiff’s claim that the defendants had failed to keep proper time records. In so
holding, the court pointed to regulations which provide that for an employee who resides
on the employer’s premises, records of actual hours worked are not required, but an
employer may maintain a copy of a reasonable agreement between the employer and
the employee to establish hours worked, which existed in this matter.
C. Deductions for Board, Lodging, or Other Facilities
In Perez v. Pacific Ohana Hostel Corp.,645 the Secretary of Labor brought claims
against a hotel and its owners on behalf of guests who were also employees for back
wages and alleged a failure to maintain adequate time records. The defendants filed a
motion for summary judgment claiming, among other things, they maintained proper
records. The court noted that an employer seeking a wage credit for the cost of
providing lodging must maintain and preserve records substantiating the costs of
643
2014 WL 1028878 (W.D. Mich. Mar. 17, 2014).
985 F. Supp. 2d 1369 (S.D. Fla. 2013).
645
2013 WL 6862684 (D. Haw. Dec. 27, 2013).
644
163 providing lodging to each guest-employee. Defendants only submitted lists of the
hotels’ monthly expenses by category and submitted conclusory declarations that they
maintained the necessary payroll and time records. The court denied defendants’
motion, finding that there were disputes of material fact as to the maintenance of
adequate records and the reasonableness of the defendants’ lodging costs.
V.
Violation of Recordkeeping Requirements
In Petty v. Russell Cellular, Inc.,646 the plaintiff brought an action alleging overtime
and recordkeeping violations and sought a declaratory judgment compelling the
defendant to maintain accurate time records. The defendant moved to dismiss the
recordkeeping claim on the ground that the FLSA’s recordkeeping requirements do not
provide a private cause of action. Following Sixth Circuit precedent from Elwell v.
University Hospitals Home Care Services,647 the court held that 29 U.S.C. § 216(b)
does not authorize employee suits for recordkeeping violations, noting that the
Secretary of Labor has exclusive authority to enforce the Act's recordkeeping
provisions. The court clarified that recordkeeping violations cannot be used to satisfy an
element of an overtime violation, although evidence of those recordkeeping violations
may be admissible along with other evidence to show willfulness. Accordingly, factual
allegations of recordkeeping violations were properly included in the complaint. Finally,
the court ruled that the plaintiff’s request for declaratory relief did not save her
recordkeeping claim, noting that the plaintiff could not obtain declaratory relief on a nonexistent claim.
646
647
2014 WL 340417 (S.D. Ohio Jan. 30, 2014).
276 F.3d 832 (6th Cir. 2002).
164 Chapter 17
DEPARTMENT OF LABOR ENFORCEMENT
AND REMEDIES
II.
DOL Investigations and Other Compliance Actions
E.
Subpoenas Issued by the DOL
2.
Procedure and Practice
In Solis v. PulteGroup, Inc.,648 the Secretary of Labor petitioned the district court
in Michigan to enforce an administrative subpoena duces tecum calling for testimony
and the production of several categories of documents by a company in the residential
construction industry. The employer opposed the subpoena on the basis that it was
abusive and served for an improper purpose, including potentially collusion with a labor
union as part of a corporate campaign, and the employer sought discovery regarding
the reasons for issuing the subpoena. A magistrate judge recommended enforcing the
subpoena, and the district court agreed. The subpoena, while quite broad, was
nevertheless within the Secretary’s statutory authority and called for information
arguably relevant to enforcing the FLSA, and the Secretary did not already have access
to the information sought. The court determined that the employer had insufficient
evidence to support a showing of abuse, improper purpose, or bad faith by the
Secretary. The court held that on the record presented, there was insufficient basis to
allow discovery into potential abuse by the Secretary.
3.
Scope
In Perez v. Paragon Contractors Corp.,649 the Secretary of Labor petitioned to
enforce administrative subpoenas issued during an investigation into a pecan ranch’s
possible child labor practices. The subpoenas focused on the company hired to harvest
the pecans, as well as the company’s president, who was a member of a local religious
community. The subpoenas sought the names, ages, and contact information of all
persons who participated in the pecan harvest, the name of the bishop in the church at
the time of the harvest, and any documentation in the company’s possession. A
magistrate judge in Utah found the president’s claimed lack of knowledge regarding the
identity of the bishop and the persons who participated in the pecan harvest to be
disingenuous. Further, in response to the company’s argument that it had no
documentation in its possession, the magistrate judge emphasized that it was unlikely
that no such documentation existed when a DOL investigator had observed children
648
649
2013 WL 4482978 (E.D. Mich. Aug. 19, 2013).
2013 WL 4478070 (D. Utah Aug. 21, 2013).
165 handing in slips of paper as they departed from the pecan ranch. The magistrate judge
also noted that the company had control over the individual hired to manage the pecan
harvest and, consequently, had possession, custody, or control of any documents in
that individual’s possession as well. The magistrate judge recommended that the court
enforce the subpoenas against both parties. The district court agreed and adopted the
magistrate judge’s recommendation.
IV.
Actions for Injunctive Relief
B.
Prospective Injunctions
1.
General Standards for Issuance
In Perez v. Howes,650 the Secretary of Labor sued the owner of a farm on behalf
of cucumber harvesters who work on the farm. Among other claims, the Secretary
asserted failure to maintain adequate time records and moved for summary judgment
and an injunction requiring the owner to comply with the FLSA’s recordkeeping
requirements. The farm owner admitted that he did not keep records of hours worked
each work day, instead asking the workers to report their total hours worked each week.
The court therefore concluded that the employer violated the FLSA’s recordkeeping
requirement. With regard to injunctive relief, the court noted that the employer had
received guidance for proper recordkeeping during a previous FLSA investigation, failed
to make efforts to comply with those requirements, and had not committed to complying
in the future. The court, therefore, issued an injunction requiring the employer to
maintain accurate daily and weekly records of employee hours worked.
D.
Temporary Restraining Orders and Preliminary Injunctions
2.
Proof and Procedure
In Perez v. Jie,651 the Secretary of Labor sought injunctive relief against owners
of a restaurant and spa for failure to comply with the FLSA’s recordkeeping
requirements and for retaliation. A district court in Washington initially denied the
requests for injunctive relief, finding nothing in the record that suggested the defendants
were not complying with the FLSA. The court did, however, order the defendants to
make available certain payroll records within 30 days so that the Secretary and the
court could assess whether the defendants were in fact complying with the FLSA. The
defendants submitted incomplete payroll records, and the Secretary renewed his
request for a preliminary injunction and for sanctions. The court found that the
defendants’ payroll records failed to identify employees’ regular hourly pay rates, the
total number of hours worked per day, or the total straight-time and overtime wages
earned during the workday or workweek. The court further noted that the investigators’
surveillance of the defendants and their employees established inconsistencies
650
651
2014 WL 1028878 (W.D. Mich. Mar. 17, 2014).
2014 WL 1320130 (W.D. Wash. Mar. 31, 2014).
166 between the records produced and the activity observed. The court therefore found that
the Secretary demonstrated a likelihood of success on the merits and ordered the
defendants to provide notice to their employees, in English and Mandarin, of the FLSA’s
anti-retaliation requirement. The court also awarded sanctions in the amount of $250,
finding that while the defendants did not act in bad faith, they failed to comply with the
court order to produce full payroll records and had ample time to do so, thereby
multiplying the proceedings unnecessarily.
F.
Motions to Modify or Vacate
In Perez v. Pan-American Berry Growers, LLC,652 blueberry growers moved to
vacate consent judgments for minimum wage and recordkeeping violations that had
been entered into with the Secretary almost a year earlier. The defendants argued that
the Secretary’s use of a hot goods objection with respect to their highly perishable
products, coupled with an insistence that the growers agree to a consent judgment as a
condition of allowing the goods to ship, amounted to misconduct and duress sufficient to
warrant relief from judgment. A magistrate judge in the district court in Oregon agreed
and issued a recommendation that the consent judgments be vacated, noting that the
Secretary’s tactics effectively deprived the growers of their day in court. The court
excused the employer’s delay in seeking relief from the consent judgments, noting the
appropriateness of the grower’s attempts in the interim to obtain information regarding
the Secretary’s hot goods authority and the methodology for calculating penalties. The
court criticized the Secretary for deviating from the traditional practice of allowing an
employer to deposit disputed back wages and penalties into escrow in order to
discharge a hot goods objection, and thereafter allow the investigation to proceed
through normal administrative and judicial review.
VII.
[Evidentiary Issues in Actions Brought by the DOL – New Heading]
A.
[Informant Privilege – New Heading]
In In re Perez,653 the Secretary of Labor filed a lawsuit asserting overtime and
recordkeeping violations against a state social services agency on behalf of a statewide
group of social workers after obtaining statements from approximately 50 witnesses
suggesting off-the-clock work. During discovery, the employer produced a list of almost
2,000 potentially affected workers, and the Secretary mailed a questionnaire to roughly
1,500 individuals asking about their working conditions. Of these, around 350
employees completed and returned the questionnaire. When the employer sought
information about these statements and questionnaires in discovery, the Secretary
produced unredacted versions for 150 employees who authorized disclosure but
asserted the informant’s privilege for the remaining 250 workers and provided redacted
versions devoid of identifying information. The district court in Washington granted the
employer’s motion to compel the Secretary to answer interrogatories that would in effect
652
653
2014 WL 198781 (D. Or. Jan. 15, 2014).
749 F.3d 849, 851-59 (9th Cir. 2014).
167 identify each informant, concluding that the informant’s privilege does not apply to
statements obtained in the course of litigation and that in any event the employer’s need
for the information outweighed the Secretary’s interest in keeping the information a
secret. The Secretary petitioned the Ninth Circuit for a writ of mandamus. The Ninth
Circuit granted the writ, holding that the informant’s privilege can apply to statements
generated during litigation and that the employer’s interest in obtaining the information
is insufficient to outweigh the risk of retaliation, particularly in light of the availability of
unredacted evidence from the 150 workers who would potentially provide representative
testimony for the Secretary under the burden-shifting scheme called for in Anderson v.
Mt. Clemens Pottery Co.654
In Perez v. American Future Systems, Inc.,655 the Secretary of Labor filed a suit
on behalf of call center employees alleging failure to pay for short break periods during
their workdays and for work activities performed when not logged into the computer
system. The employer moved to compel the Secretary to disclose the identity of
potential trial witnesses. The district court in Pennsylvania denied the motion. The court
found that the Secretary properly invoked the informant’s privilege because the DOL
promised these individuals that it would attempt to keep their identities confidential and
that revealing their identities could adversely affect the employees and deter others
from reporting violations. The court rejected the employer’s asserted need for the
information in order to prepare for trial, noting that the employer was free to seek out the
same witnesses in order to interview them, to depose them, or to seek declarations from
them.
In Perez v. Stanford Yellow Cab Taxi, Inc.,656 the Secretary of Labor sought to
enjoin the defendants, various taxi and town car transportation service providers, from
obstructing an investigation and from retaliating against employees in violation of the
FLSA. In connection with the request for a preliminary injunction, the Secretary filed a
motion seeking to submit to the court certain employee declarations for in camera
review—declarations that purportedly described the defendants’ obstructive and
retaliatory conduct. The district court in California found that such a proceeding would
be prejudicial to the defendants and denied the request for in camera review. The court
noted that “in camera review that merely leads to destruction of the declarations does
nothing to remedy the fact that ex parte information will have nonetheless been
communicated to the same court that must determine whether injunctive relief is
appropriate.”657 The court also emphasized that the defendants could not fairly mount a
defense if the Secretary’s key allegations remained secret. The likelihood of success on
the merits would be at issue in ruling on the motion for preliminary injunction and,
consequently, “the matter before the court, while preliminary in its title, [wa]s more than
that since it mirror[ed] the ultimate injunctive relief requested[.]”658 The court ordered
654
328 U.S. 680, 687 (1946).
2013 WL 5728674 (E.D. Pa. Oct. 21, 2013).
656
2013 WL 6199543 (N.D. Cal. Nov. 27, 2013).
657
Id. at *2.
658
Id. at *2-3.
655
168 disclosure to the defendants of any alleged retaliatory conduct the Secretary would like
the court to consider in ruling on the motion for preliminary injunction. Mindful of the
important policies underlying the informant’s privilege, the court also noted that the DOL
could accomplish this while protecting the employees’ identities through the use of
“John Doe” declarations.
169 Chapter 18
LITIGATION ISSUES
II.
Jurisdiction
D. Arbitration
1. Individual Arbitration Agreements
a. Form and Scope of Individual Arbitration Agreements
The plaintiff in Wirth v. Ziba Enterprises, Inc.,659 entered into an arbitration
agreement with his employer Ziba Enterprises, which specifically stated that no other
parties could participate in the arbitration. The employee then sent Ziba and an
individual, who allegedly qualified as an employer, a demand letter, requesting the
parties engage in arbitration. Three months later, the employee again sent the
employers a letter demanding they initiate the arbitration by advancing all fees and
costs. Two months later, the employee filed a lawsuit in federal court. The employers
moved to compel arbitration. The employee opposed the motion, arguing the employers
had waived their right to compel and also that the individual employer could not be party
to the arbitration pursuant to the agreement, thereby permitting the employee to
proceed in court against both employers. The court granted the motion to dismiss. First,
the court held that it was not the employers’ responsibility to initiate an arbitration
proceeding, and therefore, they did not waive their right to arbitrate simply by failing to
advance all fees and costs before the employee initiated a proceeding. Second, the
court held that it was unclear under the terms of the agreement whether the individual
employer may participate in the proceedings. Regardless, the court held that, under the
theory of equitable estoppel, the individual employer could still compel arbitration so
long as the allegations made against him were of “substantially interdependent and
concerted misconduct” with the allegations made against Ziba. The court also noted
that, even if the arbitration agreement had not permitted the individual employer to be a
party to the arbitration, the appropriate course of action would be to stay the claims
against the individual employer pending resolution of the arbitration with Ziba rather
than permit the employee to proceed in court against both defendants.
In Shapp v. Mastec Services Co., Inc.,660 the plaintiffs filed a lawsuit against their
employer under the FLSA and New York labor law. The defendants moved to compel
arbitration and dismiss. The court stayed the case, pending the Second Circuit's
decision in Raniere v. Citigroup Inc.661 and the Supreme Court’s opinion in American
659
2013 WL 4774088 (N.D. Tex. Sept. 6, 2013).
2014 WL 1311937 (N.D.N.Y. Mar. 31, 2014).
661
2013 WL 4046278 (2d Cir. Aug. 12, 2013).
660
170 Express Co. v. Italian Colors Restaurant.662 After the issuance of both decisions, the
defendants moved to lift the stay, and the plaintiffs narrowed their opposition to only
argue that the agreement did not cover one of the employers because it was a
predecessor rather than a signatory, or an affiliate of a signatory, during the time period
in question. The court granted the defendants’ motion to compel, citing evidence they
presented to prove that the employer in question was indeed a subsidiary of the
signatory company at the time of plaintiffs’ employ.
In Maldonado v. Mattress Firm, Inc.,663 a mattress delivery driver filed an
overtime claim against three defendants, alleging they were all joint employers. The
plaintiff previously entered into an arbitration agreement with two of the three
defendants. The two defendants moved to compel arbitration, and the court granted the
motion. The next day, the third defendant filed a motion for judgment on the pleadings,
or in the alternative, a motion to compel arbitration. The court denied the remaining
defendant’s motion for judgment and held that the plaintiff sufficiently alleged that he
worked at the collective direction of all three defendants. The court, however, granted
the defendant’s motion to compel arbitration under the theory of equitable estoppel. The
court explained that estoppel was appropriate when a signatory to an arbitration
agreement asserts clams of “concerted conduct by both the non-signatory and one or
more of the signatories.” In making the joint employment claims, the plaintiff did not
distinguish wrongdoing between the three defendants. Therefore, the plaintiff had
effectively asserted the “interdependent and concerted misconduct” necessary to
establish the basis for equitable estoppel.
In Burks v. Wal-Mart Stores, Inc.,664 temporary workers brought minimum wage
and overtime claims against a staffing agency and a client-employer. The staffing
agency moved to compel arbitration pursuant to an arbitration clause in the workers’
agreement with the agency. The client-employer joined in the motion. The plaintiffs
sought limited discovery to support their position that the arbitration provision was
invalid because it lacked consideration. In articulating the standard a party opposing
arbitration must meet, the court analogized to Rule 56(e) of the Federal Rules of Civil
Procedure, stating that “the party seeking to remain in federal court must demonstrate
that there is a genuine issue of material fact as to the validity of the arbitration clause.”
The court granted the plaintiffs’ motion with respect to employment notices and wage
records of the named plaintiffs, finding that the information contained in those
documents, such as hours worked and wages paid, might be relevant to the question of
whether consideration existed. This information, the court reasoned, was relevant to
plaintiffs’ arbitration challenge. The court, however, denied the request for discovery
relating to the staffing agency’s bill and payment notices, non-wage employment
benefits, and unemployment proceedings involving other workers.
662
133 S. Ct. 2304 (2013) (overruling the Second Circuit’s previous decision invalidating a
contractual waiver of class arbitration).
663
2013 WL 2407086 (M.D. Fla. June 3, 2013).
664
2013 WL 4777358 (N.D. Ill. Sept. 5, 2013).
171 b.
Enforceability of Arbitration Agreement
In Isaacs v. OCE Business Services, Inc.,665 the plaintiff filed suit against his
former employer for overtime wages under the FLSA and the New York Labor Law. The
defendant filed a motion to compel arbitration, citing an arbitration policy the plaintiff
signed as a condition of employment and a revised arbitration policy found within the
employee handbook. The plaintiff argued that the agreement was unconscionable under
state law. The New York district court disagreed. First, the arbitration policy was not
substantively unconscionable because its terms applied equally to both parties and the
defendant retained responsibility for paying the arbitrator’s fees. Second, the fact that
the defendant unilaterally drafted the policy and required the plaintiff to sign it as a
condition of his employment did not render the policy procedurally unconscionable.
Third, even though the plaintiff did not sign the revised policy, it qualified as a valid and
binding agreement because the plaintiff continued to work after receiving notice of the
modifications. The district court rejected the plaintiff’s argument that the disclaimer
language in the introductory section of the handbook precluded the enforcement of the
revised policy as the revised policy was distinct from the rest of the handbook. The
revised policy was found under a separate and bolded heading, and its terms were
explicitly binding on both parties which contrasted with the disclaimer language
applicable to the non-binding and non-mutual sections of the handbook. In addition, the
revised policy referenced the original policy, and the modifications were reasonable and
favorable to the plaintiff. As such, the district court held that the plaintiff was bound to
arbitrate.
In Billingsley v. Citi Trends, Inc.,666 employees who worked as retail clothing
store managers brought a putative FLSA collective action against their employer. After
the plaintiffs filed a motion for conditional certification of the FLSA collective action, the
employer obtained declarations and mandatory arbitration agreements from potential
collective action members. The court granted the plaintiffs’ motion for conditional
certification, and ordered notice to inform putative collective action members of their
right to join the lawsuit irrespective of the arbitration agreements.667 The defendant
moved for reconsideration and moved to compel arbitration. The court held an
evidentiary hearing and denied the defendant’s motion, finding the agreements
unconscionable and that their rollout undermined the court’s authority to manage the
collective action process. During the evidentiary hearing, the district court found that the
employees “lacked meaningful choice in whether to sign the arbitration agreements”
because they were informed that they would be fired if they did not assent to the
agreements. The district court further concluded that the timing of the post-filing, precertification arbitration rollout was “‘calculated to reduce or eliminate the number of
665
666
968 F. Supp. 2d 564 (S.D.N.Y. 2013).
560 F. App’x 914 (11th Cir. 2014).
172 collective action opt-in Plaintiffs in this case’ and the rollout was ‘replete with deceit’ and
‘designed to be[ ] intimidating and coercive.’” The defendant appealed. The Eleventh
Circuit affirmed. The court of appeals noted that district courts have “broad authority” to
exercise control over the collective action process to prevent confusion and unfairness.
The district court therefore did not abuse its discretion by permitting employees to
participate notwithstanding the arbitration agreements. The court of appeals noted that
the district court limited its decision temporally and substantively to only apply to claims
in the present action as they relate to the specific agreement entered into in the summer
of 2012.
The plaintiff in Jones v. Pro Source Services668 brought a claim in district court
against her former employers for back pay and liquidated damages under Florida law
and the FLSA. The defendants moved to stay the case and compel arbitration,
presenting evidence of an arbitration agreement between the parties. The plaintiff
argued the agreement was invalid because it contained a provision that required each
party to bear her own expenses, which was incompatible with the fee-shifting provision
of the FLSA. The court declined to invalidate the agreement, reasoning that, since the
parties had agreed to arbitrate their disputes, questions concerning the existence,
scope, and validity of their agreement to arbitrate were properly resolved by the
arbitrator.
In Longnecker v. American Express Co.,669 former and current call center
employees brought overtime claims in an Arizona district court. The employees had
previously entered into arbitration agreements with their employer. The arbitration
agreements prohibited the plaintiffs from bringing any class action claims. The
defendants moved to compel arbitration. The plaintiffs argued that (1) their arbitration
agreements were not valid and enforceable because the acknowledgement form did not
relate to the arbitration agreement, (2) the agreements violate the National Labor
Relations Act (NLRA), (3) the agreements qualify as unconscionable contracts of
adhesion, and (4) the confidentiality, termination, and modification provisions of the
agreements were substantively unconscionable. The court granted the defendants’
motion. The court found that the defendants presented evidence that the
acknowledgement forms related to the arbitration agreements and therefore were
enforceable. The court then rejected the notion that the agreements violated the NLRA,
stating that, although the Ninth Circuit had not yet ruled on the appropriateness of the
NLRA’s decision in In re D.R. Horton, Inc.,670 it had previously noted that the two
appellate courts and a majority of the district courts to consider it have found it to
conflict with the Supreme Court’s rulings on the Federal Arbitration Act. The court also
held that contracts of adhesion were not per se unconscionable under Arizona law, and
the plaintiffs did not provide any further evidence under the factors necessary to support
a showing of procedural unconscionability. As for plaintiffs’ claims of substantive
668
2013 WL 3776689 (M.D. Fla. July 17, 2013).
2014 WL 2204810 (D. Ariz. May 25, 2014).
670
357 NLRB No. 184, 2012 WL 36274 (Jan. 3, 2012).
669
173 unconscionability of the termination and modification provisions, the court noted that the
Ninth Circuit has found similar unilateral terms to be unconscionable. The court also
agreed that the confidentiality provision was unfair because it provided a one-sided
restriction that only benefited the defendants. The court, however, determined that it
could sever the unconscionable clauses and enforce the remainder of the contract.
In Collins v. Taco Bell Corp.,671 the defendant sought to enforce an arbitration
agreement after the plaintiff filed suit asserting unpaid FLSA overtime, improper pay
stubs and violations of California’s unfair competition law. A California district court
found that although the agreement was not unconscionable, one clause was unfair
because it required the plaintiff to submit to a pre-arbitration internal review process.
The court noted that the rules of the internal process were not described in the
agreement and defendants had presented no further information to the court describing
its procedure. Accordingly, the court struck only this clause and compelled arbitration
pursuant to the FAA under the modified agreement.
The plaintiffs in Raniere v. Citigroup, Inc.,672 alleged that they had been
misclassified as exempt and brought a collective action against Citigroup for overtime
pay under the FLSA. Citigroup moved to compel arbitration on an individual basis and to
enforce its class and collective action waiver. The district court held that “a waiver of the
right to proceed collectively under the FLSA is unenforceable as a matter of law.” The
district court also stated that the “effective vindication doctrine” and the Second Circuit’s
decision in In re American Express Merchants' Litigation673 “require that if any one
potential class member meets the burden of proving that his costs preclude him from
effectively vindicating his statutory rights in arbitration, the clause is unenforceable as to
that class or collective.” The Second Circuit considered de novo Citigroup’s interlocutory
appeal of the denial of its motion to compel arbitration and reversed, citing its recent
decision in Sutherland v. Ernst & Young LLP,674 in which the Second Circuit applied the
Supreme Court's recent decision in American Express Co. v. Italian Colors
Restaurant675 to claims that were virtually identical to those in Raniere.
In Aguilera v. Prospect Mortgage, LLC,676 the court granted a motion to compel
arbitration in an FLSA case brought on behalf of a group of 70 loan officers who were
subject to an arbitration agreement with the defendant-employer. The petitioners sought
to compel arbitration following decertification of a putative collective action alleging
FLSA violations in which the petitioners were opt-in plaintiffs. The defendant opposed
the petitioners’ motion arguing that the petitioners waived their right to arbitrate their
claims by consenting to join the FLSA action. The court applied California law to
determine whether the petitioners waived the right to compel arbitration and stated that
671
2013 WL 3984252 (C.D. Cal. July 31, 2013).
533 F. App’x 11 (2d Cir. 2013).
673
634 F.3d 187, 196 (2d Cir. 2011) (“Amex II”).
674
726 F.3d 290 (2d Cir. 2013).
675
, ––– U.S. ––––, 133 S.Ct. 2304, 186 L.Ed.2d 417 (2013).
676
2013 WL 4779179 (C.D. Cal. Sept. 5, 2013).
672
174 a district court has no discretion to deny a motion to compel arbitration when an
arbitration agreement is valid. The court also stated that the party opposing arbitration
bears the burden of establishing waiver and must demonstrate: “(1) knowledge of an
existing right to compel arbitration; (2) acts inconsistent with that existing right; and (3)
prejudice to the party opposing arbitration resulting from such inconsistent acts.” The
court determined that, even if the petitioners had acted inconsistently with arbitration,
arbitration was proper because the defendant failed to show that it was prejudiced by
the petitioners’ actions. The court indicated that prejudice is typically found “only where
the petitioning party’s conduct has substantially undermined the important public policy
of favoring arbitration or substantially impaired the other side’s ability to take advantage
of the benefits and efficiencies of arbitration,” such as where “the petitioning party used
the judicial discovery processes to gain information about the other side’s case that
could not have been gained in arbitration;” “a party unduly delayed and waited until the
eve of trial to seek arbitration;” or “the lengthy nature of the delays associated with the
petitioning party’s attempts to litigate resulted in lost evidence.” In short, the court
reasoned that to show prejudice a defendant must do more than show that it incurred
costs and expenses by merely participating in litigation; rather, it must show that it
incurred other harms arising from arbitration after lengthy litigation, such as duplication
of litigation on the merits.
Corbin v. Affiliated Computer Services, Inc.677 involved the application of
arbitration and contractual principles to enforce an agreement that required an
employee to arbitrate on an individual basis his claim for overtime under the FLSA and
to block the employee’s collective action. The defendant employer distributed the
agreement in an email to the plaintiff. The email informed the plaintiff that the
agreement would go into effect after 30 days if the plaintiff chose to continue his
employment after that date. The defendant’s computer system recorded the date and
time that the plaintiff received and opened the email and agreement. The court
concluded that the defendant’s proof that the plaintiff opened the email with the
arbitration agreement, coupled with the fact that he chose to continue his employment
beyond the next 30 days was sufficient to meet the defendant’s burden of establishing
the existence of and mutual assent to the arbitration agreement. The plaintiff merely
submitted an affidavit denying that he had received or read the email or the agreement,
which the court found to be inadequate to contest the defendant’s proof. The court
therefore granted the defendant’s motion to compel arbitration, and stayed the lawsuit
(as opposed to dismissing it) pending the outcome of arbitration, because the potential
resolution of the plaintiff’s FLSA claims might require judicial supervision.
c.
Arbitration of Collective Action Claims
In Huffman v. Hilltop Companies, LLC,678 multiple former employees executed an
employment agreement that contained an arbitration clause. The plaintiffs filed a class
677
678
2013 WL 3804862 (M.D. Fla. July 19, 2013).
747 F.3d 391 (6th Cir. 2014).
175 action seeking overtime compensation because the defendant had allegedly
misclassified the individuals as independent contractors. A district court in Ohio denied
the defendant’s motion to dismiss and compel arbitration, and the defendant appealed.
The Sixth Circuit held that the question of whether an arbitration agreement permits
class-wide arbitration is a gateway matter, which is reserved for judicial determination
unless the parties clearly and unmistakably provide otherwise. The court found that the
parties’ agreement was silent on the question of class arbitrability, and that the
determination therefore rested with the court. As the agreement was silent, the court
concluded that the arbitration clause did not authorize class wide arbitration.
In LaVoice v. UBS Financial Services, Inc.,679 a financial advisor asserted class
and collective action claims for violations of the FLSA in a district court in New York.
The court granted the defendants’ motion to compel the plaintiff’s individual claims to
arbitration and to stay the federal court action pending the completion of the arbitration,
reasoning that: (1) the parties agreed, in the arbitration agreements, to arbitrate the
individual claims at issue; (2) the arbitration agreements were enforceable; and (3) the
plaintiff provided insufficient evidence to show that his claims were unarbitrable under
the FAA.
In D.R. Horton, Inc. v. NLRB,680 an overtime dispute arose between the employer
and one of its former employees. Like all of the company’s employees, the charging
party had agreed to arbitrate any disputes with the company on an individual basis only,
without any class or collective arbitration. Despite his agreement, the former employee
notified the company that he intended to pursue arbitration on behalf of a nationwide
class of similarly-situated employees whom, he claimed, had been misclassified as
exempt from overtime in violation of the FLSA. The employer refused to participate in
class or collective arbitration, citing the employee’s agreement. In response, the former
employee filed a charge with the National Labor Relations Board, claiming that the
agreement to forego class or collective arbitration violated his rights under the National
Labor Relations Act. The NLRB found in favor of the employee, and refused to enforce
the employer’s agreement because agreements that require employees to resolve all
disputes through individual arbitration only interfere with employee rights under section
7 of the NLRA. The Fifth Circuit overturned the NLRB’s decision concluding that
requiring an employer to allow class or collective arbitration would effectively deny the
employer the benefits of arbitration, which is a result that would violate the Federal
Arbitration Act.
In Jackson v. Home Team Pest Defense, Inc.,681 the plaintiff brought a claim for unpaid
overtime on behalf of himself and all other current and former technicians. The defendantemployer moved to compel arbitration and to dismiss, or in the alternative to stay the lawsuit.
The defendant specifically sought a determination that the plaintiff had to bring an individual
arbitration because the agreement contained a collective action waiver. The magistrate judge
679
2013 WL 5380759 (S.D.N.Y. Sept. 26, 2013).
737 F.3d 344 (5th Cir. 2013).
681
2013 WL 6051391 (M.D. Fla. Nov. 15, 2013).
680
176 recommended the court compel arbitration but not compel the plaintiff to bring his claims
individually. The defendant filed an objection to the report and recommendation seeking to
clarify whether the court or the arbitrator should decide if the plaintiff must arbitrate his claims
individually. In affirming the magistrate judge’s report and recommendation, the district court
recognized the absence of binding precedent on this particular issue. The court noted that, while
some circuits have held that the determination of whether a prohibition of class arbitration is
enforceable is a question of arbitrability that a court must decide, the Fifth Circuit has held that it
is up to the arbitrator to determine whether a contract provision prohibits class actions. The
court reasoned that a dispute over the existence of a provision prohibiting class actions, as
opposed to the provision’s enforceability, belongs before the arbitrator because it involves
matters of contract interpretation.
In Tomkins v. Amedisys, Inc.,682 home healthcare clinicians who worked as
registered nurses, physical therapists, occupational therapists or speech/language
pathologists, alleged that their employer misclassified them during a portion of their
employment and then improperly paid them after reclassification. After the plaintiffs filed
suit, the defendant sent an email to its employees indicating that they would be bound
by a new arbitration agreement. The defendant did not mention the pending lawsuit or
require the employees to sign or acknowledge the policy in any way. The plaintiffs
moved for conditional certification and asked the court to invalidate the arbitration
policy. The court agreed that the agreement at issue could be confusing, misleading, or
one-sided. It also found it troubling that a self-executing policy could impact employees’
rights in the pending litigation. The court invalidated the agreement and certified the
collective action.
In Kovachev v. Pizza Hut, Inc.,683 the plaintiff sued on behalf of all pizza delivery
drivers alleging that the defendants violated the FLSA and Illinois state law by failing to
pay minimum wage and failing to fully reimburse vehicle expenses. Pizza Hut, in
response to the plaintiff’s complaint, moved to compel arbitration of the dispute on an
individual basis pursuant to an employee arbitration provision. The language in the
arbitration provision was silent as to whether class arbitration was permitted. The
plaintiff opposed Pizza Hut’s motion and asserted that the court should leave to the
arbitrator the decision whether class arbitration would be permitted under the arbitration
provision. Siding with the plaintiff, the court held that “[w]hen an arbitration agreement is
silent as to whether class arbitration is permissible, the question should be decided by
the arbitrator.” The court reasoned that questions about what kind of arbitration
proceeding the parties agreed to are procedural questions for the arbitrator. Since the
question of whether the plaintiff could arbitrate claims on a class basis is procedural, the
arbitrator should decide.
In DIRECTV, LLC v. Arndt,684 satellite installation and repair technicians seeking
overtime wages under the FLSA filed a demand for collective or class arbitration with
682
2014 WL 129401 (D. Conn. Jan. 13, 2014).
2013 WL 4401373 (N.D. Ill. Aug.15, 2013).
684
546 F. App’x 836 (11th Cir. 2013).
683
177 the American Arbitration Association. After the arbitrator found that the plaintiffs’
arbitration agreements provided for collective arbitration of their claims, the defendant
filed a petition in federal court seeking to vacate the arbitrator’s award. In response, the
plaintiffs argued that the district court lacked subject matter jurisdiction over the
defendant’s petition and, alternatively, that the arbitrator’s award should be affirmed.
Over the plaintiffs’ objections, the district court held that it had subject matter jurisdiction
over the defendant’s petition, granted the petition to vacate the arbitrator’s decision, and
ordered the arbitration to proceed bilaterally. The plaintiffs subsequently appealed,
arguing that the district court erred by (i) holding that it had subject matter jurisdiction,
and (ii) vacating the arbitrator’s award that the arbitration agreements provided for
collective arbitration. As to subject matter jurisdiction, the appellate court affirmed the
district court’s decision and held that federal jurisdiction was proper because the
plaintiffs’ claims arose under a federal statute, i.e., the FLSA. However, the panel held
that the district court erred in granting the defendant’s petition to vacate. In reaching this
decision, the court noted that the sole question before the district court was “whether
the arbitrator (even arguably) interpreted the parties’ agreement, not whether [s]he got
its meaning right or wrong.” Based on the language of the arbitrator’s award, the
appellate court found that she had arguably interpreted the parties’ arbitration
agreements and therefore reversed the district court’s decision.
2.
Collectively Bargained Arbitration Procedures
In Souryavong v. Lackawanna County,685 the district court denied the defendant’s
motion to dismiss for lack of subject matter jurisdiction. The court rejected the
defendant’s argument that the plaintiff could not pursue a wage claim because wages
were covered by a collective bargaining agreement. The court found that the collective
bargaining agreement did not require the plaintiff to exhaust the grievance and
arbitration procedures before proceeding with an FLSA lawsuit, and even if it did, the
plaintiff’s FLSA claim did not require interpretation of the collective bargaining
agreement. The court also denied the defendant’s motion to stay pursuant to the
Federal Arbitration Act because the collective bargaining agreement did not require
arbitration of the FLSA claim.
In Rolon v. Lackawanna County,686 a county employee brought suit in federal
court for unpaid overtime under the FLSA, the Pennsylvania Wage Payment and
Collection Law (WPCL), and the Minimum Wage Act (MWA). The defendant moved to
dismiss in part for lack of subject matter jurisdiction, arguing that the plaintiff failed to
exhaust his remedies under the collective bargaining agreement, which included
mandatory grievance and arbitration procedures. The defendant also moved to stay in
the alternative, arguing that the Federal Arbitration Act compelled arbitration. As to the
motion to dismiss, the county argued that Third Circuit precedent requires employees to
first submit to arbitration whenever there is a dispute over the “application,
685
686
2014 WL 690733 (M.D. Pa. Feb. 19, 2014).
1 F. Supp. 3d 300 (M.D. Pa. 2014).
178 implementation, or interpretation” of the collective bargaining agreement. The Plaintiff,
however, argued that he sought statutory recovery, rather than contractual recovery,
therefore permitting him to proceed to court without first seeking arbitration. The district
court agreed, noting that “[p]laintiff’s FLSA claim does not depend on an interpretation
of a disputed CBA provision.” As to the defendant’s motion to stay, the court found that
the arbitration agreement did not on its terms compel arbitration of FLSA claims, making
the Federal Arbitration Act inapplicable.
In Manning v. Boston Medical Center Corp.,687 a pair of putative collective and
class actions were filed by current and former hourly, non-exempt, hospital union
employees against their employer and related entities including James Canavan
(“Canavan”), the former CEO, and Elaine Ullian (“Ullian”), the former Human Resources
Director (“HRD”). The plaintiffs originally filed two separate complaints: one in federal
court, alleging FLSA violations including unpaid work through meal-breaks, automatic
timekeeping deductions, unpaid pre- and post-shift work, and unpaid training sessions;
and another in the Massachusetts state court, alleging various violations of the common
law. The defendants removed the state case to federal court. The district court granted
the plaintiff’s remand motion finding that that all claims were completely preempted by §
301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185(a), because the
plaintiffs were union workers covered by a collective bargaining agreement ("CBA").
Thereafter, the plaintiffs filed a single amended class action complaint, adding one nonunion employee, and simultaneously moved for conditional certification. The district
court dismissed the entire amended complaint, concluding that the claims were not
sufficiently pled, struck all class and collective action allegations, and denied plaintiffs
leave to file a second amended complaint. The First Circuit reversed (in part) and held
that the amended complaint sufficiently alleged that the employees were performing
unpaid work with the knowledge of the hospital and president. The First Circuit
concluded that LMRA and the arbitration provision in the CBA did not foreclose upon
the plaintiffs’ right to bring their FLSA claims. The court reiterated long-held Supreme
Court precedent that FLSA rights could only be waived where there was a “clear and
unmistakable” waiver of the FLSA in the CBA. Finding only very broad and general
arbitration provisions, the appellate court reversed.
In Vallejo v. Garda CL Southwest, Inc.,688 the Fifth Circuit affirmed the order of a
district court in Texas, which denied the defendant’s motion to enforce the arbitration
clause of a putative collective bargaining agreement as to three intervenors in an FLSA
action. In the underlying district court action, a former driver and guard had brought
claims against an armored-car company on behalf of himself and other similarly situated
employees seeking overtime pay under the FLSA. The court compelled the named
plaintiff to arbitrate his own claims because it was undisputed that he had signed a
collective-bargaining agreement (“CBA”) that contained an arbitration clause that
covered the dispute. Thereafter, three other employees intervened and the defendants
687
688
725 F.3d 34 (1st Cir. 2013).
559 F. App’x 417 (5th Cir. 2014).
179 moved to dismiss or stay the proceedings and to compel them to arbitration as well. The
intervenors challenged both the validity of the CBA as well as whether they agreed to
the arbitration provision. The court determined that the former issue was for an
arbitrator, but the latter was for a court, to decide. The court found that there was no
evidence that the intervenors signed the CBA. Moreover, it noted that under Texas law,
which applied to the contract-formation issues, an employee who keeps working after
receiving notice of an arbitration policy is deemed to have accepted it, but the
intervenors represented that they did not know about the agreement nor did they agree
to membership in the drivers’ association. Thus, the court held that the intervenors did
not consent to arbitration of their claims, were not otherwise bound by CBA’s arbitration
clause, and denied the defendant’s motion.
In Drake v. Hyundai Rotem USA, Corp.,689 assembly line and production workers
filed overtime claims under the FLSA and Pennsylvania Minimum Wage Act (“MWA”)
seeking compensation for work off the clock and alleged unlawful meal break
deductions. The defendant filed a motion to dismiss, arguing that the plaintiffs’ MWA
claim was preempted by § 301 of the Labor Management Relations Act (“LMRA”)
because it required interpretation of the parties’ collective bargaining agreement
(“CBA”), and that the plaintiffs’ FLSA claim was precluded by their failure to exhaust the
grievance procedure set forth in the CBA. The court agreed that the LMRA preempted
the plaintiffs’ MWA claim because the CBA contained numerous provisions that would
have to be interpreted to adjudicate the plaintiffs’ claims. However, the court rejected
the defendant’s argument that the FLSA claim was precluded, holding that the CBA’s
grievance procedure was unconstitutional as a prospective waiver of a substantive
statutory right because an employee could not file a grievance without the express
approval by the union. Because the union acted as a “gatekeeper” under the CBA and
therefore could prevent the merits of an employee’s statutory claim from being heard,
the court denied the motion to dismiss and held that the plaintiffs did not fail to exhaust
their administrative remedies under the CBA.
In Bell v. Southeastern Pennsylvania Transportation Authority,690 public transit
bus and trolley operators brought a putative class action against the defendant transit
authority for unpaid wages and overtime compensation for work performed during
morning “pre-trip” inspections that were required before each daily run. The district court
in Pennsylvania granted the defendant’s motion to dismiss on the ground that the FLSA
claim required the interpretation of the parties’ collective bargaining agreements
(“CBAs”) and was therefore subject to those agreements' grievance and arbitration
provisions. The Third Circuit vacated the district court’s decision and remanded for
further proceedings. The CBAs provided compensation for a specified amount of time
for the plaintiffs’ pre-run activities and did not include that time for purposes of
calculating overtime. The plaintiffs argued that the pre-run activities took longer than
allotted for in the CBAs and that the time worked should be included for purposes of
689
690
2013 WL 4551228 (E.D. Pa. Aug. 28, 2013).
733 F.3d 490 (3d Cir. 2013).
180 calculating overtime. Thus, the court concluded that there was no claim that plaintiffs
were not being paid in accordance with the CBAs or that the CBAs were violated in any
way; the claim rather was that the operation of the CBAs failed to properly compensate
plaintiffs under the FLSA. The court confirmed that where the FLSA claim is dependent
on a threshold interpretation of the CBA, an employee must first go to arbitration before
vindicating his or her rights in federal court under the FLSA. Here, however, resolution
of the FLSA claim required a factual determination as to how long it took the plaintiffs to
perform the pre-run activities and a legal determination whether that time was
compensable and subject to the overtime provisions of the FLSA, neither of which
depended on the resolution of a disputed reading of the CBAs.
III.
Venue
A. Generally
In Shively v. PetSmart, Inc.,691 a retail employee filed suit against her employer, a
multinational retail corporation, alleging it retaliated against her for asserting a claim
under the FLSA in a previous action. The defendant filed a motion to transfer the action
from Delaware to South Carolina, where the plaintiff worked. The defendant, a
Delaware corporation with its principal place of business in Arizona, operated a chain of
stores in 48 states throughout the country. In denying the defendant’s motion to
transfer, the district court noted that both parties had chosen “legitimate” forums in
which to pursue the litigation. The court emphasized that “plaintiffs have historically
been accorded the privilege of choosing their preferred venue for pursuing their claims,”
and it declined to “elevate a defendant’s choice of venue over that of a plaintiff based on
defendant’s convenience.” The court noted that the defendant had previously litigated in
multiple states and was financially capable of litigating in Delaware. The court also
found that the action did not represent a “local controversy” because it concerned a
multinational corporation’s alleged violation of a federal law and policies enforced on a
company-wide basis. Finally, the court noted that other public interest factors, including
“the enforceability of a judgment, the public policies of the fora, and the familiarity of the
judge with state law” carried “little weight in this transfer analysis.”
C. Consolidation and Transfer
1. Section 1404 Transfer and Forum Non Conveniens
In Williams v. Sykes Enterprises, Inc.,692 the plaintiffs brought a collective action
under the FLSA and multiple state laws against their call center employers in a district
court in Minnesota, where one plaintiff resides. One of the defendants is headquartered
in Colorado and the other is headquartered in Florida, operating call centers in 11 states
and employing at-home agents in 47 states. The defendants moved to transfer venue to
691
692
983 F. Supp. 2d 474 (D. Del. 2013).
2013 WL 5663184 (D. Minn. Oct. 17, 2013).
181 Florida under 28 U.S.C. § 1404(a), arguing Florida would be more convenient for them
and many of the potential class members and witnesses. The plaintiffs opposed the
motion arguing that Florida was not more convenient for one of the two defendants, nor
was it more convenient for the majority of the class members and witnesses who are
disbursed throughout the country. The magistrate issued a report and recommendation
to deny the motion, holding that no one location would be convenient for everyone and
that transfer at this early stage would be based on little more than speculation of
convenience. The magistrate also noted that no similar litigation was pending in any
other jurisdiction and that the parties had already begun motion practice in Minnesota.
The magistrate pointed out that courts give considerable preference to plaintiff’s choice
in forum and that the nationwide nature of this action “diminishe[d] the importance of the
forum choice consideration.” The district court adopted the report and recommendation.
In Davis v. Social Service Coordinators, Inc.,693 a remote case manager brought
overtime claims under the FLSA in a collective action on behalf of current and former
employees in a particular subdivision of the company who worked overtime but were
classified as exempt. The plaintiff also brought individual wage and hour claims under
California law. Three years after the lawsuit was filed and after a district court in
California had conditionally certified an FLSA class, in which 74 additional individuals
opted to join the suit, the defendant filed a motion to change venue to the Southern
District of Florida or in the alternative, to dismiss for forum non conveniens. In
evaluating the motion to transfer, the court noted that the action could have been
brought in the Southern District of Florida, and proceeded to weigh the factors relevant
to the convenience of the witnesses and parties and the interests of justice. The court
concluded that the convenience of witnesses was a neutral factor, as it had insufficient
information to assess it, but that the convenience of the parties favored transfer to the
Southern District of Florida, given that the defendant company’s corporate office was in
Florida and 57 of the opt-in plaintiffs lived in Florida. The court further noted that the
district courts in Fresno were overloaded and that a trial of this case “may trail any
criminal case or older case that take[s] precedence,” and any potential delay “has
relevance to the convenience of the parties’ witnesses” and would create costs for both
sides. In evaluating the “interests of justice” factors, the court noted that the plaintiff’s
choice of forum was accorded “some weight,” though less deference than it would have
been entitled to had the plaintiff not been proceeding as an FLSA collective action. The
court further concluded that the remaining factors either weighed in favor of transfer or
were neutral, and it granted the motion to transfer.
3. The “First to File” Rule
In Tillery v. Higman Barge Lines, Inc.,694 a vessel-based tankerman filed a
collective action in a Texas district court on the theory that he had been misclassified as
an exempt seaman. The defendant moved to dismiss, or in the alternative to transfer,
693
694
2013 WL 4483067 (E.D. Cal. Aug. 19, 2013).
2014 WL 1689942 (S.D. Tex. Apr. 29, 2014).
182 under the “First to File” rule. The plaintiff opposed application of the rule because the
opt-in period in a similar suit brought against the same defendant had been closed for
19 months, and no one in that collective action could join this suit. The court found that
“substantial overlap” existed between the cases and granted defendant’s motion, and
transferred the case. According to the court, “substantial overlap” only requires a finding
of similar issues and not of similar parties. Failure to transfer, the court added, would be
a waste of judicial resources.
In Achari v. Signal International, LLC,695 Indian nationals who worked for the
defendant in Mississippi brought civil claims under the FLSA, among other laws, against
their employer and others alleging that the employer, through recruiters, lured them to
the United States to work in unlawful conditions. The defendants sought to consolidate
this case with three others also filed in Mississippi federal court for purposes of
transferring them to Louisiana where an earlier-filed action raising the same issues was
pending. The court approved the consolidation and ordered the cases transferred,
finding substantial overlap as to the parties and issues. Addressing the overlap of
parties, the court found all of the Mississippi plaintiffs had been plaintiffs in the
Louisiana case prior to a denial of class certification, and while the four Mississippi
cases had some defendants in common, all of the Mississippi defendants were
defendants in the Louisiana case. Similarly, while the Mississippi cases involved many
common and some unique, theories of recovery, each of the theories asserted in any of
the Mississippi cases was asserted in the Louisiana case. Finally, in rejecting the
plaintiffs’ argument, the court found that a previous denial of class certification for lack
of commonality was not equivalent to a lack of substantial overlap for purposes of
transfer.
Jones v. Xerox Commercial Solutions, LLC696 was styled as collective action
lawsuit seeking unpaid wages, liquidated damages, and attorneys’ fees, under the
FLSA. The complaint also sought additional damages predicated on supplementary
retaliation and common law claims. In particular, the plaintiffs alleged an improper
regular rate overtime calculation affected a certain class of Xerox employees. This case
was instituted in Texas when several former opt-in plaintiffs in a wage and hour
collective action filed against Xerox in Washington state opted out of that case and filed
their own collective action. The defendants filed a motion to transfer the newly filed
collective action back to Washington state but the court declined to do so. The court
listed several reasons for refusing to transfer the litigation, including the following: 1) the
first-to-file rule is a discretionary doctrine; 2) defendants failed to carry their burden of
showing that the illegal pay practices alleged in the complaint “substantially overlap”
with those alleged in the first-filed case, since the second complaint alleged additional
impermissible pay practices; 3) the second-filed case included non-FLSA claims, unlike
the first-filed case; 4) the Texas court had a greater interest in resolving the dispute; 5)
the scope of the class is narrower than in the first-filed case; 6) the parties to the dispute
695
696
2013 WL 5705660 (S.D. Miss. Oct. 18, 2013).
2013 WL 3245957 (S.D. Tex. June 26, 2013).
183 are not the same, since the Texas plaintiffs opted out of the Washington case; and 7)
weight should be given to the plaintiffs’ choice of forum.
IV.
Parties
A. Standing
1. Actions by Private Plaintiffs
In Vallejo v. Garda CL Southwest, Inc.,697 simultaneous with the finding that the
initial plaintiff Vallejo’s FLSA claims were forced to arbitration, three opt-in plaintiffs were
granted permission to intervene and continue to litigate in Texas district court. In
contrast to Vallejo who signed and was bound by an arbitration agreement, the
intervening opt-in plaintiffs did not sign any arbitration agreement. They challenged the
validity of the arbitration agreement, and the threshold question of whether they had
ever assented to the arbitration provision itself. The district court in Texas reasoned
that, “while the invalidity challenge is for an arbitrator to decide . . . the arguments that
they never signed the agreement containing the arbitration provision or otherwise
assented raise threshold issues of arbitrability, that must be decided by the court . . . .”
The court explained that, pursuant to Supreme Court precedent, "absent a valid
provision specifically committing such disputes to an arbitrator, the contract-formation
issue was for the court to decide.” Because arbitration agreements are matters of
contract, its validity is governed by state contract law. Consequently, under Texas law,
the fact that the plaintiffs had not signed the arbitration agreement was not dispositive of
whether they assented to it. Specifically, Texas law recognizes that an employee who
has received notice of an arbitration policy accepts it by continuing to work with
knowledge of the provisions. However, "'to prove notice, an employer asserting
modification must prove that he unequivocally notified the employee of definite changes
in employment terms.'" Therefore, because Garda could not prove that the intervenors
had notice of the agreement and the arbitration clause it contained, and continued to
work after receiving that notice, the court concluded that the intervenors did not consent
to arbitration and were not bound by the arbitration clause.
In Colon v. Major Perry Street Corp.,698 the issue before the court was whether
undocumented plaintiffs could recover for unpaid minimum wage and overtime and
whether discovery into the plaintiffs’ immigration status was permissible. The court
examined the statutory text, legislature history and DOL’s interpretation of the FLSA and
compared NLRA and FLSA precedent and remedies in concluding that undocumented
workers are eligible for unpaid wages and denying discovery into a plaintiff’s
immigration status. The court noted that the text of the FLSA requires employers to pay
employees for work performed and that employee is broadly defined and any
exemptions listed in the FLSA do not include undocumented aliens. The court also
697
698
2013 U.S. Dist. LEXIS 12327, at *1 (S.D. Tex. Jan. 30, 2013).
2013 WL 6671770 (S.D.N.Y. Dec. 19, 2013).
184 noted that section 11(d) of the Immigration Reform and Control Act specifically
authorized the appropriation of funds to pay for increased enforcement of the FLSA on
behalf of undocumented workers. The legislative history of the FLSA noted that the
intent was to provide a “fair day’s pay for a fair day’s work.” The court also noted that
the legislative history of the IRCA included the concept that employers should not be
able to depress wages and working conditions by employing undocumented workers,
who would have no protections under the FLSA. The DOL has consistently interpreted
the FLSA as covering undocumented workers for over 60 years, the court commented.
The court concluded undocumented workers are entitled to back pay for the work they
perform.699
D. Joint Employment and Individual Defendants
In Stuart v. Resurgens Risk Management, Inc.,700 a former account
representative sued the employer insurance company and corporate officers for
overtime resulting from off-the-clock work. In determining whether the corporate officers
were employers under the FLSA, the court examined the circumstances of the whole
activity to gauge the economic realities of the relationship between the parties. The
Georgia district court denied the plaintiff’s motion for partial summary judgment as to the
president’s status as an employer where there were conflicting facts as to whether the
president actually supervised plaintiff and/or exercised day to day operational control.
Although the president undisputedly had authority to hire and fire employees and set
their compensation, it was not clear whether that power extended to the plaintiff’s
division. The court granted the plaintiff’s motion for partial summary judgment regarding
the vice-president’s employer status holding that the vice president, who supervised the
plaintiff’s division, was an employer under the FLSA. The vice president had day-to-day
operational control over the plaintiff’s division, including the power to set compensation
and hire and fire employees. The vice president also had sufficient control over the
plaintiff’s employment even though he required the CEO’s approval to authorize
overtime.
In Porcal v. Ciuffo,701 the plaintiff, a construction worker, sued his employer, a
sub-contractor, and individual owners and officers of the employer, for violations of the
FLSA and state wage and hour laws. After a bench trial, the Massachusetts district
court found for the plaintiff and awarded damages against all of the defendants. The
court held that the individual defendants were “jointly and severally liable for violating
the FLSA and Massachusetts wage and overtime laws . . . .” noting that “the FLSA
includes any person acting directly or indirectly in the interest of an employer in relation
to an employee.” The court used the following factors to determine individual liability
under the FLSA: “‘the individual’s ownership interest; degree of control over the
corporation’s financial affairs and compensation practices; and role in causing the
699
Id.
2013 WL 2903571 (N.D. Ga. June 12, 2013).
701
2013 WL 3989668 (D. Mass. Aug. 1, 2013).
700
185 corporation to compensate (or not to compensate) employees in accordance with the
FLSA.’” The court noted that both the president and treasurer, the two individual
defendants, actively managed and controlled the corporate defendant.
In Arteaga v. Lynch,702 a group of former employees of a plastics manufacturing
company brought claims for unpaid wages against the business owner and the owner’s
brother, who assisted with managing the business and strategic planning. The plaintiffs
moved for summary judgment against the brother, requiring an Illinois district court to
answer the threshold question of whether the brother was an employer for purposes of
the FLSA. The court first noted that the FLSA defines the term “employer” broadly, and
that courts have imposed liability under the FLSA on individuals in “a range of corporate
positions, including general managers, provided such individuals acted on behalf of the
corporation to cause the violations.” The court went on to apply the “economic reality”
test, focusing on whether the brother: 1) had the power to hire and fire the employees;
2) supervised and controlled employee work schedules or conditions of employment; 3)
determined the rate and method of payment; and 4) maintained employment records.
Applying these factors, the court found that the brother: 1) had the power to hire and fire
employees; 2) set work schedules and supervised employees, having asked employees
to continue working without pay; 3) did not determine the rates and methods of payment
for employees, though had significant influence on the amount employees were paid;
and 4) did not maintain employment records. In addition to these factors, the court
considered highly probative whether the brother had the ability to bring about violations
under the FLSA. Finding that he gave instructions to employees to work without pay and
had influence and involvement in payroll issues, the court concluded that the brother
was an employer for purposes of the FLSA.
In Roman v. Guapos III, Inc.,703 the individual defendants owned or managed five
separate restaurants that were operated under different corporations and employed
different workers. The plaintiffs were waiters and busboys who worked at just one of
these restaurants. In their second amended complaint, the plaintiffs sought to pursue a
collective action for alleged FLSA violations on behalf of themselves and all similarly
situated employees who worked at all five of the restaurants operated by two of the
individual defendants. The plaintiffs named five corporate defendants, one for each of
the five restaurants at issue, and also named the co-owners of all five restaurants and
the general manager of the restaurant where they actually worked, as individual
defendants. The defendants subsequently filed a motion to dismiss arguing, among
other things, that the court did not have subject matter jurisdiction over, and the plaintiffs
did not have standing to bring, claims against the corporate defendants operating
restaurants at which the plaintiffs never worked. In particular, the defendants argued
that the plaintiffs had failed to sufficiently allege that the defendants were plaintiffs’
employer for purposes of the FLSA and state wage claims. The court granted the
defendants’ motion in part, finding that the plaintiffs failed to allege any facts that would
702
703
2013 WL 5408580 (N.D. Ill. Sept. 26, 2013).
970 F. Supp. 2d 407 (D. Md. 2013).
186 suggest they were employed by any of the corporate defendants other than the
corporate defendant operating the restaurant at which they actually worked. The court
held that under prevailing FLSA case law, the plaintiffs were required to plead sufficient
facts to establish an employer-employee relationship as to each defendant under the
“economic realities” test. Because the plaintiffs failed to allege sufficient facts to present
a plausible employer-employee relationship regarding four of the corporate defendants,
the court dismissed all claims against those corporate defendants. In doing so, the court
rejected the plaintiffs’ “single enterprise coverage” arguments, finding that there was no
binding case law following such analysis in an FLSA context. Likewise, the court held
that the term “enterprise” in the context of an FLSA case related to coverage issues,
and not to liability based on the existence of an employer-employee relationship.
Further, the court ruled that the plaintiffs could not bring suit against the other
defendants based on the possible composition of a future class. Instead, the plaintiffs
must currently demonstrate standing against all defendants at the time the complaint
was filed.
E. Successors
In Valdez v. Celerity Logistics, Inc., employees brought FLSA claims against their
employers for failure to pay overtime and minimum wage violations. The plaintiffs'
primary claim originated from actions of their initial employer Segue Distribution, Inc.,
with additional claims for successor liability against Celerity Logistics, Inc. (CLI), which
purchased the assets from Segue, Celerity Logistics Company (CAI), which purchased
the assets from CLI, and finally, BeavEx as the successor corporation to CLI. The
alleged successor companies, CLI, CAI and BeavEx moved to dismiss the successor
liability claims by arguing that successor liability does not apply to FLSA claims, and
even if it did, the plaintiffs had not pleaded a plausible claim for successor liability. While
the Texas district court acknowledged the general rule that when a company is sold at
an asset sale, the buyer ordinarily acquires the company's assets but not its liabilities,
liability still may follow under the federal common law successor liability exception to
this general rule. The theory behind this exception, the court explained, "is that an
employee's statutory rights should not be vitiated by the mere fact of a sudden change
in the employer's business." However, the court held that the complaint did not plead
the matter in such a way that successor liability could be achieved and granted the
motions to dismiss without prejudice. The court summarized the existing case law and
identified four elements that must be addressed in the pleadings to support successor
liability claims: (1) whether there is substantial continuity between the business
operations of the successor and the predecessor; (2) whether the successor had notice
of potential liability when it acquired the relevant assets; (3) whether the predecessor is
able to provide relief directly; and (4) whether the overall equities support the imposition
of successor liability. In addition, the court identified several additional factors which
should be considered but do not need be pled: (1) whether the new employer uses the
same plant; (2) whether the new employer uses the same or substantially the same
work force; (3) whether the new employer uses the same or substantially the same
187 supervisory personnel; (4) whether the same jobs exist under substantially the same
working conditions; (5) whether the employer uses the same machinery, equipment and
methods of production; and (6) whether the employer produces the same product.
In Paschal v. Child Development, Inc.,704 the plaintiffs were all former employees
of the defendant, Child Development, Inc. The plaintiffs filed suit alleging that the
defendant did not pay them from January 9, 2012 through February 10, 2012. The
plaintiffs also named Community Development Institute Head Start (“CDIHS”) as a codefendant. CDIHS did not employ, fail to pay, have any contractual relationship with, or
make any promises to any of the plaintiffs during the month they claimed to have not
been paid. Instead, CDIHS managed a federally funded early childhood development
program on an interim basis when Child Development, Inc. could no longer do so. Child
Development ceased employing the plaintiffs as of February 10, 2012. CDIHS
conducted job fairs and made independent evaluations and hiring decisions. CDIHS
hired the plaintiffs effective February 13, 2012. CDIHS hired 361 former Child
Development staff members and four former managers/directors. CDIHS noted that the
funding it received from the federal government was for prospective operations only and
the funds were restricted from being used to pay post obligations of previous grantees.
An Arkansas district court noted that the determination of successor liability turns on
“whether the imposition of the particular legal obligation at issue would be equitable and
in keeping with federal policy.” In evaluating the issue of successor liability, the court
noted that a transfer of assets is not necessary for such a finding, but may be relevant
to a finding of substantial continuity. For the purposes of determining substantial
continuity, the court noted that CDIHS used most of the same facilities, employed
substantially the same workforce and supervisors, had substantially the same working
conditions and provided substantially the same services as the other defendant. The
court found that no substantial continuity existed because CDIHS was specifically
operating in an interim role until a new permanent grantee could be found. The court
then examined the notice of the claims and predecessor’s ability to provide relief and
found that Child Development had “obstacles” to providing relief. CDIHS argued that
that notice was inadequate because, although it had general knowledge that the
predecessor had not paid some wages, it did not have any specifics. CDIHS also
claimed that by the nature of its role as an interim operator and the restrictions against
paying for a predecessor’s obligations, it could not have negotiated any protections from
the predecessor even if it had notice. The court agreed and found that successor liability
would be inappropriate. The court also noted that in the balancing of interests, the
provision of the Head Start program to underprivileged children outweighed the
plaintiffs' claim for unpaid wages.
In Sheils v. Gatehouse Media, Inc.,705 the plaintiff filed a five count complaint
alleging various FLSA, FMLA and state law claims against the defendants, her
employer and the employer’s successor, GateHouse Suburban. The plaintiff amended
704
705
2014 WL 55179 (E.D. Ark. Jan. 7, 2014).
2013 WL 5311469 (N.D. Ill. Sept. 19, 2013).
188 her complaint to add Shaw Suburban Media Group, Inc. (“Shaw”) as a successor to
GateHouse Suburban. Shaw moved for summary judgment claiming that it was not a
successor employer. An Illinois district court noted that the Seventh Circuit has
recognized that it is “grossly unfair, except in the most exceptional circumstances, to
impose successor liability on an innocent purchaser . . . when the successor did not
have the opportunity to protect itself by an indemnification clause in the acquisition
agreement or a lower purchase price.” The court, however, found that the successor
company did not demonstrate, for purposes of summary judgment, that inequity or
unfairness would result from the imposition of successor liability but, instead,
recognized that it negotiated as part of the purchase terms that its seller would
contractually indemnify. Therefore, the district court concluded that a dispute over a
material fact existed and denied the summary judgment motion.
1. Bona Fide Successor Requirement
In Cuervo v. Airport Services, Inc.,706 car cleaners for a cleaning service to car
rental companies at the Miami airport sued the cleaning service for violations of the
FLSA and state laws. The cleaning service did not answer, default judgment was
entered, and the cleaning service filed for bankruptcy. The car cleaners ultimately filed
an amended complaint, alleging that the cleaning service’s successor in interest was
liable for the cleaning service’s FLSA violations. The alleged successor moved to
dismiss on the grounds that no cause of action exists for successor liability under the
FLSA in the Eleventh Circuit. In concluding that successor liability under the FLSA does
exist in the Eleventh Circuit, and that the case could proceed against the successor, the
Florida district court observed that every other federal appellate and district court that
has reviewed this issue has found that successor liability exists under the FLSA, and
that it is not entirely clear that Florida law is, or should be, the applicable law in
determining whether there is successor liability under the FLSA, but regardless, the car
cleaners stated a claim even if Florida law applies. The district court was persuaded that
because the Eleventh Circuit had applied successor liability standards from NLRA
cases to Title VII cases, the Eleventh Circuit would also find that it applies in FLSA
cases. The district court also analyzed whether the car cleaners properly pled the
successor liability claim, declining to determine which Second Circuit approach should
govern this analysis, and instead determining that under the Supreme Court’s
successor liability test in federal labor cases or under Florida law the car cleaners made
sufficient factual allegations to state a claim for relief. The court declined to adopt the
successor’s arguments that there could be no successor liability because the car
cleaners failed to allege that there was a merger or transfer of assets between the
cleaning service and the successor, or that the amended complaint was an end-run
around the car cleaners’ bankruptcy.
V.
Affirmative Defenses
706
984 F. Supp. 2d 1333 (S.D. Fla. 2013).
189 B. Statute of Limitations
In Zavala v. Wal-Mart Stores, Inc.,707 the plaintiffs brought RICO, unpaid minimum
wage and overtime claims (individual and collective claims under the FLSA), and
common law false imprisonment claims against the defendant employer. The defendant
previously filed a successful motion to dismiss the RICO, false imprisonment and FLSA
collective action claims. Subsequently, several plaintiffs settled with the defendant. The
defendant then moved for summary judgment as to the remaining 11 plaintiffs' individual
FLSA claims on the basis that their claims were time-barred. The case was "identical" to
a prior putative collective action alleging the same issues and filed approximately seven
years prior ("Zavala I"). The remaining 11 plaintiffs submitted opt-in consents in the
Zavala I case. In deciding defendant's summary judgment motion, the court outlined that
the FLSA limitations period is typically two years, increases to three years for a willful
violation, and begins to run "when the employer fails to pay the required compensation
for any workweek at the regular pay day for the period in which the workweek ends."
The court assumed the three-year limitations period applied. The record did not specify
the "regular pay day" for the plaintiffs, but it did indicate when they each stopped
working. All of the remaining plaintiffs opted into the Zavala I lawsuit more than three
years after they stopped working for the defendant. Therefore, their claims were already
barred when they filed written consents in Zavala I and were still time barred when they
filed the instant suit. For these reasons, the court granted summary judgment in the
defendant's favor as to the remaining 11 plaintiffs.
1. Generally
In Boaz v. FedEx Customer Information Services, Inc.,708 a FedEx employee
sued the company alleging that FedEx had violated the Equal Pay Act by paying her
less than her male coworker, and that FedEx also failed to pay her overtime
compensation. FedEx moved for summary judgment arguing that the plaintiff’s claims
were untimely under a contractual six-month limitation period in her employment
agreement. The district court agreed and held that, although the plaintiff’s claims would
have otherwise been timely under the FLSA’s and EPA’s limitations periods, they were
barred by the contractually shortened limitations period. The Sixth Circuit reversed,
holding that shortened limitations period in the employment agreement was invalid as to
the FLSA and EPA claims since it operated as a waiver of those claims, which under
those acts, cannot be waived. The court distinguished waivers upheld in Title VII cases
since, a) Title VII does not proscribe waivers, and b) employers who pay less than what
is required under the FLSA unduly gain a competitive advantage. In contrast, the court
noted, employers who discriminate on the basis of race do not gain a competitive
advantage.
2. Willful and Nonwillful Violations
707
708
2013 WL 3828414 (D.N.J. July 23, 2013).
725 F.3d 603 (6th Cir. 2013).
190 In Yapan v. Marvin Holding Co.,709 two press operators brought overtime claims
against multiple related entities and their owner, alleging that the defendants divided the
plaintiffs’ hours among the related entities to evade paying overtime and that the
defendants failed to credit the plaintiffs for all hours they worked. The plaintiffs did the
same work for each entity, were supervised by the same owner regardless of which
company they worked for, and submitted evidence that during weeks in which they
worked more than 40 hours, some of their time was designated as work for related
entities. After the defendants did not respond to the plaintiffs’ motion for summary
judgment, a district court in Illinois assumed the plaintiffs’ asserted facts were true and
granted them summary judgment. The court held the three-year statute of limitations
period for willful violations was applicable because it was a “reasonable inference that
consistently assigning extra hours to a separate payroll was a conscious decision to
disregard the applicable statutory provision.”
In Shade v. Shady Grove School,710 a former teacher’s aide filed suit alleging, in
part, that she was denied overtime. The employer filed a motion for summary judgment,
asserting that the plaintiff could not establish willfulness and thus the two-year statute of
limitations applied to the plaintiff’s claim. In denying the employer’s motion for partial
summary judgment, a district court in Oklahoma concluded that there was an issue of
fact regarding whether the plaintiff could establish that the employer acted willfully.
Specifically, the school superintendent testified that he had no knowledge of the FLSA,
he did not try to educate himself on any laws related to overtime, and he believed that
the plaintiff was volunteering her time. The plaintiff asserted that these contentions were
not credible because the superintendent’s position was contrary to the plain language of
the FLSA and his statement were belied by his 35 years of experience, attendance at
yearly training workshops, his notations on pay schedules regarding exemptions and
minimum wage, and his knowledge regarding how overtime is calculated. Because the
facts presented a close question, the court relied on the Seventh Circuit’s suggestion
that “‘[i]t is the jury’s province to decide which limitations period, two or three years,
applies in light of the plaintiff’s evidence that the defendants acted willfully.’”
a. Willfulness Standard
In Goulas v. LaGreca Services, Inc.,711 the plaintiff employee sued his former
employer for failing to pay overtime as required by the FLSA. The defendants were a
drilling company and the company’s owner. The plaintiff worked as a superintendent on
the defendants’ drilling crews. On the defendants’ summary judgment motion, a
Louisiana district court held that the plaintiff had failed to present sufficient evidence that
the alleged conduct was willful, and thereby the court held that the two year limitation
period applied. On appeal as to the willfulness issue, the Fifth Circuit held that the
employer’s payment plan providing pay for 40 hours of work at $10.00 per hour and
709
2014 WL 242839 (N.D. Ill. Jan. 22, 2014).
2013 WL 5744463 (E.D. Okla. Oct. 23, 2013).
711
557 F. App’x 337 (5th Cir. 2014).
710
191 $30.00 for all hours over 40 per week, based on a set workweek of 68 or 68.5 hours in
which the employee routinely worked above and below the set workweek hours, was
not a subterfuge of the “split-day” pay plan proscription under § 778.501 so as to evade
the FLSA’s overtime requirements. Further, the court agreed with the lower court that
paying one hourly rate for up to 40 hours of work, and triple time for each hour
thereafter was permissible under the FLSA and therefore the plaintiff had been paid for
all overtime compensation that was due.
b. Determination of Willfulness by Judge or Jury
In Davis v. FedEx Corporate Services, Inc.,712 a marketing coordinator brought
race discrimination claims under federal and state law and an overtime claim under the
FLSA. The defendant moved for partial summary judgment, contending on the overtime
claim that the plaintiff could not show a willful violation of the FLSA. As a salaried
employee, the plaintiff had not been aware she was entitled to overtime, and her
managers had not told her she was entitled to overtime or given her the company’s
overtime-record form. The plaintiff learned she was entitled to overtime during a job
audit, and then emailed a manager with a list of projects she had performed during
periods when she may have been working overtime. The manager responded with an
estimate of the plaintiff’s overtime hours worked, and the plaintiff responded to say she
had “[n]o changes to the estimate below.” She was paid for this overtime but later
claimed she was entitled to additional overtime pay. A district court in Tennessee
concluded that the defendant’s violation of the FLSA was not willful and granted
summary judgment on this issue to the defendant. The court noted that until a certain
date, the plaintiff never reported working overtime, and when she did report it, she was
compensated fully for the hours she listed. The court noted that the parties disputed
whether the plaintiff had been fully compensated for all of her overtime hours, but that
the plaintiff had accepted her manager’s estimate of overtime hours without suggesting
changes. Thus, the court concluded that there had been no willfulness, and the twoyear statute of limitations applied
In Davila v. Menedez,713 a nanny filed suit against the family she worked for
alleging various wage and hour violations. A jury awarded the nanny $33,025 in
damages. The nanny moved for liquidated damages, however, a district court in Florida
entered a directed verdict in favor of the employer on the issue of intentional, reckless
or willful behavior, thus precluding an award of liquidated damages. The nanny
appealed, arguing that prior to issuing a decision on the applicability of liquidated
damages, the jury should have been required to decide whether the employer willfully
violated the FLSA. The Eleventh Circuit overturned the district court’s decision, holding
that the district court should have waited for the jury’s decision as to whether the
employer willfully or in good faith violated the law before assessing liquidated damages.
712
713
2014 WL 1216518 (W.D. Tenn. Mar. 24, 2014).
717 F.3d 1179 (11th Cir. 2013).
192 4. Accrual of Limitations Period
In Cruz v. Maypa,714 a babysitter, who came to the United States to work for a
family, alleged that she was subjected to forced labor and involuntary servitude, and
that the employer willfully failed to pay her the federal minimum wage in violation of the
FLSA. The plaintiff filed her action over five years after her cause of action accrued,
which was the date she “escape[d] from defendant’s residence.” However, “[c]laims for
willful violations must be brought within three years of the date on which the claim
accrued.” The Virginia district court granted the defendants’ motion to dismiss the FLSA
claim as barred under the three-year statute of limitations.
5. Equitable Tolling and Equitable Estoppel
In Butler v. HomeServices Lending, LLC,715 the plaintiff alleged that she worked
overtime hours for which she was not paid. After a jury verdict in favor of the plaintiff,
the defendant moved for a ruling on its affirmative defense of equitable estoppel,
arguing that the plaintiff was equitably estopped from recovering under the FLSA
because she “willfully misrepresented her time entries in the employer’s timekeeping
system with the intent to mislead the employer.” The district court in California denied
the defendant’s motion, holding that “a FLSA Defendant is not entitled to the defense of
equitable estoppel when a jury has found that the Defendant knew or should have
known that Plaintiff was working overtime.” The court specifically rejected the
defendant’s argument that estoppel applied because the plaintiff did not request
overtime pay, finding that “an employee does not waive [her] claim for overtime
compensation by failing to request overtime compensation at the time the work is
performed.”
D. Good Faith Defenses
1. Section 10: Actions Taken in Good Faith, in Conformity With, and in
Reliance on Written Rulings or Enforcement Policies of the
Administrator
e. “Any Written Administrative Regulation, Order, Ruling, Approval,
or Interpretation”
In Affo v. Granite Bay Care, Inc.,716 after a jury found the adult care providers
were not independent contractors and thus owed overtime, the district court denied the
defendant care home’s request to find a good faith defense based on its purported
reliance on a written administrative regulation or order. The correspondence and
communications between the company and the wage-hour investigator and the DOL’s
714
981 F. Supp. 2d 485 (E.D. Va. 2013).
2014 WL 2434594 (S.D. Cal. May 29, 2014).
716
2014 WL 273223 (D. Me. Jan. 22, 2014).
715
193 Regional Director, coupled with other letters with the DOL, are not equivalent to a
“written administrative interpretation” by the DOL so as to permit use of this good faith
defense.
2. Section 11: Actions Taken in Good Faith and With Reasonable
Grounds for Believing They Were Not in Violation of the Act
b. Burden of Proof
In Chapman v. ASUI Healthcare and Development Center,717 the Fifth Circuit
affirmed summary judgment and a bench-trial verdict in favor of two caregivers seeking
overtime compensation under the FLSA. The plaintiffs were hired as independent
contractors, signed contracts acknowledging this status, and worked as caregivers in
group homes for individuals with mental disabilities. The Fifth Circuit agreed that the
plaintiffs were employees under the economic reality test, and concluded that the district
court did not abuse its discretion in awarding liquidated damages. According to the Fifth
Circuit, the defendant failed to meet its burden of establishing that it acted in good faith
and with reasonable grounds to believe that it was not violating the FLSA. The only
evidence put forth by the defendant was an acknowledgement by the company’s vice
president and program manager that the company had “spoken to an attorney and an
unnamed consultant” when deciding on the classification. There was no evidence of an
actual investigation into potential employee status.
e. Reasonable Grounds to Believe Not in Violation of the Act
In Affo v. Granite Bay Care, Inc.,718 after a jury trial in Maine found the adult care
home providers were not independent contractors and thus owed overtime, the court
granted the defendant care home’s request pursuant to 29 U.S.C. § 260 to deny the
imposition of liquidated damages. The company relied on the results and instructions
from the DOL’s earlier investigation, the DOL’s prior communication that the payment
model was in compliance, and the information obtained from the wage-hour investigator
and DOL District Director, and therefore had reasonable grounds to believe it was
complying with the FLSA.
In Adams v. City of Manchester,719 a district court in Missouri found the police
department’s records clerks were owed overtime wages, and reviewed the defendant’s
request to find a good faith defense under 29 U.S.C. § 260 and thereby avoid liquidated
damages. After a bench trial, the court found that the police chief who recommended
the policy change to deny overtime wages to records clerks failed to (a) request legal
advice on the policy change, (b) obtain a legal opinion, (c) perform any independent
research when he knew that both “exempt” and “non-exempt” statuses existed, (d) use
717
2014 WL 351868 (5th Cir. Feb. 3, 2014).
2014 WL 273223 (D. Me. Jan. 22, 2014).
719
2013 WL 3091767 (E.D. Mo. June 18, 2013).
718
194 the law enforcement resources available, or (e) contact the DOL. Therefore, the policy
change to deny overtime wages was neither made in good faith nor objectively
reasonable, so as to avoid the imposition of liquidated damages.
f. Effect of a Jury Verdict on Willfulness for Statute of Limitations
Purposes on a Judge’s Discretion Under Section 11
In Little v Technical Specialty Products, LLC,720 following a jury verdict finding
that the employer fired the plaintiff in violation of the FLSA, the district court denied the
employer’s motion opposing liquidated damages. The Texas court found that liquidated
damages were discretionary rather than mandatory under the anti-retaliation provisions
of the FLSA, 29 U.S.C. § 215(a)(3). The employer argued that liquidated damages were
not proper because it acted in good faith. The court applied a two factor test to
determine good faith: (1) subjectively, whether the employer demonstrates an honest
intention to ascertain what the FLSA requires and to act accordingly; and (2) objectively,
whether the employer reasonably believed that the offending act complied with the
FLSA. Other reasons provided by the employer for the plaintiff’s termination were not
persuasive after the jury found that the employer intentionally terminated the plaintiff in
retaliation for his complaints about the overtime policy. Although it consulted an attorney
regarding its overtime practices, the employer provided no evidence that it researched
what the FLSA requires regarding terminating an employee or that the termination was
reasonable under the circumstances. The court held that liquidated damages were
appropriate to “effectuate the purpose of section 215(a)(3) to not only vindicate the
plaintiff’s rights but also to encourage an environment where employees may voice
grievances without fear of economic retaliation.”
E. Estoppel
In Wolfe v. Solomon Law Group, P.A.,721 the plaintiff, a paralegal, initially filed a
claim for unpaid overtime against a defendant law firm. The plaintiff’s counsel notified
the court that the case settled and filed a notice of charging lien for his fees. The Florida
district court administratively closed the case. The plaintiff next filed a Chapter 7
bankruptcy case and did not list the wage case as an asset on his bankruptcy personal
property disclosures. But the plaintiff did list the case in his bankruptcy Statement of
Financial Affairs, and his attorney’s fee lien was discharged in bankruptcy. After
obtaining the bankruptcy discharge, the plaintiff moved to reopen his FLSA case, revoke
the settlement, and proceed to trial, which the court denied. The plaintiff then filed a
motion for reconsideration, claiming that the bankruptcy trustee abandoned the case to
the plaintiff. The motion was denied on two grounds. The plaintiff had no standing, and
his claims were barred by judicial estoppel. The court explained that judicial estoppel is
an equitable doctrine, and permitting a plaintiff to retain the proceeds of the lawsuit
when he made misrepresentations to the court under oath would be inequitable.
720
721
2013 WL 5755363 (E.D. Tex. Oct. 23, 2013).
2013 WL 4719343 (M.D. Fla. Sept. 3, 2013).
195 In Wakim v. Michael Cetta, Inc.,722 the plaintiff appealed to the Second Circuit,
two orders entered by the U.S. District Court for the Southern District of New York
granting summary judgment in favor of the defendants. Specifically, the plaintiff had
asserted a claim that the defendant had retaliated against him in violation of the FLSA
and New York Labor Law by not placing him in the position of “runner” as a reasonable
accommodation. The plaintiff had earlier successfully applied for disability benefits to
the Social Security Administration (“SSA”), claiming that he could no longer perform the
job of “runner.” However, in asserting his discrimination claims, the plaintiff
contradictorily asserted that being placed in the “runner” position was a reasonable
accommodation he should have received from the defendant. Because the plaintiff took
a contrary factual position in asserting his discrimination claim to one he had earlier
taken in seeking disability benefits, the district court held that that the plaintiff was
judicially estopped from pursuing the discrimination claims. Moreover, because the
plaintiff was judicially estopped from “establishing that he could work as a ‘runner’ after
his SSA-determined disability date,” the district court held that he could not meet his
burden of proving, as a requirement of his retaliation claim,” that defendants’ conduct
disadvantaged him. The Second Circuit affirmed the grant of summary judgment by the
district court on all claims, including the plaintiff’s FLSA retaliation claim.
1. Estoppel Based on Failure to Disclose FLSA Claims in Bankruptcy
Kuntsmann v. Aaron Rents, Inc.723 was an action brought by a general manager
against his employer, a retailer and lessor of goods including residential furniture and
home appliances, alleging that the employer willfully violated the FLSA by misclassifying
him and similarly situated employees as exempt from the FLSA's overtime
requirements. The court conditionally certified a collective class of general managers.
Subsequently, the employer moved for summary judgment as to certain opt-in plaintiffs
to the class action, arguing that ten individuals were judicially estopped from pursuing
their claims because each person failed to disclose their FLSA class action claims in a
prior court proceeding. The court dismissed the claims of five employees who had filed
bankruptcy petitions prior to opting in to the FLSA class case but never amended their
petitions to disclose their status as FLSA opt-in plaintiffs, holding that their status as optin plaintiffs was inconsistent with the schedule filed under oath in the bankruptcy
petition. The court dismissed the claims of two other opt-in plaintiffs who amended
pending bankruptcy petitions to reflect their status as class action plaintiffs only after
being challenged by defense counsel, on the ground that to do otherwise would create
an incentive for future plaintiffs to keep information about their pending lawsuits to
themselves as long as possible, hoping to avoid sharing any potential payout with their
creditors. However, the court denied the employer’s motion for summary judgment as to
two plaintiffs who amended their bankruptcy petitions before the defense counsel
challenge, which action the court held showed absence of the calculated intent
necessary for application of the doctrine of judicial estoppel. The court also declined to
722
723
559 F. App’x 109 (2d Cir. 2014).
2014 U.S. Dist. LEXIS 48930 (N.D. Ala. Apr. 9, 2014).
196 dismiss an opt-in plaintiff who failed to disclose the FLSA case in a child support case,
on the grounds that nowhere in the child custody forms inquiring about this plaintiff’s
assets was he asked to list contingent assets or to disclose his involvement in any other
lawsuit. Therefore, the court found that this last plaintiff had not taken an inconsistent
position in the prior case as required for judicial estoppel.
In Amash v. Home Depot U.S.A., Inc.,724 the court applied the judicial estoppel
doctrine to dismiss a plaintiff’s FLSA claim upon finding that the plaintiff failed to
disclose the existence of the claim in a Chapter 13 bankruptcy proceeding. The plaintiff,
a former assistant store manager, joined a nationwide, conditionally certified FLSA
collective action in the district of New Jersey alleging that the defendant, a home
improvement retailer, misclassified assistant store managers as exempt from FLSA
overtime requirements. At the time the plaintiff filed his consent to join the collective
action, the plaintiff’s voluntary Chapter 13 petition and plan for bankruptcy was pending
in the bankruptcy court. Although the plaintiff was required to disclose contingent and
unliquidated claims and all suits and administrative proceedings to which the plaintiff
was a party in the bankruptcy proceeding, the plaintiff neither informed the bankruptcy
court of his FLSA claim nor notified the bankruptcy court that he had joined a collective
action. Following decertification of the nationwide collective action, the plaintiff and
several other former opt-in plaintiffs filed separate actions alleging FLSA violations that
were subsequently transferred to the Northern District of New York. The defendant
sought dismissal of the plaintiff’s claim arguing that judicial estoppel prevented the
plaintiff from verifying to the bankruptcy court that he had no claims in an effort to obtain
a discharge of his debts, and then asserting to the court in the FLSA action that he is
entitled to compensatory damages for claims that existed while his bankruptcy case was
pending. The court concluded that dismissal of the plaintiff’s lawsuit was warranted after
finding that the plaintiff advanced a position in the bankruptcy proceeding that was
inconsistent with the position he advanced in the FLSA litigation and that the
inconsistent position had been adopted by the bankruptcy court. The court cautioned
that “judicial estoppel should be limited to situations where the risk of inconsistent
results with its impact on judicial integrity is certain” and emphasized that the
circumstances under which the doctrine could be applied are inherently case-specific.
In Stuart v. Resurgens Risk Mgmt., Inc.,725 a former account representative sued
the insurance company and corporate officers for overtime resulting from off-the-clock
work. The district court denied the insurance company’s motion for summary judgment
on the FLSA claims that the plaintiff failed to identify in a contemporaneous bankruptcy
proceeding. Using a two factor judicial estoppel test, the court found that the plaintiff
made an inconsistent statement under oath in a prior proceeding. However, the court
then found that the plaintiff’s inadvertent failure to initially disclose the FLSA lawsuit in
his bankruptcy petition was not calculated to make a mockery of the judicial system
where the plaintiff was not aware he needed to disclose the lawsuit and disclosed the
724
725
2013 WL 6592205 (N.D.N.Y. Dec. 16, 2013).
2013 WL 2903571 (N.D. Ga. June 12, 2013).
197 lawsuit shortly after becoming aware. The court also found judicial estoppel not
warranted where the plaintiff’s debts were not discharged by the bankruptcy court.
2. Estoppel Based on Employee’s Failure to Claim Overtime
In Mencia v. Allred,726 a sheepherder working under an H-2A Temporary
Agricultural Worker Visa claimed that he should have been paid the FLSA minimum
wage for his work rather than the monthly Adverse Effect Wage Rate applicable under
the DOL’s Special Procedures for Sheepherders because he was directed by the
defendants to spend more than half of his time engaged in non-exempt work under the
Special Procedures. The court first determined that the applicability of estoppel in FLSA
cases involving unpaid overtime was analogous to the situation. It found no evidence
that the plaintiff had objected to defendants regarding the type of work he was being
directed to perform. This failure to object, along with his renewal of his contract, was
detrimentally relied upon by defendants under general estoppel principles because they
were deprived of the opportunity to mitigate damages by either addressing the plaintiff’s
grievances, transferring him to another employer, paying him on an hourly basis, or
terminating his employment. In addition, because the Special Procedures exempt
employers from the recording and reporting of hours worked, the defendants’ reliance
on the plaintiff’s own reporting and representations prevented them from knowing or
having the ability to know that the plaintiff was working too many hours on non-exempt
tasks. Thus, the court concluded that the plaintiff was precluded from asserting his
claims under general principles of estoppel.
F. Mootness
In Holick v. Cellular Sales of New York, LLC,727 plaintiff sales representatives
appealed from the district court's order compelling mediation and dismissing without
prejudice their claims that they were misclassified as independent contractors. During
the pendency of their appeal, however, plaintiffs completed mediation. Based on this
fact, the court held that it need not decide whether the district court properly ordered
mediation because the issue was moot. As to the district court's order dismissing the
case without prejudice, the Second Circuit vacated that portion of the order and
remanded the case. The court held that the record did not allow it to confidently
conclude that the plaintiffs had notice and opportunity to alert the district court that their
statute of limitations concerns pertained to dismissal without prejudice pending
mediation.
In Wolff v. Royal American Management, Inc.,728 the plaintiff filed suit against her
former employer for unpaid overtime wages under the FLSA. After filing suit, the
defendant calculated that the plaintiff was owed $1,800.00 in overtime wages and an
726
2014 WL 869248 (D. Utah Mar. 5, 2014).
559 F. App’x 40 (2d Cir. 2014).
728
545 F. App’x 791 (11th Cir. 2013).
727
198 equal amount in liquidated damages. The defendant tendered $3,600 to the plaintiff's
counsel and moved to dismiss the complaint. The plaintiff's counsel returned the check
to the defendant. Without counsel, the plaintiff then met with the defendant, signed a
general release, and accepted the $3,600.00 check from the defendant. Thereafter the
parties moved the court to determine whether the payment and release rendered the
action moot, thereby stripping the plaintiff of attorneys' fees on the ground that the
plaintiff was not the prevailing party. The district court ultimately approved the
settlement as reasonable, even though the parties reached the settlement without the
participation of the plaintiff’s counsel. The district court further found that the settlement
had not mooted the lawsuit, and awarded the plaintiff’s counsel $61,810.44 in fees and
costs. The defendant appealed the decision to award fees and costs to the Eleventh
Circuit. On appeal, the defendant argued that the plaintiff's FLSA claims were rendered
moot when the defendant tendered to the plaintiff's counsel the amount of the plaintiff's
claimed damages, or, in the alternative, when the plaintiff voluntarily accepted and
cashed the defendant's check as full and complete settlement of the FLSA action. The
Eleventh Circuit found that because the defendant’s offer was not accompanied by an
offer of judgment, it was not full relief and therefore did not render plaintiff’s claim moot.
It did not matter that the plaintiff accepted the defendants' offer. Therefore, the lower
court's award of fees and costs was upheld.
G. Claim and Issue Preclusion
In Vig v. All Care Dental,729 the defendants moved to dismiss the plaintiff’s FLSA
and unjust enrichment claims under the theory of issue preclusion and the RookerFeldman doctrine. The plaintiff had previously received a ruling on alimony and division
of assets in a divorce proceeding in state court. The defendant argued that, in the prior
proceeding, the plaintiff litigated whether he was properly compensated. In denying the
defendant’s motion, the district court noted that the Supreme Court had previously
limited the Rooker-Feldman doctrine to circumstance where a party essentially
attempted to appeal a state court ruling by bringing a subsequent action in a lower
federal court. The plaintiff did not, however, assert a wage claim in his divorce
proceeding. The court therefore rejected the defendant’s issue preclusion arguments.
In Chapman v. ASUI Healthcare and Development Center,730 the Fifth Circuit
affirmed summary judgment, and a bench-trial verdict for two caregivers seeking
overtime compensation under the FLSA. The plaintiffs were hired as independent
contractors, signed contracts acknowledging this status, and worked as caregivers in
group homes for individuals with mental disabilities. The Fifth Circuit agreed that
plaintiffs were employees under the economic reality test, and rejected the argument
that the plaintiffs’ claims were barred by collateral estoppel. While a similar suit resulted
in a take nothing judgment, that suit also included claims for personal injuries, and the
plaintiff ultimately abandoned the FLSA claims.
729
730
2013 WL 3791008 (N.D. Ga. July 19, 2013).
2014 WL 351868 (5th Cir. Feb. 3, 2014).
199 H. Bankruptcy
In Saunders v. Getchell Agency,731 six caretakers sought unpaid wages in a
collective action under the FLSA and a class action under Maine’s wage and hour law.
The defendants moved to dismiss all claims brought by one of the named plaintiffs for
want of subject matter jurisdiction. The plaintiff had an active bankruptcy matter pending
in federal court wherein he identified his wage claims as an asset. The defendants
argued the plaintiff lacked standing because his wage claims belonged to the trustee. In
opposing the motion, the plaintiff submitted evidence that the trustee intended to
abandon the claim. The plaintiff requested the court delay its ruling on the motion while
he resolved the matter with the trustee. The district court granted the defendants’
motions, dismissing the claims. The court noted that, during the pendency of the motion,
the plaintiff did not submit any supplemental evidence proving the matter had been
resolved with the trustee.
VI.
Burden of Proof
In Young v. McCarthy-Bush Corp.,732 a concrete paving mechanic sued his
former employer due to an alleged failure to pay him for all hours worked at a
construction site. The employer moved for summary judgment arguing that the plaintiff
had offered no evidence that the company had failed to properly compensate him. In
response to the summary judgment motion, the plaintiff relied on two of his time cards
as evidence that the defendant had unlawfully reduced his hours. Each time card was
broken down into how much time a worker spent on various categories of repair and
also provided a place to enter all hours worked that day. On one time card, the plaintiff
recorded that he had performed work in three of the work categories, for two, three and
six hours respectively; yet, in the “Total Hours” box for that card, he recorded 14 hours
that day. After the plaintiff submitted the time card to management, his supervisor
corrected the total number of hours by crossing out the 14 hours and replacing it with 11
hours. Similarly on the second time card, submitted by the plaintiff in opposition to the
summary judgment motion, the plaintiff recorded four hours in each of two categories,
but nevertheless had recorded a total of 12 hours worked for the day. Again, his
supervisor crossed out that total amount, replacing it this time with eight hours. The
plaintiff argued to the court that the time cards proved that he had not been fully
compensated for all hours worked. The court rejected the argument because “[a]ll a
reasonable jury could infer from this evidence is that [the plaintiff’s supervisor] simply
corrected the total to reflect plaintiff’s own accounting of his time” and it therefore
granted summary judgment to the employer as to the plaintiff’s FLSA claim.
In Stuart v. Resurgens Risk Management, Inc.,733 a former account
representative sued the insurance company and corporate officers for overtime resulting
731
2014 WL 559040 (D. Me. Feb. 11, 2014).
2014 WL 1224459 (N.D. Ga. Mar. 24, 2014).
733
2013 WL 2903571 (N.D. Ga. June 12, 2013).
732
200 from off-the-clock work. The court denied the plaintiff’s motion for summary judgment. It
held that the plaintiff bears the burden of proving that he worked overtime without
compensation. If the employer maintained proper and accurate records, the employee
may meet that burden by producing those records. Without accurate or adequate
records, the employee can meet his burden by proving that he in fact performed work
for which he was not properly compensated and producing sufficient evidence of the
amount and extent of that work as a matter of just and reasonable inference. The court
found disputed issues of fact as to whether the plaintiff worked without compensation
made summary judgment inappropriate.
B. Proving the Prima Facie Wage Case
In Rolon v. Lackawanna County,734 a county employee brought suit in federal
court for unpaid overtime under the FLSA, the Pennsylvania Wage Payment and
Collection Law (WPCL), and the Minimum Wage Act (MWA). The defendant moved to
dismiss, arguing in part that the complaint lacked factual specificity because it did not
reference the contractual terms of the parties’ collective bargaining agreement.
According to the defendant, the complaint should have contained mention of the
plaintiff’s actual wages “and the [contractual] authority upon which he rests his assertion
that he should be . . . paid at a greater wage for hours worked in excess of forty hours.”
The district court denied the motion, finding first that the plaintiff’s claim was a
“straightforward” FLSA overtime claim that did not depend on any interpretation of the
collective bargaining agreement. Instead, the plaintiff is “merely require[d] to show ‘a
failure to pay overtime compensation and/or minimum wages to covered employees.’”
C. Proving the Number of Hours Worked
1. Generally
In Carman v. Meritage Homes Corp.,735 the plaintiffs, part-time sales assistants,
filed suit against their employer home builder, alleging that the employer failed to pay
them for all time worked, including time spent opening and closing the office, assisting
customers who stayed past closing, working through lunch, and time worked on
weekends. The plaintiffs further alleged that they were told only to report time worked
during the employer’s normal business hours and could not report more than 30 hours
per week. The employer moved for summary judgment, arguing that the time records
the plaintiffs created via the defendant’s self-reporting time system contradicted their
allegations. Further, the defendant argued due to the plaintiffs’ admissions that they
never complained of or reported unpaid hours to the defendant, they could not establish
that the defendant had actual or constructive knowledge that they were not paid for all
hours worked and could not prove willful violation of the FLSA. The district court in
Texas granted the motion in part and denied it in part. With respect to two of the
734
735
1 F. Supp. 3d 300 (M.D. Pa. 2014).
2014 WL 3919749 (S.D. Tex. Feb. 28, 2014).
201 plaintiffs, the court found they could not establish the amount and extent of their
unreported time because they admitted in their depositions that they did not always
arrive at work before the start of their shifts, work through lunch, or stay late after
closing. Further, their testimony and self-reported time entries contradicted their
allegations such that “it would be impossible for a factfinder to find which weeks, if any,
[they] worked uncompensated overtime hours.” By contrast, with respect to the
remaining three plaintiffs, the court found that a genuine factual dispute existed as to
whether the defendant was aware that they were working unpaid overtime, where the
plaintiffs presented evidence that their supervisors instructed them not to record time for
work performed outside regular business hours, despite the fact that there were some
inconsistencies between their testimony and time records.
In DeJesus v. HF Management Services, LLC,736 the plaintiff filed a complaint
against her employer, claiming the company failed to pay overtime in violation of the
FLSA and New York wage and hour law. On appeal of an order dismissing the
complaint, the Second Circuit noted that this was the third in a series of recent decisions
addressing the adequacy of pleadings alleging employers’ failure to pay for overtime
work as required under the FLSA and that these cases reflected a “tension” among
plaintiffs’ frequent difficulty to plead their claims with particularity given their
inaccessibility to their employers’ records; the possible use by lawyers in such cases of
“standardized, barebones complaints against any number of possible defendants about
whom they have little or no evidence of FLSA violations for the purpose of identifying a
few of them who might make suitable defendants,” i.e. “fishing expeditions”; and the
modern rules of pleading. The Court of Appeals reiterated that “in order to state a
plausible FLSA overtime claim, a plaintiff must sufficiently allege 40 hours of work in a
given workweek as well as some uncompensated time in excess of 40 hours.”
Furthermore, the requirement to allege overtime without compensation in a given
workweek “was not an invitation to provide an all-purpose pleading template alleging
overtime in ‘some or all workweeks’” and while the plaintiffs need not keep and cite to
mathematically precise records, in asserting their claims with more detail they should be
able to draw on the same “memory and experience” that led them to filing a federal
FLSA lawsuit in the first place. In the instant case, the Court of Appeals agreed with the
trial court that the plaintiff had failed to plausibly allege that she worked overtime without
proper compensation under the FLSA and affirmed dismissal of her claims and further
added that it was concerned that the plaintiff’s counsel elected not to take advantage of
the opportunity to re-plead his client’s claims and hoped that the decision to appeal
instead was not “an effort on counsel’s part to obtain a judicial blessing . . . to employ
this sort of bare-bones complaint.”
E. Proving Good Faith and Willfulness
736
726 F.3d 85 (2d Cir. 2013).
202 In Parada v. Banco Industrial De Venezuela, C.A.,737 the plaintiff, an office
worker sued her employer, a bank, alleging that the defendant willfully misclassified her
as exempt in an effort to deny her overtime pay. The employer filed a motion for
summary judgment and it was granted in all respects. The plaintiff appealed and the
appellate court upheld the motion for summary judgment on the overtime issue. The
plaintiff’s job involved organizing applications for credit letters, ensuring that documents
complied with applicable standards and issuing the credit letters. The defendant advised
the plaintiff that she was classified as exempt and would not receive overtime pay. The
plaintiff ultimately consulted an attorney, who sent a demand letter to the defendant for
the overtime pay. When the defendant refused to pay, the plaintiff filed a claim with the
DOL. The DOL found in favor of the plaintiff and the defendant issued a check for the
claimed amount of overtime. The DOL did not assess penalties and the plaintiff refused
to accept the check. The plaintiff filed her lawsuit more than two years after her last day
of work and, thus, claimed that the violation was willful, which would provide her a three
year statute of limitations. The court noted that the plaintiff had the burden of proof in
establishing that “the employer either knew or showed reckless disregard for the matter
of whether its conduct was prohibited by the statute.” An unreasonable act by the
defendant is not sufficient for a finding of willful. The court noted that the plaintiff failed
to produce any evidence as to how the misclassification occurred and thus failed to
meet her burden of proof.
VII.
Damages
In Yapan v. Marvin Holding Co.,738 two press operators brought overtime claims
against multiple related entities and their owner, alleging that the defendants divided the
plaintiffs’ hours among the related entities to evade paying overtime and that the
defendants failed to credit the plaintiffs for all hours they worked. The plaintiffs did the
same work for each entity, were supervised by the same owner regardless of which
company they worked for, and submitted evidence that during weeks in which they
worked more than 40 hours, some of their time was designated as work for related
entities. The plaintiffs offered “reasonable estimate[s]” of the number of hours they
worked for which they should have been paid overtime, the number of hours they
worked that were unrecorded, and the number of uncompensated hours they worked
through their lunch periods. After the defendants did not respond to the plaintiffs’ motion
for summary judgment, a district court in Illinois assumed the plaintiffs’ asserted facts
were true and granted them summary judgment. The court held that each plaintiff’s
manner of reconstructing and estimating his hours was reasonable and acceptable, and
thus the award of damages would be based on the estimates the plaintiffs provided. The
court also held that because the defendants had failed to respond to the summary
judgment motion, they had failed to meet their burden of showing that they acted in
good faith, and thus liquidated damages would be awarded.
737
738
753 F.3d 62 (2d Cir. 2014).
2014 WL 242839 (N.D. Ill. Jan. 22, 2014).
203 A. Damages Generally: Integration of State and Federal Damages
In Eschmann v. White Plains Crane Service, Inc.,739 the plaintiff brought claims
for failure to pay proper overtime wages and retaliation under the FLSA and the New
York Labor Law (“NYLL”). The plaintiff sought partial summary judgment, asserting in
relevant part that he was entitled to recover simultaneous, or cumulative, liquidated
damages under both the FLSA and the NYLL. The court acknowledged that there was
disagreement within the circuit on whether simultaneous or cumulative recovery of
liquidated damages under both statutory provisions is allowed. It ultimately adopted the
“majority view” that a plaintiff may recover liquidated damages under both statutes. It
reasoned that the purpose of liquidated damages under the FLSA is compensation to
the employee for the delay in payment, whereas under the NYLL such damages serve
as a penalty to deter an employer’s willful conduct of withholding wages.
B. Monetary Damages
1. Actions for Back Wages and Overtime
b. Computation: Salaried Employees Misclassified as Exempt
In McCoy v. North Slope Borough,740 a group of former and current pilots, lead
pilots and coordinators in the defendant's Department of Search and Rescue brought an
action alleging that they were improperly classified as exempt and that they were owed
overtime for hours they worked above 40 in a work week. During the relevant period,
the plaintiffs generally worked a two weeks on/two weeks off rotation and were paid a
fixed salary. Although the defendant paid the plaintiffs an equal amount every two
weeks (even when the plaintiffs were off duty), the salary was intended to cover 75
hours every week. The plaintiffs claimed to have worked 168 hours per week when they
were on duty. The plaintiffs and the defendant filed for summary judgment. The
defendant asserted that the plaintiffs were exempt under various exemptions. In the
alternative, the defendant argued that, if the employees are not exempt, any overtime
should be calculated using the fluctuating work week method. A district court in Alaska
held that the fluctuating work week method cannot be applied in a misclassification
case. More specifically, the court found that there was no "contemporaneous provision
for overtime" in addition to the fixed salary, and no clear mutual understanding that the
fixed salary was intended to compensate for all hours worked apart from overtime
premiums. Accordingly, the court denied summary judgment for the defendant on the
fluctuating work week method of calculating overtime and found that the proper
calculation of the overtime owed to the plaintiffs was time and a half for all hours worked
over 40 in a work week, less any appropriate offsets. The defendant argued that it
should receive an "offset" for its payment of 75 hours of straight time every week. The
court held that although it is not an "offset" as defined by the FLSA, the defendant
739
740
2014 WL 1224247 (E.D.N.Y. Mar. 24, 2014).
2013 WL 4510780 (D. Alaska Aug. 26, 2013).
204 should receive credit for the 75 hours of straight time per week paid to the plaintiffs
when calculating the damages owed.
In Black v. Settlepou, P.C.,741 the Fifth Circuit held that a federal district court in
Texas incorrectly computed compensatory and FLSA liquidated damages after
erroneously determining that the plaintiff, a paralegal working for the law-firm defendant,
agreed to be compensated under the fluctuating workweek method. Following a jury
determination that the defendant willfully misclassified the plaintiff as overtime-exempt
and failed to pay her for 274 overtime hours worked, the employer argued that the
plaintiff had agreed to be paid under the fluctuating workweek method. The trial court
agreed and awarded liquidated damages using a 50 percent overtime premium. The
appellate court held that because the paralegal never agreed to work under a fluctuating
workweek arrangement the trial court must award a 150 percent premium for the 274
overtime hours she had worked, rather than the 50 percent premium, so the appellate
court remanded the case for a recalculation of liquidated damages.
In Ransom v. M. Patel Enterprises,742 after a jury verdict finding that the
defendant retail chain misclassified its executive managers, the defendant appealed the
Texas district court’s computation of overtime damages. The magistrate judge rejected
the fluctuating workweek method, finding that the employer had agreed to pay the
employees for 55 hours of work per week. The Fifth Circuit reversed the district court,
vacated the amount of overtime damages awarded, and remanded for recalculation.
The appellate court held that the calculation of unpaid overtime is a mixed question of
law and fact. The number of hours that the plaintiffs' fixed salary was intended to
compensate (the basis for determining the regular rate of pay) is a question of fact, and
the appropriate methodology to determine the amount owed is a question of law. There
was no written agreement regarding the number of hours the plaintiffs were required to
work. The appellate court relied on testimony and time records to establish the parties’
understanding that the plaintiffs’ salary was intended to cover 50 to 55 hours or more
per week, thus it was intended to cover all hours worked. The appellate court rejected
the notion that a written agreement that an employee’s pay is intended to cover all
hours worked was required in order to apply the fluctuating workweek. Finally, the court
held that the employer’s failure to ensure the employees were paid minimum wage did
not foreclose the fluctuating workweek. In any such instances, the employees were
entitled to payment of the minimum wage, which would serve as the regular rate of pay
for purposes of computing overtime.
In O'Neill v. Mermaid Touring, Inc.,743 Lady Gaga’s former personal assistant
sued Lady Gaga and her company seeking overtime wages and claiming she was not
paid overtime pay for hours worked in excess of 40 per week. The defendants sought
summary judgment on their claim that any overtime pay should be calculated as half 741
732 F.3d 492 (5th Cir. 2013).
734 F.3d 377 (5th Cir. 2013).
743
968 F. Supp. 2d 572 (S.D.N.Y. 2013).
742
205 time based on the fluctuating work week (“FWW”) approach. The plaintiff was paid an
annual salary and no time records were kept concerning the plaintiff’s work for the
defendants. The defendants conceded that the plaintiff was misclassified as exempt and
was due some amount of overtime pay. The plaintiff claimed she was expected to work
or be on-call “24/7” and should be entitled to compensation 24 hours of each day. The
defendant agreed there was no schedule, and the plaintiff was expected to work
whenever the defendant needed her, but disputed that the “on call” time was
compensable. The plaintiff was expected to be available at all hours of the day or night
and while on tour, the plaintiff regularly slept in the same bed with the defendant who
would routinely wake up the plaintiff in the middle of the night to take care of the
defendant’s needs. The district court concluded there was a dispute of material fact as
to whether the plaintiff’s “on-call” time was compensable. Moreover, because the court
determined there was a factual dispute as to whether the plaintiff worked fluctuating
hours or was required to be available to the defendant “24/7”, the court refused to apply
the FWW methodology.
2. Liquidated Damages
a. Availability
In Valasquez v. U.S. 1 Farm Market, 744 two plaintiffs sued their former employer
under the FLSA and Connecticut wage and hour law for non-payment of wages and
overtime. After commencing the action, the plaintiff requested that the court order a
prejudgment remedy, available under Connecticut state law, sufficient to meet their
claims in the amount of $75,000. Specifically, the plaintiffs requested an attachments of
assets for this full amount. Applying this law, the court found that the plaintiffs had made
the requisite “probable cause” showing that a judgment for the amount in question will
ultimately be rendered in their favor. Although the court found that the plaintiffs had met
this burden to support their state law claims for liquidated damages, it did not reach the
same conclusion with respect to their claims for such damages under the FLSA. Rather,
the court refused to decide whether there was “probable cause” to believe that the
plaintiffs were likely to receive liquidated damages under the FLSA. In its discussion of
this issue, the court noted present uncertainty among courts as to whether liquidated
damages could be concurrently awarded under both the FLSA and applicable state law.
The court also noted that, as a practical matter, the purported liquidated damages which
could be awarded under state law, when combined with the potential award of unpaid
wages and overtime, nearly reached the full amount of the requested $75,000
prejudgment remedy.
In Yapan v. Marvin Holding Co.,745 two press operators brought overtime claims
against multiple related entities and their owner, alleging that the defendants divided the
plaintiffs’ hours among the related entities to evade paying overtime, and that the
744
745
2013 WL 6195580 (D. Conn. Nov. 26, 2013).
2014 WL 242839 (N.D. Ill. Jan. 22, 2014).
206 defendants failed to credit the plaintiffs for all the hours they worked. The plaintiffs did
the same work for each entity, were supervised by the same owner regardless of which
company they worked for, and submitted evidence that during weeks in which they
worked more than 40 hours, some of their time was designated as work for related
entities. The plaintiffs offered “reasonable estimate[s]” of the number of hours they
worked for which they should have been paid overtime, the number of hours they
worked that were unrecorded, and the number of uncompensated hours they worked
through their lunch periods. After the defendants did not respond to the plaintiffs’ motion
for summary judgment, a district court in Illinois assumed the plaintiffs’ asserted facts
were true and granted them summary judgment. The court explained that liquidated
damages are presumed to apply for FLSA violations unless the employer meets its
burden of showing that it acted in good faith. The court held that because the
defendants had failed to respond to the summary judgment motion, they had failed to
meet their burden of showing that they acted in good faith, and thus liquidated damages
would be awarded.
C. Attorneys’ Fees and Costs
In Ulin v. Lovell’s Antique Gallery,746 the Ninth Circuit affirmed a district court’s
award of attorneys’ fees and costs pursuant to the California Labor Code and the FLSA.
The plaintiff prevailed against the antique gallery and owner. Fees and costs were
awarded to the plaintiff. The appellate court reviewed the decision for an abuse of
discretion. It held that the district court followed the proper procedure, calculating a
presumptively reasonable fee award using the lodestar method and then adjusting the
award appropriately. Both the antique gallery and owner were responsible for the
attorneys’ fees and costs equally.
In Kyriakoulis v. Dupage Health Center, Ltd.,747 the plaintiffs, a receptionist and a
medical assistant, brought claims against the defendant Health Center and its officers
under the FLSA and Illinois Minimum Wage Law, seeking unpaid minimum wage and
overtime compensation. After the plaintiffs recovered a total of $8,777.50 in a jury trial,
the plaintiffs’ counsel submitted a fee petition seeking $168,607.50 in attorneys’ fees
and costs. In opposition, the defendants argued that the plaintiffs’ counsel spent an
unreasonable amount of time drafting the complaint, resisting defendants’ motion to
dismiss state common law claims, preparing plaintiffs’ motion for summary judgment,
preparing for trial, conferring amongst each other, and other miscellaneous items. The
court overruled the defendants’ objection to the plaintiffs’ counsels’ expenditure of six
hours preparing the complaint, finding that although the complaint was similar to one the
plaintiffs’ counsel had filed in a previous case, six hours was reasonable because the
plaintiffs’ counsel had to tailor the language and allegations in the complaint to the
plaintiffs’ specific claims. The court found that the 4.2 hours spent opposing the motion
to dismiss was not recoverable since the state common law claims were preempted by
746
747
528 F. App’x 748 (9th Cir. 2013).
2014 WL 1257937 (N.D. Ill. Mar. 27, 2014).
207 the FLSA under prevailing circuit law. The court only awarded 15 percent of the
$22,455.00 the plaintiffs’ counsel requested for time spent moving for summary
judgment, primarily because the issue moved on—the amount of hours worked by the
plaintiffs—was a factual dispute not resolvable via summary judgment. In sustaining the
defendants’ objection to $24,920.00 for time spent by the plaintiffs’ counsel “getting up
to speed” for trial after the initial trial date was rescheduled, the court noted that the
rescheduling was caused solely by one of the plaintiffs’ incarceration. With respect to
the $10,500 the plaintiffs’ counsel requested for time spent conferring amongst each
other, the court only awarded $4,100 because counsel did not document this time
specifically enough to demonstrate its necessity. Finally, the court rejected the
defendants’ argument that attorney fees should be limited to $60,000 in order to ensure
proportionality between the fee award and the amount of damages recovered by the
plaintiffs. The court reasoned that since FLSA actions typically involve small recoveries,
incentivizing lawyers to take such cases requires allowing them to recover fees for all
hours reasonably expended. The court approved a total fee and cost award of
$120,824.59, which included all of the time the plaintiff’s counsel expended on the trial.
In Francois v. Mazer,748 the defendant employer appealed an award of
$72,969.20 in attorneys’ fees and costs following a favorable jury verdict in the amount
of $8,950.72 on her claims brought under the FLSA and New York Labor Law. The
Second Circuit in an unpublished decision affirmed the award finding that the district
court had acted within its discretion.
1. Generally
In Oliva v. Infinite Energy, Inc.,749 the court, in assessing the plaintiff’s motion for
attorney’s fees and costs, made the preliminary observation that, while the defendant
litigated the case “fairly aggressively,” the plaintiff “appears to have expended an
inordinate amount of time litigating a case that had a value of $10,000.00 to
$15,000.00.” The plaintiff requested attorneys’ fees in the amount of $306,310.00,
paralegal fees in the amount of $2,970.00 and costs in the amount of $4,338.95. The
plaintiff’s counsel actually billed $122,524.00 in attorneys’ fees, but plaintiff sought a
multiplier of 2.5, arguing that counsel’s representation was superior to what was
reasonably expected. The plaintiff’s counsel’s rate was $295.00 an hour. The court
noted that its obligation in determining the proper amount was to first determine a
reasonable hourly rate and then multiply that number by the number of hours
reasonably expended in prosecuting the action. The plaintiff’s affidavit in support of his
counsel’s hourly rate was wholly inadequate, the court found. The affiant, a fellow
attorney, did not include his years of experience, his familiarity with FLSA rates,
plaintiff’s counsel’s experience, or rates of attorneys with similar experience. The court
instead applied its own judgment and set the proper rate at $235.00 per hour. The court
then deducted significant hours from plaintiff’s counsel’s billing submissions, including:
748
749
523 F. App’x 28 (2d Cir. 2013).
2013 WL 6815989 (N.D. Fla. Dec. 24, 2013).
208 (1) hours spent drafting motions that were not filed; (2) hours spent as a result of
plaintiff’s counsel’s own failure to follow a scheduling order; (3) administrative time; (4)
excessive time spent preparing affidavits; (5) excessive legal research time; (6) time
spent taking unnecessary depositions; and (7) excessive document review time
(applying a 500 page-per-hour standard). The court also reduced plaintiff’s proposed
paralegal fees and costs and the court declined to apply either a multiplier or downward
adjustment to the lodestar figure (observing that plaintiff’s counsel’s representation was
able but not superior to what would be expected). The court ultimately awarded the
plaintiff $60,512.50 in attorneys’ fees, $747.50 in paralegal fees and $2,178.50 in costs.
2. Specific Factors That Affect Attorneys’ Fee Awards
In Guzman v. Joesons Auto Parts,750 the court considered the plaintiff's motion
for approval of attorney's fees totaling 40 percent of the total award in the parties' jointly
proposed settlement agreement. A settlement was reached pursuant to a conference
with the magistrate judge deciding the pending motion, and the parties agreed to the
overall award paid by the defendant but not the attorney's fees. The court evaluated six
factors in determining the reasonableness of the award: (1) the time and labor
expended by counsel, (2) the magnitude and complexities of the litigation, (3) the risk of
the litigation, (4) the quality of representation, (5) the requested fee in relation to the
settlement, and (6) public policy considerations. Here, the court held that factors one to
five weighed against plaintiffs' recommendation for 40 percent of the settlement award
for reasons including the simplicity of the straight-forward, uncomplicated wage-hour
dispute involving a single plaintiff, lack of any discovery or motion practice, the relatively
short duration between the complaint being filed and a settlement being reached,
plaintiff's counsel's unimpressive quality of representation, and the fact that while fee
awards up to one third of the total settlement award were not atypical in the Second
Circuit, significantly smaller awards were also common when warranted by the
particular facts of a case. The final factor – public policy considerations – led the court
to conclude that it must award a fee that encourages class counsel to pursue FLSA
cases and helps ensure against excessive fees. For all these reasons, the court found
that adequate fee awards should total 25 percent of the named plaintiff's settlement and
20 percent of the second settling plaintiff's settlement.
e. Calculating “Reasonable” Attorneys’ Fees
In Brown v. Mustang Sally’s Spirits & Grill, Inc.,751 the plaintiffs moved for
attorneys’ fees and costs after settlement. The court determined that the case did not
merit deviation from the rule that the reasonable hourly rate is the hourly rate employed
by attorneys in the district in which the litigation is brought. Finding that the plaintiffs had
not overcome the presumption that the forum rule should apply, the court significantly
lowered the hourly rates, even when the plaintiffs’ counsel had acknowledged expertise
750
751
2013 WL 2898154 (E.D.N.Y. June 13, 2013).
2013 WL 5295655 (W.D.N.Y. Sept. 18, 2013).
209 in FLSA cases. While plaintiffs’ counsel had received higher out-of-district rates in a
case involving foreign migrant workers residing in remote areas of Mexico, the court
found that the instant case, involving exotic dancers allegedly misclassified as
independent contractors, did not merit higher out-of district rates. The court went on to
make an across-the-board reduction of 20 percent in fees to address hours billed as
non-clerical that in fact appeared to involve clerical and administrative work, and
numerous internal discussions.
(i.)
Calculating the Lodestar Figure
In Johnson v. G.D.F., Inc.,752 a jury awarded $1,000 in back pay and $4,000 in
punitive damages to a pizza delivery employee against Dominos on a retaliation claim
brought pursuant to 29 U.S.C. § 215(a)(3). After trial plaintiffs’ counsel sought over
$100,000 in attorneys’ fees, but the district court awarded only $1,500. The plaintiff
appealed to the Seventh Circuit which reversed and remanded the case instructing the
district court to determine reasonable attorneys’ fees. On remand, the district court
emphasized that Dominos’ argument that it would have settled early if it had only known
the claim was for $1,000 in back pay was rejected by the Seventh Circuit. After an
analysis the district court on remand awarded attorneys’ fees totaling $115,824.75.
In Clark v. Northview Health Services, LLC,753 the plaintiff asserted an FLSA
claim for failure to pay overtime and a breach of contract claim for failure to pay an
agreed hourly wage and mileage. A jury found in favor of the plaintiff on the FLSA claim
and for the defendant on the breach of contract claim. The plaintiff sought to recover
attorneys’ fees and costs under the FLSA. The court granted the plaintiff’s motion in
part. In calculating attorneys’ fees, the court utilized the lodestar method. The defendant
challenged the requested attorney rates on the basis that they were only supported by
lead counsel’s affidavit testimony that the rates were reasonable. The district court in
Alabama rejected this argument, relying instead on the rationale utilized in other cases
in which the same attorneys were awarded fees. The court found the lead attorney’s
rates were reasonable based on his qualifications and the approval of his rate by other
judges in the district. The court similarly approved the rate of an attorney with more than
three years of FLSA experience. By contrast, the court reduced the rates requested by
two attorneys, one of whom had limited FLSA experience and the other an attorney
fresh out of law school when the case began. In calculating the number of hours
reasonably expended on the case, the court rejected the defendant’s arguments that
the case was “over lawyered,” too much time was spent on internal conferences, fees
were sought for “non-lawyer” tasks, and that the attorneys’ time reflected inefficiency for
certain tasks performed. The court did reduce the hours billed for work on simple pretrial disclosures and the pre-trial order, as well as the hours for one attorney’s time for
attendance at trial where that attorney did not address the court or jury. In doing so, the
752
753
2014 WL 463676 (N.D. Ill. Feb. 5, 2014).
2013 WL 3930095 (S. D. Ala. July 30, 2013).
210 court found that her attendance “resulted in excessive, redundant or otherwise
unnecessary hours.”
After calculating the lodestar amount, the court adjusted the amount to account
for the plaintiff’s lack of success on her breach of contract claim because it was “based
on different facts and different legal theories” than her FLSA claim. Specifically, the
court found that the FLSA claim for unpaid overtime was unrelated to the contract claim
for unpaid straight time and mileage. Additionally, the court noted that statutory
attorneys’ fees are not available for a breach of contract claim even if the claim is
successful. In determining the appropriate reduction, the court found that the plaintiff’s
claimed damages for the contract claim were 24 percent of her total claimed damages
and, therefore, reduced the hours claimed by each of the plaintiff’s lawyers by 20
percent. The court rejected the defendant’s arguments that the fee award should be
reduced further due to the disparity between the damages claimed and damages
awarded (a difference of only $268.26), and because the plaintiff interfered with
settlement by failing to seek early resolution of the case.
In Custodio v. American Chain Link & Construction, Inc.,754 the plaintiff brought
suit on behalf of himself and those similarly situated for unpaid overtime wages under
the FLSA and state law. Pursuant to a settlement agreement providing $62,500 in
damages to the plaintiffs, the plaintiffs moved to recover $106,335.75 in attorneys’ fees
and costs. The magistrate judge recommended the plaintiffs be awarded $56,061.85 in
attorneys’ fees and costs, and, over the defendants’ objections on numerous grounds,
the district court judge adopted this recommendation and report in its entirety. The
district court noted that reasonable attorneys’ fees were determined by calculating the
number of hours reasonably expended on the litigation multiplied by a reasonable
hourly rate (in the Second Circuit, formerly known as the lodestar method). The court
concluded that the magistrate properly determined certain attorneys’ reasonable hourly
rates; rejected the application for fees for other attorneys and paralegals due to
insufficient information regarding their qualifications and experience; reduced fees for
excessive, duplicative, and vague time entries; declined to reduce fees for duplicative
time entries; and declined to reduce the fees to achieve proportionality with the amount
of recovery, or for allegedly harassing, improper, shoddy, and dilatory litigation
practices. In conducting the lodestar analysis, the magistrate also reduced the lodestar
figure to eliminate the time plaintiffs’ counsel spent on the unsuccessful motion for class
certification.
In Aguilera v. Cookie Panache by Between the Bread, LTD.,755 the plaintiff
sought unpaid wages, liquidated damages, and attorneys’ fees and costs. The parties
negotiated a settlement resolving claims of the plaintiff and one class member that had
submitted a consent form. The proposed settlement provided for a total of $30,000 in
back wages and liquidated damages to the plaintiff and the opt-in plaintiff, and $57,000
for attorneys’ fees and costs. In considering the reasonableness of the attorneys’ fees
754
755
2014 WL 116147 (S.D.N.Y. Jan. 13, 2014).
2014 WL 2115143 (S.D.N.Y. May 20, 2014).
211 request, the court employed the lodestar method, which considers the number of hours
reasonably expended on the litigation multiplied by a reasonable hourly rate. The court
stated that the plaintiffs “bear the burden of documenting the hours reasonably spent by
counsel, and the reasonableness of the hourly rates claimed.” The court also noted that
the amount awarded in attorneys’ fees being almost two times the amount to be
recovered by the plaintiffs under the settlement was noteworthy, but was not inherently
improper. The court nonetheless rejected the plaintiffs’ requested attorneys’ fees after
engaging in an itemized review of their counsel’s billing statement. The court
determined that the hourly rates of the attorneys were unreasonable and held that a
reasonable hourly rate is based on “the current prevailing market rate for lawyers in the
district in which the ruling court sits.” The court further reduced the attorneys’ fees
requested because it determined that the number of hours billed was excessive. In
determining the appropriate amount of attorneys’ fees to be awarded, the court urged
the plaintiffs’ counsel and his colleagues at the employment law bar “to focus on the fact
that the FLSA and related legislation were enacted to help disadvantaged employees,
not their lawyers.”
(ii.) Adjusting the Lodestar Amount—the 12-Factor Test
In Black v. Settlepou, P.C.,756 the Fifth Circuit reversed the district court’s finding
that the parties entered into a fluctuating workweek agreement and invalidated the
court’s damage award that was calculated based on the alleged agreement. The district
court reduced the award of attorneys’ fees based on the fact that the plaintiff received a
mere fraction of the damages they sought. Since the Circuit Court invalidated the
damage award, it asked the lower court to revisit the issue of attorneys’ fees and
advised the court to base its decision on the plaintiff’s degree of success and not the
discrepancy between the plaintiff’s demand and the verdict.
In Anderson v. Stiefel Aluminum, Inc.,757 the defendants sought a reduction of the
lodestar amount based upon the results obtained in this case. The Fifth Circuit agreed,
finding that defendants properly valued the case because their settlement offer made
early in the case was very close to the amount of the verdict. The plaintiff’s valuation of
the case was 89 percent higher than the amount of the actual verdict, so the court
reduced the lodestar calculation of attorneys’ fees by 89 percent.
In De Armas v. Miabraz, LLC,758 the court found that a 65 percent reduction in
attorneys’ fees was warranted because plaintiffs failed to establish their retaliation claim
and recovered only seven percent of the damages they sought. Although the court
noted a greater reduction may have been warranted, it took into consideration the fact
that the plaintiffs’ attorneys were not able to take on additional matters during the trial of
this case.
756
732 F.3d 492 (5th Cir. 2013).
2013 WL 3714089 (M.D. Fla. July 15, 2013).
758
2013 WL 4455699 (S.D. Fla. Aug. 16, 2013).
757
212 In Dajabic v. Rick’s Café,759 the court reduced the plaintiff’s hourly rate of $400
by $100 because the plaintiff’s counsel offered no evidence that he ever received $400
from paying clients. Rather than submit retainer agreements or any documents
supporting the proposed market rate, counsel relied on boasts of his experience and
plaudits. Also, the court reduced the rate for a law clerk who hadn’t passed the bar and
was billed at an associate rate. The court then went on to scrutinize the hours charged
within counsel’s invoices. It noted several irregularities and ultimately found the bills to
be excessive and unreasonable and reduced the time billed by 50 percent.
D. Costs
In Moore v. CITGO Refining and Chemicals Co., L.P.,760 the defendant prevailed
on summary judgment based on the plaintiffs’ inability to prove damages in an FLSA
executive exemption misclassification action and submitted a bill of costs under Rule
54(d)(1) for more than $50,000. However, the district court awarded only $5,000, based
on findings regarding the defendant’s “enormous wealth” and the plaintiffs’ good faith
and “limited resources.” Reviewing the reduction in costs for abuse of discretion, the
Fifth Circuit found that the district court erred as a matter of law in relying on the
defendant’s wealth or the comparative wealth of the parties as a basis for reducing the
cost award and that at least four circuits have rejected the “relative wealth” rationale.
The Fifth Circuit added that “[a]s a practical matter, the approach adopted by the district
court would be impermissibly punitive by preventing profitable corporations . . . from
recovering costs when litigating against individuals acting in good faith.” While it was
unclear whether the district court’s reduction was also independently based on the
plaintiffs’ limited resources, the Fifth Circuit found that that it would have been reversible
error to reduce the cost award on that basis because the plaintiffs were each making
approximately $100,000 per year and the defendant incurred a few thousand dollars in
out-of-pocket expenses per plaintiff for taking depositions.
In Ulin v. Lovell’s Antique Gallery,761 the Ninth Circuit affirmed the district court’s
award of partial fees and costs. The Court noted that apportionment of expenses
between defendants is only appropriate when the time expended by the plaintiff in
pursuing each defendant was grossly unequal and not on each defendant’s relative
liability.
VIII.
Settlement, Waiver, and Release
A. Compromise, Settlement, Waiver, and Release: Generally
759
995 F. Supp. 2d 210 (E.D.N.Y. 2014).
735 F.2d 309 (5th Cir. 2013).
761
528 F. App’x 748 (9th Cir. 2013).
760
213 The parties in Nichols v. Dollar Tree Stores, Inc.762 filed a Joint Motion for
Approval of Settlement and Dismissal with Prejudice requesting an order approving the
parties’ FLSA settlement agreement. Because the court took issue with numerous
provisions in the parties’ agreement, the court denied the motion without prejudice to
refile. As a preliminary matter, the court denied the parties’ request for an in camera
inspection of the settlement agreement and required that the parties instead file the
document in the public docket. “Sealing an FLSA settlement agreement . . . thwarts
Congress’s intent both to advance employees’ awareness of their FLSA rights and to
ensure pervasive implementation of the FLSA in the workplace.” Furthermore, because
the parties did not disclose the full terms of the settlement alongside their Joint Motion,
the court found that it was unable to determine whether the settlement sum of $528.10
was fair and reasonable. Next, the court held that the settlement agreement’s so-called
“pervasive release,” wherein the employee broadly waived all employment-related
claims whether known or unknown, while “incontestably a staple of accepted and
common litigation practice,” nonetheless was unacceptable under the FLSA. The court
reasoned that it is inherently unfair for an employer to leverage an approximately $500
FLSA release into a full waiver of rights that bear no connection to the FLSA. Similarly,
the court determined that the settlement agreement’s “no disparagement” clause was
overly broad because it restrained the plaintiff’s free speech and free association rights
to statements beyond those that concerned the FLSA claim. Finally, the court struck the
settlement agreement’s “no future employment” provision. While these provisions are
sometimes allowable in FLSA settlements, the defendant in this case is a nationwide
employer, a Fortune 500 company and the nation’s largest single price point retailer.
Accordingly, the plaintiff’s waiver of future employment opportunities with the defendant
when placed in an FLSA settlement agreement was unconscionable in the eyes of the
court.
In Briggins v Ellwood TRI, Inc.,763 the court approved a settlement, with two
exceptions, on behalf of 587 individual plaintiffs who had previously been part of
decertified FLSA collectives in two related actions alleging off-the-clock pre-shift activity
and unpaid overtime. The court rejected a provision that the agreement remain
confidential, finding that there is a strong public interest in assuring fair wages and that
employees have a right to alert other workers of potential FLSA violations. The court
also rejected a provision that would allow the defendants to seek fees and costs for their
enforcement of the settlement against any late objectors. The court found that the
provision unduly undermines the voluntary nature of the settlement and would violate
the due process rights of any plaintiffs who were unaware of the settlement or were
otherwise prevented from objecting.
In Donovan v. Rite Aid of New York Inc.,764 a former assistant manager filed
overtime claims under the FLSA and New York Labor Law and also alleged that the
762
2013 WL 5933991 (M.D. Ga. Nov. 1, 2013).
3 F. Supp. 3d 1277 (N.D. Ala. 2014).
764
2013 WL 6183136 (S.D.N.Y. Nov. 14, 2013).
763
214 defendant unlawfully retaliated against him because of his participation in a previous
wage-and-hour lawsuit with similar allegations (“the Misclassification lawsuit”). The
defendant moved for summary judgment on the grounds that the settlement agreement
in the Misclassification lawsuit barred the plaintiff’s claims and the district court agreed.
In reaching this decision, the district court found that the settlement agreement from the
Misclassification lawsuit covered all of the claims asserted by the plaintiff and that he
was bound by that settlement agreement because he affirmatively opted into that
litigation. Although the plaintiff argued that his retaliation claims were not covered by the
settlement agreement from the Misclassification lawsuit, the court found summary
judgment was proper because the agreement’s “extremely broad release” and explicit
reference to retaliation claims made clear that the claims were with within the scope of
the agreement.
In Martinez v. Hilton Hotels Corp.,765 the court held that the settlement approval
process for FLSA claims must be public and the agreement should not be maintained
under seal, unless there was a compelling reason for confidentiality. The court found the
defendants’ explanations: that disclosure would “disrupt business” and that the public
had little “genuine interest,” unpersuasive. Rather, the court cited public policy favoring
the availability of settlement terms so that the public may know how businesses treat
their employees.
In Fontes v. Drywood Plus, Inc.,766 the parties sought court approval of their
settlement of a claim brought by two employees for unpaid overtime in the amount of
$14,625 for one employee and $16,380 for the other employee. The settlement,
however, awarded the two employees $12,000 less a 25 percent attorney contingent
fee of $4,200.00, resulting in the employees receiving $2,146.67 and $2,432.33
respectively in back wages. Both back wage checks were cashed and the employee
paid their attorney 25 percent of the net amount they received for a total of $1,222.25.
Believing this settlement did not adequately compensate them for their unpaid overtime,
the employees filed a charge with the National Labor Relations Board. Upon reviewing
the proposed settlement, the court ordered counsel to submit a joint supplemental
memorandum setting forth the facts and negotiations underlying this settlement. This
document estimated without the benefit of contemporaneous time records that the
employees were owed $12,623.90 and $11,267.76 respectively less the back wage
amounts they were paid earlier. Based chiefly on concerns that the contingency fee
contract abridged employees’ entitlement to attorney’s fees under the FLSA, the court
subsequently held a fairness hearing to show why the court should not reject the
settlement as unreasonable and unfair. As a result of this hearing, the parties in
consultation with their clients modified the settlement to provide for a separate award of
attorney fees for $2,500.00 and $6,000 in back wages and liquidated damages to each
employee in addition to back wages already received along with withdrawal of
complaints filed with the NLRB. In approving this settlement, the court did not invalidate
765
766
2013 WL 4427917 (S.D.N.Y. Aug. 20, 2013).
2013 WL 6228652 (D. Ariz. Dec. 2, 2013).
215 the contingency fee arrangement and instead concluded that the separate award of
attorneys’ fees brought the plaintiff contingency fee contract in closer alignment with the
letter and intent of 29 U.S.C. § 216(b) because the back wages were not reduced by
such fees. It further concluded that the settlement’s amount of back wages represented
fair compensation when balanced against the hazards of lengthy litigation.
B. Private Settlement, Waiver, and Releases
In Bernstein v. Target Stores, Inc.,767 a pro se plaintiff filed a complaint against his
former employer seeking damages for alleged violations of the FLSA. The parties filed a
joint notice of settlement and subsequently requested that the court permit them to file
under seal their stipulation to dismiss the case with prejudice. In their motion, the parties
informed the court that they had reached a settlement involving the release of claims
under the FLSA which required the approval of the court. However, the parties also
stated that because they had reached an agreement to keep the terms of the settlement
confidential, they were seeking leave to file the settlement agreement under seal. In
denying the parties’ motion to file under seal, the court noted that although there was no
specific guidance in the Ninth Circuit, most district courts considering a motion to seal
favor public access of motions to approve settlement of FLSA claims. According to the
court, the only justification the parties provided in their motion to seal was that they
agreed to keep confidential the terms of the settlement, but the existence of a
confidentiality provision, without more, did not constitute good cause, much less a
compelling reason, to seal the FLSA settlement. The court also held that an employer’s
concern regarding exposure to additional liability and litigation did not outweigh the
presumption of public access. Finally, the court noted that it was “not inclined to
approve a settlement of FLSA claims that include[d] a broad release provision
purporting to release claims unrelated to [the] litigation, absent a particularized showing
that such a broad release . . . [was] ‘fair and reasonable.’”
In Nall v. Mal-Motels, Inc.,768 the Eleventh Circuit vacated a district court’s
approval and enforcement of a purported settlement agreement. The plaintiff had
worked as a clerk and auditor at the defendant’s motel, and subsequently hired an
attorney who filed a lawsuit on her behalf seeking overtime under the FLSA. After the
plaintiff commenced the action, the defendant’s owner approached her directly and
offered to settle the case. Without her attorney’s prior knowledge, the plaintiff agreed to
accept the proposed settlement proceeds and signed a voluntary dismissal of the
complaint with prejudice. However, there was no written settlement agreement. The
motel owner subsequently retained legal counsel to represent him and the other
corporate defendant in the action. That attorney subsequently filed a motion, seeking to
have the district court approve the settlement agreement. A magistrate judge held an
evidentiary hearing over the matter, and later issued a report recommending that the
district court approve the settlement agreement because plaintiff and the motel owner
767
768
2013 WL 5807581 (N.D. Cal. Oct. 28, 2013).
723 F.3d 1304 (11th Cir. 2013).
216 had reached “a fair and reasonable resolution of a bona fide dispute under the FLSA.”
The district court adopted the magistrate’s report and recommendation, overruled
plaintiff’s objections, and dismissed her complaint with prejudice. The plaintiff appealed.
The Eleventh Circuit vacated the dismissal and held that the judgment entered by the
trial court was not “stipulated” because the plaintiff’s attorney had objected that the
terms were not fair and reasonable, and the motion to approve the settlement
agreement in question and to dismiss the case therefore should not have been granted.
In Archer v. TNT USA, Inc.,769 the parties settled the underlying matter and, at
the direction of the Magistrate Judge, filed a proposed Stipulation and Order Dismissing
the complaint pursuant to Federal Rule of Civil Procedure 41. The court refused to
dismiss the case because the parties had not provided the court with a copy of the
agreement or memoranda explaining why the settlement was fair. The plaintiff moved
for re-consideration arguing that the FLSA does not require judicial approval of
settlements. The New York district court observed that the Second Circuit clearly
required that settlements be approved by the court. Moreover, the parties had not
presented any evidence that the settlement resolved a bona fide dispute over hours
worked or consideration due and did not compromise substantive rights guaranteed by
the FLSA. The court denied the plaintiff’s motion holding that without such proof the
court could not approve the settlement of the FLSA claims.
In Barnes v. Ferrell Electric, Inc.,770 the parties sought to stipulate to the
dismissal of plaintiff’s FLSA claims with prejudice pursuant to Federal Rule of Civil
Procedure 41(a)(1). The district court in Georgia rejected the stipulation of dismissal
and directed the parties to file a joint motion for approval of settlement of this FLSA
action. The court stated that a private action brought by an employee for back wages
under 29 U.S.C. § 216(b) cannot be dismissed with prejudice pursuant to a settlement
unless the court first approves the settlement for fairness. The court also advised that
the joint motion for approval should include a copy of the settlement agreement, and
should indicate the amount of overtime hours claimed, or other amounts due under the
FLSA as well as the amount of the settlement allocated to attorneys' fees and whether
the attorneys' fees were agreed upon separately and without regard to the amount paid
to the plaintiff for back wages and liquidated damages. Finally, the court indicated that
the settlement agreement release should be limited to FLSA liability.
In Ambrosino v. Home Depot U.S.A., Inc.,771 the court denied a motion for
settlement approval, finding that the parties’ explanation for why the agreement was
“fair and reasonable” was “conclusory and not supported by any evidence or analysis.”
In particular, the court noted that the parties failed to provide (1) an analysis of the
reasonableness of the settlement amount in light of the potential maximum recovery by
the plaintiffs; (2) the estimated overtime hours worked by the plaintiffs and their potential
769
2014 WL 1343126 (E.D.N.Y. Mar. 31, 2014).
2013 WL 5651903 (S.D. Ga. Oct. 16, 2013).
771
2014 WL 1671489 (S.D. Cal. Apr. 28, 2014).
770
217 range of recovery; and (3) any specific information about how the parties arrived at the
settlement amount. The court also noted its concerns with the breadth of the proposed
release (“any and all claims or rights that the plaintiffs may have”) because it was not
justified as fair and reasonable and did not track the claims asserted in the lawsuit.
Finally, the court found that the parties failed to explain how the proposed plaintiffs’
attorneys’ fees were fair and reasonable, noting that a future motion for settlement
approval must contain information, including attorney time records and hourly rates. The
motion was denied without prejudice so that the parties could renew their motion or
renegotiate the settlement agreement.
C. DOL-Supervised Settlements
In Jones v. Midlands Neurology & Pain Associates,772 a phlebotomist sued her
former employer, a medical office, as well as the doctor in charge of the office, in his
individual capacity alleging FLSA violations. The defendants sought summary judgment,
arguing the plaintiff waived her FLSA rights, including any claim for liquidated damages
and attorneys’ fees when she accepted payment for unpaid overtime following a fourmonth DOL investigation. Although she received payment, the plaintiff did not sign the
DOL’s WH-58 waiver form or execute any other written waiver. The court denied
summary judgment on the grounds that the plaintiff did not agree to forgo liquidated
damages and attorneys’ fees.
In Fu v. Hunan of Morris Food Inc.,773 a waiter working at a Chinese restaurant
alleged that his employer had failed to pay him the minimum wage, improperly deducted
meal and lodging costs against his wages, and failed to inform employees of FLSA
wage provisions. A two-year investigation by the DOL resulted in production of a DOL
Release which was signed by the plaintiff and the plaintiff received a settlement
payment. The plaintiff contested the validity of the release, claiming that he did not
understand he was waiving and releasing claims and that the release was (1) presented
to him “as a piece of routine paperwork” that his employer demanded he sign, (2) not
translated, read, or explained to him, and (3) contained additional Chinese writing that
was not present when he signed the release. First, the court denied the defendants’
motion to dismiss for lack of subject matter jurisdiction because the waiver provision of
section 216(c) does not limit the jurisdiction of federal courts. Second, to establish a
valid waiver through a DOL-supervised settlement, the employee must have agreed to
accept the amount tendered and received the full amount. Absent fraud, the plaintiff’s
inability to read, write, speak or understand English was immaterial to the enforceability
of the DOL Release. Thus, while the alleged failure of the defendant to translate, read,
or explain the documents was not sufficient to state a claim, the plaintiff’s allegations
regarding the presentation of the release as routine paperwork, the demand that he sign
it, and addition of Chinese writing after he signed it were sufficient at the motion to
772
773
2013 WL 5934509 (D.S.C. Sept. 20, 2013).
2013 WL 5970167 (D.N.J. Nov. 6, 2013).
218 dismiss stage to challenge his assent to the release on the basis of fraud and
misrepresentation.
D. Judicially-Approved Consent Decrees
In Morris v. Affinity Health Plan, Inc.,774 two opt-out plaintiffs filed a motion to
amend the original complaint following settlement of a hybrid lawsuit containing both a
collective action under the FLSA and class action under New York state wage and hour
law. The district court denied the motion and the opt-out plaintiffs appealed. The Second
Circuit affirmed and held the underlying court did not abuse its discretion in denying the
plaintiffs’ motion. In support of this finding, the appellate court found that the courtapproved settlement agreement in question expressly resolved both the FLSA and state
law claims, thereby ending the lawsuit in its entirety. In turn, the court held that the
plaintiffs’ decision to opt-out of the settlement “can only reasonably be construed as a
decision to opt-out of both the collective and class actions that it resolved.” The court
also rejected the plaintiffs’ argument that language in the class settlement notice –
stating that those opting-out of the settlement could “continue to sue” – allowed them to
continue the settled hybrid lawsuit.
774
558 F. App’x 52 (2d Cir. 2014).
219 Chapter 19
COLLECTIVE ACTIONS
II.
Procedural Requirements of Section 16(b)
In Camesi v. University of Pittsburgh Medical Center,775 the Third Circuit
consolidated two cases on appeal, concerning claims by the plaintiffs that their
defendant employer776 hospital systems violated the FLSA by not compensating them
for work performed during meal periods. The district courts in both cases granted
section 16(b) conditional certification, but later granted the defendants’ motions for
decertification. In both cases, the plaintiffs voluntarily dismissed their claims with
prejudice in order to secure a final judgment for purposes of appealing the 16(b)
decertification. Before addressing the issue of first impression presented by these
appeals—whether the court had appellate jurisdiction in this circumstance777 —the court
first reiterated the distinction between 16(b) collective actions and Rule 23 class actions.
Specifically, the court noted that in order to become parties to a collective action under
16(b), employees must affirmatively opt-in to the action by filing written consents with
the court. By contrast, the class-action mechanism authorized by Rule 23 provides that
once a class is certified, all persons fitting the class definition are within the class,
unless they affirmatively opt out.778
In Chandler v. Heartland Employment Services, LLC,779 a group of workers at a
nursing and rehabilitation facility alleged that their employer violated the FLSA by
requiring them to launder and iron their uniforms at home without pay. In moving for
conditional certification of a nationwide class, the plaintiffs argued that the defendant’s
policy requiring wrinkle-free uniforms “imposed a de facto ironing requirement that led
employees to perform several hours weekly of unpaid work.” In response, the defendant
argued that uniform requirements varied by facility and department, and that laundering
and ironing practices varied by individual. The Pennsylvania district court denied the
motion for conditional certification because the plaintiffs did not make a “modest factual
showing” that their proposed class of healthcare workers were similarly situated.
Specifically, the plaintiffs failed to articulate how many facilities and employees were
included in their proposed class, or that the putative class members were required to
wear similar uniforms. According to the court, “the potential variation among uniforms . .
775
729 F.3d 239 (3d Cir. 2013).
The defendant employers were the University of Pittsburgh Medical Center in one case, and
the West Perm Allegheny Health System, Inc. in the other.
777
See Ch. 19.XI.E.
778
Camesi, 729 F.3d at 242–43.
779
2014 WL 1681989 (E.D. Pa. Apr. 28, 2014).
776
220 . precludes a finding that all the members of the proposed notice class have similar
uniform-maintenance claims.”
In Bowe v. Enviropro Basement Systems,780 a laborer and foreman moved a
New Jersey district court, pursuant to section 216(b), to conditionally certify FLSA
claims against his former employer, a residential basement waterproofing business, for
failing to pay him and other similarly situated employees for all hours worked, deducting
30 minutes of paid time for meal periods that were not taken, and calculating overtime
by failing to include commissions when determining the regular rate.781 In granting the
plaintiff’s motion, which the defendant did not oppose,782 and ordering the defendant to
produce contact information to permit notice to individuals employed as laborers or
foremen,783 the district court explained that the Third Circuit acknowledges the use of a
two-step process for deciding whether FLSA cases may properly proceed as collective
actions.784 During the first step, which is commonly referred to as “conditional
certification,” but which actually concerns the district court’s facilitation of notice to
potential class members, the plaintiff must make a modest factual showing, which
requires some evidence beyond mere speculation, of a factual nexus between the
manner in which the employer’s alleged policy affected him and the manner in which it
affected other employees.785 If the plaintiff satisfies this burden, after discovery, the
second step of the process requires the court to conclusively determine “whether each
plaintiff who has opted in to the collective action is in fact similarly situated to the named
plaintiff.”786 Because the plaintiff presented evidence in the form of his own testimony,
as well as testimony from two opt-in plaintiffs and several defendant witnesses, showing
the plaintiff’s job duties were the same as other foremen and laborers, and indicating
that such employees were subject to the same employment policies and practices, the
court found the plaintiff met his burden and granted conditional certification.787
In Swinney v. Amcomm Telecommunications, Inc.,788 the plaintiff asserted the
defendant violated the FLSA by misclassifying the proposed class as independent
contractors. The Michigan district court rejected the plaintiff’s first motion for conditional
class certification. After limited discovery, the plaintiff filed a second motion for
conditional certification, which included deposition testimony, affidavits and declaration
of other individuals alleging similar misclassification. In assessing the conditional
certification motion, the court first noted that to file a collective action under §216(b) of
the FLSA, named plaintiffs must be “similarly situated” and “all plaintiffs must signal in
writing their affirmative consent to participate in the action.” Whether plaintiffs are
780
2013 WL 6280873 (D.N.J. Dec. 4, 2013).
Id. at *1–3.
782
Id. at *1.
783
Id. at *7–8.
784
Id. at *3 (citing Camesi, 729 F.3d at 242).
785
Id.at *3 (citing Zavala v. Wal-Mart Stores Inc., 691 F.3d 527, 536 n.4 (3d Cir. 2012)).
786
Id. at *4 (quoting Camesi, 729 F.3d at 243).
787
Id. at *5–7.
788
2013 WL 4507919 (E.D. Mich. Aug. 23, 2013).
781
221 similarly situated is a two-stage process. First, in the “notice stage,” the court
“determines whether the suit should be conditionally certified as a collective action so
that potential opt-in plaintiffs can be notified of the suit’s existence and of their right to
participate.” The second stage commences after all opt-in forms are received and
discovery is complete. The plaintiff’s motion involved the first, more lenient, notice
stage, which only requires a “colorable basis for his claim that a class of similarly
situated plaintiffs exist.” Courts will not determine factual disputes or credibility
questions during this stage. The plaintiff’s affidavits were evaluated only to determine “if
Plaintiff has made sufficient allegations and a modest factual showing.” Consequently,
the court rejected the defendant’s argument that conditional certification should be
denied based on inconsistencies in the plaintiff’s affidavits and granted conditional
certification.
A. The Opt-In Versus Opt-Out Requirement
In Watson v. Advanced Distribution Services, LLC,789 a group of truck loaders
assigned by a temporary staffing agency to work at a distributor’s Tennessee facility
sought conditional certification of a class of loaders who worked at the facility during the
past three years, alleging they were entitled to overtime pay. In setting forth the
standards governing the conditional certification process, the Tennessee district court
observed that once a collective action is certified, “employees seeking to join the class
must opt into the litigation by filing a written consent with the court.”790
In Ahmed v. TJ Maxx Corp.,791 a former assistant store manager brought suit
against a discount retail chain, alleging that assistant managers were misclassified as
exempt from the overtime requirements of the FLSA and, therefore, were entitled to
overtime for weeks when they worked in excess of forty hours. Although the district
court declined to accept the magistrate’s recommendation that the plaintiff’s motion for
conditional certification of a collective group consisting of assistant managers who
worked at the defendant’s locations across the country be granted, the district court
noted that a collective action under section 216 of the FLSA is different than a class
action under Fed. R. Civ. P. 23, in that a collective action requires class members to
take affirmative steps to join a case by filing an opt-in consent form. Therefore, the court
held that a party seeking conditional certification of a collective action need not
demonstrate how the Rule 23 requirements of numerosity, commonality, typicality, and
adequacy of representation are met.
In Lucke v. PPG Industries, Inc.,792 the plaintiff, a territory manager of a global
paint, glass and chemical supplier, filed a misclassification claim after his employer
reclassified territory managers as non-exempt effective January 1, 2012. The plaintiff
sought conditional certification of a putative collective action and court-facilitated notice.
789
298 F.R.D. 558, 561 (M.D. Tenn. 2014).
Id.
791
2013 WL 2649544 (E.D.N.Y. June 8, 2013).
792
2013 WL 6577772 (W.D. Pa. Dec.16, 2013).
790
222 Relying on precedent from the Eleventh Circuit, the defendant argued that the court
“must examine whether there are other employees who actually desire to join the
litigation” in determining whether conditional certification is proper.793 The court rejected
the defendant’s argument, noting that in many cases where courts have denied
conditional certification based on an examination of whether employees actually desired
to join the litigation, “there was evidence of affirmative disinterest in the lawsuit by other
employees.”794 In this case, the court noted, the defendant had presented no such
evidence of affirmative disinterest. Ultimately, the court held that the plaintiff’s affidavit
set forth sufficient facts to show that the putative group members were similarly situated
and that conditional certification should therefore be granted.
B. The Consent Requirement
In Dobson v. Timeless Restaurants, Inc.,795 at the close of trial on the plaintiffs’
collective action claim, the court was left to determine an issue related to the
computation of damages before entering final judgment in favor of the plaintiffs. The jury
calculated damages based upon the date the subject plaintiff filed her first consent in
writing to be a party to the lawsuit.796 The defendant employer opposed the use of this
date, arguing that the date the plaintiff first signed the consent was improper because
the court did not certify the case as a collective action until a later date. The defendant
reasoned that one cannot be a party to a collective action until the court certifies the
action and the party files a consent in writing.797 A Texas district court rejected this
argument, however, and upheld the original determination, finding that the defendant’s
argument is unsupported by authority.798 In support of its ruling, the court opined that
nothing in the text of 29 U.S.C. § 216(b) requires or even intimates that the opt-in
consent cannot be filed prior to the court’s ruling on certification.799
In Palmer v. Priority Healthcare, Inc.,800 a licensed practical nurse brought
overtime and other claims under the FLSA against her employer, alleging that the
employer misclassified her and other employees as independent contractors and
retaliated against her and others after she filed suit. She sought a temporary restraining
order and a preliminary injunction on behalf of herself and two other individuals who
were allegedly constructively discharged. A district court in Mississippi concluded that
the only plaintiff in the case at that time was the original named plaintiff, as there was no
motion to amend the complaint to add additional named plaintiffs, and the two others
had not filed any written consent to be opt-in plaintiffs. The court noted that while a
793
Id. at *3 (emphasis in original). The Lucke court identified the cases cited by the defendant as
(a) not binding and (b) factually distinguishable. Id.
794
Id. at *3.
795
2013 WL 6079395 (N.D. Tex. Nov. 19, 2013).
796
Id. at *1.
797
Id.
798
Id. at *2.
799
Id.
800
2013 WL 5771662 (S.D. Miss. Oct. 24, 2013).
223 plaintiff may opt in to a FLSA action prior to certification of a collective action, citing
authority that “[a]llowing additional plaintiffs to join an FLSA action before or without
collective-action is consistent with the statutory language,” he or she must file a written
consent to do so.801 Because the two other purported plaintiffs had not filed a written
consent, they were “neither named plaintiffs nor opt-in plaintiffs.”802 Accordingly, the
plaintiff had no standing to seek any relief, including reinstatement, on behalf of the
other two individuals. The court further concluded that even if the two other potential
plaintiffs had opted in by filing written consents, the motion for a preliminary injunction to
reinstate the other two potential plaintiffs would fail “for lack of any allegation or proof of
irreparable harm.”803
In Gessele v. Jack in the Box, Inc.,804 fast food workers filed a collective action
against their former employer alleging the restaurant failed to pay minimum wage and
overtime in violation of the FLSA.805 Shortly after the Oregon district court conditionally
certified certain proposed classes, the defendant moved to amend its answer to assert
an affirmative defense based on the statute of limitations. Specifically, the restaurant
alleged that the name plaintiffs’ FLSA claims were untimely because they failed to file
the required written consent with the court within the applicable statute of limitations. In
granting the restaurant’s motion for summary judgment, the court held that the FLSA
claims could not commence until the named parties’ written consents were filed with the
court as required under section 216(b). Because more than three years passed since
the most recent payday applicable to any named plaintiff, the court ruled that the FLSA
claims were untimely. In doing so, the court declined to apply the discovery rule,
equitable tolling, or equitable estoppel to preserve the FLSA claims.
1. Scope and Use of Consent Form
In LaFleur v. Dollar Tree Stores, Inc.,806 plaintiff LaFleur and plaintiff Croy
brought a collective action on behalf of hourly associates and assistant managers
against their employer for overtime and minimum wage violations under the FLSA and
Illinois state law.807 Specifically, the plaintiffs alleged that the defendant failed to pay
them for off-the-clock work during meal breaks, making bank deposits, and at other
801
See id. at *2–3 (quoting Granchelli v. P & A Interest, Ltd., 2013 WL 435942, at *2 (S.D. Tex.
Feb. 4, 2013)).
802
Id. at *3.
803
The court also concluded that the other relief the plaintiff sought, ordering the defendants to
provide contact information and notice to potential opt-in plaintiffs, was not properly brought as a request
for a preliminary injunction but rather as a motion for conditional certification of a collective action. See id.
at *4; see also Ch. 19, IV.B.3.
804
6 F. Supp. 3d 1141 (D. Or. 2014).
805
The plaintiffs also sought to bring a class action to redress certain state law claims, over which
the court declined to exercise supplemental jurisdiction after dismissing the FLSA counts on summary
judgment.
806
2014 WL 37662 (E.D. Va. Jan. 3, 2014).
807
Id. at *1.
224 various times.808 The Virginia district court previously granted conditional certification
and notice was issued to over 275,000 current and former employees.809 The court set
a May 22, 2013 deadline to file notice of consent forms and over 6,000 opt-ins returned
their notices of consent within the deadline.810 The state law claims were dismissed,
which left plaintiff Croy as the only named plaintiff.811 Before the court was the
defendant’s motion for summary judgment seeking to dismiss plaintiff Croy, who did not
file her notice of consent with the complaint nor did she file her consent before the May
22, 2013 deadline.812 Plaintiff Croy was last paid by the defendant on May 10, 2010.813
She filed her consent on July 29, 2013 when the plaintiffs moved to amend the
complaint to add two additional opt-ins as named plaintiffs.814 The court distinguished In
re Food Lion, Inc.,815 which held that the plain language of 29 U.S.C. § 216(b) indicates
that a plaintiff must be dismissed for failure to file consent to join a collective action after
the statute of limitations.816 The LaFleur court noted that the In re Food Lion, Inc.
decision was unpublished and “focused on the calculation of the statute of limitations
period as opposed to the nature of the written consent.”817 Instead, the court held that a
flexible, less stringent standard is applied when considering the form of notice.818
Because the statutory language of 29 U.S.C. § 216(b) does not state what form the
written consent must take, all that is required is that “a clear intent to be a party plaintiff
be manifested.”819 The court stated that irregular forms of consent will generally be
accepted as long as it shows a party’s desire to join the lawsuit.820 The court indicated
several ways that plaintiff Croy demonstrated efforts to consent to join, including filing a
declaration in support of motions for conditional certification, responding to
interrogatories and requests for production, and filing a traditional consent form to
Plaintiffs opposition.821 The court ultimately concluded that plaintiff Croy made sufficient
efforts within the statute of limitations to consent to join, and thus denied Dollar Tree’s
motion.822
808
Id. at *2.
Id.
810
Id. at *6.
811
Id. at *2.
812
Id. at *6.
813
Id.
814
Id. at *4.
815
151 F.3d 1029 (4th Cir. 1998).
816
LaFleur, 2014 WL 37662 at *6 (citing In re Food Lion, Inc., 151 F. 3d at 1041–42 and
Gonzales v. El Acajutla Rest. Inc., 2007 WL 869583, at *5 (E.D.N.Y. Mar. 20, 2007)).
817
Id. at *7.
818
Id. at *6.
819
Id. at *7 (citing D’Antuono v. C & G of Groton, Inc., 2012 WL 1188197 *4 (D. Conn. Apr. 9,
2012)).
820
Id. at *6 (citing Perkins v. S. New Eng. Tel. Co., 2009 WL 3754097 (D. Conn. Nov. 4, 2009)).
821
Id.
822
Id. at *7.
809
225 III.
Overview of the Two-Stage Process Used to Determine if a Collective Action
May Proceed to Trial
In Watson v. Advanced Distribution Services, LLC,823 truck loaders assigned by a
temporary staffing agency to work at a distributor’s Tennessee facility sought conditional
certification of a class of loaders who worked at the facility during the past three years,
alleging they were entitled to overtime pay. In setting forth the standards governing the
conditional certification process, the Tennessee district court observed that courts
employ a two-phase inquiry to address whether the named plaintiffs are similarly
situated to the proposed opt-in plaintiffs.824 “The first [phase] takes place at the
beginning of discovery. The second occurs after all of the opt-in forms have been
received and discovery has concluded.”825
The plaintiffs in Gallardo v. Scott Byron & Co.826 worked as site supervisors and
landscapers and sued to recover overtime pay under the FLSA and Illinois state law.
The plaintiffs claimed they performed work “off-the-clock” before and after their shifts,
and were not compensated for time spent traveling from the defendant’s main facility to
the first job of the day, and from the last job of the day back to the main facility at the
end of the day. The plaintiffs employed as site supervisors also alleged that the
defendant violated the FLSA and Illinois state law by improperly calculating their
overtime pay rate using the fluctuating workweek method. The plaintiffs moved for
conditional certification and notice, and the defendant moved for summary judgment on
the travel time claim under the FLSA, the propriety of the fluctuating workweek method
of calculating overtime pay, and the plaintiffs’ claims under the Illinois Wage Payment
and Collection Act (“IWPCA”). The court denied the plaintiffs’ motion for conditional
certification on the unpaid travel time claim because it granted the defendant’s motion
for summary judgment as to that claim. Although the court denied the defendant’s
motion for summary judgment on the plaintiffs’ fluctuating workweek claim, it also
denied the plaintiffs’ motion for conditional certification of that claim, finding that the
plaintiffs failed to demonstrate that other employees did not have a “clear
understanding” that their base salary compensated them for all hours worked.827 The
court granted conditional certification and notice as to the plaintiffs’ off-the-clock claim,
concluding that the plaintiffs’ testimony satisfied their modest burden.828
In Freeman v. Total Security Management—Wisconsin, LLC,829 protection
officers sued under the FLSA and state law to recover unpaid overtime pay for pre-shift
work and time spent attending work-related training events. The plaintiffs moved for
conditional certification of (1) a nationwide class of employees who were not
823
298 F.R.D. 558, 561 (M.D. Tenn. 2014).
Id.
825
Id.
826
2014 WL 126085 (N.D. Ill. Jan. 14, 2014).
827
Id. at *18.
828
Id. at *18–19.
829
2013 WL 4049542 (W.D. Wis. Aug. 9, 2013).
824
226 compensated for attending training directly related to their jobs; (2) a Wisconsin class of
employees who were not compensated for attending mandatory trainings on the use of
work equipment; and (3) a Wisconsin class of employees who were not compensated
for mandatory, pre-shift work. Applying the two-step framework, the court rejected the
defendant’s argument that an intermediate standard should apply, resolved all factual
inferences in favor of the plaintiffs, and granted the motion.
In Asirifi v. West Hudson Sub-Acute Care Center, LLC,830 a group of registered
nurses filed an individual and collective action, alleging their employer, a nursing facility,
automatically deducted 30-minute meal breaks from their paid shifts, regardless of
whether such a break was taken. The plaintiffs also contended they performed work in
excess of their regularly scheduled shifts without compensation, resulting in minimum
wage and overtime violations under the FLSA. The plaintiffs sought conditional
certification on the grounds that other nurses at the facility were also uncompensated
because of the defendant’s universal application of procedures and policies regarding
automatic meal break deductions and uncompensated pre- and post-shift work. The
district court in New Jersey denied the certification, holding that the alleged application
of a uniform policy, standing alone, does not show that potential class members are
“similarly situated” for purposes of seeking conditional certification.831
In Camesi v. University of Pittsburgh Medical Center,832 the Third Circuit
consolidated two cases on appeal, concerning claims by the plaintiffs that their
defendant employer833 hospital systems violated the FLSA by not compensating them
for work performed during meal periods. The district courts in both cases granted
section 16(b) conditional certification, but later granted the defendants’ motions for
decertification. In both cases, the plaintiffs voluntarily dismissed their claims with
prejudice in order to secure a final judgment for purposes of appealing the 16(b)
decertification. Before addressing the issue of first impression presented by these
appeals—whether the court had appellate jurisdiction in this circumstance834—the
appellate court first reiterated the distinction between 16(b) collective actions and Rule
23 class actions,835 and then restated the two-step process for deciding whether an
FLSA case can proceed as a 16(b) collective action. Specifically, the court noted that in
the first-step the court will apply a “fairly lenient standard” for determining whether the
plaintiffs are “similarly situated” with other employees they purport to represent. If the
plaintiffs make a “modest factual showing” of similarity, the court will conditionally certify
the case as a collective action for purposes of facilitating notice to potential opt-ins and
830
2014 WL 294886 (D.N.J. Jan. 24, 2014).
Id. at *2–3.
832
729 F.3d 239 (3d Cir. 2013). The court’s overview of the 16(b) collective action procedure is
noted at Ch. 19.III.
833
The defendant employers were the University of Pittsburgh Medical Center in one case, and
the West Perm Allegheny Health System, Inc. in the other.
834
See Ch. 19.XI.E.
835
See Ch. 19.III.A.
831
227 conducting pre-trial discovery.836 In the second step, with the benefit of discovery,
courts determine whether the employees who have opted in are, in fact, similarly
situated with the named plaintiffs, such that the case may proceed as a 16(b) collective
action.837 This second step determination occurs in the context of a defendant’s motion
to decertify, or a plaintiff’s motion for final certification (or commonly, both).
In Streeter-Dougan v. Kirkston Mortgage Lending,838 the plaintiff loan processor
brought overtime claims against her employer. The plaintiff sought to conditionally
certify a class of loan officers and loan processors, relying on her own testimony. The
court denied the motion, holding that the plaintiff’s evidence failed to meet the minimal
burden because she did not identify any loan officers by name, explain when and where
the conversations regarding overtime pay with any loan officer occurred, and did not
provide any documentary evidence from a loan officer which would lead to a reasonable
inference that loan officers, like loan processors, were the victims of an overtime
violation.839
In Ahmed v. TJ Maxx Corp.,840 a former assistant store manager brought suit
against a retail employer, alleging the employer failed to pay overtime compensation
despite the fact that she and other assistant managers were required to perform nonexempt duties. The plaintiff moved for conditional certification on behalf of a class of
assistant managers nationwide, which was initially granted by a magistrate judge. The
defendants appealed to the New York district court judge, asking for conditional
certification to be denied. The district court set aside the magistrate judge’s decision
because the assistant manager failed to provide evidence that would show the retailer’s
practice was more than just a localized policy within a specific geographical area. In
reaching that decision, the court noted the typical two-step process for certifying an
FLSA collective action. The first stage, or notice stage, permits conditional certification
and merely requires a plaintiff to make a modest factual showing to demonstrate that he
and potential plaintiffs were victims of a common policy or plan that violated the law,
which can be satisfied by relying on pleadings, affidavits and declarations alone. The
second stage occurs after discovery is completed and requires a closer examination of
whether the named plaintiff and opt-in collective action class members are similarly
situated based on the evidence obtained in the case.
In, Sutton-Price v. Daugherty Systems, Inc.,841 internet support technicians
claimed they were misclassified as exempt and sued to recover overtime pay under the
FLSA. The plaintiffs moved for conditional class certification of a diverse group of
consulting and support employees with differing job responsibilities and titles. Because
836
729 F.3d at 242–43 (citing Zavala v. Wal-Mart Stores Inc., 691 F.3d 535 (3d Cir. 2012)).
Id. (citing Symczyk v. Genesis Healthcare Corp., 656 F.3d 189, 193 (3d Cir. 2011), rev’d on
other grounds, 133 S. Ct. 1523 (2013)).
838
2013 WL 6174936 (S.D. Ind. Nov. 21, 2013).
839
Id. at *2.
840
2013 WL 2649544 (E.D.N.Y. June 8, 2013).
841
2013 WL 3324364 (E.D. Mo. July 1, 2013).
837
228 the plaintiffs engaged in a period of discovery designed to identify the class, the court
applied a “more restrictive, but still lenient standard.” In support of their motion, the
plaintiffs did not provide any evidence that the employees performed similar job duties,
instead relying solely on the defendant’s reliance on one exemption defense. In denying
the plaintiffs’ motion, the court noted that employees in different divisions had
substantially different duties and determined that the plaintiffs had not identified other
employees outside of their own subdivision who had similar duties. Although the
defendant suggested that it would be appropriate to certify a smaller class of employees
who worked in this subdivision, the court declined to do so as the plaintiffs had not
requested this relief.
In Bowe v. Enviropro Basement Systems,842 a laborer and foreman moved a
New Jersey district court, pursuant to section 216(b), to conditionally certify FLSA
claims against his former employer, a residential basement waterproofing business, for
failing to pay him and other similarly situated employees for all hours worked,
improperly deducting 30 minutes of paid time for meal periods that were not taken, and
improperly calculating overtime by failing to include commissions when determining the
regular rate.843 In granting the plaintiff’s motion, which the defendant did not oppose,844
and ordering the defendant to produce contact information to permit notice to individuals
employed as laborers or foremen,845 the district court explained that the Third Circuit
acknowledges the use of a two-step process for deciding whether FLSA cases may
properly proceed as collective actions.846 During the first step, which is commonly
referred to as “conditional certification,” but which actually concerns the district court’s
facilitation of notice to potential class members, the plaintiff must make a modest factual
showing, which requires some evidence beyond mere speculation, of a factual nexus
between the manner in which the employer’s alleged policy affected him and the
manner in which it affected other employees.847 If the plaintiff satisfies this burden, after
discovery, the second step of the process requires the court to conclusively determine
“whether each plaintiff who has opted in to the collective action is in fact similarly
situated to the named plaintiff.”848 Because the plaintiff presented evidence in the form
of his own testimony, as well as testimony from two opt-in plaintiffs and several
defendant witnesses, showing the plaintiff’s job duties were the same as other foremen
and laborers, and indicating that such employees were subject to the same employment
policies and practices, the court found the plaintiff had met his burden and granted
conditional certification.849
842
2013 WL 6280873 (D.N.J. Dec. 4, 2013).
Id. at *1–3.
844
Id. at *1.
845
Id. at *7–8.
846
Id. at *3 (citing Camesi v. Univ. of Pittsburgh Med. Ctr., 729 F.3d 239, 242 (3d Cir. 2013)).
847
Id. (citing Zavala v. Wal-Mart Stores Inc., 691 F.3d 527, 536 n.4 (3d Cir. 2012)).
848
Id. at *4 (quoting Camesi, 729 F.3d at 243).
849
Id. at *5–7.
843
229 In McKee v. PetSmart, Inc.,850 four current or former operation managers who
worked for a pet goods retailer claimed that they were improperly classified as overtime
exempt employees in violation of the FLSA. The plaintiffs brought their action as a
collective action under the FLSA and moved for conditional certification. The district
court noted that in order to conditionally certify the collective action, the vast majority of
district courts in the Third Circuit employ a “two-tiered analysis.” In the first stage, the
plaintiff must make a modest factual showing that the proposed recipients of opt-in
notices are similarly situated. At the second stage, the parties engage in discovery to
aid the court in making a final determination as to whether certification is warranted. The
plaintiff’s burden at the second stage is less lenient. The plaintiffs argued that the
expected uniformity among operation managers was sufficient to pass the lenient
standard for conditional certification at the initial stage. The defendants argued that
corporate uniformity of the position of operation manager and a plaintiff’s allegation of
FLSA violations was not, in and of itself, enough to be a sufficient nexus. The Delaware
district court reviewed whether the plaintiffs demonstrated a sufficient nexus between
their alleged experiences at select defendant stores and the experiences of current and
former operation managers across the country. The district court held that the very
nature of the operation managers’ job (and the manner in which they perform any work
or task required to ensure that a store runs smoothly) satisfied the modest factual
showing required to grant conditional certification.
In Chandler v. Heartland Employment Services, LLC,851 a group of workers at a
nursing and rehabilitation facility alleged their employer violated the FLSA by requiring
them to launder and iron their uniforms at home without pay. In moving for conditional
certification of a nationwide class, the plaintiffs argued that the defendant’s policy
requiring wrinkle-free uniforms “imposed a de facto ironing requirement that led
employees to perform several hours weekly of unpaid work.” In response, the defendant
argued that uniform requirements varied by facility and department, and that laundering
and ironing practices varied by individual. The Pennsylvania district court denied the
motion for conditional certification because the plaintiffs did not make a “modest factual
showing” that their proposed class of healthcare workers were similarly situated.
Specifically, the plaintiffs failed to articulate how many facilities and employees were
included in their proposed class, or that the putative class members were required to
wear similar uniforms. According to the court, “the potential variation among uniforms . .
. precludes a finding that all the members of the proposed notice class have similar
uniform-maintenance claims.”
In Hively v. Allis-Chalmers Energy, Inc.,852 oil and gas rig supervisors brought an
action for unpaid overtime under the FLSA and Pennsylvania state law. The supervisors
(under separate job titles including “Air Compression Supervisors,” “Air Supervisors,”
“Compression Supervisors,” or “Pushers”) alleged they were classified as exempt by
850
2013 WL 6440224 (D. Del. Dec. 9, 2013).
2014 WL 1681989 (E.D. Pa. Apr. 28, 2014).
852
2013 WL 5936418 (W.D. Pa. Nov. 5, 2013).
851
230 their employer. The three named plaintiffs moved for conditional certification arguing
that they performed non-exempt tasks, had little or no authority to make management
decisions, and were thus entitled to overtime compensation. The district court in
Pennsylvania followed a two-tiered analysis in determining whether the case should
move forward as a collective action.853 At the first phase, or the notice phase, the court
makes a preliminary determination whether the employees enumerated in the complaint
can be provisionally categorized as similarly situated to the named plaintiff.854 If the
employees meet their burden, by producing some evidence indicating common facts
among the parties’ claims, and/or a common policy affecting the collective members,
the matter is conditionally certified for notice and discovery purposes.855 At the second
stage, after notice and further discovery has taken place, the employees must show by
a preponderance of the evidence that the class members are similarly situated.856
Articulating the differences between the two stages, the district court explained “that the
initial step of conditional certification asks whether similarly situated plaintiffs do, in fact,
exist; by contrast, the second stage asks whether the specific plaintiffs that opted-in to
the class are, in fact, similarly situated to the named plaintiffs.”857
In Goodman v. Burlington Coat Factory Warehouse Corp.,858 the plaintiffs, a
group of retail store managers, alleged they were misclassified as exempt under the
FLSA and not paid overtime compensation. After the district court in New Jersey
granted conditional certification, the plaintiffs filed a motion for a protective order to limit
class discovery.859 Before ruling on the discovery motion, the court first discussed the
two-step certification process. At the first step, the plaintiff need make only a “modest
factual showing” that the putative class members can be categorized as similarly
situated.860 Although this stage is called a conditional certification, it is not truly a
certification, but rather the court making a decision to use its discretionary power to
facilitate notice.861 After discovery, the case enters stage two. If defendant files a motion
to decertify the class, the plaintiffs must then show by a preponderance of the evidence
that the plaintiffs are in fact similarly situated.862 On a case-by-case basis, the court will
undertake a fact intensive analysis to determine if the employees are similarly situated.
This analysis will include facts such as whether the employees are located in the same
department or location, whether they advance similar claims, whether they seek similar
relief, and whether they have similar salaries and circumstances of employment.863
853
Id. at *3.
Id.
855
Id.
856
Id.
857
Id.
858
292 F.R.D. 230 (D.N.J. 2013).
859
Id. at 230–31.
860
Id. at 232.
861
Id.
862
Id.
863
Id.
854
231 In Ribby v. Liberty Health Care Corp.,864 suit was filed in Ohio district court under
the FLSA against the owner and operator of a nursing home for denial of overtime pay
to non-exempt nursing staff. The plaintiffs alleged that the defendant automatically
deducted 30 minutes from the plaintiffs’ pay each day, regardless of whether they
received a meal period or were required to perform work during their meal period. The
parties agreed that all RNs, LPNs, and STNAs who received hourly compensation at the
defendant’s Toledo facility were non-exempt employees under the FLSA. In granting
conditional certification, the district court followed the two-stage process used by the
Sixth Circuit to determine whether a proposed group of plaintiffs is similarly situated.
The court noted that the first, or “notice” stage, is “fairly lenient,” requiring only a
showing of a colorable basis for the plaintiff’s claim that a class of similarly situated
plaintiffs exists. As for the second stage of the class certification process, the court
noted that a “stricter standard” is then applied, and courts more closely examine “the
question of whether particular members of the class are, in fact, similarly situated.”
In Le v. Regency Corp.,865 admissions representatives claimed they were not
paid for overtime hours worked “off the clock.” The plaintiffs moved for conditional class
certification, court authorized notice, and tolling of the statute of limitations. They
alleged that members of the proposed class were similarly situated because they
performed the same or similar job duties, worked at the same location, and were
subjected to the defendant’s unwritten policy of requiring that they perform work before
and after their shifts without compensation. Applying the two-step process, the
Minnesota district court granted the plaintiffs’ motion, placing particular reliance on the
fact that the class was limited to one location, one time-keeping system, and one
manner of compensation.
In Bilskey v. Bluff City Ice, Inc.,866 ice delivery drivers brought claims for unpaid
overtime wages under the FLSA and the Missouri Minimum Wage Law, alleging that
their employer failed to pay them for pre- and post-shift work. The plaintiffs moved for
conditional certification under 29 U.S.C. § 216(b). While noting that the Eighth Circuit
has not addressed what standard should be applied to determine whether employees
are “similarly situated,” the district court followed other district courts in the Circuit in
conducting a two-step analysis. Noting that the plaintiffs’ burden at the first step is “not
onerous” and requires only substantial allegations that the potential collective members
were victims of a single decision, policy, or plan, the district court granted conditional
certification.
In Banks v. Radioshack Corp.,867 the plaintiffs, a group of retail store employees
in a particular Radio Shack district in Pennsylvania, sought conditional certification of
their minimum wage and overtime claims under the FLSA. The plaintiffs alleged that
their employer, an electronics retailer, modified their time records by adding or
864
2013 WL 3187260 (N.D. Ohio June 20, 2013).
957 F. Supp. 2d 1079 (D. Minn. 2013).
866
2014 WL 320568 (E.D. Mo. Jan. 29, 2014).
867
2014 WL 1724856 (E.D. Pa. Apr. 25, 2014).
865
232 lengthening unpaid breaks and adjusting their clock-out times such that they were not
paid for all of the hours they worked. The defendant responded that the modifications
were accurate and reflected instances when the plaintiffs failed to accurately record
their own breaks and clock-out times. At oral argument, the plaintiffs’ counsel admitted
that he was not certain whether any of the plaintiffs had actually performed
uncompensated overtime work.868 Further, the plaintiffs’ counsel clarified that the
plaintiffs’ minimum wage claim was a “gap-time” claim, which the court noted was
generally considered not to be a valid claim under the FLSA.869 The Pennsylvania
district court reasoned that the claims were not subject to common proof because each
modification of a time record was the discrete action of an individual manager.870
Without a systematic method for identifying false modifications, each modification would
have to be adjudicated separately. Further, even if the false modifications could be
identified, individualized calculations for each employee and for each week would be
necessary to determine the amount of unpaid overtime or minimum wages. Pointing to
the difficulties of collective proof and the plaintiffs’ uncertainty as to the nature of their
claims, the district court denied the motion for conditional certification without prejudice.
In Kim v. Dongbu Tour & Travel, Inc.,871 tour guides brought a putative collective
action alleging violation of the minimum wage and overtime provisions of the FLSA and
the New Jersey Wage and Hour Law. The district court granted the plaintiffs’ motion for
conditional certification under the first step of the two-step approach set forth in Symczk
v. Genesis Healthcare Corp.,872 which is utilized to determine whether a suit brought
under 29 U.S.C. § 216(b) may move forward as a collective action. During the first step,
a court applies a “modest factual showing” standard, under which “a plaintiff must
produce some evidence, beyond pure speculation, of a factual nexus between the
manner in which the employer’s alleged policy affected her and the manner in which it
affected other employees.”873 If the plaintiff satisfies his burden at the first step, the
court conditionally certifies the collective action for purposes of notice and pretrial
discovery.874 After discovery, the court then makes a conclusive determination, applying
a less lenient standard, as to whether each opt-in plaintiff is in fact similarly situated to
the named plaintiff.875 If the plaintiff satisfies his burden at this stage, the case proceeds
to trial as a collective action.
In Potoski v. Wyoming Valley Health Care System,876 a district court in
Pennsylvania conditionally certified two classes of employees at a regional hospital
system. The court noted that the Third Circuit follows a two-step approach for deciding
868
Id. at *2.
Id. (quoting Lopez v. Tri–State Drywall, Inc., 861 F. Supp. 2d 533, 536 (E.D. Pa. 2012)).
870
Id. at *3.
871
2013 WL 5674395 (D.N.J. Oct. 16, 2013).
872
656 F.3d 189, 192–93 (3d Cir. 2011), rev’d on other grounds, 133 S. Ct. 1523 (2013).
873
2013 WL 5674395 at *2 (internal quotation marks and citations omitted).
874
Id. at *3–4.
875
Id. at *4.
876
2013 WL 6731035 (M.D. Pa. Dec. 19, 2013).
869
233 whether an action may proceed as a collective action under the FLSA. At the first stage,
“the court makes a preliminary determination whether the class of employees described
in the complaint can be provisionally categorized as similarly situated to the named
plaintiff. If the plaintiff carries his or her burden at this threshold stage, the court will
‘conditionally certify’ the collective action for the purposes of notice and pretrial
discovery.”877 Only a “modest factual showing” is required to show that the plaintiff is
similarly situated to the proposed class. To satisfy this standard, “a plaintiff must
produce some evidence, ‘beyond pure speculation,’ of a factual nexus between the
manner in which the employer’s alleged policy affected her and the manner in which it
affected other employees.”878 During this initial stage, “the merits of the plaintiffs’ claims
are not addressed.”879 After conditional certification, and at the second stage, the
plaintiffs must then satisfy their burden by a preponderance of evidence.880 During that
second stage, the court has the benefit of a more robust record and can then make a
conclusive determination as to whether each plaintiff who has opted in to the collective
action is in fact similarly situated to the named plaintiff.881
In Garcia v. Moorehead Communications, Inc.,882 plaintiff technicians and field
service managers (“FSMs”) alleged they were improperly misclassified as exempt and
moved for conditional certification of a collective.883 The Indiana court noted that,
although section 216(b) does not specifically provide for court-ordered notice, the
district courts have the discretion to implement § 216(b) by facilitating notice to potential
plaintiffs.884 Providing such notice, the court found, serves the broad remedial purpose
of the FLSA and enables the court to manage its docket.885 Here, the court concluded
that the plaintiffs made the “modest factual showing” that they and the potential
collective members were all victims of a common policy, and granted the motion.886
In O'Neal v. Emery Federal Credit Union,887 a former loan officer brought suit
claiming that the credit union’s loan officers regularly worked more than forty hours per
workweek without receiving overtime and were not paid the applicable minimum wage
for all hours worked up to forty hours per workweek. The loan officer moved the court to
conditionally certify a collective action under section 216(b) and provide notice to all of
the credit union’s loan officers nationwide. The district court in Ohio denied the motion,
finding that the plaintiff failed to satisfy the lenient stage-one standard for conditional
certification.888 The loan officer failed to satisfy this light burden because none of the
877
Id. at *3.
Id.
879
Id.
880
Id.
881
Id.
882
2013 WL 4479234 (N.D. Ind. Aug. 19, 2013).
883
Id. at *2.
884
Id. at *3.
885
Id.
886
Id. at *9.
887
2014 WL 842948 (S.D. Ohio Mar. 4, 2014).
888
2013 WL 4013167 (S.D. Ohio Aug. 6, 2013).
878
234 three declarations she submitted suggested that any declarant had actual knowledge of
the hours worked or compensation paid to any other loan officer in the company, and
thus there was no factual basis from which the court could infer that the credit union had
a common policy or practice with respect to loan officer compensation and hours
worked. Consequently, there was no factual basis to suggest that all loan officers
nationwide were similarly situated to one another.889 The loan officer then filed a second
motion for conditional certification. This time the loan officer submitted additional
witness declarations that provided details of other loan officers being subject to the
same allegedly unlawful compensation scheme. The declarations provided evidence
that loan officers working in Florida, Washington, California, and Maryland worked more
hours than specified in their loan officer agreements yet were not paid minimum wage
for those extra hours if the commissions earned failed to satisfy minimum wage
standards, and observed other loan officers working more than forty hours per week
without receiving overtime. This additional evidence provided the court with the “modest
factual showing” required to grant conditional certification and allowed the court to infer
that the named plaintiff loan officer was “similarly situated” to the other loan officers she
sought to include in the proposed class.890 The defendant submitted evidence from
managers, other loan officers, and a Vice President that loan officers’ hours,
compensation, and timekeeping requirements were not uniform nationwide. The court
rejected these submissions at stage one, noting that discovery had not yet occurred and
that factual conflicts, if any, should be resolved at stage one in favor of the plaintiff. The
court noted that at stage two, after discovery and upon an employer’s motion for
decertification, the same evidence might not be sufficient to meet the higher standard of
scrutiny used to analyze the similarly situated issue.
In Ballou v. iTalk, LLC,891 the plaintiff sales representative alleged that the
defendant wireless retailer engaged in various wage and hour violations, including
requiring employees to undergo eighty hours of training without pay, deducting $125
from each employee’s initial paycheck for onboarding expenses, deducting 60 minutes
per day from each employee’s time worked to account for an unpaid meal break, failing
to pay for pre-and-post-shift work, and withholding commissions and final wages.
Applying the lenient first-step standard, the court granted the plaintiff’s motion with
respect to all but one of his claims. In granting the motion, the court relied on the
plaintiff’s testimony and the defendant’s Rule 30(b)(6) deposition testimony, which
confirmed that certain policies applied generally to all sales representatives. In denying
the motion as to the plaintiff’s claim that the defendant withheld commissions or wages,
the court held that the plaintiff’s only evidence—his own testimony—was insufficient
because it died not establish that any other employees suffered from the same policy.
889
Id. at *1.
Id. at *3–5.
891
2013 WL 3944193 (N.D. Ill. July 31, 2013).
890
235 In Binissia v. ABM Industries, Inc.,892 the plaintiff janitors filed a collective action
alleging that the defendants manually and electronically rounded down their punch-in
and punch-out times and failed to pay them for all overtime hours worked in violation of
the FLSA and state law. The plaintiffs moved for conditional certification. The district
court noted that while the Seventh Circuit has not yet addressed how district courts
should manage collective actions, other district courts in the Circuit commonly applied a
two-part test to determine whether an FLSA claim may proceed as a collective action.
The court granted the motion, rejecting the defendant’s arguments that the policy at
issue satisfied the FLSA, and that individualized inquiries prevented conditional
certification, holding that those issues were appropriate for the decertification step.
In Brown v. Consolidated Restaurant Operations, Inc.,893 the plaintiff moved to
certify a collective action comprised of non-exempt hourly employees who alleged that
their restaurant employers’ requirement that they purchase and maintain uniforms
resulted in their receipt of less than minimum wage. The district court in Tennessee
granted conditional certification and approved notice to potential opt-ins, noting that
collective certification proceeds in a two-step process: “conditional certification” during
the initial stages of the proceeding, at which the plaintiff’s lenient burden is merely to
make a modest factual showing that she and other employees are similarly situated;
and “final certification” after all opt-ins join and discovery is concluded, at which time the
plaintiff is under a stricter standard to establish that other employees are similarly
situated.
In Jungkunz v. Schaeffer’s Investment Research, Inc.,894 a salesperson for a
publisher of stock options trading information commenced an action on behalf of himself
and putative collective action members alleging the defendant violated the FLSA by
improperly calculating overtime rates of pay and unlawfully requiring them to work offthe-clock. The district court in Ohio acknowledged the two-stage process for certification
of a collective action and required that each alleged unlawful practice or policy be
evaluated separately to determine whether conditional certification was warranted.
In Snodgrass v. Bob Evans Farms, LLC,895 a group of assistant restaurant
managers brought overtime claims alleging they were improperly classified as exempt
employees because their primary duties did not differ substantially from non-exempt
employees (such as operating the cash register, preparing and cooking food, cleaning
and stocking supplies) and they spent significant amounts of time performing these
duties. The district court in Ohio granted the plaintiffs’ motion for conditional certification
of a nationwide collective action consisting of all of Bob Evans’ current or former
assistant managers over a four-year period, totaling 2,503 potential opt-ins. The court
noted that in the Sixth Circuit, district courts generally use a two-stage process to
determine if the opt-ins are similarly situated to the lead plaintiff such that conditional
892
2014 WL 793111 (N.D. Ill. Feb. 26, 2014).
2013 WL 4804780 (M.D. Tenn. Sept. 6, 2013).
894
2014 WL 1302553 (S.D. Ohio Mar. 31, 2014).
895
2013 WL 6388558 (S.D. Ohio Dec. 5, 2013).
893
236 certification of a collective is appropriate. The district court characterized this as a “fairly
lenient” standard which “typically results in conditional certification” during the first
stage.896 During the second phase, the trial court examines more closely the question of
whether particular class members are, in fact, similarly situated.897
In Adami v. Cardo Windows, Inc.,898 a putative class of window installers and
helpers brought suit against their employer, alleging that they were improperly classified
as independent contractors and unlawfully denied overtime. The New Jersey district
court determined that it would conditionally certify a collective action consisting of
installers only, excluding from the collective action class all helpers and those installers
who signed mandatory arbitration and/or class waiver agreements. In making that
determination, the court noted the two-step process for conditional certification of an
FLSA collective action. The first step occurs early in the litigation when the court has
minimal evidence. The court applies a “fairly lenient standard,” and a plaintiff need only
make a “modest factual showing” using pleadings and affidavits to show that he is
similarly situated to the putative collective action members.899 At the second stage, a
court then makes a conclusive determination as to whether the employees who opted-in
to the collective action are in fact similarly situated. The plaintiff has the burden of
establishing by the preponderance of the evidence that he and the opt-in plaintiffs are
similarly situated.900
In Stout v. Remetronix, Inc.,901 a proposed class of field technicians brought
minimum wage and overtime claims for uncompensated time arising out of work
performed at home while “off-the-clock.” These additional duties were mandatory and
included, but were not limited to: checking company emails, providing updates to the
employer, completing surveys and questionnaires, and completing other documentation
and paperwork depending on the project.902 Counting the time spent performing these
additional duties, field technicians routinely worked in excess of 40 hours per workweek
and were not compensated an overtime premium. The plaintiff sought to conditionally
certify the case as a collective action. There is a two-stage process used in order to
determine whether a collective action may proceed to trial. The first stage is the
conditional certification stage, followed by a decertification stage once discovery has
ended.903 During the conditional certification stage, the plaintiff bears the burden to
show he is similarly-situated to other employees in both their job duties and the
employer’s treatment of their entitlement to overtime pay; at this stage, the merits of the
case are not discussed.904 Issues regarding whether some of the opt-in plaintiffs are
896
Id. at *2.
Id.
898
2014 WL 320048 (D.N.J. Jan. 29, 2014).
899
Id. at *7.
900
Id.
901
2013 WL 4048241 (S.D. Ohio Aug. 9, 2013).
902
Id. at *1.
903
Id. at *3.
904
Id.
897
237 dissimilarly situated in a material aspect is discussed at the decertification stage.905 In
granting the plaintiff’s motion for conditional certification under the FLSA, the district
court of Ohio applied the more lenient standard used during the conditional certification
stage finding that the plaintiff showed sufficient evidence that the other field technicians
were similarly-situated in both their job duties and the employer’s treatment of their
entitlement to overtime pay through the plaintiff’s pleadings and affidavit of a former
manager.
In Sylvester v. Wintrust Financial Corp.,906 the plaintiff filed suit to recover unpaid
overtime and minimum wages under the FLSA on behalf of loan originators. The plaintiff
alleged that the defendants improperly classified all of the loan originators as exempt
from FLSA requirements based on the outside sales exemption, failed to pay them a
minimum wage, failed to pay overtime when they worked over 40 hours in a workweek,
and failed to maintain records mandated by the FLSA. After the plaintiff filed suit, five
additional employees joined as opt-in plaintiffs. Together, the plaintiffs moved to
conditionally certify their lawsuit as a collective action so that they might issue notice to
prospective class members, and to extend the FLSA tolling period. In response, the
defendants filed a motion to dismiss or stay the action as to two of the plaintiffs who had
arbitration clauses in their employment agreements. An Illinois district court granted the
plaintiffs’ motion for conditional certification, allowing the plaintiffs to notify prospective
class members, and continued its decision on the motion to extend the tolling period.
The district court also granted the defendants’ motion to stay the action with regard to
two of the plaintiffs subject to arbitration. The court held that the plaintiffs met the first
stage of the two-stage test by making the “modest factual showing sufficient to
demonstrate that they and potential plaintiffs were victims of a common policy or plan
that violated the law.”907 In its holding, the court rejected the defendants’ argument that
the court should apply a heightened standard for motions for conditional certification.
The court reasoned that a heightened standard would only be appropriate in cases
where significant discovery had already been completed. Consequently, the plaintiffs
were allowed to send notice of the case to similarly situated employees and engage in
discovery. The second, more rigorous, stage of the two-stage test would require the
court to reevaluate the conditional certification after discovery and the opt-in period, to
determine if there were enough similarities between the named and opt-in plaintiffs to
allow the matter to proceed to trial on a collective basis.908
In Lucke v. PPG Industries, Inc.,909 the plaintiff, a territory manager of a global
paint, glass and chemical supplier, filed a FLSA misclassification claim after his
employer reclassified territory managers as non-exempt effective January 1, 2012. The
plaintiff sought conditional certification of the putative collective action and courtfacilitated notice. The court noted that district courts in the Third Circuit apply a two-part
905
Id. at *4.
2013 WL 5433593 (N.D. Ill. Sept. 30, 2013).
907
Id. at *3–4.
908
Id. at *3.
909
2013 WL 6577772 (W.D. Pa. Dec.16, 2013).
906
238 test to determine whether putative group members are “similarly situated.” During the
initial notice stage, the court first determines whether a group should be conditionally
certified for the purpose of notice to potential opt-in plaintiffs and for pretrial discovery
as to their claims. To make that lenient factual showing the “plaintiff must produce some
evidence, ‘beyond pure speculation,’ of a factual nexus between the manner in which
the employer’s alleged policy affected her and the manner in which it affected other
employees.”910 In the second stage, after discovery has taken place and the court is
more fully informed, the defendant may move to decertify the class on the basis that the
“similarly situated” standard has not been met, and the court will undertake a more
rigorous analysis of the evidence in making its final certification decision.911
The plaintiffs in Bergman v. Kindred Health Care, Inc.912 filed a putative
nationwide collective action and an Illinois state law class action, based on the
defendants’ application of an automatic 30-minute meal break deduction policy without
ensuring that employees do not work during all or part of the uncompensated meal
period. Before the Illinois district court was the plaintiffs’ motion for conditional
certification of the FLSA collective action. In granting in part and denying in part the
plaintiffs’ motion, the court reviewed the FLSA collective action process for
certification.913 The court observed that the first stage involves conditionally certifying a
class for notice purposes and that the plaintiffs’ burden of proof is low. During the first
stage, the court does not make merit determinations, weigh evidence, determine
credibility, or specifically consider opposing evidence presented by the defendant.914
The court observed that this lenient standard, however, has sometimes been
supplemented by more rigorous standard if there has been more extensive discovery
allowed to the plaintiffs, which was the circumstance before the court.915 The court
noted that it had an incomplete factual record, but that it would “require Plaintiffs to
make a modest ‘plus’ factual showing” and would consider both sides’ evidentiary
submissions.916
In Rogers v. HCA Health Services of Tennessee, Inc.,917 the district court granted
conditional certification of the plaintiff’s unpaid meal break claim, noting that the
determination of whether similarly situated potential plaintiffs exist does not require a
detailed showing at this initial stage.918 The plaintiff alleged that he and similarly situated
employees regularly performed work during uncompensated meal breaks. In support of
his motion for conditional certification, the plaintiff submitted his own declaration
discussing his experience and his observations of other employees. He also submitted
910
Id. at *4
Id. at *3
912
949 F. Supp. 2d 852 (N.D. Ill. 2013).
913
Id. at 855.
914
Id. at 855–56.
915
Id. at 856.
916
Id.
917
2013 WL 3224026 (M.D. Tenn. June 25, 2013).
918
Id. at *3.
911
239 a news article regarding an unrelated lawsuit discussing the defendant’s human
resources software that allegedly resulted in a “bare-bones staffing structure.” The
defendant objected that the plaintiff’s declaration was vague, lacked specificity, and
relied on hearsay, and argued that the plaintiff had not shown commonality with the
“huge universe” of workers across all of defendant’s departments. The district court
granted the motion for conditional certification, noting that, while the plaintiff’s factual
showing was “modest” and was not accompanied by any corroborating declarations
from other employees, the plaintiff had made “some” factual showing that similarly
situated employees were subject to the same allegedly illegal policies and practices.919
The court further stated that resolving the merits of plaintiff’s claims is “inappropriate at
the conditional certification stage.”920
In Engel v. Burlington Coat Factory Direct Corp.,921 the plaintiffs, former area
managers, brought an action against the defendant retail employer seeking overtime
under the FLSA claiming they were misclassified as exempt employees. The district
court explained that it conducts a two-phase inquiry to determine whether the proposed
co-plaintiffs are similarly situated. The first phase begins at the beginning of discovery
where the court applies a lenient standard that results in conditional certification of a
representative class. In phase two, following discovery, the court applies a stricter
standard in its examination of much more information gathered through discovery.
In Thompson v. Direct General Consumer Products,922 two former insurance
agents filed a putative collective action against several related corporate entities that
provide insurance and financial services to customers in the southeastern United
States. The plaintiffs alleged failure to properly account for commission income when
calculating the “regular rate” of pay, and failure to compensate for “off the clock” work,
resulting in unpaid overtime.923 After limited discovery, the plaintiffs moved for
conditional certification. The court noted that at the beginning of discovery, the court
employs a lenient standard that typically results in conditional certification of a
representative class when determining whether plaintiffs are similarly situated.924 At this
point the court does not resolve factual disputes, decide substantive issues going to the
ultimate merits, or make credibility determinations.925 At the second stage, the court
reviews the results of discovery and more closely examines whether members of the
class are similarly situated, and if not, will decertify the class.926
919
Id.
Id.
921
2014 WL 2417979 (S.D. Ohio June 3, 2013).
922
2014 WL 884494 (M.D. Tenn. Mar. 5, 2014).
923
Id. at *2.
924
Id. (citing Comer v. Wal-Mart Stores, Inc., 454 F.3d 544, 547 (6th Cir. 2006)).
925
Id. at *2 (citing Brasfield v. Source Broadband Servs., LLC, 257 F.R.D. 641–42 (W.D. Tenn.
920
2009)).
926
Id. at *2 (citing O’Brien v. Ed Donnelly Enters., Inc., 575 F.3d 567, 584–87 (6th Cir. 2009)).
240 In Harris v. Reliable Reports Inc.,927 the plaintiff filed a collective action on behalf
of himself and several hundred field reps claiming the defendant insurance inspection
and reporting company failed to pay minimum wages and overtime as required by the
FLSA. The plaintiff alleged that his supervisors directed him to underreport his hours,
that he should have been compensated for travel time to and from work, and that the
defendant’s failure to reimburse for travel and certain essential equipment reduced his
work below minimum wage. The plaintiff brought a motion for conditional certification
relying on his own declaration and the declarations of two other field reps. The Indiana
district court noted that neither the Supreme Court nor the Seventh Circuit have
provided guidance on how to determine whether potential opt-in plaintiffs are similarly
situated such that collective action is warranted. The court therefore relied on other
district courts around the country, in adopting the two-step process. The court denied
the plaintiff’s motion, holding that the plaintiff failed to present evidence that the conduct
was so pervasive as to justify conditional certification.928 The court explained that the
three field reps’ “belief”, based solely on their own personal experiences, that other field
reps were also not properly compensated was merely speculative and did not warrant
the inference that the defendant had an illegal company-wide policy.929
In Swinney v. Amcomm Telecommunications, Inc.,930 the plaintiff asserted the
defendant violated the FLSA by misclassifying the proposed class as independent
contractors. The Michigan district court rejected the plaintiff’s first motion for conditional
class certification. After limited discovery, the plaintiff filed a second motion for
conditional certification, which included deposition testimony, affidavits and declaration
of other individuals alleging similar misclassification. In reviewing the conditional
certification motion, the Michigan district court first noted that to file a collective action
under § 216(b) of the FLSA, named plaintiffs must be “similarly situated” and “all
plaintiffs must signal in writing their affirmative consent to participate in the action.”
Whether plaintiffs are similarly situated is a two-stage process. First, in the “notice
stage” the court “determines whether the suit should be conditionally certified as a
collective action so that potential opt-in plaintiffs can be notified of the suit’s existence
and of their right to participate.” The second stage happens after all opt-in forms are
received and discovery finishes. The plaintiff’s motion involved the first, more lenient,
notice stage, which only requires a “colorable basis for his claim that a class of similarly
situated plaintiffs exist. Courts will not determine factual disputes or credibility questions
during this stage. The plaintiff’s affidavits were evaluated only to determine “if Plaintiff
has made sufficient allegations and a modest factual showing. Consequently, the court
rejected the defendant’s argument that conditional certification should be denied based
on inconsistencies in the plaintiff’s affidavits and granted the motion.
927
2014 WL 2115352 (N.D. Ind. May 21, 2014).
Id. at *4.
929
Id.
930
2013 WL 4507919 (E.D. Mich. Aug. 23, 2013).
928
241 In Davenport v. Charter Communications, LLC,931 employees who worked in
customer call centers for the defendant, a broadband service provider, sought to
recover unpaid wages and overtime compensation. In determining whether plaintiffs
could proceed as a collective action to trial, the court noted that it must apply a two-step
analysis, as other courts in the Eighth Circuit have done.932 In granting the plaintiff’s
motion, the court declined to consider the defendant’s evidence that the plaintiff’s
deposition testimony contradicted her allegations, holding that credibility determinations
are left for the second stage.
In Mott v. Driveline Retail Merchandising, Inc.,933 the plaintiffs, a group of
“merchandisers” who worked at a provider of in-store marketing and retail services,
sought conditional certification of a collective action, alleging their employer failed to pay
them minimum wage and overtime compensation in violation of the FLSA. The court
explained that “at the first step [of the certification process] the named plaintiff must
make a ‘modest factual showing’ that the employees identified in the complaint are
‘similarly situated.’”934 “The court conducts a preliminary inquiry into whether the
plaintiff’s proposed class members were collectively ‘the victims of a single decision,
policy, or plan.’”935 “The plaintiff must produce some evidence ‘beyond pure speculation,
of a factual nexus between the manner in which the employer’s alleged policy affected
her and the manner in which it affected other employees.’”936 “The plaintiff has ‘a very
lenient burden to bear at this initial stage of certification,”937 and “the court does not
evaluate the merits of the claim at this stage . . . .”938 “If the plaintiff meets this lenient
standard, the court grants only conditional certification for the purpose of notice and
discovery.”939 “At the second stage, with the benefit of discovery, the court "’makes a
conclusive determination that every plaintiff who has opted in to the collective action is
in fact similarly situated to the named plaintiff.”940 “The plaintiff bears a heavier burden
of proof at this second stage and must prove, by a preponderance of the evidence, that
the proposed collective plaintiffs are similarly situated.”941 “Courts are to take an ad hoc
approach, ‘considering all the relevant factors and making a factual determination on a
case-by-case basis.’”942 “The relevant factors include ‘(1) disparate factual and
employment settings of the individual plaintiffs; (2) the various defenses available to
defendant which appear to be individual to each plaintiff; and (3) fairness and
procedural considerations . . . .’”943 “If the conditional group of plaintiffs are not in fact
931
2014 WL 1272783 (E.D. Mo. Mar. 27, 2014).
Id. at *3.
933
2014 U.S. Dist. LEXIS 69520 (E.D. Pa. May 21, 2014).
934
Id. at *5.
935
Id.
936
Id. at *6.
937
Id.
938
Id.
939
Id.
940
Id.
941
Id. at *6–7.
942
Id. at *7.
943
Id.
932
242 similarly situated to the named plaintiffs, the group is then decertified, the opt-in
plaintiffs are dismissed without prejudice, and any remaining plaintiffs are permitted to
move onto the trial stage of litigation.”944
In Cox v. Healthcare Services Group,945 an account manager (“AM”) filed suit
against his employer, a company that provides housekeeping and dietary management
services in health care facilities across the country. The plaintiff alleged that account
managers, who are sometimes also considered managers in training (“MITs”), perform
non-exempt work, and are not paid overtime to which they are entitled under the FLSA
for work in excess of forty hours per week. The plaintiff sought conditional certification of
two proposed classes: (1) all employees who worked as MITs or otherwise participated
in the defendant’s training program in Ohio during the last three years; and (2) all
employees who worked as AMs in Ohio during the last three years. The plaintiff
submitted declarations from three account managers who participated in the MIT
program and four from district managers who supervise AMs in Ohio, which stated that
AMs and MITs performed non-exempt work, routinely worked in excess of 40 hours per
week, and were not paid overtime. The plaintiff also submitted the defendant’s
“Management Trainee Policy,” which provided that MITs were entitled to overtime pay.
The Ohio district court granted the plaintiff’s motion for conditional certification, finding
that the plaintiff made a sufficient factual showing that he was similarly situated to
potential opt-in plaintiffs in the proposed classes. The court further found that the
defendant’s arguments and evidence that AMs and MITs were not similarly situated,
and that MITs were in fact paid overtime, should not be considered until the second
stage of the certification process.
In Knaak v. Armour-Eckrich Meats, LLC,946 hourly employees of a food
processing facility brought a putative collective and class action against their employer
for violations of the FLSA because they alleged they performed unpaid work before their
shifts, during meal breaks, and after their shifts.947 Specifically, the plaintiffs sought
conditional certification of all hourly employees who were required to wear protective
gear or sanitary clothing.948 In determining whether a proposed class should be certified
under the FLSA, the court noted that courts in Minnesota typically apply a two-stage
process.949 Although the defendant argued that the proposed class was overly broad
and notice should only be sent to the production line employees, the court determined
that the affidavits submitted by the plaintiffs were sufficient to show that the proposed
class was “similarly situated,” and it saw “no reason to limit the scope of the plaintiffs’
claims at this early stage.”950
944
Id.
2013 WL 2443785 (N.D. Ohio June 4, 2013).
946
991 F. Supp. 2d 1052 (D. Minn. 2014).
947
Id. at 1054.
948
Id. at 1059.
949
Id. at 1058.
950
Id. at 1060.
945
243 IV.
Stage I: Standard for Determining Whether Conditional Certification Should
Be Granted
A. Standard Applied During Stage I
In Watson v. Advanced Distribution Services, LLC,951 truck loaders assigned by a
temporary staffing agency to work at a distributor’s Tennessee facility sought conditional
certification of a class of loaders who worked at the facility during the past three years,
alleging they were entitled to overtime pay. After the two-phase inquiry applicable to the
collective certification process, the Tennessee district court explained that “[a]t the first
stage, the plaintiff bears the burden of showing that the employees in the class are
similarly situated.”952 At this first stage, conditional certification “need only be based on
a modest factual showing.”953 The district court also observed that, during the first
phase of the process, a named plaintiff only need show that his “position is similar, not
identical, to the positions held by the putative class members.”954 If the named plaintiffs
are able to demonstrate that the employees in the class are similarly situated, the court
may authorize notification of similarly situated employees to allow them to opt into the
lawsuit.
In Camesi v. University of Pittsburgh Medical Center,955 the Third Circuit
consolidated two cases on appeal, each with plaintiffs claiming their defendant
employer956 violated the FLSA by not compensating them for work performed during
unpaid meal breaks. The district courts in both cases granted section 16(b) conditional
certification, but later granted the defendants’ motions for decertification. In both cases,
the plaintiffs voluntarily dismissed their claims with prejudice in order to secure a final
judgment for purposes of appealing the 16(b) decertification. Before addressing the
issue of first impression presented by these appeals—whether the court had appellate
jurisdiction in this circumstance957—the court first reiterated the distinction between
16(b) collective actions and Rule 23 class actions,958 and then restated the two-step
process for deciding whether an FLSA case can proceed as a collective action.
Specifically, the court noted that in the first-step the court will apply a “fairly lenient
standard” for determining whether the plaintiffs are “similarly situated” with other
employees they purport to represent. If the plaintiffs make a “modest factual showing” of
similarity the court will conditionally certify the case as a collective action for purposes of
facilitating notice to potential opt-ins and conducting pre-trial discovery.959
951
298 F.R.D. 558 (M.D. Tenn. 2014).
Id.
953
Id.
954
Id.
955
729 F.3d 239 (3d Cir. 2013).
956
The defendant employers were the University of Pittsburgh Medical Center in one case, and
the West Perm Allegheny Health System, Inc. in the other.
957
See Ch.19.XI.E.
958
See Ch.19.III.A.
959
729 F.3d at 242–243 (citing Zavala v. Wal-Mart Stores Inc., 691 F.3d 535 (3d Cir. 2012)).
952
244 The plaintiffs in Hughes v. Township of Franklin,960 current and former law
enforcement officers of the defendant township, filed a collective action alleging that the
defendant failed to properly compensate them for compensable pre-shift work,
specifically, reporting ten minutes prior to the beginning their shift, as required by the
collective bargaining agreement. The plaintiffs claimed that this practice of
uncompensated work time violated the FLSA. The plaintiffs filed a motion to
conditionally certify the action as a collective action on behalf of all officers who were
subjected to the policy requiring officers to perform ten minutes of pre-shift work without
compensation over the three years preceding the inception of the action. The New
Jersey district court granted in part and denied in part the motion for conditional
certification. The court expressed concerns regarding the lack of proof of the plaintiffs’
allegations that the plaintiffs were not paid for pre-shift time. “Plaintiffs do not . . .
substantiate these allegations concerning Defendant’s failure to compensate through
the submission of pay stubs, W-2s, and/or other similar pay information, which might
demonstrate the uncompensated nature of this pre-shift time.”961 The court expressed
further concerns regarding the limited number of plaintiffs (four) and the small pool of
potential opt-in plaintiffs (25). Notwithstanding these reservations, and in large measure
because the defendant did not contest the motion nor dispute the uniform nature of the
policy, the court granted the request for conditional certification. With respect to the
plaintiffs’ request for court-approved notice, the court denied without prejudice the
plaintiffs’ request for information in excess of the names and mailing addresses of
potential plaintiffs, and allowed only a 45-day opt-in period.962
In Gallardo v. Scott Byron & Co.,963 the Illinois district court granted in part and
denied in part the plaintiffs’ motion for conditional certification as a collective action. In
the absence of any binding Seventh Circuit precedent, the district court followed the
approach of numerous other district courts in Illinois in adopting the common two-step
process. The issue before the court was whether stage one proceedings should be
conditionally certified for three different claims made by the representative plaintiffs.
Noting that the plaintiffs need only demonstrate a “modest factual showing” that they
and potential opt-in plaintiffs together were victims of a common policy or plan that
violated the FLSA, the court considered whether certification was appropriate for the
three FLSA claims the plaintiffs advanced. As to the first claim, that of unpaid travel
time, the court denied conditional certification because it found that the representative
plaintiffs had not established a violation of the FLSA; in fact, the court granted summary
judgment to the defendants on those claims in the same order. As to the claim of
improper calculation of overtime pay, the court had denied summary judgment to the
employer based on a factual dispute as to whether the two putative representatives had
a clear mutual understanding as to how they would be paid under the fluctuating
workweek method, but the court found the factual dispute unique to the individual
960
2014 WL 1428609 (D.N.J. Apr. 14, 2014).
Id. at *3.
962
Id. at *4.
963
2014 WL 126085 (N.D. Ill. Jan. 14, 2014).
961
245 plaintiffs and found no evidence that other individuals would have been similarly
situated. Thus, the court denied stage I certification as to these two claims. With respect
to the plaintiffs’ claims for off-the-clock work, the court concluded that the practice
alleged by the plaintiffs, that supervisors routinely ignored the company’s stated policy
of having only one laborer on the clock assist with beginning and ending tasks, and
requiring other laborers to help off the clock, was sufficient to meet the limited showing
necessary to certify a conditional class. However, the court rejected the proposed notice
because it included all three claims raised by the plaintiffs, and required the plaintiffs to
submit a revised notice to the defendant and the court for approval.
In Chandler v. Heartland Employment Services, LLC,964 workers at a nursing and
rehabilitation facility alleged their employer violated the FLSA by requiring them to
launder and iron their uniforms at home without pay. In moving for conditional
certification of a nationwide class, the plaintiffs argued that the defendant’s policy
requiring wrinkle-free uniforms “imposed a de facto ironing requirement that led
employees to perform several hours weekly of unpaid work.” In response, the defendant
argued that uniform requirements varied by facility and department, and that laundering
and ironing practices varied by individual. The Pennsylvania district court denied the
motion for conditional certification because the plaintiffs did not make a “modest factual
showing” that their proposed class of healthcare workers were similarly situated.
Specifically, the plaintiffs failed to articulate how many facilities and employees were
included in their proposed class, or that the putative class members were required to
wear similar uniforms. According to the court, “the potential variation among uniforms . .
. precludes a finding that all the members of the proposed notice class have similar
uniform-maintenance claims.”
In Ahmed v. TJ Maxx Corp.,965 a former assistant store manager brought suit
against a retail employer, alleging the employer failed to pay overtime compensation
despite the fact that she and other assistant managers were required to perform nonexempt duties. The plaintiff moved for conditional certification on behalf of a class of
assistant managers nationwide, which was initially granted by a magistrate judge. The
defendants appealed to the New York district court, asking for conditional certification to
be denied. The district court set aside the magistrate judge’s decision because the
plaintiff failed to provide evidence that would show the retailer’s practice was more than
just a localized policy within a specific geographical area. In reaching that decision, the
court noted the typical two-step process for certifying an FLSA collective action. The
first step is conditional certification and requires a plaintiff to make a modest factual
showing to demonstrate that he and potential plaintiffs were victims of a common policy
or plan that violated the law, which can be satisfied by relying on pleadings, affidavits
and declarations alone.
964
965
2014 WL 1681989 (E.D. Pa. Apr. 28, 2014).
2013 WL 2649544 (E.D.N.Y. June 8, 2013).
246 In Neff v. U.S. XPRESS, Inc.,966 the plaintiff, an account supervisor for the Kroger
account of the defendant’s Delaware, Ohio distribution center, brought claims alleging
the defendant willfully misclassified as exempt and failed to pay overtime compensation
to account supervisors, account managers and assistant account managers, under the
FLSA. After conducting limited discovery to determine if a class of similarly situated
plaintiffs existed, the plaintiff moved for conditional collective certification for a
nationwide class based upon her own testimony and the defendant’s job descriptions.
The magistrate recommended granting the motion as to the Delaware, Ohio site, but not
a nationwide class. After the plaintiff objected to the magistrate’s report and
recommendation, the Ohio district court noted that in seeking a collective action the
plaintiff must demonstrate that she and the potential class are similarly situated. The
court further noted that conditional certification generally occurs in two stages. During
the initial stage, the plaintiffs must establish a colorable basis for their claim that a class
of similarly situated plaintiffs exist.967 This standard may generally be met by a modest
factual showing.968 However, in cases where the parties have been permitted to conduct
some limited discovery regarding the existence of similarly situated plaintiffs, the
standard of proof for conditional certification is heightened to a ‘modest plus’ factual
showing.969 In considering the plaintiff’s objections, the court found that while she may
have met a modest showing of similarly situated plaintiffs, she had not met the modest
plus showing that a nationwide class of similarly situated plaintiffs existed because her
evidence concerned only employees holding the same position at the plaintiff’s location,
and only concerning the Kroger account she handled. Therefore, the district court
adopted the recommendation of the magistrate and limited the class to that of current
and former account managers and account supervisors who worked at the defendant’s
Delaware, Ohio distribution center.970
In O’Neal v. Emery Federal Credit Union,971 the plaintiff, a former loan officer,
brought claims alleging the defendant violated the overtime compensation and minimum
wage requirements of the FLSA. The plaintiff moved for conditional certification of a
collective action consisting of all employees who performed work as loan officers for the
defendant from three years from the date of the order granting the motion. In support of
her motion, the plaintiff and two other employees filed sworn statements alleging they
“always” or “usually” worked in excess of forty hours per week but were not paid any
premium for these hours. The three prospective plaintiffs had varying employment
contracts with the defendant and did not provide evidence based upon their personal
knowledge regarding other loan officers’ experiences or work hours. In opposing the
plaintiff’s motion, the defendant produced declarations of nine employees who all
asserted their pay and timekeeping procedures differed among managers and that they
were paid appropriately. In considering the motion, the court confirmed it uses a two 966
2013 WL 4479078 (S.D. Ohio Aug. 20, 2013).
Id. at *2.
968
Id.
969
Id. at *3.
970
Id. at *6.
971
2013 WL 4013167 (S.D. Ohio Aug. 6, 2013).
967
247 tiered certification approach. During the “initial notice stage” the court stated there is a
fairly lenient standard, wherein a plaintiff must establish a factual nexus (more than
mere allegation) to warrant conditional certification. The plaintiff must establish she and
the potential class members are similarly situated by showing their claims are unified by
common theories of defendant’s statutory violations or that the class members suffer
from a single, FLSA-violating policy. Applying that standard, the district court denied
conditional certification, finding that the statements provided by the plaintiff were
insufficient for the court to draw an inference that other loan officers worked more than
their scheduled hours without minimum wage or were not compensated for overtime.972
In Freeman v. Total Security Management,973 the plaintiffs, protection officers
sued under the FLSA and state law to recover unpaid overtime pay for pre-shift work
and time spent attending work-related training events. The plaintiffs moved for
conditional certification of (1) a nationwide class of employees who were not
compensated for attending training directly related to their jobs; (2) a Wisconsin class of
employees who were not compensated for attending mandatory trainings on the use of
work equipment; and (3) a Wisconsin class of employees who were not compensated
for mandatory, pre-shift work. Explaining the first step of the two-step framework, the
Wisconsin court held that a plaintiff need only make “a modest factual showing” that she
and potential class members are similarly situated. But, a plaintiff must show that the
plaintiffs and the opt-in plaintiffs are all “victims of a common policy or plan that violated
the law.”974 The court further held that it was insufficient to prove that all plaintiffs are
subject to some generic factual similarities. Instead the similarities must go to the merits
and effectively strip unique, individual facts out of the liability analysis. The court may
consider the plaintiff’s allegations and supporting sworn statements without considering
rebuttal evidence from the defendant. And where some discovery has been conducted
on matters relevant to conditional certification, courts may apply an intermediate
standard of scrutiny in this first stage. The court rejected the defendant’s argument that
an intermediate standard should apply, resolved all factual inferences in favor of the
plaintiffs, and granted the motion.
In Asirifi v. W. Hudson Sub-Acute Care Center, LLC,975 registered nurses filed a
claim for unpaid overtime hours for pre- and post-shift and unpaid meal breaks which
were not always taken. In addition, the plaintiffs filed a conditional certification pursuant
to section 216(b), asserting that other nurses were also uncompensated because of the
defendant’s universal application of procedures and policies. The district court in New
Jersey denied certification, finding no factual evidence to establish that there were other
potential “similarly situated” class members. Under the governing law of the Third
Circuit, the court observed that the certification process takes place in two-stages: a
notice and conditional certification decision, and then a final certification or
972
Id. at *10.
2013 WL 40495422 (W.D. Wis. Aug. 9, 2013).
974
Id. at *5.
975
2014 WL 294886 (D.N.J. Jan. 24, 2014).
973
248 decertification decision.976 At the preliminary notice stage, courts apply a lenient
standard to determine whether potential collective action members are similarly
situated, which requires plaintiffs to show a sufficient factual nexus between their
situation and the situation of other current and former employees.
In Bowe v. Enviropro Basement Systems,977 a laborer and foreman moved a
New Jersey district court, pursuant to section 216(b), to conditionally certify FLSA
claims against his former employer, a residential basement waterproofing business, for
failing to pay him and other similarly situated employees for all hours worked,
improperly deducting 30 minutes of paid time for meal periods that were not taken, and
improperly calculating overtime by failing to include commissions when determining the
regular rate.978 In granting the plaintiff’s motion, which the defendant did not oppose,979
and ordering the defendant to produce contact information to permit notice to individuals
employed as laborers or foremen,980 the district court explained that the Third Circuit
acknowledges the use of a two-step process for deciding whether FLSA cases may
properly proceed as collective actions.981 During the first step, which is commonly
referred to as “conditional certification,” but which actually concerns the district court’s
facilitation of notice to potential class members, the plaintiff must make a modest factual
showing, which requires some evidence beyond mere speculation, of a factual nexus
between the manner in which the employer’s alleged policy affected him and the
manner in which it affected other employees.982 If the plaintiff satisfies this burden, after
discovery, the second step of the process requires the court to conclusively determine
“whether each plaintiff who has opted in to the collective action is in fact similarly
situated to the named plaintiff.”983 Because the plaintiff presented evidence in the form
of his own testimony, as well as testimony from two opt-in plaintiffs and several
defendant witnesses, showing the plaintiff’s job duties were the same as other foremen
and laborers, and indicating that such employees were subject to the same employment
policies and practices, the court found the plaintiff met his burden and granted
conditional certification.984
In Pearson v. CSK Auto, Inc.,985 non-exempt retail employees sought conditional
certification in a suit alleging the defendant-employer, an automotive parts retailer, failed
to pay overtime, improperly calculated overtime, failed to pay for work performed during
meal periods, failed to pay for compensable “off-the-clock work,” and improperly edited
employee time records.986 Noting that the first stage of the certification process imposed
976
Id. at *2.
2013 WL 6280873 (D.N.J. Dec. 4, 2013).
978
Id. at *1–3.
979
Id. at *1.
980
Id. at *7–8.
981
Id. at *3 (citing Camesi v. Univ. of Pittsburgh Med. Ctr., 729 F.3d 239, 242 (3d Cir. 2013)).
982
Id.at *3 (citing Zavala v. Wal-Mart Stores Inc., 691 F.3d 527, 536 n.4 (3d Cir. 2012)).
983
Id. at *4 (quoting Camesi, 729 F.3d at 243).
984
Id. at *5–7.
985
2014 WL 1333273 (N.D. Ohio, Mar. 28, 2014).
986
Id. at *1.
977
249 only a “slight burden” on the plaintiffs to demonstrate that their “position is similar, not
identical, to the positions held by the putative class members,” the Ohio district court
held that the plaintiffs satisfied their burden via their submitted declarations and were
entitled to conditional certification.987 The district court further found that the defendant’s
opposition arguments, concerning the allegedly individualized nature of the proposed
class members’ claims and experiences, were not appropriately raised at the first stage
of the certification inquiry.
In Sutton-Price v. Daugherty Systems, Inc.,988 internet support technicians
claimed they were misclassified as exempt and sued to recover overtime pay under the
FLSA. The plaintiffs moved for conditional class certification of a diverse group of
consulting and support employees with differing job responsibilities and titles. Because
the plaintiffs engaged in a period of discovery designed to identify the class, the court
applied a “more restrictive, but still lenient standard.” In support of their motion, the
plaintiffs did not provide any evidence that the employees performed similar job duties,
instead relying solely on the defendant’s reliance on one exemption defense. In denying
the plaintiffs’ motion, the court noted that employees in different divisions had
substantially different duties and determined that the plaintiffs had not identified other
employees outside of their own subdivision who had similar duties. Although defendant
employer suggested that it would be appropriate to certify a smaller class of employee
who worked in this subdivision, the court declined to do so as the plaintiff employees
had not requested this relief.
In McKee v. PetSmart, Inc.,989 four current or former operation managers who
worked for a pet goods retailer claimed that they were improperly classified as exempt
employees in violation of the FLSA and sought conditional certification of a collective
action. The Delaware district court noted that in order to conditionally certify a collective
action (the first step of a two-step certification process), the vast majority of district
courts in the Third Circuit require the plaintiffs to make a modest factual showing that
the proposed recipients of opt-in notices are similarly situated. The plaintiffs argued that
the expected uniformity in the duties among operation managers was sufficient to pass
the lenient standard for conditional certification. The defendants argued that corporate
uniformity and the plaintiffs’ allegation of FLSA violations was not, in and of itself,
enough to demonstrate a sufficient nexus between their alleged injuries and those of
other employees. The district court held the plaintiffs had submitted sufficient evidence
that operation managers performed non-exempt duties and that the proposed opt-in
plaintiffs performed the same tasks as a matter of company policy, thus satisfying the
modest factual showing required to grant conditional certification.
In Jungkunz v. Schaeffer’s Investment Research, Inc.,990 a salesperson for a
publisher of stock options trading information commenced an action on behalf of himself
987
Id. at *2.
2013 WL 3324364 (E.D. Mo. July 1, 2013).
989
2013 WL 6440224 (D. Del. Dec. 9, 2013).
990
2014 WL 1302553 (S.D. Ohio Mar. 31, 2014).
988
250 and putative collective action members alleging the defendant violated the FLSA by
improperly calculating overtime rates of pay and requiring them to work off-the-clock.
Prior to filing the plaintiff’s motion for conditional certification of a collective action, the
parties engaged in limited discovery that included the defendant’s production of the
names, addresses, and telephone numbers of forty-three employees who had the same
job title as the plaintiff. Given that the parties’ engaged in pre-motion, limited discovery,
the district court in Ohio applied a higher standard than the customary “modest factual
showing,” required for a stage one analysis, requiring the plaintiff to make a “modest
‘plus’ factual” showing.991 The district court applied the heightened “modest plus”
standard because “(1) Plaintiff knew the identity of all or nearly all of the potential class
members and had an opportunity to contact those individuals through the normal
discovery process prior to moving for conditional certification, and (2) Plaintiff chose to
move for conditional certification of an FLSA collective class simultaneously with moving
for the certification of a Rule 23 class.”992
In Terry v. TMX Finance LLC,993 the plaintiff, a General Manager in Training
(“GMIT”) brought a putative class action for unpaid overtime wages in violation of the
FLSA. The plaintiff sought conditional class certification for “current and former GMITs
who were misclassified as salaried exempt employees . . . .”994 An Illinois district court
granted conditional certification, allowing the parties to create a proposed class notice
and to engage in discovery. The court reiterated that at the first stage of the two-stage
certification process, the plaintiff must establish the existence of similarly situated
employees who are potential plaintiffs.995 To meet this burden, the plaintiff would be
required to make “a modest factual showing sufficient to demonstrate that [he] and [the]
potential plaintiffs together were victims of a common policy or plan that violated the
law.”996 If the plaintiff could make this showing, the second stage would begin, wherein
the plaintiff could notify similarly situated employees of the case and give them an
opportunity to opt-in. The court held that the plaintiff provided sufficient evidence that
GMITs working in multiple states were subjected to a common plan.997 This evidence
consisted of declarations from GMITs indicating they were employed by the defendant
entity in their state; they worked at least 48 to 50 hours in a work week; they performed
similar duties in comparison to other GMITs; and they were paid in the same unlawful
manner.998
In Streeter-Dougan v. Kirkston Mortgage Lending,999 the plaintiff loan processor
brought overtime claims against her employer. She sought to conditionally certify a
991
Id. at *6–7.
Id. at *7.
993
2014 WL 2066713 (N.D. Ill. May 19, 2014).
994
Id. at *1.
995
Id. at *2.
996
Id.
997
Id. at *3.
998
Id. at *2.
999
2013 WL 6174936 (S.D. Ind. Nov. 21, 2013).
992
251 class of loan officers and loan processors, relying on her own testimony. Explaining the
plaintiff’s burden at the first step of the two-step approach, the court held that “Plaintiffs
do not have the burden of proving their entire case,” but “must demonstrate that there is
some factual nexus that connects her to other potential plaintiffs as victims of an
unlawful practice.”1000 The court denied the motion, holding that the plaintiff’s evidence
failed to meet the minimal burden because she did not identify any loan officers by
name, explain when and where the conversations regarding overtime pay with any loan
officer occurred, and did not provide any documentary evidence from a loan officer
which would lead to a reasonable inference that loan officers, like loan processors, were
the victims of an overtime violation.1001
In Brown v. Consolidated Restaurant Operations, Inc.,1002 restaurant employees
moved to certify a collective action comprised of non-exempt hourly employees who
alleged that their restaurant employers required them to purchase and maintain
uniforms resulting in their receipt of less than minimum wage. The district court in
Tennessee addressed the appropriate standard for the first stage of the two-stage
certification process, and held that the evidentiary standard for “conditional certification”
requires the plaintiff to make only a modest factual showing that other employees are
similarly situated. The court noted that the Sixth Circuit referred to this conditional
certification standard as “fairly lenient” and that it “typically results in certification.”
In Hively v. Allis-Chalmers Energy, Inc.,1003 oil and gas rig supervisors brought an
action for unpaid overtime under the FLSA and Pennsylvania state law. The supervisors
(under separate job titles including “Air Compression Supervisors,” “Air Supervisors,”
“Compression Supervisors,” or “Pushers”) were classified as exempt by their employer.
The three named plaintiffs moved for conditional certification arguing that they
performed non-exempt tasks, had little or no authority to make management decisions,
and were entitled to overtime compensation. The Pennsylvania district court, in granting
the plaintiffs’ motion, explained that at the first phase of the certification process—the
notice phase—all that is required is a “modest factual showing” that the proposed
plaintiffs are similarly situated.1004 Citing Symczyk v. Genesis HealthCare Corp.,1005 the
district court explained that the standard for conditional certification is not particularly
high and only calls for “‘some evidence, ‘beyond mere speculation,’ of a factual nexus
between the manner in which the employer’s alleged policy affected her and the manner
in which it affected the other employees.”1006 The employer, in opposing conditional
certification, argued that because of the amount of discovery conducted (204 requests
for production, 92 interrogatories, a production of almost 7,000 pages of documents,
1000
Id. at *1.
Id. at *2.
1002
2013 WL 4804780 (M.D. Tenn. Sept. 6, 2013).
1003
2013 WL 5936418 (W.D. Pa. Nov. 5, 2013).
1004
Id. at *3.
1005
656 F.3d 189, 192 (3d Cir. 2011), rev’d on other grounds, 133 S. Ct. 1523 (2013).
1006
Hively, 2013 WL 5936418 at *3.
1001
252 and a Rule 30(b)(6) deposition), an “intermediate” standard should apply.1007 The district
court rejected the employer’s argument for an “intermediate” standard, explaining that
the first step is simply about the provision of notice and therefore, the burden is not as
demanding as the employer claimed.1008 At the first stage, the court does not reach the
merits of the plaintiffs’ claims or make conclusive findings.1009
In Goodman v. Burlington Coat Factory Warehouse Corp.,1010 the plaintiffs, a
group of retail store managers, claimed they were misclassified as exempt under the
FLSA and not paid properly for overtime work. At issue in the case was a discovery
motion. Before ruling on the motion, the court first discussed the two-step certification
process. At the first step, the plaintiff need make only “modest factual showing” that the
employees can be categorized as similarly situated.1011 Although this stage is called a
conditional certification, the court noted that it is not a certification but the court making
a decision to use its discretionary power to facilitate notice.1012 A grant of conditional
certification at stage one is neither final nor permanent, as a class may fail certification
at stage two.1013
In Devries v. Morgan Stanley & Co.,1014 the plaintiffs, current and former preproduction Financial Advisor Associates (“FAAs”), sought conditional certification of a
nationwide class of approximately 6,970 individuals. In response to the plaintiffs’ motion
for conditional certification, the defendant argued that a more exacting standard than
would typically be applied at the first stage of the certification process be applied
because the plaintiffs had made their motion after a five-month discovery period.
Because the plaintiffs had five months to conduct discovery, rather than applying a
lenient standard focusing on the complaint allegations and a few affidavits, the Florida
district court applied what it called a “more searching standard of review” to the
plaintiffs’ motion. However, even under the more stringent standard, the district court
found that conditional certification was warranted because the plaintiffs had
demonstrated that they were subject to a common policy or practice and were similarly
situated to one another and to potential class members.
In Kim v. Dongbu Tour & Travel, Inc.,1015 tour guide employees brought a
putative collective action alleging violation of the minimum wage and overtime
provisions of the FLSA and the New Jersey Wage and Hour Law. The district court
granted the plaintiffs’ motion for conditional certification, finding that the plaintiffs met
their burden of showing they were similarly situated to the putative class through sworn
1007
Id. at *4.
Id.
1009
Id. at *6.
1010
292 F.R.D. 230 (D.N.J. 2013).
1011
Id. at 232.
1012
Id.
1013
Id.
1014
2014 WL 505157 (S.D. Fla. Feb. 7, 2014).
1015
2013 U.S. Dist. LEXIS 148549 (D.N.J. Oct. 16, 2013).
1008
253 testimony, training manuals, certifications, and copies of contractual agreements, all of
which demonstrated that the plaintiffs and the putative class were subject to the same
employment practices with respect to training, compensation, and work schedules.1016
The plaintiffs also demonstrated that the putative class was subject to the defendant’s
uniform policy of misclassifying tour guides as independent contractors, thereby
depriving them of the wages that they were owed.1017 The district court held that the
plaintiffs made a “modest factual showing” and presented evidence “beyond pure
speculation of a factual nexus between the manner in which the employer’s alleged
policy affected her and the manner in which it affected other employees.”1018
In Ribby v. Liberty Health Care Corp.,1019 non-exempt nursing staff filed a FLSA
overtime lawsuit in the Ohio district court against the owner and operator of a nursing
home for overtime pay. The plaintiffs alleged that the defendant automatically deducted
30 minutes from their pay each day, regardless of whether they received a meal period
or were required to perform work during their meal period. The parties agreed that all
RNs, LPNs, and STNAs who received hourly compensation at the defendant’s Toledo
facility were non-exempt employees under the FLSA. The court considered and
ultimately granted the plaintiff’s motion for conditional certification, after analyzing the
motion under stage one of the two stage conditional certification analysis. In describing
the “fairly lenient” standard applied by the Sixth Circuit at stage one, the court noted that
some courts hold that a plaintiff can demonstrate that potential class members are
similarly situated, for purposes of receiving notice, based solely upon allegations in a
complaint of class-wide illegal practices, although others have required a “modest
factual showing.” The court further noted that during the notice stage, courts "do not
resolve factual disputes, decide substantive issues on the merits, or make credibility
determinations.” Once plaintiffs meet their burden at this stage, “a defendant cannot
overcome their showing by arguing that individual issues predominate.”
Le v. Regency Corp.,1020 described the low standard that courts apply at the first
stage of the certification process. At the first stage, the court must only determine
whether plaintiffs have provided evidence to establish a colorable claim that the putative
class members are victims of a single decision, policy, or plan. The court need not make
any credibility determinations or findings of fact. At the notice stage, class status is
liberally granted because the court has minimal evidence to analyze the class. The
court noted the low standard for conditional certification and the plaintiffs’ minimal
burden and found the plaintiff’s had established a colorable basis that they were
similarly situated.
1016
Id. at *7.
Id. at *5–6.
1018
Id. at *7 (internal quotation marks and citations omitted).
1019
2013 WL 3187260 (N.D. Ohio June 20, 2013).
1020
957 F. Supp. 2d 1079, 1091–92 (D. Minn. 2013).
1017
254 In Banks v. Radioshack Corp.,1021 the plaintiffs, a group of retail store employees
in a particular Radio Shack district in Pennsylvania, sought conditional certification of
their minimum wage and overtime claims under the FLSA. The plaintiffs alleged that
their employer, an electronics retailer, modified their time records by adding or
lengthening unpaid breaks and adjusting their clock-out times such that they were not
paid for all of the hours they worked. The defendant responded that the modifications
were accurate and reflected instances when the plaintiffs failed to accurately record
their own breaks and clock-out times. At oral argument, the plaintiffs’ counsel admitted
that he was not certain whether any of the plaintiffs had actually performed
uncompensated overtime work.1022 Further, the plaintiffs’ counsel clarified that the
plaintiffs’ minimum wage claim was a “gap-time” claim, which the court noted was
generally considered not to be a valid claim under the FLSA.1023 The Pennsylvania
district court reasoned that the claims were not subject to common proof because each
modification of a time record was the discrete action of an individual manager.1024
Without a systematic method for identifying false modifications, each modification would
have to be adjudicated separately. Further, even if the false modifications could be
identified, individualized calculations for each employee and for each week would be
necessary to determine the amount of unpaid overtime or minimum wages. Pointing to
the difficulties of collective proof and the plaintiffs’ uncertainty as to the nature of their
claims, the district court denied the motion for conditional certification without prejudice.
In Fratcelli v. MSG Holdings, L.P.,1025 interns sued to recover overtime pay. The
plaintiffs sought conditional certification of a class made up of all interns who were not
paid. Most courts apply a two-step approach to certifying FLSA collective actions and in
the initial stage the court determines whether to conditionally certify a class and
authorize a collective action notice to putative class members. For a court to
conditionally certify a proposed class, plaintiffs have “the ‘low’ burden of making a
‘modest factual showing’ that they and ‘potential opt-in plaintiffs together were victims of
a common policy or plan that violated the law.’”1026 One way plaintiffs can meet this
burden is by showing that there are other employees who are similarly situated with
respect to their job requirements and pay provisions. While this burden is modest, it is
not non-existent.
In Frebes v. Mask Restaurants, LLC,1027 tipped employees of a restaurant sued
the restaurant and two individuals (collectively “defendants”) for violations of the FLSA.
Specifically, the plaintiffs alleged they received an incorrect subminimum wage rate due
to the defendants’ invalid use of a tip pool which required tipped employees to pay a
percentage of their tips to the defendants who then distributed a portion of those tips to
1021
2014 WL 1724856 (E.D. Pa. Apr. 25, 2014).
Id. at *2.
1023
Id. (quoting Lopez v. Tri–State Drywall, Inc., 861 F. Supp. 2d 533, 536 (E.D. Pa. 2012)).
1024
Id. at *3.
1025
2014 WL 1807105 (S.D.N.Y. May 7, 2014).
1026
Id.
1027
2014 WL 1848461 (N.D. Ill. May 8, 2014).
1022
255 employees who did not regularly receive tips. The plaintiffs sought (1) to be conditionally
certified as a class of regularly tipped employees consisting of bartenders, bussers, and
servers employed by the defendants from May 9, 2010 to present, and (2) authorization
of their proposed class notice. The court first considered whether the plaintiffs were
similarly situated for the purposes of conditionally certifying the FLSA collective action.
The plaintiffs had to make a modest factual showing that members of the class were
similarly situated and that they were injured by a common policy or plan that violated the
law. The court noted that plaintiffs do not have to show that the potential class members
have identical positions for conditional certification to be granted. In fact, the plaintiffs
can have different job titles, functions or pay and still be similarly situated.1028 In
granting the motion, the court emphasized that any distinctions about the differing job
titles the plaintiffs had were insignificant at this stage of litigation and arguments about
the dissimilarities in the class were more appropriate for the second step of the court’s
analysis after discovery.1029
In Bilskey v. Bluff City Ice, Inc.,1030 ice delivery drivers brought claims for unpaid
overtime wages under the FLSA and the Missouri Minimum Wage Law, alleging their
employer failed to pay them for pre- and post-shift work. The plaintiffs moved for
conditional certification under 29 U.S.C. § 216(b). While noting that the Eighth Circuit
has not addressed what standard should be applied to determine whether employees
are “similarly situated,” the Missouri district court followed other district courts in the
circuit in conducting a two-step analysis. Noting that the plaintiffs’ burden at the first
step is “not onerous” and requires only substantial allegations that the potential
collective members were victims of a single decision, policy, or plan, the district court
granted conditional certification.
In O'Neal v. Emery Federal Credit Union,1031 the plaintiff, a former loan officer,
alleged that the credit union’s loan officers regularly worked more than forty hours per
workweek without receiving overtime and were not paid the applicable minimum wage
for all hours worked up to forty hours per workweek. The loan officer moved the Ohio
district court to conditionally certify a collective action under section 216(b) and provide
notice to all of the credit union’s loan officers nationwide. The court denied the motion,
finding that the loan officer failed to satisfy the lenient stage one standard for conditional
certification. The loan officer failed to satisfy this light burden because none of the three
declarations suggested that any declarant had actual knowledge of the hours worked or
compensation paid to any other loan officer in the company, and thus there was no
factual basis from which the court could infer that the credit union had a common policy
or practice with respect to loan officer compensation and hours worked. Consequently,
there was no factual basis to suggest that other loan officers were similarly situated to
one another.1032 The loan officer subsequently filed a second motion for conditional
1028
Id. at *2.
Id. at *3.
1030
2014 WL 320568 (E.D. Mo. Jan. 29, 2014).
1031
2014 WL 842948 (S.D. Ohio Mar. 4, 2014).
1032
Id. at *1.
1029
256 certification, in which she submitted additional declarations providing details of other
loan officers being subject to the same allegedly unlawful compensation scheme. The
declarations provided evidence that loan officers working in Florida, Washington,
California, and Maryland worked more hours than specified in their loan officer
agreements yet were not paid minimum wage for those extra hours if the commissions
earned did not satisfy minimum wage standards, and observed other loan officers
working more than forty hours per week without receiving overtime. This additional
evidence provided the court with the “modest factual showing” required and allowed the
court to infer that the named plaintiff loan officer was “similarly situated” to the other
loan officers she sought to notify of the pending action and solicit their participation in
the lawsuit.1033 The employer submitted evidence from managers, other loan officers,
and a Vice President that its loan officers’ hours, compensation, and timekeeping
requirements were not uniform nationwide. The court rejected these concerns at stage
one, noting that discovery had not yet occurred and that factual conflicts, if any, should
be resolved at stage one in favor of the plaintiff. The court noted that at stage two, after
discovery and upon a motion for decertification, the same evidence might not be
sufficient to satisfy the higher standard of scrutiny used to analyze the similarly situated
issue.
In Garcia v. Moorehead Communications, Inc.,1034 plaintiff technicians and field
service managers alleged that they were improperly misclassified as exempt and moved
for conditional certification of a collective.1035 The court noted that, although section
216(b) does not specifically provide for court-ordered notice, the district courts have the
discretion to implement section 216(b) by facilitating notice to potential plaintiffs.1036
Providing such notice, the court found, serves the broad remedial purpose of the FLSA
and enables the court to manage its docket.1037 With regard to the proof needed for that
showing, the court noted that, “though lenient, the ‘modest factual showing’ standard is
not a mere formality.”1038 The court explained that a plaintiff may meet that showing by
presenting an affidavit, declaration, or other support beyond mere allegations that make
a “minimal showing” that there exist other potential collective members who were
subject to a common policy.1039 The court concluded that the plaintiffs had provided
sufficient support via their own declarations, declarations from other employees, and the
defendant’s admissions to warrant conditional certification and notice.1040
In Nieddu v. Lifetime Fitness, Inc.,1041 the plaintiff sought to bring a collective
action on behalf of commission-paid hair stylists to recover unpaid minimum wages and
1033
Id. at *3–5.
2013 WL 4479234 (N.D. Ind. Aug. 19, 2013).
1035
Id. at *2.
1036
Id. at *3.
1037
Id.
1038
Id. at 5 (quoting Biddings v. Lake County, 2009 WL 2175584, at *3 (N.D. Ind. July 15, 2009)).
1039
Id. at *5.
1040
Id. at *6.
1041
977 F. Supp. 2d 686 (S.D. Tex. 2013).
1034
257 overtime. The plaintiff also alleged that the employer failed to maintain the required
records pursuant to 29 U.S.C. § 211(c). On the plaintiff’s motion for conditional
certification, the Texas district court applied the intermediate standard, as opposed to
the usual lenient standard applied in the notice stage, reasoning that the parties already
conducted three months of discovery and the evidence submitted with the briefings
included responses to requests for production and transcripts from the depositions of
the defendant’s corporate representative and the opt-in plaintiff. The court found that the
plaintiff failed to meet her burden of showing that conditional certification was
appropriate under either an intermediate or lenient standard and therefore denied the
motion.
In Ballou v. iTalk, LLC,1042 the plaintiff, a sales representative, alleged that the
defendant wireless retailer engaged in various wage and hour violations, including
requiring employees to undergo eighty hours of training without pay, deducting $125
from each employee’s initial paycheck for onboarding expenses, and deducting sixty
minutes per day from each employee’s time worked to account for an unpaid meal
break, failing to pay for pre- and post-shift work, and withholding commissions and final
wages. The plaintiff sought to bring these claims as a collective action. The court held
that at the initial stage, the plaintiff has the burden of showing that there are other
similarly situated employees who are potential claimants. To meet this burden, “the
plaintiff must make ‘a modest factual showing sufficient to demonstrate that they and
potential plaintiffs together were victims of a common policy or plan that violated the
law.”1043 This is a lenient standard. Using this standard, the court determined that the
plaintiff’s allegations could proceed as a collective action as to four of his claims. The
court found there was insufficient proof to permit conditional certification regarding the
withholding of commissions or wages.
In Silva v. Calle 8,1044 a single plaintiff restaurant worker alleged that he was
denied overtime and minimum wages under federal and state law when he worked as a
bus boy, bar back, and in various other non-exempt roles at the defendants’
restaurant.1045 Relying on his own observations in a two-page affidavit, the plaintiff
moved for conditional certification and simultaneously sought to compel contact
information of current and former employees.1046 The defendants argued that the
plaintiff failed to make the limited factual showing that putative class members were
similarly situated to him, that the collective action sought was too broad, and that the
collective allegations required individualized inquiry.1047 The magistrate judge denied
the plaintiff’s motion for conditional certification without prejudice. However, the court
ordered the defendants to disclose the names and addresses of other employees.
Despite the limited standard of proof at the initial stage, “where plaintiffs fail to provide
1042
2013 WL 3944193 (N.D. Ill. July 31, 2013).
Id. at *3 (quoting Flores v. Lifeway Foods, Inc., 289 F. Supp. 2d 1042, 1045 (N.D. Ill. 2003)).
1044
2013 WL 6330848 (E.D.N.Y. Dec. 5, 2013).
1045
Id. at *1.
1046
Id.
1047
Id. at *2.
1043
258 either evidentiary support, such as affidavits or supporting documents, or specific
factual allegations, courts routinely deny conditional certification.”1048 A two-page
affidavit and an attached shift list lacked the factual support needed to satisfy the
“modest burden.” Moreover, the plaintiff’s proposed class, including bartenders, servers,
hosts, kitchen staff, and dishwashers, failed to adequately identify a similarly situated
class with the necessary specificity as to time period or job duties.1049 The court
encouraged the parties to engage in discovery to clarify the record as to the issues that
allegedly required individualized discovery, noting that the individuality issue is more
appropriately considered in the second phase of discovery after a collective action
notice is sent.1050
In Larson v. Rush Fitness Corp.,1051 the district court of Tennessee adopted the
magistrate’s Report and Recommendation1052 conditionally certifying a collective action
under the FLSA. The district court observed that “‘[t]he purpose of the first stage, or
conditional certification, is to provide notice to potential plaintiffs and to present them
with an opportunity to opt in.’”1053 The standard is “fairly lenient” and requires only “a
modest factual showing” that the plaintiff is similarly situated to the other employees
they seek to notify.1054 The district court affirmed the magistrate’s conclusion that the
plaintiff, a membership manager for the defendant fitness center operator, met his
burden1055 of showing that he was similarly situated to the opt-in plaintiffs when he
presented evidence that the defendant operated several facilities in multiple states and
employed membership managers at every facility, who like him, performed no or little
managerial functions, did not exercise discretion, did not have the power to hire or fire
employees, did not set wages or schedules, and did not resolve employee disputes.1056
The plaintiff also alleged that all managers were controlled by a centralized
management system and were subjected to the defendant's policy of not paying
overtime wages to membership managers.1057
In Barnes v. Abandonment Consulting Services, Inc.,1058 the plaintiff, an oil rig
clerk who alleged that he was misclassified as an independent contractor and not paid
required overtime by the defendant, an oil and gas staffing firm, moved for conditional
1048
Id. at *2 (citing cases).
Id. at *3–4.
1050
Id. at *4 (citing cases).
1051
2013 U.S. Dist. 163541 (E.D. Tenn. Sept. 23, 2013).
1052
2012 U.S. Dist. LEXIS 189211 (E.D. Tenn. Oct. 17, 2012), adopted by 2013 U.S. Dist. LEXIS
163541 (E.D. Tenn. Sept. 23, 2013).
1053
Id. at *7 (quoting Lindberg v. UHS of Lakeside, LLC, 761 F. Supp. 2d 752, 757–58 (W.D.
Tenn. 2011)).
1054
Id. at *7–8 (citing Comer v. Wal-Mart Stores, Inc., 454 F.3d 544, 547 (6th Cir. 2006)).
1055
Id. at *8 (The “‘lead plaintiffs bear the burden of showing the opt-in plaintiffs are similarly
situated to the lead plaintiffs.’”) (quoting O'Brien v. Ed Donnelly Enters., Inc., 575 F.3d 567, 584 (6th Cir.
2009)).
1056
Id. at *9–10.
1057
Id. at *10.
1058
2013 WL 3884198 (S.D. Tex. July 26, 2013).
1049
259 certification and notice to other potential plaintiffs. The Texas district court applied the
two-stage Lusardi1059 approach to determine whether there were other similarly situated
workers, and denied the motion. Under the Lusardi approach, a more lenient standard is
applied at the first, notice stage, which usually takes place early in the case, before
substantial discovery has occurred, and the question for the court is whether there are
others who may be similarly situated to the plaintiff. At the second, decertification stage,
the court reviews the evidence gathered in discovery and determines whether the
plaintiffs are in fact similarly situated. The court applied the higher, second-stage
standard because the plaintiff moved for conditional certification after the close of
discovery. The court observed that in such a situation, the two-step inquiry collapses
into one. Although the plaintiff had deposed a corporate official who stated that other rig
clerks regularly worked more than 40 hours per week without overtime pay, there was
no evidence that these rig clerks’ job locations and descriptions were similar to the
plaintiffs’ or that they wished to opt in to the lawsuit. The court found that conditional
certification would not promote judicial efficiency because the plaintiff had neither
moved for conditional certification early in the case nor used discovery to obtain
information about the number and circumstances of fellow workers.
In Binissia v. ABM Industries, Inc.,1060 the plaintiff-janitors filed a collective action
alleging that the defendants manually and electronically rounded down their punch-in
and punch-out times and failed to pay them for all overtime hours worked. The plaintiffs
moved for conditional certification. The Illinois district court held that at the first stage of
conditional certification, a plaintiff need only make a “modest factual showing” that they
and other potential plaintiffs are similarly situated, and that such a showing requires
nothing more than substantial allegations that the potential collective members were
victims of a single decision, policy, or plan. The court held, however, that allegations in
a complaint are not sufficient to make this showing, and that plaintiffs must provide
some evidence, such as affidavits, deposition testimony, or other documents.
In Snodgrass v. Bob Evans Farms, LLC,1061 assistant restaurant managers
brought overtime claims alleging they were improperly classified as exempt employees.
They asserted that their primary duties did not differ substantially from non-exempt
employees (such as operating the cash register, preparing and cooking food, cleaning
and stocking supplies) and they spent significant amounts of time performing these
duties. The district court in Ohio granted the plaintiffs’ motion for conditional certification
of a nationwide collective action consisting of all current or former assistant managers
over a four-year period, totaling 2,503 potential opt-ins. The court noted that in the Sixth
Circuit, district courts generally use a two-stage process to determine if the opt-ins are
similarly situated to the lead plaintiff such that conditional certification of a collective is
appropriate. The district court characterized this as a “fairly lenient” standard which
1059
Lusardi v. Xerox Corp., 118 F.R.D. 351 (D.N.J. 1987).
2014 WL 793111 (N.D. Ill. Feb. 26, 2014).
1061
2013 WL 6388558 (S.D. Ohio Dec. 5, 2013).
1060
260 “typically results in conditional certification” during the first stage.1062 While the burden of
demonstrating whether the opt-in plaintiffs are similarly situated rests on the plaintiff, the
plaintiff need only show that his position “is similar, not identical” to the positions held by
the putative class members. The court noted that opt-ins elsewhere have been deemed
similarly situated when their claims are unified by common theories of the defendants’
statutory violations, even if the proofs of these theories are “individualized and distinct;”
the plaintiff need not even show a unified policy of violations to obtain certification. The
court also established that there is no minimum threshold number of employees
required to obtain conditional certification.1063 In this case, the plaintiffs established that
the job duties and functions of the assistant managers were governed by centralized
policies created by corporate management, none were paid overtime, and the company
did not take in account variations between the actual duties of individual managers in
classifying them as exempt.1064
In Adami v. Cardo Windows, Inc.,1065 a putative class of window installers and
helpers brought suit against their employer, alleging they were improperly classified as
independent contractors and unlawfully denied overtime. The New Jersey district court
determined that it would conditionally certify a collective action consisting of installers
only, excluding from the collective action class all helpers and those installers who
signed mandatory arbitration and/or class waiver agreements. In making that
determination, the court noted the two-step process for conditional certification of an
FLSA collective action. The first step occurs early in the litigation when the court has
minimal evidence. The court applies a “fairly lenient standard,” and a plaintiff need only
make a “modest factual showing” using pleadings and affidavits to show that he is
similarly situated to the putative collective action members.1066
In Stout v. Remetronix, Inc.,1067 field technicians brought minimum wage and
overtime claims for uncompensated time arising out of work performed at home while
“off-the-clock.” These additional duties were mandatory and included, but were not
limited to: checking company emails, providing updates to the employer, completing
surveys and questionnaires, and completing other documentation and paperwork
depending on the project.1068 Counting the time spent performing these additional
duties, field technicians routinely worked in excess of 40 hours per workweek and were
not compensated an overtime premium. The plaintiff sought to conditionally certify the
case as a collective action. Courts apply a lenient standard during the conditional
certification stage, requiring that the plaintiff show that he is similar to other employees
rather than identical; the merits of the case are not argued during this initial stage. In
support of showing a companywide policy, the plaintiff adduced evidence in the form of
1062
Id. at *2.
Id.
1064
Id.
1065
2014 WL 320048 (D.N.J. Jan. 29, 2014).
1066
Id. at *7.
1067
2013 WL 4048241 (S.D. Ohio Aug. 9, 2013).
1068
Id. at *1.
1063
261 a former manager’s affidavit which testified that field technicians duties were the same,
that field technicians travel to and from their assignment sites, and that upon returning
home, field technicians are “required to perform additional work, including, but not
limited to: checking company emails, providing updates to the employer, completing
surveys and questionnaires, and completing other documentation and paperwork
depending on the project.”1069 In granting the plaintiff’s motion for conditional
certification under the FLSA, the district court of Ohio applied the more lenient standard
used during the initial stage finding that the plaintiff showed sufficient evidence that the
other field technicians were similarly-situated in both their job duties and the employer’s
treatment of their entitlement to overtime pay through the plaintiff’s pleadings and
affidavit of a former manager.
In Romero v. La Revise Associates,1070 a busboy at a restaurant brought action
for violations of the FLSA and New York Labor law, alleging that he and other tipped
employees were not paid statutory minimum wage, did not receive proper notice
regarding tip credits and were unlawfully employed in non-tipped duties exceeding 20
percent of each workday. The plaintiff moved the court for conditional approval of his
case as a collective action so he could send notice to tipped employees and kitchen
staff employed. The New York district court granted this motion. The court stated that at
the first tier the case law imposed only a very limited burden on plaintiffs for purposes of
proceeding as a conditional collective action. Once the plaintiffs have opted in and after
discovery is complete, “courts conduct a more stringent ‘second tier’ analysis upon a full
record to decide whether the additional plaintiffs are similarly situated to the original
plaintiffs.”1071 The threshold in whether to authorize class notice in an FLSA action is
whether plaintiffs have demonstrated that potential class members are “similarly
situated.” The court found that the affidavit of the plaintiff attesting to the existence of
similarly situated plaintiffs was sufficient for the purposes of a motion to approve a
collective action.
In Lucke v. PPG Industries, Inc.,1072 the plaintiff, a territory manager of a global
paint, glass and chemical supplier, filed a misclassification claim after his employer
reclassified territory managers as non-exempt. The plaintiff sought conditional
certification of the putative collective action and court-facilitated notice. Relying on
precedent from the Eleventh Circuit, the defendant argued that during step one of the
two step FLSA certification process, the court “must examine whether there are other
employees who actually desire to join the litigation.”1073 The court rejected the
defendant’s argument, and further noted that in contrast to the instant case, in those
cases where courts have denied conditional certification based on an examination of
whether employees actually desired to join the litigation, “there was evidence of
1069
Id.
968 F. Supp. 2d 639 (S.D.N.Y. 2013).
1071
Id. at 645.
1072
2013 WL 6577772 (W.D. Pa. Dec.16, 2013).
1073
Id. at *3 (emphasis in original). The Lucke court identified the cases cited by the defendant as
non-binding and factually distinguishable. Id.
1070
262 affirmative disinterest in the lawsuit by other employees.”1074 Ultimately, the court held
that the plaintiff’s affidavit set forth sufficient facts to show that the putative group
members were similarly situated and that conditional certification should be granted.
In Sylvester v. Wintrust Financial Corp.,1075 the plaintiff filed suit to recover
unpaid overtime and minimum wages under the FLSA on behalf of loan originators. The
plaintiff alleged that the defendants improperly classified all of the loan originators as
exempt from FLSA requirements based on the outside sales exemption, failed to pay
them a minimum wage, failed to pay overtime when they worked over 40 hours in a
workweek, and failed to maintain records mandated by the FLSA. After the plaintiff filed
suit, five additional employees joined as opt-in plaintiffs. Together, the plaintiffs moved
to conditionally certify their lawsuit as a collective action so that they might issue notice
to prospective class members, and to extend the FLSA tolling period. In response, the
defendants filed a motion to dismiss or stay the action as to two of the plaintiffs who had
arbitration clauses in their employment agreements. An Illinois district court granted the
plaintiffs’ motion for conditional certification, allowing the plaintiffs to notify prospective
class members, and continued its decision on the motion to extend the tolling period.
The district court also granted the defendants’ motion to stay the action with regard to
two of the plaintiffs subject to arbitration. The court held that the plaintiffs met the first
stage of the two-stage test by making the “modest factual showing sufficient to
demonstrate that they and potential plaintiffs were victims of a common policy or plan
that violated the law.”1076 In its holding, the court rejected the defendants’ argument that
the court should apply a heightened standard for motions for conditional certification.
The court reasoned that a heightened standard would only be appropriate in cases
where significant discovery had already been completed. Consequently, the plaintiffs
were allowed to send notice of the case to similarly situated employees and engage in
discovery. The second, more rigorous, stage of the two-stage test would require the
court to reevaluate the conditional certification after discovery and the opt-in period, to
determine if there were enough similarities between the named and opt-in plaintiffs to
allow the matter to proceed to trial on a collective basis.
The plaintiffs in Bergman v. Kindred Health Care, Inc.,1077 filed a putative
nationwide collective action and an Illinois state law class action, based on the
defendants’ application of an automatic 30-minute meal break deduction policy without
ensuring that employees do not work during all or part of the uncompensated meal
period. Before the Illinois district court was the plaintiffs’ motion for conditional
certification of the FLSA collective action. In granting in part and denying in part the
plaintiffs’ motion, the court reviewed the FLSA collective action process for
certification.1078 The court observed that the first stage involves conditionally certifying a
1074
Id. at *3.
2013 WL 5433593 (N.D. Ill. Sept. 30, 2013).
1076
Id. at *3–4.
1077
949 F. Supp. 2d, 852 (N.D. Ill. 2013).
1078
Id. at 855.
1075
263 class for notice purposes and that the plaintiffs’ burden of proof is low. During the first
stage, the court does not make merit determinations, weigh evidence, determine
credibility, or specifically consider opposing evidence presented by the defendant.1079
The court observed that this lenient standard, however, has sometimes been
supplanted by more rigorous standard if there has been more extensive discovery
allowed to the plaintiffs, which was the circumstance before the court.1080 The court
noted that it had an incomplete factual record, but that it would “require Plaintiffs to
make a modest ‘plus’ factual showing” and would consider both sides’ evidentiary
submissions.1081
In Saunders v. Getchell Agency,1082 the plaintiffs were “house managers”
employed by the defendants as caretakers for disabled individuals. They were required
to stay on the defendants’ properties overnight. The plaintiffs sued to collect back
wages and liquidated damages for unpaid hours between 10:00 p.m. and 6:00 a.m. The
plaintiffs filed a motion for conditional certification, alleging that the proposed collective
group was similarly situated. The Maine district court noted that the First Circuit has not
directly addressed what qualifies as “similarly situated,” but it followed other district
courts that have applied a two-tiered approach to FLSA certification, addressing at the
initial stage whether notice should issue to the class and leaving factual determinations
as to whether the class is similarly situated to the second stage. The court described the
plaintiffs’ burden at the initial stage as a modest factual showing that “the plaintiffs and
other employees, with similar but not necessarily identical jobs, suffered from a common
unlawful plan.” The court found the allegations in the complaint along with supporting
affidavits from potential opt-ins were sufficient to meet the first-stage burden.1083 It
acknowledged that the defendants’ theory that an implied agreement to deduct sleep
time from an employee's compensation relieved it of liability was both viable and
relevant to the case. However, the court explained that the plaintiffs would suffer
significant prejudice if their motion for conditional certification was held in abeyance
while discovery took place, but the defendants would have the opportunity to seek
decertification after discovery was complete.1084
In Velasquez v. Digital Page, Inc.,1085 a New York district court noted that in
deciding whether an action should be certified as an FLSA collective action, a court
determines whether the proposed class members are similarly situated by applying a
lenient evidentiary standard, whereby the plaintiffs need only make a modest factual
showing that they and the potential opt-in plaintiffs were subject to a common policy or
plan that violated the law. The court also noted that the lenient standard could be
1079
Id. at 855–56.
Id. at 856.
1081
Id.
1082
2014 WL 580153 (D. Me. Feb. 12, 2014).
1083
Id. at *6.
1084
Id. at *7.
1085
2014 WL 2048425 (E.D.N.Y. May 19, 2014).
1080
264 satisfied by a review of the pleadings, declarations and affidavits submitted by the
plaintiff.1086 In Page v. Nova Healthcare Management, L.L.P.,1087 medical center employees
seeking unpaid commissions and overtime filed a motion for conditional certification of
their claims under the FLSA. Before evaluating the merits of the plaintiffs’ motion, the
Texas district court1088 first noted that the Fifth Circuit had not definitively decided what
analysis should be employed when determining whether employees are “similarly
situated” for purposes of conditional certification. The court then recognized that courts
within the Fifth Circuit generally used one of two analyses: (i) the “fairly lenient” two-step
analysis set forth in Lusardi v. Xerox Corp.,1089 which requires only “substantial
allegations that the putative class members were together the victims of a single
decision, policy, or plan;”1090 or (ii) the “spurious class action” analysis, which is more
similar to class-action procedure used under Fed. R. Civ. P. 23. After explaining the two
approaches, the court determined that it would analyze the plaintiffs’ claims under the
Lusardi method and granted the plaintiffs’ motion for conditional certification. In reaching
this decision, the court noted that the plaintiffs had submitted four declarations with
similar allegations as to their job duties, schedules, and compensation. Accordingly, the
court held that the plaintiffs had submitted sufficient evidence to meet the “fairly lenient
standard” articulated in Lusardi.1091
In Engel v. Burlington Coat Factory Direct Corp.,1092 the plaintiffs, former retail
store area managers, brought an action seeking overtime compensation under the
FLSA claiming they were misclassified as exempt employees. The plaintiffs presented
evidence of a common pay practice and common job description among all area
managers, as well as testimony indicating that the majority of the area managers’ time
was spent performing nonexempt work. The district court explained that the first phase
of the conditional certification inquiry would only require the plaintiffs show their
positions were similar, not identical, to positions held by putative class members; that
the merits, fact disputes and credibility issues would not be considered; that the court
would consider whether potential plaintiffs were identified and whether affidavits of
potential plaintiffs were submitted; whether evidence of a wide spread discriminatory
plan was submitted; and whether a manageable class existed.
1086
Id. at *8.
2013 WL 4782749 (S.D. Tex. Sept. 6, 2013).
1088
The district court referred the motion for conditional certification to the magistrate for a report
and recommendation. After reviewing the defendant’s objections, the district court adopted the
magistrate’s report and recommendation in its entirety.
1089
118 F.R.D. 351, 359 (D.N.J. 1987).
1090
Page, 2013 WL 4782749, at *3.
1091
Id. at *7.
1092
2014 WL 2417979 (S.D. Ohio June 3, 2013).
1087
265 The plaintiff in Rogers v. HCA Health Services of Tennessee, Inc.1093 alleged that
the defendant medical center failed to compensate employees for regularly performing
work during unpaid meal breaks. In support of his motion for conditional certification, the
plaintiff submitted his own declaration discussing his experience and his observations of
other employees. He also submitted a news article regarding an unrelated lawsuit
discussing the defendant’s human resources software that allegedly resulted in a “barebones staffing structure.” The defendant objected that the plaintiff’s declaration was
vague, lacked specificity, and relied on hearsay, and argued that the plaintiff had not
shown commonality with the “huge universe” of workers across all of defendant’s
departments. The district court granted the motion for conditional certification, noting
that, while the plaintiff’s factual showing was “modest” and was not accompanied by any
corroborating declarations from other employees, the plaintiff had made “some” factual
showing that similarly situated employees were subject to the same allegedly illegal
policies and practices.1094 The court stated that resolving the merits of plaintiff’s claims
is “inappropriate at the conditional certification stage” and rejected the defendant’s
argument that the plaintiff was required at this stage to make a detailed showing of
commonality.
In Thompson v. Direct General Consumer Products,1095 two former insurance
agents filed a putative collective action against several related corporate entities that
provide insurance and financial services to customers. The plaintiffs alleged failure to
properly account for commission income when calculating the “regular rate” of pay, and
failure to compensate for “off the clock” work, resulting in unpaid overtime.1096 After
limited discovery, the plaintiffs moved for conditional collective action certification. The
Tennessee district court noted that at the beginning of discovery, the court employs a
lenient standard that typically results in conditional certification of a representative class
when determining whether plaintiffs are similarly situated.1097 At this point the court does
not resolve factual disputes, decide substantive issues going to the ultimate merits, or
make credibility determinations.1098
In Harris v. Reliable Reports Inc.,1099 the plaintiff filed a collective action on behalf
of himself and several hundred field reps claiming the defendant insurance inspection
and reporting company failed to pay minimum wages and overtime as required by the
FLSA. The plaintiff alleged that his supervisors directed him to underreport his hours,
that he should have been compensated for travel time to and from work, and that the
defendant’s failure to reimburse for travel and certain essential equipment reduced his
work below minimum wage. The plaintiff brought a motion for conditional certification
1093
2013 WL 3224026 (M.D. Tenn. June 25, 2013).
Id. at *3.
1095
2014 WL 884494 (M.D. Tenn. Mar. 5, 2014).
1096
Id. at *2.
1097
Id. at *2 (citing Comer v. Wal-Mart Stores, Inc., 454 F.3d 544, 547 (6th Cir. 2006)).
1098
Id. (citing Brasfield v. Source Broadband Servs., LLC, 257 F.R.D. 641, 642 (W.D. Tenn.
1094
2009)).
1099
2014 WL 2115352 (N.D. Ind. May 21, 2014).
266 relying on his own declaration and the declarations of two other field reps. The Indiana
district court noted that neither the Supreme Court nor the Seventh Circuit have
provided guidance on how to determine whether potential opt-in plaintiffs are similarly
situated such that collective action is warranted. The court therefore relied on other
district courts around the country, in adopting the two-step process. The court denied
plaintiff’s motion, holding that plaintiff failed to present evidence that the complained of
conduct was pervasive enough to justify conditional certification.1100 The court explained
that the three field rep’s “belief,” based solely on their own personal experiences, that
other field reps were also not properly compensated was merely speculative and did not
warrant the inference that the defendant had an illegal company-wide policy.1101
In Swinney v. Amcomm Telecommunications, Inc.,1102 the plaintiff asserted the
defendant violated the FLSA by misclassifying the proposed class as independent
contractors. The Michigan district court rejected the plaintiff’s first motion for conditional
class certification. After limited discovery, the plaintiff filed a second motion for
conditional certification, which included deposition testimony, and affidavits and
declarations of other individuals alleging similar misclassification. In reviewing the
conditional certification motion, the court first noted that to file a collective action under
section 216(b) of the FLSA, named plaintiffs must be “similarly situated” and “all
plaintiffs must signal in writing their affirmative consent to participate in the action.”
Whether plaintiffs are similarly situated is a two-stage process. First, in the “notice
stage” the court “determines whether the suit should be conditionally certified as a
collective action so that potential opt-in plaintiffs can be notified of the suit’s existence
and of their right to participate.” The second stage happens after all opt-in forms are
received and discovery finishes. The plaintiff’s motion involved the first, more lenient,
notice stage, which only requires a “colorable basis for his claim that a class of similarly
situated plaintiffs exist.” Courts will not determine factual disputes or credibility
questions during this stage. The plaintiff’s affidavits were evaluated only to determine “if
Plaintiff has made sufficient allegations and a modest factual showing. Consequently,
the court rejected the defendant’s argument that conditional certification should be
denied based on inconsistencies in plaintiff’s affidavits and granted the motion.
In Davenport v. Charter Communications, LLC,1103 employees who worked in
customer call centers for the defendant, a broadband service provider, sought to
recover unpaid wages and overtime compensation. In determining whether the plaintiffs
could proceed as a collective action to trial, the court noted that it must apply a two-step
analysis, as other courts in the Eighth Circuit have done.1104 In granting the plaintiff’s
motion, the court declined to consider the defendant’s evidence that the plaintiff’s
1100
Id. at *4.
Id.
1102
2013 WL 4507919 (E.D. Mich. Aug. 23, 2013).
1103
2014 WL 1272783 (E.D. Mo. Mar. 27, 2014).
1104
Id. at *3.
1101
267 deposition testimony contradicted her allegations, holding that credibility determinations
are left for the second stage.
In Allen v. Payday Loan Store of Indiana, Inc.,1105 the plaintiffs worked as hourly
employees for defendant, a check cashing business. On the plaintiffs’ motion for
conditional certification, the Indiana district court acknowledged that “a majority of
federal courts have adopted a two-step approach” and that in the first step “a plaintiff is
required to make a modest factual showing that he and the other employees to whom
notice is to be sent were victims of a common policy or plan that violated the law,” i.e.,
the plaintiff must “demonstrate a factual nexus that binds potential members of a
collective action together.”1106 Although the showing is “lenient, [] it is ‘not a mere
formality,” and “[a] court will not certify based on plaintiffs’ say-so alone.”1107 “Instead, to
meet their burden, Plaintiffs must provide evidence via an affidavit, declaration, or other
support beyond allegations in order to make a minimal showing of other similarly
situated employees subjected to a common policy.”1108 If the court “is provided with
evidence contradicting a plaintiff’s claims, the court “will not ‘stick its head in the sand’
and ignore that evidence.””1109 “Plaintiffs may not avoid the requirement of
demonstrating to the Court a modest factual showing of support for their claim that they
and the putative class were subject to a common unlawful practice by vague assertions
that they ‘understood’ this to be true.”1110 Rather, "to warrant a finding that similarly
situated employees exist, a plaintiff's declaration must at least allege facts sufficient to
support an inference that she has actual knowledge about other employees’ job duties,
pay structures, hours worked, and whether they were paid for overtime hours."1111
“Such actual knowledge can be shown through first-hand observations or conversations
with coworkers.”1112 “However, the court must be satisfied that the facts provided by the
plaintiffs allow for the reasonable inference that the plaintiffs actually observed other
employees being subjected to the company policy they contend is unlawful.”1113
Applying these standards, the court held that the plaintiffs failed to produce sufficient
evidence to support conditional certification and denied the motion.
In Mott v. Driveline Retail Merchandising, Inc.,1114 retail merchandisers sought
conditional certification of a collective action against their employer. The merchandisers,
who were paid on an hourly basis, claimed the employer violated the minimum wage
1105
2013 WL 6237852 (N.D. Ind. Dec. 3, 2013).
Id. at *1.
1107
Id. (citing Morgan v. Family Dollar Stores, Inc., 551 F. 3d 1233, 1260 (11th Cir. 2008);
Biddings v. Lake County, 2009 WL 2175584, at *2 (N.D. Ind. July 15, 2009)).
1108
Id. (citing Biddings, 2009 WL 2175584 at *3).
1109
Id. (quoting Hawkins v. Alorica, 287 F.R.D. 431, 441 (S.D. Ind. 2012)).
1110
Id. at *7 (quoting Adair v. Wis. Bell, Inc., 2008 WL 4224360, at *10 (E.D. Wis. Sept. 11,
2008)).
1111
Id. (quoting O'Neal v. Emery Fed. Credit Union, 2013 WL 4013167, at *8 (S.D. Ohio Aug. 6,
2013)).
1112
Id.
1113
Id.
1114
2014 U.S. Dist. LEXIS 69520 (E.D. Pa. May 21, 2014).
1106
268 and overtime provisions of the FLSA by paying them based on a predetermined amount
of work hours allocated to each retail store they visited, which included drive time
between stores and administrative work as well as merchandising work in the store,
while applying a payroll policy prohibiting them from submitting hours worked in excess
of the hours allocated. The employer opposed conditional certification, arguing its policy
was to allow merchandisers to submit and be paid for all hours worked. The
Pennsylvania district court held that the merchandisers met their initial “lenient” burden
of showing that they were subject to a common decision, policy or plan. The employer
admitted that all the merchandisers had similar job descriptions and were subject to the
same policies, and the named plaintiffs and proposed opt-in plaintiffs testified in
depositions that they had similar job responsibilities. In addition, the plaintiffs provided
seven affirmations in which named plaintiffs and opt-in plaintiffs provided supporting
descriptions of their job duties. The court also took into consideration that approximately
forty opt-in plaintiffs from across the country had filed consents. The court rejected the
employer’s argument that conditional class certification should be denied because of the
varying job duties and performance of each plaintiff, stating the evidence on which it
relied would only be “relevant to determination of a stage two decertification issue after
discovery has closed.”
In Cox v. Healthcare Services Group,1115 an account manager filed suit against
his employer, a company that provides housekeeping and dietary management services
in health care facilities across the country. The plaintiff alleged that account managers,
who are sometimes also considered managers in training, perform non-exempt work,
work in excess of forty hours per week and are not paid overtime to which they are
entitled under the FLSA. The plaintiff sought conditional certification of two proposed
classes: (1) all employees who worked as managers in training or otherwise participated
in the defendant’s training program in Ohio during the last three years; and (2) all
employees who worked as account managers in Ohio during the last three years.
Noting that courts in the Sixth Circuit follow a two-stage certification process to
determine whether a proposed group of plaintiffs is “similarly situated” for purposes of
the FLSA, and that no appreciable discovery had taken place when the motion was
filed, the Ohio district court applied the more lenient notice standard. The plaintiff
submitted declarations from three account managers who participated in the
management in training program and four from district managers who supervise
account managers in Ohio, along with the defendant’s “Management Trainee Policy,”
which provided that managers in training were entitled to overtime pay. The court
granted the plaintiff’s motion for conditional certification, finding that the plaintiff made a
sufficient factual showing that he was similarly situated to potential opt-in plaintiffs in the
proposed classes. It further found that the defendant’s arguments and evidence that
account managers and managers in training were not similarly situated, and that
managers in training were paid overtime, were better considered at the second stage of
the action.
1115
2013 WL 2443785 (N.D. Ohio June 4, 2013).
269 In Cramer v. Bank of America,1116 loan officers and mortgage loan associates
brought suit against their employer, alleging that it failed to pay them overtime wages
even though they routinely worked in excess of 40 hours per week. The plaintiffs
asserted that loan officers and mortgage loan associates all had a common principal
duty of selling mortgage products to individual consumers. The plaintiffs further asserted
that their job performance was evaluated on the same basis, they perform largely the
same set of tasks, any one employee may fill in for another employee, and they
regularly share the same work space. The plaintiffs moved for conditional class
certification for two sub-classes: a loan officer class that included employees holding
seven job titles, and a second class comprised of employees holding three job titles.
The Illinois district court noted that the Seventh Circuit has yet to define the standard
that applies at the first stage, but that courts in the Northern District of Illinois uniformly
apply the “lenient” standard at the first stage. The court found that the plaintiffs made
the required modest factual showing that they and the members of the proposed first
subclass were similarly situated, and that they were injured by a common policy or plan
that violated the law. The court rejected the defendant’s argument that the employees
could not be similarly situated because of the differences among the job descriptions of
the putative class members because at the first stage, courts review the characteristics
of the putative class at a higher level of generality, and reserve greater scrutiny for the
second stage. The court also rejected the defendant’s argument that the plaintiffs were
exempt from the FLSA’s overtime pay requirement because it was premature to
address those issues before the close of discovery. The court did not rule on the
proposed second subclass pending additional briefing on whether the defendant treated
the proposed class members as exempt.
In Knaak v. Armour-Eckrich Meats, LLC,1117 employees of a food processing
facility brought a putative collective and class action against their employer for violations
of the FLSA because they alleged they performed unpaid work before their shifts, during
meal breaks, and after their shifts.1118 Specifically, the plaintiffs sought conditional
certification of all hourly employees who were required to wear protective gear or
sanitary clothing.1119 In determining whether a proposed class should be certified under
the FLSA, courts typically apply a two-stage process.1120 Plaintiffs have a low burden to
meet at the initial “notification stage.”1121 Courts apply a fairly lenient standard and rely
only on the “complaint and any affidavits that have been submitted” in determining
whether to grant conditional certification.1122 Although the defendant employer argued
that the proposed class was overly broad and notice should only be sent to the
production line employees, the court determined that the affidavits submitted by the
1116
2013 WL 6507866 (N.D. Ill. Dec. 12, 2013).
991 F. Supp. 2d 1052 (D. Minn. 2014).
1118
Id. at 1054.
1119
Id. at 1059.
1120
Id. at 1058.
1121
Id.
1122
Id. at 1059 (quoting Sjoblom v. Charter Commc’ns, LLC, 571 F. Supp. 2d 961, 967–68 (W.D.
Wis. 2008)).
1117
270 plaintiffs were sufficient to show that the proposed class was “similarly situated,” and it
saw “no reason to limit the scope of the plaintiffs’ claims at this early stage.”1123
B. Scope of Discovery Prior to Conditional Certification
In Nieves v. OPA, Inc.,1124 the plaintiff was a restaurant worker who sued for
unpaid overtime and sought class action status. He moved the court for a protective
order after defendant’s counsel, among other things, refused to agree not to question
plaintiff about his immigration status.1125 The court granted the protective order,
prohibiting inquiry into plaintiff’s immigration status, including by means of asking for
copies of tax returns.1126 While no Seventh Circuit case had decided the issue, the court
followed other circuit and district courts that had refused to allow inquiry into immigration
status.1127 Such inquiries were not likely to lead to the discovery of admissible evidence
under Federal Rule of Civil Procedure 26(b), inasmuch as the FLSA covers employees
who are undocumented.1128 Such inquiries would chill the exercise of rights under the
FLSA.1129
1. Cases Denying Discovery
In Ornelas v. Hooper Holmes Inc.,1130 two employees alleged overtime claims
against their employer on behalf of themselves and a proposed collective action of
others similarly situated. The two employees moved for conditional certification under
section 216(b), submitting declarations from the 6 additional witnesses identified in
initial disclosures, and seeking to provide notice of the overtime collective action to
“thousands.”1131 The employer sought additional discovery to oppose the employees’
motion for conditional certification, in the form of additional documents and depositions.
The court denied the employer’s request. The employer filed a motion for
reconsideration, which the court denied because the employer had been provided
depositions of the named plaintiffs and received answers to written discovery already.
And, the employer could not establish any need for further discovery to file an
opposition to the fairly lenient stage one standard for conditional certification under
section 216(b), as the employer would not be prejudiced. The court explained that the
stage one determination is conditional, and could be revisited after discovery, where the
employer would have the opportunity to show that any additional opt-in plaintiffs are not
similarly situated to the named plaintiffs.1132
1123
Id. at 1060.
948 F. Supp. 2d 887 (N.D. Ill. 2013).
1125
Id. at 890.
1126
Id. at 893.
1127
Id. at 892.
1128
Id. (citing 29 U.S.C. § 203(e)(1) (defining “employee”)).
1129
Id.
1130
2013 WL 3146887 (D.N.J. June 19, 2013).
1131
Id. at *1.
1132
Id. at *2.
1124
271 b. Cases Granting Notice and Noting No Need to Await Discovery
In Forauer v. Vermont Country Store, Inc.,1133 the plaintiff, who had been both a
telemarketer and customer service representative for the defendant, a telemarketing
company with several locations, filed a collective action under the FLSA seeking
damages for failure to pay minimum wages for work performed off-the-clock before and
after scheduled shifts. After the Vermont district court held that the plaintiff met her
burden for conditional certification, the defendant objected to the timing of the
notification to be sent to potential members of the collective group and argued that
notice should not issue until after discovery. In approving pre-discovery notice, the court
noted that early class notice facilitates the broad remedial purpose of the FLSA and
promotes efficient case management.1134 Further, it cited with approval cases holding
that notification before discovery may enable a more efficient resolution of underlying
issues.
In Frebes v. Mask Restaurants, LLC, tipped employees, on behalf of themselves
and others similarly situated, sued the restaurant they worked for along with two
individuals (collectively “defendants”) for violations of the FLSA.1135 Specifically, the
plaintiffs alleged that they received an incorrect subminimum wage rate due to the
defendants’ invalid use of a tip pool by requiring tipped employees to pay a percentage
of their tips to defendants who then distributed a portion of those tips to employees who
did not regularly receive tips. After determining that the plaintiffs were similarly situated
for purposes of conditional certification, the court addressed plaintiffs’ proposed notice
to class members. As a threshold matter, the defendants urged that even if the court
found similarity for the purposes of certification, the court should equitably toll the
limitations period and hold off on conditional certification and/or issuance of a notice to
allow the parties to engage in limited discovery. The court declined to delay conditional
certification or issuance of class notice. The defendants cited Bergman v. Kindred
Healthcare in support of their position, but the court distinguished Bergman because the
court needed extra time to review the plaintiffs’ briefs in that case.1136
2. Cases Granting Discovery
In Asirifi v. Omni Asset Management, LLC,1137 registered nurses filed a claim for
unpaid minimum wage and overtime compensation on behalf of themselves and
similarly situated employees. During discovery, the plaintiffs filed a motion to compel
after the defendant failed to produce information about comparators and potential opt-in
1133
2013 WL 3967932 (D. Vt. July 31, 2013).
Iglesias-Mendoza v. La Belle Farm, 239 F.R.D. 363, 367 (S.D.N.Y. 2007); Hoffman v. Sbarro,
Inc., 982 F. Supp. 249, 262 (S.D.N.Y. 1997).
1135
2014 WL 1848461 (N.D. Ill. May 8, 2014).
1136
Id. at *4.
1137
2013 WL 5781479 (D.N.J. Oct 25, 2013).
1134
272 plaintiffs.1138 The district court in New Jersey affirmed the magistrate judge’s order to
compel the defendant to provide the plaintiffs with information about potential class
members, finding that discovery of putative class members prior to conditional
certification is not improper.
In Bachayeva v. Americare Certified Special Services,1139 the district court
granted the plaintiffs’ request to distribute a questionnaire to 20% of the putative class.
The defendant moved to vacate the order, claiming that such pre-certification discovery
contravened relevant case law. The defendant also asserted that the questionnaire was
overbroad because it requested information during a six-year time period, whereas the
limitations period for claims under the FLSA is, at most, three years. The court rejected
both arguments. First, the court determined that several other courts permitted the use
of questionnaires pre-certification. The court also recognized that the plaintiffs’ state
wage and overtime claims were governed by a six-year statute of limitations, and,
therefore, the time period covered by the questionnaire was permissible.
3. Cases Addressing Whether Discovery of Names and Addresses of
Potential Opt-In Plaintiffs Is Appropriate in Advance of Conditional
Certification
In Asirifi v. Omni Asset Management, LLC,1140 a group of registered nurses filed
a claim seeking unpaid minimum wage and overtime compensation on behalf of
themselves and similarly situated employees. During discovery, the plaintiffs filed a
motion to compel after the defendant failed to produce information about comparators
and potential opt-in plaintiffs.1141 The district court in New Jersey affirmed the magistrate
judge’s order to compel the defendant to provide plaintiffs with information about
potential class members, finding that discovery of putative class members prior to
conditional certification is not improper.
In Jenkins v. White Castle Management Co.,1142 a fast food restaurant worker
sued to recover overtime wages under the FLSA, Illinois Minimum Wage Law (“IMWL”),
and Illinois Wage Payment Collection Act (“IWPCA”). The plaintiff moved to compel the
defendant to respond to interrogatory responses and document requests seeking
information about putative class and collective action members. The defendant refused
to produce discovery responses related to any current or former employee other than
the only plaintiff in the case at the time of the dispute. The defendant argued these
requests as to non-parties or potential future parties or class members amounted to a
“fishing expedition” because at the time of the requests, no class or collective action had
been certified by the court. The court granted the plaintiff’s motion to compel, noting that
1138
Id. at *1.
2013 WL 4495672 (E.D.N.Y. Aug. 20, 2013).
1140
2013 WL 5781479 (D.N.J. Oct. 25, 2013).
1141
Id. at *1.
1142
2013 WL 5663644 (N.D. Ill. Oct. 17, 2013).
1139
273 it was not persuaded by the “fishing expedition” terminology. In so holding, the court
noted that the named plaintiff would face some burden of proof in filing his motions for
class and collective certification, and to deny the opportunity to seek and obtain
discovery information relating to the class and collective members and issues of
commonality relating to the class and collective members would prejudice the named
plaintiff’s ability to meet his burden on those motions.
In an appeal of a Nevada district court decision, the Ninth Circuit in Valdez v. Cox
Communications Las Vegas, Inc.1143 affirmed the denial of a cable installers’ request for
putative class member names and addresses based upon the fact that the plaintiff had
previously accepted a Rule 68 offer of judgment, which mooted his claim. The plaintiff
claimed that the defendants failed to compensate him, and other similarly situated
installers, for all overtime hours worked. After the complaint was filed, the plaintiff filed a
motion seeking the name and address of all putative class members. Before the district
court could rule on the motion, the plaintiff accepted an offer of judgment and the district
court entered a consent judgment in favor of the plaintiff. Based on the accepted offer,
the district court entered an order disqualifying the plaintiff as a class representative.
Thereafter, another installer moved to intervene in the action, which the district court
denied. The Ninth Circuit affirmed.
In Palmer v. Priority Healthcare, Inc.,1144 a licensed practical nurse brought
overtime and other claims under the FLSA against her employer, alleging that the
employer misclassified her and other employees as independent contractors and
retaliated against her and others after she filed suit. The plaintiff filed a motion for a
temporary restraining order and preliminary injunction seeking, among other things, that
the court order the defendants to provide the names and addresses of potential opt-in
plaintiffs and provide notice to such individuals.1145 A district court in Mississippi noted
that the request for this relief was not properly brought as a request for a preliminary
injunction, but rather as a motion for conditional certification of a collective action. It
further noted that providing notice to the class members was not appropriate “unless
and until the court determines that a collective action should be certified.”1146 It
concluded that the plaintiff’s motion for a preliminary injunction “bypassed the
requirements” for a motion for conditional certification, and that it would wait for a
motion for conditional certification to be filed before determining whether to conditionally
certify the class and provide notice to the potential class members.1147
In Zheng v. Good Fortune Supermarket Group,1148 the plaintiff, who worked as a
clerk at a supermarket, brought a collective action lawsuit against her employer alleging
1143
557 F. App’x. 655 (9th Cir. 2014).
2013 WL 5771662 (S.D. Miss. Oct. 24, 2013).
1145
The motion also sought reinstatement of two individuals who were not named plaintiffs and
had not filed a written consent to be opt-in plaintiffs. See Ch. 19.II.B.
1146
Id. at *4.
1147
Id. at *5.
1148
2013 WL 5132023 (E.D.N.Y. Sept. 12, 2013).
1144
274 that it failed to pay her regular and overtime wages based on a policy of time shaving.
The court denied the plaintiff’s motion for conditional certification because she had
failed to identify a single employee who purportedly suffered from the alleged time
shaving practice.1149 In tandem with her request for conditional certification, the plaintiff
sought an order for the disclosure of names, titles, compensation rates, and contact
information of prospective opt-in plaintiffs.1150 The court recognized that upon
certification of an FLSA collective action, it is appropriate for a court to permit the
discovery of the names and addresses of employees.1151 But, where a party, such as
the plaintiff, failed to make a modest factual showing of the existence of similarly
situated potential plaintiffs, such discovery was unwarranted.1152
In Chhab v. Darden Restaurants, Inc.,1153 servers and bartenders alleged that the
defendant, a restaurant chain, violated the FLSA by: (1) not paying them minimum wage
for non-tip-producing duties; (2) permitting non-tipped employees (i.e., cooks and
dishwashers) to participate in their tip pool; and (3) requiring them to work off-the-clock.
The New York district court granted the plaintiffs’ motion for conditional certification and,
in doing so, addressed the plaintiffs’ request for, among other things, the phone
numbers and email addresses of the putative class members, which the defendant
objected to providing because it believed that doing so might “encourage plaintiffs’
counsel to harass potential collective members.” Although the court expressly stated
that it did not adopt the defendant’s suggestion that plaintiffs’ counsel would harass
putative class members, the court nonetheless denied the plaintiffs’ request for phone
numbers and email addresses without any further explanation.
C. Issues Courts Have Considered in Determining Whether to Grant
Conditional Certification
1. Geographical Scope
In Aguayo v. Bassam Odeh, Inc.,1154 seven current or former Jack In the Box
employees a franchisee for failure to pay overtime under the FLS
`