2013 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 20-22, 2013 Aaron D. Kaufmann, Co-Chair Leonard Carder, LLP akaufmann@leonardcarder.com Lawrence Peikes, Co-Chair Wiggin and Dana LLP

lpeikes@wiggin.com

Preface

This report covers the period June 1, 2011 through May 31, 2012. We anticipate that it will be combined with prior reports and published as a cumulative supplement to The Fair Labor Standards Act. It also serves as the 2013 report of the Fair Labor Standards Act Subcommittee.

Acknowledgement

The Subcommittee's Chairpersons Aaron D. Kaufmann and Lawrence Peikes acknowledge with great appreciation the following authors and editors: Michael A. Alaimo Kristen H. Albertson (Editor) Jennifer Marciano Amato Steven R. Anderson Rebekah L. Bailey Allison D. Balus Paul L. Bittner (Editor) Meg Thoma Blackwood Emily Blaiss Andrew D. Bobrek Robert A. Boonin (Editor) David Borgen (Sr. Editor) J. Derek Braziel (Sr. Editor) Megan I. Brennan L. Amber Brugnoli-O'Hara Eve H. Cervantes (Sr. Editor) Andrew G. Chase Brian J. Christensen Joel M. Cohn (Sr. Editor) Jac A. Cotiguala Bruce Michael Cross Kristyn Bunce DeFilipp Aashish Y. Desai (Editor) Reena I. Desai Matthew S. Disbrow Eugene J. Droder III Douglas H. Duerr Susan E. Ellingstad (Editor) Susan Nadler Eisenberg (Sr. Editor) Daniel Field Michele R. Fisher (Editor) Craig S. Friedman Keith D. Greenberg Jennifer S. Greenlief J. Richard (Rick) Hammett Adam W. Hansen Emily Paige Harbison Wendy J. Harrison C. Andrew Head Darla Hill John S. Ho (Editor) Laura L. Ho (Editor) Howard B. Hoffman

Estelle Pae Huerta Zach P. Hutton Todd Jackson (Editor) Benjamin R. Jones Laura M. Jordan Aaron D. Kaufmann (Editor-in-Chief) Ellen C. Kearns (Sr. Editor) Jennifer Keating Jonathan A. Keselenko (Editor) Michael J. Killeen (Editor) Matthew W. Lampe Wayne D. Landsverk Elizabeth C. Lawrence (Sr. Editor) Jay P. Lechner (Editor) Rachel Lev Arthur Liou Kathy Speaker MacNett Matthew S. Makara (Asst. Editor) Erin L. Malone (Editor) Jason C. Marsili Brian D. Massatt David E. Mastagni Bernard R. Mazaheri (Editor) Dennis M. McClelland (Editor-in-Chief) Janet Goldberg McEnery Gregory K. McGillivary (Sr. Editor) T. Matthew Miller Dale J. Morgado Elizabeth C. Morris Joseph K. Mulherin Jason Nickerson Laura E. O'Donnell Nathan J. Oleson (Sr. Editor) Francis J. (Tripper) Ortman, III (Editor) Christopher M. Pardo (Editor) Kristin Taylor Parsons J. Day Peake III Lawrence Peikes (Editor-in-Chief) Bridget R. Penick Alexis Pheiffer David P. Pogrel (Editor) David A. Prather Felicia R. Reid (Editor)

Nantiya Ruan (Editor) Reed L. Russell (Sr. Editor) Jahan Sagafi Maureen A. Salas (Editor) Bethany C. Salvatore Susan Salzberg Karla E. Sanchez (Editor) Lisa (Lee) A. Schreter (Editor) Kelly M. Scindian Derek P. Scott (Editor) Mary E. Sharp W.V. Bernie Siebert Salvador P. Simao (Editor) Bonnie M. Smith Kristen E. Smith

Patrick J. Solomon Angelo Spinola Alexandra M. Steinberg Justin M. Swartz (Editor) Stephanie L. Sweitzer J. Nelson Thomas (Sr. Editor) Larry L. Turner Juno Turner Jason Vogt-Lowell Jennifer L. Watson Joshua B. Waxman (Editor) Douglas M. Werman (Editor) Julie Wilensky

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Chapter 2

OPERATIONS AND FUNCTIONS OF THE DEPARTMENT OF LABOR

III. Regulations, Interpretations, and Opinions

A. Deference Standards

2. Deference Under Chevron

In Josendis v. Wall to Wall Residence Repairs, Inc.,1 a construction worker sued defendant for unpaid wages under the Act. The defendant moved for summary judgment contending, among other things, it was not a covered enterprise. Plaintiff argued enterprise coverage based on 29 C.F.R. § 776.23(c), which purports to bring “within the scope” of the FLSA all employees engaged in construction work that is “closely or intimately related” to a covered enterprise. Plaintiff argued the court should apply Chevron deference to the regulatory language and find coverage by virtue of his remodeling work on a client’s premise, which he contends to be an “enterprise engaged in commerce or the production of goods for commerce” under 29 U.S.C. § 203(s)(1)(B). The district court rejected this argument and the Eleventh Circuit affirmed by adopting the lower court’s reasoning that the statutory language that an employee must be employed “in an enterprise engaged in commerce or in the production of goods for commerce”2 could only be construed to cover employees actually employed by the covered enterprise and cannot “stretch so far as to accommodate employees employed by a third party that performs sporadic work for a covered enterprise.”3 The court opined that Chevron deference applies only when an agency properly exercises its authority, expressly or implicitly delegated by Congress, to interpret an ambiguous statute, and then promulgate rules and regulations carrying the force of law. Such deference, however, does not apply when a statutory command of Congress is unambiguous or the regulation is “arbitrary, capricious, or manifestly contrary to the statute.” Here, the court found the FLSA's text concerning enterprise coverage to be clear and unambiguous in that an employee must be employed “in an enterprise engaged in commerce or in the production of goods for commerce” to be entitled to enterprise coverage. Thus, defendant’s motion was properly granted because plaintiff only worked only for defendant, an entity that plaintiff could not demonstrate was involved interstate commerce or made the requisite amount per year to qualify for enterprise coverage.

1 662 F.3d 1292 (11th Cir. 2011). 2 29 U.S.C. §207(a)(1). 3 Josendis, 662 F.3d at 1320.

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3. Auer Deference

In Mullins v. City of New York,4 police sergeants filed an FLSA claim against the City alleging they were misclassified as exempt. The district court entered judgment for defendant finding that the plaintiffs were executive exempt employees and plaintiffs appealed. On appeal, the Secretary of Labor filed an amicus brief on the issue of whether plaintiffs satisfied the primary duty test of the executive exemption. In reversing the district court, the Second Circuit first noted that deference to an agency’s interpretation is owed only when the regulation at issue is ambiguous. The court then found the first responder regulation ambiguous particularly when compared to the definition of “management” under 29 C.F.R. § 541.102. The court continued that the Secretary’s interpretation of the regulation is entitled to controlling deference, even if articulated in an amicus brief, unless it is plainly erroneous or inconsistent with the regulations or there is any other reason to suspect that the interpretation does not reflect the agency’s fair and considered judgment on the matter in question. Finding none of these exceptions to apply to the Secretary’s brief, the court noted that the Secretary’s interpretation was due controlling Auer deference and held the majority of plaintiffs’ time was non-exempt work in the field such that the limited amount of exempt management duties was insufficient to render their primary duty “management” as defined by the executive exemption.

B. Deference as Applied to Actions of the DOL

1. Regulations and Interpretations

In Burden v. SelectQuote Ins. Services,5 plaintiff filed a putative class action against his employer asserting that he and other insurance agents had been misclassified as exempt. Defendant moved for summary judgment arguing that plaintiffs fell within the “retail or service establishment” exemption. In denying the motion, the court relied on the Department of Labor’s interpretive regulations at 29 C.F.R. § 779.317, which provides a partial list of establishments that lack a retail or service nature, which includes insurance brokers and agents. The court rejected the defendant’s argument urging it to disregard the regulation as an outdated interpretation of what is considered a retail or service establishment. Instead, the court ruled that there was a rational basis for finding that insurance establishments, including insurance brokers, were not exempt as a retail or service establishment and that the regulation was a persuasive embodiment of the Department of Labor’s body of experience and informed judgment.

2. Opinion Letters/Administrator Interpretations

In Nigg v. U.S. Postal Service, 6 postal inspectors brought overtime claims alleging they were improperly classified as exempt employees. The district court initially

4 653 F.3d 104 (2d Cir. 2011). 5 2012 WL 216245 (N.D. Cal. Jan. 24, 2012). 6 829 F. Supp. 2d 889 (C.D. Cal. 2011).

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granted summary judgment. The Ninth Circuit reversed in part and remanded. On remand, both parties moved for summary judgment. The court denied the motion with respect to the application of the administrative exemption but held that the primary duty of postal inspectors relates to the general business operations of the Postal Service and its customers. In so holding, the court found 29 C.F.R. § 541.3(b) to be ambiguous and thus turned to a February 15, 2007 DOL Opinion Letter finding postal inspectors to be administratively exempt because their primary duty involved “the performance of work directly related to the general business operation of their employer, including the exercise of discretion and judgment.”7 The court noted that it must defer to the agency’s interpretation of the regulation unless it is plainly erroneous or inconsistent with the regulation or there is any other reason to suspect that the interpretation does not reflect the agency’s fair and considered judgment. The court continued by finding the Opinion Letter was not clearly erroneous and the reasoning comported to the court’s interpretation and thus determined it was instructive. In Marshall v. Amsted Rail Co., Inc.,8 plaintiffs brought a putative action against defendant for compensation performing certain donning and doffing activities. Defendant moved for summary judgment on the ground that donning and doffing of personal protective equipment is excluded under Section 203(o). In denying the motion, the district court held that certain general policy statements and opinion letters addressing the effect of the Portal-to-Portal Act on the determination of what constitutes principal activity are not entitled to Chevron deference otherwise accorded to an agency’s interpretation of an ambiguous statute. Instead, they are entitled to respect to the extent they have the power to persuade. The court then refused to find a 2007 Department of Labor Opinion Letter9 relating to the application of 29 U.S.C. 203(o) persuasive. The court noted that the Opinion Letter’s conclusion went beyond the language of the statute without offering any explanation for its reasoning and that the Department of Labor had abruptly changed course in 2010 reaching a contrary conclusion on the same issue. In Helmert v. Butterball, LLC,10 poultry processing workers filed minimum wage and overtime claims challenging the employer’s policy of paying “plug time” in the amount of six minutes per day for donning and doffing, regardless of the amount of time the employees actually spent in such activities. The employer moved for summary judgment relying on a provision in the DOL Field Operations Handbook that authorizes employers to use averages as opposed to actual work time. In denying the employer’s motion, the court rejected the Field Operations Handbook provision as “unpersuasive” because the Wage and Hour Administrator issued an Opinion Letter in January of 200111 stating that a company must record and pay for each employee’s actual hours of work. The court found the Opinion Letter to be persuasive and supported by the regulations and case law.

7 2007 WL 541651 (Feb. 15, 2007). 8 817 F. Supp. 2d 1066 (S.D. Ill. Sept. 20, 2011). 9 DOL Opinion Letter FLSA 2007-10, 2007 WL 2066454 (May 14, 2007). 10 Helmert v. Butterball, LLC, 805 F. Supp. 2d 655 (E.D. Ark. 2011). 11 DOL Opinion Letter, 2001 WL 58864 (Jan. 15, 2001).

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In Lewis v. Huntington National Bank,12 mortgage loan officers alleged they were improperly classified as exempt. The district court denied the defendant’s motion for partial summary judgment finding genuine issues of material fact regarding defendant’s good faith defense. In so holding, the court relied on a 2010 Administrator’s Interpretation (“AI”) that found the primary duty of a mortgage loan officer was sales and not exempt administrative work. The court rejected the defendant’s argument that the AI was unlawfully promulgated because it was published without being subject to a notice and comment period. The court noted that the AI was best categorized as an interpretive rule, which did not create substantive law but merely clarified or explained existing law or regulation. As such the Administrative Procedures Act exempts interpretive rules from the notice and comment. The court also relied on the fact that in the AI, the Wage and Hour Division expressly withdrew prior opinion letters and admitted the AI unambiguously represented a change in the Division’s interpretation of its administrative exemption regulation. Finally, the court found that the AI was not inconsistent with the plain language of the regulation.

4. Field Operations Handbook (FOH)

In Helmert v. Butterball, LLC,13 poultry processing workers filed minimum wage and overtime claims challenging the employer’s policy of paying “plug time” in the amount of six minutes per day for donning and doffing, regardless of the amount of time the employees actually spent in such activities. The employer moved for summary judgment relying on a provision in the DOL Field Operations Handbook that authorizes employers to set up a formula by which employees are given amounts of time to perform clothes changing and wash-up activities, provided that the time set is reasonable in relation to the actual time required to perform such activities. In denying the employer’s motion, the court rejected the Field Operations Handbook provision as “unpersuasive” because the Wage and Hour Administrator issued an Opinion Letter in January of 200114 stating that a company must record and pay for each employee’s actual hours of work.

6. Other DOL Materials

In Koellhoeffer v. Plotke-Giordani15 plaintiff brought an action for tip pooling violations under the FLSA. The defendant filed a motion for summary judgment, contending, among other things, that the court need not independently analyze the validity of its tip pooling policy because the U.S. Department of Labor had investigated the tip-pooling policy approximately eight years before the lawsuit was filed and determined it was compliant with the FLSA. In rejecting this argument, the court refused to give any deference to the "the results of a field investigation, i.e., the notes and conclusions of a single USDOL investigator." The court opined that such an

12 838 F. Supp. 2d 703 (S.D. Ohio 2012). 13 Helmert v. Butterball, LLC, 805 F. Supp. 2d 655 (E.D. Ark. 2011). 14 DOL Opinion Letter, 2001 WL 58864 (Jan. 15, 2001). 15 2012 WL 846670 (D.Colo. March 12, 2012).

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investigation does not even rise to the level of an opinion letter or other statement of agency enforcement policy.

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Chapter 3

COVERAGE II. The Employer-Employee Relationship

In Martin v. Spring Break ’83 Production, LLC, et al.,1 plaintiffs employed as

“grips” during the filming of a motion picture filed an action for unpaid wages under the FLSA and Louisiana state law. Plaintiffs named seven individual defendants in addition to Spring Break ’83 Production. Those defendants moved for summary judgment on the basis that Spring Break ’83 Production was plaintiffs’ sole employer during production of the movie. Plaintiffs alleged that the individual defendants either directly supervised employees or participated in employee compensation. Recognizing that numerous individuals within an organization can be “employers” under the FLSA, the district court discussed the Fifth Circuit’s five-factor “economic realities” test to determine “dependency,” the principal criterion of an employer/employee relationship: “(1) [T]he degree of control exercised by the alleged employer; (2) the extent of the relative investments of the worker and alleged employer; (3) the degree to which the worker’s opportunity for profit and loss is determined by the alleged employer; (4) the skill and initiative required in performing the job; and (5) the permanency of the relationship.” The court found the five-factor analysis ill-fitted absent an argument that plaintiffs were self-employed, and looked for other evidence of dependency. Finding no evidence of substantial interaction between plaintiffs and the individual defendants, or that any of the defendants “could independently exercise control over the work situation,” the court held the individual defendants were not employers under the FLSA or the LWPA and granted their motion for summary judgment.

In Solis v. Cindy's Total Care, Inc.,2 the Secretary of Labor brought an action in

the Southern District of New York against a nail salon, its owner, Nam Saeng Sim, and her husband, Byung Sook Kim, for failure to pay overtime wages to the salon’s 32 employees and to maintain complete and accurate wage and hour records. The Secretary sought liquidated damages and to enjoin the defendants from further violating the FLSA. Recognizing that an individual can simultaneously have multiple employers under the FLSA, the court applied the “economic reality” test, which considers whether the individual defendant: (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. After a three-day bench trial, the court held that the salon and Ms. Sim were employers under the FLSA. The court held, however, that the owner’s husband, Mr. Kim, was not an employer of the salon’s employees. While Mr. Kim handed out paychecks to the employees, posted break schedules on the wall, and sat at the check-out register while

1 797 F. Supp. 2d 719 (E.D. La. 2011). 2 2012 WL 28141 (S.D.N.Y. Jan. 5, 2012).

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visiting with his wife, the court found that this was not sufficient to show that had operational control over the employees; he also lacked the power to hire and fire, was not a corporate office,; was not involved in the day-to-day management of the salon, and was not even paid by the salon. The court entered judgment, including damages and an injunction, against the salon and Ms. Sim, but in favor of Mr. Kim.

In Smith v. Nagai,3 the plaintiff, a former cook of defendant restaurant, alleged

the restaurant and its owner failed to pay him overtime wages in violation of the FLSA and New York State Labor Law. After default judgment was entered against the defendants, plaintiff dismissed his action against the restaurant and sought to recover damages from its owner. Because the owner failed to appear at the damages hearing, the court’s decision rested entirely on the evidence presented by the plaintiff. The court found plaintiff was a “covered employee” under the FLSA, which specifically defines the term “employee” to include restaurant cooks.4 The court also held the restaurant owner to be an “employer” under the FLSA, which defines an employer as “any person acting directly or indirectly in the interest of an employer in relation to an employee.”5 The court noted that “’the overwhelming weight of authority is that a corporate officer with operational control of a corporation’s covered enterprise is an employer along with the corporation…”6 The court found the owner, who was also the Chief Executive Officer of the restaurant, jointly and severally liable for FLSA violations.

In Torres v. Gristede’s Operating Corp.,7 the employees brought unspecified

claims for damages under the FLSA and the New York Labor Law against a supermarket and the sole owner, president, and CEO of the supermarket and its parent company. The plaintiffs moved for partial summary judgment on whether the individual defendant was an “employer” within the meaning of the FLSA. Although the individual defendant’s affidavit demonstrated that he had “absolute control” of the company’s operations, he argued he is not an employer under the “economic reality” test because only evidence indicating direct control over the employees at issue should be considered. The court rejected that argument, noting that under Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132 (2d Cir. 1999), it must consider the totality of the circumstances.8 The court noted that for purposes of analyzing the totality of the circumstances and to “avoid having the test confined to a narrow legalistic definition,” it does not matter that the individual defendant delegated powers to others if he had those powers to delegate.9 It concluded that “there is no aspect of [the company’s] operations from top to bottom and side to side which is beyond [the individual defendant’s] reach” and “[t]here is no area of [the company] which is not subject to his control, whether he chooses to exercise it.”10 Accordingly, the court granted plaintiff’s motion for partial

3 2012 WL 2421740 (S.D.N.Y. May 15, 2012). 4 29 U.S.C. §203(e). 5 29 U.S.C. §203(d). 6 2012 WL 2421740, at *2 (citing Moon v. Kwon, 248 F. Supp. 2d 201, 237 (S.D.N.Y. 2002)) (internal quotation omitted). 7 2011 WL 4571792 (S.D.N.Y. Sept. 9, 2011). 8 Id. at *2. 9 Id. at *1. 10 Id. at *3.

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summary judgment and held that the individual defendant is an employer within the meaning of the FLSA and New York law.

A. “Suffer or Permit to Work”

In Stickle v. SCI Western Market Support Center, L.P., 11 funeral home

employees alleged that defendant funeral homes and affiliated corporations failed to properly compensate them for “community work,” break time, on-call work, and training time. Defendants moved for partial summary judgment, arguing there was no written policy requiring uncompensated overtime, and, to the contrary, the employer had a corporate policy requiring employees to report overtime absolved them of liability for plaintiffs’ alleged unreported overtime. The court held that whether defendants’ policies required reporting of overtime is immaterial, as it is sufficient if “[t]he employer knows or has reason to believe” the employee is working overtime. Citing regulations requiring an employer to exercise control to ensure unwanted overtime work is not performed, the district court found that promulgating a policy is insufficient to grant summary judgment to defendants as it would permit an employer to shield itself from FLSA liability by instituting but not enforcing written rules.

B. The Economic Reality Test The plaintiff in Freeman v. Key Largo Volunteer Fire and Rescue Dep’t., Inc.,12 a

former firefighter, sued the fire district and volunteer fire department for failure to pay minimum wage and overtime compensation, alleging he was not a volunteer but a paid employee. The fire district moved to dismiss as the plaintiff was not an employee of the district. The court applied the economic reality test to evaluate whether plaintiff was an employee of the district.13 The court analyzed whether the district had the power to hire or fire plaintiff, whether the district supervised or controlled the conditions of employment, and whether the district determined the rate pay for plaintiff. The court held that plaintiff’s complaint did not allege sufficient facts under the economic realities test to show that plaintiff was an employee of the district. The complaint did not allege the district had any control over plaintiff, but rather that plaintiff alone chose his work schedule based on his needs; the district did not set the rate of pay but instead provided the budget for all expenses of the volunteer department; and, although having authority over hiring and firing of “paid personnel,” the district did not have any say in whether plaintiff, a volunteer, was hired or fired.14 Because these allegations were insufficient to allege an employment relationship between the district and plaintiff, the court granted the district’s motion to dismiss.

In Gray v. Powers,15 a bartender sued his former employer, Pasha Entertainment

Group, LLC ("PEG"), and one of its owners, Michael Warren Powers, claiming minimum

11 2012 WL 245087 (D. Ariz. Jan. 25, 2012). 12 840 F. Supp 2d 1274 (S.D. Fla. Jan. 20, 2012). 13 Id. at 1278. 14 Id. 15 673 F.3d 352 (5th Cir. 2012).

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wage violations under the FLSA. Plaintiff argued that Powers, who was a member of the LLC, was an "employer" under the FLSA and should be held personally liable for PEG's violations. On appeal, the Fifth Circuit affirmed the district court's grant of summary judgment to defendant Powers because he was not an employer under the FLSA.16 The FLSA defines an employer as "any person acting directly or indirectly in the interest of an employer in relation to an employee." The Fifth Circuit uses the "economic reality" test to determine the existence of an employer/employee relationship. Under this test, the court considers whether the employer: 1) possesses the power to hire and fire employees; 2) supervises and controls employee work schedules or conditions of employment; 3) determines the rate and method of pay; and 4) maintains employment records. Although each element need not be present to find the individual is acting as an employer, the court found the defendant did not meet any of the four factors of the test: the defendant was not involved in the day-to-day operations of PEG's business, Pasha Lounge; he rarely visited Pasha, and then mainly for social, not management, reasons; and although he occasionally signed checks for Pasha, he did not determine the employees' rates or method of pay. Thus, the defendant did not have operational control over any of Pasha's employees and was not an employer for purposes of the FLSA.17

In Guijosa-Silva v. Wendell Roberson Farms, Inc.,18 a group of former H-2A

guest workers brought a lawsuit against their employer, a family-owned farming operation, and individual defendants, alleging retaliation under the FLSA. The parties filed various cross-motions for summary judgment, including plaintiffs’ motion for partial summary judgment that all defendants were “employers” under the FLSA. In deciding this issue, the district court evaluated whether "as a matter of economic reality the employee was dependent upon the defendant." For agricultural workers, the inquiry looks to three factors: "(1) whether the alleged agricultural employer has the power to direct, control, or supervise the worker of the work performed; (2) whether the alleged agricultural employer has the power to hire or fire, modify the employment conditions, or determine the pay rates or the methods of wage payment for the worker; and (3) the alleged employer's ownership in the employing company and whether the individual exercises significant control over the business's functions."19 The court granted partial summary judgment to plaintiffs, holding that the farm's Vice President and Secretary/Treasurer were employers under the FLSA because they were in direct communication with the workers' supervisor in the fields about the work needed to be done and how many workers were needed to do it; they made the ultimate decision not to rehire the employees; they controlled the employees' work environment, determined pay and executed paychecks; both were majority shareholders; and both were heavily involved in the management decisions of the farm.20

16 PEG suffered an adverse judgment at the trial court level because it failed to appear at trial. Thus, Defendant Powers was the only remaining defendant on appeal. 17 673 F.3d at 352–57. 18 2012 WL 860394 (M.D. Ga. Mar. 13, 2012). 19 Id. at *17. 20 Id. at *17–18.

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In Jean-Louis v. Metropolitan Cable Communications, Inc.,21 plaintiffs brought a putative collective action under the FLSA for unpaid overtime on behalf of technicians who installed telecommunications equipment for a contractor of Time Warner Cable. The district court granted Time Warner’s motion for summary judgment on the grounds that the company did not jointly employ its contractor’s technicians. The court described the economic reality test as dependent upon the “circumstances of the whole activity,” but stated the “overarching concern is whether the alleged employer possessed the power to control the workers in question.”22 The court concluded that Time Warner did not exercise “formal control” over the technicians because it did not have authority to hire or fire them, control their work schedules, determine the rate and method of their compensation, or maintain employment records concerning them. The court also concluded that Time Warner did not exercise “functional control” over the technicians because they did not work on Time Warner’s premises; the contractor for which they worked had its own resources and could seek work from any other cable company at any time; and Time Warner did not supervise the technicians’ work apart from reviewing “quality and time of delivery.” The court did not deem the fact that the contractor worked exclusively for Time Warner sufficient to establish an employment relationship because “almost every other factor” weighed against finding an employment relationship.

In Davis v. Four Seasons Hotel Ltd.,23 a group of resort food and beverage

servers filed a class action under Hawai’i contract and wage and hour laws against the defendant resorts operator for retaining portions of service charges added to food and beverage bills. After significant preliminary motion practice, including certifying one question for review by the Hawai’i Supreme Court, the plaintiffs filed a motion for partial summary judgment on their claims of improper retention of compensation and unpaid wages in violation of state law. In response, the defendant argued, among other things, that such claims were preempted by the FLSA. The defendant also argued it was not plaintiffs’ employer, but rather, plaintiffs were employed by two separate entities that managed the resorts’ day-to-day operations. According to the defendant, these other entities not only operated their respective resorts on a day-to-day basis, but also each separately controlled its own payroll, had its own revenues, issued its own financial statements, made its own human resources decisions, and had separate human resources departments. After finding that the FLSA did not preempt plaintiffs’ state law claims, the district court analyzed the defendant’s employer status under the FLSA’s economic reality test.24 The court found the “‘overarching concern is whether the alleged employer possessed the power to control the worker in question.’”25 Because defendant did not dispute that it had the power to control the plaintiffs in their capacity as resort servers, nor that it was the entity that retained portions of the service charges,

21 838 F. Supp. 2d 111 (S.D.N.Y. 2011). 22 Id. at 121 (citation omitted). 23 810 F. Supp. 2d 1145 (D. Hawai’i 2011). 24 The court conducted a similar analysis under state law. See id. at 1158. 25 Id. (quoting Zheng v. Liberty Apparel Co., Inc., 355 F.3d 61, 66 (2d Cir. 2003)).

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the court found as a matter of economic reality that defendant was one of the plaintiffs’ employers and granted plaintiffs’ motion for summary judgment.26

In Keeton v. Time Warner Cable, Inc., 27 employees of a cable installation

company that provided services for defendant cable company sued the cable company for unpaid overtime under the FLSA and Ohio state law. Plaintiffs sought to hold defendant cable company liable under a joint employer theory. Defendant moved for summary judgment. Applying the six factor economic realities test articulated in Donovan v. Brandel,28 the district court found the following facts: plaintiffs did not have a specific termination date; their full work schedule effectively precluded plaintiffs from performing work for any other company; defendant controlled their opportunity for profit and loss by dividing and reassigning extra work; defendant performed quality control inspections; defendant approved time off and was involved in the organization and distribution of work; and the cable installation work was integral to the cable company’s business. Because at least four of the six factors could be found to weigh in favor of finding an employment relationship, the court denied defendant’s motion for summary judgment. The district court also concluded defendant had failed to demonstrate that it was not a joint employer under the factors articulated in International Longshoremen’s Ass’n, 29 including: (1) the interrelation of operations between the companies; (2) common management; and (3) centralized control of labor relations and common ownership.30

C. Employee or Independent Contractor

In Barlow v. C.R. England, Inc.,31 plaintiff worked for the company both as an

employee-security guard and a janitor-independent contractor. Plaintiff filed suit for unpaid overtime and defendant moved for summary judgment, arguing that the FLSA did not apply to the plaintiff’s janitorial work. After applying a nine-part economic reality test, the district court granted defendant’s motion, concluding that plaintiff acted as an independent contractor in his janitorial capacity.32 The court noted that plaintiff was licensed to provide these services through an incorporated business that he owned with another person. Plaintiff invoiced defendant, defendant made checks payable to plaintiff’s company, and plaintiff filed taxes under his incorporated business. Finally, the

26 810 F. Supp. 2d at 1158. 27 2011 WL 2618926 (S.D. Ohio July 1, 2011). 28 736 F.2d 1114, 1116 (6th Cir. 1984). The Donovan factors include: (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 the work is performed; and (6) whether the work performed is an integral part of the alleged employer's business. Id. at 1117. 29 Int’l Longshoremen’s Ass’n, AFL-CIO, Local Union No. 1937 v. Norfolk So. Corp., 927 F.2d 900 (6th Cir. 1991). 30 2011 WL 2618926, at *7. 31 816 F. Supp. 2d 1093 (D. Colo. 2011). 32 Id. at 1107.

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court found evidence to suggest that plaintiff had freedom to decide how to accomplish his janitorial tasks, even though the defendant told him which tasks to perform.33

In Clincy v. Galardi South Enterprises, Inc.,34 exotic dancers brought a collective

action under the FLSA against an adult entertainment club and its operator for payment of overtime and minimum wages. The district court bifurcated the case to first determine whether plaintiffs were independent contractors or employees. The parties cross-moved for summary judgment. The court rejected defendants’ contention that plaintiffs were required to establish they were “putative” employees before the court could consider the economic realities of their relationship to determine whether an employee/employer relationship existed. Applying a six-factor test, the court found defendant club operator exercised significant control over plaintiffs’ scheduling and appearance; plaintiffs' opportunity for profit or loss depended largely on the operator's decisions about advertising and promotions; plaintiffs made minimal investments in materials compared to defendants; special skills were not required; and exotic dancing was integral to the club, all favoring a finding of an employer-employee relationship. The court found plaintiffs were employees as a matter of law, granting plaintiffs’ motion and denying defendants’ motion.

In Calle v. Chul Sun Kang Or,35 plaintiff worked for defendant construction

company installing doors, windows, and siding for defendant's residential clients. Plaintiff alleged he worked approximately 66 hours per week, but was paid a flat rate rather than an overtime rate for hours worked over 40 each week. Defendant moved to dismiss or for summary judgment on the grounds that plaintiff was an independent contractor.36 The district court rejected defendant’s focus on the independent contractor label affixed to their relationship and applied the six-factor “economic reality” test to determine whether an employment relationship existed.37 The court found that at least five of the six factors favored employment status: defendant exercised a significant degree of control over the manner in which plaintiff performed his work, including picking him up at a specified bus stop each morning, driving him to job sites, instructing him about the work to be performed; defendant set plaintiffs’ work hours and pay rate; defendant supervised the work; plaintiff had with a long-term, exclusive relationship with defendant; and plaintiff performed work that was integral to defendant’s business.38 Because defendant dictated plaintiff’s schedule and paid him a fixed daily rate, the court found plaintiff had no opportunity for profit or loss.39 Although plaintiff provided his own tool belt, defendant provided all remaining tools.40 Because at least five of the six factors favored employment status, the court denied defendant’s motion for summary judgment.

33 Id. 34 808 F. Supp. 2d 1326 (N.D. Ga. 2011). 35 2012 WL 163235 (D. Md. Jan. 18, 2012). 36 Id. at *1, 4. 37 Id. at *5–7. 38 Id. 39 Id. at *6. 40 Id.

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In Campos v. Zopounidis, 41 a former pizza delivery person for defendants’ pizzeria alleged that defendants violated the overtime and minimum wage provisions of the FLSA and Connecticut law. Plaintiff moved for partial summary judgment, seeking a ruling that he was an employee subject to the protections of the FLSA as a matter of law. The court analyzed the facts under the economic realities test endorsed by the Second Circuit, under which individuals are considered employees “if, as a matter of economic reality, [they] are dependent upon the business to which they render service.”42 The five-factors set forth in Brock v. Superior Care, Inc.,43 include: 1) the degree of control exercised by the employer over the workers; 2) the workers’ opportunity for profit or loss and their investment in the business; 3) the degree of skill and independent initiative required to perform the work; 4) the permanence and duration of the working relationship; and 5) the extent to which the work is an integral part of the employer’s business. The court found the manager of the pizzeria exercised sufficient control over plaintiff’s work to indicate employment status, including the authority to hire and fire, set his work schedule and rate of pay, and control the terms, place and manner of his compensation.44 Plaintiff had minimal opportunity for profit and loss because defendant unilaterally set the delivery fee and his hourly rate of compensation.45 Plaintiff’s job required no particular degree of skill, nor was it intended to be temporary or short-term. Finally, plaintiff’s delivery service was integral to the business.46 When viewed under the totality of the circumstances, the court determined that all factors weighed in favor of employment status and granted plaintiff’s motion for partial summary judgment.

In Crumpton v. Sunset Club Properties, LLC,47 a marketing director sought

overtime under the FLSA against a business that leased residential apartments. Defendant argued that plaintiff was an independent contractor not covered by the FLSA. After a bench trial, the district court concluded plaintiff was an employee. It applied the Eleventh Circuit’s multi-factor economic realities test, and found that, while not all factors pointed in favor of employment status, the court concluded that the factors on balance did. While the court found plaintiff had the opportunity for profit and was not controlled in her day-to-day work performance, the other factors favored an employment relationship: the services rendered by plaintiff were an integral and important part of defendant’s business; the business relationship had a reasonable degree of permanency; plaintiff brought a successful skill set to the job; she was paid a monthly salary plus commissions; and plaintiff mainly used equipment and items provided by defendant to perform her job. Accordingly, the Court found the economic realities supported a finding of employment status.

41 2011 WL 2971298 (D. Conn., July 20, 2011). 42 Id. at *3 (citing Frankel v. Bally, 987 F.2d 86, 89 (2d Cir. 1993)). 43 840 F.2d 1054, 1058–59 (2d Cir. 1988). 44 2011 WL 2971298 at *4–5. 45 Id. at *6–7. 46 Id. at *8. 47 2011 WL 3269434 (M.D. Fla. Aug. 1, 2011).

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In Wade v. Woodland Commons, LLC,48 plaintiff was a maintenance worker employed by one of two separate apartment management companies with common owners. Plaintiff worked for the second company as an independent contractor. Plaintiff claimed that his combined time working for both companies regularly exceeded 40 hours, but he was never paid overtime. The parties brought cross motions for summary judgment on the issue of plaintiff’s employment status. The court denied plaintiff’s motion in light of defendants’ evidence that plaintiff took the independent initiative to bid on the apartment jobs; submitted bids only for the work projects he wanted to perform and declined others; retained the ability to earn a profit from his work; and that plaintiff’s work, while an integral part of defendants’ business, was also performed by other contractors. The court also denied defendants’ motion, finding that plaintiff's contention that he worked in excess of forty hours a week for the “joint employers” created credibility issues not appropriate for summary judgment.

2. Illustrative Cases

a. Cases Finding Employee Status

In Stagl v. Vadell,49 plaintiffs sued three individual owners of the day spa where plaintiffs worked as a cosmetologist and a cosmetologist/manager, challenging defendants’ classification of them as independent contractors and its failure to pay them minimum wage and overtime. Plaintiffs filed a motion for summary judgment on the question of their status as employees under the FLSA. The district court first determined that the “economic realities” test, and not common law master-servant agency principles, provides the appropriate framework to analyze the plaintiffs’ employment status. Applying this multi-factor test to the undisputed facts, the court found that plaintiffs had to work during regular business hours, were required to personally perform spa services on defendants’ premises, were licensed to work only at defendants’ spa for much of their employment, did not have any ownership interest, and had no expectation of profit or loss. Although plaintiffs provided their own hair dryer, flat iron and scissors, defendants provided a workstation and cosmetic products. Similarly, although plaintiffs generally received a commission on their services and sales, the court found that defendants exercised control over plaintiffs’ compensation by requiring them to honor its discount specials. Because on balance the factors supported a finding that plaintiffs were employees, the court granted plaintiffs’ motion for summary judgment.

In Neman v. Greater Houston All-Pro Auto Interiors, LLC,50 plaintiff, an “interior

repairman” of cars, alleged that defendants, car interior and dent repair companies, violated the FLSA by improperly classifying him as an independent contractor and denying him overtime compensation. In their motion to dismiss or for a more definite statement, defendants relied principally on an employment agreement identifying plaintiff as an independent contractor, as well as W-9 tax forms plaintiff signed as an

48 2012 WL 929839 (N.D.N.Y. Mar. 19, 2012). 49 2011 WL 5553484 (D.N.D. Nov. 15, 2011). 50 2012 WL 896438 (S.D. Tex. Mar. 14, 2012).

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“individual/sole proprietor.”51 Rejecting those facts as dispositive of the issue, the court found that plaintiff pleaded sufficient facts to state a plausible claim that he was an employee under the Fifth Circuit's “economic reality” test. Specifically, plaintiff alleged in the complaint that defendants had significant control over his work, requiring plaintiff to be on defendants’ premises during his work hours, utilize defendants’ offices and body shop for his work, wear a uniform and hat with defendants’ logo, and apprentice under defendants’ upholstery technician. The complaint further alleged that defendants provided all the tools plaintiff used to fulfill work orders and that plaintiff was not free to leave work for personal matters. Accordingly, defendants’ motion to dismiss or for more definite statement was denied.

In Mack v. Talasek,52 three security guards sued a Texas security company for

minimum and overtime wages under the FLSA. Defendant security company moved for summary judgment on the grounds that plaintiffs were independent contractors rather than employees. A magistrate judge issued a memorandum and recommendation to grant defendant’s motion. After considering plaintiffs’ objections, the court granted the motion for summary judgment. The district court found that defendant exercised no control over how plaintiffs performed their jobs and specifically held that the magistrate’s report did not err in considering what restrictions defendant placed on plaintiffs and what they could do, rather than what plaintiffs chose to do.53 The court also relied on the magistrate’s findings that plaintiffs faced a risk of loss and could have increased their profits by controlling their costs and taking more jobs. The court further found plaintiffs were hired on a job-by-job basis and were not guaranteed continued work beyond each shift. The court also relied upon evidence that it was industry standard to have independent contractors perform such work. Although sustaining some of plaintiffs’ objections and finding that defendant made more substantial operational investments and plaintiffs needed no special training or unique skill set, after weighing all factors and considering the policy underlying the FLSA, the court concluded that plaintiffs were independent contractors and granted defendant’s motion.

In Li v. Renewable Energy Solutions, Inc.,54 a research scientist with a Ph.D. filed

for overtime against defendant company and its principal. Defendants moved to dismiss for lack of subject matter jurisdiction on the ground that plaintiff was not an employee under the FLSA. Plaintiff filed a cross-motion for summary judgment on the same issue. Finding the employment status of plaintiff a jurisdictional question, the district court found it appropriate to make factual findings beyond the pleadings that are decisive to determining jurisdiction. The court then applied a six-factor test to determine if the research scientist was an employee under the FLSA. Under the first factor, control, the court credited plaintiff’s more detailed account of the facts indicating that he was supervised and directed by the defendant’s CEO and reported to him weekly.55 Under the second factor, opportunity for profit or loss, the court found payment of a set,

51 Id. at *3. 52 2012 WL 1067398 (S.D. Tex., Mar. 28, 2012). 53 Id. at *2. 54 2012 WL 589567 (D.N.J. Feb. 22, 2012). 55 Id. at * 7.

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bi-weekly salary sufficient to weigh in favor of finding plaintiff an employee. The third factor favored plaintiff as he did not make any investment in equipment or support staff. The court found the fourth factor, whether the service required a special skill, a close call favoring plaintiff. The court noted that although unskilled workers are more likely to be deemed employees, all skilled workers are not independent contractors. In ascertaining worker status, courts should consider whether, “’in the larger picture, [workers] have the skills necessary to locate and manage discrete work projects characteristic of independent contractors, or whether the skills are of the task-specific, specialized kind that form a piece of a larger enterprise, suggesting employee status.’”56 The inquiry is not simply whether plaintiff utilized specialized knowledge in his work. The court found that plaintiff’s tasks formed a specific part of a larger project for defendant rather than discrete work projects, and therefore suggested employee status.57 As plaintiff was not hired for a specific period or task, the court found the fifth factor, permanence of working relationship, favored plaintiff. The last factor, whether the services rendered were an integral part of defendant’s business, was a close call. Finding that, on balance, the six-factor test favored plaintiff but raised disputed issues of material fact, the court denied defendants’ motion to dismiss for lack of subject matter jurisdiction and also denied plaintiff’s motion for summary judgment on the employment status issue.58

D. Joint Employers

In Valdez v. Cox Communications Las Vegas, Inc.,59 a cable installer supervisor employed by one of defendant’s contractors brought a collective action for minimum wage and overtime violations against defendant communications company. Defendant moved for summary judgment asserting that it was not plaintiffs’ joint employer. Applying the economic reality factors outlined in Bonnette v. California Health & Welfare Agency60 and eight additional factors to fully assess the totality of the circumstances,61 the district court granted defendant’s motion for summary judgment, finding no joint employment relationship existed as a matter of law. The court found each individual contractor, rather than the defendant, decided which employees to hire and fire. The contractors trained the installers and decided which of them would service particular customers and routes. Defendant did not monitor installers, discipline individual contractor employees, control the method of installer payment, or maintain any other employment records other than a database with minimal information collected during defendant’s “badging” process. Further, the contractors, not defendant, provided the installers’ uniforms, equipment, tools and vehicles. Finally, the court noted that “every court to address this issue ultimately has found no joint employment for cable installers

56 Id. at *8 (quoting LeMaster v. Alternative Healthcare Solutions, Inc., 726 F. Supp. 2d 854, 861 (M.D.Tenn.2010)). 57 Id. at * 9. 58 Id. at * 11. 59 2012 WL 1203726 (D. Nev. Apr. 11, 2012). 60 704 F.2d 1465, 1470 (9th Cir. 1983). 61 Valdez, 2012 WL 1203726, at *1.

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at the summary judgment stage under factual circumstances fairly similar” to those at issue in plaintiff’s suit. 62

In Keeton v. Time Warner Cable, Inc.,63 cable installation employees brought overtime claims against both the contractor company that assigned and paid them for their work and the contractor’s cable company client. Defendants filed motions for summary judgment. In denying the cable company’s motion for summary judgment, the district court noted that to determine joint employer status, the Sixth Circuit considers four factors articulated in International Longshoremen.64 These factors are whether there was: 1) interrelation of operations; 2) common management; 3) centralized control of labor relations; and 4) common ownership. Based on these factors, the court found that a genuine issue existed as to whether the defendants were joint employers.

3. Court Decisions Addressing the Joint Employment Doctrine

In Gonzalez v. HCA, Inc.,65 hospital employees brought suit against several hospitals and the hospitals’ indirect corporate parent, alleging that they performed compensable work during meal break periods for which they were not paid. The parent corporation moved for summary judgment, asserting it was not a joint employer as a matter of law. In determining whether the corporate parent was a “joint employer,” the district court noted that the Sixth Circuit considers the following four factors: (1) interrelation of operations; (2) common management; (3) centralized control of labor relations and personnel; and (4) common ownership and financial control. The court found that the parent and its subsidiary hospitals did not have common management or interrelation of operations. The court also found that the individual hospitals determined the hiring, firing, promoting, and disciplining of its employees. Thus, the court concluded that the parent corporation was not plaintiffs’ employer under the FLSA.66

In Guifu Li v. A Perfect Day Franchise, Inc.,67 current and former massage

therapist employees sued several individuals and corporate entities contending various FLSA violations. One of the corporate defendants filed a motion for summary judgment contending that it was not a joint employer. In denying the defendant’s motion, the district court noted that joint employment exists where: 1) the employers are not “completely dissociated” with respect to the employment of the individuals; 2) one employer is controlled by another; or 3) employers are under common control.68 The court found that a reasonable jury could find that the corporate entities shared common control, and thus denied defendant’s motion .69

62 Id. at *4. 63 2011 WL 2618926 (S.D. Ohio July 1, 2011). 64 927 F.2d 900 (6th Cir. 1991). 65 2011 WL 3793651 (M.D. Tenn. Aug. 25, 2011). 66 Id. at 12–13. 67 2012 WL 929784 (N.D. Cal. Mar. 19, 2012). 68 Id. at *22–26. 69 Id. at *22, 25–26.

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In Davis v. Abington Mem’l Hosp., 70 the plaintiffs filed suit against various hospital entities and its affiliates contending a failure to pay them for all hours worked.71 In granting the defendants’ motion to dismiss, the district court found that the plaintiffs failed to allege joint employer status because the complaint lacked specificity.72 In particular, the plaintiffs failed to allege who supervised their work, who set their rate of pay, the relationship between the various entities, and other terms and conditions of their employment.

In Davis v. Four Seasons Hotel Ltd.,73 resort food and beverage servers filed a

suit against the managing entity of two resorts and a third entity which had ownership interest in both resorts alleging unpaid wages under Hawai’i state law. The district court granted plaintiffs’ motion for partial summary judgment, finding the managing entity was a joint employer as a matter of law under the “economic reality” test. In particular, the court found that because the entity had the power and responsibility to control the plaintiffs, and retained portions of the service charges charged to customers who plaintiffs served, the defendant was an employer.74

In Lemus v. Timberland,75 a construction worker brought an action for unpaid

wages under the FLSA and Oregon state law against several construction companies alleging that all the companies were joint employers. Plaintiff and defendants filed cross motions for summary judgment on the issues of whether a developer/general contractor was the joint employer of a subcontractor’s employees. In applying the “economic realities test, the court noted that the Ninth Circuit has adopted two sets of factors. Under Bonnette v. Cal. Health and Welfare Agency,76 the court applied the following four factors: whether the employer had the power to 1) hire and fire; 2) supervise and determine the employees’ terms and conditions of employment; 3) determine pay; and 4) maintain employment records. In Torres-Lopez v. May,77 the court applied eight factors: 1) whether the work was akin to specialty work on the production line; 2) whether the responsibility under contracts could pass to another labor contractor without material changes; 3) whether the employer’s premises and equipment were used; 4) whether the employees have a business organization; 5) whether the work did not require initiative, judgment, or foresight; 6) the permanence in the working relationship; 7) whether employees had opportunity for profit or loss; and 8) whether services rendered were an integral part of the employer’s business. The court determined that while precedent supported applying the Bonnette factors, the court was applying both sets of factors. The court held the developer/general contractor was the joint employer, finding that the developer/general contractor: had significant control over the subcontractor employees and their work; owned the job site; set the hours of work; reserved the right to terminate the subcontractor employees in limited circumstances; 70 817 F. Supp. 2d 556 (E.D. Pa. 2011). 71 Id. at 561–62. 72 Id. at 565. 73 810 F. Supp. 2d 1145 (D. Haw. 2011). 74 Id. at 1159. 75 2011 WL 7069078 (D. Or. Dec. 21, 2011). 76 704 F. 2d 1465, 1470 (9th Cir. 1983). 77 111 F.3d 633, 639–40 (9th Cir. 1997).

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dictated the time of delivery for work materials; interrupted the work for its own purposes; reserved the right to pay the subcontractor’s employees directly; gave the subcontractor an advance in order to pay its employees; and tracked whether the subcontractor actually paid wages due.

Plaintiffs in Javier H. v. Garcia-Botello, 78 worked as seasonal migrant farm

workers. They alleged that farm labor contractors unlawfully deducted money from their earnings for transportation, food, housing, and electricity in violation of the FLSA and other laws. Plaintiffs argued that farmers to whom the labor contractors supplied labor were also liable as joint employers. Plaintiffs moved for class certification against the farmers, and the farmers moved for summary judgment.79 The district court denied both motions. It denied plaintiffs’ motion for class certification because the plaintiffs failed to demonstrate that they had standing to pursue claims against the farmers because, inter alia, they could not identify where and for whom they worked during the relevant time period. The court denied the farmers’ motion for summary judgment because plaintiffs had not had an opportunity to depose the farmers, and depositions could clarify whether the farmers were joint employment.

E. Individuals (e.g., Corporate Officers, Managers, Supervisors,

Consultants, etc.) Who Are “Employers” In Williams v. Hooah Sec. Services LLC,80 security guards brought overtime

claims against a security company and the company's owner/operator. The owner/operator made hiring and firing decisions; determined the plaintiffs' compensation and work schedules; set the company's employment policies; and negotiated customer contracts. The district court granted the plaintiffs' motion for summary judgment, holding the individual owner/operator jointly and severally liable as a joint employer. The court found that the individual owner/operator controlled significant functions of the company, and "would have been in control of the decisions violating the FLSA."81

In Sanchez v. Haltz Const. Inc.,82 masonry laborers brought putative class action

against their employers, both corporate and individual, based on unpaid minimum wage and overtime compensation for unpaid work they performed on one specific construction project. Plaintiffs asserted claims under the FLSA Illinois state statutory and common law.83 Defendants moved to dismiss all claims against the individual defendants and a general contractor on the basis that the plaintiffs failed to adequately allege that the defendants were their “employer” as defined by the FLSA.84 While the court granted the defendants motion to dismiss on other grounds, the court found that the pleadings were sufficient to show defendants were employers as defined by §203(d) as “any person acting directly or indirectly in the interest of an employer in relation to an 78 2011 WL 4344045 (W.D.N.Y. Sept. 14, 2011). 79 Id. at * 3. 80 2011 WL 5827250 (W.D. Tenn. Nov. 18, 2011). 81 Williams, 2011 WL 5827250 at *14. 82 2012 WL 13514 (N.D. Ill. Jan. 4, 2012). 83 Id. at *2. 84 Id.

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employee.”85 Using this definition, the court found that pleadings sufficient to show the general contractor was an employer under the FLSA because it engaged the plaintiffs to perform work on the construction project. Additionally, as the individual defendants were officers and owners of the defendant corporation that controlled the day to day operations of the company, they were also employers for purposes of the FLSA. The court noted that while the plaintiffs must ultimately prove these allegations as to each defendant, they need only to make a reasonable inference of these allegations at this stage of the case.86

In Santos v. Cuba Tropical, Inc., 87 supermarket stock employees brought

overtime claims seeking damages for the employer’s failure to pay plaintiffs overtime. Plaintiffs sought recovery from the corporation and also from an individual defendant whom they claimed had operational control over the corporation. The individual defendant moved for summary judgment on the grounds that while he was admittedly a part owner of the corporation, he was not an “employer” under the FLSA.88 The district court found that under two different forms of analysis, the individual was not an employer under the FLSA.89 First, the court applied the11th Circuit’s disjunctive test, as explained in Alvarez Perez v. Sanford-Orlando Kennel Club, Inc.,90 which provides an officer of a company would only be liable under the FLSA if they were involved in day-to-day operations of the company, or the officer had some direct responsibility for supervision of the employee. Here, the court found that the evidence showed only that the individual defendant was only a part owner, and was not active in the day to day operations of the corporation, thus not liable under the FLSA under the disjunctive theory.91 The plaintiff also argued that the individual defendant was still liable under the alternative economic realities test, as set forth in the Fifth Circuit’s opinion of Donovan v. Grim Hotel Co.92 However, the court noted that it was unclear as to whether the economic realities test could be applied to determine individual liability, and even if it did, it did not support a finding of liability under the facts in this case.93 The court pointed to specific factors such as the delegation of management by the individual defendant, did not control work schedules or conditions of employment, nor did the individual defendant determine rates and methods of pay.94 The court noted that even though a rubber stamp of the individual defendant’s signature was used on payroll checks, there was no other indications that he exercised operational control as to be liable under the FLSA.95 The court thus granted the individual defendant’s motion.

85 Id. at *4. 86 Id. 87 829 F. Supp. 2d 1304 (S.D. Fla. 2011). 88 Id. at 1306. 89 Id. at 1315–16. 90 515 F.3d 1150 (11th Cir. 2008). 91 829 F. Supp. 2d at 1311–13. 92 747 F.2d 966 (5th Cir. 1984). 93 859 F. Supp. 2d at 1315. 94 Id. 95 Id.

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In Berrios v. Nicholas Zito Racing Stable, Inc.,96 horse grooms and hot walkers brought FLSA and New York state law overtime claims against a company in the business of training thoroughbred racehorses and its president and solo shareholder. The parties filed cross motions for summary judgment on several issues, including whether the stable company’s president could be held individually liable under the FLSA97 Defendants contended that the company’s president was not an employer under the FLSA.98 The court denied the defendants’ motion for summary judgment because a reasonable jury could find that the president possessed the power to control work because he made hiring/firing decisions, delegated power to assistants, oversaw the assistants’ work, and was the sole shareholder.99

In Gonzalez v. Metropolitan Delivery Corp.,100 delivery truck drivers alleged that a

parcel pick-up and delivery business, as well as its owners individually, violated the FLSA by failing to pay overtime for work allegedly done during the drivers’ on-call break periods. The district court considered the issue of whether the business owners should be regarded as employers under the FLSA. The owners argued that they should not be considered employers, as they did not determine employee compensation, supervise employees, exercise any authority over hiring and firing, or control the pick-up and delivery operations. However, Eleventh Circuit precedent holds that an owner may be deemed an employer under the FLSA if the owner was involved in the business operations and controlled the “purse strings” of the corporation. Here, because the owners had primarily financial control over the company, were the sole owners, and made budgetary decisions, the court held that the owners as a matter of law are employers under the FLSA and granted summary judgment on this issue to the drivers.

In Spears v. Mid-America Waffles,101 restaurant servers sued corporate and individual restaurant owners for failure to pay minimum wage and for taking unlawful deductions. Plaintiffs alleged that defendants took a tip credit even though their tip earnings were insufficient to bring their total earnings to the minimum wage, that they spent significant time performing non-tip producing activities for which they should have received the full minimum wage, and that the defendants improperly took deductions for meal credits, drawer shortages, and broken dishes. The individual defendants challenged their status as employers under the FLSA on a motion to dismiss, arguing that the plaintiffs’ allegations that the corporate parent administered the payroll process and systems and determined compensation policies negated their contention that the individual defendants maintained day-to-day control over the restaurant. The district court rejected this argument, finding that, at the pleading stage, plaintiffs’ allegations that the individual defendants maintained day-to-day control were sufficient.

96 849 F. Supp. 2d 372 (E.D.N.Y. 2012). 97 Id. at 375. 98 Id. at 392. 99 Id. at 392–94. 100 2012 WL 1442668 (S.D. Fla. Apr. 26, 2012). 101 2011 WL 6304126 (D. Kan. Dec. 16, 2011).

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In Speert v. Proficio Mortgage Ventures, LLC,102 mortgage loan officers sued their employer, a mortgage lender, for minimum wages, overtime, and unpaid commissions. Plaintiffs moved for summary judgment as to, inter alia, whether the individual branch manager, Glenn Hyatt, was an employer under the FLSA. Noting little guidance in the Fourth Circuit on this issue, the district court found that a consistent factor in other circuits’ interpretations of the provisions at issue was the degree to which the purported employer maintained operational control over the employees in question, including the power to hire and fire, supervise and control employee work schedules, and controlling employee compensation. The corporate defendant had contended in interrogatories that branch managers had the authority to hire and fire and to manage employees while in the office, as well as to set local office hours and approve payroll and commission payments. The branch manager job description described similar duties. In contrast, Hyatt submitted an affidavit in response to the plaintiffs’ motion saying that he could only recommend new hires, and the corporate defendant’s Rule 30(b)(6) designee testified that hiring and firing authority rested with corporate headquarters. Although the district court noted that it could treat the corporate defendant’s interrogatory answer as binding on Hyatt, it determined that the more cautious approach was to treat the issue as a question of material fact to be resolved at trial and denied summary judgment on this point.

In Buenaventura v. Champion Drywall, Inc. of Nevada,103 plaintiff claimed that

they regularly worked more than forty hours per week, but were not paid overtime compensation in violation of the FLSA. In addition to filing an FLSA complaint against a drywall company and several third-party contractors, plaintiffs also named several of the defendant drywall company’s individual officers and directors (a 50% owner, two vice presidents, and the secretary and treasurer).104 The district court dismissed the four officers and directors because plaintiffs failed to allege sufficient facts permitting an inference that any of them met the FLSA’s definition of “employer.” Plaintiffs subsequently sought leave to file an amended complaint seeking to correct the deficiencies in the FLSA claims against the four officers and directors. In analyzing whether the officers and directors met the FLSA’s definition of “employer,” the district court applied the “economic realities” test in determining whether each officer and director was an “employer.”105 Specifically, the court looked at whether each officer and director had (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. In reviewing the totality of the allegations in the proposed amended complaint, the court found that there were sufficient facts to permit an inference that the 50% owner and two vice presidents 106 were “employers” because they had decision-making authority in 102 2011 WL 2417133 (D.Md. June 11, 2011). 103 2012 WL 1032428 (D. Nev. Mar. 27, 2012). 104 Buenaventura, 2012 WL 1032428, at *1. 105 Id. at *6–8. 106 As to one of the vice presidents, the court noted that it was a close question whether plaintiffs alleged sufficient facts to permit an inference that he was an “employer” because there were no allegations in the complaint that he had the power to hire or fire employees, supervised and controlled employee work schedules or conditions of employment, or maintained employment records. Id. at *7. Instead, plaintiffs

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employment decisions, established rates of pay, supervised daily operations, monitored compliance with wage and hour laws, and/or negotiated and signed contracts with general contractors. On the other hand, the court found that the proposed amended complaint did not allege sufficient facts to permit an inference that the secretary and treasurer was an “employer.” Because the individual serving as secretary and treasurer was improperly named as an individual defendant, the court denied plaintiffs’ motion without prejudice to allow plaintiffs to file a second proposed amended complaint consistent with the court’s order.107

In Castaneda v. TD Stout Preservation, Inc.,108 a former employee of a property care-taking service brought claims for unpaid overtime and liquidated damages against the company and one of the company’s owners, Terry D. Stout. Mr. Stout had been sole owner of the defendant company until 2007, when he sold 85% of his ownership interest in the company.109 After a bench trial, the district court held that defendants violated the FLSA by failing to pay plaintiff at a premium rate for overtime hours, and that Mr. Stout was also individually liable as plaintiff’s “employer.”110 The court found that Mr. Stout maintained operational control of the company, even though he had sold 85% of his ownership interest in the company in 2007, because he had been the company’s sole owner and CEO for at least a portion of the statutory period, and after the sale he remained a corporate officer, was present at the company’s home office throughout the duration of plaintiff’s employment, directed plaintiff’s work and signed paychecks, ran the business, assigned work to other employees and told them how to carry out their duties.111

In Arean v. Central Florida Investments, Inc.,112 employees of an apartment

complex filed overtime claims against, among others, the property manager, apartment complex, and investment company for alleged overtime violations. Using the economic realities test as a basis for determining employer status, the district court denied defendants’ motion for summary judgment on the overtime claim.113 The court found the property manager was responsible for supervising day-to-day operations, preparing weekly time sheets for payroll, issuing disciplinary warnings to employees, determining plaintiffs’ work hours, and directly supervising plaintiffs’ work. This was sufficient to create a triable issue as to whether the property manager was individually liable as an “employer” under the FLSA and thus defeat his motion for summary judgment.114

simply alleged that he coordinated unspecified daily operations along with the owner and the other vice president. In looking at the totality of the allegations, however, the court ultimately held there were sufficient facts to allow an FLSA claim to proceed. 107 The court also denied plaintiff’s motion for leave on other grounds because it improperly named a third-party contractor as another defendant. Id. at *4–8. 108 2012 WL 463718 (S.D. Ind. Feb. 10, 2012). 109 Castaneda, 2012 WL 463718, at *1. 110 Id. at *4. 111 Id. 112 2012 WL 1191651 (M.D. Fla. Apr. 10, 2012). 113 Id. at *13. 114 Id.

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In Gray v. Powers,115 a bartender brought a minimum wage claim against his former employer, Pasha Entertainment Group, LLC ("PEG"), and one of its owners, Michael Warren Powers. On appeal, the Fifth Circuit affirmed the district court's granting of summary judgment to defendant Powers because he was not an employer" under the FLSA.116 The Fifth Circuit used a four factor "economic reality" test to determine the existence of an employer/employee relationship, looking at whether the putative employer: 1) possesses the power to hire and fire employees; 2) supervises and controls employee work schedules or conditions of employment; 3) determines the rate and method of pay; and 4) maintains employment records. Plaintiff argued that as a member of PEG, defendant owner inherently had the power to fire him. Plaintiff relied on the "joint employer" theory to show that the defendant was an "employer" despite having no unilateral hiring and firing power. The Fifth Circuit held that all four factors had to be met for the owner to be held liable as an employer. The court held that, although PEG exercised collective power in hiring and firing general managers, the defendant owner’s participation did not prove he had the individual authority to control employment terms of lower-level employees like the plaintiff. The court also noted that merely being a member or officer of a corporation did not impute personal liability onto the defendant.117

In Benavidez v. Plaza Mexico Inc.,118 employees of defendant Mama Mexico

restaurants sought to hold the owner of Mama Mexico individually liable for FLSA violations. The district court granted plaintiffs’ summary judgment motion, which was unopposed. In applying a four factor “economic realities” test, the court found the restaurant owner had significant control of the restaurants and its employees. He was the 100 percent owner of the Mama Mexico restaurants. He personally oversaw operations, regularly reviewed payroll records and tax returns, and visited the restaurants on a weekly basis. He controlled corporate finances. Employees viewed him as “the boss,” and he had the power to hire and fire them. He controlled working conditions through instructions to managers. In addition, he determined the plaintiffs’ rate and method of payment, authorized changes in the method of payment in response to a DOL investigation, and signed employee checks. On these facts, the court found that the restaurant owner met all of the elements of the economic realities test, “indisputably possessed the power to control Plaintiffs and their working conditions,” and was therefore an employer under the FLSA.119

In Garcia v. Serpe,120 plaintiffs alleged that defendants, a group of four limited

liability companies, willfully violated the FLSA by failing to pay plaintiffs appropriate overtime; issuing plaintiffs bad checks; and paying plaintiffs less than minimum wage. Defendants moved for summary judgment on plaintiffs’ claims. The district court denied the motion and found that there remained numerous issues of material fact, including 115 673 F.3d 352 (5th Cir. 2012). 116 PEG suffered an adverse judgment at the trial court level because it failed to appear at trial. Thus, Defendant Powers was the only remaining defendant on appeal. 117 Id. at 352–57. 118 2012 WL 500428 (S.D.N.Y. Feb. 15, 2012) 119 Id. at 10. 120 2012 WL 380253 (D. Conn. Feb. 6, 2012).

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whether one of the plaintiffs, Hernandez, who had been employed by the defendant landscaping company was in fact a part owner of the landscaping company. Defendants claimed that, based on the terms of an operating agreement conveying to Hernandez a 50% stake in the landscaping company, Hernandez was not an employee. Plaintiffs contended, based on Hernandez’s testimony, that Hernandez was an employee with no ability to exercise control over the operations of the business or participate in its profits. Plaintiffs further asserted that the IRS Form K-1 for the landscaping company allocated ownership interests in the company between the common owner and his wife, and did not reflect that Hernandez held any interest in the company. The court applied the economic reality test set out by the Second Circuit in Herman v. RSR Sec. Servs. Ltd.,121 which requires a court to consider, in determining whether an individual acted as an employer or an employee, whether the alleged 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. Based largely upon Hernandez’s assertion that he had no actual control over the landscaping company, the court found that a genuine dispute remained as to Hernandez’s employee status.

In Bullock v. LVN Property Management, LLC, 122 hotel housekeepers and

maintenance workers sought to collect overtime compensation from defendants, a property management company and its manager, who was also part owner of the hotel. Defendant-manager argued that she could not be held personally liable under the FLSA.123 The district court noted that the Eleventh Circuit has “recognized that the overwhelming weight of authority is that a corporate officer with operational control of a corporation's covered enterprise is an employer along with the corporation, jointly and severally liable under the FLSA for unpaid wages….But, in order to qualify as an employer for this purpose, an officer must either be involved in the day-to-day operation or have some direct responsibility for the supervision of the employee.”124 Defendant argued that a third party, who contracted with the management company, was responsible for hiring and managing employees.125 However, the third party stated in an affidavit that defendant-manager (through the general manager of the hotel), and not he, had day-to-day control over the employees.126 Additionally, plaintiffs alleged that defendant-manager directed some of their daily activities, signed payroll checks, observed the premises, and commented on and criticized their work. The court found questions of fact regarding the degree of operational control exercised by defendant and hence denied her motion to dismiss.127

121 172 F.3d 132 (2d Cir. 1999) 122 2012 WL 266311 (M.D. Fla. Jan. 30, 2012). The property management company filed for bankruptcy and the case was stayed against that defendant. Id. at *1. 123 Id. 124 Id. (quoting Alvarez Perez v. Sanford–Orlando Kennel Club, Inc., 515 F.3d 1150, 1160 (11th Cir. 2008)) (further internal citation and quotations omitted). 125 Id. at *3. 126 Id. at *2. 127 Id. at *3.

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In Hembree v. Mid-Continent Transport, Inc.,128 an individually-named defendant who was a 50% owner and accountant for the company moved for summary judgment on the basis of the “silent partner” defense that he did not exercise sufficient managerial authority to be sued as an “employer” under the FLSA. While plaintiffs alleged facts that he not only knew about compensation policies but concurred in their use, the district court granted the individual defendant’s summary judgment motion, finding that there was no showing that any approval of compensation policies was expressed or that an expression was anything more than spoken acquiescence in something already decided by other management, and any such approval was not shown to have occurred as part of an agreement between managing owners of the business before the period covered by the claim.

In Jin v. Any Floors, Inc.,129 an employee of a flooring company brought suit

against the company and the company’s owner alleging failure to pay minimum and overtime wages in violation of the FLSA. Defendants challenged whether the company’s owner could be personally liable for damages assessed against the company. The district court determined at trial that the owner, who was a person acting directly or indirectly in the interest of an employer in relation to an employee, may be held personally liable for the FLSA violations as she was squarely within the FLSA’s definition of employer.130 The court reasoned that paying plaintiff’s wages was within the owner’s personal work responsibilities and that the owner’s omission in paying plaintiff correctly was the basis for plaintiff’s FLSA claim.131 The court also reasoned that the owner directly benefited from her failure to pay plaintiff as the owner of the company.132 Thus, the court concluded that the owner may be held personally liable for damages assessed against defendants as she stood on both sides of the corporate veil.

In Lyles v. Burt's Butcher Shoppe and Eatery Inc.133 a restaurant cook alleged he was required to perform off the clock work and sued, among others, Mr. Stacey, the sole shareholder and President of the restaurant. The district court found at trial that defendants’ policy constituted willful violations of the FLSA and awarded $63,893.42 in back pay, liquidated damages and fees and costs against the individual shareholder and the corporation jointly and severally. The court concluded that Mr. Stacey was an employer within the meaning of section 203(d) because had operational control over the restaurant and its employees. He made the decision not to pay plaintiff as required by law and actively engaged in a scheme to avoid the FLSA. A corporate officer with operational control of a corporation's covered enterprise is an employer along with the corporation, jointly and severally liable under the FLSA for unpaid wages.

128 Hembree v. Mid-Continent Transport, Inc., 2011 WL 5841313 (W.D. Mo. Nov. 21, 2011). 129 2012 WL 777501 (E.D. Va. Mar. 5, 2012). 130 Id. at *3. 131 Id. 132 Id. 133 2011 WL 4915484 (M.D. Ga., Oct. 17, 2011).

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In Chapman v. Ourisman Chevrolet Co., Inc.,134 salespersons of an automobile dealership filed a collective action lawsuit naming as defendants the company and its owner Chris Ourisman individually, among other individual defendants. Plaintiffs alleged that defendants’ pay plan improperly made certain deductions from their wages, which reduced their hourly rate below the minimum wage, and thus violated the FLSA.135 Both parties moved for summary judgment on the issue of whether Mr. Ourisman was plaintiffs’ “employer” under the FLSA, 29 U.S.C. § 203(d).136 Defendants contended that Mr. Ourisman did not exercise any authority regarding the company’s payroll practices. 137 Plaintiffs countered that Mr. Ourisman exercised managerial responsibilities and had substantial control over the employment of other employees, including at least one management employee who took directions from him.138 Plaintiffs offered evidence that Mr. Ourisman controlled the work of salespersons; was involved in reprimanding and disciplining salespersons; directed salespersons in their work; terminated at least one salesperson without consulting anyone else; signed salespersons’ timesheets; possessed all of the indicia of upper management as salespeople went to him to complain about wage issues; and was in a position to make employment policy recommendations to the company’s president.139 Because of the conflicting evidence, the district court found there was a triable issue as to Mr. Ourisman’s individual liability and thus denied summary judgment as to both parties.140

F. Volunteers

A former firefighter, in Freeman v. Key Largo Volunteer Fire and Rescue Dep’t.

Inc.141 filed a suit against the fire district and the volunteer fire department alleging that he was not a volunteer but a paid employee. He also alleged that defendants retaliated against him by refusing to allow him continue to work unless plaintiff affirmed that he was donating his time. The district court granted defendant’s motion to dismiss finding that the plaintiff’s mere assertions of employee status in the complaint failed to allege sufficient facts to show that he was an employee under the “economic reality” test which considers whether the employer had: 1) the power to hire and fire employees; 2) supervise and control the employee; 3) determine the rate and method of pay; and 4) maintain employment records.142

In Mendel v. City of Gibraltar,143 the plaintiff, a former police dispatcher, filed a

suit against his former employer, police department, alleging his termination was in violation of the Family Medical Leave Act (FMLA). Defendant contended in its motion for summary judgment that the plaintiff was not an employee under the FMLA as

134 2011 WL 2651867 (D. Md. July 1, 2011). 135 Chapman, 2011 WL 2651867, at *2. 136 Id. at *7. 137 Id. at *11. 138 Id. 139 Id. 140 Id. 141 840 F. Supp 2d 1274, 1276 (S.D. Fla. Jan. 20, 2012). 142 Id. at 1276–77. 143 842 F. Supp. 2d 1035 (E.D. Mich. Jan. 31, 2012).

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defined under the FLSA because, defendant, a public agency, did not employ 50 employees. The issue hinged on whether defendant’s “volunteer” firefighters were “employees” for purposes of this head count. Defendant contended that its firefighters were paid volunteers.144 The court granted the defendant’s motion because it found that the firefighters were not employees. The defendant lacked control over the firefighters. 145 Specifically, the firefighters were not required to respond to a fire emergency, had no duty to report to fight a fire, suffered no disciplinary action if they did not respond when called, did not work set shifts, had no consistent work schedules, and did not staff a fire station when they were not on-call. Although the court recognized that the volunteers received an hourly rate which was more than a “nominal payment,” had to undergo a hiring process, meet training requirements, and could receive promotions, these factors did not outweigh the lack of control factor.146 Because the firefighters were not defendant’s employees, plaintiffs were not protected by the FMLA and summary judgment was entered for defendant.

G. Trainees

In Chao v. Laurelbrook Sanitarium and Sch., Inc.,147 the district court awarded

defendant, a private parochial school, attorney’s fees, expenses, and costs after finding that the Secretary of Labor’s position in bringing a suit against defendant was not “substantially justified.” 148 The Secretary of Labor had contended that defendant violated child labor laws by failing to pay its vocational school students for work performed for defendant in its nursing off that was part of the school. After a bench trial, the district court found that students who work primarily for their own advantage are not performing work within the meaning of the FLSA. The court found that the students in the instant matter inured the primary benefit of their labor and therefore were not performing work.149 The United States Court of Appeals for the Sixth Circuit affirmed the district court’s decision150 and defendant filed a motion for fees and expenses. The district court granted the defendant’s motion, finding the Secretary’s decision to bring this action was not substantially justified given the strong evidence of the educational benefit of the program.151

Plaintiffs in Jatupornchaisri v. Wyndham Vacation Ownership, Inc.152 alleged that

the defendant recruited them from Thailand and Vietnam to join a J-1 visa training and internship program, employed them as housekeepers and failed to pay them minimum wages. Defendant moved to dismiss, contending that plaintiffs worked as interns, not employees. The district court denied the motion. It found that although the plaintiffs entered the country as part of a visa program for training and internship purposes, their

144 Id. at 1039–40. 145 Id. at 1041–42. 146 Id. at 1042. 147 2012 WL 1836287 (E.D. Tenn. May, 21, 2012). 148 Id. at *2–3. 149 Id. at *3. 150 Solis v. Laurelbrook Sanitarium and Sch., Inc., 642 F.3d 518 (6th Cir. 2011). 151 Id. 152 2012 WL 1600435 (M.D. Fla. May 7, 2012).

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immigration status did not determine whether they qualified as “employees” for purposes of the FLSA. The court explained “the controlling issue here is the manner in which Plaintiffs were actually treated.”153

I. Prison Labor

In Shaffer v. Direct Media, Inc.,154 a former inmate, brought suit against a telemarketing company and several individuals for whom he performed services while incarcerated in a state penitentiary. Defendants filed a motion to dismiss and the district court granted it based on Tenth Circuit precedent155 holding that prisoners are not employees under the FLSA and that the “economic reality” test is not used to determine that prisoners are not employees.

J. Undocumented Workers

In Galdames v. N & D Investment Corp,156 plaintiffs won a jury verdict for unpaid overtime. The district court denied defendant’s post-trial motion for judgment as a matter of law, rejecting the argument that as “illegal aliens” plaintiffs were not “employees” protected by the FLSA. The Eleventh Circuit affirmed, opining that the ruling plaintiffs were covered “employees” under the FLSA was consistent with its earlier decision in Patel v. Quality Inn South 157 and that the holding in Patel was not affected by the Supreme Court’s ruling in Hoffman Plastic Compounds, Inc. v. NLRB.158 In Hoffman Plastics, the Court ruled that undocumented workers could not be awarded back pay for work they did not perform. In addition to Patel being a FLSA case and not an NLRB case, the court noted that the plaintiffs in Patel and Galdames sought pay for work they had performed.

Polycarpe v. E&S Landscaping Service, Inc.,159 is similar to Galdames v. N & D

Investment Corp.160 the landscaping service filed a motion for summary judgment claiming that plaintiffs did not have standing to sue as they were undocumented workers. The court denied the motion ruling that it was bound by the 11th circuit’s holding in Patel v. Quality Inn South 161 that undocumented workers are employees under the FLSA. The court stated that the court’s decision in Patel “has foreclosed defendant’s argument that undocumented workers may not bring a claim under the FLSA.”

153 2012 WL 1600435 at *2. 154 2012 WL 681718 (W.D. Okla. Feb. 2, 2012). 155 Williams v. Meese, 926 F.2d 994, 997 (10th Cir. 1991). 156 432 Fed. Appx. 801 (11th Cir. 2011) (not selected for publication). 157 846 F.2d 700 (11th Cir. 1988) 158 535 U.S. 137 (2002) 159 2011 WL 5321006 (S.D. Fla. Nov. 3, 2011) 160 Supra at note 1. 161 Supra at note 2.

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In Jatupornchaisri v. Wyndham Vacation Ownership, Inc.162 Thai and Vietnamese nationals brought to the U.S. on J-1 visas sued for minimum wage. Plaintiffs alleged they were recruited from Thailand and Vietnam to work as interns under the auspices of a J-1 visa training program. Instead, however, the employees claimed that they were required to work as housekeepers. Defendant argued that in accord with their visas the plaintiffs were interns not employees under the FLSA. The court disagreed stating that visa status was not dispositive of employee status under the FLSA. Similarly, the court rejected the argument that the employees’ sole remedy was pursuant to the Exchange Visitors Act (“EVA”). The court reasoned that the administrative remedies under the EVA were not the same as the remedies under the FLSA.

In Lucas v. Jerusalem Café,163restaurant workers brought minimum wage and

overtime claims. After a four day jury trial that resulted in a plaintiffs’ verdict, Defendant moved for a judgment as a matter of law or a new trial, arguing that the plaintiffs lacked standing to sue for back wages because they entered the country illegally. The court summarily rejected the defendant’s argument noting that the defendant was actually asserting an affirmative defense that the undocumented workers were not employees under the FLSA. The court ruled that the workers had standing as a matter of law as they suffered injuries by virtue of defendant failing to pay minimum wages and overtime, that plaintiffs were employees and they could seek redress from the court.

The Secretary of Labor brought suit on behalf of employees of a nail salon in

Solis v. Cindy’s Total Care, Inc., 164 claiming the salon employees had not been paid minimum wages and overtime. The nail saloon raised the immigration status of the employees as an affirmative defense. The Secretary of Labor filed a motion in limine seeking to prevent the nail salon from introducing evidence of the employees’ immigration status at trial. The court granted the motion ruling that immigration status was irrelevant to determining an employee’s protection under the FLSA. The court further noted, as a matter of policy, that if employers could hire undocumented workers who had no FLSA protections, those employers would be at a competitive advantage to others in the industry who did not employ undocumented workers.

III. Individual Coverage

B. “Engaged in Commerce”

In Aguilar v. LR Coin Laundromat, Inc., 165 Laundromat employees sought payment for unpaid overtime. Defendant moved to dismiss for lack of subject matter jurisdiction, arguing that the Laundromat was not engaged in interstate commerce and neither were plainiffs for purposes FLSA coverage. Plaintiffs’ argued that they engaged in interstate commerce because they handled clothing or sold goods such as soap or

162 2012 WL 1600435 (M.D. Fla. May 7, 2012). 163 2012 WL 1758153 (W.D. Mo. May 10, 2012) (unpublished). 164 2011 WL 6013844 (S.D.N.Y. Dec. 2, 2011). 165 2012 WL 1569552 (D. Md. May 2, 2012).

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other items that were from out of state.166 The district court rejected this argument and granted dismissal.

In Rains v. East Coast Towing and Storage, LLC,167 a tow truck driver brought an

action against a towing company and the company’s president alleging that his hourly pay fell below the minimum wage in violation of the FLSA. Defendant moved to dismiss, arguing it was not engaged in interstate commerce for FLSA coverage purposes. The district court determined that plaintiff was not engaged in interstate commerce.168 Specifically, the court found that plaintiff’s duties as a tow truck driver consisted of towing illegally parked vehicles from private lots in Virginia to other private lots in Virginia.169 Based on these facts, the court determined that plaintiff was not regularly engaged in helping keep the interstate flow of traffic free and unobstructed.170 Nor was plaintiff’s handling of vehicles that likely had crossed state lines sufficient to show that plaintiff was engaged in interstate commerce as no evidence was presented indicating that the vehicles were transporting goods across state lines or were themselves being transported as goods.171 The court concluded that plaintiff may have had an effect on a vehicle moving in interstate commerce, but it was not one that is directly and vitally related to the functioning of an instrumentality or facility of interstate commerce.172 The court thus granted dismissal of the FLSA claims.

1. Work Related to the Actual Movement of Commerce

A former waitress in Joseph v. Nichell’s Caribbean Cuisine, Inc.173 filed suit against her employer restaurant for unpaid overtime and retaliation under the FLSA. The district court granted defendant summary judgment for a lack of showing of individual coverage. The court held that plaintiff was not individually engaged in interstate commerce because processing credit and debit card purchases, serving food prepared with ingredients that had crossed state lines, serving beverages that had been produced out of state, and serving out of state customers did not constitute engaging in interstate commerce for the purposes of establishing FLSA individual coverage.

2. Regular Use of the Channels of Commerce

In Rushton v. Eye Consultants of Bonita Springs, an employee of a medical practice brought a FLSA overtime claim, among others.174 Defendant filed a motion to dismiss, attacking, among other things, whether facts were pled to show plaintiff was engaged in instate commerce thus within FLSA’s “individual” coverage. On this point, plaintiff pled the nature of her duties, which solely related to patient/customer

166 Id. at *6. 167 820 F. Supp. 2d 743 (E.D. Va. 2011). 168 Id. 169 Id. 170 Id. 171 Id. 172 Id. 173 2012 WL 1933303 (S.D. Fla. Jan. 26, 2012). 174 2011 WL 2601245 (M.D. Fla. June 30, 2011).

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interaction. The court concluded this did not involve the “movement of person or things in interstate commerce,” or “regular and recurrent use of interstate telephone, telegraph, mails, or travel,” but was entirely interstate. 175 Therefore, the plaintiff failed to sufficiently plead individual coverage and the court dismissed her FLSA claim. IV. Enterprise Coverage

A. General Principles In Williams v. Hooah Sec. Services LLC,176 security officers brought overtime

claims against a company that served businesses exclusively within Tennessee. The parties cross-moved for summary judgment as to whether the defendant security company was a covered enterprise under the FLSA. The district court ruled in favor of plaintiffs, finding that the company was a covered enterprise under the FLSA's handling clause, because the employer required at least two security guards to carry handguns that had traveled in interstate commerce. The fact that defendants did not provide the handguns was irrelevant to the question of enterprise coverage, since the court found that the handguns were "materials" within the definition of the FLSA and that the plaintiffs "used these firearms for [d]efendants' commercial purpose of providing armed security services to its clients."177

In Polycarpe v. E&S Landscaping Service, Inc.,178 landscape workers brought

overtime claims against a Florida regional landscape company Plaintiffs filed a motion for summary judgment as to enterprise coverage. The district court granted the motion, finding that, in the course of their employment, plaintiffs used trucks manufactured outside of the state of Florida and that they used those trucks to transport themselves and the landscaping equipment to various job sites. As such, the trucks were “materials” as opposed to “goods” triggering enterprise coverage under the FLSA.179

B. Requirements of Section 3(r) In Garcia v. Serpe,180 defendants were a group of four limited liability companies:

a landscaping company, a cleaning company, a restaurant, and a construction company. Seven plaintiffs had worked for the landscaping company, four had worked for the cleaning company, and one had worked for the restaurant. Defendant moved for summary judgment, arguing it was not covered by the FLSA. The district court held there was a triable issue as to whether the landscaping and cleaning companies could be considered a single enterprise for purposes of FLSA liability. However, the court found that plaintiffs had failed to adduce evidence sufficient to allow a reasonable juror to conclude that either the restaurant company or the construction company were

175 Id. 176 2011 WL 5827250 (W.D. Tenn. Nov. 18, 2011). 177 Williams, 2011 WL 5827250 at *9. 178 821 F. Supp. 2d 1302 (S.D. Fla. 2011). 179 Id. at 1307. 180 2012 WL 380253 (D. Conn. Feb. 6, 2012).

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operationally interdependent with the landscaping and/or cleaning businesses (as might be reflected by an overlap of employees, joint marketing or advertising, or the provision of mutually supportive services from one business to the others). The court denied summary judgment on the enterprise coverage issue finding triable issues on whether there was a single umbrella enterprise and whether the $500,000 threshold was met by one or more of the entities individually or combined.

In Dehua Lin v. Brennan,181 plaintiff restaurant workers brought claims against an

LLC set up to run the restaurant and three of the LLC’s members. The undisputed evidence showed that the tavern used national distributors and suppliers, sold California and imported wines, and had gross sales close to or exceeding $1,000,000. 182 Therefore, the court found that the tavern was a covered enterprise under the FLSA and could be held liable for damages and granted plaintiffs motion for partial summary judgment on liability.

1. “Related Activities”

In Ray v. Yamhill Community Action Partnership,183 a resident manager for

defendant’s homeless shelter brought FLSA minimum wage and overtime claims, among other things. After trial, defendant, a non-profit Oregon corporation,184 moved for judgment as a matter of law contending it was “not an enterprise or an enterprise engaged in commerce under the FLSA because its “activities were not done ‘in connection with the activities of a public agency’ and were not ‘activities of a public agency.’”185 The court granted defendant’s motion, adopting a Second Circuit decision and finding defendant did not come within the definition of an “enterprise” under Section § 203 (r)(2)(C) because it was a private, nonprofit, independent contractor that provided transportation services to a public agency of the country under a contract.186

2. “Common Business Purpose”

In Hicks v. Avery Drei, LLC,187 the plaintiff sued her employer and its owner-manager under the FLSA for alleged unpaid overtime. The trial court granted defendants a partial directed verdict because there was no enterprise coverage188 during the time plaintiff was a security guard.189 On appeal, plaintiff challenged the 181 2011 2011 WL 5570779 (D. Conn. Nov. 15, 2011) (unpublished). 182 Id. at *3 (quoting 29 U.S.C. §203(r)(1) and .203(s)(1)(A)(i)-(ii)). 183 2011 WL 5865952 (D. Or. Nov. 22, 2011); 2011 U.S. Dist. LEXIS (D. Or. Nov. 22, 2011). 184 Id. at * 2. 185 Id. at * 4–5. 186 Id. at * 14. 187 654 F.3d 739 (7th Cir. 2011). 188 The Seventh Circuit pointed out that, in order to recover under the FLSA, plaintiff was required to prove that her employer’s businesses were (a) engaged in related activities, (b) under unified operation or common control, (3) had a common business purpose and had an annual gross volume of sales made or business done of not less than $500,000. Id. at 745–46 (citing 29 U.S.C. §§203 (s)(1)(A), 203 (r)(1) & 207(a)(1)). See Chapter 18, Section VI.B. [Proving the Prima Facie Wage Case]. 189 Defendants sought a directed verdict as well for the time plaintiff was a front desk clerk, but did not prevail. Id. at 745–46. The district court concluded that plaintiff, as a front desk clerk, would have been

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directed verdict because the owner controlled an enterprise of businesses with a common business purpose of making money.190 The Seventh Circuit affirmed the district court’s holding that a profit motive alone is not enough to constitute a “common business purpose” for purposes of enterprise coverage.191

5. Exceptions From the Section 3(r) Definition of “Enterprise”

c. Establishments Whose Only Regular Employees Are

Owners and Immediate Family Members

In Aguirre v. Safe Hurricane Shutters, Inc.,192 the district court held that owners and managers may, under certain circumstances, be included in the definition of “employee” since the FLSA contains a specific exception as to when an owner cannot be considered an employee engaged in interstate commerce.193 The court also cited the Department of Labor Field Operations Handbook 194 indicating that exempt employees are counted for purposes of satisfying the commerce element.

C. Requirements of Section 3(s)

1. Section 3(s)(1)(A)(i)—Engagement in Commerce

In Diaz v. HBT, Inc.195 a busboy and dishwasher at a restaurant sued for minimum wage and overtime violations. Plaintiffs?? claimed that the restaurant was subject to the FLSA via enterprise coverage because it had annual gross sales of more than $500,000 and its employees “handle, sell, or otherwise work on goods or materials that have moved in or have been produced for commerce.”196 The district court denied the employer’s motion to dismiss for lack of subject matter jurisdiction stating that most, if not all, restaurants likely fell within enterprise coverage and that “[i]t is difficult to imagine a defendant employer in the twenty-first century that does not have employees who handle, sell, or otherwise work on goods or materials that have moved in or have been produced for commerce by any person.”197

In Josendis v. Wall to Wall Residence Repairs, Inc.,198 a construction worker

brought claims for wages and overtime. Defendant asserted that it was not engaged in interstate commerce. In affirming the district court’s grant of summary judgment to the

engaged in commerce and therefore coverage under the FLSA for this period was established. Therefore, the district court denied the motion for directed verdict as to this period. The jury, however, denied relief to plaintiff on this portion of her FLSA claim. Id. at 742. 190 Id. at 745–46. 191 Id. at 746. 192 2011 WL 5986817 (S.D. Fla. Oct. 29, 2011). 193 See 29 US.C. §203(s)(2). 194 See FOH §12b01. 195 2012 WL 294749 (D. Md. Jan. 31, 2012). 196 Id. at *4. 197 Id. 198 662 F.3d 1292 (11th Cir. 2011).

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defendant the court observed that defendant had demonstrated that none of its employees utilized goods or materials that had moved in interstate commerce and that it never had gross revenues in excess of $500,00 annually. A showing of both elements is necessary for enterprise coverage.

In Dehua Lin v. Brennen,199 the kitchen staff of a restaurant sued for minimum wage and overtime violations. At the close of discovery, plaintiffs filed a motion for partial summary judgment on their FLSA claims. In granting the motion the court ruled that the restaurant was a covered enterprise as its employees handled, sold or otherwise worked on goods and materials that were moved or produced in interstate commerce (e.g. imported wines) and the restaurant had gross sales in excess of $1,000,000.

a. The “Handling” Standard of Enterprise Coverage

In Aguirre v. Safe Hurricane Shutters, 200 the defendant sought a jury instruction concerning the commerce element of enterprise coverage that goods purchased locally were not in interstate commerce even if their origin was out-of-state. The court rejected this “coming to rest” doctrine which it found was not in harmony with the statute. The court ruled that goods purchased locally that had their origin out of state were in interstate commerce.

2. Section 3(s)(1)(A)(ii)—The Business Dollar Volume Test

In Aguirre v. LR Coin Laundromat, Inc. 201 a Laundromat attendant sought back overtime wages. Defendant moved to dismiss arguing that there was no FLSA coverage as the Laundromat’s revenues did not exceed $500,000. Defendant produced an affidavit and tax return showing only $248,409 in gross revenues. In light of the evidence, the court ruled that there was no enterprise coverage and dismissed.

a. General Principles

In Hicks v. Avery Drei, LLC, 202 plaintiff, who worked for defendant first as a

security guard at a hotel construction site and later as a front desk clerk at the hotel, sought overtime compensation on the allegation she had not been paid overtime in either position. The district granted a partial directed verdict, finding that there was no enterprise coverage for the time plaintiff spent as a security guard when the hotel was under construction, but found enterprise coverage for the period plaintiff served as front desk clerk assisting out-of-state travelers. On appeal to the Seventh Circuit, plaintiff argued that defendant’s owner testified at trial that another of his business could have had revenues in excess of $500,000. The Seventh Circuit affirmed the directed verdict, finding that the testimony of defendant’s owner was too uncertain, that plaintiff had

199 2011 WL 5570779 (D. Conn. Nov. 15, 2011) (unpublished). 200 2011 WL 5986767 (S.D. Fla. Oct. 29, 2011). 201 2012 WL 1569552 (D. Md. May 2, 2012). 202 654 F. 3d 739 (7th Cir. 2011).

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failed to pursue the issue in discovery, and that the question of enterprise coverage is a question of law for the court, not a jury. The court also affirmed the ruling that plaintiff was engaged in interstate commerce when working as a front desk clerk and therefore enterprise coverage was established for this period of employment.

b. Gross Receipts

In Garcia v. Serpe,203 employees of four limited liability companies that ran landscaping, cleaning company, construction, and restaurant operations sued for minimum wages and overtime. Defendants claimed they individually did not have $500,00 in revenue and were therefore not enterprises engaged in interstate commerce. Plaintiffs pointed out and the common owner admitted that defendants often received large payments in cash that defendants did not claim on their tax forms. Based on this, the court refused to grant summary judgment finding there was a genuine issue of material fact as to whether defendants individually or collectively met the standard for enterprise coverage.

In Yang Li v. Ya Yi Cheng,204 plaintiffs brought FLSA overtime and minimum

wage and New York state law claims against a restaurant and its owners. Defendants moved for summary judgment for lack of subject matter jurisdiction, arguing that plaintiffs could not show the restaurant constituted an “enterprise” generating a gross income of $500,000 or more during a one-year period, or that plaintiffs were employees engaged in commerce or the production of goods for commerce, as required by the FLSA. The district court referred the matter to the magistrate judge, who conducted a hearing on the issue of subject matter jurisdiction. On the issue of enterprise coverage, the restaurant’s owner testified at the hearing and submitted income tax returns, bank statements and merchant invoices showing that the restaurant, which opened in February 2010 and closed on October 10, 2010, consistently lost money and had total sales of only $135,902. However, the plaintiff, a waitress for defendant, compiled sales from invoices and receipts over a four and a half month period, which she claimed totaled $136,438.88. Plaintiffs submitted no other evidence to refute the information contained in the defendants’ income tax returns. The magistrate judge found the restaurant owner credible and noted that even if the sales calculated by plaintiffs were extrapolated over the full eight months, the restaurant did not generate over $500,000 in business. The magistrate judge found the restaurant was not an “enterprise” under the FLSA and recommended that the district court grant summary judgment for lack of jurisdiction and decline to exercise supplemental jurisdiction over plaintiffs’ state law claims. The district court granted summary judgment for defendant, adopting the magistrate judge’s recommendation.205

203 2012 WL 380253 (D. Conn. Feb. 6, 2012). 204 2012 WL 1004854 (E.D.N.Y. Jan. 6, 2012). 205 2012 WL 1004852 (E.D.N.Y. Mar. 23, 2012).

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c. Exclusions From Gross Receipts

In Marckenson v. LAL Peker, LLC,206 the court held that pizza restaurant was not a covered enterprise under the FLSA as a matter of law, because its gross sales during the period at issue were less than the $500,000 minimum required for enterprise coverage. The court rejected plaintiff’s argument that “gross volume of sales” must incorporate unrealized revenue attributable to coupons or discounts provided to customers.207 Defendant thus was granted summary judgment.

206 2011 WL 5023422 (S.D. Fla. Oct. 19, 2011). 207 29 C.F.R. §779.259.

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Chapter 4

WHITE-COLLAR EXEMPTIONS IV. General Principles That Apply to White-Collar Exemptions

C. “Highly Compensated” Employees

In Hicks v. Mercedes-Benz U.S. Int’l., Inc.,1 the district court granted summary judgment to the employer on the claims of sixteen “group leaders” for unpaid overtime, holding that each plaintiff met the FLSA “highly compensated” exemption. The employer classified the employees as exempt, but had a policy of paying them overtime after 45 hours. The court found that each plaintiff’s compensation met the ‘at least $100,000’ criterion because – while fringe benefit and medical insurance payments made by the employer were properly excluded from “annual compensation” – pre-tax payments made by each plaintiff to his/her 401(k) and the like had to be included. These pre-tax payments constituted a voluntary use of funds that the employee could have spent elsewhere. Looking at each plaintiff’s W-2 form, as plaintiffs argued, would only have revealed taxable compensation, not total compensation. Specifically, “taxable compensation” on the W-2 form excludes “elective deferrals,” the court said.

In Allen v. Coil Tubing Services, L.L.C.,2 current and former employees of an oil

well service company with various field service positions alleged overtime violations. Upon the parties’ cross motions for summary judgment, the district court concluded that one of the plaintiffs qualified for the FLSA “highly compensated employee” exemption while working as a service supervisor. In order to qualify, the employee must earn $100,000 or more during a 52-week period, and “regularly and customarily perform at least one of the duties of an executive, administrative or professional employee.” This plaintiff customarily and regularly directed the work of two or more employees and had the authority to fire service technicians under limited circumstances and give recommendations as to the technicians’ discipline, promotion and firing. Despite only working for a period of roughly ten months before his resignation, this plaintiff’s salary was on target to exceed $100,000 for a 52-week period. V. The Salary Basis Test

In Gayle v. Harry’s Nurses Registry, Inc.,3 the plaintiff brought a claim for unpaid overtime against employer nursing referral service. The district court initially granted summary judgment as to liability for the named plaintiff and certified a collective action. Following second-stage certification of the collective action, plaintiffs moved for summary judgment. Defendants objected, contending, among other arguments, that

1 2012 WL 1566140 (N.D. Ala. Apr. 30, 2012). 2 846 F. Supp. 2d 678 (S.D. Tex. 2012). 3 2012 WL 686860 (E.D.N.Y. Mar. 2, 2012).

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the bona fide professional exemption applied to plaintiffs, making them ineligible for overtime. The court rejected defendants’ arguments, concluding the nurses were paid by the hour, not on a salary basis.

In Levine v. Unity Health Sys.,4 plaintiff mental health counselors and therapists brought an action for overtime pay against employer health system on behalf of themselves and putative class, alleging they had been misclassified as exempt bona fide professionals. Granting defendant’s motion for summary judgment, the district court found defendants satisfied the salary basis test. It was undisputed that plaintiffs were compensated on a salary basis of more than $455 per week and received the same amount each pay period regardless of quality or quantity of work performed. The court rejected plaintiffs’ argument that defendant theoretically could have paid them less than usual if they had worked fewer than 40 hours. Nor was it determinative that defendants referenced an “hourly rate” on payroll statements.

B. Requirements of the Salary Basis Test

In Prakash v. Savi Technologies, Inc., 5 plaintiff computer technical support employee filed a motion for partial summary judgment as to the issue of liability for nonpayment of overtime under the FLSA. The defendant argued the plaintiff was exempt under either the professional or computer professional exemptions or as a highly compensated employee. With respect to the salary basis test, the defendant argued that plaintiff was consistently and without interruption paid semi monthly, and his semi monthly salary was never reduced because of hours worked, vacation taken, or the quality of work performed. Plaintiff argued he was not regularly paid the same amount each pay period because his bi-monthly payments fluctuated from $2083.33 to $7081.60 based on cash flow. The court ruled that compensation that is subject to change by the employer at the end of each pay period simply is not a salary and, therefore, the plaintiff was not an exempt employee. However, the court denied plaintiff’s motion on other grounds because it found disputed issues of material fact regarding the plaintiff’s amount of compensation.

D. Impermissible Deductions From an Employee’s Salary

In Bass v. City of Jackson,6 current and former District Fire Chiefs sued the City of Jackson, alleging overtime violations. The defendant moved for summary judgment, alleging, among other things, that the chiefs were exempt executive or administrative employees. The defendant relied on an earlier Fifth Circuit case, Smith v. City of Jackson, which held that district and battalion chiefs were “exempt employees under the FLSA and, as such, are not entitled to payment under the overtime provisions of the Act.” The defendant argued that the plaintiffs’ duties were the same as those performed by the chiefs in Smith. The district court noted, however, that an employee’s exempt status is not determined solely by the duties test, but also by the salary basis test and

4 847 F. Supp. 2d 507 (W.D.N.Y. 2012). 5 2011 WL 2414349 (W.D. Wash. June 10, 2011). 6 2011 WL 8198523 (S.D. Miss. Dec. 2, 2011).

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found evidence the defendant reduced the plaintiffs’ pay based on the number of hours worked. Specifically, one plaintiff emailed the fire chief to ask if his pay would be docked if he needed to take off work for a few hours instead of an entire day or shift, since he had no accrued leave. The fire chief answered that his pay would be docked on an hourly basis. Because the defendant failed to establish that the plaintiffs met the salary basis test, the court denied the motion for summary judgment.

In Fetrow-Fix v. Harrah’s Entertainment, 7 sixteen plaintiff casino employees brought suit against their employer casino, alleging, inter alia, that minimum wage and overtime violations. Defendants moved for summary judgment, contending that representative plaintiff was an exempt executive and/or administrative employee. The court explained that executive or administrative employees must be “compensated on a salary basis.” Plaintiffs admitted that the class representative had suffered no impermissible reduction in pay, yet asserted that other similarly situated former employees were subject to such deductions. The court disagreed; each of the deductions was valid due to the employees’ FMLA leave. Moreover, defendants did not have any clearly communicated policies indicating that improper deductions would be made under any circumstances. After finding the other necessary exemption requirements met, the court granted defendant’s motion for summary judgment. In Kaiser v. At The Beach, Inc.,8 twenty-six managers sued defendant operator of tanning stores for unpaid overtime. Defendant claimed the managers were exempt under the executive exemption. Plaintiffs claimed that they were nonexempt based on salary deductions and not meeting the duties requirement of the exemption. After a bench trial, the district court found that even though defendant had a policy in place at the time authorizing deductions for late store openings and late night deposits, defendants did not “have an actual practice of taking payroll deductions” during the relevant time frame. As a result, plaintiffs were paid on a salary basis.

3. Absences of Less Than One Day

In McLean v. Garage Management Corp.,9 plaintiff Garage Managers alleged they were improperly classified as exempt under the FLSA. Plaintiffs and defendants filed cross motions for summary judgment. The payroll documents demonstrated that the plaintiffs did not receive a salary each month but, instead, that their pay was adjusted to reflect the hours they worked during each pay period. Defendants’ reliance on a Collective Bargaining Agreement (“CBA”) that required work to be reflected at an hourly rate did not persuade the court because, irrespective of the CBA, the fact that the payroll records showed fluctuations in wages based on the number of hours worked remained uncontested. It was likewise uncontested that the plaintiffs’ wages were subject to reductions based on absences from work. Moreover, defendants’ use of the word “salary” to describe plaintiffs’ compensation was irrelevant because the payroll records showed the hourly rate paid based on the number of hours worked. Thus, the

7 2011 WL 5827199 (D. Nev. Nov. 18, 2011). 8 2011 WL 6826577 (N.D. Okla. Dec. 28, 2011). 9 819 F. Supp. 2d 332 (S.D.N.Y. 2011).

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court determined that the plaintiffs were non-exempt and entered summary judgment in their favor. VI. The Executive Exemption

A. Management Duties In Ramos v. Baldor Specialty Foods, Inc.,10 current and former warehouse night

shift “captains” in a food warehouse brought overtime claims against the defendants. The court granted summary judgment for the defendants on the ground that plaintiffs were exempt executive employees, reasoning that their tasks were clearly managerial because each captain: (a) was “in charge of” his own team of pickers; (b) made sure pickers on his team arrived on time and correctly performed their jobs at an acceptable productivity level; (c) spoke to pickers on his team who worked too slowly or made too many mistakes to try to improve their performance; (d) assigned certain orders to pickers if he trusted the picker to get the right product; (e) participated in every performance evaluation of a picker on his team; (f) was responsible for telling his supervisor, the night warehouse manager, how the picker was doing his job and identifying areas for improvement; (g) had authority to issue a warning to a picker if he was not doing a good job; (h) requested that the night warehouse manager transfer poor performers to another team; (i) completed a picker production report every night for every picker on his team; and (j) signed out and inspected the equipment used by the pickers every night. The court found unpersuasive plaintiffs’ claim that captains exercised little, if any independent judgment with respect to matters of significance because this requirement did not apply to the executive exemption.

B. Primary Duty of Managing

In Grace v. Family Dollar Stores, Inc.,11 a group of assistant store managers brought suit claiming Family Dollar had misclassified them as exempt from overtime pay, in violation of the FLSA. The defendant filed a motion for summary judgment claiming the plaintiffs were exempt executive employees. The district court granted the motion, concluding that the plaintiffs had management as their primary duty. The court noted that the named plaintiff testified she performed almost every one of the exempt duties described in 29 C.F.R. § 541.102, and that the amount of time spent performing managerial tasks, including tasks performed concurrently with non-exempt work, the relative importance of her managerial duties, the freedom from supervision, the relationship between her wages and the wages paid to non-exempt workers, and the frequency with which the plaintiff exercised discretionary power, all forward a finding of exempt status.

10 2011 WL 2565330 (S.D.N.Y. June 16, 2011), aff’d, 687 F.3d 554 (2d Cir. 2012). [Editor’s Note: The Second Circuit’s decision affirming the grant of summary judgment was issued on July 22, 2012, and will be discussed in next year’s report]. 11 2011 WL 6020051 (W.D.N.C. Dec. 2, 2011).

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In multiple venues,12 former store managers at Dollar General stores claimed that they were misclassified as exempt executives under the FLSA. In each of these cases, the defendant moved for summary judgment, with a central issue being whether the managers’ primary duty was management. Of the nine district courts considering this issue, seven granted summary judgment for the defendant, concluding that the managers satisfied the executive exemption.13 Conversely, two of the nine district courts denied summary judgment, finding that genuine issues of material fact existed as to whether the managers’ primary duty was management. 14 The courts granting summary judgment generally found that the plaintiffs’ (1) time spent on managerial duties was not determinative, (2) managerial tasks constituted the most important part of their jobs; (3) discretion was sufficient for purposes of the exemption, (4) relative freedom from supervision supported their exempt status, and (5) wages were higher than non-exempt positions. The two courts denying summary judgment generally found disputed issues of material fact on many or all of these factors.

In Fetrow-Fix v. Harrah’s Entertainment,15 sixteen plaintiff casino employees

brought suit against their employer alleging, inter alia, minimum wage and overtime violations. Defendants moved for summary judgment, contending that representative plaintiff was an exempt executive and/or administrative employee. The court concluded that plaintiff, as a Game Supervisor, had several executive and leadership responsibilities, including conducting performance evaluations for other employees, preparing monthly dealer reviews, and preparing work history notations for dealers. Therefore, in conjunction with her autonomous role and lack of direct supervision, plaintiff’s duties were primarily managerial in nature. After finding the other necessary executive exemption requirements met, the court granted defendants’ motion.

In Ramos v. Baldor Specialty Foods, Inc.,16 current and former warehouse night

shift “captains” in a food warehouse brought overtime claims against the defendants. The court granted summary judgment for defendants on all claims on the ground that plaintiffs were exempt executive employees. The court found that the captains’ primary duty was management based on evidence that the “main part” of a captain’s job was to manage his team of pickers, for example, by making sure pickers were correctly doing their jobs, and that captains spent more than seven hours of their shift performing supervisory responsibilities and no more than thirty minutes to one hour per shift performing non-exempt tasks. 12 See Jones v. Dolgencorp, Inc., 789 F. Supp. 2d 1090 (N.D. Iowa 2011); Kreiner v. Dolgencorp, Inc., 841 F. Supp. 2d 897 (D. Md. 2012); Thomas v. Dolgencorp, Inc., 2012 WL 1110078 (D.S.C. Apr. 3, 2012); Aschenbrenner v. Dolgencorp, Inc., 2011 WL 2200630 (D. Neb. June 3, 2011); Cavins v. Dolgencorp, Inc., 2011 WL 6848385 (S.D. Ohio Dec. 29, 2011); Dizer v. Dolgencorp, Inc., 2012 WL 626201 (W.D. La. Jan. 12, 2012); Ely v. Dolgencorp, LLC, 827 F. Supp. 2d 872 (E.D. Ark. 2011); Gonzalez v. Dolgencorp, Inc., 2011 WL 6009860 (W.D. Mich. Dec. 1, 2011); Gooden v. Dolgencorp, Inc., 2012 WL 1110085 (D.S.C. Apr. 3, 2012). 13 Kreiner, supra; Thomas, supra; Aschenbrenner, supra; Cavins, supra; Dizer, supra; Gonzalez, supra; Gooden, supra. 14 Jones, supra; Ely, supra. 15 2011 WL 5827199 (D. Nev. Nov. 18, 2011). 16 2011 WL 2565330 (S.D.N.Y. June 16, 2011), aff’d 2012 U.S. App. LEXIS 14333 (2d Cir., July 12, 2012).

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In Kaiser v. At The Beach, Inc.,17 twenty-six managers sued defendant operator of tanning stores for unpaid overtime. On summary judgment, the defendant claimed the managers were exempt executive employees. Plaintiffs claimed they were nonexempt, in pertinent part, because they did not satisfy the duties requirement of the executive exemption. The court, granting defendant’s motion, found that although plaintiffs spent approximately 30–40% of their time on managerial tasks and 60–70% on non-managerial tasks, plaintiffs’ “primary duty,” or most important duty, was “management” of their store. The court reasoned that, although plaintiffs spent considerable time on non-exempt work, there was “no question that Plaintiffs were simultaneously managing the store and bearing overall responsibility for the store.”

In Taylor v. AutoZone, Inc.,18 store managers employed by retail automotive parts stores alleged they were misclassified as exempt under the FLSA. The defendants moved for summary judgment against three of the named plaintiffs, arguing they were covered by the executive exemption. The district court granted defendants’ motion because the plaintiffs’ managerial duties were more important than their non-exempt duties, their non-exempt duties were performed concurrently with their exempt duties, they were relatively free from day-to-day direct supervision, they were paid considerably more compensation than non-exempt assistant store managers and parts sales managers, and their suggestions and recommendations as to the hiring, firing, advancement, promotion, and other changes in employee status were given particular weight.

In Maestas v. Day & Zimmerman, LLC,19 the Tenth Circuit reversed a district

court’s grant of summary judgment in favor of defendants on the issue of whether two levels of field officers20 for a private security force were exempt executives. The court held that a determination of those duties considered “primary” for purposes of applying the executive exemption’s primary duty test is a question of law and that where the parties have a genuine dispute regarding which duties are primary, summary judgment is not appropriate. The court also held that an employee who supervises subordinates while also conducting front-line law-enforcement work performs a non-managerial task, drawing on “first-responder” regulation21 providing that first responders are not exempt executives even if they also direct the work of other employees in the conduct of an investigation or fire.

In Darosa v. Florida Default Law Group, P.L.,22 the two plaintiffs alleged that the

defendant, a creditors’ rights law firm representing banks and other lenders through the foreclosure process, misclassified them as exempt employees and failed to pay 17 2011 WL 6826577 (N.D. Okla. Dec. 28, 2011). 18 2012 WL 254238 (D. Ariz. Jan. 27, 2012). 19 664 F.3d 822 (10th Cir. 2012). 20 The court reviewed summary judgment relating to the positions of lieutenant, captain and major and affirmed summary judgment only as to the position of major, finding no genuine factual dispute regarding the primary duties of that position. 21 29 C.F.R. §541.3(b). 22 2011 WL 3715118 (M.D. Fla. Aug. 24, 2011).

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overtime compensation in violation of the FLSA. The defendant asserted at summary judgment that the plaintiffs, whose title was “foreclosure supervisors,” were covered, among other things, under the executive exemption because their primary duty was to supervise and manage their team members. As to the first plaintiff, the court denied the defendant’s motion because there was a genuine issue of fact as to whether the plaintiff’s primary duty was management. The plaintiff testified that she was a manager “in name” only and that her primary duty was to perform clerical tasks assigned by her supervisors, and she had few managerial powers, such as no power to train, discipline, or hire and fire. As to the second plaintiff, the court granted the defendant’s motion, finding the plaintiff covered under the executive exemption. Although the plaintiff alleged she spent only 20% of her time performing duties she believed to be supervisory in nature, other factors supported a finding that her primary duty was management, such as her managing and delegating work to her subordinates, creating performance evaluations, discussing performance issues with subordinates, making hiring recommendations, and training and disciplining her subordinates.

C. “The Enterprise” or “a Customarily Recognized Department or

Subdivision” Thereof

In Ramos v. Baldor Specialty Foods, Inc.,23 current and former warehouse night shift “captains” in a food warehouse brought overtime claims against the defendants. The court granted summary judgment for defendants on all claims on the ground that plaintiffs were exempt from the overtime pay provisions under the executive exemption. The court found that each team of three to six pickers that a captain supervised was a customarily recognized department or subdivision under 29 C.F.R. § 541.100(a)(2) and prior case law, and noted plaintiffs did not appear to dispute that each team of pickers had a “permanent status and continuing function” within defendant’s night shift.

D. “Customarily and Regularly Direct the Work of Two or More Other Employees”

In Aschenbrenner v. Dolgencorp, Inc.24 and Jones v. Dolgencorp, Inc.,25 former store managers at Dollar General stores claimed they were misclassified as exempt under the FLSA. In each action, the defendant moved for summary judgment, arguing that the plaintiffs were properly classified under the executive exemption. In Aschenbrenner, the district court concluded that the plaintiff was properly classified and granted the defendant’s motion, reasoning that since the plaintiff admitted to supervising more than 80 hours of employee time per week, no triable issue of material fact remained as to whether she was responsible for “the customary and regular direction of the work of two or more other employees.” In Jones, the court denied summary judgment, finding the record factually insufficient to conclusively determine that no

23 2011 WL 2565330 (S.D.N.Y. June 16, 2011), aff’d, 687 F.3d 554 (2d Cir. 2012). [Editor’s Note: The Second Circuit’s decision affirming the grant of summary judgment was issued on July 22, 2012, and will be discussed in next year’s report]. 24 2011 WL 2200630 (D. Neb. June 3, 2011). 25 789 F. Supp. 2d 1090 (N.D. Iowa 2011).

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question of material fact remained as to whether the plaintiff was a bona fide executive employee under the FLSA. However, despite the denial, the Jones court reasoned in relevant part that although the plaintiff was frequently alone in the store, it was clear from the record that she directed the work of two or more employees or the equivalent regularly enough to satisfy that element.

E. Authority With Respect to Personnel Matters “Are Given Particular Weight”

In Grace v. Family Dollar Stores, Inc.,26 a group of assistant store managers brought suit claiming Family Dollar had misclassified them as exempt from overtime, in violation of the FLSA. The defendant moved for summary judgment, asserting the executive exemption defense. The district court granted the motion, concluding that the plaintiffs had management as their primary duty. The court noted that the plaintiffs had the authority to hire or fire employees or made recommendations that carried particular weight. The court found that the named plaintiff satisfied the “particular weight” test where she was actively involved in the interviewing and employee screening process, and her district manager often followed her hiring and firing recommendations.

In Gooden v. Dolgencorp, Inc.,27 a former store manager at a Dollar General store claimed he was misclassified as exempt under the FLSA. The defendant moved for summary judgment, arguing that the plaintiff was properly classified as an exempt executive. The district court granted the defendant’s motion, concluding the plaintiff was properly classified as exempt. In relevant part, the court noted that the plaintiff could hire all key carriers without approval of his district manager, hired 73 employees during his tenure as store manager and had his recommendations to promote or demote subordinates approved by his district managers.

In Fetrow-Fix v. Harrah’s Entertainment,28 sixteen plaintiff casino employees brought suit against their employer alleging, inter alia, minimum wage and overtime violations. Defendants moved for summary judgment, contending that representative plaintiff was an executive and/or administrative employee. The court explained that executive employees must have the “authority to hire or fire other employees” or that their suggestions as to personnel matters “are given particular weight.” The court concluded that plaintiff, as a Game Supervisor, made recommendations regarding a dealer’s hiring and firing, and that these recommendations were relied upon and made on a regular, rather than sporadic, basis. Considering that all the executive exemption requirements had been met, the court granted defendants’ motion for summary judgment. 26 2011 WL 6020051 (W.D.N.C. Dec. 2, 2011). 27 2012 WL 1110085 (D.S.C. Apr. 3, 2012). 28 2011 WL 5827199 (D. Nev. Nov. 18, 2011).

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VII. The Administrative Exemption

A. “Office or Non-Manual Work”

In Fetrow-Fix v. Harrah’s Entertainment,29 sixteen plaintiff casino employees brought suit against their employer alleging, inter alia, minimum wage and overtime violations. Defendants moved for summary judgment, contending that representative plaintiff was an executive and/or administrative employee. The court explained that administrative employees’ “primary duty” must be the “performance of office or non-manual work directly related to the management or general business operations of the employer . . . .” The court concluded that plaintiff, as a Game Supervisor, supervised table games to detect cheating and theft, and evaluated dealers for efficiency and regulatory compliance. These duties are administrative in nature and akin to running the casino business. After concluding that the other administrative exemption requirements were met, the court granted defendants’ motion for summary judgment.

In Nigg v. U.S. Postal Serv.,30 retired postal inspectors brought overtime claims

alleging they were improperly classified as exempt employees. Defendant filed a motion for summary judgment, asserting the postal inspectors qualified for the administrative exemption. Plaintiffs claimed their primary work was conducting criminal investigations, which involved manual tasks, while defendant claimed the inspectors’ duties were primarily office work or other non-manual tasks. The court found neither party demonstrated which set of postal inspector duties was actually the “primary duty,” and therefore refused to grant summary judgment.

B. “Directly Related to Management or General Business Operations”

In Chicca v. St. Luke’s Episcopal Health Sys.,31 plaintiff filed suit against his former employer, a hospital system, for unpaid overtime wages under the FLSA. Plaintiff, an Information Protection Analyst who worked in the Security Services group of defendant’s IT department, alleged that defendant misclassified him as an exempt employee. Both parties moved for summary judgment on the issue of whether plaintiff was covered by the administrative exemption. Defendant asserted that plaintiff’s primary duty was directly related to the management or general business operations of the hospital because, according to a statement in plaintiff’s resume, he maintained the security of information resources against accidental or unauthorized access, modification, destruction or disclosure, and identified and reduced risks to information processing environments and associated areas. Plaintiff, however, argued that he did not decide what computer systems or applications defendant would purchase or how defendant would use its computer systems; did not set policies for computers that could govern other employees; and did not decide what the appropriate level of security access for employees should be. The district court denied summary judgment for both parties, stating that conflicting evidence regarding plaintiff’s job duties created a fact

29 2011 WL 5827199 (D. Nev. Nov. 18, 2011). 30 829 F. Supp. 2d 889 (C.D. Cal. 2011). 31 858 F. Supp. 2d 777 (S.D. Tex. 2012).

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dispute and prevented the court from determining, as a matter of law, whether plaintiff’s work was related to the management or general business operations of defendant.

In Caveness v. Vogely & Todd, Inc.,32 a former estimator at an auto body shop brought claims for unpaid overtime against her former employer, alleging it improperly classified her as exempt. Plaintiff moved for summary judgment, asserting she was not an exempt administrative employee. The district court denied plaintiff’s motion, stating that defendants set forth facts which suggested that plaintiff assisted with the “running and servicing” of defendants’ business. Defendants argued they were in the business of repairing and restoring damaged vehicles, not selling damage repair estimates or consulting services; thus if plaintiff was not a technician who repaired vehicles, she performed general business services necessary to facilitate defendants’ restoration and repair business by making estimates, setting repair schedules, assigning and prioritizing repair work, providing quality assurance, and ensuring collection. The court also noted that some of plaintiff’s job duties were similar to those of insurance claims adjusters, who “generally meet the duties test requirements for the administrative exemption.” In Colyer v. SSC Disability Serv., LLC,33 defendant, an advocate for people filing disability claims with the Social Security Administration, filed a motion for summary judgment as to plaintiff’s overtime claims, asserting that plaintiff was an exempt administrative employee. The court denied the motion. Plaintiff was a disability advocate paid $37,000 annual salary plus production bonuses. In an analysis of the administrative/production dichotomy, the court found that production bonuses given to plaintiff disfavored finding that plaintiff’s work was related to management or general business operation. Moreover, plaintiff’s adherence to clear and specific guidelines in her job and seeking supervisor’s advice in 9 out of 10 cases as to whether plaintiff should go forward with a disability claim, displayed that plaintiff did not exercise independent judgment.

In Fetrow-Fix v. Harrah’s Entertainment,34 sixteen plaintiff casino employees brought suit against their employer, alleging, inter alia, that defendants failed to pay minimum wages and/or overtime compensation. Defendants moved for summary judgment, contending that representative plaintiff was an executive and/or administrative employee. With respect to the second administrative exemption requirement, that administrative employees’ “primary duty” must involve the “performance of office or non-manual work directly related to the management or general business operations of the employer,” the court concluded that plaintiff, as a Game Supervisor, supervised table games to detect cheating and theft, and evaluated dealers for efficiency and regulatory compliance. These duties are administrative in nature and are “an integral part of ensuring that the business is run properly with respect to table games,” as well as “ensuring compliance with company policy.” After concluding that the other administrative exemption requirements were met, the court granted defendants’ motion for summary judgment.

32 2011 WL 3841649 (M.D. Tenn. Aug. 30, 2011). 33 2012 WL 882500 (S.D. Fla. Mar. 14, 2012). 34 2011 WL 5827199 (D. Nev. Nov. 18, 2011).

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In Nolan v. Transcend Servs., Inc.,35 a quality assurance manager for a medical transcription company claimed she was improperly classified as exempt under the FLSA. Defendant moved for summary judgment, arguing that plaintiff was subject to the administrative exemption, and the district court granted defendant’s motion. Specifically, the court found plaintiff performed work directly related to the running or servicing of defendant’s business, in particular auditing and quality control. The court also credited plaintiff’s admission that the quality of the medical transcriptions was “the single most important factor in transcribing medical records.”

In Nigg v. U.S. Postal Serv.,36 retired postal inspectors brought overtime claims alleging that they were improperly classified as exempt. Defendant filed a motion for summary judgment, asserting the postal inspectors were exempt administrative employees. The court found that the postal inspectors’ primary duty was directly related to management or general business operations of defendant or its customers. The inspectors’ law enforcement duties were not among the defendant’s primary functions. Rather, their primary functions related to ensuring safe and reliable mail delivery. However, the court denied defendant’s summary judgment motion on other grounds.

In Raffe v. American Nat’l Red Cross,37 a former director of emergency services of an American National Red Cross chapter brought overtime claims against defendants. Defendants filed a motion for summary judgment, asserting the director was an exempt administrative employee. The court granted defendants’ motion, finding that plaintiff’s primary duty was the performance of office and non-manual work directly related to the management or general business operations of the defendant. The court based its determination on plaintiff’s concession that he was responsible for almost every aspect of disaster services, including managing and monitoring delivery of services, that he had a role in formulating and revising disaster and emergency response plans, and that he oversaw the entire emergency services department and had the responsibility for managing the department’s operations. The court rejected plaintiff’s contention that he was merely working toward fulfilling a customer’s need for a service, rather than performing administrative duties, finding that the undisputed material facts showed that plaintiff’s duties went beyond merely producing defendants’ services for their customers.

In Carbaugh v. Unisoft Intern., Inc.,38 the court granted defendant’s motion for

summary judgment with respect to plaintiff’s overtime claims, finding plaintiff qualified for the administrative exception. The court found that plaintiff’s position as a software consultant whose job required frequent travel to customers’ locations to install, modify, and train employees on various products, who worked geographically separated from his supervisor, and whose duties required fluctuating hours each week, clearly met the definition of an “administrative employee.”

35 2012 U.S. Dist. LEXIS 703 (D. Or. Jan. 4, 2012). 36 829 F. Supp. 2d 889, 892 (C.D. Cal. 2011). 37 2011 WL 6019436 (N.D.N.Y. Nov. 30, 2011). 38 2011 WL 5553724 (S.D. Tex. Nov. 15, 2011).

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In Hines v. State Room, Inc.,39 the First Circuit affirmed a grant of partial summary

judgment applying the administrative exemption to three former sales managers who sued for overtime. Plaintiffs worked for two different banquet facilities owned by defendants, serving as the primary client contact for the businesses. Each plaintiff not only secured event business for the defendants by calling and showing the venue to prospects, but also worked with the client throughout the process and the event itself to plan the details and execute the event satisfactorily. Plaintiffs’ work was directly related to management or general business operations, the court reasoned, because the principal business of the defendants was providing banquets, and plaintiffs “worked with each client to create a custom event in all of the particulars” and also established long term relationships intended to maintain the defendants’ reputations. Plaintiffs’ sales activities were only ancillary to their principal functions.

In Parker v. Syniverse Tech., Inc.,40 plaintiff, a salaried senior network provisioner,

sued her employer, a technology based company, for unpaid overtime. Defendant moved for summary judgment, asserting plaintiff fell under the computer professional or administrative exemptions. The court found that defendant failed to meet its burden of proving that plaintiff satisfied the administrative exemption, finding a disputed issue of material fact as to whether plaintiff’s job duties related to the actual running of defendant’s business. Defendant argued that plaintiff’s work was directly related to assisting with the running or servicing of the business because her job duties were identified in 29 C.F.R. §541.201(b), i.e. quality control, research, computer network, and internet and database administration. Plaintiff, in contrast, argued her duties were more akin to “production,” which is specifically excluded under the regulation. While production activities in a service industry relate to the primary service goal of the entity and defendant’s service goal was to provide access to their telecommunications system, plaintiff’s job arguably was only to assist customers in routing signals from point A to point B by accessing defendant’s telecommunications system.

C. “Discretion and Independent Judgment”

In Chicca v. St. Luke’s Episcopal Health Sys.,41 plaintiff filed suit against his

former employer, a hospital system, for unpaid overtime. Plaintiff, an Information Protection Analyst who worked in the Security Services group of defendant’s IT department, alleged that defendant misclassified him as an exempt employee. Both parties moved for summary judgment on the issue of whether plaintiff was exempt under the administrative exemption. Defendant asserted that plaintiff’s primary duty included the exercise of discretion and independent judgment with respect to matters of significance because plaintiff often performed his work with limited supervision from or interaction with his supervisor; identified and reduced risks to information processing environments; was responsible for identifying any deficiencies or deviations from defendant’s standards and best practices; and responded to user requests for access to

39 665 F.3d 235 (1st Cir. 2011). 40 2011 WL 3269639 (M.D. Fla. Aug. 1, 2011). 41 858 F. Supp. 2d 777 (S.D. Tex. 2012).

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various software applications. Defendant also contended that plaintiff’s duties as a team leader—responsible for leading a team in overseeing and executing “major” IT projects—were alone enough for him to qualify for the administrative exemption. Plaintiff, however, argued generally that he had little discretion over his own job duties, and had no discretion at all over the manner in which other employees worked. In denying summary judgment for both parties, the district court noted that “[d]iscretion and independent judgment are distinguishable from the ability to resolve relatively minor tasks with limited supervision,” and held that the parties’ conflicting evidence created a fact dispute regarding the level of discretion and independent judgment exercised by plaintiff, thus making summary judgment for either party improper.

In Caveness v. Vogely & Todd, Inc.,42 a former estimator at an auto body shop

brought claims for unpaid overtime against her former employer, alleging it improperly classified her as exempt. Plaintiff moved for summary judgment, asserting she was not an exempt administrative employee. The district court denied plaintiff’s motion, stating that defendant set forth facts which suggested that plaintiff exercised discretion and independent judgment. Defendant submitted evidence that plaintiff decided whether to replace damaged parts and, if so, whether to use new, used or refurbished parts from either the original equipment manufacturer or a third party, and that plaintiff also decided whether to override computer estimates regarding labor hours, and scheduled and prioritized the work of technicians, deciding which tasks to assign to which technician.

In Grant v. Shaw Group, Inc.,43 an environmental scientist brought overtime claims against his employer, an environmental consulting firm. The plaintiff’s job duties included collecting data; ensuring conformance to technical standards and company policies and procedures; reviewing the history of analyzers and looking at past recorded data; running tests; determining how to proceed once he was on a job; sharing his expertise; applying his skills to particular situations; and informing other departments if problems arose or if additional work was needed. Following a bench trial, the district court found that the defendants failed to prove that either the administrative or professional exemptions applied. On the first duties prong of the administrative exemption, the court concluded that the plaintiff’s work was not “directly related to management. Rather, the evidence and testimony demonstrated that plaintiff's job duties involved primarily maintenance, testing, and physical installation of [the employer’s] systems.” On the second duties prong of the administrative exemption, the court concluded that while the plaintiff exercised some discretion, this discretion—deciding what to do upon arriving at a customer's site; deciding what steps to take in regard to the data he obtained from CEM systems; determining whether CEM systems were in compliance with regulations by performing diagnostic tests; and determining whether he could fix problems with the CEM systems or whether others should be notified—did not relate to matters of significance within the meaning of the administrative exemption.

42 2011 WL 3841649 (M.D. Tenn. Aug. 30, 2011). 43 2012 WL 124399 (E.D. Tenn. Jan. 17, 2012).

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In Darosa v. Florida Default Law Group, P.L.,44 the two plaintiffs alleged that the defendant, a creditors’ rights law firm representing banks and other lenders through the foreclosure process, misclassified them as exempt employees and failed to pay overtime compensation in violation of the FLSA. The defendant asserted at summary judgment that the plaintiffs, whose title was “foreclosure supervisors,” were covered, among other things, under the administrative exemption. Regarding the first plaintiff, the court found that there were genuine issues of material fact with respect to the third prong of the administrative exemption—whether plaintiff exercised discretion and independent judgment with respect to matters of significance. Plaintiff presented evidence that 85–90% of her time was spent performing repetitive, recurrent and routine clerical data-entry and tabulation work, which did not require the exercise of discretion and independent judgment. With respect to the second plaintiff, the court granted the defendant’s summary judgment motion on the administrative exemption because 1) her primary duty was the performance of office or non-manual work directly related to the management or general business operations of the employer” because she managed her sales team, and 2) the fact that she performed so many management and supervisor tasks is dispositive as courts have found that such tasks require the regular use of discretion and independent judgment.

In Fox v. Lovas,45 plaintiff bookkeepers brought overtime claims against their employer, and the parties filed cross-motions for summary judgment. Defendant contended plaintiffs were exempt administrative employees. To be administratively exempt, an employee’s “primary duty” must, inter alia, include the “exercise of discretion and independent judgment with respect to matters of significance.” Evaluating several factors, the court concluded that plaintiffs duties met this third requirement: plaintiffs implemented and maintained a financial bookkeeping system, made recommendations as to software programs for the company to use, made independent corrections to previously erroneous bookkeeping problems, and were given substantial autonomy in carrying out their duties. After finding the other administrative exemption requirements met, the court concluded that plaintiffs were exempt administrative employees and granted defendant’s motion for summary judgment.

In Foster v. Nationwide Mut. Ins., 46 ninety-one current and former special investigators alleged they were improperly classified as exempt under the FLSA. Plaintiffs’ job duties included conducting investigations of potentially fraudulent insurance claims. At a bench trial, the plaintiffs generally contended that their roles involved little to no discretion and that their job mainly involved fact-gathering. The court concluded that defendant satisfied the third administrative exemption duties requirement, whether the employee exercises discretion and independent judgment with respect to matters of significance, and found that the plaintiffs’ primary duty was to conduct investigations into suspicious claims with the purpose of resolving fraud disputes. This job duty included taking statements, making referrals to law enforcement, recommending the retention of, and supervising, outside vendors, and

44 2011 WL 3715118 (M.D. Fla. Aug. 24, 2011). 45 2012 WL 692131 (W.D. Ky. Mar. 2, 2012). 46 2012 WL 407442 (S.D. Ohio Jan. 5, 2012).

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conducting deposition-like interviews. The district court reasoned that the investigators at issue were tasked with resolving indicators of fraud necessary to come to an independent assessment, and had nearly unilateral discretion in referring potentially fraudulent claims to law enforcement.

In Fetrow-Fix v. Harrah’s Entertainment,47 sixteen plaintiff casino employees

brought suit against their employer, alleging, inter alia, minimum wage and overtime violations. Defendants moved for summary judgment, contending that representative plaintiff was an exempt executive and/or administrative employee. The court concluded, as to the third administrative exemption duties requirement that administrative employees’ “primary duty” must include the “exercise of discretion and independent judgment with respect to matters of significance,” that plaintiff, as a Game Supervisor, supervised table games, evaluated dealers for efficiency and regulatory compliance, made personnel recommendations, and resolved general disputes. These duties involve the implementation of the casino’s policies and operating practices, the essence of exercising discretion and independent judgment. Accordingly, the court granted defendants’ motion for summary judgment, concluding that all of the requirements for the administrative exemption had been satisfied.

In Nolan v. Transcend Servs., Inc.,48 a quality assurance manager for a medical transcription company claimed she was improperly classified as exempt under the FLSA. Defendant moved for summary judgment, arguing that plaintiff was administratively exempt, and the district court granted defendant’s motion. Specifically, the court found plaintiff exercised discretion and independent judgment even though her decisions were reviewed at a higher level and she used a manual to perform her job duties. The court reasoned that the plaintiff was not limited to applying only the techniques and procedures found in the manual, and plaintiff also helped defendant develop the manual to aid certain other employees.

In Nigg v. U.S. Postal Serv.,49 retired postal inspectors brought overtime claims alleging they were improperly classified as exempt employees. Defendant filed a motion for summary judgment, asserting the postal inspectors were exempt administrators. The court found that a disputed issue of material fact precluded summary judgment on the issue of whether the inspectors’ primary duty included the exercise of discretion and independent judgment with respect to matters of significance. Although the inspectors admitted they exercised discretion and independent judgment as part of their daily duties, the inspectors’ declarations contradicted defendant’s claims that discretion was part of their primary duty.

In Raffe v. American Nat’l Red Cross,50 a former director of emergency services

of an American National Red Cross chapter brought overtime claims against defendants. Defendants filed a motion for summary judgment, asserting the director

47 2011 WL 5827199 (D. Nev. Nov. 18, 2011). 48 2012 U.S. Dist. LEXIS 703 (D. Or. Jan. 4, 2012). 49 829 F. Supp. 2d 889 (C.D. Cal. 2011). 50 2011 WL 6019436 (N.D.N.Y. Nov. 30, 2011).

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was an exempt administrative employee. The court granted defendants’ motion, finding that plaintiff’s primary duty included the exercise of discretion and independent judgment with respect to matters of significance. In reaching this conclusion, the court relied on plaintiff’s admissions that he developed and evaluated the continuity of operations plan and that he had significant budgetary and fiscal responsibility, including the ability to reallocate emergency service funds, submit grant applications, handle procurement, oversee equipment and inventory, and authorize purchases. The court also determined that the fact that plaintiff did not have sole or final authority to make some decisions did not disqualify him from satisfying the conditions necessary for the administrative exemption.

In Hines v. State Room, Inc.,51 the First Circuit affirmed a district court’s grant of

partial summary judgment applying the administrative exemption to three former sales managers who sued for overtime. Plaintiff sales managers worked for two different banquet facilities owned by defendants, serving as the primary client contact for the businesses. Each plaintiff not only secured event business for the defendants by calling and showing the venue to prospects, but also then worked with the client throughout the process and the event itself to plan the details and execute the event satisfactorily. On appeal, the plaintiffs claimed they did not meet the third prong of the administrative exemption, which requires that their primary duties include the exercise of discretion and independent judgment as to matters of significance. The court disagreed. Plaintiffs’ jobs involved creating custom events for clients, personalized to individual tastes and budgets. This task involved at least as much creativity as the court had found sufficient when considering similar issues for insurance salespersons in a 1997 decision.52 While the defendants provided plaintiffs with a handbook, most of the rules in the handbook were merely broad guidelines that did not “cabin” the judgment the plaintiffs had to exercise. Plaintiffs argued that the Second Circuit’s 2010 decision in Novartis limited a court to reviewing the ten factors set forth in the regulations,53 but the First Circuit refused to read Novartis so narrowly. Rather, the First Circuit believed that an appropriate analysis, and that conducted in Novartis, considered a multitude of factors and the specific circumstances at issue, all as suggested by the language of the regulations and the preamble to the regulation found in the Federal Register. Finally, the court concluded that the matters as to which the sales managers exercised discretion were matters of significance to the defendant employers inasmuch as the plaintiff sales managers essentially were the face of the business.

51 665 F.3d 235 (1st Cir. 2011). 52 Id. at 244–45 (citing Reich v. John Alden Life Ins. Co., 126 F.3d 1, 14 (1st Cir. 1997)). 53 Id. at 246 (citing In re Novartis Wage & Hour Litigation, 611 F.3d 141 (2d Cir. 2010) and 29 C.F.R. §541.202(b)).

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E. Regulatory Application of Principles to Specific Job Categories

1. Insurance Claims Adjusters—29 C.F.R. §541.203(a)

The plaintiffs in Withrow v. Sedgwick Claims Management Serv., Inc.54 worked as claims examiners administering workers' compensation claims for a customer of the defendant employer, a third-party claims administrator. The defendant moved for summary judgment on the plaintiffs’ overtime claims, arguing that the plaintiffs fell within the administrative exemption. In granting the defendant's motion, the district court noted that the plaintiffs performed several of the duties listed in 29 C.F.R. §541.203(a), including interviewing insureds and physicians, reviewing factual information to prepare damage estimates, determining the total value of a claim and negotiating settlements. The court concluded that “the plaintiffs’ primary duty directly related to the general business operations of [the defendant’s] customer,” rejecting the plaintiffs’ contention that they were like production employees. The defendant's customer was in the business of providing workers’ compensation insurance, and the plaintiffs administered claims arising thereunder; plaintiffs did not produce or sell a product. The court also concluded that the plaintiffs’ primary duty included the exercise of discretion and independent judgment, even though they “did not always make [] decisions alone, without the advice of supervisors or medical professionals” and their decisions were sometimes subject to a supervisor’s approval and review. Finally, the court concluded that the plaintiffs’ exercise of discretion and independent judgment respected matters of significance, given that their decisions had a significant financial impact.

2. Financial Services Industry Employees— 29 C.F.R. §541.203(b)

In Lewis v. Huntington Nat’l Bank,55 mortgage loan officers classified as exempt by the employer bank filed a complaint for unpaid overtime. The district court denied the defendant’s motion for partial summary judgment finding genuine issues of material fact regarding defendant’s exemption defense. The court, looking to the mortgage loan officers’ primary duty, noted that while many financial service employees would fall under the administrative exemption, loan officers whose primary duty was sales are on the production side of the business and do not relate to the internal management or general business operations of the company.

10. Investigators—29 C.F.R. §541.203(j)

In Foster v. Nationwide Mut. Ins., 56 ninety-one current and former special investigators alleged that defendant improperly classified them as exempt from the FLSA’s overtime requirements. Plaintiffs job duties included conducting investigations of potentially fraudulent insurance claims. At a bench trial, the plaintiffs generally contended that their roles involved little to no discretion and that their job mainly involved fact-gathering. Focusing on the third administrative exemption requirement,

54 841 F. Supp. 2d 972 (S.D. W. Va. 2012). 55 838 F. Supp. 2d 703 (S.D. Ohio 2012). 56 2012 WL 407442 (S.D. Ohio Jan. 5, 2012).

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whether the employee exercises discretion and independent judgment with respect to matters of significance, the court found that the plaintiffs’ primary duty was to conduct investigations into suspicious claims with the purpose of resolving fraud disputes. This job duty included taking statements, making referrals to law enforcement, recommending the retention of, and supervising, outside vendors, and conducting deposition-like interviews. The court distinguished a Department of Labor opinion letter concluding that Department of Defense investigators were not administrative employees because they merely applied “their knowledge in following prescribed procedures or determining which procedure to follow, or determining whether standards are met,” because the investigators at issue were tasked with resolving indicators of fraud to come to an independent assessment and they had nearly unilateral discretion in referring potentially fraudulent claims to law enforcement.

F. Other Examples of Positions That Have Been Found to Be Exempt or Nonexempt

In Lemmon v. Ayres,57 a staff accountant brought a claim for unpaid overtime

against an accounting firm that provided financial services, including tax preparation and other accounting related functions. The defendant employer moved for summary judgment, asserting that the plaintiff was exempt. In granting the employer’s motion, the district court held that the plaintiff was exempt under both the administrative and professional exemptions. The district court concluded that the plaintiff’s primary duties of keeping accounting records, preparing financial reports, and preparing tax returns qualified for the administrative exemption. Additionally, the district court determined that the plaintiff’s accounting work qualified as “work requiring advanced knowledge” under the federal regulations. VIII. The Professional Exemption

A. Learned Professional

In Grant v. Shaw Group, Inc.,58 an environmental scientist brought suit against his employer, an environmental consulting firm, alleging his employer misclassified him as exempt from the FLSA’s overtime requirements. The plaintiff’s job duties included collecting data; ensuring conformance to technical standards and company policies and procedures; reviewing the history of analyzers and looking at past recorded data; running tests; determining how to proceed once he was on a job; sharing his expertise; applying his skills to particular situations; and informing other departments if problems arose or if additional work was needed. Following a bench trial, the district court found that the defendants failed to prove that either the administrative or professional exemptions applied. As to the professional exemption, the court noted that the plaintiff was a high school graduate with limited college course work and that his job duties did not require knowledge of an advanced type in a field of science or learning.

57 860 F. Supp. 2d 489 (S.D. Ohio Mar. 16, 2012). 58 2012 WL 124399 (E.D. Tenn. Jan. 17, 2012).

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The plaintiff in Cuttic v. Crozer-Chester Med. Ctr.59 was a licensed physician assistant who was paid on an hourly basis. Defendant argued that the exception to the salary requirement applicable to physicians and other practitioners licensed and practicing in the field of medical science provided by 29 C.F.R. § 541.304 applied to a physician assistant as well. On reconsideration, the court adhered to its initial conclusion that physician assistants did not come within that exception because its intended scope was limited to actual physicians.

1. “Work Requiring Advanced Knowledge”

In Hancock v. Woodson Inc., 60 the plaintiff, a former “utility forester” sued defendant, a “professional services company” that contracted with utility companies and government agencies to mark and clear obstructions from utility easements, for overtime violations. The defendant moved for summary judgment on the basis that the plaintiff was an exempt “professional.” The district court found there was not enough evidence to conclude the plaintiff met the “primary duty” test. In denying the defendant’s motion, the court noted that more information was needed about the plaintiff’s primary work tasks, amount of discretion he was authorized to exercise, his salary relative to the industry or others employed by defendant at the time, and the exact nature of his education.

In Lemmon v. Ayres,61 a staff accountant brought a claim for unpaid overtime compensation against an accounting firm that provided financial services, including tax preparation and other accounting related functions. The defendant employer moved for summary judgment, asserting that the plaintiff was exempt. In granting the employer’s motion, the district court held that the plaintiff was exempt under both the administrative and professional exemptions. The district court concluded that the plaintiff’s accounting duties qualified as “work requiring advanced knowledge” under the federal regulations.

In Levine v. Unity Health Sys.,62 plaintiff mental health counselors and therapists

brought an action for overtime pay against employer health system, alleging they were misclassified as exempt professionals. Granting defendant’s motion for summary judgment, the court found the plaintiffs’ primary duty was the performance of work requiring advanced knowledge, acquired through prolonged, specialized instruction. Although plaintiffs performed some administrative tasks and did not have the same authority as the treating doctors, plaintiffs’ primary duties included assessing patient’s mental health and leading therapy sessions. Plaintiffs also had to meet minimum specialized education requirements and maintain state licensure to qualify for their position.

59 806 F. Supp. 2d 796 (E.D. Pa. 2011). 60 2012 WL 845249 (S.D. Miss. Mar. 12, 2012). 61 860 F. Supp. 2d 489 (S.D. Ohio 2012). 62 847 F. Supp. 2d 507 (W.D.N.Y. 2012).

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2. “Consistent Exercise of Discretion and Judgment”

In Allen v. Coil Tubing Services, L.L.C.,63 current and former employees of an oil well service company brought suit alleging overtime violations. Upon the parties’ cross motions for summary judgment, the court concluded that one of the plaintiffs qualified for the “learned professional exemption” to the FLSA while employed as a field engineer. As to the second plaintiff, the court found that, while petroleum engineering would qualify, there was a discrepancy between the duties expected of and actually performed by the field engineer and as such it was unclear what functions required the “consistent exercise of discretion and judgment, as distinguished from performance of routine mental and manual …work.” Thus, the defendant did not show entitlement to the professional exemption. IX. Computer Employees

In Chicca v. St. Luke’s Episcopal Health Systems,64 plaintiff filed suit against his former employer, a hospital system, for unpaid overtime wages under the FLSA. Plaintiff, an Information Protection Analyst who worked in the Security Services group of defendant’s IT department, alleged that defendant misclassified him as an exempt employee. Both parties moved for summary judgment on the issue of whether plaintiff was exempt under the computer professional exemption. Defendant first argued that plaintiff’s primary duty involved the application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications. Plaintiff, however, contended that his consultations with users were merely for the purpose of adjusting employee profiles, including changing security access information. The district court concluded that, if plaintiff’s factual assertions were true, he would not fall under the computer professional exemption; thus, genuine issues of material fact precluded summary judgment for either party. Defendant also argued that plaintiff created a manual laying out procedures to be used within defendant’s information protection department. The court again found that fact issues precluded summary judgment because, although plaintiff engaged in some documentation, it was unclear whether plaintiff engaged in the documentation “of computer systems or programs” as required by 29 C.F.R. § 541.400(b)(2), or whether plaintiff engaged in the design, development, analysis, creation, testing, or modification “of computer systems or programs.”

In Parker v. Syniverse Tech., Inc.,65 plaintiff, a salaried senior network provisioner,

sued her employer, a technology based company, for overtime compensation. Defendant moved for summary judgment on the grounds that plaintiff was exempt under the computer professional or administrative exemptions. The court denied the motion because the details of plaintiff’s job duties were in dispute. The company claimed that plaintiff applied systems analysis techniques, used analytic skills to determine and design routing, consulted with users to determine system functional specifications, had

63 846 F. Supp. 2d 678 (S.D. Tex. Jan 11, 2012). 64 858 F. Supp. 2d 777 (S.D. Tex. 2012). 65 2011 WL 3269639 (M.D. Fla. Aug. 1, 2011).

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to rely on specialized knowledge and could not merely rely on a table or manual for her work. In contrast, plaintiff claimed that she merely verified routing information with customers to determine whether points codes existed in the company’s system, the company’s engineers created new routes if codes needed to be added or routes needed to be designed, and, until the work became routine, she used the company’s lengthy road map with instructions to follow in most situations.

X. The Outside Sales Exemption

A. “Making Sales”

In Lane v. Humana Marketpoint, Inc., 66 two Sales Representatives alleged overtime violations. The defendant filed for summary judgment on the basis that the sales representatives were exempt from overtime under the outside sales exemption. The sales representatives received base salary plus commissions for their sales of Humana Medicare and other Humana products, but no overtime payments. The sales representatives had assigned territories, used their homes as their offices and frequently made presentations or held seminars at public locations or customer homes. Sales representatives also marketed at doctors’ offices and senior centers, and kept assigned hours at Wal-Mart to market and respond to customer questions, and received product training and sales tools from Humana. The court granted the defendant’s motion because the plaintiffs’ primary responsibility was making sales, since sales was their principal, main, major and most important duty.

B. Tasks Incidental to Sales Activities

In Lane v. Humana Marketpoint, Inc., 67 two Sales Representatives alleged

overtime violations. The court first determined that the primary duty of the sales representatives was sales, and then labeled their customer service, performed 90% of the time for their own clients, as incidental to their sales work.

C. “Away From the Employer’s Place or Places of Business”

In Lane v. Humana Marketpoint, Inc., 68 two Sales Representatives alleged overtime violations. The court determined, in granting summary judgment to the defendant, that the sales representatives customarily and regularly performed their primary duty away from the employer’s place of business. The court noted that the bulk of sales representatives’ duties were performed away from their home offices; and that they were given a car and mobile communications allowances to facilitate their sales activities. The court, determining that the locations were away from the employer’s places of business, rejected the argument that public locations, since they were fixed, constituted employer locations.

66 2011 WL 2181736 (D. Idaho June 3, 2011). 67 2011 WL 2181736 (D. Idaho June 3, 2011). 68 2011 WL 2181736 (D. Idaho June 3, 2011).

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Chapter 5

OTHER STATUTORY EXEMPTIONS

II. Section 13(a) Exemptions From the Minimum Wage and Overtime Requirements of the Act

F. Casual-Basis Babysitters and Domestic Companionship Service

Providers

2. Domestic Companionship Service Providers

b. Companionship Services (i.) Private Home

In Nelms v. Kramer,1 plaintiff filed an action against her former employer’s estate

for an alleged violation of the FLSA, contending that she was not paid overtime compensation. Defendant argued in its motion for summary judgment that plaintiff was not entitled to overtime compensation because she fit within the companionship-services exemption in that plaintiff did not perform general household work in excess of twenty percent of the total weekly hours worked. In analyzing the types of chores performed by plaintiff, the evidence demonstrated that while certain tasks such as cleaning the guest bedroom and bathroom may have benefitted visiting family members, the primary purpose for the work was “at all times to care for [her employer].”2 To the extent that plaintiff’s work benefitted others, the court found that it was “inextricably intertwined with providing fellowship, care and protection for [her employer].”3 As such, the court found that defendant was entitled to summary judgment as it satisfied its burden of proving the existence of an exemption by clear and affirmative evidence.4

In Rodriguez v. Jones Boat Yard, Inc.,5 a former live-in caregiver appealed the

district court’s decision to grant defendants’ motion for summary judgment on her FLSA claims. The caregiver lived with her client for several years, providing services for her that included cooking, cleaning, and providing hygienic and medical services. Toward the end of her employment, plaintiff was paid by her client’s brother’s shipping company, but it was undisputed that plaintiff did not perform work for the company or the brother. Plaintiff brought FLSA claims against the shipping company and her client’s brother. At her deposition, she testified that “almost 100%” of her time was

1 2012 WL 290306 (W.D. Tex. Jan. 31, 2012). 2 Id. at *3. 3 Id. 4 Id. at *4. 5 2011 WL 3252569 (11th Cir. July 26, 2011).

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devoted to caring for her client. However, plaintiff changed her testimony in a subsequent affidavit, stating that 20% or more of her time was spent completing housework. At the district court, plaintiff’s claims were dismissed in their entirety. On appeal, the 11th Circuit held that the district court (1) did not abuse its discretion by refusing to consider the plaintiff’s affidavit under the “sham affidavit” rule; (2) did not err in holding that the plaintiff was exempt from the FLSA’s requirements under the caregiver exemption; and (3) did not err in holding that the defendants were not employers under the FLSA.

(iii.) Trained Personnel In Holt v. Witt,6 the plaintiffs were two in-home caregivers for the decedent, who sued the decedent’s estate for overtime under the FLSA. The estate moved to dismiss the claims, or alternatively for partial summary judgment, asserting that the plaintiffs were exempt under the FLSA’s companionship exemption, 29 U.S.C. § 213 (a)(15).7 That exemption applies to those who provide companionship services to the elderly, but excludes “trained personnel” such as registered or practical nurses. In opposition, the plaintiffs argued that although they had no formal training they were “trained personnel” because they had been trained on the job.8 Relying on decisions from the Sixth, Seventh and Ninth Circuits and the DOL’s FLSA regulations, the court held that the exemption applied and granted the motion. The plaintiffs’ duties consisted of monitoring the deceased’s vitals, keeping her clean, preparing her food, giving her medicine and performing light housework, which were “companionship services” rather than medical services typically provided by trained personnel. III. Section 13(b) Exemptions From the Overtime Requirements of the Act

A. Employees Covered Under the Motor Carrier Act

2. Requirements for the Section 13(b)(1) Exemption

a. Carriers Subject to the Power of the Secretary of Transportation

In Graham v. Town & Country Disposal of Western Missouri, Inc., 9 trash collectors brought suit against their employer, alleging violations of the FLSA. The parties brought cross motions for summary judgment, and the district court granted the defendant’s motion, concluding that the plaintiffs were exempt under the Motor Carrier exemption. The exemption applies to “any employee with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service pursuant to the provisions of section 31502 of Title 49.” See 29 U.S.C. § 213(b)(1). To establish the Secretary’s power, the employer must prove three elements: 1) that it is an employer whose transportation of passengers or property by motor

6 2011 U.S. Dist. Lexis 147267 (E.D. Ky. Dec. 21, 2011). 7 2011 U.S. Dist. Lexis 147267 at *4–8. 8 Id. 9 2011 WL 4378005 (W.D. Mo. Sept. 20, 2011).

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vehicle is under the jurisdiction of the Secretary of Transportation, 2) that the employee is a driver, driver's helper, loader or mechanic, and 3) that the employee engages “in activities of a character directly affecting the safety of operation of motor vehicles in the transportation on the public highways of passengers or property in interstate or foreign commerce.” See 29 C.F.R. §§ 782.2(a)-(b)(2). As to the first element, the court noted that the Department of Transportation had never issued regulations addressing whether trash is considered “property” within the meaning of the statute. Examining the plain text, structure, and analogous regulatory provisions, the court concluded that trash qualifies as property. The natural and ordinary meaning of “property” is not limited to goods with a positive economic value but also encompasses things that are used, as trash is by the trash collection business, to create value. Additionally, trash is not listed in the items specifically exempted by the MCA from the Secretary’s jurisdiction. Finally, the regulation of trash companies by the Department of Transportation fits logically within the MCA’s remedial purposes. As such, the defendant was an employer whose transportation of property by motor vehicle is subject to the jurisdiction of the Secretary of Transportation, thus satisfying the first element of the exemption.

In Albanil v. Coast 2 Coast, Inc.10 current and former employees who worked as

drivers and concrete removal laborers for a company providing concrete chipping services brought suit alleging violations of the FLSA. The district court granted defendants’ motion for partial summary judgment and held that the plaintiffs were exempt from overtime under the motor carrier exemption. The plaintiffs appealed. The dispositive issue on appeal was whether the trucks plaintiffs drove and loaded qualified as “commercial motor vehicles” because they met the 10,001-pound statutory threshold only when weight of the trailer they towed was considered. The court found the statute ambiguous as to whether the statutory weight threshold can be met by combining the weights of the truck and attached trailer. It gave deference to the DOT regulation allowing consideration of the combined weight, a construction not precluded by the statutory language and consistent with the statutory purpose. It therefore affirmed summary judgment for the defendant on the plaintiffs’ overtime claims.

In Fox v. Commonwealth Worldwide Chauffeured Transportation, 11 plaintiff

brought a putative collective action against his former employer, a New York City car service operating in the tri-state area, alleging failure to pay overtime in violation of the FLSA. Plaintiff was a chauffeur who predominantly drove Lincoln town cars and upscale passenger sedans. On occasion, however, he was called upon to drive large vans capable of transporting more than eight passengers. While plaintiff’s conditional certification motion was pending, defendant moved for summary judgment, contending that plaintiff was exempt from the FLSA’s overtime requirements under the motor carrier exemption. That exemption applies to any employee “with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service . . . .”12 The court granted defendant’s motion, reasoning that plaintiff’s job duties met all the requirements necessary for the Secretary’s jurisdiction. It first

10 2011 WL 4840967 (5th Cir. Oct. 13, 2011). 11 2012 WL 1078230 (E.D.N.Y. Mar. 30, 2012). 12 29 U.S.C. §213(b)(1).

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concluded that when there is a “mixed fleet” of “commercial motor vehicles” and non-commercial vehicles, there must be a worker-by-worker nexus between job duties and driving a commercial motor vehicle. In other words, simply having commercial motor vehicles in the employer’s fleet does not automatically exempt the entire driver workforce. Instead, it must be likely that the individual worker will be called on to drive a commercial motor vehicle in interstate commerce. That nexus was established by the undisputed facts: plaintiff often drove eight-plus passenger SUVs and vans across state lines, and his duties as a driver directly affected the safety and operation of commercial motor vehicles. Therefore, because plaintiff was an “employee . . . of a motor carrier,” he was exempt from the FLSA’s overtime protections.13

b. Employees Engaged in Activities Directly Affecting Safety

(iii.) Loaders

In Chellis v. New Century Transp., Inc.,14 a truck loader brought an action against

his employer, alleging failure to pay overtime under the FLSA. Defendant moved to dismiss under Rule 12(b)(6) on the grounds that plaintiff’s complaint failed to state a claim for relief because plaintiff was exempt from the FLSA under the motor carrier exemption. To fall within the exemption a loader must have “responsibility . . . for exercising judgment and discretion in planning and building a balanced load or in placing, distributing, or securing the pieces of freight in such a manner that the safe operation of the vehicles . . . will not be jeopardized.”15 Defendant argued that the regulation required either judgment and discretion or placing, distributing or securing freight, but the court rejected this argument, ruling that to fall within the exemption, the loader must exercise judgment and discretion in performing any of the specified duties, including placing, distributing, or securing such freight.16 Accordingly, the court ruled that plaintiff’s complaint properly stated a claim for unpaid overtime under the FLSA because he alleged that he did not have responsibility for exercising independent judgment or discretion when loading trucks.17

In Graham v. Town & Country Disposal of Western Missouri, Inc., 18 trash

collectors, including “throwers” who picked up trash from the curb and loaded it onto garbage trucks, brought suit against their employer, alleging violations of the FLSA. The parties brought cross motions for summary judgment, and the district court granted the defendant’s motion, concluding that that the throwers were exempt loaders under the Motor Carrier exemption. Loaders meet the requirement of engagement in work directly affecting the “safety of operation of motor vehicles” so long as they exercise judgment and discretion in planning and building a balanced load or in placing, distributing, or securing the pieces of freight in such a manner that the safe operation of the vehicles

13 2012 WL 1078230, at *8. 14 843 F. Supp. 2d 551 (D.N.J. 2012). 15 29 C.F.R. §782.5(a). 16 843 F. Supp. 2d at 553. 17 Id. 18 2011 WL 4378005 (W.D. Mo. Sept. 20, 2011).

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on the highways in interstate or foreign commerce will not be jeopardized. 29 C.F.R. § 782.5(a). The Court concluded that plaintiffs exercised the requisite discretion and judgment in deciding what items were to be picked up and then in placing, distributing or securing those trash items in the trucks to maintain safety.

In Lewis v. Eskridge Trucking Co., 19 a loader for defendant’s trucking company

filed a complaint for unpaid overtime. The district court granted summary judgment for the defendant, ruling that the loader was exempt from the provisions of the FLSA. The loader appealed. An exempt loader is an employee of a carrier "whose duties include . . . the proper loading of . . . motor vehicles so that they may be safely operated on the highways" and who "exercis[es] judgment and discretion in planning and building a balanced load or in placing, distributing, or securing the pieces of freight in such a manner that the safe operation of the vehicles on the highways in interstate or foreign commerce will not be jeopardized." 29 C.F.R. § 782.5(a).20 The plaintiff filled trailers with wood shavings and ensured the loads were balanced as well as inspecting trailers for maintenance problems, and did so without supervision.21 In a per curiam decision, the Eleventh Circuit affirmed the district court, holding that the loader was subject to the rules promulgated by the Secretary of Transportation under the Motor Carrier Act and hence exempt.22

I. Domestic Servants Who Reside in a Household In Upadhyay v. Sethi,23 plaintiff—a live-in domestic service housekeeper and

nanny—filed suit against defendant employer alleging that she was owed unpaid wages and overtime compensation under the FLSA and various state laws. Defendants filed a partial motion to dismiss, or alternatively, a motion for summary judgment, arguing inter alia that plaintiff was covered by the FLSA’s domestic service exemption.24 Plaintiff asserted that the massage work she performed for defendants removed her domestic service employment from the exemption. Relying on an agricultural employment rule contained in 29 C.F.R. § 780.11, plaintiff further asserted that if she performed any non-exempt work during a week, all of the work she performed that week should be treated as non-exempt under the FLSA. The district court first determined that massage work does not constitute “domestic service” within the meaning of the exemption because it is not “of primary importance to the normal functioning of a household as a whole.”25 In dismissing the plaintiff’s claim for overtime compensation, however, the district court rejected plaintiff’s attempt to make section 780.11’s agricultural standard into a default rule applicable to non-agricultural exemptions. Noting that the Second Circuit had never addressed the extension of section 780.11, the district court declined to follow two unpublished decisions from the circuit and instead determined that because the massage work performed by the plaintiff was “insignificant in comparison to the 19 449 Fed. Appx. 780, 781 (11th Cir. 2011). 20 Id. 21 Id. 22 Id. 23 848 F. Supp. 2d 439 (S.D.N.Y. 2012). 24 29 U.S.C. §213(b)(21). 25 848 F. Supp. 2d 439, 442 (S.D.N.Y. 2012).

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multitude of domestic tasks she was required to perform,” 26 plaintiff should be characterized as being employed in domestic service. Thus, defendants were entitled to the statutory protections afforded by the domestic service exemption and defendants’ partial motion to dismiss was granted as to plaintiff’s FLSA overtime claim. IV. Section 7 Exemptions From the Overtime Requirements of the Act

C. Section 7(i)—Certain Commissioned Employees of Retail and Service

Establishments

1. “Retail or Service Establishment”

In Owopetu v. Nationwide CATV Auditing Services, Inc.,27 the plaintiff, a cable installer, brought suit against his former employer, a cable installation subcontractor, alleging that his employer improperly treated him as an exempt employee under the retail-sales exemption. The court granted defendant’s motion for summary judgment finding that defendant had satisfied the requirements of Section 7(i). In determining that defendant’s sales or services were considered retail within their industry, the court accepted the testimony of the defendant’s corporate office manager – a member of the Society of Cable Telecommunication Engineers – that the employer’s enterprise was recognized as retail within the industry. The court also accepted the testimony of a vocational-rehabilitation consultant who testified that the cable installers fall within the “generally recognized and accepted definition of retail sales occupations.” The court went on to determine that defendant’s services were provided to the general public, served the everyday needs of the community, and were at the end of the stream of distribution, because the installation and repair services were provided in the homes of end-use consumers. According to the court, the fact that defendant provided its services under a subcontract with a cable provider, and therefore was not chosen or paid directly by the consumer, did not alter the outcome because the cable provider passes the installation costs on to its customers and, therefore, the costs of defendant’s services are ultimately borne by the end-use consumer.

In Burden v. SelectQuote Insurance Services,28 plaintiff filed a putative class

action against his employer asserting that he and other insurance agents had been misclassified as exempt from state and federal overtime laws. The defendant argued that plaintiffs fell within the section 7(i) exemption for commissioned employees of a retail or service establishment.29 The Department of Labor’s interpretive regulations, 29 C.F.R. § 779.317, provide a partial list of establishments to which this exception does not apply, including insurance brokers and agents.30 Defendant, however, contended that having its agents sell life insurance directly by telephone, instead of in person, was

26 Id. at 444. 27 2011 U.S. Dist. LEXIS 107195 (D. Vt. Sept. 21, 2011). 28 2012 WL 216245 (N.D. Cal. Jan. 24, 2012). 29 Id at 1084. 30 Id. at 1083–84.

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a new type of business and thus § 779.317 was inapposite.31 The court rejected this argument.32 It found that, although defendant had changed the method by which an agent sells life insurance, the company was still selling life insurance.33 Moreover, the court noted that § 779.317 refers to “Insurance” and “insurance brokers”, not to “life insurance” or “term life insurance.”34 It also pointed out that defendant’s “new” method was really more like traditional insurance brokerages, which have long used the direct marketing approach in the property and casualty insurance business.35

2. Compensation Requirements a. Commission Payment Required

In McAninch v. Monro Muffler Brake Inc., 36 three former employees of defendant—an automobile goods and repair shop—under the title of either manager or assistant manager claimed they were misclassified as exempt and thus improperly denied overtime pay under the FLSA. Plaintiffs filed a motion for conditional class certification and defendant, in turn, filed a motion for summary judgment on plaintiffs’ individual FLSA claims. Defendant claimed that plaintiffs fell squarely under the “retail commission” overtime exemption set forth in Section 7(i). The district court explained that to be exempt under Section 7(i), more than 50% of the employee’s compensation for a representative period must be commission. And, for compensation to be considered a commission, the fee paid to the employee must be based on a “bona fide commission rate.” Plaintiffs maintained that they were not exempt because their compensation did not constitute “commissions earned from the sale of goods or services.” The district court acknowledged that neither the FLSA nor the implementing regulations provides a definition for the term “commission” as it is used in the exemption regulation.37 Defendant argued that it was entitled to the exemption because its pay plan possessed the attributes the courts and the DOL have found indicative of bona fide commission rates. The district court agreed. In particular, the court found the commission plan possessed the requisite “proportionality” between the amount charged the customer and the amount paid to the employee. Significantly, the court was not troubled by the fact that employees were paid a percentage of profit as opposed to a percentage of sales. Accordingly, the district court granted defendant’s motion for summary judgment, denying as moot plaintiffs’ motion for conditional class certification.

31 Id. at 1084–85. 32 Id. at 1085. 33 Id. 34 Id. 35 Id. 36 799 F. Supp. 2d 807 (S.D. Ohio 2011). 37 Though the regulations do not offer an example of what a bona fide commission plan is, they do nevertheless point to what it is not: “A commission rate is not bona fide if the formula for computing the commissions is such that an employee, in fact, always or almost always earns the same fixed amount of compensation for each work week (as would be the case where the computed commissions seldom or never equal or exceed the amount of the draw or guarantee).”

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Chapter 8

DETERMINING COMPENSABLE HOURS WORKED

III. Principles for Determining “Hours Worked”

B. Effect of Custom, Contract, or Agreement

In Chambers v. Sears Roebuck & Co.,1 in-home service technicians alleged that defendant violated the FLSA by failing to pay for time they spent traveling from their homes to the first service call of the day and traveling home from the last service call in employer-owned vans.2 Plaintiffs argued that such time was compensable under the “custom or practice” exception to the Portal-to-Portal Act because defendant had previously compensated its technicians for these hours before implementing a new compensation policy.3 The district court rejected this theory, granting defendant’s motion for summary judgment. The Fifth Circuit affirmed,4 holding that the “custom or practice” exception applies only to employer’s customs or practices that are in effect at the time of the activity for which the employee seeks compensation.5 Defendant was free to change its customs and practices prospectively in implementing a new compensation policy, and as such defendant’s alleged prior practice of compensating its technicians for certain preliminary and postliminary work did not constitute evidence of custom or practice.6

In Krause v. Manalapan Twp., 7 two K9 police officers alleged their police

department failed to pay them overtime compensation for off-duty time spent caring for their police dogs. The department moved for summary judgment, arguing that a collective bargaining agreement comp-time provision precluded plaintiffs' FLSA claims. The department did not dispute that the plaintiffs were entitled to be compensated for hours worked in excess of 40 hours per week, that the plaintiffs spent off-duty hours caring for their dogs, or that caring for the dogs was compensable work under the FLSA. Rather, the department asserted that the comp-time provision allowed police officers, including plaintiffs, to work one less hour per shift as compensation for taking care of their police dogs. Plaintiffs did not dispute that they were given one-hour comp time, but argued that the comp-time provision did not comport with 29 C.F.R. § 785.23 because it neither referenced the FLSA nor took into consideration the parties’ rights and obligations under the FLSA. In granting defendant’s motion for summary judgment, the district court concluded that the agreement did not have to reference the FLSA, and 1 428 F. App’x 400 (5th Cir. 2011). 2 Id. at 406, 410. 3 Id. at 421. 4 Id. at 401–02. 5 Id. at 421. 6 Id. 7 2011 WL 4594202 (D.N.J. Sept. 30, 2011).

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that the parties' comp-time agreement was reasonable in that it fell ‘within a broad zone of reasonableness, considering its terms and all the facts and circumstances of the parties' relationship.’8

C. Continuous Workday Rule

In McDonald v. Kellogg Co.,9 plaintiffs, hourly production employees of a bakery, alleged their employer failed to compensate them for time spent performing activities, such as donning and doffing company-issued uniforms and protective gear, and post-donning and pre-doffing walking to and from work stations, among other activities. Earlier in the litigation, the district court concluded that Section 203(o) barred plaintiffs’ claims for compensation for time spent donning and doffing company-issued uniforms and protective equipment. However, at that time, the district court held that Section 203(o) did not preclude plaintiffs’ claims for compensation for “walking time” (and any other time within the continuous workday) on the grounds that activities such as donning and doffing that are non-compensable by virtue of Section 203(o) may nonetheless constitute principal activities for purposes of the continuous workday. Both parties moved for summary judgment on the issue of whether donning and doffing activities constitute principal activities for purpose of the continuous workday rule. Defendant argued that changing clothes could not constitute a principal activity sufficient to trigger the continuous workday rule because employees were allowed to change clothes at home. Plaintiffs, on the other hand, contended that they were required to change clothes on the employer’s premises, and, therefore, changing clothes was a principal activity sufficient to trigger the continuous workday rule, such that plaintiffs’ walking time to and from their working stations was compensable. In denying summary judgment, the district court found there were genuine disputes of fact as to whether employees were allowed to change clothes at home, or whether they were required to change clothes on the employer’s premises, which is an important factor to be considered in the overall analysis of whether clothes changing is a principal activity. In Dekker v. Constr. Specialties of Zeeland, Inc.,10 two carpenters sued their former employer, a construction company, for travel time compensation under the FLSA and other state wage and hour laws. Plaintiffs’ work schedule typically consisted of meeting at the defendant’s facility on Monday evening, driving through the night in a company van to the job site, where they remained for ten days, and leaving the job site on Thursday afternoon.11 Plaintiffs alleged that defendant failed to pay the applicable minimum wage and overtime compensation for time spent traveling to and from the job site, waiting time, and work performed during lunch breaks.12 The district court granted in part and denied in part defendant’s motion for summary judgment. With respect to the overnight travel time, the court, noting that normal travel from home to work is not

8 Id. at *5 (quoting Brock v. City of Cincinnati, 236 F.3d 793, 806 (6th Cir. 2001)). 9 2011 WL 6180499 (D. Kan. Dec. 13, 2011). 10 2012 WL 726741 (W.D. Mich. Mar. 6, 2012). 11 Id. at *1. 12 Id.

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compensable, 13 held that commuting time is non-compensable, regardless of the duration, as long as it is a “contemplated, normal occurrence” of the employment relationship.14 Nonetheless, even though the court found that the plaintiffs’ commutes were normal and contemplated occurrences, it denied defendant’s motion for summary judgment as it pertained to plaintiffs’ overnight travel time. Because the plaintiffs submitted evidence indicating that they engaged in work at the defendant’s facility before leaving for the job site – and that such work was integral and indispensable to their principal activities – the court held that there was a genuine issue of material fact as to whether the overnight travel fell within the “all-in-a-day’s work rule,” and, thus, qualified as compensable work time.15 Additionally, the court held that there was a genuine issue of material fact regarding whether the travel time cut across the plaintiffs’ normal workday, rendering it compensable.16

D. Section 3(o) of the FLSA

1. “Custom or Practice”

In Marshall v. Amsted Rail Co., Inc.,17 two plaintiffs, who were employees of a freight car and locomotive undercarriage manufacturer, brought a putative collective action, alleging their employer failed to compensate them for time spent donning and doffing protective gear in violation of the FLSA and state law. Specifically, plaintiffs argued, in relevant part, that they were denied compensation for donning and doffing fire-retardant and protective jackets, protective sleeves, hoods, helmets with shields, goggles, ear plugs, respirators, gloves, metatarsal boots, aprons, and other gear. Defendant moved for summary judgment arguing that plaintiffs’ donning and doffing claims were barred by Section 203(o) and, therefore, could not constitute a principal activity as a matter of law. The district court granted defendant’s motion to the extent the district court found that Section 203(o)’s exclusion applied to donning and doffing protective gear, as there was no custom or practice of compensating for this time. However, the district court denied defendant’s motion to the extent the district court disagreed with defendant’s assertion that, as a matter of law, plaintiffs’ time spent donning and doffing could not constitute a principal activity under the FLSA.

13 Id. at *2 (citing 29 C.F.R. §785.35). 14 Id. (quoting Kavanagh v. Grand Union Co., 192 F.3d 269, 272 (2d Cir. 1999). 15 Id. at *3 (citing Smith v. Aztec Well Serv. Co., 462 F.3d 1274, 1289 (10th Cir. 2006). 16 Id. at *4 (citing 29 C.F.R. §785.39). 17 817 F. Supp. 2d 1066 (S.D. Ill. Sept. 20, 2011).

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IV. Application of Principles A. “Suffer or Permit to Work”

1. Knowledge

In Stanislaw v. Erie Indemnity Co.,18 material damage adjusters employed by an insurance company sought overtime wages for off-the-clock work. The parties cross-moved for summary judgment. Defendant contended that plaintiffs failed to establish that it had actual or constructive knowledge of the off-the-clock work. Because the plaintiffs worked remotely and the defendant relied on them to accurately report their time, defendant argued that plaintiffs should be estopped from claiming FLSA violations based on their failure to report the overtime that they worked. The district court found that, unlike in cases where there was no evidence that employees were discouraged from reporting overtime, plaintiffs had presented evidence suggesting that their managers attempted to discourage them from accurately reporting their overtime. Because the defendants had presented contradicting evidence, the court denied both motions for summary judgment.

In Chambers v. Sears Roebuck & Co.,19 in-home service technicians alleged that

defendant’s compensation policies failed to pay them for certain clerical and other off-the-clock duties they performed in addition to their customer service calls. Defendant had directed plaintiffs to perform these duties, which included loading parts, cleaning vans, and conducting inspections, during their compensable workday.20 But plaintiffs argued that defendant had constructive knowledge that they were performing these duties off-the-clock because it pressured its technicians to maximize their number of service calls performed each day, thus causing their clerical work to be performed outside compensable hours. 21 The district court granted defendant’s motion for summary judgment. The Fifth Circuit affirmed, 22 holding that neither defendant’s encouraging technicians to be efficient nor its reprimand of one of the plaintiffs for not completing enough service calls per day was sufficient to raise a fact issue that defendant had actual or constructive knowledge that plaintiffs were performing work off-the-clock.23

In Franklin v. MIQ Logistics, LLC,24 plaintiff sought compensation for overtime

hours that she claimed to have worked but failed to report.25 The district court granted defendant summary judgment, holding that plaintiff could not meet her burden to “produce sufficient evidence to show the extent and amount of such work as a matter of

18 2012 WL 517332 (W.D.Pa. Feb. 15, 2012). 19 428 F. App’x 400 (5th Cir. 2011). 20 Chambers, 428 F. App’x at 420. 21 Id. at 420–21. 22 Id. at 401–02. 23 Id. at 420–21. 24 2011 WL 3205774 (D. Kan. Jul. 28, 2011). 25 Id. at *2.

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just and reasonable inference.”26 Plaintiff did not allege that she was told she could not record any overtime hours worked, but instead, argued unsuccessfully that such a directive could be inferred.27 Further, plaintiff could not recall any specific dates on which she worked overtime and was not compensated accordingly.28

In McCrimon v. Inner City Nursing Home, Inc., 29 an hourly nursing home

beautician and nurse’s aide sought overtime under the FLSA and state law for off-the-clock work. Plaintiff contended that her supervisor regularly instructed her to clock out and continue to work, and to record these overtime hours on slips of paper and submit them in an envelope to her supervisor. Plaintiff claimed that she consistently submitted her recorded off the clock hours to her supervisor, but she was not properly paid. Defendant maintained that plaintiff was properly paid for all hours worked. Defendant moved for summary judgment, arguing plaintiff could not demonstrate that she was improperly paid. In granting defendant’s motion for summary judgment, the district court concluded that plaintiff did not demonstrate the existence of a genuine issue of material fact in that even assuming defendant’s records were inaccurate, plaintiff’s allegations were nothing more than “bald assertions that she sometimes worked off the clock” and that plaintiff failed “to state the number of days, number of hours, or the dates on which this occurred.” The district court noted that plaintiff alleged she recorded her overtime hours on slips of paper and submitted them to her supervisor; however, plaintiff did not provide any copies or records of the hours submitted to her supervisor.

In Oldham v. United States Postal Service, a former postal service employee

filed suit to recover unpaid overtime compensation.30 Following a bench trial, the district court found that plaintiff did not work the overtime hours for which he sought payment and ruled in defendant’s favor. The district court also held that because plaintiff self-reported his time and failed to report additional hours worked, any additional recovery was barred.31 Plaintiff appealed, and the Sixth Circuit affirmed the district court’s decision. Among other challenges, plaintiff alleged that the district court erred when it applied a line of cases that require an employer to pay an employee for unrequested overtime only if that employer “knows or has reason to believe that an employee is continuing to work and that work was suffered or permitted by the employer.”32 The Sixth Circuit concluded that plaintiff reported his own time – including some overtime – and that defendant had no reason to believe plaintiff’s reports were incorrect. The court also found that plaintiff’s arguments against the district court decision were simply attempts to challenge the district court’s factual findings. As the appellate court had concluded the district court’s factual findings were not clearly erroneous, it rejected plaintiff’s arguments.33

26 Id. at *6. 27 Id. 28 Id. 29 2011 WL 4632865 (N.D. Ohio Sept. 30, 2011). 30 465 F. App’x 440, 2012 U.S. App. LEXIS 3784 (6th Cir. Feb. 23, 2012). 31 Id. at 440, 2012 U.S. App. LEXIS 3784, at *1. 32 Id. at 447, 2012 U.S. App. LEXIS 3784, at *21–22. 33 Id. at 447–48, 2012 U.S. App. LEXIS 3784, at *22–23.

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In Garner v. Chevron Phillips Chemical Co., L.P.,34 plaintiff laboratory technician filed an action against defendant chemical manufacturing company alleging retaliation and failure to pay overtime for work performed “off the clock” under the FLSA. Defendant moved for summary judgment asserting (1) that plaintiff had not complained about unpaid overtime before her termination, and so had not engaged in protected activity, and (2) that defendant did not have actual or constructive knowledge of plaintiff’s alleged “off the clock” work. The court granted the motion as to plaintiff’s FLSA retaliation claim because she could not produce any evidence that she had “complained about, instituted, or caused to be instituted any proceeding” based on alleged failure to pay overtime compensation that led to her termination. The court also granted summary judgment on plaintiff’s “off the clock” claim because although defendant did not keep adequate records of employee overtime nor make a substantial effort to ensure that employees were not working overtime, which “substantially lessened” plaintiff’s burden of proof, plaintiff failed to produce any evidence that defendant had actual or constructive knowledge that she was working overtime until she requested payment after her termination.

In Ellerd v. Cty. of Los Angeles,35 a social worker sued the County of Los

Angeles for allegedly unpaid overtime compensation.36 The parties filed cross motions for summary judgment on the issues of whether or not the defendant had actual or constructive knowledge that the plaintiff performed work for which he did not receive compensation.37 The district court denied the parties’ motions,38 finding that there was a triable issue of fact as to whether the plaintiff’s complaints to his supervisor could impute actual knowledge of the allegedly uncompensated work to the defendant because the supervisor’s status as a “manager” for purposes of the FLSA was a fact-based determination.39 Moreover, the court denied summary judgment on the issue of constructive knowledge because that determination would have required a premature credibility determination with respect to the parties’ contrasting evidence on the issue.40

In Edmund v. City of Ft. Myers,41 plaintiff, who was employed as a maintenance

worker on a municipal golf course, alleged that he was not paid overtime for all hours worked.42 He regularly clocked in 30 minutes early and claimed that his time cards were often collected at the end of his shifts even though he was required to continue working.43 He claimed that in the mornings, he opened the facilities, set up his vehicle, fed a dog that had been left by a prior superintendent, and rode the course looking for leaking or broken pipes and clogged drains.44 In denying plaintiff’s motion for summary

34 834 F. Supp. 2d 528 (S.D. Tex. Nov. 29, 2011). 35 2012 WL 893608 (C.D. Cal. Mar. 14, 2012). 36 Id. at *1. 37 Id. at *1, 3–6. 38 Id. at *6. 39 Id. at *4. 40 Id. at *4–5. 41 2012 WL 28224 (M.D. Fla. Jan. 5, 2012). 42 Id. at *2. 43 Id. at *4. 44 Id.

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judgment on other grounds, the district court rejected defendant’s position that it was unaware of plaintiff’s work because he signed a certification on time cards confirming their accuracy.45 The court noted that while an employer has a duty to inquire about whether an employee is working off the clock, the employer cannot be held liable for uncompensated work where plaintiff deliberately prevents the employer from learning about it.46 The evidence did not establish whether plaintiff’s signatures on his time cards certified the accuracy of the computerized clock-in and clock-out times, handwritten notations on the time cards from the payroll department, or both. 47 Accordingly, there was a disputed issue of material fact as to whether defendant was provided with sufficient notice of the allegedly uncompensated work.48

In Kellar v. Summit Seating Inc., 49 plaintiff, a sewing manager, sued her

employer, a company that manufacturers seating for buses, trucks and vans, alleging she was not paid overtime compensation for off-the-clock work performed before her scheduled start time. Plaintiff claimed she regularly arrived 15 to 45 minutes before her 5:00 a.m. start time to prepare work for her sewers, review the work schedules, make coffee for the employees, unlock the doors, and turn on the lights. Defendant moved for summary judgment, arguing in part that plaintiff’s supervisors (who were also the owners, president, and vice president of the company) had no knowledge of these pre-shift activities, as her supervisors did not arrive to the facility until 7:00 or 8:00 a.m. In granting defendant’s motion for summary judgment, the district court concluded that plaintiff’s pre-shift activities were non-compensable because her employer had no knowledge of her engaging in these activities, and in addition, the pre-shift activities were de minimis and “preliminary” to her principal activities. On appeal, the Seventh Circuit affirmed, but disagreed with the district court’s reasoning. The court found the pre-shift activities were neither de minimis nor preliminary, but, nevertheless, concluded that the pre-shift activities was non-compensable because defendant did not know or have reason to know plaintiff was working before her shift.

In LaFollette v. City of Gatlinburg,50 plaintiff, a hostess with the city aquarium,

sued her employer alleging violations of the FLSA, among other laws. Plaintiff claimed her supervisors knew she clocked out for lunch but then continued to work through her lunch. She maintained that her supervisors knew she worked off the clock during lunch because there was no one to cover the welcome desk where she worked, and they knew she was unable to get away from tourists who approached the welcome desk. Defendant maintained that it had no knowledge of plaintiff working off the clock, arguing that it had a policy allowing employees to leave for lunch, and that plaintiff could have used the “be back in 30 minutes” sign to leave the welcome center unmanned (as the desk was left in the evenings). In granting defendant’s motion for summary judgment on the FLSA claims, the court determined that there was no genuine issue of fact

45 Id. at *6. 46 Id. 47 Id. 48 Id. 49 664 F.3d 169 (7th Cir. 2011). 50 2012 WL 1830957 (E.D. Tenn. May 18, 2012).

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because plaintiff presented no evidence proving defendant had any knowledge of her working off the clock.

In Edwards v. City of New York,51 corrections officers for the City of New York alleged that they did not receive overtime compensation for time spent waiting to be relieved by their late-arriving colleagues.52 They claimed that they were pressured to refrain from submitting overtime slips, and that they believed overtime slips would be discarded even if submitted.53 Some plaintiffs also testified that they submitted overtime slips only if they were forced to wait for their relief for a certain minimum amount of time (e.g., 15–60 minutes).54 Moreover, while defendant required plaintiffs to sign an in/out log indicating their precise arrival and departure times, the majority of the plaintiffs instead provided the times at which their shifts were scheduled to begin and end.55 The district court granted the defendant’s motion for summary judgment on the ground that the City lacked actual or constructive knowledge of the plaintiffs’ alleged overtime work.56 The plaintiffs produced no evidence that any supervisor pressured them to refrain from submitting overtime slips, and, failed to establish that supervisors discarded overtime slips.57 Thus, they failed to prove that they actually performed work for which they were not compensated, or, that the defendant had actual or constructive knowledge of that work.58

In Garner v. Chevron Phillips Chemical Co., L.P.,59 plaintiff laboratory technician

filed an action against defendant chemical manufacturing company alleging retaliation and failure to pay overtime for work performed “off the clock” under the FLSA. Defendant moved for summary judgment asserting that defendant did not have actual or constructive knowledge of plaintiff’s alleged “off the clock” work. Granting summary judgment on plaintiff’s “off the clock” claim, the court noted that although defendant did not keep adequate records of employee overtime, nor make a substantial effort to ensure that employees were not working overtime, which “substantially lessened” plaintiff’s burden of proof, plaintiff failed to produce any evidence that defendant had actual or constructive knowledge that she was working overtime until she requested payment after her termination.

3. Duty of Management

In DeMarco v. Northwestern Memorial Healthcare,60 a registered nurse sued her employer, a healthcare facility, alleging overtime violations. The nurse claimed that she was denied uninterrupted lunch breaks and routinely worked off the clock, but was not

51 2012 WL 1694608 (S.D.N.Y. May 15, 2012). 52 Id. at *1–2. 53 Id. 54 Id. at *1. 55 Id. at *2. 56 Id. at *5. 57 Id. at *4–5. 58 Id. at *4–6. 59 834 F. Supp. 2d 528 (S.D. Tex. Nov. 29, 2011). 60 2011 WL 3510896 (N.D. Ill. Aug. 10, 2011).

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compensated despite having brought these matters to the attention of management.61 Defendant moved for summary judgment, arguing that it had no actual or constructive knowledge that the plaintiff was working outside of her breaks and, that it repeatedly trained employees to take uninterrupted lunch breaks and to avoid working off the clock.62 The district court denied the defendant’s motion as to the overtime claims, finding that the defendant’s instruction and training did not relieve it of the obligation to “exercise its control” and do everything possible to enforce its policies “by discipline or other comparable means.”63

B. Waiting Time

3. On-Call Time

In Niendick v. City of Salem,64 a former police officer alleged his former employer failed to pay him overtime compensation for on-call time. Plaintiff claimed he was not paid for the time he spent on call or standby, among other activities. Plaintiff claimed his lifestyle was “severely restricted” when he was on call such that he was unable to visit his son, who lived in another county, and he was unable to mow his yard, go to church, shop, or perform any other activities that would prevent him from responding to a cell phone and immediately arriving at the scene of an accident. Defendant maintained that plaintiff was free to engage in personal activities during his on-call time, including sleeping, shopping, and attending sporting events. In support of its argument that plaintiff was free to engage in personal activities, defendant presented the affidavit of a dispatcher who recalled a couple of times when she called plaintiff to come to work, and he was in a tree stand hunting. Plaintiff moved for partial summary judgment, seeking overtime for work performed when he was on call. In denying plaintiff’s summary judgment, the district court found that there were genuine issues of fact as to whether his on-call hours constitute working hours under the FLSA.

In Lanktree v. I-70 Towing, LLC,65 plaintiffs, who worked as tow truck drivers,

filed a lawsuit claiming they were denied minimum wages for on-call hours in violation of the FLSA. On-call hours occurred either when drivers were assigned to “first call” or “second call”. While on first call, plaintiffs had primary responsibility for all incoming calls from 5:00 p.m. to 8:00 a.m. two nights a week, and every hour of one to two weekends a month. During first-call hours, plaintiffs generally received two to three calls a week night, and 10 to 20 calls on the weekend. While on second call, plaintiffs had secondary responsibility for taking incoming calls during the same hours as first call, and generally received zero to one call on a week night and maybe two calls over the weekend. The parties did not dispute that plaintiffs were to remain close enough so they could arrive at a tow site within a reasonable time. While plaintiffs were expected to arrive within a reasonable amount of time, the parties disputed how quickly defendant

61 Id. at *1–2. 62 Id. at *4. 63 Id. at *5. 64 2012 WL 1739858 (E.D. Ark. May 16, 2012). 65 2011 WL 4729726 (W.D. Mo. Oct. 6, 2011).

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expected plaintiffs to arrive at a tow site after receiving a call. In denying defendant’s motion for summary judgment as to first-call hours, the district court found that the degree to which drivers could decline or trade calls was a genuine issue of material fact that precluded summary judgment for either party as to these on-call hours. The district court noted that defendant would be entitled to judgment as a matter of law for the first-call hours, if the drivers could decline or trade calls with no restrictions. As for second-call hours, the district court granted summary judgment in favor of defendant, regardless of whether plaintiffs could reject or trade calls, because of the infrequency of calls received during second call.

In Kouba v. Renzenberger, Inc., 66 plaintiff, who worked as a road driver

transporting rail crews to and from railroad yards, filed a lawsuit against his employer claiming that he should have been paid on-call pay for time when he was waiting for a work assignment. He was one of approximately 20 drivers who was on call daily and available for work assignments. When a job became available, the person in the number one position on the board was offered the job, and everyone else moved up one position. In his complaint, plaintiff alleged that he should have been paid on-call time when he was in the first, second, or third position on the board. While there was no requirement that drivers remain on company property while on call, they were required to arrive at the pick-up location promptly. To arrive on time, plaintiff had to leave home within five minutes of a call. Because of that time constraint, he claimed he could not do any task that could not be interrupted, such as he could not cook a hot meal or see a movie. Moreover, when in one of the first three positions on the board, drivers were required to leave their personal vehicles at work and drive home in one of the company’s vans. Having the van, however, limited the driver’s freedom because the vans could not be used for personal use. Plaintiff claimed that drivers could not trade assignments. Defendant moved for summary judgment. The district adopted a magistrate judge’s report and recommendation to deny defendant's motion for summary judgment, which concluded that a reasonable finder of fact could find the on-call time compensable, as plaintiff presented evidence that he did not have the practicable ability to leave his house because he was required to surrender his vehicle, drive a company van home, and wait there for a call.67

In Gonzalez v. Metropolitan Delivery Corp.,68 delivery truck drivers alleged that a

parcel pick-up and delivery business, as well as its owners individually, violated the FLSA by failing to pay overtime for work allegedly done during the drivers’ on-call break periods. On defendants’ motion for summary judgment – consistent with Eleventh Circuit precedent – the district court analyzed whether plaintiffs could use the break time for personal endeavors to determine the compensability of the time. While the drivers had to remain within five miles of their delivery areas, carry pagers and GPS scanners, respond immediately when paged, and carry out assignments promptly, the drivers could and did use the on-call periods for leisure and personal activities, such as running

66 2011 WL 7145606 (D. Ariz. Sept. 12, 2011). 67 2011 WL 7145606 (D. Ariz. Sept. 12, 2011), report and recommendation adopted, 2012 WL 369803 (D. Ariz. Feb. 6, 2012). 68 2012 WL 1442668 (S.D. Fla. Apr. 26, 2012).

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errands, eating lunch, and going home or to the gym. Given this evidence, the court found that the on-call restrictions were not “severe” enough to be compensable under the FLSA and granted summary judgment for defendants on the issue.

C. Rest and Meal Periods

2. Meal Periods

In Deppen v. Detroit Med. Ctr.,69 a registered nurse sued her former employer, a hospital, alleging that the defendant’s practice of automatically deducting 30 minutes from each shift for a meal break regardless of whether she actually took a break violated the FLSA. The court granted the defendant’s motion for summary judgment in part.70 It held that the FLSA does not require “employers to ensure that their employees are receiving their meal breaks whenever an automatic deduction for meal breaks is taken.”71 Plaintiff offered no evidence that she missed any meal breaks or otherwise worked through them.72

Plaintiffs in Busk v. Integrity Staffing Solutions, Inc.73 filed an FLSA complaint

alleging that their meal periods were compensable because defendant required them to walk long distances to clock out for their meals, and walk to and from walk to a remote cafeteria to eat, then to clock back in and walk back to the work area. Plaintiffs claimed these activities decreased their meal periods by as much as 10 minutes of the total 30 minutes that defendant allowed.74 The parties disputed which test the Ninth Circuit uses to determine whether a meal period is “bona fide” and therefore excluded from compensable work time.75 Defendant advocated for the “predominant benefit test,” which examines whether the meal time is spent primarily for the employer's or employee's benefit.76 Plaintiffs contended that the appropriate test is the “completely relieved from duty” standard.77 The district court concluded that plaintiffs failed to state a claim under either standard because plaintiffs did not allege that they performed any duty related to their job as warehouse workers during this time and that neither test requires the employee to be free of an employer’s control during a bona fide meal period.78

69 2011 WL 2847405 (E.D. Mich. July 19, 2011). 70 Id. at *10. 71 Id. at *9. 72 Id. 73 2011 WL 2971265 (D. Nev. July 19, 2011). 74 Id. at *1. 75 Id. at *5. 76 Id. 77 Id. 78 Id.

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E. Preparatory and Concluding Activities

2. Donning and Doffing

In Perez v. Mountaire Farms, Inc.,79 poultry processing plant employees brought an FLSA collective action against employer for time spent donning and doffing personal protective equipment. The district court certified the collective action and ruled that donning and doffing constituted compensable work and, after a bench trial on the issue of compensability, the district court entered judgment for plaintiffs. The Fourth Circuit, in a case of first impression, affirmed in part, holding donning and doffing protective gear at the start and end of shifts were “integral and indispensable” to chicken processing but reversed the district court’s holding that employees were entitled to compensation for donning and doffing time incident to unpaid meal periods. In reaching these conclusions, the Fourth Circuit explained that, under the Portal-to-Portal Act’s Amendments to the FLSA, preliminary and postliminary work activities are compensable only if they are an integral and indispensable part of the employee’s principal activities.80 Because donning and doffing at the beginning and end of the work shift were necessary to the principal work performed in the poultry processing plant and benefitted the employer, this time was compensable time under the continuous workday rule.81 However, the Fourth Circuit vacated the district court’s decision that time spent donning and doffing incident to unpaid meal breaks was compensable. The Fourth Circuit held that the time was not compensable because precedent dictated time spent donning and doffing at a poultry processing plant incident to a meal break was part of a bona fide meal period.82

In Adams v. Alcoa, Inc., 83 plaintiffs, who worked in two departments in an aluminum smelting facility, alleged that defendant’s failure to compensate them for time spent on various activities, including donning and doffing protective gear, violated the FLSA. Defendant required employees working near molten metal to wear certain items of company-provided protective equipment, including flame retardant clothing, steel-toed boots, specialized hard hats, and safety glasses.84 Although defendant prohibited employees from laundering their fire-resistant clothing at home, it allowed them to keep fresh fire-resistant clothing at home so they could put it on before coming to work. In practice, plaintiffs opted to change into this clothing at defendant’s locker room rather than at home.85 The district court granted defendant’s motion for summary judgment, ruling that the time was not compensable because the protective equipment at issue was not “integral and indispensable” to the plaintiffs’ jobs under the Second Circuit’s very narrow interpretation of those terms.86 The district court held that the donning and doffing of the protective equipment was not “indispensable” to the plaintiffs’ principal 79 650 F.3d 350 (4th Cir. 2011). 80 650 F.3d at 363. 81 650 F.3d at 367–68. 82 650 F.3d at 370. 83 822 F.Supp 2d 156 (N.D.N.Y. 2011). 84 Id. at 158. 85 Id. 86 Id. at 162–63.

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activities because they were not required to change into the gear at their employer’s premises.87 The court further concluded that the protective equipment was not “integral” because plaintiffs failed to show that they would be exposed to a “lethal atmosphere” in which they would be exposed to dangerous levels of chemicals or other contaminants if they failed to wear the equipment.88

In Lugo v. Farmer’s Pride Inc. 89 employees of a chicken processing plant

compensation for time spent donning and doffing personal protective equipment and clothing. Defendant moved for summary judgment. The parties contested whether defendant required plaintiffs to wear certain items to promote sanitation and safety, such as mesh gloves, plastic gloves, cotton gloves, hair nets, arm guards, plastic sleeves, safety glasses, plastic aprons, and smocks, or whether plaintiffs wore some of these items merely for their personal comfort and convenience. The parties also disputed whether federal regulations required plaintiffs to use certain personal protective equipment, such as ear plugs, arm guards, and mesh gloves. In denying summary judgment as to donning and doffing, the district court found there were genuine disputes of fact as to what items defendant required its employees to use, and whether the required personal protective equipment primarily benefited defendant.

In Marshall v. Amsted Rail Co., Inc.,90 two plaintiffs, who were employees of a freight car and locomotive undercarriage manufacturer, brought a putative collective action, alleging their employer failed to compensate them for time spent donning and doffing protective gear in violation of the FLSA and state law. Specifically, plaintiffs argued, in relevant part, that they were denied compensation for donning and doffing fire-retardant and protective jackets, protective sleeves, hoods, helmets with shields, goggles, ear plugs, respirators, gloves, metatarsal boots, aprons, and other gear. Defendant moved for summary judgment arguing that plaintiffs’ donning and doffing claims were barred by Section 203(o) and, therefore, could not constitute a principal activity as a matter of law. The district court granted defendant’s motion to the extent the district court found that Section 203(o)’s exclusion applied to donning and doffing protective gear, as there was no custom or practice of compensating for this time. However, the district court denied defendant’s motion to the extent the district court disagreed with defendant’s assertion that, as a matter of law, plaintiffs’ time spent donning and doffing could not constitute a principal activity under the FLSA.

In Edwards v. City of New York,91 the plaintiffs, who were corrections officers,

claimed that they were not paid for time spent donning and doffing their uniforms and equipment.92 Plaintiffs alleged that it took between four and 20 minutes to put on or take off the uniform.93 While they were permitted to wear their uniforms during their commutes (but not at other times while they were off duty), most plaintiffs testified that 87 Id. at 163–64. 88 Id. at 164–65. 89 802 F. Supp. 2d 598 (E.D. Pa. July 20, 2011). 90 817 F. Supp. 2d 1066 (S.D. Ill. Sept. 20, 2011). 91 2011 WL 3837130 (S.D.N.Y. Aug. 29, 2011). 92 Id. at *1. 93 Id.

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they chose to change in the locker rooms of their assigned facilities.94 Moreover, the plaintiffs laundered their uniforms at home.95 Based on this record, the court granted the defendant City of New York’s motion for summary judgment. 96 The court, interpreting the Portal-to-Portal Act, held that while the plaintiffs’ uniforms and equipment were indispensable to the performance of their principal activity, they were not integral to it because the plaintiffs were permitted to don and doff these materials outside of their respective workplaces.97

In Helmert v. Butterball, LLC,98 plaintiff poultry processing workers moved for

partial summary judgment on their FLSA donning and doffing claims, arguing that the donning and doffing of smocks were integral and indispensable to the principal job duties of the production employees and primarily benefitted the employer defendant, a poultry processor. The parties stipulated that the smocks at issue were permeable, un-insulated single-layer cloth, white shirts that tie in the front with three-quarter length sleeves, and the court determined that the smocks’ primary purpose was food safety. The district court granted plaintiffs’ motion for partial summary judgment that donning and doffing of the smocks was compensable under the FLSA, finding “[n]o reasonable jury could find that an activity essential to prevent food contamination in a poultry processing plant primarily benefits the employees rather than the employer.”

In Leon v. El-Milagro, Inc.,99 plaintiff, a former production employee of a tortilla

manufacturer, brought an action under the FLSA and state law seeking compensation for time spent donning and doffing her uniform and safety equipment. In denying the parties’ motions for summary judgment, the district court held that the case turned on the question of whether donning and doffing was more accurately considered “changing clothes … under normal conditions,” or rather an “integral and indispensible part” of her essential duties. In determining whether the donning and doffing time was integral and indispensable, the district court relied on Ninth Circuit’s guidance, such that ‘[t]o be integral and indispensable, an activity must be necessary to the principal work performed and done for the benefit of the employer.’100 The district court reasoned that “[a]n act is necessary if it is required by law, by company policy, or by the nature of the work performed.”101 The district court concluded that too many factual questions existed to grant summary judgment for either party.

In Lesane v. Winter,102 police officers with the Navy brought a collective action

seeking compensation for time spent donning and doffing uniforms, protective gear, and weapons. Defendant moved for summary judgment. Officers were allowed to don their clothes and protective gear at work, or at home; however, officers could not take their

94 Id. at *7. 95 Id. 96 Id. 97 Id. 98 Helmert v. Butterball, LLC, 805 F. Supp. 2d 655 (E.D. Ark. 2011). 99 2012 WL 1032890 (N.D. Ill. Mar. 23, 2012). 100 Id. at *4 (quoting Alvarez v. IBP, Inc., 339 F.3d 894, 902–03 (9th Cir. 2003)). 101 Id. 102 2011 WL 6976649 (D.D.C. Dec. 30, 2011).

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assigned weapons home. The issue of whether the officers’ donning and doffing of clothing, gear, and weapons was “integral and indispensable” to their principal activity was one of first impression for the D.C. Circuit. The district court held that donning the uniform was not integral and indispensable to policing activities because the officers had the option to change into the uniforms at home, and most of them did so, and, therefore, was not compensable. The district court reasoned that donning the uniform was not significantly different than putting on any other work-appropriate clothing. The district court held that donning and doffing protective gear and arms was integral and indispensable to the officers’ protective activity, and, therefore, compensable unless the time was de minimis. The district court noted that the nature of the gear necessitates changing at work, not home. Because defendant failed to show that time spent in integral and indispensable activities was de minimis, the district court denied defendant’s motion for summary judgment. The district court noted that “[d]eciding whether the aggregate time spent in compensable activities is de minimis … often requires trials, stipulations, or experts.”

3. Preparing Equipment

In Espinoza v. Cty. of Fresno,103 deputy sheriffs brought overtime claims for uncompensated time devoted to off-duty firearms qualification and maintenance.104 The defendant County sought summary judgment on the grounds that the plaintiffs were provided with on-duty time to perform these tasks and that the County maintained a policy permitting the plaintiffs to submit overtime requests.105 Thus, the defendant argued, "[p]laintiffs['] off-duty qualification and maintenance is done as a matter of personal preference." 106 The court denied defendant's motion, finding that notwithstanding the stated overtime policy, there was a factual dispute as to whether plaintiffs were in fact permitted to submit overtime requests when circumstances prevented them from completing their firearms qualification and maintenance during normal duty hours, or, whether they were instructed not to submit such requests.107

5. Security Screening

Plaintiffs in Busk v. Integrity Staffing Solutions, Inc.108 filed an FLSA action alleging that they were routinely required to participate in mandatory security check activities that lasted up to 25 minutes after their shift.109 Defendant moved to dismiss this claim on the basis that the time spent allegedly waiting in line for post-work security screenings is not compensable under the FLSA because it is not integral and dispensable to plaintiffs’ principal activities.110 The district court granted defendant’s motion to dismiss with respect to security screening because it found that such checking 103 2011 WL 3359632 (E.D. Cal. Aug. 3, 2011). 104 Id. at *8. 105 Id. 106 Id. 107 Id. at *9. 108 2011 WL 2971265 (D. Nev. July 19, 2011). 109 Id. at *1. 110 Id. at *4.

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in and out and waiting in line squarely falls into the non-compensable category of postliminary activities set forth in 29 C.F.R. § 790.7(g) because plaintiffs could perform their warehouse duties—fulfilling online purchase orders - without such screenings.111

6. Change of Shifts

In Edwards v. City of New York,112 corrections officers sought overtime for the

time they alleged that they waited to be relieved from their shifts.113 Some of the plaintiffs only filled out overtime slips if they were required to wait a certain period of time (e.g., 15–60 minutes), while some others did not file overtime slips at all because they did not want the relieving officer to be penalized for being late.114 Still others testified that they believed their supervisors would discard or refuse to sign off on an overtime slip.115 The district court denied plaintiffs’ motion for summary judgment on this claim,116 as plaintiffs failed to submit any admissible evidence demonstrating that their supervisors discouraged the submission of overtime slips.117 The court found plaintiffs’ conclusory and vague assertions about their perceptions that overtime was disfavored were not sufficient to establish the conduct alleged.118 Furthermore, the fact that each of the plaintiffs had in fact submitted overtime slips established that they were aware of their rights and that individual decisions to occasionally refrain from claiming overtime did not warrant summary judgment in plaintiffs’ favor.119

7. Other Preliminary/Postliminary Activities

In Balisteri v. Menlo Park Fire Protection Dist.,120 firefighters sought overtime

compensation under the FLSA for time spent collecting and returning their gear to their home station before and after traveling to and from temporary station assignments. The parties filed cross motions for summary judgment.121 The district court ruled that the act of picking up and returning gear did not qualify as “work” under the Ninth Circuit’s “three-stage inquiry” for determining the compensability of preliminary and postliminary activities122 Plaintiffs had the option to take their gear home because the employer did not require them to keep the gear at their home station or check in at their home station before traveling to the temporary station. Also, the act of maintaining the gear at the home station did not primarily benefit the employer; instead, the plaintiffs did so because they thought it too “cumbersome” to take the gear home with them.123

111 Id. 112 2011 WL 3837130 (S.D.N.Y. Aug. 29, 2011). 113 Id. at *1. 114 Id. at *2. 115 Id. 116 Id. at *9. 117 Id. 118 Id. 119 Id. 120 2012 WL 1110011 (N.D. Cal. Mar. 30, 2012). 121 Id. at *3. 122 Id. at *5. 123 Id. (noting that the employer only required the gear be ready and available).

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In Pruell v. Caritas Christi,124 hospital employees brought overtime claims on behalf of a putative class of 12,000 employees. The district court dismissed with prejudice on the grounds that the overtime violations were too conclusory to state a claim. Plaintiffs appealed to the First Circuit, which affirmed the dismissal but granted leave to amend. Plaintiffs argued that its overtime claims were supported by three alleged pay practices that resulted in violations. First, they alleged they were not compensated for time spent performing preliminary and postliminary work before and after work hours; but the complaint provided no description or examples of the alleged work performed to show that it was indeed compensable or an estimate of the amount of time spent performing these activities to show overtime was incurred. Second, plaintiffs pled they worked through the lunch breaks and that such work time was not compensated because the employer’s electronic timekeeping system automatically deducted a half hour for meal periods; but the court held that without some more allegations about how this resulted in unpaid overtime it was not sufficient to state a claims. Lastly, plaintiffs alleged they were not paid for attending training sessions; but again, the court found the pleading wanting in details of facts showing such time was compensable work time and resulted in unpaid overtime worked. The First Circuit determined that the allegations in the complaint were so threadbare or speculative that they failed to cross the line between the conclusory and the factual.125

In Edmund v. City of Ft. Myers,126 plaintiff, who was employed as a maintenance

worker at a municipal golf course, alleged that he was not paid overtime for all hours worked.127 He regularly clocked in early and claimed that his time cards were often collected at the end of his shifts even though he was required to continue working.128 He claimed that before his shift began, he would open the facilities, set up his vehicle, feed a dog that had been left by a prior superintendent, and ride the course looking for leaking or broken pipes and clogged drains.129 In denying plaintiff’s motion for summary judgment, the district court noted that these work activities contrasted with defendant’s evidence that although plaintiff sometimes clocked in early, he used the time for personal activities such as drinking coffee, as well as evidence that the plaintiff’s supervisor recorded instances where he worked outside of his normal schedule.130

F. Lectures, Meetings, and Training Programs

3. Independent Training

In Espinoza v. Cty. of Fresno,131 deputy sheriffs brought overtime claims for uncompensated time devoted to off-duty firearms qualification and maintenance.132 The

124 678 F.3d 10 (1st Cir. 2012). 125 678 F.3d 10, 15 (1st Cir. 2012). 126 2012 WL 28224 (M.D. Fla. Jan. 5, 2012). 127 Id. at *2. 128 Id. at *4. 129 Id. 130 Id. at *4–5. 131 2011 WL 3359632 (E.D. Cal. Aug. 3, 2011). 132 Id. at *8.

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defendant County sought summary judgment on the grounds that the plaintiffs were provided with on-duty time to perform these tasks and that the County maintained a policy permitting the plaintiffs to submit overtime requests.133 Thus, the defendant argued, "[p]laintiffs['] off-duty qualification and maintenance is done as a matter of personal preference." 134 The court denied defendant's motion, finding that notwithstanding the stated overtime policy, there was a factual dispute as to whether plaintiffs were in fact permitted to submit overtime requests when circumstances prevented them from completing their firearms qualification and maintenance during normal duty hours, or, whether they were instructed not to submit such requests.135

G. Travel Time 1. Preliminary and Postliminary Travel

In Chambers v. Sears Roebuck & Co.,136 in-home service technicians brought

FLSA claims alleging that defendant violated the FLSA by failing to pay for the time they spent traveling from their homes to the first service call of the day and traveling home from the last service call in employer-owned vans.137 Defendant moved for summary judgment on plaintiffs’ claims. The Fifth Circuit affirmed the district court’s order granting defendant’s motion. 138 The Court held that plaintiffs’ preliminary and postliminary travel time was not compensable because plaintiffs’ commutes, which were not greater than the 35-minute time allotment offered by defendant’s compensation policy, were within normal commuting area under Employment Commute Flexibility Act. 139 The fact that defendant placed conditions on plaintiffs’ use of company vehicles— requiring plaintiffs to transport tools and supplies, and prohibiting them from using vehicles to pick up children from school—did not render the commute time compensable.140

3. Overnight Travel

In Dekker v. Constr. Specialties of Zeeland, Inc.,141 two carpenters sued their former employer, a construction company, for travel time compensation under the FLSA and other state wage and hour laws. Plaintiffs’ work schedule typically consisted of meeting at the defendant’s facility on Monday evening, driving through the night in a company van to the job site, where they remained for ten days, and leaving the job site on Thursday afternoon.142 Plaintiffs alleged that defendant failed to pay the applicable minimum wage and overtime compensation for time spent traveling to and from the job

133 Id. 134 Id. 135 Id. at *9. 136 428 F. App’x 400 (5th Cir. 2011). 137 Chambers, 428 F. App’x at 410. 138 Id. at 401-02. 139 Id. at 411. 140 Id. at 411-13. 141 2012 WL 726741 (W.D. Mich. Mar. 6, 2012). 142 Id. at *1.

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site, waiting time, and work performed during lunch breaks.143 The district court granted in part and denied in part defendant’s motion for summary judgment. With respect to the overnight travel time, the court, noting that normal travel from home to work is not compensable, 144 held that commuting time is non-compensable, regardless of the duration, as long as it is a “contemplated, normal occurrence” of the employment relationship.145 Nonetheless, even though the court found that the plaintiffs’ commutes were normal and contemplated occurrences, it denied defendant’s motion for summary judgment as it pertained to plaintiffs’ overnight travel time. Because the plaintiffs submitted evidence indicating that they engaged in work at the defendant’s facility before leaving for the job site – and that such work was integral and indispensable to their principal activities – the court held that there was a genuine issue of material fact as to whether the overnight travel fell within the “all-in-a-day’s work rule,” and, thus, qualified as compensable work time.146 Additionally, the court held that there was a genuine issue of material fact regarding whether the travel time cut across the plaintiffs’ normal workday, rendering it compensable.147 V. Recording Working Time

In Gonzalez v. Metropolitan Delivery Corp., 148 a group of delivery persons

brought suit claiming they were not fully compensated for work performed off the clock. While plaintiffs estimated they worked five hours per week without compensation, they did not provide documentation to support that claim. Defendant brought a motion in limine seeking to exclude the plaintiffs’ estimates of time worked at trial. The district court noted that under the FLSA employers bear ultimate responsibility for accurately keeping records of hours worked and cannot “hide behind” a policy of having employees keep their own time records to avoid compensating employees for unreported overtime. Nevertheless, the court granted defendant’s motion in part, rejecting plaintiffs’ pretrial Statement of Claim, as the weekly average of time allegedly worked during breaks appeared to be “pulled out of thin air.” Instead, the court limited plaintiffs’ testimony to their specific recollections of time worked, but not recorded during breaks, without speculative averaging.

A. Rounding-Off Practices

In Gillings v. Time Warner Cable LLC, 149 plaintiffs, call center workers for

defendant cable company, alleged that the defendant’s quarter-hour rounding policy violated the FLSA. Defendant moved for summary judgment. The district court found that defendant’s rounding policy was facially neutral, resulting in both rounding up and rounding down of hours, and that some of the named plaintiffs had actually benefitted from the policy. Further, the court noted that the DOL regulations permit rounding of 143 Id. 144 Id. at *2 (citing 29 C.F.R. §785.35). 145 Id. (quoting Kavanagh v. Grand Union Co., 192 F.3d 269, 272 (2d Cir. 1999). 146 Id. at *3. 147 Id. at *4. 148 2012 WL 1600557 (S.D. Fla. May 7, 2012). 149 2012 WL 1656937 (C.D. Cal. Mar. 26, 2012).

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time entries to the nearest quarter hour, so long as the time is not always rounded in the same direction. Finding that defendant’s rounding policy was facially neutral and neutrally applied, the court granted defendant’s motion for summary judgment.

B. The De Minimis Doctrine

2. Application of the De Minimis Doctrine

d. Cases Finding Time Not De Minimis

In Campbell v. Kelly,150 the district court denied defendants’ motion for summary judgment against plaintiff’s claim that off-duty time spent caring for the sheriff department’s dog was compensable time under the FLSA. Defendant argued that plaintiff’s failure to provide records of time spent caring for the dog was fatal because he could not prove such time was more than de minimis.151 The court found a genuine dispute based on plaintiff’s testimony that he spent a vast amount of time on his duties at home and that any administrative difficulty monitoring hours was outweighed by the amount and regularity of the time involved.152 The court further held that the sheriff’s department could not shift the burden to the deputy for substantiating and documenting this additional compensable time.153

In Kellar v. Summit Seating Inc., 154 plaintiff, a sewing manager, sued her

employer, a company that manufacturers seating for buses, trucks and vans, alleging she was not paid overtime compensation for off-the-clock work performed before her scheduled start time. Specifically, plaintiff claimed she regularly arrived 15 to 45 minutes before her 5:00 a.m. start time to prepare work for her sewers, review the work schedules, make coffee for the employees, unlock the doors, and turn on the lights. Defendant moved for summary judgment, arguing that even if these pre-shift activities occurred, they were de minimis. In granting defendant’s motion for summary judgment, the district court concluded that plaintiff’s pre-shift activities were non-compensable, in part because they were de minimis. On appeal, the Seventh Circuit affirmed summary judgment in favor of defendant, but disagreed with the district court’s reasoning that the pre-shift activities were de minimis. Plaintiff testified that she spent 15 to 45 minutes every day, a substantial amount of time, performing compensable pre-shift activities, and, therefore, the pre-shift activities were not de minimis under the FLSA.

In McDonald v. Kellogg Co., 155 plaintiffs, hourly production employees of a

bakery, filed a lawsuit alleging their employer failed to compensate them for time spent performing activities, such as post-donning and pre-doffing walking to and from work stations, pre-shift activities not paid after clocking in but before their “shift time” pay

150 2011 WL 3862019 (S.D. Ohio 2011). 151 Id. at *8. 152 Id. at *7-8. 153 Id. at *8. 154 664 F.3d 169 (7th Cir. 2011). 155 2011 WL 6180499 (D. Kan. Dec. 13, 2011).

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started, and post-shift activities not paid after their “shift time” ended. Pre-shift and post-shift activities included obtaining and returning tools, walking to and from the locker rooms, and changing in and out of uniforms. Plaintiffs’ expert opined that the average employee spent between five and eight minutes walking to and from the time clock. Defendant maintained that time spent walking to and from work stations post-donning and pre-doffing could not be included in calculating hours worked because the time was so insubstantial and insignificant. Defendant relied on non-Tenth Circuit decisions holding time under 10 minutes is de minimis as a matter of law; however, as plaintiffs argued, the Tenth Circuit has not adopted a bright line ten-minute rule. In denying defendant’s summary judgment as to the de minimis argument, the district court concluded that defendant did not show that it was entitled to the de minimis defense, as defendant only calculated the time spent walking to and from the time clock, and did not consider the hours plaintiffs were not paid for time spent working before and after their shift time.

b. Aggregation

In Gilmer v. Alameda-Contra Costa Transit Dist.,156 plaintiff bus drivers brought a collective action under the FLSA for unpaid travel time against their former employer. The parties stipulated to conditional certification of the collective action, which the defendant reserved the right to challenge at a later time. After the court granted plaintiffs’ motion for summary judgment on liability, plaintiffs moved for partial summary judgment on the issue of damages. Defendant cross-moved for partial summary judgment on its de minimis defense, arguing that small amounts of split-shift travel time were not compensable under the FLSA. The court noted that the Ninth Circuit has not adopted a 10 or 15 minute de minimis rule; instead, it applies various factors in considering what is de minimis, such as the administrative difficulty of recording the additional time and the aggregate amount of compensable time. Most of the bus driver plaintiffs were regularly required to engage in split-shift travel, resulting in substantial aggregated amounts of uncompensated time. Importantly, the court noted that defendant was not arguing that recording and/or paying for the travel time was administratively difficult, only it was not required to compensate for the travel time. The court held that because plaintiffs' expert had a proven method of calculating this travel time expeditiously, defendant’s de minimis defense was in effect a request to disregard small amounts of overtime because they are small when disaggregated. Because a valid method of aggregation had been established, the court denied defendant’s motion.157

c. Cases Finding Time De Minimis

Plaintiffs in Busk v. Integrity Staffing Solutions, Inc.158 filed an FLSA complaint alleging that their meal periods were compensable because defendant required them to walk long distances to clock out for their meals, and walk to and from walk to a remote

156 2011 WL 5242977 (N.D. Cal. Nov. 2, 2011). 157 2011 WL 5242977, at *1-16. 158 2011 WL 2971265 (D. Nev. July 19, 2011).

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cafeteria to eat, then to clock back in and walk back to the work area. Plaintiffs claimed these activities decreased their meal periods by as much as 10 minutes of the total 30 minutes that defendant allowed.159 The district court concluded that even if plaintiffs had stated a valid claim with respect to meal periods, the time at issue was non-compensable as de minimis.160 It relied on Ninth Circuit law noting that “most courts have found daily periods of approximately 10 minutes de minimis even though otherwise compensable.”161 Moreover, it concluded that recording two five-minute walks per day would pose a practical administrative difficulty to record for each employee, particularly because the amount of walking time varied daily.162

In Gillings v. Time Warner Cable LLC,163 plaintiffs, who worked for Time Warner

in its call centers, filed a lawsuit alleging that they were not paid for time spent performing defendant’s clock-in procedures, which required employees to log onto their computers and open a program in order to clock in. Defendants moved for summary judgment, arguing that the time employees spent logging onto the computers, which was between three and six minutes each day, was de minimis. The district court granted defendants’ motion, holding that the clock-in time was de minimis because (1) the time spent clocking-in was at most six minutes, and (2) given the various factors that might cause certain employees to take more time to clock-in on particular days, it would be administratively difficult for defendants to record the clock-in time.

In Deloatch v. Harris Teeter, Inc.,164 a former employee of the defendant grocer’s

meat department sued for allegedly unpaid overtime and off-the -clock work in violation of the FLSA. Defendant moved for summary judgment on several grounds, including that plaintiff’s allegations of uncompensated work occurred but a few times and should thus be disregarded under the de minimis doctrine.165 In determining whether time worked for which no compensation was received should be disregarded as de minimis, courts consider: “(1) the practical administrative difficulty of recording additional time; (2) the size of the claim in the aggregate; and (3) whether such work was performed on a regular basis.”166 Here, the only reliable evidence offered by plaintiff in support of his claim of uncompensated work was testimony concerning an instance during which he was asked to work over his lunch period.167 The district court held that this lone event could, at most, raise a claim for a short amount of uncompensated time, and for work that was not performed on a regular basis at that.168 Thus, the court granted the defendant’s motion for summary judgment on the ground that the plaintiff’s claim was de minimis.169

159 Id. at *1. 160 Id. at *6. 161 Id. 162 Id. 163 2012 WL 1656937 (C.D. Cal. Mar. 26, 2012). 164 797 F. Supp. 2d 48 (D.D.C. 2011). 165 Id. at 54-55. 166 Id.. 167 Id. at 56-57. See also id. at 56 n.3 168 Id. at 56 n.3. 169 Id.

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In Edmund v. City of Ft. Myers,170 plaintiff, who was employed as a maintenance

worker on a municipal golf course, alleged that he was not paid overtime for all hours worked.171 Plaintiff regularly clocked in 30 minutes early and claimed that his time cards were often collected at the end of his shifts even though he was required to continue working.172 He claimed that before his shift began, he opened the facilities, set up his vehicle, fed a dog that had been left by a prior superintendent, and rode the course looking for leaking or broken pipes and clogged drains.173 In considering the plaintiff’s motion for summary judgment, which was denied on other grounds, the court rejected defendant’s argument that any error in the plaintiff’s compensation was de minimis.174 The court noted that while preliminary activities which took only a few moments and which were integral to the plaintiff’s work could be disregarded, plaintiff claimed he was not paid for 30 minutes each workday, which was a substantial measure of time.175

170 2012 WL 28224 (M.D. Fla. Jan. 5, 2012). 171 Id. at *2. 172 Id. at *4. 173 Id. 174 Id. at *7-8. 175 Id. at *8.

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Chapter 9

MINIMUM WAGE REQUIREMENTS

II. Payment of the Minimum Wage A. “Free and Clear” Payments

In Ramos-Barrientos v. Bland,1 migrant farm workers from Mexico alleged that

the owner of the farm in Georgia on which they worked violated the FLSA by (1) deducting from their pay the cost of housing and meals and (2) failing to reimburse them for certain fees and costs incurred in travel to the employer’s farm. These deductions and failures to reimburse allegedly reduced plaintiffs’ pay below minimum wage. The district court granted summary judgment to the employer. On appeal, the Eleventh Circuit affirmed summary judgment on the meals and travel fees claims and reversed summary judgment on the housing expense claim. Plaintiffs were employed pursuant to the H-2A guest-worker visa program, which requires the employer to provide housing for the workers at its expense. Even though the FLSA generally gives employers a wage credit for housing, the court held that a wage credit was not appropriate for H-2A workers because providing the housing was for the benefit of the employer. Providing housing complied with a requirement imposed on the employer by the visa program and did not cover a normal living expense of the employees, who would not have needed housing in Georgia but for their work. On the other hand, the court concluded that defendant was entitled to take a wage credit for the meals because those meals were primarily for the benefit of the employees, who would have incurred expenses for food in the course of ordinary life. Finally, the court found that the employer was not obligated to reimburse the workers for travel fees they had paid to a subcontractor of the company hired by the employer to assist with recruiting workers. The employer had not authorized the subcontractor to collect such charges and was unaware that it was doing so. Applying agency principles, the court ruled that the collection of the fee by the subcontractor was not attributable to the employer.

In Rivera et al. v. Peri & Sons Farms, Inc.,2 Mexican citizens admitted to work in

the United States on H-2A guest-worker visas brought suit alleging that they were required by defendant to pay for travel fees and costs, including: hiring/recruitment fees; bus fare; passport and visa fees; and lodging during travel.3 Plaintiffs brought an FLSA suit for unpaid minimum wage pursuant to a “kick-back” theory, namely, that when unreimbursed job-related expenses are deducted, their effective wages fell below the federal minimum.4 Observing that the H-2A guest-worker program specifically grants employers of H-2A workers half of the contract period to make inbound travel and subsistence reimbursements, defendant’s failure to reimburse these expenses during

1 661 F.3d 587 (11th Cir. 2011). 2 805 F. Supp. 2d 1042 (D. Nev. 2011). 3 Id. at 1044. 4 Id. at 1045-46.

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the first week of employment was not a “kick back” under section 29 C.F.R. § 531.35 because no reimbursement is due at that stage for H-2A workers and the regulation does not include such requirements under its definition of kickbacks.5 Accordingly, the district court granted defendant’s motion to dismiss.6 III. Non-Cash Wages Under Section 3(m)—“Board, Lodging or Other Facilities”

A. “Customarily Furnished” to the Employee

In Ramos-Barrientos v. Bland,7 migrant farm workers from Mexico alleged that

the owner of the farm in Georgia on which they worked violated the FLSA by (1) deducting from their pay the cost of housing and meals and (2) failing to reimburse them for certain fees and costs incurred in travel to the employer’s farm. These deductions and failures to reimburse allegedly reduced plaintiffs’ pay below minimum wage. The district court granted summary judgment to the employer. On appeal, the Eleventh Circuit affirmed summary judgment on the meals and travel fees claims and reversed summary judgment on the housing expense claim. Plaintiffs were employed pursuant to the H-2A guest-worker visa program, which requires the employer to provide housing for the workers at its expense. Even though the FLSA generally gives employers a wage credit for housing, the court held that a wage credit was not appropriate for H-2A workers because providing the housing was for the benefit of the employer. Providing housing complied with a requirement imposed on the employer by the visa program and did not cover a normal living expense of the employees, who would not have needed housing in Georgia but for their work. On the other hand, the court concluded that defendant was entitled to take a wage credit for the meals because those meals were primarily for the benefit of the employees, who would have incurred expenses for food in the course of ordinary life. Finally, the court found that the employer was not obligated to reimburse the workers for travel fees they had paid to a subcontractor of the company hired by the employer to assist with recruiting workers. The employer had not authorized the subcontractor to collect such charges and was unaware that it was doing so. Applying agency principles, the court ruled that the collection of the fee by the subcontractor was not attributable to the employer.

B. “Board, Lodging or Other Facilities”

1. Meals

In Ramos-Barrientos v. Bland,8 migrant farm workers from Mexico alleged that the owner of the farm in Georgia on which they worked violated the FLSA by (1) deducting from their pay the cost of housing and meals and (2) failing to reimburse them for certain fees and costs incurred in travel to the employer’s farm. These deductions and failures to reimburse allegedly reduced plaintiffs’ pay below minimum wage. The

5 Id. at 1047. 6 Id. at 1048-49. 7 661 F.3d 587 (11th Cir. 2011). 8 661 F.3d 587 (11th Cir. 2011).

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district court granted summary judgment to the employer. On appeal, the Eleventh Circuit affirmed summary judgment on the meals and travel fees claims and reversed summary judgment on the housing expense claim. Plaintiffs were employed pursuant to the H-2A guest-worker visa program, which requires the employer to provide housing for the workers at its expense. Even though the FLSA generally gives employers a wage credit for housing, the court held that a wage credit was not appropriate for H-2A workers because providing the housing was for the benefit of the employer. Providing housing complied with a requirement imposed on the employer by the visa program and did not cover a normal living expense of the employees, who would not have needed housing in Georgia but for their work. On the other hand, the court concluded that defendant was entitled to take a wage credit for the meals because those meals were primarily for the benefit of the employees, who would have incurred expenses for food in the course of ordinary life. Finally, the court found that the employer was not obligated to reimburse the workers for travel fees they had paid to a subcontractor of the company hired by the employer to assist with recruiting workers. The employer had not authorized the subcontractor to collect such charges and was unaware that it was doing so. Applying agency principles, the court ruled that the collection of the fee by the subcontractor was not attributable to the employer.

2. Lodging

In Ramos-Barrientos v. Bland,9 migrant farm workers from Mexico alleged that the owner of the farm in Georgia on which they worked violated the FLSA by (1) deducting from their pay the cost of housing and meals and (2) failing to reimburse them for certain fees and costs incurred in travel to the employer’s farm. These deductions and failures to reimburse allegedly reduced plaintiffs’ pay below minimum wage. The district court granted summary judgment to the employer. On appeal, the Eleventh Circuit affirmed summary judgment on the meals and travel fees claims and reversed summary judgment on the housing expense claim. Plaintiffs were employed pursuant to the H-2A guest-worker visa program, which requires the employer to provide housing for the workers at its expense. Even though the FLSA generally gives employers a wage credit for housing, the court held that a wage credit was not appropriate for H-2A workers because providing the housing was for the benefit of the employer. Providing housing complied with a requirement imposed on the employer by the visa program and did not cover a normal living expense of the employees, who would not have needed housing in Georgia but for their work.

3. “Other Facilities”

b. Fuel, Electricity, Water, and Gas

Plaintiffs in Darrow v. WKRP Management, LLC10 were pizza delivery drivers for defendants, which operate Pizza Hut franchise stores. Plaintiffs alleged that it was defendants’ policy and practice to unreasonably estimate employees’ automotive 9 661 F.3d 587 (11th Cir. 2011). 10 2011 WL 2174496 (D. Colo. June 3, 2011).

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expenses for reimbursement purposes, which caused plaintiff and similarly-situated individuals to earn less than minimum wage under the FLSA and state law. 11 Defendants moved to dismiss plaintiff’s amended complaint for failing to allege his actual automotive expenses.12 In denying defendants’ motion, the court determined that plaintiff’s estimate of his automotive expenses based on the IRS’s standard business mileage rate of $0.44 per mile was sufficient.13 The court also found that plaintiff stated a plausible claim (1) that defendants failed to reasonably approximate his actual expenses based on plaintiff’s allegation that he was reimbursed at a rate of $0.75 to $1.00 per delivery, and that he drove an average of five miles for each delivery, and (2) that plaintiff’s wage was reduced to below the federal and state minimum wages.14

IV. Payment of Wages to Tipped Employees

B. Current Statutory Provisions Regarding Tipped Employees

In Koellhoeffer v. Plotke-Giordani, 15 restaurant workers alleged that the

restaurant employer violated the FLSA by allowing an individual, whom plaintiffs contended was an "employer," to share in a tip pool. Defendant moved for summary judgment, contending that the court need not independently analyze whether its tip-pooling policy violated the FLSA because in 2002—approximately eight years before this case was filed—the U.S. Department of Labor had investigated the tip-pooling policy and determined it compliant with the FLSA. Plaintiffs contended that the investigation did not make an official finding of compliance, but merely declined to pursue the matter and recommended closure of the case. The court declined to defer as requested, stating that the DOL finding was nothing more than "the results of a field investigation, i.e., the notes and conclusions of a single USDOL investigator."16 The court held that such an investigation does not even rise to the level of an opinion letter or other statement of agency enforcement policy. Therefore, regardless of the investigator's findings, the court concluded the investigation result was not entitled to deference. However, the court did grant defendant’s motion for summary judgment on the issue of whether plaintiff failed to receive notice of the tip pooling policy because plaintiff did not dispute that he knew of the policy and posters at the workplace contained information about the tip credit.

C. General Characteristics of Tips

In Johnson v. VCG Holding Corp.,17 two emcees for an adult entertainment nightclub claimed that they were paid wages below the minimum wage and were not “tipped employees” under the FLSA because the money they received in tips from customers did not total more than $30 a month. The emcees also asserted that the 11 Id. at * 1. 12 Id. at * 2. 13 Id. at * 4. 14 Id. at * 5. 15 2012 WL 846670 (D. Colo. Mar. 12, 2012). 16 Id. at *7. 17 845 F. Supp. 2d 353, 354 (D. Me. 2012).

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money they shared with dancers who worked at the nightclub as independent contractors should not count as tips under the FLSA. The nightclub moved for summary judgment, arguing that the money emcees received from dancers should count as tips for purposes of the FLSA. The emcees responded by arguing that for an employer to receive a “tip credit,”18 the tip must come from a “customer” who tips the employee. The district court held that the dancers, as independent contractors, who tip emcees are doing so for a service, much like a customer.19 As such, the court found no reason to characterize the money paid by the dancers to the emcees as something other than a tip for purposes of the FLSA, and granted the employer’s summary judgment motion.

In Koellhoeffer v. Plotke-Giordani, 20 restaurant workers alleged that the

restaurant employer violated the FLSA by allowing an individual, whom plaintiffs contended was an "employer," to share in a tip pool. Defendant moved for summary judgment, contending that the court need not independently analyze whether its tip-pooling policy violated the FLSA because in 2002—approximately eight years before this case was filed—the U.S. Department of Labor had investigated the tip-pooling policy and determined it compliant with the FLSA. Plaintiffs contended that the investigation did not make an official finding of compliance, but merely declined to pursue the matter and recommended closure of the case. The court declined to defer as requested, stating that the DOL finding was nothing more than "the results of a field investigation, i.e., the notes and conclusions of a single USDOL investigator."21 The court held that such an investigation does not even rise to the level of an opinion letter or other statement of agency enforcement policy. Therefore, regardless of the investigator's findings, the court concluded the investigation result was not entitled to deference. However, the court did grant defendant’s motion for summary judgment on the issue of whether plaintiff failed to receive notice of the tip pooling policy because plaintiff did not dispute that he knew of the policy and posters at the workplace contained information about the tip credit.

D. Compulsory Charges for Service Are Not Tips

In Ruffin v. Entertainment of the Eastern Panhandle,22 a dancer brought claim for

failure to pay minimum wage against her former employer, an exotic dance club. The employer brought counterclaims against the dancer for conversion, breach of contract, fraud, and unjust enrichment / accounting, seeking either offset or return of monies paid to her. The court granted in part and denied in part dancer’s motion to dismiss. On the issue of compulsory fees paid by patrons for a dance, the court held that the employer sufficiently pled that the compulsory fee was a service charge under the FLSA, for which the employer was entitled to offset of the full amount against its minimum wage liability (as opposed to tips, for which the employer would be entitled to offset of only fifty percent). The court then held that the employer sufficiently pled alternative claims

18 29 C.F.R. §531.51. 19 Johnson, 845 F. Supp. 2d at 378-379. 20 2012 WL 846670 (D. Colo. Mar. 12, 2012). 21 Id. at *7. 22 -- F. Supp. 2d --, 2011 WL 7431649 (N.D. W. Va. Nov. 23, 2011).

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for breach of contract and unjust enrichment but that an offset, as opposed to a return of the performance fees, is the more appropriate remedy under the FLSA. Accordingly, the court allowed the counterclaims to go forward seeking an offset of performance fees against any award of minimum wages, which would require the employer to prove that those performance fees constituted service charges as opposed to tips.

In the second Ruffin v. Entertainment of the East Panhandle case, plaintiff

worked as a dancer for a night club as an independent contractor.23 While working for defendants, plaintiff did not receive any wages. Instead, plaintiff received “performance fees” from customers, which defendants required plaintiff to share with her employer.24 Plaintiff claimed that she was improperly classified as an independent contractor and, instead, was an employee of defendant entitled to minimum wage for each hour she worked.25 Defendants sought a set-off against any minimum wages owed to plaintiff for any “performance fees” received by plaintiff during her work for defendants. Plaintiff was granted summary judgment on the issue of set-off for because defendants lacked any admissible evidence as to the amount of “performance fees” received by plaintiff.26 Following the discovery of new documents, defendants moved for reconsideration. The court granted reconsideration and held that the daily sheets provided by defendants were sufficient to show the amount of set-off that should be allowed if the performance fees were later found to be service charges.27 The court denied plaintiff’s motion for summary judgment on the issue of whether the performance fees could be used to set-off any minimum wages owed.

G. “Customarily and Regularly”

In Roussell v. Brinker International,28 wait-staff employees at a chain restaurant

sued their employer for alleged FLSA violations. Though the FLSA allows employers to pay a sub-minimum wage to tip-receiving employees, it prohibits employers from requiring employees to pool tips with ineligible employees. Plaintiffs alleged that defendant violated the FLSA by forcing wait-staff to pool their tips with “Quality Assurance” (QA) workers, who inspected and garnished food to be served. Defendant’s stated policy indicated that servers may voluntarily tip QA workers; however, defendant conceded at trial that the 14 plaintiffs at trial had been coerced into tipping QAs. As to the only remaining issue at trial, the jury concluded that QAs were not entitled to share in a mandatory tip pool and therefore defendant violated the FLSA by coercing its wait-staff into doing so. Defendant appealed, challenging, inter alia, the jury verdict below and the district court’s denial of its post-trial motions. The Fifth Circuit affirmed the verdict. The court agreed with plaintiffs that the district court did not err in concluding that defendant was not entitled to judgment as a matter of law. Following the FLSA’s text, the court concluded that sub-minimum wage employees may only be mandated to

23 2011 U.S. Dist. LEXIS 154865, *3-5 (N.D. W. Va. Apr. 25, 2012). 24 Id. at *5-6. 25 Id. at *3-5. 26 Id. at *11-12. 27 Id. at *15-17. 28 441 F. App’x 222 (5th Cir. 2011) (unpublished).

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pool tips with other employees who “customarily and regularly receive tips.” 29 Defendant argued that the QAs performed sufficient customer service duties to allow them to participate in a mandatory tip pool. Treating defendant’s argument on appeal as a challenge to the sufficiency of the evidence, the court disagreed, concluding that the jury was reasonable in concluding that the QAs were not tip-eligible because even if they regularly interacted with customers, they may not have “customarily” or “regularly” received tips.30

The issue in Barrera v. MTC, Inc. 31 was whether a restaurant's "service

bartenders" were eligible for inclusion in a valid tip pool because they were "employees who customarily and regularly receive tips" within the meaning of Section 203(m). The service bartenders, whose work station was located in sight of customers, had little direct contact with them because the drinks they prepared were delivered by servers. The court concluded that the employees' title was not determinative, nor was the fact that they had little direct contact with customers. Instead, the court, after reviewing the legislative history of Section 203(m) and Wage and Hour Division's Field Operations Handbook, concluded that direct customer interaction was not necessarily required, but rather, visible customer service may be sufficient depending upon an analysis of all of the surrounding circumstances. In this case, because the bar was visible to customers, a question of fact existed as to whether the role of the service bartenders was more analogous to that of a bus boy, bar back (a bartender's assistant), or hostess, all of whom can be included in a tip pool, as opposed to a salad preparer, who cannot.

H. Tip Pooling In Arencibia v. 2401 Rest. Corp., 32 plaintiffs filed an action against their

restaurant employer for tip pooling violations. Plaintiffs claimed the tip pool was invalid because: (1) improper employees were included; (2) the tip pool was arbitrarily modified; (3) improper notice of the tip pool was given; and (4) there was inadequate record keeping. In granting the employer’s motion for summary judgment, the district court held that an employee’s eligibility to participate in a tip pool is a two part inquiry: the employee (1) should be in a position that “customarily and regularly” receives tips; and (2) must not be an “employer” under the FLSA. In applying the “economic reality” test, the district court first held that the pool-sharing employee was not an employer because the employee engaged in insufficient supervisory and hiring responsibilities; moreover, there was no evidence of pay rate setting, maintaining employee records, hiring, firing, or disciplining employees. The district court further held that receiving tips directed specifically towards employees who do not participate or receive any money out of the tip pool does not violate a tip pooling arrangement, noting that all undirected tips contributed by the service staff are redistributed to valid pool participants. The court next held that there was no arbitrary modification to the tip pooling arrangement and no regulations precluded the employer from making adjustments based on performance.

29 29 U.S.C. §203(m). 30 441 F. App’x at 229-30. 31 2011 WL 3273196 (W.D. Tex. July 29, 2011). 32 831 F. Supp. 2d 164 (D.D.C. 2011).

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Additionally, the court noted that there is no legal basis to hold an employer liable for not disclosing the tip pooling formula. Lastly, the district court held that there is no employee private cause of action for an employer’s failing to maintain adequate records.

In Roussell v. Brinker International,33 wait-staff employees at a chain restaurant

sued their employer for alleged FLSA violations. Though the FLSA allows employers to pay a sub-minimum wage to tip-receiving employees, the employer cannot force these employees to pool their tips with ineligible employees. Plaintiffs alleged that defendant violated the FLSA by forcing wait-staff to pool their tips with “Quality Assurance” (QA) workers, who inspected and garnished food to be served. Defendant’s stated policy indicated that servers may voluntarily tip QA workers; however, defendant conceded at trial that the 14 plaintiffs at trial had been coerced into tipping QAs. As to the only remaining issue at trial, the jury concluded that QAs were not entitled to share in a mandatory tip pool and therefore defendant violated the FLSA by coercing its wait-staff into doing so. Defendant appealed, challenging, inter alia, the jury verdict below and the district court’s denial of its post-trial motions. The Fifth Circuit affirmed the verdict. The court agreed with plaintiffs that the district court did not err in concluding that defendant was not entitled to judgment as a matter of law.

In response to the defendant’s argument that the QA employees were tip-eligible

and that the extent of an employee’s interaction with customers is irrelevant to whether they receive tips, the court explained that the FLSA does not specify what type of employees may share in the tip pool, but instead highlights that they “customarily and regularly receive tips.”34 Therefore, the court concluded that direct customer interaction is relevant because it generally distinguishes employees who receive tips and those who do not. The court also rejected defendant’s “related duties” defense, which contended that some tipped employees sometimes worked as QAs and therefore were so intertwined as to be treated similarly for tip-pooling purposes. Looking to federal regulations on the dual-role argument, the court rejected defendant’s argument, reasoning that whenever servers acted as QAs, they did so entirely separate from their normal serving position; they worked a separate QA shift, performing QA duties, and made at least minimum wage QA pay.

In Widjaja v. Kang Yue USA Corp.,35 a group of servers in the defendants’

restaurant filed a collective action alleging improper retention of tips and improper use of tip credits in violation of the FLSA. 36 More specifically, plaintiffs alleged that defendants violated the FLSA and New York wage and hour laws by: (1) engaging in improper tip pooling and allowing a managing sushi chef to share in portions of the servers’ tips; (2) taking deductions for taxes but failing to remit the taxes to the IRS; and (3) taking deductions for credit card processing fees from tips paid by patrons using credit cards. Plaintiffs’ filed a motion for partial summary judgment, which the court granted. Concerning tip pooling, the court held that defendants violated the tip credit

33 441 F. App’x 222 (5th Cir. 2011) (unpublished). 34 441 F. App’x at 231 (citing 29 U.S.C. §203(m)). 35 2011 WL 4460642 (E.D.N.Y. Sept. 26, 2011) (unpublished). 36 Id. at *4 (citing 29 C.F.R. §785.39).

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rules by allowing the sushi chef to share in the tips. In particular, the court found that because the sushi chef had the authority to hire and fire employees, made food purchasing decisions, and received a salary, he was an “employer” under the FLSA and was not permitted to share in the servers’ tips.37

The issue in Barrera v. MTC, Inc. 38 was whether a restaurant's "service

bartenders" were eligible for inclusion in a valid tip pool because they were "employees who customarily and regularly receive tips" within the meaning of Section 203(m). The service bartenders, whose work station was located in sight of customers, had little direct contact with them because the drinks they prepared were delivered by servers. The court concluded that the employees' title was not determinative, nor was the fact that they had little direct contact with customers. Instead, the court, after reviewing the legislative history of Section 203(m) and Wage and Hour Division's Field Operations Handbook, concluded that direct customer interaction was not necessarily required, but rather, visible customer service may be sufficient depending upon an analysis of all of the surrounding circumstances. In this case, because the bar was visible to customers, a question of fact existed as to whether the role of the service bartenders was more analogous to that of a bus boy, bar back (a bartender's assistant), or hostess, all of whom can be included in a tip pool, as opposed to a salad preparer, who cannot.

In Koellhoeffer v. Plotke-Giordani, 39 restaurant workers alleged that the

restaurant employer violated the FLSA by allowing an individual, whom plaintiffs contended was an "employer," to share in a tip pool. Defendant moved for summary judgment, contending that the court need not independently analyze whether its tip-pooling policy violated the FLSA because in 2002—approximately eight years before this case was filed—the U.S. Department of Labor had investigated the tip-pooling policy and determined it compliant with the FLSA. Plaintiffs contended that the investigation did not make an official finding of compliance, but merely declined to pursue the matter and recommended closure of the case. The court declined to defer as requested, stating that the DOL finding was nothing more than "the results of a field investigation, i.e., the notes and conclusions of a single USDOL investigator."40 The court held that such an investigation does not even rise to the level of an opinion letter or other statement of agency enforcement policy. Therefore, regardless of the investigator's findings, the court concluded the investigation result was not entitled to deference. However, the court did grant defendant’s motion for summary judgment on the issue of whether plaintiff failed to receive notice of the tip pooling policy because plaintiff did not dispute that he knew of the policy and posters at the workplace contained information about the tip credit.

37 See 29 U.S.C. §203(m). 38 2011 WL 3273196 (W.D. Tex. July 29, 2011). 39 2012 WL 846670 (D. Colo. Mar. 12, 2012). 40 Id. at *7.

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K. Deductions From Tips In Widjaja v. Kang Yue USA Corp.,41 a group of servers in the defendants’

restaurant filed a collective action alleging improper retention of tips and improper use of tip credits in violation of the FLSA and New York law.42 More specifically, plaintiffs alleged that defendants violated the FLSA and New York wage and hour laws by: (1) engaging in improper tip pooling and allowing a managing sushi chef to share in portions of the servers’ tips; (2) taking deductions for taxes but failing to forward the taxes to the IRS; and (3) taking deductions for credit card processing fees from tips paid by patrons using credit cards. Plaintiffs’ filed a motion for partial summary judgment, which the court granted. With regard to deductions from tips purportedly for tax withholding, the court held that defendants had violated the tip credit rules. The court noted that, while tips are subject to payroll tax withholdings, to make such withholdings, the employee must report the tips to the employer and the employer must deduct the taxes from the employee’s subsequent payroll check and forward the taxes to the IRS. Here, defendants violated the tip credit rules by taking withholdings directly from tips and then failing to remit the taxes to the IRS. The court found defendants’ argument that they could not forward withholdings to the IRS because the employees did not have social security numbers to be without merit. The court held that the law does not carve out an exception from the general duty to forward withholdings where an employee failed to submit a social security number. Finally, the court held that defendants violated the tip credit rules by taking deductions for credit card processing fees. Although defendants were permitted to deduct from charged tips an amount necessary to compensate for credit card processing fees, such deductions must be no more than necessary to offset the fees imposed by credit card issuers. Because defendants failed to present evidence that the amounts they deducted were no more than necessary to compensate for the assessed credit card fees, the court found that defendants failed to meet their burden and violated the FLSA and New York Labor Law.

V. Calculating the Minimum Wage

A. Averaging Earnings Over the Workweek

In Norceide v. Cambridge Health Alliance,43 hourly, non-exempt hospital workers

brought a collective action alleging that defendant health alliance failed to pay them for time worked during their 30-minute meal breaks and before and after their shifts. Defendant moved to dismiss the case on several grounds. In denying defendant’s motion to dismiss for failure to allege minimum wage violations, the district court rejected defendant’s argument that plaintiffs never received less than the operative minimum wage when their weekly salary was divided by the total number of hours worked each week to create an “average hourly wage.” While noting that the Second Circuit had endorsed the use of this type of weekly average method in its United States

41 2011 WL 4460642 (E.D.N.Y. Sept. 26, 2011). 42 Id. at *4 (citing 29 C.F.R. §785.39). 43 814 F. Supp. 2d 17 (D. Mass. 2011).

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v. Klinghoffer Bros. Realty Corp.44 decision and that several other circuits had since adopted it, the court found that this “method ignores the plain language of the minimum wage provision and undermines the FLSA’s primary purpose of ensuring a fair wage for workers.”45 The court instead interpreted the FLSA’s minimum wage provision text to show that the “only metric Congress envisioned was the hour, with each hour having its own discrete importance.”46 In rejecting the weekly average method, the court noted that “Congress' primary concern with protecting worker—not employers—buttresses the above conclusion that the plain language of the minimum wage provision should be read as an endorsement of the hour-by-hour method.”47

D. Piece Rates

In Olivo v. Crawford Chevrolet Inc.,48 two automobile repairmen brought action in

state court against car dealership and supervisor defendants. Plaintiffs alleged defendants violated the FLSA and New Mexico law based on their paid by the job compensation structure and failure to pay for compulsory waiting time.49 After removal, defendant dealership filed a motion for summary judgment. The district court denied summary judgment on plaintiffs’ FLSA claims. Defendant dealership argued that it had an agreement with plaintiffs wherein they were compensated for all work—including waiting time—by the wages they received for piecework.50 Rejecting that argument, the court held that an agreement would not excuse defendant from not paying minimum wages. Specifically, the court noted that “[e]mployers cannot escape the requirements of [the] FLSA by a piecework system which attributes artificial hours to set piecework.”51 The court also denied defendant’s motion with respect to plaintiffs’ state law claims. State law excluded individuals compensated on a piecework basis from the definition of employees.52 The court held that an issue of fact remained as to whether defendant’s requirement that plaintiffs remain on premises while waiting for piecework altered their piecework employee status.53

1. Nonproductive Activities

In Olivo v. Crawford Chevrolet Inc.,54 two automobile repairmen brought action in state court against car dealership and supervisor defendants. Plaintiffs alleged defendants violated the FLSA and New Mexico law based on their paid by the job compensation structure and failure to pay for compulsory waiting time.55 After removal,

44 285 F.2d 487 (2d Cir. 1960). 45 814 F. Supp. 2d 17, 23 (D. Mass. 2011). 46 Id. at 23. 47 Id. at 24. 48 799 F. Supp. 2d 1237 (D.N.M. 2011). 49 Id. at 1239-40. 50 Id. at 1241. 51 Id. 52 Id. at 1242. 53 Id. 54 799 F. Supp. 2d 1237 (D.N.M. 2011). 55 Id. at 1239-40.

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defendant dealership filed a motion for summary judgment. The district court denied summary judgment on plaintiffs’ FLSA claims. Defendant dealership argued that it had an agreement with plaintiffs wherein they were compensated for all work—including waiting time—by the wages they received for piecework.56 Rejecting that argument, the court held that an agreement would not excuse defendant from not paying minimum wages. Specifically, the court noted that “[e]mployers cannot escape the requirements of [the] FLSA by a piecework system which attributes artificial hours to set piecework.”57 The court also denied defendant’s motion with respect to plaintiffs’ state law claims. State law excluded individuals compensated on a piecework basis from the definition of employees.58 The court held that an issue of fact remained as to whether defendant’s requirement that plaintiffs remain on premises while waiting for piecework altered their piecework employee status.59

56 Id. at 1241. 57 Id. 58 Id. at 1242. 59 Id.

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Chapter 10

DETERMINING OVERTIME COMPENSATION IV. The “Regular Rate”

A. Regular Rate Includes “All Remuneration”

In the collective action Pingatore v. Town of Johnston,1 the magistrate judge

issued a report and recommendation granting the plaintiff firefighters’ motion for partial summary judgment on FLSA liability for failure to pay the appropriate overtime rate. The controlling collective bargaining agreement (CBA) provided for overtime pay of time and a half the employee’s hourly rate based upon salary divided by the number of hours in the employee’s normal workweek. The equation did not include longevity pay, hazardous material pay or rescue pay as part of the “salary” and, as such, plaintiffs argued that the contractually-agreed overtime pay rates violated the FLSA because overtime pay should be based on the regular rate of pay, which the FLSA defines to include “all remuneration for employment paid to, or on behalf of, the employee.”2 Defendant countered that it had agreed to a “bona fide” overtime rate in the CBA. The court held parties cannot contract out of the FLSA’s provisions (i.e., an employee may not waive his or her rights under the FLSA by agreeing to a pay plan that violates the same) and, therefore, defendant’s argument that the CBA should control despite the FLSA’s definition of “regular rate” to include “all remuneration” paid to the employee failed as a matter of law.3 As such, the court granted plaintiffs’ motion and held the defendant violated the FLSA by failing to include all remuneration when calculating overtime pay.4

In Ellis v. Common Wealth Worldwide Chauffuered Transp.,5 plaintiff limousine driver claimed, among other things, that defendant improperly calculated the regular rate for overtime. Plaintiff was paid $8 per hour, and $12 per hour for each hour over 40 in a week. Defendant’s customers received invoices for the fares they incurred during a period of time, and there was a recommended tip of 20%. Customers were informed that they could raise or lower the tip, and all tips were paid to plaintiff. If an invoice had not been paid when plaintiff’s wages were due, defendant would still pay plaintiff the 20% tip to plaintiff at that time. If the customer paid more when the invoice was paid, plaintiff would receive the additional amount. If less was paid, defendant did not claw back the difference. Plaintiff claimed that the 20% “tip” was in fact a service charge that should have been included in his regular rate. The district court, in granting defendant’s motion for summary judgment and denying plaintiff’s cross motion, found that the 1 2011 WL 6056891 (D.R.I. Oct. 31, 2011). 2 See 29 U.S.C. §207(e). 3 2011 WL 6056891 at *5. 4 Id.at *6. 5 2012 WL 1004848 (E.D.N.Y. Mar. 23, 2012).

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evidence established that the 20% tip was a gratuity and thus not included in the regular rate for overtime.

In Kaiser v. At The Beach, Inc.,6 26 managers sued defendant, an operator of tanning stores, for unpaid overtime. Plaintiffs had been classified as exempt from overtime under the FLSA by defendant and alleged that they were misclassified, seeking compensatory and liquidated damages. After a bench trial, the district court concluded that plaintiffs had been misclassified as exempt employees for portions of their employment and awarded them damages. In calculating damages, the court analyzed whether it was appropriate to apply the fluctuating workweek method (FWW) to determine overtime damages due, pursuant to 29 C.F.R. § 778.114. Applying the FWW results in significantly reduced damages because it allows the divisor for the regular rate of pay to be the total number of hours worked and the multiplier applied to the total overtime hours is 0.5 rather than 1.5 times the regular rate of pay.7 In order to calculate damages using the FWW method, the court noted that a “clear, mutual understanding” between the parties that the fixed salary was compensation for however many hours plaintiffs worked in a particular work (even if more than 40) was required.8 The court found this method impermissible under these facts because defendant, on occasion, compensated plaintiffs with an “overtime” payment when they picked up extra shifts.9 Based on that sporadic compensation, the court applied the common-law presumption that “an employee’s fixed weekly salary was meant to compensate him solely for 40 hours of work even when he regularly worked more than 40 hours.”10 Rejecting the FWW method, the court set forth a formula for calculating overtime due to plaintiffs based on their regular rate. In identifying plaintiffs’ regular rate, the court used plaintiff’s semi-monthly compensation as a starting point and adjusted the divisor based on any non-discretionary bonuses, commissions, 11 and the sporadic extra shift payments.12 During semi-monthly periods where plaintiffs were paid salary only, the court used a divisor of 40. For those semi-monthly pay periods during which plaintiffs received compensation in addition to their salary, the court held that “the divisor used in deriving the regular rate of pay must be total hours worked.”13 The court instructed defendant to provide calculations consistent with its opinion to plaintiffs. The court further noted that it is not unusual to use two different divisors in order to calculate damages.

6 2011 WL 6826577 (N.D. Okla. Dec. 28, 2011). 7 Id. at *25. 8 Id. at *26. 9 Id. 10 Id. 11 The court elected to calculate the regular rate based on the amount of commissions paid in a given month, rather than based on the amount of commissions earned in a given month. Id. at *10; Kaiser v. At The Beach, Inc., 2012 WL 1245400, *2 (N.D. Okla. Apr. 12, 2012) (overruling objection regarding failure to include all commissions paid in the regular rate objection). 12 Kaiser, 2011 WL 6826577 at *27. 13 Id. at *28 (citing Chavez v. City of Albuquerque, 630 F.3d 1300 (10th Cir. 2011) and 29 C.F.R. §778.117 (regulations contemplating commissions added to a fixed salary that clearly require an hours worked divisor in deriving a regular rate as opposed to a 40 hour divisor)).

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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)

In the collective action Pingatore v. Town of Johnston,14 the magistrate judge issued a report and recommendation granting the plaintiff firefighters’ motion for partial summary judgment on FLSA liability for failure to pay the appropriate overtime rate. The controlling collective bargaining agreement (CBA) provided for overtime pay of time and a half the employee’s hourly rate based upon salary divided by the number of hours in the employee’s normal workweek. The equation did not include longevity pay, hazardous material pay or rescue pay as part of the “salary” and, as such, Plaintiffs argued that the contractually-agreed overtime pay rates violated the FLSA because overtime pay should be based on the regular rate of pay, which the FLSA defines to include “all remuneration for employment paid to, or on behalf of, the employee.”15 Defendant did not dispute that these amounts should be excluded from the calculation of “all remuneration,” and the court determined that the “law is unequivocal that these payments must be included in the regular rate for FLSA purposes.” 16 Instead, defendant countered that it had agreed to a “bona fide” overtime rate in the CBA. The court held parties cannot contract out of the FLSA’s provisions (i.e., an employee may not waive his or her rights under the FLSA by agreeing to a pay plan that violates the same) and, therefore, defendant’s argument that the CBA should control despite the FLSA’s definition of “regular rate” to include “all remuneration” paid to the employee failed as a matter of law.17 As such, the court granted plaintiffs’ motion and held the defendant violated the FLSA by failing to include all remuneration when calculating overtime pay.18

In McLean v. Garage Management Corp.,19 the plaintiffs were Garage Managers

who alleged they were improperly classified as exempt under the executive exemption and that the defendant garage management company was required to include certain bonuses in its computation of the “regular rate” for purposes of calculating overtime. Plaintiffs and defendants filed cross motions for summary judgment. After finding that plaintiffs were not exempt and granting summary judgment on that point, the court evaluated whether a monthly lump sum “Extra Compensation” (“EC”) bonus fully compensated plaintiffs for any overtime due and whether these EC bonuses had to be included in the calculation of plaintiffs’ “regular rate” of pay. First, because the EC bonuses were lump sum payments that did not fluctuate based on the number of

14 2011 WL 6056891 (D.R.I. Oct. 31, 2011). 15 See 29 U.S.C. §207(e). 16 2011 WL 6056891 at *5. 17 Id. 18 Id. at *6. 19 819 F. Supp. 2d 332 (S.D.N.Y. 2011).

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overtime hours an employee worked, the court held that they did not qualify as overtime payments under the relevant regulation. Second, the court agreed with plaintiffs that the EC bonuses did not qualify as premium payments that could be excluded from an employee’s regular rate. Rather, the court noted that when employees receive a bonus, that bonus should be calculated as part of the total remuneration for purposes of calculating the regular rate. Although acknowledging that certain premium payments could be excluded, the court held that defendants had not shown that the EC bonuses were premium payments. Thus, the court granted plaintiffs’ motions, holding that the EC bonuses were not overtime wages and that, to calculate overtime pay, the regular rate needed to be increased by apportioning the EC bonuses to the hourly rate.

c. “Clock Pattern” Premium Pay—Section 7(e)(7)

In Gilmer v. Alameda-Contra Costa Transit Dist.,20 plaintiffs were bus drivers who brought a collective action under the FLSA against their former employer. The parties stipulated to conditional certification of the collective action, which the defendant reserved the right to challenge at a later time. Plaintiffs moved for partial summary judgment on the issue of damages.21 The defendant cross-moved to decertify the collective action and for summary judgment on certain aspects of the damages. One aspect of damages that the defendant opposed was the inclusion of "elapsed" or "spread" time premiums. These amounts referred to premium pay for a bus driver when the elapsed time, or "spread," between the driver's start-time and end-time for the day exceeded ten hours. The defendant argued that elapsed time pay should not be included in regular time calculation but should be treated as a credit to offset overtime compensation due. Under the FLSA, the "regular rate" of pay excludes "clock pattern" premium pay, which is "extra compensation provided by a premium rate paid to the employee." "Clock pattern" premium pay: (1) must be paid pursuant to an employment contract or CBA; (2) must be paid for work outside of the hours established in good faith by the contract or CBA as the basic, normal, or regular workday (not exceeding eight hours) or workweek (not exceeding 40 hours); and (3) must equal or exceed one and one-half times the rate established by the contract or CBA for like work performed during such workday or workweek. Here, the elapsed time premiums were established by contract, but there was no uniform workday by which to determine whether work was performed outside of an established workday. Because the elapsed time premiums were paid due to the spread between the start-time and end-time, and not due to work performed outside the normal working day, they amounted to a premium paid for undesirable working conditions. Thus, elapsed time premiums were not creditable against overtime compensation owed by the defendant, and were properly included in the calculation of the plaintiffs' regular rate.22

20 2011 WL 5242977 (N.D. Cal. Nov. 2, 2011). 21 Plaintiffs had previously moved for, and the court had granted, summary judgment on the issue of liability. 22 2011 WL 5242977, at *11-16.

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d. Other Types of Premium Pay Distinguished

In Kaiser v. At The Beach, Inc.,23 26 managers sued defendant, an operator of tanning stores, for unpaid overtime. Plaintiffs had been classified as exempt from overtime under the FLSA by defendant and alleged that they were misclassified, seeking compensatory and liquidated damages. After a bench trial, the district court concluded that plaintiffs had been misclassified as exempt employees for portions of their employment and awarded them damages. In calculating damages, the court analyzed whether it was appropriate to apply the fluctuating workweek method (FWW) to determine overtime damages due, pursuant to 29 C.F.R. § 778.114. Applying the FWW results in significantly reduced damages because it allows the divisor for the regular rate of pay to be the total number of hours worked and the multiplier applied to the total overtime hours is 0.5 rather than 1.5 times the regular rate of pay.24 In order to calculate damages using the FWW method, the court noted that a “clear, mutual understanding” between the parties that the fixed salary was compensation for however many hours plaintiffs worked in a particular work (even if more than 40) was required.25 The court found this method impermissible under these facts because defendant, on occasion, compensated plaintiffs with an “overtime” payment when they picked up extra shifts.26 Based on that sporadic compensation, the court applied the common-law presumption that “an employee’s fixed weekly salary was meant to compensate him solely for 40 hours of work even when he regularly worked more than 40 hours.”27 Rejecting the FWW method, the court set forth a formula for calculating overtime due to plaintiffs based on their regular rate. In identifying plaintiffs’ regular rate, the court used plaintiff’s semi-monthly compensation as a starting point and adjusted the divisor based on any non-discretionary bonuses, commissions, 28 and the sporadic extra shift payments.29 During semi-monthly periods where plaintiffs were paid salary only, the court used a divisor of 40. For those semi-monthly pay periods during which plaintiffs received compensation in addition to their salary, the court held that “the divisor used in deriving the regular rate of pay must be total hours worked.”30 The court instructed defendant to provide calculations consistent with its opinion to plaintiffs. The court further noted that it is not unusual to use two different divisors in order to calculate damages.

23 2011 WL 6826577 (N.D. Okla. Dec. 28, 2011). 24 Id. at *25. 25 Id. at *26. 26 Id. 27 Id. 28 The court elected to calculate the regular rate based on the amount of commissions paid in a given month, rather than based on the amount of commissions earned in a given month. Id. at *10; Kaiser v. At The Beach, Inc., 2012 WL 1245400, *2 (N.D. Okla. Apr. 12, 2012) (overruling objection regarding failure to include all commissions paid in the regular rate objection). 29 Kaiser, 2011 WL 6826577 at *27. 30 Id. at *28 (citing Chavez v. City of Albuquerque, 630 F.3d 1300 (10th Cir. 2011) and 29 C.F.R. §778.117 (regulations contemplating commissions added to a fixed salary that clearly require an hours worked divisor in deriving a regular rate as opposed to a 40 hour divisor)).

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In Gilmer v. Alameda-Contra Costa Transit Dist.,31 plaintiffs were bus drivers who brought a collective action under the FLSA against their former employer. The parties stipulated to conditional certification of the collective action, which the defendant reserved the right to challenge at a later time. Plaintiffs moved for partial summary judgment on the issue of damages.32 The defendant cross-moved to decertify the collective action and for summary judgment on certain aspects of the damages. One aspect of damages that the defendant opposed was the inclusion of "elapsed" or "spread" time premiums. These amounts referred to premium pay for a bus driver when the elapsed time, or "spread," between the driver's start-time and end-time for the day exceeded ten hours. The defendant argued that elapsed time pay should not be included in regular time calculation but should be treated as a credit to offset overtime compensation due. Under the FLSA, the "regular rate" of pay excludes "clock pattern" premium pay, which is "extra compensation provided by a premium rate paid to the employee." "Clock pattern" premium pay: (1) must be paid pursuant to an employment contract or CBA; (2) must be paid for work outside of the hours established in good faith by the contract or CBA as the basic, normal, or regular workday (not exceeding eight hours) or workweek (not exceeding 40 hours); and (3) must equal or exceed one and one-half times the rate established by the contract or CBA for like work performed during such workday or workweek. Here, the elapsed time premiums were established by contract, but there was no uniform workday by which to determine whether work was performed outside of an established workday. Because the elapsed time premiums were paid due to the spread between the start-time and end-time, and not due to work performed outside the normal working day, they amounted to a premium paid for undesirable working conditions. Thus, elapsed time premiums were not creditable against overtime compensation owed by the defendant, and were properly included in the calculation of the plaintiffs' regular rate.33

In McLean v. Garage Management Corp.,34 the plaintiffs were Garage Managers

who alleged they were improperly classified as exempt under the executive exemption and that the defendant garage management company was required to include certain bonuses in its computation of the “regular rate” for purposes of calculating overtime. Plaintiffs and defendants filed cross motions for summary judgment. After finding that plaintiffs were not exempt and granting summary judgment on that point, the court evaluated whether a monthly lump sum “Extra Compensation” (“EC”) bonus fully compensated plaintiffs for any overtime due and whether these EC bonuses had to be included in the calculation of plaintiffs’ “regular rate” of pay. First, because the EC bonuses were lump sum payments that did not fluctuate based on the number of overtime hours an employee worked, the court held that they did not qualify as overtime payments under the relevant regulation. Second, the court agreed with plaintiffs that the EC bonuses did not qualify as premium payments that could be excluded from an employee’s regular rate. Rather, the court noted that when employees receive a bonus,

31 2011 WL 5242977 (N.D. Cal. Nov. 2, 2011). 32 Plaintiffs had previously moved for, and the court had granted, summary judgment on the issue of liability. 33 2011 WL 5242977, at *11-16. 34 819 F. Supp. 2d 332 (S.D.N.Y. 2011).

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that bonus should be calculated as part of the total remuneration for purposes of calculating the regular rate. Although acknowledging that certain premium payments could be excluded, the court held that defendants had not shown that the EC bonuses were premium payments. Thus, the court granted plaintiffs’ motions, holding that the EC bonuses were not overtime wages and that, to calculate overtime pay, the regular rate needed to be increased by apportioning the EC bonuses to the hourly rate.

In the collective action Pingatore v. Town of Johnston,35 the magistrate judge

issued a report and recommendation granting the plaintiff firefighters’ motion for partial summary judgment on FLSA liability for failure to pay the appropriate overtime rate. The controlling collective bargaining agreement (CBA) provided for overtime pay of time and a half the employee’s hourly rate based upon salary divided by the number of hours in the employee’s normal workweek. The equation did not include longevity pay, hazardous material pay or rescue pay as part of the “salary” and, as such, Plaintiffs argued that the contractually-agreed overtime pay rates violated the FLSA because overtime pay should be based on the regular rate of pay, which the FLSA defines to include “all remuneration for employment paid to, or on behalf of, the employee.”36 Defendant did not dispute that these amounts should be excluded from the calculation of “all remuneration,” and the court determined that the “law is unequivocal that these payments must be included in the regular rate for FLSA purposes.” 37 Instead, defendant countered that it had agreed to a “bona fide” overtime rate in the CBA. The court held parties cannot contract out of the FLSA’s provisions (i.e., an employee may not waive his or her rights under the FLSA by agreeing to a pay plan that violates the same) and, therefore, defendant’s argument that the CBA should control despite the FLSA’s definition of “regular rate” to include “all remuneration” paid to the employee failed as a matter of law.38 As such, the court granted plaintiffs’ motion and held the defendant violated the FLSA by failing to include all remuneration when calculating overtime pay.39

7. Payments Made When No Work Is Performed—Section 7(e)(2)

In Balisteri v. Menlo Park Fire Protection Dist.,40 plaintiff firefighters filed an action against defendant, the fire protection district for which they worked, in part for its failure to include the combined vacation and sick pay buy-back in its calculation of the regular rate for overtime compensation. The parties submitted cross-motions for summary judgment.41 The court noted that the issue was a matter of first impression in the Ninth Circuit and that other circuit courts were split on the issue.42 Some authorities, such as the Department of Labor, distinguish between unused vacation and sick pay for the purpose of calculating the regular rate. The court cited a 2009 Department of Labor 35 2011 WL 6056891 (D.R.I. Oct. 31, 2011). 36 See 29 U.S.C. §207(e). 37 2011 WL 6056891 at *5. 38 Id. 39 Id. at *6. 40 2012 WL 1110011, *3 (N.D. Cal. Mar. 30, 2012). 41 Id. 42 Id. at *7.

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Opinion Letter,43 which concluded that companies could exclude vacation buy-backs but should include sick leave stipends. The DOL reasoned that vacation buy-backs could be excluded because the regulations expressly permitted the exclusion of vacation pay when no work is performed.44 A sick leave stipend, on the other hand, is tantamount to an attendance bonus.45 The court in Balisteri found that the annual leave bank at issue was distinguishable from the systems discussed in the opinion letter because it combined both unused sick and vacation leave into a single bank.46 The court found this distinction material because, with the annual leave bank, the employees could take time off without regard to whether it was scheduled or unscheduled. The bank did not distinguish between vacation and sick pay, and therefore, its accrued unused portion could not be analogous to a bonus and should be excluded for the purpose of calculating the regular rate of pay.47

In Edwards v. City of New York,48 plaintiff corrections officers claimed, among other things, that their employer, the New York department of corrections, improperly failed to include certain holiday pay in the regular rate as a bonus and violated the FLSA as a result. Pursuant to their collective bargaining agreement, plaintiffs were entitled to double time if they worked on any of the 11 paid holidays. In addition, they received a biannual “holiday bonus.” In denying plaintiffs summary judgment on the claim that the biannual “holiday bonus” should be included in the regular rate, the court agreed with defendant’s position that, pursuant to 29 U.S.C. § 207(e)(2), amounts paid for occasional periods of non-work, including for holidays, are not “bonuses” that are included, and were therefore properly excluded from the regular rate.

8. Reimbursement for Work-Related Expenses—Section 7(e)(2)

Plaintiffs in Darrow v. WKRP Management, LLC, 49 were pizza delivery drivers for the defendants, which operate Pizza Hut franchise stores. The plaintiffs alleged that it was the defendants’ policy and practice to unreasonably estimate employees’ automotive expenses for reimbursement purposes, which caused the plaintiff and similarly situated individuals to earn less than minimum wage under the FLSA and Colorado law.50 The defendants moved to dismiss the plaintiff’s amended complaint pursuant to Rule 12(b)(6) on the grounds that plaintiff failed to allege his actual automotive expenses.51 Denying the defendants’ motion, the court first explained that an employer is permitted to reimburse an employee for work related expenses based on a reasonable approximation of such costs, and that reimbursement is not included in the

43 2009 WL 649021 (Jan. 16, 2009) (WH Op. Letter FLSA2009-19). 44 Id. at *4 (citing 29 C.F.R. §778.219(a)). 45 Id. (“Regular attendance benefits the employer by not requiring replacement salaries including possible overtime, limiting administrative costs related to rescheduling, and improving workplace morale.”). 46 2012 WL 1110011 at *8 (N.D. Cal. Mar. 30, 2012). 47 Id. (distinguishing with Chavez v. City of Albuquerque, 630 F.3d 1300, 1307-09 (10th Cir. 2011). 48 2011 WL 3837130 (S.D.N.Y. Aug. 29, 2011). 49 2011 WL 2174496 (D. Colo. June 3, 2011). 50 Id. at *1 51 Id. at *2.

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regular rate of pay.52 However, the Court explained that the FLSA prohibits “kick-backs” to the employer which directly or indirectly cause the employee to pay back part or all of the wage paid to the employee, and determined that the plaintiff’s estimate of his automotive expenses based on the IRS’s standard business mileage rate of $0.44 per mile was sufficient to raise a claim that this had occurred.53 The court also found that the plaintiff stated a plausible claim: (1) that the defendants failed to reasonably approximate his actual expenses based on the plaintiff’s allegation that he was reimbursed at a rate of $0.75 to $1.00 per delivery, and that he drove an average of five miles for each delivery, and (2) that the plaintiff’s wage was reduced to below the federal and state minimum wages as a result.54

C. Calculating Regular Rate and Overtime Under Various Methods of Payment

2. Payment of Wages Based on a Nonhourly Rate

c. Day Rates and Job Rates

In Coffin v. Blessey Marine Services, Inc.,55 a collective action suit seeking unpaid overtime wages, plaintiffs, tankermen, asked the court to determine that they were not “seamen” exempt from the FLSA under 29 U.S.C. § 213(b)(6), and if the “day rate” paid by defendant, their employer, an operator of tugboats that transfer barges, does not satisfy the FLSA, that they are entitled to 1.5 their regular rate for all hours worked over 40 in a week. The court decided that if plaintiffs are not exempt under the FLSA as “seamen” and, if the “day rate” paid does not satisfy the requirements of the FLSA under 29 C.F.R. § 778.112, then plaintiffs would be entitled to additional compensation for all hours worked over 40 in a week. Plaintiffs argued that the “day rate” standard was not met because the “day rate” was not the only compensation they received, and that the other forms of compensation they received invalidated the “day rate.” The court further stated that, if appropriate to award damages, for any overtime hours for which they received no compensation, plaintiffs would be entitled to time and one half their regular rate. For overtime hours for which they were already paid, they would be entitled to additional pay of one-half their regular rate.

In Huerta v. Victoria Bakery,56 the trial court addressed overtime claims by two

bread makers who were paid a daily rate by defendant, a bakery. Defendant defaulted, and the matter was before a magistrate judge on plaintiffs’ motion for entry of default judgment. The magistrate judge recommended back pay and liquidated damages under the FLSA for the two workers after calculating, from the daily rate, a regular rate of pay for each. 57 Specifically, the court divided each plaintiff’s total weekly 52 Id. at *3. 53 Id. at *3-4. 54 Id. at *5. 55 2012 WL 1016013 (S.D. Tex. Mar. 23, 2012). 56 2012 WL 1100647 (E.D.N.Y. Feb. 17, 2012), report accepted in part, rejected in part, 2012 WL 1107655 (E.D.N.Y. Mar. 30, 2012). 57 2012 WL 1100647 at *11.

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compensation by the number of hours worked each week in order to reach a regular rate of pay figure.58 Fifty percent of the rate constituted the overtime premium which had gone unpaid. The district court accepted the magistrate’s recommendation on these points.59

d. Salaried Employees—Generally

In Santillan v. Henao,60 an employee hired to weld, bend, and polish stainless steel for a stainless steel company, brought claims for unpaid wages against the corporation and individuals under the FLSA and New York Labor Law. The plaintiff alleged that he was only paid a weekly salary by the defendant and thus entitled to back pay, spread of hours compensation under New York law, and liquidated damages for all hours beyond forty that he worked each week. After the district court entered a default judgment against the defendants, the matter was referred to the magistrate judge for determination of liability and damages.61 Since the plaintiff was paid on a weekly basis, the court determined that his hourly rate was determined by dividing the salary by the average number of hours that the plaintiff worked each week, as provided by C.F.R. § 778.113.62 Additionally, the plaintiff’s overtime rate for damages was determined by multiplying the number of hours worked in a week beyond 40 by the overtime rate, which was one half of the hourly rate previously calculated by the court.63

In Berrios v. Nicholas Zito Racing Stable, Inc.,64 plaintiffs, who worked as grooms

and hot walkers for a thoroughbred horseracing company, filed suit under the FLSA and New York labor law, alleging that defendant horseracing company failed to pay them the required overtime rate for hours that they worked in excess of 40 each week. Plaintiffs also alleged defendant failed to pay “spread of hours” wages under New York law. The parties cross-moved for summary judgment on several questions of law, including whether plaintiffs were paid a fixed salary for a fixed schedule, which defendants asserted did not violate the FLSA or state labor laws.65 After noting that the requisite “clear understanding” that a salary was intended to compensate the employee for all hours worked was absent from this case, the court found that defendant failed to rebut the presumption that plaintiffs’ weekly compensation only covered the first 40 hours of the workweek, and granted plaintiffs’ and denied defendant’s cross-motion for summary judgment on this point of law.66

In Ransom v. M. Patel Enterprises, Inc.,67 plaintiffs filed a collective action under

the FLSA alleging defendant employer misclassified them as exempt and they were

58 Id. (citing 29 C.F.R. §778.112). 59 2012 WL 1107655 at *3. 60 822 F. Supp. 2d 284 (E.D.N.Y. 2011). 61 Id. at 289. 62 Id. at 295. 63 Id. 64 849 F. Supp. 2d 372 (E.D.N.Y. 2012) 65 Id. at 379. 66 Id. at 385-87. 67 825 F. Supp. 2d 799 (W.D. Tex. 2011).

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entitled to overtime, and the parties filed cross-motions for summary judgment on the proper method of calculating damages if employer was found to have wrongfully withheld overtime pay.68 Defendant argued the proper calculation method was the “fluctuating workweek method” (“FWW”), where, assuming an employee received a weekly salary, the hourly rate was determined by dividing the salary by the number of hours actually worked in a given week and overtime due was determined by multiplying the number of hours over 40 by one-half this hourly rate.69 The court held that defendant failed to offer persuasive summary judgment evidence that the mutual intention of the parties was that the salary was intended to cover all hours worked. However, plaintiffs were not entitled to summary judgment either because determining the method of overtime calculation was a fact-dependent inquiry, and the facts were in dispute or insufficiently developed.70 After the jury trial, the court again addressed whether the FWW method should be used to calculate damages.71 The court found that evidence at trial demonstrated that parties did in fact discuss how many hours the weekly salary was intended to compensate and almost all plaintiffs who testified stated they were told when hired that they would work a minimum of 55 hours per week.72 The court noted the testimony was confirmed by plaintiffs’ exhibit, which showed many of the plaintiffs averaged close to 55 hours a week and defendants’ testimony was consistent with this estimate.73 The court found that the parties indented the weekly salary to compensate for a 55 hour workweek and held it would use a 55-hour week in determining the regular rate.74

In Lopez v. Genter’s Detailing, Inc.,75 employees of an auto detailer filed a complaint for unpaid overtime, after being paid a fixed hourly rate for all hours worked, regardless of whether the hours were over 40 in a single workweek. Defendants argued that the rate of pay reflected on paystubs was a “blended rate” that took into account regular and overtime rates and incorporated them into a single rate based on 96 hours worked over a 2 week period. Defendants admitted, however, that this formula did not compensate plaintiffs adequately for work performed in excess of 96 hours. After a trial, the jury awarded damages only for the hours worked over 96 in a bi-weekly pay period, the plaintiffs filed a renewed motion for judgment as a matter of law on the grounds that the blended rate scheme applied here was inconsistent with the FLSA as a matter of law. The district court granted the plaintiffs’ motion, holding that the plaintiffs were entitled to damages for all hours worked over 40 in a week.76 The court rejected the defendant’s argument that the rate shown on the plaintiffs’ paystubs was a blended rate that included both overtime and regular rates for work under 96 hours a pay period. As evidence thereof, the court explained that part-time workers that worked significantly

68 Id. at 801. 69 Id. 70 Id. at 810. 71 2012 WL 242788 (W.D. Tex. Jan. 25, 2012); 2012 WL 242788 (W.D. Tex. Jan. 25, 2012). 72 2012 WL 242788 at * 6. 73 Id. at * 6-7. 74 Id. at * 7. 75 2011 WL 5855269 (N.D. Tex. Nov. 21, 2011). 76 Id. at * 4.

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less than 40 hours a week were paid at a similar rate as the full-time workers even though full-time pay supposedly included the blended regular and overtime rates.77

e. Salaried Employees—Fluctuating Workweek Method

In Givens v. Will Do, Inc. Houston, 78 the plaintiff, a former coordinator for defendant, brought suit against her former employers, a lunch-time dating service, after she was terminated from her position at the defendants' franchise, “It's Just Lunch” ("IJL"). The plaintiff alleged she was not paid for overtime. The defendants moved for partial summary judgment, asserting inter alia that: (1) the plaintiff was an administrative employee and thus exempt from receiving overtime; and (2) any unpaid overtime should be calculated using the fluctuating workweek method. Plaintiff argued that the fluctuating workweek method did not apply when an employee has been misclassified as exempt and urged the court to adopt the method of overtime calculation in In re EZPawn LP Fair Labor Standards Act Litigation.79 The general rule for calculating an employee's regular rate is "wage divided by hours." When an employee is paid a salary, the regular hourly rate is computed by dividing the salary by the number of hours that salary is supposed to compensate. This accommodates two types of salary arrangements: fixed pay for regular hours and fixed pay for variable or fluctuating hours. Under the fluctuating workweek method, when the parties understand that the salary covers all hours worked, then the regular rate equals pay divided by all hours actually worked. This means the regular rate is lower and the unpaid overtime equals one-half the regular rate for all overtime hours. Because this method results in much less overtime, the parties often dispute which method is appropriate for non-exempt salaried employees. The employee bears the burden of proving that the fluctuating workweek method does not apply. Here, the plaintiff argued that the fluctuating workweek formula, as approved and applied by the Fifth Circuit,80 violated the statutory overtime pay requirements of the FLSA. Plaintiff instead argued that the "traditional method" applied in EZPawn was correct. However, the court noted that this "traditional method" was contrary to applicable authority: EZPawn cited to no regulation or case law indicating that the regular rate should be based on non-overtime hours only. Moreover, the Blackmon method of computing unpaid overtime "has an impeccable pedigree," stretching back from current FLSA regulations to early circuit court decisions and Interpretative Bulletin No. 4, issued the same year that the FLSA was passed. Thus, the fluctuating workweek method as approved by Blackmon was the proper method for determining plaintiff's overtime in the event of misclassification.81

In Perkins v. Southern New England Telephone Co., 82 plaintiff telephone

company employees brought overtime claims for violations of the FLSA and Connecticut General Statues 83 in a misclassification action against defendant, a 77 Id. at * 3. 78 2012 WL 1597309 (S.D. Tex. May 4, 2012). 79 633 F. Supp. 2d 395 (W.D. Tex. 2008). 80 Blackmon v. Brookshire Grocery Co., 835 F.2d 1135, 1138-39 (5th Cir. 1988). 81 2012 WL 1597309, at *1-9. 82 2011 WL 4460248 (D. Conn. Sept. 27, 2011). 83 Connecticut Gen. Stats. §§31-60(a), 31-76(c).

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telephone company. The parties filed opposing motions in limine regarding the appropriate rate at which a jury should calculate overtime payments for the plaintiffs, who were paid a fixed salary regardless of the number of hours they worked. Plaintiffs contended overtime should be calculated at “time and a half” the employee’s normal rate. Defendant argued that any overtime rate should be one-half the regular rate of pay, relying, on the United States Supreme Court’s opinion in Overnight Motor Transportation Co. v. Missel,84 and an interpretative bulletin on the fluctuating workweek method of calculating overtime.85 In granting the plaintiffs’ motion in limine, the district court first held that Missel was not controlling on its facts and then explained “the plain language of Section 778.114 requires that, in order to employ the fluctuating workweek method of overtime compensation, an employer – pursuant to a clear agreement – must contemporaneously pay employees an overtime premium of one-half the regular rate for overtime hours.” 86 Because the employer did not pay contemporaneous overtime premiums, the court held Section 778.114 did not apply and a time and a half overtime rate instruction would be given.87

In Clark v. Williamson County,88 a collective action by 115 EMS workers against

the defendant government entity, the magistrate judge decided cross-motions for summary judgment by recommending defendant’s motion be granted and plaintiffs’ motion be denied. Plaintiffs, who were indisputably non-exempt, claimed that defendant was not paying the overtime premium in conformance with fluctuating workweek method of calculating overtime (“FWW”) because they received in effect straight time overtime pay. Before 1998, defendant paid plaintiffs under the traditional FWW method. The court addressed two issues: whether the plaintiffs knew and agreed to be paid under the FWW method; and whether the FWW method was a disguise to pay plaintiffs a flat hourly rate for all hours worked. The plaintiffs received a weekly salary and if a plaintiff worked less than 40 hours in a week, the defendant reduced their leave time to make up the difference. If a plaintiff worked over 40 hours in a week, the defendant paid for the overtime hours at an hourly rate equal to the weekly salary divided by 40 hours. The plaintiffs claimed they did not understand how they would be paid and were told they would receive a straight rate for every hour worked, but defendant had informed the plaintiffs of the payroll method through memoranda, handbooks, and PowerPoint presentations. The court held that plaintiffs’ after-the-fact claims of confusion were insufficient when an employer adequately informs its employees of the method of payment. The court also determined that the defendant’s FWW method was not a disguise to pay plaintiffs a flat rate for overtime because it paid plaintiffs more than required under the FLSA’s fluctuating workweek rule. Defendant calculated a higher regular rate by dividing the weekly salary by 40 hours instead of the actual hours worked. Furthermore, defendants paid the full hourly rate instead of half-time for overtime as required by the FWW regulations.

84 316 U.S. 572, 580 (1942). 85 See 29 C.F.R. §778.114. 86 2011 WL 4460248 at *4. 87 Id. 88 2012 WL 1222950 (W.D. Tex. Apr. 11, 2012)

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In Javansalehi v. BF & Associates, Inc.,89 the plaintiff, a sales representative, alleged that the defendants, whose business was to sell imported rugs, misclassified her as exempt from the FLSA’s overtime requirements. The defendants moved for partial summary judgment, contending that any overtime owed to the plaintiff should be calculated at 0.5 times the regular rate of pay, under the fluctuating workweek method, instead of 1.5 times the regular rate of pay. The court noted that the proper method of calculating damages was not susceptible to summary judgment, because it would not resolve a claim or defense at issue in the litigation. However, the court re-construed the request as a motion in limine, and held that the plaintiff should receive half-time overtime under the fluctuating workweek method. In particular, the court found that the plaintiff’s compensation arrangement satisfied all requirements of the fluctuating workweek method of calculating overtime because: (1) she received a fixed salary as compensation for all hours worked; (2) the salary compensated plaintiff for all straight time hours at a rate not less than the minimum wage; (3) her hours fluctuated from week to week; and (4) there was a “clear mutual understanding” between the parties that the fixed salary would compensate the plaintiff for all hours worked in a particular week, not for a fixed number of hours.

In Ransom v. M. Patel Enterprises, Inc.,90 where plaintiffs filed a collective action

under the FLSA alleging defendant employer misclassified them as exempt and they were entitled to overtime, the parties filed cross-motions for summary judgment on the proper method of calculating damages if employer was found to have wrongfully withheld overtime pay.91 Defendant argued the proper calculation method was the “fluctuating workweek method” (“FWW”), where, assuming an employee received a weekly salary, the hourly rate was determined by dividing the salary by the number of hours actually worked in a given week and overtime due was determined by multiplying the number of hours over 40 by one-half this hourly rate.92 The court held that defendant failed to offer persuasive summary judgment evidence that the mutual intention of the parties was the salary was intended to cover all hours worked and plaintiffs were not entitled to summary judgment because determining the method of overtime calculation was a fact-dependent inquiry, and the facts were in dispute or insufficiently developed.93 In considering whether the FWW should be applied, the court referenced its prior decision in EZPawn where it explained that the Department of Labor bulletin many courts had followed was not a regulation, it was adopted for a wholly different purpose, and use of the bulletin as a damage methodology was inconsistent with the FLSA and its stated purposes.94 The court reviewed the Seventh Circuit’s holding in Urnikis-Negro v. American Family Property Services,95 noting the issued centered on how many hours the weekly salary was intended to compensate and affirmed the trial court’s finding that plaintiff’s salary was intended to compensate her no

89 2012 WL 1566184 (D. Or. May 2, 2012). 90 825 F. Supp. 2d 799 (W.D. Tex. 2011). 91 Id. at 801. 92 Id. 93 Id. at 810. 94 Id. at 803 (citing In re EZ Pawn, 633 F. Supp. 2d, 395, 402-03 (W.D. Tex. 2008). 95 616 F.3d 665 (7th Cir. 2010).

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matter how many hours she worked in a week.96 The court agreed the regular rate of pay was dependent in part on factual information, but noted the facts were usually less than clear and determining what parties intended was challenging when parties never discussed the issue. 97 The court reviewed prior Supreme Court decisions and concluded these decisions required a fact-specific inquiry and, while Urnikis recognized the fact-specific inquiry, the Seventh Circuit’s conclusion was incorrect because it failed to adopt a damage methodology consistent with its recognition and followed the FWW method.98 The court found that in a misclassification case, where there were enough facts from which to conclude that the parties actually had an understanding about how many hours the salary was intended to compensate, then those facts would determine the regular rate and resulting damages. 99 If the facts were unhelpful, the court concluded the correct approach when there was no persuasive evidence, direct or circumstantial, of a contrary agreement, would be to presume that a weekly salary paid to a non-exempt employee compensated them for 40 hours of work.100 After the jury trial, the court again addressed whether the FWW method should be used to calculate damages.101 The court found that evidence at trial demonstrated that parties did in fact discuss how many hours the weekly salary was intended to compensate and almost all plaintiffs who testified stated they were told when hired that they would work a minimum of 55 hours per week.102 The court noted the testimony was confirmed by plaintiffs’ exhibit, which showed many of the plaintiffs averaged close to 55 hours a week and defendants’ testimony was consistent with this estimate.103 The court found that the parties indented the weekly salary to compensate for a 55 hour workweek and held it would use a 55-hour week in determining the regular rate.104

In Kaiser v. At The Beach, Inc.,105 26 managers sued defendant, an operator of

tanning stores, for unpaid overtime. Plaintiffs had been classified as exempt from overtime under the FLSA by defendant and alleged that they were misclassified, seeking compensatory and liquidated damages. After a bench trial, the district court concluded that plaintiffs had been misclassified as exempt employees for portions of their employment and awarded them damages. In calculating damages, the court analyzed whether it was appropriate to apply the fluctuating workweek method (FWW) to determine overtime damages due, pursuant to 29 C.F.R. § 778.114. Applying the FWW results in significantly reduced damages because it allows the divisor for the regular rate of pay to be the total number of hours worked and the multiplier applied to the total overtime hours is 0.5 rather than 1.5 times the regular rate of pay.106 In order to calculate damages using the FWW method, the court noted that a “clear, mutual

96 Id. at 680-81. 97 825 F. Supp. 2d 799, 804-05. 98 Id. at 808. 99 Id. 100 Id. at 809-10. 101 2012 WL 242788 (W.D. Tex. Jan. 25, 2012). 102 Id. at *1-3. 103 Id. at *2. 104 Id. 105 2011 WL 6826577 (N.D. Okla. Dec. 28, 2011). 106 Id. at *25.

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understanding” between the parties that the fixed salary was compensation for however many hours plaintiffs worked in a particular work (even if more than 40) was required.107 The court found this method impermissible under these facts because defendant, on occasion, compensated plaintiffs with an “overtime” payment when they picked up extra shifts.108 Based on that sporadic compensation, the court applied the common-law presumption that “an employee’s fixed weekly salary was meant to compensate him solely for 40 hours of work even when he regularly worked more than 40 hours.”109 Rejecting the FWW method, the court set forth a formula for calculating overtime due to plaintiffs based on their regular rate. In identifying plaintiffs’ regular rate, the court used plaintiff’s semi-monthly compensation as a starting point and adjusted the divisor based on any non-discretionary bonuses, commissions, 110 and the sporadic extra shift payments.111 During semi-monthly periods where plaintiffs were paid salary only, the court used a divisor of 40. For those semi-monthly pay periods during which plaintiffs received compensation in addition to their salary, the court held that “the divisor used in deriving the regular rate of pay must be total hours worked.”112 The court instructed defendant to provide calculations consistent with its opinion to plaintiffs. The court further noted that it is not unusual to use two different divisors in order to calculate damages.

(iii.) “Clear Mutual Understanding”

In Givens v. Will Do, Inc. Houston,113 the plaintiff, a former coordinator for defendant, brought suit against her former employers, a lunch-time dating service, after she was terminated from her position at the defendants' franchise, “It's Just Lunch” ("IJL"). The plaintiff alleged she was not paid for overtime. The defendants moved for partial summary judgment, asserting inter alia that: (1) the plaintiff was an administrative employee and thus exempt from receiving overtime; and (2) any unpaid overtime should be calculated using the fluctuating workweek method. The defendants claimed that if plaintiff was owed any overtime, it should be calculated using the fluctuating workweek method. The parties disputed whether the fluctuating workweek method applied and whether there was a "clear mutual understanding" about how many hours the plaintiff was required to work at her salary. The plaintiff claimed that during her job interview, she was told she would have set hours every day, that she would rarely or never stay late, and that she was never told that her work hours would fluctuate from week to week or that she would not receive overtime pay for working overtime. Defendants

107 Id. at *26. 108 Id. 109 Id. 110 The Court elected to calculate the regular rate based on the amount of commissions paid in a given month, rather than based on the amount of commissions earned in a given month. Id. at *10; Kaiser v. At The Beach, Inc., 2012 WL 1245400, *2 (N.D. Okla. Apr. 12, 2012) (overruling objection regarding failure to include all commissions paid in the regular rate objection). 111 Kaiser, 2011 WL 6826577 at *27. 112 Id. at *28 (citing Chavez v. City of Albuquerque, 630 F.3d 1300 (10th Cir. 2011) and 29 C.F.R. §778.117 (regulations contemplating commissions added to a fixed salary that clearly require an hours worked divisor in deriving a regular rate as opposed to a 40 hour divisor)). 113 2012 WL 1597309 (S.D. Tex. May 4, 2012).

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responded that plaintiff worked more than 40 hours per week for over a year and a half without voicing a complaint, which showed a "clear mutual understanding" that her salary covered all hours worked. However, the plaintiff offered evidence that one of the defendants chastised her when she complained that her paycheck was not delivered promptly, so the plaintiff's subsequent silence about her long work hours could have been the product of intimidation rather than an implicit "understanding" of her hours requirements. Defendants' motion for summary judgment on the fluctuating workweek was denied because there was a genuine factual dispute as to how many hours the plaintiff was supposed to work.114

In Grant v. Shaw Group, Inc.,115 an environmental scientist brought suit against his employer, an environmental consulting firm, alleging his employer misclassified him as exempt from the FLSA’s overtime requirements. The plaintiff was paid a fixed salary for all hours worked whether few or many, but the parties disputed whether a clear and mutual understanding existed with respect to whether the plaintiff’s salary was intended to cover all hours worked or merely 40 hours per week. Following a bench trial, establishing liability in favor of the plaintiff, the court concluded that the fluctuating workweek method of compensation did not apply. The court noted that the defendant’s offer letter outlining the compensation did not describe the fluctuating workweek method. Further, the court reasoned that the plaintiff’s actions in questioning his employer’s overtime policies early in his employment demonstrated a lack of clear and mutual understanding. Last, the court found relevant that the defendant’s officer in charge of classification decisions was unsure of whether the plaintiff was compensated according to the terms of the fluctuating workweek method.

In Javansalehi v. BF & Associates, Inc.,116 the plaintiff, a sales representative,

alleged that the defendants, whose business was to sell imported rugs, misclassified her as exempt from the FLSA’s overtime requirements. The defendants moved for partial summary judgment, contending that any overtime owed to the plaintiff should be calculated at 0.5 times the regular rate of pay, under the fluctuating workweek method, instead of 1.5 times the regular rate of pay. The court noted that the proper method of calculating damages was not susceptible to summary judgment, because it would not resolve a claim or defense at issue in the litigation. However, the court re-construed the request as a motion in limine, and held that the plaintiff should receive half-time overtime under the fluctuating workweek method. The parties disputed whether they had a “clear mutual understanding” that the plaintiff’s fixed salary would compensate her for all hours worked each week. The court held that the defendant demonstrated the existence of a “clear mutual understanding,” even though the parties never entered into an express written agreement. It noted that, under the Department of Labor’s interpretation, an “agreement or understanding need not be in writing in order to validate the application of the fluctuating workweek method of payment overtime.” Instead, “[w]here an employee continues to work and accept payment of a salary for all hours of work, her acceptance of payment of the salary will validate the fluctuating workweek

114 Id. at *3-8. 115 2012 WL 124399 (E.D. Tenn. Jan. 17, 2012). 116 2012 WL 1566184 (D. Or. May 2, 2012).

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method of compensation . . . .”117 In addition, the court stated that the “Department’s regulations do not require that the ‘clear and mutual understanding’ extend to the method used to calculate the overtime pay.” Rather, the parties must only understand that the employee will be paid a fixed salary for all hours worked.118

In Ransom v. M. Patel Enterprises, Inc.,119 where plaintiffs filed a collective action

under the FLSA alleging defendant employer misclassified them as exempt and they were entitled to overtime, the parties filed cross-motions for summary judgment on the proper method of calculating damages if employer was found to have wrongfully withheld overtime pay.120 Defendant argued the proper calculation method was the “fluctuating workweek method” (“FWW”), where, assuming an employee received a weekly salary, the hourly rate was determined by dividing the salary by the number of hours actually worked in a given week and overtime due was determined by multiplying the number of hours over 40 by one-half this hourly rate.121 The court held that defendant failed to offer persuasive summary judgment evidence that the mutual intention of the parties was the salary was intended to cover all hours worked and plaintiffs were not entitled to summary judgment because determining the method of overtime calculation was a fact-dependent inquiry, and the facts were in dispute or insufficiently developed.122 After a jury trial, the court again addressed whether the FWW method should be used to calculate damages.123 The court found that evidence at trial demonstrated that parties did in fact discuss how many hours the weekly salary was intended to compensate and almost all plaintiffs who testified stated they were told when hired that they would work a minimum of 55 hours per week.124 The court noted the testimony was confirmed by plaintiffs’ exhibit, which showed many of the plaintiffs averaged close to 55 hours a week and defendants’ testimony was consistent with this estimate.125 The court found that the parties indented the weekly salary to compensate for a 55 hour workweek and held it would use a 55-hour week in determining the regular rate.126 V. Special Problems Concerning the Regular Rate

A. Change in the Beginning of the Workweek

In Abshire v. Redland Energy Services, LLC,127 plaintiffs, hourly employees who

worked on oil drilling rigs, filed suit on behalf of themselves and other similarly situated employees, alleging that the defendant, an operator of oil drilling rigs, had changed the

117 Id. at *9 (internal citation omitted). 118 Id. 119 825 F. Supp. 2d 799 (W.D. Tex. 2011). 120 Id. at 801. 121 Id. 122 Id. at 810. 123 2012 WL 242788 (W.D. Tex. Jan. 25, 2012). 124 Id. at *1-3. 125 Id. at *2. 126 Id. 127 822 F. Supp. 2d 874 (W.D. Ark. 2011).

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payroll period in an attempt to avoid having to pay overtime. Prior to the change, plaintiffs’ shift schedule consisted of 12-hour shifts several days per week calculated from Tuesday through Monday, every other week. Prior to June 2009, plaintiffs worked approximately 84 hours per work week and were thus paid time-and-a-half for the 44 hours of overtime they had worked. In June 2009, however, the employer changed the payroll period to run from Sunday through Saturday while leaving the Tuesday through Monday shift schedule the same. The plaintiffs filed suit alleging that the defendants’ decision to change the payroll period without altering the shift schedule violated the FLSA because it was allegedly done in order to avoid paying the employees overtime. It was undisputed that, both before and after the payroll period change, the employees each worked at least 84 hours over a seven-day period, every other week; but that, after implementation of the new payroll period, the employees received less overtime compensation than before the policy went into effect. The employer contended that it modified the payroll policy to create a uniform payroll administration so that all of its employees would be on the same payroll schedule. Noting that there was little legal authority regarding whether an employer’s decision to change its employees’ pay period violates the FLSA when that decision results in a decrease in employee overtime, the court explained that an employer may establish a pay week that differs from its employees’ work week if it is for a legitimate, or bona fide, business reason, and such a change is permissible even when it results in decreased payments of overtime compensation to employees. The court found here that the employer had provided a legitimate reason for changing its work week for payroll purposes, its corporate officers and staff had uniformly testified at deposition that the purpose behind the change was to align all employees on the same company payroll, and the change had been openly communicated to all of the employees. Critically, the change was intended to be permanent. Finally, the court explained that the FLSA’s requirements are satisfied once a defendant shows that its policy change was made for a legitimate business purpose, and that business purpose need not be the exclusive reason for the policy change. Thus, the court granted summary judgment in favor of defendant.

C. Deductions From Wages

2. Deductions for Items Other Than Facilities

Plaintiffs in Darrow v. WKRP Management, LLC, 128 were pizza delivery drivers for the defendants, which operate Pizza Hut franchise stores. The plaintiffs alleged that it was the defendants’ policy and practice to unreasonably estimate employees’ automotive expenses for reimbursement purposes, which caused the plaintiff and similarly situated individuals to earn less than minimum wage under the FLSA and Colorado law.129 The defendants moved to dismiss the plaintiff’s amended complaint pursuant to Rule 12(b)(6) on the grounds that plaintiff failed to allege his actual automotive expenses.130 Denying the defendants’ motion, the court first explained that an employer is permitted to reimburse an employee for work related expenses based on

128 2011 WL 2174496 (D. Colo. June 3, 2011). 129 Id. at *1 130 Id. at *2.

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a reasonable approximation of such costs, and that reimbursement is not included in the regular rate of pay.131 However, the Court explained that the FLSA prohibits “kick-backs” to the employer which directly or indirectly cause the employee to pay back part or all of the wage paid to the employee, and determined that the plaintiff’s estimate of his automotive expenses based on the IRS’s standard business mileage rate of $0.44 per mile was sufficient to raise a claim that this had occurred.132 The court also found that the plaintiff stated a plausible claim: (1) that the defendants failed to reasonably approximate his actual expenses based on the plaintiff’s allegation that he was reimbursed at a rate of $0.75 to $1.00 per delivery, and that he drove an average of five miles for each delivery, and (2) that the plaintiff’s wage was reduced to below the federal and state minimum wages as a result.133

131 Id. at *3. 132 Id. at *3-4. 133 Id. at *5.

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Chapter 11

GOVERNMENT EMPLOYMENT II. Coverage Issues C. Volunteers 2. Receipt of Expenses, Reasonable Benefits, or a Nominal Fee In Freeman v. Key Largo Volunteer Fire and Rescue Department, Inc., 1 a volunteer fire fighter brought a claim alleging that the defendants violated the FLSA by failing to pay him minimum wage and overtime. Defendant moved to dismiss on the grounds that plaintiff had yet again failed to allege facts showing an employer-employee relationship (the district court had granted an earlier motion to dismiss on the same grounds). Plaintiff alleged that he was an employee because he received more than a nominal fee from defendants for his services as a fire fighter. To evaluate the existence of an employment relationship, the district court applied the economic reality test. The court found that none of the test’s factors weighed in favor of plaintiff being considered an employee. Defendants lacked the authority to hire or fire plaintiff. Plaintiff’s schedule varied based on his availability. While volunteers did receive a fee for service, there was a set cap that could not be exceeded regardless of how much the volunteer would work. Finally, none of the parties could produce employment records for plaintiff. The court concluded that plaintiff did not allege facts sufficient to show an employment relationship and therefore granted dismissal. In Mendel v. City of Gibraltar,2 a police dispatcher brought a claim that defendant had terminated him in violation of the Family Medical Leave Act (FMLA). Defendant claimed that it was not obligated to abide by the requirements of the FMLA because it employed less than 50 employees. To determine whether the defendant was an employer covered by the FMLA, the district court evaluated whether the defendant’s fire fighters were employees or volunteers. The district court granted defendant’s motion for summary judgment finding that the fire fighters were volunteers under the FLSA and therefore were not employees that could be counted toward the FMLA requirement. The court placed significant weight on the lack of control the defendant exerted over the fire fighters. In particular, fire fighters were not obligated to report when called by the defendant, they could not be disciplined for failing to respond to a call, a fire fighter’s volunteer status could only be revoked when he or she failed to meet government-mandated training requirements, fire fighters did not have set work schedules, and they did not staff a fire station when not responding to a call. The court acknowledged that the $15 per hour that fire fighters received was more than nominal, but noted that fire

1 841 F. Supp. 2d 1274 (S.D. Fla. 2012). 2 842 F. Supp. 2d 1035 (E.D. Mich. 2012).

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fighters were provided no compensation for the training and testing they must undergo to be certified, and the compensation they received did not outweigh the lack of control defendant had over them. Finally, the court noted that there were no allegations made by fire fighters that they were in fact employees, rather this was a situation where another employee was seeking to have them categorized as employees to effectuate enforcement of the FMLA. III. Exemptions from Overtime Requirements in the Public Sector A. Section 7(o) — Compensatory Time 1. Prior Agreement or Understanding In Courtright v. Board of County Commissioners of Payne County,3 a former jailer of the sheriff’s department claimed that he was denied overtime compensation and improperly compensated with compensatory time instead of monetary payment in violation of the FLSA. The district court granted defendant’s motion for summary judgment finding that it is sufficient for an employee to know that his or her employer rewards overtime with compensatory time. Here evidence demonstrated that plaintiffs were aware of the defendant’s compensatory time policy and that defendant had created a written personnel policy explicitly stating that only compensatory time was available to compensate employees for overtime work. B. Section 7(p)(1) — Special Detail Work In Clark v. City of Fort Worth,4 police officers worked during off-duty hours as security officers at two event facilities owned by the defendant city. The police department leased the event facilities to outside licensees for use in events such as charity balls, dog shows, and corporate gatherings, and required licensees to hire off-duty city police officers as security personnel for the events. The officers applied to be included on an eligibility list maintained by the city for such assignments and could decline to perform any given off-duty assignment they were offered. No officer was disciplined for declining to accept an off-duty assignment. The licensees paid the officers directly and did not share any budget or retirement system with the City. The City’s control of the eligibility list and its decision to provide workers' compensation insurance for officers on special detail assignments did not override the weight of the other evidence. The district court granted the defendants' motion for summary judgment on the ground that the special detail exemption allowed the City to exclude the plaintiffs' off-duty hours from the total hours worked for overtime purposes. The district court’s decision was affirmed in an unpublished opinion by the Fifth Circuit finding that for the reasons expressed in the district court opinion.5 3 2011 U.S. Dist. LEXIS 60017 (W.D. Okla. June 3, 2011). 4 800 F. Supp. 2d 781 (N.D. Tex. 2011). 5 Clark v. City of Fort Worth, 464 F. App’x 325 (5th Cir. 2012).

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E. Training Time In Allen v. City of Texas City,6 fire fighters brought an action for compensation under the FLSA for all hours spent attending specialized training to obtain or maintain occupational certifications necessary for their jobs. In determining whether the training time was compensable the district court considered both 29 C.F.R. § 553.226 (addressing compensability of training time for public employees) and 29 C.F.R. § 785.27 (addressing when training time may excluded from compensable time). The parties did not dispute that the training at issue involved new skills, or that plaintiffs could still perform their jobs without the training. Furthermore the evidence submitted supported that the training was not a pre-requisite to becoming a fire fighter for the defendant. The one factor at issue was whether the employees’ participation in the training was truly voluntary. Plaintiffs assert that they feared they would be forced to resign if they did not take the training. Defendant countered this position by referencing a Conditions of Employment agreement that stated training would be voluntary. Due to the disputed evidence, the court concluded that summary judgment was inappropriate because a credibility determination was necessary to decide the voluntariness of the training. In Misewicz v. City of Memphis,7 fire fighters brought a claim for training time they were required to complete to be certified as paramedics. In considering cross motions for summary judgment, the district court noted the presumption that employer-required training time will be compensable unless one of the two exceptions to the general rule apply. Here the court concluded that the paramedic training at issue was not required by a higher level of government, as required under the second exception for compensation under 29 C.F.R. § 553.226. The court then examined the first exception which is when training is required of all employees (both public sector and private sector). performing a particular type of job in a jurisdiction. The court found that the record was unclear as to whether the City had actually hired plaintiffs “to provide emergency medical services only a certified paramedic could provide.” Both parties also sought summary judgment based on DOL regulations 29 C.F.R. § 785.27. Similar to the regulation specifically addressing training time for public employees, 29 C.F.R. §553.226, § 785.27 presumes that training time is compensable unless four criteria have been met. Here, the parties disputed whether the training was actually voluntary and whether it was directly related to plaintiffs’ duties as fire fighters. In addressing whether the paramedic training was truly voluntary, the court noted that genuine issues of fact remain in dispute because the evidence presented demonstrates that a reasonable juror could conclude that becoming a paramedic was not a pre-requirement to employment and that a number of fire fighters were unaware of the training requirement even after they were hired. As the court explained in analyzing the exception to the regulation applicable to public employees, the evidence before it was insufficient to determine what defendant had actually hired plaintiffs to do and thus denied summary judgment as to both parties. 6 2012 U.S. Dist. LEXIS 30308 (S.D. Tex. Mar. 6, 2012). 7 864 F. Supp. 2d 688 (W.D. Tenn. 2012).

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IV. FLSA Exemptions in the Public Sector A. The White-Collar Exemptions 3. Professional Employees In Solis v. Washington,8 the Secretary of Labor filed a complaint alleging that defendant failed to pay overtime to certain social workers in violation of the FLSA. The district court granted summary judgment in favor of defendant finding that the social workers qualified as learned professionals and were exempt from the FLSA. The Ninth Circuit reversed the district court’s decision. This case was the first time the Ninth Circuit had considered the regulations related to the learned professional exemption. After considering other circuits interpretations of the regulations and opinions from the DOL, the court concluded that the dispositive question was whether the defendant required a “prolonged course of specialized intellectual study” before an individual was eligible to be a social worker. Here the defendant did not require any specialized course of study directly related to the position, but rather accepted applicants from a variety of different fields. While the defendant did require that applicants have a certain amount of practical experience, for the exemption to apply, the knowledge must come from advanced and specialized instruction, not practical experience. The court concluded that the defendant had failed to meet its burden to show that its social workers qualified for the learned professional exemption and reversed the district court’s decision. 5. Issues Under the Salary Basis Test In Bass v. City of Jackson,9 current and former district fire chiefs brought a claim alleging that they were not properly compensated under the FLSA for hours worked above 40 in a week. The parties cross-moved for summary judgment. Defendant contends that plaintiffs are exempt from coverage under the FLSA as they are executive and administrative employees. The district court acknowledged that plaintiffs performed the duties of exempt executive and administrative employees; however, the court found triable issues on whether the salary basis test was met because there was evidence that plaintiffs’ salaries reduced depending on the number of hours they worked. Summary judgment was thus denied to both parties. In Edmund v. City of Fort Myers,10 an irrigation technician claimed that he was not properly compensated for overtime work in excess of 40 hours within a workweek. The parties filed cross-motions for summary judgment on the exemption issue, among other issues. Defendant asserted that plaintiff was exempt from FLSA coverage. However, defendant admitted in discovery that plaintiff was paid hourly. Because it is undisputed that plaintiff is an hourly employee, the court ruled plaintiff was not exempt

8 656 F.3d 1079 (9th Cir. 2011). 9 2011 U.S. Dist. LEXIS 155694 (S.D. Miss. Dec. 2, 2011). 10 2012 U.S. Dist. LEXIS 1424 (M.D. Fla. Jan. 5, 2012).

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as a matter of law and thus granted plaintiffs’ motion for partial summary judgment and denied defendant’s motion for summary judgment. V. Special Provisions that Apply to Fire Protection and Law Enforcement

Employees of Public Agencies A. Small Department Exemption In Niendick v. City of Salem,11 a police officer brought an FLSA overtime claim. The district court denied plaintiff’s motion for summary judgment finding that questions of fact remained as to whether defendant was entitled to the small department exemption. The defendant claimed that it employed only four law enforcement officers. However, in responding to plaintiff’s interrogatories the defendant acknowledged the existence of reserve officers. While maintaining that it only employed four law enforcement officers, defendant failed to provide any evidence to support that these reserve officers should be properly classified as volunteers and thereby exempt from employee status. As the only evidence provided by plaintiff that these reserve officers were actually employees was his own testimony asserting that defendant paid its reserve officers, the court concluded that questions of fact remained as to whether defendant was entitled to the small department exemption. B. The Section 7(k) Exemption In Bass v. City of Jackson,12 current and former district fire chiefs brought a claim alleging that they were not properly compensated under the FLSA for those hours above forty worked in a week. Defendant moved for summary judgment, arguing for partial exemption under Section 207(k) as plaintiffs were engaged in fire protection activities. In a 30(b)(6) deposition, defendant’s witness testified that defendant had adopted a 15-day work period for fire fighters. However, the defendant’s witness went on to explain that the 15-day work period did not apply to the plaintiffs because the defendant considered them to be exempt employees. The court concluded that this contradictory testimony created a genuine issue of material fact and denied defendant summary judgment. In Bittick v. City of Foristell, 13 current and former police officers brought a collective action alleging that defendant failed to compensate them for 15 minutes of work related activities they engaged in prior to the beginning of their work shifts in violation of the FLSA. Defendant moved for summary judgment asserting the partial exemption for law enforcement officers under Section 207(k). The district court ruled that Section 207(k) exempted the officers as a matter of law. It was undisputed that defendant was a public law enforcement agency and that it had adopted a work period of two weeks. Even though defendant paid overtime for hours worked below the Section 207(k) threshold, the court noted that a municipality will not forfeit an exemption

11 2012 U.S. Dist. LEXIS 68291 (E.D. Ark. May 16, 2012). 12 2011 U.S. Dist. LEXIS 155694 (S.D. Miss. Dec. 2, 2011). 13 2011 U.S. Dist. LEXIS 149792 (E.D. Mo. Dec. 30, 2011).

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by enacting a policy that provides overtime more generously then statutorily required. The court thus granted defendant summary judgment. In Courtright v. Board of County Commissioners of Payne County,14 a former jailer and similarly situated employees of the sheriff’s department claimed that they were denied overtime compensation and improperly compensated with compensatory time instead of monetary payment in violation of the FLSA. Defendant moved for summary judgment, arguing that the work schedule for these law enforcement employees satisfied the partial exemption set forth in Section 207(k). The district court granted defendant’s motion for summary judgment as to plaintiffs’ claims for overtime compensation due as plaintiffs’ failed to demonstrate that they worked above the Section 207(k) threshold of 171 hours in a 28 period. It was undisputed that the defendant had adopted a 28-day work period pursuant to Section 207(k). Plaintiffs were regularly scheduled to work 160 hours in each 28-day work period. Despite plaintiffs claims that they worked unscheduled hours each 28-day period, the number of hours claimed did not cause the plaintiffs to have worked above the Section 207(k) threshold and therefore could not support a claim for overtime compensation under the FLSA. In Edwards v. City of New York,15 current and former correction officers brought a claim alleging that they were entitled to compensation for time spent donning and doffing equipment as well as overtime for time spent waiting for their relief to arrive. Plaintiff sought summary judgment on the overtime claim, among other issues. In ruling in favor of the City, the district court found that there was significant evidence that plaintiffs operated on 28-day work period that exempted them under Section 207(k). Plaintiffs were scheduled to work four eight hour and thirty-one minute days followed by two days off. Over the 28-day period this caused plaintiffs to work 170 hours and twenty minutes. Following such a schedule would not result in a consistent number of hours for a seven-day period. As a result, the court concluded that this regular and recurring schedule provided substantial evidence that the defendant had adopted a 28-day work period pursuant to Section 207(k) and was entitled to the benefit of the partial exemption. Plaintiff was thus denied summary judgment. In Foley v. City of Buffalo,16 a fire fighter brought a collective action alleging that defendant for overtime. Defendant asserted the affirmative defense that it had adopted a Section 207(k) work period. The district court noted that this case presented as issue that has yet to be decided by the Second Circuit—whether an employer is required to “affirmatively adopt” a Section 207(k) work period in order for the exemption to apply. After analyzing decisions from the First, Fifth, Seventh, and Eleventh Circuits, the district court concluded that an employer can establish a Section 207(k) work period through implementation. Plaintiff’s complaint alleged that fire fighters were scheduled to work an eight-day recurring schedule. Taking the facts pleaded by plaintiff as true, the court found that plaintiff had admitted that the defendant had established an eight-day work period. As plaintiff failed to assert that the fire fighters worked hours above the

14 2011 U.S. Dist. LEXIS 60017 (W.D. Okla. June 3, 2011). 15 2011 U.S. Dist. LEXIS 97134 (S.D.N.Y. Aug. 29, 2011). 16 2011 U.S. Dist. LEXIS 82285 (W.D.N.Y. July 27, 2011).

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FLSA threshold for an eight-day work period, plaintiff failed to state a claim upon which relief could be granted. In Hart v. Tuolumne Fire District,17 a fire fighter brought a claim alleging that he regularly worked hours that defendant failed to compensate him for in violation of the FLSA. The district court granted defendant’s motion to dismiss, but granted plaintiff leave to amend, finding that plaintiff had failed to plead sufficient facts to support that he had worked hours in excess of the applicable Section 207(k) threshold. The court noted that plaintiff had only alleged that fire fighters were scheduled to work one 48-hour shift every six days and that those facts alone were insufficient to demonstrate that the plaintiff worked in excess of the Section 207(k) threshold. In Hughes v. City of Chicago,18 a retired police officer brought a claim alleging that defendant failed to pay him for overtime work in violation of the FLSA. The district court noted that defendant had adopted a 28-day work period for its law enforcement officers pursuant to Section 207(k). Despite adopting the 28-day work period, defendant had a collective bargaining agreement with its officers that caused it to pay overtime at times earlier than required under the Section 207(k) threshold. Defendant claimed that because officers could receive more overtime pay than was required by the FLSA that it was entitled to credits which caused it to owe plaintiff nothing. However, the plaintiff’s complaint alleged that he regularly worked hours above the Section 207(k) threshold and that he was compensated at a rate lower than his hourly rate of pay. Taking the facts pleaded as true, the court concluded that it could not definitively rule that the plaintiff was not entitled to relief. In James v. Fenske, 19 current and former sheriff deputies brought a claim alleging that the defendants failed to pay the plaintiffs overtime for hours worked above 40 in a week in violation of the FLSA. The district court granted the defendant’s motion for summary judgment as to plaintiffs' overtime claim. The court found that defendant had adopted a 14-day work period pursuant to Section 207(k) and that deputies were not entitled to overtime until they worked above 86 hours in a 14-day work period. Plaintiff provided no evidence that deputies had ever been compensated for overtime for hours below the Section 207(k) threshold. While defendant created an internal operating schedule that called on plaintiffs to only work 40-hour weeks, this did not create an obligation for the defendant to provide plaintiffs with overtime compensation for hours worked above 80 in a 14-day work period but still below the 86-hour threshold. In O’Hara v. City of Pittsburgh,20 police officers brought a claim alleging that shift differential and longevity pay had been improperly excluded from their regular rate calculation in violation of the FLSA. The district court held a bench trial and determined that defendant was liable for violations of the FLSA and the only question was whether defendant was entitled to a "safe harbor" from liquidated damages. In an effort to avoid

17 2011 U.S. Dist. LEXIS 97113 (E.D. Cal. Aug. 30, 2011). 18 2012 U.S. Dist. LEXIS 8714 (N.D. Ill. Jan. 25, 2012). 19 2012 U.S. Dist. LEXIS 26632 (D. Colo. Mar. 1, 2012). 20 2011 U.S. Dist. LEXIS 101790 (W.D. Pa. Sep. 9, 2011).

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paying liquidated damages, defendant argued that it was entitled to the Section 207(k) partial exemption. The court rejected defendant’s argument, explaining that Section 207(k) is only a tool for calculating entitlement to overtime. Here the parties had stipulated the amount of overtime that was owed. Therefore Section 207(k) had no application to whether the defendant was entitled to safe harbor. In Siegmund v. County of Orange,21 deputy sheriffs, district attorney investigators and supervisory district attorney investigators brought a claim alleging that defendant failed use their regular rate when compensating them for overtime worked above forty hours in a week. The district court granted defendant summary judgment on a Section 207(k) defense. The Ninth Circuit affirmed, finding that the existence of a memorandum of understanding (MOU) did not create a disputed issue of fact as to whether defendant had adopted a work period pursuant to Section 207(k). The Ninth Circuit agreed that defendant had provided uncontroverted evidence that it had established a regular recurring 14-day work period. The parties’ MOU establishing a 40-hour workweek did not prohibit the adoption of a Section 207(k) work period. The Section 207(k) work period and the MOU could coexist because the FLSA provides the floor and does not limit parties from agreeing to more generous overtime compensation as the parties did here with the MOU. C. Compensable Hours of Work Rules 4. Animal Care In Campbell v. Kelly,22 a deputy sheriff and lone member of the K-9 unit brought a claim alleging that the defendant violated the FLSA by failing to compensate him for overtime hours worked training and caring for the K-9 unit dog. The district court denied defendant’s motion for summary judgment finding that there was a genuine dispute as to whether plaintiff’s off-duty activities caring for the dog constituted compensable work. The court noted that after establishing the K-9 unit, defendant published policies making the handler responsible for the grooming, daily care, training, and housing of the dog. Furthermore, even though the plaintiff did not keep detailed records of the time he spent caring for the dog, the defendant’s knowledge that plaintiff was caring for the dog and the policies directing the type of care he was obligated to provide create a strong likelihood that the work done was not de minimis. In Krause v. Manalapan Township,23 current and former patrolmen who were members of the defendant’s K-9 Unit brought a claim alleging that defendant failed to pay them overtime for time spent caring for their police dogs outside of their regular shifts in violation of the FLSA. The district court granted defendant’s motion for summary judgment. The court noted that due to the indeterminate nature of caring for a police dog, 29 C.F.R. § 785.23 allows the parties to come to a reasonable agreement setting the amount of time a handler will be compensated for to take care of his or her

21 461 F. App’x 639 (9th Cir. 2011). 22 2011 U.S. Dist. LEXIS 97889 (S.D. Ohio Aug. 31, 2011). 23 2011 U.S. Dist. LEXIS 112365 (D.N.J. Sep. 30, 2011).

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animal while off-duty. When defendant created the K-9 unit, the Chief informed the officers that they would need to be compensated for their off-duty time caring for the animals. The parties agreed that the K-9 handlers would be entitled to one hour of compensatory time each shift, allowing the handlers to come in an hour late or leave an hour early while still receiving credit for all of the hours of their shifts. This agreement was formalized through inclusion in the collective bargaining agreement defendant entered into with the union that represented the plaintiffs. The court found that the parties were not obligated to mention the FLSA in the agreement to make it valid; it was enough that defendant’s Chief made the proposal specifically to compensate the handlers for the off-duty time they would be using to care for the dogs. Because the plaintiffs failed to show that the defendant had actual or constructive knowledge that plaintiffs spent time in excess of the allotted hour caring for the dogs, it was appropriate for defendant to reasonably rely on the parties’ agreement. VII. The Federal Sector B. Compensable Hours of Work Rules 2. Preliminary and Postliminary Activities In Lesane v. Winter,24 police officers with the Office of Naval Intelligence brought a suit alleging that they are owed compensation for the time they spend donning and doffing their uniforms and protective gear, and for time spent obtaining weapons. The district court denied defendant’s motion for summary judgment because defendant failed to show that the time plaintiffs spent performing integral and indispensable activities was de minimis. Whether donning and doffing clothing, gear, and arms qualified as an integral and indispensable activity entitled to compensation was a question of first impression in the D.C. Circuit. In considering the issue, the court rejected the notion that application of a bright line 10 minute rule to determine de minimis should be applied if the activity is regular and recurring. The court found that officers’ time changing in and out of their uniforms, which a majority of the officers opted to do at home, was not integral and indispensable to their policing activities and thus not compensable. However, donning and doffing the protective gear and arms that officers were obligated to wear while on shift was compensable. Plaintiffs submitted evidence that the minimum time spent donning and doffing the protective gear and arms took six to eight minutes. The court acknowledged that due to the continuous workday rule it must also consider the time in between when an officer dons or doffs his or her protective gear and the time he or she walks to or waits in line to receive his or her arms. The court thus concluded there was a triable issue as to whether time plaintiffs spent donning and doffing protective gear and receiving their arms was more than de minimis. 24 866 F. Supp. 2d 1 (D.D.C. 2012).

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F. Liquidated Damages and Willfulness In Abbey v. United States, 25 traffic management coordinators and air traffic control specialists had previously won on summary judgment that defendant's payment of credit hours and compensatory time as overtime compensation violated the FLSA. The district court held a trial on the issue of liquidated damages and whether defendant had willfully violated the Act for statute of limitations purposes. The court concluded that defendant was unable to meet its burden to demonstrate that its violations of the FLSA were done in good faith and on reasonable grounds. The court noted that in creating its compensatory time and credit hour policy defendant failed to conduct any legal analysis of the interaction of its obligations under Title 5 and the FLSA. Furthermore, the fact that no one specifically questioned defendant’s authority to use its compensatory time policy did not remove its obligation to continually ensure its compliance with the FLSA. Nor did defendant show it had other reason to believe it was in compliance, such as reliance on human resource staff, on an opinion sought from a government agency tasked with interpreting the FLSA, or a potential ambiguity in the law that impacted the defendant’s decision. The defendant’s inability to meet its burden of showing good faith entitled the plaintiffs to liquidated damages. While the court concluded that defendant’s violation had not been done in good faith for purposes of liquidated damages, it did find that the violation did not rise to the level of being reckless or willful and thus the court would not extend the statute of limitations from two to three years. The court noted that the plaintiffs did not assert, and the record did not support, that the defendant knew its conduct violated the FLSA. The court found it relevant that the defendant did not receive any complaints from employees or the union that its policy violated the FLSA. Furthermore, even when the defendant did learn that its policy was in violation of the FLSA, the court concluded that maintaining its policy for an additional year was not reckless because the defendant was forced to revisit a policy that had been in place for years and also that defendant needed to come to an agreement with the union prior to making changes. G. Other Issues in the Federal Sector 1. Cases Addressing the Impact of Other Laws In Alozie v. United States,26 current and former law enforcement officers brought a claim alleging they were entitled overtime compensation for the time worked during their daily 30-minute lunch break. The Court of Federal Claims held a bench trial and found for defendant. As law enforcement officers who were required to work irregular overtime in the performance of their duties, plaintiffs were compensated with administratively uncontrollable overtime (AUO). Plaintiffs were only entitled to overtime at one-and-one-half their normal pay in those situations where the supervisor scheduled the overtime in advance of the administrative workweek. Even if not ordered, overtime may still be considered regularly scheduled where the employer knew about it in advance of the administrative workweek but failed to officially order it. The court found, 25 106 Fed. Cl. 254 (2012). 26 106 Fed. Cl. 765 (2012).

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however, that the plaintiffs were never denied the opportunity to take a meal period and regularly did take their meal breaks. On the occasions when plaintiffs did work through their meal period they were never directed not to take a meal break by a supervisor, and typically only worked through the break to deal with unexpected emergencies. Plaintiffs failed to show that their supervisors had knowledge of these instances, or that the work should have been scheduled in advance. The court concluded that any time in which plaintiffs were obligated to work through a lunch period to deal with an unexpected emergency they were properly compensated for that time through their AUO. IX. Unique Constitutional Defenses B. The Eleventh Amendment 1. Cases Granting Eleventh Amendment Immunity In Bergemann v. Rhode Island Department of Environmental Management,27 environmental police officers brought a claim alleging that defendant failed to properly compensate them in violation of the FLSA for hours worked during their lunch period. The case was originally filed in state court, and due to the presence of the FLSA claim, defendant removed the case to federal court. The district court dismissed the action on grounds that defendant, a state entity, was immune under the Eleventh Amendment. In affirming the district court decision, the First Circuit addressed a matter of first impression for the circuit—namely whether a state can waive its sovereign immunity by removing a claim to federal court. The court acknowledged that a state may waive its immunity impliedly by actively engaging in litigation sufficient to demonstrate its consent to suit. However, waiver by litigation will only be found in those situations where the state’s actions provide it with an unfair tactical advantage. Where a state has consistently maintained its immunity, its “invocation of federal jurisdiction to enforce that immunity does not effect a waiver.”28 In Ghayyada v. Rector and Visitors of the University of Virginia,29 a registered nurse clinician was terminated and brought a claim seeking to recover damages under multiple different statutes including the FLSA. The district court dismissed plaintiff’s FLSA claims with prejudice finding that the Eleventh Amendment made defendant immune from FLSA suits. The court noted that the Commonwealth of Virginia had not consented to be sued for claims arising under the FLSA. In Hill v. Walker,30 a former Arkansas Department of Human Services employee brought a claim against defendant alleging violations of the FLSA for failure to pay her for unused compensatory leave. The district court granted defendant’s motion to dismiss plaintiff’s FLSA claims on 11th Amendment immunity grounds. The court noted

27 665 F.3d 336 (1st Cir. 2011). 28 Id. at 343. 29 2011 U.S. Dist. LEXIS 102279 (W.D. Va. Sep. 12, 2011). 30 2012 U.S. Dist. LEXIS 58225 (E.D. Ark. Apr. 26, 2012).

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that plaintiff’s former employer was an agency of the state and therefore a suit against defendant in her official capacity was actually a suit against the state. In Larimer v. Konocti Vista Casino Resort,31 a former employee sought overtime pay under the FLSA. The district court granted defendant’s motion to dismiss finding that the defendant was entitled to sovereign immunity as a tribal government. In considering this case, the district court noted that whether the FLSA abrogates tribal sovereign immunity had never been directly addressed by the Ninth Circuit. In deciding the issue the court referenced other circuits approach to the issue, analyzing it in a similar fashion to determining whether Congress intended to abrogate state sovereign immunity. The Supreme Court has made it clear that Congress will only be found to have abrogated sovereign immunity when the statutory language is unmistakably clear. Turning to the statutory language, the court found that the FLSA made no mention of any private right of action against tribal governments. Furthermore, where the statutory language does specifically abrogate sovereign immunity, it only does so to public agencies, which was limited to agencies of the United States and state governments. Because Congress specifically considered the abrogation issue, but made no mention of tribal governments, the FLSA does not abrogate tribal sovereign immunity. In Stallworth v. Alabama Department of Mental Health and Mental Retardation,32 three employees of the Department’s William D. Partlow Developmental Center filed suit in Alabama state court alleging violations of the FLSA. Defendant removed the case to federal district court and sought dismissal of the claim due to the court’s lack of subject matter jurisdiction. The district court granted defendant’s motion to dismiss finding that the claim was barred by sovereign immunity. Because defendant is an agency of the state, it too is entitled to assert sovereign immunity against the plaintiffs’ FLSA claims. Plaintiffs attempted to assert that the defendant waived its immunity by removing the case to federal court. The district court acknowledged that some circuits have expanded the waiver of immunity when a state removes the matter to federal court, however the Eleventh Circuit had not yet ruled on the matter. Since the defendant had not waived its immunity in state court, and the Eleventh Circuit had not yet weighed in on expanding the waiver of sovereign immunity, the district court declined to find “that a state always waives its sovereign immunity upon removing a case to federal court.” In Versiglio v. Board of Dental Examiners of Alabama,33 plaintiff brought a claim under the FLSA seeking unpaid overtime. Defendant asserted sovereign immunity and moved to dismiss plaintiffs' FLSA claims due to the court lacking subject matter jurisdiction. The district court denied defendant’s motion finding that the defendant was not an arm of the state entitled to sovereign immunity. The Eleventh Circuit originally affirmed the district court’s decision relying on an Alabama Court of Appeals case that found that defendant was not an arm of the state.34 Following the Eleventh Circuit’s initial decision, the Alabama Supreme Court issued a case holding that the defendant

31 814 F. Supp. 2d 952 (N.D. Cal. 2011). 32 801 F. Supp. 2d 1231 (M.D. Ala. 2011). 33 686 F.3d 1290 (11th Cir. 2012). 34 Versiglio v. Board of Dental Exam’rs of Ala., 651 F.3d 1272 (11th Cir. 2011).

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was in fact an arm of the state and entitled to immunity in Alabama state courts. The Eleventh Circuit then took the matter up again on rehearing and reversed its earlier decision finding that defendant was in fact an arm of the state and entitled to sovereign immunity. 2. Cases Rejecting Eleventh Amendment Immunity

a. Political Subdivisions and Other Entities Within States In Edmund v. City of Fort Myers,35 an irrigation technician claimed that he was not properly compensated for overtime work in excess of forty hours within a workweek. The district court denied defendant’s motion to dismiss based on its claim that it was entitled to immunity under the Eleventh Amendment. The court noted that municipalities in Florida are granted broad home rule and police powers. Therefore, defendant is not an “arm” of the state and is not entitled to Eleventh Amendment immunity.

35 2011 U.S. Dist. LEXIS 138085 (M.D. Fla. Dec. 1, 2011).

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Chapter 15

RETALIATION II. Parties

A. Plaintiffs

1. “Any Employee”

In Spitzmesser v. Tate Snyder Kimsey Architects, LTD.,1 plaintiff, a minority

shareholder in the defendant architecture firm, alleged that he had been terminated in retaliation for complaining that the firm was violating the FLSA by providing his coworkers with compensatory time in lieu of overtime pay. The defendant moved to dismiss the claim, arguing that because the plaintiff was a shareholder, he could not be considered an employee for purposes of the FLSA. The district court found that because the plaintiff’s shareholder rights were significantly limited and because written agreements outside the pleadings would likely shed light on his employee status, the plaintiff had made sufficiently plausible allegations to survive a motion to dismiss. The court also rejected the defendant’s arguments about the form of the alleged complaint, holding that the plaintiff need not have complained externally or in writing, but rather need only have communicated the substance of his concerns to the employer. Finding that the plaintiff had sufficiently pled that he was an employee who was terminated because he reported to his employer that he believed the employer was violating the FLSA, the court denied defendant’s motion to dismiss.

In Cedano v. Alexim Trading Corp.,2 plaintiff cargo truck drivers sued their former employer, an international cargo agent, seeking compensation for unpaid overtime hours worked off-the-clock, as well as liquidated damages they allegedly suffered when defendant fired them in retaliation for asserting their FLSA rights. Plaintiffs alleged they were fired because they complained to defendant about not being paid for overtime as required by the FLSA. Defendant argued that plaintiffs were fired for misbehavior; in response, plaintiffs claimed that defendant’s reason was pretext.3 Defendant moved for summary judgment on the issues of (1) whether plaintiffs were exempt from the overtime provisions of the FLSA because they were “drivers” as defined by the Motor Carrier Exemption; and (2) whether plaintiffs could be protected by the retaliation provisions of the FLSA if they were exempt.4 The district court granted summary judgment for defendant on the issue of whether plaintiffs were exempt employees, finding that plaintiffs fell under the Motor Carrier Exemption.5 The court, however, 1 2011 WL 2552606 (D. Nev. June 27, 2011). 2 2011 WL 5239592 (S.D. Fla. Nov. 1, 2011). 3 Id. at *1. 4 Id. 5 Id. at *3.

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denied summary judgment on defendant’s assertion that plaintiffs could not be protected by the retaliation provisions of the FLSA because they were exempt.6 The FLSA’s prohibition on retaliation is broader than its coverage of overtime violations, the court noted.7 “Therefore, Plaintiffs’ exemption from the protections of the wage and hour provisions of the FLSA does not preclude them from bringing a claim under the retaliatory firing provision of the FLSA.”8

2. Former Employees In Thayer Corp. v. Reed,9 a corporation filed an action against its former chief financial officer alleging violation of various federal and state laws. The former employee filed counterclaims, alleging that the corporation owed him back wages and had retaliated against him in violation of the FLSA. The corporation moved to dismiss, arguing that the defendant's status as a former employee defeated his FLSA retaliation counterclaim. In an issue of first impression, the district court held that, given the legislative and judicial consensus that the FLSA be construed broadly, the defendant's status as a former employee would not defeat his retaliation counterclaim. In so holding, the district court stated: "[a]n after-termination complaint is not necessarily fatal to a claim under the FLSA where the action giving rise to the complaint arose while the complainant was still an employee. FLSA protections would be significantly diminished if an employer could violate federal wage laws with impunity by showing the employee the door before he complains."10

4. Applicants for Employment In Dellinger v. Science Applications Intern Corp., 11 the defendant employer extended a conditional job offer to the plaintiff, a job applicant.12 During the course of the post-application paperwork, the plaintiff disclosed that she had filed an FLSA lawsuit against her previous employer, and the defendant employer withdrew the job offer several days later. The plaintiff filed suit for retaliation under the FLSA. 13 The defendant filed a motion to dismiss, arguing that plaintiff was not the defendant’s “employee” within the meaning of the FLSA, and the court agreed and granted the motion.14 Although plaintiff had a job offer from defendant and was close to starting work, she had not actually performed any work, and therefore could not be said to be employed within the meaning of the Act.15 The court agreed with the plaintiff in principle that it was problematic for employers to freely retaliate against prospective employees who had sought to vindicate their FLSA rights, but the court refused to broaden the

6 Id. at *4. 7 Id. 8 Id. 9 2011 WL 2682723 (D. Me. July 11, 2011). 10 Id. at *14. 11 649 F.3d 226 (4th Cir. 2011). 12 Id. at 227. 13 Id. 14 Id. at 231. 15 Id. at 229.

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scope of the FLSA in the face of the clear language and purpose of the Act to apply only to the employer-employee relationship.16

B. Defendants 1. “Any Person”

In Wigfall v. Saint Leo University, Inc.,17 the district court granted defendant’s

motion for summary judgment on plaintiffs’ retaliatory termination claim under the FLSA. Plaintiffs were former employees of Sodexo, Inc., which had a contract to provide food services on defendant’s campus. Plaintiffs, and others, previously filed a claim against Sodexo for race discrimination and retaliation, unpaid overtime wages, and battery. That lawsuit settled. After settlement, defendant determined that there would be numerous advantages to operating its own food service program—including the fact that it could save defendant hundreds of thousands of dollars. Defendant terminated its contract with Sodexo, which in turn terminated all of its food service workers, including plaintiffs. Plaintiffs filed this lawsuit against defendant alleging discrimination and retaliation under Section 1981, the Florida Whistleblower Statute, and the FLSA. Plaintiffs claimed defendant was a joint employer because, while employed, they wore ID patches identifying them as defendant’s employees, attended an annual orientation held for defendant’s faculty and staff, some were told that a wage increase came directly from defendant, and because some plaintiffs received instructions directly from defendant’s officials. The district court concluded that those facts only showed Sodexo imposed requirements on its employees to comply with its contract. Instead, defendant “lacked authority over the terms and conditions”18 of the plaintiffs’ employment and played no role in the decision to terminate. Therefore, plaintiffs’ retaliatory discharge claim failed as a matter of law. Furthermore, even if defendant was a joint employer of the plaintiffs, the district court concluded that plaintiffs could not establish a prima facie case. Plaintiffs attempted a convoluted argument that Sodexo’s decision to terminate their employment was related to defendant’s decision to terminate its contract with Sodexo, and that defendant’s contract decision was related to the plaintiffs’ participation in the earlier lawsuit against Sodexo. The district court found this argument was “too tenuous to satisfy the causal link element of the prima facie case.”19

2. Individuals In Payne v. Universal Recovery, Inc.,20 a case for retaliatory termination and

minimum and overtime wages under the FLSA referred for pretrial management, the magistrate judge considered Plaintiff’s Motion to Hold Case in Abeyance and Defendants’ 12(b)(6) Motion to Dismiss. Plaintiff’s former counsel had dismissed a previous action for minimum wages and overtime without prejudice under Fed.R.Civ.P.

16 Id. at 230-231. 17 2012 WL 717868 (M.D. Fla. Mar. 6, 2012). 18 Id. at *7. 19 Id. at *8. 20 2011 WL 7415414 (N.D. Tex. Dec. 7, 2011).

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41(a). After failing in a pro se motion to reinstate that original action, plaintiff, a repo driver/caller, filed a new lawsuit alleging failure to pay minimum and overtime wages, retaliatory termination for his FLSA suit, and conspiracy to prevent him from receiving unemployment benefits. Defendants moved to dismiss all of plaintiff’s FLSA claims against individual defendants on the ground that plaintiff failed to plead employer status for those defendants. The court applied the economic reality test noting four factors: (1) whether the individual has the power to hire and fire the employee; (2) whether he supervised and controlled the employee’s work schedule or conditions of employment; (3) whether he determined the rate and method of payment for the hours worked; and (4) whether he maintained employment records. The court found plaintiff’s allegations sufficient to provide grounds for relief against an individual defendant who had told him that a lawsuit was not necessary because she would cut him a check for the unpaid wages and that he would not be fired if he dismissed his lawsuit. Similarly, he had plead sufficient grounds for relief against an individual defendant who had told plaintiff that she had been instructed to fire him and escort him off the property and that she had severance pay for him if he signed the Hold Harmless agreement. Exhibits also described this individual defendant as being plaintiff’s supervisor and making the decision to terminate plaintiff’s employment. However, plaintiff failed to submit factual allegations to give rise to a reasonable inference that three other individual defendants were plaintiff’s employers under the FLSA where plaintiff had merely alleged that they acted directly or indirectly in the interest of the company in relation to plaintiff’s employment and retaliatory termination or were substantially in control of the terms and conditions of plaintiff’s work.

In Butler v. Cleburne County Commission,21 plaintiff brought various claims, including failure to pay overtime and retaliation claims under the FLSA, against his alleged employers, the county water authority, various commissioners, and members of the water authority and the county commission. The court dismissed the FLSA claims against the individual defendants.22 It reasoned that the claims asserted against the individual defendants in their official capacity were redundant of the FLSA claims against the respective entities.23 Additionally, it explained that because the Eleventh Circuit has held that the term “employer” under the FLSA does not include a public official sued in his individual capacity, they cannot be held individually liable.24 III. Protected Activities Under Section 15(a)(3)

B. Contacting the Department of Labor

In Randolph v. ADT Sec. Services, Inc. 25 two residential sales services representatives who sold ADT products and services to individuals brought an action

21 2012 WL 2357740 (N.D. Ala. Jan. 17, 2012). 22 Id. at *17. 23 Id. 24 Id. (citing Wascura v. Carver, 169 F.3d 683, 686 (11th Cir. 1999); Welch v. Laney, 57 F.3d 1004, 1011 (11th Cir. 1995)). 25 2011 WL 3476898 (D. Md. Aug. 8, 2011).

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against their former employer for wrongful termination under Maryland state law and for violation of the FLSA, claiming ADT fired them in retaliation for filing a complaint with the Maryland Department of Labor, Licensing, and Regulation (“DLLR”).26 The district court granted plaintiffs’ motion for summary judgment on the FLSA retaliation claim on the ground that ADT retaliated against them by firing them for disclosing certain documents to the DLLR because the documents were part of their complaint and disclosure of those documents, including some defendant characterized as confidential, was a protected activity.27 Plaintiffs completed the DLLR wage claim form, which instructed them to provide documentation supporting their claims and emphasized the importance of documentation, and submitted documentation including, among other things, residential service contracts that contained personal customer information and some information indicating location of alarm panels and alarm passwords.28 ADT suspended and later dismissed plaintiffs because they disclosed confidential customer and proprietary information to the DLLR.29 The court held the reasonableness of disclosing the confidential documents was irrelevant on the ground that the FLSA’s complaint clause was more akin to a participation clause.30 The court noted that the Supreme Court indicated FLSA’s enforcement needs argued for an interpretation of the word “complaint” that would provide broad protection to the employee.31 The court found that “dictionary definitions of the word ‘complaint,’ the use of that word in other cases and statutes, and the legislative purposes of the FLSA all support the conclusion that supporting documentation is part of an FLSA complaint . . . [and] filing of such documents is one aspect of the protected activity of filing a complaint.”32 Additionally, the court found that documents characterized by ADT as confidential provided support for plaintiffs’ wage claims and, under a fundamental fairness approach, “[i]t would seem contrary to the FLSA’s purposes to punish plaintiffs for complying with the DLLR’s instructions.”33 The court held that plaintiffs engaged in protected activity in submitting their supporting documentation to the DLLR and, because defendant fired plaintiffs because of their filings with the DLLR, defendant retaliated against Plaintiffs because they engaged in a protected activity. 34 The court denied defendant’s motion for reconsideration of its order. 35 The court rejected ADT’s contention that newly discovered evidence, the definition of “complaint” in the DLLR’s Field Operations Handbook (“FOH”), demonstrated the confidential information plaintiffs submitted to the DLLR was not a “complaint” because that confidential information when analyzed on an “item by item basis” did not indicate a reasonable probability of a wage law violation.36 The court held defendant had not demonstrated the evidence was newly discovered

26 Id. at *1-2. 27 Id. at *4-9. 28 Id. at *2. 29 Id. 30 Id. at *5-6. 31 Id. at *6-9. 32 Id. 33 Id. at *9. 34 Id. 35 2012 WL 273722, at *1. 36 Id. at *3.

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and defendant simply did not locate the chapter before the court issued its order.37 Assuming, arguendo, that the definition was newly discovered evidence, the court explained that defendant’s assumption was not supported by the FOH’s paragraph, and the court’s prior order implicitly rejected the defendant’s narrow approach when it noted FLSA’s enforcement needs supported its interpretation of the word “complaint” to provide broad protection to the employee and the purported confidential documents provided support for plaintiffs’ wage claims.38 In Logan v. Brewer,39 plaintiff, a truck driver and manual laborer, filed a complaint for overtime and retaliatory discharge in violation of the FLSA against his employer, a contractor. The district court denied defendants’ motion for summary judgment relating to the retaliatory discharge claim.40 Two months prior to his termination, plaintiff told defendant that he had talked with a federal labor employee and consulted an attorney regarding an overtime issue. Defendants argued that plaintiff failed to formally assert protected rights. The court held that an oral complaint must be sufficiently clear for a reasonable employer to understand it, by content and context, as an assertion of FLSA rights.41 The court found that regardless of his prior conversation with his supervisor, plaintiff’s conversation with defendant stating his entitlement to overtime, and consultation with the Department of Labor and a lawyer, were sufficiently clear.42

C. Filing Any Complaint [Amended Heading—Formerly “Internal Workplace Complaints”]

1. Cases Holding That a Formal Complaint Is Not Required

In Truckenmiller v. Burgess Health Center,43 plaintiff human resources director filed suit against defendant hospital alleging retaliatory termination in violation of the Equal Pay Act provisions of the FLSA following comments plaintiff made about the unequal pay structure between females with “Director” titles and male counterparts with “Chief” titles. Defendants moved for summary judgment arguing that plaintiff’s statements were insufficient to constitute a “complaint” under the Supreme Court’s decision in Kasten v. Saint Gobain Plastics Corp.,44 and thus were not protected activity within the context of the FLSA’s anti-retaliation provisions. In denying defendants’ motion for summary judgment, the district court found that a reasonable juror could find for the plaintiff on the issue of whether her comments satisfied the Kasten requirements. Because plaintiff’s statements were made at a senior leadership meeting and thus, may have been sufficiently formal, the district court held that the context, speaker and content suggested that plaintiff was “raising a serious, non-trivial issue.”45 Further, a

37 Id. 38 Id. at *4. 39 2011 WL 6029928 (S.D. Ala. Dec. 6, 2011). 40 Id. at *1. 41 Id. at *4. 42 Id. 43 814 F. Supp. 2d 894 (N.D. Iowa 2011). 44 131 S. Ct. 1325 (2011). 45 814 F. Supp. 2d 894, 908 (N.D. Iowa 2011).

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jury could determine that plaintiff’s “complaint” was adequately clear and detailed so as to put defendant on full and fair notice of the alleged statutory violation. Defendants also argued that plaintiff was unable to show either a causal connection between her lodged complaint and termination or that defendants’ proffered reason for her discharge—plaintiff’s inadequate job performance—was pretextual under the McDonnell Douglas46 burden-shifting framework. The district court rejected both arguments. While mere temporal proximity is normally not enough to establish causal connection, the two day span between plaintiff’s comments and subsequent termination along with evidence that the defendants did not follow their customary discharge practices were sufficient to establish plaintiff’s prima facie case. Moreover, the temporal proximity, evidence that plaintiff had not been told of certain project deficiencies prior to her termination, and defendants’ failure to follow their usual discharge practices generated genuine issues of material fact as to whether “a retaliatory reason more likely motivated the defendants or as to whether the defendants’ proffered explanation is unworthy of credence”47 thereby making summary judgment in defendants’ favor inappropriate.

In Perez v. Brands Mart Serv. Corp.,48 plaintiff, hired as an installer’s helper, pursued compensation for unpaid minimum wage and a claim for retaliatory discharge under the FLSA against defendant, a retailer that sells electronics needing installation. Plaintiff, who was paid on a commission basis, alleged that he was not compensated for time spent waiting inside a store where products he installed were sold. Plaintiff complained in writing and orally to his supervisors and orally to the human resources department. Plaintiff’s employment relationship with defendant ended when he refused to wait inside the store without receiving additional compensation for his time. The court granted defendant’s motion for summary judgment, holding that plaintiff was paid well-above minimum wage for all hours worked, including the time he spent waiting in the store, under a lawful commission arrangement.49 As to the retaliation claim, the decision turned on whether plaintiff’s complaint put defendant on sufficient notice of an alleged FLSA violation, per the standard announced in Kasten v. Saint-Gobain Performance Plastics Corp.50 The court held plaintiff’s complaint was not “sufficiently clear and detailed for a reasonable employer to understand it, in light of both the content and context, as an assertion of rights protected by the statute and a call for their protection.”51 The court reasoned that although plaintiff did ask defendant for more money to compensate him for waiting in the store, defendant knew that plaintiff received more than minimum wage in commissions. Additionally, the court considered that plaintiff did not mention the FLSA or state that he was making a demand for minimum wage.52

46 McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). 47 Truckenmiller, 814 F. Supp. 2d at 912. 48 2011 WL 3236022 (S.D. Fla. July 28, 2011). 49 Id. at *5-6. 50 131 S.Ct. 1325 (2011). 51 Perez at *9, quoting Kasten at 1334. 52 Id. at *9-10.

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In Olivo v. Crawford Chevrolet, Inc., 53 plaintiffs, former employees of the defendant car dealership, alleged that they were terminated in retaliation for making internal complaints that they were not compensated for all hours worked in violation of the FLSA and the New Mexico Minimum Wage Act. Plaintiffs were employed in the car dealership’s service department and were paid a set, predetermined amount per service assignment. Plaintiffs allege that they were required to wait several hours per week, without pay, at the body shop between work assignments. Plaintiffs further alleged that they complained to a manager about having to wait between jobs, but did not specifically complain about not being paid for this time. In analyzing whether their verbal complaints to the manager constituted protected activity, the court first acknowledged that verbal complaints may satisfy the complaint requirement of the FLSA’s anti-retaliation provision if the complaint gives fair notice that the employee is asserting an FLSA violation. The court found that the plaintiffs’ complaint regarding waiting time did provide fair notice that they were asserting an FLSA violation because it was undisputed that the plaintiffs were not paid during waiting time and there would be no reason to complain about waiting if they were being paid. Thus, the court found that a reasonable person could have understood that plaintiffs were asserting an FLSA violation, even if the FLSA was not specifically mentioned.

In Morris v. Aon Service Corp.,54 plaintiff, a former administrative assistant, filed a

wrongful termination claim against her former employer under the FLSA, alleging that her termination was in retaliation for raising concerns about her pay. Among the arguments made by Defendant in its motion for summary judgment was that plaintiff failed to provide sufficient notice such that a reasonable employer would understand that an assertion of FLSA rights was being made.55 While defendant argued that plaintiff did not specifically mention that she was invoking FLSA rights or call for their protection, the court found that there was a genuine issue of material fact due to the presentation of evidence by plaintiff that she reported to her employer of her external Wage and Hour complaint and she had “driven people crazy” at work with her pay complaints.56 In denying defendant’s motion, the court opined that oral complaints can be sufficient notice in an FLSA retaliation claim and that even informal, internal complaints are sufficient to satisfy the notice element.57

In Coberly v. Christus Health,58 on cross-motions for summary judgment, plaintiff, a senior chef in defendant’s hospital, claimed that the four times he verbally complained about not being paid for time worked in excess of 40 hours in a week constituted protected activity. The defendant contended that plaintiff’s complaints never mentioned the FLSA, rather he referred to his offer letter, which provided for overtime pay and therefore was not protected activity. The court found that although the offer letter was

53 799 F. Supp. 2d 1237 (D.N.M. 2011). 54 2011 WL 5864757 (E.D. Mich. Nov. 22, 2011). 55 Id. at *3. 56 Id. 57 Id. 58 829 F. Supp. 2d 521 (N.D. Tex. Nov. 3, 2011).

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pre-empted by the FLSA, plaintiff’s complaints were protected activity because he put defendant on notice that he was asserting a right to overtime.

In Jafari v. Old Dominion Transit Management Co., 59 plaintiff, a driver for defendant transportation company, alleged that his employer retaliated against him in violation of the FLSA by terminating his employment after he complained to his employer that it failed to pay him in accordance with the terms of its compensation plan. The plaintiff alleged that he filed an “official complaint” with company management, and that the defendant’s Chief Operating Officer asked him not to “go outside the company with his concerns.” The district court granted the defendant’s motion to dismiss on the ground that internal complaints do not constitute protected activity under the FLSA. The Fourth Circuit reversed, holding that “intracompany complaints may constitute protected activity.” Citing its concurrently filed, published decision in Minor v. Bostwick Laboratories, Inc.,60 the court emphasized that “’the statute requires fair notice’ to employers, and that not every instance of an employee ‘letting off steam’” constitutes protected activity. However, the court held that the plaintiff adequately pled he engaged in protected activity, by alleging that he filed an “official complaint” with management and that the company asked not to make an external complaint.61

In Ghobrial v. Pak Manufacturing, Inc.,62 the plaintiff, a salaried machine operator, brought an action alleging violations of state wage laws and the Fair Labor Standards Act against defendant, a surgical instrument manufacturer. Months later and after having retained new counsel, the plaintiff moved the court to amend his complaint to bring a claim for retaliation under FLSA, claiming that he was terminated from employment a week after orally complaining to his supervisor that he should be paid for overtime hours. Defendant objected on the basis of futility, because plaintiff complained about his wages only orally and never made a formal written complaint.63 The court rejected this argument, holding that no formal written complaint is required and that the plaintiff’s informal complaint was sufficiently clear to be understood and qualify under FLSA.

In Manfield v. Alutiiq Intern. Solutions, Inc.,64 the district court reviewed a motion to dismiss FLSA retaliation claims by two plaintiffs, a site supervisor and regular employee, raised by defendant, a security services provider. The court granted defendants’ motion to dismiss as to the supervisor’s retaliation claim finding that his two communications with the defendants regarding discrepancies in other employees’ overtime pay lacked the formality required to put the defendants on notice that the plaintiff was asserting rights under the FLSA. This plaintiff had called human resources to speak about discrepancies in other employees’ timesheets and later followed-up to see when the discrepancies would be corrected. The court found that this plaintiff did 59 2012 WL 251957 (4th Cir. Jan. 27, 2012) 60 669 F.3d 428 (4th Cir. 2012). 61 2012 WL 251957, at *4. 62 2012 WL 893079 (D.N.J. Mar. 13, 2012). 63 Defendant also challenged on grounds of undue delay and prejudice, but the court rejected this argument as well. 64 851 F. Supp. 2d 196 (D. Me. 2012).

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not claim that he voiced an opinion to the defendants about the legality of their actions and failed to inform them of any intent to institute an FLSA action. The court denied defendants’ motion to dismiss as to the other plaintiff, the regular employee, who alleged in the complaint that she spoke directly to human resources about discrepancies in her paycheck, told the human resources manager the deductions to her paycheck were illegal, and cited the FLSA in her communications. 65

In Riffe v. Wal-Mart Stores, Inc., plaintiff was a lead cash office associate whose regular work hours were 5 a.m. to 2 p.m., Tuesday through Saturday. Under the defendant-retailer’s policy, associates who worked outside their time reflected in their time punch entries were to record such “off the clock” time by entering an “electronic time adjustment” reflecting the actual hours worked and the reason for each adjustment. When making such adjustments, associates must select their reason from a list that included “forgot badge” and “missed punch,” but did not include an option for receiving phone calls at home. Associates who receive phone calls at home were to complete a “time adjustment slip” stating the amount of time worked, and obtain a manager’s signature. During her employment, plaintiff received several phone calls at home and entered the time for these phone calls by completing an electronic time adjustment coded with “forgot badge” or “missed punch.” She also complained to her managers about such phone calls. After being fired for reporting work hours that she did not work, plaintiff brought a claim for FLSA retaliation. The court granted summary judgment for defendant and denied plaintiff’s cross-motion, holding that plaintiff failed to establish a prima facie case of retaliation. Neither plaintiff’s complaints to management nor her electronic time adjustments constituted protected activity for purposes of FLSA retaliation because they were insufficiently clear and detailed and did not frame her complaint as a violation of the FLSA.

In Carbaugh v. Unisoft International, Inc.,66 the court granted summary judgment to defendant, a scheduling system provider, against plaintiff’s claims that he was a victim of retaliation following his repeated requests for compensation for hours worked in excess of 40 hours per week. Plaintiff’s job consisted of demonstrating and troubleshooting defendant’s product with clients, and the court found that plaintiff met the “administrative exemption” of the FLSA, meaning he was not entitled to overtime pay. Additionally, citing to Kasten v. Saint-Gobain Performance Plastics Corp.,67 the court held that not all “abstract grumblings or vague expressions of discontent are actionable complaints”68, and the plaintiff’s occasional complaints of his long hours and lack of increased compensation did not rise to the level of a protected activity.

In Hawks v. Forest River, Inc.,69 two female “off-line” assembly workers alleged retaliation in violation of the Equal Pay Act (which borrows the FLSA’s retaliation provision) for engaging in statutorily protected activity by stating that they were aware

65 Id. at 207. 66 2011 WL 5553724 (S.D. Tex. Nov. 15, 2011). 67 131 S.Ct. 1325, 1334 (2011). 68 Id. 69 2011 WL 5434241 (N.D. Ind. Nov. 8, 2011).

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that “on-line” male workers in their group, who unlike plaintiffs worked more hours and could not leave early because their production affected other “on-line” assembly workers, were earning hundreds of dollars more in pay a week. The trial court granted employer’s motion for summary judgment, holding that the alleged statement was too general and unspecific to constitute statutorily protected activity because plaintiffs did not discuss discriminatory intent or the assertion of legal rights, and instead discussed their willingness to work longer hours, assume additional duties, and undergo additional training in order to earn the same pay, indicating that their concerns were addressed to their satisfaction and had nothing to do with impermissible gender discrimination. In Thayer Corp. v. Reed,70 a corporation filed an action against its former chief financial officer alleging violation of various federal and state laws. The former employee filed counterclaims, alleging that the corporation owed him back wages and had retaliated against him in violation of the FLSA. The corporation moved to dismiss, arguing that the defendant's failure to make a formal complaint was fatal to his FLSA retaliation counterclaim. The district court held that the former employee's allegation that, after his employment ended, he had "made a written demand upon [the corporation] for payment of wages in the amount of $7,121" was sufficient to have placed the corporation on notice that he was claiming unpaid wages. Although the language of the written demand was not before the district court on plaintiff's motion to dismiss, the district court found that the defendant sufficiently had alleged the time, place, and manner of his FLSA complaint. In so finding, the district court stated: "[t]o make an FLSA claim, it is not necessary for an employee to cite the FLSA or even that he is aware that he is making an FLSA claim."71 In Shadduck v. United Parcel Service, Inc.,72 two truck drivers, members of the Teamsters, brought claims against their former employer for retaliation after the shipping company terminated their employment following several grievances they filed with their union regarding pay and scheduling pursuant to the collective bargaining agreement (“CBA”). The district court granted the employer’s motion for summary judgment. Plaintiffs did not complain that they were unpaid for work, but rather that they were not paid a higher rate for certain activities as required by the CBA. The court held that although the truck drivers’ grievances were complaints under the CBA and did not evidence a subjective belief that the employer had also violated the FLSA, such subjective belief was unnecessary in order for a grievance to be protected conduct. However, plaintiffs’ grievances did not concern subjects covered by the FLSA and therefore did not put the employer on notice that they were asserting rights under the FLSA. Thus, the grievances were not protected activity and the court granted summary judgment in favor of the employer. In Shakib v. Back Bay Restaurant Group, Inc.,73 a food server brought collective action claims against his former employer restaurant and two individuals for unpaid

70 2011 WL 2682723 (D. Me. July 11, 2011). 71 Id. at 15. 72 2011 WL 4452210 (N.D. Ill. Sept. 26, 2011). 73 2011 WL 4594654 (D.N.J. Sept. 30, 2011).

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wages including overtime, under both the FLSA and state law. The district court denied defendants’ motion to dismiss the claim for unlawful retaliation under the FLSA.74 The court, following the reasoning in Kasten v. Saint-Gobain Performance Plastics Corp.,75 explained that an oral complaint can be sufficiently clear and detailed for a reasonable employer to understand it as an assertion of rights protected by the FLSA and a call for their protection, and held that plaintiff’s numerous complaints to management concerning failure to compensate plaintiff for all hours worked were sufficient to show that he had engaged in protected activity.

2. Cases Holding That a Formal Complaint Is Required

In Orellana v. Cienna Properties, LLC,76 plaintiff brought suit alleging that her former employer failed to pay her in accordance with the FLSA and state law and terminated her in retaliation for making an internal demand for payment for all hours worked. Because defendant failed to timely answer the complaint, plaintiff filed a motion for default judgment, thus requiring the court to determine whether the factual allegations contained in the complaint entitled plaintiff to relief. In reviewing the allegations surrounding plaintiff’s retaliation claim, the court found that plaintiff failed to state a claim for retaliation, because plaintiff failed to allege a protected activity within the meaning of the FLSA. Specifically, the court held that the FLSA protects only the institution of formal proceedings, and does not extend to intra-company complaints. Thus, the court found that plaintiff’s internal complaints to her supervisor that she be paid overtime compensation were insufficient as a matter of law to constitute protected activity under the FLSA’s anti-retaliation provision.

In Hyunmi Son v. Reina Bijoux, Inc. et al.,77 a Korean-born female book-keeper

and in-house bill collector brought a lawsuit alleging, among other things, FLSA retaliation against her former employer, Korean-born residents operating a jewelry business.78 Throughout her employment, plaintiff was expected to work a substantial amount of overtime for which she was not compensated.79 When she was informed that she would be required to work even more uncompensated hours, plaintiff protested and was told that she would be terminated if she insisted on being compensated for working overtime.80 Defendants filed a motion to dismiss the plaintiff’s FLSA retaliation claim.81 The district court granted the motion to dismiss, reasoning that because the plaintiff’s complaints were made informally to her employer and not to a government agency, she did not engage in protected activity under the FLSA and so cannot make out a prima

74 Defendants sought a motion to dismiss on numerous other grounds and claims not relevant to this discussion, including on the basis of lack of personal jurisdiction, and preemption of state law claims based on the same facts as the FLSA claims. 75 131 S.Ct. 1325 (2011). 76 2012 WL 203421 (D. Md. Jan. 23, 2012). 77 823 F. Supp. 2d 238 (S.D.N.Y. 2011). 78 Id. at 239. 79 Id at 240. 80 Id. 81 Id. at 243-44.

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facie retaliation claim.82 The district court rejected the plaintiff’s efforts to rely on Kasten v. Saint-Gobain Performance Plastics, 83 distinguishing and limiting Kasten to oral complaints to a government agency, and noting that Kasten specifically refrained from deciding whether the FLSA protects either oral or written complaints made informally to an employer.84

D. “Good Faith” Requirement

In Cedano v. Alexim Trading Corp., 85 cargo truck drivers sued their former employer, an international cargo agent, seeking compensation for unpaid overtime hours worked off-the-clock. Specifically, plaintiffs alleged that they had unrecorded work hours because defendant purposefully kept the time-keeping machine inside a facility that was only open during business hours, thus preventing plaintiffs from entering those hours worked outside of business hours. 86 Plaintiffs also brought claims retaliatory discharge, alleging that defendant fired them after they complained about defendants’ timekeeping practices.87 Defendant argued that plaintiffs were fired for misbehavior; and in response, plaintiffs claimed that defendant’s reason was pretext.88 Defendant moved for summary judgment on plaintiffs’ overtime and retaliation claims.89 The district court granted summary judgment for defendant on the issue of whether plaintiffs were exempt employees, finding that plaintiffs fell under the Motor Carrier Exemption.90 The court, however, denied defendant’s motion for summary judgment on plaintiffs’ retaliation claims.91 After holding that plaintiffs were protected under the FLSA’s anti-retaliation provisions despite being exempt employees, 92 the court determined that plaintiffs had a good faith reasonable belief that the defendant’s conduct violated the FLSA.93 The court found: (1) that plaintiffs believed defendant was violating the FLSA's overtime and record keeping by placing the time-keeping machines indoors where they were unavailable to plaintiffs outside of business hours, and that the purpose of keeping these machines indoors was to avoid properly accounting for all of their working hours and therefore avoid paying them overtime wages; and (2) that plaintiffs’ had a genuine and reasonable belief that they were entitled to overtime pay because they had been paid overtime on occasions when the time-entry machine documented the extra hours.94 Thus, “[e]ven though Plaintiffs were incorrect in their belief that they were entitled to overtime pay, their complaints to management about overtime pay constituted activity protected by the FLSA.”95 82 Id. at 244. 83 131 S. Ct. 1325 (2011). 84 Hyunmi Son, 823 F. Supp. 2d at 243-44. 85 2011 WL 5239592 (S.D. Fla. Nov. 1, 2011). 86 Id. at *1. 87 Id. 88 Id. 89 Id. 90 Id. at *3. 91 Id. at *5. 92 Id. at *4. 93 Id. at *5. 94 Id. 95 Id.

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In Perez v. Brands Mart Serv. Corp.,96 plaintiff, hired as an installer’s helper,

pursued compensation for unpaid minimum wage and a claim for retaliatory discharge under the FLSA against defendant, a retailer that sells electronics needing installation. Plaintiff, who was paid on a commission basis, alleged that he was not compensated for time spent waiting inside a store where products he installed were sold. Plaintiff complained in writing and orally to his supervisors and orally to the human resources department. Plaintiff’s employment relationship with defendant ended when he refused to wait inside the store without receiving additional compensation for his time. The court granted defendant’s motion for summary judgment, holding that plaintiff was paid well-above minimum wage for all hours worked, including the time he spent waiting in the store, under a lawful commission arrangement.97 As to the retaliation claim, the decision turned on whether plaintiff’s complaint put defendant on sufficient notice of an alleged FLSA violation, per the standard announced in Kasten v. Saint-Gobain Performance Plastics Corp.98 The court held plaintiff’s complaint was not “sufficiently clear and detailed for a reasonable employer to understand it, in light of both the content and context, as an assertion of rights protected by the statute and a call for their protection.”99 The court reasoned that although plaintiff did ask defendant for more money to compensate him for waiting in the store, defendant knew that plaintiff received more than minimum wage in commissions. Additionally, the court considered that plaintiff did not mention the FLSA or state that he was making a demand for minimum wage.100

The court further held that, even if plaintiff had satisfied the notice requirement

under Kasten, plaintiff did not have sufficient evidence to prove that he had a good faith, reasonable belief that defendant had committed an FLSA violation.101 The commissions paid to plaintiff exceeded the minimum wage for each hour plaintiff worked.102 The record was devoid of evidence that plaintiff subjectively believed that he was not paid for the waiting time at issue.103 Moreover, even if plaintiff had such a belief, plaintiff could not demonstrate that such a belief was “objectively reasonable.”104 In analyzing the “objectively reasonable belief” requirement, plaintiff is presumed to have knowledge of the substantive law and it is undisputed that the commissions paid to plaintiff caused him to be properly paid minimum wage.105

96 2011 WL 3236022 (S.D. Fla. July 28, 2011). 97 Id. at *5-6. 98 131 S.Ct. 1325 (2011). 99 Perez, 2011 WL 3236022, at *9. 100 Id. at *9-10. 101 Id. at *10-11. 102 Id. at *10. 103 Id. 104 Id. at *10-11. 105 Id. at *11.

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G. Complaints by Managers and Human Resources Personnel

Plaintiff in Mousavi v. Parkside Obstetrics, Gynecology & Infertility, S.C.106 worked as an office manager at defendant’s medical practice. Among other duties, plaintiff was in charge of managing payroll, effectuating payments, and ensuring that the employees did not work beyond their scheduled hours.107 During the course of her employment, plaintiff made a pay complaint to her employer on behalf of another employee and then subsequently levied a pay complaint on her own behalf.108 Plaintiff was terminated and filed this action with the district court. The sole issue before the court on defendant employer’s motion for summary judgment was plaintiff’s retaliatory discharge claim under the FLSA. 109 Defendant argued that plaintiff never asserted FLSA rights because, as office manager, she was merely performing her duties of keeping the office compliant with federal law.110 The court, acknowledging that the Seventh Circuit had not addressed the exact contours of “protected activity,” turned to the Tenth Circuit for guidance.111 In McKenzie v. Renberg’s, Inc.,112 the court held that “to engage in protected activity, the employee must step outside . . . her role of representing the company and either file (or threaten to file) an action adverse to the employer, actively assist other employees in asserting FLSA rights, or otherwise engage in activities that reasonably could be perceived as directed towards the assertion of rights protected by the FLSA.”113 Applying the McKenzie rationale to the facts of the case, the court in Mousavi opined that plaintiff was not engaging in a protected activity when she complained on behalf of another employee because plaintiff did so in furtherance of her job responsibilities as manager of payroll.114 This finding, coupled with a lack of evidence demonstrating a causal link her actions and her termination led the court to grant defendant’s motion for summary judgment.115

In Pettit v. Steppingstone, Center for the Potentially Gifted,116 the Sixth Circuit

Court of Appeals affirmed the district court’s grant of summary judgment to the school in an FLSA retaliation action brought by the school’s Director of Admissions/Director of Human Resources. In December 2007, the plaintiff suspected two employees were misclassified under the FLSA, advised her supervisor, contacted outside legal counsel for an opinion, and drafted an informative memorandum which she gave to her supervisor. From January 2008 to February 2008, plaintiff discussed the perceived FLSA violation as well as her own misclassification concerns via e-mail correspondence with both her supervisor and the Board of Directors. In May 2008, defendant terminated

106 2011 WL 3610080 (N.D. Ill. Aug. 16, 2011). 107 Id. at *1. 108 Id. at *1-2. 109 Id. at *2-3. 110 Id. at *4. 111 Id. 112 94 F.3d 1478 (10th Cir. 1996). 113 94 F.3d at 1486-87. 114 Mousavi, 2011 WL 3610080 at *4. 115 Id. at *5. 116 429 F. App’x 524 (6th Cir. 2011).

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plaintiff’s employment for failure to execute an employment agreement. In a case of first impression, the Sixth Circuit held that plaintiff’s complaints about the two misclassified employees and defendant’s lack of a wage and hour policy did not constitute protected activity under Section 215(a), as they were made in her capacity as Director of Human Resources.117 The Sixth Circuit explained that, under FLSA retaliation law, there is a legally cognizable distinction between the performance of job duties and the assertion of one’s own FLSA rights or the rights of others.118 Employees specifically tasked with personnel or human resources duties deal with FLSA compliance with the interests of the employing company in mind.119 Plaintiff’s threats of legal action and assertion of a violation of her own FLSA rights, however, did constitute protective activity.120

In Haynes v. Crescent Real Estate Equities,121 plaintiff, a vice president of

human resources, filed a complaint alleging retaliatory termination under the FLSA after she informed management that its bonus program was non-discretionary and therefore its non-exempt employees were not being paid correctly for overtime. The complaint alleged that her regular duties did not include determining the manner for paying overtime and bonuses, and that after she brought up the issue and was told to “let it go,” she again advised management that its overtime and bonus pay practices were unlawful and that they needed to adjust the budget accordingly to account for additional overtime pay owed. Defendant moved to dismiss on the grounds that the complaint did not adequately plead protected conduct, because bringing complaints about potential FLSA issues to management’s attention was done in furtherance of her job duties and she did not step outside of her normal role as vice president of human resources. In denying defendant’s motion to dismiss, the trial court held that even though asserting that her normal role did not involve making decisions about overtime pay does not necessarily lead to the conclusion that she was stepping outside of her normal role when she advised management of unlawful pay policies, the allegations that she repeated her advice to management after being told to “let it go” and then advised management that its budget needed to be adjusted to account for overtime and bonuses in accordance with the FLSA adequately pled that she otherwise made clear that she was stepping outside of her job description and taking a position adverse to the company “once her employer told her to stop and she failed to do so.”

In Wood v. SatCom Marketing, LLC,122 plaintiff, a human resources assistant,

brought retaliation claims against the defendant, a telemarketing company, under the FLSA, the Minnesota Whistleblower Act, the Minnesota Human Rights Act, and the common law of wrongful termination. Defendant moved for summary judgment. The court analyzed all the claims together and applied the McDonnell Douglas burden-shifting framework to evaluate circumstantial evidence of retaliation. 123 The court 117 Id. at 530-31. 118 Id. at 530. 119 Id. at 530-31. 120 Id. at 531. 121 2011 WL 5597351 (S.D. Tex. Nov. 17, 2011). 122 2012 WL 591503 (D. Minn. Feb. 22, 2012). 123 Id. at *6-7.

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concluded that plaintiff failed to establish a prima facie case of retaliation because her actions were not protected activities.124 The court noted that reporting a violation of the law is protected activity if it is made in good faith.125 Good faith is determined by inspecting the report’s content as well as the reporter’s purpose, with the central question being whether the report was made to expose an illegality.126 Reporting an alleged illegality is not protected activity when an employer is well aware of the alleged violation, or when the employee’s job is to investigate and report wrongdoing.127 The court concluded that the plaintiff’s actions were not protected activities because: (1) it was the plaintiff’s job to conduct legal analysis of pertinent employment law issues; (2) she did not intend to expose an illegality when her supervisor inadvertently saw documents she printed at work; (3) a letter she sent expressing concerns about an employment policy was made after the company had also been made aware of her concerns; and (4) her report to a coworker outside of her chain of command who was not in a position to change the policy (but who conveyed her concerns to management) was not made in good faith to expose illegality because management already knew about the concerns of illegality. 128 The court granted summary judgment for defendants, concluding that even if the plaintiff had established a prima facie case of retaliation, she failed to show that the defendants’ legitimate reasons for her termination (being disciplined multiple times and put on a performance action plan) were pretextual.129 IV. Prohibited Conduct Under Section 15(a)(3)

C. Postemployment Acts In Thayer Corp. v. Reed,130 a corporation filed an action against its former chief financial officer alleging violation of various federal and state laws. The former employee filed counterclaims, alleging that the corporation owed him back wages and had retaliated against him in violation of the FLSA. The corporation moved to dismiss, arguing that the defendant failed to allege that he was subjected to an adverse employment action. In an issue of first impression, the district court held that the defendant's FLSA action was not foreclosed because the alleged retaliatory conduct (which included "threatening to send naked pictures of a woman allegedly found on [the defendant's] email to his wife and pornography from [the defendant's] computer to the general public and by filing a seven-count lawsuit against him in federal court") was not directly related to the defendant's employment and occurred after the end of his employment.131 Adopting the Supreme Court's rationale in Burlington Northern & Santa Fe Railway Co. v. White,132 a retaliation case brought under Title VII of the Civil Rights

124 Id. at *7-8. 125 2012 WL 591503, at *7. 126 Id. 127 Id. 128 Id. at *8-9. 129 Id. at *9-12. 130 2011 WL 2682723 (D. Me. July 11, 2011). 131 Id. at 16. 132 548 U.S. 53 (2006).

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Act of 1964,133 the district court found that whether the plaintiff's alleged retaliatory conduct would dissuade a reasonable worker from making a FLSA complaint was a fact question that the district court could not answer at that stage of the proceedings.

D. Retaliatory Lawsuits In Sederquist v. Industrial Engineering & Development, Inc.,134 engineering plant employees brought collective action claims for unpaid overtime and declaratory relief, and one claim of retaliation on behalf of an opt-in plaintiff where the employer sent a demand letter to the opt-in plaintiff seeking return of money paid to her and ultimately a counterclaim against the opt-in plaintiff for civil theft and unjust enrichment. The district court granted the employer’s motion to dismiss the retaliation claim, with leave to amend. Plaintiff failed to allege a prima facie case of retaliation because the complaint lacked allegations as to whether the opt-in plaintiff was an employee of the employer, but was entitled to re-plead employment status. The court, recognizing a split of decisions in the district courts in Florida, decided to follow the case decided by a judge in the Southern District, which holds that whether the filing of a counterclaim constitutes adverse employment action to support a claim of retaliation is a factual determination not subject to resolution on a motion to dismiss. Thus while plaintiff also failed to allege that the counterclaim lacked a reasonable basis in fact or law, plaintiff was entitled to plead retaliatory intent. V. Prima Facie Case and Burden of Proof

In Wigfall v. Saint Leo University, Inc.,135 the district court granted defendant’s motion for summary judgment on plaintiffs’ retaliatory termination claim. Plaintiffs were former employees of Sodexo, Inc., which had a contract to provide food services on defendant’s campus. Plaintiffs, and others, previously filed a claim against Sodexo for race discrimination and retaliation, unpaid overtime wages, and battery. That lawsuit settled. After settlement, defendant determined that there would be numerous advantages to operating its own food service program—including the fact that it could save defendant hundreds of thousands of dollars. Defendant terminated its contract with Sodexo, which in turn terminated all of its food service workers, including plaintiffs. Plaintiffs filed this lawsuit against defendant alleging discrimination and retaliation under Section 1981, the Florida Whistleblower Statute, and the FLSA. Plaintiffs claimed defendant was a joint employer because, while employed, they wore ID patches identifying them as defendant’s employees, attended an annual orientation held for defendant’s faculty and staff, some were told that a wage increase came directly from defendant, and because some plaintiffs received instructions directly from defendant’s officials. The district court concluded that those facts only showed Sodexo imposed requirements on its employees to comply with its contract. Instead, defendant “lacked authority over the terms and conditions”136 of the plaintiffs’ employment and played no

133 42 U.S.C. §2000e. 134 2011 WL 3331307 (M.D. Fla. Aug. 3, 2011). 135 2012 WL 717868 (M.D. Fla. March 6, 2012). 136 Id. at *7.

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role in the decision to terminate. Therefore, plaintiffs’ retaliatory discharge claim failed as a matter of law. Furthermore, even if defendant was a joint employer of the plaintiffs, the district court concluded that plaintiffs could not establish a prima facie case. Plaintiffs attempted a convoluted argument that Sodexo’s decision to terminate their employment was related to defendant’s decision to terminate its contract with Sodexo, and that defendant’s contract decision was related to the plaintiffs’ participation in the earlier lawsuit against Sodexo. The district court found this argument was “too tenuous to satisfy the causal link element of the prima facie case.”137

Plaintiff in Mousavi v. Parkside Obstetrics, Gynecology & Infertility, S.C.138 worked as an office manager at defendant’s medical practice. Among other duties, plaintiff was in charge of managing payroll, effectuating payments, and ensuring that the employees did not work beyond their scheduled hours.139 During the course of her employment, plaintiff made a complaint to her employer on behalf of another employee and then subsequently levied a pay complaint on her own behalf.140 Several days after her personal complaint was made, plaintiff was terminated.141 The sole issue before the district court on defendant employer’s motion for summary judgment was plaintiff’s retaliatory discharge claim under the FLSA.142 In support of its motion, defendant argued that plaintiff cannot establish a causal connection between her complaints and her termination in order to establish a prima facie case. The court ruled that plaintiff’s circumstantial evidence of suspicious timing between her complaints and termination, without additional evidence, was insufficient to survive summary judgment.143

In Pettit v. Steppingstone, Center for the Potentially Gifted,144 the Sixth Circuit

affirmed the district court’s grant of summary judgment to defendant in an FLSA retaliation action brought by the school’s Director of Admissions/Director of Human Resources. In December 2007, the plaintiff suspected two employees were misclassified under the FLSA, advised her supervisor, contacted outside legal counsel for an opinion, and drafted an informative memorandum which she gave to her supervisor. The Sixth Circuit agreed that, although plaintiff met her four-prong prima facie case of retaliation, she failed to prove pretext after the company offered a legitimate, non-retaliatory reason for her separation under the McDonnell Douglas burden-shifting framework. First, the court held plaintiff engaged in protected activity when she threatened legal action and asserted FLSA violations on her own behalf.145 Second, the parties agreed that plaintiff claimed to be exercising her rights under the FLSA.146 Third, the court found plaintiff’s inability to barter for extended day care

137 Id. at *8. 138 2011 WL 3610080 (N.D. Ill. Aug. 16, 2011). 139 Id. at *1. 140 Id. at *1-2. 141 Id. at *5. 142 Id. at *3. 143 Id. at *5. 144 429 F. App’x 524 (6th Cir. 2011). 145 Id. at 531. 146 Id.

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services and constructive discharge from employment constituted adverse action.147. Finally, plaintiff established a causal link between her protected activity and the adverse action. Plaintiff was given an employment contract containing a number of unfavorable terms within days of sending the “protected activity” e-mails, creating an inference of retaliation through temporal proximity.148 Because plaintiff established a prima facie case, the burden shifted to defendant to rebut the presumption of discrimination by producing evidence that it required plaintiff to execute the employment agreement for legitimate, nondiscriminatory reasons. The Sixth Circuit held defendant met this burden by proffering, inter alia, plaintiff was stripped of her human resources duties because the school needed her to focus on admissions, and limited her hours due to budget concerns.149 For plaintiff’s claim to survive summary judgment, the final burden shifts to plaintiff to prove pretext. The court granted defendant’s motion for summary judgment because plaintiff was unable to meet the burden on production to prove the defendant’s proffered reasons for its adverse actions against the plaintiff were pretext for retaliation, as she did not produce any evidence to rebut defendant’s proffered reasons for their actions.150

In Arencibia v. 2401 Rest. Corp.,151 plaintiffs filed an action against their restaurant

employer for alleged tip pooling violations. One plaintiff, a former server, also brought a claim for retaliation, claiming his inquiry as to whether the staff would receive lunch breaks or meals for the additional hours being asked to work led to his termination. In granting the employer’s motion for summary judgment, the district court concluded that whether an employer is required to provide meal breaks is not an issue regulated by or addressed anywhere in the FLSA, and thus, a request for such breaks cannot form the basis of a retaliation claim. The district court also concluded that the employee’s claim would still fail even if construed as a complaint about tip pooling as the basis of the retaliation, because the decision maker did not have knowledge of any protected activity. Accordingly, plaintiff could not show his complaints were causally linked to his termination.

In Azkour v. Little Rest Twelve, Inc.,152 a “busser/runner” brought an action against his restaurant-employer for minimum wage and overtime violations, as well as unlawful retaliation, under both the FLSA and New York state law. Plaintiff alleged that the restaurant paid him less than minimum wage and retained a portion of his tips, which it then redistributed to managerial employees.153 Plaintiff first complained to management, and then to the Department of Labor, about these practices. Plaintiff alleged that soon thereafter he was harassed at work and then terminated.154 Plaintiff moved for summary judgment on this retaliation claim. Defendant responded that it neither harassed the plaintiff nor terminated his employment. Defendant asserted that 147 Id. at 532-33. 148 Id. at 533-34. 149 Id. at 535. 150 Id. at 536-539. 151 831 F. Supp. 2d 164 (D.D.C. 2011). 152 2012 WL 402049 (S.D.N.Y. Feb. 7, 2012). 153 Id. at *1. 154 Id. at *2.

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plaintiff tendered a letter of resignation while he was on suspension. 155 The court ruled that the unrebutted evidence showed that, upon learning of plaintiff’s DOL complaint, the restaurant reduced plaintiff’s number of shifts.156 This reduction of hours, according to plaintiff, caused him to resign. Defendant did not submit evidence of an alternate reason for plaintiff’s resignation. In granting summary judgment for plaintiff, the court emphasized that the adverse employment action occurred three days after the plaintiff filed the DOL complaint, evidencing a causal connection between the protected activity and the adverse employment action he experienced.157 In Conus v. Watson’s of Kansas City, Inc.,158 defendant, a retailer of consumer products, filed for summary judgment and such motion was denied. Plaintiff, a commissioned salesperson, called the Kansas and U.S. Department of Labor to report alleged wage and hour violations. Thereafter, plaintiff informed 4 or 5 other employees of his action. Within 14 days, defendant terminated plaintiff. In applying the McDonnell Douglas analysis, the court found that there was temporal proximity between plaintiff’s wage complaint and termination, and explained that causal connection between termination and protected activity requires employer knowledge of protected activity. Plaintiff was terminated via a telephone conversation, and plaintiff testified that the firing was initially attributed to low sales numbers but when plaintiff questioned further, “conversations with other employees” was also brought up as a factor in the decision. The court found that the prima facie was established as a result. Further, some of defendant’s proffered non-retaliatory reasons for termination were shown to be inconsistent and others contradictory. Inconsistent and contradictory reasons for a termination can allow a jury to infer all of defendant’s proffered reasons are pretextual. Plaintiff’s discrediting of many of defendant’s reasons for termination suggested that a reasonable jury could find them all to be pretextual.

In Ghobrial v. Pak Manufacturing, Inc.,159 the plaintiff, a salaried machine operator, brought an action alleging violations of state wage laws and the Fair Labor Standards Act against defendant, a surgical instrument manufacturer. Months later and after having retained new counsel, the plaintiff moved the court to amend his complaint to bring a claim for retaliation under FLSA, claiming that he was terminated from employment a week after orally complaining to his supervisor that he should be paid for overtime hours. Defendant objected on the basis of futility160 and contended that the plaintiff could not satisfy two elements of the prima facie test – that the plaintiff engaged in a protected activity and that there was a causal link between the plaintiff’s protected action and the employer’s adverse action.161 With respect to the first element, the court found that the plaintiff did engage in protected activity by making an informal oral

155 Id. 156 Id. at *7. 157 Id. at *8. 158 2012 WL 1934467 (D. Kan. May 29, 2012). 159 2012 WL 893079 (D.N.J. Mar. 13, 2012). 160 Defendant also challenged on grounds of undue delay and prejudice, but the court rejected this argument as well. 161 There was no challenge to the second element of the prima facie case, that the employer took an adverse employment action against the plaintiff.

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complaint to his supervisor. As for causality, the court found that plaintiff’s complaint and his termination from employment were separated by only a week, and that this close proximity was sufficient to make a prima facie case of causality.

In Riffe v, Wal-Mart Stores, Inc., the plaintiff was a lead cash office associate whose regular work hours were 5 a.m. to 2 p.m., Tuesday through Saturday. Under the defendant-retailer’s policy, associates who worked outside their time reflected in their time punch entries were to record such “off the clock” time by entering an “electronic time adjustment” reflecting the actual hours worked and the reason for each adjustment. When making such adjustments, associates must select their reason from a list that included “forgot badge” and “missed punch” but did not include an option for receiving phone calls at home. Associates who receive phone calls at home were to complete a “time adjustment slip” stating the amount of time worked, and obtain a manager’s signature. During her employment, plaintiff received several phone calls at home and entered the time for these phone calls by completing an electronic time adjustment coded with “forgot badge” or “missed punch.” She also complained to her managers about such phone calls. After being fired for reporting work hours that she did not work, plaintiff brought a claim for FLSA retaliation. The court granted summary judgment for Wal-Mart and denied plaintiff’s motion for the same, holding that plaintiff failed to establish a prima facie case of retaliation. The court held that neither plaintiff’s complaints to management nor her electronic time adjustments constituted “protected activity” for purposes of FLSA retaliation because they were insufficiently clear and detailed and did not frame her complaint as a violation of the FLSA.

In Dean v. Specialized Sec. Response,162 a security guard sued his former employer alleging retaliatory discharge under the FLSA, as well as allegations of race discrimination and violations of state law. In particular, the plaintiff claimed he was terminated approximately one-and-a-half to two months after he complained about not receiving overtime pay. The defendant filed a motion for summary judgment arguing that it terminated the employee because of his criminal record. The court held that, to maintain a claim for retaliation under the FLSA, the plaintiff has the burden of presenting a prima facie case by establishing three factors: (1) the employee engaged in protective activity; (2) an adverse action by the employer occurred either after or contemporaneously with the protected activity; and (3) a causal connection between the protected activity and the adverse action. If the plaintiff establishes a prima facie case, the burden shifts to the defendant to articulate some legitimate non-discriminatory reason for the termination. Finally, if the defendant satisfies its burden of production, the burden shifts back to the plaintiff to show that the employer’s proffered reason for the employment decision was not the true reason, but a pretext for discrimination. The court here found that the plaintiff had established a prima facie case of FLSA retaliation, holding, among other things, that an internal complaint was a protected activity under the FLSA. However, the court also found that the defendant had presented sufficient evidence that it terminated the plaintiff due to his criminal history. Nonetheless, the court denied defendant’s motion for summary judgment, finding that the close proximity in time between the plaintiff’s complaint for overtime and his termination, combined with 162 2011 WL 3734238 (W.D. Pa. Aug. 24, 2011).

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the defendant maintaining the plaintiff’s employment at least four months after it learned of his criminal record, was a sufficient showing of pretext to avoid summary judgment.

In Wood v. SatCom Marketing, LLC,163 plaintiff, a human resources assistant, brought retaliation claims against the defendant, a telemarketing company, under the FLSA, the Minnesota Whistleblower Act, the Minnesota Human Rights Act, and the common law of wrongful termination. The defendant moved for summary judgment, and the court analyzed all of the claims together. It concluded that because there were no “smoking guns” to link the plaintiff’s employment discipline with her status as a whistleblower, the plaintiff had not adequately alleged direct evidence of discriminatory intent as a matter of law.164 The court concluded that the plaintiff failed to establish a prima facie case of retaliation because her actions – which the court stated were part of her job and not intended in good faith to expose an illegality – were not protected activities.165 The court granted summary judgment for the defendants, concluding that even if the plaintiff had established a prima facie case of retaliation, she failed to show that the defendants’ legitimate reasons for her termination were pretextual.166

In Campbell v. Kelly, 167 plaintiff, a former deputy sheriff and lone K-9 officer, sued the sheriff’s office and the sheriff individually for several counts under state and federal law, including for retaliation under the FLSA. Defendant moved for summary judgment on the retaliation count. The court granted summary judgment in favor of the defendant after explaining that, while plaintiff had twice raised what could possibly be construed as internal FLSA complaints, these instances were in 1999 and 2002, respectively. The court held that a time period of seven to ten years was far too long to create an inference of causal connection. Thus, plaintiff failed to raise a prima facie case. In Logan v. Brewer, 168 plaintiff, a truck driver and manual laborer, filed a complaint for overtime and retaliatory discharge in violation of the FLSA against his employer, a contractor. The district court denied defendants’ motion for summary judgment relating to the retaliatory discharge claim.169 After a year and a half on the job, plaintiff began keeping a log of his hours worked and informed his supervisor that he was entitled to overtime pay under federal law. After the supervisor talked to one of the defendants, the supervisor abruptly told plaintiff he could not discuss overtime anymore.170 Four or five months prior to plaintiff’s termination, the defendant began engaging the plaintiff in hostile conversations that became more frequent. About three months prior to termination, the defendant assigned plaintiff extra labor-intensive duties.171 Two months prior to his termination, plaintiff told defendant that he had talked

163 2012 WL 591503 (D. Minn. Feb. 22, 2012). 164 Id. at *6. 165 Id. at *8. 166 Id. at *9-12. 167 Id. 168 2011 WL 6029928 (S.D. Ala. Dec. 6, 2011). 169 Id. at *1. 170 Id. 171 Id. at *3.

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with a federal labor employee and consulted an attorney regarding the overtime issue. The hostile conversations and labor-intensive work increased for the last month prior to plaintiff’s termination.172

On summary judgment, the court rejected defendants’ argument that plaintiff failed to formally assert protected rights when talking to his supervisor as, regardless of his first conversations with his supervisor, plaintiff’s subsequent conversation with a defendant stating his entitlement to overtime, request to be paid the same, and consultation with the Department of Labor and a lawyer were sufficiently clear.173 The court also rejected defendants’ claim that there was no temporal proximity to show a causal connection because the two months between the conversations directly with defendant and the termination supported causation based solely on close temporal proximity, and, regardless, temporal proximity was only necessary in the absence of other evidence but defendants’ verbal abuse and demands for manual labor escalated each time plaintiff brought up overtime compensation could also establish causation.174 Finally, the court also held that plaintiff sufficiently challenged all four of defendants’ purported reasons for termination as pretext for discrimination. The court found it reasonable to infer that defendants’ stated reasons for termination were not really relied upon by defendants where (1) defendants failed to list plaintiff’s use of illegal prescription drugs on a Department of Industrial Relations form that required listing plaintiff’s reasons for termination,175 (2) that defendants permitted plaintiff to continue working and driving vehicles after testing positive for drugs indicated that testing positive was not actually relied upon for termination, (3) that plaintiff impermissibly had a dog on defendants’ property could be pretextual where plaintiff lived on defendants’ property and claimed defendants’ ordering the dog off of the property was in retaliation for claiming overtime, (4) defendants’ claim that plaintiff refused to work was insufficient as defendants failed to include it in their affidavit in support of summary judgment, providing an inference that it was not a real reason for termination, and (5) defendants’ escalating mistreatment of plaintiff as he brought up overtime issues provided evidence that the real reason for termination was plaintiff’s overtime claims.176 VI. Defenses and Other Responses

A. Statute of Limitations

In Butler v. Cleburne County Com'n,177 plaintiff brought various claims, including failure to pay overtime and retaliation claims under the FLSA, against his alleged employers, the county water authority, various commissioners, and members of the water authority and the county commission. Plaintiff filed his case more than two, but less than three, years after he was terminated.178 The court explained that the FLSA’s 172 Id. 173 Id. 174 Id. at *5. 175 Id. at *6. 176 Id. at *7. 177 2012 WL 2357740 (N.D. Ala. Jan. 17, 2012). 178 Id. at *18.

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two-year statute of limitations period bars all FLSA claims unless plaintiff can establish the violation was “willful,” under which a three-year statute of limitations applies.179 Plaintiff alleged that defendants “intentionally and in pattern and practice” failed to pay overtime even though they tracked it, and that the acts of retaliation committed “were performed with malice, willfulness, and reckless indifference to Plaintiff's protected rights.”180 The court held that such allegations were sufficient to survive the motion to dismiss, but only to the extent that the violations were willful.181

C. Waiver and Release

In Johnson v. Manpower Professional Services, Inc., 182 plaintiff, an African-American contract recruiter, claimed race-based denial of overtime pay and retaliatory termination against the defendant professional services company for whom he recruited. Plaintiff was employed by a third-party agency, which then placed him with defendant. For the first five weeks the recruiter worked, he received overtime pay. He stopped receiving overtime after those first five weeks. When plaintiff asked his supervisor why he no longer received overtime pay, his supervisor told him his status changed from “overtime non-exempt” to “overtime exempt.” Plaintiff’s supervisors complained to the third-party agency about plaintiff’s job performance, and plaintiff was eventually terminated and replaced with a Caucasian female who was paid extra overtime pay. Plaintiff sued the third-party agency and defendant, and eventually settled with the third-party agency. As part of that settlement, plaintiff signed a “limited release” waiving his claims against the agency, “its parent, subsidiary, related, and affiliated companies,” of “any and all … claims … arising under the [Fair Labor Standards Act] or any state of local law concerning payment of wages … includ[ing] but not limited to all claims for payment of wages, compensatory damages, liquidated damages, or attorney’s fees arising under the aforesaid statutes.”183 Plaintiff then went to the Equal Employment Opportunity Commission and filed charges against the third-party agency and his employer. He received a right to sue letter and commenced an action against both parties, with claims under Title VII, Section 1981, and the FLSA. Both defendants moved for summary judgment, and the district court granted both motions. The court applied Texas state law to determine whether the FLSA claim was covered by the release entered into by the recruiter. The court held that even though the release was constructed as a “Limited Release,” the language releasing the third-party agency from liability was broad enough to cover plaintiff’s FLSA retaliation claim.184

179 Id. 180 Id. 181 Id. 182 442 Fed. App’x 977 (5th Cir. 2011). 183 Id. at 979-80. 184 Id. at 984-85.

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VII. Remedies

B. Monetary Damages

4. Compensatory and Punitive Damages

b. Punitive Damages

In Lewey v. VI-Jon, Inc.,185 plaintiff filed suit against her former employer alleging, inter alia, retaliation in violation of subsection 215(a)(3) of the FLSA. Plaintiff had complained that she was not being paid for off the clock work, and her employer agreed to give her back pay. Then, starting just two days later, plaintiff was suspended several times and finally terminated. After plaintiff filed suit, defendant brought a motion to strike plaintiff’s prayer for punitive damages for her FLSA claim. The court denied defendant’s motion, after recognizing the split in authority across the country, holding that the remedy of “appropriate legal relief” authorized under subsection 216(b) includes punitive damages.

185 2012 WL 1859031 (E.D. Mo. May 22, 2012).

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Chapter 16

RECORDKEEPING

V. Violation of Recordkeeping Requirements

In Lopez v. Tri-State Drywall, Inc.,1 plaintiff brought an action against defendant

for, among other things, failing to comply with the FLSA’s record keeping provisions. The defendant moved to dismiss the record keeping claim. The district court granted the defendant’s motion. In so holding, the court, citing numerous other decisions, held there is no private right of action under the FLSA's record keeping or notice provisions. The court further opined that such a private right of action is inconsistent with 29 U.S.C. § 216(b).

In Solis v. China Star of Wichita, Inc.,2 the Secretary of Labor moved for a

contempt order against a restaurant and its co-owners and managers for, among other things, failing to keep proper records pursuant to a consent judgment previously entered. In granting the Secretary’s petition, the district court held that the defendants failed to offer any evidence that they complied with the consent judgment’s record keeping requirements nor did they show that, for reasons beyond their control, they were unable to comply with the record keeping requirements. The court found the appropriate remedy was an order adopting the Secretary’s findings that 11 employees were owed a total of $111,697 in unpaid minimum wages and overtime compensation and an equal amount in liquidated damages since the defendants’ failure to keep proper records was willful.

1 861 F. Supp. 2d 533 (E.D. Pa. 2012). 2 2012 WL 1059876 (D. Kan. Mar. 28, 2012).

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Chapter 17

DEPARTMENT OF ENFORCEMENT AND REMEDIES

II. DOL Investigations and Other Compliance Actions

E. Subpoenas Issued by the DOL

1. Statutory Basis of DOL’s Subpoena Power In Solis v. CSG Workforce Partners LLC,1 the Secretary of Labor sought to

enforce an administrative subpoena against an employer as part of a preliminary FLSA investigation. In a motion to dismiss, the employer argued that the individuals targeted by the Secretary’s investigation were not employees under the FLSA, and thus, the Secretary had no authority to issue a subpoena. In rejecting this argument, the district court held that the employer may not raise the FLSA coverage argument in a subpoena enforcement proceeding, and turn the proceeding into a “mini-trial by allowing it to interpose defenses that are more properly addressed at trial.”2 The court further opined that in a subpoena enforcement action, the agency cannot be required to demonstrate the very matter it seeks to investigate, here coverage of employees, before it has had the opportunity to examine the relevant records. In addition, the court rejected the employer’s argument that the Secretary must issue a definitive ruling regarding the status of the employees prior to investigating the liability of the employer. IV. Actions for Injunctive Relief

A. Generally In Gate Guard Services L.P. v. Solis,3 the plaintiff, an employer, had previously

filed a declaratory judgment action against the Secretary of Labor following the conclusion of a DOL investigation that found it owed more than $6 million in back wages because it had misclassified gate attendants and service technicians as independent contractors. The Secretary filed a separate FLSA enforcement action and moved to dismiss the employer’s declaratory judgment complaint, contending that its action was not a final agency action and the employer cross moved to consolidate the FLSA enforcement action with the declaratory judgment action. The district court denied the Secretary’s motion and granted the employer’s motion. The court found that the DOL’s action was a “final agency action” for purposes of judicial review under the Administrative Procedures Act, because the DOL had finished its investigation, served papers on the employer informing it of the conclusions that the wages were then due, 1 2012 WL 1379310 (D. Utah Apr. 20, 2012). 2 Id. at *2 (internal citations omitted). 3 2011 WL 2784447 (S.D. Tex. July 12, 2011).

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and that DOL expected immediate compliance. The court also noted the conclusion reached by the DOL presented a “very real dilemma” because it forced the employer to either change its practices or risk being sued by the Secretary. The court also applied a balancing test in concluding that the case was ripe and that it could properly exercise jurisdiction over the declaratory judgment claim.

B. Prospective Injunctions In Solis v. Milling Away, LLC,4 the Secretary of Labor sought, among other things,

prospective injunctive relief against a furniture manufacturer and its owner for their failure to comply with the payment terms of certain settlement agreements. In granting the Secretary’s motion for injunctive relief, the district court first noted that the issuance of an injunction pursuant to Section 217 is within the reasonable discretion of the trial court. The court rejected the employers’ arguments that they had cooperated with the Secretary and that they did not have the funds to pay wages given the economic downturn. The court concluded that injunctive relief was warranted because the (1) the defendants failed to pay any wages to the applicable employees without any reasonable justification; (2) defendants failed to comply with numerous settlement agreements; and (3) the court had serious doubts as to the defendants’ willingness to comply with the Act in the future.

1. General Standards for Issuance

In Solis v. Melt Brands Stores, LLC,5 the Secretary of Labor moved for a default judgment order against the defendants for unpaid overtime and liquidated damages. The Secretary also sought injunctive relief. The district court granted the Secretary’s motion for a default judgment including injunctive relief. In so holding, the court noted that several factors must be assessed in determining whether to grant an injunction including the employer’s previous conduct, its current conduct, and the reliability of its promises of future compliance. Based on the defendants’ past and present noncompliance, the court held an injunction was appropriate to prevent future violations of the Act.

In Solis v. United Buffet, Inc.,6 the Secretary of Labor moved for a default judgment against the defendants for unpaid compensation. The Secretary also requested two forms of injunctive relief -- one preventing the defendants from committing future violations of the FLSA, and another preventing them from withholding the award of unpaid compensation. In issuing the injunctive relief, the district court noted that in deciding whether to award injunctive relief, a court must weigh the findings of violations against factors that indicate a reasonable likelihood that the violations will not recur. The court further noted that in exercising its discretion, the court must give substantial weight to the fact that the Secretary seeks to vindicate a public, and not a private, right. Applying this analysis, the court concluded that the defendants had not

4 2012 WL 359688 (N.D. Ohio Feb. 2, 2012). 5 2012 WL 364685 (D. Colo. Feb. 2, 2012). 6 2012 WL 669867 (N.D.Cal. Feb. 29, 2012).

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demonstrated a bona fide intent to comply with the FLSA or to prevent future violations and that the defendants’ failure to appear in their own defense demonstrated a lack of concern for compliance with law. Thus, an injunction would increase the likelihood that they would pay the employees the court-ordered award. V. DOL Actions for Back Wages

A. Secretary of Labor’s Right to Bring Action for Back Wages In Solis v. Makozy,7 the Secretary of Labor moved for the district court to

reconsider its decision to close the case under the automatic stay provision of the Bankruptcy Code. The court granted the motion, holding that the police and regulatory power exception to the automatic stay provision applied and reopened the matter. The court agreed with the Secretary that cases filed by the DOL to enforce wage and hour regulations of the FLSA fall within the regulatory and police powers exception to the automatic stay. The court further rejected the defendants’ argument that the court should refrain from exercising jurisdiction in deference to the bankruptcy court’s jurisdiction stating that unlike other cases where such deference is warranted, an FLSA action does not “limit[] the bankruptcy court from exercising its broad authority, and does not prevent the defendant from seeking appropriate equitable relief in the bankruptcy forum.”8 However, the court held that if a judgment is obtained in favor of the plaintiff, all enforcement proceedings would be transferred to the appropriate bankruptcy forum.

In Solis v. SCA Restaurant Corp.,9 the defendants moved to stay an FLSA

enforcement action brought by the Secretary of Labor pursuant to Section 362 of the Bankruptcy Code’s automatic stay provision. The district court denied the motion, holding the action is exempt from the automatic stay pursuant to the police and regulatory power exception set forth in Section 362(b)(4) of the Bankruptcy Code. The court articulated that in determining whether the automatic stay provision applies, it needs to distinguish between situations in which the government is acting pursuant to its police and regulatory power as opposed to one where the government acts merely to protect its status as a creditor. The court opined there are two tests commonly used in making this determination, the first is a “pecuniary purpose” test where the court looks to whether a governmental proceeding relates to public safety and welfare which favors application of the stay exception or the government’s interest in the debtor’s property which does not. The second test referred to as a “public policy” test distinguishes between proceedings that adjudicate private rights and those that effectuate public policy. Although the court noted that the Second Circuit has yet to determine which test applies, it concluded that under either test, the police and regulatory exception was met.

7 2012 WL 1458232 (W.D. Pa. Apr. 27, 2012). 8Id. at *3 (citations omitted) . 9 463 B.R. 248 (E.D.N.Y. 2011).

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In C.S.G. Workforce Partners LLC v. Watson10 plaintiffs, a number of limited liability companies, sued a Regional Administrator of the DOL’s Wage and Hour Division, seeking to quash a subpoena duces tecum. The subject subpoenas sought information about the plaintiffs' clients, customers and contractors in an effort to determine the possible joint employer status of those customers. Plaintiffs contended that, as limited liability companies, their "members" were partners and, thus, not "employees" for purposes of the FLSA. The Regional Administrator moved to dismiss the complaint on the grounds of sovereign immunity. Plaintiffs argued that their lawsuit came within an exception to the general bar against suits seeking specific relief from the government, namely where a government officer's conduct is illegal as not within the agency's statutory powers. The district court rejected the argument noting the exception applies only when the official lacks delegated power—not where the official exercises delegated power erroneously. Here, it was clear that the regional administrator had the authority to investigate alleged violations of the FLSA and to issue a subpoena to compel the production of documentary evidence relating to the matter under investigation. The fact that the Regional Administrator may have acted erroneously or incorrectly as a matter of law was irrelevant. Therefore, the doctrine of sovereign immunity applied and the court did not have subject matter jurisdiction over the dispute and granted the Administrator’s motion to dismiss while also dismissing plaintiffs’ motion to quash the subpoena.

10 2012 WL 256169 (D. Utah Jan. 27, 2012).

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Chapter 18

Litigation Issues

I. Overview In Pruell v. Caritas Christi,1 hospital employees appealed the district court’s

decision to dismiss with prejudice for failure to state a claim their complaint for unpaid overtime under the FLSA. In their complaint, plaintiffs claimed they were not compensated for work performed during their lunch periods and before and after work hours, but the complaint provided no description or examples of the alleged work performed or estimate of the amount of time spent performing these activities. Plaintiffs were seeking to bring such claims on behalf of a class of similarly situated employees under Section 216(b) of the FLSA. The First Circuit determined that the allegations in the complaint were so threadbare or speculative that they failed to cross the line between the conclusory and the factual. The court also noted that class actions are “useful to remedy widespread wrongs, but such lawsuits still require at the outset a viable named plaintiff with a plausible claim.”2 The court therefore affirmed the district court’s finding that the complaint was deficient because it failed to plead a claim for relief under the FLSA. The appellate court remanded the case back to the district court to give plaintiffs one final opportunity to file a sufficient complaint.3

II. Jurisdiction

B. Federal Courts In Aberle v. Saunders MEP, Inc., 4 plaintiff, who had worked as Senior

Architect/Project Manager for defendant, asserted claims for minimum wage, overtime, and breach of contract against defendant and its owner. Plaintiff filed a motion for partial summary judgment as to liability and damages in regard to his FLSA claims. Defendants admitted that as a result of “severe cash flow problems” they had been unable to pay the plaintiff a salary of at least $455 per week for certain periods of time that plaintiff had worked for the company. Plaintiff was able to establish that, during those weeks for which he was not paid, he had worked in excess of 40 hours per week. Consequently, the court held that the defendants were liable to plaintiff for both unpaid minimum wages and unpaid overtime as well as liquidated damages in an amount equal to the combined unpaid minimum wage and overtime that had already been found to be owed.

1 678 F.3d 10 (1st Cir. 2012). 2 678 F.3d 10, 14 (1st Cir. 2012). 3 678 F.3d 10, 15 (1st Cir. 2012). 4 2011 WL 2728350 (E.D. Tex. June 16, 2011).

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C. State Courts In Aberle v. Saunders MEP, Inc., 5 the plaintiff, who had worked as Senior

Architect/Project Manager for the defendant, asserted minimum wage, overtime, and breach of contract claims against both the company and its owner. With regard to the FLSA claims, the defendants admitted that as a result of “severe cash flow problems,” they had been unable to pay the plaintiff a salary of at least $455 per week for certain periods of time that plaintiff had worked. Because the plaintiff was able to establish that, during those weeks for which he was not paid, he worked in excess of 40 hours per week, the court granted the plaintiff’s motion for summary judgment and held that defendants were liable to plaintiff for unpaid minimum wages and overtime as well as liquidated damages in an amount equal to the combined minimum wage and overtime amount that defendants had now been ordered to pay the plaintiff. In addition, the plaintiff sought attorney’s fees and costs. However the court noted that the plaintiff’s request included attorney fees for both the FLSA and the breach of contract claims (on which Plaintiff had not prevailed at summary judgment). The court allowed the plaintiff to supplement his fee request in order to explain why he should be awarded the total requested fee amount. In the event that he was unable to do so, the plaintiff’s attorney fee would be limited to the attorney’s hours related to the FLSA issues only.

D. Arbitration In Arnold v. Directtv, Inc.,6 defendant asked the district court to stay a related

arbitration pending before the American Arbitration Association with similar class issues as those currently pending before the court concerning service technicians’ pay. Defendant argued it should not have to litigate the same issues in multiple forums and allowing the arbitration to proceed creates a risk of inconsistent rulings. The parties conceded different plaintiffs were involved in the two actions, but some of the same issues could arise. The district court denied the motion to stay explaining that the Federal Arbitration Act does not authorize a district court to enjoin arbitration and that it is clear a party’s right to arbitrate may not be sacrificed on the altar of efficient class action management.

1. Individual Arbitration Agreements

In LaVoice v. UBS Financial Services, Inc.,7 plaintiff, a financial advisor at UBS

Financial Services for some eight years, alleged violations of the FLSA and New York law. Defendant filed a motion to compel arbitration in response to plaintiff’s lawsuit as a result of a number of arbitration provisions in agreements and loans signed by the financial advisor. The motion to compel arbitration was granted based on the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion8. The court also noted that there was no impediment to his recovery of attorney’s fees under the arbitration agreement.

5 2011 WL 2728350 (E.D. Tex. June 16, 2011) 6 d (E.D. Mo. 2012). 7 2012 WL 124590 (S.D.N.Y. Jan. 13, 2012). 8 131 S.Ct. 1740 (2011).

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In Laughlin v. VMware, Inc., 9 technical trainers for defendant, a software

company, claimed they were misclassified as exempt employees by defendant, and denied overtime as a result of that misclassification. Defendant filed a motion to require submission of the technical trainers’ claims to arbitration in accordance with the terms and conditions of the arbitration provision of their Employment Agreements. The court noted that even after AT&T Mobility LLC v. Concepcion,10 California courts use a procedural and substantive unconscionability analysis to determine if arbitration should be utilized in the case of employment agreements. For purposes of procedural unconscionability analysis the court considered whether or not the agreement was an adhesion contract. Since the plaintiff was required to sign the agreement without time to consider or discuss with an attorney if she wanted the job, and since the contract was preprinted and not tailored to her position, the court determined that the agreement was an adhesion contract. The court also found the agreement to be substantively unconscionable in two areas--cost splitting and attorney’s fees. The cost splitting equally impacted the employee and employer, and the arbitrator had no ability to vary that arrangement. The Ninth Circuit had already ruled that such an arrangement was unconscionable. However, the court permitted agreement to be enforced after the two offensive provisions were severed from the agreement.

b. Enforceability of Arbitration Agreement In Gokhberg v. Sovereign Bancorp, Inc.,11 current and former employees brought

claims alleging that defendant failed to pay minimum wage and overtime compensation and failed to maintain payroll records. Defendant moved to compel arbitration of plaintiffs’ claims. Plaintiffs contended that the arbitration agreement was unconscionable, substantively and procedurally, both of which are required to find unconscionability. The court pointed out that unequal bargaining power is not sufficient, standing alone, to find an arbitration agreement procedurally unconscionable. Further, the court found that because the employees were given a copy of the agreement and adequate time to review it before accepting the offer of employment, were not denied the opportunity to seek legal counsel, and were encouraged to ask questions about the agreement, the arbitration agreement was not procedurally unconscionable and is enforceable. The court thus granted defendant’s motion to compel arbitration.

In Owen v. Bristol Care, Inc.,12 the defendant moved to compel arbitration of

plaintiff’s putative collective action on an individual, non-collective basis. The court found there was adequate consideration for the arbitration agreement, which was executed at the outset of, and as a condition of, plaintiff’s employment. The court further found that plaintiff’s claims fell within the scope of the arbitration agreement. The court declined, however, to enforce the arbitration agreement on the grounds that it prevented plaintiff from vindicating a substantative federal right afforded to her by the

9 2012 WL 298230 (N.D. Cal. Feb. 1, 2012). 10 131 S.Ct. 1740 (2011). 11 2011 WL 3862155 (E.D. Pa. Sept. 1, 2011). 12 2012 WL 1192005 (W.D. Mo. Feb. 28, 2012).

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FLSA because the agreement expressly prohibited collective actions allowed under 216(b) of the FLSA.

In Daugherty v. Encana Oil & Gas (USA), Inc.,13 plaintiffs worked as pumpers for defendant, which developed and produced natural gas. 14 Plaintiffs alleged that defendant failed to pay them overtime compensation in violation of the FLSA, and that they were terminated as retaliation. Plaintiffs signed an independent contractor agreement (“ICA”) with defendant that contained an arbitration provision.15 The court determined that plaintiffs must arbitrate their claims holding that the arbitration agreement was not expressly or by clear implication repudiated by the parties, the overtime pay dispute arose under the ICA, the ICA applied to each plaintiff, and the ICA was not unconscionable under Colorado law. Further, the court struck any provision of the ICA that permitted assessment of any costs of the arbitration to be borne by plaintiffs.16

In Pruiett v. West End Restaurants, LLC, 17 current and former restaurant

employees filed a collective action complaint alleging that defendant deprived plaintiffs and other similarly situated employees of their right to minimum wage and overtime pay in violation of the FLSA. Defendant filed a motion to compel arbitration, as the plaintiffs had each signed a mediation and arbitration agreement that provided for alternative dispute resolution procedures for any disputes arising out of the employee’s employment, explicitly including claims under the FLSA. The agreement required that a party asserting a claim must do so within one year of accrual, but it also provided that if any provision of the agreement were found to be unenforceable, such provision would be severable. The court concluded that the arbitration agreement’s statute of limitations, which was shorter in length than the FLSA’s statute of limitation, was unenforceable because it precluded plaintiff’s substantive right to full compensation.18 The court reasoned that under the FLSA, a plaintiff’s substantive right to full compensation is determined by the statute of limitations as an FLSA plaintiff may recover compensatory damages as far back as the statute of limitations will reach.19 Thus, a necessary consequence of a contractual limitations period that shortened the statute of limitations for an FLSA claim is that a successful plaintiff would be precluded from receiving full compensatory recovery under the statute.20 The court nonetheless granted defendant’s motion to compel arbitration because it determined that the unenforceable limitations provision did not taint the entire agreement as the agreement provided for severability of any unenforceable provisions.21

13 2011 WL 2791338 (D. Colo. July 15, 2011). 14 Id. at *1. 15 Id. at *1-2. 16 Id. at *6-13 (D. Colo. July 15, 2011). 17 2011 WL 5520969 (M.D. Tenn. Nov. 14, 2011). 18 Id. at *5. 19 Id. at *5. 20 Id. 21 Id. at *7.

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c. Arbitration of Collective Action Claims

In Saincome v. Truly Nolen of America, Inc.,22 a pest control technician filed a collective action against a national pest control service provider seeking unpaid overtime under the FLSA. Defendant filed a motion to compel arbitration, pointing to an “Agreement to Binding Arbitration” signed by plaintiff on his first day with the company. Defendant further sought to prohibit plaintiff from pursuing the arbitration on a class-wide basis. Applying California state law, the court granted defendant’s motion to compel arbitration, but allowed plaintiff to proceed on a class-wide basis. The court rejected all of plaintiff’s enforceability arguments, including lack of mutual consent, unconscionability and undue influence. Although plaintiff alleged that he did not read the agreement because a company employee rushed him, ripped out the signature pages for his signature, and did not provide him with a copy, the court rejected the mutual consent argument, noting that the signature page was entitled “Acceptance of Binding Arbitration,” and contained a warning to “Please Read Carefully, Acceptance of this Policy Affects your Legal Rights.” It also found the undue influence argument lacked merit. With regard to unconscionability, the court considered both procedural and substantive unconscionability. It concluded that although plaintiff was required to sign the agreement to retain employment, and although the practical disadvantages of signing the agreement flowed disproportionately to plaintiff, it was not unconscionable as a matter of law. However, the court deemed an attorneys’ fees provision, which permitted either party to recover attorneys’ fees as the result of a successful motion to compel arbitration, unconscionable and severed that provision from the agreement. As for the class-wide arbitration issue, the court allowed plaintiff to proceed on a class-wide basis. The court distinguished the U.S. Supreme Court’s decision in Stolt-Nielsen S.A. v. AnimalFeeds International Corporation,23 holding that since the present agreement was a contract of adhesion, the reasoning in Stolt-Nielsen, which focused on the consent underlying arbitration agreements, did not apply. It also distinguished the U.S. Supreme Court’s decision in AT&T Mobility v. Concepcion.24 In Concepcion, the Court questioned whether arbitrators are equipped to manage complex class action suits. However, the court concluded that these same concerns are not applicable to FLSA collective actions, because class members must affirmatively opt-in.

In Guida v. Home Savings of America, Inc.,25 plaintiffs brought a putative class action against their former employer and two other defendants, alleging FLSA and state wage and hour claims. Defendants moved to dismiss plaintiffs' complaint and compel arbitration on an individual basis under the Federal Arbitration Act ("FAA"). Plaintiffs agreed to arbitrate under the valid arbitration agreement between the parties but argued that the arbitrator, not a judge, should decide whether the arbitration could proceed as a class action. The trial court first addressed whether ability to proceed on a class basis was more akin to a procedural question, as the plaintiffs argued, or an issue of arbitrability, as defendants contended. Disputes about whether the parties are bound

22 2011 WL 3420604 (S.D. Cal. Aug. 3, 2011). 23 130 S. Ct. 1758 (2010). 24 131 S. Ct. 1740 (2011). 25 793 F. Supp. 2d 611 (E.D.N.Y. 2011).

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by an arbitration agreement, or whether a particular controversy is covered under the scope of such an agreement, are gateway issues that go to arbitrability and which the court must decide. But "procedural questions which grow out of the dispute and bear on its final disposition are presumptively not for the judge, but for an arbitrator, to decide." Defendants relied on AT&T Mobility LLC v. Concepcion26 to argue that the ability to arbitrate on a class basis was not a procedural question. In Concepcion, the Court found that "the procedural requirements necessary to safeguard the interests of an entire class are best carried out in a court rather than an arbitration setting."27 However, the Guida court noted that Concepcion does not suggest that courts should decide whether the parties agreed to arbitrate on a class basis when the underlying agreement is silent or ambiguous. Thus, the court ordered the parties to arbitrate and left the determination of a class action to the arbitrator.28

In Polanco v. Brookdale Hospital Medical Center,29 three plaintiff employees filed

suit on their own behalf alleging defendant failed to pay them for work performed during lunch breaks and after the end of their regular forty hour shifts in violation of state and federal overtime and minimum wage laws. The parties were subject to a collective bargaining agreement. Defendant moved to dismiss on the grounds that state claims are preempted and federal claims are precluded by the Labor Management Relations Act. The court dismissed the motion, stating specifically as to the FLSA that “Employees’ rights to minimum wage and overtime pay under the FLSA are separate and distinct from employees’ contractual rights arising out of an applicable collective bargaining agreement.” In so doing the court analogized to employees not having to exhaust arbitration prior to filing FLSA claims, citing the Supreme Court case, Barrentine v. Arkansas-Best Freight System, Inc.30

In Herrington v. Waterstone Mortg. Corp.,31 plaintiff a former loan officer, brought

a collective action for unpaid overtime. Defendant moved to dismiss or stay the action because the claims were subject to an arbitration provision. Plaintiff agreed that the arbitration provision in her employment agreement covered her claims, but argued (among other things) that the provision was unenforceable because the collective action prohibition32 in the arbitration provision violated the FLSA and the National Labor Relations Act. The district court held the collective action waiver to be invalid under the NLRA. 33 This waiver was, however, the only invalid provision of the arbitration agreement. The court applied a two factor test used in other circuits to determine whether the invalid waiver could be severed – and the matter arbitrated as a collective action – or whether the entire arbitration agreement had to be struck and the matter

26 131 S.Ct. 1740 (2011). 27 793 F. Supp. 2d at 619. 28 Id. at 611-20. 29 819 F. Supp. 2d. 129 (E.D.N.Y. 2011). 30 450 U.S. 728, 101 S.Ct. 1437 (1981). 31 2012 WL 1242318 (W.D. Wis. Mar. 16, 2012). 32 The class action prohibition in the arbitration provision read as follows: “Such arbitration may not be joined with or join or include any claims by any persons not party to this Agreement.” 2012 WL 1242318 at *1. 33 Id. at *6-7. See Chapter 19 XVII. A. [Enforceability of Collective or Class Action Waivers].

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tried in court. Specifically, the court looked at: (i) whether the unlawful provision was essential to the agreement as a whole; and (ii) whether multiple unlawful provisions supported the conclusion that the drafter of the agreement was attempting to undermine the other party’s rights.34 As to the first factor, the court noted that the American Arbitration Association has published rules for class arbitration,35 so the waiver was not essential to an agreement to arbitrate. Even plaintiff acknowledged that collective actions were “not inherently incompatible with arbitration.”36 There was no support for an employer effort to undermine plaintiff’s rights. Thus, the court found that the two factors militated in favor of severing the invalid collective action waiver, but enforcing the arbitration provision even in the context of a collective action. Therefore, the court severed the invalid waiver and stayed the action pending arbitration.37

2. Collectively Bargained Arbitration Procedures

a. Generally

In Hughes v. City of Chicago,38 a retired police officer sued for overtime pay.

Defendant filed a Rule 12(b)(6) motion to dismiss the complaint and for a stay in favor of arbitration. Defendant argued, in part, that plaintiff’s overtime wages and applicable FLSA credits were matters to be determined under the terms of the collective bargaining agreement between the parties.39 Specifically, whether plaintiff was entitled to overtime, the city said, turned on whether defendant was entitled to certain credits that it had taken against the overtime due to plaintiff. In this circumstance, defendant argued, Seventh Circuit precedent required proceeding under the CBA. The district court disagreed with defendant, denying the motion to dismiss and refusing to stay the action pending arbitration.40 Defendant’s precedent, two Seventh Circuit cases,41 involved plaintiff classes that were labeled “hopelessly heterogeneous” by the circuit court. In one of those cases, Jonites v. Exelon Corp., the Seventh Circuit had relegated the plaintiffs to separate, not collective, FLSA actions or to the procedures under the CBA at issue.42 In Leahy v. City of Chicago, the other case, the Seventh Circuit required use of the CBA procedures.43 Here, the retired officer was the only plaintiff in the matter before the district court so neither case was directly on point. The court followed Jonites rather than Leahy and thus did not require plaintiff to use the CBA procedures. In reaching its decision, the district court relied on a 2010 district court decision44 that

34 Id. at *7. 35 Id. 36 Id. 37 Id. 38 2012 WL 246460 (N.D. Ill. Jan. 25, 2012). 39 Id. at *2. 40 Id. 41 Those cases were Jonites v. Exelon Corp., 522 F.3d 721 (7th Cir. 2008) and Leahy v. City of Chicago, 96 F.3d 228 (7th Cir. 1996). 42 2012 WL 246460, at *2 (citing Jonites, 522 F.3d at 726). 43 Id. at * 2 (citing Leahy, 96 F.3d at 232). 44 Id. at *2, fn. 2 (citing Chaves v. Don Stoltzer Mason Contractor, Inc., 2010 WL 1417029, *4 (N.D. Ill. Apr. 5, 2010)).

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described Leahy as “no longer good authority” for the argument that a CBA displaces the FLSA when it protects all rights guaranteed by the FLSA. III. Venue

A. Generally In Martignago v. Merrill Lynch & Co., Inc.,45 the court denied defendant’s motion

to transfer venue from New York to Texas in a putative nationwide collective action seeking overtime. In addressing the motion to transfer, the court considered the relevant factors under 28 U.S.C. 1404(a) and found that defendant had not met its burden of demonstrating that transfer was appropriate. The court found that while most of the factors were neutral, convenience of the witnesses, locus of operative facts and the plaintiff’s choice of forum weighed against transfer. In addressing the factors of convenience of the witnesses and locus of operative facts, the court found that although the underlying events claimed by the named plaintiff arose out of Texas, plaintiff’s claims focused on the nature and implementation of defendant’s nationwide policies and not those of the Texas office in particular and that, as such, most discovery would take place at defendant’s headquarters in New York.

C. Consolidation and Transfer

1. Section 1404 Transfer and Forum Non Conveniens In Gregory v. FedEx Ground Package Sys., Inc.,46 plaintiffs were former FedEx

delivery drivers employed in various cities in Virginia, including Norfolk. Plaintiffs contended that defendant misclassified them as independent contractors, depriving them of certain financial benefits they would have received as employees and unjustly enriching defendant. After a long procedural history, plaintiffs filed a sixth amended complaint. Defendant filed a motion to dismiss, and in the alternative, a motion to strike plaintiffs' FLSA claims from the latest complaint. Defendant also filed a motion to dismiss, sever and transfer. Specifically, defendant moved to drop all non-Norfolk plaintiffs from the case. In the alternative, defendant moved to sever plaintiffs' claims and transfer the non-Norfolk plaintiffs' claims to the federal districts and divisions in which those plaintiffs worked. A court may transfer a civil action to another district where it might have been brought "for the convenience of parties and witnesses" and "in the interest of justice." When weighing the merits of a motion to transfer, a court considers the plaintiff's choice of forum, the convenience of the parties, witness convenience and access, and the interests of justice. The district court found that while venue might have been proper in the forums proposed by defendant, defendant did not show that circumstances weighed strongly in favor of transfer. Although the evidence showed that a significant number of defendant's proposed witnesses would have to travel across the state for trial, the court had no way of gauging the number of people who would be inconvenienced or the effect of the inconvenience on defendant's case. 45 2012 WL 112246 (S.D.N.Y. Jan. 12, 2012). 46 2012 WL 2396873 (E.D. Va. May 9, 2012).

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Thus, the court denied defendant's motion to dismiss or sever and transfer to the extent that it sought dismissal or transfer of the non-Norfolk plaintiff's claims.47

In Krulisky v. Bristol-Myers Squibb Co.,48 plaintiff filed a complaint in the United

States District Court for the Southern District of New York, initiating a purported collective action for the benefit of defendant's territory business managers, associate territory business managers, pharmaceutical representatives, and pharmaceutical sales representatives. Defendant filed a motion to transfer the action to the District of New Jersey, or, in the alternative, to the Western District of Washington or the Southern District of Florida, pursuant to 28 U.S.C. § 1404(a). The court granted the motion to transfer the action to the District of New Jersey. In making its decision, the court applied the following factors: convenience of the parties, locus of operative facts, plaintiff's choice of forum, convenience of witnesses, location of documents and other sources of proof, availability of process, trial efficiency and the interests of justice. With regard to the convenience of the parties, the court found that the Southern District of New York was "not a particularly convenient forum for any of the parties," whereas the District of New Jersey was more convenient for the defendant because the home office and headquarters for the group for which plaintiff worked was in New Jersey. Additionally, defendant’s New Jersey office included the group’s senior executives as well as all the individuals involved in sales or supporting sales (other than the field sales managers, who were located across the country). None of the operative facts occurred in the Southern District of New York, and many of them took place in the District of New Jersey. Any relevant compensation decisions also took place in the District of New Jersey. With regard to plaintiff's choice of forum, the court noted that this factor is given less significance in a putative class action than in an individual action. Furthermore, the court pointed out that plaintiff himself was not a resident of the Southern District of New York, and that by the time of the hearing, not a single resident of the Southern District of New York had opted into the case. Moreover, the court found that the District of New Jersey was somewhat more convenient for defendant's managers who worked and lived in the District of New Jersey, whereas the District of New Jersey was no less convenient for plaintiff than the Southern District of New York. Plaintiff did not work or live in either district. The court also found that defendant would likely supply the majority of the relevant documents which were located at its New Jersey location. Availability of process was found to weigh in favor of transfer to New Jersey, because some possible witnesses included former employees of defendant who worked in New Jersey and possibly still lived in New Jersey. Finally, the court found that the District of New Jersey had the strongest connection to the case and, on balance, the interest of justice favored transfer to New Jersey because of New Jersey's connection to the issues that would be litigated.

47 Id. at *1-16. 48 2011 WL 2555963 (S.D.N.Y. June 27, 2011).

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3. The “First to File” Rule In Herrera v. Wells Fargo Bank, 49 two personal bankers filed claims in a

California district court for failure to compensate off-the-clock hours and provide meal and rest breaks under FLSA and California law. Plaintiffs filed claims on behalf of a putative class of all defendant’s personal bankers, assistant managers, and customer service sales representatives nationwide. Defendant moved to transfer venue to Texas under the “first to file” rule, because an action for the same claims was already pending there. The district court granted the motion to transfer, rejecting plaintiffs’ arguments that the Texas action did not include a class comprised of California employees alleging California state law claims, and was limited to persons who worked as personal bankers “or with any similar title who performed similar duties of [plaintiff].” Additionally, the court found that equitable concerns did not warrant a different result particularly because there was no indication that the plaintiffs in the first-filed Texas action would be amenable to coordinating discovery with plaintiffs in the California case. Furthermore, plaintiffs failed to present any explanation of how the interests of the California class would be contravened if the action were transferred to Texas.

IV. Parties In Valdez v. Cox Communications Las Vegas, Inc.,50 the named plaintiff, a cable installer supervisor employed by one of defendant’s contractors, brought an FLSA action against defendant communications company on behalf of himself and other similarly situated cable installers. Defendant moved for summary judgment, asserting that it was not plaintiffs’ joint employer and was therefore not responsible for complying with the FLSA’s minimum wage and overtime requirements for those individuals. Applying the economic reality test, the factors outlined in Bonnette v. California Health & Welfare Agency,51 additional extraneous factors,52 and the circumstances of the entire employment activity, the district court granted defendant’s motion, finding that no joint employment relationship existed as a matter of law. The court found that each individual contractor, not defendant, decided which employees to hire and fire. The contractors trained the installers and decided which of them would service particular customers and routes. Defendant denied daily monitoring of installers, it did not discipline individual contractor employees, and it neither controlled the method of installer payment nor maintained any relevant employment records. Further, the contractors, not the defendant, provided the installers’ uniforms, equipment, tools and vehicles. Finally, in granting defendant’s motion for summary judgment, the district court noted that “every court to address this issue ultimately has found no joint employment for cable installers at the summary judgment stage under factual circumstances fairly similar”53 to those at issue in plaintiff’s suit.

49 2011 WL 6141087 (N.D. Cal. Dec. 9, 2011). 50 2012 WL 1203726 (D. Nev. Apr. 11, 2012). 51 704 F.2d 1465, 1470 (9th Cir. 1983). 52 Valdez, 2012 WL 1203726, at *1 (D. Nev. Apr. 11, 2012). 53 Id. at *4.

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In Solis v. Cindy's Total Care, Inc.,54 the Secretary of Labor brought an action in the Southern District of New York against a nail salon, its owner, and her husband, for failure to pay overtime wages to the salon’s 32 employees and for failure to maintain complete and accurate wage and hour records. The Secretary also sought statutory liquidated damages and to enjoin the defendants from further violating the FLSA. An investigation by the Wage and Hour Division (“WHD”) concluded that the salon did not pay its employees a premium wage rate for their overtime hours, but instead it paid them a predetermined daily rate, regardless of the number of hours worked. The WHD found that many employees worked ten hours per day, six days per week. The court, in a three-day nonjury trial, considered the evidence of the investigation, as well as the testimony of several of the employees, in finding that the defendants had violated the FLSA. The court used the economic realities test to determine if the owner’s husband was an “employer” as defined by the FLSA. The court held that the Secretary did not meet the burden of proving that the owner’s husband was an employer simply because he handed out pay to the employees, posted break schedules on the wall, and sat at the check-out register while visiting with his wife. The court found that the owner’s husband did not have operational control over the employees, did not have the power to hire and fire employees, was not a corporate officer, was not involved in the day-to-day management of the salon, and did not receive a regular paycheck. Thus, the Secretary did not satisfy the elements of the economic realities test. While the court ruled in favor of plaintiffs in the bench trial, it did not hold the husband liable for the FLSA violations.

In Li v. Ya Yi Cheng,55 plaintiffs alleged that the defendants – a restaurant and its

owners – violated the FLSA and the New York Labor Law by failing to pay plaintiffs minimum wages, overtime wages and spread of hours pay. Defendants filed a motion to dismiss for lack of subject matter jurisdiction, arguing that plaintiffs could not show that the restaurant constituted an “enterprise” generating a gross income of $500,000 or more during a one year period. Defendants also argued that plaintiffs could not sustain their burden to show they were employees engaged in commerce or the production of goods for commerce, as required by the FLSA. The magistrate judge agreed and recommended that the district court grant the motion to dismiss. Under the FLSA, to constitute “work in commerce,” a substantial part of the employee’s work must involve “performing work involving or related to the interstate movement of persons or things…”56 In support of its motion, defendants argued that plaintiffs could not establish that they were engaged in commerce or in the production of goods for commerce, because the restaurant was a small restaurant located in Brooklyn that catered to local residents. Plaintiff Yang Li acknowledged that she was a waitress who worked exclusively at the restaurant which, the magistrate judge found, did not meet the definition of “engaged in commerce” under the FLSA. The magistrate judge also found that there was a dispute over whether plaintiff Zhou Li was an employee at the restaurant or just an investor; however, plaintiffs failed to offer any evidence that he was an employee. Thus, the court found that plaintiffs were not employees engaged in commerce and recommended that the district court dismiss plaintiffs’ FLSA claims for

542012 WL 28141 (S.D.N.Y. Jan. 5, 2012). 55 2012 WL 1004854 (E.D.N.Y. Jan. 6, 2012). 56 Id. at *4 (citing 29 C.F.R. 779.103).

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lack of subject matter jurisdiction. It also recommended that the district court decline to exercise supplemental jurisdiction over plaintiffs’ state law claims.

B. Joinder of Parties In Gregory v. FedEx Ground Package Sys., Inc.,57 plaintiffs were former delivery

drivers employed in various cities in Virginia, including Norfolk. Plaintiffs contended that defendant misclassified them as independent contractors, depriving them of certain financial benefits they would have received as employees and unjustly enriching defendant. After a long procedural history, plaintiffs filed a sixth amended complaint, and the defendant filed a motion to dismiss, and in the alternative, a motion to strike plaintiffs' FLSA claims from the latest complaint. Defendant also filed a motion to sever and transfer. Specifically, the defendant moved to drop all non-Norfolk plaintiffs from the case or, in the alternative, defendant moved to sever plaintiffs' claims and transfer the non-Norfolk plaintiffs' claims to the federal districts and divisions in which those plaintiffs worked. The district court found that while plaintiffs' claims shared common issues of law, the "factual dissimilarities [were] myriad," and severance of plaintiffs' claims was proper. Under Rule 21 of the Federal Rules of Civil Procedure, a court may at any time, on just terms, add or drop a party or sever any claim against a party. Parties are considered misjoined when they fail to satisfy the permissive joinder standard under Rule 20. Plaintiffs joined under Rule 20 must assert a right to relief "arising out of the same transaction, occurrence, or series of transactions or occurrences," and "a question of law or fact common to all of them [must] arise in the action." The Fourth Circuit has held that Rule 20's "transaction or occurrence" test permits "all reasonably related claims for relief by" different parties to be tried in one proceeding, and a court should construe Rule 20 to promote trial convenience and prevent multiple lawsuits. Plaintiffs' sixth amended complaint alleged that all plaintiffs performed services for the defendant in Virginia. However, they worked at terminals in various cities, were managed by different people, and signed operating agreements in different locations and at different times. The underlying legal question uniting all plaintiffs was "whether they were employees or independent contractors." Although plaintiffs argued that the same operating agreements and company-wide policies dictated their treatment and showed they were employees, the court did not find this to be sufficient.58 Instead, the case required the fact-finder "to examine the way in which [defendant’s] managers treated ten different employees at four different terminals before reaching the question" of whether the defendant's conduct was wrongful. Similarly, plaintiffs' individual overtime claims did not satisfy the "transaction and occurrence" test, as each plaintiff would still have to offer individualized proof that they worked hours for which they were not paid. The court held that severance would "allow the parties to better articulate their individualized claims and defenses, and it granted the defendant’s motion to sever."59

57 2012 WL 2396873 (E.D. Va. May 9, 2012). 58 Plaintiffs did not contend that their FLSA claims should be treated as a collective action under 29 U.S.C. §216(b). 59 2012 WL 2396873 at *1-16.

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D. Joint Employment and Individual Defendants

In Williams v. Hooah Sec. Services LLC,60 security guards brought overtime claims against both the security company they worked for and the company's owner/operator. The defendant owner/operator made hiring and firing decisions, determined plaintiffs' compensation and work schedules, set the company's employment policies, and negotiated customer contracts. The district court granted plaintiffs' motion for summary judgment, holding the individual owner/operator jointly and severally liable as a joint employer. The court found that the individual owner/operator controlled significant functions of the company, and "would have been in control of the decisions violating the FLSA."61

In Santos v. Cuba Tropical, Inc., 62 supermarket stock employees brought

overtime claims seeking damages for the employer’s failure to pay plaintiffs for weekly hours worked in excess of forty. Plaintiffs sought recovery from the corporation and from an individual defendant whom they claimed had operational control over the corporation. The individual defendant moved for summary judgment on the grounds that while he was admittedly a part owner of the corporation, he was not an “employer” under the FLSA.63 The district court found that under two different forms of analysis, the individual was not an employer under the FLSA.64 First, the court looked to the disjunctive test to determine if the defendant was an employer under the FLSA. The court explained that under the 11th Circuit’s disjunctive test, as explained in Alvarez Perez v. Sanford-Orlando Kennel Club, Inc.,65 an officer of a company would only be liable under the FLSA if they were involved in day-to-day operations of the company, or the officer had some direct responsibility for supervision of the employee. Here, the court found that the individual defendant was only a part owner, and he was not active in the day to day operations of the corporation. Thus, he was not individually liable under the disjunctive theory.66 Plaintiff also argued that the individual defendant was liable under the alternative economic realities test, as set forth in the Fifth Circuit’s opinion in Donovan v. Grim Hotel Co.67 However, the court noted that it was unclear as to whether the economic realities test could be applied to determine individual liability, and even if it did, it did not support a finding of liability under the facts in this case.68 The court pointed to specific factors such as the delegation of management by the individual defendant, his lack of control of work schedules or conditions of employment, and the fact that he did not determine rates and methods of pay.69 The court noted that even though a rubber stamp of the individual defendant’s signature was used on payroll

60 2011 WL 5827250 (W.D. Tenn. Nov. 18, 2011). 61 2011 WL 5827250, at *14. 62 829 F. Supp. 2d 1304 (S.D. Fla. 2011). 63 Id. at 1306. 64 Id. at 1315-16. 65 515 F.3d 1150 (11th Cir. 2008). 66 829 F. Supp. 2d at 1311-13. 67 747 F.2d 966 (5th Cir. 1984). 68 859 F. Supp. 2d at 1315. 69 Id.

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checks, there was no other indications that he exercised operational control as to be liable under the FLSA.70

In Stickle v. SCI Western Market Support Center, L.P.,71 plaintiffs, funeral home

employees, alleged that defendants, funeral homes and affiliated corporations, failed to properly compensate them for “community work,” break time, on-call work, and training time. The defendants moved for summary judgment, arguing that plaintiffs had adduced no evidence that individually named defendants were involved in any potential FLSA violations. The district court found plaintiffs’ argument that one named defendant ran the human resources department, and that she reported to the other named defendant, irrelevant. The court held that because there was no evidence connecting the human resources department with any FLSA violations, plaintiffs had failed to create a dispute of material fact sufficient to prevent summary judgment to the individually named defendants on that point.

In Martin v. Spring Break ’83 Production, LLC,72 plaintiffs, who were employed as

“grips” during the filming of a motion picture, failed an action for unpaid wages pursuant to the FLSA and Louisiana Wage Payment Act. They also sought to enforce a settlement agreement resolving grievances for failure to pay wages promised, pursuant to a collective bargaining agreement. In the lawsuit, plaintiffs named seven individual defendants in addition to the corporation producing the film. The individual defendants moved for summary judgment on the basis that the corporation producing the film was plaintiffs’ sole employer during production of the movie, so the individual defendants should be dismissed. Plaintiffs contended, however, that defendants’ motion should be denied because the individual defendants either directly supervised employees or participated in employee compensation. Although the district court recognized that the FLSA allows for numerous individuals within an organization to be “employers” under the Fifth Circuit’s economic reality test, the court held that plaintiffs had failed to demonstrate that plaintiffs depended upon the individual defendants to such an extent that an employer/employee relationship was established. The court also found it significant that there was no evidence the individual defendants boasted “control over the work situation.” Additionally, the court held that the individual defendants were not employers under the LWPA because, under the statute’s five factor test, plaintiffs could not show they entered into an employment contract with the defendants. The only employment contract involving plaintiffs was a collective bargaining agreement signed by the corporation producing the film. Accordingly, the court held that the individual defendants did not qualify as plaintiffs’ employers under the FLSA or LWPA, and thus they were not individually liable to plaintiffs for breach of contract or unpaid wages.

In Guifu Li v. A Perfect Day Franchise, Inc.,73 a class of current and former massage therapist employees brought a suit against corporate and various individual defendants, alleging FLSA violations. Defendants filed a motion for summary judgment asserting, among other things, that one of the corporate defendants was not liable

70 Id. 71 2012 WL 245087 (D. Ariz. Jan. 25, 2012). 72 797 F. Supp. 2d 719 (E.D. La. 2011). 73 2012 WL 929784 (N.D. Cal. Mar. 19, 2012).

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under the FLSA as a joint employer. In denying defendants’ motion for summary judgment, the court recognized that, because an employee may be employed by more than one entity at the same time, two or more employers may be liable under the FLSA as “joint employers.” In so holding, the court noted that, under 29 C.F.R. § 791.2(b)(3), joint employment exists when the employers are not “completely disassociated” with respect to the employment of the individuals, and where one employer is controlled by another, or the employers are under common control. The court held that a jury could find that the two corporate defendants operated under common control of one individual and thus they would be joint employers under the FLSA.74

In Jean-Louis v. Metropolitan Cable Communications, Inc.,75 plaintiffs brought a

putative collective action under the FLSA for unpaid overtime on behalf of technicians who installed telecommunications equipment for a contractor of Time Warner Cable. The court granted Time Warner’s motion for summary judgment on the grounds that the company did not jointly employ its contractor’s technicians. The court concluded that Time Warner did not exercise “formal control” over the technicians, because it did not have authority to hire or fire them, control their work schedules, determine the rate and method of their compensation, or maintain employment records concerning them. The court noted that, although Time Warner reserved the right to “de-authorize” a technician from conducting further installations for Time Warner based on quality control audits of installation work, that did not suggest an employment relationship because the company “did so only in the case of a handful of technicians out of the hundreds Metro employed.” The court also concluded that Time Warner did not exercise “functional control” over the technicians because they did not work on Time Warner’s premises, the contractor had its own resources and could seek work from any other cable company at any time, and Time Warner did not supervise the technicians’ work apart from reviewing “quality and time of delivery.” Although the contractor worked exclusively for Time Warner and did not contract with other companies, the court did not deem that fact sufficient to establish joint employment because “almost every other factor” weighed against finding a joint employment relationship existed.

In Jackson v. Art of Life, Inc.,76 five plaintiffs who worked as para-transit van

drivers for “Art of Life” brought suit against two corporations and its owners under the FLSA for unpaid overtime.77 One corporation was owned by the individually named defendant and his father, who each owned 50% of the stock. Daily business operations were conducted by the individually named defendant and his manager.78 The second corporation was owned by the individually named defendant and his mother for the purpose of providing para-transit service.79 At trial, deposition excerpts were read establishing that the manager admitted he was paid by both corporations for the same work, that all dispatchers worked out of one location, and that both companies punched

74 Id. at *25-26. 75 838 F. Supp. 2d 111 (S.D.N.Y. 2011). 76 836 F. Supp. 2d 226 (E.D. Pa. 2011). 77 Id. at 228. 78 Id. 79 Id. at 232.

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in and out on the same time clock.80 In his trial testimony, the owner denied much of this, but he admitted that employees of one corporation did not have any of their own independent work, and that the corporation had no assets of its own.81 Plaintiffs sought to hold both corporations jointly liable.82 In its findings of fact and conclusions of law, the district court found, as a matter of fact, that both corporations had strongly interrelated operations, unified control of labor relations, and a strong element of common ownership.83 The court held that both corporations were liable to plaintiffs, as they together formed an integrated enterprise.84 The court further based its conclusion on the fact that one corporation had very little existence independent of the other, it could not act independently, and both companies were controlled by the same person.85

In Lemus v. Timberland,86 a construction worker brought an action for unpaid

wages under the FLSA and Oregon state law against five (5) construction companies alleging they were joint employers. After dismissing his claims against two companies pursuant to a settlement agreement, plaintiff sought to amend the complaint by removing another company as a defendant and naming two new companies as additional defendants. One of the new companies was the entity that maintained full-time employees and the other was the “paymaster” responsible for paying the employees and subcontractors. Plaintiff asserted those new companies along with the remaining ones from his original complaint, acted as a single enterprise and were therefore liable as joint employers. In denying in part and granting in part plaintiff’s motion to amend, the district court deferred to defendants’ stipulation that the new companies acted as representative agents of the already formed single purpose entities. The court concluded that adding the new companies would be futile.

In Wolman v. Catholic Health System of Long Island, Inc.,87 health care workers

brought claims for unpaid wages under the FLSA and New York Labor Law, as well as various state common-law claims, against an individual defendant and several defendant hospitals and healthcare facilities. Defendants filed a motion to dismiss, arguing that plaintiffs failed to sufficiently plead an employer-employee relationship with all defendants. The court noted that to determine whether an entity or individual is an employer under the FLSA, courts apply the “economic reality” test, considering many factors as to the degree of the entity or individual’s formal and informal control over the employee.88 The court dismissed the FLSA claims against all but one of the defendant healthcare facilities, noting that the alleged facts about the other entities might have established some general commonalities among the defendants, but they did not touch on the central issue of whether the defendants exercised sufficient control over plaintiffs

80 Id. 81 Id. at 233. 82 Id. at 236. 83 Id. at 234. 84 Id. at 235. 85 Id. at 237. 86 2011 WL 7069078 (D. Or. 2011). 87 853 F. Supp. 2d 290 (E.D.N.Y. 2012). 88 Id. at 297.

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to be considered their joint employers.89 The court rejected plaintiffs’ arguments that defendants were an integrated enterprise with common ownership engaged in a joint venture, and that defendants were liable under agency and alter-ego liability theories.90 The court also dismissed the claims against the individual defendant, concluding that under the totality of the circumstances, the complaint failed to state a claim that defendant had the power to control the workers in question. In particular, there were no facts that the individual defendant ever had direct contact with the lead plaintiffs or that he had operational control over the defendant entity.91 V. Affirmative Defenses

In Aguilar v. City of Lights of China Restaurant, Inc.,92 plaintiff sued for alleged

unpaid minimum wage and overtime. As part of its answer, defendant set forth a number of affirmative defenses, including (a) accord and satisfaction, (b) estoppel, (c) laches, and (d) payment/offset and (e) fraud. Plaintiff filed a motion to strike these five affirmative defenses. In deciding the motion, the court considered whether the Supreme Court's decisions in Bell Atlantic Corp. v Twombly,93 and Ashcroft v. Iqbal,94 should be applied to defendant's affirmative defenses. The court noted that a majority of the district courts, including those within the Fourth Circuit, had concluded that the Twombly-Iqbal approach did, in fact, apply to affirmative defenses. The court reasoned that defendant was required to provide a "short and plain" statement of the claim or defense. The court granted plaintiff's motion and struck the accord and satisfaction, estoppel, laches, payment/offset affirmative defenses. It likewise struck the fraud defense for the additional reason that it failed to comply with Fed. R. Civ. P. 9(b)'s requirement that in "alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake."

In Upadhyay v. Sethi,95 plaintiff, a live-in domestic service housekeeper and nanny, filed suit against defendant employer alleging that she was owed unpaid wages and overtime compensation under the FLSA and various state laws. Defendants filed a partial motion to dismiss, or alternatively, a motion for summary judgment, arguing that plaintiff was covered by the FLSA’s domestic service exemption and that most of plaintiff’s complaint was barred by the applicable statutes of limitation. To counter defendants’ statute of limitations argument, plaintiff asserted that the relevant limitations periods should be equitably tolled because she was unaware she had a cause of action 89 Id. at 298. The court declined to dismiss the FLSA claims against defendant hospital where a lead plaintiff worked, noting that the Second Circuit had previously held both a nurse referral agency and a hospital where it placed its nurses liable as joint employers for FLSA violations. Id. at 300. Also, the complaint alleged that plaintiff performed his nursing duties at that hospital, submitted his hours directly to the hospital for compensation, and that the hospital set his weekly schedule and determined which of his hours were compensable. Id. This evidence was sufficient to plead that the entity was plaintiff’s employer. Id. 90 Id. at 298-99. 91 Id. at 299. 92 2011 WL 5118325 (D. Md. Oct. 24, 2011). 93 550 U.S. 544, 127 S. Ct. 1955, 167 L.Ed. 2d 929 (2007). 94 556 U.S. 662, 129 S. Ct. 1937, 173 L.Ed. 2d 868 (2009). 95 848 F. Supp. 2d 439 (S.D.N.Y. 2012).

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until eleven or twelve years after she began her employment with the defendants. In denying defendants’ motion for summary judgment, the district court began by noting that the burden of demonstrating the appropriateness of equitable tolling is on plaintiff. Further, and although the FLSA and the analogous state laws at issue require the posting of notice explaining wage and hour requirements, “a failure [of notice] is not by itself sufficient to warrant equitable tolling; plaintiff must also show that she had not received notice of her rights through any other avenue.”96 Affidavits submitted by the parties presented competing versions of when, if ever, plaintiff was informed of her statutory rights, thus creating credibility issues engendered by competing narratives and rendering summary judgment inappropriate.

A. Generally: Exemptions, Deductions, and Credits In Graham v. Town & Country Disposal of Western Missouri, Inc., 97 trash

collectors brought suit against their employer, alleging violations of the FLSA. The parties brought cross motions for summary judgment, and the district court granted the defendant’s motion, concluding that that the employees were exempt under the Motor Carrier Act. The court began with the premise that the Motor Carrier Act exempts from the overtime requirement “any employee with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service pursuant to the provisions of Section 31502 of Title 49.”98 Employers must prove three elements: 1) that it is an employer whose transportation of passengers or property by motor vehicle is under the jurisdiction of the Secretary of Transportation, 2) that the employee is a driver, driver's helper, loader or mechanic, and 3) that the employee engages “in activities of a character directly affecting the safety of operation of motor vehicles in the transportation on the public highways of passengers or property in interstate or foreign commerce.” 99 On the first element, the court noted that the department had never issued regulations stating whether trash should be considered “property” within the meaning of the statute. Examining the plain text, structure, and analogous regulatory provisions, the court concluded that the defendant was an employer whose transportation of property by motor vehicle is under the jurisdiction of the Secretary of Transportation, thus satisfying the first element of the exemption. On the second and third elements, the court observed that a “loader” engages in work directly affecting the “safety of operation of motor vehicles” so long as he has responsibility when such motor vehicles are being loaded for exercising judgment and discretion in planning and building a balanced load or in placing, distributing, or securing the pieces of freight in such a manner that the safe operation of the vehicles on the highways in interstate or foreign commerce will not be jeopardized.100 The Court concluded that when plaintiffs decided what items were to be picked up and placed in the trash trucks, they exercised the sort of judgment and discretion contemplated by the regulation, thus satisfying the second and third elements of the exemption.

96 848 F. Supp. 2d at 445. 97 2011 WL 4378005 (W.D. Mo. Sept. 20, 2011). 98 29 U.S.C. Section 213(b)(1). 99 29 C.F.R. Section 782.2(a)-(b)(2). 100 29 C.F.R. §782.5(a).

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B. Statute of Limitations In Matuska v. NMTC, Inc.,101 former employees of defendant, a manufacturer

and distributor of various products, including automobile equipment, alleged they were misclassified as exempt employees. Defendant moved for summary judgment, arguing, among other things, that plaintiffs’ claims were time barred because plaintiffs failed to timely file a written consent to join the lawsuit before the two-year non-willful statute of limitations expired. The district court noted that while Section 255(a) allows for a three-year statute of limitations in the case of a “willful violation,” plaintiffs did not allege in their complaint that defendant acted willfully. Plaintiffs were thus afforded a two-year statutory period to satisfy the requirements for maintaining a collective action under the FLSA; namely, “1) each [p]laintiff must manifest his written consent, and 2) [p]laintiff’s attorney must file that consent with the [c]ourt.” Because plaintiffs did not dispute that they had failed to satisfy the latter of these requirements, the district court held that plaintiffs did not timely commence their action within the meaning of the FLSA.

In Allen v. Coil Tubing Services, L.L.C.,102 current and former employees of an oil

well service company brought this action alleging overtime violations. Upon the parties’ cross motions for summary judgment, the court concluded that plaintiffs did not introduce sufficient evidence to suggest a finding of willfulness which would have the effect of increasing the statute of limitations from two to three years. The fact that plaintiffs asked their managers why they were not receiving overtime does not raise a genuine fact question as to whether defendant “knew or recklessly disregarded that its pay structure violated the FLSA.”103

In Edwards v. City of New York,104 defendant moved on summary judgment to

have the 2-year statute of limitations applied to claims by corrections officers for unpaid overtime and improper calculation of the regular rate. Plaintiffs contended that the limitations should be equitably tolled for 6 years because of defendant’s failure to post the FLSA notice. In rejecting such contention and applying the 2-year limitations period, the district court noted that actual notice of rights defeats a claim for equitable tolling. In this instance, because plaintiffs had in fact requested, and been paid for, overtime work and because the collective bargaining agreement specifically addressed overtime, the court found plaintiffs had actual notice of their rights.

2. Willful and Nonwillful Violations

In Wade v. Woodland Commons, LLC105 the district court held that plaintiff failed

to provide sufficient evidence to establish a willful violation for purposes of summary

101 2012 WL 1533779 (D.N.J. Apr. 30, 2012). 102 846 F. Supp. 2d 678 (S.D. Tex. Jan 11, 2012). 103 Id. at 713. 104 19 WH Cas. 2d 616 (S.D.N.Y. 2011). 105 2012 WL 929839 (N.D.N.Y. Mar. 19, 2012).

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judgment. The Court noted that the fact that one of the individual directors of the employer was an attorney was insufficient to establish willfulness. Moreover questions of fact existed as to whether the employer knew the plaintiff was entitled to overtime. Defendants’ willfulness in this case was an issue of fact left for trial.

In McLean v. Garage Management Corp.,106 plaintiffs were garage managers

who alleged they were improperly classified as exempt and denied overtime. The court held that defendant presented no evidence that it took “active steps” to ascertain the FLSA’s relevant provisions and therefore did not act in good faith within Section 10 of the act. Specifically, the court noted that defendant’s conducted no “active investigation” to determine whether its unique pay system was in full compliance with the law. The court also found that defendant’s reliance on oral conversations with DOL investigators during audits of different matters was insufficient to establish it took the requisite active steps required to establish good faith. Finally, the court found that, because defendant invoked the attorney-client privilege, it could not sustain a defense based on good faith reliance on the advice of counsel. Conversely, the court held that plaintiffs were required, and failed, to show that defendant acted in reckless disregard of the law in order to establish willfulness under the Act. Although defendant’s reliance on the previous government audits was insufficient to show good faith the court observed that none of the audits put defendant on notice that its compensation system violated the FLSA. The court also pointed to the fact that defendant’s garage managers were well compensated as evidence that defendant believed its compensation system was in compliance with the law. Thus, the court held that, because plaintiffs did not show willfulness, the statute of limitations was two years.

In Lugo v. Farmer’s Pride Inc.107 plaintiff brought suit against a Pennsylvania

chicken processing plant seeking compensation for time spent donning and doffing personal protective equipment and clothing. The parties brought cross motions for summary judgment over the compensability of the activities, the statute of limitations, and the availability of liquidated damages. The parties disputed the extent to which the donning and doffing was required benefited of defendant rather than plaintiffs. Following DOL notice of FLSA violations, defendant implemented a compensation schedule for donning and doffing based on its time estimates. The district court denied the motions with respect to the donning and doffing claims. The court granted partial summary judgment in favor of defendant holding it was not subject to liquidated damages or a three year statute of limitations. The court held that a two year statute of limitations applied as a matter of law because defendant acted neither willfully nor recklessly. Defend did not attempt to evade compliance, but rather conducted an internal study, implemented a new compensation schedule, received DOL approval, made revisions to the schedule over time, and communicated with DOL.

In Jackson v. Art of Life, Inc.,108 five plaintiffs who worked as para-transit van

drivers brought suit under the FLSA for unpaid overtime.109 Following a bench trial, the

106 2012 WL 1358739 (S.D.N.Y. Apr. 19, 2012). 107 802 F. Supp. 2d 598 (E.D. Pa. 2011). 108 836 F. Supp. 2d 226 (E.D. Pa. 2011).

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district court found that the evidence supported a finding of willfulness.110 Defendant and its owner/operator, had been investigated several times by the U.S. Department of Labor (DOL) with respect to alleged overtime violations.111 The district court reasoned that after the DOL investigation, it could not be credited that the owner/operator did not know the basic rule that an employee must be paid time and a half after 40 hours per week.112 Moreover, the DOL investigation settlement involved an agreement on Art of Life’s part to keep separate track of payroll entries, overtime, and hours worked, which was further evidence of the fact that the owner/operator was aware of very basic overtime laws involved in the case.113 Finally, the district court found, as a matter of fact, that the earning statements generated by defendant purposefully concealed the fact that plaintiffs were paid straight hourly wages with no overtime.114 Together with the implausible testimony from the owner/operator, in which he claimed he was paying plaintiffs on a salary basis as opposed to hourly basis, the purposefully deceptive action regarding the earning statements clearly demonstrated willfulness.115

b. Determination of Willfulness by Judge or Jury In Gilmer v. Alameda-Contra Costa Transit Dist.,116 plaintiffs and their opt-in

class were bus drivers who brought a collective action under the FLSA against their former employer. The parties stipulated to conditional certification of the collective action, which the defendant reserved the right to challenge at a later time. Plaintiffs moved for partial summary judgment on the issue of damages.117 Defendant cross-moved to decertify the collective action and for summary judgment on certain aspects of the damages. Part of plaintiffs' summary judgment motion alleged that defendant engaged in willful violations of the FLSA. Defendant cross-moved for a ruling that a finding of willfulness was precluded by the record. Although FLSA claims are generally subject to a two-year statute of limitations, if a claim arises out of a willful violation of the FLSA, the statute of limitations may be extended to three years. A "willful" violation occurs when the employer knew or showed reckless disregard as to whether its conduct was prohibited. Defendant argued that willfulness should be precluded from the record because it relied on substantial legal authority when it stated its position on compensation for travel time and thus did not act willfully. The court found that a jury could infer that defendant's counsel and its managers reasonably relied on a case that the court eventually found unpersuasive. Defendant also argued that it relied on the collective bargaining agreement and believed its practices were lawful since the union

109 Id. at 228. 110 Id. at 237. 111 Id. 112 Id. at 238 113 Id. 114 Id. 115 Id. 116 2011 WL 5242977 (N.D. Cal. Nov. 2, 2011). 117 Plaintiffs had previously moved for, and the court had granted, summary judgment on the issue of liability.

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agreed to them. The court found that a reasonable jury could find for either party on whether this reliance was reasonable. Thus, both parties' motions were denied.118

In Hernandez v. Starbucks Coffee Co.,119 coffee shop “store managers” filed

FLSA claims alleging misclassification as exempt employees, and defendant moved for summary judgment on “willfulness,” arguing that the exempt classification decision was made after a detailed review of the position by compensation professionals and again after the 2004 amendments, and further that a district court in another circuit had ruled subsequently that the exempt classification was correct. The district court denied defendant’s motion, finding genuine issues of fact existed as to whether defendant’s violation was willful and agreeing with plaintiffs that “the determination of willfulness is a question better left for the jury.”

In Francois v. Mazer,120 plaintiff, a nanny, filed an action on April 3, 2009 alleging several claims against defendants, former employers, including claims for unpaid overtime under the FLSA and under the New York Labor Law (“NYLL”). Plaintiff was employed as a nanny by defendants for six and a half years, from April 2002 until December 18, 2008. Plaintiff alleges that defendants willfully failed to pay her overtime in accordance with Section 207 of the FLSA. In their motion for summary judgment, defendants incorrectly stated that the three year statute of limitations applied to both the FLSA and NYLL claims. The court noted that defendants failed to ask the court to make a determination of whether they willfully violated the FLSA. The court stated that “[i]n any event, ‘Courts in this Circuit have generally left the question of willfulness to the trier of fact.”121

5. Equitable Tolling and Equitable Estoppel

In Switzer v. Wachovia Corp.,122 financial specialists classified as "nonexempt

salaried with overtime" who were paid on a fluctuating work week basis filed a collective action alleging that the bank had violated the FLSA by failing to satisfy the requirements for the fluctuating work week payment system. Plaintiffs sought equitable tolling to allow additional plaintiffs to file notices of consent to join the collective action. In denying the motion for equitable tolling, the district court did not find any evidence that defendant had induced plaintiffs not to file suit within the statute of limitations, that defendant had failed to post required wage and hour posters, that defendant's settlement of two other FLSA lawsuits brought by financial specialists unfairly impeded plaintiffs from pursuing their FLSA claims in a timely manner, or that the prior judge's recusal delayed certification of the action as a collective action.123

118 2011 WL 5242977, at *1-16. 119 2011 WL 2729530 (S.D. Fla. June 29, 2011). 120 2012 U.S. Dist. LEXIS 26666 (S.D.N.Y. Feb. 28, 2012). 121 Id. at *12 (quoting Ramirez v. Rifkin, 568 F. Supp. 2d 262, 268 (E.D.N.Y. 2008) (collecting cases)). 122 2012 WL 1231743 (S.D. Tex. Apr. 12, 2012). 123 Id. at 2-3.

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In Doe v. Siddig,124 a former domestic employee brought to the United States from Sudan as a minor to work as a domestic servant and nanny filed suit against her former employers. The complaint contained a number of claims, including false imprisonment, failure to pay statutory minimum wages in violation of the FLSA and breach of contract, and sought damages covering a 19-year employment period. During that time, plaintiff further alleged she had been isolated from the outside world, prevented from learning English or attending school, and verbally abused. Defendants filed a motion to dismiss, asserting that six of plaintiff’s claims, including the FLSA claim, were barred by the applicable statutes of limitations. In relevant part, the court denied the motion, reasoning that the doctrine of equitable tolling is not generally amenable to resolution on a motion to dismiss. Further, while several courts had found factual allegations similar to that of plaintiff sufficient to invoke equitable tolling, the court reasoned that the doctrine is complex enough that “it would be prudent to await additional development of the factual record before proceeding further.”

D. Good Faith Defenses In Goody v. Jefferson County,125 a probation officer sued his former employer,

alleging the municipality’s practice of paying overtime as straight “comp time” violated the FLSA. Defendant brought a motion for summary judgment, admitting it violated the FLSA, but asserting that no reasonable factfinder could conclude that the violation was willful and not in good faith. The district court denied the motion. With respect to willfulness, plaintiff offered only one piece of evidence, alleging that he had complained to his supervisor about not receiving overtime premiums, and that his supervisor responded that defendant had an “unwritten policy” of not paying overtime premiums. The district court found that in light of that evidence, and the lack of evidence put forth by defendant attempting to refute plaintiff’s allegation of willfulness, a reasonable factfinder could conclude the defendant willfully violated the FLSA.

In Khadera v. ABM Industries Inc.,126 janitorial employees brought claims under

the FLSA alleging that their employers, janitorial services companies, forced them to work off-the-clock, failed to provide them with adequate rest breaks, required them to work through meal breaks, and failed to pay overtime. The district court had conditionally certified a class of janitorial employees in February 2010 and denied defendants’ motion to decertify the class in December 2011. In denying plaintiffs’ motion for partial summary judgment striking defendants’ good faith affirmative defenses, the court found that the defense was available under both the FLSA and state law with respect to the issue of whether double damages should be awarded, and further found that genuine issues of material fact existed with respect to whether the defense could be applied given the facts of the case. Specifically, the court concluded that evidence presented by defendants that they instructed their employees not to work off the clock and that they had to sign to certify the accuracy of their time cards could

124 810 F. Supp. 2d 127 (D.D.C. 2011). 125 2011 WL 2582323 (D. Idaho June 29, 2011). 126 2012 WL 581402 (W.D. Wash. Feb. 21, 2012).

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lead a reasonable factfinder to find that defendants acted in good faith and that therefore partial summary judgment was not appropriate.

1. Section 10: Actions Taken in Good Faith, in Conformity With,

and in Reliance on Written Rulings or Enforcement Policies of the Administrator

In Martinez-Hernandez v. Butterball, LLC,127 production line employees at a

turkey processing plant alleged violations of the FLSA and the North Carolina Wage and Hour Act due to defendant’s utilization of a “gang-time” or scheduled-time compensation system. Pursuant to this system, plaintiffs were paid for the time their production line was in operation minus two unpaid thirty-minute breaks. Plaintiffs sought unpaid wages for time spent off-the-clock donning and doffing protective equipment, cleaning such equipment, and traveling to and waiting at production lines. Defendant sought to preclude plaintiffs from recovering any damages stemming from alleged violations by asserting the “good faith reliance” defense pursuant to Section 10 of the Portal-to-Portal Act, and from recovering liquidated damages pursuant to the “good faith” defense in Section 11 of the Act. Section 10 offers employers protection against liability under the FLSA if the employer pleads—and proves—that it “acted in good faith reliance upon a written administrative regulation, order, ruling, approval, or interpretation, of the United States Department of Labor (“DOL”), or an administrative practice or enforcement policy of DOL.” Under Section 11 of the Act, the court has discretion to deny or limit liquidated damages in cases where the employer demonstrates that he acted in good faith, and further, had reasonable grounds to believe that he was not acting in violation of the FLSA. The North Carolina statute provides for the same good faith defense to liquidated damages. Defendant asserted that its actions were indeed aimed at ascertaining and following the law; namely, in light of the Supreme Court’s decision in IBP, Inc., v. Alvarez,128 defendant began paying its employees “plug time” of six minutes per day for donning and doffing time—an amount resulting from defendant’s consultation of, among others, industry newsletters, memoranda offered by legal experts, DOL Opinion Letters, and case law. Nevertheless, plaintiffs moved for summary judgment on defendant’s good faith reliance defense, insisting that defendant’s actions—simply seeking to limit defendant’s liability—failed to demonstrate an honest intention to comply with the wage and hour laws. The district court, finding that the issue of defendant’s intentions and the reasonableness of its efforts to comply with the FLSA and North Carolina law remained unresolved, thus denied summary judgment on defendant’s good faith defense to liquidated damages.

b. “In Good Faith”

In Lewis v. Huntington National Bank,129 mortgage loan officers, classified as

exempt by the bank that employed them, filed a complaint for overtime. The district court denied defendant’s motion for partial summary judgment finding genuine issues of

127 2011 WL 4591073 (E.D.N.C. Sept. 30, 2011). 128 546 U.S. 21 (2005). 129 838 F. Supp. 2d 703 (S.D. Ohio 2012).

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material fact regarding defendant’s good faith defense. 130 The court found it unnecessary to address whether defendant acted in good faith after finding defendant had failed to meet its burden to prove that it relied on and acted in conformity with an opinion letter. 131 The court found that good faith element usually turns on a determination of the reliance and conformity elements of the affirmative defense.132

c. “In Actual Conformity With”

In Lewis v. Huntington National Bank,133 mortgage loan officers, classified as exempt, filed a complaint for overtime. The district court denied defendant’s motion for partial summary judgment finding genuine issues of material fact regarding defendant’s good faith defense.134 The court held that the defendant failed to show that its loan officers’ duties matched those in the opinion letter. Defendant failed to articulate how it determined the loan officers’ primary duties and, in its investigation of the loan officer position, failed to interview a single loan officer regarding their actual duties.135

In Swigart v. Fifth Third Bank,136 current and former mortgage loan officers

employed by defendant bank filed a class action alleging they were wrongfully classified as exempt and sought compensation for unpaid overtime wages under the FLSA and Ohio law. Defendant moved for partial summary judgment, arguing that, when misclassifying the mortgage loan officers as administratively exempt, it relied in good faith on a 2006 Opinion Letter issued by the Wage and Hour Division of the United States Department of Labor that opined that mortgage loan officers were administratively exempt. The district court denied defendant's motion for partial summary judgment because there were genuine issues of material fact as to whether the defendant had conformed to the 2006 Opinion Letter, as required to prove its good faith defense. Specifically, the district court found no evidence that the circumstances described in the 2006 Opinion Letter actually matched the circumstances at the defendant's bank. The evidence showed that the job duties of the defendant's mortgage loan officers differed significantly from the hypothetical job duties outlined in the 2006 Opinion Letter.137

d. “In Reliance On”

In Lewis v. Huntington National Bank,138 mortgage loan officers, classified as

exempt, filed a complaint for overtime. The district court denied the defendant’s motion for partial summary judgment finding genuine issues of material fact regarding

130 Id. at 705, 714. 131 Id. at 714 n.9. 132 Id. 133 838 F. Supp. 2d 703 (S.D. Ohio 2012). 134 Id. at 705, 714. 135 Id. at 717. 136 2012 WL 1598752 (S.D. Ohio May 7, 2012). 137 Id. at *11. 138 838 F. Supp. 2d 703 (S.D. Ohio 2012).

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defendant’s good faith defense.139 Defendant had always classified loan officers as exempt.140 The court held that defendant could not prove that it actually relied upon a 2006 opinion letter to support maintaining loan officers as exempt where its policy to treat loan officers as exempt predated the 2006 opinion letter and defendant’s practices were not in compliance with 1991 and 2001 opinion letters that indicated loan officers were not exempt.141

In Swigart v. Fifth Third Bank,142 current and former mortgage loan officers

employed by a bank filed a class action alleging that they were wrongfully classified as exempt and seeking compensation for unpaid overtime wages under the FLSA and Ohio law. The defendant moved for partial summary judgment, arguing that, when misclassifying the mortgage loan officers as administratively exempt, it relied in good faith on a 2006 Opinion Letter issued by the Wage & Hour Division of the United States Department of Labor that opined that mortgage loan officers were administratively exempt. The district court denied the defendant's motion for partial summary judgment because there were genuine issues of material fact as to whether the defendant had relied on the 2006 Opinion Letter, as required to prove its good faith defense. Specifically, the district court found no evidence that the defendant had made an attempt to communicate with its mortgage loan officers or their supervisors to determine their primary job duties or whether they actually were performing the same job duties as the mortgage loan officers described in the 2006 Opinion Letter.143 Furthermore, the district court found that the defendant considered its mortgage loan officers to be its "sales force," as evidenced by the fact that the defendant hired, trained, fired, promoted, evaluated, ranked, and paid its mortgage loan officers based on their sales of mortgage loans; assigned sales managers to supervise the mortgage loan officers and to help them increase their sales; required the mortgage loan officers to cross-sell other financial products; and issued the mortgage loan officers a "playbook" informing them that they were required to follow a mortgage loan sales process.144

2. Section 11: Actions Taken in Good Faith and With Reasonable Grounds for Believing They Were Not in Violation of the Act

In Lugo v. Farmer’s Pride Inc.,145 plaintiff brought suit against a Pennsylvania

chicken processing plant seeking compensation for time spent donning and doffing personal protective equipment and clothing. The parties brought cross motions for summary judgment over the compensability of the activities, the statute of limitations, and the availability of liquidated damages. The parties disputed the extent to which the donning and doffing that was required benefited defendant rather than plaintiffs. Following DOL notice of FLSA violations, defendant implemented a compensation schedule for donning and doffing based on its time estimates. The district court denied 139 Id. at 705, 714. 140 Id. at 715. 141 Id. at 716. 142 2012 WL 1598752 (S.D. Ohio May 7, 2012). 143 Id. at *10. 144 Id. 145 802 F. Supp. 2d 598 (E.D. Pa. 2011).

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the motions with respect to the donning and doffing claims. The court granted partial summary in favor of defendant holding it was not subject to liquidated damages or a three year statute of limitations. Defendant subjectively made a good faith attempt to ascertain and comply with FLSA’s requirements by conducting an internal study and implementing a compensation schedule. Defendant’s belief it complied with the FLSA was objectively reasonable after having communicated with the DOL and obtained its approval of the compensation schedule.

e. Reasonable Grounds to Believe Not in Violation of the Act

In Kaiser v. At The Beach, Inc.,146 twenty six tanning salon managers alleged

they were misclassified as exempt and thereby denied overtime. After a bench trial, the district court concluded that plaintiffs had been misclassified as exempt employees for time periods when plaintiffs were not paid the statutory minimum of $455 per week.147 After defendant increased plaintiffs’ salaries, the court found that plaintiffs were exempt employees and not entitled to unpaid overtime.148 For the period during which defendant owed plaintiffs overtime, the court found that defendant was “liable for both compensatory damages as well as ‘an additional equal amount as liquidated damages,’ essentially doubling the plaintiffs’ damage award.” There was no evidence that defendant made efforts to even learn of their obligations under the FLSA and continued to underpay managers for purposes of the exemption after the DOL had found them in violation. Accordingly, the court found defendant could not make out a good faith defense against liquidated damages, as it acted with “reckless disregard” to FLSA’s requirements and lacked any reasonable belief that they were complying with the FLSA.149

E. Estoppel 1. Estoppel Based on Failure to Disclose FLSA Claims in Bankruptcy

In In re Family Dollar FLSA Litigation,150 defendant moved for summary judgment

as to two employees, “Martinson” and “Slater.”151 The district court granted summary judgment, holding that the failure of Martinson and Slater to disclose their FLSA claims as an asset in their Chapter 7 bankruptcy proceedings barred them from pursuing their claims under the doctrine of judicial estoppel.152 Martinson filed for bankruptcy and then subsequently opted into the FLSA case. 153 Slater petitioned for bankruptcy and received a discharge prior to filing a lawsuit against defendant.154 The district court first observed that in order for a party to be judicially estopped, they must have acted

146 2011 WL 6826577 (N.D. Okla. Dec. 28, 2011). 147 Id. at *12-13. 148 Id. at *13. 149 Id. at *20. 150 2011 WL 4899972 (W.D.N.C. Oct. 14, 2011). 151 Id. at *1. 152 Id. at *2. 153 Id. at *1. 154 Id.

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intentionally and not inadvertently.155 According to the district court, a “plaintiff’s failure to disclose can only be deemed ‘inadvertent’ when the ‘debtor lacks knowledge of the undisclosed claims or has no motive for their concealment.’ ” 156 “To establish inadvertence, a plaintiff ‘must show not that she was unaware that she had a duty to disclose her claims but that, at the time she filed her bankruptcy petition, she was unaware of the facts giving rise to them.’ ”157 The district court reasoned that Martinson had knowledge of her claims against defendant when she filed her opt-in consent form, which was during her bankruptcy proceeding.158 In addition, the district court held that Martinson had a motive to conceal the FLSA claims from the bankruptcy court since proper disclosure would certainly result in less favorable payment plans.159 With respect to Slater, the district court observed that Slater had filed for bankruptcy before filing her lawsuit, but the lawsuit established that she had the requisite knowledge of her claims based on her allegations of working 60-90 hours per week without overtime compensation.160 The district court rejected Slater’s argument that she could recover FLSA damages that accrued after she filed her bankruptcy petition, reasoning that “[t]he accrual rule does not create new causes of action.”161 Finally, the district court held that Martinson and Slater lacked standing to pursue these claims, reasoning that a debtor’s pre-petition cause of action is property of the bankruptcy estate, and the bankruptcy trustees cannot intervene or substitute to pursue these claims because there is no evidence that the trustees have been informed of the wage claims or defendant’s pending motion.162

F. Mootness In Pitts v. Terrible Herbst, Inc.,163 an employee appealed a district court’s

decision to dismiss a class action claim for mootness. Plaintiff had filed a class action complaint in Nevada district court under Section 16(b) and Nevada labor laws for failure to pay overtime and minimum wage. While awaiting a ruling on plaintiff’s motion to compel discovery relevant to class certification, the defendant made plaintiff an offer of judgment for the total amount due the individual plaintiff, which plaintiff refused. The district court then dismissed the complaint as moot since plaintiff had failed to timely seek class certification. The appeals court ruled that an offer of judgment for the full amount of a putative class member’s claims did not moot that representative’s class action complaint. This is so even when the court has not ruled on class certification where a claim is so “inherently transitory” that the court may not have time to rule before the proposed representative’s individual interest expires. In this case the certification

155 Id. at *2 (citing Folio v. City of Clarksburg, 134 F.3d 1211, 1217 (4th Cir. 1998). 156 Id. at *2. 157 Id. at *3 (citing Jethroe v. Omnova Solutions, Inc., 412 F.3d 598, 601 (5th Cir. 2005)) (emphasis in original). 158 Id. at *2. 159 Id. at *3. 160 Id. at *3. 161 Id. at *3 n. 4 (acknowledging, however, contra authority regarding the “accrual rule” in Nehmelman v. Penn National Gaming, Inc., 2011 WL 1988548 (N.D. Ill. May 20, 2011)). 162 Id. at 4. 163653 F.3d 1081 (9th Cir. 2011).

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had not been ruled upon yet and the claim was not “inherently transitory”. Nevertheless the court held where “a defendant seeks to buy off the small individual claims of the named plaintiffs, the analogous claims of the class—though not inherently transitory—become no less transitory than inherently transitory claims…The end result would be the same: a claim transitory by its very nature and one transitory by virtue of the defendant’s litigation strategy share the reality that both claims would evade review.” If the class is certified, the offer of judgment to the initial named plaintiffs will not affect the ability of class plaintiffs to opt in. At that point, “a defendant may moot a class action through an offer of settlement only if he satisfies the demands of the class; an offer to one cannot moot the action because it is not an offer to all.”

H. Bankruptcy

In Solis v. SCA Restaurant Corp.,164 the Secretary of Labor filed an action seeking to permanently enjoin the defendant restaurant from violating the FLSA. Soon after the Secretary initiated the case, the defendant filed Chapter 7 voluntary bankruptcy. The district court held that the FLSA claim was not automatically stayed under Section 362 of the Bankruptcy Code and that the Secretary may proceed with the FLSA claim under the police and regulatory power exception. In doing so, the court considered three tests to distinguish whether the Secretary was acting pursuant to police and regulatory purposes or merely to protect the government’s status as a creditor. First, the court described the nature of the pecuniary purpose (also called the pecuniary interest) test. The pecuniary purpose test determines whether the governmental proceeding relates to public safety and welfare, or whether the government is acting as a private creditor and has an interest in the debtor’s property. Only the former governmental action would allow for an exception to the stay. Second, the court considered the pecuniary advantage test, a broader iteration of the pecuniary interest test. With the pecuniary advantage test, the relevant inquiry is whether the government’s actions would create a pecuniary advantage vis-à-vis other creditors. 165 If such a pecuniary advantage exists, the court will hold that the governmental action is not exempt. Here, the government had no pecuniary interest in defendant’s estate in seeking to enforce a statutory scheme intended to prevent unfair competition in the market by payment of substandard wages. Finally, the court discussed a public policy test, which distinguishes proceedings that adjudicate private rights from those that effectuate public policy. Under this test, a court may find that the action furthers both interests to some extent and still find that the action is exempt from the stay, so long as the private interest does not significantly outweigh the public benefit. The court held that the injunction sought by the Secretary would prevent further violations, protect labor conditions, and prevent unfair labor competition in the market from companies who pay substandard wages. Emphasizing that the Second Circuit had yet to pass on the validity of any of the three tests, the court analyzed the FLSA claim under all three tests. The court held that the exemption applied regardless of whether the court applied the pecuniary purpose, pecuniary advantage, or public policy test. The government had no pecuniary interest in the bankruptcy estate, given that it 164 463 B.R. 248, 18 Wage & Hour Cas.2d (BNA) 728. 165 Id. at 252.

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sought an injunction to prevent further violations of the FLSA, as well as liquidated damages equal to the amount of the employees’ unpaid overtime compensation. VI. Burden of Proof

A. Burden of Proof Generally

In Upadhyay v. Sethi,166 a live-in domestic service housekeeper and nanny filed suit against her employer alleging that she was owed unpaid wages and overtime compensation under the FLSA and various state laws. Defendants filed a partial motion to dismiss, or alternatively, a motion for summary judgment, arguing that plaintiff was covered by the FLSA’s domestic service exemption167 and that most of plaintiff’s claims were time barred. Plaintiff countered that the limitations periods should be equitably tolled because she unaware that she had a cause of action until 11 or 12 years after she began her employment with defendants. In denying defendants’ motion for summary judgment, the district court noted that the burden of demonstrating the appropriateness of equitable tolling is on plaintiff. Further, and although the FLSA and the analogous state laws at issue require the posting of notice explaining wage and hour requirements, “a failure [of notice] is not by itself sufficient to warrant equitable tolling; plaintiff must also show that she had not received notice of her rights through any other avenue.”168 Affidavits submitted by the parties presented competing versions of when, if ever, plaintiff was informed of her statutory rights, thus creating credibility issues engendered by competing narratives and rendering summary judgment inappropriate. The court did however grant defendants’ request for an evidentiary hearing to test plaintiff’s equitable tolling claims.

In Bass v. City of Jackson,169 current and former District Fire Chiefs sued the City

for unpaid overtime under the FLSA. Plaintiffs moved for summary judgment, arguing that the district court should equitably estop defendant from raising the defense of statute of limitations. Generally, the statute of limitations on an FLSA claim is two years, but it can be three years for “willful” violations.170 Specifically, plaintiffs asserted that defendant misled them for several years to believe they were not owed overtime wages. A court may prevent an employer from asserting the defense if the employer misrepresents or conceals the facts that support the claim. The party claiming estoppel must show it reasonably relied on its adversary’s conduct to its detriment and that it did not or should not have known its adversary’s conduct was misleading. Citing Fifth and Seventh Circuit precedent, the district court noted that to preclude a “statute of limitations” defense, equitable estoppel requires affirmative steps, such as the

166 848 F. Supp. 2d 439 (S.D.N.Y. 2012). 167 The district court granted defendants’ partial motion to dismiss plaintiff’s FLSA overtime claim finding that the minimal amount of massage work performed by plaintiff did not exclude her employment from the domestic service exemption contained in 29 U.S.C. §213(b)(21). See Upadhyay, 848 F. Supp. 2d 439, 440–44 (S.D.N.Y. 2012) and chapter 5 III.A.1 [Section 13(b) Exemptions From the Overtime Requirements of the Act]. 168 848 F. Supp. 2d at 445. 169 2011 WL 8198523 (S.D. Miss. Dec. 2, 2011). 170 29 U.S.C. §255(a).

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destruction of evidence or promises not to raise the defense.171 The court denied plaintiffs’ estoppel argument. First, plaintiffs relied only on defendant’s mistaken belief that plaintiffs were exempt from FLSA overtime compensation. Second, plaintiffs did not provide evidence defendant concealed facts that supported plaintiffs’ claims. Specifically, plaintiffs did not point at any affirmative conduct by defendant that affirmatively stopped plaintiffs from filing suit. The court therefore applied the two year statute of limitations.

In Bass v. City of Jackson,172 defendant also moved for summary judgment,

alleging plaintiffs were exempt from the FLSA as employees (1) “employed in a bona fide executive, administrative, or professional capacity,” 173 or (2) engaged in “fire protection activities.”174 Generally, employees must prove they were employed at the relevant time, they performed the work for which they allege they were not compensated, and that the employer knew or should have known the employee worked overtime. Once an employee satisfies these burdens, the burden shifts to the employer to show the amount of work performed or provide other proof negating the employee’s evidence. To prove an exemption, the district court found that the defendant had the “high”175 burden of proving the employees fell “plainly and unmistakably”176 under the exemptions and that courts construe exemptions narrowly against an employer. For the administrative and executive exemption, the district court found that defendant needed to prove the employees (1) performed duties and (2) received salaries like exempt employees.177 The district court held there was a question of fact regarding whether plaintiffs were paid on a salary basis. For the “fire activities” exemption, defendant needed to show that it had adopted a work period “by clear and affirmative evidence”178 that authorized plaintiffs to work in excess of forty hours per workweek. Finding a question of fact as to whether defendant adopted such a work week for plaintiffs, the district court denied defendant’s motion for summary judgment on this basis as well.

Finally, in Bass, plaintiffs moved for summary judgment on their liquidated

damages. To avoid liquidated damages, defendant had a “plain and substantial” burden to prove its alleged FLSA violation was in good faith and predicated on reasonable grounds.179 However, because plaintiffs had not established liability, the district court denied their motion for summary judgment on liquidated damages.

171 Bass, 2011 WL 8198523, at *9 (citations omitted). 172 2011 WL 8198523 (S.D. Miss. Dec. 2, 2011). 173 29 U.S.C. §213(a)(1). 174 29 U.S.C. §207(k). 175 2011 WL 8198523, at *3 (quoting Burns v. Blackhawk Mgmt. Corp., 494 F. Supp. 2d 427, 430 (S.D. Miss. 2007). 176 Id. 177 29 C.F.R. §541.2. 178 2011 WL 8198523, at *7 (citing Birdwell v. City of Gadsden, 970 F.2d 802, 805 (11th Cir. 1992)). 179 Id. at 8.

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B. Proving the Prima Facie Wage Case In D'Antuono v. C & G of Groton, Inc.,180 the district court considered the

defendant’s argument on summary judgment that the named plaintiff’s claims were barred under the FLSA due to the statute of limitations because she failed to file the requisite consent form.181 Plaintiff argued that her affidavit filed in support of the plaintiffs’ opposition to a motion to dismiss constituted a signed, written consent filed with the court.182 The affidavit stated that “[g]iven my current financial circumstances and my understanding of the costs associated with arbitration, I cannot afford to arbitrate my claims and I could not afford to undertake this litigation and pursue my rights if I had the risk of paying the Defendants’ costs if I lost at arbitration.”183 In determining that the affidavit was sufficient and denying defendant’s summary judgment motion, the district court found that the affidavit “implicitly very[fied] the complaint, express[ed] an interest that legal action be taken to protect her rights, and express[ed] an interest in being a party plaintiff.”184 The court also considered that plaintiff sat for a lengthy deposition, which was relevant in the evaluation of whether she intended to participate in the case.185

In Daniels v. 1710 Realty LLC,186 a superintendent for residential properties at

defendant property management company alleged that defendant failed to pay overtime wages under the FLSA. The matter was tried to a magistrate judge. As part of his prima facie burden, the district court noted that plaintiff must produce “sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.187 The court determined that although an FLSA plaintiff may rely on his own testimony to establish the hours he worked and that the standard is not high, plaintiffs’ testimony here was vague, contradictory and could not provide the court with a sufficient basis to determine as a matter of just and reasonable inference that he actually worked overtime hours on a regular basis, or even at all.188 For instance, plaintiff could not specifically describe the tasks he performed on a daily basis, how long it took him to perform such tasks and how often worked “after hours.”189 Further, regarding whether plaintiff was entitled to compensation he worked on weekends, the court determined that plaintiff failed to prove that defendant knew or should have known that he worked weekends.190 Because plaintiff failed to meet his prima facie burden, the court entered judgment for defendant.191

180 2012 WL 1188197 (D. Conn. Apr. 9, 2012). 181 Id. at * 1. 182 Id. at *3. 183 Id. 184 Id. at *4. 185 Id. 186 2011 WL 3648245, (E.D.N.Y. Aug. 17, 2011). 187 Id. at *4. 188 Id. at * 5. 189 Id. 190 Id. at *7. 191 Id. at *8.

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In Hicks v. Avery Drei, LLC,192 the plaintiff worked for her employer, a hotel management company, first as a security guard during construction of the hotel, and then as a front desk clerk. She sued her employer and its owner-manager under the FLSA for unpaid overtime earned in both positions. The trial court granted the defendants a partial directed verdict as to enterprise coverage during the time plaintiff was a security guard. On appeal, plaintiff challenged that partial directed verdict as error. In order to prevail in an FLSA overtime case, the Seventh Circuit noted that plaintiff first had to demonstrate that either she or her employer were subject to the FLSA.193 Specifically, plaintiff had to demonstrate that she was herself engaged in, or that she was employed in an enterprise that was engaged in, commerce or the production of goods for commerce.194 The Seventh Circuit said that to fall within the FLSA based on the enterprise’s activity, the owner’s businesses had to (a) be engaged in related activities, (b) be under unified operation or common control, (c) have a common business purpose and (d) have an annual gross volume of sales of no less than $500,000.195 In the end, plaintiff was unable to establish the common business purpose, and could not establish that the district court was wrong to keep the volume of sales question from the jury. Whether an employer is subject to the FLSA is a question of law ordinarily, the court said.196 The evidence on sales volume was so meager that, coupled with plaintiff’s undeveloped arguments, there was no error in keeping it from the jury. The Seventh Circuit therefore affirmed the district court’s granting of the partial directed verdict.

In Huerta v. Victoria Bakery,197 the trial court addressed overtime claims by two

bread makers who were paid a daily rate. The employer defendant defaulted, and the matter was before a magistrate judge on plaintiffs’ motion for entry of default judgment. Contrary to the recommendation by the magistrate judge, the district court judge held that plaintiffs’ original complaint provided a sufficient basis for inferring the requisite interstate commerce connection under the approach used by other judges in the district. While the court did not detail the approach used by those other judges, it apparently found the inference appropriate because defendant had a large volume of sales in a major metropolitan area that extended over several states. The court was not concerned that the inference was inappropriate in a default context because defendant had received the original complaint and the motion to dismiss papers.198 Accordingly, the district court rejected the magistrate’s recommendation to dismiss the action with leave to amend, and accepted the damage calculation made by the magistrate, entering judgment for plaintiffs.

192 654 F.3d 739 (7th Cir. 2011). 193 Id. at 745. 194 Id. at 745-46. 195 Id. (citing 29 U.S.C. §§203 (s)(1)(A), 203 (r)(1) & 207(a)(1)). 196 Id. at 747. 197 2012 WL 1100647 (E.D. N.Y. Feb. 17, 2012), report accepted in part, rejected in part, 2012 WL 1107655 (E.D. N.Y. Mar. 30, 2012). 198 Id.

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In Stickle v. SCI Western Market Support Center, L.P.,199 plaintiff funeral home employees alleged that defendant funeral homes and affiliated corporations variously failed to properly compensate them for “community work,” break time, on-call work, and training time. Defendants moved for summary judgment and argued that plaintiffs had failed to produce evidence that defendants knew of plaintiffs overtime work. The district court noted that, although defendants bore the burden of production, plaintiffs nonetheless had to show that the employer had some knowledge of the hours that they worked. Plaintiffs presented evidence that their managers, who were not named as defendants, either knew or should have known that they performed uncompensated overtime work. In declining to award summary judgment for the employer, the court followed the Fifth Circuit’s reasoning in Brennan v. Gen. Motors, 200 holding that defendants could not disclaim knowledge of inaccurate time reporting when their own managers were to blame for the inaccuracy.

C. Proving the Number of Hours Worked In Gonzalez v. Metropolitan Delivery Corp.,201 delivery truck drivers alleged that a

parcel pick-up and delivery business, as well as its owners individually, violated the FLSA by failing to pay overtime for work allegedly done during the drivers’ on-call break periods. The business and owners contended that the drivers were responsible for recording their time worked and the record shows the drivers were fully paid for all regular and overtime worked. However, the drivers’ testimony stated they worked during break time and did not report it. The court found that the testimony was enough to preclude summary judgment on the issue of whether the drivers were fully compensated for all time worked, and ordered the drivers to provide the defendants with calculations of the time omitted from their pay, along with all supporting documentation.

In Amaya v. Superior Tile and Granite Corp.,202 plaintiffs, a tile and granite

salesperson and a granite fabricator and installer, sued their employer and its owner for failure to pay overtime and keep records of time worked and wage payments as required by the FLSA and the New York Labor Law. The district court held a bench trial and found in favor of plaintiffs. The court explained that the plaintiffs’ burden of proof was met by providing evidence to show the amount of their work as a matter of just and reasonable inference. Where, as in this case, the employer fails to keep accurate records, the employees’ recollection of hours worked is presumed to be correct. Finding that plaintiffs had provided a reasonable estimate of the dates and hours they worked and the pay they received, the court based its damage calculations on plaintiffs’ evidence. Noting the liquidated damages are the norm in FLSA litigation, the court awarded such damages. The court found that defendants had not established the defense of acting in good faith and having reasonable grounds for believing that the acts did not violate the law. Good faith means more than ignorance of the law. It requires that the employer have taken active steps to determine the law’s requirements.

199 2012 WL 245087 (D.Ariz. Jan. 25, 2012). 200 482 F.2d 825 (5th Cir. 1973). 201 2012 WL 1442668 (S.D. Fla. Apr. 26, 2012). 202 2012 WL 130425 (S.D.N.Y. Jan. 17, 2012).

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Finding that plaintiffs had also established that the violations were willful, the court awarded liquidated damages for the three-year period preceding the commencement of the case.

D. Proving Exemptions and Other Defenses In Orten v. Johnny’s Lunch Franchise, LLC,203 plaintiff, a salaried employee, filed

suit against his employer alleging that his employer ceased paying him wages for several pay periods due to the company’s financial difficulties. The district court dismissed plaintiff’s claim under Fed. R. Civ. P. 12(b)(6) on the grounds that plaintiff was an exempt employee and because nothing in the record indicated that his salary was subject to reduction because of the variations in the quality and quantity of the work but, rather, were due to the company’s financial struggles. On appeal, the Sixth Circuit reversed the dismissal because the district court improperly placed the burden of showing a violation of the salary basis test on the employee, rather than the employer. Noting that exemptions are to be nearly construed against the employer and that the employer bears the burden of establishing the exemption by a preponderance of the evidence and by clear and affirmative evidence that the employee meets every requirement of an exemption, the court found that it was improper for the district court to focus on the sufficiency of plaintiff’s complaint and “the not yet created record” in the case, and plaintiff’s allegations that his salary for several pay periods was reduced to zero were sufficient to survive a motion to dismiss.

E. Proving Good Faith and Willfulness In Goody v. Jefferson County,204 a probation officer sued his former employer,

alleging the municipality’s practice of paying overtime as straight “comp time” violated the FLSA. Defendant brought a motion for summary judgment, admitting it violated the FLSA, but asserting that no reasonable factfinder could conclude that the violation was willful and not in good faith. The district court denied the motion. With respect to good faith, the district answered two discrete questions. First, the court concluded that defendant could assert the defense despite its failure to raise it in its answer to plaintiff’s complaint, citing plaintiff’s lack of prejudice. Second, recognizing that “[c]ourts have the discretion to deny an award of liquidated damages if the employer shows that it acted in subjective ‘good faith’ and had objectively ‘reasonable grounds' for believing that its conduct did not violate the FLSA,” the court concluded that a reasonable factfinder could conclude the FLSA violation was not made in good faith. The court found insufficient defendant’s statement that it never had a subjective intention to violate the FLSA. Rather, the court found relevant that defendant never sought the advice or counsel or reliance or some objective legal authority demonstrating its practices complied with the law.

203 668 F.3d 843 (6th Cir. 2012). 204 2011 WL 2582323 (D. Idaho June 29, 2011).

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F. Standards of Review on Appeal In Hicks v. Avery Drei, LLC, 205 plaintiff worked for her employer, a hotel

management company, first as a security guard during construction of the hotel, and then as a front desk clerk. She sued her employer and its owner-manager under the FLSA for unpaid overtime earned in both positions. In the trial court, defendants were granted a partial directed verdict as to enterprise coverage during the time plaintiff was a security guard. On appeal, plaintiff challenged that directed verdict as error. The Seventh Circuit, following its own precedent, reviewed the district court’s granting of the directed verdict de novo.206 In order to reverse the district court in this context, the Seventh Circuit held that plaintiff had to show more than a scintilla of evidence to support her position.207 Plaintiff did not do so, having offered only vague testimony described the amount of defendants’ revenues. In addition, the court said that the enterprise coverage was ordinarily a question of law, not fact.208 Accordingly, the court affirmed the district court’s granting of a partial directed verdict for defendants.

In Roussell v. Brinker International, Inc.,209 a 216(b) class of 55 restaurant servers proceeded to trial on allegations that their employer, a restaurant chain, improperly coerced them into sharing tips with ineligible employees in violation of the FLSA. Plaintiffs prevailed at trial and were awarded damages. The restaurant appealed the judgment, raising a number of issues. With regard to the issue of class certification under 216(b), the restaurant argued that the district court should have decertified the class. The Fifth Circuit reviewed this issue for an abuse of discretion. Applying this standard, it deferred to the district court’s application of the “similarly situated standard” for evaluating the appropriateness of the class, despite the fact that the Fifth Circuit, as well as other circuits, had not yet settled on whether this was the proper standard, and found no abuse of discretion. The appeals court similarly applied a deferential standard on the issue of whether the 14 testifying plaintiffs were appropriately representative of the 55 member class. The court held that the trial court is in a better position to formulate an appropriate methodology for trial, and that “[a]ny arguable ‘error is presumed harmless until shown to be prejudicial’”210 Defendant further challenged certain evidentiary rulings and other trial rulings, which were also reviewed for an abuse of discretion. The remaining issues presented on appeal involved questions of law and mixed questions of law and fact and were all reviewed on a de novo basis. For example, defendant argued that the district court erred by extrapolating defendant’s concession on the issue of coercion from the 14 testifying plaintiffs to the remaining 41 non-testifying plaintiffs. The appeals court considered this a mixed question of law and fact and reviewed on a de novo basis. It affirmed the district court’s ruling on this issue.

205 654 F.3d 739 (7th Cir. 2011). 206 Id. at 745. 207 Id. at 747. 208 Id. 209 441 Fed. Appx. 222 (5th Cir. 2011). 210 Id. at 227 (quoting McClain v. Lufkin Indus., Inc., 519 F.3d 264, 282 (5th Cir. 2008).

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G. Representative Testimony

In Roussell v. Brinker International, Inc.211, a 216(b) class of 55 restaurant servers proceeded to trial on allegations that their employer, a restaurant chain, improperly coerced them into sharing tips with ineligible employees in violation of the FLSA. A jury rendered a plaintiffs’ verdict and awarded damages. The restaurant appealed to the Fifth Circuit, arguing that plaintiffs did not provide representative testimony of the class. Prior to trial, defendant deposed all 55 plaintiffs. Also before trial, defendant restaurant requested representative testimony. Plaintiffs provided 14 plaintiffs to testify. Defendants stipulated that all 14 of these plaintiffs were, in fact, coerced to share tips. The focus of the trial, therefore, went to the restaurant’s affirmative defense that the employees with whom tips were shared were not tip-ineligible employees. The jury heard live testimony regarding 25 plaintiffs and received deposition testimony regarding the remaining 30 plaintiffs. On appeal, the restaurant argued that plaintiffs were allowed to hand-pick 14 “perfect plaintiffs,” rather than using a random sample, and therefore, the testifying plaintiffs were not a representative sample of the class. The Fifth Circuit applied a deferential standard on this issue, holding that trial judges are in a better position than an appellate court to formulate trial methodology. Accordingly, the appeals court held that a jury hearing evidence on 25 of 55 plaintiffs (45 percent) was sufficiently informed, and therefore, there was no reversible error. In concluding there was no error, the court noted the restaurant’s failure to explain how testimony from the non-testifying plaintiffs would have altered the outcome, despite the fact that it had deposed all 55 plaintiffs as well as additional witnesses prior to trial.212

VII. Damages

Plaintiffs in Widjaja v. Kang Yue USA Corp.213 filed a collective action lawsuit

alleging violations of the FLSA and New York Labor Laws (NYLL) against their employer, a sushi restaurant, and its owner. At the end of each shift, plaintiffs received credit card tips from the restaurant’s cash reserves. However, defendants withheld 11.5% of the tips—3.85% to offset the cost of converting the tips to cash and 7.65% to cover payroll taxes. While employers may, without violating minimum wage laws, deduct the hourly wage of tipped employees a “tip credit” as long as the employees retain all tip money, plaintiffs alleged that defendants violated these laws by withholding portions of their credit card tips. Further, employers are allowed to withhold payroll taxes and forward them to the IRS and, in turn, reduce the net pay of minimum wage paid employees. Here, however, plaintiffs proved defendants failed to forward the withheld wages to the IRS. The court held that this amounted to a “naked retention of plaintiffs’ tips”214 in direct violation of the FLSA and NYLL. The district court then found

211 441 Fed.Appx. 222, 2011 WL 4067171 (5th Cir. 2011. 212 The court also observed that the restaurant failed to explain what the district court should have done in the alternative. Although the restaurant endorsed random sampling on appeal, it opposed statistical sampling earlier in the case. Id. at 227. 213 2011 WL 4460642 (E.D. N.Y. Sept. 26, 2011). 214 Id. at *6.

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that although defendants were entitled to deduct a credit card processing fee, defendants “failed to adduce sufficient evidence showing that the amounts withheld were pursuant to an agreement with the credit card company.” 215 After finding defendants liable, the district court found that plaintiffs were entitled to liquidated damages. The district court found that it “strained credulity” 216 to believe that defendants’ retention of tips and their subsequent failure to provide the monies to the IRS was a part of any good faith attempt to comply with the FLSA. Furthermore, defendants’ inability to provide records supporting the need for a credit card processing fee deduction showed that they had not made reasonable inquiries into the relevant law.

A. Damages Generally: Integration of State and Federal Damages In Smith v. Nagai,217 plaintiff, a former cook of the defendant restaurant, alleged

that the restaurant and its owner failed to pay him overtime wages in violation of the FLSA and New York State Labor Law (“NYLL”). Default judgment was entered against defendants. Plaintiff discontinued his action against the restaurant and sought to recover damages from its owner. Defendant failed to appear at the damages hearing and the court’s decision therefore rested entirely on the evidence presented by plaintiff. After finding that plaintiff was a “covered employee” under the FLSA, the restaurant met the requirements for enterprise coverage under the FLSA, and the restaurant owner was an “employer” jointly and severally liable under the statute, the court calculated the damages owed to the plaintiff. First, the court calculated unpaid overtime wages for the NYLL’s six-year statute of limitations period, using plaintiff’s calculations of his regular wage rate and hours worked at the restaurant. The court then added FLSA liquidated damages equal to the amount of unpaid overtime and NYLL liquidated damages in the amount of 25% of the total damages due for unpaid wages. Under the NYLL, a plaintiff also is entitled to prejudgment interest at a rate of 9%, except that such interest is not available where a plaintiff’s claims under the FLSA and NYLL overlap. Thus, the court calculated prejudgment interest for the three year NYLL statute of limitations period that was not also covered by the FLSA. Finally, the court found that the defendants retaliated against plaintiff for reporting his wage and hour concerns to the U.S. Department of Labor and, therefore, recommended that the damages award to plaintiff also include liquidated damages under the FLSA, which provides that an employer who retaliates against an employee is liable for “the payment of wages lost and an additional equal amount as liquidated damages,”218 as well as compensatory damages for mental anguish.

B. Monetary Damages

In Amaya v. Superior Tile and Granite Corp.,219 plaintiffs, a tile and granite

salesperson and a granite fabricator and installer, sued their employer and its owner for

215 Id. at *7. 216 Id. at *9. 217 2012 WL 2421740 (S.D.N.Y. May 15, 2012). 218 2012 WL 2421740, ay *4 (citing 29 U.S.C. 216(b)). 219 2012 WL 130425 (S.D.N.Y. Jan. 17, 2012).

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failure to pay overtime and keep records of time worked and wage payments as required by the FLSA and the New York Labor Law (NYLL). The district court ruled in plaintiffs’ favor after a bench trial. The court said that the basic measure of damages is the amount plaintiffs should have been paid minus the amount that they were actually paid. Because the employer did not keep adequate records, the court determined the hours worked and regular rate on the basis of plaintiffs’ testimony. Noting the liquidated damages are the norm in FLSA litigation, the court awarded such damages. The court found that defendants had not established the defense of acting in good faith and having reasonable grounds for believing that the acts did not violate the law. Good faith means more than ignorance of the law. It requires that the employer have taken active steps to determine the law’s requirements. Finding that plaintiffs had also established that the violations were willful, the court awarded liquidated damages for the three-year period preceding the commencement of the case. Finally, the court awarded prejudgment interest under the NYLL.

In Gurung v. Malhotra,220 plaintiff, a former domestic employee, brought an action against her former employers, asserting claims pursuant to several federal and New York State labor and human rights laws arising from her employment. The district court entered default judgment against defendants, and referred the matter to a magistrate judge for a damages inquest. The court subsequently accepted all of the recommendations from the magistrate judge’s report. Plaintiff was hired by defendants to move with them from India to the United States and to serve as defendants’ domestic worker. Before leaving India, defendants promised to pay the plaintiff 5,000 Indian rupees (approximately $108) per month for three years in exchange for light housekeeping duties. Once in the United States, plaintiff worked 12 hour days for a brief period, followed by a sustained period of working 16 hour days, and defendants only paid the plaintiff once (5,500 rupees) during the three years she worked for them. The magistrate judge awarded the plaintiff $1,458,335, plus a to-be-determined amount for research performed by her legal counsel. Damages awarded under FLSA were $135,720 in unpaid wages, which were calculated based on the hours plaintiff worked for defendants for which she was not paid, times the New York minimum wage for all hours worked. In addition, the magistrate judge awarded $111,256 in liquidated damages, calculated based on the hours plaintiff worked for defendants for which she was not paid, times the federal minimum wage rate. The magistrate judge also recommended an award of attorneys’ fees and costs under the FLSA. Plaintiff requested $580,220.44 in fees and $24,469.97 in costs. The magistrate judge found the costs figure to be excessive because $15,829.49 of it was attributed to the cost of electronic research. He also awarded the plaintiff $8,640 in costs, plus whatever she could subsequently prove is a reasonable amount for legal research. The court awarded attorneys’ fees of $220,898 and reached that figure by using a range of hourly fees recently found to be appropriate in the District and by reducing the hours billed by 25% to account for some excess he found in portions of the billing.

220 851 F. Supp. 2d 583 (S.D.N.Y. Mar. 16, 2012).

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1. Actions for Back Wages and Overtime

a. Computation: Generally

In Perez v. Mountaire Farms, Inc.,221 poultry processing plan employees brought an FLSA collective action against employer for time spent donning and doffing personal protective equipment. The district court certified the collective action and ruled that donning and doffing constituted compensable work and, after a bench trial on the issue of compensability, the district court entered judgment for plaintiffs. The Fourth Circuit, in a case of first impression, affirmed in part, holding donning and doffing protective gear at the start and end of shifts were “integral and indispensable” to chicken processing but reversed the district court’s holding that employees were entitled to compensation for donning and doffing time incident to unpaid meal periods. In determining the appropriate amount of compensable time, the Fourth Circuit affirmed the district court’s conclusion that 10.204 minutes was a reasonable estimate of compensable time for donning and doffing gear based upon the plaintiffs’ expert’s “practical real-time evaluation of the donning and doffing process.”222 To determine whether the 10.204 minutes spent donning and doffing work clothes was de minimis, the Fourth Circuit adopted the Ninth Circuit’s de minimis test which analyzes the practical difficulty the employer would encounter in recording the additional time, the total amount of compensable time, and the regularity of the additional work.223 Here the experts were able to measure the time to don and doff protective gear before and after shifts, computed annual amount of compensable time for donning and doffing gear was equivalent to a week’s pay, and the donning and doffing occurred throughout each workday. As such, the 10.204 minutes spent donning and doffing protective gear before and after shifts was compensable.224

b. Computation: Salaried Employees Misclassified as Exempt In Javansalehi v. BF & Associates, Inc., 225 plaintiff, a sales representative,

alleged that defendants misclassified her as exempt from the FLSA’s overtime requirements. Defendants moved for partial summary judgment, contending that any overtime compensation owed to plaintiff should be calculated at 0.5 times the regular rate of pay, under the fluctuating workweek method, instead of 1.5 times the regular rate of pay. The district court noted that the proper method of calculating damages was not susceptible to summary judgment because it would not resolve a claim or defense at issue in the litigation. However, the court construed the request as a motion in limine and held that plaintiff would receive half-time overtime under the fluctuating workweek method. The parties disputed whether they had a “clear and mutual understanding” that plaintiff would receive a fixed salary for all hours worked in a particular week, not for a fixed number of hours. The court noted that, under the DOL’s interpretation, an

221 650 F.3d 350 (4th Cir. 2011). 222 650 F.3d at 372-73. 223 650 F.3d at 373. 224 650 F.3d at 374. 225 2012 WL 1566184 (D. Or. May 2, 2012).

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“agreement or understanding need not be in writing in order to validate the application of the fluctuating workweek method of payment overtime.” Instead, “[w]here an employee continues to work and accept payment of a salary for all hours of work, her acceptance of payment of the salary will validate the fluctuating workweek method of compensation . . . .” 226 In addition, the court concluded that the “Department’s regulations do not require that the [understanding] extend to the method used to calculate the overtime pay.” Rather, the parties must only understand that the employee will be paid a fixed salary for all hours worked.227

In Kaiser v. At The Beach, Inc.,228 twenty six tanning salon managers alleged

they were misclassified as exempt and thereby denied overtime. After a bench trial, the district court concluded that plaintiffs had been misclassified as exempt employees for time periods when plaintiffs were not paid the statutory minimum of $455 per week.229 After defendant increased plaintiffs’ salaries, the court found that plaintiffs were exempt employees and not entitled to unpaid overtime. 230 For the period during which defendant owed plaintiffs overtime, the court found that defendant was “liable for both compensatory damages as well as ‘an additional equal amount as liquidated damages,’ essentially doubling the plaintiffs’ damage award,” because of defendant’s reckless disregard for whether its conduct violated the FLSA and lack of reasonable belief of compliance with the FLSA. 231 In calculating compensatory damages, the court analyzed the calculation of back-due overtime wages in accordance with 29 C.F.R. § 778.114, i.e., the FWW method.232 In order to calculate damages using the FWW method, the court noted that a “clear, mutual understanding” between the parties that the fixed salary was compensation for however many hours plaintiffs worked in a particular work (even if more than 40) was required.233 The court found this method impermissible under these facts because defendant, on occasion, compensated plaintiffs with an “overtime” payment when they picked up extra shifts.234 Based on that sporadic compensation, the court applied what it recognized as the common-law presumption that “an employee’s fixed weekly salary was meant to compensate him solely for 40 hours of work even when he regularly worked more than 40 hours.”235

In Ransom v. M. Patel Enters, Inc.,236 plaintiffs filed a collective action under the

FLSA alleging defendant employer misclassified them as exempt and they were entitled to overtime. The parties filed cross-motions for summary judgment on the proper method of calculating damages if the employer were found to have wrongfully withheld

226 2012 WL 1566184, at *9. 227 Id. 228 2011 WL 6826577 (N.D. Okla. Dec. 28, 2011). 229 Id. at *12-13. 230 Id. at *13. 231 Id. at *20. 232 Id. at *25. 233 Id. at *26. 234 Id. 235 Id. 236 825 F. Supp. 2d 799 (W.D. Tex. 2011).

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overtime pay.237 Defendant argued the proper calculation method was the “fluctuating workweek method” (FWW), where the hourly rate was determined by dividing the salary by the number of hours actually worked in a given week and overtime due was determined by multiplying the number of hours over 40 by one-half this hourly rate.238 The district court held that defendant failed to offer persuasive summary judgment evidence that the mutual intention of the parties was the FWW method if plaintiffs were found to be non-exempt. The court held that plaintiffs were not entitled to summary judgment because determining the method of overtime calculation is a fact-dependent inquiry, and the facts were in dispute or insufficiently developed.239 In considering whether the FWW should be applied, the court referenced its EZPawn decision where it explained that the DOL bulletin was not a regulation, it was adopted for a wholly different purpose, and use of the bulletin as a damage methodology was inconsistent with the FLSA and its stated purposes.240 The court reviewed the Seventh Circuit’s holding in Urnikis-Negro v. American Family Property Services,241 noting the issued centered on how many hours the weekly salary was intended to compensate and affirmed the trial court’s finding that plaintiff’s salary was intended to compensate her no matter how many hours she worked in a week.242 The court concluded the FLSA and prior Supreme Court decisions required a fact-specific inquiry and, while Urnikis recognized the fact-specific inquiry, the Seventh Circuit’s conclusion was incorrect because it failed to adopt a damage methodology consistent with its recognition.243 The court found that in a misclassification case, where facts showed the parties actually had an understanding about how many hours the salary was intended to compensate, then those facts would determine the regular rate and resulting damages.244 The court concluded the correct approach when there was no persuasive evidence, direct or circumstantial, of a contrary agreement, would be to presume that a weekly salary paid to a non-exempt employee compensated them for 40 hours of work.245

d. Deductions and Setoffs

In Johnson v. D.M. Rothman Co.,246 unionized warehouse employees brought

claims for unpaid overtime wages, alleging the employer failed to include certain wage differentials owed to them under the governing collective bargaining agreement. The employees sought back overtime pay and liquidated damages. The employer did not dispute that the employees were owed back pay, and that it erred by failing to include the wage differentials before calculating overtime. However, the employer also discovered an accounting error in which the employer made substantial overpayments to the employees when it failed to include unpaid meal breaks in its accounting. The

237 Id. at 801. 238 Id. 239 Id. at 810. 240 Id. at 803 (citing In re EZ Pawn, 633 F. Supp. 2d, 395, 402-403 (W.D. Tex. 2008). 241 616 F.3d 665 (7th Cir. 2010). 242 Id. at 680-81. 243 Id. at 808. 244 Id. 245 Id. at 809-10. 246 861 F. Supp. 2d 326 (S.D.N.Y 2012).

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employer moved for summary judgment, arguing that the overpayment for the meal breaks offset the overtime owed to the employees for the wage differential. The employees did not dispute the overpayment, but argued the underpayment of overtime must be first doubled as liquidated damages. The district court granted in part the employer’s motion for summary judgment. The court held that even if the underpayment should be doubled, the damages do not alter the result because the underpayment was more than offset by the overpayments for each pay period the employees sought unpaid overtime wages.247

2. Liquidated Damages

In Allen v. Coil Tubing Services, L.L.C., 248 current and former field service employees of an oil well service company brought claims alleging overtime violations. Upon the parties’ cross motions for summary judgment, the court concluded that liquidated damages were not warranted for the violations and that the court, therefore, would not exercise its discretion by awarding such damages.249 While so holding, the court found that longstanding precedent in which it was held that the FLSA Motor Carrier Act Exemption, 29 U.S.C. § 213(b)(1), applied to oil field service operators and served as some basis for defendant’s decision constituted the requested good faith for denying liquidated damages. 250

In Solis v.Milling Away, LLC,251 the Secretary of Labor filed a motion for summary

judgment to enforce a prior settlement against a furniture manufacturer and its owner for overtime and minimum wage claims. The court upheld the executed settlement agreement and granted the summary judgment motion. In addition, although not included in the original settlement agreement, the Secretary sought an award of liquidated damages under 29 U.S.C. § 216(b) because defendants failed to pay employees any wages during the relevant time period. Defendants argued that their failure to pay was not in bad faith, but rather because of the economic downturn and their own inability to pay. The court rejected this argument, holding that denial of bad faith is irrelevant in an award of liquidated damages. The court reaffirmed the notion that liquidated damages under the FLSA are compensation, not a penalty, and that absent a showing of substantial good faith by the employers, the defendants’ employees are entitled to such award.252 The court also rejected the defendants’ argument for a different, smaller damage award, as discussed in settlement negotiations. The court deemed those discussions inadmissible in a motion for summary judgment.253

247 Id. at 334-335. 248 846 F. Supp. 2d 678 (S.D. Tex. Jan 11, 2012). 249 Id. at * 714. 250 Harshman v. Well Serv., Inc., 248 F.Supp. 953 (W.D. Pa. 1964). 2512012 WL 359688 (N.D. Ohio Feb. 2, 2012). 252Id. at *7 (internal quotation marks omitted). 253Id.

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In Williams v. Hooah Sec. Services LLC,254 the district court granted the plaintiff security officers' motion for summary judgment as to the defendants' violation of the FLSA for failure to pay the plaintiffs for the overtime hours worked. The court declined to exercise its discretion not to award liquidated damages, noting that liquidated damages are "the norm" and that the court's discretion not to award such damages should only be exercised where the employer can establish that it acted in good faith and had objectively reasonable grounds for believing they were not violating the FLSA.255 In this case, it was undisputed that the defendants did not know they were required to pay overtime, but they did nothing to determine whether or not they were required to do so. Thus, the plaintiffs were awarded an additional equal amount of unpaid overtime compensation as liquidated damages.

In Kaiser v. At The Beach, Inc.,256 twenty six tanning salon managers alleged

they were misclassified as exempt and thereby denied overtime. After a bench trial, the district court concluded that plaintiffs had been misclassified as exempt employees for time periods when plaintiffs were not paid the statutory minimum of $455 per week.257 After defendant increased plaintiffs’ salaries, the court found that plaintiffs were exempt employees and not entitled to unpaid overtime. 258 For the period during which defendant owed plaintiffs overtime, the court found that defendant was “liable for both compensatory damages as well as ‘an additional equal amount as liquidated damages,’ essentially doubling the plaintiffs’ damage award.”

3. Interest In Huerta v. Victoria Bakery,259 the court addressed federal and New York state

law overtime claims by two bread makers who were paid a daily rate. The employer defendant defaulted, and the matter was before the magistrate judge on a motion for entry of default judgment. The magistrate judge recommended back pay and liquidated damages under the FLSA for the break makers after calculating a regular rate of pay from the daily rate for each. Holding that an award of prejudgment interest under the New York state statute did not overlap with the purposes of liquidated damages, the magistrate recommended such an award under New York law on both the federal and state law back pay awards. 260 The district court accepted the magistrate’s recommendation on these points.261

254 2011 WL 5827250 (W.D. Tenn. Nov. 18, 2011). 255 2011 WL 5827250, at *14-15. 256 2011 WL 6826577 (N.D. Okla. Dec. 28, 2011). 257 Id. at *12-13. 258 Id. at *13. 259 2012 WL 1100647 (E.D. N.Y. Feb. 17, 2012), report accepted in part, rejected in part, 2012 WL 1107655 (E.D. N.Y. Mar. 30, 2012). 260 2012 WL 1100647 *13-14. State law wage law damages in this case consisted of only a “spread-of-hours” damage. Id. at *11-12. 261 2012 WL 1107655 at *3.

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C. Attorneys’ Fees and Costs In Andrade v. Aerotek, Inc.,262 plaintiff sued under the FLSA asserting that they

had been misclassified as exempt employees and were not paid for hours that were worked but, on the instruction of their managers, not recorded on their timesheets. Plaintiffs initially sought a nationwide collective action based on the misclassification claims. The court denied a motion for collective certification of such a nationwide claim and allowed the case to continue only as to a narrower class. After the court granted summary judgment on plaintiffs’ misclassification claims, defendant served, and plaintiffs accepted, an offer of judgment for the off-the-clock claims. The offer of judgment provided for a total of $13,940.08 in back pay and provided that reasonable attorneys’ fees and costs would be determined by the court. In establishing the lodestar for the fee award, the court took into account all hours that were devoted exclusively to plaintiffs’ off-the-clock claims and disregarded all hours devoted exclusively to the unsuccessful misclassification claims. However, the court gave credit for work on the misclassification claims that was inextricably intertwined and shared a common core of facts with the successful off-the-clock claims. The court said that the most critical factor in calculating the reasonable fee award is the degree of success obtained. Because plaintiffs had sought recovery of a nationwide class and ultimately won only $13,940.08 in back pay for eight plaintiffs, the court reduced the lodestar by 25%.

In Anthony v. Franklin First Financial, Ltd.,263 plaintiffs sought attorneys’ fees and

costs after settlement of their claims. Defendants disputed the amount of plaintiffs’ proposed hourly rates and total hours billed. The district court, adopting the lodestar method, analyzed the reasonableness of the hourly rates and time expended.264 The court explained that reasonableness of a proposed hourly rate is determined by the prevailing market rate for lawyers in the district in which the ruling court sits.265 The prevailing market rate should be current, and “courts may conduct an empirical inquiry based on the parties’ evidence or may rely on the court’s own familiarity with the rates if no such evidence is submitted.”266 Plaintiffs proposed hourly rates of $350 and $225 for partners and a junior associate, respectively. While the court found the hourly rates proposed by plaintiffs to be high for attorneys with comparable levels of experience, it gave “significant weight” to the retainer agreements plaintiffs submitted in support of their $350 hourly rate and on that basis declined to adjust the hourly rates for these more senior attorneys.267 Plaintiffs, however, did not demonstrate that clients had ever paid the proposed $225 hourly rate for the junior attorney’s counsel. That, coupled with the junior associate’s recent admission to the bar and the fact that most of his work on the case was as a law clerk and not an admitted attorney, led the court to reduce the hourly rate from $225 to $175.268 As to time expended, the court found that some of plaintiffs’ proposed billing hours were excessive or unnecessary, including charges for 262 852 F.Supp. 2d 637 (D. Maryland 2012). 263 ___ F. Supp. 2d ___, 2012 WL 546668 (S.D.N.Y. Feb. 21, 2012). 264 Id. at *1. 265 Id. at *2. 266 Id. 267 Id. 268 Id. at *3.

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administrative tasks performed by attorneys, duplicate attendance at depositions and conferences, internal meetings between attorneys assigned to the case, and time spent revising attorney work product that, in many instances, was originally drafted by one of the firm’s partners.269 The court accordingly reduced the total attorneys’ fees by 20%.270

Plaintiff in Arias v. Alpine Towing, Inc.,271 sought an award of attorneys’ fees and costs after a jury returned a favorable verdict only as to his unpaid minimum wages and overtime claims, but not finding employer’s actions willful and denying his retaliation claim. The magistrate judge ruled that to be a “prevailing party” under Section 216 plaintiff need prevail on all claims in order to be awarded a full recovery of fees. While finding that the rates of $325 and $300 for the senior attorneys and $175 for the junior attorney reasonable, the court reduced the total fee award by ten percent awarding $70,861.05. The court explained the reduction noting the same tasks were performed by multiple attorneys; there was also considerable administrative tasks billed. The court also awarded costs, including, however, costs related to mediation as it was not expressly permitted in 28 U.S.C. Section 1920.

In Bachman v. Cablenet Services Unlimited, Inc.,272 plaintiffs filed a motion to

dismiss with prejudice four particular plaintiffs. Plaintiffs requested the dismissal because the four plaintiffs waived their right to participate in Bachman by opting into another action styled Mertilus v. Cablenet Services, Unlimited, Inc.273 The court granted the motion and maintained jurisdiction over the issue of attorneys’ fees and costs. After the plaintiffs in Mertilus settled their claims, the plaintiffs in Bachman subsequently filed a request for attorneys’ fees and costs, arguing that the four dismissed plaintiffs received “better settlements in the Mertilus case because of plaintiffs’ counsels’ representation in [Bachman].”274 The court denied the request, finding that the four plaintiffs did not qualify as “prevailing parties” in the Bachman case because the settlement occurred in Mertilus not Bachman.275

In Azamar v. Stern,276 plaintiffs brought a lawsuit against their employers for

various violations of the FLSA. One defendant failed to timely respond to written discovery requests and to court orders.277 As such, plaintiffs moved for sanctions against the defendant in the form of a default judgment, which the court entered.278 Later, the defendant sought vacation of the default judgment, and the court granted the

269 Id. at *3-*4. 270 Id. at *4. 271 2011 WL 4102530 (S.D. Fla. 2011). 272 2011 WL 3475309 (M.D. Fla. July 15, 2011). 273 Id. at *1 (citing Mertilus v. Cablenet Services, Unlimited, Inc., No. 2009-cv-61919 (S.D. Fla.) (filed Dec. 3, 2009)). 274 Id. 275 Id. (“Plaintiffs filed a Motion to Dismiss themselves from this action, and the Court dismissed them. No ‘judicially sanctioned change’ occurred in the legal relationship of the parties.”). 276 278 F.R.D. 23 (D.D.C. 2011). 277 Id. at 24–25. 278 Id. at 25.

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request, but concluded that “an alternative sanction of ‘assessing costs against [the defendant was] not only appropriate, but warranted.’”279 Plaintiffs then moved for sanctions in the form of attorneys’ fees. Defendant opposed the motion, arguing the request of fees should be limited to fees incurred in preparing the motion for default and the motion for sanctions.280 The court agreed in part, but ultimately awarded fees related to additional tasks that it determined were related to the defendant’s sanctionable conduct, such as time spent seeking discovery responses from the defendant, related court appearances, and time spent opposing the defendant’s motion to vacate default.281

2. Specific Factors That Affect Attorneys’ Fee Awards

d. Attorneys’ Fees for Appellate Work In Dellarussiani v. Ed Donnelley Enterprises, Inc.282 plaintiffs were six former

employees of two McDonald’s franchises owned by defendant holding company. Plaintiffs were originally part of a class action that was decertified, and plaintiffs’ litigation paralleled another action, O’Brien v. Ed Donnelley Enterprises, Inc. 283 , containing other former members of the class.284 The same law firm handled both sets of litigation, and much of the discovery for the Dellarussiani plaintiffs was done in the O’Brien action prior to class decertification.285 Plaintiffs alleged that defendant failed to pay regular and overtime wages for time actually worked as required by the FLSA, and plaintiffs were successful in several of their claims.286 Plaintiffs’ attorneys originally submitted invoices detailing all the work done in both sets of litigation to the court for approval.287 The court found the attorneys’ invoices vague, unhelpful, and riddled with work entries that had no arguable connection to the Dellarussiani plaintiffs, and so awarded only the amount clearly related to those plaintiffs--$6,024 out of $155,171 sought.288 On appeal the Sixth Circuit held that some of the O’Brien fees could be properly awarded to the attorneys, because discovery for the Dellarussiani plaintiffs had been conducted in O’Brien, before the class decertification.289 The Sixth Circuit also admonished the attorneys to present a clearer record of the fees they incurred and ensure all claimed fees were directly related to the Dellarussiani litigation. On remand to the district court the attorneys presented the same incomprehensible records, and the court, noting that the Dellarussiani plaintiffs were 16% of the total original class, simply awarded the attorneys 16% of their total claimed fees--$20,691.290 On appeal, the Sixth

279 Id. (quoting Azamar v. Stern, 275 F.R.D. 1, 7 (D.D.C. 2011)). 280 Id. 281 Id. at 26. 282 468 Fed. Appx. 479 (6th Cir. 2012), unpublished. 283 2006 WL 3483959 (S.D. Ohio Nov. 30, 2006). 284 Dellarussiani, 468 Fed. Appx. at 481. 285 Id. at 482. 286 Id.at 481. 287 Id. at 482. 288 Id. 289 Id. at 483. 290 Id.

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Circuit affirmed, holding that (1) the lower court’s calculation method was not an abuse of discretion, especially considering attorneys had two chances to present clear and accurate records and failed; and (2) the attorneys were not entitled to any fees relating to their appeal of the first fee award and their arguments on remand for a higher fee award, as neither of these actions benefited the plaintiffs.291

e. Calculating “Reasonable” Attorneys’ Fees

In Padurjan v. Aventura Limousine & Transp. Service, Inc.,292 plaintiff challenged

the attorneys’ fees awarded by the district court following settlement of an FLSA action against his former employer. The Eleventh Circuit upheld the district court’s exercise of independent judgment to reduce the reasonable rate for plaintiff’s attorney where the district court found the attorney had engaged in an “inefficient, overlitigatory approach” and the court was knowledgeable about a prior reduction in that attorney’s award on the same ground in another case. Plaintiff also argued that the district court erred by reducing the reasonable hours incurred by fixed percentages without providing precise justification for each hour reduced. The court upheld the reduction, noting that the $200,000 sought in attorneys’ fees indicated the case was voluminous and that the district court provided at least a “concise but clear explanation of its reasons for the reduction” through its adoption of the magistrate’s thorough report and recommendations. Finally, the Eleventh Circuit ruled that the Supreme Court’s decision in Crawford Fitting Co. v. JT Gibbons, Inc.293 precluded the recovery of fees incurred for an expert witness employed by plaintiff to calculate an approximate fee award where the statute does not operate to shift such witness fees.

In Johnson v. GDF, Inc.,294 a restaurant employee brought an action against his

former employer, alleging he was fired in retaliation for filing an overtime claim. After a jury trial, the employee was awarded back pay and punitive damages totaling $5,000, as well as an additional $5,455 following mediation after the trial. The employee moved for award of attorney’s fees and costs, but the district court rejected the proposed amount of $112,566.87. The employee appealed the district court’s decision to reject the award of attorney’s fees. On appeal, the Seventh Circuit considered whether the district court abused its discretion by rejecting the proposed fee. The court focused on the two elements of the lodestar amount, the hours reasonably expended multiplied by the reasonable hourly rate.295 The employer argued that the hours expended were unreasonable, because the employee’s attorney did not disclose the true value of the claim and should have settled the small amount of the claim quickly instead of accruing the large amount of time litigating the claim. The court disagreed, finding that the employer was or should have been aware of the amount of the claim, and that the employer disputed not just the amount of the claim but whether the employee was fired at all. Therefore, it was an abuse of discretion for the district court to deny nearly all of

291 Id. at 485-486. 292 441 Fed.Appx. 684 (11th Cir. 2011)(unpublished). 293 482 U.S. 437 (1987). 294 668 F.3d 927 (7th Cir. 2012). 295 Id. at 929 (citing Pickett v. Sheridan Health Care, 664 F.3d 632, 640–43 (7th Cir. 2011)).

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the attorney’s hours. As for the attorney’s hourly rate, the court held it was an abuse of discretion for the district court to set the employee attorney’s rate by only considering hourly rates set by prior decisions involving the attorney where his fees were challenged as unreasonable.296

In Gurung v. Malhotra,297 the plaintiff, a former domestic employee, brought an

action against her former employers, asserting claims pursuant to several federal and New York State labor and human rights laws. The district court entered default judgment against the defendants, and referred the matter to a magistrate judge for a damages inquest. The magistrate judge recommended an award of attorneys’ fees and costs, but found plaintiff’s request of $580,220.44 in fees and $24,469.97 in costs to be excessive. The judge awarded attorneys’ fees of $220,898 and reached that figure by using a range of hourly fees recently found to be appropriate in the district and by reducing the hours billed by 25% in determining a fee award. The magistrate judge rejected $15,829.49 attributed to electronic research costs, cut the overall costs award to $8,640, and allowed further submissions on what is a reasonable amount for legal research. The district court adopted the magistrate judge’s recommendations.

In Hurst v. Town of Merrillville, Ind.,298 a group of 10 former EMT employees filed

claims against the Town of Merrillville, Indiana for willful violations of the FLSA’s overtime and retaliatory provisions.299 Plaintiffs won a jury verdict.300 Plaintiffs filed a motion for attorneys’ fees and costs, and defendants opposed it, setting forth three main arguments: (i) plaintiffs should not be compensated for time spent by plaintiffs drafting amendments to the original complaint to correct plaintiffs’ counsels’ own errors and to modify the written documents to correspond to the case as presented to the court; (ii) that plaintiffs should not recover attorneys’ fees for an unsuccessful motion for reconsideration; and (iii) plaintiffs should not be allowed to recovery attorneys’ fees for more than 90 hours identified for the preparation of discovery responses, where many entries do not identify the specific tasks performed. 301 With respect to the first argument, the district court agreed and deducted from the amount of the fees requested, the time spent drafting three amended complaints and time spent revising a final pretrial order.302 In addition, the district court agreed with defendants that it would be inappropriate for defendants to bear the cost for plaintiffs’ unsuccessful motion for reconsideration.303 Finally, the district court denied defendants’ challenge as to the excessive time spent on the preparation of discovery responses, reasoning that defendants did not identify which of the entries it deemed inadequately described, and without a more specific argument, and given that much of the work was done by

296 Id. at 934. 297 851 F. Supp. 2d 583 (S.D.N.Y. Mar. 16, 2012). 298 2011 WL 24622313 (N.D. Ind. June 17, 2011). 299 Id. at *1. 300 Id. 301 Id. at *2-3. 302 Id. at *2. 303 Id. at *3.

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paralegals at a lower rate, the court would not consider approximately 90 hours per plaintiff for discovery to be excessive.304

(ii.) Adjusting the Lodestar Amount—the 12-Factor Test

In Landaeta v. Da Vinci's Florist, LLC,305 the district court considered the twelve

factors identified in Johnson v. Georgia Housing Express, Inc.306 Applying the first factor, the court struck a number of plaintiffs' attorneys' time entries where it found that activities had been billed twice or where activities were unnecessary or did not require the involvement of more than one attorney. The court also found an excessive number of "meetings" as well as internal e-mails and teleconferences, and reduced the requested attorneys' fees accordingly. Applying the second factor, the novelty and difficulty of the questions, the court reduced plaintiffs' request to the extent that plaintiffs claimed that it needed original pay records, as the court found that copies of the electronic records, which the plaintiffs already had, would suffice. Applying the third factor, the level of skill required to perform the legal service properly, the court reduced the attorneys' fees request for time spent researching case law and drafting an opinion letter, as the court concluded that the applicable law was "straightforward." Applying the fourth factor, the preclusion of employment by the attorney due to acceptance of the case, the court declined to consider this factor in favor of plaintiffs because defendants expressed interest in an early settlement of the litigation. There was no dispute regarding the hourly rates claim, and the court did not feel that the fact that the fee was contingent was significant, especially in light of defendants' early interest in resolving the case. The time limitations imposed by the client or the circumstances were not deemed significant, as both sides acknowledged the case would be resolved quickly. Plaintiffs were successful in the matter and, while defendants sought to reduce the fees further because they had conceded liability, the court acknowledged it was prudent for plaintiffs' counsel to prepare for potential adverse developments in the case, even though defendants' counsel indicated their client's willingness to settle. The court, considering factor 10, characterized as low the "undesirability" of the case. The court recognized that plaintiffs' counsel's success in the case would likely lead to significant potential referrals considering factor 11. Finally, regarding awards in similar cases, the court focused on when the case was resolved, in this case well before discovery closed and before any dispositive motions were filed.

In In re Staples Inc. Wage and Hour Employment Practices Litigation,307 the

district court addressed the issue of attorneys’ fees and costs after approval of a global settlement of a class action against the defendant.308 Counsel for plaintiffs requested a fee award of $11.5 million, which is 27.5% of the $42 million global settlement fund.309 The court held that it would apply the percentage of recovery method for awarding

304 Id. 305 2011 WL 5118420 (D. Md. Oct. 24, 2011). 306 488 F.2d 714 (5th Cir 1974). 307 2011 WL 5413221 (D. N.J. Nov. 4, 2011). 308 Id. at *1. 309 Id.

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attorneys’ fees, indicating that it would cross-check the percentage of recovery award against the lodestar method.310 Observing that in the Third Circuit that multipliers of one to four are “‘frequently awarded in common fund cases when the lodestar method is applied,’” the district court held that the multiplier fell within the 1 to 4 range accepted in the Third Circuit.311 However, in so holding, the district court reduced the original total lodestar amount calculated by counsel at $6.386 million, holding that one of the prior cases making up part of the multidistrict global settlement, Stillman et al. v. Staples,312 which had resulted in a judgment and an award of attorneys’ fees at specific “blended hourly rates,” was law of the case as applied to all non-Stillman work.313 As a result, the reduced lodestar amount was $4.187 million.314 Nevertheless, under either calculation, the multiplier fell within the 1 to 4 range accepted in the Third Circuit.315 Accordingly, the district court found that the requested fee award of 27.5% of the common fund was reasonable.316

D. Costs In Frye v. Baptist Mem. Hosp., Inc., plaintiffs brought a collective action claiming

defendant had failed to pay for time worked during meal breaks.317 The district court granted summary judgment in favor of defendant. Following summary judgment, defendant moved for costs under Fed. R. Civ. P. 54.318 The court awarded defendant $55,401.63 in costs against only Plaintiff. Plaintiff challenged the award stating that the award frustrated the remedial purpose of the FLSA and that it was unfair to only tax him for the total costs of the collective action with 402 other class members. The court upheld the cost award. The court stated that awarding costs to prevailing defendants in FLSA actions is clearly possible.319 The court evaluated defendants’ request for costs under Rule 54(d) and not the FLSA. The court stated that awarding costs in this case did not frustrate the remedial purposes of the FLSA as the FLSA was not intended to eliminate the risks to plaintiffs that advance a failed claim.320 Plaintiff chose to bring his claim as a collective action and assumed the risks of doing so. Plaintiff further argued he would be impoverished by the cost award. The court responded that plaintiff did not meet his burden to show that he lacked an ability to pay by providing sufficient detail of his financial condition.321

310 Id. at *3. 311 Id. at 4-5 (quoting In re Cendant Corp., Derivative Action Litig., 232 F. Supp. 2d 327, 341-42 (D. N.J. 2002)). 312 07-CV-849-PS (D. N.J.). 313 Id. at 5. 314 Id. 315 Id. 316 Id. 317 2012 U.S. Dist. LEXIS 40943, *1-3 (W.D. Tenn. Mar. 26, 2012). 318 Id. at *2. 319 Id. at *7. 320 Id. at *10-11. 321 Id. at 24-25.

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In Padurjan v. Aventura Limousine & Transp. Service, Inc.,322 plaintiff challenged the attorneys’ fees and costs awarded by the district court following settlement of an FLSA action against his former employer. The Eleventh Circuit upheld the district court on all counts, including the refusal award certain costs. In particular, the Eleventh Circuit ruled that the Supreme Court’s decision in Crawford Fitting Co. v. JT Gibbons, Inc.323 precluded the recovery of fees incurred for an expert witness employed by plaintiff to calculate an approximate fee award where the statute does not operate to shift such witness fees. VIII. Settlement, Waiver, and Release

A. Compromise, Settlement, Waiver, and Release: Generally In Griffin-Moore v. City of Brooksville, Fla.,324 plaintiff alleged that defendant

violated the FLSA by failing to pay her overtime. Defendant served plaintiff with a second offer of judgment, in which defendant offered to pay the plaintiff $20,000 to resolve all claims, as well as all claims that "Plaintiff has, had or may claim to have."325 Plaintiff had filed a concurrent lawsuit in state court, asserting a worker's compensation retaliation claim. Thus, under the language of defendant's offer, defendant would pay plaintiff $20,000 to resolve her FLSA claim, her worker's compensation retaliation claim, and any other then-existing claims. Plaintiff did not accept the defendant's offer within fourteen days, so the offer was withdrawn under Rule 68. Plaintiff subsequently filed a motion to strike or declare ineffective the offer. In her motion, plaintiff contended that the offer violated Fed. R. Civ. P. 68 by unfairly forcing her to accept the offer. Fed. R. Civ. P. 68 requires the offeree to pay back any costs incurred after rejecting a settlement offer if the judgment that the offeree eventually obtains is less than the unaccepted offer. However, state law claims are not counted as part of the overall judgment. If plaintiff received a judgment on her FLSA claim for less than $20,000, she would be penalized for not accepting defendant's offer, even if the combined value of her FLSA claim and state law claim exceeded $20,000, because her retaliation claim would not be considered when evaluating her FLSA judgment. Thus, plaintiff would be penalized for not accepting defendant's offer of $20,000 regardless of any recovery she might obtain on the retaliation claim. The district court agreed with plaintiff that this would be a patently unfair result, and the court granted the Motion to Strike.326

In Symczyk v. Genesis HealthCare Corp.,327 a registered nurse filed a collective

action alleging that her health care employer had violated the FLSA. Defendant served an offer of judgment to the plaintiff in full satisfaction of her individual alleged damages, attorney's fees, and costs. The district court dismissed the complaint for lack of subject 322 441 Fed.Appx. 684 (11th Cir. 2011)(unpublished). 323 482 U.S. 437 (1987). 324 2012 WL 1560644 (M.D. Fla. May 2, 2012). 325 This settlement offer was served pursuant to Federal Rule of Civil Procedure 68, which provides in 68(d) that "[i]f the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made." Fed. Civ. P. R. 68(d). 326 2012 WL 1560644 at *1-2. 327 656 F.3d 189 (3d Cir. 2011).

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matter jurisdiction on the grounds that the offer mooted the collective action. The Third Circuit reversed the district court's decision, holding that the collective action did not become moot when, prior to moving for conditional certification and prior to any other plaintiff opting in to the suit, the putative representative received an offer of judgment in full satisfaction of her individual claim.328 [Editors’ Note: This case is pending in the U.S. Supreme Court.]

B. Private Settlement, Waiver, and Releases In Hogan v. Allstate Beverage Co., Inc.,329 the district court denied a motion by

the employer to enforce a private settlement agreement reached on plaintiff’s overtime and liquidated damages claims because the confidentiality provision and release provision were unfair to plaintiff. Plaintiff asserted overtime claims, but also filed an administrative charge with the EEOC claiming his employer discriminated against him on the basis of his race. Plaintiff’s first attorney allegedly struck a deal with defense counsel to settle the FLSA claim for $5,000 and attorney’s fees, but the race discrimination claim was to remain viable. When neither attorney could draft the agreement to preserve plaintiff’s race discrimination claim to his satisfaction, plaintiff fired his attorney. Plaintiff and his new counsel recalculated damages owed to plaintiff on his FLSA claim, arriving at a figure in excess of $5,000 and sought to gain class status. Defense counsel then attempted to enforce the $5,000 settlement agreement she claimed to have reached with plaintiff’s first attorney. Before the district court, the employer argued that the settlement of the claim for $5,000 was a binding agreement. The district court held that the emails between defense counsel and plaintiff’s first attorney did not create a binding agreement under Alabama or federal common law.330 Second, even if the agreement was binding, it failed as “a fair and reasonable resolution of a bona fide dispute over FLSA provisions.”331 The court explained that, despite the general rule that FLSA provisions are not subject to settlement, an FLSA action may be settled under court supervision if there is a bona fide dispute over coverage, such as the amount of time worked or the amount of back wages due.332 Here, the parties did have a bona fide dispute over the amount of overtime due to plaintiff, but, rather than just arrange a settlement using a middle-ground number that both could agree on, this settlement also required plaintiff to waive all claims against the employer and demanded confidentiality. The court noted that while these terms may be standard in settling civil litigation, such concessions by the plaintiff, or “side deals,” did not relate to the settlement of a bona fide dispute under the FLSA and could not be enforced under the FLSA if they were not deemed fair after close scrutiny.333 The court held that under the FLSA, the two concessions demanded by this defendant employer were unfair.

328 Id. at 200-01. 329 821 F. Supp. 2d 1274, 1276 (M.D. Ala. 2011). 330 Id. at 1279. 331 Id. at 1281. 332Id. at 1281-82. But any amount not in dispute must be paid without extracting any valuable concessions in return. Id. at 1282. 333 Id.

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Chapter 19

COLLECTIVE ACTIONS

IV. Stage I: Standard for Determining Whether Conditional Certification Should Be Granted

A. Standard Applied During Stage I

In Winfield v. Citibank, N.A.,1 five personal bankers brought off-the-clock claims,

asserting that defendant imposed rigorous sales quotas that they could not possibly meet in a 40-hour workweek, yet employed a policy of strictly limiting overtime hours, which resulted in widespread FLSA violations. In support of their motion seeking conditional certification and court-authorized notice, plaintiffs produced evidence from themselves, one opt-in plaintiff and four declarants who worked, collectively, in thirteen branches in six of the thirteen states in which the bank operated. The district court granted plaintiffs’ motion, concluding that plaintiffs’ evidence provided a sufficient “basis for inferring that plaintiffs’ experiences were representative of those of [p]ersonal [b]ankers nationwide.”2 Rejecting defendant’s argument that any violations of its written policy requiring payment for overtime hours worked must have been “anomalous incidents instigated by rogue managers,” the court found that plaintiffs’ evidence that managers at several branches had committed FLSA violations tied to defendant’s nationwide policy of minimizing overtime constituted a “modest factual showing that they and potential opt-in plaintiffs were subject to an unlawful policy or practice” sufficient for conditional certification.3 The court denied defendant’s motion to strike all hearsay statements, noting that courts in the Second Circuit regularly rely on hearsay evidence in support of motions for conditional certification.4 The court also rejected defendant’s argument that plaintiffs had to satisfy the Rule 23(a) commonality requirement. The court explained that in making a modest factual showing that plaintiffs were subject to a “common” policy or plan that violated the law, plaintiffs were not required to demonstrate that they meet the commonality requirement of Rule 23 as articulated in Wal-Mart Stores, Inc. v. Dukes.”5

In Scott v. NOW Courier, Inc.,6 five current and former couriers sued defendant for allegedly misclassifying them as independent contractors, and thereby denying them minimum wage and overtime compensation under the FLSA and related benefits under Indiana law. Plaintiffs moved to conditionally certify their FLSA claims as a collective action and for class certification of their state law claims pursuant to Fed. R. Civ. P. 23.

1 843 F. Supp. 2d 397 (S.D.N.Y. 2012). 2 Id. at 407. 3 Id. at 408-09. 4 Id. at 402-03, (quoting Moore v. Eagle Sanitation, 276 F.R.D. 54, 59 (E.D.N.Y. 2011)). 5 Id. at 409 (citing Dukes, 131 S. Ct. 2541 (2011)). 6 2012 WL 1072751 (S.D. Ind. Mar. 29, 2012).

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Defendant opposed the motions on grounds that plaintiffs were independent contractors as opposed to employees and could not, as a matter of law, constitute “similarly situated employees as required by § 216(b) of FLSA and Rule 23 of the Federal Rules of Civil Procedure.”7 To maintain a collective action at the initial notice stage, according to the court, plaintiffs must make a “threshold showing” that similarly situated employees exist. The court recognized, however, that when conditional certification follows substantial discovery, it may collapse two stages of the analysis and deny certification.8 Applying an intermediate standard to the conditional certification analysis, the court denied plaintiffs’ motion for conditional certification based on its view that the factual record did not support their claim that drivers were similarly situated to plaintiffs in terms of their employment relationships with defendant.9

In Scott v. Bimbo Bakeries, USA, Inc., 10 plaintiffs, delivery drivers, sued

defendants for alleged violations of the FLSA, the Pennsylvania Wage Payment and Collections Law, and the Pennsylvania Minimum Wage Act. Plaintiffs alleged that defendants maintained a nationwide policy of misclassifying delivery drivers as independent contractors, thereby denying them minimum wages and overtime pay.11 Plaintiffs filed a motion for approval of notice to potential class members and seeking conditional certification of their FLSA claims.12 The court explained that to maintain a collective action, plaintiffs must make a preliminary showing that they are similarly situated to putative class members. The court noted however, that district courts are divided as to what type of evidence is relevant to the similarly situated analysis in independent contractor misclassification cases. Some courts view evidence of similarity in light of the factors used to consider whether an individual is an employee under the FLSA, while others simply look to general similarities. Still other courts take a combined approach and look to factors relevant under the FLSA “employee test” as well as evidence of general similarities. The court applied the combined approach and found that plaintiffs made a modest factual showing to warrant conditional certification of their FLSA claims.13

In Blaney v. Charlotte-Mecklenberg Hosp. Authority,14 a group of non-exempt

nurses and nurses’ assistants sued their employer, a health care system, for compensation for time worked during meal breaks. Plaintiffs alleged that defendant required nurses and nurses’ assistants to carry a cell phone or pagers while on lunch breaks, to answer pages or calls received during their lunch break, and to return to work as needed for purposes of attending to patients. Plaintiffs alleged that these restrictions, coupled with defendant’s policy of automatically deducting 30 minutes for meal breaks regardless of whether they worked through the meal period, violated the FLSA. Plaintiffs, therefore, sought payment for the unpaid lunches and for overtime 7 Id. at *4-5. 8 Id. at *21-24. 9 Id. at *24, 32. 10 2012 WL 645905 (E.D. Pa. Feb. 29, 2012). 11 Id. at *1-3. 12 Id. at *4. 13 Id. at *8-10. 14 2011 WL 4351631 (W.D.N.C. Sept. 16, 2011).

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compensation for hours worked in excess of 40 per week as related to the unpaid lunch periods.

Plaintiffs moved to conditionally certify their claims as a collective action.

However, the parties disagreed as to whether plaintiffs need only make a minimal showing that members of the putative class were similarly situated to justify certification, or whether a more stringent standard should be applied at the initial stage since the parties had engaged in meaningful pre-trial discovery. In determining whether conditional collective action certification was appropriate, the court acknowledged that, while the first stage is usually “fairly lenient,” when there is sufficient evidence at the initial stage to make clear that certification is not appropriate, the court can collapse two stages of the conditional certification analysis and deny certification. Applying an intermediate standard, the court denied plaintiffs’ motion for conditional certification based on its view that evidence obtained during discovery did not support their claim that defendant had a common company-wide policy that required all non-exempt nurses and nurses’ assistants to be on-call and work during their lunch breaks in violation of the FLSA.15

In Perez v. Guardian Equity Mgmt., LLC,16 plaintiff, a maintenance worker at an

apartment complex, sought compensation for overtime hours he worked but was not paid. He claimed that his manager changed his time records to comply with instructions given by upper-level management to limit employees’ overtime hours. He moved for conditional certification of a class of maintenance workers at eleven apartment complexes. Defendant argued that conditional certification was improper because its written policy was to pay for all overtime hours worked, and any underpayment was caused by the manager and unique to plaintiff.17 In granting conditional certification, the district court held that the issue was not merely whether there was a single policy governing compensation but rather whether there was a common practice of deviating from that policy.18 The court found that the common policy requirement was satisfied by plaintiff’s evidence that the directive to limit employees’ overtime hours was given to the local managers at each apartment complex; that maintenance workers at other complexes told plaintiff that they were similarly underpaid; and that defendant’s policy required managers to assemble and prepare time records that were sent to a central corporate payroll director.19 With regard to the question of whether other aggrieved employees would want to join the case, the court found that although no other employees filed affidavits, the circumstances of the case allowed a relaxed showing. Specifically, where plaintiff did not work at the same facility as the other potential class members and some class members expressed a fear of retaliation for coming forward, the interest requirement was met where plaintiff testified that he had identified other maintenance workers with similar complaints.20

15 Id. at *6-11. 16 2011 WL 2672431 (S.D. Tex. July 7, 2011). 17 Id. at *7. 18 Id. at *8. 19 Id. 20 Id.

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In Walker v. Honghua America, LLC,21 defendant designed and manufactured

land rigs and offshore drilling modules. Four plaintiffs were crane operators, and four others worked as roughneck/riggers. Most of the plaintiffs were classified as independent contractors and received straight time when they worked overtime. Plaintiffs sought conditional certification of a single class of crane operators and roughneck/riggers pursuant to 29 U.S.C. § 216(b). Noting that the Fifth Circuit has not endorsed a single approach to the procedure to use for collective action certification, the district court elected to adopt the two stage approach it found articulated in Lusardi v. Xerox Corp. 22 The court held that plaintiffs met their burden under the lenient conditional certification test, which required only a minimal showing by plaintiffs that there was a reasonable basis for crediting the assertions that more than 200 aggrieved employees had not received overtime, that they are similarly situated in terms of job duties and overtime claims, and that those individuals wished to opt-in.

In Ondes v. Monsanto Co.,23 plaintiff moved for certification of a collective action

alleging that his employer failed to pay him and others similarly situated for off-the-clock work in violation of the FLSA. In support of his motion, plaintiff submitted his own sworn declaration stating that he and other employees in his classification were paid at an hourly rate and were instructed by their managers to work off-the-clock. He further testified that they were told to limit their working time because of insufficient budgeted funds to pay for all hours worked and that they were offered comp time or unpaid time off in lieu of reporting all hours worked. As such, plaintiff claimed that he and similarly situated employees were common victims of company-wide policies and practices designed to deny them payment for all hours worked. In analyzing whether plaintiff satisfied his burden of demonstrating that he and the putative collective action members were similarly situated, the court first noted that a lenient standard applied. The court then explained that plaintiff could meet his burden by making a modest factual showing sufficient to demonstrate that he and the potential class members were victims of a common policy or plan that violated the law. The court went on to find that plaintiff satisfied the lenient standard through his sworn declaration stating that the policy of requiring employees not to report all hours worked applied to all putative collective action members.

In Myles v. Prosperity Mortg., Co., 24 a former loan officer alleged that his

employer improperly classified him as exempt from overtime pay under the “outside sales” exemption. In opposition to plaintiff’s motion for collective action certification, defendant contended that the Supreme Court’s decision of Wal-Mart Stores, Inc. v. Dukes25 applies to FLSA actions such that the district court should modify the traditional two-step analysis for collective actions. Distinguishing between Rule 23 of the Federal Rules of Civil Procedure and the collective action mechanism of the FLSA, the court

21 2012 WL 1601288 (S.D. Tex. May 7, 2012). 22 118 F.R.D. 351 (D.N.J.1987). 23 2011 WL 6152858 (E.D. Mo. Dec. 12, 2011). 24 2012 WL 1963390 (D. Md. May 31, 2012). 25 131 S. Ct. 2541 (2011).

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opined that special policy considerations in the FLSA generally render Rule 23 standards inapplicable to FLSA collective actions.26 Furthermore, the court reasoned that even if it were proper to import Rule 23 standards into an FLSA case, the decision in Dukes does not suggest conditional certification is inappropriate in this case.27 Having addressed the inapplicability of Rule 23 standards, the court went on to grant the motion in part and deny it in part based on the traditional FLSA two-step analysis.28

In Jones v. SuperMedia, Inc.,29 a group of sales associates working for an

advertising firm filed a collective action alleging violations of the FLSA’s overtime provisions. Plaintiffs moved for conditional certification, and the court, in granting the motion, held that at the conditional certification stage, courts “generally require nothing more than substantial allegations that the putative class members were together the victims of a single decision, policy, or plan. . . .”30 The court found evidence that plaintiffs were similarly situated to the putative collective group because defendant failed to include commissions in calculating any inside sales associate’s overtime, and because sales associates worked unreported hours to meet sales quotas as part of an unofficial firm policy. The court also held that the declarations submitted in support of plaintiffs’ motion were evidence not of “sporadic violations arising out of individual circumstances” but of violations “stemming from a common impetus.”31

In Espinoza v. 953 Assocs.,32 plaintiffs were hourly employees who worked in

various positions at the Eatery restaurant. In addition, plaintiff worked at the Whym as a food runner. Plaintiffs sought certification of the case as a collective action under the FLSA and as a class action under NY state law pursuant to Rule 23. Plaintiffs testified they were required to clock out and continue working, that their managers reduced the hours recorded that they worked, and that they were docked for meals and breaks that they were not allowed to take. Finding that plaintiff’s time at the Whym was outside of the limitations period and too incidental, the district court only granted conditional certification to the employees at the Eatery. In finding that the employees were similarly situated for purposes of Section 216(b), the court found that plaintiffs performed essentially the same restaurant tasks and had all reported similar wage violations (i.e., hours deducted, being required to work after clocking out, etc.).

In Troy v. Kehe Food Distributors, Inc., 33 sales representatives and

merchandisers brought overtime claims under the FLSA, the Washington Minimum Wage Act, and other Washington state laws against a food distributor. Plaintiffs sought certification of a collective action under the FLSA and certification of a class under Rule 23 of the Federal Rules of Civil Procedure. The court concluded that plaintiffs were similarly situated to the members of the proposed class. It rejected defendant’s 26 Myles, 2012 WL 1963390 at *6. 27 Id. 28 Id. at *9. 29 2012 WL 995292 (N.D. Tex. Mar. 23, 2012). 30 Id. . 31 Id. 32 280 F.R.D. 113 (S.D.N.Y. 2011). 33 276 F.R.D. 642 (W.D. Wash. 2011).

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argument that Wal-Mart Stores, Inc. v. Dukes,34 precluded certification of a collective action. It noted that the courts have made clear that the FLSA’s “similarly situated” requirement is less demanding than the Rule 23 commonality requirement at issue in Dukes. It also distinguished Dukes on the grounds that in this case, no inquiry into individual supervisors’ discretionary decisions was required.35 Accordingly, the court granted certification of the FLSA collective action.

In Butler v. DirectSAT USA, LLC, 36 satellite installation technicians filed a

collective action against their employer alleging wage and overtime violations under the FLSA and state law. Plaintiffs moved for conditional certification and for facilitation of notice to the putative collective class. Defendant argued that the court should require plaintiffs to make a heightened showing through the use of an “intermediate standard” because the parties had conducted certain discovery.37 The district court found no authority within the District of Maryland supporting defendant’s argument and held that plaintiffs made a modest factual showing that they were similarly situated.38

In Creely v. HCR ManorCare, Inc.,39 plaintiffs sued the operators of assisted

living and skilled nursing facilities, alleging that defendants’ policy of automatically deducting a 30-minute meal period from employees’ electronic time records when they worked a shift of more than five or six hours resulted in violations of the FLSA. They claimed that the automatic deduction practice illegally shifted the burden of monitoring compensable time to individual employees by requiring them to take affirmative action to cancel the automatic deduction when they did not receive an uninterrupted meal break. They also contended that defendants did not ensure that employees received a proper meal break. By agreement, the parties conducted limited discovery before plaintiffs moved for conditional certification. Therefore, they were past the normal first stage for moving for conditional certification, but not yet at the second stage at the close of discovery. The issue presented was whether plaintiffs should shoulder a higher burden when moving for conditional certification. The court determined that plaintiffs’ burden at the conditional certification stage was greater than if they had not conducted the agreed upon discovery. The court engaged in an extensive discussion of the case law dealing with such an “intermediate” posture. The court concluded that the appropriate standard, although still lenient, required plaintiffs to make a showing beyond the allegations in their complaint that it is more likely that a group of similarly situated individuals may be uncovered by soliciting opt-in plaintiffs. It stated, “Plaintiffs must provide the Court with some additional evidence, even a small amount, that would tend to make it more likely that a similarly situated class exists.” Nevertheless, the court explained that it would not be proper to weigh the relative merits of the claims at this stage. The court also rejected as premature defendants’ argument that the proposed

34 131 S. Ct. 2541 (2011). 35 Id. at 651. 36 2012 WL 1203980 (D. Md. Apr. 10, 2012). 37 Id. at *4. 38 Id. at *4-5. 39 789 F. Supp. 2d 819 (N.D. Ohio 2011).

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class was unmanageable and that there were too many location-specific nuances. Those issues are more properly addressed in the stage 2 analysis.

In Hargrove v. Ryla Teleservices, Inc., 40 plaintiffs were current and former

employees of defendant’s call center in Norfolk, Virginia. The action was referred to a magistrate judge for the disposition of plaintiffs’ motion for conditional certification and judicial notice. Plaintiffs alleged they were not paid for some of their work activities. Specifically, they alleged they were required to boot up their computers, review work related e-mails and messages, and set up phone calls prior to the start of their shifts, but were not compensated for such pre-shift work. Plaintiffs also alleged that, on some occasions, they were not paid promptly and in full on their regularly scheduled paydays. Plaintiffs asserted they were similarly situated because performed the same job duties, worked in the same call center, were subject to the same performance metrics and would suffer if they were not logged into defendant’s phone and computer system at the start of their shifts, were required to perform various tasks before their shifts started, were hourly wage earners, and were frequently not paid on time. In further support of their motion, plaintiffs submitted twelve employee declarations, all of which contained essentially identical allegations and portions of defendant’s employee handbook. In support of granting plaintiffs’ motion, the court noted the low threshold for conditional class certification and rejected defendant’s arguments for a more restrictive standard.

Employee sales representatives in Karic v. Major Automotive Companies, Inc.41

sought to recover unpaid minimum wages on behalf of a class of employees from various related car dealerships. Plaintiffs alleged that they had not been paid the minimum wage for hours worked because they were only paid $20 per week, plus commission if they sold vehicles. Defendants denied that plaintiffs were not paid the minimum wage, as it believed additional discovery would demonstrate. Plaintiffs sought a declaratory judgment, unpaid wages, unpaid commissions, liquidated damages, pre-judgment interest, post-judgment interest, and an injunction requiring defendants to pay all required wages. The district court granted plaintiffs’ motion to conditionally certify a collective action against related defendant companies. The court applied the lenient conditional certification standard and refused to apply a heightened standard used by some courts after discovery has occurred because “while the parties have engaged in discovery for several months . . . discovery is far from complete.”42 Given the lenient standard, the court included defendant entities for which plaintiffs had not provided a specific affidavit. It did this in light of allegations in the complaint that all defendant entities are commonly owned and operated by the same individuals who set a common policy and testimony from eight plaintiffs working at various locations.

In Smith v. Pizza Hut, Inc.,43 plaintiffs were current and former delivery drivers

alleged defendant failed to reimburse them properly for vehicle related expenses and, therefore, failed to pay them minimum wage under the FLSA. In opposing plaintiffs’

40 2012 WL 489216 (E.D. Va. Jan. 3, 2012). 41 799 F. Supp. 2d 219 (E.D.N.Y. 2011). 42 Id. at 225. 43 2012 WL 1414325 (D. Colo. April 12, 2012).

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motion for conditional certification, defendant argued that the court should apply a stricter standard than the lenient “notice stage” standard because some discovery had taken place prior to plaintiffs filing their motion. Consistent with prior district court decisions in the Tenth Circuit, the district court declined to bypass the first stage analysis. The court stated that following both steps of the two-step certification approach would result in the least risk of prejudice to both parties. If the court bypassed the first, notice stage, “some potential plaintiffs might not become aware of the lawsuit and would not have the opportunity to join the suit.”44 By contrast, the court found that “delaying the second stage review risks little harm to Defendant, who will be free to move for decertification at the close of discovery,” particularly where discovery had not been completed.45 Because the prejudice to plaintiffs in bypassing the initial notice stage outweighed the prejudice to defendant in delaying the second stage, the court held that the notice stage standard was appropriate. The court ultimately granted plaintiffs’ motion for conditional certification.

In Tice v. AOC Senior Home Health Corp.,46 a group of licensed vocational

nurses brought overtime claims under the FLSA against a health care corporation. Plaintiffs moved for conditional certification and the district court noted that the Fifth Circuit has acknowledged two different approaches that may be used in deciding whether to certify a collective actions and authorize notice: (1) the Lusardi two-stage approach; and (2) the Shushan “spurious class action” approach.47 The court decided to apply the Lusardi approach, the prevailing standard among federal courts. Under Lusardi, certification is divided into two stages: the notice stage (conditional certification) and the merits stage (which typically occurs after discovery is mostly complete). The court described the standard applied during the first stage as follows. The plaintiff bears the burden of presenting preliminary facts showing that a similarly situated group of potential plaintiffs exists. The determination is made under a “fairly lenient standard requiring nothing more than substantial allegations that putative class members were victims of a single decision, policy, or plan.”48 The court should satisfy itself that the potential plaintiffs are “similarly situated” regarding their job requirements and pay provisions, but they need not have identical positions. Although the preliminary factual showing is lenient, it must be based on a personal knowledge of the facts. The court determined that, based on the declarations of the plaintiffs and another potential class member, plaintiffs had sufficient evidence warranting conditional certification and notice to class members and granted plaintiffs’ motion.49

In Titchenell v. Apria Healthcare Inc.,50 a customer service specialist brought suit

against defendant for regular and overtime compensation under the FLSA for off-the-

44 Id. at *4. 45 Id. at *4. 46 826 F. Supp. 2d 990 (E.D. Tex. 2011). 47 Id. at 994. 48 Id. at 995. 49 The court also rejected defendant’s arguments that plaintiffs failed to: (1) identify any potential class members besides themselves and (2) show that other potential class members are similarly situated due to potential differences in job duties and work schedules. See Tice, 826 F. Supp. 2d at 995-96. 50 2011 WL 5428559 (E.D. Pa. Nov. 8, 2011).

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clock work. Plaintiff moved for conditional certification, and the district court noted that at the conditional certification stage, a court makes a “preliminary inquiry” into whether the plaintiff and the proposed group are similarly situated, an inquiry that “occurs early in the litigation when minimal evidence is available to the court.”51 The court explained that courts in the Third Circuit are divided on the appropriate standard for conditional certification. Some courts have held that a “mere allegation” that an employer’s policy has harmed other plaintiffs is sufficient, while others have required a “modest factual showing” that the similarly situated requirement is satisfied. 52 If discovery has commenced and the parties submit evidence to support their positions, the more stringent test is appropriate.53 As discovery had already begun, the court considered plaintiff’s motion under the “modest factual showing” standard, which required plaintiff to provide some modest evidence, beyond pure speculation, that defendant’s policy affected other employees.”54 The court noted that without evaluating the merits of the case, a court must determine whether the proposed class consists of similarly situated employees who were “collectively the victims of a single decision, policy, or plan” but held that plaintiff met this standard and granted conditional certification.55

In Troncone v. Velahos,56 a sales representative brought minimum and overtime

wage claims under the FLSA against an organization that provided foreclosure prevention services, a defendant law firm affiliated with the organization, and individual defendants who were attorneys at the law firm.57 Plaintiff sought to skip the conditional certification stage and move directly to final certification of an opt-in FLSA collective action. The court concluded that it could not certify the collective action, because none of the members of the proposed class had joined the lawsuit by consenting in writing, as required by Section 216.58 Also, it did not have a complete list of opt-in class members, so it could not determine whether the class included any parties exempt from the FLSA. The court held, however, that plaintiff was entitled to conditional certification, because at the conditional certification stage, a court determines whether the proposed class consists of similarly situated employees, which involves a “fairly lenient standard” and often requires “nothing more than substantial allegations that the putative class members were together victims of a single decision, policy, or plan infected by discrimination.”59 Based on the allegations in the complaint and certifications of two other sales representatives, the court sua sponte granted conditional certification.

51 Id. at *3. 52 Id.. 53 Id. 54 Id. (citing Smith v. Bancorp, Inc., 2003 WL 22701017, at *3 (E.D. Pa. Nov. 13, 2003)). 55 Id. 56 2011 WL 3236219 (D.N.J. July 28, 2011). 57 Plaintiff also brought claims under New Jersey state law and sought to certify a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure. Id. at *1. The court declined to exercise supplemental jurisdiction over some of the claims and found that it did not have supplemental jurisdiction over the other claims, dismissing all of the state law claims. See id. at *5-7. 58 Id. at *3. 59 Id. at *4 (citation omitted).

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Plaintiffs in MacGregor v. Farmers Ins. Exch. 60 were property claims representatives who brought FLSA claims against defendant for uncompensated work performed in excess of 40 hours per week. Plaintiffs claimed that a supervisor approval process resulted in denial of overtime compensation. The court denied plaintiffs’ motion, despite recognizing the lenient standard applied at the notice stage. Applying the principles of Wal-Mart Stores, Inc. v. Dukes,61 it held individualized determinations predominate and thus not subject to the efficiencies of collective action treatment. It found that where violations stem from enforcement decisions of supervisors without a companywide policy directing such decisions, collective treatment is not appropriate. However, the court noted that had plaintiffs submitted even “modest factual support” of an unwritten policy requiring supervisors to deny overtime, collective treatment may have been appropriate.

In Mitchell v. Acosta Sales, LLC, 62 plaintiffs, who were former non-exempt

merchandisers, sought to conditionally certify a collective class of similarly situated individuals to recover for alleged overtime violations. The initial step in the certification process is for the court to review the pleadings and any affidavits to determine whether notice should be issued to the potential class. The court noted that the determination is made “under a fairly lenient standard and typically results in conditional class certification,” since there is only a “limited amount of evidence generally available to the court at this stage of the proceedings.”63 Further, courts “tend to require nothing more than substantial allegations that the putative class members were together the victims of a single decision, policy, or plan”64 if “supported by affidavits which successfully engage a defendant’s affidavits to the contrary.”65 The court pointed out that “unsupported assertions of widespread violations” are insufficient to overcome the first hurdle of the certification procedure. 66 Ultimately, the court granted plaintiffs’ motion after considering plaintiffs’ declarations, deposition testimony, and verified interrogatory responses, which accomplished the “modest factual showing” required at the first stage of the certification procedure to show that the nationwide wide group was similarly situated.67

In Lang v. DirecTV, Inc.,68 a group of satellite technicians filed a collective action

alleging, among other things, violations of minimum wage, overtime, and record keeping laws under the FLSA and Louisiana state law. In analyzing plaintiffs’ motion for conditional certification, the court considered three approaches: the Lusardi v. Xerox

60 2011 WL 2981466 (D.S.C. July 22, 2011). 61 131 S. Ct. 2541 (2011). 62 841 F. Supp. 2d 1105 (C.D. Cal. Dec. 16, 2011). 63 Id. at 1115 (quoting Edwards v. City of Long Beach, 467 F. Supp. 2d 986, 989-90 (C.D. Cal. 2006) (citations omitted)). 64 Id. (quoting Sarviss v. Gen. Dynamics Info. Tech., Inc., 663 F. Supp. 2d 883, 903 (C.D. Cal. 2009) (citation omitted)). 65 Id. (quoting Trinh v. JP Morgan Chase & Co., 2008 WL 1860161 (S.D. Cal. Apr. 22, 2008)). 66 Id. at 1115 (quoting Edwards, 467 F. Supp. 2d at 989-90) (citations omitted)). 67 Id. at 1117. 68 2011 WL 6934607 (E.D.La. Dec. 30, 2011).

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Corp. analysis,69 the Shushan v. Univ. of Colorado70 analysis, and the so-called “hybrid” analysis, which was a combination of the two analyses.

First, the court explained that the Lusardi standard requires that at the initial

“notice stage” plaintiffs need only establish that there is a reasonable basis to support their allegation that a class of similarly situated persons exists, that the putative collective members are similarly situated, and that there are other individuals who want to opt in to the lawsuit. If conditional certification is granted then as the case continues, Lusardi applies a three factor test considering (1) the extent to which employment settings are similar or disparate; (2) the extent to which any of the employer’s defenses are common or individualized; and (3) fairness and procedural concerns. Second, the court reviewed the Shushan approach, known as the spurious class action approach. Under that approach, plaintiff must prove the existence of a definable, manageable class and that show that plaintiffs are proper representatives of that class, including fulfilling the requirements of Rule 23. Third, the court considered the hybrid approach, which requires plaintiffs to demonstrate identifiable facts or a legal nexus to bind the claims so that hearing the cases together promotes judicial efficiency.

Ultimately, the court applied the Lusardi approach and granted plaintiffs’ motion. In Lawson v. Bell South Telecomm., Inc.,71 a group of field managers filed a

collective action, alleging that they were misclassified as exempt executive or administrative employees and their responsibilities did not satisfy the duties tests for any of the FLSA exemptions. In support of their motion for conditional certification, plaintiffs presented a “Day in the Life” document, which established what plaintiffs were required to do at each time of the day. The court granted plaintiffs’ motion, finding that plaintiffs’ evidence established that all field managers shared similar job duties and daily routines and alleged the same unlawful treatment.

B. Scope of Discovery Prior to Conditional Certification

1. Cases Denying Discovery

b. Cases Granting Notice and Noting No Need to Await Discovery In Guifu Li v. A Perfect Franchise, Inc.,72 a class of current and former massage

therapists who were classified as independent contractors brought a suit against corporate and various individual defendants alleging FLSA violations. Plaintiffs moved for conditional certification of the action under the FLSA. To determine whether conditional certification at the initial “notice stage” was proper, the court noted it required little more than substantial allegations, supported by declarations or discovery, that “the putative class members were together the victims of a single decision, policy, or plan.”

69 118 F.R.D. 351 (D.N.J. 1987). 70 132 F.R.D. 263 (D. Colo. 1990). 71 2011 WL 3608462 (N.D. Ga. Aug. 16, 2011). 72 2011 WL 4635198 (N.D. Cal. Oct. 5, 2011).

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Recognizing that the analysis is “lenient” at the first step, the court noted that generally courts rely on only the pleadings and any affidavits. Based on the evidence submitted, the court found that the putative class members had substantially similar experiences, and thus, a collective action would promote judicial efficiency.73

2. Cases Granting Discovery

In Allen v. Mill-Tell, Inc.,74 satellite technicians alleged that defendant violated the FLSA by failing to pay earned overtime compensation and violated state law by wrongfully withholding or deducting earned wages. Before conditional certification of the FLSA collective action and Rule 23 certification of the state law claim, plaintiff moved to compel discovery by defendants. The district court granted the motion in part and denied it in part. The court stated that while generally pre-certification discovery should pertain to the requirements of Rule 23 or the requirements for conditional certification under the FLSA, that principle was not to be strictly applied. The court held that plaintiffs were entitled to the names and contact information for the putative class members but that further discovery at that stage as to putative class members would not be allowed. The court also allowed discovery that went to the merits of the named plaintiff’s claims because such information would be relevant even if the certification was eventually denied.

In Robinson v. Ryla Teleservices,75 customer service representatives brought FLSA claims against an Alabama call center for failing to pay them for time spent working before logging onto the timekeeping system, and for failing to timely pay them during certain pay periods. The district court permitted defendant an opportunity to conduct limited discovery prior to requiring it to respond to plaintiffs’ motion for conditional certification. Ultimately, the court granted plaintiffs’ motion. In doing so, it rejected defendant’s argument that because some discovery had taken place, it should apply a higher standard for determining conditional certification. In applying the low standard for the initial stage of certification, the court found that plaintiffs were similarly situated because they all worked in the same or similar positions with nearly identical duties, and alleged the same FLSA violations. The court declined defendant’s invitation to apply Wal-Mart Stores, Inc. v. Dukes76 to the case, noting that “if applicable at all, Dukes is not applicable at the first step of the two-step collective action certification process.”77 Lastly, although defendants argued that plaintiffs’ claims did not arise from a common policy but rather, from ad hoc decisions by management, the court refused to resolve this factual issue in the current motion.78

In Simons v. Pryor’s, Inc.,79 a restaurant manager brought an action on behalf restaurant managers and assistant managers who worked at two different restaurant 73 Id. at *4-6. 74 2012 WL 1344991 (D. Kan. Apr. 18, 2012). 75 2011 WL 6667338 (S.D. Ala. Dec. 21, 2011). 76 131 S. Ct. 2541 (2011). 77 Robinson, 2011 WL 6667338 at *3. 78 Id. at *4. 79 2011 WL 3158724 (D.S.C. July 26, 2011).

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chains, alleging that their exempt status was lost due to improper pay deductions. Specifically, plaintiff alleged that defendants had a written policy and practice under which they took payroll deductions “based on the quantity and/or quality of work,” including deductions for cash register shortages, losses resulting from a failure to follow company check and credit card policies, property damage, etc. Plaintiff moved for conditional certification. The district court denied the motion, finding that plaintiff failed to establish that the policy and practice of allegedly making improper deductions was applied broadly to salaried managers at all restaurants for both chains, that plaintiff relied upon a broad and ill-defined group of alleged improper deductions, and that plaintiff failed to make a threshold showing that the deductions were improper. The court, however, found that plaintiff “made a sufficient showing to persuade the court to leave open the possibility of later certification.”80 Thus, the district court denied the motion without prejudice and ordered the parties to engage in limited discovery specifically related to conditional certification, including written discovery, the deposition of all individuals who provided affidavits, and the deposition of defendants’ representative who drafted the policy at issue.

3. Cases Addressing Whether Discovery of Names and Addresses of

Potential Opt-In Plaintiffs Is Appropriate in Advance of Conditional Certification

In Allen v. Mill-Tell, Inc.,81 satellite technicians alleged that defendant violated the

FLSA by failing to pay earned overtime compensation and violated state law by wrongfully withholding or deducting earned wages. Before conditional certification of the FLSA collective action and Rule 23 certification of the state law claim, plaintiff moved to compel discovery by defendants. The court granted the motion in part and denied it in part. The court stated that while generally pre-certification discovery should pertain to the requirements of Rule 23 or the requirements for conditional certification under the FLSA, that principle was not to be strictly applied. The court held that plaintiffs were entitled to the names and contact information for the putative class members but that further discovery at that stage as to putative class members would not be allowed. The court also allowed discovery that went to the merits of the named plaintiff’s claims because such information would be relevant even if the certification was eventually denied.

In Flowers v. MGTI,82 a group of restaurant servers alleged that defendant failed

to pay them for all hours worked and overtime, improperly maintained a tip pool with ineligible employees, and required them to pay for broken glasses and walkout tabs from tips. Plaintiffs sought certification and also sought expedited discovery to obtain the names, last known addresses, phone numbers, dates of birth, and social security numbers of other potential plaintiffs. After granting conditional certification, the court granted the discovery request in part but limited discovery to the names, addresses, and phone numbers of potential class members. The district court noted, however, that

80 Id. at *9. 81 2012 WL 1344991 (D. Kan. Apr. 18, 2012). 82 2012 WL 1941755 (S.D. Tex. May 29, 2012).

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if notices were returned to plaintiffs’ counsel as undeliverable, then defendants were required to produce social-security numbers and dates of birth for the unaccounted for individuals.83

C. Issues Courts Have Considered in Determining Whether to Grant

Conditional Certification

1. Geographical Scope

In Yerger v. Liberty Mut. Group, Inc.,84 a field auditor for an insurance company claimed that her employer violated the FLSA when it failed to pay her and other similarly situated field auditors overtime wages. Plaintiff moved to conditionally certify a nationwide collective action, submitting six declarations that showed defendant expected field auditors to work more than 40 hours per week and did not pay them overtime compensation. In denying the motion, the district court found that the six declarations were not representative of the nationwide class plaintiff sought to represent. All six declarants worked for only one of defendant’s three business units, and all but one of the declarants worked in the southeastern United States. The court concluded that plaintiff’s evidence, at best, demonstrated a common policy among one business unit in a single region of the United States, but did little to establish that plaintiff was similarly situated to the nationwide class she sought to represent.85

In Myles v. Prosperity Mortg., Co., 86 a former loan officer alleged that his

employer improperly classified him as exempt from overtime pay under the “outside sales” exemption. In opposition to plaintiffs’ motion for collective action certification, defendant contended that plaintiff failed to demonstrate that a similarly situated group of potential plaintiffs exists. While the district court found sufficient evidence had been presented as to potential plaintiffs from one particular entity, called Long and Foster, the evidence was unspecific and contradicted as to other offices.87 Defendant contended that conditional certification should be limited to those states in which declarants worked. The court, however, declined to limit the proposed class by geography at this conditional stage due to the fact that defendant conceded that it categorized all loan officers as exempt, and not just those in particular states. As such, the court granted conditional certification in part, conditionally certifying a class consisting of current and former employees who worked as loan officers for the Long and Foster offices.88

In Aponte v. Comprehensive Health Mgmt., Inc.,89 plaintiffs, benefits consultants

for a health care services provider, moved for conditional certification of their overtime claims. Plaintiffs alleged they all performed the same or similar job duties by providing promotional services for defendants. The district court, having found sufficient similarity 83 Id. at *5. 84 2011 U.S. Dist. LEXIS 131997 (E.D.N.C. Nov. 15, 2011). 85 Id. at *15-16, 20. 86 2012 WL 1963390 (D. Md. May 31, 2012). 87 Id. at *7. 88 Id. at *10-11. 89 2011 WL 2207586 (S.D.N.Y. June 2, 2011).

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and uniformity in plaintiffs’ positions across both products and geographic regions, granted conditional certification. The court found that the evidence presented showed that plaintiffs’ primary job responsibilities and qualifications were largely similar from region to region, as defendants’ job description corroborated. Likewise, plaintiffs’ primary job responsibilities in relation to products were also similar, as they promoted the same types of health plans. The court dismissed defendants’ argument that plaintiffs and opt-in plaintiffs were not similarly situated because some benefits consultants signed separation agreements potentially waiving and releasing a variety of employment-related claims, finding that this “discrete issue” at the preliminary stage did not preclude a finding of similarity.90

In McGlone v. Contract Callers, Inc.,91 a field service representative sought

conditional certification of his FLSA claim. Plaintiff alleged that defendants treated all of these employees the same by: (1) automatically deducting break time despite occasions when an uninterrupted 30-minute break did not exist; and (2) requiring the employees to perform work-related responsibilities before clocking in or after clocking out. Defendant opposed the motion on evidence that each office was a standalone division based upon its geographical location. Because plaintiff’s claim of company-wide policies was based on “information and belief,” rather than personal knowledge, the district court held that plaintiff had not satisfied his burden of showing that a nationwide collective action was appropriate. The court did, however, find that plaintiff demonstrated sufficient personal knowledge of alleged violations and directives of supervisors in the New York division and, therefore, certified a modified class of employees in plaintiff’s position in New York.

In Diaz v. S & H Bondi’s Dept. Store,92 store employees sought conditional

certification for their regular and overtime FLSA compensation claims against a department store. Because plaintiffs submitted evidence and affidavits that they had been required to work up to 60 hours per week without overtime at two of defendant’s three department store locations, and all locations were overseen by the same management personnel, the district court found that plaintiffs had carried their burden of proof for conditional certification of all employees at all three stores.93

In Flowers v. MGTI, 94 a group of restaurant servers moved for conditional certification. In deciding the motion, the district court explained that, although the initial step in the Lusardi two-step conditional approach entails a lenient standard generally based only on pleadings and supporting affidavits, plaintiffs still must show that the putative class members were together the victims of a single decision, policy, or plan.95 Even though plaintiffs established a sufficient basis to extend certification to defendant’s Houston location, the court held that “FLSA violations at one of a company’s multiple locations generally are not, without more, sufficient to support company-wide notice.”96 90 Id. at *6. 91 2012 WL 1174722 (S.D.N.Y. Apr. 9, 2012). 92 2012 WL 137460 (S.D.N.Y. Jan. 18, 2012). 93 Id. at *6. 94 2012 WL 1941755 (S.D. Tex. May 29, 2012). 95 Id. at *2. 96 Id. at *4.

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The court concluded that the employer’s Milwaukee office would not be included in the action because plaintiffs did not show that they were impacted by a policy stemming from that location.

In Johnson v. VCG Holding Corp.,97 two disc jockeys moved for conditional class

certification on minimum wage claims against a defendant corporation that owned several adult entertainment nightclubs. Plaintiffs alleged they not exempt “tipped employees” under the FLSA, because they did not receive more than $30 per month in tips from customers and money they received from dancers at the nightclub did not count as tips. Plaintiffs sought certification of a class that included all disc jockeys at all of the employer’s locations. One of the emcees previously worked for the employer at two different locations and was paid less than minimum wage at both locations. Though denying conditional certification on other grounds, the district court held that “[i]n light of the fairly lenient standard at the notice stage,” the employee’s experience at two different clubs was sufficient to justify conditional certification at the employer’s other out-of-state locations.98 The court noted that based on significant differences in the experiences and duties of disc jockeys, discovery may reveal variation in the activities, duties, and compensation. However, the court said that these differences are best considered after discovery has provided a more accurate record.

In Delano v. MasTec, Inc.,99 plaintiffs, a group of satellite installation and service technician's filed a collective action against defendant, a subcontractor of DirecTV. Plaintiffs alleged that they were not paid for time spent: (1) traveling to and from each job assignment; (2) obtaining necessary tools and equipment; (3) closing out assigned jobs through a central call system; and (4) at job sites where the installation or service order was not completed or cancelled. Plaintiffs also alleged the employer had a policy of encouraging employees to underreport time and to limit reported time to 40 hours a week. Plaintiffs moved for conditional certification and court-facilitated notice to other installation and repair technicians working for defendant at all locations in Florida. The court denied the motion, holding that consents of technicians in Georgia and North Carolina could not establish the existence of Florida technicians who wished to join the lawsuit and disregarded a Florida technician who had opted in but had already been compelled to arbitration.

In Guillen v. Marshalls of MA, Inc.,100 plaintiff, a former assistant store manager,

sued Marshalls alleging that defendants failed to pay him overtime. After denying plaintiff’s motion for conditional approval as a nationwide collective action, the district court considered a second motion whereby plaintiff sought to include in the collective action all assistant store managers at defendants’ stores nationwide, except for those in California. At the time of consideration of the second motion, a number of assistant store managers in the New York City area had since joined the action. Although defendants asserted that assistant store managers are exempt from FLSA overtime

97 802 F. Supp. 2d 227 (D. Me. 2011). 98 Id. at 235-36. 99 2011 WL 2173864 (M.D. Fla. June 2, 2011). 100 841 F. Supp. 2d. 797 (S.D.N.Y. 2012).

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requirements, plaintiffs alleged they performed a number of non-exempt duties, such as cleaning, sweeping, bagging products, and taking out the garbage. However, the court noted that plaintiffs failed to provide any evidence that assistant store managers nationwide were performing such non-exempt tasks, and, as a result, denied the motion.

In D’Antuono v. C & G of Groton, Inc,101 exotic dancers brought a collective

action alleging that defendants misclassified them as independent contractors. Plaintiff sought to conditionally certify a collective class comprising of exotic dancers who worked at two of defendant’s clubs. The district court granted the motion as to one of the two locations. The district court determined that, as to one of the clubs, the affidavits and deposition testimony constituted a sufficient preliminary showing that all putative plaintiffs held the same or similar positions, the same or similar duties, and were all designated, as a class, as independent contractors. The court found this modest factual showing sufficient to demonstrate that plaintiff and potential plaintiffs were victims of a common policy or plan that violated the law for purposes of issuing notice. As to the second club, the district court held that plaintiff did not allege sufficient facts to support her claim that the two club locations are “not autonomous,” nor did plaintiff offer specific allegations from exotic dancers who performed at the second club location.102

In Mitchell v. Acosta Sales, LLC,103 plaintiffs, who were former non-exempt

employees who had worked as merchandisers for defendants, sought to conditionally certify a collective class for overtime violations. The court granted plaintiffs’ motion to conditionally certify the collective class, after considering plaintiffs’ submission consisting of declarations, deposition testimony, and verified interrogatory responses, which accomplished the “modest factual showing” they were required to make at the first stage of the certification procedure to substantiate that they and other merchandisers employed by defendants nationwide were similarly situated.104

In Bobbitt v. Broadband Interactive, Inc.,105 plaintiffs, a group of technicians,

moved for conditional certification alleging that defendant violated the FLSA and Florida law by failing to pay them minimum wages and overtime pay prior to their reclassification from independent contractors to employees. Plaintiffs also moved to facilitate court-authorized notice to a putative class of technicians who performed work for defendant throughout the state of Florida. Defendant objected to the geographic scope of the proposed class and sought to limit the class to collections/disconnect technicians who worked in Hillsborough County, Florida, which is the county where the largest number of technicians worked. Defendant argued that a Florida class would not be appropriate because technicians in different county areas were not similarly situated with regard to service areas, points of contact, operating procedures, technical job

101 2011 WL 5878045 (D. Conn. Nov. 23, 2011). 102 Id. at * 6. 103 841 F. Supp. 2d 1105 (C.D. Cal. Dec. 16, 2011). 104 Id. at 1117. 105 2012 U.S. Dist. LEXIS 71628 (M.D. Fla. May 23, 2012).

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requirements, and pay rates. Alternatively, defendant sought to limit the putative class to the counties where plaintiffs and opt-in plaintiffs performed work, arguing that these were the only counties from which plaintiffs demonstrated that sufficient interest in joining the lawsuit existed. The court concluded that plaintiffs’ declarations had sufficiently demonstrated that Florida technicians were similarly situated in terms of work performed and manner of payment, and that other technicians in Florida were interested in joining the lawsuit. Accordingly, the court granted plaintiffs’ motion to conditionally certify a FLSA collective class of all technicians in Florida.106

2. Variance in Job Duties

In Faust v. Comcast Cable Commc’ns Mgmt., LLC.,107 call center employees brought overtime claims for work performed off- the-clock. Plaintiffs alleged that, although they were only paid for scheduled time worked, they were required to arrive prior to their scheduled start time in order to boot up their computers, open necessary software applications and review important company emails so that they would be ready to accept calls at their scheduled start time. The district court granted plaintiffs' motion for conditional certification as to all employees at one of defendant’s call centers whose primary duty was to perform telephone customer service, rejecting defendant’s argument that plaintiffs and the proposed members of the collective action were not similarly situated because they worked in different departments and had different schedules, job duties, performance goals, supervisors and managers. The court concluded that such differences were irrelevant since all potential members of the collective action “share[d] the common complaint that they were encouraged to work off the clock but did not receive overtime pay.”108 The court noted that the evidence plaintiffs presented suggested that the practice was “not limited to just one rogue supervisor but [was] a call center-wide problem.”109

In Yerger v. Liberty Mut. Group, Inc., 110 plaintiff brought an overtime claim

against defendant insurance company on behalf herself and similarly situated field auditors nationwide. In support of her motion for conditional certification, plaintiff submitted declarations from six field auditors, in which the declarants asserted that defendant expected field auditors to work more than 40 hours each week and did not pay overtime compensation for such work.111 Defendant opposed plaintiff’s motion, arguing that plaintiff had failed to demonstrate that she was similarly situated to the nationwide class she sought to represent. While field auditors performed similar work, defendant argued that each of its three business units was distinct and separately managed, such that the work performed by field auditors in another business unit significantly differed.112 To maintain a collective action, according to the court, the potential class members need not hold identical positions, but there must at least be a 106 Id. at *15-18. 107 2011 WL 5244421 (D. Md. Nov. 1, 2011). 108 Id. at *5. 109 Id. 110 2011 U.S. Dist. LEXIS 131997 (E.D.N.C. Nov. 15, 2011). 111 Id. at *15. 112 Id. at *9, 13.

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similarity as to “coverage, exemption, or nonpayment o[f]. . . overtime arising from at least a manageably similar factual setting with respect to their job requirements and pay provisions[.]”113 The court denied plaintiff’s motion to certify the collective action, finding that the employees were not similarly situated because work performed by field auditors substantially differed from the work of other field auditors employed by defendant.114

In Blaney v. Charlotte-Mecklenberg Hosp. Authority,115 non-exempt nurses and

nurses’ assistants brought a collective action alleging that defendant, a health care system, violated the FLSA by failing to pay for time worked during meal breaks. To maintain a collective action, according to the court, plaintiffs must make a factual showing that they and the other putative collective action members “were victims of a common policy or plan that violated the law.”116 Plaintiffs alleged that defendant maintained an unlawful common policy requiring plaintiffs to be on-call during unpaid lunch periods, which often resulted in their lunch periods being interrupted, and a policy of automatically deducting meal break time, even when plaintiffs worked through all or part of their breaks.117 Defendant countered with evidence that the only “common policy” was one that required full compensation for all hours worked; and argued that the policies plaintiffs complained of were entirely dependent on decentralized management practices. Defendant further showed that wide variances existed with respect to on-call requirements across facilities and whether employees were required to take cell phones or pagers with them on meal periods. In addition, variations existed in the scheduling of meal break periods, the manner in which meal breaks were taken, and how to account for missed or interrupted meal breaks. According to defendant, these variations required individualized assessments, making the case inappropriate for collective action treatment.118 The district court agreed and denied plaintiffs’ motion for conditional certification.119

In Alli v. Boston Market Co.,120 plaintiffs holding the positions assistant general

manager, culinary manager and hospitality manager at Boston Market Restaurants asserted FLSA overtime claims alleging that defendant misclassified these positions as exempt from FLSA. Plaintiffs supported their motion for collective action with evidence that there was no relevant difference in the duties of these various restaurant manager positions and that defendant ran its restaurants according to uniform policies in matters such as food safety, food handling, and food preparation dictated by corporate headquarters. Plaintiffs also submitted evidence that all training for the three positions was done pursuant to detailed guidelines set by corporate headquarters. In granting the motion, the district court ruled that this evidence satisfied plaintiffs’ modest burden of submitting evidence that the positions in question performed similar work at each of the restaurants. 113 Id. at *11-12. 114 Id. at *19-20. 115 2011 U.S. Dist. LEXIS 105302 (W.D.N.C. Sept. 16, 2011). 116 Id. at *18-19. 117 Id. at *4-5. 118 Id. at *22-26. 119 Id. at *36. 120 2011 WL 4006691 (D. Conn. Sept. 8, 2011).

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In Aponte v. Comprehensive Health Mgmt., Inc.,121 plaintiffs, benefits consultants

for a health care services provider, moved for conditional certification of their overtime claims. Plaintiffs alleged they all performed the same or similar job duties by providing promotional services for defendants. The district court, having found sufficient similarity and uniformity in plaintiffs’ positions across both products and geographic regions, granted conditional certification. The court found that the evidence presented showed that plaintiffs’ primary job responsibilities and qualifications were largely similar from region to region, as defendants’ job description corroborated. Likewise, plaintiffs’ primary job responsibilities in relation to products were also similar, as they promoted the same types of health plans. The court dismissed defendants’ argument that plaintiffs and opt-in plaintiffs were not similarly situated because some benefits consultants signed separation agreements potentially waiving and releasing a variety of employment-related claims, finding that this “discrete issue” at the preliminary stage did not preclude a finding of similarity.122

In Lawson v. Bell South Telecomm., Inc., 123 defendant opposed plaintiffs'

conditional certification motion and argued that there was so much variation in job duties and responsibilities among the putative group that certification was improper. However, the court granted plaintiffs’ motion, noting that defendant classified all of the field managers as exempt from the FLSA’s overtime provisions and that members of defendant’s upper management admitted that field technicians nationwide had the same job duties.

Plaintiff in Jenkins v. TJX Companies Inc.124 sought conditional certification of a

nationwide collective action, in which he alleged that defendants misclassified Assistant Store Managers (ASMs) as exempt from the FLSA’s overtime requirements. In support of the motion, plaintiff submitted (1) evidence that defendants used a common job description and the same training materials for all ASMs nationwide, (2) testimony from company representatives that defendants designated the same “roles and responsibilities” for all ASMs, (3) his own deposition testimony that he primarily performed non-exempt work, and (4) a one page excerpt from an expert report purporting to show a breakdown of the tasks performed by ASMs at unidentified stores. The district court denied conditional certification, without prejudice, because it found that plaintiff failed to demonstrate that putative class members were “similarly situated” with regard to their job duties. It noted that where “the Plaintiff proposes a nationwide class, he must ultimately demonstrate a nationwide policy pursuant to which ASMs are assigned duties that render [defendants’] exempt classification inappropriate.” 125 Evidence of common training materials, job descriptions, and similar “roles” did not suffice because none of that evidence indicated that employees performed common, non-exempt duties. The court explained that a “common national policy regarding job

121 2011 WL 2207586 (S.D.N.Y. June 2, 2011). 122 Id. at *6. 123 2011 WL 3608462 (N.D. Ga. Aug. 16, 2011). 124 853 F. Supp. 2d 317 (E.D.N.Y. 2012). 125 Id. at 321.

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responsibilities” does not support conditional certification “where the plaintiff is not attacking the defendant’s formal job policies, but rather is asserting that [employees] were not given duties in compliance with those policies . . . .”126 Plaintiffs’ deposition testimony regarding his own job duties did not demonstrate that other ASMs performed similar duties. In addition, although the court noted that expert analysis of employees’ actual job duties “could reveal that other . . . ASMs predominantly performed non-exempt work,” it could not draw any conclusions from the one page report that plaintiff submitted because it was “so vague that any inference the Court might draw would be completely speculative . . . .”127

In Jacob et al. v. Duane Reade, Inc., et al., 128 a group of assistant store

managers (ASMs) who were classified as exempt, brought an FLSA collective action against a retailer, alleging they were misclassified and worked hours in excess of 40 per week. In opposition to plaintiffs’ motion for conditional certification, defendant argued, among other things, that plaintiffs failed to demonstrate that all ASMs were similar situated. In support, defendants submitted deposition testimony and declarations from current employees. However, the district court declined to weigh the competing testimony that plaintiffs and defendants had submitted. In rejecting defendants’ argument, the district court further observed that the issue is “not whether Plaintiffs and other ASMs were identical in all respects, but ‘rather whether they were subjected to a common policy to deprive them of overtime pay when they worked more than 40 hours per week.’”129 If defendant’s logic was extended, no group of opt-in plaintiffs “would ever be ‘similarly situated’ unless they were clones of one another working in completely identical stores, in identical neighborhoods, with identical clientele.’”130 Finally, the district court observed that defendants do not consider the differences in the ASMs job duties sufficient to require defendant to undertake an individual analysis before it categorically classified all ASMs as exempt from the FLSA.

In Richardson v. Wells Fargo Bank, N.A.,131 plaintiffs, a group of non-exempt “personal bankers,” filed a collective action alleging that defendant unlawfully denied them overtime pay by “promulgat[ing] compensation policies and practices” requiring plaintiffs to work off-the-clock. The parties engaged in months of discovery before plaintiffs moved for conditional certification and class notice. Although the court found that plaintiffs were similar with respect to their job duties and allegations, it denied certification because plaintiffs failed to show that defendant had a national company-wide decision, policy, or plan to deny personal bankers overtime pay.132

In Romero v. Mountaire Farms,133 2,000 chicken processing plant employees

sought compensation for time spent obtaining and donning their sanitary and protective 126 Id. at 322-23 127 Id. at 322. 128 2012 WL 260230 (S.D.N.Y. Jan. 27, 2012). 129 Id. at *8 130 Id. (quoting Demassia v. Duane Reade, Inc., 2006 WL 2853971, at *21 (S.D.N.Y. Oct. 5, 2006)). 131 2012 WL 334038 (S.D. Tex. Feb. 2, 2012). 132 Id. at 4-6. 133 796 F. Supp. 2d 700 (E.D.N.C. 2011).

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equipment before and after their scheduled time on the processing line and before and after their unpaid meal breaks. The district court granted plaintiffs’ motion for conditional certification in part and narrowed both the class definition and the claims. First, the court narrowed the class definition to include only employees who were paid on a “gang time” or “line time” system, in which employees had a scheduled start time but varying end times. Second, the court found that time spent donning and doffing before and after the employees’ unpaid meal breaks was not compensable under the FLSA. It narrowed the class definition to exclude this time.134

In Davis v. Mostyn Law Firm, P.C,135 a group of former paralegals filed a

collective action against a law firm for overtime compensation. Plaintiffs filed a motion for expedited class notice and limited discovery and argued that they regularly worked over 40 hours, performed similar duties (including typing, filing, copying, and general work associated with representing the firm’s clients), and were improperly denied overtime compensation. Defendant argued that the individual paralegal job duties varied based on different types of compensation (salaried versus hourly), different locations, and three distinct categories of paralegals. Further, defendant argued that because at least five potential exemptions could apply to various class members and damages claims would vary, individualized issues would predominate making proceeding on a class basis impracticable. Following Lusardi v. Xerox Corp.,136 the district court declined to review the underlying merits of the case and, instead, looked for identifiable facts and a legal nexus binding the claims for purposes of judicial efficiency. Accordingly, the court found that plaintiffs were sufficiently similarly situated to conditionally certify the case. The court disregarded defendant’s argument concerning individualized exemptions, indicating that Department of Labor guidance suggested that such exemptions would not apply to most paralegals. Likewise, although it noted that there may have been some variation in job duties, the court found that the “thrust of the job duties, as established by the Plaintiffs’ declarations, remains similar.”137 Nonetheless, the court limited the class to salaried paralegals and refused to include non-salaried paralegals and legal assistants, because there was no evidence establishing a similar policy or practice binding such other plaintiffs to the salaried paralegals.

In Pippins v. KPMG LLP,138 plaintiffs moved for conditional certification of a

collective action for “themselves and other similarly situated current and former KPMG audit associates whom KPMG classified as exempt.” The district court ruled that plaintiffs met their burden of proving they were similarly situated as to their job duties and requirements. They all shared the same title and worked in the same audit function. They were not CPAs when hired, received uniform training and were governed by the same regulatory and professional standards in the performance of their duties. They were required to follow detailed guidelines from the firm which did not vary

134 Id. 135 810 F. Supp. 2d 1145 (D. Haw. 2011). 136 118 F.R.D. 351 (D.N.J. 1987). 137 Id. at *7 (internal quotations omitted). 138 2012 WL 19379 (S.D.N.Y. Jan. 3, 2012).

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by customer. The court also found that defendants had uniformly classified the audit associates as exempt without regard to any possible differences as to individualized functions. The court granted plaintiffs’ motion, noting that, at the conditional certification stage, plaintiffs were not required to show an actual misclassification had occurred that could be determined on a collective basis.

In Tice v. AOC Senior Home Health Corp.,139 licensed vocational nurses brought

overtime claims under the FLSA against the defendant health care corporation. Plaintiffs moved for conditional certification and the district court rejected defendant’s argument that conditional certification was unwarranted due to potential differences in job duties and work schedules. It explained that at the first stage, “the relevant inquiry is whether the potential class members performed the same basic tasks and were subject to the same pay practices.”140 Accordingly, a court “need not find uniformity in each and every aspect of employment” to find a class of employees similarly situated under the FLSA.141 The court conditionally certified the collective action because plaintiffs demonstrated that they shared the “same basic job duties and were subject to the same pay practices.” In particular, plaintiffs primarily provided nursing services, including administering medications, dealing with ventilators, and dealing with feeding and breathing tubes. In addition, they all claimed that they were required to work overtime without the appropriate compensation.142

In Shipes v. Amurcon Corp.,143 former property management employees – a

leasing agent and a staff accountant – brought collective action claims for overtime. The district court granted conditional certification for a class of hourly employees, and denied, without prejudice, conditional certification for the salaried employees. Plaintiffs alleged that the employer engaged in time shaving and mischaracterizing overtime as compensatory time in order to avoid paying overtime to the hourly leasing agents. Plaintiffs also alleged that the employer misclassified the salaried employees (including but not limited to staff accountants) as exempt in order avoid paying them overtime. The court held that among the salaried employees, a fact intensive analysis of the various job duties of the putative salaried class members was necessary to show misclassification as exempt, and thus class treatment was not appropriate. For hourly employees, however, the various job duties were irrelevant because they did not have a burden to show misclassification as exempt.

In Gillian v. Starjem Rest. Corp.,144 restaurant employees asserted the employer violated the FLSA because it improperly managed its tip pool and failed to pay all overtime due. Plaintiffs sought certification of a class that included all tipped employees, including waiters/servers, bussers, runners, bartenders and busboys. In denying plaintiffs’ motion, the district court pointed out that an overtime payment 139 826 F. Supp. 2d 990 (E.D. Tex. 2011). 140 Id. at 996. 141 Id. (citation omitted). 142 In granting conditional certification, the court also rejected defendant’s argument that plaintiffs failed to identify any potential class members besides themselves. See id. at 995. 143 2012 WL 995362 (E.D. Mich. Mar. 23, 2012). 144 2011 WL 4639842 (S.D.N.Y. Oct. 4, 2011).

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violation was an individualized determination of the number of hours worked each day and each week based on each employee’s job. Additionally, the fact that several employees served in several different positions at the restaurant, some of which were arguably included in the tip pool and others that were not, made it impossible for the collective action class to adequately represent the interests of all parties, and could in some instances lead to adverse effects for class members.

In Arrington v. Michigan Bell Tel. Co., 145 the district court denied without

prejudice plaintiffs’ motion for conditional certification of overtime claims. The court explained that plaintiffs, first level managers, may show either their positions and duties are similar to putative class members or they were victims of a single policy or practice. The court found that plaintiffs failed to meet the modest requirements that they were similarly situated because they provided nothing more than conclusory allegations. The only evidence they provided were declarations from the two plaintiffs themselves discussing their experiences and beliefs that defendant was not compensating other first level managers for overtime work. The court noted no other plaintiffs at the time had joined the suit and anticipation of a class of 150 without any basis to support such a belief supports the holding they were not similarly situated. The court concluded that when denying motions for certification at this stage it may permit discovery to provide plaintiffs with an opportunity to obtain sufficient evidence to warrant conditional certification.

In Ack v. Manhattan Beer Distrib., Inc.,146 plaintiffs sales associates sued for unpaid overtime, claiming that they were paid a weekly salary based on a 40-hour week regardless of the number of hours actually worked, and moved for conditional certification on behalf of all current and former sales associates. Defendants argued that plaintiffs failed to establish that the members of the proposed collective action were similarly situated or that defendants had an unlawful policy. The district court held plaintiffs had met the modest burden for early notice, based on the five named plaintiffs’ declarations stating they had been employed by defendants and were not compensated for overtime hours worked. In addition, each of the named plaintiffs stated that he had personal knowledge that other sales associates regularly worked hours beyond 40 per week and received paychecks showing only 40 hours of work per week. Finally, each described a similar practice, pursuant to which he was told he would be working a 40-hour week and paid accordingly, but was in fact required to work a substantial amount of overtime without receiving any overtime premium.

Defendants argued that, since the duties of sales associates in other locations

and under different supervisors were different, that precluded a finding that the named plaintiffs and the potential opt-in plaintiffs were similarly situated. Defendants argued that plaintiffs’ employment experiences were limited to its Brooklyn Sales Division, specifically those working on chain store accounts and under two particular supervisors who, defendants claimed, had engaged in “unique practices.” The court rejected this argument because it found that defendants had failed to rebut plaintiffs’ demonstration 145 2011 WL 3319691 (E.D. Mich. Aug. 1, 2011). 146 2012 WL 1710985 (E.D.N.Y. May 15, 2012).

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of a company-wide policy, such as the fact that at least two plaintiffs alleged that one of the two supervisors expressly told them that “the Company d[oes] not pay overtime.” Moreover, the court noted that defendants had not submitted any evidence that any sales associates, and in particular any named plaintiff, was actually paid any overtime for work over 40 hours.

In Walker v. Honghua America, LLC,147 the court granted conditional certification,

however it found that a single class was inappropriate. It explained that the two job categories in which plaintiffs worked, crane operators and roughneck/riggers, had significantly different job duties and skill levels, among other things, and were not similarly situated. However because plaintiffs were similarly situated within their respective positions, the court certified two separate classes, one consisting of crane operators and the other of riggers/roughnecks.

3. Individualized Allegations or Defenses

In Faust v. Comcast Cable Comm’ns Mgmt., LLC.,148 call center employees

brought overtime claims for work performed off-the-clock. Plaintiffs alleged that, although they were only paid for scheduled time worked, they were required to arrive prior to their scheduled start time in order to boot up their computers, open necessary software applications and review important company emails so that they would be ready to accept calls at their scheduled start time. The district court granted plaintiffs' motion for conditional certification as to all employees at one of defendant's call centers whose primary duty was to perform telephone customer service, rejecting defendant’s argument that a collective action was inappropriate because adjudicating the dispositive issue would require burdensome individualized inquiries. The court acknowledged that some individualized analysis is inevitable in cases such as this, but concluded that “[a]ny burden on the parties due to the need to perform some individualized inquiry [was] outweighed by the justice gained in giving aggrieved employees an opportunity to vindicate their rights by joining together to challenge apparent illegal policies of their employer.”149 Plaintiffs met their burden of “demonstrating that there are sufficient common links between the employees so that notice may be issued to the opt-in class,”150 which is all that is required at the conditional certification stage.

The district court conditionally certified the class in Evans v. Lowe’s Home Ctrs.,

Inc.,151 and rejected defendant’s argument that each individual’s circumstances were different. Plaintiffs claimed that defendant failed to pay overtime wages for department and assistant department managers, whereas defendant argued that it properly used a fluctuating workweek method of determining overtime compensation. The court concluded that the only individualized inquiry that might be required is whether defendant explained the overtime method to opt-in plaintiffs and whether plaintiffs had a

147 2012 WL 1601288 (S.D. Tex. May 7, 2012). 148 2011 WL 5244421 (D. Md. Nov. 1, 2011). 149 Id. at *5. 150 Id. 151 2004 WL 6039927 (M.D. Pa. June 17, 2011).

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clear mutual understanding of the overtime method. In light of the lenient burden and the limited individualized facts, the court held that the class should be conditionally certified, although it found that there may be a need for subclasses.

In Ware v. T-Mobile USA,152 the district court conditionally certified a class action

brought by six former call center customer service and technical support representatives. Plaintiffs alleged defendant failed to compensate them properly for pre-shift work and work performed during unpaid meal breaks and by miscalculating their regular rate of pay. The district court granted conditional certification on behalf of plaintiffs at two call centers, but found that since plaintiffs did not present a declaration from a current or former employee at any other call center the certification would be limited to only those two call centers. Defendant also argued that the class should not be certified since plaintiffs had not shown sufficient interest among the members of the putative class. The district court disagreed, finding that since plaintiffs had presented another former employee who opted into the action, this single opt in sufficiently satisfied the lenient standard for conditional certification. Defendant next cited Wal-Mart Stores, Inc. v. Dukes,153 and asked the court not to certify due to the individualized nature of plaintiffs’ claims. The district court found Dukes did not apply because the Sixth Circuit had distinguished Rule 23’s more stringent class certification criteria from the FLSA’s opt-in criteria. As such, the district court found that putative plaintiffs in an FLSA case may be similarly situated if their claims are “unified by common theories of defendants’ statutory violations, even if the proofs of these theories are inevitably individualized and distinct.”154

In Ondes v. Monsanto Co.,155 plaintiff moved for collective action for off-the-clock

work in violation of the FLSA. In opposing conditional certification, the employer asserted that there were significant differences among members of the proposed class that prevented certification, including varying work locations and supervisors, various payment methods and employing entities, the need for individual inquiry into whether each putative class member was instructed to work off-the-clock, whether employees heeded that instruction, and whether the employer was aware of unreported work. The district court certified a collective action, finding that though there was conflicting evidence regarding off-the-clock work by class members, it would not make credibility determinations or findings of fact with respect to contradictory evidence presented at the initial stage. The court further stated that reported differences within the putative class are insufficient to deny conditional certification even if they impact plaintiff’s ability to prove liability because the court does not reach the merits of the parties’ claims and defenses at the certification stage. Thus, the court held that plaintiff’s affidavit provided enough evidence to demonstrate that employees were similarly situated and subject to a common practice.

152 828 F. Supp. 2d 948 (M.D. Tenn. 2011). 153 131 S. Ct. 2541, 180 L. Ed. 2d 374 (2011). 154 Ware, 828 F. Supp. 2d at 956.. 155 2011 WL 6152858 (E.D. Mo. Dec. 12, 2011).

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In Scott v. Bimbo Bakeries, USA, Inc., 156 delivery drivers classified as independent contractors brought a nationwide collective action for the recovery of overtime and minimum wages. Plaintiffs alleged that defendants had a nationwide policy of misclassifying delivery drivers as independent contractors. Defendants opposed conditional certification, arguing in part, that several individual differences existed between plaintiffs and potential class members, thus rendering collective action treatment inappropriate. Defendants also argued that certain exemptions may apply to certain individuals to preclude their claims under the FLSA. The court rejected these arguments. Instead, it viewed plaintiffs’ evidence of similarity as sufficient to demonstrate the “modest factual showing” required at conditional certification and granted conditional certification.

In Ack v. Manhattan Beer Distrib., Inc., 157 plaintiffs sales associates sued defendants for unpaid overtime, claiming that they were paid a weekly salary based on a 40-hour week regardless of the number of hours actually worked. The district court granted conditional certification based upon the five named plaintiffs’ declarations showing they had been denied overtime pay and that they had personal knowledge that other sales associates regularly worked hours beyond 40 per week and received paychecks showing only 40 hours of work per week. Each plaintiff also described a similar practice, pursuant to which he was told he would be working a 40-hour week and paid accordingly, but was in fact required to work a substantial amount of overtime without receiving any overtime premium. Defendants argued that, since the duties of sales associates in other locations and under different supervisory were different, that precluded a finding that the named plaintiffs and the potential opt-in plaintiffs were similarly situated. Defendants argued that plaintiffs’ employment experiences were limited to its Brooklyn Sales Division, specifically those working on chain store accounts and under two particular supervisors who, defendants claimed, had engaged in “unique practices.” The court rejected this argument, finding defendants had failed to rebut plaintiffs’ demonstration of a company-wide policy, such as the fact that at least two plaintiffs alleged that one of the two supervisors expressly told them that “the Company d[oes] not pay overtime.” Moreover, the court noted that defendants had not submitted any evidence that any sales associates, and in particular any named plaintiff, was actually paid any overtime for work over 40 hours.

In Alli v. Boston Market Co.,158 plaintiffs holding the positions assistant general

manager, culinary manager and hospitality manager at Boston Market Restaurants asserted FLSA overtime claims alleging that defendant misclassified these positions as exempt from FLSA. Plaintiffs supported their motion for collective action with evidence that there was no relevant difference in the duties of these various restaurant manager positions and that defendant ran its restaurants according to uniform policies in matters such as food safety, food handling, and food preparation dictated by corporate headquarters. Plaintiffs also submitted evidence that all training for the three positions was done pursuant to detailed guidelines set by corporate headquarters. In granting the

156 2012 WL 645905 (E.D. Pa. Feb. 29, 2012). 157 2012 WL 1710985 (E.D.N.Y. May 15, 2012). 158 2011 WL 4006691 (D. Conn. Sept. 8, 2011).

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motion, the district court ruled that this evidence satisfied plaintiffs’ modest burden of submitting evidence that the positions in question performed similar work at each of the restaurants. The court declined to consider declarations by current assistant general managers indicating that their job duties differed from those performed by plaintiffs. The court said that such evidence of individual differences was more appropriately considered in the second stage of the collective action.

In Aponte v. Comprehensive Health Mgmt., Inc.,159 plaintiffs, benefits consultants

for a health care services provider, moved for conditional certification of their overtime claims. Plaintiffs alleged they all performed the same or similar job duties by providing promotional services for defendants. The district court, having found sufficient similarity and uniformity in plaintiffs’ positions across both products and geographic regions, granted conditional certification. The court found that the evidence presented showed that plaintiffs’ primary job responsibilities and qualifications were largely similar from region to region, as defendants’ job description corroborated. Likewise, plaintiffs’ primary job responsibilities in relation to products were also similar, as they promoted the same types of health plans. The court dismissed defendants’ argument that plaintiffs and opt-in plaintiffs were not similarly situated because some benefits consultants signed separation agreements potentially waiving and releasing a variety of employment-related claims, finding that this “discrete issue” at the preliminary stage did not preclude a finding of similarity.160

In Guifu Li v. A Perfect Franchise, Inc.,161 a class of current and former massage

therapist employees who were classified as independent contractors brought a suit against corporate and various individual defendants alleging FLSA violations. Defendants opposed plaintiffs’ motion for collective action, arguing that there were factual differences among the named plaintiffs, including who interviewed and hired the plaintiffs and differences in plaintiffs’ wage rates and hours worked. The district court found those differences to be minor and noted that they may affect damages calculations, but not a finding that class certification is appropriate at the lenient notice stage.162

In Gillian v. Starjem Restaurant Corp.,163 restaurant employees asserted the

employer violated the FLSA because it improperly managed its tip pool and failed to pay all overtime due. Plaintiffs sought certification of a class that included all tipped employees, including waiters/servers, bussers, runners, bartenders and busboys. In denying plaintiffs’ motion, the district court pointed out that an overtime payment violation was an individualized determination of the number of hours worked each day and each week based on each employee’s job. Additionally, the fact that several employees served in several different positions at the restaurant, some of which were arguably included in the tip pool and others that were not, made it impossible for the

159 2011 WL 2207586 (S.D.N.Y. June 2, 2011). 160 Id. at *6. 161 2011 WL 4635198 (N.D. Cal. Oct. 5, 2011). 162 Id. at *4-5. 163 2011 WL 4639842 (S.D.N.Y. Oct. 4, 2011).

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collective action class to adequately represent the interests of all parties, and could in some instances lead to adverse effects for class members.

In Gibson v. NCRC, Inc.,164 a field service technician who provided general

maintenance services to retailers, sought conditional certification of a collective action alleging that defendant violated the FLSA by not compensating technicians for “nonproductive” time spent driving between customers’ work sites. Defendant objected to conditional certification, arguing that certification as a collective action was inappropriate because field service technicians worked different hours under different conditions. The court granted plaintiff’s motion, holding these differences were not enough to overcome the evidence of a consistent policy that was uniformly applied, and any differences could be “addressed with relative efficiency by objective arithmetic calculations.”165

In Jones v. SuperMedia, Inc.,166 sales associates filed a putative collective action

against an advertising firm, alleging violations of the FLSA’s overtime provisions. Plaintiffs moved for conditional certification. In granting the motion, the district court found that evidence existed that defendant failed to include commissions in overtime compensation and that other sales associates worked unreported hours to meet sales quotas as part of an unofficial firm policy. Accordingly, the court held that the evidence showed there were violations “stemming from a common impetus.”167

In Davis v. Mostyn Law Firm, P.C,168 a group of former paralegals filed a

collective action against a law firm for overtime compensation. Plaintiffs filed a motion for expedited class notice and limited discovery and argued that they regularly worked over 40 hours, performed similar duties (including typing, filing, copying, and general work associated with representing the firm’s clients), and were improperly denied overtime compensation. Defendant argued that the individual paralegal job duties varied based on different types of compensation (salaried versus hourly), different locations, and three distinct categories of paralegals. Further, defendant argued that because at least five potential exemptions could apply to various class members and damages claims would vary, individualized issues would predominate making proceeding on a class basis impracticable. Following Lusardi v. Xerox Corp.,169 the district court declined to review the underlying merits of the case and, instead, looked for identifiable facts and a legal nexus binding the claims for purposes of judicial efficiency. Accordingly, the court found that plaintiffs were sufficiently similarly situated to conditionally certify the case. The court disregarded defendant’s argument concerning individualized exemptions, indicating that Department of Labor guidance suggested that such exemptions would not apply to most paralegals. Likewise, although it noted that there may have been some variation in job duties, the court found

164 2011 WL 2837506 (S.D. Tex. July 18, 2011). 165 Id. at *5. 166 2012 WL 995292 (N.D. Tex. Mar. 23, 2012). 167 Id. 168 810 F. Supp. 2d 1145 (D. Haw. 2011). 169 118 F.R.D. 351 (D.N.J. 1987).

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that the “thrust of the job duties, as established by the Plaintiffs’ declarations, remains similar.”170 Nonetheless, the court limited the class to salaried paralegals and refused to include non-salaried paralegals and legal assistants, because there was no evidence establishing a similar policy or practice binding such other plaintiffs to the salaried paralegals.

In Guillen v. Marshalls of MA, Inc.,171 plaintiff, a former assistant store manager, sued Marshalls alleging that defendants failed to pay him overtime wages in violation of FLSA. After denying plaintiff’s motion for conditional approval as a nationwide collective action, the district court considered a second motion whereby plaintiff sought to include in the collective action all assistant store managers at defendants’ stores nationwide, except for those in California. At the time of consideration of the second motion, a number of assistant store managers in the New York City area had since joined the action. Although defendants asserted that assistant store managers are exempt from FLSA overtime requirements, plaintiffs alleged they performed a number of non-exempt duties, such as cleaning, sweeping, bagging products, and taking out the garbage. However, the court noted that plaintiffs failed to provide any evidence that assistant store managers nationwide were performing such non-exempt tasks. As such, the court denied the motion on the basis that plaintiffs failed to demonstrate they were similarly situated to the employees they proposed to include in the collective action.

In Smith v. Pizza Hut, Inc.,172 pizza delivery drivers asserted minimum wages claims, alleging that because defendant failed to reimburse them properly for vehicle related expenses their wages fell below the FLSA’s minimum wage. The court granted plaintiffs’ motion for conditional certification, citing other district court decisions, including from Colorado, in which the court granted conditional certification to pizza delivery drivers on similar theories. Defendant argued that those prior decisions were undermined by the U.S. Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes. The court rejected this argument, noting numerous cases where district courts rejected the argument that Dukes altered the standard for FLSA collective action certification. The court found that plaintiffs’ allegations that members of the putative class held the same job, shared the same job duties, were paid at or near minimum wage, incurred automobile expenses while delivering pizzas and were subject to defendant’s reimbursement policy, were sufficient to meet the limited burden at the notice stage. Plaintiffs also submitted declarations from putative class members in support of their motion, which stated that defendant’s reimbursement policy was inadequate and resulted in their pay falling below minimum wage. The court rejected defendant’s argument that the opt-in plaintiffs were not similarly situated to the named plaintiff because there were variances in their individual circumstances regarding their base wages and automobile expenses, finding that the variances were only relevant for the calculation of damages. “The mere possibility that some members of the proposed

170 Id. at *7 (internal quotations omitted). 171 841 F. Supp. 2d, 797 (S.D.N.Y. 2012). 172 2012 WL 1414325 (D. Colo. April 12, 2012).

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class may have different damages (or no damages at all) is not reason to refuse to notify all potential class members in the first instance.”173

In Darrow v. WKRP Mgmt., LLC, 174 pizza delivery drivers alleged that

defendants violated the FLSA by failing to sufficiently reimburse them for vehicle-related expenses and, thereby, reducing their wages below minimum wage. The court granted plaintiffs’ renewed motion for conditional certification, determining that plaintiffs set forth substantial allegations that the potential class members were victims of a single, decision, policy or plan—reimbursement on a per delivery basis—that resulted in a violation of the FLSA. In granting plaintiffs’ motion, the court rejected defendants’ argument that individualized defenses precluded certification because, the court noted, individual questions and defenses are only relevant at the second stage of collective certification.

In Titchenell v. Apria Healthcare Inc.,175 a customer service specialist brought

claims for regular and overtime compensation under the FLSA for off-the-clock work. Plaintiff moved for conditional certification early on in discovery. Defendant argued that the claims of the potential class members were too individualized to treat in a collective action, contending that the case would involve questions of fact that will “vary widely” for each potential plaintiff, which favors denial of certification in off-the-clock cases.176 The court noted that a claim or defense regarding individualized circumstances is more appropriate for the second step of the certification process and that plaintiff produced evidence that defendant had a nationwide policy of requiring plaintiff to do more work than she could perform in their normal work week, which was sufficient to warrant conditional certification.177

In Alexander v. Cydcor, Inc.,178 hourly, non-exempt senior sales supervisors and

sales representatives for a company that sold DirecTV subscriptions sued for underpayment of overtime. They alleged underpayments occurred because defendants altered time records, entered inaccurate time logs, failed to pay earned bonuses, and miscalculated employees’ regular rates.. In granting conditional certification, the district court dismissed defendants’ argument that conditional certification requires plaintiffs to provide highly specific details of the alleged overtime violations. The court noted that the final certification stage as opposed to the notice stage is the appropriate time to consider factors such as whether the individualized nature of the violations militate against conditional certification.

173 Id. at * 5. 174 2012 WL 638119, at *1 (D. Colo. Feb. 28, 2012). 175 2011 WL 5428559 (E.D. Pa. Nov. 8, 2011). 176 Id. at *7. 177 The court also rejected defendant’s other arguments that: (1) plaintiff worked unpaid overtime on her own initiative and not because of defendant’s policy or practice; and (2) plaintiff was not similarly situated to other potential class members. See id. at *4-6. 178 Alexander v. Cydcor, Inc., 2012 WL 1142449 (N.D. Ga. Apr. 6, 2012).

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In Andel v. Patterson-UTI Drilling Co., LLC,179 a group of welders, alleged that they were misclassified as independent contractors. They moved for conditional certification and the magistrate judge recommended that the motion be denied. The district court judge adopted the magistrate’s report, concluding that whether plaintiffs were actually employees could not be determined without significant individualized analyses, which would not promote judicial economy. In particular, the court noted that there were differences among plaintiffs concerning the hours and days they worked, the procedure for invoicing and being paid, the length of time they performed services for defendant and the relative investment and ability to control opportunities for profit and loss.

In Hadley v. Journal Broadcast Group, Inc.,180 three former TV station employees

alleged that their supervisors routinely shaved time off of their records to prevent them from receiving overtime pay and required that they work off-the-clock. In denying plaintiffs’ motion for conditional certification, the district court explained that plaintiffs’ vague and inconsistent allegations were not evidence of a company-wide policy or program to reduce employees’ time. Moreover, the time shaving allegations appeared to be limited to one supervisor. The court also rejected plaintiffs’ assertion that time spent “thinking about the job when not at work” was compensable off-the-clock work. The court explained that it is hard to stop or monitor, and there was no evidence that supervisors told plaintiffs to do it. Ultimately, the court found the allegations to be so individualized that there would not likely be common answers achieved through a collective action.

4. Interest in Joining the Action

In Ware v. T-Mobile USA,181 the district court conditionally certified a class action brought by six of defendant’s former employees on behalf of customer service and technical support representatives at defendant’s call centers. Plaintiffs alleged defendant failed to compensate them properly for pre-shift work and work performed during unpaid meal breaks and by miscalculating their regular rate of pay. The district court granted conditional certification on behalf of plaintiffs at two call centers, but found that since plaintiffs did not present a declaration from a current or former employee at any other call center the certification would be limited to only those two call centers. Defendant also argued that the class should not be certified since plaintiffs had not shown sufficient interest among the members of the putative class. The district court disagreed, finding that since plaintiffs had presented another former employee who opted into the action, this single opt-in sufficiently satisfied the lenient standard for conditional certification.

In Bobbitt v. Broadband Interactive, Inc., 182 plaintiffs, a group of cable

technicians, brought suit alleging that they were denied minimum wages and overtime

179 280 F.R.D. 287 (S.D. Tex. 2012). 180 2012 WL 523752 (E.D. Wis. Feb. 16, 2012). 181 828 F. Supp. 2d 948 (M.D. Tenn. 2011). 182 2012 U.S. Dist. LEXIS 71628 (M.D. Fla. May 23, 2012).

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pay under the FLSA and Florida law because defendant misclassified them as independent contractors. Plaintiffs moved for conditional certification and court-authorized notice. Plaintiffs argued that seven of defendant’s approximately 140 Florida technicians had already filed consents to join the lawsuit, and pointed to several declarations from other opt-in plaintiffs stating that “other Florida [collections/disconnect technicians] would be interested in joining this lawsuit.”183 Defendant countered with declarations from seventeen other Florida based technicians, who all stated that they did not want to join the lawsuit. Defendant argued that those declarations demonstrated that there was not sufficient evidence that other individuals had an interest in joining the lawsuit such that conditional certification was appropriate. The court disagreed and held that defendant’s declarations were not sufficient to overcome the interest shown by others in joining the lawsuit.184

In Bennett v. Advanced Cable Contractors, Inc., 185 plaintiff filed a putative

collective action for failure to pay overtime to cable technicians in Georgia. In considering plaintiff’s motion for conditional certification, the district court applied the two-tiered approach to conditional certification adopted by the Eleventh Circuit in Hipp v. Liberty Nat’l Life Ins. Co.,186 and noted that, under this analysis, a plaintiff need only present sufficient evidence that he is similarly situated to putative class members and that other employees had expressed interest in joining the lawsuit.187 The court held that the 14 opt-in consents plaintiff presented were sufficient to demonstrate that other employees wished to join the action.188

In Perez v. Guardian Equity Mgmt., LLC,189 plaintiff, a maintenance worker at an

apartment complex, sought compensation for overtime hours he worked but was not paid. He moved for conditional certification of a class of maintenance workers at each of the defendant’s eleven apartment complexes. Defendant argued that conditional certification was improper because its written policy was to pay for all overtime hours worked, and any underpayment plaintiff experienced was caused by the manager at the complex where he worked and thus unique to the plaintiff. In granting conditional certification, the court held that the issue was not merely whether there was a single policy governing compensation but rather whether there was a common practice of deviating from that policy. The court found the common policy requirement was satisfied by plaintiff’s evidence that the directive to limit employees’ overtime hours was given to the local managers at each of defendant’s apartment complexes; that maintenance workers at other complexes told plaintiff that they were similarly underpaid; and that defendant’s policy required complex managers to assemble and prepare time records that were sent to a central corporate payroll director. With regard to the question of whether other aggrieved employees wanted to join the case, the court found that although no other employees filed affidavits, the circumstances of the case 183 Id. at *9. 184 Id. at *10-11, 14. 185 2012 U.S. Dist. LEXIS 63605 (N.D. Ga. May 7, 2012). 186 252 F.3d 1208, 1216 (11th Cir. 2001). 187 Bennett, 2012 U.S. Dist. LEXIS 63605 at *36. 188 Id. at *42-43. 189 2011 WL 2672431 (S.D. Tex. July 7, 2011).

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allowed a relaxed showing. Specifically, where plaintiff did not work at the same facility as the other potential class members and some class members expressed a fear of retaliation for coming forward, the interest requirement was met where plaintiff testified that he had identified other maintenance workers with similar complaints.190

In Ondes v. Monsanto Co.,191 plaintiff moved for certification of a collective action

alleging that his employer failed to pay him and others similarly situated for off-the-clock work in violation of the FLSA. Defendant opposed conditional certification in part on the grounds that plaintiff had identified no other individuals interested in joining the class. The court granted certification based on plaintiff’s allegation in his affidavit that other individuals in his department worked overtime and that he heard managers tell other employees not to report all hours worked. The court further held that evidence that potential class members desire to opt in is not required at the conditional certification stage, as such requirement would force plaintiffs to issue their own form of informal notice or to otherwise go out and solicit plaintiffs, which would “unnecessarily give rise to unethical issues.”

In Martin v. Psalms, Inc.,192 a non-exempt certified nursing assistant alleged that

her employer, a retirement community, violated the FLSA by subjecting employees to an automatic 30-minute meal period deduction regardless of whether the employees took the break. Defendant opposed conditional certification, arguing among other things, that only one other employee besides plaintiff had opted in to the lawsuit. Moreover, defendant argued that plaintiff only purported to have knowledge of five other employees who may have worked during the meal period out of the potential class of two hundred and eighty-eight hourly non-exempt employees. The district court rejected defendant’s argument, finding that a showing of interest in the collective action has neither been required nor refuted in the Sixth Circuit. The court noted, however, that the Eleventh Circuit has held that the question is not how many, but simply whether, others desire to join the action. Accordingly, the court adopted the magistrate’s recommendation to conditionally certify the class, finding that the addition of at least one opt-in plaintiff was evidence of sufficient interest in certification at this initial stage.

In Jason v. Falcon Data Com, Inc.,193 plaintiff brought a putative collective action

for unpaid overtime under the FLSA on behalf of technicians who installed cable equipment. Plaintiff alleged that defendants paid technicians on a piece rate basis, without paying them overtime compensation. Plaintiff moved for conditional certification, contending that all technicians held the same position, performed the same job duties, and were subject to the same compensation system. Defendants opposed conditional certification on numerous grounds, including plaintiff’s failure to demonstrate that additional employees wished to opt in to the lawsuit. The district court granted conditional certification, holding that “[d]istrict courts in this circuit have refused to

190 Id. 191 2011 WL 6152858 (E.D. Mo. Dec. 12, 2011). 192 2011 WL 2882387 (W.D. Tenn. July 15, 2011). 193 2011 WL 2837488 (E.D.N.Y. July 18, 2011).

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require plaintiffs to establish that other employees desire to join the suit.”194 The court observed that a different rule would “essentially force plaintiffs or their attorneys to issue their own form of informal notice” and that “absent court-supervised notice, current employees may be less likely to opt in for fear of retaliation.”195 In addition, the court noted that the argument was now moot, because 14 employees opted in the lawsuit after the court held oral argument on the motion.

In Gibson v. NCRC, Inc.,196 defendant argued that conditional certification was

inappropriate because plaintiff had not shown that any other field service technicians were interested in joining the litigation. The court rejected this argument and held that, due to the nature of defendant’s business model, where field service technicians received assignments electronically, never reported to a central office, and rarely worked together, requiring a showing that other individuals would be interested in joining the action was inappropriate.

In Johnson v. VCG Holding Corp.,197 two disc jockeys moved for conditional

class certification against owners of a number of adult entertainment nightclubs. Plaintiffs claimed that they were paid wages below the minimum wage and could not be considered “tipped employees” under the FLSA, because they did not receive more than $30 a month in tips from customers and money they received from dancers at the nightclub did not count as “tips.” Plaintiffs sought certification of a class that included all disc jockeys at all of the employer’s locations. In denying the motion, the district court explained that plaintiffs failed to identify others interested in joining the putative class. The court noted that the requirement to identify interested parties in an FLSA case serves to prevent preliminary class certification from being “automatic, as long as the Complaint contains the magic words: ‘Other employees similarly situated.’” 198 Therefore, the employee’s mere declaration that he was aware of others that were dissatisfied with their pay and interested in the legality of their arrangement with the employer was insufficient to show the members of the class were interested in joining the suit.

In Delano v. MasTec, Inc.,199 former satellite installation and service technicians

filed a collective action against defendant, a subcontractor of DirecTV engaged in the business of satellite installation and service. Plaintiffs moved to conditionally certify a collective action and send notices to similarly situated technicians in Florida. The court denied plaintiffs’ motion. Among other things, the court found that plaintiffs failed to submit sufficient evidence that a significant number of technicians wanted to join the lawsuit. Further, the court found that the consent forms of technicians in Georgia and North Carolina could not establish the existence of Florida technicians who wished to join the lawsuit.

194 2011 WL 2837488 at *6. 195 Id. 196 2011 WL 2837506 (S.D. Tex. July 18, 2011). 197 802 F. Supp. 2d 227 (D. Me. 2011). 198 Parker v. Rowland Express, Inc., 492 F. Supp. 2d 1159, 1165 (D. Minn. 2007). 199 2011 WL 2173864 (M.D. Fla. June 2, 2011).

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In Butler v. DirectSAT USA, LLC, 200 satellite installation technicians filed a

collective action against their employer alleging wage and overtime violations of the FLSA and state law. In granting plaintiffs moved for conditional certification and for facilitation of notice, the district court rejected defendant’s assertion that plaintiffs are required to identify other potential opt-in plaintiffs in order to obtain conditional certification. It also noted that this objection was meritless, given that two other technicians had sought to join the action as opt-in plaintiffs.201

In Hadley v. Journal Broadcast Group, Inc.,202 three former TV station employees alleged that their supervisors routinely shaved time off of their records to prevent them from receiving overtime pay and required that they work off-the-clock. In denying plaintiffs’ motion for conditional certification, the district court also noted the lack of interest by other potentially affected employees when denying the motion.

In Khan v. Airport Mgmt. Servs., LLC,203 plaintiff, who held several managerial roles in airport/commuter station news shops, claimed that defendant misclassified him and a class of similarly situated managerial employees as exempt. He sought to conditionally certify a class of current and former employees who held the title of “manager” but whom he claimed were not actually exempt under the FLSA. In support of his motion, plaintiff relied only on his declaration and the declarations of three former non-exempt, hourly co-workers. Defendant submitted 23 declarations from individuals with various management roles in shops across the country claiming that they had broad managerial duties. In denying plaintiff’s motion for conditional certification, the district court found that plaintiff “ha[d] not produced sufficient evidence that there are other employees who may share his claim.”204 The court found that though “not determinative,” it was “telling” that after five months of discovery, plaintiff had been “unable to produce a single other individual interested in participating as a plaintiff in this case.”205

In Tice v. AOC Senior Home Health Corp.,206 licensed vocational nurses brought overtime claims and moved for conditional certification against the defendant health care corporation. The court noted that at this stage, a plaintiff bears the burden of presenting preliminary facts showing that a similarly situated group of potential plaintiffs exists. It concluded that plaintiffs met that burden by submitting three declarations (two from the named plaintiffs and one from a potential class member) demonstrating that the nurses shared the same basic job duties and were subject to the same pay

200 2012 WL 1203980 (D. Md. Apr. 10, 2012). 201 Id. at *8. 202 2012 WL 523752 (E.D. Wis. Feb. 16, 2012). 203 2011 WL 5597371 (S.D.N.Y. Nov. 16, 2011). 204 Id. at *4. 205 Id. at *5. 206 826 F. Supp. 2d 990 (E.D. Tex. 2011).

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practices.207 It rejected defendant’s argument that plaintiffs failed to identify any class member besides themselves, noting that the two named plaintiffs specifically identified a third person as a potential class member and submitted a declaration from her.

In D’Antuono v. C & G of Groton, Inc.,208 exotic dancers brought a collective

action alleging that defendants misclassified them as independent contractors. In granting plaintiffs’ motion for conditional certification, the district court determined that the affidavits and deposition testimony submitted by plaintiff constituted a preliminary showing that all putative class members held the same or similar positions, the same or similar duties, and were all designated, as a class as independent contractors. This modest factual showing, according to the district court, was sufficient to demonstrate that plaintiff and potential plaintiffs were victims of a common policy or plan that violate the law. In making its decision, the district court rejected defendants’ argument that plaintiff must demonstrate that other potential plaintiffs exist for conditional certification, stating that the Second Circuit has no such requirement.

5. Similar Practices or Policies

In Ware v. T-Mobile USA,209 the district court conditionally certified a class action brought by six of defendant’s former employees on behalf of customer service and technical support representatives at defendant’s call centers. Plaintiffs alleged defendant failed to compensate them properly for pre-shift work and work performed during unpaid meal breaks and by miscalculating their regular rate of pay. The district court granted conditional certification on behalf of plaintiffs at two call centers, but found that since plaintiffs did not present a declaration from a current or former employee at any other call center the certification would be limited to only those two call centers. Defendant also argued that the class should not be certified since plaintiffs had not shown sufficient interest among the members of the putative class. The district court disagreed, finding that since plaintiffs had presented another former employee who opted into the action, this single opt-in sufficiently satisfied the lenient standard for conditional certification.

In Scovil v. FedEx Ground Package Sys., Inc., 210 delivery drivers in Maine

alleged Fed Ex misclassified them as independent contractors and thereby failed to pay them overtime. In support of their conditional certification motion, plaintiffs submitted affidavits from six drivers who claimed that they had similar job duties and were paid according to a common policies and practices (payment per-package delivered). In addition, the affiants all claimed they were all subject to an alleged common policy of misclassification of employment status. Defendant objected to conditional certification on the basis that, under the economic realities test, plaintiffs and other delivery drivers

207 In granting conditional certification, the court rejected defendant’s argument that plaintiffs and potential class members were not sufficiently similar due to potential differences in job duties and work schedules among the nurses. See id. at 995-96. 208 2011 WL 5878045 (D. Conn. Nov. 23, 2011). 209 828 F. Supp. 2d 948 (M.D. Tenn. 2011). 210 811 F. Supp. 2d 516 (D. Me. 2011).

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were not similarly situated. In granting conditional certification, the district court applied certain factors from the economic realities test to determine whether plaintiffs’ proposed class of drivers was similarly situated. The court then found that, based on the affidavits submitted, plaintiffs made a sufficient showing that they suffered from a common unlawful policy or plan.

In Schwerdtfeger v. Demarchelier Mgmt., Inc., 211 plaintiffs, who worked for

defendant as servers, hosts or hostesses, bartenders, busboys, and dishwashers, sued on behalf themselves and similarly situated employees, asserting minimum wage and overtime violations. They further alleged their employer had engaged in a policy and practice of unlawfully withholding tips and gratuities from its tipped employees.212 In support of their motion for conditional certification, plaintiffs submitted affidavits contending that they worked more than 40 hours per week and did not receive minimum wage for hours worked or overtime compensation for hours worked in excess of 40 per week. Plaintiffs’ affidavits also stated that managers unlawfully shared tips and gratuities with tipped employees. Defendant opposed plaintiffs’ motion, arguing that the named and putative class members were not similarly situated because they performed different functions, and because some plaintiffs were entitled to receive tips and gratuities while others were not. In granting conditional certification, the district court applied the two-stage test adopted by the Second Circuit, which provides that, during the first stage, a court determines whether putative class members are similarly situated. The court concluded that plaintiffs’ evidence was sufficient to satisfy their minimum burden of showing that they were “victims of a common policy or plan that violated the law.”213

In Blaney v. Charlotte-Mecklenberg Hosp. Authority,214 a group of non-exempt

nurses and nurses’ assistants moved for conditional certification, alleging that defendant violated the FLSA by failing to pay them for time worked during their lunch breaks. Specifically, plaintiffs alleged that defendant’s policy of requiring nurses and nurses’ assistants to be on-call during their meal breaks, which often meant that meal periods were interrupted, coupled with defendant’s policy of automatically deducting 30 minutes for meal breaks, violated the FLSA. The district court found that plaintiffs failed to meet their burden of demonstrating that plaintiffs and members of the putative class together were “victims of a common policy or plan that violated the law,” as the alleged “common policies” were not applicable to all members of the putative class and were actually left to decentralized decision making.215 The court therefore determined that conditional collective action certification was inappropriate. 216 In so holding, the court acknowledged that a policy which automatically deducts pay for meal periods is not, by itself, unlawful under the FLSA, nor was defendant’s policy of requiring nurses to be on-call during meal periods.217 211 2011 U.S. Dist. LEXIS 60338 (S.D.N.Y. June 6, 2011). 212 Id. at *2-3. 213 Id. at *8-10. 214 2011 U.S. Dist. LEXIS 105302 (W.D.N.C. Sept. 16, 2011). 215 Id. at *19-22. 216 Id. at *36. 217 Id. at *19-20.

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In Perez v. Guardian Equity Mgmt., LLC,218 defendant argued that conditional

certification was improper because its written policy was to pay for all overtime hours worked, and any underpayment of time worked plaintiff experienced was caused by the manager at the complex where he worked and thus unique to plaintiff.219 In granting conditional certification, the court held that the issue was not merely whether there was a single policy governing compensation but rather whether there was a common practice of deviating from that policy. The court found the common policy requirement was satisfied by plaintiff’s evidence that a directive to limit employees’ overtime hours was given to the local managers at each of defendant’s apartment complexes; that maintenance workers at other complexes told plaintiff that they were similarly underpaid; and that defendant’s policy required complex managers to assemble and prepare time records that were sent to a central corporate payroll director.220

In Walker v. Honghua America, LLC, 221 the court conditionally certified an

overtime collective action brought by purportedly misclassified independent contractors. The court held that, because defendant had recently changed its policy to hiring contractors through a third-party staffing company rather than directly contracting with the individuals itself, those individuals who were hired after the policy change were not ‘similarly situated’ to those [engaged as contractors] before that time, as they [were] not together ‘victims of a single decision, policy, or plan,’ regardless of whether FLSA violations continued to occur after that time.” Accordingly, the court limited the class period to before the date of the policy change.

In Rosario v. Valentine Avenue Discount Store, Co., Inc.,222 a former clerk of a

family of discount department stores filed an action under the FLSA and state law alleging failure to pay minimum wage and overtime. The district court granted plaintiffs’ motion for conditional certification based on a showing of a common plan or policy, although it concluded that the class should be limited to workers who held positions similar (although not necessarily identical) to the plaintiff and the one opt-in plaintiff. In support of the motion, plaintiff submitted his own sworn declaration and the sworn declaration of the opt-in plaintiff. Each set forth the number of hours they worked on a weekly basis, and the weekly or hourly pay they received. Both workers also alleged they were required to clock out before the end of their shift, or not clock in at all on certain days, and both alleged that an additional amount was deducted from their wages to pay for restroom cleaning. Further, both workers named additional workers, and alleged that they had talked to these other workers who stated they were also denied overtime or minimum wage. The district court held that these two sworn declarations containing specific information on hours and pay, coupled with the hearsay statements regarding other employees, were sufficient to meet the minimum burden of “a modest factual showing sufficient demonstrate that they and potential plaintiffs together were

218 2011 WL 2672431 (S.D. Tex. July 7, 2011). 219 Id. at *7. 220 Id. 221 2012 WL 1601288 (S.D. Tex. May 7, 2012). 222 828 F. Supp. 2d 508 (E.D.N.Y. 2011).

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victims of a common policy or plan that violated the law.” The court considered several factors in concluding that a common policy and plan extended to all store locations, including: the fact that the two plaintiffs worked at different locations yet experienced similar treatment; common ownership and operation of all locations; active involvement in hiring and firing by the common owner; regular transfer of workers between locations and continuation of the failure to pay overtime and minimum wage despite the transfers; and centralized payroll.

In Ack v. Manhattan Beer Distrib., Inc.,223 plaintiffs sales associates sued for

unpaid overtime, claiming that they were paid a weekly salary based on a 40-hour week regardless of the number of hours actually worked, and moved for conditional certification on behalf of all current and former sales associates. Defendants argued that plaintiffs failed to establish that the members of the proposed collective action were similarly situated or that defendants had an unlawful policy. The district court held plaintiffs had met the modest burden for early notice, based on the five named plaintiffs’ declarations stating they had been employed by defendants and were not compensated for overtime hours worked. In addition, each of the named plaintiffs stated that he had personal knowledge that other sales associates regularly worked hours beyond 40 per week and received paychecks showing only 40 hours of work per week. Finally, each described a similar practice, pursuant to which he was told he would be working a 40-hour week and paid accordingly, but was in fact required to work a substantial amount of overtime without receiving any overtime premium.

Defendants argued that, since the duties of sales associates in other locations

and under different supervisory were different, that precluded a finding that the named plaintiffs and the potential opt-in plaintiffs were similarly situated. Defendants argued that plaintiffs’ employment experiences were limited to its Brooklyn Sales Division, specifically those working on chain store accounts and under two particular supervisors who, defendants claimed, had engaged in “unique practices.”

The court concluded that a common policy was properly alleged to have existed

of not paying overtime to sales associates where they worked over 40 hours in a week sufficient to allow it to conditionally certify the lawsuit as a collective action. The affidavits of the five-named plaintiffs uniformly stated that (1) they had worked over 40 hours and not been paid overtime; and (2) they knew of other sales associates who had worked over 40 hours in a week, but had not been paid overtime. Furthermore, two of the named plaintiffs alleged in their affidavits that they had been told by their company supervisor that defendant did not pay overtime. The court also relied on the fact that the company failed to provide any information indicating that it had ever paid a sales associate overtime on any occasion. On the other hand, two additional affidavits, submitted post-oral argument at the request of the court, by sales associates who worked for defendants in Queens under different supervisors stated that they generally worked more than 40 hours per week without overtime compensation.

223 2012 WL 1710985 (E.D.N.Y. May 15, 2012).

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According to the court, plaintiffs had sufficiently established that defendants had a common policy governing its pay practices with respect to its sales associates even though the company operated multiple locations. Not only had plaintiffs submitted affirmative evidence in that regard, but there was no evidence to support defendants’ suggestion that the supervisors who were responsible for overtime determinations in Brooklyn and Queens had acted aberrantly in permitting sales associates to work more than 40 hours without overtime pay. Thus, the court concluded that “it is reasonable to infer that all sales associates were paid out of defendants’ home office and thus all sales associates regardless of their location were paid in the same manner – a weekly rate based on 40 hours, even if a sales associate worked additional hours.”224

In Alli v. Boston Market Co.,225 plaintiffs holding the positions assistant general

manager, culinary manager and hospitality manager at Boston Market Restaurants asserted FLSA overtime claims alleging that defendant misclassified these positions as exempt from FLSA. Plaintiffs supported their motion for collective action with evidence that there was no relevant difference in the duties of these various restaurant manager positions and that defendant ran its restaurants according to uniform policies in matters such as food safety, food handling, and food preparation dictated by corporate headquarters. Plaintiffs also submitted evidence that all training for the three positions was done pursuant to detailed guidelines set by corporate headquarters. In granting the motion, the district court ruled that this evidence satisfied plaintiffs’ modest burden of submitting evidence that the positions in question performed similar work at each of the restaurants.

In Lawson v. Bell South Telecomm., Inc.,226 a group of field managers alleged

they were misclassified as exempt executive or administrative employees. In support of their motion for conditional certification, plaintiffs presented a “Day in the Life” document, which established what plaintiffs were required to do at each time of the day. The court granted plaintiffs’ motion, finding that plaintiffs’ evidence established that all field managers shared similar job duties and daily routines and alleged the same unlawful treatment.

Plaintiff in Jenkins v. TJX Companies Inc.227 sought conditional certification of a

nationwide collective action on behalf of Assistant Store Managers (ASMs), who they claimed were misclassified as exempt from the FLSA’s overtime requirements. The district court denied conditional certification without prejudice. In support of the motion, plaintiff submitted evidence that defendants used a common job description and the same training materials for all ASMs nationwide. The court found that such evidence of a “common policy” did not demonstrate that putative class members were similarly situated with regard to their job duties. It noted that where “the Plaintiff proposes a nationwide class, he must ultimately demonstrate a nationwide policy pursuant to which

224 Id. at *5. 225 2011 WL 4006691 (D. Conn. Sept. 8, 2011). 226 2011 WL 3608462 (N.D. Ga. Aug. 16, 2011). 227 853 F. Supp. 2d 317 (E.D.N.Y. 2012).

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ASMs are assigned duties that render [defendants’] exempt classification inappropriate.”228 Evidence of common training materials, job descriptions, and similar “roles” did not suffice because none of that evidence indicated that employees performed common, non-exempt duties. The court explained a “common national policy regarding job responsibilities” does not support conditional certification “where the plaintiff is not attacking the defendant’s formal job policies, but rather is asserting that [employees] were not given duties in compliance with those policies . . . .”229

In Jacob et al. v. Duane Reade, Inc., et al., 230 a group of assistant store

managers (ASMs) who were classified as exempt, brought an FLSA collective action against the retailer, alleging they were misclassified and worked hours in excess of 40 per week. In opposition to plaintiff’s motion for conditional certification, defendant argued that plaintiffs must demonstrate that they and other ASMs were similarly situated with respect to the claim that they were required to perform non-managerial job duties in contravention of the formal job description. While observing that there is contrary authority supportive of defendant on this issue, the district court held that plaintiffs were not seeking a nationwide collective action, and that plaintiffs do not rely exclusively on defendant’s job description and other corporate documents to show that plaintiffs are similarly situated. Accordingly, the court found that there was “enough evidence” for plaintiffs “to meet the light burden at this preliminary stage” showing that the ASMs were similarly situated.231

In Darrow v. WKRP Mgmt., LLC, 232 pizza delivery drivers alleged that

defendants violated the FLSA by failing to sufficiently reimburse them for vehicle-related expenses and, thereby, reducing their wages below minimum wage. Specifically, plaintiffs alleged they were similarly situated with respect to the requirements of their particular job, that defendants paid all of their delivery drivers at or near the minimum wage, and that they were all subjected to the same reimbursement policy. The court granted plaintiffs’ renewed motion for conditional certification, determining that plaintiffs set forth substantial allegations that the potential class members were victims of a single, decision, policy or plan—reimbursement on a per delivery basis—that resulted in a violation of the FLSA.

In Flowers v. MGTI,233 plaintiffs, a group of restaurant servers, alleged their

employer failed to pay them for all hours worked and overtime, improperly maintained a tip pool which included ineligible employees, and required them to pay for broken glasses and walkout tabs from tips. Plaintiffs moved for conditional certification. The court explained that although conditional certification based upon the Lusardi two-step approach entails a lenient standard generally based only on pleadings and supporting affidavits, plaintiffs still must show that the putative class members were together the

228 Id. at 321. 229 Id. at 322-23 230 2012 WL 260230 (S.D.N.Y. Jan. 27, 2012). 231 Id. at *7. 232 2012 WL 638119, at *1 (D. Colo. Feb. 28, 2012). 233 2012 WL 1941755 (S.D. Tex. May 29, 2012).

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victims of a single decision, policy, or plan.234 Accordingly, although the court granted plaintiffs’ motion, it denied plaintiffs’ request to include employees from defendant’s Milwaukee location because plaintiffs had not shown a common policy or practice existed at that location.

In Richardson v. Wells Fargo Bank, N.A.,235 plaintiffs, who were non-exempt

“personal bankers,” filed a collective action for overtime pay, alleging the bank “promulgated compensation policies and practices” requiring plaintiffs to work off-the-clock.236 After months of discovery, plaintiffs moved for conditional certification. The district court denied the motion and found that plaintiffs did not identify any company-wide, national policy or plan of denying overtime and consequently failed to show the putative class members were similarly situated. The court noted that defendant had a written policy that required employees to accurately report all hours worked; the employee handbook directed non-exempt employees to take lunch breaks and record times they worked during lunch breaks and instructed employees they were entitled to pay for all hours actually worked even if they exceeded their regular schedule or were not authorized in advance; and, defendant prohibited managers form working employees off-the-clock and trained its managers that time worked before and after scheduled hours must be reported. The court rejected plaintiffs’ argument that the job descriptions and postings were evidence of a national policy or plan.237 The court found it significant that most plaintiffs provided no evidence that their supervisors actually told them that them they must work off-the-clock or provide proof of any requested request for overtime pay.238

In Norceide v. Cambridge Health Alliance, three current and former non-exempt

hospital employees claimed their healthcare system employer failed to pay them for time worked during meal breaks, as well as for pre- and post-shift work.239 While plaintiffs did not point to a formal policy, they did argue that defendant had a practice of discouraging employees from recording pre- and post-shift time worked as well as time worked during meal breaks. Because of this practice, defendant ultimately paid its employees for their scheduled time rather than time actually worked. Plaintiffs moved for conditional class certification, and the district court granted plaintiffs’ motion. The court found that plaintiffs met the similarly situated standard by demonstrating all putative class members were subject to defendant’s practice of paying for scheduled time rather than time worked. Defendant argued its employees were assigned to different types of time-keeping systems, some of which tracked all time worked. However, the court concluded that, regardless of the timekeeping system used, defendant’s management discouraged all plaintiffs from reporting time worked during meals or pre-/post-shift. Since this practice uniformly deprived employees of pay for

234 2012 WL 1941755 at *2 (citing Lusardi v. Xerox Corp., 118 F.R.D. 351 (D.N.J. 1987)). 235 2012 U.S. Dist. LEXIS 12911 (S.D. Tex. Feb. 2, 2012). 236 Id. at *2-3. 237 Id. at *19. 238 Id. at *19-20. 239 814 F. Supp. 2d 17 (D. Mass. 2011)

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time worked outside of their scheduled hours, the court found conditional certification appropriate.

In Robinson v. Ryla Teleservices,240 customer service representatives brought FLSA claims against an Alabama call center for failing to pay them for time spent working before logging onto the timekeeping system, and for failing to timely pay them during certain pay periods. The district court permitted defendant an opportunity to conduct limited discovery prior to requiring it to respond to plaintiffs’ motion for conditional certification. In granting plaintiffs’ motion, the court rejected defendant’s argument that the discovery that had taken place to date warranted application of the a higher standard for determining conditional certification. In applying the low thresh hold for the initial stage of certification, the court found that plaintiffs were similarly situated because they all worked in the same or similar positions, shared similar job duties, and alleged the same FLSA violations. The court declined defendant’s invitation to apply Wal-Mart Stores, Inc. v. Dukes241 to the case, noting that “if applicable at all, Dukes is not applicable at the first step of the two-step collective action certification process.”242 Lastly, although defendants argued that plaintiffs’ claims did not arise from a common policy but rather, from ad hoc decisions by management, the court refused to resolve this factual issue in the current motion.243

In Garrett v. Sitel Operating Corp., 244 call center customer service representatives alleged that defendant violated the FLSA by failing to compensate them for principal work activities performed off-the-clock. Plaintiffs moved for conditional certification of a class of customer service representatives who had been directed by defendant to boot up and log into computer programs prior to clocking in and to clock out before closing computer programs and shutting down their computers each day. In support of their motion, plaintiffs filed eight declarations from putative class members who asserted allegations of pre- and post-shift work similar to those alleged by plaintiffs in their initial complaint. The district court noted the Sixth Circuit’s adoption of a lenient standard for evaluating conditional certification claims and found that the declarations sufficiently showed defendant’s unwritten policy of requiring employees to perform essential work tasks, including booting up and shutting on the computers, while off-the-clock. The court thus held plaintiffs and the class were sufficiently similarly situated, warranting certification of the collective action.

In Davis v. Mostyn Law Firm, P.C,245 paralegals filed an FLSA collective action

against a law firm and moved for expedited notice and limited discovery. Following Lusardi v. Xerox Corp.,246 the court noted that the standard for conditionally certifying a collective action was lenient and typically results in conditional certification. Importantly, the court stated that it does not review the underlying merits of the case, but instead 240 Slip Copy, 2011 WL 6667338 (S.D. Ala. Dec. 21, 2011). 241 131 S. Ct. 2541 (2011). 242 Robinson, 2011 WL 6667338, at *3. 243 Id. at *4. 244 2011 WL 5827240 (W.D. Tenn. Nov. 18, 2011). 245 810 F. Supp. 2d 1145 (D. Haw. 2011). 246 118 F.R.D. 351 (D.N.J. 1987).

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looks for identifiable facts and a legal nexus binding the claims so that hearing the cases together promotes judicial efficiency. Accordingly, the court found that plaintiffs were sufficiently similarly situated to conditionally certify the case. The court disregarded defendant’s argument concerning individualized exemptions and indicated that Department of Labor guidance suggested that such exemptions would not apply to most paralegals. Likewise, although it noted that there may have been some variation in job duties, the court found that the “thrust of the job duties, as established by the Plaintiffs’ declarations, remains similar.” Nonetheless, the court limited the class to salaried paralegals, and refused to include non-salaried paralegals and legal assistants, because there was no evidence establishing a similar policy or practice binding such other individuals to the salaried paralegals. ]

In Butler v. DirectSAT USA, LLC, 247 satellite installation technicians filed a

collective action against their employer alleging wage and overtime violations of the FLSA and state law. Plaintiffs moved for conditional certification and for facilitation of notice.248 The court concluded that plaintiffs, who worked two different warehouses in the last three years, were all similarly situated based on their allegations that they had all been subjected to same company and timekeeping policies and procedures, were instructed not to record all of their pre and post-shift work, and had not been paid overtime compensation even though they worked in excess of 40 hours per week.249

In Hadley v. Journal Broadcast Group, Inc.,250 three former TV station employees alleged that their supervisors routinely shaved time off of their records to prevent them from receiving overtime pay and required that they work off-the-clock. In denying plaintiffs’ motion for conditional certification, the court explained that plaintiffs’ vague and inconsistent allegations were not evidence of a company-wide policy or program to reduce employees’ time. Moreover, the time shaving allegations appeared to be limited to one supervisor. The court also rejected plaintiffs’ assertion that time spent “thinking about the job when not at work” was compensable off-the-clock work. The court explained that it is hard to stop or monitor, and there was no evidence that supervisors told plaintiffs to do it. Ultimately, the court found the allegations to be so individualized that there would not likely be common answers achieved through a collective action.

In Knispel v. Chrysler Group LLC,251 plaintiffs sought to pursue a collective action

on behalf of similarly situated non-union contract employees. Plaintiffs alleged that defendant failed to pay such employees overtime pay for actual overtime hours worked. On plaintiff's motion for conditional certification, the court found that plaintiffs made a "modest factual showing" that there were common policies or practices that violated the FLSA, including requiring contract employees to submit time records reflecting only their non-overtime hours worked, requiring contract employees to take compensatory time off in lieu of paying overtime, requiring contract employees to work without breaks or lunch

247 2012 WL 1203980 (D. Md. Apr. 10, 2012). 248 Id. at *2. 249 Id. at *5-6. 250 2012 WL 523752 (E.D. Wis. Feb. 16, 2012). 251 2012 WL 553722 (E.D. Mich. Feb. 21, 2012).

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and requiring contract employees to travel between worksites or engage in overnight travel without hourly compensation.

In Pippins v. KPMG LLP,252 plaintiffs moved for conditional certification of a

collective action for “themselves and other similarly situated current and former KPMG audit associates whom KPMG classified as exempt.” The court ruled that plaintiffs met their burden of proving they are similarly situated as to their job duties and requirements. They shared the same title, worked in the same audit function and had uniform training. They were required to follow detailed guidelines that did not vary by customer and were governed by the same regulatory and professional standards. The court also found that defendants had uniformly classified the audit associates as exempt without regard to any possible differences as to individualized functions, and ruled that the alleged misclassification could be determined on a collective basis.

In Simons v. Pryor’s, Inc.,253 a restaurant manager sought conditional certification

of a class of restaurant managers and assistant managers who worked at two different restaurant chains, alleging that their exempt status was lost due to defendants making improper pay deductions “based on the quantity and/or quality of work.”254 In support, plaintiff provided an affidavit from one former co-worker and, on reply, submitted an affidavit of her own. In support of their opposition, defendants submitted affidavits from four current restaurant managers who stated that they never have had deductions made from their salaries of the type plaintiff alleged. The district court denied plaintiff’s motion, finding that she failed to establish that defendants’ purported written policy and practice of making improper deductions was applied broadly to all salaried managers at all restaurants for both chains. Additionally, the court found that there were unanswered questions regarding the relationship between the two restaurants and when and at which locations plaintiff and her affiant incurred the alleged improper deductions. Thus, the court could not “determine whether these were single-location aberrations, or part of a larger policy applicable broadly to [one restaurant chain or both].”255 The court also found that plaintiff relied upon a broad and ill-defined group of alleged improper deductions, and that she failed to make a threshold showing that the deductions were improper. Thus, the court denied the motion for conditional certification, but did so without prejudice and ordered the parties to engage in limited discovery, including written discovery and depositions, specifically related to conditional certification.

In Titchenell v. Apria Healthcare Inc.,256 a customer service specialist sought collective action status for regular and overtime wages for off-the-clock work. Defendant argued that plaintiff worked unpaid overtime on her own initiative and not because of a policy or practice. The district court rejected this, noting that plaintiff had made a “modest factual showing” of a policy or practice requiring unpaid overtime, including evidence that plaintiff’s supervisor was aware that plaintiff worked after 5:00

252 2012 WL 19379 (S.D.N.Y. Jan. 3, 2012). 253 2011 WL 3158724 (D.S.C. July 26, 2011). 254 Id. at *3. 255 Id. at *8. 256 2011 WL 5428559 (E.D. Pa. Nov. 8, 2011).

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p.m. without overtime and incentivized her to do so.257 Defendant produced conflicting evidence, but the court noted that an inquiry into credibility and the merits of the claims was improper at the conditional certification stage.258 The court also concluded that plaintiff made a “modest factual showing” that other employees were similarly situated by submitting two affidavits demonstrating that at least two other individuals with the same job as plaintiff encountered the same unwritten policy that customer service specialists should finish their work off the clock to meet performance demands because supervisors approved overtime only sparingly. 259 The court rejected defendant’s argument that the proposed class’s claims were too individualized for collective treatment and granted plaintiff’s motion.260

In Moore v. Eagle Sanitation, Inc.,261 two former laborers and drivers filed a

lawsuit seeking to recover for unpaid overtime from their former employer and sought to conditionally certify the matter as a collective action. During the first stage of the certification process, plaintiffs submitted their own affidavits stating that other employees worked in excess of 40 hours per week without proper overtime pay and in so doing, specifically named other employees and claimed that they knew that these employees were inappropriately denied overtime pay because “they specifically discussed the matter among themselves.”262 Though defendants challenged plaintiffs’ affidavits, the court noted that the affidavits outlined specific allegations and thus, were sufficient, notwithstanding the affidavits’ inclusion of “conclusory allegations and hearsay” at the initial stage of the certification inquiry.263

In Alvarez v. IBM Restaurants Inc., 264 restaurant employees brought claims under the FLSA and state law, alleging that they were subjected to a policy and practice requiring them to work in excess of 40 hours per week without adequate compensation under the overtime and minimum wage laws. In granting plaintiffs’ motion for conditional certification, the district court found that plaintiffs had satisfied the lenient evidentiary standard of establishing that they and other potential class members were similarly situated by submitting affidavits describing a common policy to require employees to work overtime without adequate compensation and describing their own particular work circumstances. The affidavit identified other employees who allegedly were also underpaid.

6. Addressing “Dispositive Issues” Prior to Conditional Certification

In D’Antuono v. C & G of Groton, Inc,265 three plaintiffs moved for collective action status on behalf of themselves and other similarly situated exotic dancers

257 See id. at *4-6. 258 Id. at *6. 259 Id. 260 See id. at *7. 261 276 F.R.D. 54 (E.D.N.Y. Jul. 18, 2011). 262 Id. at 58. 263 Id. at 59. 264 839 F. Supp. 2d 580 (E.D.N.Y. 2012). 265 2011 WL 5878045 (D. Conn. Nov. 23, 2011).

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challenging defendants’ treatment of them as independent contractors. The district court addressed defendants’ argument that exotic dancers who signed an arbitration agreement which included a collective and class action waiver precluded certification. Defendants relied on the district court’s previous decision that two of the three named plaintiffs had signed “leases” with enforceable collective and class action waiver provisions, thereby closing the case as to those two named plaintiffs.266 The court, however, refused to consider the dispositive issue of whether all potential class members are precluded from joining a collective action because of the “leases,” following other courts that have elected to conditionally certify a class before ruling on the enforceability of such type of arbitration agreements.267 Further, the district court, in granting conditional certification, noted that many of defendants’ arguments should not be considered for the purposes of the first-stage conditional certification analysis, such as whether the remaining named plaintiff actually worked at defendants or whether she was an employee of defendants.

In Fetrow-Fix v. Harrah’s Entertainment,268 sixteen casino employees moved for

collective action status for minimum and overtime compensation for mandatory pre-shift meetings. Plaintiffs moved for two nationwide classes across 35 casinos, one for certain non-exempt personnel and another for personnel that defendant classified as exempt. Prior to the conditional certification motion there had been extensive discovery and other motion practice as well. The district court had previously granted Defendants summary judgment, finding one of the plaintiffs was executive exempt as a matter of law; on that basis, it refused to certify the class of “exempt” workers. The court also rejected the non-exempt class, noting that unsupported assertions of FLSA violations are insufficient to support a collective action.

In Romero v. Mountaire Farms,269 2,000 chicken processing plant employees

sought compensation for time spent obtaining and donning their sanitary and protective equipment. Plaintiffs’ claims included donning and doffing before and after their scheduled time on the processing line, as well as before and after their unpaid meal breaks. The disctrict granted plaintiffs’ motion for conditional certification in part and narrowed both the class definition and the claims. First, the court limited the class to include only employees who were paid on a “gang time” or “line time” system, in which employees had a scheduled start time but varying end times. Second, the court found that time spent donning and doffing before and after the employees’ unpaid meal breaks was not compensable under the FLSA. It narrowed the class definition to exclude this time and dismissed those claims.

266 2011 WL 5878045, at * 2-3 (D. Conn. Nov. 23, 2011). 267 Id. at *2. 268 2011 WL 6938594 (D. Nev. Dec. 30, 2011). 269 796 F. Supp. 2d 700 (E.D.N.C. 2011).

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8. Certification Against Multiple Employers

In Johnson v. VCG Holding Corp.,270 two disc jockeys moved for conditional class certification on behalf of all disc jockeys at a number of defendants’ adult entertainment nightclubs. Plaintiffs claimed that they were paid wages below the minimum wage and could not be considered “tipped employees” under the FLSA because they did not receive more than $30 a month in tips from customers and money they received from dancers at the nightclub did not count as tips. One of the disc jockeys previously worked for the employer at two different locations and was paid less than minimum wage at both locations. Though dismissing the certification on other grounds, the district court held that “[i]n light of the fairly lenient standard at the notice stage,” the employee’s experience at two different clubs owned by the employer was sufficient to justify conditional certification at the employer’s out-of-state locations.271 The court noted that based on significant differences in the disc jockeys’ experiences and duties, discovery may reveal variation in the activities, duties, and compensation of disc jockeys. However, the court said that these differences are best considered after discovery has provided a more accurate record.

Employee sales representatives in Karic v. Major Automotive Cos., Inc.272 sought

to recover unpaid minimum wages on behalf of a class of employees from various related car dealerships. Plaintiffs, who worked at several different car dealerships, alleged that they had not been paid minimum wages for hours worked because they were only paid $20 per week plus commission if they sold vehicles. Defendants denied that plaintiffs were not paid the minimum wage, as they believed additional discovery would demonstrate. Plaintiffs sought a declaratory judgment, unpaid wages, unpaid commissions, liquidated damages, pre-judgment interest, post-judgment interest, and an injunction requiring defendants to pay all required wages. The district court granted plaintiffs’ motion to conditionally certify a collective action against related defendant companies. Applying the lenient conditional certification standard, the court included defendant entities for which plaintiffs had not provided a specific affidavit based on allegations in the complaint and the eight plaintiffs’ declarations from which the court inferred that all defendant entities are commonly owned and operated by the same individuals who set a common policy at all locations.

D. Misclassification Cases

1. Cases Granting Conditional Certification in Misclassification Cases

In Scovil v. FedEx Ground Package Sys., Inc., 273 delivery drivers in Maine alleged Fed Ex misclassified them as independent contractors and thereby failed to pay them overtime. In support of their conditional certification motion, plaintiffs submitted affidavits from six drivers who claimed that they had similar job duties and were paid

270 802 F. Supp. 2d 227 (D. Me. 2011). 271 Id. at 235-36. 272 799 F. Supp. 2d 219 (E.D.N.Y. 2011). 273 811 F. Supp. 2d 516 (D. Me. 2011).

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according to a common policies and practices (payment per-package delivered). In addition, the affiants all claimed they were all subject to an alleged common policy of misclassification of employment status. Defendant objected to conditional certification on the basis that, under the economic realities test, plaintiffs and other delivery drivers were not similarly situated. In granting conditional certification, the district court applied certain factors from the economic realities test to determine whether plaintiffs’ proposed class of drivers was similarly situated. The court then found that, based on the affidavits submitted, plaintiffs made a sufficient showing that they suffered from a common unlawful policy or plan.

In Scott v. Bimbo Bakeries, USA, Inc.,274 a group of delivery drivers sued for

alleged violations of the FLSA and Pennsylvania law. They claimed that defendants misclassified them as independent contractors. 275 Plaintiffs moved for conditional certification of a nationwide collective action.276 In support of their motion, plaintiffs pointed to evidence that suggested potential class members had similar job duties, shared a similar business relationship with defendants, and were all subject to essentially the same “Distribution Agreement,” which classified them as independent contractors. Defendants argued that certification should be denied due to several individual differences between plaintiffs and potential class members, including plaintiffs’ use of employees or helpers.277 In granting plaintiffs’ motion for conditional certification, the district court found that plaintiffs had demonstrated a “modest factual showing” that defendants’ alleged policy of treating delivery drivers as employees rather than independent contractors affected both plaintiffs and potential class members alike. The court also found that although defendants produced evidence of individual differences, these facts did not undermine plaintiffs’ “modest factual showing.”278

In Bobbitt v. Broadband Interactive, Inc., 279 plaintiff collections/disconnect

technicians alleged defendant cable company misclassified them as independent contractors and thereby failed to pay minimum wages and overtime pay under the FLSA and Florida law. The district court granted plaintiffs’ motion for conditional certification, rejecting defendant’s argument that conditional certification was inappropriate in part because the claims at issue involved a highly fact intensive inquiry whether plaintiffs were employees versus independent contractors. Applying the two-tiered approach to conditional certification adopted by the Eleventh Circuit in Hipp v. Liberty Nat’l Life Ins. Co.,280 the court found plaintiffs had presented sufficient evidence that putative class members were similarly situated with respect to job requirements and pay and that other employees had expressed an interest in joining the lawsuit.281

274 2012 U.S. Dist. LEXIS 26106 (E.D. Pa. Feb. 29, 2012). 275 Id. at *24-25. 276 Id. at *4. 277 Id. at *37. 278 Id. at *36-37. 279 2012 U.S. Dist. LEXIS 71628 (M.D. Fla. May 23, 2012). 280 252 F.3d 1208, 1218 (11th Cir. 2001). 281 Id. at *5-6, 11-14.

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In Walker v. Honghua America, LLC,282 the district court granted first-stage conditional certification on plaintiffs’ claims arising from being allegedly misclassified as independent contractors. The court rejected defendants’ contention that a core issue -- employee versus independent contractor status—was inherently ill-suited to collective action treatment, citing several contrary decisions.283 The court highlighted a split in authority as to whether the appropriate analysis of independent contractors’ similarity at the conditional certification stage. It noted that some courts use the economic realities test and some analyze the similarities among the putative class members’ work arrangements, while others “borrow from each of these approaches.” The court held that the “economic factors test is likely not appropriate for determination at the first stage of FLSA class certification.” Even so, the court said that plaintiffs have presented sufficient evidence that they are similarly situated under the five factors.

In Ack v. Manhattan Beer Distributors, Inc.,284 sales associates sued defendants

for unpaid overtime, claiming that they were paid a weekly salary based on a 40-hour week regardless of the number of hours actually worked. In opposition to plaintiffs’ motion for conditional certification, defendants argued that plaintiffs failed to establish that the members of the proposed collective action were similarly situated or that defendants had an unlawful policy. The district court granted the motion, relying on the five named plaintiffs’ declarations showing they that they each had been told they would be working a 40-hour week and paid accordingly, but were in fact required to work a substantial amount of overtime without receiving any overtime premium, and that they had personal knowledge that other sales associates regularly worked hours beyond 40 per week and received paychecks showing only 40 hours of work per week. Defendants argued, among other things, that plaintiffs’ claims involved individualized determinations as to whether a particular sales associate was exempt as outside salespersons due to the fact that the methods of operation varied not only between company divisions, but also within each sales division, that the “spectrum of sales and merchandising performed by sales associates varies substantially.” The court rejected this argument because plaintiffs “seek to establish that all sales associates were misclassified as exempt, which does not require an individualized analysis.”285

In Alli v. Boston Market Co.,286 plaintiffs holding the positions assistant general

manager, culinary manager and hospitality manager at Boston Market Restaurants asserted FLSA overtime claims alleging that defendant misclassified these positions as exempt from FLSA. Plaintiffs supported their motion for collective action with evidence that there was no relevant difference in the duties of these various restaurant manager positions and that defendant ran its restaurants according to uniform policies in matters such as food safety, food handling, and food preparation dictated by corporate headquarters. Plaintiffs also submitted evidence that all training for the three positions was done pursuant to detailed guidelines set by corporate headquarters. In granting the

282 2012 WL 1601288 (S.D. Tex. May 7, 2012). 283 Id at *6. 284 2012 WL 1710985 (E.D.N.Y. May 15, 2012). 285 Id. at *6 286 2011 WL 4006691 (D. Conn. Sept. 8, 2011).

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motion, the district court ruled that this evidence satisfied plaintiffs’ modest burden of submitting evidence that the positions in question performed similar work at each of the restaurants.

In Lawson v. Bell South Telecomms., Inc.,287 a group of field managers filed a

collective action alleging that they were misclassified as exempt executive or administrative employees. In support of their motion for conditional certification, plaintiffs presented a “day in the life” document, which established what plaintiffs were required to do at each time of the day. The court determined that this document established that all field managers share the same daily routines and similar job duties, and alleged the same unlawful treatment, thereby satisfying the lenient conditional certification standard.

In Jacob et al. v. Duane Reade, Inc., et al., 288 a group of assistant store

managers (ASMs) alleged that they were misclassified as exempt and thereby denied overtime pay.289 The district court held that plaintiffs had “made more than the necessary ‘modest showing’ that ASMs” were similarly situated.” 290 In granting conditional certification, the district court first rejected defendant’s argument that plaintiffs relied solely on “conclusory allegations” that ASMs are actually misclassified, reasoning it was “largely premature” and “inappropriate to determine at this stage the unbriefed issue of whether the ASM job description is consistent with a position rightfully exempt from the FLSA overtime requirements.”291 The district court next rejected defendant’s argument that uniform, company-wide policies and job descriptions were insufficient to meet plaintiff’s low burden. While observing that there is contrary authority supportive of defendant on this issue, the district court held that plaintiffs were not seeking a nationwide collective action, and that plaintiffs do not rely exclusively on defendant’s job description and other corporate documents to show that plaintiffs are similarly situated. Finally, defendant argued that plaintiffs had failed to demonstrate that all ASMs were similar situated, and in support, submitted deposition testimony and declarations from current employees. However, the district court declined to weigh the competing testimony that plaintiffs and defendants submitted. In rejecting this argument, the district court observed that the issue is “not whether Plaintiffs and other ASMs were identical in all respects, but ‘rather whether they were subjected to a common policy to deprive them of overtime pay when they worked more than 40 hours per week.’”292 According to the district court, if defendant’s logic was extended, no group of opt-in plaintiffs “would ever be ‘similarly situated’ unless they were clones of one another working in completely identical stores, in identical neighborhoods, with identical clientele.’” 293 Finally, the district court observed that defendants do not consider the differences in the ASMs’ job duties sufficient to require defendant to undertake an individual analysis before it categorically classified all ASMs as exempt 287 2011 WL 3608462 (N.D. Ga. Aug. 16, 2011). 288 2012 WL 260230 (S.D.N.Y. Jan. 27, 2012) 289 Id. at *1 290 Id. at *9 291 Id. at *5 292 Id. at *8 293 Id. (quoting Demassia v. Duane Reade, Inc., 2006 WL 2853971, at *21 (S.D.N.Y. Oct. 5, 2006)).

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from the FLSA. Accordingly, the district court found that there was enough evidence for plaintiffs “to meet the light burden at this preliminary stage” showing that the ASMs were similarly situated.294

In D’Antuono v. C & G of Groton, Inc,295 exotic dancers brought a collective

action alleging that defendants misclassified them as independent contractors.296 In granting plaintiffs’ motion for conditional certification, the district court determined that the affidavits and deposition testimony submitted by plaintiff constituted a sufficient preliminary showing that all putative class members held the same or similar positions, the same or similar duties, and were all designated, as a class, as independent contractors. The district found this modest factual showing sufficient to demonstrate that the class of exotic dancers were victims of a common policy or plan that violated the law.

In Raniere v. Citigroup Inc., 297 two home lending specialists and a loan consultant sought a collective action against defendants, a global financial services holding company and its subsidiary bank and subsidiary mortgage company, alleging defendants improperly classified them as exempt from the FLSA.298 The district court held that “based on pleadings, affidavits, and other exhibits,” plaintiffs made “more than the necessary ‘modest showing’ of a nexus between their situation and that of potential opt-in plaintiffs for conditional certification” under the FLSA.299 The court noted that plaintiffs’ contention that defendants’ nationwide reclassification of potential opt-in members, while alone did not justify conditional certification, supported that defendants “treated [p]laintiffs and potential opt-in plaintiffs with uniform pay and employment-related policies.”300 The court rejected defendants’ argument for a fact-intensive inquiry as inconsistent with the conditional certification standard and premature. The court found that defendants’ submission of eleven declarations from current employees that attempted to demonstrate diversity of job functions would not defeat conditional certification in light of plaintiffs’ showing. The court noted that if plaintiffs’ affidavits were “sufficiently similar and detailed to constitute a preliminary showing that they and other potential plaintiffs together were victims of a common policy or plan, plaintiffs have met their burden.” 301

In Pippins v. KPMG LLP,302 plaintiffs moved for conditional certification of a

collective action for “themselves and other similarly situated current and former KPMG audit associates whom KPMG classified as exempt.” The court ruled that plaintiffs met their burden of proving they are similarly situated as to their job duties and requirements. They all shared the same title, worked in the same audit function and

294 Id. at *7, 9 295 2011 WL 5878045 (D. Conn. Nov. 23, 2011). 296 Id. at *2. 297 827 F. Supp. 2d 294 (S.D.N.Y. 2011). 298 Id. at 298-99. 299 Id. at 325. 300 Id. at 322. 301 Id. 302 2012 WL 19379 (S.D.N.Y. Jan. 3, 2012).

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had uniform training. They were required to follow detailed guidelines and were governed by the same regulatory and professional standards. The court also found that defendants had uniformly classified the audit associates as exempt without regard to any possible differences as to individualized functions. The court ruled the employees were similarly situated and the alleged misclassification could be determined on a collective basis.

In Swigart v. Fifth Third Bank,303 mortgage loan officers employed by a bank filed

sought collective action status for overtime claims stemming from their alleged misclassification. The district court granted the motion, noting that all loan officers were subject to the same exempt classification that plaintiffs alleged violated the FLSA, were denied overtime pay, shared the same primary job duty, selling residential mortgage products, and were subject to similar production goals.304

In Davis v. Mostyn Law Firm, P.C,305 paralegals moved to certify a collective

action against a law firm for overtime pay. Plaintiffs argued that paralegals regularly worked over 40 hours in a workweek, performed similar duties (including typing, filing, copying, and general work associated with representing the firm’s clients), and were improperly denied overtime compensation. Defendant countered that conditional certification in a misclassification case was improper because an employer’s classification of a position is not a decision, policy, or plan that supports collective active treatment. The district court granted the motion, finding that there was evidence that salaried paralegals were subject to the same company-wide policy (i.e., they were not paid overtime). Further, the court noted that the similarly-situated requirement was a lenient standard and plaintiffs’ declarations were sufficient to conditionally certify a misclassification case.

2. Cases Denying Conditional Certification in Misclassification Cases

In Andel v. Patterson-UTI Drilling Co., LLC,306 plaintiffs, a group of welders,

alleged they were misclassified as independent contractors and moved for conditional certification. The district court judge adopted the magistrate’s report and recommendation denying the motion. The court concluded that whether plaintiffs were employees under the FLSA could not be determined without a significant individualized analysis, which was contrary to the primary purpose behind collective actions of promoting judicial economy.

In Arrington v. Michigan Bell Tel. Co., 307 the district court denied, without prejudice, plaintiffs’ motion for conditional certification. The court explained that plaintiffs, first level managers, may show either their positions and duties are similar to putative class members or they were victims of a single policy or practice. The court

303 276 F.R.D. 210 (S.D. Ohio 2011). 304 Id. at 213-14. 305 810 F. Supp. 2d 1145 (D. Haw. 2011). 306 280 F.R.D. 287 (S.D. Tex. 2012). 307 2011 WL 3319691 (E.D. Mich. 2011).

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found that plaintiffs failed to meet the modest requirements that they were similarly situated because they provided nothing more than conclusory allegations. The only evidence they provided were declarations from the two plaintiffs themselves discussing their experiences and beliefs that defendant was not compensating other first level managers for overtime work. The court noted no other plaintiffs at the time had joined the suit and anticipation of a class of 150 without any basis to support such a belief supports the holding they were not similarly situated. The court concluded that when denying motions for certification at this stage it may permit discovery to provide plaintiffs with an opportunity to obtain sufficient evidence to warrant conditional certification.

Plaintiff in Jenkins v. TJX Companies Inc.308 sought conditional certification of a nationwide collective action on behalf of Assistant Store Managers (ASMs), who they claimed were misclassified as exempt from the FLSA’s overtime requirements. The district court denied conditional certification without prejudice. In support of the motion, plaintiff submitted evidence that defendants used a common job description and the same training materials for all ASMs nationwide. The court found that such evidence of a “common policy” did not demonstrate that putative class members were similarly situated with regard to their job duties. It noted that where “the Plaintiff proposes a nationwide class, he must ultimately demonstrate a nationwide policy pursuant to which ASMs are assigned duties that render [defendants’] exempt classification inappropriate.”309 Evidence of common training materials, job descriptions, and similar “roles” did not suffice because none of that evidence indicated that employees performed common, non-exempt duties. The court explained a “common national policy regarding job responsibilities” does not support conditional certification “where the plaintiff is not attacking the defendant’s formal job policies, but rather is asserting that [employees] were not given duties in compliance with those policies . . . .”310

In Hardemon v. H & R Block Eastern Enterprises, Inc.,311 plaintiffs sought conditionally certify a nationwide class of H&R Block officer managers for overtime pay. The court denied plaintiffs’ motion, citing one of the prior cases in which a court refused to certify a nationwide class of 80,000 employees because they were not similarly situated. It found that defendant had several different defenses depending on individual opt in circumstances, and thus concluded the putative class members were not similarly situated. It denied the nationwide class sought and also de-certified a smaller class limited to areas in Florida.

In Khan v. Airport Mgmt. Servs., LLC,312 plaintiff, who held several managerial roles in airport/commuter station news shops, claimed that defendant misclassified him and a class of similarly situated managerial employees as exempt. He sought to conditionally certify a class of current and former employees who held the title of “manager” but whom he claimed were not actually exempt under the FLSA. In support

308 853 F. Supp. 2d 317 (E.D.N.Y. 2012). 309 Id. at 321. 310 Id. at 322-23 311 2011 WL 3704746 (S.D. Fla. Aug. 23, 2011). 312 2011 WL 5597371 (S.D.N.Y. Nov. 16, 2011).

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of his motion, plaintiff relied only on his declaration and the declarations of three former non-exempt, hourly co-workers. Defendant submitted 23 declarations from individuals with various management roles in shops across the country claiming that they had broad managerial duties. In denying plaintiff’s motion for conditional certification, the district court found that plaintiff “ha[d] not produced sufficient evidence that there are other employees who may share his claim.”313 The court found that though “not determinative,” it was “telling” that after five months of discovery, plaintiff had been “unable to produce a single other individual interested in participating as a plaintiff in this case.”314

E. Off-the-Clock Cases In Ware v. T-Mobile USA,315 the district court conditionally certified a class action

brought by six of defendant’s former employees on behalf of customer service and technical support representatives at defendant’s call centers. Plaintiffs alleged defendant failed to compensate them properly for pre-shift work and work performed during unpaid meal breaks and by miscalculating their regular rate of pay. The district court granted conditional certification on behalf of plaintiffs at two call centers, but found that since plaintiffs did not present a declaration from a current or former employee at any other call center the certification would be limited to only those two call centers. Defendant also argued that the class should not be certified at all since plaintiffs had not shown sufficient interest among the members of the putative class. The district court disagreed, finding that since plaintiffs had presented another former employee who opted into the action, this single opt in sufficiently satisfied the lenient standard for conditional certification. Defendant next cited Wal-Mart Stores, Inc. v. Dukes,316 and asked the court not to certify due to the individualized nature of plaintiffs’ claims. The district court found Dukes did not apply because the Sixth Circuit had distinguished Rule 23’s more stringent class certification criteria from the FLSA’s opt-in criteria. As such, the district court found that putative plaintiffs in an FLSA case may be similarly situated if their claims are “unified by common theories of defendants’ statutory violations, even if the proofs of these theories are inevitably individualized and distinct.”317

In Perrin v. Papa John’s Intern., Inc., 318 pizza delivery drivers moved for

conditional class certification alleging their employer violated the FLSA by applying an automobile expense reimbursement methodology that underestimated both the expenses incurred by the delivery drivers and the number of miles they drove, bringing plaintiffs’ hourly wages to a rate below the minimum wage. 319 Pursuant to the reimbursement methodology, drivers received a flat fee for each delivery made

313 Id. at *4. 314 Id. at *5. 315 828 F. Supp. 2d 948 (M.D. Tenn. 2011). 316 131 S. Ct. 2541, 180 L. Ed. 2d 374 (2011). 317 Ware, 828 F. Supp. 2d at 956 (citing O’Brien v. Ed Donnelly Enters., 575 F.3d 567, 585 (6th Cir. 2009)). 318 2011 WL 4089251 (E.D. Mo. Sept. 14, 2011). 319 Plaintiff also asserted wage and hour violations of Missouri, Arizona, Florida, Illinois, Maryland, and North Carolina law under Federal Rule of Civil Procedure 23.

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regardless of the distance traveled. In granting plaintiffs’ motion for conditional certification, the district court held that plaintiff came forward with detailed, substantial allegations that he and the drivers he sought to represent were subject to a single policy that systematically under-reimbursed them for automobile expenses incurred in the course of their employment and thus yielded an hourly rate less than the applicable minimum wage. 320 The court also found the company’s merit-based arguments, including policy variances over time and from location to location, were premature at the conditional certification stage of litigation. In granting the motion, the court rejected defendant’s request to include in the notice language stating that potential plaintiffs may be required to travel to the district to testify in deposition or in court. It explained that such language only serves to discourage individuals from joining. However, the court agreed with defendant that mailing of the notice to the potential plaintiffs was sufficient and did not require defendant to post it in the workplace.

In Alvarez v. IBM Restaurants Inc.,321 restaurant employees brought claims under the FLSA and state law alleging they were subjected to a policy and practice requiring them to work in excess of 40 hours per week without adequate compensation under the overtime and the minimum wage laws. In granting plaintiffs’ motion for conditional certification, the court found that plaintiffs had satisfied the lenient evidentiary standard of establishing that they and other potential class members were similarly situated by submitting affidavits describing a common policy requiring employees to work overtime without adequate compensation and describing their own particular work circumstances. The affidavit identified other employees who allegedly were also underpaid.

In Nobles v. State Farm Mutual Auto. Ins. Co.,322 a claims processor and a claims representative sought to certify a class of hourly employees, claiming defendant had a written policy under which it paid certain non-exempt, hourly employees a standard number of hours plus scheduled overtime without regard to the actual number of hours worked. The district court granted plaintiffs’ motion for class certification using a two-step analysis. The court explained that under this process, first plaintiffs seek collective action certification for notice purposes, and the court analyzes the request under a lenient standard without reaching the merits of plaintiffs’ claims. It explained that the second step typically occurs at close of discovery and, at that point, defendant may move to decertify the class. Because the parties had engaged in some discovery, defendant asked the court to apply an “intermediate” standard by evaluating the facts already presented to the court. The court rejected defendant’s argument. In so doing, the court noted that the outcome would have been the same even if it had adopted defendant’s approach because the court found class certification appropriate under Fed. R. Civ. P. 23.323

320 2011 WL 4089251 at *4. 321 839 F. Supp. 2d 580 (E.D.N.Y. 2012). 322 2011 WL 3794021 (W.D. Mo. Aug. 25, 2011). 323 Id. at *9.

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In Romero v. H.B. Automotive Group, Inc.,324 plaintiff asserted FLSA overtime and minimum wage claims against her former employer, a company owning automobile dealerships. During her employment by defendants, plaintiff worked as an automobile salesperson and subsequently an inventory manager, a position in which she kept dealerships stocked with automobile goods. Plaintiff was the only person ever hired by defendant as an inventory manager. After class discovery, plaintiff sought conditional certification of her collective FLSA class, defined as any “non-managerial” employee of defendant who was not paid proper minimum or overtime wages. The court denied plaintiff’s motion, citing a number of reasons, including that (1) plaintiff’s own claim for overtime wages while she was a salesperson was meritless because she was exempt; (2) plaintiff was the only inventory manager ever hired by defendants; (3) the proposed class included a “broad array” of positions in at least six different dealerships; (4) no job descriptions were provided; (5) some of the proposed class members were classified as exempt while others were not; and (6) plaintiff’s only evidence that others were similarly situated to her was an unsigned affidavit that was not considered by the court.

In Poplawski v. Metroplex on the Atlantic LLC,325 construction workers moved for

certification of a collective action under the FLSA and a state law class action under Rule 23(b)(3). Defendant did not file an answer or respond to the motion. In granting certification, the court ruled that plaintiffs only need to make a “modest factual showing sufficient to demonstrate that they and potential plaintiffs together were victims of a common policy or plan and violated the law”. Since plaintiffs alleged that defendants have a common practice of violating the FLSA’s wage and overtime payment requirements, and defendants have not appeared to dispute that plaintiffs were similarly situated, the court granted conditional FLSA certification. The court also certified the class for purposes of Rule 23. As to numerosity, plaintiffs were required to show the proposed class was so numerous that joinder of all members would be impracticable. Relying on the numbers alleged by plaintiffs alone, the court ruled in favor of certification. Since plaintiffs alleged 40 to 160 similarly situated employees on defendants’ construction projects, the court considered the class to be sufficiently numerous. In determining whether common questions predominated, the court found the central issue was whether defendant failed to pay overtime. The court contrasted cases requiring extensive inquiries into the facts and circumstances of an individual’s employment such as in off –the-clock cases.

In Tice v. AOC Senior Home Health Corp.,326 licensed vocational nurses brought

FLSA overtime claims. Plaintiffs moved for conditional certification and the court noted that at the conditional certification stage a plaintiff bears the burden of presenting preliminary facts showing that a similarly situated group of potential plaintiffs exists. In granting conditional certification, the court noted that plaintiffs and one potential class

324 2012 WL 151480 (S.D.N.Y. May 1, 2012), 325 2012 WL 1107711 (E.D. N.Y. Apr. 2, 2012). 326 826 F. Supp. 2d 990 (E.D. Tex. 2011).

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member who submitted a declaration were subject to the same pay practices, and all claimed they were required to work overtime without appropriate compensation.327

In Titchenell v. Apria Healthcare Inc.,328 a customer service specialist brought off-

the-clock claims under the FLSA and moved for conditional certification. The court considered the motion under the “modest factual showing” standard rather than the “mere allegation” standard because discovery had already begun.329 Defendant argued that plaintiff worked unpaid overtime on her own initiative and not because of a policy or practice. The court rejected this argument, noting that plaintiff had made a “modest factual showing” of a policy or practice requiring unpaid overtime, including evidence that plaintiff’s supervisor was aware that plaintiff worked after 5:00 p.m. without overtime and incentivized her to do so.330 Plaintiff also submitted two affidavits demonstrating that at least two other individuals encountered the same unwritten policy that customer service specialists should finish their work off the clock.331

1. Pre-Shift and Post-Shift Cases

In Sandifer v. U.S. Steel Corp., 332 steelworkers brought a collective action

alleging that defendant violated the FLSA by failing to compensate employees for the time spent putting on and taking off work clothes in a locker room at the plant and for time spent walking from the locker room to work stations, and vice versa at the end of the day.333 Specifically, plaintiffs were required to change into a protective outfit that consisted of flame-retardant pants and jacket, work gloves, metatarsal boots, a hard hat, safety glasses, earplugs, and a “snood” (a hood that covered the top of the employee’s head, chin and neck).334 On summary judgment, the district court ruled that time the employees spent changing was not compensable, but that travel time may be compensable under the FLSA.335 The district court certified the travel time issue for interlocutory appeal, and plaintiffs cross-appealed on the issue of whether the time spent changing clothes was compensable. The Seventh Circuit affirmed the district court’s finding that time spent changing clothes was not compensable under Section 203(o) of the FLSA, which creates an exclusion for clothes changing time pursuant to the terms of a collective bargaining agreement.336 However, the court held the district judge erred in finding travel time compensable.337 As the time employees spent changing clothes in the locker rooms was a non-compensable activity pursuant to 327 Id. at 996. The court also rejected defendant’s arguments that (1) plaintiffs and potential class members were not sufficiently similar due to potential differences in job duties; and (2) that plaintiffs had not identified any potential class members other than themselves. See id. at 995-96. 328 2011 WL 5428559 (E.D. Pa. Nov. 8, 2011). 329 See 2011 WL 5428559 at *3 (citing Smith v. Bancorp, Inc., 2003 WL 22701017, at *3 (E.D. Pa. Nov. 13, 2003)). 330 See id. at *4-6. 331 Id. at *6. 332 678 F.3d 590 (7th Cir. 2012). 333 Id. at 591. 334 Id. at 592. 335 Id. 336 Id. at 595. 337 Id. at 599.

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Section 203(o), plaintiffs did not begin their “principal activity” until they actually reached their work stations.338 Therefore, such time was non-compensable under the Portal-to-Portal Act, Section 254(a).339 The Seventh Circuit noted that such a holding was contrary to the Sixth Circuit’s holding in Franklin v. Kellogg Co.,340 but explained that it felt the Franklin ruling was “clearly wrong” as it “offers only a conclusion, not reasons.”341 It also explained that even though the DOL filed an amicus curiae opinion on behalf of plaintiffs, the DOL’s opinion was entitled to little weight as the court found it to be political in nature, especially in light of the DOL’s recent switch in positions on the issue.342

In Bittick v. City of Foristell,343 police officers in the City of Foristeel, Missouri filed

suit under the FLSA, alleging they were denied minimum wages and overtime compensation for all hours worked over 40 per workweek, including compensation for fifteen minutes of “pass on time” spent inspecting and transferring equipment between officers, preparing logs of patrol car drive time, and otherwise discussing work-related issues before their work shifts began. Defendant scheduled plaintiffs to work in two-week work periods, and had a policy of compensating them at overtime rates for all hours worked beyond 80 in a 14-day work period.344 Defendant moved for summary judgment on plaintiffs’ FLSA claim, arguing that its 14-day work period for police officers entitled it to a partial overtime exemption under 29 U.S.C. § 207(k). Plaintiffs argued that § 207(k) does not apply to them because they worked in excess of 86 hours during a 14-day work period. 345 The court held that defendant demonstrated that the employees met the requirements for the exemption to apply. Specifically, defendant was a public law enforcement agency that had adopted a qualifying 14-day work period, and plaintiffs were engaged in law enforcement activities. Therefore, to be eligible for overtime, plaintiffs must demonstrate that they worked over 86 hours in a 14-day work period for the FLSA overtime requirements to apply. In granting defendant’s motion for summary judgment as to the partial exemption from overtime, the court also held that defendant did not lose the exemption for paying overtime more generously than the adopted 14-day work period required.346

In Bennett v. Advanced Cable Contractors, Inc.,347 plaintiff brought a collective

action on behalf of cable technicians who were employed by defendant in Georgia claiming that defendant had an unlawful policy of paying its cable technicians on a piece-rate basis without overtime compensation for hours worked beyond 40 in a week. Plaintiff moved for conditional certification, and in support of his motion, he submitted his own declaration and declarations from six other putative class members, who each

338 Id. at 596. 339 Id. at 596-97. 340 619 F.3d 604 (6th Cir. 2010). 341 678 F.3d at 598. 342 Id. at 599. 343 2011 U.S. Dist. LEXIS 149792 (E.D. Mo. Dec. 30, 2011). 344 Id. at *7-8, 13-14. 345 Id. at *12-13. 346 Id. at *13-14. 347 2012 U.S. Dist. LEXIS 63605 (N.D. Ga. May 7, 2012).

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attested that they worked for defendant as a cable technician in Georgia, received piece-rate compensation, and regularly worked over 40 hours per week without receiving overtime pay.348 The district court applied a lenient standard and held that plaintiff presented sufficient evidence to establish that he was similarly situated to the class he sought to represent.349

In Ugas v. H & R Block Enterprises, LLC,350 a tax professional employed by

defendant filed suit alleging state law claims and a failure to pay overtime compensation and wages in violation of the FLSA. Plaintiffs filed a motion for conditional certification of a nationwide FLSA subclass. Defendants argued that because significant discovery had already occurred, the court should apply the more rigorous second-stage certification analysis. Defendants further asserted that under this standard, plaintiffs were not similarly situated because each putative class member’s off-the-clock claims would require individualized inquiries into what happened at different branch locations and under different managers. Defendant also argued that different defenses would likely be available as to different class members and that conditional certification was therefore inappropriate. The district court granted plaintiff’s motion for conditional certification concluding that the named plaintiff had adequately demonstrated that she was similarly situated based on evidence that could show defendant pursued an unwritten policy to improperly withhold wages and overtime. However, because there was no evidence presented by plaintiff of commonality beyond the Pomona district—as opposed to the broader region containing defendant’s Pomona, California offices—the district court limited the putative class to “those current and former employees of [defendant] in the Pomona district only.”351

In Perez v. Guardian Equity Mgmt., LLC, 352 plaintiff moved for conditional

certification of a class of maintenance workers at each of defendant’s 11 apartment complexes. Defendant argued that conditional certification was improper because its written policy was to pay for all overtime hours worked, and any underpayment plaintiff experienced was caused by the manager at the complex where he worked and thus unique to plaintiff.353 In granting conditional certification, the court held that the issue was not merely whether there was a single policy governing compensation but rather whether there was a common practice of deviating from that policy.354 The court found the common policy requirement was satisfied by plaintiff’s evidence that the directive to limit employees’ overtime hours was given to the local managers at each of the defendant’s apartment complexes; that maintenance workers at other complexes told plaintiff they were similarly underpaid; and that defendant’s policy required complex managers to assemble and prepare time records that were sent to a central corporate payroll director.355 348 Id. at *39. 349 Id. at *36-41. 350 2011 WL 3439219 (C.D. Cal. Aug. 4, 2011). 351 Id. at *12. 352 2011 WL 2672431 (S.D. Tex. July 7, 2011). 353 Id. at *7. 354 Id. at *8. 355 Id.

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In Gibson v. NCRC, Inc.,356 plaintiff, a field service technician who provided

general maintenance services to retailers, brought a collective action arguing that defendant violated the FLSA by not compensating technicians for “nonproductive” time spent driving between customers’ work sites. The court granted plaintiff’s motion for conditional certification, finding there was a uniform policy with regard to compensation of technicians for “nonproductive” time and sufficient evidence that defendant had not compensated plaintiff and other technicians for driving time between job sites.

In Robinson v. Ryla Teleservices,357 customer service representatives brought FLSA claims against an Alabama call center alleging a failure to pay for time spent working before logging onto the timekeeping system and to timely pay them during certain pay periods. The court permitted defendant an opportunity to conduct limited discovery before responding to plaintiffs’ motion for conditional certification. Ultimately, the court granted plaintiffs’ motion. In doing so, it rejected defendant’s argument that because some discovery had taken place, it should apply a higher standard for determining conditional certification. In applying the low standard for the initial stage of certification, the court found that plaintiffs were similarly situated because they all worked in the same or similar positions with nearly identical duties, and alleged the same FLSA violations. The court declined defendant’s invitation to apply Wal-Mart Stores, Inc. v. Dukes358 to the case, noting that “if applicable at all, Dukes is not applicable at the first step of the two-step collective action certification process.”359 Lastly, although defendants argued that plaintiffs’ claims did not arise from a common policy but rather, from ad hoc decisions by management, the court refused to resolve this factual issue on the current motion.360

In Garrett v. Sitel Operating Corp., 361 call center customer service representatives alleged that defendant violated the FLSA by failing to compensate them for principal work activities performed off-the-clock. Plaintiffs moved for conditional certification of a class of customer service representatives who had been directed by defendant to boot up and log into computer programs prior to clocking in and to clock out before closing computer programs and shutting down their computers each day. In support of their motion, plaintiffs filed eight declarations from putative class members who asserted allegations of pre- and post-shift work similar to those alleged by plaintiffs in their initial complaint. The district court noted the Sixth Circuit’s adoption of a lenient standard for evaluating conditional certification claims and held that based upon the submitted declarations, plaintiff presented sufficient evidence of defendant’s unwritten policy of requiring employees to perform essential work tasks, including booting up and shutting down the computers, while off-the-clock. The court ruled that plaintiffs met

356 2011 WL 2837506 (S.D. Tex. July 18, 2011). 357 Slip Copy, 2011 WL 6667338 (S.D. Ala. Dec. 21, 2011). 358 131 S. Ct. 2541 (2011). 359 Robinson, 2011 WL 6667338 at *3. 360 Id. at *4. 361 2011 WL 5827240 (W.D. Tenn. Nov. 18, 2011).

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their burden of demonstrating that they and proposed class members were sufficiently similarly situated, certifying the collective action.

In Delano v. MasTec, Inc.,362 plaintiffs, a group of satellite installation and service technicians, filed a collective action against defendant, a subcontractor of DirecTV. Plaintiffs alleged that they were not paid for time spent: (1) traveling to and from each job assignment; (2) obtaining necessary tools and equipment; (3) closing out assigned jobs through a central call system; and (4) at job sites where the installation or service order was not completed or cancelled. Plaintiffs also alleged the employer had a policy of encouraging employees to underreport time and to limit reported time to 40 hours a week. Plaintiffs moved for conditional certification and court-facilitated notice to other installation and repair technicians working for defendant at all locations in Florida. The court denied the motion, holding that consents of technicians in Georgia and North Carolina could not establish the existence of Florida technicians who wished to join the lawsuit.

2. Uncompensated Work During Meal Break Time

In Blaney v. Charlotte-Mecklenberg Hosp. Authority,363 plaintiffs, a group of non-

exempt nurses and nurses’ assistants, filed a motion for conditional collective action certification of their claims against defendant, a health care system, for failure to compensate plaintiffs for work during their meal breaks in violation of the FLSA. Specifically, plaintiffs alleged that defendant violated the FLSA by requiring plaintiffs to be on-call during unpaid lunch periods, which often resulted in their lunch periods being interrupted, and automatically deducting meal break time, even when plaintiffs worked through all or part of their breaks.364 In response to plaintiffs’ motion for conditional class certification, defendant argued that plaintiffs could not meet their burden of establishing that conditional collective treatment was appropriate because they failed to identify a common policy or plan that violated the FLSA. Defendant submitted declarations from 26 employees, demonstrating that the alleged policy of requiring nurses and nurses’ assistants to be on-call during lunch breaks was not applicable to all members of the putative class. 365 In rejecting plaintiffs’ motion for conditional certification, the court found that plaintiffs failed to present evidence sufficient to demonstrate that members of the putative class were subjected to an unlawful common policy or practice of requiring nurses and nurses’ assistants to be on-call during their unpaid lunch periods. Absent such common policy, plaintiffs were left with only a lawful policy of automatic deductions for meal periods.366 Accordingly, the court denied plaintiffs’ request for conditional certification.367

362 2011 WL 2173864 (M.D. Fla. June 2, 2011). 363 2011 U.S. Dist. LEXIS 105302 (W.D.N.C. Sept. 16, 2011). 364 Id. at *3-4. 365 Id. at *10-11, 22. 366 Id. at *22-23. 367 Id. at *36.

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In Blakes v. Illinois Bell Tel. Co.,368 current and former cable splicers sued their employer, a telephone service company, for violations of the FLSA and Illinois law. Plaintiffs alleged that defendant failed to compensate them for time spent working during unpaid lunch breaks and for time spent off-the-clock performing necessary work tasks, such as completing timesheets, after their scheduled work shifts.369 Plaintiffs moved to conditionally certify their claims as a collective action under the FLSA.370 In support of their motion, plaintiffs submitted evidence showing that cable splicers were frequently required to travel to job sites and work through their meal periods to maintain the security and safety of their job sites, and that defendant required cable splicers to record a 30-minute lunch break on their timesheets, regardless of whether they actually worked through their meal periods. 371 In granting conditional collective action certification, the court found that plaintiffs made the necessary modest factual showing of a common policy allegedly violating the FLSA sufficient to justify sending judicial notice of the uncompensated lunch-break claim to potential class members.372 The court rejected defendant’s request that a third-party administrator issue the notice to potential plaintiffs rather than plaintiffs’ counsel.

In DeMarco v. Northwestern Memorial Healthcare,373 plaintiff alleged that she

and other hospital employees were routinely interrupted during their meal breaks with work-related tasks but not properly compensated for these breaks.374 Having survived defendant’s summary judgment motion,375plaintiff sought conditional class certification. First, the court found plaintiff produced sufficient evidence to justify conditional certification for herself and the other nurses in her unit, by presenting evidence: that the nurses routinely worked during their meal breaks; that although the hospital’s timekeeping system could remove a meal deduction from a shift, using that feature was contrary to the culture at the hospital; and that the hospital’s meal break policies were not being enforced by management.376 Second, despite a lack of direct knowledge of other nurses outside of plaintiff’s unit, the court found sufficient evidence to conditionally certify a class of all nurses at the hospital, because the nature of plaintiff’s claims were based on work duties shared by all nurses, and evidence showed that management held several mass meetings regarding meal breaks. The court concluded that this demonstrated a systemic problem.377 Third, the court limited the conditional certification to nurses, rather than all hospital employees, because the nature of the nurses’ duties was central to plaintiff’s allegations.378

368 2011 WL 2446598 (N.D. Ill. June 15, 2011). 369 Id. at *1-3. 370 Id. at *4. 371 Id. at *8-11. 372 Id. at *9-11. 373 2011 WL 3510905 (N.D. Ill. Aug 10, 2011). 374 Id. at *3. 375 DeMarco v. N.W. Mem. Health., 2011 WL 3510896 (N.D. Ill. Aug. 10, 2011). 376 DeMarco, 2011 WL 3510905 at *3. 377 Id. 378 Id. at *4.

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In Schwerdtfeger v. Demarchelier Mgmt., Inc.,379 restaurant workers brought collective action claims under the FLSA and state law, alleging their employer failed to pay minimum wage and overtime, and unlawfully appropriated their tips and gratuities. Plaintiffs worked for defendant as servers, hosts or hostesses, bartenders, busboys, and dishwashers.380 Plaintiffs moved for conditional certification of a collective action under § 216(b) of the FLSA. To maintain a collective action, according to the court, plaintiffs must demonstrate that similarly situated employees exist. To do so, “the plaintiffs need only make a ‘modest factual showing’ that they and the potential opt-in plaintiffs together were victims of a common policy or plan that violated the law.’”381 Defendant opposed plaintiffs’ motion for conditional certification, arguing that the named and putative class members were not similarly situated because they performed different job functions.382 The court rejected defendant’s argument, concluding that the fact that employees in the putative class performed different job functions did not necessarily bar conditional certification. According to plaintiffs, all employees who performed different job functions were subjected to the same alleged unlawful policy that violated the FLSA. The court then conditionally certified the class, finding plaintiffs’ affidavits adequately demonstrated that plaintiffs and the putative class members were similarly situated.383

3. Rounding Cases

In Nehmelman v. Penn. Nat. Gaming, Inc.,384 a former casino employee brought an action asserting various off-the-clock practices, including rounding of time worked. With respect to rounding, she alleged that defendant’s policy of rounding to the nearest quarter of an hour “always works against the employees” in violation of the FLSA.385 In response to plaintiff’s motion for conditional class certification, defendant argued that the court would need to make individualized inquiries as to whether each plaintiff was working during the extra minutes before and after his or her scheduled shift and urged the court to consider Rule 23 “gap period” cases in denying the motion.386 The court dismissed this argument, finding that Rule 23 cases, including Wal-Mart Stores, Inc. v. Dukes,387 should not be applied, opting instead for the traditional two-step analysis in FLSA certification cases.388 The court found that plaintiff had evinced the presence of common issues with respect to the alleged rounding policy for purposes of conditional certification.389

379 2011 U.S. Dist. LEXIS 60338 (S.D.N.Y. June 6, 2011). 380 Id. at *3. 381 Id. at *6, 9-10. 382 Id. at *11. 383 Id. at *10, 12, 16. 384 822 F. Supp. 2d 745 (N.D. Ill. 2011). 385 Nehmelman, 822 F. Supp. 2d at 754. 386 Id. 387 131 S. Ct. 2541 (2011). 388 Nehmelman, 822 F. Supp. 2d at 755. 389 Id. at 757.

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VI. Form of Court-Ordered Notice A. Notice Content In Pack v. Investools, Inc.,390 the court considered the propriety of various

aspects of plaintiff’s proposed notice. The court permitted plaintiffs’ description of eligible plaintiffs as “sales representatives, sales associates, educational counselors, or others with similar titles.” In reaching this decision, the court considered that it had not announced a definition of the conditionally certified class in its order granting plaintiffs’ request for conditional certification, that this description was consistent with the proposed definition that plaintiffs had submitted in their memorandum in support of that request, and that defendants could later move for decertification at the close of discovery if discovery revealed that any consenting members of the conditionally certified class were not similarly situated to the named plaintiffs. However the court found the description of eligible participants lacking in that it did not notify recipients that only those who worked overtime and were not compensated at 1.5 times the minimum wage were eligible to join. In addition, because the statute of limitations is measured from the date a consent form is filed, plaintiffs were instructed to indicate that recipients could join the suit if they were employed at any time within the three years and nine months prior to the date on which they sign their consent to join the lawsuit. Though FLSA collective actions and Rule 23 class actions are not analogous, the court found that the differences were not so relevant to a layperson that the words “class action” in a collective action notice would not be materially misleading. In addition, the court instructed plaintiffs to replace their description of the lawsuit with defendants’ more accurate and neutral proposed description.

The subject heading in plaintiffs’ proposed notice used the phrase “right to join,”

and defendant’s proposed language merely informed the recipient that the notice was regarding the “Fair Labor Standards Act (“FLSA”) Lawsuit Filed Against Investools.”391 The court considered that the phrase “right to join” could raise unjustified hopes of financial recovery and that the purpose of the notice is not just to inform recipients that a lawsuit is commencing, but to invite their participation. Therefore, plaintiff was instructed to change the subject line to read “Re: Your Participation in a Lawsuit Seeking to Recover Unpaid Overtime Wages under the Fair Labor Standards Act.”392

The court approved the retaliation language stating that “Federal law prohibits

employers from retaliating or discriminating against you in any way if you choose to take part in this lawsuit. If you are still employed by Investools, your decision about whether or not to join this lawsuit will not affect your employment in any way.”393 The court found the second sentence of this phrase was not unnecessary and unclear, as defendants argued, but rather was helpful and clear to employees applying the cited law to their situation.

390 2011 WL 5325290 (D. Utah 2011). 391 Id. at *3. 392 Id. 393 Id.

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The court allowed language that asked recipients not to contact defendants’

counsel and did not see a need for inclusion of defendants’ counsel’s contact information. Finally, with regard to language describing confidentiality of communications with plaintiffs’ counsel, plaintiffs were instructed to modify the confidentiality language to reflect that only those communications protected by the scope of the attorney client privilege will be kept confidential.

1. Inclusion of the Employer’s Defenses

In Bobbitt v. Broadband Interactive, Inc.,394 plaintiffs, a group of technicians,

moved for conditional certification. Defendant objected to the contents of the proposed notice and consent form and argued that plaintiffs’ proposed consent form should not refer to defendant as the putative plaintiffs’ “current/former” employer” because it was disputing the existence of an employment relationship. While the court granted plaintiffs’ motion for conditional certification, the court ordered plaintiffs to edit the proposed court-authorized notice to remove that reference.395

In Moore v. Eagle Sanitation, Inc.,396 two laborers and drivers filed a lawsuit seeking to recover for unpaid overtime from their former employer and sought to conditionally certify the matter as a collective action. After granting plaintiffs’ motion for conditional certification, defendants challenged plaintiffs’ proposed notice to be issued to potential opt-in plaintiffs on various grounds, including that it did not include more information about defendants’ affirmative defenses. The court observed that the proposed notice acknowledged that defendants denied plaintiffs’ allegations and any liability for back pay, damages, costs, or attorneys’ fees and held that the general denial, “given the similarly brief description of plaintiffs’ claims in the proposed notice, is sufficient to put the potential plaintiffs on notice that Defendants deny the allegations.”397

In Alexander v. Cydcor, Inc., 398 plaintiffs were employed as senior sales

supervisors and sales representatives for a company that sold DirecTV subscriptions. Plaintiffs brought suit under the FLSA on behalf of themselves and others similarly situated for overtime wages. The court conditionally certified a class to receive notice of the action and granted defendant’s request to include a statement of defense in the notice, as the court had previously allowed in other actions.

2. Obligations of the Opt-In Plaintiffs

In Rosario v. Valentine Avenue Discount Store, Co., Inc.,399 a former clerk of a

family of discount department stores filed an action under the FLSA alleging a failure to

394 2012 U.S. Dist. LEXIS 71628 (M.D. Fla. May 23, 2012). 395 Id. at *24. 396 276 F.R.D. 54 (E.D.N.Y. Jul. 18, 2011). 397 Id. at 60. 398 2012 WL 1142449 (N.D. Ga. Apr. 6, 2012). 399 828 F. Supp. 2d 508 (E.D.N.Y. 2011).

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pay minimum wages and overtime. Plaintiff moved for conditional certification as a collective action under 29 U.S.C. § 216(b). The district court granted conditional certification and approved a notice of pendency and consent form for potential opt-in plaintiffs. Defendant challenged a number of aspects of the proposed notice. Defendants first sought to have the description of the opt-in plaintiffs’ obligations modified to state that plaintiffs “will be subject to discovery obligations, which may include providing deposition or trial testimony under oath, responding to documents requests, and/or responding to requests for information.”400 The district court rejected this proposal, observing that the notice should include only a “neutral and non-technical reference to discovery obligations.” It approved the following language instead: “If you join this lawsuit, you make be asked to give testimony and information about your work for defendants to help the Court decide whether you are owned any money.”401 Defendants also sought language making it clear that opt-in plaintiffs need not retain plaintiff’s counsel. The court found the following language sufficient to address this concern: “You can join this lawsuit by representing yourself or by retaining counsel of your own choosing.”402 The district court further rejected defendants’ request to include language warning plaintiffs that they may be obligated to pay defendants’ costs, holding that the chilling effect of such language is disproportionate to the actual likelihood that such costs would be applied to plaintiffs. The district court also declined defendants’ request that opt-in plaintiffs be required to sign the consent forms under penalty of perjury, noting that other courts in the Second Circuit have similarly rejected this requirement. Finally, the district court rejected defendants’ request to include detailed information regarding their defenses in the notice. The court concluded that the following statement was sufficient: “The defendant has denied the allegations of this lawsuit, and has raised various defenses. The court has approved the sending of this Notice, but the Court expresses no opinion on the merits of this lawsuit. A final decision on the merits of this lawsuit has not been made by the Court.”403

In Darrow v. WKRP Mgmt. LLC,404 pizza delivery drivers alleged that defendants

violated the FLSA by failing to sufficiently reimburse them for vehicle-related expenses and, thereby, reducing their wages below minimum wage. In considering the form and content of the notice of lawsuit after granting plaintiffs’ renewed motion for conditional certification, the court considered defendants’ objection to plaintiffs’ proposed notice that it did not inform potential plaintiffs that they may have to pay costs if they do not prevail. The court found that since plaintiffs’ counsel agreed to cover such costs there was no need to include that language. The court did determine, however, that the notice failed to inform potential plaintiffs of certain obligations, and ordered that the notice be amended to state that “While this suit is pending, you may be required to submit documents and written answers to questions and to testify under oath at a deposition, hearing, or trial which may take place in Denver, Colorado.405

400 Id. at 520. 401 Id. 402 Id. 403 Id. at 520-21. 404 2012 WL 638119, at *1 (D. Colo. Feb. 28, 2012). 405 Id. at *6.

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In Knispel v. Chrysler Group LLC,406 plaintiffs sought to pursue a collective action

on behalf of non-union contract employees, alleging that defendant failed and refused to pay such employees overtime pay for actual overtime hours worked. At the same time the court granted conditional certification, it authorized written notice to similarly situated individuals to allow them to opt into the lawsuit. With regard to the content of the notice, the court concluded that inclusion of a statement advising a person who opts in that he or she may be required to respond to written discovery, sit for a deposition, or testify at trial, was appropriate. The court also held that the notice should include the fact that individuals who opt in may be liable for a defendant's costs of litigation.

In Smith v. Pizza Hut, Inc.,407 plaintiffs were current and former delivery drivers for defendant who filed suit under the FLSA alleging that defendant failed to reimburse them properly for vehicle related expenses and, therefore, failed to pay them minimum wage under the FLSA. Over defendant’s objections, the court granted plaintiffs’ motion for conditional certification of a collective action. As part of its opposition to conditional certification, defendant made several objections to plaintiffs’ proposed notice to the putative class. One of defendant’s objections to the notice was that it did not inform putative class members that they may be required to pay defendant’s costs if they did not prevail. The proposed notice stated that plaintiffs’ counsel had taken the case on a contingency basis and that “there will be no attorneys’ fees or costs chargeable” to potential plaintiffs.408 The court was unable to determine whether the notice language constituted a promise by plaintiffs’ counsel not to seek costs from plaintiffs and other class members if plaintiffs did not prevail. Thus, the court ordered that unless plaintiffs’ counsel submitted an affidavit stating they would cover the award of any costs, they must insert language into the proposed notice warning putative class members that if they do not prevail on their claims, court costs and attorneys’ fees may be assessed against them. The court also sustained defendant’s objection to the notice because it failed to put putative class members on notice that they may be required to be deposed, submit written discovery, compelled to testify, and appear in Denver for proceedings.

In Perrin v. Papa John’s Intern., Inc.,409 delivery drivers brought an action to

recover unreimbursed automobile expenses and minimum wages. The district court previously conditionally certified the action and ordered the parties to brief the issues surrounding the adequacy and content of the proposed notice, the time period for opting into the action, and the appropriate location, if any, for posting of the notice.410 The district court, inter alia, held the notice must provide opt-in plaintiffs with sixty days to join the collective action, and must instruct opt-in plaintiffs that they may be responsible for the company’s costs if the company prevailed in the lawsuit. The court ordered plaintiffs to include the following language in the notice: “If you do not prevail on your claim, court costs and expenses may possibly be assessed against you.” The court

406 2012 WL 553722 (E.D. Mich. Feb. 21, 2012). 407 2012 WL 1414325 (D. Colo. Apr. 12, 2012). 408 Id. at *7. 409 2011 WL 4815246 (E.D. Mo. Oct. 11, 2011). 410 See Perrin v. Papa John’s Intern., Inc., 2011 WL 4089251 (E.D. Mo. Sept. 14, 2011).

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rejected defendant’s request to include language stating that potential plaintiffs may be required to travel to the district to testify in deposition or in court. It explained that such language only serves to discourage individuals from joining. However, the court agreed with defendant that mailing of the notice to the potential plaintiffs was sufficient and did not require defendant to post it in the workplace.

In Pack v. Investools, Inc.,411 the court considered the propriety of various

aspects of plaintiff’s proposed notice of collective action. The court granted defendants’ request that recipients be notified of potential obligations inherent in joining the suit, finding that the following proposed language provided helpful information for recipients deciding whether to participate: “While this lawsuit is pending, individuals who opt in may be required to provide information or documents, appear for a deposition, testify at trial or otherwise participate in this action.”412

3. Contested Issues

In Moore v. Eagle Sanitation, Inc.,413 two laborers and drivers filed a lawsuit

seeking to recover for unpaid overtime from their former employer and sought to conditionally certify the matter as a collective action. After the court granted plaintiffs’ motion for conditional certification, defendants challenged plaintiffs’ proposed notice to be issued to potential opt-in plaintiffs on various grounds, including that it failed to apprise the potential opt-in plaintiffs that “receipt of the Notice does not mean that the individual receiving the notice has a valid claim.”414 The court declined to require plaintiffs include such a statement within their notice, because other parts of the notice alerted the potential opt-in plaintiffs to the fact that “[t]he Judge has not decided who is right and who is wrong yet” and stated that “if you choose to join this lawsuit, you will be bound by any decision of the Court, judgment of the Court, or settlement, whether favorable or unfavorable.”415

In Diaz v. S & H Bondi’s Dept. Store, 416 plaintiff store employees sought

conditional certification for their regular and overtime FLSA compensation claims against the defendant department store. The court approved conditional certification of a class of all employees at the defendant’s three stores. Plaintiffs and defendants disagreed on some of the notice content, including whether the contact information for defendant’s attorney would be listed, the class members’ right to separate counsel, the possibility of class members incurring litigation costs, the place and date for return of the opt-in forms, and the translation of the opt-in form into both English and Spanish.417 The court ordered that defendant’s counsel be listed on the notice, following the lead of other courts in the district, and that the contact information for defendant’s attorneys be listed under a heading of “COUNSEL” rather than “FURTHER INFORMATION”, as 411 2011 WL 5325290 (D. Utah 2011). 412 Id. at *4. 413 276 F.R.D. 54 (E.D.N.Y. Jul. 18, 2011). 414 Id. at 61. 415 Id. 416 2012 WL 137460 (S.D.N.Y. Jan. 18, 2012). 417 Id. at *7-8.

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requested by defendant, to avoid confusion.418 The court also ruled: (1) that the notice should mention the opt-in members’ right to procure separate counsel, following other courts in the district; (2) the notice would not mention the possibility of class members being liable for litigation costs to defendant, following other courts in the Second Circuit and noting the possibility of such costs being imposed was slight and such notice carried the risk of chilling class participation; (3) standard practice in the district was to permit a 60-day window for the notices to be returned, and plaintiffs had presented no reason why additional time was necessary; (4) the notices would be returned to the clerk of courts419; and (5) the notice would be translated into Spanish as well as English because several of plaintiffs’ affidavits were in Spanish, meaning there was a high likelihood of other class members being Spanish speakers.420 In Pippins v. KPMG LLP, 421 employees working as audit associates of an accounting firm moved for conditional certification of a collective action. Plaintiffs sought to conditionally certify a class consisting of “themselves and other similarly situated current and former KPMG audit associates whom KPMG classified as exempt”. The court ruled that plaintiffs met their burden of proving they are similarly situated as to their job duties and requirements. The court rejected defendant’s claim that the notice to potential class members was improper since it did not inform such class members that joining might affect their current or contemplated accounting licenses. The court believed this information could discourage class members and doubted its veracity. The court also ruled against defendant’s argument that it should not be required to turn over telephone, social security numbers and email addresses, noting plaintiffs’ agreement to not seek social security numbers unless needed to find possible members, and to execute a confidentiality agreement for those social security numbers.

4. Judicial Neutrality

In Pack v. Investools, Inc.,422 the court considered the propriety of various

aspects of plaintiff’s proposed notice of collective action. Although affixing the name of the court through the phrase “authorized by the U.S. District Court for the District of Utah” does not violate judicial neutrality as long as the notice also indicates that no opinion is given as to the merits of the case, the court directed the language to be amended to read “this notice and its contents have been authorized by the U.S. District Court for the District of Utah.” 423 In contrast, the court ordered the removal or modification of the “from” line indicating that the notice had been sent from the court, which was not necessary, potentially deceiving, and might endanger judicial neutrality.

418 Id. 419 The court noted that courts the district were split on whether notices should be returned to the court or to plaintiff’s attorneys but made its decision without elaboration. 420 Diaz, 2012 WL 137460 at *7-8. 421 2012 WL 19379 (S.D.N.Y. Jan. 3, 2012). 422 2011 WL 5325290 (D. Utah 2011). 423 Id. at *2.

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In Hernandez v. Merrill Lynch & Co.,424 financial solutions advisors (“FSA’s”) brought overtime claims alleging they were misclassified as exempt. The court granted plaintiffs’ motion for conditional certification and defendants objected to plaintiffs’ proposed notice to be issued to potential opt-in plaintiffs. Addressing each of defendants’ objections, the district court: (1) struck a sentence stating that the court had found plaintiffs to be similarly situated to other FSA’s because no such determination had yet been made at the conditional certification stage; (2) allowed defendants to submit language describing defendants’ position in the case, “with proportionality as the correct touchstone,” in comparison to language describing plaintiffs’ description of their case; (3) allowed anti-retaliation language in the notice regardless of whether the complaint contains allegations of retaliation; (4) rejected defendants’ complaint that the notice does not state that each opt-in is required to respond to defendants’ written discovery requests and to travel to the forum state for depositions or trial, allowing instead language that opt-ins “may be asked to provide” discovery or otherwise participate in discovery and/or a trial; (5) rejected defendants’ attempt to include the particular locations where the named plaintiff FSA’s worked as “presumably to infer to potential opt-in plaintiffs that FSA’s at [another] call center are not included in this [nationwide] action”; (6) rejected defendant’s attempt to include descriptions of the different FSA’s (and other) positions in the notice as similarly pretextual; (7) allowed language informing potential opt-ins that they can contact plaintiffs’ counsel with questions before they have retained counsel; (8) removed the header stating “Court Authorized Notice” as implying more court sponsorship than is appropriate; (9) rejected defendants’ demand that notice be sent by a third-party administrator rather than counsel, required production of email addresses as well as mailing and telephone information, and denied plaintiffs’ request for production of social security numbers and notice posting at job sites, and (10) placed no limit (other than the normal ethical requirements already imposed by the law itself) on how plaintiffs choose to use the information required to be provided by defendants.425

In Smith v. Pizza Hut, Inc.,426 plaintiffs were current and former delivery drivers for defendant. They filed suit under the FLSA alleging that defendant failed to reimburse them properly for vehicle related expenses and, therefore, failed to pay them minimum wage under the FLSA. Over defendant’s objections, the court granted plaintiffs’ motion for conditional certification of a collective action. As part of its opposition to conditional certification, defendant made several objections to plaintiffs’ proposed notice to the putative class, some of which the court overruled and some of which it sustained. The court rejected defendant’s argument that the notice suggested the court had found merit to the case, finding there was nothing inaccurate or misleading about a heading which merely stated that the district court judge and magistrate judge were “overseeing this collective action.”427

424 2012 WL 1193836 (S.D.N.Y. Apr. 6, 2012). 425 Id. at *5-8. 426 2012 WL 1414325 (D. Colo. April 12, 2012). 427 Id. at *9.

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6. Contact Information In Ack v. Manhattan Beer Distributors, Inc.,428 plaintiffs sued defendants for

unpaid overtime, claiming that were paid a weekly salary based on a 40-hour week regardless of the number of hours actually worked, and moved for conditional certification on behalf of all current and former sales associates. Defendants argued in opposition that plaintiffs failed to establish that the members of the proposed collective action were similarly situated or that defendants had an unlawful policy. After deciding to conditionally certify the lawsuit as a collective action, the court also considered plaintiffs' proposed notice to current and former employees. The court held that, among other things, the notice “should include contact information for defendants’ counsel and defendants’ proposed language concerning the effect of joining the lawsuit.”429 In Curless v. Great American Real Food Fast, Inc.,430 plaintiffs were tipped servers at several of defendant's restaurants who alleged that defendant violated the FLSA by not informing them of the tip credit provisions of the FLSA and by regularly requiring them to perform non-tipped work without paying minimum wages for that work. Defendant objected to the form of notice proposed by plaintiffs, arguing that contact information for defendant's counsel should be added along with a statement that defense counsel may be contacted. Defendant also argued that a statement should be added to the effect that potential plaintiffs can contact an attorney of their own choice. The court agreed with the second request, but ruled that the notice did not need to include defendant's attorney or state that defendant's attorney may be contacted.

In Pippins v. KPMG LLP,431 audit associates employed by an accounting firm moved for conditional certification of a collective action. The court granted the motion. The court rejected defendant’s claim that the notice to potential class members was improper since it did not inform such class members that joining might affect their current or contemplated accounting licenses. The court believed this information could discourage class members and doubted its veracity. The court also rejected defendant’s argument that it should not have to turn over telephone, social security numbers and email addresses, noting plaintiffs’ agreement to only seek social security numbers to find possible members, and to execute a confidentiality agreement.

B. Scope and Method of Providing Notice Plaintiffs in Ross v. Wolf Fire Protection432 filed suit against their employer, a fire

protection company, on behalf of similarly situated pipefitter employees, alleging the company violated the FLSA and state wage and hour laws by failing to compensate them for pre- and post-shift time picking up and dropping off necessary equipment. After plaintiff filed suit, the company held a meeting with existing employees in a parking

428 2012 WL 1710985 (E.D.N.Y. May 15, 2012). 429 Id. at *6. 430 280 F.R.D. 429 (S.D. Ill. Jan. 18, 2012). 431 2012 WL 19379 (S.D.N.Y. Jan. 3, 2012). 432 799 F. Supp. 2d 518 (D. Md. 2011).

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lot outside its facility. The company president introduced the company’s attorney to the employees. The attorney explained that a group of former employees had filed suit claiming they were entitled to overtime, explained that the company was investigating the claims, and stated that the company was “requesting their voluntary assistance to ascertain certain facts surrounding the lawsuit.”433 At the end of the meeting, the attorney distributed affidavits to the workers. She asked them to carefully review, change language that was not completely accurate, and sign them if they agreed with the contents and wished to do so. Thirty-three employees signed the affidavits. The company then moved for summary judgment on the basis of the affidavits. The district court denied the company’s motion for summary judgment, citing issues of fact surrounding whether the pre- and postliminary time was de minimis, and whether the work was integral and indispensible. In response to this motion, plaintiffs moved to strike the employee affidavits submitted in support of the motion, and asked for a protective order preventing the company from communicating with potential class members. Plaintiffs argued that the protective order was necessary because the communication with the employees was an attempt to coerce employees to opt-out of the litigation. The court declined to strike the affidavits or issue a protective order, observing that employers are generally within their rights to communicate with prospective opt-in plaintiffs, and are even allowed to solicit affidavits, as long as the communication is not abusive and does not threaten the functioning of the litigation. The district court cautioned that it found several aspects of defendant’s communication “troubling.”434 First, the company failed to inform employees that the lawsuit in question was a class action suit which they might be able to join, and the affidavits contained statements which could prevent the employees from joining the class. Second, the company introduced the attorney as the “company attorney” but did not explain that she did not also represent the employees. Nevertheless, the court found an absence of bad faith. It distinguished this case from others in which employers lied to employees to obtain signatures on affidavits. It also noted that the signed affidavits contained language informing employees that their signatures on the affidavits were voluntary and would not affect their employment. Therefore, the court concluded the broad protective order sought was not necessary. It warned, however, that future misleading communications with potential class members would result in the issuance of a protective order.

1. Temporal Scope of the Limitations Period

In Schwerdtfeger v. Demarchelier Mgmt., Inc., 435 plaintiffs, who worked for

defendant as servers, hosts or hostesses, bartenders, busboys, and dishwashers, sued on behalf of themselves and similarly situated employees, asserting minimum wage and overtime violations. They further alleged their employer had engaged in a policy and practice of unlawfully withholding tips and gratuities from its tipped employees.436 Plaintiffs moved for conditional certification and for authorization of class notice.

433 Id. at 521. 434 Id. at 526. 435 2011 U.S. Dist. LEXIS 60338 (S.D.N.Y. June 6, 2011). 436 Id. at *2-3.

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Plaintiffs sought to provide court-authorized notice to employees who worked for defendant since 2004.437 Defendant opposed conditional certification and objected to plaintiffs’ proposed notice to the putative class members in part because it included individuals who worked for defendant beyond the FLSA’s three year statute of limitations applicable to willful violations. The court found that because plaintiffs had alleged New York state law claims, with a six-year statute of limitations, in addition to their FLSA claims, plaintiffs’ proposed notice to potential opt-in plaintiffs who worked for defendant as far back as 2004 was proper.438

In Bobbitt v. Broadband Interactive, Inc., 439 plaintiffs, collections/disconnect

technicians, filed suit against defendant, a cable television company, for failure to pay minimum wages and overtime pay under the FLSA and Florida law, alleging that defendant had misclassified them as independent contractors. Plaintiffs brought their FLSA claims on behalf of themselves and a putative class of current and former collections/disconnect technicians who worked for defendant in Florida at any time from July 29, 2008 through January 1, 2011.440 In their proposed court-authorized notice, plaintiffs used a three-year limitations period for the FLSA claims, and added an additional 178 days because of a tolling agreement defendant had entered into in a prior related case. Defendant objected to plaintiffs’ proposed notice on the grounds that plaintiffs had improperly calculated the applicable statute of limitations. Defendant argued first that because plaintiffs failed to produce any evidence of a willful violation of the FLSA, a two-year limitations period was applicable, as opposed to a three year period. The court rejected this argument and held that plaintiffs’ allegation in their complaint that defendant had willfully violated the FLSA was sufficient to support a three-year period in the court-authorized notice. Defendant next argued that the limitations period should not be extended an additional 178 days because the tolling agreement applied only to claims in the previous case and could not be used to extend the limitations period in the present case. The court agreed and held that the limitations period in the court-authorized notice could not be extended by the tolling agreement.441

In Bennett v. Advanced Cable Contractors, Inc.,442 plaintiff moved for conditional certification and to toll the statute of limitations as to the claims of putative opt-in plaintiffs as of the date that plaintiff filed his complaint. Plaintiff argued that the filing of a collective action complaint automatically tolled the statute of limitations443 The court rejected plaintiff’s argument and held that under the plain language of the FLSA, only a written consent to opt in to a class action tolls the statute of limitations.444

437 Id. at *2-3, 6-7. 438 Id. at *7-8, 19-20. 439 2012 U.S. Dist. LEXIS 71628 (M.D. Fla. May 23, 2012). 440 Id. at *3. 441 Id. at *18-21. 442 2012 U.S. Dist. LEXIS 63605 (N.D. Ga. May 7, 2012). 443 Id. at *4-5. 444 Id. at *5-9.

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In Rosario v. Valentine Avenue Discount Store, Co., Inc.,445 a former clerk of a family of discount department stores filed an action under the FLSA and state law alleging failure to pay minimum wage and overtime. Plaintiff moved for conditional certification as a collective action under 29 U.S.C. § 216(b). The district court granted conditional certification and approved a notice and consent form for potential opt-in plaintiffs. Plaintiff proposed that the notice be sent to all employees who worked for defendants for three years preceding the commencement of the action. Defendants took the position that two years is more appropriate, as plaintiff failed to allege facts supporting the conclusion that the conduct was willful and would be subject to the longer three year statute of limitations under 29 U.S.C. § 255(a). The district court concluded that specific challenges to the timeliness of the claims of certain opt-in plaintiffs could be addressed at the second stage of the certification process, and held that the time period should be limited to three years from the date of the notice (not the date of the commencement of the action).

In Alvarez v. IBM Restaurants Inc., 446 restaurant employees brought claims

under the FLSA and state law alleging they were subjected to a policy and practice requiring them to work in excess of 40 hours per week without adequate compensation under the overtime and the minimum wage laws. In granting plaintiffs’ motion for conditional certification, the court directed that notice be sent to all persons who had been employed by defendants within three years of the commencement of the action. Citing the New York statute of limitations, plaintiffs had requested the notice be sent to employees during the preceding six years. Defendants, on the other hand, had requested that the period be set at two years, the FLSA period for non-willful violations.

In Moore v. Eagle Sanitation, Inc.,447 two laborers and drivers filed a lawsuit

seeking to recover unpaid overtime under both the FLSA and New York state law from their former employer, and sought to conditionally certify the matter as a collective action. After the court granted plaintiffs’ motion for conditional certification, plaintiffs moved for an order requiring defendants to furnish contact information for potential opt-in plaintiffs employed by defendants for a six-year period. Defendants objected to plaintiffs’ request on grounds that the FLSA, at most, provided a limitations period of three-years prior to plaintiffs having filed suit; further, to the extent that plaintiffs sought to move for class certification pursuant to Federal Rule of Civil Procedure 23 of their state wage and hour claims under New York Law and its corresponding six-year statute of limitations, they had not yet filed a motion for class certification. In noting that it was exercising supplemental jurisdiction over plaintiffs’ state law claims, the court found it appropriate to allow plaintiffs to obtain contact information for the six-year period. The court concluded that the number of potential plaintiffs did not appear very large, thus it seemed efficient to require defendants to produce the contact information only once and that such production would not be unduly burdensome to defendants, even if some of the recipients who would receive the notice had time-barred FLSA claims.

445 828 F. Supp. 2d 508 (E.D.N.Y. 2011). 446 839 F. Supp. 2d 580 (E.D.N.Y. 2012). 447 276 F.R.D. 54 (E.D.N.Y. Jul. 18, 2011).

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In Mitchell v. Acosta Sales, LLC,448 plaintiffs, who had worked as non-exempt merchandisers for defendants, sought to conditionally certify a collective class of similarly situated individuals to recover for alleged overtime violations. After the court granted plaintiffs’ motion for conditional certification, defendants requested the court limit the notice to a statutory period of two years for non-willful violations rather than three years for willful violations. Based on the evidence plaintiffs submitted during the conditional certification stage consisting of declarations, deposition testimony, and verified interrogatory responses alleging defendants employed a common plan of overtime violations, the court declined to so limit the limitations period.

In Jason v. Falcon Data Com, Inc.,449 plaintiff brought a putative collective action

for unpaid overtime under the FLSA on behalf of technicians who installed cable equipment. Plaintiff alleged that defendants paid technicians on a piece rate basis, without paying them overtime compensation. Plaintiff moved for conditional certification of a collective action. Defendants opposed certification and also argued that, if the court granted conditional certification, it should send notice only to technicians employed in the past two years—the FLSA’s limitations period for non-willful violations—because plaintiff had not supplied evidence of a willful violation that would extend the FLSA’s limitations period to three years. The district court granted conditional certification and ordered notice to technicians employed in the past three years, noting that defendants did not provide legal authority supporting a two-year notice period and that it was premature to decide whether defendants committed any willful violations because initial discovery in the action “did not cover the issue of willfulness.”450

Plaintiffs in Madero v. Trattoria La Regina, Inc.451 filed a hybrid class action and

collective action for unpaid overtime under the FLSA and New York state law. The court granted a stipulated motion for conditional certification and facilitated notice pursuant to Section 216(b), but ordered the parties to submit a proposed notice of pendency of lawsuit. The parties disagreed over whether the notice period should be 3 or 6 years. Plaintiffs argued for a 6 year period because of the 6 year statute of limitations under state law. The court ordered the period limited to 3 years, finding no purpose in notifying time barred individuals of a pending suit to which they may not opt in. Rejecting judicial economy claims, the court noted the individuals may later receive notice of a class action, but plaintiffs must follow Rule 23 procedures. The court ruled notice should commence on the date the court approves the consent form.

In Titchenell v. Apria Healthcare Inc., 452 plaintiff moved for conditional certification of a collective action. In granting conditional certification, the court addressed defendant’s objections to the proposed notice. With respect to the temporal scope of the liability period, the court concluded that the beginning date of the class

448 841 F. Supp. 2d 1105 (C.D. Cal. 2011). 449 2011 WL 2837488 (E.D.N.Y. July 18, 2011). 450 2011 WL 2837488 at *7. 451 789 F. Supp. 2d 401 (E.D.N.Y. 2011). 452 2011 WL 5428559 (E.D. Pa. Nov. 8, 2011).

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period is three years before the date the court approved the notice.453 It noted that for an opt-in plaintiff, the statute of limitations is tolled only when that individual plaintiff files written consent.454

2. Equitable Tolling

In Bobbitt v. Broadband Interactive, Inc., 455 plaintiffs sought conditional certification and court-authorized notice. In their proposed notice, plaintiffs used a three-year limitations period and argued that the limitations period should be tolled an additional 178 days because of a tolling agreement defendant had entered into in a prior, related case. The court, however, held that the limitations period was not tolled because the tolling agreement applied only to claims in the prior case.456

In Bennett v. Advanced Cable Contractors, Inc.,457 plaintiff filed a motion to toll

the running of the statute of limitations as to the claims of putative opt-in plaintiffs.458 In support of his motion, plaintiff argued that defendant ignored cable technicians’ complaints regarding lack of overtime compensation, misrepresented to them that they were not eligible to receive overtime compensation, instructed employees to unlawfully alter timesheets to reflect fewer working hours than actually reported, and, as a result, misled putative plaintiffs as to their rights to participate in the lawsuit.459 The court denied plaintiff’s motion, explaining that courts apply the doctrine of equitable tolling sparingly and only upon finding an inequitable event that prevented a plaintiff’s timely opting into the lawsuit.460 The court found that plaintiff failed to allege any extraordinary circumstances preventing putative opt-in plaintiffs from timely opting in to the lawsuit.461

In McGlone v. Contract Callers, Inc.,462plaintiff sought conditional certification of a

class of all employees who had worked in the same position at any location during the three year period prior to filing the complaint. Plaintiff alleged that the employer treated all of these employees the same by: (1) automatically deducting break time despite occasions when an uninterrupted 30-minute break did not exist; and (2) requiring the employees to perform work-related responsibilities before clocking in or after clocking out. The court ultimately certified a modified class of employees in plaintiff’s same position in the New York district. Turning to plaintiff’s equitable tolling argument, the court noted that although the FLSA statute of limitations typically runs for each plaintiff when he or she files suit, the court has discretion to equitably toll this limitation period in order “to avoid inequitable circumstances.” The court then cited another district judge in holding that a court’s delay in ruling on a motion for certification may be deemed the

453 Id. at *7-8. 454 Id. at *7. 455 2012 U.S. Dist. LEXIS 71628 (M.D. Fla. May 23, 2012). 456 Id. at *19-21. 457 2012 U.S. Dist. LEXIS 63605 (N.D. Ga. May 7, 2012). 458 Id. at *4, 18. 459 Id. at *14-18. 460 Id. at *18-19. 461 Id. at *21. 462 2012 WL 1174722 (S.D.N.Y. Apr. 9, 2012).

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type of “extraordinary circumstance” justifying application of the equitable tolling doctrine. Based on the court’s delay in ruling on certification, the court therefore held that the statute of limitations was tolled as of the date plaintiff filed the certification motion.

In Manning v. Gold Belt Falcon, LLC,463 plaintiff moved to equitably toll the

statute of limitations as of the date the plaintiff in a companion case had first moved for conditional certification. Plaintiff asked the court to expand the period covered by the collective notice by more than one and one-half years because of judicial delay. The court denied plaintiff’s motion, noting that equitable tolling was not appropriate because plaintiff had taken a “wait and see” approach by waiting more than nineteen months to move for conditional certification and that “one who fails to act diligently cannot invoke equitable principles to excuse that lack of diligence.”

In Putnam v. Galaxy 1 Marketing, Inc.,464 satellite installation technicians brought

an action against satellite installation companies alleging they were improperly classified as independent contractors and denied minimum and overtime wages in violation of the FLSA. Plaintiffs filed a motion for conditional certification of a class of similarly situated individuals and they also requested that the court equitably toll the statute of limitations for each individual plaintiff from the date the complaint was filed. Plaintiffs contended that the limitations period should be tolled because defendant refused to provide contact information for potential opt-in plaintiffs, thus preventing similarly situated plaintiffs from obtaining sufficient knowledge of the lawsuit and their right to opt-in to it. The court rejected plaintiffs’ request to toll the limitations period for similarly situated plaintiffs from the date the complaint was filed. The court reasoned that in FLSA collective actions the opt-in plaintiff’s claim ordinarily should not relate back to the date of the original complaint for statute of limitations purposes.465 Rather, an individual plaintiff’s claims commence when a written consent to opt-in is filed.466 The court determined that equitable tolling is warranted only when a plaintiff establishes that he has been pursuing his rights diligently and that some extraordinary circumstance stood in his way.467 The court concluded that plaintiffs had not met their burden of demonstrating their entitlement to equitable tolling.468 The court found that a failure to disclose contact information is not an exceptional circumstance warranting equitable tolling because to grant the exceptional remedy of equitable tolling any time an FLSA defendant declined to provide contact information would, in effect, require that the statute of limitations be tolled as a matter of course, which is a result plainly contrary to the procedural rules that govern FLSA collective actions.469 The court nonetheless tolled the limitations period from the date on which plaintiff filed their motion to conditionally certify a class until the date on which the 45 day notice period began to

463 2011 WL 5828497 (D.N.J. Nov. 17, 2011). 464 276 F.R.D. 264 (S.D. Iowa 2011). 465 276 F.R.D. at 275. 466 Id. 467 Id. 468 Id. at 276. 469 Id.

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account for the time necessary to decide plaintiffs’ motion for conditional certification of the class.470

In Carrillo v. Schneider Logistics, Inc.,471 the court found plaintiff’s proposed method of notification of potential class members in a collective action was reasonable. Specifically, the court ruled that placing notification in various media outlets and distributing notice at public places such as churches and community centers was appropriate, given the low-wage and transient nature of the workforce in question. For these same reasons, the court determined that a 180-day opt-in period was not unduly long, despite defendants’ objections. Further, the court found that placing notifications in current employees’ paystubs and requiring defendants to pay for notification was not overly burdensome, since the FLSA is a fee-shifting statute and plaintiffs had presented sufficient evidence to show they would likely prevail on the merits. Finally, the court provided guidance on the content of the notice, stating that including an assertion that plaintiffs might be held responsible for litigation costs should they not prevail would be inappropriate and unduly chilling.

In Curless v. Great American Real Food Fast, Inc.,472 plaintiffs were tipped servers at several of defendant's restaurants who alleged that defendant violated the FLSA by not informing them of the tip credit subsection of the FLSA and by regularly requiring them to perform non-tipped work without paying minimum wages for that work. Defendant objected to discovery requests seeking information about potential plaintiffs and refused to provide that information. That discovery request was resolved by the court approximately five and one-half months after the date the discovery responses were due. Plaintiffs moved for equitable tolling, arguing that the statute of limitations should be tolled from the date the complaint was filed. Defendant objected, arguing that the discovery was withheld in good faith. The court noted that equitable tolling is extended sparingly and only where claimants exercised diligence in preserving their legal rights. Quoting from Pace v. DiGuglielmo,473 the court stated: “A litigant seeking equitable tolling bears the burden of establishing two elements: (1) that he has been pursuing his rights diligently; and (2) that some extraordinary circumstances stood in his way.” The court then noted that there was a disagreement in the case law over whether a defendant was required to provide contact information for potential plaintiffs before a collective action was certified and pointed out that those opinions that hold there is no requirement to provide information before certification conclude that equitable tolling is not appropriate. Nevertheless, and even though defendant here acted in good faith, the court concluded that plaintiffs were entitled to equitable tolling because they diligently pursued their rights and filed a motion for conditional certification before the deadline set by the court, and they established exceptional circumstances—the inconsistency and confusion in the law on whether a defendant had to provide the contact information before certification. However, the court did not agree with plaintiffs’ position that tolling

470 Id. 471 2012 WL 556309 (C.D. Cal., Jan. 31, 2012). 472 280 F.R.D. 429 (S.D. Ill. 2012). 473 544 U.S. 408, 418 (2005).

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should run from the date the complaint filed; rather, the court ordered tolling from the date the discovery responses were due until the date the court resolved the dispute.

In Knispel v. Chrysler Group LLC,474 plaintiffs sought to pursue a collective action

on behalf of similarly situated non-union contract employees. Plaintiffs allege that defendant failed to pay such employees overtime pay for actual hours worked. At the time plaintiffs filed their motion for conditional certification, plaintiffs also asked the court to equitably toll the limitations period for future opt-in plaintiffs "until the opt-in notice period has expired." The court acknowledged that equitable tolling is potentially available in an FLSA case, but decided to follow the holdings of other district courts within the Sixth Circuit that equitable tolling is not "suitable for preemptive, one-size-fits-all application to a group of as-yet unidentified potential plaintiffs." However, the court left the door open for potential plaintiffs whose claims would otherwise be time-barred to apprise the court of their circumstances and individually move for equitable tolling.

3. Temporal Scope for Notice Period

In Carrillo v. Schneider Logistics, Inc.,475 the court found plaintiff’s proposed

method of notification of potential class members in a collective action was reasonable. Specifically, the court ruled that placing notification in various media outlets and distributing notice at public places such as churches and community centers was appropriate, given the low-wage and transient nature of the workforce in question. For these same reasons, the court determined that a 180-day opt-in period was not unduly long, despite defendants’ objections. Further, the court found that placing notifications in current employees’ paystubs and requiring defendants to pay for notification was not overly burdensome, since the FLSA is a fee-shifting statute, and plaintiffs had presented sufficient evidence to show they would likely prevail on the merits. Finally, the court provided guidance on the content of the notice, stating that including an assertion that plaintiffs might be held responsible for litigation costs should they not prevail would be inappropriate and unduly chilling.

Because of a previous finding by a state agency that defendants’ record-keeping practices were faulty, the court permitted tolling of any potential claims back to the date defendants began operating the business at issue, thus ensuring each potential member of the collective action would be able to ensure their rights under the FLSA were enforced.

C. Method of Providing Notice In Phelps v. MC Comm’ns, Inc.,476 a cable service installer moved to conditionally

certify a FLSA failure-to-pay-overtime opt-in class and requested notice of the collective action to putative plaintiffs. The district court granted the motion, but denied plaintiff’s request for an order that defendant post the notice in its place of business, publish it in

474 2012 WL 553722 (E.D. Mich. Feb. 21, 2012). 475 2012 WL 556309 (C.D. Cal., Jan. 31, 2012). 476 2011 WL 3298414 (D. Nev. Aug. 1, 2011).

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the employee newsletter, and e-mail it to putative collective action members. Rather, the court ordered the company to provide plaintiff’s counsel with the names, addresses, telephone numbers, and e-mail addresses for all putative collective class members. The district court also provided a 90-day deadline for putative plaintiffs to opt into the lawsuit.

In Perrin v. Papa John’s Intern., Inc.,477 delivery drivers brought an action to recover unreimbursed automobile expenses and minimum wages. The district court previously conditionally certified the action and ordered the parties to brief the issues surrounding the adequacy and content of the proposed notice, the time period for opting into the action, and the appropriate location, if any, for posting of the notice.478 The district court approved plaintiffs’ method of providing notice via first-class and electronic mail, but declined to require the company to post the notice in the workplace as, in this case, “the posting of notice in the workplace adds little to the efficacy of mailed notice and may be redundant, confusing to other workers, and unduly burdensome for Defendants.”479

In Alli v. Boston Market Co.,480 plaintiffs holding the positions of assistant general

manager, culinary manager and hospitality manager at Boston Market Restaurants asserted FLSA overtime claims alleging that defendant misclassified these positions as exempt from FLSA. The court granted plaintiffs’ motion for conditional certification. Finding that notice by mail was appropriate, the court authorized the mailing of notice to potential opt-in plaintiffs. For this reason, defendant was ordered to produce the names, mailing addresses, work locations, and dates of employment of potential opt-in plaintiffs. The court denied plaintiffs’ request for social security and telephone numbers.

In Darrow v. WKRP Mgmt., LLC, 481 pizza delivery drivers alleged that defendants violated the FLSA by failing to sufficiently reimburse them for vehicle-related expenses and, thereby, reducing their wages below minimum wage. In considering the method of the notice of lawsuit after granting plaintiffs’ renewed motion for conditional certification, the court agreed with plaintiffs that a ninety-day notice period was reasonable given the potential difficulties inherent in contacting delivery drivers across several states, many of whom were former employees. However, the court denied plaintiffs’ request to post the notice in defendants’ break rooms, determining that any benefits from posting the notice did not outweigh the burden on defendants from having to post the notice in all of their stores.

In D’Antuono v. C & G of Groton, Inc,482 current and former exotic dancers brought a collective action against their employer under the FLSA, alleging that defendants misclassified them as independent contractors. The district court granted

477 2011 WL 4815246 (E.D. Mo. Oct. 11, 2011). 478 See Perrin v. Papa John’s Intern., Inc., 2011 WL 4089251 (E.D. Mo. Sept. 14, 2011). 479 2011 WL 4815246 at *2. 480 2011 WL 4006691 (D. Conn. Sept. 8, 2011). 481 2012 WL 638119, at *1 (D. Colo. Feb. 28, 2012). 482 2011 WL 5878045 (D. Conn. Nov. 23, 2011).

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plaintiffs’ motion for conditional certification as to one of defendants’ club locations. As to providing notice of the lawsuit, the district court ordered defendants to mail the notice to all potential class members and to provide the district court with proof of the mailing. In addition, the court ordered defendants to post the finalized notice “in a prominent location,” at the club such as the dressing rooms or another area used primarily by the exotic dancers.483 The court required defendants to provide photographs of the posted notice to the court and plaintiff.

In Carrillo v. Schneider Logistics, Inc., 484 the court found plaintiff’s proposed method of notification to potential class members in a collective action was reasonable. Specifically, the court ruled that placing notification in various media outlets and distributing notice at public places such as churches and community centers was appropriate, given the low-wage and transient nature of the workforce in question. For these same reasons, the court determined that a 180-day opt-in period was not unduly long, despite defendants’ objections. Further, the court found that placing notifications in current employees’ paystubs and requiring defendants to pay for notification was not overly burdensome, since the FLSA is a fee-shifting statute, and plaintiffs had presented sufficient evidence to show they would likely prevail on the merits. Finally, the court provided guidance on the content of the notice, stating that including an assertion that plaintiffs might be held responsible for litigation costs should they not prevail would be inappropriate and unduly chilling.

In Curless v. Great American Real Food Fast, Inc.,485 plaintiffs were tipped servers at several of defendant's restaurants who alleged that defendant violated the FLSA by not informing them of the tip credit subsection of the FLSA and by regularly requiring them to perform non-tipped work without paying minimum wages for that work. In addition to mailing the notice to potential plaintiffs, plaintiffs wanted defendant to place copies of the notice in the employees’ pay envelopes and, in addition, send a reminder notice prior to the expiration of the opt-in period. Defendant objected to the pay envelope request on the basis that it manually passed out the paychecks and did not put them in envelopes. It also objected to the request that it mail out a reminder. The court found that defendant’s objection to the pay envelope request, on the basis that there were no envelopes bordered on the ridiculous, concluding that whoever hands out the paycheck is equally capable of handing out a second piece of paper (the notice) with that check. Therefore the court granted this request. However, the court denied the request that a reminder notice be mailed, concluding that potential plaintiffs will already receive two notices (one in the mail and one with their paycheck) and that a third notice was superfluous and perhaps even crossing into harassment.

483 Id. at *7. 484 2012 WL 556309 (C.D. Cal. Jan. 31, 2012). 485 280 F.R.D. 429 (S.D. Ill. 2012).

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VII. Contact With Collective Action Members A. Contact by Plaintiffs and Their Counsel In Bennett v. Advanced Cable Contractors, Inc., 486 defendant moved for

sanctions and for limitations on plaintiff’s counsel’s pre-conditional certification communications with opt-in plaintiffs after non-attorney representatives from plaintiff’s counsel’s offices contacted several of defendant’s employees by telephone, seeking to solicit their participation in the lawsuit. The court denied defendant’s motion, holding that an absence of bad faith on part of plaintiff’s counsel, combined with constitutional protections afforded to pre-certification communications to potential class members, weighed against an award of sanctions, despite professional rules of ethics, which generally prohibit lawyers and non-lawyer representatives from soliciting services from individuals who have not sought their legal advice.487 Moreover, because the court granted plaintiff’s motion for conditional certification, it denied as moot defendant’s request to limit plaintiff’s counsel’s future pre-conditional certification contact with putative opt-in plaintiffs.488

B. Contact by Defendants and Their Counsel In Urtubia v. B.A. Victory Corp.,489 a waiter brought an action on behalf of himself

and similarly situated waiters, food runners and bussers, alleging wage and hour violations under the FLSA and state law. Plaintiff alleged that he and others were not compensated for hours worked in excess of 40 hours each week and were forced to sign blank time cards before receiving their paychecks. In addition to plaintiff’s motion for conditional certification, plaintiff also sought an order directing defendants to cease all contact with potential class members about the lawsuit, “and specifically prohibiting Defendants from threatening potential [undocumented] class members with being reported to immigration authorities.” Plaintiff alleged that several current employees were forced by defendant to sign sworn affidavits about their wages and also offered evidence that a former dishwasher who had previously agreed to be a co-plaintiff, withdrew from the suit after defendants threatened to report him to immigration and seek his deportation. The court found that defendants were in a position to exercise a strong level of coercion on current employees and that the evidence offered by plaintiff was suggestive of actual interference with potential class members. Thus, because both the circumstances and defendants’ relationship with current employees were “sufficiently fraught with potential for abuse,”490 the court granted plaintiff’s application for injunctive relief issuing a “carefully tailored, limited restriction”491 on defendants’ right to communicate directly with current and former potential class member employees regarding plaintiff’s putative class and collective action.

486 2012 WL 1600443 (N.D. Ga. May 7, 2012). 487 Id. at *11. 488 Id. 489 857 F. Supp. 2d 476 (S.D.N.Y. 2012). 490 Id. at 485. 491 Id.

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In Guifu Li v. A Perfect Franchise, Inc.,492 a class of current and former massage

therapists who were classified as independent contractors brought a suit against corporate and various individual defendants alleging wage and hour violations under both the FLSA and state law. In addition to conditional certification, plaintiffs also moved for class certification under Federal Rule of Civil Procedure 23. The court found evidence to support that defendants coerced and intimidated employees who were putative class members to sign out-opt forms. In deciding whether a class of state law claims would be a superior method to adjudicate the claims, the court considered defendants’ conduct. Based on defendants’ improper contact with potential class members, the court noted that it did not want to create additional barriers for plaintiffs to exercise their rights under state law and held that a class action would be a superior method of adjudicating the state law claims. Further, the court found that defendants’ wrongful conduct prevented proposed class members from being able to assert their claims. The court, therefore, equitably tolled plaintiffs’ claims from the date when defendants began their “campaign” to get opt-out forms until the date when curative notices were sent to the affected putative class members.493

In Snide v. Discount Drug Mart, Inc.,494 plaintiff, a former hourly employee,

alleged that defendant violated the FLSA and state law by forcing her and other similarly situated employees to work “off-the-clock” to avoid paying them overtime. She also alleged that defendant failed to pay her and other employees overtime for all hours worked in excess of 40. In addition to moving for conditional certification and expedited discovery toward the issuance of class notice, plaintiff moved for a protective order barring defendant from having any contact with putative class members about relevant issues as a sanction for defendant’s conduct in interviewing certain store employees. Plaintiff presented an affidavit from one employee who claimed she was misled when interviewed by defendant’s CFO and attorney, who purportedly told her they were conducting a survey and did not advise her of the pending lawsuit. The court denied plaintiff’s motion. It found that an employer generally may communicate with its employees prior to conditional certification of a class under the FLSA and that such communications are protected by the First Amendment unless the communications “misrepresented facts about the lawsuit, discouraged participation in the suit, or undermined the class’ confidence in, or cooperation with, class counsel.”495 The court declined to presume that defendant’s communications with employees were coercive based only on a single affidavit, particularly where the affiant did not state that she was misled regarding her opting-in as a plaintiff in a collective action or that she was being discriminated against as an employee of defendant. By contrast, defendant presented evidence that it conducted the interviews as an investigation into the factual basis of plaintiff’s claims and that it disclosed the nature of the interviews and the lawsuit to

492 2011 WL 4635198 (N.D. Cal. Oct. 5, 2011). 493 Id. at *11, 16. 494 2011 WL 5434016 (N.D. Ohio Oct. 7, 2011). 495 2011 WL 5434016 at *10 (citing Kerce v. West Telemarketing Corp., 575 F. Supp. 2d 1354, 1366-67 (S.D. Ga. 2008)).

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interviewees. Thus, the court found there was no basis to grant plaintiff’s motion for protective order and sanctions.

VIII. Case Management Issues

A. Scope of Discovery From Opt-In Plaintiffs In Khadera v. ABM Industries Inc.,496 janitorial employees brought claims under

the FLSA alleging that their employers, janitorial services companies, failed to pay them overtime wages due. The district court conditionally certified a class of janitorial employees. Defendants filed a motion to take discovery of the opt-in plaintiffs. The district court denied defendants’ motion because defendants had already filed a motion for decertification of the class, mooting the usual rationale for seeking opt-in discovery of needing to determine whether the opt-ins are similarly situated for purposes of a decertification motion.

B. Bifurcation of Liability and Damages In Clincy v. Galardi South Enterprises, Inc.,497 the court ordered the bifurcation of

discovery so that it could first be determined whether plaintiffs, a group of exotic dancers, were employees or independent contractors. After the court decided that plaintiffs were employees, it referred the case to mediation and strongly suggested to the parties that the mediation should resolve the case. IX. Management of Multiple Collective Actions

A. Multidistrict Transfer

1. FLSA Cases Transferred Under Section 1407 In In re Wells Fargo Wage and Hour Employment Practices Litigation (No. III),498

the judicial panel on multidistrict litigation held that FLSA litigation involving four actions in three districts would be transferred to the Southern District of Texas. Over objection by plaintiffs in litigation pending in the District of New Jersey and the Western District of Washington, who opposed centralization, the judicial panel on multidistrict litigation observed that there were common questions of fact, and that the Southern District of Texas would serve the convenience of the parties and witnesses. The judicial panel on multidistrict litigation reasoned that classification and compensation policies were at the core of the four cases and discovery would overlap and found that inconvenience would be outweighed by the benefits of the Section 1407 proceedings, which would ensure that pretrial proceedings would be conducted in a manner leading to a just and expeditious resolution of the action. The Southern District of Texas was selected because two of the four actions were pending there, discovery had begun, and the

496 2011 WL 3651031 (W.D. Wash. Aug. 18, 2011). 497 808 F. Supp. 2d 1326 (N.D. Ga. 2011). 498 804 F. Supp. 2d 1832 (U.S. Jud. Pan. Mult. Lit. 2011).

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district was geographically centrally located and accessible for parties and witnesses throughout the United States.

B. Alternatives to Section 1407 Transfer In Medina v. Happy’s Pizza Franchise, LLC,499 three employees of a pizza

franchise brought overtime claims against the franchisor, as well as the two franchisees in Chicago where plaintiffs worked. Two of the plaintiffs also claimed they were denied overtime pay when working for other franchise locations in Michigan. Plaintiffs sought to certify the case to include similarly situated employees working for the franchises who had been denied overtime pay. After the court conditionally certified the case, which resulted in over 200 individuals opting-into the action from franchise locations in the Eastern and Western Districts of Michigan, the Northern District of Ohio, and the Northern District of Illinois, plaintiffs moved to partially decertify the action. They requested that the court divide the opt-in plaintiffs into subclasses to correspond with the districts within which they worked, and then transfer all of the opt-in plaintiffs who had not worked for any of the franchise locations in the Northern District of Illinois to the appropriate districts in which they worked in Michigan and Ohio. The court noted that pursuant to 28 U.S.C. Section 1404(a), the court could transfer a case to any other district or division where it originally could have been brought “[f]or the convenience of parties and witnesses, in the interest of justice . . . .” In evaluating whether it should effectuate transfers, the court initially noted that the “suits of the opt-in plaintiffs in the subclasses could have been brought in the Michigan and Ohio districts.”500 Accordingly, the court then considered the factors of convenience and interest of justice. In so doing, the court noted that transfers would allow the individual franchisees in Michigan and Ohio to be named as defendants and plaintiffs to obtain jurisdiction over them, thus streamlining discovery. Moreover, as a matter of logistics, both the plaintiffs and the franchisees would be located within the transfer districts, further streamlining discovery. Finally, the court considered the fact that just as the original three plaintiffs had brought overtime claims not only under the FLSA but also under Illinois state law, if the opt-in plaintiffs wished to pursue state law claims in either Michigan or Ohio, those courts would be more familiar with their respective state wage and hour laws. X. Pre-Trial Disposition of Cases

A. Offers of Judgment to Collective Action Plaintiffs and Opt-Ins In Velasquez v. Digital Page, Inc.,501 defendant sought dismissal of plaintiffs’

FLSA action seeking overtime compensation for themselves and a class of similarly situated individuals. Despite defendant’s request for a calculation of damages as to both the class and subsequently for the two named plaintiffs individually, plaintiffs reaffirmed that the suit was being pursued as a collective action and that a demand would be made once the size of the class was ascertained. Defendants then extended

499 2012 WL 379751 (N.D. Ill. Feb. 3, 2012). 500 Id. at *6. 501 842 F. Supp. 2d 486 (E.D.N.Y. 2012).

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an offer of judgment exceeding any amount the two named plaintiffs could receive at trial. Plaintiffs rejected defendant’s offer and defendant sought dismissal, arguing that the offer of judgment rendered plaintiffs’ action moot and so deprived the district court of subject matter jurisdiction. Despite noting that the Second Circuit Court of Appeals had yet to rule on the mootness issue in FLSA collective action overtime cases, the district court emphasized that other district courts in the circuit “have held that a Rule 68 offer of full damages, even if rejected, may render the case moot and subject to dismissal.”502 In denying defendant’s motion to dismiss however, the district court pointed to the fact that on the same day the offer of judgment was made, an additional opt-in plaintiff was identified and a motion for conditional collective action certification was filed soon thereafter. The court held that “[w]here additional plaintiffs have opted in to the matter, and the Rule 68 offer does not include those plaintiffs, the offer does not moot the case.”503 The court distinguished this case from its earlier holding in Darboe v. Goodwill Industries of Greater N.Y. & Northern N.J.,504 where the Rule 68 offer was made more than one year after the case had been pending and no other plaintiff sought to join the collective action. In contrast, defendant’s offer here was made two months after the suit was filed and an additional opt-in plaintiff had already been identified. Moreover, the court explained that plaintiffs’ counsel consistently expressed its intent to pursue the FLSA case on a collective basis and was not dilatory in seeking conditional class certification. Accordingly, the court denied defendant’s motion, finding that the Rule 68 offer did not render plaintiffs’ action moot.

In Jones v. SuperMedia, Inc., 505 defendant submitted a Rule 68 offer of

judgment, which was accepted by three of the plaintiffs. Subsequent to this acceptance, defendant filed a motion to dismiss, claiming that the employees’ FLSA claims were moot because defendant’s offer of judgment satisfied the claims contained in the complaint. The district court denied the motion, because the parties disagreed how the offer was calculated. Specifically, plaintiffs submitted evidence, supported by declarations, that the offer was insufficient because the employer’s time-keeping records were inaccurate.

In Pitts v. Terrible Herbst, Inc.,506 an employee appealed a district court’s decision to dismiss a class action claim for mootness. Plaintiff had filed a class action complaint in Nevada district court under the FLSA and Nevada labor laws for failure to pay overtime and minimum wage. While awaiting a ruling on plaintiff’s motion to compel discovery relevant to class certification, defendant made plaintiff an offer of judgment for the total amount due the individual plaintiff, which plaintiff refused. The district court then dismissed the complaint as moot since plaintiff had failed to timely seek class certification. The appeals court ruled that an offer of judgment for the full amount of a putative class member’s claim did not moot that representative’s class action complaint. This is so even when the court has not ruled on class certification where a claim is so

502 Id. at 488. 503 Id. 504 485 F. Supp. 2d 221 (E.D.N.Y. 2007). 505 2012 WL 995292 (N.D. Tex. Mar. 23, 2012). 506 653 F.3d 1081 (9th Cir. 2011)

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“inherently transitory” that the court may not have time to rule before the proposed representative’s individual interest expires. In this case the certification had not been ruled upon yet and the claim was not “inherently transitory”. Nevertheless the court held where a defendant seeks to buy off the small individual claims of the named plaintiffs, the analogous claims of the class, though not inherently transitory, become no less transitory than inherently transitory claims. The end result would be the same: a claim transitory by its very nature and one transitory by virtue of defendant’s litigation strategy share the reality that both claims would evade review. If the class is certified, the offer of judgment to the initial named plaintiffs will not affect the ability of class plaintiffs to opt in. At that point, “a defendant may moot a class action through an offer of settlement only if he satisfies the demands of the class; an offer to one cannot moot the action because it is not an offer to all.”

In Symczyk v. Genesis HealthCare Corp., 507 defendant served an offer of

judgment on plaintiff in full satisfaction of her alleged damages, attorney's fees, and costs. The district court dismissed the complaint for lack of subject matter jurisdiction on the ground that the offer mooted the collective action. The Third Circuit reversed the district court's decision, holding that the collective action did not become moot when, prior to moving for conditional certification and prior to any other plaintiff opting in to the suit, the putative representative received an offer of judgment in full satisfaction of her individual claim.508 The court noted that “absent undue delay, when an FLSA plaintiff moves for ‘certification’ of a collective action, the appropriate course - particularly when a defendant makes a Rule 68 offer to the plaintiff that would have the possible effect of mooting the claim for collective relief asserted under [Section] 216(b) - is for the district court to relate the motion back to the filing of the initial complaint.”509

B. Summary Adjudication of Opt-In Plaintiff Claims In Withrow v. Sedgwick Claims Mgmt. Service, Inc.,510 claims examiners filed a

collective action seeking overtime compensation on behalf of themselves and others similarly situated. At the same time plaintiffs moved for conditional certification, defendant moved for summary judgment on plaintiffs’ overtime claims, arguing that plaintiffs’ positions fell within the administrative exemption to the overtime requirement. The district court granted defendant's motion and denied plaintiffs’ motion for conditional certification as moot.

In Matuska v. NMTC, Inc.,511 defendant filed a motion for summary judgment,

arguing that, among other things, plaintiffs’ claims failed to comply with the FLSA’s requirement that each opt-in plaintiff file a written consent to join the lawsuit. The district court agreed largely based on plaintiffs’ concession that they did not file consent forms. The court rejected plaintiffs’ attempts to create an issue of fact by submitting

507 656 F.3d 189 (3d Cir. 2011). 508 Id. at 200-01. 509 Id. at 201. 510 841 F. Supp. 2d 972 (S.D. W. Va. 2012). 511 2012 WL 1533779 (D.N.J. Apr. 30, 2012).

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declarations asserting that plaintiffs pursued their claims individually. The court explained that being named in a complaint and participating in discovery does not suffice to satisfy the FLSA’s written consent requirement. In support of this point, the district court cited to the Seventh Circuit’s decision in Harkins v. Riverboat Services, Inc.,512 which held: “[t]he statute is unambiguous: if you haven’t given your written Consent to join the suit, or if you have but it hasn’t been filed with the court, you’re not a party.”513 Given that plaintiffs brought their collective action only in a collective capacity, and that plaintiffs failed to file written consents within the statutory period, the district court granted defendant’s summary judgment motion.

In Lugo v. Farmer’s Pride Inc.,514 plaintiffs brought suit against a Pennsylvania

chicken processing plant seeking compensation for time spent donning and doffing personal protective equipment and clothing. The parties brought cross summary judgment motions, which the court denied with respect to the donning and doffing claims. The court found genuine disputes of fact existed as to whether plaintiffs were required to don all the equipment at issue, whether defendant was the primary beneficiary of the equipment, and whether the time plaintiffs actually spent donning and doffing the equipment in excess of the compensation schedule defendant had implemented for donning and doffing time was de minimis. However, the district court granted partial summary judgment in favor of defendant on plaintiffs’ liquidated damage claims.

In Jones-Turner v. Yellow Enterprise Systems, LLC,515 the court conditionally certified a class of emergency medical technicians (“EMTs”). Plaintiff EMTs claimed their employer failed to compensate them for the automatic deduction of thirty minutes pay for a meal break during shifts when they did not receive a meal break as defined under the FLSA, for certain training sessions, and for being denied rest breaks. Notice was sent out to 900 current and former EMTs and 77 chose to opt-in to the action. Defendant moved to decertify, providing evidence that individual EMTs vary in whether they call in for meal breaks as required by the employer, that employees are encouraged to take meal breaks during slow periods, that employees receive orientation materials and that some employees were compensated for missing lunches. The district court granted the motion to decertify the class, finding no showing of a single decision, policy or plan resulting in the failure to properly compensate EMTs. The court noted that “a multitude of factors are implicated in determining whether EMTs . . . were properly paid. The analysis is highly individualized . . .” and therefore the claims of the individual EMTs were not properly certified.516

In Hernandez v. Starbucks Coffee Co., 517 the court conditionally certified a

collective action of coffee shop “store manager” misclassification claims. After the

512 385 F.3d 1099 (7th Cir. 2004). 513 Id. at 1101. 514 802 F. Supp. 2d 598 (E.D. Pa. 2011). 515 2011 WL 4861882 (W.D. Ky. Oct. 13, 2011). 516 Id. 517 2011 WL 2729530 (S.D. Fla. June 29, 2011).

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discovery period ended, defendant moved for summary judgment as to four of 715 opt-in plaintiffs on the grounds that those four plaintiffs offered generally consistent testimony that compelled the conclusion that they were, as a matter of law, exempt “executive” employees under the FLSA. The district court held that because it had recently denied defendant’s motion to decertify the collective action, thereby determining that the case would proceed to trial as a collective action, it was not procedurally proper for defendant to move for summary judgment as to four individual opt-in plaintiffs. Accordingly, the court denied defendant’s summary judgment motion.

In Taylor v. Waddell & Reed, Inc.,518 financial advisors filed a collective action

against a business that sold financial products, alleging that they were wrongly classified as independent contractors, rather than employees, in violation of the FLSA and California law. In granting defendant's motions for partial summary judgment, the district court found that even if plaintiffs were misclassified as independent contractors their FLSA claims would fail nevertheless because plaintiffs would fall under the “outside salesperson” exemption as their primary activities were sales and sales-related and they customarily and regularly engaged in sales activity away from defendant's office. The district court also denied as moot plaintiffs' motion for conditional class certification because no FLSA claims survived, and therefore, there could be no “similarly situated” employees.519

C. Issue Preclusion in Multiple Collective Actions In Hardemon v. H & R Block Eastern Enterprises, Inc.,520 plaintiffs, former tax

employees, sought to conditionally certify a class pursuant to 29 U.S.C. § 216(b). In denying plaintiffs’ motion for conditional certification the court cited a prior, related case where the court refused to certify a nationwide class of 80,000 employees because they were not similarly situated.

XI. Stage II: The Standard for Deciding Motions to Decertify Collective Actions

A. Introduction In Medina v. Happy’s Pizza Franchise, LLC,521 three employees of a pizza

franchise brought overtime claims against the franchisor, as well as the two franchisees in Chicago where the plaintiffs worked. Two of the plaintiffs also claimed that they were denied overtime pay when working for other franchise locations in Michigan. Plaintiffs sought to certify the case to include similarly situated employees working for the franchises who had been denied overtime pay. After the court conditionally certified the case, which resulted in over 200 individuals opting-in to the action from franchise locations in the Eastern and Western Districts of Michigan, the Northern District of Ohio, and the Northern District of Illinois, plaintiffs moved to partially decertify the action.

518 2012 WL 10669 (S.D. Cal. Jan. 3, 2012). 519 Id. at *3-5. 520 2011 WL 3704746 (S.D. Fla. Aug. 23, 2011). 521 2012 WL 379751 (N.D. Ill. Feb. 3, 2012).

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They requested that the court divide the opt-in plaintiffs into subclasses to correspond with the districts within which they worked, and then transfer all of the opt-in plaintiffs who had not worked for any of the franchise locations in the Northern District of Illinois to the appropriate districts in which they worked in Michigan and Ohio. Defendants sought dismissal of the case, arguing that decertification results in dismissal, thereby making transfer inappropriate. The court noted that during the second stage of the collective action determination, after discovery is completed and the opt-in plaintiffs have been identified, “[t]he burden is on the plaintiffs to show that they are similarly situated,” or otherwise the action will be decertified. 522 However, the court acknowledged that plaintiffs were not seeking partial decertification on grounds that plaintiffs were not similarly situated; in fact, discovery had not been completed, so the court explained it was premature for it to make such a determination. Rather, plaintiffs were only requesting that the court divide the opt-in plaintiffs into four subclasses corresponding to the judicial districts in which they worked, then sever and transfer the out-of-district subclasses to the appropriate districts. The court agreed that it could not yet make a determination as to the propriety of decertification based on a lack of similarity between the plaintiffs, but that the partial decertification sought by the plaintiffs was appropriate.

In Craig v. Rite Aid Corp.,523 the court had conditionally certified a collective class

comprised of defendant’s assistant store managers nationwide. More than 1,000 class members opted in. Before the close of discovery, defendant moved to decertify the class, arguing that the facts made it clear that the claims of the opt-in plaintiffs simply could not be adjudicated in anything other than an individualized manner. Plaintiffs moved to stay all briefing on the decertification motion, arguing that they had not completed discovery relevant to the factors the court must consider on decertification, particularly corporate-level discovery concerning centralized corporate-level policies and uniform operating procedures. The court granted plaintiffs’ motion to stay, concluding that although there was no requirement that a decertification motion be postponed until after the close of discovery, it was the common practice and was warranted here because the court should have the full evidentiary record before it when engaging in the multi-faceted legal and factual inquiry necessary to determining the suitability of proceeding in a collective action.

B. Disparate Factual and Employment Settings of the Plaintiffs In Roussell v. Brinker Int’l, Inc.,524 a group of restaurant servers alleged that their

employer, a restaurant chain, improperly coerced them into sharing tips with ineligible employees. Early in the litigation, 3,556 servers opted-in as plaintiffs. During discovery, the parties deposed more than 50 plaintiffs and nearly 100 other persons. Following discovery, the district court decertified the 3,556-person class, finding the issue of coercion too individualized to be tried in one case. The district court ultimately certified a class consisting of the 55 plaintiffs who had been deposed, holding that they were

522 Id. at *2. 523 2012 WL 279647 (M.D. Pa. Jan. 31, 2012). 524 41 Fed. Appx. 222 (5th Cir. 2011).

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similarly situated based upon their deposition testimony. The case proceeded to trial, and plaintiffs prevailed. On appeal, defendant argued that the district court should have decertified the 55-person class because the issue of coercion was individualized to individual managers and not the result of a single nationwide policy, and because the issue of the tip-eligibility of the QA employees was also varied based upon the work shift and location of the QA employees. On appeal, the Fifth Circuit noted that it, like other circuits, had not settled on the legal standard for collective action certification, but deferred to the district court’s application of the “similarly situated” analysis, as opposed to the Rule 23 approach. Applying this standard, the court found no abuse of discretion. The court held that the deposition testimony of the 55 plaintiffs showed a pattern of coercion, despite the fact there was no evidence of a centralized policy. Although defendant pointed to certain differences between employees on different shifts and in different departments, the court concluded that defendant exaggerated these differences. The court criticized defendant for not analyzing the issue at a high enough level of abstraction, and explained that in evaluating the distinctions among employees, the “distinctions must make a difference relevant to the legal issues presented.”525

1. Misclassification Claims

In Zanes v. Flagship Resort Development, LLC,526 the court denied defendant’s

motion to decertify a collective action involving current and former timeshare salespersons who alleged defendant wrongfully denied them overtime pay in violation of the FLSA and New Jersey law. Also pending before the court was plaintiffs’ motion for final collective action certification, which the court granted. 527 With regard to defendant’s decertification motion, the court noted that plaintiffs must meet a higher standard at the decertification stage to establish the similarly situated requirement. The court reasoned that a higher standard applies at the decertification stage, as opposed to conditional certification, because at this stage, “the court has much more information on which to base its decision.”528 The court’s analysis focused on whether plaintiffs were similarly situated to proposed class members and identified three factors relevant to this analysis: (1) disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to defendants; and (3) fairness and procedural considerations.529 In denying decertification, the court found that plaintiffs met their burden in establishing that they were similarly situated to class members. Plaintiffs and the proposed class members had similar job duties and responsibilities, worked in the same location, and were all paid on a commission-basis. In addition, all plaintiffs asserted common claims under the FLSA for defendant’s alleged failure to pay overtime.530

525 Id. at 226-27. 526 2012 U.S. Dist. LEXIS 22191 (D.N.J. Feb. 22, 2012). 527 Id. at *1, 13. 528 Id. at *7. 529 Id. at *10. 530 Id. at *12.

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2. Off-the-Clock Claims

In Gilmer v. Alameda-Contra Costa Transit Dist.,531 plaintiffs and their opt-in class were bus drivers who brought a collective action under the FLSA against their former employer. The parties stipulated to conditional certification of the collective action, which defendant reserved the right to challenge at a later time. Plaintiffs moved for partial summary judgment on the issue of damages.532 Defendant cross-moved to decertify the collective action and for summary judgment on aspects of the damages. In considering the motion to decertify, the court looked at several factors, including: the disparate factual and employment settings of the individual plaintiffs; the various defenses available to defendant which appeared to be individual to plaintiffs; fairness and procedural considerations; and whether plaintiffs made any required filings before filing suit. Defendant argued that "disparate factual circumstances exist due to evidence that certain opt-in plaintiffs never worked more than 40 hours in a week," and thus never incurred damages resulting from the overtime compensation policies. Additionally, certain drivers did not engage in either split-shift or start-end travel. The court held that it had already determined that defendant's overtime policy regarding start-end and split-shift travel violated the FLSA. Thus, the only issue remaining pertained to damages, and variations in damages awards did not justify decertification. Also, the drivers’ use of different modes of transportation and variation in travel patterns, which would affect each plaintiff's actual travel time on a given day, did not support decertification. Finally, plaintiffs' action was directed at particular compensation policies that indisputably governed their pay. Any differences in modes of transportation and variations in travel time did not negate the uniform policy that clearly applied to all plaintiffs. The court denied defendant’s motion to decertify the collective action.533

In Martinez-Hernandez v. Butterball, LLC,534 production line employees at a

turkey processing plant in North Carolina filed a complaint alleging violations of the FLSA and the North Carolina Wage and Hour Act due to their employer’s utilization of a “gang-time” or scheduled-time compensation system. Pursuant to this system, plaintiffs were paid for the time their production line was in operation minus two unpaid thirty-minute breaks. Plaintiffs sought unpaid wages for time spent off-the-clock donning and doffing protective equipment, cleaning such equipment, and traveling to and waiting at production lines. Defendant moved to decertify plaintiffs’ Rule 23 class, as well as the conditionally certified FLSA class. In support of its motion, defendant maintained that plaintiffs could not demonstrate that any under compensation occurred on a collective basis. Rather, defendant argued, the amount of compensation received by each individual plaintiff varied according to each individual’s donning and doffing practices. Defendant further argued that employees’ protective equipment, pre- and post- shift activities, time spent walking and waiting, and break practices all varied by department. Although the district court recognized that such differences did exist among the class

531 2011 WL 5242977 (N.D. Cal. Nov. 2, 2011). 532 Plaintiffs had previously moved for, and the court had granted, summary judgment on the issue of liability. 533 2011 WL 5242977 at *1-16. 534 2011 WL 4549606 (E.D.N.C. Sept. 29, 2011).

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members, the court found these differences related mostly to the issue of damages. The court asserted that such differences, while perhaps requiring individualized assessments of damages, did not lead to individual defenses that overshadowed the class claims. Rather, the court found that continued certification of the FLSA collective action and Rule 23 class action was proper because of the common thread: members of the conditionally certified class were all employees of defendant seeking virtually the same form of relief for off-the-clock claims stemming from the same “gang-time” compensation system.

In Mahoney v. Farmers Ins. Exchange,535 the district court denied defendant’s

motion to decertify a collective action comprised of the named plaintiff and seventeen opt-in plaintiffs who alleged that they worked off-the-clock. The court found that despite substantial precedent against nationwide collective actions involving off-the-clock claims, and despite lack of similarity with regard to certain policies, periods worked, locations and supervisors, this smaller collective action could proceed because the opt-in plaintiffs had submitted significant evidence regarding their supervisors’ informal pressure not to request overtime, actual refusal to grant overtime, and instruction to avoid detection of off-the-clock work. The court found that although defendant maintained a written policy prohibiting off-the-clock work, these practices amounted to evidence of a “policy-to-violate-the-policy” which in turn amounted to violations “stemming from a common impetus.”536 The court also rejected defendant’s contention that decertification was necessary because of the highly individualized nature of its defenses, which included plaintiffs’ knowledge of the company’s policies, whether each plaintiff was paid for overtime work, whether plaintiffs’ off-the-clock work was compensable, whether some of the off-the-clock work was de minimis, and whether defendant had actual or constructive knowledge of any off-the-clock work. The court found that such defenses could be adequately raised at a trial involving representative testimony.

In Prise v. Alderwoods Group, Inc.,537 a group of funeral home employees

alleged that defendant, a national corporation, maintained several company-wide policies that resulted in plaintiffs not being compensated for overtime. Specifically, plaintiffs challenged defendant’s alleged policy of not compensating employees for required community work performed outside of regular work hours, work performed while on-call, overtime work that was not preapproved, time spent training to receive their insurance license, and meal breaks during which employees were required to perform work. The court conditionally certified a nationwide collective action, and 721 plaintiffs opted in. Defendant moved for decertification, contending that plaintiffs failed to demonstrate they were similarly situated. Defendant argued that collective treatment was not warranted as the evidence at best showed only that the policies challenged were implemented in an ad hoc, decentralized manner depending upon the individualized circumstances and management practices at each funeral home

535 2011 WL 4458513 (S.D. Tex. Sept. 23, 2011). 536 Id. at *9. 537 817 F. Supp. 2d 651 (W.D. Pa. 2011).

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location.538 In granting defendant’s motion, the court relied upon deposition testimony indicating that whether time allegedly worked was compensated varied widely by factors such as the funeral home in which plaintiffs worked, plaintiffs’ supervisors, and by the specific factual circumstances of each plaintiff.539 The court concluded that plaintiffs lacked substantial evidence of a corporate-wide decision, policy or plan, and that the disparate factual and employment settings of plaintiffs supported a finding that plaintiffs were not similarly situated.540

In Jones-Turner v. Yellow Enterprise Systems, LLC,541 the court conditionally

certified a class of emergency medical technicians (“EMTs”). Plaintiff EMTs claimed their employer failed to compensate them for the automatic deduction of thirty minutes of pay for a meal break during shifts when they did not receive a meal break as defined under the FLSA, for certain training sessions, and for being denied rest breaks. Notice was sent out to 900 current and former EMTs and 77 chose to opt-in to the action. Defendant moved to decertify, providing evidence that individual EMTs vary in whether they call in for meal breaks as required by the employer, that employees are encouraged to take meal breaks during slow periods, that employees receive orientation materials and that some employees were compensated for missing lunches. The district court granted the motion to decertify the class, finding no showing of a single decision, policy or plan resulting in the failure to properly compensate EMTs. The court noted that “a multitude of factors are implicated in determining whether EMTs . . . were properly paid. The analysis is highly individualized . . .” and therefore the claims of the individual EMTs were not properly certified.542

In Camesi v. University of Pittsburgh Medical Center,543 plaintiffs brought claims

alleging that defendants’ practice of automatically deducting time for meal breaks denied them overtime under the FLSA. The court initially conditionally certified the action and notice was issued. Pursuant to an agreement between the parties, the court ordered limited discovery for the purpose of determining whether the case should remain certified. When assessing whether the case should remain certified, the court explained that the requirements are more rigorous at stage II, given the parties’ opportunity to take discovery.”544 The court explained that the following factors should be considered: 1) disparate factual and employment settings of the individual plaintiffs; 2) the various defenses available to defendants that appear to be individual to each plaintiff; and 3) fairness and procedural considerations. 545 After assessing these factors, the court found that final certification was not appropriate in this case. It explained that since the court’s original grant of conditional certification, numerous federal courts have rejected the notion that collective action treatment of automatic

538 Id. at 672-73. 539 Id. at 675-80. 540 Id. 541 2011 WL 4861882 (W.D. Ky. Oct. 13, 2011). 542 Id. 543 2011 WL 6272873 (W.D. Pa. Dec. 20, 2011). 544 Andrako v. U.S. Steel Corp., 788 F. Supp. 2d 372, 378 (W.D. Pa. Mar 9, 2011). 545 Prise v. Alderwoods Group, Inc., 2011 WL 4101145 (W.D. Pa. Sept 9, 2011).

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deductions is warranted under an FLSA “burden-shifting” theory.546 It cited White v. Baptist Memorial Health Care Corp,547 where the court held that standing alone an employer policy providing automatic deductions for meal breaks does not violate the FLSA and, therefore, an employer’s mere adoption of a system that, by default, deducts meal breaks from its employees’ compensation does not constitute a unified policy of FLSA violations capable of binding together a collective action.548

In Hernandez v. Starbucks Coffee Co.,549 a group of coffee shop store managers

filed a misclassification collective action. After the case was conditionally certified, defendant moved for decertification, arguing that the “common evidence” showed that the primary duty of store managers was to manage the stores and that plaintiffs could not prove their case on a collective basis without highly individualized inquiries. The district court denied defendant’s decertification motion, relying extensively on another district court’s finding denying decertification of a similar FLSA collective action by store managers against the same defendant. In that other case, the court concluded that the store managers shared similar job duties and were classified the same nationwide and rejected evidence that individual opt-in plaintiffs went about doing a particular task in different ways as irrelevant to whether the store managers shared common responsibilities to perform similar tasks.

In Khadera v. ABM Indus. Inc.,550 janitorial employees brought claims under the

FLSA alleging that their employers, janitorial services companies, forced them to work off-the-clock, failed to provide them with adequate rest breaks, required them to work through meal breaks, and failed to pay overtime. The district court had conditionally certified a class of janitorial employees and defendants sought to decertify the class. Defendants argued that the opt-in plaintiffs had 24 different job titles and therefore worked in differing employment settings, which warranted decertification. The court denied defendants’ motion, finding that though some differences existed, the overwhelming majority of the opt-in plaintiffs were performing cleaning duties and that, therefore, they were similarly situated.

In Kuznyetsov v. West Penn Allegheny Health System, Inc.,551 plaintiffs brought a

collective action against their employers for work performed during meal breaks and unpaid overtime. After the case was conditionally certified, defendants moved to decertify the collective action on the basis that the “similarly situated” standard was not met. In granting defendants’ motion, the court noted the disparate factual and employment settings of the individual plaintiffs. The court noted there were vast

546 See, e.g., White v. Baptist Mem. Health Care Corp., 2011 WL 1883959 (W.D. Tenn. May 17, 2011). 547 Id. 548 See also Blaney v. Charlotte-Mecklenburg Hosp. Auth., 2011 WL 4351631 (W.D.N.C. Sept, 16, 2011); Zivali v. AT & T Mobility, LLC, 784 F. Supp. 2d 456 (S.D.N.Y. May 12, 2011); Cason v. Vibra Healthcare, 2011 WL 1659381 (E.D. Mich. May 3, 2011); Frye v. Baptist Mem. Hosp., 2010 WL 3862591 (W.D. Tenn. Sept. 27, 2010). 549 2011 WL 2712586 (S.D. Fla. June 29, 2011). 550 2011 WL 7064235 (W.D. Wash. Dec. 1, 2011). 551 2011 WL 6372852 (W.D. Pa. Dec. 20, 2011).

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differences among plaintiffs’ job duties, geographic locations, and supervisors, and that these differences weighed heavily against the case continuing as a collective action.

In Smith v. Safety-Kleen,552plaintiff worked at a center that recycled chemical and

solvent waste. Because plaintiff and other employees worked near hazardous chemicals, defendant had a Personal Protective Equipment (“PPE”) Management Program in place, which required plaintiff and other employees to wear various PPE, some of which they were required to put on before clocking in for their shift and some of which they were required to put on after clocking in. At the end of their shift, employees were required to clock out, take off their PPE, and take showers before changing back into their street clothes. Plaintiff asserted putative collective action claims under the FLSA, alleging that he was owed compensation for time spent showering and changing clothes. The court conditionally certified the class and 12 individuals opted into the lawsuit. After discovery closed, defendant moved for summary judgment and to decertify the class. The court denied the motion for summary judgment but granted the motion for decertification, holding that plaintiff failed to show that he and the opt-in plaintiffs were similarly situated. In doing so, the court found that while plaintiff relied primarily on the fact that he and the opt-in plaintiffs all were subject to the same uniform, PPE and showering policies, he failed to establish that he and the opt-in plaintiffs had similar job duties. Instead, he lumped the job duties of the named plaintiff and all opt-in plaintiffs together and asserted that each plaintiff performed every duty. In fact, as defendant showed, they had different jobs and duties. Further, the court found that plaintiff failed to show that he and the opt-in plaintiffs were similarly situated in terms of whether their meal breaks were interrupted. There was a material dispute of fact on this issue, which showed that lead workers (one of whom testified that his breaks were interrupted) may have had different meal-time responsibility than ordinary workers (one of whom testified that his breaks were not interrupted).

C. Individualized Defenses In Mahoney v. Farmers Ins. Exchange,553 the district court denied defendant’s

motion to decertify a collective action comprised of the named plaintiff and seventeen opt-in plaintiffs who alleged that they worked off-the-clock. The court found that despite substantial precedent against nationwide collective actions involving off-the-clock claims, and despite a lack of similarity with regard to certain policies, periods worked, locations and supervisors, this smaller collective action could proceed because the opt-in plaintiffs had submitted significant evidence regarding their supervisors’ informal pressure not to request overtime, actual refusal to grant overtime, and instruction to avoid detection of off-the-clock work. The court found that although defendant maintained a written policy prohibiting off-the-clock work, these practices amounted to evidence of a “policy-to-violate-the-policy” which in turn amounted to violations “stemming from a common impetus.”554 The court also rejected defendant’s contention that decertification was necessary because of the highly individualized nature of its

552 2012 WL 162206 (N.D. Ill. Jan. 18, 2012). 553 2011 WL 4458513 (S.D. Tex. Sept. 23, 2011). 554 Id. at *9.

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defenses, which included plaintiffs’ knowledge of the company’s policies, whether each plaintiff was paid for overtime work, whether plaintiffs’ off-the-clock work was compensable, whether some of the off-the-clock work was de minimis, and whether defendant had actual or constructive knowledge of any off-the-clock work. The court found that such defenses could be adequately raised at a trial involving representative testimony.

In Prise v. Alderwoods Group, Inc.,555 a group of funeral home employees

alleged that defendant, a national corporation engaged in the funeral home business, maintained several company-wide policies that resulted in plaintiffs not being compensated for overtime. The court conditionally certified a nationwide collective action, and 721 plaintiffs filed opt-in consents. Defendant then filed a motion for decertification. Defendant argued that collective treatment was not warranted as the evidence at best showed only that the policies challenged were implemented in an ad hoc, decentralized manner depending upon the individualized circumstances at each funeral home location and the management practices at that location.556 In granting defendant’s motion, the court determined that several individualized defenses were applicable to plaintiffs’ overtime claims, such as whether individual plaintiffs performed the alleged work, whether defendant had knowledge of the work performed, and whether the work was compensated.557

In Khadera v. ABM Indus. Inc.,558 janitorial employees brought claims under the

FLSA alleging that their employers, janitorial services companies, forced them to work off-the-clock, failed to provide them with adequate rest breaks, required them to work through meal breaks, and failed to pay overtime. The district court had conditionally certified a class of janitorial employees and defendants sought to decertify it. Defendants argued that there were several individualized defenses that warranted decertification of the class, including lack of knowledge by supervisors of overtime work because certain opt-in plaintiffs never reported overtime work and jury trial waivers and arbitration clauses certain opt-in plaintiffs had signed. However, the court found that any individualized defenses did not warrant decertification. In regard to the lack of knowledge defense, the court concluded that “[t]he law does not require each member of the plaintiff class to establish that he or she individually complained of the FLSA violation at issue,” and that “[i]t is sufficient that Defendants were generally aware . . . of the types of practices that Plaintiffs allege were used to deny them overtime.”559 The court then found that defendants had waived any defense based on arbitration clauses by failing to raise it until decertification proceedings and that the waiver of rights to a jury trial does not constitute a defense.

555 817 F. Supp. 2d 651 (W.D. Pa. 2011). 556 Id. at 672-73. 557 Id. at 675-81. 558 2011 WL 7064235 (W.D. Wash. Dec. 1, 2011). 559 Id. at *3.

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In Kuznyetsov v. West Penn Allegheny Health System, Inc.,560 plaintiffs brought a collective action against their employers for unpaid overtime compensation for work performed during meal breaks. After the case was conditionally certified, defendants moved for decertification. One of the arguments defendants raised was that they would have to present significant individualized defenses, which made it impractical for the case to continue as a collective action. The court agreed and stated that defendants had produced evidence that individual supervisors had discretion with regard to whether a meal break was missed and how a meal break deduction would be canceled. Accordingly, the court concluded that the defenses as to each plaintiff would require consideration of different facts and individualized testimony that was unique to each plaintiff and could not be generalized.

D. Fairness and Procedural Considerations In Prise v. Alderwoods Group, Inc.,561 a group of home employees claimed

defendant, a national corporation engaged in the funeral home business, maintained several company-wide policies that resulted in plaintiffs not being compensated for overtime. The court granted conditional certification, and 721 plaintiffs filed opt-in consents. Defendant then filed a motion for decertification, contending that plaintiffs failed to demonstrate they were similarly situated for each of the policies challenged. Plaintiffs opposed decertification, asserting they would suffer prejudice if the collective class was decertified as they would be unable to bear the costs of pursuing their claims individually, and proposing that the trial be bifurcated into liability and damages phases to address defendant’s concerns about fairness and manageability. In granting defendant’s motion for decertification, the court determined that fairness and procedural considerations weighed against collective treatment of plaintiffs’ claims.562 The court, citing Lugo v. Farmer’s Pride, Inc.,563 stated that the various defenses asserted by defendant were not common to all of the plaintiffs and the disparate factual and employment settings of individual plaintiffs would require hundreds of mini-trials on liability, which would create the potential for unfairness to both plaintiffs and defendant.564

In Hernandez v. Starbucks Coffee Co.,565 coffee shop store managers filed a

collective action alleging misclassification. The court granted conditional certification and defendant moved for decertification, arguing that because plaintiffs’ claims could only be resolved through individualized inquiries, handling them collectively raised significant fairness and procedural concerns. The court rejected this argument, however, and held that because it had already concluded that plaintiffs met their burden for establishing that they were similarly situated, there were no compelling fairness or procedural concerns to prevent the case from moving forward collectively.

560 2011 WL 6372852 (W.D. Pa. Dec. 20, 2011). 561 817 F. Supp. 2d 651 (W.D. Pa. 2011). 562 Id. at 675-81. 563 737 F. Supp. 2d 291, 303 (E.D. Pa. 2010). 564 Prise, 817 F. Supp. 2d at 675-81. 565 2011 WL 2712586 (S.D. Fla. June 29, 2011).

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In Khadera v. ABM Indus. Inc.,566 janitorial employees brought claims under the

FLSA alleging that their employers, janitorial services companies, forced them to work off-the-clock, failed to provide them with adequate rest breaks, required them to work through meal breaks, and failed to pay overtime. The district court had conditionally certified a class of janitorial employees and defendants sought to decertify the class. Both parties argued that fairness and procedural considerations weighed in favor of their respective positions. In denying defendants’ motion, the court found that “a collective action would reduce the burden on the members of the Plaintiff class by pooling their resources and efficiently resolving common issues of law and fact.”567 The court came to this conclusion in part based on a statistician report plaintiffs submitted demonstrating that the case could be tried using representative testimony and that damages could similarly be determined using representative testimony.568 The court also concluded that the jury trial waivers signed by some of the opt-in plaintiffs did not render a collective proceeding unfair or procedurally unsound because the parties could either withdraw their jury demand or the court could conduct a trial by jury that resolved fact questions for the majority of the class and then itself resolve fact questions regarding the opt-in plaintiffs that waived their right to a jury trial.

In Kuznyetsov v. West Penn Allegheny Health System, Inc.,569 plaintiffs brought a

collective action for unpaid overtime compensation for work performed during meal breaks. The case was conditionally certified and, after discovery, defendants moved for decertification. The court granted defendants’ motion, finding there was no uniform policy or procedure because individual supervisors had individualized practices. The court also found that the disparate factual and employment settings of plaintiffs presented significant manageability problems. The court stated that, “inevitably, we would end up with over 800 mini-trials.” Accordingly, the court held that proceeding as a collective action was neither fair nor efficient. XIII. Trial

A. Representative Testimony and Evidence In Roussell v. Brinker International, Inc.,570 a class of 55 restaurant servers

alleged that defendant improperly coerced them into sharing tips with ineligible employees in violation of the FLSA. Plaintiffs prevailed at trial and were awarded damages. Defendant appealed. On appeal, defendant argued that plaintiffs who testified at trial did not provide representative testimony of the class. Prior to trial, defendant deposed all 55 plaintiffs. Also before trial, defendant stipulated that all 14 of the representative plaintiffs were coerced to share tips. On appeal, defendant argued 566 2011 WL 7064235 (W.D. Wash. Dec. 1, 2011). 567 Id. at *6. 568 The court rejected defendants’ contention that the statistician’s conclusions were faulty on the grounds that those arguments went to the weight the evidence should be given and not the threshold question of whether liability and damages could be determined in a representative manner. Id. at *6. 569 2011 WL 6372852 (W.D. Pa. Dec. 20, 2011). 570 441 Fed. Appx. 222 (5th Cir. 2011).

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that plaintiffs were allowed to hand-pick the “perfect plaintiffs,” rather than using a random sample at trial, and therefore, that the testifying plaintiffs were not a representative sample of the class. The Fifth Circuit applied a deferential standard on this issue, holding that trial judges are in a better position than an appellate court to formulate trial methodology. Applying this standard, the court held that a jury hearing evidence on 25 of the 55 plaintiffs (45 percent) was sufficiently informed, and therefore, there was no reversible error.571

B. Use of Expert Witnesses In Perez v. Mountaire Farms, Inc., 572 a group of poultry processing plant

employees brought an FLSA collective action against their employer for time spent donning and doffing personal protective equipment. The Fourth Circuit, in a case of first impression, held that donning and doffing protective gear at the start and end of shifts was “integral and indispensable” but reversed the district court’s holding that employees were entitled to compensation for donning and doffing time incidental to unpaid meal periods. In determining the total compensable time for donning and doffing, the Fourth Circuit affirmed the district court’s reliance on the plaintiffs’ expert’s study to conclude that the total compensable time for donning and doffing activities was 17 minutes.573 The Fourth Circuit modified this calculation, however, based upon its determination that donning and doffing incident to meal breaks was not compensable and, as such, subtracted the 6.789 minutes of non-compensable time plaintiffs’ spent donning and doffing incident to unpaid meal periods and concluded that the total compensable time employees spent donning and doffing gear was 10.204 minutes per day.574 XIV. Attorneys’ Fees, Costs, and Expenses in Collective Actions

A. Attorneys’ Fees in Collective Actions Litigated to Judgment In Ransom v. M. Patel Enterprises, Inc.,575 after a jury returned a verdict for

plaintiffs, the court entered a judgment for plaintiffs for unpaid wages and liquidated damages, along with court costs. 576 Plaintiffs then moved for an award of their attorneys’ fees and costs, and defendants sought to reduce the amount contending that plaintiffs “were relatively unsuccessful” because they recovered only 36 percent of what they requested in damages and did not establish a willful violation of the FLSA.577 The court explained it calculated a “lodestar” figure “by multiplying the number of hours reasonably expended by an appropriate hourly rate in the community for such work” and

571 Id. at 227. The court also observed that the restaurant failed to explain what the district court should have done in the alternative. Although the restaurant endorsed random sampling on appeal, it opposed statistical sampling earlier in the case. Id. 572 650 F.3d 350 (4th Cir. 2011). 573 Id. at 371-73. 574 Id. 575 2012 U.S. Dist. LEXIS 64953 (W.D. Tex. May 9, 2012). 576 Id. at *2-3. 577 Id. at *3.

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might decrease or enhance the lodestar based on the twelve factors578 set forth in Johnson v. Georgia Highway Express, Inc.579 The court held plaintiff attorneys’ hourly rates were within the market rate for attorneys in the area, the billing records supported the hours worked, and none of the Johnson factors supported a reduction in the lodestar amount.580 Regarding the lodestar amount, the court noted plaintiffs obtained damages that represented nearly 300% of what defendants contended were due.581

In Lopez v. Genter’s Detailing, Inc.,582 after a trial, and an award to plaintiffs of

the exact amount requested, the court addressed the contested issue of reasonable attorneys’ fees. Plaintiffs requested a 1.5 enhancement of the lodestar amount submitted. The court granted plaintiffs’ reasonable fees but denied the requested enhancement. The court also denied defendants’ request that plaintiffs’ attorneys’ fees be reduced because of clerical errors because those errors were corrected in a supplemental application for fees.583 The court also denied defendants’ request that time spent on the claims of dismissed or settling plaintiffs be deducted, as well as defendants’ request to reduce plaintiffs’ attorney rate for time spent performing legal research that would typically be performed by young associates.584 However, the court granted defendants’ request to deduct for time spent assisting with the preparation of a nonparty amicus brief.585

B. Attorneys’ Fees in Settlement of Collective Actions

A magistrate judge in Villaneuva-Gonzalez v. Grainger Farms, Inc.,586 acting on a

disputed fee petition, reduced attorneys’ fees associated with unsuccessful class certification litigation activity, excessive travel, excessive time spent on preparing a motion for fees, case mediation and ambiguous time entries. Nevertheless, the court refused to credit defendants’ argument that attorneys’ fees should be further reduced because the back wage recovery was small relative to attorneys’ fees. In terms of costs, the court identified a split of authority regarding whether certain costs are reimbursable in FLSA cases.

D. Costs and Expenses

1. Fee-Shifting Awards of Costs and Expenses to Prevailing Plaintiffs In assessing a petition for fees and costs, a magistrate judge in Villaneuva-

Gonzalez v. Grainger Farms, Inc.587 identified a split in authority as to whether certain

578 Id. at *4. 579 488 F.2d 714, 717-19 (5th Cir. 1974). 580 Ransom, 2012 U.S. Dist. LEXIS 64953 at *20. 581 Id. 582 2012 WL 1252563 (N.D. Tex. Mar. 19, 2012). 583 Id. at *3. 584 Id. 585 Id. at *4. 586 2011 WL 5834677 (M.D. Fla. Aug. 9, 2011). 587 Id.

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costs are reimbursable in FLSA cases. It noted that some courts hold that if a specific expense is not listed as a cost recoverable under 28 U.S.C. § 1920 it is not recoverable. In other FLSA cases expenses such as travel are deemed “litigation expenses” and are recoverable as part of the attorneys’ fee award. The court noted that in the Eleventh Circuit a prevailing party is not entitled to mediation expenses, meals, postage, online research, travel and lodging expenses because these expenses are considered costs and are not recoverable under Section 1920.

3. Awards of Costs to a Prevailing Defendant

In Frye v. Baptist Mem. Hosp., Inc., plaintiffs claimed defendant failed to pay for time worked during meal breaks.588 Plaintiff Frye brought the action as a collective action. The district court granted summary judgment in favor of defendant. Following summary judgment, defendant moved for costs under Rule 54.589 The court awarded defendant $55,401.63 in costs against only Plaintiff Frye. Frye challenged the award stating that the award frustrated the remedial purpose of the FLSA and it was unfair to only tax him for the total costs of the collective action with 402 other class members. The court upheld the cost award. The court stated that awarding costs to prevailing defendants in FLSA actions is clearly possible.590 The court evaluated defendant’s request for costs under Rule 54(d) and not the FLSA. The court stated that awarding costs in this case did not frustrate the remedial purposes of the FLSA as the FLSA was not intended to eliminate the risks to plaintiffs that advance a failed claim.591 Plaintiff Frye chose to bring his claim as a collective action and assumed the risks of doing so. Plaintiff Frye further argued he would be impoverished by the cost award. The court responded that he did not meet his burden to show that he lacked an ability to pay by providing sufficient detail of his financial condition.592

XVII. Arbitration of Collective Actions

In Pruiett v. West End Restaurants, LLC, 593 restaurant employees filed a

collective action complaint alleging that defendant deprived them and other similarly situated employees of their right to minimum wages and overtime pay in violation of the FLSA. Plaintiffs filed a motion to expedite court-supervised notice to similarly situated employees. Defendant filed a motion to compel arbitration, as plaintiffs had each signed a mediation and arbitration agreement that provided for alternative dispute resolution procedures for any disputes arising out of the employee’s employment, explicitly including claims under the FLSA. The agreement contained a statute of limitations provision that the court determined to be unenforceable, but the agreement also provided for severability of any provision of the agreement found to be unenforceable. In granting defendant’s motion to compel, the court reasoned that

588 2012 U.S. Dist. LEXIS 40943, at *1-3 (W.D. Tenn. Mar. 26, 2012). 589 Id. at *2. 590 Id. at *7. 591 Id. at *10-11. 592 Id. at *24-25. 593 2011 WL 5520969 (M.D. Tenn. Nov. 14, 2011).

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federal law requires that any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.594 The court also noted that even where provisions of an arbitration agreement are determined to be unenforceable, Sixth Circuit precedent strongly favors enforcement of severability clauses in mandatory arbitration agreements.595 The court thus severed the unenforceable provision of the agreement and dismissed the case with prejudice.

In Beauperthuy v. 24 Hour Fitness USA, Inc.,596 employees of 24 Hour Fitness

claimed they had been denied overtime payments in violation of the FLSA. Plaintiffs filed an arbitration demand with Judicial and Mediation Services, Inc. (JAMS) in San Francisco. Though the arbitration clause in their employee handbook did not specify a location for arbitration, plaintiffs’ counsel chose San Francisco, in part, because it was near defendants’ national headquarters. Defendants sent plaintiffs’ counsel a letter indicating it would not agree to proceed with arbitration in San Francisco. Plaintiffs then filed a motion to compel arbitration under Section 4 of the Federal Arbitration Act, which provides: “A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court…for an order directing that such arbitration proceed in the manner provided for in such agreement.”597 The core of the parties’ dispute on the motion was whether defendants, by refusing to arbitrate in San Francisco but professing a willingness to arbitrate elsewhere, “refused” to arbitrate under the Section 4 and whether the court was required to compel arbitration in San Francisco. The court granted plaintiffs’ motion, finding defendants’ interpretation of Section 4 would defeat the policy of rapid and unobstructed enforcement of arbitration agreements embodied in the FAA.598 Because Section 4 only authorizes a district court to order arbitration in its own district, a state of paralysis would result if a court were powerless to intervene when the parties were unable to settle on a mutually agreeable location. Because the arbitration clause was silent on the location of arbitration, the court took the only action within its power and ordered arbitration in San Francisco.

A. Enforceability of Collective or Class Action Waivers In Owen v. Bristol Care, Inc., 599 defendant moved to compel arbitration of

plaintiff’s putative collective action on an individual basis. The court found that there was adequate consideration for the arbitration agreement, which was executed at the outset of, and as a condition of, plaintiff’s employment. The court further found that plaintiff’s claims fell within the scope of the arbitration agreement. The court declined, however, to enforce the arbitration agreement on the grounds that it prevented plaintiff from vindicating a substantive federal right afforded to her by the FLSA because the agreement expressly prohibited collective actions allowed under 216(b) of the FLSA.

594 Id. at *2. 595 Id. at *7. 596 2011 WL 6014438 (N.D. Cal. Dec. 2, 2011). 597 Id. at *2. 598 Id. at *4. 599 2012 WL 1192005 (W.D. Mo. Feb. 28, 2012).

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In LaVoice v. UBS Fin. Servs., Inc., 600 plaintiff, a financial advisor, alleged

violations of the FLSA and New York law. Defendant filed a motion to compel arbitration as a result of a number of arbitration provisions in agreements and loans plaintiff signed. Under one of the loan agreements plaintiff waived any right to commence, be a party to or a class member of a class or collective action, and instead agreed to arbitration under New York law. Plaintiff claimed the waiver provisions in the arbitration agreements were unenforceable. However, the court determined that plaintiff’s statutory rights would not be precluded by enforcement of the waiver after reviewing a number of factors, including estimated damages, attorney’s fees, expert fees, likelihood of success on the merits, and counsel’s disinclination to pursue claims individually. Additionally, the court relied on the fact that plaintiff could recover attorney’s fees under the arbitration agreement. The court determined that plaintiff had not met his burden of establishing that costs were prohibitively expensive and would preclude him from bringing his claims. As a result, defendant’s motion to compel arbitration was granted.

In Raniere v. Citigroup Inc., 601 two home lending specialists and a loan

consultant filed a collective action against defendants, a global financial services holding company and its subsidiary bank and subsidiary mortgage company, alleging defendants willfully violated the FLSA and improperly classified them as exempt from the FLSA. Defendants moved to compel arbitration of the two home lending specialists’ claims and argued the home lending specialists entered into binding arbitration, referencing an appendix to the 2011 employee handbook that contained the arbitration policy. Plaintiffs opposed defendants’ motion and contested whether the right to proceed collectively under the FLSA may be waived. The court denied defendants’ motion in its entirety.602 The court held both plaintiffs agreed to arbitrate. If found that one plaintiff was bound by the 2011 arbitration policy because her acknowledgment of receipt of the 2011 employee handbook and continued employment were sufficient to find that she consented to the 2011 arbitration policy. It also found it was undisputed that the other plaintiff continued her employment after receiving an email with a link to the revised arbitration policy and the record was sufficient to show this plaintiff’s assent to the 2011 arbitration policy and waiver. The court rejected plaintiffs’ unconscionability argument because they failed to show defendants engaged in high-pressure tactics or that plaintiffs lacked meaningful choice. Even so, the court held that a waiver of the right to proceed collectively under the FLSA was unenforceable as a matter of law. The court observed that the FLSA’s collective action provisions were crafted “over the course of several Congresses to balance the need to incentivize the bringing of often small claims by way of collectivization in order to ensure the statute’s function . . . . [and] legislative history evidences Congress’ precise determination of how this balance should be struck in order to ensure the statute’s remedial and deterrent functions.”603 Additionally, the court referenced Supreme Court decisions noting the right to sue under

600 2012 WL 124590 (S.D.N.Y. Jan. 13, 2012). 601 827 F. Supp. 2d 294 (S.D.N.Y. 2011). 602 Id. at 318. 603 Id. at 313.

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the FLSA is an enforcement provision and that the FLSA requires that it be applied even to those who would decline its protections.604 The court also held that the collective waiver provision, under the facts of the case, was not unenforceable on the basis that costs would prevent the two plaintiffs from vindicating their statutory rights in individual arbitration.605

In Quilloin v. Tenet Healthsystem Philadelphia,606 defendant appealed the district

court’s denial of its motion to compel arbitration. The arbitration agreement signed by plaintiff at the time of employment did not contain an express class action waiver. Based on the omission of the waiver, the district court determined that a genuine issue of material fact existed that might render the arbitration agreement unconscionable and unenforceable under Pennsylvania law.607 The Third Circuit reversed the district court on two grounds. First, it found that Pennsylvania law was preempted by the Federal Arbitration Act (FAA) based on the Supreme Court’s ruling in AT&T Mobility, LLC v. Concepcion and the Third Circuit’s ruling in Litman v. Cellco P’ship.608 Specifically, the court determined that Pennsylvania law sought to impose class arbitration despite a contractual agreement for individualized arbitration and, thus, presented a great obstacle to the fulfillment of the FAA’s purpose.609 Second, the court determined that the district court erred in analyzing whether a class action waiver would render the arbitration agreement unconscionable as the district court acknowledged that the determination as to whether class action is prohibited is for the arbitrator.610 The court stated that mere speculation that an arbitrator might interpret ambiguous agreements in a manner that casts doubt on enforceability does not authorize a court to decide the antecedent question of how the ambiguity is to be resolved. Consequently, the court remanded the matter to the district court with instructions to stay litigation proceedings and compel arbitration.611

In Herrington v. Waterstone Mortg. Corp.,612 a loan officer brought a proposed

collective action for unpaid overtime. Defendant moved to dismiss or stay the action because the claims were subject to an arbitration provision. Plaintiff agreed that the arbitration provision in her employment agreement covered her claims but argued, among other things, that the provision was unenforceable because the collective action prohibition613 in the agreement violated the FLSA and the National Labor Relations Act.

604 Id. at 313-14. 605 Id. at 317. 606 673 F.3d 221 (3d Cir. 2012). 607 The district court also denied defendant’s motion to compel on the grounds that a genuine dispute of material fact existed as to whether the agreement barred recovery of attorney’s fees and permitted defendant to run out the clock on the statute of limitations, which might render the arbitration agreement unconscionable and unenforceable under Pennsylvania law. The appellate court determined that the district court erred in denying defendant’s motion to compel arbitration on these grounds. 608 673 F.3d at 232 (citing Concepcion, 131 S. Ct. 1740 (2011) and Litman, 655 F.3d 225 (3d Cir. 2011)). 609 Quilloin, 673 F.3d at 233. 610 Id. at 232. 611 Id. 612 2012 WL 1242318 (W.D. Wis. Mar. 16, 2012). 613 The class action prohibition in the arbitration provision read as follows: “Such arbitration may not be joined with or join or include any claims by any persons not party to this Agreement.” Id. at *1.

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The court found the waiver enforceable under the FLSA,614 noting that Gilmer,615 an ADEA case, and out-of-circuit FLSA cases conclude that collective action rights under 29 U.S.C. § 216(b) are not substantive and that a waiver of those rights is permissible. However, the district court found the waiver invalid under the NLRA.616 The court explained that in In re D. R. Horton, Inc.,617 the NLRB concluded that an employer violates the NLRA by including a collective action waiver in an individual arbitration agreement because collective action rights under the NLRA are substantive.618 The district court followed the board decision and found the collective action waiver to be invalid, severed the invalid clause from the arbitration provision, and stayed the action pending arbitration.619

In Sutherland v. Ernst & Young LLP,620 an accounting firm employee filed a

collective and putative class action alleging that she was wrongfully classified as exempt and seeking compensation for unpaid overtime wages under the FLSA and New York law. Defendant moved to dismiss or stay the proceedings and to compel arbitration because, as a condition of her employment, plaintiff had consented to defendant's agreement to resolve disputes through binding arbitration and to permit arbitration on an individual basis only. The district court held that the agreement was unenforceable because the class action waiver provision precluded plaintiff from enforcing her rights under the FLSA and New York law. In denying defendant’s motion for reconsideration, the district court noted that although attorney’s fees and costs were recoverable under the agreement to the same extent they would be recoverable in court, relative to the plaintiff’s potential recovery the significant attorney’s fees and costs attendant to prosecuting the claim on an individual basis effectively would prohibit plaintiff from bringing suit.621

B. Interpretation of Arbitration Agreements That Are “Silent” Regarding

Class Actions In Valle v. Lowe’s HIW, Inc.,622 plaintiff “zone managers” filed suit alleging,

among other state law claims, that defendant failed to pay overtime compensation in violation of the FLSA. Agreements signed by plaintiffs when they were hired included binding arbitration provisions for any controversy arising out of plaintiffs’ employment

614 Id. at *2. 615 Id. 616 Id. at *3-4. The district court concluded that, under Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 86 (1982), and 7th Circuit interpretations of Kaiser Steel, it had authority to invalidate a contractual provision that violated the NLRA, notwithstanding NLRB exclusive jurisdiction to enforce the NLRA. 617 357 N.L.R.B. No. 184 (2012). 618 2012 WL 1242318 at *4. Defendant argued that plaintiff, as a former employee, had no right to protection under the NLRA and that D. R. Horton did not apply. The court disagreed, reasoning that the prohibited interference in this case occurred at a time when plaintiff was employed (i.e., when she was asked to sign the employment agreement containing the waiver of collective action) and not later. Id. at *5-6. 619 Id. at *7. 620 847 F. Supp. 2d 528 (S.D.N.Y. 2012). 621 Id. at 533. 622 2011 WL 3667441 (N.D. Cal. Aug. 22. 2011).

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and specifically provided that the arbitration requirement covered disputes under the FLSA. Defendant filed a motion to compel arbitration asserting that because plaintiffs signed arbitration agreements, the Federal Arbitration Act required the court to dismiss plaintiffs’ action and compel their submission to the agreed upon binding arbitration. Defendant further argued that under the Supreme Court’s decision in Stolt Nielsen N.A. v. AnimalFeeds International Corp.,623 the arbitration provisions—silent on the issue of class arbitration—barred plaintiffs from pursuing any collective, class, or representational arbitration. Plaintiffs, while admitting that the agreement existed and that the claims at issue were within the scope of the agreements, alleged that the agreements were invalid and therefore unenforceable. The district court granted defendant’s motion to compel arbitration finding the parties agreed to arbitrate. The court refused to preemptively invalidate the agreement based on what would in essence be possible future rulings by the arbitrator. For example, “[e]ven if an arbitrator found that Stolt Nielsen prohibited Plaintiffs from representing other zone managers,” such a ruling would not render the arbitration agreement unenforceable because it would not bar the plaintiffs from bringing a state law Private Attorney General Act (PAGA) action624 on behalf of themselves and the state. 625 The court also found no substantive unconscionability to the arbitration agreement, rejecting plaintiffs’ contention that certain American Arbitration Association rules—incorporated by reference into the arbitration agreement—were one-sided in defendant’s favor thereby rendering the agreement invalid.

In Guida v. Home Savings of America, Inc.,626 plaintiffs brought a putative class

action against their former company and two other defendants, alleging FLSA and state wage and hour claims. Defendants moved to dismiss plaintiffs’ complaint and compel arbitration on an individual basis under the Federal Arbitration Act. Plaintiffs agreed to arbitrate under the valid arbitration agreement between the parties but argued that the arbitrator, not a judge, should decide whether the arbitration could proceed as a class action. The trial court first addressed whether the ability to proceed on a class basis was more akin to a procedural question, as plaintiffs argued, or an issue of arbitrability, as defendants contended. The court noted that disputes about whether the parties are bound by an arbitration agreement, or whether a particular controversy is covered under the scope of such an agreement, are gateway issues that go to arbitrability which the court must decide, but ‘procedural questions which grow out of the dispute and bear on its final disposition are presumptively not for the judge, but for an arbitrator, to decide.”627 The court agreed that the Supreme Court’s plurality opinion in Green Tree Fin. Corp. v. Bazzle628 supported plaintiffs’ argument that the class action question was a procedural one for the arbitrator to decide and that following Bazzle did not conflict with the court’s more recent decision in Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp.629 In Bazzle, the plurality held that 623 130 S. Ct. 1758 (2010). 624 Plaintiffs had previously sought leave to amend their complaint to bring an action under PAGA. 625 Valle, 2011 WL 3667441 at *6. 626 793 F. Supp. 2d 611 (E.D.N.Y. 2011). 627 Id. at 615. 628 539 U.S. 444 (2003). 629 130 S. Ct. 1758 (2010).

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“whether the [arbitration] contracts forbid class arbitration” was a procedural question concerning contract interpretation and arbitration that an arbitrator was “well-suited to answer.”630 While Stolt-Nielsen pointed out in dicta that only a plurality in Bazzle supported that opinion, it did not indicate that the plurality was incorrect in holding that an arbitrator should decide whether a contract permits class arbitration. Moreover, the court found a recent Third Circuit opinion persuasive on the issue.631 In that case, the court concluded that “[w]here contractual silence is implicated, the arbitrator and not a court should decide whether a contract was indeed silent on the issue of class arbitration” and whether the contract forbids class arbitration.632 The Guida court likewise held that the ability of a class to arbitrate where the parties contest whether the arbitration agreement is silent or ambiguous on the issue is a procedural question for the arbitrator. The court ordered the parties to arbitrate but left the determination of the viability of class arbitration to the arbitrator.

In Mork v. Loram Maintenance of Way, Inc.,633 plaintiff filed an overtime action

asserting that defendant failed to pay him and similarly situated employees appropriately under the FLSA and various state wage and hour laws. The parties agreed that plaintiff’s claims had to be submitted to arbitration by virtue of a signed arbitration agreement, but they disputed whether the court could order collective arbitration where the arbitration agreement did not specifically reference collective arbitration. Defendant argued that the arbitration clause precluded plaintiff from pursuing a collective action on behalf of other similarly situated individuals, and asked the court to compel individual arbitration of plaintiff’s claims. The court concluded that the parties agreed to collective arbitration in the arbitration agreement, notwithstanding the lack of any specific reference to “collective arbitration.”634 Ultimately, the court held that the arbitration agreement contained sufficient indicia of agreement to collective arbitration because: (1) the agreement applied to “claims or disputes of any nature arising out of or relating to the employment relationship” and “statutory claims . . . arising out of” the employment, which would include FLSA collective actions; 2) only disputes related to the arbitration agreement itself were not subject to arbitration, thus “[b]y negative implication, collective arbitration–a type of arbitration not expressly excluded–can be presumed to be covered by the wide ranging terms of” the agreement; (3) the parties agreed to be bound by the American Arbitration Association rules in effect at the time of the claim or dispute, and AAA rules provided that it would administer demands for class arbitration if the parties’ had an arbitration agreement that was otherwise silent with respect to class arbitration; (4) concerns of arbitrating class claims which may be present in class actions under Rule 23 of the Federal Rules of Civil Procedure were not present in an FLSA collective action because the plaintiffs are required to opt-in, not opt-out; and (5) public policy would not be served if the court

630 Bazzle, 539 U.S. at 452.

631 Vilches v. The Travelers Co., Inc., 413 Fed.App’x 487 (3d Cir. 2011). 632 Id. at 492. 633 844 F. Supp. 2d 950 (D. Minn. 2012). 634 Id. at 954.

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adopted a rule providing that collective arbitrations can only be effectuated if an arbitration agreement makes specific reference to them.635

D. Conditional Certification When Putative Class Members May Be Subject to Arbitration Agreement

In D’Antuono v. C & G of Groton, Inc,636 three exotic dancers brought a collective action on behalf of themselves and others similarly situated individuals alleging they were misclassified as independent contractors in violation of the FLSA. In evaluating whether the case should be conditionally certified, the district court addressed defendants’ argument that exotic dancers who signed an arbitration agreement that included a collective and class action waiver precluded certification. Defendants relied on the district court’s previous decision that two of the three named plaintiffs had signed “leases” with enforceable collective and class action waiver provisions, thereby closing the case as to those two named plaintiffs.637 Defendants argued that there are no missing “class members” and that many of the potential opt-in plaintiffs likely signed similar agreements, and therefore have no right to “opt-into” the case.638 In certifying the collective class and rejecting defendants’ argument, the court noted that it did not previously find that all leases signed by exotic dancers are enforceable, just the two named plaintiffs’ leases. Further, while it is true that no potential class members may opt into those two named plaintiffs’ case, the court found that did not preclude them from joining the third named plaintiff’s case, who did not sign a lease. Lastly, the court determined that the existence of other exotic dancers’ arbitration agreements is immaterial to the question of class certification, noting that although the applicability of arbitration agreements will need to be determined individually, that did not prevent certification.

635 Id. at 955-56. 636 2011 WL 5878045 (D. Conn. Nov. 23, 2011). 637 Id. at *2-3. 638 Id. at *3.

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Chapter 20

“HYBRID” FLSA/STATE LAW CLASS ACTIONS

II. Legal Challenges to Hybrid Actions

A. “Incompatibility” In Ondes v. Monsanto Co.,1 the plaintiff filed a lawsuit alleging that he and other

similarly situated automated engineering employees were denied straight-time and overtime compensation in violation of the FLSA and Missouri law as a result of being required to work off the clock. Plaintiff brought a Section 216(b) collective action under the FLSA and a Rule 23 class action under Missouri law. Defendant filed a motion to dismiss plaintiff’s claims on the grounds that the plaintiff’s Section 216(b) FLSA collective action and Rule 23 class action claims were inherently incompatible. The court denied defendant’s motion to dismiss. Noting that plaintiff’s allegations relating to his FLSA and state law claims were virtually identical, and would rely on the same evidence, the court determined the interests of justice and judicial economy would not be served by requiring the plaintiff to re-litigate his state law claims in state court.

In Bell v. Citizens Financial Group, Inc.,2 the plaintiffs alleged that the defendants

had a standard practice of improperly classifying assistant branch managers (“ABMs”) as exempt from the overtime requirements of the FLSA, the Pennsylvania Minimum Wage Act, and the Massachusetts Minimum Fair Wage Act. Following an order granting plaintiffs’ motion for conditional certification of a FLSA class, the plaintiffs moved for Rule 23 certification of the state law claims. At the class certification hearing, the court raised sua sponte the potential incompatibility of actions dual filed under both the FLSA and state wage and hour laws, and it denied Rule 23 certification of the state law claims on that basis. Agreeing with the majority of district courts within the Third Circuit, the court found that “[a]llowing a Rule 23 opt-out action to proceed in the same lawsuit as an opt-in FLSA action would allow plaintiffs to evade the requirements of the FLSA by permitting litigation through a representative action and bringing unnamed plaintiffs into the lawsuit. … Moreover, it would ‘essentially nullify Congress’s intent’ in creating the FLSA opt-in scheme and would ‘eviscerate the purpose of [the FLSA’s] opt-in requirement.”3

In George v. DirectSat USA, LLC,4 the plaintiff technicians alleged violations of

Nevada’s wage payment and overtime compensation laws and of Arizona’s wage payment laws. Plaintiffs asserted federal jurisdiction under the Class Action Fairness Act, 28 U.S.C. § 1332(d)(2)(A). Defendants moved to dismiss the state law claims, 1 2011 WL 6152858 (E.D. Mo. Dec. 12, 2011). 2 2011 WL 2261117 (W.D. Pa. June 8, 2011). 3 Id. at *5 (quoting Otto v. Pocono Health System, 457 F. Supp. 2d 522, 523-24 (M.D. Pa. 2006)). 4 2012 WL 845589 (D. Nev. Mar. 12, 2012).

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arguing that the claims were precluded and/or preempted by the FLSA. The court rejected defendants’ preemption arguments, finding no binding precedent for the court to follow and no persuasive authority elsewhere.

In Shahriar v. Smith & Wollensky Restaurant Group, Inc.,5 tipped employees

employed as servers brought collective action claims under the Fair Labor Standards Act and class action claims under New York state law. Plaintiffs alleged that the restaurant required them to share tips with tip-ineligible employees, failed to pay them minimum wages and overtime, and failed to pay them an extra hour when they worked in excess of ten hours in a day as required by New York law. The Second Circuit, recognized the difference between the “collective action” procedure provided by the FLSA, which requires class members to opt-in, differs from the class action procedure applicable to New York state law wage claims which allows for an opt-out procedure, but rejected defendants’ argument that there is an inherent conflict between the opt-in collective actions and opt-out class actions, holding that they were not incompatible as the claims were based on the same nucleus of facts and the savings clause in the FLSA allows states to enact laws more protective of employees. Following the precedent set by the Seventh, Ninth, and District of Columbia Circuits, the court reasoned that worse confusion could ensue by declining supplemental jurisdiction, thereby forcing the case to proceed in two forums at once. The court distinguished Third Circuit precedent,6 which declined to exercise supplemental jurisdiction in a case that involved a complex question of law on a case-specific analysis.

In Garner v. Butterball, LLC,7 the plaintiffs brought an action under the FLSA and

the Arkansas Minimum Wage Act (“AMWA”) alleging that the defendant had willfully not paid hourly production and support employees at its turkey processing plants all of their earned overtime compensation for, among other things, time spent donning, doffing, and sanitizing required gear and equipment. The defendant opposed plaintiffs’ motion to certify a Rule 23 class under the AMWA asserting, among other arguments, that an FLSA collective action and a Rule 23 class action are inherently incompatible. Following the weight of authority among federal courts that had considered the question, including the majority of federal district courts within the Eighth Circuit and four out of five federal appellate courts, the court rejected defendant’s argument and certified plaintiffs’ claims under Rule 23(b)(3).

In Calderon v. GEICO General Ins. Co.,8 security investigators for an insurance company filed a nationwide collective action asserting claims under the FLSA to recover overtime pay. The district court previously granted plaintiffs’ motion for conditional certification. After the close of the notice period, plaintiffs filed an amended complaint adding a claim for overtime pay under New York state law and also filed a motion for certification of a state law class under Federal Rule of Civil Procedure 23. Defendants opposed plaintiffs’ motion for class certification and argued that Rule 23 classes are

5 659 F.3d 234 (2d Cir. 2011). 6 Citing De Asencio v. Tyson Foods, Inc., 342 F.3d 301 (3d Cir. 2003). 7 2012 WL 570000 (E.D. Ark. Feb. 22, 2012). 8 279 F.R.D. 337 (D. Md. 2012).

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“inherently incompatible” with the FLSA. The court recognized that the Fourth Circuit had not addressed the issue and that district courts have reached contrary conclusions on the issue.9 The Court ultimately found there is no conflict in permitting an FLSA and Rule 23 class in the same matter, reasoning that to hold otherwise would be inefficient and would increase the possibility of inconsistent adjudications.10

In Hawkins v. Securitas Sec. Services USA, Inc.,11 plaintiffs, who were formerly

employed by defendant as hourly, non-exempt uniformed security officers, brought an action under the FLSA and the Illinois Minimum Wage Law (“IMWL”) alleging the defendant failed to pay them for “off the clock” work. Specifically, the plaintiffs alleged they performed work before and after their shifts, cleaned and maintained their uniforms, and participated in mandatory training and orientation, but were not compensated for those activities. The court denied, in part, and granted, in part, plaintiffs’ motion for certification of a Rule 23 state law class. In particular, the court certified a Rule 23 IMWL class insofar as the IMWL claim sought relief for time spent in mandatory training and orientation for which the plaintiffs were not compensated. In determining that plaintiffs satisfied the superiority requirement of Rule 23(b)(3), the court noted the Seventh Circuit flatly rejected the argument that an IMWL claim is categorically incompatible with a materially identical FLSA claim.12

Knepper v. Rite Aid Corp.13 was an appeal of two different Federal Rule of Civil

Procedure 23(b)(3) class action lawsuits brought by drug store assistant managers, Knepper v. Rite Aid Corp. and Fisher v. Rite Aid Corp., both pending in the Middle District of Pennsylvania. The plaintiffs in the cases were also part of a nationwide opt-in case under Section 216(b) of the FLSA pending in the same district, called Craig v. Rite Aid Corp. In both Knepper and Fisher, the district court granted defendants’ motions to dismiss on the pleadings because it found Rule 23 opt-out actions to be inherently incompatible with the FLSA’s opt-in procedure, regardless of the fact that the FLSA claims were contained in an entirely different lawsuit. In reversing the district court’s decision, the Third Circuit found that neither the text nor the legislative history of Section 216(b) supported the concept of inherent incompatibility. The court found that the text did not contain such support because the FLSA includes an express savings clause for state law. The court further found that the legislative history did not support such a finding because it demonstrated that the main purposes of the amendment that required employees to give consent in writing to become parties to suit were to avoid representative actions brought by unions and to avoid employees opting into cases only after a favorable outcome. The court’s holding was bolstered by the fact that at the time Section 216(b) was amended, modern Rule 23 opt-out class actions did not even exist, so avoiding those types of actions could not possibly have been Congress’ intent at the time. The court distinguished its holding in De Asencio v. Tyson Foods, Inc.,14 because

9 Id. at 342. 10 Id. 11 280 F.R.D. 388 (N.D. Ill. 2011). 12 Id. at 397 (citing Ervin v. OS Rest. Servs., Inc., 632 F.3d 971 (7th Cir. 2011)). 13 675 F.3d 249 (3d Cir. 2012). 14 342 F.3d 301 (3d Cir. 2003).

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there the court declined to exercise supplemental jurisdiction over state law claims based on the novel state law issues in the case and the very large state law class.

In Pridgen v. RAB Communications, Inc.,15 the defendant telecommunications

industry contractor filed a motion to dismiss the plaintiff installer’s FLSA and New Jersey state law overtime claims on the grounds that plaintiff’s Section 216(b) FLSA claim and Rule 23 state law claim were inherently incompatible. Citing De Asencio v. Tyson Foods, Inc.,16 the Court determined that whether the FLSA and state law claims could proceed together in the same litigation turned on whether the exercise of supplemental jurisdiction was appropriate. The court denied defendant’s motion to dismiss, ruling that it was premature to engage in the supplemental jurisdiction analysis because the parties had not yet engaged in discovery and no motion for class certification had been filed.17

B. Rules Enabling Act In Calderon v. GEICO General Ins. Co.,18 security investigators for an insurance

company filed a nationwide collective action asserting claims under the FLSA to recover overtime pay. The district court granted plaintiffs’ motion for conditional certification. After the close of the notice period, plaintiffs filed an amended complaint adding a claim for overtime pay under New York state law and also filed a motion for certification of a state law class under Federal Rule of Civil Procedure 23. Defendants argued that certifying a Rule 23 class in an existing FLSA action would violate the Rules Enabling Act because the FLSA's consent requirement conferred a substantive right on employees not to have their rights litigated without their knowledge and express consent. The court rejected defendants’ argument and concluded that permitting a Rule 23 state-wide class to proceed in conjunction with a collective action does not “abridge, enlarge, or modify any substantive right” because the FLSA opt-in requirement does not confer rights with respect to the manner in which state law wage and hour claims are litigated.19

In Knepper v. Rite Aid Corp.20 the Third Circuit found that neither the text nor the

legislative history of Section 216(b) supported the concept of inherent incompatibility. Defendants urged the court to affirm the district court’s dismissal order on several different grounds, including that certification of Rule 23 class actions would violate the “substantive rights” granted by Section 216(b) of the FLSA and therefore violate the Rules Enabling Act. The Third Circuit rejected this argument, finding that, particularly under the Supreme Court decision in Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co.,21 the rights granted by Section 216(b) are procedural, and, even if they are not, they would not be abridged or modified by the certification of state law class claims under Rule 23. 15 2011 WL 5920932 (D. N.J. Nov. 28, 2011). 16 342 F.3d 301 (3d Cir. 2003). 17 2011 WL 5920932, at *3. 18 279 F.R.D. 337 (D. Md. 2012). 19 Id. at 343 (citing 28 U.S.C. §2072). 20 675 F.3d 249 (3d Cir. 2012). 21 _ U.S. _, 130 S.Ct. 1431 (2010).

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III. Federal Jurisdiction Over the State Law Claims in Hybrid Actions

B. Supplemental Jurisdiction Under 28 U.S.C. §1367

1. The Supplemental Jurisdiction Statute In Shahriar v. Smith & Wollensky Restaurant Group, Inc.,22 tipped employees

employed as restaurant servers brought collective action claims under the Fair Labor Standards Act and class action claims under New York state law. Plaintiffs alleged that the defendant required them to share tips with non-tipped employees, failed to pay them minimum wages and overtime, and failed to pay them an extra hour when they worked more than 10 hours in a day as required by New York law. The Second Circuit held that because the state law claims were derived from the same common nucleus of operative facts as the FLSA claims, the court had supplemental jurisdiction over the state law claims under 28 U.S.C. §1367(a).

In Scott v. Bimbo Bakeries, USA, Inc.,23 delivery drivers brought a collective

action under the FLSA and supplemental state law claims for minimum wages and overtime pay under the Pennsylvania Wage Payment and Collection Law and the Pennsylvania Minimum Wage Act. Before the court was the defendants’ motion to dismiss, and plaintiffs’ motion for judicial approval of notice to a nationwide collective class of delivery drivers who were designated by defendants as independent contractors from 2007 to the present.24 Although the issue was not raised in briefing by the parties, the court also addressed whether it was appropriate to exercise supplemental jurisdiction “where parallel federal and state claims are brought under different procedural mechanisms.”25 Under 28 U.S.C. § 1367(a), courts may exercise supplemental jurisdiction over state law claims that form part of the “same case or controversy” as the federal claims at issue. A court may, however, decline to exercise supplemental jurisdiction for “compelling reasons” pursuant to 28 U.S.C. §1367(c)(4).26 The court noted that some district courts have declined to exercise supplemental jurisdiction on grounds that the FLSA opt-in mechanism and the Rule 23 opt-out mechanism were “inherently incompatible,” thus offering a “compelling reason to decline jurisdiction.”27 Nevertheless, the court concluded that FLSA opt-in actions were not inherently incompatible with parallel state law opt-out actions and retained supplemental jurisdiction over the state law claims.28

22 659 F.3d 234 (2d Cir. 2011). 23 2012 U.S. Dist. LEXIS 26106 (E.D. Pa. Feb. 29, 2012). 24 Id. at **2, 24. 25 Id. at *38. 26 Id. 27 Id. at *40. 28 Id. at *44.

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2. Whether Supplemental Jurisdiction Is Authorized In Smith v. Family Video Movie Club, Inc.,29 the plaintiffs were hourly employees

who worked at the defendant’s movie and video game rental stores in Iowa, Illinois and Michigan. They alleged that they were required to perform work “off-the-clock,” including assisting customers, opening and closing stores, cleaning and maintaining stores, making phone calls, working on inventory, stocking shelves and making bank deposits. They brought claims under the FLSA, Illinois Minimum Wage Law and Michigan Minimum Wage Law. The defendant moved to strike the class claims brought under the two state statutes, arguing that the FLSA preempts the Rule 23 state law class claims. The district court denied the motion. Although the Seventh Circuit has not specifically addressed whether state wage and hour claims are preempted by the FLSA, it has held that “there is no categorical rule against certifying a Rule 23(b)(3) state-law class action in a proceeding that also includes a collective action under the FLSA.”30 Thus, the court held that the FLSA does not preempt plaintiffs’ Rule 23 class claims. The court also rejected the defendant’s argument that a state law class action would nullify its rights under the FLSA, an issue that also was addressed – and rejected – by the Seventh Circuit.31

a. No Federal Statute “Expressly” Precludes Jurisdiction

In Scott v. Bimbo Bakeries, USA, Inc.,32 a group of delivery drivers brought suit

alleging that defendant had wrongly classified them as independent contractors instead of employees in violation of the FLSA. Plaintiffs also brought supplemental state law claims under the Pennsylvania Wage Payment and Collection Law and the Pennsylvania Minimum Wage Act (“PMWA”) for minimum wages and overtime pay. Before the court was defendants’ motion to dismiss and plaintiffs’ motion for conditional certification of a collective action.33 Regarding plaintiffs’ PMWA claim, defendants argued, in part, that the FLSA impliedly preempted this claim, to the extent plaintiffs’ sought to bring their claim under Fed. R. Civ. P. 23. Defendants contended that to allow plaintiffs to bring state law claims under Rule 23’s opt-out procedure would undermine the FLSA’s collective action opt-in procedure. The court rejected this argument, reasoning that because plaintiffs’ had not sought class certification under Rule 23, defendants’ argument was premature.34 Nevertheless, the court still addressed whether it would be appropriate to exercise supplemental jurisdiction “where parallel federal and state claims are brought under different procedural mechanisms.”35 Under 28 U.S.C. §1367(c)(4), a court may decline to exercise supplemental jurisdiction for “compelling reasons.”36 The court held that the “conflict” between the FLSA’s opt-in and state law’s opt-out procedures did not constitute a “compelling reason” under §1367(c)(4) to decline 29 2011 WL 3439276 (N.D. Ill. Aug. 4, 2011). 30 2011 WL 3439276, at *3 (citing Ervin v. OS Rest. Servs., Inc., 632 F.3d 971, 973-74 (7th Cir. 2011)). 31 Id. (citing Ervin, 632 F.3d at 977). 32 2012 U.S. Dist. LEXIS 26106 (E.D. Pa. Feb. 29, 2012). 33 Id. at **1-2. 34 Id. at **13-14. 35 Id. at **38-39. 36 Id. at *38.

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jurisdiction.37 The court reasoned in support that nothing in the FLSA expressly precluded the exercise of supplemental jurisdiction.38 The court therefore retained supplemental jurisdiction over plaintiffs’ PMWA claims and denied in part defendants’ motion to dismiss.39

b. Whether the State Law Claims Are So Related to the FLSA Claims That They Form Part of the “Same Case or Controversy”

In Shahriar v. Smith & Wollensky Restaurant Group, Inc.,40 tipped employees

employed as restaurant servers brought collective action claims under the Fair Labor Standards Act and class action claims under New York state law. Plaintiffs alleged that the restaurant required them to share tips with tip-ineligible employees, failed to pay them minimum wages and overtime, and failed to pay them an extra hour when they worked more than 10 hours in a work day as required by New York law. The Second Circuit held that because the state law claims were derived from the same common nucleus of operative facts as the FLSA claims, they formed part of the same case or controversy, sufficient to satisfy the supplemental jurisdiction requirements of 28 U.S.C. §1367.

In Romero v. Mountaire Farms,41 2,000 chicken processing plant employees

sought compensation for time spent obtaining and donning their sanitary and protective equipment. Plaintiffs’ claims were pleaded under both the Fair Labor Standards Act and the North Carolina Wage and Hour Act (NCWHA) for time spent donning and doffing before and after their scheduled time on the processing line, as well as before and after their unpaid meal breaks. Plaintiffs moved for conditional certification of their FLSA claims and Rule 23 class certification for their state law NCWHA claims. The court granted conditional certification of the FLSA claims but narrowed the proposed class definition. Certification was also granted on the state claims, but the portion of such claims that overlapped with the time period for the co-extensive FLSA claims was preempted. The court concluded that plaintiffs' state law claims under the NCWHA shared a common nucleus of operative fact with the claims raised under the FLSA. The alleged violations of the NCWHA and the FLSA were based on the same conduct of defendant with regard to many of the same employees occurring over a common period of time. Thus, the court exercised supplemental jurisdiction under § 1367(a) over plaintiffs' NCWHA claims.

In Troncone v. Velahos,42 a sales representative brought minimum wage and

overtime claims under the FLSA against an organization that provides foreclosure prevention services, a defendant law firm affiliated with the organization, and individual defendants who were attorneys at the law firm. The plaintiff also brought several

37 Id. at *44. 38 Id. at **42-44. 39 Id. at **44-45. 40 659 F.3d 234 (2d Cir. 2011). 41 796 F. Supp. 2d. 700 (E.D.N.C. 2011). 42 2011 WL 3236219 (D.N.J. July 28, 2011).

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supplemental claims under New Jersey law and sought to certify a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure.43 The court denied the plaintiff’s request to grant final certification of the FLSA collective action, but sua sponte granted conditional certification.44 As to the state-law claims, the court concluded that the New Jersey Wage and Hour Law (NJWHL) and the FLSA claims had identical allegations that the defendants failed to pay the plaintiff and similarly situated employees minimum wage and overtime, and thus the claims were connected by a common nucleus of operative facts such that they were part of the same case or controversy for purposes of 28 U.S.C. § 1367.45 The court concluded that it could not exercise supplemental jurisdiction over the plaintiff’s claims under the New Jersey Wage Payment Law (NJWPL), however, because those claims and the FLSA claims required “distinctly different factual inquiries.” 46 Under the NJWPL, the plaintiff sought salary and commissions pursuant to an oral or written agreement, which required an inquiry into whether an agreement existed, whereas the inquiry for violation of the FLSA claims was limited to whether the plaintiff performed her duties and was paid as required by the FLSA. The court also concluded that it could not exercise supplemental jurisdiction over the plaintiff’s unjust enrichment claim, which concerned the defendant’s alleged scheme to avoid paying required contributions to Social Security and Medicare by classifying the plaintiff as an independent contractor, because that claim also did not share a common nucleus of operative facts with the FLSA claims.

In Calderon v. GEICO General Ins. Co.,47 security investigators for an insurance

company filed a nationwide collective action asserting claims under the FLSA to recover overtime pay. The district court granted plaintiffs’ motion for conditional certification. After the close of the notice period, plaintiffs filed an amended complaint adding a claim for overtime pay under New York state law and also filed a motion for certification of a state law class under Federal Rule of Civil Procedure 23. Defendants opposed the motion for class certification, arguing the court did not have supplemental jurisdiction over plaintiffs’ state law claims. Defendants argued the use of the word “action” in Section 216(b) meant that a state law claim could not be a separate cause of action when brought simultaneously with a FLSA claim. The district court rejected this argument and held that the “clear weight of authority” allows supplemental jurisdiction when the state law claims are predicated on the same facts that are the basis for the FLSA claim.48

43 Id. at *1. 44 Id. at *4. 45 2011 WL 3236219, at *5. Although the court concluded that it could exercise supplemental jurisdiction over these claims, it declined to do so, concluding that the conflict between the FLSA “opt-in” and Rule 23 “opt-out” regimes was a “compelling reason” to decline supplemental jurisdiction. Id. at *6. 46 2011 WL 3236219, at *7. 47 279 F.R.D. 337 (D. Md. 2012). 48 Id. at 343-44.

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c. Whether Supplemental Jurisdiction Extends to Individuals Who Do Not Opt In to the FLSA Action

In Levy v. HSBC Bank, USA, N.A.,49 plaintiffs brought a putative collective action

arising from defendants’ alleged misclassification and denial of overtime pay and compensation for meal and rest periods in violation of the FLSA and related state laws. Plaintiffs moved for class certification of one collective class under the FLSA and 3 additional classes under Fed. R. Civ. P. 23 for violations of California law and New York law. Defendant brought a motion to dismiss or strike plaintiffs’ state law claims on the grounds that (1) the “opt-in” procedure required for collective actions under the FLSA is legally incompatible with the “opt-out” procedure mandated by Rule 23; and (2) the state law claims predominate over the federal law claims because they introduce issues beyond those raised by the FLSA claims and will include more class members than the federal class. The court denied defendants’ motion, citing authority holding that the procedural “conflict” between the FLSA and Rule 23 is not a proper reason to decline jurisdiction, and finding it would be premature to make a determination as to the predominance of the state law claims so early in the litigation.

3. Whether the Court Should Decline to Exercise Supplemental

Jurisdiction

a. Novel or Complex Issues of State Law

(ii.) Cases Retaining Jurisdiction In Whitehorn v. Wolfgang’s Steakhouse, Inc.,50 tipped employees of steakhouse

restaurants filed minimum wage and overtime claims under the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL). After the court had granted FLSA conditional certification, plaintiffs moved for class certification of their NYLL claims. Plaintiffs alleged that defendants did not record the hours worked by tipped employees and employees working split shifts. Instead, defendants paid its employees for a set amount of hours depending on the shift worked and irrespective of the hours actually worked. As such, they claim to have not been paid for all hours worked and their pay fell below the minimum wage in violation of the FLSA and New York Labor Law (NYLL). Plaintiffs also claimed they were not paid proper overtime compensation. Defendants argued, among other things, that the court should decline to exercise supplemental jurisdiction because a claim involving tip distributions raised a novel or complex issue under New York state law. The court disagreed and explained that other courts had addressed the circumstances when employees can participate in tip pools and defendants could provide no reason for this court not to perform a similar analysis.

49 2011 WL 5978656 (W.D.N.Y. Nov. 27, 2011). 50 275 F.R.D. 193 (S.D.N.Y. 2011).

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b. Substantial Predominance of State Law Claims

(ii.) Cases Retaining Jurisdiction

In Bass v. PJCOMN Acquisition Corp.,51 pizza delivery drivers in Colorado and Minnesota alleged defendants violated the FLSA and the Colorado Minimum Wage of Workers Act (CMWWA) because their compensation, minus the costs they were required to incur as a condition of their employment, resulted in payment below the minimum wage. The court had previously certified the FLSA claims of the Colorado and Minnesota drivers as a collective action. The Colorado drivers sought to certify their CMWWA claims as a class action under Federal Rule of Civil Procedure 23. In response, the defendants argued that the court should decline to exercise supplemental jurisdiction over the state law claims because it would be unwieldy to manage a FLSA collective action on behalf of Colorado and Minnesota delivery drivers in combination with a Rule 23 class action on behalf of Colorado delivery drivers under state law. The court found no circumstance warranted the decline of the exercise of supplemental jurisdiction. The court stated that if it were to decline to exercise supplemental jurisdiction, the plaintiffs would likely file a Rule 23 class action in state court asserting their CMWWA claims while the FLSA collective action remained pending in federal court, which would not serve the interests of judicial economy.52 Moreover, although management of the case would present some logistical challenges, these challenges would not be insurmountable.53 Finally, because the evidence relevant to the two claims was essentially the same, the CMWWA claims would not predominate over the FLSA claims.54

In Whitehorn v. Wolfgang’s Steakhouse, Inc.,55 tipped employees of steakhouse

restaurants filed minimum wage and overtime claims under the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL). After the court had granted FLSA conditional certification, plaintiffs moved for class certification of their NYLL claims. Plaintiffs alleged that defendants did not record the hours worked by tipped employees and employees working split shifts. Instead, defendants paid its employees for a set amount of hours depending on the shift worked and irrespective of the hours actually worked. As such, they were not paid for all hours worked, and their pay fell below the minimum wage in violation of the FLSA and New York Labor Law (NYLL). Plaintiffs also claimed they were not paid proper overtime compensation. Defendants argued that the district court should not exert supplemental jurisdiction over the state law claims because the state law claims substantially predominated over the federal claims. The district court disagreed, finding that “predominance” for supplemental jurisdiction purposes refers to the type of claim, not the number of claimants. Here, “the factual overlap between the minimum wage, overtime, and spread of hours claims ‘is virtually

51 2011 WL 2149602 (D. Colo. June 1, 2011). 52 Id. at *5. 53 Id. at *6. 54 Id. 55 275 F.R.D. 193 (S.D.N.Y. 2011).

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total,’ and ‘it would ill serve the interests of convenience or judicial economy to relitigate in state court the defendants’ pay practices.”56

In Shahriar v. Smith & Wollensky Restaurant Group, Inc.,57 tipped employees employed as restaurant servers brought collective action claims under the Fair Labor Standards Act and class action claims under New York state law. Plaintiffs alleged that the restaurant required them to share tips with tip-ineligible employees, failed to pay them minimum wages and overtime, and failed to pay them an extra hour when they worked more than 10 hours in a day as required by New York law. The Second Circuit held that determination of the FLSA claims would dispose of the state law claims, thus the state law claims did not predominate and the district court had no discretion to deny supplemental jurisdiction on that basis.

In Garcia v. Freedom Mortg. Corp., 58 plaintiffs were loan officers and loan

processors who sought compensation for alleged overtime violations under both state and federal law. The lawsuit was certified as an FLSA collective action. The plaintiffs also sought Rule 23 class certification for the state law claims. In its response to plaintiffs’ motion, defendant urged the court not to exercise supplemental jurisdiction over the state law claims since the state law claims would involve a much larger class of plaintiffs than the FLSA claims and, therefore, the state law claims predominated over the federal claims. The court rejected defendant’s argument, explaining that predominance is not a numbers test but instead examines whether the state legal issues predominate over the federal issues. Here, since both the federal and state legal issues were identical, the letter did not predominate. Thus supplemental jurisdiction was proper.

In Calderon v. GEICO General Ins. Co.,59 security investigators for an insurance

company filed a nationwide collective action asserting claims under the FLSA to recover overtime pay. The district court previously granted plaintiffs’ motion for conditional certification. After the close of the notice period, plaintiffs filed an amended complaint adding a claim for overtime pay under New York state law and also filed a motion for certification of a state law class under Federal Rule of Civil Procedure 23. Defendants argued that the court should decline to exercise supplemental jurisdiction because the state law claims would substantially predominate over the FLSA claim, given that the state class would outnumber the nationwide opt-ins 77 to 49 and would outnumber the New York opt-ins 77 to 9.60 The court rejected defendant’s argument as “clearly wrong” and held that the exercise of supplemental jurisdiction over plaintiffs’ state law claims was warranted because the alleged state law violations were predicated on the same facts that formed the basis of plaintiffs' FLSA claims.61

56 Id. at 197. 57 659 F.3d 234 (2d Cir. 2011). 58 2011 WL 2413251 (D.N.J. June 10, 2011). 59 279 F.R.D. 337, 339 (D. Md. 2012). 60 Id. at 344. 61Id. at 345.

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In Hawkins v. Securitas Sec. Services USA, Inc.,62 plaintiffs, who were formerly employed by defendant as hourly, non-exempt uniformed security officers, brought an action under the FLSA and the Illinois Minimum Wage Law (“IMWL”) alleging the defendant failed to pay them for “off the clock” work. Specifically, the plaintiffs alleged they performed work before and after their shifts, cleaned and maintained their uniforms, and participated in mandatory training and orientation, but were not compensated for those activities. The court denied, in part, and granted, in part, plaintiffs’ motion for certification of a Rule 23 state law class. The court certified a Rule 23 IMWL class insofar as the IMWL claim sought relief for time spent in mandatory training and orientation for which the plaintiffs were not compensated. In opposition to plaintiffs’ motion for class certification, defendant argued that the court should decline to exercise supplemental jurisdiction over the IMWL claim. Defendant claimed supplemental jurisdiction was not proper because the IMWL claim would substantially predominate over the FLSA claim given that only the two named plaintiffs had FLSA claims. The court determined that whether a claim substantially predominates does not turn on disparity of class size but on the type of claim. The court held that the IMWL claims did not substantially predominate because the FLSA claims were materially identical to the IMWL claims.63

In Levy v. HSBC Bank, USA, N.A.,64 plaintiffs brought a putative collective action

arising from alleged misclassification and denial of overtime pay and compensation for meal and rest periods in violation of the FLSA and related state laws. Plaintiffs moved for conditional certification of one collective class under the FLSA and 3 additional classes pursuant to Federal Rule of Civil Procedure 23 for violations of California law and New York law. Defendant brought a motion to dismiss or strike the plaintiffs’ state law claims on the grounds that (1) the “opt-in” procedure required for collective actions under the FLSA is legally incompatible with the “opt-out” procedure mandated by Rule 23; and (2) the state law claims predominate over the federal law claims because they introduce issues beyond those raised by the FLSA claims and will include more class members than the federal class. The court denied defendants’ motion, citing authority holding that the procedural “conflict” between the FLSA and Rule 23 is not a proper reason to decline jurisdiction, and finding it would be premature to make a determination as to the predominance of the state law claims so early in the litigation.

In Villanueva v. Davis Bancorp, Inc. 65 plaintiffs brought putative class and

collective action claims under FLSA and the Illinois Minimum Wage Law (“IMWL”) and moved for class certification of their IMWL claims. The Court found that the fact that the state class was potentially larger than the FLSA collective action did not necessarily mean the state claims predominated and the court need not decline to exercise supplemental jurisdiction under 28 U.S.C. § 1367(a), citing Ervin v. OS Restaurant Services, Inc., 632 F.3d 971 (7th Cir. 2011). In deciding whether the exercise of supplemental jurisdiction is appropriate, the court evaluated the nature of the claim

62 280 F.R.D. 388 (N.D. Ill. 2011). 63 Id. at 398. 64 2011 WL 5978656 (W.D.N.Y. Nov. 27, 2011). 65 2011 WL 2745936 (N.D. Ill. July 8, 2011).

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asserted under the federal and state laws rather than the number of parties involved. The court retained jurisdiction because plaintiffs’ IMWL claims “essentially replicate the FLSA claims-they plainly do not predominate.” Id. at *4.

d. “Exceptional Circumstances”/“Compelling Reasons” In Romero v. Mountaire Farms,66 2,000 chicken processing plant employees

sought compensation for time spent obtaining and donning their sanitary and protective equipment. Plaintiffs’ claims were pleaded under both the Fair Labor Standards Act and the North Carolina Wage and Hour Act (NCWHA) for time spent donning and doffing before and after their scheduled time on the processing line, as well as before and after their unpaid meal breaks. Plaintiffs moved for conditional certification of their FLSA claims and Rule 23 class certification for their state law NCWHA claims. The court granted conditional certification of the FLSA claims but narrowed the proposed class definition. The court also granted class certification of the state law NCWHA claims, but the portion of such claims that overlapped with the time period for the co-extensive FLSA claims were deemed preempted. Finally, the court found that supplemental jurisdiction was authorized and would be exercised over plaintiffs’ state claims. The question of whether “exceptional circumstances” existed under 28 U.S.C. § 1367(c)(4) to warrant declining jurisdiction, while a close call according to the court, was resolved in the negative. Citing to the denounced Zelaya v. J.M. Macias, Inc. decision,67 the court noted that the existence of two distinct classes for the state and federal claims did not constitute “exceptional circumstances.”

(i.) “Conflict” Between Opt-In Actions and Opt-Out Actions

In Scott v. Bimbo Bakeries, USA, Inc.,68 delivery drivers brought a collective

action against defendant for alleged violations of the FLSA and Pennsylvania law. Plaintiffs claimed defendants misclassified them as independent contractors, thereby denying them “certain benefits guaranteed to ‘employees’ under the FLSA, including minimum wage and overtime pay.”69 Plaintiffs sought conditional certification of their FLSA claim as a collective action but did not seek class certification of their state law claims. 70 Nevertheless, the court on its own addressed whether plaintiffs could simultaneously pursue parallel federal and state law claims under different procedural mechanisms or whether the combination of the FLSA opt-in collective action and the Rule 23 opt-out class action combination was “incompatible.”71 The court recognized that at the time there was no controlling authority and that some district courts within the Third Circuit had declined to exercise supplemental jurisdiction over state law claims based on the inherent incompatibility between the opt-out provisions of Rule 23 and the FLSA’s opt-in procedure.72 The court rejected the argument and held that neither the 66 796 F. Supp. 2d. 700 (E.D.N.C. 2011). 67 999 F. Supp. 778 (E.D.N.C. 1998). 68 2012 U.S. Dist. LEXIS 26106 (E.D. Pa. Feb. 29, 2012). 69 Id. at **24-25. 70 Id. at *13 n.7. 71 Id. at **38-44. 72 Id. at **39-40.

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plain language of the FLSA’s opt-in provision nor its legislative history prohibits the prosecution of parallel FLSA nor state wage claims in the same case. Accordingly, the court retained supplemental jurisdiction and allowed the plaintiffs to bring both the FLSA claim and supplemental state law claims.73

In Shahriar v. Smith & Wollensky Restaurant Group, Inc.,74 tipped employees

employed as restaurant servers brought collective action claims under the Fair Labor Standards Act and class action claims under New York state law. Plaintiffs alleged that the restaurant required them to share tips with non-tipped employees, failed to pay them minimum wages and overtime, and failed to pay them an extra hour when they worked more than 10 hours in a day as required by New York law. The Second Circuit, while recognizing the difference between the “collective action” procedure provided by the FLSA, which requires class members to opt-in, differs from the class action procedure applicable to New York state law wage claims which allows for an opt-out procedure, rejected defendants’ argument that there is an inherent conflict between the opt-in collective actions and opt-out class actions, holding that this was not a compelling reason to decline supplemental jurisdiction. Following the precedent set by the Seventh, Ninth, and District of Columbia Circuits, the court reasoned that worse confusion could ensue by declining supplemental jurisdiction, thereby forcing the case to proceed in two forums at once.

In Troncone v. Velahos,75 a sales representative brought minimum wage and

overtime claims under the FLSA against an organization that provides foreclosure prevention services, a defendant law firm affiliated with the organization, and individual defendants who were attorneys at the law firm. The plaintiff also brought several supplemental state law claims under New Jersey law and sought to certify a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure.76 The court denied the plaintiff’s request to grant final certification of the FLSA collective action, but sua sponte granted conditional certification. 77 As to the state-law claims, the court concluded that the claims under the New Jersey Wage and Hour Law (NJWHL) and the FLSA claims had identical allegations that the defendants failed to pay the plaintiff and similarly situated employees minimum wage and overtime, and thus the claims were connected by a common nucleus of operative facts such that they were part of the same case or controversy for purposes of 28 U.S.C. § 1367.78 Although the court found that it could exercise supplemental jurisdiction over these claims, it declined to do so, concluding that the conflict between the FLSA “opt-in” and Rule 23 “opt-out” regimes was a “compelling reason” to decline supplemental jurisdiction.79 It noted that allowing a party to bring a Rule 23 class action for relief based upon the same conduct that gave rise to a FLSA collective action would “undermine the Congressional policy of limiting

73 Id. at **42-44. 74 659 F.3d 234 (2d Cir. 2011). 75 2011 WL 3236219 (D.N.J. July 28, 2011). 76 Id. at *1. 77 Id. at *4. 78 Id. at *5. 79 Id. at *6.

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FLSA collective actions to plaintiffs who expressly ‘opt-in’ to the lawsuit.”80 Thus, the court dismissed the plaintiff’s state law claims.81

(ii.) Manageability

In Villanueva v. Davis Bancorp, Inc.82 plaintiffs brought a putative class and collective action on behalf of courier drivers under the Illinois Minimum Wage Law (IMWL) and Fair Labor Standards Act (FLSA). In retaining jurisdiction over plaintiffs’ state law claims, the court found that the relatively small IMWL class was manageable, despite defendant’s contentions that putative class members’ status as employees or independent contractors might differ under the IMWL and the FLSA “depending on whether the motor carrier exemption applies under Illinois law, and because the court will have to calculate damages differently under the two statutes.” Noting that class/collective action treatment would have little effect on this analysis, and finding further that the issues involved were not complicated, the court retained jurisdiction and granted class certification. The court acknowledged that “. . . some difficulties may be encountered in managing the class action,” however, there was no compelling reason to deny class certification, and it expressed confidence that the parties would be able to devise solutions to address these issues in a fair and efficient manner.

(iii.) Class Member Confusion

In Villanueva v. Davis Bancorp, Inc.83 plaintiffs brought a putative class and collective action on behalf of courier drivers under the Illinois Minimum Wage Law (IMWL) and Fair Labor Standards Act (FLSA). In opposing plaintiffs’ motion to certify the IMWL claims, defendants argued that a class action would be difficult to manage in the event that a collective action was also certified under §216(b) because potential plaintiffs could be confused by various opt-in and opt-out notices. The court rejected this contention, writing that “This problem can be solved by the use of adequate notice procedures . . .”84 The court also noted that it would likely be more confusing to putative class members if the cases were litigated separately.85

In Ondes v. Monsanto Co.,86 the plaintiff filed a lawsuit alleging that he and other

similarly situated automated engineering employees were denied straight-time and overtime compensation in violation of the FLSA and Missouri law as a result of being required to work off the clock. Plaintiff pleaded a Section 216(b) collective action under the FLSA and a Rule 23 collective action under Missouri law. Defendant filed a motion to dismiss plaintiff’s claims on the grounds that the plaintiff’s Section 216(b) FLSA

80 Id. at *6 (citation omitted). 81 The court also concluded that it could not exercise supplemental jurisdiction over the plaintiff’s claims under the New Jersey Wage Payment Law and for unjust enrichment because those claims and the FLSA claims did not share a common nucleus of operative facts. Id. at **6-7. 82 2011 WL 2745936 (N.D. Ill. July 8, 2011). 83 2011 WL 2745936 (N.D. Ill. July 8, 2011). 84 2011 WL 2745936, at *3 (N.D. Ill. July 8, 2011). 85 Id. 86 2011 WL 6152858 (E.D. Mo. Dec. 12, 2011).

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collective action and Rule 23 class action claims were inherently incompatible. In support of its inherent incompatibility argument, defendant argued that the issuance of two notices—one stating that putative class members must opt into the class to be included and the other stating that the putative class member will be included unless he opts out of the class—created a danger of confusion. The court rejected this argument, reasoning that a properly drafted notice could avoid or mitigate any danger of confusion.87

IV. Standing to Prosecute the State Law Claims in Hybrid Actions

In Nobles v. State Farm Mutual Auto. Ins. Co.,88 a claims processor and a claims

representative sought to certify a class of hourly employees who they claimed were not properly paid for hours worked in violation of the FLSA and state laws. Specifically, plaintiffs claimed defendant had a written policy under which it paid certain non-exempt, hourly employees a standard number of hours plus scheduled overtime without regard to the actual number of hours worked. Plaintiffs sought recovery under both the FLSA and state laws for lost minimum wages and overtime pay, lost wages, compensatory damages, and liquidated damages, as well as any other permissible remedy.89

Plaintiffs filed a second amended complaint, alleging employees of State Farm

Fire who worked at defendant’s operation centers were also subject to the pay policy at issue. Defendant filed a motion to dismiss, arguing, among other things, that plaintiffs lacked standing to assert this joint employer claim. The district court denied defendant’s motion even though the representative plaintiffs did not work for State Farm Fire. Because unnamed class members could have standing to pursue the joint employer claims, the court held that the named plaintiffs had standing as well.90 V. Rule 23 Class Certification in Hybrid Actions

A. Numerosity/Impracticability of Joinder In Whitehorn v. Wolfgang’s Steakhouse, Inc.,91 tipped employees of steakhouse

restaurants filed minimum wage and overtime claims under the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL). After the court had granted FLSA conditional certification, plaintiffs moved for class certification of their NYLL claims. The court concluded that Plaintiffs satisfied the numerosity requirements because they identified at least 71 potential class members.

Plaintiffs in Troy v. Kehe Food Distributors, Inc.92 brought a nationwide collective

action under the Fair Labor Standards Act (“FLSA”) and a class action under the

87 Id. at *8 n.6. 88 2011 U.S. Dist. LEXIS 95379, at **2-3 (W.D. Mo. Aug. 25, 2011). 89 Id. at **3-5. 90 Id. at **30-32. 91 275 F.R.D. 193 (S.D.N.Y. 2011). 92 276 F.R.D. 642 (W.D. Wash. 2011).

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Washington Minimum Wage Act (“WMA”) for unpaid overtime wages on behalf of merchandisers and sales representatives servicing Albertsons, a third-party grocery store chain (“Albertsons sales representatives”). Plaintiffs simultaneously moved to certify the Washington class action under the WMA pursuant to Fed. R. Civ. P. 23 and a nationwide FLSA collective action. Plaintiffs proposed a Washington class containing, at least 43 to 54 merchandisers and Albertsons sales representatives, thereby making joinder of all of the proposed class members impracticable.93 In support of the proposed Washington class, plaintiffs argued sufficient numerosity existed because the duties of merchandisers and Albertsons sales representatives were interrelated and overlapping. Although each job role had unique responsibilities, both roles were responsible for the same activities (i.e., sales and merchandising activities).94 In response, defendant argued that plaintiffs had not met numerosity because the proposed class improperly combined two distinct job functions - merchandisers and sales representatives - into a single class.95 By separating the proposed class into two classes, defendant argued that the merchandiser class would not satisfy numerosity because there were only 11 merchandisers, thereby making joinder practicable. The district court certified both the Washington class action and the nationwide FLSA collective action. In granting certification of plaintiffs’ Washington class, the court found that plaintiffs had established numerosity because the duties of merchandisers and Albertsons sales representatives were interrelated and overlapping. Thus, the court was satisfied that the two positions could be combined into a single class for certification purposes.

In Gortat v. Capala Bros., Inc.,96 a group of laborers and foreman working for a construction services company sought to recover earned but unpaid wages under the FLSA, and New York Labor Law. Following class certification of the plaintiffs’ state law claims under Fed. R. Civ. P. 23, the defendants filed a motion to decertify the Rule 23 class, arguing the class lacked numerosity as required by Rule 23. The parties disagreed over the size of the class. Plaintiffs contended the class consisted of 43 members and defendants contended the class consisted of 28 members, or only 5 members if named plaintiffs and members who elected not to join the FLSA collective action were excluded. The court found no basis to exclude the named plaintiffs and members who elected not to join the FLSA collective action from the class.97 The court otherwise denied defendants’ motion, noting that the same reasons that supported certification in the first instance warranted denial of defendant’s motion to decertify. Specifically, the class included many members who had inadequate resources to proceed on their own and had little incentive to exercise their rights given the relatively small amounts they could reasonably expect to recover.98 The court also determined the stage of the litigation warranted denial of defendants’ motion because the information supporting the motion, the number of opt-outs and the number of signed releases, had been in defendants’ possession for over a year.99 93 Id. at 652. 94 Id. at 649-50. 95 Id. at 652. 96 2012 WL 1116495 (E.D.N.Y. Apr. 3, 2012). 97 Id. at *3. 98 Id. 99 Id. at *4.

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In Morangelli v Chemed Corporation, 100 plaintiffs who worked as plumbers

moved for nationwide conditional certification of their Fair Labor Standards Act minimum wage and overtime claims and for class certification under Fed. R. Civ. P. 23 of similar claims under the state laws of fourteen different states. The court noted that Rule 23(a) requires a proposed class action to “be sufficiently numerous.” 101 The plaintiffs proposed that each of the fourteen states where violations were alleged had well in excess of forty putative class members, i.e., the number which the Second Circuit had deemed “presumptively sufficient for a class to be considered numerous.”102 Although defendants challenged that two of the states had less than forty putative class members, the court noted that they did not explain why joinder would not be impracticable. Accordingly, the court held that the numerosity requirement had been met for purposes of Rule 23.

In McClean v. Health Systems, Inc.,103 former hourly, nonexempt nursing home

employees alleged that defendant violated the FLSA and Missouri common law and wage laws by: (1) maintaining a time-keeping system that unlawfully rounded time before and after each shift; (2) “willfully failing to include non-discretionary bonus payments into overtime calculations;” and (3) implementing a policy that automatically deducted a thirty minute meal period for shifts of six or more hours regardless of whether the employee actually took a meal period. The court had previously granted conditional certification of a collective action under the FLSA and plaintiffs thereafter moved to certify their Missouri state law claims under Rule 23. Turning first to plaintiffs’ claims related to rounding practices and bonuses, the court held that the claims met both Rule 23(a) and 23(b)(3)’s requirements and should be certified. With respect to Rule 23(a)’s numerosity requirement specifically, the court’s conclusion that numerosity was met relied on testimony from defendant’s human resources director that there were approximately 3,500 hourly employees working in 60 facilities in Missouri.

In Shahriar v. Smith & Wollensky Restaurant Group, Inc.,104 tipped employees

employed as restaurant servers brought collective action claims under the Fair Labor Standards Act and class action claims under New York state law. Plaintiffs alleged that the restaurant required them to share tips with non-tipped employees, failed to pay them minimum wages and overtime, and failed to pay them an extra hour when they worked more than 10 hours in a week as required by New York law. The class consisted of approximately 275 persons. The Second Circuit held, and the parties did not dispute, that 275 is “numerous enough” to meet the numerosity requirement.

In Romero v. Mountaire Farms,105 2,000 chicken processing plant employees

sought compensation for time spent obtaining and donning their sanitary and protective

100 275 F.R.D. 99 (E.D.N.Y. June 16, 2011). 101 Morangelli, 275 F.R.D. at 104 (quoting Myers v. Hertz Corp., 624 F.3d 537, 547 (2d Cir. 2010)). 102 Id. at 120 (citing Consolidated Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 483 (2d Cir. 1995)). 103 2012 WL 607217 (W.D. Mo. Feb. 23, 2012). 104 659 F.3d 234 (2d Cir. 2011). 105 796 F. Supp. 2d. 700 (E.D.N.C. 2011).

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equipment. Plaintiffs’ claims were pleaded under both the Fair Labor Standards Act and the North Carolina Wage and Hour Act (NCWHA) for time spent donning and doffing before and after their scheduled time on the processing line, as well as before and after their unpaid meal breaks. Plaintiffs moved for conditional certification of their FLSA claims and Rule 23 class certification for their state law NCWHA claims. With regard to the numerosity element, the court explained that there is no numerical minimum for satisfying the numerosity requirement, but that a class with as few as 18 class members could be sufficient. In this case, the court found plaintiffs’ prediction of a class of approximately 2,000 members easily satisfied the numerosity requirement of Rule 23(a)(1).

In Gardner v. Western Beef Properties, Inc.,106 plaintiff assistant grocery store

managers and assistant managers alleged that they worked in excess of forty hours per week without being paid overtime or minimum wages in violation of the FLSA and the New York Labor Law (“NYLL”), while the defendant grocery store owners maintained that the plaintiffs were properly classified as exempt from overtime and minimum wage requirements under both state and federal law. Already having achieved preliminary certification of their FLSA claims as a collective action, the plaintiffs sought certification of a Rule 23 class for their NYLL claims. The defendants argued that the plaintiffs had failed to establish numerosity because, of the 334 potential class members, only 45 had opted in, and six of the 45 had been dismissed from the collective action, bringing the total number beneath the presumptive numerosity threshold of 40 putative class members. The magistrate judge noted, however, that the plaintiffs were on the cusp of the 40-class member threshold and that, as other courts in the Second Circuit had done, certain mitigating factors, including whether potential plaintiffs could be fearful that they might suffer reprisal for joining a class, should be taken into consideration when determining whether the numerosity requirement had been met. Because the number of opt-in plaintiffs was so close to the threshold and based on the mitigating factors which the court was permitted to consider, the magistrate judge determined that the numerosity requirement for class certification had been satisfied.107 The court went on to deny plaintiffs’ motion to certify a Rule 23 class based on plaintiffs’ failure to meet the required showing of commonality.

In Espinoza v. 953 Associates, 108 the plaintiffs were tipped employees of defendants’ restaurants. Plaintiffs contended they and a class of employees who worked in a variety of job positions, including server, host, busser, food runner, delivery person, cook, food preparer and bartender, were not paid all of their earned overtime, minimum, and other wages in violation of the FLSA, the New York Labor Law (NYLL), and the New York Code of Rules and Regulations (NYCRR). Plaintiffs contended they were required to clock out and continue working, that their hours were adjusted by managers to reduce the hours worked, and that they were docked for meals and breaks that they were not allowed to take. Plaintiffs filed a motion seeking certification of a Section 216(b) class under the FLSA and a Rule 23 class for their state law claims. The

106 2011 WL 6140518 (E.D.N.Y. Sept. 26, 2011). 107 Id. at *3. 108 280 F.R.D. 113 (S.D.N.Y. 2011).

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court granted plaintiffs’ motions and certified Section 216(b) and Rule 23 classes. In determining that the Rule 23(a) requirements had been met, the court found that plaintiffs had established numerosity by demonstrating that the putative class would consist of 150 to 200 persons. The court rejected defendants’ argument that the collective action mechanism made joinder practicable, noting the collective action related solely to plaintiffs’ FLSA claims.109

In Lewis v. Alert Ambulette Service Corp.,110 ambulette drivers sought collective

and class certification for minimum wage and overtime claims under the FLSA and New York state law. In certifying the New York class, the court found numerosity was satisfied because joinder was impracticable.111 The court reasoned that impracticability does not mean impossibility and depended on the totality of circumstances, “includ[ing] judicial economy arising from the avoidance of a multiplicity of actions, geographic dispersions of class members, financial resources of class members, the ability of claimants to institute individual suits, and requests for prospective injunctive relief which would involve future class members.”112 The court held that a reasonable estimate of more than forty potential class members presumptively met the numerosity requirement.113

In Poplawski v. Metroplex on the Atlantic LLC,114 construction employees moved

for conditional certification of an opt-in class of employees under the FLSA and an opt-out class under 23(b)(3) for their New York state law claims. Defendant did not file an answer or respond to the motion. The court granted plaintiffs’ motion for conditional certification of their FLSA claims and with regard to the numerosity prong of Fed. R. Civ. 23, explained that plaintiffs were only required to show the proposed class was so numerous that joinder of all members would be impracticable, noting there is no bright line rule to determine when the proposed class is too numerous for joinder to be impracticable. It depends on all the circumstances such as geographical dispersion of class members, financial resources of class members, and avoidance of multiplicity of suits. However, the court used the number of persons plaintiffs’ alleged worked on construction sites with them to find adequate numerosity. Since the plaintiffs alleged 40 to 160 similarly situated employees on defendants’ construction projects, the court considered the class to be sufficiently numerous.

B. Superiority

1. Availability of an Opt-In Action for the FLSA Claims

In Garcia v. Freedom Mortg. Corp.,115 plaintiffs were loan officers and loan processors who sought compensation for alleged overtime violations under both state 109 Id. at 127. 110 2012 WL 170049 (E.D.N.Y. Jan. 19, 2012). 111 Id. at **8-9. 112 Id. at *9. 113 Id. 1142012 WL 1107711 (E.D.N.Y. Apr. 2, 2012). 115 2011 WL 2413251 (D.N.J. June 10, 2011).

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and federal law. The lawsuit was certified as an FLSA collective action. The plaintiffs also sought Rule 23 class certification for the state law claims. The court denied plaintiffs’ motion for class certification. The court stated that it must “balance, in terms of fairness and efficiency, the merits of a class action against those of ‘alternative available methods’ of adjudication.”116 The court found that the plaintiffs had not shown that certification would be fair to the class members in light of the class members’ individual interest in controlling the prosecution of their litigation. The court cited the fact that only 44% of the class members had opted into the FLSA collective action based on the same underlying facts as evidence that many employees did not want to join the lawsuit. As a result, it would be unfair to “drag the putative class members into this Court when they have already demonstrated an interest to not be involved in this litigation.”117

In Aponte v. Comprehensive Health Management, Inc.,118 the plaintiffs, who

worked as benefits consultants for the defendant health care services provider, moved for conditional certification of their FLSA overtime claims and class certification of their state law overtime claims under Fed. R. Civ. P. 23. The district court granted both motions, and concluded a Rule 23 class action was superior to other alternative methods of adjudicating the controversy. The court noted that it did not foresee any atypical difficulties in managing the Rule 23 and Section 216(b) classes and concluded that a class action was superior given the potential class size and the likelihood of relatively modest recoveries available to individual class members.119 The court also determined a Rule 23 class action was superior because the existence of multiple lawsuits might result in inconsistent outcomes.

In Alonso v. Uncle Jack’s Steakhouse, Inc.,120 restaurant employees brought an action under the FLSA and New York Labor Law (NYLL) alleging that defendants failed to pay overtime, misappropriated gratuities in violation of NYLL, failed to pay a spread-of-hours premium as required by NYLL, required plaintiffs to purchase and care for their own uniforms in violation of NYLL, and retaliated against plaintiffs in violation of the FLSA and NYLL. After the action had been conditionally certified as a collective action under the FLSA, plaintiffs moved for certification under NYLL as a class action pursuant to Rule 23. That motion was granted. The court found that a Rule 23 class action was superior to other methods of resolving the NYLL claims because the state law claims were nearly identical to the FLSA claims and the state and federal claims could be tried collectively in the court.121 The court determined this was preferable to the alternative, which would be to allow hundreds of individual claims to go forward in state court.

116 Id. (citing Georgine v. Amchem Prods., 83 F.3d 610, 632 (3d Cir. 1996)). 117 Id. at *4. 118 2011 WL 2207586 (S.D.N.Y. June 2, 2011). 119 Id. at *11. 120 2011 WL 4389636 (S.D.N.Y. Sept. 21, 2011). 121 Id. at *5.

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3. Class Member Confusion In Guifu Li v. A Perfect Franchise, Inc.,122 a class of current and former massage

therapists alleged that the defendants had misclassified them as independent contractors and had violated the FLSA and the California Labor Code by failing to pay them minimum and overtime wages, failing to provide meal periods, failing to furnish and keep accurate wage statements, failing to timely pay wages, wrongly subtracting material costs from plaintiffs’ wages, and wrongly taking plaintiffs’ tips. Plaintiffs filed motions to conditionally certify a Section 216(b) class under the FLSA and to certify a state law class under Fed. R. Civ. P. 23. The defendants argued that certifying a class action for the employees’ state law claims in conjunction with the employees’ FLSA collective action would not be superior to other available methods for the fair and efficient adjudication of the litigation. The court recognized that some confusion among potential plaintiffs could occur because they would be asked to both opt in and opt out of the claims in the lawsuit. The court, however, held that several factors weighed in favor of adjudicating the state law claims as a class and outweighed the concern for any potential confusion among putative class members.123 The court also noted that the defendants produced no evidence that class members were opposed to participating in a class action, and therefore, the court was not concerned that class members would be forced to adjudicate their claims in a manner they did not want.124

In Calderon v. GEICO General Ins. Co.,125 security investigators for an insurance

company filed a nationwide collective action asserting claims under the FLSA to recover overtime pay. The district court granted plaintiffs’ motion for conditional certification. After the close of the notice period, plaintiffs filed an amended complaint adding a claim for overtime pay under New York state law and also filed a motion for certification of a state law class under Federal Rule of Civil Procedure 23. Defendants contended that plaintiffs failed to satisfy the Rule 23(b) superiority requirements, based on, among other reasons, the potential confusion that could arise from issuing notices of the right to opt-in and to opt-out in the same case. The district court rejected this argument and certified plaintiffs’ state law claim under Rule 23, finding that the promotion of judicial efficiency outweighed any concerns over class member confusion.126

122 2011 WL 4635198 (N.D. Cal. Oct. 5, 2011). 123 Id. at *10-11. 124 Id. at *11. 125 279 F.R.D. 337 (D. Md. 2012). 126 Id. at 347.