New Jersey Labor and Employment Lawyer & Attorney : Fox Rothschild LLP Law Firm : Serving Essex County, Sussex County, Roseland, New Jersey

Many times when an employee or group of employees files a FLSA class action, the plaintiffs will file a state action, making the same allegations, i.e. unpaid overtime, but under a state wage-hour statute.  There have been a host of cases exploring the issue of whether these parallel actions can be maintained simultaneously.  The tension is that a FLSA action is an opt-in action, meaning in order to join (whether for the good or bad) the employee must affirmatively opt in.  A "regular" class action, such as those brought under a parallel state statute, are opt out actions, meaning everyone similarly situated (as determined by the court) is in, unless they affirmatively opt out and decide not to be a part of the case.

I believe that dual maintenance of these actions is not proper and such dual actions undermine the validity of the Fair Labor Standards Act and the specific procedures Congress enacted for the enforcement of this federal law.  Many federal judges have agreed.  For example, in Woodard v FedEx Freight East, Inc., decided February 19, 2008, the federal judge in Pennsylvania agreed that a companion state class overtime action to a federal overtime action was the "antithesis" of the FLSA collective action and undermined the FLSA.

The court noted that Congressional intent was to limit the number of participants in such collective actions to people with similar interests.  The prosecution of the companion state action would frustrate that Congressional intent.  The court rejected the argument that dual maintenance was proper as it would facilitate judicial economy and convenience.  Such considerations, ruled the court, cannot override a Congressional mandate.

There have been other courts that have allowed dual suits to go forward in this context.  I believe those courts are dead wrong.  How, for example, would the procedure of identifying class participants be accomplished.  Under a FLSA opt-in process, there is a time limit set for people to opt in and if they do not, they are foreclosed from doing so.  Under the dual maintenance process, this would not matter as those that failed to opt in would, essentially, be in anyway unless they deliberately opted out.  This is too incongruous and contradictory to believe that it could be handled efficiently and it further highlights the contradictions inherent in allowing both actions to continue at once.

I believe this issue will need to be decided by federal appellate courts and/or the United States Supreme Court.  In the interim, the defendant/employer should always make a motion to dismiss the state law overtime claim, as such a motion stands a good chance of succeeding and then all the employer is fighting is federal FLSA claim, which is the more dangerous of the two, all things considered.

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We all know Blackwater as the company that has been given one billion dollars in federal contracts to do work in Iraq.  There have already been numerous allegations concerning the activities of Blackwater agents and their tactics.  Now, it appears that this company may have, on a widespread scale, been violating labor law by classifying individuals as independent contractors when they should have been deemed employees.

Blackwater classified its security guards as independent contractors.  As they were not deemed employees by the company, the company was able to qualify for small business contracts without competing with other qualified bidders.  This is the essence of the allegation made by Congressman Henry Waxman (D-Calif).  The company claimed that it did not sufficiently control the activities of the guards in Iraq and Afghanistan for them to be labeled employees.  Not only does this contradict what a Blackwater lawyer had argued in a wrongful death case, when he was seeking money damages for their estates, it also strikes me as a position without foundation.

In order to establish the element of "control," which then shows someone is an employee, it is not necessary for the putative employer to control every aspect of the individual's work day.  It is enough if a general umbrella of control, actual or potential, exists over the employee(s).  It appears to me, based on the little that is now public, that Blackwater did exercise sufficient general control over these people and its claim that "all" that it did was to pay them seems bland.

At stake are millions of dollars in taxes to the IRS and probably millions of dollars in overtime monies to the employees.  It is very tough to establish a true independent contractor relationship and the framework of these relationships seems to be the antithesis of such a relationship.

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A federal court in California declined to certify a class action under the FLSA, an action that was filed by financial sales representatives of US Bancorp in a case entitled Guess v US Bancorp.  The plaintiffs wanted a nationwide class action, as many of these suits hope for and seek.

In numerous postings, I have observed that the threshhold for obtaining class certification in a FLSA class action is relatively low.  There must be a common policy, plan or practice applicable to all potential, putative class members.  In this case, the employer argued that the job titles and, more importantly, the job duties of the proposed plaintiffs varied tremendously and thus they were not  "similarly situated" for class action purposes.  The court agreed.

The plaintiffs had contended they were misclassified as exempt, were really non-exempt and therefore overtime eligible.  The company argued that it employed 52,000 people nationwide and the job responsibilities differed widely from state to state and division to division.  The key was that the plaintiff failed to make a sufficient showing that the work duties of all other financial services representatives were substantially similar to his.

This gives heart to employers.  These class actions can be defeated if the proper evidence rebutting allegations of "similarity" can be adduced.  The plaintiffs in this case, however, have been given the opportunity to offer additional evidence and re-file the class action motion.  So, maybe, we will hear more of this.  Maybe not.  

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