I always look for a preemption defense when I am defending a FLSA collective action, whenever there is a labor contract involved. What a magic bullet that is—get rid of the entire matter in one fell swoop (with maybe just a 12(b)(6) motion). But, and it is a big but, there must be something in the labor contract that is pertinent. If not, that tactic fails, as evidenced by a recent (split) Third Circuit opinion.  The Court refused to dismiss a FLSA collective action brought by nurses at a New Jersey assisted living home and send the case to arbitration, asserting that there were factual disputes, not claims contained within the collective bargaining agreement. The case is entitled Tymeco Jones et al. v. SCO Silver Care Operations LLC, and was issued by the Court of Appeals for the Third Circuit.

The plaintiffs alleged that their employed miscalculated their overtime wages and did not pay them when they were compelled to work through lunch. The Court found that the workers did not explicitly waive their right to sue under the Fair Labor Standards Act and the claims did not center on a contractual dispute at its heart. As the majority succinctly stated, “neither of the plaintiffs’ FLSA claims depend on disputed interpretations of CBA provisions such that arbitration is necessary.”

The nurses filed the action in December 2013, charging that the Company did not include shift differentials (up to $3.00 per hour) when calculating their overtime, i.e. their regular rate and also claimed they were not paid for working through lunch on the many occasions that they did. The employer argued that the case should have been sent to arbitration.

The Third Circuit noted that a court could compel arbitration on a federal statutory claim when the Union “clearly and unmistakably” waived its right to sue and the statute at issue did not exclude arbitration as a forum. In addition, a court could order arbitration when the claims depended “on the disputed interpretation of a CBA provision” even if the Union had not waived its right to sue.  That was not the case herein, as the Court concluded that “all of these so-called disputed ‘interpretations’ of the CBA … are factual questions — length of meal breaks, types of interruptions, how they were handled and whether the plaintiffs ever received compensation due to these interruptions.”

The Takeaway

I think this is a chance worth taking. There are always labor contract articles that focus on methods and amounts of compensation. I believe, all the time, a plausible argument can be made for a preemption position. The employer here came close to prevailing. Even if the employer loses, I believe it makes the case that the challenged payment method is legal, because, if it was not, wouldn’t the Union have challenged it or negotiated it out of the contract?