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

In December, I blogged about off-the-clock work in my post Unreported, Off-the-Clock Work.  Off-the-clock work includes meal break time, and issues arise when employees work during these breaks, or claim that they work during these breaks, but are not paid.  Recently, an Ohio federal judge decertified a class of employees who alleged that their employer’s meal break policy violated the FLSA.  The judge decertified the class action suit because the workers’ experiences were too diverse to justify the class. 

The case, Creely v. HCR ManorCare Inc. et al., was filed in the U.S. District Court for the Northern District of Ohio, the case number is 3:09-cv-02879.

The employer, HCR ManorCare Inc., (“HCR”) has more than 44,000 hourly employees.  A class of 318 nurses, licensed practical nurses, certified assistants, and admissions coordinators claimed that employees missed meal breaks and were not properly compensated because HCR failed to  ensure that employees were paid.  Specifically, the plaintiffs claimed that HCR failed to train employees on how to report incidents where they worked during meal breaks, and even in some instances, actively discouraged employees from doing so.  The judge however, decertified the conditional class because the claims presented varying accounts of what instructions these workers received on claiming wages earned while working through meal breaks (since wages were automatically deducted for meal break time). 

Although this class was decertified, this decision demonstrates the overriding importance for employers to maintain reasonable procedures for employees to report ostensible work performed during meal times.  To avoid incidents like this, employers should ensure that employees are properly trained to report their time and managers are keenly aware of their employees working, or seeking to work, through lunch.

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When a labor contract contains provisions that address wage hour issues (such as travel time, or donning and doffing time) a defense argument to dismiss a FLSA suit is that the suit is preempted by federal labor law.  This is essentially asserting that the wage hour issue is inextricably tied with contract interpretation so it for an arbitrator, not a court.  That principle was at the heart of a recent FLSA action where the judge declined the invitation to dismiss a lawsuit alleging overtime was not aid, because the court concluded that it was still an open issue whether the parties’ labor contracted barred the claims.  The case is entitled Fenison et al. v. Prime Healthcare Centinela LLC and was filed in state court in California.

“To avail itself of [a statutory exemption to the overtime law], defendant must establish, inter alia, that there is a valid collective bargaining agreement,” the judge found, in denying the employer’s summary judgment motion. “ There is a triable issue of material fact as to whether there is one. Plaintiffs have submitted evidence which they contend supports the position that there is not, while defendants contend that there is.”

The plaintiffs alleged that they were denied overtime. In California, prior to 2000, there was no daily overtime or “clock overtime” requirement, which means that employees working more than eight hours in a day were entitled to overtime (as opposed to forty hours in a week).  Then, in 2000, the law changed and clock overtime became the law of California.  The plaintiffs allege that the hospital, in response to the law, reduced the regular rate and added on a differential payment to avoid paying the hourly employees any more than it had done when the prior law was in effect, allege the plaintiffs.

The suit seeks to cover some fourteen hundred hospital workers who worked under the allegedly improper system since 2007.  The hospital moved for summary judgment, asserting the labor contract as a defense.  “Plaintiffs’ employment with Centinela has always been governed by the collective bargaining agreement. It follows that plaintiffs’ claims for unpaid ‘wages’ is completely barred by [the statutory exemption]”

The judge, however, denied the motion, finding that there had not been enough evidence submitted to demonstrate that there was a valid labor contract between the parties and that it controlled the issue sought to be litigated.  The court will, notwithstanding this ruling, allow the employer to file a new motion, accompanied by necessary affidavits, so the hospital may still prevail on the preemption defense.
 

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The health care industry seems to draw more than its fair share of class action lawsuits.  In another example of this trend, home-health workers have filed a FLSA class action in federal court, alleging that their employer misclassified them as exempt and thus improperly denied them overtime.  The case is entitled Cook v. Amedisys, Inc. filed in federal court in the District of Connecticut.

The theory of the suit is that the employer did not pay for actual hours worked but had implemented a point system for determining compensation.  Counsel for the plaintiffs stated that the Company’s “compensation scheme encourages employees to take on more patient visits and work longer hours, while Amedisys reaps the benefits by reducing their labor costs and boosting their profit margins.”  As the Company has more than four hundred locations and more than 16,000 employees (in 38 states), the potential expansiveness of this lawsuit is staggering.

The classifications of workers involved are home-health registered nurses, physical therapists, occupational therapists and speech language pathologists.  These employees are paid on a per-visit rate, with each visit worth between 1-2 points; there are “estimated” hours built into the system, based on an assessment of how long each type of visit should take.  Travel time is not paid for, nor is the time that must be taken to prepare necessary paperwork or to drop off the collected samples.  On the travel time issue, the complaint alleges that even travel during the day (which is clearly compensable under FLSA regulations) is unpaid.

This suit could be a real problem for the employer.  I do not believe that the exemption defense (i.e. professional) is available, as technician and technologist types of employees (with few, if any, exceptions) are non-exempt, notwithstanding that they may be highly skilled and have studied in specialized programs.

Even if the exemption argument is available, on the duties prong, the Company then has to establish that these workers are paid on a “fee basis,” which is an alternative to payment on a salary basis, which the exemption tests otherwise mandate.
 

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I have written several times about Assistant Manager class actions being quite difficult to defend because these employees often perform a great deal of “subordinate” type work, making the issue of “primary duty” a tricky one.  In a recent class action involving these employees, a federal judge has denied a motion for conditional certification (which does not often happen) on the basis that the lead plaintiff Assistant Manager was not similarly situated to the people he tried to represent. The case is entitled Guillen v. Marshalls of MA Inc and was filed in the Southern District of New York.

The plaintiff had claimed that the violations were willful, thereby entitling him (and the other opt-ins) to a third year of recovery.  Then, going after the primary duty requirement, the plaintiff alleged that he devoted the bulk of his time to non-exempt tasks such as janitorial work and unloading trucks.

The deficiency in the plaintiff’s motion, however, was that he failed to show that Assistant Managers throughout the country were performing their jobs in precisely the same manner.  Put differently, there was not a strong showing that Assistant Managers elsewhere were discharging non-exempt duties.  The court stated that “Guillen’s latest motion adds virtually no evidence suggesting that Guillen is similarly situated to ASMs in Marshalls stores nationwide with respect to the main contention in this case: that he was required to perform tasks that rendered him nonexempt from the FLSA’s overtime requirements.”

The court noted that there was nothing in the job description for this classification that required the performance of non-exempt work that the plaintiff alleged was done.  There was no evidence of any nationwide requirement(s) in this area as well.  The plaintiffs could not find a companywide policy that would apply to all of these employees.  As I have often noted, that is the anathema for an employer defending such a case. In this case, there could have been thousands of employees employed in these jobs across the country and without a showing of commonality (i.e. a policy), there would be a need for individual scrutiny of what each employee actually did.

What this case again reinforces for me is that the knee jerk reaction of any company defending a FLSA collective action should be to look for and solidify all evidence of the dissimilarity of the lead plaintiff and the “others.”  Company compensation policies should also be examined and, if need be, appropriately revised.
 

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In a recent case, a federal judge in New York has allowed a class action to proceed for thousands of employees who allege that they were misclassified as exempt by an accounting firm.  The case is entitled Pippins et al. v. KPMG LLP and was filed in the Southern District of New York.  The judge also ordered that the Company turn over a computer-readable list of the names and contact information for possible opt-in plaintiffs.

The judge found there to be commonality because the accounting field is governed in large part by a number of regulations and standards that would render the plaintiffs as “similarly situated.”  The court noted, however, that “the uniformity does not mean audit associates are entitled to overtime.” The Company has claimed that these employees are exempt under the administrative and/or professional exemptions.  The Company also defended by asserting that, because each employee’s duties may have differed, there would be required an individualized scrutiny as to what each employee did, thus destroying the necessary element of commonality.

What is important is that the “individualized” defense may ultimately prove to be successful, although at the conditional certification step, a court is not focusing on these individual differences but rather looking at what elements of commonality may be present, such as similar educational backgrounds and similar training regimens.

The plaintiffs (naturally) contend that they performed clerical-type work, which was routine and repetitive.  They claimed that “all” they do is do basic reviews of documents and financial records.  I imagine the Company will defend not only on the individual scrutiny basis but will also try to knock out as many plaintiffs as it can but pointing to the higher levels of education they possess, the degrees and certificates, which will evidence that they do more than just “clerical” work and are using their advanced education (college or above) to conduct financial analyses, (which is the essence of an administrative or professional defense) and not just crunching numbers.
 

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I have been representing an employer in a class action in which Registered Nurses, paid hourly, sought overtime.  We won on summary judgment at the trial court, on the strength of two New Jersey Department of Labor Opinion Letters (one going back to 1975), that held that it was the DOL’s interpretation that as long as the Nurses (or other professionals) performed “professional” work, they were exempt from overtime provided they made the minimum amount required (i.e. $400 per week).  The claimed liability reached into the hundreds of thousands of dollars.  In sum, on the basis of two pieces of paper, we succeeded in securing the dismissal of the case.  The case is entitled Anderson v. Phoenix Health Care, Inc., A-2607-10T2 (N.J. App. Div. Nov. 16, 2011).

On November 16, 2011, the New Jersey Appellate Division affirmed this lower court holding.  The Court noted that courts should defer to an agency’s interpretation of its own laws and regulations if that interpretation was not “plainly unreasonable.”  Against that framework, the Court held that this interpretation was not, in fact, “plainly unreasonable,” even though hourly payment was not ostensibly “allowed” by the applicable regulations.  The Court reasoned that the “critical question is whether the employee is a professional, not whether that professional’s compensation is determined by reference to an hourly rate instead of a salaried rate.”

The Court also concluded that, even if this longstanding, i.e. almost forty years, interpretation was not reasonable, my client could avail itself of the safe harbor, good faith exception found in New Jersey law (and the FLSA and, more likely than not, the wage hour laws of many States).  That good faith exception provides “immunity” for a defendant when that entity has conducted itself in reliance upon or in conformity with interpretations or enforcement practices of a the relevant agency.  That is what my client had done in this case.

So, in essence, we used the Opinion Letters for both of these purposes, in an offensive manner, as a sword, rather than a shield.  First, we argued that the interpretation was not unreasonable, but even if we lost on the ground, we claimed the refuge of the safe harbor.  The lesson for employers is that if they wish guidance on a certain point of law, securing an Opinion Letter provides not only guidance, but also protection, even if the logic or reasoning of the Letter is ultimately struck down by a Court, the particular employer that conducted itself in accord with the Letter will not be held liable.

The irony in this is that as New Jersey has now adopted the FLSA regulations (as of a few months ago), this defense would likely not be available to an overtime claim filed by an hourly paid Registered Nurse.

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Doug Weiner and Meg Thering, in the Wage Hour Defense Blog, recently commented on the introduction of the Computer Professionals Update Act in the US Senate on October 20, 2011.  They posit that this is a good development for employers, as employers would be more easily able to classify employees as exempt under the computer exemption.

The new legislation would expand the coverage of the exemption to individuals who work in a "computer or information technology occupation, including, but not limited to, work related to computers, information systems, components, networks, software, hardware, databases, security, internet, intranet or websites, as an analyst, programmer, engineer, designer, developer, administrator or other similarly skilled worker."   Also, employees who direct the work of individuals performing these duties would be exempt.

I welcome this development.  I have had numerous cases and matters for clients where the focus has been whether certain computer employees were exempt or not.  There are many fine lines in undertaking this analysis, almost as many as there are titles in this field.  The employer is forever placed in the difficult position of having to make a judgment call ion the exemption question and if it is proven wrong. almost astronomical liability is the result, as these workers are often earning very good compensation (whether at an hourly rate or a salary).  To take the more conservative approach and simply treat the workers as non-exempt is not the answer either because although it spares the employer the specter of a possible lawsuit (usually class action) it escalates the overtime outlays that the employer is subject to.

Now, if the legislation passes, employers will not be forced to make what are now very difficult decisions.  I believe employers are, for the overwhelming most part, intent on doing the right thing and complying with the law.  When the law is not easily amenable to reasonable interpretation and forecasting, that desire to comply is hampered.  With this new law, employers may be able to correctly classify computer workers and not have to be stressed out over whether they will be hit with a FLSA class action.

To be continued...

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After a three-week jury trial, Southern New England Telephone Company has won a verdict finding that employees who were titled as field managers and classified as exempt, were in fact exempt under the Fair Labor Standards Act and state law.  This case is significant because, as a rule, first-level managers are often in reality “working foreman” type of workers and are usually found to be non-exempt.  The case is entitled Perkins et al., v. Southern New England Telephone Company and was filed in federal court in the District of Connecticut.

Under the FLSA, employees classified as executive exempt must supervise at least two workers on a full time and direct basis, must have input into or authority over different personnel decisions, such as hiring, firing, compensation, promotion, etc and must have management as their primary duty.  With first-level managers, the problem (for defense counsel) often arises because these managers do the same kind of work as their subordinates so the primary duty factor often is an issue.

The plaintiffs had claimed that they were merely given the title of manager and were, under that umbrella, compelled to work 50-70 hours per week, without overtime payment.  The plaintiffs contended, as indicated above, that they had and exercised no managerial authority over their so-called subordinates.

The plaintiffs’ lawyers had valued the case at a startling figure exceeding $50 million.  This verdict is even more significant given the fact that the judge had ruled (prior to trial) that the Company had destroyed a very large chunk of evidence that the plaintiffs’ lawyers asserted hampered their prosecution of the case and benefited the defendants.

The judge evidently agreed with the plaintiffs, as he had rejected defendant’s motion to dismiss the case, finding that the field managers were themselves closely supervised and actually earned less than the people they supervised.  The defendant will not, I daresay, argue with the result, but, on balance, this is against the odds.
 

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 A few months ago, the US Supreme Court issued the landmark decision in ATT Mobility LLC v. Concepcion in which the Court held that the Federal Arbitration Act preempted state law that forces class arbitration on parties that have not consented to it.  The Court ruled that a California rule that found class action waivers on consumer arbitration agreements unconscionable was preempted by the FAA.  Now, a New Jersey federal judge has applied Concepcion to dismiss a FLSA class action and has sent the case to be arbitrated instead.  The case is entitled Opalinski et al. v. Robert Half International Incorporated and was filed in federal court in the District of New Jersey.

District Judge Faith S. Hochberg granted the motion to compel arbitration and dismiss the case, relying on Concepcion and held that its tenets were applicable to FLSA actions.  Judge Hochberg did not accept the plaintiffs’ contention that the defendant had waived its right to go to arbitration, because the Company had waited more than fourteen months before moving to compel arbitration.

Judge Hochberg wrote that “after determining that the arbitration clauses in both Opalinski’s and McCabe’s employment agreements require them to arbitrate their FLSA claim and that [Robert Half] has not waived its right to compel arbitration, this court sees no reason to permit plaintiffs to continue to litigate this action in this forum.”

The Company contended that its ostensible delay in moving to compel arbitration was allowable because the Concepcion case had “dramatically changed the legal landscape” in class actions where arbitration clauses existed and were potentially applicable to a given case.  The Judge held that the motion to compel arbitration satisfied all of the requirements established by the Third Circuit for granting , including finding that the Company had a reasonable basis for the delay, i.e. the issuance of the Concepcion decision, which had changed the law.

I predict this is but the first of many cases that will follow the same pattern.  Also, more employers will be inserting class action waiver language into their arbitration agreements with employees (which are often included in Employee Handbooks) and this tactic may well significantly hamper the ability of plaintiff attorneys to file FLSA class/collective actions.  On the other hand, employers may be unhappy by getting what they “wished for,” because one possible outcome is that the employer may have to arbitrate dozens, if not hundreds, of arbitrations where the facts and law are the same.

To be (surely) continued…
 

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In June, I wrote about a lawsuit filed by a former film editor for “Girls Gone Wild,” who alleged that he was entitled to overtime pay because Manta Films Inc. and GGW Direct LLC improperly classified him as an independent contractor.  In response to the allegations, Joe Francis, the founder of “Girls Gone Wild,” stated that the lawsuit was “nonsense” because the plaintiff signed an arbitration agreement and release stating that the companies had paid him for all wages owed. The lawsuit is entitled Anagnos v. Magna Production Inc, et al. and was brought on behalf of a proposed class of 400 current and former workers.

As expected, Francis’ reliance on the arbitration agreement was misplaced.  Not only was he unable to dismiss the lawsuit based on the signed agreement, but on October 3, 2011, a California judge refused to enforce the arbitration agreement in its entirety. Specifically, the court denied the request to have an arbitrator, rather than a judge or a jury, decide the class action.  This decision should not come as a surprise to anyone, except maybe Francis, since the California courts have consistently refused to uphold mandatory arbitration clauses for class actions under the Fair Labor Standards Act.

The Court’s recent ruling in Anagnos v. Magna Production Inc. et al. highlights the fact that employers cannot hide behind such agreements in defending wage and hour lawsuits.  As seen in connection with independent contractor agreements, the courts will disregard any agreement that it deems to be contrary to the state and/or federal wage laws.
 

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Just when the New York Mets thought that things couldn’t get any worse for them this season, they get “hit” with a class action lawsuit for allegedly failing to pay Citi Field security guards overtime. The plaintiffs, Errol K. Roberts and David N. Vernod, allege that Citi Field security guards regularly work 40 hours a week, plus 6 hours of overtime for each Mets’ home game, but do not receive time and a half when they work more than 40 hours in a week.

Specifically, the plaintiffs claim that the Mets pay security guards $17.00 per hour and provide them with a flat rate of $102.00 for each home game they work.  However, this flat rate only covers their regular hourly rate and does not factor in premium overtime pay.  The security guards are seeking an injunction, unpaid wages, liquidated damages, and attorneys fees.  The case is entitled Errol K. Roberts, et al. v. Sterling Mets LP and was filed in United States District Court for the Eastern District of New York.

Much like their infield this year, the Mets’ defense appears weak.  Notably, security guards are generally not exempt employees, and the Mets certainly do not appear to treat the Citi Field security guards as exempt.  In particular, the security guards are paid by the hour, not a salary, and they receive a set lump sum when they work extra hours.  The Mets could argue that the lump sum payment for home games represents overtime pay.  However, under the federal regulations, this arrangement is only valid where there is a signed writing between the employee and the employer to this effect. It is not clear whether such a written agreement exists.

Based on the allegations in the Complaint, it is unlikely that the Mets will be able to put up much of a fight in this case.  My advice to the franchise on how to comply with the law under their current pay structure for security guards --- hope for rain.
 

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When employers are compelling employees or “suggesting” to employees that they engage in work-related activities before or after they go on and off the clock, trouble is brewing.  In the latest of these working time class actions, a group of employees working for Lululemon Athletica Inc. have sued the company under the Fair Labor Standards Act ("FLSA"), claiming pay for time worked beyond their normal shifts.  The “work time” at issue is the watching of inspirational DVDs and the taking of exercise classes.  The case is entitled Brown v. Lululemon Athletica Inc. and was filed in the District Court for Northern District of Illinois.

The plaintiffs claim that the company had a system-wide policy on this issue, so the papers filed in court seek a class that may extend to at least three states.  These employees, dubbed “educators,” have alleged that the company, whose primary line of business is yoga-inspired athletic gear/clothing has compelled them to work a number of extra hours each week, which would take all of them into overtime situations and generating considerable liability.

The employees claim that they were required to view inspirational DVDs in their homes and attend mandatory staff meeting on a monthly basis, which took two hours.  They seek compensation for this alleged work time as well.

The employees have filed an amended complaint, where they specify that the possible class encompasses 1,400 current/former Lululemon employees who worked at least two overtime hours per week.  In frightening fashion, the complaint hypothesizes that damages may top five million dollars.

If the employer actually compelled these employees to engage in these activities and the activities can be demonstrated to have some integral connection to their work, there may be liability.  The flip side also applies---if the employees’ positions and their employment would be in jeopardy if they did not partake in these activities, or they reasonably feared their jobs would be in jeopardy, liability might also lie.

The underlying “moral” is for employers to self-audit their compensation practices, particularly as applied to these sideline-type activities, which are often hidden in the compensation radar.
 

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In a rather new twist on the working time class action trend, Southwestern Bell Telephone Co. is being sued in a Fair Labor Standards Act (“FLSA”) collective action, where the underlying theory is that the company has denied union representatives compensation for their time performing union-related duties.  The case is entitled Kayser et al. v. Southwestern Bell Telephone Company and was filed in the U.S. District Court for the Eastern District of Missouri.

The workers allege that their time spent representing union members at labor-management meetings are hours worked and they are not being paid, in violation of the FLSA.  The Complaint alleges that shop stewards and other functionaries of the Communications Workers of America (“CWA”) discharge a number of duties, among them the representation of union members at disciplinary, investigatory and grievance meetings.  At all of these proceedings, there is a right to union representation under the National Labor Relations Act (as well as most union contracts).

The investigatory meetings, from which discipline might be imposed, are held by the company during the “accused” employee’s work time.  Such meetings are for the ostensible benefit of the company so it can determine whether employee misconduct has occurred, claim the plaintiffs.  On those occasions when the employee asks for union representation, the Union provides the representative.  An analogous procedure is utilized when the meeting is to impose discipline on a member, hear a grievance presentation, or any other labor-management purpose.  Again, the common denominator, according to the plaintiffs, is that the meetings are held on employee work time.

The employee/representative plaintiffs seek overtime, based on a theory that these hours would take them beyond the statutory threshold for overtime, i.e., 40.  As a “side issue,” the complaint alleges that employees are chilled and deterred from seeking to become union functionaries because they know their compensation will suffer.  The employees seek an injunction, as well as liquidated (i.e. double) damages and attorneys’ fees.  The class purports to cover current/former union representatives in Missouri, Kansas, Oklahoma, Arkansas and Texas.

There is a specific FLSA regulation addressing the issue of whether time spent in union matters is working time. 29 CFR 785.42.  The regulation leaves that determination to “the process of collective bargaining or to the custom and practice under the collective bargaining agreement.” I daresay that the employer will defend by asserting that if this matter is not specifically addressed in the labor contract, it means the parties never intended for the time to be compensable.  The case is interesting because it highlights the interplay or, some might say, the tension, between federal labor law and the FLSA.
 

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I have defended a number of Fair Labor Standards Act (FLSA) class actions and individual suits and many of these result in settlement.  When these cases are settled, naturally, a document is drawn up for the plaintiff(s) to sign.  These settlements, under law, must be judicially approved and if they are not, both parties (especially the defendant)  run the risk  that the settlement may be invalid and the plaintiff(s) then legally able to continue the lawsuit.   A recent case illustrates the dangers inherent in negotiating and finalizing settlements in FLSA cases.

In Dees v. HydraDry, Inc. filed in the Middle District of Florida, a federal district judge, who received a joint stipulation for dismissal of an overtime suit, issued an opinion in which he stressed the role of the court in assessing the worthiness of settlement agreements; the opinion emphasized that confidentiality agreements in FLSA settlements will not receive judicial approval.

If the settlement includes full relief, meaning that it includes the liquidated (i.e. double) damages and attorney’s fees, then the parties need not request judicial review, but if there is some form of compromise, meaning that the employee has given up any rights in the settlement, then court approval is necessary.  The judge wrote that if “the employer in a FLSA case might offer full monetary compensation to the employee for the FLSA case might offer full monetary compensation to the employee for the FLSA claim, but might require the employee to refrain from informing fellow employees about the result the employee obtained.  Or the employer might require the employee to trim the shrubbery at the employer’s home each weekend for a year.  In either instance, the employee outwardly receives full monetary compensation for his unpaid wages, but effectively the additional term. . (the ‘side deal’) confers a partially offsetting benefit on the employer.”

In order to ensure that the spirit and substance of the FLSA is protected by a settlement, the judge stated that a court should engage in a two-fold analysis.  The first step is to determine whether the compromise is fair and reasonable to the employee.  If that threshold is reached then the court must examine whether the settlement in any other manner improperly undermines the “values” embodied by the FLSA.  In other words, a court should approve the settlement only if the settlement is fair to the employee and facilitates the purposes of the FLSA.

The judge outlined the following factors in determining whether the settlement is fair to the employee: 1) the existence of fraud or collusion behind the settlement: 2) the complexity, expense, and likely duration of the litigation; 3) the stage of the proceedings and the amount of discovery completed; 4) the probability of plaintiff’s success on the merits; 5) the range of possible recovery; and, 6) the opinions of counsel.  The court also opined that such settlements should not ever be confidential, as the court’s action in approving such a settlement was a “public act.”

In conclusion, settlements are a necessary, indeed, vital component of resolving FLSA cases.  The last thing the employer wants is to reach a settlement and then have a court throw it out or worse, not seek judicial approval and learn later that the case it thought was finished has been revitalized through the employer’s own fault (i.e. not submitting for judicial approval).
 

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In another of the slew of tip pool cases that have ripped through the restaurant industry in New York City and elsewhere, a federal judge has granted class certification to workers who receive tips in the Smith &-Wollensky Restaurant Group Inc.  These employees allege that the chain has improperly required them to pool their tips in a manner proscribed by the law.  The case is entitled Schmidt v. Smith & Wollensky and was filed in the U.S. District for the Northern District of Illinois.

The lawsuit charges that Smith & Wollensky did not comply with the Fair Labor Standards Act (FLSA) rules regarding the tip-credit provisions of the Fair Labor Standards Act and Illinois wage law  The “tip credit” allows an employer to pay less than the federal minimum wage, on the assumption that the employee will make up the difference in tips.

However, certain rigid requirements must be met. If employees who do not receive tips as a customary function of their job duties, they cannot share in the pooled monies.  The complaint charges that such employees did share in the pool and, as such, the validity of the tip pool is destroyed and the employer then loses the ability to claim the tip credit.  What follows then is that for every hour worked, the employer has not properly paid the minimum age and tremendous liability (potentially) arises, depending on the number of employees involved and how far back the statute of limitations goes (e.g. two or three years under FLSA and longer under state law).  In this case, the complaint charges that the employer required servers to share tips with “expediters, dishwashers, silver polishers and coffee makers” and also included a manager in the tip pool.

In granting class certification under Rule 23, the state law claim, the judge rejected the employer’s argument that the class was unduly broad as it sought to include all of the employees receiving tips, not just servers.  This was based on holdings by the Court of Appeals for the Seventh Circuit which has determined that a class is too broadly defined if it seeks to include employees who could not have a recovery or suffered an injury at the misconduct of the employer.  The District Court judge, however, ruled that the manner in which the class was defined was not overly broad because it “appropriately includes those employees who ‘could’ have been injured by defendant's alleged conduct.”

In the restaurant industry, tip pooling arrangements are under constant focus and are the targets of a rash of class action lawsuits.  One way to resolve this dilemma is not to tip pool and just allow each waiter to receive/keep his own tips.  The downside is that there will be fights over good “stations” and other possible employee discord/unrest.  This may a smaller price to pay than thousands (or hundreds of thousands) of dollars in damages.
 

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In Florida, an Assistant Manager has filed a class action against RadioShack Corporation, alleging that the company has misclassified these managers as exempt executives and has not paid them overtime.  The case is Truax v. RadioShack Corp. and was filed in the U.S. District Court for the Southern District of Florida.

The plaintiff is also claiming that Radio Shack “knowingly and willfully” violated the Fair Labor Standards Act; this is an attempt to extend the otherwise two-year statute to three years and to recover liquidated (i.e. double) damages.  The plaintiff is claiming that the company failed to pay time and one-half for the overtime hours.  The named plaintiff claimed he regularly worked 55 hours every week but was only paid straight pay for the hours, rather than time-and-a-half that is mandated by the FLSA.

In another case, RadioShack is alleged not to have paid workers for attending store meetings. In that case, Kamar et al. v. RadioShack Corp., the U.S. Court of Appeals for the Ninth Circuit has affirmed a lower federal court ruling that granted class certification to the plaintiffs.  That case involved mandatory meetings (on Saturday) that non-exempt employees attended and were not paid for.

On the Assistant Manager issue, the best defense is that these workers are truly exempt. The second best defense is that the class certification motion must fail because individualized assessment of each Assistant Manager is needed because some might have exercised more managerial duties than others.  The need for individual scrutiny is the antithesis of a class action .

As far as the mandatory meetings, this is basic FLSA law.  Non-exempt employees compelled to attend meetings or trainings are on the clock. 
 

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A case has recently issued that provides instructive guidance for employers who may want to insulate themselves from potential liability in a class action lawsuit.  A federal judge has ruled that an entity, a sub-contractor that provided janitorial personnel and crews to Target Corp. was contractually obliged to indemnify Target in a Fair Labor Standards Act lawsuit where the janitorial employees sued Target and the contractor for unpaid overtime compensation.  The case is entitled Itzep et al. v. Target Corp. et. al and was filed in the Western District of Texas..

Significantly, the defendants did not contest the fact that the workers did in fact work more than forty hours, but were not properly paid overtime.  The dispute was really about which defendant would have to pay the damages.  The subcontractor, Jim’s Maintenance, contended that the indemnification provision was facially illegal as it was void under the public policy of the State of Minnesota (the state that the parties agreed contractually controlled the claim).

The federal judge rejected that contention.  The judge agreed that the public policy of Minnesota was not offended by this contract, which was between two commercial entities.  It was a business transaction.  The judge also held, however, that Target was precluded from seeking indemnification for defense costs, as it did not tender the defense to the subcontractor as required by the contract, but the court held that the company could seek indemnification for its other expenses.

The bottom line was that the subcontractor was obliged to pay its employees, not Target.  When it did not pay, the workers sued both entities and won the judgment, but then target could, on the “back end” go after the subcontractor as it was and remained that entity’s legal obligation to pay the workers. That is unless the entities were found to be joint employers (which they were not).  This scenario posed an entirely different set of perils for an employer who subcontracts out certain work (most commonly cleaning and janitorial) but whose supervisors may exercise nominal or putative authority over the subcontractor’s employees when they work at the customer, i.e. Target.

The lesson for employers engaged in such subcontracts is to apportion the liability for unpaid wages, overtime and discrimination and other claims to the subcontractor for its employees.  This can be done via provisions in the contract that spell out the obligations of each party and what will happen, i.e. indemnification, if a particular party does not live up to those obligations.
 

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In yet another case involving Assistant Managers, the named plaintiff in a exemption misclassification case has moved for conditional certification, after successfully defeating the defendant-employer’s Rule 68/Offer of Judgment strategy.

I have written about Rule 68 many times and have urged that this is a viable way for a defendant to close a case out, without going through the torture of protracted, extraordinarily expensive litigation. In this case, however, the federal judge concluded that this was an attempt to “pick off” the lead plaintiff and thwart the case for everyone else, so he denied the motion and is allowing the case to proceed.  The case is entitled Nash v. CVS Caremark Corp and is in federal court in the District of Rhode Island.

The employer moved for dismissal, on mootness grounds, as I have done, after making an offer of full relief to the named plaintiff in July 2009.  When the plaintiff rejected the offer, the company argued that the court no longer had jurisdiction over the case, because by rejecting the offer that would have provided him the maximum possible recovery, the plaintiff could not legally pursue the matter.

The court disagreed.  The judge saw this as an effort to cut the head off the case and prematurely terminate the litigation.  The judge wrote that “the present motion underscores the unique danger of tactical manipulation in FLSA cases.”  The court went on to note that “nothing in Rule 68 itself suggests that it should be used as a vehicle for sabotaging claim-aggregating devices.”  To the court, this defense action created a “virtually unwinnable” situation for plaintiffs in collective actions.

The judge saw the tactic as forcing the plaintiff to either pursue discovery very early in the case, when a court likely will deem it premature, or seek class certification and/or notice before discovery, which runs the risk of harming the interest of these as-yet undiscovered class members.  The judge decried this “moot-and-dismiss” tactic, as it might allow the company to forum-shop as well as plaintiff-shop.

I disagree with this judge.  Rule 68 exists and it exists for just this purpose.  I believe if the named plaintiff (and any early opt-ins) turns down the Offer, the case is and should be amenable to dismissal. Another response is to make the Offer to all class members, i.e. those who properly opt in to the action.  Then, the pick off argument fails.
 

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I have often lamented that the administrative exemption is the grayest of the three white-collar exemptions and the toughest to prove.  There are, however, some notable exceptions to this rule.  A federal court has granted summary judgment to a temporary employment recruiting firm, where the former employee, an Account Recruiting Manager, alleged he was non-exempt and entitled to overtime under the Fair Labor Standards Act (“FLSA”).  The case is entitled Andrade et al. v. Aerotak Inc. and was filed in the District of Maryland

The court held that the recruiters were not so-called white collar production workers and fit within the administrative exemption.  Interestingly, although the suit was originally filed as a class action, the court denied conditional class certification, because there were too many individualized determinations necessary.  In other words, the plaintiff failed to demonstrate a common policy, practice covering these workers.

The duties of the recruiter involved finding and placing financial services professionals in various contract positions with the staffing company’s clients, the contracts usually ranged from 6-12 months.  The company claimed the exemption and the court agreed; on the critical issue of discretion utilization, the court found the workers used independent judgment involving matters of significance.

The court essentially held that the recruiters were performing the functional equivalent of work performed by Human Resources people and they were not simply churning out the employer’s “goods,” which is the crux of the white-collar production “doctrine.”

The toughest line to draw is whether an individual is using skill and experience or discretion and independent judgment.  The employer defense of administrative exemption usually, in my experience, founders on this very point.  Perhaps this case gives a roadmap for future defenses as to how the discretion component of the administrative exemption should be presented and argued.

I think it does!
 

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A federal judge has dismissed a possible class/collective action concerning an alleged failure by Butterball, the giant poultry company, to pay workers for donning and doffing time.  I have written many times on this subject, but this case is different because the court found that the employees’ union had agreed to the policy of not compensating workers for this time. The case is entitled Salazar et al. v. Butterball, LLC and was filed in federal court in the U.S. District Court for the District of Colorado.

The workers are unionized and represented by the United Food and Commercial Workers, Local 7. The court ruled that, during negotiations, the union had waived or given away the right to be compensated for this time.  The employees in this lawsuit maintained that, notwithstanding this provision, it was illegal to force the workers to negotiate for something that they were already legally entitled to, i.e. compensation for donning and doffing time.

Significantly, the court noted that the union had filed a grievance over the nonpayment of donning and doffing time, but never channeled the grievance to arbitration.  Thus, the company also had the argument that the Union had abandoned the grievance and had “doubly” waived its right to press for compensation, i.e. through collective bargaining and the dropping of the grievance and failure to pursue it to arbitration.

The Company argued that since payment for donning and duffing time concerned wages, it was a so-called mandatory subject of bargaining; the union had never pursued the matter at the bargaining table and therefore the Company contended that these unionized workers could now not come after it through the back door.

The plaintiffs argued that if the federal judge adopted the magistrate judge’s findings, that would, “contrary to law, create a requirement that a union must use its right under federal law to be paid for all time worked as a bargaining chip in collective bargaining or lose that right.”  The court rejected that argument and did in fact adopt the magistrate’s findings.

The lesson to be learned---if an employer is unionized, it can, through collective bargaining, either “win” a provision that such time is non-compensable, or agree with the union that “some” modicum of such time is also compensable.
 

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Five years ago, the Class Action Fair Act (“CAFA”) was enacted to deal with the onslaught of class action cases and to ensure, if I may say, fairness in the manner in which these cases were litigated but it appears that the ever active and creative plaintiffs bar is coming up with new ways to allow cases to remain in state court, rather than going to federal court where perhaps they feel or believe that the chances of winning are slimmer.  Defense counsel must adjust and adapt, quickly.

What some plaintiff counsel are doing is structuring and narrowing their Complaints so they can circumvent the jurisdictional diversity that the law mandates be applied. The fact is that CAFA was enacted to prevent abuse of the class action procedure/device.  The law eased the rules for establishing diversity jurisdiction so plaintiff lawyers could not engage in ting forum-shopping and lodge their suits in what they believed were states friendly to the plaintiff’s side. In this manner, defendants were able more facilely to remove cases to the federal courts.

The trick that has been discovered is to plead the case quite narrowly, in a real focused manner. For example, if the case is filed for less than one-hundred plaintiffs and damages of less than five million dollars are sought, the lawyers may be able to salvage keeping the case in state court, which they may perceive as a tactical advantage or may, in fact, be a tactical advantage.   In this analysis, the particular venue and/or the particular judge that preside over the case.

Often, class action cases settle. Rarely do they go to trial, given the enormous risks for the employer, i.e. fee-shifting, as well as for plaintiffs and their lawyers, who stand to realize nothing from a case if the class action motion is defeated or the case falls on the merits, e.g. employees found exempt, as a class.  Thus, there is much machination to get a case before the “right” judge who may broker. Whether with heavy hand or not, a settlement.

A recent, illustrative example. In a 2008 case involving Abbott Laboratories, a federal judge in the Eastern District of Tennessee ruled that the plaintiffs were trying to evade the dictates of CAFA by filing eleven class action Complaints, which mirrored each other, except that the period of time for which recovery was sought was different for each  “class.”   The various complaints defined the class period as various one-year periods ranging from 1990-2008.

However, each of the discrete Complaints included contentions relating to the entire reach of the charged conspiracy for all of the separate time periods in the ten years at issue.  The judge held that these artificial time demarcations were an attempt to ensure that the damages in each case were less than five million dollars, in order to circumvent CAFA. Essentially, he found that the plaintiffs were “gerrymandering” the cases to avoid the application of the CAFA.

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The electronic giant, Best Buy, has requested that a judge approve a $900,000 settlement in a New York State wage-hour class action in which the plaintiffs sought payment for time worked “off-the-clock.”  That working time was the minutes spent going through security clearings at the end of the work day, assumedly to ensure that employees did not steal anything during their shifts.  The case is entitled Turner v. Best Buy Company, Inc.

Although the case was filed in state court, the employer had removed the case to federal court under the Class Action Fairness Act of 2005.  After going through a great deal of discovery, the parties decided to settle the action, although they maintained their respective positions.  The company maintained that it properly paid all employees for all time worked, while plaintiffs took the view that going through the security check was an employer instigated “activity” that required compensation.

Interestingly, and significantly, the employer has agreed to modify its operating procedures to allow all employees to remain on the clock until their manager allows them to leave the store.  Thus, although the employer denied any culpability, the remedial action it took suggests that it knew that there was an issue here.

The key to determining whether preliminary or postliminary activities are compensable is the element of employer compulsion or the lack thereof.  I equate this activity to the employer ordering a retail cashier to report ten minutes early to balance out the cash drawer or to stay ten minutes after the shift ends to do the same.  It is a safe bet that where employer ordering, or direction or compulsion of an activity related to the main job is involved, the activity is working time and compensable.  The other benchmark is how integrally related to the main job is the side activity.

I have often commented on these preliminary and postliminary issues.  They are a real danger to the employer because oftentimes, the employer may not even appreciate that this “little” activity or routine or inconvenience to employees is actually “work,” which can then lead to a single employee filing an action (as was done here) and everybody else coming on board.  The proactive approach is to analyze every non-exempt job and ascertain if there are preliminary or postliminary activities involved or related to it and then apply the above-referenced analysis and make the call on whether it is or is not working time.
 

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Law firms are usually defending clients in wage-hour suits where the allegation is that the employee claims he/she has been misclassified as exempt when they are really not and are due overtime. But, law firms themselves must be diligent about properly classifying their own employees, especially when they categorize employees exempt under the administrative exemption. This is the lesson being learned by the so-called boutique intellectual property law firm of Turocy & Watson LLP, where a legal secretary has filed a class action, charging that the firm did not properly pay the “class” of secretaries overtime.

The case is docketed as Osolin v. Turocy & Watson, LLP et al filed in federal court in the Northern District of Ohio and charges a violation of the Fair Labor Standards Act.. The plaintiff believes there are approximately 30 legal secretaries in the class. All of these secretaries were paid a salary and were allegedly misclassified as exempt.

The complaint alleges that none of the plaintiffs did any managerial work or directed the work of employees, or had authority to hire and fire. Under that factual predicate, the plaintiffs would not fit within the executive exemption, but the firm will likely defend on the basis that they are administrative employees. As I have often warned, this is the most difficult exemption to prove and if the facts show that the secretaries performed secretarial, clerical work the majority of the time, this exemption will not be available as it will founder on the “discretion and independent judgment” element.

It is highly doubtful that the firm could show they were professional employees, even if the employees were given the moniker “paralegal,” as paralegals are explicitly deemed non-exempt under the federal regulations.

The burden of proof is always on the employer in an exemption case. This behooves employers, law firms or otherwise, to make reasoned, defensible exemption determinations and classifications at the time of hire, because it only takes a single plaintiff to start a world of trouble. In sum, these lawyers need a lawyer.
 

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I have posted a few times about Fair Labor Standards Act donning and doffing cases. The general rule is that donning and doffing is compensable if these preliminary and postliminary activities are integral to the performance of the employee’s primary job.

For a rule, there is always an exception. In a case entitled Johnson v. Koch Foods Inc., filed in the Eastern District of Tennessee, a federal judge has ruled that because the parties’ labor contract applicable to covering chicken processors working at a cut and kill plant explicitly excluded compensation for time spent donning and doffing certain sanitary and safety gear, the workers were not entitled to compensation for the time it took to put and remove the gear.

The judge analogized the putting on/taking off of the gear to “changing clothes,” which is not compensable under Section 203(o) of the Fair Labor Standards Act. The court did warn, however, that of a jury determined that such activities were integral and indispensable, they then could be compensable under the “continuous workday rule.”

This result seems anomalous because the workers were required to put on the protective gear prior to reporting to the production line, to begin their primary work, but they were only compensated for the time actually on the line.

There is a divergence in the federal Circuits as to what constitutes “clothes.” The Ninth Circuit has held that the “changing clothes” safe harbor applies only when the items at issue are clearly and unmistakably clothing, as is commonly understood. However, the Eleventh Circuit has held that the term applies to hairnets, gloves and hearing protection equipment. The US Department of Labor has issued an Opinion Letter concluding that the Section 203(o) definition of clothes “includes items worn on the body for covering, protection, or sanitation.”

This issue may ultimately have to be decided by the US Supreme Court. In the meantime, employers need to make assessments of the indispensability of the preliminary activity to the main job and start the analysis of compensability from that vantage point.
 

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Under the Fair Labor Standards Act, there is no law requiring employees receive a lunch period or break times. However, when the employer gives time for lunch, the employees must receive at least thirty minutes and the time must be uninterrupted. Put differently, the employees must be completely relieved from duty. When employees are not so relieved, they must then be compensated for that time, i.e. the half-hour, which all becomes “converted” into working time.

This is what the DOL found happened in this investigation, which ultimately included 4000 nurses. Some of the nurses answered phones while on lunch and others performed “some” duties. The result, however, is the same---all of the time is converted.

The hospitals also had an automatic deduction policy, by which one-half hour was automatically deducted from the nurses’ time for that day, on the assumption that the lunch was taken. Although the hospitals had a policy about not working during lunch (i.e. not carrying the hospital-provided phones during meal breaks) and also had a policy that allowed nurses to cancel the automatic deduction if they performed actual, productive work. The hospitals claimed that the nurses did not follow the policy. The result was a supervised settlement providing for 1.7 million dollars to be paid to the affected employees.

I have clients who have these automatic deduction systems for lunch time. As this makes clear, the automatic is not so automatic. There must still be supervisory oversight and intervention in issues where employees may have worked through lunch, to ensure that proper payment is made. The employer must have a system where employees can report that they worked through lunch and the employees, in my view, must be given training on the system, so all productive time is paid for and the DOL does not come knocking on the door.

In sum, a policy, a piece of paper, will not provide a defense to claims of uncompensated working time. More is required of the employer.
 

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A federal judge has ruled that a dispatcher, who was suing as the named plaintiff in a FLSA collective action seeking overtime, was not able to prove that he was “similarly situated” to other employees and this the judge refused to grant even the conditional certification necessary to keep the case going.  The case is entitled Landry v Peter Pan Bus Lines and is being litigated in the District of Massachusetts.

Although dismissed, the case raises the specter of the exempt status of dispatchers in the trucking and bus industry.  I believe this is a pervasive issue/problem for this industry, as many trucking and bus employers classify their dispatchers as exempt from overtime, believing that they are part of “management.”

Although, in a real-world sense, these important employees are part of the management “team,” under the FLSA exemption regulations, they must meet certain criteria. If they do not meet the criteria, both work duties and salary minimums, they are non-exempt and overtime eligible, notwithstanding their importance to the transportation operations.

The plaintiff had alleged that his job did not require the exercise of independent judgment, which is the hallmark of the administrative exemption, nor that he performed any “managerial responsibilities,” which impacts upon both the executive and administrative exemptions.  These theories were never tested, as the plaintiff sought to secure class certification too early, before any discovery had been taken. If the case was re-filed with another lead plaintiff and the plaintiff’s lawyers were a littler more patient, i.e. allowing for a period of discovery, the case might have turned out differently.

Employers in the transportation industry should pay special attention to the job duties of their dispatchers.  If the employer concludes that these employees are currently non-exempt, it is possible to enhance their job duties so that they evolve into exempt employees.   Another possibility is that the dispatchers may fit within the motor carrier exemption, but they must affect safety for this exemption, rather than simply dispatch vehicles.

In any event, the time to analyze the dispatcher exemption issue is now, before the threat of a lawsuit looms.
 

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In a case entitled Clifton Sandifer et al. v. U.S. Steel Corp. a federal judge has cut out some claims from a work time class action suit, but has allowed one major allegation to remain in the case. That cause of action involves whether the employees should be paid for the time spent in walking from their locker room to their work stations.

The case is in federal court in Indiana; the plaintiffs filed suit in December 2007. Unlike many class actions I have commented upon, this was not a misclassification lawsuit, but rather a work time case. The plaintiffs sought compensation for time spent donning, doffing, walking, showering and laundering personal clothing in excess of the 40-hour workweek. The employees allege that these “work” activities consumed 9-10 hours per week.

The judge threw out the portions of the case pertaining to the donning and doffing of protective clothing, agreeing with US Steel that the compensability of these activities was addressed in the parties’ collective bargaining agreement. The court also found that showering was not required by the company and therefore was a postliminary (i.e. after work) activity for which no compensation was required.

Similarly, even though instructions were provided on how to launder clothing worn under work gear, transporting and laundering clothing was not required by the Company and thus it was not compensable. The judge kept the walking to work station claim, rejecting the company argument that these were non-compensable preliminary and postliminary work. The judge also rejected the de minimis doctrine argument, finding that walking times varied widely throughout the plant.

Judge Miller also did not accept the argument that these claims were preempted under the National Labor Relations Act as they ostensibly involved interpretations of the collective bargaining agreement, rather than statutory violations of the Fair Labor Standards Act.
 

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In an unusual move, Rite Aid Corp. is seeking dismissal of an overtime class action filed by a former drugstore employee, asserting it is identical to another class action that had been previously filed and is still working its way through the courts. The case is docketed as Georgianna Gordon v. Rite Aid Corp.

The Company urges that, under federal law, the action filed first takes precedence over this action, which was recently filed in the U.S. Southern District of New York. The earlier action, entitled Indergit v. Rite Aid Corp. and Rite Aid of New York Inc. was filed some ten months before this current action.

As the Indergit action was filed before this case, and as there is considerable identity of the issues and parties, the Company urges that the Court apply the first-filed ruled. This seems somewhat self-evident, as the issues presented in this case are being actively litigated in Indergit. If the federal judge does not dismiss the action, the Company will then seek a stay pending resolution of the earlier case.

Ms. Gordon worked as an Assistant Manager and Manager at Rite Aid from July 2007-June 2009. She alleges that she primarily did non-exempt work, such as stocking shelves. She admits that she opened/closed the store and responded to and resolved customer complaints, but denies that she ever hired or scheduled employees, which would clearly be exempt work. She claims she worked between 50-60 hours per week and earned a salary of approximately $800 per week.

She also alleges that she did not exercise independent judgment. This is an odd allegation, especially under the Fair Labor Standards Act, as the “discretion and independent judgment” component of that exemption test has been deleted under the revised regulations of August 2004.

This is not the first case of overtime “flu” to hit this Company. In July 2009, a class of Assistant Managers in Ohio sued Rite Aid on a misclassification theory. To further complicate matters, similar misclassification lawsuits have been lodged against Rite Aid competitors CVS Caremark Corp. and Walgreen Co.

These Assistant Manager cases are extremely tough to defend, because it is difficult to prove that management remains the employees’ “primary duty” even when they are working the cash register, stocking shelves or waiting on customers. I believe, and have advised numerous clients, the best and most prudent thing to do is to treat these folks as non-exempt from the commencement of their employment, build the overtime into their compensation, assuming they have to work 48-50 hours every week and then never worry about overtime lawsuits. Never worry about overtime lawsuits. Sorry—I’m being redundant.

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In a ground-breaking decision, the Ninth Circuit Court of Appeals has set a path down for defendant-employers in Fair Labor Standards Act (“FLSA”) class actions that is breathtaking in its simplicity and conclusive effect. In Vinole v. Countrywide Home Loans, the Court ruled that an employer need not wait until the close of discovery (which is very expensive and time-consuming) to file a motion seeking to deny class certification before the plaintiff moves to have the class certified.

The plaintiffs, External Home Loan Consultants, alleged that they had been misclassified as exempt outside sales employees, resulting in an illegal failure to pay them overtime. The Company, relying on California Wage Orders and the language in the FLSA regulations, had in fact classified these workers as exempt as outside sales people.

Before the pretrial motion deadline and discovery deadlines ensued, the Company filed a motion to deny class certification under Federal Rule of Civil Procedure 23. The plaintiffs opposed the motion, claiming that it was premature because they had not yet filed their class certification motion and further contending that class certification was appropriate, based on the evidence that they had adduced.

In affirming the lower federal court’s denial of class certification, the Ninth Circuit held that too much individual analysis of what the employees did, e.g. outside sales work or lack thereof, was required. As I have written about many times, individuality is the death knell of a class action, as plaintiffs must prove commonality, i.e. a common policy, plan or practice applicable to the entire class.

This can be the start of a trend that might push back on the multiplicity and veritable explosion of class actions. In giving employers a weapon to use offensively, the Ninth Circuit (usually, a fairly liberal, pro-employee Circuit) has signaled that, as Bob Dylan wrote four decades ago, the “times, they are a changin’”
 

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