I have blogged before about fancy golf clubs being sued for FLSA violations.  Well, here is another one.  The Farm Neck Golf Club is a members-only golf club on Martha’s Vineyard, where Presidents Barack Obama and Bill Clinton have played.  This organization was just sued in a putative collective/class action by a cafe cook who alleged that she was not properly paid for overtime hours.  The case is entitled Shkuratova v. Farm Neck Association Inc. and was filed in federal court in the District of Massachusetts.

Golf Course
Copyright: Photozek07 / 123RF Stock Photo

The former cook, Anna Shkuratova, began a putative class action over overtime compensation for violations of the federal Fair Labor Standards Act and state law.  The Complaint stated that the “plaintiff was subject to defendants’ common practices, policies or plans including failing to pay at least minimum wage for all regular hours worked, failing to pay at least one and one-half times the regular rate of pay for hours worked in excess of 40 hours per week, failing to compensate plaintiff and class members for hours worked off the clock and failing to keep accurate time and payroll records in violation of the FLSA.”

The golf club is located in a very pretty piece of farmland on the eastern edge of the island, right on the water.  It has earned a consistently high rating in Golf Digest’s Places to Play, “and is considered by many to be one of the premiere golfing experiences in the Northeast, a true test of golf in an idyllic setting.”

The named plaintiff states that she worked as a cook at the club’s Cafe at Farm Neck from May 2016-September 2016.  The plaintiffs seek five subclasses of employees who were not paid minimum and overtime wages and who worked off the clock, such as kitchen employees, front-of-house cafe workers, golf course workers such as golf professionals and pro shop salespeople, tennis pros and maintenance workers.

The Takeaway

It is the off-the-clock allegations that, to me, are the most troubling.  Oftentimes, employers have to work under very tight labor budgets and there is pressure, implicit or otherwise, to stay within those budgets.  It is that pressure that sometimes results in FLSA violations.

Sometimes…

Jonathan Ash writes:

Waiter carrying tray of glasses
Copyright: bedya / 123RF Stock Photo

In what amounts to a victory for all employers throughout the State of New York, the Supreme Court of New York recently granted summary judgment in one of the first cases to effectively make use of the newly amended affirmative defense set forth in the Wage Theft Prevention Act (“WTPA”).  The case is entitled Ahmed v. Morgans Hotel Group Management, LLC.

Employers in the hospitality industry in New York often fall victim to unsubstantiated claims by former employees of unpaid wages.  Attorneys will send letters threatening a potential class action wage and hour lawsuit and demanding that the employer provide documentation on a class-wide basis to disprove the existence of the claim in order to resolve the case with a substantial settlement.  The mere threat of such a lawsuit is enough to get employers to comply with this fishing expedition.

In this instance, the Company limited its production to only those documents necessary to show that the named plaintiff(s) did not have a claim that they were not paid gratuities for banquet events where the Company charged an administrative fee.  The Court rejected the plaintiff’s claim and concluded that no reasonable customer could have been confused and that because the plaintiff could not identify a single instance in which the gratuity was not paid, the WTPA claim must fail.

Perhaps more significantly, however, was the claim for unpaid minimum wage, which was based upon the alleged failure to provide the required notice under the Hospitality Wage Order.  Plaintiffs’ attorneys attempt to capitalize on this nuanced area of the law in hopes that one of these requirements is not met due to human error or inadvertence.

One year ago, the WTPA was amended to provide that “it shall be an affirmative defense” to such a violation if the employer can show complete and timely payment of all wages due and that the employee never earned below the minimum wage.  In such a case, the employee suffered no actual injury, so this affirmative defense prevents a windfall and discourages the predatory practices of plaintiffs’ attorneys.

The Takeaway

This significant decision paves the way for other employers to defend against such actions.  Rather than succumbing to the demands of an aggressive plaintiffs’ attorney fishing for information, employers now have a means to defend these claims through this affirmative defense if they can show that the employee was always timely paid wages equal to or above the minimum wage.


Jonathan Ash is an associate in the firm’s Labor & Employment Department, resident in its Princeton office.

There have been many class actions concerning the job title “Assistant Manager” and this malady has risen again.   The chain, Hooters, has been sued in a nationwide collective action that alleges the Company misclassified assistant store managers, calling them supervisors, in order to avoid paying overtime.  The case is entitled Stirewalt et al. v. Hooters of America LLC and was filed in federal court in the Northern District of Alabama.

Hooters Restaurant
By Ildar Sagdejev (Specious) (Own work) [GFDL or CC BY-SA 4.0-3.0-2.5-2.0-1.0], via Wikimedia Commons
The named plaintiffs allege that they worked up to eighty (80) hours per week but were never paid overtime due to their misclassification.  The claim they only had the title of Manager, but that their main duty was sales and not the supervision of at least two other employees, over whom they could exercise managerial authority.  They claim that when they did create schedules, they were “almost always changed,” according to the Complaint.  They claim that although they interviewed new job applicants, the recommendations they made were often ignored by their supervisors.

More significantly, the Complaint alleges fraudulent conduct by the Company. It alleges that the “defendants have intentionally and repeatedly misrepresented the true status of managerial compensation … to avoid suspicion and inquiry by employees regarding their entitlement to monies owed to them.  Plaintiffs, as well as other similarly situated present and former employees, relied upon these misrepresentations by defendants and [were] unable to determine [their] true status under the FLSA by the exercise of reasonable diligence because of those misrepresentations.”

The plaintiffs want notices to be sent to current and former assistant managers who worked at a Hooters store within the last three years.  This would allow these workers to opt in to the collective action.  The plaintiffs seek overtime, commissions, bonuses, vacation and sick time and, naturally, attorneys’ fees.

The Takeaway

I don’t mind these so much.  (Famous last words?)  These kinds of actions usually necessitate an individualized determination of the duties of the various employees and that is the death knell of a viable class action.  The problem is if they were subject to the same, uniform, system-wide policies, that would be bad.  But, at least from the start the defendant here has a legitimate, viable chance of defeating the motion(s) for class certification.

A defendant in a FLSA collective action case is fighting an initiative to compel it to produce information that the named plaintiffs allege is relevant to their discovery requests.  The defendant labels the requests a “fishing expedition.”  The case is entitled Martinez et al v. T-Mobile Ltd. et al., and was filed in federal court in the Northern District of Illinois.

Woman using her mobile phone, city skyline night light background
Copyright: ldprod / 123RF Stock Photo

The plaintiffs want the defendant, Wireless Vision LLC, to produce electronically stored information to support (supposedly) their claim that it was the Company’s policy to have employees work before they clocked in to start the day and after they clocked out, as well as working through clocked-out breaks.  They claim they were not paid for those hours.  The Company refutes this by affirming that it has produced thousands of pages of documents in an appropriate and acceptable format, records such as payroll records, personnel files and disciplinary records.

The Company’s papers that the “plaintiffs’ motion is like a tree without roots.  The premise of the motion is that the plaintiffs’ are automatically entitled to unspecified ESI; from assumed repositories of ESI in the hands of Wireless Vision; that are assumed relevant to the case; which entitlements are based upon unstated search protocols with no safeguards at all and no consideration of feasibility and costs.”  The Company asserted that if the plaintiffs wanted the information in a different format, they should have to convert it. The Company also asserted that the plaintiffs should make a showing as to the reason what they sought was discoverable and why the information thus far produced was not sufficient.

The plaintiffs counter by claiming that although almost one-thousand pages were produced, this was nothing more than timekeeping, payroll and personnel records for the nine opt-in plaintiffs and the Employee Manual. The plaintiffs want emails and documents relating to the Company’s payroll and timekeeping software, performance evaluation programs, commission structure or training of sales representatives.  The plaintiffs also claim that the information they want is easily accessible, as the Company’s own IT department had control over all of its computer systems.

The plaintiffs claimed they worked before they officially clocked in and they were compelled had to collect supplies, prepare equipment, meet with supervisors and other duties.  They also claimed working time after they punched out, sometimes for allegedly several hours, to perform other job-related duties.

The Takeaway

The discovery requests appear burdensome and excessive.  The problem is, as I have found, that lower federal courts, especially Magistrates, are being fairly liberal in the amount and kinds of information that they are allowing to be discovered in FLSA collective action litigation.

A group of sales representatives for a car dealership have requested conditional certification in a Fair Labor Standards Act case.  The employees allege that they were paid less than minimum wage and were not properly paid their commissions.  The case is entitled Hotaranu et al. v. Star Nissan Inc. and was filed in federal court in the Eastern District of New York.

Auto dealership row of cars
Copyright: happyalex / 123RF Stock Photo

The named plaintiffs contend that they only received a base rate of $100 per week for those weeks in which they did not earn commissions, thereby causing their compensation not to meet the minimum wage standards. The complaint (filed in September 2016) alleges that there were numerous times when a sales representative did not earn any commissions, or where the commission were insufficient to meet the minimum wage/overtime requirements of the FLSA.

The Complaint also claims that the dealer manipulated gross profits of sold cars that resulted in reductions of the commissions earned by the sales representatives.  The named plaintiffs allege that they received flat commissions regardless of the gross profit on the car sold.  This, they claim, was done, notwithstanding agreed-upon calculations in their commission agreements.

The motion for certification claims that the plaintiffs have met their burden for conditional collective certification because they have demonstrated that the sales representatives are subject to the same policies.  At the conditional certification stage, the burden is fairly low (in any event) and the plaintiffs note that they have produced an alleged “well-pled” complaint and four affidavits from Star Nissan employees.  This is sufficient, according to plaintiffs, for the motion to be granted.

The Takeaway

It seems that there is a good chance that the motion will be granted, as the burden on plaintiffs at this stage is low – some might say, ridiculously so.  With that said, there might be an out, a magic bullet for the employer.  If the auto dealership is defined as a “retail business” under Section 207(i) of the FLSA and if the commissions earned equaled or exceeded 50% of weekly income over a representative period, then the sales representative(s) would be exempt from overtime for those weeks under the so-called commission exemption of the FLSA.

Then, the whole thing (or a good chunk of it) goes away.

Worth looking into…

The issue of whether to pay for training time is a vexing one.  In a recent case, a major airline avoided liability (for the most part) in a FLSA collective action alleging that it did not pay workers for time spent in a customer service-training program.  The Court held that the trainees were not employees “engaged” in work.  The case is entitled Otico v. Hawaiian Airlines Inc., and was filed in federal court in the Northern District of California.

Airplane
Copyright: khunaspix / 123RF Stock Photo

The individual (Otico) had claimed that she was entitled to ten days pay for her time spent in a pre-employment training program.  The Court concluded, in granting summary judgment that no reasonable juror could conclude that this person was acting as an “employee” when she took the training courses.  The Court found that the airline was not directly benefitting from any free labor.  The Court held that “the trainees receive the benefit of learning how to do a job they hope to get.  Otico, therefore, was the ‘primary beneficiary’ of the arrangement. Although one wonders why Hawaiian is unwilling to pay something to these people, since they no doubt must sacrifice to participate in the program, the law does not require it to do so.”

The employer contended that the training provided was equivalent to the kind of instruction that the people could have received at a trade or vocational school and which would have cost them a lot of money.  The airline also asserted that it incurred extra costs and there were disruptions to its operations that were a by-product of its providing the training.

Ms. Otico, as a part of the hiring process, claimed that she was compelled to attend the unpaid training course, which took ten days, for eight hours per day.  The people learned about federal regulations and how to utilize the airline computer/software system.  Ms. Otico completed the course in December 2015 and got a job with the airline after she passed a drug test and received clearance from the airport.

The Takeaway

I do not understand the judicial reasoning here.  The person claimed that attendance was mandatory, the course material was related to the trainee’s job, and attendance was during regular working hours.  If those facts are true, then, under FLSA regulations and precedent, this time should have been compensable.

Usually, in FLSA cases, no emotional damages are allowable in retaliation cases.  Perhaps that inviolate principle is now changing.  In an important case, the Fifth Circuit has recently held that “an employee may recover for emotional injury resulting from retaliation” under the Fair Labor Standards Act in Pineda, et al. v. JTCH Apartments LLC. 

Stressed businessman in the office
Copyright: tomwang / 123RF Stock Photo

The FLSA prohibits employers from retaliating against employees for complaining about not being paid correctly or for commencing a lawsuit or an administrative proceeding.  The anti-retaliation damages clause states that “[a]ny employer who violates the provisions … shall be liable for such legal or equitable relief as may be appropriate to effectuate the purpose of” the anti-retaliation section.  In Pineda, the issue was whether this language allowed a plaintiff to recover emotional harm damages in FLSA retaliation cases as well as the lost wages.

The plaintiff was a maintenance worker who was given an apartment to live in, at a discounted rent, as part of his compensation.  He sued for alleged unpaid overtime; then, three days after the Company was served with the Complaint, the employer told Pineda (and his wife) to vacate their apartment for nonpayment of rent, where the unpaid rent equaled the discount that the Company had given to Mr. Pineda.  The employee then added a FLSA retaliation Count and at trial requested a jury instruction on emotional distress damages for the retaliation claim, which was denied.   The employee won his wage case (and attorney fees) and then he appealed the lower court’s refusal to instruct the jury on emotional distress damages to the Fifth Circuit.

The Fifth Circuit found the language of the FLSA damages provision for retaliation claims to be “expansive” and should “be read to include the compensation for emotional distress that is typically available for intentional torts like retaliatory discharge.” The Fifth Circuit cited precedent from other Circuits that have approved such awards.  The Fifth Circuit also noted that intentional retaliation cases were more detrimental than ordinary wage violations.  In this case, the Court noted that the plaintiff’s testimony on the nature and level of emotional harm was “sufficient to enable a jury to find that the plaintiff experienced compensable emotional distress damages.” Now, he has to prove such harm.

The Takeaway

Employers must be careful when they want to discipline or fire an employee who filed a wage claim or complained about his compensation.  It seems that a disturbing trend is forming, with more and more courts ready to award emotional distress damages in FLSA retaliation cases.  Thus, even a simple wage violation, even if an accident, may expose the employer to damages for pain and suffering.  The action(s) cannot be, or be perceived to be, retaliatory.

Although Andrew Puzder, the fast food executive who has been named as the nominee for Secretary of Labor, has indicated that he is “looking forward” to his confirmation hearing, there are also indications that he may withdraw his name from consideration for this post.  There are unnamed sources that assert that he was having second thoughts about the job and could be “bailing” due in part to the intense criticism that has come at him from many sides, e.g. labor unions.

Andrew Puzder
By U.S. Senate [Public domain or Public domain], via Wikimedia Commons
Mr. Puzder opposes increasing the minimum wage and an expansion for overtime pay and has hard line positions on immigration.  In this vein, the AFL-CIO President Richard Trumka and Sen. Patty Murray, D-Wash. have requested that Puzder release documents prior to the confirmation hearing, showing the manner in which his company has treated its employees, such as contracts with CKE franchisees, employee pay and benefit data and employee handbooks.  Indeed, Senator Murray called Puzder “a uniquely unqualified choice.” Mr. Trumka stated that Puzder has “used his position and authority to enrich himself at the expense of workers by violating labor laws.”

A group that supports restaurant industry workers issued an unscientific report that concluded that workers were subjected to significant wage theft while Puzder was in charge and also that many female employees were victims of sexual harassment in numbers that far exceeded the national average in this industry.  The report was mentioned during the hearings held last week led by Senator Murray and Sen. Elizabeth Warren, when they heard testimony from workers relating to their experiences with many allegedly restrictive employment practices.

Puzder has also been criticized for his views on immigration.  He has called the current system “unfair and unworkable.”  He has stated that any such reform should include a guest worker program, as well as some channel or mechanism to “adjust status” for people in this country without authorization and “special relief” for the children of unauthorized immigrants.  Interestingly, the news site Breitbart (which has been linked to white nationalists, i.e. the “alt-right”) also attacked the nominee, claiming that he “stands diametrically opposed to Trump’s signature issues on trade and immigration.”

The Takeaway

We will see (yet again).  Seems like there is an active groundswell of opposition that is shaping up that may doom this nominee.

There have been a number of cases in which the FLSA employee status of exotic dancers has been litigated.  Well, in a very recent one, the plaintiffs’ counsel is strongly attacking the Company’s early summary judgment motion.  The dancers argued they were employees, not independent contractors; the Court has now granted conditional certification to the class.  The case is entitled Shaw et al. v. The Set Enterprises Inc. et al., and was filed in federal court in the Southern District of Florida.

Former dancers Sarah Shaw, Rebecca Wiles and Ashley Howell argued that the amount of control exerted over them by the club owners was the key in deciding what their status should be.  The plaintiffs reeled off many cases in which just such findings were made.  Their papers noted that their “position is not novel; the vast majority of courts to have considered this issue have found exotic dancer/entertainers to be employees as a matter of law.”

Their theory was a willful misclassification had occurred and they were paid only through tips from the customers.  The class was granted conditional certification in December 2016, as the Court found that a sufficient evidentiary showing was made indicating 300 entertainers worked at the two clubs during the three years leading up to the lawsuit and all were similarly situated.

The owners asserted they were independent contractors who just paid a “modest fee” to the club as a licensee, in exchange for being allowed to perform, use the facilities and collect tips and fees from the clientele. They also asserted they exercised no control while they were dancing and performing.

An attorney for the plaintiffs said that notice was being sent to 4,500 prospective class members.  He opined that, in the end, these people would be considered employees under the law, as they have in many other cases.  He said that “there’s been very strong precedent over the last ten years or so, consistently, in nearly all courts, that has found entertainment dancers do qualify as employees. We believe the same will be found under the facts of this case.”

The Takeaway

These cases are very fact-sensitive, but I agree that the majority of them rule that these folks are employees.  This case is interesting in the sense that an ultimate decision on the merits has not been made, but the opt-in notices are being sent to prospective claimants.

Senator Elizabeth Warren, D-Mass., and Patty Murray, D-Wash., took testimony from workers at Carl’s Jr. and Hardee’s. These are the businesses that are operated by Labor Secretary nominee Andrew Puzder. The employees spoke of wage theft and other allegedly improper employment practices.

The Senators organized the forum after Sen. Lamar Alexander, R-Tenn. (the Chair of the Senate Health, Education, Labor and Pensions Committee) denied a request by several Democratic senators to allow the workers to testify at Puzder’s forthcoming confirmation hearing.  Senator Warren utilized the event to attack a number of policy positions that the nominee has taken, such as his opposition to an increase in the federal minimum wage and his opposition to the USDOL’s initiative to increase the numbers of workers eligible for overtime.

One of the workers testified that restrictive labor budgets set down for the individual restaurants compelled managers to have employees work off-the-clock without pay to make sure that all of the work was done.  She also asserted that the Company placed restrictions on the number of full-time workers so that health care benefits need not be provided.

Senator Warren observed that “if you work for a living, this man is important to you.” She noted that the Secretary will be responsible for enforcing wage and hour laws and establishing workplace safety standards and then added that “unfortunately, Mr. Puzder is not the kind of person that workers can trust will stand up for them.”

Senator Murray observed that “I can’t help but think about President-elect Trump throughout the campaign telling rally after rally that he was on the side of workers.  I met with the secretary of labor nominee, Mr. Puzder, and it’s such a contrast to what I heard President-elect Trump say. … I’m increasingly concerned that this is a very broken promise from the president-elect.”

The Takeaway

It is difficult to envision how this Secretary will be a pro-employee advocate. His views have been well-publicized and they will be/are in line with the very much pro-business (i.e. anti-worker) views of the new President.

Assuming the nominee is confirmed, we will soon see where this goes…