When a FLSA case (or a state law wage hour case) is filed against a unionized client, the first line of defense for me is to ascertain if we can argue that the court has no jurisdiction because the wage hour claims are preempted by federal labor law and must be decided pursuant to federal labor contract law. Preemption is also appropriate where the state-based cause of action is “inextricably intertwined” with the collective bargaining agreement. In Johnson v. Langer Transport Corporation, filed in federal court in New Jersey, this doctrine has recently been given renewed vitality.
The plaintiff claimed that he was not paid regular or overtime wages, that the Company failed to accurately record wages and hours and then retaliated against him when he made complaints regarding his allegations of unpaid wages. The Company argued that this would necessarily require the Court to examine and interpret the labor contract to determine the worker’s pay rate, how hours were reported and tracked, the Company timekeeping policies, and its policies for reporting errors in pay.
The plaintiff contended that there was no dispute about the labor contract, what it says, or anyone’s rights under the contract. Instead, the plaintiff argued that he was not paid for hours he worked with the Company because it “manipulated” the time clock and refused to pay him. This, according to the plaintiff, did not require an analysis of the contract’s terms. He argued that the factual determination of the amount of time worked, and the legal determination regarding whether this time is compensable under the applicable wage law did not depend on a reading of the terms of the labor contract.
The Court concluded that the claims for unpaid wages under the New Jersey Wage Hour Law were preempted under the Labor Management Relations Act because such claims, at their core, required an analysis and interpretation of the contract. While the Court recognized that not every dispute tangentially involving a provision of a collective bargaining agreement is preempted, because that would be inconsistent with congressional intent, the core allegations of this Complaint were founded directly on rights created by the labor contract, specifically the Plaintiff’s right to be paid in accordance with labor contract provisions.
If the labor contract provision at issue violates an explicit state wage hour law, then the wage claim is not preempted. For example, in New Jersey the minimum wage is $8.38 per hour; if management and labor agreed to pay a starting rate of $8.00 per hour, such an explicit violation would exist and preemption would not be appropriate.
If, on the other hand, an arguable contention can be made that the dispute requires interpretation of contract terms, or explicitly addresses a matter agreed to by management and labor negotiators and codified in the contract (sometimes for years), the case for preemption becomes that much stronger. If faced with a state court or NJDOL proceeding involving such an issue, the defendant (i.e. Employer) should strongly consider moving for a declaratory judgment in federal court.