Labor Management Relations Act

 

Employers should always look for a preemption defense when a FLSA suit is lodged against a unionized client.  Clear proof of that was just given by the Ninth Circuit when that Court held that unionized offshore oil rig workers could not pursue overtime claims because the Labor Management Relations Act (LMRA) barred the suit.  The case is entitled Curtis et al. v. Irwin Industries Inc. et al. and issued from the Court of Appeals for the Ninth Circuit.

The Court affirmed the lower court.  The holdings were based on the fact that the labor contract satisfied the California overtime pay requirements.  The Court found that “Curtis’s claim for overtime pay is preempted under § 301 of the Labor Management Relations Act because California overtime law does not apply to an employee working under a qualifying collective bargaining agreement, and Curtis worked under such an agreement…”

The workers did twenty-four hour shifts on offshore oil rigs.  They worked twelve and were off for twelve but asserted that they could not leave the platform or otherwise use the time for their own pursuits.  They were on the platforms for seven consecutive days.  The workers worked under two separate labor agreements.

The Ninth Circuit noted that Section 301 meant that “nonnegotiable rights” under state law, i.e. minimum wage and overtime, were not always preempted, even if the parties had a labor contract.  The Court stated that a two-step test should be utilized to determine if preemption was appropriate.

The first prong of the test is to determine if the controversy concerned a right inuring to the employees only because of its presence in the labor contract.  That would be sufficient to find that preemption was appropriate.  If a court determined the controversy involved a right established under state law, then the court would inquire whether any provision(s) of the labor contract had to be interpreted for the claim to be resolved and if such an analysis was necessary, then the matter was also preempted.  The Court found that “because Curtis’s right to overtime ‘exists solely as a result of the CBA,’ his claim that Irwin violated overtime requirements by not paying him for the 12 off-duty hours is preempted under § 301.”

The Takeaway

Whenever there is a labor contract involved, try to find some connection between provisions in that contract and the purported overtime or other claim.  Stress that contractual interpretation is required to resolve the dispute, so it is an arbitral issue, rather than a statutory one. Or violation.

It’s certainly worth a try…

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.

Copyright: laschi / 123RF Stock Photo
Copyright: laschi / 123RF Stock Photo

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.

The Takeaway

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.