Fair Labor Standards Act

The class action plaintiffs’ bar celebrated yesterday’s Supreme Court’s decision in Tyson Foods, Inc. v. Bouaphakeo (pdf), rejecting Tyson’s challenge to class certification. One lawyer called it “a huge David v. Goliath victory.”

But when plaintiffs’ lawyers wake up this morning and focus on the details of the Court’s opinion, they are in for a serious post-celebration hangover.

The Court’s reasoning for the first time maps a clear route for defendants to use in challenging plaintiffs’ use of statistical evidence in class actions. It also provides important guidance for defendants about preserving the ability to challenge plaintiffs’ reliance on statistics.

Continue Reading What does Tyson Foods, Inc. v. Bouaphakeo mean for class actions?

Under Federal Rule of Civil Procedure 23(b)(3), a court may certify a suit for damages as a class action when “there are questions of law or fact common to the class” that “predominate over any questions affecting only individual members.” Similar certification standards apply when a plaintiff seeks to certify a collective action under the Fair Labor Standards Act (FLSA). Yesterday, in its highly anticipated decision in Tyson Foods, Inc. v. Bouaphakeo (pdf), the Supreme Court affirmed the certification of an FLSA collective action where the evidence tying class members together was a study of a representative sample of similarly situated workers.

Continue Reading Supreme Court affirms certification of FLSA collective action in Tyson Foods, Inc. v. Bouaphakeo

The Supreme Court on Tuesday heard oral argument in Tyson Foods, Inc. v. Bouaphakeo, No. 14-1146, a case that has been closely watched for its potential to narrow the circumstances in which a class action may be certified under Federal Rule of Civil Procedure 23 and a collective action for unpaid wages certified under the Fair Labor Standards Act (FLSA). We previously described this case in prior blog posts. One of us attended the argument, and the other closely reviewed the transcript (pdf). Our combined reaction: The anticipated decision in this case may focus on an FLSA issue and, if so, then it seems unlikely to mark a sea change in the rules governing Rule 23 class actions. Continue Reading Supreme Court Hears Argument in Tyson Foods v. Bouaphakeo—and a Blockbuster Class Certification Ruling Seems Less Likely

Can a named plaintiff press ahead with a class action if he or she “won’t take ‘yes’ for an answer”? That colorful question, which Chief Justice Roberts asked counsel for the respondent during oral arguments yesterday in Campbell-Ewald Co. v. Gomez, is at the heart of the debate over whether offers of judgment can moot class actions. By the end of the oral argument (pdf), it seemed clear that a number of the Justices were concerned about allowing a plaintiff whose individual claims would be fully satisfied by an offer of judgment to nonetheless invoke the machinery of the federal courts.

Continue Reading Can an Offer of Judgment to the Named Plaintiff Moot a Class Action? Supreme Court Hears Arguments in Campbell-Ewald Co. v. Gomez

court-gavelToday, the Supreme Court granted review in what may be a major decision on the standards for class certification, Tyson Foods, Inc. v. Bouaphakeo, No. 14-1146.

Continue Reading Supreme Court to Revisit Class-Certification Standards in Tyson Foods, Inc. v. Bouaphakeo

The Supreme Court makes its biggest headlines when it wades into the biggest issues of the day. But the Supreme Court also maintains a substantial docket of seemingly small—but ultimately important—technical questions.

In recent years, the Court has been particularly interested in defining precisely when an hourly employee is on and off the clock. For example, earlier this term, the Court held in Sandifer v. United States Steel Corp. that employers need not compensate certain workers for time spent donning and doffing safety gear. The Court will answer a related question next term. Yesterday, the Court granted certiorari to decide whether end-of-shift security screenings to prevent theft are compensable time under the Fair Labor Standards Act, as amended by the Portal-to-Portal Act.

Although such screenings may take only a matter of minutes, when aggregated over the course of a two-year limitations period for numerous employees, the damages exposure can be substantial. That explains why a series of nationwide back-pay class actions have been filed in the wake of the Ninth Circuit’s decision that time spent in security screenings must be compensated.

The Supreme Court will now review that decision in Integrity Staffing Solutions, Inc. v. Busk, No. 13-433. The legal issue is whether security screenings are “integral and indispensable” to employees’ “principal activities” or merely “preliminary” or “postliminary” to those activities. Under the Ninth Circuit’s view, security screenings are compensable because the task is necessary to the employees’ work and done for the benefit of the employer. But the Second Circuit has described security procedures as “modern paradigms of the preliminary and postliminary activities described in the Portal-to-Portal Act.”

Integrity Staffing is likely to be among the first cases heard when the Court reconvenes after its summer recess. Until then, expect the wave of related class actions to continue.

In recent years, one of the hottest types of collective actions against employers under the Fair Labor Standards Act (“FLSA”) is what is commonly called a “donning and doffing claim”—a lawsuit for unpaid wages for time employees spent changing clothes for work, such as putting on uniforms, safety gear, and the like. In a recent decision, Sandifer v. United States Steel Corp. (pdf), No. 12-417, the Supreme Court unanimously clarified the rules for these collective actions.

One of the major fights in donning and doffing suits is over the meaning of a key provision of the FLSA that exempts employers from having to compensate employees for off-the-clock “time spent in changing clothes … at the beginning or end of each workday” (29 U.S.C. § 203(o)) if a collective bargaining agreement so provides. Many agreements do exactly that.

Nonetheless, parties have litigated for years over what activities are exempt under Section 203(o). The plaintiffs’ bar typically takes a very narrow view of what constitutes “changing clothes” under the statute. The Court’s decision today takes a far more practical view of the statute. Sandifer makes clear that time spent donning or doffing protective gear that is (1) designed and used to cover the body and (2) commonly regarded as an article of dress—including hard hats, protective jackets, and protective coverings for the arms and legs—is exempt if the employees’ collective bargaining agreement so provides. In addition, minimal time spent putting on or removing other protective gear (such as safety glasses and earplugs) during this time is likewise exempt. Sandifer is therefore likely to reduce the number of circumstances that would allow plaintiffs to succeed in bringing donning-and-doffing lawsuits under the FLSA.

We provide more details about the decision in Sandifer after the jump.
Continue Reading Do Employers Have To Pay Unionized Workers For Time Spent Donning and Doffing Safety Gear? Supreme Court Says No.

Former interns used to get revenge against their employers by writing tell-all blog posts and memoirs. Now, they’re lending their names to plaintiffs’ lawyers, who then file wage-and-hour class or collective actions alleging that interns must be paid like hourly employees.

The unpaid internship is among the hottest areas in wage-and-hour litigation. Two of the more noteworthy cases—that so far have come out in opposite ways—are currently pending in the Southern District of New York: Glatt v. Fox Searchlight Pictures and Wang v. Hearst Corporation (pdf).

In Fox Searchlight, former interns from the film Black Swan alleged that they had been misclassified and should have been paid as “employees.” Judge William Pauley held that the interns were employees and, therefore, Fox Searchlight was liable for violating minimum wage and overtime laws. The court also granted the interns’ motion for class certification.

By contrast, in Wang v. Hearst Corp., Judge Harold Baer denied the plaintiffs’ motions for summary judgment and class certification. Judge Baer found that a genuine issue of fact existed as to whether the interns were employees and that a determination of liability would require individual analysis of what the interns did and what benefits they received.

Last month, the Second Circuit granted interlocutory review of both decisions. The Second Circuit’s ultimate rulings should provide employers with further clarity concerning the law surrounding internship programs.

In the meantime, one (presumably unintended) effect of such lawsuits is to scare employers into shuttering their internship programs altogether in order to avoid the risks and costs associated with potential litigation. For example, after being targeted by a wage-and-hour class action, Condé Nast—of The Devil Wears Prada fame—recently discontinued its coveted internship program, which was famously a stepping stone into the publishing, fashion, and entertainment worlds.

Companies that do choose to continue their internship programs should confirm that they have properly classified their employees in compliance with the Fair Labor Standards Act and applicable state laws. Some employers may assume that the classification (such as exempt, independent contractor, or unpaid intern) that they give to an employee is determinative. But it turns out that courts generally give little weight to an employer’s classification.

Where should employers look? In the context of determining whether a person may be properly considered to be an unpaid intern, the Department of Labor recommends (pdf) that courts consider:

  • whether the internship is similar to training which would be given in an educational environment; 
  • whether the internship experience is for the benefit of the intern; 
  • whether the intern displaces employees; 
  • whether the employer that provides the training derives any immediate advantage from the activities of the intern; 
  • whether the intern is entitled to a job at the conclusion of the internship; and 
  • whether the employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Companies that have been threatened with (or are already facing) a wage-and-hour lawsuit on behalf of interns may try to use the case-by-case, individualized nature of the Department of Labor’s multi-factor balancing test to defeat certification of any putative class or collective action. Interns at the same company often have very different experiences, depending upon their duties and the employees who are supervising them. Those differences could derail class or collective treatment in a particular lawsuit.

Companies may also consider asking Congress to take an interest. It turns out that, under the relevant law and regulations, Congressional interns are excluded from the FLSA’s coverage (and so the government is spared similar class actions.) Many Hill interns have described their unpaid experiences as extraordinarily valuable; perhaps the same logic might apply in the business context.

The Fair Labor Standards Act of 1938 (“FLSA”) permits an employee to file a “collective action” for damages against an employer individually and on behalf of other “similarly situated” employees who later choose to join the lawsuit. 29 U.S.C. § 216(b). In Genesis Healthcare Corp. v. Symczyk, before any other employee had opted to join the suit, the defendant made an offer of judgment to the named plaintiff for the full relief sought by her individual claims. Today, the Supreme Court held—by a 5-4 vote—that the district court had properly dismissed the FLSA collective action for lack of standing. Writing for the majority, Justice Thomas explained that once the offer of judgment had mooted the named plaintiff’s individual claims: “A straightforward application of well-settled mootness principles compels” the conclusion that the entire action “became moot, because she lacked any personal stake in representing” other employees, and thus there no longer was any “case or controversy” for decision, as required by Article III of the U.S. Constitution.

The court of appeals had reversed the dismissal, reasoning that to allow the defendant to “pick off” the named plaintiff with an offer of judgment before the collective action could be certified would “frustrate” the goals of FLSA collective-action provisions. In the Supreme Court, the majority rejected this argument because it rested on distinguishable cases involving class actions. In those cases, the majority explained, either it would be impossible for any other class member to pursue claims for injunctive relief if the class action were dismissed (because of the claims’ transitory nature) or the putative class already had acquired “independent legal status” before the offer of judgment was made. Neither is true of an FLSA collective action for damages that no other employee had yet joined.

The plaintiff also had relied on a statement in Deposit Guaranty National Bank v. Roper, 445 U.S. 326 (1980), criticizing the use of offers of judgment to “pick off” the named plaintiff in a class action before class certification. But the majority explained that Roper’s holding turned on the fact that the plaintiff in that case had a continuing interest in trying to reduce his share of attorneys’ fees by splitting them among an entire certified class. By contrast, in this case, the offer of judgment included the named plaintiff’s attorneys’ fees and thus “provided complete relief on [the plaintiff’s] individual claims.” Moreover, the majority suggested that Roper may have been abrogated by a later decision holding that an interest in seeking attorneys’ fees is insufficient to confer standing.

Justice Kagan, joined by Justices Ginsburg, Breyer and Sotomayor, dissented, taking issue with the majority’s reliance on what they saw as the lower courts’ “mistake” that the plaintiff’s claim was mooted by the unaccepted offer of judgment. The dissenters noted that the Court had simply assumed that the named plaintiff’s individual claims were moot because she had conceded that fact in the litigation. But because plaintiffs in future cases will not make the same concession, the dissenters contended that the Court’s holding was a “one-off” result involving a situation “that should never arise again.”

Symczyk is of substantial importance to any business that faces collective or class actions of any stripe. Despite the dissent’s assertion that the Court’s holding is limited to this case only, the logic of the Court’s decision applies to all FLSA collective actions—and potentially to class actions in general. Symczyk thus promises to give businesses a powerful method of settling named plaintiffs’ claims in the context of meritless collective and class actions. If a business is willing to pay the named plaintiff’s demand in full at the very outset of the case, the Supreme Court’s decision suggests that a plaintiff may be barred from pursuing a collective or class action and subjecting the business to the enormous costs of class-wide discovery in an effort to coerce a settlement.

Plaintiffs in future cases can be expected to argue, as did the dissent, that such an offer of judgment does not moot their individual claims.  Defendants may wish to point out that, in a footnote, the majority signaled that although it was not reaching the issue, if it did, it likely would agree with the unanimous conclusion of the courts of appeals that such an offer does have that effect.  See Szymczak, slip op. at 6 n.4 (citing O’Brien v. Ed Donnelly Enters., Inc., 575 F.3d 567, 575 (6th Cir. 2009); McCauley v. Trans Union, L.L.C., 402 F.3d 340, 342 (2d Cir. 2005); Weiss v. Regal Collections, 385 F.3d 337, 340 (3d Cir. 2004); Greisz v. Household Bank (Ill.), N.A., 176 F.3d 1012, 1015 (7th Cir. 1999)).  Defendants also can defend that conclusion by explaining that, as a matter of first principles, there is no Article III case or controversy for the court to resolve if the defendant is willing to agree to the relief the plaintiff seeks.

In any event, defendants should remain aware that making an offer of judgment to a named plaintiff to moot a collective or class action likely would not impede any government enforcement action based on the underlying allegations.

Employers frequently face “donning and doffing” collective actions under the Fair Labor Standards Act (FLSA).  In these lawsuits, plaintiffs accuse employers of failing to pay employees for off-the-clock time spent doffing and donning uniforms or safety gear at the beginning and end of every shift.  Today, the Supreme Court granted review in Sandifer v. United States Steel Corp., No. 12-417, to decide a recurring issue in these cases—the extent to which collective-bargaining agreements can waive employees’ right to compensation for time spent putting on and removing safety gear.  For more information about this case, which will be argued and decided next term, please see our report on the Supreme Court’s grant of certiorari.