The Sixth Circuit has issued a significant decision in O’Brien et al. v. Ed Donnelly Enter., resolving several key issues on class certification under the FLSA.  The case was initiated by two employees who alleged that their employer violated the FLSA by requiring employees to work “off the clock” and by altering employees’ payroll reports to reflect fewer hours than what the employees had actually worked.  The district court initially certified the class of plaintiffs but later decertified the class on the grounds that the opt-in plaintiffs were not “similarly situated” to the lead plaintiff because individualized questions predominated.  Finding that the district court “implicitly and improperly applied a Rule-23 type analysis… a more stringent standard than is statutorily required [for FLSA class certification],” the Sixth Circuit found that the employees were similarly situated because the named employees demonstrated that all employees “suffer[ed] from a single, FLSA-violating policy.” In reaching this result, the Sixth Circuit also clarified that when common theories of liability do not exist among all employees, partial decertification and not a denial of certification may be more appropriate. This is a substantial relaxation of the heightened standards previously employed and thus, greatly increases the chance that employees’ FLSA claims will be certified for collective action. 

The Sixth Circuit also established the following standards:

1. Employees’ refusal of an offer of judgment should not result in the dismissal of employees’ claims.  If an employer offers to satisfy the employee’s demand and the employee refuses the offer, the employee’s claim is moot.  However, a district court should not dismiss the employee’s claim outright.  Instead, the court should enter judgment in favor of the employee for the amount offered by the employer.
2. Courts can impose sanctions on an employer for spoliation of evidence even if the requested records were destroyed prior to the initiation of litigation.  The Court clarified that sanctions can be appropriate for the destruction of evidence, even when records are destroyed prior to the initiation of litigation, where an employer “should have known that the evidence may be relevant to future litigation.”
3. Reaffirming the employee-friendly burden of proof for FLSA plaintiffs.  The Court reiterated the principal that an FLSA plaintiff must prove by a “preponderance of the evidence that he or she ‘performed work for which he [or she] was not properly compensated.”  In doing so, the Court reaffirmed the rule that “the [employee’s] burden of proof is relaxed” when an employer maintains inaccurate or inadequate records, and that upon satisfaction of that relaxed burden, the burden shifts to the employer to negate the employee’s inferential damage estimate.

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On July 24, 2009, the federal minimum wage increased from $6.55 per hour to $7.25 per hour.  The increase is the third and final increase provided by the Fair Minimum Wage Act of 2007.  Under the increase, all employees covered by the Fair Labor Standards Act must be paid a minimum of $7.25 per hour.  Where the employee is covered by both state and federal law, the employee is entitled to the higher minimum hourly rate.  For more information on wage and hour laws, click here.