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.

For information on The Employment Law Group® law firm’s Wage and Hour Practice, click here.

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.

A federal judge has conditionally certified a class action suit of potentially 85,000 current and former employees of the University of Pittsburgh Medical Center (UPMC) for violations of the Fair Labor Standards Act (FLSA).  The suit alleges that UPMC violated the FLSA by denying its employees overtime pay and automatically deducting money from their paychecks for meal breaks even though the employees worked during their entire shift.  Under the FLSA, an employer may not automatically deduct meal breaks from an employee’s wages if the employee has not actually taken the break unless the employer identifies special conditions to support such a policy.  Finding that UPMC failed to identify the special conditions necessary to support the practice of deducting meal breaks regardless of whether employees actually took the breaks, the judge granted conditional certification to the FLSA representative action.  Accordingly, plaintiffs can notify all current and former non-exempt employees from the past three years that they can opt in to the lawsuit.  The case is Camesi et al. v. University of Pittsburgh Medical Center et al and is in the U.S. District Court for the Western District of Pennsylvania.  If you have been subjected to similar unfair practices, visit The Employment Law Group® law firm’s Wage and Hour Practice at http://www.employmentlawgroup.net/PracticeAreas/Non-Payment-of-Wages.asp.

Casey’s General Store Inc. has agreed to pay $12 million to settle two class action suits concerning alleged violations of wage and hour laws.  According to two former assistant managers, the company violated the Fair Labor Standards Act by repeatedly failing to pay them overtime for hours worked in excess of 40 hours per week.  Additionally, the assistant managers alleged that the company denied its employees mandatory meal and rest breaks and required them to work before and after their shifts.  The settlement, which remains subject to state court approval, covers a putative class of over 80,000 employees.   A hearing on the preliminary approvals is scheduled for next Monday, May 18, 2009. 

For more information on wage and hour laws, visit The Employment Law Group® law firm’s Wage and Hour Practice at http://www.employmentlawgroup.net/PracticeAreas/Non-Payment-of-Wages.asp

A California district court has decided that a group of former landscaping employees can proceed with their lawsuit against their former employer, Mega Lighting, Inc. (“Mega”) for violations of the Fair Labor Standards Act (“FLSA”) and the Rackateer Influenced and Corrupt Organizations Act (“RICO”). In Aguilar v. Mega Lighting, Inc., former landscaping employees filed a civil complaint against their former employer, alleging that the company violated the FLSA when it deliberately failed to pay the employees minimum wage and overtime. The employees also alleged that the company retaliated against them when they sought legal counsel regarding possible wage and hour claims. Additionally, the employees alleged that individual members of Mega violated RICO by: (1) engaging in mail and wire fraud, (2) fraudulently obtaining public works projects, and (3) failing to pay the requisite prevailing wages to employees who worked on the public works projects. The district court found that the employees sufficiently alleged Mega’s probable impact on interstate commerce and thus satisfied the jurisdictional requirements under both the FLSA and RICO, and it has let both counts proceed against the company. For more information on wage and hour laws and The Employment Law Group® law firm’s Wage and Hour Practice, click here.

On April 8, 2009, a federal judge ordered Martin & Gass, Inc. (“M&G”) to pay back pay and damages to a former employee for violations of the Fair Labor Standards Act (“FLSA”).  The order  follows a March 2009 verdict, where the jury found that M&G failed to pay the plaintiff, Charles Alford, overtime wages for 288 hours during the time period from June 2005 to March 2008.  After the jury returned a verdict in favor of Mr. Alford, M&G argued that it should not be required to pay liquidated or double damages because it did not willfully violate the FLSA.  The district court rejected this argument, finding that a lack of willfulness by itself is insufficient to demonstrate good faith and negate an award of liquidated damages.  According to the court, an employer may avoid liquidated damages if it can show that its failure to obey the statute was in “good faith and predicated upon such reasonable grounds that it would be unfair to impose…more than a compensatory verdict.”  Finding that M&G failed to make any inquiry before misclassifying Alford as an exempt employee, the court concluded that M&G was “at best extremely careless as to [its] obligation under the FLSA” and thus, it was liable for unpaid overtime as well as liquidated damages. 

This case is significant because it rejects the commonly held notion that liquidated damages under the FLSA can be awarded only where the employer’s conduct is willful and affirms the principle that “liquidated damages…are the norm” rather than the exception for violations of the FLSA.
The order and opinion in Alford v. Martin & Gass, Inc., No. 1:08cv595 (E.D. Va. April 8, 2009) is available here. 

Mr. Alford was represented by Scott Oswald and Nicholas Woodfield, Principals at The Employment Law Group® law firm.  For more information about The Employment Law Group® law firm’s Wage and Hour Practice, visit http://www.employmentlawgroup.net/PracticeAreas/Non-Payment-of-Wages.asp.

Last week, in a Fair Labor Standards Act (“FLSA”) case, a federal judge denied summary judgment to a pharmaceutical company after finding that the former sales representatives were non-exempt employees entitled to overtime payment.  In the complaint, the employees alleged that their employer, Schering Corporation (“Schering”) misclassified them as “exempt” employees and as a result, failed to pay them overtime wages in violation of the FLSA.  In response to the allegations, Schering argued that the former employees were pharmaceutical sales representatives and thus, fell within the FLSA’s outside sales exemption.  The district court rejected Schering’s argument, finding that the pharmaceutical sales representatives did not fit within the outside sales exemption because they did not “make sales or obtain contracts or orders,” as required under the regulations.  Moreover, the court noted that the sales representatives did not have the capacity to carry out sales with the physicians that they visited because their employer prohibited them from entering into contracts with physicians for the prescription or purchase of their employer’s product.  Relying on the plain meaning of the statutory and regulatory texts that define the FLSA’s outside sales exemption, the court concluded that the employees did not “sell” or make a “sale” under the FLSA and must receive time-and-a-half for all hours worked in excess of 40 hours a week.

The takeaway from this case is that the standard for determining whether an employee falls within the “outside sales” exemption is not whether the term “sales” is included in her title, but rather whether the employee actually sells something within the scope of her duties. 

The order and opinion in Kuzinski et al, v. Schering Corp., No. 3:07cv233 (D. Conn. March 30, 2009) is available here.  For information on The Employment Law Group® law firm’s Wage and Hour Practice, click here.

A security guard has filed a complaint in the U.S. District Court for the Southern District of Florida against Wackenhut Corporation (“Wackenhut”) for violations of the Fair Labor Standards Act (“FLSA”).  In the complaint, the former employee alleges that the company violated the wage requirements of the FLSA when it paid him and other similarly-situated employees overtime based on “arbitrary lower, and incorrect, hourly wages,”  instead of the time-and-a-half compensation required by law.  Additionally, the complaint alleges that Wackenhut acted “willfully, intentionally and in reckless disregard of the rights of [the employees],” because it refused to pay the security guards the correct overtime payment despite notice and demand on same.  This is not the first time that Wackenhut has been sued for violations of the FLSA.  In October of 2008, a similar class action was filed against Wackenhut in Kansas, alleging that the company violated the overtime provisions of the FLSA by refusing to compensate its security officers with the statutory minimum rates for regular and overtime hours worked.  Under the FLSA, non-exempt employees are entitled to time-and-a-half for all hours worked in excess of 40 hours per week.  Accordingly, employers who fail to compensate their employees according to the regulations of the FLSA, may be liable for unpaid wages, unpaid overtime, liquidated damages, and attorneys’ fees.  For more information about the FLSA and The Employment Law Group® law firm’s Wage and Hour Practice, click here.

In a wage and hour class action suit, attorneys representing more than 500 employees asked a New York district court to grant final approval of a $2.5 million dollar settlement that was preliminarily approved in October of 2008.  In the complaint, two former servers alleged that their employer, Nobu restaurant, violated the Fair Labor Standards Act (FLSA) by refusing to pay its hourly employees the required minimum wage and by failing to pay overtime.  The complaint also alleged that the restaurant’s servers were improperly forced to share tips with management and other non-tipped employees in violation of state laws.   According to the terms of the settlement agreement, each member of the class action suit will receive approximately $3,300.  For more information about the FLSA and The Employment Law Group® law firm’s Wage and Hour Practice, click here.

In a Fair Labor Standards Act (“FLSA”) collective action against Applebee’s, the U.S. District Court for the Western District of Missouri denied Applebee’s motion to compel interrogatories which required each of nearly 5,600 opt-in employees to account for all duties performed at work since May 2005.  In reaching its decision, the court held that the interrogatories were unduly burdensome and that Applebee’s failed to meet the necessary threshold requirements to compel discovery.   This decision is significant because it reminds employers that they should not rely on the discovery process to determine employees’ work hours, but instead should satisfy their duty under the law which is to create and maintain accurate time records for each employee. 

To learn more about the FLSA and The Employment Law Group® law firm’s Wage and Hour practice, click here.