July, August and September continued to be busy months in the world of wage and hour law. In our continuing efforts to keep our clients and friends apprised of recent developments in that often vexing and treacherous legal arena, we highlight below important developments during this period.
The U.S. District Court for the Southern District of New York (Da Silva Moore v. Publicis Group SA & MSL Grp., S.D.N.Y., No. 1:11-cv-01279, June 29, 2012) granted a motion for former female employees of MSLGroup seeking conditional certification of a collective action under the Equal Pay Act. The employees established that they and other potential opt-in plaintiffs were similarly situated, rejecting the defendant’s argument that the plaintiffs failed to demonstrate that they performed equal work requiring equal skill, effort, and responsibility, under similar working conditions, yet were paid less than similarly situated males.
The U.S. District Court for the Central District of California (McKenzie v. Federal Express Corp., C.D. Cal., No. 10-02420, July 2, 2012) approved the settlement of a class action, but reduced the portion of the award for plaintiffs’ attorneys’ fees. Because the case was not complex, the court concluded that plaintiffs’ counsel did not warrant a 33.3% fee award. Instead, the court granted plaintiffs’ counsel 25%; the “benchmark” award for such cases established by the U.S. Court of Appeals for the Ninth Circuit. The case involved FedEx’s failure to provide required information on wage statements issued to hourly workers.
The U.S. District Court for the Northern District of California (Cathcart v. Sara Lee Corp., N.D. Cal., No. 09-5748, brief filed July 2, 2012) is considering whether to approve a proposed settlement of a wage and hour claim under the Fair Labor Standards Act (FLSA) and California state law where employees seeking to represent a class of former and current route sales representatives seek $1.25 million. Under the proposed settlement, defendants Sara Lee Corp., Sara Lee Bakery Group, and Earthgrains Baking Cos. would pay $1.25 million into a fund benefiting a proposed settlement of approximately 792 current and former employees who worked as route sales representatives or driver salesmen at any time between December 8, 2005, and the date the court grants preliminary approval of the settlement.
In a settlement between the U.S. Department of Labor (DOL) and the owner of Jasmine Hall Care Homes Inc. in the U.S. District Court for the Eastern District of California (Solis v. Jasmine Hall Care Homes Inc., E.D. Cal., No. 2:05-cv-1306, consent judgment July 3, 2012), the operator of group homes for developmentally disabled adults agreed to pay $850,000 in back wages, plus interest, to 52 employees to settle federal charges that the employer failed to pay minimum wage and overtime compensation. Jasmine Hall Care Homes Inc. required its employees to remain on the premises for 24-hours during their shifts, but paid them a monthly salary based on an eight hour shift. The DOL sought back pay for the additional 16 hours a day each employee was on the premises. The defendant contended that the employees received free room and board, health benefits, other household amenities, and had ample time to engage in leisure activities. In response, the DOL argued that Jasmine Hall Care Homes Inc. failed to pay minimum wage and overtime at a rate of one-and-a-half times the hourly rate for hours above 40 worked per week.
The U.S. Court of Appeals for the Eleventh Circuit (Layton v. DHL Express (USA) Inc., 11th Cir., No. 11-12532, July 9, 2012) held that DHL Express (USA) Inc. was not the joint employer of nearly 75 drivers who were employed by a contractor that provides DHL with courier services in Alabama and who brought a FLSA overtime collective action against both companies. Applying an eight-factor test, the court affirmed summary judgment in favor of DHL by finding that the “totality of the economic circumstances” indicated that drivers of Sky Land Express Inc. were not “economically dependent” upon DHL. With respect to the issue of control, the district court acknowledged that DHL may have “incidentally impacted” the drivers’ work hours by telling them when to pick up packages, but the control was “abstract” and did not show that DHL had an “overly active role in the oversight” of the drivers’ work.
The U.S. Court of Appeals for the Seventh Circuit (Espenscheid v. DirectSat USA LLC, 7th Cir., No. 12-1943, August 6, 2012) denied the defendant’s motion to dismiss the satellite television technicians’ appeal of the decertification of their FLSA collective action where the technicians in Wisconsin settled their individual overtime claims, but the settlement agreement included provisions allowing them to appeal the decertification and to receive incentive rewards for their service as class representatives, contingent on class certification.
In the U.S. District Court for the Southern District of New York (Mullins v. New York, S.D.N.Y., No. 04-2979, proposed settlement announced 8/22/12), the city of New York and more than 4,300 current and former police sergeants reached a proposed $20 million settlement of a FLSA suit that challenged the department’s overtime pay practices since 2001. In addition to the $20 million settlement, the city agreed to pay the plaintiffs’ reasonable attorneys’ fees in an amount yet to be determined.
The U.S. District Court for the Eastern District of Arkansas (Douglas v. First Student, Inc., E.D. Ark., No. 4:09-cv-00652-BSM, August 23, 2012) decertified a class action of school bus drivers who claimed they were not paid overtime wages. The plaintiffs alleged that First Student, a leading student transportation company with 68,000 drivers, paid them based on estimates of the amount of time it took them to perform their jobs and not actual time worked. The court ruled that there was too much variation in the duties performed by the drivers to proceed as a class. The judge, however, granted the drivers leave to bring an interlocutory appeal to the Eighth Circuit because his decertification of the class involved questions of law about which there is a significant disagreement among the courts.
The U.S. District Court for the District of Colorado (Young v. Dollar Tree Stores Inc., D. Colo., No. 1:11-cv-01840, August 24, 2012) granted conditional collective certification to a group of Dollar Tree assistant store managers who alleged their employer violated the FLSA by failing to pay them overtime wages and denying them meal breaks. The suit asserted that Dollar Tree subjected the managers to scheduling demands that deprived them of their federally mandated wages, refused to allow employees to take unpaid meal breaks for shifts six or more hours, and required the employees to make bank drops after their shifts ended.
The U.S. District Court for the Central District of California (Buckland v. Maxim Healthcare Services, Inc., C.D. Cal. No. 2:11-cv-08414-JST-JEM August 27, 2012) denied class certification to a group of Maxim Healthcare Services Inc. nurses who claimed they did not receive overtime wages because the class did not meet the commonality or adequacy requirements. The court rejected the plaintiffs’ argument because they could not demonstrate that any underpayment was the result of a uniformly applied policy. The court also ruled that the lawyers for the class could not adequately represent it because they continued to prosecute claims on behalf of a deceased class representative, failed to present evidence that Maxim’s policies related to the proposed class, and did not comply with local rules and the court’s orders.
The U.S. District Court for the Southern District of Indiana (Jones v. C & D Techs. Inc., S.D. Ind., No. 11-cv-1431, August 28, 2012) ruled that Indiana factory workers covered by a collective bargaining agreement were preempted by the Labor Management Relations Act (LMRA) from pursuing state law claims alleging that they were denied pay due for time donning and doffing protective clothing. The court concluded that because resolving the state law claim would require “consulting” the union agreement, federal law preempted the court from considering the issue.
The U.S. District Court for the District of Maryland (Quickley v. University of Maryland Medical System Corp., D. Md. No. 1:12-cv-321, September 14, 2012) held that a nurse who alleged that she was not compensated for meal breaks could proceed with her class action against a Maryland health system. In rejecting the defendant’s partial motion for summary judgment, the court held that the plaintiff adequately alleged that the University of Maryland Medical System Corp. and Maryland General Hospital could be considered “joint employers” for purposes of the FLSA. In addition, the court concluded that the hospitals must ensure that employees have an opportunity to take breaks or facilitate timekeeping reports that allow corrections for missed breaks.
The U.S. District Court for the District of Nevada (Wuest v. California Healthcare West, D. Nev. 3:11-cv-855, September 18, 2012) held that a surgical technologist could not challenge an “8/80” compensation schedule that paid her for 10 eight-hour workdays during a two-week period as violating Nevada’s overtime laws. The U.S. District Court for the District of Nevada ruled that the Nevada exemption for employees covered by a collective bargaining agreement, Nev. Rev. Stat. § 608.018(3)(e), was applicable to the instant matter. The court also concluded that the exemption was not preempted by the National Labor Relations Act and did not discriminate against unionized employees by denying them rights enjoyed by non-union workers.
The U.S. District Court for the Northern District of Illinois (Brand v. Comcast Corp., N.D. Ill, No. 1:12-cv-01122, September 26, 2012) conditionally certified a collective action on behalf of line technicians at a Comcast facility where the plaintiff alleged that Comcast failed to pay him overtime wages for doing work after his shift ended. The court denied the motion to the extent the plaintiff sought to cover all 358 of Comcast’s line technicians working in 33 locations because the plaintiff could not show a common policy or plan that the company applied statewide. However, the court found that the plaintiff and the five opt-in plaintiffs who worked at the same facility could pursue a collective action for unpaid wages because they were similarly situated.
The New Mexico Supreme Court (Ole Educ. Fund v. Nash, N.M., No. 33-805, September 12, 2012) ruled that voters will have the opportunity to decide whether Albuquerque should raise the minimum wage to $8.50 per hour on November 6, 2012. The court reversed the U.S. District Court for the District of New Mexico and rejected the Albuquerque City Council’s challenge to the ballot initiative. The initiative would increase the minimum wage from $7.50 per hour and provide an annual cost-of-living adjustment.
A California appellate court (Flores v. Lamps Plus Inc., Cal. Ct. App., No. B220954, publication order September 5, 2012), relying on the California Supreme Court’s recent decision in Brinker Restaurant Corp. v. Superior Court, affirmed the trial court’s denial of class certification sought by non-exempt employees of a retail lighting chain who claimed the company denied them meal and rest breaks and violated other labor laws. Relying on Brinker, the court rejected the plaintiffs’ claim that California employers must ensure employees take meal and rest breaks. Instead, it found that an employer satisfies California law by relieving employees of all duties, relinquishing control over the employees for the period, and not impeding or discouraging them from taking the break.
FEDERAL AND STATE ACTION
On August 22, 2012, North Carolina Governor Bev Perdue signed an executive order to form an inter-governmental task force aimed at identifying and preventing employee misclassification. Perdue signed the order to protect workers, to prevent businesses from gaining an unfair advantage by violating the law, and to retain tax revenue due to the states.
On August 27, 2012, the Department of Labor announced that Frank Donio, Inc., a wholesale produce broker, was required to pay $657,069 in back wages and liquidated damages to 519 line workers at the company’s Hammonton, New Jersey, packing facility after an investigation by the Labor Department’s Wage and Hour Division revealed violations of the FLSA. The employees were being paid $6.50 per hour, less than the required minimum wage. The employees also were not paid time-and-one-half their regular pay rates for hours they worked in excess of 40 hours per week. The Wage and Hour Division concluded that Heng Heng Agency, Inc., the company that supplied Frank Donio, Inc. with workers, was also liable for FLSA violations as a joint employer.