A federal judge in the U.S. District Court for the Eastern District of New York recently became the latest judge to decertify an FLSA collective action based upon an automatic meal deduction policy. The case, Desilva v. North Shore-Long Island Jewish Health System, Inc., was brought by a group of employees who worked at several different facilities operated by the health system. The plaintiffs claimed the employer’s alleged practice of automatically deducting 30 minutes per shift from each employee’s pay for meal periods violated the FLSA and parallel provisions of the New York Labor Law. The matter was conditionally certified as a collective action, including: “hourly employees involved in direct patient care responsibility whose scheduled hours include a deduction for an unpaid meal break and who would have had to report performing work during meal breaks in order to be paid for such work.”  More than 1,000 employees filed opt-in consent forms and joined the litigation as party plaintiffs. 

Of particular significance, the court recognized that “evolving caselaw” supports the proposition that automatic meal period deduction policies are not per se unlawful under the FLSA.  The court noted that timekeeping policies are legal as long as they “allow for the complete and accurate recording of all time worked” and held that the defendant’s policies met that requirement.  Defendant utilized the Kronos timekeeping system and implemented an automatic thirty-minute meal break deduction if employees worked six or more hours in a single day.  The employer also required employees to review their facility’s timekeeping policies and participate in timekeeping training.  In addition, supervisors were trained to provide employees with meal breaks and to ensure compensation for all time worked, even when employees worked through meal breaks.  The court rejected the plaintiffs’ argument that the employer’s requirement that employees report when they worked through meal periods in order to be paid for the time somehow “converted” the auto-deduct policy into an illegal policy.  Moreover, the court recognized that a lawful common policy or practice cannot serve as the basis for an FLSA collective action, and, therefore, plaintiffs in auto-deduct cases who wish to proceed with their claims on a collective basis must prove either that their employer has a practice of systematically disregarding its lawful policy or that the plaintiffs are factually similarly situated. 

The Desilva plaintiffs could not meet this burden. The court decertified the collective action because the employees failed to demonstrate that “lawful policies are or were consistently and systematically violated in such a way that would be possible to generalize across the 1,196 opt-in Plaintiffs in this case....The record demonstrates that Plaintiffs work or worked in a wide variety of departments at a vast array of location and held a diverse collection of positions.”  In this regard, the court noted the health system had 395 departments in 39 business units at 59 locations, with 235 different positions that had varying degrees of patient responsibility.  As a result of these variances, the court found that “plaintiffs scheduled their meal breaks differently,” their job duties differed, and the lack of compensation for unpaid meal breaks differed accordingly.  In addition, the court found that each plaintiff’s differences would require “the kind of individualized inquiry that is antithetical to collective action treatment.” Finally, the court held that because plaintiffs proposed that the FLSA violations arose from “a hodgepodge of procedures implemented in varying ways by different managers across a numerous departments and locations...a determination on the merits is not susceptible to generalized proof.”  The court also noted that, because there was no uniform policy or practice, the defendant’s potential defenses would be “highly fact specific” and would depend upon proving that each individual manager had actual or constructive knowledge that the plaintiffs were eligible for overtime compensation and were performing work off-the-clock, which was not de minimis, without compensation. And, based upon these highly individualized factual issues, fairness and procedural considerations weighed heavily against proceeding as a collective action. The court also rejected the plaintiffs’ argument that the case could be effectively tried through representative testimony. 

In addition, the court held that certification of the plaintiffs’ state wage law claims as a class action pursuant to Rule 23 was inappropriate because the plaintiffs failed to prove that common questions of law and fact predominated over individual factual inquiries or that the case was manageable as a class action. The plaintiffs’ claims hinged upon whether a particular manager appropriately followed the defendant’s policies, which required the manager to decide what, if any, time worked during an automatically deducted meal period an employee should be paid for. The court, citing Wal-Mart v. Dukes, noted that a policy that allows individual supervisors to exercise their discretion is the opposite of a uniform policy and cannot support class treatment.  

What was particularly important in Desilva was that the defendant’s timekeeping policies allowed for the complete and accurate recording of all time worked, and employees and supervisors were well-trained on the policies. As reflected in Desilva, these types of policies and practices will provide good defenses to employers in auto-deduct cases.