The decision whether to reclassify employees whose exempt status is arguable can sometimes create something of a double bind for employers: reclassification should be the conservative approach, but it also can be risky if it is interpreted as evidence that the prior classification was wrong. For this reason, employers may fear that reclassification aimed at reducing potential liability may actually spur litigation.
Last week the District of New Jersey issued a decision that provides some hope and help for employers facing this conundrum. In Henry v. Express Scripts Holding Co., an employee who had been reclassified by the defendant in 2013 sought conditional certification of a putative collective of 170 employees who had been reclassified at the same time. She claimed that she was similarly situated to these individuals because the defendant “did not review the job duties that the employees performed during the prior three years” and “did not pay back overtime wages to any of the 170 reclassified employees.”
The district court rejected this bid for conditional certification, stating that in the Third Circuit an employee must show the existence of a common policy or practice that arguably violates the FLSA, and “[r]eclassification, alone, does not evidence a FLSA violation” for these purposes. The plaintiff had failed to show any additional facts that would support her claim or suggest that “the previous classifications as exempt resulted in FLSA violations.” Accordingly, the court held that the plaintiff had failed to make the “modest factual showing” necessary for conditional certification and denied the motion.
The Henry case does not eliminate all risk associated with a reclassification, and whether and how to reclassify remains a nuanced issue that should be discussed with counsel. Going forward however, employers should be able to point to Henry in trying to avoid certification of FLSA lawsuits stemming from such decisions.