For more than a few years -- at least since the United States Supreme Court’s seminal 2017 decision in Epic Systems v. Lewis -- employers across the country have weighed whether to have their employees sign arbitration agreements with class and collective action waivers.
While many employers have chosen to do so, many have elected not to.
A little over two years ago, the U.S. Court of Appeals for the Fifth Circuit became the first federal appellate court in the country to reject the widespread and longstanding two-step approach of first “conditionally” certifying Fair Labor Standards Act (“FLSA”) collective actions under a very lenient, plaintiff-friendly standard, followed by applying more rigorous scrutiny after the close of discovery at the “decertification” or “final certification” stage. As we discussed here, the Fifth Circuit concluded in Swales v. KLLM Transport Services, LLC that the FLSA requires not two steps, but instead a single step that carefully examines whether the group of workers at issue is “similarly situated” before a court authorizes any notices to potential opt-in plaintiffs.
Our colleague Michael S. Kun at Epstein Becker Green was recently quoted in SHRM, in “Distinctions Among Class, Collective and Representative Actions Make a Difference,” by Allen Smith.
Following is an excerpt:
The terms “class,” “collective” and “representative” actions sometimes are bandied about as though they were the same thing, but they have distinct meanings that employers benefit from understanding. This article, the second in a series, examines the differences among these types of lawsuits and practical ramifications, such as how an employer might seek early resolution, as well as how certification of a class or collective action affects whether an employer’s attorney may speak with plaintiffs.
Our colleague Michael S. Kun at Epstein Becker Green was recently quoted in SHRM, in “How to Respond to Class Actions,” by Allen Smith.
Following is an excerpt:
Frequently involving wage and hour issues, class actions against employers can result in lengthy litigation, but early response to them may reduce damages. This article, the first in a two-part series on class actions, examines strategies for responding to such actions, including how to interact with current employees who are seeking information on a lawsuit. The second part explains the differences among class, collective and representative actions. …
The U.S. Supreme Court’s June 15, 2022 decision in Viking River Cruises v. Moriana could have a tremendous impact upon pending and future litigation, as well as employment practices in the state.
For some California employers, it will impact pending Private Attorneys General Act (“PAGA”) litigation where the named plaintiff has an arbitration agreement with a class and representative action waiver.
Litigators who defend cases brought under the Fair Labor Standards Act (“FLSA”), particularly ‘collective actions” alleging wage-and-hour violations, often have been able to counter, or even sometimes support, allegations that arbitration agreements have been waived where the conduct of a party has caused prejudice to the other side. In the case of Morgan v. Sundance, Inc., a unanimous Supreme Court has now held that the determinant of waiver is solely dependent upon the nature and magnitude of the actions of the party that might be inconsistent with arbitration, without respect to alleged prejudice.
In a provocative decision in the case known as Swales v. KLLM Transport Servs., L.L.C., No. 19-60847 (5th Cir. 2021), the U.S. Court of Appeals for the Fifth Circuit broke from the pack by upending the standard two-step process for Fair Labor Standards Act (“FLSA” or the “Act”) collective certification. The Court opined that the two-step process followed by many, if not most, district courts throughout the country wrongly permitted conditional certification of collective actions without the appropriate evidentiary support to properly determine whether members of the ...
Let me be the millionth person to say that we are living in unprecedented times.
Well, unless you count the Spanish Flu, which few of us probably dealt with as that was more than a century ago.
And, not incidentally, few if any of the wage-hour laws employers deal with today were in place back then.
As employers navigate issues that they never imagined, there are more than a few myths circulating about wage-hour laws that are worth mentioning here – and worth debunking.
Myth No. 1: “Employees Won’t Sue Over Alleged Wage-Hour Violations Occurring During The COVID-19 Crisis”
The ...
Depending on the jurisdictions within which they operate, certain employers and their counsel will soon see a significant change in early mandatory discovery requirements in individual wage-hour cases brought under the Fair Labor Standards Act (“FLSA”).
A new set of initial discovery protocols recently published by the Federal Judicial Center (“FJC”), entitled Initial Discovery Protocols For Fair Labor Standards Act Cases Not Pleaded As Collective Actions (“FLSA Protocols”), available here, expands a party’s initial disclosure requirements to include ...
Since 2000, the number of wage and hour cases filed under the Fair Labor Standards Act (“FLSA”) has increased by more than 450 percent, with the vast majority of those cases being filed as putative collective actions. Under 29 U.S.C. § 216(b), employees may pursue FLSA claims on behalf of “themselves and other employees similarly situated,” provided that “[n]o employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought.” Despite the prevalence of FLSA ...
By Michael Kun
Much has already been written about last week’s California Supreme Court decision in Duran v. U.S. Bank Nat’l Ass’n, a greatly anticipated ruling that will have a substantial impact upon wage-hour class actions in California for years to come. Much more will be written about the decision as attorneys digest it, as parties rely on it in litigation, and as the courts attempt to apply it.
In a lengthy and unanimous opinion, the California Supreme Court affirmed the Court of Appeal’s decision to reverse a $15 million trial award in favor of a class of employees who ...
By: Kara M. Maciel
The following is a selection from the Firm's October Take 5 Views You Can Use which discusses recent developments in wage hour law.
- IRS Will Begin Taxing a Restaurant's Automatic Gratuities as Service Charges
Many restaurants include automatic gratuities on the checks of guests with large parties to ensure that servers get fair tips. This method allows the restaurant to calculate an amount into the total bill, but it takes away a customer's discretion in choosing whether and/or how much to tip the server. As a result of this removal of a customer's voluntary act, the ...
The U.S. Court of Appeals for the Second Circuit recently took a significant step toward bringing uniformity to the law of class and collective action waivers under the Fair Labor Standards Act (FLSA).
In Sutherland v. Ernst & Young LLP, the court held that employees can be contractually compelled to arbitrate their claims on an individual basis, and thereby waive their right to participate in a FLSA collective action. The decision is another in a series of cases that have required employees to arbitrate employment-related claims on an individual basis ...
By Michael Kun
“Hybrid” wage-hour class actions are by no means a new concept.
In a “hybrid” class action, the named plaintiff files suit seeking to represent classes under both the federal Fair Labor Standards Act (“FLSA”) and state wage-hour laws. As the potential recovery and limitations periods for these claims are often very different, so, too, are the mechanisms used for each.
In FLSA claims, where classes can be “conditionally certified” if a plaintiff satisfies a relatively low burden of establishing that class members are “similarly situated” – a ...
In Genesis Healthcare Corp. v. Symczyk, the Unites States Supreme Court held that a collective action under the FLSA was properly dismissed for lack of subject matter jurisdiction after the named plaintiff ignored the employer’s Fed. R. Civ. P. 68 offer of judgment. The Court concluded that the plaintiff had no personal interest in representing putative, unnamed claimants, nor did she have any other continuing interest that would preserve her suit from mootness.
The plaintiff’s collective action was originally filed in District Court for the Eastern ...
By Douglas Weiner
Last month, we released our Wage and Hour Division Investigation Checklist for employers and have received terrific feedback with additional questions. Following up on your questions, we will be regularly posting FAQs as a regular feature of our Wage & Hour Defense Blog.
In this post, we address an increasingly common issue that many employers are facing in light of aggressive government enforcement at the state and federal level from the Department of Labor.
QUESTION: If a DOL team of Wage Hour Investigators arrive unannounced demanding the immediate production ...
By Michael Kun
As we have written before in this space, the latest wave of class actions in California is one alleging that employers have not complied with obscure requirements requiring the provision of “suitable seating” to employees – and that employees are entitled to significant penalties as a result.
The “suitable seating” provisions are buried so deep in Wage Orders that most plaintiffs’ attorneys were not even aware of them until recently. Importantly, they do not require all employers to provide seats to all employees. Instead, they provide that employers ...
By Michael Kun
Employers with operations in California have become aware in recent years of an obscure provision in California Wage Orders that requires “suitable seating” for some employees. Not surprisingly, many became aware of this provision through the great many class action lawsuits filed by plaintiffs’ counsel who also just discovered the provision. The law on this issue is scant. However, at least two pending cases should clarify whether and when employers must provide seats – a case against Bank of America that is currently before the Ninth Circuit Court of ...
By Frederick Dawkins and Douglas Weiner
Earlier this month, at the ABA Labor and Employment Law Conference, Solicitor of Labor M. Patricia Smith reaffirmed that investigating independent contractors as misclassified remains a top priority of the U.S. Department of Labor’s (“DOL”) enforcement initiatives. The DOL will continue to work with other federal and state agencies, including the IRS, to share information and jointly investigate claims of worker misclassification. The joint enforcement effort is certainly driven by, among other things, an interest in ...
By Michael Kun
Yesterday, only weeks after its long-awaited Brinker v. Superior Court decision, the California Supreme Court issued another important ruling on California meal and rest period laws.
In Kirby v. Immoos Fire Protection, Inc., the Supreme Court ruled that neither party may recover attorney’s fees on claims involving meal and rest periods. The Court analyzed the legislative history of the meal and rest period provisions and concluded, “We believe the most plausible inference to be drawn from history is that the Legislature intended [meal and rest period] claims to ...
By: Michael Kun
This morning, the California Supreme Court has just issued its long-awaited decision in the Brinker case regarding meal and period requirements. It is largely, but not entirely, a victory for employers. A copy of the decision is here.
A few highlights of the decision:
On rest periods, the Court confirmed the certification of a rest period class because Brinker’s written policy arguably did not comply with the law as to the second rest period in a day. In so doing, it clarified when employees are entitled to rest periods:
· Employees are entitled to 10 minutes’ rest for ...
By Douglas Weiner and Meg Thering
In one of the many “wrinkles” in Fair Labor Standards Act (“FLSA”) litigation, settlements of wage and hour disputes between an employer and its employees are only enforceable if supervised by the U.S. Department of Labor or approved by a court. Courts will approve settlements if they are “fair”; however, as demonstrated in a recent decision arising out of New Jersey - Brumley v. Camin Cargo Control - courts may need to be reminded that employers also have rights and legitimate interests. The Brumley Court took what was a bargained-for ...
Wage and hour investigations and class action lawsuits continue to be a potentially serious problem for many employers, resulting in an abundance of new cases filed and many large settlements procured. In addition, in September 2011, under the guidance of the Obama Administration, the Department of Labor and IRS announced an effort to coordinate with each other to address misclassification of employees as independent contractors, which is resulting in additional investigations, fines, and/or legal liability levied on an employer.
By Amy Traub and Desiree Busching
Like the fashions in the magazines on which they work and the blockbuster movies for which they assist in production, unpaid interns are becoming one of the newest, hottest trends— the new “it” in class action litigation. As we previously advised, there has been an increased focus on unpaid interns in the legal arena, as evidenced by complaints filed by former unpaid interns in September 2011 against Fox Searchlight Pictures, Inc. and in February 2012 against Hearst Corporation. In those lawsuits, unpaid interns working on the hit ...
Wage Hour laws and regulations are complex, non-intuitive, and constantly changing. Mistakes in wage and salary administration have led to class actions resulting in six and seven figure recoveries against the most sophisticated employers - banks and major industrial giants as well as smaller employers without in-house legal and high level Human Resources officials. Peter M. Panken, Lauri Rasnick and Douglas Weiner in our New York Office have recently authored an article in conjunction with a major national Continuing Legal Education program in Washington entitled: “ ...
By John F. Fullerton, III, Douglas Weiner, and Meg Thering
The plague of lawsuits for unpaid overtime compensation by employees who claim that they were misclassified by their current or former employer as “exempt” from overtime under the “administrative” exemption of the Fair Labor Standards Act shows no signs of receding. These lawsuits continue to present challenges to employers, not just in terms of the burdens and costs of defending the cases, but in the uncertainty of the potential financial exposure.
Read the full article online.
By Michael Kun and Aaron Olsen
Plaintiffs seeking to bring state law wage-hour class actions against employers in the trucking industry have run into a significant road block in California. For the second time in a year, a United States District Court has held that claims based on California’s meal and rest period laws are preempted by federal law.
In Esquivel et al. v. Performance Food Group Inc., the plaintiffs claimed the defendant scheduled their delivery routes such that the plaintiffs were unable to take duty-free meal periods. The defendant argued that the Federal Aviation ...
By David Garland and Douglas Weiner
In February 2011, the U.S. Court of Appeals for the Ninth Circuit gave a resounding victory to employers in the pharmaceutical industry by finding that pharmaceutical sales representatives are covered by the outside sales exemption of the Fair Labor Standards Act (“FLSA”). Christopher v. SmithKline Beecham, No. 10-15257 (9th Cir. Feb. 14, 2011). Plaintiffs, and the U.S. Department of Labor (“DOL”) in an amicus brief, had argued the exemption did not apply because sales reps are prohibited from making the final sale. Prescription ...
For several years, employers’ counsel have moved to block the combining of state wage and overtime claims with federal Fair Labor Standards Act (“FLSA”) claims, arguing that Rule 23 opt-out class actions were inherently inconsistent with FLSA collective opt-in actions. For support, they cited to the decision of the Third Circuit in De Asencio vs. Tyson Foods, Inc., 342 F. 3d 301 (3rd Cir. 2003) reversing a district court’s exercise of supplemental jurisdiction because of the inordinate size of the state-law class, the different terms of proof ...
By Amy Traub and Christina Fletcher
Once a settlement has been reached in an FLSA collective action, the defendant-employer typically wants that settlement to go into effect and end the case as soon as possible, so that the company can get past the myriad of distractions brought by the suit. However, as litigants increasingly are finding, the parties’ agreement to settle an FLSA collective action is nowhere near the end of the road, or the end of the case. There is a “judicial prohibition” against the unsupervised waiver or settlement of claims brought under the ...
By Betsy Johnson and Evan J. Spelfogel
Employment litigation is growing at a rate far greater than litigation in general. Twenty-five times more employment discrimination cases were filed last year than in 1970, an increase almost 100 percent greater than all other types of civil litigation combined. Case backlogs at the U.S. Equal Employment Opportunity Commission ("EEOC") and in state and federal courts and administrative agencies nationwide number in the hundreds of thousands. Class and collective wage and overtime cases are inundating the courts. These types of cases now ...
by Michael Kun and Aaron Olsen
In recent years, some plaintiffs' counsel bringing wage-hour claims have have made the strategic decision to bring "hybrid" class actions; that is, actions alleging both federal and state wage-hour claims. These cases can cause logistical nightmares for the courts, and great benefits for plaintiffs, for two primary reasons: (1) the standard for certification of a class is differerent for federal and state claims, and (2) classes in federal claims are "opt in" classes while those for state claims are "opt out" classes. Indeed, in bringing ...
A conflict is brewing in the federal courts over whether a defendant's offer to settle a collective action FLSA case for full relief can moot the case and effectively deprive the court of jurisdiction. Plaintiff's lawyers view this tactic as a trick aimed at "picking off" class members to avoid a larger suit, while defendants argue that the courts should not be used to stir up litigation once a party's claim has been fully satisfied. Put simply, why continue a lawsuit once the plaintiff has won everything he or she could collect?
In a recent decision out of North Carolina, a federal judge has ...
by Douglas Weiner
Epstein Becker Green was well represented at the National Advanced Forum on Wage & Hour Claims and Class Actions held in New York City on May 19 and 20. EBG attorney Douglas Weiner addressed the Conference regarding his experience as a former Senior Trial Attorney for the U.S. Department of Labor, identifying emerging trends of Fair Labor Standards Act litigation, and the most expensive mistakes employers make – and how to avoid them. The second day Mr. Weiner moderated a panel of Judges experienced in presiding over wage & hour class actions who gave their ...
by Michael Kun
How quickly can $87 million go up in smoke?
Pretty darned quickly, especially if you are referring to the $87 million that was awarded to plaintiffs and their attorneys in a tip-pooling class action against Starbucks in San Diego.
In Chau v. Starbucks (CA4/1 D053491 6/2/09), Jou Chau, a former Starbucks barista, brought a class action against Starbucks challenging the Company's policy that permits certain service employees, known as shift supervisors, to share in tips that customers place in a collective tip box.
If you've ever been to a Starbucks, you know exactly where ...
Making FLSA collective actions go away quickly just got harder in Texas. In a recent decision in December 2008, the Fifth Circuit Court of Appeals (with jurisdiction over Texas) significantly limited the availability of a valuable defensive tactic regularly asserted by defendants in FLSA collective actions – the offer of judgment under Federal Rule of Procedure 68. Prior to the Court’s ruling, defendants were often able to reduce their liability under the FLSA by preemptively offering a settlement to class representatives, satisfying theirclaims in full. By ...
Despite the lenient standards for conditionally certifying an FLSA collective action, a federal court in Miami recently ruled that a collective action against a local auto dealership was inappropriate.
First, some background on FLSA collective actions. The Fair Labor Standards Act provides that an action for overtime compensation “may be maintained . . . by any one or more employees for and in behalf of himself or themselves and other employees similarly situated.” 29 U.S.C. § 216(b). The Eleventh Circuit Court of Appeals, which covers Alabama, Florida, and Georgia ...
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Recent Updates
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