Using The Fair Labor Standards Act For Nickel And Dimed Employees

Two weeks ago I discussed how banks routinely targeted the most financially vulnerable members of society for fraudulent overdraft and debt collection procedures. If there are three words to sum up the American economy for the lower half of earners, it’s “nickel and dimed.” When Barbara Ehrenreich was researching her book Nickel and Dimed, she was shocked by “the totalitarian nature of so many low-wage workplaces. On two jobs, for example, there was a rule against talking with your fellow employees.”

 

It’s hard not to use the phrase “nickel and dimed” every time I read about a Fair Labor Standards Act case, and yesterday The Legal Intelligencer reported on the $20.9 million settlement of a wage-and-hour class action against Rite Aid. If anyone’s interested, the Order approving the settlement is here. While it was being litigated, the case also produced a good opinion in the Third Circuit, reported at 675 F.3d 249, which allowed state and federal wage-and-hour claims to be brought together in hybrid class/collective actions, bringing claims for the same actions under state and federal statutes.

 

The class action was brought on behalf of Rite Aid’s assistant store managers and co-managers, whom the company had claimed were part of management, and thus, they claimed, exempt from overtime pay requirements under the FLSA and its analogous state wage-and-hour laws. The lawsuit sought a change in the employees’ designation as well as reimbursement for unpaid overtime wages — and it won on both fronts, forcing a change in the company’s policies two years into the lawsuit and recovering an average of $1,800 to each of the class plaintiffs. (If you’re interested in exemptions law, back in October, Andrew Frisch of Morgan & Morgan at the Overtime Law Blog summarized some recent exemption court opinions.)

 

There’s a lot of doom-and-gloom in the plaintiff’s bar these days. Over the past decade, the Supreme Court has amended by fiat the Rules of Civil Procedure relating to pleading, has been on the warpath against class actions, has granted the word “arbitration” magical powers even greater than “abracadabra,” and has blown up virtually all lawsuits against generic drug manufacturers — all regardless of the laws Congress actually wrote.

 

But one area in which plaintiffs have done well recently has been the Fair Labor Standards Act.  The Supreme Court surprised everyone by granting FLSA anti-retaliation protections to oral complaints in Kasten v. Saint-Gobain Performance Plastics Corp. Similarly, there have been a number of significant recent victories, including:

 

  • O’Brien v. Ed Donnelly Enters., 575 F.3d 567, 584 (6th Cir. Ohio 2009)(holding FLSA only requires that employees be “similarly situated” to file as a class, and so plaintiffs seeking to certify a collective action under the FLSA face a lower burden than those seeking to certify a class action under Federal Rule of Civil Procedure 23).

 

  • Dees v. Hydradry, Inc., 706 F. Supp. 2d 1227 (M.D. Fla. 2010)(a District Court case, but the opinion has been cited widely)(holding that an FLSA settlement cannot include a confidentiality provision, cannot prospectively waive FLSA rights, and must must award reasonable attorney’s fees, and suggesting courts review whether either the employer or the industry has a history of noncompliance);

 

  • Reiseck v. Universal Communs. of Miami, Inc., 591 F.3d 101, 107 (2d Cir. 2010)(adopting Martin v. Cooper Electric Supply Co., 940 F.2d 896, 905 (3d Cir. 1991), which held that an employee making specific sales to individual customers is a salesperson for the purposes of the FLSA, while an employee encouraging an increase in sales generally among all customers is an administrative employee for the purposes of the FLSA.)

 

There were some losses for employees under the FLSA, too, like:

 

  • Grace v. Family Dollar Stores, Inc. (In re Family Dollar FLSA Litig.), 637 F.3d 508, 516–17 (4th Cir. 2011)(store manager whose time was spent mostly on “mundane physical activities” such as “unloading trucks, stocking inventory, running cash registers, or sweeping floors” was actually “performing management duties whenever she was in the store” and so wasn’t entitled to overtime for any of the 65 hours per week she worked);

 

  • Silva v. Miller, 307 Fed. Appx. 349, 350 (11th Cir. 2009)(refusing to honor contingent fee agreement in single-plaintiff FLSA case, thus making those cases much riskier for employment lawyers to take).

 

 

But I suppose the proof is in the pudding, and in 2012 there were a number of significant settlements in FLSA collective / class actions. I haven’t kept a comprehensive database, but I have plucked a couple out of my files, including another exemption case: Alli v. Boston Mkt. Corp., 2012 U.S. Dist. LEXIS 54695 (D. Conn. Apr. 17, 2012)($3 million settlement where franchise restaurant “Assistant General Manager, Culinary Manager, or Hospitality Manager … were denied legally-mandated overtime pay because Boston Market erroneously categorized all such positions (outside of California) as exempt from the overtime provisions of the FLSA.”)

 

Probably the most high profile FLSA settlement was a wage and tip violations case involving a bunch of restaurants owned by Mario Batali and Joseph Bastianich. Capsolas v. Pasta Res., Inc., No. 10-cv-5595 (RLE), 2012 U.S. Dist. LEXIS 144651 (S.D.N.Y. Oct. 5, 2012)($5.25 million settlement after allegations employer “(1) unlawfully deducting the equivalent of four to five percent of each shift’s wine or alcoholic beverage sales from the tip pool; (2) unlawfully taking a ‘tip credit’ and paying Plaintiffs and class members less than the minimum wage; and (3) failing to pay Plaintiffs and class members spread-of-hours pay when they worked more than ten hours in a day.”) An employer-side blog has more on “tip pool” problems.

 

But the most common complaint in the cases that settled seemed to be pure miscalculation of workers’ hours, all of which had the same “totalitarian” streak described by Ehrenreich:

 

  • Brumley v. Camin Cargo Control, Inc., 2012 U.S. Dist. LEXIS 40599 (D.N.J. Mar. 26, 2012)($3.9 million settlement, for an average of $34,821 for each class member, where employer claimed to use “fluctuating work week method” to pay employees, in which an individual is paid a flat, fixed rate for all hours up to forty in a given week, and then compensated by an additional overtime premium for each hour of overtime worked over forty — but then paid below the “fixed” rate, while still claiming benefits of the method for calculating overtime)

 

  • Tijero v. Aaron Bros., 2012 U.S. Dist. LEXIS 183238 (N.D. Cal. Dec. 20, 2012)($800,000 settlement where “Plaintiffs allege that Defendant failed to pay class members overtime wages, provide meal periods and rest breaks, pay minimum wages for work conducted ‘off the clock,’ pay compensation due at termination, and provide accurate wage statements.”)

 

  • Ripley v. Sunoco, Inc., 2012 U.S. Dist. LEXIS 88889 (E.D. Pa. June 26, 2012)($675,000 with refinery employees where “Plaintiffs aver that Defendant failed to pay them for overtime wages when they worked over forty hours per week … clearing a security checkpoint at the beginning of each shift; engaging in off-site and off-the-clock work while “on-call,” donning and doffing personal protective equipment, obtaining and storing work tools, traveling to and from assigned work sites, preparing and cleaning work equipment, and engaging in shift-change briefings with co-workers.”)

 

  • Kritzer v. Safelite Solutions, LLC, No. 2:10-cv-0729, 2012 U.S. Dist. LEXIS 74994 (S.D. Ohio May 30, 2012)($455,000 settlement because “The gravamen of the claim was that Safelite required the CSRs to spend time booting up their computer systems before beginning their shift and shutting down their systems after their shift ended, without compensating them for that time.”)

 

  • Hosier v. Mattress Firm, Inc., 2012 U.S. Dist. LEXIS 94958 (M.D. Fla. June 8, 2012)($1.6 million settlement for employees who “(1) participated in training during which they were ineligible to earn commissions; (2) received commissions that exceeded their draw during no more than one-twelfth of the commission periods during which they were entitled to receive commissions; or (3) were paid less than one-and-one-half the applicable minimum wage amount during any commission period.”

 

Most of these cases involved blatant violations: an employer can’t start counting the clock when they feel like they’re getting their money’s worth, they have to start it when the employee is working, and that includes training, cleaning equipment, starting up computers, and briefing other workers. An employer similarly can’t use one method to calculate standard employee hours and another to calculate overtime hours, particularly not when both methods favor the employer.

 

Will big corporate employers learn in 2013? I’m not holding my breath; it’ll just be more nickel and diming, as they say.

 

 

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