Tag Archives: Supreme Court

U.S.S.C.: High Court Declines to Decide Whether a “Full” Monetary Offer Absent Entry of Judgment Can Moot a Claim

Convergent Outsourcing, Inc. v. Zinni

On the heels of last month’s Genesis Healthcare Corp. v. Symczyk, the Supreme Court had the chance to decide a case which actually would help define the true parameters of the mootness doctrine, visa vis cases where the plaintiff claims finite (and typically relatively small) individual damages, but seeks to represent a putative class. However, as in the Symczyk, the Supremes left some observers scratching their heads and declined to answer the question posed to it. Although the Zinni case was a case brought under the Fair Credit Reporting Act (FCRA) and not the FLSA, the issue presented is common in FLSA cases.  Specifically, the issue presented by the Zinni case was:

Does an offer to provide a plaintiff with all of the relief he has requested, including more than the legal amount of damages plus costs and reasonable attorney’s fees, fail to moot the underlying claim because the defendant has not also offered to agree to the entry of a judgment against it?

Previously, the Eleventh Circuit had held that such an offer, absent an agreement by the defendant to allow entry of a judgment against it, necessarily cannot moot a claim, because it fails to truly give the plaintiff all of the relief sought which he or she may obtain by litigating the case. Given the high court’s decision to deny cert on the case, this remains good law and parties should govern themselves accordingly.

Click Convergent Outsourcing, Inc. v. Zinni to read the Eleventh Circuit’s underlying decision and ScotusBlog to view the briefing and orders at the Supreme Court.

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U.S.S.C.: Where Named Plaintiff Acknowledged That Unaccepted OJ Mooted Her Claim, Collective Action Mooted and May Not Proceed

Genesis Healthcare Corp. v. Symczyk

What effect, if any, does an unaccepted “full relief” offer of judgment have on the ability of a named plaintiff to continue with his or her putative collective action claims under the FLSA? This was the question FLSA practitioners had eagerly awaited the answer of from the Supreme Court, ever since the Court accepted certiorti of the Symczyk v. Genesis Healthcare Corp. However, in a decision of almost no real world value, the Court elected to dodge this question and instead answer its own hypothetical question/issue, so limited in scope, that Justice Kagan (in her dissent) points out, it has absolutely no value in practical application. For this reason, at least one practitioner surveyed regarding the opinion stated, “I don’t care about this decision at all.  Really pretty meaningless.”  In order to understand why such a seemingly important opinion actually means so little we must examine exactly what the Court decided and on what facts it made its decision.

As stated by the Court, its actual holding was that:

a collective action brought by single employee on behalf of herself and all similarly situated employees for employer’s alleged violation of the Fair Labor Standards Act (FLSA) was no longer justiciable when, as conceded by plaintiff-employee, her individual claim became moot as result of offer of judgment by employer in amount sufficient to make her whole.

Describing the relevant facts the Court explained:

In 2009, respondent, who was formerly employed by petitioners as a registered nurse at Pennypack Center in Philadelphia, Pennsylvania, filed a complaint on behalf of herself and “all other persons similarly situated.” App. 115–116. Respondent alleged that petitioners violated the FLSA by automatically deducting 30 minutes of time worked per shift for meal breaks for certain employees, even when the employees performed compensable work during those breaks. Respondent, who remained the sole plaintiff throughout these proceedings, sought statutory damages for the alleged violations.

When petitioners answered the complaint, they simultaneously served upon respondent an offer of judgment under Federal Rule of Civil Procedure 68. The offer included $7,500 for alleged unpaid wages, in addition to “such reasonable attorneys’ fees, costs, and expenses … as the Court may determine.” Id., at 77. Petitioners stipulated that if respondent did not accept the offer within 10 days after service, the offer would be deemed withdrawn.

After respondent failed to respond in the allotted time period, petitioners filed a motion to dismiss for lack of subject-matter jurisdiction. Petitioners argued that because they offered respondent complete relief on her individual damages claim, she no longer possessed a personal stake in the outcome of the suit, rendering the action moot. Respondent objected, arguing that petitioners were inappropriately attempting to “pick off” the named plaintiff before the collective-action process could unfold. Id., at 91.

The District Court found that it was undisputed that no other individuals had joined respondent’s suit and that the Rule 68 offer of judgment fully satisfied her individual claim. It concluded that petitioners’ Rule 68 offer of judgment mooted respondent’s suit, which it dismissed for lack of subject-matter jurisdiction.

Although discussed in detail by Justice Kagan in her dissent, the Court’s majority opinion, penned by Justice Thomas ignored the fact that the plaintiff actually received no money, no judgment and no settlement as a result of the unaccepted offer of judgment. Nonetheless, the Court reasoned, because the plaintiff had ostensibly stipulated at the district court that her claim was mooted by the unaccepted offer of judgment, and she had failed to cross-appeal to the Supreme Court (a decision which was entirely in her favor), the Court refused to entertain the plaintiff’s argument that the unaccepted OJ could not have mooted the case in the first place. Instead, charging ahead, under the false pretense that the unaccepted OJ had in fact mooted the plaintiff’s individual claim, the Court went on to hold that under such (imagined) circumstances, a defendant could “pick off” an FLSA collective action, where the plaintiff has not sought conditional certification of a collective action at the time he or she receives an offer of judgment that he or she acknowledges moots his or her individual claim.

While the Court’s majority went to great length to distinguish the collective action mechanism of 216(b) from the Rule 23 class action mechanism on which the reasoning of Circuit Courts have relied in reaching the opposite conclusion, the Court failed to acknowledge it was deciding an issue that was really not even before it, and in practicality unlikely to ever appear before any court ever again.

In a stinging must-read dissent Justice Kagan pointed this out and ridiculed the conservative majority for essentially wasting everyone’s time with a meaningless opinion. The Court ultimately failed to answer the real issue of interest- what effect does an unaccepted “full relief” offer of judgment have on the ability of a named-plaintiff to pursue a collective action.  As Justice Kagan noted, the text of Rule 68 dictates it should have no effect at all.  Pointing out that the plaintiff had actually received no recovery in the case, because the offer of judgment at issue was not accepted, Kagan went reasoned, the majority’s opinion had virtually no application outside of the contrived facts on which it was based. Kagan began:

The Court today resolves an imaginary question, based on a mistake the courts below made about this case and others like it. The issue here, the majority tells us, is whether a ” ‘ collective action’ ” brought under the Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. § 201 et seq., “is justiciable when the lone plaintiff’s individual claim becomes moot.” Ante, at ––––. Embedded within that question is a crucial premise: that the individual claim has become moot, as the lower courts held and the majority assumes without deciding. But what if that premise is bogus? What if the plaintiff’s individual claim here never became moot? And what if, in addition, no similar claim for damages will ever become moot? In that event, the majority’s decision—founded as it is on an unfounded assumption—would have no real-world meaning or application. The decision would turn out to be the most one-off of one-offs, explaining only what (the majority thinks) should happen to a proposed collective FLSA action when something that in fact never happens to an individual FLSA claim is errantly thought to have done so. That is the case here, for reasons I’ll describe. Feel free to relegate the majority’s decision to the furthest reaches of your mind: The situation it addresses should never again arise.

Although this was a case watched most by FLSA practitioners for obvious reasons, it is a case which further highlights the absurd pro-big business mentality employed by today’s conservative majority on the court. In fact, as an aside Kagan took another parting shot at the similarly limited opinion just issued by the court in the Comcast case. (In footnote 2 to her dissent, she notes, “[f]or similarly questionable deployment of this Court’s adjudicatory authority, see Comcast Corp. v. Behrend, 569 U.S. ––––, ––––, 133 S.Ct. 1426, 1437, ––– L.Ed.2d –––– (2013) (joint opinion of GINSBURG and BREYER, JJ.) (observing in dissent that “[t]he Court’s ruling is good for this day and case only”).”).

In sum, this decision will leave practitioners scratching their heads. It is unclear what, if any, actual effect it will have on future cases. For this reason, one has to wonder- why did the Court take up the case in the first place.  It would seem that absent a stipulation by a plaintiff that his or her case is mooted by a Rule 68 offer of judgment (which in fact is an impossibility) or an acceptance of such an offer of judgment, a defendant still may not moot a putative collective action with an offer of judgment.

Click Genesis Healthcare Corp. v. Symczyk to read the Court’s entire opinion and Justice Kagan’s dissent.

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D.N.J.: District Court Denies Motion to Vacate Clause Construction Permitting Arb to Proceed on Class Basis, Where Contract Was Silent as to Class Issues; U.S.S.C. to Take Up Issue

Opalinski v. Robert Half Intern., Inc.

Another court, this one within the Third Circuit (which had previously ruled on the issue), has held that an arbitrator does not exceed his or her authority when the arbitrator permits FLSA claims to proceed on a class-wide basis, in the face of an arbitration agreement that the parties stipulate is “silent” as to class issues. Determining that same was permissible under Stolt-Nielsen and under principles of New Jersey contract law, the court explained:

At issue here is whether the Award should be vacated because the Arbitrator exceeded her powers by finding that the Agreements allow for class arbitration. Defendants contend that the Arbitrator’s finding was erroneous and violates Supreme Court precedent. See Stolt–Nielsen v. AnimalFeeds Int’l Corp., –––U.S. ––––, 130 S.Ct. 1758, 176 L.Ed.2d 605 (2010) (finding that arbitration panel exceeded its powers by imposing its own policy choice instead of interpreting and applying the agreement of the parties, and explaining that a party cannot be compelled to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so). Defendants note that the Agreements did not expressly authorize class arbitration and argue that an agreement to arbitrate does not implicitly authorize class arbitration, nor does the non-existence of an express class action waiver imply that the parties agreed upon class arbitration.

Defendants’ arguments are unpersuasive particularly given the binding precedent of Sutter v. Oxford Health Plans LLC, 675 F.3d 215 (3d Cir.2012), which is directly on point. In light of Stolt–Nielsen, the Third Circuit Court of Appeals in Sutter evaluated an arbitrator’s decision that class arbitration was allowed under a contract that was silent on the issue of class arbitration. The court explained that while “Stolt–Nielsen does prohibit an arbitrator from inferring parties’ consent to class arbitration solely from their failure to preclude that procedure,” it did not establish a rule that class arbitration is only allowed where an arbitration agreement expressly provides for class arbitration procedures. Sutter, 675 F.3d at 222, 224 . Instead, an arbitrator can interpret an arbitration clause to allow for class arbitration, even if the clause does not expressly provide for it, if the arbitrator articulates a contractual basis for that interpretation. Id. at 224. The arbitrator in Sutter examined the parties’ intent and used contract interpretation principles to reach his conclusion. He described the text of the arbitration clause—which provided that “no civil action concerning any dispute arising under this [a]greement shall be instituted before any court”—as broad and embracing all conceivable court actions including class actions. He further explained that an express carve-out for class arbitration would be required to negate this reading of the clause. Id. at 218. When reviewing the award, the court explained that the arbitrator had the authority to find for class arbitration because such a finding had a contractual basis. Id. at 223–24.

In light of binding Third Circuit authority and basic principles of New Jersey law regarding contract interpretation, the court held that the arbitrator was within her powers to hold that the arbitration of plaintiff’s claims could proceed on a class-wide basis, in the absence of an explicit class-waiver in the arbitration agreement.

Click Opalinski v. Robert Half Intern., Inc. to read the entire Opinion & Order.

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Significantly, within days of the Opalinkski decision, the Supreme Court agreed to take up this very issue. To that end, the Supreme Court accepted cert of the Sutter case, on which the Opalinski relied. The question certified by the Supreme Court is:

Whether an arbitrator acts within his powers under the Federal Arbitration Act (as the Second and Third Circuits have held) or exceeds those powers (as the Fifth Circuit has held) by determining that parties affirmatively “agreed to authorize class arbitration,” Stolt-Nielsen, 130 S. Ct. at 1776, based solely on their use of broad contractual language precluding litigation and requiring arbitration of any dispute arising under their contract.

Click Oxford Health Plans LLC v. Sutter to read more about the Supreme Court’s decision to accept cert.

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U.S.S.C. Grants Cert to Decide Whether a Defendant-Employer Can Moot a Putative Collective Action By “Picking Off” the Named Plaintiff

Genesis HealthCare Corp. v. Symczyk

As reported by law360 and the ScotusBlog, today the Supreme Court announced that it had granted Certiori to a Defendant-employer who sought to moot a putative collective action by offering “full relief” to the named-Plaintiff before she could file a motion seeking conditional certification of her claims as a collective action.

Initially, the trial court dismissed the plaintiff’s claims noting that:

 [Plaintiff] does not contend that other individuals have joined her collective action. Thus, this case, like each of the district court cases cited by Defendants, which concluded that a Rule 68 offer of judgment mooted the underlying FLSA collective action, involves a single named plaintiff. In addition, Symczyk does not contest Defendants’ assertion that the 68 offer of judgment fully satisfied her claims….

However, the Third Circuit reversed reasoning, in part:

When Rule 68 morphs into a tool for the strategic curtailment of representative actions, it facilitates an outcome antithetical to the purposes behind § 216(b). Symczyk’s claim-like that of the plaintiff in Weiss—was “acutely susceptible to mootness” while the action was in its early stages and the court had yet to determine whether to facilitate notice to prospective plaintiffs. See Weiss, 385 F.3d at 347 (internal quotation marks omitted). When the certification process has yet to unfold, application of the relation back doctrine prevents defendants from using Rule 68 to “undercut the viability” of either’ type of representative action. See id. at 344.

In sum, we believe the relation back doctrine helps ensure the use of Rule 68 does not prevent a collective action from playing out according to the directives of § 216(b) and the procedures authorized by the Supreme Court in Hoffmann–La Roche and further refined by courts applying this statute. Depriving the parties and the court of a reasonable opportunity to deliberate on the merits of collective action “conditional certification” frustrates the objectives served by § 216(b). Cf. Sandoz, 553 F.3d at 921 (explaining “there must be some time for a[n FLSA] plaintiff to move to certify a collective action before a defendant can moot the claim through an offer of judgment”). Absent undue delay, when an FLSA plaintiff moves for “certification” of a collective action, the appropriate course—particularly when a defendant makes a Rule 68 offer to the plaintiff that would have the possible effect of mooting the claim for collective relief asserted under § 216(b)—is for the district court to relate the motion back to the filing of the initial complaint.

Now the Supreme Court will apparently be weighing in on the issue.  

Of note, the plaintiff was a single plaintiff and had not sought conditional certification of a collective action at the time the defendant sought to moot the claim.  We will see how much, if at all, these facts play into the Court’s decision to come. 

Click ScotusBlog to read the briefs and Overtime Law Blog, to read our initial post regarding the 3rd Circuit’s Opinion.

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U.S.S.C.: Pharma Reps Outside Sales Exempt

In an anxiously awaited decision the Supreme Court handed down a 5-4 decision today holding that Pharmacy Reps are not entitled to overtime.  Affirming the Ninth Circuit’s decision holding pharma reps to be outside sales exempt the conservative majority’s decision was delivered by Justice Alito.

Click Christopher v. Smithkline Beecham Corp. to read the entire decision.

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Direct Care Job Quality Improvement Act Would Amend the FLSA to Include Basic Labor Protections for Home Care Workers

The Direct Care Job Quality Improvement Act [S. 1273/H.R. 2341] – a bill that would help create a more stable, valued direct care workforce was introduced on 6/23/2011, by Rep. Linda Sanchez (D-CA) and Sen. Robert P. Casey, Jr. (D-PA). Senator Tom Harkin (D-IA), Chairman of the Senate Health, Education, Labor and Pensions committee and Sen. Bernie Sanders (I-VT) were also original co-sponsors of the Senate bill. The House bill had twenty-one original co-sponsors. This legislation takes major steps towards ensuring the health, autonomy and well-being of more than 13 million Americans with long-term care needs today and an estimated 27 million by 2050.

The Direct Care Job Quality Improvement Act would amend the Fair Labor Standards Act (FLSA) to include basic labor protections for home care workers. Currently, FLSA covers domestic service workers and most direct care workers in institutional settings such as nursing homes; however, the law continues to exclude home care workers from basic minimum wage and overtime protections.

In addition to extending wage and overtime protections for home care workers, The Direct Care Job Quality Improvement Act would:

  • Establish data collection and reporting requirements to monitor important workforce indicators such as size, compensation levels, turnover rates and vacancies.
  • Improve the recruitment and retention of direct care workers by providing grants to states to expand and support efforts aimed at recruiting, training and retaining an adequate supply of direct care workers.
Under current regulations, most home health care workers who perform companionship services in or about the private home of the person by whom he/she is employed are exempt from the FLSA’s minimum wage and overtime requirements.  The current regulation has previously been upheld by the United States Supreme Court in the case of Long Island Care at Home, LTD. v. Coke.

To read more about the proposed legislation click here.

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U.S.S.C.: State Law Regarding Unconscionability of Class Waivers in Arbitration Agreements Preempted by the Federal Arbitration Act (FAA)

AT&T Mobility LLC v. Concepcion

There has long been talk of the pr0-business conservative majority that currently comprises the United State’s Supreme Court.  However, many pundits have commented that while the Court has ruled as might be expected, largely based on their political leanings, on social issues, there has been wide agreement that other cases have not necessarily gone as some might have expected.  Last term with its decision that corporations could contribute unlimited amounts of money to political campaigns (while individuals were subject to the caps put in place by campaign finance laws), it appeared that the Court was getting more comfortable in trading in a lot of the basic individual freedoms that have always been a foundation for the United States, in exchange for satiating the demands of big business who are forever seeking to tilt the playing field in its favor.  Wednesday the Court handed down perhaps its biggest blow to average Americans ever, when it reversed the Ninth Circuit’s opinion in Concepcion v. AT&T Mobility, a decision that had sought to balance individual consumer rights, against those of a behemoth corporation.

As the Court stated in its Syllabus opinion, “[t]he cellular telephone contract between respondents (Concepcions) and petitioner (AT&T) provided for arbitration of all disputes, but did not permit classwide arbitration. After the Concepcions were charged sales tax on the retail value of phones provided free under their service contract, they sued AT&T in a California Federal District Court.Their suit was consolidated with a class action alleging, inter alia, that AT&T had engaged in false advertising and fraud by chargingsales tax on “free” phones. The District Court denied AT&T’s motion to compel arbitration under the Concepcions’ contract. Relying onthe California Supreme Court’s Discover Bank decision, it found the arbitration provision unconscionable because it disallowed classwide proceedings. The Ninth Circuit agreed that the provision was unconscionable under California law and held that the Federal Arbitration Act (FAA), which makes arbitration agreements “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract,” 9 U. S. C. §2, did not preempt its ruling.”

However, the Supreme’s disagreed.  Instead they held that “[b]ecause it ‘stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,’ Hines v. Davidowitz, 312 U. S. 52, 67, California’s Discover Bank rule is preempted by the FAA. Pp. 4–18.”

Of course big business cheered the opinion as a necessary step towards giving parties the rights they had contracted for.  In reality however, the Ninth Circuit’s decision was much more in line with the realities of today’s business environment.  As anyone who has a cell phone can attest, the contracts we all enter into with a cell phone provider are anything but a fairly negotiated one.  In order to get your phone and/or start your service, you must sign away any rights you would normally have, in a take it or leave it contract.

Although aimed at eliminating consumer class actions, those in which the size of the claims is typically a few dollars to a few thousand dollars at most, the effects of the decision will be felt throughout all types of litigation, including employment and wage and hour litigation, where individual claims are often small by themselves, by collectively worthwhile for an attorney to pursue, in order to vindicate the rights of an entire class.  Given what could be a death nell for class and collective litigation for employees, pro-consumer legislators have been shaken to action.

As noted by blog thePopTort, Senator Al Franken, who actually has a great track record persuading Congress to outlaw unfair arbitration agreements, is taking the lead on this one.  Responding to yesterday’s decision, “U.S. Sens. Al Franken (D-Minn.) and Richard Blumenthal (D-Conn.) and Rep. Hank Johnson (D-Ga.) said today they plan to introduce legislation next week that would restore consumers’ rights to seek justice in the courts. Their bill, called the Arbitration Fairness Act, would eliminate forced arbitration clauses in employment, consumer, and civil rights cases, and would allow consumers and workers to choose arbitration after a dispute occurred.”

Consumer and employee groups have been quick to respond as well, calling for legislation, that has been raised but stalled in prior legislative sessions in Washington, D.C.  For example the National Employment Lawyers Association (NELA), who had filed an Amicus Brief in support of the Concepcions, released this press release calling for immediate action by Congress to rectify the situation.  It remains to be seen how this will all end in both the short and long terms, but for now the decision is unquestionably a boon for big business, who has essentially been given the green light to ignore laws big and small to the detriment of average Americans, with the knowledge that there will be little or no repercussions for same.

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U.S.S.C.: Oral Complaints Are Sufficient to Trigger the Anti-Retaliation Provisions of the Fair Labor Standards Act

Kasten v. Saint-Gobain Performance Plastics Corp.

Kasten brought an anti-retaliation suit against his former employer, respondent (Saint-Gobain), under the Fair Labor Standards Act of 1938 (Act), which forbids employers “to discharge . . . any employee because such employee has filed any complaint” alleging a violation of the Act, 29 U. S. C. §215(a)(3). In a related suit, the District Court found that Saint-Gobain violated the Act by placing timeclocks in a location that prevented workers from receiving credit for the time they spent donning and doffing work related protective gear. In this case Kasten claimed that he was discharged because he orally complained to company officials about the timeclocks. Holding that such oral complaints were not protected activity, the trial court granted the respondent summary judgment. Subsequently, the Seventh Circuit affirmed. Reversing, the Supreme Court held that the scope of statutory term “filed any complaint” includes oral, as well as written, complaints.

Click Kasten v. Saint-Gobain Performance Plastics Corp. to read the entire decision.

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U.S.S.C.: Court Denies Certiorari to Novartis and Schering on Appeals of Decisions Finding Pharma Reps Non-Exempt Under the FLSA

Novartis Pharmaceuticals Corp. v. Lopes, Simona M. and Schering Corporation v. Kuzinski, Eugene, et al.

In a case with far sweeping ramifications for the pharmaceutical industry and its employees, following the Second Circuit’s decision that found pharmaceutical representatives (pharma reps) to be non-exempt and therefore, entitled to overtime, the Supreme Court has denied Plaintiff’s Petition for Cert, and therefore the issue remains largely unresolved.  In a decision discussed here, the Second Circuit had previously held that the pharma reps were non-exempt, notwithstanding the pharmaceutical companies’ arguments that they were outside sales and/or administrative exempt.  However, the Third Circuit, on facts it acknowledged were limited to the case before it, recently reached the opposite conclusion, holding Johnson & Johnson pharma reps to be exempt under the administrative exemption.  Most recently, the Ninth Circuit held that, notwithstanding the fact that pharma reps cannot and do not consummate sales, their promotional activities are close enough to render them exempt under the outside sales exemption.

The Department of Labor had submitted an Amicus Brief in support of the employees in both the Second and Ninth Circuit cases.  While the Second Circuit relied on the DOL’s Brief in large part, reaching its conclusion that the pharma reps are non-exempt, the Ninth Circuit rejected the arguments in the Brief.

It will be interesting to see if the large pharmaceutical companies, most of whom are in the midst of FLSA collective actions and/or state wage and hour class actions, will reclassify their pharma reps based on the Novartis decision.  The stakes are huge, and the risk- if they chose not to- could be an imposition of liquidated damages, in addition to unpaid wage awards in any case(s) the employees win.

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USSC: Plaintiff’s Petition for Certiorari Denied Regarding Calculation of Damages for “Salaried Misclassified” Workers

Urnikis-Negro v. American Family Property

In a case where the United States Supreme Court could have decided the oft-raised issue of how to calculate an employee’s damages, following a finding that they were “salaried misclassified,” the Supreme Court has denied Plaintiff’s Petition for Cert, and therefore the issue remains largely unresolved.  In a decision discussed here, the Seventh Circuit held that the proper calculation of damages in such a situation was the the “fluctuating workweek” methodology, rather than time and a half.  The Fourth Circuit held that only “half-time” damages are due when an employee is salaried misclassified recently too.  This decision was widely watched by Wage and Hour practitioners, because of the impact the calculation issue has on damages for such employees who are misclassified.   Under the fluctuating workweek calculation, an employee who was salaried and misclassified receives less than one third the damages he or she would receive if the award were made at time and a half.

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