11th Cir.: Despite Variable Premium/Bonuses That Fluctuated With Quantity/Quality of Work Performed, Bookkeeper/Accountants Were Paid on “Salary Basis”
Bell v. Callaway Partners, LLC
Plaintiffs were bookkeepers/accountants classified by Defendant as exempt from the Fair Labor Standards Act’s (FLSA) overtime pay requirement. This appeal concerned solely the issue of whether Plaintiff- who was paid a combination of a guaranteed weekly salary plus a variable bonus (at a straight-time rate rather than time and a half)- was paid on a “salary basis” for the purposes of satisfying the so-called “white collar” exemptions of the FLSA. The Court ruled that she was and affirmed the ruling of the lower court, holding that variations in bonus or extra pay do not affect the underlying analysis of whether the first 40 hours are paid at on a “salary basis.”
Describing the pay structure at issue, the Court stated:
“Plaintiffs’ pay consisted of two distinct components. First, Plaintiffs received a guaranteed weekly salary of $1600 or more that did not depend on the quality or quantity of the work performed. This weekly salary was reduced by one-fifth of the weekly salary for every full day a Plaintiff took off from work for personal reasons during the normal workweek without substituting Paid Time Off (“PTO”). But, a Plaintiff could work fewer than eight hours during any given workday without any reduction in his or her weekly salary. Second, Plaintiffs were eligible to receive additional incentive compensation (a “bonus”) paid at a straight-time hourly rate based on the cumulative number of billable hours that Plaintiffs worked. Any bonus to be awarded was determined based on how many additional hours over forty a Plaintiff worked in a given week minus any “deficit” hours a Plaintiff had accumulated in past weeks. For example, if a Plaintiff worked seven and not eight hours on each regularly-scheduled workday in a given week, thus totaling 35 hours of work, he or she still earned the full predetermined weekly salary, but would not earn a bonus in a subsequent week until he or she made up the bonus-hour deficit of five hours and then worked more than 40 hours in a given week.”
Holding that this compensation methodology complied with the “salary basis” test, the Court reasoned:
“An employee is considered “paid on a salary basis” if “he regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of his compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed.” 29 C .F.R. § 541.602. Plaintiffs argue that they were not paid on a salary basis because the amount of their bonuses fluctuated based on the cumulative number of hours worked. But, as we have previously determined, “as long as there is a non-deductible minimum, additional compensation on top of the non-deductible salary is permissible.” Hogan v. Allstate Ins. Co., 361 F.3d 621, 625 (11th Cir.2004) (citation omitted). And, while additional compensation is permissible, the regulations do not require additional compensation, nor do they prescribe a set method for setting up a bonus system. 29 C.F.R. § 541.604(a) (“An employer may provide an exempt employee with additional compensation without losing the exemption or violating the salary basis requirement, if the employment arrangement also includes a guarantee of at least the minimum weekly-required amount paid on a salary basis…. Such additional compensation may be paid on any basis ….”).
After a review of the record, we agree with the district court’s well-reasoned analysis concluding that Callaway’s bonus system conformed to the requirements of the salary basis test. (R.374 at 13-24.) While Callaway’s incentive program may have been designed in a way that encouraged overtime work, as Plaintiffs argue it was, because it deducted for “deficit” hours, it nevertheless conformed to the requirements of the FLSA. Because there was a non-deductible minimum weekly salary, Callaway was free to structure any bonus program as it saw fit.
Plaintiffs also argue that Callaway violated the salary basis test when it deducted a full day’s pay for personal days missed during the workweek (Monday through Friday) but did not pay Plaintiffs for a “full day” for partial days worked on Saturday or Sunday. Again, we agree with the district court’s analysis concluding that such deductions were allowable under the provisions of 29 C.F.R. § 541.602(b)(1). (R.374 at 25-34.) Therefore, we hold that the district court did not err in finding Callaway’s pay policies to be in compliance with the FLSA.”
S.D.N.Y.: NYLL Unpaid Gratuities and FLSA Overtime Claims Not Precluded By LMRA or CBA; No Interpretation of CBA Required To Determine Whether Defendant Violated Law
Alderman v. 21 Club Inc.
Plaintiffs, unionized waitstaff who worked Defendant’s private banquets filed suit seeking the recover of unpaid tips, pursuant to the New York Labor Law, and unpaid overtime, pursuant to the FLSA. Plaintiffs specifically sought the portion of service charges charged by Defendant, but not paid to Plaintiffs as “tips” as required by New York law. The Defendant moved to dismiss, asserting that Plaintiffs’ claims for unpaid tips were precluded by the LMRA (the CBA stated that banquet waitstaff would receive the equivalent of 18% of the gross price of any banquet they worked). The Court denied Defendant’s Motion, because the claims were pendant not on the CBA, but on the NYLL.
The Court explained:
“As described earlier, plaintiffs’ first claim is under NYLL § 196-d for unpaid gratuities to plaintiffs who worked banquet events at the ’21’ Club. Defendants contend that this claim in reality is one under Section 301 of the LMRA, 29 U.S.C. § 185, which preempts the application of state labor law. Section 301 of the LMRA provides:
Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce … may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties.
The Supreme Court has interpreted Section 301 “as a congressional mandate to the federal courts to fashion a body of federal common law to be used to address disputes arising out of labor contracts.” Allis-Chalmers Group v. Lueck, 471 U.S. 202, 209 (1985). When a state law claim alleges a violation of a labor contract or when the resolution of a state law claim depends on an interpretation of a collective bargaining agreement, Section 301 preempts that claim. See Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246, 261 (1994). But if a state “prescribes rules or establishes rights and obligations that are independent of a labor contract, actions to enforce such independent rights or rules would not be preempted by section 301.” Vera v. Saks & Co., 335 F.3d 109, 115 (2d Cir.2003). Indeed, the “bare fact that a collective-bargaining agreement will be consulted in the course of state-law litigation plainly does not require the claim to be extinguished.” Livadas v.. Bradshaw, 512 U.S. 107, 124 (1994). In order to determine whether a state law claim is preempted because it requires interpretation of a collective bargaining agreement, the court must analyze whether the “legal character” of the state law claim is truly independent of the rights conferred under the collective bargaining agreement. Salamea v. Macy’s East, Inc., 426 F.Supp.2d 149, 153-54 (S.D.N .Y.2006).
In the present case, plaintiffs bring their gratuities claim under NYLL § 196-d and not under the CBA. Both § 196-d and the CBA give employees rights in respect to gratuities, although they are worded differently in ways that have significance in this case. Specifically, the CBA guarantees gratuities in the amount of 18% of the total bill for the function. Section 196-d guarantees to the employees whatever has been charged to provide gratuities, without reference to a specific percentage. It is necessary, therefore, for the court to define exactly what plaintiffs’ claim is and then to determine whether it fits under § 196-d or under the CBA or both.
The relevant portions of the complaint are paragraphs 21 and 22 in the factual allegations and paragraphs 33 and 34 stating the claim:
21. For private events, Defendants charged gratuities to the hosts of the events equal to a percentage of the cost of the events.
22. While Defendants distributed a potion of these gratuities to the service staff that worked these parties, Defendants did not distribute all of the gratuities. Thus, Defendants illegally retained substantial portions of the gratuities paid by private event hosts, instead of distributing them in their entirety to service staff.
33. Defendants received gratuities from customers for all private banquets.
34. Defendants retained portions of Plaintiffs’ tips and Class members’ tips.
On their face, the allegations of the complaint do not refer to 18%. However, they are not precise in excluding the possibility that in fact plaintiffs are seeking the 18% referred to in the CBA. But the court believes that the December 29, 2008 letter of union president Bill Granfield is relevant in construing the nature of the gratuities claim. This letter makes a demand that the ’21’ Club pay to employees “the difference between your service charge rate and the 18% gratuity rate contained in the contract.” The reference to “the contract” presumably means the CBA. Thus, in late 2008, the Union was claiming that the service charges were greater than the 18% referred to in the CBA and was demanding that the entire amount be paid to the employees.
The court concludes that the complaint should be taken on its own terms and cannot properly be construed as actually referring only to the 18%.
The complaint asserts that it is made under NYLL § 196-d. That statute provides:
No employer or his agent or an officer or agent of any corporation, or any other person shall demand or accept, directly or indirectly, any part of the gratuities, received by an employee, or retain any part of a gratuity or of any charge purported to be a gratuity for an employee. This provision shall not apply to the checking of hats, coats or other apparel. Nothing in this subdivision shall be construed as affecting the allowances from the minimum wage for gratuities in the amount determined in accordance with the provisions of article nineteen of this chapter nor as affecting practices in connection with banquets and other special functions where a fixed percentage of the patron’s bill is added for gratuities which are distributed to employees, nor to the sharing of tips by a waiter with a busboy or similar employee.
The first sentence of the statute prevents an employer from taking the gratuities received by an employee. The relevant part of the last sentence states that nothing in the statute affects the practice in connection with functions where a fixed percentage is added to the patron’s bill for gratuities which are distributed to employees. The statute is somewhat confusing because the assurance of the employee’s rights in the first sentence is followed by the latter portion of the last sentence which states that the statute is not applicable to functions where an amount is added to the patron’s bill for gratuities.
Plaintiffs cite authorities that they contend give them rights under the statute. It is not the province of the court on the present motion to resolve questions which may arise as to the exact construction of the statute. It is sufficient to say that, as far as state law is concerned, plaintiffs would surely be entitled to attempt to recover under the statute. What defenses there may be under state law, and how the issues are resolved, remains to be seen. One thing is clear under § 196-d, and that is that there is no reference to 18% or any limit of 18%.
On the question of whether plaintiffs’ gratuities claim should be construed as in reality coming under the CBA so that federal law applies, the language of the CBA was quoted earlier in this opinion. The CBA only guarantees 18%. Consequently, a claim for more than 18% is not properly one under the CBA. It is properly made under § 196-d.
The result is, and the court so holds, that the gratuities claim is not preempted by federal law.
The court notes the contention that the history of the Union submissions by way of grievances constitutes an admission that the gratuities claim in the present case properly falls within the ambit of the CBA. The court rejects this argument. The employees did not give up their right to assert a gratuities claim under § 196-d in the present action.”
The Court also ruled that Plaintiffs were not required to submit their claims to arbitration, based on the language in the CBA.
To read the entire opinion, click here.
Daprizio v. Harrah’s Las Vegas, Inc.
This case was before the Court on Defendant’s Motion to Dismiss Plaintiffs’ state law claims on several grounds. As discussed here, the Court ruled that the FLSA precludes Nevada State Law Class Action claims.
“The Court finds that the FLSA precludes the state law class action. The conflict between the two mass action schemes involves the mechanisms by which parties become members of a suit. Defendant argues that “allowing the parallel claims to be pursued concurrently would allow the application of the collective action opt-out mechanism of Rule 23, invoked by the state law claims, to govern what Congress intended to be a more limited situation of opt-in collective action [under the FLSA].” (Mot. Dismiss 13, ECF No. 2). The Court agrees. The FLSA states that, “No employee shall be a party plaintiff to any such action unless he gives consent in writing to become such a party and such consent is filed in the court in which such action is brought.” 29 U.S.C. § 216(b). This is the “opt-in” provision used for FLSA collective actions, under which a putative class member is not bound unless he or she affirmatively opts in to the suit. Gardenvariety class actions, however, are governed by Rule 23, which states that “the court will exclude from the class any member who requests exclusion.” Fed.R.Civ.P. 23(c)(2)(B)(v). This is the “opt-out” provision, under which members of a certified class must affirmatively opt out of the class or be bound by the class action litigation. This divergence between the respective opt-in and opt-out procedures of a FLSA collective action and a garden-variety class action results in a class action under state labor laws being preempted by the FLSA’s collective action scheme.
The Ninth Circuit has based its preemption analysis on the Supreme Court’s three categories: (1) express preemption-“where Congress explicitly defines the extent to which its enactments preempt state law”; (2) field preemption-“where state law attempts to regulate conduct in a field that Congress intended the federal law exclusively to occupy”; and (3) conflict preemption-“where it is impossible to comply with both state and federal requirements, or where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Williamson v. Gen. Dynamics Corp., 208 F.3d 1144, 1149 (9th Cir.2000) (citing Indus. Truck Ass’n, Inc. v. Henry, 125 F.3d 1305, 1309 (9th Cir.1997) (citing English v. Gen. Elec. Co., 496 U.S. 72, 78-80 (1990))). “Consideration of the issues arising under the Supremacy Clause ‘start[s] with the assumption that the historical police powers of the states [are] not to be superseded by … Federal Act unless that [is] the clear and manifest purpose of Congress.’ “ Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516 (1992) (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947)). “Preemption issues must be decided on a case-by-case basis.” Williamson, 208 F.3d at 1155.
A court of this District has ruled that the FLSA precludes state-law labor class actions. In Williams v. Trendwest Resorts, Inc., the court found that “the class action mechanisms of the FLSA and Rule 23 are incompatible. It would be inappropriate to permit Plaintiff’s attempt to circumvent the restrictive opt-in requirement of the FLSA….” No. 2:05-CV-0605-RCJ-LRL, 2007 WL 2429149 at *4 (D.Nev. Aug. 20, 2007) (Jones, J.). In Trendwest Resorts, the defendant’s employees were attempting to recover overtime wages under the FLSA as well as under California state labor law. The court pointed out that notice was sent to 1578 employees of Trendwest Resorts in California and Nevada, but only 194 individuals had opted into the putative class. Id. Had Rule 23 been implemented, the other 1100 California employees who failed to affirmatively opt in would have been brought into the case. Id . In the present case, there is only one complaining party and an unknown number of potential class members. “[T]he policy behind requiring FLSA plaintiffs to opt in to the class would largely be thwarted if a plaintiff were permitted to back door the shoehorning in of unnamed parties through the vehicle of calling upon similar state statutes that lack such an opt-in requirement.” Leuthold v.. Destination Am., Inc., 224 F.R.D. 462, 470 (N.D.Cal.2004) (citation and internal quotation marks omitted).
Plaintiff argues that no preemption issue exists since none of the three types of preemption apply. Express and field preemption are not in dispute since neither side alleges that the federal law expressly preempts state law or that labor disputes are strictly a federal issue. Conflict preemption, Plaintiff argues, also does not apply because the “Nevada overtime and minimum wage claims do not ‘stand as an obstacle’ to Congress’ purpose in enacting the FLSA.” (Resp. Mot. Dismiss 9:11-12, ECF No. 14). In support of this argument, Plaintiff points to the “savings clause” of the FLSA which allows states to enact wage and hour laws more favorable to workers than the minimum requirements of the FLSA and quotes Williamson, which states that, “the FLSA’s ‘savings clause’ is evidence that Congress did not intend to preempt the entire field.” 208 F.3d at 1151 (citing 29 U.S.C. § 218(a)). This argument is unpersuasive for two reasons. First, the savings clause of the FLSA that Plaintiff mentions deals expressly with minimum wages and child labor laws. The language leaves little room for broader inference and probably no room for broader application. Second, the quote from Williamson Plaintiff mentions explicitly refers to field preemption, a type of preemption Plaintiff explicitly disclaims. The savings clause simply means that plaintiffs may bring FLSA collective actions based on violations of state wage and hour laws that are stricter than federal requirements. But the fact that Congress permits suit based on a state’s wage and hour requirements that are stricter than those in the FLSA does nothing to ameliorate the conflict between the FLSA opt-in provision and the Rule 23 opt-out provision.
Because of the tension between the opt-in procedure of an FLSA collective action and the opt-out procedure of a garden-variety Rule 23 class action, a conflict exists. See, e.g., Rose v. Wildflower Bread Co., No. CV09-1348-PHX-JAT, 2010 WL 1781011, at *3 (D.Ariz. May 4, 2010). The Ninth Circuit has stated even more broadly in dicta that “[c]laims that are directly covered by the FLSA (such as overtime and retaliation disputes) must be brought under the FLSA.” Williamson, 208 F.3d at 1154. This could be read as preempting even Plaintiff’s individual claim, but that question is not before the Court.”
There continues to be a rift between various circuits (and even within circuits) as to whether so-called hybrid FLSA Collective Actions may co-exist with State Law Class claims. Stay tuned to see whether the Supreme Court will ultimately weigh in.
To read the entire decision, click here.
D.Kan.: “A & P Mechanic” Was Non-Exempt; Learned Professional Exemption Was Inapplicable, Because Plaintiff’s Work Was Routine Mechanical Work
Dressler v. Kansas Copters and Wings, Inc.
This decision was rendered following a bench trial. Plaintiff an “A&P Mechanic” sought unpaid overtime pursuant to the Fair Labor Standards Act (“FLSA”). The Defendant asserted that Plaintiff was exempt from overtime under the professional exemption. Rejecting Defendant’s assertions, the Court ruled that Plaintiff was not professionally exempt, because his job duties did not meet any of the duties requirements for the application for such exemption.
Reciting its findings of fact, the Court stated:
“Plaintiff David Dressler is a certified A & P mechanic. After graduating from high school, plaintiff joined the United States Marine Corps. For five years, plaintiff worked as an aviation hydraulics mechanic in the Marines. Plaintiff then worked several years as a dental assistant. In January 2005, plaintiff enrolled in the Aviation Institute of Maintenance. Plaintiff obtained his A & P certification in August 2006. Plaintiff was then employed by Midwest Corporate Aviation and Wells Aircraft. On March 15, 2008, plaintiff applied for a position with Kansas Copters & Wings, Inc.
Kansas Copters is a factory authorized dealer and service center for the Robinson R22 helicopter. The president of the company, defendant Earl Schreiber, decided to offer plaintiff a position because of plaintiff’s experience with helicopters in the military and his education. On March 21, plaintiff signed an employment agreement with Kansas Copters. Plaintiff additionally signed a non-compete agreement in which he agreed to not accept employment for any company that offers the same services as defendants.
The employment agreement states in pertinent part:
Your primary function would be to work as an A & P mechanic. All of our employees are responsible for facility maintenance and janitorial duties…. You may be required to work on your days off and/or holidays from time to time. You will be required to travel and attend courses as needed by the company.
Should you terminate your employment we require a thirty (30) day advance notice. Any notice of less than thirty (30) days and/or employment of less than three years would require for you to reimburse the company(s) any funds spent on your training, attending courses, and any other expenses …
As such, the starting salary for this overtime exempt position considering your qualifications is $600.00 per week … Compensatory time is earned hour for hour for every hour in excess of Sixty (60) hours per work week…. The company(s) reserve the right to withhold compensatory time and/or regular pay, and/or vacation time and/or holiday pay in the amount equal to what the company(s) have paid for aforementioned training and expenses, etc., until you have served at least three (3) years continued employment.
Earl Schreiber drafted the employment agreement after consulting with his attorney. Schreiber determined that an A & P mechanic at his company would be exempt from the overtime provisions in the FLSA due to the specialized training and unique services offered by defendants. In making his determination, Schreiber researched the issue of overtime by reviewing brochures from the federal government and browsing the internet. Schreiber also contacted other businesses which contracted with Robinson aircraft. Schreiber learned that these businesses also paid their mechanics a weekly rate. Schreiber therefore determined that the position of an A & P mechanic would be exempt from overtime.
Plaintiff’s work at Kansas Copters was supervised by Laurence Schreiber, who was also an A & P mechanic. Plaintiff was required to perform routine maintenance on Robinson helicopters. Plaintiff was also required to diagnose issues that arose with Kansas Copters’ customers’ aircraft for non-scheduled maintenance. Plaintiff would adjust flight control surfaces, make repairs and adjustments to the engine, and replace parts. Plaintiff would then certify whether the aircraft was safe for flight. In addressing and diagnosing problems, plaintiff would review the flight history and utilize the manuals that were specific to the aircraft. Plaintiff did not deviate from the manuals. Plaintiff did not modify the flight systems and he was not hired to design modifications to the aircraft.
In addition to making repairs at the airport in Augusta, plaintiff was also expected to service Robinson helicopters at other locations. On one occasion during his employment, plaintiff traveled to Nebraska to make repairs on a Robinson helicopter. Plaintiff was also required to perform maintenance on the facility. Plaintiff would clean the floors, paint the hangar and pull weeds. All employees at Kansas Copters were required to assist in the upkeep of the facility. Plaintiff was required to do this type of work when he was not working on a helicopter.
Plaintiff’s work schedule initially required him to work from 8 a .m. to 5 p.m., Monday through Friday. Plaintiff then attended the Robinson Training Course in California during the week of May 11. After returning from the course, plaintiff was certified to work on Robinson helicopters. Plaintiff then began working on Saturdays for eight hours in addition to his regular forty-hour work week. Plaintiff’s compensation rose to $625 a week due after successful completion of the training course.
Plaintiff’s last day of employment with Kansas Copters was August 20, 2008. Instead of issuing plaintiff his final check in the amount of $625, Kansas Copters withheld plaintiff’s pay for reimbursement for the Robinson course.”
Determining that Plaintiff was not professional exempt, the Court reasoned:
“To qualify for the learned professional exemption, an employee’s primary duty must be the performance of work requiring advanced knowledge in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction. This primary duty test includes three elements:
(1) The employee must perform work requiring advanced knowledge;
(2) The advanced knowledge must be in a field of science or learning; and
(3) The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.
First, in determining whether the initial element is met, the court is guided by the definition set forth in the regulations:
The phrase “work requiring advanced knowledge” means work which is predominantly intellectual in character, and which includes work requiring the consistent exercise of discretion and judgment, as distinguished from performance of routine mental, manual, mechanical or physical work. An employee who performs work requiring advanced knowledge generally uses the advanced knowledge to analyze, interpret or make deductions from varying facts or circumstances. Advanced knowledge cannot be attained at the high school level. 29 C.F.R. § 541.301(b).
The testimony in this case established that plaintiff performed his position as an A & P mechanic in strict compliance with guidelines set forth by the manufacturer. Plaintiff could not deviate from the design of the helicopter or make any modifications without specific input from the manufacturer. Plaintiff’s work was routine and he worked on the same type of aircraft. The court finds that plaintiff’s work was not predominantly intellectual in character. Plaintiff’s work was routine mechanical work and therefore does not qualify for the learned professional exemption.
Even if the court were to find that the first element was met, the final two elements have not been proven. The second element is as follows:
The phrase “field of science or learning” includes the traditional professions of law, medicine, theology, accounting, actuarial computation, engineering, architecture, teaching, various types of physical, chemical and biological sciences, pharmacy and other similar occupations that have a recognized professional status as distinguished from the mechanical arts or skilled trades where in some instances the knowledge is of a fairly advanced type, but is not in a field of science or learning. 29 C.F.R. § 541.301(c).
Clearly, an aircraft mechanic does not fall into the traditional professions listed in the regulation. Defendants cite Paul v. Petroleum Equip. Tools Co., 708 F.2d 168 (5th Cir.1983) to support the position that pilots have been found to qualify for the professional employee exemption. In Paul, the court determined that flying is a field of science or learning because the pilot “must acquire extensive knowledge of aerodynamics, airplane regulations, airplane operations, instrument procedures, aeronautical charts, and weather forecasting.” 708 F.2d at 173. Plaintiff, however, is not a pilot. Plaintiff’s knowledge is not similar to what is required of a pilot. Plaintiff’s learning is of a mechanical nature and that is excluded by the regulation.
The final element has also not been met. The regulations explain the element as follows:
The phrase “customarily acquired by a prolonged course of specialized intellectual instruction” restricts the exemption to professions where specialized academic training is a standard prerequisite for entrance into the profession. The best prima facie evidence that an employee meets this requirement is possession of the appropriate academic degree. However, the word “customarily” means that the exemption is also available to employees in such professions who have substantially the same knowledge level and perform substantially the same work as the degreed employees, but who attained the advanced knowledge through a combination of work experience and intellectual instruction. Thus, for example, the learned professional exemption is available to the occasional lawyer who has not gone to law school, or the occasional chemist who is not the possessor of a degree in chemistry. However, the learned professional exemption is not available for occupations that customarily may be performed with only the general knowledge acquired by an academic degree in any field, with knowledge acquired through an apprenticeship, or with training in the performance of routine mental, manual, mechanical or physical processes. The learned professional exemption also does not apply to occupations in which most employees have acquired their skill by experience rather than by advanced specialized intellectual instruction. 29 C.F.R. § 541.301(d).
While plaintiff clearly gained his education from technical school and Marine Corps experience, advanced education is not required in order to gain FAA certification. Plaintiff’s short course of training with the manufacturer of Robinson helicopters does not amount to a prolonged course of specialized intellectual instruction. Defendants have again cited cases which deal only with pilots. Plaintiff is not a pilot. The language in the regulation contemplates that some individuals may qualify for the exemption without formal education but then cites rare examples of occupations which routinely required advanced education. The examples cited are clearly those professions which are highly intellectual in nature and not mechanical, like that of an A & P mechanic.
The court finds that plaintiff’s position as an A & P mechanic is not exempt under § 213(a)(1) because he does not qualify as a professional.”
To read the entire decision, click here.
Camilotes vs. Resurrection Healthcare
In their motion to compel, Plaintiffs sought information and documents from Defendants relating to Defendants’ participation in the National Database of Nurse Quality Indications (“NDNQI”), a program operated by the American Nurses Association. The NDNQI is a comprehensive database consisting of information compiled from various hospitals. The database includes data compiled from a RN Satisfaction Survey, which includes questions regarding nurses’ meal breaks, shifts and hours. Hospitals participate in the NDNQI in order to improve patient care and nursing practices. The NDNQI provides assurances of anonymity and confidentiality to the nurses who participate in the program.
Declining to shield such discovery under Defendants’ claim of “self-evaluation” privilege, the Court reasoned:
“Defendants contend that the self-evaluation privilege protects the reports and documents sought by Plaintiffs from discovery. “The self-critical analysis privilege is intended to encourage companies to engage in candid and often times critical internal investigations of their own possible wrong doings.” Ludwig v. Pilkington N. Am., Inc., 2004 WL 1898238, 2004 U.S. Dist. LEXIS 16049 (N.D.Ill. Aug. 13, 2004). “Despite the benefits of encouraging such investigations, courts have been somewhat hesitant to embrace the self-critical analysis privilege and have often qualified their uses of the privilege with phrases like ‘assuming that the self-critical analysis privilege exists’ or have noted that other courts have questioned the existence of such a privilege altogether.” Id. at *4. Significantly, the Seventh Circuit has “never recognized” the “self-critical analysis privilege.” Burden-Meeks v. Welch, 319 F.3d 897, 899 (7th Cir.2003); see also Gardner v. Johnson, 2008 WL 3823713, 2008 U.S. Dist. LEXIS 61707 (N.D.Ill. Aug. 13, 2008) (“The self-critical analysis privilege has never been adopted as federal common law by the Seventh Circuit.”). Indeed, when noting that the court has not recognized the privilege, the Seventh Circuit also highlighted that, “[m]any decisions caution against the creation of new privileges, even for what appear to be good reasons.” Burden-Meeks, 319 F.3d at 901 (citing University of Pennsylvania v. EEOC, 493 U.S. 182, 189, 107 L.Ed.2d 571, 110 S.Ct. 577 (1990)).
Defendants cite two cases in their motion to support the contention that courts in this district have applied the self-critical analysis privilege and found documents protected by the privilege. Neither case, however, is instructive because in those rulings the courts merely assumed or presumed that the privilege applied. Moreover, as one court in this district has recognized, “[t]he majority of courts that ultimately concede or assume the privilege exist have narrowed the privilege’s scope so that it does not apply to the documents at issue in the individual cases.” Ludwig, 2004 WL 1898238, 2004 U.S. Dist. LEXIS 16049, at *5 (N.D.Ill. Aug. 13, 2004). Considering that the Supreme Court instructs that privileges are “not lightly created nor expansively construed, for they are in derogation of the search for truth,” United States v. Nixon, 418 U.S. 683, 709 (1974), the Court finds more persuasive the decisions of district courts that have declined to apply the self-critical analysis privilege. See, e.g., EEOC v. City of Madison, 2007 WL 5414902, 2007 U.S. Dist. LEXIS 70647 (W.D.Wis. Sept. 20, 2007) (declining to recognize the “self-critical analysis privilege” because “[t]he Seventh Circuit has not recognized such a privilege”) (citing Burden-Meeks, 319 F.3d at 901); Ludwig, 2004 U.S. Dist. LEXIS 16049, at *8) (N.D.Ill. Aug. 13, 2004) (declining application of the self-critical analysis privilege in part based on the “tenuous” nature of the privilege); Bell v. Woodward Governor Co., 2004 U.S. Dist. LEXIS 1052, 2004 WL 5645759 (N.D.Ill. Jan. 26, 2004) (“Because the Seventh Circuit has not yet taken a definitive position on the proper scope of the self-critical analysis privilege, this court will rely on its past decisions in finding that the privilege does not exist with regards to affirmative action materials.”).
Moreover, it is clear that the documents and information sought by Plaintiffs are relevant to this dispute. In their complaint, Plaintiffs seek damages from Defendants for unpaid wages as a result of work performed during meal breaks. The NDNQI documents contain information regarding whether nurses received meal breaks, whether they interacted with patients during those meal breaks, and the duration of the meal breaks. The information contained in the NDNQI documents is thus relevant to Plaintiffs’ claims. Moreover, while Defendants contend that the documents are inadmissible hearsay, the Federal Rules of Civil Procedure only limit discovery to “any matter, not privileged, that is relevant to the claim or defense of any party” and specifically note that the discovery “need not be admissible at trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.” Fed.R.Civ.P. 26(b)(1); see also Automated Solutions Corp. v. Paragon Data Sys., 231 Fed. Appx. 495, 497 (7th Cir.2007.)
Finally, while the Court recognizes that disclosure of the NDNQI data to Plaintiffs may raise confidentiality concerns, the protective order already in place in this matter should allay any concerns in this regard.
For the foregoing reasons, the Court grants Plaintiffs’ motion to compel. Defendants are to produce responsive documents and information to Plaintiffs’ Second Request for the Production of Documents by August 23, 2010.”
The Court thus joined other courts that have declined to recognize the self-evaluation privilege, such as the case previously reported here.
2d. Cir.: Question Of Joint Employer Is Mixed Question Of Law And Fact, Properly Submitted To The Jury
Ling Nan Zheng v. Liberty Apparel Co. Inc.
Plaintiffs-appellees were 25 Chinese garment workers living and working in New York City’s Chinatown. In 1999, they sued Liberty Apparel Company and its principals Albert Nigri and Hagai Laniado (collectively, “the Liberty Defendants”), and others, for violations of the Fair Labor Standards Act (“FLSA”), and the New York Labor Law (“NYLL”). After a lengthy procedural history, the case went to a jury trial, and the principal issue was whether the Liberty Defendants were plaintiffs’ “joint employer” for purposes of the FLSA and New York state law claims.
The Liberty Defendants appealed that judgment. In this opinion, the Second Circuit considered Defendants’ contention that the district court-rather than the jury-should have determined whether the Liberty Defendants were plaintiffs’ joint employer. And on that issue, they affirmed. The substantive law regarding the joint employment issue was discussed in a separate opinion.
After a lengthy procedural history, the defendants removed for summary judgment, and on May 23, 2008, Judge Sullivan denied that motion. Zheng v. Liberty Apparel Co., 556 F.Supp.2d 284, 287 (S.D.N.Y.2008) (“Zheng III ”). The court determined that, while there was no genuine issue of fact that the first, second, and fourth Zheng II factors weighed in the Liberty Defendants’ favor, there was a dispute of fact regarding factors three, five, and six. Id. at 289-95. On February 11, 2009, after a two-and-a-half week trial, the jury found in plaintiffs’ favor. The court denied the Liberty Defendants’ post-verdict motions to set aside the verdict and for a new trial. By final judgment entered October 26, 2009, plaintiffs were awarded $556,566.76 in damages.
Discussing the issues on this appeal, the Court framed them as: Whether “(1) the district court improperly allowed the jury to determine the “ultimate legal question” whether the Liberty Defendants were plaintiffs’ joint employer, whereas instead the court itself should have resolved that issue; (2) the district court refused to charge the jury that, as a matter of law, three of the six Zheng II factors weighed in the Liberty Defendants’ favor (to some degree); and (3) as a matter of law, plaintiffs’ evidence was insufficient to support the jury’s finding of joint employment. As to the § 345-a(1) claim, the Liberty Defendants argue that (1) the statute does not authorize a private right of action, and, alternatively, (2) whether it authorizes a private right of action raises a novel and complex issue of state law such that the district court should have declined to exercise supplemental jurisdiction over that claim, see 28 U.S.C. § 1367(c)(1).”
Holding that the Court below had correctly submitted the issue of joint-employment to the jury, the Court reasoned:
“In the context of a jury trial, the question whether a defendant is a plaintiffs’ joint employer is a mixed question of law and fact. Such questions “involve[ ] the application of a legal standard to a particular set of facts.” Richardson v. N.Y. State Dep’t of Corr. Serv., 180 F.3d 426, 437 (2d Cir.1999) (internal quotation marks omitted). “FLSA claims typically involve complex mixed questions of fact and law….” Barrentine v. Arkansas-Best Freight Sys., 450 U.S. 728, 743 (1981); cf. Holzapfel v. Town of Newburgh, N.Y., 145 F.3d 516, 521 (2d Cir.1998).
The jury’s role was to apply the facts bearing on the multi-factor joint employment inquiry to the legal definition of joint employer, as that term had been (properly) defined by the district court in the jury charge. “[M]ixed questions [of law and fact] are ‘especially well-suited for jury determination….’ “ Richardson, 180 F.3d at 437 (quoting Mendell v. Greenberg, 927 F.2d 667, 673 (2d Cir.1990)); see also Kirsch v. Fleet St., Ltd., 148 F.3d 149, 171 (2d Cir.1998); Simms v. Vill. of Albion, N.Y., 115 F.3d 1098, 1110 (2d Cir.1997) (“A mixed question of fact and law may be submitted to the jury only if the jury is instructed as to the applicable legal standards.”).
In the Liberty Defendants’ view, the district court should have provided a special verdict form so that the jury could detail its factual findings regarding the various joint employment factors, and so that the district court could then have applied those findings to make the final determination as to joint employment. But such a rule would distort the jury’s proper role, described above, of applying law to fact. Moreover, requiring the use of a special verdict form would be anomalous in the law, cf. Fed.R.Civ.P. 49(a); Kirsch, 148 F.3d at 171; 9B C. Wright & A. Miller, Federal Practice & Procedure § 2505 (“Wright & Miller”); and appellate courts rarely-if ever-vacate for failure to use a special verdict form, see Skidmore v. Balt. & O.R. Co., 167 F.2d 54, 67 (2d Cir.1948) (“[W]e cannot hold that a district judge errs when, as here, for any reason or no reason whatever, he refuses to demand a special verdict, although we deem such verdict usually preferable to the opaque general verdict.”); Wright & Miller § 2505 (“[A]s numerous courts have held, as evidenced by the many cases cited in the note below, the exercise of th[e trial court’s discretion in using a general rather than a special verdict form] is not likely to be overturned on appeal.”).
The Liberty Defendants’ reliance on language from Zheng II is misplaced. That decision recognized that the joint employment question is a mixed one of law and fact: “Finally, there is the conclusion of law to be drawn from applying the factors, i.e., whether an entity is a joint employer.” Zheng II, 355 F.3d at 76 (emphasis added); cf. id. at 76 n.13 (noting “[t]he fact-intensive character of the joint employment inquiry”). Moreover, to the extent Zheng II contemplated de novo review of a joint employment determination, it did so only in the context of summary judgment, not a jury trial. De novo review of a jury’s joint employment determination would necessitate use of a special verdict-which, as we explained above, we do not require-and would cause the appellate court to tease apart the interwoven elements of facts and law, a project that would raise serious Seventh Amendment concerns, cf. Castillo v. Givens, 704 F.2d 181, 199 (5th Cir.1983) (Higginbotham, J., concurring)-if it could even be done.
For the foregoing reasons, we hold that the district court properly submitted the joint employment issue to the jury. The judgment of the district court is affirmed, subject to the partial vacatur and remand required by the companion summary order. The mandate shall issue forthwith.”
M.D.Fla.: Approval of Settlement Agreement Rejected, Where “Pervasive” General Release Makes Evaluation For Fairness “Elusive”
Moreno v. Regions Bank
As reported here several months ago, Judge Steven Merryday, in the Middle District of Florida rejected FLSA settlement agreements containing confidentiality provisions, as well as those containing non-disparagement agreements, in a set of well-reasoned opinions, discussing their conflict with the remedial purposes behind the Fair Labor Standards Act. Continuing his critique of what, for better or worse had largely become common practice in the resolution of FLSA cases, he has rejected a recent Motion for Approval, because the Settlement Agreement contained a “pervasive” general release of all claims known and unknown, without the exchange of any value for same, thus making an evaluation of the agreement for fairness “elusive” in his words.
The settlement agreement contained the following general release:
“In exchange for the Consideration, as set forth in Paragraph 2 . . ., Plaintiff for himself, attorneys, heirs, executors, administrators, successors and assigns hereby waives and releases, knowingly and willingly, Defendant, its heirs, executors, administrators, legal representatives, parent corporations, predecessor companies, insurers, past, present and future divisions, subsidiaries, affiliates and related companies and their successors and assigns and all past, present and future directors, officers, employees and agents of these entities, personally and as directors, officers, employees and agents, (“Released Parties”) from any and all claims of any nature whatsoever Plaintiff has arising out of his employment with Defendant, known or unknown, including but not limited to, any claims Plaintiff may have under federal, state or local employment, labor, or anti-discrimination laws, statutes and case and law and specifically claims including, but not limited to, any claims or allegations contained in or relating to the Lawsuit, arising under the federal Age Discrimination in Employment Act, The Older Worker Benefit Protections Act, the Civil Rights Acts of 1866 and 1964, as amended, the Americans with Disabilities Act, the Employment Retirement Income Security Act of 1974 (“ERISA”), the Family and Medical Leave Act, the Rehabilitation Act of 1973, the Fair Labor Standards Act, the Labor-Management Relations Act, the Equal Pay Act and the Worker Adjustment Restraining and Notification Act, the Florida Civil Rights Act, the Florida AIDS Act, the Florida Equal Pay Law, the Florida Wage Discrimination Law, the Florida Law Prohibiting Discrimination on the Basis of Sickle Cell Trait, the Florida Constitution, Florida common law and any and all other applicable state, federal, county or local ordinances, statutes or regulations, including claims for attorneys’ fees. Furthermore, if any charge of discrimination is brought on Plaintiff’s behalf, Plaintiff dismisses any claim to any benefits as a result of such charge. Plaintiff agrees that he will not apply for any positions with any of the Released Parties at any rime. Plaintiff has been fully compensated for his claims under the Fair Labor Standards Act. Plaintiff also represents and certifies that he has received full payment for all hours worked while employed by Defendant, including overtime hours, bonuses and vacation pay, and has received all benefits and leaves available or requested under the Family Medical Leave Act. Finally, Plaintiff has not suffered any workplace injuries while working for Defendant.”
Holding that such a “pervasive” general release in an FLSA compromise is, as a matter of law, unfair to the Plaintiff-employee, the Court reasoned:
“In the typical settled case, the parties (especially the defendant) design for a complete disengagement from each other, and a comprehensive settlement coupled with a general release usually accomplishes the intended effect. The district judge often remains unaware of the terms of the compromise, and the post-settlement dismissal of the action implies neither approval nor disapproval of any aspect of the parties’ settlement agreement. In these cases, the reciprocal, general release remains an accepted and common litigation practice. Although this disengagement almost uniformly accompanies the settlement of the typical civil action, settlement of an FLSA action requires judicial approval. A pervasive release in an FLSA settlement introduces a troubling imponderable into the calculus of fairness and full compensation.
In nearly every case, the pervasive release confers no benefit on the employer because the employee has no other claim. In the typical case, the release is valueless—the employer receives nothing of monetary value, and the employee relinquishes nothing of monetary value. The general release is usually an instrument to ensure peace of mind to the employer’s otherwise worried mind. In the occasional case, however, an unknown claim accrues to the employee. For example, suppose an employee of a widget factory sues the employer for unpaid wages, the parties settle for $500.00, and the employee agrees to a pervasive release. Years later, the employee discovers that a chemical used to manufacture widgets has caused serious injury. In this instance, the employee’s release of the unknown claim (if effective) both confers an undeserved and disproportionate benefit on the employer and effects an unanticipated, devastating, and unfair deprivation on the employee. The release absolves the employer of an ominous contingent liability in exchange for $500.00 (which, in any event, the employer unconditionally owed to the employee).
An employee who executes a broad release effectively gambles, exchanging unknown rights for a few hundred or a few thousand dollars to which he is otherwise unconditionally entitled. In effect, the employer requests a pervasive release in order to transfer to the employee the risk of extinguishing an unknown claim. In the language of Hydradry, a pervasive release is a “side deal”4 in which the employer extracts a gratuitous (although usually valueless) release of all claims in exchange for money unconditionally owed to the employee. (If an employee signs a pervasive release as part of a “side deal” and later discovers a valuable but released claim, the employee perhaps looks for compensation from the attorney who advise the employee to grant the release.) Although inconsequential in the typical civil case (for which settlement requires no judicial review), an employer is not entitled to use an FLSA claim (a matter arising from the employer’s failing to comply with the FLSA) to leverage a release from liability unconnected to the FLSA.
Lynn’s Food’s imposition of the duty to scrutinize an FLSA compromise necessarily implies the court’s duty to scrutinize the claims and the defenses presented by the pleadings. An employee seeking to vindicate his FLSA rights often desperately needs his wages, and both the employee and the employer want promptly to resolve the matter. In a claim for unpaid wages, each party estimates the number of hours worked and the plaintiff’s wage (i.e., establishes a range of recovery), and the court evaluates the relative strength of the parties’ legal argument asserted in the particular case. However, in an FLSA action, neither party typically attempts to value the claims not asserted by the pleadings but within the scope of a pervasive release—that is, those “known and unknown,” or “past, present, and future,” or “statutory or common law,” or other claims included among the boiler plate, but encompassing, terms unfailingly folded into the typical general release.6 Absent some knowledge of the value of the released claims, the fairness of the compromise remains indeterminate. See, e.g., Alba Conte & Herbert B. Newberg, Newberg on Class Actions § 12:15, at 313 (4th ed. 2002) (“Of course, in order independently and objectively to evaluate the adequacy of the entire settlement . . ., the court must possess sufficient evidence or information to weigh the strengths and weaknesses of the additional . . . claims.”).
In sum, a pervasive release in an FLSA settlement confers an uncompensated, unevaluated, and unfair benefit on the employer. In the typical case, no unknown claim accrues to the employee and the pervasive release effects no change to the legal relationship of the parties. In other words, in the typical case, the pervasive release is superfluous and can be stricken without objection from either the employee or the employer. In the occasional case, an unknown claim accrues to the employee and the employer receives a release from a contingent liability in exchange for a modest payment of wages unconditionally owed to the employee. The employer who obtains a pervasive release receives either nothing (if no claim accrues) or a windfall at the expense of the unlucky employee. In either instance, the employee bears the risk of loss, and the employer always wins—a result that is inequitable and unfair in the
circumstance. The employer’s attempt to “play with house money” fails judicial scrutiny.
Lynn’s Food requires more than a “rubber stamp” of an FLSA compromise; the district court must assure the “fairness” of the proposed compromise. Although the parties’ desire for complete “disengagement” is understandable, a pervasive release in settlement of an FLSA action is both unfair and incapable of valuation. A compromise of an FLSA claim that contains a pervasive release of unknown claims fails judicial scrutiny.”
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7th Cir.: FWW Is Appropriate Method To Determine Unpaid Overtime Where Plaintiff Was Salaried Misclassified
Urnikis-Negro v. American Family Property Services
Although plaintiff Brenda Urnikis-Negro prevailed in her suit for overtime pay, she contended on appeal that the district court improperly calculated the amount of pay she was owed. After a bench trial, the district court found that the Defendants, violated the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. §§ 201, et seq. (“FLSA”), when they treated Urnikis-Negro as an administrative employee who was exempt from the overtime provisions of the statute. Urnikis-Negro v. Am. Family Prop. Servs., Inc., No. 06 C 6014, 2008 WL 5539823, at *5-*9 (N.D.Ill. Jul. 21, 2008); see 29 U.S.C. §§ 207, 216(b). As a result of Defendants’ misclassification, Urnikis-Negro was never paid anything above her fixed salary for her overtime hours.
However, in calculating Urnikis-Negro’s regular rate of pay and thence the overtime to which she was entitled, the court used the fluctuating workweek (“FWW”) method set forth in 29 C.F.R. § 778.114(a), an interpretive rule promulgated by the Department of Labor. 2008 WL 5539823, at *11-*12.
Recognizing that section 778.114(a) itself does not provide the authority for applying the FWW method in a misclassification case, it applied the FWW anyway. In a troubling opinion, the Court specifically stated that the FWW “is not a remedial measure that specifies how damages are to be calculated when a court finds that an employer has breached its statutory obligations.”
Nonetheless, the Court held that irrespective of the rule, it was appropriate for the district court to apply the FWW method in this case, citing the authority found in the Supreme Court’s decision in Overnight Motor Transp. Co. v. Missel, 316 U.S. 572, 62 S.Ct. 1216 (1942), superseded on other grounds by statute as stated in Trans World Air Lines, Inc. v. Thurston, 469 U.S. 111, 128 n. 22, 105 S.Ct. 613, 625 n. 22 (1985), “which approved this very method of calculating of an employee’s regular rate of pay and corresponding overtime premium. We therefore affirm the district court’s judgment.”
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7th Cir.: 203(o) Does Not Preempt State Law; Notwithstanding The Fact That Time Spent Donning/Doffing Of PPE Constitutes Changing “Clothes” Under the FLSA, Such Time Is Compensable Under WI State Law And Not Waivable By CBA
Spoerle v. Kraft Food Global, Inc.
In this case, the Plaintiff-employees brought a collective action against employer under the Fair Labor Standards Act (FLSA) and state law, contending that hourly employees at employer’s plant should be paid for time spent donning and doffing safety and sanitation articles and walking to and from their work stations at the beginning and end of their shifts. The trial court granted employees’ motion for summary judgment, and employer appealed. The Seventh Circuit held that the employees’ claims were not preempted by FLSA and affirmed.
The Court framed the issue as “whether § 203(o ) preempts state law that lacks an equivalent exception[?]” Answering in the negative, the Court reasoned:
“The Fair Labor Standards Act has a saving clause:
No provision of this chapter … shall excuse noncompliance with any Federal or State law or municipal ordinance establishing a minimum wage higher than the minimum wage established under this chapter or a maximum work week lower than the maximum workweek established under this chapter…. No provision of this chapter shall justify any employer in reducing a wage paid by him which is in excess of the applicable minimum wage under this chapter, or justify any employer in increasing hours of employment maintained by him which are shorter than the maximum hours applicable under this chapter.
29 U.S.C. § 218(a). This means, the district court concluded, that donning and doffing time counts toward the workweek (and overtime rates) if state law so provides. Kraft Foods concedes that Wisconsin requires time spent donning and doffing safety gear to be compensated at the minimum wage or higher, and that this time counts toward the limit after which the overtime rate kicks in. See Wis. Stat. §§ 109.03, 103.02; Wis. Admin. Code § DWD 272.12(2)(e). (This makes it unnecessary to decide whether federal law would require payment for this time, in the absence of a § 203(o ) agreement. See Pirant v. United States Postal Service, 542 F.3d 202, 208-09 (7th Cir.2008) (discussing which kinds of required safety gear are “integral and indispensable” for purposes of the analysis in IBP ).) Kraft Foods contends, however, that § 203(o ) preempts Wisconsin’s law. The district judge rejected that argument and entered judgment in plaintiffs’ favor as a matter of Wisconsin rather than federal law, see 626 F.Supp.2d 913 (W.D.Wis.2009), a step supported by the supplemental jurisdiction of 28 U.S.C. § 1367.
Kraft Foods contends that § 203(o ) embodies a federal decision to permit a collectively bargained resolution to supersede the rules otherwise applicable to determining the number of hours worked. That’s an accurate statement, as far as it goes. But “as far as it goes” means “as far as § 203(o ) itself goes.” And the statute tells us exactly how far it goes. The first words of § 203(o ) are: “In determining for the purposes of sections 206 and 207 of this title the hours for which an employee is employed …”. Section 206 sets the federal minimum wage per hour worked. Section 207 specifies how many hours a person may work in a given period before overtime pay commences. These are rules of federal law. States are free to set higher hourly wages or shorter periods before overtime pay comes due. That’s what § 218(a) says. Nothing in § 203(o ) limits the operation of § 218(a).
As far as we can tell, this is the first time an employer’s argument that § 203(o ) preempts state law has reached a court of appeals. All three district judges who have considered this argument have rejected it. In addition to the decision under review, see In re Cargill Meat Solutions Wage & Hour Litigation, 632 F.Supp.2d 368, 392-94 (M.D.Pa.2008); Chavez v. IBP, Inc., 2005 U.S. Dist. LEXIS 29714 at *112-22 (E.D.Wash. May 16, 2005). If Wisconsin had provided for a minimum hourly wage exceeding the rate in the collective bargaining agreement between Kraft Foods and Local 538, the state law would trump the CBA. And if this is so for the hourly rate, it must be equally so for the number of hours, because how much pay a worker receives depends on the number of hours multiplied by the hourly rate. It would be senseless to say that a state may control the multiplicand but not the multiplier, or the reverse, because control of either one permits the state to determine the bottom line (provided that the state’s number exceeds the federal minimum; § 218(a) does not allow a state to authorize employers to pay less than the federal floor).
As Kraft Foods sees things, Wisconsin is meddling with collective bargaining, so that federal labor law preempts state law if § 203(o ) does not do the trick. Yet nothing in the Wisconsin statutes gives a state court, or other state official, any role in interpreting or enforcing a collective bargaining agreement. What Wisconsin requires is that the collective bargaining agreement be ignored, to the extent that it sets lower wages or hours than state law specifies. Cf. Lingle v. Norge Division of Magic Chef, Inc., 486 U.S. 399, 108 S.Ct. 1877, 100 L.Ed.2d 410 (1988) (state rules that disregard, rather than interpret, collective bargaining agreements are not preempted by federal labor policy). Suppose the CBA set a wage of $8 per hour, higher than the current federal minimum wage of $7.25, while Wisconsin law set a minimum wage of $8.25. (Wisconsin’s actual minimum wage is $7.25, but some states, including Illinois, use $8.25.) No one would contend that the employer could pay the workers $7.25 an hour, even though that is allowed by federal law if labor and management agree (this is the same sense that excluding donning and doffing time is allowed by § 203(o )). Which rate would prevail: $8 from the CBA or $8.25 from state law? According to § 218(a), the employer must pay $8.25 an hour; state law supersedes the collective bargaining agreement. And if this is so about the wage per hour, it is equally true about the number of hours.
Nothing that labor and management put in a collective bargaining agreement exempts them from state laws of general application. If a CBA were to say: “the workers will receive the minimum wage under FLSA, and not one cent more no matter what state law provides,” that would be ineffectual. So too would an agreement along the lines of: “Because our base hourly rate is more than 150% of the minimum wage, we need not pay overtime rates under state law.” States can set substantive rules that determine the effective net wage, even when a CBA plays a role (as it does when a law requires overtime pay at some multiple of the base pay set in a collective bargaining agreement). Every state’s overtime-compensation rule could affect collective bargaining-knowing that state law requires pay at time-and-a-half, labor and management might agree to a lower base rate per hour-but that effect would not prevent application of the state’s wage-and-hour statutes.
Management and labor acting jointly (through a CBA) have no more power to override state substantive law than they have when acting individually. Imagine a CBA saying: “Our drivers can travel at 85 mph, without regard to posted speed limits, so that they can deliver our goods in fewer compensable hours of work time.” That clause would be ineffectual. And a CBA reading instead that “our drivers can travel at a reasonable rate of speed, no matter what state law provides” would be equally pointless. Making a given CBA hard to interpret and apply (as the word “reasonable” would be) would not preempt state law on the theory that states must leave the interpretation of CBAs to the National Labor Relations Board and the federal judiciary; states would remain free to enforce laws that disregarded CBAs altogether. That is what Wisconsin does when determining which donning and doffing time is compensable.
The district court therefore did not err in concluding that plaintiffs are entitled to be paid for all time required by Wisconsin law, and the judgment is AFFIRMED.”
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