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N.D.Cal.: Broad General Release of All Claims in the Context of FLSA Claim Rejected By Another Court
McKeen-Chaplin v. Franklin American Mortg. Co.
While not a groundbreaking decision, this case serves as a reminder of how much the FLSA settlement approval process can vary from court to court and judge to judge. While many courts have broadened the circumstances under which parties may resolve an FLSA claim (e.g. those within the Fifth Circit), others continue to carefully track the remedial purposes of the FLSA, in recognition that the statute seeks to protect the rights of employees, who typically lack any real bargaining power with regard to their employers (or former employers). As highlighted here, the court joined a growing number of courts from around the country to reject a general release contained within a settlement agreement regarding FLSA (and other wage and hour claims), when the employer provides no additional compensation for such release.
Discussing this issue, the court reasoned:
The Court also has concerns with the scope of the general release provision contained in the settlement agreements signed by Plaintiffs, which provides that each Plaintiff “fully” and “completely” releases Defendant and others from “any and all claims … whether known or unknown, arising from, relating to, or in any way connected with [Plaintiff’s] employment with or termination of employment from [Defendant]….” Schug Decl., Exh. A ¶ 3. Courts have found that overly broad release provisions, which release a Defendant from all claims to settle their wage claims, including claims that are unrelated to the claims asserted in the complaint, are improper in FLSA and class action settlements. See Moreno v. Regions Bank, 729 F.Supp.2d 1346, 1347, 1350–1352 (M.D.Fla.2010) (FLSA settlement); Hogan v. Allstate Beverage Co., Inc., 821 F.Supp.2d 1274, 1284 (M.D.Ala.2011) (same); Gambrell v. Weber Carpet, Inc., 2012 WL 5306273, at *2, 5 (D.Kan.2012) (same); see also Bond. v. Ferguson Enterprises, Inc., 2011 WL 284962, at *7 (E.D.Cal.2011) (finding release overbroad in class action where release did not track the extent and breadth of Plaintiffs’ allegations and released unrelated claims of any kind or nature up to the date of the agreement); Kakani v. Oracle Corp., 2007 WL 1793774, at *2–3 (N.D.Cal.2007) (rejecting a settlement in part because of the “draconian scope” of the proposed release, which, among other things, released and forever discharged the defendant from any and all claims that were asserted or could have been asserted in the complaint whether known or unknown).
The Court finds that the parties have failed to demonstrate that it would be fair and reasonable for the Court to enforce the broad general release provision contained in the settlement agreements. The provision does not track the breadth of the allegations in this action and releases unrelated claims, whether known or unknown, that the Plaintiffs may have against Defendant. See Collins v. Cargill Meat Solutions Corp., 274 F.R.D. 294, 303 (E.D.Cal.2011) (finding release proper and not overly broad because the “released claims appropriately track the breadth of Plaintiffs’ allegations in the action and the settlement does not release unrelated claims that class members may have against defendants”); Vasquez v. Coast Valley Roofing, Inc., 670 F.Supp.2d 1114, 1126 (E.D.Cal.2009) (finding release proper because the “released claims appropriately track the breadth of Plaintiffs’ allegations in the action and the settlement does not release unrelated claims that class members may have against defendants.”). The parties have not explained why the release of “any and all claims … whether known or unknown, arising from, relating to, or in any way connected with [Plaintiff’s] employment with or termination of employment from [Defendant]” is fair and reasonable. There has been no showing that Plaintiffs have been independently compensated for the broad release of claims unrelated to any dispute regarding FLSA coverage or wages due, including, among others, claims for discrimination under Title VII, intentional infliction of emotional distress, and “outrageous conduct.” See Moreno, 729 F.Supp.2d at 1351 (“[A]n 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.”). Nor has there been a showing that the Plaintiffs have a full understanding of what they are releasing in exchange for a settlement payment. There is no evidence that Plaintiffs have being fully informed of the consequences of the release provision.
Click McKeen-Chaplin v. Franklin American Mortg. Co. to read the entire Order.
10th Cir.: Employee Who Performed Work Afterhours for Employer Through His Separate Company Held to be Independent Contractor for Afterhours Work
Barlow v. C.R. England, Inc.
Following an order granting the defendant summary judgment, the plaintiff appealed. As discussed here, the issue before the Tenth Circuit regarding the plaintiff’s FLSA claim, was whether he was properly deemed to be an independent contractor for janitorial work her performed for his employer afterhours, while the same employer deemed him to be an employee for security work he performed during the day. In a decision lacking much by way of reasoning, the Tenth Circuit affirmed the decision of the court below and held that the defendant’s dual classification for the two different types of duties performed was valid.
The Tenth Circuit laid out the pertinent facts as follows:
In February 2005, Barlow began working as a part-time security guard at a Denver maintenance yard operated by England, a large trucking company. Barlow patrolled England’s grounds for about thirty hours a week, from 6:30 P.M. to 5:00 or 6:00 A.M. Friday through Sunday nights. Most of the yard was fenced in, accessible through an automatic overhead gate. Barlow also performed maintenance and ground work to try to reach 40 hours of work per week.
After Barlow had been at England for about a year and a half, he asked the facility’s site manager, John Smith, for extra work. Smith, who had initially hired Barlow, was not satisfied with England’s janitorial contractor at that time, so he asked England’s personnel department about having Barlow take over. Smith was told he could not allow Barlow to work any more hours because the company would have to pay overtime.
To get around this, Smith suggested Barlow create a company England could contract with. Barlow formed E & W Janitorial & Maintenance Services, LLC. Beginning in February 2007, Barlow cleaned for England on Mondays, Wednesdays, and Saturdays, pursuant to an oral agreement with Smith. On a few occasions, his girlfriend, a co-owner of E & W, filled in. England provided his cleaning supplies, but did not require Barlow clean in any particular order. England, the only company for which E & W worked, paid $400 a month for E & W’s services.
Without much reasoning regarding this portion of the plaintiff’s claim, the court held:
We also agree with the district court’s decision to grant summary judgment against Barlow regarding his FLSA claims. Barlow argues that he performed his janitorial work as an employee under the FLSA, and that he was therefore entitled to overtime pay. But applying the “economic realities” test of employee status, we conclude that Barlow was not a statutory employee for purposes of the FLSA.
The “economic realities” test seeks to look past technical, common-law concepts of the master and servant relationship to determine whether, as a matter of economic reality, a worker is dependent on a given employer. Baker v. Flint Engineering & Const . Co., 137 F.3d 1436, 1440 (10th Cir.1998). “The focal point in deciding whether an individual is an employee is whether the individual is economically dependent on the business to which he renders service, or is, as a matter of economic fact, in business for himself.” Doty v. Elias, 733 F.2d 720, 722–23 (10th Cir.1984) (emphasis added) (citations omitted). “In applying the economic reality test, courts generally look at (1) the degree of control exerted by the alleged employer over the worker; (2) the worker’s opportunity for profit or loss; (3) the worker’s investment in the business; (4) the permanence of the working relationship; (5) the degree of skill required to perform the work; and (6) the extent to which the work is an integral part of the alleged employer’s business.” Baker, 137 F.3d at 1440. It also “includes inquiries into whether the alleged employer has the power to hire and fire employees, supervises and controls employee work schedules or conditions of employment, determines the rate and method of payment, and maintains employment records.” Id. “None of the factors alone is dispositive; instead, the court must employ a totality-of-the-circumstances approach.” Id.
Some factors favor Barlow, while other factors favor C.R. England, but, ultimately, we agree with the district court that Barlow was an independent contractor. Barlow and his partner created a licensed, limited liability company in order to provide janitorial services. Cf. Rutherford Food Corp. v. McComb, 331 U .S. 722, 730 (1947) (classifying as employees speciality group of production line workers in part because “[t]he group had no business organization that could or did shift as a unit from one slaughter-house to another”). Barlow kept records for the company, opened a separate bank account, and filed a corporate tax return. The district court also noted Barlow had the “freedom to decide how to accomplish” his tasks, even if the company reviewed the ultimate work product. 816 F.Supp.2d at 1107. Indeed, little in the case indicates the relationship between Barlow and C.R. England materially differed from one the company would have with any other cleaning service except for the fact Barlow also happened to otherwise be an employee. This suggests Barlow was in business for himself as a janitor, and we therefore affirm the district court’s decision to grant summary judgment.
Click Barlow v. C.R. England, Inc. to read the entire decision.
D.Ariz.: Where Construction Inspector Was Salaried Misclassified, Damages to Calculated Using Default Time and a Half Methodology, Not FWW
Blotzer v. L-3 Communications Corp.
This case was before the court on the parties’ cross motions for summary judgment. Both plaintiff and defendant contended that they were entitled to judgment as a matter of law regarding the exempt status of plaintiff, a construction inspector. The parties further disputed whether the fluctuating workweek methodology or the FLSA’s default time and a half methodology was applicable to calculate plaintiff’s damages, assuming he had been misclassified. After finding plaintiff to be non-exempt, the court held that plaintiff’s damages had to be calculated using the FLSA’s default methodology, because: (1) it is contrary to the rationale of the FLSA to apply the FWW method in misclassification cases; (2) application of the FWW in misclassification cases runs counter to the intent of the FLSA; and (3) even if the FWW method were applied, the defendant had failed to prove the elements of the FWW method were present in the case.
The court explained:
The FWW method set forth in 29 C.F.R. § 778.114 is not intended to apply retroactively in a misclassification case. See Urnikis–Negro, 616 F.3d at 666 (stating that 29 C.F.R. § 778.114 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). It was drafted by the Department of Labor as “forward-looking” and only describes how employers and employees should structure an agreement for future compensation. Id. at 677. Moreover, because the regulation was adopted without formal rule-making, it is entitled to less deference. See Hasan v. GPM Investments, LLC, 2012 WL 3725693, *2 (D.Conn.2012) (citing Christensen v. Harris Co., 529 U.S. 576, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000)). The Court concludes that the FWW should not be applied in the present case because: (1) it is contrary to the rationale of the FLSA to apply the FWW method in misclassification cases; (2) application of the FWW in misclassification cases runs counter to the intent of the FLSA; and (3) even if the FWW method were applied, Defendant has failed to prove the elements of the FWW method are present in this case.
Application of the FWW method in a misclassification case is contrary to FLSA’s rationale. The FWW method requires proof of a “clear mutual understanding” that: (1) the fixed salary is compensation for the hours worked each work week, whatever their number; and (2) overtime pay will be provided contemporaneously such that it fluctuates depending on hours worked per week. See 29 C.F.R. §§ 778.114(a) & (c). In a misclassification case, at least one of the parties initiated employment with the belief that the employee was exempt from the FLSA, paid on a salary basis, and therefore not entitled to overtime. When an employee is erroneously classified as exempt and illegally being deprived of overtime pay, neither the fourth nor fifth legal prerequisites for use of the FWW method is satisfied. The parties do not have a “clear, mutual understanding” that a fixed salary will be paid for “fluctuating hours, apart from overtime premiums” because the parties have not contemplated overtime pay. In addition, because the employees were erroneously classified as exempt, overtime compensation was not provided contemporaneously. See Russell v. Wells Fargo and Co., 672 F.Supp.2d 1008 (N.D.Cal.2009); Hasan, 2012 WL 3725693 at * 4 (collecting cases which hold that, in a misclassification case, the parties never agreed to an essential term of a fluctuating work week arrangement, ie. that overtime would be paid at different rates depending on the number of hours worked per week). As the court stated in Ransom v. M. Patel Enters., Inc., 825 F.Supp.2d 799, 810 n. 11 (W.D.Tex.2011):
The significance of the employee’s lack of knowledge of nonexempt status cannot be overstated. The fundamental assumption underpinning the FWW is that it is fair to use it to calculate overtime pay because the employee consented to the payment scheme. But in the context of an FLSA misclassification suit when consent is inferred from the employee’s conduct, that conduct will always, by definition, have been based on the false assumption that he was not entitled to overtime compensation. The job will have been advertised as a salaried position. The employee, if he raised the issue, will have been told that the salary is all he will receive, regardless of how many hours he works. That is the very nature of a salaried, exempt position. When it turns out that the employer is wrong, and it is learned that the FLSA required the employer to pay the employee an overtime premium, the notion that the employees conduct before he knew this is evidence that the employee somehow consented to a calculation method for the overtime pay that no one even knew was due, is perverse. If the FWW requires consent in some fashion, the employee’s actions before he knew he was due overtime pay just cannot logically be the basis of that consent.
Furthermore, 29 C.F.R. § 778.114(c) provides that the FWW method cannot be used “where all the facts indicate that an employee is being paid for his overtime hours at a rate no greater than that which he receives for non-overtime hours.” In a misclassification case, because employees have not been paid overtime premiums, they are compensated for those hours worked more than forty at a rate not greater than the regular rate. Russell, 672 F.Supp.2d at 1014. Thus, attempting to retroactively apply the FWW method to a miscalculation case is akin to “the old ‘square peg in a round hole’ problem [because it requires] apply[ing] § 778.114 to a situation it was not intended to address.” EZPawn, 633 F.Supp.2d at 402.
“In making its decision here, the Court is ‘mindful of the directive that the [FLSA] is to be liberally construed to apply to the furthest reaches consistent with Congressional direction.’ ” Russell, 672 F.Supp.2d at 1014 (citing Klem, 208 F.3d at 1089). Application of the FWW in a misclassification case gives rise to a “perverse incentive” for employers, because the employee’s hourly “regular rate” decreases with each additional hour worked. In fact, the difference between the FWW method and the traditional time-anda-half method can result in an employee being paid seventy-one percent less for overtime over a given year, and under the FWW method, the effective overtime hourly rate of an employee working sixty-one hours or more is less than the non-overtime hourly rate of an employee who worked no more than forty hours per week. See Russell, 672 F.Supp.2d at 1012;
see also Hasan, 2012 WL 3725693 at *2 (calculating the pay difference for a misclassified employer under both methods). This result is contrary to the FLSA’s purpose: encouraging employers to spread employment among more workers, rather than employing fewer workers who are then required to work longer hours. See Robertson v. Alaska Juneau Gold Min. Co. ., 157 F.2d 876, 879 (9th Cir.1946)
The court further explained that even if it had reached the opposite conclusion of law (i.e. that the FWW could be applicable in some misclassification cases), the facts of the case would still preclude its application here:
Finally, even if the Court concluded that the FWW method does apply in some miscalculation cases, it would not apply in the present case because Defendant has failed to demonstrate a “fluctuating” work week or a “clear mutual understanding” of straight pay and a contemporaneous overtime arrangement as required by the regulation. The FWW was intended to apply to “fluctuating” work schedules, ie. schedules in which an employee endures long hours some weeks but enjoys the benefit of short hours in other weeks, all at the same rate of pay. See Hasan, 2012 WL 3725693 at *4. In the present case, it is undisputed that Plaintiffs consistently worked more than 40 hours per week. Thus, Plaintiffs’ “variance, between weeks with a moderate amount of overtime hours, and weeks where a majority of hours worked exceeded the 40 hour threshold, is not the same as the up and down fluctuation contemplated by the DOL and by the Court in Missel.” Id. In addition, by its plain terms, the FWW method applies only when the employee clearly understands that he will receive straight-time pay for all hours worked and extra compensation of at least half his regular rate of pay, in addition to the fixed salary, for overtime hours during the weeks when he works overtime. Hunter v. Sprint Corp., 453 F.Supp.2d 44, 59 (D.D.C.2006); Russell, 672 F.Supp.2d at 1013–14. No such clear, mutual understanding is present in this case. Defendant contends that Plaintiffs agreed to work for a set salary regardless of whether they worked “35 hours or 55 hours.” (Doc. 74, pg.13.) Defendant misquotes Plaintiffs’ testimony regarding the number of hours they anticipated working. Although Defendant describes the Plaintiffs’ testimony regarding their salary as their “sole source of income regardless of whether they worked 35 or 55 hours,” neither Plaintiff testified to any expectation of ever working less than 40 hours. (Doc. 71, pg. 10; Doc. 71–1, pgs. 35 & 52.) The undisputed evidence is that Plaintiffs expected to work 50 hours a week. Furthermore, even if Defendant could prove that Plaintiffs and Defendant had a clear, mutual understanding that Plaintiffs would work 50 hours a week without overtime pay, such an arrangement amounts to an agreement “not to receive their FLSA entitlement to overtime pay. This would be illegal. Employees cannot agree to waive their right to overtime pay.” Russell, 672 F.Supp.2d at 1014. The parties’ lack of “mutual understanding” regarding Plaintiffs’ salary is further supported by the fact that Plaintiffs, upon realizing that they were being required to work far more than 50 hours per week, complained about their hours and were eventually paid some overtime.
In sum, the Court agrees with its sister district court in Northern California which held that “If Defendants’ position were adopted, an employer, after being held liable for FLSA violations, would be able unilaterally to choose to pay employees their unpaid overtime premium under the more employer-friendly of the two calculation methods. Given the remedial purpose of the FLSA, it would be incongruous to allow employees, who have been illegally deprived of overtime pay, to be shortchanged further by an employer who opts for the discount accommodation intended for a different situation.” Russell, 672 F.Supp.2d at 1014. Accordingly, the Court concludes that the FWW method to damages calculation is not applicable in the instant case.
Click Blotzer v. L-3 Communications Corp. to read the entire Order.
Recent Conditional Certification Decisions of Interest
Anyone who has ever moved for or opposed a motion for conditional certification (i.e. a “Stage 1” motion) of a collective action is likely familiar with the common defense tactic whereby a defendant asserts that the named plaintiff and members of the putative class are not similarly situated. Typically a defendant argues that individualized issues pertaining to the claims of the named plaintiff(s) (and members within the putative class) render the case ill-suited for class/collective treatment. As discussed below, three recent decisions discuss three separate issues related to this analysis. In the first, a court held that a pro se plaintiff could not adequately serve the interests of the putative class and denied conditional certification. However, in the second and third cases discussed below, the courts rejected the defendants’ contentions that: (1) an undocumented (“illegal”) immigrant was ill-suited to serve as a representative plaintiff; and (2) issues regarding whether specific putative class members signed binding arbitration agreements relating to the issues raised by the named-plaintiff were not properly raised at stage 1.
Pro Se Plaintiff Inadequate Representative for Collective Action
Koch v. CHS Inc.
In the first case, the pro se plaintiff (apparently fairly savvy) moved for conditional certification. Denying the motion, the court held that a pro se plaintiff cannot pursue their claims in a collective action for lack of adequacy of representation. Specifically, the court explained:
The issue of whether a pro se plaintiff can sue on behalf of other members in a collective action is one of adequacy of representation. Determining adequate representation is typically based on a two-part inquiry: “First, the named representatives must appear able to prosecute the action vigorously through qualified counsel, and second, the representatives must not have antagonistic or conflicting interests with the unnamed members of the class.” Lerwill v. Inflight Motion Pictures, Inc., 582 F.2d 507, 512 (9th Cir.1978). Courts have generally concluded that a pro se plaintiff cannot pursue claims on behalf of others in a representative capacity. See Simon v. Hartford Life, Inc., 546 F.3d 661, 664 (9th Cir.2008); see also Johns v. County of San Diego, 114 F.3d 874, 876 (9th Cir.1997) (“While a non-attorney may appear pro se on his ow n behalf, he has no authority to appear as an attorney for others than himself.”); C.E. Pope Equity Trust v. United States, 818 F.2d 696, 697 (9th Cir.1987) (holding that a pro se litigant may not appear as an attorney for others). Here, because Koch is a pro se litigant, he cannot pursue claims on behalf of other CHS employees in a representative capacity.
The rule holds true for pro se plaintiffs seeking to bring collective action suits under the F LSA. Morgovsky v. AdBrite, Inc. ., No. C10–05143–SBA, 2012 WL 1595105 *4 (N.D.Cal. May 4, 2012) (denying pro se plaintiff’s motion to bring a collective action under the FLSA and dismissing collective action claims); Spivey v. Sprint/United Mgt. Co., No. 04–2285–JWL, 2004 WL 3048840 (D.Kan. Dec.30, 2004) (holding that a claim under 29 U.S.C. § 216(b) cannot be brought by a pro se plaintiff).
Accordingly, the Court agrees with CHS that Koch, because he proceeds in the litigation pro se, cannot represent the class members on whose behalf he purports to bring suit. Therefore, proceeding with the litigation as a collective action is not permitted pursuant to 29 U.S.C. § 216(b). The motion will be denied.
Click Koch v. CHS Inc. to read the entire Memorandum Decision and Order.
Named-Plaintiff’s Immigration Status Has No Bearing on Similarly Situated Analysis
Torres v. Cache Cache, Ltd.
In the second case of interest, arising from alleged tip pool violations at defendant’s restaurant, the defendant opposed conditional certification, in part, based on the fact that the named-plaintiff was allegedly an undocumented immigrant. The court rejected this notion, citing well-established authority that an FLSA plaintiff’s immigration status is irrelevant to a claim inasmuch thereunder, inasmuch as same seeks payment for work already performed. Discussing this issue the court reasoned:
Finally, in an apparent attempt to distinguish Plaintiff from other proposed collective action members, Defendants note his status as an illegal immigrant and involvement in other similar FLSA lawsuits. Neither of these issues, however, is likely to provide Defendants with a valid defense that is unique to Plaintiff. First, there are a number of cases finding that evidence of immigration status has no relevance in an FLSA action. See e.g. Reyes v. Snowcap Creamery, Inc., 2012 WL 4888476 at *2 (D.Colo. Oct.15, 2012) (recognizing that “weight of authority clearly holds that a plaintiff’s immigration status is irrelevant in an FLSA action” and citing supporting authority). It is also questionable whether Defendants will be able to introduce evidence of other lawsuits involving Plaintiff. See Van Deelen v. Johnson, 2008 WL 4683022 at *2 (D.Kan. Oct.22, 2008) (evidence of plaintiff’s prior lawsuits cannot be admitted for purpose of proving that plaintiff is litigious but may be admissible for other purposes).
Click Torres v. Cache Cache, Ltd. to read the entire Order.
Whether Putative Class Members’ Claims Are Subject to Arbitration is an Issue Reserved for Stage 2
Hernandez v. Immortal Rise, Inc.
In the final decision, the court had before it the Report and Recommendation of the magistrate judge recommending conditional certification. As it had in its opposition to the underlying motion, the defendant argued that members of the putative class who had previously signed agreements to arbitrate their FLSA claims, were not similarly situated to the plaintiff and the remainder of the putative class. As such, the defendant argued such putative class members should be excluded from receiving notice of their right to join the case by opting in. Rejecting this contention, the court held that the issue of whether (and who) may have signed arbitration agreements, is an issue reserved for Stage 2 (decertification) analysis, and is not properly addressed at the conditional certification stage:
Next, defendants argue that the proposed class should be limited to cashiers and those who had not signed arbitration agreements, excluding grocery packers and delivery workers, whom defendants never employed, and employees subject to arbitration agreements. However, these are issues of fact that should be determined during discovery rather than at this preliminary stage. See D’Antuono v. C & G of Groton, Inc., No. 11–cv–33, 2011 U.S. Dist. LEXIS 135402, at *12–13 (D.Conn. Nov. 23, 2011) (holding that the enforceability of arbitration agreements should not be determined during conditional class certification); Lujan v. Cabana Mgmt., No. 10–cv–755, 2011 U.S. Dist. LEXIS 9542, at *23–24, 2011 WL 317984 (E.D.N.Y. Feb. 1, 2011) (quoting Realite v. Ark Rests. Corp., 7 F.Supp.2d 303, 307 (S.D.N.Y.1998)) (holding that defendants’ contention that its restaurants constituted separate entities raised a contested issue of fact, and was therefore not a basis for denying conditional class certification). Thus, Judge Bloom correctly found that the proposed class should not be limited as defendants propose.
Click Hernandez v. Immortal Rise, Inc. to read the entire Order.
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.
E.D.Mo.: Where Common Tip Pool Violations Alleged, Employees of Franchise Stores as Well as Those at Company-Owned Stores Similarly Situated at Stage 1
White v. 14051 Manchester, Inc.
This case was before the court on the plaintiffs’ motion for conditional certification. As discussed here, the plaintiffs sought to facilitate class notice to employees who worked at the franchise locations of the franchisee who employed them, as well as those who worked for “Hotshots” franchisor or company-owned locations. In support of their motion, plaintiffs argued that all tipped employees at all Hotshots locations, regardless of the owner, were required to participate in illegal tip pools whereby they were required to tip out back-of-the-house employees not eligible to participate in a valid tip pool. Rejecting the defendants’ argument that the court should limit the putative class to those tipped employees employed by the franchisee who employed plaintiffs the court explained, that it would be inappropriate to resolve the merits issue regarding which entities employed each putative class member at Stage 1.
Discussing this issue the court opined:
The Supreme Court has noted that whether a relationship is covered by the FLSA turns on the economic realities of the working relationship rather than technical definitions relating to employment. Goldberg v. Whitaker House Coop., Inc., 366 U.S. 28, 33, 81 S.Ct. 933, 6 L.Ed.2d 100 (1961). The FLSA defines “employee” broadly to include “any individual employed by an employer.” 29 U.S.C. § 203(e)(1)(2006). In turn, “employ” is defined as “to suffer or permit to work” 29 U.S.C. § 203(g), and an “employer” is any person “acting directly or indirectly in the interest of an employer in relation to an employee.” 29 U.S.C. § 203(d). “Thus, based on the language of the statute, an employee is any individual who is permitted to work by one acting directly or indirectly in the interest of an employer.” Helmert v. Butterball, LLC, No. 4:08CV00342, 2010 U.S. Dist. LEXIS 28964, at *6 (E.D.Ark. Mar. 5, 2010); see also Nicholson v. UTi Worldwide, Inc., No. 3:09–cv–722, 2011 U.S. Dist. LEXIS 41886, at *3 (S.D.Ill. Apr. 18, 2011)(conditionally certifying class of “forklift operators employed” by defendant that included workers hired through temporary staffing agencies).
The Court finds that, for purposes of this Motion, Defendants “permitted or suffered to work” all Hotshots employees, even those at the franchise locations. Given the FLSA’s broad definition of the “employee” and its remedial purpose, Defendants’ franchise arrangement demonstrates sufficient “control” for conditional class certification. Moreover, the employment relationship for franchise employees is disputed by the Plaintiffs, and the Court cannot make credibility determinations at this juncture. See Arnold v. DirecTv, Inc., No. 4:10–CV–352–JAR, 2012 U.S. Dist. LEXIS 140777, at *8 (E.D.Mo. Sept. 28, 2012)(“The Court will not make any credibility determinations or findings of fact with respect to contradictory evidence presented by the parties at this initial stage.”).
The Court also finds that the proper class definition is all Hotshots employees who shared in any tip pool. Employees who participated in the tip pool were allegedly victims of the same policy or plan and denied compensation as a result of the tip-pooling arrangement. While the Court acknowledges that distinctions exist among the Hotshot’s teams and locations, Plaintiffs’ affidavits provide enough evidence at this stage to demonstrate employees were similarly situated and subject to a common practice. McCauley, 2010 U.S. Dist. LEXIS 91375, at *12–13 (citing Busler v. Enersys Energy Products, Inc., No. 09–00159, 2009 U.S. Dist. LEXIS 84500, at *9–10, 2009 WL 2998970 at *3 (W.D.Mo. Sep. 16, 2009)); see also Fast v. Applebee’s Intern., Inc., 243 F.R.D. 360, 363–64 (W.D.Mo.2007) (citations omitted) (“To be similarly situated, however, class members need not be identically situated. The ‘similarly situated’ threshold requires only a modest factual showing.”); Schleipfer v. Mitek Corp., No. 1:06CV109, 2007 U.S. Dist. LEXIS 64042, at *9 (E.D.Mo. Aug. 29, 2007)(class members need not be identically situated). “[A]rguments concerning the individualized inquiries required and the merits of Plaintiffs’ claims are inappropriate at this stage of the proceeding and can be raised before the Court at the second, or decertification, stage.” Dominquez v. Minn. Beef Indus., No. 06–1002, 2007 U.S. Dist. LEXIS 61298, at *10 (D.Minn. Aug. 21, 2007)(internal quotation omitted).
Click White v. 14051 Manchester, Inc. to read the entire Memorandum and Order.
2 Recent Cases Draw Distinction Between Volunteers and Employees
With the uptick in FLSA case filings in recent years, a previously rarely litigated issue- whether certain types of workers are volunteers or “employees” subject to FLSA coverage- has increasingly come under judicial scrutiny. And, while case law has long interpreted the FLSA in a liberal manner, with the stated purpose of erring on the side of coverage for workers, two recent cases demonstrate that definition is not without its limits. In the first case, the domestic partner/girlfriend of a Domino’s Pizza store manager helped the manager with his management duties, in the hopes that eventually such efforts would lead to the partner’s advancement within the company. In the second case, an alumni for a public high school served as a mentor to students following his graduation from school. As discussed below, in both cases, the courts employed the “economic reality” test, and held that the workers were volunteers as opposed to employees.
Emanuel v. Rolling in the Dough, Inc.
In the first case, the plaintiff- apparently the girlfriend of the general manager of a Domino’s franchise store- assisted her boyfriend in his duties as the general manager. After the boyfriend’s employment with the defendant ceased, the plaintiff sought renumeration for all of the work she had previously performed on behalf of defendants, while he boyfriend had been employed. Interestingly, it appears from the style of the case that the defendants- who denied that the plaintiff was ever their employee- sought to bring a claim for indemnification/contribution against the boyfriend by impleading him as a third-party defendant. Looking at the totality of the circumstances, the court concluded that she was a volunteer and not an employee under the FLSA. Thus, the court granted the defendants’ motion for summary judgment.
Elucidating the relevant facts, the court explained that at some point in 2007, the plaintiff (Emanuel) told her boyfriend that she wanted to work at the store he managed on behalf of the defendants. Apparently, the plaintiff wanted to help with her boyfriend’s effort to become a Domino’s Pizza franchise owner.In response the boyfriend said he’d have to speak to the defendants about Emanuel working at the Elmhurst store. Thereafter, the boyfriend conveyed to Emanuel that defendants “believed your talents can be better utilized somewhere else.” Nonetheless, sometime later, the boyfriend (Shafer) communicated to Emanuel that she could begin working at the Elmhurst store. Significantly, the plaintiff acknowledged that she could not have worked in the store pursuant to the defendants anti-nepotism policy and that defendants would have told her to “get the hell out of my store,” had they known she was performing work in the store.
It was undisputed that neither the defendants, nor plaintiff’s boyfriend or anyone for that matter, ever promised plaintiff any compensation for the work she performed.
Ultimately, the plaintiff’s boyfriend and defendants got into a dispute regarding their agreement about his [plaintiff’s boyfriend’s] compensation, and as a result both plaintiff and her boyfriend ceased working for defendants. Subsequently, she filed the lawsuit, seeking compensation for the approximately 3 years of work she performed on behalf of defendants (and her boyfriend).
Laying out the elements of the “economic reality” test, the court explained:
Courts look to the totality of the circumstances when determining whether an individual is an “employee” under the FLSA and examine the “economic reality” of the working relationship. See, e.g., Vanskike v. Peters, 974 F.2d 806, 808 (7th Cir.1992). Courts have considered a variety of factors when examining the “economic reality” of a purported employment relationship, though none are dispositive or controlling. Secretary of Lab. v. Lauritzen, 835 F.2d 1529, 1534 (7th Cir.1987). Six commonly applied factors are: (1) the nature and degree of the alleged employer’s control as to the manner in which the work is to be performed; (2) the alleged employee’s opportunity for profit or loss depending upon his managerial skill; (3) the alleged employee’s investment in equipment or materials required for his task, or his employment of workers; (4) whether the service rendered requires a special skill; (5) the degree of permanency and duration of the working relationship; and (6) the extent to which the service rendered is an integral part of the alleged employer’s business. Id. at 1534–35.
Rejecting the plaintiff’s contention that she was defendants’ “employee,” the court reasoned:
“Here, plaintiff Emanuel advances an absurd position. Emanuel argues that defendant Lindeman’s repeated statement that he would not pay her to work at the Elmhurst store was not a refusal to hire her as an employee, but an offer for her to work for free. Since Emanuel claims to have worked at the Elmhurst store without compensation and without [defendants] forcibly ejecting her from the store or otherwise preventing her from working, it is her position that an employment relationship impliedly exists.” However, noting the no one ever promised plaintiff compensation and that her work likely violated one or more of defendants corporate policies, the court held it was unreasonable for plaintiff to believe she was actually their employee, rather than a volunteer. Thus, the court granted the defendants’ motion for summary judgment.
Click Emanuel v. Rolling in the Dough, Inc. to read the entire Memorandum Opinion and Order.
Brown v. New York City Dept. of Educ.
In the second case, the plaintiff, Brown, graduated from the New School for Arts and Sciences, a high school that shared space with Banana Kelly. After graduation, Brown maintained ties with Banana Kelly and occasionally came in to visit former teachers. In October 2007, when Plaintiff expressed an interest in mentoring students, the school offered Plaintiff the opportunity to do so at Banana Kelly. Neither Brown nor the school raised the issue of compensation at this time, and neither discussed Brown’s employee status. No one interviewed Brown about his background or qualifications. Thereafter, the plaintiff went to Banana Kelly and continued at the school for more than three years, finally leaving in December 23, 2010, apparently because he was being investigated for inappropriate conduct related to his comments to a freshman student. During his time at the school, with minor exceptions, the plaintiff reported five days a week throughout the academic year, working 7-8 hours per day on a regular basis.
Citing the fact that the plaintiff never submitted to the normal, legal requirements for employment by the Department of Education: application, interview, background check, job classification, and assignment, the court rejected plaintiff’s assertion that he was an employee, because he expected compensation for his services. Although it was undisputed that the defendant told plaintiff that there was not enough money in the budget to pay him, according to the plaintiff, defendant promised that he would attempt to search the budget for the funding.
Again, looking at the “economic realities” and the totality of the facts of the situation, the court held that plaintiff was a volunteer and not an employee, subject to FLSA coverage. Thus, the court granted defendant’s motion for summary judgment.
The court gave the following overview of the analysis applicable to the issue:
Whether one is a volunteer is to be determined “in a common-sense manner, which takes into account the totality of the circumstances surrounding the relationship between the individual providing services and the entity for which the services are provided.” Purdham, 637 F.3d at 428;City of Elmendorf, 388 F.3d at 528; Todaro, 40 F.Supp.2d at 230. Accordingly, courts should review “the objective facts surrounding the services performed to determine whether the totality of the circumstances establish volunteer status, or whether, instead, the facts and circumstances, objectively viewed, are rationally indicative of employee status.” Purdham, 637 F.3d at 428. The court then examined 2 factors to determine whether the plaintiff was an employee or a volunteer. First, the court considered whether Brown performed the tasks at Banana Kelly for “civic, charitable, or humanitarian reasons,” pursuant to 553.101(a).
Looking at this factor, the court reasoned:
One is a volunteer, if motivated by an altruistic sense of civic duty, see Krause, 969 F.Supp. at 276, as opposed to the expectation of compensation, see Rodriguez, 866 F.Supp. at 1019. When the situation is one of mixed motives, “the regulatory definition does not require that the individual be exclusively, or even predominantly, motivated by ‘civic, charitable or humanitarian reasons. Rather, what is required is that the individual must be motivated by civic, charitable or humanitarian reasons, at least in part.” Purdham, 637 F.3d at 429 (citing Todaro, 40 F.Supp. at 230); see also Benshoff v. City of Virginia Beach, 9 F.Supp.2d 610, 623 (E.D.Va.1998) (finding that firefighters were volunteers when motivated primarily, but not exclusively, by civic, charitable and humanitarian concerns). Here, Brown accepted Jerome’s offer to mentor, in part, because he wanted “[s]omeone … to stand up, and make a change, and show the kids that we do care.” (Welikson Dec. Ex. C, Brown Dep. at 35:21–22.) He felt that the school needed the change because in his experience as a student, “nobody cared” (id. 35:14–17). This motivation remained unchanged as Brown started performing non-mentorship tasks. Brown testified that he helped with lunch duty, dismissals and escorting students despite his displeasure with being asked because he wanted to be a “team player” and that he “want[ed] to help and [he] care[d].” (38:14–39:5.) He felt obligated because he did not want to “let[ ] the school down.” (id. at 150:20–22.) These statements show a continued civic and charitable intent to improve the environment at Banana Kelly. At the same time, Brown testified that he worked because he believed (“hoped”) that money was forthcoming. (Okoronkwo Dec. Ex. 13 Brown Dep. 231:18–19). Accepting Brown’s acknowledgements, the Court turns to whether, in this mixed motive case, Brown acted at least in part, by the proper humanitarian concerns. See Purdham, 637 F.3d at 429. Plaintiff’s testimony shows that his actions at Banana Kelly, had their source, at least in part, in his concern for what would become of students if he did not show up, and was thus properly motivated.
Next the court looked at whether there was a “promise, expectation or receipt of compensation for services rendered.” 29 C.F.R. § 553.101(a). Noting that plaintiff was not compensated, was not offered “under-the-table” compensation, and was not promised compensation, the court concluded that the plaintiff had no reasonable expectation of compensation. Looking at all the circumstances the court concluded that:
There is ample evidence that Brown knew and understood, despite his hopes to the contrary, that he would not be compensated. Brown admitted that he understood that he would not get paid for mentoring. No one led Plaintiff to believe that he would get paid for non-mentoring tasks. Laub testified that he had conversations with Plaintiff in which he relayed to Brown that he was volunteer and intern. Banana Kelly gave him certificates of appreciation that acknowledged his services as an intern and volunteer which Brown accepted without objection. While labels used by the parties do not control the outcome (P. Opp. at 11), the parties’ understanding of their arrangement is a relevant factor in the totality-of-circumstances analysis. See Rodriguez v. Township, 866 F.Supp. 1012, 1020 (S.D.Tex.1994) (declining to hold that the plaintiff was a volunteer in part because both parties understood their relationship as an employment, rather than volunteer, relationship).
Taking all of the circumstances into consideration, the court concluded that the plaintiff was a volunteer.
Click Brown v. New York City Dept. of Educ. to read the entire Opinion and Order.
N.D.Ill.: Former Attorney and Accountant Improper Third-Party Defendants in FLSA Case; Non-Employers Not Subject to Liability
Strauss v. Italian Village Restaurant, Inc.
This case was before the court on the third-party defendants’ motion to dismiss. The defendant, sued for FLSA violations, sought to implead its former attorneys and accountant, on the basis that the faulty legal/accounting advice they rendered resulted in the potential liability at issue in this wage and hour case. While indemnification by the professionals who rendered allegedly bad advice which led to the liability would seem to be a legitimate claim, the court dismissed the claim, because neither of the third-party defendants were alleged to be the plaintiffs’ employer (or joint employers), a prerequisite for the imposition of liability under the FLSA.
Reasoning that the professional consultants at issue were not subject to liability under the FLSA, Illinois state wage and hour laws, or similar counts derived from such statutes, the court explained:
Multiple employers may be held liable under the FLSA when “the facts establish that the employee is employed jointly by two or more employers.” The Supreme Court has held that the determination of whether a party is an employer is based on the “economic reality” of the situation. Courts have considered a variety of factors when making this determination, including the ability to hire or fire the employees, supervision of the employees’ schedules, determination of wages, and the maintenance of employment records. The Seventh Circuit has held that an “employer must exercise control over the working conditions of the employee.”
As these third-party defendants accurately point out, there is nothing in the Italian Villages’s conclusory allegations in these counts that suggests that these defendants could ever be considered “employers” within the meaning of the FLSA. There are no allegations that these third-party defendants had any control over these plaintiffs’ working conditions as the case law require; that they could hire, fire or manage them. Nor could there be. These firms were hired by the Italian Village to negotiate the employment contracts and to manage employee payroll. Their work in this respect was controlled by the Italian Village. Regardless of how much The Italian Village chose to rely on the advice and counsel of their third-party contractors with respect to these issues, there is no authority that the Court could find that supports the argument that the Italian Village’s reliance on these firms’ transforms these into “employers” under the FLSA.
Essentially the Italian Village is asking the Court to by-pass the statutory scheme set forth in the FLSA and shift responsibility for compliance with the FLSA from itself, the employer, to third-party consultants which it paid for services rendered. But nothing in the FLSA suggests that the Italian Village’s alleged “reasonable reliance” on its consultants can shift compliance with the law on to them as well. Moreover, there is ample authority that holds that the FLSA precludes all such potential blame-shifting and bars third-party actions for contribution and indemnity using any tort theories.
The Italian Village’s response to this raft of authority is that it is directed only at attempts by employers to shift liability to certain key employees, not to third parties like the accountants and attorneys sued here. Actually this is not correct. In Chao v. St. Louis Internal Medicine, the court held that an accounting firm could not be sued as a third-party defendant in an FSLA case under a tort theory. But even if this case did not so hold, this Court can see no real distinction between efforts to shift liability to employees, which is prohibited by the case law, and the Italian Village’s efforts to shift liability to their third-party consultants. Either scenario is barred by the FLSA’s express language that liability for compliance rests with the employer and the employer only so that the statute’s mandates are not diluted.
Click Strauss v. Italian Village Restaurant, Inc. to read the entire Memorandum Opinion and Order.
5th Cir.: Department Head Who Notified Employer of Potential FLSA Violations Did Not Engage in Protected Activity, Because She Did Not “Step Outside Her Normal Job Role”
Lasater v. Texas A & M University-Commerce
This case was before the Fifth Circuit on appeal of an order awarding the defendant summary judgment on plaintiff’s FLSA retaliation claim. Specifically, the plaintiff, a former department head for the defendant asserted that she was terminated for raising concerns regarding the defendant’s payroll policies (and failure to comply with the FLSA) to an independent auditor and later her supervisors. The court below held that plaintiff failed to allege that she had engaged in protected activity, because she was merely performing her duties for defendant when she reported her concerns regarding non-compliance. The Fifth Circuit agreed and affirmed the award of summary judgment for the defendant.
The Fifth Circuit recited the following factual history:
This case arises from TAMUC’s termination of Lasater’s employment in December 2009. From March 2006 to December 2009, Lasater was employed as the Director of the Office of Financial Aid and Scholarships at TAMUC. Prior to that, Lasater worked in the Financial Aid Department at Texas A & M University–Corpus Christi for 17 years.
In November 2008, Lasater met with Lori Ellison, an outside auditor from The Texas A & M University System who was conducting a regularly scheduled audit. During the meeting, Lasater alleges that Ellison asked her if she had any “concerns” and Lasater told her that “there were some things that were of concern to me and I felt like I needed to, in good faith, report some things that I thought were violations, including comp time.” Lasater alleges that in the course of the conversation with Ellison she discussed a number of problems related to the university’s employee compensatory time (“comp time”) policy. First, she was concerned that comp time had to be used before vacation time; because vacation time would be lost if not taken before the end of the year, this could in turn cause employees to lose accrued comp time. She also voiced her concerns that employees in her department had accrued large balances of comp time and were too busy for Lasater to allow them to timely use their comp time and still meet the demands of her office. Third, she specifically expressed her concerns about one of her employees, Diane Lewis, who had been promoted to a position within the department exempt from the overtime requirements of the FLSA and TAMUC had declined Lasater’s request that Lewis be paid for her accrued comp time after her promotion. Finally, Lasater alleges that she reported to Ellison her concerns about the operation of TAMUC’s Financial Services division, including its failure to “draw down” its allotted federal funds and the fact that it was not performing monthly reconciliations related to federal funds for financial aid. At the time of the meeting Lasater did not suggest to Ellison that TAMUC policies regarding comp time violated the FLSA or refer to any applicable law she believed had been violated.
Relevant TAMUC policy provides that employees who are not exempt under the FLSA may earn comp time for working more than forty hours per week; the policy requires component universities to compensate employees by giving them time off rather than paying them overtime. TAMUC policy also provided that administrators who supervise staff were to ensure that no employee accrue a comp time balance in excess of 240 hours and that, if necessary, employees were to use comp time before taking vacation time. Lasater, as a supervisor, had the responsibility for approving, and the authority to deny, employee leave requests. The policy also states that an employee who transfers between departments may, upon the department managers’ agreement, be paid for accumulated comp time but no policy required payment for comp time to an employee promoted within a department. TAMUC policy additionally provides that inquiries or interpretations of FLSA legal issues should be directed to the System Human Resources Office or the Office of General Counsel.
In December 2008, Ellison reported Lasater’s concerns up the chain of command to Lasater’s supervisor, Stephanie Holley; Mary Hendrix, Vice President for Student Access and Success; and Dan Jones, President of TAMUC. Lasater alleges that shortly after her conversation with the auditor Holley and Hendrix demanded to know why she had reported the comp time issue and began to act colder toward her, harassed her, increased their scrutiny of her, and forced her to take unqualified employees.
In May 2009, Holley gave Lasater a favorable evaluation, and in August, Lasatar received a merit raise. In September 2009, Holley and Hendrix met with Lasater and discussed their concerns about the need for a training manual, the role of Lewis, and how Lasater was not “allowing other people into [her] inner circle.” In early December 2009, Rose Giles, one of Lasater’s subordinates, approached Holley to discuss her frustration with the fact that she did not feel Lasater’s staff was properly trained. Holley then spoke with Susan Grove, the Assistant Director of Scholarships, who alleged that Lasater did not adequately train her staff, spent most of her time with co-employee Lewis to the exclusion of all others, repeatedly arrived late, and had a tendency to “lash out.” Grove stated that she was so distressed by Lasater’s management style that she was planning to leave the university. On December 15, 2009, Holley and Hendrix informed Lasater that her employment was terminated.
Discussing the type of behavior a management-level employee must engage in, for such behavior/activity to constitute “protected activity,” the court explained:
[T]his circuit has recognized that an employee’s communication does not constitute a complaint unless that employee “somehow steps outside of his normal job role” so as to make clear to the employer that the employee is “taking a position adverse to the employer.” Id. at 627–28. Such a requirement is “eminently sensible for management employees” because a managerial position “necessarily involves being mindful of the needs and concerns of both sides and appropriately expressing them.” Id. at 628. Thus, voicing “concerns is not only not adverse to the company’s interests, it is exactly what the company expects of a manger.” Id. (emphasis in original). Without such a requirement, “nearly every activity in the normal course of a manager’s job would be protected activity.” Id.
Illustratively, a personnel director responsible for monitoring compliance with workplace laws did not engage in protected activity when she discussed her “concerns about the company’s possible FLSA violations” with the president of the company. McKenzie v. Renberg’s Inc., 94 F.3d 1478, 1481 (10th Cir.1996). The Tenth Circuit found her “job responsibilities” included discussing wage issues and that assisting the company with FLSA compliance was “completely consistent with her duties.” Hagan, 529 F.3d at 627 (quoting McKenzie, 94 F.3d at 1487). It held that it is “the assertion of statutory rights (i.e., the advocacy of rights) by taking some action adverse to the company … that is the hallmark of protected activity.” Id. (emphasis in original) (quoting McKenzie, 94 F.3d at 1486). Thus because McKenzie “never crossed the line from being an employee merely performing her job as personnel director to an employee lodging a personal complaint about the wage and hour practices of her employer and asserting a right adverse to the company,” her discussion of her FLSA violation concerns with the president could not reasonably “be perceived as directed towards the assertion of rights protected by the FLSA.” Id. (emphasis in original) (quoting McKenzie, 94 F.3d at 1486–87).
Applying this standard to the facts at bar, the court held that the plaintiff failed to show she stepped outside of her normal job role in reporting her concerns regarding the defendant’s comp time system to the auditor and to her supervisors. Further, the court noted that even if she had, her actions could not reasonably be construed to have asserted FLSA rights on behalf of herself or the employees who were the subject of her conversations. Thus, the court affirmed summary judgment for the defendant.
Click Lasater v. Texas A & M University-Commerce to read the entire per curiam decision.
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