Friday, February 13, 2015

Plenty of Cents But Little Sense - Courts Struggle With the Fair Labor Standards Act

Despite its swiftly-approaching eightieth birthday the Fair Labor Standards Act is as relevant today as it was when passed in 1938.  Despite its vintage, the last year has seen D.C.-area courts struggle with a number of complex and consequential questions of interpretation under the FLSA which have the potential to inform litigation nationwide.  A smorgasboard of the most important and most interesting issues addressed by D.C.-area courts in the last year is provided below.

I.                Equitable Tolling

In Cruz v. Maypa, 773 F.3d 138 (4th Cir. 2014), the Court, Judge Gregory writing for the panel, held that that the failure to post the required FLSA notice in the employer’s home could equitably toll the statute of limitations, and remanded for discovery.  The panel’s decision was consistent with the Fourth Circuit’s 1983 decision in Vance v. Whirlpool Corp., 716 F.2d 1010 (4th Cir. 1983) where the Court held that the EEOC filing requirement under the Age Discrimination in Employment Act could be equitably tolled by the employer’s failure to post an ADEA notice of rights. The plaintiff was a domestic servant from the Philippines and spoke Tagalog.  The defense argued that posting of the notice would have been futile because the poster provided by the Wage and Hour division is not available in Tagalog.  In response, the Court stated "Besides being offensive, this argument turned on a factual issue which must be construed in Cruz's favor...Cruz has not alleged that she speaks no English, only that her English is limited.  Furthermore, this argument would lead to the absurd result of affording fewer protections to non-English speaking employees."

II.             Individual Liability

In Martin v. Wood, 772 F.3d 192 (4th Cir. 2014), the Fourth Circuit, Judge Niemeyer writing for the panel, dismissed on Eleventh Amendment grounds, an FLSA suit brought by an employee against supervisors in their individual capacities of a state-operated hospital for allegedly improperly refusing to authorize overtime for hours worked in excess of a forty-hour week.  The Court seemingly indicated that if the supervisors were alleged to have been acting in an ultra vires manner or if they had acted to serve a personal interest, the FLSA action could proceed against them in their individual capacities.  Based on the pleadings before the Court here, the Court concluded that the plaintiff was simply attempting to circumvent Eleventh Amendment immunity.

III.           Preemption

In Barton v. House of Raeford Farms, 745 F.3d 95 (4th Cir. 2014), Judge Niemeyer writing for the panel, the Court held that the plaintiff’s claims under a state wage law were preempted by the Labor Management Relations Act, because their disputes about pay were essentially a disagreement as to how to calculate their “hours worked” under a collective bargaining agreement.  Here, the collective bargaining agreement was silent as to how compensable time was to be calculated in a donning and doffing circumstance.  The custom and practice had been to compensate only for “line” time and not for “clock” time.  As a result, the panel, repeatedly noting that the CBA stated that it was the “exclusive” agreement, even though the employer allegedly had represented at the time of hire that it would pay “clock” time, the Court held that such claim was preempted.

IV.            Timely Payment of Wages

In Martin v. U.S., 117 Fed. Cl. 611 (2014), the Court of Federal Claims (Chief Judge Campbell-Smith) addressed the Federal Government's partial shutdown which lasted from October 1 through October 16, 2013, resulting in a five-day delay in paying some federal workers.  The issue before the Court was whether such a short delay in the payment of wages could nonetheless give rise to an FLSA claim for failure to timely pay non-exempt employees.  The Court, applying the Supreme Court's "On Time" mandate found in Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 707 (1945) declined to adopt the government's proposed "totality of the circumstances" test and instead held that "timely payment was the usual rule."  Given that the federal employees had all been paid, albeit a few days late, the claim here is a claim for liquidated damages.  The Court did not address that issue except to note the good faith test. 

V.              The Tucker Act

In Abbey v. United States, 745 F.3d 1363 (Fed. Cir. 2014), the plaintiffs pursued an FLSA claim in the Court of Federal Claims, invoking the Court's jurisdiction under the Tucker Act.  The Government, in a reversal of what has been its position for three decades, argued that the Supreme Court’s decision in U.S. v. Bormes, 133 S. Ct. 12 (2012) requires the overturning of the longstanding holding that the Tucker and Little Tucker Acts apply to damages cases against the federal government under the FLSA.  The Court, Judge Taranto writing for the panel, rejected this argument. 

VI.            Full Payment

In Marshall v. Safeway, Inc., 88 A.3d 735 (Md. 2014), the Maryland Court of Appeals held that where an employer made an unauthorized deduction of $29.64 from an employee’s pay in response to two writs of garnishment, it was not paying all the compensation that was due to the employees, which constituted a violation of the Maryland Wage Payment and Collection Law.

VII.         Overtime and Wage Theft

In Peters v. Early Healthcare Giver, Inc., 97 A.3d 621 (Md. 2014), the Maryland Court of Appeals (Judge Adkins writing for the Court) addressed enhanced damages where the Employer failed to pay overtime, which the Court characterized as “Wage Theft.”  First, the Court rejected the employee's argument that there should be a presumption in favor of granting enhanced damages.  Next, the Court addressed whether there was a basis for a legitimate, bona fide, dispute, stating that an incorrect legal belief may form the basis for a legitimate, bona fide, dispute. When asked to establish guiding principals that the trial courts should follow when exercising their discretion as to whether, and in what amount, to award enhanced damages, the court's solution was to simply say that "the trial courts are encouraged to consider the remedial purpose of the MWPCL when deciding whether to award enhanced damages to employees.”  Finally, the Court affirmed that the WPCL contemplates a maximum award of three times the unpaid wage, not three times the unpaid wage in addition to recovery the unpaid wages. 

VIII.      Misclassification

In Mock v. Fed. Home Loan Mortg. Corp., No. 1:13-cv-01292, 2014 U.S. Dist. LEXIS 97259 (E.D. Va. July 15, 2014), aff’d, No. 14-1782, 2014 U.S. App. LEXIS 24569 (4th Cir. Dec. 30, 2014), the plaintiff, an Engineering Senior and Engineering Tech Lead, claimed that he had been improperly and willfully classified as exempt under the FLSA.  The Court granted the employer’s motion for summary judgment, on the bases that the plaintiff is a highly compensated employee who performs non-manual work, and that he also qualified for the administrative employee and computer professional exemptions under the FLSA.

IX.           Rounding

In Hughes-Smith v. Crown Linen Serv., Inc., No. 1:13-cv-1048, 2014 U.S. Dist. LEXIS 28415 (E.D. Va. March 5, 2014), the Court (Judge Cacheris) approved the employer's policy whereby it rounded down employee time from one to seven minutes and rounded up employee time from eight to fourteen minutes.  The employer tracked hours in fifteen minute intervals. 

X.              Collective Action Certification/Decertification

In Lafleur v. Dollar Tree Stores, Inc., No. 2:12-cv-00363, 2014 U.S. Dist. LEXIS 69886 (E.D. Va. May 20, 2014), the Court (Judge Jackson) reaffirmed its denial of defendant’s motion to decertify the collective action which it had certified under the FLSA.  Among other reasons, the Court indicated that the decision of the Fourth Circuit in Monahan v. Cnty. of Chesterfield, 95 F.3d 1263 (4th Cir. 1996) was distinguishable because Monahan does not deal with the similarly situated standard for collective action certification.  

XI.           State Legislation

On September 19, 2014 the Mayor signed the D.C. Wage Theft Prevention Act, B20-0671, which is projected to go into effect, following Congressional review, on February 26, 2015.  Among its provisions, the Act requires employer notices (and allows for tolling of the SoL in their absence), permits class actions, amends the D.C. Wage Payment & Collection law to cover white collar, executive, and professional employees previously excluded, and provides that fee awards “shall” be made using adjusted Laffey rates.  

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