FLSA Cases Keeping Sixth Circuit Court Occupied

In the past month, the Sixth Circuit has issued a number of FLSA decisions affecting employers and employees.  Last week, the Court rejected objections to a class action settlement on behalf of exotic dancers.  Jane Does 1-2 v. Déjà Vu Consulting, Inc., No. 17-1801 (6^th Cir. 6-3-19).  In another, the Court rejected claims for overtime compensation by certain Fire Battalion Chiefs on the grounds that they were exempt employees and were not entitled to extra standby pay.  Holt v. City of Battle Creek, No. 18-1981 (6^th Cir. 6-3-19).   In another, the Court affirmed the trial court judgment imposing liability for unpaid overtime compensation for employees of a small lumber company, but remanded for a redetermination of the amount of damages due which did not include time spent on bona fide meal breaks or commuting to and from work.  Secretary of Labor v. Timberline South, LLC, No. 18-1763 (6^th Cir. 5-29-19).  In that case, the Court also refined the test for enterprise coverage for employers which only purchase and use equipment locally, but that which is manufactured out of state.  It also rejected the employer’s good faith defense for seeking incomplete advice from a non-expert.  Finally, the Court affirmed the dismissal of a FLSA retaliation claim where the plaintiff failed to show that she had ever communicated any complaints about unpaid overtime.   Rogers v. The Webstraurant Store, Inc., No. 18-6229 (6^th Cir. 5-23-19). Her “vague, non-adversarial conversations about staying late are not sufficiently “serious occasion[s]” to be considered complaints under the FLSA.”


Déjà Vu Consulting involved the settlement of class claims (brought under both Civil Rule 23 and FLSA § 216(b)) that exotic dancers had been misclassified as independent contractors to avoid paying minimum wages  and been subject to illegal wage deductions.  It was similar to prior litigation which involved many of the same dancers and defendants.  Many, if not all, of the 28,177 class members had signed agreements with the defendants containing arbitration clauses with prevailing parties being entitled to recover attorney’s fees, etc.   Accordingly, the Court found it was not an abuse of discretion for the trial court to affirm the settlement reached in light of the risk to the plaintiffs of being compelled to individually arbitrate their claims and possibly be financially liable to the defendants.   The Court also found that formal discovery was not necessary in light of the extensive discovery conducted in the prior case involving many of the same type of claims and parties.  The settlement provided for both injunctive and financial relief.   The financial settlement of $6.5M was divided among $1M in cash payments, $4.5 attributed to a secondary settlement pool that could be claimed while working at the defendant clubs in the future and $900K to class counsel.  The dissent would have remanded for a recalculation of the counsel fees because she characterized a requirement of the settlement – that the plaintiff dancers work at a defendant club to receive a financial benefit from the secondary pool of monetary relief – as a “coupon” under Class Action Fairness Act which can only be considered for purposes of evaluating attorney’s fees based on the coupons redeemed instead of merely the pool of money set aside.


Holt involved claims for unpaid overtime and standby time by two Fire Battalion Chiefs, the second in command in the Fire Department hierarchy. Their primary job duties involved management and administration.   They received an extra 1.5 hours of pay for each day when they were on call during the night shift (in addition to overtime if they were actually called back to work) and were required to monitor the radio and pager while on call.   They could not leave town or drink alcohol when on call because they might be called to a fire scene.


In evaluating their exempt status, the Court rejected the plaintiff’s argument that a narrow reading of exemptions should be given in light of the Supreme Court’s prior Encino Motorcar decision. The trial court found that Battalion Chief’s primary duty was managerial in nature because they

were required to directly supervise lower-ranking officers and personnel, evaluate personnel, administer and enforce department policy, and coordinate the day-to-day operations of the department . . . .  the battalion chiefs were expected to “take charge and operate as the incident commanders at the scene of a fire.”  

Further, one “was ‘in charge’ of all suppression personnel and [the other] was ‘in charge’ or ‘oversaw’ the training division.  Approximately 27 lieutenants and captains directly reported to [one] who monitored their adherence to standards.  Moreover, Chief [Hausman] testified that if any fire fighter ‘had a problem[,]’ he or she would take it to plaintiff Holt.”  In addition,  although the trial “court recognized that Plaintiffs did not have independent authority to hire, fire, or suspend fire fighters, it credited certain testimony as showing that Plaintiffs’ “suggestions and recommendations as to hiring, firing, advancement, promotion or any other change of status of other employees were given ‘particular weight.’”  The FLSA regulations do “not require courts to ask whether an employee’s recommendations as to personnel decisions were accepted every single time—instead, it presents the question of whether those recommendations were given “particular weight,” which is precisely what the district court found.”


In light of their management exempt status, the Court decline to evaluate whether they were also exempt administrative employees and whether their standby restrictions were so onerous as to require extra compensation.


Timberline concerned a small lumber company that harvested and transported lumber only inside the state of Michigan and bought and sold only from Michigan companies.   The operations manager consulted with an accountant and believed that some the employees were exempt agricultural workers and the transportation were exempt under the Motor Carrier Exemption Act, but did not consult with an attorney or explain why the office employees would be considered exempt.   The employer kept track of working hours for the hourly employees, but not the salaried employees.  Following a DOL investigation, the DOL filed a lawsuit and was awarded summary judgment in the amount of $439,437.42 in back pay and liquidated damages for unpaid overtime owed to 50 employees.


The first issue to be considered was whether the employer was a covered enterprise under the FLSA.  The employer argued that its equipment, though manufactured outside of the state,  was purchased locally and, as the end user of that equipment, could not be considered for purposes of §203(s)(1)(A)(1) of the FLSA that covers employers which have “employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person.”  The Court ultimately adopted the test utilized by the Eleventh Circuit to evaluate whether equipment used by an employer to create its product constituted goods or materials under the FLSA enterprise test.   The Eleventh Circuit considered an amendment to the FLSA to include “materials” as well as “goods” and the exception for “goods” when the employer was the ultimate enduser of the goods.  It cautioned that

the same items could be goods in one case, materials in another, and neither goods nor materials in still another case, depending on the use of the item in the context of each case.  “Where a catering business uses the china plates at a client’s banquet, the plates count as part of the ‘materials’ necessary for serving a catered meal.  But, where a department store sells the same china plates as stand-alone items, the plates count as ‘goods’ for that retailer.”  Id.  Those same plates hung as decorations on the lobby wall of an accounting firm, however, constitute neither goods nor materials “because the plates have no significant connection to the business’s accounting work.”

                 . . .

Applying the definition of “materials” from Polycarpe, the logging and harvesting equipment used by Timberline’s employees plainly constitute “materials” because the equipment is necessary to cut down trees and transport the timber, which in turn have a significant connection to Timberline’s commercial activities of harvesting and selling timber.

The Court rejected the employer’s argument that this would effectively impose the FLSA on every business which purchases computers that are all manufactured overseas and pens that are manufactured out of state because the DOL has never sought such broad enforcement.  The Court also noted that Polycarpe specifically mentioned that incidental and internal consumption of an item would not satisfy the requirement that the materials be used in the employer’s commercial activity.  “[C]overage here is not premised on employees’ incidental use of office items; rather, it is premised on employees’ regular and recurrent use of logging and harvesting equipment that is used to carry out the company’s commercial activity of harvesting timber.”


The Court next rejected the employer’s Motor Carrier exemption because its drivers never left the State of Michigan even though they held CDLs and had DOT registration numbers:

The dispositive inquiry here is not whether Timberline’s employees held commercial driver’s licenses or whether its trucks had DOT registration numbers; rather, the dispositive inquiry is whether Timberline’s drivers transport goods in interstate commerce, thus rendering Timberline a motor private carrier.  49 U.S.C. § 13102(15); Vaughn, 291 F.3d at 904.  Courts have consistently interpreted this to mean that drivers must travel or transport the goods across state lines, or transport the goods in a “‘practical continuity of movement’ across State lines from the point of origin to the point of departure.”

Further, the employer failed to show that its timber was used by its buyers in interstate commerce.   On the contrary, it disclaimed knowledge of what use was made of the timber it sold.


Third, as for calculating back pay, the DOL had argued that employees’ regular rate include the compensation that they had received for their meal and commuting time – which otherwise is not considered working hours for purposes of the FLSA – because the employer traditionally and customarily paid employees for such time and the Portal-to-Portal Act referred to including such time of customarily compensated.  Neither the DOL nor the Court had made any effort to determine how many of the employees’ paid hours constituted such commuting or meal break time.  The Court rejected that argument:

Although the plain language of the Portal-to-Portal Act suggests that home-to-work commutes are deemed compensable if the employer has a custom or practice of compensating for such work, 29 C.F.R. § 785.34 explains that “ordinary travel from home to work (see § 785.35) need not be counted as hours worked even if the employer agrees to pay for it.”  And, 29 C.F.R. § 785.35 says plainly that “[n]ormal travel from home to work is not worktime.”  The reason is that the FLSA only requires overtime compensation for “actual work or employment,” Tenn. Coal, Iron & R. Co., 321 U.S. at 597, “[a]nd even where there is a contract, custom, or practice to pay for time spent in such a ‘preliminary’ or ‘postliminary’ activity, section 4(d) of the Portal Act does not make such time hours worked under the Fair Labor Standards Act, if it would not be so counted under the latter Act alone,” . . . “The general rule . . . is and always has been that the FLSA does not treat ordinary home-to-job-site travel as compensable.”  Kuebel v. Black & Decker Inc., 643 F.3d 352, 360 (2d Cir. 2011).  The same is true of “bona fide meal periods.”  29 C.F.R. § 785.19; see also Ruffin v. MotorCity Casino, 775 F.3d 807, 811-15 (6th Cir. 2015) (examining whether meal periods were compensable under the FLSA as “work”).

The Court remanded for the DOL and trial court to calculate how many hours the employees had been paid for commuting and meal breaks and to deduct that from the damages calculation.  Nonetheless, “Defendants may not use the amounts paid for those otherwise non-compensable work periods as an offset against the amounts owed.”


Fourth, the Court also rejected the employer’s argument that liquidated damages should not be awarded or should at least be reduced because it acted in good faith in consulting with its accountant about the agricultural exemption and in paying its employees well above the industry average.  An employer is required to show that it took affirmative steps to comply with the FLSA, but nonetheless violated it.   The employer did not provide sufficient information to the accountant about all of the employees and the accountant did not profess to be a FLSA expert.  Further, the employer knew that not all of the employees would qualify under the agricultural exemption and did not take reasonable steps to investigate the status of the other workers.  It did not even convincingly argue the agricultural exemption before the trial court and did not appeal that issue to the Sixth Circuit.  As for the generous compensation, that matter is irrelevant for purposes of FLSA compliance in the absence of good faith and reasonable grounds for non-compliance.


The plaintiff in Rogers had failed to demonstrate appropriate customer service skills and had been placed on a performance improvement plan.  She alleged that she had been terminating for complaining about unpaid overtime, but she failed to show that she had made any such complaints that could be objectively perceived as a complaint.  Her first “complaint” was really an apology for being late and asking whether she could attribute the 15 minutes that she worked past her shift the prior evening towards the 25 minutes that she had been late.  Her second “complaint” related to the tone of her voice when asking if she was supposed to work on her PIP outside of regular work hours.    Her third “complaint” related to notes that she sent her manager about how she was engaging in “self-reflection” outside of work hours and that she had been told to do this on “her own time.”  Indeed, he manager contacted her about whether she was working unauthorized overtime in order to give her back time that she had worked.  The plaintiff then admitted that she had not been recording all of her time working, but did not think that would be a concern.


Even if the allegations were true, the Court found that they could not constitute “complaint” under the FLSA that could support a retaliation claim. “The Supreme Court has said that the act of filing an FLSA complaint must contain ‘some degree of formality,’ such that a reasonable employer would understand it ‘as an assertion of rights protected by the statute and a call for their protection.’” However, “none of them even indicated that Rogers was complaining  or used any synonym or similar expression.”  Moreover, it is not clear that the employer could have realized that she was making a complaint.

While an employee need not explicitly mention the FLSA, she must do something to give fair notice that she is actually complaining about overtime or a lack of fair compensation, i.e. the core things the FLSA protects.  Kasten, 563 U.S. at 14.  Rogers’s vague, non-adversarial conversations about staying late are not sufficiently “serious occasion[s]” to be considered complaints under the FLSA.

                 . . . .

Not every grumble or “expression[] of concern or discomfort or frustration” by an employee constitutes an FLSA complaint.  Robinson v. Wal-Mart  Stores, Inc., 341 F. Supp. 2d 759, 763 (W.D. Mich. 2004).  Instead, an employee’s expressions  must be “sufficiently clear and detailed” to count as a complaint.  Kasten, 563 U.S. at 14.  Rogers’s allegations provide no information on how a mere tone of voice can be that clear.  Moreover, no required inference can save her lawsuit from that lack of clarity.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Rejects ADA Claims For Failure to Show a Disability or Failure to Accommodate

Last week, the Sixth Circuit Court of Appeals affirmed the summary judgment dismissal of an ADA claim on the grounds that the plaintiff failed to show that he was disabled, that the employer failed to provide him with a reasonable accommodation and that he had timely filed one of his claims within the 300 day limitations period.  Booth v. Nissan North America, Inc., No. 18-5985 (6^th Cir. 6-7-19).  The plaintiff’s physician indicated that he had some lifting and bending restrictions which, at worse, may have impacted his ability to perform a particular job.  “[J]ust because a plaintiff has work restrictions does not mean that he is disabled.”


According to the Court’s opinion, the plaintiff worked for more than a decade after his doctor gave him permanent medical restrictions on bending and reaching.  In 2015, he applied for a transfer, which was denied on account of those medical restrictions.  He sought reconsideration several times, but was again denied.  Shortly thereafter, the employer modified his assembly line position to require all of the employees to be able to perform four job functions instead of merely two.  When he informed the employer that the additional two job functions would violate his medical restrictions, he was temporarily kept in his two-function position.  In 2016, he was requested to update his medical restrictions with his physician because they were inconsistent with his current position.  He did so in 2017 and the physician modified the restrictions which would have prevented him from performing the additional job functions.  The plaintiff agreed with the restrictions and, once they had been modified, was able to perform the new job and continued to do so even throughout the litigation.


In November 2016, the plaintiff filed an EEOC Charge, which was dismissed for failure to show that he had a disability.  He filed a lawsuit challenging the failure to transfer him to the material handler position, and failing to accommodate his alleged disability.  The trial court granted the employer’s motion for summary judgment.


The plaintiff was informed in November 2015 that he would not be transferred into the material handler position because of his medical restrictions. Although he attempted to get that decision reversed, the supervisors and human resources explained to him that the decision would not change unless his medical restrictions changed.  He did not file his EEOC Charge until more than 365 days later even though the ADA requires Charges to be filed within 300 days.  His requests for reconsideration did not re-start the limitations period.


Even if his claim had been timely, the Court also found that he had failed to prove that he had a disability. Prior to the amendment of the ADA, the Court had made clear that “simply having a work restriction does not automatically render one disabled,  . . . .  nor does being unable to perform a discrete task or a specific job.”  After the ADA was amended, “an impairment that “substantially limits one major life activity need not limit other major life activities in order to be considered a disability.”

Even so, Congress did not modify the definition of the major life activity of working, and a plaintiff who alleges a work-related disability “is still required to show that her impairment limits her ability to ‘perform a class of jobs or broad range of jobs.’”   . . . . EEOC regulations explain that a plaintiff cannot claim a disability by simply “[d]emonstrating a substantial limitation in performing the unique aspects of a single specific job.”  29 C.F.R. § 1630, App. (2016).  That Booth’s neck injury and related work restrictions kept him from working in the material handling role does not resolve whether Booth is disabled under the ADA.  Rather than point to one job that he cannot perform, a plaintiff alleging a work-related disability must show that his condition precludes him from working in a class or broad range of jobs, “such as . . . assembly line jobs.”  Id.  Booth has not made that showing.  To the contrary, Booth concedes that he has worked without interruption on the assembly line since injuring his neck in 2004—and has continued to work there since this litigation began.  

The Court also rejected his timely failure to accommodate claim, which was based on the employer’s “pressure” to have his medical restrictions modified under threat of termination if he failed to do so.  

 However, the Court rejected this claim for the same reason as his refusal-to-transfer claim:  he could not show that he was disabled.   Moreover, he could not show that the employer failed to accommodate him because he continued to work uninterrupted even though the litigation. “Nor does Booth suggest that he misreported his symptoms or otherwise encouraged his doctor to modify the restrictions in order to preserve his job.  To the contrary, Booth testified that he does not disagree with his doctor’s revisions to his work restrictions.”


NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Supreme Court Issues New Employment Decisions

As its term nears its annual close, the Supreme Court has issued a couple of opinions of interest to employers and employees.   What is surprising is that the Court was unanimous in both decisions.   This morning, the unanimous Supreme Court agreed that only federal law applied to off-shore drilling platforms under the Outer Continental Shelf Lands Act (“OCSLA”)  and that the laws of adjacent states only applied when applicable and there is no other federal law on the issue.   Parker Drilling Management Services Ltd v. Newton, No 18-389 (6-10-19).  Accordingly, only the Fair Labor Standards Act and not California wage and hour laws applied to the plaintiff’s class action claims that he was improperly not paid for standby-time when he could not leave his rig.    Last week, the Court ruled that a defendant employer’s failure to include an objection to a plaintiff’s failure to file a religious discrimination Charge of Discrimination with its Rule 12(b) defenses in a responsive pleading in a Title VII action forfeited the defense.  Therefore, the employer could not later challenge the court’s subject matter jurisdiction to defeat a claim for religious discrimination which had not been raised in her EEOC Charge (which had only asserted sexual harassment and retaliation).  Fort Bend County Texas v. Davis, No. 18-525 (6-3-19). “Title VII’s charge-filing instruction is not jurisdictional, a term generally reserved to describe the classes of cases a court may entertain (subject-matter jurisdiction) or the persons over whom a court may exercise adjudicatory authority (personal jurisdiction). . . .  Prerequisites to suit like Title VII’s charge-filing instructions are not of that character; they are properly ranked among the array of claim-processing rules that must be timely raised to come into play.” In other words, “a rule may be mandatory without being jurisdictional, and Title VII’s charge-filing requirement fits that bill.”


In Davis, the plaintiff had filed a Charge of Discrimination with the EEOC alleging that she had been sexually harassed and retaliated against for complaining.  After her Charge had been filed, she was fired for missing work while she attended a church service even though she had previously objected to the work schedule as conflicting with the church service.  While she intended to amend her EEOC Intake Questionnaire, she never amended the formal Charge document which is sent to the employer at the beginning of an EEOC investigation.  The trial court granted summary judgment on all claims, but the Court of Appeals reversed judgment on the religious discrimination claim.  At that point, the employer raised for the first time that the plaintiff had not amended her Charge to include a claim for religious discrimination and this deprived the court of subject matter jurisdiction.   The trial court granted the employer’s motion to dismiss for lack of subject matter jurisdiction, but the Court of Appeals reversed on the grounds that filing a Charge is not a jurisdictional issue and the defense had been forfeited when it had not been raised earlier in the litigation.  Although the Court had previously refused to grant certiorari on the religious discrimination claim, it granted certiorari as to whether filing a Charge of Discrimination is a jurisdictional prerequisite to pursuing a civil action. 


Justice Ginsburg observed that “the word “jurisdictional” is generally reserved for prescriptions delineating the classes of cases a court may entertain (subject matter jurisdiction) and the persons over whom the court may exercise adjudicatory authority (personal jurisdiction).” 

The Court has therefore stressed the distinction between jurisdictional prescriptions and nonjurisdictional claim-processing rules, which “seek to promote the orderly progress of litigation by requiring that the parties take certain procedural steps at certain specified times.”   . . .  A claim processing rule may be “mandatory” in the sense that a court must enforce the rule if a[n opposing] party “properly raise[s]” it.  But an objection based on a mandatory claim processing rule may be forfeited “if the party asserting the rule waits too long to raise the point.”

             . . .

            Title VII’s charge-filing requirement is not of jurisdictional cast.  Federal courts exercise jurisdiction over Title VII actions pursuant to 28 U. S. C. §1331’s grant of general federal-question jurisdiction, and Title VII’s own jurisdictional provision  . . . .Separate provisions of Title VII, §2000e–5(e)(1) and (f )(1), contain the Act’s charge-filing requirement.  Those provisions “d[o] not speak to a court’s authority,”  . . . , or “refer in any way to the jurisdiction of the district courts,”

             . . .

And recognizing that the charge-filing requirement is nonjurisdictional gives plaintiffs scant incentive to skirt the instruction.  Defendants, after all, have good reason promptly to raise an objection that may rid them of the lawsuit filed against them.  A Title VII complainant would be foolhardy consciously to take the risk that the employer would forgo a potentially dispositive defense.

In sum, a rule may be mandatory without being jurisdictional, and Title VII’s charge-filing requirement fits that bill.

In short, employers may still move to dismiss claims where the plaintiff failed to file a Charge of Discrimination, but they raise and preserve that defense as required by Civil Rule 12(b) instead of waiting years to challenge the court’s subject matter jurisdiction.


In Newton, the plaintiff worked on drilling platforms off the coast of California.  His 14-day shifts consisted of 12-hour work hours (paid well above minimum wages) and 12 unpaid hours of standby time when he was required to remain on the platform.  He filed a class action in California state courts under California law challenging the failure to pay him and his co-workers for standby time.  While the parties acknowledged that the OCSLA applied, the plaintiff asserted that consistent state laws still applied on the Outer Continental Shelf (OCS).  The trial courts applied Fifth Circuit law that state law only applied when there were gaps in federal law and dismissed the claims because the FLSA did not leave gaps.   The Ninth Circuit reversed and held that state law continued to apply unless it was incompatible with federal law.  The statute itself provided that state laws applied ““to the extent that they are applicable and not inconsistent with this subchapter or with other Federal laws and regulations of the Secretary now in effect or hereafter adopted . . . “


Justice Thomas explained that the statute’s use of “applicable” and “not inconsistent” required an interpretation that gave meaning to both terms.  If a state law applied merely because it was relevant and addressed the subject, then the statute would not need to only apply “applicable” state laws.   On the other hand, if state law only applied when there would gaps, it could be difficult to imagine how such a law could possibly be inconsistent when federal law was silent on the subject, although that could happen when federal law was intentionally silent on an issue or the law could be inconsistent with a federal law on a different issue.   In light of the fact that federal law had exclusive jurisdiction over the OCS, and there is no overlapping jurisdiction, “these provisions convince us that state laws can be ‘applicable and not inconsistent’ with federal law under §1333(a)(2)(A) only if federal law does not address the relevant issue.”


Federal law has exclusive jurisdiction and only borrows certain state laws when federal law is silent on the issue.   Also, in light of the supremacy of federal law and the lack of overlapping jurisdiction, it would make little sense to treat the OCS as a mere extension of the adjacent state where federal law only applies when it conflicts with state law.  Rather, the OCS is treated more like a federal enclave.


There, the Court held that “if a federal law addresses the issue at hand, then state law is not adopted as federal law on the OCS.”  In applying this standard, the  Court easily dismissed the state law wage and hour claims because the Fair Labor Standards Act already addressed those issues.  “Therefore, the California minimum wage is not adopted as federal law and does not apply on the OCS.”


Because the lower courts had not analyzed all of the plaintiff’s claims, the Court remanded the matter so that those issues could be examined under the standard announced in this case. 


NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Supreme Court Denies Relief In Two Employment Cases

This week, the Ohio Supreme Court issued two per curiam decisions.  In the first, the Court concluded that there was “some evidence” showing that OPERS did not abuse its discretion when it denied pension benefits to an independent contractor psychiatrist hired by the Lucasville prison despite the amount of control that the prison exercised. State ex rel. Sales v. Ohio Pub. Emps. Retirement Bd., Slip Opinion No. 2019-Ohio-1568.  In the second decision, the Court ruled that the Cuyahoga County Common Pleas Court lacked jurisdiction to restrain the City of Cleveland from changing the starting time of its union firefighters from 8:30 a.m. to 7:00 a.m. because such matters are within the exclusive jurisdiction of SERB.  State ex rel. Cleveland v. Russo, Slip Opinion No. 2019-Ohio-1595.


According to the Court’s opinion, the pro se psychiatrist signed a Personal Services Contract with the prison which identified him as an independent contractor, required him to work 16 hours/week for up to 8 hours/day and required him to submit an invoice in order to be paid.  He was issued 1099 tax forms and did not receive any fringe benefits, or unemployment or workers compensation coverage.   The agreement was renewed several times.  After he terminated the contract, he sought service credits from the Public Employee Retirement System.  OPERS denied his application and appeal, as did a Franklin County magistrate, but the Court of Appeals reversed based on the amount of control the prison exercised over him.   The prison provided him with an office while he was there, provided him with some training, issued him a badge, provided him with malpractice coverage, set his work schedule, and required him to clock in and out.  The court acknowledged that it was unlikely that any psychiatrist could be an independent contractor under such conditions.  The Court reversed because the appeal was subject to an abuse of discretion standard that must affirm OPERS if there is any evidence that could support its decision.  The OPERS regulations distinguishing between employees and contractors favored independent contractor status because he was not carried on payroll, submitted invoices, received no fringe benefits and was identified as an independent contractor, etc. This was “some evidence” supporting the OPERS decision to deny service credit.


According to the Court’s opinion, the firefighter union had filed an unfair labor practice charge over the City’s intention to change the shift starting time.  It then filed for a temporary restraining order, which was granted on the grounds that the change could affect child custody arrangements.  The City sought a mandamus, which was granted because SERB possesses exclusive jurisdiction over disputes covered by the collective bargaining agreement.  No independent statutory or common law right supported the union’s requested relief.


NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Mostly Affirms $5M FLSA Verdict

Yesterday, the Sixth Circuit Court of Appeals mostly affirmed an approximately $5M verdict in a FLSA collective action for unpaid overtime and liquidate damages due to 156 employees.  Pierce v. Wyndham Vacation Resorts Inc., No. 18-5258 (6^th Cir. 4-29-19).   After a 14-day bench trial with over 50 witnesses, the trial court determined that three categories of sales employees worked on average 52 hours per week, but were denied overtime pursuant to a practice and policy which was supported by testimony and exhibits from some management employees.  The employer attempted to dispute that it had a consistent policy by pointing to various reasons that employee time sheets were changed (i.e., failing to record time, working from home, leaving work early, etc.), but this evidence was used to reduce the alleged number of work hours and not to reject the existence of the policy and practice.  The divided Court determined that one category of sales employees should not have been included in the same class as the others because they had different functions, started work two hours later, were not required to attend the same events and meetings, and only had one representative testify, who did not support that his experiences and working hours were the same as other employees, etc. Instead, at the least, there should have been a separate sub-class with evidence supporting a verdict.  The case was remanded to recalculate damages.


According to the Court’s opinion, the employer had four locations in Tennessee involving the sale of time-share vacation properties.   It had three types of sales employees: front-line selling time-shares, inhouse selling upgraded timeshares to existing owners and discovery employees handling leases (but not time shares).  All of them were primarily paid on commissions, but were paid minimum wage draws based on hours worked.  In 2009, it began paying overtime.  The lawsuit was filed in 2013 alleging that the employer had a practice and policy of not paying overtime to the sales force by, among other things, directing employees to not record overtime and by modifying their time cards if they did so.

All of the testifying plaintiffs consistently said that Wyndham required them to underreport their time or altered their recorded time.  They all provided an average of the number of hours they worked each week, ranging from 50 to 80 hours per week, and their basis for that number:  the mandatory morning meeting, tours throughout the day, frequent late-night work and special events, and six- or seven day work weeks.  But, through it all, they didn’t worry about keeping an accurate account of their hours because the company told them it would recoup any overtime pay from their commissions.  

The administrative manager at the Nashville location testified that upper management instructed that sales employees could not be paid overtime and that managers should alter employees’ timecards to show no more than 40 hours per week.  The vice president of sales and marketing at the two Smoky Mountain locations acknowledged that Wyndham performed an audit that showed that salespeople worked off the clock.  Several emails from managers also mentioned Wyndham’s no-overtime-pay policy.  The evidence thus showed that Wyndham executed an across-the-board time-shaving policy that failed to compensate the employees for the hours they worked.

The trial court concluded that the employees worked on average 52 hours/week, awarded $2,512,962 in unpaid overtime and an equal amount in liquidated damages.  Attorney fees for the prevailing employees were not mentioned, but will not be insignificant.


The Court rejected the employer’s challenge to the class certification, with one exception.  It agreed that the discovery employees were not similarly situated because they did not sell time-shares like the other employees, were not required to attend all of the same events or work the same hours or work the same days.  In addition, they were not required to report to work until approximately two hours after the other employees and the testimony was unclear about when they could leave. While they may have stayed later, there was no evidence on that point.   “At the least, the court should have created a separate subclass for the discovery employees.”


“To determine whether plaintiffs are similarly situated, we consider (1) ‘the factual and employment settings of the individual[ ] plaintiffs,’ (2) ‘the different defenses to which the plaintiffs may be subject,’ and (3) ‘the degree of fairness and procedural impact of certifying the action as a collective action.’” The trial court had treated them as one class because they were subjected to the same alleged overtime policy.   While the front-line and inhouse sales employees sold the same product (to different types of customers), they also reported to work at approximately the same time for the same meeting, gave tours, attended events, worked the same days, were compensated the same and recorded time in the same payroll system.  As mentioned, the discovery sales employees had different working hours.


The Court rejected the employer’s attempt to argue that there was not a consistent policy of avoiding overtime because of all of the different reasons that employee time cards were modified.  In light of the evidence introduced, that claim was rejected.  Instead, the Court found that these various explanations could be part of the same policy and practice.  In addition, this evidence was used to reduce the number of alleged overtime hours.


The Court also rejected the employer’s attempt to discredit the employee testimony because it was permitted to depose and call any witnesses it wanted and almost 30% of the employees testified (which is a far greater percentage than in prior successful lawsuits).


The Court also rejected the employer’s expert (who was the only testifying expert) because the expert relied heavily on employee time sheets, which the employees testified were meaningless in light of the employer’s direction to not record overtime and the practice of modifying time sheets that reflected overtime.


NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.