Another Off-the-Clock Case Felled by Time Study

Last week, we discussed the decision of the Northern District of California in Rodriguez v. Nike Retail Services, Inc., Case No. 14-cv-01508-BLF (N.D. Cal. Sept. 12, 2017), in which the employer’s use of a time study resulted in summary judgment being granted against the entire class in an off-the-clock case involving post-shift bag searches. That court has now issued a similar decision, Chavez v. Converse, Inc., Case No. 15-cv-03746 NC (N.D. Cal., Oct. 11, 2017), involving a different shoe retailer.

Like the Rodriguez case, this one involved a shoe store that required employees departing at the end of their shifts to submit to bag searches designed to deter employee theft. As with the Rodriguez case, the court initially certified the class, but was later presented with time study data that reflected that the average bag search was completed in well under a minute. In this instance, the court further discounted anecdotal evidence of searches taking upward of 18 minutes in one case, finding that it could not overcome the fact that the “overwhelming majority” of inspections took so little time. The court granted summary judgment for the employer under the de minimis doctrine. Continue Reading

Time Study Kills Off-the-Clock Claim

In many cases, particularly in light of last year’s decision in Tyson Foods, Inc. v. Bouaphakeo, it is the plaintiff who tries to use statistical evidence in an off-the-clock case to estimate damages (we blogged the Tyson Foods decision here. But that same data may not only be used by the employer but also can actually defeat a case altogether, as a recent decision from the Northern District of California illustrates.

In Rodriguez v. Nike Retail Services, Inc., Case No. 14-cv-01508-BLF (N.D. Cal. Sept. 12, 2017), the plaintiffs were hourly employees working at California Nike retail shoe stores. At the end of each working day, they were required to go through bag checks intended to reduce internal theft. These searches were generally conducted after the employees punched out as they exited the store. The plaintiffs brought suit on the basis that they were not paid for the time spent either waiting for the searches or having their bags searched.

Under federal law, this time was almost certainly not compensable because it was not integral to the employees’ work. See Integrity Staffing Solutions, Inc. v. Busk (we blogged that decision here. The plaintiffs instead asserted state law claims under California law, which counts as working time any time the employee is “subject to the control of the employer.” The district court certified the case in 2016 and specifically noted that under Tyson Foods, the plaintiffs could try to prove the amount of time spent in the post-shift searches through representative statistical evidence. So, good for the employees. Continue Reading

Illinois Appellate Court Reverses Certification in Off-the-Clock Case

With many of the most common sources of overtime claims being exhausted (e.g., assistant manager cases), plaintiffs are bringing off-the-clock cases in increasing numbers. While employers should certainly pay nonexempt employees for the hours they work, these claims are being asserted based on ever-more vague allegations. The benefit to the plaintiffs (or their attorneys) is clear: There are many more nonexempt employees than there are exempt ones, and such allegations can be used to sidestep records reflecting that the employees were paid for all hours worked.

Despite the rhetoric, these claims suffer from many practical and policy problems. From a policy perspective, most employers do have time-keeping systems and rely upon those systems to calculate the appropriate pay. Policies requiring employees to report off-the-clock time (or even requests for such time) are becoming more common. Having those systems undermined by anecdotal evidence of deviations makes it all but impossible for employers to avoid litigation. It does little to ensure compliance. Continue Reading

Seventh Circuit Affirms Judgment Against Class in Off-Duty BlackBerry Use Case

There certainly has been no shortage of publicity about the potential for wage and hour claims for time spent by hourly employees using smartphones or other electronic devices for work while off duty. Many employers have tried to address the need to pay for such time, and to avoid litigation, by promulgating procedures for such employees to record and be paid for the hours they work on mobile devices. That should be the end of it, but litigation continues when employees, for their own reasons, choose not to follow those procedures or to put in for the additional time. But is the employer responsible for that?

That was the issue presented in Allen v. City of Chicago, Case No. 16-1029 (7th Cir. Aug. 3, 2017). In that case, the city of Chicago apparently provided BlackBerry devices for officers working in its organized crime division. Incidentally, the case was filed in 2010, when such devices were more common – the opinion does not reflect whether the falloff in the popularity of that product resulted in different mobile devices being provided. Officers who used the BlackBerrys when off duty, a frequent occurrence due to the nature of their work, could submit “time due slips” to their supervisors to be paid for that time. In many cases, however, the officers simply did not submit those slips and thus were never paid for the time they had spent on their mobile devices during off hours. As the trial court found, while supervisors could in theory cross-check the work done by the officers with their time slips to find instances where work was done but not compensated, doing so was largely impractical. Following a six-day bench trial, the trial court entered judgment against the class. Continue Reading

Ohio District Court Dismisses Contract-Based Wage and Hour Class Action

A mud-covered pig is still a pig

We’re used to seeing off-the-clock cases for minimum wage and overtime, but at times such claims aren’t available, such as when the employees are paid well above the minimum wage and either do not work overtime or are paid for it. In most states, and under the FLSA, such claims are really ones for breach of contract rather than for wage and hour violations. The question then arises whether such contract claims, ones that employees worked off the clock but received minimum wage and overtime, can be asserted on a class-wide basis.

This was the issue in Hopkins v. U.S. Bancorp., Case No. 1:16-cv-552 (S.D. Ohio Aug. 17, 2017). In that case, the employee sought to bring class-wide claims on the basis that he and others were not paid for all hours worked. He premised his claim upon the breach of an oral contract in which he claimed he was told orally in a job interview that he would make about $15 per hour plus benefits. What made the case dangerous was not the amount of wages, which was relatively small (and, frankly, somewhat weak), but the plaintiff’s effort to bolster that claim by wrapping a class action claim around it on behalf of thousands of other workers. Continue Reading

Convergys Corporation and LogistiCare Solutions, Incorporated v. NLRB – The Fifth Circuit Considers Class and Collective Action Waivers Without Arbitration Agreements

The U.S. Court of Appeals for the Fifth Circuit decided two cases considering the impact of the National Labor Relations Act (NLRA) on class or collective action waivers required by companies for their applicants and employees.

Convergys Corporation

The first decision, in Convergys Corporation v. NLRB, No. 15-60860 (5th Cir. Aug. 7, 2017), addressed whether the company violated the NLRA by having applicants and employees sign stand-alone class and collective action waivers and then taking steps to enforce the waivers. Circuit Judge Jennifer Walker Elrod, writing for the majority, found that Convergys did not violate Section 7 of the NLRA by requiring execution of the waivers and did not violate the NLRA in enforcing the waivers.

Notably, Judge Elrod explained that the court had “already rejected the Board’s position that Section 7 guarantees a right to participate in class or collective actions, holding that the use of a class or collective action is a procedure rather than a substantive right.” Continue Reading

Digging In Its Heels: Disputing The DOJ’s Position, The NLRB Remains Defiant In Supreme Court Brief That Individual Arbitration Agreements Violate Employee Rights Under The NLRA

On August 9 the National Labor Relations Board (NLRB or Board) filed its responsive brief in one of three cases before the Supreme Court that may determine the future validity of individual arbitration agreements in the employment sector. Since 2012, the Board’s position has been that arbitration agreements prohibiting collective or class litigation or arbitration impermissibly interfere with employees’ rights to engage in “concerted activity” under Section 7 of the National Labor Relations Act (NLRA). The Board’s latest brief was filed in NLRB v. Murphy Oil USA, Inc., No. 16-307, which arose from the Fifth Circuit and has been consolidated with two other cases involving Epic Systems Corp. (No. 16-285) and Ernst & Young (No. 16-300) from the Seventh and Ninth Circuits. We have extensively covered the lengthy run-up of the cases involving Epic Systems Corp., Ernst & Young and Murphy Oil USA, Inc., including the grant of certiorari, in a Jan. 17, 2017, blog post here; a subsequent Sixth Circuit opinion in a June 1, 2017, blog post; and the Department of Justice (DOJ) change of position in a June 20, 2017, blog post.

The NLRB’s brief is notable in that it reflects the Board digging in its heels on the hotly contested position that the NLRA guarantees an employee’s right to engage in collective or class procedures, regardless of the presence of an arbitration agreement under the Federal Arbitration Act (FAA) requiring individual arbitration. In a June about-face, the DOJ broke from the Board’s position and switched sides to join the employers, arguing in an amicus brief that the Board is incorrect – that “the NLRA does not specifically bar enforcement of agreements to arbitrate statutory claims or declare such agreements to be unlawful.”

Continue Reading

Esparza V. Ks Industries, L.P. – Separating PAGA & Unpaid Wage Claims – A Ray Of Sunshine?

We have been following how California courts deal with the intersection of Private Attorneys General Act (“PAGA”) claims and individual arbitration agreements after Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014) (“Iskanian”) for some time.  See, for example, our blog posts from October 7, 2015, March 8, 2017 and March 30, 2017 on the subject.  This area of law is confusing and has suffered from a lack of legislative or judicial guidance.

Now, a California court of appeals has added substantial clarity by ruling that claims for unpaid wages based on California Labor Code Section 558 where a percentage of recovery is not allocated to the Labor and Workforce Development Agency are not covered by PAGA and must be arbitrated.

In Esparza v. KS Industries, L.P., No. F072597 (Cal. Ct. App. 5th Dist., Aug 2, 2017), a former employee sought damages, individually and on behalf of other employees, seeking unpaid wages, civil penalties, interest, attorneys’ fees and costs under the Labor Code and for violation of PAGA.  When KS Industries filed a motion to compel arbitration, the employee responded that a claim for civil penalties under PAGA cannot be arbitrated, and that includes claims for recovery of wages.  The trial court denied the motion to compel and the request for a stay.  And KS Industries appealed.  Continue Reading

Florida Court Denies Conditional Certification of FLSA Case Involving Restaurant Staff

As we’ve noted before, many courts have applied the standard for conditional certification so leniently that in places the requirement of a group of “similarly situated” employees under the FLSA has all but disappeared. So, it’s refreshing to see a case that still requires at least a minimal showing of a similarly situated class – and in particular one involving restaurants, one of the most fertile sources of collective action litigation.

In Cedeno v. Kona Grill, Inc., Case No. 8:17-cv-01039-JSM-AEP (M.D. Fla., July 24, 2017), the plaintiff was a sous chef at a Kona Grill restaurant in Sarasota, Florida. He brought a collective action for alleged unpaid overtime, contending that he and others had been misclassified as exempt. He sought to represent employees holding a range of positions in the restaurant’s 46 locations in the United States and Puerto Rico. Continue Reading

Second Circuit Vacates District Court Judgment in Sex Discrimination Case Permitting an Arbitrator to Certify a Class Including Absent Class Members

In a sex discrimination case we have been following for almost six years, the Second Circuit has added a measure of rationality by vacating a lower court opinion that would have permitted an arbitrator’s certification of a class that included approximately 44,000 absent class members who had not consented to join.

The three-judge panel in Jock v. Sterling Jewelers, Inc., No. 15-3947 (2d Cir., July 24, 2017), vacated District Judge Jed Rakoff’s November 15, 2015 opinion which upheld that portion of a Class Determination Award that would bind absent class members who did not consent to be bound. See District Court Opinion and Order at 3-4. Judge Rakoff had found:

“. . . defendant’s argument on this point is foreclosed by earlier rulings in the case. The Second Circuit in [a 2011 Opinion, (“Jock I”)] stated that ‘there is no question that the issue of whether the agreement permitted class arbitration was squarely presented to the arbitrator’. All members of the class certified by the Arbitrator signed the . . . agreements; the arbitrator interpreted these agreements to permit class arbitration; and the Second Circuit upheld the Arbitrator’s authority to do so.” Id. at 4. Continue Reading

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