The Ninth Circuit Rules That both an Arbitrator and a Trial Court May Have a Role in a Case with Individual and PAGA Claims

John LewisBy John Lewis on Posted in PAGA

Employers, plaintiffs, and courts continue to grapple with the difficult issue of the interplay between the California Private Attorneys General Act (“PAGA”) and arbitration agreements. We’ve addressed these issues several times on this blog, including a March 30, 2017 blog in which we discussed the case of Hernandez v. Ross Stores, Inc., No. E064026, 2016 WL7131651 (Cal. Ct. App. 4th Dist., Dec. 7, 2016). In that case, a California state court of appeals held that an employee “cannot be compelled to submit any portion of his representative PAGA claim to arbitration including whether he was an ‘aggrieved employee’.”

In Hernandez, the plaintiff had brought a single representative PAGA claim.  As demonstrated below, the result is different when PAGA is just one of several claims brought. Continue Reading

Court Grants Summary Judgment For Employer In Tip Credit Collective Action

Greg MersolBy Greg Mersol on Posted in Wage and Hour

What? I Need a Valid Claim to Represent a Class?!

With scores of collective actions being filed every month and many courts willing to issue conditional certification on even very weak claims, it’s easy to forget that, yes, it’s important for there to be a claim in the first place. That’s one of the lessons in last week’s decision in Calabrese v. TGI Fridays Inc., Civil Action No. 16-CV-0868 (E.D. Pa., Nov. 2, 2017). The Calabrese case started out like countless other wage-and-hour cases in the restaurant industry. In February 2016, the plaintiff, a restaurant server, brought suit against the TGI Friday’s chain for unpaid wages. The crux of his claim was that he was not advised that the restaurant would be taking advantage of the tip credit provisions section of the FLSA (29 U.S.C. § 203(m)) and the comparable versions of state law. Those long-standing provisions permit a restaurant to pay the employee only half of the applicable minimum wage and to take a credit for the tips an employee receives to make up the difference between the minimum wage and any overtime. The applicable regulations include the commonsense requirement that the employee be advised that the tip credit provisions would apply. 29 C.F.R. § 531.59.

The plaintiff contended that he did not recall hearing the term “tip credit” during his orientation, and thus the employer should not have been able to take advantage of the tip credit provisions when computing his pay. He not only brought suit in his own right, but also sought conditional certification across the entire TGI Friday’s chain.

The problem, however, was that, as you might expect, Friday’s did have procedures to tell employees that the tip credit would apply. Its policy was to alert new hires about the issue both verbally and by showing them forms explaining how the tip credit would work. Significantly, the tip credit was also explained in the handbooks given to all employees and which they acknowledged receiving.

Faced with this evidence, the court found that the employee’s claim that he did not recall hearing about the tip credit did not create a question of fact. It also rejected arguments that the plaintiff had to participate in an improper tip pool, concluding that while the employer encouraged tip sharing and the employee may have felt awkward not sharing his tips with certain other workers, that awkwardness was not attributable to the employer. The court thus granted summary judgment for the employer and denied the plaintiff’s motion for conditional certification.

The decision in Calabrese is important in several respects. First, it is typical of many of the kinds of wage-and-hour claims currently being brought, where the underlying basis is thin at best and the employee banks on obtaining conditional certification to coerce a settlement from the employer. Second, that tactic might very well have worked in some courts, but in this instance the court was prepared to examine difficulties with the merits before leaping to a certification decision. This court also neatly resolved the issue by holding that the employee’s own testimony that he did not recall hearing about the credit created no fact question when the employer had reasonable policies in place to ensure that he would have.

The bottom line: Some courts will consider the weaknesses of the plaintiff’s own claim before deciding whether to grant conditional certification.

California Court Denies Conditional Certification of “Regular Rate” Overtime Case

Greg MersolBy Greg Mersol on Posted in Wage and Hour

With waves of cases already having addressed common targets for wage and hour litigation – assistant managers, healthcare workers, loan officers, donning and doffing claims, and the like – cases alleging more arcane claimed violations are becoming more common. In many of these cases, plaintiffs’ counsel have sighted popular employee perks, like free meals or other benefits, as potential new avenues to assert class or collective claims. The crux of such claims is that the perk or benefit should be added into the regular rate for overtime purposes.

Some of these claims do raise colorable technical violations of the statute. Non-discretionary bonuses, for example, should be rolled into the regular rate for purposes of calculating overtime. 29 C.F.R. § 778.211. But frequently, the amounts involved are fairly small. A $100 annual production bonus may translate to only a few cents per hour, and possibly little or nothing if the employee does not routinely work overtime. And what if the amount involved is debatable as being part of the regular rate? Is it really worth an expensive lawsuit that will only discourage the employer from offering anything? Is it really in a class’s best interest to challenge free meals? Continue Reading

The Next Employment Class Action Lawsuit That Will Blindside You

Greg MersolBy Greg Mersol on Posted in BIPA

Little-known Illinois statute now a source of class claims against employers

Do any of your office systems involve fingerprint scans or facial recognition? If so, and if you have any Illinois business operations, you may soon become a target of the latest round of employment class actions.

In 2008, Illinois passed the Biometric Information Privacy Act (referred to, when people are aware of it, as BIPA). The statute is codified at 740 ILCS 14/1, and a copy can be found here. We say “when people are aware of it” because the statute has merited little attention until now. A recent search engine request using that acronym came up with answers such as a line of home care products, a Namibian government agency and a kind of Korean lute, but there was only one reference to the obscure statute. It is poised, however, to take on increasing importance because a spate of suits under the act are now underway and catching numerous businesses off guard. Continue Reading

Another Off-the-Clock Case Felled by Time Study

Greg MersolBy Greg Mersol on Posted in Off-the-clock

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

Greg MersolBy Greg Mersol on Posted in Off-the-clock, Overtime Claims

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

Greg MersolBy Greg Mersol on Posted in Off-the-clock, Wage and Hour

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

Greg MersolBy Greg Mersol on Posted in Wage and Hour

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

Greg MersolBy Greg Mersol on Posted in Wage and Hour

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

John LewisBy John Lewis on Posted in Arbitration Agreements, Class Action Waivers

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

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