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On appeal, the Seventh Circuit held that the clothes at issue in this case – flame-retardant pants and jacket, work gloves, work boots, a hard hat, safety glasses, ear plugs, and a hood – are clothes under section 203(o), and therefore the time spent putting on and taking off such items are not compensable. To the extent the hard hat, glasses, and ear plugs were not technically “clothes,” the court noted that putting on these items did not qualify as compensable “work” because the time spent in such activity was de minimis. Accordingly, U.S. Steel was not required to compensate its employees for the time spent changing into and out of work clothes.

The conclusion reached by the Seventh Circuit in Sandifer conflicts with Ninth Circuit authority holding that “special protective gear [is] different in kind from typical clothing” and is not “clothes” under section 203(o). Still, the Fourth, Sixth, Tenth, and Eleventh Circuits have adopted a different definition – one that includes anything one “wears,” including “accessories” such as ear plugs and safety glasses.

The time it takes for an individual employee to don or doff work related clothing may seem inconsequential, but when such time is aggregated in class and collective actions it can be significant. Thus, the Supreme Court’s resolution of what constitutes “changing clothes” in the context of section 203(o) may have a significant impact on employers nationwide.

Photo credit: Matt Collingwood

Finding that the settlement payment waived the technicians’ right to file suit, the Fifth Circuit affirmed summary judgment for Spring Break Louisiana. In doing so, the court relied heavily on the holding and analysis set forth in Martinez v. Bohls Equipment Company, a Western District of Texas decision that thoroughly examines the history of the FLSA, its amendment by the Portal-to-Portal Act of 1947, the Fair Labor Standards Amendments of 1949, and subsequent interpretative case law, ultimately holding that “parties may reach private compromises as to FLSA claims where there is a bona fide dispute as to the amount of hours worked or compensation due.” (quoting Martinez). Applying that same rationale, the Fifth Circuit determined that the payment offered to and accepted by the technicians pursuant to the union’s settlement agreement operated as “an enforceable resolution . . . predicated on a bona fide dispute about time worked and not as a compromise of guaranteed FLSA rights themselves.”

Finally, although the Fifth Circuit recognized that its holding directly contravened the Eleventh Circuit’s 30-year-old decision in Lynn’s Food Stores, the court distinguished that case by noting that the plaintiffs in Lynn’s Food Stores were unaware at the time of the settlement of their FLSA rights, had not consulted with an attorney, and, in some cases, could not speak English. The lighting and rigging technicians, on the other hand, had already retained an attorney and filed suit by the time they received and cashed their settlement checks. Thus “[t]he money [the technicians] received and accepted, pursuant to the settlement agreement, for settlement of their bona fide dispute did not occur outside the context of a lawsuit, [and] hence the concerns the Eleventh Circuit expressed in Lynn’s Food Stores are not implicated.”

Photo credit: MBPhoto, Inc.

In light of the Circuit split, the U.S. Supreme Court granted review of the Seventh Circuit’s decision in Kasten v. Saint-Gobain Performance Plastics Corp., and has now issued its opinion.

The Kasten case involved an unwritten, oral complaint to the employer, thus implicating both issues (1) and (2) above. Kevin Kasten worked at a Saint-Gobain manufacturing plant in Wisconsin. Kasten claimed that on several occasions he complained to his supervisors and a Human Resources generalist that the location of the time clocks was illegal because it prevented employees from being paid for time spent donning and doffing their required protective gear, and said that he might file a lawsuit. After frequently being warned about not recording his comings and goings on the time clock, Kasten was terminated. He sued Saint-Gobain, claiming that his employment was terminated in retaliation for his complaints in violation of the FLSA. The Western District of Wisconsin dismissed Kasten’s case, holding that unwritten, oral complaints are not protected activity under the FLSA’s anti-retaliation provision. The Seventh Circuit affirmed, holding that while internal complaints to an employer are protected under the FLSA, such complaints must be in writing because the term “filed” implies a writing. The court thus affirmed the dismissal of Kasten’s complaint.

In light of the circuit split surrounding the interpretation of the phrase “filed any complaint,” the Supreme Court granted review. The Court vacated the Seventh Circuit’s decision, holding that unwritten, oral complaints are protected. Justice Breyer (joined by Justices Roberts, Kennedy, Ginsburg, Alito and Sotomayor, with Kagan not taking part) held that while the meaning of the phrase “filed any complaint” was ambiguous, considering the purpose and context of the statute, it should be interpreted to include unwritten, oral complaints. The Court reasoned that excluding oral complaints would: (1) undermine the FLSA’s enforcement scheme as the anti-retaliation provision enables employees to report substandard conditions without fear of economic retaliation, (2) disadvantage those with difficulty making requests in writing such as the illiterate, less educated and/or overworked, (3) prevent government agencies from using hotlines, interviews and other oral methods of receiving complaints, and (4) discourage private employers from using informal workplace grievance procedures to secure compliance.

In order to ensure fair notice to the employer, the Court held that the phrase “filed any complaint” contemplates “some degree of formality, certainly to the point where the recipient has been given fair notice that a grievance has been lodged and does, or should, reasonably understand the matter as part of its business concerns.” The Court articulated the following standard: a complaint is “filed” when “a reasonable, objective person would have understood the employee to have put the employer on notice that the employee is asserting statutory rights under the Act.” The complaint “must be sufficiently clear and detailed for a reasonable employer to understand it, in light of both the content and context, as an assertion of rights protected by the statute and a call for their protection.”

Surprisingly, the Court declined to comment on whether the FLSA protected only complaints filed with the government or whether complaints to an employer are also protected. The Court reasoned that, while the issue was addressed by the Seventh Circuit, it was not raised by the Company in its opposition to Kasten’s petition for certiorari and there was no need to resolve it in order to decide the oral/written issue. In his dissent, Justice Scalia (joined by Thomas) criticized the majority’s approach, noting that the issue was fairly encompassed within the Company’s opposition to the petition for certiorari, and would have been more logically addressed first. Justice Scalia would have affirmed the dismissal of the complaint on the ground that the plain meaning of “filed any complaint” and its context make clear that the anti-retaliation provision contemplated an official grievance filed with a court or agency, not oral or written complaints to an employer. Thus, the circuit split on whether a complaint must be filed with the government to be protected remains. However, employers are cautioned to tread carefully and be mindful that a majority of the circuit courts have extended the FLSA’s protection to internal company complaints.

The court found that the visa, travel, and recruitment expenses primarily benefited the employer and that, as per U.S. Department of Labor regulations, the employer must reimburse the workers for those costs if the workers would otherwise effectively receive sub-minimum wage compensation. See 29 C.F.R. §§ 531.3(d), 531.35.

The court relied heavily on the fact that a 2009 Department of Labor Field Assistance Bulletin declared that employers must reimburse H-2B visa workers for the costs of transportation, obtaining a visa, and third-party recruiters whose services the employer retains. The Field Assistance Bulletin reasoned that the costs of transporting H-2B workers and of obtaining an H-2B visa primarily benefit the employer because the H-2B visa program provides “greater-than-normal” benefits to the employer, since such workers are available to an employer only if it attests that no comparable domestic workers are available. In concluding that the recruitment costs primarily benefited the employer, the district court emphasized that the employer had retained the third-party recruiter’s services.

The courts have been divided on this issue. The Eleventh Circuit has similarly ruled that travel and visa expenses must be reimbursed when a worker’s effective wage received would otherwise be below minimum wage. See Morante-Navarro v. T&Y Pine Straw, Inc., 350 F.3d 1163, 1166 n.2 (11th Cir. 2003). The Fifth Circuit, however, has held to the contrary. See Castellanos-Contreras v. Decatur Hotels, 622 F.3d 393 (5th Cir. 2010) (en banc).

This entry was written by Bruce Millman and Nicholas Ortiz.

Photo credit: oddrose
 

Polycarpe was a consolidated appeal of six Florida cases in which the district courts found that the FLSA did not apply because of insufficient interstate commerce. Each court’s finding was based on the fact that the employer had purchased its “goods” and “materials” intrastate. Some of the courts also held that the employees had not handled the necessary types of goods or materials. According to the Eleventh Circuit, however, each of these findings resulted from an “erroneous” interpretation of the FLSA. The case is notable for the court’s rejection of the “coming to rest” doctrine and interpretation of “materials” under the FLSA.

Rejecting the “Coming to Rest” Doctrine

The Fair Labor Standards Act  applies to two types of employers: 1) those with employees engaged in interstate commerce or in the production of goods for commerce; and 2) those with employees “handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person.”¹ In Polycarpe, the lower courts further limited the FLSA’s scope by following the “coming to rest doctrine,” which states that the FLSA does not apply to those employees who handle goods or materials that , prior to the employer’s acquisition, have already come to rest within the state. The Eleventh Circuit, however, found that the “coming to rest doctrine” was inconsistent with the FLSA as currently amended and thus held that, on remand, the district court in each case must decide whether the goods or materials were “at any time” produced in or moved interstate.

Defining “Materials”

Because some of the lower courts’ decisions in Polycarpe were based on interpretation of and the interplay between “goods” and “materials,” the court discussed each term at length and provided guidance on how lower courts should distinguish between the two. Of particular note is the court’s discussion of “materials,” given that the FLSA contains no definition of the term. Consulting the FLSA’s legislative history, Department of Labor regulations, and even Webster’s Dictionary, the Eleventh Circuit concluded that “materials” means “tools or other articles necessary for doing or making something.” Additionally, the court held that determining whether an item may be included in the term “materials” requires a 2-part test: “1) whether, in the context of its use, the item fits within the ordinary definition of ‘materials’ under the FLSA; and 2) whether the item is being used commercially in the employer’s business.” Discussing the first part of its test, the court gave the example of china plates which, if used by a caterer at a client’s banquet, would count as “materials,” but if simply sold as stand-alone items, would count as “goods.” As for the second part of the test, the court explained that the item must have a “significant connection” to the employer’s business. Thus, china plates would have a significant connection to a caterer’s business, but the same plates would not count as “materials” if used by an accounting firm as objects of decoration.

This entry was written by Milton Castro.

¹Both of these scenarios assume a $500,000 annual gross volume of sales. 29 U.S.C. § 203(s)(1)(A).