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Next, the court found the interns failed to satisfy the predominance requirement, which the court noted is even more demanding than the commonality requirement, because there was no uniform policy among the magazines regarding the interns’ training, duties, and supervision. Thus, individualized analysis would be required to determine four of the six DOL factors used to determine whether the interns were required to be paid. “Because the content of the internships, which is the core of the dispute, cannot be evaluated based on common proof,” the court concluded, “individual issues clearly overwhelm the common ones here.”

The court noted that its conclusion regarding lack of predominance did not even take into account any problems related to damages calculation, citing the U.S. Supreme Court’s holding in Comcast Corp. v. Behrend that common questions cannot predominate when individual damage calculations will inevitably overwhelm questions common to the class. The court rejected the plaintiffs’ argument that Comcast was limited to antitrust cases, finding that the Supreme Court had explicitly rejected that proposition when it stated: “This case [] turns on the straightforward application of class-certification principles.” In addition, referring to the Supreme Court’s decision in RBS Citizens, N.A. v. Ross, the court stated that “one must pause at least for a moment” when the Supreme Court has vacated and remanded a Seventh Circuit decision in an employee misclassification case “in light of Comcast.”

While the district court’s class certification decision did not ultimately turn on individualized damages issues, the court’s commentary on the applicability of Comcast in wage and hour class actions is another favorable development for employers, particularly in the Southern District of New York, which, as the court itself noted, has been fertile ground for certification of wage and hour class actions. As discussed in a prior post, two other New York federal courts also recently denied class certification or granted decertification based on Comcast – Roach v. T.L. Cannon Corp. and Tracey v. NVR, Inc.

Second, on her meal period class claim, the named plaintiff alleged that she never received an uninterrupted 30-minute lunch break, presented testimony of another employee who claimed he had been required to work through unpaid meal breaks, and described data from earlier litigation purporting to show that 23.1 percent of unpaid breaks were interrupted by work. Under California law, an employer must relieve its employees of all duty for an uninterrupted 30-minute period but need not actually ensure its employees take meal breaks and need only pay for interrupted or missed meal breaks when it knows or should have known that an employee was working through the meal period. Again, the district court found Comcast instructive, stating that while the plaintiff’s “evidence and method of proof was applicable to the class as a whole, it does not adequately tie [her] allegation . . . to a proper and reliable measure of damages for work done on those breaks,” particularly because of the requirement to prove the employer knew or should have known of the work during the unpaid meal periods.

The Forrand decision represents at least the fourth wage and hour decision applying Comcast’s requirement that plaintiffs establish “damages are capable of measurement on a classwide basis” and denying class certification for failure to satisfy Rule 23(b)(3)’s predominance requirement. As discussed in a prior post, two of these decisions were in district courts in the Second Circuit – Roach v. T.L. Cannon Corp., and Tracy v. NVR, Inc. – and one was in a district court in the Ninth Circuit – Ginsburg v. Comcast Cable Communications Management. In addition, on April 1, 2013, the U.S. Supreme Court vacated and remanded Ross v. RBS Citizens, N.A. for further consideration in light of Comcast. In Ross, the Seventh Circuit had affirmed the district court’s decision certifying a class action involving off-the-clock and misclassification claims.

However, in Martins v. 3PD, Inc., a federal district court in Massachusetts certified a wage and hour class action and distinguished Comcast on the grounds that the parties in Comcast had conceded that the individual damages calculations fell within the “Herculean task” category and therefore warranted denial of class certification under the predominance requirement. The court interpreted Comcast “not to foreclose the possibility of class certification where some individual issues of the calculation of damages might remain, as in the current case, but those determinations will neither be particularly complicated nor overwhelmingly numerous.”

These decisions are likely only the start of a potential flood of decisions discussing the application of Comcast to class certification decisions in wage and hour cases. We will keep you posted as significant developments occur.

*The case was litigated by Federal Express’s in-house legal department.

Similarly, as to the FLSA collective claims, the court reasoned that the broad variations in the SMRs’ work activities made it “impossible to make a blanket determination concerning the FLSA exempt status of the entire class of putative plaintiffs in this case . . . .” In this regard, the court noted that the evidence demonstrated a wide variety of employment practices and time management requirements among the SMRs so that dozens of mini-trials would be required to determine whether individual SMRs satisfied the outside sales exemption.

The Tracy decision is significant for a number of reasons. First, the decision is a notable exception to the many decisions by the district courts in the Second Circuit, which have generally granted certification in both FLSA collective actions and Rule 23 class actions. Although the court specifically noted that “it seems beyond peradventure that the Second Circuit’s general preference is for granting rather than denying class certification,” the court relied on Comcast and Dukes to buck the trend. In doing so, the Tracy court joins the court in Roach v. T.L. Cannon Corp.,* the only other decision to date within the Second Circuit to apply Comcast to deny class certification in a wage and hour case.

Second, the decision is important because of its potential application to other outside sales misclassification cases in other industries, in which sales and marketing representatives who call on customers typically engage in varied activities, in different locations, for varied periods of time outside of the office.

While it remains to be seen how the Second Circuit and courts in the Southern and Eastern Districts of New York will apply Comcast to Rule 23 wage and hour class actions, and how all courts will apply Comcast to FLSA collective actions, so far Comcast has raised the burden on plaintiffs seeking class certification to show not only commonality as to their claims but also that their damages must be measurable on a classwide basis. 

*Littler attorneys represented the defendant in that case.

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The district court granted the defendants’ motion to strike the untimely affidavits, reasoning that the late production of the affidavits was prejudicial to the defendants because the city’s entire litigation posture might have been different if these numbers had been provided earlier. In addition, the court noted, allowing the officers to put forth untimely evidence of damages would prolong the litigation by forcing the district court to allow the defendants to re-open discovery and re-depose the officers, which would be unfair to the defendants, waste judicial resources, and fail to deter future violations of discovery obligations. The district court then granted summary judgment for the defendants because, without the affidavits, the court concluded that the officers could not satisfy their burden of proving the amount and extent of their alleged overtime work.

On appeal, the Eighth Circuit affirmed, finding that the district court did not abuse its discretion in striking the affidavits. Perhaps even more significantly, the Eighth Circuit delineated the standard of evidence required when the employer has not kept accurate time records. The court pointed out that the “relaxed” evidentiary standard under Mt. Clemens only applies when the existence of damages is certain. Thus, in this case, the plaintiffs had an initial burden of showing they carried flex hours forward into a new work week (in violation of the FLSA), or went entirely unpaid for those hours – a burden they did not satisfy. Although the officers provided evidence of the flextime practice, without the untimely affidavits there was no evidence of specific dates and hours worked, or money owed. “The city’s failure to provide accurate time records reduces the officers’ burden, but does not eliminate it,” the court stated. “Even though [Mt. Clemens] relaxes the burden of proof, the officers must still prove the existence of damages . . . . Without record evidence of a single hour worked over forty hours that did not receive overtime wages or flextime, the officers’ unsupported estimations of the unpaid hours due are not enough.”

Carmody provides welcome clarity to the often misconstrued “relaxed” evidentiary standard to be applied when, as in flextime or misclassification cases, employers have not maintained records of hours worked by employees they believed, in good faith, were not entitled to overtime wages.

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In Ross, the Seventh Circuit affirmed the district court’s pre-Dukes certification of a class of hourly bank employees who alleged off-the-clock work and a class of assistant branch managers who alleged they were misclassified as exempt. The court of appeals found that the Supreme Court’s discussion of the Rule 23(a)(2) commonality standard in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. __, 131 S. Ct. 2541 (2011), a gender discrimination class action, did not change the commonality analysis in the case. Specifically, the Seventh Circuit distinguished Dukes as a case requiring individual inquiry into the discriminatory intent of thousands of managers, whereas it found that plaintiffs’ assertion of an “unofficial policy” of not paying for all time worked was susceptible to a “common answer that potentially drives the resolution of this litigation.” With respect to the exemption claims, the Seventh Circuit stated that “an individualized assessment of each [class member’s] job duties is not relevant to a claim that an unlawful company-wide policy exists to deny [class members] overtime pay.” Finally, the Seventh Circuit rejected the company’s argument that, in accordance with Dukes, it was entitled to present individualized affirmative defenses to the exemption claims, reasoning that Dukes only applied to claims for equitable relief under Rule 23(b)(2) and not claims for monetary relief under Rule 23(b)(3).

The employer sought a writ of certiorari on the following two questions: (1) Whether it was consistent with Dukes to hold that a defendant in a Rule 23(b)(3) class action has no right to raise statutory affirmative defenses on an individual basis if the class seeks only monetary relief; and (2) whether the Rule 23(a)(2) commonality standard is satisfied when a class claims the denial of overtime pay, without resolving whether dissimilarities in the class would preclude it from establishing liability on a class-wide basis.

Because the Seventh Circuit’s Ross decision did not expressly discuss the common proof of damages as an aspect of class acertification, it is unclear how Comcast will be applied on remand. However, the district court concluded that individualized damages issues were generally not relevant to certification decisions, stating: “Courts have not traditionally found individualized questions of damages to prevent class certification.” After Comcast, that may no longer be true.
 

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.

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In its opinion, the Seventh Circuit first concluded that the district court correctly decided that the protective gear worn by U.S. Steel employees consisting of flame-retardant pants and jacket, work gloves, work boots, a hard hat, safety glasses, ear plugs and a hood, were plainly work clothes for the most part, and therefore “clothes” under the Act. To the extent the hard hat, glasses, and ear plugs were not technically “clothes,” the court summarily dismissed an argument that putting on this particular equipment qualified 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.

If clothes-changing time was not compensable, the Seventh Circuit decided that to require the employer to pay for the travel time – walking between the locker room and the work station – was “puzzling and paradoxical.” The court noted that the Portal-to-Portal Act, 29 U.S.C. § 254, rendered time spent “walking, riding, or traveling” to and from the place an employee performs his “principal activity” non-compensable. If Section 3(o) had not applied, thereby making clothes-changing time compensable as a principal activity, the travel time would likewise have been compensable. But here, the employer and union had decided that clothes-changing time was not work time, and therefore need not be compensated. Therefore, changing clothes could not be a “principal activity” that the employee was employed to perform.

The Seventh Circuit noted the Supreme Court’s decision in Steiner v. Mitchell, 350 U.S. 247 (1956), holding that when an employer requires an employee to don and doff work clothes at the workplace, then donning and doffing are integral and indispensable to the employee’s primary duty, and therefore compensable under the Act. The Supreme Court’s decision in IBP, Inc. v. Alvarez, 546 U.S. 21 (2005), extended this holding to conclude that time spent walking from a principal activity (changing clothes) to a work station is likewise compensable, and not within the exemption created by the Portal-to-Portal Act. But the Steiner Court noted the significance of the fact that there was no collective bargaining agreement in place that would make clothes-changing time non-compensable in that case. Section 3(o) permitted the parties by agreement to take clothes-changing time outside the scope of the employee’s “principal activity,” which is exactly what U.S. Steel and its unions had done. Because clothes-changing was non-compensable and not a “principal activity,” walking to the employees’ work stations was likewise non-compensable under section 254. The Seventh Circuit further grounded its analysis in the stated legislative purpose for enacting the Portal-to-Portal Act in 1947, and Congress’s concern with the disruption of the workplace caused by a series of Supreme Court decisions that had forced employers to compensate for travel time and clothes-changing time.

Finally, the Seventh Circuit acknowledged the shifting positions articulated by the U.S. Department of Labor on the meaning of the term “clothes” in Section 3(o) of the Act, and the compensability of travel time under these circumstances. During the Clinton Administration, the Department took a narrow view of the term, but broadened its definition in a subsequent opinion letter issued during the Bush Administration. After the change in administrations in 2009, the Department reverted to its earlier position, and also rejected the Bush Administration’s position on “principal activity.” Although “[s]uch oscillation is a normal phenomenon of American politics,” the Seventh Circuit found nothing in the Department’s position that could assist the court in determining the legal question – other than an echo of the plaintiff’s arguments and a noted disagreement with the previous administration’s position. Under these circumstances, the court concluded that it owed no deference to the Department’s interpretation of the statute.

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During Monday’s hour-long oral argument, the justices engaged in lively questioning over the application of the exemption in the pharmaceutical industry. One important point of discussion revolved around the PSRs’ ability to obtain assurances from doctors to prescribe their drugs. Attorney Thomas Goldstein represented the PSRs and argued that because PSRs do not receive binding or written commitments from physicians to prescribe medications, they do not engage in sales under Section 3(k) of the FLSA. While Chief Justice Roberts agreed that physicians merely tell the PSRs that they will consider using their products in relevant medical situations, Justice Scalia raised the point that the particularities of selling in the pharmaceutical industry should be taken into account, noting that “these people look like salesmen to me.” Respondent SmithKlineBeecham’s counsel, former Solicitor General Paul Clement, argued that the PSRs in fact are engaged in “sales” because they obtain binding commitments from doctors and that these commitments can be oral. Mr. Clement further argued that extending the DOL’s position to the industry as a whole would end in an illogical result as pharmaceutical sales representatives selling medical devices to doctors would be exempt, but representatives selling drugs would not.

Faced with massive and unexpected liability – estimated by many to be in the billions – the justices also expressed concerns over DOL’s use of amicus briefs to declare new policies. Justice Breyer questioned whether the Secretary of Labor even weighed in before the new position was advanced by the lawyers in the Solicitor’s Office of the DOL. He further indicated that the DOL should have first engaged in administrative notice-and-comment rulemaking, giving all affected parties notice before changing course on the exempt status of the PSRs. Justice Scalia asked whether it was the DOL’s policy making program to “run around the country” and make new regulations through amicus briefing. Department of Justice Deputy Solicitor General Malcolm Stewart, arguing on behalf of the United States, admitted that the DOL had received a request for an opinion letter in 2007, inquiring as to whether PSRs were outside salesmen, but that it never responded. Justice Scalia stated that he found it “extraordinary” that the DOL was going to come in – without engaging in any prior enforcement actions or issuing any agency guidance on the issue – and proclaim that 90,000 people are now owed retroactive overtime. One final point made by Mr. Clement – and echoed by Justice Ginsburg – was that, even if it is found that the PSRs do not meet the outside sales exemption requirements, the issue is not fully resolved as the position could still qualify for the administrative exemption under the FLSA. The application of the administrative exemption is not currently at issue before the Supreme Court.

This case has far reaching implications as there are over 90,000 PSRs employed by the pharmaceutical industry. In addition, the case will likely have a broader impact on the manner in which an agency can announce new positions. A decision is expected by the end of June. We will prepare a complete analysis of the decision once it is issued.

To learn more about the case and its potential implications for employers, please see Littler's ASAP, Supreme Court to Decide Significant Case on the Outside Sales Overtime Exemption, by Richard Black and Bradley Strawn.

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In that case the plaintiff worked as a medical technologist for Bostwick Laboratories. The plaintiff claimed that she and several coworkers met with the company’s chief operating officer to report that their supervisor was altering their timesheets to reflect that they had not worked the overtime that they had recorded, when they had worked the overtime hours. According to the plaintiff, the chief operating officer told them that he would look into the issue, but rather than resolving it, her employment was terminated on the following Monday. The plaintiff sued Bostwick Laboratories in the Eastern District of Virginia, claiming FLSA retaliation, among other things. Bostwick Laboratories moved to dismiss the complaint on the ground that an employee’s informal internal company complaint regarding a possible FLSA violation was not protected activity under the FLSA. The district court agreed, based on the then-precedential Fourth Circuit decision in Ball v. Memphis Bar-B-Q Co., and without having the guidance yet of the U.S. Supreme Court’s decision in Kasten, and dismissed the complaint. The plaintiff appealed.

The Fourth Circuit reversed, holding that “filed any complaint” includes internal company complaints, joining the First, Third, Sixth, Seventh, Eighth, Ninth, Tenth and Eleventh Circuits and leaving the Second Circuit’s minority position on this issue in doubt. In reaching its decision, the Fourth Circuit reasoned that protecting internal company complaints would further the remedial purposes of the FLSA and was consistent with agency enforcement positions.

While some circuits are still split on the issue of whether the FLSA retaliation protections apply to internal complaints, employers should investigate and remedy oral or written internal complaints regarding wage and hour violations, and strictly prohibit retaliation against those who make such complaints. For more information on FLSA retaliation, see the DOL’s recently posted Fact Sheet on FLSA retaliation.

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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’s reliance on Amex was surprising considering the Supreme Court’s recent order vacating and remanding the judgment in that case to the Second Circuit for reconsideration in light of Stolt-Nielsen S.A. v. Animal Feeds Int’l Corp, 130 S. Ct. 1758 (2010) (“Stolt-Nielsen”). In Stolt-Nielsen, the Supreme Court held that class arbitration is not permitted unless the parties agree to it. The district court determined, however, that Amex remained persuasive authority and analyzed Sutherland’s case using the factors articulated there.

Based on this analysis, the district court determined that the arbitration agreement at issue was unenforceable. Specifically, the court found that Sutherland’s maximum potential recovery of approximately $1,867.02, was “too meager to justify” her expenses, which were likely to exceed $200,000. The court reasoned that under these circumstances, Sutherland was unlikely to find an attorney willing to represent her. By contrast, if Sutherland was permitted to aggregate her claim with similarly situated individuals, “she would have no difficulty in obtaining legal representation.” Finally, the court asserted that enforcement of the class waiver provision would grant E&Y effective immunity from labor laws. Therefore, the court denied defendant’s motion to dismiss and compel arbitration and permitted plaintiff’s class action to proceed.

This entry was written by Sarah Green.

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Plaintiffs have urged courts to reject the “half time” method in favor of the so-called “time and a half” method, which results in much larger damages awards. The “time and a half” method divides the employee’s weekly salary by a fixed number of hours (typically 40) to determine a fixed weekly regular rate. The employee is then awarded 1.5 times that rate for all hours worked each week in excess of that fixed number.

While some district courts have accepted plaintiffs’ arguments in favor of the “time and a half” method, the Supreme Court’s decision not to disrupt the Seventh Circuit’s endorsement of the “half time” method was not surprising. Four other circuit courts and the U.S. Department of Labor have approved the “half time” method, and no circuit court has taken a contrary position. See Desmond v. PNGI Charles Town Gaming, LLC, 2011 U.S. App. LEXIS 702 (4th Cir. Jan. 14, 2011); Clements v. Serco, Inc., 530 F.3d 1224 (10th Cir. 2008); Valerio v. Putnam Assocs., Inc., 173 F.3d 35 (1st Cir. 1999); Blackmon v. Brookshire Grocery Co., 835 F.2d 1135 (5th Cir. 1988); Wage and Hour Opinion Letter, FLSA 2009-3 (Jan. 14, 2009).

This entry was written by Robert W. Pritchard.

In contrast, in 2007, in Long Island Care at Home, Ltd, v. Evelyn Coke, the U.S. Supreme Court held that Fair Labor Standards Act (FLSA) regulations exempted home care agencies from having to pay overtime to its employees who worked in clients' homes. The Pennsylvania Supreme Court, however, rejected Bayada’s argument that it should be subject to the exemption standards under the FLSA, not Pennsylvania Minimum Wage law.

The decision means that, in Pennsylvania, home health agencies must now pay overtime to aides who work more than 40 hours in a workweek. The decision also has broader implications for any employer relying on the domestic services exemption. To come within the domestic services exemption: (1) the worker must be providing domestic services in or about a private home; and (2) the work must be performed in the home of the employer, not a third party. Employers in the state should carefully review their overtime exemptions and be sure that they are not erroneously relying on FLSA provisions where there are differing Pennsylvania requirements.

This entry was written by Thomas Benjamin Huggett.
 

Kevin Kasten worked at a Saint-Gobain manufacturing plant in Wisconsin. He was issued three warnings for failing to properly clock in and out, and was suspended and then terminated in connection with a fourth incident. He claimed that at the time of his warnings and suspension, he told 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 suggested to one supervisor that he might file a lawsuit. Following his termination, 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 the case, holding that unwritten oral complaints are not protected activity under the FLSA’s anti-retaliation provision. The Seventh Circuit Court of Appeals affirmed. The Seventh Circuit first held that “the plain language of the statute indicates that internal, intra-company complaints are protected,” based on the use of the word “any” before “complaint,” joining the majority of Circuit Courts that have considered the issue. 570 F.3d at 838.¹ However, the court then reasoned that the use of the term “filed” implies a writing and held that unwritten oral internal complaints are not protected activity under the FLSA. 570 F.3d at 839. The court rejected the argument made by Kasten and the Secretary of Labor in an amicus brief that “filed” should be interpreted as “to submit.” Id. The court also reasoned that when Congress wants to protect retaliation more broadly, it knows how to do so, for example in Title VII, which prohibits retaliation because one has “opposed any practice.” 570 F.3d at 840. The court thus affirmed the dismissal of the Complaint.

The Supreme Court granted review to address the Circuit split on the interpretation of “filed any complaint.” At oral argument today the Court did not allow much in the way of argument, peppering the attorneys with hypotheticals, and hinting at several possible outcomes:

• Several Justices raised the possibility that the Court could hold that internal complaints are not protected at all, siding with the minority of Circuit Courts on that issue.
• If internal complaints can constitute protected activity, Justice Ginsburg credited the argument that every other time the word “file” is used in the FLSA, it refers to a writing and allowing oral internal complaints would deviate from the standard meaning of the term in the statute at issue. This would be a reason to affirm the Seventh Circuit’s decision, holding that only written internal complaints are protected.
• If internal oral complaints can constitute protected activity, the Justices asked the parties to identify a standard to qualify an oral complaint as protected activity. They used the example of an oral complaint to a supervisor at a cocktail party and seemed uncomfortable with the possibility that this could be protected activity. Justices Alito and Sotomayor probed whether “filed any complaint” may incorporate whatever complaint procedures the company has. Alternatively, Justice Breyer focused on the extent of the formality of the complaint, expressing a concern that a tap on the shoulder raising a complaint could go unnoticed by a supervisor. In response, an objective standard was proposed: “whether a reasonable person would have understood the employee to have submitted a complaint.”

In sum, it appears that if the Court allows internal oral complaints to qualify as protected activity, it is likely to impose a standard that ensures that employers have sufficient notice of the complaint. Stay tuned!

This entry was written by Martha Keon.
 

¹ But see Ball v. Memphis Bar-B-Q, Co., Inc., 28 F.3d 360, 364 (4th Cir. 2000) (the FLSA’s “statutory language clearly places limits on the range of retaliation proscribed by the act.”); Lambert v. Genesee Hosp., 10 F.3d 46, 55 (2d Cir. 1993) (The plain language of this provision limits the cause of action to retaliation for filing formal complaints, instituting a proceeding, or testifying, but does not encompass complaints made to a supervisor”).

The employee and Petitioner argued that these issues were important for the Court to resolve because there is a conflict among the circuits and district courts. Most notably, the Ninth Circuit in Alvarez v. IBP, Inc., 339 F.3d 894 (9th Cir. 2003), aff’d on other grounds, 546 U.S. 21 (2005), held that that protective items worn in the beef and pork industries are not “clothes” within the meaning of Section 203(o), and, therefore, employees are required to be paid for this time, which is in direct conflict with the Fourth Circuit’s opinion.

In opposition to the petition for review to the Supreme Court, the employer and Respondent, Allen Family Foods, Inc., distinguished Alvarez v. IBP, Inc., noting that the meat packing and poultry industries use different protective gear, and that the Petitioner oversimplified the facts in the case. In addition, the employer noted that, after the petition was filed, the U.S. Department of Labor issued an opinion letter stating that the term “clothes” in Section 203(o) does not apply to the protective gear worn by meat packing employees, but distinguished the heavy protective gear worn in meat packing plants from the lighter gear worn in poultry plants. Administrator’s Interpretation No. 2010-2 (June 16, 2010).

The employee also presented the issue of whether the requirement that exemptions from the FLSA are to be narrowly construed also applies to Section 203(o). In response, the employer argued that Section 203(o) is not an exemption, because it does not exempt any employee from the minimum wage or overtime provisions of the Act, and, therefore, ordinary statutory interpretation should apply.

Employers should not read too much into the Court’s refusal to hear this case. It is possible the Court prefers that other circuits weigh in on the issue before accepting review, particularly in light of the Department of Labor’s recent Administrator’s Interpretation.

This entry was written by Steven Kaplan.

Providing context for its decision, the court noted that Congress intended to exclude certain pre- and post-shift activities from work time when it enacted the Portal-to-Portal Act to amend the Fair Labor Standards Act. Under that amendment, as further stated in a persuasive 2006 DOL memorandum, changing clothes under usual circumstances is not compensable. In this case, the City had a policy of allowing officers to dress wherever they preferred, including at home, but required motorcycle officers to dress at home. The Court agreed that to the extent officers elected to dress at work, their decision was strictly a matter of employee convenience, and, as a result, their decision to change clothes at work did not render that time compensable.

The court recognized that previous decisions from the United States Supreme Court and the Ninth Circuit allowed compensation for donning and doffing, but in all those cases, changing clothes had to be performed on the employer's premises because of the nature of the work, a policy of the employer, or applicable law. Those cases provided the following three-part test to assess whether pre- and post-shift activities are compensable: (1) does the activity constitute "work"? (2) is the activity an "integral and indispensable duty" of the job?, and (3) is the activity so insignificant in scope and duration as to be excluded from compensability as de minimis?

The court expressed doubt whether the act of changing in and out of a uniform and gear constituted "work," but proceeded to the second prong of the test where the officers' argument "fatally falter[ed]." To be "integral and indispensable, a pre- or post-shift activity must be "necessary to the principal work performed and done for the benefit of the employer." Both the majority and the dissent deemed that the act of donning and doffing a uniform was not integral to the job and, therefore, was not compensable. The majority noted that, although there was no dispute that the uniform and gear was required, the process of donning and doffing was not required to occur at work, and was equally effective whether performed at home or work. There was no mutual obligation fulfilled by donning and doffing at work, and the ultimate decision was a matter of convenience to the employee, not the employer. The dissent also recognized that the uniform may connote authority but does "not assist the officers in making arrests, interviewing witnesses or writing reports," and, therefore, is not integral.

The majority considered the gear used by officers in the same context as (and as part of) their uniform and found it to be indispensable but not integral to the principal duty of law enforcement. The dissent reasoned that the police gear assisted officers in the performance of their principal duty, and, consequently, was both indispensable and integral. The dissent further noted that the time spent donning and doffing gear was most likely a matter of only "seconds, or a few minutes," which would make that time non-compensable as de minimis. The dissent concluded that the case should be remanded because the record does not contain evidence of the amount of time actually required for donning and doffing gear.

This decision is significant for private employers as well. To the extent any employer requires its employees to wear a uniform (or gear), this decision provides a framework for determining whether an employee is entitled to compensation. Although certain factors or set of facts may lead to variations, employers requiring its employees to don and doff uniform and gear at work are likely required to compensate employees for that time—provided it is not de minimis—but employees are generally not entitled to compensation if they have the right to change at home at the beginning and end of their workday.
 

This entry was written by Laurent Badoux.