In a decision last month from the District Court for the District of New Jersey, Judge Irenas denied a defendant’s Motion to Decertify an FLSA Collective Action comprised of 100 loan officers and 20 loan processors.  See Garcia v. Freedom Mortgage Corp., 2011 U.S. Dist. LEXIS 62212 (D.N.J. June 10, 2011).  Conditional certification was previously granted to two subclasses – one for the loan officers and one for the loan processors.    Plaintiffs argued that under the federal Fair Labor Standards Act (FLSA) and the state New Jersey Wage and Hour Laws, they were wrongfully denied overtime compensation for hours worked over 40 within a single workweek. The loan officers were compensated either solely based on commission or through a combination of a salary and commission.  The loan processors were compensated with a salary and also by a bonus based on the number of loans successfully closed.  Generally, the loan officers would gather general information from potential customers, obtain a copy of the potential customer’s credit report, and pass the information along to a loan processor.  The loan processor generally organized the potential customer’s application after collecting information pertaining to compensation and tax history, passed the information to an underwriter, scheduled the closing, and arranged for appraisal and title work. 

In denying defendant’s motion for decertification, the court held that although there were differences between the individual plaintiffs within each subclass, the similarities outweighed such differences, and, as such, the class members were indeed similarly situated.  Moreover, the Court noted that “[a]ll Plaintiffs within each subclass had similar job duties, responsibilities and compensation structures.  All Plaintiffs within each subclass were subject to the same policy and practice of Defendant to treat such Plaintiffs as employees exempt from the overtime requirements of the FLSA.”  Also, the Court rejected defendant’s argument that damages would be “nearly impossible” to calculate.  Instead, the Court noted that it is the employer’s burden to maintain proper employee records and if the employer failed to keep such records, damages may still be calculated based upon other evidence before the Court.

Lastly, the Court also denied defendant’s motion for summary judgment noting that there were genuine issues of material fact concerning whether loan officers and loan processors were exempt from the overtime mandates because they were, as alleged by defendant, administrative employees.  Plaintiffs will be able to defeat this administrative exemption defense if they can, among other things, show that the loan officers and loan processors typically did not utilize discretion or independent judgment in their daily work.

Conditional certification of a collective action under the Fair Labor Standards Act (“FLSA”) was recently granted in a New Jersey case involving approximately 100 employees who worked in the construction industry holding job titles such as hazardous abatement workers, demolition workers, and teamsters.  In Kristic v. J.R. Contracting & Environmental Consulting, et al., 2011 U.S. Dist. LEXIS 28121 (D.N.J. March 16, 2011) United States District Judge Peter Sheridan of the District of New Jersey held that conditional certification was proper where the approximately 100 hourly employees were similarly situated and were  not paid overtime compensation for working over forty (40) hours per week.  Judge Sheridan granted conditional certification despite the presence of signed arbitration agreements on behalf of some of the construction workers and held that Defendant’s Motion to Dismiss was procedurally improper.  Thus, New Jersey overtime lawyers should not automatically assume that the presence of an arbitration agreement necessarily precludes a plaintiff from seeking relief in federal court, notably an order granting conditional certification under the FLSA.  In granting conditional certification, the Court noted that four plaintiffs claimed, apparently based on their general recollection and routine, that they worked 8 to 10 hours per day.  Plaintiffs also sued two individual officers of defendant for the overtime violations alleging that the officers not only controlled the company but also controlled payment of the employees’ compensation.   Lastly, plaintiffs also sought to recover payment for wages and benefits allegedly owed to them as the result of working on publically-funded contracts – apparently a claim for payment of what is sometimes referred to as the “ prevailing wage.”

In a recent 2010 decision from the Southern District of New York, Cruz v. Hook-SupeRx,L.L.C., 2010 U.S. Dist. LEXIS 81021 (S.D.N.Y. Aug. 5, 2010), Judge Crotty granted conditional collective action certification to a group of current and former Assistant Store Managers at CVS.  The Assistant Managers hailed from six states:  Pennsylvania, New Jersey, New York, Massachusetts, Michigan, and North Carolina.

Conditional collective certification was granted pursuant to the Fair Labor Standards Act (FLSA) which allows employees to not only sue on their own behalf but also on behalf of other employees who are “similarly-situated.”  Plaintiffs alleged that they were improperly classified as executives and wrongfully denied any overtime compensation.    Judge Crotty noted that Plaintiffs burden at this stage was minimal and that “[a] modest factual showing is sufficient to demonstrate that Plaintiffs and potential Plaintiffs were victims of a common policy or plan that violated the law.” 

Indeed, the Court found very persuasive declarations of Assistant Store Managers in over 9 states which showed that CVS stores were all controlled by a corporate office; that Assistant Store Managers were required to participate in a uniform training program; and that the Assistant Managers were performing many non-exempt duties:  shelving merchandise, unpacking boxes, loading and unloading trucks, helping customers and working a cash register.  Moreover, the Assistant Managers did not regularly hire or fire other employees. 

Judge Crotty granted Plaintiffs’ motion for conditional collective action certification and also authorized court notice to go out to other Assistant Store Managers eligible to join the case.  This case demonstrates that the standard for initially certifying a class pursuant to the FLSA is indeed a low hurdle for overtime and wage attorneys to meet.  Thus, overtime and wage attorneys in Pennsylvania, New Jersey, and New York should be cognizant of possible claims that Assistant Managers may have for denied overtime compensation.

In September 2007, the United States Court of Appeals for the Third Circuit issued its much-anticipated decision in DeAsencio v. Tyson Foods, Inc., 500 F.3d 361 (3d Cir. 2007).  The decision is a victory for workers within the Third Circuit – which includes Pennsylvania, Delaware, and New Jersey – because the Court rejected the overly-restrictive definition of compensable work advocated by big business and its high-powered friends, such as the United States Chamber of Commerce, the National Chicken Council, and the American Meat Institute, all of whom filed amicus briefs opposing the workers’ position.

The DeAsencio lawsuit was brought by a group of poultry workers who sought compensation under the FLSA for unpaid activities such as (i) gathering and donning smocks, gloves, hairnets, and other company-mandated gear at the beginning of the workday, (ii) washing themselves and certain gear at the beginning of the workday, (iii) traveling to their workstation at the beginning of the workday, and (iv) doffing and returning company-mandated gear at the end of the workday.  The company asserted that such activities were not compensable because, among other reasons, the activities did not require substantial physical or mental “exertion.”

On appeal, a unanimous Third Circuit Court rejected the notion that an activity’s compensability under the FLSA turns on the degree of “exertion” required by the activity.  The Court explained that a “broad definition of work” applies when determining whether “preliminary” and “postliminary” activities are compensable.  What matters, the Court explained, is whether the activities are “integral and indispensable” to the worker’s principal activities.  Thus, because the wearing of sanitary and protective gear is mandatory due to the nature of poultry processing, the compensable workday begins when the poultry worker picks up his first item of gear, and the worker is entitled to be paid from that moment forward.  Whether this first compensable act requires substantial mental or physical “exertion” is irrelevant to the worker’s right to be paid.

If you know or represent workers who are required to perform pre-shift activities, you should be on the lookout for potential FLSA violations.  The Winebrake Law Firm represents hundreds of workers in collective action lawsuits seeking compensation for time spent engaged in pre-shift activities.  These lawsuits, which currently are pending in federal courts in Pennsylvania, Mississippi, Georgia, and Arkansas, seek full compensation for an array of pre-shift activities, including:  gathering and donning company mandated equipment; traveling to the workstation; programming or “logging in” to computer systems; attending pre-shift meetings; and performing pre-shift exercises.

I recently handled an overtime lawsuit in Northeastern Pennsylvania in which the defense attorney seemed to view the recovery of attorney’s fees under FLSA Section 16(b) as a privilege rather than a right.  And this lawyer is not alone.  We get the same reaction from overtime lawyers and attorneys in Philadelphia and New Jersey.  

These defense attorneys are simply wrong, and they fail to understant that the FLSA’s fee-recovery provision is absolutely essential to the statute’s enforcement scheme.  “A successful FLSA claim carries with it the recovery of attorney’s fees.”  Gumecinda v. Ruiz, 808 F.2d 427, 429 (5th Cir. 1987) (citing 29 U.S.C. sec. 216(b)); see also Hilton v. Executive Self Storage Assocs., Inc., 2009 U.S. Dist. LEXIS 51417, *27 (W.D. Tex. June 18, 2009) (“Fee awards are mandatory for prevailing plaintiffs in FLSA cases.”); Pratter v. Commerce Equities Mgmt., Co., 2008 U.S. Dist. LEXIS 98795,*6 (S.D. Tex. Dec. 8, 2008) (same).  The Congressional purpose behind this provision “is to insure effective access to the judicial process by providing attorney fees for prevailing plaintiffs with wage and hour grievances.”  Fegley v. Higgins, 19 F.3d 1126, 1143 (6th Cir. 1994) (internal quotations omitted).  As federal courts repeatedly recognize, the FLSA’s fee recovery provision is crucial to Congress’ intent that workers be able to vindicate their FLSA rights through private litigation.  See, e.g., Fegley, 19 F.3d at 1134-35 (FLSA fee award “‘encourages the vindication of congressionally identified policies and rights’”); United Slate, Tile and Composition Roofers v. G&M Roofing and Sheet Metal Co., Inc., 732 F.2d 495, 502 (6th Cir. 1984) (purpose of FLSA fee award “is to insure effective access to the judicial process”); Maddrix v. Dize, 153 F.2d 274, 275-76 (4th Cir. 1946) (“Obviously Congress intended that the wronged employee should receive his full wages plus the penalty without incurring any expense for legal fees or costs.”); Shannon v. Saab Training USA, LLC, 2009 U.S. Dist. LEXIS 52677, *8 (M.D. Fla. June 23, 2009) (“To encourage private enforcement of statutory rights under the FLSA, Congress created a fee-shifting provision”).

In Shelton v. Ervin, 830 F.2d 182 (11th Cir. 1987), the Eleventh Circuit Court of Appeals explained that the FLSA’s fee recovery provision is not collateral to the merits of an FLSA lawsuit but, rather, is an “integral part of the merits” of the lawsuit.  The Court held:  “[FLSA] Section 216 provides for an award of attorney’s fees, as opposed to granting the court discretion in awarding such fees, to the prevailing plaintiff in FLSA cases. In consideration of the language of section 216(b) and its underlying purpose, we hold that attorney fees are an integral part of the merits of FLSA cases and part of the relief sought therein. Thus, a final determination as to the award of attorney fees is required as part of the final appealable judgment.”  Id. at 184; accord Ellison v. LeGrande, 2009 U.S. Dist. LEXIS 14127, *6 n. 3 (M.D. Fla. Feb 24, 2009).