Reported FLSA Circuit Court Opinions Decided Between January 1, 2014 and March 14, 2015

For purposes of the recent NELA wage and hour seminar, I prepared some commentary regarding all reported decisions issued by the Nation’s Circuit Courts between January 1, 2014 and March 14, 2015. The summary, which is reproduced below, is limited to precedential opinions that (i) arise under the FLSA and (ii) have been or will be reported in the Federal Reporter. I did my best to capture every such decision, but I probably missed a few. Also, this summary does not include Circuit Court decisions addressing wage/overtime issues arising under state or local laws.

First Circuit

Litz v. The Saint Consulting Group, Inc., 772 F.3d 1 (1st Cir. Nov. 4, 2014)

Holding: Employees’ weekly “stipends” satisfied the “salary basis” test, enabling the company to deny overtime under the “highly compensated employee” regulation.

Comments: Plaintiffs’ counsel made some good arguments that the employees’ weekly “stipends” violated the salary basis rules because the stipends were “subject to reductions because of variations in the . . . quantity of work performed.” But these employees were making well over $100,000 per year, and, as the Supreme Court’s 2012 Christopher demonstrates, it sure is difficult to convince judges that such well-heeled employees should get overtime pay.

Newman v. Advanced Technology Innovation Corp., 749 F.3d 33 (1st Cir. Apr. 18, 2014)

Holding: Because the per diem component of the plaintiffs’ pay was tied, in part, to the number of hours work, the per diem payments should have been included in determining the employees regular pay rate for overtime calculation purposes.

Comments: This opinion cogently summarizes the rules applicable to determining when per diem payments can be excluded from the regular rate calculation. The Court relies, in part, on the DOL Field Operations Handbook.

Perez v. Lorraine Enterprises, Inc., 769 F.3d 23 (1st Cir. Oct. 1, 2014).

Holding: Restaurant violated FLSA by failing to provide servers with advance notice that it utilized the “tip credit” to satisfy its minimum wage obligation.

Comments: Most notably, the Court’s rejected the restaurant’s argument that the servers were sufficiently put on notice of the tip credit based on the content of their pay stubs.

Second Circuit

Brown v. New York City Department of Education, 755 F.3d 154 (2d Cir. June 18, 2014)

Holding: Individual who performed volunteer work at public school for a three-year period was not an employee covered by the FLSA.

Comments: Why this relatively sophisticated plaintiff would continuously work for three years without pay seems puzzling. The facts are so extreme that this case is easily distinguishable from any case you may file.

Parada v. Banco Industrial de Venezuela, C.A., 753 F.3d 62 (2d Cir. Mar. 25, 2014)

Holding: Plaintiff not entitled to equitable tolling back to the time she filed her administrative overtime complaint with DOL.

Comment: This unsurprising decision demonstrates the risks that workers take when they rely on DOL’s investigative process – rather than trial lawyers – to recover back wages.

Pippins v. KPMG LLP, 759 F.3d 235 (2d Cir. July 22, 2014)

Holding: Salaried, non-CPA accountants at large accounting firm are covered by the learned professional exemption.

Comment: This holding follows a trend of decisions finding staff accountants to be exempt. It seems like judges perceive these types of well-educated employees as merely “paying their dues” before moving up the corporate ladder. Also, the opinion contains a good discussion of the differences between the administrative exemption and the professional exemption and demonstrates how white collar employees can be exempt professionals even though they do not engage in the type of managerial decision-making required under the administrative exemption.

Third Circuit

Davis v. Abington Memorial Hospital, 765 F.3d 236 (3d. Cir. Aug. 26, 2014)

Holding: (1) Plaintiff asserting FLSA overtime claim “must sufficiently allege forty hours of work in a given workweek as well as some uncompensated time in excess of the forty hours” but is not required to “identify the exact dates and times that she worked overtime.” (2) Absent a minimum wage violation, the FLSA does not permit employees to recover damages for “gap-time” (unpaid hours worked under the 40-hour threshold).

Comments: The Court endorses a pleading requirement that does not seem very onerous to meet. Also, the “gap time” holding is unsurprising.

Opalinski v. Robert Half International Inc., 761 F.3d 326 (3d Cir. July 30, 2014)

Holding: Where an FLSA claim is covered by an arbitration agreement that does not clearly indicate whether the worker waived her right to pursue the claim as a collective action, the federal judge – not the arbitrator – determines whether class-wide arbitration is permissible.

Comments: Employers hate this holding, which conflicts with a holding by the Sixth Circuit. Eventually, this issue will make its way to the Supreme Court.

Rosano v. Township of Teaneck, 754 F.3d 177 (3d Cir. June 10, 2014)

Holding: (1) Governmental “law enforcement” or “fire protection” agency can calculate overtime damages using FLSA Section 7(k) methodology even if the agency did not contemporaneously intend to utilize a Section 7(k) “work period” in paying workers. (2) Police officer uniforms constitute “clothing” under FLSA Section 3(o).

Comments: Neither holding is too surprising. The Section 7(k) analysis is a must-read before you file an overtime rights case on behalf of police officers, prison guards, or firefighters.

Thompson v. Real Estate Mortgage Network, 748 F.3d 142 (3d Cir. Apr. 3, 2014)

Holding: Employees adequately pled that: (i) two companies were joint employers under FLSA; (ii) one of the companies could be liable under the FLSA as a “successor in interest”; and (iii) two corporate executives could be individually liable under FLSA.

Comments: This opinion contains good language explaining that, at the pre-discovery pleadings stage, plaintiffs are not expected to have access to the type of detailed, intra-company information necessary to fully address the joint-employment, successor liability, and individual liability factors.

McMaster v. Eastern Armored Services, Inc., __ F.3d __, 2015 U.S. App. LEXIS 3826 (3d Cir. Mar. 11, 2015)

Holding: Under the SAFETEA-LU Technical Corrections Act of 2008, employee who spent approximately 50% of her time driving vehicles weighing less than 10,000 pounds is not covered by the FLSA’s motor carrier exemption and is entitled to overtime premium pay.

Comments: This is a significant opinion that rejects the flimsy reasoning of several district courts from around the country. Under this opinion, many drivers who work for “mixed-fleet” employers are entitled to overtime premium pay.

Fourth Circuit

Cruz v. Maypa, 773 F.3d 138 (4th Cir. Dec. 1, 2014)

Holding: Plaintiff’s FLSA claim was equitably tolled because her employer failed to conspicuously post notice of employees’ FLSA-rights as required by 29 C.F.R. § 516.4.

Comments: A nice decision, especially coming from the Fourth Circuit. The plaintiff, an immigrant laborer, had been severely exploited and was sympathetic. The Court explains: “absent a tolling rule, employers would have no incentive to post notice since they could hide the fact of their violations from employees until any relevant claims expired.”

Martin v. Wood, 772 F.3d 192 (4th Cir. Nov. 18, 2014)

Holding: Supervisors at state-owned hospital enjoyed Eleventh Amendment immunity from FLSA lawsuit because their allegedly illegal conduct was “inextricably tied to their official duties.”

Comments: It is well-established in the Fourth Circuit that the Eleventh Amendment protects from FLSA lawsuits both state defendants and individual defendants acting in their “official capacities.” In this opinion, the Court makes it difficult for plaintiffs to circumvent this rule by simply labeling the suit as being filed against an defendant in his/her “individual capacity.”

Fifth Circuit

Allen v. Coil Tubing Services, L.L.C., 755 F.3d 279 (5th Cir. June 13, 2014)

Holding: In deciding whether employees are sufficiently engaged in “safety-affecting interstate activities” to be covered by the FLSA motor carrier exemption, courts are not necessarily required to analyze each employee’s individual work experience.

Comments: We have not seen the last of this important issue, as indicated by Judge Dennis’ scholarly dissent. The Third Circuit is currently considering the same issue in a pending appeal entitled Resch v. Krapf’s Coaches, Inc., No. 13-3947.

Coffin v. Blessey Marine Services, Inc., 771 F.3d 276 (5th Cir. Nov. 13, 2014)

Holding: Vessel-based tankermen covered by FLSA’s seaman exemption.

Comments: The Court accepted this interlocutory appeal after the employer’s summary judgment motion was denied. In refusing to follow previous decisions that workers who load and unload cargo from ships are not covered by the seaman exemption, the Court emphasized that these particular plaintiffs lived on the vessel.

Johnson v. Heckmann Water Resources, Inc., 758 F.3d 627 (5th Cir. July 14, 2014)

Holding: In determining overtime pay, employers may utilize a recurring, seven-day workweek that does not coincide with the employees’ work schedule.

Comments: This decision is based on well-established regulations and is entirely unsurprising. Decision contains a concise recitation of the seven-day workweek rule and the pertinent regulations.

Orozco v. Plackis, 757 F.3d 445 (5th Cir. July 3, 2014)

Holding: Owner of franchisor is not a covered employer with respect to FLSA claims of an employee of the franchisee.

Comments: In my view, this decision exemplifies “conservative judicial activism.” The appellate panel overturned a jury verdict (and the district court’s decision endorsing the jury verdict) in which the franchisor’s owner was found liable based on the jury’s weighing of the “economic reality” factors. It seems like the panel substitutes its own judgment for that of the jury.

Sixth Circuit

Killion v. Kehe Distributors, 761 F.3d 574 (6th Cir. July 30, 2014)

Holding: District court improperly entered summary judgment against salaried sales representatives under FLSA’s outside sales exemption, where the sales representatives’ responsibilities include, inter alia, delivering products to retail stores, stocking shelves, and facilitating the automatic re-ordering process.

Comments: It’s nice to see a reversal of summary judgment in an FLSA misclassification case. The appellate court recognized that, based on the disputed evidence, a reasonable jury could find that the sales representatives’ primary duty was not “making sales.” The decision contains a good discussion of what types of activities are “incidental” to making sales.

Michigan Corrections Organization v. Michigan Department of Corrections, 774 F.3d 895 (6th Cir. Dec. 17, 2014)

Holding: (1) State Department of Corrections is constitutionally immune from FLSA liability. (2) Neither FLSA nor any other theory provides a private right of action for plaintiffs to seek injunctive relief against the Department’s Director in his individual capacity.

Comments: Judge Sutton’s scholarly opinion contains a good discussion of the constitutional limits of the FLSA. Very heady stuff.

Misewicz v. City of Memphis, 771 F.3d 332 (6th Cir. Nov. 14, 2014)

Holding: Municipal paramedics’ training time is not compensable under FLSA.

Comments: This decision contains a good discussion to the rules applicable to determining whether municipal employee’s training time is compensable. The Court explains that, in refusing to pay for training time, a municipality is only required to satisfy 29 C.F.R. § 553.226(b) and is not required to also satisfy 29 C.F.R. § 553.226(a) (which applies to private employers). Here, the paramedics were not entitled to be paid for their training time because, under § 553.226(b)(1), the training was required for their state certifications.

Seventh Circuit

Driver v. Appleillinois, LLC, 739 F.3d 1073 (7th Cir. Jan 15, 2014)

Holding: Restaurant’s petition for interlocutory appeal of class certification denied.

Comments: I am including this opinion because, notwithstanding the above holding, it contains some language by Judge Posner that you may find helpful. In particular, the opinion states that restaurants may not take a tip credit – and, therefore, must pay the full minimum wage – for any amounts of time that tipped employees spend performing duties “that are unrelated to their tipped duties.” Examples of such duties include “washing dishes, preparing food, mopping the floor, or cleaning bathrooms.” This rule is presented as distinct from the rule that restaurants may not take a tip credit when servers spend more than 20% of their time on “non-tipped work” that is “related to” tipped work (such as, for example, setting or clearing tables).

Gaines v. K-Five Construction Corp., 742 F.3d 256 (7th Cir. Jan. 3, 2014)

Holding: Truck driver not entitled to compensation for purported pre-shift truck inspection work where he failed to offer any evidence that management knew or should have known he was performing such work.

Comments: This opinion, which is primarily dedicated to non-FLSA issues, applies a well-established FLSA rule to some very case-specific facts. Not too noteworthy.

Mitchell v. JCG Industries, Inc., 745 F.3d 837 (7th Cir. Mar. 18, 2014)

Holding: Under FLSA Section 3(o), unionized workers’ clothes-changing during unpaid meal breaks is not compensable.

Comments: This controversial Judge Posner opinion drew a strong dissent from Judge Wood. Later, a sharply-divided Seventh Circuit denied en banc review by a 6-4 vote, with Judge Williams issuing a strongly-worded dissent on behalf of herself and Judges Wood, Rovner, and Hamilton. In essence, this decision extends the Supreme Court’s recent Sandifer holding into the meal break. This is controversial because FLSA Section 3(o) always has been understood to be limited to activities at the beginning and end of the workday, not during meal breaks. Anyway, before getting too excited about this opinion, it’s important to remember that (i) Section 3(o) only applies to unionized workplaces and (ii) it is questionable whether other Circuit Courts will be influenced by this decision in light of the dissenting voices within the Seventh Circuit.

Eight Circuit

Bouaphakeo v. Tyson Foods, Inc., 765 F.3d 791 (8th Cir. Aug. 25, 2014)

Holding: (1) District court correctly refused to decertify an FLSA collective of meat packers seeking to recover for donning, doffing, and walking times, even though the uncompensated time of some collective members may not have crossed the 40-hour overtime threshold. (2) Plaintiffs are permitted to estimate “class-wide” damages based on the average amount of time a statistically valid sample of employees spent donning, doffing, and walking.

Comments: This helpful opinion affirms a $2.8 million jury verdict against Tyson Foods and rejects some of the defense bar’s favorite “trial by formula” arguments against class/collective litigation. The defense bar constantly argues that chaos will ensue if a class/collective action actually goes to trial. This opinion demonstrates that complex class/collective actions can be managed through verdict and that, even in off-the-clock cases, damages can be quantified on a class-wide basis.

Conners v. Gusano’s Chicago Style Pizzeria, __ F.3d __, 2015 U.S. App. LEXIS 3632 (8th Cir. Mar. 9, 2015)

Holding: Where originating plaintiffs did not sign arbitration agreements, they lacked standing to challenge the validity of arbitration agreements signed by members of the putative FLSA collective who signed such agreements.

Comments: Because this opinion is grounded in constitutional standing, it does not address the substantive arguments regarding the propriety of arbitration agreements that employers present to putative collective members after the commencement of an FLSA collective action.

Guyton v. Tyson Foods, Inc., 767 F.3d 754 (8th Cir. Aug. 25, 2014)

Holding: District court did not commit reversible error during class/collective donning and doffing trial that resulted in a defense verdict in favor of Tyson Foods.

Comments: The errors complained of by plaintiffs are case-specific and probably do not have much application to other cases. Like Bouaphakeo, this case exemplifies that class/collective actions can be manageably tried to verdict.

Holaway v. Stratasys, Inc., 771 F.3d 1057 (8th Cir. Nov. 6, 2014)

Holding: Plaintiff’s FLSA claim was properly dismissed on summary judgment because he failed to present any credible evidence that he worked over 40 hours in any week.

Comments: This opinion is very fact-specific. The Court recognizes the rule that, when an employer fails to maintain time records, the employee can prove his/her work hours by “just and reasonable inference.” The Court then explains that the plaintiff failed to meet this relatively low standard.

Madden v. Lumber One Home Center, Inc., 745 F.3d 899 (8th Cir. Mar. 17, 2014)

Holding: Jury verdict that three lumber yard supervisors were overtime-exempt executives reversed, in part.

Comments: At trial, the jury found that all three plaintiffs were overtime-exempt executives. The Court affirms this verdict as to two of the supervisors. However, the Court overturns the jury verdict with respect to one supervisor who, based on the evidence, played absolutely no rule in personnel decisions. The opinion contains some good language regarding the executive exemption’s requirement that a plaintiffs “suggestions and recommendations” regarding personnel decisions be “given particular weight.”

Petroski v. H&R Block Enterprises, LLC, 750 F.3d 976 (8th Cir. May 5, 2014)

Holding: H&R Block tax preparers are not employed by the company during the “off-season” and, as such, have no FLSA right to be paid for time spent attending off-season training courses.

Comments: This was a big case, and the holding seems unfair. But the Court’s reasoning is limited to “seasonal” employees required to perform unpaid work during their off-season. Outside of the tax preparation arena, the opinions’ reach seems limited.

Ninth Circuit

Avila v. Los Angeles Police Department, 758 F.3d 1096 (9th Cir. July 10, 2014)

Holding: Jury properly found that police officer’s termination was retaliatory under the FLSA.

Comments: This opinion does not break any new ground and is very fact-specific. It’s not too surprising that the plaintiff police officer – who was terminated shortly after testifying against the department in a federal FLSA trial – prevailed.

Landers v. Quality Communications, Inc., 771 F.3d 638 (9th Cir. Nov. 12, 2014)

Holding: Plaintiff asserting an FLSA overtime claim “must allege that she worked more than forty hours in a given workweek without being compensated for the hours worked in excess of forty during that week.” However, the plaintiff “may establish a plausible claim by estimating the length of her average workweek during the applicable period and the average rate at which she was paid, the amount of overtime wages she believes she is owed, or any other facts that will permit the court to find plausibility.”

Comments: This opinion takes an approach that is similar to the Third Circuit’s approach in Davis (discussed above). If you are interested in the FLSA pleading issue, this opinion includes a great survey of the various circuit court authority from throughout the country.

Tenth Circuit

Albers Board of County Commissioners of Jefferson County, 771 F.3d 697 (10th Cir. Nov. 13, 2014)

Holding: Employer did not violate the FLSA by calculating the overtime premium based upon the employee’s actual – rather than agreed upon – pay rate.

Comment: Plaintiffs claimed that their employer paid them at an hourly rate that was lower than the agreed-upon pay rate. Plaintiffs then tried to transform this breach of contract claim into an FLSA violation by arguing that, under the FLSA, the agreed-upon rate must be used to calculate the overtime premium. The Court flatly rejected this argument, observing that, under the FLSA, the regular rate is the amount actually “paid to” the employee. See 29 U.S.C. § 207(e).

Ellis v. J.R.’s Country Stores, Inc., __ F.3d __, 2015 U.S. App. LEXIS 3667 (10th Cir. Mar. 9, 2015)

Holding: Employer did not lose the executive exemption by making a single, improper deduction to a manager’s salary.

Comment: This opinion is not too surprising. Plaintiff’s misclassification theory hinged on evidence that, on one single occasion, the employer made an improper deduction to her salary. When this deduction was brought to the employer’s attention, it promptly reimbursed Plaintiff. The opinion contains a good discussion of the salary deduction rules and the “window of correction” regulation.

Garcia v. Tyson Foods, Inc., 770 F.3d 1300 (10th Cir. Aug. 19, 2014)

Holding: (1) Jury in this class/collective donning and doffing lawsuit properly found in the workers’ favor and awarded class-wide damages based on the evidence presented. (2) District court properly awarded Plaintiffs’ counsel over $3.3 million in attorney’s fees.

Comments: This opinion – the third Tyson Foods opinion covered in this paper – provides another example of how large FLSA collective actions can be effectively tried to verdict. Like the Tenth Circuit’s Bouaphakeo opinion (discussed above), this opinion contains some good language regarding the propriety of “representative evidence” in trying FLSA collective actions. The portion of the opinion addressing attorney’s fees contains some good language (i) rebutting Tyson’s “partial-success” arguments and (ii) reaffirming that statutory fees under the FLSA will often exceed the amount of unpaid wages awarded to the plaintiffs.

Sanchez v. Nitro-Lift Technologies, Inc., 762 F.3d 1139 (10th Cir. 2014)

Holding: Plaintiff’s FLSA claim covered by arbitration clause contained in a Confidentiality/Non-Compete Agreement he signed when first hired.

Comments: The outcome of this case is both unsurprising and fact-specific. The Court also discusses – without deciding – whether high arbitration fees can violate the Plaintiff’s substantive right to pursue his FLSA claim.

Eleventh Circuit

Baliey v. Titlemax of Georgia, Inc., 776 F.3d 797 (11th Cir. Jan. 15, 2015)

Holding: A supervisor’s knowledge that employees are working off-the-clock is imputed to the employer for FLSA liability purposes, and, under such circumstances, the employer cannot escape liability by asserting that the employee had “unclean hands” by failing to report all of her work hours.

Comments: This is a very important opinion. The Court squarely addresses and rejects an increasingly prominent defense argument: that workers are to blame for off-the-clock work by failing to comply with company policies that require employees to report all time. As the Court explains, this argument contradicts the FLSA’s policy of addressing the unequal bargaining power between employers and employees. If an employee is working off-the-clock and her supervisor knows or should know, then the employer is liable.

Walthour v. Chipio Windshield Repair, LLC, 745 F.3d 1326 (11th Cir. Mar. 21, 2014)

Holding: The FLSA does not substantively prevent the enforcement of arbitration agreements that prevent workers from pursuing their claims on a class-wide or collective basis.

Comments: Even under the Federal Arbitration Act, an arbitration agreement cannot be applied in a manner that violates a plaintiff’s substantive rights under another federal statute. Unfortunately, in this case, the Court found that the FLSA’s collective action mechanism is not the type of substantive statutory right that overrides the FAA.

Watkins v. City of Montgomery, 775 F.3d 1280 (11th Cir. Dec. 24, 2014)

Holding: (1) Jury in FLSA collective action properly determined that disciplinary deductions from the salaries paid to exempt fire department lieutenants did not violate the “salary basis” rules. (2) District court properly instructed the jury with respect to the executive exemption.

Comments: This is a fourth example in this paper of an FLSA collective action that was successfully tried to verdict. The opinion contains a good discussion of the regulations and caselaw applicable in determining whether salary deductions for disciplinary violate the salary basis requirement.

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