By Gerald L. Maatman, Jr., Shannon Noelle, and Olga A. Romadin
Duane Morris Takeaways: On October 12, 2026, Judge Brian R. Martinotti of the U.S. District Court for the District of New Jersey denied an employer’s Rule 72 objection of Magistrate Judge Michael A. Hammer’s decision granting conditional certification in Dotson, et al. v. TZ Insurance Solutions LLC, Case No. 2:25-CV-13323 (D.N.J. Oct. 12, 2026). Three named plaintiffs, former and current sales agent employees of the insurance company-defendant, brought a collective action alleging the Company violated the FLSA by failing to compensate them for time spend logging in and out of computer systems and excluded non-discretionary bonus and commission payments from the regular rate of pay. The Company challenged the Magistrate Judge’s conditional certification decision on the basis that it did not adequately consider the Company’s declarations regarding its timekeeping process and certified an overbroad collective action not requested in the complaint that included non-remote and remote employees. These arguments were rejected as was the Company’s request for interlocutory review of whether the two-step framework is applicable in the Third Circuit. The Court opined that a two-step process applies requiring only a “modest factual showing” at the first, conditional certification stage during which Plaintiffs can rely on declarations establishing that “similarly situated plaintiffs do in fact exist” that were affected by a common employer policy.
Case Background
Plaintiffs Kimberly Dotson, Jennifer Connor, and Amenda McConnell brought a putative collective action individually and on behalf of others similarly situated, against TZ Insurance Solutions LLC (“TZ Insurance,” or “Defendant”), alleging violations under the Fair Labor Standards Act (“FLSA”) and common law by failing to compensate them for all time worked. Id. at 2. Plaintiffs, current and former hourly insurance sales agents that all worked remotely, specifically alleged that TZ Insurance did not pay them for required pre-shift, meal-period, and post-shift bootup and boot-down work, and that it underpaid their overtime by leaving non-discretionary bonus and commission payments out of their regular rate of pay. Id.
The Company moved to dismiss the claims, but the District Court denied the motion. Id. On February 11, 2026, Plaintiffs moved for conditional certification. On July 29, 2026, Magistrate Judge Michael A. Hammer granted the motion. On August 12, 2026, the Company challenged the ruling. It advanced three arguments challenging the Magistrate Judge’s decision, including: (1) it failed to consider Defendants’ declarations explaining its timekeeping process for Sales Agents and detailing two studies it commissioned to estimate the time it takes Sales Agents to bootup and log-in or shut down and log out of computer systems; (2) it was overbroad in conditionally certifying a group of non-remote and remote Sales Agents that are not similarly situated; and (3) included a breach of contract claim that could not be certified under the FLSA because it was not pled as such in the complaint. Id. at 4. The Company also requested, in the alternative, for certification of an interlocutory appeal on the question of whether the two-step framework for FLSA actions applies in the Third Circuit. Id. Defendants’ three arguments were denied as was its request for interlocutory certification of whether the two-step framework applies.
The Court’s Ruling
As to the Company’s first challenge, the Court, in rejecting the argument, found that the first stage of conditional certification requires only a “modest factual showing” to demonstrate a “factual nexus between the manner in which the employer’s alleged policy affected him or her and the manner in which it affected the proposed collective” and that “similarly situated plaintiffs do in fact exist.” Id. at 5. This factual showing, to be clear, is a low threshold requiring just “something beyond mere speculation.” Id. As such, the Court found that Defendants’ declarations regarding timekeeping processes went to the merits of Plaintiffs’ claims as the evidence “seeks to disprove Plaintiffs’ allegations of the timekeeping process Defendant required them to perform and the amount of time the processes took.” Id. at 6-7. Moreover, on the modest factual showing front, the Court found that though Magistrate Judge Hammer’s “conclusion was based on Plaintiffs’ declarations, courts in this circuit have consistently found declarations sufficient to satisfy Plaintiff’s burden of demonstrating similarly situated plaintiffs exist.” Id. This portion of the Court’s opinion underscores the leniency of the modest factual showing standard; whereas, Plaintiffs’ declarations were sufficient to meet their burden, Defendants’ declarations were insufficient to rebut their showing.
In rejecting the Company’s second challenge, the Court found that “Plaintiffs’ declarations alleged the same policies applied to all Sales Agents” and that the Company’s declarations did not dispute this point, either. Id. at 7. The Court also noted that Plaintiffs submitted job postings for the Sales Agent position, which listed uniform responsibilities for remote and location-specific Sales Agents. Id. All of which the Court reasoned supported the Magistrate Judge’s finding that Sales Agents were subject to the same treatment, “amounting to the required modest factual showing.” Id. The Court clarified, “Judge Hammer was not yet required to determine [if] the members of the collective were in fact similarly situated to the named plaintiffs.” Id.
As to the Company’s third challenge, the District Court found that Plaintiffs did allege that the Company’s failure to include commissions and non-discretionary bonus payments into the regular rate of pay violated the FLSA disagreeing with Defendant’s claim that such a claim was not asserted in the operative complaint. Id. at 8. The Court also found that the claim that Magistrate Judge Hammer certified was separate and distinct from the breach of contract claim — i.e., Plaintiffs alleged that they were not paid commissions in breach of their sales agent agreements and also alleged that such commissions were not factored into the regular rate of pay resulting in an underpayment of overtime pay. Id. at 9. The second allegation was certified as part of the FLSA collective action. Id. The Court further noted that the Third Circuit has rejected the argument that the regular rate of pay under the FLSA always has to be “actual wages.” Id. Therefore, Plaintiffs simply brought two concurrent claims as they are permitted to do under applicable case law. Id.
Finally, as to the Company’s request, in the alternative, that the Court certify the question of whether a two-step framework applies for interlocutory review, the Court declined to do so. It opined that this a settled area in the of law in the Third Circuit. Id. at 12.
Implications for Companies
The District Court’s decision in Dotson reinforces the Third Circuit’s firm adherence to the “modest factual showing” standard and the leniency in applicable of this standard as a practical matter. In opposing conditional certification, employers would be well-advised to submit detailed declarations and documents showing differences in policies applicable to the proposed collective (remote vs. non-remote and locale-specific) and should also draft job postings carefully to avoid what could be viewed as concessions in litigation.