Category: Wage & Hour Litigation

By Gerald L. Maatman, Jr., Olga A. Romadin, and Elizabeth G. Underwood

Duane Morris Takeaways: On June 29, 2026, in Martinez v. T. Slack Environmental Services, Inc., No. A-1008-24 (N.J. App. Div. June 29, 2026), the New Jersey Appellate Division addressed key issues in a wage and hour representative action brought pursuant to the New Jersey Wage and Hour Law (“WHL”) and the Prevailing Wage Act (“PWA”), including whether a representative action brought under the WHL and the PWA is distinct from a class action under N.J. Rule 4:32-1, and the appropriate statute of limitations for companion wage claims.  Id. at 2.  The Appellate Division affirmed in part and reversed in part a decision of the trial court holding that the WHL and PWA statutory language is independent of Rule 4:32-1 and therefore does not require class certification, and finding that a two-year—and not six—statute of limitations applies to WHL and Earned Sick Leave Law (“ESLL”) claims.  Id. at 3.

This decision is significant for employers in because it confirms that representative wage actions under New Jersey’s wage statutes may proceed outside Rule 4:32-1 class certification procedures while also clarifying that WHL and ESLL claims carry a two-year limitations period, and PWA claims carry a six-year limitations period as breach of contract claims.

Case Background

Juan Martinez (“Martinez”) alleged that he worked as an hourly laborer for T. Slack Environmental Services, Inc. (“T. Slack”), a small, non-union New Jersey contractor that employed between six and ten hourly laborers subject to the same pay practices from 2006 to 2019.  Id. at 3-4.

In February 2020, Martinez filed a lawsuit in which he alleged that T. Slack failed to pay required prevailing wages for public work, including for tasks classified as “B” and “C” laborer functions under the PWA.  Id. at 4.  He also claimed that defendants miscalculated overtime by paying him at lower rates rather than using a blended or weighted rate when he worked on both public and private projects or in different job titles during the same week.  Id. at 5.  Martinez further alleged uncompensated “off-the-clock” work, including transporting equipment to and from worksites and defendants’ Kenilworth facility, and asserted that earned sick leave was improperly calculated using the lower private wage rate.  Id. at 5-6.

Following discovery conducted under the supervision of a special adjudicator, Martinez moved to certify a statutory representative action under the WHL and PWA in September 2024.  Id. at 6-7.  Defendants opposed on several grounds, arguing that Martinez had not satisfied the class action requirements of Rule 4:32-1, that a representative action was not permissible outside of Rule 4:32-1, that the putative class lacked numerosity, that Martinez was not an adequate representative, and that individualized questions precluded both representative and class treatment.  Id. at 7.

The motion court granted Martinez’s motion, certified the matter as a representative action, designated Martinez as the representative of defendants’ current and former employees, and imposed a six-year look-back period for overtime claims from February 28, 2014, to February 28, 2020.  Id. at 7.  Defendants appealed.  Id. at 8.

The Appellate Division’s Decision

The Appellate Division held, consistent with its recent decision in Cano v. County Concrete Corp., 483 N.J. Super. 459 (App. Div. 2026), that “the statutory language of both the WHL and PWA is independent of Rule 4:32-1 and therefore does not require class certification.”  Id. at 3.  The Appellate Division explained that the remedial nature of the PWA permits any worker “to maintain such action for and on behalf of [themselves] or other work[ers] similarly situated,” N.J.S.A. 34:11-56.40, and that this statute addresses the similar concerns of the WHL and ESLL.  Id. at 15.

In addition, the Appellate Division rejected T. Slack’s argument that Martinez was required to present evidence of other similarly situated employees to qualify as a representative action.  Id.  Instead, it determined that, as in Cano, Martinez’s complaint put defendants on notice regarding the existence of similarly situated employees, and that the plain language of the PWA and WHL does not require a named plaintiff to identify the similarly situated employees to defendants.  Id. at 15-16.  Defendants, moreover, were already aware of approximately fifteen employees whose names and contact information had previously been provided to Martinez.  Id. at 16.

Lastly, the Appellate Division reversed the six-year look-back period for WHL claims, and, by incorporation, ESLL claims.  Id. at 18.  Relying on Maia v. IEW Constr. Grp., 257 N.J. 330 (2024), the Appellate Division held that the 2019 amendment extending the WHL limitations period from two years to six years applies prospectively only, so the two-year limitations period governed those claims.  Id.

On the other hand, the Appellate Division affirmed the six-year look-back period for PWA claims.  Id. at 18-19.  Because PWA claims for unpaid prevailing wages are treated as breach of contract claims, and the PWA does not provide its own limitations period, the general six-year contract limitations period under N.J.S.A. 2A:14-1 applied.  Id. at 19.

Implications For Employers

This decision confirms that representative wage actions under New Jersey’s WHL, PWA, and ESLL may proceed independently of Rule 4:32-1 class certification requirements.  While this may expand procedural avenues for plaintiffs pursuing wage claims on behalf of similarly situated employees, employers should note that the decision also limits potential exposure for WHL and ESLL claims by applying a two-year statute of limitations to pre-2019 conduct.

By Gerald L. Maatman, Jr., Rebecca S. Bjork, and Olga A. Romadin

Duane Morris Takeaways: On June 3, 2026, addressing an issue of first impression on overtime gap time, the U.S. Court of Appeals for the Third Circuit in U.S. Department of Labor v. Comprehensive Healthcare Mgmt. Servs. LLC, No. 24-2842, 2026 WL 1582064 (3d Cir. June 3, 2026), partially reversed an order of a district court that had awarded damages to the U.S. Department of Labor(“DOL”), which had brought a lawsuit on behalf of 6,000 healthcare employees, alleging various overtime violations under the Fair Labor Standards Act (“FLSA”) by Comprehensive Healthcare Management Services LLC (“Comprehensive”). On appeal, Comprehensive argued that the district court had erred in finding that the FLSA affords a remedy for overtime gap time claims, which address non-overtime hours in a non-exempt employee’s workweek, as well as misapplied a lower burden of proof to some of the claims against it, had erred in its finding that certain employees were nonexempt, and in some of its factual findings. The Third Circuit agreed with the employer in part, and vacated and remanded the matter to the district court.

Case Background

In 2018, the DOL brought a lawsuit in the U.S. District Court for the Western District of Pennsylvania against fifteen nursing and assisted living entities owned and operated by Comprehensive Healthcare Management Services LLC and its chief executive officer, alleging that the defendants had failed to pay hourly employees for all hours worked and the appropriate rate of pay, as well as failing to keep accurate pay records in violation of the FLSA. Id. at *1. One of the claims involved overtime gap time, which occurs when an employee who exceeds the overtime threshold does not receive pay for all non-overtime hours worked. Id.

In January 2024, the district court held a bench trial, following which it ruled in favor of the DOL, finding that there were “system errors” in the calculation of pay. Id. at *2. The district court explained that the defendants’ timekeeping system had not kept an accurate record of employees’ working hours, and Comprehensive paid employees for scheduled hours instead of hours they actually worked, as well as that the system automatically deducted meal breaks, even if employees had worked through them, and that the defendants had failed to accurately pay overtime wages. Id. The district court found that employees were not paid the required one-and-one-half regular rate required under the FLSA, and that the regular rate did not include pay that was required to be calculated in it, including shift differentials, bonuses, and other types of pay. Id. The district court also concluded that some employees had been improperly classified as exempt from the FLSA’s overtime requirement. Id. The district court, noting that the Third Circuit had not yet ruled upon the “viability of overtime gap time claims,” nonetheless awarded $35,804,438.20 in damages against Comprehensive for these violations. Id. at *3. Comprehensive appealed.

The Third Circuit’s Decision

On appeal, Comprehensive argued that the district court had erred in finding that claims for overtime gap time were cognizable under the FLSA. Id. at *3. The Third Circuit noted a disagreement among the circuits, with the Second Circuit having opined that overtime gap time claims were not cognizable under the FLSA in Lundy v. Cath. Health Sys. Of Long Island, Inc., 711 F.3d 106, 115-17 (2d Cir. 2013), while the Fourth Circuit found that they were in Conner v. Cleveland County, 22 F.4th 412, 426 (4th Cir. 2022). Id. Writing for the majority in a split panel decision, Third Circuit Chief Judge Michael A. Chagares explained that “[w]hen the statutory language is clear, the text is the beginning and the end of our inquiry.” Id. at *4. On review of the text of the FLSA, the appellate court found no mention of overtime gap time and concluded that the statute does not provide a remedy to overtime gap claims.  Id. In finding that there was no support in the text of the statute for an overtime gap claims, the court of appeals rejected the Labor Secretary’s argument that under § 207 of the FLSA, the term “regular rate” contemplates an overtime requirement, and so requires that a regular rate must be paid for all hours worked. Id. Further, the Third Circuit was unconvinced by the Secretary’s reference to the DOL’s guidance, which stated that overtime under the FLSA requires the payment of all straight time worked during non-overtime hours, finding that this ran counter to the unambiguous text of the Act. Id. at *4-5. Finally, agreeing with the Court of Appeals for the Second Circuit, the Third Circuit determined that individuals seeking to bring such claims could do so under state laws. Id. at *5. Thus, agreeing with Comprehensive, the Third Circuit reversed the district court’s ruling finding that Comprehensive had violated the FLSA by failing to compensate certain employees for overtime gap time. Id.

In reviewing the remaining arguments brought by Comprehensive, the Third Circuit court found that the district court did not err in applying a lower evidentiary burden to the claims against Comprehensive under the Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946) burden-shifting framework, where an employee alleging an employer failed to keep adequate records may do so by producing sufficient evidence prior to the burden being shifted to the employer to counter the claims. Id. at *5-6. Noting that the district court based its findings on the time and pay records produced by Comprehensive, the appellate court concluded that “Mt. Clemens did not affect the analysis for these claims.” Id. at *6. The Third Circuit also found no clear error in the district court’s factual findings or finding of an ongoing pattern or practice of regular rate miscalculation, writing that the single witness that Comprehensive had produced in support of its contention that employees were paid for all hours worked instead of based on their scheduled hours was found to be unreliable by the district court, and that the Secretary of Labor had produced more concrete proof in the form of an investigation, and documentary proof corroborated by hundreds of employees. Id. Next, the Third Circuit affirmed the lower court’s finding that employees at different facilities were regularly not paid for work performed through meal breaks based on a representative sample of employee testimony and the testimony of the company’s regional consultant. Id. at *7.

Finally, the Third Circuit agreed with Comprehensive that the district court’s determination that certain employees were not exempt from the FLSA’s overtime requirements was an error because it had applied the “plain and unmistakable” burden of proof to its analysis, but under the U.S. Supreme Court’s decision in Encino Motorcars, LLC v. Navarro, 584 U.S. 79 (2018), an employer seeking to prove an employee’s exempt status does so by a preponderance of the evidence, and vacated the part of the lower court’s decision and remanded it for further proceedings. Id. at *8-9.

In a partial dissent, U.S. Circuit Court Judge Jane R. Roth wrote that the text of the FLSA “is far from clear,” and the case law defining a regular rate offered additional confusion that could be addressed by making the actual rate, contracted rate, and regular rate of pay to be the same, aligning with the Fourth Circuit decision in Conner and the U.S. Department of Labor guidance that the majority declined to endorse. Id. at *10-11.

Implications For Employers

Employers with a workforce falling under the FLSA should take heed in ensuring that exempt employees, such as those working in an executive, administrative, or professional capacity, meet the statutory minimums such as salary requirements to qualify as bona fide exempt from overtime requirements. Maintaining accurate pay and time records for exempt and non-exempt workers and conducting regular audits may serve well in defending against miscalculation allegations, as the appellate court here confirmed the lower court’s conclusion based on records provided by the company.

This federal appellate court decision further signals a circuit split on the issue of whether overtime gap time claims are cognizable under the FLSA, with the Third Circuit here joining the Second Circuit in deciding that under the plain meaning of the text they are not, while the Fourth Circuit maintains that the FLSA does offer relief for plaintiffs seeking to bring such claims.

By Gerald L. Maatman, Jr., Elisabeth Bassani, and Olga A. Romadin

Duane Morris Takeaways: On May 18, 2026, Judge Robert J. Colville of the U.S. District Court for the Western District of Pennsylvania issued an order severing claims of over 14,000 plaintiffs who had alleged violations of the Fair Labor Standards Act (“FLSA”) and state laws in Brannon, et al. v. Federal Express Corp., No. CV 2:24-1128, 2026 WL 1382330 (W.D. Pa. May 18, 2026), Abner, et al. v. Federal Express Corp., No. 2:25-1129, 2026 WL 1382330 (W.D. Pa. May 18, 2026), and Smith, et al. v. Federal Express Corp., No. 2:25-1507, 2026 WL 1382330 (W.D. Pa. May 18, 2026). Following an order to show cause, plaintiffs in each of the three matters filed motions to sever and to transfer venue, which the Court granted, tolling the statute of limitations to permit individual plaintiffs to file individual claims.

Case Background

Three mass actions were filed following voluntary decertification and dismissal by plaintiffs in Claiborne, et al. v. FedEx Ground Package Systems, Inc., No. 2:18-CV-1698 (W.D. Pa.), a conditionally certified class and collective action consisting of over 30,000 opt-ins alleging FLSA overtime violations which had been pending in the Western District of Pennsylvania for almost seven years. Id. at *1. The Court subsequently granted a Motion on Misjoinder, Change of Venue, and Separate Trials, and severed the claims of all plaintiffs in Claiborne, and a related matter entitled Atwood, et al. v. FedEx Ground Package Systems, Inc., No. 2:24-CV-1127 (W.D. Pa.). Id. The Court also issued a Memorandum Order in which it opined that Brannon and Abner were also likely mis-joined, and ordered the plaintiffs in those matters to show cause. Id. In response, the plaintiffs motioned to sever and transfer their claims to appropriate forums, as the court had granted in Claiborne and Atwood, which FedEx opposed. Id.

The Court’s Decision

The Court, including the Smith matter in its opinion due to all three matters being represented by the same law firm, granted the plaintiffs’ motion to sever, and tolled the statute of limitations at 60 days, though it declined to transfer the claims of the thousands of individual plaintiffs to appropriate forums as requested because it determined that doing so would be overly burdensome for the Court and the Clerk’s Office. Id. at *3.

Noting the wide disparity in the numbers of putative plaintiffs in Claiborne and Atwood, which had twelve and two, respectively,and the hundreds and thousands of named plaintiffs in the three matters at issue here, the Court warned that the mass actions had the appearance of “a tactical maneuver around the standard or collective action procedures,” which the plaintiffs were unable to maintain, and the Court found to be improper. Id. at *2.

The Court found, as it had in its prior orders, that the plaintiffs here were mis-joined under Federal Rule of Civil Procedure 20. Id. at *3. Noting that the U.S. District Court for the District of Massachusetts echoed its conclusions on mis-joinder in related cases before it, the Court wrote that its prior conclusions regarding impracticality of litigating the claims in Claiborne and Atwood were equally applicable here in that holding a trial for 14,296 individual plaintiffs with individual issues predominating was “patently untenable.” Id. Further, the Court found that the claims did not arise out of the same transaction, occurrence, or series of transactions or occurrences, as required for joinder under Rule 20, and thus elected to sever the claims. Id.

Finally, the Court determined that the plaintiffs’ severed claims would be continuations of their current cases, and therefore permitted an extension of the tolling period to allow them 60 days to file individual actions in appropriate forums, but cautioned that any further efforts to bring additional mass claims would be “at their own peril.” Id. at *4.

Implications For Employers

For employers with a workforce that may fall under the FLSA, this decision offers practical insight into maintaining a compliant overtime program.

The Court’s decision additionally highlights the proliferation of creative procedural tactics, such as mass actions, undertaken by plaintiffs’ attorneys as a strategic loophole when class and collective actions are otherwise unsuccessful.

By Gerald L. Maatman, Jennifer A. Riley, Anna Sheridan, and Elisabeth Bassani

Duane Morris Takeaways: On March 31, 2026, in Justin Lawrence, et al, v. Sun Energy Services LLC d/b/a/ Deep Well Services, 2:23-CV-02155 (W.D. Pa, March 31, 2026), Judge Christy Criswell Wiegand of the U.S. District Court for the Western District of Pennsylvania certified, but narrowed, a Rule 23 class action and FLSA collective action after narrowing the case to two of the three asserted theories and adding additional temporal restrictions. In a decision that threads the needle between plaintiffs’ ambition and Rule 23 reality, this is a strong reminder that courts will certify only what can be proven with common evidence, and nothing more.

Case Background

Plaintiff Justin Lawrence (“Lawrence” or “Plaintiff”) brought a hybrid action under the Fair Labor Standards Act (“FLSA”) and the New Mexico Minimum Wage Act alleging that oilfield company Deep Well Services failed to properly compensate employees in three ways, including: (1) by failing to pay for pre-shift travel to out of town jobsites; (2) by failing to compensate time spent in mandatory pre-shift safety meetings; and (3) by  excluding the bonuses paid to eligible employees when calculating employees’ rate of regular pay.

On October 15, 2024, the Court conditionally certified an FLSA collective action consisting of “current and former employees of Sun Energy Services LLC d/b/a Deep Well Services (“Deep Well”) who have worked in the United States as a Greenhat, Leadhand, Roughneck, or Snubbing Operator from [date certain three years prior to date of Notice] to the present and were not paid for out of town travel, were not paid for the time spent attending pre-shift safety meetings, or who did not have the amount of any quarterly bonus included in the calculation of their regular rate of pay in determining their overtime rate of pay.” Id. at *4. One hundred and fifty-five former or current employees opted in to the collective action.

The Court’s Decision

In a detailed 17-page opinion, Judge Weigand considered whether to certify the New Mexico claims as a class action (and/or to confirm final collective action certification under the FLSA) by analyzing the typicality, commonality, predominance, and superiority factors under each of the three theories put forth by Plaintiffs.

As an initial matter, the Court found that typicality was met for each claim. For Plaintiffs’ Travel Time and Bonus Computation claim, the Court held that commonality, predominance, and superiority were also met. This was found over Deep Well’s objection that the policy regarding payment of out-of-town travel changed in January 2025 allowing for payment of time spent driving to and from jobs but not time spent flying, making it difficult to calculate the amount of each class member’s damages. The Court found however that “differences in the amount of each class member’s damages are insufficient to defeat a finding that common issues predominate.” Id. at *9. The Court similarly found that since each individual member’s expected recover “is likely too meager to incentivize filing an individual action,”  “a class action is the superior method for adjudicating the travel time claim.” Id. at *9.

However, the Court was not convinced by Plaintiffs’ argument that “common evidence ‘binds together’ the putative class members’ claims regarding the pre-shift meetings.” Id. at *10. The Plaintiffs were unable to demonstrate a uniform policy of not paying employees for time spent in pre-shift safety meetings and relied only on deposition testimony that was contradicted elsewhere in the record. The Court also found that Plaintiffs would have to put forth individualized evidence to establish liability with respect to the safety meetings since Deep Well pays their employees an additional two hours of wages for every shift worked . The Court found that allowing the safety meeting claim to proceed as a class would result in countless mini-trials and found that Plaintiff failed to establish either superiority or predominance for the safety meeting claim.

Even after finding that two of the claims met all required elements to be certified, the Court found that the class definition was overly broad. The Court added a time constraint, narrowing the class definition to leave out the safety meeting claims, added language to narrow the class to “only those members whose claims are not barred by the applicable statute of limitations,” and distinguished normal commute time from out-of-town commuting time requiring an overnight stay.  Id. at 14.

Mirroring the ruling for the Rule 23 class certification motion, the Court gave final certification for the collective action relative to the time travel claim and the bonus claim. The Court found that the members of the collective action were similarly situated. Id. at 15. Although the Plaintiffs worked in four different positions, the Court found that they all performed similar enough functions to be found “similarly situated.” Most importantly, however, the Court reasoned that the members of the collective action “challenge the same uniform employer practices” of failing to pay for job time and failure to include the bonus into the regular rate of pay. Id. at 16. Even with the “considerably less stringent” similarly situated requirements under 29 U.S.C. § 216(b), the Court concluded that Plaintiff had failed to meet his burden under § 216(b) with respect to the safety meeting claim as there was no company-maintained general practice. As a result, the Court narrowed the collective action to the same class definition.

Implication for Companies

The Lawrence decision shows that courts are not passively evaluating certification – they are scrutinizing it based on the evidentiary record. The Court’s decision not to certify the class under the safety meeting theory shows that difference in how work is performed (across locations, supervisors, or time periods) can be powerful tools at certification, especially when it leads to individualized determinations. 

For employers, the message is clear: attack overbreadth early and often. Even if certification is not defeated outright, narrowing the class can materially reduce exposure.

By Gerald L. Maatman, Jr., Elizabeth Underwood, and Olga A. Romadin

Duane Morris Takeaways: On March 26, 2026, Judge Paul Engelmayer of the U.S. District Court for the Southern District of New York issued an order denying certification of a Fair Labor Standards Act (“FLSA”) collective action brought by a study coordinator alleging that his employer, a medical school, misclassified him and a group of similarly-situated individuals in Castillo, et al. v. Albert Einstein College of Medicine, Inc. et al., No. 24 Civ. 00984, 2026 WL 834712 (S.D.N.Y. Mar. 26, 2026). Following discovery, the Court found that a higher standard for the first step of the conditional certification process was warranted, and on review of evidence submitted by the defendants as well as the plaintiff, it declined to certify the collective action, concluding that the differences in coordinators’ duties precluded a collective action.

Case Background

Plaintiff, a researcher in the Cognitive Neurophysiology Laboratory of the Albert Einstein College of Medicine, a medical school based in New York, brought a collective action against the College and three related entities, including a teaching college and the schools’ parent corporations, alleging that they had misclassified study and research coordinators as “learned professionals” exempt from overtime under the FLSA. Id. at *3.

The College filed a motion to dismiss Castillo’s amended complaint in July 2024, arguing that it was not an “employer” under the FLSA and NYLL, but the Court found this unavailing and denied the motion, and the parties proceeded to discovery. Id. at *1. Castillo then moved for conditional certification under the FLSA, seeking to encompass a collective of current and former employees working as research and study coordinators for the College of Medicine and its related entities who he alleged were not compensated for overtime work. Id. Castillo also sought to toll the FLSA statute of limitations period and asked the Court to authorize notice to individuals employed by the defendants as far back as three years. Id.

 The District Court’s Decision

The Court found that, in light of the substantial discovery between the parties, the plaintiff faced a higher threshold requirement of making a “modest plus” factual showing in step one of the Second Circuit’s two-step process to certify a collective action under the FLSA, which it ruled Castillo had failed to meet because evidence submitted by both parties was not convincing that a collective of similarly-situated individuals existed. Id. at *5.

In its analysis, the Court noted that classifying a category of employees as learned professionals exempt under the FLSA is not, on its own, enough for a finding of a “common policy, plan, or practice” to find them to be “similarly situated.” Id. at 6. Plaintiffs have to show a uniform misclassification by identifying individuals with similar duties and responsibilities, and Castillo had failed to do so here because his reliance on two declarations and six job descriptions lacked the weight and detail necessary to account for the work of hundreds of individuals in dozens of departments and programs across the institutions. Id. at *7-8.

The Court was further swayed by the defendants’ evidence of substantial job descriptions showing a variety of duties and responsibilities both demonstrating variation and fitting into the learned professional exemption.  Id. at *8-9. Defendants produced 49 job descriptions demonstrating that coordinators’ duties ran the gamut—while some were primarily tasked with data collection, others were responsible for developing clinical studies, making medical recommendations, or engaging with patients—and had “differing levels of intellectual rigor” and educational requirements. Id. 

Finally, the Court found that Castillo’s reliance on the deposition testimony of the College’s vice president of human resources actually bolstered the defendants’ position that the duties and responsibilities of coordinators vary widely from one position to the next, undermining his argument that they are similarly situated and thus eligible for conditional certification. Id. at *10-11.

 Implications For Employers

This decision offers several practical takeaways for employers in fields where workers may fall under an FLSA exemption.  Employers are well-served by maintaining and cataloging detailed job descriptions that accurately reflect the duties and educational requirements of each position.

The Court’s decision also highlights the strategic value of the “modest plus” standard for defendants facing FLSA conditional certification motions.  Where pre-certification discovery has already taken place, defendants in many circuits may involve this heightened standard and submit their own evidence to demonstrate that putative class members are not similarly situated with respect to their job duties and requirements.

By Gerald L. Maatman, Jr., Gregory Tsonis, and George J. Schaller

Duane Morris Takeaways: On March 17, 2026, in People ex. rel. Ill. DOL v. Quality Therapy & Consultation, Inc., et al., 2026 Ill. App. Unpub. LEXIS 594 (1st Dist. 2026), the Illinois Appellate Court affirmed the circuit court’s decision finding corporate officers were not “employers” as defined in section 2 of the Illinois Wage Payment And Collection Act (“IWPCA”), the corporate officers had not knowingly permitted underpayments, and accordingly, the corporate officers were not liable under Section 13 of the IWPCA.  Justice Margaret S. McBride authored the opinion on behalf of the Appellate Court.

The decision in Quality Therapy protects corporate decision-makers from personal and strict liability where those decision-makers do not “knowingly permit” a corporation, or such an employer, to violate provisions of the IWPCA. 

Case Background

In 1996, Quality Therapy and Consultation, Inc. was founded by Frances M. Parise and John Parise (collectively “the Parises”).  Quality Therapy, 2026 Ill. App. Unpub. LEXIS 594,at *2.  Quality Therapy provided occupational therapy, speech therapy, and physical therapy services in Illinois to long-term care facilities.  Frances Parise acted as Quality Therapy’s president and secretary whereas John Parise was the chief executive officer, and each owned 50% of Quality Therapy and shared authority for business decisions.  Id. at *2-3. 

After Quality Therapy incurred substantial legal fees from a 2015 federal investigation into its Medicare billing practices and experienced a slow in payments from a primary client, the State of Illinois, Quality Therapy’s profit margins shifted into the negative.  Id. at *3-4.  In September 2017, Quality Therapy, as a result of the negative margins, could not meet its payroll obligations and issued a WARN Act notice to its employees, “advising that the business would close and all employment would cease in 60 days.”  Id. at *4. 

Thereafter Quality Therapy informed staff they would not receive their September wages and Quality Therapy was closing on September 30, 2017.  Id.  Throughout September, the Illinois Department of Labor (the “Department”) received the first of “93 wage applications from [former] employees that would eventually total $550,496, exclusive of statutory penalties.”  See id. at *5.

Quality Therapy relied on a bank line of credit to fund payroll on a timely basis, and after the Parises notified the bank that Quality Therapy was closing, the bank immediately called the corporation’s line of credit and froze all funds on hand.  Id.  Quality Therapy never regained control of its bank account and was unable to access any of its money to pay its employees.

Circuit Court Case Background

In December 2019, the Department filed a three-count complaint, which was later amended in February 2020, and directed individual counts against Quality Therapy, as well as Frances and John Parise, that each knowingly permitted Quality Therapy’s underpayments of unpaid wages and other compensation.  The Department maintained all three defendants met the definition of employer under the IWPCA.  Id. at *7.

Quality Therapy had been dissolved and was found in default.  The Parises moved for summary judgment on the amended complaint and argued that the Illinois’ Supreme Court decision in Andrews v. Kowa Printing Corp., 217 Ill. 2d 101 (2005), “precluded a corporate officer’s individual liability under section 2 of the Wage Act.”  Quality Therapy, 2026 Ill. App. Unpub. LEXIS 594, at *7-8.  The Department responded that “[the Parises] each acted directly or indirectly in [Quality Therapy’s] interest, which made them ‘employers’ within the meaning of section 2.” Id. at *8 

The circuit court denied summary judgment and then presided over a two-day bench trial focusing on Quality Therapy’s ability to pay.  Id.  The circuit court entered default judgment against Quality Therapy, but, the circuit court rejected “the Department’s argument that the Parises were ‘employers’” as defined in section 2 of the IWPCA, and found that “only [Quality Therapy] was the wage claimants’ employer under section 2.”  Id. at *8.  The circuit court also denied the claims against the Parises under section 2 and found “[t]he only proper [IWPCA] claim brought under the pleadings against [the Parises] is grounded in” section 13 of the IWPCA.  Id.  The circuit court reasoned that Frances and John Parise, as corporate officers of Quality Therapy, had not knowingly permitted the underpayments and were not liable under section 13 since Quality Therapy was incapable of meeting its payroll.  Id.  

The Department appealed on the grounds that “the circuit court erred in finding that the Parises were not employers with Section 2.” The Department acknowledged its argument on appeal ran contrary to the Illinois Supreme Court’s decision in Andrews, 217 Ill. 2d 101, but the Department contended that the 2011 amendment to section 13 of the IWPCA “impliedly amended section 2 [of the IWPCA] and superseded Andrews.” Quality Therapy, 2026 Ill. App. Unpub. LEXIS 594, at *9.

The Appellate Court Decision

The Appellate Court affirmed the circuit court’s holding that the Parises were not employers within section 2 of the IWPCA.  The Appellate Court, applying the Andrews precedent and interpreting “the statutory language,” concluded “that the amendment to section 13 had no effect whatsoever on section 2” of the IWPCA.  Id. at *11.

The Appellate Court rejected the Department’s argument that the 2011 amendment to the IWPCA blended sections 2 and 13 such that it “would render anyone who had a decision making role in payment decisions personally liable for unpaid wages and final compensation.”  Id. at *9.  The Appellate Court explained the two sections contained distinct definitions, standards, and terms, and presumed that “the legislature did not intend, inconvenient, absurd, or unjust consequences.”  Id. at *10. 

The Department’s appeal focused on the last clause of section 2 stating that “any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee” is deemed an “employer” for purposes of the IWPCA.  Id. at *11 (quoting 820 ILCS § 115/2).  The Department asserted the last clause of section 2 should be read “in conjunction with section 13.” 

At issue was the underlined language, added to section 13 in the 2011 amendment:

“In addition to an individual who is deemed to be an employer pursuant to section 2 of this Act, any officers of a corporation or agents of an employer who knowingly permit such employer to violate the provisions of this Act shall be deemed to be the employers of the employees of the corporation.”  820 ILCS § 115/13.

The Appellate Court disagreed that the 2011 amendment to section 13 “effectively modified section 2 and dramatically changed a corporate decision maker’s potential liability for wages.”  Id. at *11-12.  The Appellate Court reasoned that the IWPCA imposes liability on “two separate and distinct definitions of ‘employer’” because “[i]f there was no distinction between the liability of the corporation and the individual officer, then there would be no reason to have two separate definitions of what constitutes an ‘employer.’”  Quality Therapy, 2026 Ill. App. Unpub. LEXIS 594at *12-13 (citing Elsener v. Brown, 2013 IL App (2d) 1209209 ¶ 66).

The Appellate Court also rejected the Department’s expansive interpretation of section 2 and section 13 as “unpersuasive.”  Id. at *13.  Notably, the Appellate Court cited the Illinois Supreme Court’s language in Andrews, which acknowledged “the breadth of the language” in section 2 was “confounding” because when read literally, it would “make an ‘employer’ out of every person who possesses even a modicum of authority over another employee, from the CEO to the head of the maintenance staff, as such persons undeniably act ‘directly or indirectly in the interest of an employer in relation to an employee.’”  Andrews, 217 Ill 2d. at 107.  Accordingly, following the Illinois Supreme Court, the Appellate Court opined that “[a] literal reading [of that clause] would result in absurdity or unjustness in part because of an employer’s strict liability for wages.”  Quality Therapy, 2026 Ill. App. Unpub. LEXIS 594at *13. 

Various other reasons supported the Appellate Court’s decision.  Andrews, the Appellate Court noted, has been consistently applied without “any court or litigant suggesting that the analysis was abrogated by the amendment to section 13 that took effect in 2011.”  Id. at *16 (collecting cases following Andrews.)  Additionally, the Appellate Court noted that the legislature’s drafted language across both relevant sections of the IWPCA were not constructed with “parallel wording” nor a declaration of an intent to change section 2’s meaning for the phrase “any person or group of persons.”  Id. at *18.  Following the Department’s interpretation of the IWPCA, the Appellate Court reasoned, would upend “well-established principles of corporate law” and “create personal liability for shareholders, officers, managers, and supervisory employees, regardless of the precision with which corporate formalities are observed, and would remove the fundamental protections afforded by long-standing principles of corporate law.”  Id. at *21-22.

Consequently, the Appellate Court found “the amendment to section 13 maintains the framework of the [IWPCA] – it did not alter the general definition set out in section 2 nor did it modify liability under section 13.”  Id. at *20. 

Finally, the Appellate Court also dismissed the Department’s “new argument on appeal” that it could rely on a self-adopted regulation “which blends sections 2 and 13 based on the Department’s reading of the amendment.”  Id. at *22.  The Appellate Court found the Department’s interpretation was not well founded and the regulation was “also flawed because it is not based on the new, clear prefatory clause in section 13.”  Id. at *26-27.

Accordingly, the Appellate Court affirmed the circuit court’s judgment.

Implications For Employers

Quality Therapy draws a line in the sand delineating when a corporate decisionmaker meets the definition of “employer” under section 2 of the IWPCA.  The Appellate Court relied on longstanding Illinois Supreme Court precedent to find the 2011 amendment to section 13 of the IWPCA did not alter the scope of section 2 of the IWPCA.  

Employer’s facing claims for violations of the IWPCA must ensure they comply with the payment provisions of the IWPCA.  However, protections for corporate-decision makers remain intact, and merely being in a decision-making role with respect to payment decisions is insufficient to establish personal liability for unpaid wages and final compensation under the IWPCA. 

Instead, Quality Therapy establishes that only those corporate decision makers who “knowingly permit” an employer to violate provisions of the IWPCA shall be also deemed an “employer of the employees of the corporation” pursuant to section 13 of the IWPCA.

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Tyler Zmick

Duane Morris Takeaways:  In Johnson, et al. v. Amazon.com Services, LLC, 2026 IL 132016 (Mar. 19, 2026), the Illinois Supreme Court held that unlike the federal Fair Labor Standards Act (“FLSA”), Illinois’s Minimum Wage Law (“IMWL”) requires employers to compensate hourly employees for time spent completing pre-shift COVID-19 screenings and other “preliminary or postliminary” activities. In doing so, the Illinois Supreme Court embraced an employee-friendly interpretation regarding the scope of compensable time under the IMWL. Johnson is a must-read opinion for companies that impacts all employers with hourly, non-exempt employees working in Illinois.

Background

Plaintiffs were former hourly Amazon employees who worked at the company’s distribution warehouses in Illinois. In March 2020, in response to the COVID-19 pandemic, Amazon began requiring employees to undergo COVID-19 symptom screenings before they could enter the warehouses and clock in for their shifts. According to Plaintiffs, it “took 10 to 15 minutes on average” to complete the pre-shift screenings. See Johnson, 2026 IL 132016,¶ 4.

Plaintiffs subsequently filed a class action lawsuit alleging that Amazon violated the FLSA and IMWL by not paying them and other warehouse employees for time spent undergoing the mandatory screenings.

Amazon moved to dismiss Plaintiffs’ Complaint under Federal Rule of Civil Procedure 12(b)(6), arguing that Plaintiffs’ claims failed because under the FLSA an hourly employee need not be compensated for time spent on “activities which are preliminary to or postliminary to” the employee’s principal work duties. See 29 U.S.C. § 254 (a)(2). In granting Amazon’s motion and dismissing Plaintiffs’ FLSA and IMWL claims, the U.S. District Court for the Northern District of Illinois reasoned that “state and federal courts frequently look to case authority interpreting and applying the FLSA for guidance in interpreting the [IMWL].” Johnson, 2026 IL 132016,¶ 7.

Plaintiffs appealed to the U.S. Court of Appeals for the Seventh Circuit. Rather than ruling on the substance of the appeal, however, the Seventh Circuit certified the following question to the Illinois Supreme Court: “whether Section 4a of [the IMWL] incorporates the [FLSA’s] exclusion from compensation for ‘employee activities that are preliminary or postliminary to their principal activities.’” Id. ¶ 1.

The Illinois Supreme Court’s Decision

The Illinois Supreme Court began its analysis by noting that the IMWL provides “a right of overtime compensation for Illinois employees” and also sets forth 10 “specific exceptions to the general right to overtime compensation.” Johnson, 2026 IL 132016,¶ 12 (citing 820 ILCS 105/4a(1)-(2)). Importantly, the Court observed that four of Section 4a(2)’s 10 exceptions incorporate certain provisions of the FLSA and/or related federal regulations, yet none of the exceptions reference FLSA regulations regarding the exclusion of “preliminary or postliminary activities” from the definition of compensable time. See id. ¶¶ 14, 16.

The Illinois Supreme Court further noted that the IMWL gives the Illinois Director of the Department of Labor (“IDOL”) authority to define the IMWL’s terms. See 820 ILCS 105/10(a). Pursuant to that authority, IDOL promulgated a regulation defining “hours worked” as “all the time an employee is required to be on duty, or on the employer’s premises, or at other prescribed places of work, and any additional time the employee is required or permitted to work for the employer.” 56 Ill. Adm. Code 210.110. In addition to acknowledging the breadth of this definition, the Illinois Supreme Court emphasized that while IDOL referenced provisions of the FLSA and related federal regulations in certain statutory definitions, IDOL did not reference the FLSA regulations “that establish a preliminary or postliminary activities exclusion from ‘hours worked.’” Johnson, 2026 IL 132016 ¶ 16; see also id. (“To the contrary, IDOL defines ‘hours worked’ to include all time an employee is required to be on the employer’s premises, which contradicts the potential applicability of any such exclusion.”).

Accordingly, the Illinois Supreme Court held that a plain reading of Section 4a and IDOL’s definition of “hours worked” reveals that the Illinois legislature did not incorporate the FLSA’s “preliminary and postliminary activities exclusion” into the IMWL. Rather, the legislature delegated the authority to define “hours worked” to IDOL, who “adopted a definition of ‘hours worked’ that necessarily includes preliminary and postliminary activities, explicitly encompassing all time that an employee is required to be on an employer’s premises.” Id. ¶ 18.

In so holding, the Illinois Supreme Court rejected Amazon’s argument that the FLSA’s “preliminary and postliminary activities exclusion” should apply to the IMWL because the IMWL’s general overtime provision “is patterned after the general overtime provision found in…the FLSA.” Id. ¶ 19. The Court reasoned that “while section 4a of the [IMWL] contains the same general overtime provision of the FLSA, it does not include the preliminary and postliminary activity exclusion that is set forth in the FLSA….[T]o accept Amazon’s invitation would be to read exceptions into the statute that depart from its plain language, in violation of our well-established rules of statutory interpretation.” Id. ¶ 20.

Implications Of The Decision

The Illinois Supreme Court’s opinion in Johnson is required reading for companies with hourly employees working in Illinois. The decision definitively answers the question whether the IMWL incorporates the FLSA’s “preliminary or postliminary activities exclusion” – a question that, until now, has been heavily litigated.

Johnson is also a reminder of the importance of complying with federal and state wage-and-hour statutes, as laws in many jurisdictions (including Illinois) impose additional requirements on employers that are not found in the FLSA. See, e.g., Johnson, 2026 IL 132016, ¶ 20 (noting that the overtime provisions of the IMWL and the FLSA “are not parallel but rather state the same general rule with marked differences in their respective statements of exceptions”). Companies must be vigilant to ensure they comply with wage-and-hour laws in all jurisdictions where they have hourly employees.

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Gregory Tsonis

Duane Morris Takeaways:  In a significant decision issued on March 6, 2026, Judge Neil H. Cohen of the Circuit Court of Cook County, Illinois, held that Section 67 of the Illinois Day and Temporary Labor Services Act (“DTLSA”), 820 ILCS 175/67, is unconstitutional because it improperly authorizes private parties to enforce the statute in a manner that usurps the constitutional authority of the Illinois Attorney General. The ruling arose in Figueroa, et al. v. Visual Pak Holdings, LLC, et al., No. 2025 CH 04411 (Cir. Ct. Cook County Mar. 6, 2026), and can be found here.

The court concluded that the statute’s “interested party” enforcement provision effectively creates a qui tam-style enforcement mechanism without the safeguards that preserve the Attorney General’s control over litigation brought on behalf of the State.  Because the statute does not require notice to the Attorney General and gives the Attorney General no authority to intervene, control, dismiss, or settle such cases, the court held that the provision violates the Illinois Constitution.  The ruling could significantly affect the growing wave of DTLSA litigation brought by worker advocacy organizations and may reshape how the statute is enforced going forward.

Background On The Day And Temporary Labor Services Act And Figueroa Lawsuit

The Illinois Day and Temporary Labor Services Act, 820 ILCS 175/1 et seq., regulates staffing agencies that provide temporary or day laborers to client companies. The statute imposes obligations on staffing agencies and the client companies that utilize temporary labor.  These obligations include registration requirements, disclosure rules governing job assignments, and compliance with wage and safety protections designed to regulate the temporary labor industry.

In recent years, amendments to the statute expanded its scope and enforcement mechanisms, including provisions mandating equal pay to equivalent permanent employees, safety training, recordkeeping and disclosure requirements, and joint compliance obligations between staffing agencies and the companies that receive temporary workers.

Central to the dispute in Figueroa was Section 67 of the statute, which authorizes enforcement actions by so-called “interested parties.” The statute defines an “interested party” broadly as “an organization that monitors or is attentive to compliance with public or worker safety law, wage and hour requirements, or other statutory requirements.”  820 ILCS 175/5.   Under Section 67, these organizations may file civil actions after providing notice to the Illinois Department of Labor and certain requirements are met, and can seek injunctive relief to compel compliance with the statute even if the organization itself did not employ the workers and did not suffer a direct injury.  Pursuant to Section 67(d) of the DTLSA, an “interested party” that prevails in a civil suit can recover 10% of any statutory penalties awarded, as well as attorneys’ fees and costs. 

The Figueroa litigation was brought by temporary workers and the Chicago Workers’ Collaborative (“CWC”), a nonprofit worker advocacy organization, alleging violations of the DTLSA by the defendants. The defendants moved to dismiss CWC’s claims in the complaint, asserting that CWC lacks standing to bring suit because its standing is based Section 67 of the DTLSA, which is unconstitutional.  The defendants also moved to dismiss the individual plaintiffs’ claims and challenged venue in Cook County, as CWC is the only entity located in Cook County and the defendants and employee plaintiffs are located in Lake County, Illinois.  

Because the challenge implicated the constitutionality of a state statute, the Illinois Attorney General intervened in the case to defend the law.

The Court’s Decision

After first establishing that CWC lacked associational standing that would allow it to bring claims, the court turned to assessing the constitutionality of Section 67, on which CWC’s standing relied.

The court first analyzed whether Section 67 of the DTLSA is a “qui tam” statute.  Under a “qui tam” enforcement mechanism, private parties may bring lawsuits on behalf of the government and receive a portion of the penalty recovered.  “Qui tam” statutes are not inherently unconstitutional, but typically contain procedural safeguards that ensure the government retains ultimate control over the litigation.  Although the Attorney General “argue[d] that section 67 is not a qui tam statute,” the court noted that the Attorney General took the opposite position in another case, Staffing Services Association of Illinois v. Flanagan, Case No. 1:23-cv-16208 (N.D. Ill).  Ultimately, because the State, and not the interested party, is the entity with “an actual and substantial interest” in the action, the court had little difficulty concluding that “Section 67 is a qui tam statute.”  Id. at 5.  

Next, the court turned to whether Section 67 of the DTLSA improperly usurps the power of the Attorney General to represent the state.  Under the Illinois Constitution, the Attorney General serves as the State’s chief legal officer and possesses the authority to enforce state law on behalf of the public.  While the legislature may create private rights of action, it cannot enact statutes that effectively transfer the State’s enforcement authority to private actors.  Qui tam statutes found constitutional, such as the False Claims Act, “provide for control over the litigation by the Attorney General by granting the Attorney General authority to intervene at any time, authority to control the litigation. and the authority to dismiss or settle the litigation at any time regardless of the wishes of the qui tam plaintiff.”  Id. at 5. 

By contrast, the court concluded, the DTLSA contains none of those safeguards.  Section 67 does not require notice to the Attorney General when an interested party files suit, nor does it give the Attorney General authority to intervene, take control of the case, or dismiss or settle the action. The statute therefore allows private organizations to pursue enforcement litigation entirely independent of the State. 

The Attorney General argued that such explicit authority over suits was unnecessary in the statutory text of the DTLSA, as the Attorney General Act provides the Attorney General with authority to intervene, initiate, and enforce any proceedings concerning “the payment of wages, the safety of the workplace, and fair employment practices.”  Id. at 6 (quoting 15 ILCS 205/6.3(b)).   The court, however, noted that the DTLSA does not require an “interested party” to provide the Attorney General with notice that it filed a suit under Section 67, and thus the Attorney General “cannot exercise its authority to represent the State if it has no notice of the filing of suit under Section 67” of the DTLSA.  Id. at 6.  As a result, the court held, the lack of notice “renders section 67 an unconstitutional usurpation of the Attorney General’s authority[.]”  Id. at 6.

Although the failure to provide notice was sufficient to find Section 67 unconstitutional, the court also held that Section 67 was also unconstitutional on the separate grounds that it “does not grant the Attorney General any control over the interested party’s suit.”  Id.  The court found unpersuasive the argument that the Attorney General Act provides the Attorney General with the right to intervene, reasoning that “[a] right to intervene is not the same as a right to control the litigation, including the right to dismiss that litigation over the objections of the plaintiff.  Id.   Because the statute allows private actors to enforce public rights without oversight or control by the Attorney General, the court concluded that Section 67 improperly interferes with the Attorney General’s constitutional authority and is therefore unconstitutional. 

Because Section 67 was found unconstitutional, the court dismissed CWC’s claims for lack of standing and the case was appropriately transferred to a proper venue in Lake County, which could properly consider the arguments for dismissal of the individual plaintiffs.

Implications For Employers

The Figueroa decision could significantly affect the enforcement landscape under the DTLSA, though it is likely to face appellate review.   Employers operating in Illinois should therefore closely monitor further developments as the courts continue to address the scope and enforcement of the statute.

In recent years, worker advocacy organizations have increasingly relied on Section 67 to bring enforcement actions seeking injunctive relief against staffing agencies and the companies that utilize temporary labor.  By holding that provision unconstitutional, the decision calls into question the viability of those lawsuits and may substantially limit the ability of advocacy groups to initiate DTLSA litigation.  As a result, the ruling may shift enforcement of the statute more squarely toward state regulators, including the Illinois Department of Labor and the Attorney General’s Office.  While this could reduce the number of private enforcement actions filed by advocacy organizations, employers should expect that regulatory authorities will continue to scrutinize staffing practices and DTLSA compliance. 

Finally, employers should not interpret the ruling as diminishing the importance of DTLSA compliance.  Importantly, the decision does not invalidate the DTLSA itself, but strikes only the statute’s “interested party” enforcement mechanism as unconstitutional.  The statute’s substantive requirements remain in effect, including the provisions governing wage protections, safety obligations, and responsibilities shared between staffing agencies and client companies.  Staffing agencies and employers that utilize temporary labor should continue to review their staffing arrangements and compliance practices carefully.