Tag: conditional certification

By Gerald L. Maatman, Jr., Gregory Tsonis, Shaina Wolfe

Duane Morris Synopsis- In Roberts, et al. v. One Off Hospitality Group, Ltd., Case No. 21-CV-05868 (N.D. Ill. Nov. 10, 2022), a group of restaurants successfully defended against the proposed conditional certification of a collective action under the Fair Labor Standards Act (“FLSA”) in a lawsuit brought by a bartender.  In a win for the defense at a stage where plaintiffs generally have a low evidentiary burden, the Court determined that barebones affidavits fall short of what a Plaintiff must show in terms of proof to anchor a conditional certification order. While Plaintiff alleged that the restaurants’ policy off-the-clock work and overtime policies violated the FLSA, Judge Virginia M. Kendall of the U.S. District Court for the Northern District of Illinois determined that Plaintiff did not make the “modest factual showing” that other similarly situated employees experienced the allegedly common, unlawful policy.  The decision demonstrates the importance and value in maintaining up-to-date lawful employee handbooks, and specifically, policies on wages and overtime.

Case Background

Plaintiff, an hourly non-exempt bartender, filed lawsuit alleging that One Off Hospitality Group — the owner and operator of several popular restaurants including Publican and Big Star — and several executives (“Defendants”) violated the FLSA and other Illinois wage and hour laws.  She alleged that Defendants failed to properly pay her by requiring her to clock-in and clock-out at the times of her scheduled shift, regardless of the time she actually worked, to avoid paying overtime compensation.  She further alleged that Defendants did not pay their employees for performing off-the-clock work and/or offered gift cards as compensation instead of cash.  When she recorded her overtime work, Plaintiff claimed that management reprimanded her for violating internal company policy.

On July 14, 2022, Plaintiff moved, pursuant to § 216(b) of the FLSA, for conditional certification of a collective action of all current and former hourly non-exempt employees who worked within Defendants’ restaurants.  In support of her motion, Plaintiff attached only two sworn declarations.  Plaintiff’s declaration focused on her unique experience, and detailed the compensation structure and missed overtime hours she experienced. Plaintiff also included a declaration from a former Floor Supervisor and Assistant General Manager that worked in Defendants’ restaurants, which focused on the company’s policy of requiring employees to work off the clock. In opposition, Defendants put forth their Employee Handbook and emphasized that their written, uniform policy at every location prohibited off-the-clock work.  Defendants also included sworn declarations from employees and managers stating the company policy and the repercussions for engaging in off the clock work.

The Court’s Ruling Denying Conditional Certification

The Court denied Plaintiff’s motion for conditional certification.  It found that Plaintiff had not made a “modest factual showing” that she and other employees were victims of a common policy or plan that violated the law. Id. at 3.

After analyzing the evidence, the Court held that Plaintiffs’ sworn declarations were insufficient and that she needed other corroborative evidence.  Notably, Court emphasized that, “[c]ritically absent are affidavits from any other similarly situated employees who worked at the defendants’ restaurants.” Id. at 4. Significantly, the Court explained that “[t]he need for additional support is particularly pronounced where, as here, the defendants maintained a facially lawful policy.” Id. The Court held that “‘modest factual support’ demands more than the barebones affidavits provided.” Id.

Implications for Employers

The Court’s decision in denying conditional certification is not an outlier, but over the past several years, nearly 80 percent of such motions have been granted in federal court due to the low burden applicable to § 216(b) of the FLSA.

Judge Kendall’s decision underscores the value of generally maintaining Employee Handbooks and, specifically, policies regarding wages and overtime.  In addition to providing clear guidelines to employees on what is allowed, these policies provide the first line of defense in FLSA lawsuits seeking to groups of allegedly similarly situated employees, particularly where plaintiffs marshal minimal evidence that certification of a collective action is appropriate.

By: Gerald L. Maatman, Jr., Jennifer A. Riley, and Alex W. Karasik

Duane Morris Takeaways:  In Lincoln v. Apex Human Services LLC, Case No. 22-CV-341, 2022 U.S. Dist. LEXIS 175714 (E.D. Pa. Sept. 28, 2022), Judge Harvey Bartle III of the U.S. District Court for the Eastern District of Pennsylvania denied Plaintiff’s motion for conditional certification a proposed collective action of over 100 registered nurses who alleged they were misclassified as independent contractors and owed unpaid overtime. Since conditional certification is typically granted at a rate of nearly 80% in wage & hour collective actions, the employer-friendly ruling in Lincoln is well-worth a read by corporate counsel. The decision can be used by businesses to defend against FLSA misclassification claims where the named plaintiff fails to establish that they are similarly-situated to other proposed collective members.

Case Background

Plaintiff sued Defendants under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., the Pennsylvania Minimum Wage Act, 43 P.S. § 333.104 et seq., and the Pennsylvania Wage Payment and Collection Law, 43 P.S. §260.1, et seq.  She alleged that Defendants misclassified registered nurses (“RNs”), licensed practical nurses (“LPNs”), and other providers as independent contractors, thereby denying them required overtime pay and other employee benefits.  Id. at *1.  Plaintiff moved for conditional certification and judicial notice under Section 216(b) of the FLSA.

The Court’s Decision

The Court denied Plaintiff’s motion for conditional certification.

The Court explained that Third Circuit case law has developed a two-tiered test to determine whether employees are similarly-situated for purposes of allowing an FLSA representative action to proceed.  Id. at *2 (citations omitted). Relevant here, the court first conducts a preliminary inquiry into whether employees are similarly-situated.  Id. at *2-4.

Plaintiff argued that conditional certification was appropriate for three reasons, including: (1) all current workers were subject to Defendants’ uniform policy of failing to pay overtime; (2) all former workers were subject to Defendants’ uniform policy of failing to pay overtime; and (3) Plaintiff met the lenient standard of showing that workers were similarly, if not identically, situated.  Id. at *4-5.  To support her arguments, Plaintiff offered three types of evidence, such as her signed independent contractor agreement; texts messages between the plaintiff and one individual Defendant; and one pay stub from 2019 and four pay stubs from 2020 showing that taxes were not withheld from her pay. She claimed that this evidence was sufficient to meet the standard for conditional certification, which only requires a plaintiff to show “modest evidence, beyond pure speculation,” that the class members are similarly-situated.  Id. at *5 (citation omitted).

The Court rejected Plaintiff’s position. It held that Plaintiff failed to present any evidence showing that she was similarly-situated to other proposed collective action members.  Citing three other cases from the Eastern District of Pennsylvania, the Court noted that the plaintiffs in those cases presented some evidence, typically through affidavits or declarations, of how their individual situation was like that of other proposed collective members.  Id. at *6.  Here, Plaintiff merely alleged that there are over 100 Apex workers who were misclassified as independent contractors and denied overtime pay.  The Court opined that the evidence Plaintiff provided was specific only to her situation, such as her own contract, text messages and pay stubs.  As a result, the Court determined that Plaintiff failed to provide even minimal evidence that she and the proposed collective members were similarly-situated.  Id. at *6.

For these reasons, the Court denied Plaintiff’s motion for conditional certification.

Key Takeaways For Employers

In FLSA misclassification cases, it is not uncommon for plaintiffs to seek the Court‘s approval to pursue these matters as collective actions.  In situations where a named plaintiff fails to provide limited (or any) evidence regarding how they are similarly-situated to other proposed collective members, employers can use the decision in Lincoln to defend against motions for conditional certification.  This strategy can result in a court prohibiting the named plaintiff from disseminating notice, or in other words, reduce a case from having potentially hundreds of plaintiffs down to a single plaintiff.