Hunton Employment & Labor Perspectives

Court watchers following the ripple effects of groundbreaking wage and hour opinion Swales v. KLLM Transport Services, LLC, 985 F.3d 430 (5th Cir. 2021) (“Swales”) may have gained their first insight into the Supreme Court’s thought process following Chief Justice John Robert’s refusal to pause a conditional collective action certification in Maximus Inc. v. Thomas, et al., No. 22A164, currently pending in the Eastern District of Virginia and following this decision and a failed appeal from the Fourth Circuit.

The Department of Justice (DOJ) announced earlier this month that it will begin the rulemaking process related to “Nondiscrimination on the Basis of Disability:  Accessibility of Web Information and Services of State and Local Governments.” 

Just days ago, the highest court in Massachusetts—the Supreme Judicial Court (“SJC”)— decided whether former food delivery drivers for GrubHub could escape their arbitration agreements and bring a wage and hour class action lawsuit in court. In excellent news for employers operating in the intrastate delivery sector, the SJC held that they could not. Archer v. GrubHub, Inc., SJC-13228. 2022 WL 2964639 (July 27, 2022) (“GrubHub II”).

Of the many class action-related decisions from the last year, two courts issued holdings that are particularly relevant to defending against class action lawsuits (particularly in the context of the Fair Credit Reporting Act (FCRA)).

On September 8, 2021, the House Education and Labor Committee issued proposed legislation in connection with the House’s new spending bill. Among other pro-union proposals issued in connection with the Protecting the Right to Organize (PRO) Act, the proposed legislation seeks to amend the National Labor Relations Act (NLRA) by banning class and collective action waivers.

The proposed legislation says that no employer shall “enter into or attempt to enforce” any express or implied agreement not to “pursue, bring, join, litigate, or support any joint, class, or collective claim” arising from the employment relationship.   This is unwelcome news to employers who rely on class and collective action waivers in their arbitration agreements.

Use of employee biometric data – including fingerprints, eye scans, voiceprints, and facial scans – continues to be a popular, yet legally risky, proposition for employers. Several states and municipalities have laws that specifically govern the use of biometric data, the highest profile of which is the Illinois Biometric Information Privacy Act (BIPA).

Since the Supreme Court’s 2018 Epic Systems ruling, employers increasingly rely on arbitration agreements for more efficient resolution of both single plaintiff and class action claims.  Prolonged judicial review of arbitration awards, however, can dilute that efficiency.  As a result, some employers include waivers of judicial review, in whole or in part, in their arbitration agreements.

But are such waivers permissible?  In a recent decision, the Fourth Circuit said “yes” as it relates to appellate review.

Uber Technologies, Inc. has been sued in a class action lawsuit alleging the company’s use of criminal background checks discriminates against Black and Latinx drivers. The complaint, filed in the U.S. District Court for the Southern District of New York on April 8, challenges Uber’s “unlawful use of criminal history to discriminate against its drivers in New York City as well as its brazen noncompliance with human rights and fair credit laws.”

Named plaintiff Job Golightly, a Black resident of Bronx County, New York, drove for Uber from 2014 through August 2020. Golightly claims that his criminal history consists of a single 2013 misdemeanor speeding violation from Virginia. According to the lawsuit, until 2017 Uber had relied solely on background checks conducted by the New York City Taxi and Limousine Commission (TLC). Plaintiffs allege that in mid-2017, in response to negative news coverage on assaults committed by drivers, Uber began using the credit reporting agency Checkr to conduct additional background checks on current and prospective drivers. As a result, in August 2020 Uber allegedly conducted a background check on Golightly that revealed his 2013 speeding violation. One day later, Golightly claims that Uber deactivated him from its platform, preventing him from driving for the company.

For over 30 years, most district courts throughout the country have used a two-step conditional certification process to govern certification of collective actions under the Fair Labor Standards Act (FLSA).  But in its recent and game-changing opinion, Swales v. KLLM Transport Services, LLC, the Fifth Circuit rejected that two-step process and laid out a stricter framework for FLSA collective actions.

The Federal Reserve anticipates an approximate two percent reduction in unemployment by June 2021, envisioning rapid mass-hiring by employers once governments lift the more stifling COVID-19 restrictions.  Businesses requiring pre-employment background checks may be uniquely exposed to liability under the Fair Credit Reporting Act (“FCRA”) if minor mistakes are amplified by mass-hiring events.

An Alabama federal judge granted AutoZone's request to dismiss nearly 500 current and former store managers from a nationwide collective action that the national auto-parts chain had misclassified them as exempt under the Fair Labor Standards Act (“FLSA”) and denied them overtime, holding those plaintiffs had missed the three-year statute of limitations and that plaintiffs had failed to establish equitable tolling should apply to save their claims.

This month, the Southern District of Florida declined to certify a nationwide class of Denny’s servers alleging the restaurant chain had violated the minimum wage and tip credit provisions of the Fair Labor Standards Act (FLSA) on the basis that the named plaintiff failed to provide enough evidence that the servers were similarly situated.

Plaintiff Lindsay Rafferty worked as a server at a Denny’s restaurant in Akron, Ohio from February 2012 through October 2018.  On November 13, 2019, Rafferty filed a lawsuit against Denny’s alleging that the restaurant paid its employee servers a sub-minimum hour wage under the tip credit provisions of the FLSA and that Denny’s required its servers to perform non-tipped “sidework.”

A federal district court in Florida recently declined to conditionally certify a nationwide collective action brought under the Fair Labor Standards Act (“FLSA”) because the plaintiff did not show sufficient evidence that she was similarly situated to other restaurant managers who wanted to join.

A hotly contested ruling in a Fair Credit Reporting Act (“FCRA”) class action case will soon be appealed to the Supreme Court of the United States.  The Ninth Circuit in Ramirez v. TransUnion LLC, Case No. 17-17244, recently granted the parties’ Joint Motion to Stay the Mandate, seeking to stay the Ninth Circuit’s mandate pending TransUnion’s filing of a petition for writ of certiorari in the Supreme Court.  The Motion to Stay comes soon after the court denied TransUnion’s Petition for Rehearing or Rehearing En Banc regarding the Ninth Circuit’s decision in Ramirez v. TransUnion LLC, 951 F.3d 1008 (9th Cir. 2020).

A recent Fifth Circuit opinion held that a company’s arbitration agreement did not prevent employees from pursuing their claims as a collective arbitration, rather than individual claims.  As class claims related to COVID-19 begin to surge, the opinion provides occasion for companies to review their arbitration agreements to ensure that the companies’ aims are clearly drafted.

 COVID-19

The harm COVID-19 has wrecked on workplaces is no secret.  As employees and employers grapple with remote work, pay reductions, and record unemployment, it is reasonable to expect a surge of employment litigation in the months ahead.

The Ninth Circuit recently overturned a district court’s grant of class certification on a wage statement claim under California Labor Code §226 because there were no “real-world consequences” stemming from the alleged misidentification of the employer’s name on the wage statement. Lerna Mays, a former Wal-Mart employee, brought a putative wage and hour class action alleging various claims, including a claim that Wal-Mart violated Section 226 because her employer was Wal-Mart Stores, Inc., but her pay stubs listed “Wal-Mart Associates, Inc.” The district court granted certification of plaintiff’s wage statement claim, and Wal-Mart appealed.

For the first time in the Ninth Circuit, the Court of Appeals addressed the issue of whether every class member in a class action lawsuit needs “standing” to recover damages at the final judgment stage, and found in the affirmative.  In Ramirez v. TransUnion LLC, No. 17-17244, 2020 WL 946973 (9th Cir. Feb. 27, 2020), a class of 8,185 consumers brought a class action against the credit reporting agency TransUnion LLC (“TransUnion”) pursuant to the Fair Credit Reporting Act (“FCRA”), alleging that TransUnion, knowing that its practice was unlawful, incorrectly placed terrorist alerts on the front page of consumers’ credit reports and later sent the consumers misleading and incomplete disclosures about the alerts and how to remove them.

A recent California appellate court decision has held that a banquet hall’s “mandatory service charge” could, under the right circumstances, be a “gratuity” that must be paid to employees under California Labor Code § 351. In O’Grady v. Merchant Exchange Productions, the defendant-employer added on a percentage service charge for all banquet contracts for food and beverages. Some, but not all, of the service charge was distributed to managers who did not serve food or beverages at the banquet. Plaintiff brought a putative class action alleging that the defendant’s practice of distributing the service charge proceeds to non-managerial banquet staff violated California Labor Code § 351, which states that gratuities are the sole property of the employees, and the employer (including managers) may not take any portion of the gratuity. The trial court held as a matter of law that a service charge cannot be a tip or gratuity under § 351 and dismissed the case.

Dollar General and the Equal Employment Opportunity Commission (“EEOC”) recently settled a six-year-old Title VII lawsuit.  The EEOC brought its race discrimination claim on behalf of a Charging Party and a class of Black job applicants, alleging that Dollar General’s use of criminal justice history information in the hiring process had a disparate impact on Black applicants.

In Cordúa Restaurants, Inc., 368 NLRB No. 43 (2019), the National Labor Relations Board (“Board”) issued its first major decision following the Supreme Court’s 2018 ruling in Epic Systems, addressing a number of issues of first impression and providing guidance on the permissible scope and implementation of class action waivers.  

 In Cordúa, a group of employees had filed a collective action under the FLSA.  In response, the employer promulgated and maintained a revised arbitration agreement, requiring employees to agree not to opt in to class or collective actions.  In distributing the revised agreement, the employer explained that employees would be removed from the work schedule if they declined to sign it.  In addition, another employee was discharged for filing a class action wage lawsuit against the employer and discussing wage issues with his fellow employees.

In a case of first impression, the Third Circuit rejected the view of the United States Department of Labor, ruling that incentive payments from third parties are not necessarily included in the calculation of an employee’s overtime rate.

In Secretary United States Department of Labor v. Bristol Excavating, Inc., No. 17-3663, 2019 WL 3926937 (3d Cir. Aug. 20, 2019) (“Bristol”), the Court of Appeals overturned a District Court’s order holding that all incentive payments made by third parties must be included in an employee’s overtime rate under the Federal Labor Standards Act (“FLSA”). The unanimous Third Circuit panel held that the understanding of the employer and employee determines whether third-party payments should be included in the overtime rate.

The United States District Court for the Western District of New York recently granted an early dismissal of a class action lawsuit prior to class certification.  Mandala v. NTT Data, Inc., 18-CV-6591 CJS, 2019 WL 3237361, at *1 (W.D.N.Y. July 18, 2019). The plaintiffs in Mandala were two African-American men who applied for and were offered jobs with the defendant employer.  After the employer conducted a criminal background check on the plaintiffs and found they each had a felony criminal conviction, the employer withdrew their job offers.  The plaintiffs filed a class action lawsuit against the employer alleging claims for disparate impact race discrimination under Title VII, and violations of New York state laws prohibiting criminal history discrimination and regulating the background check process.

The Federal Trade Commission (“FTC”) recently rescinded several Model Forms and Disclosures related to the Fair Credit Reporting Act (“FCRA”), determining they are no longer necessary.  As we wrote about last Fall, [“Fall” hyperlink to CEJ and RTQ HELP blog article dated September 21, 2018] this change is the result of the Consumer Financial Protection Bureau (“CFPB”) issuing its own model forms and disclosures.  The FTC forms that have been rescinded and the corresponding CFPB forms that now apply are as follows:

In Corona Regional Medical Center v. Sali, No. 18-1262 (May 3, 2019), the Supreme Court recently dismissed a petition for a writ of certiorari that would have resolved a circuit split as to whether expert testimony must be admissible to be considered at the class certification stage.  As a result, the Ninth Circuit remains one of only two circuits that have ruled workers are not required to submit admissible evidence to support a motion for class certification.  In contrast, the Second, Third, Fifth, and Seventh Circuits have all held that expert testimony must be admissible to be considered at the class certification stage.

Massachusetts’ highest court, The Supreme Judicial Court (“SJC”), recently issued its long awaited decision in Sullivan v. Sleepy’s LLC, SJC-12542, in which the SJC responded to certified questions of first impression from the United States District Court for the District of Massachusetts. The case is particularly important for businesses which pay employees through commissions or draws (i.e., advances on commissions), particularly in the retail context where the ruling departs considerably from federal law.

Earlier this month, the Massachusetts Supreme Judicial Court (“SJC”) settled a long-standing debate amongst opposing parties in wage-hour class actions regarding the standard for class certification. The SJC’s decision in Gammella v. P.F. Chang’s China Bistro, Inc., No. SJC-12604, 2019 WL 1575527, definitively establishes that Rule 23 of the Massachusetts Rules of Civil Procedure – viewed as a stricter standard for certification and the same civil standard applicable to most other Massachusetts state court class actions – is the applicable standard for determining class certification in wage and hour cases.   The SJC also weighed in on satisfaction of the “numerosity” requirement for certification under Rule 23 and held that a rejected offer of judgment to a named plaintiff that covers all potential damages does not cut off that plaintiff’s claims.

Background

In a recent case, Correia v. NB Baker Electric, Inc., the California Court of Appeal held that employers cannot require employees to arbitrate their representative claims under the California Private Attorney General Act of 2004 (“PAGA”), Labor Code § 2699 et seq., without the State’s consent.

In Correia, two former employees sued their employer, NB Baker Electric, Inc. (“Baker”), alleging wage and hour violations and seeking civil penalties under PAGA. Baker petitioned the trial court for arbitration pursuant to the parties’ arbitration agreement, which provided that arbitration would be the exclusive forum for any dispute and which prohibited employees from bringing “any class action or representative action” in any forum.

We recently highlighted DOL opinion letter 2018-27, which rescinded the 80/20 rule and was a welcome change for employers in the restaurant industry.  However, less than two months after the DOL’s policy change, the U.S. District Court for the Western District of Missouri rejected the DOL’s new guidance, claiming it is “unpersuasive and unworthy” of deference.

As a refresher, the 80/20 rule requires businesses to pay tipped workers at least minimum wage (with no tip credit) for non-tip generating tasks when these tasks take up more than 20% of the tipped workers’ time.

Before the lame duck period of the 115^th Congress, Rep. Jerrold Nadler (D-NY) and a group of 58 Democrat co-sponsors, introduced the Restoring Justice for Workers Act (H.R. 7109), which would prohibit  employers from requiring employees to sign mandatory arbitration agreements.

The Department of Labor (“DOL”) recently published an Opinion Letter (FLSA-2018-27) reissuing its January 16, 2009 guidance (Opinion Letter FLSA-2009-23) and reversing its Obama-era position on the 20% tip credit rule.  This opinion letter marks another major shift in DOL’s policy and presents a welcome change for employers in the restaurant industry.

In a new class action filed recently against a hospital housekeeping company, employees allege their employer’s fingerprint scanning time-tracking system runs afoul of privacy laws.  The Pennsylvania-based company Xanitos Inc. now faces the lawsuit in federal court in Illinois, claiming the company violated the state’s Biometric Information Privacy Act (BIPA).

The combination of a quirky procedural posture and broad language used by the Supreme Court in 1941 have left Home Depot trapped in a North Carolina state court defending against a class action, despite the removal provisions of the Class Action Fairness Act.  On September 27, 2018, the Supreme Court granted certiorari to decide whether CAFA authorizes removal of class action counterclaims when its requirements are otherwise met.

As we wrote about last month, on May 21, 2018, the Supreme Court rendered its decision in Epic Systems Corp. v. Lewis, 138 S. Ct. 1632 (2018), rejecting perhaps the largest remaining obstacles to the enforcement of class action waivers in arbitration agreements in the employment context.  The Court concluded that the class action waivers did not violate the National Labor Relations Act (“NLRA”).  Although the Court’s opinion also seemed dispositive of whether such agreements could be avoided under the Fair Labor Standards Act (“FLSA”), at least one claimant tried to continue to litigate the issue, which was disposed of last week in Gaffers v. Kelly Servs., Inc., No. 16-2210 (6th Cir. 2018).  And now the Sixth Circuit has addressed whether Epic Systems would apply to arbitration agreements with putative independent contractors who contended that they should have been treated as employees.

The National Labor Relations Board (“Board”) has taken the first step to potentially reshape labor law since the May 21, 2018 Epic Systems case, in which the Supreme Court held that class waivers in arbitration agreements do not violate the National Labor Relations Act (“Act”).

On August 15, 2018, the Board vacated its decision and order in Cordúa Restaurants, Inc., 366 NLRB No. 72 (April 26, 2018), where a three-member panel of the Board held that an employee engaged in concerted, protected activity by filing a class action wage lawsuit against his employer.

The Board’s recent vacating of this order is noteworthy for two reasons.

A magistrate judge in the U.S. District Court for the District of Oregon recently made findings and recommendations to dismiss a purported class action against Kroger subsidiary Fred Meyer.  The suit alleges that the retailer’s background check process for prospective employees violates the Fair Credit Reporting Act by both failing to properly disclose that a report will be run, and failing to comply with the statute’s procedural requirements before taking adverse action against an applicant.

In a major win for employers, the U.S. Supreme Court held that arbitration agreements with class action waivers do not violate the National Labor Relations Act (“NLRA”).  The Court’s narrow 5-4 decision paves the way for employers to include such waivers in arbitration agreements to avoid class and collective actions.

The U.S. Supreme Court voted to hear an appeal of the Ninth Circuit’s decision in Varela v. Lamps Plus, Inc.  The Court is expected to decide whether workers can pursue their claims through class-wide arbitration when the underlying arbitration agreement is silent on the issue.  The case could have wide-reaching consequences for employers who use arbitration agreements.

On April 23, 2018, the U.S. District Court for the Northern District of Illinois in Ratliff v. Celadon Trucking Servs., 1:17-cv-07163, dismissed a putative class action lawsuit alleging a violation of the pre-adverse action notice requirements in section 1681b(b)(3) of the Fair Credit Reporting Act (“FCRA”).  Ratliff is significant in the body of background check precedent because it is a part of an emerging trend of § 1681b(b)(3) claims (as opposed to the more commonly challenged § 1681b(b)(2)Disclosure claims) challenged and dismissed for lack of Article III standing.

In the opinion, Judge Manish S. Shah found plaintiff Ratliff could not show that he suffered an injury-in-fact after defendant Celadon allegedly did not properly provide him with an FCRA mandated notice before declining his employment due to the results of his criminal background check.

The Sixth Circuit recently affirmed a district court’s summary judgment decision finding that an employer, Plastipak Holdings, Inc., Plastipak Packaging, Inc., Plastipak Technologies, LLC, Plastipak, and William C. Young (collectively, “Plastipak”) properly had paid employees using the “fluctuating workweek” method and dismissing plaintiffs’ claims for underpayment of wages under the Fair Labor Standards Act (“FLSA”).

When a party receives an adverse order on a motion for class certification, whether the court of appeals grants permission to appeal under Rule 23(f) can be a crucial turning point in the case.  If the appellate court will not hear this interlocutory appeal, the only way to obtain review of that decision is to take the case through trial, to a final judgment.  But, due to the high stakes and large costs involved, few class actions are tried and cases often settle after the class certification order is issued by the trial court.

On December 21, 2017, the U.S. District Court for the Eastern District of Pennsylvania in Moore v. Rite Aid Headquarters Corp., 2:13-cv-01515, dismissed a class action lawsuit alleging a violation of the pre-adverse action notice requirements in section 1681b(b)(3) of the Fair Credit Reporting Act (“FCRA”).  Moore is significant in the body of criminal background check precedent because it is a post-Spokeo ruling dismissing a pre-adverse action notice claim (as opposed to a 1681b(b)(2) Disclosure claim) on standing grounds after the parties participated in discovery and developed a factual record.

The United States Supreme Court has granted consolidated review of three cases to determine whether arbitration agreements that waive employees’ rights to participate in a class action lawsuit against their employer are unlawful. The Court’s decision to address the uncertainty surrounding class action waivers of employment claims follows a circuit split last year in which the Fifth and Eighth circuits upheld such waivers and the Seventh and Ninth circuits found that such waivers violate the National Labor Relations Act. Given the increasingly widespread use of class action waivers by employers to stem costly class and collective actions, the high court’s ruling is likely to have a significant nationwide impact.

With its May 26 Lewis v. Epic-Systems Corp. decision, the Seventh Circuit became the first circuit to back the reasoning in D.R. Horton, Inc., 357 NLRB No. 184 (2012), and held that a mandatory arbitration agreement prohibiting employees from bringing class or collective actions against their employer violates the National Labor Relations Act (NLRA). This decision creates a circuit split regarding the enforceability of arbitration agreements with class action waivers in the employment context, and the issue is now ripe for potential Supreme Court review.

On January 20, 2016, the U.S. Supreme Court issued its ruling in Campbell-Ewald Co. v. Gomez, affirming the Ninth Circuit’s decision that a defendant cannot moot a putative class action by offering full relief to the individual plaintiff.

In the second half of December 2015, the National Labor Relations Board (“NLRB”) issued 16 rulings on the illegality of mandatory arbitration agreements containing class and collective action waivers, even in situations where the agreements allow employees to opt out of, or into, the waiver. The NLRB continues to hold firm that these types of waivers violate the National Labor Relations Act (“NLRA”) because they infringe upon the employees’ protected right to engage in concerted activity—despite the U.S. Supreme Court’s continued favoring of class action waivers, see, e.g., DirecTV, Inc. v. Imburgia, 577 U.S. __, 135 S. Ct. 1547 (2015), and the Fifth Circuit’s express rejection of the NLRB’s position in D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013), and in Murphy Oil USA, Inc. v. NLRB, No. 14-60800, 2015 U.S. App. LEXIS 18673 (5th Cir. Oct. 26, 2015).

Retailer Big Lots Stores, Inc. is facing a putative class action in Philadelphia, wherein the plaintiff alleges that the company “systematically” violated the Fair Credit Reporting Act’s (“FCRA”) “standalone disclosure requirement” by making prospective employees sign a document used as a background check consent form that contained extraneous information. Among other things, the plaintiff alleges that Big Lots’ form violates the FCRA because it includes the following three categories of extraneous information: (1) an “implied liability waiver” (specifically, a statement that the applicant “fully understand[s] that all employment decisions are based on legitimate nondiscriminatory reasons”); (2) state-specific notices; and (3) information on how background information will be gathered and from which sources, statements pertaining to disputing any information, and the name and contact information of the consumer reporting agency.

In a move that could significantly increase the cost and expense of defending a Fair Labor Standards Act (“FLSA”) collective action, a federal district court Judge has dispensed with the traditional method for joining putative class members in an FLSA collective action. The Judge is going to permit employees to join if they submit a notice.  Such a move could lead to more protracted litigation and will certainly be appealed. In Turner, et al. v. Chipotle Mexican Grill, Inc., No. 1:14-cv-02612, Senior U.S. District Judge John L. Kane of the U.S. District Court for the District of Colorado granted the plaintiffs’ motion for conditional certification and judicial notice to the class. The case involves plaintiffs’ wage and hour claims against Chipotle under the Fair Labor Standards Act and the state laws of Arizona, California, Colorado and New Jersey. That the plaintiffs’ motion was granted is not, in and of itself, notable. But what is remarkable is the procedure applied for those who would seek to join the suit.

On August 12, 2015, the Fifth Circuit held that an unaccepted Rule 68 offer of judgment to a named plaintiff in a class action does not render the plaintiff’s claim moot. In Hooks v. Landmark Indus., Inc., No. 14-20496 (5th Cir. 2015), the Fifth Circuit joined the minority of Circuit Courts—Second, Ninth, and Eleventh Circuits—and held that an unaccepted Rule 68 offer is a legal nullity, with no operative effect. The majority of the Circuit Courts to decide this issue —Third, Fourth, Sixth, Seventh, Tenth, and Federal Circuits—have all held that a complete Rule 68 offer moots an individual’s claim.

The U.S. Supreme Court refused on Monday to take up a challenge to the California Supreme Court’s holding that California Private Attorney General Act (“PAGA”) claims cannot be waived in employment arbitration agreements containing a class action waiver.

A California appellate court recently invalidated an arbitration agreement that an employee had voluntarily entered into on the basis that it contained an unenforceable waiver of the employee’s claims under the California Private Attorneys General Act (“PAGA”) and, under the parties’ agreement, that provision could not be severed.

In Mark v. Gawker Media LLC (“Gawker”), S.D.N.Y. Case No. 13-cv-4347, the Court permitted Plaintiff’s counsel to submit a plan to distribute class notice through social media.  Plaintiff put forward a plan to use five websites to not only distribute notice, but also to potentially locate additional collective action members.  The Southern District of New York rejected this proposal, even after the parties had agreed to certain aspects of it, finding “[t]he proposals [were] substantially overbroad for the purposes of providing notice to potential opt-in Plaintiffs, and [that] much of Plaintiff’s plan appear[ed] calculated to punish Defendants rather than provide notice of opt-in rights.”

On December 9, 2014, the Supreme Court ruled in Integrity Staffing Solutions, Inc. v. Busk that the time spent waiting to undergo and undergoing security screenings is not compensable under the Fair Labor Standards Act (“FLSA”).  U.S. Supreme Court, No. 13-433.  The case involved hourly temporary staffing-agency warehouse workers who retrieved products from warehouse shelves and packaged the products for delivery to Amazon.com customers.  Before leaving the warehouse each day, workers were required to undergo a security screening involving the removal of wallets, keys, and belts from their persons and passing through metal detectors.

On June 23, 2014, the California Supreme Court announced a landmark ruling that arbitration agreements with mandatory class waivers are generally enforceable while carving out one notable exception.  That exception consists of representative claims brought under the Private Attorneys General Act (PAGA) which is unique to California.

On May 29, 2014, the California Supreme Court issued its long-awaited opinion in Duran v. U.S. Bank National Association, remanding the case to the trial court due to the trial court’s flawed trial methodology.

In several recent cases in California, courts have applied Brinker Restaurant Corp., et al. v. Superior Court to reverse trial court decisions denying class certification.  Brinker is the ground breaking case in California where the California Supreme Court held that employers are only required to provide the opportunity for employees to take 30 minute meal breaks, but are not required to ensure those breaks are actually taken.  The Brinker court also held that where an employer has a uniformly-applied policy that is unlawful, class certification may be appropriate.  The recent ...

Employers across the Country are relying on Wal-Mart Stores, Inc. v. Dukes (2011) 131 S.Ct. 2541 to fight class certification or to file decertification motions.  Many are finding success, and for good reason.  Dukes is a major obstacle to class certification.  However, in a recent California appeals decision, Williams v. Superior Court (Allstate Insurance Company), December 6, 2013, Second District, Div. Eight, 2013 S.O.S. B244043, the appellate court found that the trial court abused its discretion when it decertified a class based on Dukes.  The trial court found that Dukes

EMPLOYMENT DECISIONS

Vance v. Ball State University: Narrow Definition of Supervisor in Harassment Suits
In Vance, the Supreme Court announced a narrow standard for determining which employees constitute “supervisors” for purposes of establishing vicarious liability under Title VII. In a 5-4 decision, the Court decided that a supervisor is a person authorized to take “tangible employment actions,” such as hiring, firing, promoting, demoting or reassigning employees to significantly different responsibilities. The majority opinion rejected the EEOC’s ...

On March 27, 2013, the U.S. Supreme Court held that evidence of class-wide injury must survive a “rigorous analysis” before a putative class can be certified.  Comcast Corp. v. Behrend, No. 11–864, 2013 WL 1222646, at *5 (U.S. March 27, 2013). While the Comcast case involved subscribers to Comcast’s cable television service who filed a class action lawsuit alleging anti-trust violations and monopolization, the decision is significant for employers facing class actions.

A pending federal case highlights some of the wage-and-hour pitfalls emerging from the use of e-mail and smartphones.  Chicago Police Department Sergeant Jeffrey Allen originally filed his suit, alleging overtime compensation violations under the Fair Labor Standards Act (FLSA) in 2010.  On January 14, 2013, U.S. Magistrate Judge Sidney Schenkier of the Northern District of Illinois, Eastern Division, granted Allen’s conditional certification for a collective action under the FLSA.  In his suit, Allen claims that the City of Chicago violated the FLSA when it failed to compensate him, an hourly non-exempt employee, and a putative class of Chicago police officers for time spent reading and responding to emails via city-issued BlackBerries outside of normal working hours.

California employers may be familiar with Wang v. Chinese Daily News, a wage-and-hour class action that has been in litigation for almost a decade. The latest decision in this case, a published opinion from the Ninth Circuit on March 4, 2013, offers a boost to defense counsel who face a class actions in this circuit.

On March 19, in The Standard Fire Insurance Company v. Knowles, No. 11-1450, the United States Supreme Court ruled that stipulations by a named plaintiff on behalf of a proposed class prior to certification cannot serve as the basis for avoiding federal jurisdiction under the Class Action Fairness Act of 2005 (“CAFA”).

Following the Supreme Court’s game-changing decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011), courts have struggled to determine the level and nature of proof a class plaintiff must present at the class certification stage. This is especially so when it comes to the requirements related to commonality: that there be questions of law or fact common to the class and that the common questions predominate over any questions affecting only individual class members. Fed. R. Civ. P. 23(a)(2), (b)(3). Recently, Chief District Judge George King of the Central District of California refused to certify a wage-and-hour class on the ground that plaintiff was unable to establish commonality. See Pedroza v. PetSmart, Inc., No. ED CV 11-298-GHK (DTBx) (C.D. Cal. Jan. 28. 2013) (minute order).  This detailed order offers many great lessons for wage-and-hour actions brought on a class basis.

As reported on Hunton & Williams’ Privacy and Information Security Law Blog, on January 25, 2013, Kmart Corporation (“Kmart”) agreed to a $3 million settlement stemming from allegations that it violated the Fair Credit Reporting Act (“FCRA”) when using background checks to make employment decisions. The FCRA addresses adverse actions taken against consumers based on information in consumer reports and includes numerous requirements relating to the use of such reports in the employment context.

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A California Court of Appeal recently found that California employers can lawfully apply the federal standard for rounding. This standard is set forth in 29 CFR Sec. 785.48(b), and previously has been adopted by California’s Department of Labor Standards Enforcement (“DLSE”).  29 CFR Sec. 785.48 (b) permits an employer to round an employee’s starting time and stopping time to the nearest 5 minutes, or one-tenth, or quarter of an hour, assuming the rounding will not result in a failure to compensate the employees, over time, for all the time they have actually worked. The DLSE had previously adopted this standard in its Enforcement Manual. In the October 29, 2012 published decision in See’s Candy Shops v. Superior Court of San Diego County, No. D060710, the court concluded that the federal/DLSE standard is legal in California, if the employees are fully compensated over a period of time.  See also Alonzo v. Maximus, Inc. (C.D. Cal. 2011) 832 F.Supp.2d 1122, 1126. (“[t]his ‘regulation permits employers to use a rounding policy for recording and compensating employee time as long the employer’s rounding policy does not ‘consistently result[] in a failure to pay employees for time worked.’ ’ ”). The Court rejected Plaintiff’s argument that the federal regulation is inconsistent with California Labor Code Section 204, which provides that “all wages [other than certain specified exceptions] are due and payable twice during each calendar month.” Plaintiff essentially argued that employers should be required to engaged in a mini actuarial process at the time of payroll. The Court rejected this argument.

The Supreme Court recently announced the cases for which it has granted certiorari for the 2012-2013 term.  Among these, and now slated to be adjudicated in the nation’s highest court next term, are the appeals of three cases that will surely impact employment litigation.  In these cases, the Court will discuss (1) what the evidentiary standard is in federal courts, post-Dukes,  for class certification, (2) whether a case becomes moot, and thus beyond the judicial power of Article III, when the lone plaintiff receives an offer from the defendants to satisfy all of the plaintiff's claims, and (3) what constitutes a “supervisor” for a vicarious liability claim under Title VII.

On June 4, 2012, the California Court of Appeal held that class-action waivers in employment arbitration agreements are enforceable under the Federal Arbitration Act (“FAA”).  In Iskanian v. CLS Transportation Los Angeles LLC, the appeal court affirmed an order to compel arbitration of wage-and-hour claims in light of the 2011 United States Supreme Court case AT&T Mobility LLC v. Concepcion.  As a result, Iskanian provides employers with the necessary ammunition to argue for the enforceability of employment contract provisions providing for arbitration of claims and waiver of class-action lawsuits.

Brinker International, one of the world's leading casual dining restaurant companies, announced yesterday that the California Supreme Court has issued an opinion in Brinker Restaurant Corp. et al. v. The Superior Court for the State of California for the County of San Diego (Hohnbaum). This long-awaited decision, on which Hunton & Williams attorneys M. Brett Burns, Laura M. Franze, and Susan J. Sandidge served as counsel of record for Brinker, resolves multiple first-impression issues regarding California meal period and rest break class actions. Among other things, the Court ...

Two members of the National Labor Relations Board recently held that employers may not require employees to enter into arbitration agreements, as a condition of employment, that waive the ability to pursue class or collective claims. The Board’s ruling does not sound the death knell for class action waivers, however, as many Plaintiff’s lawyers have touted.

The Ninth Circuit did an about-face last week by reversing its earlier decision in Sepulveda v. Wal-Mart and nixing the proposed class action.  The decision is further evidence of the post-Dukes difficulty plaintiffs face when attempting to certify Rule 23(b)(2) classes seeking monetary relief.

On October 3, 2011, the U.S. Supreme Court vacated the Ninth Circuit’s decision in Wang v. Chinese Daily News, Inc., 623 F.3d 743 (9th Cir. 2010), and remanded it “for further consideration in light of Wal-Mart Stores, Inc. v. Dukes, 564 U.S. ___ (2011).” The Supreme Court did not provide any further analysis of the Wang decision in its granting of the petition for a writ of certiorari.

On September 28, 2011, an Illinois federal district court dismissed the putative class action claims brought by U.S. Equal Employment Opportunity Commission (EEOC) against United Parcel Service Inc. (UPS) in a case where the EEOC alleged that UPS’s 12 month medical leave policy violated the Americans With Disabilities Act by not providing reasonable accommodations to disabled employees.  (EEOC v. United Parcel Service Inc., N.D. Ill, No. 1:09-cv-05291.)

On August 9, 2011, the Ninth Circuit Court of Appeals ruled that a putative class action cannot be rendered moot by a defendant’s Rule 68 offer of judgment to the named plaintiff, even when the offer of judgment fully satisfies the named plaintiffs claim.  In doing so, the Ninth Circuit joined the other three circuits that have considered the pre-certification effect of an offer of judgment on the mootness of a class action.  The other three circuits (Second, Third, and Fifth) have similarly held that a defendant cannot “pick off” lead plaintiffs with an offer of judgment in order to avoid a class action.

The class action under the Fair Labor Standards Act arguably is the employer’s most dreaded legal claim.  In April 2011, the United States Supreme Court provided a potential escape hatch for employers.  In AT&T Mobility v. Concepcion, the Supreme Court seemed to signal -- “seemed” being the operative word -- that employers need only enter into arbitration agreements in which employees disclaim their ability to file an FLSA class action (or, as it’s actually called in the FLSA, a “collective” action).

This week, the United States Supreme Court issued its decision in what has been called the “most important class action case in more than a decade.”  In Wal-Mart Stores, Inc. v. Dukes, et al., No. 10-277, 564 U.S. ___ (June 20, 2010), the plaintiffs, current and former employees of the Nation’s largest private employer, Wal-Mart, sought judgment against the company for injunctive and declaratory relief, punitive damages, and backpay, on behalf of themselves and a nationwide class of some 1.5 million female employees, alleging sex discrimination in violation of Title VII of the Civil Rights Act of 1964.

On April 27, the U.S. Supreme Court decided that the Federal Arbitration Act (“FAA”) preempts rules created by states, such as California, that classify most class action arbitration waivers in consumer contracts as unconscionable.  The Court’s 5-4 decision in AT&T Mobility LLC v. Concepcion, 2011 WL 1561956 (U.S. Apr. 27, 2011) could signal big changes for consumer − and potentially wage and hour − class action litigation.

The Bright v. 99 Cents Only Stores decision, issued by the California Court of Appeal for the Second Appellate District last November, illustrates a recent wage and hour class action litigation trend against retail employers in California over lack of “suitable seating” for their employees. The California Supreme Court denied review of this case in February 2011.

When settling class actions, there is always a question regarding how broad the release can be, and whether an employee can stay silent through the settlement process, only to later sue for claims that arguably were not released.  A California Court of Appeal recently held in Villacres v. ABM Industries that a court-approved class action settlement can prevent a class member from filing a new lawsuit asserting claims that were brought in the previously settled class action and also claims that could have been brought in the prior action − as long as the terms of the settlement’s general release are broad enough to cover those types of claims.

On October 15, 2010, the Eleventh Circuit reversed course on a controversial decision interpreting the jurisdictional requirements of the Class Action Fairness Act of 2005 (“CAFA”).  Vacating its earlier decision that was at odds with every other circuit to consider the issue, the Court held that CAFA plaintiffs are not required to allege that at least one of the plaintiffs suffered damages in excess of $75,000.  In line with traditional CAFA interpretation, the Court held that plaintiffs need only satisfy the aggregate $5,000,000 amount in controversy requirement.

The U.S. District Court for the Eastern District of Pennsylvania recently decertified a wage and hour collective action against Pennsylvania poultry processor Farmers Pride, ruling that a collective action is not an appropriate mechanism for resolving claims that the employer failed to fully compensate employees for time spent engaged in donning- and doffing-related activities.  The Court’s 47-page opinion reflects a thorough analysis that will serve as guidance to employers and courts around the country faced with similar collective action claims.