Hunton Employment & Labor Perspectives

When there is a willful violation to the Fair Credit Reporting Act (”FCRA”) consumers can recover either actual damages sustained by the consumer or statutory damages of no less than $100 and not more than $1000. (Punitive damages and attorney fees also are available).  There has been a trend in the district courts examining whether plaintiffs must prove that they suffered actual damage in order to recover statutory damages. Since 2007 several Circuits have reviewed this argument and each has explained that the provision for statutory damages does not require a showing of “actual damages.” The Eleventh Circuit is the most recent to weigh in on this question in Santos v. Healthcare Revenue Recovery Grp., and agrees with its sister Circuits.

Tyson Foods, Inc. (“Tyson”) is no stranger to religious accommodation lawsuits over the impact of its COVID-19 vaccine mandate given its continued efforts to operate through the height of the pandemic in 2021—but the battle just heated up with a proposed class action complaint filed in the Eastern District of Arkansas.

In Harris et. al. v. Medical Transportation Management, Inc. et. al., the D.C. Circuit Court of Appeals held that a putative class cannot be certified as an “issue” class under Rule 23(c)(4) without also satisfying the requirements in Rule 23(a) and (b).  This ruling is important because it prohibits putative classes from using the “issue” class mechanism of Rule 23(c)(4) to skirt the important procedural requirements in Rule 23(a) and (b) that are meant to protect both the litigants and absent parties.  The court also encouraged the use of the partial summary judgment mechanism, rather than Rule 23(c)(4), to resolve discrete legal issues common to many class members. 

On May 19, 2023, the United States Court of Appeals for the Sixth Circuit became the second circuit court to reject a familiar two-step certification procedure for collective actions under the Fair Labor Standards Act (FLSA).  In Clark v. A&L Home Care and Training Center, LLC, the court held that FLSA plaintiffs who seek to represent other employees in a collective action must demonstrate a “strong likelihood” that other employees they seek to represent are “similarly situated” to the lead plaintiffs.  

Last week, the Ninth Circuit issued a decision holding that California employers can require employees to enter into mandatory arbitration agreements as a condition of their employment.  In the decision, Chamber of Commerce v. Bonta, No. 20-15291 (9th Cir., Feb. 15 2023), a three-judge panel reversed the Ninth Circuit’s own prior decision and found that Assembly Bill 51 (AB 51), which sought to impose criminal and civil penalties on employers who require employees to enter into such agreements, is preempted by federal law.

In January 2021, the Ninth Circuit upheld a 2018 ruling by the Federal Motor Carrier Safety Administration (“FMCSA”), which found that federal law preempts California state meal and rest break laws as applied to drivers of property-carrying commercial motor vehicles.  A few months later, the United States Supreme Court denied a petition challenging the Ninth Circuit’s decision.  We previously wrote about the Ninth Circuit’s ruling, and the Supreme Court’s denial, in a post that you can read here.

In a recent ruling, the U.S. District Court for the Northern District of Illinois determined that a bartender’s evidence – affidavits from herself and her supervisor – were insufficient to obtain conditional certification on her Fair Labor Standards Act (“FLSA”) claim. Plaintiff Alexa Roberts brought suit against One Off Hospitality Group and several of its restaurants and management personnel (“Defendants”) alleging that she was deprived of wages and overtime compensation in violation of the FLSA, the Illinois Minimum Wage Law (“IMWL”), and the Illinois Wage Payment and Collection Act (“IWPCA”). Plaintiff alleged that she was required to clock in and out at the times of her scheduled shift even if she worked in excess of those times so that Defendants would not have to pay overtime. She further alleged that Defendants were aware that other employees were also working off the clock.

On June 15, 2022, the U.S. Supreme Court issued its decision on Viking River Cruises, Inc. v. Moriana (Case No. 20-1573) reversing the California Court of Appeal’s decision to affirm the denial of Viking’s motion to compel arbitration Moriana’s “individual” PAGA claim and to dismiss her other PAGA claims.

On October 4, 2021, the United States Supreme Court denied certiorari on a petition challenging the Ninth Circuit’s ruling that California’s strict meal and rest period rules do not apply to commercial truck drivers engaged in interstate commerce.  The Court’s denial of the petition leaves in place a decision that came as a welcome sigh of relief for employers in the trucking industry.

The Worker Adjustment and Retraining Notification (“WARN”) Act requires employers to give employees at least 60 days’ notice when a “mass layoff” is about to occur at a “single site of employment,” which is typically a single location or a group of contiguous work locations.  Courts are beginning to confront the question of what constitutes a “single site of employment” under the WARN Act for employees working remotely, and how remote work policies impact class certification considerations.  Given the prevalence of remote work during the pandemic and the likely continuation of such work arrangements, these decisions are of particular importance to employers considering mass layoffs or facing class actions based on the application of remote work policies or practices.

On December 13, 2021, the Massachusetts Supreme Judicial Court (“SJC”) issued its long-awaited decision determining that the Massachusetts Independent Contractor Statute, G.L. c. 149, § 148B (“Independent Contractor Statute”), which establishes the three-pronged “ABC” test used to classify workers as independent contractors or employees – and provides for a rebuttable presumption that workers are employees unless the purported employer proves otherwise – is not the applicable standard to determine whether an entity is a joint employer.

The United States Supreme Court has agreed to take a closer look at the enforceability of arbitration agreements that bar representative claims brought under PAGA, a California law that allows individual employees to police labor code violations.

On November 15, 2021, the U.S. Supreme Court agreed to hear Robyn Morgan v. Sundance, Inc. (No. 21-326), a lawsuit from a fast-food worker who asserts that her employer waived its right to compel arbitration by engaging in litigation conduct inconsistent with its purported contractual right to arbitration.  By granting review, the Court is poised to resolve a circuit split as to whether a party must prove prejudice when arguing that the other party waived its right to arbitration by acting in a manner inconsistent with the arbitration agreement.

A California appellate court recently upended a representative PAGA and class action settlement because the named plaintiff did not exhaust administrative remedies under PAGA because he failed to identify each separate theory of liability.

A critical ruling in the world of franchising, in Haitayan v. 7-Eleven, Inc., 2021 WL 4078727 (C.D. Cal. Sept. 8, 2021), the U.S. District Court for the Central District of California applied the so-called Borello test to find that franchisees were independent contractors, instead of employees, for purposes of their claims for unpaid business expense reimbursements under California’s Labor Code section 2802.

In a huge win for California employers, the California Court of Appeals recently confirmed that courts have discretion to strike claims for penalties under the Private Attorneys General Act of 2004 (“PAGA”) if the claims will be unmanageable at trial.  This decision will help employers defeat—or significantly pare down—the broad and unwieldy claims for PAGA penalties that have become popular with the plaintiffs’ bar.

On August 17, 2021, the Sixth Circuit Court of Appeals became the first federal appellate court to hold that where nonresident plaintiffs opt into a putative collective action under the FLSA, a court may not exercise specific personal jurisdiction over claims unrelated to the defendant’s conduct in the forum state.  Canaday v. The Anthem Companies, Inc. (Case No. 20-5947) (6th Cir).  The next day, the Eighth Circuit reached the same conclusion in a separate case.  Vallone v. CJS Solutions Group, LLC, d/b/a HCI Group (Case No. 20-2874) (8th Cir).

We previously blogged about how ...

On April 7, 2021, a split panel of the U.S. Court of Appeals for the Eleventh Circuit (the “11th Circuit”) issued its highly-anticipated decision in Gil v. Winn-Dixie Stores, reversing a 2017 judgment against Winn-Dixie that found that the grocery chain’s website violated Title III of the Americans with Disabilities Act (“ADA”).  The 11th Circuit reversed and remanded the case for further proceedings, in part, based on its finding that websites are not a “public accommodation” under the ADA.

The Seventh Circuit Court of Appeals recently decertified a class of female correctional facility employees who alleged gender discrimination based, in part, on a theory of “ambient” harassment.  The opinion underscores how the individualized nature of harassment claims can act as a barrier to class certification.

Nature of Claims

Female employees of the Cook County Jail Complex sued their employer for gender discrimination based on the County’s alleged failure to prevent and remedy male prison inmates’ sexual harassment of the plaintiffs.  Plaintiffs claimed that Cook County permitted this harassment to go unchecked and failed to maintain effective procedures to prevent and remedy the harassment.

Title III of the Americans with Disabilities Act of 1990 (“Title III”) prohibits discrimination on the basis of disability in public accommodations, requiring that individuals with a disability be offered the “full and equal enjoyment . . . of any place of public accommodation.”  42 U.S.C. § 12182(a).  As we previously discussed, the 30-year-old statute does not directly address whether “places of public accommodation” include websites, mobile applications, and other emerging web-based applications and technologies and, therefore, does not provide a standard for ensuring accessibility for web-based accommodations.

Last month, the Seventh Circuit Court of Appeals rejected a proposed class of thirty-seven employees for failure to satisfy Federal Rule of Civil Procedure 23’s numerosity requirement.

“Much ink has been spilled” over the requirements of Rule 23, the Seventh Circuit noted.  But only a small share of those cases concern the numerosity requirement.  Most opinions deal with commonality or typicality.  Recognizing this paucity, the court took occasion to outline the parameters of the numerosity factor. The resulting opinion is a useful guide to parties engaged in smaller class actions or class actions where the commonality or typicality requirements may only apply to a smaller group of workers.

The Ninth Circuit Court of Appeals has joined several sister circuits in holding that courts should consider the amount of “possible” and not “probable” punitive damages in determining the $5 million amount-in-controversy for federal jurisdiction in class action cases.

The case of Greene v. Harley-Davidson, Inc. presented a technical, but unresolved issue for the court – determining the proper burden when the defendant removes a case from state court based on Class Action Fairness Act (“CAFA”) jurisdiction and relies on punitive damages to establish the $5 million CAFA amount-in-controversy requirement.

The Ninth Circuit Court of Appeals recently clarified that a named plaintiff gives up his or her right to represent a class if, in an individual settlement, he or she does not carve out from the settlement a concrete financial interest in the putative class action.  In so holding, the court explained that it was not enough for a plaintiff to generically carve out “class claims,” without identifying a more specific financial stake that would remain in the outcome of the class claims.

An employer’s obligations under the Fair Credit Reporting Act (“FCRA”) are triggered when it obtains a “consumer report” from a “consumer reporting agency” for use in making an employment decision. A federal court in the Middle District of Florida is set to rule on a summary judgment motion clarifying whether a business that transmits public records unaltered to a prospective employer is a “consumer reporting agency”.

The California Court of Appeals for the Second District evaluated the validity of unlimited vacation policies in a recent decision. Unlimited vacation policies operate how one might expect: instead of having a specific number of hours vest that the employee can use to take paid time off, an unlimited policy provides that the employee can take as much vacation per year as they would like to subject to company approval. In California, when vacation vests, it is treated as wages at termination and must be paid out. Since unlimited vacation does not vest, there is no payment due at termination.

On Thursday, the California Supreme Court ruled that employees must be paid for time spent undergoing security checks before leaving work.

Last month, a court in the N.D. of California denied class certification to a group of Chipotle workers who alleged that the burrito chain maintained unlawful English-only workplaces in the state of California.  Guzman v. Chipotle Mexican Grill, Inc., Case No. 17-cv-02606 (N.D. Cal. Jan. 15, 2020).  The opinion is a textbook example of how a lack of uniform written policies can, in some instances, benefit employers defending pattern and practice lawsuits.  Separately, the case also provides occasion to review the EEOC’s stance on English-Only policies.

On December 6, 2019, a coalition of both national and state business organizations and trade associations filed a Complaint in the U.S. District Court for the Eastern District of California.  The lawsuit seeks both a preliminary and permanent injunction against implementation and enforcement of the recently enacted California law that makes it unlawful for California employers to require employees to sign arbitration agreements, under certain circumstances.

The body of law surrounding class action employment arbitrations received another jolt Monday when the Second Circuit revived an arbitration action with a potential class of roughly 70,000 employees.

In Jock v. Sterling Jewelers, the Second Circuit overturned the district court and upheld an arbitrator’s decision to bind absent class members to the arbitration provisions of the company’s agreement.  The case represents another significant development in the realm of class arbitrations and class waivers, which have been the subject of significant recent litigation.

Last week, a federal judge in the Eastern District of Michigan granted Domino’s Pizza, Inc.’s motion to dismiss, holding that workers operating under the Domino’s brand must arbitrate their claims that the pizza chain made its franchises promise not to hire each other's employees, then misled the public to believe no such agreement existed.

Earlier this year, a federal court in Illinois decertified a small class of Physicians who alleged gender-based pay discrimination under the Equal Pay Act (“EPA”).  Sajida Ahad, MD v. Board of Trustees of Southern Illinois University, No. 15-cv-3308 (C.D. Ill. Mar. 29, 2019).  Although not a groundbreaking appellate court decision, the opinion does provide a roadmap for employers facing EPA collective actions, which may gain traction in the wake of increasing media attention on pay disparities.

The Fifth Circuit recently joined a majority of its sister circuits in holding that the question of whether arbitration agreements authorize class arbitration should be decided by courts.

In 20/20 Communications v. Lennox Crawford, the Fifth Circuit held that the availability of class-wide arbitration in a Fair Labor Standards Act case is a “gateway issue” of arbitrability.  The court reasoned that the fundamental differences between individual and class-wide arbitration required judicial determination as to which approach was available, absent “clear and unmistakable” language in the agreement delegating the decision to the arbitrator.

In a unanimous decision in Rodriguez v. Nike Retail Srvs., the Ninth Circuit overturned a California district court’s ruling in a wage and hour class action under the California Labor Code that granted Nike’s motion for summary judgement after applying the federal de minimis doctrine.

In a positive development for employers, the California Court of Appeals affirmed summary judgment for an employer in a class action alleging willful violations of the Federal Fair Credit Reporting Act (“FCRA” or “Act”).  In Culberson v. Walt Disney Parks and Resorts, the plaintiffs alleged Disney willfully violated two provisions of the FCRA: (1) plaintiffs alleged Disney’s disclosures letting job applicants know they may be subject to a consumer report were not contained in a standalone document; and (2) plaintiffs alleged Disney rejected some applicants based on information in their consumer reports without first providing the notice required by the FCRA.  In affirming summary judgment, the court concluded that it need not decide whether Disney violated the FCRA, because the court found that any such violation was not willful. 

In  a 5-4 decision, the U.S. Supreme Court slammed the door shut on class arbitration unless specifically authorized by the parties.  The decision, Lamps Plus, Inc. v. Varela, reaffirmed the Court’s prior precedent that arbitration is a matter of consent, and that “[s]ilence is not enough” to infer consent to class arbitration. 

Federal Rule of Civil Procedure 23(f) governs petitions for interlocutory appeals of orders that grant or deny class certification and requires that a petition for permission to appeal must be filed “within 14 days after the order is entered.” It makes no mention of motions for reconsideration.

Recently-introduced federal legislation could have a significant impact on equal pay class actions. On January 30, 2019, Democratic legislators reintroduced the Paycheck Fairness Act (H.R.7), which provides for various changes to the Equal Pay Act of 1963 (“EPA”).  Earlier versions of this bill, which was originally introduced in 1997, have all died in Congress. However, on February 26, 2019, the House Committee on Education and Labor voted in favor of H.R.7, which means the legislation will now be presented to the full House for a vote.

Some key features of the newly-proposed legislation include:

Two years after jointly issuing its 2016 Antitrust Guidance for Human Resource Professionals with the FTC, the DOJ is now taking active steps to clarify its stance on no-poaching agreements.  On January 25, 2019, the DOJ filed a Notice of Intent to File a Statement of Interest in three different class action lawsuits brought by employees of fast-food franchises against their employers alleging that no-poaching agreements in franchise agreements violate antitrust law.

As detailed in our previous article on this issue, in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco Cty., 137 S. Ct. 1773 (June 17, 2017), the U.S. Supreme Court established limitations on personal jurisdiction over non-resident defendants in “mass actions,” effectively supporting the view that plaintiffs cannot simply “forum shop” in large class and collective actions and instead must sue where the corporate defendant has significant contacts for purposes of general jurisdiction or limit the class definition to residents of the state where the lawsuit is filed.  Notably, the Supreme Court’s decision was limited to personal jurisdiction issues in state courts, which has led to a split on the question of whether, and to what extent, the Supreme Court’s analysis applies to class and collective actions pending in federal court.

In a rare win for plaintiffs seeking to avoid arbitration, the U.S. Supreme Court rejected a trucking company’s attempt to compel arbitration in a driver’s proposed minimum wage class action.  The Court held that the Federal Arbitration Act’s exemption for interstate transportation workers applies not only to employees, but also to those classified as independent contractors.

Employers failing to strictly comply with FCRA requirements in conducting background checks continue to face expensive consequences.  On November 16, 2018, the United States District Court for the Southern District of California approved a $1.2 million settlement of a class action lawsuit alleging violations of the FCRA filed against the popular pet supplies chain Petco.

The U.S. District Court for the Northern District of California is a popular venue for class action lawsuits.  As of November 1, 2018, it is also the first to require parties settling such lawsuits to make broad public disclosures regarding the settlements.

After the Eleventh Circuit’s holding in Asalde v. First Class Parking Systems LLC 894 F.3d 1248 (11th Cir. 2018), more small employers may be subject to the requirements of the FLSA.  By expanding the “handling clause,” the case chips away at the degree of interstate commerce necessary for the FLSA to apply.

The California Supreme Court has ruled that California employers cannot rely on the federal de minimis doctrine to avoid claims for unpaid wages on small amounts of time.   Under the de minimis doctrine, employers may be excused from paying workers for small amounts of otherwise compensable time if the work is irregular and administratively difficult to record.  Federal Courts have frequently found that daily periods of approximately 10 minutes are de minimis even though otherwise compensable.

In Troester v. Starbucks Corporation, the California Supreme Court held that California wage and hour laws have not adopted the FLSA’s de minimis doctrine.  As a result, Starbucks was not permitted to avoid paying an employee who regularly spent several minutes per shift working off-the-clock.  The Supreme Court acknowledged, however, that there may be circumstances involving “employee activities that are so irregular or brief in duration that it would not be reasonable to require employers to compensate employees for the time spent on them.”

The Supreme Court recently approved substantial changes to the Federal Rules of Civil Procedure, including amendments to Rule 23, which covers federal class actions.  The amendments to Rule 23 seek to modernize and standardize the notice, settlement, objection, and appeal procedures.  If Congress approves the amendments, they will become effective December 1, 2018.     

Criminal Background Inquiries in the Hiring Process:  Class Action Litigation and “Ban the Box” Trends in 2018

Wednesday, August 8, 2018 1:00 p.m. – 2:00 p.m. ET

Speakers

Robert T. Quackenboss Partner, Hunton Andrews Kurth LLP Washington, DC

Susan Joo Associate, Hunton Andrews Kurth LLP San Francisco, CA

The Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d)(2), confers federal subject matter removal jurisdiction over purported class actions filed in state court when, among other things, there is an amount-in-controversry (“AIC”) exceeding $5,000,000.  Deciding whether a class action can be properly removed under CAFA typically turns on whether this high jurisdictional threshold can be met.

In China Agritech, Inc. v. Resh, the U.S. Supreme Court held that putative class members cannot rely on equitable tolling to file new class actions under Rule 23 of the Federal Rules of Civil Procedure.

Resh was the third shareholder class action suit filed against China Agritech, Inc. under the Securities Exchange Act of 1934. The plaintiffs in the two previous suits settled their claims after the court denied their motions for class certification.

The California Supreme Court has adopted a new three-part test to determine whether a worker is an independent contractor or an employee under California’s wage orders, which regulate wages, hours, and working conditions.  The highly anticipated ruling could have wide ranging effects for businesses operating in California and beyond, as companies try to navigate the new gig economy.

On March 26, 2018, the Supreme Court heard oral argument in Resh v. China Agritech, Inc., a case that could have far-reaching implications in the class action context.  Resh addresses the interplay of successive class actions and the statute of limitations, specifically, whether a plaintiff can pursue a class action after the statute of limitations has run.  Although the issue arose in a securities case, the Court’s ruling will affect class actions and time bars in all areas, including employment.

The practice of “tip-pooling,” which refers to the sharing of tips between “front-of-house” staff (servers, waiters, bartenders) and “back-of-house” staff (chefs and dishwashers), has been in the news recently as the Trump Department of Labor (“DOL”) seeks to roll back a 2011 Obama-era rule limiting the practice under the Fair Labor Standards Act (“FLSA”).

On February 1, 2018, the United States District Court for the Eastern District of Pennsylvania dismissed an overtime class action suit brought on behalf of a group of former democratic campaign workers for their work during the 2016 presidential election.  See Katz v. DNC Services Corp., Civil Action No. 16-5800 (E.D. Pa. Feb. 1, 2018).  In dismissing the overtime suit, the Court relied on an often-overlooked defense to the Fair Labor Standard Act (“FLSA”) – namely, that the FLSA only covers employees engaged in interstate commerce as opposed to employees engaged in purely local activities.