Conditional Certification

SDFLAuthored by Christopher Kelleher and Noah Finkel

Seyfarth Synopsis: Federal court denies motion for conditional certification for a proposed class of employees working at separate Subway franchises.

Earlier this year, the DOL’s Wage-Hour Division issued a much-publicized Administrator Interpretation on what employers constitute joint employers, including an explanation of how two or more employers under common ownership can constitute “horizontal” joint employers.  As articulated by the WHD’s sweeping pronouncement, it appeared that virtually any jointly-owned entities might constitute joint employers, at least in the eyes of the WHD.

But in a victory for employers in the battle over joint employer status, a federal district judge in the Southern District of Florida recently denied a motion for conditional collective action certification for a group of Subway employees of different franchises with common ownership.  In Aguiar, et al. v. Subway 39077, Inc., Timothy E. Johnson, et al., plaintiff Yirandi Aguiar sought collective action certification for the overtime claims for all “Store Managers” working at approximately 38 Subway franchises owned and operated as separate corporate entities by Timothy Johnson in Southern Florida.

Applying the usual “fairly lenient standard” to determine whether conditional collective action  certification was warranted, the Court rejected Aguiar’s attempt to certify the collective on several levels.  First, the proposed collective was comprised of individuals employed by approximately 38 separate, non-party corporate entities.  Second, Aguiar only provided “Consent to Join” forms and affidavits from three individuals including herself, and thus failed to sufficiently show the existence of other employees who wished to opt into the action.

Third, and most significantly, even if Aguiar could satisfy these first two elements, the Court found that the putative plaintiffs were not similarly situated.  In making this determination, the Court noted that the individuals worked at separate corporate entities, and Aguiar did not show that she or other employees were authorized to sell or make sandwiches at any other of the 38 franchises.  Additionally, the franchises were spread throughout Southern Florida, and thus were not geographically concentrated.  And finally, Aguiar failed to provide information regarding a joint payroll department or joint supervision over the proposed collective action members.

This case demonstrates that even under the “lenient standard” described above, merely alleging common ownership over a number of franchises is not enough to show joint employment status or to obtain a broad conditional certification order.

Authored by Hillary J. Massey

Employers have a new tool for opposing conditional and class certification of overtime claims by financial advisors and other exempt employees—last week, a judge in the District of New Jersey denied conditional and class certification of such claims because the plaintiffs failed to show that common issues predominated. The court, pointing to other decisions denying class status to financial advisors in recent years, concluded that the advisors’ duties varied significantly and required individual treatment. While recent headlines have announced large settlements of class claims by financial advisors, this decision bolsters employers’ opposition to those and other purported wage and hour class and collective claims.

The four named plaintiffs brought suit under the FLSA and the laws of New Jersey, New York, and Connecticut, claiming that they and the purported class members were entitled to overtime pay and business expenses, and proposing three classes and an opt-in federal collective. Plaintiffs contended the bank’s uniform categorization of financial advisors as exempt was improper because the advisors regularly made sales “cold calls,” regularly attended networking events to attract new clients, were paid based on their ability to generate sales, were heavily supervised, and had no role in managerial decisions affecting the bank’s business.

Denying plaintiffs’ motions, the judge first concluded that plaintiffs failed to establish their claims were typical and they were adequate representatives of the class because, unlike the plaintiffs, many proposed class members had signed releases of all claims.  The court explained it was unclear how the class representatives would challenge releases they did not sign.

On predominance, the judge concluded that the bank’s policies, plaintiffs’ depositions, and the declarations submitted with the bank’s opposition demonstrated that financial advisors varied in:

  • how often they sold financial products;
  • how they were supervised;
  • how they were paid;
  • what types of clients they served; and
  • how much autonomy they enjoyed.

For example, one plaintiff testified that some advisors did cold calling while others did not, and plaintiffs testified that as their business became more established, they spent less time generating sales.  The record also showed that some managers were involved in the day-to-day work of their financial advisors, but others were more hands off.  Thus the court concluded that common questions did not predominate.

As in another case we recently discussed, where the Sixth Circuit upheld the dismissal of a proposed collective action of bank loan underwriters, the court here also rejected plaintiffs’ heavy reliance on the DOL’s 2010 Administrative Interpretation concerning mortgage loan officers’ non-exempt status, noting that that the Interpretation did not apply to financial advisors.

Finally, despite a “lenient standard,” the judge denied plaintiffs’ motion for conditional certification under the FLSA.  Plaintiffs could not meet their burden by merely showing that the bank had a uniform policy of treating financial advisors as exempt, and the significant class discovery record revealed that financial advisors’ duties varied greatly.

The case will now proceed on the merits of the claims of the four individual plaintiffs only.

EDNY-SealCo-authored by Robert S. Whitman and Howard M. Wexler

Plaintiffs’ counsel frequently speak of the “low” burden necessary at first stage for conditional certification under the FLSA.  However, a recent decision from the Eastern District of New York highlights that plaintiffs may win the battle over conditional certification but still lose the war for final certification at second stage.

In Mendez v. U.S. Nonwovens Corp., the plaintiffs succeeded in obtaining conditional certification based on their claim that the defendants enforced several “policies” that adversely affected employees’ wages, including failure to timely pay, failure to pay employees based on timecard punches, and requiring pre-shift work without additional compensation.  At the close of discovery, they moved for class certification under Rule 23, which the court denied except as to a subclass of employees who claimed they were entitled to spread of hours pay under the New York Labor Law.

The defendants concurrently moved for decertification of the FLSA collective action.  Magistrate Judge Steve I. Locke granted the motion.  He  noted the “heightened scrutiny” that must be applied at second stage certification, in contrast to the “modest factual showing” of similarity at the first stage.  While the Second Circuit has not yet set forth a particular method for deciding second stage certification, Judge Locke noted that district courts generally look at the following factors:  (1) disparate factual and employment settings of individual plaintiffs; (2) defenses available to defendants which appear to be individual to each plaintiff; and (3) fairness and procedural considerations.

Because Judge Locke found that the defendants’ policies were not facially unlawful, he required the plaintiffs to provide sufficient evidence that the defendants’ implementation of these policies violate the FLSA.  Based on a review of the evidence, he found “no generalized or representative proof of such a policy that would establish liability on a collective-wide basis.”

While the court said that each plaintiff may have a claim to unpaid overtime, “those claims may only be established through individualized evidence” given their varied experiences.  He also noted that “anecdotal evidence of individual failures” in paying certain employees does not constitute “proof of a company-wide policy or practice.”  And given the disparate factual claims of liability, the defenses would “necessarily vary” on a plaintiff-by-plaintiff basis as well.

Mendez is yet another reminder that all is not lost when FLSA conditional certification is granted. Where there is compelling evidence that a trial would require individualized factual determinations and an assessment of individual defenses, employers can and should return to the judge to highlight those distinctions among the opt-in plaintiffs in an effort to reverse their fortunes without the yoke of the “lenient standard” of stage one.

Co-authored by Molly C. Mooney and Noah Finkel

Last week, a federal judge in the Northern District of Illinois lifted the weight of collective action certification off Life Time Fitness, Inc. and refused to certify a proposed collective of more than 6,000 personal trainers because each trainer’s employment varied too much to resolve their potential claims on a collective basis.

The trainers in Steger v. Life Time Fitness, Inc. alleged that Life Time had an unofficial policy of intimidating and pressuring trainers to work off the clock. Life Time trainers are paid based on commissions. The trainers presented evidence that some managers encourage trainers to underreport their hours in order to prevent “draws” against those commissions. According to the trainers, this evidenced a broader, common policy discouraging trainers from reporting all hours worked. Life Time, however, argued that its corporate policies mandate accurate timekeeping, and any encouragement of off-the-clock work was highly individualized based on a trainer’s location, job title and duties, productivity, and personal decisions.

The district court agreed with Life Time, since plaintiffs’ evidence that some managers pressured employees to underreport hours also demonstrates that some managers did not. It also credited Life Time’s corporate policies, which require all employees to accurately report their time, and of which, at least some class members were aware. Ultimately, the district court found certification inappropriate, as the resolution of class members’ claims would require a highly individualized analysis to determine the extent to which each trainer worked off the clock.

This case comes on the heels of a pair of wage and hour certification decisions in the Seventh Circuit relating to off-the-clock work. In both Ross v. RBS Citizens, N.A., which this blog covered here, and Bell v. PNC Bank, plaintiffs alleged that their employers had unofficial policies encouraging off-the-clock work. After the Seventh Circuit affirmed class certification in Ross, the Supreme Court vacated the lower court’s judgment and remanded the case to the Court of Appeals “for further consideration in light of Comcast Corp. v. Behrend,” a decision in which the Supreme Court determined that an inability to show that damages can be measured on a class-wide basis may be fatal to a collective action.

Although Ross settled before the Seventh Circuit could apply Comcast, the Seventh Circuit chimed in again in Bell. There, it affirmed class certification, reasoning that whether plaintiffs can ultimately prove the existence of an unofficial policy encouraging off-the-clock work is irrelevant at the certification stage. Rather, plaintiffs simply must show that the denial of overtime pay came from an alleged broader, informal company policy rather than from the discretionary decisions of individual managers.

Bell suggests that a way to defeat class or collective action certification of an “unofficial policy” claim is to show that the pressure to work off the clock was the result of individual decisions by managers at the local level. That is precisely what happened here. The district court reasoned that the claim at issue was driven, not by a uniform unwritten corporate policy, but rather by the individual actions of specific managers acting contrary to corporate policy. Moreover, and encouragingly for employers defending collective actions and used to the invocation of the phrases “lenient standard” and “modest showing” at the conditional certification stage, the district court was able to recognize this at the early stage of the case and deny notice to the putative collective action members.

Authored by Alex Passantino

‘Twas the week before Christmas, 2-0-1-5
When the poetry elves on the blog came alive.
Crafting their rhymes with a purpose so clear:
Presenting the wage-hour gems of the year.

In January, for new regs in this year our breath bated.
Then for six painful months, we speculated and waited.
And just as we geared up to celebrate Independence,
Out came a proposal that will create more defendants.

With a salary level that for 10 years has been flat,
They looked at New York’s and said “higher than that.”
More than double the old; and then they got clever …
The proposed sal’ry level will increase for forever.

Anticipated changes to duties caused quite a fuss
When DOL said “If you’ve got some ideas, just tell us.”
Of the Department’s proposal, employers were understandably wary,
So we wrote down some ideas on how to make it less scary.

Nearly 300 thousand comments they have to review,
It will be late into next year before they are through.

Next up on the list of your wage-hour joy,
Are the efforts to change what it means to employ:
ContractorsJoint employment. Fissured industry.
Interns. The “third way” and gig economy.

Economic realityRight to control.
They’re integral to your business? Now you’re in a deep hole.
So many angles, it can drive you berserk.
As agencies and courts figure out what is “work.”

And if divergent decisions bring you a sense of elation,
Then please focus attention on class certification.
Approvals, denials, and some decerts, too.
No matter the side, there’s a case for you.

But as summer approached, there arose quite a stir,
A case that’d explain what the class cert rules were.
A Supreme explanation, o my-o, o me-o
We’d learn about class via Bouaphakeo.

They’ve argued, but there’s no decision, not yet,
And a limited ruling on records might be all that we get.
But the cases keep coming. Their numbers broke the charts.
Whether giant class actions or cases broken in parts.

And the response to those filings? The employers’ retort?
A wide range of ways to get them out of court.

Some cases get mooted. Some cases do not.
At Genesis’s open question, SCOTUS might take a shot.
Does an offer of judgment that’s not been accepted
Mean the plaintiff cannot proceed with his class as expected?

Increasingly used as a litigation life saver
Arbitration agreements with a class action waiver;
And when asked if state laws could class waivers prevent, yo,
The Supremes laid the smack-down to dear Sacramento.

With all of these options, it comes as a surprise then,
That one resolution keeps on getting the Heisman.
For reasons that many cannot understand,
To settle wage claims courts think they must hold your hand.

That’s our year in review, we whipped you right through it.
Next year? The new regs and a mad dash to review it.
But before 2015 joins the past’s ranks,
You keep on reading our blog, and for that we give thanks!

THANKS TO ALL OF OUR READERS. BEST WISHES FOR A HAPPY, HEALTHY, AND PROSPEROUS NEW YEAR!

sealCo-authored by Laura E. Reasons and Noah A. Finkel

BlackBerry devices may be a thing of the past; but smartphones–and their ability to allow employees to be constantly connected–certainly aren’t going away any time soon.

On Thursday, a judge in the Northern District of Illinois held in Allen v. City of Chicago that the Chicago Police Department (CPD) did not violate the FLSA by failing to pay law enforcement employees for time spent off-duty performing work on their CPD-issued BlackBerry devices. The ruling provides several lessons to employers on how to protect themselves against so-called “BlackBerry claims” by non-exempt employees carrying smartphones that many have been predicting may soon flood the courts.

Plaintiff, a sergeant in CPD’s Bureau of Organized Crime (BOC) filed suit alleging that he and other CPD officers should have been paid for time they spent off-duty reading and responding to emails on their BlackBerrys, and performing related follow-up work.

The Court conditionally certified an opt-in collective action of sworn BOC officers below the rank of Lieutenant who had a BlackBerry device and who would have incurred overtime had their off-duty work on a BlackBerry device been recorded, and then also denied the City’s decertification and summary judgment motions. Thus, the case proceeded to an approximately 4-day bench trial last August on the claims of 51 plaintiffs in the collective action. On December 10, the Court issued an opinion ruling in favor of the City and against the plaintiffs.

The Court said that, to succeed on their FLSA claims, plaintiffs must prove by a preponderance of the evidence, that (1) they performed overtime work for which they were not properly compensated, and (2) the City had actual or constructive knowledge that plaintiffs worked overtime without compensation. While plaintiffs succeeded on the first point, the City prevailed because plaintiffs failed to prove it had knowledge of their off-the-clock work.

Plaintiffs argued that the City maintained an unwritten policy to deny plaintiffs payment for their off-duty work on their Blackberry devices. This policy was enforced, they reasoned, through pressure not to incur overtime, a requirement that they receive prior approval to work overtime, and a Department-wide “understanding” that off-duty BlackBerry work would not be compensated.

The Court found that the plaintiffs performed off-duty work. They monitored their BlackBerrys, responded to time-sensitive messages to supervisors and co-workers and made and received phone calls. Although some of these activities were de mimimis and thus non-compensable the Court held that some of the BlackBerry activities were compensable work activities.

But the Court then looked at whether the City knew or should have known that the plaintiffs were working off-the-clock. Because the officers’ schedules varied day-to-day, and because they were often in the field, their supervisors typically did not know when an officer was responding to an email or call off-duty, as opposed to during working time. Moreover, much of the off-duty BlackBerry activity was between the officers and their coworkers or others, giving the City even less opportunity to learn of the off-duty work.

Witnesses also testified–and the Court found–that some officers did fill out “time due slips,” pursuant to CPD’s procedures, seeking overtime pay for the BlackBerry work. Whenever this happened, the time was compensated and no one was disciplined for seeking this compensation.  Because of the volume of “time due slips” supervisors reviewed each day, and the lack of detail on the “time due slips,” it was difficult to determine whether overtime was paid for off-duty BlackBerry work versus other work. It also would have been difficult for the City to determine if a “time due slip” was submitted for known off-duty work, since the slips were sometimes reviewed days later and contained very little detail. Some of the plaintiffs contended that they did not submit “time due slips” for off-duty BlackBerry work because the City maintained an illegal, unspoken policy not to pay for such work. But the Court rejected this argument.

It is a principal tenet of the FLSA that the law “stops short of requiring the employer to pay for work it did not know about, and had no reason to know about” so the officers’ claims failed.

This case has several important take-aways for employers, even outside the public-safety context:

  • Off-duty work on mobile devices can be found to be compensable. Employers who provide mobile devices to non-exempt employees (or allow them to perform work on their own devices), must ensure strong policies are in place prohibiting off-the-clock work, and must have mechanisms in place to encourage reporting of after-hours work.
  • Minimal activity such as simply monitoring emails likely will not amount to compensable work. It is more akin to being “on call” since employees can passively monitor a mobile decide while still using their time for their own benefit. Any time likely won’t be found compensable unless something more is required–such as responding to emails, making phone calls, or doing any follow-up research.
  • Proving employer knowledge of off-duty work is a very difficult burden for plaintiffs to meet, especially if the mobile communications are not with a supervisor. This is particularly so on a class or collective basis. Nonetheless, employers cannot turn a blind eye if they have reason to believe employees are working off-the-clock, and should address issues through policy, coaching, and–if necessary–discipline.
  • The Court, here, recognized that each side failed to take basic steps to eliminate ambiguity about CPD’s approach to compensating off-duty BlackBerry work. The plaintiffs, it reasoned, should have obtained clarity by submitting “time due slips” to see if CPD would pay overtime and test their assertion that it would not. CPD, on the other hand, could have had a written policy clarifying that all off-duty BlackBerry work should be reported, and would be compensated–like all other work.
  • Finally, the Court recognized that our reliance on devices that allow work to be performed remotely isn’t going away any time soon. Therefore, it behooves employers to review their policies and practices and ensure they work cooperatively with employees to prevent litigation.

 

Co-authored by Robert S. Whitman and Howard M. Wexler

Expert witness fees are not recoverable under the FLSA. So held the Second Circuit in a decision that highlights a strategy we have previously discussed for employers to fend off class/collective actions.

In Gortat v. Capala Brothers, Inc., the plaintiffs alleged that they were denied wages, including overtime compensation, throughout their employment. After six years of litigation, the case went to trial and the plaintiffs prevailed, winning unpaid wages as well as $514,284.00 in attorney’s fees and $68,294.50 in costs. In support of their claims, the plaintiffs retained an economic expert to aid in establishing their alleged damages.

In their appeal to the Second Circuit of the fee award, the defendants argued that the expert fees (which constituted $10,425 of the attorney’s fee award ) are not recoverable under the FLSA. The court agreed. It relied on the text of the FLSA, which states that where a defendant has violated the Act, “the court … shall, in addition to any judgment awarded to the … plaintiffs, allow a reasonable attorney’s fee to be paid by the defendant, and costs of the action.” Based on this language, the court said that the plaintiffs were not entitled to be reimbursed for the expert fees, as the FLSA does not explicitly provide for such reimbursement. The Second Circuit then vacated the award and remanded the case to the District Court to determine if the New York Labor Law authorizes the award of such fees.

In isolation, this decision is hardly a game changer. However, we have previously written about the increasing importance of a trial plan for wage and hour class/collective actions to ensure that cases can effectively be tried on a multi-plaintiff basis rather than wind up as hundreds (or potentially thousands) of mini-trials. In Tyson Foods, Inc. v. Bouaphakeo, which the Supreme Court will hear next Term, one of the issues before the Court will be whether liability and damages may be determined by statistical techniques that presume all class or collective members are similar.

Plaintiffs often resist coming up with a trial plan during discovery or briefing on certification of the class/collective action, arguing that such details can be left until the eve of trial. Now, to the extent plaintiffs retain an expert to aid in formulating a trial plan earlier in the case, Gortat makes it clear that, at least in the Second Circuit, they will have to pay for the expert out of their own pocket. Having to foot the bill for such costs, with no chance of recouping them later on, may cause plaintiffs’ counsel to rethink the scope of the class/collective action they wish to pursue, or whether to pursue one at all.

Authored by Steve Shardonofsky

In the beginning, the U.S. Supreme Court decided in Genesis Healthcare that an FLSA case is moot when the plaintiff accepts an offer of full relief. As we noted in our previous blog, the decision left open, however, the question of what happens when the plaintiff affirmatively declines the offer or when the offer expires, which is what happens in most cases (under Rule 68, an offer not accepted within 14 days is considered withdrawn). In addition, because Genesis Healthcare involved a collective action under the FLSA as opposed to a class action under Rule 23, the Supreme Court did not answer whether a Rule 68 offer of full relief to a class representative moots a wage-hour action that includes a Rule 23 claim under state law (or a case that involves only state law wage-hour claims). The Court may soon answer these questions and write the second, much-anticipated chapter in this legal saga.

On May 18, the U.S. Supreme Court agreed to review in Gomez v. Campbell-Ewald Company whether a potential Rule 23 class under the Telephone Consumer Protection Act may be mooted by an offer of complete relief. According to the class-action complaint filed by Jose Gomez in March 2010, Campbell-Ewald Company allegedly sent thousands of unsolicited text messages through a subcontractor in violation of the TCPA as part of the U.S. Navy’s recruitment efforts. While Gomez was still the only named plaintiff in the case and before the case was certified as a class action, the company offered to pay him (under Rule 68) for each unsolicited text message substantially more than the damages he could have recovered under the statute. In September 2014, the U.S. Ninth Circuit Court of Appeals reversed the lower court’s order granting summary judgment in favor of the company on grounds of derivative sovereign immunity and holding that the putative Rule 23 class action could continue even though the defendant offered full relief to the sole plaintiff before he moved for class certification. As the U.S. Chamber of Commerce noted in its amicus brief in support of the writ for certiorari, the 9th Circuit’s ruling harms employers and the judicial system because it encourages lawsuits and discourages settlements. More fundamentally, however, the ruling harms plaintiffs because it “allows putative class counsel to maintain federal lawsuits for their own benefit, even when their only client stands to gain nothing,” and there is no longer a live case or controversy.

In a reply petition for a writ of certiorari filed by Campbell-Ewald, the company emphasized that the case “presents a clean opportunity to decide the issue left open in Genesis Healthcare, as well as the related–and equally important–question of when an offer of complete relief moots a class claim.” The Court’s guidance on these issues is necessary for employers and wage-hour practitioners alike, because a Circuit split exists on whether a Rule 68 offer of full relief to a class representative moots a Rule 23 class action. Most recently, the 11th Circuit in Stein v. Buccaneers Limited Partnership joined the 3rd, 5th, 9th, and 10th Circuits in holding that it does not. By granting the writ, the Supreme Court may well be ready to answer this important question once and for all, and provide additional guidance on whether a court loses jurisdiction of an FLSA case and must dismiss it before it blossoms into a collective action after an unaccepted offer of judgment.

Like Genesis Healthcare, this the case is certain to prove to be a key precedent in wage-hour cases–under the FLSA and Rule 23. So stay tuned … we will keep our readers updated on any future developments.

Arkansas-Co-authored by Abad Lopez and Noah Finkel

The two-step “send notice now/worry later” approach to FLSA collective actions — in which courts approve notice to potential collective action members under the lenient standard but comfort defendant-employers with the bromide of “don’t worry, we can revisit the issue at the decertification stage under a more rigorous standard” — continues to leave a bad taste.

Those who follow FLSA collective action litigation are familiar with the recipe. Motions for conditional certification usually are subject to a “lenient standard” under which a plaintiff need carry only a “low burden” in making a “modest showing.” These motions thus typically result in a notice of collective action being issued to all those meeting the collective action definition. Dozens, hundreds, or even thousands then opt in to the case and substantially increase a defendant-employer’s potential exposure. Substantial discovery then occurs, and then the defendant-employer files a motion for decertification. Viewing that motion under a far more rigorous standard, courts often undo conditional certification and find that the collective action members are not in fact similarly-situated to each other. The dozens, hundreds, or even thousands who opted in then are dismissed from the case without prejudice.

So damage repaired, right? Unfortunately, no. Those former opt-ins — who would not exist but for the conditional certification order — can remain a significant cost and potential liability for an employer. They may file new lawsuits separately or in smaller groups, or they may even find their way back into the current lawsuit.

In other words, by refusing to conduct a meaningful analysis at the conditional certification stage, courts invite numerous individuals to join litigation through the collective action mechanism, even when their claims do not belong in the same lawsuit. Defendants then bear the burden of defending multiple lawsuits that, but for the ease of the two-step approach, probably would not have been brought to begin with.

A recent case in Arkansas illustrates this point. In Conners v. Catfish Pies, Inc., et al., an Arkansas federal judge conditionally certified a lawsuit accusing Gusano’s Chicago-Style Pizzeria restaurant operators of using illegal tip pools to pay waiters less than the minimum wage. Conners, who worked as a server at the Gusano’s location in Conway, Arkansas, claimed she was forced to pool her tips with cooks and other kitchen employees, who typically do not receive gratuities, in violation of the FLSA. Conners argued that because Gusano’s tip-sharing agreement was invalid, the company was required to pay her a minimum wage of $7.25 per hour, rather than the $2.75 plus tips that she was given.

Following conditional certification under the “lenient standard,” more than a dozen current and former waiters joined the lawsuit. Later, the court purportedly undid the damage when it decertified the lawsuit using the more rigorous analysis in the second step of the two-step certification process typically utilized for collective actions under the FLSA. In its decertification order, the court found that the plaintiffs were in fact not “similarly situated” because different workers were employed by different entities that operated the restaurants, and thus were subject to different pay practices.

But what seemed like a victory for the defendants turned out to be a headache. A few months later, the judge reconsidered part of his decision to decertify the collective action and split the case into four separate trials. Although the court had previously dismissed the claims of all opt-in plaintiffs in its decertification order, it allowed each opt-in plaintiff to join the lawsuit as a named plaintiff against the respective restaurant where he or she was employed. Instead of a victory, the restaurants now have to defend against multiple lawsuits by plaintiffs who were not properly before the court in the first place. For these restaurants, decertification didn’t undo the damage of the conditional certification order. Ultimately, decertification compounded their problem. And to add insult to injury, that is only after these restaurants spent a lot of time and money after conditional certification to get to decertification.

The Conners v. Catfish Pies litigation is a reminder that conditional certification, though it can be undone, has long-term consequences for defendant-employers. Even if the case ceases being a collective action, it nevertheless can transform into a multi-named-plaintiff case, or it can morph into dozens or more separate cases. Defendants need to continue to make this clear to judges when they oppose conditional certification.

Authored by Jessica Lieberman

The decision whether to reclassify employees whose exempt status is arguable can sometimes create something of a double bind for employers: reclassification should be the conservative approach, but it also can be risky if it is interpreted as evidence that the prior classification was wrong.  For this reason, employers may fear that reclassification aimed at reducing potential liability may actually spur litigation.

Last week the District of New Jersey issued a decision that provides some hope and help for employers facing this conundrum.  In Henry v. Express Scripts Holding Co., an employee who had been reclassified by the defendant in 2013 sought conditional certification of a putative collective of 170 employees who had been reclassified at the same time.  She claimed that she was similarly situated to these individuals because  the defendant “did not review the job duties that the employees performed during the prior three years” and “did not pay back overtime wages to any of the 170 reclassified employees.”

The district court rejected this bid for conditional certification, stating that in the Third Circuit an employee must show the existence of a common policy or practice that arguably violates the FLSA, and “[r]eclassification, alone, does not evidence a FLSA violation” for these purposes.  The plaintiff had failed to show any additional facts that would support her claim or suggest that “the previous classifications as exempt resulted in FLSA violations.”  Accordingly, the court held that the plaintiff had failed to make the “modest factual showing” necessary for conditional certification and denied the motion.

The Henry case does not eliminate all risk associated with a reclassification, and whether and how to reclassify remains a nuanced issue that should be discussed with counsel.  Going forward however, employers should be able to point to Henry in trying to avoid certification of FLSA lawsuits stemming from such decisions.