It is not every day that multi-million dollar wage and hour class action judgments get reversed. But that is exactly what happened twice late last week in the Eighth Circuit in two cases against the same employer involving similar issues. In one, the Court reversed a judgment of more than $18.7 million, and in the other, it reversed a judgment for just under $5 million.
In both cases, groups of workers at meat processing plants in Nebraska brought class action claims under Nebraska state wage payment law alleging that the employer owed them additional compensation for pre- and post-shift activities. In both cases, the district court certified the state law claims as class actions under Rule 23, granted summary judgment in favor of the plaintiff-employees, and held trials on damages only, both of which resulted in multi-million dollar judgments.
For the most part, these claims were not brought under the FLSA or even under a state overtime law. Rather, they were primarily brought under Nebraska wage payment law with attendant FLSA claims. State law wage payment claims are brought in many wage-hour cases for two reasons. First, as with a state overtime claim (provided one is available under applicable law), a state wage payment claim usually can brought under an opt-out class action procedure rather than under an opt-in collective action procedure. Because opt-in rates often are not high, the former nearly always results in a far higher number of claimants in a case than the latter. Second, state wage payment laws often are a way for plaintiff-employees to claim “gap time,” that is, the hours for which they claim they should have been paid that do not exceed 40 hours in a week and thus do not implicate the overtime provisions of the FLSA or state overtime law.
But the Eighth Circuit reversed both wage payment law judgments. It reasoned that an employee cannot use the FLSA to support a claim under Nebraska wage payment law because that law allows employees to recover only those wages that the employer previously agreed to pay. The Court accordingly found that the employees’ state-law claims failed as a matter of law because their claims were based solely on alleged FLSA violations and the evidence did not show a prior agreement to pay the claimed wages. In one of the cases, the employees based their wage payment claim on a collective bargaining agreement between the employees’ union and the employer which the Eighth Circuit held, did not include a term to pay the additional compensation claimed by the employees.
That these opinions concern Nebraska wage payment law—a not frequently invoked statute in wage-hour litigation—should not detract from their significance. Wage payment theories are often invoked to try to obtain an opt-out class action as opposed to merely an opt-in collective action and/or to claim relief for “gap time.” Nebraska law’s requirement that there be an “agreement” to pay those wages is not unique. Many state wage payment laws contain a similar requirement to bring such a claim. The Eighth Circuit decisions show that district courts should examine that requirement carefully, especially since many plaintiffs in wage-hour cases testify that they believe that their employer had a policy to not pay wages for the time at issue in the case.