In Tyson Foods, Inc. v. Bouaphakeo, 136 S.Ct. 1036 (2016), the Supreme Court held that representative proof from a sample, based on an expert witness’s estimation of average time that employees spent donning and doffing protective gear, could be used to show predominance of common questions of law or fact for purposes of class certification. The Court also reaffirmed the long-held FLSA principle that where an employer fails to keep accurate time records, an employee can meet her burden by providing evidence showing hours worked as a matter of just and reasonable inference.
The plaintiffs worked for Tyson Foods. These employees worked in the kill, cut, and retrim departments of a Tyson’s pork processing plant in Iowa. Their work required them to wear protective gear, but the exact composition of the gear depended on the tasks a worker performed on a given day. Tyson compensated some, but not all, employees for this donning and doffing, and did not record the time each employee spent on those activities.
The employees filed suit, alleging that the donning and doffing were integral and indispensable to their hazardous work and that Tyson’s policy not to pay for those activities denied them overtime compensation required by the Fair Labor Standards Act of 1938 (FLSA). They also raised a claim under an Iowa state wage law.
The employees sought certification of their state claims as a class action under Federal Rule of Civil Procedure 23 and certification of their FLSA claims as a “collective action” under 29 U.S.C. § 216. Tyson objected to certification of both classes, arguing that, because of the variance in protective gear each employee wore, the employees’ claims were not sufficiently similar to be resolved on a classwide basis.
The District Court concluded that common questions, such as whether donning and doffing protective gear was compensable under the FLSA, were susceptible to classwide resolution even if not all of the workers wore the same gear.
To recover for a violation of the FLSA’s overtime provision, the employees had to show that they each worked more than 40 hours a week, inclusive of the time spent donning and doffing. Because Tyson failed to keep records of this time, the employees primarily relied on a study performed by an industrial relations expert, Dr. Kenneth Mericle. Mericle conducted videotaped observations analyzing how long various donning and doffing activities took, and then averaged the time taken to produce an estimate of 18 minutes a day for the cut and retrim departments and 21.25 minutes for the kill department. These estimates were then added to the timesheets of each employee to ascertain which class members worked more than 40 hours a week and the value of classwide recovery.
Tyson argued that the varying amounts of time it took employees to don and doff different protective gear made reliance on Mericle’s sample improper, and that its use would lead to recovery for individuals who, in fact, had not worked the requisite 40 hours. The jury awarded the class about $2.9 million in unpaid wages. The Eighth Circuit affirmed the judgment and the award. 136 S.Ct. 1036 at 1039-45.
The Court’s Decision
The Supreme Court affirmed.
First, the Court observed that before certifying a class under Rule 23(b)(3), a district court must find that “questions of law or fact common to class members predominate over any questions affecting only individual members.” Fed R. Civ. R. 23(b)(3). In Tyson Foods, the parties agreed that the most significant question common to the class was whether donning and doffing protective gear is compensable under the FLSA. Tyson claimed, however, that individual inquiries into the time each worker spent donning and doffing predominated over that common question. The employees argued that individual inquiries were unnecessary because it could be assumed that each employee donned and doffed for the same average time observed in Mericle’s sample. 136 S.Ct. 1036 at 1045-46.
Second, the Court observed that whether and when statistical evidence like an expert sample could be used to establish classwide liability depends on the purpose for which the evidence is being introduced and on “the elements of the underlying cause of action.” 136 S.Ct. at 1046 (quoting Erica P. John Fund, Inc. v. Halliburton Co., 563 U.S. 804, 809 (2011). The Court then reasoned that because a representative sample may be the only feasible way to establish liability, it cannot be deemed improper merely because the claim is brought on behalf of a class. Thus, the employees could show that Mericle’s sample was a permissible means of establishing hours worked in a class action by showing that each class member could have relied on that sample to establish liability had each brought an individual action. 136 S.Ct. at 1046-47.
Third, and perhaps most importantly, the Court discussed how its decision in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946) showed why the sample was permissible under the circumstances in Tyson Foods.
The Court observed that in Mt. Clemens Pottery, where an employer violated its statutory duty to keep proper time records, the Court concluded the employees could meet their burden by proving that they in fact “performed work for which [they were] improperly compensated and … produc[ing] sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.” Id. at 687. In Tyson Foods, similarly, the employees sought to introduce a representative sample to fill an evidentiary gap created by the employer’s failure to keep adequate records. Had the employees proceeded with individual lawsuits, each employee likely would have had to introduce Mericle’s study to prove the hours he or she worked. The representative evidence was a permissible means of showing individual hours worked. 136 S.Ct. at 1046-47.
Fourth, the Court discussed how its holding was consistent with Wal–Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011). In Dukes, as in Tyson Foods, the underlying question was whether a sample could have been used to establish liability in an individual action. In Dukes, the Court pointed out, the employees were not similarly situated, so none of them could have prevailed in an individual suit by relying on depositions detailing the ways in which other employees were discriminated against by their particular store managers. In contrast, the Tyson Foods employees, who worked in the same facility, did similar work, and were paid under the same policy, could have introduced Mericle’s study in a series of individual suits. 136 S.Ct. at 1048.
The Court went on to address the proposed bright-line rules advocated by the parties and their respective amici. The Court determined that the Tyson Foods case was “no occasion” to adopt broad and categorical rules governing the use of representative and statistical evidence in class actions. Rather, the Court observed, the ability of a party to use a representative sample to establish classwide liability depends on the purpose for which the sample is being introduced and on the underlying cause of action. In FLSA actions, the Court emphasized, inferring the hours an employee has worked from a study such as Mericle’s has been permitted by the Court so long as the study is otherwise admissible. 136 S.Ct. at 1049 (citing Mt. Clemens, 328 U.S. at 687).
Finally, the Court addressed Tyson’s argument that the employees were required to demonstrate that uninjured class members would not recover damages awards. The Court declined to address that question, because the damages awarded by the jury had not yet been disbursed and the record did not indicate how it would be disbursed. 136 S.Ct. at 1049-50.
In sum, the Tyson Foods Court held that where an employer does not keep accurate time records, the employee can provide a reasonable estimate of time worked for purposes of the FLSA. Thus, representative proof from a sample, based on an expert witness’s estimation of average time that employees spent donning and doffing protective gear, could be used to show predominance of common questions of law or fact for purposes of class certification.
The case reaffirmed the important FLSA principle of Mt. Clemens Pottery that when an employer fails to keep proper time records, the employees could meet their burden by proving that they in fact “performed work for which [they were] improperly compensated and … produc[ing] sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.” 328 U.S. at 687.
This article was also published to TimCoffieldAttorney.com.
In Babb v. Wilkie, Secretary of Veteran Affairs, No. 18-882, ___ U.S. ___ (Apr. 6, 2020), the Supreme Court held that the federal-sector provision of the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 633a(a), demands that personnel actions be untainted by any consideration of age. This means that a federal sector employee can prevail on an age discrimination claim without proving but-for causation. However, the presence or absence of but-for causation is important in determining the available remedies.
Babb was a federal employee, a pharmacist, at a U.S. Department of Veterans Affairs Medical Center (the “VA”). Babb sued the VA for, inter alia, age discrimination in various adverse personnel actions. The VA offered various alleged nondiscriminatory reasons for the actions. The District Court granted the VA’s summary judgment motion after finding Babb had established a prima facie case, that the VA had proffered legitimate reasons for the challenged actions, and that no jury could reasonably conclude that those reasons were pretextual.
Babb appealed. She argued the District Court’s requirement that age be a but-for cause of a personnel action was inappropriate under the ADEA’s federal-sector provision. Because that section requires most federal-sector “personnel actions” affecting individuals aged 40 and older be made “free from any discrimination based on age,” Babb argued such a personnel action is unlawful if age is a factor in the challenged decision — even if many other factors having nothing to do with age were also factors. Under Babb’s reading of the ADEA, therefore, even if the VA’s proffered reasons in her case were not pretextual, the VA still violated the ADEA if age discrimination played any part at all in the decision. The Eleventh Circuit rejected that argument, citing binding circuit precedent, and Babb appealed again.
The Supreme Court reversed. It held that the plain meaning of § 633a(a) demands that personnel actions be “untainted by any consideration of age.” However, the Court further explained that for an employee to obtain reinstatement, damages, or other relief related to the end result of an employment decision, the employee needed to show but-for causation — that is, that a personnel action would have been different if age had not been taken into account. If age discrimination played a lesser role in the decision, other remedies, like injunctions or other forward-looking relief, may be appropriate.
In short, the VA argued that the ADEA’s federal-sector provision imposes liability only when age is a but-for cause of an employment decision, while Babb argued that it prohibits any adverse consideration of age in the decision-making process. The Court sided with Babb, holding that the plain meaning of the statutory text shows that age need not be a but-for cause of an employment decision in order for there to be a violation. No. 18-882 at 4–7.
First, the Court did a close reading of the statutory language:
All personnel actions affecting employees or applicants … who are at least 40 … shall be made free from any discrimination based on age.
The Court noted the phrase “free from” means “untainted,” and the word “any” underscores the broad scope of that phrase. The Court had previously held that the normal definition of “discrimination” is “differential treatment.” Jackson v. Birmingham Bd. of Ed., 544 U.S. 167, 174 (2005). And “[i]n common talk, the phrase ‘based on’ indicates a but-for causal relationship[.]’” Safeco Ins. Co. of America v. Burr, 551 U.S. 47, 63 (2007). The “shall be made” phrase denotes a duty, “emphasizing the importance of avoiding the taint.” No. 18-882 at 4–5.
The Court then determined that the statutory language indicated age must be a but-for cause of the discrimination alleged, but not of the challenged personnel action.
The Court grounded its reasoning in two aspects of the statute’s syntax. First, it observed that the adjectival phrase “based on age” modifies the noun “discrimination,” not the phrase “personnel actions.” Thus, age must be a but-for cause of discrimination but not the personnel action itself. Second, the adverbial phrase “free from any discrimination” modifies the verb “made” and describes how a personnel action must be “made”: in a way that is not tainted by any differential treatment based on age. Id.
The Court therefore determined the plain meaning of § 633a(a) is that the statute does not require proof of but-for causation — that an employment decision would have turned out differently if age had not been taken into account. Instead, a federal employer violates the statute if it makes age a factor in an employment decision. The Court rejected the VA’s argument, based on the various meanings of particular words, that the statutory text requires more than a federal employer’s “mere consideration” of age in personnel decisions. Id. at 5–7.
Second, the Court rejected the VA’s primary argument, that this “mere consideration” interpretation was undermined by the Court’s decisions interpreting other employment and consumer protection laws as requiring but-for causation. See Gross v. FBL Financial Services, Inc., 557 U.S. 167 (2009) (ADEA’s private-sector provision, 29 U.S.C. §623(a)(1)); University of Texas Southwestern Medical Center v. Nassar, 570 U.S. 338 (2013) (Title VII’s anti-retaliation provision, 42 U.S.C. §2000e–3(a)); Safeco Ins. Co. of America, 551 U.S. 47 (2007) (Fair Credit Reporting Act, 15 U.S.C. §1681m(a)).
The Court observed that because the language of § 633a(a) (“free from any discrimination based on age”) is markedly different than the language of those other statutes, those cases are perfectly consistent with the Court’s interpretation of the federal-sector ADEA provision. Nor did the traditional rule favoring but-for causation change the result. While § 633a(a) does requires proof of but-for causation, it requires that proof only for the “discrimination,” not for the personnel action. No. 18-882 at 8-11.
Third, the Court observed that it was not “anomalous” to hold the Federal Government to a higher standard than private employers or state and local governments when it comes to age discrimination. This difference is supported by the ADEA’s legislative history. Specifically, when Congress expanded the ADEA’s scope beyond private employers, it added state and local governments to the private-sector provision’s definition of “employers.” But Congress “deliberately prescribed a distinct statutory scheme applicable only to the federal sector,” Lehman v. Nakshian, 453 U.S. 156, 166 (1981), and that federal scheme did away with the private sector provision language. Because the statute’s words are unambiguous, the Court’s job was complete. It would be beyond the Court’s power to second-guess the legislature’s chosen language. No. 18-882 at 11–13.
Finally, after all that, the Court determined that in federal sector ADEA cases but-for causation is nevertheless important in determining the appropriate remedy. The Court concluded for an employee to obtain compensatory damages or other forms of relief related to the end result of an employment decision, the employee must without show that age discrimination was a but-for cause of the employment outcome. The Court observed that this conclusion is supported by basic principles of redress long employed by the Court, as in, for example, Steel Co. v. Citizens for Better Environment, 523 U.S. 83, 103 (1998), and by traditional principles of tort and remedies law. Remedies must be tailored to the injury. Therefore, the Court reasoned, it would not be appropriate to award lost wages or reinstatement to an employee who cannot show age discrimination was a but-for cause of her termination (or other challenged employment decision), since that would mean she would have been terminated even in the absence of any age discrimination. Still, some remedies may be available. Consistent with traditional remedies principles, the Court observed that federal employees who show that age was a but-for cause of differential treatment in an employment decision, but not a but-for cause of the decision itself, can still seek injunctive or other forward-looking relief. No. 18-882 at 13–14.
In sum, the Babb Court held that the ADEA’s federal-sector provision demands that personnel actions be untainted by any consideration of age. This means that a federal sector employee can prevail on an age discrimination claim without proving but-for causation. However, the presence or absence of but-for causation is important in determining the available remedies. In the absence of but-for causation, the only available remedies may be injunctive or other forward-looking relief.
This article was also published to TimCoffieldAttorney.com.
In Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66 (2013), the Supreme Court held that a putative Fair Labor Standards Act collective action brought by one employee on behalf of others was no longer justiciable when, as conceded by the employee, her individual claim became moot before others joined the case.
Symzcyk worked for Genesis Healthcare as a registered nurse. In 2009, Symczyk brought a putative collective action under the FLSA on behalf of herself and “other employees similarly situated.” 29 U.S.C. § 216(b). She alleged Genesis violated the FLSA by automatically deducting 30 minutes of time worked per shift for meal breaks for certain employees, even when the employees performed compensable work during those breaks. Symcyzk, who remained the sole plaintiff throughout the case, sought statutory damages for the alleged violations.
After Symczyk filed suit, but before any other employees joined the suit, the employer sent Symczyk an offer of judgment under Federal Rule of Civil Procedure 68, which Symczyk ignored. The offer had proposed to pay all of her statutory damages, plus costs and reasonable attorney’s fees. The District Court, finding that no one else had joined the case, and that the Rule 68 offer fully satisfied Symczyk’s claim, concluded that Symczyk’s suit was moot. The court therefore dismissed the case for lack of subject-matter jurisdiction.
The Third Circuit reversed, holding that while Symczyk’s individual claim was moot, the collective action on behalf of other similar employees was not. The Third Circuit reasoned that allowing employers to use calculated Rule 68 offers to “pick off” named plaintiff-employees before certification would frustrate the goals of collective actions. The court therefore remanded the case to the trial court, with instructions to allow Symczyk to seek conditional certification of the collective action and move forward with the case on behalf of other employees who might join. See 569 U.S. at 69-71.
The Supreme Court reversed. The Court held that because Symczyk had no “personal interest” in representing other putative, unnamed employees, nor any other kind of continuing interest that would render her suit not moot, the trial court properly determined it lacked subject-matter jurisdiction over the case.
At the outset, the Court declined to decide whether an unaccepted Rule 68 offer that fully satisfies a plaintiff’s individual claim is sufficient to render that claim moot. Symczyk, however, had conceded this point with respect to her claim and did not argue it on appeal. The Court therefore assumed, without deciding, that the employer’s offer to Symczyk mooted her individual claim. 569 U.S. at 72-73.
The Court then determined that “well-settled mootness principles” controlled the outcome of the case. Once Symczyk’s individual claim became moot, the Court determined that the suit became moot because she had no personal interest in representing others in the action. The Court rejected Symczyk’s contrary arguments because they relied on cases that arose in the context of Rule 23 class actions. The Court found those case inapposite, both because Rule 23 actions are “fundamentally different” from FLSA collective actions and because the cases were “inapplicable” to the facts in Symczyk’s case. 569 U.S. at 73-79.
The cases Symczyk rallied behind were Sosna v. Iowa, 419 U.S. 393 (1975) and United States Parole Comm’n v. Geraghty, 445 U.S. 388 (1980). Symczyk argued these cases meant she could seek certification of an FLSA collective action after her individual claim became moot. The Court determined Sosna and Geraghty did not support her position. In short, Sosna held that a class action is not rendered moot when the named plaintiff’s individual claim becomes moot after the class has been duly certified. Geraghty extended those principles to denials of class certification motions, and further provided that, where a putative class action would have acquired independent legal status but for the district court’s erroneous denial of class certification, a corrected ruling on appeal “relates back” to the time of the erroneous denial. See 445 U.S. at 404 and n. 11.
At first glance, these cases seemed like they supported Symczyk’s position. The Court observed, however, that Geraghty’s holding was explicitly limited to cases in which the named plaintiff’s claim remains live at the time the district court denies class certification. See 445 U.S. at 407 and n. 11. Symczyk, by contrast, had not yet moved for “conditional certification” when her claim became moot. Nor had the District Court anticipatorily ruled on any such request. Symczyk therefore had no certification decision to which her claim could have related back. More importantly, the Court emphasized that essential to Sosna and Geraghty was the fact that a putative class acquires an “independent legal status” once it is certified under Rule 23. By contrast, under the FLSA, “conditional certification” does not produce a class with an independent legal status, or join additional parties to the action. 569 U.S. at 73-75.
Second, the Court addressed a line of cases, like County of Riverside v. McLaughlin, 500 U.S. 44, 52 (1991), holding that an “inherently transitory” class-action claim is not necessarily moot upon the termination of the named plaintiff’s claim. The Court found these cases inapplicable. Symczyk argued that an employer’s use of Rule 68 offers to “pick off” a named plaintiff before the collective-action process is complete renders the action “inherently transitory.” But the Court observed the “inherently transitory” rationale was developed to address circumstances in which the defendant’s challenged conduct was effectively unreviewable because no plaintiff possessed a personal stake in the suit long enough for litigation to run its course. For this reason, the Court observed, the McLaughlin line of cases focused on the fleeting nature of the challenged conduct giving rise to the claim, not on the defendant’s litigation strategy. Unlike a claim for injunctive relief, a damages claim (like the FLSA claims at issue in Smyczk’s case) cannot evade review — the damage has been done, and can be measured and compensated. The Court further pointed out that an offer of full settlement cannot insulate such a claim from review. While dismissing Symzcyk’s case before certification would foreclose the putative other plaintiff-employees of Genesis from vindicating their rights in Symzcyk’s suit, those employees would remain free to do so in their own lawsuits. 569 U.S. at 75-77.
Finally, the Court addressed its decision in Deposit Guaranty Nat. Bank v. Roper, 445 U.S. 326 (1980), which Symczyk cited for her argument that the purposes served by the FLSA’s collective-action provisions would be frustrated by defendants’ use of Rule 68 to “pick off” named plaintiffs before the collective-action process has run its course. The Court found Roper did not support this argument. In Roper, the named plaintiffs’ individual claims became moot after the District Court denied their Rule 23 class certification motion and entered judgment in their favor based on defendant’s Rule 68 offer. The Roper Court held that the named plaintiffs could appeal the denial of certification because they possessed an ongoing, personal economic stake in the substantive controversy — namely, to shift a portion of attorney’s fees and expenses to successful class litigants. Symczyk, by contrast, conceded that her employer’s offer provided complete relief, and she asserted no continuing economic interest in shifting attorney’s fees and costs. Moreover, the Roper holding was tied to the unique significance of Rule 23 class certification decisions, distinguishing it from the FLSA collective action context. 569 U.S. at 77-79.
In summary, Genesis held that a putative FLSA collective action brought by single employee was no longer justiciable when, as conceded by the employee, her individual claim became moot by an offer of judgment providing complete relief and no other employees had joined the case. The Court, however, declined to decide whether an unaccepted offer of judgment could render a plaintiff’s claim moot.
This blog was also published to TimCoffieldAttorney.com.
In Falk v. Brennan, 414 U.S. 190 (1973), the Supreme Court held that an entity is an “employer” under the Fair Labor Standards Act when it exercises substantial control over the terms and conditions of the work of the employees at issue.
The Fair Labor Standards Act generally requires a covered “employer” to pay its covered nonexempt employees minimum wages for each hour worked and overtime wages for all hours worked in excess of 40 hours per workweek. 29 U.S.C. §§ 206(a) & 207(a). The FLSA defines “employer” as “includ[ing] any person acting directly or indirectly in the interest of an employer in relation to an employee[.]” 29 U.S.C. § 203(d). With some exceptions, the FLSA generally defines “employee” as “any individual employed by an employer.” 29 U.S.C. § 203(e)(1). The FLSA defines “employ” as including “to suffer or permit to work.” 29 U.S.C. § 203(g).
The FLSA also provides that for an employer to be covered under the Act’s dollar-volume “enterprise” coverage provision, the employer must receive “annual gross volume of sales made or business done  not less than $500,000[.]” 29 U.S.C. § 203(s)(1)(A)(ii).
D&F operated a property management company in Virginia. It rendered management services for the owners of several apartment complexes. Under its contracts with the apartment owners, D&F agreed to perform, on behalf of each owner and under his “nominal” supervision, “virtually all management functions that are ordinarily required for the proper functioning of an apartment complex.” 414 U.S. at 192. Those functions included advertising the apartments; signing, renewing, and canceling leases; collecting rents; instituting and settling all legal proceedings for eviction, possession of the premises, and unpaid rent; making necessary repairs and alterations; negotiating contracts for essential utilities and other services; purchasing supplies; paying bills; preparing operating budgets for the property owners’ review and approval; submitting periodic reports to the owners; and “hiring and supervising all employees required for the operation and maintenance of the buildings and grounds.” Id. at n4.
As compensation, D&F received a fixed percentage of the gross rents collected from each project. D&F deposited the rents it collected in local bank accounts. From these accounts it paid all expenses incurred in operating and maintaining the buildings. After deducting its compensation, as well as other expenses, D&F periodically transmitted payments to the various apartment owners. If disbursements for any apartment complex exceeded the gross rental receipts, the owner was required to reimburse D&F. 414 U.S. at 192-93. D&F collected about $8 million dollars per year in rents for all the buildings it managed. Id. at n6. However, its gross commissions received on those rentals were less than $500,000 per year. Id. at n10.
The Secretary of Labor filed suit against D&F on behalf of the maintenance workers, alleging that D&F violated the minimum wage, overtime, and recordkeeping requirements of the FLSA with respect to those workers. Id. Significantly, these employees worked under the supervision of D&F and were paid from the rents received at the apartment complexes where they worked. Under the contracts between the apartment owners and D&F, the maintenance workers were considered to be “employees of the project owners.” Id.
A central question for the Court was whether the maintenance workers were also employees of D&F, such that D&F was responsible for complying with the FLSA’s minimum wage, overtime, and recordkeeping requirements with respect to those workers.
A secondary question was which figure should be considered in determining whether D&F met the $500,000 threshold for enterprise coverage: D&F’s gross rentals collected ($8M annually), or D&F’s gross commissions on those rentals (less than $500,000).
The Court held that in addition to the apartment owners, D&F was also an FLSA “employer” of the maintenance workers — even though the owners and D&F had agreed that the workers were employees only of the owners. The Court reached this decision by interpreting the operative provisions of the FLSA as speaking to the extent of control a potential “employer” exercises over a worker.
First, the Court observed that Section 203(d) of the FLSA defines “employer” as ‘any person acting directly or indirectly in the interest of an employer in relation to an employee.’ 29 U.S.C. § 203(d). It further noted that Section 3(e) defines ‘employee’ to include ‘any individual employed by an employer.’ 29 U.S.C. s 203(e). Significantly, the Court interpreted these two provisions as providing an “expansive” definition of “employer” — meaning that whether an entity was an FLSA employer, with the attendant minimum wage, overtime, and recordkeeping responsibilities, could not be controlled by an agreement between entities that only one of them would be the “employer.”
The Court further indicated that the relevant inquiry, in answering the “employer” question, was whether the potential employer had “substantial control of the terms and conditions of the work” the employees performed. Id. at 195. D&F, for example, appears to have had supervisory powers with respect to the maintenance workers at the buildings it managed. See id. at 193 (“These employees work under the supervision of D&F”). The Court therefore determined that “in view of the expansiveness of [the FLSA’s] definition of ‘employer’ and the extent of D&F’s managerial responsibilities at each of the buildings, which gave it substantial control of the terms and conditions of the work of these employees,” D&F was pursuant to the FLSA an ‘employer’ of the maintenance workers Id.
With respect to the dollar-volume limitation question, the Court observed that D&F “sells” only professional management services, and therefore the gross rentals it collected as part of rendering those services to building owners did not represent sales attributable to D&F. Id. at 197-201. Based on this reasoning, the Court concluded D&F’s commissions were the relevant measure of its gross sales made or business done for purposes of the dollar-volume limitation in Section 203(s)(1). Thus, even though D&F was an “employer” under the the terms of the FLSA, and an “enterprise” under Section 203(r), the FLSA did not apply to D&F because its gross sales were below the Section 203(s)(1) dollar-volume threshold. Id. at 201.
In sum, Falk v. Brennan held that an entity is an “employer” under the FLSA when it exercises substantial control over the terms and conditions of the work of employees at issue. This decision later became relevant to the Department of Labor’s development of regulations guiding the analysis of FLSA “joint employment” situations. In those situations, where more than one entity benefits from the work of employees, the extent to which each entity exercises control over the terms and conditions of the workers’ employment is an important consideration in determining the entities’ respective or joint responsibilities under the FLSA. For the DOL’s analysis of its most recent changes to the rule (29 C.F.R. § 791) regarding joint employment, effective March 2020, go here.
This blog was also published to TimCoffieldAttorney.com.
In Christensen v. Harris County, 529 U.S. 576 (2000), the Supreme Court held that the Fair Labor Standards Act does not prohibit public employers from compelling employees to use compensatory time.
The Fair Labor Standards Act allows public employers (including states and their political subdivisions) to compensate employees for overtime work by granting them compensatory time instead of paying them a cash overtime wage. 29 U.S.C. § 207(o). Compensatory time is paid time off. To comply with this part of the FLSA, the public employer must provide the compensatory time at a rate not less than one and one-half hours for each hour of overtime worked. Id. Compensatory time can accumulate, like vacation time. Importantly, if employees do not use their accumulated compensatory time, under certain circumstances the FLSA requires the public employer to pay the employees cash compensation. 29 U.S.C. §§ 207(o)(3)-(4).
Employees in Harris County accumulated a great volume of unused compensatory time. This caused Harris County to worry that a budget crisis would result if it had to pay its employees for their accrued unused compensatory time. In an effort to avoid that situation, the county adopted a policy requiring its employees to schedule time off. The county’s reasoning was that requiring time off would reduce the amount of accrued compensatory time among its workers, thereby reducing the likelihood of a budget crisis from having to pay for unused compensatory time.
Ed Christensen was a Harris County deputy sheriff. He and a group of fellow deputy sheriffs sued the county, claiming the policy of requiring employees to use their compensatory time violated the FLSA. Christensen argued that the FLSA does not permit an employer to compel an employee to use compensatory time in the absence of an agreement allowing the employer to do so. The District Court ruled for Christensen and entered a declaratory judgment that the county’s policy violated the FLSA. The Fifth Circuit reversed. It held that the FLSA did not address the issue of compelling the use of compensatory time and therefore did not prohibit the county from implementing its policy.
The Court’s Decision
The Supreme Court affirmed, holding that neither the text of the FLSA nor its implementing regulations prohibits a public employer from compelling its employees to use their compensatory time.
First, the Court rejected Christensen’s argument that § 207(o)(5) of the FLSA implicitly prohibits compelled use of compensatory time in the absence of an agreement. That section provides that an employer must grant an employee’s request to use her compensatory time unless doing so would unduly disrupt the employer’s operations. 29 U.S.C. § 207(o)(5). Citing Raleigh & Gaston R. Co. v. Reid, 13 Wall. 269, 270 (1872) for the proposition that when a statute limits a thing to be done in a particular mode, it implicitly disallows any other mode, Christensen argued that because § 207(o)(5) allowed only an employee to require the use of compensatory time, that section implicitly prohibited an employer from requiring the use of compensatory time. Id. at 583-84. The Court disagreed with that conclusion. Instead, it found that the only “negative inference” to be drawn from § 207(o)(5) was that an employer may not deny a request for any reason other than that provided in § 207(o)(5). Id. Thus, the section did not prohibit employers from compelling the use of compensatory time.
The Court went on to explain that the purpose of § 207(o)(5) was to ensure that an employee receive “some timely benefit for overtime work.” Id. at 584. The FLSA’s nearby provisions reflect a similar concern. For example, § 207(o)(3)(A) provides that workers may not accrue more than 240 or 480 hours of compensatory time, depending upon the nature of the job. This provision “helps guarantee that employees only accrue amounts of compensatory time that they can reasonably use.” Christensen at 584. Similarly, the Court observed that § 207(o)(2)(B) conditions an employer’s ability to provide compensatory time (in lieu of paying cash overtime wages) upon the employee not accruing compensatory time in excess of the § 207(o)(3)(A) limits. Thus, these provisions, like § 207(o)(5), reflect a legislative concern that employees receive “some timely benefit in exchange for overtime work.” Christensen at 584.
The Court therefore concluded that the best reading of the FLSA is that it ensures liquidation of compensatory time. The law places restrictions on an employer’s ability to prohibit employees from using their compensatory time. But it says nothing about restricting an employer’s efforts to require employees to use the time. Id. at 585. Because the FLSA text is silent on this issue and because the county’s policy was compatible with § 207(o)(5), the Court held that Christensen could not, as § 216(b) of the FLSA requires, prove that the county violated the FLSA’s overtime provisions.
The Court further noted that two other features of the FLSA supported its reading that the FLSA did not prohibit employers from compelling the use of compensatory time. First, the FLSA allows employers to decrease the number of hours that employees work. Id. at 585 (citing Barrentine v. Arkansas—Best Freight System, Inc., 450 U.S. 728, 739 (1981) (“[T]he FLSA was designed … to ensure that each employee covered by the Act … would be protected from the evil of overwork …”). And second, the FLSA expressly allows employers to cash out accumulated compensatory time by paying the employee her regular hourly wage for each hour accrued. Id. at 585 (citing 29 U.S.C. § 207(o)(3)(B) & 29 CFR § 553.27(a)(1999). Thus, the FLSA allows an employer to require an employee to take time off work, and to use the money it would have paid in wages to cash out accrued compensatory time. Id. at 585. The Court concluded that Harris County’s policy of compelling the use of compensatory time “merely involves doing both of these steps at once.” Id. at 586.
Christensen also argued, unsuccessfully, that employers were prohibited from compelling the use of compensatory time pursuant a Department of Labor opinion letter. In that letter, the DOL concluded that an employer may compel the use of compensatory time only if the employee has agreed in advance to such a practice. Id. at 586-87. The Court observed that the opinion letter was not entitled to deference under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), because interpretations contained in opinion letters — similar to policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law — do not warrant Chevron deference. While “persuasive” interpretations in opinion letters are “entitled to respect” under Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944) the Court concluded DOL’s interpretation was not persuasive. Id. at 587.
While Chevron deference does apply to an agency interpretation contained in a regulation, the regulation at issue, 29 CFR § 553.23(a)(2), provided only that “[t]he agreement or understanding [between the employer and employee] may include other provisions governing the preservation, use, or cashing out of compensatory time so long as these provisions are consistent with [§ 207(o)].” Id.; Christensen at 587-88. The Court concluded that nothing in 29 CFR § 553.23(a)(2) “even arguably” requires that an employer’s compelled use policy must be included in an agreement. Id. 588. Thus, Chevron deference did not apply. Lastly, deference to an agency’s interpretation of its regulation is warranted under Auer v. Robbins, 519 U.S. 452, 461 (1997), only when the regulation’s language is ambiguous. The Court held that the DOL’s regulation was not ambiguous, and therefore the DOL’s interpretation of that regulation was not entitled to Auer deference. Id. at 588.
In sum, Christensen held that the FLSA does not prohibit public employers from compelling their employees to use their accrued compensatory time. While this issue is not specifically addressed in the text of the FLSA, the law does not explicitly prohibit this practice, and the conclusion that public employers may compel the use of compensatory time is consistent with other aspects of the FLSA that allow an employer to require employees to take time off from work and to use the money it would have paid in wages to cash out accrued compensatory time.
This blog was also published to TimCoffieldAttorney.com.
In Kasten v. Saint-Gobain Performance Plastics Corp., 563 U.S. 1 (2011), the Supreme Court held that the anti-retaliation provision of the Fair Labor Standards Act protects employees who make oral (as well as written) complaints that their employer violated the FLSA.
Kasten worked for Saint-Gobain Performance Plastics. He complained orally to his superiors that the company located its timeclocks between the area where Kasten and his co-workers put on (and removed) their work-related protective gear and the area where they carried out their job duties. This location, Kasten complained, prevented workers from receiving credit for the time they spent putting on and taking off their work clothes — contrary to the requirements of the FLSA. Kasten complained only orally and did not make a written complaint. Saint-Gobain fired him. Id. at 5-6.
Kasten then sued his former employer, alleging that Saint-Gobain violated the FLSA’s anti-retaliation provision by terminating him for complaining orally about the legality of the location of the timeclocks. The trial court granted summary judgment for the employer, holding that the FLSA’s anti-retaliation provision covered only written complaints and did not cover oral complaints. The Seventh Circuit affirmed and Kasten appeals.
The Court’s Decision
The FLSA’s anti-retaliation provision makes it unlawful for employers “to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to [the FLSA], or has testified or is about to testify in such proceeding, or has served or is about to serve on an industry committee.” 29 U.S.C. § 215(a)(3) (emphasis added).
The Court held that the scope of the statutory term “filed any complaint” includes oral, as well as written, complaints — and therefore the FLSA prohibits retaliation against employees who complain orally about violations of the wage and hour law.
As an initial matter, the Court cited its decision in Dolan v. Postal Service, 546 U.S. 481, 486 (2013) for the principle that proper interpretation “depends upon reading the whole statutory text, considering the [statute’s] purpose and context …, and consulting any precedents or authorities that inform the analysis.” The Court further explained that the text at issue — “filed any complaint” — taken alone, could not provide a conclusive answer as to whether it included oral complaints. Some dictionary definitions of “filed” contemplated a writing; others permitted using “file” in conjunction with oral material.
The Court noted that in addition to dictionary definitions, state statutes and federal regulations sometimes contemplate oral filings, and an analysis of contemporaneous judicial usage shows that when the FLSA was passed in 1938 oral filings were a known phenomenon. And even if “filed,” taken in isolation, might suggest a narrow interpretation limited to writings, the remainder of the phrase — “any complaint” — suggested a broad interpretation that would include an oral complaint. Thus, the Court concluded that the phrase “filed any complaint,” taken by itself, was not clear. Id. at 5-11.
Nor could the FLSA’s other references to “filed” resolve the question of whether oral complaints were included. Some parts of the FLSA involve filed material that is almost always written; others specifically require a writing, and others leave the oral/written question unresolved. Because the text at issue, taken alone, might, or might not, encompass oral complaints, the Court had to look to other methods of interpretation. Id. at 5-11.
The Court observed that several “functional considerations” indicated that Congress intended the anti-retaliation provision to cover both oral and written complaints. Id. at 11. First, looking to the FLSA’s purposes, the Court noted that a narrow interpretation excluding oral complaints would undermine the law’s basic objective: to prohibit “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers,” 29 U.S.C. § 202(a). The Court had previously observed that the FLSA relies for enforcement of its substantive standards on “information and complaints received from employees,” Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288, 292 (1960), and its anti-retaliation provision makes the enforcement scheme effective by preventing “fear of economic retaliation” from inducing workers “quietly to accept substandard conditions[.]” Ibid. With that purpose in mind, the Court noted that limiting the provision’s scope to written complaints could have the undesirable result of preventing Government agencies from using hotlines, interviews, and other oral methods to receive complaints. 563 U.S. at 11-14.
Second, the Court determined that in light of the delegation of enforcement powers to federal agencies, the agencies’ views about the meaning of the phrase “filed any complaint” should be given weight. The Secretary of Labor, charged with enforcing the FLSA, has long interpreted “filed any complaint” as covering both oral and written complaints. Similarly, the Equal Employment Opportunity Commission, charged with enforcing other employment laws, has a similar view that oral complaints are protected complaints. The Court held that these views were reasonable and consistent with the FLSA. And the length of time the Secretary of Labor held its position suggested it was the result of careful consideration, not “post hoc rationalizatio[n].” Id. at 14-16 (quoting Motor Vehicle Mfrs. Assn. of United States, Inc. v. State Farm Mut. Automobile Ins. Co., 463 U.S. 29, 50 (1983)).
Finally, Saint-Gobain made an alternative argument that the anti-retaliation provision only covered official complaints to government agencies or in court, and therefore did not protect internal complaints (written or oral) to employers. The Court declined to address this argument, however, because it was not properly raised in the certiorari briefs and did not need to be addressed to resolve the oral/written complaint issue. Id. at 17.
Scalia dissented on that point, arguing that the language of anti-retaliation provision, in light of the FLSA’s other references to “filing,” only protected official grievances filed with a court or an agency, not oral complaints — or even formal, written complaints — from an employee to an employer. Id. at 18-26.
Kasten clarified that an oral complaint about an employer’s FLSA violation is protected activity under the FLSA. The law therefore prohibits employers from retaliating against employees who complaint about violations of the federal wage and hour law, regardless of whether the employee complains orally or in writing.
This blog was also posted to TimCoffieldAttorney.com.
In Integrity Staffing Sols., Inc. v. Busk, 574 U.S. 27 (2014), the Supreme Court held that under the Fair Labor Standards Act, time warehouse workers spent waiting for and undergoing security screenings was not compensable time. More broadly, the decision clarified the proper analysis of “principal activities” verses preliminary and postliminary activities. Principal activities are compensable under the FLSA. Purely preliminary or postliminary activities (like a commute) are not, but some activities before or after a shift might still be compensable principal activities. The term “principal activities” includes all activities which are an “integral and indispensable part of the principal activities.” An activity is “integral and indispensable to the principal activities” if it is an “intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.” 574 U.S at 33.
Busk worked for Integrity Staffing Solutions as an hourly warehouse worker. Integrity Staffing provided warehouse staffing to Amazon. Integrity Staffing’s warehouse workers retrieved and packaged products for delivery to Amazon.com customers. Integrity Staffing required these employees to undergo a security screening before leaving the warehouse each day, but did not pay them for the time (roughly 25 minutes each day) they spent waiting for and undergoing the screening. Busk and his co-workers filed suit under the Fair Labor Standards Act. They asserted, inter alia, they were entitled to compensation for the time they spent waiting to undergo and undergoing the screenings. They also argued the screenings were compensable because the company could have reduced the time involved to a negligible de minimis amount by adding screeners or staggering shifts, and because the screenings were conducted to prevent employee theft and, thus, for the sole benefit of the employers and their customers.
The District Court dismissed this claim. It held the screenings were not integral and indispensable to the employees’ principal activities but were instead postliminary and noncompensable under the Portal–to–Portal Act. The Ninth Circuit reversed that decision in part, holding that the postshift screening would be compensable as integral and indispensable to the employees’ principal activities if the screenings were necessary to the principal work and performed for the employer’s benefit. Integrity Staffing appealed.
The Court’s Decision
The Supreme Court reversed. It held the time the warehouse workers spent waiting to undergo and undergoing security screenings was not compensable under the FLSA.
First, the Court explained Congress passed the Portal–to–Portal Act in response to the “unexpected liabilities” created by a broad judicial interpretation of the FLSA’s undefined terms “work” and “workweek.” See 29 U.S.C. § 251(a). The Portal–to–Portal Act therefore exempted employers from FLSA liability for claims based on “activities which are preliminary to or postliminary to” the principal activities that an employee is employed to perform. 29 U.S.C. § 254(a)(2).
The Court had long held that the term “principal activities” includes all activities which are an “integral and indispensable part of the principal activities.” Steiner v. Mitchell, 350 U.S. 247, 252–253 (1956). In Integrity Staffing, the Court further explained that an activity is “integral and indispensable to the principal activities” if it is an “intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.” 574 U.S at 33.
For example, in Steiner, the Court held the time battery-plant employees spent showering and changing clothes was compensable because the chemicals in the plant were “toxic to human beings” and the employer conceded that “the clothes-changing and showering activities of the employees [were] indispensable to the performance of their productive work and integrally related thereto.” Id. at 34 (quoting Steiner at 249, 251). Similarly, in Mitchell v. King Packing Co., 350 U.S. 260, 262 (1956), the Court held compensable the time meatpacker employees spent sharpening their knives because dull knives would “slow down production” on the assembly line, “affect the appearance of the meat as well as the quality of the hides,” “cause waste,” and lead to “accidents.” 574 U.S. at 34 (quoting Mitchell at 262). By contrast, in IBP, Inc. v. Alvarez, 546 U.S. 21 (2005), the Court held noncompensable the time poultry-plant employees spent waiting to don protective gear because such waiting was “two steps removed from the productive activity on the assembly line.” 574 U.S. at 34 (quoting IBP at 42). The Court further noted Department of Labor regulations were consistent with this approach. See 29 CFR § 790.8(b) (“The term ‘principal activities’ includes all activities which are an integral part of a principal activity.”); 29 CFR § 790.8(c) (“Among the activities included as an integral part of a principal activity are those closely related activities which are indispensable to its performance.”); 29 CFR 790.7(g) (examples of preliminary and postliminary activities). 574 U.S. at 30-35.
The Court then held the security screenings at issue in Integrity Staffing were noncompensable postliminary activities. First, the Court determined the screenings were not the principal activities the employees were employed to perform. The workers were not employed to undergo security screenings. They were employed to retrieve goods from the warehouse and package them for shipment. Nor were the security screenings “integral and indispensable” to those activities. In support of this conclusion, the Court cited a 1951 Department of Labor opinion letter, which found noncompensable under the Portal–to–Portal Act both a preshift screening conducted for employee safety and a postshift search conducted to prevent employee theft.
The employees in Integrity Staffing, like the Ninth Circuit, essentially took the position that if an activity was required by an employer it was compensable under the FLSA. The Court disagreed with this approach, noting that it would sweep into “principal activities” the very activities that the Portal–to–Portal Act was designed to exclude from compensation (like the time waiting to don protective gear held noncompensable in IBP). Finally, the Court rejected the employees’ argument that the screenings were compensable because Integrity Staffing could have reduced the time to a de minimis amount. Whether an employer could conceivably reduce the time employees spent on a preliminary or postliminary activity did not change the nature of the activity or its relationship to the principal activities that an employee is employed to perform. Therefore, that concern was properly addressed through bargaining, rather than in a suit under the FLSA. 574 U.S. at 35-37.
In sum, Integrity Staffing clarified the analysis of “principal activities” verses preliminary and postliminary activities. Principal activities are compensable. The term “principal activities” includes all activities which are an “integral and indispensable part of the principal activities.” An activity is “integral and indispensable to the principal activities” if it is an “intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.” 574 U.S at 33. More specifically, Integrity Staffing stands for the proposition that time spent waiting for and undergoing security screenings was not a principal activity and therefore not compensable under the Fair Labor Standards Act.
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The Fair Labor Standards Act requires employers to pay minimum wages and overtime wages based on time worked by covered employees. Oftentimes, an employee has to spend time waiting to put equipment, walking to a worksite, or doing other preshift tasks necessary to perform her job. Is the employee entitled to compensation under the FLSA for that time? Trial courts routinely address various iterations of this question. In IBP, Inc. v. Alvarez, 546 U.S. 21 (2005), the Supreme Court answered one of them. It held that the FLSA requires employers to pay employees for time spent walking to and from stations that distributed employer-mandated safety equipment.
Alvarez involved two separate but similar cases. Employees of IBP filed suit under the FLSA seeking compensation for time they spent putting on and taking off (“donning and doffing”) required protective gear and walking between the locker rooms and the production floor of IBP’s meat processing facility. The trial court decided these activities were compensable. The Ninth Circuit affirmed. IBP appealed.
In the companion case, employees of Barber Foods sought compensation under the FLSA for time they spent donning and doffing required protective gear at Barber’s poultry processing plant, as well as time they spent walking and waiting associated with picking up and returning the gear. The trial court found in favor of Barber on the walking and waiting claims, finding those activities were not compensable. The First Circuit affirmed, finding that the walking and waiting times were preliminary and postliminary activities excluded from FLSA coverage by §§4(a)(1) and (2) of the Portal-to-Portal Act of 1947. The employees appealed.
The U.S. Supreme Court consolidated the cases to address the question of whether the FLSA requires employers to pay employees for time spent walking to and from stations that distributed required safety equipment.
In Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 691–692 (1946), the Supreme Court held that a “workweek” under the FLSA included the time employees spent walking from time clocks near a factory entrance to their workstations. In response to that decision, Congress passed the Portal-to-Portal Act. The Portal-to-Portal Act excepted from FLSA coverage walking on the employer’s premises to and from the location of the employee’s “principal activity or activities,” §4(a)(1), and activities that are “preliminary or postliminary” to “said principal activity or activities,” §4(a)(2).
The Department of Labor subsequently issued regulations which interpreted the Portal-to-Portal Act as not affecting the computation of hours within a “workday,” 29 CFR §790.6(a), which includes “the period between the commencement and completion” of the “principal activity or activities,” §790.6(b).
In a subsequent Supreme Court decision, Steiner v. Mitchell, 350 U.S. 247, 256 (1956), the Court explained that the “term ‘principal activity or activities’ … embraces all activities which are ‘an integral and indispensable part of the principal activities,’ ” including the donning and doffing of specialized protective gear “before or after the regular work shift, on or off the production line.”
The Court’s Decision
In the 2005 Alvarez decision, the Court held that an employee putting on employer-required safety equipment qualified as a “principal activity” under the FLSA. The continuous “workday” for purposes of calculating compensable time began when employees started that activity. Therefore, compensable time included the subsequent time employees spent walking to and from the worksite after donning their protective gear, and time spent waiting to doff the gear. The Court further held that the previous time spent waiting to put on the safety equipment, however, was not included in the workday, and not compensable time, because it was a “preliminary” activity under the Portal-to-Portal Act. 546 U.S. at 28-38.
Time spent walking to and from the worksite after donning and before doffing protective gear is compensable time
First, the Alvarez held that the time the IBP employees spent walking after changing into protective gear from the locker room to the production floor was compensable under the FLSA. 546 U.S. at 33-37.
The Court explained that Section 4(a)(1) of the Portal-to-Portal Act text does not exclude this time from the FLSA. IBP had argued that, because donning is not the “principal activity” that starts the workday, walking occurring immediately after donning and immediately before doffing is not compensable. That argument, the Court pointed out, was foreclosed by its decision in Steiner, which clarified that §4 does not remove activities that are “integral and indispensable” to “principal activities” from FLSA coverage because those activities are themselves “principal activities.” 350 U. S. at 253. The Court went on to explain that that these identical terms cannot mean different things within the same law (§4(a)(2) and in §4(a)(1)). According to the normal rules of statutory interpretation, identical words used in different parts of the same statute are generally presumed to have the same meaning. Further, with respect to §4(a)(2)’s reference to “said principal activity or activities,” “said” is an explicit reference to the use of the identical term in §4(a)(1). Alvarez, 546 U.S. at 33-35.
The Court also rejected IBP’s argument that Congress’s repudiation of the Anderson decision (by passing the Portal-to-Portal Act) reflected a legislative purpose to exclude the walking time at issue from the FLSA. The Court found this argument unpersuasive because it observed the time at issue in Alvarez, which occurred after the workday begins (by donning) and before it ends (by doffing), was more comparable to time spent walking between two different positions on an assembly line than to the walking in Anderson, which occurred before the workday began. Id. at 34-35.
The Court also pointed out the DOL regulations supported the compensable nature of the IBP employees’ walking time. For example, 29 CFR §790.6 did not strictly define the workday’s limits as the period from “whistle to whistle.” And 29 CFR §790.7(g), n. 49, which provides that postdonning walking time is not “necessarily” excluded from §4(a)(1) of the Portal-to-Portal Act, does not mean that such time is always excluded. Therefore, the Court determined those regulations could not overcome clear statements elsewhere in the regulations that supported the compensable nature of postdonning walking time. 546 U.S. at 35-37.
Time spent waiting to doff is compensable time
With respect to the Barber Foods employees, the Court similarly held that because donning and doffing gear that is “integral and indispensable” to employees’ work is a “principal activity” under the FLSA, the continuous workday rule required that the time the Barber Foods employees spent walking to and from the production floor after donning and before doffing, as well as the time spent waiting to doff at the end of the day, are not affected by the Portal-to-Portal Act. Therefore, this time was compensable under the FLSA. 546 U.S. at 37-39.
Time spent waiting to don is not compensable time
Finally, however, the Court held that time spent waiting to don protective gear before work is not compensable time. The Court’s reasoned that §4(a)(2) of the Portal-to-Portal Act excluded from the FLSA the time employees spend waiting to don the first piece of gear that marks the beginning of the continuous workday. The Court determined that this qualifies as a “preliminary” activity because it was “two steps removed” from the productive activity on the assembly line. While certain preshift activities were necessary for employees to engage in their principal activities, the Court found that this does not mean that those preshift activities are “integral and indispensable” to a “principal activity” under Steiner. The Court expressed a concern that it could not conclude that Barber employees predonning waiting time was a compensable “principle activity” without also reaching the necessary (but untenable) conclusion that the walking time in Anderson would also be a “principal activity” unaffected by the Portal-to-Portal Act. The Court observed that 29 CFR §790.7(h) (differentiating between being “engaged to wait,” which is compensable, and “wait[ing] to be engaged, which is not compensable) did not support a finding that time spent waiting to don protective gear was compensable. 546 U.S. at 39-42.
In short, Alvarez held that an employee putting on employer-required safety equipment qualified as a “principal activity” under the FLSA. The continuous “workday” for purposes of calculating compensable time began when employees started that activity.
This determination, that the workday begins with donning, has two important implications. First, FLSA compensable time included the subsequent time employees spent walking to and from the worksite after donning their protective gear, and time waiting to doff their gear. Second, however, the previous time employees spent waiting to don the protective equipment was not included in the workday, and not compensable time, because it was a “preliminary” activity under the Portal-to-Portal Act.
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Law of Joint Employment
A worker’s joint employers are jointly and severally liable for any violations of the Fair Labor Standards Act. Salinas v. Commercial Interiors, Inc., 848 F.3d 125, 134 (4th Cir. 2017). This means that for purposes of the FLSA’s requirements that an employer pay minimum wages and overtime wages to non-exempt employees, a worker may have more “employers” than just the company who issues her paychecks. In short, if more than one entity has the ability to help determine the conditions of a workers’ employment, more than one entity may be liable if the worker is not paid the minimum wages or overtime compensation required by federal law.
DOL Joint Employment Regulations
The Department of Labor regulation implementing the FLSA distinguishes “separate and distinct employment” from “joint employment.” 29 C.F.R. § 791.2(a). “Separate employment” exists when “all the relevant facts establish that two or more employers are acting entirely independently of each other and are completely disassociated with respect to the” individual’s employment. Id. By contrast, “joint employment” exists when “employment by one employer is not completely disassociated from employment by the other employer(s).” Id. When two or more entities are found to jointly employ a particular worker, “all of the employee’s work for all of the joint employers during the workweek is considered as one employment for purposes of the [FLSA].” Id. (emphasis added). Thus, for example, all hours worked by the employee on behalf of each joint employer are counted together to determine whether the employee is entitled to overtime pay under the FLSA. Id; Hall v. DIRECTV, LLC, 846 F.3d 757, 766 (4th Cir. 2017).
Fourth Circuit Factors
In Salinas, the Fourth Circuit observed that the joint employment regulations speak to “one fundamental question: whether two or more persons or entities are ‘not completely disassociated’ with respect to a worker such that the persons or entities share, agree to allocate responsibility for, or otherwise codetermine — formally or informally, directly or indirectly — the essential terms and conditions of the worker’s employment.” 848 F.3d at 141 (quoting 29 C.F.R. § 791.2(a) and citing In re Enter. Rent-A-Car Wage & Hour Employment Practices Litig., 683 F.3d 462, 468 (3d Cir. 2012) (“[W]here two or more employers … share or co-determine those matters governing essential terms and conditions of employment — they constitute ‘joint employers’ under the FLSA.” (internal quotation marks omitted)).
With these principles in mind, courts in the Fourth Circuit consider six factors in determining whether entities constitute joint employers:
(1) whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to direct, control, or supervise the worker, whether by direct or indirect means;
(2) whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to, directly or indirectly, hire or fire the worker or modify the terms or conditions of the worker’s employment;
(3) the degree of permanency and duration of the relationship between the putative joint employers;
(4) whether, through shared management or a direct or indirect ownership interest, one putative joint employer controls, is controlled by, or is under common control with the other putative joint employer;
(5) whether the work is performed on a premises owned or controlled by one or more of the putative joint employers, independently or in connection with one another; and
(6) whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate responsibility over functions ordinarily carried out by an employer, such as handling payroll, providing workers’ compensation insurance, paying payroll taxes, or providing the facilities, equipment, tools, or materials necessary to complete the work. Id. at 141.
Salinas at 141.
The Fourth Circuit in Salinas observed that these six factors may not constitute an exhaustive list of all potentially relevant considerations. Id. at 142. “To the extent that facts not captured by these factors speak to the fundamental threshold question that must be resolved in every joint employment case — whether a purported joint employer shares or codetermines the essential terms and conditions of a worker’s employment — courts must consider those facts as well.” Id.
As these factors illustrate, the Fourth Circuit’s joint employer test turns on whether the entities in question codetermine the essential conditions of a worker’s employment. Salinas at 143. Thus, the existence of a general contractor-subcontractor relationship “has no bearing on whether entities … constitute joint employers for purposes of the FLSA.” Id. 143–44.
Application of Salinas Factors
For example, in Salinas, the Fourth Circuit held that a drywall installation subcontractor and general contractor were joint employers under the FLSA because, inter alia, the subcontractor provided staffing for the contractor based on the contractor’s needs; the employees performed the work for the contractor’s benefit; the contractor supervised the employees’ progress daily and provided feedback; and the employees wore uniforms bearing the contractor’s logo. 848 F.3d at 146.
For another Fourth Circuit case on the joint employer issue, see Hall v. DIRECTV, LLC, 846 F.3d 757, 762 (4th Cir. 2017). In that case, the plaintiff technicians sufficiently alleged DIRECTV as a joint employer, even though the technicians were nominally employed by a subcontractor. The court held that DIRECTV could be liable as a joint employer along with the subcontractor because, inter alia, the technicians were required to “obtain their work schedules and job assignments through DIRECTV’s centralized system,” to check in with DIRECTV after completing assigned jobs, and to “wear DIRECTV uniforms…when performing work for the company.” Similarly, in Young v. Act Fast Delivery of W. Virginia, Inc., 2018 WL 279996, *8 (S.D. W.Va. Jan. 3, 2018), the court held that under Salinas, a pharmaceutical delivery company was a joint employer of the plaintiff couriers, even though the couriers were nominally employed by a third party subcontractor.
As the Fourth Circuit emphasized in Salinas, “Separate employment exists when … ‘two or more employers are acting entirely independently of each other and are completely disassociated with respect to’ the individual’s employment.” 848 F.3d at 133-34 (emphasis in original) (quoting 29 C.F.R. § 791.2(a)). “By contrast, joint employment exists when ‘the facts establish … that employment by one employer is not completely disassociated from employment by the other employer.’” Salinas at 134 (emphasis in original).
Therefore, under the Fourth Circuit’s framework, the “fundamental question” guiding the joint employment analysis is “whether two or more persons or entities are ‘not completely disassociated’ with respect to a worker such that the persons or entities share, agree to allocate responsibility for, or otherwise codetermine — formally or informally, directly or indirectly — the essential terms and conditions of the worker’s employment.” Id. at 140. If the facts show that two related companies were not “completely disassociated” or “acting entirely independently” with respect to a worker’s employment, they may be joint employers. If the entities shared control over the conditions of employment, they may both be potentially jointly and severally liable for FLSA violations as joint employers.
McKennon v. Nashville Banner: Law of After-Acquired Evidence
What happens when an employer, having wrongfully terminated an employee (in violation of federal employment law), discovers in litigation that the employee did something that would have legitimately and lawfully lead to termination, had the employer known about it before wrongfully firing the employee? Does the employer still have to pay lost wages for the wrongful termination, or does this “after-acquired evidence” excuse the violation?
The Supreme Court addressed these questions in McKennon v. Nashville Banner Pub. Co., 513 U.S. 352 (1995). The Court rejected the argument that a legitimate reason for termination, discovered after an unlawful discharge, excuses the unlawful action or bars the employee from recovery. However, the Court also indicated that such after-acquired evidence may limit the employee’s ability to obtain reinstatement or recover all lost wages associated with the termination.
McKennon worked thirty years for Nashville Banner Publishing Company until she was terminated at age sixty-two. McKennon filed suit, alleging that her discharge violated the Age Discrimination in Employment Act of 1967 (ADEA). McKennon’s suit sought a variety of legal and equitable remedies available under the ADEA, including backpay. In her deposition, McKennon admitted that during her final year of employment she had copied and taken home several of the Banner’s confidential financial documents. 513 U.S. 354-56.
For the purposes of summary judgment, the Banner conceded that it had discriminated against McKennon because of her age. Id. The District Court, however, granted summary judgment for the company, holding that McKennon’s misconduct in taking the confidential documents was grounds for termination and that neither back pay nor any other remedy was available to her under the ADEA. The Court of Appeals affirmed on the same reasoning. McKennon appealed. Id. at 355-56.
The Court’s Decision
The Court reversed. It held that an employee who is fired in violation of federal employment law is not barred from all relief when, after her discharge, her employer discovers evidence of wrongdoing that would have led to her termination on lawful and legitimate grounds had the employer known of it. 513 U.S. 356-360.
After-Acquired Evidence Not a Complete Bar
First, the Court held that this kind of “after-acquired evidence” is not a complete bar to recovery. The Court reasoned that even if the employee engaged in misconduct that would have prompted a termination, the employer’s discrimination that actually prompted the discharge cannot be disregarded. The Court assessed the purposes of the ADEA’s remedial provisions, 29 U.S.C. § 626(b) and 29 U.S.C. § 216(b), which (like the remedial provisions of other employment laws) were designed both to compensate employees for injuries caused by unlawful discrimination and to deter employers from discriminating in the first place. The Court concluded that allowing after-acquired evidence to bar all relief would frustrate both of these important objectives. Therefore, the Court held that after-acquired evidence did not bar all relief for unlawful discrimination. Id. at 358-360.
Relevance to Crafting an Appropriate Remedy
Second, however, the Court observed that trial courts should take into account after-acquired evidence of an employee’s wrongdoing in determining the specific remedy for the employer’s discrimination. To hold otherwise, and bar any consideration of employee misbehavior in the relief analysis, would be to ignore the employer’s legitimate concerns about employee misconduct. The ADEA, like other employment laws, just prohibits discrimination. It does not limit employers from having legitimate rules and exercising appropriate lawful discretion in hiring, promoting, and firing employees. Therefore, the Court noted, employee wrongdoing is relevant in taking due account of such lawful prerogatives and the employer’s corresponding equities arising from the wrongdoing. Id. at 360-61.
General Rule: No Reinstatement or Front Pay
Third, the Court discussed how trial courts might balance these competing concerns — on one hand, the prohibition against unlawful discrimination, and on the other, the employer’s right to address legitimate employee misconduct in an appropriate manner. The Court decided that remedial relief in such cases should be addressed on a case-by-case basis. However, the Court stated that as a general rule, if the employer proves the employee engaged in misconduct that would have prompted a lawful termination had the employer known about it, neither reinstatement nor front pay is an appropriate remedy. Id. at 362. This is because “it would be both inequitable and pointless to order the reinstatement of someone the employer would have terminated, and will terminate, in any event and upon lawful grounds.” Id.
Possible Limitations on Back Pay
The Court indicated that the more difficult issue, in after-acquired evidence cases, is the proper measure of back pay. This is because even a guilty employer cannot be required to ignore information it learns about employee wrongdoing that would lead to a legitimate discharge, even if it is acquired during the course of a discrimination lawsuit and might have gone undiscovered in the absence of the discrimination that led to the lawsuit. Id. at 362. The Court stated that the “beginning point in formulating a remedy should therefore be calculation of backpay from the date of the unlawful discharge to the date the new information was discovered.” Id. In determining the appropriate relief, the court can consider extraordinary equitable circumstances that affect the legitimate interests of either party. But an “absolute rule barring any recovery of backpay, however, would undermine the [federal employment law’s] objective of forcing employers to consider and examine their motivations, and of penalizing them for employment decisions that spring from … discrimination.” Id. Thus, as a general rule, after-acquired evidence does not bar back pay, but it might limit the amount of back pay an employee can recover.
No Bar to General Compensatory, Punitive, or Liquidated Damages
It is also worth noting that McKennon did not state or suggest that compensatory damages for past or future emotional harm should be time-limited. The decision only addressed possible limitations on lost wages and reinstatement. Allowing full emotional distress damages even if the defendant prevails on an after-acquired evidence defense makes good sense in light of McKennon’s reasoning. This is because no legitimate business prerogative would be served by allowing a proven discriminator to avoid paying the full cost of the emotional damage caused by the discrimination. The same reasoning supports the conclusion that after-acquired evidence does not bar punitive damages or liquidated damages, in cases where the usual standards for awarding punitive or liquidated damages are met. Here is a link to EEOC’s guidance on this issue.
Employer’s Burden of Proof
Finally, the Court discussed the employer’s burden in attempting to prove an “after-acquired evidence” defense. When an employer seeks to use this defense, it must first establish that the wrongdoing was of “such severity that the employee in fact would have been terminated on those grounds alone had the employer known of it at the time of the discharge.” Id. at 362-63. The Court also expressed concern that, due to the possibility of uncovering after-acquired evidence, employers might routinely undertake extensive discovery into an employee’s background or job performance to resist employment discrimination claims. Id. at 363. However, the Court concluded the trial courts’ authority to award attorney’s fees under §§ 216(b) and 626(b) and to invoke the appropriate provisions of the Federal Rules of Civil Procedure would likely deter most abuses of the discovery rules. Id.
The Court in McKennon rejected the notion that a legitimate reason for termination, discovered after an unlawful discharge, excuses the unlawful action or bars the employee from recovery. However, such after-acquired evidence may limit the employee’s ability to obtain reinstatement or recover all lost wages associated with the termination. To use this defense, an employer must prove that the employee engaged in misconduct of such severity that the employee would have been terminated on those grounds alone had the employer learned of it during her employment. As a general rule, if the employer meets this burden, reinstatement is not an appropriate remedy and back pay may be limited.