Supreme Court Issues One and Prepares for a Second Major Decision Under the Fair Labor Standards Act
On April 16, 2013, in Genesis Healthcare Corp. v. Symczyk, the Supreme Court held that a putative FLSA collective action became moot when the lone plaintiff received a complete offer of judgment before other potential plaintiffs joined the action. (No. 11-1059, slip op.)
Laura Symczyk sued on behalf of herself and other employees alleging that her employer violated the FLSA by deducting 30 minutes of paid time for meal breaks even if the employees actually worked during those breaks. Before any other employees joined, the employer served a Rule 68 offer of judgment for the full amount of plaintiff's allegedly unpaid wages, plus "reasonable attorneys' fees, costs, and expenses." Though the plaintiff did not accept the offer of judgment, the district court granted a motion to dismiss for lack of subject matter jurisdiction because the employer's offer fully satisfied plaintiff's individual claim and thereby mooted the lawsuit.
The Third Circuit reversed, reasoning that the collective action was not moot because defendants could not "pick off" named plaintiffs with strategic Rule 68 offers before certification, as doing so would frustrate the goals of a collective action.
The Supreme Court majority, in a 5-4 opinion authored by Justice Thomas, declined to address whether the unaccepted Rule 68 offer for judgment fully satisfied the plaintiff's claim. Instead, relying on plaintiff's apparent concession that she retained no personal interest in the action, the majority held that the plaintiff had no personal interest in the collective action and, for that reason, could not represent putative, unnamed claimants. Moreover, the majority opined that "even if respondent were to secure a conditional certification ruling on remand, nothing in that ruling would preserve her suit from mootness." Thus, in the Court's opinion, a defendant may moot a putative collective action even after a motion for conditional certification is filed, briefed, and granted, so long as no additional class members have joined the suit.
As such, under appropriate circumstances employers may be able to dispose of an FLSA collective action where no putative class members have joined the suit through a strategic offer to settle individual claims by way of offering the named plaintiff or plaintiffs the full relief sought in the case.
The Supreme Court is poised to decide another significant wage and hour case, Sandifer v. U.S. Steel Corp., having accepted review on February 19, 2013 as to one question: What constitutes "changing clothes" within the meaning of section 203(o) of the FLSA?
Section 203(o) allows for the exclusion of "time spent in changing clothes" from hours worked at the beginning or end of the workday when excluded from work time by either the express terms or by custom and practice under a bona fide collective bargaining agreement. Employers in a wide-range of industries are anxiously waiting clearer guidance on this issue as many employers require employees to wear additional clothing or protective gear at work and have excluded clothes-changing time under their collective bargaining agreements.
Most circuits have held that anything worn by the employee constitutes clothing and thus may be excluded from compensable time under section 203(o). The Ninth Circuit, on the other hand, ruled that "donning and doffing" specialized protective gear was not "changing clothes" and thus was compensable. The United States Department of Labor issued an Administrator's Interpretation on June 16, 2010, opining that the section 203(o) "exemption does not extend to protective equipment worn by employees that is required by law, by the employer, or due to the nature of the job." The Supreme Court may weigh in on the level of deference afforded to the DOL's interpretation, which has changed three times since 2002.
Significantly, whether the time spent is compensable bears not only on the actual donning and doffing activity, but on when the work day begins. If the court concludes that changing into certain clothing is compensable, then the work day begins when that activity begins. Thus, walking to the work station and similar preliminary activities also become compensable, potentially resulting in significant additional wage liability for employers. Employee advocates urge the Court to find that changing into and out of personal protective equipment is beyond Congress' intention in using the phrase "changing clothes." U.S. Steel--and employers everywhere--are urging the Supreme Court to adopt the reasoning of the 7th Circuit (and others) to avoid trying to distinguish between clothing or gear considered "specialized," and thus compensable, and that which is "just" clothing.
Carole J. Bernick is a partner in the Portland office of Davis Wright Tremaine, and Jason E. Barsanti is a lawyer in the Chicago office of Meckler Bulger Tilson Marick & Pearson. Both lawyers represent management in labor and employment law matters.
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