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This article is part three of a three-part series concerning employer defense against class action certification of employment law claims.  Peter Mavrick is a Fort Lauderdale employment attorney, who also represents businesses in Miami and Palm Beach. The Mavrick Law Firm defends the interests of businesses and business owners in employment law disputes, including lawsuits demanding wages and damages from alleged employment discrimination and retaliation.

Certain employment law claim may seek class action certification under Rule 23 of the Federal Rules of Civil Procedure.  The federal Fair Labor Standards Act (FLSA) does not allow such class action claims for overtime or minimum wages, but instead has its own procedure called “collective actions.”  “The certification requirements for a Rule 23 class action are more demanding” than the collective action process under the FLSA.  Calderone v. Scott, 838 F.3d 1101 (11th Cir. 2016).  A plaintiff seeking to certify a class must first show that the case meets the prerequisites of Rule 23(a), namely:

(1) the class is so numerous that joinder of all members is impracticable;

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This article is part two of a three-part series discussing how employers may successfully challenge class certification of lawsuits seeking overtime and minimum wages.  The federal Fair Labor Standards Act (FLSA) sets forth a unique procedure of “collective actions,” instead of “class actions.”  A collective action requires cumbersome procedures to get putative plaintiffs to join the lawsuit and person seeking to join the case must file with the court a written consent to join the case.  29 U.S.C.A. § 216(b) (“No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought”).  Peter Mavrick is a Fort Lauderdale employment attorney and a Miami employment attorney who defends the interests of businesses and business owners in employment law disputes, including lawsuits demanding wages and damages from alleged employment discrimination and retaliation.

At the initial stage of an FLSA collective action, a court will consider whether to grant “conditional certification.”  Conditional certification is a legal decision that will allow a plaintiff’s lawyer to seek discovery of other possible plaintiffs, and invite potential plaintiffs to join the lawsuit.  This is a very important threshold legal decision, and strategically an employer will want to work to persuade the Judge to refuse conditional certification.  A court will grant conditional certification if a plaintiff demonstrates a reasonable basis to believe that: (1) there are other employees of the Defendant who desire to opt-in and (2) that these other employees are “‘similarly situated’ with respect to their job requirements and with regard to their pay provisions.” Dybach v. State of Fla. Dep’t of Corrs., 942 F.2d 1562 (11th Cir.1991); see Calderone v. Scott, 838 F.3d 1101 (11th Cir. 2016) (“To maintain an opt-in collective action under § 216(b), plaintiffs must demonstrate that they are ‘similarly situated”).  The employee-plaintiff has “the burden of demonstrating a reasonable basis for crediting [his] assertions that aggrieved individuals existed in the broad class that [he] proposed.”  Haynes v. Singer Co., Inc., 696 F.2d 884 (11th Cir.1983).  Opt-in plaintiffs “need show only that their positions are similar, not identical, to the positions held by the putative class members.” Hipp v. Liberty Nat’l Life Ins. Co., 252 F.3d 1208 (11th Cir. 2001).  While there is no bright line test in determining whether plaintiffs are sufficiently similar, the more legally significant differences that exist among the opt-in plaintiffs, the less likely it is that the court will determine that the group of employees is similarly situated.  Anderson v. Cagle’s, 488 F.3d 945 (11th Cir. 2007).

A plaintiff must also show that there are other employees who wish to opt-in to the suit before a collective action may be certified.  Dybach v. State of Fla. Dep’t of Corr., 942 F.2d 1562 (11th Cir.1991).  In making this showing, a plaintiff cannot rely on speculative, vague, or conclusory allegations.  Alvarez v. Sun Commodities, Inc., 12-60398-CIV, 2012 WL 2344577 (S.D. Fla. June 20, 2012).  An employer may prevail and avoid conditional certification by providing affidavits which are not sufficiently rebutted by the plaintiff’s affidavits.  Grayson v. K Mart Corp., 79 F.3d 1086 (11th Cir.1996); Kubiak v. S.W. Cowboy, Inc., 2014 WL 2625181 (M.D. Fla. June 12, 2014) (an employer may prevail on decertifying the class by showing that only a relatively small proportion of members of a class wish to opt-in).  The Mavrick Law Firm has successfully defended attempted collective actions by proving to federal and state Judges that the plaintiffs have not presented sufficient evidence that there is a true class of similarly situated plaintiffs.

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This article is the second part of the discussion of employer’s defense against overtime wage claims based on the commission sales overtime wage exemption, set forth in 18 U.S.C. § 207(i). exemption that allows certain businesses to not pay the employees paid mostly with commissions an overtime premium.  Peter Mavrick is a Fort Lauderdale employment lawyer who defends Florida businesses and their owners against lawsuits seeking overtime and other wages.

As discussed in further detail herein, many federal courts have rejected United States Department of Labor regulations interpreting this exemption.  The regulations often do not make sense either because they are contradictory or are outdated in light of the modern economy.  Many of the regulations were issued before globalization and the transition of the American economy from a manufacturing to a service economy.

Consequently, federal courts have recognized that Department of Labor regulations applying the commission-sales exemption are arbitrary and not deserving deference.  Some of the regulations are either contradictory or make no sense.  For example, one regulation (29 C.F.R. § 779.319) states that a refrigerator repair shop has a retail concept even if orders are taken over the telephone and work is done in the home, but another regulation (21 C.F.R. 779.317) somehow states that air conditioning contractors do not have a retail concept. These two businesses perform the exact same job, on essentially the same equipment, for the exact same customers and are distinguishable only by the scale and degree of cooling that are provided by the machines being repaired.  There is no apparent reason for distinguishing these two businesses.  Successful defense of a business when the regulations lack apparent rational basis can lead federal courts to rule in favor of the business despite clear violation of the Department of Labor’s regulation.

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This article is part one of a two-part series on the commission-based employee overtime wage exemption under the Fair Labor Standards Act (FLSA).  The FLSA, at 18 U.S.C. § 207, generally requires employees to be paid one and a half times their normally hourly rate when working more than forty hours in a week.  However, this federal statute contains some nuances and exceptions that allow employers to avoid the requirement to pay overtime premium compensation.  One of these exceptions is for commission-based employees who work for “retail or service establishments.”  Peter Mavrick is a Fort Lauderdale employment attorney who defends Florida businesses and their owners against claims for overtime wages.

The FLSA (at 18 U.S.C. § 207(i)) explains the commission-based employee exemption:

No employer shall be deemed to have violated [overtime law] by employing any employee of a retail or service establishment for a workweek in excess of the applicable workweek specified therein, if (1) the regular rate of pay of such employee is in excess of one and one-half times the minimum hourly rate applicable to him under [federal minimum wage law], and (2) more than half his compensation for a representative period (not less than one month) represents commissions on goods or services. In determining the proportion of compensation representing commissions, all earnings resulting from the application of a bona fide commission rate shall be deemed commissions on goods or services without regard to whether the computed commissions exceed the draw or guarantee.

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To determine whether a person is an employee or independent contractor for purposes of the Fair Labor Standards Act (“FLSA”), courts examine several factors to determine the “economic reality” of the relationship between the alleged employee and employer. Merely putting an independent contractor label on the alleged employee or entering a contract that controls the relationship does not exempt a person from the requirements of the FLSA.  The court’s determination instead is governed by whether that relationship demonstrates economic dependence. Peter Mavrick is a South Florida employment attorney who represents the interests of business and their owners in labor and employment litigation, including lawsuits seeking overtime wages and minimum wages.

The Eleventh Circuit Court of Appeals (“Eleventh Circuit”), i.e., the appellate court governing federal labor and employment lawsuits in the State of Florida, recently ruled in favor of an employer who properly classified a worker as an independent contractor instead of as an employee. The Eleventh Circuit held that the employer owed the worker no overtime wages because he was an independent contractor.  In J. L. Nieman v. National Claims Adjusters, Inc., et al., Case No.: 3:17-cv-01430-HES-JRK (11th Cir. 2019), insurance adjustor J. L. Nieman (“Nieman”) sued National Claims Adjusters, Inc.’s (“National”) and David Ierulli’s (collectively “NCAI”) for failure to pay wages and for retaliatory discharge under the FLSA.

Neiman did not state many facts in his complaint that would support his claim for employee status. The allegations in his complaint suggested that nothing prevented Neiman from working for other insurance companies, and he did in fact do so during his relationship with NCAI.  Neiman’s allegations did not allege that NCAI controlled the number of hours he worked, supervised him, or paid for his professional licensing. Also, Neiman alleged that his belief that his temporary role with NCAI might have “potentially” become a permanent one did not suggest economic dependence.  The district court granted NCAI’s motion to dismiss and found such factors to be indicative of the lack of an employment relationship. Nieman’s appeal followed.

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This is Part Two of the two-part series of articles discussing the overtime wage exemption of truck loaders under the Fair Labor Standards Act (FLSA).  Following the United State Supreme Court’s decisions discussed in Part One, the United States Department of Labor (DOL) issued regulations interpreting the Motor Carrier Act Exemption set forth at 29 C.F.R. § 782.5.  The applicable DOL regulation (at § 782.5(a)) defines “loader” under the Motor Carrier Act (MCA) to mean “an employee of a carrier [under the Motor Carrier Act] … whose duties include … the proper loading of his employer’s motor vehicles so that they may be safely operated on the highways of the country.”  The regulations explain that a loader’s work “directly affects ‘safety of operation’ [of a motor vehicle] so long as he has responsibility when such motor vehicles are being loaded, for exercising judgment and discretion in planning and building a balanced load or in placing, distributing, or securing the pieces of freight in such a manner that the safe operation of the vehicles on the highways in interstate commerce will not be jeopardized.”  Following the DOL’s issuance of this regulation, substantial court litigation followed addressing the meaning, and ultimately the legal enforceability of this regulation.  Federal appellate court decisions have viewed the DOL regulation as an overeach of the DOL’s authority that properly resides with the Department of Transportation.  The Mavrick Law Firm defends businesses against overtime wage claims.

A relatively recent decision from the United States Court of Appeals for the Eighth Circuit in Williams v. Central Transport International, Inc., 830 F.3d 773 (8th Cir. 2016), rejected the DOL’s reference to “exercising judgment and discretion” set forth in 29 C.F.R. § 782.5(a) as “not the governing standard.”  Citing the Supreme Court’s decision in Levinson v. Spector Motor Serv., 330 U.S. 649, 67 S.Ct. 931 (1947), the Eighth Circuit in Williams stated that “the DOL has no authority to define what employees are subject to the Secretary of Transportation’s jurisdiction and therefore fall within the MCA Exemption … Accordingly, we give no weight or deference to the DOL’s regulation purporting to define who is an exempt loader.”  Williams further explained that:

“the DOL regulation, 29 C.F.R. 782.5(a), is contrary to the Supreme Court’s governing standard.  The ICC asserted jurisdiction over loaders because ‘a motor vehicle must be properly loaded to be safely operated on the highways’ … ‘What the [ICC] intended to cover was the physical act of loading freight in a safe manner.’ … ‘[L]oaders, even if closely supervised, remain within I.C.C. jurisdiction.’ … Thus, Pyramid’s de minimus exception ‘is not based upon whether the worker was supervised in activities that have an undeniable, direct effect on safety,’ such as loading a trailer bound for interstate travel. … [¶] Based on the Supreme Court’s controlling precedents, we conclude that, if an employee spends a substantial part of his time (as defined in Levinson, Pyramid, and Morris) participating in or directing the actual loading of a motor vehicle’s common carrier’s trailers operating in interstate or foreign commerce, the Secretary of Transportation has the authority to regulate that employee’s hours of service and the MCA Exemption applies, regardless of the employee’s precise role in the loading process.”

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This article is Part One in a two-part series of articles discussing the exemption of loaders from the wage-hour requirements of the Fair Labor Standards Act (FLSA).  Businesses whose works load large trucks transporting goods in interstate commerce can defend themselves from overtime and minimum wage claims.  Under the Motor Carrier Act exemption to the FLSA, loaders of trucks whose vehicle weight exceeds 10,001 pounds and meeting the “interstate commerce” requirement can be exempt from the overtime and minimum wage requirements of the FLSA.  The Mavrick Law Firm has successfully defended many businesses against overtime and minimum wage lawsuits by means of the Motor Carrier Act Exemption in Miami-Dade, Broward, and Palm Beach Counties.

To understand the Motor Carrier Act exemption to the FLSA, it is important to understand its enactment vis-à-vis the FLSA.  Enacted in 1935, the Motor Carrier Act authorized the Interstate Commerce Commission (ICC) to set the “qualifications and maximum hours of service” for employees of motor vehicle common carriers.  See 49 U.S.C. § 304(a), which was later repealed.  Congress transferred the ICC’s functions to the Secretary of Transportation with some revision of the statute, and this jurisdiction remains.   See 49 U.S.C. § 31502(b).  In 1938, Congress enacted the FLSA, which empowered the Secretary of Labor to regulate, inter alia, the maximum hours of covered employees.  See 29 U.S.C. § 207(a)(1).  Congress included the Motor Carrier Act Exemption to the FLSA to avoid potentially overlapping jurisdictions.  In the following years, the United States Supreme Court issued a series of decisions interpreting the Motor Carrier Act Exemption.

In United States v. American Trucking Ass’ns, 310 U.S. 534, 60 S.Ct. 1059 (1940), the Supreme Court rejected the contention of interstate truckers that all their employees are exempt, concluding that the ICC’s jurisdiction to regulate maximum hours “is limited to those employees whose activities affect the safety of [motor vehicle] operation.”  In Southland Gasoline Co. v. Bailey, 318 U.S. 44, 63 S.Ct. 917 (1943), the Supreme Court held that the Motor Carrier Act Exemption applies whenever the Secretary of Transportation has the authority to regulate the maximum hours of motor carrier employees, regardless of whether that authority has been exercised.  It is therefore irrelevant that the Secretary of Transportation has never set maximum hours for motor carrier employees.

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The United States Department of Labor (DOL) is a federal agency created in 1913 under the administration of President William H. Taft, which enforces the Fair Labor Standards Act (FLSA) created in 1938 under the administration of President Franklin D. Roosevelt. The DOL’s Wage and Hour Division (WHD) which formed simultaneously with the enactment of the FLSA, has the primary function of administering the federal labor laws of the FLSA. Although the FLSA establishes guidelines for payment of overtime and minimum wage, there are various exemptions under which employees are considered exempt, and thus not entitled to compensation for overtime. Peter Mavrick is a Fort Lauderdale attorney who has extensive specialized experience dealing with the FLSA and its exemptions.

One of these exemptions is the “professional exemption,” which was analyzed by the United States Court of Appeals for the Eleventh Circuit in Dybach v. State of Fla. Dep’t of Corr., 942 F.2d 1562, 1564 (11th Cir. 1991). In Dybach, the employee was an adult probation officer employed by the Department of Corrections of the State of Florida, who alleged that her employer violated the FLSA by not paying overtime wages. She filed a lawsuit seeking unpaid overtime wages and liquidated damages. The employer fought the lawsuit and contended it owed nothing because the employee was an exempt professional.

The DOL has recognized four distinct types of exempt professional employees: (1) “learned” professionals; (2) “artistic” or “creative” professionals; (3) “teachers”; and (4) employees engaged in the practice of law or medicine. See 29 C.F.R. § 541.301-304. It is important to note, however, that this list is not exhaustive as the DOL is constantly continuing its efforts to recognize other types of “professional employees,” such as the computer professionals exemption. For the employee to be employed in a bona fide professional capacity under the FLSA, the employee’s primary duty must be work requiring advanced knowledge in a specialized field acquired by prolonged study. This primary duty must meet three requirements pursuant to 29 C.F.R. § 541.301(a)(1)—(3): (1) the employee must perform work requiring advanced knowledge; (2) the advanced knowledge must be in a field of science or learning; and (3) the advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

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The use of the two-tier method to determine whether collective actions should proceed under Section 216(b) of the Fair Labor Standards Act (“FLSA”) is inappropriate because it: (1) conflates Rule 23 standards with non-applicable wage and overtime claims under the Fair Labor Standards Act; and (2) wastes judicial resources and the resources of the parties. While the two-tier approach is popular among the district courts, the Eleventh Circuit has stressed that “[n]othing in [the Eleventh Circuit’s] precedent … requires district courts to utilize this approach. Hipp v. Liberty Nat. Life Ins. Co., 252 F.3d 1208, 1219 (11th Cir. 2001). Thus, courts should consider the utility of authorizing notice under Section 216(b) rather than relying on jurisprudential concerns that are based in “imprecise pleading and stare decisis yield[ing] path-dependence and lock-in.” Turner v. Chipotle Mexican Grill, Inc., 123 F. Supp. 3d 1300, 1306 (D. Colo. 2015).

The two-tier approach is a method of determining whether collective actions should proceed under Section 216(b). The first phase uses a very lenient standard to determine whether the named plaintiffs are similarly situated to the putative opt-in plaintiffs and whether there are similarly situated individuals who want to join the litigation. Most plaintiffs clear the low bar of the first phase, just to, in most cases, have their classes de-certified in second phase when the court makes a factual determination on the “similarly situated” issue. See Hipp 252 F.3d at 1218 (“Based on our review of the case law, no representative class has ever survived the second stage of review”).

The conflation of Rule 23 class action standards with the application of 216(b) to collective actions can traced to the 1976 enactment of the Age Discrimination Enforcement Act (“ADEA”). The ADEA authorized similarly situated plaintiffs to aggregate their claims by incorporating 216(b) as its enforcement mechanism. As a result of the proliferation of ADEA lawsuits, the leading cases that address collective action proceedings under section 216(b) are ADEA actions, rather than actions brought under the FLSA. Moreover, because ADEA 216(b) cases often import Title VII discrimination standards that are subject Rule 23 class certification. Thus, what should be a relatively straightforward analysis of wage and overtime claims under the FLSA, is now a confounding analysis that assesses wage and overtime claims with the Rule 23 like two-tiered method, which was designed to address patterns and practices of discrimination. See Turner 123 F. Supp. 3d at 1305–06 (finding that reliance on Rule 23 “class certification” concepts in true 216(b) FLSA cases to be the result of a confluence of factors, including haphazard terminology, a misunderstanding of precedent and legislative intent, and excessive path dependence in the application of stare decisis.) “Rule 23 actions are fundamentally different from collective actions under the FLSA,” Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 1530 (2013), as such, courts should not default to the use of the two-tier method when determining if a class should be conditionally certified.

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Employers that are faced with collective actions under the Fair Labor Standards Act may be able to defeat Motions for Conditional Certification if they can demonstrate the individualized nature of named plaintiff’s claims. See Caballero v. Kelly Services, Inc., WL 12732863, at *7 (S.D. Tex. Oct. 5, 2015) (denying certification where alleged violations were “not the result of a systemic policy,” so “assessment of the[ ] issues necessitates an individual inquiry for each Plaintiff, thereby making a collective action inappropriate.”) Employers can prove that the potential plaintiffs’ claims are individualized and unfit for collective action by establishing the disparate nature of the putative class’ and its representatives job requirements and pay provisions. The need for individualized inquires contravenes the basic theory of judicial economy upon which the certification of collective actions is based. See id. at *1. Therefore, employers who highlight the individualized defenses and inquiries may prevent a collective proceeding. See Lugo v. Farmer’s Pride Inc., 737 F. Supp. 2d 291, 300–01 (E.D. Pa. 2010).

To determine whether 216(b) collective actions are appropriate, most courts utilize the two-tier method. See Hipp. at 1208. At the first “notice stage,” the district court makes a decision—usually based only on the pleadings and any affidavits which have been submitted— as to whether the putative class should be conditionally certified. See id. When assessing the pleadings and affidavits, courts in the Southern District of Florida satisfy themselves that “(1) there are similarly situated with regard to their job requirements and pay provisions; and (2) there is a desire among similarly situated individuals to opt-in to the class.” See Martinez at 1853.  Put another way, there is a two-part analysis to assessing the first tier, which determines whether conditional certification will be granted.

A defendant that successfully highlights the differences in pay and job requirements between the putative plaintiffs will probably defeat a Motion for Conditional Certification. Defendants should contrast on the job requirements and pay provisions of the named plaintiff with those that the named plaintiff seeks to represent. Thus, defendants should bring attention to inconsistencies in the pleadings and affidavits or declarations to establish that plaintiff differences in pay provisions and job requirements: defendants should highlight differences such as exempt status, job duties, and schedules, among other things. See Palacios v. Boehringer Ingelheim Pharm., Inc., WL 6794438, at *1 (S.D. Fla. Apr. 19, 2011) (denying first stage “notice” authorization because an individualized analysis was required to determine whether putative class members are exempt from the FLSA overtime provisions); Holt v. Rite Aid Corp., 333 F. Supp. 2d 1265, 1272 (M.D. Ala. 2004) (denying conditional certification because “similarly situated” inquiry must be analyzed in terms of the nature of the job duties performed by each putative plaintiff); Udo v. Lincare, Inc., WL 5354589, at *11 (M.D. Fla. Sept. 17, 2014) (denying notice authorization partly due to the variance in schedules among the potential opt-in plaintiffs.)

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