Delaware Employment Law Blog

FLSA overtime claims can be tremendously difficult to defend, particularly when the plaintiff-employees don’t “recall” when or how many hours they allegedly worked. Many employers are shocked when they learn that the plaintiffs can pursue their claims without making any real proffer of such critical evidence. A decision from the Eighth Circuit last month represents a significant step in the right direction—and away from the shadowboxing that many FLSA lawsuits can involve.

The plaintiff-police officers were given flextime or time off in lieu of overtime compensation. Neither the officers nor the city tracked the accrued flextime, which the officers alleged would be lost if not used within a short period. The officers filed a collective action under the FLSA.

In response to the city’s written discovery requests, the officers did not identify the number of uncompensated hours or the amount of money that they claimed to be owed. After discovery closed, the city moved for summary judgment, arguing that the officers failed to satisfy their evidentiary burden. In response, the officers submitted affidavits in which they offered precise estimations, week by week, of the hours they claimed to be owed.

The district court granted summary judgment to the city, dismissing the case. As the basis for its decision, the court found that the officers had unjustifiably failed to comply with their discovery obligations and that, without the affidavits, the officers failed to satisfy their burden of production by showing “the amount and extent of their alleged overtime work.”

On appeal, the Eighth Circuit upheld the decision of the district court. The officers argued that the relaxed evidentiary standard should be applied, which would excuse their failure to show the unpaid time during discovery. This argument was based on the undisputed fact that the city had failed to keep time records. The Eighth Circuit rejected this argument, finding that the relaxed evidentiary standard applies only “where the existence of damages is certain.” Here, the officers’ failure to prove the extent of the allegedly unpaid overtime meant that they had not proved any damages and, therefore, the lesser standard was not triggered.

This case represents another glimmer of hope for employers facing FLSA lawsuits. In many respects, defending an overtime suit can be a lot like shadowboxing, especially if the plaintiff-employees “decline” to specify the basis for their claim. This decision by the Eighth Circuit imposes a definite burden on the plaintiff-employee to produce some actual evidence of their alleged damages.

Carmody v. Kan. City Bd. of Police Comm’rs, No. 12-3051 (8th Cir. Apr. 23, 2013).

Auto-deduct policies and meal breaks continue to make FLSA headlines. Last week, the Second Circuit tackled these policies, as well as gap-time claims, head on and came down on the side of the employer.

The case involved a collective action brought by employees of various health-care facilities. The basic allegation was that the plaintiff-employees had not been paid for time worked during meal breaks, before and after shifts, and time spent at training. The plaintiffs brought claims under the federal FLSA and under the New York state wage law. The district court dismissed the complaint several times before the case made it to the 2d Circuit.

The plaintiffs brought two types of claims under the FLSA: (1) overtime; and (2) gap time. Both were dismissed by the trial court. The Second Circuit affirmed the dismissal.

Overtime

The court concluded that, "in order to state a plausible FLSA overtime claim, a plaintiff must sufficiently allege 40 hours of work in a given workweek as well as some uncompensated time in excess of the 40 hours." Here, the plaintiffs didn't make any factual allegations about how much time they claimed to have worked but not been paid. Similarly, they did not allege whether this missed time (in whatever amount that may be), bumped them into a more-than-40-hour workweek.

As so aptly stated by the court, the plaintiffs' vague allegations "supply nothing but low-octane fuel for speculation, not the plausible claim that is required." Based on the failure to allege any specific facts about the time worked, the dismissal of the claim was affirmed.

Gap Time

We've posted about gap time previously. In this case, the Second Circuit described a gap-time claim as "one in which an employee has not worked 40 hours in a given week but seeks recovery of unpaid time worked, or in which an employee has worked over 40 hours in a given week but seeks recovery for unpaid work under 40 hours."

The court, consistent with the majority of courts to have reached the question, explicitly rejected a gap-time claim brought under the FLSA. As the court explained, there is "no claim under FLSA for hours worked below the 40-hour overtime threshold, unless the average hourly wage falls below the federal minimum wage."

And, in a question of first impression, the court held that the FLSA does not provide for a gap-time claim even when an employee has worked overtime. The court explained:

The agreement to work certain additional hours for nothing was in essence an agreement to accept a reduction in pay. So long as reduced rate still exceeds the minimum wage, an agreement to accept reduced pay is valid.

So long as an employee is being paid the minimum wage or more, the FLSA does not provide recourse for unpaid hours below the 40-hour threshold, even if the employee also works overtime hours the same week. This is an important and timely victory for employers in their continued defense against FLSA lawsuits.

Another Employer's Auto-Deduct Policy Is Upheld (Creeley v. HCR ManorCare, Inc., (N.D. Ohio Jan. 31, 2013)).

6th Cir. Affirms Dismissal of FLSA Gotcha Litigation (White v. Baptist Mem'l Health Care Corp. (6th Cir. Nov. 6, 2012)).

The Legality of Automatically Deducting Meal Breaks (Camilotes v. Resurrection Health Care Corp. (N.D. Ill. Oct. 4, 2012)).

E.D. Pa. Dismisses Nurses' Claims for Missed Meal Breaks, Part I and Part II (Lynn v. Jefferson Health Sys., Inc. (E.D. Pa. Aug. 8, 2012)).

FLSA Victory: Class Certification Denied (Pennington v. Integrity Commun, LLC (E.D. Mo. Oct. 11, 2012))

In my post, Manager's Drunk Facebook Post Leads to Retaliation Claim, I wrote about a wage-and-hour lawsuit brought by bartenders at the famous Coyote Ugly Saloons.  In that post, my focus was on retaliation claims that the employees had added by way of an amended complaint.  I promised, though, to follow up with a post dedicated to the wage claim.  And here it is. 

The case began its life as an FLSA collective action based on an allegedly illegal tip pool.  The class included current and former employees who worked as bartenders, barbacks, and waitresses.  Bartenders were required to put all of the tips they earned during a shift into a pool.  The pool was then distributed among bartenders, barbacks, and security guards who worked that shift.  An employee's share of the pool depended on the job performed but was always percentage based.  Bartenders never retained more than 85% of the total pool. 

Tip pooling is a common practice and not as draconian as it may sound when it's done properly.  But when it's done improperly, it can be a major source of hostility.  In this case, the employees claimed that the tip pool was unlawful because security guards, who were not "tipped employees," participated in it. 

The FLSA defines "tipped employees," as those who "customarily and regularly receive tips."  The employer argued that security guards sufficiently interacted with customers so as to constitute employees who "customarily and regularly receive tips."  This claim was based on the undisputed fact that the security guards checked the I.D.s of patrons, interacted with them, and encouraged people passing by to come inside. 

But to prove that the security guards were "tipped employees" as defined by the FLSA, the employer submitted evidence of an alleged industry standard.  It purported to show this standard by introducing the testimony of a couple of people who had patronized the saloons and who claimed to have tipped the security guards.

The court rejected this argument, finding that a so-called industry is never a consideration in determining the proper classification of an employee under the FLSA.  In fact, if anything, the court noted, the argument was more of an admission of improper misclassification.  The fact that an entire industry is getting it wrong does not mean the FLSA does not apply.  

And I heartily agree.  Really, since when has the claim that "everyone's doing it" been sufficient to excuse liability?  In my house, that argument never worked--even when I was just a lass. So I'm hard pressed to understand why the employer thought it would work here. 

In Creely v. HCR ManorCare, Inc., a class of 318 nurses, LPNs, CNAs, an admission coordinators alleged that they had not been paid for time worked during meal breaks. The employer was a nationwide provider of short- and long-term medical and rehabilitation care with more than 300 facilities. Each facility had its own management team and HR personnel but its policies were developed at company headquarters and implemented at all facilities.

The employer's meal-break policy required that hourly employees take a daily 30-minute meal break. The employer's timekeeping system automatically deducted 30 minutes from the time worked a shift longer than 5 or 6 hours.

Employees did not clock in or out for their breaks. An employee who missed a break was required to fill out a "missed-punch" form and submit it to a manager, who would sign it and turn it into the Payroll Department. Payroll personnel would then adjust the timecard to reverse the automatically deducted 30 minutes.

Unlike the plaintiffs in White v. Memorial Baptist Hospital, the plaintiff-employees here did not argue that the policy was per se illegal. They also did not argue that the employer had an unofficial "policy to violate" its lawful policy. Instead, they argued that they were denied overtime pay due to the employer's implementation of the auto-deduct policy. Specifically, they claimed that they had not been paid for breaks that they'd not taken because:

1. Defendant illegally shifted the burden of monitoring time worked to the employees by requiring them to cancel the automatically deducted time;
2. Defendant took no affirmative measures to monitor whether the employees actually received their meal breaks;
3. Defendant failed to train or inform employees or management what to do if a meal break was missed or interrupted; and
4. The employees didn't report missed breaks because they were discouraged from doing so.

It was these arguments that led the court to decertify the class, finding that the plaintiffs were not similarly situated for the purposes of the FLSA. The court found that the application of the lawful auto-deduct policy varied between managers and facilities. For example, some managers provided follow-up training to the plaintiffs on the missed-punch forms, while other managers were accused of actively discouraging the plaintiffs from submitting the forms. In other words, the Plaintiffs' knowledge of and training on the policy, and the application of the policy itself, varied in large part depending on the individual managers at the employer's facilities.

This case is yet another in a growing line of auto-deduct cases that fail at the final certification stage.
Creely v. HCR ManorCare, Inc., No. 09-2879 (N.D. Ohio Jan. 31 2013).

See also
The Legality of Automatically Deducting Meal Breaks
E.D. Pa. Dismisses Nurses' Claims for Missed Meal Breaks

Lady Gaga has cancelled the remaining dates in her Born This Way Ball tour. Try to hold back those tears, dear readers. I know you're upset.

I, too, am upset by this news, particularly because I had tickets to next week's show in Philadelphia. Ok, I didn't buy the ticket, it was a gift, but, dag nab it, I was going to put it to good use! Although "Mother Monster," as she's known, doesn't exactly make regular appearances on my playlist, she's supposed to put on one heck of a show and, by George, I was excited to see it!

Alas, it appears that the Rock 'n Roll gods, which would be the musical gods I pay homage to most days, may be punishing me for straying into the land of popular music. Hopefully I will be forgiven by attending the Mumford & Sons show on Sunday and The Who show in Atlantic City next Friday.

But I digress. Back to Gaga.

As I said, I am disappointed to hear that Gaga won't be able to perform next week. Disappointment is a sentiment that the pop star understands. She was very disappointed when her former personal assistant (and personal friend), sued her in federal court.

In the suit, the assistant, Jennifer O'Neill alleges that she is owed more than 7,000 hours in overtime pay because, she claims, she was "on call" 24 hours a day, 7 days a week. (No, really, that's what she alleges). She was paid--in case you're wondering--$75,000 per year.

Lady Gaga's defense rests, in part, on her claim that the assistant was not "on the clock" during all of those long nights but, instead, was hanging out with Gaga as her friend. Gaga insisted that she and O'Neill were spending time together as friends, not as employer and employee. Gaga went on to say that she had showed O'Neill the "time of her life," and that O'Neill "slept in Egyptian cotton sheets every night, in five-star hotels, on private planes, eating caviar."

That may be all well and true but it does not serve as a legal defense to a claim for unpaid wages. The FLSA provides that workers cannot waive their right to wages earned. So, even if O'Neill had said, "Ahh, Gaga, you needn't pay me anything for this work. It's payment enough that I have the honor to hang out with such a superstar and her jet-setter friends," she would not have waived her right to be paid for time worked.

Of course, that doesn't mean that she's entitled to overtime, either. We'll have to wait and see what the court says.

Until then, though, here's a snippet of entertainment to hold you over. During her deposition, Gaga gave plenty of entertaining testimony, as reported by the New York Post. Many of her comments sound like what I'd like to say to FLSA plaintiffs. Here are a few other gems with my comments in brackets:

"Are you going to stare at me like a witch this whole time -- honestly?"
[How many times I would have liked to say that to my opposing counsel and/or the plaintiff who is sitting across the table from me, giving me the death stare.]

"I'm quite wonderful to everybody that works for me, and I am completely aghast to what a disgusting human being that you have become to sue me like this."
[The sentiment of many employers, who feel the same way when an employee files suit.]

"You don't get a schedule that is like you punch in and you can play [expletive] Tetris at your desk for four hours and then you punch out at the end of the day. This is -- when I need you, you're available."
[Boy, that sounds an awful lot like "you're on call."]

And, now, my personal favorite:

"This whole case is bulls--t, and you know it."
[Well, that pretty much sums it up, doesn't it?]

Maybe Gaga is cooler than I've given her credit for, after all. For more celebrity testimony, see this post about rap star Lil' Wayne's deposition.

Wage-and-hour lawsuits continue to plague employers around the country. Off-the-clock claims are some of the most difficult to defend because, by definition, the employee did not record the time in dispute. Trying to disprove an allegation is about as easy as boxing shadows.

Employers who face these off-the-clock claims are understandably frustrated by the ability of an employee to bring a lawsuit based on the employee's failure to comply with workplace rules. A recent trend has been the application of an affirmative defense similar to the one used in harassment cases. This defense is a very positive development for employers.

A recent decision by the 10th Circuit applied a similar reasoning with a similarly positive result. In Brown v. ScriptPro, LLC, the plaintiff-employee claimed that he'd worked from home during a 4-month period so he could take time off before the birth of his child. Despite the company's policy that required employees to record and submit time worked, the plaintiff claimed that he did not report the time. After he was fired for performance issues a few months later, he filed suit

The district court dismissed the suit, finding that the employee had failed to meet his burden to produce evidence of the overtime he claimed to have worked. He argued that the employer failed to keep the required time records. As a result, he argued, his burden to prove the amount of time worked should be lessened. The 10th Circuit disagreed.

Instead, the court found that the employee not only could have submitted the time he worked from home but, also, that he should have done so as required by the employer's policy. Thus, the employee's failure to record and report all time worked was fatal to his claim.

Brown v. ScriptPro, LLC, No. 11-3293 (10th Cir. Nov. 27, 2012).

In Frye v. Baptist Memorial Hospital, the Sixth Circuit upheld the legality of automatically deducting meal breaks. The decision was not the first to hold that an automatic-deduction policy does not constitute a per se violation of the FLSA. Nor will it be the last.

But it is an important one to employers who utilize these policies.

In Frye, the court affirmed the decertification of the collective action. As a result, the opt-in plaintiffs' claims were dismissed. The named plaintiff's claims also were dismissed because he had not filed a notice of consent within the three-year statute of limitations.

With the entire suit dismissed, the employer sought to have its defense costs reimbursed by the plaintiff. And, in what can be described only as a total victory, the employer's request was granted. The Sixth Circuit affirmed the award of more than $55,000.

The court first held that nothing in the FLSA precludes an award of costs to a prevailing defendant. As most employers know, the FLSA specifically provides for an award of costs to a prevailing plaintiff. It does not, however, address prevailing defendants. Nevertheless, the Federal Rules of Civil Procedure does contain such a provision. Rule 54, specifically, provides that a prevailing party may seek to have their costs reimbursed.

Here, the court held, the employer was, indeed, a "prevailing party" because it had been successful in having the class decertified and the named plaintiff's claims dismissed. Thus, the court found, the defendant was entitled to recover the costs expended in defending against the lawsuit.

Could this be the wave of the future? Costs awarded to the defendant employer in claims brought under the FLSA? Ah, to dream a little dream.

[Editor's Note: This post erroneously described the award as including fees and costs, whereas the award represented costs only. The post was modified to correct the error.]

See also,

E.D. Pa. Dismisses Nurse's Claim for Missed Meal Breaks

FLSA lawsuits based on missed meal breaks and automatic-deduction policies are one of many current trends in of wage-and-hour litigation. Meal-break claims brought by nurses and hospital staff are a particularly common scenario. But employers in the health-care sector need not give up hope, as there have been several recent opinions in favor of the employer in such cases. See FLSA Victory, Class Certification Denied. A recent decision by the 6th Circuit offers another positive example.

In White v. Baptist Memorial Health Care Corporation, (6th Cir. Nov. 6, 2012),the plaintiff, an ER nurse, did not have regularly scheduled meal breaks but was permitted to take them as the demands of her work allowed. The hospital had an automatic-deduction policy, whereby 30 minutes were deducted from time worked unless the employee submitted a time-exception form. The plaintiff in the case did not submit the form when she missed her meal break and did not complain that she was not being paid for that time.

After the district court awarded summary judgment to the employer, the employee appealed to the Sixth Circuit. The appellate court affirmed the decision, finding that the employee's failure to comply with the hospital's procedures by submitting the time-exception form precluded the hospital from knowing about the unreported time.
This line of reasoning is similar to the affirmative defense available to employers in harassment lawsuits. The theory behind it is that an employer cannot be held liable for conduct of which it does not know. The burden to report unlawful harassment--and, in this case, unpaid time--falls to the employee.

This is not only a logical holding but, also, an important one for employers. It supports the idea that an employee will not be permitted to sit on information and wait to use it against her employer whenever she's so inclined. The decision is a bar against "Gotcha" litigation, which I've also described as "Legal Extortion." With any luck, federal courts will continue to embrace this approach in similar FLSA cases and collective actions.

Ask any employment lawyer what the worst employment law is and I'd be willing to bet the overwhelming majority would answer, "the FLSA." Although the Fair Labor Standards Act (FLSA) was written with the right idea in mind--to ensure employees are paid for the work that they perform--the law is sorely out of date and subject to gross abuse by employees and employees' lawyers. Most of the FLSA cases I see look more like extortion than enforcement actions.

Despite the law's rampant abuse, the number of suits filed under the FLSA continue to increase. There are any number of reasons for this. One (big) reason is the potential recovery for the plaintiffs' lawyers. A victorious plaintiff in an FLSA claim is entitled to recover all of his reasonable attorney's fees and costs. When the parties reach a settlement--which is overwhelmingly the case--the employees' lawyer usually gets one-third of his clients' recovery, often resulting in a disproportionately large payday for the lawyer even when his client receives a small sum.

Another reason for the popularity of FLSA claims is the easy standard for conditional certification. The burden is very, very low for a plaintiff seeking to conditionally certify a class of employees. And, once certification is granted, the likelihood of settlement increases exponentially.

Which is why I get particularly excited when I read about a decision denying conditional certification of a collective action under the FLSA. One such decision, Pennington v. Integrity Communications, LLC, was issued by a federal court in Missouri on October 11, 2012.

In Pennington, the two plaintiffs worked as cable installers. They alleged that they were improperly classified as independent contractors. They contended that they should have been classified as employees and, consequently, were owed back-pay overtime and other damages. The plaintiffs moved to conditionally certify a class of similiarly situated individuals and notify potential class members.

The court reiterated that the burden on the plaintiffs at this stage is low, explaining that, typically a motion for conditional certification is decided only on the plaintiffs' affidavits. Here, the plaintiffs had, indeed, submitted affidavits, in which they averred that they regularly worked more than 40 hours per week--specifically, they averred that they worked, on average between 50 and "at least" 70 hours per week. The plaintiffs also averred that they were aware of other cable installers, who similarly worked more than 40 hours per week.

What the plaintiffs did not aver, however, was that those other installers weren't paid at an overtime rate for those hours worked over 40 in a workweek. Because of this omission, the court denied the plaintiffs' motion for conditional certification, finding that they'd failed to meet their burden to point to similarly situated individuals. As a result, the court denied the motion to certify a class.

And that is good news for employers. But there's bad news, too. The decision is not a total victory for the employer. The plaintiffs will get another bite at the proverbial apple and are entitled to re-file their motion with revised affidavits. Nevertheless, every small win under the FLSA is an important one. And it's important that the court adhered to the proper standard, instead of granting the motion in a rubber-stamp manner.

Pennington v. Integrity Commun's, LLC, No. 1:12-cv-5 SNLJ, 2012 U.S. Dist. LEXIS 146296 (E.D. Mo. Oct. 11, 2012).

See also
The Legality of Automatically Deducting Meal Breaks
Here's to [My] Job Security
The FLSA Is Legal Extortion of Employers
Top 10 FLSA Blogs

Many employers automatically deduct thirty minutes for employees' meal breaks. The employer's policy provides that an employee must take their allotted 30-minute break unless a supervisor authorizes the employee to work through the break. And, in the unusual case when the employee does have to miss her break, she must report it to ensure she gets paid.

There are several reasons to have an automatic-deduction policy. For example, for employees who spend most of the workday out of the office without access to a time clock, an automatic-deduction policy can be the only realistic option for timekeeping purposes. It also means less administrative work and room for error when employees forget to clock back in after a break. Auto-deduct policies are very common in hospitals and other health-care facilities.

But this type of meal-break policy isn't popular only with employers; plaintiff's counsel have taken a liking to it, as well. Over the last few years, numerous suits have been filed as class actions under the state and federal (FLSA) wage laws. The suits allege that the employees did not get the benefit of the full meal break but were not paid for the time because of the automatic-deduction policy. As with any class or collective action, meal-break suits can mean big costs for employers.

But the news isn't all bad. Several opinions have been issued recently finding against plaintiffs in automatic-deduction cases. A case issued last week by a court in the Northern District of Illinois is yet another indication that the tides may have turned in favor of employers. In Camilotes v. Resurrection Health Care Corp., No. 1:10-cv-00366 (N.D. Ill. Oct. 4, 2012), the court decertified the FLSA collective action, finding that the claims and defenses were too individualized to justify proceeding as a class.

Specifically the court pointed to the fact that the plaintiffs worked different shifts and reported to many different supervisors, each of whom enforced the meal-break policy differently. The court also looked to the fact that the plaintiffs alleged different numbers of missed breaks whether those missed breaks actually caused the plaintiffs to have worked overtime.

Although the case is a victory for the employer, it was a victory hard fought, as the employer had to get through the costly discovery process before succeeding on decertification.

Continuing the FLSA theme from last week, today's post is about the impact of a recent decision by the 5th Circuit in Martin v. Spring Break Productions, LLC, No. 11-30671 (5th Cir. July 24, 2012). The relevant facts of the Martin decision are very simple. Employees filed a grievance with their Union, in which they alleged that they had not been paid for all time worked. The Union investigated the claims but concluded that it could not determine whether or not the employees had worked on the days alleged. The Union and the employer entered into a settlement agreement to resolve the dispute.

The agreement recognized that "disputes remain[ed] between the parties as to the amounts that may be due." Despite the disputes, the agreement prohibited the employees from pursuing future legal action against the employer after receiving their settlement payments. The agreement was not signed by, nor was it intended to be signed by the employees themselves but, instead, by the Union on the employees' behalf. The agreement expressly provided that the Union had the full power and authority to enter into the settlement on the employees' behalf.

Before the agreement was signed by the Union, the employees filed suit in California state court. The employer removed the suit to federal court. The court dismissed the claims based on the settlement agreement. The employees appealed the decision to the U.S. Court of Appeals for the Fifth Circuit, where they made two arguments with respect to the settlement agreement.

First, the employees argued that the agreement was not enforceable against them because they had not signed it and never agreed to it. The employees did not dispute that they'd received "full payment" for their claims pursuant to the agreement or that they'd cashed the checks they'd received pursuant to the agreement. The 5th Circuit quickly rejected this part of the employee's argument and found, instead, that they were bound by the decision of its Union, which had been recognized as the exclusive representative of the bargaining unit.

Second, the employees argued that, even if the agreement was binding on them, the release that it contained was invalid because individuals may not privately settle FLSA claims. This argument was predicated on a decision by the 11th Circuit in 1982, Lynn's Food Stores, Inc. v. United States. In that decision, the court held that FLSA claims may not be settled without the approval of the Department of Labor or a court. The dispute arose as a result of a U.S. DOL investigation and the employees, who did not speak English and who had not consulted with an attorney, did not know that the DOL had determined they were owed back wages.

The 5th Circuit held that the rationale of Lynn's Food Stores did not apply to the facts before them. Instead, the court held, a private compromise of claims under the FLSA is permissible where there exists a bona fide dispute as to the hours worked or compensation due. In that context, a release of party's rights under the FLSA is enforceable.

The potential impact of the Martin decision is expansive, particularly in light of the Third Circuit's holding in Genesis Health Care (which currently is on appeal to the U.S. Supreme Court), that an FLSA collective action is not mooted when an employer pays the full amount claimed. Now, it seems that there is at least the possibility that an employer can prevent a collective action altogether if it tenders a payment to the employee pursuant to a settlement agreement, provided the amount of wages owed is a bona fide issue of dispute and that the employee is represented by counsel.

This is particularly important when an employer receives a demand letter from an employee's lawyer, threatening suit unless the employer agrees to pay the employee an amount of allegedly unpaid wages. Previously, the employer could (and often times would) pay the employee at least some portion of the demand and the parties would memorialize their agreement in writing. The employer would then keep its proverbial fingers crossed in the hopes that the employee would not file a lawsuit seeking the remaining amount of claimed wages. If, however, the employee did later sue, the employer would not have had much hope of having the suit dismissed due to the settlement agreement. In other words, the Martin decision, at least potentially, helps to remove one way in which employees (and employees' lawyers) use the courts as a way to exact legal extortion to receive as much money as they want to claim they are owed.

The FLSA has been the subject of several posts on this blog recently. See, e.g., this post about tip-pooling this one on missed meal breaks, this one on the 3d Cir.'s recent decision on the class-certification standard, and this one on an important FLSA case on appeal to the Supreme Court.

And there are several important FLSA decisions about which I've not yet posted. See Phil Miles' post on the 3d Cir.'s decision on joint employment in FLSA cases and Michael Fox's post on the 5th Circuit's opinion enforcing a private FLSA settlement, to tide you over till I get caught up.

[Don't begrudge me, dear readers, I do have a day job, after all.]

But the fact of the matter is unavoidable--wage disputes continue to capture the attention of employers across the country. If you need proof beyond my representation of such, I'll direct you to the results of a recent study by Seyfarth Shaw, which shows that FLSA lawsuits are at an all-time high this year.

So, what's an employer to do to avoid being on the defense side of an FLSA lawsuit? The best way to avoid getting sued for FLSA violations is to not violate the FLSA. Although most employers think they are in compliance, the unfortunate reality is that, often times, they are not. The best thing to do, then, is to get educated about the many intricacies of the FLSA. And a great (and free) way to do that is through the wonderful world of employment-law blogs.

Here, in alphabetical order except for the first, which is my pick for #1, are the FLSA blogs that I consider to be the best of the best:

Overtime Law Blog, written by Andrew Frisch

Epstein Becker Green's Wage & Hour Defense Blog

Fisher & Phillips, LLP's Wage and Hour Laws blog

Fox Rothschild's Wage & Hour Blog

Francezek Radelet's Wage & Hour Insights

Greenwald Doherty's Overtime Advisor

Jackson Lewis' Wage & Hour Law Update

Littler's Wage and Hour Counsel blog

Seyfarh Shaw's The Wage & Hour Litigation Blog

Wage & Hour Defense Institute, which is published by the organization's member firms.

And, although they don't publish posts with enough frequency to qualify for my Top 10, these blogs also deserve a place on your feed reader:

Womble Carlyle's Fair Labor Standards Act Law blog.

Independent Contractor Compliance, Pepper Hamilton, LLP

Have I missed one? Leave a comment if you read (or write) an FLSA-specific blog (general employment-law blogs like mine doesn't count).

The FLSA's tip-pooling prohibition made news headlines in March when the restaurant group owned by Chef Mario Batali was reported to have settled an FLSA lawsuit for $5.25 million. Apparently, though, the news headlines did not make its way to Vermont. At least not to the Juniper Hill Inn, anyway. If you watched the premier episode of Gordon Ramsay's new show, Hotel Hell, you already know that Juniper Hill Inn was the project du jour.

The hotel had lots of problems, of course, but the biggest problem was with management. The two co-owners were not exactly "good leaders." And, although I could surely spend an entire post rambling on about the employment-law lessons to be learned from the stars of prime-time reality-dramas, I'll limit myself to just one this time.

During a meeting with Ramsay, the staff confided that the owners "shared" in the tip pool. In other words, staff had to tip the owners at the end of the shift. When Ramsay confronted one of the owners about it, he admitted to having "shared" the staff's tips. He proceeded to explain that he had been so frustrated by the staff's failings that he believed that taking their wages was the only way to get them to improve their performance.

Dear readers, I ask that you humor me for just a moment, as I walk down the road of the obvious. If you regularly belittle your employees, they are not likely to respond positively or work harder to impress you. And if you then make them pay you for treating them badly (even if you call it "tip sharing"), they are almost certainly not going to "aim to please."

I was, I'll admit, fairly surprised that the show's legal team allowed the program to air with the "FLSA confession" segment left in. The statute of limitations is, after all, far from expired. Perhaps the show's happy ending, in which the owners turn their act around and changed their ways for the better will prevent them from getting sued at all. Here's to hoping.

In the meantime, let's take this opportunity to review the tip-pooling rules of the FLSA.

The FLSA permits employers to pay tipped employees a reduced minimum wage. provided they follow certain rules. One of the biggest rules, and the one that's made the news lately, is that tipped employees must keep all of the tips they receive except those that are shared with other tipped employees as part of a tip pool.

Management (and owners) may not share in a tip pool. Thus, absent some fact to which the audience was not made privy, our friends in Vermont, who are, indeed, owners, were prohibited from taking any portion of their staff's tips.

Now, let's tip our hats to our friend, Gordon Ramsay, for giving us another valuable lesson in employment law.

In an FLSA collective action brought in Delaware, Pennsylvania, or New Jersey (the three states within the 3d Circuit), there is a two-step process for class certification. At the initial stage, called conditional certification, the burden is low. At the second stage, called final certification, the standard is more stringent but the precise test that should be applied has been unclear. Until now.

On August 9, 2012, the Third Circuit issued an opinion in Zavala v. Wal Mart Stores, Inc., in which it decided the standard that courts must apply. Specifically, the Third Circuit held that, at the final-certification stage, the district court must "make a finding of fact that the members of the collective action are 'similarly situated'" and that the burden to establish this fact by a preponderance of the evidence rests with the plaintiffs.

The court adopted an ad hoc approach to making the decertification decision. This approach requires the consideration of all relevant factors to determine similarity on a case-by-case basis. Factors that may be relevant include: whether the plaintiffs are employed in the same department, division, and location; whether they advance similar claims; whether they seek the same form of relief; and whether they have similar salaries and circumstances of employment. The plaintiffs may be found to be dissimilar based on the existence of individualized defenses.

Finally, the court concluded that the plaintiffs must meet their burden to establish similarity by a preponderance of the evidence in order to obtain final certification and proceed with the case as a collective action.

This is the second opinion from the Third Circuit on important FLSA issues. in the last several weeks. The court's decision on a third important FLSA issue, Smyczyk v. Genesis Healthcare Corp., has been appealed to the U.S. Supreme Court, where arguments will be heard this term. Needless to say, the FLSA remains a very hot topic in the world of employment law.

Essentially, the FLSA contains just two requirements for non-exempt employees: (1) that the employees be paid minimum wage; and (2) that they are compensated at a rate at least one and one-half times the regular rate for all time worked in excess of 40 hours in a workweek.

"Gap time" is not covered by the FLSA. Gap time is time worked but not paid. To qualify as gap time, the time worked must not: (1) put the employee in the over-40-hours-in-a-week category, which would trigger the overtime requirement; or (2) bring the employee's hourly rate below the minimum wage.

An example.

Assume Employee X's regular rate of pay is $20 per hour. Also assume that she worked 38 hours but was paid for only 36 hours in a given workweek. Thus, the employee was paid $720 ($20 x 36) but should have been paid $760 ($20 x 38).

The 2 hours unpaid constitutes "gap time." The employee may have a state-law claim to recover the unpaid $40 but the FLSA would not apply because the 2 hours would not put the employee over 40 hours and, even when the 2 hours are included, her regular rate is more than minimum wage ($720 / 38 = $18.95 per hour).

Gap-Time Claims and the FLSA

The issue of gap time is common in cases involving missed or interrupted meal breaks and in cases of pre- and post-shift work performed before or after the employee clocks in or out. Where an employee alleges that her time was deducted to account for a break but that she did not actually take the break, she is likely to have nor more than a couple of hours a week of unpaid time. And, many times, these 2 or 3 hours is not sufficient to bump the employee into overtime. Thus, they are gap-time claims not properly brought under the FLSA.

In a decision issued yesterday by the Eastern District of Pennsylvania, the court dismissed six related collective action lawsuits brought by registered nurses who alleged they had not been properly paid for training, pre- and post-shift work, and missed meal breaks.

In the order, the court explained that, since the nurses were suing under the overtime provisions of the FLSA, they had to allege that they had worked more than 40 hours in a workweek and that they had not been paid for that time. Instead, the nurses had alleged only that they had worked and not been paid--but failed to allege that the additional time worked put them into the over-40-hours-in-a-week category. In other words, the nurses had alleged only a claim for gap time, which was not a proper claim under the FLSA.

Lynn v. Jefferson Health Sys., Inc., No. 2:09-cv-05549 (E.D. Pa. Aug. 8, 2012)