A recent case from the Third Circuit casts a spotlight on many of the problems inherent in so-called off-the-clock claims for overtime.
In Ferreras v. American Airlines, Case No. 18-3143 (3d Cir. Dec. 24, 2019), the plaintiffs claimed that various employer time-keeping policies resulted in employees not being paid for all hours worked. One was an automatic deduction of 30 minutes for meal breaks. Another was a ""grace period" for employees to clock in and clock out that assumed that employees worked only during their scheduled shifts. The company permitted employees to apply for pay if they did work outside of those periods or during a meal period but, they claimed, they were dissuaded from doing so.
The plaintiffs brought suit under the New Jersey counterpart to the Fair Labor Standards Act and sought certification under Rule 23. Incidentally, because the FLSA does not apply to air carriers, they likely could not have brought claims under federal law. 29 U.S.C. section 213(a)(1). The plaintiffs moved for class certification and the district court certified the case, dismissing many of the arguments raised by the defendant as either premature or inaccurate. We'll discuss the grounds below.
On appeal pursuant to Rule 23(f), the Third Circuit reversed, for four important reasons. First, the district court apparently confused Rule 23 certification in wage and hour cases with conditional certification under the FLSA, and thus applied an overly lenient standard. As the court noted, notions of conditional certification have no place in Rule 23 jurisprudence, and it is insufficient to say that a case can be decertified if rule 23's rigorous standards have not been met to begin with.
Second, the court in general applied a weak "pleading" standard rather than Rule 23's requirement that a plaintiff meet each element by a preponderance of the evidence. There is no presumption in favor of finding that those standards have been met.
Third, the court found that the district court had failed to make evidentiary findings. In particular, the district court did not "engage" the employer's arguments that the claims would by definition require individualized proof. Each employee for each pay period would need to prove that they were actually working during the disputed time to receive compensation. The district court's apparent decision to defer that determination until after further discovery was simply improper.
Fourth, the court of appeals concluded that the plaintiffs' claims lacked commonality. The district court had found that the plaintiffs proved commonality because of the employer's overarching timekeeping policies. This finding was erroneous because it did not allow resolution of the litigation on a class-wide basis. Rather, the court would still need to discern among groups of employees (such as mechanics, gate agents, and others) and among different individuals as to their own work habits. It rejected the argument that the issues could be resolved on a representative basis as each employee was different and the activities being challenged varied from person to person. Thus, the plaintiffs failed to establish both commonality and predominance.
This decision is important because it addresses many of the problems surrounding the certification of off-the-clock cases. In most instances, the time spent comes down to what each different individual does on each individual day, not class-wide determinations. And even if a uniform employer policy affects all of them, they still come down to individual determinations, a fact no amount of discovery will change. The decision in Ferreras in particular dismisses the most common arguments plaintiffs make in support of certifying such cases, such as that common policies or application of those policies alone will justify certification of an off-the-clock claim. And it reinforces a district court's obligation to engage in a rigorous analysis and to reject certification if the case comes down to disputes over what different employees were doing on particular days.
The Bottom Line: The Third Circuit has rejected many of the arguments commonly used to support certification of off-the-clock cases.
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