Employees Must be “Similarly Situated” to Certify a Collective Action Under the Fair Labor Standards Act

In Creely v. HCR ManorCare, Inc., 2013 WL 377282 (N.D. Ohio Jan. 31, 2013), the United States District Court for the Northern District of Ohio decertified a collective action filed pursuant to the Fair Labor Standards Act (“FLSA”) holding that plaintiffs failed to present substantial evidence that they were similarly situated with respect to defendant’s electronic auto-deduct timekeeping policy.

In Creely, a group of 318 registered nurses, licensed practical nurses, certified nursing assistants, and admissions coordinators opted into a collective action against their employer HCR ManorCare (“HCR”), a nationwide provider of short and long-term rehabilitation facilities, alleging that they were denied overtime wages in violation of the FLSA. Defendant implemented an electronic timekeeping system that automatically deducted a thirty minute break period from timecards of hourly employees who worked a set amount of hours per day. Defendant’s policy indicated that any employee who was unable to take the pre-determined break period was required to fill out and submit a “missed punch form” to their manager who would coordinate with payroll to adjust the employee’s time card accordingly.

Plaintiffs argued that employees who missed or worked through the pre-determined break period were not paid because defendant illegally shifted the burden of monitoring “compensable work time” to its employees and failed to properly train employees on how to report missed time. Moreover, plaintiffs contended that managers at some of defendant’s facilities actively discouraged employees from reporting missed meal breaks.

 

FLSA Collective Action

The FLSA permits employees to file a collective action for unpaid overtime on behalf of themselves and other employees who are “similarly situated.” Upon receiving notice of the action, putative class members can opt into the action by providing their written consent. The court will conditionally certify the class during the notice stage; however, a more stringent factual determination of whether the class members are in fact similarly situated occurs after discovery. During the second stage, the court considers (1) the disparate factual and employment settings of the individual opt-in plaintiffs; (2) the various defenses available; and (3) fairness and procedural considerations.

The Certification Hurdle

In Creely, the court determined that although defendant’s auto-deduct policy applied to all members of the class, the application of the policy varied extensively based on an employee’s job duties, individual managers, and the patient population at a particular HCR facility. For example, employees at some facilities were encouraged to use the “missed punch form,” while employees at other facilities were not. The court reasoned that because the auto-deduct policy was implemented in a decentralized manner, plaintiffs failed to demonstrate that they were similarly situated. Furthermore, the court noted that defendant’s defenses would turn on individual inquiries into plaintiffs’ experiences at each HCR facility. Accordingly, the court concluded that given the varying circumstances at each facility, class certification would hinder, not promote judicial economy.

The copy of the Creely decision can be found here.

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