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Supreme Court Upholds FLSA Overtime Award

Supreme Court Upholds FLSA Overtime Award

OVERVIEW
On March 22, 2016, the U.S. Supreme Court issued a ruling in Tyson Foods, Inc. v. Bouaphakeo, a class action lawsuit involving claims for overtime pay under the Fair Labor Standards Act (FLSA). The 6-2 ruling upheld a $2.9 million jury verdict to employees who had not been properly compensated for time spent donning and doffing protective gear.

Tyson argued that the lawsuit should not have been a class action because some members of the group had not worked 40 hours per week and were not entitled to overtime pay. The Supreme Court rejected this argument because Tyson had failed to keep adequate records of its employees’ compensable work time. The Supreme Court permitted the class action lawsuit (and damages awarded) to be based on evidence of the average experiences of the group.

ACTION STEPS
Employers should ensure that they comply with the FLSA by keeping detailed records of all employee work time and all conditions and practices of employment. Employers should also ensure that they pay employees for all time that is compensable under the FLSA definition. This includes any time employees spend on activities that are “integral and indispensable” to their regular work, such as donning and doffing required safety gear.

HIGHLIGHTS

  • The Supreme Court upheld a $2.9 million verdict in an FLSA overtime class action lawsuit.
  • The employer did not keep adequate records of employees’ overtime hours.
  • The Supreme Court allowed employees to use “representative evidence” to establish the amount of overtime worked.

EMPLOYER IMPACT

  • The ruling may make it easier for other employees to assert FLSA class action claims.
  • Employers can avoid similar issues by keeping adequate records of employee work time.

 


 

Background
In the case of Tyson Foods, Inc. v. Bouaphakeo, a group of 3,344 employees brought a class action lawsuit demanding unpaid overtime wages against Tyson Foods, a company that runs a pork processing plant in Iowa. The employees claimed they should have been paid overtime wages for time spent donning and doffing protective gear that they were required to wear for slaughter and meat-cutting work.

Tyson did not keep any records of the employees’ donning and doffing time. As a result, the employees relied on a study that measured how long it took 53 of them to complete the donning and doffing activities. By calculating the averages of those measurements, the study established an estimate of the amount of time each of the employees in the group had likely spent on the activities.

The group also relied on a second study, which calculated how much of the estimated time spent was compensable as overtime. That study supported an award of $6.7 million, but it also concluded that about 212 of the employees did not meet the 40-hour-per-week threshold, and, therefore, suffered no unpaid overtime damages. The specific employees who did or did not meet that threshold could not be identified under the methods used in the study.

Tyson argued that the two studies were not sufficient to allow the case to proceed as a class action, since the average amounts were not the actual work times and could potentially allow some employees to recover damages even though they did not, in fact, work any uncompensated overtime. Tyson also argued that the donning and doffing time was not compensable working time under the FLSA. A jury sided with the employees and awarded them $2.9 million in unpaid overtime wages.

The verdict was affirmed on appeal. Tyson then appealed to the Supreme Court.

Because the employer did not keep records of the time employees spent donning and doffing required protective gear, the employees relied on statistical averages to establish that they all suffered damages and could bring their overtime claim as a class action.

Supreme Court’s Decision
The Supreme Court also agreed with the employees and upheld the verdict. The central issue that the Supreme Court reviewed was whether each employee should be required to prove his or her damages individually or whether it was permissible to base damages on the average numbers established by the two studies.

The Supreme Court held that using the inferences drawn from the studies was permissible. The Supreme Court reached this decision because the employer kept no records of the donning and doffing time, which was required under the FLSA and would have provided the most logical way for the employees to establish more accurate amounts. The Supreme Court also found that the studies would have sufficiently supported each of the employees’ claims if they had been presented in separate, individual actions.

While the Supreme Court upheld the jury award for the group as a whole, it sent the case back to the District Court for further proceedings on how to disperse the award to individual employees, based on their particular damages.


 

Impact on Employers
The Supreme Court’s decision does not establish any new, broadly applicable rules for employers, but it does provide a cautionary tale about the dangers of failing to keep adequate records as required under the FLSA.

The dissenting Justices noted that determining which time should be recorded is a challenge for employers, since certain time spent by employees is not compensable time under the FLSA. However, the Supreme Court’s decision indicates that employers should use caution in their recordkeeping efforts and should generally err on the side of recording any and all time that could be compensable working time. The FLSA provision requiring employers to keep records of all hours worked and “other conditions and practices of employment” may provide some guidance in this regard.

Employers should err on the side of recording any and all time that employees could possibly assert to be compensable working time.

In the current case, Tyson did not challenge the jury finding that some of the employees’ donning and doffing activities was compensable work under the FLSA. Thus, the Supreme Court’s decision does not provide any additional guidance regarding what is or is not included in the FLSA’s definition of compensable work time.

Finally, the Supreme Court made it clear that its decision does not establish any broad and categorical rules governing the use of representative or statistical evidence in class action cases. The question of whether an inference drawn from that type of evidence is “just and reasonable,” and, therefore, permissible to support a class action certification, will depend on the specific facts and circumstances in any other case

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