The Wait Is Over…What’s Next for the NCAA?

It was a class action case that captured the attention of sports fans across the country: The United States Supreme Court agreed to tackle the issue of “amateurism” in collegiate sports, and the extent to which the National Collegiate Athletic Association (NCAA) could limit the education-related benefits that institutions of higher education within the NCAA umbrella could pay to student athletes without violating federal antitrust laws. In a unanimous June 21, 2021, decision in NCAA v. Alston, the Justices held that the NCAA restrictions at issue amounted to an unlawful restraint of trade.

In a recent blog post, Gregg E. Clifton, a Principal in the Phoenix office of Jackson Lewis and Co-Leader of the firm’s Collegiate and Professional Sports Practice Group, gives a detailed analysis of the Supreme Court’s decision, the sweeping view articulated by Justice Kavanaugh in his concurrence, and the larger context of the decision and its impact on college athletics.

Read Gregg’s analysis here.

$102 Million Pay Stub, Meal Break Judgment Against Walmart Reversed

In a significant victory for California employers, the U.S. Court of Appeals for the Ninth Circuit reversed a $102 million award against Walmart in a suit alleging that the retailer violated the California Labor Code’s wage statement and meal-break provisions. The decision is Magadia v. Wal-Mart Associates, Inc., May 28, 2021, No. 19-16184.

The Ninth Circuit’s opinion is an important clarification of the cognizable harm required to establish Article III standing under the Private Attorneys General Act (“PAGA”) and the Labor Code’s wage statement requirements.

The critical takeaways:

  • An employee does not have standing to bring PAGA claims in federal court for alleged Labor Code violations that the employee themselves did not suffer.
  • An employer may make lump-sum payments as a retroactive adjustment to employees’ overtime rate to factor in bonus payments without identifying a corresponding “hourly rate” for the payment on employees’ wage statements.

A discussion of the Ninth Circuit opinion appears in the Jackson Lewis California Workplace Law Blog.

 

Class Action Trends Report Spring 2021

In our latest issue of the Class Action Trends Report, Jackson Lewis attorneys discuss how employers can undertake Diversity, Equity and Inclusion (DEI) initiatives without risking class action discrimination suits; wage and hour compliance issues arising from the COVID-19-induced work-from-home surge; and a landmark Fifth Circuit decision rejecting the common two-stage framework for conditional certification of Fair Labor Standards Act collective actions.

Virginia’s new overtime law authorizes collective actions

Virginia employers are at increased risk of class action wage litigation following passage of the Virginia Overtime Wage Act.

“Previously, Virginia had been content to rely on the overtime pay requirements of the federal Fair Labor Standards Act (FLSA),” note Kristina H. Vaquera and Shaun M. Bennett in a recent Jackson Lewis legal alert discussing the new statute, which Governor Ralph Northam signed into law on March 31, 2021. Like the FLSA, the Virginia Overtime Wage Act obligates employers to pay one and one-half times an employee’s regular rate of pay for hours worked in excess of 40 in a workweek. Also like the FLSA: Beginning July 1, 2021, employees will be entitled to pursue state-law overtime claims as collective actions.

Virginia law typically does not authorize class or collective actions. However, there are exceptions, and the Virginia Overtime Wage Act is now one of them. Amendments to existing sections of the Virginia Code accompanying the new law authorize collective actions “consistent with the collective action procedures of the Fair Labor Standards Act” for violations under the Virginia Overtime Wage Act.

In addition, the Virginia law departs from the FLSA in several important, employee-friendly ways, including a lengthier limitations period to bring potential claims (three years is the default liability period), and the availability of greater damages. (The Virginia law also differs from the FLSA in how the regular rate of pay is calculated.) The bottom line is that Virginia employers face the possibility of defending overtime claims of multiple employees in a collective lawsuit covering workweeks up to a three-year period.

The Virginia Overtime Wage Act creates the potential for significant liability to employers that fail to properly classify and compensate their employees. Employers operating in the state should review their overtime pay practices to ensure compliance with both the FLSA and the new Virginia law.

The detailed discussion of the Virginia law can be found here.

If you have any questions about the Virginia Overtime Wage Act and its collective action provision, consult a Jackson Lewis attorney.

ADA Does Not Require Websites Be Accessible, Appeals Court Holds

A website is not a “place of public accommodation” within the meaning of Title III of the Americans with Disabilities Act (ADA), a federal appeals court has held in a groundbreaking decision on disability discrimination. And an inaccessible website is not necessarily equal to the denial of goods or services. Gil v. Winn-Dixie Stores, Inc., No. 17-13467 (11th Cir. Apr. 7, 2021).

Website access class action lawsuits have proliferated in recent years. Businesses being sued have ranged from small “mom and pop” restaurants to Fortune 50 corporations. The surge began in 2016, with more than 260 suits filed. The numbers swelled after a federal court in Florida, in June 2017, held that a regional grocery chain must ensure its website is ADA-compliant. As such, this decision is welcome news to businesses operating in the Eleventh Circuit.

The decision is especially favorable for entities that operate fully online businesses, as “it holds that a website itself is not a place of public accommodation to which the ADA applies,” write Mendy Halberstam, Joseph Lynett, and Rebecca McCloskey, in their detailed analysis of the decision. In addition, they note, brick-and-mortar businesses that provide alternative means for disabled patrons to obtain goods and services, such as in-person or by phone or email instead of just through a website, also will find good points in the court’s decision.

As the authors advise, “it remains to be seen whether other circuits will follow or that the court’s decision will be favored with respect to state disability laws. Businesses must carefully scrutinize the interplay between federal and state disability laws in order to determine the correct course.”

Does the Workers’ Compensation Act Bar BIPA Claims? Illinois Supreme Court Will Weigh In

The Illinois Supreme Court recently agreed to hear an appeal of an Appellate Court’s decision addressing whether an employee’s claim for damages under Illinois’s Biometric Information Protection Act (BIPA) is preempted by the exclusivity provisions of the Illinois Workers’ Compensation Act (IWCA).

Over the past few years. there has been a significant number of class action lawsuits under the BIPA. A key defense for employers defending BIPA lawsuits has been that the BIPA is preempted by the IWCA. Back in September, the Illinois Appellate Court for the First Judicial District held that employees’ BIPA claims were not preempted under the IWCA and could go forward. The Illinois Supreme Court will consider whether this defense has merit, and perhaps reign in the significant number of lawsuits, including putative class actions filed under the BIPA.

In their recent blog post, Maya Atrakchi and Jason C. Gavejian, attorneys in Jackson Lewis’ Privacy, Data and Cybersecurity Practice Group, urge companies to “immediately take steps to comply with the statute.” 

BIPA poses class-wide risks to companies with operations in Illinois or who engage with employees or consumers in the state. However, biometric privacy should be on the radar of companies everywhere, as other biometric laws are in place in other states, and additional legislation has been introduced elsewhere, at both the state and federal levels.

Class Action Trends Report: Looking back, looking ahead

Last year presented many challenges, and 2021 offers a fresh start. In this issue of the Class Actions Trends Report we review the most significant developments of 2020 and look ahead to what a new year and a new presidential administration may mean for employers.

Topics addressed in this issue include:

  • Top 10 class action stories and trends from 2020
  • The increase in class actions challenging 401(k) plan fees
  • Class action developments in areas such as discrimination, wage and hour and arbitration
  • What employers can expect from the Biden administration

Jackson Lewis Class Action Trends Report, Winter 2021

2020 Wage & Hour Developments: A Year in Review

The laws governing wages and hours of work affect nearly everyone—and have a significant affect on class and collective actions. How employees are paid, whether as hourly non-exempt, salaried-exempt, tipped, or commissioned sales workers, and how much they are paid, are questions of deep interest to employees and employers alike. And because the laws regulating wages generally apply only to employees, as opposed to independent contractors, who is an employee is also a significant issue of concern.

All these issues were addressed in 2020 by the U.S. Department of Labor (DOL), the U.S. Circuit Courts of Appeal, and state legislatures. Federal and state laws regulating wages and hours of work continued to change and develop last year, expanding in some areas and contracting in others.

In “2020 Wage & Hour Developments: A Year in Review,” attorneys in Jackson Lewis’ Wage and Hour Practice Group look back on the significant wage and hour developments  in the laws governing the payment of wages and limitations on hours of work.

 

Fifth Circuit Rejects Two-Step Approach for Certifying FLSA Collective Actions

The U.S. Court of Appeals for the Fifth Circuit has just issued an important decision addressing “how stringently, and how soon, district courts should enforce Section 216(b)’s ‘similarly situated’ mandate” when considering motions for certification of collective actions under the Fair Labor Standards Act (FLSA). The appeals court rejected the familiar two-step, conditional certification-followed-by-decertification approach that is common across the country in collective actions. Swales v. KLLM Transport Services, LLC, No. 19-60847 (Jan. 12, 2021).

The Court made clear that district courts must review the factual record developed by the parties to determine whether plaintiffs meet the “similarly situated” standard before notice goes out to potential opt-in plaintiffs. This holding rejects the commonplace doctrine that courts should avoid considering discovery at the conditional certification stage and should rather assume that the allegations in the plaintiffs’ complaint are valid.

The suit was brought by truck drivers alleging they were misclassified as independent contractors and are “employees” under the FLSA. The Fifth Circuit has jurisdiction over Louisiana, Mississippi, and Texas.

Implications

The immediate effect of Swales is that, for FLSA cases in the Fifth Circuit, plaintiffs will not be able to issue notice to potential opt-in plaintiffs based merely on allegations. Rather, the district courts will have to assess discovery to determine whether plaintiffs are actually “similarly situated” to the collective they purport to represent.

Open Questions

The decision leaves many questions unanswered in the Fifth Circuit, including whether decertification motions remain part of FLSA collective cases. If courts are to determine whether plaintiffs satisfy the “similarly situated” standard in order for notice to be issued using a standard akin to that for traditional class actions under Federal Rule of Civil Procedure 23, with its “well-established procedural safeguards to ensure that the named plaintiffs are appropriate class representatives,” 216(b) certification may become a single-step, definitive determination.

Gatekeeping Framework

Considering the case on interlocutory review, the appeals court addressed head-on the extent to which a district court may examine the factual circumstances of whether potential opt-in plaintiffs are “similarly situated” before conditionally certifying a collective action. It adopted a “definitive legal standard,” setting what it called a “gatekeeping” framework: assessing whether putative opt-in plaintiffs are similarly situated “before notice is sent to potential opt-ins … not abstractly but actually.”

In hearing motions for conditional certification, district courts in the circuit have used “ad hoc tests of assorted rigor” in deciding whether employees are similarly situated, the appeals court observed. In the case at hand, it explained, the district court had applied “a Goldilocks version of Lusardi [two-step certification], something in between lenient and strict.” The Fifth Circuit panel wanted to adopt a more precise approach while expressly rejecting Lusardi, which it had “carefully avoided adopting” in the past. The problems that standard creates “occur not at decertification, but from the beginning of the case,” the panel stressed. Namely: “The leniency of the stage-one standard, while not so toothless as to render conditional certification automatic, exerts formidable settlement pressure.”

Two-stage certification “may be common practice,” the court noted. “But practice is not necessarily precedent.”

As the judges pointed out during oral argument in August, it would be of little benefit to let plaintiffs proceed collectively based on a single common fact or issue in dispute if the record as a whole indicates the employees have demonstrably different material facts or legal claims at issue. The opinion reflects that sentiment. It also heeds the U.S. Supreme Court’s binding and “unequivocal” admonition, in its 1989 decision in Hoffman-LaRoche, Inc. v. Sperling, against stirring up litigation.

If you have questions about how this decision affects collective actions in the Fifth Circuit and elsewhere, contact a Jackson Lewis attorney.

Four Ways Manufacturing Employers Can Reduce Risk of Class Action Litigation

How can manufacturing employers reduce the prospect of costly wage and hour class and collective actions?

In this legal update, James M. Stone, head of Jackson Lewis P.C.’s Manufacturing Industry Group, and Eric J. Gitig, an associate in the firm’s Los Angeles, California, office, offer guidance to minimize the risk of class litigation, particularly for unionized manufacturers with collective bargaining obligations.

 

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