E. Jason Tremblay

Arnstein & Lehr Chicago Partner Jason Tremblay will speak at the “Employment Law for Businesses” seminars co-hosted by Arnstein & Lehr. The 4-part seminar series covers topics on  employment laws, pitfalls facing employers and easy steps to reduce liability and protect your business. The seminars will take place in Arnstein & Lehr’s Chicago office and by teleconference in March, April, June and July. The first seminar will be March 14 and is titled “Independent Contractor v. Employee: Why it matters and what you can do about it.”

To find out more information about the seminars, please click here.

E. Jason Tremblay

On August 4, 2011, we reported on the case of Dionne v. Floormasters Enters, a case from the Eleventh Circuit Court of Appeals that effectively allowed an employer to avoid paying attorneys’ fees in an FLSA lawsuit and also allowed the dismissal of an FLSA lawsuit prior to class certification where an offer of judgment made by the employer made the plaintiff-employee “whole.” However, since then, several other circuits, namely the Third and Ninth Circuit Courts of Appeal, have published contrary decisions holding that an offer of judgment made by an employer to a plaintiff-employee in an FLSA case will not moot the case where the court has not yet ruled on class certification.

In Pitts v. Terrible Herbst, Inc. (Case No. 10-15965), the plaintiff-employee was owed less than $100.00 for unpaid wages. Despite the fact that the employer communicated an offer of judgment in the amount of $9,000.00 — almost ten times what the plaintiff could receive if he proceeded and prevailed at trial — the court would not dismiss the case because it had not yet ruled on class certification. As a result, the Ninth Circuit Court of Appeals decision makes it clear that employers who are being sued for unpaid wages can do little to dispose of an FLSA action without settling with the entire class.

More recently, in the Third Circuit Court of Appeal’s decision in Symczyk v. Genesis Healthcare Corp. (Case No. 10-3178), the defendant-employer also made an offer of judgment in the full amount of the plaintiff’s claim, plus reasonable attorneys’ fees. Since the offer provided for all of the relief that the plaintiff-employee could have received had she pursued the claim through trial, the offer constituted “full relief” of her claims. Thereafter, the employer moved to dismiss the lawsuit on grounds that the court lacked subject-matter jurisdiction because the offer of judgment had mooted plaintiff’s claim, which the trial court granted. However, on appeal, the Third Circuit Court of Appeals unanimously reversed the trial court ruling and rejected the defendant-employer’s argument based on several policy and equity-based reasons. Among other reasons, the appellate court held that such a ruling would allow defendant-employers to “pick off” the claims of plaintiffs to avoid class certification. We believe these policy-based reasons are flawed because they do not take into account the economic reality of FLSA claims. For example, unnamed but unsettled plaintiff-employees could still sue and would not be precluded from asserting their own FLSA claims, even on behalf of a class of similarly-situated employees against the defendant-employer. Thus, we believe the Third Circuit’s concerns are somewhat theoretical in nature.

The Third Circuit’s holding in Symczyk and the Ninth Circuit’s holding in Pitts leaves a defendant-employer with virtually no recourse except to defend an FLSA collective action lawsuit. The employer cannot make an offer of judgment, even in the full amount of the plaintiff-employee’s claim. Instead, it must proceed with discovery and do its best to defend against the conditional-certification motion. In other words, at least in Third and Ninth Circuits, employers faced with a collective FLSA lawsuit should be prepared to defend and/or settle with the entire class because an offer of judgment with the named plaintiff will not moot the FLSA claims prior to class certification.

In light of this split in authority, it is likely the U.S. Supreme Court will have to weigh in on the issue. However, until then, the effect of these differing cases on any pending FLSA case will likely depend upon the jurisdiction where the claim is pending.

Should you have any questions regarding these cases, or on the FLSA in general, please do not hesitate to contact E. Jason Tremblay of Arnstein & Lehr LLP at (312) 876-6676.

E. Jason Tremblay

In a rare FLSA victory for employers, the 11th Circuit recently handled down a key decision for employers seeing to limit their exposure to attorneys’ fees in FLSA actions which, in many cases, can far exceed the amount of damages suffered by the employees. In Dionne v. Floormasters Enters, 2011 U.S. App. Lexis 15560 (11th Cir July 28, 2011), the court effectively held that employers can avoid paying attorneys’ fees in FLSA cases by paying the employees all wages claimed, plus the statutory liquidated damage amount, prior to judgment. Specifically, since the employer in Dionne had given plaintiff all the relief he was entitled to through the litigation, the trial court dismissed the case because there was no “case or controversy.” And, once that happened, the court went on to hold that the plaintiff’s attorney was not entitled to an award of fees because there was no judicial determination in the plaintiff’s favor, a condition precedent to an award of attorneys’ fees under the FLSA. Therefore, in cases where liability is likely to be established and the amount of unpaid wages or overtime is easily calculated, this case serves as a roadmap to resolving the case early on in the litigation without the risk of being required to pay attorneys’ fees.

To read the case in full, please click here.

The dealership moved to stay and compel arbitration based upon employment agreements with the plaintiffs that included arbitration clauses.  The employees argued that FLSA claims can’t be forced into arbitration, and that employees can’t waive their rights to have FLSA cases heard in court.

Federal District Judge Kenneth A. Marra disagreed and ordered the plaintiffs’ cases to arbitration. To read the decision, click here.  Ghidon, et al., v. Rick Case Hyundai, et al., No. 09-60088 (SD FL, 2009).

Employment Arbitration: Law and Practice By Paul Starkman, Gail Golman Holtzman, Donald J. Spero

For more comprehensive information and guidance on arbitrating employment claims, see Employment Arbitration: Law and Practice By Arnstein & Lehr partner and Employment Practice Group leader Paul Starkman,  Gail Golman Holtzman, Donald J. Spero.