Truck Drivers

A California appellate court has confirmed a lower court’s ruling for a truck driver who argued an arbitration provision in his employment contract was invalid, allowing him to file a class action lawsuit per California’s labor laws.

In May 2012, Tony Muro was hired by Cornerstone Staffing Solutions, an employee staffing firm providing assistance to a variety of employers throughout California, Michigan, Nevada and New Jersey, according to court documents. Cornerstone specialized in logistics and transportation staffing and recruitment. Muro’s position was to drive trucks for Team Campbell, shipping products from its location in Fontana, California across the country.

When he joined Cornerstone, Muro signed an employment contract that included a provision requiring that any employment disputes be resolved in arbitration, as well as a separate provision in which he waived his right to pursue class actions, either in court or in arbitration.

In 2015, Muro filed a proposed class action against Cornerstone for a number of alleged violations of California wage law, including failure to pay all compensation for time worked, failure to provide meal periods, failure to authorize/permit rest breaks, failure to comply with itemized wage statements, failure to pay timely wages due at termination/waiting time penalties, and violation of the unfair competition law.

Cornerstone responded to the suit by seeking to enforce the arbitration provision as to Muro’s individual claims and dismiss the class allegations. Cornerstone claimed that Muro was not exempt from the Federal Arbitration Act (“FAA”) because he worked for a staffing firm and not a transportation company. But Muro argued that an exception to the FAA applied in his case because he was a transportation worker.

A three-judge panel for California’s Fourth Appellate District sided with Muro, holding that the FAA exemption hinges on the type of work done by an employee, and not a company’s main industry.

“Absent specific direction from the United States Supreme Court, we decline to … require that workers who are actually engaged in transporting goods in foreign or interstate commerce also prove that their employer is involved in the transportation industry,” Justice William Dato wrote.

Since the FAA is inapplicable to Muro’s contract, the panel said, the correct test to determine whether the class waiver provision should be enforced is a test prescribed under California appellate precedent.

“We conclude that … the trial court correctly found a class proceeding would be a significantly more effective way of permitting the employees to enforce their statutory rights,” the panel said. “For these reasons, based on its finding the class waiver constituted an unlawful exculpatory clause, the trial court properly denied the petition to compel arbitration.”

A recent Tennessee overtime case resulted in two conflicting and competing legal concepts – an employee’s right to initiate collective action litigation under the Fair Labor Standards Act (“FLSA”) and an employer’s right to require an employee to sign waivers of their right to pursue a collective action under the terms of an arbitration agreement. This case in Tennessee highlights the complexities that can sometimes arise in Federal Labor Standards Act cases.

Allegations of Altering Time Sheets to Reduce Number of Hours Worked

The lead plaintiff in this case had been employed for two years as an hourly employee for a national franchise that operated truck stops. Her case, similar to many FLSA cases, alleged that the employer intentionally altered time sheets in an attempt to reduce number of reported hours per week, effectively dodging legal obligations to provide overtime compensation.

The FLSA requires that employers pay all non-exempt employees at a rate of one and one half their regular hourly rate for all hours worked over forty in a single work week.  The failure to pay these overtime premiums can have severe consequences for an employer.  If an employee believes that they and other similarly situated workers have been deprived of overtime wages, the FLSA permits them to file an action on behalf of themselves and also on behalf of all similarly situated employees.

Filing a Collective Action

Often times in wage and hour cases, defending a claim against an individual can be relatively inconsequential to an employer.  However, when that employee gathers a large group of his co-workers and files a collective action, the case becomes something of great concern to an employer who is caught skimming wages from their employees.

FLSA collective actions are similar in nature to class actions. A lead plaintiff will initiate a case by filing a complaint, identify a group of current or former employees that were harmed or affected by the employers actions and are similarly situated to the lead plaintiff, then the lead plaintiff will file a motion for conditional certification, which asks the Court to certify the collective to proceed with their claims together. After a court certifies the case as a collective action, the defendant will be required to turn over a list that identifies each individual that is to be notified that the case is pending.  Notice will subsequently be sent to each member of the collective, and they will be afforded an opt-in period (generally between 60 and 90 days) in which they can opt-into the lawsuit.

The Plaintiff identified a class of over 80,000 workers similarly situated workers.  However, her employer argued against certification of the collective because many members of the collective had signed a waiver of their right to proceed in a collective action by signing an arbitration agreement that included a class waiver.  If successful in their argument, the employer would only face a lawsuit seeking a small amount of damages by a single employee, as opposed to facing a collective claim by up to 80,000 of their employees.

However, the named plaintiff never signed an arbitration agreement, nor did she waive her right to pursue a collective action. The employer opposed conditional certification of the FLSA collective and argued that approximately 50,000 of potential members of the collective signed valid arbitration agreements with class waivers and those specific employees should not be provided with notice of the collective action..

The federal trial judge, however, granted conditional certification of Plaintiffs’ collective and allowed her to provide notice to the other harmed workers, including the 50,000 other workers that signed arbitration agreements with the trucking company. The employer attempted to appeal this decision but obtained no relief from the Sixth Circuit Court of Appeals.

Currently, the United States Supreme Court has taken up the issue as to whether class or collective action waivers in arbitration agreements violated the National Labor Relations Act.  Many expect the United States Supreme Court to decide the issue by next year.  The decision will have a massive impact on the ability for individuals to advocate their rights against large employers who skim wages from large groups of employees a few dollars at a time.

Case: Dwight.D.Mitchell v Federal Express Corp case number 8:16-cv03172 in U.S. District Court; District of Maryland.

FedEx must face a proposed collective class action with allegations from security workers claiming overtime wages were denied, according to a Maryland federal judge., who stated that it is too soon to evaluate whether FedEx is entitled to exemptions from overtime provisions subjected to Fair Labor Standards Acts (FLSA).

FedEx Motion was Denied

FedEx motion to dismiss Dwight D Mitchells’ suit has been denied by Senior U.S. District Judge Deborah K. Chasanow, who concluded that the litigation findings were too premature to be able to efficiently determine whether FLSA exemptions applied to the FedEx packaging company.

Judge Chasanow stated “Though the defendant has provided other case examples in which court findings have found that FedEx qualifies to be classed as an air carrier, it cannot meet the high burden placed on defendants relying on an affirmative defence in a motion to dismiss”

The judge explained that the question of how employees spend their working time is a question of fact, regardless of whether employees activities exclude them from overtime benefits of the FLSA. To be able to determine whether Mitchell’s claim is eligible for FLSA exemption would require individualised assessment of the actual work duties performed by that employee.

Judge Chasanow commented, “Without adequate detailed information to the defendant’s air transportation business and plaintiffs’ job duties, any determination made to the plaintiffs status would be inevitably premature.”

The judge allowed the notion in Mitchells claim that FedEx failed to pay overtime hours worked in excess of forty hours, which is in violation of FLSA overtime provisions. She also allowed that the failure to pay overtime by FedEx violated Maryland Wage and Hour Law.

Judge Chasanow stated that ‘ A determination of how MWHL’s wage and hour requirements relate to the defendant’s routes, services and prices necessitates the development of factual records. More information is required to assess how the defendant provides these services.”

FedEx is intending to continue defending the lawsuit and stated that “while they respectfully disagree with the court’s opinion, this is only a procedural ruling and does not yet address the allegations substance, which FedEx believes are without merit.

 

The Plaintiff’s job duties and allegations

Mitchell, who is a senior security specialist that has been employed with FedEx since 2006, alleged in his complaint made in September 2016 that FedEx misclassified him as an exempt salaried employee to avoid paying overtime wages, including excess travelling time resulting in additional overtime.

Employed as a security specialist, Mitchell’s job is described as investigating and implementing corrective action plans regarding workplace theft and violence, as well as investigating and resolving pilferages, vandalism acts, security policy violations, misconduct and other activities that negatively affect the FedEx company.

When Mitchell was promoted to his current role of senior security specialist in 2008, he undertook additional tasks such as negating customer complaints and investigating delivery problems and was required by FedEx to be on call on both weekends and weekdays after his shift had ended.

Mitchell alleges that while he was on-call, he was required to stay within geographical distance of FedEx facilities and was banned from alcohol consumption in case he was needed to handle urgent work issues. Mitchell claimed on average he received up to three calls per day after his shift had already ended, and each call could take anywhere from a couple of minutes to several hours for resolution.

Mitchell alleged he consistently works between fifty to sixty hours per week without overtime due to the multiple areas of work he was assigned to manage.

A major disagreement over the application of various laws between the parties

Mitchell hit back at FedEx’s motion to dismiss in January, stating his suit should be granted permission to proceed to determine whether FedEx is an ‘air carrier’ under federal law that may make FedEx exempt from the FLSA overtime provision.

 “Plaintiff has clearly and concisely provided a cause of action under the FLSA which relief can be granted” Mitchell stated in his response brief. “Plaintiff alleges that he was employed by defendant, that he was paid as an exempt employee by the defendant, and that plaintiff worked overtime without compensation when he was a non-exempt employee entitled to overtime payments.”

FedEx responded and argued that its company is classified as an air carrier and official duties include engagement with interstate commerce, and it’s subject to the provisions of Title II of the Railway Labor Act therefore exempt from overtime requirements of FLSA. FedEx argued that all FedEx employees are subject to the RLA.

FedEx contested that Mitchell’s state law claim should be dismissed due to being pre-empted by the Airline Deregulation Act, which includes provisions that bar states from regulating airline industry in relation to routes, services and prices.

FedEx filed within their response that enforcing the state law in question here would have a forbidden significant effect on FedEx’s current services and pricings and that even an indirect impact requires pre-emption.

In Mitchell’s response, he countered that neither the RLA or FLSA define the term ‘common carrier by air’ and further investigation was required to determine whether FedEx fits the definition of an air carrier.