Not a Member? Get access to HR news and resources that you can trust.
Here is how HR can help prevent the missteps that could cost your company big in court.
Is your employee handbook ready for the changing world of work? With SHRM’s Employee Handbook Builder get peace of mind that your handbook is up-to-date.
60+ new SHRM Seminar dates in 10 U.S. cities and virtually.
Expand your influence and learn how to become an effective leader -- Join us in Phoenix, AZ, October 2-4, 2017.
A district court did not err when it allowed a jury to evaluate the overtime claims of nearly 300 employees of a cable installation company based on a sample of 17 plaintiffs, the 6th U.S. Circuit Court of Appeals ruled.
FTS USA LLC is a company that contracts with various cable companies such as Comcast and Time Warner to provide cable installation and support primarily in Alabama, Arkansas, Florida, Mississippi and Tennessee. FTS employs technicians at local field offices, called profit centers. UniTek USA, LLC, is FTS’s parent company, and is in the business of wireless, telecommunications, cable and satellite services, and provides human resources and payroll functions to FTS.
All FTS technicians perform similar job duties and receive the same rate of compensation using the companywide timekeeping system. FTS technicians report to a profit center at the beginning of each workday to receive their job assignments. FTS technicians perform the same duties each day, which is to install cable. Employees record their time worked by hand, and FTS project managers transmit the time sheets to UniTek’s director of payroll. Technicians are paid pursuant to a piece rate compensation plan, meaning each job is worth a set amount of pay, regardless of the time it takes to complete the job. FTS technicians are paid an overtime premium by applying a 0.5 multiplier to the regular rate for overtime hours. (Because the piece rate also provides regular rate compensation for overtime hours, the 0.5 multiplier results in time-and-a-half overtime pay.)
A group of FTS technicians filed a collective action lawsuit under the Fair Labor Standards Act (FLSA) claiming that FTS implemented a companywide time-shaving policy that required technicians to systematically underreport their overtime hours. They claimed that managers told or encouraged technicians to underreport time, or even falsified time sheets themselves. At trial, FTS technicians presented documentary evidence and testimony from technicians, managers and an executive showing that FTS’s time-shaving policy originated with FTS's corporate office. Various types of evidence were submitted to show that managers instructed technicians to underreport hours, and that they were instructed to do so by the corporate office. No evidence was presented that the managers and technicians were disciplined for underreporting time.
During the litigation, the parties agreed upon a discovery plan that focused upon a small group of the total number of nearly 300 employees. At trial, only 17 employees presented evidence and testimony concerning their hours worked and potential overtime owed. When this evidence was submitted to a jury, the jury found an average number of overtime hours that were unpaid to the testifying employees. After the trial, the judge used that same average and a 1.5 multiplier to determine damages for the 17 testifying employees and 279 employees who did not testify at the trial.
FTS and UniTek argued that the jury should have determined damages for the other, nontestifying employees, and that the 17 employees who testified were not representative of the entire group of employees.
On appeal, the 6th Circuit ruled that the judge did not err in treating the 17 employees who testified as representative of the entire group of FTS employees. The court also found that it was not necessary for the jury to determine damages for every single FTS employee who was part of the collective action. The court noted that the FLSA allows for a collective action procedure so that representative evidence can be used and a group of employees may benefit from the testimony of a small sample of the employees. Nevertheless, the 6th Circuit overturned the 1.5 multiplier used by the trial court and found that a 0.5 multiplier should have been used instead (because the 1.5 multiplier resulted in duplicative damages due to the piece rate paid for overtime hours).
A dissenting judge noted that differences in testimony between the 17 testifying plaintiffs showed that the evidence was not uniform. The judge pointed out that some of the employees merely claimed that they were encouraged to keep their hours short by FTS managers, which does not violate the FLSA. The judge also argued that using an average for the small group of employees, who may not be a representative sample of all of the employees, was not appropriate.
Monroe v. FTS USA, LLC, 6th Cir., No. 14-6063 (March 2, 2016).
Professional Pointer: The FLSA is considered a remedial statute. This means that courts are encouraged to read it broadly to give employees the maximum protections that may be provided by the law.
Jeffrey L. Rhodes is an attorney with Doumar Martin PLLC in Arlington, Va.
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Your session has expired. Please log in again before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
CA Resources at Your Fingertips
SHRM’s HR Vendor Directory contains over 3,200 companies