Time-Shaving' Policies Challenged

​Seasonal restaurant employees who alleged that they were victims of "time-shaving" policies that deprived them of minimum wage and overtime could sue together under the Fair Labor Standards Act (FLSA), the U.S. District Court for the District of Maryland decided. It preliminarily certified an FLSA collective action.

The employer is a seasonal restaurant that operates from early May through October in Ocean City, Md. It hires approximately 70 to 90 seasonal employees to fill roles in the restaurant.

The plaintiffs worked as servers at various points from 2014 through 2017. Many employees worked in multiple roles, including as food runners, expediters, hostesses, bartenders and souvenir-shop workers. The plaintiffs alleged that when they worked as servers, the defendants had in place a common scheme to avoid paying them for the full number of hours they worked and to avoid overtime payment.

These policies included requiring servers to arrive early to prepare the restaurant for opening and to stay late to clean the restaurant; a time-shaving practice whereby servers' recorded hours did not include the time worked before patrons were seated and after patrons left; a tip-pooling arrangement that provided tips to staff members who should not have been included, depriving servers of tips to which they were entitled; and other policies that may have reduced their wages below minimum wage, such as requiring waitstaff to purchase certain equipment and to pay the bills of customers who left without paying.

The plaintiffs asked the district court to certify an FLSA class of all servers and bartenders from the three-year period preceding the date their lawsuit was filed who worked for the employer and received wages of less than the federal minimum wage of $7.25 per hour.

[SHRM members-only toolkit: Complying with U.S. Wage and Hour Laws and Wage Payment Laws]

When deciding whether to certify an FLSA collective action, courts generally follow a two-stage process:

1. They make a threshold determination of whether the plaintiffs have demonstrated that potential class members are similarly situated, such that court-facilitated notice to the potential class members would be appropriate.

2. They conduct a more stringent inquiry to determine whether the plaintiffs really are similarly situated. "Similarly situated" does not mean identical but whether the "members can demonstrate that they were victims of a common policy, scheme, or plan that violated the law." Since employees cannot reasonably be expected to have evidence of a stated policy of refusing to pay overtime, to meet their burden at the initial stage, the plaintiffs must make "a relatively modest factual showing."

In this case, the district court emphasized that the plaintiffs:

• Worked in the same position as servers.
  
• Were subject to the same pay structure.
  
• Were subject to the same alleged time-shaving policies in 2014 and 2015 and the same alleged failure to pay overtime wages in 2016.
  

In addition, all servers were subject to:

• The same tipping pool practice.
  
• The same policies regarding purchase of business supplies.
  
• The same policies regarding payment of walkout bills.
  

Taken together, the district court concluded, these facts indicated that the servers were "subject to a common policy" that allegedly deprived them of wages for all hours worked and overtime wages to which they were entitled.

The employer argued that the plaintiffs were not similarly situated because only some of the opt-in plaintiffs submitted affidavits, and the affidavits that were filed included discrepancies among them. It also argued that certification of an FLSA collective action should be denied due to manageability.

But, the district court stated, plaintiffs are not required to be identical to be considered similarly situated. The issues specific to each server regarding the number of unpaid hours worked or for which they were potentially underpaid were characterized by the district court as insufficient to defeat the plaintiffs' conditional certification.

Knox v. Hooper's Crab House Inc., D Md., No. CCB-17-1853 (Feb. 6, 2018).

Professional Pointer: The pay nonexempt employees should receive requires knowing the number of hours worked. Since "a workday" generally means the period between the time on any particular day when an employee commences and ceases principal activity, the workday may be longer than an employee's shift.

Roger S. Achille is an attorney and professor at Johnson & Wales University in Providence, R.I.

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