The Supreme Court recently upheld a whopping $2.9M dollar judgment in a class action lawsuit against Tyson Foods brought by its current and former employees. Law nerds, such as myself, anticipated the potential that this case might create a rule narrowing the circumstances in which employees could bring a class action lawsuit against their employer. Instead, the Supreme Court strengthened existing rules on wage-an-hour law (how an employer has to pay their employees) and maintaining records. This means that it’s more important than ever that both employees and employers understand how this law works in order to either protect your rights or protect your neck from Tyson’s fate.
The Tyson Case
Tyson Food was originally sued by its employees for not paying them for the time it took to take on and off protective gear necessary for their positions. In 1998, Tyson had been ordered by a court to start paying for this time spent donning and doffing protective gear. While Tyson complied at first, they stopped paying for the time spent on protective gear in 2007—instead only paying select employees for time spent with gear. At the time of the suit, Tyson paid its workers on a “gang-time” system. Under this system, Tyson paid only for time employees were at their work stations and the production line was moving.
Tyson’s employees, unsatisfied with this development, formed a class action lawsuit to get the unpaid overtime resulting from Tyson’s failure to pay for time spent dealing with gear. The employees won in the first go round to the tune of $2.9M (less than half of the $6.7M they were asking for), then they won again on Tyson’s appeal to U.S. Eighth Circuit Court of Appeals. Tyson, having lost twice, went to the Supreme Court arguing that the employees shouldn’t have been allowed to sue as a class and that there was no way to figure out which employees should receive damages.
Lawsuits with Class
In order to understand Tyson’s first complaint, it’s important to first understand how class action lawsuits work. In simplest terms, class actions are lawsuits brought by a group of people who’ve suffered the same or similar injury. One of the common examples is, as here, employees suing their employer over a policy that affected all of them.
Employment lawsuits can form a collective action under the rules of the Fair Labor Standards Act (FLSA), a class action under Federal Rules of Civil Procedure 23, or both. The biggest difference between the two is how you become a member of the suit. A collective action requires each member of the suit to opt into the suit. A Rule 23 class action includes all unnamed members who fall within the class definition unless they opt out. In Tyson case, the employees collective action had 444 members while the Rule 23 class action lawsuit had 3,344.
Tyson argued to the Supreme Court that neither the collective action nor the class action were properly certified (told that they were proper class action suits) because the employees didn’t spend the same amount of time dealing with protective gear. They said that this means that the employees didn’t have a common complaint.
Tyson had good reason to think that the Supreme Court would back them up on this argument. Just a few years back the Supreme Court ruled in favor of Walmart in a class action employment discrimination case—saying the 1.5M class members didn’t have similar enough situations to be certified as a class.
However, much to Tyson’s chagrin, the Supreme Court didn’t think this case was similar to the Walmart case. Tyson’s fatal flaw? They never kept any records of the time their employees spent changing into and out of their gear.
The FLSA and Proper Records in Wage an Hour Cases
The Supreme Court rejected Tyson’s argument based on the rules of the FLSA. The FLSA is a body of federal law which sets rules for, among other things, minimum wage, overtime pay, and recordkeeping requirements.
The FLSA requires employers to pay for activities integral and indispensable to regular work, even if these activities don’t occur at the employee’s workstation. It also requires employers to keep accurate records of the hours their employees work as well as wages earned. These recordkeeping requirements can become more involved from state to state, and even the FLSA has some more specific requirements.
Where an employer fails to keep proper records, employees can rely on representative evidence to establish the hours they’ve worked. This evidence only needs to be sufficient for a reasonable inference that the employees’ evidence is an appropriate approximation of the hours they worked. For this reason, it is incredibly important for an employer to keep legally compliant records.
Tyson kept no records whatsoever of the time their employees spent changing in and out of protective gear. For this reason, Tyson’s employees were able to rely on the evidence of an expert to determine the average time it took to deal with the protective gear and calculate unpaid overtime based on this average. The Supreme Court found that Tyson’s employees, working at the same facility and affected by the same policy, were similarly situated in that they could all have introduced the same expert study to establish the hours they weren’t paid for. This is as opposed to the Walmart case, where each instance of alleged discrimination arose from a different set of facts and had a different effect.
Implications of the Supreme Court’s Decision
Tyson’s second argument, that the class included members who had no right damages, led the Supreme Court to send the case back down to the district court to figure out how to allocate the $2.9M.
However, the Supreme Court’s first ruling still means that where an employer doesn’t keep records, they are opening themselves up to even more liability than they could have expected. For employees, this makes a cheaper means of litigating their rights more available. For employers, it means that improper records may be open the door to an easily certified class action lawsuit against them—just like Tyson. It’s worth it for employers to seek out an employment lawyer to ensure their records don’t leave them vulnerable to this situation—as Tyson found out.
Authored by Jonathan Lurie, LegalMatch Legal Writer and Attorney at Law