Status of “Collective Actions” Under the FLSA (Fair Labor Standards Act) Since Genesis Healthcare Corporation v. Symczyk

us supreme court.jpgThe FLSA, codified at 29 U.S.C. §201 et seq., was enacted in 1938 in order to help the “lowest paid … of the nation’s working population” to secure a livable wage. Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 707 n. 18 (1945). Current FLSA law allows an employee to maintain an action against the employer “in behalf of himself or themselves and other employees similarly situated.” 29 U.S.C. §216(b).

The purpose of the provision authorizing an employee to sue in behalf of “other employees similarly situated,” which has come to be known as the “Collective Action Provision,” is to minimize litigation by allowing numerous claims to be brought against the same employer in one lawsuit. This benefits both sides. It benefits employees by making it easier for them to hire lawyers to handle their claims. In most FLSA claims, the amount in dispute is relatively small. Collective Action cases raise the stakes, making FLSA cases more enticing to lawyers. This is a practical reality, one that courts recognize as legitimate. CA cases benefit employers by allowing numerous claims to be resolved in one action instead of in individual lawsuits.

A recent U.S. Supreme Court decision appears to put Collective Action claims at risk.

In Genesis Healthcare Corporation v. Symczyk, 133 S. Ct. 1523 (2013), Symczyk sued under the FLSA for herself and other co-workers. The District Court for the Eastern District of Pennsylvania dismissed Symczyk’s complaint for lack of subject matter jurisdiction after defendants Genesis Healthcare Corporation and Elder Care Resources Corporation extended an offer of judgment under Fed.R.Civ.P. 68 in full satisfaction of her alleged damages, fees, and costs. The trial court decision was appealed. The United States Court of Appeals, Third Circuit, framed the issue as follows: “At issue in this case is whether a collective action brought under § 216(b) of the FLSA becomes moot when, prior to moving for ‘”conditional certification”‘ and prior to any other plaintiff opting in to the suit, the putative representative receives a Rule 68 offer.” The court answered No, reversing the trial court’s ruling. Symczyk v. Genesis HealthCare Corp., 656 F. 3d 189 (3rd Cir. 2011).

In essence, the Court of Appeals decided that removing or “picking off” the lead plaintiff from the FLSA case did not moot the action.

Because of a split of authority on this issue, the U.S. Supreme Court elected to review Symczyk.

In a 5-4 decision, the Court ruled for the employer. In its view, if a plaintiff’s claim is mooted, the entire lawsuit simultaneously becomes moot. Not surprisingly, the majority consisted of Chief Justice John G. Roberts and Justices Scalia, Kennedy, Alito, and Thomas. (Biographies of current Justices.)

All in all, being able to short circuit active lawsuits to prevent the claims of similarly situated individuals from being brought probably harms employees more than it does employers. Most employees do not know their rights and others sit on them for lack of initiative. Lawyers are not allowed to solicit clients to advise them of their rights or motivate them to proceed. Accordingly, without an active lawsuit to join, their claims are less likely to be prosecuted. Knowing this, employers prefer to nip CA claims in the bud.

Had plaintiff Symczyk objected to then proved that the Rule 68 offer did not fully compensate her, the action would have been allowed to proceed. Once the trial court had certified that the other employees were similarly situated, the action could not be shut down by a subsequent offer to the lead plaintiff.

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