The Fair Labor Standards Act (FLSA) requires employers to pay covered, non-exempt employees the minimum wage for all hours worked and overtime for all hours worked in excess of 40. The Department of Labor sometimes enforces the various contours of the FLSA, but more often we see them prosecuted privately through “collective actions.” These actions allow employees to collect unpaid wages, liquidated damages, costs, and attorneys’ fees. Because of the hundreds or even thousands of employees who may choose to “opt-in” to the suit, they can carry high exposure and are expensive to litigate. Given their attractiveness to plaintiff’s attorneys, it is no surprise that the number of FLSA suits has tripled over the past decade. Fortunately, the United States Supreme Court’s decision in Genesis Healthcare Corporation v. Symczyk provides employers with a powerful weapon to end this expensive litigation before it gets off the ground by offering named plaintiffs full relief.
The United States Supreme Court ruled on April 16, 2013 that a nurse’s collective action became moot—meaning that the court lost jurisdiction to hear it—when her individual claim become moot and no other nurses had joined the suit. Without other employees, the nurse lacked any personal interest in representing others and, therefore, the case could not proceed as a collective action. This matters because the Sixth Circuit, in O’Brien v. Ed Donnelly Enterprises, ruled that an offer of judgment satisfying a plaintiff’s entire demand moots the case and can be used to show the court lacks jurisdiction.
Employers are now armed with a powerful weapon to combat this ever-increasing and expensive litigation. When a collective action is filed, employers should quickly consider a Rule 68 offer of judgment satisfying the named plaintiff’s entire claim, including unpaid wages, liquidated damages, costs, and attorneys’ fees. If the offer is accepted within fourteen days, judgment is entered against the employer for that amount and the exposure associated with employees who might have otherwise joined is avoided. If the offer of judgment is not accepted within fourteen days, the employee’s individual claim becomes moot and— provided that no other employees have joined the suit—employers can move to dismiss under Genesis for lack of subject matter jurisdiction.
Every wage-and-hour case is different. But the takeaway of Genesis is that it provides employers with a strategy to minimize their liability on alleged FLSA violations before a collective action gets off the ground.
Please do not hesitate to contact a member of our Employment Practices Group if you have questions about the decision, want advice on FLSA compliance, need to defend a collective action, or have an employment question.