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Petition Seeks Supreme Court Review of FLSA Collective Actions for Workers in New Jersey and Nationwide

The Fair Labor Standards Act (FLSA) establishes a national minimum wage and sets standards for overtime compensation. While New Jersey has set a higher minimum wage than the federal rate, the FLSA still plays a critical role in many New Jersey wage and hour disputes. It allows workers to file “collective actions,” which are similar in many ways to class actions. A petition for certiorari is currently pending before the U.S. Supreme Court and asks the justices to address ambiguity in the FLSA’s provision on collective actions. The employer in the case filed the petition in August 2020, but both parties have asked the court to defer consideration of the petition while they engage in settlement negotiations. If they reach a settlement, the employer has indicated that it will withdraw the petition, meaning that the court will not hear the case.

The federal minimum wage has been at its current level, $7.25 per hour, since July 2010. See 29 U.S.C. § 206(a)(1)(C). The provisions regarding overtime have remained largely unchanged since Congress first enacted the statute in 1938. Employers must pay non-exempt employees at one-and-a-half times their regular rate for work time during a week that exceeds forty hours. Id. at § 207(a)(1).

Employers who violate the minimum wage or overtime provisions of the FLSA may be liable for the amount of unpaid wages, plus an equal amount as unliquidated damages. If, for example, an employer withholds $1,000 in overtime compensation from an employee, a court may order them to pay that employee $2,000 in damages. The FLSA allows an employee to file suit on their own behalf and for other “similarly situated” employees who have consented in writing to inclusion in the lawsuit. Id. at § 216(b). The statute does not define “similarly situated.”

The petition for certiorari before the Supreme Court comes from a Second Circuit ruling that partly favored the plaintiff employees. They alleged in a New York federal court that their employer misclassified them as exempt employees. They sought certification as a class action under Rule 23 of the Federal Rules of Civil Procedure and as a collective action under the FLSA. The trial court denied certification as a class. It also decertified the collective action, holding that the plaintiffs had not established that they were all “similarly situated.”

The Second Circuit vacated the part of the lower court order that decertified the collective action. It held that the district court erred by holding the plaintiff’s FLSA collective action claims to the same standard as a class action under Rule 23. While Rule 23 sets clear standards for matters like numerosity and commonality of claims, the FLSA only requires that the plaintiffs be “similarly situated.”

A split arguably exists among circuit courts of appeal about how to define “similarly situated” in FLSA collective actions. The Third Circuit, whose jurisdiction includes New Jersey, has adopted an “ad hoc approach” that gives district judges a great deal of discretion. Other courts hold FLSA collective actions to a standard close to that of Rule 23. Whether the Supreme Court will resolve the question remains to be seen.

The experienced and knowledgeable wage and hour dispute attorneys at the Resnick Law Group advocate for the rights of workers in New Jersey and New York. To schedule a confidential consultation to discuss your rights and options with a member of our team, please contact us today online, at 973-781-1204, or at 646-867-7997.

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