Immigrant Workers' Fear of Retaliation Cited for Federal Court's Approving State Law Class Action

Posted: March 24, 2008

Seeking to protect a group of immigrant workers from retaliation related to participation in a collective action under the Fair Labor Standards Act, which requires that they affirmatively “opt in” to the suit, a United States District Court in New York has certified a class action under the Federal Rules of Civil Procedure, in which objecting class members have to “opt out” of the suit, to allow the immigrants to pursue state law claims for unpaid overtime under New York’s Labor Law. Guzman v. VLM, Inc., d/b/a Reliable Bakery et al., No. 07-CV-1126 (JG) (E.D.N.Y. Mar. 2, 2008). Although the court previously certified an FLSA collective action in October 2007, this decision encourages the workers, who were mainly from Pakistan and Central and South America, to pursue their state law claims with less risk of retribution in an “opt out” class action under FRCP Rule 23, as only four workers had elected to opt into the collective action. The court found that the workers’ fear of retaliation was preventing them from participating in the FLSA collective action and that a Rule 23 class action would serve the interests of fairness, convenience and judicial economy, as the two actions involved the same issues.

The plaintiffs, bakery workers, sued their employer and its president claiming that they regularly worked over 40 hours per week, but did not receive overtime pay, in violation of the FLSA and New York Labor Law. The workers also claimed they did not receive “spread of hours” compensation for hours worked over 10 in one day. Allegedly, when one of the workers complained to the company’s president about his pay, the president told him that the company “was paying the rest of the workers the same way” and that the company could not pay him more without paying everyone else more. The workers’ pay stubs and pay checks (submitted in support of the motion for class certification) did not list an hourly rate of pay or the hours worked.

In response to the plaintiffs’ allegations, the employer denied that it failed to pay overtime and submitted affidavits from 10 workers who stated that they all received the minimum wage, overtime, as well as incentive bonuses. Charts of the employees’ wages were attached to the affidavits. According to the court, those charts showed “curious” incentive bonuses “apparently intended to insulate the employee’s pay from variation based on hours actually worked.” The court noted that the incentive bonuses varied from week to week and that the bonuses “smoothe[d] the amount of weekly pay to a whole dollar amount, and usually one divisible by 10.” The charts further indicated that the incentive bonuses allegedly decreased as the amount of hours worked in a week increased so the employee’s pay remained at the same level. The plaintiffs denied receiving any incentive bonuses.

The court reviewed the requirements for Rule 23 class certification. In determining whether to certify a class, the court must examine whether the class can prove: (1) “numerosity” of the class, (2) the “commonality” of questions of law or fact, (3) the “typicality” of the named plaintiffs’ claims or defenses, and (4) the “adequacy” of the named plaintiffs as class representatives. If these elements are established, Rule 23(b)(3) allows a class action to be “maintained” as long as common legal and factual questions “predominate” of over individual ones. The final requirement is that a class action be “superior to other available methods for fairly and efficiently adjudicating the controversy.”

Addressing these requirements, the court determined that the class, consisting of between 133 and 250 members, was sufficiently numerous. The employer did not dispute the commonality or adequacy requirements, and the court determined that they were met. The court determined that the plaintiffs’ claims were typical of the class based on the company’s president’s alleged statements regarding payments to employees, the incentive bonus payments, and the workers’ statements regarding the employer’s failure to pay overtime.

As to whether the questions of law or fact common to class members predominate over any questions affecting only individual members, the court concluded that the predominance criterion was satisfied because the central issue in the case turned on “whether the defendants had a uniform policy or practice of denying overtime and spread-of-hours compensation to its employees.”

Lastly, the court addressed whether the class action would be superior to other methods of resolving the controversy. It found that the “values of judicial economy, convenience, and fairness all favor exercising supplemental jurisdiction.” The court noted that the “factual overlap between the federal claims and the state claims” was almost complete. Thus, it would not serve the “interests of convenience or judicial economy to relitigate in state court the defendants’ pay practices.” The court also found that the plaintiffs’ fear of retaliation warranted allowing an opt-out proceeding. The court stated that “the FLSA’s opt-in procedure is simply not an equivalent stand-in for a class action in this case.” It noted that Second Circuit precedent permitted federal and state law class actions to proceed simultaneously. Accordingly, the court granted the plaintiffs’ motion for class certification.

This decision seeks to address a concern of wage-hour class action participants that may be especially acute in the case of immigrant workers – that they will suffer retaliation – in a unique way. The protection of passivity afforded by this solution, however, is not complete. At some point, the workers will need to participate actively in the case, either in discovery or at trial, either of which could raise the specter of job loss in the minds of these workers.

Employers should be aware that they often can turn a reasonably defensible case into a difficult one by failing to prevent their managers from taking allegedly retaliatory actions against employees who have asserted claims for violations of protected federal and state law rights. Employers should train their supervisors and managers on avoidance of retaliation for protected activity. Employers also should consult with counsel before taking any adverse employment action against employees who have asserted claims against them.