Employment Alert: Southern District of New York Decertifies FLSA Collective Action

In a departure from recent trends, the Southern District of New York recently decertified a Fair Labor Standards Act ("FLSA") collective action, signaling the court's willingness to scrutinize plaintiff's individual wage and hour claims. The case is Seward v. International Business Machines Corp.

Facts of the Case

Charles Seward worked for International Business Machines ("IBM") as a call center representative ("CCR") at IBM's Riveredge, Georgia, facility.

Mr. Seward's primary job duty was fielding incoming telephone calls. IBM required him to be "call ready" at the start of his shift.

Mr. Seward filed an FLSA collective action, alleging that IBM required CCRs at the Riveredge facility to perform tasks off the clock prior to the start of their shifts—primarily "booting up" their computers—so that they would be "call ready" at the start of their shifts.

In July 2009, the court conditionally certified Mr. Seward's collective action. Opt-in notices were sent to 663 current or former CCRs from the Riveredge facility. Thirty-nine individuals joined the lawsuit.

What the Court Said

After a collective action is conditionally certified and discovery taken, a court must determine, on the basis of a fuller record, whether opt-in plaintiffs are similarly situated to the named plaintiffs.

In making this determination, courts examine three factors: (1) common or disparate factual and employment settings of the plaintiffs; (2) defenses available that may apply against the claims of all plaintiffs or only to individual plaintiffs; and (3) fairness and procedural considerations.

The court found the first factor to cut in favor of decertification. Not all of the opt-in plaintiffs handled incoming calls, and of the ones who did, not all were expected to boot up their computers before their shift started.

In addition, discovery evidence revealed that IBM did not have a uniform policy that set forth any expectation that workers would boot up their machines off the clock, or prior to the start of their shift.

The court also found that the second factor favored decertification. In the absence of a formal policy regarding the compensability of booting up computers, IBM's defenses would be highly fact specific and unique to each plaintiff's circumstances—the employee's individual knowledge, the expectations of the employee's specific manager, and the amount of time, if any, that they spent booting up their computer before their shift.

Finally, the court found that fairness considerations favored decertification, primarily due to the individualized issues present in the case, and the likelihood that the jury would be confused and overwhelmed by the large volume of individualized evidence—40 "mini-trials," as IBM argued.

What Employers Should Do

When faced with class or collective actions, an employer, together with counsel, must quickly develop evidence as to the individuality of each of the potential class members' circumstances and claims. This approach requires that an evidence gathering process be developed and implemented with speed.

For more information about this and other employment matters, please contact:

Manesh K. Rath (+1 202.434.4182, rath@khlaw.com),
Robert A. Sheffield (+1 202.434.4139, sheffield@khlaw.com).