Ouellette v. Wal-Mart Stores, Inc., and Florida’s Minimum Wage Law: Are Class Actions for Minimum Wage on Florida’s Horizon?
I n 2004, Florida’s voters and the First Circuit Court of Appeal took steps which may work together to open Florida’s courthouses to class claims for unpaid wages under state and contract law. In November 2004, the First Circuit Court of Appeal decided Ouellette v. Wal-Mart Stores, Inc., 888 So.2d 90, 91 (Fla. 1st DCA 2004) , rejecting Wal-Mart’s argument that the individualized nature of the plaintiffs’ damage claims barred class certification. This came on the heels of the initiative petition amending Florida’s Constitution to require employers to pay employees a minimum wage of $6.15 for all hours worked and authorizing class actions for failure to pay this minimum wage.
Properly interpreted, this constitutional amendment should require employers to pay their employees the state minimum wage during every hour they work. Taken together, Ouellette and the new minimum wage amendment should pave the way for class actions seeking unpaid minimum wages in Florida.
Ouellette v. Wal-Mart Stores, Inc.
In Ouellette, appellants alleged that Wal-Mart required them to work “off the clock” without compensation, deleted compensable work hours from their paychecks, and of failed to provide them with promised rest and meal breaks. Appellant’s proposed class consisted of all individuals formerly or currently employed by Wal-Mart in Florida on or after July 13, 1997.1 As a class, they pled claims in quantum meruit, unjust enrichment, breach of contract, and failure to pay wages in violation of F.S. §448.08 (2000).2 On review, the First District Court of Appeal affirmed based upon its finding that the class was overbroad.3 However, the appellate court rejected appellee’s argument that the individualized nature of the employees’ damage claims barred class certification.4 In support, it cited the 11th Circuit Court of Appeal’s opinion in Klay v. Humana, Inc.,382 F.3d 1241, 1259, 1273 (11th Cir. 2004), which described the various management tools available to trial courts to address individualized damages issues in a class action. The tools include:“(1) bifurcating liability and damage trials with the same or different juries; (2) appointing a magistrate judge or special master to preside over individual damages proceedings; (3) decertifying the class after the liability trial and providing notice to class members concerning how they may proceed to prove damages; (4) creating subclasses; or (5) altering or amending the class.”5 Having, thus, allowed for the possibility of a class action presenting individualized damages issues, the First District Court remanded the case to the circuit court without prejudice to appellants to redefine their class on remand.
The Facts in Ouellette
The plaintiffs in Ouellette filed their class action petition against Wal-Mart in July 2001.6 They alleged that the wage violations stemmed from an inherent internal conflict between Wal-Mart’s “preferred scheduling system,” which set payroll budgets based upon a wage percent, and Wal-Mart’s incentive program under which managers were eligible for bonuses upon demonstrating store profit.7 Plaintiffs sought to certify a class under Florida’s Rule 1.220(a)(3), by alleging that the question of whether Wal-Mart made express or implied contracts with its hourly employees and whether it engaged in a pattern of conduct of breaching those contracts by requiring its employees to work off the clock without compensation are questions about Wal-Mart’s liability that are common to the entire class.8 They sought to define the class of plaintiffs as “[a]ll current and former hourly employees of Wal-Mart Stores, Inc., (including its operating divisions Sam’s Club and Wal-Mart Supercenters) in the State of Florida during the period July 13, 1997 to the present.”9 Defendant responded that the class was not adequately defined or clearly ascertainable and was overbroad, because it would include individuals without claims.10 It also argued that calculating damages for breach of contract involves numerous varying proof issues.11
No Relief Under FLSA
The FLSA12 might have provided an avenue for a collective action for unpaid minimum wages for the Ouellette plaintiffs, but for the fact that under the FLSA, minimum wage claims are calculated by multiplying the total number of hours worked (i.e., those hours paid and unpaid by the employer) by the federal minimum wage, and subtracting that amount from the amount the potential claimant was actually paid.13 If the difference between those two amounts results in a positive number, then there is no FLSA liability for that workweek. Therefore, if the plaintiffs in Ouellette earned more than the federal minimum wage with respect to the hours Wal-Mart paid them in a work week, it is unlikely they would have succeeded on FLSA minimum wage claims under this method of calculation.
Florida’s New Minimum Wage Law
Florida amended its constitution by initiative petition in 2004, effective May 2005, to establish minimum wage provisions which exceed the FLSA. Florida established a minimum wage of $6.15 per hour, versus the requirement in the FLSA for a minimum wage of $5.15 per hour.14
Florida’s new minimum wage statute omits the use of the phrase used in the FLSA for minimum wage “in any workweek.”15 It requires employers to “pay employees wages no less than the minimum wage for all hours worked in Florida.”16 Therefore, from the plaintiff’s perspective, Florida’s minimum wage law should be interpreted to require the minimum wage of $6.15 to be paid for each hour worked, rather than a sum which exceeds minimum wage based upon a total of the number of hours worked per week.
For instance, in Alvarez v. IBP, Inc., 339 F.3d 894, 912 (9th Cir. 2003), a federal district court in the state of Washington predicted that Washington’s courts are likely to adopt a per hour right to minimum wage. Washington’s minimum wage act requires employers to pay minimum wage “per hour.”17 The Ninth Circuit’s statement was based upon its observation that Washington’s minimum wage statute omits the phrase “in any workweek” contained in the relevant portion of the FLSA, that the Washington Supreme Court has not criticized a holding using a per hour measure, and that Washington’s Department of Labor employs a per hour standard for determining minimum wage compliance.18 Florida’s minimum wage amendment also omits the term “in any workweek.” Interpreting Florida’s law to require at least minimum wage for each hour worked would bring within its ambit the claims of many individuals otherwise ineligible from bringing a minimum wage claim based upon the total income they are paid in a workweek.
Florida’s minimum wage guarantee is also more generous in its provisions than the FLSA. It is governed by a general four-year statute of limitations with a five-year limitation period for willful violations, both of which exceed the FLSA’s limitations periods. Finally, Florida’s amendment specifically provides that individuals experiencing violations of this amendment may bring a class action pursuant to Fla. R. Civ. P. 1.220.
The FLSA does not preempt state law contract provisions that are more generous than the FLSA demands.19 Therefore, actions under Florida’s new minimum wage amendment should not be preempted by the FLSA because its provisions are more generous than the FLSA with respect to the statute of limitations for bringing claims.
The Ouellette plaintiffs were able to attempt to advance their claims as a class because the FLSA does not preempt a state law claim for wages based upon contractual provisions promising to compensate employees for time not mandatorily compensable under the FLSA.20 Recently, a group of employees sued Lowe’s Home Centers in a federal district court in Kansas for failure to pay for off-the-clock work and overtime.21 They avoided being preempted by the FLSA because, like the plaintiffs in Ouellette, they sued under breach of contract theories. The court stated that
an employer may establish contractual rights to overtime or other payments that exceed the FLSA’s mandate…and an employer may be held liable for breach of contract if a plaintiff establishes a right to such a payment in a contract independent of the FLSA.22
Florida’s Class Action Rule
Florida’s class action Rule of Civil Procedure 1.220, under which the Ouellette plaintiffs attempted to proceed, is interpreted similarly to its federal counterpart, Federal Rule of Civil Procedure 23.23 Florida’s minimum wage amendment specifically authorizes the use of Rule 1.220 for its enforcement.24 A party seeking certification of a class must survive a rigorous analysis to determine if it has met its burden to show numerosity, commonality, typicality, and adequacy of representation.25 In addition, claims must meet at least one of the three bases for class certification.26 The party seeking certification must show either that 1) the prosecution of separate claims or defenses by or against individual members of the class would establish incompatible standards of conduct for the party opposing the class, or that adjudications concerning individual members of the class would, as a practical matter, be dispositive of the interests of other members of the class; 2) the party opposing the class has acted or refused to act on grounds generally applicable to all the members of the class; or 3) the claim or defense is not maintainable under either of the preceding bases, but that the questions of law or fact common to the putative class predominate over any question of law or fact affecting only individual members of the putative class, and that the class representation is the superior method for fair and efficient adjudication.27
FLSA Opt-in Collective Actions
In contrast to Florida’s minimum wage act, the Fair Labor Standards Act provides a mechanism known as the “collective action,” through which employees can join together to assert their claims.28 The collective action mechanism differs from the class action procedures available under Rule 23 and Fla. R. Civ. P. 1.220 in several material respects. First, the factors a court considers in determining whether a class is “similarly situated” for the purposes of §216(b) collective action are less stringent than the factors delineated in Rule 23.29 In addition, to participate in a §216(b) action and be bound by its results, an individual must affirmatively opt into the action by filing a consent-to-join form.30 In contrast, in a Rule 23 action, a class member is bound by the results unless he or she affirmatively opts out of the class.31 As a result, a certified Rule 23 class is more likely to incorporate all or most eligible members.32 In a §216(b) collective action, the opt-in rate is typically significantly lower than the potential pool of plaintiff-employees in an opt-out class for various reasons, including apathy, lack of follow-through and fear of retaliation.33 Aggregation of claims in larger numbers in a Rule 23 class “profoundly affects the substantive rights of the parties to the litigation. Notably, aggregation affects the dynamics for discovery, trial, negotiation and settlement, and can bring hydraulic pressure to bear on defendants. The more aggregation, the greater the effect on the litigation.”34
New Frontiers for Practitioners in Florida
Florida’s minimum wage amendment, which requires the payment of the state minimum wage for each hour worked and the First District Court of Appeal’s recognition that individualized damages issues do not prevent a finding under Rule 1.220 that common issues in the case predominate, will open up possibilities for a broad range of class-wide wage claims, which are not preempted by the FLSA. Practitioners will find these claims even more attractive considering the four- or five- year statute of limitations offered by Florida’s minimum wage law.
For instance, Florida’s courthouses may be open to claims for unpaid preliminary and postliminary time as described in IBP,35where meat packing plant employees sued for time spent donning and doffing specialized protective clothing and safety gear, as well as off-the-clock claims for unpaid travel time or work at home.36 In IBP, applying a per hour standard pursuant to Washington state law for hourly employees, the Ninth Circuit concluded that IBP was liable to its employees for minimum wage for their lost 30-minute meal periods and second rest breaks, double damages, and prejudgment interest, on top of the damages it owed its employees pursuant to their §216(b) claims for FLSA violations.37
As the new minimum wage amendment creates new rights for employees and Florida, and as Florida courts, as in Ouellette, approve class action proceedings for wage claims of various kinds, the doors to Florida courts have opened wider for Florida employees.
1 Ouellette, 888 So.2d at 92.
2 Id. at 91.
3 Id. at 92.
4 Id. at 91.
5 This is consistent with holdings in other state courts. For instance, in Sav-on Drug Stores, Inc. v. S.C. (Rocher), 2004 Cal. LEXIS 8486, the Supreme Court of California reversed a trial court’s order denying class certification in a class action for recovery of unpaid overtime compensation. The appellate court rejected defendant’s argument that individualized damage determinations would cause the class action to “degenerate into a multitude of mini trials.” The court stated that “a class action is not inappropriate simply because each member of the class may at some point be required to make an individual showing as to his or her eligibility for recovery or as to the amount of his or her damages.”
6 See Appellants’ Initial Brief, Case no. 1D04-0773, p. 2. The case was filed in the Circuit Court of Washington County, Florida, Lower Tribunal No. 67-01-326 CA.
7 Appellants’ Initial Brief, Case no. 1D04-0773, p. 7. Plaintiffs alleged that the potential savings Wal-Mart achieved simply as a result of failing to pay for the plaintiffs’ missed breaks was in the range of $50 million. Id. at 8.
8 Id. at 21.
9 Ouellette, 888 So. 2d at 92.
10 Answer and Cross Initial Brief of Appellees, Case no. 1D04-773, p. 34.
11 Id. at 11.
12 See 29 U.S.C. §§206, 216(b).
13 See United States v. Rosenwasser, 323 U.S. 360, 363-64 (1945).
14 Fla. Const. art. X, §24.
15 Fla. Const. art. X, §24(c).
17 RCW 49.46.020.
18 IBP, 339 F.3d at 912.
19 Freeman v. City of Mobile, 146 F.3d 1292, 1298 (11th Cir. 1998).
20 See Avery v. City of Talladega, Ala., 24 F.3d 1337, 1348 (11th Cir. 1994).
21 Hammond v. Lowe’s Home Ctrs., Inc., 316 F.Supp.2d 975, 979 (D. Kan. 2004).
22 Hammond, 316 F.Supp.2d at 979; see also, e.g., Brown v. Money Tree Mtg., Inc., 2004 U.S. Dist. LEXIS 16741 (D. Kan. August 23, 2004).
23 Liggett Group, Inc., et al. v. Engle, 853 So.2d 434, 445 (Fla. 3d D.C.A. 2003) (citations omitted).
24 See Fla. Const. art X, § 24(e).
25 Freedom Life Ins. Co. of America v. Wallant, 2004 Fla. App. LEXIS 2002, 6 (Fla. 4th D.C.A. December 29, 2004).
26 See Fla. R. Civ. P. 1.220(b).
27 Fla. R. Civ. P. 1.220; Liggett Group, 853 So.2d at 445 (citations omitted).
28 See 29 U.S.C. §216(b).
29 Grayson v. K Mart Corp., 79 F.3d 1086, 1096 (11th Cir. 1996), cert. denied, 117 S.Ct. 435 (1996).
30 29 U.S.C. §216(b). The statute of limitations continues to run on even the named plaintiffs’ claims until a consent to join form is filed. Harkins v. Riverboat Serv., 2002 U.S. Dist. LEXIS 19637, 6-7 (N.D. Ill., May 17, 2002).
31 Fed. R. Civ. P. 23(c)(2)(B-C).
32 See De Asencio v. Tyson Foods, Inc., 342 F.3d 301, 310 (3d Cir. 2003).
33 See, generally, Soler v. G & U, Inc., 1980 U.S. Dist. LEXIS 11285, 17 (S. D. N. Y. May 7, 1980), citing Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 707, n. 18 (1945).
34 De Asencio, 342 F.3d at 310.
35 IBP, 339 F.3d 894.
36 See, e.g., Boudreaux v. Banctec, Inc.,366 F.Supp.2d 425 (E.D. La. 2005).
37 IBP at 902, 914.
Marguerite M. Longoria is an associate at Burr & Smith, LLP. Ms. Longoria is board certified by The Florida Bar in labor and employment law, and specializes in the Fair Labor Standards Act. She is also a member of the Virginia State Bar and graduated from Stetson College of Law, cum laude, in 1993. Ms. Longoria acknowledges gratefully the contribution of Sam J. Smith, managing partner of Burr & Smith, to the ideas and research reflected in this article.
This column is submitted on behalf of the Labor and Employment Law Section, Frank D. Kitchen, chair, and Frank E. Brown, editor.