As healthcare providers continue to face a sea of wage and hour class actions, Littler attorneys successfully convinced the Sixth Circuit Court of Appeals to affirm decertification of an FLSA collective action against Baptist Memorial Hospital, a large Tennessee hospital system. In Frye v. Baptist Memorial Hospital, the plaintiff brought a collective action, claiming that the hospitals’ policy of automatically deducting pay for employee lunch breaks violated the FLSA’s requirement to pay employees for all the time worked.

The district court initially granted conditional certification to the class under the more lenient standard courts have generally applied at the initial notice stage in FLSA collective actions, but following discovery the court decertified the action because the plaintiff failed to show that other would-be class members were similarly situated. It also found that the plaintiff failed to establish a common FLSA injury from the automatic deduction policy because the vast majority of opt-in plaintiffs were aware of the policies for reporting work during breaks, were paid when they properly reported working, and were not discouraged from or retaliated against for reporting missed breaks. The district court also refused to find a common injury based on the hospitals’ alleged failure to monitor their automatic deduction policy for FLSA violations because it found the vast majority of employees knew the policies for reporting hours worked during meal breaks and the hospitals were unaware that their procedures for reversing the deductions were not working.

Faced with an FLSA collective action regarding automatic meal break deductions for the first time, the Sixth Circuit Court of Appeals agreed that the plaintiff’s evidence was insufficient to demonstrate that opt-in plaintiffs were similarly situated and experienced a common FLSA injury. It elaborated on the Sixth Circuit standard for decertifying a collective action under FLSA Section 216(b) at the final stage, which occurs after conditional certification and near the end of discovery. The court stated that this stage warrants a “stricter standard” than at the conditional certification stage, considering differences in employment settings, the availability of different individualized defenses, and the fairness and procedural impact of proceeding as a class action.

The Sixth Circuit agreed with the district court that there was insufficient evidence of a common injury as a result of the automatic deduction policy and that the plaintiff’s common theory of injury was essentially nothing more than a critique of the policy. The court emphasized, however, that such a policy, by itself, is lawful under the FLSA and would not alone establish the similarity necessary to maintain a collective action.

The court also agreed that different workplace experiences regarding department procedures to reverse deductions, training, and oversight outweighed any similarities alleged by the plaintiff. The court rejected the plaintiff’s failure to monitor theory based on some employees’ failure to report work during meals breaks, stating that employers could not be required to pay for work where they did not know and had no reason to know about the work. But the court left unresolved the question of whether an employer’s failure to monitor could ever form a basis for certification.

Frye is a welcome decision for healthcare employers facing the continuing threat of FLSA collective actions based on automatic meal break deduction policies. The case is particularly helpful where employers can show that employees understand the policies and procedures to reverse any automatic deduction and have been paid for missed breaks when they have followed the employer’s procedures.

To learn more about the decision, please see Littler's ASAP, Sixth Circuit Upholds Decertification of FLSA Collective Action Challenging Automatic Meal Break Deductions, by Paul Prather, Lisa Leach, and Alex Boals.

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