In a very favorable decision for healthcare employers facing the onslaught of wage and hour class and collective actions, in Wolman v. Catholic Health System of Long Island, a federal district court in New York dismissed the plaintiffs’ Fair Labor Standards Act (FLSA) claims for failure to provide sufficient facts to state a claim, and declined to exercise supplemental jurisdiction over plaintiffs’ state wage law claims. The court also dismissed the plaintiffs’ Racketeer Influenced and Corrupt Organization Act (RICO) claims.

As in most of the recent hospital class and collective actions, plaintiffs alleged that the hospital required them to work during unpaid meal breaks, failed to pay them for work performed before and after scheduled shifts, and did not pay them for time spent attending training sessions. Noting that several district courts in the Second Circuit have held that an FLSA overtime claim must “at least approximately, allege the hours worked, for which wages were not received,” the court found that the complaint in this case failed even “this basic test.” In this case, the court stated, the complaint gave no indication of the number and length of plaintiffs’ unpaid breaks, or how frequently they performed work during those breaks.

In addition, the court pointed out, not all time spent on work-related tasks before or after a shift is compensable, noting that “preliminary/postliminary activity, such as changing clothes,” and “de minimis” time spent on pre-and post-shift activities are not compensable. Similarly, the court indicated, not all training time is compensable. In this case, the court found, the plaintiffs had not provided information suggesting that the training programs they attended were compensable.

Although the dismissal of the FLSA claims was without prejudice, and the court gave plaintiffs leave to amend their complaint, the court made it clear that an amended complaint would have to provide "more factual detail concerning  who the named Plaintiffs are, where they worked, in what capacity they worked, the types of schedules they typically or periodically worked, and any collective bargaining agreements they may have been subject to. Likewise, to the extent that Plaintiffs seek to rely upon the Unpaid Time or Unpaid Training Policies, Plaintiffs should — consistent with this opinion — plead enough factual detail concerning this unpaid time and training to render their allegations plausible. The Court will not be impressed if the Third Amended Complaint prattles on for another 217 paragraphs, solely for the sake of repeating various conclusory allegations many times over." The articulation of these standards for filing a viable FLSA claim are very helpful to employers, particularly in the Second Circuit, which has not always been favorable to employers in wage and hour class and collective actions.

The language the court used in dismissing the plaintiffs’ RICO claim is also extremely helpful to employers. The court stated that the plaintiffs’ allegations that the mailing of pay stubs to employees constituted mail fraud in furtherance of a pattern of racketeering activity are “not just implausible, they are illogical.” Specifically, as to plaintiffs’ claim that the pay stubs “misled plaintiffs” as to the amount of hours they worked and the amount of wages to which they were entitled, the court stated: "But Plaintiffs do not allege that they suffer from anterograde amnesia, or otherwise lack the capacity to retain short-term memories. So they should have recalled how much they actually worked in a given workweek. Thus, to the extent that the mailed pay stubs differed from Plaintiffs' recollection, that difference did not 'conceal' the fraudulent scheme. Quite the opposite: it should have placed Plaintiffs on notice that Defendants were not fully paying them for their work."

In further support of its opinion, the court quoted the Massachusetts federal district court’s decision in Cavallaro v. UMass Memorial Health Care Inc.:

As defendants aptly note, [i]f the paychecks informed [p]laintiffs that they were paid for fewer hours than they allegedly worked, that information would serve to expose, not further, the alleged fraud. Consequently, the use of the mail was not in furtherance of the allegedly fraudulent scheme, and plaintiffs have failed to state a § 1962(c) RICO cause of action for mail fraud.

We would hope that the persuasive logic of these courts’ opinions will discourage plaintiffs from tacking on RICO claims to wage and hour complaints.

This entry was written by Greg Keating, Co-Chair of Littler’s Healthcare Practice Group, and Lee Schreter, Co-Chair of Littler’s Wage and Hour Practice Group, who represent UMass Memorial Health Care, Inc. in the Cavallaro case.

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