Labor & Employment Law Daily Class action revived in suit alleging P.F. Chang’s owed workers for reporting pay
Wednesday, April 17, 2019

Class action revived in suit alleging P.F. Chang’s owed workers for reporting pay

By Ronald Miller, J.D.

The Massachusetts high court concluded that Mass. R. Civ. P. 23 provides the correct standard for determining class certification under the state wage laws, and the wage laws did not infer a more lenient standard. Even so, a restaurant employee met his burden of demonstrating numerosity under that rule.

A combination of thousands of instances where P.F. Chang’s failed to pay hundreds of employees reporting pay for leaving their scheduled shifts before they had worked three hours, the absence of any recordkeeping justifying the nonpayments, and the employer’s refusal to provide the names of the employees involved made it reasonable to infer that the number of employees would satisfy the numerosity requirement for a class action suit, ruled the Massachusetts Supreme Judicial Court. Finding sufficient evidence that the employer shortchanged employees who were dismissed early from scheduled shifts, the state high court reversed the judgment of the trial court denying class certification (Gammella v. P.F. Chang’s China Bistro, Inc., April 12, 2019, Kafker, S.).

The employee performed a variety of tasks at various P.F. Chang’s restaurants, including greeting customers, helping behind the bar, running food, and assembling delivery orders, for approximately eight years. As required by the employer, employees clocked in and out using a timekeeping system that formed the basis for their compensation. The employee, along with servers, bartenders, hosts, and other staff, were compensated on an hourly basis at the minimum wage.

Reporting pay. In November 2014, the employee brought suit under the Wage Act, G.L. c. 149, § 150, and G.L. c. 151, § 20 alleging that the employer denied employees pay for reporting to work. Specifically, the employee alleged that the employer had a common practice that violated the “reporting pay” or “three-hour” requirement of 454 Code Mass. Regs. § 27.04(1), which requires employers to pay employees three hours’ wages at no less than the minimum wage if they report for a scheduled shift of three or more hours but are involuntarily dismissed before they have worked three hours.

The employee testified that on numerous occasions, despite being scheduled to work three or more hours, he was involuntarily dismissed and forced to clock out before he had worked three hours. On those occasions, he was not given three hours’ pay but was only paid for his actual hours worked.

Discovery evidence. Although P.F. Chang’s claimed that its policy was to comply with the three-hour reporting requirement, it produced no evidence that it had ever done so. Rather, the reports it produced during discovery revealed that, in 20 instances involving the employee and approximately 7,000 instances involving hundreds of other employees, it did not provide reporting pay when employees clocked out before they worked three hours. A company official claimed that the employees had voluntarily asked and were granted permission to leave before three hours of their shifts had elapsed.

Motion for certification. Following discovery, the employee moved to certify a class of employees who worked less than three hours of a scheduled shift without receiving reporting pay, as identified by number in the reports. Relying on an opinion letter interpreting the reporting requirement from the state’s Executive Office of Labor and Workforce, the trial court denied class certification, concluding that an employer did not have to provide reporting pay where an employee chose to leave work before three hours of a scheduled shift had elapsed “‘completely on a voluntary basis,’ free from any express or implied pressure from the employer.” The trial court found that it was impossible to determine whether any employees would fall in the class, and so concluded that the class was insufficiently numerous to satisfy the certification requirements of Rule 23.

Offers of judgment. After class certification was denied, the employer made two offers to the employee under Rule 68 that purported to provide complete relief to his individual claim. The employee rejected both offers. The employer then moved to dismiss the case on the grounds that through its Rule 68 offers he had mooted his claim. Moreover, the employer argued that the employee did not have standing to serve as class representative for any putative class he might seek to revive. Thereafter, the Massachusetts high court transferred the matter from the Court of Appeals on its own motion.

Class certification standard. As a threshold matter, the state high court addressed the employee’s argument that the wage laws “confer [] rights greater than those conferred more generally under rule 23 with respect to class litigation.” G.L. cc. 149 and 151 authorize an aggrieved employee to “prosecute in his own name and on his own behalf, or for himself and for others similarly situated, a civil action for injunctive relief, for any damages incurred and for the full amount of minimum wages less any amount actually paid to him by the employer.” Thus, the employee argued that a more lenient class certification standard should be inferred from these provisions of the wage laws. For its part, the employer argued that the trial court correctly applied the certification standards set out in Rule 23.

The state high court agreed with the employer, holding that Rule 23 provides the correct framework for analyzing a class certification motion brought under the Wage Act or the Minimum Fair Wage Law. The legislative history of these statutes makes clear that the primary purpose of this language was to authorize class actions that were not previously provided for. Moreover, nothing in the statutory text or legislative history suggested that the legislature meant to create a lower standard for class certification than Rule 23 when it added this provision to the wage laws.

Numerosity satisfied. The trial court denied certification on the grounds that the employee failed to satisfy the numerosity requirement of Rule 23(a). However, the employee identified hundreds of unnamed employees who worked less than three hours on their scheduled shifts but did not receive reporting pay. The employer did not maintain records explaining why any of these employees left early and admitted it could not know if they had been involuntarily dismissed. Moreover, it refused to provide the identities of these employees in response to discovery requests.

At the class certification stage, this was “information sufficient to enable the motion judge to form a reasonable judgment that the class meets the requirements of rule 23″ with respect to the numerosity requirement, the high court concluded. The combination of thousands of instances of nonpayment of reporting pay to hundreds of employees, the absence of any recordkeeping justifying the nonpayments, and the employer’s refusal to provide the names of the employees involved made it reasonable to infer that the number of employees would satisfy the numerosity requirement.

The motion judge also should have recognized that the dollar amount that each employee could potentially recover was likely too small for individual suits to be practicable, and that the employees bringing such individual suits would have reason to fear retaliation, the state high court noted. In concert, all of these considerations demonstrated that the employee met the class certification threshold for the numerosity requirement.

Accordingly, the high court reversed the lower court’s order denying the employee’s motion for class certification and granting the employer’s motion to dismiss.

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