Employment Law Daily Collective action to contest employer’s time-shaving practices upheld; use of representative testimony too
Friday, March 4, 2016

Collective action to contest employer’s time-shaving practices upheld; use of representative testimony too

By Ronald Miller, J.D. A federal district court’s grant of certification of an FLSA collective action by cable installation technicians, who alleged that their employer implemented a company-wide time-shaving policy that required employees to systematically underreport their overtime hours, was affirmed by a divided Sixth Circuit. However, the appeals court reversed the district court’s calculation of damages and remanded the case for recalculation of damages consistent with its opinion. Judge Sutton filed a separate opinion concurring in part and dissenting in part (Monroe v. FTS USA, LLC, March 2, 2026, Stranch, J.). Time-shaving policy. The employer contracted with various cable companies to provide cable installation and support. To offer these services, it employed cable technicians. All technicians share substantially similar job duties and are subject to the same compensation plan and company-wide timekeeping system. The technicians are paid on a “piece-rate” compensation plan, meaning each assigned job is worth a set amount of pay, regardless of the amount of time it takes to complete the job. The technicians alleged that the employer failed to pay them proper overtime compensation. They presented evidence that managers encouraged them to underreport time or even falsify timesheets. The technicians also presented documentary evidence showing that the employer’s time-shaving policy originated in the company’s corporate office. No evidence was presented that managers or technicians were disciplined for underreporting time. Representative action. In March 2009, the district court granted conditional certification and authorized notice of the collective action. A total of 293 technicians ultimately opted in to the collective action. Following discovery, the district court denied the employer’s motion to decertify the class, finding that the class was similarly situated, and the action proceeded to trial. The jury returned verdicts of liability in favor of the class, finding that the technicians worked in excess of 40 hours weekly without being paid overtime compensation and that the employer knew or should have known and willfully violated the law. The court used the jury’s factual findings to calculate damages for all testifying and nontestifying technicians in the opt-in collective action. Challenge to certification. On appeal, the employer challenged the certification of the case as a collective action, the sufficiency of the evidence as presented at trial, the jury instruction on commuting time, and the district court’s calculation of damages. The employer argued that differences among technicians regarding location, supervisors, their reasons for submitting false timesheets, and types and amount of uncompensated time required an individual analysis as to every plaintiff. With respect to employment settings, the record revealed that regardless of their location, the vast majority of technicians performed the same job duties and were subject to the same timekeeping system and compensation plan. It contained ample evidence of a company-wide policy that originated with company executives requiring technicians to underreport hours. Further, the technicians identified the methods by which the employer enforced its time-shaving policy—requiring plaintiffs to work off-the-clock or altering timesheets. Individualized defenses. Next, the appeals court examined the different defenses to which the technicians might be subject on an individual basis. The employer sought to raise separate defenses by examining each individual plaintiff on the number of unrecorded hours each worked. However, the Sixth Circuit has held that individualized defenses alone do not warrant decertification where sufficient common issues or job traits otherwise permit collective litigation. In the absence of accurate employer records, both Supreme Court and Sixth Circuit precedent dictate that the burden then shifts to the employer to “negate the reasonableness of the inference to be drawn from the employee’s evidence” and, if it fails to do so, the resulting damages award need not be perfectly exact or precise. Under this framework, and with the use of representative testimony and an estimated average approach, defenses successfully asserted against representative testifying technicians were properly distributed across the claims of nontestifying technicians. The technicians’ representative evidence allowed appropriate consideration of the individual defenses raised here. As a result, the appeals court declined to find that the district court committed a clear error of judgment in refusing to decertify the collective action on the basis of the employer’s claimed right to examine and raises defensed separately against each opt-in plaintiff. Fairness and procedural impact. The appeals court determined that the degree of fairness and the procedural impact of certifying the case also supported certification. This case satisfied the policy behind FLSA collective actions and Congress’s remedial intent by consolidating many small and related claims of employees for which proceeding individually would be too costly to be practical. Lastly, the appeals court rejected the employer’s contention that Espenscheid v. DirectSat USA, LLC—a Seventh Circuit case—compelled decertification, pointing out that that decision was at odds with Sixth Circuit precedent. Sufficiency of evidence. The employer also challenged the district court’s allowance of representative testimony to prove liability for nontestifying technicians. But the appeals court pointed out that in FLSA cases the use of representative testimony to establish liability has long been accepted. Moreover, other circuits overwhelmingly recognize the propriety of using representative testimony to establish a pattern of violations that include similarly situated employees who did not testify. Next, the appeals court rejected the employer’s contention that the testifying technicians were not representative of the nontestifying technicians. It observed that the testifying technicians were spread among various locations and were subject to the same job duties, timekeeping system, and compensation plan as nontestifying technicians. In light of the proper use of representative testimony to prove liability, the appeals court was satisfied with the sufficiency of the evidence presented. Damages. As to damages, the employer objected to the use of an estimated-average approach to calculate damages for nontestifying technicians. However, the Sixth Circuit pointed out that it and other circuits (and district courts) have explicitly approved an estimated average. Accordingly, the appeals court concluded that the average number of unpaid hours worked by testifying and nontestifying technicians resulted from a just and reasonable inference supported by sufficient evidence. But it remanded the calculation of damages back to the district court, noting that by recalculating hourly rates to reflect the actual increased number of hours the technicians worked each week, the district court used a higher hourly rate than would have been used if no violation had occurred. This approach over-compensated the technicians. Partial concurrence, partial dissent. Dissenting with respect to certification of the collective action, Judge Sutton argued that the only way representative proof of liability made sense was if the theory of liability of the testifying technicians mirrored (or was at least substantially similar to) the theory of liability of the nontestifying plaintiffs. He asserted that the fact that representative proof works in some cases does not mean that it works in all cases. The dissent determined that the plaintiffs’ trial plan did not work. Rather, the plaintiffs should have accounted for their distinct theories of liability by dividing themselves into subclasses. Further, the dissent asserted that because the plaintiffs’ proposed trial plan violated both statutory and constitutional requirements, the court should remand the case and allow the plaintiffs to propose a new procedure that permits reasoned and fair adjudication of their claims.

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