Labor & Employment Law Daily Panera assistant managers granted conditional certification of misclassification claim
Monday, October 22, 2018

Panera assistant managers granted conditional certification of misclassification claim

By Brandi O. Brown, J.D.

A group of Panera assistant managers granted conditional certification of a nationwide collective action over overtime pay, ruled a federal district court in the District of Columbia. According to the employees, the employer misclassified them as exempt from the overtime provisions of the FLSA and the District of Columbia Minimum Wage Act, and denied them overtime pay, even though most of their work was non-managerial. The collective covers employees in all but four U.S. states and, based on allegations of willfulness and tolling, will extend back to March 2014. The court denied, in part, the methods of notice requested by the plaintiffs and ordered the parties to meet and confer regarding the form and content of the opt-in notice (Meyer v. Panera Bread Co., October 16, 2018, Harvey, G.).

Non-managerial work and unpaid overtime. The plaintiffs, two former assistant managers for Panera restaurants in Washington, D.C. and Birmingham, Alabama, filed suit in 2017 alleging violations of the FLSA and DCMWA. They alleged that they were misclassified as exempt employees, even though they predominantly did work that was non-managerial, and therefore were denied overtime pay for hours they worked in excess of 40 per week, which they regularly worked. They also alleged that the employer failed to keep accurate records of the time they worked, failed to keep payroll records as required, and that it willfully violated the law in an effort to keep labor costs down.

The employees filed a motion for conditional certification of an FLSA collective action, and for court-authorized notice. They submitted with their motion declarations by nine former employees. The putative collective would seek opt-in by assistant managers in all states but four: New York, New Jersey, California (where they were already treated as non-exempt as required by state law), and Massachusetts.

FLSA collective conditionally certified. At the conditional certification stage, the court explained, only a “modest factual showing” is required and the employees satisfied that standard. As part of their “core allegations” they asserted that assistant managers were misclassified as exempt, which the court presumed was based on the executive exemption, even though the employer was aware, and even required, those employees to perform predominantly non-managerial work that would entitle them to overtime pay for any hours over 40 that they worked.

They submitted declarations with similar assertions from assistant managers from several different states, as well as the declaration of a training manager. A declaration of a vice president for human resources that was submitted asserted that assistant managers were reclassified as non-exempt in 2016 in response to a federal government rule publication. According to the employees, the reclassification did not result in any change in duties for the assistant managers, which suggested that the original classification was improper. They also submitted job postings that lent support to their claims.

De facto policy. The employees also made the modest factual showing that they had been subjected to a “de facto” and illegal policy by the employer. The declarations they presented were sufficient evidence that the employer’s corporate headquarters exercised significant control over restaurant operations. They indicated that the ordinary hierarchy of management tended to require that assistant-managers perform non-managerial duties and placed restaurant management duties to the general manager. They also demonstrated a link between the non-managerial duties performed by assistant managers and the employer’s desire to keep a lid on labor costs.

The contrary arguments made by the employer, such as its attempts to undermine the credibility of the declarants, were premature for this stage, the court explained. Its merits-based arguments were also premature and likewise unsuccessful, as was its argument with respect to the threat of mini trials with regard to binding arbitration agreements that could apply to some plaintiffs. Those concerns would be addressed in subsequent stages, the court explained.

Employer willfulness. Regarding the proposed notice period, the court assumed that the amended complaint would relate back to the filing of the original complaint. Moreover, the allegations were sufficient to give rise to an inference that the employer acted willfully, and therefore that the longer three-year limitations period applied. It also accepted, at this stage, the employees’ argument that a tolling agreement that was in place for 249 days beginning in mid-2016 would operate to extend the reach of the limitations period. Thus, the court found that the notice period would extend back to March 25, 2014 and would end on the date of this order.

Proposed notice. With respect to the notice itself, the court partially granted the employees’ request for information from the employer regarding contact information for potential members of the collective. Over the objection of the employer, it agreed that the employees should receive, in addition to the uncontested name and last known physical address, the identified members’ last known email address. It granted the employees’ request for a 60-day period for potential collective members to send in consent-to-sue forms, as well as a reminder at the 30-day mark.

However, it denied the employees’ request for telephone numbers and social security numbers, however. It also denied the employees’ request that the employer be ordered to include notice in current assistant managers’ pay envelopes and denied for now its request to create a standalone website for submission of claim forms by opt-in members. With respect to the content of the proposed notice, noting the “litany of objections” made by the employer, the court ordered the parties to confer and jointly propose a notice.

Motion to strike declarations. In a separate order issued on the same day, the court denied the employer’s motion to strike two declarations submitted by the employees in support of their motion for conditional certification, and also rejected the employees’ motion for equitable tolling, finding no extraordinary circumstances warranting equitable tolling here.

First, in another litigation filed in New Jersey, a Panera assistant manager had submitted a declaration asserting that, while attending trainings at other Panera restaurants, she observed assistant managers there performing nonmanagerial duties. A Panera general manager likewise filed a declaration in that case attesting that she observed assistant managers performing nonmanagerial tasks while attending monthly meetings at other restaurants. The employees in this case submitted the declarations in support of their motion for conditional certification. Panera filed a motion to quash them, contending they were “sham” affidavits in that they were not based on personal knowledge and, moreover, that the assertions therein were contradicted by the declarants’ inconsistent deposition testimony in the other case. The court here doubted that Federal Rule 12(f) even offered the relief requested, but added that even if such relief were available, the court would deny Panera’s request on the merits as overbroad, and also on the basis that the company’s substantive objections to the declarations fell flat.

Equitable tolling. Next, the court rejected the employees’ motion to toll the limitations period for potential opt-in plaintiffs from the date that their original motion for conditional certification was filed until the date of the court’s ruling on their renewed motion for conditional certification. Any delay was caused by the plaintiffs’ errors, the court noted—namely, their failure to name the proper defendants—and the court rejected the plaintiffs’ contention that Panera had attempted to “hide the ball” by refusing to identify the proper corporate defendant.

The plaintiffs also argued that equitable tolling was necessitated by the fact that Panera had since reclassified the plaintiffs as nonexempt in 2016—effectively cutting off the claims of the collective. It was a “bold argument,” the court said, and it was rejected here, along with the underlying implication that Panera had reclassified the assistant managers as part of a tactic to “shave off” time at the backend, and thus liability. In the court’s view, this was a “a bizarre way to characterize a change that Plaintiffs must believe was not only required by law, but also in the best interests of the potential collective members—or at least those who worked for Defendant when the change went into effect.”

Interested in submitting an article?

Submit your information to us today!

Learn More

Labor & Employment Law Daily: Breaking legal news at your fingertips

Sign up today for your free trial to this daily reporting service created by attorneys, for attorneys. Stay up to date on labor and employment legal matters with same-day coverage of breaking news, court decisions, legislation, and regulatory activity with easy access through email or mobile app.