United States: The FLSA and Your CBA: 3rd Circuit Finds Claims Were Not Subject to Dispute Resolution Provisions

In Jones v. SCO Silver Care Operations LLC, No. 16-1101 (May 18, 2017), the Third Circuit Court of Appeals addressed whether several certified nursing assistant plaintiffs were entitled to pursue their claims for violations of the Fair Labor Standards Act (FLSA) in court or were required to submit the claims to an arbitrator in accordance with the collective bargaining agreement (CBA) between their union and their employer. The Third Circuit held that the certified nursing assistants' overtime claims did not depend upon an interpretation of the CBA, and accordingly, rejected the employers' contention that the plaintiffs were first required to present their claims to arbitration.

Factual Background

Tymeco Jones, Iesha Bullock, and Teairra Pizarro were certified nursing assistants who worked for Silver Care, a skilled nursing facility. On behalf of themselves and a proposed class of nursing assistants, they instituted a lawsuit against Silver Care in the U.S. District Court for the District of New Jersey. The certified nursing assistants alleged that Silver Care violated the FLSA and related New Jersey wage-and-hour laws by failing to include in their base rate of pay certain wage differentials when calculating the amount of overtime due to them. In addition, they alleged that Silver Care improperly excluded 30-minute meal break periods from their total hours worked, although nursing assistants who worked night shifts rarely took uninterrupted meal breaks because the shifts were understaffed relative to the day shifts.

Although the CBA did not expressly require arbitration of FLSA disputes, Silver Care filed a motion to dismiss or stay the proceedings pending arbitration on the ground that resolution of the FLSA claim depended upon the terms of the CBA, which established the plaintiffs' entitlement to wage differentials and which stated that meal periods "shall be free and uninterrupted, and employees shall not be on call" except during "emergencies [when] employees are expected to respond." The district court rejected Silver Care's arguments and denied the motion to dismiss or stay the proceedings. Silver Care appealed the denial of its motion to dismiss or stay the proceedings to the Third Circuit.

The Third Circuit's Ruling

The Third Circuit affirmed. First, the court examined the claim that Silver Care had miscalculated the base rate of pay by failing to take into account the pay differentials that were established by the collective bargaining agreement. Examining Silver Care's argument that the parties to the negotiations had agreed that the total wage differentials included a base pay differential and an overtime differential, the court held that this was irrelevant to a determination of Silver Care's liability under the FLSA. The court reasoned that the definition of regular rate of pay established by Congress, which requires that an employer take into account "all remuneration for employment paid to, or on behalf of, the employee," subject only to eight statutory exceptions, controlled rather than any understanding that was contemplated or agreed to between the union and the employer when the parties negotiated the pay differential provisions of the CBA. Because a determination of an employee's regular hourly rate of pay could be made by examining payroll records, the court held that the overtime rate claim did not require an interpretation of any disputed language of the CBA.

Next, the court considered the plaintiffs' claim that Silver Care had violated the FLSA by failing to include their meal breaks in the total hours worked. Although Silver Care contended that there were disputes about the length of the meal breaks, the nature of restrictions imposed on employees during the meal breaks, and whether the parties in practice considered interrupted time as part of the paid portion of the break or an unpaid portion of the break, the court reasoned that those disputes were questions of fact which also did not depend upon an interpretation of the language of the CBA. Referring to its decision in Babcock v. Butler County, 806 F.3d 153 (3d Cir. 2015), where the court examined both a CBA and the facts to determine that certain employees were not entitled to compensation under the FLSA for a meal period because the meal period primarily benefitted the employees, the court concluded that the relevance of the language of the Silver Care CBA to the "predominant benefit" analysis adopted in Babcock did not transform the nursing assistants' meal break claim into a dispute about the interpretation of the CBA.  

As a result, the court concluded that the nursing assistants were not required to submit either of the FLSA claims to arbitration.

Key Takeaways

Grievance procedures that require arbitration of disputes are as common in CBAs as provisions addressing wages, wage increases, and meal periods. However, Jones affirms that disputes about an employer's compliance with the FLSA will not be subject to the dispute resolution provisions of a CBA merely because the CBA sets compensation or includes provisions about meal breaks. Because the FLSA (like Title VII of the Civil Rights Act of 1964 and a host of other federal and state laws) guarantees certain substantive rights, employers must either explicitly identify the FLSA in the dispute resolution provisions of a CBA, or be prepared to defend such claims in court.

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