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Jones v. Does

United States Court of Appeals, Third Circuit

May 18, 2017

TYMECO JONES, IESHA BULLOCK, and TEAIRRA PIZARRO, on behalf of themselves and those similarly situated
v.
JOHN DOES 1-10; SCO SILVER CARE OPERATIONS LLC d/b/a ALARIS HEALTH AT CHERRY HILL Appellant

          Argued: November 16, 2016

         On Appeal from the United States District Court for the District of New Jersey (D.C. No. 1-13-cv-07910) District Judge: Honorable Noel L. Hillman

          Stuart A. Weinberger, Esq. [Argued] Goldberg & Weinberger Counsel for Appellant

          Matthew D. Miller, Esq. [Argued] Justin L. Swidler, Esq. Swartz Swidler Counsel for Appellee

          Before: AMBRO, CHAGARES, and FUENTES, Circuit Judges

          OPINION

          FUENTES, Circuit Judge.

         Plaintiffs, Tymeco Jones, Iesha Bullock, and Teairra Pizzarro, are certified nursing assistants who bring this action against their employer, SCO Silver Care Operations ("Silver Care") for violations of the Fair Labor Standards Act ("FLSA") and related New Jersey state wage and hour laws. The plaintiffs claim that Silver Care underpaid them for overtime in two ways. First, Silver Care failed to include certain hourly wage differentials in the calculation of the plaintiffs' regular rate of pay, resulting in illegally low overtime rates. Second, Silver Care deducted plaintiffs' half-hour meal breaks from their total hours worked, even though they often worked through those breaks. A year after the plaintiffs filed their lawsuit, but before any discovery took place, Silver Care moved to dismiss or to stay the proceedings pending arbitration, citing the arbitration clause in the governing collective bargaining agreement ("CBA"). The District Court denied the motion to dismiss or to stay pending arbitration. Defendant Silver Care appeals, contending that both overtime claims must first be submitted to arbitration to resolve disputed interpretation of the CBA, including the definition of the wage differentials and policies concerning the meal breaks. For the reasons set out below, we will affirm the decision of the District Court.

         I. Background

         The plaintiffs are employed at an assisted living facility, which was bought by Silver Care in 2007. The terms of their employment are governed by a CBA, negotiated by the nurses' union at the time of the purchase in 2007. This agreement lays out, among other things, wages, raises, breaks, and a grievance procedure that directs all disputes and complaints arising under the CBA to arbitration. Together, the three plaintiffs bring underpayment of overtime claims on their own behalf and on behalf of a class of nursing assistants who have worked at the nursing home at any time between December 31, 2010 and December 31, 2013. Their allegations are twofold: First, though plaintiffs are paid wage differentials, an additional $1.25 an hour to $3.00 an hour to account for shift premiums and raises, these differentials are not included in their regular rate of pay when overtime pay is calculated. Second, plaintiffs' 30-minute meal breaks are automatically deducted from total time worked even though they often need to work through those breaks during night shifts. Briefly summarized below are the facts relevant to each of these two claims, followed by the procedural history.

         A. Exclusion of Wage Differentials in Overtime Calculation

         Nursing assistants are paid a base rate of $10 to $14 an hour. In addition to these base rates, they may also be paid some or all three types of differentials: (1) "shift differentials"-an additional $2.50 an hour or $3.00 an hour, depending on the time and day of the shift; (2) "raise differentials"-an additional $1.25 an hour to those who received a certain type of raise; and (3) "frills differentials"- an additional $1.00 an hour or $1.60 an hour for nursing assistants who elected to forgo certain benefits. Whereas nursing assistants are compensated for overtime at one and a half times their base rate plus frills differential, plaintiffs here allege, and have submitted paystubs to demonstrate, that the shift differentials and raise differentials are not included. Consequently, the plaintiffs contend that they are undercompensated for overtime, which should be at one and a half times their all-in hourly rate during the regular work period.

         B. Uncompensated 30-Minute Meal Breaks

         Under the CBA, nursing assistants who are scheduled for eight-hour shifts are entitled to two paid 15-minute breaks and one unpaid 30-minute meal break per shift. The plaintiffs allege that nursing assistants who work during the night shifts "rarely, if ever" took an uninterrupted meal break because those shifts are chronically understaffed.[1] For example, whereas each nursing assistant is typically responsible for twelve to seventeen patients during the day and evening shifts, a nursing assistant on a night shift would be responsible for around thirty patients. In fact, the plaintiffs allege that, due to the staff shortage, the night shift supervisors do not schedule meal breaks for the night shift nursing assistants, and that when they do eat, they do so at the nurse's station, rather than in the break room, in order to hear the call bell alerting them to patients requiring care. Despite the frequent interruptions and restrictions, the plaintiffs allege that the 30-minute meal breaks are automatically deducted from their total hours worked. Consequently, the plaintiffs allege that they are not being paid for all the hours worked, including overtime for those weeks in which they worked more than forty hours.

         C. Procedural History

         The plaintiffs filed suit in December 2013. Silver Care moved to dismiss the complaint, which motion was denied when the plaintiffs filed an amended complaint. Silver Care subsequently moved to dismiss the amended complaint, which was granted as to the plaintiffs' claims seeking injunctive relief, but denied as to the claims seeking monetary damages. Thereafter, the plaintiffs moved to conditionally certify their suit as a collective action. Silver Care opposed the motion for conditional certification and moved to dismiss or to stay the proceedings pending arbitration. The District Court granted conditional certification and denied Silver Care's motion to dismiss or stay proceedings pending arbitration, holding that the plaintiffs' FLSA claims do not arise out of or implicate the CBA. Silver Care subsequently moved for reconsideration, which was also denied. Silver Care appealed.[2]

         II. Discussion

         The main issue on appeal is the applicability of the arbitration clause in the CBA to each of the plaintiffs' FLSA overtime claims. We begin by examining the relevant legal framework before turning to the plaintiffs' two claims.

         A. Legal Framework

         Whether and when a plaintiff's FLSA claims can be covered by an arbitration clause in a CBA is subject to a two-prong test. A court may compel arbitration of a plaintiff's federal statutory claim when (1) the arbitration provision clearly and unmistakably waives the employee's ability to vindicate his or her federal statutory right in court; and (2) the federal statute does not exclude arbitration as an appropriate forum.[3] Even if no clear or unmistakable waiver exists, however, we have held that arbitration may still be compelled if the plaintiff's FLSA claim "depends on the disputed interpretation of a CBA provision, " which dispute must "first go to arbitration-through the representative union-before [the employee may] vindicat[e] his or her rights in federal court under the FLSA."[4] We established this narrow rule to prevent a plaintiff from circumventing applicable statutes of limitations and contractually binding grievance procedures set out in a CBA. Tellingly, we have applied it to dismiss a plaintiff's FLSA claim in only one case, Vadino v. A. Valey Engineers.[5]

         In Vadino, the plaintiff-employee brought two claims.[6]First, the plaintiff alleged that the employer breached the CBA by paying him less than the wages due to a journeyman under the CBA.[7] Second, he alleged that the employer breached the overtime provision of the FLSA because he was not paid for overtime hours at one and a half times the journeyman rate to which he claimed that he was entitled under the CBA.[8] In short, both claims centered on his argument that the CBA promised him higher wages than what he actually received. Consequently, because his FLSA claim was "inevitably intertwined with the interpretation or application of [the] collective bargaining agreement, "[9] we held that he must first resolve his contractual dispute according to the internal grievance procedure set out in the CBA.[10] He could vindicate his federal statutory right in court only after resolution of his CBA claim.[11]

         By contrast, we held more recently in Bell v. Southeastern Pennsylvania Transportation Authority that the plaintiffs were not required to resolve any contractual disputes through arbitration before bringing their FLSA claim in federal court because their FLSA claim was completely independent of any interpretation of the CBA.[12] In that case, the plaintiffs, who worked as bus drivers and trolley operators, claimed that they should have been compensated for time spent performing vehicle inspections before the start of their daily trips.[13] The defendant argued that this FLSA claim depended on "whether the provisions of the CBA governing compensation for reporting time prior to the start of daily schedules include payment for pre-trip inspections."[14]That argument failed, however, because the employees did not claim that "they are entitled to additional payment under a CBA."[15] Rather, "resolution of the FLSA claim requires a factual determination of the amount of time Operators are required to work prior to their scheduled start, and a legal determination regarding whether this time is (1) compensable and (2) subject to the overtime provisions of the FLSA."[16]

         In summary, to the extent that an employee may be compelled to arbitrate his or her FLSA claims at all, the arbitration clause in the CBA must clearly and unmistakably state so. However, even where an arbitration clause does not contain a clear and unmistakable waiver of a plaintiff's right to a judicial forum, a plaintiff may nonetheless be compelled to arbitrate disputes over interpretations of the CBA, if the FLSA claims depend on such contractual disputes.

         Here, Silver Care does not dispute that the arbitration provision lacks a clear and unmistakable waiver of the employees' right to vindicate their FLSA claims in federal court.[17] Instead, Silver Care argues that this case must be stayed pending arbitration because both of the plaintiffs' FLSA claims depend on disputed interpretations of the CBA. For the following reasons, we disagree.

         B. Miscalculation of Overtime Rate Claim

         Silver Care argues that the plaintiffs' FLSA claim alleging miscalculation of the overtime rate rests upon a dispute over an implicit term of the CBA regarding whether the differentials already include a payment for overtime. Silver Care claims that during the collective bargaining process, when it negotiated to grandfather in some of the differentials, it also came to an agreement with the nurses' union that the additional differential amounts would already include overtime.[18] For example, Silver Care asserts that what appears to be a "$3.00 per hour weekend differential is a gross amount comprised of the $2.00 per hour differential and an extra $1.00 per hour in overtime premium . . . regardless of whether [the weekend shift] was worked in excess of 40 hours per week."[19] This, Silver Care posits, constitutes a dispute over an implicit term of the CBA that must first be sent to arbitration before a court can decide whether the plaintiffs have a claim under the FLSA.[20]

         Silver Care's argument fails because the plaintiffs' overtime claim is governed by the FLSA. Unlike the dissent, we believe that the statute requires us to bypass how the CBA breaks down the pay differentials, and look only to whether these pay differentials fit into the statutory definition of remuneration that must be included in the calculation of an employee's regular hourly rate of pay.

         The FLSA requires qualifying employers to pay "at a rate not less than one and one-half times the regular rate" to employees for hours worked in excess of forty hours a week.[21] The regular rate of pay is defined as "all remuneration for employment paid to, or on behalf of, the employee, " and the statute explicitly sets out a limited list of eight exceptions to this rule of "all remuneration."[22] We have held that these statutory exclusions are exclusive. "[A]ll remuneration for employment paid which does not fall within one of these seven exclusionary clauses must be added into the total compensation received by the employee before his regular hourly rate of pay is [to be] determined."[23]Furthermore, these statutory exclusions "are narrowly construed, and the employer bears the burden of establishing [that] an exemption [applies]."[24]

         In other words, whether the wage differentials should be included in the regular rate of pay depends not on any labels assigned to them by the CBA, but on whether they fit into one of the statutory exclusions. An employee's "regular rate is a readily definable mathematical calculation that is explicitly controlled by the FLSA."[25] As the Supreme Court puts it, the regular rate "is not an arbitrary label chosen by the parties; it is an actual fact."[26] Once amount of wages actually paid is known, "the determination of the regular rate becomes a matter of mathematical computation, the result of which is unaffected by any designation of a contrary 'regular rate' in the wage contracts."[27] Therefore, whether the CBA designates $2.00 of the $3.00 shift premium for working on Sunday as "regular pay" and $1.00 as "overtime" is completely irrelevant to a court's analysis of the proper overtime payment owed to the plaintiffs. A court determines the regular hourly rate of pay "by dividing [the employee's] total remuneration for employment (except statutory exclusions) in any workweek by the total number of hours actually worked by him in that workweek for which such compensation was paid."[28] This calculation can be done simply by looking at a paystub.

         In conclusion, the plaintiffs' miscalculation of overtime rate claim does not depend on any disputed term of the CBA, ...


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