U.S. Supreme Court Upholds the Right to Use Statistical Evidence in FLSA Class Actions

On March 22, 2016, the United States Supreme Court held that plaintiffs in a donning and doffing class action properly used representative and statistical evidence to establish class-wide liability in Tyson Foods, Inc. v. Bouaphaeko.   

Employees working in the kill, cut, and retrim departments of the Tyson Food plant in Iowa, argued Tyson violated the Fair Labor Standards Act (FLSA) by failing to compensate them for time “donning and doffing” protective gear. Tyson failed to keep any records of the time employees took for this purpose. As a result, the employees had to rely primarily on a study performed by an industrial relations expert, Dr. Kenneth Mericle. Mericle conducted 744 videotaped observations of employees donning and doffing their gear and averaged the time taken in the observations. Mericle then used the average donning and doffing times and added it to the regular time worked by the 3,344 members in the class action to determine whether they had worked over forty (40) hours in the week. 

At trial, the jury awarded the class $2.9 million in compensatory damages. Tyson sought to reverse the judgment, arguing it was unfair to allow class members to rely on representational evidence to establish damages.  Tyson's primary objections were that some class members had no damages and that the amount of time spent donning and doffing gear varied by job assignment.

Delivering the opinion of the Supreme Court, Justice Kennedy held the class could rely on Mericle’s sample study to prove damages because each class member could have relied on the sample to establish liability had each brought an individual action. Justice Kennedy followed precedent authorizing the use of estimates in wage cases, particularly when the employer failed to keep records of hours worked.  It would otherwise be nearly impossible for plaintiffs to establish a claim in cases where the employer fails to keep time records. He noted “that when employers violate their statutory duty to keep proper records, and employees thereby have no way to establish the time spent doing uncompensated work,” barring the use of statistical evidence would create “an impossible hurdle for the employee.”

While acknowledging "the question whether uninjured class members may recover is one of great importance," Kennedy criticized Tyson for opposing bifurcation of liability and damages.  In so doing, Tyson made it difficult to remove uninjured individuals from the class after the award was rendered. Kennedy indicated that Tyson should not profit from the difficulties it created.

The Court distinguished its 2011 decision in Wal-Mart, which rejected use of statistical analysis to establish liability in a class action for gender discrimination.  Kennedy dispatched the effort to pigeonhole Wal-Mart, noting that the Tyson class members were similarly situated.  This case is an important affirmation of the right to use statistical estimates to enforce FLSA rights and prosecute wage and hour class actions.

California Employers Face Class Action Liability for Failing to Reimburse Work-Related Cell Phone Use

On August 12, 2014, the California Court of Appeal held in Cochran v. Schwan's Home Service, Inc. that California employers face class action liability if they fail to reimburse employees for work-related cell phone use. Employers must reimburse a reasonable percentage of employee cell phone bills, regardless of the cell phone plan or who pays the bill.

In Cochran, customer service managers of Home Service filed a class action lawsuit alleging the company failed to reimburse them for work-related cell phone use. The class included 1,500 employees.  Labor Code section 2802 requires employers to indemnify employees for "all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer..."

The Court stated: "It does not matter whether the phone bill is paid for by a third person or at all. In other words, it is no concern to the employer that the employee may pass on the expense to a family member or friend, or to a carrier that has to then write off a loss." The Court found section 2802 is aimed at preventing employers from passing on operating expenses. Also, the Court held employers should not intrude into the private lives of their employees to find out how they manage their finances. While such details may affect each employee's recovery, it is irrelevant in determining employer liability under section 2802. Employers must reimburse employees for a "reasonable percentage" of their cell phone bills if they use their cell phones for work. Failure to do so may subject employers to class action liability for all affected employees.