Sonia Sotomayor’s District Court Decisions Dealing with the Fair Labor Standards Act

As promised, we now consider cases decided by Sonia Sotomayor while she was Judge for the U.S. District Court in the Southern District of New York. Four of Judge Sotomayor’s decisions deal with the Fair Labor Standards Act (FLSA). Since wage and hour litigation stemming from the FLSA is one of the hottest areas going these days, looking at Sotomayor’s point of view on the FLSA is important.

Archie v. Grand Central Partnership, Inc., 997 F. Supp. 504 (SDNY 1998)
In this case, former homeless and jobless participants in an employment program filed suit against three non-profits, alleging they were paid sub-minimum wages in violation of the Fair Labor Standards Act and the New York State Minimum Wage Act. The non-profits maintained that the participants in this program weren’t employees but trainees receiving essential job skills development and counseling and, thus, weren’t entitled to minimum wage payment.

Sotomayor found that the non-profits were a common enterprise for FLSA purposes because they engaged in related activities through outreach programs and social services. That seems to be a solid decision, given her finding that the non-profits were unified and operated by the same group of individuals.

Sotomayor also ruled that the non-profits were engaged in interstate commerce (making them subject to the FLSA) because, among other things, they handled goods and materials that went through interstate commerce and they met the $500,000 revenue requirement. It doesn’t take much to show that any employer is engaged in interstate commerce, so this part of her ruling would be found in almost any judge’s opinion concerning a similar case.

Acknowledging that participants in a program like the one in question can be trainees and not employees under the FLSA, Sotomayor found that the non-profits flunked the six-part test designed by the Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) to determine whether an individual is a trainee or an employee. Perhaps the most significant factor in deciding this case against the non-profits was Sotomayor’s finding that the program participants often performed the same tasks and duties as regular staff employees of the non-profits. Thus, they were entitled to be paid the minimum wage plus overtime.

Interestingly, the non-profits urged Sotomayor to recognize an exemption for them from the FLSA in light of the scope of the non-profits’ program. Sotomayor ruled that it was up to Congress to create statutory exemptions or the Executive Branch to recognize an exemption by regulation or otherwise. According to Sotomayor, it’s not the function of a court to legislate an exemption like the non-profits wanted.

The opinion in this case is more than 35 pages long and provides plenty of food for thought about Sotomayor’s approach to wage and hour cases. It also demonstrates that her knowledge of the FLSA is thorough.

Hoffmann v. Sbarro, Inc., 982 F. Supp. 249 (SDNY 1997)
Restaurant employees filed a collective action (the FLSA’s version of a class action), claiming that the class of employees they represented had been wrongly classified as exempt employees and, thus, not paid overtime. Part of Sotomayor’s ruling deals with certain procedural aspects of a collective action and is, therefore, worth the scrutiny of labor and employment lawyers about Sotomayor’s thinking on these procedural aspects.

The substantive part of the case deals with the employees’ claim that restaurant managers were misclassified as exempt executive employees, and there was little dispute about this. Restaurant managers were subject to a company-wide policy requiring them to reimburse Sbarro for cash shortages, inventory shortages or other losses occurring under their supervision. In fact, the managers had signed an “Agreement to Reimburse Losses,” authorizing Sbarro to dock the managers’ compensation for such shortages and losses. The problem, of course, is that exempt employees can’t be subject to this kind of policy or practice.

Sbarro defended itself by arguing no harm, no foul. When it realized the error of its way, Sbarro rescinded the policy and reimbursed managers whose compensation had been subject to improper deductions. Under 29 C.F.R. Section 541.118(a)(6), a regulation promulgated by the Department of Labor, employers are given a “window of correction” — an absolute right to cure improper deductions retroactively and avoid any liability for unpaid overtime. Sbarro contended, therefore, that this case should be dismissed without a trial.

According to Sotomayor, however, the regulation relied on by Sbarro was unclear and had been interpreted in different ways by various courts. Moreover, the Secretary of Labor had interpreted this regulation to mean that there was no “window of correction” for employers that have engaged in a “pattern” of improper deductions. Sbarro’s deduction policy was long-standing and perhaps constituted an unlawful pattern. The case couldn’t be dismissed, therefore, and was ready to proceed to trial.

Matthews v. LeBoeuf, Lamb, Greene & MacRae, 902 F. Supp. 26 (SDNY 1995)
The former head of a law firm’s clerk office sued the firm for back pay. According to the employee, he was initially paid overtime but was then switched to being paid a flat rate in violation of the FLSA.

This Sotomayor opinion is perhaps of more interest to labor and employment lawyers, because it relates exclusively to whether the lawyers representing the employee should be disqualified from the case. The defendant law firm contended they should be because they worked as lawyers for the law firm at the time of the firm’s alleged wrongdoing. Thus, there was simply no way they could appropriately represent the employee in this case.

Acknowledging that it’s possible that lawyers could be disqualified under these circumstances, Sotomayor ruled that there was no basis for disqualification in this case. Even if the lawyers were called as fact witnesses (as the defendant law firm had threatened to do), there was nothing to indicate that their testimony would be prejudicial to either party. In addition, there was nothing to indicate that the lawyers involvement in this case would violate any continuing fiduciary duty they owed to the law firm.

Sotomayor had given the law firm ample opportunity to produce evidence showing prejudice or a fiduciary duty violation. Other than making a general allegation that the lawyers shouldn’t be involved in the case, the law firm had provided nothing to support its argument that its former lawyers should be disqualified from the case.

Realite v. Ark Restaurants Corp., 7 F. Supp. 2d 303 (SDNY 1998)
Several non-exempt restaurant employees filed a collective action against their employer, claiming the employer had failed to pay the minimum wage and overtime and had worked the employees “off the clock.” The employer asked Sotomayor to deny the employees’ effort to proceed with this case as a collective action.

Sotomayor rejected the employer’s request and certified the case as a collective action. She emphasized that the certification was only for the purpose of the plaintiff employees sending out a notice to other employees who were supposedly similarly situated and for the purpose of allowing discovery to proceed. She wasn’t certifying that all individuals who would receive the notice were similarly situated. That remained to be seen but could be determined only by giving them notice and allowing discovery to begin.

Summary of Sotomayor’s wage and hour decisions
Although Sotomayor’s wage and hour decisions as a district judge are well-reasoned, if anything can be discerned from them about how she’s likely to view cases under the Fair Labor Standards Act, it would be that she’s a stickler for making sure that employers comply with the law and pay employees like they should be paid. In the above decisions, she seemed inclined to take a common sense, what’s-really-going-on approach and not inclined to accept employers’ technical legal defenses, at least not without a trial.

Next, we’ll look at Judge Sotomayor’s district court record on sex discrimination cases.