The United States District Court for the Southern District of Indiana recently decided a case highlighting the importance of clear employer policies when it comes to wage payment issues. In Smith v. Professional Transportation Inc. et al., 13-cv-00221 (N.D. Ind. January 26, 2018), the named plaintiff alleged that the defendant failed to pay Branch Administrators overtime compensation and/or failed to classify Branch Administrators as exempt and pay them as prescribed by the FLSA (the Court noted the allegations were unclear).  The parties stipulated to the conditional certification of a class that was defined as “[a]ll individuals who were employed or are currently employed by [defendant] as a Branch Administrator at any time between November 10, 2011, and January 9, 2015.”  The defendant then moved to decertify the conditional class, and the District Court granted the motion.

In decertifying the class, the Court found that the named plaintiff did not demonstrate that she was similarly situated to all opt-in Branch Administrators who were subject to a common policy in violation of the FLSA.

In reaching this conclusion, the Court noted that it was unclear whether the named plaintiff was alleging that the Branch Administrators were misclassified as non-exempt and not paid $455.00 per week (the FLSA minimum weekly salary to qualify for exempt status), or that they were properly classified as non-exempt but not paid overtime. The Court declined to certify the collective action on the former ground, observing that the named plaintiff had not cited to any authority standing for the proposition that an employer must classify employees as exempt if they perform some amount of managerial work.

As for the named plaintiff’s allegations that the defendant required the Branch Administrators to work more than their authorized hours without pay, the Court held that individualized issues predominated over common ones. The Court noted that, even though the named plaintiff and one of the opt-in plaintiffs each claimed that they worked more than their agreements with the defendant authorized, those statements alone did not constitute a “policy” on the part of the defendant.  On the contrary, the evidence showed that defendant’s policy was to pay all excess time for which payment was sought, even if it was not pre-approved.  The Court also concluded that individualized issues predominated over any common policy or practice because determining the truth of whether or not there was any off-the-clock work would turn on the credibility of the witnesses.  In addition, the agreements with each Branch Administrator varied from employee to employee.  Finally, the named plaintiff’s suggestion on how opt-in damages could be proven at trial itself supported denial of the class, as plaintiff suggested that each opt-in should submit a declaration identifying the total number of hours worked in an average week.  The Court concluded that such a method established liability for each opt-in without requiring the plaintiff to prove that liability.

Smith underscores the importance of employers having up-to-date and lawful written wage payment policies, and lends support for future arguments relating to the predominance of individualized issues in a collective.