Eat Your Lunch Alone: Federal Courts Decertifying Collective Actions Based Upon Auto-Deduction Policies


 By: Marty B. Heller

The scenario is common: an employer wants to avoid issues with clocking in and out of lunch every day, so employees are told to take a one hour lunch and the hour automatically is deducted from their time worked. Of course, the employees are told to inform their supervisor if they work through lunch so that the automatic deduction is reversed. Believe it or not, this simple system has had plaintiffs’ attorney’s salivating at the opportunity for collective action lawsuits against employers.

There is a new trend in federal courts, however, that may stop the influx of these collective action claims, or at least slow them down. In Jarosz v. St. Mary Medical Center, (E.D. Pa. Sept. 22, 2014), the court recognized that collective actions based upon FLSA violations allegedly arising from automatically deducting time for lunch are fraught with factual specific inquiries, and as a result, the court de-certified a collective action. In this case, the court concluded that the Medical Center had a de-centralized meal policy with no specific rules regarding cancelling or scheduling its automatic meal deduction. As a result, the court concluded that the employees could not be similarly situated when many of the employees were supervised by different individuals who had different lunch-time policies.

This case comes on the heals of another decision, Davis v. Abington Memorial Hospital, (3d Cir., Aug. 26, 2014), in which the court upheld dismissal of collective action claims alleging that an automatic deduction policy failed to compensate for all hours worked. The crux of this decision was that the plaintiffs merely suggested FLSA violations.

Several courts have come to the same conclusion over the last year. The trend of these courts is a positive sign for employers, recognizing that employees who report their time worked to supervisors in different ways and who were supervised by different people likely cannot proceed together in a collective action to allege FLSA violations from an auto-deduction policy.

Ultimately, this case and the growing trend of cases, shows that courts are likely to rule that an auto-deduction policy, standing alone, is insufficient to support a proposed collective action under the FLSA. However, that is not to say that auto-deduction policies now are risk-free. These policies still create FLSA issues because they create a substantial risk of employees working off-the-clock when they inevitably work at some point during a lunch break. If you are using an automatic lunch deduction, we recommend a strong off-the-clock reporting policy, combined with accurate records stating when an employee takes lunch each day. In short, these cases may protect employers from huge collective actions, but the fact remains that auto-deduction policies, without time records indicating when lunch is taken, often lead to allegations of improper deductions and working off-the-clock that are very difficult to defend.



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Eat Your Lunch Alone: Federal Courts Decertifying Collective Actions Based Upon Auto-Deduction Policies


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