People For the American Way

Biden Judge Upholds Collective Lawsuit by Multiple Employees for Overtime Pay

News and Analysis
Biden Judge Upholds  Collective Lawsuit by Multiple Employees for Overtime Pay

Judge Dana Douglas, nominated by President Biden to the US Court of Appeals for the Fifth Circuit, wrote a unanimous opinion  that rejected a corporation’s effort to overturn a district judge’s ruling that multiple employees could join in a collective lawsuit against the corporation for failing to provide proper overtime pay under the federal Fair Labor Standards Act (FLSA). The June 2023 decision was in Loy v Rehab Synergies LLC.                                                                        


What is this Case About and What Happened in the District Court?

 Valerie Loy brought a lawsuit against Rehab Services LLC under the FLSA for failing to pay her and other employees proper overtime pay. The corporation is a large employer and operates 44 facilities across Texas that provide physical and other therapy. According to Loy, the corporation encouraged employees to perform work that could not be billed to specific patients “off-the-clock” to artificially increase their productivity and meet “onerous productivity requirements” imposed by the corporation. This meant that they had to work significantly more than 40 hours per week and “worked unpaid overtime,” in violation of FLSA.

Because of the corporation’s similar misconduct towards multiple employees, Loy sought to bring her case as a collective action under the FLSA, similar to a class action. The company strongly resisted but the lower court agreed with Loy. By the time of trial, a total of 22 workers had opted in to the collective action. The jury in the case returned a verdict in favor of the workers, and also found that the corporation had “willfully violated” the FLSA.

The case is an example of recent efforts by employers to undermine workers’ rights to bring collective actions under FLSA. Rehab had contested the collective action determination multiple times, including even filing a motion after the verdict was announced.

Rehab appealed to the conservative Fifth Circuit. It argued that the district court had erred by allowing the case to proceed as a collective action, potentially threatening the rights of workers under the FLSA.

How did Judge Douglas and the Fifth Circuit Rule and Why is it Important?

Judge Douglas wrote a unanimous opinion that rejected the corporation’s challenge and upheld the verdict and the trial court’s decision to let the case proceed as a collective action.  Quoting past precedent, Douglas explained that such collective actions are important not only because they “lower individual costs to vindicate rights by the pooling of resources,” but also because the “judicial system benefits by efficient resolution in one proceeding” of common legal and factual issues.

After a “thorough review,” Judge Douglas found “no legal error” by the court below. She pointed to specific “evidence of employer knowledge of off-the-clock work in violation of the FLSA.” Although there were some differences among the experiences of the workers, Judge Douglas concluded that the district court had properly determined that they were “similarly situated” under applicable precedent. And it “would have been inconsistent with the FLSA to require 22 separate trials” in this case, she wrote, although she carefully did not criticize the corporation’s vigorous advocacy against collective actions. Judge Douglas is the first black woman confirmed to the Fifth Circuit, and was also described as bringing a “GOP-appealing resume” because of family law enforcement background and received support from both home-state Republican Senators. Conservative Trump judges James Ho and Donald Oldham agreed with Douglas in this case, and the lower court ruling and verdict were affirmed

In addition to vindicating the overtime pay rights of Valerie Loy and other Rehab employees, the Fifth Circuit’s decision is important because it makes clear the significance of allowing collective FLSA actions and rejected an employer attack on them, even in the conservative Fifth Circuit. In addition, the ruling provides another illustration of the importance of promptly confirming fair-minded Biden nominees like Judge Douglas, whose opinion in this case shows her ability to work with conservative judges who may often disagree with her, to our federal courts