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News | May 05, 2011

Text From Recent Brief Arduing that the Pennsylvania Minimum Wage Act Provides a Private Right of Action for Overtime Actions

In this class action lawsuit, Plaintiff asserts that Defendants Wilkes-Barre Hospital Company, LLC and Wyoming Valley Health Care System (“Defendants”) violated the Pennsylvania Minimum Wage Act (“PMWA”), 43 P.S. §§ 333.101, et seq., by failing to calculate overtime premium compensation based on a 7-day workweek. Plaintiff’s legal claim is strong. In another class action lawsuit raising the identical PMWA theory, the Philadelphia Common Pleas Court granted summary judgment against the hospital employers and, thereafter, a $2.75 million settlement was reached. See pp. 4-5 infra.

Seeking to avoid further litigation, Defendants move for judgment on the pleadings. See Docs. 12-13. According to Defendants, the PMWA does not permit Pennsylvania employees to bring civil lawsuits for unpaid overtime. See id.

Defendants’ motion should fail. As discussed herein, Defendants’ exact argument was previously rejected by Western District of Pennsylvania Judge Donetta Ambrose. See p. 6 infra. Moreover, Defendants’ argument contradicts the express language of at least six additional federal and state court opinions, see pp. 6-9 infra, and conflicts with a plethora of other civil actions in which employees pursue (and courts consider) PMWA overtime claims, see pp. 9-11 infra.

Defendants cannot locate any caselaw supporting their radical argument that the courthouse door is closed to Pennsylvania employees seeking to vindicate their PMWA overtime rights. Instead, Defendants present the Court with a statutory analysis that ignores a plain reading of the PMWA’s civil remedy provision, see pp. 11-13 infra, and drastically overstates the distinction between “minimum wage” pay and “overtime” pay, see pp. 13-14 infra. Defendants’ flawed statutory analysis does not provide a basis for this Court to overturn the well-established principle (exemplified in hundreds of cases) that Pennsylvania employees may enforce their PMWA overtime rights through civil litigation.

I. BACKGROUND
A. Procedural History
In February 2011, Plaintiff, a nurse formerly employed by Defendants, commenced this lawsuit by filing a Class Action Complaint (“Complaint”) in the Luzerne County Common Pleas Court. See Doc. 1, Ex A. Defendants removed the action to this Court, see Doc. 1, answered, see Doc. 11, and filed the instant motion for judgment on the pleadings, see Docs. 12-13.

In the meantime, Plaintiff has moved for class certification, see Docs. 14-15, and Defendants have moved to stay the class certification proceedings, see Doc. 17. Plaintiff opposes the stay, and her opposition papers are forthcoming.
Finally, Defendants have filed a third-party complaint against a labor union that purportedly serves as the collective bargaining agent for some of the class members. See Doc. 16. The labor union has not yet responded to this complaint.

B. The Nature of Plaintiff’s Legal Claim.
The PMWA requires that employees be compensated for every hour worked in a workweek, see 43 P.S. § 333.104(a), and receive overtime compensation “not less than one and one-half times” the employee’s regular pay rate for all hours worked over 40 in a workweek, see 43 P.S. § 333.104(c). Under the PMWA, overtime is calculated based on the number of hours worked in a “workweek,” which is strictly defined as “a period of 7 consecutive days.” See 34 Pa. Code § 231.42.

Defendants admit that they do not calculate the overtime pay of Plaintiff and other class members based on a 7-day workweek. See Complaint (Doc. 1, Ex. A) at ¶¶ 10, 13-14; Answer (Doc. 11) at ¶¶ 10, 13-14. Instead, Defendants pay the overtime premium only when employees work in excess of eight (8) hours in one day or eighty (80) hours in a 14-day pay period. See id. This compensation method, known as the “8/80 Rule,” is permitted for certain health care employers under the federal Fair Labor Standards Act (“FLSA”). See 29 U.S.C. § 207(j). However, in this lawsuit, Plaintiff contends that no such exception to the 7-day-workweek rule exists under the PMWA, and, therefore, Defendants’ utilization of the 8/80 Rule violates the PMWA. See generally Complaint at ¶¶ 9-14, 22-28; see also In re Cargill Meat Solutions Wage and Hour Litig., 632 F. Supp. 2d 368, 393-94 (M.D. Pa. 2008) (explaining that states may enact wage and overtime laws that are more beneficial to workers than the FLSA); Bayada Nurses, Inc. v. Commonwealth of Pennsylvania, 8 A.3d 866, 883 (Pa. 2010) (same).

C. In Another Class Action Lawsuit, the Philadelphia Common Pleas Court Found Merit in the Same Legal Argument Presented by Plaintiff in the Instant Lawsuit.

The exact legal issue presented in this lawsuit was recently addressed by the Philadelphia Common Pleas Court in consolidated actions entitled Turner v. Mercy Health System, et al., No. 3670 (Jan. Term 2008) and Vanston v. Marian Community Hospital, et al., No. 4284 (June Term 2008). There, the employees alleged that the hospitals’ use of the 8/80 Rule to calculate overtime premium pay violated the PMWA. See Complaints, attached as Exhibits A-B. The employees were represented by several lawyers, including the undersigned lawyers from The Winebrake Law Firm, LLC. See id.

The parties filed extensive summary judgment papers addressing the legality of the 8/80 Rule under the PMWA. On March 10, 2010, the Court issued an order and opinion granting the employees’ summary judgment motion and holding that the 8/80 Rule violates the PMWA. See Turner v. Mercy Health System, 2010 Phila. Ct. Com. Pl. LEXIS 146 (Pa. Com. Pl. Mar. 10, 2010). The Court reasoned that the PMWA contains no exceptions to the general rule that overtime be paid based on a 7-day workweek. See id. at *4.

Following the summary judgment ruling, the parties engaged in an extensive review and analysis of the relevant timekeeping and payroll data for the employee class. After engaging in mediation overseen by former Pennsylvania Supreme Court Justice Russell Nigro, the parties settled the Turner/Vanston actions for $2,750,000.00. On April 20, 2011, the Court granted final approval of the settlement. See Exhibit C.

II. ARGUMENT
Defendants’ argument that Pennsylvania employees cannot enforce their PMWA overtime rights through private civil actions should fail because the argument contradicts both existing caselaw and the pertinent statutory language.

A. Defendants’ Argument Contradicts Existing Caselaw.
As discussed below, courts consistently and repeatedly permit Pennsylvania employees to bring civil actions to enforce their PMWA overtime rights:

1. One District Court Has Addressed and Rejected Defendant’s Exact Legal Argument.
The exact argument posed in Defendants’ motion was addressed and rejected by Western District of Pennsylvania Judge Donetta Ambrose in Zelinsky v. Staples, Inc., 2008 U.S. Dist. LEXIS 75051 (W.D. Pa. Sep. 29, 2008). There, employees asserted that the employer illegally classified them as exempt from the PMWA ‘s overtime pay provision. See id. at *1-3. The employer moved to dismiss the PMWA claim, arguing that “no private right of action exists under the [PMWA] based on an employer’s failure to pay overtime.” Id. at *21. Judge Ambrose flatly rejected the employer’s argument, observing that it contradicted “the plethora of cases in Pennsylvania state courts and this district where plaintiffs sought to recover overtime pay under the PMWA.” Id. at *21-22 (citing cases). In addition, Judge Ambrose wrote: “I further do not read section 13 of the PMWA [43 P.S. § 333.113] as precluding a private right of action for unpaid overtime.” Id. at *22.

Zelinsky is directly on-point and, standing alone, provides this Court with ample authority to deny Defendants’ motion.

2. At Least Six Additional Courts Have Explicitly Observed that Employees May Bring Civil Actions to Enforce Their PMWA Overtime Rights.

In addition to Zelinsky, at least six other courts have explicitly explained that the PMWA provides employees with a private right of action for unpaid overtime. The pertinent court decisions are discussed below:

First, in Lugo v. Farmer’s Pride, Inc., 967 A.2d 963 (Pa. Super. 2009), food processing employees asserted that the employer violated the PMWA by failing to credit the time the employees “spent donning, doffing, and sanitizing their protective gear.” Id. at 965; accord id. at 967-68. According to the employees, “[h]ad that work been recorded as paid time, [they] would have worked over forty hours a week and been entitled to be paid one and one half times their regular hourly wages for all time worked in excess of forty hours per week.” Id. at 968. Faced with these allegations, the Pennsylvania Superior Court held that the employees’ demand for overtime pay fell within the PMWA’s civil remedy provision (codified at 43 P.S. § 333.113) and was consistent with the PMWA’s declaration of policy (codified at 43 P.S. § 333.101). See id.

Second, in Sanders v. Loomis Armored, Inc., 614 A.2d 320 (Pa. Super. 1992), the Pennsylvania Superior Court considered whether a PMWA overtime claim was retroactively barred by an amendment to the PMWA’s motor carrier exemption. See id. at 320-22. The court’s retroactivity analysis required it to consider whether the employees had a “vested right” in their PMWA overtime claim. See id. at 322-23. In concluding that the employees had a vested right, the court explicitly recognized that the PMWA empowered the employees to bring a civil action for unpaid overtime:  Here, employees could have first maintained their action when each, respectively: (1) worked in excess of forty (40) hours in one week; and (2) received less than the overtime wages specified under the [PMWA]. . . . Therefore, we conclude that employees have a vested right in their cause of action which cannot be extinguished by the 1990 amendment to the [PMWA] without violating their constitutional right to due process.  Id. at 324 (emphasis supplied).

Third, in Gusdonovich v. Business Info. Co., 705 F. Supp. 262 (W.D. Pa. 1985), an employee sought, among other relief, unpaid overtime wages under the PMWA. See id. at 263. The employee also brought a Pennsylvania common law claim for “violation of public policy.” See id. at 266. In considering the public policy claim’s viability, the district court was required to consider whether the FLSA and PMWA provided the employee with a “statutory remedy” for overtime pay. See id. The district court concluded that, indeed, a private statutory remedy exists under both statutes:

Both the FLSA and the [PMWA] provide a remedy for an employee who was not paid overtime wages as those acts require. 29 U.S.C.A. § 216(b); 43 Pa.C.S.A. § 333.113 (1968). These remedies are available against “employers.”
Id. (emphasis supplied).

Fourth, in Dailey v. Progressive Corp., 2003 U.S. Dist. LEXIS 21109 (E.D. Pa. Nov. 12, 2003), an employee asserted that his employer failed to pay overtime under the PMWA. See id. at *5. In considering the PMWA overtime claim, the district court recognized that the PMWA “authorizes civil actions against noncompliant employers.” Id. at * 13 (emphasis supplied).

Fifth, in Raykhman v. Digital Elevator Co., 1993 U.S. Dist. LEXIS 13112 (E.D. Pa. Aug 30, 1993), the district court denied an employer’s motion for summary judgment as to the employee’s PMWA overtime claim. See id. at *18-20. Therein, the district court observed that “if [the employee] is found to be an employee by the jury, he has a valid claim for wages and overtime pay under the [P]MWA.” Id. at *19 (emphasis supplied).

Sixth, in Turner, supra, the Philadelphia County Common Pleas Court observed: “Additionally, among its many protections for workers, the [P]MWA, declares that employees ‘shall be paid for overtime at not less than one and one-half times’ their regular rates . . . and it authorizes civil actions against noncompliant employers.” Turner, 2010 Phila. Ct. Com. Pl. LEXIS 146, at *14 (emphasis supplied).

3. Additional Caselaw Confirms that Private Civil Actions for Unpaid Overtime Under the PMWA are Commonplace.

The court decisions discussed in subsections 1-2 above are only the tip of the iceberg when it comes to demonstrating that Pennsylvania employees consistently and repeatedly are permitted to pursue civil actions to enforce their PMWA overtime rights. In this regard, the Court is directed to the margin for some examples of PMWA overtime lawsuits.

B. Defendant’s Argument Contradicts the PMWA’s Language and Purpose.
In addition to conflicting with a mountain of caselaw, Defendants’ quest to invalidate, as a matter of law, all private PMWA overtime lawsuits cannot be squared with the PMWA’s statutory language. In particular, the PMWA’s “Civil Actions” provision expressly permits overtime rights lawsuits. See pp. 11-13 infra. Moreover, Defendants’ argument suffers from additional flaws, including the false notions that the PMWA makes clear distinctions between “minimum wage” pay and “overtime” pay, see pp. 13-14 infra, and that overtime premium pay does not fall within the common meaning of a “minimum wage,” see p. 14 infra.

1. PMWA Section 13 Explicitly Encompasses the PMWA’s Overtime Pay Provision.
Defendants fundamentally argue that PMWA Section 13, entitled “Civil Actions,” does not encompass overtime rights claims. Section 13 provides, in relevant part: “If any employee is paid by his or her employer less than the minimum wages provided by section 4 of this act or by any regulation issued thereunder, such worker may recover in a civil action . . . .” 43 P.S. § 333.113 (emphasis supplied).

Contrary to Defendants’ argument, Section 13 explicitly covers overtime disputes. This is so for two independent reasons:

First, Section 13 encompasses the entirety of Section 4, which includes both minimum wage provisions, see 43 P.S. 333.104(a), and overtime pay provisions, see id. at § 333.104(c). If, as Defendants assert, the Legislature wanted to limit Section 13’s reach to “pure” minimum wage disputes, it easily could have done so by simply drafting the words “provided by section 4(a) of this act” instead of the words “provided by section 4 of this act.” But the Legislature did not do this. Instead, it drafted Section 13 to encompass the entirety of Section 4. See id. at § 333.113. Defendants fail to provide any coherent explanation for why this Court should unilaterally limit Section 13’s reach to Section 4(a) when, in fact, the express statutory language contains no such limitation.

Second, Section 13 explicitly reaches “any regulation” issued under Section 4. 43 P.S. § 333.113 (emphasis supplied). In drafting this language, the Legislature clearly understood that such regulations would address overtime pay issues. In fact, the PMWA provision addressing the Secretary of Labor & Industry’s regulatory power expressly contemplates that minimum wage regulations “may include, but are not limited to, . . . overtime standards . . . ,” id. at § 333.109, and, in fact, the regulations are chalk-full of important overtime standards, see, e.g., 34 Pa. Code §§ 231.41-231.43, 231.81-231.85. Indeed, this lawsuit (like the previously discussed Turner action) addresses one such regulation. See id. at § 231.42 (defining the “workweek” as “a period of 7 consecutive days” and requiring that overtime be calculated on a “workweek basis”).

In sum, Section 13’s language, standing alone, provides the Court with an ample basis to deny Defendants’ motion. However, as discussed in subsections 2 and 3 below, Defendants’ statutory analysis suffers from additional flaws.

2. The PMWA Does Not Clearly Distinguish “Minimum Wage” Pay From “Overtime” Pay.
Defendants repeatedly argue that the PMWA distinguishes between “minimum wage” pay and “overtime” pay. As demonstrated by the following examples, however, the PMWA freely uses the term “minimum wage” to encompass both the minimum wage rate described in Section 4(a) and the overtime premium rate described in Section 4(c).

First, the very title of the statute demonstrates an expansive use of the “minimum wage” terminology. The statute’s formal title is “The Minimum Wage Act of 1968.” See 43 P.S. § 333.102. Yet, it is beyond dispute that the statute prominently addresses overtime premium pay. See, e.g., id. at §§ 333.104(c).

Second, PMWA Section 4 is headed “Minimum Wages.” See 43 P.S. § 333.104. Yet, as already discussed, this section includes the statute’s core requirement that employees receive overtime premium pay calculated at one and one-half their regular pay rate. See 43 P.S. § 333.104(c).

Third, PMWA Section 9 empowers the Secretary of Labor & Industry to issue regulations “which shall be deemed appropriate to carry out the purposes of this act and to safeguard the minimum wage rates thereby established.” 43 P.S. § 333.109 (emphasis supplied). The Section then states: “Such regulations may include, but are not limited to, . . . overtime standards . . . .” Id. (emphasis supplied). In other words, Section 9 explicitly characterizes regulations concerning “overtime standards” as the types of regulations that safeguard “minimum wage rates.”

3. Overtime Premium Pay Is a “Minimum Wage.”
Defendants assert that “[t]he plain, ordinary, dictionary definition of ‘minimum wage’ is the lowest hourly wage that may be paid to a worker under law.” Def. Br. (Doc. 13) at p. 14. This assertion does not help Defendants’ cause. Under the PMWA, when an employee works over 40 hours in a week, he/she must be paid “not less than one and one-half times [his/her] regular rate.” 43 P.S. § 333.104(c). To pay the employee anything less is illegal. See id. In other words, overtime premium pay falls squarely within Defendants’ own definition of a “minimum wage”: it is the “lowest hourly wage that may be paid to [the employee] under law.”

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