|March 5, 2014|
Previously published on March 3, 2014
The Tennessee Wage Regulation Act provides no private right of action to aggrieved employees, a federal district court in Nashville has ruled in a collective action for alleged unpaid wages. Abadeer v. Tyson Foods, Inc., No. 3:09-cv-00125 (M.D. Tenn. Oct. 3, 2013). However, the U.S. District Court for the Middle District of Tennessee also ruled the employer violated the Fair Labor Standards Act and breached its employment agreement with the employees by failing to pay them for all hours worked, including pre- and post-shift activities. But the court denied summary judgment to the employees on their claim for uncompensated meal periods.
The plaintiffs were hourly production workers at a processing plant in Goodlettsville, Tennessee, operated by Tyson Foods, Inc. Upon hire, they were told they “would be paid an hourly wage for all of the hours they worked.”
The plaintiffs brought a collective action under the FLSA and Tennessee law against the employer alleging that it:
- failed to compensate them for time spent engaging in pre- and post-shift activities, including donning and doffing sanitary and protective gear, obtaining and storing necessary equipment, and sanitizing certain items;
- failed to compensate them for time spent on meal periods because they were not fully relieved of their duties during meal periods;
- breached employment contracts to compensate them for all “hours worked; and
- violated the Tennessee Wage Regulation Act (“TWRA”), Tenn. Code Ann. § 50-2-101(b), requiring an employer to inform employees of their wages and pay employees those agreed-upon wages.
In 2009, the court refused to dismiss of the plaintiffs’ TWRA claim. It found that a private right of action existed under the statute. While this case was pending, the Tennessee Legislature, in 2013, amended the TWRA to delete language providing that the wage amount agreed upon between employer and employee “shall constitute a basis for litigation in civil cases.” The Legislature then added, “[t]he department of labor and workforce development shall enforce this section.” 2013 Tenn. Pub. Acts Ch. 240 § 2.
Both parties in this case subsequently filed cross-motions for summary judgment with the District Court.
Retroactivity of TWRA Amendment
The viability of the plaintiffs’ liability claims under the TWRA, the court reasoned, turned on the meaning and effect of the statute and its amendments. In Tennessee, whether or not a state statute implies a private right of action is a question of state law. “The touchstone of the analysis is legislative intent: whether the legislature intended in passing the statute to provide a private right of action.”
When determining whether a statute is retroactive, a court must examine whether the legislature’s intended to clarify an ambiguous statute or substantively modify it. Clarifying amendments may be applied retroactively; while substantive amendments cannot because retrospective application of “a remedial or procedural statute [that] impairs a vested right or contractual obligation . . . is constitutionally impermissible.”
Pre- and Post-Shift Activities
Under the FLSA, a person employed for a workweek in excess of 40 hours is required to be paid time-and-a-half for all hours worked beyond 40 hours. 29 U.S.C. § 207(a)(2). The law limits the definition of compensable work to exclude activities that are preliminary or postliminary to principal activities. The U.S. Supreme Court has ruled that “the term ‘principal activity’ or ‘activities’ . . . embraces all activities which are an integral and indispensable part of the principal activities.” If an activity primarily benefits the employer, it is considered integral and indispensable.
Breach of Contract
Under Tennessee law, an employment relationship essentially is contractual. “Its terms and conditions are supplied from two sources—applicable federal and state law and the agreement of the parties.” Therefore, employees may have “the right and expectation of having work hours consistent with applicable federal and state law.”
The employer argued the 2013 amendment clarified that no private right of action existed under the TWRA. The court agreed. It noted the amendment made “relatively minor” changes to the statute by removing a sentence that had been read to support an implied right of action and inserting a sentence to direct that an executive agency could enforce the substantive right. Further, the legislative history confirmed the amendment was introduced in response to a judicial decision that changed the legislature’s intent in enacting the TWRA. Last, the court found the amendment was consistent with a reasonable interpretation of pre-amendment law.
Having concluded the amendment clarified existing law, the court found that it applied retroactively since the employees did not have “a vested right to enforce the statute because the statute does not—and never did—include a private right of action.” Accordingly, the court dismissed the employees’ TWRA claim.
FLSA, Breach of Contract Claims
On the other hand, the court determined the employer had violated the FLSA by failing to compensate the employees for their entire shift, including all time spent donning and doffing sanitary and protective gear and equipment. It ruled these activities primarily benefited the employer by decreasing the risk of contamination to food products, an essential part of the business.
Likewise, the court found the employer violated its employment agreement with the employees for failing to pay them for “all hours worked.” The employer argued the phrase, “all hours worked,” was too indefinite to form an enforceable contract. The court rejected this, finding the “minimal meaning” of “hours worked” could be discerned from the FLSA, which established the floor for the parties’ agreement. Because the court determined the pre- and post-shift activities were compensable under the FLSA, the employer’s failure to compensate employees for these activities breached the employment agreement. Accordingly, it granted summary judgment on these claims.
Finally, the court denied summary judgment on the employees’ claims for meal periods under the FLSA and for breach of contract because multiple factual disputes existed between the parties regarding the length of the meal period and the extent to which the employees may have performed compensable work during the meal period.
This case confirms the Tennessee Wage Regulation Act does not provide for a private right of action for unpaid wages and provides significant guidance on the compensability of pre- and post-shift activities and meal periods. The case confirms a violation of the FLSA may serve as a basis for a breach of contract claims, as well.