A group of hourly employees working for the pawnshop chain Gem Financial Services Inc. have been granted conditional certification in a Fair Labor Standards Act action; their allegation is (as usual) unpaid overtime.  The federal Judge ruled that the workers had presented sufficient evidence at this early juncture to show that a common compensation policy applied to them and it was arguably illegal.  The case is entitled Dalton et al. v. Gem Financial Services Inc. et al., and was filed in federal court in the Eastern District of New York.

Pawn Shop
Copyright: schubphoto / 123RF Stock Photo

The Judge concluded that “courts in this circuit have routinely allowed for conditional certification where plaintiffs proffer precise and detailed information outlining the alleged mistreatment suffered by other similarly situated employees as a result of defendants’ compensation policies.”

The employer has twenty-eight retail locations throughout the New York area and in excess of 130 workers.  The employees allege that they were routinely shorted on overtime pay for weeks when they worked in excess of the statutory threshold of forty hours.  Added to the pure wage hour claims is the allegation by one of the three original plaintiffs, Diori Johnson, an accountant, who states that she was asked to falsify time records, make improper deductions from exempt employees’ salaries and continually not pay employees the proper amount.

An HR administrator, who visited company pawn shops, always heard complaints from employees that they were not paid overtime and saw (allegedly) rounding practices that always resulted in clocked hours being rounded down.  The Judge noted these employees’ experiences and observations as the basis for deciding to grant conditional certification.  The Court stated that “this type of consistent involvement in the day-to-day compensation realities of other Gem employees enabled plaintiffs to directly observe defendants’ alleged wage-denial scheme.”

Interestingly, the Court also concluded that the workers did not meet the Second Circuit standard for demonstrating sufficient similarities between non-exempt workers and other employees who were allegedly misclassified as exempt from overtime to be able to conditionally certify a collective action class including both groups.

The Takeaway

This case shows the best and the worst of results for the employer.  The Court (rather easily) granted certification on the one class of workers, where the Court believed that a common policy and practice applied to all of them.  Then, the Court refused to grant certification to a second requested class, where the allegation was that the workers were non-exempt.  On that component, the Court believed that not enough similarity or commonality had been shown.  That is the essence of a successful defense to a collective action.

On that first group, it seems an uphill climb…