Dukes’ Applicability may be Limited

A recent opinion from the United States Court of Appeals for the Seventh Circuit demonstrates that the Supreme Court's decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) may have limited applicability to wage and hour class actions.

In Ross v. RBS Citizens N.A., No. 10-3848 (7th Cir. Jan. 27, 2012), a group of bank employees claimed that it was company policy to deny overtime pay to non-exempt employees and that some exempt employees were improperly classified. The district court certified two classes for claims arising under the Illinois Minimum Wage Law ("IMWL") pursuant to Federal Rule of Civil Procedure 23. The employer appealed the class certification, and the Seventh Circuit considered the issue in light of the Supreme Court's holding in Dukes. Ultimately, the Seventh Circuit held that Dukes was not applicable and that the classes were properly certified. Of central importance to the court's ruling was the type of proof required in both cases. Specifically, in Dukes, the plaintiffs would be required to establish discriminatory intent in order to establish liability under Title VII of the Civil Rights Act of 1964. Conversely, wage and hour claims generally do not hinge on the decision-maker's intent. Consequently, the Seventh Circuit held that the two classes satisfied Rule 23's commonality requirement because the only question to be resolved was whether the employer refused to compensate employees for overtime and/or whether employees had been misclassified.

Ross reflects that while Dukes may be a powerful holding as applied to claims of discrimination, its impact on wage and hour claims may be significantly more limited. Employers must take steps to ensure that they are adequately documenting hours worked by non-exempt employees and properly paying overtime in accordance with applicable state and federal law. Moreover, employers should take steps to ensure that all employees classified as exempt are properly classified as such. This appears to be a point of concern for the Department of Labor during 2012, and employers should be proactive to ensure compliance.