Smith v. Hillstone Healthcare, Inc. et al

Filing 42

OPINION AND ORDER denying 23 Motion to Certify Class, denying 28 motion to dismiss. Signed by Judge James L. Graham on 2/11/2019. (ds)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Doniele Smith, on behalf of herself and
others similarly situated
v.

Case No. 2:17-cv-1075

Plaintiff,

Judge Graham
Magistrate Judge Deavers

Hillstone Healthcare Inc. and
Cornerstone Innovations, Inc.,
Defendants.
Opinion and Order

This case is before the court on plaintiff Doniele Smith’s second motion to conditionally
certify a collective action under the Fair Labor Standards Act, 29 U.S.C. § 207. Smith asserts that
defendants Hillstone Healthcare Inc. and Cornerstone Innovations, Inc. violated the FLSA by not
properly calculating the rate of overtime pay given to her and other similarly-situated employees.
In a prior order, the court dismissed the complaint without prejudice to Smith filing an
amended complaint. Smith has amended her complaint to add factual allegations concerning the
nature of the bonuses she received from defendants. She and other employees allegedly received
bonuses for working extra shifts or hours beyond their normal shifts. She alleges that overtime pay
should have been based upon the sum of their regular hourly pay and the shift bonuses they
received, but defendants instead paid them one and one-half times of only their regular hourly pay.
For the reasons stated below, the motion to conditionally certify is granted.
I.

Background
Doniele Smith is a licensed State Tested Nursing Assistant (STNA) who was employed at

the Isabelle Ridgway Care Center in Columbus from November 2015 to August 2017. Defendants
purchased the Isabelle Ridgway Care Center in May 2017 and are alleged to have become joint
employers of Smith at that time. Smith alleges that Hillstone operates a number of facilities in Ohio
which offer long-term care, hospice care, therapy and other healthcare services.
allegedly provides payroll services to Hillstone.

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Cornerstone

According to the amended complaint, Smith worked in excess of 40 hours in a workweek on
more than one occasion during the period from May 2017 to August 2017. For certain workweeks
in which she worked overtime, she was also paid a bonus for working a shift or hours that she was
not previously scheduled to work. Though the fact of her working the extra shift or hours was not
pre-scheduled, the amount of the bonus payments offered to Smith and similarly-situated employees
allegedly was predetermined by prior agreement or promise.
Smith has submitted her declaration in support of the second motion to conditionally certify.
She states that shift bonuses were offered on a regular basis. Smith Decl., ¶¶ 8-9. Smith has
submitted one of her pay statements as an example. The statement shows that she earned a bonus
of $150 during a one-week period in June 2017. During that same week, she worked 7 overtime
hours. Smith’s pay statement shows that her regular hourly rate of pay was $11.00 and that her
overtime rate was $16.50, which is one and one-half times $11.00.
Plaintiff asserts that defendants, in calculating overtime pay, should have first added her
regular hourly wages and any bonuses earned, divided that sum by 40 hours worked, and then
multiplied that result by one and one-half. See 29 C.F.R. § 778.209(a).
Plaintiff seeks to certify a collective action which would include all current and former
hourly employees of defendants who have received bonus payments in addition to their regular
hourly wages during any workweek in which they worked over 40 hours in the past three years.
II.

Conditional Certification
A.

Nature of the Claim – Shift Bonus

The Fair Labor Standards Act requires covered employers to pay non-exempt employees not
less than one and one-half times the employee’s regular rate of pay for each hour worked in excess
of forty hours per week. 29 U.S.C. §207. A violation of the FLSA subjects an employer to liability
for unpaid wages, liquidated damages and attorneys’ fees and costs. 29 U.S.C. § 216(b).
The “regular rate” of pay is defined as “all remuneration for employment,” but it excludes
payments for “services performed during a given period” if “both the fact that payment is to be
made and the amount of the payment are determined at the sole discretion of the employer at or
near the end of the period and not pursuant to any prior contract, agreement, or promise causing the
employee to expect such payments regularly.” 29 U.S.C. § 207(e)(3). See also Featsent v. City of
Youngstown, 70 F.3d 900, 905 (6th Cir. 1995).

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The applicable regulations make a distinction between discretionary and nondiscretionary bonuses:
Section 7(e) of the Act requires the inclusion in the regular rate of all remuneration
for employment except eight specified types of payments. Among these excludable
payments are discretionary bonuses . . . .
29 C.F.R. § 778.208.
In order for a bonus to qualify for exclusion as a discretionary bonus under section
7(e)(3)(a) the employer must retain discretion both as to the fact of payment and as
to the amount until a time quite close to the end of the period for which the bonus is
paid. The sum, if any, to be paid as a bonus is determined by the employer without
prior promise or agreement. The employee has no contract right, express or implied,
to any amount. If the employer promises in advance to pay a bonus, he has
abandoned his discretion with regard to it.
29 C.F.R. § 778.211(b).
The court denied plaintiff’s original motion for conditional certification because the
complaint did not contain sufficient factual content from which the court could draw a reasonable
inference that plaintiff or the purported class were paid nondiscretionary bonuses. The court finds
that the amended complaint cures that deficiency. 1 It provides sufficient allegations to support an
inference that plaintiff and other similarly-situated employees were offered shift bonuses of a
predetermined amount to work extra shifts and hours which they were not scheduled to work. The
bonus payments were offered with enough regularity that employees came to expect the offer of
such payments and the promised amount. Am. Compl., ¶ 29. See also Smith Decl., ¶¶ 8-9.
B.

Others Similarly Situated

A collective action under the FLSA “may be maintained against any employer . . . by any one
or more employees for and in behalf of himself or themselves and other employees similarly
situated. No employee shall be a party plaintiff to any such action unless he gives his consent in
writing[.]” 29 U.S.C. § 216(b). In order to join a collective action, an employee must (1) be
“similarly situated” to the plaintiff who maintains the action, and (2) give his written consent to join.
Comer v. Wal-Mart Stores, Inc., 454 F.3d 544, 546 (6th Cir. 2006).
Courts apply a “fairly lenient standard” at the conditional certification stage in determining
whether the employees to be notified are similarly situated to the plaintiff. Comer, 454 F.3d at 547.
Plaintiff must “make a modest factual showing” that is she similarly situated to the other employees
she is seeking to notify. Id. at 546-47 (internal quotation marks and citations omitted). “[P]laintiffs
are similarly situated when they suffer from a single, FLSA-violating policy, and when proof of that
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Defendant Hillstone’s motion to dismiss the amended complaint (doc. 28) is therefore denied.
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policy or of conduct in conformity with that policy proves a violation as to all the plaintiffs.”
O’Brien v. Ed Donnelly Enter., Inc., 575 F.3d 567, 585 (6th Cir. 2009).

See also Lewis v.

Huntington Nat’l Bank, 789 F.Supp.2d 863, 868 (S.D. Ohio 2011) (“[S]imilarly situated class
members under FLSA are those whose causes of action accrued in approximately the same manner
as those of the named plaintiffs.”).
As noted above, plaintiff Smith submitted her own declaration and pay statement in support
of her position that she has been offered and paid shift bonuses. Plaintiff has also submitted
declarations (and pay statements in some cases) from six other STNAs employed at several of
defendants’ healthcare facilities in Ohio. These employees have worked for defendants at various
times from 2015 to the present. According to the declarations, defendants offered bonuses to
STNAs to incentivize them to work additional shifts. Based on these employees’ experiences and
their knowledge from talking with coworkers, it is their belief that defendants regularly made shift
bonus offers.
The court finds from these declarations that plaintiff has satisfied her modest burden of
showing that is she similarly situated to the other employees she is seeking to notify. Like Smith’s
bonuses, the bonuses received by the declarants were in round, lump sums, such as $150 and $200.
In considering the declarations, pay statements and the allegations of the amended complaint, the
court finds that plaintiff has sufficiently shown at this early stage that defendants offered and paid
shift bonuses at predetermined amounts with enough regularity that employees expected that the
bonuses would be offered and what the amounts would be. Plaintiff has further shown through the
declarations and pay statements that the shift bonuses paid by defendants to STNAs were not
factored into the rate at which defendants paid for overtime hours. Thus, plaintiff has alleged that
she and other employees suffered from the same policy.
C.

Definition of the Class

Plaintiff proposes that the class be defined as all current and former hourly, non-exempt
employees of defendants who, beginning three years before the filing date of the amended
complaint, received “nondiscretionary bonus payments” in addition to their regular hourly rate of
pay during any workweek in which they worked more 40 hours. Defendants raise four objections to
the proposed class definition.
1.

Description of the Bonus Received

Defendants first object to the use of the word “nondiscretionary” in describing the bonuses
paid to the proposed class. The court agrees. In this setting, “nondiscretionary” is a legal term. If
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defendants did not base overtime pay rates on the bonus amounts, then a determination of whether
the bonuses were “discretionary” or “nondiscretionary” will likely be the deciding factor as to
whether defendants violated FLSA. Defendants deny that they engaged in unlawful conduct and
contend that the bonuses were discretionary.
The only type of bonus payment that plaintiff has identified as being paid by defendants is
what is described in the amended complaint and declarations as a bonus for working extra shifts or
hours beyond what an employee was scheduled to work. These are often referred to as a shift
bonus or supplementary shift bonus. See Dep’t of Labor, Wage and Hour Division, Fact Sheet #54,
The Health Care Industry and Calculating Overtime Pay (July 2009) at p. 4.
The court will therefore revise the class definition to be confined to employees who received
“bonus payments for working extra shifts or hours beyond what the employee was scheduled to
work (sometimes called a shift bonus or supplementary shift bonus).”
2.

Job Category

Plaintiff would include all current and former hourly, non-exempt employees of defendants
in the class definition. Defendants object that the class must be manageable and should not
encompass all hourly employees regardless of job title. See Lewis v. Huntington Nat’l Bank, 789 F.
Supp.2d 863, 868 (S.D. Ohio 2011). According to defendants, their hourly employees include not
only STNAs like plaintiff and the declarants, but also nurses, housekeepers, cooks, dieticians and
activity aides.
Plaintiff offers no response to defendants’ objection, other than to invite the court to use its
discretion to modify the class. See, e.g., Baldridge v. SBC Commc’ns, Inc., 404 F.3d 930, 931-32
(5th Cir. 2005). The court agrees with defendants’ objection. Plaintiff and all of the declarants are
STNAs, and none of the declarations cite an example of defendants paying shift bonuses to
employees in a different job position.
The court will therefore modify the class definition to be limited to all current and former
hourly, non-exempt employees who performed duties as a State Tested Nursing Assistant for
defendants.
3.

Geographic Scope

The proposed class definition contains no geographic limitation. It appears to be the case
that defendant Hillstone operates facilities only in Ohio. See Smith Decl., ¶ 2. The court will
modify the class definition to encompass STNAs employed by defendants at Hillstone’s facilities in
Ohio.
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4.

Time Period

Plaintiff proposes that the class period should begin three years prior to the filing of the
amended complaint in June 2018.

One of the declarants began her employment in 2015.

Defendants argue that the three-year period applies only when a willful violation of the FLSA has
taken place. See 29 U.S.C. § 255(a).
The court finds that plaintiff may proceed with a class having a three-year lookback. The
amended complaint alleges that defendants were made aware of their obligation to include shift
bonuses in overtime pay calculations by a Department of Labor publication issued in 2009. The
complaint further alleges that defendants willfully elected not to correctly compensate their
employees for overtime hours.
This aspect of the court’s ruling is without prejudice to defendants raising, after discovery,
the legal issue of whether plaintiffs have created a genuine dispute of material fact that defendants
willfully violated the applicable provisions of FLSA.
III.

Conclusion
Accordingly, plaintiff’s second motion for conditional certification (doc. 23) is GRANTED.

The court conditionally certifies a class under the Fair Labor Standards Act consisting of:
All current and former hourly, non-exempt employees of defendants who: (1)
performed duties as a State Tested Nursing Assistant (STNA) for defendants (2) at
one of defendant Hillstone’s facilities in Ohio and (3) who, in performing duties as a
STNA, received bonus payments for working extra shifts or hours beyond what the
employee was scheduled to work (sometimes called a shift bonus or supplementary
shift bonus) (4) during any workweek that the employee worked over 40 hours (5)
beginning three years prior to the filing date of the First Amended Complaint and
continuing through the date of the final disposition of this case.
Defendants are ordered to provide to plaintiff’s counsel within 14 days of the date of this Order a
list in electronic and importable format of all persons potentially fitting within the proposed class.
The list shall include an employee’s full name, location(s) of employment, position(s) of
employment, last-known mailing address, last-known telephone number(s), last-known email
address(es), and dates of employment at Hillstone.
Defendants have stated no objections to the plaintiff’s proposed opt-in notice, consent
form, method of delivery or 90-day opt-in period. The parties are ordered to meet and confer
regarding the revisions which need to be made to the proposed notice’s class definition and
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references to “nondiscretionary bonus” payments. They shall jointly submit a revised opt-in notice
for the court’s approval within 14 days of this Order.

s/ James L. Graham
JAMES L. GRAHAM
United States District Judge
DATE: February 11, 2019

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