Tom v. Generac Power Systems Inc
Filing
51
DECISION AND ORDER signed by Chief Judge William C Griesbach on 8/3/2018 denying 24 Motion for Conditional Certification and Authorization of Notice to Similarly-Situated Persons Pursuant to 29 U.S.C. § 216(b). (cc: all counsel) (Griesbach, William)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
TIMOTHY TOM, JR.,
Plaintiff,
v.
Case No. 17-C-1413
GENERAC POWER SYSTEMS, INC.,
Defendant.
DECISION AND ORDER
Plaintiff Timothy Tom, Jr., filed this action on behalf of himself and other similarly situated
manufacturing employees throughout Wisconsin employed by Defendant Generac Power Systems,
Inc. Tom alleges that Generac maintains a pay policy that violates the Fair Labor Standards Act of
1938 (FLSA), 29 U.S.C. § 201 et seq., by rounding manufacturing employees’ start and end time
to their scheduled times rather than the times that they actually clocked in or out, resulting in the
alleged failure to compensate the employees for hours worked in excess of 40 during the week. This
matter comes before the court on Tom’s motion for conditional certification of a collective action
under the FLSA and for court facilitated notice to the proposed class. ECF No. 24. Tom seeks to
certify a conditional class consisting of all manufacturing employees who worked at Generac’s
Wisconsin facilities in Eagle, Jefferson, Oshkosh, Waukesha, and Whitewater between October 16,
2014, and October 16, 2017. In addition to Tom, ten individuals have already filed forms giving
notice of their consent to join this lawsuit as plaintiffs. ECF Nos. 5, 6, 13. For the reasons stated
below, Tom’s motion for conditional certification and court facilitated notice will be denied.
BACKGROUND
Generac is a Wisconsin corporation that manufactures power products, such as residential
and commercial generators, at locations in Eagle, Jefferson, Oshkosh, Waukesha, and Whitewater,
Wisconsin. Compl. ¶ 2, ECF No. 1; Answer ¶ 2, ECF No. 9; see also ECF No. 43-1 at 4–6. At
those five locations, Generac employs more than 1,200 non-exempt manufacturing employees in a
variety of positions. Compl. ¶ 26; Answer ¶ 26; ECF No. 45 ¶ 4; ECF No. 44 ¶ 4; ECF No. 43 ¶ 5;
ECF No. 42 ¶ 4; ECF No. 39 ¶ 8. During the three years preceding the filing of the complaint, Tom
worked as a Material Handler and a Team Lead at Generac’s Oshkosh facility. Compl. ¶ 15; Answer
¶ 15. In this capacity, Tom worked with other manufacturing employees to manually produce power
products. ECF No. 29-4 at 4.
An employee handbook establishes the terms and conditions of employment for all of
Generac’s manufacturing employees. ECF No. 43-1. Under the handbook, all non-exempt
manufacturing employees receive pay at 1.5 times their regular rate of pay for any hours worked in
excess of forty hours in a workweek. Compl. ¶ 29; Answer ¶ 29. The handbook further provides
that “[a]ll overtime for hourly and non-exempt employees must be authorized in advance by a
manager.” ECF No. 43-1 at 10. Although the handbook provides that employees who work
overtime without prior authorization from a manager will be paid for any overtime worked, it also
warns that those employees will face discipline—including possible termination—for working
without prior authorization contrary to Generac’s policy. Id. Whether during straight time or
overtime, the handbook also prohibits employees from doing any work without recording their time.
Id. If an employee believes that there has been an error in his or her pay, then the handbook dictates
that the employee should contact the payroll department. Id. at 11. Likewise, the handbook explains
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that if an employee identifies an error in his or her time reporting, such as a missed entry, it is the
employee’s responsibility to notify a manager immediately. Id. at 22. Indeed, the handbook
expressly explains that “[y]ou are responsible for making sure that the correct times are collected for
the purpose of paying you accurately.” Id. at 22.
Generac tracks its manufacturing employees’ hours of work using an electronic punch clock
system running software created by Paper-Less, LLC. Compl. ¶ 24; Answer ¶ 24; ECF No. 35-1
at 8–9. Punch clock terminals are located at various locations throughout Generac’s facilities; for
example, Tom testified at his deposition that at the Oshkosh facility he used two punch clocks
located on the production line and two located near the two exits to the main parking lot. ECF
No. 37 ¶ 14; ECF No. 35-1 at 8–9. Using a unique employee number, each manufacturing employee
uses these terminals to “clock in” and “clock out” electronically at the beginning and end of their
shifts. Compl. ¶¶ 32–35; Answer ¶¶ 32–35. The Paper-Less software records the actual time that
individual manufacturing employees clock in and clock out each day. See Compl. ¶¶ 34, 36; Answer
¶¶ 34, 36. Based on its production needs, Generac sets weekly schedules in advance for each of its
hourly manufacturing employees. Compl. ¶ 41; Answer ¶ 41; ECF No. 26 ¶ 7. Each shift includes
two paid rest breaks and an unpaid thirty minute meal period. ECF No. 40 ¶ 14.
Generac permits hourly manufacturing employees to punch in before the start of their shift,
but it prohibits them from actually beginning to work until the shift’s scheduled start time. ECF
No. 43 ¶ 19; ECF No. 42 ¶ 17; ECF No. 40 ¶¶ 11, 13 19. When an employee clocks in, the
computer terminal displays the current time and the time that the employee is expected to begin
working; the start time displayed corresponds to the scheduled start time for the shift and is the time
used for compensation purposes. ECF No. 43 ¶ 21; ECF No. 35-1 at 11. In other words, when an
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employee clocks in “early,” meaning during the fifty minutes prior to the scheduled start time, the
clock in time for payroll purposes is automatically adjusted to the scheduled shift start time. ECF
No. 29-1 at 17. (If an employee clocks in prior to this “early” start time, the system automatically
adjusts the clock in time forward to the next quarter hour. ECF No. 29-1 at 14.) When an employee
clocks out after the scheduled shift end time, the electronic system similarly adjusts backwards to
the scheduled shift end time for payroll purposes, rather than using the later clock out time. ECF
No. 29-1 at 12; ECF No. 29-2 at 6.
At each of the Generac facilities, a buzzer signals the start and end of shifts and breaks. ECF
No. 40 ¶¶ 16–17; ECF No. 35-1 at 2–3. Between the time they clock in and the time the buzzer
signals the beginning of a shift, manufacturing employees are permitted to socialize, attend to
personal matters, and settle into their workstations, where they are expected to be ready to work
when the buzzer sounds. ECF No. 43 ¶¶ 19–20; see also ECF No. 43-1 at 22 (“When starting bells
ring, you are to be at your station ready to work.”). To reiterate, however, hourly manufacturing
employees are expressly prohibited from working before their shift’s scheduled start time and after
its scheduled end time without permission from their supervisor. ECF No. 43 ¶ 10.
Tom, opt-in plaintiff Charles Werba, and Cary Lewandowski, a non-plaintiff former
manufacturing employee, all state that they performed compensable work immediately after clocking
in and immediately before clocking out, even when that work occurred before or after the scheduled
start or end times of their shifts. ECF No. 30 ¶ 8; ECF No. 28 ¶ 7; ECF No. 26 ¶¶ 5–6. However,
Daniel Juedes, Tom’s supervisor, states that he is not aware of any employee working hours without
being paid and that, despite Tom bringing other matters to his attention, Tom never complained to
him about problems with his timekeeping or compensation. ECF No. 40 ¶¶ 34–42. Juedes regularly
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updates timekeeping reports in response to requests from employees informing him of errors, and
he regularly approves overtime requests from employees who want to work more hours than
provided for by their regularly scheduled shifts. Id. ¶¶ 29–32. Similarly, Nick Leick, Werba’s
supervisor, states that aside from one occasion in 2016 when Werba complained about not being paid
for work he performed after the scheduled end of his shift, he has adjusted Werba’s schedule in
response to requests that he be allowed to work before his scheduled start time or after his scheduled
end time. ECF No. 46 ¶¶ 34–38.
ANALYSIS
The FLSA permits collective actions “against any employer . . . by any one or more
employees for and in behalf of himself or themselves and other employees similarly situated.” 29
U.S.C. § 216(b). Unlike a typical class action suit under Federal Rule of Civil Procedure 23, in
which unwilling plaintiffs must “opt out” of the class, a collective action under Section 216(b) of the
FLSA requires employees or former employees to “opt in” to the class by providing written consent
to join the collective action. Woods v. N.Y. Life Ins. Co., 686 F.2d 578, 579–80 (7th Cir. 1982)
(discussing differences between Rule 23 class action and FLSA collective action). To implement the
opt-in procedure in an FLSA collective action, district courts may, in their discretion, facilitate notice
to potential plaintiffs. See Hoffmann–La Roche Inc. v. Sperling, 493 U.S. 165, 169 (1989); Woods,
686 F.2d at 580.
“The critical inquiry in determining whether a court should exercise its discretion to authorize
the sending of notice to potential plaintiffs is whether the representative plaintiff has shown that she
is similarly situated to the potential class plaintiffs.” Austin v. CUNA Mut. Ins. Soc’y, 232 F.R.D.
601, 605 (W.D. Wis. 2006). “Generally, in order to determine whether the representative plaintiff
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is ‘similarly situated’ to potential opt-in plaintiffs, this Court follows a two-step certification
approach.” Ehmann v. Pierce Mfg., Inc., No. 16-CV-247, 2016 WL 5957275, at *2 (E.D. Wis.
Oct. 13, 2016) (citing Adair v. Wis. Bell, Inc., No. 08-CV-280, 2008 WL 4224360, at *8 (E.D. Wis.
Sept. 11, 2008)).
In the first stage, the court examines whether the plaintiff has demonstrated a “reasonable
basis” for believing he is similarly situated to potential class members. Miller v. ThedaCare Inc.,
No. 15-CV-506, 2016 WL 4532124, at *3 (E.D. Wis. Aug. 29, 2016). The plaintiff must make “at
least a modest factual showing” that collective action is appropriate. Adair, 2008 WL 4224360, at
*4. To establish that factual support, the plaintiff may present affidavits, declarations, deposition
testimony, or other documents that “demonstrate some ‘factual nexus between the plaintiff and the
proposed class or a common policy that affects all the collective members.’” Ehmann, 2016 WL
5957275, at *2 (quoting Nehmelman v. Penn Nat’l Gaming, Inc., 822 F. Supp. 2d 745, 750 (N.D.
Ill. 2011)). Although the “modest factual showing” standard is lenient, it is not a “mere formality.”
Adair, 2008 WL 4224360, at *3. Indeed, the plaintiff must submit admissible evidence in order to
make the required showing. Id. at *8. Because “a plaintiff’s discovery demands upon conditional
certification may impose ‘a tremendous financial burden to the employer,’” courts must be careful
to avoid wasting the parties’ time and resources in cases that do not warrant certification. Id. at *4
(quoting Woods, 686 F.2d at 581). If the class is conditionally certified, notice may be sent to other
potential class members, and discovery may proceed.
At the second step, which usually arises on the defendant’s motion for decertification, the
court must determine whether the plaintiffs who have opted in are, in fact, similarly situated. Miller,
2016 WL 4532124, at *4 (citing Brabazon v. Aurora Health Care, Inc., No. 10-CV-714, 2011 WL
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1131097, at *2 (E.D. Wis. Mar. 28, 2011)). In this phase, the court assesses whether continuing as
a collective action provides efficient resolution in one proceeding of common issues of law and fact.
See Hoffman–La Roche, 493 U.S. at 170.
Here, Tom moves for conditional certification of a collective class consisting of all current
and former manufacturing employees at Generac’s Eagle, Jefferson, Oshkosh, Waukesha, and
Whitewater locations between October 16, 2014, and October 16, 2017. Tom argues that he is
similarly situated with the other non-exempt hourly manufacturing employees because they all
worked in the manufacturing process on shifts scheduled by Generac, they regularly worked more
than forty hours in a week, they used the electronic timekeeping system to clock in and out before
and after their shifts, they performed compensable work prior to their scheduled start times
immediately after clocking in, and they performed compensable work after their scheduled stop times
immediately before clocking out. He further alleges that, by automatically calculating the workday
for payroll purposes based on the scheduled start and end times for the shift, Generac’s electronic
timekeeping system consistently failed to compensate them for work performed before and after the
shift’s start and end times.
Generac counters that its practice of calculating payroll based on the scheduled shift start and
end times rather than actual clock in and clock out times constitutes a permissible grace period under
the FLSA and its implementing regulations. Specifically, 29 C.F.R. § 785.48 provides guidance for
the use of time clocks:
(a) Differences between clock records and actual hours worked. Time clocks are not
required. In those cases where time clocks are used, employees who voluntarily
come in before their regular starting time or remain after their closing time, do not
have to be paid for such periods provided, of course, that they do not engage in any
work. Their early or late clock punching may be disregarded. Minor differences
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between the clock records and actual hours worked cannot ordinarily be avoided, but
major discrepancies should be discouraged since they raise a doubt as to the accuracy
of the records of the hours actually worked.
(b) “Rounding” practices. It has been found that in some industries, particularly
where time clocks are used, there has been the practice for many years of recording
the employees’ starting time and stopping time to the nearest 5 minutes, or to the
nearest one-tenth or quarter of an hour. Presumably, this arrangement averages out
so that the employees are fully compensated for all the time they actually work. For
enforcement purposes this practice of computing working time will be accepted,
provided that it is used in such a manner that it will not result, over a period of time,
in failure to compensate the employees properly for all the time they have actually
worked.
29 C.F.R. § 785.48(a)–(b). Unsurprisingly, Generac focuses on subsection (a)’s instruction that
early and late punches may be disregarded, while Tom focuses on subsection (b)’s admonition that
rounding is appropriate only when it does not result in the failure over time to pay employees for all
time worked. At the conditional certification state, however, whether Generac’s policies and
practices actually violated the FLSA is a less pertinent question than whether the admissible evidence
in the record constitutes a modest factual showing as to the existence of a nexus between Tom and
the members of the proposed class with regard to Generac’s alleged policies and practice. With
regard to this latter question, the court concludes that Tom has not made the showing necessary to
support conditional certification.
It is first important to emphasize that Generac maintains a written policy expressly prohibiting
manufacturing employees from working off the clock in the manner described by Tom, and it has
presented evidence indicating that it abides by those policies in practice. “Where there is evidence
that employers have, and enforce, appropriate pay policies, that evidence weighs strongly against
conditional certification.” Nieddu v. Lifetime Fitness, Inc., 977 F. Supp. 2d 686, 703 (S.D. Tex.
2013). Generac’s employee handbook requires manufacturing employees to record all time worked
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(whether straight time or overtime), prohibits employees from working overtime without prior
approval from a supervisor, nonetheless promises to pay unapproved overtime (although with a
concurrent threat of disciplinary action), and places the responsibility on employees to contact their
supervisor and the payroll department if they identify errors in their punches or pay. ECF No. 43-1
at 10–11, 22. Furthermore, in opposition to the motion, Generac has submitted eleven declarations
corroborating the implementation of Generac’s written policies at the five manufacturing facilities,
including declarations by a human resources manager from each of the five facilities (ECF Nos. 39,
42–45), a production manager and two supervisors from the Oshkosh facility (ECF Nos. 37, 40, 46),
and three hourly manufacturing employees, two at the Oshkosh facility and one at the facility in
Eagle (ECF Nos. 36, 38, 41).
The declarations submitted by Generac paint a broader picture of the company’s payment
policies than Tom describes. All three hourly manufacturing employees who submitted declarations
assert familiarity with Generac’s policies prohibiting work before and after the beginning and end of
a shift. ECF No. 41 ¶¶ 4, 6; ECF No. 38 ¶ 4; ECF No. 36 ¶ 5. Both supervisors and the production
manager from Generac’s Oshkosh facility further note that they have never required any hourly
manufacturing employees to work before a shift, after a shift, or during a break without
compensating them, and they disclaim any awareness of employees working without authorization
before or after their scheduled start or end times. ECF No. 46 ¶¶ 4, 20–21; ECF No. 40 ¶¶ 4,
20–21; ECF No. 37 ¶ 9, 22. These supervisors and the hourly manufacturing employees all note the
presence of the alarm bells throughout their facilities alerting employees to the start and end times
of their shifts, as well as the notice of scheduled start and end times that appears on the time clocks
when employees clock in for the day. ECF No. 46 ¶ 12; ECF No. 41 ¶¶ 3, 6–7; ECF No. 40 ¶¶ 12,
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16–17; ECF No. 38 ¶¶ 4, 6–7; ECF No. 37 ¶¶ 19–20; ECF No. 36 ¶¶ 4–6. And the human resources
managers from each of the five facilities confirm that Generac uniformly applies its policies
prohibiting unauthorized, off-the-clock work at each facility, as well as the systems such as the bells
and time clock displays to communicate to hourly manufacturing employees their scheduled shifts
for which they will be paid. ECF No. 45 ¶¶ 7–24; ECF No. 44 ¶¶ 7–23; ECF No. 43 ¶¶ 10–25; ECF
No. 42 ¶¶ 8–24; ECF No. 39 ¶¶ 11–22.
Against this backdrop, the reason that Tom is not similarly situated to the proposed class of
hourly manufacturing employees becomes clear: to the extent that Tom performed compensable
work outside of his scheduled shift times—meaning between the time he clocked in and the time his
shift began or between the time his shift ended and the time he clocked out—he was doing so of his
own accord, without the authorization of his supervisors, and contrary to company policy. See ECF
No. 40 ¶ 39 (“Mr. Tom never complained to me about any problems with his timekeeping or
compensation for time worked at Generac.”). During his deposition, Tom acknowledged his
awareness of Generac’s policies prohibiting working without authorization, as well as the clear
means by which the company reiterates shift schedules to employees on the time clock and informs
them about shift start and end times using bells that ring in the facility. ECF No. 35-1 at 5–7. He
further admitted that nobody at Generac ever instructed him to work time for which he would not
be compensated, that nobody instructed him to work after clocking in but before his scheduled shift
start times, and that his supervisor always approved his requests to work overtime. Id. at 8, 13–14.
Any work that Tom performed outside of his scheduled shifts thus occurred not as a product of a
policy commonly affecting all hourly manufacturing employees at Generac but as a result of his own
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decision to work during times when Generac expressly instructed him and all other employees not
to perform work.
Claims that Tom, as well as fellow declarants Werba and Lewandowski, did not receive
compensation as a result of their decisions to work without authorization and their failure to inform
their supervisors about that work are insufficient to show that they and the members of the proposed
class were victims of a common policy that deprived them of compensation. “[T]he FLSA stops
short of requiring the employer to pay for work it did not know about, and had no reason to know
about.” Kellar v. Summit Seating Inc., 664 F.3d 169, 177 (7th Cir. 2011). The mere act of clocking
in before the start of a scheduled shift does not place the employer on notice that an employee begins
to work before the scheduled start time. Id. at 177–78; see also 29 C.F.R. § 785.48(a). Given that
an employee’s individual action clocking in early does not automatically put the employer on notice
that the employee has begun to work, the act of clocking in prior to the start of a scheduled shift or
after its scheduled end time cannot support a finding that the hourly manufacturing employees were
subject to a common policy depriving them of compensation before and after their scheduled shift
times. The mere fact that Tom, Werba, and Lewandowski claim that they each individually worked
without compensation between their clock times and their scheduled shift times—or even their claims
that they observed others performing such work—are insufficient to make even a modest factual
showing that Generac maintains a policy that fails to compensate more than 1,200 workers for
several minutes of work each shift. See Adair, 2008 WL 4224360, at *10 (“[A] plaintiff may not
substitute her own judgment for the Court’s by averring her ‘understanding’ that her employer had
a widespread improper practice, while shielding the Court’s review of her conclusion and the
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sufficiency of the facts on which it is based by general assurances that it was formed by her
observations and conversations with others.”).
Tom argues that he satisfies the lenient standard for conditional certification because he has
demonstrated that all hourly manufacturing employees at the five facilities used the same electronic
timekeeping system and were subject to the same adjustment policy relying on their scheduled start
and end times for calculating compensation, rather than their clock in and clock out times. But as
the discussion above shows, focusing on the common electronic timekeeping system and adjustment
practices fails to adequately describe Generac’s policies, which also prohibit all employees from
working without authorization and from failing to report any time that they work. An employee in
Tom’s position who properly followed Generac’s policies would report any pre- or post-shift work
to the employee’s supervisor—although that employee might risk disciplinary consequences for
working without permission. Moreover, considering the record as a whole, Tom has not made a
modest factual showing to suggest that Generac engages in an unofficial practice of requiring
employees to work before and after their scheduled shifts. To the contrary, the record indicates that
Generac employs a number of measures—time clock reminders, bells, and supervisor reminders—to
ensure that hourly manufacturing employees do not work before their scheduled shift start times and
after their scheduled shift end times. Because the court therefore concludes that Tom’s claims arise
out of his individual actions and do not demonstrate a nexus between his experience and the
experience of members of the proposed class, the court finds that conditional certification is not
appropriate in this case.
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CONCLUSION
For the foregoing reasons, Tom’s motion for conditional certification and court-facilitated
notice (ECF No. 24) is DENIED. Because the court denies the motion for conditional certification,
it is not necessary to address the parties’ arguments regarding Tom’s proposed notice.
Dated this 3rd day of August, 2018.
s/ William C. Griesbach
William C. Griesbach, Chief Judge
United States District Court
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