KPMG Audit Associates Win Conditional Class Certification in FLSA Action

KPMG Audit Associates Win Conditional Class Certification in FLSA Action

On January 3, 2012, in Pippins v. KPMG LLP, 2012 U.S. Dist. LEXIS 949 (S.D.N.Y. Jan. 3, 2012) [an enhanced version of this opinion is available to lexis.com subscribers], U.S. District Judge Colleen McMahon issued an order conditionally certifying a national collective action against KPMG LLP, one of the "Big-Four" accounting firms. Last year, the plaintiffs brought a lawsuit alleging that KMPG misclassified thousands of current and former entry-level audit associates as exempt and failed to pay them overtime in violations of the Fair Labor Standards Act (the "FLSA"), 29 U.S.C. § 201 et seq., and under the New York Labor Law, Article 19 § 650 et seq.

The FLSA requires employers to pay their employees overtime wages which are calculated at a rate of "one and one-half times the regular rate" for each hour worked in excess of 40 hours per week, 29 U.S.C. § 207(a)(1). This requirement is subject to certain exemptions. For example, the FLSA's overtime protections do not apply to individuals "employed in a bona fide executive, administrative, or professional capacity." 29 U.S.C. § 213(a)(1). In Pippins, KPMG argues that audit associates fall under this exemption.

Section 216(b) of the FLSA, creates a private right of action to recover unpaid overtime compensation, and provides that employees may pursue their claims collectively. The collective action procedure is designed to promote the "'efficient adjudication of similar claims,' so that 'similarly situated" employees may pool resources to prosecute their claims." In her decision, Judge McMahon did not weigh the merits of plaintiffs' underlying claims but determined that they had satisfied the FLSA's "similarly situated" requirements for conditional certification because all audit associates at KPMG were subject to the same job duties/responsibilities, pay provisions, policies and procedures regarding the performance of their duties and received the same training. Recognizing these similarities, the Court held that it would be "shocking" not to find that KPMG audit associates met the low threshold for certification of an FLSA collective action.

Because Federal Rule of Civil Procedure 23's requirements for class certification do not apply to the certification of a collective action under the FLSA, the Court emphasized that the Supreme Court's seminal decision in Wal-Mart Stores v. Dukes, 131 S. Ct. 2541 (2011), is inapplicable in the FLSA context:

[N]othing in Dukes speaks to an FLSA case, where it is well-established that Rule 23's requirements do not apply, and conditional certification is predicated on the substantial similarity of class members' job situations, rather than on showings of numerosity, commonality, and typicality.

In granting the order, the Court concluded that, "Plaintiffs have made the required modest showing that they were subject to certain wage and hour practices at their workplace and, to the best of their knowledge, and on the basis of their observations, their experience was shared by members of the proposed class."

Judge McMahon has ordered that "discovery relating to the issue of why all Audit Associates are classified as exempt, without regard to their personal situations, be conducted on an expedited basis, with an eye to having someone (probably Plaintiffs) move for summary judgment no later than April 27, 2012." Abbey Spanier will continue to watch this case for any new developments.

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