On December 17, 2024, the United States Court of Appeals for the Fourth Circuit handed down its published opinion in Stafford v. Bojangles’ Restaurants, Inc., 2024 WL 5131108 (4th Cir. 2024). In a rare move, the Fourth Circuit vacated and remanded a district court’s class certification order for improperly certifying a class of employees with class definitions that were “overly general.” In summary, Stafford limits the extent to which classes and class definitions can be overinclusive, overly broad, and premised on generalized employment policies under Federal Rule of Civil Procedure 23.
In Stafford, the named plaintiff was an hourly-paid shift manager at Bojangles. After his termination, the plaintiff brought suit under the Fair Labor Standards Act (FLSA) and the North Carolina Wage and Hour Act against Bojangles, contending Bojangles failed to pay him overtime wages when it required him to clean the restaurant off the clock and drive between different restaurants for work-related activities.
After a federal district court conditionally certified a collective action under the FLSA and 550 individuals joined suit, the new plaintiffs then sought class certification of various state wage-and-hour law claims under Federal Rule of Civil Procedure 23 for classes involving employees in North Carolina, South Carolina, Alabama, Georgia, Kentucky, Tennessee, and Virginia. In contrast to the original plaintiff, these other plaintiffs had a variety of claims, alleging Bojangles required shift managers to perform work before and after scheduled shifts and during unpaid meal breaks, days off, and when they were not clocked into Bojangles’ timekeeping system. They also asserted that Bojangles altered and edited their hours to avoid paying overtime wages.
Although the district court denied class certification for classes in Alabama, Georgia, Kentucky, Tennessee, and Virginia, it certified classes in North Carolina and South Carolina under the Federal Rule of Civil Procedure 23(a) and (b)(3) for the state law claims. For the commonality and predominance requirements embodied in the Rules, the court only determined that 80% of prospective class members were subject to Bojangles’ “Opening Checklist,” which allegedly required the completion of certain tasks before an employee clocked in. When certifying the North Carolina and South Carolina classes, the trial court defined both classes as “[a]ll persons who worked as a shift manager at Bojangles . . . at any time from three years prior to the filing of this Complaint to the entry of judgment in this case.” The Fourth Circuit granted Bojangles’ petition to review the district court’s certification order.
On appeal, the Fourth Circuit vacated and remanded the district court’s certification order for several reasons. First, the court held that the commonality and predominance requirements were not satisfied by Rule 23(a) and (b)(3), the invoked requirements for class certification. According to the court, the district court’s order only focused on “off-the-clock pre-shift work,” which did not resolve any of the “time-shaving claims or claims of unpaid off-the-clock wages at any other time.” After considering the impact of the Opening Checklist, the court also adopted the new rule that “[a]llegations of generalized policies are not usually sufficient for the purposes of class certification,” particularly when there are “factually diverse claims” remain at issue. Second, the court concluded that the district court’s class definitions ran afoul of Rule 23(c)(1)(B) because they provided no “specificity,” were “overinclusive to ensure commonality,” and simply “too broad and ill-defined.” Adopting reasoning from the Third Circuit, the court determined that the district court’s definitions provided no reference to the underlying claims, issues, or defense for class treatment, which failed to delineate any class parameters.
Employers must remain mindful of their obligations under federal, state, and local laws addressing wage-and-hour issues. To that end, employers should have attorneys evaluate their employee handbooks, and other internal policies and procedures, to ensure that employees are properly classified and compensated for work associated with their defined roles and responsibilities. Misclassification and failing to accurately compensate employees can lead to legal consequences, including penalties and lawsuits, and may negatively impact employee morale, productivity, and retention.
If faced with a class action or potential class action, especially under Stafford, employers should carefully understand the nature of the alleged violations, determine which policies are implicated by the class, and work with legal counsel to decide whether the class is truly susceptible for class treatment. If the class is not susceptible for class treatment, employers may be able to avoid the added liabilities that are typically associated with class actions.
