Democratizing the FLSA Injunction: Toward a Systemic Remedy for Wage Theft.

• Author: Cohen, Jordan Laris
• Position: Fair Labor Standards Act

AUTHOR. Yale Law School, J.D. 2017. I am grateful to Nicholas Parrillo for his inspirational teaching and thoughtful supervision of this project; to Nicole Hallett for many crucial practice-informed insights and for her dedicated supervision in clinic; and to Mike Wishnie for providing the clinical opportunities and supervision that stimulated much of my thinking in these areas. I also thank Yuvraj Joshi, Andrea Levien, and Will Bloom for their feedback and encouragement, as well as Annika Mizel, Arjun Ramamurti, Anthony Sampson, Kyle Victor, Erin van Wesenbeeck, and the Yale Law Journal editors for their helpful suggestions and excellent editing. The views expressed herein are my own and not necessarily those of my employer. All errors are my own.

NOTE CONTENTS INTRODUCTION 708 I. FLSA'S ENFORCEMENT REGIME AS NEW DEAL VESTIGE 720 A. The Post-1960s Trend Toward Private Enforcement 720 B. FLSA's Private Enforcement Regime 725 II. THE REGULATORY CASE FOR PRIVATE WAGE AND HOUR INJUNCTIONS 730 A. Regulatory Advantages of Private Injunctive Relief 731 1. More Aggressive and Consistent Enforcement 731 2. Informational Advantages of Workers and Their Advocates 733 3. Worker Empowerment 735 B. Potential Objections to Extending Private Injunctive Relief 737 1. Lack of Democratic Accountability 738 2. Overly Burdensome for Employers 740 3. Abusive Private Enforcers 744 III. LITIGATION STRATEGY AND THE WAGE AND HOUR INJUNCTION 745 A. How [section] 217 Injunctions Work 745 B. Litigation Benefits of Wage and Hour Injunctions 747 1. Contempt Sanctions and Other Equitable Relief 748 2. Broad Scope of Relief 750 3. Returning to a Familiar and Potentially Sympathetic Judge 754 4. Functionally Extending the Statute of Limitations 755 5. Ongoing Court Monitoring and Pressure 756 C. Litigation Disadvantages of Contempt Actions 757 IV. THE COLLECTIVE NATURE OF EMPLOYMENT LAW 760 CONCLUSION 763 INTRODUCTION

When a federal court finds that an employer has engaged in employment discrimination in violation of Title VII, the standard remedy is to award damages such as back pay, order immediate equitable relief such as reinstatement or promotion, and enjoin the employer's unlawful practice prospectively--frequently as applied to all employees, even in the absence of a class action. (1) For example, assume a plaintiff challenges an employer's use of a placement test, and a court holds the test has a disparate impact on Black applicants that cannot be justified by business necessity. Rather than merely preventing the employer from applying the discriminatory test to that particular plaintiff, as well as providing any damages or immediate equitable relief, the court will issue an injunction preventing the employer from using the unlawful test at all.

Not so when it comes to employers stealing wages. When workers show that an employer has violated the minimum wage or overtime provisions of the Fair Labor Standards Act (FLSA), (2) courts will award damages (including liquidated damages), (3) and, for claims of employer retaliation, will provide immediate equitable relief such as reinstatement or front pay. (4) Courts will not, absent the addition of such a term in a settlement agreement, prospectively enjoin an employer's practice of paying workers less than minimum wage, withholding overtime pay, making illegal deductions, or committing other forms of "wage theft." Instead, plaintiffs or other workers who are subject to continued wage theft from the same employer must file new claims--perhaps attempting to relate these claims to the earlier action--and run through the lengthy motions of civil litigation again.

This feature of FLSA enforcement is not due to a lack of injunctive relief under the Act, as [section] 217, titled "Injunction proceedings," explicitly provides federal courts with equitable jurisdiction to "restrain violations" of FLSA's main provisions. (5) Rather, the statute reserves this remedy for agency enforcement by stating in [section] 211 that "the Administrator shall bring all actions under section 217." (6) Courts have ordered broad injunctions requiring employers, on pain of contempt, to conform to FLSA's provisions. (7) However, they have consistently held that injunctive relief is only available in actions brought by the Department of Labor (DOL), (8) and not in the vast majority of FLSA cases, which are brought by private parties. (9) As Judge Easterbrook has observed, by limiting injunctive relief to actions brought by the Secretary of Labor, "[t]he statute leaves the heavy artillery to public officials." (10)

The absence of private injunctive relief is not the only remedial inadequacy that has prevented FLSA from effectively combatting wage theft on a systematic level; the statute also lacks an opt-out class mechanism. That combination has produced a hobbled private enforcement regime (11) as compared to other federal employment laws like Title VII of the Civil Rights Act of 1964 or the Age Discrimination in Employment Act (ADEA). (12) Opt-out class actions, such as under Rule 23 of the Federal Rules of Civil Procedure, allow one or more named plaintiffs to bring an action on behalf of a class of similarly situated individuals, where joinder of all such individuals is impracticable and certain other criteria are met. (13) Where a class action is properly maintained, individuals within that class are covered by any judgment or settlement unless they affirmatively "opt out" of the litigation. (14) This device thus allows plaintiffs to extend the remedy in a successful case to the entire class of affected individuals, and it allows defendants the benefits of claim preclusion on the same broad scale. By contrast, FLSA's "collective action" provision, which essentially serves to facilitate notice to potential plaintiffs and joinder, requires employees to affirmatively "opt in" to an action by name in order to be covered. (15) Whereas an opt-out class mechanism allows a handful of named plaintiffs to aggregate and represent the interests of thousands or even millions of individuals who do not directly participate in the litigation, FLSA's inefficient "collective action" provision requires that organizers and attorneys contact each worker to be covered, and, in the face of a significant possibility of employer retaliation, convince those workers to put their names to a complaint at a point in the case when recovery is uncertain. Moreover, because opt-in actions neither provide relief to nor bind the entire class of affected individuals, they fail to definitively resolve legal issues for both plaintiffs and defendants. For instance, while multiple Rule 23 actions cannot be maintained for the same claims on behalf of the same class of individuals, FLSA's opt-in mechanism may and sometimes does result in the maintenance of multiple overlapping collective actions with different groups of opt-in plaintiffs, none of which resolves the issue on behalf of all affected workers. (16) Opt-in collective actions therefore present an inefficient and logistically difficult means of aggregating claims as compared to opt-out class actions.

Not all states that enacted parallel wage and hour laws wholly replicated the FLSA private-enforcement model. Some state laws provide opt-out class mechanisms, though this limited patchwork does not reach all American workers covered by FLSA. (17) Similarly, while most state wage and hour laws either do not provide injunctive relief or, like FLSA, reserve such relief for agency actions, seven states allow private wage and hour injunctions: Arkansas, Florida, Massachusetts, Minnesota, New Mexico, Rhode Island, and Utah. (18) The record of available opinions, however, suggests that advocates do not actively pursue employer-wide prospective injunctions or enforce injunctions through contempt. That is, advocates do not appear to wield wage and hour cases as one might an employment discrimination case, aimed at changing an employer's policies and ensuring prospective compliance.

In a world where wage theft is endemic in certain industries (19) and often makes economic sense for employers given the low likelihood of enforcement, employers frequently maintain illegal practices following "successful" enforcement actions. Instead of forcing employers to restructure business models built on illegally underpaying workers, workers are often forced to play an ongoing, retrospective game of whack-a-mole. (20) Meanwhile, workers lose an estimated $15 billion annually in minimum wage violations (21)--an enormous, regressive, and illegal wealth transfer to employers, disproportionately taken from low-wage workers, immigrants, people of color, and women. (22) This is no petty theft for the injured workers. Victims typically lose a substantial portion of their already-low incomes, sometimes enough to push them below the federal poverty line: one study found that the average year-round worker who is a victim of wage theft loses $3,300 per year, resulting in an annual income of just $10,500. (23) Moreover, wage theft harms society at large by increasing workers' dependency on public assistance programs, in effect subsidizing employers who violate the law; (24) reducing payroll and tax revenues; (25) decreasing workers' spending power; (26) and exerting downward pressure on wages. (27)

FLSA enforcement has thus proven a "regulatory failure," (28) in which the wage standards that Congress intended to provide universal protection for workers and an even baseline for employer competition are "regularly and systematically violated." (29) In a survey of low-wage workers in Chicago, Los Angeles, and New York City, the National Employment Law Project (NELP) found that twenty-six percent of workers were paid less than minimum wage in the previous week and that seventy-six percent of employees were not paid their legally required overtime, resulting in an estimated $2,634 loss annually per worker. (30) A vast...