7th Circuit vacates ruling in light of new uniform-rental law

The 7^th Circuit Court of Appeals has vacated in part a Southern District Court’s decision, asking it to reconsider whether an amended Indiana wage-deduction law could be retroactively applied to claims made against a former employer for withholding employee wages to rent work uniforms.

Brian Weil and Melissa Fulk — two former employees of Bloomfield automobile parts manufacturer Metal Technologies, Inc. — filed class and collective actions and individual claims against the company, alleging it violated the Fair Labor Standards Act of 1938 and Indiana wage laws.

Weil and Fulk first filed a time-rounding claim against Metal Technologies, arguing it unlawfully paid employees only for the hours that they were scheduled to work even when their timestamps showed that they were clocked in for longer periods.

The plaintiffs also filed a wage-deduction claim, alleging the company took payment for rented work uniforms out of employees’ paychecks during two separate time periods, despite the fact that Indiana law authorized withholding only for uniform purchases.

U.S. Southern District Court Chief Judge Jane Magnus-Stinson initially certified the claims, but only granted FLSA certification on the plaintiffs’ time-rounding issue. However, the district court later decertified that claim, concluding the employees’ time stamp was not a per se record of work, and because Weil and Fulk failed to prove employees were working longer shifts, the court concluded they couldn’t prove a theory of liability to the common class. 

But the district court split in its wage-deduction decision, granting Weil and Fulk summary judgment on the original wage-deduction form period between January 2013 and April 10, 2016, and denying judgment in respect to the amended form used after that period.

Although the plaintiffs received little damages on the time-rounding claims, they garnered $93,152.58 in treble damages for the class under the original wage-deduction form, as well as $8,102.04 after the district court ruled Indiana law permitted wage deductions only for purchasing, not renting, uniforms. Additionally, $99,229.58 was awarded in attorney fees for the wage-deduction claims and $16,869.03 for the time-rounding claims.

Both parties appealed. Metal Technologies argued against the wage-deduction ruling and Weil and Fulk argued against the decertification of their time-rounding claims. Each party also sought attorney fees and costs. 

Following the 7^th Circuit Court of Appeals’ oral argument in the matter, the Indiana legislature enacted a retroactively applicable law permitting employers to deduct employee wages for renting a uniform.Thus, the 7^th Circuit vacated the lower court’s judgment and remanded the case of Brian Weil v. Metal Technologies, Inc.,18-2440 for the district court to consider whether Indiana Code 22-2-6-3(b) applies to the wage-deduction claims.

“If it does, the district court will also have to revisit the attorneys’ fees and costs that it awarded the plaintiffs on those claims,” wrote Circuit Judge Amy Coney Barrett.

The appellate panel also rejected the plaintiffs’ arguments to reverse the decertification, finding that the district court was not bound to maintain its initial decision unless Metal Technologies introduced new evidence.

The 7^th Circuit further concluded that the decertification of the class and collective claims was appropriate based on the plaintiffs’ lack of evidence that employees were working without compensation.

It concluded that the Metal Technologies employee manual “does not say that employees will be compensated for every minute that they are clocked in even if they aren’t working.”

“In fact, it says the opposite: employees will be compensated only for actual time worked. So any argument that Metal Technologies violated its own manual fails as well,” Barrett wrote.

Therefore, the 7^th Circuit affirmed in part, vacated in part, and remanded the case to the district court for proceedings.