On May 26, 2016, a divided Arkansas Supreme Court reached a surprising decision in the case of Gerber Products Company v. David Hewitt II et al, 2016 Ark. 222, raising new concerns for Arkansas employers. In its decision, the Court broadly defined the scope of “work” under the Arkansas Minimum Wage Act (AMWA) to include time spent donning and doffing personal protective equipment. The Court also departed from federal law permitting employers and unions to negotiate compensation for donning and doffing activities, finding that such agreements are not recognized under Arkansas law. The consequences of this decision may be far reaching. As Justice Rhonda K. Wood wrote in dissent:
As a result of the majority’s decision, Arkansas will repeat the past mistakes of the federal government, and the floodgates will open to litigation at the enormous cost to business in Arkansas. In addition, the majority undermines the collective-bargaining process and destroys any confidence employers and employees have in the enforceability of their agreements.
Given the Gerber decision, Arkansas employers—especially those with unionized workforces—should now revisit their existing pay practices for compliance under the AMWA despite compliance with existing federal law.
Analysis. Employees of Gerber’s Fort Smith baby food processing and manufacturing facility filed a class action complaint against Gerber alleging Gerber failed to compensate them for all hours worked under the AMWA. More specifically, the employees alleged Gerber failed to compensate them for time spent donning and doffing personal protective equipment, sanitizing clothing and equipment, washing their hands, and walking to and from their work stations. As a result of the extra time spent performing these activities, the employees claimed they often worked more than 40 hours per week without overtime compensation.
In defense against the employees’ claims, Gerber asserted that time spent donning and doffing was not compensable under the AMWA. Gerber further argued its established custom and practice under a collective bargaining agreement between Gerber and Lodge 260 of the International Association of Machinists and Aerospace Workers (AFLCIO) excluded donning and doffing activities from compensable time as permitted under Section 203(o) of the Fair Labor Standards Act (FLSA).
The Court rejected Gerber’s arguments, holding that the employees’ donning and doffing activities met the definition of “work” under the AMWA because the activities were “performed pursuant to strict procedures developed by Gerber” and were “performed for the benefit of Gerber.” Addressing the collective bargaining agreement between Gerber and the AFLCIO, the Court rejected Gerber’s arguments that the AMWA and the FLSA should be interpreted consistently, finding that the AMWA does not contain a provision similar to the FLSA’s Section 203(o) and the Court would not read a similar provision into the AMWA where the legislature was silent.
Impact on Arkansas Employers. The Gerber decision stands in sharp contrast to federal precedent. In Sandifer et al. v. United States Steel Corp., 571 U.S. _ (2014), Justice Scalia wrote that the object of Section 203(o) of the FLSA is to “permit collective bargaining over the compensability of clothes-changing time and to promote the predictability achieved through mutually beneficial negotiation.” Where the Sandifer decision gave Arkansas’s unionized employers the authority to negotiate the issue of compensation for donning and doffing activities, the Gerber decision plainly takes away this right under the AMWA. The consequence is striking—an Arkansas employer’s compliance with the FLSA is not enough, even where the employer has expressly negotiated or established a custom and practice of not compensating for donning and doffing activities through collective bargaining.
As Justice Wood warned in dissent, the Gerber decision raises the specter of new litigation at an enormous cost to Arkansas businesses. Arkansas employers should now:
Evaluate existing pay practices related to donning and doffing under the broad definition of “work” used by the Gerber Court, even if such practices previously have been evaluated for compliance with the FLSA.
Evaluate the express terms or customs and practices established through collective bargaining that currently exclude donning and doffing activities from compensable time.
Broadly review all pay practices for compliance with the AMWA regardless of compliance with federal law.
If your organization has questions regarding the impact of this ruling on Arkansas employers, please contact your Kutak Rock attorney, the authors of this article (Scott Jackson and Genoveva Gilbert), or other members of our National Labor and Employment Practice listed below.