State Common Law Claims May Be Preempted By The Fair Labor Standards Act

A District Court Judge in the Eastern District of Pennsylvania recently ruled that the Fair Labor Standards Act (“FLSA”) preempted a plaintiff’s attempt to add state common law counts for breach of contract and unjust enrichment onto his statutory wage and hour claims. Formica v. US Environmental, Inc., (No. 18-459; July 11, 2018).  The plaintiff alleged FLSA, Pennsylvania Minimum Wage Act, and Pennsylvania Wage Payment and Collection Law claims. 

All of the plaintiff’s claims in the underlying case were based on a failure to pay overtime, and other earned compensation, including travel and meal time.  Each of these claims could be fully remedied under the FLSA and the Pennsylvania Wage Act claims referenced above. The plaintiff’s breach of contract and unjust enrichment claims did not have an independent factual basis and instead were based on the same core of facts as the FLSA claim.

The District Court for the Eastern District of Pennsylvania is in the Third Circuit, which had not previously decided whether state non-statutory, common law claims could be preempted by the FLSA. The district court relied on Fourth Circuit precedent, which held in a similar case that state law claims for contract, negligence and fraud are preempted by the FLSA. Anderson v. Sara Lee Corp, 508 F.3d 181 (4th Cir. 2007).  The district court in Pennsylvania recognized that the Third Circuit has signaled it would follow the rule in the Fourth Circuit, and adopted the reasoning in Anderson.  The district court then employed that reasoning to dismiss the “duplicative State common law claims as preempted by the FLSA”.  Since the common law claims shared a common factual basis as the wage and hour claims and would be fully remedied under those statutes, the common law claims were preempted. Other Circuits, including the Seventh, have not yet addressed this specific issue.

The lesson here is a simple one.  Employers often confront situations in which plaintiffs are attempting to add, for a variety of reasons, additional counts to their allegations. Some of these claims are based in breach of contract and others on equity. These claims are often made with the intention of expanding remedies available to the plaintiff and, perhaps, even expanding the statute of limitations for certain claims. Formica signals growing support for legal challenges employers make against duplicative common law claims that plaintiffs tack on to a suit involving statutory wage and hour counts. Employers should not hesitate, even in the Seventh Circuit, to file motions to dismiss based on the strength of the Anderson case in the Fourth Circuit and this most recent decision out of the Eastern District of Pennsylvania.

For more information, contact Tom Luetkemeyer or your regular Hinshaw attorney.

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