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Employer Law Report

Sixth Circuit Awards Employer Over $55,000 in Costs in FLSA Collective Action

Posted in Employment Class & Collective Actions, Wage & Hour

In September, we told you about the Sixth Circuit’s decision in Frye v. Baptist Memorial Hospital, Inc., where the court handed down, not one, but two favorable rulings for employers in an FLSA collective action. First, the court held that automatic pay deduction policies for unpaid meal breaks do not per se violate the FLSA, and that a class representative plaintiff in a collective action must formally opt-in to their own case to "commence" suit and stop the running of the statute of limitations or be barred from suit. Here’s that blog.

After considering the employer’s motion for costs, the Sixth Circuit went for a trifecta and awarded the employer over $55,000 in fees and costs in defending the action. In challenging the award, Frye had four primary arguments. First, Frye argued the FLSA does not provide for an award of costs to a prevailing defendant, and that such an award would have a chilling effect on future FLSA claims. Second, he claims that the employer was not a "prevailing party" as to the opt-in plaintiffs of the decertified collective action whose claims were dismissed without prejudice. Third, that the employer’s costs in defending the action should not be taxed against him because they were not necessary to resolve his substantive claims. Finally, he argued that because he only earned $75,000 a year, he would be impoverished if required to pay.

In response to Frye’s argument that the employer’s costs were not recoverable under the FLSA, the court found that nothing in the FLSA precludes an award of costs to a prevailing defendant. Although Section 216(b) of the FLSA specifically addresses costs to a prevailing plaintiff, the court held that the employer could use Federal Rule of Civil Procedure 54 to seek its costs. The court summarily dismissed Frye’s "chilling effect" argument without discussion. As for Frye’s argument that the employer was not really a "prevailing party," the court didn’t buy that either and found that since the employer successfully obtained decertification of the collective action and summary judgment on Frye’s claims due to his failure to opt-in, the employer was the prevailing party for purposes of the action. The court also held that the district court did not abuse its discretion in ordering Frye to pay because, given his level of income and expenses, Frye failed to demonstrate that he was unable to pay the costs awarded.