Temp Nurses & Hospital Techs Class Certified Despite Differing Housing Benefits

With staffing agencies gaining a greater foothold in the employment market, their employees face unique challenges in trying to hold them accountable for wage-and-hour violations. The staffing business model—where employees ostensibly under the staffing agency’s control are lent out to different companies—is often deemed to preclude class certification, since the assigned positions and duties can be too varied, creating too many individualized inquiries. However, one court recently rejected this line of reasoning in a case involving nurses’ and hospital technicians’ claims for housing benefits provided by Fastaff, a travel nurse staffing agency. See Dalchau v. Fastaff, LLC, No. 17-cv-01584-WHO (N.D. Cal. April 9, 2018), Order Granting Motion for Class Certification and Denying Motion to Stay (slip op. available here). The plaintiffs avoided commonality and predominance problems by emphasizing that the defendant employer’s policy inflicted a common legal injury on the class of staffed temporary employees. This theory confounded Fastaff’s counsel, who did not even offer a defense against it. Indeed, in granting class certification, Judge William Orrick let the defendant employer know just how poorly they understood the legal thrust of the plaintiffs’ case.

In March 2017, the plaintiffs in Dalchau filed a putative class action and a Fair Labor Standards Act (“FLSA”) collective action on behalf of hourly-paid employees of defendants Fastaff and its parent company, U.S. Nursing Co. Fastaff, which provides temporary staffing for hospitals, offered housing to their employees during their assignments. Fastaff’s traveling nurses and technicians had the option of either accepting a weekly stipend or staying in company-provided housing. However, before the employee can receive the full benefit, he or she had to complete a set amount of work. If the employee did not fulfill their work requirements, Fastaff would collect the difference by either prorating the employee’s stipend or the deducting the difference from their paycheck as “charge-back.” Slip op. at 2. Under certain circumstances, Fastaff could determine, at its discretion, whether any “exceptional” personal circumstance had occurred causing the employee to not fulfill their assigned hours, and could approve an exception and not make the deduction.

The plaintiffs alleged that the value of this weekly housing stipend or supplied housing, a benefit offered by the employer, was being excluded improperly from the employees’ regular rate for purposes of calculating overtime, resulting in underpayment. Slip op. at 1. In response, Fastaff argued that certification was improper because the different methods of bestowing the housing benefit created too many individualized situations, particularly where an exception to the charge-back was granted. However, as the court clarified, the nurses did not claim commonality on a similar set of facts. Instead, the nurses claimed the company inflicted a common legal injury when it refused to include the housing benefit into their regular rate for overtime payments. Their claim focused on a widespread, uniform policy of excluding the housing benefits from their regular rate calculations resulted in illegal underpayment, not a universal set of facts (such as whether all employees received the full amount of their benefits). Further, the court stated that the commonality “does not require that class members suffer identical harm.” Slip op. at 11.

In light of the above, Judge Orrick granted the plaintiffs’ motion for class certification. Fastaff must now defend this employment practice on the merits as the case moves forward towards trial.

Authored by:
Brooke Waldrop, Associate
CAPSTONE LAW APC