Route sales representatives of Bimbo Bakeries USA, Inc., are responsible for driving delivery trucks on established routes and stocking shelves with Bimbo’s products. Their employment is governed by a CBA that includes an “alternative compensation program.” Under the program, Bimbo pays sales representatives (1) $21 per hour for all hours worked in a 5-day workweek and $31.50 for all overtime hours or (2) base pay ($110) plus commissions at the negotiated rate of 12 percent, whichever is higher.
The sales representatives filed a class action lawsuit alleging violations of the federal Fair Labor Standards Act (FLSA) and the New Jersey Wage and Hour Law (NJWHL). They alleged that Bimbo paid them a base salary of $110 per week plus a 12 percent commission on all sales on their routes but failed to properly pay them overtime for all hours worked over 40 per week. Bimbo filed a motion to dismiss the claims on the theory that they were preempted by Section 301 of the Labor Management Relations Act (LMRA).
The LMRA permits federal courts to establish a uniform interpretation of contract terms to aid in the negotiation and administration of CBAs. Thus, the LMRA preempts state-law claims if the resolution of the claims depends on analyzing the terms of a CBA.
If the resolution of the claims is independent of and does not require a court to interpret a CBA, the claims can proceed. If a claim rests on the interpretation of a CBA, the dispute must be resolved through the mechanisms provided by the LMRA—namely, grievance and arbitration procedures and, if necessary, a lawsuit in federal court under Section 301.
District Court’s Ruling
The court denied Bimbo’s motion to dismiss, finding that the employer’s obligation to pay employees overtime was independent of any contractual terms and that Section 301 does not grant parties to a CBA the ability to contract for what is illegal under state law.
The court rejected Bimbo’s argument that the employees’ claims or its defense that the sales reps were exempt from overtime required the court to analyze the CBA’s pay provisions. Rather, the determination of the employees’ claims required only reference to the CBA, and application of the contract’s wage provisions was straightforward. Further, Bimbo did not point to a dispute between the parties about what the terms of the CBA actually meant—i.e., there were no CBA terms to actually interpret.
Moreover, the court was not convinced that it even needed to refer to the CBA to calculate the employees’ regular hourly wage because their time and pay records would confirm whether they were properly paid and their actual duties, not a description, would dictate whether they were exempt from overtime.
Therefore, the court found that the sales representatives’ claims were not preempted by the LMRA and that they were not required to exhaust the CBA’s grievance and arbitration procedures before proceeding with their claims in court.
This case is a reminder that employers cannot assume that claims that refer to CBA provisions will be preempted by labor law. Rather, LMRA preemption applies to a specific group of claims that requires an analysis of what the contract terms were intended to mean. Further, especially with wage and hour matters, employers should always ensure that they are complying with the myriad of federal and state laws that can lead to potential exposure.