The Evolution of ‘Abadeer’: The General Assembly’s Clarification of the Wage Regulations Act

In the arena of wage and hour litigation, it has become more and more common for plaintiffs to append state law causes of action (under various theories) to their federal claims. The primary benefit to the plaintiffs is that state law claims potentially carry a longer statute of limitations, and, thus a greater look-back period for damages. In Tennessee, we have seen this tactic result, in at least one case, in an effort to state a private right of action under the Tennessee Wage Regulations Act (TWRA).[1] One section of the TWRA, Tenn. Code Ann. § 50-2-101(b), requires employers to inform employees of the amount of wages to be paid for their labor prior to the performance of any work. Since its passage, this statute was generally thought to be enforced by the Tennessee Department of Labor and Workforce Development, not through a private right of action. However in 2009, the United States District Court for the Middle District of Tennessee held that Tenn. Code Ann. §50-2-101(b) contained an implied private right of action to recover unpaid wages. This decision, the first of its kind, caused concern among Tennessee employers. Eventually, the General Assembly stepped in, via an amendment, to clarify its intent that the statute did not provide a private right of action. More recently, the Middle District, in the same litigation as the 2009 decision, reversed course, and held that the amendment simply clarified legislative intent, therefore giving it retrospective application. Simply put, at least according to the United States District Court for the Middle District of Tennessee, § 50-2-101(b) does not, nor has it ever, provided for a private right of action.

The journey begins with Abadeer v. Tyson Foods Inc., the 2009 decision from the Middle District of Tennessee.[2] Abadeer is a wage and hour collective action brought under 29 U.S.C. § 216(b), in which the plaintiffs alleged that Tyson Foods violated the FLSA by failing to pay them for donning and doffing uniforms and protective gear, and by requiring them to work during unpaid meal breaks. In addition to their FLSA claims, the plaintiffs sought supplemental jurisdiction[3] for state law claims for breach of contract and for a violation of Tenn. Code Ann. § 50-2-101(b). Tyson moved to dismiss the TWRA claim, arguing that Tenn. Code Ann. § 50-2101(b) does not provide a private right of action. At the time, the pre-amendment law stated in pertinent part:

It is unlawful for any proprietor, foreman, owner or other person to employ, permit or suffer to work for hire, in about, or in connections with any workshop or factory any person whatsoever without first informing the employee of the amount of wages to be paid for the labor. The amount agreed upon between employer and employee, or employee representative shall constitute basis for litigation in civil cases.[4]

The Hon. William J. Haynes of the Middle District of Tennessee noted that while other sections of the TWRA provided for enforcement by the Department of Labor (§§ 50-2-103 and 104), § 50-2-101(b) notably did not reference agency enforcement. Further, the court reasoned that § 50-2-101(b) “expressly contemplates civil litigation and a [private] remedy clearly benefits the workers.”[5] As such, the court concluded that plaintiffs have an implied right of action under § 50-2-101(b) to recover unpaid wages, and thus declined to dismiss plaintiffs’ TWRA claim. 

The 2009 Abadeer decision was the first time a court had interpreted § 50-2-101(b) as creating a private right of action.[6] In light of that decision, on April 23, 2013, the General Assembly amended the statute by adding a subsection (d) that states: “the department of labor and workforce development shall enforce this section.”[7] The amendment also deleted the sentence from subsection (b) that referenced “litigation in civil cases.” The effect of this amendment would be challenged in the same lawsuit that necessitated its passage, just at a different procedural juncture.

Following the amendment of §50-2-101(b), the Abadeer defendant moved for summary judgment on the TWRA claim. Tyson Foods asked the court to reconsider its 2009 ruling in light of the recent amendment, and to either dismiss the claim outright, or at least deny plaintiffs’ motion for summary judgment. The matter was heard before the Hon. Kevin H. Sharp of the Middle District of Tennessee. There was no doubt that the amendment prohibited a private right of action under §50-2-101(b). What was not yet clear was whether the amendment had retrospective, or merely prospective, application (i.e., whether § 50-2-101(b) had ever allowed a private right of action).

The court set the stage as follows:

The parties’ dispute hinges on whether the 2013 amendment clarified the legislative intent behind a law that was ambiguous on its face, or whether the amendment substantively modified a law to remove a private right of action and reassign enforcement to a state agency. If it’s the latter, the employees’ contention that the legislature cannot retrospectively interfere with their pending legal claim, a vested right, is correct. This is because retrospective application of “a remedial or procedural statute [that] impairs a vested right or contractual obligation … is constitutionally impermissible.” (Citation omitted.) But if it’s the former, the employees never had a vested right to begin with, and the legislature is free to apply its remedial amendment retroactively.[8]

Initially, the court determined that §50-2-101(b) did not expressly provide a private right of action. However, that did not end the inquiry — it still had to determine whether the legislature intended to create an implied right of action.

The district court ultimately concluded that the 2013 amendment “clarified the legislative intent behind an ambiguous law without substantively modifying it” and, as such, “the remedial amendment applies retroactively.”[9] In so doing, the court relied on three factors. First, the court noted that the amendment only made minor changes to the statute — removing one sentence and inserting another. Second, the legislative history clearly indicated that the amendment was introduced in response to and to overturn the 2009 Abadeer decision, which had “changed the legislative intent.”[10] Third, the court held that “the amended statute is consistent with a reasonable interpretation of the pre-amendment law.”[11]

The evolution of Abadeer — originally allowing a private right of action, and then, after the amendment, reversing course — removes at least one state law claim that may be asserted in an FLSA collective action. Furthermore, we are reminded that the only avenue for enforcing a violation of §50-2-101(b) is to file a complaint with the Tennessee Department of Labor.

Notes

  1. Tenn. Code Ann. § 50-2-101 et seq.
  2. No. 3:09-CV-00125, 2009 U.S. Dist. LEXIS 59488 (M.D. Tenn. July 10, 2009).
  3. 28 USCS § 1367(a) (“the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy.”).
  4. Tenn. Code Ann. § 50-2-101(b) (2009) (emphasis added).
  5. 2009 U.S. Dist. LEXIS 59488 at *18.
  6. Following the 2009 Abadeer decision, the Hon. J. Daniel Breen of the Western District of Tennessee held in an FLSA collective action that the gravamen of a supplemental unjust enrichment claim, for purposes of the statute of limitations, is a claim for wages under Tenn. Code Ann. § 50-2-101(b). The court held that § 50-2-101(b) is subject to the three-year statute of limitations for “monetary liability for personal services” under Tenn. Code Ann. § 28-3105(3). Carter v. Jackson-Madison County Hosp. Dist., No. 1:10-cv-01155-JDB-egb, 2011 U.S. Dist. LEXIS 157329, **8-16 (W.D. Tenn. Dec. 13, 2011). See also Montgomery v. Decatur County Gen. Hosp., No. 11-1096, 2012 U.S. Dist. LEXIS 188046 (W.D. Tenn. Mar. 19, 2012)(same).
  7. Act of Apr. 23, 2013, 2013 Tenn. Pub. Acts. Ch. 240 §§ 1, 2 (amending Tenn. Code Ann. § 50-2-101).
  8. Abadeer, 2013 U.S. Dist. Lexis 145918, *72 (M.D. Tenn. Oct. 3, 2013) (internal citations omitted).
  9. Id. at *77.
  10. Rep. Haynes. Statement to the House Consumer and Human Resources Subcommittee. House Bill 1223, March 20, 2013. Video available at http://tnga.granicus.com/MediaPlayer.php?view_id=269&clip_id=7511. (“There was a federal court decision [Abadeer 2009] that has changed the way — has changed the legislative intent of what the legislature originally intended when they passed the Wage Regulation Act years ago. And so, all this is going to do … the court said that they interpreted that section of the law to give employees a private right of action to sue their employer when there’s wage disputes. The law has always been, in this state, that they can — that the Department of Labor would regulate that. So, we’re just changing that back into compliance with that … what the original legislative intent was.”).
  11. Abadeer, 2013 U.S. Dist. Lexis 145918 at *77.

Edward G. Phillips EDWARD G. PHILLIPS is a lawyer with Kramer Rayson LLP in Knoxville, where his primary areas of practice are labor and employment law. He graduated with honors from East Tennessee State University and received his law degree from the University of Tennessee College of Law in 1978 with honors, and as a member of The Order of the Coif. He is a former chair of the Tennessee Bar Association’s Labor and Employment Law Section.

 

BRANDON L. MORROW is an associate with Kramer Rayson LLP in Knoxville where his primary areas of practice are labor and employment, and litigation. He earned a bachelor’s degree from the University of Tennessee and a law degree from UT College of Law in 2012.