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Laura Franks and Sandra Jordan v. Mkm Oil

September 7, 2012


The opinion of the court was delivered by: Judge Edmond E. Chang


Plaintiffs Laura Franks and Sandra Jordan, as proposed class representatives, have filed this lawsuit against Defendant MKM Oil, Inc.*fn1 Plaintiffs seek damages based on violations of the Fair Labor Standards Act, 29 U.S.C. §§ 201, et seq., the Illinois Minimum Wage Law, 820 ILCS 105/1, et seq., and the Illinois Wage Payment and Collection Act, 820 ILCS 115/1 et seq. Plaintiffs have moved for conditional certification pursuant to § 216(b) of the FLSA, [R. 120], and for class certification of the two state law claims, [R. 164]. For the reasons explained below, the FLSA motion is denied, and the class certification motion is granted in part and denied in part.


MKM Oil is a corporation that operates between 30 and 40 retail gas stations in Illinois. R. 165 at 1-2. Each retail station employs anywhere from 5 to 20 employees at a time. R. 146 ¶ 180. Plaintiffs Laura Franks and Sandra Jordan are both former employees of MKM, id. ¶ 45; Franks was an Assistant Manager, id. ¶ 54, and Jordan was a cashier operator, R. 120-8. Plaintiffs base their lawsuit on three distinct factual allegations, which we describe below.

A. Time Conversion Error

Throughout Plaintiffs' employment, MKM tracked work hours using a computer based system named "RUBY." R. 146 ¶ 143. The RUBY system tracks increments of time by actual minutes; for example, an employee who worked for 4 hours and 30 minutes would have an entry that reads: "4:30." Id. ¶ 144. MKM does not, however, use the RUBY system to pay its employees. Id. ¶ 145. Instead, it uses the "ADP" payroll system, an acronym for the outside vendor that created the system. Id. MKM employees would manually enter and transfer work time between the two systems by completing a handwritten "weekly hours sheet." Id. at 151. The hour sheets then would be transmitted to MKM corporate headquarters, where the work hours would be manually entered by a MKM employee into the ADP Payroll system. Id. ¶ 152.

This conversion produced a serious problem. The ADP Payroll system tracks time differently than the RUBY system; it uses increments of time based on what Plaintiffs refer to as the "Military Time" method. Id. ¶ 145(b).*fn2 Under the Military Time method, time is tracked by hundredths of an hour. That means that an employee who worked for 4 hours and 30 minutes should have their time entered as 4.50. Id. ¶ 146.

But that did not happen. Instead, the manual conversion from the RUBY system to the ADP system led to inconsistencies. Id. ¶ 147. Using the above example, the RUBY entry would indicate that the employee worked 4:30 hours, but the conversion would lead to an ADP entry of 4.30 hours instead of 4.50 hours. So, in effect, the employee would lose credit for .20 hours. When Franks discovered this problem, she complained to her manager, Lara Harmon. Id. ¶¶ 147, 157.

Harmon claims that she reported this problem to MKM management repeatedly, but management ignored her. Id. ¶ 160. At the same time, Harmon seems to have lulled Franks by saying that Franks was the one calculating her hours incorrectly. Id. ¶ 159. Harmon admitted, however, that she did not really understand how the conversion worked, but "that was how it was done." Id. ¶ 162. According to Plaintiffs, the violations stemming from the conversions occurred from 2004 until 2010, R. 165 at 2, and affected 95% of all MKM employees, which amount to hundreds and thousands of individuals. R. 188 at 3.

B. Deductions for Losses

Plaintiffs also allege a company-wide policy of pay deductions to make up for business losses suffered during the employee's shift. R. 120-1 ¶ 13. For example, Laura Franks was responsible for paying her manager $8.17 in cash when a customer filled up their gas tank but failed to pay and instead drove away (Plaintiffs refer to this phenomenon as a "Drive-Off"). Id. ¶ 13(a). Sandra Jordan was responsible for paying $39.80 due to a customer theft that occurred on her watch. R. 120-8 ¶ 12(a). Both Franks and Jordan list other instances of paying for business losses. See R. 120-1, R. 120-8. Plaintiffs also claim that other employees were also required to pay their managers for a variety of other cash shortfalls, such as when the cash register reported a shortage. R. 120-1 ¶ 16.

MKM denies the existence of a company-wide policy where employees paid their managers for business losses. R. 181 at 16. Moreover, MKM has submitted affidavits from individual branch managers, who state a number of different methods in handling cash shortfalls. Id. For example, at some stores, managers claimed that they never had employees pay cash out of pocket. E.g., R. 182, Exh. 7 ¶ 3. At others, they allowed the employee the choice of paying cash in lieu of receiving disciplinary measures. E.g., R. 182, Exh. 25 ¶ 5. Indeed, the employee manual indicates that if there are cash shortfalls or drive-offs, employees will be subject to "discipline and corrective action" but makes no mention of punitive measures, such as having employees pay cash out of pocket. R. 189-8 at 7.

Plaintiffs have produced, however, some evidence that cash payments were a common policy. First, they have furnished a copy of a separate document titled "MKM Drive-Off Policy" that states:

When reviewed by management, if all steps were followed, the employee will not be responsible for paying the drive-off. If any of the above steps were neglected, you will be responsible for payment of the drive-off and additional corrective action could/will result.

R. 120-11 at 2 (emphasis added). Second, Plaintiffs have provided at least 250 copies of signed documents titled "MKM Drive-Off Policy" that state:

I, [name] understand the MKM Oil, Inc. drive-off policy and I understand if I neglect to do any of the steps laid out in the drive-off policy I will be responsible for payment of any drive-off I have while operating the register. I understand payment must be received by the next pay date following the drive-off. I also understand I can ask to be put on a payment plan in order to pay for the drive-off. However, if I miss a payment, the balance of the drive-off will be expected by the next pay date or further action will be taken.

R. 189, Exhs. 18-23 (emphasis added). Each one of these documents was signed by the employee, the manager, and each document includes the specific retail location. Id.

C. Off-the-Clock Work

Laura Franks also claims that as an Assistant Manager, she was required to work "Off-the-Clock" without pay every Friday night. R. 120, Exh. 1 ¶ 18. Off-the-Clock work was work involving calculating payroll and work hours for all employees at the retail location. Id. ¶ 20(d). Specifically, she needed to print register tapes, organize them, and place the tapes in a specific location for her supervisor to retrieve. Id. ¶ 20(l). Franks would then have to set the alarm, turn off the lights, and lock the door. Id. According to Franks, these tasks took 4-6 minutes, but she was prohibited from logging this time as work time. Id. ¶ 20.

Franks complained to Harmon, her manager, about being forced to work during these 4-6 minutes without compensation. Id. ¶ 20(j). Franks claims that Harmon instructed Franks to continue to perform the Off-the-Clock duties regardless of whether time was recorded. Id. ¶ 20(k). According to Franks, when she tried to record her time for these tasks, Harmon would go back to change Franks's time entries. Id.

¶ 24. Franks claims that Harmon acted this way in accordance with official MKM policy. Id.

MKM denies that there was a company policy that barred the recording of Offthe-Clock work, and presents a series of affidavits by managers at other branches. R. 182. According to these managers, the Off-the-Clock work varied widely depending on the particular retail location. R. 181 at ...

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