The Slow Movement to Better Balance — Part 1  Lesson Topics: · Father of Capitalism · National Labor Relations Act (NLRA) · Fair Labor Standards Act (FLSA) · Exceptions to Minimum Wage Mandate · Overtime Pay INTRODUCTION In the prior lessons, we have discussed the ways in which businesses might find themselves liable in the employment arena for a variety of conduct. In Lesson Seven, we will discuss some much more fundamental changes in the law that have occurred in the last century as society has recognized the dangers of unchecked capitalism and the need for worker rights and protections. Father of Capitalism Adam Smith has been described as the “father of capitalism”. In the 18th century, he authored a seminal paper on the benefits capitalism, and although the years since then have brought with them some deviation from Smith’s ideas, his work is largely responsible for the modern laissez-faire capitalist economy which exists in America today. Smith’s underlying philosophy essentially proposes that the economy operates at optimal levels when the people are free to pursue their own individual economic self-interests. He posited that if people were uninhibited to make business decisions that maximized their own productivity and profitability, the economy would benefit from such efforts through increased competition and continual product specialization (Vision, 2006). However, if Smith’s ideas were in any way errant, then it was because he failed to account for the fact that human selfishness, to the extent of ignoring the interests of others, would lead to abuse by those with power over those without. With that in mind, the American 20th century was to a large extent a slow, arduous evolution of worker rights and liberties, aimed at providing a governmental structure that balances the interests of private sector capitalism with the welfare of the society which it employs (Karlin, 2015). LEARN MORE ABOUT ADAM SMITH National Labor Relations Act (NLRA) The National Labor Relations Act (NLRA) was passed in 1935 and was the first major step in securing the rights of workers, by giving them a legally protect voice to negotiate the terms of their own working circumstances (National Labor Relations Board, n.d.). Prior to the NLRA, it was perfectly legal for employers to use coercion, threats, and adverse employment action to quash any attempts at employee organizing for the purposes of collective bargaining. The NLRA created the National Labor Relations Board, a government oversight agency which is responsible for the protection of worker rights to collective bargaining. Under the NLRA, employees have the right to create unions, join existing unions, negotiate with employers concerning work circumstances (pay, schedules, etc.), and even to strike or picket if the response of the employer in question is not to their satisfaction. It is illegal under the NLRA for employers to: · Prohibit union activities · Use rewards or punishments in order to infl.

1. The Slow Movement to Better Balance — Part 1
Lesson Topics:
· Father of Capitalism
· National Labor Relations Act (NLRA)
· Fair Labor Standards Act (FLSA)
· Exceptions to Minimum Wage Mandate
· Overtime Pay
INTRODUCTION
In the prior lessons, we have discussed the ways in which
businesses might find themselves liable in the employment
arena for a variety of conduct. In Lesson Seven, we will discuss
some much more fundamental changes in the law that have
occurred in the last century as society has recognized the
dangers of unchecked capitalism and the need for worker rights
and protections.
Father of Capitalism
Adam Smith has been described as the “father of capitalism”. In
the 18th century, he authored a seminal paper on the benefits
capitalism, and although the years since then have brought with
them some deviation from Smith’s ideas, his work is largely
responsible for the modern laissez-faire capitalist economy
which exists in America today. Smith’s underlying philosophy
essentially proposes that the economy operates at optimal levels
when the people are free to pursue their own individual
economic self-interests. He posited that if people were
uninhibited to make business decisions that maximized their
own productivity and profitability, the economy would benefit
from such efforts through increased competition and continual
product specialization (Vision, 2006).
However, if Smith’s ideas were in any way errant, then it was
because he failed to account for the fact that human selfishness,
to the extent of ignoring the interests of others, would lead to
abuse by those with power over those without. With that in

2. mind, the American 20th century was to a large extent a slow,
arduous evolution of worker rights and liberties, aimed at
providing a governmental structure that balances the interests of
private sector capitalism with the welfare of the society which it
employs (Karlin, 2015).
LEARN MORE ABOUT ADAM SMITH
National Labor Relations Act (NLRA)
The National Labor Relations Act (NLRA) was passed in
1935 and was the first major step in securing the rights of
workers, by giving them a legally protect voice to negotiate the
terms of their own working circumstances (National Labor
Relations Board, n.d.). Prior to the NLRA, it was perfectly legal
for employers to use coercion, threats, and adverse employment
action to quash any attempts at employee organizing for the
purposes of collective bargaining.
The NLRA created the National Labor Relations Board, a
government oversight agency which is responsible for the
protection of worker rights to collective bargaining. Under the
NLRA, employees have the right to create unions, join existing
unions, negotiate with employers concerning work
circumstances (pay, schedules, etc.), and even to strike or picket
if the response of the employer in question is not to their
satisfaction.
It is illegal under the NLRA for employers to:
· Prohibit union activities
· Use rewards or punishments in order to influence union
support
· Question an employee about his or her views concerning a
union
However, unions are not completely free to operate without
restrictions either. Under the NLRA, unions may not
discriminate in their support of employees based on their union
views. They cannot require union support, and cannot threaten

3. any adverse action for failure to do the same.
It is important to remember that union membership may never
be required under the NLRA. Unions are free to solicit
membership to new employees, and employees are free to join if
they wish, but there can be no penalty for failure to join.
However, there is one caveat worth elucidating, the ‘right to
work’ debacle.
READ MOREAbsent state legislation, unions are technically
free to create agreements with employers for mandatory union
dues to be paid to the union by each employee (through payroll
deduction) notwithstanding employee union membership; in
these cases, employees may be lawfully required to pay dues,
but still are not required to join the union or participate in its
activities in any way. However, roughly half of the states in
America have passed so-called ‘right to work’ statutes, which
essentially prohibit such agreements; unions are still free to
operate, but may not create employer agreements for mandatory
action or payment from employees. Thus, states with these types
of laws are commonly referred to as ‘right to work’ states,
while those without are called ‘non-right to work’ states. Today
(March 2016), half of the states in America have ‘right to work’
laws in place (United States Department of Labor, n.d.-a).
Fair Labor Standards Act (FLSA)
Despite the tremendous impact of the NLRA (discussed supra),
it became apparent that minimum standards of employee
working conditions still needed to be legally prescribed in order
to curb employer abuses. Thus, the next piece of legislation
furthering worker rights was the Fair Labor Standards Act
(FLSA) which came just three years after the NLRA in 1938.
The goal of the FLSA was to improve compensation and labor
conditions for American workers, particularly in manufacturing,
which was the dominant industry of the time. In this lesson, we
will discuss the minimum wage and overtime mandates of the
FLSA; Lesson Eight will discuss other important features of the
act.

4. MINIMUM WAGE
One of the biggest components of the FLSA was a federally
mandated minimum wage (United States Department of Labor,
n.d.-b). Prior to a minimum wage standard, employers were free
to leverage the supply and demand dynamics of available work
to force people into labor for deplorable compensation.
Congress justified their power to regulate wages on almost
every business by way of the Interstate Commerce Clause, and
the very first minimum wage was set in 1938 (at the time of the
FLSA’s enactment) at $.25, which would be just $4.19 in
today’s dollars (after adjustment for inflation) (CNN Money,
n.d.). However, that wage has obviously been continuously
amended since then, and the current minimum wage (as of
March 2016) is $7.25; it was last adjusted to this amount in July
2009.
Although the federal minimum wage prescribes the national
compensation floor, it is important to keep in mind that states
are free to set their own minimums at higher levels than the
federal rate, and in fact, 29 states and Washington D.C. have
done so (National Conference of State Legislatures, 2016). In
addition to state laws that amend the minimum wage, HR
professionals should remember that unions may negotiate higher
mandatory wages with employers pursuant to the NLRA.
Exceptions to Minimum Wage Mandate
There are a few exceptions to the FLSA minimum wage mandate
worth noting. HR professionals need to be very familiar with all
laws which pertain to their industry, and ensure their practices
conform.
· EXCEPTION 1
The first is that any business which generates less than
$500,000 USD in annual sales is exempted from the minimum
wage requirement. This exception is designed to prevent federal
law from crushing small business growth with unfeasibly
burdensome labor costs. However, there is also an exception to
the exception: hospitals, schools, and public agencies must
abide by the federal minimum wage notwithstanding their size

5. or revenue volume (United States Department of Labor, 2009a).
· EXCEPTION 2
Another exception to the minimum wage mandate is for tipped
employees. Under current law (March 2016), any employee who
regularly receives more than $30 in tips per month is exempt
from minimum wage standards, and so his or her employer can
credit a percentage of their tips in order to meet the federal
wage standard (United States Department of Labor, 2013).
· EXCEPTION 3
A final exception to the minimum wage mandates concerns
employment of younger employees. First, the FLSA prohibits
the employment of anyone under the age of 14 in the interest of
outlawing child labor. However, under the FLSA, employers in
certain industries (retail, services, agriculture, or post-
secondary education) are permitted to pay full-time college
students 85 percent of the federal minimum wage. For high
school students at least 16 years of age and enrolled in
vocational education programs, an employer may pay the
student 75 percent of the federal minimum wage. In both cases,
student employees are limited to 20 hours per week while
school is in session, and the employer must file for a certificate
beforehand with the United States Department of Labor (United
States Department of Labor, 2010). However, it is important to
note that employers are prohibited from using these reduced
wage incentives to replace other active employees who are
legally entitled to higher wages.
The first is that any business which generates less than
$500,000 USD in annual sales is exempted from the minimum
wage requirement. This exception is designed to prevent federal
law from crushing small business growth with unfeasibly
burdensome labor costs. However, there is also an exception to
the exception: hospitals, schools, and public agencies must
abide by the federal minimum wage notwithstanding their size

6. or revenue volume (United States Department of Labor, 2009a).
Overtime Pay
In addition to minimum wage standards, the FLSA also governs
mandatory overtime pay for workers. Prior to overtime pay
regulation, employers could force employees to work
inhumanely long hours without any additional compensation.
The FLSA overtime rules require that employees who work
more than 40 hours in any given week be paid at least time-and-
a-half for all hours over forty (United States Department of
Labor, n.d.-c).
IMPORTANT CAVEATS
NUMBER OF HOURS
First, neither the FLSA nor any other federal legislation caps
the number of hours which an employer can require an
employee to work. Employers are free to require that their
employees work as many hours as the employer pleases, and if
an employee refuses, the employer may legally terminate him or
her for cause. However, the reality of the overtime
compensation mandate under FLSA means that hours over 40
for each employee are much more (50% more) expensive for the
employer, and thus employers are financially incentivized by
this law to limit employee hours and avoid overtime whenever
possible.
Additionally, employers who work employees unreasonably
long hours run the risk that the employee might make poor
judgments and cause unnecessary risk of negligence through
being sleep-deprived or otherwise just “burnt out”, so this is yet
another incentive for employers to be reasonable with respect to
required hours (United States Department of Labor, 2008b).
HOURS OVER 40
Another important thing to remember about the overtime
requirement is that it mandates time-and-a-half pay on any
hours over 40 per week. This is important because not all
employers pay employees on a weekly basis. Recently,

7. employers have begun to realize that paying employees less
frequently results in reduced overhead costs for the payroll
function. Since there are no federal regulations governing pay
frequency many employers are choosing to pay their employees
bi-weekly or even monthly (Reeves, 2014). However, many
states have enacted laws to restrict pay periods.
However, just because the pay interval is increased does not
mean that hours from more than one week can be aggregated for
the sake of calculating overtime pay. For example, suppose an
employer pays his employees bi-weekly, and in a given pay
period, one of his employees works 60 hours in the first week
and 20 hours in the second. The employer is not permitted to
aggregate the hours and deny overtime pay based on the fact
that the employee’s total hours across the two weeks (80) are
that which would be expected from two 40-hour work weeks (or
because the average of the two weeks is 40 hours per week).
Instead, the employer must pay overtime compensation for the
20 hours of overtime that the employee accrued in the first
week, notwithstanding hours in the second week.
CLASSIFIED AS EXEMPT
A final important matter to consider with respect to the
overtime mandate is that some employees may be classified as
exempt from these rules based on their duties. Whether or not
an employee can be classified as exempt under FLSA is usually
determined by three factors:
1. The amount of compensation: Employees paid less than
$23,600 per year are considered non-exempt. On the other end
of the spectrum, most employees compensated at $100,000 or
more are considered exempt, but this is not true in every case.
2. How compensation is structured: If an employee is paid a
fixed salary not subject to change based on hourly production or
productivity, they are more likely to be construed as exempt.
There are, however, a host of exceptions and acceptable pay
modifications that employers may make while still finding an
employee exempt under FLSA.

8. 3. The nature of the position: Employees are likely to be
considered exempt if they regularly supervise two or more other
employees as a primary duty of their position, and have input on
the status of such employees’ jobs.
Generally speaking, executive and administrative employees
may be eligible for exemption. However, it is important to note
that titles are of very little significance in a legal assessment of
eligibility for exemption. An employer can call any employee a
“manager” if they wish, but if the circumstances of that
employee’s job do not meet the standards for exemption, his or
her title will not affect such a finding. There is also a special
exemption for “professional” employees who might not
otherwise meet the above-described test; this exception applies
to the traditional notion of “profession” which includes doctors,
lawyers, dentists, teachers, architects, clergy, etc. (United
States Department of Labor, 2008a).
As with the minimum wage standard, it is important to
remember that states are free to tighten restrictions on overtime
laws, and set additional thresholds for compensation. For
example, in addition to FLSA standards, California requires that
employers in the state pay their employees time-and-a-half for
any hours over eight in a workday, and double time pay for any
hours over 12 in a workday (FindLaw, n.d.). There are also
special exceptions for certain industries at the federal level;
nursing, for example, may adopt an “8 and 80” rule where they
pay overtime pay for any hours beyond eight in a day or 80 in a
two-week pay period (United States Department of Labor,
2009b). Also, unions may negotiate with employers for
additional compensation beyond federal and state mandates. HR
professionals should be familiar with the federal and state laws
(as well as any exceptions) that control their industry, and
union contracts, if applicable.

9. RECENT ADJUDICATION
Em p l o y m e n t Law — N a t io n a l La b o r Re l a t io n s
Ac t —
NLRB C l a s s if ie s Ca n v a sse r s as E m p l o y e e s , N o
t I n d e -
p e n d e n t C o n t r a c t o r s . — Sisters’ Camelot, 363
N.L.R.B. No. 13
(Sept. 25, 2015).
W hat it means to “work” is changing. Many have eschewed the
traditional nine-to-five job for more flexible, often one-time
“gigs”: de­
livering groceries, fixing a sink, driving a stranger to the
airport. Sup-
ported by online intermediaries such as Uber and Task Rabbit,
this
growing gig economy1 offers greater freedom for workers and
busi-
nesses alike. But at the same time, it has raised questions about
the
existing categories of employment law. Already, disputes have
ignited
over whether gig workers are employees or merely independent
con-
tractors under the law.2 Traditionally, one of the most crucial
factors
indicating the existence of an employment relationship has been
the
w orker’s loss of autonomy.3 The challenge in the gig economy
—
where everyone gets to “be their own boss”4 5 — is to
determine who, if
anyone, still counts as an employee under this test. Recently, in
Sisters’ Camelot,s the National Labor Relations Board did just
that,

10. finding that door-to-door canvassers with flexible work
schedules were
employees within the meaning of the National Labor Relations
Act.6
The Board concluded that the canvassers — while free to choose
when
and how much to work — still faced many of the same
constraints as
traditional employees and were therefore entitled to the same
protec-
tions.7 The B oard’s decision demonstrates how existing legal
catego-
1 See Se t h D. H a r r is & Al a n B. Kr u e g e r , T h e H a
m il t o n P r o j e c t , A P r o p o s a l
f o r Mo d e r n i z in g La b o r Laws f o r T w e n t y -Fir s t
-C e n t u r y Wo r k : T h e “In d e ­
p e n d e n t WORKER” 12 (2015) (estimating that at least
600,000 workers participate in the online
gig economy); McKlNSEY GLOBAL INSTITUTE, A LABOR
MARKET THAT WORKS 33 (2015)
(noting that “contingent workers” in “digital marketplaces” are
a “rapidly growing” segment of the
U.S. working-age population).
2 The distinction is important. Employees are entitled to all the
benefits and protections as-
sociated with this status under various laws, including minimum
wages, overtime compensation,
and the right to collective bargaining. Contractors are not. As
such, many gig workers have ini-
tiated misclassification suits against online intermediaries such
as Uber and Lvft. See, e.g.,
O ’Connor v. Uber Techs., Inc., No. C-13-3826, 2015 WL
5138097 (N.D. Cal. Sept. 1, 2015); Cotter
v. Lyft, Inc., 60 F. Supp. 3d 1067 (N.D. Cal. 2015).

11. 3 See H a r r is & Kr u e g e r , supra note I, at 8 tbl.i.
4 Uber and the American Worker: Remarks from David Plouffe,
U b e r : NEWSROOM (Nov. 3,
2015), https://newsroom .uber.com /1776 [http://perm a.cc/X Z
6F-B L C V ]. Uber has reported that
“nearly 90 percent of [its] drivers choose Uber because they
want to be their own boss and set
their own schedule.” Id.
5 363 N.L.R.B. No. 13 (Sept. 25, 2015).
6 29 U.S.C. §§ 151-169 (2012); id. at 1.
7 See id. at 2-6.
2039
https://newsroom.uber.com/1776
http://perma.cc/XZ6F-BLCV
2040 HARVARD LAW REVIEW [Vol. 129:2039
ries can and do incorporate nontraditional workers. Flexible or
not,
many relationships in the gig economy are still shaped by the
very
power asymmetries that define an employment relationship —
and
should be recognized as such.
Sisters’ Camelot is a nonprofit organization in Minnesota that
dis-
tributes food to low-income individuals.8 It funds its operations
al-
most entirely through donations collected by door-to-door

12. canvassers,
who operate on a flexible schedule and can choose whether to
work on
any given day.9 Those who do decide to work must show up at
the
Camelot facility at a particular time to be transported to their
desig-
nated canvassing area.10 Canvassers can solicit donations only
within
their assigned area, and only for Camelot — they are prohibited
from
soliciting for other organizations at the same time, and can be
disci-
plined for doing so.* 11 They are also required to keep detailed
records
on each house they visit.12 At the end of their shift, the
canvassers de-
liver their collected donations and are transported back to the
facili-
ty.13 Each canvasser receives a nonnegotiable commission
based on
individual donations collected.14
Christopher Allison was one of these canvassers. In 2013,
Camelot
learned that Allison was involved in efforts to organize a
canvassers’
union.15 He was fired.16 His fellow canvassers were warned
that, de-
spite their efforts, they could not “force [Camelot] into the role
of boss-
es.”17 The canvassers filed a complaint with the Board, alleging
viola-
tions of their right to organize under the National Labor
Relations
Act.18 An essential premise of their argument was that they

13. were em-
ployees within the meaning of the Act and entitled, as such, to
protec-
tion from unfair labor practices.19
An administrative law judge dismissed their complaint,20
ruling that the canvassers were independent contractors, not
employ-
8 Id. at 1.
« Id.
10 Id.
11 Id. at 2, 4.
12 Id. at 1, 2.
13 Id. at 1.
14 Id. at 4.
15 Id. at 6.
16 Id.
n Id.
18 The canvassers alleged that Sisters’ Camelot committed
unfair labor practices by terminat-
ing Allison, by warning the canvassers that their organizing
efforts would be futile, and by grant-
ing them certain benefits in order to dissuade them from further
union activities. Id. at i; see also
29 U.S.C. §§ 157-158 (2012).
19 See 29 U.S.C. § 157 (“Employees shall have the right to self-
organization . . . .” (emphasis
added)).
20 Sisters’ Camelot, No. 18-CA-100514, slip op. at 7 (NLRB
Div. of Judges Aug. 7, 2013).

14. 2 0 1 6 ] R E C E N T A D JU D IC A T IO N 2 0 4 1
ees. 21 Crucial to this conclusion were the judge’s findings that
the
canvassers were in control of their own schedules and lacked
direct
supervision. 22 The judge emphasized that the canvassers were
free to
make important choices: whether to show up for their shifts and,
dur-
ing their shifts, whether to “work . . . or goof-off. ” 23 Under
his analy-
sis, these facts “strongly indicate[d] independent contractor
status. ” 24
On review, a three-member panel of the Board25 reversed the
judge’s dismissal, finding that the canvassers were employees
protect-
ed under the Act. 26 Consistent with its longstanding approach,
the
Board undertook a holistic consideration of “all of the incidents
of the
relationship” 27 between Camelot and its canvassers. It applied
a mul-
tifactor test and concluded that nine out of the eleven relevant
factors
indicated the existence of an employment relationship. 28 In
stark con-
trast to the judge’s analysis below, the Board determined that —
not-
withstanding the canvassers’ “freedom to work or not work as
they
choose” 29 — Camelot still imposed significant constraints on
the can-

15. vassers’ choices and opportunities. The Board emphasized that
the
canvassers, once on the clock, worked at set times and
locations. 3 0
21 Id. Recognizing, however, that “a reviewing body may
conclude otherwise,” id., the judge
also addressed the merits of the complaint, finding th at — i f
the canvassers were employees —
Camelot did indeed violate their rights under the Act, id. at 9.
22 See id. at 7.
23 Id. at 4.
24 Id. The judge applied the B oard’s longstanding multifactor
test for determining whether an
individual is an employee or an independent contractor. See id.
At the time of his decision, the
test consisted of ten factors: (1) the extent of control by the
employer; (2) whether the individual is
engaged in a distinct occupation or business; (3) the extent of
supervision by the employer; (4) the
skill required in the occupation; (5) whether the employer
supplies the instrumentalities, tools, and
place of work; (6) the length of time the individual is employed;
(7) the method of payment; (8)
whether the work is part of the regular business of the
employer; (9) the understanding between
the parties; and (10) whether the employer is in the business.
See Roadway Package Sys., Inc.,
326 N.L.R.B. 842, 849 n.32 (1998). The judge found that all but
two factors (the skill required
and whether the employer supplied the instrumentalities of
work) favored independent contractor
status. Sisters’ Camelot, slip op. at 3-7.

16. 25 The panel consisted of Chairman M ark Gaston Pearce, Kent
Hirozawa, and Lauren
McFerran.
26 See Sisters’ Camelot, 363 N.L.R.B. No. 13, at 1, 5—6. The
Board also agreed with the judge
that Camelot had violated the Act by terminating Allison and by
its statement of futility. Id. at 6.
27 Id. at 2 (quoting FedEx Home Delivery, 361 N.L.R.B. No.
35, at 1 (Sept. 30, 2014)); see also
NLRB v. United Ins. Co. of Am., 390 U.S. 254, 258 (1968).
28 The Board applied the multifactor test as articulated and
refined in FedEx Home Delivery,
361 N.L.R.B. No. ss, a decision issued after the judge’s ruling
in Sisters’ Camelot. See Sisters’
Camelot, 363 N.L.R.B. No. 13, at 2. Analyzing the same ten
factors as the judge below, the
Board found that all but two (length of employment and the
parties’ understanding of the rela­
tionship) weighed in favor of employee status. Id. at 5. The
Board also considered an eleventh
factor set forth in FedEx — whether the individual in question
is rendering services as an inde-
pendent business — and found that this, too, indicated an
employment relationship. See id.
29 Sisters’ Camelot, 363 N.L.R.B. No. 13, at 2.
30 See id.
2 0 4 2 HARVARD LAW REVIEW [Vol. 129:2039
Their compensation was nonnegotiable. 31 Detailed records of

17. their
canvassing allowed Camelot to supervise their activities with
“close
scrutiny. ” 32 And canvassers had no control over “important
business
decisions” that could affect their profit or loss: where, how, and
from
whom to solicit. 33 Considered together, these facts all pointed
toward
an employment relationship.
The Board’s decision offers important lessons for the gig
economy.
By recognizing the canvassers as employees, the Board signaled
its
continued commitment34 to accommodating — and protecting
— non-
traditional forms of work. The flexible relationship between
Camelot
and its canvassers invites comparisons to the broader gig
economy. 35
And while the Board’s specific findings are highly fact bound,
its
broader reasoning provides useful guidance on how to
categorize
workers in the gig economy. In Sisters’ Camelot, the Board
made clear
that, despite shifting boundaries, the existing categories of
“employee”
and “independent contractor” are still viable — capacious
enough to
capture new, unconventional work patterns, but narrow enough
to
confer protection only on those relationships that warrant it.
The Board’s premise — a fundamental one in employment law

18. —
is that all workers fall on one side of a distinct dichotomy:
employee, or
independent contractor. But when it comes to gig workers, this
prem-
ise has been challenged. Commentators have been quick to point
out
that many aspects of the gig economy — the flexible schedules,
the lack
of in-person supervision, the ability to work for many
businesses at the
same time — defy simple classification. 36 Some
decisionmakers agree,
contending that the current legal framework is too rigid to
accommo-
date the now-countless variations of work. In a lawsuit against
Lyft, a
federal judge lamented that the categorization of gig workers is
an un-
31 See id. at 4.
32 Id. at 5; see also id. at 3.
33 Id. at 5.
34 Sisters’ Camelot is consistent with a series of NLRB
decisions conferring employee status on
part-time or otherwise flexible workers. See, e.g., FedEx Home
Delivery, 361 N.L.R.B. No. 55
(Sept. 30, 2014) (FedEx delivery drivers); Lancaster Symphony
Orchestra, 357 N.L.R.B. 1761
(2011) (orchestra musicians); Roadway Package Sys., Inc., 326
N.L.R.B. 842 (1998) (delivery
drivers).
35 Some commentators have already picked up on the decision’s
potential implications for

19. Uber drivers. See, e.g., Brian Mahoney, N LRB Speaks on Indy
Contractors, P O L IT I C O (Sept. 28,
2015, 10:00 AM), http://www.politico.com/tipsheets/morning-
shift/2015/09/nlrb-v-gig-econom y
-u a w -fia t-d e a l-in -je o p a rd y -jo in t-e m p lo y e r-u p d
a te -2 10419 [http://perm a.cc/8U S C -S B U M ];
Benjamin Sachs, New N LRB Decision on Independent
Contractors, ON L A B O R (Sept. 28, 2015),
http://0nlab0r.0rg/2015/09/28/new -nlrb-decisi0n-0n-
independent-c0ntract0rs [http://perm a.cc
/EH4R-3HLU].
36 See, e.g., H a r r i s & K R U E G E R , supra note I, at 6—
10; Greg Ip, As the Gig Economy Chang-
es Work, So Should Rules, W A L L ST. J. (Dec. 9, 2015, 12:49
PM), http://www.wsj.com/articles/as
-the-gig-economy-changes-work-so-should-rules-1449683384.
http://www.politico.com/tipsheets/morning-shift/2015/09/nlrb-
v-gig-economy
http://perma.cc/8USC-SBUM
http://0nlab0r.0rg/2015/09/28/new-nlrb-decisi0n-0n-
independent-c0ntract0rs
http://perma.cc
http://www.wsj.com/articles/as
2 0 1 6 ] R E C E N T A D JU D IC A T IO N 2 0 4 3
tenable endeavor — like being “handed a square peg and asked
to
choose between two round holes. ” 37 Professors Seth Harris
and Alan
Krueger have proposed creating a new legal category, the
“independent
worker,” for those who occupy the “middle ground between

20. traditional
employees and independent contractors. ” 38 Their argument is
that the
existing legal framework cannot adequately identify who
deserves
which benefits and protections under the law, creating
uncertainty, in-
efficiency, and opportunities for regulatory arbitrage. 39 In
their view,
working relationships in the gig economy are “not so dependent,
deep,
extensive, or long lasting” that businesses like Uber should be
com-
pelled to “assume responsibility for all aspects of . . . workers’
econom-
ic security” 4 0 — that is, to take on “the role of bosses. ” 41
W hat complicates this view is that, in reality, many workers in
the
gig economy are deeply dependent on the businesses that hire
them.
Harris and Krueger characterize the many laws that regulate the
em-
ployment relationship as reflecting a “social compact between
employ-
ees and employers, ” 42 with employees sacrificing their
autonomy in ex-
change for some degree of economic security. 43 Some gig
workers find
themselves making exactly this kind of sacrifice, but without
receiving
protection in return . 44
Moreover, Harris and Krueger premise their argument on the
idea
that gig workers “do not fit easily into the existing legal

21. definitions of
‘employee’ and ‘independent contractor’ status. ” 45 Granted,
the par-
ticular details of work might look different in the gig economy,
but, as
the Board has consistently recognized, careful consideration of
the rel-
evant factors46 can still uncover employment relationships
where they
37 Cotter v. Lyft, Inc., 60 F. Supp. 3d 1067, 1081 (N.D. Cal.
2015).
38 HARRIS & Kr u e g e r , supra note 1, at s. Their
paradigmatic example is the Uber driver
Id.
39 See id. at 6-7.
40 Id. at 8. Harris and Krueger argue that independent workers
should be entitled to some,
but not all, of the benefits associated with employee status. See
id. at 15-21.
41 Sisters’ Camelot, 363 N.L.R.B. No. 13, at 6.
42 H a r r is & Kr u e g e r , supra note 1, at 6.
43 See id. at 7.
44 Professor Benjamin Sachs has applied this argument to Uber
drivers. See, e.g., Benjamin
Sachs, Do We Need an “Independent Worker” Category?, ON
LABOR (Dec. 8, 2015),
http://0nlab0r.0rg/2015/12/08/d0-we-need-an-independent-
w0rker-categ0ry [http://perma CC/VN3U
-3RTE],
45 H a r r is & Kr u e g e r , supra note 1, at 2.
46 The test for determining employee status varies across

22. statutes and jurisdictions, but most
courts and agencies emphasize similar factors, such as control.
See, e.g., Nationwide Mut. Ins.
Co. v. Darden, 503 U.S. 318, 323-24 (1992) (articulating a
multifactor test for determining em-
ployee status under ERISA, including the “right to control the
manner and means” of work, id. at
323 (quoting Cmty. for Creative Non-Violence v. Reid, 490
U.S. 730, 751 (1989))); Sec’y of Labor
V. Lauritzen, 835 F.2d 1529, 1534-35 (7th Cir. 1987)
(articulating a six-factor “economic reality”
test, id. at 1534, for determining employee status under the Fair
Labor Standards Act (FLSA),
http://0nlab0r.0rg/2015/12/08/d0-we-need-an-independent-
w0rker-categ0ry
http://perma
2044 HARVARD LAW R E V I E W [Vol. 129:2039
exist. In Sisters’ Camelot, the Board’s analysis of three factors
in par-
ticular — control, supervision, and entrepreneurial opportunity
—
shows how. 47
One of the most important factors indicating an employment
rela-
tionship is control. Traditionally, employers have exercised
control
over their employees by dictating wages, hours, and working
condi-
tions. In the gig economy, none of these usual mechanisms are a
given.

23. Many gig workers today have broad discretion over when,
where, and
how much to work. The Board’s analysis in Sisters’ Camelot,
howev-
er, suggests that such discretion does not necessarily deprive a
worker
of employee status. Like many gig workers, Camelot’s
canvassers
were “free[] to work or not work as they [chose] , ” 4 8 but the
Board con-
cluded that “such discretion [was] outweighed by the control” 4
9 that
Camelot otherwise exercised over their work lives — for
example, by
setting their daily start and end times, requiring detailed
recordkeep-
ing, restricting their canvassing area, and disciplining them . 50
The key
inquiry for the Board was not whether Camelot controlled the
can-
vassers’ schedules, but rather how much control it exercised
when the
canvassers did decide to work. The Board opted for a broad
under-
standing of control, recognizing that, especially in
nontraditional work
arrangements, it can often take atypical forms.
Another factor often used to distinguish employees from
indepen-
dent contractors is supervision. Assessing this factor can be
difficult in
the gig economy, where online intermediaries dominate and in-
person
supervision is rare. Lack of direct supervision does not,
however, pre-

24. clude a worker from employee status. In Sisters’ Camelot, the
Board
acknowledged that the canvassers were “not generally subject to
in-
person supervision” — in part because it would have been
“highly im­
practical” — but still found a “significant level of oversight” in
the re-
lationship, achieved through detailed recordkeeping
requirements. 51
Notably, the Board measured supervision in relative terms,
based on
what was practicable in that context. 52 This approach offers a
means
including “the nature and degree of the alleged employer’s
control,” id. at 1535); see also S.G.
Borello & Sons, Inc. v. D ep’t of Indus. Relations, 769 P.2d
399, 404 (Cal. 1989) (emphasizing “the
right to control work details,” among other factors indicating
employee status); Rev. Rul. 87-41,
1987-1 C.B. 296 (outlining the Internal Revenue Service’s
twenty-factor test for determining
“whether sufficient control is present to establish an employer-
employee relationship”).
47 For a discussion on how the B oard’s analysis of these
factors sheds light on the classification
of Uber drivers, see Sachs, supra note 35.
48 Sisters’ Camelot, 363 N.L.R.B. No. 13, at 2.
49 Id. at 2 n.5.
50 Id. at 2.
51 Id. at 3.
52 See id.-, see also Mitchell Bros. Truck Lines, 249 N.L.R.B.
476, 481 (1980) (evaluating su-

25. pervision in the context of “the nature of the occupation”),
overruled in part on other grounds by
Container Transit, Inc., 281 N.L.R.B. 1039 (1986).
2 0 1 6 ] R E C E N T A D JU D IC A T IO N 2 0 4 5
of distinguishing between the many online intermediaries in the
gig
economy. While many of them maintain a strict hands-off
model,
some of them — such as Uber and Instacart — have detailed
feedback
mechanisms to enable remote monitoring, 53 suggesting the
existence of
an employment relationship.
One final factor bearing on a w orker’s status is his
entrepreneurial
opportunity for profit or gain. For many gig workers, a
significant
draw is the potential to “make good money” 54 — conditioned,
of
course, on how much they choose to work. But their
opportunities for
profit are limited in other ways, too. In Sisters’ Camelot, the
Board
demonstrated a strong awareness of these constraints, stressing
that
the relevant test is “actual, not merely theoretical,
entrepreneurial op-
portunity. ” 55 Although Camelot’s canvassers were free to
work for
other organizations, these opportunities for extra profit were

26. out-
weighed, in the Board’s view, by the substantial limits imposed
on en-
trepreneurial initiative: commission rates were nonnegotiable,
and
canvassers were prohibited from soliciting outside their
assigned areas
or for other organizations during their shifts. 56 There was little
that
the canvassers could do — besides working harder, in theory —
to in-
crease their profits. The Board’s actual-opportunity test offers
another
means for distinguishing between the different kinds of
relationships in
the gig economy. On this factor, setting fixed rates, like Uber
does, 57
might indicate an employment relationship, whereas using a
bidding
model or allowing workers to set their own prices — like Agent
Any-
thing58 and Sidecar59 do — might not.
The Board’s analysis of these three factors makes clear that
many
of the distinctive features of the gig economy — the flexible
schedules,
the lack of in-person supervision, and the promise of
entrepreneurial
opportunity — do not disqualify its workers from employee
status. On
the contrary. When applied with nuance, as in Sisters’ Camelot,
the
Board’s multifactor test reveals that even nontraditional “gigs”
can

27. 53 See, e.g., O ’Connor v. Uber Techs., Inc., No. C-13-3826,
2015 WL 5138097, at *19 (N.D.
Cal. Sept. 1, 2015) (“Uber maintains a uniform ability to
monitor certain aspects of its drivers’
performance, principally through the star rating system and
other rider feedback___ ”).
54 Sign Up to Drive with Uber, UBER,
https://get.uber.com/drive [http://perma.cc/U32L
-SA7H]. Uber entices drivers with the promise of substantial
profits: “Got a car? Turn it into a
money machine.” Id.
55 Sisters’ Camelot, 363 N.L.R.B. No. 13, at 5 (emphasis
added) (citing FedEx Home Delivery,
361 N.L.R.B. No. 55, at 1 (Sept. 30, 2014)).
56 Id. at 4-5.
57 E.g., O’Connor, 2015 WL 5138097, at *17 (“[T]he evidence
is clear that Uber sets its drivers’
pay without any input or negotiation from the drivers.”).
58 See How It Works, AGENT An y t h i n g ,
http://www.agentanything.com/how-it-works
[http://perma.cc/WL7H-DMDXl.
59 See Take Control with the New Sidecar, SIDECAR, http://m
arketplace.side.cr/driver [http://
perma.cc/9SC8-TYSQ].
https://get.uber.com/drive
http://perma.cc/U32L
http://www.agentanything.com/how-it-works
http://perma.cc/WL7H-DMDXl
http://marketplace.side.cr/driver

28. 2046 H A R V A R D L A W R E V I E W [Vol. 129:2039
impose significant constraints on a w orker’s autonomy. These
con-
straints are precisely what define an employment relationship.
W hat will be difficult for decisionmakers, going forward, is to
rec-
ognize those constraints in new and diverse work arrangements.
Gig
workers can fit into the traditional dichotomy of employees and
inde-
pendent contractors, but, as the detailed analysis in Sisters’
Camelot
shows, not without close scrutiny of the facts. 6 0 Harris and
Krueger
have argued that the classification of gig workers will require
“long,
costly, and uncertain legal battles, ” 61 and that persistent
uncertainty
about their status exacerbates the risk of misclassification, with
busi-
nesses “reorganizing] their work to . . . avoid providing
required bene-
fits and protections. ” 62 Reliance on complex, multifactor tests
only
adds to the uncertainty. 63 The existing categories may still
work, but
for them to work well, legislatures, courts, and agencies may
want to
consider stronger decisionmaking rules — such as explicit
statutory
protections for gig workers64 or, more broadly, a default
presumption

29. in favor of employee status. 65
Without a doubt, the gig economy will continue to test our
under-
standing of what “work” means. And the classification of its
workers
will present distinct challenges. But the gig worker is not a
“square
peg. ” 66 As the Board demonstrated in Sisters’ Camelot, even
nontradi-
tional working relationships can fit comfortably within the
existing
framework of employment.
60 Not all of the facts found in Sisters’ Camelot are applicable
to all gig workers. For example,
the canvassers were unable to choose their “daily start and end
times,” Sisters’ Camelot, 363
N.L.R.B. No. 13, at 2, and did not provide their own tools,
“only their own pens,” id. at 3. For
workers who have more flexible schedules, or who provide their
own tools — using, for example,
their own cars — questions about their legal status might still
remain.
61 H a r r is & Kr u e g e r , supra note 1 , at 6.
62 Id. at 7.
63 This concern is not new. Judge Easterbrook raised it in
Secretary o f Labor v. Lauritzen, 835
F.2d 1529 (7th Cir. 1987), where the Seventh Circuit
determined that migrant pickle pickers were
employees under the FLSA. See id. at 1534-38. In his
concurrence, Judge Easterbrook lamented
that the court’s multifactor test “offer[ed] little guidance for
future cases,” making it difficult for

30. businesses to structure their behavior. Id. at 1539 (Easterbrook,
J., concurring). “Why keep cu­
cumber farmers in the dark about the legal consequences of
their deeds?” he asked. Id.
64 Recently, the Seattle City Council unanimously passed a bill
allowing drivers for Uber, Lyft,
and other ride-hailing apps to unionize. See Nick Wingfield &
Mike Isaac, Seattle Will Allow
Uber and Lyft Drivers to Form Unions, N.Y. TIMES (Dec. 14,
2015), http://www.nytimes.com
/2015/12/15/technology/seattle-clears-the-way-for-uber-drivers-
to-form-a-union.html.
65 Some countries, including Mexico, the Netherlands, and
Portugal, have adopted statutes
establishing a rebuttable presumption in favor of employee
status. See HARRIS & KRUEGER,
supra note 1, at 6. Recently, the U.S. Department of Labor
issued a new interpretation of the
FLSA that represented a small step in this direction,
emphasizing that the Act was “specifically
designed to ensure as broad of a scope of statutory coverage as
possible” and should be interpret­
ed to include “most workers” as protected employees. See U.S.
Dep’t of Labor, Wage & Hour
Div., A dministrator’s Interpretation No. 2015-1 (July 15,
2015).
66 Contra Cotter v. Lyft, Inc., 60 F. Supp. 3d 1067, 1081 (N.D.
Cal. 2015).
http://www.nytimes.com
Copyright © 2016 by The Harvard Law Review Association.

31. Copyright of Harvard Law
Review is the property of Harvard Law Review Association and
its content may not be copied
or emailed to multiple sites or posted to a listserv without the
copyright holder's express
written permission. However, users may print, download, or
email articles for individual use.
FAIR LABOR FRAUD: THE PECULIAR INTERPLAY OF
CIVIL
RICO AND THE FEDERAL MINIMUM WAGE ACT
Jam^s W. Crooks*'
This Note examines the interaction between the Fair Labor
Standards Act (FLSA), which guarantees a minimum wage and
over-
time pay to most categories of employees, and the civil
remsdies of the
Racketeer Influenced and Corrupt Organizations Act (RICO). In
the
past few years, plaintiffs have argued that employers commit
mail fraud
by mailing inadequate paychecks to employees, a predicate act
that these
plaintiffs argue creates civil RICO liability. Most courts
confronted with
these FLSA-based RICO claims have dismissed them, arguing
that the
FLSA's detailed remedial scheme precludes a RICO remedy for
this con-
duct. This Note examines the text and history of the two
statutes, as well

32. as case law on analogous interactions between RICO, the FLSA,
and
other employment laws, and determines that courts should not
categori-
cally dismiss FLSA-based RICO claims. Rather, judges should
examine
the conduct underlying the claims in each case to determine
whether the
defendant in fact committed mail fraud. If so, the judge should
allow
the claim to proceed as a RICO action, as nothing in either
statute pre-
cludes such a result. By focusing on the conduct underlying the
claim,
judges can best carry out Congress's intent to guarantee a fair
wage for
a fair day's work.
INTRODUCTION
Croup lawsuits brought by underpaid and overworked
employees
are the most common type of group action brought in federal
court, ac-
counting for nearly twenty percent of all such lawsuits.' These
suits focus
primarily on violations of minimum wage and overtime laws
prescribed
by statute.^ Since its passage in 1938, the Fair Labor Standards
Act
* J.D. Candidate 2013, Columbia Law School.
1. Marc H. Harwell & Mary DeCamp, Class Action Litigation
Issues in a Wage and
Hour Discrimination Context, 58 Fed'n Def & Corp. Couns. Q.

33. 269, 270 (2008).
2. This Note focuses on suits under the Fair Labor Standards
Act See infra note 3.
However, suits are often brought (in both federal and state
court) under state minimum
wage statutes. For examples of state wage statutes that create a
private right of action for
employees, see Conn. Gen. Stat Ann. §§ 31-58 to 31-76m (West
2011); IUinois Minimum
Wage Law, 820 111. Gomp. Stat Ann. 105/1-/15 (West 2009);
Pennsylvania Wage Payment
& Collection Law, 43 Pa. Cons. Stat Ann. §§ 260.1-.45 (West
2009). For examples of law-
suits under these respective state laws, see Neary v. Metro.
Prop. & Cas. Ins. Co., 472 F.
Supp. 2d 247 (D. Conn. 2007); Mitchell v. JCG Indus., 792 F.
Supp. 2d 1005 (N.D. 111.
2011); De Asencio v. Tyson Foods, Inc., 500 F.3d 361 (3d Gir.
2007).
2153
2154 COLUMBIA LAW REVIEW [Vol. 112:2153
(FLSA)* has set these wage and hour standards at the federal
level.
Despite the ubiquity of such lawsuits, however, the FLSA's
substan-
dve guarantees are chronically underenforced.* One plausible
explana-
don for this undexenforcement is that FLSA plaintiffs are not
permitted

34. to sue in a typical class acdon under Federal Rule of Civil
Procedure 23,
which allows individuals' rights to be lidgated in a class acdon
without
their actual consent^ if other requirements are met.® By
contrast, the stat-
utory language of the FLSA has an explicit "opt-in"
requirement: In or-
der to join a group acdon, a putadve plaindff must give her
"consent in
3. Pub. L. No. 75-718, 52 Stat 1060 (1938) (codified as
amended at 29 U.S.C. §§ 201-
219).
4. See Craig Becker & Paul Strauss, Represendng Low-Wage
Workers in the Absence
of a Class: The Peculiar Case of Secdon 16 of the Fair Labor
Standards Act and the Un-
derenforcement of Minimum Labor Standards, 92 Minn. L. Rev.
1317, 1318 (2008) (not-
ing "shocking rates cf noncompliance vnth [FLSA], pardcularly
in low-wage industries
such as the Janitorial, food service, garment, and hospitality
industries"); David Weil &
Amanda Pyles, Why Complain? Complaints, Compliance, and
the Problem of Enforce-
ment in die U.S. Workplace, 27 Comp. Lab. L. & Pol'y J. 59, 62
(2005) (finding odds of
employer being inspected by Department of Labor for wage
violadons to be well below
. 1 % in a given year); s-ee also Nat'l Emp t Law Project
Holding the Wage Floor: Enforce-
ment of Wage and Hour Standards for Low-Wage Workers in an
Era of Government Inac-
don and Employer Ur.accountability 3-7 (2006), available at

35. hup://nelp.3cdn.net/95b39
fc0al2a8d8a34_iwm6bihbv2.pdf (on file with the Columbia Law
Review) (documendng la-
bor violadons in certain industries, including esdmates that over
70% of garment employ-
ers in Southern Galifomia and 100% of poultry processing
plants are in violadon of wage
and hour laws).
5. Fed. R. Civ. P. 23(c)(3) (making judgment binding on all
members of class "who
have not requested exclusion, and whom the court finds to be
members of the class").
6. Rule 23(a) has threshold requirements that
(1) the class is sc numerous that joinder of all members is
impracdcable ['nu-
merosity']; (2) there are quesdons of law or fact common to the
class ['com-
monality']; (3) the claims or defenses of the representadve
pardes are typical of
the claims or defenses of the class ['typicality']; and (4) the
representadve par-
des will fairly and adequately protect the interests of the class
['adequacy'].
Fed. R. Civ. P. 23(a). Further, Rule 23(b) lays out the
requirements for pardcular types of
class acdons. Most class acdons for wage and hour lawsuits are
maintained under Rule
23(b)(3). See Daniel C. Lopez, Note, Collecdve Confusion:
FLSA Collective Acdons, Rule
23 Class Acdons, and aie Rules Enabling Act 61 Hasdngs LJ.
275, 287 n.lO6 (2009) (not-
ing Rule 23(b)(3) class acdons are most common in employment
law because "nearly all

36. [acdons for recovery imder wage and hour statutes] demand
exclusively monetary relief).
Rule 23(b) (3) requires that "quesdons of law or fact common to
members of the class
predominate over any quesdons affecdng only individual
members, and that a class acdon
is superior to other available methods for the fair and efficient
adjudicadon of the contro-
versy." Fed. R. Civ. P. 23(b)(3). For a more in-depth discussion
of the procedural require-
ments of Rule 23 class acdons, see generally Manual for
Complex Lidgadon (Fourth) § 21
(2004); 5 James Wm. Moore et al., Moore's Federal Pracdce (3d
ed. 2010); Stuart T.
Rossman et al., Nat'l Consumer Law Ctr., Consumer Class
Acdons (7th ed. 2010);
4 William Rubenstein et al., Newberg on Class Acdons (4th ed.
2002 & Supp. 2010); 7A-7B
Charies Alan Wright ei al.. Federal Pracdce and Procedure (3d
ed. 2005 & Supp. 2012).
2012] FAIR LABOR FRAUD 2155
writing."' This statutory requirement cannot be waived by a rule
of proce-
dure;^ thus, groups seeking recovery under the ELSA for being
over-
worked or underpaid cannot use Rule 23, under which a plaintiff
meet-
ing the Rule's requirements is considered a class member unless
she opts
out. ELSA plaintiffs must instead proceed in what has been
termed a "col-
lective action," in which each individual seeking recovery must

37. affirma-
tively opt in as required by the ELSA.̂
This opt-in requirement has a significant impact. Commentators
es-
timate that ELSA collective actions have seventy to eighty-five
percent
fewer members than would a class under Rule 23.'" The primary
cause of
this stark difference in class size is likely "inertia": "[N]otice
received in
the mail is just another piece of junk that the recipient has
neither the
time nor the interest to read, let alone act on."" It is likely that
this same
inertia leads to larger classes in Rule 23 class actions, as
individuals often
do not take the time or effort to opt out.'^ Whatever its cause,
this inertia
7. 29 U.S.C. § 216(b) (2006). While § 216(b) is the only federal
statute to explicitiy
require consent in writing, see 7B Wright et al., supra note 6, §
1807, its opt-in require-
ment is expressly referenced and incorporated into the Age
Discrimination in
Employment Act (ADEA), 29 U.S.C. § 626(b), and the Equal
Pay Act (EPA), id.
§ 206(d)(3). Thus, suits for recovery under these statutes are
similarly governed by the
FLSA's collective action procedure. See generally Elizabeth K.
Spahn, Resurrecting the
Spurious Class: Opting-In to the Age Discrimination
Employment Act and the Equal Pay
Act Through tiie Fair Labor Standards Act, 71 Geo. LJ. 119,
120 (1982) (noting ADEA

38. and EPA "were grafted onto the FLSA").
8. The Federal Rules of Civil Procedure are passed under
authority delegated by
Congress to the Supreme Court under the Rules Enabling Act
(REA), 28 U.S.C. § 2072
(2006). The REA states that "[s]uch rules shall not abridge,
enlarge, or modify any sub-
stantive right." Id. § 2072 (b). Thus, Rule 23's opt-out
requirements cannot be interpreted
to supersede § 216(b)'s opt-in requirement with respect to suits
under the FLSA. See, e.g.,
Damassia v. Duane Reade, Inc., 250 F.R.D. 152, 165 (S.D.N.Y.
2008) (finding § 216(b)
confers on defendants "the right to be free of the burden of
representative actions . . . for
violations of the FLSA" and thus may not be abrogated by Rule
23).
9. 7B Wright et al., supra note 6, § 1807 ("Collective actions
under the [FLSA] are a
unique species of group litigation."). The history behind the
FLSA's opt-in provision is
discussed infra notes 49-57 and accompanying text.
10. Matthew W. Lampe & E. Michael Rossman, Procedural
Approaches for Counter-
ing the Dual-Filed FLSA Collective Action and State-Law Wage
Class Action, 20 Lab. Law.
311,313 (2005) [hereinafter Lampe & Rossman, Procedural
Approaches] (estimating only
15% to 30% of similarly situated putative plaintiffs opt in to
such collective actions); see
also Becker & Strauss, supra note 4, at 1317-18 (noting
practical effect of FLSA opt-in
requirement is reduced class size because fewer people opt in,

39. lowering available damages
for class, and thus reducing plaintiffs' lawyers' incentive to
sue).
11. Ellis V. Edward D.Jones & Co., 527 F. Supp. 2d 439, 444
(W.D. Pa. 2007) (citing
Noah A. Finkel, State Wage-and-Hour Law Class Actions: The
Real Wave of "FLSA" Litiga-
tions?, 7 Emp. Rts. & Emp. Pol'y J. 159, 161, 174 (2003)).
12. Id. at 445. For an in-depth discussion of the importance of
default rules and their
so-called "stickiness" vritii respect to class actions, see Richard
A. Nagareda, The Préexist-
ence Principle and the Structure of the Class Action, 103
Colum. L. Rev. 149, 224 (2003)
(arguing necessary action required by opt-in or opt-out rules
vnll impose transaction costs
the individual does not want to bear). For a discussion of this
and similar economic effects
2156 COLUMBIA LAW REVIEW [Vol. 112:2153
is undoubtedly a powerful force: For similar causes of action.
Rule 23
classes are much larger than the corresponding FLSA collective
action
groups, and they may even be "exponentially greater" and
"number [] in
the millions."" Because they would greatiy multiply the number
of plain-
tiffs in any suit—and thus the eventual damage exposure to
defendants—
the threat of opt-out class action lawsuits would likely be an

40. effective de-
terrent against employers violating the FLSA. Thus, in the hope
of skirt-
ing the FLSA's opt-in requirement, employees' lawyers have
attempted to
use the (much more generous) Rule 23 class action in a number
of
ways.''*
One such nascent strategy is to couple an FLSA suit with an
allega-
tion that the defendant violated the Racketeer Influenced and
Corrupt
Organizations Act (RICO)'^ by fraudulendy depriving
employees of
wages to which they were entitied under the FLSA.'® The RICO
statute
lists a number of extant state and federal criminal offenses and
provides
additional criminal and civil punishments for violations of these
laws."
Successful civil RICO lawsuits grant plaintiffs access to two
powerful de-
terrent and remunerative devices: the right to treble damages'*
and ac-
cess to Rule 23 of the Federal Rules of Civil Procedure—that is,
an opt-
out class action.'^
But the path to RICO recovery is not straightforward for the
under-
paid employee. The statute lists over fifty crimes as "predicate
acts" that
may expose a defendant to RICO liability.^" The list is
exhaustive,^' and

41. of class actions, see generally Richard A. Posner, Economic
Analysis of the Law § 21.12
(8th ed. 2011).
13. De Asencio v. Tyson Foods, Inc., 342 F.3d 301, 310 (3d Cir.
2003); see also Noah
A. Finkel, State Wage-and-Hour Law Class Actions: The Real
Wave of "FLSA" Litigations?,
7 Emp. Rts. & Emp. Pol'y J. 159, 161, 174 (2003) (observing
Rule 23 classes may be larger
than FLSA groups, but arguing Rule 23 is value-neutral).
14. For a discussion of various strategies used by plaintiffs, see
infra Part II.B.
15. 18 U.S.C. §§ 1961-1968 (2006). RICO provides both civil
and criminal remedies.
This Note focuses on RlCO's civil remedies, as detailed in §
1964. However, civil RICO
suits still deal in criminal law: To obtain a civil remedy under
RICO, a plaintiff must prove
by a preponderance of the evidence that the defendant(s)
engaged in criminal conduct
that is prohibited by RICO's substantive provisions. The
interplay of the criminal and civil
aspects of RICO are detailed infra Part I.B. For a thorough
treatment of civil RICO, see
generally Gregory P.Joseph, Civil RICO: A Definitive Guide
(2010).
16. The earliest case involving an FLSA-based RICO claim that
could be found was
Choimbol V. Fairfield Resorts, Inc., in which the court noted
neither the parties nor its own
research found any such prior cases. No. 2:05CV463, 2006 WL
2631791, at *6 (E.D. Va.

42. Sept 11,2006).
17. See infra Part I.B (discussing RICO in more detail).
18. 18U.S.C. §1964(c).
19. While the RICO statute itself does not explicitiy mention
class actions, RICO class
actions may proceed under Rule 23. See, e.g., Nat'l Org. for
Women, Inc. v. Scheidler, 510
U.S. 249, 254 (1994) (RICO class action).
20. 18 U.S.C. §1961(1).
2012] FAIR LABOR FRAUD 2157
violadon of the FLSA is not included. Thus, FLSA-based RICO
claims
usually run as follows: When an employer mails its employee a
paycheck
that it knows contains less pay per hour than required by the
FLSA, it not
only violates that statute but it also profits by lying (by keeping
for itself
money to which the employee is endded) and thus commits
fraud.̂ ^ Ac-
cording to plaindffs, this acdvity consdtutes mail fraud^*
because mailing
the paycheck was necessary to carry out the fraudulent
scheme.^'' Mail
fraud is listed in RICO as a predicate act̂ ^ and thus, these
plaindffs ar-
gue, these employers are subject to civil RICO liability.̂ ®
These clainis produce a fundamental difficulty. Congress

43. intended
RICO's civil provisions to (1) supplement its criminal sancdons
to deter
organizadons frorn engaging in, among other things, fraud and
theft and
(2) provide a remedy to persons injured by enterprises engaged
in a pat-
tern of criminal acdvity.^' Organizadons that fraudulendy
deprive em-
ployees of wages seem to fall well within the ambit of these
goals. How-
ever, Congress did not include the FLSA in its exhausdve list of
RICO
predicate acts,̂ * and thus it did not intend straightforward
FLSA viola-
dons to be enforced via RICO. Congress did include mail fraud
in the list
of RICO predicate acts, which the Supreme Court has noted
brings un-
der RICP's proscripdons a broad swath of conduct that Congress
may
21. Id.; see also United States v. Phillip Morris USA, Inc., 566
F.3d 1095, 1115 (D.C.
Cir. 2009) (noting Congress intended § 1961(1) to be exhaustive
list because it used the
word "means" instead of "includes").
22. See Second Amended Complaint—Class Action and Demand
for Jury Trial 6,
Cavallaro v. UMass Mem'l Health Care, Inc., No. 09-CV-40152-
FDS, 2011 WL 2295023 (D.
Mass. June 8, 2011), 2011 WL 585138 1 6 [hereinafter Sample
Complaint] (noting "de-
fendants' scheme to cheat employees out of their property and to
convert the employees'

44. property, including their wages and/or overtime pay, by
misleading employees about their
rights under the FLSA"); id. 1 111 ("Through the paystubs and
payroll information it pro-
vided to employees, [Defendant] deliberately concealed from its
employees that they did
not receive compensation for all the work they performed and
misled them into believing
they were being paid properly.").
23. 18 U.S.C. §1341.
24. Sample Complaint, supra note 22, 1 127 ("Defendants'
predicate acts of mailing
the misleading payroll checks in furtherance of their Scheme
constitute a pattern of con-
duct unlawful pursuant to [RICO] . . . .").
25. 18 U.S.C §1961(1).
26. Of course, a plaintiff must prove more than just that the
defendant committed
mail fraud and the plaintiff suffered an injury. For example, a
plaintiff must also prove
that her injury was proximately caused by the defendant's
mailing. Holmes v. Sec. Investor
Prot Corp., 503 U.S. 258, 268 (1992). For a discussion of this
and odier elements of a civil
RICO claim, see generally Joseph, supra note 15.
27. See Gerard E. Lynch, RIGO: The Crime of Being a
Criminal, Parts I & II, 87
Colum. L. Rev. 661, (iTl-1?, (1987) [hereinafter Lynch, Parts I
& II] (describing goals of
RICO).

45. 28. See 18 U.S.C § 1961(1) (defining "racketeering activity" in
exhaustive list). Note
also that some other labor laws are included in this list such as
29 U.S.C § 501 (c) (2006)
(prohibiting embezzlement of union funds).
2158 COLUMBIA LAW REVIEW [VoL 112:2153
not have had in mind when it wrote the statute.^^ Moreover,
civil RICO's
powerful remedies may be able to do more than the FLSA to
deter the
rampant wage and hour violations that currentiy plague the U.S.
labor
market.*"
This Note seeks to address this conflict and provide guidance to
judges faced witii FLSA-based RICO claims. Part I reviews
both the FLSA
and RICO, including their statutory language, remedial
structures, and
legislative histories, as well as key Supreme Court decisions
defining their
outer limits. Part II focuses on FLSA-based RICO claims, with
particular
focus on the differing approaches district courts have taken to a
recent
spate of such suits. Specifically, Part ILA analyzes the two
primary hurdles
these claims face: (1) whether the mailing of a deficient
paycheck may
constitute mail firaud, and (2) if so, whether Congress
nonetheless in-
tended the FLSA to be the exclusive remedy for such

46. underpayment. Be-
cause of the novelty of FLSA-based RICO claims, in answering
tiiese ques-
tions many courts have looked to case law addressing similar
overlap in-
volving other statutes. Part II.B examines those comparator
cases that
district courts have relied on to dismiss FLSA-based RICO
claims. While
these analogous lawsuits may shed light on the conflict between
the FLSA
and RICO, Part II concludes by noting the limitations of such
compari-
sons and arguing that FLSA-based RICO claims must be
addressed on
their own terms.
Part n i suggests that the FLSA should not always preclude a
RICO
remedy for lost wages. District courts faced with FLSA-based
RICO claims
have suggested that the FLSA provides tiie exclusive remedy
for lost or
stolen wages, but this automatic preclusion collides with one of
RICO's
purposes: punishing fraudulent conduct. While not every FLSA
violation
amounts to fraud, RICO remedies should be available to
plaintiffs whose
wages were stolen via a scheme that would be indictable as mail
fraud.
Thus, courts must look at defendants' underlying conduct to
determine
whether fraud occurred. If it did, allowing an FLSA-based
RICO claim to
proceed is not contrary to either statute's language or goals.

47. Indeed, it
may be the best way to deter and punish behavior that both
statutes pro-
hibit.
I. T H E STATUTES, THEIR HISTORY, AND THEIR LIMITS
This Part introduces the two statutes at issue: the FLSA in Part
LA
and RICO in Part I.B. These sections discuss the statutory text
in the con-
text of the Acts' passages so as to shed light on the conduct
Congress
29. See, e.g., Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 500
(1985) (noting that,
while inclusion of mail fraud as predicate act evidences
congressional intent that RICO
prohibit broad swath of activity, "RICO is evolving into
something quite different from the
original conception of its enactors").
30. See supra note 4 and accompanying text (discussing extent
of FLSA under-
enforcement).
2012] FAIR LABOR FRAUD 2159
sought to prevent and the remedies it meant to provide for
violadons of
the Acts' substandve provisions. This Part also considers
important case
law regarding these statutes' remedies.

48. A. The FLSA: Guaranteeing a Fair Day's Pay for a Fair Day's
Work
The text of the Fair Labor Standards Act of 1938*' makes fairly
clear
what Congress intended in passing the statute. The FLSA's
purpose pro-
vision states that two primary goals of the Act are (1) to
improve the
condidon of workers and (2) to reduce "unfair method[s] of
comped-
don in commerce" created by substandard labor condidons.*^
Congress
further noted in the Act's introducdon that, in passing the FLSA,
it in-
tended to "correct and as rapidly as pracdcable to eliminate
[detrimental
labor condidons] . . . without substandally curtailing
employment or
earning power."**
This purpose is carried out via the substandve provisions of the
Act,
which provide two basic guarantees to employees: (1) a
minimum wage,
which ensures that employees are paid at minimum á set dollar-
per-hour
rate;** and (2) an overdme provision, requiring employers to
pay employ-
ees an increased wage (at least one-and-one-half dmes base pay)
for each
hour worked in excess of forty hours per week.*^ These
guarantees ex-
tend only to individuals who qualify as "employees,"*® which
is defined by
the FLSA as "any indi'vidual employed by an employer."*' This

49. circular
definidon is helped only slighdy by the definidon of "employ"
as "to suf-
fer or permit to work."** Several types of employees, such as
agricultural
31. Pub. L. No. 75-718, 52 Stat 1060 (codified as amended at 29
U.S.C. §§ 201-219).
32. 29 U.S.C. § 202(a). The statute also notes the existence of
"labor condidons detri-
mental to the maintenance of the minimum standard of living
necessary for health, effi-
ciency, and general well-being of workers." Id.
33. Id. §202 (b).
34. Id. § 206(a)(l). The current minimum wage for employees
covered by the FLSA
is $7.25 per hour. Fair Minimum Wage Act of 2007, Pub. L. No.
110-28, § 8102, 121 Stat
112,188 (to be codified at 29 U.S.C. § 206(a)(l)).
35. 29 U.S.C. § 207(a)(l) ("[N]o employer shall employ any of
his employees . . . for
a workweek longer than forty hours unless such employee
receives compensadon for his
employment in excess of the hours above specified at a rate not
less than one and one-half
dmes the regular rate at which he is employed.").
36. See id. § 206 ("Every employer shall pay to each of his
employees [a minimum
wage]."); id. § 207 ("No employer shall employ any of his
employees . . . for a workweek
longer than forty hours . . . .").

50. 37. Id. § 203(e)(l). Somewhat circularly, the Act defines
"employer" as "any person
acdng direcdy or indirecdy in the interest of an employer in
reladon to an employee." Id.
§203(d).
38. Id. § 203(g). The Supreme Court, because of this definidon,
held diat the FLSA
covers a broader swath of conduct than other employment
statutes, which do not define
the term "employ" and thus embody the common law definidon
of the term. See
Nadonwide Mut Ins. Co. v. Darden, 503 U.S. 318, 326 (1992)
(nodng "striking breadth" of
FLSA definidon of "employ" causes it to "cover some pardes
who might not qualify as such
2160 COLUMBIA LAW REVIEW [Vol. 112:2153
workers, are expressly exempted by the Act.̂ " In addition to
providing
these "wage and hour" guarantees to eligible employees, the Act
also
contains an express prohibition on certain types of child
labor.*" Despite
subsequent amendments to the law, these core proisions have
remained
largely untouched since 1938, and thus the ELSA has always
been in-
tended to remedy labor conditions detrimental to the
maintenance of
the minimum standard of living necessary for health, efficiency,
and

51. general well-being of workers.*'
To effectuate this purpose. Congress provided broad remedies,
both
civil and criminal, for violation of the ELSA's substantive
guarantees. In
cases where an employer willfully violates the minimum wage
or overtime
requirements, the Secretary of Labor may recommend that the
Department of Justice pursue criminal penalties,*^ although
such prose-
cutions are rare.*^ Civil suits under tiie Act are far more
common.
under a strict application of traditional agency law principles"
used under other employ-
ment statutes).
39. 29 U.S.C. § 213(a) (6). For the entire list of industries that
are exempted from the
FLSA's substantive provisions, see id. § 213(a)(l)-(17)
(minimum wage exemptions); id. §
213(b)(l)-(30) (overtime exemptions).
40. See id. § 203(1) (defining "oppressive child labor" as
including most forms of em-
ployment for sixteen-year-olds or as occupations deemed to be
"particularly hazardous" for
children between ages of sixteen and eighteen); id. § 212(a)
(forbidding entry into inter-
state commerce aray product produced by "oppressive child
labor").
41. The history surrounding the Act's passage confirms this.
Three years prior, the
Supreme Court in A.L.A. Schechter Poultry Corp. v. United

52. States struck down Congress's pre-
vious attempt to regulate wages in the National Industrial
Relations Act of 1933 (NIRA).
295 U.S. 495, 550 (1935); see also Adkins v. Children's Hosp.,
261 U.S. 525, 562 (1923)
(invalidating District of Columbia's minimum wage law),
overruled by W. Coast Hotel Co.
V. Parrish, 300 U.S. 379 (1937). President Roosevelt publicly
bemoaned this decision be-
cause he had personally advocated for the wage provisions of
the NIRA. John S. Forsythe,
Legislative History of the Fair Labor Standards Act, 6 Law &:
Contemp. Probs. 464, 464
(1939). The Court proceeded the following year to rebuke
similar efforts at wage regula-
tion by the states. See Morehead v. New York ex rel. Tipaldo,
298 U.S. 587, 618 (1936)
(striking dovm New York wage and hour statute), overruled in
part by Olsen v. Nebraska
ex rel. W. Reference & Bond Ass'n, 313 U.S. 236 (1941). In tiie
wake of tiie Morehead deci-
sion. Democrats in Congress saw a "chance for a bold
declaration." Forsythe, supra, at 464.
Taking advantage of the harsh public response to these rulings,
they campaigned for a
constitutional amendment that would address poor working
conditions and child labor.
This played a major role in their landslide victory in 1936,
which helped embolden
President Rooseveit and congressional Democrats into
introducing the infamous "Court-
packing plan" on February 5, 1937. Id. at 464-65. Ultimately,
the Supreme Court relented
by approving state wage and hour regulation in West Coast
Hotel Co. v. Parrish, hence signal-
ing its acquiescence to congressional power in the realm of

53. federal labor standards. 300
U.S. 379, 400 (1937); see also Forsythe, supra, at 465.
42. 29 U.S.C. § 2]6(a) (subjecting employers who vrillfully
violate wage and hour or
child labor requirements to fine of not more than $10,000, or to
imprisonment for not
more than six months, or to both).
43. See Lisa Morowitz, Government Contracts, Social
Legislation, and Prevailing
Woes: Enforcing the Davis Bacon Act, 9 In Pub. Interest 29, 35
(1989) ("A study by the
[General Accounting Office] of [the Department of Labor's]
Fair Labor Standards Act
(FLSA) enforcement practices . . . indicates that regional
directors in at least four regions
2012] FAIR LABOR FRAUD 2161
Section 216(b) makes any employer who violates either the
minimum
wage or overtime provision civilly liable.'*'* Employees suing
under
§ 216(b) may recover their lost wages—that is, what the
employer should
have paid them under the Act—as well as "an additional equal
amount,"
or so-called "liquidated damages," if the violation was
willi'ul.'*^ In addi-
tion to these (double) damages, an employee may recover from
the de-
fendant reasonable attorneys' fees and the costs of litigation.'*®
This gen-

54. erous remedial structure*' is further augmented by the broad
jurisdiction
the statute provides: Civil actions brought under § 216(b) may
be heard
by "any Federal or State court of competent jurisdiction by any
one or
more employees for and in behalf of himself or themselves and
other
employees similarly situated."** .
Despite the generous remedial provisions provided by the Act,
it also
contains a key restriction relevant to the analysis of FLSA's
interaction
with RICO.'*^ Section 216(b) requires that any individual give
her "con-
sent in writing" before she be allowed to join a group action for
FLSA
remedies.^" For virtually every other type of claim in federal
court, this is
not the case: A plaintiff can bring an action on behalf of a class
if she
meets the standards of Federal Rule of Civil Procedure 23.^'
However,
this powerful litigation tooP^ is unavailable to employees
seeking to re-
cover wages that the FLSA guarantees them.
could not recall having filed a criminal suit under the Act in
more than ten years."). For
courts' treatment of criminal cases brought under the FLSA, see,
for example. Meek v.
United States, 136 F.2d 679, 679-80 (6th Cir. 1943) (upholding
conviction under FLSA
after employer fired employee who complained about possible
FLSA violations) ; United

55. States V. Ewald Iron Co., 67 F. Supp. 67, 75-76 (W.D. Ky.
1946) (acquitting criminal de-
fendant due to prosecution's inability to prove sufficient
"willfulness" under Act).
44. 29 U.S.C. §216(b).
45. Id.
46. Id.
47. Compared to most state wage and hour statutes, for
example, the liquidated dam-
ages scheme of the FLSA provides significantly more generous
relief. See Finkel, supra
note 13, at 181-82; see also Pennsylvania Labor Law, 43 Pa.
Cons. Stat Ann. § 260.10
(West 2009) (capping liquidated damages at 25% of "wages due,
or five hundred dollars
($500), whichever is greater"); Ellis v. Edward D.Jones & Co.,
527 F. Supp. 2d 439, 453
(W.D. Pa. 2007) ("[D]ue to the FLSA's more generous
liquidated damages scheme, actual
recovery under the state law might well be less.").
48. 29 U.S.C. §216(b).
49. See infra Part ILA (discussing how limitations on FLSA
remedies relate to argu-
ments for and against use of RICO to recover for FLSA
violations).
50. 29 U.S.C. §216(b).
51. For a discussion of the requirements for a class action under
Federal Rule of Civil
Procedure 23, see supra note 6; see also Amchem Prods., Inc. v.
Windsor, 521 U.S. 591,
606-08 (1997) (discussing individual requirements in context of

56. asbestos litigation).
52. See Posner, supra note 12, § 21.11 (discussing income and
deterrent effects of
class actions).
2162 COLUMBIA LAW REVIEW [Vol. 112:2153
Suits under the Act must be carried out under a unique
procedure
called a "collecdve acdon,"^^ rather than zs, Rule 23 class
acdons. This
restricdon on group acdons dates back to an amendment to the
FLSA
called die Portal-to-Portal Act of 1947.̂ * The Portal-to-Portal
Act added
important procedural restrictions to the FLSA. It limited the
statute of
limitadons to two years (unless a violadon was in bad faith, in
which case
it was extended to three),^^ and it allowed liquidated damages
only in
cases in which the plaindff could prove bad faith.̂ ® But most
importandy,
the Act forbade opt-out representadve acdons—such as those
permitted
in modern class acdons under Rule 23. While the primary
purpose of the
1938 enactment of the FLSA was to protect workers' rights, the
1947
Amendments had employers' interests in mind, limidng
plaindffs'
groups to the "opt-in" collecdve acdon.^'

57. The limitadons contained in the Portal-to-Portal amendments
con-
tribute significandy to the well-documented underenforcement
of the
FLSA's substandve guarantees. Compliance with minimum wage
and
overdme provisions is shockingly low, "pardcularly in low-wage
industries
such as the janitorial, food service, garment, and hospitality
industries."^*
The Department of Labor has been unable to conduct inspecdons
at the
necessary rates to ensure higher levels of compliance;^"
therefore, the
more viable threat of civil liability under a Rule 23 opt-out
class acdon
53. 7B Wright et al., supra note 6, § 1807 ("Collective actions
under the [FLSA] are a
unique species of group litigation.").
54. Pub. L. No. 80-49, 61 Stat 84 (codified at 29 U.S.C §§ 251-
262). The Portal-to-
Portal Act was, in part, a response to pressure from employers
to limit FLSA liabilities. The
primary purpose of this bill was to prevent so-called "portal-to-
portal" suits—actions by
plaintiffs to recover compensation for time spent traveling to
and from work—as nearly
2,000 such suits had been filed in a six-month time span. See
Lopez, supra note 6, at 281-
84 (discussing genesis of Portal-to-Portal Act). These suits were
by no means trivial: It was
estimated that over $6 billion of liability would result from
them. See Daniel V. Dorris,
Comment, Fair Labor Standards Act Preemption of State Wage-

58. and-Hour Law Claims, 76
U. Chi. L. Rev. 1251, 1256 (2009) (discussing vrave of "portal-
to-portal" suits in years pre-
ceding Act's passage).
55. 29 U.S.C §255.
56. Id. §260. '
57. Dorris, supra note 54, at 1256.
58. Becker & Strauss, supra note 4, at 1318; see also Nat'l
Emp't Law Project supra
note 4, at 4-6 (estimating over 70% of garment employers in
southern California and
100% of poultry processing plants are in violation of wage and
hour laws).
59. See Weil & Pyles, supra note 4, at 62 (estimating annual
probability of
Department of Labor inspection of one of seven million
workplaces covered by FLSA is
well below .1%). This underenforcement did not begin in the
2000s, but was almost cer-
tainly exacerbated by the Bush Administration's hands-o£f
approach to labor standard
enforcement. Michael A. Fletcher, Labor Department Accused
of Straying from
Enforcement, Wash. Post, Dec. 1, 2008, at A2; see also Letter
from Sen. Barack Obama to
Elaine Chao, Labor Sec'y (Jul. 25, 2008) (on file with the
Columbia Law Review) (citing two
Government Accountability Office studies indicating Bush
Labor Department was "not
fulfilling its mission to prevent and remedy violations of federal
minimum wage and over-
time laws").

59. 2012] FAIR LABOR FRAUD 2163
could potentially provide an important deterrent mechanism®"
necessary
to fulfill the FLSA's guarantee of "a fair day's pay for a fair
day's work."®'
It is no surprise, then, that employment advocates have looked
to more
generous remedial statutes such as RICO to recover FLSA
remedies.
B. RICO: The "Broadest of the Federal Criminal Statutes'^^
The Racketeer Infiuenced and Corrupt Organizations Act®* was
de-
signed with the primary purpose of combating organized crime.
The
Senate Judiciary Committee's report on the bill explicitiy
described
RICO's purpose as "the elimination of the infiltration of
organized crime
and racketeering into legitimate operations in interstate
commerce."®*
But RICO's statutory language does not reflect this discrete,
narrow goal.
Rather than enact a statute that targets only the organized
criminals that
were at the forefront of its mind (such as the Mafia® )̂,
Congress passed
60. Becker & Strauss, supra note 4, at 1318-19 (arguing strict
adherence to § 216(b)
requirement of opt-in class actions "has failed to respect the
nation's minimum labor

60. standards" and is "unjust [and] unwise public policy").
61. 6 Franklin D. Roosevelt, The Public Papers and Addresses
of Franklin D.
Roosevelt: The Gonstitution Prevails, 1937, at 210 (1941).
62. Jeff Atkinson, "Racketeer Infiuenced and Gorrupt
Organizations," 18 U.S.C.
§§ 1961-68: Broadest of die Federal Criminal Statutes, 69 J.
Crim. L. & Criminology 1, 1
(1978).
63. Organized Crime Conti-ol Act of 1970,18 U.S.C. §§ 1961-
1968 (2006).
64. Senate Comm. on the Judiciary, Report on Organized Crime
Control Act of 1969,
S. Rep. No. 91-617, at 76 (1969). Similarly, much of the fioor
debate regarding die bill
discussed organized crime as a specific target of the bill. See,
e.g., 116 Cong. Rec. 602
(1970) (statement of Sen. Ralph Yarborough) (calling RICO "a
full-scale attack on orga-
nized crime"); id. at 819 (statement of Sen. Hugh Scott) (stating
bill's "purpose is to erad-
icate organized crime in the United States"); id. at 35,199
(statement of Rep. Peter
Rodino) (describing bill as "a truly full-scale commitment to
destroy the insidious power of
organized crime groups"). Furthermore, each of the five
purposes listed in the statement
of findings associated with the bill references organized crime
either explicidy or implic-
itiy. See Pub. L. No. 91-452, 84 Stat 922, 922-23 (1970).
Several commentators discussing RICO's broad scope have

61. noted this fact. See, e.g..
Lynch, Parts I & II, supra note 27, at 662 ("Congress viewed
RICO principally as a tool for
attacking the specific problem of infiltration of legitimate
business by organized criminal
syndicates."); Daniel Z. Herbst, Comment, Injunctive Relief and
Civil RICO: After Scheidler
V. National Organization for Women, Inc., RICO's Scope and
Remedies Require Réévaluation,
53 Cath. U. L. Rev. 1125, 1125 (2004) ("Congress enacted the
RICO . . . in response to
public outcry and several government studies revealing
pervasive infiltration of the legiti-
mate business community by the mafia and other organized
crime syndicates."); Adam B.
Weiss, Note, From the Bonannos to the Bin Ladens: The Reves
Operation or Management
Test and the Viability of Civil RICO Suits Against Financial
Supporters of Terrorism, 110
Colum. L. Rev. 1123, 1127 (2010) (noting statute "was enacted
at the height of the Mafia's
strength in America" and "was created with the major American
crime families in mind");
cf Nixon Signs Bill to Combat Crime, N.Y. Times, Oct. 16,
1970, at A18 (noting President
Nixon's advocacy of bill as "major tool in the fight against
organized crime").
65. These particular groups are noted specifically several times
in the Act's legislative
history. See Barr v. WUI/TAS, Inc., 66 F.R.D. 109, 113
(S.D.N.Y. 1975) (discussing fre-
quent references in legislative history to "'racketeers,'
'organized crime' and 'organized

62. 2164 COLUMBIA LAW REVIEW [Vol. 112:2153
instead what has been called the "broadest of the federal
criminal stat-
utes."®® RICO's-breadth is primarily due to two factors: (1)
the wide-
ranging list of predicate offenses for which a defendant may be
eligible
under the statute; and (2) the statute's provisions for harsh
criminal pun-
ishments and civil remedies for violadons of its prohibidons.
RICO prohibits three broad types of conduct: (1) the use or
invest-
ment of racketeering-derived funds in an enterprise that affects
interstate
commerce;®' (2) the acquisidon of an interest in or control over
any such
enterprise through a pattern of racketeering acdvity;®* and (3)
any con-
duct or pardcipadon in the affairs of such an enterprise through
a pat-
tern of racketeering acdvity.®" The first two of these
prohibidons focus on
"act[s] of infiltradng legidmate business by investment of illicit
profits or
by illegidmate tacdcs."'" The third category criminalizes the
broadest
range of conduct. It has "virtually unlimited sweep" as an
"expansive
prohibidon of the operadon of an enterprise through a pattern of
rack-
eteering acdvity.""
Each of thèse categories incorporates the definition of a

63. "pattern of
racketeering" found in § 1961(1) of the statute. That secdon
lists a bevy
of state and federal crimes. Violadon of any of the crimes in the
list con-
sdtutes "racketeering acdvity."'^ To consdtute a "pattern" of
such acdvity.
crime families,' as well as the 'syndicate,' 'Mafia' and 'Gosa
Nostra"'); see also Weiss, supra
note 64, at 1128 n.26 ("There is litde dispute that Congress was
focused primarily on orga-
nized crime [such as the Mafia and La Cosa Nostra] when
considering RICO.").
66. Atkinson, supra note 62, at 1 (acknowledging RICO as
"most sweeping criminal
statute ever passed by Congress"). For an oft-cited discussion of
RICO's breadth, see gen-
erally Lynch, Parts I & II, supra note 27 (discussing broad
interpretadon given to RICO by
federal courts); Gerard E. Lynch, RICO: The Crime of Being a
Criminal, Parts III & IV, 87
Colum. L. Rev. 920 (1987) [hereinafter Lynch, Parts III & rV]
(discussing desirability of
such breadth).
67. 18 U.S.C. §1962(a).
68. Id. § 1962(b); see also id. § 1961(5) (defining "pattern of
racketeering acdvity" as
"at least two acts of racketeering acdvity, [the second of which
must occur] within ten
years (excluding any period of imprisonment) after the
commission of a prior act of rack-
eteering acdvity").

64. 69. Id. § 1962 (c). The statute also makes it a crime to conspire
to violate subsecdons
(a), (b),or (c).Id. § 1962(d).
70. Lynch, Parts I & II, supra note 27, at 662.
71. Id. Judge Lynch notes that, in seeking criminal prosecudons
under RICO, pros-
ecutors have used this provision to strike at those who commit
crimes in the course of
otherwise lawful business, "whether or not they fit any ordinary
definidon of 'racketeer' or
'organized criminal.'" Id.
72. 18 U.S.C. § 1961(1) (including in definidon of "racketeering
acdvity" such state
crimes as murder, arson, and robbery). The inclusion of state
crimes as predicates was
purposeful and designed to broaden the scope of federal
criminal law. See United States v.
Turkette, 452 U.S. 576, 586 (1981) ("[T]he language of die
statute and its legisladve his-
tory indicate that Congress was well aware that it was entering a
new domain of federal
involvement"); see also 116 Cong. Rec. 35,217 (1970)
(statement of Rep. Robert
Eckhardt) (stadng RICO would "mov[e] large substandve areas
formerly totally within the
police power of the State into the Federal realm"). While this
was an unusual foray of the
2012] FAIR LABOR FRAUD 2165

65. a defendant must commit at least two of these so-called
"predicate acts"
within ten years of each other.'^ While violation of the ELSA is
not listed
as a predicate act, § 1961(1) does include mail fraud,'* which
one com-
mentator noted "drastically increas[ed] the potential penalties
facing
many [nonviolent] criminals."'^
In addition to this expansive definition of "racketeering," the
Act's
broad definition of a criminal "enterprise"'^ subjects a whole
host of leg-
itimate and illegitimate organizations to its prohibitions. The
breadth of
conduct and organizations that these definitions of racketeering
and en-
terprise cover led one commentator to conclude famously that
RICO
could be fairly characterized as the "crime of being a
criminal.""
Enforcement of these expansive prohibitions may come in the
form
of either criminal penalties'* or civil liability.'" This Note
focuses on the
latter, which is defined in § 1964(c).®" That section provides
that "[a]ny
federal government into areas traditionally covered by state
criminal law, the Supreme
Court noted that "[t]here is no argument that Congress acted
beyond its power in so do-
ing." Turkette, 452 U.S. at 587. For a discussion of the trend of
federal expansion into areas

66. of criminal law traditionally relegated to state enforcement, see
generally Thane Rehn,
Note, RICO and the Commerce Clause: A Reconsideration of
the Scope of Federal Crimi-
nal Law, 108 Colum. L. Rev. 1991 (2008). For further
discussion, see also Weiss, supra note
64, a t l l 2 6 n . l 5 .
73. 18 U.S.C. § 1961(5); see also HJ. Inc. v. Nw. Bell Tel. Co.,
492 U.S. 229, 239
(1989) (noting Congress intended fairly fiexible definition of
"pattern" under RICO). To
constitute a pattern, predicate acts must be related, that is, they
must have the same or
similar purposes, results, participants, victims, or metiiods of
commission, or otherwise be
interrelated by distinguishing characteristics, and they must not
be isolated events. Id.
(identifying "'continuity plus relationship'" as pattern
requirements (quoting 116 Cong.
Rec. 18,940 (1970) (statement of Sen. John McClellan))).
74. See 18 U.S.C. § 1961(1) (including as predicate act
violation of 18 U.S.C. § 1341,
the federal mail fraud statute). For a discussion of the elements
of mail fraud, see infra
notes 102-103 and accompanying text.
75. Lynch, Parts I Sc II, supra note 27, at 684.
76. 18 U.S.C. § 1961(4) (defining "enterprise" as including "any
individual, partner-
ship, corporation, association, or other legal entity, and any
union or group of individuals
associated in fact although not a legal entity").

67. 77. Lynch, Parts I & II, supra note 27, at 661; see also Ross
Bagley, Dorian Hurley &
Peter Mancuso, Racketeer Infiuenced and Corrupt
Organizations, 44 Am. Crim. L. Rev.
901, 905-07 (2007) ("[T]he term 'racketeering activity' includes
a broad assortment of
state and federal crimes.").
78. 18 U.S.C. § 1963(a). Because this Note focuses primarily on
RICO's civil reme-
dies, it does not treat in depth the criminal sanctions available
to prosecutors under
§ 1963(a). For a discussion of̂ RICO's criminal penalties and
the evolution of RICO into
an all-purpose prosecutorial tool, see generally Lynch, Parts I
Sc II, supra note 27; Lynch,
Parts III & IV, supra note 66.
79. 18 U.S.C. §1964(c).
80. Equitable relief is also available. Id. § 1962(a). Such relief
may include divestiture
of an interest in the criminal enterprise, restrictions on future
activities or investments,
and dissolution or reorganization of the enterprise. Id.; see also
G. Robert Blakely & Brian
Gettings, Racketeer Infiuenced and Gorrupt Organizations
(RICO): Basic Concepts—
Criminal and Civil Remedies, 53 Temp. L.Q. 1009, 1037-38
(1980) (discussing equitable
2166 COLUMBIA LAW REVIEW [Vol. 112:2153
person injured in his business or property by reason of a

68. violation of sec-
tion 1962 of this chapter may sue therefor in any appropriate
United
States district court and shall recover threefold the damages he
sustains
and the cost of the suit, including a reasonable attorney's fee."*'
That is,
an individual who could be prosecuted under RICO's criminal
provisions
could also (or instead) be sued by a plaintiff injured by the
defendant's
indictable conduct.
By allowing private plaintiffs to sue for RICO violations,
RICO's civil
remedies were designed to supplement its criminal provisions.
The main
goal of both was to deter and punish infiltration into legitimate
business
by organized crime syndicates.*^ Yet both the criminal and the
civil provi-
sions have been used widely in contexts bearing litde
resemblance to that
of organized crime. In fact, RICO is used in other contexts far
more of-
ten than it is used to prosecute or sue criminal organizations
such as the
Mafia.*' The inclusion of mail fraud*'* and wire fraud*^ makes
nearly any
relief available for civil RICO plaintiffs). However, because
most FLSA plaintiffs seek dam-
ages—in the form of back pay, liquidated damages, or, in the
case of the FLSA-RICO suits
that are the focus of this Note, treble damages—this Note
focuses primarily on § 1964 (c)

69. and the damages remedy.
81. 18 U.S.C. § 1964(c). Despite this language regarding federal
jurisdiction (and the
absence of corresponding language granting state courts similar
jurisdiction), the
Supreme Court has held that state courts do have concurrent
jurisdiction to hear civil
RICO claims. Tafflin v. Levitt, 493 U.S. 455, 467 (1990). In
Tafflin, the Court held that the
permissive language of § 1964(c), stating plaintiffs "may" sue
in United States district
court, should not be read as implying that Congress intended to
overcome the presump-
tion in favor of concurrent state court jurisdiction. Id. at 460-
61. The Court emphasized
that states could very well have particularized expertise in such
suits, given RICO's defini-
tion of "racketeering activity" as including a host of state
crimes. Id. at 465-66 (" [W] e have
full faith in the ability of state courts to handle the complexities
of civil RICO actions, par-
ticularly since many RICO cases involve asserted violations of
state law . . . over which state
courts presumably have greater expertise."); see also § 1961(1)
(defining "racketeering
activity" as including, inter alia, a bevy of state crimes such as
murder, arson, and kidnap-
ping). A plaintiff suing for recovery under RICO may of course
have her case removed to
federal court by a defendant based on federal question
jurisdiction, as RICO is a federal
statute. 28 U.S.C. § 1331 (2006); see also Carisbad Tech., Inc.
v. HIF Bio, Inc., 129 S. Ct
1862, 1867 (2009) (noting for RICO suit initially brought in
state court "[i]t is undisputed

70. that when this case was removed to federal court, the District
Court had original jurisdic-
tion over the federal RICO claim pursuant to 28 U.S.C. §
1331"); Joseph, supra note 15, at
18-19 (detailing removal procedure for civil RICO actions).
82. Weiss, supra note 64, at 1128-29 (noting RICO's "espoused
goal of disrupting il-
licit infiltration of legitimate businesses").
83. See Lynch, Parts I & II, supra note 27, at 662 (noting that
when article was pub-
lished in 1987, RICO had been used predominantiy in
prosecutions outside of context of
organized crime). Judge Lynch cites examples of the types of
prosecutions brought under
§ 1962(a) and (b)—including garden-variety crimes such as
typical business fraud and
bribery—and notes that "[i]n none of these cases can it be said
that organized criminals
were penetrating the legitimate economy," and that "only a
handful of cases . . . appear to
have involved defendants who had 'infiltrated' legitimate
enterprises in the manner con-
sidered a national problem." Id. at 727-28; see also Weiss, supra
note 64, at 1128 n.24.
84. 18 U.S.C. § 1341 (criminalizing fraudulent schemes
involving use of mails).
2012] FAIR LABOR FRAUD 2167
fraudulent scheme by any organizadon to defraud a person of
business

71. or property a violadon of RICO.*®
The Supreme Court has repeatedly affirmed the breadth of
RICO,
acknowledging that it is most often used in contexts far
removed from
what Congress may have envisioned. For example, when the
First Circuit
attempted to limit RICO's applicadon to run-of-the-mill
business fraud by
legidmate organizadons, the Supreme Court rejected this
judicially man-
ufactured limitadon, stadng that the First Circuit had "clearly
departed
from and limited the statutory language" and had reached an
impermis-
sible "conclusion . . . based on a faulty premise."*' Four years
later, when
the Second Circuit attempted to limit civil RICO claims to
defendants
who previously had been convicted of racketeering acdvity, the
Supreme
Court again emphadcally disagreed. It found "no room in the
statutory
language for an addidonal, amorphous . . . requirement" and
noted "a
less restricdve reading is amply supported by . . . the general
principles
surrounding this statute."** Not surprisingly, the Court cited
the legisla-
dve history of the Act to defend this broad interpretadon.*"
In the mail fraud context, a unanimous Court recendy affirmed
the
statute's breadth by declaring that a plaindff need not prove that
she

72. herself detrimentally relied on a defendant's fraudulent
misrepresenta-
dons—a requirement for civil fraud claims at common law.""
Because the
statute allows a civil remedy for conduct that is "indictable" as
mail
fraud—and prosecutors need not show any reliance whatsoever
when
bringing a mail fraud charge—a plaindff need not show that she
herself
relied on the misrepresentadons, only that the defendant's
misrepresen-
tadons proximately caused her injury."'
Such decisions support the Supreme Court's conclusion that
"'the
fact that RICO has been applied in situadons not expressly
andcipated by
Congress does not demonstrate ambiguity. It demonstrates
breadth.'""^
This history provides a framework through which to view the
viability of
RICO suits that are predicated on FLSA violadons.
85. Id. § 1343 (criminalizing fraudulent schemes' use of
communication systems,
such as telephone or email, that cross state lines).
86. Lynch, Parts I &: II, supra note 27, at 684.
87. United States v. Turkette, 452 U.S. 576, 581-83 (1981).
88. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 495, 497
(1985).
89. See id. at 498 (citing multiple congressional statements
indicating "RICO was an
aggressive initiative to supplement old remedies and develop

73. new methods for fighting
crime").
90. Bridge v. Phoenix Bond & Indem. Co., 128 S. Ct 2131, 2145
(2008).
91. Id. at 647-48.
92. Sedima, 473 U.S. at 499 (quoting Haroco, Inc. v. Am. Nat'l
Bank & Trust Co. of
Chi., 747 F.2d 384, 398 (7th Cir. 1984)). The Court had
similarly directed lower courts to
follow this language. See id. :
2168 COLUMBIA LAW REVIEW [VoL 112:2153
II. EVALUATING THE FLSA-BASED RICO CLAIM
With this statutory and historical framework as a foundation.
Part II
examines the FLSA-based RICO claims themselves. Part ILA
discusses
recent cases involving such claims and the varying ways in
which they
have been handled by district courts. Most courts dismiss these
claims,
finding them precluded by the FLSA. In doing so, these courts
repeat-
edly rely on a number of comparator cases involving similar
statutory
overlap. Part II.B discusses these cases, concluding that key
differences
between them and FLSA-RICO claims prevent a simple
application of
their logic to this context. Thus, courts have erred insofar as

74. they have
cited these cases as commanding dismissal of the FLSA-based
RICO
complaint.
A. Recent FLSA-RICO Cases: Bootstrapping Claims with
Boilerplate Complaints
The differing approaches to FLSA-RICO complaints stem
largely
from a recent spaie of lawsuits by hospital workers against their
employ-
ers. These lawsuits use a "boilerplate" RICO complaint^^ that
states the
hospitals committed mail fraud when they sent paychecks to
their em-
ployees that did not adequately compensate them for
overtime.^'' The
complaint alleges not that the hospitals lied about the amount of
time
worked, but rather that they misrepresented the amount of pay
that the
employees were owed under the FLSA.̂ ^ By one court's
estimate, "at least
twenty-nine strikingly similar versions of the complaint at
issue" have
been filed since 2009,"® and various federal district courts in
different
circuits have rendered at least eleven decisions."' In many of
these deci-
93. For an examp.e of such a complaint, see Sample Gomplaint,
supra note 22.
94. Id. 1 127.
95. Id. 1 121.
96. Gavallaro v. JMass Mem'l Health Care, Inc., No. 09-40152-

75. FDS, 2011 WL
2295023, at *6 (D. Mas;:. June 8, 2011), vacated, 678 F.3d 1
(1st Cir. 2012).
97. See, e.g., Davjs v. Abington Mem'l Hosp., 817 F. Supp. 2d
556 (E.D. Pa. 2011);
DeSilva v. N. Shore-Lcng Island Jewish Healdi Sys., Inc., 770
F. Supp. 2d 497 (E.D.N.Y.
2011); Manning v. Bos. Med. Corp., No. 09-11463-RWZ, 2011
WL 796505 (D. Mass. Feb.
28, 2011); Sampson v. Medisys Healtii Network Inc., No. lO-
CV-1342 (SJF) (.'VRL), 2011 WL
579155 (E.D.N.Y. Feb. 5, 2011); Nakahata v. N.Y.-Presbyterian
Healthcare Sys., Inc., Nos.
10 Civ. 2661(PAC), 10 Civ. 2662(PAC), 10 Civ. 2683(PAC), 10
Civ. 3247(PAC), 2011 WL
321186 (S.D.N.Y. Jan. 28, 2011); Wolman v. Catholic Health
Sys. of Long Island, No. 10-
CV-1326 (JS)(ETB), 2G10 WL 5491182 (E.D.N.Y. Dec. 30,
2010); Pruell v. Caritas Christi,
No. 09-11466-GAO, 2010 WL 3789318 (D. Mass. Sept 27,
2010); Gavallaro v. UMass Mem'l
Healdi Gare, Inc., No. D9-40152-FDS, 2010 WL 3609535 (D.
Mass. July 2, 2010); Gamesi v.
Univ. of Pittsburgh Msd. Cti-., No. 09-85J, 2010 WL 235123
(W.D. Pa. Jan. 11, 2010);
Taylor v. Pittsburgh Mercy Healthcare Sys., Inc., No. 09-377,
2009 WL 2992606 (W.D. Pa.
Sept 17, 2009); Kuznyetsov v. W. Penn Allegheny Healdi Sys.,
Inc., No. 09-379, 2009 WL
2175585 (W.D. Pa. July20, 2009).
2012] FAIR LABOR FRAUD 2169