August 15, 2025|Publications
August 15, 2025 | United States District Court, Middle District of North Carolina | Slip Copy
Executive Summary
In a slip opinion, Judge Thomas D. Schroeder of the Middle District of North Carolina granted in part plaintiff Katrina Cole’s motion for conditional certification of a collective action under the Fair Labor Standards Act (“FLSA”). Cole, a certified nursing assistant (“CNA”), alleged that automatic meal break deductions at nursing home facilities deprived hourly patient care workers of overtime wages. Defendants argued that their policies were lawful and that any issues were isolated to specific facilities. The Court, while describing the question as close, concluded that Cole had presented enough evidence to allow notice to be sent to a narrowed group of CNAs at several Choice Health Management facilities in North Carolina. Importantly for franchisors and multi-unit operators, the Court allowed the claims to proceed across multiple locations while leaving the joint employer issue unresolved at this stage.
Relevant Background
Cole worked as a CNA at Universal Health Care/Blumenthal, one of 17 facilities operated by Choice Health Management Services, LLC (“Choice”). She alleged that Choice applied a uniform timekeeping policy that automatically deducted 30 minutes for lunch breaks, even though staff were often required to continue patient care duties during that time. Cole claimed supervisors were aware of these interruptions, discouraged employees from reporting them, and in some instances disregarded correction forms she submitted.
In support of her motion, Cole offered her own sworn declaration and four additional employee statements from other Choice facilities. These statements described frequent interruptions during meal breaks, supervisors’ knowledge of the interruptions, and a lack of training on reporting missed breaks. Defendants responded that automatic deductions are lawful, that their timekeeping system allowed reporting of missed breaks, and that each facility had local managers responsible for implementing policies. They also argued that the supporting statements were unsworn, procedurally deficient, and came from individuals who worked only a handful of shifts.
Decision
The Court began by reviewing the two-step framework for FLSA collective actions. At the first step—conditional certification—the burden is generally described as “fairly lenient,” requiring only a modest factual showing that employees are “similarly situated.” See Solais v. Vesuvio’s II Pizza & Grill, Inc., No. 1:15CV227, 2016 WL 1057038, at *5–6 (M.D.N.C. Mar. 14, 2016); Adams v. Citicorp Credit Servs., Inc., 93 F. Supp. 3d 441, 453–54 (M.D.N.C. 2015). The Court noted that, at this preliminary stage, it was not resolving factual disputes or credibility questions, but rather deciding whether the plaintiff had shown enough to justify notice to potential opt-in plaintiffs.
Choice argued that its automatic meal deduction policy was lawful under the FLSA and could not, standing alone, support liability. The Court noted that automatic meal-deduction systems have been found to be lawful. See Marshall v. Novant Health, Inc., No. 3:18-cv-633, 2020 WL 5577888, at *7 (W.D.N.C. Sept. 17, 2020); Chapman v. Saber Healthcare Grp., LLC, 623 F. Supp. 3d 664, 675 (E.D. Va. 2022). But the Court reasoned that Cole alleged something more: that the deduction policy operated in combination with practices discouraging employees from reporting missed breaks. This, the Court said, made the case a “close question,” but one where the plaintiff had provided just enough evidence to move forward.
The Court then addressed defendants’ objections to Cole’s supporting evidence. Defendants emphasized that some witnesses had not been disclosed during discovery and that their statements were unsworn. The Court found the nondisclosure harmless. The witnesses were defendants’ own employees, Cole had disclosed a list of names, and defendants had chosen not to depose any of them. In light of those choices, the Court allowed the evidence to be considered at this stage.
Finally, the Court narrowed the proposed collective. Because the evidence focused only on CNAs, the class was limited to that role rather than all patient care employees. And because the declarations came from a subset of facilities, the class was confined to those North Carolina facilities where the witnesses worked. The Court expressly declined to reach whether Choice could ultimately be treated as a joint employer across its facilities, observing that such issues were better reserved for a later stage of the litigation.
Looking Forward
For franchisors, multi-unit franchisees, and single-unit operators, Cole provides several lessons.
- Joint employer exposure remains unresolved. Even though Choice argued each facility was independently managed, the Court allowed notice to go forward across multiple facilities. Courts often defer joint employer determinations until later, which means franchisors and franchisees may find themselves drawn into system-wide litigation even where local managers make day-to-day decisions.
- Automatic meal-deduction systems have been found to be lawful, but local practices can still create risk. In Cole, allegations that supervisors discouraged reporting of missed breaks were enough to support conditional certification. Franchisors, multi-unit franchisees, and single-unit operators alike should ensure that policies are not only compliant on paper but also reinforced through consistent training, monitoring, and enforcement.
- Certification will often mirror the scope of the evidence presented. Here, the Court limited the class to CNAs at specific North Carolina facilities, showing that plaintiffs who present narrow declarations cannot always obtain broad system-wide certification at the outset. Still, even a narrowed class can expand litigation risk, particularly for operators with multiple locations.
- Compliance requires documentation. Clear policies, accessible reporting mechanisms, and documentation of enforcement can help reduce exposure. At later stages, these records may be critical in defeating collective claims or narrowing the scope of liability.
In sum, Cole demonstrates how FLSA collective actions may survive the early stages even on a facially deficient record, leaving franchisors and franchisees to manage significant litigation risk until courts address joint employer liability and the merits at later stages.
Thomas O’Connell is a Shareholder at Buchalter APC and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
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