Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze the legal standard governing conditional certification of a collective action under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 216(b), as applied in the United States District Court for the Middle District of Florida, and to assess Verimark Hospitality Group Inc.'s ("VHG" or the "Company") prospects for defeating or narrowing conditional certif

1. Overtime violations under 29 U.S.C. § 207(a) — allegations that VHG systematically failed to compensate hourly employees for all hours worked in excess of forty hours per workweek at the applicable overtime rate.

2. Automatic meal-break deductions — allegations that VHG's Luminos TimeTrack payroll system automatically deducted thirty minutes per shift for meal breaks under rule AR-MEAL-030, regardless of whether employees actually received bona fide, duty-free meal periods.

3. Uncompensated pre-shift and post-shift work — allegations that hourly employees were required to perform compensable work activities before clocking in and after clocking out, including donning and doffing uniforms, booting up computer systems, attending shift-handover briefings, and performing other preparatory and concluding tasks.

4. Tipped-employee minimum wage violations under Article X, Section 24 of the Florida Constitution — allegations that VHG failed to pay certain tipped employees the applicable Florida minimum wage when tips were insufficient to bridge the gap between the tipped minimum wage and the full minimum wage, and that tip-pool arrangements included ineligible employees.

5. Misclassification of lead/senior hourly roles as exempt — allegations that VHG improperly classified certain "lead" and "senior" hourly positions (e.g., Lead Front Desk Associate, Senior Housekeeper, Lead Server) as exempt from overtime requirements, despite those employees lacking the requisite supervisory or managerial duties to qualify for an exemption under 29 U.S.C. § 213(a)(1). It bears emphasis that not all

II. Statutory Framework — 29 U.S.C. § 216(b) A. Opt-In Mechanism Distinguished from Rule 23 Opt-Out Class Actions

Section 216(b) of the FLSA provides, in relevant part: An action to recover the liability prescribed in [29 U.S.C. §§ 206 and 207] may be maintained against any employer . . . by any one or more employees for and in behalf of himself or themselves and other employees similarly situated. No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such con

III. The Two-Stage Certification Process in the Eleventh Circuit and Middle District of Florida A. Stage One: Conditional Certification (Notice Stage) At the first stage of the certification process — commonly referred to as "conditional certification" or the "notice stage" — the named plaintiff bears the burden of demonstrating that she and the putative collective members are "similarly situated." However, the showi

IV. Application to the Verimark Hospitality Group Wage-and-Hour Claims A. Plaintiff's Likely Arguments for Conditional Certification Based on our review of the demand letter, VHG's corporate records, and the applicable legal standards, we anticipate that GLO will advance the following arguments in support of conditional certification. Each argument is assessed below.

1. Uniform Company-Wide Policies and Centralized Payroll. GLO's strongest argument for conditional certification will be the existence of uniform, company-wide wage-and-hour policies administered through a single, centralized payroll system. Specifically: Luminos Payroll Solutions Inc. VHG utilizes a single payroll processor — Luminos Payroll Solutions Inc. — for all fourteen Verimark-branded properties, under accoun

2. Common Allegations Across Properties. GLO will further argue that the five categories of alleged violations are framed as systemic — affecting all hourly, non-exempt employees across multiple Verimark-branded properties, not merely isolated incidents at a single location. This framing is consistent with the conditional certification standard, which requires only a showing that the named plaintiff and putative coll

3. Centralized Management and Corporate Control. GLO will emphasize VHG's centralized corporate management structure as further evidence that wage-and-hour practices were uniform across properties. Key corporate decision-makers with company-wide authority over wage-and-hour matters include: • Enrique J. Fuentes, Director of Payroll & Workforce Compliance, who is responsible for administering the Luminos TimeTrack sys

1. Property-Level Variations in Employment Practices. Despite the centralized payroll system and uniform written policies, VHG should develop evidence that actual workplace practices vary meaningfully across the seven at-issue properties — and indeed across all fourteen Verimark-branded properties. The distinction between formal, written policy and actual, on-the-ground practice is critical: while GLO will point to t

2. Geographic and Market Differences. The seven at-issue properties span three distinct Florida markets — Tampa Bay (Regency Tampa, Shores Clearwater, Bayfront St. Petersburg), Orlando (Grand Orlando), and South Florida (Resort & Spa Boca Raton, Oceanview Fort Lauderdale, Key West Collection) — each of which has materially different labor market conditions, seasonal staffing patterns, and operational models. The Key

3. Verimark Shores Clearwater — The Palomar Joint-Employer Complication. The Verimark Shores Clearwater property presents a unique factual and legal complication. Unlike VHG's other properties, the Shores Clearwater is not owned by VHG or any VHG affiliate. Rather, it is owned by Palomar Realty Partners LLC (Managing Member: Ricardo E. Montalvo) and managed by VHG pursuant to the Hotel Management Agreement dated June

4. Distinct Job Codes and Roles Undermine Commonality. GLO's demand letter sweeps broadly, seeking a collective of all "hourly, non-exempt employees." However, the five categories of alleged violations do not affect all hourly employees equally, and VHG should argue that the overbreadth of the proposed collective undermines the "similarly situated" showing. Tipped-employee minimum-wage claims apply only to employees

5. Individualized Defenses. VHG should also develop evidence of individualized defenses that may apply differently to different putative collective members, undermining the premise that all members are "similarly situated." Good-Faith Defense Under 29 U.S.C. § 259. VHG may be able to assert a good-faith defense based on reliance on guidance from the U.S. Department of Labor or on established administrative practice r

6. Scope Limitation — Seven vs. Fourteen Properties. GLO's demand letter identifies seven specific VHG properties as "at issue" but then seeks to define the putative collective to include all hourly employees at all Verimark-branded properties in Florida — a total of fourteen properties. VHG should vigorously oppose this expansion. At the conditional certification stage, the plaintiff must make a factual showing that

V. Strategic Considerations for VHG A. Pre-Litigation Posture — Impact on Certification Analysis As of the date of this memorandum, GLO's demand letter has not yet ripened into a filed complaint. The February 28, 2026 response deadline remains pending, and VHG has the opportunity to shape its pre-litigation posture in a manner that may influence the conditional certification analysis. If the matter proceeds to litiga

VI. Recommendations Based on the foregoing analysis, we recommend that VHG take the following actions:

1. Develop Property-Level Evidence Now. Utilize the scoping-phase audit to systematically document variations in wage-and-hour practices across the seven at-issue properties and the remaining seven VHG properties. The audit should focus on the four areas most relevant to certification arguments: meal-break practices, pre-/post-shift activities, tip-pool composition and practices, and the actual duties of lead/senior

2. Engage Ridgepoint Advisory Group LLC Promptly. The forensic payroll analytics engagement with Dr. Alicia Tran should be initiated as soon as practicable. The estimated cost of $85,000 to $120,000 is within the $350,000 board-authorized budget for the pre-litigation scoping phase. The engagement scope should specifically require property-level and department-level granularity in the analysis of time-punch data, mea

3. Prepare Preliminary Decertification Strategy. Even before litigation is filed, VHG should assemble a framework for an eventual Stage Two decertification motion. This framework should organize the evidence around the Eleventh Circuit's three-factor test: (a) disparate factual and employment settings across properties, with particular emphasis on the Verimark Shores Clearwater joint-employer complication and the ope

4. Consider Narrowing Arguments at Conditional Certification. If GLO files suit and moves for conditional certification, VHG should prepare opposition arguments focused on narrowing the collective rather than defeating certification outright. Specifically, VHG should argue that any conditional certification should be limited to: (a) the seven at-issue properties identified in the demand letter, rather than all fourte