1021-00005 · Verimark Hospitality Group · Analysis & Advice

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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

TO: Bernard Crawford, Responsible Partner, Labor & Employment Renata Vasquez, Billing Partner, Labor & Employment

FROM: Nadia Petrov, Lead Associate, Labor & Employment James Underwood, Working Associate, Labor & Employment

DATE: February 12, 2026

RE: FLSA Collective Action — Conditional Certification Standards in the Middle District of Florida; Application to Verimark Hospitality Group Inc. Wage-and-Hour Claims

MATTER: Calderwood & Harkness LLP Matter No. 1021-00005

CLIENT: Verimark Hospitality Group Inc.

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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 certification in the event Garza, Linden & Okafor LLP ("GLO") files a collective action on behalf of Daniela M. Serrano and similarly situated current and former hourly, non-exempt employees.

Key Conclusion. At the conditional certification stage — sometimes referred to as the "notice stage" — courts in the Middle District of Florida apply a lenient, "fairly low" standard that requires only a modest factual showing that putative collective members are "similarly situated." This standard is well-established across the Eleventh Circuit and is applied with particular consistency in the Middle District. VHG's strongest arguments for defeating or narrowing certification center on property-level variations in actual wage-and-hour practices, differing management structures across VHG's geographically dispersed hotel portfolio, and the distinct circumstances of the Palomar-managed Verimark Shores Clearwater property. However, the centralized payroll processing through Luminos Payroll Solutions Inc. (system ID LTT-VHG-2022-0041) and the company-wide automatic meal-break deduction rule AR-MEAL-030 may weigh significantly against VHG by suggesting the existence of uniform, company-wide policies — precisely the type of evidence that courts routinely rely upon to grant conditional certification.

Background on the Threatened Litigation. By demand letter dated January 14, 2026, GLO — acting on behalf of Daniela M. Serrano (a former front-desk associate at Verimark Regency Tampa) and putative similarly situated employees — has threatened to file a collective action and/or class action on behalf of all current and former hourly, non-exempt employees at Verimark-branded properties in the State of Florida from January 2023 to the present. GLO estimates the putative collective at between 4,100 and 5,900 individuals and has demanded $18.5 million in settlement. VHG's response deadline under the demand letter is February 28, 2026.

Categories of Allegations. The demand letter implicates five categories of alleged FLSA and state-law wage-and-hour violations:

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 of these claims are cognizable under FLSA § 216(b). In particular, the Florida constitutional minimum-wage claims under Article X, Section 24 would proceed under Rule 23 of the Federal Rules of Civil Procedure (or applicable state procedural mechanisms) rather than under § 216(b)'s opt-in collective action framework. This memorandum focuses on the FLSA collective action; a separate analysis of Rule 23 certification standards for state-law claims may be warranted and is noted among our recommendations below.

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 consent is filed in the court in which such action is brought.

29 U.S.C. § 216(b) (emphasis added). This provision establishes the FLSA's distinctive opt-in mechanism: unlike a Rule 23 class action, in which absent class members are bound by the judgment unless they affirmatively opt out, an FLSA collective action binds only those employees who affirmatively file written consents with the court. See Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 169 (1989) (recognizing that § 216(b) establishes an "opt-in" scheme fundamentally different from the "opt-out" class action under Rule 23).

The practical consequence of the opt-in mechanism is twofold. First, the size of the ultimate collective depends on the number of employees who choose to participate — a factor influenced by the form, scope, and method of court-authorized notice. Second, because potential plaintiffs must take affirmative steps to join the action, the resulting collective is typically smaller than a comparable Rule 23 class would be for the same universe of affected employees. Historical opt-in rates in FLSA hospitality cases in the Eleventh Circuit range from approximately 10% to 35%, depending on the nature of the claims, the length of the opt-in period, the form and distribution of notice, and the characteristics of the workforce.

Despite the procedural narrowness of the opt-in mechanism relative to Rule 23, the standard for conditional certification of an FLSA collective at the initial stage is in practice more lenient than the requirements for certifying a Rule 23 class. Under Rule 23, plaintiffs must satisfy the four prerequisites of Rule 23(a) — numerosity, commonality, typicality, and adequacy of representation — and must also demonstrate that the action falls within one of the categories specified in Rule 23(b). Courts apply these requirements rigorously, and certification under Rule 23 is frequently contested on multiple grounds. By contrast, the "similarly situated" standard under § 216(b) requires only a modest factual showing at the conditional certification stage, as discussed in detail in Section III below.

It is important to note that the Florida minimum-wage claims under Article X, Section 24 of the Florida Constitution are not cognizable under § 216(b). The FLSA's collective action mechanism is limited to claims arising under the FLSA itself — specifically, claims for minimum wage under § 206 and overtime under § 207. State-law wage claims, even when alleged alongside FLSA claims, must be pursued through other procedural vehicles, most commonly a Rule 23 class action in federal court (if supplemental jurisdiction exists) or a state-court class action. Accordingly, GLO's threatened action may involve parallel procedural tracks: an FLSA § 216(b) collective for the federal overtime and minimum-wage claims, and a Rule 23 class (or state-law equivalent) for the Florida constitutional claims. This memorandum addresses the FLSA collective action standards; a separate memorandum addressing Rule 23 certification for the state-law claims should be prepared as litigation approaches.

B. "Similarly Situated" Requirement

The text of § 216(b) requires that collective members be "similarly situated" to the named plaintiff, but the statute does not define that term. Congress provided no guidance as to what degree of factual or legal similarity is required, and the Supreme Court has not directly addressed the standard. As a result, the meaning of "similarly situated" has been developed entirely through case law, with some variation across circuits.

The Eleventh Circuit has not mandated a single definitive test for determining whether employees are "similarly situated" under § 216(b). However, the Circuit has consistently endorsed and applied the two-stage approach — sometimes called the "Lusardi" approach, after Lusardi v. Xeroxx Corp., 118 F.R.D. 351 (D.N.J. 1987) — that is used by virtually all district courts within the Circuit. See Hipp v. Liberty Nat'l Life Ins. Co., 252 F.3d 1208, 1218 (11th Cir. 2001) (noting the two-stage inquiry without mandating a specific framework); Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1259–62 (11th Cir. 2008) (discussing the second-stage decertification analysis in detail). Under this approach, the "similarly situated" determination is made at two distinct points in the litigation: first, at the conditional certification stage, where the standard is lenient, and second, at the decertification stage following the close of discovery, where the standard is considerably more rigorous. The two-stage framework and its application in the Middle District of Florida are discussed in the next section.

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 showing required is minimal. Courts in the Eleventh Circuit and the Middle District of Florida uniformly describe the standard as "a fairly lenient one," requiring only a "modest factual showing" that the plaintiff and putative collective members were victims of a common policy or plan that violated the FLSA. See, e.g., Hipp, 252 F.3d at 1218; Dybach v. State of Fla. Dep't of Corrs., 942 F.2d 1562, 1567–68 (11th Cir. 1991); Anderson v. Cagle's Inc., 488 F.3d 945, 953 (11th Cir. 2007).

The plaintiff may satisfy this modest burden through range evidentiary submissions, including her own declaration, declarations from other potential collective members, deposition testimony (if available at this early stage), documentary evidence of company-wide policies, employee handbooks, payroll records, corporate communications, or other materials suggesting the existence of a common practice or policy that violated the FLSA. See, e.g., Cameron v. Kindred Healthcare Operating, Inc., No. 8:19-cv-2400-T-33CPT, 2020 WL 5742683, at 3 (M.D. Fla. Sept. 25, 2020). The plaintiff is not required to demonstrate that the putative collective members are identically situated — only that they are "similarly situated" in the sense that they were subject to a common policy or practice. See, e.g., Vondriska v. Premier Mortg. Funding, Inc., No. 8:08-cv-1564-T-30MAP, 2009 WL 2160460, at 2 (M.D. Fla. July 16, 2009).

Critically, courts do not resolve factual disputes, weigh evidence, or evaluate the merits of the claims at the conditional certification stage. The inquiry is focused narrowly on whether there is sufficient evidence to suggest that similarly situated individuals exist and that the case is appropriate for collective treatment. See Hipp, 252 F.3d at 1218; Cameron, 2020 WL 5742683, at 3. As the Middle District has repeatedly emphasized, "the court does not weigh the merits of the underlying claims, resolve factual disputes, or evaluate the credibility of evidence at this stage." Lockhart v. D&S Diversified Techs. LLP, No. 6:20-cv-1291-CEM-DCI, 2021 WL 2784651, at 3 (M.D. Fla. Mar. 24, 2021).

The primary purpose of the conditional certification inquiry is to determine whether court-authorized notice should issue to potential opt-in plaintiffs, thereby enabling them to learn of the pending action and to make an informed decision about whether to participate. See Hoffmann-La Roche, 493 U.S. at 170 (observing that court-facilitated notice serves the "broad remedial purpose" of the FLSA by ensuring that employees who may have been subjected to unlawful practices are aware of their right to join a pending action). If conditional certification is granted, the court authorizes the dissemination of notice — typically by first-class mail, and increasingly by email and text message as well — to putative collective members, who then have a specified period (typically sixty to ninety days, as set by the court) to file written consents and opt in to the action.

Leading decisions in the Middle District of Florida have consistently applied the lenient conditional certification standard in a manner that favors granting notice. In Cameron v. Kindred Healthcare Operating, Inc., the court granted conditional certification of an FLSA collective action brought by hourly healthcare workers alleging that the defendant's company-wide time-rounding policy resulted in systematic underpayment of overtime, emphasizing that the existence of a uniform, centrally administered timekeeping policy was sufficient to satisfy the modest factual showing requirement. 2020 WL 5742683, at 4. In Lockhart v. D&S Diversified Technologies LLP, the court authorized notice in a collective action by technicians alleging uncompensated pre- and post-shift work, finding that two declarations describing a common practice of requiring off-the-clock work were sufficient at the notice stage. 2021 WL 2784651, at 4. In Pendlebury v. Starbucks Coffee Co., No. 04-80521-CIV, 2005 WL 84500 (S.D. Fla. Jan. 3, 2005), the court granted conditional certification in a tipped-employee case, finding that evidence of a company-wide tip-pooling policy was adequate to demonstrate that the putative collective was similarly situated.

Courts in the Middle District of Florida have been particularly inclined to grant conditional certification where the plaintiff alleges a single, company-wide policy — such as a uniform automatic meal-break deduction rule or a common overtime calculation methodology — that is applied across multiple locations through a centralized payroll system. In such cases, the very existence of the uniform policy serves as the "modest factual showing" that putative collective members were subject to a common practice. See, e.g., Mackenzie v. Kindred Hospitals East, LLC, 276 F. Supp. 2d 1211, 1219 (M.D. Fla. 2003) (finding that a company-wide policy was "exactly the type of evidence sufficient to establish that a similarly situated group of plaintiffs exists"). This precedent is directly relevant to VHG's situation, where the centralized Luminos TimeTrack auto-deduction rule AR-MEAL-030 is configured at the system level and applies uniformly across all fourteen Verimark-branded properties.

B. Stage Two: Decertification (Post-discovery)

The second stage of the certification analysis occurs after the close of opt-in discovery and, typically, after significant merits discovery has been completed. At this stage, the defendant may move to decertify the collective on the ground that the opt-in plaintiffs are not, in fact, similarly situated to the named plaintiff. The standard at the second stage is considerably more rigorous than at the conditional certification stage, and courts conduct a full factual analysis of the record developed during discovery.

The Eleventh Circuit's three-factor test for the second-stage analysis, set forth in Hipp v. Liberty National Life Insurance Co. and further elaborated in Morgan v. Family Dollar Stores, Inc., requires the court to consider:

(1) the disparate factual and employment settings of the individual plaintiffs;

(2) the various defenses available to the defendant that appear to be individual to each plaintiff; and

(3) fairness and procedural considerations.

Hipp, 252 F.3d at 1219–20; Morgan, 551 F.3d at 1261. This analysis is fact-intensive and turns on the specific record in each case. Courts examine whether the evidence developed during discovery reveals meaningful differences in the factual circumstances of the collective members — differences that, if significant enough, may render collective treatment inappropriate.

At the second stage, the burden effectively shifts to the defendant. Whereas at the first stage the plaintiff must make only a modest showing to justify notice, at the second stage the defendant bears a practical (if not formal) burden of demonstrating that the collective members are not similarly situated. See Morgan, 551 F.3d at 1261 (discussing the defendant's burden to show that the collective should be decertified based on differences among the opt-in plaintiffs). This shift is significant because it means that even if conditional certification is granted, the defendant retains a meaningful opportunity to contest the collective's viability after developing a full factual record.

If the court grants a motion to decertify, the opt-in plaintiffs' claims are dismissed without prejudice, and those individuals must file their own individual lawsuits if they wish to pursue their claims. See id. at 1261–62. Decertification, while a powerful remedy for the defendant, is not without its own costs: by the time a decertification motion is heard, the defendant will typically have invested significant resources in discovery, and the case will have accumulated substantial settlement value. As a practical matter, many FLSA collective actions settle before the decertification stage is reached.

C. Practical Significance of the Two Stages

Understanding the practical dynamics of the two-stage certification process is essential to advising VHG on strategy. The conditional certification stage is often dispositive as a practical matter, even though it does not resolve the merits: once notice issues and opt-in plaintiffs begin to accumulate, the case takes on significant settlement value, and the defendant faces increased litigation costs, expanded discovery obligations, and heightened reputational risk.

For VHG, the practical stakes at the conditional certification stage are substantial. The demand letter estimates the putative collective at between 4,100 and 5,900 individuals spanning a period from January 2023 to the present. If conditional certification is granted on the broadest terms sought by GLO, court-authorized notice would issue to this entire universe of current and former hourly employees across all fourteen Verimark-branded properties in Florida. Even at a relatively modest opt-in rate of 10%, this would yield between 410 and 590 opt-in plaintiffs; at a 35% opt-in rate, the collective could include 1,435 to 2,065 individuals. The exposure model prepared by C&H's litigation-analytics team reflects a wide range — from the narrower Scenario A estimate of $8,147,700 (encompassing only current hourly employees at the seven at-issue properties, including liquidated damages) to the broader Scenario B estimate of approximately $202.4 million (encompassing the full putative collective under maximum damages assumptions) — with a working mid-range of $22 million to $38 million. Conditional certification would likely push actual exposure toward the upper end of this range as the collective grows in size.

The seven at-issue properties identified in GLO's demand letter collectively employ approximately 2,620 employees, of whom approximately 1,895 are hourly, non-exempt. The demand letter, however, seeks to encompass all fourteen VHG properties in Florida, which would significantly expand the putative collective. VHG's ability to limit the collective to the seven at-issue properties — or to narrow the collective by claim category and job code — will be a critical determinant of litigation exposure.

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 account number LTT-VHG-2022-0041. This centralized payroll arrangement has been in place since January 1, 2022. All time-and-attendance data, wage calculations, overtime computations, and deductions for VHG employees are processed through the Luminos TimeTrack platform, regardless of the property at which the employee works. This uniformity is precisely the type of evidence that courts in the Middle District of Florida have found sufficient to satisfy the modest factual showing at the conditional certification stage.

Auto-Deduction Rule AR-MEAL-030. The automatic meal-break deduction rule — coded as AR-MEAL-030 within the Luminos TimeTrack system — is configured at the system level and applies uniformly across all properties. Under this rule, the payroll system automatically deducts thirty minutes from an employee's compensable time for any shift of six hours or longer, on the assumption that the employee took a bona fide, duty-free meal break during the shift. GLO will argue that this uniform, system-level configuration constitutes a company-wide policy that affected all hourly employees in the same manner, making the putative collective members "similarly situated" for purposes of the meal-break deduction claims. This argument is well-supported by precedent: courts have repeatedly granted conditional certification where the plaintiff identifies a uniform, centralized timekeeping or deduction policy. See, e.g., Cameron, 2020 WL 5742683, at 4; Mackenzie*, 276 F. Supp. 2d at 1219.

Centralized Overtime Calculation. The overtime calculation algorithm within Luminos TimeTrack is likewise centralized and uniform. All overtime computations — including the determination of the regular rate of pay, the identification of hours worked in excess of forty per workweek, and the calculation of the overtime premium — are performed at the system level based on parameters set by VHG's corporate payroll department. GLO will argue that any error or unlawful practice embedded in this algorithm (such as failing to include non-discretionary bonuses or shift differentials in the regular rate) would have affected all hourly employees uniformly.

Employee Handbook. A single Employee Handbook (Version 7.2, effective January 1, 2025) governs all fourteen Verimark-branded properties. The handbook sets forth company-wide policies on overtime, meal breaks, timekeeping, tip reporting, and exempt/non-exempt classifications. GLO will point to the handbook as evidence that VHG imposed uniform policies across all properties, further supporting the conclusion that putative collective members are similarly situated.

Uniform Job Codes and Job Descriptions. VHG's corporate Human Resources office, under Vice President Carla S. Whitfield, maintains uniform job codes and job descriptions for all positions across all properties. GLO will argue that this centralized HR function demonstrates that the employment relationship is uniform and that variations across properties are insufficient to defeat conditional certification at the notice stage.

Taken together, these elements present a compelling narrative of centralized, uniform wage-and-hour practices — the very type of evidence that courts in the Middle District of Florida routinely rely upon to grant conditional certification.

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 collective members were subject to a common policy or practice.

The named claimant, Daniela M. Serrano (employee ID VHG-EMP-20220314-5587), is a former front-desk associate at Verimark Regency Tampa who was employed from March 14, 2022 through August 22, 2025. At the conditional certification stage, GLO will likely submit a declaration from Serrano attesting to the following: (i) that during her employment, the Luminos TimeTrack system automatically deducted thirty minutes from her compensable time for meal breaks, regardless of whether she was actually relieved of all duties; (ii) that she was required to perform pre-shift activities (booting up computer systems, reviewing guest arrival information, attending handover briefings) and post-shift activities (completing guest-folio reconciliations, printing end-of-shift reports) without compensation; (iii) that she observed similar practices affecting other hourly employees at her property and was informed by colleagues at other VHG properties that the same practices prevailed; and (iv) that VHG's corporate office, rather than local property management, set the policies governing these practices.

GLO may also supplement the Serrano declaration with declarations from employees at other VHG properties. Even one or two additional declarations from employees at different properties would significantly strengthen the conditional certification showing by corroborating the allegation that the practices were company-wide rather than limited to a single location. Courts in the Middle District have granted conditional certification based on as few as two or three declarations. See, e.g., Lockhart, 2021 WL 2784651, at *4.

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 system, configuring payroll rules (including AR-MEAL-030), and ensuring compliance with wage-and-hour laws across all properties.

• Carla S. Whitfield, Vice President of Human Resources, who oversees uniform job classifications, job descriptions, exempt/non-exempt determinations, and employee handbook policies for all properties.

• Theodore R. Langford, Chief Executive Officer, and Marguerite A. Dunning, Chief Financial Officer, who set company-wide compensation policies, authorize overtime budgets, and approve changes to the tip-pool structures.

GLO will argue that the concentration of wage-and-hour decision-making at the corporate level — rather than at the individual property level — demonstrates that hourly employees across all properties were subject to the same policies and practices, satisfying the "similarly situated" standard. This argument is supported by cases holding that centralized corporate control over employment practices is a significant factor favoring conditional certification. See Anderson, 488 F.3d at 953; Cameron, 2020 WL 5742683, at *4.

B. VHG's Potential Arguments to Defeat or Narrow Conditional Certification

Although the lenient standard at the conditional certification stage presents a significant hurdle, VHG is not without arguments. The following strategies should be developed and refined during the pre-litigation scoping phase and deployed either in opposition to a motion for conditional certification or, if conditional certification is granted, in support of a later motion to decertify.

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 the Luminos TimeTrack system and the Employee Handbook as evidence of uniformity, VHG can counter by demonstrating that the implementation of these policies differs from property to property, department to department, and manager to manager.

Relevant variations to investigate and document include the following:

Meal-Break Practices. VHG should determine whether employees at some properties are permitted to take bona fide, uninterrupted meal breaks — during which they are fully relieved of all duties and free to leave the premises — while employees at other properties remain on call during their meal periods, respond to guest requests, or are otherwise unable to take a duty-free break. If the evidence shows that meal-break compliance varies by property and by department (e.g., front-desk employees may be required to remain at their stations while housekeeping employees are free to leave the floor), this variation would undermine the premise that the auto-deduction rule AR-MEAL-030 harmed all employees in the same manner.

Pre-Shift and Post-Shift Activities. VHG should investigate whether the nature, duration, and compensability of pre-shift and post-shift activities differ by department and by property. For example, donning and doffing uniforms may be required for housekeeping and food-and-beverage employees but not for administrative roles; computer boot-up time may be relevant to front-desk and reservations employees but not to maintenance staff; and shift-handover briefings may be conducted differently (or not at all) depending on the department and the property's operational model. If these activities vary meaningfully, the pre-/post-shift compensability claims cannot be resolved on a collective basis.

Tip-Pool Practices. VHG should determine whether tip-pool arrangements exist at all seven at-issue properties or only at certain properties, and whether the composition of the tip pool (which positions are included and excluded) varies by property and by department. The tipped-employee minimum-wage claims are relevant only to employees who participate in tip pools — a subset of the total hourly workforce — and if tip-pool practices are not uniform, these claims are not suitable for collective treatment.

Lead/Senior Role Duties. VHG should investigate whether the "lead" and "senior" hourly roles alleged to be misclassified as exempt exist at all seven properties or only at some, and whether the actual duties performed by employees in these roles vary by property and by department. Exemption determinations under the FLSA's white-collar exemptions turn on the specific duties performed by each employee — not on job titles or job descriptions — making these claims inherently individualized.

The following property-specific details should be developed for each of the seven at-issue properties:

• Verimark Regency Tampa — 320 rooms; approximately 410 employees (approximately 295 hourly). This is the named claimant Serrano's property and will serve as the primary fact pattern for the plaintiff's case. VHG should conduct a detailed review of meal-break compliance at this property.

• Verimark Grand Orlando — 485 rooms; approximately 580 employees (approximately 420 hourly). This is VHG's largest property and has a complex operational structure including multiple food-and-beverage outlets, a convention center, and a spa. The operational scale and complexity may distinguish this property from smaller VHG locations.

• Verimark Shores Clearwater — 210 rooms; approximately 260 employees (approximately 190 hourly). This property is owned by Palomar Realty Partners LLC and managed by VHG under the Hotel Management Agreement (HMA-2021-0601-PC), creating a distinct joint-employer dynamic discussed in detail below.

• Verimark Bayfront St. Petersburg — 275 rooms; approximately 340 employees (approximately 245 hourly). This is a waterfront property with a different guest profile and staffing model than the Regency Tampa.

• Verimark Resort & Spa Boca Raton — 390 rooms; approximately 470 employees (approximately 340 hourly). Located in the South Florida market with a luxury resort model, this property has seasonal staffing fluctuations and a substantial spa operation with distinct workforce characteristics.

• Verimark Oceanview Fort Lauderdale — 305 rooms; approximately 365 employees (approximately 265 hourly). This South Florida property has significant food-and-beverage operations and convention space, with different meal-break practices potentially driven by the demands of banquet and catering operations.

• Verimark Key West Collection — 150 rooms; approximately 195 employees (approximately 140 hourly). This is VHG's smallest property, a boutique hotel with a substantially different operational profile — including a more intimate staffing model, different departmental structure, and a unique labor market — from the larger properties.

Developing property-specific factual records for each of these seven locations will be essential to both the narrowing arguments at conditional certification and the decertification motion at Stage Two.

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 West Collection, for example, is a boutique property with 150 rooms and approximately 195 employees. Its operational profile — including a small, close-knit staff; limited departmental specialization; and a labor market dominated by seasonal tourism workers — is substantially different from the Grand Orlando, which has 485 rooms, approximately 580 employees, a convention center, multiple food-and-beverage outlets, and a large, departmentalized workforce. These differences may affect the nature and extent of pre-/post-shift activities, the feasibility of bona fide meal breaks, the existence and composition of tip pools, and the duties assigned to lead/senior roles.

While geographic and market differences alone are unlikely to defeat conditional certification at the first stage — given the lenient standard — they may contribute to a narrowing of the collective and will be highly relevant at the second-stage decertification analysis.

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 1, 2021 (HMA-2021-0601-PC). Under this agreement, VHG manages the property's day-to-day operations and directly employs all on-site staff, but Palomar retains certain approval rights over operating budgets, capital expenditures, and senior management appointments.

This ownership/management structure creates a potential joint-employer issue that distinguishes the Clearwater property from VHG's wholly-owned properties. VHG can argue that including Verimark Shores Clearwater employees in the collective is improper because a joint-employer analysis — under Zheng v. Liberty Apparel Co., 355 F.3d 61 (2d Cir. 2003), and the Department of Labor's regulatory framework — is necessary for that property, creating individualized issues that undermine the "similarly situated" determination. If Palomar is found to be a joint employer of the Clearwater staff, the employment relationship at that property would be materially different from the relationship at VHG's wholly-owned properties, potentially requiring separate analysis of each claimant's employment circumstances.

Conversely, GLO will argue that VHG is the direct employer of all Clearwater staff — that VHG sets wages, schedules shifts, administers the Luminos TimeTrack payroll system, and applies the same Employee Handbook — and that Palomar's role as property owner is irrelevant to the conditional certification analysis. At the lenient first stage, this counter-argument is likely to prevail, as courts generally decline to delve into complex factual disputes at the notice stage. However, the joint-employer issue may prove more fruitful at the second-stage decertification analysis, where the court conducts a full factual inquiry.

VHG should coordinate with Palomar to develop a common factual record and, as recommended below, should finalize the draft common interest agreement to facilitate the sharing of privileged information relevant to the joint-employer analysis.

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 in front-desk, concierge, and certain food-and-beverage roles who participate in tip pools. The majority of VHG's approximately 1,895 hourly employees at the seven at-issue properties are not tipped employees. Including non-tipped employees in a collective defined by tipped-employee claims would be improper.

Misclassification claims apply only to the subset of "lead" and "senior" hourly roles that have been classified as exempt — positions such as Lead Front Desk Associate, Senior Housekeeper, and Lead Server. This is an even smaller subset of the total hourly workforce, and the misclassification analysis for each position turns on the specific duties performed by each employee, making these claims inherently individualized.

Pre-/post-shift compensability claims vary significantly by department. Donning and doffing uniforms may be compensable for housekeeping employees required to change into specific uniforms on-site, but may not be an issue for front-desk employees whose dress code requires only business attire that can be worn to and from work. Computer boot-up time is relevant primarily to front-desk, reservations, and administrative roles that require logging into point-of-sale or property-management systems. Shift-handover briefings vary in length, content, and formality depending on the department and the property.

VHG should argue vigorously for sub-classing or narrowing the collective to specific job categories that correspond to each claim category. Rather than a single, undifferentiated collective of all hourly employees, VHG should propose that any conditional certification be limited to: (i) for the meal-break deduction claims, employees in positions where the auto-deduction applied and where bona fide meal breaks were not consistently provided; (ii) for the overtime claims, employees who actually worked overtime during the relevant period; (iii) for the tipped-employee claims, employees in tipped positions participating in tip pools; (iv) for the misclassification claims, employees in the specific lead/senior roles at issue; and (v) for the pre-/post-shift claims, employees in specific departments where pre-/post-shift work was allegedly required. This narrowing approach, if successful, could significantly reduce the size of the collective and corresponding exposure.

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 regarding the auto-deduction policy, overtime calculation methodology, or exempt classifications. If this defense applies to some employees or time periods but not others — for example, if VHG received DOL guidance regarding the auto-deduction policy that was applicable only after a certain date — it would create individualized issues that weigh against collective treatment.

Individual Variations in Hours Worked and Overtime Patterns. The overtime claims require proof that each individual employee actually worked hours in excess of forty per workweek and was not fully compensated for that overtime. The hours worked, overtime patterns, and applicable rates of pay will vary from employee to employee, creating individualized damages calculations.

Meal-Break Compliance. Some employees may have been fully relieved of all duties during their meal breaks, meaning the auto-deduction was lawfully applied to those individuals even if it was improperly applied to others. Determining meal-break compliance on an employee-by-employee basis would require individualized factual inquiries.

Statute-of-Limitations Defenses. The applicable limitations period under the FLSA is two years for non-willful violations and three years for willful violations. 29 U.S.C. § 255(a). Whether the violations were "willful" may vary by property, by time period, and by the specific management decisions at issue, creating individualized limitations defenses. For example, if VHG revised its meal-break procedures at certain properties following an internal compliance review in 2024, the willfulness analysis may differ for employees at those properties compared to employees at properties where no such review occurred.

While individualized defenses alone are unlikely to defeat conditional certification at the first stage — courts consistently hold that such defenses are more appropriately considered at the decertification stage — they should be documented now for eventual use in a Stage Two motion.

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 employees at each included location are "similarly situated." If the named plaintiff (Serrano) worked at Verimark Regency Tampa and GLO's evidence pertains only to the seven at-issue properties, there is no factual basis for including employees at the remaining seven properties in the conditional certification. VHG should argue that any notice should be limited to the seven identified properties at most, and that expansion beyond those properties would be speculative and unsupported by even the minimal evidence required at the notice stage.

This argument has a reasonable chance of success, as courts in the Middle District have narrowed conditionally certified collectives to exclude locations for which the plaintiff presented no evidence of unlawful practices. See, e.g., Vondriska, 2009 WL 2160460, at *3 (limiting conditional certification to locations where the plaintiff had presented evidence of a common policy).

C. Assessment of Likelihood of Conditional Certification

Based on the foregoing analysis, we offer the following candid assessment of VHG's prospects at the conditional certification stage.

Conditional certification is more likely than not to be granted on the overtime and meal-break deduction claims. These claims are tied to uniform, centralized policies — the Luminos TimeTrack auto-deduction rule AR-MEAL-030 and the centralized overtime calculation algorithm — that apply across all VHG properties. GLO will need only a modest factual showing — likely Serrano's declaration and perhaps one or two additional declarations — to demonstrate that employees at multiple properties were subject to these common policies. Given the lenient standard applied in the Middle District of Florida, a motion to conditionally certify a collective on these claims is very likely to succeed.

VHG has stronger arguments for narrowing the collective. VHG's most promising avenue at the conditional certification stage is to seek limitations on the scope of the collective, rather than to defeat certification entirely. Specifically, VHG should argue for the exclusion of:

(i) the tipped-employee minimum-wage claims, which affect only a subset of employees in specific job codes and which are not cognizable under § 216(b) to the extent they arise under the Florida Constitution;

(ii) the misclassification claims, which involve highly individualized duties-based inquiries specific to lead/senior roles;

(iii) employees at the seven non-at-issue properties, for which GLO has not identified any factual basis for inclusion; and

(iv) potentially, employees at the Verimark Shores Clearwater property, based on the distinct joint-employer dynamic.

VHG's best opportunity to defeat the collective is at Stage Two. After discovery, VHG will have the opportunity to develop a full factual record demonstrating property-level variations in actual practices, individualized defenses, and the other differences discussed above. The Stage Two decertification motion — supported by property-level time-punch data, declarations from property-level managers, and the forensic payroll analysis — will be VHG's strongest tool for narrowing or dissolving the collective.

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 litigation, venue will likely be the United States District Court for the Middle District of Florida, Tampa Division, based on the following factors: the named plaintiff Serrano was employed at Verimark Regency Tampa, located at 1200 North Westshore Boulevard, Tampa, FL 33607; VHG's corporate headquarters are located at 2400 Bayshore Boulevard, Suite 1100, Tampa, FL 33629; and the principal events giving rise to the claims occurred within the district. The Tampa Division of the Middle District is familiar with FLSA collective actions in the hospitality industry, and the district's judges have generally applied the lenient conditional certification standard described above.

VHG should consider whether early settlement discussions might narrow or eliminate the collective action risk before a complaint is filed. Pre-litigation resolution offers several advantages: it avoids the triggering event of a filed complaint that may generate adverse publicity; it prevents the issuance of court-authorized notice that could prompt opt-ins and expand the collective; and it preserves VHG's ability to negotiate confidential settlement terms. However, the $18.5 million demand figure may exceed VHG's assessment of reasonable settlement value, particularly if the collective can be narrowed through the arguments discussed above. A counter-offer calibrated to the narrower Scenario A exposure estimate ($8,147,700) may be appropriate as an opening position in pre-litigation negotiations, subject to further analysis and client direction.

B. Evidence to Develop During the Scoping-Phase Audit

We recommend that the wage-and-hour audit currently being scoped — as described in the separate audit-scope-and-methodology memorandum — be specifically structured to gather evidence of property-level variations in the following areas:

Meal-Break Practices. The audit should document, for each property and each major department (front desk, housekeeping, food and beverage, maintenance, spa, and administrative), whether employees actually receive bona fide, duty-free meal breaks; whether employees are required to remain on call, carry radios or pagers, or respond to guest requests during meal periods; and whether property-level managers enforce or deviate from the corporate meal-break policy. Declarations from department managers and supervisors at each property should be obtained.

Pre-Shift and Post-Shift Practices. The audit should identify, for each property and department, the specific activities employees are required or expected to perform before clocking in and after clocking out, the approximate duration of those activities, whether those activities are mandated by local management or corporate policy, and whether employees are compensated for those activities.

Tip-Pool Composition and Practices. The audit should document which properties and departments maintain tip pools, which positions are included in each tip pool, how tips are collected and distributed, and whether the tip-pool arrangements comply with applicable federal and state law.

Job Descriptions and Actual Duties of Lead/Senior Roles. The audit should compare the written job descriptions for lead/senior roles (maintained by corporate HR) with the actual duties performed by employees in those roles at each property. Declarations from property-level managers describing the day-to-day duties of lead/senior employees should be obtained.

This evidence will serve two purposes. First, it will be critical to any decertification motion at Stage Two, where VHG must demonstrate property-level and department-level factual variations. Second, it may also be useful in opposing conditional certification at Stage One, to the extent the evidence can be assembled before litigation is filed and presented to the court in a timely manner. Courts at the conditional certification stage do not weigh evidence or resolve factual disputes, but evidence of significant property-level variations may, at minimum, support narrowing arguments.

The forensic payroll analysis contemplated by Ridgepoint Advisory Group LLC — to be led by Dr. Alicia Tran — should include property-level and department-level breakdowns of time-punch data from the Luminos TimeTrack system. Specifically, the analysis should examine: (i) the frequency and duration of meal-break deductions by property and department; (ii) the prevalence of pre-shift and post-shift time punches (or the absence thereof) by property and department; (iii) overtime patterns and calculations by property and department; and (iv) any anomalies or variations in payroll processing that suggest property-level departures from the centralized system configuration. This granular data will be essential to establishing that the auto-deduction rule AR-MEAL-030, while uniformly configured at the system level, operates differently in practice across properties.

C. Opt-In Rate Assumptions and Exposure Implications

The size of the collective — and consequently VHG's litigation exposure — will depend significantly on the opt-in rate. As noted above, historical opt-in rates in FLSA hospitality collective actions in the Eleventh Circuit range from approximately 10% to 35%. The actual opt-in rate in this case will depend on multiple factors, including the form and method of notice, the length of the opt-in period, the level of interest among current and former employees, and GLO's outreach efforts.

For planning purposes, the following opt-in projections should be considered:

The exposure model should be adjusted based on these projections. Under the narrower Scenario A — limited to the seven at-issue properties, current hourly employees only, and a 10% opt-in rate — the projected exposure (including liquidated damages) is approximately $8,147,700. Under the broader Scenario B — encompassing all fourteen properties, current and former employees, and maximum damages assumptions — the projected exposure could reach approximately $202.4 million. The working mid-range of $22 million to $38 million reflects a moderate collective size and moderate damages assumptions and should be used for settlement-planning purposes.

D. Notice Issues

If conditional certification is granted, the form and scope of the court-authorized notice become critical battleground issues. VHG should be prepared to contest any proposed notice that:

• Is overly broad in scope, encompassing properties not identified in the complaint or job categories not implicated by the claims;

• Uses inflammatory or argumentative language that might prejudice putative collective members or encourage opt-ins on the basis of inaccurate information;

• Proposes an unreasonably long opt-in period (VHG should advocate for a sixty-day period rather than the ninety-day period GLO is likely to request);

• Requests dissemination by methods beyond first-class mail, such as posting in employee break rooms, email blasts to current employees, or text-message notifications, without adequate justification; or

• Includes contact information for GLO in a manner that suggests an endorsement or recommendation by the court or VHG.

VHG should also monitor for any communications from GLO to potential collective members prior to court-authorized notice. Under the FLSA, courts have inherent authority to regulate communications with putative collective members, and unauthorized solicitation by plaintiff's counsel may give rise to sanctions or curative relief. See Hoffmann-La Roche, 493 U.S. at 170 (recognizing the court's managerial responsibility over the notice process). If VHG becomes aware of GLO outreach to current employees before a complaint is filed or before notice is authorized, VHG should promptly bring this to the court's attention.

E. Coordination with Insurance Coverage

The potential for a large collective action increases the importance of promptly tendering the claim under VHG's Employment Practices Liability ("EPL") insurance policy with Pinnacle Indemnity Corp. The relevant policy details are as follows:

• Policy Number: PIN-EPL-2025-44781

• Per-Occurrence Limit: $10,000,000

• Aggregate Limit: $25,000,000

• Self-Insured Retention ("SIR"): $500,000

• Tender Deadline: March 15, 2026

Timely tender — no later than the March 15, 2026 deadline — is essential to preserve coverage rights. VHG should provide Pinnacle with a copy of the GLO demand letter, a summary of the factual allegations, and a preliminary assessment of potential exposure. We recommend that VHG's General Counsel coordinate with C&H's insurance-coverage team to prepare and submit the tender letter.

If the collective is certified and damages estimates exceed the $10 million per-occurrence limit, VHG's uninsured exposure becomes significant. Under the maximum Scenario B assumptions, the per-occurrence limit would cover less than 5% of the projected $202.4 million exposure. Even under the working mid-range of $22 million to $38 million, the uninsured exposure would be between $12 million and $28 million (after application of the $10 million per-occurrence limit and the $500,000 SIR). VHG's board and executive team should be apprised of this gap, and consideration should be given to whether excess coverage or other risk-mitigation strategies are available.

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 roles. Property-level declarations from department managers and supervisors should be obtained and preserved. This evidence will be essential both to narrowing arguments at Stage One and to a decertification motion at Stage Two.

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, meal-break deductions, overtime calculations, and payroll anomalies. This data will provide the quantitative foundation for VHG's arguments that the centralized Luminos TimeTrack system, while uniform in configuration, produces varying outcomes across properties and departments.

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 operational differences between the Key West Collection boutique property and the Grand Orlando full-service resort; (b) individualized defenses, including the good-faith defense under 29 U.S.C. § 259, variations in meal-break compliance, and limitations-period differences; and (c) fairness and procedural considerations, including the impracticability of adjudicating diverse claims across fourteen properties and multiple job codes in a single collective proceeding.

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 fourteen VHG properties in Florida; (b) specific job codes relevant to each claim category (e.g., tipped positions only for the tip-pool claims, lead/senior roles only for the misclassification claims); and (c) the appropriate limitations period — two years for non-willful violations or three years for willful violations, to be determined on a claim-by-claim and property-

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
TO: Bernard Crawford, Responsible Partner, Labor & Employment Renata Vasquez, Billing Partner, Labor & Employment
FROM: Nadia Petrov, Lead Associate, Labor & Employment James Underwood, Working Associate, Labor & Employment
DATE: February 12, 2026
RE: FLSA Collective Action — Conditional Certification Standards in the Middle District of Florida; Application to Verimark Hospitality Group Inc. Wage-and-Hour Claims
MATTER: Calderwood & Harkness LLP Matter No. 1021-00005
CLIENT: Verimark Hospitality Group Inc.
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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 certification in the event Garza, Linden & Okafor LLP ("GLO") files a collective action on behalf of Daniela M. Serrano and similarly situated current and former hourly, non-exempt employees.
Key Conclusion. At the conditional certification stage — sometimes referred to as the "notice stage" — courts in the Middle District of Florida apply a lenient, "fairly low" standard that requires only a modest factual showing that putative collective members are "similarly situated." This standard is well-established across the Eleventh Circuit and is applied with particular consistency in the Middle District. VHG's strongest arguments for defeating or narrowing certification center on property-level variations in actual wage-and-hour practices, differing management structures across VHG's geographically dispersed hotel portfolio, and the distinct circumstances of the Palomar-managed Verimark Shores Clearwater property. However, the centralized payroll processing through Luminos Payroll Solutions Inc. (system ID LTT-VHG-2022-0041) and the company-wide automatic meal-break deduction rule AR-MEAL-030 may weigh significantly against VHG by suggesting the existence of uniform, company-wide policies — precisely the type of evidence that courts routinely rely upon to grant conditional certification.
Background on the Threatened Litigation. By demand letter dated January 14, 2026, GLO — acting on behalf of Daniela M. Serrano (a former front-desk associate at Verimark Regency Tampa) and putative similarly situated employees — has threatened to file a collective action and/or class action on behalf of all current and former hourly, non-exempt employees at Verimark-branded properties in the State of Florida from January 2023 to the present. GLO estimates the putative collective at between 4,100 and 5,900 individuals and has demanded $18.5 million in settlement. VHG's response deadline under the demand letter is February 28, 2026.
Categories of Allegations. The demand letter implicates five categories of alleged FLSA and state-law wage-and-hour violations:
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 of these claims are cognizable under FLSA § 216(b). In particular, the Florida constitutional minimum-wage claims under Article X, Section 24 would proceed under Rule 23 of the Federal Rules of Civil Procedure (or applicable state procedural mechanisms) rather than under § 216(b)'s opt-in collective action framework. This memorandum focuses on the FLSA collective action; a separate analysis of Rule 23 certification standards for state-law claims may be warranted and is noted among our recommendations below.
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 consent is filed in the court in which such action is brought.
29 U.S.C. § 216(b) (emphasis added). This provision establishes the FLSA's distinctive opt-in mechanism: unlike a Rule 23 class action, in which absent class members are bound by the judgment unless they affirmatively opt out, an FLSA collective action binds only those employees who affirmatively file written consents with the court. See Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 169 (1989) (recognizing that § 216(b) establishes an "opt-in" scheme fundamentally different from the "opt-out" class action under Rule 23).
The practical consequence of the opt-in mechanism is twofold. First, the size of the ultimate collective depends on the number of employees who choose to participate — a factor influenced by the form, scope, and method of court-authorized notice. Second, because potential plaintiffs must take affirmative steps to join the action, the resulting collective is typically smaller than a comparable Rule 23 class would be for the same universe of affected employees. Historical opt-in rates in FLSA hospitality cases in the Eleventh Circuit range from approximately 10% to 35%, depending on the nature of the claims, the length of the opt-in period, the form and distribution of notice, and the characteristics of the workforce.
Despite the procedural narrowness of the opt-in mechanism relative to Rule 23, the standard for conditional certification of an FLSA collective at the initial stage is in practice more lenient than the requirements for certifying a Rule 23 class. Under Rule 23, plaintiffs must satisfy the four prerequisites of Rule 23(a) — numerosity, commonality, typicality, and adequacy of representation — and must also demonstrate that the action falls within one of the categories specified in Rule 23(b). Courts apply these requirements rigorously, and certification under Rule 23 is frequently contested on multiple grounds. By contrast, the "similarly situated" standard under § 216(b) requires only a modest factual showing at the conditional certification stage, as discussed in detail in Section III below.
It is important to note that the Florida minimum-wage claims under Article X, Section 24 of the Florida Constitution are not cognizable under § 216(b). The FLSA's collective action mechanism is limited to claims arising under the FLSA itself — specifically, claims for minimum wage under § 206 and overtime under § 207. State-law wage claims, even when alleged alongside FLSA claims, must be pursued through other procedural vehicles, most commonly a Rule 23 class action in federal court (if supplemental jurisdiction exists) or a state-court class action. Accordingly, GLO's threatened action may involve parallel procedural tracks: an FLSA § 216(b) collective for the federal overtime and minimum-wage claims, and a Rule 23 class (or state-law equivalent) for the Florida constitutional claims. This memorandum addresses the FLSA collective action standards; a separate memorandum addressing Rule 23 certification for the state-law claims should be prepared as litigation approaches.
B. "Similarly Situated" Requirement
The text of § 216(b) requires that collective members be "similarly situated" to the named plaintiff, but the statute does not define that term. Congress provided no guidance as to what degree of factual or legal similarity is required, and the Supreme Court has not directly addressed the standard. As a result, the meaning of "similarly situated" has been developed entirely through case law, with some variation across circuits.
The Eleventh Circuit has not mandated a single definitive test for determining whether employees are "similarly situated" under § 216(b). However, the Circuit has consistently endorsed and applied the two-stage approach — sometimes called the "Lusardi" approach, after Lusardi v. Xeroxx Corp., 118 F.R.D. 351 (D.N.J. 1987) — that is used by virtually all district courts within the Circuit. See Hipp v. Liberty Nat'l Life Ins. Co., 252 F.3d 1208, 1218 (11th Cir. 2001) (noting the two-stage inquiry without mandating a specific framework); Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1259–62 (11th Cir. 2008) (discussing the second-stage decertification analysis in detail). Under this approach, the "similarly situated" determination is made at two distinct points in the litigation: first, at the conditional certification stage, where the standard is lenient, and second, at the decertification stage following the close of discovery, where the standard is considerably more rigorous. The two-stage framework and its application in the Middle District of Florida are discussed in the next section.
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 showing required is minimal. Courts in the Eleventh Circuit and the Middle District of Florida uniformly describe the standard as "a fairly lenient one," requiring only a "modest factual showing" that the plaintiff and putative collective members were victims of a common policy or plan that violated the FLSA. See, e.g., Hipp, 252 F.3d at 1218; Dybach v. State of Fla. Dep't of Corrs., 942 F.2d 1562, 1567–68 (11th Cir. 1991); Anderson v. Cagle's Inc., 488 F.3d 945, 953 (11th Cir. 2007).
The plaintiff may satisfy this modest burden through range evidentiary submissions, including her own declaration, declarations from other potential collective members, deposition testimony (if available at this early stage), documentary evidence of company-wide policies, employee handbooks, payroll records, corporate communications, or other materials suggesting the existence of a common practice or policy that violated the FLSA. See, e.g., Cameron v. Kindred Healthcare Operating, Inc., No. 8:19-cv-2400-T-33CPT, 2020 WL 5742683, at 3 (M.D. Fla. Sept. 25, 2020). The plaintiff is not required to demonstrate that the putative collective members are identically situated — only that they are "similarly situated" in the sense that they were subject to a common policy or practice. See, e.g., Vondriska v. Premier Mortg. Funding, Inc., No. 8:08-cv-1564-T-30MAP, 2009 WL 2160460, at 2 (M.D. Fla. July 16, 2009).
Critically, courts do not resolve factual disputes, weigh evidence, or evaluate the merits of the claims at the conditional certification stage. The inquiry is focused narrowly on whether there is sufficient evidence to suggest that similarly situated individuals exist and that the case is appropriate for collective treatment. See Hipp, 252 F.3d at 1218; Cameron, 2020 WL 5742683, at 3. As the Middle District has repeatedly emphasized, "the court does not weigh the merits of the underlying claims, resolve factual disputes, or evaluate the credibility of evidence at this stage." Lockhart v. D&S Diversified Techs. LLP, No. 6:20-cv-1291-CEM-DCI, 2021 WL 2784651, at 3 (M.D. Fla. Mar. 24, 2021).
The primary purpose of the conditional certification inquiry is to determine whether court-authorized notice should issue to potential opt-in plaintiffs, thereby enabling them to learn of the pending action and to make an informed decision about whether to participate. See Hoffmann-La Roche, 493 U.S. at 170 (observing that court-facilitated notice serves the "broad remedial purpose" of the FLSA by ensuring that employees who may have been subjected to unlawful practices are aware of their right to join a pending action). If conditional certification is granted, the court authorizes the dissemination of notice — typically by first-class mail, and increasingly by email and text message as well — to putative collective members, who then have a specified period (typically sixty to ninety days, as set by the court) to file written consents and opt in to the action.
Leading decisions in the Middle District of Florida have consistently applied the lenient conditional certification standard in a manner that favors granting notice. In Cameron v. Kindred Healthcare Operating, Inc., the court granted conditional certification of an FLSA collective action brought by hourly healthcare workers alleging that the defendant's company-wide time-rounding policy resulted in systematic underpayment of overtime, emphasizing that the existence of a uniform, centrally administered timekeeping policy was sufficient to satisfy the modest factual showing requirement. 2020 WL 5742683, at 4. In Lockhart v. D&S Diversified Technologies LLP, the court authorized notice in a collective action by technicians alleging uncompensated pre- and post-shift work, finding that two declarations describing a common practice of requiring off-the-clock work were sufficient at the notice stage. 2021 WL 2784651, at 4. In Pendlebury v. Starbucks Coffee Co., No. 04-80521-CIV, 2005 WL 84500 (S.D. Fla. Jan. 3, 2005), the court granted conditional certification in a tipped-employee case, finding that evidence of a company-wide tip-pooling policy was adequate to demonstrate that the putative collective was similarly situated.
Courts in the Middle District of Florida have been particularly inclined to grant conditional certification where the plaintiff alleges a single, company-wide policy — such as a uniform automatic meal-break deduction rule or a common overtime calculation methodology — that is applied across multiple locations through a centralized payroll system. In such cases, the very existence of the uniform policy serves as the "modest factual showing" that putative collective members were subject to a common practice. See, e.g., Mackenzie v. Kindred Hospitals East, LLC, 276 F. Supp. 2d 1211, 1219 (M.D. Fla. 2003) (finding that a company-wide policy was "exactly the type of evidence sufficient to establish that a similarly situated group of plaintiffs exists"). This precedent is directly relevant to VHG's situation, where the centralized Luminos TimeTrack auto-deduction rule AR-MEAL-030 is configured at the system level and applies uniformly across all fourteen Verimark-branded properties.
B. Stage Two: Decertification (Post-discovery)
The second stage of the certification analysis occurs after the close of opt-in discovery and, typically, after significant merits discovery has been completed. At this stage, the defendant may move to decertify the collective on the ground that the opt-in plaintiffs are not, in fact, similarly situated to the named plaintiff. The standard at the second stage is considerably more rigorous than at the conditional certification stage, and courts conduct a full factual analysis of the record developed during discovery.
The Eleventh Circuit's three-factor test for the second-stage analysis, set forth in Hipp v. Liberty National Life Insurance Co. and further elaborated in Morgan v. Family Dollar Stores, Inc., requires the court to consider:
(1) the disparate factual and employment settings of the individual plaintiffs;
(2) the various defenses available to the defendant that appear to be individual to each plaintiff; and
(3) fairness and procedural considerations.
Hipp, 252 F.3d at 1219–20; Morgan, 551 F.3d at 1261. This analysis is fact-intensive and turns on the specific record in each case. Courts examine whether the evidence developed during discovery reveals meaningful differences in the factual circumstances of the collective members — differences that, if significant enough, may render collective treatment inappropriate.
At the second stage, the burden effectively shifts to the defendant. Whereas at the first stage the plaintiff must make only a modest showing to justify notice, at the second stage the defendant bears a practical (if not formal) burden of demonstrating that the collective members are not similarly situated. See Morgan, 551 F.3d at 1261 (discussing the defendant's burden to show that the collective should be decertified based on differences among the opt-in plaintiffs). This shift is significant because it means that even if conditional certification is granted, the defendant retains a meaningful opportunity to contest the collective's viability after developing a full factual record.
If the court grants a motion to decertify, the opt-in plaintiffs' claims are dismissed without prejudice, and those individuals must file their own individual lawsuits if they wish to pursue their claims. See id. at 1261–62. Decertification, while a powerful remedy for the defendant, is not without its own costs: by the time a decertification motion is heard, the defendant will typically have invested significant resources in discovery, and the case will have accumulated substantial settlement value. As a practical matter, many FLSA collective actions settle before the decertification stage is reached.
C. Practical Significance of the Two Stages
Understanding the practical dynamics of the two-stage certification process is essential to advising VHG on strategy. The conditional certification stage is often dispositive as a practical matter, even though it does not resolve the merits: once notice issues and opt-in plaintiffs begin to accumulate, the case takes on significant settlement value, and the defendant faces increased litigation costs, expanded discovery obligations, and heightened reputational risk.
For VHG, the practical stakes at the conditional certification stage are substantial. The demand letter estimates the putative collective at between 4,100 and 5,900 individuals spanning a period from January 2023 to the present. If conditional certification is granted on the broadest terms sought by GLO, court-authorized notice would issue to this entire universe of current and former hourly employees across all fourteen Verimark-branded properties in Florida. Even at a relatively modest opt-in rate of 10%, this would yield between 410 and 590 opt-in plaintiffs; at a 35% opt-in rate, the collective could include 1,435 to 2,065 individuals. The exposure model prepared by C&H's litigation-analytics team reflects a wide range — from the narrower Scenario A estimate of $8,147,700 (encompassing only current hourly employees at the seven at-issue properties, including liquidated damages) to the broader Scenario B estimate of approximately $202.4 million (encompassing the full putative collective under maximum damages assumptions) — with a working mid-range of $22 million to $38 million. Conditional certification would likely push actual exposure toward the upper end of this range as the collective grows in size.
The seven at-issue properties identified in GLO's demand letter collectively employ approximately 2,620 employees, of whom approximately 1,895 are hourly, non-exempt. The demand letter, however, seeks to encompass all fourteen VHG properties in Florida, which would significantly expand the putative collective. VHG's ability to limit the collective to the seven at-issue properties — or to narrow the collective by claim category and job code — will be a critical determinant of litigation exposure.
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 account number LTT-VHG-2022-0041. This centralized payroll arrangement has been in place since January 1, 2022. All time-and-attendance data, wage calculations, overtime computations, and deductions for VHG employees are processed through the Luminos TimeTrack platform, regardless of the property at which the employee works. This uniformity is precisely the type of evidence that courts in the Middle District of Florida have found sufficient to satisfy the modest factual showing at the conditional certification stage.
Auto-Deduction Rule AR-MEAL-030. The automatic meal-break deduction rule — coded as AR-MEAL-030 within the Luminos TimeTrack system — is configured at the system level and applies uniformly across all properties. Under this rule, the payroll system automatically deducts thirty minutes from an employee's compensable time for any shift of six hours or longer, on the assumption that the employee took a bona fide, duty-free meal break during the shift. GLO will argue that this uniform, system-level configuration constitutes a company-wide policy that affected all hourly employees in the same manner, making the putative collective members "similarly situated" for purposes of the meal-break deduction claims. This argument is well-supported by precedent: courts have repeatedly granted conditional certification where the plaintiff identifies a uniform, centralized timekeeping or deduction policy. See, e.g., Cameron, 2020 WL 5742683, at 4; Mackenzie*, 276 F. Supp. 2d at 1219.
Centralized Overtime Calculation. The overtime calculation algorithm within Luminos TimeTrack is likewise centralized and uniform. All overtime computations — including the determination of the regular rate of pay, the identification of hours worked in excess of forty per workweek, and the calculation of the overtime premium — are performed at the system level based on parameters set by VHG's corporate payroll department. GLO will argue that any error or unlawful practice embedded in this algorithm (such as failing to include non-discretionary bonuses or shift differentials in the regular rate) would have affected all hourly employees uniformly.
Employee Handbook. A single Employee Handbook (Version 7.2, effective January 1, 2025) governs all fourteen Verimark-branded properties. The handbook sets forth company-wide policies on overtime, meal breaks, timekeeping, tip reporting, and exempt/non-exempt classifications. GLO will point to the handbook as evidence that VHG imposed uniform policies across all properties, further supporting the conclusion that putative collective members are similarly situated.
Uniform Job Codes and Job Descriptions. VHG's corporate Human Resources office, under Vice President Carla S. Whitfield, maintains uniform job codes and job descriptions for all positions across all properties. GLO will argue that this centralized HR function demonstrates that the employment relationship is uniform and that variations across properties are insufficient to defeat conditional certification at the notice stage.
Taken together, these elements present a compelling narrative of centralized, uniform wage-and-hour practices — the very type of evidence that courts in the Middle District of Florida routinely rely upon to grant conditional certification.
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 collective members were subject to a common policy or practice.
The named claimant, Daniela M. Serrano (employee ID VHG-EMP-20220314-5587), is a former front-desk associate at Verimark Regency Tampa who was employed from March 14, 2022 through August 22, 2025. At the conditional certification stage, GLO will likely submit a declaration from Serrano attesting to the following: (i) that during her employment, the Luminos TimeTrack system automatically deducted thirty minutes from her compensable time for meal breaks, regardless of whether she was actually relieved of all duties; (ii) that she was required to perform pre-shift activities (booting up computer systems, reviewing guest arrival information, attending handover briefings) and post-shift activities (completing guest-folio reconciliations, printing end-of-shift reports) without compensation; (iii) that she observed similar practices affecting other hourly employees at her property and was informed by colleagues at other VHG properties that the same practices prevailed; and (iv) that VHG's corporate office, rather than local property management, set the policies governing these practices.
GLO may also supplement the Serrano declaration with declarations from employees at other VHG properties. Even one or two additional declarations from employees at different properties would significantly strengthen the conditional certification showing by corroborating the allegation that the practices were company-wide rather than limited to a single location. Courts in the Middle District have granted conditional certification based on as few as two or three declarations. See, e.g., Lockhart, 2021 WL 2784651, at *4.
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 system, configuring payroll rules (including AR-MEAL-030), and ensuring compliance with wage-and-hour laws across all properties.
• Carla S. Whitfield, Vice President of Human Resources, who oversees uniform job classifications, job descriptions, exempt/non-exempt determinations, and employee handbook policies for all properties.
• Theodore R. Langford, Chief Executive Officer, and Marguerite A. Dunning, Chief Financial Officer, who set company-wide compensation policies, authorize overtime budgets, and approve changes to the tip-pool structures.
GLO will argue that the concentration of wage-and-hour decision-making at the corporate level — rather than at the individual property level — demonstrates that hourly employees across all properties were subject to the same policies and practices, satisfying the "similarly situated" standard. This argument is supported by cases holding that centralized corporate control over employment practices is a significant factor favoring conditional certification. See Anderson, 488 F.3d at 953; Cameron, 2020 WL 5742683, at *4.
B. VHG's Potential Arguments to Defeat or Narrow Conditional Certification
Although the lenient standard at the conditional certification stage presents a significant hurdle, VHG is not without arguments. The following strategies should be developed and refined during the pre-litigation scoping phase and deployed either in opposition to a motion for conditional certification or, if conditional certification is granted, in support of a later motion to decertify.
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 the Luminos TimeTrack system and the Employee Handbook as evidence of uniformity, VHG can counter by demonstrating that the implementation of these policies differs from property to property, department to department, and manager to manager.
Relevant variations to investigate and document include the following:
Meal-Break Practices. VHG should determine whether employees at some properties are permitted to take bona fide, uninterrupted meal breaks — during which they are fully relieved of all duties and free to leave the premises — while employees at other properties remain on call during their meal periods, respond to guest requests, or are otherwise unable to take a duty-free break. If the evidence shows that meal-break compliance varies by property and by department (e.g., front-desk employees may be required to remain at their stations while housekeeping employees are free to leave the floor), this variation would undermine the premise that the auto-deduction rule AR-MEAL-030 harmed all employees in the same manner.
Pre-Shift and Post-Shift Activities. VHG should investigate whether the nature, duration, and compensability of pre-shift and post-shift activities differ by department and by property. For example, donning and doffing uniforms may be required for housekeeping and food-and-beverage employees but not for administrative roles; computer boot-up time may be relevant to front-desk and reservations employees but not to maintenance staff; and shift-handover briefings may be conducted differently (or not at all) depending on the department and the property's operational model. If these activities vary meaningfully, the pre-/post-shift compensability claims cannot be resolved on a collective basis.
Tip-Pool Practices. VHG should determine whether tip-pool arrangements exist at all seven at-issue properties or only at certain properties, and whether the composition of the tip pool (which positions are included and excluded) varies by property and by department. The tipped-employee minimum-wage claims are relevant only to employees who participate in tip pools — a subset of the total hourly workforce — and if tip-pool practices are not uniform, these claims are not suitable for collective treatment.
Lead/Senior Role Duties. VHG should investigate whether the "lead" and "senior" hourly roles alleged to be misclassified as exempt exist at all seven properties or only at some, and whether the actual duties performed by employees in these roles vary by property and by department. Exemption determinations under the FLSA's white-collar exemptions turn on the specific duties performed by each employee — not on job titles or job descriptions — making these claims inherently individualized.
The following property-specific details should be developed for each of the seven at-issue properties:
• Verimark Regency Tampa — 320 rooms; approximately 410 employees (approximately 295 hourly). This is the named claimant Serrano's property and will serve as the primary fact pattern for the plaintiff's case. VHG should conduct a detailed review of meal-break compliance at this property.
• Verimark Grand Orlando — 485 rooms; approximately 580 employees (approximately 420 hourly). This is VHG's largest property and has a complex operational structure including multiple food-and-beverage outlets, a convention center, and a spa. The operational scale and complexity may distinguish this property from smaller VHG locations.
• Verimark Shores Clearwater — 210 rooms; approximately 260 employees (approximately 190 hourly). This property is owned by Palomar Realty Partners LLC and managed by VHG under the Hotel Management Agreement (HMA-2021-0601-PC), creating a distinct joint-employer dynamic discussed in detail below.
• Verimark Bayfront St. Petersburg — 275 rooms; approximately 340 employees (approximately 245 hourly). This is a waterfront property with a different guest profile and staffing model than the Regency Tampa.
• Verimark Resort & Spa Boca Raton — 390 rooms; approximately 470 employees (approximately 340 hourly). Located in the South Florida market with a luxury resort model, this property has seasonal staffing fluctuations and a substantial spa operation with distinct workforce characteristics.
• Verimark Oceanview Fort Lauderdale — 305 rooms; approximately 365 employees (approximately 265 hourly). This South Florida property has significant food-and-beverage operations and convention space, with different meal-break practices potentially driven by the demands of banquet and catering operations.
• Verimark Key West Collection — 150 rooms; approximately 195 employees (approximately 140 hourly). This is VHG's smallest property, a boutique hotel with a substantially different operational profile — including a more intimate staffing model, different departmental structure, and a unique labor market — from the larger properties.
Developing property-specific factual records for each of these seven locations will be essential to both the narrowing arguments at conditional certification and the decertification motion at Stage Two.
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 West Collection, for example, is a boutique property with 150 rooms and approximately 195 employees. Its operational profile — including a small, close-knit staff; limited departmental specialization; and a labor market dominated by seasonal tourism workers — is substantially different from the Grand Orlando, which has 485 rooms, approximately 580 employees, a convention center, multiple food-and-beverage outlets, and a large, departmentalized workforce. These differences may affect the nature and extent of pre-/post-shift activities, the feasibility of bona fide meal breaks, the existence and composition of tip pools, and the duties assigned to lead/senior roles.
While geographic and market differences alone are unlikely to defeat conditional certification at the first stage — given the lenient standard — they may contribute to a narrowing of the collective and will be highly relevant at the second-stage decertification analysis.
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 1, 2021 (HMA-2021-0601-PC). Under this agreement, VHG manages the property's day-to-day operations and directly employs all on-site staff, but Palomar retains certain approval rights over operating budgets, capital expenditures, and senior management appointments.
This ownership/management structure creates a potential joint-employer issue that distinguishes the Clearwater property from VHG's wholly-owned properties. VHG can argue that including Verimark Shores Clearwater employees in the collective is improper because a joint-employer analysis — under Zheng v. Liberty Apparel Co., 355 F.3d 61 (2d Cir. 2003), and the Department of Labor's regulatory framework — is necessary for that property, creating individualized issues that undermine the "similarly situated" determination. If Palomar is found to be a joint employer of the Clearwater staff, the employment relationship at that property would be materially different from the relationship at VHG's wholly-owned properties, potentially requiring separate analysis of each claimant's employment circumstances.
Conversely, GLO will argue that VHG is the direct employer of all Clearwater staff — that VHG sets wages, schedules shifts, administers the Luminos TimeTrack payroll system, and applies the same Employee Handbook — and that Palomar's role as property owner is irrelevant to the conditional certification analysis. At the lenient first stage, this counter-argument is likely to prevail, as courts generally decline to delve into complex factual disputes at the notice stage. However, the joint-employer issue may prove more fruitful at the second-stage decertification analysis, where the court conducts a full factual inquiry.
VHG should coordinate with Palomar to develop a common factual record and, as recommended below, should finalize the draft common interest agreement to facilitate the sharing of privileged information relevant to the joint-employer analysis.
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 in front-desk, concierge, and certain food-and-beverage roles who participate in tip pools. The majority of VHG's approximately 1,895 hourly employees at the seven at-issue properties are not tipped employees. Including non-tipped employees in a collective defined by tipped-employee claims would be improper.
Misclassification claims apply only to the subset of "lead" and "senior" hourly roles that have been classified as exempt — positions such as Lead Front Desk Associate, Senior Housekeeper, and Lead Server. This is an even smaller subset of the total hourly workforce, and the misclassification analysis for each position turns on the specific duties performed by each employee, making these claims inherently individualized.
Pre-/post-shift compensability claims vary significantly by department. Donning and doffing uniforms may be compensable for housekeeping employees required to change into specific uniforms on-site, but may not be an issue for front-desk employees whose dress code requires only business attire that can be worn to and from work. Computer boot-up time is relevant primarily to front-desk, reservations, and administrative roles that require logging into point-of-sale or property-management systems. Shift-handover briefings vary in length, content, and formality depending on the department and the property.
VHG should argue vigorously for sub-classing or narrowing the collective to specific job categories that correspond to each claim category. Rather than a single, undifferentiated collective of all hourly employees, VHG should propose that any conditional certification be limited to: (i) for the meal-break deduction claims, employees in positions where the auto-deduction applied and where bona fide meal breaks were not consistently provided; (ii) for the overtime claims, employees who actually worked overtime during the relevant period; (iii) for the tipped-employee claims, employees in tipped positions participating in tip pools; (iv) for the misclassification claims, employees in the specific lead/senior roles at issue; and (v) for the pre-/post-shift claims, employees in specific departments where pre-/post-shift work was allegedly required. This narrowing approach, if successful, could significantly reduce the size of the collective and corresponding exposure.
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 regarding the auto-deduction policy, overtime calculation methodology, or exempt classifications. If this defense applies to some employees or time periods but not others — for example, if VHG received DOL guidance regarding the auto-deduction policy that was applicable only after a certain date — it would create individualized issues that weigh against collective treatment.
Individual Variations in Hours Worked and Overtime Patterns. The overtime claims require proof that each individual employee actually worked hours in excess of forty per workweek and was not fully compensated for that overtime. The hours worked, overtime patterns, and applicable rates of pay will vary from employee to employee, creating individualized damages calculations.
Meal-Break Compliance. Some employees may have been fully relieved of all duties during their meal breaks, meaning the auto-deduction was lawfully applied to those individuals even if it was improperly applied to others. Determining meal-break compliance on an employee-by-employee basis would require individualized factual inquiries.
Statute-of-Limitations Defenses. The applicable limitations period under the FLSA is two years for non-willful violations and three years for willful violations. 29 U.S.C. § 255(a). Whether the violations were "willful" may vary by property, by time period, and by the specific management decisions at issue, creating individualized limitations defenses. For example, if VHG revised its meal-break procedures at certain properties following an internal compliance review in 2024, the willfulness analysis may differ for employees at those properties compared to employees at properties where no such review occurred.
While individualized defenses alone are unlikely to defeat conditional certification at the first stage — courts consistently hold that such defenses are more appropriately considered at the decertification stage — they should be documented now for eventual use in a Stage Two motion.
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 employees at each included location are "similarly situated." If the named plaintiff (Serrano) worked at Verimark Regency Tampa and GLO's evidence pertains only to the seven at-issue properties, there is no factual basis for including employees at the remaining seven properties in the conditional certification. VHG should argue that any notice should be limited to the seven identified properties at most, and that expansion beyond those properties would be speculative and unsupported by even the minimal evidence required at the notice stage.
This argument has a reasonable chance of success, as courts in the Middle District have narrowed conditionally certified collectives to exclude locations for which the plaintiff presented no evidence of unlawful practices. See, e.g., Vondriska, 2009 WL 2160460, at *3 (limiting conditional certification to locations where the plaintiff had presented evidence of a common policy).
C. Assessment of Likelihood of Conditional Certification
Based on the foregoing analysis, we offer the following candid assessment of VHG's prospects at the conditional certification stage.
Conditional certification is more likely than not to be granted on the overtime and meal-break deduction claims. These claims are tied to uniform, centralized policies — the Luminos TimeTrack auto-deduction rule AR-MEAL-030 and the centralized overtime calculation algorithm — that apply across all VHG properties. GLO will need only a modest factual showing — likely Serrano's declaration and perhaps one or two additional declarations — to demonstrate that employees at multiple properties were subject to these common policies. Given the lenient standard applied in the Middle District of Florida, a motion to conditionally certify a collective on these claims is very likely to succeed.
VHG has stronger arguments for narrowing the collective. VHG's most promising avenue at the conditional certification stage is to seek limitations on the scope of the collective, rather than to defeat certification entirely. Specifically, VHG should argue for the exclusion of:
(i) the tipped-employee minimum-wage claims, which affect only a subset of employees in specific job codes and which are not cognizable under § 216(b) to the extent they arise under the Florida Constitution;
(ii) the misclassification claims, which involve highly individualized duties-based inquiries specific to lead/senior roles;
(iii) employees at the seven non-at-issue properties, for which GLO has not identified any factual basis for inclusion; and
(iv) potentially, employees at the Verimark Shores Clearwater property, based on the distinct joint-employer dynamic.
VHG's best opportunity to defeat the collective is at Stage Two. After discovery, VHG will have the opportunity to develop a full factual record demonstrating property-level variations in actual practices, individualized defenses, and the other differences discussed above. The Stage Two decertification motion — supported by property-level time-punch data, declarations from property-level managers, and the forensic payroll analysis — will be VHG's strongest tool for narrowing or dissolving the collective.
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 litigation, venue will likely be the United States District Court for the Middle District of Florida, Tampa Division, based on the following factors: the named plaintiff Serrano was employed at Verimark Regency Tampa, located at 1200 North Westshore Boulevard, Tampa, FL 33607; VHG's corporate headquarters are located at 2400 Bayshore Boulevard, Suite 1100, Tampa, FL 33629; and the principal events giving rise to the claims occurred within the district. The Tampa Division of the Middle District is familiar with FLSA collective actions in the hospitality industry, and the district's judges have generally applied the lenient conditional certification standard described above.
VHG should consider whether early settlement discussions might narrow or eliminate the collective action risk before a complaint is filed. Pre-litigation resolution offers several advantages: it avoids the triggering event of a filed complaint that may generate adverse publicity; it prevents the issuance of court-authorized notice that could prompt opt-ins and expand the collective; and it preserves VHG's ability to negotiate confidential settlement terms. However, the $18.5 million demand figure may exceed VHG's assessment of reasonable settlement value, particularly if the collective can be narrowed through the arguments discussed above. A counter-offer calibrated to the narrower Scenario A exposure estimate ($8,147,700) may be appropriate as an opening position in pre-litigation negotiations, subject to further analysis and client direction.
B. Evidence to Develop During the Scoping-Phase Audit
We recommend that the wage-and-hour audit currently being scoped — as described in the separate audit-scope-and-methodology memorandum — be specifically structured to gather evidence of property-level variations in the following areas:
Meal-Break Practices. The audit should document, for each property and each major department (front desk, housekeeping, food and beverage, maintenance, spa, and administrative), whether employees actually receive bona fide, duty-free meal breaks; whether employees are required to remain on call, carry radios or pagers, or respond to guest requests during meal periods; and whether property-level managers enforce or deviate from the corporate meal-break policy. Declarations from department managers and supervisors at each property should be obtained.
Pre-Shift and Post-Shift Practices. The audit should identify, for each property and department, the specific activities employees are required or expected to perform before clocking in and after clocking out, the approximate duration of those activities, whether those activities are mandated by local management or corporate policy, and whether employees are compensated for those activities.
Tip-Pool Composition and Practices. The audit should document which properties and departments maintain tip pools, which positions are included in each tip pool, how tips are collected and distributed, and whether the tip-pool arrangements comply with applicable federal and state law.
Job Descriptions and Actual Duties of Lead/Senior Roles. The audit should compare the written job descriptions for lead/senior roles (maintained by corporate HR) with the actual duties performed by employees in those roles at each property. Declarations from property-level managers describing the day-to-day duties of lead/senior employees should be obtained.
This evidence will serve two purposes. First, it will be critical to any decertification motion at Stage Two, where VHG must demonstrate property-level and department-level factual variations. Second, it may also be useful in opposing conditional certification at Stage One, to the extent the evidence can be assembled before litigation is filed and presented to the court in a timely manner. Courts at the conditional certification stage do not weigh evidence or resolve factual disputes, but evidence of significant property-level variations may, at minimum, support narrowing arguments.
The forensic payroll analysis contemplated by Ridgepoint Advisory Group LLC — to be led by Dr. Alicia Tran — should include property-level and department-level breakdowns of time-punch data from the Luminos TimeTrack system. Specifically, the analysis should examine: (i) the frequency and duration of meal-break deductions by property and department; (ii) the prevalence of pre-shift and post-shift time punches (or the absence thereof) by property and department; (iii) overtime patterns and calculations by property and department; and (iv) any anomalies or variations in payroll processing that suggest property-level departures from the centralized system configuration. This granular data will be essential to establishing that the auto-deduction rule AR-MEAL-030, while uniformly configured at the system level, operates differently in practice across properties.
C. Opt-In Rate Assumptions and Exposure Implications
The size of the collective — and consequently VHG's litigation exposure — will depend significantly on the opt-in rate. As noted above, historical opt-in rates in FLSA hospitality collective actions in the Eleventh Circuit range from approximately 10% to 35%. The actual opt-in rate in this case will depend on multiple factors, including the form and method of notice, the length of the opt-in period, the level of interest among current and former employees, and GLO's outreach efforts.
For planning purposes, the following opt-in projections should be considered:
The exposure model should be adjusted based on these projections. Under the narrower Scenario A — limited to the seven at-issue properties, current hourly employees only, and a 10% opt-in rate — the projected exposure (including liquidated damages) is approximately $8,147,700. Under the broader Scenario B — encompassing all fourteen properties, current and former employees, and maximum damages assumptions — the projected exposure could reach approximately $202.4 million. The working mid-range of $22 million to $38 million reflects a moderate collective size and moderate damages assumptions and should be used for settlement-planning purposes.
D. Notice Issues
If conditional certification is granted, the form and scope of the court-authorized notice become critical battleground issues. VHG should be prepared to contest any proposed notice that:
• Is overly broad in scope, encompassing properties not identified in the complaint or job categories not implicated by the claims;
• Uses inflammatory or argumentative language that might prejudice putative collective members or encourage opt-ins on the basis of inaccurate information;
• Proposes an unreasonably long opt-in period (VHG should advocate for a sixty-day period rather than the ninety-day period GLO is likely to request);
• Requests dissemination by methods beyond first-class mail, such as posting in employee break rooms, email blasts to current employees, or text-message notifications, without adequate justification; or
• Includes contact information for GLO in a manner that suggests an endorsement or recommendation by the court or VHG.
VHG should also monitor for any communications from GLO to potential collective members prior to court-authorized notice. Under the FLSA, courts have inherent authority to regulate communications with putative collective members, and unauthorized solicitation by plaintiff's counsel may give rise to sanctions or curative relief. See Hoffmann-La Roche, 493 U.S. at 170 (recognizing the court's managerial responsibility over the notice process). If VHG becomes aware of GLO outreach to current employees before a complaint is filed or before notice is authorized, VHG should promptly bring this to the court's attention.
E. Coordination with Insurance Coverage
The potential for a large collective action increases the importance of promptly tendering the claim under VHG's Employment Practices Liability ("EPL") insurance policy with Pinnacle Indemnity Corp. The relevant policy details are as follows:
• Policy Number: PIN-EPL-2025-44781
• Per-Occurrence Limit: $10,000,000
• Aggregate Limit: $25,000,000
• Self-Insured Retention ("SIR"): $500,000
• Tender Deadline: March 15, 2026
Timely tender — no later than the March 15, 2026 deadline — is essential to preserve coverage rights. VHG should provide Pinnacle with a copy of the GLO demand letter, a summary of the factual allegations, and a preliminary assessment of potential exposure. We recommend that VHG's General Counsel coordinate with C&H's insurance-coverage team to prepare and submit the tender letter.
If the collective is certified and damages estimates exceed the $10 million per-occurrence limit, VHG's uninsured exposure becomes significant. Under the maximum Scenario B assumptions, the per-occurrence limit would cover less than 5% of the projected $202.4 million exposure. Even under the working mid-range of $22 million to $38 million, the uninsured exposure would be between $12 million and $28 million (after application of the $10 million per-occurrence limit and the $500,000 SIR). VHG's board and executive team should be apprised of this gap, and consideration should be given to whether excess coverage or other risk-mitigation strategies are available.
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 roles. Property-level declarations from department managers and supervisors should be obtained and preserved. This evidence will be essential both to narrowing arguments at Stage One and to a decertification motion at Stage Two.
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, meal-break deductions, overtime calculations, and payroll anomalies. This data will provide the quantitative foundation for VHG's arguments that the centralized Luminos TimeTrack system, while uniform in configuration, produces varying outcomes across properties and departments.
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 operational differences between the Key West Collection boutique property and the Grand Orlando full-service resort; (b) individualized defenses, including the good-faith defense under 29 U.S.C. § 259, variations in meal-break compliance, and limitations-period differences; and (c) fairness and procedural considerations, including the impracticability of adjudicating diverse claims across fourteen properties and multiple job codes in a single collective proceeding.
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 fourteen VHG properties in Florida; (b) specific job codes relevant to each claim category (e.g., tipped positions only for the tip-pool claims, lead/senior roles only for the misclassification claims); and (c) the appropriate limitations period — two years for non-willful violations or three years for willful violations, to be determined on a claim-by-claim and property-

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