Wage & Hour Counsel : Wage & Hour Lawyer & Attorney : Littler Mendelson Law Firm : Employment Law, Labor Relations

By Martha Keon

In Dellinger v. Science Applications Internal Corporation, the Fourth Circuit Court of Appeals affirmed the dismissal of an applicant’s FLSA retaliation claim, holding that only current or former employees can sue for retaliation under the FLSA and that an applicant is not an employee.

Natalie Dellinger was offered a job with Science Applications International Corporation (“SAIC”), contingent on the transfer of her security clearance, among other things. Dellinger accepted the offer and filled out a form to transfer her security clearance. The form required her to disclose any non-criminal court actions to which she was a party, and she disclosed a Fair Labor Standards Act (“FLSA”) lawsuit that she had filed against her former employer. Shortly thereafter, SAIC withdrew its contingent offer of employment.

Dellinger sued SAIC, claiming that the withdrawal of the offer violated the FLSA’s anti-retaliation provision. SAIC moved to dismiss the complaint on the ground that the FLSA’s anti-retaliation provision only protects employees, and not applicants. The United States District Court for the Eastern District of Virginia agreed and dismissed the case. Dellinger appealed, with the Secretary of Labor filing an amicus brief supporting her arguments.

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In Zelasko-Barrett v. Brayton Purcell, LLP, No. A130540 (Aug. 17, 2011), California's First District Court of Appeal affirmed the trial court's order granting summary judgment in favor of the employer, Brayton Purcell. The appellate court held that California's professional overtime exemption applied to the plaintiff during the period of time he was employed as a law clerk at Brayton Purcell and had not yet passed the California Bar Examination. To learn more about the decision and its implications for employers, please continue reading Littler's ASAP, California Court Finds Professional Overtime Exemption Applies to Law Clerks, by Alan Levins, Kurt Bockes and Rachelle Wills.

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By Chris Kaczmarek

New Hampshire recently enacted a number of amendments to its wage and hour laws. Some of these amendments are of great importance to employers in the Granite State.

First, New Hampshire greatly expanded the types of deductions employers may make from employees’ wages. Specifically, an employer may now make such deductions “for any purpose on which the employer and employee mutually agree that does not grant financial advantage to the employer, when the employee has given his or her written authorization and deductions are duly recorded.” The new law provides, however, that such deductions may not be used to offset payments intended for purchasing items required in the performance of the employee’s job in the ordinary course of the operation of the business. In response to this change in the law, which became effective on August 6th, the New Hampshire Department of Labor (NHDOL) has published two new forms for use by employers: (1) a form by which an employee may authorize voluntary deductions; and (2) a form by which an employee authorizes the employer to recoup accidental overpayments of wages. These forms are available on the NHDOL’s website.

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By Diane Kimberlin

In Kuzinski v. Schering Corp, the U.S. District Court for Connecticut has dealt another blow to Schering Corporation’s efforts to prove that its pharmaceutical representatives are not entitled to overtime pay under the federal Fair Labor Standards Act. In ongoing litigation, the court had already rejected Schering’s argument that its pharmaceutical representatives were exempt outside sales employees. Schering tried another tactic, arguing that its sales representatives qualified as exempt from overtime under the administrative exemption. The plaintiffs filed their own motion for summary judgment. Acting on these cross motions for summary judgment, the court issued a decision on August 5, 2011, finding that the sales representatives are not exempt administrative employees.

Employers seeking to apply the FLSA’s administrative exemption must prove that: (1) the employees are paid a salary of at least $455 a week; (2) their “primary duty” is “the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers;” and (3) the employees’ “primary duty” includes the “exercise of discretion and independent judgment with respect to matters of significance.” According to the district court, Schering’s sales representatives did not meet the second or third parts of this test.

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In a case of first impression, California's Sixth District Court of Appeal sets down a new four-part test for distinguishing between sabbaticals and vacation in Paton v. Advanced Micro Devices, Inc. The decision is important because it provides guidance to California employers regarding the circumstances under which unused Paid Time Off (PTO) benefits must be paid out upon termination.

In the case before the court, the plaintiff became eligible for, but never took, an eight week paid sabbatical. According to the employer's sabbatical program, the paid leave would be forfeited if not used while the employee remained with the company. After the plaintiff resigned and did not receive any pay-out for his unused sabbatical, he brought a class action lawsuit claiming that the sabbatical was the legal equivalent of extra vacation for long-term employees. As a result, the employee argued, an eligible employee who did not use the eight weeks of paid time off should be paid for any unused portion upon termination, just as he would be paid for accrued and unused vacation.

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By Ryan L. Eddings

A federal judge in California held this week that employers may lawfully deduct amounts owed by employees on their employer-guaranteed credit cards from the employees’ final pay. In Ward v. Costco Wholesale Corporation, a group of former employees claimed that Costco’s deduction of outstanding amounts owed by these former employees on their Costco-sponsored credit cards from the employees’ final paychecks violated the Fair Labor Standards Act and California minimum wage and overtime legal requirements.

Like many employers, Costco provided a guaranteed credit card program to some employees, guaranteeing the credit card to the issuer in the event of an employee’s default. Each employee signed an authorization permitting Costco to deduct an amount equal to the employee’s credit card then-outstanding balance from the employee’s final paycheck. Each terminating employee received a final paycheck that included pay for all hours worked during the final pay period, as well as accrued vacation and sick leave pay. Costco then deducted an amount equal to the outstanding balance of the employer-sponsored credit card from the employees’ final pay.

At trial, the group of former employees argued that only gross wages for hours worked could be considered in determining whether Costco satisfied its obligation to pay minimum and overtime wages. The court rejected this argument, holding that it could also consider the pay for non-work, such as accrued vacation and sick leave pay. Using this figure, the court concluded that none of the nineteen former employees “had an amount withheld high enough to invade minimum or overtime wages.” Accordingly, the court entered judgment in favor of Costco, holding that plaintiffs failed to prove a violation of the FLSA and California wage and hour laws.

Photo credit: Matthew John Hollinshead

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By Jeanne Barber

On July 28, 2011, the Eleventh Circuit Court of Appeals in Dionne v. Floormasters Enterprises, Inc. held that an employer is not required to pay a plaintiff’s attorneys’ fees and costs if it denies liability under the Fair Labor Standards Act (FLSA) and tenders the full amount claimed by the employee, thereby rendering the employee’s claim moot.

The plaintiff, a warehouse clerk for Floormasters Enterprises, filed a complaint to recover overtime compensation under the FLSA, as well as liquidated damages, and reasonable attorneys' fees and costs. Floormasters filed a motion to dismiss the complaint, arguing that although it “vigorously den[ied] all of Plaintiff’s allegations,” it paid the plaintiff his total estimated damages. The plaintiff conceded that his claim thus became moot, but nonetheless requested that the court award him attorneys' fees and costs on the ground that he was the prevailing party in the action. The district court granted the employer’s motion and denied plaintiff’s request for attorneys' fees.

On appeal, the Eleventh Circuit held that the FLSA plainly requires that the plaintiff receive a judgment in his favor to be entitled to attorneys’ fees. The court found that there was no judgment in this case because the district court played only a minimal role and did not approve any agreement or enforce any settlement order. To hold otherwise, the court cautioned, would encourage plaintiffs to file meritless lawsuits and allow them to still recover attorneys’ fees. 

Photo credit: MBPhoto, Inc.

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