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

By James Oh, Andrew Voss and Tracy Stott Pyles

After a trial to the court in September 2011, the United States District Court for the Southern District of Ohio entered judgment on January 5, 2012 in favor of Defendant Nationwide Mutual Insurance Company, on all claims alleged against it by a nationwide class of Special Investigators who claimed they were misclassified as exempt from the overtime requirements of the FLSA and New York and California state wage laws.

The case was initially filed in September 2007 in federal court in California, and venue was transferred to the Southern District of Ohio, where Nationwide is headquartered. Notice to opt-in was issued nationwide to current and former Special Investigators, and ninety-one joined the action.

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The Department of Labor’s Wage and Hour Division has issued three new fact sheets on unlawful retaliation. One fact sheet discusses retaliation under the Fair Labor Standards Act (FLSA). The FLSA makes it a violation for any person to “discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this Act, or has testified or is about to testify in any such proceeding, or has served or is about to serve on an industry committee.” To learn more about the FLSA fact sheet and its implications for employers, please continue reading at Littler's Washington D.C. Employment Law Update.

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By Milton Castro

In a recent “off-the-clock” case, the Seventh Circuit Court of Appeals affirmed an Indiana district court decision and held that the time an employee spends before his or her shift in preparation for the shift is not compensable – even if such time is in excess of 10 minutes and to the significant benefit of the employer – if the employer does not know or have reason to know that the employee is regularly working this off-the-clock time.

In the case, Plaintiff Susan Kellar alleged that she regularly arrived at Defendant Summit Seating Inc.’s (“Summit”) worksite between 15 and 45 minutes before the start of her shift. According to the plaintiff, she would then typically spend:

• 5 minutes unlocking doors, turning on lights, turning on equipment, and punching into the time clock;
• 5 minutes preparing coffee for herself and the rest of the employees;
• 5-10 minutes (or longer) gathering material and distributing it to her subordinates’ workstations; and
• 5 minutes taking a coffee / smoking break.

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On December 15, 2011, the Department of Labor’s Wage and Hour Division (WHD) issued its much-anticipated proposed rule that could make more than a million domestic caregivers eligible to receive minimum wage and overtime pay under the Fair Labor Standards Act (FLSA). According to the WHD, the home healthcare industry has changed since the FLSA regulations governing home care employees were enacted more than 35 years ago. To that end, the proposal seeks to revise the FLSA’s companionship and live-in worker regulations to limit the types of duties that render a home caregiver exempt from FLSA requirements, clarify the type of activities and duties that may be considered “incidental” to the provision of companionship services, amend the recordkeeping requirements for live-in domestic workers, and specify that the exemption is limited to care givers employed by the individual, family or household using the services only. Third-party employers, including in-home staffing agencies, would not be entitled to claim the exemption even if the worker is jointly employed by the third party and the family/household. To learn more about the proposed rule and its implications for employers, please continue reading at Littler's Washington D.C. Employment Law Update.

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By Christopher Kaczmarek and Joseph Lazazzero

The First Circuit Court of Appeals recently held that banquet sales managers qualified for the administrative exemption to the Fair Labor Standards Act (FLSA). The court reached this holding in the case of Hines v. State Room, Inc. even though the banquet sales managers were bound by a price schedule established by their employer and therefore had virtually no authority to make financial decisions.

In this case, the banquet sales managers were responsible for contacting potential clients, assisting clients in selecting the appropriate venue, and designing a function so as to meet the client’s objectives and budgetary constraints. The “vast majority” of their work involved “unscripted conversations” with current and potential customers regarding the details of the event.

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The U.S. Supreme Court has agreed to resolve in Christopher v. SmithKline Beecham Corp. (11-204) whether the Fair Labor Standards Act’s (FLSA) outside sales exemption applies to pharmaceutical sales representatives (PSRs). The Court also will consider whether deference is owed to the Secretary of Labor's own interpretation of the FLSA exemption and related regulations. At stake is not only how an estimated 90,000 PSRs are to be paid under the FLSA, but also the deference to be paid to amicus briefs filed by the Department of Labor (DOL).

The FLSA’s outside sales exemption relieves from the Act’s overtime requirements “any employee employed . . . in the capacity of outside salesman (as such terms are defined and delimited from time to time by regulations of the Secretary).” Specifically, the regulations explain that an employee who works as an outside salesman is one:

(1) Whose primary duty is: (i) making sales within the meaning of section 3(k) of the Act; or (ii) obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and (2) Who is primarily and regularly engaged away from the employer's place or places of business in performing such primary duty.

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Bipartisan legislation introduced in the Senate last week would update the Fair Labor Standards Act’s (FLSA) computer employee exemption. Section 13(a)(17) of the FLSA establishes minimum wage and overtime exemptions for computer systems analysts, computer programmers, software engineers, or other similarly skilled workers provided that these employees’ specific job duties and compensation meet certain requirements. To learn more about the legislation and its potential implications for employers, please continue reading at Littler's Washington D.C. Employment Law Update blog.

Photo credit: PressFoto

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Rep. Lynn Woolsey (D-CA) has reintroduced legislation that would create new record-keeping requirements for employers that hire independent contractors, and impose stricter penalties for misclassification. Notably, the Employee Misclassification Prevention Act (H.R. 3178) would amend the Fair Labor Standards Act (FLSA) to require employers to keep records on and notify workers of their employment or independent contractor classification and their right to challenge that classification. To learn more about the proposed legislation and its potential implications for employers, please continue reading at Littler's D.C. Employment Law Update blog.

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By Christopher B. Kaczmarek and Jeanne Barber

Judge Gertner of the U.S. District Court for the District of Massachusetts recently issued an opinion rejecting the Klinghoffer rule, potentially making it easier for a plaintiff to prevail on claims that his or her employer failed to pay the minimum wage. Under the Klinghoffer rule, which takes its name from the case of United States v. Klinghoffer Bros. Realty Corp., 285 F.2d 487 (2d Cir. 1980), courts apply a weekly-average method to determine whether an employer is in compliance with the minimum wage requirement of the Fair Labor Standards Act. Applying this rule, courts have declined to find a minimum wage violation as long as the total weekly average wage divided by the hours actually worked is at least equal to the applicable minimum wage. For example, assume an employee works 26 hours per week at a rate of $10 per hour, earning $260 each week. Even if this employee worked an additional four hours for which she was not paid, her average hourly wage would equal $8.67, exceeding the minimum wage.

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By Alison Hightower

A social worker required to hold a bachelor’s degree in social or human services, behavioral science or an allied field does not necessarily qualify as a “learned professional,” properly exempt from overtime under the Fair Labor Standards Act, the Ninth Circuit recently held in Solis v. State of Washington DSHS (No. 10-35590 (Sept. 9, 2011).

The social workers in question were public employees of the State of Washington’s Department of Social and Health Services (DSHS), tasked with identifying the needs of children and their families and arranging for services to assure the children’s safety and well-being. Their obligations included investigating child abuse and neglect, developing treatment plans and recommending such plans to the courts, evaluating the progress children and families made in following those treatment plans, making placement decisions, and even recommending whether parental rights should be terminated.

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By Michael Gregg

A federal district court recently issued a decision in Hernandez v. Alpine Logistics, LLC, that requires employers to pay overtime compensation to employees who are otherwise exempt from overtime under the Motor Carrier Act for any workweek that the employee operates a vehicle weighing 10,000 pounds or less.

The primary issue in Alpine Logistics was whether employees who drove both larger vehicles (10,001 pounds or more) and smaller vehicles (10,000 pounds or less) were exempt from overtime under the Motor Carrier Exemption. The court pointed to Department of Labor Wage and Hour Division Fact Sheet # 19 in support of its holding that employees who drove both larger and smaller vehicles during the same workweek were entitled to overtime compensation. The court held that the Motor Carrier Exemption does not apply to an employee during workweeks in which the employee operates a smaller vehicle even if the employee also operates a larger vehicle during the same week.

Employers with a mixed fleet of vehicles should review their classification decisions and/or vehicle assignments to assess any potential exposure the Alpine Logistics decision may present.

To learn more about the decision and its implications for employers, please continue reading Littler's ASAP, Employers that Operate a Mixed Fleet of Vehicles May Lose the Motor Carrier Overtime Exemption.

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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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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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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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By Whitney Ferrer

In Verkuilen v. MediaBank LLC, the U.S. Court of Appeals for the Seventh Circuit held that an account manager for a company that provides computer software to advertising agencies qualified for the administrative exemption to the Fair Labor Standards Act and was therefore exempt from overtime.

The plaintiff in this case worked as an account manager for MediaBank LLC. In this position, she acted as a “bridge” between the software developers at MediaBank and its customers. As account manager, the plaintiff was responsible for determining the customer’s needs, relaying those needs to the software developers in order to facilitate the customization of the software, and helping the customer use the customized software.

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By Sarah Green

On April 13, 2011, a federal district court judge in Illinois held, in Mullins v. Target Corp., that “investigators” employed by Target Corporation qualified for the administrative exemption to the FLSA. Accordingly, the court dismissed a putative class action filed against Target by those investigators.

Plaintiff previously worked for Target as an investigator. Her job duties included conducting investigations of fraud and theft occurring at Target’s retail stores in Chicago and Indiana. The employee brought an action individually, and on behalf of all other Target investigators, alleging that she and her fellow investigators were misclassified as exempt and therefore should have been paid overtime.

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By Tracy Stott Pyles

A federal district court judge in Wisconsin recently held that the FLSA does not provide a cause of action for “gap” time claims. “Gap” time generally refers to uncompensated, non-overtime hours. Courts are divided as to whether the FLSA permits such claims.

In Espenscheid v. DirectSat USA, LLC, the employer argued that the plaintiffs could not pursue their claims for gap time because the hours in question were not overtime hours and the plaintiffs’ total compensation for any work week divided by the hours worked during that period did not fall below the minimum wage. The court began its analysis by noting that “most” courts prohibit pure gap claims, i.e., claims for straight time in weeks in which the employee worked no overtime. The court also noted that some courts permit gap time claims for weeks in which the employee worked more than 40 hours and the relevant employment agreement does not expressly or implicitly compensate for all non-overtime hours.

The court ultimately granted the employer’s motion for summary judgment on the gap time issue, holding that the FLSA does not provide a cause of action for gap claims “of any kind.” In reaching its conclusion, the court noted that: (1) the failure to pay for non-overtime hours diminishes the employee’s overall compensation, but there is no language in the FLSA creating a cause of action for diminished overall compensation; (2) the FLSA itself only requires the payment of minimum wages and overtime wages; (3) the FLSA not does expressly prevent an employer from requiring employees to work some hours below the overtime threshold for free, provided the employees’ average wage exceeds the minimum wage; (4) the “prohibited acts” listed in Section 215 of the FLSA do not include failure to pay straight or gap time wages; and (5) the FLSA does not provide an avenue for the recovery of straight time pay.

Photo credit: MBPhoto, Inc.

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By Steven Kaplan

While arbitration agreements are generally enforceable in the Fourth Circuit, a Maryland court recently denied a motion to compel arbitration in a collective action based on three provisions the court believed were “unconscionable. In Gadson v. Supershuttle International employees filed a collective action under the FLSA alleging that the employer misclassified them as independent contractors. In response, the employer filed a motion to compel arbitration because the plaintiffs had executed franchisee agreements that contained a provision to arbitrate disputes arising from the agreement. Plaintiffs opposed the motion asserting that the following three provisions were unenforceable: (1) fee splitting; (2) prohibition of class actions; and (3) truncating the statute of limitations. The court agreed and held that the “severability” clause could not save the agreement because it would require “a near rewrite of the contract.”

The court found the fee splitting provision unlawful because the individual recovery for each plaintiff was projected to be far below the cost of the arbitration. To support this argument, Plaintiffs provided the court with their tax returns which demonstrated that they would not be able to afford the arbitration.

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By Kimberly Yates

On April 5, 2011, the Wage and Hour Division of the U.S. Department of Labor published its final amendments to regulations interpreting the Fair Labor Standards Act of 1938 (FLSA) and the Portal-to-Portal Act of 1947.

The new regulations provide specific guidance pertaining to ownership of employee tips, a description of permissible tip pooling arrangements, and clarification of the required notice to a tipped employee concerning an employer’s intent to utilize the FLSA’s tip credit. The DOL explains the amendments were driven by a need to revise regulations that are out of date as a result of “subsequent legislation.” The final amendments to the regulations, which differ in some significant respects from those the DOL originally proposed in 2008, will be effective May 5, 2011.

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By Martha Keon

The FLSA provides that an employer may not:

discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to [the Act], or has testified or is about to testify in such proceeding, or has served or is about to serve on an industry committee.

The meaning of the phrase “filed any complaint” has been vigorously disputed in the federal courts, resulting in circuit splits on two issues:

1. Does “filed any complaint” protect only complaints to the government or does it also include internal complaints to the employer? The majority view held by the First, Third, Sixth, Seventh, Eighth, Ninth, Tenth and Eleventh Circuits is that internal complaints to an employer are protected, while the minority view held by the Second and Fourth Circuits is that only complaints to government authorities are protected.
2. Does “filed any complaint” mean that the complaint has to be in writing or are unwritten, oral complaints also protected? Following the same general pattern, the Second, Fourth and Seventh Circuits have held that unwritten, oral complaints are not protected, while the Fifth, Sixth, Eighth, Ninth and Eleventh Circuits have protected unwritten, oral complaints.

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On February 15, 2011, the U.S. District Court for the District of New Jersey decertified a class of approximately 1,500 Home Depot merchandising assistant store managers (MASMs) who brought claims under the Fair Labor Standards Act (FLSA) against Home Depot. In Aquilino v. Home Depot, U.S.A., Inc., the plaintiffs were MASMs, who were the second-highest ranking employee in a Home Depot, subordinate only to the store manager. The MASMs claimed that they were improperly classified as executive employees who were exempt from the overtime requirements of the FLSA, and sued Home Depot for failing to pay them overtime wages.

In 2006, the court conditionally certified the class of MASMs, but expressly stated that certification “may be revisited . . . if it later appears, after appropriate discovery, that the additional plaintiffs who opt in the lawsuit are not similarly situated.” Notice was sent to approximately 12,728 current and former MASMS – 1,747 initially joined the litigation, and 1,502 remained in the litigation. Home Depot later moved to decertify the conditional collective action, arguing that the plaintiffs could not establish that they were similarly situated to the proposed class.

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On February 22, 2011, the U.S. Supreme Court declined to review a decision from the Seventh Circuit Court of Appeals which had approved the use of the “half time” method of computing unpaid overtime compensation in a misclassification case under the FLSA. Urnikis-Negro v. American Family Property Services, 616 F.3d 665 (7th Cir. 2010), cert. denied, No. 10-745 (Feb. 22, 2011).

Pursuant to the “half time” method, when an employee agrees to receive a fixed weekly salary as payment for all hours worked, the employee’s “regular rate” for any particular workweek is determined by dividing the employee’s weekly salary by the number of hours actually worked in that week. If it is later determined that the employee was misclassified as exempt, the amount of unpaid overtime compensation due for that week is equal to half of the employee’s regular rate times the number of overtime hours worked.
 

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The U.S. District Court for the Western District of New York has determined that the Fair Labor Standards Act requires employers to reimburse foreign H-2B visa workers for certain expenses paid by the workers if, after subtracting the costs from the workers’ wages, the workers’ effective net salary would fall below minimum wage. See Teoba v. Trugreen Landcare, No. 10-CV-6132 (W.D.N.Y. filed Feb. 15, 2011). The plaintiffs in Teoba alleged that they had paid for the costs of obtaining an H-2B visa, traveling to the United States, and the services of a third-party recruitment firm, which the employer had retained. The plaintiffs further alleged that after deducting the costs from their earned wages they received a net salary that fell below minimum wage.

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The Department of Transportation’s Federal Motor Carrier Safety Administration (FMCSA) has released a proposed rule amending the hours of service requirements for drivers of property-carrying commercial motor vehicles (CMVs). As discussed in a news release, the proposal would keep the “34-hour restart” provision allowing drivers to restart the clock on their weekly 60 or 70 hours by taking at least 34 consecutive hours off-duty, but that period would have to include two consecutive off-duty periods from midnight to 6:00 a.m. Drivers would be allowed to use this restart only once during a seven-day period. To learn more about the proposed rule and its implications for employers, please continue reading at Littler's D.C. Employment Law Update blog.

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The Ninth Circuit Court of Appeals has recently held that the City of Oakland, California did not violate the Fair Labor Standards Act (“FLSA”) when it required its police officers to repay the City for the cost of their training if they voluntarily resigned before completing five years of employment. (Gordon v. Oakland, No. 09-16167 (9th Cir. Nov. 19, 2010)).

In Gordon, the City and the bargaining unit for its police officers had entered into an agreement which required police officers to repay the City a pro rata share of their police academy training costs if they voluntarily separated from the City’s employment prior to completing five years of service. For example, a police officer who resigned after one year of service would have to repay 80% of the training costs whereas a police officer resigning after four years of service would only have to repay 20%. A police officer who resigned after five years of service would owe nothing to the City for training cost reimbursement. The agreement further provided that any repayment would be due at the time of the officer’s separation and that the City could deduct amounts due from the officer’s final paycheck.
 

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The Fair Labor Standards Act (FLSA) provides that it is unlawful "to discharge or in any other manner discriminate against any employee because such employee has filed any complaint ... under or related to this Act." 29 U.S.C. § 215(a)(3). The question before the U.S. Supreme Court today in Kasten v. Saint-Gobain Performance Plastics Corp., 570 F.3d 834 (7th Cir.), reh’g denied, 585 F.3d 310 (7th Cir. 2009), cert. granted, 130 S.Ct. 1890 (2010), was whether “filed any complaint” includes making an internal oral complaint.

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Senator John Kerry (D-MA) and Rep. Jim McDermott (D-WA) have introduced a bill that would curtail the use of a federal “safe harbor” that allows businesses to treat workers as independent contractors for federal employment tax purposes, regardless of the employee’s actual status under the common law test. The Fair Playing Field Act of 2010 (pdf) (H.R. 6128, S. 3786) would, among other things, require the Secretary of the Treasury to issue prospective guidance on worker classification for federal employment tax purposes. The safe harbor provided under section 530 of the Revenue Act of 1978 would continue to be available until the date an individual’s employment status is reclassified. The worker’s reclassification date would be the earlier of (a) the first day of the first calendar quarter beginning more than 180 days after the date of an employee classification determination by the Secretary of the Treasury; or (b) the effective date of the “first application final regulation” issued by the Secretary of the Treasury with respect to such individual (or if later, the first day of the first calendar quarter beginning more than 180 days after such regulation is issued). To learn more about the bill and its potential implications for employers, please continue reading at Littler's Washington, D.C. Employment Law Update blog.

Photo credit: SchulteProductions

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In a recent opinion, Polycarpe v. E & S Landscaping Serv. Inc., No. 08-15154 (11th Cir. Aug. 31, 2010), the Eleventh Circuit held that employees of primarily intrastate businesses may nonetheless be covered under the Fair Labor Standards Act (FLSA) if they can show that, in their employment, they utilized “materials” that had moved at any time in interstate commerce. “This decision makes it easier for low-wage workers to vindicate their rights under the FLSA by permitting workers to prove that they worked for covered enterprises,” said Steven J. Mandel, the Department of Labor’s Deputy Solicitor for National Operations.

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In Songer v. Dillon Resources, Inc., No. 09-10803 (Sept. 3, 2010), a unanimous panel of the Fifth Circuit issued two holdings, both favorable to employers attempting to establish the Motor Carrier Act exemption to the Fair Labor Standards Act (FLSA). The first issue was whether an employee staff-leasing company may assert the Motor Carrier Act exemption embodied in the FLSA. In Songer, one of the defendants was an employee staff-leasing company that hired drivers and assigned them to various interstate trucking companies. In that case, the plaintiffs were assigned to two different trucking companies that hauled aggregate used in the cement and concrete industries. Sometimes the aggregate was hauled across state lines, but in some instances the aggregate was only hauled within the state of Texas. The Fifth Circuit held that a staff-leasing company was entitled to the Motor Carrier Act exemption because it provided drivers to interstate trucking companies. The Fifth Circuit also held that all of the truck drivers were subject to the Motor Carrier Act exemption, even if some of them drove primarily intrastate. The court held that each truck driver did not have to personally participate in interstate commerce but, rather, only had to have a reasonable expectation that he/she could be called upon to drive across state lines. In Songer, all of the truck drivers could reasonably be expected to engage in interstate commerce because the dispatcher randomly assigned trips, some of which crossed state lines; no truck driver had a dedicated route; and all of the drivers had to meet DOL requirements, such as completing DOT logs and drug tests.

This entry was written by Shawn Oller.

Photo credit: MobiusDaXter

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In Parker v. NutriSystem, Inc., No. 09-3545 (Sept. 8, 2010), a divided panel of the Third Circuit held a system of flat-rate compensation for each sale that an employee makes may qualify for the retail commission exception to the overtime requirements of the federal Fair Labor Standards Act. In so ruling, the majority rejected the Department of Labor's argument that commissions must be linked to the sales price. To learn more about the decision and its implications for employers, please continue reading Littler's ASAP "Third Circuit Holds that Flat-Rate Commissions May Qualify for Retail Commission Exception to FLSA's Overtime Requirements" by Matthew Hank.

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This week, Rep. Linda Sanchez (D-CA) introduced legislation that would extend the federal minimum wage and overtime protections of the Fair Labor Standards Act (FLSA) to most home care workers, improve federal and state data collection and oversight with respect to the direct care workforce, and create a grant program to help states recruit and train direct care workers. Specifically, the Direct Care Workforce Empowerment Act (H.R. 5902) would limit the “companionship services” FLSA exemption to those who work 20 or fewer hours per week. To learn more about the bill, please continue reading at Littler's D.C. Employment Law Update blog.

Photo credit: AlexRaths

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Following a Connecticut district court’s denial of summary judgment to the employer in Ruggeri v. Boehringer Ingelheim Pharmaceuticals, Inc., a collective action brought by pharmaceutical sales representatives who claimed the were improperly classified as exempt employees, the pharmaceutical company has been hit with another putative collective action by sales representatives seeking overtime wages. But in this new case, Lopez-Lima v. Boehringer Ingelheim Pharmaceuticals, filed on July 21, 2010 in the federal District Court for the Southern District of Florida, plaintiffs allege that Boehringer hired them as “non-exempt commission-paid pharmaceuticals sales representative[s].” To learn more about the case, please continue reading at Littler's Healthcare Employment Counsel blog.

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The Department of Labor’s Wage and Hour Division (WHD) has released a fact sheet to help employers comply with the lactation break time obligations established by the new health care law. The Patient Protection and Affordable Care Act (“Affordable Care Act”) amends section 7 of the Fair Labor Standards Act (FLSA) to require employers to provide rest breaks and suitable space for employees who are nursing mothers to express breast milk for up to one year after the child’s birth. To learn more about the fact sheet, please continue reading at Littler's Washington D.C. Employment Law Update blog.

Photo credit: camilla wisbauer
 

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The Federal Motor Carrier Safety Administration (“FMSCA”) recently announced its intent to grant a limited, two-year exemption from federal hours of service rules for certain drivers engaged in the transportation of ammonia. The FMSCA, a division of the U.S. Department of Transportation, is currently seeking public comments regarding this proposal.

The FMSCA administers the regulations governing the maximum driving and on-duty time for drivers utilized by motor carriers. On March 22, 2010, FMSCA announced a 90-day waiver of these regulations for drivers involved in the transportation of certain ammonia products.

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Legislation introduced in both the House and Senate would impose new record-keeping requirements on employers that hire independent contractors, and impose stricter penalties for misclassification. Introduced by Rep. Lynn Woolsey (D-CA) and Sen. Sherrod Brown (D-OH), the Employee Misclassification Prevention Act (H.R. 5107, S. 3254) would amend the Fair Labor Standards Act (FLSA) to require employers to keep records on and notify workers of their employment or independent contractor classification and their right to challenge that classification. For more information on the legislation and its implications for employers, continue reading at Littler's D.C. Employment Law Update blog.

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While the most recent change to the Fair Labor Standards Act (FLSA) and the attention it may receive might seem small in comparison to Health Care Reform, the FLSA Amendment is significant. The Amendment, which now provides break time to nursing mothers, imposes a new requirement under the FLSA. For further analysis on the Amendment and its implications for employers, continue reading at Littler's D.C. Employment Law Update blog.

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To commemorate Equal Pay Day, Sen. Tom Harkin (D-Iowa) and Rep. Eleanor Holmes Norton (D-DC) reintroduced the Fair Pay Act (S. 904, H.R. 2151).  Continue reading on Littler's Washington DC Employment Law Update blog.

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President Obama has chosen Lorelei Boylan as his nominee for Administrator of the Department of Labor’s Wage and Hour Division.  Continue reading on Littler's Washington DC Employment Law Update blog.

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This final segment of our three part series on the Multi State District Office (MODO) focuses on creating informal agreements with your MODO with regards to voluntary compliance.

Of course, most District Offices, in addition to MODO responsibilities, must also conduct and manage its own investigation case load, and tend to have more work than resources. So, if a company has not had multiple investigations, a large investigation covering multiple facilities or a history of non-compliance, the employer will have little (or no) contact with its MODO.

However, MODOs are also tasked with encouraging employers to create voluntary compliance programs and to work with cooperatively with employers who choose to create such programs. Thus, MODOs will welcome an employer interested in developing a cooperative program to maintain compliance.

There are no written or formal agreements between MODOs and employers – and, in most cases, we would not recommend entering a formal agreement. However, it is very beneficial for companies to create informal arrangements with their MODOs. The arrangement usually begins with a meet and greet between the District Director of the MODO and senior company executives (such as the General Counsel and/or Vice President of Human Resources). During this meeting the employer demonstrates their commitment to compliance and designates a contact person who will deal directly with the DOL. In return, the company should ask the MODO to notify the contact person whenever a complaint is filed against the company.

Both the DOL and employers benefit from this relationship. First, the employer’s contact person is able to develop a relationship with the MODO. If a complaint is filed, there is less tension on both sides and the matter is usually resolved quickly and efficiently. Rather than an investigator asking a manager for payroll records, the MODO will call the contact person and obtain the records and set up interviews if necessary. This process helps the employer avoid unreasonable investigators, and if a bad investigator is assigned to investigate the company, the employer can seek relief from the MODO. The process is less disruptive and easier on both parities. Another advantage of working with a MODO is the ability to obtain their assistance when conducting self audits or correcting payroll errors. Finally, the DOL usually will not assess civil money penalties or interest to employers who develop positive working relationships with them.

With increased wage and hour enforcement on the horizon, it is more important then ever to develop a good working relationship with your company’s MODO. Creating a partnership with your MODO now is perhaps the best preventative measure you can take to avoid contentious and unpleasant investigations in the future.

This blog entry was authored by Salvador Simao.

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This second part of our three part series on the Main Office District Office (MODO) focuses on the specific procedures that apply to multi-state enterprises.  A previously reported in Part I:  Who's Your MODO, Littler's Salvador Simao, a former trial attorney with the Department of Labor (DOL), discusses ways in which multi-state employers can effectively partner with the DOL.

Although not generally known by employers, the Wage and Hour Division has procedures to coordinate enforcement efforts for multi-state employers. These procedures are outlined within Chapter 61 of the Wage Hour Field Operations Handbook (FOH), which is not released to the public. The purpose of these procedures is two fold: First, to ensure consistent results when investigating similar issues in different facilities in different geographic locations. Second, to enable the Wage and Hour Division to uncover national, systematic violations.

In general, these procedures assigns each multi-state employer to the District Office (DO) with geographic jurisdiction over the employer’s company headquarters (or Main Office – MO). Thus, the acronym for the multi-state employer process is the MODO process – the Main Office District Office. The goal of the MODO process is to obtain maximum compliance while using DOL resources as efficiently as possible.

Of course, investigators have primary responsibility for conducting a wage-hour investigation in a single facility. Under the MODO process, however, an investigator can recommend that the investigation be expanded to cover additional facilities or even all the facilities of the employer if s/he uncovers a violation that appears to be caused by a company-wide policy or process. The decision to expand the investigation beyond one facility or one state is made by the MODO, who will consider the employer’s overall enforcement history in making that decision.

It is also the MODO’s responsibility to independently monitor the multi-state employers headquartered within its jurisdiction. The MODO will look for similar violations occurring at an employer’s facilities in different states to determine whether a national investigation is warranted. The MODO will create a strategy to ensure the employer comes into and remains in compliance with wage-hour laws. To this end, the MODO will receive reports at the conclusion of every investigation involving the multi-state employers headquartered within its jurisdiction.
These responsibilities of the MODO are generally accomplished using the Wage and Hour Division’s enforcement database, called WHISARD, which contains information regarding every investigation conducted by the Division.

The final segment of our three part series on the Multi State District Office (MODO) will focus on creating informal agreements with your MODO with regards to voluntary compliance.

This blog entry was authored by Salvador Simao.

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In this three-part series, Littler shareholder Salvador Simao, a former trial attorney with the Department of Labor (DOL), discusses ways in which multi-state employers can effectively partner with the DOL. The first part examines the organization of the DOL Wage & Hour Division, and enforcement efforts under new Secretary of Labor Hilda Solis.

In her first public appearance after Senate confirmation, Secretary of Labor Hilda Solis declared to the AFL-CIO Executive Council, “There is a new sheriff in town.” Armed with reports from the Congressional General Accounting Office (GAO) criticizing enforcement efforts by the Wage and Hour Division, Secretary Solis is well positioned to begin changing the culture at DOL.
Already, the Wage and Hour Division is hiring 100 new investigators. Congress gave DOL funding for the new investigators in the stimulus package. Under the Bush administration, although collecting more back wages than the Clinton administration, the number of wage-hour investigators declined from 950 to 750. In short, we can expect to see increased wage-hour enforcement in the near future.

What can employers do to minimize or avoid aggressive enforcement? One way is to seek a cooperative relationship with your company’s Wage and Hour Division MODO. What is a MODO? Read on – we explain it all below.

Organization of the Wage and Hour Division
The DOL’s Wage and Hour Division enforces the Fair Labor Standards Act, Family Medical Leave Act, the Employee Polygraph Protection Act, the Consumer Credit Protection Act, and prevailing wage laws. Generally, the Wage and Hour Division will conduct an investigation of a company if it receives an employee complaint or as part of a targeted initiative (e.g., a survey of child labor compliance in quick service restaurants). At times, follow-up investigations will be done to ensure continued compliance with the laws.

Investigations are performed out of about 50 district offices. Each district office has a District Director (DD), one or two Assistant District Directors (ADD) and, of course, investigators. Some districts are so large that they have satellite offices. For example, in North Carolina the district office is Raleigh, but there is also a “field office” in Charlotte. Field Offices are normally run by an ADD who reports to the DD in the district office.

District Directors report into a regional office, which in turn reports into the national office. The Wage and Hour Division has five regional offices: the Northeast Region in Philadelphia, the Southeast Region in Atlanta, the Southwest Region in Dallas, the Midwest Region in Chicago and the West Region in San Francisco. Each regional office is run by a Regional Administrator and a Deputy Regional Administrator. Employers rarely deal with the regional and national offices, as most investigations are resolved at the district office level.

As is true in any organization, individual investigators have different styles and approaches when it comes to conducting audits. However, there are ways to reduce anxiety and ensure consistency in various audits if your company has locations in multiple states. In the second part of this series, we explain the role of the Main Office District Office (MODO) and the specific procedures that apply to multi-state enterprises.

This blog entry was autored by Salvador Simao.

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On Tuesday, February 10, 2009, Rep. Cathy McMorris Rodgers (R-WA) reintroduced the Family-Friendly Workplace Act (H.R. 933), a bill that would amend the Fair Labor Standards Act (FLSA) to permit private-sector employees to chose compensatory leave in lieu of cash wages for overtime hours worked. This “comp time” option has long been available to public sector employees, and has proven to be very popular. Continue reading on Littler's Washington DC Employment Law Update blog.

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The Eleventh Circuit Court of Appeals rules that the “outside sales” exemption to the FLSA overtime requirements was properly applied to an executive for a title insurance company whose primary duty was conducting “promotional work” with the company’s clients, even though the employee did not finalize sales herself. According to the court, the executive, who was credited with sales through commission-based compensation, was conducting “sales in some sense.”

For more information about this development, see Littler's ASAP "Eleventh Circuit Holds Title Insurance Executive Who Conducts 'Promotional Work' Exempt Under the FLSA 'Outside Sales' Exemption" by Angelo Spinola and Matthew Laflin.

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President Obama has signed his first piece of legislation, the Lilly Ledbetter Fair Pay Restoration Act, into law. The Act is likely to result in an increase in the number of discrimination claims against employers, as it effectively eliminates the statute of limitations in wage discrimination cases and significantly expands the class of protected employees, and thus, potential litigants. For a more in-depth analysis, see Littler's ASAP: Paycheck Rule Revived for Pay Discrimination Claims with Signing of the Lilly Ledbetter Fair Pay Act.

This blog update was authored by Andrea Hallier.
 

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In an opinion letter dated December 19, 2008 (FLSA2008-18), the DOL found that itamae-sushi chefs and teppanyaki chefs were tipped employees under the FLSA, eligible to participate in employer-mandated tip pools.

Section 3(t) of the FLSA defines tipped employees as “any employee engaged in an occupation in which he/she customarily and regularly receives more than $30 a month in tips.” 29 U.S.C. § 203(t). Section 3(m) allows tip-pooling among employees who customarily and regularly receives tips. 29 U.S.C. § 203(m); see also 29 C.F.R. § 531.54.

Itamae-sushi chefs and teppanyaki chefs have direct contact with customers, at the bar counter area (itamae-sushi chefs) and at customer tables (teppanyaki chefs). In support of its opinion, the DOL cited its “longstanding position that counter persons who serve customers may participate in tip pools. Citing FLSA Field Operations Handbook § 30d04(a); Wage and Hour Opinion Letter 1/25/83 (waiter chef who brings food order from kitchen to table and cooks it on hibachi grill in front of customers may share in tip pooling).
 

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In a decision that could lead to significant litigation cost savings for employers, the United States Court of Appeals for the Tenth Circuit recently endorsed the so-called “fluctuating workweek” method of calculating back pay awards for misclassified, salaried employees in lawsuits arising under the Fair Labor Standards Act (FLSA).

The FLSA provides that non-exempt employees are generally entitled to overtime pay at a rate of one and one-half times their regular rate of pay for all time worked in excess of 40 hours per week. 29 U.S.C. § 207(a)(1). When a non-exempt employee is paid a fixed salary and there is a “clear mutual understanding” that the salary is compensation for all hours worked each workweek (whether many or few), then: (a) the regular rate of the employee may be determined each workweek by dividing the salary by the number of hours worked in that week; and (b) payment for overtime hours at one-half that rate will satisfy the overtime pay requirement (because such hours have already been compensated at “straight time” via the salary itself). 29 C.F.R. § 778.114.

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