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

By Stephen Fuchs

In a welcome decision for employers, Tracy v. NVR Inc., the federal District Court for the Western District of New York granted the employer’s motion to decertify a collective action under the FLSA and denied the plaintiffs’ motion to certify a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure. The case involved a putative class of Home Sales and Marketing Representatives (SMRs) who claimed they were misclassified as exempt outside sales representatives.

The key issue in the case was whether the SMRs satisfied the outside sales exemption requirement that they work away from the employer’s business for the requisite period of time each week. In denying certification of the Rule 23 state law class action, the Tracy court cited the U.S. Supreme Court’s recent decisions in Comcast Corp. v. Behrend, which held that class certification requires a classwide method of measuring damages, and Dukes v. Wal-Mart Stores Inc., which held that commonality requires not only common questions, but also common answers to those questions. Applying these principles, the court found that because the SMRs worked in different locations, under different supervisors, and performed duties outside of their offices in varying degrees and in different ways, their claims “as well as any determinations to be made concerning damages – are too highly individualized to form the basis for a class action.” Moreover, the court concluded, “the interests of judicial economy would not be served by the hundreds of fact-intensive ‘mini-trials’ that a class action of this nature would require.”

• Print
• Trackbacks
• Share Link

By Matthew Hank

In Carmody v. Kansas City Board of Police Commissioners, the Eighth Circuit Court of Appeals addressed the standard of proof in a wage and hour case when an employer fails to maintain accurate timekeeping records. The court held that, even under the “relaxed standard” established by the U.S. Supreme Court in Anderson v. Mt. Clemens Pottery Co., plaintiffs in a wage and hour case must still provide evidence of actual damages.

Carmody involved a group of police officers who sued the Kansas City Board of Police Commissioners, claiming they were given flextime instead of overtime wages as required by the Fair Labor Standards Act (FLSA). Neither the officers nor the city tracked the accrued flextime. In response to discovery requests, the officers failed to provide information about the number of uncompensated hours they claimed to have worked or the amount of money they alleged was owed. Only after the close of discovery, and after the defendants moved for summary judgment, did the officers come forth with evidence of damages: the officers’ affidavits containing precise estimations, week by week, of unpaid hours worked.

• Print
• Trackbacks
• Share Link

By Bill Allen and Steven Kaplan

Relying on AT&T Mobility, LLC v. Concepcion, 131 S. Ct. 1740 (2011), the U.S. Court of Appeals for the Fourth Circuit held on April 1, 2013 that an arbitration provision in a franchise agreement prohibiting signatories from participating in class and collective actions is lawful in light of the clear federal directive in support of arbitration. In Muriithi v. Shuttle Express, Inc., the Fourth Circuit further found that: (1) an agreement that provides for a split in the cost of arbitration must be analyzed on a case-by case basis; and (2) a truncated statute of limitations contained outside of the arbitration clause should be reviewed by the arbitrator. The court’s decision overturned the District Court of Maryland’s March 2011 pre-Concepcion ruling that the arbitration agreement was “so permeated by substantively unconscionable provisions” that it was unenforceable. The plaintiff, a driver for a passenger shuttle service, had alleged that he and other putative class members were improperly classified as “franchisees” or “independent contractors,” and were therefore entitled to minimum wage and overtime pay under the FLSA.

• Print
• Trackbacks
• Share Link

By Bill Allen

Less than one week after issuing its decision in Comcast Corp. v. Behrend, 2013 U.S. LEXIS 2544 (Mar. 27, 2013), the Supreme Court granted a writ of certiorari in Ross v. RBS Citizens, N.A., 667 F.3d 900 (7th Cir. 2012), vacated the Seventh Circuit’s decision, and remanded the case for further consideration in light of Comcast. The Court’s action may have a significant impact on class action wage and hour law, as Ross has been frequently cited by wage and hour class action plaintiffs to limit the reach of the Supreme Court’s landmark class certification ruling in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. __, 131 S. Ct. 2541 (2011).

• Print
• Trackbacks
• Share Link

By Bill Allen

In Martin v. Citizens Financial Group, Inc., No. 2:10-cv-00260 (E.D. Pa. Mar. 27, 2013), Judge Goldberg of the Eastern District of Pennsylvania decertified an FLSA collective action involving 843 opt-in plaintiffs who had worked in a variety of hourly positions at over 1,000 bank branches in nine states. The plaintiffs alleged that the defendant’s unlawful practices included prohibiting employees from recording all time worked in excess of 40 hours in a week, erasing or modifying employees’ time records to eliminate or reduce overtime hours, providing “comp time” in subsequent weeks in lieu of paying overtime, and requiring employees to work during unpaid breaks. The district court held that the plaintiffs had failed to establish they met the FLSA’s “similarly situated” requirement.

Although the court found the plaintiffs’ evidence tended to establish that the putative class members may have been denied overtime, the plaintiffs were unable to produce “substantial evidence of a single decision, policy, or plan” that affected employees in the same way. Rather, the plaintiffs reported that the overtime denial decisions were made independently, either at the branch or regional level, and were in direct conflict with the company’s written policy requiring compliance with all state and federal overtime compensation rules. The court noted that the 435 declarations submitted by the plaintiffs themselves showed frequent disparities in the methods in which the plaintiffs alleged they were denied overtime.

• Print
• Trackbacks
• Share Link

By Stephanie Gail Lee

On February 22, 2013, the U.S. District Court for the Eastern District of New York held that parties may privately settle a Fair Labor Standards Act (FLSA) case without judicial approval or Department of Labor (DOL) supervision. While it is uncertain that such settlement agreements will be upheld upon challenge, defense attorneys should feel more confident in counseling their clients regarding the option to settle their FLSA case out of court. Doing so may ameliorate employers’ fear of publicly filing settlement agreements, which can instigate copycat lawsuits and media attention, and rid the need for added litigation expenses in connection with fairness proceedings.

In Picerni v. Bilingual Seit & Preschool, Inc., the district court ruled that a teacher could dismiss her FLSA lawsuit pursuant to a private settlement agreement with her former employer. Just a few months prior, before the parties had participated in a status conference and before the defendant answered the plaintiff’s complaint or otherwise appeared, the court found just the opposite. When the plaintiff notified the court that she accepted a settlement offer from the defendant, the court rejected the parties’ agreement, citing case law that holds that stipulated settlements in a FLSA case must be approved by the court for fairness when an out-of-court settlement was not directly supervised by the DOL.

• Print
• Trackbacks
• Share Link

By Jennifer Ciralsky and Sophia Behnia

In Wang v. Chinese Daily News, Inc., on remand from the U.S. Supreme Court, the Ninth Circuit Court of Appeals applied the Supreme Court’s decision in Dukes v. Wal-Mart to reverse and remand a federal district court decision certifying a California state wage law class action. Like Dukes, Wang has had a somewhat protracted history. Following certification as an FLSA collective action, and prior to the Supreme Court’s decision in Dukes, the district court certified the plaintiffs’ state wage law claims as a class action under Rule 23(b)(2) of the Federal Rules of Civil Procedure (FRCP) or, in the alternative, under Rule 23(b)(3). Following a 16-day jury trial, the plaintiffs were awarded over $2.5 million. The company appealed and the Ninth Circuit affirmed. On appeal to the U.S. Supreme Court post-Dukes, the Court vacated the Ninth Circuit decision and remanded for reconsideration in light of its decision in Dukes.

• Print
• Trackbacks
• Share Link

In Lundy v. Catholic Health System of Long Island, Inc., 2013 U.S. App. LEXIS 4316 (2d Cir. Mar. 1, 2013), the Second Circuit Court of Appeals recently held for the first time that the Fair Labor Standards Act (FLSA) does not provide a claim for uncompensated "gap" time wages even when employees work overtime, provided the alleged uncompensated time does not drop employees' wages below the minimum wage. Gap time is time worked under 40 hours in a week. For example, an employee may work 39 hours in a week but be paid for only 35, in which case she has four hours of uncompensated gap time. If she works 42 hours in a week but is paid for only 38, she has two hours of uncompensated gap time (hours 39 and 40) and two hours of unpaid overtime (hours 41 and 42). In Lundy, the Second Circuit held that employees must plead "some" amount of uncompensated but compensable time worked over 40 in a week, but left open the possibility, depending on the case, that employees may need to also plead an approximation of overtime hours to establish a plausible claim. The decision also bolsters employers' arguments that district courts may exercise supplemental jurisdiction to decide state law claims even where the court dismisses all federal law claims.

To learn more about the decision, please see Littler's ASAP, Second Circuit Rejects FLSA Gap Time Claims and Explores FLSA Pleading Requirements, by Bradley Strawn.

• Print
• Trackbacks
• Share Link

By Alex Frondorf

On February 19, 2013, in Sandifer v. U.S. Steel Corp., the U.S. Supreme Court agreed to resolve a circuit split over the meaning “changing clothes” under the Fair Labor Standards Act (FLSA), 29 U.S.C. section 203(o).

Under the FLSA, employees are not entitled to compensation for time “spent in changing clothes . . . at the beginning or end of each workday” if excluded from working time under a collective bargaining agreement. While the meaning of “clothes” might seem obvious, the FLSA does not provide a definition and circuit courts have provided differing interpretations.

In Sandifer, U.S. Steel employees sued their employer for the time spent putting on and taking off protective gear in a locker room, and walking to and from the locker room to their work stations. The employees worked under a collective bargaining agreement, which did not require compensation for changing clothes. The district court found that the workers were not entitled to compensation under section 203(o).

• Print
• Trackbacks
• Share Link

Building upon a growing body of case law finding automatic-deduction meal break claims are not suitable for class or collective action treatment, an Ohio federal judge decertified a collective action against a national system of medical and rehabilitation care facilities by registered nurses, licensed practical nurses, certified nursing assistants, and admissions coordinators who claimed they were not paid for missed or interrupted meal breaks that were automatically deducted from pay. In Creely v. HCR ManorCare, Inc., Littler attorneys convinced the court that the employees’ experiences were too diverse to allow the case to proceed as a collective action under the Fair Labor Standards Act. To learn more about the decision, see Littler's Healthcare Employment Counsel blog.

• Print
• Trackbacks
• Share Link

In a decision that may significantly impact certification and decertification decisions in FLSA collective actions, a three-judge panel of the Seventh Circuit Court of Appeals upheld the decertification of a Rule 23 class and FLSA collective action, essentially applying the standards set forth by the U.S. Supreme Court in Dukes v. Wal-Mart to an FLSA collective action.

In Espenscheid v. DirectSat USA, 2013 U.S. App. LEXIS 2409 (7th Cir. Feb. 4, 2013), Judge Posner, writing for the panel, expressly stated that "despite the difference between a collective action and a class action and the absence from the collective-action section of the Fair Labor Standards Act the kind of detailed procedural provisions found in Rule 23, there isn't a good reason to have different standards for the certification of the two different types of action. . . ." Noting that simplification is favored in the law and that one of the intentions of both FLSA collective actions and Rule 23 class actions is to promote efficiency, the court concluded that "we can, with no distortion in our analysis, treat the entire set of suits before us as if it were a single class action."

To learn more about the decision, please see Littler's ASAP, New Seventh Circuit Decision May Pave the Way for More Stringent Certification Standards in FLSA Collective Actions, by Laurent Badoux, Adam Wit, and Kathryn Siegel.

• Print
• Trackbacks
• Share Link

By Edward Berbarie and Henry Lederman

Last week, the U.S. District Court for the Eastern District of New York upheld a class action waiver in an employment arbitration agreement, sending the plaintiffs’ FLSA collective action claims to arbitration on an individualized basis. The plaintiffs, former sales representatives for United HealthCare, claimed that the class action waiver was unenforceable for several reasons. First, the plaintiffs claimed that participating in a collective action under the FLSA is a statutory right that cannot be waived. The court disagreed, finding that nothing in the FLSA or its legislative history establishes that the right to participate in a collective action is a non-waivable right. To the contrary, the court reasoned that because an employee is required to file a consent form in order to participate in a collective action under the FLSA, an employee certainly has the power to waive their participation in such an action. The plaintiffs next attempted to rely upon the Second Circuit’s opinion in In re American Express Merchants’ Litigation, 667 F.3d 204 (2d Cir. 2012), which found a class action waiver to be unenforceable because the practical effect of enforcing the waiver in that case would have precluded the plaintiffs from bringing their claims. The court also rejected this argument, noting that the Second Circuit made clear that class action waivers are not per se unenforceable, and finding that the plaintiffs in this case failed to show that arbitrating their FLSA claims on an individual basis would have been cost prohibitive. Lastly, the court rejected the plaintiffs’ argument, under the NLRB’s D.R. Horton decision, that class action waivers violate employees’ rights to engage in concerted activity. The court instead agreed with the Eighth Circuit’s recent decision in Owen v. Bristol Care, Inc., 702 F.3d 1050 (8th Cir. Jan. 7, 2013), which rejected the NLRB’s rationale in D.R. Horton and held that class waivers are enforceable in relation to claims brought under the FLSA.

Photo credit: Logan Simmons

• Print
• Trackbacks
• Share Link

On Monday, December 10, 2012, the U.S. Supreme Court declined to review a Fifth Circuit Court of Appeals decision, Martin v. Spring Break ’83 Productions, L.L.C., which held that parties may privately settle and release wage claims that result from a bona fide dispute as to liability rather than a compromise of guaranteed FLSA rights. Martin, as we previously discussed, stands in sharp contrast to the Eleventh Circuit Court of Appeals decision in Lynn’s Food Stores, Inc. v. United States, which held that FLSA disputes could only be settled if either the U.S. Department of Labor supervised payment or a court approved a settlement after an employee filed a private lawsuit.

This is positive news for employers that operate within the Fifth Circuit, which includes Texas, Louisiana, and Mississippi. Whether district or other appellate courts will follow the Fifth Circuit’s lead, in light of the Supreme Court allowing the Martin decision to stand, remains uncertain. However, employers who operate within the Eleventh Circuit, which includes Florida, Georgia, and Alabama, are still bound by the Lynn’s Food decision.

• Print
• Trackbacks
• Share Link

By Wayne Hersh and Cori Garland

In Abshire v. Redland Energy Services, LLC,  five current and former employees filed a complaint against Redland Energy Services, LLC, a servicer of natural gas wells, alleging the company violated the Fair Labor Standards Act (FLSA) by failing to properly pay overtime. The employees’ claims arise from a change to their defined workweek under the FLSA and the impact on their overtime hours as a result.

The employees at issue, operators of Redland’s two drilling rigs, initially worked 12-hour shifts for seven consecutive days and then would be off for the next seven days. While these employees were subject to a Tuesday-to-Monday workweek for calculating overtime, all other Redland employees had a Sunday-to-Saturday workweek. Then, in May 2009, Redland changed the drilling rig employees’ workweek to Sunday-to-Saturday. The memo announcing the change stated: “There will be no adjustment of your work week, which will remain from Tuesday-Monday [but] you will begin to have a reduction in overtime hours as your work week will be split into 2 payroll periods.” Redland explained that the workweek change saved significant resources because it streamlined payroll and reduced overtime pay.

The impacted employees claimed the change to their workweek violated the FLSA because Redland adjusted their workweeks to decrease overtime compensation.

• Print
• Trackbacks
• Share Link

Courts are continuing to reject class and collective actions asserting claims against hospitals for automatic meal-break deductions. Most recently, in Camilotes v. Resurrection Health Care Corporation, a federal district court in Illinois decertified an FLSA collective action and denied certification of a state law class action asserting such claims. This case, and others like it that have denied certification or granted decertification in automatic meal-break deduction cases, provide guidance on steps that healthcare employers can take to reduce the risk of class actions in these types of cases. To learn more about the decision, please continue reading at Littler's Healthcare Employment Counsel.

• Print
• Trackbacks
• Share Link

A recent decision by a Texas federal court, in Chapman v. ASUI Healthcare of Texas Inc., underscores the importance for healthcare entities of carefully assessing the nature of their relationship with workers to determine whether they may be classified as independent contractors.

After having worked at ASUI for a number of years, the plaintiffs brought suit for unpaid wages and overtime under the FLSA, claiming they were misclassified as independent contractors instead of employees. To determine whether the plaintiffs were properly classified as independent contractors, the district court used the traditional five-factor “economic realities” test, assessing: (1) the degree of control exercised by ASUI; (2) the extent of the relative investments of the plaintiffs and ASUI; (3) the degree to which the plaintiffs’ opportunity for profit or loss was determined by ASUI; (4) the skill and initiative required in performing the job; and (5) the permanency of the relationship. The court found that each of these factors reflected that the plaintiffs were employees under the FLSA, not independent contractors.

To learn more about the decision and its potential implications for employers, please continue reading at Littler's Healthcare Employment Counsel blog.

• Print
• Trackbacks
• Share Link

By Craig Brown and Inna Shelley

As healthcare providers continue to face a sea of wage and hour class actions, Littler attorneys successfully convinced the Sixth Circuit Court of Appeals to affirm decertification of an FLSA collective action against Baptist Memorial Hospital, a large Tennessee hospital system. In Frye v. Baptist Memorial Hospital, the plaintiff brought a collective action, claiming that the hospitals’ policy of automatically deducting pay for employee lunch breaks violated the FLSA’s requirement to pay employees for all the time worked.

The district court initially granted conditional certification to the class under the more lenient standard courts have generally applied at the initial notice stage in FLSA collective actions, but following discovery the court decertified the action because the plaintiff failed to show that other would-be class members were similarly situated. It also found that the plaintiff failed to establish a common FLSA injury from the automatic deduction policy because the vast majority of opt-in plaintiffs were aware of the policies for reporting work during breaks, were paid when they properly reported working, and were not discouraged from or retaliated against for reporting missed breaks. The district court also refused to find a common injury based on the hospitals’ alleged failure to monitor their automatic deduction policy for FLSA violations because it found the vast majority of employees knew the policies for reporting hours worked during meal breaks and the hospitals were unaware that their procedures for reversing the deductions were not working.

• Print
• Trackbacks
• Share Link

By Brian Mosby

Plaintiffs seeking class certification in a wage and hour employment case must do more than simply allege that members of the proposed class are similarly situated, especially where the plaintiffs propose a very broad class. In Farnsworth v. Welspun Tubular LLC, 2012 U.S. Dist. LEXIS 115398 (E.D. Ark. Aug. 16, 2012) (Marshall, J.), the plaintiffs moved to certify a class of “all current and former Welspun employees in Arkansas who were classified as salaried at some point during the three years before this case was filed.”

The plaintiffs in Farnsworth never made it past the notice stage. At that stage, the court conducts a lenient review of the proposed class to determine whether the members of the proposed class are similarly situated. Here, the plaintiffs argued the proposed class members were similarly situated because: (1) many of the proposed class members were reclassified from exempt to non-exempt even though their job duties did not change and, thus, the employer originally misclassified the employees; and (2) Farnsworth identified a number of employees, across departments and job duties, who he thought were similarly situated. The court rejected both arguments for the same reason – a lack of evidentiary support.

• Print
• Trackbacks
• Share Link

By David Jordan and Sarah Morton

For nearly 30 years, courts and the U.S. Department of Labor (DOL) have instructed parties to seek judicial or DOL approval to effectuate a settlement of claims under the Fair Labor Standards Act (FLSA). See Lynn’s Food Stores, Inc. v. United States, (concluding that “[t]here are only two ways in which back wage claims arising under the FLSA can be settled or compromised by employees:” payment supervised by the DOL or judicial approval of a stipulated settlement after an employee has brought a private cause of action). Last month the Fifth Circuit surprisingly reversed course in Martin v. Spring Break ’83 Productions, L.L.C., holding that parties may privately settle and release wage claims that include a bona fide dispute as to liability.

Martin involved a group of lighting and rigging technicians in the filmmaking and video productions industry who filed grievances against their employer, Spring Break Louisiana, alleging that the company failed to pay them wages for all hours worked while filming the movie Spring Break ’83. The technicians’ union representative investigated the grievances but could not determine whether the technicians had actually worked the hours alleged. The union subsequently entered a settlement agreement with Spring Break Louisiana over the disputed hours, agreeing on behalf of the technicians to accept settlement payments in exchange for the union’s agreement that the union and technicians would not file suit. Prior to receiving (and cashing) their settlement payments, the technicians filed suit regardless, arguing that, without judicial or DOL supervision, the union’s agreement was unenforceable.

• Print
• Trackbacks
• Share Link

Following a growing trend among courts in FLSA collective actions, a federal judge in the District of Columbia refused to certify a broad group of employees asserting claims in connection with an automatic meal break deduction policy. In Dinkel v. Medstar Health, Inc., the plaintiffs, who worked at one of the nine hospitals within Medstar Health’s network, sought to certify a class of all employees subject to automatic meal break deductions at all nine Medstar Health hospitals. The plaintiffs claimed that the auto-deduct policy, which allowed employees to request payment for missed meal breaks, “was coupled with a common practice of imposing limitations on, discouraging, and ignoring efforts to recover pay for missed meal breaks.” To learn more about the decision and its potential implications for employers, please continue reading at Littler's Healthcare Employment Counsel.

• Print
• Trackbacks
• Share Link

By Brian Mosby

In welcome news for employers who treat “team leaders” as exempt pursuant to the executive exemption, the Second Circuit Court of Appeals, in Ramos v. Baldor Specialty Foods, Inc., held that a “team” of workers can qualify as a “customarily recognized subdivision or department” for purposes of determining whether their supervisor can qualify for the executive exemption.

The plaintiffs worked as night shift “captains” in the company’s warehouse department. Captains oversaw teams of pickers. Captains made sure the pickers arrived to work on time and performed their duties as expected. Captains could assign work depending on the captain’s trust of the picker, or the picker’s speed and productivity. Captains prepared the team’s distinct work area for the shift. At the end of the shift, captains, who report to the night warehouse manager, prepared a productivity report for each picker. The reports impact whether the night warehouse manager will award the picker a productivity bonus. Captains have the ability to request pickers transfer to a different team. The night warehouse manager typically grants these requests. Captains recommend pay raises, issue warnings, and have the authority to fire pickers. For their work, captains earn $700 per week.

• Print
• Trackbacks
• Share Link

By Martha Keon

The Third Circuit recently clarified the test for joint employer status under the Fair Labor Standards Act in the context of a holding company providing shared services to its subsidiaries in In re: Enterprise Rent-a-Car Wage & Hour Employment Practices Litigation, 2012 U.S. App. LEXIS 13229 (3d Cir. June 28, 2012).

At all times relevant, Enterprise Holdings, Inc. was the parent company and sole stockholder of 38 domestic subsidiaries operating rental car agencies in different states. The same three individuals who were the holding company’s directors – the Chairman and CEO, the President and COO, and the Executive Vice President and CFO – were also the only Board members of each of the subsidiaries. The holding company provided shared services to its subsidiaries, which were optional in the discretion of the subsidiary and paid for via dividends and management fees. The shared services included: employee benefit plans, rental reservation tools, a central customer contact service, insurance, technology, legal services, business guidelines, and human resources services. The human resources services provided by the holding company included providing job descriptions, best practices, training materials, performance review forms, and compensation guidelines. There was evidence that during 2005, representatives of the holding company recommended that the subsidiaries not pay overtime wages to assistant managers who were employed by subsidiaries outside of California.

• Print
• Trackbacks
• Share Link

The Internal Revenue Service has issued new guidance (Rev. Rul. 2012-18) that provides answers to a number of questions about how taxes are imposed on employee tips under the Federal Insurance contributions Act (FICA). The document begins with a detailed explanation of both an employer’s and employee’s FICA tax obligations as they apply to tips, clarifies how tips are to be reported to the employer and to the agency, and discusses the consequences for unreported amounts. The guidance also differentiates between what constitutes a tip and a service charge for tax purposes, explains when the section 45B employer tip credit should be applied, and sets forth a series of Q&As for employees and employers. The document is designed to modify and supersede prior guidance (Rev. Rul. 95-7) issued on this topic. To learn more about the guidance and its potential implications for employers, please continue reading at Littler's Washington D.C. Employment Law Update.

• Print
• Trackbacks
• Share Link

Today the U.S. Supreme Court issued its highly anticipated opinion in Christopher v. SmithKline Beecham Corp., one of the only U.S. Supreme Court cases to address overtime exemptions under the Fair Labor Standards Act (FLSA), and the first to address the criteria for the application of the “outside sales” exemption. In a 5-4 decision written by Justice Samuel Alito, the Supreme Court held that pharmaceutical sales representatives who were employed by GlaxoSmithKline PLC, formerly known as SmithKline Beecham Corp., were primarily engaged in “sales,” and therefore were properly classified as exempt under the FLSA’s outside sales exemption. To learn more about the decision and its implications for employers, please continue reading at Littler's Healthcare Employment Counsel.

Additionally, for a more detailed analysis of the decision, please see Littler's ASAP, U.S. Supreme Court Holds Pharmaceutical Sales Representatives Are Exempt Outside Sales Employees and Rebukes DOL's Efforts to Regulate Via Amicus Filings, by Lisa Schreter, Richard Black, and Libby Henninger.

• Print
• Trackbacks
• Share Link

Last week a number of bills were introduced in the U.S. House of Representatives and Senate that seek to amend the Fair Labor Standards Act (FLSA) and prevent an FLSA-related regulation from moving forward. Some measures would toughen the statute by adding stronger pay discrimination nonretaliation provisions and increasing the minimum wage, while others target the FLSA’s minimum wage and overtime exemption provisions. To learn more about the bills and their potential implications for employers, please continue reading at Littler's Washington D.C. Employment Law Update.

• Print
• Trackbacks
• Share Link

The Seventh Circuit has weighed in on the employers’ side of the pharmaceutical sales representative exemption issue, finding that pharmaceutical sales representatives at Abbott Laboratories, Inc. and Eli Lilly & Company were properly classified as exempt under the administrative exemption to the overtime requirements of the Fair Labor Standards Act (FLSA). In Schaefer-LaRose v. Eli Lilly & Co., the Seventh Circuit issued a consolidated opinion in two cases in which the district courts had reached opposite results, with one court ruling in favor of the plaintiffs and the other ruling against. To read more about the Seventh Circuit's decision and its implications for employers, please continue reading at Littler's Healthcare Employment Counsel.

• Print
• Trackbacks
• Share Link

By Andrew Voss

In a case that explicitly acknowledges a consequential circuit split, the Seventh Circuit Court of Appeals has concluded that the time that an employee spends walking from the locker room to his work station after changing into work clothes is not compensable if the applicable collective bargaining agreement does not require compensation for the time spent changing clothes. Sandifer v. United States Steel Corporation, Nos. 10-1821, 10-1866 (7th Cir. May 8, 2012). The Seventh Circuit’s decision acknowledges a contrary holding in Franklin v. Kellogg Co., 619 F.3d 604 (6th Cir. 2010), but concludes that the Sixth Circuit was “clearly wrong.” The Seventh Circuit also considered and rejected the Department of Labor’s position, as articulated in recent opinion letters and in a brief filed as amicus curiae on the plaintiffs’ behalf, finding that the Department’s “gyrating agency letters” offered little to assist the court in its deliberations other than a political perspective on the law, and therefore were entitled to no deference.

The case focuses on the impact of Section 3(o) of the federal Fair Labor Standards Act, 29 U.S.C. § 203(o), which excludes “any time spent in changing clothes or washing at the beginning or end of each workday” from working time, if such time is excluded by the express terms or by custom or practice under a bona fide collective bargaining agreement. U.S. Steel’s hourly employees complained that they were owed additional wages for time spent putting on and taking off protective gear in a locker room, and walking to and from the locker room to their work stations. The applicable collective bargaining agreements did not require compensation for changing clothes, and the district court found that the exclusion under Section 3(o) applied. The court determined that the travel time to the employees’ work stations may be compensable, however, but certified the issue for appeal. The Seventh Circuit accepted the appeal.
 

• Print
• Trackbacks
• Share Link

By Libby Henninger

The U.S. Supreme Court heard oral arguments today in Christopher v. SmithKline Beecham Corp., a case to determine whether pharmaceutical sales representatives (PSRs) qualify for the outside sales exemption under the federal Fair Labor Standards Act (FLSA). The Supreme Court’s opinion will settle a split between the Second and Ninth Circuits in which the Second Circuit held that PSRs are not making sales under the FLSA and – in the underlying case – the Ninth Circuit held that they are, qualifying them as outside sales employees. A broader issue to be decided by the Court is the level of deference owed to a regulatory agency that announces new substantive positions through amicus curiae filings. Here, the Second Circuit’s opinion was largely based on a position taken by the Department of Labor (DOL) through an amicus brief where it advocated that the PSRs do not qualify for an exemption to the FLSA’s overtime requirements. The Ninth Circuit rejected the DOL’s position, finding it need not be afforded deference under Auer v. Robbins, 519 U.S. 452 (1997).

• Print
• Trackbacks
• Share Link

Earlier this week, GlaxoSmithKline PLC, formerly known as SmithKline Beecham Corporation, filed its brief in the U.S. Supreme Court in Christopher v. SmithKline Beecham Corporation, one of the only Supreme Court cases to address the overtime exemptions under the Fair Labor Standards Act, and the first to address the criteria for the outside sales exemption. At issue is whether pharmaceutical sales representatives qualify for the outside sales exemption because pharmaceuticals are generally purchased by end-users at pharmacies, which purchase from wholesale distributors. The Court's decision may have far-reaching implications, not only for the pharmaceutical industry, but also for other industries that depend on representatives to call on customers at their place of business to generate sales, although the actual sales orders are placed by customers through a centralized order and distribution center or similar process. The case is also significant because it may determine the extent to which courts are required to defer to U.S. Department of Labor's changing interpretations of federal employment statutes and regulations. To learn more about the case and its potential implications for employers, please continue reading Littler's ASAP, Supreme Court to Decide Significant Case on the Outside Sales Overtime Exemption, by Richard Black and Bradley Strawn. To learn more about how the case progressed through the courts, please see our previous posts on the trial court decision, the appellate court decision, and the Supreme Court agreeing to review and resolve the matter.

• Print
• Trackbacks
• Share Link

According to a recently-released Field Assistance Bulletin, the Department of Labor’s Wage and Hour Division (WHD) has advised its staff to uniformly enforce a rule that became effective on May 5, 2011 governing ownership of employee tips under the Fair Labor Standards Act (FLSA). In many states employers are permitted to take a “tip credit,” or pay employees less than the minimum wage so long as the employees receive sufficient tip income to make up the difference. The new WHD tip rule stipulates, among other things, that tips are the property of the employee regardless of whether the employer has taken a tip credit under section 3(m) of the FLSA, and that an employer is prohibited from using an employee’s tips for any reason other than as a tip credit or in furtherance of a legitimate tip pool. The bulletin sent to WHD regional administrators and district directors emphasizes that this rule will be enforced in all states, even the nine states under the jurisdiction of the Ninth Circuit. To learn more about the bulletin and its potential implications for employers, please continue reading at Littler's Washington D.C. Employment Law Update.

• Print
• Trackbacks
• Share Link

By Martha Keon

The Fair Labor Standards Act (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” was recently clarified by the U.S. Supreme Court in Kasten v. Saint-Gobain Performance Plastics Corp. to include unwritten, oral complaints as long as “a reasonable, objective person would have understood the employee to have put the employer on notice that the employee is asserting statutory rights under the Act.” While the Supreme Court seemed to have decided by implication whether “filed any complaint” includes internal complaints to the employer, the majority in Kasten stated that it was declining to reach the conclusion, leaving the circuit split on that issue unresolved. The Fourth Circuit took up the issue of “internal complaints” in Minor v. Bostwick Laboratories Inc. 

• Print
• Trackbacks
• Share Link

By Laurent Badoux

On January 27, 2012, the United States District Court for the District of Arizona granted AutoZone’s motion for summary judgment in a case brought on behalf of a nationwide class of current and former store managers seeking overtime pay under the Fair Labor Standards Act (FLSA). In so ruling, the court rejected the store managers’ argument that they were not bona fide executive employees under the FLSA.

The store managers contended they spent as much as 90% of their time working on manual (i.e., non-managerial) tasks that required rote compliance with AutoZone’s detailed, standardized policies and procedures. Therefore, the store managers contended, they were not exempt executive employees.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.
 

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.
 

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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

• Print
• Share Link

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.

• Print
• Trackbacks
• Share Link

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

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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
 

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link

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.
 

• Print
• Trackbacks
• Share Link

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).
 

• Print
• Trackbacks
• Share Link

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.

• Print
• Trackbacks
• Share Link