Don't ignore state law when considering wage-and-hour issues

In Integrity Staffing Solutions v. Busk, the U.S. Supreme Court held the employees of an Amazon fulfillment center were not entitled to be paid under the FLSA for time spent waiting in line for a post-shift security screening.

And yet, last week, in parallel litigation under Nevada state law, the 6th Circuit Court of Appeals just held that time spent undergoing mandatory security checks is compensable under Nevada law,  reversing a contrary lower court ruling.

Compliance-by-carrot trumps compliance-by-stick

Democratic administrations are about enforcement.
Republican administrations are about education.

The endgame is still enforcement, but each side approaches this goal very differently.

This dichotomy might be an oversimplification, but, in at least in contrasting the Obama Administration to the Trump Administration, it is very true.

The FLSA's exemptions are becoming more "fair" for employers

In Encino Motorcars, LLC v. Navarro, the Supreme Court ruled that overtime exemptions under the Fair Labor Standards Act "are to be given a 'fair reading,' meaning they are not to be construed too narrowly" (as had historically been the case).

The Court applied this "fair reading" standard to conclude that automobile service advisors are exempt under the FLSA's automobile-service exemption.

The legality of pre-certification communications with potential class members

Your nightmare as an employer has just become your reality.

A disgruntled former employee has launched a wage and hour class action lawsuit against you.

You’d like to get out ahead of the game by having your lawyers start marshaling your evidence. For example, they’d like to interview employees and gather affidavits in opposition to the eventual motion for class certification.

But can they?

SCOTUS decision on class action waivers is not the epic win for employers it may seem to be

Yesterday, in a narrow, 5-4 partisan decision, the Supreme Court issued its most anticipated employment decision of its current term, Epic Sys. Corp. v. Lewis [pdf]. The Court reconciled six years of debate between split federal circuits into a unified standard that permits the waiver of class actions via the compelled individual arbitration of employment disputes.

Apparently God is in the restaurant business, at least according to the 6th Circuit

Photo by chuttersnap on Unsplash

It’s been nearly three years since I first reported on the Department of Labor’s wage and hour lawsuit against Akron, Ohio’s, Cathedral Buffet, owned and operated by the Earnest Angley Ministries.

The DOL’s allegations are pretty offensive. Not only did it claim that all of the restaurant’s employees worked for free, it also claimed that the ministry coerced church members into volunteering, telling them they “had an obligation to provide their labor to the Buffet, in service to God, and that a failure to offer their labor to the Buffet … would be the same as failing God;” that Angley “was God’s prophet, and saying ‘no’ to Angley would be tantamount to saying ‘no’ directly to God,” and “‘blaspheming against the Holy Ghost.’”

I abhor the term “wage theft,” and you should too

Photo by Thirteen .J on Unsplash

This past Sunday’s Cleveland Plain Dealer ran a story entitled, Do wage theft laws in Ohio harm or help workers? Notably, it quoted yours truly as the voice of management on this issue (thanks to Olivera Perkins for the interview):

Some business advocates argue with the very term “wage theft.” Jon Hyman, a local lawyer who represents employers, says not every employer cited for wage theft has willingly denied rightful wages.”To me, wage theft is a loaded term,” he said. “It presumes an intent to steal.” 

Must you pay employees for FMLA-related breaks during the work day?

Photo by Liam Stahnke on Unsplash

Last week, the Department of Labor Wage and Hour Division resumed its practice of publishing Opinion Letters. One of the first it published answers an interesting question about the intersection of the FLSA and the FMLA.

Must an employer pay an employee for FMLA-approved breaks taken during the work day?

I’ve taken some journalistic license and paraphrased the questions. The answers, however, are verbatim from the DOL Opinion Letter FLSA2018-19 [pdf].

Supreme Court puts the breaks on the narrow constructions of FLSA exemptions

Photo by Coolcaesar (Own work),
via Wikimedia Commons

Yesterday, in a narrow 5-4 decision, the Supreme Court held that automobile service advisors are exempt from the FLSA’s overtime requirements.

The exemption applies to “salesmen … primarily engaged in … servicing automobiles.” The majority broadly defined these terms to hold that the plaintiffs were exempt.

And while this aspect of the decision is interesting to automobile repair shops and car dealerships, it's the opinion’s broader implications that are more interesting to me.

Department of Labor trying to get employees PAID for inadvertent FLSA violations

Photo by Sharon McCutcheon on Unsplash

For almost as long as I’ve been writing this blog, I’ve been preaching the proactive benefits of wage and hour audits for employers (e.g., here and here).

It appears that the Department of Labor agrees.

Last week, it announced a nationwide pilot program—the Payroll Audit Independent Determination (PAID) program—which will permit employers to self-report FLSA violations to the Department of Labor without risk of litigation or enforcement proceedings. It enables employers to resolve inadvertent minimum wage and overtime violations without litigation.

Save money on overtime payments with the fluctuating work week

Photo by rawpixel.com on Unsplash

In my never-ending quest to show you how many different ways you can screw up paying your employees under the federal wage and hour laws, today I am going to talk about how to properly calculate overtime payments for salaried, non-exempt employees.

An employer has two choices in how to pay overtime to a salaried non-exempt employee: by a fixed work week or by a fluctuating work week.

For reasons that will be illustrated below, the latter is a much more cost-effective option, and is your best way to save money overtime payments for this class of employees.

Spoiler alert: there is some math involved.

“Exhibit A” for what’s wrong with the Fair Labor Standards Act

Consider this scenario.

Employer and Employee have a good-faith dispute over whether Employer owes Employee for unpaid overtime for time Employee spent traveling.

Employee sues.

Court awards Employee $608.08 for unpaid overtime (doubled to $1,216.16 as liquidated damages).

So far, this all seems kosher.

Then, however, Employee files his petition for attorneys’ fees.

$141,236.50 in attorneys’ fees.

Can you pay your employees in Bitcoin?

“What is Bitcoin? I don’t understand how fake money works.”

These were the words of my 9-year-old last week.

Let me try to help him, and you, out.

Federal judge hands Grubhub a huge victory in groundbreaking gig economy trial

Raef Lawson worked as a restaurant delivery driver for Grubhub for four months in late 2015 and early 2016. He claimed that the company misclassified him as an independent contractor, and owed him overtime for hours he worked over 40 in any workweek.

Last week, in Lawson v. Grubhub [pdf], a California federal judge granted the gig-employer a huge victory by ruling that Lawson and all other similarly situated drivers are independent contractors, and not employees.

Walmart (yes, Walmart) has now done more for worker rights than the U.S. government

Image by Sven via Wikimedia Commons

Earlier this month, Walmart announced sweeping additions to how it compensates its employees.

When is a break not a break under the FLSA?

The FLSA draws a pretty clear line as to when breaks must be paid, and when they can be unpaid.

If a break 20 minutes or less in duration, it must be paid. Any longer, and an employer can make it an unpaid break.

What if, however, instead of providing employees paid breaks, an employer installs a system of flex time—the employer only pays employees for the time they are logged onto its system, which maximizes employees’ ability to take breaks from work at any time, for any reason, and for any duration.

Does this “flex time” system of unlimited unpaid breaks pass muster under the FLSA?

Is the DOL’s white-collar salary test DOA?

Late last week, a federal judge in Texas struck down the Department of Labor’s attempt to raise the salary test for the Fair Labor Standards Act’s white-collar exemptions from $455 per week to $913 per week.

The court held that because the statute defines the administrative, executive, and professional exemptions based on their duties, any salary test that renders the duties irrelevant to the analysis is invalid. Thus, because the Obama-era $913 salary test could overshadow the exemption’s duties in the execution of the exemptions, the new salary level is invalid.

I founds footnotes 5 and 6 to be very interesting, but I’m not sure the position they advance are intellectually consistent with the bulk of the opinion.

Compare:

This opinion is not making any assessments regarding the general lawfulness of the salary-level test or the Department’s authority to implement such a test. Instead, the Court is evaluating only the salary-level test as amended by the Department’s Final Rule. ... During questioning at the preliminary injunction hearing, the Court suggested it would be permissible if the Department adjusted the 2004 salary level for inflation. [fns. 5 and 6]

-vs-

The Final Rule more than doubles the previous minimum salary level. By raising the salary level in this manner, the Department effectively eliminates a consideration of whether an employee performs “bona fide executive, administrative, or professional capacity” duties. ... Nothing in Section 213(a)(1) allows the Department to make salary rather than an employee’s duties determinative of whether a “bona fide executive, administrative, or professional capacity” employee should be exempt from overtime pay. [opinion]

To me, the only way to read the opinion is that any salary test exceeds the DOL’s authority to implement the EAP exemptions (fns. 5 and 6 notwithstanding). Alternatively, if the only salary test that will pass muster is one that is so low that anyone who meets the duties test also must, de facto, meet the minimum salary threshold (the status quo of $455, adjusted for inflation to $592), why have a salary test at all?

Thus, in the opinion of this blogger, the DOL’s salary test is DOA. Now, let’s wait for the appeal and see what the court of appeals has to say on this issue.

BREAKING: federal judge strikes down FLSA white-collar exemption salary test

Ding, dong, the DOL’s salary test for white collar exemptions is dead (sort of).

A Texas federal judge has held that the Department of Labor improperly used a salary-level test to determine which white-collar workers are exempt from overtime compensation.

Avoid “FLSA roshambo” to win off-the-clock overtime claims

Defending claims for off-the-clock work is one of the most difficult tasks employers face under the Fair Labor Standards Act. An employee (or worse, group of employees) says, “I (we) worked, without compensation, before our shift, after our shift, or during our lunch; pay me (us).” Often, these employees have their own personal, detailed logs supporting their claims. And the employer has bupkis. It then must prove a negative (“You weren’t really working when you say you were”), which places the employer in a difficult and often unwinnable position. It’s a wage-and-hour game of rock-paper-scissors, where paper always beats air.

When we last examined Allen v. City of Chicago—a case in which a class of Chicago police officers claimed their employer owed them unpaid overtime for their time spent reading emails off-duty on their smartphones—an Illinois federal court had dismissed the claims, holding that most of the emails were incidental and non-essential to the officers’ work, and, regardless, the employer lacked specific knowledge of non-compensated off-duty work.

Last week—in what is believed to be the first, and only, federal appellate court decision on whether an employer owes non-exempt employees overtime for time spent off-duty reading emails on a smartphone—the 7th Circuit affirmed [pdf].

Is joint employment the issue that unites our divided government?

I cannot recall a time when our government has been more divided across ideological and party lines. (I don’t count the early 1860s, because that’s not a time a can remember.) Thankfully, an issue has come along to build a peace bridge over the streets and through the halls of Washington D.C.

This issue—joint employment, via the Save Local Business Act [pdf], which clarifies that two or more employers must have “actual, direct, and immediate” control over employees to be considered joint employers.