Ohio amends its employment laws to limit joint employment for franchisors

As the debate over the meaning of "joint employer" continues to rage at both the NLRB and in the federal courts, Ohio has jumped into the debate by passing legislation to limit this definition under various Ohio employment laws.

Effective yesterday, franchisors will not be deemed joint employers with their franchisees unless:

• the franchisor agrees to assume that role in writing or a court of competent; or
• a court of competent jurisdiction determines that the franchisor exercises a type or degree of control over the franchisee or the franchisee's employees that is not customarily exercised by a franchisor for the purpose of protecting the franchisor's trademark, brand.

Beware pre- and postliminary activities

In Integrity Staffing Solutions v. Busk, the Supreme Court held that the FLSA only requires employers to compensate employees for time spent performing "preliminary" (pre-shift) and "postliminary" (post-shift) activities that are "integral and indispensable" to an employee’s principal activities. What are "integral and indispensable?" Those activities that are (1) "necessary to the principal work performed" and (2) "done for the benefit of the employer."

Why the Cleveland Clinic's $15 minimum wage matters to you

Earlier this week, the Cleveland Clinic committed, by January 2020, to raise the minimum wage for its employees to $15 an hour.

According to its CEO, Dr. Tom Mihaljevic, its all about making sure employees feel respected and valued … and attracting and retaining the best employees.

As the largest employer in Northeast Ohio and the second largest employer in the state of Ohio, Cleveland Clinic has a responsibility to lead the way and help shape the future of health care and the health care workforce.…

Every caregiver's role is important. Increasing our minimum wage demonstrates our commitment to our employees and their families, as well as the community and our patients. It is a reflection of who we want to be as an organization.…

Ultimately, we want to continue attracting the best and brightest caregivers in all roles. We want to remain an employer of choice and give back to the caregivers who do so much for the patients we serve at Cleveland Clinic. Our goal at Cleveland Clinic is to be the best place for health care and the best place to work in health care. To reach that goal, we will continue to align caregiver pay with other top employers in the markets where Cleveland Clinic operates.…

The Clinic joins other large employers—Amazon, Walmart, Target, Disney Parks, McDonald's—in adopting a $15 minimum wage.

Which is great for them and their employees, but why should this matter to you and your business?

Because by raising their minimum wage, you will have to do the same. Or you will if you want to attract and retain quality employees. These employers have moved the needle on the issue of the minimum wage. To compete in the job market against those offering a $15 minimum wage, other companies will have to match, or risk losing quality employees to higher paying employers. Thus, over time, the $15 minimum wage will organically spread.

This is not to say that this increased minimum wage is not without problems of its own. For example, if you raise your minimum wage to $15 an hour, what happens to all of those employees already earning $15 an hour? To the employee, hired 10 years ago at $8 an hour, who worked his butt off for the past decade, and, through a series of promotion and raises, earned his way up to $15 an hour? Will you provide a proportional raise to keep pace? And, if not, a $15 minimum wage will convert those millions of workers into minimum-wage employees. And, for better or for worse, there is a certain stigma with being classified as minimum wage—especially if you've worked hard for years not to be minimum wage.


These are not easy issues with easy solutions. However, the $15 minimum wage train has most definitely left the station, and there is no going back. The question is not if you will adopt it, but when, and how.

* Photo by Verne Ho on Unsplash

A quick review on the rules for docking pay for exempt employees

"Can I dock part of an employee's paycheck?"

It's one of the questions I get most often from clients.

So, let's take a quick run through the rules of docking employee's pay for exempt employees.

Court reminds that economic realities, not corporate formalities, govern independent contractor status

The distinction between independent contractors and employees continues to confound employers.

At issue in Acosta v. Jani-King of Oklahoma (10th Cir. 10/3/18) [pdf] is whether the Department of Labor could continue its FLSA claims on behalf of individuals who provide cleaning services as franchisees of a janitorial company. If the franchisees are independent contractors, then the FLSA does not coverthem. If, however, the company misclassified them as independent contractors, then the DOL has something to litigate.

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.