Category: FLSA

Categories
FLSA Overtime/Wage & Hour

Warehouse Workers Not Entitled to Overtime for Security Screens

On December 9, 2014, the United States Supreme Court handed down its long awaited decision in Integrity Staffing Solutions, Inc. v. Busk.  That case involved warehouse workers at various Amazon.com facilities. Those workers were required to pass through a security screening after their shift ended. They were not paid for the time that they had to stand in line. The amount of time that took is disputed. The Company said it wasn’t very much. The employees claimed that it was an extended period of time.

The employees lost at the trial court level, but the United States Court of Appeals for the Ninth Circuit reversed. They ruled that time spent in security screenings to guard against employee theft qualified as compensable time under the Fair Labor Standards Act.

The United States Supreme Court disagreed. In a unanimous opinion authored by Justice Thomas, the Court explained:

We hold that an activity is integral and indispensable to the principal activities that an employee is employed to perform – and thus compensable under the FLSA – if it is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities. Because the employees’ time spent waiting to undergo and undergoing Integrity Staffing’s security screenings does not meet this criteria, we reverse the judgment of the Court of Appeals.

At first blush, this opinion seems a little unfair. Why should an employee not be paid for standing in a line that the employer forces them to stand in? It is important to remember that fairness is not the test. The issue is whether it is compensable under the Portal-to-Portal Act, which was an amendment to the FLSA. As a general rule, time spent traveling to and from work is not compensable. However, is important to understand the limits of this holding.

This case does not overrule the “continuous work day rule.” Under this rule, an employee is entitled to all of his time spent between the first principal activity and the last principal activity. Therefore, even under the Supreme Court’s decision, time spent in security screenings would be compensable if the employees had performed some work-related activity prior to going through them. Therefore, if they had had to attend meetings, fill out paperwork, or do some other clearly compensable work activity, they would be paid for going through the screenings.

Nevertheless, the unfairness of this decision is striking. It could produce draconian results. What if an employer forces employees to stand in a one-hour line? What if they force them to take a two- hour bus ride? These extreme categories clearly cry out for Congressional action, which is probably not forthcoming.

Categories
FLSA Overtime/Wage & Hour

This is a Good Question: Whatever Happened to Overtime?

Whatever happened to overtime? That is the answer that Nick Hanaur of Politco seeks to answer in a recent article. Overtime is protected by the Fair Labor Standards Act, a federal law that dates back to 1938. Under the FLSA, most employees are entitled to 1 ½ their regular rate of pay for any hours worked over forty. There are a few exceptions. Salaried employees who have very specific job duties are exempt from overtime if they make $455.00 per week. This $455.00 per week number has stayed stagnant for a long time. That means that a “manager” or “executive” who works sixty hours per week only has an effective hourly rate of $7.58 per hour if they work a sixty hour work week. As hours have gotten longer and pay has gotten less, this is not unusual. Managers who work especially long hours may make less than minimum wage.

Hanaur’s article makes the argument that the government’s failure to raise the salaried threshold for exempt employees is having a significant impact on the middle class. Indeed, it is decreasing the number of people that are in the middle class. It may come as a surprise that Congress is not the entity that sets this number. Instead, the United States Department of Labor has “rule making” authority to issue regulations that would increase this threshold number. The Obama Administration has signaled that it was going to raise this threshold, but has yet to act. Hanaur makes a persuasive argument that such action is overdue. To read his article, follow this link:

http://www.politico.com/magazine/story/2014/11/overtime-pay-obama-congress-112954.html

Categories
FLSA Overtime/Wage & Hour

SNL NOT LAUGHING: NBC UNIVERSAL PAYS $6.4 MILLION TO SETTLE WAGE AND HOUR CLAIM BY INTERNS

There are more tears than laughs at Saturday Night Live these days. NBC Universal paid $6.4 million to settle a claim by interns who worked on a variety of shows, including SNL. This follows a $110,000 settlement from the producers of the Charlie Rose Show, which also compensated interns for the work they performed.

 In the current job market for college students and new graduates, employers often use the economy as an opportunity to get free work. The Fair Labor Standards Act (FLSA) is clear that most unpaid internships are flat out illegal. If an employer gets the benefit of work from an employee, then the employee probably has to be paid.

Categories
FLSA Overtime/Wage & Hour

Increase in Salary Basis for Overtime

The Fair Labor Standards Act requires that most employees be paid 1 ½ times their regular rate of pay when they work over 40 hours in a work week. There are a number of exceptions to this, including the so called “White Collar Exemptions.” The White Collar Exemptions say that certain employees may be paid a set salary instead of 1 ½ times their regular rate of pay for overtime. Those regulations are complex and the subject of significant litigation.

One of the requirements for the White Collar Exemptions is that the employees must be paid at least $455 per week. This is a very modest threshold. It is less than $24,000 per year. It seems unfair that a convenience store manager could be paid $24,000 a year for 60-80 hours of work. However, this is often the case. The United States Department of Labor is taking a new look at this threshold.

The Fair Labor Standards Act gives the Department of Labor “rule making” authority to set standards in implementing the overtime provisions of the Fair Labor Standards Act. In other words, the Department of Labor can raise the minimum salary that exempt employees receive without having to go to Congress. The DOL is beginning this process. This is part of President Obama’s initiative to close the income inequality gap in the United States. The Obama administration believes that raising the minimum salary for exempt employees would put more money in consumers’ hands and help grow the economy.

It is also just the right thing to do. The idea that an employer could legally work an employee 60-80 hours per week and pay them less than $24,000 per year is morally troubling.

The following is a link to a March 13, 2014 Wall Street Journal article about these important changes:

http://online.wsj.com/news/articles/SB10001424052702304704504579434183690961244?KEYWORDS=Fair+Labor+Standards+Act&mg=reno64wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304704504579434183690961244.html%3FKEYWORDS%3DFair%2BLabor%2BStandards%2Bct

Categories
FLSA Overtime/Wage & Hour Sex Discrimination

Lilly Ledbetter’s Thoughts on the Paycheck Fairness Act

Lilly Ledbetter’s name was thrust into the public spotlight when the United States Supreme Court decided to hear her case.  To the amazement of many, she lost.  The Supreme Court held that an employer can effectively “run out the clock” on an Equal Pay Act violation.  Ms. Ledbetter was making less money than her male co-workers.  She didn’t know it.  By the time she found out, the Supreme Court said it was too late to sue.

 This led Congress to pass legislation to change the law.  The act, appropriately named the Lilly Ledbetter Act, was the first bill signed into law by President Obama.

More potential reforms are on the horizon.  The Paycheck Fairness Act would be an amendment to the Equal Pay Act and the Fair Labor Standards Act.  The law would give more teeth to the Equal Pay Act.  More about that in a later blog.  The law would also permit employees to share wage information.  This would allow them to be informed about the pay their co-workers receive.  In turn, this would make it easier to for a victim of discrimination to learn that they she was not being paid legally.

In a recent Washington Post op-ed, Ms. Ledbetter shared her thoughts on the Paycheck Fairness Act.  It’s worth a read.  Here’s the link.

http://www.washingtonpost.com/opinions/lilly-ledbetter-says-the-president-can-do-more-for-equal-pay-sign-an-executive-order/2014/01/17/3eae5e62-7e0d-11e3-93c1-0e888170b723_story.html?hpid=z3

Categories
FLSA Overtime/Wage & Hour

UNPAID INTERNSHIPS AND THE FAIR LABOR STANDARDS ACT

It is a tough market for new graduates.  While the job market may not be as tough as it was a couple of years ago, it certainly has not recovered.  My law firm receives resumes from job seekers every week.  Some of those resumes are from students who just want to get their foot in the door. They offer to do unpaid internships. They say they just want experience.  This seems to make sense.  The problem is that this is a ripe area for employer abuse.  Over and over again, we hear stories of students who thought they were getting unpaid internships where they gain valuable work experience.  Instead, they are subjected to long hours, no training, and little experience that would actually benefit them in a future career.

The Fair Labor Standards Act (FLSA) addresses this problem.  Under the FLSA, an intern must be paid a minimum wage and overtime if they are a “covered employee.”  To determine whether an intern is a covered employee, the regulations issued by the Department of Labor look at the following factors:

–          The extent to which the internship provides training similar to the training that would be given in an educational environment;

–          The degree to which the internship experience benefits the intern rather than the employee;

–          Whether the intern displaces regular employees;

–          Whether the intern is closely supervised by existing staff;

–          Whether the company derives immediate advantages from the intern’s activities;

–          Whether the intern is entitled to a job at the conclusion of the internship; and

–          Whether the employer and the intern have reached an agreement that the intern is not entitled to wages for his/her work.

This is a multi-factor test, and no one factor is conclusive.  It is safe to say, however, it is rare that an intern would not be a “covered employee,” and thus entitled  to pay. Students who are working “unpaid” internships would be well-advised to consult with a lawyer to see if they are the victims of wage theft.

Categories
FLSA

New Rules for Home Healthcare Workers

As expected, the Department of Labor has issued new rules for home healthcare workers. They provide some long overdue and much needed protection to employees who work in homes of the elderly.  Historically, domestic workers who provide “companionship services” have not been protected by the minimum wage and overtime provisions by the Fair Labor Standards Act. This is due to a number o f historic factors, not the least of which is the refusal of Congress in decades past to pay living wages to employees who largely are minorities.

The Department of Labor has extended the protection of these employees. The most significant change is that the so called “companionship exemption” can only be claimed by individuals. In other words, multi-billion dollar companies who contract to provide in home healthcare can no longer get away with refusing to pay minimum wage and overtime to their employees.

Second, the tasks that are considered “companionship” have become significantly limited. “Companionship” is now defined as providing fellowship and protection for an elderly person or a person with a illness, injury or disability who requires assistance in caring for himself or herself. For example, companionship services include conversation, reading, games, crafts, accompanying personal walk, etc. “Companionship services” can also include the provision of “care” if the care is provided in conjunction with fellowship and protection and does not exceed more than 20% of the total work week. “Care” includes assistance with daily activities, such as dressing, grooming, feeding, bathing, toileting, and transferring. In other words, if a person spends more than 20% of his time actively assisting the person with their daily activities, then they cannot be exempt. Further, performance of household work that primarily benefits other members of the household or the performance of medically related tasks result in the loss of an exemption. Therefore, a housekeeper would not qualify for the companionship exemption.

Finally, the record keeping requirements are expanded so that employers must keep accurate time records for live in domestic service employees.

To give employers an opportunity to come into compliance, the new rules do not take affect until January 1, 2015. Nevertheless, these are important rules that will primarily prevent large corporations from taking advantage of an exemption that was intended to benefit the elderly who were paying “companions” out of their own pocket.

Categories
FLSA

Final Thoughts on Boaz: Employee’s Belief is not Determinative

There is another very good nugget in the Boaz case. It is just a single sentence, but it is very important for plaintiff’s lawyers to remember after their client gives his or her deposition. The Sixth Circuit said “an employee’s subjective belief that her position was exempt from the FLSA, however, does not mean the position was exempt as a matter of law.” In other words, if an attorney’s client, who does not have a sophisticated legally trained mind, testifies that she thought she was exempt from the FLSA, this is not a party opponent admission. The question is whether their duties, in light of the evidence, satisfy one of the exemptions. The employee’s belief that they are exempt is not determinative.

This is good language for plaintiff’s counsel to have on hand when their client makes a poorly thought out admission during her deposition because she was not able to match wits with a sophisticated opposing counsel. Remember, “the employee’s subjective belief” is not determinative that she was actually exempt in light of the law.

Categories
FLSA

Boaz v. FedEx Customer Information Services, Inc., et al. Part 2: Effective Vindication for Rights

In my last blog post, I wrote about the recent Sixth Circuit decision in in Boaz v. FedEx Customer Information Services, Inc., et al. That case stands for the proposition that an employer cannot contractually shorten the statute of limitations for claims under the Fair Labor Standards Act or the Equal Pay Act.

There were, however, a couple of additional nuggets worth noting. In Boaz, FedEx relied on a Sixth Circuit case called Floss v. Ryan’s Family Steak House, 211 F.3d 306 (Sixth Circuit 2000). In that case, the court held that an employee asserting an FLSA claim could waive her right to a judicial forum and instead arbitrate the claim. FedEx argued that such waivers are perfectly acceptable in the context of shortening the statute of limitations. The Sixth Circuit noted that “Floss itself said that an employee can waive his right to a judicial forum only if the alternative forum ‘allow[s] for the effective vindication [of the employee’s] claim.’” The court noted that a contract that shortens the statute of limitations does the exact opposite. In other words, it clearly prevents the vindication of an employee’s statutory rights.

This is important because it shows the Sixth Circuit still recognizes the holding in Floss. In other words, in the context of an arbitration agreement, an employee might still be able to challenge the validity of the arbitration agreement if it effectively prevents the employee from vindicating his or her rights. A great example of this is the financial ability to pay. If an arbitration agreement says that the employee must pay for the arbitration, or pay for a substantial part of the arbitration, an employee might successfully be able to argue that their too darn broke to pay for a $400 an hour arbitrator. This might defeat the arbitration agreement. That’s a good point for employee rights advocates to remember.

Categories
Age Discrimination (ADEA) FLSA Title VII

Employment Agreements that Limit a Statute of Limitations. Enforceable?

Employers love arbitration agreements. Employers are beginning to love agreements that have provisions that limit an employee’s statute of limitations. The Sixth Circuit just handed down a decision that addressed such an agreement from Federal Express. In that case, Boaz v. FedEx Customer Information Services, Inc., et al., the Plaintiff filed a Fair Labor Standards Act and Equal Pay Act case. Federal Express tried to convince the court to dismiss the FLSA case because it was brought more than six months after the statute of limitations.

The case involved claims under both the FLSA and the Equal Pay Act. Many people associate the Equal Pay Act with discrimination lawsuits. However, for purposes of this case, it is important to remember that the Equal Pay Act was an amendment to the FLSA. The Sixth Circuit framed the issue as follows: “Although Boaz’s claims were timely under the multi-year limitations. Under those Acts, her claims were untimely under the six month limitations in her employment agreement.”

Her employment agreement said “to the extent the law allows an employee to bring legal action against Federal Express Corporation, I agree to bring to that Complaint within the time prescribed by law or six months from the date of the event forming the basis of my lawsuit, whichever expires first.”

Because the lawsuit was filed after the six month limitation, Federal Express thought they had a get-out- of-jail-free card.

Fortunately for the employee, the Sixth Circuit did not agree. The Sixth Circuit said that “the issue is whether Boaz’s employment agreement operates as a waiver of her rights under the FLSA.” They noted that employees may waive their rights under Title VII. However, employees cannot waive their rights under the FLSA. Therefore, they reasoned that the six month limitation period is not valid in an FLSA case. This left the question of whether the Equal Pay Act claim was also barred. While an employee can waive a claim under Title VII, the Sixth Circuit said that the Equal Pay Act is different. The Equal Pay Act was an amendment to the FLSA. Because the statute of limitation cannot be contractually shortened for FLSA claims, it cannot be contractually shortened for Equal Pay Act claims either.

What is the takeaway? Employers can have contracts that shorten the statute of limitations for some claims, such as Title VII. However, an employer cannot have a contract that shortens the statute of limitations for a Fair Labor Standards Act case in the Sixth Circuit. Likewise, because the Equal Pay Act was an amendment to the FLSA, Equal Pay Act claims also cannot be subject to contracts that shorten the statute of limitations. The court does not say so, but presumably the Age Discrimination in Employment Act is similar to the Equal Pay Act. It also is based on the statutory construction of the Fair Labor Standards Act.

There are two other nuggets the Sixth Circuit addressed in the Boaz case. However, you will have to stay tuned for our next blog post to find out about those.