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17th Annual TBA Labor and Employment Forum

Here’s a great CLE opportunity that will cover a ton of labor and employment topics.  The 17th Annual TBA Labor and Employment Forum is April 12 in Nashville.  I will be speaking about current developments in wage and hour law. 

This is my second year to speak at this event, and it’s an honor to be included among such great employment lawyers from across the state.  This year, the line-up of speakers includes  Judge Clifford Shirley, John Bode, Bob Boston, Stan Graham, and Mark Travis.  Register at http://tinyurl.com/azdyxcl

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Overtime/Wage & Hour

Rule 68 Offer of Judgments in FLSA Collective Actions: An Update on the Genesis Healthcare Case

Earlier this month, the United States Supreme Court heard oral arguments in the Genesis Healthcare case, which will likely decide whether employers may use Rule 68 Offers of Judgment to “pick off” the claims of lead plaintiffs. This would result in employers being able to use a procedural device for a purpose it was clearly not intended: to deprive putative class members from the opportunity to join FLSA collective actions. To read my previous post on the case, you can follow this link: http://www.tennesseeworkplacelaw.com/2012/10/18/rule-68-offers-of-judgment-in-flsa-collective-actions-is-it-really-an-offer/

At oral argument, the justices seemed predictably split. The progressive justices appeared hesitant to allow an employer to manipulate the judicial process by making a Rule 68 Offer of Judgment which would eliminate its liability to the larger class. The conservative block appeared sympathetic to the employer’s argument. This will likely leave the swing vote with Justice Kennedy and, perhaps, Chief Justice Roberts.

It will be interesting to see how judicial philosophies will play into this decision. Because this deals with a Rule of Civil Procedure rather than a statute, there will likely be less discussion of “intent,” as Congress played no role it the drafting of the text. Rather, the courts are the guardians of their own procedures.

On a personal note, the employee’s case was argued by Neal Katyal. If you’ll forgive my shameless name-dropping, I had the great pleasure of meeting Neal at the Sixth Circuit Judicial Conference last April. We had lunch together, and I was immediately impressed by his intellect and grasp of Supreme Court jurisprudence. Neal is a graduate of Dartmouth and Yale Law School. He previously served as acting Solicitor General and successfully argued the constitutionality of the Affordable Care Act before the Sixth Circuit. He has argued many cases before the U.S. Supreme Court and is likely the most preeminent legal mind of my generation.

The Genesis Healthcare case is crucially important for employee rights advocates. Regardless of the outcome, we were fortunate to be able to trust Neal with the stewardship of this case. Neal and I exchanged emails following his oral argument. Nothing is left to do now but wait. Or, as Neal said in his email, “Fingers crossed, my friend.”

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Overtime/Wage & Hour

Just Because Your Boss Calls You a “Manager” Doesn’t Mean You Aren’t Entitled to Overtime

Many employers think they can avoid paying overtime just by saying that the employee is “salaried.”  They find out the hard way this isn’t true.  This often comes up when an employer calls an employee a “supervisor” or a “manager,” but that person doesn’t really meet the definition of “manager.” 

Our firm recently settled a case on behalf of a store manager who was paid a salary and worked 50 or more hours per week.  He was called a “manager,” but had very little actual  authority.  He cleaned the store, stocked shelves, and did the same work that other employees did.  There was a dispute over whether or not he could hire or fire employees.  The federal judge refused to throw out the case, finding that a jury could conclude that his duties really were not those of a manager.  The case settled shortly after the judge’s ruling.

In order to be a true “manager,” and thus not be entitled to overtime, the employer must prove:

  • The employee’s salary was at least $455 per week;
  • The employee’s primary duty must be management;
  • The employee must customarily and regularly direct the work of two or more full time employees; and
  • The employee  must have the authority to hire or fire, or the employee’s suggestions regarding hiring, firing, advancement, promotion, or change of employee status must be given particular weight.

Notice that the employer has to prove these four points, and he has to prove ALL of the four points.  In other words, a lot of folks are getting paid as managers who should be paid overtime.

That may be happening to the assistant managers at T.J. Maxx.  A federal judge in New York has just certified a collective action (similar to a class action) on behalf of assistant managers at the retail giant.  If you are being paid as a manager, but you don’t really perform management duties, you may be owed a significant amount of overtime.

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Overtime/Wage & Hour

Record Keeping Under the FLSA – Employer’s Burden

“Off the clock” cases make up a large percentage of FLSA claims.  When an employee that has been the victim of wage theft comes to me, he or she often is concerned that they do not have records of exactly when (date and time) they worked “off the clock.”  Fortunately, the Defendant is required to keep detailed time and payroll records of all non-exempt employees, rather than the employee.  29 C.F.R. 516.2. These records must include when the employee’s workweek begins under the FLSA.  29 C.F.R. 516.2(5).  The records must also include “hours worked each workday and total hours worked each workweek”  and must be maintained for at least three years.  29 C.F.R. 516.2(7), 5(a).

Addressing this issue, the Sixth Circuit in Fegley v. Higgins, 19 F.3d 1126, explained the consequences of an employer’s failure to keep proper records of hours worked by an employee in light of the FLSA.  In Fegley, the Court granted the plaintiff’s motion for partial summary judgment on the issue of liability for an FLSA overtime violation.  The Sixth Circuit, citing the seminal case from the U.S. Supreme Court, went on to explain:

[W]here the employer’s records [of work hours] are inaccurate or inadequate and the    employee cannot offer convincing substitutes …. we hold that an employee has carried out his burden if he proves he has in fact performed work for which he was improperly compensated and if he produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference. The burden then shifts to the employer to come forward with evidence of the precise amount of work performed or with evidence to negative the reasonableness of the inference to be drawn from the employee’s evidence. If the employer fails to produce such evidence, the court may then award damages to the employee, even though the result be only approximate.

Id. at 1133 (quoting Anderson v. Mt. Clemens Pottery, 328 U.S. 680, 687-88, 66 S.Ct. 1187, 1192 (1946)).

As such, employees in “off the clock” cases need only be able to give a reasonable approximation of their “off the clock” work.

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Overtime/Wage & Hour Uncategorized

Rule 68 Offers of Judgment in FLSA Collective Actions: Is it Really an Offer?

When an employee files a collective action under Fair Labor Standards Act, she is trying to recover unpaid wages for herself and other workers who find themselves in the same pickle.

An astute defense lawyer might tell his client, “Pay her!” This is not necessarily altruism.  It might just be a sneaky little litigation tactic.

An “Offer of Judgment” under Rule 68 of the Federal Rules of Civil Procedure is where a defendant offers to have judgment taken against it.  If the plaintiff refuses, she must “beat the offer” at trial or have to pay costs.  This works well in most single party cases.  However, it creates some interesting (and unintended) complications in an FLSA collective action.

In a very good decision, the Sixth Circuit decided to sort all of this out so lawyers wouldn’t be left scratching our heads.  See O’Brien v. Ed Donnelly Enterprises, 575 F.3d 657 (6th Cir. 2009).  The Sixth Circuit said:

  1. If a defendant makes an offer of judgment for everything (or more) that the plaintiff is claiming, then the plaintiff’s claim is moot.  The court should just enter judgment and move on to other things.  It doesn’t matter whether the plaintiff formally accepts it.
  2. If the case is a collective action, however, the defendant cannot get rid of the case by offering only the lead plaintiff everything she is entitled to.  The Sixth Circuit said, “a Rule 68 Offer of Judgment cannot moot a lead plaintiff’s FLSA claim when the lead plaintiff timely moves for collective certification, because the motion relates back to the lead plaintiff’s filing of the complaint.”
  3. If the court ultimately denies the motion for collective certification, then no harm is done.  If the defendant had previously made an Offer of Judgment for the full amount the lead plaintiff is owed, then “the lead plaintiff represents only herself, and her claim is moot.”  She still gets her money.

Thanks to the O’Brien court, this has been the law in the Sixth Circuit (which includes Tennessee) for the last three years.  Recently, the Third Circuit addressed this issue and reached a result that was similar in most respects.  All of the courts, however, do not agree.  If you’ve read this blog very much, you know that it’s hard to get judges to agree on anything.

The United States Supreme Court has now decided they need to take a look at this issue.  They granted certiorari in the case from the Third Circuit, Genesis Healthcare Corp. v. Symczyk.    Oral argument is December 3.

This will be the first procedural FLSA case the Supreme Court has tackled in some time.  It will be interesting to see how the court handles this specific issue.  On a broader scale, it will give us the first look at the way the Roberts court views the procedures that have developed in FLSA collective actions.    Stay tuned.

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Overtime/Wage & Hour

Horton Who? FLSA Collective Actions Following the D. R. Horton Decision

When I think about class action waivers in employment contracts, I’m reminded of  Dr. Seuss and Mark Twain.  Twain once said,  “News of my death is greatly exaggerated.” 

Employee rights advocates have thought for a while that  class and collective actions  under the Fair Labor Standards Act might also be dead.  Like Twain, perhaps news of the death of FLSA collective actions in arbitration has been exaggerated.

It is generally permissible for arbitration and employment agreements to have clauses which prevent employees from pursuing class or collective actions. That’s what our friends in the defense bar have been telling us.  Not so fast, says the National Labor Relations Board.  That brings us to Dr. Seuss.

My eight year old loves “Horton Hears a Who” by Dr. Seuss.  If I’m real honest, I didn’t like Horton.  My son insisted that we go see the Dr. Seuss musical based on “Horton” at the Nashville Children’s Theatre.  He loved it.  I was miserable. 

I have, however,  changed my mind. I love Horton.  I love everyone and everything named “Horton.”  I especially love the National Labor Relation Board’s recent D.R. Horton decision.

In D.R. Horton, the NLRB held that a contract which prohibits collective actions is void because it violates the National Labor Relations Act.  The Act prohibits  agreements that prevent employees from engaging in concerted activity.  Horton reasoned that collective actions are “concerted activity” and thus cannot be waived.

So what are employee rights lawyers to do?  If you know of the class action waiver prior to filing suit, I suggest filing a charge with the National Labor Relations Board to declare it an unfair labor practice.  Then file your lawsuit.  When you get the obligatory Motion to Compel Arbitration, tell the judge that the agreement is an unfair labor practice, tell her that you’ve filed your charge with NLRB, and ask her to strike it down.  If you don’t know about the agreement when you file suit, I suggest you file your charge with the NLRB as soon as you find out about it, which will probably be when you get served with the Motion to Compel Arbitration.

In the meantime, we’ll keep an eye on how the courts interpret Horton, and I’ll be a lot more tolerant of that darn elephant.

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Overtime/Wage & Hour

Time Records in “Off the Clock” Cases

When I meet with a worker who has been worked “off the clock” by his employer, he or she will inevitably make the following statement:

“. . . but I don’t have any records of the “off the clock” work I performed?”

This is a common concern among individuals that have been worked “off the clock” by their employers because they generally have not documented their time spent working “off the clock.”  Fear not, the Fair Labor Standards Act and the case law interpreting it protect employees put in this no win situation.

Employers are required to keep detailed records of all non-exempt employees.  These records must include when the employee’s workweek begins under the FLSA.  The records must also include “hours worked each workday and total hours worked each workweek” and must be maintained for three years.  If Defendant’s records are inaccurate, the employee may give a just and reasonable approximation of his/her damages.

In Fegley, the Sixth Circuit explained the consequences of an employer’s failure to keep proper records of hours worked by an employee in light of the FLSA.  The Sixth Court granted the plaintiff’s motion for partial summary judgment on the issue of liability for an FLSA overtime violation, citing the seminal case from the U.S. Supreme Court and explaining as follows:

[W]here the employer’s records [of work hours] are inaccurate or inadequate and the    employee cannot offer convincing substitutes …. we hold that an employee has carried out his burden if he proves he has in fact performed work for which he was improperly compensated and if he produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference. The burden then shifts to the employer to come forward with evidence of the precise amount of work performed or with evidence to negative the reasonableness of the inference to be drawn from the employee’s evidence. If the employer fails to produce such evidence, the court may then award damages to the employee, even though the result be only approximate.

Id. at 1133 (quoting Anderson v. Mt. Clemens Pottery, 328 U.S. 680, 687-88, 66 S.Ct. 1187, 1192 (1946)).

A recent case that we tried before the Honorable Judge J. Daniel Breen of the United States District Court for the Western District of Tennessee illustrates this issue.  See Barnes v. Tennessee Personal Assistance, Inc., Docket No. 10-1260 (W.D. Tenn. June 18, 2012) (Memorandum Opinion).  In this case, we were able to obtain summary judgment on the issue of liability, convincing the Court as a matter of law that Ms. Barnes had been misclassified as a salary non-exempt employee.  After waiving the jury, the parties tried the issue of damages to Judge Breen.

At trial, Defendant had no records of the hours worked by Plaintiff.  As such, Defendant was unable to produce any payroll records on the issue of how much time Plaintiff worked.  Plaintiff, on the other hand, produced a calendar on which she had recorded some, but not all of her hours worked.  Thus, the Court was left to determine the damages owed to Ms. Barnes based on her calendar and the testimony of witnesses.

Because Defendant was unable to meet its burden, the Court found that Ms. Barnes was able to prove that she had worked approximately 841 hours of overtime.  The Court noted that Defendant “had no documentation to prove Barnes’ estimate of her overtime was inaccurate, except to state that she would have known if the Plaintiff were working that much.  [Defendant] acknowledged, however, that she did not monitor employees’ work hours.”

Thus, Ms. Barnes reasonable approximation of her overtime hours prevailed, demonstrating that employees don’t have to have records of when they worked “off the clock.”  Rather, they are only required to provide evidence supporting a reasonable approximation of their overtime worked, which serves to protect employees forced to work “off the clock” by their employers.

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Overtime/Wage & Hour

Chinese Overtime? I Thought This Was America.

What employees should know about the fluctuating workweek

One day a prospective client walked into my office and told me that she was paid “Chinese overtime.”  I knew that China was taking over a good deal of the world economy,  but I had no idea that we were now paying employees based on their law.

When I looked into the way this client was being paid, it certainly seemed like something from a Communist country.   “Chinese overtime” is a slang phrase that refers to the fluctuating workweek regulations of the Fair Labor Standards Act.  Basically, these regulations say that an employer can pay an employee “half time” instead of “time and a half” for the hours worked over 40.  This, of course, results in a huge savings for employers.  When you do the math, an employee usually makes about 25% of the overtime that they would make with most employers.  In exchange, however, employers must guarantee employees a minimum of 40 hours of pay every single week.  Sounds easy enough, but the devil is in the details.

In the case of the fluctuating workweek regulations, there are a bunch of details.  Consider, for example,  a policy that gives employees only a limited number of sick leaves or says that employees are not paid for jury duty.  In that case, the employees pay is not guaranteed.  In that case, an employee may be owed a whole lot of unpaid overtime because the employer never had a valid fluctuating workweek plan in place.

An employee may also be entitled to unpaid overtime if the employer paid the employee more than the guaranteed salary.  Huh?  An employer cannot pay an employee more than the guaranteed salary?  Well, according the Department of Labor and a whole host of really smart federal judges, that also violates the fluctuating workweek.

This make a lot of sense when you think about it (federal judges are smart folks, you know).  The law does not want to encourage employers to shift a large portion of an employee’s salary to some type of bonus while simultaneously paying them a pittance for an hourly wage.

The long and the short of it is that the fluctuating workweek can be done legally.  In my experience, however, it usually is not.  My firm has handled two large national class actions and a number of class actions against major regional companies who have screwed up the fluctuating workweek.  It’s very hard for a company to implement the fluctuating workweek correctly.

So . . . if you’ve been told that your overtime is paid by “Chinese overtime,” you might want to call a lawyer.  Our friends from China have not yet taken over America’s labor laws.

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Overtime/Wage & Hour

Independent Contractor Misclassification: Do you quack like a duck?

Boss: Congratulations! You’re hired!

Worker: That’s great. What are your benefits?

Boss: Well, you don’t exactly have benefits. You see, you’ll be an independent  contractor. You’ll actually work for yourself.

Worker: Does that mean I’ll get to set my own schedule?

Boss: No, you’ll still have to work when we tell you to.

Worker: Does it mean I get to turn down work I don’t want to do?

Boss: No! If you do that we’ll fire your [explicative deleted, this is a family friendly blog].

Worker: Well, what does it mean that I’m an independent contractor?

Boss: It means you’ll get the shaft in a variety of ways. It means you won’t get overtime. It means you might not even get minimum wage. It means you will have to pay your own payroll taxes.  And it means I’m saving a [heck] of a lot of money.

While entirely fictional, some form of this conversation plays out daily. Employers save as much as 30% on payroll by misclassifying employees as independent contractors.  In 2006, the federal government estimated it lost $2.6 billion in unpaid taxes because employers wrongly classified employees as independent contractors.

How do you know if you’ve been misclassified?  Here are some questions to ask yourself.

  • Does my employer set my schedule?
  • Is my job important to my boss’ business?
  • Am I able to work for my employer’s competitors?
  • Does my employer buy my tools?
  • Does my employer supervise my work?

If you said “yes” to at least two of these questions, your employer may be stealing overtime and other money from you. Are you an employee? Well if you look like a duck, quack like a duck, and have webbed feet, then you probably need to see a lawyer.