Wage & Hour Litigation Blog

Summertime Blues? Solicitor of Labor Eyes July Publication of Overtime Regs

Posted in DOL Enforcement

Authored by Alex Passantino

Pinning down a publication date for the DOL’s final revisions to the white-collar exemption rules has proven difficult for anyone outside of the agency’s headquarters. Sometimes, the answer seems to elude even those inside the Frances Perkins Building. From statements from the Solicitor last Fall that the rule would be out in “late 2016” (subscription) to the Department’s regulatory agenda setting a target date of July 2016 to Secretary of Labor Perez’s confidence that the rule would be out by Spring of 2016, we’ve seen a fairly wide range of expectations out of DOL.

At a recent meeting of the New York State Bar Association, we got yet another, although this one is in line with the Department’s official target: the Solicitor of Labor told a group of attorneys that the overtime rule would be issued in early July.

The Department proposed to increase the salary level required for exemption to $50,440, and the salary required for the highly compensated employee exemption to $125,000. The Department also proposed to automatically increase the salary on a regular basis, based on inflation or other factors. DOL inquired into a number of issues related to the duties tests, including the propriety of changing the standards for determining an employee’s “primary duty,” but did not afford the regulated community the opportunity to comment on any specific proposal.

DOL received nearly 300,000 comments in response to its proposal. It is in the process of reviewing those comments and finalizing the rule. Once DOL has finalized the rule and publishes it in the Federal Register, employers likely will have between 60 and 120 days to come into compliance with the new standards. Given the short timeframe, employers should be starting to review their potentially impacted positions now.

Lifting the Weight: Conditional Certification Denied for Personal Trainers Claiming Off-the-Clock Work

Posted in Conditional Certification

Co-authored by Molly C. Mooney and Noah Finkel

Last week, a federal judge in the Northern District of Illinois lifted the weight of collective action certification off Life Time Fitness, Inc. and refused to certify a proposed collective of more than 6,000 personal trainers because each trainer’s employment varied too much to resolve their potential claims on a collective basis.

The trainers in Steger v. Life Time Fitness, Inc. alleged that Life Time had an unofficial policy of intimidating and pressuring trainers to work off the clock. Life Time trainers are paid based on commissions. The trainers presented evidence that some managers encourage trainers to underreport their hours in order to prevent “draws” against those commissions. According to the trainers, this evidenced a broader, common policy discouraging trainers from reporting all hours worked. Life Time, however, argued that its corporate policies mandate accurate timekeeping, and any encouragement of off-the-clock work was highly individualized based on a trainer’s location, job title and duties, productivity, and personal decisions.

The district court agreed with Life Time, since plaintiffs’ evidence that some managers pressured employees to underreport hours also demonstrates that some managers did not. It also credited Life Time’s corporate policies, which require all employees to accurately report their time, and of which, at least some class members were aware. Ultimately, the district court found certification inappropriate, as the resolution of class members’ claims would require a highly individualized analysis to determine the extent to which each trainer worked off the clock.

This case comes on the heels of a pair of wage and hour certification decisions in the Seventh Circuit relating to off-the-clock work. In both Ross v. RBS Citizens, N.A., which this blog covered here, and Bell v. PNC Bank, plaintiffs alleged that their employers had unofficial policies encouraging off-the-clock work. After the Seventh Circuit affirmed class certification in Ross, the Supreme Court vacated the lower court’s judgment and remanded the case to the Court of Appeals “for further consideration in light of Comcast Corp. v. Behrend,” a decision in which the Supreme Court determined that an inability to show that damages can be measured on a class-wide basis may be fatal to a collective action.

Although Ross settled before the Seventh Circuit could apply Comcast, the Seventh Circuit chimed in again in Bell. There, it affirmed class certification, reasoning that whether plaintiffs can ultimately prove the existence of an unofficial policy encouraging off-the-clock work is irrelevant at the certification stage. Rather, plaintiffs simply must show that the denial of overtime pay came from an alleged broader, informal company policy rather than from the discretionary decisions of individual managers.

Bell suggests that a way to defeat class or collective action certification of an “unofficial policy” claim is to show that the pressure to work off the clock was the result of individual decisions by managers at the local level. That is precisely what happened here. The district court reasoned that the claim at issue was driven, not by a uniform unwritten corporate policy, but rather by the individual actions of specific managers acting contrary to corporate policy. Moreover, and encouragingly for employers defending collective actions and used to the invocation of the phrases “lenient standard” and “modest showing” at the conditional certification stage, the district court was able to recognize this at the early stage of the case and deny notice to the putative collective action members.

Meowing Dogs and Barking Cats: Supreme Court’s Grant of Cert on Exempt Status of Automobile Service Advisors May Result in Reminder that Exemptions Are Functional and Flexible

Posted in Misclassification/Exemptions

Co-authored by Kara Goodwin and Noah Finkel

The U.S. Supreme Court recently agreed to resolve the question of whether “service advisors” at car dealerships—workers whose primary job responsibilities involve identifying service needs and selling service solutions to the dealership’s customers—are exempt from the Fair Labor Standard Act’s (“FLSA”) overtime pay requirements. Although the case involves a somewhat-discrete exemption that has been ruled on only a handful of times in the past four decades, far-reaching implications on the interpretation of FLSA exemptions may ride on the Supreme Court’s decision.

Case Background

In Navarro et al. v. Encino Motorcars, LLC, a group of current and former car dealership employees who worked as service advisors brought a collective action under the FLSA in the Central District of California alleging that their dealership employer failed to pay them overtime wages. As service advisors, the plaintiffs would meet and greet car owners as they entered the service area; evaluate customers’ service and repair needs; suggest services to be performed on the vehicle to address the customers’ complaints; solicit supplemental services to be performed (such as preventive maintenance); prepare price estimates for repairs and services; and inform the owner about the status of the vehicle. Service advisors did not receive an hourly wage or a salary but were instead paid by commission based on the services sold.

The district court dismissed the overtime claim and concluded (consistent with an unbroken line of authority from federal and state courts across the country) that service advisors fall within the FLSA’s exemption for “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles,” 29 U.S.C. § 213(b)(10)(A), because service advisors are “salesm[e]n … engaged in … servicing automobiles.”

The Ninth Circuit reversed, deferring to a Department of Labor regulatory definition stating that the exemption is limited to salesmen who sell vehicles and mechanics who service vehicles, thus excluding from the exemption service advisors (i.e., salesmen who sell services). In doing so, the Ninth Circuit acknowledged that its holding “conflicts with decisions of the Fourth and Fifth Circuits, several district courts, and the Supreme Court of Montana”—i.e., every other court to have considered the question—which had uniformly ignored or refused to defer to the Department of Labor’s “restrictive” interpretation of § 213(b)(10)(A) and recognized that the use of the disjunctive “or” in § 213(b)(10)(A) between the words “selling” and “servicing” means that the exemption applies to any salesman, partsman, or mechanic who is primarily engaged in either of those duties. In contrast, the Ninth Circuit concluded that a “natural reading” of the exemption suggested that Congress could not have intended that “selling” and “servicing” would apply to all three subjects (salesman, partsman, mechanic), proposing a similarly structured phrase involving what to do if “my dogs or cats were barking or meowing” and stating that the interpretation adopted by the other courts “would include a meowing dog and a barking cat.” Accordingly, the Ninth Circuit took a more narrow approach to interpreting the exemption, holding that Congress likely intended “salesman” to be connected only to “selling” automobiles, thus excluding service advisors (salesmen who sell services) from the exemption.

The Supreme Court granted the dealership’s petition for a writ of certiorari and agreed to answer the question of “whether ‘service advisors’ at car dealerships are exempt under 29 U.S.C. § 213(b)(10)(A) from the FLSA’s overtime-pay requirements.”

Potential Implications for FLSA Collective Actions

While the Supreme Court’s ruling on this issue undoubtedly will have immediate and significant impact on the nation’s 18,000 franchised car dealerships and estimated 45,000 service advisors, it may also have far-reaching implications for the interpretation of FLSA exemptions generally.

For example, in 2012, the Supreme Court rejected a “narrow” interpretation of the outside sales exemption in Christopher v. SmithKline Beecham Corp., which would have excluded pharmaceutical sales representatives, and favored a “functional,” “flexible,” and “realistic” rather than “technical” and “formalistic” approach to interpreting the FLSA exemption. Similarly here, the dealership is asking the Supreme Court to reject the Ninth Circuit’s narrow interpretation and to take a functional and realistic approach to interpreting § 213(b)(10)(A) because service advisors are “a paradigmatic example of a salesman engaged in servicing automobiles,” are “functionally equivalent” to salesmen, partsmen, and mechanics, and are similarly responsible for the selling and servicing of automobiles.” If the Supreme Court agrees, it would provide further evidence to support a more flexible and elastic approach to interpreting FLSA exemptions—a critical development as the Department of Labor issues its upcoming revisions to the white-collar exemptions.

Second Circuit Leaves Interns in the Cold—Again

Posted in Misclassification/Exemptions

internship blog image 8.jpgCo-authored by Robert Whitman and Adam Smiley

While most New Yorkers rode out last weekend’s blizzard by binge watching television or enjoying playoff football, three Second Circuit judges apparently spent their time more productively, as the court on Monday issued an amended decision in its landmark ruling from last summer on unpaid internships.

As we have previously reported, the court’s July 2015 decision in Glatt v. Fox Searchlight held that the “primary beneficiary” test should be used to decide whether unpaid interns should be deemed employees or trainees. The court also held that this test requires highly individualized inquiries—a conclusion that may deal a blow to plaintiffs’ abilities to obtain class or collective certification in these cases.

In its amended decision, the Court added a third “salient feature” to the primary beneficiary test, holding that the “intern-employer relationship should not be analyzed in the same manner as the standard employer-employee relationship because the intern enters into the relations with the expectation of receiving educational or vocational benefits that are not necessarily expected with all forms of employment.” The court also inserted a statement that its analysis of the intern v. trainee question is limited to internships and not to “training programs in other contexts.”

Later in the amended opinion, after the listing of the seven non-exhaustive factors that determine the “primary beneficiary” of an internship, the court noted that the “touchstone” of its analysis was the economic reality of the relationship. In light of this, the court said, it is relevant to consider evidence “about an internship program as a whole rather than the experience of a specific intern.” This is an important addition because it may render the specific experiences of a named plaintiff less important in the overall “primary beneficiary” analysis and make it easier for an employer to satisfy the test even if a particular manager did not administer a compliant program.

The court also modified its analysis of the previously vacated Rule 23 claims under New York law. It deleted the prior reference to “individualized” inquiries driving the denial of class certification, and replaced it with “highly context-specific” inquiries regarding an internship program as the barrier to a finding of commonality. The holding now reads as follows: “[T]he question of an intern’s employment status is a highly context-specific inquiry. [E]vidence that the defendants received an immediate advantage from the internship program will not help to answer whether the internship program could be tied to an education program, whether and what type of training the internship program provided, whether the internship program continued beyond the primary period of learning, or the many other questions that are relevant in this case.”

After the court issued its first decision in Glatt last July, the plaintiffs filed a petition for en banc review. Despite the denial of en banc review in Wang v. Hearst Corp., the companion case involving Hearst interns, the Glatt petition has remained pending. We suspect that this amended opinion reflects a compromise by the court’s judges to avoid a potentially contentious review by the full court. We now expect a decision on the en banc petition to be issued soon.

Although the court has now revised the “primary beneficiary” to apply only to intern cases, the Glatt decision still has broad implications for employers that use unpaid interns. In particular, courts within the Second Circuit are still required to take a holistic view of an internship program, and the hurdles to class and collective certification remain in place. As always, however, employers should conduct a careful analysis of their internship programs to ensure full compliance with any wage and hour obligations and protect themselves from future litigation.

Reports of the Death of the Mootness Maneuver Are Greatly Exaggerated

Posted in Settlement

Authored by Noah Finkel

As noted by this blog on several occasions, including most recently here, the U.S. Supreme Court and several appellate courts have grappled with the question of whether and to what extent a defendant facing a class or collective action can moot a case by offering a plaintiff complete relief under Rule 68 or in a settlement offer. Today the Supreme Court made clear in Campbell-Ewald Co. v. Gomez that an unaccepted offer of complete relief under Rule 68 does not render a case moot and thus does not end a purported class or collective action.

To be sure, the Court’s ruling narrows the grounds on which a defendant can obtain an early dismissal of a class or collective action by making a Rule 68 offer of complete relief to the class representative. As our colleagues explain here, the Court has now held that if a class representative rejects or declines to accept the offer, then “basic principles of contract law” mean that the offer has no force, and the class representative’s claim is not mooted. Indeed, under the express terms of Rule 68, an unaccepted offer of judgment expires after 14 days. (If an offer is accepted, then that may be a different story—particularly if the case is a collective action and not a class action, as discussed here.)

But does this make the mootness maneuver moot? No—and especially not in wage-hour cases, where in several classes of cases a defendant-employer readily can determine the maximum amount of a class representative’s claim for damages. As this blog has explained here, there is a better way for a defendant-employer to moot a class action, and that is by making a tender of complete relief to the plaintiff/class representative without reliance on Rule 68. Do not even reference a settlement agreement or release. Rather, make the tender unconditional. As many courts have held, if the plaintiff/class representative has been provided with all relief sought in the lawsuit for him or herself, and this is done before a class is certified or opt-in plaintiffs join a collective action, then there is no longer a live controversy between the parties on the merits and the court no longer has subject matter jurisdiction over the claim. Indeed, today’s opinion expressly noted that “[w]e need not, and do not, now decide whether the result would be different if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff … .”

What about the attorneys’ fees that the plaintiff’s counsel incurred in bringing the putative class or collective action? Depending on the statute, those might not need to be included. Under the FLSA, for example, only a “prevailing plaintiff” is entitled to attorneys’ fees, and if a case is dismissed as moot, the plaintiff did not prevail.

A tender of complete relief is not for every case. There are several reasons why a defendant employer would not seek to moot a wage-hour case by making such a payment. Many regular-rate cases, failure to pay overtime or minimum wage claims, tip credit matters, certain off-the-clock theories, and other pleadings that contain specifics on the amount of alleged underpayments may be amenable to calculating a plaintiff’s maximum recovery, but calculating “complete relief” in many wage-hour cases may not be so clear. In other types of cases, the amount needed to pay complete relief may be calculable but exorbitant. And in all cases, there is a risk that other potential plaintiffs may be waiting in the wings, and a tender of full relief to the first current or former employee who files a claim can lead others to make similar claims—leading to an endless and expensive game of whack-a-mole. Ultimately, each employer in each case needs to decide the propriety of the mootness maneuver on a case-by-case basis, weighing the cost of an offer (or offers) of complete relief against the cost of defending a collective or class action. As Justice Kagan warned in her dissent in Genesis Healthcare v. Symczyk—the Supreme Court’s most recent foray into the mootness issue before today—“don’t try this at home.”

WHD Issues Another Momentous Interpretation, Mapping Joint Employer Status on Horizontal and Vertical Planes

Posted in Joint Employment

Co-authored by Brett Bartlett and Kevin Young

As we predicted, the federal Wage and Hour Division has issued another edict that will have far-ranging effects on businesses across the U.S. economy, specifically those sharing employees with related operations or relying on third parties to perform or staff services that their own employees would otherwise carry out. On Wednesday, the WHD issued a new Administrator’s Interpretation that enunciates what its author, Dr. David Weil, describes as clear guidance regarding the standards for determining whether a business can be held jointly responsible with one or more other businesses for violating the pay and labor provisions of the FLSA and the Migrant Worker Protection Act. Here, we focus here on the FLSA.

Dr. Weil, who is the WHD Administrator, issued related guidance last summer in which he stated his agency’s position that almost all workers are employees, regardless of whether they work pursuant to a contract providing that they are anything but. Again noting that a contract between two or more businesses will not answer key questions inherent to the determination of employer-employee status, Dr. Weil has made clear that it is the economic realities of a business’s relationship with a given worker that is dispositive. In this most recent guidance, Dr. Weil examines two joint employment scenarios that will ring familiar with many businesses:

  • Horizontal Joint Employment: When two or more related businesses share an employee and thereby undertake obligations to pay her in accordance with federal law. For example, a nurse who works during a single week for three hospitals within the same hospital system is jointly employed by the three hospitals. This means if she works cumulatively more than 40 hours for the three hospitals, she would be entitled to overtime from all three, which would be jointly and severally liable for such pay under the FLSA.
  • Vertical Joint Employment: When a primary business becomes jointly responsible under the FLSA for the employees of an unrelated business because the economic realities demonstrate that it too employs such individuals. For example, if the nurse in the above example is employed directly by a staffing agency that the hospital system engages to provide nurses to its healthcare providers, then the hospital system might be deemed to be jointly and severally liable for violating the FLSA, along with the staffing agency and the three hospitals operating in its system, if the economic realities proved an employer-employee relationship between the hospital system and the worker.

The WHD has not previously enunciated standards tied to these horizontal and vertical employment scenarios. Dr. Weil does, however, strive in this week’s guidance to provide some clarity around what they mean. We have done our best to translate what some might describe as regulatory jargon into practical terms in our recent One Minute Memo.

As we explain in the Memo, an Administrator’s Interpretation is not entitled to judicial deference. It is not clear, in fact, that any court will heed the guidance that Dr. Weil attempts to provide. Certainly businesses should expect that some judges will treat his words as gospel. Others will not.

What is more certain is that plaintiffs’ lawyers and their clients will view the substance of the Administrator’s Interpretation as justifying claims made against tenuously-related businesses as they try to expand the scope of those from whom they might extract settlement dollars and, occasionally, judgments.

The more immediate impact that businesses must anticipate is that WHD investigators and their supervisors will aggressively examine relationships between related and unrelated businesses, aiming to assess whether the economic realities allow more than one business to be held responsible for employing and paying workers in compliance with the FLSA.

This WHD ruling is important. Businesses should take notice, regardless of the industry in which they operate. Our Memo provides some useful tips for reducing the risks that the Administrator’s Interpretation creates. We are here to discuss further preventative actions that any business can take.

Nothing New for Doc Review: Federal Court Rules That Doc Review Attorney, Like Other Practicing Lawyers, is Exempt

Posted in Misclassification/Exemptions

Co-authored by Kat Jugo and Kevin Young

The lawyers in our readership are quite familiar with the fact that, as a general matter, practicing attorneys are not entitled to overtime pay under the FLSA. But does that exempt status change when an attorney is retained only to review and flag documents? No it does not, per a decision issued last week by a federal judge in New York.

The case, Henig v. Quinn Emanuel, et al., was filed by a licensed attorney who was employed by a staffing agency. Through the agency, the attorney was placed at Quinn Emanuel, an international law firm, for a two-month document review project. There, he was instructed and trained to review documents and apply tags to indicate whether they were: (i) responsive; (ii) privileged; (iii) confidential; and/or (iv) “Key” or “Interesting.”

In March 2013, the attorney filed suit in New York’s Southern District, claiming that he was misclassified as exempt from the overtime requirements of the FLSA and the New York Labor Law. After limited discovery, Quinn Emanuel and the staffing agency moved for summary judgment, arguing that the attorney was properly classified under the professional exemption. That exemption applies to various professionals, including, as a general matter, lawyers who (i) hold a license permitting the practice of law, and (ii) are engaged in the practice of law.

The attorney claimed that he was misclassified because he was not engaged in the practice of law. He asserted that his review work was rote and automated, and that it did not require him to exercise legal judgment. For example, he alleged that while reviewing a document for privilege, he was simply identifying whether it was authored, sent, or received by an attorney. Such work, he argued, did not require legal judgment and, therefore, did not constitute the practice of law.

The court disagreed and granted summary judgment to Quinn Emanuel and the staffing agency. Unmoved by the fact that document review may sometimes be routine or tightly restrained, the court found that the attorney exercised at least a modicum of legal judgment. Such judgment included, for example, his decisions to tag certain documents as “Key,” as well as his comments on the potentially privileged nature of other documents. For instance, the attorney testified that he tagged a document as “Key” because “it didn’t seem like something that should be buried.”

The ruling comes on the heels of a less than favorable Second Circuit ruling in Lola v. Skadden Arps, et al., a similar case filed by a contract attorney. The district court decision in that case, which we wrote about just over a year ago, dismissed the plaintiff’s claims on similar grounds, albeit pursuant to a Rule 12(b)(6) motion to dismiss (rather than a Rule 56 motion for summary judgment). Unfortunately, that decision was later vacated and remanded by the Second Circuit, which found that document review does not per se constitute the practice of law, and the plaintiff’s claim that he did not exercise any legal judgment was enough to survive a motion to dismiss.

If the story had ended with the Second Circuit’s decision in Skadden, then law firms in New York, Connecticut, and Vermont would be left to wonder whether courts might uphold an exempt classification for document review attorneys. This recent victory for Quinn Emanuel makes clear that they might, so long as the attorneys’ work includes some professional judgment.

The takeaway from this decision comes with two words of caution, however. First, as in Skadden, the decision is subject to appeal. It is difficult to predict whether the fact that the Second Circuit so recently weighed in on the exempt status of contract attorneys (in Skadden) will make it more likely or less likely to do so again in this case. Second, in assessing what constitutes the “practice of law,” both decisions—Skadden and Quinn Emanuel—looked to definitions from the state in which the given plaintiff was licensed to practice. Both state’s definitions included the exercise of legal judgment within their definitions. For states where the definitions vary, the analysis may vary as well.

Signs of (American United) Life for Independent Contractor Status in Massachusetts

Posted in Independent Contractors, Misclassification/Exemptions, State Laws/Claims

Authored by Patrick Bannon and Anne Bider

Independent contractor misclassification claims have become an epidemic — nationally and especially in Massachusetts.  Under most tests for independent contractor status, whether an individual’s services are within the usual course of the business of the company for which they are performed is an important factor.  Under Massachusetts’ Independent Contractor Statute it is an essential element of independent contractor status.  But who gets to define the scope of the company’s business, and how?

After a stream of cases under Massachusetts law in which courts rejected defendants’ attempts to define the scope of their businesses, the U.S. District Court for the District of Massachusetts recently issued a decision that gives businesses hope.  In Ruggiero v. American United Life Insurance Company, the Court held that plaintiffs cannot use the independent contractor statute to expand the boundaries of a legitimately defined business—even if those boundaries exclude services that are important to and closely integrated with a company’s business.

The plaintiff in Ruggiero was an insurance agent who entered into a contract with American United Life Insurance Company (“AUL”) to sell AUL’s insurance products and recruit and train other agents to do the same.  With the help of a loan from AUL, the plaintiff established an agency in Massachusetts.  After a few disappointing years, the plaintiff sued under the Massachusetts Independent Contractor Statute, claiming the rights and benefits of an AUL employee.  To defend the claim, AUL was required to show that: (1) Ruggiero was free from the company’s direction and control; (2) Ruggiero’s services were “outside the usual course of the business” of AUL; and (3) Ruggiero was engaged in an independently established trade.

The crux of the dispute was Prong 2.  AUL contended that, while some insurance companies issued products and sold them—taking a product from inception all the way to the customers’ hands—others limited their business.  AUL argued that it drafted policy language, obtained regulatory approval of policies, and invested premiums.  It did not, however, sell policies.  Instead, it left distribution to third parties, including banks, credit unions, wholesalers, and insurance agents, including the plaintiff.

In ruling on cross-motions for summary judgment, the Court agreed with AUL.  It found that while sales were “essential” to AUL’s success, AUL had legitimately outsourced that function.  And, unlike cases involving delivery services, cleaning companies, and adult clubs, where defendants artificially attempted to deconstruct their businesses to avoid proper classification of employees, AUL’s definition of its business was bona fide.  In reaching the conclusion that the plaintiff’s services were outside the scope of AUL’s business, the Court also found it relevant that the plaintiff mostly sold non-AUL policies, thus benefitting competing insurance companies as well as AUL.

The Court also held that AUL established Prongs 1 and 3 of the Independent Contractor Test, noting that the plaintiff was free to run his agency as he pleased and sell the products of AUL’s competitors.  That the plaintiff sold the insurance products of a number of unrelated insurance companies – indeed, sold mostly non-AUL products – undoubtedly also helped as to Prong 2, by persuading the judge that the plaintiff’s services could legitimately be considered outside AUL’s business.

The Ruggiero decision offers Massachusetts employers insight into how courts may approach the most contested provision in the nation’s most stringent independent contractor laws.  For employers outside of Massachusetts, it also provides a counterpoint to the idea, recently  advocated by the Wage and Hour Division of the U.S. Department of Labor, that close coordination between a company and an individual who provides services that are important to the company’s business automatically creates an employment relationship.  Employers who think that theory is unreasonably broad can find support in the Ruggiero decision.

WHD Collects Nearly $247 Million in Back Wages

Posted in DOL Enforcement

Authored by Alex Passantino

As the calendar year draws to a close, many federal agencies release their statistics for the preceding fiscal year, which ended on September 30. As part of this year-ending wave of information, the Department of Labor’s Wage & Hour Division released its enforcement statistics for FY2015.

Here are the highlights:

  • Back wage collections under all acts enforced by WHD were $247 million, up $6 million from the preceding year, but down from the high of $280 million in FY2012.
  • The number of employees receiving back wages was 240,000, the lowest since FY2010.
  • With 21,902 complaints, WHD had its fewest complaints in nearly 20 years, since FY1997. Those complaints are taking longer to resolve—125 days, up from 116 days last year.
  • Surprisingly for an agency that has been touting its enforcement efforts, the number of hours spent by investigators in enforcement were down to their lowest levels since FY2010. Whether the decrease is due to increased turnover of investigative staff, additional time spent on training efforts, or something else entirely is something not demonstrated in the data released by WHD.
  • WHD’s concluded cases—27,914—also continued their four-year downward trend with the third fewest number of concluded cases since FY1998’s high of 50,344.
  • Continuing a theme, WHD’s efforts in the low-wage industries (agriculture, day care, restaurants, garment manufacturing, guard services, health care, hotels/motels, janitorial services, and temporary help) were down again from the high of FY2012, with decreases in cases, back wages recovered, and employees who received back wages.
  • WHD conducted 154 targeted child labor cases, down from 1,285 in FY2007, and the fewest number of directed child labor cases recorded since FY1997. Including complaint cases, WHD concluded 542 child labor cases, which is also the lowest number of such cases reported.
  • FMLA complaints were also down, and 53% of FMLA cases result in findings of “no violation.”
  • Enforcement in agriculture was down in number of investigations, employees receiving back wages, and back wages recovered. Civil money penalties (CMP) assessed, however, were up nearly $2 million, to $5 million, as WHD increased its CMP assessments by a similar amount in the H-2A program alone.
  • Similarly, while cases, employees in violation, employees receiving back wages, and back wages recovered were down in the industries with a high prevalence of H-2B workers (forestry, amusement, construction, food service, hotel/motel, janitorial services, landscaping services), CMPs in those industries were up more than $1 million.

Ultimately, the snapshot of data provided indicates that WHD is spending more time on targeted cases in specific industries. Those cases are taking longer to complete, likely due in part to WHD’s efforts to assess CMPs.

Employers, particularly those in the low-wage industries flagged above, should take the time now—before WHD announces it plans to investigate—to review their payroll practices. For example, we have reason to believe that WHD is already focusing its attention on the hotel/motel industry and will only step that attention up in 2016.

I’m Dreaming of a White Collar: 2015 Year in Review

Posted in Arbitration Agreements, City/Local Ordinances, Conditional Certification, Damages, Decertification, Defenses, Discovery, DOL Enforcement, Executive Orders, Hybrid Lawsuits, Independent Contractors, Joint Employment, Jurisdiction, Meal/Rest Breaks, Misclassification/Exemptions, Off-the-Clock Issues, Offer of Judgment, Overtime, Regular Rate, Rule 23 Certification, Salary Basis, Service Charges/Gratuities, Settlement, State Laws/Claims, Uncategorized

Authored by Alex Passantino

‘Twas the week before Christmas, 2-0-1-5
When the poetry elves on the blog came alive.
Crafting their rhymes with a purpose so clear:
Presenting the wage-hour gems of the year.

In January, for new regs in this year our breath bated.
Then for six painful months, we speculated and waited.
And just as we geared up to celebrate Independence,
Out came a proposal that will create more defendants.

With a salary level that for 10 years has been flat,
They looked at New York’s and said “higher than that.”
More than double the old; and then they got clever …
The proposed sal’ry level will increase for forever.

Anticipated changes to duties caused quite a fuss
When DOL said “If you’ve got some ideas, just tell us.”
Of the Department’s proposal, employers were understandably wary,
So we wrote down some ideas on how to make it less scary.

Nearly 300 thousand comments they have to review,
It will be late into next year before they are through.

Next up on the list of your wage-hour joy,
Are the efforts to change what it means to employ:
ContractorsJoint employment. Fissured industry.
Interns. The “third way” and gig economy.

Economic realityRight to control.
They’re integral to your business? Now you’re in a deep hole.
So many angles, it can drive you berserk.
As agencies and courts figure out what is “work.”

And if divergent decisions bring you a sense of elation,
Then please focus attention on class certification.
Approvals, denials, and some decerts, too.
No matter the side, there’s a case for you.

But as summer approached, there arose quite a stir,
A case that’d explain what the class cert rules were.
A Supreme explanation, o my-o, o me-o
We’d learn about class via Bouaphakeo.

They’ve argued, but there’s no decision, not yet,
And a limited ruling on records might be all that we get.
But the cases keep coming. Their numbers broke the charts.
Whether giant class actions or cases broken in parts.

And the response to those filings? The employers’ retort?
A wide range of ways to get them out of court.

Some cases get mooted. Some cases do not.
At Genesis’s open question, SCOTUS might take a shot.
Does an offer of judgment that’s not been accepted
Mean the plaintiff cannot proceed with his class as expected?

Increasingly used as a litigation life saver
Arbitration agreements with a class action waiver;
And when asked if state laws could class waivers prevent, yo,
The Supremes laid the smack-down to dear Sacramento.

With all of these options, it comes as a surprise then,
That one resolution keeps on getting the Heisman.
For reasons that many cannot understand,
To settle wage claims courts think they must hold your hand.

That’s our year in review, we whipped you right through it.
Next year? The new regs and a mad dash to review it.
But before 2015 joins the past’s ranks,
You keep on reading our blog, and for that we give thanks!

THANKS TO ALL OF OUR READERS. BEST WISHES FOR A HAPPY, HEALTHY, AND PROSPEROUS NEW YEAR!