Wage & Hour Litigation Blog

Court Insures Allstate Against Unsound Trial Plan Mayhem

Posted in Off-the-Clock Issues, Rule 23 Certification

Co-authored by Sherry Skibbe and Andrew Paley

Allstate Insurance Company “insured” a major victory last week in an off the clock class action pending in Los Angeles Superior Court, vindicating employers’ argument that plaintiffs cannot simply intone the magical incantation of “statistical sampling” as a means of collective proof in a class action. Rather, plaintiffs must proffer a detailed and manageable trial plan that relies on sound statistical science. Likening Plaintiff’s trial plan to a house built on a poor foundation, Judge John Shepard Wiley rejected the statistically unsound trial plan because it would be “an enduring source of grief.”

After almost nine years of litigation, Judge Wiley granted Allstate’s motion to decertify both an off-the-clock and wage statement class because none of the multiple trial plans suggested by Plaintiff complied with the requirements in the California Supreme Court’s 2014 decision in Duran v. U.S. Bank National Association or last month’s U.S. Supreme Court decision in Tyson Foods, Inc. v. Bouaphakeo.

Over the past two years, Plaintiff offered several trial plans based on statistical sampling and extrapolation suggested by two different experts. The court, however, found that each of the plans failed to comply with sound statistical methodology and were “premised on invalid logic.” Recognizing that a 95% confidence interval and a 5% margin of error is the common convention, the court roundly criticized Plaintiff’s expert who proposed an 84% confidence interval and anywhere from a 10-20% margin of error. The court also rejected Plaintiff’s plea to let him proceed with trial and enter a directed verdict if he could not prove his claims because such a plan was “doomed to be an expensive waste of time.” Under proper sampling methodologies, the case would be unmanageable at trial as the sample size would require testimony from at least 495 class members.

Significantly, the court’s decision implicitly rejects the Plaintiff’s argument that not all members of his proposed survey need to testify at trial. The decision is therefore powerful ammunition to counter plaintiffs’ oft repeated argument that a “sample of a sample” is sufficient to testify at trial. If sound statistical methodology requires a sample of 495 class members in order to extrapolate the results to the larger class consistent with the proper confidence interval and margin of error, then all 495 class members need to testify at trial so that the jury can determine their credibility and assess their testimony. Plaintiffs cannot simply propose that their expert will testify at trial as to the results of a survey of the sample. If this means that the trial will be unmanageable, then the case should be decertified.

Although Plaintiff argued that Tyson Foods was a “game changer,” the court found Tyson Foods to be entirely consistent with Duran. The court recognized that Tyson Foods and Duran prohibit the use of statistically inadequate evidence such as that presented by Plaintiff. Although representative proof sometimes can be used in a certified class action, statistical evidence only can be used if the proof is reliable.

This case provides employers with several important “take-aways.” Defense counsel should aggressively challenge a plaintiff’s proposed trial plan to ensure that the trial plan is statistically reliable. Additionally, neither Tyson Foods nor Duran stands for the proposition that statistical sampling and surveys can be used to prove liability in every case. Whatever the supposed benefits of a class action may be, they cannot defeat a defendant’s right to due process. Trial plans must be tailored to the specific facts of the claims alleged and an unmanageable trial plan that is not scientifically sound should be rejected.

Advising On Their Own: Financial Advisors’ Class Claims Defeated

Posted in Conditional Certification, Misclassification/Exemptions, Overtime, Rule 23 Certification, State Laws/Claims

Authored by Hillary J. Massey

Employers have a new tool for opposing conditional and class certification of overtime claims by financial advisors and other exempt employees—last week, a judge in the District of New Jersey denied conditional and class certification of such claims because the plaintiffs failed to show that common issues predominated. The court, pointing to other decisions denying class status to financial advisors in recent years, concluded that the advisors’ duties varied significantly and required individual treatment. While recent headlines have announced large settlements of class claims by financial advisors, this decision bolsters employers’ opposition to those and other purported wage and hour class and collective claims.

The four named plaintiffs brought suit under the FLSA and the laws of New Jersey, New York, and Connecticut, claiming that they and the purported class members were entitled to overtime pay and business expenses, and proposing three classes and an opt-in federal collective. Plaintiffs contended the bank’s uniform categorization of financial advisors as exempt was improper because the advisors regularly made sales “cold calls,” regularly attended networking events to attract new clients, were paid based on their ability to generate sales, were heavily supervised, and had no role in managerial decisions affecting the bank’s business.

Denying plaintiffs’ motions, the judge first concluded that plaintiffs failed to establish their claims were typical and they were adequate representatives of the class because, unlike the plaintiffs, many proposed class members had signed releases of all claims.  The court explained it was unclear how the class representatives would challenge releases they did not sign.

On predominance, the judge concluded that the bank’s policies, plaintiffs’ depositions, and the declarations submitted with the bank’s opposition demonstrated that financial advisors varied in:

  • how often they sold financial products;
  • how they were supervised;
  • how they were paid;
  • what types of clients they served; and
  • how much autonomy they enjoyed.

For example, one plaintiff testified that some advisors did cold calling while others did not, and plaintiffs testified that as their business became more established, they spent less time generating sales.  The record also showed that some managers were involved in the day-to-day work of their financial advisors, but others were more hands off.  Thus the court concluded that common questions did not predominate.

As in another case we recently discussed, where the Sixth Circuit upheld the dismissal of a proposed collective action of bank loan underwriters, the court here also rejected plaintiffs’ heavy reliance on the DOL’s 2010 Administrative Interpretation concerning mortgage loan officers’ non-exempt status, noting that that the Interpretation did not apply to financial advisors.

Finally, despite a “lenient standard,” the judge denied plaintiffs’ motion for conditional certification under the FLSA.  Plaintiffs could not meet their burden by merely showing that the bank had a uniform policy of treating financial advisors as exempt, and the significant class discovery record revealed that financial advisors’ duties varied greatly.

The case will now proceed on the merits of the claims of the four individual plaintiffs only.

Better Sit Down for This… or Stand and Rejoice? California Supreme Court Clarifies “Suitable Seating” Rules

Posted in State Laws/Claims

Authored by Jeffrey A. Berman, Julie G. Yap, and Michael Afar

Last week, the California Supreme Court issued a ruling on a California Wage Order requirement that employers provide “suitable seats” for employees when the “nature of the work reasonably permits the use of seats.” The consolidated decision says employers have to provide seating where employee tasks performed at a particular location reasonably permit sitting, and where providing a seat would not interfere with the performance of standing tasks.

Background: Taking a Stand for Seats

Nykeya Kilby worked as a Clerk/Cashier for CVS Pharmacy, Inc. Sometimes she moved around the store, gathered shopping carts, and restocked display cases, but she spent 90% of her workday at the cash register. Kemah Henderson worked as a teller at JPMorgan Chase Bank. Sometimes she escorted customers to safety deposit boxes, worked the drive-up teller window, and checked to ensure that ATMs were working properly, but she spent the majority of her time at her teller window. Neither company provided the plaintiffs with seats. CVS’s business judgment was that standing promotes excellent customer service.

Kilby and Henderson stood up for themselves—and others—by seeking to represent CVS cashier and JPMorgan teller classes in federal district court for violation of California’s “suitable seating” requirements. But the district court denied class certification and granted summary judgment to CVS, since the “‘nature of the work’ performed by an employee must be considered in light of that individual’s entire range of assigned duties” and that “courts should consider an employer’s ‘business judgment.’”

On appeal, the Ninth Circuit sat this one out. It noted the “lack of any controlling California precedent” and that the “nature of the work,” “reasonably permits,” or “suitable seats” language was not defined. So it asked for the California Supreme Court’s interpretation.

The Decision: It Definitely Depends

The California Supreme Court addressed the undefined terms:

First, it held that the “nature of the work” refers to tasks performed at a given location for which a right to a suitable seat is claimed. In rejecting both an “all-or-nothing approach” and a “single task” approach that would be “too narrow,” it said trial courts should look to the “actual tasks performed, or reasonably expected to be performed,” rather than “abstract characterizations, job titles, or descriptions that may or may not reflect the actual work performed.”

Second, the Cal Supremes concluded that whether the nature of the work “reasonably permits” sitting is determined objectively based on the “totality of the circumstances.” An employer’s business judgment, the physical layout of the workplace, and the “feasibility” of providing seats—including “whether providing a seat would unduly interfere with other standing tasks, whether the frequency of transition from sitting to standing may interfere with the work, or whether seated work would impact the quality and effectiveness of overall job performance”—all should be considered. The court did caution that whether an employer would “unreasonably design a workspace” to deny a seat that might otherwise be reasonably suited for certain tasks also should be considered.

Third, the court effectively suggested that what would be “suitable seating” depends, by ruling that “an employer seeking to be excused from the requirement bears the burden of showing compliance is infeasible because no suitable seating exists.”

The Takeaway: What It Means for California Employers

While Kilby/Henderson provides some guidance on “suitable seating” rules, the case now requires an inquiry focusing on each particular location where an employee works—as opposed to generally analyzing an employee’s entire set of job tasks. And while the California Supreme Court validated the employer’s position that “business judgment” and store layouts must be considered, those factors are relevant, but not dispositive.

So it’s all clear: “the nature of the work” depends on any individual employee’s actual work, whether it “reasonably permits” sitting depends on a totality of work factors, and what constitutes “suitable seating” depends on what is infeasible in a particular workplace.

In the end, although the California Supreme Court may have affirmed the viability of a cause of action for suitable seating, employers might stand and rejoice. The required location-specific analysis in seating may now be so individualized that class actions across classifications and locations are no longer “suitable.”

Edited by Simon L. Yang

Doing the “Two Step”: Court Denies Second Stage Certification of FLSA Claims

Posted in Conditional Certification, Decertification, Rule 23 Certification

EDNY-SealCo-authored by Robert S. Whitman and Howard M. Wexler

Plaintiffs’ counsel frequently speak of the “low” burden necessary at first stage for conditional certification under the FLSA.  However, a recent decision from the Eastern District of New York highlights that plaintiffs may win the battle over conditional certification but still lose the war for final certification at second stage.

In Mendez v. U.S. Nonwovens Corp., the plaintiffs succeeded in obtaining conditional certification based on their claim that the defendants enforced several “policies” that adversely affected employees’ wages, including failure to timely pay, failure to pay employees based on timecard punches, and requiring pre-shift work without additional compensation.  At the close of discovery, they moved for class certification under Rule 23, which the court denied except as to a subclass of employees who claimed they were entitled to spread of hours pay under the New York Labor Law.

The defendants concurrently moved for decertification of the FLSA collective action.  Magistrate Judge Steve I. Locke granted the motion.  He  noted the “heightened scrutiny” that must be applied at second stage certification, in contrast to the “modest factual showing” of similarity at the first stage.  While the Second Circuit has not yet set forth a particular method for deciding second stage certification, Judge Locke noted that district courts generally look at the following factors:  (1) disparate factual and employment settings of individual plaintiffs; (2) defenses available to defendants which appear to be individual to each plaintiff; and (3) fairness and procedural considerations.

Because Judge Locke found that the defendants’ policies were not facially unlawful, he required the plaintiffs to provide sufficient evidence that the defendants’ implementation of these policies violate the FLSA.  Based on a review of the evidence, he found “no generalized or representative proof of such a policy that would establish liability on a collective-wide basis.”

While the court said that each plaintiff may have a claim to unpaid overtime, “those claims may only be established through individualized evidence” given their varied experiences.  He also noted that “anecdotal evidence of individual failures” in paying certain employees does not constitute “proof of a company-wide policy or practice.”  And given the disparate factual claims of liability, the defenses would “necessarily vary” on a plaintiff-by-plaintiff basis as well.

Mendez is yet another reminder that all is not lost when FLSA conditional certification is granted. Where there is compelling evidence that a trial would require individualized factual determinations and an assessment of individual defenses, employers can and should return to the judge to highlight those distinctions among the opt-in plaintiffs in an effort to reverse their fortunes without the yoke of the “lenient standard” of stage one.

Fifth Circuit Rejects Off-the-Clock Bid: That’s Not Fair(child)

Posted in Off-the-Clock Issues

Co-authored by Dennis Clifford and Rachel Hoffer

From December 2011 to September 2012, Ambrea Fairchild was living the new All American dream: hired by All American Check Cashing, Inc. as an hourly manager trainee in its Hattiesburg, Mississippi store, Fairchild was soon promoted to manager, a salaried position, in March 2012. But Fairchild performed poorly in her new role; after six written warnings in as many months, All American demoted her back to the manager trainee position. In January 2013, Fairchild’s parabolic career path inevitably brought her back to zero; All American fired her for her below par performance.

Fairchild sued All American, looking to square accounts with the company for overtime she claimed she worked but was not paid as a manager trainee. Of course, All American had a system in place to keep overtime in check: company policy required employees to obtain prior approval before working overtime. All American’s policy also required hourly employees to accurately record the hours they worked in its timekeeping system. In a bench trial, Fairchild told the judge that she worked additional hours off the clock that she did not report to All American.

After Fairchild finished presenting her case, All American asked the court for judgment in its favor, and the judge obliged. Fairchild appealed and, after losing her appeal, asked the Fifth Circuit to rehear her case. Instead, on March 18, 2016, the panel of Fifth Circuit judges withdrew its prior opinion and issued a new one, revising its opinion as to Fairchild’s Fair Labor Standards Act claim. But it didn’t change its mind: while the district court judge had applied the wrong standard when he dismissed the claim—applying Federal Rule of Civil Procedure 50(a), which applies to jury trials and was more favorable to Fairchild, instead of Rule 52(c), which applies to bench trials—the decision to enter judgment in All American’s favor was right on the money.

In affirming the district judge’s decision, the Fifth Circuit relied heavily on a case old enough to buy beer, Newton v. City of Henderson. Newton was a police officer, working on a task force with the U.S. Drug Enforcement Agency, but the city was responsible for paying him. The city required employees to obtain approval before working overtime and to report overtime hours on a special payroll form. The city paid Newton for the time he reported on the payroll forms but not for unauthorized overtime he failed to report. Newton argued he should still be paid overtime because, while he didn’t use the correct form or specify the number of hours he worked, he reported his work activities to the city on a daily basis; thus, the city had constructive knowledge of his overtime work. The Fifth Circuit didn’t buy that argument: the city had ordered Newton not to work overtime; Newton ignored the procedures for reporting overtime; and Newton failed to establish that his supervisors should have known he was required to work overtime.

Relying on Newton, the Fifth Circuit held that the trial court did not clearly err in finding that All American didn’t have actual or constructive knowledge that Fairchild was working overtime without compensation. With regard to her first period as a Manager Trainee, Fairchild didn’t seek approval to work overtime or report her overtime hours in the timekeeping system; instead, she admittedly chose not to report unauthorized overtime because the company prohibited working overtime without advance approval. Nevertheless, Fairchild argued that, because her computer usage reports showed she was still working after she clocked out, All American had constructive knowledge of her off-the-clock work. But All American would only have constructive knowledge if it “should have known” about Fairchild’s off-the-clock work. And the district court did not clearly err in finding that, just because All American could have known about the overtime work from the computer usage reports, does not mean that All American should have known about it.

Employers faced with off-the-clock claims like Fairchild’s might be eager to try the arguments All American used to obtain judgment in its favor, and to rely on the Fifth Circuit’s opinion in Fairchild in seeking judgment for themselves. But before they bet their bottom dollar on a motion for summary judgment or a motion for judgment as a matter of law, employers should remember this: the standards of review for both motions require the trial court to view the evidence in the light most favorable to the non-moving employee, and to draw any inferences in the employee’s favor. But Fairchild involved a Rule 52(c) judgment on partial findings, in which the trial court makes factual findings according to its own view of the evidence and the appellate court reviews those factual findings for clear error. We know from the procedural history of the case that the district judge didn’t see the facts any differently when viewing them in the light most favorable to Fairchild. The judge in your case, however, might view similar evidence differently when wearing employee-colored glasses. This is all the more reason for employers to implement and enforce clear policies and procedures on overtime (including requests to work overtime), timekeeping, and compensation.

Gimme Shelter: A Safe Harbor Deadline Looms for California Piece-Rate Employers

Posted in State Laws/Claims

Authored by Michael Kopp

Piece-rate employers in California have faced a surge of class action lawsuits in recent years seeking substantial sums for the failure to separately pay for rest breaks and nonproductive time. On January 1, 2016, California Labor Code section 226.2 went into effect, requiring employers to separately compensate piece-rate employees for rest break and nonproductive time. But the statute also offers piece-rate employers a safe harbor option to clear the decks of liability as to certain wage and hour claims, provided the employer makes the election by July 1, 2016. Before this deadline passes, piece-rate employers must take stock of their potential liability and the relative risks of accepting or declining this safe harbor.

The need for safe harbor? Wage and penalty claims for unpaid rest breaks and nonproductive time have proliferated against California piece-rate employers. A wave of California state and federal court decisions, including Bluford v. Safeway Stores, Inc. and Gonzalez v. Downtown LA Motors, have held that employers must make a separate payment for rest break and nonproductive time, in addition to piece-rate compensation. Labor Code 226.2 now provides employers an affirmative defense to these claims for unpaid rest breaks and nonproductive time, as well as the derivative claims for liquidated damages, penalties, premiums, and wage statement violations, for periods prior to December 31, 2015.

What is the price for safe passage? Employers have two alternate payment options. Under the first option, employers may pay the wages for all previously uncompensated rest and recovery periods and nonproductive time from July 1, 2012 through December 31, 2015, along with statutory interest. This option presents a challenge for most piece-rate employers, who are likely not to have tracked nonproductive time. It also invites ongoing challenges as to whether the full amount of nonproductive and rest break time was correctly paid. The safe harbor itself contains a safe harbor, which allows an employer to correct “good faith” miscalculations in the safe harbor payment within 30 days of notice. The employer has the burden of proving, however, that the mistake “was solely the result of good faith error.”

Under the second option, employers may pay a flat 4% of the employee’s gross earnings from July 1, 2012 through December 31, 2015, for pay periods in which a piece rate was paid. This option will generally be the safer, simpler, and cheaper option. For a 40- hour workweek, rest break wages alone will generally amount to slightly over 4% of the employee’s gross wages, even without including any nonproductive time. In addition, unlike the first option, there is no requirement to pay statutory interest. Finally, gross wage records should be accessible and less subject to dispute than estimates of untracked nonproductive time.

Regardless of which method is used, the employer must provide employees statements identifying the payment calculations. In addition, the employer must use due diligence (such as skip tracing) to locate and pay former employees. Payments must be made “as soon as reasonably feasible” after providing notice to the state of the safe harbor election, and must be completed no later than December 15, 2016. In addition, employers must preserve the records regarding payments and the calculations until December 16, 2020.

Get your pass stamped. As a deterrent to would be litigants and plaintiff’s attorneys, employers who have elected the safe harbor will be identified on the California Department of Industrial Relations’ website through March 31, 2017.

Carve outs? Employers currently mired in long-standing litigation of these claims may not qualify. If the complaint was filed prior to March 1, 2014, the claim will likely escape the safe harbor. Claims that are not based on unpaid rest breaks, but rather allege that rest breaks were not permitted, are not subject to the safe harbor. A specific type of wage claim, more commonly asserted in an agricultural context, is also excluded for claims filed prior to April 1, 2015. The defense also does not apply to claims accruing after January 1, 2016.

To the safe harbor or the unprotected seas? The impending deadline forces a risk calculation. For piece-rate employers who have not previously made separate payments for rest breaks and nonproductive time, the payment comes at a substantial discount to potential class litigation exposure. Depending upon the pay practices and specifics of the workforce, some employers are more at risk of wage and hour litigation than others. As the clock continues to tick toward the July 1, 2016 deadline, if you would like assistance in evaluating these risks, please do not hesitate to contact the authors or any other member of Seyfarth’s Labor and Employment Group.

Gawker Victory Against Unpaid Interns Provides Helpful Roadmap

Posted in Misclassification/Exemptions

Co-authored by Rob Whitman, Adam Smiley, and Nadia Bandukda

A federal judge has sided with Gawker in the media company’s legal battle with a former unpaid intern who claimed that he should have been compensated as an employee. On March 29th, Judge Alison Nathan in the Southern District of New York granted Gawker’s motion for summary judgment and found that the Second Circuit’s “primary beneficiary” test tipped in favor of Gawker, meaning that the plaintiff, Aulistar Mark (“Mark”), was a “bona fide” intern not entitled to compensation under the FLSA. The Court also denied Mark’s motion for class certification as moot.

Mark interned with the company’s videogame blog, and assisted in “taking photos and videos, editing images, researching, writing and editing posts and articles, and conducting interviews” for the blog’s editors and writers. The blog published 34 articles written by Mark.

The court concluded that Mark, and not Gawker, was the primary beneficiary of his internship. Several factors were key to this decision:

  • Mark received academic credit and his internship was tied to a formal education program, in that his university required that he take a class to accompany his internship, write several papers about the internship, submit a “learning agreement” regarding the internship, and that his intern supervisor submit evaluations of Mark’s performance.
  • Mark’s editor at the blog provided mentorship and various opportunities to learn journalism skills that were not offered to full-time employees, who were expected to already possess such skills. In particular, the editor worked with Mark over many weeks editing a large-scale reported story that was the “capstone” of his internship. Mark even admitted that his relationship with this editor was similar to his relationship with his journalism school editor.
  • While Mark’s research and written work had the potential to displace paid employees for “part of the time,” there was no evidence that Gawker “in fact used interns to displace paid employees, that interns had skills comparable to…expected employees, or that [without interns], Gawker would have hired more employees.”

In reaching its conclusion, the court focused on “the benefits to the student while still considering whether the manner in which the employer implements the internship program takes unfair advantage or is otherwise abusive towards the intern.” It found that Gawker did not take unfair advantage of Mark, and that Mark’s work benefitted him as an intern “as least as much” as it did Gawker by giving him the opportunity to practice the job he was training for and gave him published articles for his portfolio.

One other notable aspect of the decision: the court declined to exercise supplemental jurisdiction over another intern’s claims under the New York Labor Law and dismissed these allegations without prejudice. This leaves open the possibility that a New York State court would apply a standard other than Glatt (e.g. the NYSDOL 11-factor test), although we think state courts will give Glatt significant if not conclusive deference.

Who Me? Yes, YOU: Personal Liability for Wage Hour Violations

Posted in State Laws/Claims

Authored by Michael A. Wahlander and John R. Giovannone

With March Madness in full swing, we interrupt your crumbling tournament brackets to ensure you’re aware of a truly maddening development. California law now makes individuals potentially liable for employer violations of many often-convoluted wage and hour rules.

That’s right—individuals, not just companies, may be liable for wage and hour violations.

We mentioned this legislation here last Fall, when it was part of California’s “A Fair Day’s Pay Act” (SB 588). We described it there as what it is: an enhancement to the California Labor Commissioner’s enforcement authority. The bill’s introductory summary explained that the “bill would authorize the Labor Commissioner to provide for a hearing to recover civil penalties against any employer or other person acting on behalf of an employer … for a [wage and hour] violation.” The Senate Bill Analysis opined that the bill targeted “willful” wage theft and would give the “Labor Commissioner” additional avenues to enforce its judgments. The Senate Bill Analysis can be found here, and the full text of the bill can be found here.

Even though the limited purpose of the new law is clear, enterprising members of the plaintiffs’ bar have recently sought to read the new law as authorizing a private right of action against individual managers. These lawyers have seized upon a legislative oversight. Although 12 of the 13 bill’s enactments refer to the Labor Commissioner, the 13th provision—Section 558.1 of the California Labor Code—does not expressly mention “Labor Commissioner.” These lawyers have seized upon this obvious oversight to argue that Section 558.1 goes further than its 12 companion provisions and somehow creates a private right of action against individuals.

The personal liability language of Section 558.1 is not complex: any employer or “other person acting on behalf of an employer” “may be held liable as the employer for” violations of the directives in the Wage Orders and in various provisions of the Labor Code. Thus, the Labor Commissioner may now hold individuals liable for certain wage and hour violations, including California’s big six: unpaid overtime, unpaid minimum wage, denied meal/rest breaks, untimely termination pay, inadequate wage statements, and failure to reimburse for employee business expenses.

The Legislature defines “other person acting on behalf of an employer” as “a natural person who is an owner, director, officer, or managing agent of the employer.” The “managing agent” definition mirrors that found in California’s punitive damages statute. Under that statute and case law, “managing agents” are all employees who exercise substantial independent authority and judgment in their corporate decision-making such that their decisions ultimately determine corporate policy.

But while this statutory language thus creates the potential for individual liability at the hands of the Labor Commissioner, none of the foregoing statutory language, nor anything in the legislative history of the bill’s enactment creates a private right of action. As the California Supreme Court has explained, it takes more than statutory silence in a Labor Code provision to create a private right of action: the statute must contain “clear, understandable, unmistakable terms, which strongly and directly indicate that the Legislature intended to create a private cause of action;” and if the statute lacks that language, the statute’s legislative history must be examined. Applied here, that analysis would show that the plaintiffs’ lawyers are out of line, and should seek their easy pickings elsewhere.

We expect courts to remedy the plaintiffs’ interpretive overreaching. Meanwhile, however, the new statute remains significant for high-level managers regardless of who is empowered to enforce it. What’s clear is that now, more than ever, employers and their corporate policy-makers may have a personal stake in ensuring that the company’s wage and hour house is in order and ensuring that employees are paid properly. Employers would be well-advised to take proactive measures to ensure compliance with California’s unique wage and hour landscape, such as auditing current pay practices and policies.

If you would like assistance in ensuring your company’s wage and hour compliance, or if have questions regarding the issues raised in this post, then please do not hesitate to contact the authors or any other member of Seyfarth’s Labor and Employment Group.

House, Senate Seek to Stop Overtime Rules

Posted in DOL Enforcement

Authored by Alex Passantino

Last week proved to be a busy one in the world of wage and hour policy. First, WHD sent its final rule package to OMB for review. Then, Secretary of Labor Tom Perez testified before three Congressional committees , where he was asked about many DOL initiatives, including the overtime rule, joint employment, and independent contractors. During one of these hearings, Secretary Perez suggested that OMB’s review of the final overtime rule would be completed in the next 45-90 days. The rule would be issued shortly thereafter.

Unless Congress has something to do with it. Both the House and the Senate introduced the Protecting Workplace Advancement and Opportunity Act (HR 4773/S.2707). The Protecting Workplace Advancement and Opportunity Act would:

  • Prevent DOL from implementing the rule as currently proposed.
  • Require DOL to fully and accurately consider the following before issuing a new rule:
    • the economic impact on small businesses, nonprofits, institutions of higher education, and other affected parties;
    • the management and human resources costs, such as costs associated with reclassifying employees; and
    • the impact on employment, workplace flexibility, employee benefits structures for exempt and nonexempt employees, career advancement opportunities, new business formation, and business termination.
  • Require the comment period for any future proposed rule to be at least 120 days and the effective date of any future rule to be at least 1 year after the rule’s publication in the Federal Register.
  • Make clear that automatic increases are not allowed under current law.
  • Prohibit changes to the duties tests where proposed regulatory text was not made available for public review and comment.

The Protecting Workplace Advancement and Opportunity Act was introduced by two sponsors in the House and two in the Senate. Multiple co-sponsors are expected to sign on to the bill in the coming weeks. It also is expected that the overtime rulemaking will be the subject of discussions during the upcoming appropriations process.

Ultimately, of course, the Protecting Workplace Advancement and Opportunity Act or any appropriations rider must be approved by both the House and the Senate, and then must be signed by the President before it can become law. Given election year politics and the possibility of a Presidential veto, successful legislative action on the overtime rule will be difficult. We’ll keep you posted as the legislative process progresses.

Coming Soon to the Blog: The California Wage & Hour Series

Posted in State Laws/Claims

We are thrilled to announce a special blog series, coming soon to this very blog! This series will focus on wage & hour issues specific to the Golden State and will highlight the unique problems raised by California labor laws and litigating California wage & hour cases. As many of our readers are all too well aware, California’s wage & hour laws differ from federal laws in subtle yet important ways. This series will focus on some of the key differences that are impacting employers with a California presence, as well as cover breaking California law on issues of importance to wage & hour litigation. We hope you find the series valuable, and we look forward to posting!