Authored by Alex Passantino 

As Juno prepares to pummel the Northeast with snow, employers should prepare for any weather-related closures of their offices, factories, or other facilities.  The effect of a weather-related closure on compensation requirements varies for different types of employees and also varies by state.

EXEMPT EMPLOYEES

Most employees who are exempt from federal overtime requirements and paid on a salary basis are not subject to reductions to their weekly salaries because of a closure.  Even if an exempt employee misses a full day of work, the employer may not reduce the employee’s weekly salary (unless the employee misses an entire work week).  An employer that improperly reduces an employee’s salary might lose or jeopardize the ability to treat the employee as exempt from overtime pay requirements — potentially a very costly mistake.

Even though employers will almost certainly have to pay exempt employees their full salaries regardless of storm-related closures, employers do have the right to charge exempt employees for vacation or PTO for any work that they miss.  Employees who do not have enough accrued vacation or PTO to cover the closure, however, must still be paid their full weekly salaries.

The legal rules for paying exempt employees apply in all states.  Of course, in deciding whether to charge employees with vacation or PTO, employers may also want to consider non-legal factors such as employee morale and the organization’s finances.

NON-EXEMPT EMPLOYEES

For non-exempt employees, federal law requires only that employers pay employees for the hours they actually work.

TELECOMMUTING

In assessing pay requirements for all employees, employers should keep in mind that, even if an office or other facility is closed, some employees might work remotely.  Work performed remotely generally must be paid to the same extent as work performed on an employer’s premises — even if the employer did not request that the work be performed.  Non-exempt employees working remotely must generally be paid at their usual hourly rate (and subject to the usual requirements for overtime pay).

REPORTING PAY

Certain Northeastern states have additional requirements that apply to hourly employees who report to work when a facility is closed or not operating at full capacity.  For example:

  • Connecticut has a reporting pay requirement that applies to employees in the “Mercantile trade.”  Employees in that industry must be paid four hours at their regular rate of pay, if they actually report for work.  The “Mercantile trade” is defined as the wholesale or retail selling of commodities and any operation supplemental or incidental thereto.  A two-hour guarantee is in place for the restaurant and hotel industries, if the employee was not “given adequate notice the day before” that she should not report for work.
  • Massachusetts mandates reporting pay for non-exempt employees of at least three hours at the statutory minimum wage ($9.00) if they are scheduled to work more than three hours on a given day and actually report for work.  Employees scheduled for less than three hours need only be paid for their scheduled hours.
  • New Hampshire requires reporting pay for non-exempt employees who actually report for work of at least two hours at their regular rate.
  • New Jersey requires reporting pay for non-exempt employees who actually report for work of at least one hour at their applicable wage rate (unless, prior to this report to work, the employer already made available to the employee the minimum number of hours of work agreed upon for the week).
  • New York requires “call-in pay” for non-exempt employees of at least four hours, or the number of hours in the regularly scheduled shift (whichever is less) at the basic minimum hourly wage ($8.75) for employees who actually report for work.  A 2009 New York Department of Labor opinion letter, however, interpreted the reporting-pay obligation as not applying if “the amount paid to an employee for the workweek exceeds the minimum and overtime rate for the number of hours worked and the minimum wage rate for any call-in pay owed.”  Employees working in the hospitality industry may be subject to different requirements.
  • Rhode Island requires an employer to pay an employee who reports for duty at the beginning of a work shift (where the employer offers no work for him to perform) not less than three (3) times the employee’s regular hourly rate of pay.
  • Washington, D.C., requires reporting pay of at least four hours at the statutory minimum wage ($9.50) for non-exempt employees who actually report for work if they are scheduled to work for at least four hours.  Employees scheduled for less than four hours need only be paid for their scheduled hours.

Some of the reporting pay requirements noted above may be waived if the employer makes a good faith effort to provide employees with reasonable advance notice that they should not to report to work.  Employers that foresee that their facilities will be closed should give employees who are scheduled to work as much notice as possible for both practical and wage/hour compliance reasons.

If you are an employer with questions about the requirements summarized above or any other impacts that the storm may have on your legal obligations as an employer, we encourage you to contact any Seyfarth Shaw attorney with whom you work.

Leading employment law firm Seyfarth Shaw has updated its definitive guide to the litigation of wage and hour lawsuits. Co-authored by three Seyfarth partners and edited by the chair of the firm’s national wage-hour practice, Wage & Hour Collective and Class Litigation is an essential resource for practitioners. The unique treatise provides insight into litigation strategy through all phases of wage & hour lawsuits, and is now updated with additional significant cases through 2014.

Among many other topics, the treatise’s authors examine how employers in multiple industries are targeted for wage-hour lawsuits and provides substantive procedural and practical considerations that determine the outcome of such actions in today’s courts. Principally designed to assist employment litigators and in-house counsel, the treatise also proves useful to senior management seeking to fend off wage-hour actions before they strike.

Authors Noah Finkel, Brett Bartlett and Andrew Paley, who practice in the firm’s Chicago, Atlanta and Los Angeles offices respectively, as well as Boston-based Richard Alfred, who is Chair of Seyfarth’s National Wage & Hour Litigation Practice Group, are each experienced wage and hour litigators who have handled numerous collective and class actions asserting violations under both state and federal law.

“The growth of wage and hour decisions at the appellate level has continued, and will have a significant impact on pending and future litigation,” said Alfred. “Our updated edition arrives at the perfect time for corporations looking for the most current insight and strategy on wage & hour litigation. New have touched on pleading requirements, the enforcement of class waivers in arbitration agreements, exemptions, and use of statistical evidence and sampling in class trials, among others. This handbook delves into these new developments and offers practical litigation advice to all employers navigating this complex space.”

Wage & Hour Collective and Class Litigation covers the complex rules surrounding all types of wage and hour lawsuits. These include claims under the Fair Labor Standards Act, claims under state wage and hour laws, or hybrid cases involving both, as well as special issues involving government contractors. It provides readers guidance around: how to respond to a wage and hour complaint; what to consider when deciding whether to remove a case to federal court; how to assess the particular merits of a claim; whether to settle; how to oppose plaintiffs’ motion to facilitate notice for conditional certification; what kinds of affirmative defenses are best; and how to tilt the odds in favor of the defense.

In its fourth update to the treatise, Wage & Hour Collective and Class Litigation features discussions of recent decisions from appellate and trial courts and their effect on wage and hour litigation, emphasizing the following developments:

  • Recent federal appellate court decisions, including the Third Circuit’s decision in Davis v. Abington Memorial Hospital, analyzing what is necessary to plead a plausible claim for relief to avoid a motion to dismiss in wage and hour cases.
  • The California Supreme Court’s recent decision in Duran v. U.S. Bank.  This case establishes important principles in the class action setting on the use of statistical evidence and sampling, on employers’ due process rights to present evidence on their affirmative defenses and the use of trial plans to determine if class actions are manageable.  Although controlling law only in California, Duran establishes principles that may be helpful to employers litigating class actions in any forum.
  • The Second Circuit decision in Pippins v. KPMG on the application of the professional exemption to entry-level accountants.
  • The California Supreme Court’s decision in Iskanian v. CLS Transportation Los Angeles, LLC, which overruled its prior decision in Gentry v. Superior Court.  The Iskanian ruling provides California employers with far more flexibility to utilize arbitration agreements in the employment setting and avoid class action litigation.
  • The Third Circuit’s decision in Thompson v. Real Estate Mortgage Network  applying a more lax federal common law standard to determine successor liability under the FLSA.

The 2015 update to Wage & Hour Collective and Class Litigation is published by American Lawyer Media’s Law Journal Press.  It is available online at www.lawcatalog.com.

Co-authored by David D. Kadue and Simon L. Yang

On Tuesday, January 20, 2015, the Court declined to take the case of CLS Transportation Los Angeles, LLC v. Iskanian, in which an employer asked the Court to reverse a ruling of the California Supreme Court. At issue was whether an employee who has agreed to submit all employment-related claims to arbitration, and who has also agreed to waive participation in class and representative actions, can evade that agreement and sue the employer under California’s Private Attorney General Act (“PAGA”). The California Supreme Court in June 2014 had sided with the suing employee.

Many observers expected that the case would be the latest episode in a drama that features a complicated relationship between two supreme courts. To simplify a bit, the U.S. Supreme Court traditionally has read the Federal Arbitration Act (“FAA”) to require the enforcement of private arbitration agreements by their terms. The California Supreme Court, meanwhile, has often searched creatively for some Cal-centric reason to deny enforcement to arbitration agreements.

Recent examples of the contrasting supreme viewpoints have occurred in the context of arbitration agreements that waive the procedural right to proceed or participate in a class action. The California Supreme Court once held, in both the consumer-claim context and in the employee-claim context, that a class-action waiver in an arbitration agreement is unenforceable, because any such waiver offends the California public policy favoring class actions. But then the U.S. Supreme Court, in Concepion v. AT&T Mobility, ruled in 2011 that the FAA preempts the California ban on class-action waivers. Concepion involved a consumer complaint. For several years, California courts resisted the clear implication that Concepcion also applies to employee complaints. Finally, in Iskanian, the California Supreme Court relented, acknowledging that, under the FAA, class-action waivers in arbitration agreements are enforceable, even in California.

But even then the Iskanian court also sounded a note of resistance, based on a special Cal-peculiarity: the court held that Concepcion does not apply to a PAGA claim. The rationale for creating this PAGA exception to Concepcion was that a PAGA claim differs from a class action in that PAGA plaintiffs act as private attorneys general, on behalf of the State of California—an entity that never agreed to arbitrate. Meanwhile, a dozen or more federal district court decisions repudiated this rationale, holding that the FAA, as interpreted by Concepcion, requires courts to enforce arbitration agreements calling for individual arbitration of PAGA claims, even if that enforcement keeps the plaintiff from acting as a private attorney general.

The employer petitioned the U.S. Supreme Court for a hearing on whether the California Supreme Court, in Iskanian, has once again strayed from the FAA’s true path. In supporting this request for intervention, the employer community explained that Iskanian’s rationale does not withstand scrutiny, for several reasons. First, the injuries that PAGA addresses are Labor Code violations that have harmed the suing “aggrieved employee.” The notion that this injury is really to the State of California is an overbroad legal fiction that could apply to any statutory claim—as California presumably has an interest in compliance with all of its statutes. This legal fiction contrasts with the actual governmental injury asserted in a true qui tam claim under the False Claims Act, in which a private party, on behalf of the government, alleges fraud on the government, after notifying the government of the claim and letting the government decide whether to sue for itself. Second, PAGA differs from a true qui tam action in that the State of California plays almost no role in a PAGA action. Under the False Claims Act, the government investigates the claims and a case cannot proceed as a qui tam action unless the government expressly consents, so the government plays a true gatekeeper role. Under PAGA, by contrast, the California Labor and Workforce Development Agency (“LWDA”) has a limited chance to investigate and intervene after the aggrieved employee gives written notice of a violation, and the LWDA almost never investigates. On the contrary, unless, within 33 days, the LWDA says it will investigate (a once-in-a-blue-moon occurrence), the aggrieved employee can sue, without any government oversight, so that the aggrieved employee may unilaterally dismiss the action. Third, the State of California rarely sees the 75% share of the civil penalties that PAGA nominally promises. Settlements of Labor Code claims often involve no PAGA penalty whatsoever. The only judicial oversight is to approve any PAGA penalty sought: if no PAGA penalties are allocated, the court has nothing to approve. Individual plaintiffs can thus use PAGA claims to pressure a greater settlement of their private claims, while producing nothing for the State. In short, because individuals control PAGA actions from start to finish, enabling them to seek recovery for their own alleged injuries, there is no good reason to distinguish PAGA claims from other wage and hour claims. As to all these claims, the FAA preempts any state public policy that would interfere with the enforcement of arbitration agreements. So why should PAGA be any different?

Yet, alas, on Tuesday the U.S. Supreme Court denied the employer’s petition. We thus expect to see continuing discord between federal and California courts on whether PAGA represents an exception to the general rule that courts should enforce arbitration agreements that waive class and representative actions.

Co-authored by Robert S. Whitman and Robert T. Szyba

New Jersey employers now have an answer to a question that had previously been mired in uncertainty:  What test is used to determine whether an individual is an employee or an independent contractor under state wage and hour laws?

In Hargrove v. Sleepy’s, LLC, the New Jersey Supreme Court, answering a question certified by the U.S. Court of Appeals for the Third Circuit, held that the “ABC Test,” taken from the New Jersey Unemployment Compensation Law, applies. Under that test, a worker is presumed to be an employee unless three elements—listed in subsections A, B, and C of the key section of the statute—are met.

Those factors are:

(A) the individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact;

(B) the service is either outside the usual course of business for which such service is performed, or such service is performed outside of all the places of business of the enterprise for which such service is performed; and

(C) the individual is customarily engaged in an independently established trade, occupation, profession, or business.

Unless all three criteria are satisfied, the worker will be deemed an employee.

The plaintiffs in Sleepy’s were delivery drivers who sued under the Employee Retirement Income Security Act (ERISA), the Family and Medical Leave Act (FMLA), New Jersey Wage Payment Law (as well as the state wage laws of New York, Massachusetts, Maryland, and Connecticut), and for breach of contract. They sought rescission of their independent contractor agreements and reformation of their contracts for employment, admission into Sleepy’s ERISA-governed benefit plans, damages for interference with their alleged FMLA benefits, and damages for allegedly unlawful wage deductions and offsets.  Sleepy’s moved for summary judgment on grounds that the workers were independent contractors.  The U.S. District Court agreed, holding that the facts “overwhelmingly show[ed] that the plaintiffs were independent contractors” and thus had no viable employment claims.  The court utilized the so-called “common law test” in its analysis, following the U.S. Supreme Court’s lead in Nationwide Mutual v. Darden, an ERISA case.

Considering the question after certification from the Third Circuit, the New Jersey Supreme Court noted that, of the various tests for independent contractor status, the ABC Test was the most expansive in favor of employment status, as it is the only such test that begins with the presumption that the worker is an employee and puts the burden on the employer to establish otherwise.  The test was also advocated by the state Department of Labor and Workforce Development, which uses it in administrative determinations under the Wage and Hour Law and in unemployment insurance matters.  The Court stated that, in adopting the test, it sought to foster predictability in employment determinations and greater consistency among the state wage and hour laws.  Nonetheless, it recognized that the test differs from the “economic realities” analysis used under the Fair Labor Standards Act and thus could create inconsistent results under state and federal law in New Jersey.

For New Jerseyans, the bar for employment status under the state’s wage and hour laws has been lowered.  Garden State companies that use independent contractors now run a greater risk than before of having those contractors deemed employees.  Because the (alleged) employer bears the burden of establishing independent contractor status, which is distinctly different from applicable federal law, companies should take this opportunity to carefully assess their existing contractor relationships to ensure that these workers are properly classified.

On January 22, Seyfarth Shaw’s class action experts are presenting a webinar to discuss highlights from Seyfarth’s 11th Annual Workplace Class Action Litigation Report.  The Report covers the array of bet-the-company litigation issues that businesses face and discusses the emerging trends and continuing rising tide of both EEOC litigation and Wage & Hour class actions and collective actions.

The Report and webinar should prove educational to anyone faced with class or complex litigation. To find out more about the webinar and to register, click here.

Co-authored by Gena B. Usenheimer and Jade Wallace

The close of 2014 presented a host of potential problems for home health care providers.  As a result of new Department of Labor (“DOL”) regulations changing the federal “companionship” exemption from overtime and minimum wage requirements, many home health care agencies have been bracing themselves for significant changes to their pay practices.

The DOL originally issued its Final Rule on September 17, 2013, which revised the federal regulations defining the FLSA’s companionship exemption.  Most notably, the revisions (1) made the exemption available only where the “employer” is the individual, family, or household using the services, thereby making it impossible for third-party agencies to avail themselves of the exemption and (2) changed the definition of “companionship” so as to exclude many home health care aides from the exemption’s coverage.

On December 22, 2014, just ten days before the Final Rule was schedule to take effect, Judge Richard Leon of the U.S. District Court for the District of Columbia vacated the regulation which precluded third-party agencies from relying upon the minimum wage and overtime exemption.  Following that order, on December 31, 2014, the Judge issued a temporary restraining order preventing the revised definition of “companionship services” from taking effect until January 15, 2015.

After holding oral argument on the legality of the revised definition, today Judge Leon found the DOL is “yet again … trying to do through regulation what must be done through legislation” and vacated the regulation narrowing the definition of companionship services.

While the DOL will all but certainly appeal these decisions, for now, the FLSA’s companionship exemption remains available to third-party agencies and the definition of “companionship services” is unchanged.

Authored by Gena D. Usenheimer

Hourly pharmacists for CVS in California were forced to swallow a bitter pill late last year when Judge S. James Otero of the Central District or California denied their motion for class certification on claims for unpaid off-the-clock and overtime work.

The plaintiffs alleged that they were forced to work additional hours without pay in order to serve the pharmacy’s customers.  They argued that they could establish their claims on a class-wide basis by relying on CVS’s “Rx Connect” software system, which allows pharmacy employees to perform various daily tasks such as obtaining prescription information, verifying insurance data, and printing labels.  To access the system, employees must enter a three-letter credential that is obtained by inputting employee ID and password information each day.  The plaintiffs claimed they could establish liability for off-the-clock (and overtime) work by cross-referencing time records with the prescription records tracked in the Rx Connect database.

Judge Otero found the plaintiffs’ argument deficient in two main respects.  First, during the class period, CVS used two different computer systems, both of which allowed for the sharing of log-on credentials among multiple employees, making it nearly impossible to determine who was working when.  Second, the Rx Connect system (used for the majority of the class period) did not keep a record of which credentials were active for which employee at any given time.  This, too, made it nearly impossible to determine who was working when.  The court thus agreed with CVS that the only reliable way to learn whether pharmacy employees actually performed off-the-clock work is to ask them.  The need for such individualized inquiries defeated Rule 23(a)’s commonality requirement.

The same problem plagued the plaintiffs’ proposed overtime class:  there was no reliable method to track hours worked, and the evidence varied from manager to manager as to whether pharmacy employees were permitted to work overtime.  The court also found that the proposed class representatives were inadequate based on an “inherent tension” between supervisory pharmacists and those with subordinate titles.

The decision, Howard v. CVS Caremark Corp., serves as another helpful reminder that the presence of individualized inquiries remains a powerful weapon in the fight against Rule 23 class certification.

Co-authored by Gerald L. Maatman, Jr. and Jennifer A. Riley

Restaurant servers are some of the few employees to whom employers can pay less than the minimum wage.  This is because they receive tips from customers that, so long as those tips are large enough, often push an employee’s income well above minimum wage.  The FLSA thus allows an employer to take a “tip credit” as to most restaurant servers, provided the employer dots its “i’s” and crosses its “t’s” in following the tip credit regulations.

The vague nature of some of those regulations, and the relatively undeveloped nature of the case law interpreting them, has allowed some plaintiff’s wage-hour lawyers to feast on unsuspecting restaurateurs in obtaining back wages and liquidated damages on behalf of servers, bartenders, and other tipped employees.

But late last month, a federal court judge in the Northern District of Illinois came up with a better recipe for analyzing the tip credit regulations.  In Schaefer v. Walker Bros. Enterprises, et al., Judge Norgle granted summary judgment against plaintiff-servers on their claims that the restaurants at which they work improperly failed to pay servers minimum wage while performing sidework tasks such as refilling, stocking, and chopping, and failed to provide proper notice of their intention to take the tip credit.

The decision in Schaefer represents a significant victory for restaurant employers, particularly the significant number that require their servers to perform end-of-shift and beginning-of-shift sidework duties at the tip credit rate of pay.

Factual Background

In 2010, plaintiff-servers brought suit against Walker Brothers contending that they violated federal and state minimum wage laws in two ways:  (1) by incorrectly using the tip credit to pay the servers an hourly rate less than minimum wage while requiring them to perform duties unrelated to their tipped occupation; and (2) by failing to inform the servers of their intent to apply the tip credit to the servers’ wages.

Walker Brothers own six restaurants in the Chicago suburbs that operate under the name “The Original Pancake House.”  Upon hire, Walker Brothers provides servers with an employee handbook that states, among other things, that they apply a tip credit that reduces servers’ hourly wages 40% below minimum wage.  They also display DOL-approved posters explaining the tip credit in well-traveled areas of all six restaurants.

In addition to serving customers, servers perform sidework tasks that vary by the station to which they are assigned and by other factors such as location, shift, and manager.  Before May 2011, servers regularly sliced produce like strawberries and mushrooms.  Before and after that time, servers also placed scoops of ice cream on customers’ waffles and stirred blueberries into fruit compote.  Some servers also performed duties like putting water in soup warmers, brewing iced tea, and occasionally dusting or polishing brass.

Servers predominantly performed side work at the beginning or ends of their shifts, but also replenished and restocked certain items throughout the day.  Servers did not perform maintenance or janitorial work, such as cleaning bathrooms, washing dishes, mopping or vacuuming floors, washing windows, or taking out garbage.

On September 19, 2013, the Court granted class certification on the servers’ claims.  The restaurant thereafter moved for summary judgment on the servers’ claims.

The Court’s Opinion

The Court extensively recounted the law relating to the tip credit as set forth in the regulations and the DOL Field Operations Handbook.  Employers may pay “tipped employees” a wage below the federally mandated minimum wage rate, so long as, with tips, they earn at least the minimum wage.  Employers can take the tip credit “only for hours worked by the employee in an occupation in which the employee qualifies as a ‘tipped employee.’”

When “an employee is employed in a dual job,” for example, when a “maintenance man in a hotel also serves as a waiter,” employers cannot take advantage of the tip credit when the employee performs tasks unrelated to his tipped occupation.   On the other hand, when employees perform duties “related” to their tipped occupation, such as when a waitress cleans and sets tables, toasts bread, and makes coffee, “employers may apply the tip credit and continue to pay employees below minimum wage.

The Court then issued three key holdings with respect to application of the tip credit.  First, it held that plaintiffs bear the burden of proving that they were not properly compensated.

Second, the Court held that, even viewed in the light most favorable to plaintiffs, the sidework tasks performed by servers were “incidental to the regular duties of the server (waiter/waitress) and generally assigned to the servers” and, therefore, fell within the DOL Handbook’s interpretation of the applicable regulation. In doing so, the Court also distinguished an earlier Northern District of Illinois case in which it was held that a different restaurant could not take a tip credit.  In that case, employees submitted declarations stating that they were assigned to clean bathrooms, wash dishes, scrub floors, pick up trash in the parking lot, take out garbage, and roll silverware.  In Schaefer, however, the servers admitted that they were not subjected to extensive cleaning duties.   The Court thus held:  “Where the related duties are performed intermittently and as part of the primary occupation,” such as the duties are here, “the duties are subject to the tip credit.”

Third, the Court held that summary judgment in favor of the restaurant was appropriate on the notice claims.  Defendants displayed posters approved by the Illinois Department of Labor in well-traveled areas of their restaurants and informed servers of the tip credit in multiple ways, including by giving servers an employee handbook.

Implications For Employers

The Court’s decision in Schaefer is a stunning victory for the restaurant industry.  Before the Court’s decision in Schaefer, few courts had addressed tip credit claims, and little favorable law existed to validate employers’ regular practice of using servers to perform incidental side work tasks.  As a result, restaurant employers can breathe a little easier in 2015.

Co-authored by Richard Alfred and Patrick Bannon

2014 saw no letup in the deluge of wage and hour litigation.  Year-to-year, federal wage and hour lawsuits filed in federal courts increased by another 4.7%, bringing the total increase in federal court wage and hour cases over the past decade to more than 238%.  With the increase in litigation in this area, several significant trends emerged or accelerated.

First, in Integrity Staffing Solutions, Inc. v. Busk, the Supreme Court unanimously ruled that for a pre-shift or post-shift activity to be compensable under the Fair Labor Standards Act it must be an “intrinsic element” of the job, something that an “employee cannot dispense if he is to perform his principal activities.”  Time passing through post-shift security screening does not meet this standard, the Court concluded, to the relief of retailers and other employers who might otherwise have faced massive exposure,

Second, federal courts applying the Iqbal/Twombly pleading standards have been requiring plaintiffs to include more specific facts  in their complaints.  For example, complaints that merely allege that plaintiffs worked more than 40 hours and were not paid overtime are likely to be dismissed in a growing number of federal circuits.  The Ninth Circuit, most recently joined this trend by requiring “a plaintiff asserting a violation of the FLSA overtime provisions [to] allege that she worked more than forty hours in a given workweek without being compensated for the hours worked in excess of forty during that week.”  Landers v. Quality Communs., Inc., 771 F.3d 638, 645 (9th Cir. Nov. 12, 2014).  Requiring specific allegations makes it harder for plaintiffs’ counsel to use one-size-fits-all complaints and requires greater investigation before filing a complaint.  It may also strengthen defendants’ ability to defeat or limit certification of class or collective actions by highlighting early in a case significant differences among plaintiffs and potential class members or opt-ins.

Third, the law continued to evolve in favor of the enforcement of agreements to submit wage and hour claims to bilateral arbitration.  In particular, waivers of the right to participate in class or collective actions or in “class arbitration” are increasingly allowing employers to resolve wage disputes on an individual employee basis.  Further, in 2014 the Third Circuit in Opalinski v. Robert Half Int’l. endorsed the Sixth Circuit’s Reed Elsevier v. Crockett decision in determining that the issue of who decides whether an agreement to arbitrate allows for class arbitration is an issue of arbitrability for the court to decide.  This trend continued in an unpublished Ninth Circuit opinion in Eshagh v. The Terminix Int’l. Company (12/22/14).  With no Circuit taking a contrary view, these circuit court rulings are likely to lead to greater consistency in entrusting the important issue of the availability of class or collective arbitration to courts, rather than arbitrators.

Fourth, plaintiffs’ counsel concerned about their ability to pursue a class or collective action continue to try out the strategy of filing multiple suits or claims against the same employer on behalf of numerous individual plaintiffs or smaller groups of plaintiffs.  In at least one large collective action last year that had been conditionally certified, experienced plaintiffs’ counsel agreed to the decertification of the collective and then filed 37 lawsuits throughout the country, in addition to hundreds of arbitration demands, using opt-ins from the collective action as individual plaintiffs and claimants.  The strategy backfired, however, when plaintiffs lost a jury trial and several motions for summary judgment in the Eastern District of Virginia, resulting in a finding that mortgage loan officers were properly classified as exempt outside salesmen.  Cougill, et al. v. Prospect Mortgage, E.D. Va., No. 13-cv-1433.

Fifth, the Supreme Court heard argument in December 2014 in two cases that will determine not only whether mortgage loan officers satisfy the FLSA’s administrative employee exemption, but also how much weight, if any, courts should give to the pronouncements of the U.S. Department of Labor.  In 2010, the DOL–without notice or an opportunity for public comment–withdrew a 2006 Opinion Letter stating that mortgage loan officers are generally exempt, and issued of an Administrator’s Interpretation stating just the opposite.  The Supreme Court’s decision is expected in the first part of 2015.

Sixth, President Obama has called on the U.S. Department of Labor to revise its regulations defining the FLSA’s “white-collar” exemptions.  The DOL has delayed its target date for issuing proposed revisions, with the current due date now set for February 2015.  The administration has stated that the new regulations should significantly increase the number of employees eligible for overtime.  Possible changes could include:  a substantial increase in the minimum weekly salary requirement (currently $455); a re-definition of an employee’s “primary duty” that requires exempt employees to perform a minimum percentage of their time on exempt work and/or eliminates the ability of managers to engage in management and non-exempt work concurrently.  If the proposed revisions survive expected opposition during the comment period from the business community and Congressional leaders and become final, they would be the most significant revisions to the wage and hour regulations in decades.

Last but certainly not least, 21 states have increased their minimum wage effective January 1, 2015.  Connecticut’s minimum wage will increase to the highest level, at $9.15 per hour.  Massachusetts is not far behind with its minimum wage rising to $9.00 per hour.  The Federal minimum wage remains at $7.25 per hour, except for workers on Federal construction and service contracts solicited on and after January 1, 2015 and for those on contracts awarded outside the solicitation process, whose minimum wage rises to $10.10 by President Obama’s  Executive Order implemented by the Department of Labor’s final rule.  Of course, in those states with a minimum wage greater than federal law, employers must pay their employees no less than the higher applicable state minimum wage.

These developments all but ensure that avoiding and defending wage and hour class and collection actions should remain a high-priority for employers in 2015.

 

Authored by Alex Passantino

It’s the week before Christmas, and we’ve accepted our mission,
The annual wage hour “sum-up” composition.
And to start it all off, we’ve got something nice,
‘Cause the Supreme Court addressed wage and hour stuff twice.

The year started out with the first one of those;
As Justice Scalia answered “What counts as clothes?”
With one simple phrase, the Court cleaned up a mess,
Clothes should be “commonly regarded as articles of dress.”

Gloves and hardhats, and fireproof suits,
And your shirt and your pants (and, presumably, boots),
They all count as clothes, from your toes to your face.
But not glasses, or plugs that can block out the bass.

Then later this year, the Court came back again,
To answer the question, “The clock, it starts when?”
If you screen all your workers so they don’t steal your stuff,
And the clock stops before they’re in line, that’s enough.

The statute considered? ’Tis one that’s immortal.
The 68-year-old Portal-to-Portal.
With language so dated, it puts “whilst thou” to shame,
So we list the words here and we call them by name:

Principal Activity!  Integral! And Indispensable!
The words that define whether work is compensable.
The task’s required?  So what?  That’s not a fight you should pick.
You pay only those duties whose element’s intrinsic.

Now we leave SCOTUS cases and we turn to the rest,
The five or six topics our blog writers liked best.
Appearing so often, it borders on a fixation.
Are cases addressing increased decertification

And non-certification (you know what we mean).
Early on, or at trial, and all points in between.
Surveys kicked out.  Class reps were rejected.
Comcast has turned out to be nearly all we expected.

And even where Rio can dance on the sand,
Out came a case simply known as Duran.
If you’re asked to provide your trial proof logistics,
You can no longer just smile, shrug, and yell out “Statistics!”

So much litigation, so many cases to savor
And that’s only the issue of class–based arb waiver.
Add holding plaintiffs to standards when pleading a case,
And it kinda feels like employers are leading this race.

But just when you think wage claims might become less systemic,
We look at case numbers and declare “Epidemic!”
Interns, exemptions, independent contractor relations
Dominate dockets across the whole nation.

The government, too, makes employers squirm.
And this year, a new boss has gotten confirmed.
Those in restaurants, lodging, and others franchised,
Into DOL investigations, you’ll soon be baptized.

Now as we approach the end of the year,
And look forward to next, and the things we should fear,
At the top of the list, the elephant in the room,
Is the effort to make your exemptions go “Boom!”

In early 2015, we’ll know what DOL may have planned,
If the rules out in Cali will apply ‘cross the land.
But before we say bye to the year that’s near past
Thanks for reading our blog.  You’ve made it a blast.

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