Co-authored by Gerald L. Maatman, Jr., Christina M. Janice, Michael W. Stevens, and Kylie R. Byron

Make no mistake, the role of Justice of the U.S. Supreme Court profoundly impacts the balance of power among the branches of our government.  Now, with the untimely passing of Justice Antonin Scalia on February 13, the void created in the balance within the Supreme Court itself cannot be overstated. President Obama’s promptly convened news conference about nominating a replacement, and the Republican presidential debate’s focus on confirming – or not confirming – a nominee, demonstrate that in the space of 24 hours the future composition of the Supreme Court has become one of the most important issues facing the country and its governance.

So what does this mean for employers?

First, many cases pending on the Supreme Court’s docket now almost certainly will reach a different outcome than they would have had Justice Scalia remained on the Supreme Court through the end of the June 2016 Term.  Several key cases, including some with important ramifications for employers, have not yet been decided.

Second, the previous ideological makeup of the Supreme Court — generally thought of as five conservatives and four liberals — now has shifted to an even split between conservative and liberal Justices as the work of the Supreme Court continues.  This tenuous balance likely will change again, but the complexion of the Supreme Court largely will depend on whether President Obama is able to secure the confirmation of a replacement, or if the vacancy remains open through the upcoming presidential election.  Whether President Obama or his successor nominates the next Justice may influence the direction of the Supreme Court for years or decades to come.

Some Context Regarding The Supreme Court

The death of Justice Scalia means that the normally nine-member Supreme Court will probably be down to eight Justices when it rules this Term on such divisive issues as abortion rights, immigration, affirmative action, and the power of public-sector unions.

President Obama already has stated that he intends to nominate a replacement, and the White House has signaled that it has been preparing a slate of potential nominees. However, it is unclear whether the Republican-controlled Senate will allow a nomination to proceed, or if the Senate will confirm an Obama nominee.  Even if a nominee is confirmed, he or she is unlikely to join the Supreme Court prior to the end of its 2016 Term in June.

Given the political showdown that is all but sure to consume the White House and Congress, it is substantially likely that several important decisions will be split on a 4 – 4 vote.  When the Supreme Court is equally divided, the lower court ruling remains in place but no national precedent is set.  Thus, several rulings this Term that were expected to change American law instead may only extend the status quo.

Moreover, Justice Scalia’s death affects more cases on the Supreme Court’s docket than those that have yet to be argued, or voted upon by the Supreme Court. His death also affects cases where oral argument has taken place, but rulings have not yet been issued.  His previous votes in any such cases no longer count.  Thus, if a preliminary vote on a case was 5 – 4 with Scalia in the majority, that opinion would have provided national precedent.  Now, with his vote eliminated, a 4 – 4 decision emerges that does not affect the state of the law.

Cases On The Docket

Over the past decade, the U.S. Supreme Court – with its conservative faction led by Justice Scalia – increasingly has shaped the contours of complex litigation through its rulings on class actions, employment-related litigation, and governmental enforcement issues.  Justice Scalia was at the center of these rulings. Two significant examples include his authorship of the 2011 decision in Wal-Mart Stores, Inc. v. Dukes  and the 2013 decision in Comcast Corp. v. Behrend, both of which dramatically changed the rules for when and how class actions may proceed.

This Term also includes several cases that have the potential to affect employers in the realm of consumer or employment class actions, labor relations, and affirmative action.  Supreme Court prognosticators were expecting several of these decisions to be decided 5 – 4 and set national precedent.  Although we cannot predict with certainty how the Supreme Court will rule, it now appears substantially likelier that many of the decisions will turn out 4 – 4, leaving the lower court decision intact and, in some cases, failing to resolve circuit splits that led to the grant of certiorari in the first place.

Key cases affecting employers include:

  • Spokeo, Inc. v. Robins, No. 13-1339 – Widely considered the most important class action case of the current Supreme Court term, Spokeo concerns whether individuals who lack allegations of actual injury, but claim a technical violation of a statutory right, can still file class actions.  The case involves the Fair Credit Reporting Act and liability for hiring procedures. Oral argument took place in November of 2015.
  • Tyson Foods, Inc. v. Bouaphakeo, No. 14-1146 – The case presents an opportunity for the Supreme Court to allow or forbid class actions that rely on a composite or “average plaintiff” or “average class member” for damages purposes, sometimes dubbed as “trial by formula.”  Brought under the Fair Labor Standards Act, this case presents an opportunity for the Supreme Court to determine whether differences between class members essentially prohibit class treatment or that averaging and aggregation are permissible.  Oral argument also took place in November of 2015.
  • Friedrichs v. Calif. Teachers Association, No. 14-915 – At issue in this case is whether public-sector employees may be compelled to contribute dues to a union.  Oral argument took place in January of 2016, and the five conservative Justices seemed ready to invalidate the law.  A 4 – 4 split would leave intact the lower court ruling that permitted the law to stand.
  • CRST Van Expedited, Inc. v. EEOC, No. 14-1375 – This closely watched case concerns the largest fee sanction award – approximately $4.7 million – ever issued against the Commission.  The fee was issued in favor of an employer after a district court ruled that the EEOC failed to meet its pre-suit investigation obligations in a case involving dozens of claimants.  The Supreme Court is expected to clarify the obligations of the EEOC in prosecuting systemic lawsuits, and the grounds on which it may be sanctioned for initiating litigation without satisfying its duties under Title VII.  Oral argument is set for March.
  • Fisher v. University of Texas, No. 14-981 – This case involves the use of affirmative action programs in public university admissions processes.  Fisher had previously been up to the Supreme Court in 2013, at which point the it was remanded to the lower court for reconsideration.  At oral argument in December of 2015, the conservative Justices seemed ready to strike down the law. Because Justice Kagan has recused herself, it is possible that this case may still be decided on a 4 – 3 vote.
  • Heffernan v. Patterson, No. 14-1280 – This case concerns First Amendment freedoms of speech and association.  The Supreme Court is likely to determine what standards apply to public employers taking action on the basis of the assumed speech or assumed political affiliation of employees.  Oral argument took place in January of 2016.
  • Zubik v. Burwell, No. 14-1418 – This case addresses whether or not the government places an undue burden on religiously-affiliated employers by requiring them to opt out of the Affordable Care Act’s contraception coverage mandate.  Oral argument is set for March of 2016. A 4 – 4 split would affirm the Third Circuit’s holding that the Act places no substantial burden on employers and religiously-affiliated employers will be required to comply with the Act or face statutory penalties.

Seyfarth is monitoring each of these cases carefully, and likewise will be paying close attention as the process unfolds for the nomination of the next Supreme Court Justice.  The stakes for the future of employment law are high, and Seyfarth will keep you updated in real-time as developments occur.

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!

Co-authored by Robert Whitman, Joanna Smith, and Samuel Sverdlov

Joining a budding national trend, renowned restaurateur Danny Meyer of Union Square Hospitality Group last week announced that he will eliminate formal tipping at his restaurants starting in 2016. Meyer stated that the new policy, aptly named “Hospitality Included,” is meant to better compensate “back of house” staff, who are legally restricted from receiving tips, and to make the dining experience less complicated for diners.

But is there a more subtle, yet potentially more significant, legal benefit as well? By eliminating tipping, Meyer and other like-minded restauranteurs might be shielding themselves from costly legal exposure for wage and hour violations.

Historically, restaurants have been able to offset part of their payroll costs by taking advantage of federal and state tip credits, which allow them to pay waiters and other customer-facing “front of house” employees at a lower hourly rate, provided they receive a certain amount in tips. Despite the obvious financial advantage to this approach, the industry has been plagued in recent years with class and collective actions stemming from alleged tipping violations. (See examples here, here, and here.) Such claims include failing to pay minimum wage, improperly including kitchen workers in servers’ tip pools, using a portion of tips to servers of alcohol and wine to pay sommeliers’ salaries, and failing to provide required notice of the tip credit.

Furthermore, some hospitality industry experts, such as Michael Lynn of the Cornell University School of Hotel Administration, believe that tipping inherently disadvantages minority workers, suggesting that tipping practices could put employers at risk of disparate impact discrimination class action suits.

A “no tipping” policy eliminates these litigation risks. In addition to simplifying an employer’s payroll and reducing paperwork, the end of tipping could mean the end of costly class action allegations of tip pool, tip share, and service charge violations, as well as minimum wage and overtime violations predicated on an improper tip pool or share.

Moreover, over the next few years, the benefit to employers from tipping will be greatly reduced as more municipalities and states raise their minimum wage rates while reducing the tip credit. For example, as of December 31, 2015, the minimum wage rate in New York is set to rise to $9.00 an hour. New York’s Acting Commissioner of Labor has accepted the recommendation of a Wage Board to reduce the tip credit from $4.00 an hour to $1.50 an hour as of December 31, 2015. This will effectively increase the minimum wage for tipped workers in New York from $5 to $7.50 an hour at the end of this year. Other increases in minimum wage rates are occurring nationwide—San Francisco voted last November to increase its minimum wage to $15 per hour by 2018, Chicago will bring the minimum wage to $13 by 2019, and many other cities and states have follow suit.

The success of Meyer’s “Hospitality Included” approach remains to be seen. For now, it seems that adopting a no-tipping policy has several strategic benefits that will help the hospitality industry combat class and collective actions stemming from tipping violations and a rapidly increasing minimum wage.

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 early 2015.

Among many other topics, the treatise’s authors examine how employers in multiple industries are targeted for wage-hour lawsuits and provide 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.

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 fifth 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:

  • The United States Supreme Court’s decision in Integrity Staffing Solutions v. Busk in which the Court held that time spent by employees going through anti-theft metal detectors at the end of their shifts was not compensable because it was not integral or indispensable to the employees’ principal activities.
  • The United States Supreme Court’s decision to hear Tyson Foods v. Bouaphakeo, a case that will provide the Supreme Court with the opportunity to clarify the extent to which Wal-Mart Stores, Inc. v. Dukes applies to FLSA collective actions.
  • Federal District Court decisions refusing to follow the California Supreme Court’s decision in Iskanian and ruling that the FAA preempts California’s rule against the waiver of PAGA claims.
  • The Ninth Circuit joining the First, Second and Third Circuits in requiring allegations that a plaintiff worked more than 40 hours in a given work week without being compensated for those additional hours to avoid a motion to dismiss, and the Eighth Circuit requiring proof of such conduct to avoid summary judgment.
  • A number of Federal District Court cases specifying how notice of conditional certification must be provided and what must be contained in the notice, including notifying potential class members that they could be liable for costs.

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.

We are thrilled to announce that thanks to the feedback of clients and friends like our loyal blog readers, Seyfarth’s Labor & Employment group has just been recognized for excellence with one of the most prestigious awards in the legal profession. Earlier this week, the team was named Labor & Employment Team of the Year at the 10th annual Chambers USA Awards for Excellence ceremony in New York. The Chambers Awards honor the achievements of leading law firms and lawyers across the country for pre-eminence in key practice areas and notable achievements during the past 12 months, including outstanding work, impressive strategic growth, and excellence in client service. Chambers described Seyfarth as “the market-leading labor & employment practice in the country with an expertise and track-record of successful, strategically effective defenses to complex, high-stakes  wage & hour litigation, employment discrimination class actions, and bet-the-company EEOC lawsuits.”

What means the most to us are the quotes from our clients, which included: “Aside from being legal experts in their fields, the firm’s attorneys are incredibly responsive and provide pragmatic, value-add legal advice,” and “I’ve had several occasions when they’ve given advice contrary to that of other firms—in every instance the lawyers at Seyfarth have been correct.”

At the end of the day, what motivates each and every L&E lawyer at Seyfarth is the goal of providing our clients with the level of service they deserve. It’s the driver of everything we do, and that’s why this award means so much to us.

THANK YOU to all our loyal blog readers for coming along on this ride with us. We appreciate it more than we can say.

Co-authored by Steve Shardonofsky and Howard M. Wexler

In 2011, the U.S. Supreme Court held in Kasten v. Saint-Gobain Performance Plastics Corp., that oral complaints of a violation of the Fair Labor Standards Act can constitute protected activity under the FLSA’s anti-retaliation provision.  But the question whether an oral complaint made to a private employer rather than to the government qualifies as protected activity was not before the Court in Kasten, and the case did not resolve a split among the Courts of Appeals on this issue.

In Greathouse v. JHS Security Inc. et al., the Second Circuit Court of Appeals joined the First, Fourth, Fifth, Seventh, Eighth, Ninth, Tenth, and Eleventh Circuits and held that Section 215(a)(3) of the FLSA does not require an employee to complain to a government agency as a predicate for an FLSA retaliation claim.  The Court, however, took pains to emphasize that not every “oral complaint” will be enough to state an FLSA retaliation claim as the complaint must be “sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute [FLSA] and a call for their protection.”

Second Circuit’s Decision

The Greathouse plaintiff complained to his boss that he had not been paid in several months. The plaintiff alleged that his employer responded by saying that he would pay the plaintiff when he felt like it and by then pointing a gun at the plaintiff.  Understanding this exchange as ending his employment, the plaintiff two weeks later filed a lawsuit for unpaid wages as well as retaliation.  He alleged that his employer constructively discharged him in retaliation for his complaint about unpaid wages, thereby violating the FLSA and New York Labor Law’s anti-retaliation provisions.  The district court entered a default judgment in favor of the plaintiff on his claim for unpaid wages, but rejected his retaliation claim because the Second Circuit previously held that informal oral complaints to supervisors did not amount to “filing a complaint” under the FLSA and therefore could not support a retaliation claim.

The Second Circuit, “[b]oth impelled and guided by Kasten,” examined the legislative history of the FLSA and reversed its prior stance, holding that the “FLSA’s remedial goals counsel in favor of construing the phrase ‘filed any complaint’ in section 215(a)(3) broadly, to include intra-company complaints to employers.”  But the Second Circuit emphasized that not all oral complaints constitute protect activity.  Whether an oral complaint constitutes protected activity is a “context-dependent inquiry” and not all “grumbles in the hallways about an employer’s payroll practice” will rise to the level of protected activity as “some degree of formality” is required.  This holding is consistent with other Courts of Appeals that have addressed the issue, such as the First Circuit and Ninth Circuit.

Implications for Employers

Employers are well advised to be attentive to their employees’ complaints.  Following Kasten, and now Greathouse, it is even more important for employers to be sensitive to employees’ intra-company oral as well as written complaints regarding wages, overtime, and hours worked.  Managers and supervisors should be trained to recognize complaints under the FLSA and corresponding state laws and to respond to them appropriately.  Whether an internal complaint rises to the level of protected activity is a context-specific inquiry.  While the courts continue to assert that there are no “magic words” that an employee must use to assert a complaint and that generalized statements or complaints regarding pay practices may not rise to the level of protected activity under the FLSA (or even under the National Labor Relations Act), this should not embolden employers to ignore vague complaints.  After all, although you may believe today that a particular complaint is mere “venting” or “blowing off steam,” a court or a jury may later disagree.  Of course, following an employee’s complaint, employers need to ensure that any adverse action is based on legitimate, non-retaliatory reasons and not in response to the complaint.

Authored by Alex Passantino

On Wednesday, Secretary of Labor Thomas E. Perez told a House committee that he hoped the Department’s proposed revisions to the white-collar overtime regulations would be published this Spring.

During a hearing of the House Education and Workforce Committee in which the topic was the President’s FY2016 budget request for the Department of Labor, Secretary Perez explained that the Department was “working overtime” on the proposal.  He provided no further specifics on the proposed rule’s timing, other than a hope that the proposal would be completed in the coming months.

By Seyfarth Shaw LLP

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.

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.

“Recently, we have seen an eruption of wage and hour appellate decisions bound to have a great 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 trial decisions have touched on class certification, the National Labor Relations Act and employee arbitration agreements in wage and hour lawsuits, among others. This handbook will delve into these new developments and offer practiced 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 latest update, 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:

  • The continuing impact of Comcast Corporation. v. Behrend on certification of state law wage and hour cases under Rule 23 of the Federal Rules of Civil Procedure.
  • Recent California appellate decisions in the class action context examining: the extent to which merits issues can or should be considered in the class action context; the use of sampling methodologies; and the proper standard to be applied in exempt status cases at class certification.  It should be noted that, after this Release went to press, the California Supreme Court addressed these issues and more in detail in Duran v. U.S. Bank National Association.  This is a very important wage and hour decision and will be addressed in detail in the next Release.
  • The continuing trend of federal and state cases refusing to follow the NLRB’s decision in D.R. Horton which held that requiring employees to waive their right to litigate employment claims in class actions violated the National Labor Relations Act.
  • The Sixth Circuit’s decision on whether arbitrability is an issue for the court or the arbitrator to decide when the arbitration agreement is silent on the question.
  • California appellate court decisions analyzing the circumstances in which employee arbitration agreements are unconscionable under California law.  It should be noted that, once again after this Release went to press, the California Supreme Court issued another important decision, this time addressing unconscionability in the context of employee arbitration agreements and refusing to follow D.R. Horton.  This important decision, Iskanian v. CLS Transportation Los Angeles, LLC, will also be addressed in detail in the next Release.

The 2014 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.

Many of our blog’s authors are from Chicago, where it is said we “vote early and vote often.” You may not be able to vote early, and we don’t (necessarily) advocate that you vote often (nudge, nudge; wink, wink). But through Friday, August 8, you still can vote in the ABA’s annual competition for the 100 best legal blogs by clicking here. When prompted on your ballot, the blog’s address is http://www.wagehourlitigation.com. Simply provide a short explanation of why you like our blog and the value it provides.  For more information on the ABA’s blog vote, click here.

The American Bar Association is holding its annual competition for the 100 best legal blogs. Through this competition, the ABA is seeking to identify legal blogs that people in the legal profession should know about.

We would appreciate your support in helping Seyfarth Shaw’s Wage & Hour Litigation Blog recognized more widely.

Wage & Hour Litigation Blog is a resource for employers to stay current on developments in wage and hour law, including recent court decisions, legislative updates, and Department of Labor compliance, rule-making and enforcement activities.

The deadline to nominate the blog is Friday, August 8, 2014.

Click the link to vote by that date. The blog’s address is http://www.wagehourlitigation.com/. Simply provide a short explanation of why you like our blog, and the value it provides.

Hurry over to the polls, and cast your vote!