Header graphic for print

Wage & Hour – Development & Highlights

To Highlight Recent and Noteworthy Developments In Cases And Regulations on Wage and Hour Laws That Affect Large and Small Businesses

When Is It Time For A Wage Hour Audit? Answer—Now!

Posted in Uncategorized

Better safe than sorry is the old adage.  Nowhere is this maxim more applicable than for an employer’s compensation practices, especially on issues of classification, working time, and record keeping protocols and obligations.

In the last several years, there has been an escalation of wage hour lawsuits, single and class action.  These cases can be grouped into certain categories that correspond almost exactly to particular payroll practices and corporate/financial decisions that impact the FLSA and state law.  Some of these flashpoint areas are:

  • Overtime claims arising from classification of employees as exempt or non-exempt;
  •  Independent contractor/consultant classification;
  •  Preliminary and postliminary work claims (e.g. donning and doffing, travel time);
  •   Automatic deductions for lunch (the curse of the smart clock)
  •  On-call cases; and
  • The Blackberry/E-Mail Claims (a “new” type of preliminary and postliminary work).

There is no way to tell when a claim will arise.  Usually, they come from workers fired for eminently good reasons but who complain to the DOL or file suit and, bad luck, have, not been properly paid.  If the “policy” at issue affects a group or, class, of workers, the snow ball rolls downhill.

The best, really, the only protection employers have is to self-audit all of their compensation practices and if there are issues, fix them, but do so in ever so subtle a manner as to “not arouse suspicion.”  The focus should be not only on having/drafting the legally correct (and employer friendly) policies but to exercise oversight to ensure they are implemented and maintained in a consistent manner.

The best defense is a good offense.  Another adage but, here, the best defense is proactive planning.  Such audits do not cost a great deal and the report that I submit to the employer when I do one highlights areas of concern and suggested remedial measures.  Such an audit also provides the ability to mount a “good faith” argument/defense.

An ounce of prevention….

Defeating Conditional Certification Motions in FLSA Collective Actions

Posted in Class Actions

How can an employer-defendant defeat a FLSA class action?

That is the timeless question a defendant’s counsel asks himself when faced with the specter of a FLSA collective action. To this end, I recently read a post in Employment Law 360 where practitioners opined on these methods.

Dig Into the Merits Early 

In days gone by, a defendant would focus on staving off or defeating the motion for conditional certification and would perhaps relegate merits based analysis to the second tier of the case. Now, with the blurring lines between merit based and procedural discovery, if a prompt and accurate assessment of the facts shows that some/many/all of the claims rest on faulty theories, perhaps a motion on the pleadings or early summary judgment motion is doable.

Seek Out Individual Differences 

I always pray at the altar of “individualization” because such a defense dooms the class action. The employer must be arguing that individual differences between putative class members makes the entire premise of a “class” untenable. If the court concludes it has to conduct a mini-trial for each opt-in or putative plaintiff, that totally undermines the validity of the proposed class action.

Stay on Top of Evolving Case Law

The pendulum is swinging towards defendants on a number of crucial issues pertaining to certification. Lawyers should always be citing the most current developing law, especially cases clarifying or interpreting major Supreme Court cases. This includes staying abreast of pending cases if they could be useful, as well as scanning similar lawsuits in the particular industry that may also provide unique guidance (and tactics).

Don’t Underestimate Seemingly Minor Defenses

In the state law, Rule 23 action that invariably accompanies the FLSA collective suit, employers often don’t put a lot of effort into disputing, for example, the adequacy of the class representative or numerosity of the proposed class. Don’t take those factors for granted. You don’t know what when these “side issues” turn into winning arguments.

Make Use of Expert Witnesses

Think about using experts, even at this early stage of the litigation. One size does not fit all. Experts do not have to be used “just” for the merits, but may lend a hand in fighting the class certification bid.

The Lesson

Start perhaps by focusing on the individualization issue/defense, but all of these tactics can and should be used. They work!!!

Paralegals Sue For Overtime In NJ Federal Court: I Thought This Was Settled?

Posted in Overtime Issues

I have blogged numerous times about lawyers suing law firms, claiming that they were really clerks, not lawyers and therefore entitled to overtime. This situation presents a different scenario. An employee has sued the law firm of Pasricha & Patel LLC in a FLSA collective action, claiming that the law firm misclassified paralegals as exempt employees and thus did not pay overtime. The case is entitled Barros v. Pasricha & Patel LLC et al. and was filed in federal court in the District of New Jersey.

The paralegal Jason Barros, is suing the firm and the individual co-owners (who can be found liable under the FLSA for wages). The Complaint alleges that the firm paid the paralegals on a salaried basis but the nature of their duties nevertheless rendered them non-exempt. As in all of these suits, the plaintiff alleges willfulness. The Complaint alleges that the “defendants’ method of paying plaintiff and others similarly situated in violation of the FLSA was willful and was not based on a reasonable belief that its conduct complied with the FLSA. In this regard, in addition to defendants being attorneys, this firm has itself represented employees who have alleged that their employer unlawfully failed to pay them overtime pay in violation of the FLSA.”

“We think that they’re entitled to overtime pursuant to Department of Labor regulations,” stated Mitchell Schley, the attorney for the named plaintiff Barros. I think he might be right, at least superficially. If these folks are doing traditional paralegal work, their status has been settled since the 2004 FLSA revisions. Surmounting the clear language of the regulations will be a challenge.

One possible defense is that they qualify for the executive or, more possibly, the administrative exemption. Perhaps another is that the overtime was built into the “salary.” Getting to that, however, would mean that the firm lost on the exemption issue.

Or—settle this case and change the system. Fast.

Independent Contractor Status

Posted in Uncategorized

Since the Fair Labor Standards Act (“FLSA”) only benefits employees, the status of a business’s workers as either “employees” or “independent contractors” is extremely significant in FLSA actions.  By misclassifying an “employee” as an “independent contractor,” businesses, small and large, may be surprised when they are subject to liability for overtime and minimum wage violations.  Certainly, the adult entertainment industry is in a state of shock after the Eastern District of Pennsylvania’s decision held that exotic dancers are “employees” of an adult nightclub protected under the FLSA.[1]

The Plaintiffs were exotic dancers who filed a collective action against The Penthouse Club in Philadelphia alleging they were employees benefitted under the FLSA.  As discussed in previous blogs, the court assesses the “totality of the circumstances” under the economic realities test to determine whether a worker is an independent contractor or employee under the statute. Since the dancers were not compensated by the nightclub, were responsible for marketing themselves through word-of-mouth, and set their own schedules, surely The Penthouse Club thought they were safe from any employment liability.  Shockingly, the court found the dancers were employees after assessing the “control” the nightclub has with the premises.  Specifically, the Court noted with importance that the nightclub provided rules and guidelines regarding the facility’s maintenance and the dancers’ appearances.

While the federal court’s decision directly affects the nightclub industry, all employers should take note of this decision due to its effect on future FLSA cases. Even after taking appropriate steps to prevent exposure from liability, businesses may be vulnerable due to speculative results arising from the court’s balancing test.  For example, as noted by the Eastern District of Pennsylvania in its assessment: “[m]any other courts have previously found that little specialized skill is required to be a nude dancer.”[2]

*This post was written by our Summer Associate Julius Suarez.

 


[1]              The case referred to in the blog above is Verma v. 3001 Castor, Inc., No. 13-3034, 2014 WL 2957453 (E.D. Pa. June 30, 2014).

[2]              Verma, 2014 WL 2957453, at *9.

Why “Working Time” FLSA Lawsuit Settlement Irritates Me

Posted in Working Time

I have blogged many times about the use of automatic lunch deduction time clocks and the inherent dangers that reside in such a procedure. Well, as if more proof was needed on the dangers of this protocol, a major medical center has agreed to pay $1,500,000 to settle a case under the Fair Labor Standards Act in which a class of nurses claimed that this timekeeping system docked them for meals they never took and for time that they worked through lunch. The case is entitled Manning v. Boston Medical Center Corporation and was filed in federal court in the District of Massachusetts.

The plaintiff had sued five years ago, claiming that the automatic timekeeping system unfairly and improperly deducted time for meals and breaks from employee hours worked, but there were numerous times that the employee(s) worked through their breaks. Nevertheless, the supervisor would yet deduct the “lunch time” from the total hours worked. A lot of time and effort and attorney fees would have gone to calculating (or determining) how much each individual should “truly” receive. Thus, the parties indicated to the Court that the “proposed settlement agreement will provide a fair and reasonable recovery to BMC’s patient care employees who had potential claims challenging BMC’s pay practices under the FLSA.” The case has meandered up and down the federal system for five years.

The settlement fund is given the interesting moniker of a “maximum gross settlement amount.” It will handle administration/mediation costs and employer payroll taxes. The lawyers will receive 33% of the settlement. The Company got the typical non-admissions language as a part of the settlement. The Medical Center defended by asserting that the plaintiffs could not show that the alleged lunchtime work was performed with the Center’s knowledge. To date, there are four plaintiffs, over 71 valid opt-in plaintiffs and more than 5,000 putative class members. The joint motion contended that “if the proposed agreement is not approved by the court, the parties face an extended and costly battle.”

This could have been prevented. Future suits like this can be prevented through the simple use of a fail-safe system, like overtime approval sheets or time sheets that are certified to by the employees. When being proactive is this easy to do and class actions still seep through, it really bothers me

Really…

Recent FLSA Exemption Changes Under Attack (Already?)

Posted in Exemptions

OMG!!

I knew this was coming down the pike. It isn’t enough that the exemption tests remain (even after the 2004 amendments to the FLSA regulations) an oftentimes gray morass that leaves employers and their counsel constantly guessing about who is and is not exempt. Now, Senate Democrats have introduced a bill to amend the FLSA to make even more salaried workers overtime eligible.

Right now, 12% of salaried employees are overtime eligible, that is, they do not fall into one of the three “white collar exemptions.” Under the new tests, this number would geometrically rise to 47%, under the proposed Restoring Overtime Pay for Working Americans Act. Senator Harkin, who is leading the push for the bill, stated that “every worker deserves a fair day’s pay for a hard day’s work, but because our overtime laws are out-of-date, Americans around the country who work long hours away from their families are denied a paycheck that reflects that work. That hurts their families and our economy.”

As currently constituted, in order to meet the exemptions, an individual must receive a salary of $455 per week, up from the admittedly low $250 per week that existed prior to the 2004 revisions. Under the proposal, this salary threshold would rise (over some years) to $1,090 per week and then be tied to inflation. “Highly compensated” employees, who now must earn at least $100,000 annually to be exempt, would need to earn at least $125,000 per year.

The legislation would also focus on the (already thorny) issue of “primary duty,” which means the percentage of time that workers spend performing exempt work. Now, a worker (under ordinary circumstances) must spend 51% of their time doing such work and can still be considered exempt if the percentage falls below 51% of the facts show that they retain management as their main job duty. Under this legislation, the person would have to spend the “majority” of their time performing exempt work (such as is currently the law in California).

This, to me, is an unwarranted “attack” on the relatively new regulations only in existence for about a decade. If passed, the law will make it more difficult for businesses to operate and may likely impel employers to keep more workers as straight hourly, rather than risk a misclassification challenge. In certain industries, like the retail and restaurant industries, this may create havoc. If anything, the regulations, especially the administrative regulation, should be revised to make them more understandable and easier to apply in practice.

Quinn Discovery Dispute A Defeat For the Plaintiff

Posted in Exemptions

I had recently blogged about the discovery dispute in the FLSA class action case involving Quinn Emanuel Urquhart & Sullivan LLP and how I believed the plaintiffs were overreaching and should not get the information. They wanted data concerning every attorney applicant for a document review assignment that contract attorney-plaintiffs were working on. The case is William Henig v. Quinn Emanuel Urquhart & Sullivan LLP et al., docket number 1:13-cv-01432, and was filed in the Southern District of New York.

The District Court Judge, Ronnie Abrams, had permitted plaintiff William Henig access to more information concerning the person who had interviewed him for his temporary position, but denied him from securing information about other applicants. The law firm then sent a letter to the Court, advising that it had turned over every document relating to the practice of law by Mr. Henig in the month and half he was there and urged that more data, of which there were thousands of pages, was irrelevant.

The Magistrate then determined that the information was relevant and ordered its production. Then, in another loopy turn of events in this meandering saga, Judge Abrams has recently concluded that “the qualifications of other individuals working on the project — and the qualifications of individuals who applied but were not selected to work on the project — have little, if any, probative value, and the burden of producing this information ‘outweighs its likely benefit.’”

This is a solid defeat for the plaintiff(s) and one that I believe was anticipated and, on the law/merits, eminently correct. The law firm had argued that the magistrate judge had exceeded the parameters of an earlier Court Order and they were vindicated in that position. Allowing this production of thousands of documents would have led to infinitely more questions and disputes and would have undeniably been used as a leveraging tool in any settlement discussions or demands that the plaintiffs would have made or be making.

This bodes well for the defendants. I believe all of these cases should be dismissed, because the individuals are in fact exercising the kind of knowledge and discretion that they went to law school for in the first place, even though it may not be in the context they idealized when they wanted to become lawyers.

Must Know Facts for Hiring Teenagers this Summer

Posted in Uncategorized

Beach. Amusement. Sunshine. School is almost out and eager teenagers will soon be knocking on your doors seeking summer employment. If you plan on hiring teenagers this, or any summer, here are a few facts to keep in mind.

N.J.S.A, section 34:2-21.3  prohibits New Jersey minors under 18 years old from working more than 6 consecutive days in a workweek.  These minors are also prohibited from working more than 8 hours in a day and more than 40 hours in any given week. A written permission from a parent or guardian is required when hiring a minor of age 14 or 15 to work beyond 7 pm on a summer (period beginning on the last day of the school year and ending on Labor Day) day. With permission from a parent or guardian, a typical workday in the summer for a 14 or 15 year old minor may extend until 9 pm. Minors under 16 may not be legally employed to work in factories according to section 34:2-21.2.

Additionally, section 34:2-21.4 encompasses hourly restrictions on when an employee who is a minor should receive his or her lunch break. Wage and hour laws prohibit minors under the age of 18 from working more than five consecutive hours without, at least, a thirty-minute break.

Need more info? The New Jersey Department of Labor and Workforce Development is a great place to start. Visit: http://lwd.dol.state.nj.us/labor/wagehour/lawregs/child_labor_law.html to learn more about employing minors today!

*This post was written by our Law Clerk Dionne N. Julius.

Wage and Hour Overtime Calculator Advisor – A Resource for Employers

Posted in Overtime Issues, Working Time

Calculating federal overtime requirements is no easy task.  As such, the Department of Labor’s website provides a phenomenal resource to employers: the Overtime Calculator Advisor!

The Overtime Calculator Advisor provides employers with comprehensive info to understand federal overtime requirements.  We all know that the FLSA requires that covered, nonexempt employees in the be paid at least the federal minimum wage for each hour
worked and receive overtime pay at one and one-half times the employee’s regular rate of pay for all hours worked over 40 in a workweek.  Additionally, overtime pay is due on the regular pay day for the period in which the overtime was worked.  No matter what, the overtime pay requirement may not be waived by agreement.   Furthermore, absent only a narrow exception, the overtime pay requirement cannot be met through the use of compensatory time off.

The Overtime Calculator Advisor is a great resource for employer’s to understand their requirements under the FLSA overtime rules.  It’s a great starting point to ascertain the parameters of who should be receiving overtime, and how to effectuate such payments.

 

Discovery Battle Looms In Attorney Exemption Case for Quinn

Posted in Exemptions

I have posted several times about the rash of attorney FLSA lawsuits where the claim is “I was only doing clerical work” theory. In one of these cases, involving Quinn Emanuel Urquhart & Sullivan, the plaintiff is seeking what the law firm has deemed a “fishing expedition” and needlessly expansive discovery demands. The case is entitled Henig v. Quinn Emanuel Urquhart & Sullivan LLP and is filed in the Southern District of New York.

The law firm asserts that it provided all documents relating to whether the named plaintiff did/did not perform “attorney work.” In this regard, the plaintiff only worked there for six weeks, performing document review work in 2012. The firm claims that the documents prove Henig conducted himself as a lawyer.

Henig is seeking information relating to every applicant for the document review project, as well as the names of the interviewers of all applicants and all the papers concerning the firm’s decision to use the staffing agency named Providus to find contract attorneys. This demand is based on a Magistrate’s Order that the firm contends went well beyond the limitations imposed by a prior Order; in his recent decision, the Magistrate has determined that interrogatories and requests aimed at the “document review project overall” that Henig participated in, with other reviewers, is appropriate. Thus, the plaintiff claims the work histories of these other reviewers are fair game.

The plaintiff’s theory is that the “extremely routine nature” of his duties took him out of the professional exemption and essentially made him a clerk, a paper pusher (although he used a computer, instead of his hand, to push the paper. The firm has contended throughout that his work did fall within the safe harbor of the exemption, but Judge Ronnie Abrams would not dismiss the Complaint, finding factual issues concerning Henig’s actual work still remained.

I think the only documents relevant are those pertaining to whether Henig himself did or did not perform attorney work. It seems to be this might be a plaintiff tactic designed to facilitate or leverage a settlement.