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I often settle FLSA actions, as do many other lawyers, defense and plaintiff. It makes sense for both sides, given the costs and uncertainties of litigation and the protracted time it takes for a case to weave its way through the courts. There is now a growing controversy as to the degree that such settlements need to be reviewed by the courts. This dilemma has now found its way to the Second Circuit Court of Appeals in a case that may produce a watershed result. The case is entitled Yu v. Hasaki Restaurant Inc. et al., and was argued before the Court of Appeals for the Second Circuit.

A sushi chef who sued his employer and the employer wanted to settle the lawsuit for $20,000. The district court Judge (Jesse Furman) maintained that the statute required him to review the settlement for appropriateness. The matter has now been appealed to the appellate court where oral argument (and some tough questioning by the appellate panel) took place.

The plaintiff’s lawyer argued that Rule 68 of the Federal Rules of Civil Procedure explicitly provided that any agreement reached under that Rule had to be entered as a judgment. One of the appellate judges seemed to disagree, stating that this Rule was not intended to be used in that manner. The Judge observed “really, what is 68(a) about? … It’s about getting people to accept settlements in torts.” The lawyer responded that “it’s meant to create a settlement where there are disputes about the facts and what’s owed.” The lawyer noted that these kinds of disputes often exist in wage-and-hour cases.

The lawyer for the advocacy group Public Citizen asserted that the district court was right. She stated that the Judge Furman was correct in looking towards the Second Circuit’s recent holding in Cheeks v. Freeport Pancake House for guidance. That case closed the door on settling and dismissing FLSA cases under FRCP 41. The plaintiff’s lawyer countered by stating that there is no similar requirement in Rule 68, as there is in Rule 41, i.e. making sure that no other statute would preclude the proposed settlement.

Judge Debra Ann Livingston’s inquiries allowed the plaintiff’s lawyer to go into a speech about the long amount of time it takes for settlements to be approved by district courts. That Judge was also dubious of the applicability of the Cheeks holding. She observed that Rule 68 settlements were matters of pubic record, while Rule 41 settlements could be (and were) negotiated in a private setting.

The Takeaway

Settlements are such a vital part of the FLSA-litigation process that any obstacle that gets placed in the way of the facilitation of such settlements is bad for both plaintiff and the defendant…

businessman with boxing gloves ready to fightI have always approached litigation as seeking to maintain a cordial, civil relationship with my adversary, especially if it is (as happens a lot) my goal to settle the case early on.  There are times, however, I love when it gets nasty.  Especially when I am not involved.  In a recent FLSA class case, a federal magistrate judge was angry at both attorneys.  The court actually granted a motion for sanctions against the employer but observing that both sets of lawyers persistently ignored the court’s warnings to act like professionals and both had rendered the normal conduct of discovery almost “impossible.” The case is entitled Piccolo v. Top Shelf Productions et al., and was filed in federal court in the Eastern District of New York.

Magistrate Judge Gary R. Brown said that Joseph M. Labuda and Saul D. Zabell were constantly unprofessional and the attorneys were unable “to act with a modicum of courtesy toward each other.”  The Judge stated that “both [attorneys] have handled this matter in a needlessly contentious fashion.  Such tactics will no longer be tolerated.”

Mr. Piccolo filed suit, claiming he was not paid proper overtime, amongst other violations.  He sought to represent a class of all other nonexempt employees.  The case began discovery in July 2017 and, as the Judge wryly put it, it went “off the rails.”  The judge would not recite the list of “seeming[ly] endless complaints and accusations, and what can only be characterized as a cavalcade of name-calling by counsel.”  There were eight time he had to tell them to be civil to each other. But, they did not stop.

For example, the latest tiff involved a deposition and the antics that went on there.  The Judge ordered that the deposition be allowed to continue but he did not trust the lawyers enough that they would act civilly.  He therefore ordered that it would be held in the courtroom.  The Judge told both lawyers that “any improper conduct will result in significant sanctions.”  The Judge also did not spare the lawyer who was not sanctioned.  He scolded him for suggesting that the court was biased against him.  The Judge said that was “transparently manipulative.”

The Takeaway

Can’t we just get along?

At long last, new USDOL Opinion Letters are bursting forward.  Like Spring.  The agency just issued three new letters on a variety of topics, including one of my favorites, travel time.  The other letters address issues of compensable break time as well as the kinds of lump-sum payments that could be garnished for child support.

writing letter
Copyright: perhapzzz / 123RF Stock Photo

The new Labor Secretary stated early on that the agency was going back to issuing these letters.  I applauded that decision at the time.  These letters reflect the agency’s interpretations of various issues under the FLSA, some of them arcane and off-beat, issues that existing case law does not address.  Under President Obama, the agency ceased issuing opinion letters, but favored so-called Interpretations, which were more global in scope.

I want to focus on the travel time letter, FLSA 2018-18.  The inquiry of the submitter was whether the employer had to pay crane technicians, who worked irregular hours, for their travel time under three scenarios: 1) an employee who travels from his home state on Sunday for a training class commencing at 8AM on Monday; 2) an hourly technician who travels from his home to his work location and then to a job site; and, 3) a worker who travels from job site to job site many times during a single day.

The USDOL response was that the first scenario mandated payment for the employee if his hours of travel cut across their normal workday (which is consistent with the FLSA regulations on this point).   The Letter provided three methods to reasonably determine normal work hours for employees with irregular schedules to determine whether the time was compensable.

The first method involves a review of the worker’s hours during the most recent month of employment so that a final determination could be made on the compensability of the travel time.  The second provides that if typical work hours cannot be determined, the employer may choose the average start and end times for the workday.  Lastly, where there are truly no normal work hours, the employer and employees could negotiate a reasonable amount of time in which travel outside the home communities was compensable.

The Takeaway

I know that plaintiff side lawyers and worker advocates may feel that such letters amount to “get out of jail free” cards employers, who want to avoid liability.  The opposite is the case.  The letters provide guidance so that employers may know how to comply with the law in various situations.   That the following of the guidance in a letter gives the employer the protection of the safe harbor provisions in wage hour law is a justly deserved by product.

Keep writing, Mr. Wage-Hour Administrator…

U.S. Secretary of Labor Alex Acosta
U.S. Secretary of Labor Alexander Acosta (By US Department of Labor (L-17-05-01-C-AlexanderAcosta-023-E) [Public domain], via Wikimedia Commons)
I have often blogged about the usefulness of USDOL (or any DOL) Opinion Letters and I have lamented that this procedure was stopped under President Obama.  I hailed that the new Secretary of Labor was going back to it.  Well, we have hit the bonanza and the year has just started!  Opinion Letters provide a mechanism for businesses (or individuals) to ask that the DOL provide formal guidance on specific factual and/or compliance issues under the FLSA.

The agency has now re-issued more than a dozen advisory opinion letters that had been published towards the end of the Bush administration but were later rescinded.  The reinstated letters address inclusion of bonus issues, employee exemption issues, especially the administrative exemption and whether “on-call” hours constitute hours worked in certain situations.

For example, in one letter the DOL ruled that project supervisors working in a residential home building industry qualified for an administrative exemption.  The Opinion Letter noted that the majority of the project supervisors’ job duties were administrative in nature and required the use of independent judgment.  Those duties included acting as the homebuilding company’s representative at the worksite in dealings with subcontractors, suppliers, customers and government inspectors and modifying the construction process as needed.

The DOL also emphasized the independent judgment factor when it found (in another letter) that client service managers at an insurance company qualified for the administrative exemption.  These employees’ primary duty was to serve as insurance advisers and consultants to the insurer’s clients.  As such, they utilized independent judgment when giving advice and did not need to receive prior approval for their advice.

There were also letters that addressed under what conditions bonuses should be included in the regular hourly rate of employees, which increases the amount of overtime the employees would be due.  These letters are vital because these issues come up with regularity.

The Takeaway

These letters might address technical issues but they also touch on substantive ones as well. I respect and value these letters because they still provide answers to important questions and serve as definitive guidance in assisting employers in complying with the FLSA.

A thorny enough task by itself…