Workforce Bulletin

What employers should know about key developments this week:

• Severance Agreement Overhaul: The No Severance Ultimatums Act, awaiting Governor Kathy Hochul’s signature, would extend a 21-day review period plus a seven-day revocation period to all employees and require severance agreements to explicitly state that the employee has the right to consult counsel. The legislation would take effect immediately upon signature.
• Trapped at Work Act Amendments: On December 19, 2026, New York’s ban on “stay or pay” promissory notes takes effect. The Trapped at Work Act carves out financial bonuses and wage advances and adds new conditions for tuition repayment agreements. New York joins California and Connecticut in banning certain promissory notes.
• Earned Safe and Sick Time Act Update: Amended Earned Safe and Sick Time Act rules, now in effect for New York City employers, require 32 hours of unpaid protected time off immediately upon hire and set new obligations for employers that use electronic systems to track sick leave balances for departing employees.

In this episode of Employment Law This Week^®, Epstein Becker Green attorney Drew C. Ambrose discusses the No Severance Ultimatums Act and what employers should be doing now to prepare their severance agreements ahead of the governor’s signature.

On July 1, 2026, new minimum wage rates will take effect in numerous localities nationwide. Many California employers—especially those in the health care sector—may need to adjust payroll settings, as statutory health care worker wage rates (explained in detail here and here) and many local rates will change at the year’s half-way mark.  Plus, one state and several cities and counties beyond the Golden State will likewise raise their minimum wage. Note that some locations mandate more than one rate, basing wage requirements on employer size, industry, or region. Employers should review these changes, set forth in the chart below, and ensure ongoing compliance.

Alaska employers should be aware that the state adjusts its minimum salary threshold for overtime exemption based on the minimum wage. Accordingly, the salary threshold will increase from $1,040 to $1,120 per week on July 1, 2026.

One more change comes later in the year: Florida’s minimum wage will increase from $14.00 to $15.00 on September 30, 2026.

Third time’s the charm. After two consecutive vetoes by former Governor Glenn Youngkin, Governor Abigail Spanberger signed Senate Bill 215 into law on April 22, 2026,[1] bringing Virginia in line with pay transparency laws already on the books in neighboring Maryland and Washington, D.C.

For employers operating across the region, the clock is ticking: the Act takes effect July 1, 2026, and imposes both pay disclosure requirements and restrictions on when they may consider an individual’s prior compensation when making employment decisions.

As we reported last month, the U.S. Department of Labor (“DOL” or “Department”) kicked off the new year by publishing six Opinion Letters, four of them addressing specific topics related to Fair Labor Standards Act (“FLSA” or “Act”) compliance.  These Opinion Letters provide practical guidance responsive to real-world questions from individuals or organizations.

As the New Year began, new minimum wage rates took effect in numerous states and localities nationwide.

Effective January 1, 2026, 18 states, along with many local jurisdictions, raised their minimum wage requirements, and six states adjusted salary thresholds for exempt executive, administrative, and professional employees. Employers should review these changes and ensure ongoing compliance.

Meet Courtney McFate, a skilled employment litigator with a knack for balancing a wide range of compliance and business objectives.

In this one-on-one interview, Courtney joins fellow Epstein Becker Green attorney George Whipple to discuss her evolution from a rule-following litigator to a trusted business advisor who helps clients navigate complex legal landscapes without compromising their goals.

Courtney shares her experience in guiding businesses through U.S. Department of Labor (DOL) wage and hour audits, emphasizing the importance of preemptive internal audits to mitigate risks and save millions in potential penalties. She also highlights her approach to evidence preservation and strategic planning when facing wage and hour class actions, ensuring her clients are prepared and protected.

Eligible Illinois employees are now entitled to up to 40 hours of paid leave annually to serve on military funeral honors detail thanks to an amendment (the “Amendment”) to Illinois’s Military Leave Act that Governor Pritzker signed on August 1, 2025. The new law benefits qualified employees of Illinois employers with more than 50 employees and took immediate effect to allow paid leave for those qualified to participate in a military funeral honor guard.

The Amendment limits the benefit to those who are qualified to participate in a “Funeral Honors Detail,” an honor guard detail provided for the funeral of any veteran in compliance with federal regulations. A Funeral Honors Detail performs specified services at a veteran’s funeral ceremony, such as folding the United States flag and presenting it to the veteran’s family, or playing “Taps” at a veteran’s funeral.

The Amendment applies to Illinois employers with at least 51 employees, but it is silent as to whether this count includes employees beyond the state’s borders. Covered employers must provide at least eight hours of paid military funeral honors detail leave (“Funeral Honors Detail Leave”) per month, up to 40 hours per calendar year, to qualified employees.

Only two months after Missouri’s statewide paid sick and safe time law became effective, Governor Mike Kehoe signed House Bill 567, which will repeal the earned paid sick time benefit effective August 28, 2025.

As we previously reported, Missouri was one of three states to adopt a sick leave obligation for private employers, adopted through ballot measures during the 2024 election. By commencing leave accrual and usage on May 1, 2025, Missouri was the first of the three states to require private employers to provide paid sick time to all employees within the state. Currently, Missouri employers must provide one hour of paid sick and safe leave (PSSL) for every 30 hours worked.

Employers in many states and localities will see an increase in minimum wages starting July 1, 2025.

Many Changes Coming in California

As it often does, California leads the way with a patchwork of minimum wage increases across localities and industries scheduled for this summer.

Los Angeles Prepares for the Olympics with Proposed Wage Increases

Employers, workers, and advocates have been closely following headlines regarding Los Angeles’s so-called “Olympic Wage” initiative. The legislation in question, Ordinance 188610, requires higher minimum wages, minimum health benefits, and training standards for employees of large hotels and employers servicing the Los Angeles International Airport (“LAX”). This is not the first time these industries have been singled out; however, this proposal specifically contemplates the upcoming 2026 World Cup and 2028 Olympics.

With Memorial Day in the rearview mirror and the month of June upon us, many companies and organizations throughout the country are preparing to kick off the summer by welcoming an incoming cohort of summer interns.  Internship programs are a win-win for both employers and students: they enable employers to identify future talent and provide students valuable work experience and training.  That said, employers choosing to offer such programs should take care to structure them properly to avoid any risk of liability under applicable federal and state wage and hour laws.  Keep reading to learn the key wage-hour compliance issues and best practices for hosting interns this summer.

Do I have to pay my interns?

Most likely, yes—at least unless the internship is one where the intern mainly shadows and observes but performs little to no productive work.  At least under U.S. Department of Labor Wage and Hour Division (WHD) guidance, internships generally are presumed to constitute an employment relationship under the federal Fair Labor Standards Act (“FLSA”)—and, therefore, an employer must pay wages to its interns—unless the internship satisfies the “primary beneficiary test.”

On May 9, 2025, Governor Hochul signed a budget bill into law that includes an amendment (“the Amendment”) to the New York Labor Law (NYLL). This Amendment took immediate effect, applies to pending and future actions, and dramatically changes the relief employees can seek for first-time violations the pay frequency provisions for “manual workers” found in NYLL Section 191.

The Amendment substantially reduces potential damages from 100% liquidated damages to lost interest on delayed payments for first-time violations of the NYLL’s frequency of pay requirements where employers otherwise paid manual workers’ wages on regular pay days, no less frequently than semi-monthly. For future violations, liquidated damages will only be available for a second or subsequent violation if there is a finding and order by the New York State Department of Labor (“NYS DOL”) or court of competent jurisdiction of a prior violation for employees performing the same work.  

On May 1, 2025, the U.S. Department of Labor’s (DOL) Wage and Hour Division (Division) issued Field Assistance Bulletin (FAB) No. 2025-1 (“FAB 2025-1”), announcing that it is currently working to reformulate the test as to how independent contractor status is determined under the Fair Labor Standards Act (“FLSA”).  Although it is unclear what contours the revised rule will eventually take, FAB 2025-1 signals a clear intention to make it easier for businesses to classify workers as independent contractors. 

The rulemaking process will take time.  FAB 2025-1 accordingly provides that, during the interim, the DOL will no longer enforce a 2024 rule established under the Biden administration.  The 2024 rule, which consisted of a non-exhaustive multi-factor test, is largely viewed as placing a difficult hurdle with respect to independent contractor classification.

FAB 2025-1 relaxes the DOL enforcement standard by reverting to the “economic reality” framework outlined in Fact Sheet #13 (July 2008), as informed by Opinion Letter FLSA2019-6. The “economic reality” framework asks whether the worker is an independent contractor in business for themselves, or an employee economically dependent on the business they serve. While this does not involve a single rule or test, significant factors include:

The complex web of federal and state wage and hour laws create potentially devastating risk of exposure for employers.  Years of possible liability for yet unknown claims, liquidated damages, shifting attorneys’ fees, not to mention the risk of class or collective suit, can quickly transform seemingly minor and technical irregularities into expensive complications.  And for companies that partner with other entities to meet their staffing needs, resolving this risk of liability is a critical piece of their business operations.

Quite often, the quick solution for this concern is through a traditional business arrangement: contractual indemnification.  Shifting risk of loss via contract is fairly standard, especially as courts generally enforce the unambiguous terms of the parties’ agreement.  Yet employers should take note of a concerning trend among courts across the country, which have in some cases refused to enforce indemnification agreements in Fair Labor Standards Act (“FLSA”) matters on public policy grounds.

In a surprisingly employer-friendly decision, the California Court of Appeal recently held that voluntary, prospective written meal waivers for shorter shifts, i.e., those that are more than five but no more than six hours in total, are valid and enforceable.  In Bradsbery v. Vicar Operating, Inc., the Court of Appeal held that revocable, prospective meal waivers for shorter shifts are enforceable in the absence of any evidence the waivers are unconscionable or unduly coercive.

Case Background

Plaintiffs, former veterinary assistants and technicians, filed a putative class action in July 2014 against their former employer, Vicar Operating.  Plaintiffs alleged in part that Vicar Operating had violated Labor Code section 512(a) by requiring Plaintiffs and putative class members to work shifts between five and six hours without a meal period and without waiving their right to a meal period by mutual consent.  Plaintiffs argued that as a result, Vicar owed Plaintiffs and the putative class members premiums for missed meal periods.

In a decision with significant implications for employers and employees alike, the New Jersey Supreme Court on March 17, 2025, clarified that commissions constitute wages under the New Jersey Wage Payment Law (“NJWPL”). In Musker v. Suuchi, Inc. et al., the Court reversed the rulings of both the trial court and the Appellate Division, holding that commissions paid for an employee’s labor or services “always constitute a wage under the WPL.”

In drawing its conclusion, the court focused on the NJWPL’s definition of “wages,” which is defined as “direct monetary compensation for labor or services rendered by an employee, where the amount is determined on a time, task, piece, or commission basis.” N.J.S.A. 34:11-4.1(c) (emphasis added).

Wage and hour compliance often presents complex challenges for employers, with unclear regulations and changing enforcement priorities.

Addressing these issues proactively and resolving potential disputes are vital for maintaining compliance and reducing risks.

In this one-on-one interview, Epstein Becker Green (EBG) attorney Paul DeCamp sits down with fellow EBG attorney George Whipple to offer his seasoned perspective on wage and hour matters. Tapping into his experience as the former head of the Wage and Hour Division under President George W. Bush, Paul provides an insider’s view of government enforcement priorities, compliance pitfalls, and the complexities employers face when disputes arise.

Beginning April 9, 2025, Ohio employers will be legally required to give employees access to their paystubs. Citing transparency, accountability, and fairness in the workplace, the Ohio General Assembly unanimously passed the the Paystub Protection Act (PPA),  which requires Ohio employers to issue paystubs, either electronically or via hard copy, to all employees on regular paydays that include the:

• Names of the employee and employer;
• Employee’s address;
• Employee’s total gross wages during the pay period;
• Employee’s total net wages during the pay period;
• Amount and purpose of each addition or deduction to wages; and
• Dates of the pay period.

For hourly employees, the following three additional items are required:

• Total hours worked;
• Hourly rate; and
• Hours worked in excess of 40 hours in one workweek.

While California employers may be generally aware of the nine requirements for wage statements, a careful review of the nuances of each of those requirements is necessary to ensure compliance under Labor Code section 226. But the inquiry does not end there. When, how, and what to do to maintain these records is equally important in maintaining compliance and thereby protecting the company against wage statement penalties.  

Required Contents—the Basics

We previously covered what California employers need to include on wage statements pursuant to Labor Code section 226(a):

1. Gross wages earned;
2. Total hours worked;
3. Certain information for employees paid on a piece-rate basis;
4. All deductions;
5. Net wages earned;
6. Pay period;
7. Employee’s name and either (a) the last four digits of the social security number or (b) employee identification number;
8. Name and address of the legal entity that is the employer; and
9. All applicable hourly rates.

Section 3(m)(2)(B) of the FLSA prohibits employers, including managers or supervisors, from keeping any portion of an employee’s tips.  Accordingly, the law has been clear that a manager or supervisor cannot participate in a general employee tip pool, since tip pools including tips of other employees. 

Although this appears clear at first blush, the blurred lines of restaurant staffing creates ambiguity as to who is exactly a manager or supervisor.  Non-exempt employees often work in a certain supervisory capacity as team or shift leads.  Conversely, it is also common for managers and supervisors in restaurants to perform a certain amount of non-supervisory duties.  So, when are employees with minor supervisory responsibilities treated as managers for tip pooling?  And can managers participate in tip pools when they perform non-supervisory duties?

The Serrano/Ducksworth defense.

If you know what I’m referring to, you don’t need to read any further.  But if you don’t, well, please read on.

A great many employment lawsuits include claims against alleged “joint employers” – for instance, a temporary staffing company and the client to which the employee was assigned, or related corporate entities that share similar names (and, perhaps, shared services, which is another issue).

And in many of those lawsuits, plaintiffs and their counsel have simply lumped the two companies together and have alleged that “defendants” engaged in unlawful conduct, without making any effort to distinguish between the two defendants, much less their alleged conduct.

Once again, we rang in the new year with a great many state and local minimum wage increases.

This year, 23 states—and several counties and cities—will increase their minimum wages and, where applicable, tipped minimum wage. Most of these increases went into effect on January 1, 2025.

Employers with minimum wage (and tipped minimum wage) workers should discuss newly implemented increases with counsel to ensure their compensation practices comply across all relevant jurisdictions.

Following the United States Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana (2022) U.S. 639 and the California Supreme Court’s decision in Adolph v. Uber Technologies, Inc. (2023) 14 Cal. 5^th 1104, when faced with employee arbitration agreements, California trial courts have regularly compelled plaintiffs to arbitrate their individual Private Attorneys General Act (“PAGA”) claims first, while staying their representative, non-individual PAGA claims.

In an attempt to avoid arbitrating the named plaintiffs’ individual PAGA claims – and knowing that the representative, non-individual claims would be dismissed if the employers prevailed in an individual arbitration – more than a few plaintiff’s counsel have tried to circumvent Adolph by asserting that their clients were not bringing individual claims at all, but were only bringing claims on behalf of others. 

In response, employers have argued that, based on the clear statutory language, every PAGA action necessarily includes an individual PAGA action such that those individual claims have to be arbitrated first.

In what many would consider to be an employer-friendly decision, more than a decade ago in Brinker Restaurant Corp. v. Superior Court, the California Supreme Court clarified many of the general requirements for meal and rest periods under California law. But in 2021, the California Supreme Court issued employee-friendly decisions in Donohue v. AMN Services, LLC and Ferra v. Loews Hollywood Hotel, LLC.  Since these latter decisions have seemingly spurred an increased number of class and PAGA actions alleging meal and rest period violations, it makes sense to revisit the requirements. 

California wage-hour law is governed in large part by 18 different wage orders that apply to different industries and occupations.  “The number of wage orders, and their internal variations, reflects the reality that differing aspects of work in differing industries may call for different kinds of regulation,” as the California Supreme Court explained in Mendiola v. CPS Security Solutions, Inc.  Indeed, as the Court explained in Brinker, “[w]hat will suffice [for meal and rest breaks] may vary from industry to industry.”

With that in mind, this tip is not a one-size-fits-all guide but instead discusses California’s meal and rest period requirements generally.

Over the past three decades, California voters have reliably approved proposals to increase the statewide minimum wage. Until now.

In November,  by a slim margin of 50.7% to 49.3%, voters surprised many by rejecting Proposition 32, which would have increased minimum wages for most non-exempt employees in the state.

Under Proposition 32, the hourly minimum wage for non-exempt employees working for employers with 26 or more employees would have immediately increased from $16 to $17 for the remainder of 2024, with an additional increase to $18 per hour on January 1, 2025. Those working for employers with 25 or fewer employees would have seen an increase the hourly minimum wage from $16 to $17 on January 1, 2025.

The rejection of Proposition 32 in a state that has historically supported minimum wage increases could signal a shift in the labor landscape. It may reflect concerns about rising costs and fears that families and businesses are being priced out of the Golden State. And the vote could be a bellwether for the nation as California is well known as a trendsetting state, especially on wage-and-hour issues.

On November 15, 2024, a district judge for the U.S. District Court for the Eastern District of Texas issued a significant, albeit somewhat unsurprising, opinion in Texas v. Department of Labor, vacating the U.S. Department of Labor’s (“DOL”) 2024 Final Overtime Rule (“Final Rule”), which, as we previously reported (here and here), had raised the minimum salary threshold on July 1, 2024, and was set to further increase the minimum salary threshold on January 1, 2025, for the executive, administrative, and professional (“EAP”) exemptions, and the highly compensated employee (“HCE”) exemption.

As a refresher, the Final Rule featured three components: (1) an increase to $844 per week (or $43,888 per year) for the EAP exemptions and to $132,964 for the HCE exemption that took effect on July 1, 2024; (2) a further increase to $1,128 per week (or $58,656 per year) for the EAP exemptions and to $151,164 for the HCE exemption on January 1, 2025; and (3) automatic increases every three years, beginning July 1, 2027.

The DOL previously issued a similar overtime final rule in 2019 that increased the minimum salary threshold from $455 per week to $684 per week. Unlike the 2024 Final Rule, the 2019 rule withstood legal challenge, and was upheld this past September by the U.S. District Court of Appeals for the Fifth Circuit.

On Election Day 2024, voters in six states weighed in on ballot initiatives that addressed several employment law topics. Among these were propositions to change state minimum wages and mandate paid sick leave for workers. The outcomes were mixed.

Alaska

In Alaska, voters passed by a narrow margin Ballot Measure 1, which will increase the state’s minimum wage from the current rate of $11.73 per hour to $13.00 per hour on July 1, 2025. It will subsequently rise to $14.00 per hour on July 1, 2026, and $15.00 per hour on July 1, 2027. Increases thereafter will be calculated based on inflation.

Ballot Measure 1 included other provisions affecting workplaces. Its passage means that many employers will need to comply with new paid sick leave requirements. Starting July 1, 2025, eligible employees will accrue a minimum of one hour of paid sick leave for every 30 hours worked and will be allowed to use at least 40 and up to 56 hours of accrued paid sick leave annually, depending on how many employees work for their employer.

A third portion of Ballot Measure 1, also effective July 1, 2025, prohibits so-called “captive audience” meetings. The new law will prohibit employers from retaliating against employees who refuse to attend company meetings about political or religious topics.

In Guthrie v. Rainbow Fencing Inc., 113 F.4^th 300 (2d Cir. 2024), the Second Circuit weighed in on a brewing dispute among New York district courts as to whether (and how) a plaintiff’s allegations may establish Article III standing to pursue wage notice or wage statement claims under New York’s Wage Theft Prevention Act (“WTPA”) in federal court. 

Basic Requirements of the WTPA

The WTPA requires covered businesses to provide employees with both: (1) a notice, at the time of hiring, outlining their rate of pay, allowances, certain healthcare benefits, among other things; and (2) wage statements, each time wages are paid, describing the calculation of regular and overtime pay, along with other related information regarding pay deductions or allowances.

Even minor compliance errors with these statutory requirements can expose businesses to liability.  Recoverable damages for an individual plaintiff’s wage notice and wage statement claims are capped at a combined total of $10,000; however, when asserted on behalf of a large putative class, WTPA damages can potentially eclipse any claims for alleged underpayments, which will create significant potential exposure for businesses.

With more than 24 million mothers with children under the age of 18 in the U.S. workforce, many of whom breastfeed their children, it is important for employers to understand the break time and pumping space protections afforded to nursing mothers by the Fair Labor Standards Act (FLSA).

Reasonable Break Time to Pump

Under the FLSA, nursing employees are entitled to reasonable break time during the workday to express breast milk for their nursing child for one year following the child’s birth. The employee must be entitled to a break “each time such employee has need to express milk.” The frequency, duration, and timing of the breaks an employee may need will likely vary depending on the employee and child.

Employers are not required to pay non-exempt employees for break time to pump unless otherwise required by applicable law, or if the employees are not completely relieved of their duties while pumping. Under the Department of Labor (DOL) regulations implementing the FLSA, breaks of 20 minutes or less must be paid, and if an employer provides such breaks to its employees generally, nursing employees may use such paid breaks to pump. Additionally, if an employer provides paid breaks to all employees, the employer must pay employees who choose to pump during their paid breaks.

On August 23, the United States Court of Appeals for the Fifth Circuit issued its much-anticipated decision in Restaurant Law Center v. United States Department of Labor.  In one of the very first federal appellate court rulings since the Supreme Court overruled Chevron USA Inc. v. Natural Resources Defense Council, Inc.  this year, the unanimous three-judge panel concluded that the Department of Labor’s 2021 Final Rule regarding tipped employees and the minimum wage, commonly known as the “80/20 Rule” or the “80/20/30 Rule,” is both contrary to the pertinent statutory text and  arbitrary and capricious.  As a result, the court vacated the rule.

Background: Minimum Wage, the Tip Credit, Dual Jobs, and 80/20

The Fair Labor Standards Act (the “FLSA”) allows employers to count a portion of tips received by a “tipped employee” toward satisfying the federal minimum wage obligation.  The statute defines a “tipped employee” as “any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips.”  That portion of the statute has been in place, largely unchanged, since 1966.  Whether an employee counts as a “tipped employee” determines whether the employer may pay a reduced hourly wage of as low as $2.13, so long as the tips suffice to make up the difference to minimum wage.  Employees who are not tipped employees must receive at least the full minimum wage directly from their employer.

In 1967, the Department of Labor issued a regulation positing that workers may have more than one job with an employer, one of which involves tips and one or more of which does not.  The example the Department used was a hotel employee who works some shifts as a server in the hotel restaurant and other shifts as the hotel’s maintenance person.  The so-called “dual jobs” regulation took the position that the employer may pay the lower hourly wage, known as taking the tip credit, for the time spent in the tipped occupation of server, but not for the time spent in the untipped maintenance occupation.

Employers are generally required to pay nonexempt employees overtime compensation of at least one and a half times their regular rate of pay for hours worked over 40 in a workweek. While this is nothing new for employers, determining an employee’s regular rate is often more complex than one might think, and it is often a great cause of confusion for employers.

As we have previously discussed on this blog, the regular rate is a term of art that encompasses all nondiscretionary payments to an employee, and not just hourly wages—subject to certain exceptions. (For a discussion of what must be included in the regular rate, please see our prior post.) If, for instance, an hourly, non-exempt employee receives a productivity bonus, the regular rate for that employee is the hourly rate of pay plus the productivity bonus.

The Department of Labor Fact Sheet #56A explains the basic calculation of the regular rate in the following way:

Total compensation in the workweek (exclusive of statutory exclusions) ÷ Total hours worked in the workweek = Regular rate for the workweek

The Michigan Supreme Court has written the latest, and perhaps last, chapter of an ongoing saga affecting most Michigan employers. In Mothering Justice v. Attorney General, the Michigan Supreme Court fully restored sweeping minimum wage and paid sick leave laws, bringing finality to a legal controversy that has been churning since the laws were first proposed in 2018. Pursuant to that decision, the laws will take full effect in their original form, about six months from now, on February 21, 2025.

How We Got Here

In 2018, labor advocacy groups presented the Michigan legislature with two voter initiatives related to minimum wage (the Improved Workforce Opportunity Wage Act (IWOWA)) and paid sick leave (the Earned Sick Time Act (ESTA)) through the state’s citizen initiative process. Michigan’s constitution allows voter initiatives to propose legislation, and the legislature may take one of these three actions: (1) adopt “without change or amendment”; (2) reject and place the proposed legislation on the ballot; or (3) reject and propose an amendment, placing both on the ballot. As we previously explained, the Legislature quickly enacted amended versions of the IWOWA (2018 PA 368) and the ESTA, which was renamed the Paid Medical Leave Act (PMLA) (2018 PA 369), with significant changes. As we detailed here, the amended versions of these laws were less burdensome to employers.

The legislature’s actions led the initiatives’ advocates to file a legal action challenging the lawmakers’ authority to modify a voter initiative so quickly and dramatically through a process labeled “adopt and amend.”  That lawsuit has wended its way through Michigan’s courts, with the final outcome decided on July 31, 2024, echoing that of the initial holding issued in 2022: the Michigan legislature’s adoption-and-amendment of the two initiatives violated the State constitution’s provision on voter initiatives. Hence, those amendments are void as unconstitutional and the laws as originally conceived should take effect.

On August 1, 2024, in Turrieta v. Lyft et al., the California Supreme Court held that a plaintiff in a Private Attorneys General Act (“PAGA”) action does not have a right to intervene -- or to object to or vacate a judgment -- in a separate PAGA action involving overlapping claims.

The Court’s conclusion resolves an issue that is not uncommon in PAGA litigation where a resolution is reached in one of several separate PAGA lawsuits filed against the same employer. And it will make it easier for parties to resolve PAGA actions without fear that settlements will be toppled by other employees or their lawyers. 

In an increasingly cashless society, many employers are considering moving to payroll debit cards to provide workers with greater flexibility and convenience. However, employers considering offering payroll debit cards should be aware of a number of potential pitfalls associated with the technology, ensuring that their payroll debit card plan is compliant with relevant state laws.

Why Use a Payroll Debit Card?

There a number of benefits associated with payroll debit cards both for employers and employees. Employers can benefit from payroll debit cards by avoiding the cost of printing and mailing paychecks for all participating employees. Payroll debit cards are helpful for employees who do not have bank accounts and wish to avoid check cashing fees or other fees associated with maintaining a bank account. Additionally, payroll debit cards may provide a nimbler mechanism for employers who desire to offer a more flexible pay period option for employees, such as daily or instant pay.

On July 25, 2024, the California Supreme Court issued its long-awaited ruling in Castellanos et al., v. State of California and Protect App-Based Drivers and Services, et al., upholding the 2020 voter initiative known as Proposition 22 the allows certain gig economy companies to classify drivers as independent contractors.

In 2019, California Assembly Bill 5, also known as AB5, expanded the landmark California Supreme Court decision in Dynamex Operations West, Inc. v. Superior Court, and made the "ABC" test law. 

Much has been made about the recent, hurried legislation to amend the Private Attorneys General Act (“PAGA”) in order to take the Fair Pay and Employer Accountability Act (“FPEAA”) off the California ballot this November.  

If passed by California voters, the FPEAA would have repealed PAGA and replaced it with a new statute and a new process that were more employer-friendly -- and more employee friendly. 

(The idea of a ballot initiative to repeal or create laws may sound very unusual to anyone outside of California.  But California permits this kind of mob rule, for better or worse, so long as enough signatures are gathered and verified to qualify to be placed on the ballot.)

For all of the celebration about how these PAGA amendments will benefit employers, the PAGA amendments remind me of nothing so much as New Coke. 

You don’t know about New Coke, do you? 

You see, back in 1985, Coca-Cola announced that it was changing the longtime formula for its soda and replacing it with a new formula that everyone would love even more. There was much excitement about it.  (Keep in mind that this was before the internet, smartphones, texting, streaming, etc.)  The launch of the new version of the soda was covered in the mainstream media, and people just couldn’t wait. They actually lined up outside stores to be the first to get their hands on it.

And then New Coke was launched.

As we previously reported, the U.S. Department of Labor (DOL) issued a new final rule increasing the minimum salary amounts for the executive, administrative, and professional (EAP) and highly compensated employee exemptions. Shortly after the DOL announced its final rule, three lawsuits were filed in federal district courts in Texas challenging the DOL’s authority to increase the salary thresholds. However, despite these challenges, the first increase took effect on July 1, 2024 for all employers, except for the State of Texas as an employer.

State of Texas v. DOL

On May 22, 2024, a group of national business associations filed a complaint in the United States District Court for the Eastern District of Texas against the DOL challenging the final rule.[1] This lawsuit was later consolidated with a complaint filed in the same court by the State of Texas similarly challenging the final rule.[2] Notably, the consolidated action alleges that the final rule exceeds the DOL’s statutory authority under the Fair Labor Standards Act (“FLSA”) and the Administrative Procedure Act (“APA”), and that the final rule is arbitrary and capricious, in violation of the APA.

In Elijah Baer, et al. v. Tesla Motors, Inc., fifteen plaintiffs filed a putative class and Private Attorneys General Act (“PAGA”) representative action lawsuit against Tesla, Inc. (“Tesla”) alleging wage-hour violations of California law. Two of the plaintiffs were employed by Staffmark Investment LLC (“Staffmark”) – a non-party staffing agency – and assigned to work at Tesla for a period in 2020. The other plaintiffs were direct former or current employees of Tesla going back to 2017. After Tesla removed the action to federal court, it moved to compel arbitration.

The plaintiffs signed various arbitration agreements throughout their employment. From the fall of 2018 to May 2022, Tesla utilized a recruiting software called Averture. According to Tesla, Averture required applicants to create a secure online profile with their own personal information. Eight of the plaintiffs signed offer letters with Tesla through Averture containing an arbitration provision. These plaintiffs did not dispute that they signed, and Tesla countersigned, the offer letters.

At some point in 2022, Tesla stopped using Averture and started using a system called Inside Tesla. The security measures applicable to Averture were largely the same as those employed by Inside Tesla; however, applicants who were offered employment under Inside Tesla signed an offer letter and a standalone arbitration agreement. Four of the plaintiffs signed arbitration agreements through the Inside Tesla system.

With an anticipated increase in workers no longer subject to exemption from overtime pay under a new U.S. Department of Labor rule that is scheduled to take effect on July 1, 2024 (learn more here), employers will need to sharpen their pencils and make adjustments. What’s more, on that date, many states and localities will see a hike in minimum wage requirements.

Most of these jurisdictions will have straightforward rate adjustments, with a uniform increase across all industries. However, a somewhat more complicated and significant development comes out of California, which has raised minimum wage mandates for just one sector.

On May 15, 2024, the New Jersey Supreme Court held in Maia v. IEW Construction Group that both the six-year look-back period and liquidated damages provided by the state Wage Theft Act (WTA) do not apply retroactively. Notably, the WTA’s extended statute of limitations will only apply to conduct that occurred after the WTA’s effective date—August 6, 2019. As such, employees filing suit before August 6, 2025 to recover unpaid wages may only recover for conduct occurring after the WTA’s effective date even though the relevant time period would not include the full six-year look-back period. Although the look-back period is now six years, if an employee files a lawsuit today, that employee would only be able to recover for conduct dating back to August 6, 2019 (which is a limitations period of less than 5 years). Similarly, employees may only recover liquidated damages—which were not previously available under the state wage and hour laws—for conduct occurring after the WTA’s effective date.

For background, the New Jersey Wage and Hour Law (WHL) and the New Jersey Wage Payment Law (WPL) require employers timely pay their employees for all wages earned, including any overtime. In August 2019, New Jersey enacted the WTA, amending the WHL and WPL by adding liquidated damages and extending the statute of limitations from two years to six years. This means that, pursuant to the WTA amendments, employees who file suit seeking to recover unpaid wages may recover any unpaid wages within six years prior to the commencement of such lawsuit (often referred to as the “six-year look-back period”) plus liquidated damages up to 200% of the wages owed, together with costs and reasonable attorney’s fees.

As we have previously addressed, the U. S. Department of Labor (DOL) has issued its final rule raising salary thresholds for overtime exemptions under the federal Fair Labor Standards Act (FLSA) effective January 1, 2025.

While there are legal challenges to the final rule, the DOL is offering webinars about the final rule to employers on May 30, 2024 and June 3, 2024.

Those webinars could certainly provide employers with valuable insights into the DOL’s approach. 

While the DOL may well encourage employers to make modifications immediately to comply with the final rule, the legal ...

The U.S. Supreme Court has ruled that in determining exemption from the Federal Arbitration Act (“FAA”) for “workers engaged in foreign or interstate commerce” — commonly referred to as the “transportation worker” exemption—courts must focus on workers’ job duties rather than the industry in which they work. Bissonnette v. LePage Bakeries Park St., LLC. The ruling overturns a Second Circuit decision that held that the workers arguing exemption from the FAA did not qualify as transportation workers because they did not work in the transportation industry. The ...

On April 23, 2024, the U.S. Department of Labor (“DOL”) announced a new final rule through which it has significantly raised the bar for businesses to continue to classify their employees as exempt from overtime pursuant to the executive, administrative and professional (“EAP”) and “highly compensated employee” exemptions. Specifically, the DOL announced substantial increases to the salary threshold requirements for these exemptions, which will take effect on a staggered basis on July 1, 2024, and again on January 1, 2025.  

The New Salary Thresholds

The salary ...

Workday breaks can go a long way to reduce employees’ stress and fatigue on the job while also improving overall job satisfaction and productivity. It important for New York State employers and employees to familiarize themselves with the legal requirements of workplace breaks. This tip offers an overview of New York State workplace meal and rest period laws and provides guidance on how to remain in compliance.

Meal Periods

Meal Period Requirements

Generally, New York law requires employers to provide a meal break. Section 162 of the New York State Labor Law establishes the ...

Washington, D.C. is poised to extend the reach of its minimum wage requirements. On January 10, 2024, Washington D.C. Mayor Bowser signed the Minimum Wage Clarification Amendment Act of 2023 (B25-0134) (the “Amendment”), which modifies the circumstances under which an employee must be paid the District of Columbia’s minimum wage.

Traditionally, D.C.’s wage and hour law has required employers to pay employees at least the D.C. minimum wage when they (i) perform more than 50% of their work in the District, or (ii) the employee is based in D.C., and “regularly spends a ...

On January 31, 2024, a Massachusetts trial court dismissed a claim against the Boston Globe alleging that the newspaper violated the commonwealth’s Wage Act by failing to pay an executive’s 2020 profit-share which the executive labeled a “commission.”  The court concluded that the percentage of the Globe’s profits that the executive may be owed under his compensation plan is not a percentage of revenue he personally generated and as a result is not a “commission” under the Wage Act.

Vinay Mehra, the Globe’s President from 2017 until his June 2020 termination, filed ...

Despite Punxsutawney Phil declaring an early spring, employers should continue to prepare for weather-related emergencies and their wage and hour implications.  As with most of wage and hour-related determinations, employers should be mindful of the distinctions between their exempt and non-exempt workforce when assessing their obligations under the Fair Labor Standards Act (FLSA), and state and local laws, to pay employees as a result of weather-related emergencies.

Salaried Exempt Employees

Under the FLSA, employers may not deduct from the salary of an employee classified ...

On January 9, 2024, the United States Department of Labor’s (DOL) Wage and Hour Division (WHD) announced a final rule regarding how to determine whether a worker qualifies as an employee or may be considered an independent contractor under the Fair Labor Standards Act (FLSA).  Designed to combat misclassification, the final rule rescinds DOL’s Trump-era Independent Contractor Rule issued in January 2021 and restores the non-exhaustive six-factor test courts have long used to evaluate whether or not independent contractors were properly classified.  The test considers:

Here’s a question you likely have never considered: Are hackers overseas infiltrating employers’ computer systems just to sign arbitration agreements with class action waivers for random employees?

While there is no evidence that this has ever happened anywhere, and no logical reason why it would, plaintiffs’ lawyers and even some courts seem to believe this could happen. And that is at the heart of the latest battleground over arbitration agreements with class actions waivers.

Since the United States Supreme Court’s decision in Epic Systems v. Lewis, more and more ...

On January 17, 2024, the Appellate Division of the New York Supreme Court for the Second Department held in Grant v. Global Aircraft Dispatch, Inc. that no private right of action exists for a violation of New York Labor Law (“NYLL”) Section 191, the frequency of payment provision that dictates how often New York employers must pay certain types of employees. The decision in Grant creates a departmental split with a previous decision issued by the First Appellate Department over whether a private right of action exists under the NYLL and arrives on the heels of Governor Hochul’s ...

On January 18, 2024, the California Supreme Court issued its much-anticipated decision in Estrada v. Royalty Carpet Mills, resolving a dispute among the appellate courts and concluding that Private Attorneys General Act (“PAGA”) claims may not be stricken as unmanageable. 

While some have read the decision as a resounding victory for the plaintiffs’ bar that will force every PAGA case to settle for large amounts, the decision does no such thing.

It may challenge employers and their lawyers to be more creative, but it does not mean that every PAGA action now warrants an outsized ...

With the new year comes raises in minimum wages, yet again.  As reflected in the charts below, in 2024, minimum wage and, in applicable jurisdictions, tipped minimum wage will increase in 23 states and in a number of counties and cities.

Accordingly, employers with minimum wage workers (or tipped minimum wage workers) should consult with counsel to ensure that their compensation practices are compliant with the laws in all of the jurisdictions in which they operate.

On December 27, 2023, and just in time for the 2024 ball to drop, the New York State Department of Labor (NYSDOL) finalized the salary thresholds for exempt employees that were proposed as a part of Minimum Wage Order Updates in October 2023. Similarly, New York passed Senate Bill S5572 in September 2023, increasing the salary thresholds for exempt employees under Article 6 of the New York Labor Law.

As a reminder, the classification of exempt or non-exempt is particularly important for determining which employees are (1) exempt from the overtime laws, meaning that such employees are ...

With limited exceptions, California law does not require employers to provide employees with a premium rate of pay for working during holidays or paid days off for holidays unless contractually obligated to do so. However, many employers chose to do so for a variety of reasons. For employers that choose to provide holiday benefits, your “presents” is requested for this read.  

Why offer holiday pay?

Many employers voluntarily elect to offer holiday benefits. Some common reasons for doing so are:

• Boosting employee morale;
• Increasing company loyalty;
• Making an employment offer ...

The Clash famously asked “Should I stay, or should I go?” on their 1982 album, Combat Rock, and with recent attacks on non-competes at both the state and federal level, some employers are imposing additional costs on employees who take advantage of an employer’s training opportunities only to leave and join a competitor. So-called “stay or pay” clauses, or training-repayment-agreement-provisions (TRAPs), typically require an employee to pay the employer the cost the employer incurred to train the employee if the employee leaves their employment within a certain ...

Although incorporating nondiscretionary compensation like commissions and (promised or contractual) production bonuses into the calculation of the “regular rate of pay” has been federal law for decades, claims involving that calculation – or lack thereof – have increasingly been brought by California plaintiffs’ lawyers.  Even though miscalculations or noncalculations may result in a difference of a few dollars or even pennies lost, plaintiffs’ lawyers litigate these claims in hopes of obtaining penalties that far outweigh any underpayments.  Rather than ...

Over the past five years, ten states and several local jurisdictions across the country have passed wage transparency laws in an effort to address gender and racial wage disparities.  Wage transparency laws may apply to wage range disclosures and promotional opportunities in job advertisements, among current employees and job applicants.  In this changing landscape, employers must be diligent in order to comply with these laws, given their variety with respect to who must receive disclosures, which factual circumstances trigger disclosure requirements, and what information ...

What is the 8 and 80 overtime system?

The Fair Labor Standards Act (“FLSA”) generally requires covered employers to pay non-exempt employees overtime for all hours worked over 40 in a workweek. However, the FLSA provides an exception for certain employers in the healthcare industry, who are instead permitted to adopt a fixed work period of 14 consecutive days and pay overtime for all hours worked: (a) over 8 in a single day, or (b) over 80 in a 14-day work period.

Under the 8 and 80 overtime system, for example, an employee who works a 12-hour shift would be entitled to 4 hours of ...

There is a comedian by the name of Jeff Foxworthy who has been enormously popular for the past two decades or so. 

Perhaps you are familiar with him.  (And if you are, you probably thought that you stumbled upon the wrong blog just now.)

Remarkably, Mr. Foxworthy’s name comes up frequently when talking about whether workers have been properly classified as independent contractors.  Not because there is anything funny about that issue; there isn’t.  And not because Mr. Foxworthy was misclassified as an independent contractor.  Instead, his name pops up because Mr. Foxworthy has ...

On September 13, 2023, the United States Department of Labor’s (DOL) Wage and Hour Division (WHD) and the U.S. Equal Employment Opportunity Commission (EEOC) entered a Memorandum of Understanding (MOU) to work together to enforce federal laws and regulations that advance equal employment opportunity and fair pay. The MOU outlines procedures for the agencies to increase their coordination in information sharing, joint investigations, trainings, and outreach efforts.

I. Information Sharing

The MOU allows the agencies to consolidate and share information on issues ...

An amended version of AB 1228 was passed in the California Legislature on September 14, 2023, [1] which would raise minimum wages for fast food workers and water down the authority of the new Fast Food Council that was created in a bill passed last year. AB 1228, originally introduced on February 16, 2023, was revised on September 11, 2023 after negotiations occurred between labor unions and the fast food industry. It significantly modifies provisions from the Fast Food Accountability and Standards Recovery Act (FAST Recovery Act) passed last year, which does not go into effect ...

An amended version of SB 525 was passed in the California Legislature on September 14, 2023, [1] which would raise minimum wages for health care workers across the state, starting June 1, 2024.  SB 525 is now awaiting signature or veto from California Governor Gavin Newsom, who has until October 14, 2023 to sign or veto this bill.

CHANGES IN MINIMUM WAGES:

SB 525 sets forth different tiers of minimum wage increases that vary based on the following:

• Large health systems and dialysis clinics:[2]
  • Minimum wage for covered health care employees shall be:
    • From June 1, 2024, to May 31, 2025 ...

On August 16, 2023, a unanimous three-judge panel of the Third Circuit vacated and remanded a decision from the Middle District of Pennsylvania ruling that the time spent by oil-rig workers changing in and out of their protective gear was not compensable.

Plaintiffs Rodney Tyger, Shawn Wadsworth brought a Fair Labor Standards Act collective action against Defendants Precision Drilling Corp., Precision Drilling Oilfield Services, Inc., and Precision Drilling Company, LP (“Precision”), an oil rig, for failing to pay them for pre-shift donning and post-shift doffing of ...

On August 30, 2023, in one of the U.S. Department of Labor’s most highly anticipated rulemakings of the year, the Wage and Hour Division announced the details of its forthcoming Notice of Proposed Rulemaking regarding the salary requirements of the Fair Labor Standards Act’s overtime exemption for executive, administrative, and professional employees.  In short, the Department has elected to go big, with the soon-to-be-published draft rule containing the following key elements:

1. Increasing the minimum salary for the basic executive, administrative, and professional ...

Earlier this year, on February 6, 2023, the New Jersey Governor signed the Temporary Workers’ Bill of Rights into law.

On August 21, 2023, the New Jersey Department of Labor and Workforce Development (NJDOL) Division of Wage and Hour and Contract Compliance published Proposed Regulations to govern the new law. The Department will be accepting public comments regarding the Law until October 20, 2023. While the Bill of Rights has wide-sweeping consequences for temporary laborers and third-party clients, it is also notable for making New Jersey the first state to require equal ...

On August 4, 2023, the Governor of Illinois signed HB 2862 into law, amending the Illinois Day and Temporary Labor Services Act (DTLS).

Under the amendments, temporary labor service agencies must pay temporary workers who are assigned to a third-party client for more than 90 days wages and benefits (or the cash value of such benefits) equal to the lowest-paid comparable direct-hire employee at the third-party client.

A direct-hire comparator means an individual with equal seniority status to the temporary worker who performs the “same or substantially similar” role under ...

The “regular rate of pay,” an often-misunderstood legal term of art, can be a thorn in the side of employers when calculating how to pay non-exempt hourly employees. These employees must be paid an overtime rate of at least one and a half times their regular rate of pay. Issues can arise when, in addition to their hourly wages, non-exempt hourly employees receive compensation that can change their regular rate of pay, and thus their overtime rate of pay, on a weekly basis. In some states, such as California, the regular rate of pay is also used when paying meal and rest break premiums ...

Psychologist Abraham Maslow once observed, “If the only tool you have is a hammer, it is tempting to treat everything as if it were a nail.”[1] That sums up the state of commission litigation under the Massachusetts Wage Act: mandatory treble damages, attorneys’ fees, and the prospect that a court might strike a term of an agreed-upon commission plan as an unenforceable “special contract” that deprives an employee of earned wages has led to an uptick in the number of commission claims. Given these potential consequences, employees sometimes try to fit a square peg into a ...

With $3 million in funding from A.B. 102, California’s recent appropriations bill, the Industrial Welfare Commission (IWC), the administrative body charged by statute to regulate wages, hours, and working conditions, will reconvene for the first time since 2004, when it was defunded for budgetary reasons.  The IWC was established in 1913 and has gone through several changes throughout the years.  Its most recent, lasting impact on employment in California, however, consists of 17 “wage orders” regulating the wages, hours and working conditions in specific industries. 

For more than a few years -- at least since the United States Supreme Court’s seminal 2017 decision in Epic Systems v. Lewis -- employers across the country have weighed whether to have their employees sign arbitration agreements with class and collective action waivers. 

While many employers have chosen to do so, many have elected not to. 

For decades, many employers have rounded non-exempt employees’ work time when calculating their compensation.  Maybe they have rounded employee work time to the nearest 10 minutes, maybe to the nearest quarter hour, but they done it. And, generally, the courts have approved of the practice.

But as more and more lawsuits are filed challenging the practice, and as the courts begin to review time-rounding more frequently and more critically, the question employers with time-rounding policies should ask themselves today is this:  Why are we still rounding our employees’ time?

The California Court of Appeal for the First Appellate District recently issued its opinion regarding business-related expenses in Thai v. International Business Machines Corporation. The Court found that expenses incurred by employees in direct consequence of performing their jobs may be reimbursable regardless of whether such expenses are directly caused by the employer.

Paul Thai was employed by defendant and respondent IBM. Thai required, among other things, internet access, telephone service, a telephone headset, a computer and accessories in order to perform the functions of his job. On March 19, 2020, Governor Newsom issued a stay-at-home order that instructed all California residents “[t]o stay home or at their place of residence except as needed to maintain continuity of operations of the federal critical infrastructure sectors” and any other additional sectors later designated as critical. After the order went into effect, IBM directed Thai and thousands of other workers to continue performing their regular job duties from home. Thai and the other IBM workers personally paid for the services and equipment necessary to do their jobs while working from home, and IBM did not reimburse them for those expenses.

On July 21, 2023, a unanimous three-judge panel once again affirmed a California federal court’s ruling that the truck drivers who deliver ingredients from Domino’s Southern California Supply Chain Center to Domino’s California franchisees are exempt from the Federal Arbitration Act (“FAA”).

Employers with operations both large and small in California are all too familiar with California’s Private Attorneys General Act (“PAGA”), the controversial 2004 statute that permits a single employee to stand in the shoes of the state’s attorney general and file suit on behalf of other employees to seek to recover penalties for alleged Labor Code violations.

PAGA lawsuits are filed with great regularity by members of the plaintiffs’ bar.

And the in terrorem effect of PAGA lawsuits, in which a plaintiff need not satisfy class certification criteria to represent an entire workforce, has led many employers to pay large settlements just to avoid legal fees and the possibility of larger awards -- even when the evidence of unlawful conduct is spotty or entirely absent.

Handbooks are developed to outline policies and procedures employees must abide by in the workplace.  But a handbook serves a dual, equally important purpose:  to act as an operable defense against workplace claims brought by employees as a way to demonstrate that the employer had equitable and compliant policies in place.

In California, employers are required to disseminate such workplace information to employees another way: through workplace postings.  The Department of Industrial Relations requires workplace postings be displayed in a ‘conspicuous’ place where they are easily visible to the intended audience, such as a bulletin board or mail-room/break-room wall or, in special circumstances, in a binder if there is no room to post such materials.  In California, every business must post not only the Wage Order(s) that apply to its operation and the minimum wage[1] where employees can see them, but also 16 other employment notices.  Failure to post required, up-to-date notices can have serious consequences, including costly penalties[2] and criminal charges. 

The California Supreme Court has issued its highly anticipated decision in Adolph v. Uber Technologies, Inc., concluding that plaintiffs who must arbitrate their “individual” PAGA claims are not deprived of standing to pursue “non-individual” PAGA claims in court on behalf of others.

More precisely, Justice Goodwin H. Liu wrote that “an order compelling arbitration of the individual claims does not strip the plaintiff of standing as an aggrieved employee to litigate claims on behalf of other employees under PAGA.”

The current statewide minimum wage rate in California is $15.50 for all employers. However, some localities across the Golden State have set their own higher minimum wage rate. For many of these localities, the next increase is set to take effect on July 1, 2023.

For example, in Los Angeles County, the minimum wage increases from $16.04 to $16.78 in the City of Los Angeles and from $15.96 to $16.90 in unincorporated areas.  Here is a list of those local cities and counties raising their minimum wage rates:

As the COVID-19 Public Health Emergency has come to an end, employees are heading back to conferences in droves and resuming their usual training activities. While employers big and small understand they must compensate employees for all time worked under the Fair Labor Standards Act (“FLSA”) as well as state and local wage and hour laws, whether attendance at such conferences and other training time constitutes hours worked for non-exempt employees remains a murky area for employers.

Four-Factor Test

Generally, training programs, lectures, meetings, and similar activities are compensable hours worked unless all four of the following factors are true:

On May 3, 2023, New York Governor Kathy Hochul announced – and then signed into law – the New York Legislature’s 2024 Budget Agreement (“Budget”), which includes increases to the state’s minimum wage.  Effective January 1, 2024, the minimum wage will increase to $16 per hour in New York City and Nassau, Suffolk, and Westchester counties, and to $15 per hour in the remainder of the state.  The minimum wage will then increase by another $.50 each year in 2025 and 2026—reaching $17 per hour in downstate New York by 2026. Subsequent annual increases to the minimum wage will be tied to the inflation rate. The State Department of Labor (DOL) is required to publish future adjusted minimum wage rates by no later than October 1st of each year.

On April 28, 2023, the U.S. Court of Appeals for the Fifth Circuit reversed and remanded a decision from the Western District of Texas declining to issue a preliminary injunction barring the Department of Labor (“DOL”) from enforcing a regulation known as the “80/20/30 rule.”

As we previously reported, on October 29, 2021, the DOL issued a final rule for determining which tipped employees may receive “tip credit” in lieu of receiving the full minimum wage directly from the employer.  Under the 80/20/30 rule, employers must pay employees at least the minimum wage if they spend more than 20% of their time on tasks that do not immediately and directly generate tips, including wiping down tables, filling salt and pepper shakers, rolling silverware into napkins, and other duties referred to in the industry as “side work,” or if they spend more than 30 consecutive minutes performing such tasks.  The Restaurant Law Center and the Texas Restaurant Association promptly sought a preliminary injunction in the Western District of Texas.

On March 23, 2023, Utah Governor Spencer Cox signed into law Senate Bill 73 (“SB 73”) expanding the group of employees eligible for tip pooling by allowing employers to include non-tipped employees in a bona fide tip pooling or sharing arrangement.

Historically, only “tipped employees” were permitted to participate in a tip pooling or sharing arrangement under Utah State law. This form of tip pooling is also allowed under federal law and is otherwise known as a traditional tip pool. A “tipped employee” is one who customarily and regularly receives tips or gratuities.”[1] Common examples of tipped employees include waiters and waitresses, whereas dishwashers, chefs, cooks, and janitors are examples of non-tipped employees.

The lingering morning chill in the air (at least, here, in the Northeast) suggests that summer is not quite here, but as the daylight persists through the evening hours, businesses small and large are gearing up for yet another summer – intern – season.

In anticipation of the arrival of these ambitious and eager workers, companies’ human resources professionals and stakeholders are asking the age-old questions:

Should these interns be classified as “employees” of the company?

Must they be compensated?

Isn’t knowledge and real-world experience the appropriate reward (and maybe some academic credit)?

Is this a wage and hour violation?

The answer to this question is that, it depends, which is a dependably frustrating response from a management-side employment lawyer.

A little over two years ago, the U.S. Court of Appeals for the Fifth Circuit became the first federal appellate court in the country to reject the widespread and longstanding two-step approach of first “conditionally” certifying Fair Labor Standards Act (“FLSA”) collective actions under a very lenient, plaintiff-friendly standard, followed by applying more rigorous scrutiny after the close of discovery at the “decertification” or “final certification” stage.  As we discussed here, the Fifth Circuit concluded in Swales v. KLLM Transport Services, LLC that the FLSA requires not two steps, but instead a single step that carefully examines whether the group of workers at issue is “similarly situated” before a court authorizes any notices to potential opt-in plaintiffs.

work | \ wərk \ (noun):  activity in which one exerts strength or faculties to do or perform something

In common parlance, the concept of “work” connotes some physical or mental exertion.  The law, however, defines the term more broadly, and properly compensating employees often is not as simple as paying for all time spent performing “work” in the usual sense of that term.  The Fair Labor Standard Act (“FLSA”) and the laws of many states require employers to also pay for certain periods of time during which employees are idle and simply waiting to begin working—even if those employees never become engaged in work. 

On March 10, 2023, a unanimous three-judge panel upheld an Oregon federal court’s ruling that time Amazon employees spent undergoing mandatory security screenings before and after work shifts and off-premises meal breaks was not compensable, as the screenings were not integral and indispensable to their jobs under state law.

Following the California Supreme Court’s remand of Naranjo v. Spectrum Security Services, Inc., the California Court of Appeal in that same case held that the defendant-employer had not committed “knowing and intentional” violations of the wage statement statute by not including meal period premiums on the wage statements and had not “willfully” paid all wages due at the end of employment by not previously paying meal period premiums that were owed. The Court held that, although the employer did not prevail on its defense that employees in a certified class action were subject to valid on-duty meal period agreements, neither waiting time penalties (capped at 30 days’ of wages at the daily rate of pay for each former employee) nor wage statement penalties (capped at $4,000 per employee) could be imposed against the employer given the good faith dispute that any meal period premiums were owed.

The Washington, D.C. Council (the Council) has yet again taken action to delay enforcement of Initiative 82, the District’s new law to eliminate the use of the “tip credit” for certain service industry employees by July 1, 2027.

Gratuities are often helpful for both employees and their employers: tips supplement a worker’s income, and federal law and the laws of most states allow employers to credit a portion of a worker’s tips toward the company’s minimum wage obligations. But what exactly is a tip and how do employers take this so-called “tip credit?”

What is a tip or gratuity?

As we reported earlier this week, on February 22, 2023, the Supreme Court issued its decision in Helix Energy Solutions Group, Inc. v. Hewitt, finding that a daily-rate worker who earned over $200,000 annually was not exempt from the Fair Labor Standards Act’s (FLSA or Act) overtime requirements. The Court reasoned that, although the employee’s compensation exceeded the amount required under 29 C.F.R. § 541.601’s highly compensated employee (HCE) exemption, and he customarily and regularly performed at least one exempt duty (there, the “executive” duty of supervising a crew of workers), his employer did not pay him on a “salary basis” because he did not “receive a fixed amount for a week no matter how many days he … worked.”

Practically, Helix’s holding is unlikely to have broad consequences. Most employers pay employees who earn enough to qualify as an HCE (currently, $107,432 annually) and perform at least one exempt administrative, executive, or professional duty a predetermined salary. But employers who have classified non-salaried high earners as exempt HCEs will acutely feel its effects.

The Ninth Circuit has issued its long-awaited ruling in Chamber of Commerce v. Bonta, perhaps putting a nail in the coffin of the controversial California law known as AB 51, which would have made it criminal conduct to require an applicant or employee to sign an arbitration agreement.

The history of AB 51 and the case challenging it is a tortuous one, to say the least, but the issue has always remained the same: was the California legislature too clever in its attempt to circumvent the Federal Arbitration Act (“FAA”) and the Supreme Court’s landmark decision in Epic Systems?

Generally speaking, the FLSA requires that employers pay employees the required minimum wage and overtime for all hours worked in excess of 40 hours in any workweek (at a rate of one and one-half times the employee’s regular rate of pay). Accordingly, courts have consistently held that the FLSA provides employees with a basis to sue for the recovery of unpaid wages if an employee is paid below the required minimum wage or an employee is not adequately compensated for overtime hours worked in excess of 40 hours.

But what about claims that do not fit neatly into either of those two buckets? Cue in gap-time claims.

The Los Angeles City Council passed the Fair Work Week Ordinance (“FWWO”) that seeks to “implement enforcement measures for the new fair work week employment standards” for employees in the retail sector.  Going into effect April 1, 2023, the FWWO will apply to any person, association, organization, partnership, business trust, limited liability company or corporation in the retail business or trade sector that directly or indirectly exercises control over the wages, hours or conditions of at least 300 employees globally.  This includes employees through an agent or any other person, including through the services of a temporary staffing agency.

We seem to say this every year -- December always seems to go by far too fast.  And with holidays and vacations, not to mention many employees still working remotely, it’s not unusual for matters to be put off until the new year — or for a project or two to fall through the cracks.

On Tuesday, November 8, 2022, Washington, D.C. voters approved a ballot measure to eliminate the “tip credit” which allowed service industry employers to pay servers, bartenders, and other tipped employees $5.35 an hour rather than D.C.’s $16.10 per hour minimum wage. Currently, employers are required to pay the balance if an employee is unable to make up the difference through tips. Initiative 82 will phase out the tip credit, raising the tip credit minimum wage to $6.00 in January 2023, and then to $8 on July 1, 2023, and then increasing by $2.00 every year until 2027. In 2027 ...

In reversing a Nevada district court’s grant of summary judgment, the Ninth Circuit, in Cadena v. Customer Connexx LLC, recently held that the time call center employees spent booting up their computers is compensable. Because a functioning computer was necessary for the call center employees to do their job, the court unanimously agreed that the time required to turn on their computer and log in was “integral and indispensable to their principal activities” and, therefore, compensable, subject to certain limitations.

California plaintiffs’ lawyers typically bring every type of wage-hour claim they can.  Increasingly, however, they have focused on one type of claim – wage statement violations.

As we have previously written about, bringing class and representative actions under California’s Private Attorneys General Act (“PAGA”) alleging that employers did not fully comply with California’s onerous wage statement laws has become a lucrative practice for the plaintiffs’ bar.  Given the flurry of litigation, it is beneficial for employers that do business in California to review their wage statements to best ensure compliance.

On October 25, 2022, the Department of Labor extended the comment period for its new proposed rule regarding independent contractor status under the Fair Labor Standards Act. While the comment period was originally set to expire on November 28, 2022, interested parties will now have until December 13, 2022 to submit comments.

In light of the federal court ruling reinstating the Trump-era independent contractor regulation (discussed here), on October 13, 2022, the Department of Labor published a Notice of Proposed Rulemaking regarding independent contractor status under the Fair Labor Standards Act.

work·week | \ ˈwərk-ˌwēk \

noun

Perhaps one of the most important terms of art under the Fair Labor Standards Act (“FLSA”), an employer’s designated workweek impacts nearly every aspect of an employee’s pay – from minimum wage and overtime to application of most exemptions. Let’s break down this concept.

What is a workweek?

The FLSA regulations define workweek as “a fixed and regularly recurring period of 168 hours - seven consecutive 24-hour periods.” Contrary to popular belief, a workweek need not coincide with a calendar week, nor must it align with an employer’s hours of operation. Instead, it can begin on any day and at any hour of the day. However, the key is that once a workweek is determined, it must remain fixed regardless of the employees’ hours worked with limited exception.

Employers based outside of California can suffer knockout blows if they enter the ring as employers in California and operate under the mistaken assumption that adherence to the Fair Labor Standards Act (“FLSA”) is the same as complying with the California Labor Code and Wage Orders.  Below are the main ways (but certainly not the only ways) employers are “caught cold” because they do not receive or apply California wage-and-hour training and learn the hard way that the plaintiffs’ bar will not pull any punches.

Pursuant to two voter initiatives, Michigan has a new minimum wage of $12 per hour, as well as a requirement that employees be provided up to 72 hours of paid sick leave – but those changes will not go into effect until February 19, 2023.

In 2018, two initiatives – the Improved Workforce Opportunity Wage Act (2018 PA 368) and the Earned Sick Time Act (2018 PA 369) – were presented to the Michigan legislature. The wage initiative raised the minimum wage to $12 per hour by 2022. The paid sick time initiative required most employers to provide up to 72 hours of paid sick leave per year.