Workforce Bulletin

California generally requires that, when employees accrue vacation time during their employment, any accrued but unused vacation time must be paid out at the end of employment.  But so-called “unlimited” vacation policies have generally been understood to be a potential exception to that rule.  Such “unlimited” policies are more accurately referred to as “professional” or “reasonable use” vacation policies, where such policies do not provide for vacation to accrue.  Instead, employees under such policies are allowed to take an unspecified amount of paid time ...

In Viet v. Le, No. 18-6191, the U.S. Court of Appeals for the Sixth Circuit provided insight into the kind of evidence employees must present in order to create a jury question over whether they worked unpaid overtime in violation of the Fair Labor Standards Act (“FLSA”).

In the case, plaintiff Quoc Viet purchased used copiers in the United States and shipped them to Vietnam for resale by the defendants Victor Le and Copier Victor, Inc.  Copier Victor classified Viet, who worked from his home and a nearby warehouse, as an independent contractor.  Le paid Viet a fixed rate for each copier ...

Due to the COVID-19 pandemic and the resulting shelter-in-place and related orders, many businesses across America have already shuttered, while others are on the brink of collapse.  In these challenging times, businesses are understandably considering any and all potential solutions to keep their employees on payroll while remaining solvent.  Some employers have even been considering converting their W-2 employees to 1099 independent contractors.  The surface appeal is simple, which is that employers can avoid employment taxes, benefit costs, and overtime compensation ...

The U.S. Department of Labor (“DOL”) has renewed its invitation to employers and employees to engage in a “national online dialogue” in connection with the Families First Coronavirus Response Act (FFCRA), which took effect on April 1.  The DOL is soliciting comments and questions with respect to its questions and answers, posters, and fact sheets that it has published in connection with the FFCRA.

The DOL has also extended the deadline from March 29 to April 10 for employers and employees to provide input online at https://ffcra.ideascale.com.

Employers may want to speak ...

It is no secret that independent contractor misclassification claims are being filed against employers with a great deal of frequency, often as class actions and often in California.  Many of those lawsuits have been filed against gig economy companies.  But, of course, they are not the only companies facing such claims.

As a result, many companies that classify workers as independent contractors are asking a basic question, “Are those workers properly classified?”

It sounds like such a simple question, one that should have a simple answer.

But there is no simple answer, at least ...

In addition to its recent, exigent responsibility of preparing guidance on the protections and relief offered by the Families First Coronavirus Response Act, the U.S. Department of Labor’s Wage and Hour Division (“WHD”) has issued three new opinion letters addressing the excludability of certain types of payments from the regular rate of pay under the Fair Labor Standards Act (“FLSA”).  While these opinion letters do not tread new ground, they are useful reminders of important regular rate principles and merit careful review.

As background, under the FLSA, an employer ...

Be careful what you ask for.

We have used that expression frequently when writing about recent federal court orders requiring DoorDash and Postmates to conduct thousands of individual arbitrations in California pursuant to the terms of their arbitration agreements with their drivers.

Thousands of individual arbitrations for which DoorDash and Postmates would have to pay many millions of dollars in arbitration fees alone.

The risk of dozens, hundreds or even thousands of individual arbitrations attends any time an employer seeks the benefits of an arbitration agreement ...

As previously discussed, Colorado officially adopted the Colorado Overtime and Minimum Pay Standards Order # 36 (“COMPS Order”) on January 22, 2020, which went into effect on March 16, 2020.  However, the Division of Labor Standards and Statistics in the Colorado Department of Labor and Employment (“the Division”) has recently implemented temporary emergency modifications to the COMPS Order.  The temporary changes will remain in effect through July 14, 2020 (the “temporary period”), although the State intends to go through a formal notice and comment period to make ...

The U.S. Department of Labor (“DOL”) has invited employers and employees to engage in a “national online dialogue” in connection with the expected April 2, 2020 implementation of the Families First Coronavirus Response Act (FFCRA).  The DOL is soliciting comments and questions as it develops compliance assistance materials and outreach strategies related to FFCRA.

Input may be offered online at https://ffcra.ideascale.com through March 29, 2020, or through Twitter chat hosted by @ePolicyWorks on March 25, 2020 at 2:00 p.m. using the hashtag: #EPWChat.

Given the number of states that have already ordered the closure of non-essential businesses due to the COVID-19 pandemic, employers fortunate to remain operational are likely dealing with the myriad challenges of a remote workforce.

As we previously wrote here, employers with work-from-home (“WFH”) policies in place need to make sure they are appropriately compensating their workers and are otherwise complying with all applicable federal, state, and local wage and hour laws.

In the WFH context, the related wage and hour concepts of “waiting time” and “on-call ...

In an effort to slow the spread of the 2019 novel coronavirus (“COVID-19”), many employers around the country are encouraging—if not requiring—their employees to work remotely.  Although telecommuting during a public health crisis presents obvious benefits, it also presents employers with unique challenges, such as ensuring compliance with applicable expense reimbursement laws.

Employees working from home may incur any number of expenses – home computers, printers, Internet service, WiFi connections, smartphones and even paper, pens and other office ...

Employers in California have been inundated with wage-hour class actions for the past two decades.  And, time and again, they have had to deal with employee-friendly decisions from the California Supreme Court.

Leave it to the Ninth Circuit Court of Appeal to step in and put an end to a proposed class action, finding that there were no “real-world consequences” from wage statements that had an error in the employer’s name.

In Lerna Mays v. Walmart Stores, Inc., the plaintiff brought suit under California Labor Code section 226 after receiving her final pay stub, which listed her ...

In the coming days, weeks and perhaps months, many employers will have difficult decisions to make about their operations and their workforces.  With their operations shutting down or running at less than capacity, many employers will decide that they must lay off employees.

It’s a decision that no employer wishes for or enjoys.  And it is one that poses some risks.

Not only must employers take steps to ensure that layoff decisions are made in a manner that does not adversely impact protect groups, but employers need to be mindful of the various state laws governing when final wages must ...

Our colleagues Jeffrey H. Ruzal, Denise M. Dadika, Maxine H. Neuhauser, and Eduardo J. Quiroga have co-authored an Act Now Advisory that will be of interest to our readers: "Department of Labor Issues OSHA, Wage/Hour, and FMLA Guidance Addressing COVID-19."

Following is an excerpt:

In response to the spreading 2019 novel coronavirus (“COVID-19”) pandemic, which has now been declared a national emergency by President Trump, the Department of Labor has released guidance to employers, summarized more fully below:

• • The Occupational Safety and Health Administration ...

Employers grappling with workplace attendance issues in the wake of the COVID-19 coronavirus may soon face additional challenges resulting from a potential economic downturn.  Media stories are already beginning to report on potential furloughs and layoffs.  For some employers, reducing the workweek (e.g., from 5 working days to 4 working days) could be a reasonable business response.  But would reducing the workweek affect the overtime exemption for exempt employees?

That question has been answered by the Tenth Circuit in In re Wal-Mart Stores, Inc., 395 F.3d 1177 (10th Cir ...

As the number of U.S. states reporting cases of COVID-19 coronavirus increases, many employers are imposing mandatory work from home (“WFH”) policies to mitigate risk of contamination and ensure business continuity.  Some employers are requiring employees who have travelled to or received visitors from mainland China (or other areas with high infection rates) and those with fever or other flu-like symptoms to remain at home for 14 days, while others are instructing half or more, up to their entire workforce, to work remotely until further notice.  Whatever the form, employers ...

Recently, we wrote here about a federal court order requiring DoorDash to conduct more than 5,000 individual arbitrations under the terms of its mandatory arbitration agreements, with each arbitration to address claims that it had misclassified its drivers as independent contractors.

The order would fall in the category of “Be Careful What You Wish For.”  In seeking to avoid class or collective actions by having employees sign arbitration agreements with class action waivers, employers face the possibility of hundreds or thousands of individual arbitration for which they ...

We encourage our readers to visit Workforce Bulletin, the newest blog from our colleagues at Epstein Becker Green (EBG).

Workforce Bulletin will feature a range of cutting-edge issues—such as sexual harassment, diversity and inclusion, pay equity, artificial intelligence in the workplace, cybersecurity, and the impact of the coronavirus outbreak on human resources—that are of concern to employers across all industries. EBG's full announcement is here.

Click here to subscribe for email notifications—you’ll receive a confirmation email to click.

(And if you haven't ...

With the March 16, 2020 effective date of the new rule interpreting joint employer status under the Fair Labor Standards Act (“FLSA”) almost upon us, employers should brush up on the updated guidance and review their relationships with workers to ensure compliance.  Otherwise, they may face the expensive possibility of being held jointly and severally liable under the FLSA for all of the hours the individuals worked in the workweek, including hours worked for a different company.

The New Rule

A joint employment relationship may arise under two potential scenarios.

Scenario 1:  ...

It is not unusual for businesses at risk of employee theft to implement security screenings for employees as they exit the employer’s facilities.  Such screenings are especially common in industries where small, costly items could easily be slipped into a pocket or handbag – jewelry, smartphones, computer chips, etc.

In light of the California Supreme Court’s decision in Frlekin v. Apple, Inc., those security screenings now seem likely to lead to even more litigation wherein employees claim that they were not paid for their time spent waiting to be screened, at least in ...

It’s no secret that many employers have employees sign arbitration agreements with class and collective action waivers in the hopes of avoiding the massive wage-hour lawsuits that have become so prevalent in the past two decades.

Nor is it any secret that, following the U.S. Supreme Court’s decision in Epic Systems affirming that such agreements can be valid, even more employers have chosen to use them with their workforces.

But, in discussing with clients whether to implement such agreements, lawyers worth their salt have always told their clients this: “Be careful what you ...

As we recently wrote here, Uber and Postmates (and two of their drivers) to file an eleventh-hour lawsuit seeking to enjoin the enforcement of California’s controversial new independent contractor law – known as AB 5 – against them.

In a significant blow to the challenge to the companies’ challenge to the new law, the court has denied Uber and Postmates’ request for a preliminary injunction to block the enforcement of AB 5 against them.

In denying the request for a preliminary injunction, the court concluded that Uber and Postmates were not likely to succeed on the merits of ...

As previously discussed, Colorado has taken steps to increase the salary threshold for employees that fall under the “white collar” exemptions, following in the footsteps of Alaska, California, New York, Maine, and Washington State – and the federal Department of Labor. On January 22, 2020, the Colorado Department of Labor adopted the final Colorado Overtime and Minimum Pay Standards Order #36 (“COMPS Order”), which makes significant changes for both exempt and non-exempt employees. Most provisions become effective March 16, 2020, with the exception of the ...

As we wrote here, United States District Court Judge Kimberly J. Mueller of the Eastern District of California wrote a brief “minute order” explaining that she was issuing a preliminary injunction to halt enforcement of California’s controversial anti-arbitration law, known as AB 51.

The new law, which was set to go into effect on January 1, 2020, would outlaw mandatory arbitration agreements with employees. AB 51 would also prohibit arbitration agreements that would require individuals to take affirmative action to be excluded from arbitration, such as opting out.  ...

Most employers are well aware that employees must be paid on a “salary basis” to be considered exempt from the overtime requirements of the Fair Labor Standards Act (“FLSA”). This means employees must receive the same amount of pay each week regardless of the amount or quality of work they perform for a given week. Accordingly, exempt employees must be paid their full weekly salary for any week in which they perform work, whether or not the employee has actually worked a full work week. See 29 C.F.R. § 541.602(a)(1).

One issue that may fly under the radar, however, is which ...

The California Legislature’s attempt to circumvent both the Federal Arbitration Act (“FAA”) and the Supreme Court’s landmark decision in Epic Systems by crafting a new law prohibiting California employers from requiring employees to enter into arbitration agreements is off to a rocky start in the courts, to say the least.

As discussed below, a federal court has issued a preliminary injunction enjoining enforcement of California’s controversial new anti-arbitration statute known as AB 51.  Barring some new development, it now appears clear that the statute cannot be ...

As we have written here, the day before California’s controversial AB 5 was set to go into effect, U.S. District Court Judge Roger Benitez issued a temporary restraining order to block enforcement of the law as to approximately 70,000 independent truckers.

Subsequently, Judge Benitez granted a preliminary injunction to prevent enforcement of the statute to those truckers.

In reaching his decision, Judge Benitez concluded that, as to independent truckers, the Federal Aviation Administration Authorization Act preempts AB 5.

The preliminary injunction is a significant ...

On Thursday, January 16, 2020, the U.S. Department of Labor’s Wage and Hour Division (“WHD”) published in the Federal Register the much-anticipated Final Rule regarding joint employer status under the Fair Labor Standards Act.  This rule completes the rulemaking process initiated in early April of last year, when WHD published its Notice of Proposed Rulemaking (“NPRM”), which we discussed here.

The new standards reflected in the Final Rule become effective, barring court action in the interim, on March 16, 2020.  This interval of just 342 days from publication of the NPRM ...

In its first installment of opinions letters in 2020, the U.S. Department of Labor’s Wage and Hour Division (“WHD”) addressed two issues under the Fair Labor Standards Act (“FLSA”): (i) the salary basis requirements in the context of per-project compensation arrangements and (ii) calculation of overtime pay for employees who receive nondiscretionary lump-sum bonus payments earned over time and not tied to a specific period.  (A third letter, FMLA2020-1-A, considered FMLA requirements vis-à-vis public employees.)  While neither of these FLSA opinion letters ...

As we recently wrote here, just hours before California’s controversial AB 5 went into effect, a federal court in San Diego issued a temporary restraining order (“TRO”) to enjoin enforcement of the independent contractor statute as to approximately 70,000 independent truckers, many of whom have invested substantial sums of money to purchase their own trucks and to work as “owner-operators.”

Now, days after a state court judge ruled that the statute does not apply to independent truckers, the federal court has extended the TRO while it decides whether to enter a ...

As we recently wrote here, on December 29, 2019, just days before California’s new arbitration statute known as AB 51 was to go into effect, a federal judge in the United States District Court of the Eastern District of California granted a temporary restraining order (“TRO”) to enjoin enforcement of AB 51.

The new law, which was set to go into effect on January 1, 2020, would outlaw mandatory arbitration agreements with employees.

AB 51 would also prohibit arbitration agreements that would require individuals to take affirmative action to be excluded from arbitration, such ...

Following the challenges to AB 5, California’s controversial new independent contractor law, can be a difficult endeavor.  Every day seems to bring a new development.

We have written before about the hasty passage of the statute, about a ballot initiative to escape the scope of the law by ride-share and delivery companies, and challenges by independent truckers, freelance journalists and photographers, and ride-share and delivery companies.

While many were focused on whether a federal judge, who had already issued a temporary restraining order to enjoin enforcement of the new ...

As we wrote here recently, organizations representing freelance journalists and photographers filed suit seeking to enjoin enforcement of California’s controversial independent contractor statute, AB 5, as to them.

While they are not the only ones challenging the new law, their suit is not off to a promising start.

While a federal judge issued a temporary restraining order (“TRO”) to enjoin AB 5 as it applies to independent truckers,  U.S. District Court Judge Philip Gutierrez in Los Angeles denied the freelance journalists and photographers’ request for a TRO on January ...

With the start of the New Year, new state and local minimum wage increases have gone into effect for non-exempt employees across the country.

The chart below summarizes the new minimum wage rates that went into effect on January 1, 2020, unless otherwise indicated.  (More will take effect July 1, 2020.)

On January 1, 2020, California’s new independent contractor statute, known as AB 5, went into effect.  The law codifies the use of an “ABC” test to determine if an individual may be classified as an independent contractor.

The hastily passed and controversial statute has been challenged by a number of groups as being unconstitutional and/or preempted by federal law, including ride-share and delivery companies and freelance writers.

Just hours before AB 5 went into effect, a California federal court in San Diego enjoined enforcement of the statute as to some individuals – ...

AB 5, California’s hastily passed and controversial independent contractor statute, which codifies the use of an “ABC test,” is set to go into effect on January 1, 2020.

Already, the California Trucking Association has filed suit challenging the statute.

As have freelance writers and photographers.

Now, it’s ride-share and delivery companies’ turn to file suit.

Those companies have already commenced the process to create a ballot initiative that would allow voters to decide whether to exempt ride-share and delivery drivers from the “ABC test.”

Now, on December ...

We recently wrote about a new California law set to go into effect on January 1, 2020 that would outlaw mandatory arbitration agreements with employees.

The new law, known as AB 51, would also prohibit arbitration agreements that would require individuals to take affirmative action to be excluded from arbitration, such as opting out.  The law would also appear to extend to jury waivers and class action waivers. And it would include criminal penalties.

An eleventh-hour court order will keep that statute from being enforced, at least for a few days.

On December 29, 2019, just days before ...

We have written previously about California’s new statute, referred to as AB 5, which codifies and expands the “ABC test” for independent contractors set forth in Dynamex Operations West, Inc. v. Superior Court.

A California ballot initiative that would remove ride-share and delivery drivers from application of the “ABC test” is already underway.

And the California Trucking Association has filed suit challenging the statute.

Now, other organizations have challenged the statute. Specifically, organizations representing freelance writers and photographers have ...

As previously discussed, the federal Department of Labor has begun the process of increasing the minimum salary threshold for employees that fall under the “white collar” exemptions. Joining Alaska, New York, and California, Washington State and Maine have now approved higher salary thresholds for employees that fall under the exemptions; Colorado is expected to follow in early 2020.

Effective July 1, 2020, Washington employers will be required to pay a higher salary to satisfy the professional, administrative, and executive exemptions, with gradual increases from July ...

Over the past six months, Congress has made two notable attempts to amend the Fair Labor Standards Act of 1938 (the “FLSA”).  In July, U.S. Representative Elise Stefanik (R-NY) introduced The Modern Worker Empowerment Act (“MWEA”) with the stated aim of harmonizing the FLSA’s definition of employee with the common law.  And last month, Senator Brian Schatz (D-HI) introduced the Treating Workers with Dignity Act of 2019 (“TWDA”), which would amend the FLSA to require certain compensated breaks.

Modern Worker Empowerment Act

Subject to certain exclusions, the FLSA ...

On December 6, 2019, the Second Circuit Court of Appeals held that judicial approval is not required for offers of judgment to settle Fair Labor and Standards Act (“FLSA”) claims made pursuant to Federal Rule of Civil Procedure 68(a). This development may provide employers with a valuable strategic tool for use in FLSA cases, at least in the Second Circuit, allowing the parties to include terms in offers of judgment that the courts might disallow were court approval required.

Generally speaking, Rule 68 offers of judgment are a pre-trial mechanism whereby defendants can cap their ...

It seems as though there is a minefield that employers must navigate to ensure that they fulfill their wage and hour obligations to their employees. Employers must somehow comply with overlapping and seemingly contradictory federal, state, district, county, and local requirements. The wave of civil actions that are filed against employers alleging wage and hour violations is not slowing. And given the potential financial consequences for non-compliance, illustrated in part by a $102 million award for technical paystub violations, meeting these requirements must be a ...

As winter once again approaches, employers, particularly those in cold-weather states, face the recurring specter of inclement weather affecting business operations and employee attendance.  While the weather may create stress and disruption for a business and its people, employers must not lose sight of the fact that the rules governing how you pay your employees continue to apply throughout any weather event.

There are five main rules that employers need to keep in mind when bad weather strikes:

1. If a business closes for any amount of time less than a full workweek, it must ...

On December 16, 2019, the United States Department of Labor’s Wage and Hour Division (“WHD”) published in the Federal Register a Final Rule updating the Fair Labor Standards Act (“FLSA”) regulations that govern, among other things, whether certain types of pay and benefits constitute part of a non-exempt employee’s regular rate of pay for purposes of calculating overtime under federal law.  Under section 7(e) of the FLSA, an employee’s regular rate for any given workweek “shall be deemed to include all remuneration for employment paid to, or on behalf of the ...

On November 26, 2019, San Francisco Superior Court Judge Richard B. Ulmer ruled that the Federal Arbitration Act (“FAA”) might not apply to Uber drivers who are engaged in interstate commerce while driving passengers to or from international airports.

In his claims before the Division of Labor Standards and Enforcement (“DLSE”), driver Sangam Patel (“Patel”) seeks recovery of unpaid wages, overtime pay, vacation pay, meal and rest break premiums, and unpaid business expenses allegedly owed by Uber. Uber petitioned to compel arbitration of Patel’s (“Patel” ...

On November 21, 2019, the Pennsylvania Department of Labor and Industry (“DLI”) formally withdrew new regulations that would have increased the minimum salary requirements for the Pennsylvania Minimum Wage Act’s (“PMWA”) white-collar exemptions.  The withdrawal occurred on the same day the state’s Independent Regulatory Review Commission (“IRRC”) was scheduled to consider the new requirements and rule upon them at a public meeting.

The Withdrawn Rule

The final rule was issued on October 17, 2019, and would have increased the minimum salary threshold for the ...

As we wrote here in September 27, the new “white collar” salary thresholds under the federal Fair Labor Standards Act (“FLSA”)  are set to go into effect on January 1, 2020.

That deadline is sneaking up fast.

And, like waiting until the last minute to start holiday shopping, waiting until the last minute to make important decisions regarding the new thresholds may not be wise.

The New Salary Thresholds

Effective January 1, 2020, the salary threshold for the executive, administrative, and professional exemptions under the FLSA will increase from $23,660 ($455 per week) to ...

As businesses throughout the State of California continue to grapple with the potential implications of AB5, a new law designed to make it more difficult for companies to treat workers as independent contractors, the California Trucking Association (“CTA”) is taking legal action.

As we previously wrote here, AB5 codified and expanded the “ABC test” adopted by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court for determining whether workers in California should be classified as employees or as independent contractors.

To satisfy the ABC ...

After a false start three years ago, the federal Department of Labor (“DOL”) will finally be rolling out an increased minimum salary threshold for employees qualifying under the “white collar” exemptions. The increase in the salary threshold for professional, administrative, and executive exemptions (making up the “white collar” exemptions) under the Federal Fair Labor Standards Act (“FLSA”) will become effective on January 1, 2020.

In order to qualify for one of these exemptions, there are three elements to meet:

• The employee must be paid on a salary basis ...

Upsetting what many considered settled precedent, a California Court of Appeal has held that a mandatory service charge may qualify as a “gratuity” under California Labor Code Section 351 that must be distributed to the non-managerial employee(s) who provided the service.

In O’Grady v. Merchant Exchange Productions, Inc., No. A148513, plaintiff, a banquet server and bartender, filed a putative class action against their employer for its failure to distribute the entirety of the proceeds of an automatic 21% fee added to every food and beverage banquet bill to the ...

As we wrote here recently, California’s Governor Gavin Newsom signed a bill known as AB5, which is designed to make it more difficult for companies to treat workers as independent contractors.  The new law, which goes into effect on January 1, 2020, codified and expands the “ABC” test adopted by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court for determining whether workers in California should be classified as employees or as independent contractors.

Now some gig economy businesses are striking back.  On October 29, 2019, a coalition of ...

On August 26, 2019, we wrote of the plan by the U.S. Department of Labor’s Wage and Hour Division (“WHD”) to update the Fair Labor Standard Act (“FLSA”) regulations on calculating overtime pay for salaried non-exempt workers to allow employers to include additional forms of compensation in the so-called “fluctuating workweek” calculations.  Under a fluctuating workweek calculation, an employer divides all of an employee’s relevant compensation for a given workweek by the total number of hours the employee worked in the week to derive the regular rate for that ...

California law has specific requirements regarding the payment of final wages to terminated employees. The failure to comply with those requirements can require an employer to pay an individual up to 30 days of pay – known as “waiting time” penalties. As “waiting time” claims are often pursued in the context of class actions, where plaintiffs seek up to 30 days of pay for each former employee, it is critical that employers understand when final wages must be paid. And that deadline is different depending up whether the company has terminated the employment or the employee has ...

In bringing meal and rest period claims on behalf of their clients, the plaintiffs’ bar has long argued that merely because there was an alleged meal or rest period violation, there were also “derivative” statutory violations entitling their clients to additional penalties.  By arguing that an employer is also on the hook for such penalties, plaintiffs’ attorneys argue that the potential exposure is greater.  And with greater potential exposure, employers will be more inclined to settle – or so the rationale goes.

These purported “derivative” violations have come in ...

As employers with operations in California had feared, Governor Gavin Newsom has signed AB 51, which effectively outlaws mandatory arbitration agreements with employees – a new version of a bill that prior Governor Jerry Brown had vetoed repeatedly while he was in office.

The bill not only prohibits mandatory arbitration agreements, but it also outlaws arbitration agreements in which employees must take an affirmative action to escape arbitration, such as opting out.

And as the statute is written in broad terms that extend to waivers of statutory “procedures,” it appears to ...

Our colleague Jeffrey H. Ruzal at Epstein Becker Green has recently published a post on the Hospitality Labor and Employment Law blog that will be of interest to our readers: “U.S. DOL Announces Proposed New Rule on Tip Credits and Pooling."

Following is an excerpt:

The proposed rulemaking will codify the DOL’s recent guidance that an employer may take a tip credit for any amount of time an employee in a tip-earning occupation performs related non-tipped duties that are performed contemporaneously with, or within a reasonable time immediately before or after ...

In the fall of 2016, before the Obama administration increases to the minimum salary were set to go into effect (spoiler alert – they didn’t!), we wrote in this space about the challenges facing employers in addressing those expected changes: “Compliance with the New DOL Overtime Exemption Rule May Create Unexpected Challenges for Employers.”

As we wrote earlier this week, the current administration’s changes are set to go into effect on January 1, 2020: “U.S. Department of Labor Issues Long-Awaited Final Rule Updating the Compensation Requirements for the FLSA’s ...

What is considered compensable travel time pursuant to the Fair Labor Standards Act (“FLSA”) is not always clear or intuitive to employers, even for those who usually have a good handle on wage and hour laws. This blog post hopefully will simplify the requirements set forth in the U.S. Department of Labor’s (“DOL”) regulations and interpretive guidance to help clarify when employees must be paid for travel time.

Ordinary Home-to-Work Travel

Likely not a surprise for most employers, employees are not entitled to pay for time that they normally spend commuting between their ...

For the past four-plus years, the U.S. Department of Labor (“DOL”) has actively pursued revisions to the compensation requirements for the executive, administrative, and professional exemptions to the Fair Labor Standards Act’s overtime requirement.  On September 24, 2019, DOL issued its Final Rule implementing the following changes, effective January 1, 2020:

• The new general minimum salary for these exemptions increases from the current level of $455 per week ($23,660 per year) to $684 per week ($35,568 per year).
• The new minimum annual compensation threshold for the ...

There may soon be a fair number of big rig trucks for sale in California, as well as computers, desks and other material investments of persons who determine that they may no longer offer their services as independent contractors and must shut down their small businesses, a potential repercussion of new legislation intended to restrict the use of independent contractor status in the state.

Whether those and other practical consequences of the hurried passage of the new law were considered by the California legislature is unclear.

But the eleventh-hour exemptions that were extended ...

The U.S. Department of Labor’s Wage and Hour Division (“WHD”) continues to issue guidance at a rapid pace, releasing a new opinion letter regarding the retail or service establishment overtime exemption under the Fair Labor Standards Act (“FLSA”).  The letter brings clarity to a recurring issue affecting retailers.

FLSA Section 7(i) Exemption

As background, FLSA Section 7(i) exempts a retail or service establishment employee from the FLSA’s overtime pay requirements if (i) the employee’s regular rate of pay exceeds 1.5 times the federal minimum wage for any week ...

We have frequently written about California’s Private Attorneys General Act (“PAGA”), a unique statute that allows private individuals to file suit seeking “civil penalties” on behalf of themselves and other “aggrieved employees.”

The only remedy available to employees in actions brought under PAGA is a civil penalty.  That is significant because civil penalties are unlike the remedies available in conventional lawsuits that are not brought under PAGA; such non-PAGA remedies can include allegedly unpaid overtime, vacation pay, or meal and rest period ...

A number of years ago – 20 perhaps – someone shared with me a study that was conducted by a major university where participants were asked which professions they most distrust.

My recollection is that it was conducted at Duke University, but I could be wrong.  (I do remember distinctly that there were 998 participants in the survey, which still seems like a peculiar number to me.  They couldn’t find two more people?)

In any event, one spot from the top of the list of most distrusted professions (or the bottom, depending on your perspective) was used car salespersons.  Yes, I know, a ...

On August 22, 2019, in Trina Ray et al. v. County of Los Angeles and Trina Ray et al. v. Los Angeles County Department of Public Social Services, Case Numbers 17-56581 and 18-55276, the U.S. Court of Appeals for the Ninth Circuit ruled that home care workers may sue Los Angeles County for unpaid overtime under the Fair Labor Standards Act (“FLSA”).

Until recently, California home care workers (also known as companions) whose wages are paid by state or county programs were exempt from state and federal overtime laws. Beginning on January 1, 2015, however, a new Department of Labor ...

As part of its spring 2019 regulatory agenda, the U.S. Department of Labor’s Wage and Hour Division (“WHD”) will consider a proposed revision to the Fair Labor Standard Act’s (“FLSA”) regulations on calculating overtime pay for workers whose hours fluctuate from week to week.

Generally, non-exempt employees covered by the FLSA must receive overtime pay for hours worked in excess of 40 in a workweek at a rate at least time and one-half their regular rates of pay – the standard calculation of overtime.  However, the FLSA provides an alternative method of calculating ...

As the result of a sweeping “Wage Theft” law (“Law”), which became effective upon enactment on August 6, 2019,  New Jersey employers will face toughened penalties and increased exposure for failure to pay wages, benefits and overtime (collectively “wages”) owed to workers. Employers should take immediate notice because any missteps or mistakes may prove extremely costly. In sum, the Law:

• makes employees eligible to receive 200% liquidated damages for all unpaid wages and benefits and recovery of attorneys’ fees and costs;
• permits employees to bring collective ...

At a time when many states and localities are increasing the minimum wage, New Hampshire’s Senate passed a bill that would increase the state’s minimum wage to $12 per hour by 2022.  The very next day, New Hampshire Governor Chris Sununu vetoed the bill. In doing so, Governor Sununu issued a veto message that said the bill would have a “detrimental effect” on the state’s residents and would lead to lost jobs, reduced hours, and less money in the pockets of employees.

Governor Sununu boasted that New Hampshire has the lowest poverty rate in the country, along with one of the lowest ...

The U.S. Department of Labor’s Wage and Hour Division (“WHD”) shows no signs of fatigue as it releases two new opinion letters on the Fair Labor Standards Act (“FLSA”) within the first week of August.  These opinion letters address the FLSA’s partial overtime exemption on a “work period basis” and the status of public agency volunteers.  As we have previously advised, employers should read the WHD’s opinion letters carefully and consult with experienced counsel with any questions about their practices vis-à-vis WHD interpretive guidance.

FLSA Section 7(k)

As ...

Given the prevalence of wage-hour class actions filed against California employers, the Ninth Circuit Court of Appeals from time to time asks the California Supreme Court to clarify certain California wage-hour laws. Last week, the Ninth Circuit asked again in Cole v. CRST Van Expedited, Inc., seeking clarification on the following two questions:

1. Does the absence of a formal policy on meal and rest breaks violate California law?
2. Does an employer’s failure to keep records of meal and rest breaks taken by employees create a rebuttable presumption that the breaks were not provided?

More than seven years 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. Nothing the California Supreme Court said has slowed the filing of meal and rest period class actions against employers doing business in the state.

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 ...

The New York State Assembly and Senate have passed a potentially groundbreaking act (S2844B/A486B) (the “Act”) that would allow current or former employees to obtain liens on their employer’s personal and real property based upon only the mere accusation of wage violations.  And it arguably would allow those employees to obtain liens against individuals, including owners, managers and supervisors.

If the Act is signed by Governor Cuomo, New York would join the few states to permit such liens based on an unproven wage violation allegation.

A lien is a legal claim or a right ...

The U.S. Department of Labor’s Wage and Hour Division (“WHD”) has issued an opinion letter addressing the compensability of a long-haul truck driver time in a truck’s sleeper berth during multi-day trips.  While this question is highly fact-specific, the WHD’s response offers a useful refresher on the widely applicable Fair Labor Standards Act (“FLSA”) concepts of compensability of waiting, sleeping, and traveling time.

In Opinion Letter FLSA2019-10, issued on July 23, 2019, the employer operates a fleet of trucks, licensed by the Department of Transportation to ...

As we have previously written, the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court dramatically changed the standard for determining whether workers in California should be classified as employees or as independent contractors for purposes of the wage orders adopted by California’s Industrial Welfare Commission. A significant question left open by that ruling was whether Dynamex would apply retroactively.

On May 2, 2019, in Vazquez v. Jan-Pro Franchising International, Inc., the Ninth Circuit concluded that Dynamex in ...

After a brief, two-month hiatus, the Wage and Hour Division of the U.S. Department of Labor (“WHD”) has issued another round of opinion letters answering various questions submitted by the public.  Specifically, these opinion letters address the calculation of overtime pay for nondiscretionary bonuses, the application of the highly compensated employee exemption to paralegals, and rounding hours worked under the Service Contract Act (“SCA”).  This guidance marks the first issued by the new Wage and Hour Administrator Cheryl Stanton, who has been in the seat since April.

For decades, 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 it.

But the question employers with time-rounding policies should ask themselves today is this:  Why are we still rounding our employees’ time?

If your answer to that question is Because we have always done it, or Because someone told us it is lawful, it might be time to rethink the issue.

(And if your answer is ...

On June 10, 2019, the U.S. Supreme Court reversed a decision of the Ninth Circuit Court of Appeal and unanimously held that California state wage-and-hour laws do not apply to drilling workers off the coast of California.

In Parker Drilling Management Services, Ltd. v. Newton, the Court held that, under the Outer Continental Shelf Lands Act (“OCSLA”), state law “is not adopted as surrogate federal law” on the Outer Continental Shelf (“OCS”) if “federal law addresses the relevant issue.”

In the case, an employee on the OCS brought claims under a variety of California ...

Earlier this year, in New Prime, Inc. v. Oliveira, 586 U.S. __, 139 S. Ct 532 (2019), the United States Supreme Court held that the Federal Arbitration Act (“FAA”) does not apply to arbitration agreements with independent contractors who are engaged in interstate commerce.  The Supreme Court did not address whether such agreements could be enforced through other laws.

Now, two different panels of the New Jersey Appellate Division have rendered decisions addressing this unresolved issue.  Those panels, however, reached different conclusions regarding whether the arbitration ...

While it may be true that employees rarely even look at their wage statements, there is one group of persons who certainly do – plaintiffs’ lawyers.  Or, more precisely, California plaintiffs’ lawyers.

And after a stunning $102 million award against Wal-Mart for wage statements that the court concluded did not fully comply with California’s onerous wage statement laws, California plaintiffs’ lawyers are likely to look at their clients’ wage statements even more closely – and to file even more class action lawsuits alleging that employers’ wage statements failed ...

Connecticut appears poised to become the next state to raise its minimum wage to $15 per hour, following the trend set by California, Illinois, Massachusetts, New Jersey, New York, and most recently Maryland, in addition to numerous local jurisdictions.  Governor Ed Lamont is expected to sign H.B. 5004, which passed the state’s House and Senate earlier this month.

Under the bill, the state’s current minimum wage of $10.10 will increase to $11 on October 1, 2019. From there, it will increase one dollar every eleven months until it reaches $15 on June 1, 2023. Thereafter, increases ...

On April 29, 2019, the U.S. Department of Labor (“DOL”) issued an opinion letter concluding that workers providing services to customers referred to them through an unidentified virtual marketplace are properly classified as independent contractors under the Fair Labor Standards Act (“FLSA”).

Although the opinion letter is not “binding” authority, the DOL’s guidance should provide support to gig economy businesses defending against claims of independent contractor misclassification under the FLSA. The opinion letter may also be of value to businesses ...

In April 2018, the California Supreme Court issued its long-awaited opinion in Dynamex Operations West, Inc. v. Superior Court, dramatically changing the standard for determining whether workers in California should be classified as employees or as independent contractors for purposes of the wage orders adopted by California’s Industrial Welfare Commission (“IWC”). In so doing, the Court held that there is a presumption that individuals are employees, and that an entity classifying an individual as an independent contractor bears the burden of ...

Webinar – Spring/Summer 2019

Internship programs can help employers source and develop talent, but they do not come without their pitfalls. If you are an employer at a tech startup, a large financial institution, a fashion house, or something else entirely, and you plan on having interns this summer, this webinar is for you. Learn the steps for creating a legally compliant internship program.

For many years, the U.S. Department of Labor (“DOL”) used the “six-factor test” when determining whether an employee was legally considered an unpaid intern, such that the intern ...

Our colleague Stuart M. Gerson at Epstein Becker Green recently posted an article on LinkedIn that will be of interest to our readers: “SCOTUS Today: Class Action Ambiguity Finds No Shelter Under the Federal Arbitration Act.”

Following is an excerpt:

In a 5-4 opinion (divided on expected conservative/liberal lines), authored by the Chief Justice, the Supreme Court has ruled in the case of Lamps Plus, Inc. v. Varella, No. 17-988, that under the Federal Arbitration Act (“FAA”), an ambiguous agreement cannot provide the necessary contractual basis for concluding that ...

On April 12, 2019, in a federal case known as Hamilton v Wal-Mart Stores, Inc., a California jury awarded more than $6 million in meal break premiums to a class of Wal-Mart employees who worked at the company’s fulfillment center in Chino, California.  The jury found that by requiring class members to complete a mandatory security check prior to leaving the facility, Wal-Mart discouraged them from leaving the premises for meal breaks, failing to comply with its obligation to provide class members with required meal breaks.  The verdict – which Wal-Mart may well appeal – provides ...

Our colleagues Adriana S. Kosovych, Jeffrey H. Ruzal, and Steven M. Swirsky at Epstein Becker Green have a post on the Hospitality Labor and Employment Law blog that will be of interest to our readers: “DOL Proposes New Rule to Determine Joint Employer Status under the FLSA.”

Following is an excerpt:

In the first meaningful revision of its joint employer regulations in over 60 years, on Monday, April 1, 2019 the Department of Labor (“DOL”) proposed a new rule establishing a four-part test to determine whether a person or company will be deemed to be the joint employer of persons ...

The Acting Administrator of the U.S. Department of Labor’s Wage and Hour Division recently issued opinion letters addressing (i) the 8-and-80 overtime pay system available to certain healthcare employers; (ii) the overtime exemption for teachers, and (iii) the exemption for employees in agriculture.  The analyses and conclusions in those opinion letters are instructive for employers not only in those industries, but in many other industries as well, because they confirm the Department’s commitment to construing FLSA exemptions fairly rather than narrowly.

“8 ...

On March 22, 2019, we wrote that the two houses of the Maryland General Assembly had agreed on a conference report adopting the Senate’s version of a bill that would increase the state-wide minimum wage to $15 by 2025 or 2026, depending on the size of the company, with two minor changes. We also discussed the bill on March 18, 2019.

As we predicted, Governor Hogan vetoed the bill on March 27, but the General Assembly on March 28, 2019 voted to override the veto. This means the first increase in the state-wide minimum wage will be on January 1, 2020, from $10.10 to $11 for all employers.

On March 18, 2019, we wrote that both houses of the Maryland Assembly had passed bills that would increase the state-wide minimum wage to $15 by 2025 or 2028, depending on the size of the company, but that the House and the Senate still had to work out their differences.

The two chambers acted quickly and on March 20, 2019 (Senate) and March 21, 2019 (House) adopted a conference report that essentially adopted the Senate version (SB 280), with two changes: (1) a two-year acceleration in the timing for companies with fewer than 14 employees, from January 1, 2028 to January 1, 2026, and (2 ...

Maryland appears poised to increase its minimum wage to $15 per hour over the next few years, joining California, Illinois, Massachusetts, New Jersey, New York, and various local jurisdictions, including its own Montgomery County and neighboring District of Columbia.

On March 14, 2019, the Maryland Senate approved a bill (SB 280) that would increase the state-wide minimum wage for companies with at least 14 employees from $10.10 to $15 by January 1, 2025, starting with an increase to $11 on January 1, 2020. Smaller business would have until January 1, 2028 to reach $15. Although this ...

On March 14, 2019, the U.S. Department of Labor’s Wage and Hour Division (“WHD”) released two opinion letters concerning the Fair Labor Standards Act (“FLSA”). One letter addresses the interplay between New York State’s overtime exemption for residential janitors (colloquially referred to as apartment “supers”) and the FLSA, which does not exempt such employees, and the other addresses whether time spent participating in an employer’s optional volunteer program constitutes “hours worked” requiring compensation under the FLSA.

While these opinion ...

As we wrote in this space just last week, the U.S. Department of Labor (“DOL”) has proposed a new salary threshold for most “white collar” exemptions.  The new rule would increase the minimum salary to $35,308 per year ($679 per week) – nearly the exact midpoint between the longtime $23,600 salary threshold and the $47,476 threshold that had been proposed by the Obama Administration.  The threshold for “highly compensated” employees would also increase -- from $100,000 to $147,414 per year.

Should the proposed rule go into effect – and there is every reason to believe it ...

In putative class action lawsuits, it is not uncommon for counsel for the employer to interview putative class members about the claims in the lawsuit. A new decision from the United States District Court for the Eastern District of Pennsylvania has concluded that such communications could be improper, at least in that state.

In Weller v. Dollar General Corp., No. 17-2292 (E.D. Pa.), a case in which the plaintiff brought both putative class action claims under Fed. R. Civ. P. 23 and a proposed collective action on the Fair Labor Standards Act (“FLSA”), the employer interviewed ...

The New York State Department of Labor (“NYSDOL”) recently announced that it would no longer pursue employee scheduling regulations concerning “call-in” (or “on-call”) pay and other so-called predictive scheduling matters. As we previously reported, the proposed regulations, if adopted, would have required most employers in New York State to provide call-in pay under various circumstances, even though the employee had not actually worked or, in some situations, had not even reported to work.

Proposed Regulations

The NYSDOL’s proposed regulations had ...

The U. S. Supreme Court established limitations on personal jurisdiction over non-resident corporate defendants in state court “mass” actions in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco Cty., 137 S. Ct 1773 (June 17, 2017) (hereafter “BMS”).  BMS’s key holding was that the necessary nexus between an appropriate court for a mass action and a corporate defendant required more than just the company’s connections in the state and the alleged similarity of claims by resident plaintiffs and non-resident plaintiffs.  The practical effect is ...

The U.S. Department of Labor has released a proposal to update the overtime rules under the federal Fair Labor Standards Act. Employers should be prepared to raise salaries to meet the minimum thresholds, pay overtime when appropriate, and otherwise adhere to the new rules if they go into effect.

Federal overtime provisions are contained in the Fair Labor Standards Act ("FLSA"). Unless exempt, employees covered by the FLSA must receive overtime pay for hours worked over 40 in a workweek. To be exempt from overtime (i.e., not entitled to receive overtime), an exemption must apply ...

The obligations of a district court to analyze conflicting evidence regarding class and collective action certification was recently addressed by the Third Circuit Court of Appeals in Reinig v. RBS Citizens N.A., 912 F.3d 115, (3d Cir. 2018) (“Citizens”). In that case, the Third Circuit opined that Fed.R.Civ.P. 23 class certification orders (i) must explicitly define the classes and claims that are the subject of a certification order and (ii) provide an analysis of how the court reconciled any conflicting evidence supporting class certification.

In addition, the Third ...

Illinois Governor Pritzger has signed a bill raising the Illinois minimum wage to $15 per hour by 2025, making Illinois the first Midwestern state to hike the minimum wage to that level. States on both coasts, including California, Massachusetts, and New Jersey, have already moved to enact such a hike.

Currently, the minimum wage in Illinois is $8.25 per hour. Under the new legislation, the minimum wage will increase to $9.25 by January 1, 2020 and to $10 on July 1, 2020. The minimum wage will then increase by $1 per hour each January 1 until it reaches $15 per hour in 2025.

The business ...

As we previously shared in this blog, the U.S. Department of Labor’s Wage and Hour Division (“WHD”) issued an opinion letter in November 2018 changing the Department’s position regarding whether and when an employer with tipped employees, such as a restaurant, can pay an employee a tipped wage less than the federal minimum wage.

The issue was whether an employer must pay a tipped employee the full minimum wage for time spent performing what the industry calls “side work”: tasks such as clearing tables or filling salt and pepper shakers that do not immediately generate ...

Joining California and New York, New Jersey has become the third state with a phased-in $15 minimum wage requirement for most employees. On February 4, 2019, Governor Phil Murphy signed into law A15 (“Law”), which raises the state minimum wage rate for employers with six or more employees to $10.00 per hour on July 1, 2019, and then to $11.00 per hour on January 1, 2020. Thereafter, the minimum wage will increase annually on January 1 by $1.00 per hour until it reaches $15.00 per hour on January 1, 2024. The minimum wage hike will phase in at a slower rate for employers with five or ...

The Third Circuit Court of Appeals ruled that a federal statute that governs interstate trucking does not preempt the application New Jersey’s ABC test for distinguishing between employees and independent contractors.

In Bedoya v. American Eagle Express Inc., New Jersey-based delivery drivers for AEX alleged that the company misclassified them as independent contractors rather than employees in violation of the New Jersey Wage and Hour Law and the New Jersey Wage Payment Law. AEX moved to dismiss the drivers’ claims as preempted by the Federal Aviation Administration ...