On Tuesday, September 20, 2016, twenty-one states filed a complaint in federal court in Texas challenging the new overtime rule finalized by the Department of Labor (“DOL”) in May of this year. The States seek to prevent implementation of the new rule, which is scheduled to become effective on December 1, 2016. That same day, fifty-five business groups, including several chambers of commerce, filed a similar lawsuit in Texas federal court to block the rule.
In 2015, the Department of Labor (“DOL”) proposed substantial changes to the minimum salary level requirements, sought input on whether bonuses and incentives should be included in meeting the salary level test and considered changing the duties test to establish overtime eligibility. Taken together, these proposed changes would have had a drastic effect on the obligation of employers to pay overtime. On May 18, 2016, DOL issued its Final Rules and employers have until December 1, 2016 to comply. Overall, the changes strike a middle ground as DOL declined to adopt the more restrictive California 50% duties test. However, doubling the salary level threshold and other changes present significant economic and compliance challenges for employers. Below is a summary of key takeaways and steps employers should consider to address these changes and ensure compliance.
Whether a Human Resources Director will be deemed the “employer” and held individually liable for alleged violations under the Family Medical Leave Act (“FMLA”) should be left to the jury, according to the Second Circuit’s recent FMLA decision. In Graziadio v. Culinary Institute of America, et al., 15-888-cv (2d Cir. Mar. 17, 2016), the Second Circuit found that there could be a viable claim for individual liability under the FMLA and it also announced the standard for what could be considered unlawful “interference” with FMLA rights.
While the Supreme Court in Tyson Foods, Inc. v. Bouaphakeo dashed employers’ hopes that the Court would broadly preclude statistical evidence and severely limit wage and hour class actions in a fashion similar to its restriction of discrimination class actions in Wal-mart v. Dukes, the Court was also clear that this type of evidence will not be appropriate or probative in all wage and hour claims. In ruling for the class action claimants, the Court affirmed a $2.9 million jury award for overtime claims related to donning and doffing at an Iowa pork processing plant. In so ruling, the Supreme Court refused to adopt the position advanced by Tyson Foods and several of its amici that class actions cannot be resolved by reliance upon representative evidence or statistical samples. It also refused to embrace Tyson Food’s reading of Wal-mart v. Dukes as standing for the proposition that representative sample is an impermissible means of establishing class-wide liability. But the Court also made clear whether statistical evidence could be used for liability depends on the claims asserted and the particular evidence. While the decision is not unsurprising after oral arguments, it seems likely that employers will see an uptick in plaintiffs aggressively relying on “representative” statistical evidence in wage and hour collective and class cases. There are, however, several “lessons learned” based upon the majority’s decision.
The U.S. Department of Labor (DOL) sent its much anticipated final overtime regulations to the Office of Management and Budget (OMB) for review on March 14, 2016. Technically, this move came slightly ahead of schedule. OMB now has 90 days to review, which would put its “due date” in mid-June – ahead of the July regulatory agenda publication date we previously reported. However, as these overtime regulations are a top-line priority subject to intense political scrutiny, there is reason to believe OMB may not complete its review within the 90-day window.
Solicitor of Labor Patricia Smith likes to quip that the Department is “working overtime on overtime.” DOL took a break from the much-anticipated overtime regulations and issued new guidance yesterday on the question of who qualifies as a “joint employer” under the Fair Labor Standards Act (FLSA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA). The guidance (Administrator’s Interpretation (AI) No. 2016-1) issued by Wage and Hour Division (WHD) Administrator Dr. David Weil, sets forth a broad (and sometimes ambiguous) reading of statutory provisions, regulations, and case law to address joint employment issues under the two statutes. The guidance was not unexpected as some advocates have been asking for the DOL’s position on joint employment since the NLRB’s expansion of joint employment in Browning-Ferris, 362 NLRB No. 186 (Aug. 27, 2015). Notably, the level of coordination between DOL and the NLRB on joint employment issues has been the subject of Congressional oversight and the oversight committee now claims that DOL provided suspect responses to members of Congress regarding interactions between the agencies on the issue.
A recently filed petition for certiorari asks the U.S. Supreme Court to clarify the procedural requirements for ending private causes of action under the Fair Labor Standards Act (“FLSA”). Specifically, petitioner Dorian Cheeks is asking the Supreme Court to review a decision from the U.S. Court of Appeals for the Second Circuit holding that Federal Rule of Civil Procedure 41 (“FRCP 41”) prohibits the dismissal of FLSA claims through private, stipulated settlement agreements absent approval from either a federal district court or the U.S. Department of Labor (“DOL”).
The Second Circuit revived an FLSA collective action filed by Michael Lola, an attorney licensed to practice law in California, who for fifteen months performed document review services for Skadden Arps, Slate, Meagher & Flom LLP (“Skadden”) though a staffing agency while living and working in North Carolina. Lola alleged that these services did not constitute the “practice of law,” and that he was therefore eligible for overtime under the Fair Labor Standards Act. Rejecting Lola’s arguments, a Southern District of New York judge dismissed the complaint on a Rule 12(b)(6) motion on the grounds that Lola was exempt from overtime. However, the Second Circuit held that when accepting all of Lola’s allegations as true for purposes of a motion to dismiss, his work might not constitute the practice of law.
In addressing a matter of first impression, the Second Circuit Court of Appeals set out a new standard to determine when an unpaid intern is deemed an employee for purposes of the Fair Labor Standards Act (“FLSA”) and thus entitled to compensation, including minimum wage and overtime, under the FLSA. Two appeals were argued in tandem on this issue with the Second Circuit issuing an Opinion on July 2, 2015 in Glatt v. Fox Searchlight Pictures, Inc., and a Summary Order in Wang v. Hearst Corp.
Baseball season is well underway as fans fill themselves up on hot dogs and beers, don their rally caps for some late-inning luck, and cheer for their favorite players. Meanwhile, a class action against Major League Baseball by former minor league players has been trotting through federal court. In Senne v. MLB, No. 3:14-cv-00608-JCS (N.D. Cal. Feb. 7, 2014), ECF No. 1, the plaintiffs cry foul in alleging that “paying their dues” on the way to the big leagues isn’t paying the bills. Specifically, the plaintiffs allege that MLB and all 30 of its teams have violated the FLSA by not paying the minor leaguers overtime and minimum wage.