November 12, 2014
Wage and Hour
November 11, 2014
With that first real chill in the air, the holiday season is suddenly upon us. For parents, it is a time to relive our childhood, watching with our children all of those holiday specials ranging from It's the Great Pumpkin, Charlie Brown to Santa Claus is Comin' to Town. Unfortunately, for members of our misfit profession, “tis the season” is not so much about being jolly, but more about defending lawsuits. And speaking of lawsuits, a daily perusal of employment law blogs and periodicals reveals that there is no shortage of new and innovative ways to sue an employer. The seemingly endless tide of profligate litigation makes me shiver like Linus in the Pumpkin Patch about what would happen if the Department of Labor, the EEOC, or the plaintiff’s bar set its sights on Santa and his manufacturing plant in the North Pole. For this reason, I offer the following guidance to Mr. Kringle d/b/a Santa on how to clean up some glaring employment law violations. (Disclaimer: Our guidance to Mr. Kringle is not intended to be legal advice nor should it be a substitute for him retaining local counsel familiar with the laws in his local jurisdiction. I would also include the obligatory tax advice disclaimer, but I believe Mr. Kringle is tax-exempt.) I will discuss individual lawsuits below. However, my main concern in terms of liability is in the arena of the class action. I say this with all due love and affection, “Mr. Kringle, your workshop is a treasure-trove of wage and hour violations.” The elves work, quite obviously, more than 40 hours a week. They work through meal periods and weekends and holidays. Where is their overtime pay? While efficiently furnished, I don’t see any punch clock for your employees. Can we say liquidated damages and attorneys’ fees? Your workplace is also quite literally an accident waiting to happen. The elves have no protective equipment. There is an Abominable Snowman on the shop floor. Can we all say, “OSHA”? Mr. Kringle, despite your big heart, your workplace is rife with harassment and discrimination. For example, there is Rudolph’s red nose and the universally known harassment and bullying to which he has been subjected (“used to laugh and call him names”). The un-remedied mocking of Rudolph makes for a great holiday gift for the plaintiff’s lawyer who signs up Rudolph and his “slam dunk” suit. (We make no representations as to whether any plaintiffs-side lawyers are on the "Nice List" and worthy of such a gift). I think it is imperative that all of your reindeer immediately receive anti-harassment training. So too with poor Hermey. The Seinfeldesque “Anti-Dentite” environment that you have condoned is ripe for litigation and is otherwise an insult to dentists world-wide. That leads us to our Faragher defenses. Are your EEO policies translated into “Elfish” and properly distributed with a clear record of same? Of additional concern, have you taken care to make sure that the post-toy delivery workplace celebration does not cross the proverbial “line” of appropriateness and result in more than just hangovers at the workshop the next day? Finally, we need a word about the Island of Misfit Toys. Notwithstanding that the public may want all lawyers permanently deposited in this desolate place, it is nonetheless illegal to segregate your workforce on the basis of such protected characteristics as being a cowboy who rides an ostrich. And, who among us wouldn’t want to ride an ostrich? Of course, Mr. Kringle is not the only one staring down the barrel at punitive damages. Yes, I’m talking to you, Mr. Burgermeister Meisterburger. Making toys is plainly a recreational activity under state labor laws and interfering with concerted activity in this regard will get you an unfriendly knock on the door from the NLRB. So, to our clients and blog subscribers, I wish you all a joyous holiday season in front of a warm fire surrounded by friends and family, without any visions of EEOC complaints or Department of Labor audits dancing in your heads.
June 20, 2014
March 17, 2014
February 13, 2014
On February 12, 2014, President Obama signed an Executive Order requiring that all new federal contracts and subcontracts contain a clause specifying that the minimum wage to be paid to workers under those federal contracts and subcontracts must be at least $10.10 per hour beginning January 1, 2015. The federal contracts and subcontracts covered by this Executive Order include procurement contracts for services or construction and contracts for concessions. This new $10.10 minimum wage will also apply to disabled employees who are currently working under a special certificate issued by the Secretary of Labor permitting payment of less than the minimum wage. Beginning January 1, 2016, and annually thereafter, the minimum wage for federal contractors will be increased by the Secretary of Labor based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, and rounded to the nearest multiple of five cents. The Secretary of Labor is required to publish the new minimum wage at least 90 days before the new minimum wage is scheduled to take effect. For tipped employees, the hourly cash wage that must be paid by a federal contractor must be at least $4.90 beginning on January 1, 2015. In each subsequent year, the federal contractor minimum wage for tipped employees will be increased by 95 cents until it equals 70 percent of the federal contractor minimum wage in effect for non-tipped employees. If an employee’s tips, when added to the hourly wage, do not add up to the federal contractor minimum wage for non-tipped employees, the federal contractor will be required to supplement the employee's hourly wage to make up the difference. The Secretary of Labor is expected to issue regulations by October 1, 2014, to implement the provisions of the Executive Order.
January 27, 2014
On January 27, 2014, the U.S. Supreme Court issued a unanimous decision clarifying the meaning of "changing clothes" under the Fair Labor Standards Act ("FLSA"). In Sandifer v. United States Steel Corp., the Supreme Court adopted a fairly broad definition of the phrase "changing clothes," which should provide employers with some comfort that provisions of a collective bargaining agreement excluding clothes-changing time from compensable hours worked will likely be applied to time spent by employees donning and doffing most forms of protective gear. In general, the FLSA requires employers to pay employees for time spent donning and doffing protective clothing and equipment, if the employer requires employees to wear such protective clothing and equipment, and if the employee must change into and out of the protective clothing and equipment at the work site. However, Section 203(o) of the FLSA provides that such time is not compensable if the employer and the representative of the employer's employees have agreed to a provision in their collective bargaining agreement to exclude from hours worked "time spent in changing clothes or washing at the beginning or end of each workday." In Sandifer, a group of U.S. Steel employees contended that even though their collective bargaining agreement excluded time spent "changing clothes" from compensable work time, they should nevertheless be compensated for such time because many of the items they were required to wear were protective in nature. The employees argued that the items they were required to wear should not be considered "clothes" under the FLSA because those items are intended to protect against workplace hazards. The employees also argued that, by putting on those protective items over their own clothes (rather than substituting those protective items for their own clothes), they were not engaged in "changing" clothes under the FLSA. The Supreme Court refused to interpret the phrase "changing clothes" as narrowly as the employees urged. With respect to the definition of "clothes," the Supreme Court examined the dictionary definition of the term that existed at the time Section 203(o) of the FLSA was enacted, and held that the term includes all items that are designed to cover the body and are commonly regarded as articles of dress. The Supreme Court further held that the definition of "clothes" does not necessarily exclude items that are worn exclusively for protection, as long as those items are designed to cover the body and are regarded as articles of dress. With respect to the definition of "changing," the Supreme Court again examined the dictionary definition of the term that existed at the time Section 203(o) was enacted, and held that the term can mean either substituting or altering. Accordingly, the Supreme Court concluded that time spent by employees altering their garments by putting on and taking off articles of dress constituted "changing clothes" under the FLSA, and that the employees were not entitled to compensation for such time based on the exclusion set forth in the collective bargaining agreement. Applying these definitions, the Supreme Court considered 12 items of protective gear: a flame-retardant jacket, a pair of pants, and a hood; a hardhat; a snood (which is a hood that covers the neck and upper shoulder area); wristlets; work gloves; leggings; metatarsal boots; safety glasses; earplugs; and a respirator. The Supreme Court found that the first nine items qualified as "clothes," but the last three did not. Thus, the Supreme Court was left to consider the question of whether courts should tally the minutes spent donning and doffing each item, in order to deduct the time spent donning and doffing the non-clothing items from non-compensable time. Recognizing that "it is most unlikely Congress meant Section 203(o) to convert federal judges into time-study professionals," the Supreme Court stated that courts should analyze whether the time period at issue can, on the whole, be characterized as "time spent in changing clothes or washing." The Supreme Court articulated a "vast majority" standard for courts to use in their analysis:
If an employee devotes the vast majority of the time in question to putting on and off equipment or other non-clothes items (perhaps a diver's suit and tank) the entire period would not qualify as 'time spent in changing clothes' under Section 203(o), even if some clothes items were donned and doffed as well. But if the vast majority of the time is spent in donning and doffing 'clothes' as we have defined that term, the entire period qualifies, and the time spent putting on and off other items need not be subtracted.
The Supreme Court concluded that the employees of U.S. Steel spent a vast majority of the time in question donning and doffing items that fell within the definition of "clothes," and that their time was non-compensable under the terms of the collective bargaining agreement. Although courts addressing this issue in the future will be bound by the broad definition of the phrase "changing clothes" set forth in the Supreme Court's Sandifer decision, courts will be left to analyze on a case-by-case basis whether employees spend a "vast majority" of the time in question donning and doffing items that qualify as clothes or non-clothes items.
January 8, 2014
- the employee's rate or rates of pay (for non-exempt employees, this must include both the regular and overtime rate)
- the employee's basis of pay (e.g., hourly, shift, day, week, salary, piece, commission, or other)
- allowances, if any, claimed as part of the minimum wage (e.g., tips, meals, lodging)
- the regular pay day; and
- the name (including any "doing business as" name), address, and telephone number of the employer.
NYSDOL Adopts Amended Minimum Wage Orders Implementing New Requirements for Employers Effective December 31, 2013
December 18, 2013
October 17, 2013
On October 16, our firm conducted a webinar, which provided a detailed explanation of the wage deduction regulations promulgated by the New York State Department of Labor ("NYSDOL") on October 9. If you wish to view a recording of the webinar in its entirety and print out a copy of the PowerPoint slides from the webinar, you can click here.
October 9, 2013
September 30, 2013
August 23, 2013
On August 9, 2013, in Sutherland v. Ernst & Young LLP, the Second Circuit Court of Appeals ruled that the Fair Labor Standards Act (“FLSA”) does not prohibit the enforcement of a class action waiver in an arbitration agreement. The Second Circuit determined that nothing in the FLSA could be construed to override the liberal policy favoring the enforceability of arbitration agreements established by the Federal Arbitration Act ("FAA"). The Second Circuit further held that a class action waiver in an arbitration agreement was not rendered invalid simply because that waiver removed the financial incentive for the employee to pursue a claim under the FLSA.
Stephanie Sutherland (“Sutherland”) sued her former employer, Ernst & Young LLP (“E&Y”), in a putative class action to recover overtime wages under the FLSA and the New York State Department of Labor’s Minimum Wage Order. When Sutherland accepted her offer of employment with E&Y, she signed an offer letter and a confidentiality agreement, both of which provided that disputes between Sutherland and E&Y would be resolved in mandatory mediation and arbitration, pursuant to the terms of E&Y’s Common Ground Dispute Resolution Program (the “Arbitration Agreement”), a copy of which was attached to the offer letter and the confidentiality agreement. Sutherland and E&Y agreed that the Arbitration Agreement barred both civil lawsuits and any class arbitration proceedings.
After Sutherland filed her putative class action in federal court, E&Y filed a motion to dismiss or stay the proceedings, and to compel arbitration on an individual basis. The U.S. District Court for the Southern District of New York denied the motion, and E&Y appealed. The Second Circuit reversed the District Court’s order.
The Second Circuit noted that the FAA establishes a liberal federal policy favoring arbitration and that federal courts should enforce arbitration agreements according to their terms unless there is a contrary congressional command overriding the FAA’s mandate in favor of arbitration. The Second Circuit held that the FLSA contains no contrary congressional command against waiving class actions. The court reasoned that since Section 16(b) of the FLSA requires an employee to affirmatively opt-in to any collective action brought under the statute, the employee surely also has the power to waive participation in class proceedings as well. Notably, the Second Circuit expressly declined to follow the National Labor Relations Board’s decision in D. R. Horton, Inc., which held that a waiver of the right to pursue a claim under the FLSA collectively in any forum violates the National Labor Relations Act.
Sutherland asserted that the Second Circuit should invalidate the class action waiver in the arbitration agreement because the waiver prevented her from effectively vindicating her statutory claims, and thus operated as a prospective waiver of her "right to pursue” statutory remedies. She argued that she could not effectively vindicate her FLSA claims because she had no financial incentive to pursue those claims on an individual basis. She claimed that she would be forced to expend approximately $200,000 in an individual action to recover less than $2,000 in damages. The District Court had been persuaded by this argument, relying on the Second Circuit’s 2009 decision in In re: American Express Merchants’ Litigation.
After the District Court’s ruling, however, the Supreme Court reversed the Second Circuit’s decision in American Express. The Supreme Court held that the plaintiffs in that case could not justify the invalidation of a class action waiver under the “effective vindication doctrine” by showing that they had no economic incentive to pursue their antitrust claims individually in arbitration. The Supreme Court noted that the mere fact that it was not worth the expense to prove a statutory remedy did not constitute an elimination of the right to pursue that remedy. Accordingly, the Second Circuit concluded that its 2009 American Express decision, upon which the District Court relied, was no longer good law.
With this decision, the Second Circuit has joined the trend among the federal circuit courts to enforce class action waivers in FLSA lawsuits. Given the high cost of litigating wage and hour class actions, arbitration agreements containing class action waivers can be a useful tool for some employers. Employers should carefully evaluate whether it would be worthwhile to enter into arbitration agreements with employees and whether to include a class action waiver in such arbitration agreements.