BREAKING NEWS: U.S. DOL Announces New FLSA Proposed Rule

By Scott A. Holt

 

The U.S. Department of Labor (DOL) released its proposed rule today that would broaden federal overtime pay regulations by raising the minimum salary threshold to $50,440 per year in order qualify for an exemption from overtime under the Fair Labor Standards Act (FLSA).

To help understand what this means, below are answers to some questions you might have:

Q.        Why is the DOL making this change?

A.        The proposed change was prompted by a memorandum President Obama issued in March 2014 which directed the DOL to “modernize and streamline” the regulations on exemptions from the FLSA’s minimum wage and overtime pay requirements.  Continue reading

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A Reminder About Comp Time

It’s summer and that means it’s time for summer vacations.  Some employers are unaware of the law regarding when an employee may be paid “comp time” instead of wages.  So here’s a brief recap of what you should know.logo_from_dev

Rule #1

Absent an exemption (see below), all employees must be paid at an overtime rate of 1.5 times the normal hourly rate for all hours worked in excess of 40.

This means that an employee who earns $20/hr. must be paid $30/hr for each hour worked over 40.

If the employee works 40 hours, he is paid $20 x 40 = $800.  If he works 42 hours, he is paid $20 x 40 ($800) plus $30 x 2 ($60) as overtime compensation.

But he may not be paid his regular rate for the first 40 hours ($800) plus 2 hours of “comp time.”  No, no, no.  All time in excess of 40 must be paid (money in an amount equal to) 1.5 times the normal hourly rate.

Rule #2

Provided the employer complies with Rule #1, the employer may offer comp time as a supplemental form of wages.

One common example of this is paying comp time for hours 35-40.  So, in addition to his regular wage of $800, the employee may also be paid 5 hours in comp time as an incentive or reward for working those last five hours.  Similarly, some employers offer comp time for premium shifts.

Both scenarios are totally kosher, so long as the employee is receiving his regular wage.  Comp time is a supplement not a substitute.

Rule #3

As with any rule, there are exceptions.

But, with comp time, the exceptions are few.  An employer may pay an employee comp time in lieu of  wages in certain situations.  First, exempt employees (those who are not entitled to overtime in the first instance) can be paid comp time for time worked in excess of 40 in a week.

Second, certain public-sector employees may be paid comp time, including state and local government employers.  In the public sector, under certain conditions, employees may receive compensatory time off at a rate of 1.5 hours for each overtime worked, instead of cash overtime pay.

Law enforcement, fire protection, and emergency response personnel and employees engaged in seasonal activities may accrue up to 480 hours of comp time; all other state and local government employees may accrue up to 240 hours.

Recap

There are exceptions to every rule.  For example, some states do not permit the use of comp time or limit accrual to a lesser number than provided by federal law.  Before you implement a comp-time system in your workplace, you should consider having it reviewed with legal counsel.  And, if you have a comp-time system in place for non-exempt employees as a substitute for overtime pay, you should consider consulting with your employment lawyer to determine whether the system violates state or federal wage payment laws.

See also U.S. DOL Fact Sheet #7 State & Local Governments Under the FLSA

Other FLSA posts

Auto-Deduct Meal-Break Policies Live to See Another Day

The number of FLSA lawsuits filed each year continues to rise.  See The Wage & Hour Litigation Epidemic Continues, at Seyfarth Shaw’s Wage & Hour Litigation Blog.  Often, the lawsuits follow certain trends, targeting a particular industry, job type, or claim.  One such trend, which I’ve written about previously, is meal-break claims.  In these suits, the plaintiffs allege that their pay was automatically deducted for meal breaks that they never received.logo_from_dev

Although this has been a popular claim, it’s not been a very successful one.  And a recent case from the Eastern District of New York gives employers real reason to believe that meal-break claims are all but dead upon arrival.

In DeSilva v. North Shore-Long Island Jewish Health System, Inc., the court decertified a collective action of 1,196 plaintiffs who had alleged that they were subject to automatic deduction of meal breaks that they didn’t receive.  In its opinion, the court makes clear that such claims will have a difficult time proceeding as a collective action:

In the time since this action was initially filed, mounting precedent supports the proposition that [the employer’s] timekeeping system and system-wide overtime compensation policies are lawful under the FLSA.

The court explains that this “mounting precedent” has resolved any doubt about the validity of auto-deduct policies, which require an employee to report a missed break to his supervisor in order to be paid for it.  If no report of a missed break is made, the break period (usually 30 minutes) is automatically deducted from the time worked.  This timekeeping system has the benefit of not requiring that employees clock in and out during their breaks-only at the beginning and end of each shift.  The court reiterated that “automatic meal deduction policies are not per se illegal” and:

[w]ithout more, a legal automatic meal deduction for previously scheduled breaks cannot serve as the common bond around which an FLSA collective action may be formed.”

This decision continues to build on the growing body of case law dismissing or decertifying FLSA collective and class actions arising from auto-deduct meal-break policies.  Good news for employers, particularly in health care, where these policies are commonplace.

DeSilva v. N. Shore-Long Island Jewish Health System, Inc., No. 10-CV-1341 (PKC) (WDW), 2014 U.S. Dist. LEXIS 77669 (E.D.N.Y. June 5, 2014).

 

See also

2d Cir. Drops the FLSA Hammer (Dejesus v. HF Mgmt’s Servs., LLC, No. 12-4565 (2d Cir. Aug. 5, 2013).

Another Auto-Deduct Case Bites the Dust (Raposo v. Garelick Farms, LLC (D. Mass. July 11, 2013)).

8th Cir- FLSA Plaintiffs Must Spell It Out (Carmody v. Kan. City Bd. of Police Comm’rs (8th Cir. Apr. 23, 2013)).

2d Cir- FLSA Does Not Cover Gap Time (Lundy v. Catholic Health Sys. (2d Cir. Mar. 1, 2013)).

Another Employer’s Auto-Deduct Policy Is Upheld (Creeley v. HCR ManorCare, Inc., (N.D. Ohio Jan. 31, 2013)).

6th Cir. Affirms Dismissal of FLSA Gotcha Litigation (White v. Baptist Mem’l Health Care Corp. (6th Cir. Nov. 6, 2012)).

The Legality of Automatically Deducting Meal Breaks (Camilotes v. Resurrection Health Care Corp. (N.D. Ill. Oct. 4, 2012)).

E.D. Pa. Dismisses Nurses’ Claims for Missed Meal Breaks, Part I and Part II (Lynn v. Jefferson Health Sys., Inc. (E.D. Pa. Aug. 8, 2012)).

FLSA Victory: Class Certification Denied (Pennington v. Integrity Comm’n, LLC (E.D. Mo. Oct. 11, 2012)).

Chefs and Employment Law: A Valentine’s Day Post

Rumor has it that today is Valentine’s Day.  Being married to a chef-restaurateur, Valentine’s Day doesn’t mean “romantic holiday” to me as much as “very, very busy workday.”  And, for that reason, I’ll dedicate today’s post to the food-service professionals who have a long weekend of work ahead of them.

There are plenty of employment-law topics with a chef or restaurant connection.  Here are a few stories from recent history that come to mind.love heart tattoo art_thumb

Wage-and-Hour Claims

Certainly, restaurants are not the only industry subject to wage-and-hour claims by employees.  But there does seem to have been a recent proliferation of settlements of such claims by businesses owned by famous-name chefs.

There was the $5.25 million settlement forked out by Chef Mario Batali in March 2012, over allegations that servers’ tips had been improperly withheld.  Then there was the January 2014 settlement agreement that Chef Daniel Boulud reached with 88 workers who alleged that their pay had been improperly reduced to account for tips, resulting in payment of overtime at an incorrect rate.  The amount of that settlement is confidential.  And, even more recently, there was the $446,500 settlement agreement reached to resolve the wage claims of 130 servers at two NYC restaurants owned by Chef Wolfgang Puck.

Why are so many wage claims against restaurants?  One reason is the complexity of the laws in this area.  The overtime laws are complicated even in the context of an employee who receives hourly wages only.  But, add to that tip credits, earned tips, and tip pooling, and you’ve got a virtual maze of complex issues.  The laws are not easy to navigate, especially without guidance from experienced legal counsel.

Social-Media Use and/or Misuse

I’d be remiss, of course, if I didn’t give at least one social-media related story, too.  So I will end today’s post with a reference to a story about a chef who sent a bunch of not-so-nice tweets from the restaurant’s official Twitter account after he’d been fired but before (apparently) the restaurant had changed the password on its account.

Chef Grant Achatz, owner of Alinea in Chicago, landed in hot water when he tweeted about a couple who brought their 8-month old to dinner.  I have a definite opinion on this story.  Having been to Alinea, I feel very comfortable saying that it is not a place where an 8-month old needs to be and, if the 8-month old is crying at the top of his lungs, it’s not a place where that baby should be.  The restaurant is very expensive, with meals starting at more than $200 per person.  Reservations are wickedly difficult to get with only 80 seats.

Most important, though, is the nature of the experience.  Diners fight for reservations and pay big bucks for a reason–the meal is something you remember forever.  The food is so far beyond anything else, it’s almost an Alice-In-Wonderland experience.  And to have that be ruined by the guests at the table next to you would be, to me anyway, a crushing disappointment.

So, there.  That’s where I stand on the question.  Chef Achatz’s tweet did not offend me or make me adore his restaurant any less.

FMLA Master Class: Feb. 12, 2014

The Family and Medical Leave Act has been a part of the workplace for more than a decade, so it’s gotten easier for HR to administer, right?  Not so.  Confusing regulations, coupled with numerous recent changes at both the legislative and regulatory levels and conflicting court decisions, ensure that FMLA continues to be one of the biggest compliance headaches for employers.

Let us help you clarify the confusion surrounding the numerous legislative and regulatory changes to the FMLA and get answers to all your FMLA questions at this advanced-level seminar just for Delaware employers.  Learn More.

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  • The latest expansion, so you don’t risk noncompliance
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  • How to tame the intermittent leave and reduced schedule beasts, and put a stop to abuse and fraud
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2d Cir. Drops the FLSA Hammer

The FLSA continues to wreak havoc for countless employers. I’ve written numerous times about the difficulties in defending against a claim brought under the FLSA or its state counterparts.  Even meritless claims can be incredibly costly to litigate, leaving many employers feeling like they have no choice but to settle. I believe the term I’ve used on more than one occasion to describe such situations is “legal extortion.”3d man with hammer_thumb

There are, however, some small glimmers of hope from the courts. I’ve written about a line of cases that have rejected plaintiff’s auto-deduction cases.  I also wrote recently about an 8th Cir. decision, Carmody v. Kansas City Board of Police Commissioners, in which the court awarded summary judgment against a class of plaintiff-police officers who failed during discovery to identify with specificity the hours they claimed to have worked but not been paid. This decision was a very big deal for employers.  Which is why a new decision from the 2d Circuit offers even more hope that the law will trend towards dismissal of meritless cases involving legal extortion.

In Dejesus v. HF Management Services, LLC, the plaintiff’s overtime claim was dismissed by the trial court because her complaint did not include “any approximation of the number of unpaid overtime hours worked, her rate of pay, or any approximation of the amount of wages due.”  Instead, her complaint merely alleged that she worked more than forty hours per week during “some or all weeks” of her employment.

On appeal, the 2d Cir. affirmed the decision of the trial court, finding that the plaintiff had not plausibly alleged that she worked overtime without proper compensation under the FLSA.  The court reiterated the standard that it had announced in Lundy v. Catholic Health System of Long Island, decided earlier this year.  Specifically, the standard requires a plaintiff to sufficiently allege 40 hours of work in a given workweek as well as some uncompensated time in excess of the 40 hours.”

In Lundy, the court did not go so far as to require that the plaintiff include an approximation of the number of overtime hours sought but it did say that including such an approximation “may help draw a plaintiff’s claim closer to plausibility” and thereby avoid dismissal.

Perhaps the most powerful part of the court’s opinion in Dejesus was the acknowledgment that the information about the plaintiff’s allegations rest squarely with the plaintiff.  As the court explained, if an employee has absolutely no recollection whatsoever about the times worked, then he or she should not have pursued a claim in court.

Hopefully, this trend continues and, with any luck, courts in other circuits will begin to adopt this reasoning in FLSA cases.

Dejesus v. HF Mgm’t Servs., LLC, No. 12-4565 (2d Cir. Aug. 5, 2013).

See also

Another Auto-Deduct Case Bites the Dust (Raposo v. Garelick Farms, LLC (D. Mass. July 11, 2013)).

8th Cir- FLSA Plaintiffs Must Spell It Out (Carmody v. Kan. City Bd. of Police Comm’rs (8th Cir. Apr. 23, 2013)).

2d Cir- FLSA Does Not Cover Gap Time (Lundy v. Catholic Health Sys. (2d Cir. Mar. 1, 2013)).

Another Employer’s Auto-Deduct Policy Is Upheld (Creeley v. HCR ManorCare, Inc., (N.D. Ohio Jan. 31, 2013)).

6th Cir. Affirms Dismissal of FLSA Gotcha Litigation (White v. Baptist Mem’l Health Care Corp. (6th Cir. Nov. 6, 2012)).

The Legality of Automatically Deducting Meal Breaks (Camilotes v. Resurrection Health Care Corp. (N.D. Ill. Oct. 4, 2012)).

E.D. Pa. Dismisses Nurses’ Claims for Missed Meal Breaks, Part I and Part II (Lynn v. Jefferson Health Sys., Inc. (E.D. Pa. Aug. 8, 2012)).

FLSA Victory: Class Certification Denied (Pennington v. Integrity Comm’n, LLC (E.D. Mo. Oct. 11, 2012)).

Another Auto-Deduction Case Bites the Dust

Auto-deduction cases involve a potential class of employees who allege that they were not paid for time worked because their employer automatically deducted time for meal breaks.  The employees claim that, for various reasons, they were not able to take their breaks and, therefore, are owed for the time that was deducted from their hours worked.  These claims have been on the rise in the past few years but, recently, have seen rougher times as more and more courts have refused to certify the class.

A recent decision from the District of Massachusetts is another case to add to that list.  In Raposo v. Garelick Farms, LLC, a group of truck drivers sought back pay for time worked during meal breaks that were automatically deducted from their pay.  The court denied the plaintiff-employees’ motion for class certification, though, concluding that the employees had failed to meet their burden of proof.

The court’s analysis was simple but solid, looking to two issues.  First, did the employees show that everyone in the class had worked through their breaks and, if so, did they do so for the same reason?  Second, could the employees’ damages be calculated on a class-wide basis?  The court answered both questions in the negative.

As to the first issue, the court found that some employees had taken their meal breaks but others had not.  Among those who claimed to have worked through the break, the reasons for doing so varied between employees and changed frequently.  So, the court concluded, the answer to the first question-can liability be established on a class-wide basis-was “no.”

Turning to the second issue, the court found that some employees had complained to their respective supervisors and, as a result, been compensated for the missed breaks.  Whether or not they complained and to whom they complained affected whether or not they were later paid for the missed time. 

As a result, the court found that certification was not appropriate.  Another victory for employers who find themselves facing a wage-and-hour lawsuit for unpaid meal breaks.

Raposo v. Garelick Farms, LLC, No. 11-11943-NMG (D. Mass. July 11, 2013).

See also:

8th Cir- FLSA Plaintiffs Must Spell It Out (Carmody v. Kan. City Bd. of Police Comm’rs (8th Cir. Apr. 23, 2013)).

2d Cir- FLSA Does Not Cover Gap Time (Lundy v. Catholic Health Sys. (2d Cir. Mar. 1, 2013)).

Another Employer’s Auto-Deduct Policy Is Upheld (Creeley v. HCR ManorCare, Inc., (N.D. Ohio Jan. 31, 2013)).

6th Cir. Affirms Dismissal of FLSA Gotcha Litigation (White v. Baptist Mem’l Health Care Corp. (6th Cir. Nov. 6, 2012)).

The Legality of Automatically Deducting Meal Breaks (Camilotes v. Resurrection Health Care Corp. (N.D. Ill. Oct. 4, 2012)).

E.D. Pa. Dismisses Nurses’ Claims for Missed Meal Breaks, Part I and Part II (Lynn v. Jefferson Health Sys., Inc. (E.D. Pa. Aug. 8, 2012)).

FLSA Victory: Class Certification Denied (Pennington v. Integrity Comm’n, LLC (E.D. Mo. Oct. 11, 2012)).