Tag Archives: FLSA

PROPOSED LEGISLATION MAY EXPAND THE SCOPE OF THE COMPUTER EMPLOYEE EXEMPTION

By Douglas Weiner and Meg Thering

On October 20, 2011, the Computer Professionals Update Act (“the CPU Act”) – one of the first potential pieces of good news for employers this year – was introduced in the U.S. Senate.  If passed, the CPU act would expand the computer employee exemption of the Fair Labor Standards Act (“FLSA”).  S. 1747.

Unlike much of the other legislation affecting employers that has been proposed or passed this year, the CPU Act would make business easier for employers and decrease the risk of employee misclassification lawsuits.  If the proposed legislation passes, employers would be able to classify more employees as exempt from the overtime provisions of the FLSA.  This would be a welcome change from the persistent drum beat of enhanced enforcement initiatives announced by government agencies and upticks in class and collective actions this year.

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Combining State Court Rule 23 Class Action with Federal FLSA Collective Action

By Evan J. Spelfogel

For several years, employers’ counsel have moved to block the combining of state wage and overtime claims with federal Fair Labor Standards Act (“FLSA”) claims, arguing that Rule 23 opt-out class actions were inherently inconsistent with FLSA collective opt-in actions. For support, they cited to the decision of the Third Circuit in De Asencio vs. Tyson Foods, Inc., 342 F. 3d 301 (3rd Cir. 2003) reversing a district court’s exercise of supplemental jurisdiction because of the inordinate size of the state-law class, the different terms of proof required by the implied contract state-law claims, and the general federal interest in opt-in wage actions. Since De Asencio, numerous district courts in the Third Circuit have dismissed state law wage claims that paralleled FLSA claims because of the “inherent incompatability” between opt-in collective actions and opt-out class actions. 

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National Restaurant Chain Seeks Guidance from U.S. Supreme Court on Tip Credit

By:  Ana S. Salper

With the recent surge in class action wage and hour lawsuits, hospitality employers have developed a heightened sensitivity to tip pooling arrangements, distributions of service charges to employees, and application of the “tip credit.” A case before the U.S. Supreme Court this month, Applebee’s International Inc. v. Gerald A. Fast et al., is likely to add further fuel to the fiery “tip credit” world,  as the high court will have to decide whether tipped employees should be paid minimum wage for nontipped tasks employees perform.

Under the Fair Labor Standards Act (“FLSA”), tipped employees can be paid below minimum wage – as low as $2.13 per hour – so long as employees earn enough tips to reach the minimum wage (which is $7.25 under federal law, although state minimum wages may be higher).  In the case pending before the high court, Applebee’s is asking the Court to decide whether employers can use the tip credit to pay tipped employees — namely, waiters and bartenders — below minimum wage even if they spend more than 20 percent of their time performing nontipped tasks. Applebee’s is challenging a U.S. Department of Labor (“DOL”) rule that requires an employer to pay a tipped employee the regular minimum wage if they spend more than 20% of their work time in a given week performing non-tipped duties. 

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New Case Allows Employer to Potentially Avoid Attorneys’ Fees In FLSA Cases

Arnstein & Lehr Attorney Jason Tremblay

E. Jason Tremblay

In a rare FLSA victory for employers, the 11th Circuit recently handled down a key decision for employers seeing to limit their exposure to attorneys’ fees in FLSA actions which, in many cases, can far exceed the amount of damages suffered by the employees. In Dionne v. Floormasters Enters, 2011 U.S. App. Lexis 15560 (11th Cir July 28, 2011), the court effectively held that employers can avoid paying attorneys’ fees in FLSA cases by paying the employees all wages claimed, plus the statutory liquidated damage amount, prior to judgment. Specifically, since the employer in Dionne had given plaintiff all the relief he was entitled to through the litigation, the trial court dismissed the case because there was no “case or controversy.” And, once that happened, the court went on to hold that the plaintiff’s attorney was not entitled to an award of fees because there was no judicial determination in the plaintiff’s favor, a condition precedent to an award of attorneys’ fees under the FLSA. Therefore, in cases where liability is likely to be established and the amount of unpaid wages or overtime is easily calculated, this case serves as a roadmap to resolving the case early on in the litigation without the risk of being required to pay attorneys’ fees.

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Law Moving in Right Direction for "Half-Time" Method of Calculating Damages in FLSA Overtime Cases

By: John F. Fullerton III and Douglas Weiner

The current prevalence of lawsuits for unpaid overtime compensation under the Fair Labor Standards Act (“FLSA”) by employees who claim they were misclassified by their current or former employer as “exempt” from overtime has been well-documented.  These lawsuits continue to present challenges to employers, not just in terms of the burdens and costs of defending the cases, but in the uncertainty of the potential financial exposure. As our colleagues have previously reported (here and here), there are two methods in which the employees can be compensated for the allegedly unpaid overtime wages in such a case.  Under the FLSA, overtime compensation for non-exempt employees is computed at “a time and half” rate for hours worked in excess of forty in a week.  In appropriate situations, however, when the employees have received a fixed salary for all hours worked (which is frequently what has occurred in a misclassification case because the employer has treated the employees as exempt from overtime), the overtime compensation owed to non-exempt salaried employees can and should be calculated based on the “half-time” or “fluctuating workweek” method. 

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Wage & Hour Division Continues Enforcement Actions against Virginia Hotels

By:  Kara M. Maciel

The Department of Labor’s Wage and Hour Division in Norfolk, Virginia has announced that it will be stepping up its compliance audits and enforcement efforts against area hotels. In the past few years, the DOL stated it found violations at about 60% of local hotels. According to the DOL, the agency recently made spot checks at 10 area hotels since April. This is just one part of the agency’s nationwide enforcement program and its “Plan/Prevent/Protect” initiative against the hospitality industry. Common violations assessed by the DOL include:

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Why Doesn’t the Supreme Court Provide a Pathway Through the Morass of Retaliation Law?

The EEOC has reported that it receives more charges of retaliation than any other type of employment discrimination charge, and that there are thousands of cases involving allegations of illegal retaliation filed every year.  Retaliation is often prohibited by statute, but the Supreme Court has expanded the scope of actionable retaliation lately, holding that there was a cause of action for retaliation even though the statute in question did not expressly cover the situation at issue.

The Fair Labor Standards Act (FLSA) prohibits discrimination against an employee “because such employee has filed any complaint” under the Act.  In Kasten v. Saint Gobain Performance Plastics Corp. (PDF), 563 U.S. ___ (2011), the U.S. Supreme Court held that, although there can be no retaliation if the employer is not on fair notice of the initial complaint, a complaint need not necessarily be in writing to trigger protection under the Act.  

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Don’t Touch That Phone–It May Cost You! California Applies Different Rules for "On Call" Time

A client recently asked us to provide them with a summary of the California rules for paying non-exempt employees for “on-call” time.  Our client requires non-exempt IT employees to carry cell phone and/or pagers after hours and on weekends so they can respond to requests for assistance and emergencies at the facility which operates on a 24/7 basis.  The employees are required to respond to a call or page within 10-15 minutes and to be available to go to the facility immediately if necessary.  The questions presented were: 1) whether these employees should be paid for the time spent carrying the cell phone or pager and 2) is there a minimum amount of pay the employees must receive if they are required to report to the facility.  We thought that it would be helpful to share our thoughts here. 

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Don’t Forget the Tip! DOL issues new regulations for tipped employees

Not even the United States Department of Labor (DOL) forgets the tip. On April 5, 2011, the DOL amended the Fair Labor Standards Act (FLSA) regulations for tipped employees. The regulations require employers with tipped employees to take action before the regulations take effect on May 5, 2011. Here are a few “tips” for employers regarding the new regulations:

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Supreme Court Rules Oral Complaints Protected by FLSA But Leaves Open Questions of Notice and Formality

by Charles Wilson

On March 22nd, the Supreme Court, in Kasten v. Saint-Gobain Performance Plastics Corp., a 6-2 opinion written by Justice Breyer, ruled the Fair Labor Standards Act (“FLSA”) protects oral complaints of perceived wage and hour violations. In making such ruling, the Court resolved a conflict among the lower courts but left open the question of what is sufficient fair notice and whether an employee is required to report the complaint to a government agency rather than internally to the employer. Regardless, the Court’s ruling will likely expose employers to more risk of retaliation claims when making adverse employment decisions after an employee raises concerns about how they are compensated.

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