Jump, Jive and Wail: Wage Hour Mania Ups The Ante 1 Presented by: Jake Schwartz, Esq.

Jump, Jive and Wail:

Wage Hour Mania Ups The

Ante

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Presented by: Jake Schwartz, Esq.

Overview

Recent developments and coming changes:• Legislation

• Regulation

• DOL interpretations

• DOL enforcement

• Significant court rulings

• Class and collective action litigation trends

• Five best practices for effective management of wage and hour issues

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Legislation

• Employee versus independent contractor

• Prevailing wages

• Minimum wage

• Private-sector comp time

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Regulations

• On the regulatory agenda

– Family and Medical Leave Act– Child labor– FLSA recordkeeping

• Additional priorities

– Pre-shift and post-shift tasks– Tipped employees– Part 541 “white collar” exemptions

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DOL Interpretations

• “Interpretations” are departure from long-standing practice of issuing opinion letters– Wage & Hour Division will issue “general” interpretations of

law and regulations that apply across-the-board to all those affected by a specific provision

– Change from opinion letters issued based on a specific set of facts

• Result?– May alter employers’ ability to defend a classification or

practice because the presumption will be that the interpretation governs similar situations, whereas opinion letters could be distinguished on facts

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DOL Enforcement

• Government contractors, emphasizing debarment

• Investigations instead of compliance assistance

• Penalties instead of cooperative resolution

• Increased litigation

• Targeting non-unionized employers

• Increased coordination with workers’ counsel

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Key Substantive Issues For Enforcement

• Misclassification of independent contractors– Construction– Health care

• Off-the-clock time– Pre-shift and post-shift activity

• Computer boot-up and power down

• Donning and doffing

• Prevailing wages– Contracts associated with stimulus money

• Child Labor

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Employers & Industries Targeted For Enforcement

• Restaurants• Agriculture• Health care• Hotels and motels• Day Care• Guard services• Janitorial services• Garment manufacturing• Temporary help

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Civil Money Penalties

• Two most common scenarios for CMPs:– Minimum wage / overtime violations

• Repeated or willful violations

• Up to $1,100 per violation

– Child Labor• Up to $11,000 per employee

• Up to $50,000 per violation causing death or serious injury to a minor

• Up to $100,000 per repeated or willful violation causing death or serious injury to a minor

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Significant Court Rulings

Pharmaceutical Sales Representatives (PSRs)

• Smith v. Johnson & Johnson (3d Cir. 2010)– Third Circuit affirmed summary judgment finding PSRs

exempt under administrative exemption

• Other appeals docketed in Ninth Circuit and Second Circuit

• Notably, DOL has filed an amicus brief in support of plaintiffs, contrary to long-standing DOL interpretations

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Significant Court Rulings

• Fast v. Applebee’s International (W.D. Mo.)

– May 2007: district court attempted to create an analytic framework for tipped employees who perform non-tip-producing duties in short intervals

• Led to increase of class action filings against the restaurant industry

– August 2009: court vacated its 2007 decision on the eve of trial, requested additional briefing from the parties

– March 2010: court reiterated analytic framework but certified the ruling for interlocutory review by the Eighth Circuit

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Significant Pending Appeals

• Hybrid wage and hour class (state law) and collective (federal law) actions

– Ervin v. OS Restaurant Partners, Inc. (7th Cir.)

• Whether a court can consider the existence of a similar “opt-in class” when determining whether an “opt-out” class is the superior method of adjudication

– Parker v. Nutrisystem, Inc. (3d Cir.)

• Whether a court may strike class claims when claims under state and federal law are interpreted in the same manner

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Significant Pending Appeals

Brinker Restaurant Corp. v. Superior Court (Hohnbaum), 165 Cal. App. 4th 25 (2008)

Case History

Trial court certified a class of restaurant workers claiming they were required to take meal breaks too early or late in the day

Issues

Whether California meal-break law is violated when (a) an employee takes a meal break early or late in the workday or (b) an employer makes a meal break “available” although does not ensure each employee takes the meal break

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Emerging Litigation Trends

• On the rise– Hybrid class actions with

state-law claims and FLSA claims

– Outside sales exemption cases

– Independent contractor status litigation

– Litigation regarding compensable time: donning and doffing, pre- or post-shift tasks, remote access after hours

– Tip-credit/tip-pooling cases

• On the decline– Manager/assistant-

manager misclassification cases

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Five Best Practices For Effectively Managing

Wage And Hour Issues

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1. Address wage and hour concerns aggressively

• Treat compliance as essential to overall risk management

• As important as pervasive discrimination, occupational safety and health hazards, and other multi-million-dollar contingent liabilities

• Wage and hour concerns need to be on your radar screen ever day

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2. Know your policies, practices and systems

• Do your corporate-level policies contain non-compliant elements?

• Do you comply with all applicable state laws as well as federal standards, including changes?

• What is happening away from the corporate office in the field in terms of local variations and deviations in practice?

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3. Watch out for practices that can lead to off-the-clock work

• Labor budgets, especially declining ones as profit margins tighten and the same work needs to get done

• Bonuses or other compensation tied to efficient use of labor

• Performance ratings tied to minimizing labor costs, including overtime costs

• Decreased staffing resulting in employees classified as exempt performing more and more non-exempt duties

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4. Be strategic about documents

• How do you prove that an executive had hire/fire authority or input into changing employee status?

• How do you prove that an administrative employee was involved in planning and analysis?

• What recordkeeping practices will be more defensible to an investigator or to a jury?

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5. Train everyone regularly

• Managers and supervisors need to understand that their authority to improve profitability does not extend to violating wage and hour rules

• Workers need to be informed that nobody has the authority to direct them to work off the clock

• Training at least annually is essential, and perhaps more frequently in high-turnover industries

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