Articles Posted in Wage and Hour Disputes

businesswomanFederal overtime rules seek to ensure that workers receive fair compensation for excess time spent working. Not all employees are entitled to overtime pay under the Fair Labor Standards Act (FLSA). Employees must be vigilant in identifying attempts by employers to avoid paying overtime, such as misclassification of employees under an FLSA exemption. In 2014, the Obama administration requested a review of certain FLSA overtime exemption categories, in an effort to bring them in line with the modern workplace. After the U.S. Department of Labor (DOL) published a final rule, a group of state governments and business groups filed suit and obtained a preliminary injunction. Nevada, et al. v. U.S. Dept. of Labor, et al., No. 4:16-cv-00731, mem. op. (E.D. Tex., Nov. 22, 2016). Now, a group of workers in New Jersey have filed a putative class action testing the scope and extent of the injunction. Alvarez, et al. v. Chipotle Mexican Grill, Inc., et al., No. 2:17-cv-04095, complaint (D.N.J., Jun. 7, 2017).

The FLSA requires employers to pay workers at least “one and one-half times the regular rate” for work time during any week that exceeds 40 hours. 29 U.S.C. § 207(a)(1). Some employees are exempt from this requirement, however, including anyone who works “in a bona fide executive, administrative, or professional capacity.” Id. at § 213(a)(1). The statute does not define “executive, administrative, or professional” (EAP), so the DOL developed definitions in 29 C.F.R. Part 541. These definitions have undergone multiple revisions since the FLSA was first enacted in 1938, most recently in 2004.

A memo issued by the White House in March 2014, addressed to the Secretary of Labor, sought “to modernize and streamline the existing overtime regulations for [EAP] employees.” 79 Fed. Reg. 18737 (Apr. 3, 2014). The DOL published a Final Rule in May 2016, which was scheduled to go into effect on December 1 of last year. 81 Fed. Reg. 32391 (May 23, 2016). Several months later, 21 states and a number of business groups filed suit against the DOL over the new rule.

Grand CanyonThe wage gap between men and women has received considerable media attention recently, and new legislation is attempting to improve conditions. Federal law prohibits disparate pay based on gender, but it leaves several loopholes. A new law in New York City is intended to close one of these loopholes by prohibiting employers from asking job applicants for salary history or from using salary history to determine a new employee’s compensation. This practice often perpetuates the wage gap without specifically violating equal pay laws, since female employees’ salary histories are often likely to reflect lower rates of pay than male colleagues. Several jurisdictions around the country have enacted similar laws. New York City’s law will take effect on October 31, 2017.

The federal Equal Pay Act (EPA) of 1963 prohibits employers from paying employees of different sexes at different rates “for equal work” in jobs that require “equal skill, effort, and responsibility…under similar working conditions.” 29 U.S.C. § 206(d)(1). It makes exceptions, however, for wages that are determined based on seniority, merit, “quantity or quality of production,” or “a differential based on any other factor other than sex.” Id. This last exception arguably applies to decisions based on salary history, since the applicant’s gender is not a direct factor in the employer’s calculations. A federal appellate court reached this conclusion recently in Rizo v. Yovino, No. 16-15372, slip op. (9th Cir., Apr. 27, 2017).

New York state law resembled the EPA until 2015, when the legislature passed a bill limiting the “factor other than sex” exception. Under the amended statute, the “factor” cannot be “based upon or derived from a sex-based differential in compensation,” and it must “be job-related…and…consistent with business necessity.” N.Y. Lab. L. § 194(1)(d). Furthermore, a complainant can challenge any “employment practice that causes a disparate impact on the basis of sex.” Id. The New Jersey Legislature passed a bill in 2016 that would have made similar amendments to equal pay provisions, found in N.J. Rev. Stat. § 10:5-12. The governor conditionally vetoed the bill, and the legislature failed to override the veto.

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hourglassThe Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., is the federal statute that governs minimum wage and overtime compensation for many employers around the country. Its overtime provisions have endured, more or less unchanged, since Congress enacted the statute in 1938. A bill currently pending in Congress, however, could change the nature of overtime compensation for workers all over the U.S. H.R. 1180, known as the Working Families Flexibility Act (WFFA) of 2017, would give employees and employers the option of compensatory time off from work, or “comp time,” instead of overtime compensation. Advocates of the bill say that this would only apply in cases of voluntary agreements between employers and employees. Critics, however, contend that the bill would result in less flexibility for workers’ schedules and less money for workers who might depend on overtime compensation. The House of Representatives passed the WFFA in May 2017. Its Senate counterpart, S. 801, is pending in committee.

Overtime compensation is currently required under the FLSA for all non-exempt employees of covered employers. For any amount of work in excess of 40 hours in a workweek, the employer must pay one-and-a-half times the employee’s regular hourly rate. 29 U.S.C. § 207(a). Employees who are exempt from overtime requirements include individuals “employed in a bona fide executive, administrative, or professional capacity;” outside salespersons; and workers in certain agricultural jobs. Id. at § 213(a). The FLSA currently only provides for comp time, instead of overtime, for employees of government agencies. Id. at § 207(o).

The WFFA largely takes the FLSA’s provisions regarding comp time for public employees, found in § 207(o), and applies them to all workers covered by the overtime rules. The bill would add a new subsection (s) to § 207 entitled “Compensatory Time Off For Private Employees.” The new subsection would state that an employee “may receive,…in lieu of monetary overtime compensation, compensatory time off at a rate not less than one and one-half hours” for every hour covered by overtime requirements.

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commaEmployment law is composed of statutes and regulations at multiple levels of government. It is perhaps inevitable that disputes will arise over the meaning of particular legal provisions. Courts have the responsibility of determining how to apply a law or regulation when its meaning is unclear, usually through a process known as statutory construction. If the “plain language” meaning of the rule or statute is ambiguous, they may look at the legislative history to see what lawmakers intended. A recent federal appellate court decision interpreted a statute based on the legislature’s use of punctuation. O’Connor v. Oakhurst Dairy, 851 F.3d 69 (1st Cir. 2017). The court found that a missing serial comma, also known as the “Oxford comma,” in a list of exemptions from a state overtime wage law created a very narrow exemption, which did not include the plaintiffs. This meant that the plaintiffs were entitled to overtime pay.

State and federal employment laws require employers to pay non-exempt workers one-and-a-half times their regular hourly rate for work performed in excess of 40 hours in a week. States may differ in how they define exemptions from overtime law. New Jersey, like most jurisdictions, exempts workers “employed in a bona fide executive, administrative, or professional capacity,” as well as numerous specific jobs. N.J. Rev. Stat. § 34:11-56a4. The O’Connor case deals with Maine’s overtime statute, which exempts workers employed in “the canning, processing, preserving, freezing, drying, marketing, storing, packing for shipment or distribution of” various food products. 26 Me. Rev. Stat. § 664(3)(F). The dispute centered on the lack of a serial comma between the words “shipment or distribution.”

The “Oxford comma” appears before the final item in a written list of three or more items. For example, in the sentence “I would like an apple, a banana, and a pear,” the Oxford comma appears after the word “banana.” The same sentence without that comma is equally grammatically correct:  “I would like an apple, a banana and a pear.” Usually, use of the Oxford comma is purely a question of style—some style manuals require it, while others do not. At times, though, the lack of an Oxford comma creates an ambiguity.

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interviewThe modern workplace often involves complex relationships among employers and between employees and employers. An individual employee might have an employer that issues their paychecks but has them work at the site of, or under the direct supervision of, a different employer. Should an employee need to assert a cause of action under an employment statute like the Fair Labor Standards Act (FLSA), a clear definition of the employee-employer relationship is critical. Federal caselaw and regulations establish guidelines for identifying “joint employers” for the purposes of the FLSA and other statutes. A recent decision from the Fourth Circuit Court of Appeals expands the definition of “joint employer” beyond the definition used in the Third Circuit, which includes New Jersey and other jurisdictions. Salinas v. Commercial Interiors, Inc., No. 15-1915, slip op. (4th Cir., Jan. 25, 2017).

The FLSA governs wage and hour issues, establishing a nationwide minimum wage and requiring employers to pay non-exempt workers time-and-a-half for work in excess of 40 hours in a week. The statute provides some of the broadest definitions of certain key terms in the entire United States Code. It defines “employee” as “any individual employed by an employer,” and its definition of “employ” merely states that it “includes to suffer or permit to work.” 29 U.S.C. §§ 203(e)(1), (g). It does not provide a distinct definition of “employer.”

Regulations promulgated by the U.S. Department of Labor (DOL) note that the FLSA does not limit individual employees to one employer. The DOL attempts to distinguish between “joint employment,” in which multiple employers employ an employee in a single position, and “separate and distinct employment,” in which an individual employee has more than one job with different employers. 29 C.F.R. § 791.2(a). Under DOL regulations, a “joint employment” situation may exist when two or more employers have “an arrangement…to share the employee’s services,” when one employer “act[s]…in the interest of the other employer (or employers),” or when one employer is partly or wholly under the control of another employer. Id. at § 791.2(b).

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Parkway Congestion 02The “daily commute” is an iconic element of routine life in the U.S. In 2013, about three-fourths of American workers drove to work by themselves. Average commute time in New Jersey was 28.6 minutes in 2000. That number grew to 30.9 minutes in 2013. Assuming a fifty-week work year, New Jersey workers therefore spent an average of 128 hours and 45 minutes in morning traffic. The number has probably only increased since then, and this does not include time spent getting home at the end of the day. This data raises an interesting question about when a commute constitutes “work” in a legal sense, meaning time for which an employer must compensate a commuting employee. The short answer is that commuting time is usually not “work” in this sense, but the longer answer offers some exceptions to that general rule.

New Jersey law does not address the question of whether commuting time is compensable, so we must look to federal law. The Fair Labor Standards Act (FLSA) of 1938, 29 U.S.C. § 201 et seq., establishes a national minimum wage and rules for overtime compensation. It does not provide a specific definition of “work.” Congress enacted the Portal-to-Portal Pay Act (PPPA), 29 U.S.C. § 251 et seq., in 1947 to address “potential retroactive liability [that] may be imposed upon employers” under the FLSA. Id. at § 251(a). Section 4 of this law exempts employers from liability under the FLSA for failing to pay the minimum wage to an employee for “walking, riding, or traveling to and from the actual place of” employment. Id. at § 254(a)(1).

The U.S. Department of Labor (DOL) has issued regulations based on § 4 of the PPPA. Commuting from home to work is not compensable time under the FLSA in an “ordinary situation,” meaning when such travel is “a normal incident of employment.” 29 C.F.R. § 785.35. This applies, according to the DOL, regardless of whether a worker has a fixed place of employment or works for an employer at multiple locations.
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clocksIn May 2016, the U.S. Department of Labor (DOL) issued a new rule that reportedly would have extended overtime pay for millions of workers around the country. Twenty-one U.S. states, led by Nevada, filed suit against the DOL in September to challenge the rule, alleging that it violated provisions of the Fair Labor Standards Act (FLSA), the Administrative Procedures Act (APA), and the U.S. Constitution. State of Nevada et al. v. U.S. Dep’t of Labor et al., No. 4:16-cv-00731, complaint (E.D. Tex., Sep. 20, 2016). A federal judge granted an injunction against the rule in November, temporarily halting its implementation nationwide. An appeal is still pending in the Fifth Circuit as of late January, but a new administration has also moved into the White House. It is not at all clear whether the DOL will continue to pursue the appeal or even defend the rule in the remainder of the trial court proceedings.

The FLSA establishes a national minimum wage and requires employers to pay nonexempt workers overtime pay at a rate of one-and-a-half times their regular rate of pay. Certain employees are exempt from the FLSA’s overtime provisions, including workers in executive, administrative, and professional positions. The DOL refers to these as EAP exemptions or white-collar exemptions. See 29 U.S.C. § 213(a)(1), 29 C.F.R. Part 541. The exemptions apply to employees who work in these fields and earn income above a certain threshold.

The new rule would raise the threshold from the current $455 per week for a full-time employee to $913 per week, or from $23,660 to $47,476 per year. 81 Fed. Reg. 32391, 32393 (May 23, 2016). The DOL estimated that this would affect about 4.2 million people nationwide. The rule was scheduled to take effect on December 1, 2016, but a lawsuit and an injunction changed that.

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Our economic system depends on the competition of individuals and businesses in a free market, subject to reasonable regulations. When one or more “persons”—a legal term that includes individuals and various types of businesses—take actions that make their segment of the market less competitive, they may be in violation of federal or state antitrust laws. These statutes prohibit employment practices, such as “wage-fixing” agreements among competing companies, that unfairly harm employees’ interests. The U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) recently issued a guidance document, entitled “Antitrust Guidance for Human Resource Professionals,” addressing the enforcement of federal antitrust laws. In addition to civil penalties, the DOJ has the authority to pursue criminal charges for anticompetitive practices in some situations. The guidance document advises human resources (HR) professionals to enact policies aimed at avoiding civil and criminal liability for their employers.employee

Congress passed the Sherman Antitrust Act, 15 U.S.C. §§ 1 through 11, in 1890 in order to combat the formation of monopolies that could take over control of entire markets or commodities, such as oil or steel. When a single company has control over a particular product or service within a market, consumers typically suffer because of factors like the lack of incentive to keep prices at a reasonable level. Employees can also suffer when there is no other employer who has need of their skills. Federal laws and many state laws allow state regulators to take steps to prevent actions, such as mergers of two or more formerly competing businesses, that could lead to a monopoly.

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cough medicineFor most workers in the U.S., paid sick leave is a benefit conferred by their employer, solely based on the employer’s determination that it is a worthwhile investment. If an employer were to stop offering paid sick leave to its employees, they would have no recourse other than finding another job. No federal law requires paid sick leave, and only a handful of states—not including New Jersey or New York—have enacted laws mandating a minimum amount of paid sick leave. The news is not all dire, though. Thirteen cities in New Jersey have enacted their own paid sick leave laws. Morristown, New Jersey is the latest town to do so, although the mayor has reportedly delayed its implementation until early 2017. Employees of certain government contractors will soon benefit from a new Department of Labor (DOL) Final Rule, which takes effect at the end of November 2016.

Allowing workers to stay home due to an illness, without losing several days’ pay, seems like a sensible policy, at least when looking at society at large. Employees who cannot afford to lose the income may go into work despite being sick. This can spread illnesses like the flu, ultimately causing even bigger problems. While the Family Medical Leave Act allows unpaid leave for certain purposes, federal law makes no provision for paid sick leave. Only five states have paid sick leave laws:  California, Connecticut, Massachusetts, Oregon, and Vermont. In a nationwide sense, it is generally up to individual employers to decide whether or not to offer it to their employees. On a solely individual level, an employer might not see the value of giving paid sick leave to its workers. Businesses may not like regulations, but sometimes they serve a very important purpose.

Morristown became the 13th New Jersey municipality to enact a paid sick leave law in September 2016. Ordinance O-35-2016 describes the numerous societal benefits of allowing employees to earn paid sick leave, including “reduc[ing] recovery time” and “reduc[ing] the likelihood of people spreading illness to other members of the workforce and to the public.” Employees earn one hour of paid sick leave for every 30 hours that they work, up to a maximum of 24 hours (three work days) in a calendar year for employers with fewer than 10 employees, and 40 hours (five days) for employers with 10 or more employees. Additional exceptions apply, depending on various circumstances.

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sunsetThe Fair Labor Standards Act (FLSA), along with state laws like the New Jersey Wage and Hour Law (WHL), requires employers to pay overtime compensation to non-exempt employees after they have worked more than 40 hours in a week. 29 U.S.C. § 207(a), N.J. Rev. Stat. § 34:11-56a4. Overtime pay violations can deprive workers of substantial amounts of wages, but while these amounts are significant to these workers, they are often not enough to make individual legal actions worth the cost. State and federal laws allow people with relatively small claims to file a lawsuit as a class action on behalf of the massive number of similarly situated claimants, and the FLSA has a procedure for “collective actions.” A federal judge in New Jersey recently granted certification to a FLSA collective action, as well as several state-law class actions, in a suit for unpaid overtime. Rivet, et al. v. Office Depot, Inc., No. 2:12-cv-02992, opinion (D.N.J., Sep. 13, 2016).

In order to obtain certification as a class action under federal law, plaintiffs must establish four elements:  numerosity of class members, commonality of legal or factual questions, representativeness of the plaintiffs’ claims, and ability of the plaintiffs to “fairly and adequately” represent the class. Fed. R. Civ. P. 23(a). The FLSA does not establish as many specific elements for a collective action, simply stating that the claimants must be “similarly situated.” 29 U.S.C. § 216(b).

The Third Circuit Court of Appeals, whose jurisdiction includes New Jersey, has identified examples of facts and circumstances that can establish or refute that claimants are “similarly situated.” Claimants who work “in the same corporate department, division, and location,” who “advance similar claims” and “seek substantially the same form of relief,” and who “have similar salaries and circumstances of employment” could be considered “similarly situated” for the purposes of an FLSA collective action. Rivet, op. at 4, quoting Zavala v. Wal-Mart Stores, Inc., 691 F.3d 527, 536-37 (3d Cir. 2011).

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