New Jersey Employee Misclassification Lawsuit Cites Obama-Era Overtime Rule

Federal 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.

A federal district court granted the state and business group plaintiffs’ request for a preliminary injunction in November 2016, about one week before the rule was to take effect. It found that the rule probably exceeded the authority granted to the DOL by the FLSA. The court further ruled that the injunction should apply nationwide, since “the [rule] is applicable to all states,” and “the scope of the alleged irreparable injury extends nationwide.” Nevada, memo. op. at 18. An appeal of the injunction is pending.

The plaintiffs in Alvarez are employees of the defendant “who are training to become general managers.” Alvarez, complaint at 8. They allege in their complaint that they have been classified as exempt EAP employees, but they would not be exempt under the currently enjoined overtime rule. They claim that the injunction in Nevada prevents the DOL “from implementing and enforcing” the new rule, but it did not stop the rule from taking effect. Id. at 9. The injunction, they allege, does not “affect the ability of persons not party to the Nevada case…to bring private lawsuits” under the FLSA to enforce the rule. Id. at 10, citing 29 U.S.C. § 216(b).

If you need to speak with an overtime attorney in New Jersey or New York about an employment-related dispute or another matter, contact the Resnick Law Group today online, at 973-781-1204, or at (646) 867-7997.

More Blog Posts:

Bill Pending in Congress Would Change FLSA Overtime Rules, The New Jersey Employment Law Firm Blog, June 30, 2017

Placement of Comma Determines Appellate Court Decision in Overtime Wage Dispute, The New Jersey Employment Law Firm Blog, June 16, 2017

New Federal Overtime Rule Blocked by Judge, Faces Uncertain Future, The New Jersey Employment Law Firm Blog, February 9, 2017

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