Another NLRB Administrative Law Judge’s decision on a mandatory arbitration agreement has been issued. In Fuji Food Products, Inc. and Gonzalez, the ALJ found that Fuji engaged in an unfair labor practice in violation of the NLRA by (1) seeking to compel individual arbitration of Gonzalez’s class-action wage and hour lawsuit filed against it in state court and (2) by continuing to maintain the mandatory arbitration provision at issue in similar agreements signed by other employees. The ALJ also discussed NLRB v. Noel Canning, the recent Supreme Court decision, in his rejection of Fuji’s argument that the D.R. Horton decision by the Board regarding mandatory arbitration provisions is invalid.
This week the EEOC issued new Enforcement Guidance on Pregnancy Discrimination. Questions and Answers about the new Guidance can be found here. A new Fact Sheet on Pregnancy Discrimination for Small Businesses, which summarizes the Pregnancy Discrimination Act, can be found here. The PDA has been in effect since 1978, so it is not “new protection,” as some news outlets seemed to imply in reaction to the new Enforcement Guidance. The new Enforcement Guidance, however, provides a broader interpretation of the PDA, than the interpretation provided by a number of federal courts of appeals’ decisions. (E.g., Young v. UPS, 707 F.3d 437 (4th Cir. 2013), currently on appeal to the U.S. Supreme Court.) (I will post more on this broader interpretation in a subsequent post.)
The new Enforcement Guidance also reaffirms the EEOC’s position that an employer will violate Title VII by providing health insurance that excludes coverage of prescription contraceptives, but otherwise provides comprehensive coverage. The EEOC acknowledges the recent Supreme Court’s decision in Burwell v. Hobby Lobby Stores, in a footnote stating, “This enforcement guidance explains Title VII’s prohibition of pregnancy discrimination; it does not address whether certain employers might be exempt from Title VII’s requirements under the First Amendment [not addressed in the Hobby Lobby opinion] or the RFRA [The Religious Freedom Restoration Act].” It will be interesting to see whether and how the EEOC chooses to address this issue in the future.
Any new EEOC enforcement guidance is significant for both employers and employees, even if it is questionable what effect it may have on a court’s decision in a particular case, because it will be used by EEOC staff in determining what charges warrant closer attention. Future posts will describe in greater detail the sections of the new Enforcement Guidance that require particular attention.
My last post was about unpaid internships. This post is about volunteers (that is, people who work for nothing).
The Department of Labor has not issued regulations or guidance on when a for-profit employer may use volunteers. In any event, generally, for-profit employers who are subject to the Fair Labor Standards Act (“FLSA”) should not use unpaid volunteers. In almost every case, it will be a violation of the FLSA if they do use volunteers. (At the very least, if a for-profit employer is about to use a volunteer for certain tasks, it should seek the advice of legal counsel first.) Not for profit employers and governmental agencies, however, may be able to use volunteers without violating the FLSA under the right circumstances.
The leading court opinion on when the use of unpaid volunteers may be allowed under the FLSA is Tony and Susan Alamo Foundation et al. v. Secretary of Labor. 471 U.S. 290 (1985). The Foundation was a non-profit religious organization that obtained most of its income from operating a number of commercial businesses. The businesses were staffed by the Foundation ”associates” who were mostly recovering drug addicts, former derelicts, or former criminals who had been helped by the Foundation. The associates received no cash salaries, but were provided with food, clothing, housing, and other benefits. Many of them had been with the Foundation for a number of years.
The Supreme Court held that the associates were employees and should have been paid under the FLSA. Significant for the Court was the fact that the associates were provided with in-kind benefits (food, clothing, etc.) in exchange for their services over a long period of time. The Court pointedly stated, “The Act reaches only the “ordinary commercial activities” of religious organizations, 29 CFR § 779.214 (1984), and only those who engage in those activities in expectation of compensation. Ordinary volunteerism is not threatened by this interpretation of the statute.”
After the Alamo Foundation case, the FLSA was amended to include the following provisions:
(4)(A) The term “employee” does not include any individual who volunteers to perform services for a public agency which is a State, a political subdivision of a State, or an interstate governmental agency, if–
(i) the individual receives no compensation or is paid expenses, reasonable benefits, or a nominal fee to perform the services for which the individual volunteered; and
(ii) such services are not the same type of services which the individual is employed to perform for such public agency.
(B) An employee of a public agency which is a State, political subdivision of a State, or an interstate governmental agency, may volunteer to perform services for any other State, political subdivision, or interstate governmental agency, including a State, political subdivision or agency with which the employing State, political subdivision, or agency has a mutual aid agreement.
29 U.S.C. § 203(4).
(5) The term “employee” does not include individuals who volunteer their services solely for humanitarian purposes to private non-profit food banks and who receive from the food banks groceries.
So, it appears that volunteers for non-profit organizations and public agencies may not be held to be “employees” under the FLSA if the volunteers do not engage in any ”ordinary commercial activities” (for example, work in the gift shop of a non-profit hospital) and do not have any expectation of compensation in any form, except as allowed under the FLSA provisions set out above.
This past Saturday, The New York Times published an article about unpaid interns no longer accepting their no-pay status as a given. (Finally!) The article specifically referenced the “Black Swan” case in which a group of unpaid interns have sued Fox Searchlight Pictures, Inc. and Fox Entertainment Group, Inc. for wages. (It has been referred to as the “Black Swan” case because the unpaid interns worked on the movie The Black Swan, an excellent film by the way.) According to the article, there are currently about fifteen other similar lawsuits pending. (Pro Publica is tracking intern lawsuits here.) Given the proliferation of unpaid internships in the past few years, there are likely to be a few more lawsuits filed.
So when must an intern be paid? The Department of Labor (“DOL”) has a “Fact Sheet” posted on its website describing in general terms when an unpaid internship program is acceptable under the federal Fair Labor Standards Act, at least in the for-profit sector. The Fact Sheet lists six factors, all of which must be met for an unpaid internship program to be valid according to the DOL:
(1) the internship must be similar to training that would be given in an educational setting;
(2) the internship must be for the benefit of the intern;
(3) the intern must not displace regular employees and works under close supervision of existing staff;
(4) the internship does not provide any immediate advantage to the employer providing the training and may actually impede the employer’s operations;
(5) the internship does not entitle the intern to a job at the conclusion of the internship; and
(6) the employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
The court in the Black Swan case applied these six factors and found that only the last two factors had been met by the internship program. So, the unpaid interns should have been paid.
If you are a for-profit employer which is considering hiring interns, the DOL’s six factors can help you determine whether you have to pay them under the FLSA. (In most cases, you probably will.) If you are considering not paying them, you also should consult with an employment lawyer just to be sure. If you are an intern not being paid, these six factors can help you decide whether to seek help to recover back wages.
Next post: What about “volunteers” and the FLSA?
Not so fast… Reports of the Death of State Law Class Action Wage Claims May Have Been Greatly Exaggerated*
A few management attorneys have claimed that the Supreme Court’s decision in Comcast Corp. v. Behrend dealt a significant blow to class action suits brought under state wage & hour laws. (See here and here.) The Ninth Circuit, in an opinion issued on Tuesday, contradicts this reading of Behrend, as does a closer reading of the Supreme Court’s opinion.
In Behrend (a case arising under federal antitrust laws) the Supreme Court held that class certification should not have been granted because the plaintiffs’ damages model was not sufficiently tied to the theory of anticompetitive impact remaining in the case. In fact, the plaintiffs conceded that their damages model was based on four theories of anticompetitive impact originally alleged, three of which were dismissed by the district court. In dicta, the Supreme Court stated, “Without presenting another methodology, respondents cannot show Rule 23(b)(3) predominance: Questions of individual damage calculations will inevitably overwhelm questions common to the class.” In other words, the plaintiffs should have presented a damages model that was based only on the theory of anticompetitive impact remaining in the case.
It really is a misreading of Behrend to say it dealt a significant blow or a death-knell to class action suits brought under state wage & hour laws, and the Ninth Circuit agrees. In Leyva v. Medline Industries, Inc., the plaintiffs alleged four separate claims under California labor laws: (1) rounding violations- Medline allegedly rounded hourly employees’ start times in 29 minute increments; (2) bonus violation- Medline allegedly excluded bonuses from employee’s overtime rates; (3) waiting time penalties based on the alleged rounding and bonus violations; (4) wage statement penalties based on alleged rounding and bonus violations. The district court denied class certification finding plaintiffs failed to meet the requirements of Rule 23(b)(3). The Ninth Circuit reversed and remanded this determination citing to Behrend and stating, “[T]he presence of individualized damages cannot, by itself, defeat class certification under Rule 23(b)(3). It is true that the plaintiffs must be able to show that their damages stemmed from the defendant’s actions that created the legal liability.”
*See misquote of Mark Twain.
Lately I have noticed a number of posts on employment law blogs calling the Fair Labor Standards Act (FLSA) outdated or antiquated. (For example, here, here, and here. (Back in 2011, a few witnesses similarly testified before the House Subcommittee on Workforce Protections.) The most recent such post also complains about how complicated the FLSA has become over the 70 years of its existence and claims that employers really do not intend to violate the FLSA law. Rather, employers who violate the FLSA really are committing a ”sin of omission”; that is, because the FLSA is so complicated, employers just do not know they are violating the law.
First, I think most employers do try to comply with the FLSA and there are some employers that, despite their best efforts, still make unintended mistakes, mostly because they got bad advice or because they did not seek advice from a good employment lawyer. I also think there are some employers, however few, who either do not care whether they are complying with the FLSA (or other employment laws) or try to test the outer limits of the FLSA and go too far. The FLSA violations by these employers are not only a problem for their employees, who may be underpaid, they are a problem for law-abiding employers who are put at a competitive disadvantage.
That being said, certain sections of the FLSA and its regulations are complicated, mostly those section containing the exemptions to the overtime and minimum wage requirements. So, one way to “streamline” the FLSA would be to get rid of some, if not all, of the exemptions. In other words, because compliance with the FLSA seems to have become too confusing for some, maybe it is time to require overtime for everyone, including executive, administrative, and professional employees. (BTW, at least one proponent of work-life balance policies has suggested something similar but for different reasons.) That certainly would make it “easier” for employers to comply with the FLSA. Of course, for obvious reasons, it is highly unlikely that this type of ”streamlining” would happen and surely it is not what those who complain about the FLSA mean when they say it should be “streamlined.”
It is difficult sometimes for an employer to ensure it is complying with the FLSA, particularly when the employer wants to take advantage of the Act’s exemptions, but that does not make the Act outdated or antiquated. In any event, there is assistance readily available, from the Department of Labor’s Compliance Assistance website and/or from an experienced employment lawyer. In fact, any new or growing small business that is about to hire help would be wise to seek counsel from an employment attorney and any established employer would be wise to have an employment lawyer periodically review their employment procedures and policies. That just makes good business sense.
In Genesis HealthCare Corp. v. Symczyk (Supreme Court April 16, 2013), Ms. Symczyk claimed that her employer, Genesis HealthCare, deducted thirty minutes of time for meal breaks even when she and other unnamed employees had performed compensable work during their meal breaks. She sued Genesis on behalf of herself and, as allowed under the Fair Labor Standards Act, “all other persons similarly situated.” Along with answering Ms. Symczyk’s complaint, Genesis offered her $7,500 for her claimed unpaid wages and “such reasonable attorneys’ fees, costs, and expenses…as the Court may determine” (in the form of a Rule 68 motion); that is, everything that Ms. Symczyk would receive herself if the lawsuit continued through trial and she won. Nothing was offered for the as yet unidentified ”other persons similarly situated.” The offer was good for ten days. Ms. Symczyk never responded. Genesis then asked the Court to dismiss Ms. Symczcyk’s lawsuit, including the claim on behalf of “all other person similarly situated,” because the Court now lacked jurisdiction since Ms. Symcyk’s claim was moot (that is, there was nothing left for the Court to decide since Genesis had offered to pay her everything she claimed she was owed).
As the case proceeded, everyone (including Ms. Symczyk’s counsel apparently) assumed that Ms. Symczyk’s individual claim was moot, even though she had not accepted Genesis’s offer. They all focused on whether the collective action (that is, Ms. Symcyk’s claim on behalf of “all other persons similarly situated”) also was moot. Then, the Supreme Court says this in its opinion: “While the Courts of Appeals disagree whether an unaccepted offer that fully satisfies a plaintiff’s claim is sufficient to render the claim moot, we do not reach this question, or resolve the split, because the issue is not properly before us.” In other words, since you did not ask us directly, we are not going to tell you if your assumption was correct and it may be wrong. The Court then assumes, without deciding, what everyone else assumed about Ms. Symcyk’s claim and holds that the whole suit, including the collective claim, should be dismissed. (All of which brings to mind that saying about the word “assume” that some people, for some reason, love to quote whenever anyone uses the word “assume.”) Thus, keeping alive for another day the issue of whether a Rule 68 motion that is rejected by a plaintiff in an FLSA lawsuit can moot an individual claim. (And based on Justice Kagan’s dissent, the answer appears to be no, but I do not want to assume anything.)
So, why is this opinion a job creation program for lawyers? First, based on this decision, named plaintiffs in FLSA suits now have a disincentive to accepting any offers to settle. Of course, there will be some plaintiffs who will want to take their money and run, but there also will be other plaintiffs who will not take the money if they are told that the whole lawsuit will be dismissed as a result. In other words, some plaintiffs actually do want to right a perceived wrong on behalf of their fellow employees even if it means waiting a while longer for their money. Second, since the Court refused to decide the issue as to whether an unaccepted Rule 68 motion can moot an individual’s FLSA claim, attorneys can and will continue to spend their time (and their client’s money) and the courts’ time, continuing to fight over this issue until it again reaches the Supreme Court. Third, in all probability, there will be another appeal to the Supreme Court to decided an issue that should have been decided in the Symczyk case.
In other words, in the words of Justice Kagan, “The Court could have resolved this case (along with a Circuit split, see ante, at 5, and n.3) by correcting the Third Circuit’s view that an unaccepted settlement offer mooted Symczyk’s individual claim. Instead, the Court chose to address an issue predicated on that misconception, in a way that aids no one, now or ever.”
It seems like every week I read a new opinion about whether an arbitration provision should be enforced in the employment context.
On Monday the Court of Appeals for the Fourth Circuit issued an opinion in Muriithi v. Shuttle Express, Inc., that considered whether an arbitration clause was unenforceable because (1) it did not allow for class-wide claims; (2) it split the cost of the arbitration between the franchiser and the franchisee, and (3) it only allowed claims to be brought within a year after the action being challenged had occurred. The arbitration clause was part of a franchise agreement between the parties. The District Court had held that the provision was unconscionable and, therefore, not enforceable. (The core issue in the case, but not on appeal, is whether the plaintiff is an employee, rather than an independent contractor, entitled to minimum wage and overtime under the FLSA and Maryland law.)
The Fourth Circuit disagreed with the District Court and held that the arbitration clause was enforceable based on: (1) the Supreme Court’s opinion in AT&T Mobility LLC v. Concepcion, 563 U.S. 1 _ (2011), (arbitration clause that prohibits class-wide claims is not unconscionable); (2) plaintiff had failed to prove that the cost splitting provision would result in prohibitive arbitration costs as required by Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79 (2000); and (3) the one year statute of limitation provision was an issue for the arbitrator since it was not included in the arbitration clause, but related to the franchise agreement as a whole. The Court remanded the case back to the district court with instructions to enter an order compelling arbitration (with full costs of the arbitration to be paid by Shuttle Express as promised at oral argument).
Update: For a copy of the District Court’s opinion click here.
Last week I wrote a post about cameras in the state supreme courts and in the U.S. Supreme Court, as my small contribution to Sunshine Week discussions. (If state supreme courts can have cameras in their courtrooms without dire or no consequences, then surely the U.S. Supreme Court can as well.) Coincidentally, at about the time I was writing my post, Justice Breyer and Justice Kennedy were testifying before a House Appropriations Subcommittee about the Judiciary’s proposed budget and the expected effects of sequestration. During their testimony, Representative Mike Quigley (D-Illinois, 5th District) asked if it was possible to televise the oral arguments at the Court (at about 45:44 minutes on the video of the hearing.) Both Justices again expressed the Court’s reluctance to do so.
Basically, Justice Kennedy’s and Justice Breyer’s arguments against having cameras at the Supreme Court were as follows:
(1) it will confuse the public about what the Justices do;
(2) it will affect how the Justices ask questions or, in other words, according to Justice Kennedy, it will cause an “insidious dynamic”;
(3) all other courts will be forced to do it, including trial courts where there may be privacy concerns;
(4) it will make it possible for people to make fun of them which will affect how they behave at oral arguments;
(5) there needs to be more careful study about what effects cameras would have on the Court before allowing cameras in for oral arguments.
(It is amazing how similar many of these reasons are to the types of arguments I have heard public officials at the local government level make against having their meetings televised. In my experience, however, after the cameras are allowed in, most public officials view it as a positive experience.)
Quite frankly and with all due respect, the Justices’ reasons for keeping out cameras during the oral arguments at the Supreme Court are illogical and misinformed. First, even assuming that the Justices are correct, that the public is easily confused about the legal process, shouldn’t the solution be to provide more information to the public, not less? Second, if Supreme Court Justices really would behave differently at oral arguments because the public would have direct access to the actual questions the Justices ask, then why hasn’t that already happened? Audio and transcripts of the oral arguments already are posted online and have been available for some time. (Not to mention, it is really hard to believe that Supreme Court Justices could be so easily influenced.) Third, although arguments against cameras in the trial court are stronger for privacy reasons, many trial courts already allow them in under the right circumstances and in accordance with standards set by the U.S. Supreme Court. Fourth, seriously, Supreme Court Justices are worried about someone making fun of them? Fifth, is there really a need for further study of the issue when many state supreme courts have allowed cameras in their courtroom during oral arguments for many years now? Surely, the results of the “studies” done in these ”laboratories” should be sufficient. (As Justice Brandeis wrote in his dissent in New State Ice Co. v. Liebmann, 285 U.S. 262 (1932), ”It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”)
If the Supreme Court really is a “teaching institution,” as the Justices kept stating last Thursday, then it is failing that part of its purpose by not allowing cameras in during oral arguments.
This week’s post is a departure from employment law because it is Sunshine Week. The purpose of Sunshine week is to raise public awareness about the importance of open government and the freedom of information. It is a cause on which I have spent a great deal of time until fairly recently. So, in recognition of Sunshine Week, this post will touch on the issue of cameras in supreme courts, including the U.S. Supreme Court.
Over the past few years a number of individuals and groups have been pushing for the U.S. Supreme Court to allow cameras in the courtroom during oral arguments. Recently, a number of commentators have even written law journal articles on the issue: Nancy S. Marder, The Conundrum of Cameras in the Courtroom (Arizona State Law Journal 2013), Kyu Ho Youm, Cameras in the Courtroom in the Twenty-First Century: The U.S. Supreme Court Learning From Abroad (The Bringham Young University Law Review 2013), Mary-Rose Papandrea, Moving Beyond Cameras in the Courtroom; Technology, the Media, and the Supreme Court (also in The Bringham Young University Law Review 2013), and Anthony E. Mauro, Let the Cameras Roll: Cameras in the Court and the Myth of Supreme Court Exceptionalism (Reynold Courts & Media Law Journal 2011). C-SPAN has a dedicated web page on the issue. In December, 2011, the U.S. Senate held a hearing on proposed legislation that would have required televising the Supreme Court’s open sessions (with limited exceptions).
Currently the U.S, Supreme Court posts audio recordings of arguments on its website at the end of each argument week. So members of the public who cannot attend in person, do have some access to what takes place during oral argument. Arguments, however, have never been live streamed or videoed. Most of the Justices have expressed a reluctance to allow cameras in. As Adam Liptak of the New York Times recently pointed out, this reluctance is contrary to the trend occurring in other countries, such as the United Kingdom and Canada.
Surely, allowing video of oral arguments before the U.S. Supreme Court would increase the public’s understanding of what takes place at the Supreme Court and how our legal system works. Audio recordings just do not provide enough information, particularly about the solemnity of the occasion. (Based on the audio recordings, it would not be unreasonable for the public imagine that the justices are sitting around a table in their street clothes, drinking coffee, asking a lot of questions, and sometimes arguing with one another.)
After reading Adam Liptak’s article, I started to wonder how many state supreme courts have gotten over their fear of cameras in their courtrooms. So, I decided to find out and, in honor of Sunshine Week, below is a table of what I discovered. The column on the left contains links to the various state supreme courts’ websites and the column on the right contains descriptions of whether each court provides audio or video (or both) of oral arguments, with a link to the relevant webpage. Twenty-seven of the courts provide recorded and/or live video of oral arguments and eight provide recorded and/or live audio. (Some courts even provide both audio and video.)
(By the way, since July 18, 2011, fourteen federal trial courts have been taking part in a 3-year digital video pilot project. Although, as of December 31, 2012, the number of court proceedings video-recorded seems relatively small (50), the number of viewings (116,520) indicates that the public has a strong interest in this sort of access.)