Blog Move

All future postings for this blog will be at this location:  Employment Law News-

Thank you to all those readers who landed here.  I hope you found the information useful and/or thought provoking.   I hope to see you at the other site.

Walmart Announces It Will Increase Wages and Other Wage News.

The New York Times reports today that Walmart plans to increase the wages of its employees nationwide.  This news is significant because Walmart is the biggest employer in the country.  So the wage increase could indicate that the economy really is improving.

Earlier this week the Washington Post published a story about Arkansas (coincidentally Walmart’s home state) recently raising its minimum wage to $7.50, a mere $0.25 over the current federal minimum wage of $7.25.  The increase passed in Arkansas only when it was put on the ballot and the voters got to vote on it.  The Post story describes how even $0.25 more an hour can make a difference to some working poor and how hard it is to survive on $7.50/hour wages even in Arkansas.  Imagine how hard it must be to survive on minimum wage in other states that have a higher cost of living.

Finally, there was this story reporting that a Houston company is suing a lawyer over overtime advice.  Allegedly, the attorney told the head of the company that it did not have to pay overtime to domestic workers employed at the private home of the owner of the company.  So, the company stopped paying overtime.  Probably not surprisingly someone complained and the Department of Labor assessed $134,595 in overtime back pay against the company.  Regardless of whether or not the allegations are true about the advice the company received from its attorneys, the fact of the matter is the company did not have to stop paying overtime to what it supposedly described as “longtime and loyal employees.” Yet it chose to do so.  Probably not what most people would think of as a great way to reward “longtime and loyal employees.”

Another Reason to Post Notices Required Under Federal Employment Laws

Employers are required by law to post notices about certain federal employment laws.  A recent opinion by the Court of Appeals for the 4th Circuit illustrates why a failure to do so could have unexpected consequences for the employer.  In Cruz v. Maypa, the 4th Circuit held that the statue of limitations period for filing a claim under the Fair Labor Standards Act was equitably tolled because the employer had failed to post the required notice under the Act.  (The court relied on its opinion in Vance v. Whirlpool Corp., 716 F.2d 1010 (4th Cir. 1983), in which the 180-day period by which to file an administrative claim under the Age Discrimination in Employment Act was equitably tolled because Whirlpool failed to post the required statutory notice.)

In Cruz, the most recent alleged FLSA violation occurred in 2007.  The complaint, however, was not filed until 2013, about six years later.  The statute of limitations for FLSA claims is three years, if a willfull violation has occurred, or 2 years otherwise.  So, if the statute of limitations had not been equitably tolled, the 4th Circuit would have upheld dismissal of the FLSA claim.  Instead, the 4th Circuit remanded the FLSA claim so the District Court could determine when the plaintiff first retained legal counsel or obtained actual knowledge of her rights under the FLSA.   Presumably this same reasoning would apply to a number of other employment laws that require notice, including Title VII.





U.S. Supreme Court – No Heightened Pleading Rule in §1983 Case

Last week the Supreme Court held in Johnson et al. v. City of Shelby, Mississippi that plaintiffs seeking damages for violations of constitutional rights are not required to expressly cite §1983 in order to state a claim.  In any event, the Court ordered that on remand the plaintiffs be allowed to add a citation to §1983 to their complaint.  The opinion was per curiam.  The Court pointed out that neither Bell Atlantic Corp. v. Twomby, 550 U.S. 544 (2007) nor Ashcroft v. Iqbal, 556 U.S. 662 (2009) were applicable because those opinions address whether factual allegations are sufficient in a complaint to survive a motion to dismiss.

The plaintiffs in Johnson were a couple of police officers who alleged they were denied their Fourteenth Amendment due process right when they were fired because of their opposition a city alderman’s planned illegal operations.  Their complaint did not include a cite to §1983 which authorizes a cause of action under the Fourteenth Amendment.  The district court dismissed the complaint for failure to state a claim because the complaint did not cite §1983.  The district court did not allow the plaintiffs to amend their complaint to add a citation to §1983.  The Fifth Circuit affirmed, which brought the parties to the Supreme Court.

Yet Another NLRB ALJ Decision Regarding Mandatory Arbitration

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.

The EEOC’s New Enforcement Guidance Re: Pregnancy Discrimination

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.


Volunteers Under the FLSA

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).

And this:

(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.


Unpaid Interns on the Offensive

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.

Overtime for Everyone?

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.