Hunton Employment & Labor Law Perspectives : Employment Lawyers & Attorneys : Hunton & Williams Law Firm : Labor Law Legislative Updates

The U.S. Department of Labor provides general information and compliance guidance regarding numerous wage, hour, employment, and labor laws via “fact sheets” which are available to employees, employers, and the general public. Fact sheets can serve as helpful reference and compliance material for employers. On December 23, 2011, the DOL issued three new fact sheets on the issue of unlawful retaliation.  These newly released fact sheets address retaliation under the Fair Labor Standards Act (“FLSA”), the Family and Medical Leave Act (“FMLA”), and the Migrant and Seasonal Agricultural Workers Protection Act (“MSPA”).

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The Ninth Circuit did an about-face last week by reversing its earlier decision in Sepulveda v. Wal-Mart and nixing the proposed class action.  The decision is further evidence of the post-Dukes difficulty plaintiffs face when attempting to certify Rule 23(b)(2) classes seeking monetary relief.

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On October 3, 2011, the U.S. Supreme Court vacated the Ninth Circuit’s decision in Wang v. Chinese Daily News, Inc., 623 F.3d 743 (9th Cir. 2010), and remanded it “for further consideration in light of Wal-Mart Stores, Inc. v. Dukes, 564 U.S. ___ (2011).” The Supreme Court did not provide any further analysis of the Wang decision in its granting of the petition for a writ of certiorari.

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On October 4, 2011, the California Supreme Court announced that it will hear oral argument in Brinker v. Superior Court (Hohnbaum) on Tuesday, November 8, 2011, at 9:00 a.m. in San Francisco.  Because the Court’s procedures typically require it to file its written opinion within 90 days of oral argument, employers can reasonably expect a decision in the case sometime between December 2011 and February 2012.

The long-awaited decision is expected to provide clarity concerning the proper interpretation of California’s statutes and regulations governing an employer’s duty to provide meal and rest breaks to non-exempt workers.  Among other things, the Court is expected to rule on the crucial issue of whether California meal period laws require employers to ensure that employees take uninterrupted meal breaks or whether employers are required to provide their employees the opportunity to take such breaks, which the employee may voluntarily decide to skip with no adverse consequence to  the employer.

We will continue to issue updates as this case progresses.

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On August 9, 2011, the Ninth Circuit Court of Appeals ruled that a putative class action cannot be rendered moot by a defendant’s Rule 68 offer of judgment to the named plaintiff, even when the offer of judgment fully satisfies the named plaintiffs claim.  In doing so, the Ninth Circuit joined the other three circuits that have considered the pre-certification effect of an offer of judgment on the mootness of a class action.  The other three circuits (Second, Third, and Fifth) have similarly held that a defendant cannot “pick off” lead plaintiffs with an offer of judgment in order to avoid a class action.

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On July 8th, partially relying on the U.S. Supreme Court’s June 20th decision in Wal-Mart Stores, Inc. v. Dukes (for an analysis of the Dukes decision, see our previous blog entry), the United States District Court for the Northern District of California decertified a class of current and former store managers who alleged that Dollar Tree Stores Inc. had misclassified them as exempt employees and denied them overtime pay.  The case, Cruz v. Dollar Tree Stores, Inc., proves that although Dukes involved discrimination as opposed to wage and hour claims, the rationale in Dukes can also be used to defeat wage and hour class actions.

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The class action under the Fair Labor Standards Act arguably is the employer’s most dreaded legal claim.  In April 2011, the United States Supreme Court provided a potential escape hatch for employers.  In AT&T Mobility v. Concepcion, the Supreme Court seemed to signal -- “seemed” being the operative word -- that employers need only enter into arbitration agreements in which employees disclaim their ability to file an FLSA class action (or, as it’s actually called in the FLSA, a “collective” action).

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The United States Department of Labor (“DOL”) has announced the launch of its first application, or “app,” for smartphones to “help employees independently track the hours they work and determine the wages they are owed” in accordance with the Fair Labor Standards Act (“FLSA”). The application is available in both English and Spanish and allows employees to privately record regular work hours, break and meal times, and any overtime hours. The free app is currently compatible only with iPhone and iPod Touch; however, the DOL is exploring updates for compatibility with other smart phones such as Android and Blackberry phones.

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On December 13, 2010, New York passed the Wage Theft Prevention Act (“WTPA”).  The WTPA, which amends the state’s labor law regarding wage payments, and becomes effective on April 12, 2011.  It  heightens the requirements of employers as relating to notice and the payment of wages while also stiffening the penalties for notice and payment failures.

Notice Requirements:

The law currently in effect requires employers to inform new hires in writing of their designated pay date, rate of pay, and overtime rate, if applicable.  The WTPA revises this portion of the law, placing further obligations on employers by requiring this notice to be issued not only upon hire but also by February 1 of every subsequent year.  The WTPA also expands the information to be provided to include: the employee’s rate of pay and how it is paid (hourly, weekly, commission, etc.); allowances claimed against minimum wage (e.g., tip, meal or lodging credits); the employer’s regular pay day; the employer’s name and any “doing business as” names; the address of the employer’s main office or principal place of business and mailing address if different; the employer’s telephone number, plus any other information the Commissioner of Labor deems “material and necessary.”  The notice must be provided in English, or in the employee’s primary language if his/her primary language is not English, and must be signed and acknowledged by the employee each time it is received.

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When settling class actions, there is always a question regarding how broad the release can be, and whether an employee can stay silent through the settlement process, only to later sue for claims that arguably were not released.  A California Court of Appeal recently held in Villacres v. ABM Industries that a court-approved class action settlement can prevent a class member from filing a new lawsuit asserting claims that were brought in the previously settled class action and also claims that could have been brought in the prior action − as long as the terms of the settlement’s general release are broad enough to cover those types of claims.

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Employers who hold their breath and declare an employment position as “exempt” from the Fair Labor Standards Act’s overtime previsions − all the while knowing that the exempt v. non-exempt question is a close call − should take a simple step to save themselves substantial damages should a court later rule the position non-exempt.

When entering into an employment arrangement with the employee, the employer should obtain the employee’s acknowledgement in writing that the employee’s weekly hours may fluctuate, and that each weekly portion of the employee’s annual salary will constitute payment for all hours worked during that week.

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The U.S. District Court for the Eastern District of Pennsylvania recently decertified a wage and hour collective action against Pennsylvania poultry processor Farmers Pride, ruling that a collective action is not an appropriate mechanism for resolving claims that the employer failed to fully compensate employees for time spent engaged in donning- and doffing-related activities.  The Court’s 47-page opinion reflects a thorough analysis that will serve as guidance to employers and courts around the country faced with similar collective action claims.

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In a recent decision, a federal district court judge held that Abbott Laboratories, Inc.’s pharmaceutical sales representatives do not qualify for either the outside sales or administrative exemptions of the Fair Labor Standards Act (“FLSA”).  Under the FLSA, employers are required to pay overtime for hours worked over 40 in a week, unless an employee qualifies for an exemption under the Act. While the FLSA contains many such exemptions, the most commonly used exemptions are the executive, outside sales, and administrative exemptions.  Each exemption has specific requirements that must be met.

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For years, employers wrestling with thorny wage and hour issues under the Fair Labor Standards Act (“FLSA”) have used the Wage & Hour Division’s (“WHD”) opinion letters for fact-specific guidance.  To the extent a particular issue was not addressed by a current opinion letter, the employer could submit a request for an opinion letter and obtain definitive guidance from WHD.  Employers who relied on opinion letters were immune from FLSA liability under the Portal Act’s safeharbor provision, which allows an employer to avoid liability for FLSA violations if the employer relied on a written interpretation of the WHD.

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Continuing a trend in Congress to limit employers’ use of independent contractors, on April 22, 2010, Rep. Lynn Woolsey (CA) and Senator Sherrod Williams (OH) introduced the Employee Misclassification Prevention Act (H.R. 5107, S. 3254) (“EMPA”) in the House and Senate respectively.  The EMPA would amend the Fair Labor Standards Act (“FLSA”) and render worker misclassifications a violation of federal law.  Employers would be required to maintain records reflecting hours worked and wages paid for employees and non-employee workers.  They also would be required to provide workers a “notice” that identifies: the worker’s classification, a yet to be created Department of Labor website (containing an on-line complaint link), contact information for the applicable Department of Labor office, and other additional information as prescribed by regulation.  For workers classified as non-employees, the Notice would be required to state: “Your rights to wage, hour, and other labor protections depend upon your proper classification as an employee or non-employee. If you have any questions or concerns about how you have been classified or suspect that you may have been misclassified, contact the U.S. Department of Labor.”

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In its recently published Spring 2010 Regulatory Agenda, the Department of Labor (“DOL”) announced that it plans to propose a rule that would amend the current recordkeeping regulations under the Fair Labor Standards Act (“FLSA”).  Under the proposed rule, any employers seeking to exclude workers from the FLSA’s coverage will be required to perform a classification analysis, disclose that analysis to the worker, and retain that analysis to provide to Wage and Hour Division (“WHD”) enforcement personnel upon request.  The proposal will also address burdens of proof when employers fail to comply with records and notice requirements.

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With a dearth of job openings for recent college graduates, many have pursued unpaid internships while continuing to search for fulltime employment.  A 2008 survey found that half of all college students hold at least one internship before graduating.  In light of the 18.8% March unemployment rate for American workers aged 16-24—nearly double the 9.7% unemployment rate for the workforce at large—this practice can be beneficial for interns, who gain experience and contacts, as well as for employers, who can benefit from having eager interns ready to learn and contribute.

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On April 1, Secretary of Labor Hilda Solis announced a new campaign aimed at enforcing federal wage and hour laws on behalf of low-wage and immigrant workers and warned employers, “A new sheriff is in town.”

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Employers striving to comply with federal and state wage laws may soon have one more thing to worry about -- local “wage theft” laws.  In Florida, the Board of Commissioners for Miami-Dade County recently approved an ordinance that prohibits private sector employers from failing to pay employees all wages owed and gives the county authority to intervene and seek remedies on behalf of employees.  San Francisco already has a wage theft ordinance, and Los Angeles and New Orleans are considering similar measures.

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Both the Third and the Seventh Circuits are set to address the issue of whether collective actions under the Fair Labor Standards Act are compatible with class actions under state wage and hour laws.  In the Third Circuit, briefing is underway in Parker v. NutriSystem, Inc., No. 09-3545.  And argument is set in the Seventh Circuit for April 2, 2010 in Ervin v. OS Restaurant Servs., Inc., No. 09-3029.  Both courts will address what some have called the “inherent incompatibility” of FLSA collective actions and state law wage and hour class actions that are pursued in the same case.

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In a short and simple opinion by Judge Morton Greenberg, the U.S Court of Appeals for the Third Circuit affirmed summary judgment in favor of Johnson & Johnson against pharmaceutical sales representative Patti Lee Smith, finding that the FLSA’s administrative employee exemption applied to her.  The Third Circuit is the first court of appeals to examine the FLSA exempt status of pharmaceutical sales representatives.  The ruling in favor of the employer represents a significant development for pharmaceutical companies around the country, many of whom are facing similar FLSA lawsuits brought by their pharmaceutical sales representatives.

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Companies doing business in California should note that, on November 23, 2009, the Chief Counsel of the California Division of Labor Standards Enforcement (“DLSE”) issued an Opinion Letter on behalf of Labor Commissioner Angela Bradstreet, in which the DLSE modified its position on the issue of making deductions from vacation and sick leave balances accrued by exempt employees for the purpose of covering partial-day absences.  The Opinion Letter brings California law more in line with the federal Fair Labor Standards Act regarding the “salary basis test” and deductions from exempt employee paid time-off accounts for partial-day absences.

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A recent decision from the California Supreme Court has provided a rare victory for companies with employees in that state.  In Schachter v. Citigroup, Inc., the Court ruled that a forfeiture provision in an employee incentive compensation plan did not violate California wage laws.

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Last week, Secretary of Labor Hilda Solis announced the Department of Labor's planned launch of an ambitious new public awareness campaign called "We Can Help."  The campaign, set to debut in early 2010, is designed to help inform workers about their rights under federal wage and hour laws.

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