Category: Wage and hour advice and litigation

Hold onto Your Hats! DOL Sends “Regular Rate” Rule for Review

Jason E. Reisman

On January 23, 2019, the Department of Labor (“DOL”) passed along another potential bombshell rule (see our prior post here on the white collar exemption salary threshold rule that’s also currently under review) to the White House Office of Information and Regulatory Affairs (“OIRA”)—this time, it’s a proposed rule to update and clarify the definition of “regular rate” under the Fair Labor Standards Act (“FLSA”). Here’s what the DOL said in its fall 2018 agenda:

The Department believes that changes in the 21st century workplace are not reflected in its current regulatory framework. … The Department is interested in ensuring that its regulations provide appropriate guidance to employers offering these more modern forms of compensation and benefits regarding their inclusion in, or exclusion from, the regular rate. Clarifying this issue will ensure that employers have the flexibility to provide such compensation and benefits to their employees, thereby providing employers more flexibility in the compensation and benefits packages they offer to employees. Similarly, the Department believes that the proposed changes will facilitate compliance with the FLSA and lessen litigation regarding the regular rate.

Once OIRA reviews the rule, it can be released to the public for comment.

Sounds fantastic, doesn’t it? Can’t wait to see what new and wonderful clarity the DOL has to offer—remember, the general rule is that the “regular rate” (which is used for the calculation of overtime pay for non-exempt employees) must include all forms of remuneration for employment, other than certain specified exceptions. We should expect some employer-favorable clarifications to those “exceptions,” which could relate to the ever-elusive concept of “discretionary bonuses,” and other compensation perks.

Get excited—the Trump DOL is working for you (employers of the world, that is)!

It’s Back!! New DOL Salary Threshold Rule Is on the Doorstep!

Jason E. Reisman

Just when you thought it was safe to go back in the water, the U.S. Department of Labor (“DOL”) reappears to address an issue that has most American employers on edge: How far will it expand the scope of who is eligible for overtime pay? After taking what seems like forever, the Trump DOL—despite the government shutdown—has apparently now completed its long-awaited revised new rule to reset the minimum salary threshold for employees subject to the Fair Labor Standards Act’s white collar exemptions.

We all remember the Obama DOL’s effort to expand overtime eligibility to four million currently-exempt employees by increasing the salary minimum by more than double, to $47,476 (which was blocked by a federal judge in Texas). The real question for now is, what has the Trump DOL decided is the “correct” new salary level? All signs point to a figure in the low to mid-$30,000s. We should find out very soon.

For now, sources are reporting that the finalized proposed new rule is about to be submitted (maybe today) to the White House’s Office of Information and Regulatory Affairs (“OIRA”) for review. This is the first step in the process before the proposed rule is released to the public for comment. Though the federal government is currently shut down, the White House is working. The last agenda issued by the DOL stated that this new rule would be released in March, so they seem to be on track for that.

So … stay tuned— “Same Bat time, same Bat channel!” More to come.

Philadelphia City Council Passes “Fair Workweek” Bill and Votes to Increase Minimum Wage for City Workers and Contractors

Andrew A. Napier

On December 6, the Philadelphia City Council passed two pieces of legislation that already are being touted as altering the landscape for workers in the city, especially those in the service industry.

“Fair Workweek” Bill

The “Fair Workweek” Bill, introduced by Councilwoman Helen Gym in June, applies to large chain businesses with more than 250 employees in the retail, food, or hospitality sectors, and at least 30 locations across the country or state (“Covered Employers”). If signed it would go into effect on January 1, 2020, and will require Covered Employers to give employees (including full-time, part-time, and seasonal and temporary workers) who work within the geographical boundaries of the City, 10 days’ advance notice of their work schedule. The amount of advance notice will increase to 14 days beginning January 1, 2021. An employee may decline, without penalty, any shift that occurs less than nine hours after the end of a shift, and if the employee agrees to work the shift, the employer must pay the employee an extra $40 per shift. Continue reading “Philadelphia City Council Passes “Fair Workweek” Bill and Votes to Increase Minimum Wage for City Workers and Contractors”

ALERT: New Jersey Raising Minimum Wage!

Thomas J. Szymanski

New Jersey’s minimum wage will increase by 25 cents, from $8.60 to $8.85 per hour, effective January 1, 2019. For non-exempt employees making the minimum wage, employers will be required to pay an overtime rate of $13.28 for every hour worked over 40 in a work week, to comply with the State’s minimum wage requirements.

Employers should be aware that one of Governor Phil Murphy’s top legislative priorities is to increase the minimum wage to $15 per hour. Although the Legislature passed a $15-an-hour minimum wage bill in 2016, which was vetoed by then-Governor Chris Christie, neither Governor Murphy nor the Legislature has communicated a path forward to get another bill on the table.

As wage payment violations carry significant penalties in New Jersey, you should contact a member of Blank Rome’s labor & employment practice group if you have any questions about compliance with New Jersey’s minimum wage increase or any other wage and hour issues.

Goodbye Uber Class Action, Hello Individual Arbitration

Natalie Alameddine and Caroline Powell Donelan

Last week, in a significant blow to claims that gig economy workers are entitled to pursue disputes on a class or collective basis, and possibly whether those workers will be able to establish that they are employees and not independent contractors, a three-judge panel of the Ninth Circuit Court of Appeals unanimously decertified a class of 240,000 Uber drivers. The decision in O’Conner v. Uber is a victory for the ride-share company, which will now be able to defend claims that it misclassified employees as independent contractors on an individual basis—one arbitration at a time.

For the past five years, there has been an ongoing and contentious dispute over whether Uber drivers (and similarly, Lyft and other ride-share drivers) are independent contractors or employees. If the workers are deemed to be employees, Uber could face hundreds of millions of dollars in alleged California labor code violations and business expense claims. To combat the possibility of having to litigate this issue on a class-wide basis, Uber entered into arbitration agreements with each driver, requiring that any driver’s claims be arbitrated and that each case had to be arbitrated individually (rather than as a class action). Continue reading “Goodbye Uber Class Action, Hello Individual Arbitration”

“De Minimis” May Be Down, but It’s Not Out—And What Does It Mean for Employer Rounding Policies in California?

Laura Reathaford, Caroline Powell Donelan, and Caitlin I. Sanders

On July 26, 2018, the California Supreme Court issued its long-awaited opinion in Troester v. Starbucks Corp., __ P.3d __ (2018). In the days that have followed, legal headlines have lamented the presumed “death” of the de minimis doctrine. But is Troester really that simple? And what does it mean for employer rounding policies?

The issue in Troester was whether the federal Fair Labor Standards Act’s (“FLSA”) de minimis doctrine applies to claims for unpaid wages under certain provisions of the California Labor Code. For the better half of the past century, the de minimis doctrine has been applied in the federal wage and hour context to excuse payment of wages under the FLSA for insubstantial or insignificant periods of time. Continue reading ““De Minimis” May Be Down, but It’s Not Out—And What Does It Mean for Employer Rounding Policies in California?”

PA Raising Salary Threshold for White Collar Exemptions—Déjà Vu All Over Again … or Worse?

Jason E. Reisman

Here we go again, Pennsylvania employers, but this time on the local front, rather than nationally. Following up on Governor Wolf’s announcement in January that Pennsylvania needed to “modernize” its outdated wage and hour regulations—last updated in 1977—governing the executive, administrative, and professional exemptions under the Pennsylvania Minimum Wage Act, the Pennsylvania Department of Labor and Industry (“DOLI”) published proposed new regulations at the end of June.

The DOLI’s proposal includes significantly raising the minimum salary threshold required for these “white collar exemptions”—sound familiar? Worse yet, these proposed changes will ultimately increase the new salary minimum above the threshold originally proposed for the Fair Labor Standards Act (“FLSA”) by the U.S. Department of Labor (which, as you undoubtedly recall, was enjoined and then struck as over-reaching by an Obama-appointed federal judge in Texas). Continue reading “PA Raising Salary Threshold for White Collar Exemptions—Déjà Vu All Over Again … or Worse?”

Independent Contractors in California—Misclassification Is Now “Easy as ABC”

Caroline Powell Donelan

California employers are facing a harsh new reality as a result of the state Supreme Court’s recent decision adopting a new test for determining whether a worker can properly be classified as an independent contractor (versus an employee) “for purposes of California wage orders,” which generally impose obligations on employers relating to non-exempt employees’ wages, hours, and working conditions like meal periods and rest breaks.

The underlying claims were brought by two delivery drivers alleging Dynamex, a nationwide same-day courier and delivery service, had improperly classified them and other “similarly situated” drivers as independent contractors. In relevant part, these drivers:

  • were paid a flat fee or percentage of the delivery fee received from the customer;
  • were generally free to set their own schedules;
  • were free to reject or accept jobs assigned by Dynamex;
  • used their own cell phones and vehicles for work;
  • were free to choose their own routes;
  • could perform work for other companies; and
  • were hired for an indefinite period of time.

Under most tests distinguishing independent contractors from employees, these facts would have weighed toward an independent contractor determination. However, in a densely-academic, 82-page opinion, the Court held that the “suffer or permit to work” definition of “employ” contained in the wage orders should replace the more flexible “right of control” test which has been used in California since 1989. Specifically, the Court adopted the “ABC” test as the proper way to distinguish employees from independent contractors. Continue reading “Independent Contractors in California—Misclassification Is Now “Easy as ABC””

Blank Rome Alert—Gig Economy More Employer-Friendly? Ask Uber!

Jason E. Reisman

Spoiler alert! Yesterday, the U.S. District Court for the Eastern District of Pennsylvania handed Uber what the Court described as Uber’s first win on its independent contractor classification for one class of its drivers: “This case is the first to grant summary judgment on the question of whether drivers for UberBLACK are employees or independent contractors within the meaning of the Fair Labor Standards Act ….” The case is Razak et al. v. Uber Technologies, Inc. et al. (Civil Action No. 16-573; 4/11/18).

Wow. Pretty significant progress for the gig economy’s foundational feature—the engagement of workers classified as “independent contractors.” I dare say that, with this decision, the gig economy may have just gotten a little more employer-friendly—at least here in Eastern Pennsylvania and at least as to Uber. Continue reading “Blank Rome Alert—Gig Economy More Employer-Friendly? Ask Uber!”

DOL Gets “Cute” with New Compliance Guidance … Animated Videos

Jason E. Reisman

The U.S. Department of Labor (“DOL”) has been trumpeting its “new” focus—with the incoming Trump administration—on “educating” employers to improve compliance. The latest effort by the DOL involves newly created, short animated videos—you can watch all five of them here.

The DOL announced these videos with this selling point: “Tired of poring through regulations and dense text trying to determine your legal responsibilities under federal labor law as an employer? We have a solution.” Well, we’re not sure that’s exactly accurate since they do not provide a comprehensive explanation of the legal responsibilities of covered employers. Continue reading “DOL Gets “Cute” with New Compliance Guidance … Animated Videos”