PPE Not Clothes Under Section 203(o) of The FLSA

The Department of Labor released its second Administrator’s Interpretation today – No. 2010-2. The meat of the Department’s interpretations is that Section 203(o) exception to what is compensable time, does not extend to protective equipment worn by employees that is required by law, by the employer, or due t the nature of the job.

Section 203(o) of the Fair Labor Standards Act (FLSA) provides that time spent “changing clothes or washing at the beginning or end of each workday” is excluded from compensable time under the FLSA if the time is excluded from compensable time pursuant to “the express terms or by custom or practice” under a collective bargaining agreement. 29 U.S.C. § 203(o). However, in many donning and doffing cases, where employees are not paid for the time that they put on and take off certain pieces of equipment, employers attempt to use Section 203(o) to defeat such a claim. In following the Judge Crabb’s lead in Spoerle v. Kraft Foods Global, Inc., 527 F. Supp. 2d 860, 868 (W.D. Wis. 2007), and other similar decisions, the Department concluded that time spent donning and doffing protective equipment worn by employees is a compensable activity in spite of Section 203(o)

The Department explained Section 203(o) does not make donning and doffing activities any less ‘integral and indispensable’ to the employees’ performance of their daily tasks. In other words, the character of donning and doffing activities is not dependent upon whether such activities are excluded pursuant to a collective-bargaining agreement. To hold otherwise would expand the Section 203(o) exclusion well beyond clothes. If the donning, doffing, and washing excluded by Section 203(o) are determined by the trier of fact to be integral and indispensable, those activities could commence the workday.

Meat packing and other similar workplaces where employees are asked to don and doff equipment are an area rife with wage theft. The Department’s interpretation is another tool for employees to ensure they receive compensation for every hour they work.

New Protections For Working Mothers

As part of the Health Care Reform Bill recently signed into law by President Obama new protections for working mothers have been provided under the FLSA.

Here's the text of the new section:

SEC. 4207. REASONABLE BREAK TIME FOR NURSING MOTHERS.

Section 7 of the Fair Labor Standards Act of 1938 (29 U.S.C. 207) is amended by adding at the end the following:

(r)(1) An employer shall provide—

(A) a reasonable break time for an employee to express breast milk for her nursing child for 1 year after the child’s birth each time such employee has need to express the milk; and

(B) a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by an employee to express breast milk.

(2) An employer shall not be required to compensate an employee receiving reasonable break time under paragraph (1) for any work time spent for such purpose.

(3) An employer that employs less than 50 employees shall not be subject to the requirements of this subsection, if such requirements would impose an undue hardship by causing the employer significant difficulty or expense when considered in relation to the size, financial resources, nature, or structure of the employer’s business.

(4) Nothing in this subsection shall preempt a State law that provides greater protections to employees than the protections provided for under this subsection.

While the language of the new law does not require employers to pay employees for this break time under federal law, Wisconsin law, along with other similar states, might. If the break is for less than an uninterrupted thirty (30) minutes, under Wisconsin law employers will be required to compensate the employee for the break. See Wis. Admin. Code DWD § 274.02. As with any new law, time will tell how and to what extent the new law will actually work to protect employees.

On April 22, 2010 Sen. Sherrod Brown, (D-OH) and Rep. Lynn Woolsey, (D-CA) introduced the Employee Misclassification Prevention Act (EMPA) in the Senate and House, respectively. The primary aim of EMPA is to stop employers from improperly designating employees as independent contractors. Misclassification of employees as independent contractors is a major tactic employers use to avoid paying employees minimum and overtime wages, along with denying these employees other rights provided under various employment laws.

You can read the full text of the bill here.

If passed as written, EMPA would, among other things:

1) require every company covered by the FLSA to provide a written notice to all workers informing them that they have been classified as either an employee or “non-employee,” directing them to a Department of Labor Web site for further information about the rights of employees under the law, and informing them to contact the Department of Labor if they have any questions about whether they have been misclassified;

2) require companies to keep accurate records of the hours of work and wages of employees and keep comparable records for “non-employees” providing labor or services to the business;

3) add a new provision making it a “prohibited act” under FLSA §15 (29 USC §215) to fail to properly classify a worker as an employee; and

4) double the amount of liquidated damages (resulting in triple damages) for willful violations of the minimum wage or overtime laws where the employer has also misclassified the affected employee.

The bill as currently written would also direct the Secretary of Labor to establish a webpage on the Department of Labor website to inform individuals of their rights.
This law would be a great step in the fight to prevent wage theft as employees will have greater protections than ever against the unscrupulous employers who improperly classifies their workers.

DOL to review Recordkeeping Regulations

The Department of Labor announced today that they will be reviewing numerous regulations - making the agenda are the record keeping regulations. The DOL is contemplating what would be an enormous tool for employees to fight wage theft. The current regulations require an employer keep certain records. However, they do not require the employer to make those records available to employees. Where employees are barred from obtaining information, they cannot tell whether their rights are being violated. As the DOL accurately puts it, this "is an issue of transparency and is critical to workers’ understanding of their legal rights and responsibilities."

Additionally, the DOL is contemplating requiring "[a]ny employers that seek 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 give to WHD enforcement personnel who might request it."

You can read more here.

Improper deductions from paychecks

A common way that employers steal wages from their employees is through a practice of making improper deductions from the employees’ paycheck.

In Wisconsin, “No employer may make any deduction from the wages due or earned by any employee…for defective or faulty workmanship, lost or stolen property or damage to property, unless the employee authorizes the employer in writing to make that deduction.” Wis. Stat. § 103.455. A common example of an employer violating this policy would be the cashier who, without authorization, has a shortage from her drawer deducted from her pay. If an employer makes such an improper deduction in violation of this statute, the employer shall be liable for double damages in a civil action brought by the employee. See id.

It is crucial to note that not all deductions will be deemed improper. The language of the statute clearly provides that an employee can authorize a deduction; however, if the authorization is not in writing it is not valid. It is also clearly established by case law that authorization by the employee for the deduction is only valid if it is given after the loss and before the deduction. See Donovan v. Schlesner, 72 Wis. 2d 74, 240 N.W.2d 135 (1976).

Although Wis. Admin. Code § DWD 272.10 requires an employer list all deductions on the employees pay stub, along with the number of hours worked and the employees rate of pay, an employer does not have to list miscellaneous deductions.

FLSA retaliation before the Supreme Court

On March 22, 2010 the Supreme Court of the US granted cert. to hear the matter of Kasten v. Saint-Gobain Performance Plastics Corp. The issue in front of the Court is as follows: “Is an oral complaint of a violation of the Fair Labor Standards Act (“FLSA”) protected conduct under the anti-retaliation provision, 29 U.S.C. § 215(a)(3)?” Section 15(a)(3) of the Fair Labor Standard Act (“FLSA”) makes it unlawful for an employer “to discharge or in any manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding, under or related to this chapter…”29 U.S.C. § 215(a)(3) (emphasis added). The Court’s ruling in this case will have a significant impact on the rights of individuals who are attempting to stop employers from stealing their wages as it will possibly open another avenue for the aggrieved worker to gain protections.

In this case, Kasten alleges that he was retaliated against in violation of the FLSA when he was terminated after voicing complaints that the location of the employer’s time clocks was illegal under the FLSA. On appeal from the Western District of Wisconsin, the 7th Circuit affirmed the grant of summary judgment to the employer on the grounds that Kasten had not “filed a complaint” within the meaning of Section 15 of the FLSA when he made oral complaints to his employer. The 7th circuit held that while an internal complaint is protected, the complaint must be in written form. Kasten v. Saint-Gobain Performance Plastics Corp. 570 F.3d 834 (7th Cir. 2009).

If the Supreme Court holds that an oral complaint of a violation of the FLSA is enough to trigger protections of the anti-retaliation section of the FLSA, it will certainly open the door for more employees to have their rights protected. It is important to remember; however, that even if the Court holds in favor of expanding the protection to oral complaints, the best practice to prevent retaliation is to express your concerns to your employer in writing.

Salary pay does not mean exempt from overtime pay

Just because you are paid salary it does not necessarily mean that you are not entitled to overtime payment for hours that you work in excess of forty (40) in a workweek. Many people have the impression that if they are paid a salary they are not entitled to overtime; this is not always the case. In determining if an employee falls under one of the “white collar exemptions” (Administrative, Executive, Professional) of the Fair Labor Standards Act (“FLSA”) three tests must be put into play, the salary test, the salary basis test and the duties test. Only if each test is met, the employee will be considered exempt and will not be entitled to overtime payments.

The salary and salary basis tests are defined in the regulations issued by the Department of Labor at 29 CFR §541.600. Under the first test – the salary test - an employee must be compensated on a salary basis at a rate of not less than $455 per week. The $455 a week may be translated into equivalent amounts for periods longer than one week.

The second test – the salary basis test - the employee must be paid a guaranteed minimum of $455 per week which is not subject to reduction because of variations in the quality or quantity of the work performed. With few exceptions, if the employee works any time in a workweek, he or she is entitled to the predetermined salary.

The third test – the duties test – looks to the actual duties performed by the employee, not what their job description or title says.

The Executive Exemption applies to an employee: (1) whose primary duty is management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof; (2) who customarily and regularly directs the work of two or more other employees; and (3) who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight. See 29 C.F.R. §§541.100-106

The Administrative Exemption applies to an employee: (1) whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers; and (2) whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. See 29 C.F.R §§541.200-204

The Professional Exemption applies to an employee who meets the salary basis test and is either a learned professional or a creative professional. To qualify for the learned professional exemption, the position held by the employee must require knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction. To qualify for the creative professional exemption, the position held by the employee must require invention, imagination, originality or talent in a recognized field of artistic or creative endeavor. See 29 CFR §§541.300-304

It is important to remember that the determination of whether an employee meets one of the three “white collar exemptions” is very fact specific. If you have any question about whether you (or your employees) are properly classified, you should contact an attorney as soon as possible.

Department of Labor Issues New Administrator’s Interpretation

Rather than release individualistic opinion letters interpreting the application of the Fair Labor Standards Act, the DOL will now issue broad Interpretations of the law. The DOL believes this will be a much more efficient and productive use of its resources. The DOL’s goal is to provide meaningful and comprehensive guidance and compliance assistance to the broadest number of employers by issuing interpretations of the law and regulations, applicable across-the-board to all those affected by the provision in issue. The DOL will still utilize requests for opinion letters to gauge which areas of law require additional clarity.

Employer cannot terminate employee to avoid pay

Firing an employee to avoid paying him/her a commission, bonus, or other form of compensation is another example of wage theft. An employer cannot fire an employee to deprive him/her of the benefits accrued prior to being terminated. See Phillips v. US Bank, N.A., 2009AP246, 2010 Wisc. App. LEXIS 87, ¶7 (Wis. Ct. App. Feb. 2, 2010) (“an at-will employee may [not] be deprived of benefits that accrued before he or she was let go if the firing was to prevent payment of those benefits”). Basic principle/agent law establishes that an agent “is entitled to the promised amount if the principal, in order to avoid payment of it, revokes the offer and” the agent has performed the work necessary to receive the compensation. Restatement (Second) of Agency § 454 (1958); Philips, at ¶ 7.

The Court of Appeals, in reaching its decision in Phillips, relied on Leen v. Butter Co., 177 Wis. 2d 150, 153 (Ct. App. 1993), a case explaining the procuring cause doctrine. Noting that an employer does not have to act in good faith in terminating an at-will employee, the Court held that an employer must comply in good faith with its “contractual obligations” to properly pay its employees. Phillips, ¶8.

Procuring Cause Doctrine

An employee of an employer is entitled to commissions he/she procures from a ready, willing and able purchaser. The default rule is that such commissions must be paid irrespective of whether the employee is employed at the time the commission is to be paid. See Leen v. Butter Co., 177 Wis. 2d 150, 153 (Ct. App. 1993). Unless an agreement between the employee and employer “provides otherwise, final consummation of the sale is not required.” Fryer v. Conant, 159 Wis. 2d 739, 744 (Ct. App. 1990) (the sale for which the employee was entitled to commissions did not take place until after the time limit in the employment agreement had ran).

Therefore, when an employee does all the work necessary to receive a bonus, commission, or some other similar payment, it must be paid to the employee regardless of whether that employee is still employed. However, should there be a contract between the employee and the employer that requires an employee to be employed when the compensation is to be paid out, the default rule is modified.

Attorneys fees in small value wage claims

In the grand scheme of the legal system, a claim involving a few hundred or even a few thousand dollars is not one of monumental impact. However, for an individual who lives paycheck to paycheck denial of even a small amount of wages can cause major hardships. Thankfully, Wisconsin Statues and case law have provided that if an employee is a prevailing party in a wage claim, the trial court may award attorney fees. See Wis. Stat. § 109.03(6); Jacobson v. American Tool Cos., 222 Wis. 2d 384, 402, 588 N.W.2d 67 (Ct. App. 1998).

The Wisconsin Court of Appeals explained that “the purpose of Wis. Stat. ch. 109 is to ensure employees receive their wages to prevent harm to themselves and their families. If [the plaintiff] were not awarded attorney fees, he would be forced to pay the fees out of his pocket and, thus, would not receive the full wages to which he was entitled.” Zakowski v. CWA Transport, Inc., 2004 WI App 186; 276 Wis. 2d 572; 687 N.W.2d 549 (Ct. App.).

This decision and the statutes do not give litigants carte blanche to seek excessive attorney fees but rather limits attorney fees to a reasonable hourly rate multiplied by a reasonable number of hours expended and allows for adjustments for factors enumerated in SCR 20:1.5 and other “relevant” factors. See Lynch v. Crossroads Counseling Center, Inc., 2004 WI App 114, 275 Wis. 2d 171, 684 N.W.2d 141 (Ct. App.). What is clear, however, is that the amount of recovery itself is not a valid reason to reduce attorney fees below a reasonable amount.

Immigration status irrelevant when pursuing unpaid wages.

One of the groups most vulnerable to wage theft is the low-wage worker - particularly those workers who are undocumented. Many companies will use the immigration status of their employees against them by threatening that if they bring a claim for any wage violations, their immigration status will be put out in the open. Similarly, once a wage claim is filed, Defendants’ counsel will attempt to obtain information about immigration status through discovery with the hope that prospective plaintiffs will be discouraged from opting-in to a collective action lawsuit brought under §216 of the FLSA. Such threats strike a very real fear in employees which often results in employees allowing their employers to take advantage of them.

It has become clear from the developing case law that the immigration status of plaintiffs is not relevant to a liability determination under the FLSA.

The courts have held that the protections of the FLSA are available to citizens and undocumented workers alike as they are seeking proper compensation for work that has already been performed. The court further found that there was an in terrorem effect of having Plaintiffs produce information regarding their immigration statuses. See Flores v. Albertsons, Inc., 2002 U.S. Dist. LEXIS 6171 (C.D. Cal. 2002). This differs from Hoffman Plastic Compounds, Inc. v. National Labor Relations Board, where the Court held that an award of backpay to illegal immigrants for work “not performed” was against the policies of the Immigration Reform and Control Act and thus immigration status was relevant for the purposes of liability. 122 S. Ct. 1275 (2002).

The federal district court for the Eastern District of Wisconsin has similarly held that an employees immigration status is not relevant to a determination of liability and thus is not a proper subject of discovery. Hernandez v. City Wide Insulation of Madison, Inc., 2006 U.S. Dist. LEXIS 86756 (E.D. Wis. 2006). The Court did leave open the possibility that immigration status may be relevant to a determination of credibility, but noted that immigration status of the plaintiffs, “is not dispositive of their credibility such that it outweighs the harm that disclosure might bring to plaintiffs.” Id.

What is a wage?

While the Fair Labor Standards Act protects both minimum wages and overtime compensation, many states have filled in the gaps left under the FLSA with their own state wage laws. As an example, Wisconsin law demands payment of all wages earned by the employee within 31 days from the date the wages were earned. Wis. Stat. § 109.03(1). A wage is broadly defined by Wis. Stat. § 109.01(3) to include, in addition to salaries, commissions, holiday pay, severance pay, bonuses, and any similar advantage agreed upon between the employer and the employee. Wisconsin’s Court of Appeals recently concluded that there are two facets to a wage under Wisconsin law – 1) the employee must have at some time performed services that entitle him to a wage; and 2) the employee’s entitlement to the wage must be clear and already determined by either an agreement or the employer’s policy. Sliwinski v. City of Milwaukee, 2009 WI App 162, P17 (Wis. Ct. App. 2009) (petition for review is denied).

In doing so, the Court of Appeals has rejected the often argued claim that an employee is not due wages unless the employee actually performs work. The Court of Appeals correctly found that as long as the employee has performed work at some point, he or she is entitled to remuneration while sick, on vacation, laid off or even after dismissal. In affirming that one of the purposes of Wis. Stat. ch. 109 is to assure prompt payment of wages, the Court of Appeals found that the plaintiff’s statutory post-discharge pay was a wage despite the fact that the employee did not perform services for the city during the period of time at issue.