UPDATE: Proposed Changes to the Companionship and Live-In Worker Regulations

Updating our previous post regarding changes coming to the applicability of the FLSA to Companionship and Live-In Workers, the Department of Labor has published its Notice of Proposed Rulemaking.

The comment period closes February 27, 2012.

Various States Up The Minimum Wage With New Year

While the federal and Wisconsin minimum wages remain unchanged, several states have announced minimum wage rate increases effective January 1, 2012. The increases are as follows:

Arizona – Standard minimum wage increases from $7.35 to $7.65 an hour. Minimum wage for tipped employees increases from $4.35 to $4.65.

Colorado – Standard minimum wage increases from $7.36 to $7.64 an hour. Minimum wage for tipped employees increases from $4.34 to $4.62 an hour.

Florida – Standard minimum wage increases from $7.31 to $7.67 an hour. Minimum wage for tipped employees increases from $4.29 to $4.65 an hour.

Montana – Standard wage increases from $7.35 to $7.65 an hour. (Montana law does not allow employers to take a tip credit against minimum wage for tipped employees.)

Ohio – Standard minimum wage increases from $7.40 to $7.70 an hour. Minimum wage for tipped employees increases from $3.70 to $3.85 an hour.

Oregon – Standard wage increases from $8.50 to $8.80 an hour. (Oregon law does not allow employers to take a tip credit against minimum wage for tipped employees.)

Vermont – Standard minimum wage increases from $8.15 to $8.46 an hour. Minimum wage for tipped employees increases from $3.95 to $4.10 an hour.

Washington – Standard minimum wage increases from $8.67 to $9.04 an hour. (Washington law does not allow employers to take a tip credit against minimum wage for tipped employees.)

Proposed Changes to the Companionship and Live-In Worker Regulations

On December 15, 2011, President Obama and the Department of Labor issued a notice that it will soon publish a Notice of Proposed Rulemaking to the Companionship and Live-In Worker Regulations. The current regulation, created in 1974, is an exemption from minimum wage and overtime pay requirements for casual babysitters and companions for the aged and infirm. It also created an exemption only for live in domestic workers. The exemption has not been substantially changed since 1975.

Because the in-home healthcare industry has changed and grown significantly since 1975, President Obama is changing the exemption to provide extra protection for our country’s in-home healthcare workers. When the exemption was originally created, it was intended to be used for casual babysitters and neighbors performing elder sitting. Today, many in-home care workers are employed by staffing agencies and have many more responsibilities than keeping someone company. Workers employed by in-home staffing agencies were not what Congress originally intended to have exempted. President Obama now wants to provide protections under the FLSA for these professional caregivers.

On December 15, 2011, in President Obama’s Remarks on Minimum Wage and Overtime Protections for In-Home Care Workers, he stated “Today, we’re guaranteeing homecare workers minimum wage and overtime pay protection. And that’s thanks to the hard work of my Secretary of Labor, Hilda Solis. We are going to make sure that over a million men and women in one of the fastest-growing professions in the country don’t slip through the cracks. We’re going to make sure that companies who do right by their workers aren’t undercut by companies who don’t. We’re going to do what’s fair, and we’re going to do what’s right.”

The Department of Labor is not eliminating the exemption, but proposing significant changes on the limitations. The new regulations will define the tasks that may be performed by an exempt companion more clearly. The new definition of a companion’s duties is limited to fellowship and protection, with some allowance for certain personal care services, as long as the service is incidental (does not exceed 20% of the hours worked that week) and performed along with the protection and fellowship. Companionship and fellowship include activities such as playing cards, watching television, visiting with friends, taking walks, and engaging in hobbies. The incidental personal care services include activities such as dressing, grooming, toileting, driving to appointments, feeding, laundry, and bathing. Companion’s duties would no longer include general household work; as evidenced by Congress’s protections for housekeeping employees, it wants these types of employees to be protected by the FLSA.

The proposed exemption will now only apply to companions employed only by the family or the household; it will not apply to third parties such as in home staffing agencies. The proposed change will still allow the household employing the worker to claim the exemption even if it is a joint employer with an agency. However, the agency can no longer claim the exemption when it is a joint employer with the household.

The proposed exemption will make the record-keeping requirements for live-in domestic workers the same as for other employers under the FLSA.

Kohler Co. Class Update

The following are recent articles from area newspapers regarding the Kohler Co. class certification:

The Milwaukee Business Journal - Wage complaint against Kohler Co. certified as class action

The Sheboygan Press - Kohler Co. faces class action lawsuit - Administrative employees file suit about overtime

If you have any questions regarding this case or any other related matter, contact Cross Law Firm for more information.

SCOTUS to Hear Outside Sales Exemption Case

The U.S. Supreme Court (SCOTUS) recently agreed to decide whether the Fair Labor Standards Act's “outside sales exemption” applies to pharmaceutical sales representatives who do not directly sell, but rather meet with doctors to encourage them to prescribe their brand of prescription medications.

In the case of Christopher v. SmithKlineBeecham Corp. d/b/a GlaxoSmithKline, U.S., No. 11-204, cert. granted 11/28/11). The SCOTUS will review a February 2011 decision by the U.S. Court of Appeals for the Ninth Circuit, which held that the FLSA's outside sales exemption barred the claims of a proposed class of drug sales representatives for GlaxoSmithKline. (635 F.3d 383 (9th Cir. 2011)). The Ninth Circuit declined to defer to the DOL’s position that the exemption did not apply to the pharmaceutical sales representatives because their job was to promote their company's drugs, not to make final sales. The Ninth Circuit’s decision was contrary to a Second Circuit decision from July 2010 which held that the pharmaceutical sales representatives for Novartis and Schering were non-exempt under the FLSA and entitled to pursue overtime claims. (611 F.3d 141 (2d Cir. 2010)).

With its upcoming decision the SCOTUS will to resolve the circuit split on the scope of the FLSA's outside sales exemption. The SCOTUS will also likely address what deference federal courts owe to the secretary of labor's interpretations of the FLSA. We will keep you informed when the SCOTUS decision comes down.

Class Certification Granted In Action Against Kohler Co.

On Tuesday December 13, 2011, Magistrate Judge William E. Callahan, Jr. of the Eastern District of Wisconsin granted an employee’s request to certify an action against Kohler Co. as a class action. The Court certified a class of the following individuals:

All persons who are or have been employed by Kohler as an Administrative Assistant I, Administrative Assistant II, Area Associate I, Area Associate II, Secretary and Senior Secretary in Wisconsin, at any time from September 2, 2007 through the final disposition of this case, who have worked without being compensated for each hour worked under a comp time or compensatory time scheme and/or by following a policy not allowing employees to record every hour worked including working through unpaid lunch breaks.

In certifying the class and discussing the Commonality question from Wal-Mart Stores, Inc. v. Dukes, __ U.S. __, 131 S. Ct. 2541 (U.S. 2011), the Court explained:

Unlike the plaintiffs in Dukes, a common question clearly emerges from the actions of the plaintiffs and the defendant in this case. The plaintiffs argue that they were permitted to work off-the- clock in order to finish assigned work. The plaintiffs agree that there was a policy disallowing overtime, but that in order to complete their work, the plaintiffs needed to work before or after an assigned shift, or through lunch. The plaintiffs testify that the overtime they worked occurred on the defendant's premises. Based on these facts, the plaintiffs assert that the defendant violated Wisconsin's Wage Law.

The plaintiffs do not argue that Kohler had an express policy not to compensate employees for overtime. The plaintiffs acknowledge that Kohler had an express policy not to allow employees to work overtime, but to compensate them appropriately for overtime worked. Despite this express policy, Kohler may still be liable under Wisconsin's Wage Law.

Wis. Adm. Code § DWD 272.12(2)(a)(1) does not contain a requirement that the plaintiff prove that her employer "knew or should have known" that the employee was working. Instead, the section assumes that if hours are being worked on the premises or job site, the "employer knows or has reason to believe that [the employee is] continuing to work and the time is working time." Wis. Adm. Code § DWD 272.12(2)(a)(1). Additionally, the burden rests heavily on the employer to ensure that employees are not performing work that the employer does not want to be performed. Wis. Adm. Code § DWD 272.12(2)(a)(3). Kohler cannot rely on an express policy providing for overtime compensation if the company's practice is to permit overtime to be worked without compensating employees for their overtime. Wis. Adm. Code § DWD 272.12(2)(a)(3).

The class in this action asserts the same injury: work off-the-clock, resulting in the defendant's failure to pay wages due to the plaintiffs.

...

After reviewing the record, the court agrees that the commonality requirement has been met. The plaintiffs present evidence that they had significant workloads. They also present evidence that each plaintiff would work before and/or after his or her scheduled work times, or during lunch, in order to complete this work. The plaintiffs assert that they were not always paid for the overtime hours they worked. At least one plaintiff was told whether or not she could be compensated for overtime after working the overtime hours. Thus, the plaintiffs present a common harm that can be redressed by finding the answer to the question, "Did Kohler have a policy or practice of suffering or permitting its employees to work uncompensated overtime?" This complies with the standard set forth in Dukes.

This adds to a string of cases in which the applicable of the Dukes case to FLSA cases has been narrowed.

The Court's order can be found here.

For more informaiton about this case, contact Larry Johnson at ljohnson@crosslawfirm.com or through Cross Law Firm's wage and hour website.