What is changing clothes?

On Tuesday February 19, 2013 the U.S. Supreme Court announced that it will hear arguments regarding what constitutes “changing clothes” within the meaning of section 203(o) of the Fair Labor Standards Act?  Section 203(o) of the Fair Labor Standards Act provides: “In determining for the purposes of sections 206 and 207 of this title the hours for which an employee is employed, there shall be excluded any time spent in changing clothes or washing at the beginning or end of each workday which was excluded from measured working time during the week involved by the express terms of or by custom or practice under a bona fide collective-bargaining agreement applicable to the particular employee.”  The Supreme Court’s decision will likely have a wide-ranging impact on a variety of industries.  The case is captioned, CliftonSandifer, et al. v. United States Steel Corporation.  Check back for updates as this case progresses.

More on raising the minimum wage

The following excerpt from the U.S. Department of Labor’s website (www.dol.gov) provides an excellent overview of some of the common objections to raising the minimum wage. While these are just one commenter’s views, it is important to keep an open dialogue and provide citizens with information on the subject.

The president's plan to raise the federal minimum wage will benefit 15 million American workers, and have a positive effect on the economy. Still, there are some common myths about raising the minimum wage. We checked in with our Chief Economist Jennifer Hunt on the following three myths:

Myth: Raising the minimum wage reduces employment. False Minimum wage increases have little or no adverse effect on employment as shown in independent studies from economists across the country. Additionally, a recent letter by leading economists including Lawrence Katz, Richard Freeman, Joseph Stiglitz and Laura Tyson points out that "[i]n recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum wage workers, even during times of weakness in the labor market.

Myth: Only part-time workers are paid the minimum wage? False Fifty-three percent of all minimum wage earners are full-time workers.

Myth: Raising the minimum wage will negatively affect teen employment. False Eighty-nine percent of those earning the minimum wage are 20 years of age or older, and studies have shown that minimum wage increases have had little or no adverse effect on teen employment.

Obama Calls for Minimum Wage Increase

During Tuesday night’s State of the Union address, President Obama made a call to Congress to raise the federal minimum wage from its current rate of $7.25/hour. Speaking emphatically regarding the current state of the low wage worker, the President said,

“We know our economy’s stronger when we reward an honest day’s work with honest wages. But today, a full-time worker making the minimum wage earns $14,500 a year. Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong. That’s why, since the last time this Congress raised the minimum wage, 19 states have chosen to bump theirs even higher. Tonight, let’s declare that, in the wealthiest nation on Earth, no one who works full time should have to live in poverty -- and raise the federal minimum wage to $9 an hour.”

Check back for updates on any congressional action taken in relation to the President’s challenge.

Chicago cracks down on wage theft

Arise Chicago, an organization focused on building partnerships between faith communities and workers in the Chicago area, successfully ushered in a new anti-wage theft ordinance which is to take effect this summer. The ordinance passed the City Council by unanimous vote. The ordinance allows the city to suspend or revoke a business license of businesses who violate the Illinois’ Wage Payment and Collection Act.

The Ordinance comes after a University of Illinois study finding wage theft rampant in Chicago car washes. http://www.wbez.org/news/study-wage-theft-rampant-chicago-car-washes-102562

Visit http://arisechicago.org/ for more information.

Minimum Wage Linked to Poverty Line - Proposed Legislation

On Monday January 14, 2013 a bill was introduced in the United States House of Representatives and referred to the Committee on Education and the Workforce proposing a change to the minimum wage guaranteed by the Fair Labor Standards Act.

The proposed bill would peg the minimum wage to a number that is sufficient to equal 115% of the federal poverty threshold for a family of two based upon an individual working 2080 hours per year. The minimum wage would be adjusted every four years to reflect any change in the poverty threshold. Recent statistics (from 2011) show the federal poverty threshold for a family of two to be $15,504. If the bill were passed as written, using the new formula, the minimum wage would increase from $7.25/hour to $8.57/hour.

A copy of the bill can be found here: http://www.govtrack.us/congress/bills/113/hr229/text

Check back in the coming months for updates on this bill as it attempts to make its way through Congress.

The FLSA on Appeal

Rule 68 Offers of Judgment - The Supreme Court of the United States is poised to issue a decision on whether a Rule 68 Offer of Judgment moots an FLSA class in its infancy. In December, the Court heard arguments in a case involving a registered nurse meal break case. Prior to moving for conditional certification, Genesis Healthcare propounded upon the plaintiff an offer of judgment in an amount of her unpaid wages. Upon the offer not being accepted, Genesis Healthcare moved to dismiss the case. The District Court agreed and the Third Circuit reversed. You can listen to the arguments before the Supreme Court here as to whether an offer of judgment to a named plaintiffs in a collective action extinguishes the entire lawsuit.

http://www.supremecourt.gov/oral_arguments/argument_audio_detail.aspx?argument=11-1059

It should be noted that the collective action mechanism is of great importance to victims of wage theft. Allowing an employer to pick off employees who attempt to assert their rights is simply another wall put up between the victims of wage theft and their fair day’s pay.

Successor Liability – The Seventh Circuit Court of Appeals heard arguments last week on whether or not the common law doctrine of successor liability extends to claims brought under the FLSA. The Seventh Circuit, along with most other appellate courts, has applied the doctrine consistently avoid undercutting federally protected labor and employment rights when the assets of a business are sold. Under state law, normally an employer can sell their assets without any provision for liabilities – including those arising under a federal employment law – Title VII, ERISA, NLRA. However, federal courts have used a broader approach to successor liability to ensure victims of federally protected employment law are made whole in an effort to meet the Congressional intent. You can find the argument here.

www.ca7.uscourts.gov/fdocs/docs.fwx?submit=showbr&shofile=12-2440_001.mp3

Again, ensuring an employer make its employees whole through the doctrine of successor liability is a key to stopping wage theft.

Seventh Circuit Denies Summary Judgment in Wage Retaliation Case

After the Supreme Court decided that oral complaints provide protection from retaliation under the FLSA, as discussed in this earlier post, the case continues to make good law for employees. On remand, the Western District of Wisconsin granted summary judgment to the employer on the employees claim for retaliation only to be reversed later by the Seventh Circuit.

The Seventh Circuit explained that to “establish a prima facie case of retaliation under the direct method, an employee must show: (1) that he engaged in protected expression; (2) that he suffered an adverse employment action; and (3) that a causal link existed between the protected expression and the adverse action.” Circumstantial evidence can be used to establish the causal link which allows a jury to infer retaliation where: (1) there is evidence of suspicious timing, ambiguous statements or behaviors; (2) evidence that similarly situated employees were treated differently; or (3) a pretextual reason for adverse employment action.

As with many retaliation complaints, there was suspicious timing – the employee asked a supervisor if she had seen information about a class action against the employer. This statement was then relayed by email to human resources two days later and the employee was terminated. The employee also introduced evidence that another employee had been treated more favorably. Finally, there was evidence before the Court that employer had changed the initial reasoning for the termination from a violation of one policy to the violation of another policy.

Importantly, despite the employer denying doing anything wrong and presenting arguments, backed by their own evidence, to rebut the arguments made by the plaintiff, the case must go to a jury. Too often, discrimination cases are decided on summary judgment despite there being disputed facts as to what happened. At times, it seems that the summary judgment standard is not properly applied – that all facts are viewed in the light most favorable to the non-moving party, drawing all reasonable inferences in their favor, and that in doing so, summary judgment is improper when a reasonable jury could return a verdict for the non-moving party. In this case, the Seventh Circuit properly required the disputed facts be placed before a jury to decide what version of the story is true.

The Court’s opinion can be found here - http://www.ca7.uscourts.gov/tmp/OE0M17QI.pdf

Salaried Workers May Still Be Entitled to Overtime

I was talking to a friend of mine yesterday and the topic of overtime came up.  She was stunned that people who are paid a salary could and often are still entitled to overtime compensation.  As we previously wrote in this blog, an employer cannot avoid paying overtime compensation simply by paying its employees a salary rather than on an hourly basis.  See our previous post here. 

A recent case we filed against Beer Capitol Distributing is a prime example of this often misunderstood principle.   

Just because you are paid a salary, it does not follow that you should not still receive overtime compensation. 

DOL Releases FLSA Retaliation Fact Sheet

In a March 22, 2011 decision, Kasten v. Saint-Gobain Performance Plastics Corp., the Supreme Court held that the FLSA prohibits retaliation against employees for making a complaint about FLSA violations, even if the complaint is oral, as opposed to being written.  In December 2011, the Wage and Hour Division of the Department of Labor issued a Fact Sheet providing general information concerning the anti-retaliation FLSA provision.  Fact Sheet # 77A: Prohibiting Retaliation Under the Fair Labor Standards Act presents information on prohibitions, coverage, and enforcement.  Under the Coverage section, the Fact Sheet explains that the provision applies even if there “is no current employment relationship between the parties” and it also applies “to all employees of an employer even in those instances in which the employee’s work and the employer are not covered by the FLSA.”  Most importantly, the fact sheet includes the standard set forth in Kasten v. Saint-Gobain Performance Plastics Corp.: “Employees are protected regardless of whether the complaint is made orally or in writing.”  For additional information, visit: http://www.wagehour.dol.gov.

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.

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.