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.

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.