Applying Integrity Staffing., Federal District Court Holds that Time Spent at Pre-Shift Safety Meetings Is Not Compensable Under the FLSA

Joining similar decisions applying the Supreme Court’s interpretation of the Portal-to-Portal Act in Integrity Staffing Solutions, Inc. v. Busk, Senior District Judge Terrence F. McVerry of the Western District of Pennsylvania recently held that time spent attending allegedly mandatory pre-shift safety meetings was not compensable under the FLSA because those safety meetings were neither “principal activities” nor “integral and indispensable” to the mining employees’ principal activities. Bonds v. GMS Mine Repair & Maint., Inc., 2015 U.S. Dist. LEXIS 127769 (W.D. Pa. Sept. 23, 2015).

In Bonds¸ Plaintiffs argued they were entitled to compensation for time spent attending fifteen-minute safety meetings before each shift. The Plaintiffs had previously alleged a claim for compensation based on waiting time associated with travel via shuttle to and from a remote parking lot to the work site, but conceded that such claims were not viable during the pendency of the litigation based on applicability of Integrity Staffing.

Judge McVerry determined that the time spent at pre-shift safety meetings was not compensable under the FLSA, as it was neither a principal activity of the job, nor integral and indispensable to the miners’ principal activities. Rejecting Plaintiffs’ argument that pre-shift safety meetings were integral and indispensable activities to the work performed by the Plaintiffs, Judge McVerry held that “[a]ttendance at a pre-shift safety meeting (while perhaps desirable) is not an intrinsic element of conducting underground mining activities.” Therefore, since “the miners are able to perform underground labor regardless of whether they attended the pre-shift meetings,” such meetings were “the sort of activity that is ‘two steps removed’ from the productive activity that, in this case, occurs underground.”

Bonds joins several other decisions applying the “integral and indispensable” test reiterated in the Supreme Court’s unanimous decision in Integrity Staffing.

New York Federal Court Finds Business Properly Classified Translators As Independent Contractors

This month, two New York federal judges reviewing a claim of misclassification rejected a claim for overtime compensation, agreeing that a business properly classified two translators as independent contractors rather than as “employees” under the Fair Labor Standards Act and the New York Labor Law. See Mateo v. Universal Language Corp., 2015 U.S. Dist. LEXIS 128638 (E.D.N.Y. Sept. 4, 2015), aff’d by 2015 U.S. Dist. LEXIS 128377 (E.D.N.Y. Sept. 23, 2015).

In Mateo, after the defendant stopped participating in the litigation, the court struck its answer and permitted the named plaintiff and the twelve opt-in plaintiffs to seek the entry of default. The plaintiffs then moved for a default judgment, seeking overtime wages under the FLSA and the NYLL.

Following an evidentiary hearing regarding Plaintiffs’ alleged damages, Magistrate Judge James Orenstein sua sponte recommended that the district court deny the motion, decertify the collective action under the FLSA, and dismiss the complaint with prejudice as to the named plaintiff and without prejudice as to the opt-in plaintiffs, finding that the named plaintiff and the opt-in plaintiff who testified at the inquest were not defendant’s employees. Contrary to the complaint’s allegations, both these plaintiffs testified that they were responsible for providing their own computer equipment and headphones; the defendant agency’s clients (rather than the defendant) furnished the software they used; they were not reimbursed for work-related expenses; they typically worked at the clients’ offices or in their own homes; they were not assigned office space at defendant’s office; they could and did sometimes refuse work assignments from defendant; and they could and did work for other companies during the period they provided translation services to defendant’s clients. Despite the presence of several uncontroverted allegations tending to support employee status – including that plaintiffs lacked their own stationery reflecting independent businesses, defendant’s training and dress code requirements, defendant’s identification of replacement translators for its clients when necessary, and defendant’s web site reference to translators as “employees” – Magistrate Judge Orenstein held that the economic reality of the relationship was that the named plaintiff and one of the opt-in plaintiffs were independent contractors.

Reviewing the Magistrate’s report, District Judge Nicholas Garaufis adopted it in full, finding that “Courts in th[e Second C]ircuit have found facts similar to these indicative of an independent contractor relationship.” As a result, the district court denied the motion for default judgment, decertified the collective action, and dismissed the named plaintiff’s claims with prejudice and the opt-in plaintiffs’ claims without prejudice.

The translation and interpretation industry has long relied on the use of independent contractors to provide sporadic, often highly specialized services. Employers in all industries should continue to be vigilant in reviewing their classifications of individuals as employees or independent contractors.

Eleventh Circuit Rejects Airline Deregulation Act Preemption Challenge To Living Wage Ordinance

Courts continue to wrestle with preemption issues, the tension between sweeping federal laws purporting to regulate an industry or industries and laws enacted at the local level, such as labor laws impacting labor costs. In the most recent example, the Court of Appeals for the Eleventh Circuit rejected a cargo airline’s argument that the Airline Deregulation Act of 1978’s mandate that states make no law impacting the “price, route or service of an air carrier,” preempts Miami-Date County’s living wage ordinance as applied to such carriers. Amerijet Int’l v. Miami-Dade County, 2015 U.S. App. LEXIS 16700 (11th Cir. 2015).

The ordinance – one of the first of its kind, originally passed in 1999 – currently requires that “certain individuals or entities that conduct business with the County or that use the facilities of Miami International Airport” pay a “living wage” to workers providing “covered services,” which specifically includes a number of essential airport operations functions:

Guiding aircraft in and out of Airport; aircraft loading and unloading positions, designated by the Aviation Department; placing in position and operating passenger, baggage and cargo loading and unloading devices, as required for the safe and efficient loading and unloading of passengers, baggage and cargo to and from aircraft; performing such loading and unloading; providing aircraft utility services, such as air start and cabin air; fueling; catering; towing aircraft; cleaning of aircraft; delivering cargo, baggage and mail to and from aircraft to and from locations at any Miami-Dade County Aviation Department facility; and providing such other ramp services approved in writing by the Aviation Department.

Id. at * 2-3 quoting MIAMI-DADE CODE OF ORDINANCESch. 2, art. I, § 2-8.9(f)(2)(A).

The living wage required by the ordinance is currently $14.27 (slightly lower if benefits are provided), some $6.22 above Florida’s minimum wage of $8.05. Plaintiff urged that application of the ordinance to its cargo handling services was preempted as an inappropriate attempt by the county to regulate the preempted field of air carrier regulation. The Eleventh Circuit demurred, finding that the ordinance was a law of general application (not specific to the airline industry), and that ADA preemption extended only to the “elements of air travel that are bargained for by passengers [or shippers] with air carriers.” The ancillary services of a subcontractor, in the Court’s view, did not meet this standard or otherwise come under the preemption doctrine.

Laws setting a higher wage floor in a specific jurisdiction (such as a state, county or municipality) or industry, such as New York’s new rules for fast food workers, will continue to spark controversy and litigation. Employers must analyze preemption arguments in developing compliance strategies.

Applying Integrity Staffing, Ninth Circuit Holds that Firefighters’ Time Moving Gear to and from Temporary Assignments is Not Compensable Under the FLSA

Applying the Supreme Court’s unanimous decision in Integrity Staffing Solutions, Inc. v. Busk, the United States Court of Appeals for the Ninth Circuit recently ruled that firefighters are not entitled to compensation under the FLSA for time spent moving certain necessary gear to and from temporary work assignments at fire stations other than their “home” stations. Balestrieri v. Menlo Park Fire Prot. Dist., 2015 U.S. App. LEXIS 15785 (9th Cir. Sept. 4, 2015).

At issue in Balestrieri was whether the transportation of gear by plaintiff-firefighters from their home station to a “visiting station” in order to voluntarily cover an extra shift was “integral and indispensable” to the firefighters’ principal duties, and thus compensable. Upholding the “clearly-plain” accuracy of the trial district court’s decision, the Ninth Circuit held this activity was not “integral and indispensable” to their principal work activities. The Court analogized the activity to office workers who “may drive to their work locations, park, and walk to where they work, before they go on the clock,” such as a “lawyer who may put on a suit and tie that he does not wear to the mall on Saturday.” Mirroring the Supreme Court’s holding in Integrity Staffing, the Court explained just because activity may be necessary as a practical condition of employment, it is not on that basis alone compensable for the purposes of the FLSA under the Portal-to-Portal Act.

The Court based its decision on the standard set forth by the Supreme Court in Integrity Staffing, noting that the Supreme Court reviewed and reversed the Circuit’s decision in that case, which had found certain activity – security screening wait time – compensable because it was for the employer’s benefit. Accordingly, the court applied the Supreme Court’s formulation of the test for compensability, namely whether the activity is “tied to the productive work that the employee is employed to perform.” Based on such application, the court ruled that “When the firefighter has put his name on the list for overtime calls, he is free to take his gear home, and if he gets a call, he can go to the visiting station for the assigned shift without even stopping by his home station. Thus, driving to the home station first [to retrieve his or her gear] is not ‘indispensable’ to the firefighters’ principal activities.”


Separately, the Court held that the employer did not need to include amounts paid for “annual leave buyback” in its calculation of the firefighters’ regular rates of pay for the purposes of determining overtime.

Balestrieri reflects a court’s consideration of common wage-hour claims faced by public sector employers, and is required reading for state and local administrators responsible for compliance.

Uber Litigation Continues To Serve As Legal Lightning Rod for “On Demand” Economy

Cases challenging the independent contractor status of certain service providers under the wage-and-hour laws are likely to continue in the near future due to the difficulties in applying the law to complex factual patterns. The Department of Labor recently provided additional guidance for determining contractor status in the form of an Administrator’s Interpretation (and the National Labor Relations Board also weighed in, modifying its view of “joint employment” in Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (Aug. 27, 2015)). A recent case involving Uber drivers may be a bellwether. O’Connor, et al. v. Uber Technologies, Inc., N.D. Cal. C-13-3826.

The named Plaintiffs are Uber drivers alleging that in classifying them as independent contractors, the company violated various provisions of the California Labor Code. Uber’s position, and that of its many advocates, is that it exerts insufficient control over the drivers’ work to be deemed their “employer,” and merely identifies those in need of a service with the providers of that service, similar to the way in which eBay pairs purchasers of a product with sellers of that product. Worker advocates, however, argue that the traditional labor and wage and hour laws (many enacted decades ago and unchanged since), must be interpreted to protect the thousands of individuals providing services under Uber’s business model.

Adjudication on the merits in O’Connor has yet to occur, and appeals invariably will follow, setting the stage potentially for the Supreme Court to fashion an appropriate rule balancing labor and wage policy with the freedom to innovate and bring technology to bear in the new economy.

Those operating—or contemplating—an “on demand economy” business model should closely monitor developments in this case and stay abreast of other judicial and legislative changes potentially impacting the business model.

Eleventh Circuit Adopts Second Circuit’s “Primary Beneficiary” Test to Determine Compensability of Internships

The Court of Appeals for the Eleventh Circuit last week adopted the Second Circuit’s “primary beneficiary” test as the appropriate test for determining whether an unpaid clinical intern was truly an “employee” within the meaning of the FLSA. Schumann v. Collier Anesthesia, P.A., 2015 U.S. App. LEXIS 16194 (11th Cir. 2015).

In rejecting the test set forth in the Department of Labor’s “trainee” fact sheet, a test premised on the specific facts of a 1947 Supreme Court case, the Eleventh Circuit noted: “with all due respect to the Department of Labor, it has no more expertise in construing a Supreme Court case than does the Judiciary.” Adopting the Second Circuit’s articulation of a non-exhaustive set of considerations, the Eleventh Circuit observed that the best way to discern the primary beneficiary in a relationship where both the intern and the employer may obtain significant benefits is “to focus on the benefits to the student while still considering whether the manner in which the employer implements the internship program takes unfair advantage of or is otherwise abusive towards the student.” Notably, the Court observed that under such test “the mere fact that an employer obtains a benefit from a clinical internship does not mean that the employer is the ‘primary beneficiary’ of the relationship.”

Providers of internships should continue be vigilant in reviewing their classifications of individuals as employees or unpaid interns and in structuring their internship programs.

NY Commissioner of Labor Adopts Fast Food Wage Board Report

Today, Acting Commissioner of Labor Mario Musolino adopted the Fast Food Wage Board’s July recommendations, in an Order available here.  The Order takes effect within thirty days of its publication in ten New York newspapers.  Employers covered – or arguably covered – by the definition of “Fast Food Establishment” contained in the Wage Board’s recommendations must prepare for the “phased in” increases to the minimum wage called for by the Order.

Second Circuit: $350/Hour Sufficient Fee For Plaintiffs’ Counsel in FLSA Cases

One common impediment to resolution of FLSA claims is the amount of attorneys’ fees sought by the claimant’s attorney. One important factor in assessing an appropriate fee is the rate likely to be awarded by the Court should Plaintiff prevail in that jurisdiction. A new appeals court decision approves fixing that rate at $350/hour for experienced counsel in the Eastern District of New York. Encalada v. Baybridge Enters., 2015 U.S. App. LEXIS 15985 (2d Cir. 2015).

In Encalada, Plaintiff’s counsel appealed the narrow issue of whether the Court erred in setting its “award of attorney’s fees based on its calculation of twenty billable hours at an hourly rate of $350.” The appeals court determined that the trial court had “properly engaged in ‘a case-specific inquiry into the prevailing market rates for counsel of similar experience and skill to the fee applicant’s counsel,’ . . . when it determined that a fee below the $500 to $600 per hour sought by plaintiff’s counsel [was] sufficient ‘to induce a capable attorney to undertake the representation.’” Id. at *2.

This decision provides useful guidance to district courts when assessing attorneys’ fees and for defendants when negotiating such fees as part of a settlement.

DOL Receives 50,000 Comments In Final Week, Total Nearly 250,000

Employers anxiously await the final regulations codifying the upcoming changes to the FLSA white collar exemptions. Those who seek to “read the tea leaves” regarding the rulemaking process based on the comments submitted by the public at large have a lot of work to do, as the Department announced it received in excess of 247,000 comments in total, many of them under the wire before last Friday’s deadline.

“Certainly DOL can defensibly say it has received a sufficient volume of feedback through the notice and comment procedure,” observed Jackson Lewis Wage and Hour Practice Group Chair Paul DeCamp. “Whether those comments receive their due consideration and are integrated into the rulemaking process remains to be seen.”

Businesses must continue to plan for the new rules which likely will be effective early next year, particularly as internal budgets for 2016 are set.

DOL: Comment Period Closed For Proposed Final Rule

In a letter to Congress, Wage-and-Hour Administrator David Weil yesterday stated that the Department would not extend the 60-day comment period for providing feedback regarding the Department’s proposed rule, indicating that “a comment period of this length . . . will meet the goal . . . of ensuring Department has level of insight from the public needed.” Absent intervention, final regulations implementing the proposed increase in the federal salary basis minimum could be effective as soon as early 2016. These final regulations may differ from the proposed regulations, though the legal effect of such modifications remains open to debate. Decker v. Northwest Environmental Defense Center, 133 S. Ct. 1326, 1341 (2013) (Scalia, J. dissenting) (“Auer deference encourages agencies to be vague in framing regulations, with the plan of issuing ‘interpretations’ to create the intended new law without observance of notice and comment procedures . . . Auer is not a logical corollary to Chevron but a dangerous permissions slip for the arrogation of power”); Boose v. Tri-County Metropolitan Transp. Dist. of Oregon, 587 F.3d 997, 1004 (9th Cir. 2009) (“We will not under the guise of deference, engage in an end-run around notice-and-comment rulemaking. Until the Secretary formally promulgates the proposed regulations [the defendant] is not required to follow them”).

Watch this space for continued coverage of the DOL’s rulemaking.