Header graphic for print

Wage & Hour Law Update

New Jersey Supreme Court Confirms “ABC Test” for New Jersey Wage Claims

Visit the Jackson Lewis Workplace Resource Center here for a detailed analysis of the New Jersey Supreme Court’s decision in Hargrove v. Sleepy’s, LLC, 2015 N.J. LEXIS 38 (N.J. Jan. 14, 2015), finding the “ABC test” for contractor status applicable to claims brought under New Jersey state wage statutes.

Eleventh Circuit Explains That Employer Knowledge of Work Renders It Compensable

The Fair Labor Standards Act requires payment for all hours an employer suffers or permits an employee to work.  This standard is broad, and an employee’s timesheet is not a panacea against claims that he or she worked additional time where managerial employees may have corrupted that timesheet, either directly or through their communications to the employees.  A new decision from the Court of Appeals for the Eleventh Circuit, the Circuit encompassing Florida and thus a prominent source of authority on wage-hour issues, highlights these principles.  Bailey v. Titlemax of Ga., 2015 U.S. App. LEXIS 614 (11th Cir. 2015).

Bailey sets forth an approach similar to that used by the Second Circuit in Kuebel v. Black & Decker Inc., 643 F.3d 352 (2d Cir. 2011); namely, where a plaintiff presents credible – though contested – evidence that managerial employees both changed the hours he recorded on his timesheet (in a handful of instances) and instructed him to modify his timesheets to reduce the hours worked, a question of fact was presented as to whether unpaid work time had taken place with employer knowledge.  Importantly, the Court did not state that the mere allegation of additional time worked in the face of a timesheet would in and of itself be sufficient, and indeed the same Circuit court recently upheld the rejection of such a challenge.

Good timekeeping practices remain step one in FLSA compliance with respect to overtime-eligible employees.  As highlighted by this decision, managerial training to ensure management actions and/or communications do not create liability is a close second.

DC Judge Leon Also Vacates New Definition of “Companionship Services”

On the heels of his ruling vacating the DOL’s new rule (which was scheduled to be effective January 1st) rendering the FLSA’s companionship exemption unavailable to “third party” employers of companions, Judge Richard Leon has now issued a companion decision vacating the new, substantially narrowed definition of “companionship services” contained in the same DOL rulemaking.  Home Care Ass’n of Am. v. Weil, D.D.C., No. 14-CV-967, DKT 32 (1/14/15).  Judge Leon’s new decision again expressed hostility towards the USDOL’s use of regulatory rulemaking to unmake the exemption, pointing out that the revised companionship exemption would be so narrow as to be meaningless because it would “write out of the exemption the very ‘care’ the elderly and disabled need, unless it were drastically limited . . . so as to be of little practical use.”   While the Judge called the DOL’s “concern about the wages of home care providers . . . understandable,” he held “Congress [to be] . . . the appropriate forum in which to debate and weigh the competing financial interests in this very complex issue affecting so many families.”

DOL appeal seems likely, if not inevitable, leaving an entire industry in legal limbo.  Industry employers should consult with counsel to develop their short and long-term compliance strategy, taking into account the many different possible outcomes.

California Intermediate Appellate Court Reverses Ruling Finding “On Call” Rest Breaks Violated State Law

Confronting a novel issue of state law in the wake of the California Supreme Court’s 2012 decision addressing California’s meal-and-rest break requirements, an appellate panel of the California Court of Appeal’s Second District ruled that a security firm did not violate rest break requirements where its security guards were “on call” during the required rest breaks.  Augustus v. Abm Sec. Servs., 2014 Cal. App. Unpub. LEXIS 9287 (Cal. App. 2d Dist. Dec. 31, 2014).

In Augustus, prominent security firm ABM “admitted it requires its security guards to keep their radios and pagers on during rest breaks, to remain vigilant, and to respond when needs arise.”  Plaintiffs alleged that these obligations were “indistinguishable from normal security work” and rendered every rest break invalid.  Analyzing California Labor Code Section 226.7 (“an employer shall not require an employee to work during a meal or rest or recovery period”), the appellate panel reversed the trial court’s finding that the rest breaks did not meet statutory requirements.  The appeals court noted that while the guards remained on call they were free to and did in fact engage in various personal activities, and were in fact relieved of many duties that an active duty security guard was required to actively pursue.  The Court juxtaposed the rest period requirement with the same Wage Order’s meal period requirement, which did require being relieved of all duty, and rejected plaintiffs’ argument that the meal break standard applied equally to rest breaks.

Compliance with California’s meal and rest period requirements remains paramount for California employers in all industries due to significant penalties for violations.

Vote To Eliminate Tip Credit In New York Fails

As reported by our colleagues at the New York State Restaurant Association, the current Wage Board, convened to examine the state of the tip credit under New York law, today voted on, but ultimately rejected, a motion to eliminate the tip credit entirely.  Tip credits under federal and state wage laws permit an employer to pay less than the full statutory minimum wage where an employee receives sufficient tips and other conditions are met.  Many fear that elimination or significant reduction of the tip credit will force drastic and unintended responses from small business owners, such as reduction in non-tipped employee wages, and/or replacement of tipping with administrative fees collected and controlled by the establishment.  Should such a measure ultimately be adopted, New York would join several other states with no tip credit.  The Wage Board’s deliberations are ongoing.

Team Leaders at Processing Facility Properly Classified as Exempt

Division of supervisory duties among different classifications of exempt employees sometimes gives rise to claims that some or all of those managerial employees do not qualify for the executive exemption.  Analyzing and rejecting one such challenge, an Arkansas federal court recently concluded that “Team Leaders” at one of the nation’s largest frozen food processing facilities qualify for exempt status.  Garrison v. Conagra Foods Packaged Foods, 2015 U.S. Dist. LEXIS 891 (E.D. Ark. Jan. 6, 2015).

In Garrison, plaintiffs conceded that they met all the prongs of the executive exemption save the last: that an exempt executive hire and fire employees, or make recommendations given “particular weight” regarding such employment actions.  The Court disagreed finding that the Team Leaders’ evaluations of hourly workers were among the primary, if not the primary, material on which upper management based decisions regarding: 1) discharge or retention and probationary employees; 2) promotions and demotions; 3) temporary reassignment and scheduling; and, 4) employee discipline.  Accordingly, the employees were properly classified as exempt.

Documentation regarding employment decisions is not only critical for EEO and recordkeeping compliance purposes, but a primary source of favorable evidence in defending misclassification cases such as Garrison.

D.C. Judge Issues Stay of Home Care Rule

Following his ruling on December 22 finding the DOL’s regulations limiting the companionship exemption to overtime a violation of the Administrative Procedure Act, on New Year’s Eve Judge Richard J. Leon issued a stay in the form of a temporary restraining order.  Home Care Ass’n of Am. v. Weil, D.D.C., No. 14-CV-967, DKT 26 (12/31/14).  This Order restrains the Department from implementation of the revised rule until January 15, 2015.  A hearing on Home Care Association of America’s request for an injunctive order extending this stay is scheduled to be held on January 9, 2015.  Watch this space for further developments.

Minimum Wage Up Around the Country Effective January 1

Whether a function of recent legislation or a rule tying the minimum wage to inflation, the minimum wage will increase in more than a dozen states in the new year, as it did last year.  These changes impact workers at or near the minimum wage (including, in many cases, tipped workers), and also impact other wage provisions, such as New York’s salary basis for exempt employees.  Monitor the Jackson Lewis Workplace Resource Center for a complete summary of this year’s changes.

DC Judge Invalidates Home Care Rule

Last evening, the Home Care Association of America followed in the footsteps of the Mortgage Bankers Association, obtaining a ruling that the DOL’s reversal of its position regarding the exempt status of agency-employed “companions” violated the Administrative Procedure Act.  Home Care Ass’n of Am. v. Weil, 2014 U.S. Dist. LEXIS 176307 (D.D.C. Dec. 22, 2014).  The DOL had issued new regulations drastically curtailing the scope of the exemption, which were scheduled to take effect in January.

Judge Richard Leon of the United States District Court for the District of Columbia held that the DOL’s prior regulations defining “companionship services” and “domestic service employment” filled the “definitional gaps” in the statutory language of 29 U.S.C. § 213(a)(15).  “Once those definitional gaps were filled, however, the statutory loop was closed,” and the DOL exceeded its authority by issuing a new rule stating that companions employed by agencies are subject to minimum wage and overtime.  In reaching its decision and upholding the challenge to the rule filed by the Home Care Association of America, the Court found that Congress’ intent to exempt such employees from minimum wage and overtime was clear, and that there was no “explicit—or implicit—delegation of authority [by Congress] to the Department to parse groups of employees based on the nature of their employer who otherwise fall within those definitions.”

Please watch this space for further developments.

Florida Federal Court Holds Cashiers Are Proper Tip Pool Participants

The legality of a given employee’s participation in a tip pool under the FLSA turns on whether the participants are “Tipped employees” under 29 U.S.C. § 203(t).  The specific question is whether they “engaged in an occupation in which [they] customarily and regularly receive[] more than $ 30 a month in tips.”  A new decision from the District Court for the Southern District of Florida concludes that poker room cashiers satisfy this standard under its plain language.  Palacios v. Hartman & Tyner, Inc., 2014 U.S. Dist. LEXIS 172859 (S.D. Fla. Dec. 15, 2014).

The issue in Palacios was straight-forward:  namely, whether Plaintiff poker room poker dealers could be required to pool tips with cashiers engaged in the traditional duties of exchanging chips and currency at the chip cage inside the poker room.  Defendants presented unrebutted evidence the cashiers themselves received $30/month in tips directly from customers as set forth in the statute, outside of any tip pool participation.  The court held that this established the employee was engaged in a tipped occupation under the plain language of 29 U.S.C. § 203(t).  The Court did not require that the employee spend a specific amount of time performing direct customer service to be deemed a tipped employee.

Claims continue to be brought challenging employer tip practices under wage-and-hour laws and, at times, consumer protection statutes.  Businesses permitting tipping, whether incorporating such tips into their wage practices through a tip credit or not, must analyze their exposure to such claims.