Wage and Hour Law Update : Wage & Hour Lawyer & Attorney : Jackson Lewis Law Firm : Minimum Wage, Overtime & Service Contracts

As we recently discussed, interplay between state wage-and-hour laws and other statutes (federal or state) is not always seamless, as neither the state wage statute nor the competing law or regulation at issue properly addresses the extent to which their scope might interfere with each other. However, as employment statutes, the wage-and-hour laws are often construed broadly, and some courts are reluctant to limit their scope regardless of the presence of another statute. In a recent example of this judicial reticence, the United States Court of Appeals for the Ninth Circuit reversed a trial court decision finding that a district court could not adjudicate plaintiffs’ state wage-and-hour law claims against SuperShuttle because it lacked subject matter jurisdiction. Kairy v. SuperShuttle Int'l, 2011 U.S. App. LEXIS 22161 (9th Cir. Nov. 3, 2011).       

Plaintiffs, “franchisee” van drivers for SuperShuttle in California, allege they were misclassified as independent contractors for the purposes of various provisions of the California Labor Code. The trial court applied a three-part test laid out by the California Supreme Court to resolve conflicts potentially implicating the jurisdiction of Public Utilities Commission (“PUC”). The trial judge determined that: 1) the PUC had authority to formulate policy regarding the classification of all drivers for so-called passenger stage corporations (“PSCs”), including SuperShuttle; 2) the PUC had exercised such authority by issuing a General Order relating to PSC conduct, and a decision interpreting that order; and, accordingly 3) that to allow plaintiffs’ wage action to proceed would interfere with this regulation of PSC drivers. Id. at 6-7. In reversing, the appellate court acknowledged that the PUC had authority to regulate the relationship between a PSC, such as SuperShuttle, and its drivers, and that it was a “close” question as to whether the General Order issued by the PUC constituted an exercise of this authority. However, the appellate court ruled that application of the wage/hour laws would not interfere with the PUC regulations governing drivers. Thus, the Public Utilities Code was “not implicated, and the district court retains subject matter jurisdiction over this case.”

Public sector employers, and all businesses performing work for public sector entities, must closely analyze the interplay of employment statutes and the regulatory environment governing their particular industry.

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On February 14, 2010, the United States Court of Appeals for the Ninth Circuit held GlaxoSmithKline's pharmaceutical sales representatives (“PSRs”) are exempt from the FLSA's minimum wage and overtime requirements under the outside sales exemption, rejecting a contrary decision from the Second Circuit, and an amicus brief filed by the United States Department of Labor.  Christopher v. SmithKline Beecham Corp., 2011 U.S. App. LEXIS 2834 (9th Cir. Feb. 14, 2011).  The Ninth Circuit refused to defer to the DOL, finding the amicus brief was merely a new “reinterpretation” of the exemption by the DOL, set forth only in its amicus brief, not in any regulations, and constituted a break from pharmaceutical industry standards regarding what constitutes sales, which the DOL had not objected to since the FLSA’s inception decades ago.   According to the Ninth Circuit, “[i]n this industry, [a] ‘sale’ is the exchange of non-binding commitments between the PSR and physician at the end of a successful call. . . . [F]or all practical purposes, this is a sale.”  Id. at * 35 (emphasis added). 

Based on this Circuit split and the existing split between the Second and Third Circuits over the application of the administrative exemption to PSRs (not at issue in the Ninth Circuit decision), the Supreme Court may be more likely to weigh in on this issue.

We will continue to monitor developments surrounding this evolving issue.

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The FLSA’s professional exemption has two subcategories: the “learned professional” (those who perform work requiring the use of advanced knowledge customarily acquired through prolonged academic instruction), and its sibling, the “creative professional” (those engaged in the “performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor"). See 29 C.F.R. § 541.302(a). This week, the federal Court of Appeals for the Ninth Circuit reviewed one of the few decisions analyzing the applicability of this exemption, and affirmed the lower court’s ruling that the defendant newspaper’s reporters did not meet its requirements.  Wang v. Chinese Daily News, 2010 U.S. App. LEXIS 19929 (9th Cir. 2010)

The Ninth Circuit focused on the DOL’s regulation addressing the potential applicability of the exemption to journalists. That regulation distinguishes between work requiring “invention, imagination, originality or talent” from work which depends primarily on “intelligence, diligence and accuracy.” 29 C.F.R. § 541.302(d). In affirming, the Circuit Court concluded that the materials submitted on summary judgment made clear that newspaper’s articles did not have the sophistication of the national-level papers, where there might be a “small minority of journalists who are exempt.” Moreover, the Court held the intense pace at which newspaper reporters worked precluded them from engaging in sophisticated analysis. Their primary duties did not involve "conducting investigative interviews; analyzing or interpreting public events; writing editorials, opinion columns or other commentary," even if they engaged in these activities some of the time, the Court held.  The Court concluded that characterizing journalists as exempt would therefore be “inconsistent with the Department of Labor's intent that ’the majority of journalists . . . are not likely to be exempt,’ and with the requirement that FLSA exemptions be construed narrowly.” Chinese Daily News, 2010 U.S. App. LEXIS 19929 at * 13-15 (internal citations omitted). 

When the district court granted summary judgment to the plaintiffs it noted that as of that date there was only one case where a court found a newspaper reporter to be exempt. Lynne Wang v. Chinese Daily News, Inc., 435 F. Supp. 2d 1042, 1053 (C.D. Cal. 2006) citing Sherwood v. Washington Post, 871 F. Supp. 1471 (D.D.C. 1994)(exempting Washington Post bureau chief assigned to cover Mayor Marion Barry and later the vice presidential campaign). 

The Ninth Circuit’s decision, along with two earlier Circuit opinions it cites, is a cautionary tale regarding the narrow scope of the creative professional exemption, particularly as applied to journalists. Employers, especially those in the newspaper, magazine and related industries, must ensure that any individual treated as an exempt creative professional utilizes the requisite “invention, imagination, originality or talent” in performing his/her job duties. New media content providers must also be aware that - technological differences notwithstanding - authors and producers of Internet content will be analyzed under the same framework.

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