U.S. House of Representatives Passes $15 Minimum Wage Bill

After six months of primarily internal Democratic Party wrangling, on July 18, 2019 the House of Representatives passed the Raise the Wage Act, which, if it became law, would progressively increase the federal minimum wage to $15.00 per hour over a six-year period. The House passage of the Bill comes at a time when an increasing number of states and local jurisdictions already have enacted minimum wage laws well above the federal minimum, which has been set at $7.25 per hour for a decade. Currently, more than half of the States have minimum wage rates higher than the federal minimum.

Despite House passage of the Act, the Bill almost certainly will not be passed by the Republican-controlled Senate, if it even comes up for a vote. Likewise, there is no expectation that President Trump would sign the Bill into law even if it Congress passed it.

Jackson Lewis will continue to monitor this and other wage and hour issues. If you have any questions, please contact the Jackson Lewis attorney(s) with whom you regularly work.

Lack of Alignment Between Employer’s Payroll Workweek and FLSA “Workweek” Results in Overtime Liability, First Circuit Holds

Although the Fair Labor Standards Act (FLSA) includes an overtime exception for employees who reside on the work premises for an “extended” period of time – at least 120 hours in a “workweek” – that exception is inapplicable if an employer’s payroll workweek does not coincide with an employee’s scheduled workweek for at least that many hours. Giguere v. Port Resources, Inc., 2019 U.S. App. LEXIS 18391 (1st Cir. June 19, 2019).

Generally under the FLSA, an employer must pay for all time that it requires an employee to spend at a worksite, including sleep time. 29 C.F.R. § 785.7. However, U.S. Department of Labor (DOL) regulations provide that an employer may exclude sleep time if certain conditions are met. One such exception applies to “live-in” employees, defined as those who “reside[] on [the] employer’s premises on a permanent basis or for extended periods of time.” 29 C.F.R. § 785.23. In a 1988 enforcement memorandum, the DOL defined “extended periods of time” as “resid[ing] on the premises for a period of at least 120 hours in a workweek.” Further, the memorandum defined “workweek” as “seven consecutive 24-hour periods.” The memorandum added that the employer’s workweek “need not coincide with the calendar week,” but once the employer has established the day its workweek begins, the following seven-day period “remains fixed regardless of the schedule of hours worked by [the employee].” 29 C.F.R. § 778.105.

In Giguere, the employer ran group homes for adults with developmental disabilities and its employees included “long-term” staff, who worked shifts of seven days on, followed by seven days off. Each week-long shift included four 4-hour unpaid breaks and eight hours of nightly unpaid sleep time. Consistent with the language of Section 785.23, the employer implemented a “Sleep Time Agreement,” which governed the conditions of the sleep-time exception to the paid work time of the long-term staff.

However, the employer computed its payroll workweek from Sunday to Sunday, while the shift schedule for the long-term staff ran from Thursday to Thursday. Thus, each long-term shift spanned two payroll workweeks and, after subtracting the unpaid break hours and eight hours of unpaid sleep each night, the employer paid its long-term staff for 40 paid working hours during the first payroll workweek (Thursday to Saturday) and for 56 paid working hours during the second payroll workweek (Sunday to Wednesday). Believing this pay structure to unlawfully deny him all overtime due, a former long-term staffer filed a collective/class action suit, alleging violations of the FLSA and comparable Maine state law. The district court agreed with the employee, granting him and the class summary judgment on the FLSA claims, and the First Circuit Court of Appeals affirmed.

The employer’s sleep-time policy failed to comply with the FLSA because its payroll workweek did not sufficiently overlap with the shift schedule of the long-term employees to whom the sleep-time policy applied. As a result, the long-term staff did not reside on the premises for at least 120 hours during the employer-established workweek. Instead, at most these employees resided for 96 hours on-site in a given payroll workweek (56 paid hours plus 32 unpaid sleep-time hours and 8 unpaid break hours during the four-day period from Sunday to Wednesday).

While acknowledging that the DOL regulations could benefit from some clarification, the First Circuit nonetheless concluded that, lacking anything suggesting a repudiation of the Department’s 1988 memorandum opinion, and in light of the clear-cut language of the definition of “workweek” in the DOL regulations, the plaintiff “has the better reading” of the applicable law. Curiously, in support of its decision, the Court of Appeals cited to the “narrow construction” principle previously applicable to the analysis of overtime exemptions under the FLSA. Last year, that principle was uniformly rejected by the U.S. Supreme Court in Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117 (2018), in favor of a “fair reading” approach to such exemptions.

As Giguere illustrates, employers need to ensure that when considering the application of an exception to the FLSA’s general rules, all of the conditions necessary for that exception are met. If you have any questions about treatment of sleep time under the FLSA, or any other wage and hour question, please contact the Jackson Lewis attorney(s) with whom you regularly work.

Nevada Enacts Minimum Wage Increase to $12 Per Hour

Nevada’s minimum wage will increase to $12.00 per hour (or $11.00 for employees offered health insurance) by mid-2024, based on a new bill signed into law by Nevada Governor Steve Sisolak. Beginning July 1, 2020, Nevada’s current minimum wage rates of $8.25 (without health insurance) and $7.25 (with health insurance) will increase by $0.75 to $9.00 and $8.00 respectively per hour, and will increase annually at that same rate until reaching $12.00 (or $11.00) per hour on July 1, 2024.

D.C.’s Economic Policy Institute estimates that about 300,000 Nevadans will be affected. At the signing, Governor Sisolak noted Nevada’s current minimum wage has not increased since 2010, and that “Keeping working Nevadans stuck in a 10-year-old minimum wage erodes the real value and purchasing power of the wages of hardworking Nevadans.” There are now only 21 states whose minimum wage is equal to or lower than the federal minimum wage of $7.25 per hour.

Jackson Lewis will continue to monitor minimum wage changes and other wage and hour issues. If you have any questions, please contact the Jackson Lewis attorney(s) with whom you regularly work.


Timber Harvesting Company Cannot Escape Overtime Liability, But Commute and Meal Break Time Should Not Have Been Included, Sixth Circuit Holds

Rejecting employer Timberline South’s argument, among others, that FLSA coverage did not apply because all of its timber harvesting occurred only within one state, the Sixth Circuit Court of Appeals nevertheless concluded that the commuting and meal break times should not have been included in the trial court’s calculation of overtime damages. Secretary of Labor v. Timberline South, LLC, 920 F.3d 1065 (6th Cir. 2019). The Sixth Circuit includes the federal courts in Michigan, Ohio, Kentucky and Tennessee.

In Timberline, the U.S. Department of Labor (DOL) brought a collective action against the company, alleging violations of the overtime and recordkeeping provisions of the FLSA. Following discovery, the district court granted summary judgment in favor of the DOL, awarding nearly $440,000 in unpaid overtime and an equal amount in liquidated damages. Timberline appealed the district court’s decision on several grounds.

First, the company argued that it was not subject to FLSA coverage because it harvests timber only in Michigan; it transports the timber to mills located only in Michigan; its contracts included cutting timber only in Michigan; and its heavy equipment was purchased from Michigan dealers. Therefore, asserted the company, it was not engaged in interstate commerce, a prerequisite to FLSA coverage. Rejecting that argument, the Sixth Circuit noted that Timberline’s large trucks and other heavy equipment were manufactured outside of Michigan, and therefore the company’s employees “handled” goods or materials produced in commerce. Similarly, in an issue of first impression in the Sixth Circuit, the Court of Appeals concurred with the Eleventh Circuit’s broad definition of the term “materials” under the FLSA, to mean not just raw components such as plastic or metal, but to encompass “the tools or other articles necessary for doing or making something.” Thus, because Timberline was using materials – i.e. its heavy equipment – in a manner significant to its operations (as opposed to the incidental use of materials such as pens, paper and other office consumables), the company was subject to FLSA coverage.

Next, the company contended that even if some of its employees were subject to the FLSA, others – its drivers – were exempt because they fell under the Motor Carrier Act (MCA), given that Timberline’s trucks are operated under U.S. Department of Transportation (DOT) registration numbers, its drivers maintain commercial driver’s licenses, and Timberline was involved in “a practical continuity of movement” in interstate commerce because its timber “is an ingredient in the goods manufactured by the mills to which it is delivered.” Rejecting these arguments, the Sixth Circuit noted that the company had presented no evidence that their timber was eventually shipped in interstate commerce. Moreover, the fact that the timber would have been altered (e.g. converted into paper products) before crossing state lines weighed against an MCA exemption. In addition, the Sixth Circuit previously had ruled that the mere maintenance of a commercial drivers’ license and/or registering vehicles with the DOT was an insufficient basis for applying the exemption.

Interestingly, in so holding the Sixth Circuit erred in stating that the FLSA’s overtime exemptions “are narrowly construed against the employer,” as this standard unequivocally was rejected, in favor of a “fair reading” of the Act’s exemptions, by the U.S. Supreme Court last year in Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117 (2018). More recently, the Sixth Circuit acknowledged the current “fair reading” standard in Holt v. City of Battle Creek, 2019 U.S App. LEXIS 16561 (6th Cir. June 3, 2019), concluding that this standard was to be applied broadly to FLSA exemptions and was not limited to the particular exemption at issue in Encino Motorcars.

Despite affirming the district court’s finding of overtime liability, the Sixth Circuit agreed with the company that the time employees spent commuting from home to work or for meal periods should not have been included in the damages calculation. Citing the regulations and cases interpreting the Portal to Portal Act, 29 U.S.C. § 254, the Court of Appeals held that an employer cannot be found liable to pay overtime based on regular commute time and other “non-work” time such as meal breaks, even if the employer has a custom or practice to pay for such otherwise non-compensable time. Accordingly, the case was sent back to the trial court for a recalculation of damages.

Finally, the company asserted that liquidated damages were inappropriate because the company’s director had reasonably and in good faith relied on advice from the predecessor company’s accountant – that logging companies are exempt from the FLSA’s overtime provisions – and because the company’s pay structure, which resulted in higher-than-average compensation for its employees, made an award of liquidated damages “particularly unjust.” Rejecting these arguments, the Sixth Circuit noted that the director never sought any advice or conducted any research to support his conclusion that the MCA exemption applied, despite knowing that his drivers never crossed state lines, and never discussed the duties of any particular employee with the accountant such that the accountant (who admittedly was not an FLSA expert) could have provided advice as to the applicability of any exemption. Moreover, held the Court of Appeals, the company’s compensation of its employees might be relevant to the amount of liquidated damages, but that comes into play only if the employer has established the “good faith” and “reasonable grounds” elements for determining that its employees were exempt from overtime. As Timberline had failed to satisfy these elements, the level of its employees’ pay was irrelevant.

If you have any questions about the issues discussed in this case or any other wage and hour questions, please consult the Jackson Lewis attorney(s) with whom you regularly work.

Colorado Lifts Ban on Local Minimum Wage Ordinances – With Restrictions

Repealing a 20-year old prohibition on local enactment of minimum wage ordinances, on May 28, 2019, Governor Jared Polis signed House Bill 1210 allowing, with certain restrictions, such local ordinances. Under H.B. 1210, no more than 10 percent of Colorado’s local jurisdictions may enact local minimum wage rates and any such rates cannot increase by more than 15 percent annually. Under the law, several adjoining communities may join to enact regional minimum wage rates.

In addition, any jurisdiction that enacts a local minimum wage rate is required to provide a tip credit for employees of any business “that prepares and offers for sale food or beverages for consumption either on or off the premises,” equal to the tip credit provided in the state’s constitution. Currently, the minimum wage in Colorado is $11.10 per hour (scheduled to increase to $12.00 per hour on January 1, 2020) and the statewide minimum wage for tipped employees is $8.08.

The new law allows local jurisdictions to enact minimum wage ordinances beginning in 2020, with an effective date on or after January 1, 2021. To enforce its local minimum wage, the city, county or other governmental entity may adopt provisions creating a private right of action that includes fines, penalties, actual (regular and overtime) damages, liquidated damages, interest, costs, attorney’s fees, and any other “appropriate or equitable relief.”

With the repeal of its local minimum wage preemption law, Colorado bucks the recent trend of states that have enacted such prohibitions. Currently, about one-half of the states have such local preemption laws.

For more information on H.B. 1210 or any other wage and hour issue, please contact the Jackson Lewis attorney(s) with whom you regularly work.

Connecticut to Join the Increasing Number of States Enacting a $15 Minimum Wage Law

With Governor Ed Lamont pledging to sign it into law, Connecticut will become the latest state to pass a $15.00 per hour minimum wage bill joining, among other states, its Northeast neighbors New York, New Jersey and Massachusetts, in doing so.

Under the Connecticut law, the state’s current minimum wage of $10.10 per hour will rise to $11.00 per hour on October 1, 2019; to $12.00 per hour on September 1, 2020; to $13.00 per hour on August 1, 2021; to $14.00 per hour on July 1, 2022; and finally to $15.00 per hour on June 1, 2023. On January 1 of each year thereafter, the minimum wage will be adjusted by the percent change in the federal Employment Cost Index (ECI) for all civilian workers’ salaries and wages for the one-year period ending on June 30 of the previous year.

The new law also freezes at their current levels the sub-minimum hourly cash wage that hospitality employers must pay employees who customarily receive tips. That sub-minimum cash wage is $6.38 per hour for hotel and restaurant staff and $8.23 per hour for bartenders. Thus, to the extent that a tipped employee’s combination of minimum cash wages and tips fails to meet the standard hourly minimum wages for a given week, the employer will have to make up the difference. Finally, the previous law allowed employers to pay a lower “training wage” for learners and beginners, as well as a “youth wage” for employees under the age of 18, at a rate of no less than 85% of the standard minimum wage for the first 90 days of their employment. The new law eliminates the training wage, while retaining the youth wage for employees under age 18, unless such minors are emancipated.

At the federal level, meanwhile, a bill introduced by Democratic leaders at the beginning of 2019, to gradually increase the federal minimum wage to $15.00 per hour, has gained little traction, while Secretary of Labor Alexander Acosta recently testified before a Senate budget committee that he does not believe an increase in the federal minimum ($7.25 since 2009) is appropriate at this time.

Jackson Lewis will continue to monitor these and other wage and hour issues. If you have any questions, please contact the Jackson Lewis attorney(s) with whom you regularly work.

Indiana Law Now Allows Paycheck Deductions for Uniform Rentals

Under an amendment to the state’s wage deduction statute, employers in Indiana may now deduct from an employee’s paycheck the rental cost of uniform shirts, pants, and other job-related clothing. The amendment, Senate Bill 99, was signed by Governor Eric Holcomb on May 1, 2019, and went into effect immediately. Michael Padgett, a Principal in the Indianapolis office of Jackson Lewis, testified before the Senate on behalf of the Indiana Chamber of Commerce in support of the amendment.

Indiana has a very restrictive wage deduction statute that only permits deductions if they are part of a written agreement by both the employer and employee, are personally signed by the employee, and are revocable at any time by the employee. In addition, a deduction may only be made for one of the reasons listed in the statute, such as health insurance premiums and union dues. Two common items that, until recently, were not listed among the allowable deductions were the cost of employee uniforms and the purchase of tools and equipment needed by an employee to complete his or her job. In 2015, the Indiana legislature added the purchase of uniforms and job-required equipment to the list of permissible deductions but did not include the costs of uniform rental, despite the fact that such costs routinely were deducted from paychecks by employers, particularly when the uniforms were provided by a third-party service.

Under the newly-enacted amendment, uniform rental likewise may be deducted from an employee’s wages, with a cap of either $2500 annually or five percent of the employee’s weekly disposable earnings, whichever is less. However, the cost of personal protective equipment required by federal rules may not be deducted.

Furthermore, and in what certainly will be a sigh of relief to employers facing potential pre-amendment violations, the amendment legalizes any deduction agreed upon prior to the amendment’s effective date, if it meets the above requirements and the amount deducted was either retained by the employer and credited upon an indebtedness owing to the employer by the employee, or was paid by the employer.

If you have any questions about this law or any other wage and hour questions, please contact the Jackson Lewis attorney(s) with whom you regularly work.

DOL Extends Comment Periods for Proposed Joint Employer and Regular Rate Regulations

Citing the interest expressed by “law firms, unions, and advocacy organizations, among others,” the U.S. Department of Labor (DOL) has extended the period for public comment on recently-issued Notices of Proposed Rulemaking (NPRM) regarding amendments to the regulations concerning determination of the “regular rate” of pay under the Fair Labor Standards Act (FLSA) and to amendments clarifying what constitutes a “joint employer” under the Act.

The NPRM regarding the regular rate was published on March 29, 2019 and the NPRM regarding joint employers was published on April 9, 2019, both with 60-day public comment periods. With the just-announced extensions, the new deadline for submitting comments regarding the proposed regular rate rulemaking will be June 12, 2019 and the deadline for comments regarding the proposed joint employer regulations will be June 25, 2019.

An in-depth discussion of both proposed rulemaking efforts may be found on the Jackson Lewis website, here (Regular Rate) and here (Joint Employer).

Notably, the DOL has not announced a similar extension of the comment period for the NPRM it recently issue on a proposed increase in the salary level requirements for the white collar exemptions. That comment period currently is scheduled to expire on May 21, 2019.

If you have any questions about these proposed regulatory changes or any other wage and hour questions, please contact the Jackson Lewis attorney(s) with whom you regularly work.

California’s “ABC” Test for Independent Contractor Analysis to be Applied Retroactively, Ninth Circuit Holds

The U.S. Court of Appeals for the Ninth Circuit has dealt California employers another setback when responding to claims of misclassification of independent contractor status for violations of the Industrial Welfare Commission Wage Order (“IWC Wage Orders”), holding that the State’s recently-adopted “ABC” test must be applied retroactively. Vazquez v. Jan-Pro Franchising Int’l, Inc., 2019 U.S. App. LEXIS 13237 (9th Cir. May 2, 2019).   Almost exactly a year earlier, the California Supreme Court, in Dynamex Operations West, Inc. v. Superior Court of Los Angeles County, 416 P.3d 1 (Cal. 2018), broadened the definition of “employee” in the context of the IWC Wage Orders when undertaking the employee-versus-independent contractor analysis, by adopting what commonly is known as the ABC test. Under that standard, to establish that an individual is in fact an independent contractor, an employer must prove that:

A: The work must be free from the control and direction of the company in connection with the performance of the work, both under the contract for performance of the work and in fact;

B: The worker performs work that is outside the usual course of the company’s business; and,

C: The worker is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed.

With the retroactive application of the more employee-friendly ABC test, the Dynamex decision will have an even more  significant impact on companies throughout California that rely on workforce configurations using independent contractors.

A detailed discussion of the Ninth Circuit’s decision in Vazquez may be found here,  https://www.jacksonlewis.com/publication/california-s-abc-test-independent-contractor-analysis-be-applied-retroactively

while a discussion of last year’s Dynamex decision may be found here:


If you have any questions about these decisions or any wage and hour question, please consult the Jackson Lewis attorney(s) with whom you regularly work.

Wisconsin Supreme Court Holds State Law Precludes Pay for Normal Commute Time in Employer-Provided Vehicles

Reversing a decision of the lower appellate court, the Wisconsin Supreme Court has held that state law does not require employers to pay employees for routine commute time driving company-provided vehicles between the employees’ homes and their assigned jobsites. Kieninger v. Crown Equipment Corp., 2019 WI 27 , 2019 Wisc. LEXIS 123 (Mar. 20, 2019).  The Supreme Court held that its conclusion was based on a reasonable interpretation of the regulations governing Wisconsin’s wage and hour laws. This is particularly notable because the Wisconsin legislature has not adopted the language of the Employee Commuting Flexibility Act (EFCA), which in 1996 established that normal commute time, even when driving an employer-provided vehicle, is not compensable under the federal Fair Labor Standards Act (FLSA).

Specifically, under the applicable regulations, “wages accrue when employees are engaged in ‘physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer’s business.’”  Noted the Supreme Court (citing Wis. Admin. Code § DWD 272.12(1)(a)1). Moreover, “[t]hese exertions take place within a ‘workday,’ which comprises [] the period between the time on any particular workday at which such employee commences their principal activity or activities and the time on any particular workday at which they cease such principal activity or activities’” and “the ‘principal activities’ of which a workday consists ‘include[] all activities which are an integral part of a principal activity.’” (citing Wis. Admin. Code § DWD 272.12(2)(e)1). To that end, “[t]asks ‘integral’ to a principal activity encompass ‘those closely related activities which are indispensable to its performance.’” (citing Wis. Admin. Code § DWD 272.12(2)(e)1.c).

“Distilling this guidance into a workable framework,” noted the Supreme Court, “tells us that an employee’s activity is compensable if it takes place during a workday (that is, it is part of the employee’s principal activities, or is closely related and indispensable to them), it involves physical or mental exertion controlled or required by the employer, and it is necessarily and primarily done for the benefit of the employer’s business.” The regulations themselves clearly establish that normal commuting from home to work and back in an employee’s vehicle is not compensable, and “[w]hether the employee is in a personal or a company vehicle, he is doing the exact same thing, and no one disputes that the time at issue would not be compensable if [the plaintiff] had driven his own automobile.”

Moreover, the mere fact that the employee may be carrying tools in the employer-provided vehicle necessary to perform his principal job activities is an insufficient basis to convert the commute time into compensable work time, as such circumstances would “transform[] virtually every commute into a wage-earning event.” If that were the case, the mere fact that the employee is transporting himself to work would qualify as compensable time because “conveying an employee’s physical and mental resources to the office is integral and indispensable to a principal activity, to wit, whatever they were hired to do.” The Supreme Court distinguished this employee’s situation (direct travel from home to worksite) from cases in which an employee is required to make a two-leg journey, first from home to an employer-designated meeting place to pick up tools and then from the meeting place to the job site. The applicable regulations require that the second leg of that journey is compensable. The Supreme Court noted that those regulations describe the circumstances of employees who do not commute in an employer-owned vehicle, which is the opposite of the situation the employee in this case was faced with. Thus, held the Supreme Court, “[w]e cannot conclude that conveying company tools from an employee’s home to his jobsite, without more, makes his travel time ‘an integral part of a principal activity’ . . . or a ‘closely related’ activity that is ‘indispensable to its performance’ within the meaning of [the applicable regulations]” and such commute time is, therefore, non-compensable.

If you have any questions about this decision or any other wage and hour questions, please contact the Jackson Lewis attorney(s) with whom you regularly work.