Monthly Archives: March 2010

Health Care Reform Law Amends FLSA to Require Breastfeeding Breaks, Thompson Reports

Under the new Health Care Reform Law, the FLSA has been amended in several important respects.  In addition to the highly publicized provision of healthcare for previously uninsured people, Thompson reports that employers must now provide breaks for women who are breastfeeding:

“Employers must now provide “reasonable” unpaid breaks to nursing mothers to express milk for their infants under an amendment to the Fair Labor Standards Act included in the landmark health care law signed by President Obama on March 23.

The health care law adds a new provision to the FLSA, 29 U.S.C. §207(r)(1), which allows nursing mothers to take a break every time they need to express breast milk and requires employers to provide a private location, other than a bathroom, where such employees may express milk. Employees must be allowed such breaks for up to one year after their child’s birth.

Employers of fewer than 50 employees are exempt if the breastfeeding requirements would “impose an undue hardship by causing the employer significant difficulty or expense.”

A number of states already mandate breastfeeding breaks, and under the FLSA, employers must comply with the standard that is more favorable to the employee (29 U.S.C. §218).

The health care law also amends the FLSA to require employers of more than 200 employees to automatically enroll new employees in existing employer-offered health plans.”

To read the entire article click here.

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9th Cir.: Time Police Officers Spent Donning/Doffing Uniforms and Equipment Not Compensable, Because Officers Had The Option Of Donning/Doffing At Home

Bamonte v. City of Mesa

Appellants, police officers employed by Appellee City of Mesa (City), challenged the district court’s entry of summary judgment in favor of the City.  The officers contended that the City violated the Fair Labor Standards Act (FLSA) by failing to compensate police officers for the donning and doffing of their uniforms and accompanying gear. Because officers had the option of donning and doffing their uniforms and gear at home, the district court determined that these activities were not compensable pursuant to the FLSA and the Portal-to-Portal Act. The Ninth Circuit affirmed, and held that these activities were not compensable pursuant to the FLSA.

To read the entire opinion click here.

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Filed under Donning and Doffing, Municipal Employees, Work Time

Mortgage Loan Officers Do Not Typically Qualify For The Administrative Exemption, Says DOL

Administrator’s Interpretation No. 2010-1

The Wage and Hour Division, under the current Administration, has issued its first Administrative Interpretation Letter.  The introductory text of the Letter is below:

“Based on the Wage and Hour Division’s significant enforcement experience in the application of the administrative exemption, a careful analysis of the applicable statutory and regulatory provisions and a thorough review of the case law that has continued to develop on the exemption, the Administrator is issuing this interpretation to provide needed guidance on this important and frequently litigated area of the law.  Based on the following analysis it is the Administrator’s interpretation that employees who perform the typical job duties of a mortgage loan officer, as described below, do not qualify as bona fide administrative employees exempt under section 13(a)(1) of the Fair Labor Standards Act, 29 U.S.C. § 213(a)(1).

Typical Job Duties of Mortgage Loan Officers

The financial services industry assigns a variety of job titles to employees who perform the typical job duties of a mortgage loan officer.  Those job titles include mortgage loan representative, mortgage loan consultant, and mortgage loan originator.  For purposes of this interpretation the job title of mortgage loan officer will be used.  However, as the regulations make clear, a job title does not determine whether an employee is exempt. The employee’s actual job duties and compensation determine whether the employee is exempt or nonexempt.  29 C.F.R. § 541.2.

Facts found during Wage and Hour Division investigations and the facts set out in the case law establish that the following are typical mortgage loan officer job duties: Mortgage loan officers receive internal leads and contact potential customers or receive contacts from customers generated by direct mail or other marketing activity.  Mortgage loan officers collect required financial information from customers they contact or who contact them, including  information about income, employment history, assets, investments, home ownership, debts, credit history, prior bankruptcies, judgments, and liens.  They also run credit reports.  Mortgage loan officers enter the collected financial information into a computer program that identifies which loan products may be offered to customers based on the financial information provided.  They then assess the loan products identified and discuss with the customers the terms and conditions of particular loans, trying to match the customers’ needs with one of the company’s loan products. Mortgage loan officers also compile customer documents for forwarding to an underwriter or loan processor, and may finalize documents for closings.  See, e.g., Yanni v. Red Brick Mortgage, 2008 WL 4619772, at *1 (S.D. Ohio 2008); Pontius v. Delta Financial Corp., 2007 WL 1496692, at *2 (W.D. Pa. 2007); Geer v. Challenge Financial Investors Corp., 2007 WL 2010957 (D. Kan. 2007), at *2; Chao v. First National Lending Corp., 516 F. Supp. 2d 895, 904 (N.D. Ohio 2006), aff’d, 249 Fed.App. 441 (6th Cir. 2007); Epps v. Oak Street Mortgage LLC, 2006 WL 1460273, at *4 (M.D. Fla. 2006); Rogers v. Savings First Mortgage, LLC, 362 F. Supp. 2d 624, 627 (D. Md. 2005); Casas v. Conseco Finance Corp., 2002 WL 507059, at *1 (D. Minn. 2002).”

To read the entire Letter click here.

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Filed under Department of Labor, Exemptions, Wage and Hour News

Supreme Court Agrees To Decide Whether A Verbal Complaint To An Employer Is Sufficient To Trigger FLSA Anti-Retaliation Protections

Kasten v. Saint-Gobain Performance Plastics Corp.

The Supreme Court has granted certiorari to decide whether the question:

“Is an oral complaint of a violation of the Fair Labor Standards Act protected conduct under the anti-retaliation provision, 29 U.S.C. § 215(a)(3)?”

In a decision discussed here,  the 7th Circuit previously held that “any complaint” includes an employee’s internal complaint to his or her own company.  However, the Court also held that an employee who complains verbally, not in writing, has not engaged in statutorily protected activity, so he or she is not protected by the FLSA’s anti-retaliation provision.

Following the decision, the Plaintiff sought a rehearing en banc.  In the decision denying a rehearing en banc, three 7th Circuit judges dissented.  The dissenting judges noted that the 7th Circuit was the only Circuit to construe the definition of protected activity so narrowly.  Now the Supreme Court will decide whether they were right, or whether the remedial nature of the FLSA supports protection from retaliation for those who make verbal complaints, but not complaints in writing.

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1st Cir.: Municipality Need Not Give Notice To Its Public Safety Officers Before The Municipality Takes Advantage Of 29 U.S.C. § 207(k); Notice Not A Prerequisite To Application Of Public Safety Exemption

Calvao v. Town Of Framingham

Plaintiffs are police officers of the Town of Framingham who brought a putative class action suit against the Town in April 2005, alleging that the Town had failed to pay them sufficient overtime in violation of the FLSA, 29 U.S.C. §§ 201-19, and seeking damages.  In anticipation of the Town’s defense, the officers sought a declaratory judgment that the Town was ineligible for the FLSA’s limited public safety exemption from overtime, 29 U.S.C. § 207(k), because the Town failed to adequately put them on notice of its intent to use 207(k), an exemption eases the FLSA’s overtime pay requirements on public employers who establish work schedules that meet statutory requirements.  Affirming the decision of the Court below, the First Circuit held that a Town seeking to utilize 207(k) need not put its public safety employees on formal notice beforehand.

Initially, the Court discussed the legal background of the so-called “Public Safety Exemption” as follows:

“The history and scope of the FLSA public safety exemption set the background. “Congress enacted the FLSA in 1938 to establish nationwide minimum wage and maximum hours standards.” Moreau v. Klevenhagen, 508 U.S. 22, 25 (1993); Ellen C. Kearns et al., The Fair Labor Standards Act § 1.III, at 12-13 (1999). Later amendments in 1966 and 1974 extended the Act’s reach to state and municipal employers. See Moreau, 508 U.S. at 25-26. Despite congressional efforts to mitigate the effect of these amendments on municipal coffers, e.g., Kearns et al., supra § 11.V.B., at 687, the amendments triggered protracted litigation, as state and local public employers mounted constitutional challenges to the FLSA’s regulation of state-employer compensation schemes. See Moreau, 508 U.S. at 26 & n. 6 (collecting cases). In part, the employers were successful. See Nat’l League of Cities v. Usery, 426 U.S. 833, 851-52 (1976) (invalidating 1974 amendments to the FLSA to the extent that they “impermissibly interfere[d] with the integral governmental functions” of states and municipalities).

In February 1985, the Supreme Court upheld Congress’s power under the FLSA to regulate the payments due to state and local employees. See Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528 (1985). State and municipal authorities reacted with “grave concern” to the decision, due in part to “[t]he projected ‘financial costs of coming into compliance with the FLSA-particularly the overtime provisions.’ “ Moreau, 508 U.S. at 26 (quoting S.Rep. No. 99-159, at 8 (1985)).

In response, both the House and Senate held hearings on the issue “and considered legislation designed to ameliorate the burdens associated with necessary changes in public employment practice.” Id. Congress ultimately enacted several provisions designed to allay public employers’ fears and contain costs. See, e.g., id. Congress also delayed enforcement of the FLSA against state and local employers until April 15, 1986, to give them time to comply with the Act’s amended requirements. See Fair Labor Standards Amendments of 1985, Pub.L. No. 99-150, § 2(c), 99 Stat. 787, 788-89.

Section 207(k) was originally passed in 1974. The provision created a partial FLSA exemption for law enforcement and fire protection personnel (“public safety personnel”). See29 U.S.C. § 207(k). When Garcia held the FLSA applied to municipal employees, § 207(k) became very important to municipalities. See Martin v. Coventry Fire Dist., 981 F.2d 1358, 1361 (1st Cir.1992).

Under the FLSA, employees other than public safety personnel are generally entitled to payment “at a rate not less than one and one-half times” their regular wages for any time worked in excess of forty hours in a seven day period. 29 U.S.C. § 207(a)(1). However, the partial exemption in § 207(k) set a higher threshold number of hours that public safety personnel can work in a twenty-eight day work period-or a proportional number of hours in a shorter work period of at least seven days-before these employees become entitled to overtime compensation. See id. § 207(k).”

After discussing the elements of the 207(k) exemption in detail, the Court addressed the pointed issue in the case, holding that formal notice of the imposition of a 207(k) work schedule is not an element required for a municipality to reap its benefits.  The Court reasoned, “Plaintiffs assert that the Town was required to give affected employees notice in order to establish a § 207(k) work period and qualify for the public safety exemption. Plaintiffs’ claim raises an issue of statutory interpretation and is before us on summary judgment. For both of these reasons, our review is de novo. See Chiang v. Verizon New England Inc., No. 09-1214, 2010 WL 431873, at *5 (1st Cir. Feb. 9, 2010). “We may affirm the district court on any basis apparent in the record.” Id.

We reject plaintiffs’ argument in light of § 207(k)‘s text and history, as well as the interpretive guidance given by the Department of Labor in its regulations. On the undisputed facts, the Town’s actions were sufficient to establish a qualifying work period, despite the asserted lack of notice to its employees. Summary judgment was appropriate.

We start with the statutory text. The text of § 207(k) does not specify that a public employer is required to establish a work period or identify how an employer might do so. Further, the text contains no requirement of notice to the affected employee. 29 U.S.C. § 207(k).

The Town points to related legislative history. Congress explicitly rejected a proposal mandating employee agreement before a § 207(k) work period could be established. Barefield v. Vill. of Winnetka, 81 F.3d 704, 710 (7th Cir.1996) (citing H.R.Rep. No. 953, 93d Cong., 2d Sess. (1974) (Conf.Rep.)); see also Agawam, 350 F.3d at 291 (noting that “employees’ approval is not required” under § 207(k)). The Town argues this is indicative that not only was no agreement required but no notice was required. This reading is consistent with Congress’s goal of “ensur[ing] that public agencies would not be unduly burdened by the FLSA’s overtime requirements.” Kearns et al., supra § 11.V.B., at 687; see alsoH.R. Rep. 93-913, at 2837-38 (1974) (describing the House’s original version of § 207(k), which provided for a complete overtime exemption for public safety personnel to help ensure that the FLSA would have a “virtually non-existent” impact on state and local governments).

It is true that § 207(k)‘s text does not prohibit giving notice either. However, Congress expressly delegated responsibility for implementing the statute to the Secretary of Labor, see Moreau, 508 U.S. at 27 (citing 29 U.S.C. § 203), who, after notice and comment, promulgated regulations, see52 Fed.Reg.2012;51 Fed.Reg. 13402 (Apr. 18, 1986). These regulations make it clear the Secretary rejected a notice requirement under § 207(k). Under these circumstances, “Congress clearly ‘expect[ed] the agency to be able to speak with the force of law,’ “ and we “must defer to the regulations’ resolution of a statutory ambiguity, so long as it is ‘reasonable.’ “ Rucker v. Lee Holding Co., 471 F.3d 6, 11 (1st Cir.2006) (quoting United States v. Mead Corp., 533 U.S. 218, 229 (2001)).

During rulemaking, the Secretary of Labor reviewed and rejected a proposal to impose a notice requirement for § 207(k). 52 Fed.Reg. at 2024-25. The Secretary observed that unlike other sections of the FLSA, which “require [ ] that there be an agreement or understanding concerning compensatory time prior to the performance of work, there is no requirement in the Act that an employer formally state its intention or obtain an agreement in advance to pay employees under section 7(k).” Id. at 2025 (emphasis added).

The resulting regulation, 29 C.F.R. § 553.224, plainly rejected both a requirement that municipalities make a formal statement of intention and a requirement that they obtain agreement. The regulation explains that “any established and regularly recurring period of work which, under the terms of the Act and legislative history, cannot be less than 7 consecutive days nor more than 28 consecutive days” suffices as a work period, noting that “[e]xcept for this limitation, the work period can be of any length, and it need not coincide with the duty cycle or pay period or with a particular day of the week or hour of the day.” Id. § 553.224(a).

Section 553.224‘s reference to an “established” work period is the foundation of plaintiffs’ claim that an employer must provide notice to employees to set up a § 207(k) work period. But § 553.224 includes no procedural steps of any kind, let alone a notice requirement.

Our caselaw reflects in dicta the Secretary’s interpretation that federal law in § 207(k) does not require notice to the affected employee, see Agawam, 350 F.3d at 291;see also id. at 291 n .21 (“The work period requirement is ordinarily not a high hurdle.”), as does the law in other circuits to have considered the issue, see Milner, 165 F.3d at 1223 (per curiam) (“[T]he [§ 207(k) ] exemption need not be established by public declaration.”);   Spradling v. City of Tulsa, 95 F.3d 1492, 1505 (10th Cir.1996) (“[A] public employer may establish a 7(k) work period even without making a public declaration, as long as its employees actually work a regularly recurring cycle of between 7 and 28 days.”) (internal quotation marks and citation omitted); Barefield, 81 F.3d at 710 (finding a municipal employer entitled to § 207(k) exemption, even though the work schedule at issue predated the enactment of the provision and the employer “made no declaration of intent to come under Section 7(k)”) (internal quotation marks omitted).

Here, the Town has used a § 207(k)-compliant work period at all relevant times. The Town’s memo of April 11, 1986, shows that its “4-2” and “5-3” work cycles are component parts of a fixed, recurring twenty-four day work period. Cf. Agawam, 350 F.3d at 291 (rejecting public employer’s claim to the § 207(k) exemption when the employer used six-day work cycles and could “not point to a single statement or document indicating that it adopted a work period longer than six days”). Both of these schedules are consistent with the identified work period, as both divide evenly into a twenty-four day period. See Avery, 24 F.3d at 1344 (holding that a “five days on, two days off duty cycle, repeated four times” constitutes a “valid twenty-eight day work period”) (internal quotation marks omitted). Additional memoranda discussing the FLSA’s imminent effective date and expressing the Town’s intention to take advantage of the public safety exemption further support this conclusion.

Plaintiffs do not directly challenge the regulatory framework outlined above. They instead urge that a subsequent letter ruling by an administrator at the Department of Labor mandates a notice requirement and is entitled to deference by this court under Auer v. Robbins, 519 U.S. 452, 461 (1988), or Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944). That argument was not properly presented to the district court and is waived. E.g., McCoy v. Mass. Inst. of Tech., 950 F.2d 13, 22 (1st Cir.1991). We nonetheless address the claim to ensure clarity on this point of law, and we reject plaintiffs’ assertion for three distinct reasons.

First, the administrator’s letter ruling made no mention of a notice requirement. It said only that “[a]n employer must designate or otherwise objectively establish the work period … and pay the affected employees in accordance with its provisions.” Dep’t of Labor Ltr. Rul. FLSA-1374 (Jan. 3, 1994). The letter’s emphasis on “objectively establish[ing]” a work period is not inconsistent with 29 C.F.R. § 553.224. To the contrary, it merely paraphrases the regulation’s requirement that employers make use of an “established and regularly recurring period of work,” id. § 553.224(a), in order to claim the benefits of the exemption.

Second, the letter responded to an inquiry regarding a specific decision by this court, Martin v. Coventry Fire Dist., 981 F.2d 1358 (1st Cir.1992), which addressed different issues. When responding to the inquiry, the administrator plainly stated that the letter ruling was “based exclusively on the facts and circumstances” presented. Dep’t of Labor Ltr. Rul. FLSA-1374. The letter is irrelevant to plaintiffs’ present argument.

Finally, “[i]nterpretations such as those in opinion letters … do not warrant Chevron-style deference.” Christensen v. Harris County, 529 U.S. 576, 587 (2000). To the contrary, such letters “are ‘entitled to respect’ … only to the extent that th[eir] interpretations have the ‘power to persuade.’ “ Id. (quoting Skidmore, 323 U.S. at 140). Here, the Secretary of Labor explicitly rejected the very position that plaintiffs ascribe to the administrator’s letter, stating clearly during rulemaking that employers need not formally declare their intentions to pay employees under § 207(k). 52 Fed.Reg. at 2024-25. Even if plaintiffs’ reading of the letter were accurate, the letter’s inconsistency with the Secretary’s earlier pronouncement would render it unpersuasive. See Skidmore, 323 U.S. at 140.”

Thus, the Court concluded, “Plaintiffs’ argument fails. The Town was not required to notify plaintiffs that it had established a § 207(k) work period. Summary judgment was appropriately granted.”

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E.D.Ky.: “Self-Critical Analysis” Privilege Does Not Shield Employer From Disclosure Of Documents Relating To FLSA Classification; Such Discovery Is Relevant To Issues Of “Good Faith” And Willfulness

Cochran v. National Processing Co.

This matter was before the Court on the Motions to Quash filed by the Defendants.  Defendants sought to quash a subpoena issued by the Court and served on one of the Defendants (Hanna), seeking documents relating to the FLSA classification of the Plaintiffs, who were employees of Defendant, National, assigned to work for Defendant, Hanna.  Defendants argued that the documents requested in the subpoena are protected under the self-critical analysis privilege and that they are beyond the scope of discovery.

The underlying action was pending in the United States District Court for the Southern District of Texas.  National was the Defendant in the Texas action. The Plaintiffs in that action are current and former National employees. They asserted a claim against National under the Fair Labor Standards Act, alleging that National had improperly classified them as “exempt” employees under the Act and has, thus, improperly failed to pay them overtime.  Hanna, which is located in Lexington, Kentucky, was not a party to the Texas action. However, the subpoena required Hanna to produce certain documents relating to work performed by Hanna for National regarding National’s policies and procedures for paying overtime.

Discussing the lack of “self critical analysis” privilege, the Court stated:

“National argues that the documents sought by the Plaintiffs are protected by the ‘self-critical analysis privilege.’

As an initial matter, it is not clear that the privilege exists. As support for its argument that the Sixth Circuit has adopted the self-critical analysis privilege, the Plaintiffs cite ASARCO, Inc. v. N.L.R.B., 805 F.2d 194 (6th Cir.1986). In that case, the Sixth Circuit determined that the employer should not have to disclose self-critical reports prepared after serious accidents in order to improve safety and prevent similar mishaps. Id. at 199. The court determined that “[t]he practice of uninhibited self-critical analysis, which benefits both the union’s and employer’s substantial interest in increased worker safety and accident prevention, would undoubtedly be chilled by disclosure.” Id. at 200.

However, that case involved a company’s duty to turn over certain information in collective bargaining efforts with the employee’s union. The Sixth Circuit specifically noted that items subject to discovery in litigation may not be subject to disclosure “in the collective bargaining context” and that any duty to disclose in that context must be evaluated in light of the rights and obligations created by the National Labor Relations Act. Id. at 199.

Even after ASARCO, district courts have found that the Sixth Circuit has never explicitly adopted the self-critical analysis privilege. See United States v. Allison Engine Company, Inc., 196 F.R.D. 310, 313-14 (S.D.Ohio 2000); Hickman v. Whirlpool Corp., 186 F.R.D. 362, 363 (N.D.Ohio 1999).

One district court has summarized the status of the privilege as follows:

Furthermore, “no circuit court of appeals has explicitly recognized the self-critical analysis privilege.” Johnson v. United Parcel Serv., Inc., 206 F.R.D. 686, 689-90 (M.D.Fla.2002). Most important, the validity of the self-critical analysis privilege is highly doubtful in light of the Supreme Court’s decision University of Pennsylvania v. EEOC, 493 U.S. 182, 110 S .Ct. 577, 107 L.Ed.2d 571 (1990), which declined to recognize a common law privilege against disclosure of confidential peer review materials.Granberry v. Jet Blue Airways, 228 F.R.D. 647, 650 (N.D.Cal.2005).

In Allison Engine, the court considered a claim of self-critical analysis privilege regarding internal audits of quality control for products supplied to the United States Navy. It applied a four-part test from Bredice v. Doctors Hosp., Inc., 50 F.R.D. 249 (D.D.C.1970):

(1) the information must result from self-critical analysis undertaken by the party seeking protection; (2) the public must have a strong interest in preserving the free flow of the type of information sought; (3) the information must be of the type whose flow would be curtailed if discovery were allowed; and (4) no documents should be accorded the privilege unless it was prepared with the expectation that it would be kept confidential.

Allison Engine, 196 F.R.D. at 312.

The court rejected the privilege in that case, noting that the privilege had rarely been applied and that its very rationale had been called into doubt.   Id. at 313.See also Wade v. Washington Metropolitan Area Transit Authority, 2006 WL 890679 at * 5 (D.D.C.2006)(the privilege is “rarely recognized.”)

Even if the Sixth Circuit has or would adopt the privilege, National would not meet all four elements of the test set forth above. National argues that the documents requested from Hanna relate to an evaluation that National hired Hanna to perform of National’s classification of employees as exempt or non-exempt under the FLSA. However, clearly not all the information contained in documents relating to the evaluation are necessarily protected by the privilege:

The privilege is not absolute. It applies only to analysis or evaluation, not the facts on which evaluation is based. See In re: Crazy Eddie Securities Litigation, 792 F.Supp. 197, 205 (E.D.N .Y.1992). Courts have protected analytical or evaluative information but allowed discovery of factual information. See Troupin, 169 F.R.D. at 550. Under the privilege, parties are not required to reveal self-critical analyses, but must produce data or statistical information. See Roberts v. National Detroit Corp., 87 F.R.D. 30, 32 (E.D.Mich.1980). Information, documents or records otherwise available from other sources are not immune from discovery. See Shipes, 154 F.R.D. at 307 (citing Hollowell v. Jove, 247 Ga. 678, 279 S.E.2d 430, 434 (1981)). Additionally, this is a qualified privilege and it can be overcome by showing extraordinary circumstances or special need. See Reichhold Chem. Inc., 157 F.R.D. at 527. The privilege must be balanced against the opposing party’s need for discovery. See In re: Crazy Eddie Securities Litigation, 792 F.Supp. at 205Allison Engine, 196 F.R.D. at 315.

The subpoena requests “all documents relating or pertaining to any review(s), audit(s), consulting or human resources management-related work performed by you for [National] regarding its policies or procedures concerning payment of overtime and/or classification of employees for overtime purposes,” and “all communications between you and anyone with [National] related to its policies or procedures concerning payment of overtime and/or classification of employees for overtime purposes.”

National has produced no evidence at all regarding the kinds of information contained in the documents requested, i.e., whether the information is “analysis” or “evaluation” or whether the information is “factual.” Thus, the Court has no basis for finding any of the documents are privileged.

Further, the privilege is most often applied in cases involving public health or safety. First Eastern Corp. v. Mainwaring, 21 F.3d 465, 467 n. 1 (C.A.D.C.1994). In fact the privilege was “initially developed to promote public safety by encouraging businesses to voluntarily evaluate their safety procedures. Morgan v. Union Pacific R. Co., 182 F.R.D. 261, 265 (N.D.Ill.1998)(citing Bredice v. Doctors Hosp. Inc., 50 F.R.D. 249, 251 (D.D.C.1970)). “Because production of such documents ‘would tend to hamper honest, candid self-evaluation geared toward the prevention of future accidents,’ the doctrine evolved in order ‘to prevent a ‘chilling’ effect on self-analysis and self-evaluation prepared for the purpose of protecting the public by instituting practices assuring safer operations.’ “ Id. (citing Granger v. National R.R. Passenger Corp., 116 F.R.D. 507, 508-509 (E.D.Pa.1987)).

While the privilege has been applied in other settings, the “essence of the privilege is the value to the public of continuing the free flow of the type of information created by the analysis. Consequently, the inquiry focuses on the public policy requirement, that is, whether disclosure of material generated by a party’s self-critical analysis will discourage or curtail future such studies.” Drayton v. Pilgrim’s Pride Corp., 2005 WL 2094903 at *2 (E.D.Pa.2005).

The assessment at issue in this case involved National’s classification of employees as exempt or non-exempt under the FLSA. National argues that it hired Hanna to develop and implement a compensation structure for the company including an evaluation of National’s classification of employees as exempt or non-exempt under the FLSA. Disclosure of that assessment will not inhibit National from conducting further such assessments. In order to pay its employees, it obviously must continue to classify them as exempt or non-exempt. Thus, to the extent that the Hanna report contained any “evaluation” or “analysis,” National must continue to engage in that analysis in order to pay its employees and avoid liability under the Act.

The privilege has been extended to employment cases to “protect business entities which are legally mandated to critically evaluate their hiring and personnel policies.” Morgan v. Union Pacific R. Co., 182 F.R.D. 261, 265 (N.D.Ill.1998). However, the rationale for the privilege in employment cases is different than it is for tort cases. While, “the justification for the privilege in tort cases is to promote public safety through voluntary and honest self analysis,” id., the privilege in employment cases is meant to “protect those businesses that are required to engage in critical self-evaluation from exposure to liability resulting from their mandatory investigations.” Id. To the extent that Hanna’s assessment contained any “evaluation” or “analysis,” National has pointed to no law requiring such an evaluation.

For all these reasons, the Court hold that the Hanna documents are not protected under the self-critical analysis privilege.

Next the Court addressed Defendants’ argument that the documents sought were not relevant.  Rejecting this argument, the Court explained, “National objects that the documents sought are not relevant to the Plaintiffs’ action and Hanna has joined in that objection. National argues that the Plaintiffs are IT Support Technicians in Texas but that the subpoena seeks information about every National employee and that it seeks information beyond the classification of those employees under the FLSA.

The Plaintiffs argue that the documents are relevant to the “good faith” defense to the imposition of liquidated damages under the Act and to the extended statutory limitations period for “willful violations” of the Act. National has asserted the good faith defense and has denied any willful violations or purposes of extending the limitations period. The Plaintiffs argue that the defense “delves into the mind of the employer” and, thus, communications with Hanna regarding interpretation and application of the FLSA are relevant.

The Court agrees with the Plaintiffs that National’s communications with Hanna regarding the FLSA classification of its employees for overtime purposes is relevant to National’s “good faith” and “willfulness.” The subpoena is confined to documents regarding “payment of overtime and/or classification of employees for overtime purposes.” Accordingly, the documents requested in the subpoena are discoverable.”

EDITOR’S NOTE:  Within days of the issuance of the Order in this case, a court within the Northern District of California held that there is no such thing as the “self-critical analysis” privilege.  See Lewis v. Well Fargo & Co., 2010 WL 890183 (N.D.Cal. March 12, 2010).

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D.Md.: Training Time Outside Of Regular Work Hours Not Compensable, Because It Was Primarily For The Benefit Of The Employees Not The Employer

Carter v. Mayor & City Council of Baltimore City

Before the Court was Defendants’ Motion for Summary Judgment.  This was the second such Motion, because the Court had denied the prior application with leave to further establish the factual record.  Plaintiffs claimed that they were entitled to be paid for certain time spent training in Defendants’ CRT Apprentice program outside of their regular workweek.  The Court disagreed, granting Defendants’ Motion.  As discussed below, the Court reasoned that since the primary benefit of the training was to the Plaintiffs, such time spent training was not compensable under the FLSA or Portal-to-Portal Act.

Discussing the facts pertinent to its inquiry the Court explained:

“Plaintiffs are current or former apprentices in a Baltimore City Fire Department (BCFD) three-year Firefighter/Paramedic Apprenticeship Program. Plaintiffs allege that as part of their apprenticeship they were required to attend class and perform on-the-job practical training on an ambulance and in the hospital without compensation in violation of the FLSA.

It is undisputed that one of the duties of a Firefighter/Paramedic is to provide emergency medical care, including Advanced Life Support. In order to provide Advanced Life Support, Maryland state law requires licensure as a Cardiac Rescue Technician (CRT). Md.Code Regs. 30.01.01.20. State law designates the State Emergency Medical Services Board (EMS Board) to approve CRT courses, conduct examinations, and issue CRT licenses. Md.Code Ann., Educ. § 13-516(a)(2) [a portion of the facts is excluded here]…

The Fire Department required remedial training for apprentices when they failed the required national registry EMT test or any of the exams during the CRT-I course. In addition, if students failed the National Registry exam three times, the National Registry required the students to take a 48 hour review before it would allow them to re-take the exam.

The Maryland Institute for Emergency Medical Services Systems issued regulations governing the content of ALS education programs. Md.Code Regs. 30.04.02.01 et seq. In addition to classroom training, ALS students must also complete a supervised clinical experience, which includes the practice of skills within clinical education facilities, and a supervised field internship, which includes the practice of skills while functioning in a prehospital ALS environment. Id. 30.04.02.05. During the clinical and field training, the MIEMSS regulations require that the student is supervised by clinical and field preceptors. Id. 30.04.02.06. In the field portion of the training, the ratio of students to preceptors must be one to one. Id. 30.04.02.06(F)(2).

Upon entering the fire academy, the apprentices signed an Apprenticeship Agreement in which they agreed to the terms of the Apprenticeship Standards filed with the Maryland Apprenticeship and Training Council. The Standards include a requirement that apprentices will complete a minimum of 144 hours per year of related instruction and that these hours will not be considered as hours worked when given outside regular working hours. In addition to the CRT-I course, apprentices were required to undergo enhanced training, including courses in pump operations, aerial operations, hazmat tech, arson awareness/sprinkler, and rescue technician.

During the second portion of the apprentices’ training, they worked an eight day cycle, with 4 days on and 4 days off. Training to obtain their CRT licensure was sometimes scheduled on the apprentices’ days off. Apprentices were not compensated during the off-duty training times. Plaintiffs contend that they should have been compensated for this off-duty training time under the FLSA.”

Discussing the relevant law and concluding that Plaintiffs’ after-hours training was not compensable under the FLSA, the Court stated:

“Plaintiffs allege that the City violated this provision by refusing to pay them overtime for the hours spent in training outside their regular workweek.

Cases analyzing whether training mandated by employers or potential employers should be compensable as hours worked include cases in which the potential employer requires the completion of training before an individual may be hired and cases in which the individual is an apprentice or already an employee and required to complete training as part of the apprenticeship or as an agreed upon condition to hiring. The seminal cases relating to training and the FLSA are the companion cases, Walling v. Portland Terminal Co., 330 U.S. 148 (1947) and Walling v. Nashville, Chattanooga and St. Louis Ry., 330 U.S. 158 (1947). In Portland Terminal, the defendant railroad had required the completion of a course of practical training before individuals could be hired as prospective yard brakemen. 330 U.S. at 149. The course involved a progressive increase in the trainees’ ability to act as a brakeman beginning with observing routine activities through gradually conducting the actual work of a brakeman under close scrutiny. Id. The Supreme Court noted that the activities of the trainee did not displace any of the regular employees, who were required to supervise any actual work done by the trainees, and did not expedite the company business, but may at times have impeded it. Id. at 149-50. Once certified as competent, the individuals who completed the training comprised a pool of qualified workmen available to the railroad when needed. Id. at 150. The Supreme Court focused on whether the trainees were to be considered employees and thus protected by the FLSA. Id. The FLSA defines employ as “to suffer or permit to work.” Id. at 152; 29 U.S.C. § 203(g). Despite the broad definition, the Supreme Court held that it could not “be interpreted so as to make a person whose work serves only his own interest an employee of another person who gives him aid and instruction.” Portland Terminal, 330 U.S. at 152. The Court compared the training at issue to courses in railroading in a public or private vocational school, in which “it could not be reasonably suggested that [the students] were employees of the railroad merely because the school’s graduates would constitute a labor pool for the railroad.” Id. at 152-53. Thus, the Court held that when the railroads received no “immediate advantage” from the work done by the trainees, the trainees were not employees under the FLSA. Id. at 153.

In analyzing Portland Terminal, the Fourth Circuit has concluded that the general test used to determine if an employee is entitled to the protections of the Act is “whether the employee or the employer is the primary beneficiary of the trainees’ labor.” McLaughlin v. Ensley, 877 F.2d 1207, 1209 (4th Cir.1989). In McLaughlin, the defendant owned a snack foods distribution business in which he required new hires to spend five days travelling an ordinary route with an experienced routeman as training before they were hired. 877 F.2d at 1208. The trainees loaded and unloaded the delivery truck, restocked stores with the defendants products, were given instruction on how to drive the trucks, were introduced to retailers, were taught basic snack food vending maintenance, and occasionally helped in preparing orders of goods with financial exchanges. Id. The court found that, unlike in Portland Terminal, the prospective employees were simply helping to service a route, and the instruction they received did not rise to the level that one would receive in a general, vocational course in outside salesmanship. Id. at 1210. Instead, the court found that the trainees were taught only simple, specific job functions related to the defendant’s business. Id. For those reasons, the court concluded that the trainees were entitled to be considered covered employees under the FLSA. Id. Compare Reich v. Parker Fire Protection District, 992 F.2d 1023 (10th Cir.1993) (holding that firefighter trainees were not employees because they obtained training comparable to a vocational school and the defendant was not immediately benefited by the trainees’ activities as their training activities were supervised and they did not assume the duties of career firefighters; the benefit to the defendant from the plaintiffs’ supervised training activities was de minimis ).

Where trainees are already employees, the Courts look also to the Portal-to-Portal Act, which provides that an employer need not pay an employee for activities that are “preliminary or postliminary” to the principal activity or activities the employee is employed to perform. 29 U.S.C. § 254(a)(2). The Supreme Court has interpreted the mandate of the Portal-to-Portal Act to mean “that activities performed either before or after the regular work shift, on or off the production line, are compensable … if those activities are an integral and indispensable part of the principal activities for which covered workmen are employed.” Steiner v. Mitchell, 350 U.S. 247, 256 (1956).

The most oft-cited case applying the “preliminary or postliminary” test to training activities is Ballou v. General Electric Co. 433 F.2d 109 (1st Cir.1970). In Ballou, the First Circuit held that the classroom training required of the defendant’s apprentices taking place outside of working hours was neither integral nor indispensable to the apprentices’ principal activity, which was the work that took place during their regular 40 hour work-training week. Id. at 112. The court looked to Portland Terminal and found that if the defendant had not employed the appellants as workers, but provided only training programs that they were required to complete successfully before they could be employed as journeymen, the apprentices would be entitled to no compensation. Id. Thus, the court concluded that “the employer’s decision to hire its employees before the completion of training did not obligate it to compensate them for the time spent in their status as students after their hiring.” Bienkowski v. Northeastern Univ., 285 F.3d 138, 141 (1st Cir.2002) (citing Ballou, 433 F.2d at 112).Accord Chao v. Tradesman Int’l, Inc., 310 F.3d 904, 910 (6th Cir.2002) (“Therefore, we agree with the First Circuit that the defendant employer should not be made liable for overtime pay for time its employees spend as students, rather than as workers…. We do not see why the employer should be penalized for allowing a potential employee to begin earning income while striving to meet certain prerequisites for the job when the employer could just as easily withhold employment until successful completion of all the job requirements.”).

In Bienkowski, the First Circuit applied its analysis in Ballou to facts similar to the facts found here. 285 F.3d at 141. In Bienkowski, the defendant hired the plaintiffs as probationary police officers with a requirement that they receive and retain certification as Massachusetts-registered EMTs within one year of their appointment. Id. at 139. At the time of hire, the plaintiffs signed a letter acknowledging the requirement. Id. The training, as required pursuant to Massachusetts statutes, regulations, and Department of Public Health standards, required approximately 110 hours of classroom work, as well as 10 hours of in-hospital evaluation time, practical exams, and written exams. Id. Although the plaintiffs could have taken the EMT courses at various locations throughout Massachusetts, they chose to take the course at Northeastern, where they were entitled to tuition reimbursement. Id. For the most part, the course requirements took place outside of the plaintiffs’ working hours. Id. at 140. Prior to receiving their certification, the plaintiffs were prohibited from performing EMT work, but following their certification, they regularly used their skills on the job. Id. The Court held that it would not hold the defendant “liable for overtime pay for time its employees spend as students, rather than as workers, simply because [the defendant] decided to hire its employees on a probationary basis until they complete the training required to hold the job on a permanent basis.” Id. at 141.

Defendants have articulated and Plaintiffs have not disagreed that the classes and on-the-job training required of the apprentices can be broken down into four categories: 1) initial classroom training to obtain CRT licensure; 2) classroom enhanced training; 3) clinical training with an ambulance medic team and in the hospital to obtain CRT licensure; and 4) mandatory repeat classroom training to obtain CRT licensure when a student has failed any of the required exams. Under either the “primary beneficiary” test of McLaughlin or the “integral and indispensable part of the principal activities” test of Steiner, the hours spent in all four categories of training are not compensable as hours worked under the FLSA.

All of the classroom and practical training required to obtain the CRT license, the classroom enhanced training, and the repeat classroom training are no different than that found in Portland Terminal, Ballou, and Bienkowski. Plaintiffs are apprentices in an apprenticeship program approved by the Department of Labor and as part of that program were required to take the CRT Training, which required both classroom and clinical training. As the CRT license was required in order for Plaintiffs to conduct their duties as firefighters/paramedics, the City could have required the Plaintiffs to obtain the license before hiring them. In fact, similar training is provided at Baltimore City Community College and Community College of Baltimore County. Instead the city allowed Plaintiffs to obtain the license while they were concurrently employed by the city, and funded the training. Although the City ultimately benefitted from Plaintiffs obtaining the CRT license in that it then had a pool of employees certified to conduct ALS, Plaintiffs obtained a license fully transferrable to their employment with any other employer that required the ability to provide Advanced Life Support. Thus, as in Portland Terminal and unlike in McLaughlin, Plaintiffs were the primary beneficiaries of the training. Moreover, as Plaintiffs were not able to perform any of the ALS duties until they obtained their license, as in Bienkowski the training was not an integral and indispensable part of their paid work duties during the period of their training.

This Court’s holding is supported by Department of labor regulations interpreting the FLSA that exclude from the computation of “hours worked” the time spent in certain kinds of training.  One such regulation is found at 29 C.F.R. § 553.226(b).

(b) While time spent in attending training required by an employer is normally considered compensable hours of work, following are situations where time spent by employees of State and local governments in required training is considered to be noncompensable:

(1) Attendance outside of regular working hours at specialized or follow-up training, which is required by law for certification of public and private sector employees within a particular governmental jurisdiction (e.g., certification of public and private emergency rescue workers), does not constitute compensable hours of work for public employees within that jurisdiction and subordinate jurisdictions.

(2) Attendance outside of regular working hours at specialized or follow-up training, which is required for certification of employees of a governmental jurisdiction by law of a higher level of government (e.g., where a State or county law imposes a training obligation on city employees), does not constitute compensable hours of work.

(3) Time spent in the training described in paragraphs (b)(1) or (2) of this section is not compensable, even if all or part of the costs of the training is borne by the employer.

A 1999 Department of Labor Opinion letter applies this regulation to facts identical to those found here.

Q.1. As a condition of employment, firefighters for County A must have current EMT (emergency medical training) certification. Although this certification is granted through the state, the state does not require the fire fighters have the certification. However, since City A requires it, the training is not “voluntary.” Under these circumstances, must the EMT training that is required to maintain this certification be counted as hours worked if the training takes place during non-working hours?

A.1. No. While time spent in attending training required by an employer is normally considered compensable hours of work, attendance outside of regular working hours at specialized or follow-up training which is required by law for certification of employees of a governmental jurisdiction, does not constitute hours of work under the FLSA. See Section 553.226 of Regulations, 29 CFR Part 553.  Sept. 30, 1999, Dept. of Labor Op. Letter, 1999 WL 1788163.

In addition, the Department of Labor has issued a regulation as to apprenticeship training.

[T]ime spent in an organized program of related, supplemental instruction by employees working under bona fide apprenticeship programs may be excluded from working time if…. (b) such time does not involve productive work or the performance of the apprentice’s regular duties. If the above criteria are met the time spent in such related instruction shall not be counted as hours worked unless the written agreement specifically provides that it is hours worked. The mere payment or agreement to pay for time spent in related instruction does not constitute an agreement that it is hours worked.  29 C.F.R. § 785.32.

Plaintiffs do not contest that the initial CRT training and the enhanced training are not compensable under these regulations. They argue, however, that although the clinical training is a required component of the CRT-I course, it was compensable time because it was productive work and constituted performance of their regular duties. The undisputed evidence shows that a regular medic unit is staffed by two individuals, which could be two ALS providers or an ALS provider and a BLS provider. When Plaintiffs were assigned to a medic unit as part of their training, there was always an ALS provider and another BLS provider; the trainee would then be a third person on the team. Plaintiffs state in their opposition that “[i]n the experience of many Plaintiffs, under the guise of ‘training,’ only one person, the [ALS] preceptor-was paid. Therefore, a paid position on the medic unit was eliminated during the training, as the Defendants filled it with two unpaid apprentices.” Opp. at 8.

Contrary to Plaintiffs’ statements in their opposition, however, neither of the provided affidavits establishes that unpaid trainees replaced a paid BLS provider. Moreover, they have not established that any benefit the City may have received from the trainee’s presence is anything more than de minimis or that it outweighed the benefit to the trainee in completing a required component of the CRT training. One affiant testified that the other BLS provider was paid and drove the ambulance while he, as the trainee, sat in the back of the ambulance. Stoakley Aff. ¶ 4. Notably, the second affiant said nothing regarding whether the other BLS provider was paid and said nothing about whether he ever drove the ambulance while he was on a training run. Bonovich Aff. ¶ 4. Thus, Plaintiffs have provided no reason to believe that when they were conducting training runs they were not able to work with the ALS provider in a training capacity for the entire period.

Similarly, the time spent by the trainees in the hospital was also a required component of the CRT training. Plaintiffs’ affidavits confirm that all of the Plaintiffs’ activities in the hospital were supervised. They have not shown, however, that their activities were part of their regular duties or any more productive than the supervised work done by trainees in Portland Terminal. Thus, the clinical training does not constitute compensable hours worked under the FLSA and the Portal-to-Portal Act.

Plaintiffs also argue that the duplicative classroom training, required when Plaintiffs did not pass certain examinations required for the EMT-I certification, is compensable as hours worked because it was neither a part of the approved apprenticeship program nor a legal requirement. While the apprentice standards may have simply required the CRT-I course, it is logical to conclude that the apprentices were expected to successfully complete the course and obtain their CRT license. If an apprentice fails the course and must repeat it in order to satisfy the requirements to obtain the CRT license, it is hard to imagine how this is any different than the initial requirement to attend the course. Moreover, it seems perverse logic to say that the initial training is not compensable, but if an apprentice fails the training, it then becomes compensable. Finally, the Court sees no immediate benefit to the Defendants from Plaintiffs taking remedial courses since it delayed the time that Plaintiffs could conduct ALS duties. Thus, the Court sees no difference in the initial requirement to attend the CRT course and the requirement to take duplicative training when the student fails the required exams.”

Having determined that the training time at issue was not compensable, the Court granted Defendants’ Motion for Summary Judgment.

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