Home » Posts tagged 'FLSA' (Page 32)

Tag Archives: FLSA

11th Cir.: Receipt And Signing WH-58 Form And Cashing Of The Employer’s Check Is Sufficient To Effect A Waiver Of Right To Sue Under FLSA

January 21, 2010 8:09 am / Leave a comment

Blackwell v. United Drywall Supply

Plaintiffs were employed by Defendants. In September 2007, they sued Defendants pursuant to the Fair Labor Standards Act (FLSA). Plaintiffs alleged that, from 2002 forward, Defendants intentionally violated the Act by failing to pay them properly for overtime. Plaintiffs further alleged that, in 2007, “as a result of an investigation by the United States Department of Labor involving allegations of the improper payment of overtime compensation to its laborer employees, [United Drywall] made payments to various employees for past due overtime compensation.” Plaintiffs alleged that Defendants retaliated against Williams for his complaints to the Department of Labor regarding overtime violations. And, Plaintiffs alleged that the payments made as part of the Department of Labor supervised settlement were “far lower than what the employees were legally due.” They sought allegedly unpaid overtime compensation for three years before the filing of the complaint and attorney’s fees and expenses pursuant to § 216 of the Act. The Court below granted Defendants’ Motion for Summary Judgment holding that Plaintiffs’ signing of the DOL WH-58 form and cashing of settlement checks was a valid waiver of their FLSA rights. On appeal, the Eleventh Circuit affirmed.

Framing the issue before it, the Court explained, “Defendants moved for summary judgment, arguing, among other things: (1) that Plaintiffs had waived their right to sue under the Act when they cashed checks from United Drywall pursuant to the 2007 settlement between the parties supervised by the Department of Labor, and (2) that Plaintiffs are exempt employees under the Motor Carrier Exemption in the Act (“the Exemption”) and therefore are not entitled to back pay pursuant to the Act. Plaintiffs opposed the motion, arguing that there were genuine issues of fact regarding whether they had knowingly waived their rights to sue and whether the Exemption applied. After considering arguments and evidence from both sides, the district court granted Defendants’ motion for summary judgment. The court held that, because Plaintiffs had received Department of Labor form WH-58 (which contained a statement that if Plaintiffs accepted the back wages provided in conjunction with the form, they would give up their rights to bring suit under the Act) and because Plaintiffs had cashed the checks provided in conjunction with the WH-58 forms, Plaintiffs had waived their rights to sue Defendants for the payments they sought under the Act. The court entered judgment for Defendants. Plaintiffs appeal the judgment.”

Addressing and denying Plaintiffs’ appeal, the Court reasoned, “Plaintiffs argue that the district court erred in finding waiver because Plaintiffs did not knowingly and intentionally waive their rights to sue. They argue that the WH-58 form provided to them by the Department of Labor is ambiguous and did not put them on notice that, by cashing the checks, they would waive their rights to sue for additional back pay. Defendants argue that the district court correctly found waiver and that the judgment can be supported on the additional ground that the Exemption applies to bar Plaintiffs’ claims. In their reply brief, Plaintiffs respond that affirmance of the judgment based on the Exemption would not be proper because the Exemption is not applicable to Defendants’ business as a matter of law or, in the alternative, there are genuine issues of material fact regarding the application of the Exemption.

We affirm the judgment. We find no error in the district court’s holding “that receipt of a WH-58 form and cashing of the employer’s check is sufficient to effect a waiver of the right to sue under the FLSA.” There is no dispute that Plaintiffs received WH-58 forms in connection with the checks written by United Drywall and given to Plaintiffs by the Department of Labor as part of the supervised settlement between United Drywall and its employees. Those forms are receipts for payment of “unpaid wages, employment benefits, or other compensation due … for the period up to and including 05/20/2007 … under … The Fair Labor Standards Act….” They contain this language:

NOTICE TO EMPLOYEE UNDER THE FAIR LABOR STANDARDS ACT-Your acceptance of back wages due under the Fair Labor Standards Act means that you have given up any right you may have to bring suit for back wages under Section 16(b) of that Act. ( Id.)

The WH-58 forms then proceed to describe the types of recovery and statutes of limitations under § 16(b) of the Act. We agree with the district court that these forms unambiguously informed Plaintiffs that, if they cashed the checks provided with the forms, they would be waiving their rights to sue for back pay. And, there is no dispute that Plaintiffs cashed the checks. Therefore, the district court correctly determined that ‘both Plaintiffs have waived their right to sue. Affirming the judgment on waiver grounds, we do not address the parties’ arguments regarding application of the Exemption.’ “

M.D.Ga.: Dollar General “Store Manager” May Have Been Misclassified As Executive Exempt; Defendant’s Motion For SJ Denied

January 19, 2010 10:00 am / 2 Comments on M.D.Ga.: Dollar General “Store Manager” May Have Been Misclassified As Executive Exempt; Defendant’s Motion For SJ Denied

Myrick v. Dolgencorp, LLC

Pending before the Court was Defendant Dolgencorp, LLC’s (Dollar General) Motion for Summary Judgment, seeking an Order holding that Plaintiff, a “Store Manager” was subject to the Executive Exemption to the FLSA, and not entitled to overtime compensation. The Court denied Defendant’s Motion, reasoning that a reasonable jury could find that Plaintiff’s primary duty was not management, as required for application of the Executive Exemption.

Discussing the applicable burden and facts of the case, the Court said, “Dollar General bears the burden of proving the executive exemption affirmative defense. Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1269 (11th Cir.2008). The Eleventh Circuit has recognized the “Supreme Court’s admonition that courts closely circumscribe the FLSA’s exceptions.” Nicholson v. World Bus. Network, Inc., 105 F.3d 1361, 1364 (11th Cir.1997). The exemption “is to be applied only to those clearly and unmistakably within the terms and spirit of the exemption.” Morgan, 551 F.3d at 1269 (quotation omitted). Thus, the Court is required to narrowly construe exemptions to the FLSA overtime requirement. Id .

The Eleventh Circuit does not use a “categorical approach” to decide whether an employee is an exempt executive. Id. “[W]e have noted the ‘necessarily fact-intensive nature of the primary duty inquiry,’ that ‘the answer is in the details,’ and that ‘where an issue turns on the particular facts and circumstances of a case, it is not unusual for there to be evidence on both sides of the question, with the result hanging in the balance.’ “ Id. (quotation and alteration omitted).

Department of Labor regulations interpret the executive exemption defense. Myrick’s claims span between 2001 and 2003. Accordingly, the “old regulations,” which were in effect prior to August 23, 2004, apply to this case.Id. at 1265-66. The regulations contain a short test that defines the phrase “employee employed in a bona fide executive … capacity.” 29 C.F.R. § 541.1 (2003). “This short test has three requirements: (1) an employee ‘is compensated on a salary basis at a rate of not less than $250 per week,’ (2) his ‘primary duty consists of the management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof,’ and (3) his work ‘includes the customary and regular direction of the work of two or more other employees.’ “ Id. at 1266 (quoting 29 C.F.R. § 541.1 (2003)).

Myrick does not dispute Dollar General’s argument or evidence showing that she met the salary requirement of the short test, or that she regularly directed the work of two other employees.Thus, the first and last requirements of the short test are met. The parties do, however, dispute the second element-whether Myrick’s primary duty was management.

1. Primary duty is management

The regulations provide examples of managerial tasks:

Interviewing, selecting, and training of employees; setting and adjusting their rates of pay and hours of work; directing their work; maintaining their production or sales records for use in supervision or control; appraising their productivity and efficiency for the purpose of recommending promotions or other changes in their status; handling their complaints and grievances and disciplining them when necessary; planning the work; determining the techniques to be used; apportioning the work among the workers; determining the type of materials, supplies, machinery or tools to be used or merchandise to be bought, stocked and sold; controlling the flow and distribution of materials or merchandise and supplies; providing for the safety of the men and the property. 29 C.F.R. § 541.102.

The regulations do not, however, provide a definition of “primary duty.” “A determination of whether an employee has management as his primary duty must be based on all the facts in a particular case.” 29 C.F.R. § 541.103 (2003). The regulations provide a list of factors a court should consider when determining whether an employee’s primary duty is management. These factors are: (1) “[t]he amount of time spent in the performance of the managerial duties”; (2) “the relative importance of the managerial duties as compared with other types of duties”; (3) “the frequency with which the employee exercises discretionary powers”; (4) “his relative freedom from supervision”; and (5) “the relationship between [the employee’s] salary and the wages paid other employees for the kind of nonexempt work performed by the supervisor.” Id.; Morgan, 551 F.3d at 1267.

a. The amount of time spent in the performance of managerial duties

Myrick testified during her deposition that she spent 20% of her time on managerial duties, and 80% of her time on non-managerial tasks.

Myrick also testified that she did managerial work. This included interviewing potential employees, reviewing the revenue reports, completing various paperwork, ordering merchandise, evaluating employees, preparing the work schedules, receiving mail, hiring some employees, investigating customer complaints, and reviewing store policies. (Myrick dep., pp. 33, 54, 70, 77, 94, 95-96, 99, 130-32, 166, 175, 227, 250).

Myrick was required to complete her paperwork at night after the store closed, and on occasion took the paperwork home with her. (Myrick dep., p. 281). It normally took her an hour every day to do the required paperwork. (Myrick dep., p. 131). Myrick had to perform this managerial task after store hours because “[w]hile I was at the store I was always busy doing something else. Didn’t have time to do paperwork.” (Myrick dep., p. 281).

The regulations state that “an employee who spends over 50 percent of his time in management would have management as his primary duty.” 29 C.F.R. § 541.103 (2003). Taking Myrick’s testimony as true, she does not meet the 50% threshold. However, “[t]ime alone … is not the sole test,” and “in situations where the employee does not spend over 50 percent of his time in managerial duties, he might nevertheless have management as his primary duty if the other pertinent factors support such a conclusion.” 29 C.F.R. § 541.103 (2003). Thus, the Court must consider the other four factors.

b. The relative importance of the managerial duties as compared with other types of duties

The Court must examine the importance of Myrick’s duties in light of their value to Dollar General. See Dalheim v. KDFW-TV, 918 F .2d 1220, 1227 (5th Cir.1990). Dollar General argues that Myrick’s managerial duties were most important, as she had more impact on store profitability than any other employee, and was responsible for ensuring profitability. Because of her efforts, the Quitman store “turned around.” (Myrick dep., p. 52). Myrick also testified that if the store manager leaves the store, “things don’t get done.” (Myrick dep., p. 173). Dollar General also argues that the importance of Myrick’s managerial tasks is evidenced by the Store Manager job description and the criteria on which she was evaluated as a Store Manager. Finally, Dollar General argues that the importance of Myrick’s managerial duties was reflected in the fact that Dollar General paid her a higher salary and she had bonus potential.

While Myrick did testify in her deposition that she thought the Store Manager had the most impact on store profitability (Myrick dep ., p. 173), when asked what she thought had more impact on the profitability of the stores, the managerial duties (scheduling, employee training, hiring, watching for inventory shrink, ensuring customer satisfaction) or the non-managerial duties (cleaning the bathroom, stocking the shelves, sweeping the floor), Myrick testified that “[i]t all goes together.” (Myrick dep., p. 174). Later, Myrick testified that some of the most important job duties she had as a Store Manager for Dollar General were “provid[ing] superior customer service, leadership.” (Myrick dep., p. 274). When asked what went into those tasks, Myrick identified making sure the store was stocked and clean, and making sure inventory got out on the floor. Id. These were all manual labor tasks that Myrick had to do herself because she did not have enough employees to do them. (Myrick dep., p. 276). And while Myrick did testify that she turned the Quitman store around through her efforts, when asked what she did differently than the previous store manager, Myrick stated that she “actually put the merchandise on the floor.” (Myrick dep., p. 52). When asked if she did anything else, Myrick testified, “No. That’s basically it.” Id.

Dollar General argues that Myrick has raised no issue of fact to dispute that Dollar General found her managerial duties to be of significant importance, and again points to the facts that Dollar General paid Myrick a higher salary and evaluated her on her managerial duties. Dollar General states that Myrick admitted to performing the duties outlined by the Store Manager job description, and that testimony further shows that Myrick performed managerial duties, rather than non-exempt duties. While a review of Myrick’s deposition confirms that she testified that she performed the job functions outlined in the job description, her testimony shows that her physical labor was required to meet these goals, including “facilitat[ing] the efficient staging, stocking and storage of merchandise by following defined company work processes,” “ensur [ing] that all merchandise is presented according to established practices, …” and “maintain[ing] a clean, well organized store, facilitat [ing] a safe and secure working and shopping environment.” (Doc. 26-3, p. 2).

Dollar General contends that what Myrick believed her most important duties to be is unimportant, as an employee’s primary duty is “what [the employee] does that is of principal value of the employer….” (Doc. 27, p. 6). Dollar General repeatedly states that the focus must be on what the employer values, not what the employee subjectively believes her employer values. Yet, the only evidence before the Court is Myrick’s subjective testimony about what she thought was and was not important. Dollar General makes the conclusory statement that it found Myrick’s managerial duties to be of significant importance, but provides no evidence to support that conclusion. It is not for the Court to guess or assume on summary judgment that a higher salary or a bonus means that Dollar General valued one set of duties over another. Dollar General wants to have it both ways. At one point, it states that “Plaintiff’s principal value to Dollar General was her management of her stores, as she herself testified.” (Doc. 25-2, p. 15). But when Myrick points to portions of her testimony which support her position that there is an issue of fact as to whether her managerial or nonmanagerial duties were more important, Dollar General replies that what Myrick believes to be more important is irrelevant and her opinions as to the duties she believes added the most value should be disregarded. (Doc. 27, pp. 6-7). The Court will not accept Myrick’s testimony when it is favorable to Dollar General’s position and ignore it when it is favorable to her own.

Dollar General has not presented sufficient evidence to meet its burden of showing that Myrick’s managerial duties were of principal value to Dollar General. Thus, this factor does not favor Dollar General.

c. Frequency with which an employee may exercise discretionary powers

Dollar General next argues that Myrick exercised tremendous discretion on a daily basis. Specifically, Myrick exercised discretion with respect to scheduling her subordinates’ hours, apportioning payroll budgets, delegating, assigning, and prioritizing tasks, training employees, counseling employees, appraising employee performance, resolving customer service issues, determining who to hire or fire, and how to best implement company policies and procedures. Dollar General states that Myrick’s managerial discretion was not fettered by the company’s standard operating procedure manual because she testified that she did not know such a manual existed. Dollar General further notes that Myrick was the highest store-level supervisory personnel in her stores, and she “determined what was important and what needed to be done.” (Myrick dep., p. 231).

When asked during her deposition how much discretion she felt like she had to run her own store, Myrick replied, “Not a lot.” (Myrick dep., p. 276). Myrick points to this testimony to show that she did not frequently exercise discretionary powers. To rebut Dollar General’s allegation that she exercised discretion every day in the store, Myrick relies on her deposition testimony that she was severely restricted in the way in which employees were scheduled because of the labor budget she was assigned, that she would be asked questions if she exceeded the labor budget, that she had limited discretion over how to apportion the payroll budget as 40% of it had to be devoted to truck day, and that she could not exercise discretion over delegating and assigning tasks because there was usually only one other employee in the store with her at a time, which meant that she could not delegate non-managerial tasks, as she would end up having to do non-managerial work either in running the register or stocking shelves, for example. (Myrick dep., pp. 70-71, 112, 167, 275).

In Morgan, the Eleventh Circuit found that the evidence presented regarding the frequency with which the employee exercised discretionary power supported the jury’s verdict in favor of the employees. The plaintiffs presented evidence that store managers rarely exercised discretion because either the store’s manuals or the district managers controlled the store’s operations. “The manuals and other corporate directives micro-managed the days and hours of store operations, the number of key sets for each store, who may possess the key sets, entire store layouts, the selection, presentation, and pricing of merchandise, promotions, payroll budgets, and staffing levels.” 551 F.3d at 1270.

Myrick’s testimony shows that Dollar General decided who had keys to the stores and how many were issued, set the weekly payroll budget, decided what merchandise was ordered, set the store hours of operation, and set the store and merchandise layouts, other than in approximately 25% of the store, and even that discretion could be overridden by the district manager. (Myrick dep., pp. 69, 76-77, 128-29, 199-200, 277, 287-88). Furthermore, Myrick had no discretion to deviate from or change the company’s planogram.(Myrick dep., p. 277). She also testified that even if she ordered merchandise, that did not mean she would receive it, as Dollar General could decide not to send it to her. (Myrick dep., p. 77).

Looking at the evidence in the light most favorable to Myrick, the discretionary power factor does not favor Dollar General, or is at least neutral.

d. The employee’s relative freedom from supervision

Dollar General argues that Myrick operated autonomously for the most part, as she had limited contact with her district manager, had an office she kept locked that only the Assistant Store Manager had access to, was the only employee with a key to the back door of the stores, and was unaware of the company’s standard operating procedures. (Myrick dep., pp. 46, 49-50, 129, 161, 233).

A review of Myrick’s testimony shows that on at least one occasion, the district manager personally directed Myrick to stock merchandise. Before any repairs could be made at the stores, Myrick had to get approval from Dollar General’s home office. When Myrick took a set of keys from an employee whom she believed to be stealing from the store, the district manager made Myrick give the keys back to the employee. If employees got into a dispute, Myrick had to refer them to the corporate resolution office. Myrick did not have the authority to set rates of pay or recommend raises. When Myrick wanted to take a day off from work, she had to get approval from the district manager. Myrick could only discipline employees for serious infractions after receiving approval from the district manager. The district manager instructed Myrick to spray the parking lot with Round-Up and to make repairs to the eaves of the Quitman store. On at least one occasion, Myrick was required to lend her employees to another store. Myrick could not mark down damaged goods or make special orders without the district manager’s approval. The district manager at least once made Myrick relocated products she had put in a purported “flex” area of the store. Myrick had to have the district manager’s approval before hiring an Assistant Store Manager, though she never actually hired one. When Myrick asked for more hours for her store because she did not have enough manpower to get all of the required work done, the request was refused. Myrick never terminated any employee without the district manager’s approval. The district manager was in charge when the stores did inventory, and also checked the paperwork completed by Myrick to make sure she did it right. (Myrick dep., pp. 46-49, 63-64, 100-102, 113-114, 175, 188, 197, 202, 220-21, 227, 256, 258, 276, 285, 287-88).

The evidence presented by Myrick could support a finding that she was not relatively free from direct supervision. Thus, this factor does not weigh in favor of Dollar General.

e. The relationship between the employee’s salary and the wages paid other employees for the kind of non-exempt work performed by the supervisor

When Myrick first became a store manager at Pavo, she was paid $500 weekly. She later received a raise to $510 weekly. After her move to the Quitman store, Myrick was paid $650 weekly. She was paid this flat rate for all hours worked. (Myrick dep., p. 39). Myrick testified that she worked an average of 66 hours per week. (Myrick dep., p. 122). She also earned annual bonuses as a Store Manager of $1,474.59 in 2002 and $1,500 in 2003.(Myrick dep., p. 140).

Using Myrick’s figure of 66 hours per week, she made $7.58 per hour when first made a store manager, then $7.73 per hour, and finally $9.85 per hour. According to documents produced by Dollar General, Assistant Store Managers earned $7 per hour and clerks generally earned $5.35 per hour.

The evidence in Morgan showed that assuming a 60-hour week, store managers earned approximately $2 to $3 more per hour than hourly-paid assistant store managers. The Eleventh Circuit found that “[g]iven the relatively small difference between the store managers’ and assistant managers’ hourly rates, it was within the jury’s province to conclude that this factor either did not weigh in Family Dollar’s favor or at least did not outweigh the other factors in Plaintiffs’ favor.” 551 F.3d at 1271. Similarly, Myrick made, at most, $2.85 more per hour than the Assistant Store Managers.As this difference in pay is similar to that in Morgan, this factor does not weigh in Dollar General’s favor, or at least, is neutral as to whether management was Myrick’s primary duty.”

Based on a review of all of the specific facts of this case, as applied to the factors necessary for the Executive Exemption to apply, the Court concluded, “[i]t is Dollar General’s burden to show that the executive exemption applies in this case. It has failed to establish each element of the exemption. As a question of fact exists as to whether Myrick’s primary duty was management, Dollar General’s Motion for Summary Judgment (Doc. 25) is denied.”

D.N.J.: Defendants’ Purported Use Of Fluctuating Workweek (FWW) Violated FLSA, Because They Did Not Pay Plaintiffs A “Fixed Amount As Straight Time Pay”

January 15, 2010 9:16 pm / 2 Comments on D.N.J.: Defendants’ Purported Use Of Fluctuating Workweek (FWW) Violated FLSA, Because They Did Not Pay Plaintiffs A “Fixed Amount As Straight Time Pay”

Adeva v. Intertek USA, Inc.

This case was before the Court on the parties respective Motions for Summary Judgment on a variety of issues. Significantly, the Defendants purported to pay Plaintiffs under a Fluctuating Workweek methodology, pursuant to 29 C.F.R. §778.114. Granting Plaintiffs’ Motion for Summary Judgment, the Court rejected this claim, holding that since Defendants failed to pay Plaintiffs a “fixed amount as straight time pay” each week, the pay methodology at issue violated the FLSA.

In framing the issue, the Court stated, “[t]he essential question is whether Defendants paid Plaintiffs on a proper Fluctuating Workweek (‘FWW’) method pursuant to 29 C.F.R. § 778.114(a). Defendants pay Plaintiffs a percentage of their annual salary, and, if eligible, ‘day off pay,’ ‘off shore pay,’ and ‘holiday pay.’ Plaintiff alleges that because of such special payments, Defendants cannot demonstrate that the amount paid each week was “fixed.” A “fixed amount as straight time pay” is necessary to apply the FWW under the Fair Labor Standards Act. 29 C.F.R. § 778.114(a).”

Reasoning that the pay method at issue did not comply with the FLSA, the Court discussed the general principles of the FLSA and the specific pre-requisites for application of the FWW.

“29 U.S.C. § 207(a) of the Fair Labor Standards Act (“FLSA”) requires the payment of overtime compensation “at a rate not less than one and one-half times the regular rate.” The fluctuating workweek method (“FWW”) provides an alternative for calculating overtime premiums when certain conditions are met. In short, to apply the FWW method, Defendants must demonstrate that:

1) Plaintiffs’ hours fluctuate from week to week, 2) Plaintiffs receive a fixed salary that does not vary with the number of hours worked during each workweek (excluding overtime premiums), 3) the fixed amount received by Plaintiffs provides compensation every week at a regular rate that is at least equal to the minimum wage, and 4) that Defendants and Plaintiffs share a ‘clear mutual understanding’ that Defendants will pay that fixed salary regardless of the number of hours worked. 29 C.F.R. § 778.114(a); O’Brien v. Town of Agawam, 350 F.3d 279, 288 (1st Cir.2003); Flood v. New Hanover, 125 F.3d 249, 252 (4th Cir.1997).

The essential question before the Court is whether Defendants have met the prerequisites for applying the FWW method. The Court is not convinced that Defendants pay Plaintiffs “a fixed salary that does not vary with the number of hours worked during each workweek (excluding overtime premiums).” 29 C.F.R. § 778.114(a). The record demonstrates that Plaintiffs’ compensation for non-overtime hours varied, depending upon earned offshore pay, holiday pay or day-off pay. The Court is convinced that due to such payments, Plaintiffs cannot receive the fixed salary required to apply the FWW. See, e.g., O’Brien, 350 F.3d at 288 (holding that a ten-dollar night-shift increase precluded application of the FWW); Ayers v. SGS Control Services, Inc., 2007 WL 646326 (S.D.N.Y.2007) (holding “any Plaintiff who received sea pay or day-off pay did not have fixed weekly straight time pay, in violation of 29 C.F.R. § 778.114(a).”); Dooley v. Liberty Mutual Insurance Company, 369 F.Supp.2d 81, 86 (D.Mass.2005) (holding that payment of a premium rate for weekend work precludes application of the FWW).

Most recently, the Southern District of New York was faced with the identical issue currently before this Court. Ayers, 2007 WL 646326. In granting summary judgment in favor of plaintiffs, that Court held that because plaintiffs received sea-pay and day-off pay, their salaries were not fixed, consequently precluding usage of the FWW method of payment. Id. at 8-9. In rendering its decision, the Ayers court relied on the O’Brien and Dooley decisions. In O’Brien, the First Circuit noted that the plain text of § 778.114 requires payment of a “fixed amount as straight time pay for whatever hours he is called upon to work in a workweek, whether few or many.” O’Brien, 350 F.3d at 288. Guided by the statutory language, the Court held that workers who received additional compensation (in the form of a $10 shift differential payment) could not have received a fixed amount as required under § 778.114. Id. at 289;see also Dooley, 369 F.Supp.2d 81, 86 (holding that payment of a premium rate for weekend work precludes application of the FWW).The sea-pay, day-off pay, night-shift pay and weekend-pay analyzed in the Ayers, O’Brien and Dooley decisions are nearly identical to the types of payments received by Plaintiffs in this case. Clearly, the payment of differentials such as sea-pay differential or increased pay for working a “night-shift,” means that employees are not being paid a “fixed” salary regardless of hours worked. Instead, the salary fluctuates, based upon whether the employee is or is not receiving “sea-pay” or “night-shift pay.” If the regulation merely required that employees received a minimum salary every week, which could be increased by such bonuses, then Defendants’ argument would have substantial force. The regulation, however, contains no such thing. Consequently, the Court holds that Defendants are precluded from using the FWW method of payment as such premiums and bonuses run afoul of the “fixed salary” requirement of 29 C.F.R. § 778.114(a). Plaintiffs’ motion for summary judgment is granted, in part, as Defendants’ FWW compensation methodology violates the FLSA.”

Although not discussed here, the Court granted Defendants’ Cross Motion, in part, holding that Defendants’ FLSA violation(s) were not willful. To read more about the case click here.

D.Or.: FLSA Supports Award Of Attorney Fees For Post-Judgment Collection Efforts

January 12, 2010 10:26 pm / Leave a comment

Van Dyke v. BTS Container Service, Inc.

After plaintiff prevailed in this FLSA case, Judgment was entered for $4,724.29 and a Supplemental Judgment for $35,248.10 in attorney fees and costs. Due to financial difficulties, Defendants failed to satisfy the judgment, necessitating Plaintiff to garnish certain monies from Defendants to satisfy the judgment. Before the court was Plaintiff’s Supplemental Motion for Attorney Fees for Post-Judgment Collection. The Court granted the Motion.

The Court explained, “[u]nder Oregon law, attorney fees to enforce a judgment are “legal services related to the prosecution or defense of an action” which the court may consider when it awards attorney fees. Johnson v. Jeppe, 77 Or.App. 685, 688, 713 P.2d 1090 (1986) (quoting ORCP 68).

The Ninth Circuit has not determined if the Fair Labor Standards Act (“FLSA”) supports the court awarding attorney fees for post-judgment collection efforts. But cf. Jones v. Giles, 741 F .2d 245, 250 (9th Cir.1984) (finding no abuse of discretion in the size of the trial court’s $2,500 award for post-judgment attorney fees in an FLSA case without addressing whether such fees were available under the statute). Federal courts have awarded attorney fees for post-judgment collection efforts in other contexts. See Shaw v. AAA Eng’g & Drafting, Inc., 213 F.3d 538, 544-45 (False Claims Act case); Free v. Briody, 793 F.2d 807, 808-09 (7th Cir.1986) (ERISA case). I conclude that the FLSA also allows me to award post-judgment collection fees. Without such an award, a judgment is a hollow victory for a plaintiff who was improperly paid.”

2d. Cir.: Advertising Salespeople Are Not Administratively Exempt Under The FLSA; Sales Are Not “Directly Related To Management Policies Or General Business Operations”

January 12, 2010 8:38 am / Leave a comment

Reiseck v. Universal Communications of Miami, Inc.

This case was before the Court on Plaintiff’s appeal an Order at the district court below, granting Defendants summary judgment on all counts of Plaintiff’s claim. The Court affirmed all parts of the judgment below, except for that pertaining to the FLSA. Resolving a question of first impression, the Court held that advertising salespeople, who conduct sales with individual customers are not subject to the administrative exemption as a matter of law, because such sales work is production work not administrative.

The Court discussed the following facts as relevant to its decision:

“September 2002, Reiseck began working as a Regional Director of Sales at Universal in New York City. As Regional Director of Sales, Reiseck was responsible for generating advertising sales in the northeastern United States and Canada from the travel and finance sectors for Universal’s magazine publication, Elite Traveler. While an employee of Universal, Reiseck was paid a base salary plus certain commissions. Plaintiff was paid no overtime during her tenure with Universal.

Elite Traveler is distributed on a complimentary basis. Advertising sales therefore constitute the majority of Universal’s revenue from Elite Traveler. The magazine had a sales staff, a marketing staff, and an editorial staff. The sales staff sold advertising space; the marketing staff created promotional material to increase advertising sales; and the editorial staff produced the “content” of the magazine.”

Discussing the inapplicability of the administrative exemption to the case at bar, the Court applied the s0-called pre-2004 “short test.”

“Under the short test as it applies here, an employee falls under the administrative employee exemption if the employee is paid on a salary or fee basis at a rate of not less than $250 per week (i.e., the “salary test”), id. § 541.2(e)(2), and the employee’s “primary duty consists of … the performance of office or nonmanual work directly related to management policies or general business operations of his employer,” id. § 541.2(a), and requires “the exercise of discretion and independent judgment,” id. § 541.2(e)(2), (i.e., the “duties test”). As noted above, there is no dispute that Reiseck’s employment satisfies the salary test prong of the short test.

Because the first prong of the short test is not in dispute, we move to the second prong-the duties test. Here, it is uncontested that Reiseck’s primary duty consisted of “the performance of office or non-manual work”; therefore we must consider whether Reiseck’s primary duty was “directly related to management policies or general business operations” of Universal. Id. § 541.2(a).

The phrase “directly related to management policies or general business operations” is not self-defining, and the Secretary of Labor has promulgated interpretive regulations to aid our application of this test. See, e.g., id. § 541.2. Although the Secretary’s legislative regulations-those promulgated pursuant to an express grant of authority by Congress, like 29 C.F.R. § 541.2-have the power to control courts’ reading of the law, the Secretary’s interpretive regulations have only the power to persuade courts. See Skidmore v. Swift & Co., 323 U.S. 134, 139-40 (1944). See generally United States v. Mead Corp., 533 U .S. 218 (2001). And thus we defer to the Secretary’s interpretative regulations only to the extent that we find them persuasive. See Skidmore, 323 U.S. at 140.

In its interpretive regulations, the Department of Labor describes “directly related to management policies or general business operations” in several ways. First, the interpretive rules state that the phrase at issue “describes those types activities relating to the administrative operations of a business as distinguished from ‘production’ or, in a retail or service establishment, ‘sales’ work.” 29 C.F.R. § 541.205(a). They also state that “the phrase limits the exemption to persons who perform work of substantial importance to the management or operation of the business.” Id. Alternatively, the interpretive rules state that the administrative operations include “advising the management, planning, negotiating, representing the company, purchasing, promoting sales, and business research and control.” Id. § 541.205(b).

At first glance, the two definitions of the phrase “directly related to management policies or general business operations” in the interpretive regulations seem to point to contradictory conclusions in Reiseck’s case. On the one hand, plaintiff was a salesperson responsible for selling specific advertising space, and so seems to fit comfortably on the “sales” side of the administrative/sales divide. See id. § 541.205(a). On the other hand, Reiseck also “promoted sales” in some sense, and thus seems to have performed administrative operations. See id. § 541.205(b). We are required to resolve this apparent contradiction. Whether advertising salespersons are administrative employees for the purposes of the exemptions to the FLSA’s overtime pay provisions is a question of first impression for this Court. In answering this question, we also refine our interpretation of the administrative exemption to the FLSA.

First, we consider the Department’s distinction between “administrative” and “sales.” As a magazine publisher, Universal is not one of the archetypal businesses envisaged by the FLSA; it is neither a manufacturer nor a retailer. Accordingly, placing Reiseck’s work into either the administrative or sales category is difficult initially. Nevertheless, a careful consideration of Universal’s business model provides some clarity. Because Universal does not charge readers for Elite Traveler, advertising sales are a critical source of revenue for Universal. One could thus conclude that advertising space is Universal’s “product.” If advertising space is Universal’s product and Reiseck’s primary duty was the sale of that product, then she may reasonably be considered a sales employee, rather than an administrative employee.

Next, we consider the contradictory conclusion suggested by the second description found in the interpretive regulations-namely, that administrative operations include “promoting sales.” 29 C.F.R. § 541.205(b). Because Reiseck sold advertising space, it seems that she must have “promoted sales.” But under that theory, any sales clerk in a retail store would “promote sales” when assisting potential customers, and there would be no administrative/sales distinction in a retail store despite the clear assertion of the interpretive rule that sales work in a retail store is not administrative work for the purposes of the FLSA. Id. One of our sister circuits has provided some helpful guidance on this matter. In Martin v. Cooper Electric Supply Co., 940 F.2d 896, 905 (3d Cir.1991), the Third Circuit reasoned that sales promotion “consists of marketing activity aimed at promoting (i.e., increasing, developing, facilitating, and/or maintaining) customer sales generally.” According to the logic of the Third Circuit, which we now adopt, an employee making specific sales to individual customers is a salesperson for the purposes of the FLSA, while an employee encouraging an increase in sales generally among all customers is an administrative employee for the purposes of the FLSA. Consider a clothing store. The individual who assists customers in finding their size of clothing or who completes the transaction at the cash register is a salesperson under the FLSA, while the individual who designs advertisements for the store or decides when to reduce prices to attract customers is an administrative employee for the purposes of the FLSA.

Here, Reiseck is plainly a salesperson. Although she did “develop new clients” with the goal of increasing sales generally, this was not her primary duty. Under the interpretive regulations, an employee’s “primary duty” is the duty that consumes a “major part, or over [fifty] percent, of the employee’s time.” 29 C.F.R. § 541.103 (defining “primary duty” for the executive employee); see also 29 C.F.R. § 541.206 (applying the definition of “primary duty” for the executive employee to the administrative employee). The record shows that Reiseck’s primary duty was to sell specific advertising space to clients. Even Gollan, plaintiff’s supervisor, conceded that Reiseck was a member of the “sales staff” and not the “marketing staff.” Because Reiseck’s primary duty was the sale of advertising space, she is properly considered a “salesperson” for the purposes of the FLSA and therefore does not fall under the administrative exemption to the overtime pay provisions of the FLSA.

Recent amendments to the interpretive regulations provide helpful guidance to support our conclusion above. Although these interpretive regulations do not apply retroactively, see ante note 5, (and even if they did apply retroactively, we need not consider them if we find them unpersuasive, see Skidmore, 323 U.S. at 140), we nevertheless note that the new regulations reach the same conclusion that we reach above. When providing examples of employees who fall under the administrative exemption, the interpretative regulations state that an employee in the financial sector whose primary duty includes “marketing, servicing, or promoting the employer’s financial products” likely falls under the administrative exemption. 29 C.F.R. § 541.203(b) (2004). But, the regulations then specify that “an employee whose primary duty is selling financial products does not qualify for the administrative exemption.” Id. (emphasis added). For example, if a bank employee, acting within the scope of her primary duty, encourages a customer to open a money market account while she opens a checking account for that customer, she would not likely be an administrative employee because she simply was selling a financial product. If, however, an employee’s primary duty included deciding which interest rates to offer to encourage customers to open money market accounts, then that employee would likely be considered an administrative employee, because she was “marketing … or promoting” the financial products.Universal’s sale of advertising space is similar to a financial services company’s sale of financial products. Neither fits neatly within the traditional retail sales model, yet both are standard products sold directly to clients. Additionally, the new interpretative regulations confirm t

Because Reiseck’s primary duty is not administrative, she cannot fall under the administrative exemption to the overtime pay provisions of the FLSA. Our inquiry ends there-we need not inquire whether her work requires “the exercise of discretion and independent judgment,” because the short test requires both that the employee’s primary duty be administrative and that the employee’s work involves the use of discretion. 29 C.F.R. § 541.2(e)(2).”

5th Cir.: Notwithstanding The Language of § 203(o), Actual Bargaining Is Not Necessary In Order To Find That A “Custom or Practice” Exists Under § 203(o); Pattern Of Non-Compensation Sufficient

January 9, 2010 2:43 pm / Leave a comment

Allen v. McWane Inc.

This collective action under the Fair Labor Standards Act (“FLSA”), on behalf of hourly employees of McWane, Inc., sought payment for pre-and post-shift time spent donning and doffing protective gear. The district court granted summary judgment on the basis that at each plant there existed a custom or practice of not compensating pre- or post- shift time spent putting on and taking off protective gear. Despite the clear language of the statute, the Fifth Circuit affirmed, holding that absent any evidence that the parties had ever actually discussed or agreed during collective bargaining, that such time would not be compensable, any employer who has consistently failed to compensate employees for otherwise compensable work time may utilize the limited exception of § 203(o), thus barring employees’ claims seeking payment for such time.

In reaching its conclusion, the Court dismissed Plaintiff’s arguments based on the plain reading of § 203(o), stating, “Allen argues that here the facts do not establish a ‘custom or practice under a bona fide collective-bargaining agreement’ that would make changing time non-compensable. Allen claims that compensation for the pre- and post-shift changing time is a pre-existing right under the FLSA, subject to exclusion only if it has been affirmatively bargained away in CBA negotiations; i.e., negotiation of whether to pay for pre- and post-shift changing time must be shown before the court may conclude that there was a custom or practice as provided in § 203(o). According to Allen, there has been no acquiescence or waiver here because the union representatives did not have knowledge of the right to compensation for this pre- and post-shift changing time, nor any knowledge of or acquiescence to a policy of nonpayment for that time.

This court addressed a related issue in Bejil: whether employees had a right to compensation for changing time where the union and the employer had discussed that very question during CBA negotiations, but the CBA ultimately remained silent on the matter. 269 F.3d at 480. We concluded that such silence in the CBA, after the parties negotiated over the matter, resulted in a “custom or practice” of not compensating the employees for the changing time, and therefore § 203(o) barred claims for back wages for such time. Id. Here, unlike in Bejil, there was no discussion of whether McWane should compensate the Allen plaintiffs for such clothes changing time.

The Third and Eleventh Circuits have considered the specific question of whether § 203(o) requires the employees and employer to have discussed the issue of compensation for pre- and post-shift changing time, where the CBA is silent on the issue, in order to find that a custom or practice of nonpayment existed pursuant to a CBA. The Third and Eleventh Circuits concluded that it was not necessary for the issue to have been raised in negotiations. Anderson v. Cagle’s, Inc., 488 F.3d 945, 958-59 (11th Cir.2007); Turner v. City of Philadelphia, 262 F.3d 222, 226 (3d Cir.2001).

Turner presented the following uncontested facts: (1) Philadelphia had not compensated corrections officers for uniform change time for over 30 years; (2) every CBA between Philadelphia and the officers had been silent as to compensation for change time; (3) the union president proposed at labor management meetings with Philadelphia’s Labor Relations Administrator that change time be made compensable, but the union did not make this request in formal CBA negotiations; (4) the union did, however, ask for and receive a uniform maintenance allowance; and (5) the union never filed a grievance or demanded arbitration based on the non-compensability of change time. Turner, 262 F.3d at 225.

The Turner plaintiffs made an argument similar to the one articulated by Allen, that “a ‘custom or practice’ of non-compensability cannot come into being unless (1) the issue of compensability is specifically raised in formal collective bargaining negotiations, and then (2) dropped by the negotiators.” Id. at 226. Rejecting this approach, the Third Circuit held that the plaintiffs and their union had acquiesced to the municipal government’s thirty-year policy of not compensating for changing time. Id. at 227. The court explained:

We think that plaintiffs interpret the phrase “custom or practice under a bona fide collective-bargaining agreement” too narrowly, placing undue emphasis on the clause “under a bona fide collective-bargaining agreement” while virtually reading the clause “custom or practice” out of § 203(o). In essence, plaintiffs construe “custom or practice under a bona fide collective-bargaining agreement” as “custom or practice established through formal collective bargaining negotiations.” To the contrary, we view the phrase as simply restating the well-established principle of labor law that a particular custom or practice can become an implied term of a labor agreement through a prolonged period of acquiescence. Id. at 226. The Turner court also rejected the argument that the plaintiffs had an antecedent right to payment under the FLSA such that they could not acquiesce to non-compensation without the issue being negotiated, noting that § 203(o) itself defines what work time is encompassed by that right to payment. Id. at 226-27.

In Anderson, the employer had not compensated the employees for time spent donning and doffing protective gear for approximately ten years. 488 F.3d at 958. Additionally, the court assumed for purposes of its decision that every CBA during the relevant time period had been silent as to compensation for changing time, and assumed that the parties had never discussed the policy. Id. at 958. The Anderson court followed Turner, also rejecting the argument that a custom or practice under § 203(o) cannot exist unless the parties negotiated about the non-compensation policy. Id. at 958-59. “Relying again on a common sense understanding of the statute’s language, we believe that a policy concerning compensation … for clothes changing, written or unwritten, in force or effect at the time a CBA was executed satisfies § 203(o)‘s requirement of a ‘custom or practice under a bona fide’ CBA.” Id. “Absence of negotiations cannot in this instance equate to ignorance of the policy. Rather, it demonstrates acquiescence to it.” Id. at 959.

The Eleventh Circuit noted that the issue in Anderson was not controlled by the Fifth Circuit’s decision in Hoover v. Wyandotte Chemicals Corporation, 455 F.2d 387 (5th Cir.1972). In Hoover, another action to recover overtime pay under the FLSA, this court held that employees were not entitled to additional compensation for the extra eight to ten minutes of clothes changing time that they requested during collective bargaining negotiations, but which was not incorporated into the executed CBA. Id. at 388. The custom and practice of the employer for approximately fifteen years had been to pay for fifteen minutes of changing time. During the most recent CBA negotiations, pay for 23-25 minutes of time had been requested but not adopted. Hoover held that the request did not change the custom or practice, which was to pay only for fifteen minutes of changing time. Id. at 389. Although the employer had agreed to pay for changing time, where the employees raised the issue during CBA negotiations but there was no change in practice by the employer or change to the CBA on the issue, the relevant custom of non-payment for clothes changing time over fifteen minutes remained unaltered.

Allen both criticizes the reasoning of Turner and Anderson and tries to distinguish them. Allen observes that in Anderson the plaintiffs did not contend that they lacked notice of the relevant compensation policy, whereas here the employees and their union representatives were unaware of the potential for compensation under the FLSA. 488 F.3d at 959. However, neither Turner nor Anderson address the employees’ awareness of the law, much less find it to be a controlling factor in their holding. Anderson merely observed that the plaintiffs were aware that the company had a policy of not paying for pre- and post-shift clothes changing time. Id. Similar facts were present in Turner. 262 F.3d at 225. Both courts concluded that silence by the employees and their union as to the non-compensability of this time when the CBAs were executed meant that a custom or practice of nonpayment was established pursuant to a CBA, and thus the time was not to be calculated as “hours worked” under § 203(o).

Allen relies heavily on the reasoning employed by Kassa v. Kerry, Inc., 487 F.Supp.2d 1063, 1071 (D.Minn.2007). In Kassa, the defendant moved for summary judgment based on § 203(o). The court voiced its agreement with Turner, and determined that § 203(o) may apply even where non-payment for changing time was never raised in negotiations. The court then identified three elements as essential to determine the existence of a “custom or practice” under § 203(o): time, knowledge, and acquiescence. Id. at 1070-71 (relying on Detroit & Toledo Shore Line R.R. Co. v. United Transp. Union, 396 U.S. 142, 154 (1969)). Kassa assigned the burden to the defendant to show that “its policy of non-compensation for clothes-changing time lasted for a sufficiently long time, with sufficient knowledge and acquiescence by [the] employees, that the policy became an implicit term-a ‘custom or practice’-under the CBA.” Id. at 1071. In Kassa, the record established that the non-payment by defendant had occurred for six years and the union had never complained about non-payment when executing the CBA. Id. The district court found this insufficient as a matter of law to establish a custom or practice, and denied summary judgment.

Allen also relies on the Supreme Court’s statement in Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S. 728, 740 (1981), that “FLSA rights cannot be abridged by contract or otherwise waived….” Barrentine addressed whether employees at a union-organized plant operating under a CBA could sue their employer for violations of the minimum wage provisions of the FLSA. The CBA in Barrentine required the employees to submit the claim to a grievance committee; when they did so, the committee rejected their claims. The Court held that the right to sue for the violation of the FLSA could not be abridged or waived. Id. at 740. There is a significant distinction between the minimum wage provision at issue in Barrentine and the application of § 203(o) in the instant case: the FLSA rights at issue in Barrentine are independent of the collective bargaining process. Id. at 745. By contrast, under § 203(o) the right to be paid for pre- or post-shift changing time may be abridged by contract-a bona fide CBA. See also Livadas v. Bradshaw, 512 U.S. 107, 131-32 (1994) (addressing question of meaningful bargaining under the National Labor Relations Act, referring to § 203(o) of the FLSA as an example of a “narrowly drawn opt-out provision,” and noting employees have full protection of the minium standard “absent any agreement for something different”).

We are persuaded by the reasoning of the Third and Eleventh Circuits, and join them in holding that even when negotiations never included the issue of non-compensation for changing time, a policy of non-compensation for changing time that has been in effect for a prolonged period of time, and that was in effect at the time a CBA was executed, satisfies § 203(o) ‘s requirement of “a custom or practice under a bona fide” CBA. See Anderson, 488 F.3d at 958-59 (policy of non-compensation had been in place for at least ten years); Turner, 262 F.3d at 226 (policy of non-compensation had been in place for thirty years). In such instances, regardless of whether the parties negotiated regarding compensation for changing time, acquiescence of the employees may be inferred. By contrast, where there have been no relevant negotiations and the facts do not demonstrate that a policy of non-compensation for changing time has been in effect for a prolonged period of time, other evidence of knowledge and acquiescence by the employees will be required. See Gatewood v. Koch Foods of Miss., 569 F.Supp.2d 687, 698-700 (S.D.Miss.2008) (holding that even in the absence of a long-standing tradition of non-compensation or negotiations for compensation of time spent changing clothes, “when employees and union representatives are conclusively aware of the facts surrounding compensation policies for changing clothes at the beginning and end of each workday, and reach an agreement under a CBA that does not compensate employees for the time, a ‘practice’ exists under the CBA sufficient to invoke the § 203(o) defense”).

Thus, as long as there was a company policy of non-compensation for time spent changing for a prolonged period of time-allowing the court to infer that the union had knowledge of and acquiesced to the employer’s policy-and a CBA existed, the parties need not have explicitly discussed such compensation when negotiating the CBA. McWane “only need prove that the parties had a ‘custom or practice’ of non-compensation under the agreement.” Bejil, 269 F.3d at 479. It is undisputed that McWane has never compensated its employees for changing time, going as far back as 1965. After more than forty years of non-compensation, we may safely infer that McWane’s employees had knowledge of and acquiesced to the policy of non-compensation. Therefore, we conclude that McWane has demonstrated a “custom” of non-compensation for changing time.”

Interestingly, the Court noted that the parties had stipulated that the time spent donning and doffing personal protective equipment was synonymous with “changing clothes” and thus potentially waivable, creating the narrow issue before the Court. Inasmuch as there are recent decisions from around the country falling on both sides of this issue (i.e. some finding such time not to constitute “changing clothes”) the Court’s holding may have limited application going forward, because if the disputed time was not time spent “changing clothes” 203(O) would have no applicability.

Low-wage Workers Suffer High Rate Of Workplace Abuse and Wage Theft, UCLA Survey Shows

January 7, 2010 11:53 am / Leave a comment

UCLA Today, a periodical covering faculty and staff news at UCLA has released a story summarizing the findings of a recent study conducted by 3 UCLA researchers, that examined the frequency of labor and wage abuses against low-wage workers in the Los Angeles area. According to the story, “[a]n alarmingly high number of Los Angeles County workers at the bottom of the labor market are the victims of “wage theft” and other workplace violations by employers, who on average deprive workers of 12.5 percent of their weekly paycheck, according to a study released today, Jan. 6, by three researchers with the Institute for Research on Labor and Employment at UCLA.

Approximately 88 percent of those surveyed reported at least one instance of being paid less than the minimum wage, working overtime and not being paid for it, working off-the-clock for free, or other pay-based violation during the previous work week.

The results of a 2008 survey of 1,815 workers in the county holding such low-wage jobs as nannies, bank tellers, retail workers, garment workers, janitors and gardeners show that most of these violations are more prevalent in Los Angeles than in New York or Chicago, where similar surveys were done. Detailed, hour-long interviews were conducted with the workers who were asked to describe their previous work week.

“This is a wake-up call to the community,” said Professor Ruth Milkman, lead author and a professor of sociology at UCLA and the City University of New York Graduate Center. Ana Luz Gonzalez, a doctoral candidate in urban planning, and Victor Narro, project director at the UCLA Downtown Labor Center and a lecturer in Chicano studies, are co-authors on the study.

Most egregious, said researchers, was that 30 percent of those surveyed in L.A. County were being paid less than the legal minimum wage for California, which is $8 an hour.”

To read the entire report click here. To read the UCLA Today news story click here.

Few Labor Violators Fined, Des Moines Register Reports

January 5, 2010 12:03 pm / Leave a comment

Today’s Des Moines Register reports that very few employers who are found guilty of violating the special Federal Minimum Wage laws, applicable to disabled workers, are actually fined as a result of their violations.

The report disclosed that, “[t]he U.S. government fined only three of the 797 employers that violated federal labor laws while paying subminimum wages to disabled workers over a five-year period.

The newly disclosed statistics come from the U.S. Department of Labor and are in response to questions posed nine months ago by U.S. Sen. Tom Harkin, D-Ia.

Harkin has been studying the enforcement of a 71-year-old federal law that enables companies to pay disabled workers less than the minimum wage if they first obtain federal approval.

Harkin chaired a Senate committee hearing that examined why Henry’s Turkey Service was allowed to pay its mentally retarded workers 41 cents an hour to work in a turkey processing plant in West Liberty.

Critics say the new statistics confirm what they have long alleged: Companies typically have nothing to lose by violating wage-and-hour laws intended to protect disabled workers.

Harkin said Monday that there is ‘no question’ the law currently fails to provide the disabled with ‘fair employment opportunities that are sufficiently policed to prevent exploitation.’

He said he is preparing ‘substantial legislative changes’ that he expects to make public in the next few months.”

To read the entire article click here.

4th Cir.: Because Donning and Doffing of Protective Clothing Constitutes “Changing Clothes,” Compensability of Such Time is Waivable, Under § 203(o), By Collective Bargaining Agreement

January 5, 2010 11:18 am / Leave a comment

Sepulveda v. Allen Family Foods

Deciding an issue that has divided courts across the country, the 4th Circuit held that, because the donning and doffing of personal protective equipment (PPE) constitutes “changing clothes,” the right to be compensated for such time may be collectively bargained away in a Collective Bargaining Agreement (CBA).

“Under the Fair Labor Standards Act, 29 U.S.C. § 201 seq.bargaining to exclude “any time spent in changing clothes. . . at the beginning or end of each workday” from compensable work time. § 203(o). In this case, we are asked to determine whether the donning and doffing of protective gear at a poultry processing plant constitutes “changing clothes” within the meaning of Section 203(o). We conclude that it does. Consequently, the employer and union here may—as they currently have—exclude donning and doffing from compensable work time.”

Realizing the factually intensive nature of most, if not all so-called donning and doffing cases, the Court noted that its decision did not mean that the donning and doffing of such PPE was not compensable time, stating “[o]ur holding, of course, does not mean that employees should not be paid for time spent donning and doffing protective gear. Instead, it simply recognizes that the purpose of Section 203(o) is to leave this issue to the collectivebargaining process. Employers and unions are free to determine for themselves how much compensable time should be allocated and for what activities of “changing clothes.” This sort of fact-intensive determination has classically been grist for the mill of collective bargaining, and Congress ensured that employers and unions could keep it that way by enacting Section 203(o).”

To read the entire decision click here.

Overtime Law Blog