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Wage and Hour Update
Presented by: Joan B. Tucker Fife
Emilie C. Woodhead
July 31, 2015
Today’s eLunch Presenters
Joan Fife Partner
San Francisco
Emilie Woodhead Of Counsel Los Angeles
What We Will Cover – Federal
• Observations of the last year • FLSA • What to watch for • Certification and Decertification • Misclassification • Independent Contractors/Interns • Other Issues
• Arbitration
• Wage Theft
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What We Will Cover – The Dreaded CA.
• California Update • Day of Rest
• Bag Search
• Certification
• PAGA
• Arbitration class waivers
• Seating
• Meal and rest breaks
• Wage statements
• On call work
• Reimbursement for mobile devices
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Certification
Watch this CASE!
• Bouaphakeo v. Tyson Foods, Inc., 765 F.3d 791 (8th Cir. 2014) cert. granted, 135 S. Ct. 2806 (2015) • Hourly workers at Iowa pork processing plant filed collective action to collect
overtime for time spent donning/doffing and walking to/from work stations
• Plaintiffs won $2,892,378 jury verdict (liquidated damages raised figure to $5,785,757)
• Tyson appealed, arguing statistical analysis improper because differences in class members and damages
• Several class members were uninjured and had no legal right to damages
• Eighth Circuit affirmed award of damages
• Supreme Court granted certiorari on June 8, 2015
• Likely to be decided between January and June 2016
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Favorite holdings – Any Case with the word “decert granted” • Stiller v. Costco Wholesale Corp., 298 F.R.D. 611 (S.D.
Cal. 2014) • Hourly workers sued for overtime for time spent locked in stores,
against their will, after clocking out at end of shifts • Decertification where there is no discernible method to calculate
injury on a class-wide basis • Leads to settlement
• Mathis v. Darden Restaurants, 2014 WL 4428171 (S.D. Fla. Sept. 1, 2014) • Hourly restaurant workers sued for overtime for off-the-clock work • Mega-class of 218,000 servers and bartenders • Decertified for lack of unified treatment
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Miss. Classification?
Department of Labor’s Proposed Regs
• Issued June 30, 2015 (comments may be submitted up until 60 days after publication in Federal Register)
• Limits “white collar” exemptions • Salary standard raised to $970/week, $50,440 annually
• Formerly $445/week, $23,660 annually (last updated in 2004)
• Highly compensated standard raised to $122,148 annually (formerly $100,000)
• Solicits comments on duties tests (including California’s primary duty standard)
• Effective date of any regs? • Actions to take?
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Sample Cases
• Beauford v. ActionLink, LLC, 781 F.3d 396 (8th Cir. 2015) • “Brand advocates” not covered by outside salesman or
administrative exemption; class members who had cashed settlement checks did not waive right to sue
• Navarro v. Encino Motorcars, LLC, 780 F.3d 1267 (9th Cir. 2015) • Service Advisors for automobile dealership were not exempt under
FLSA’s exemption for “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles.”
• Why include here? • “The Service Advisors … are also duty bound and obligated by D …”
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Sample Cases (cont.)
• Lola v. Skadden, Arps, Slate, Meagher & Flom LLP, 2015 WL 4476828 (2d Cir. 2015) • Staff attorneys not exempt because they were performing work that
a “machine” could do.
What to watch for? • Exempt employees with salary under $50,440 • Working managers • Help desk/non-discretionary IT • Oil field workers
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Independent Contractor and Interns
DOL’s Administrator’s Interpretation
• Released July 15, 2015 • Part of DOL’s recent efforts to curtail alleged misclassification • Intended to provide guidance on how agency interprets the law
as it applies generally • Unknown as to the degree of deference it will be given in courts,
but clearly outlines FLSA’s definition of employer as “to suffer or permit to work” was “designed to ensure as broad of a scope of statutory coverage as possible”
• Encourages use of the “economic realities test”
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DOL (cont.)
• Economic Realities Test 1. extent to which work performed is integral part of purported employer’s
business;
2. worker’s opportunity for profit or loss depending on their managerial skill;
3. extent of relative investments of purported employer v. worker;
4. whether work performed requires special skills and initiative;
5. permanency of the relationship; and
6. degree of control exercised or retained by purported employer.
• Economic dependency is controlling, not title given or assumed • Control is not to be given undue weight, all factors equal
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Cases
• Glatt v. Fox Searchlight Pictures, Inc., 2015 WL 4033018 (2d Cir. 2015) • Order granting unpaid interns conditional certification vacated and
remanded • Primary beneficiary test was appropriate test to determine
employment status • Not similarly situated enough for collective action
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Cases (cont.)
• Meyer v. U.S. Tennis Ass’n, 2015 WL 3938148 (2d Cir. 2015) • Class of U.S. Open tennis umpires filed suit to recover unpaid
overtime • Court used economic realities test to determine that umpires were
independent contractors • Affirmed grant of summary judgment
• Gayle v. Harry’s Nurses Registry, Inc., 594 F. App’x 714 (2d Cir. 2014) • Nurses were employees using economic realities test • Did not perform companionship services to fall under exemption • Affirmed grant of summary judgment
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Other Issues
Arbitration
• Monserrate v. Hartford Fire Ins. Co., 2014 WL 4101684 (M.D. Fla. 2014) • Analysts brought suit to recover overtime • Cost-splitting requirement did not make arbitration agreement
unenforceable • Court required plaintiffs with arbitration agreements to arbitrate
claims
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Arbitration (cont.)
• Brown v. Citicorp Credit Services Inc., 2015 WL 1401604 (D. Idaho 2015) • Customer service employees filed suit to recover overtime for time
spent on computers before shift • District court initially rejected argument that individual arbitration is
only means of settling claim, finding conclusion impermissible under D.R. Horton
• 9th Circuit releases opinion citing concern with D.R. Horton • Granted motion for reconsideration and sent case to arbitration
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“Wage Theft” fka “Off-the-Clock”
• In re Foot Locker, Inc. Fair Labor Standards Act (FLSA) & Wage & Hour Litig., 2014 WL 7692447 (E.D. Pa. 2014) • Hourly employees sued for overtime for off-the-clock work
• Foot Locker settled with retail associates in NY and IL for $7.1 million
• Harris v. Chipotle Mexican Grill, Inc., 49 F. Supp. 3d 564 (D. Minn. 2014) • Hourly employees sued for overtime for off-the-clock work
• Presented evidence of local policy of requiring off-the-clock work, but not sufficient evidence of a national policy
• Presented colorable claim sufficient to satisfy conditional certification of local class
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“Wage Theft” (cont.)
• Flood v. Carlson Restaurants Inc., 2015 WL 4111668 (S.D.N.Y. 2015) • Hourly Friday’s employees sued for off-the-clock work • Carlson attempted to settle with plaintiffs • Settlement agreement included confidentiality agreement prohibiting
plaintiffs from mentioning agreement • Also required employees to pay liquidated damages of 20% of
settlement payment in the event of breach of the agreement • Court rejected settlement agreement because sweeping
confidentiality agreement may stifle pursuit of rights under the FLSA • Practice pointer? Consider impact of NLRB guidance re/
confidentiality
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California Update
Day of Rest
• Mendoza v. Nordstrom (9th Cir. 2015): Ninth Circuit certified three questions to California Supreme Court • Is one day of rest in seven calculated by workweek or on a rolling basis for
any consecutive seven-day period?
• Does exemption apply where total hours do not exceed 30/week or six/day apply when employee works less than six hours in any one day of the week, or only where employee works less than six hours each day of the week?
• What does it mean to say employer may not “cause” employee to work more than six days in seven?
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Searches
• Frlekin v. Apple Inc., (N.D. Cal. July 16, 2015) • Apple employees filed suit to recover compensation for time spent having
their bags searched
• Supreme Court recently held that time spent during mandatory searches was not compensable in Integrity Staffing Solutions, Inc. v. Busk
• Under California law, time spent searching bags is compensable if employer has control over employees
• Court certified class
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California Cases – Certification Granted
• Martinez v. Joe’s Crab Shack Holdings (Cal. App. 2014) • Managerial employees brought class action alleging misclassification as
exempt
• Trial court denied class certification; Court of Appeal reversed; CA Supreme Court transferred matter back to Court of Appeal for review in light of Duran
• Court of Appeal said trial court erred in denying certification; plaintiffs’ claims that they filled in for hourly workers in performing non-exempt tasks were typical of the class and common policies and issues predominated
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California Cases – Certification Denied
• In re Walgreen Co. Overtime Cases (Cal. App. 2014) • Employees alleged they were not provided meal breaks; trial court denied
class certification; Court of Appeal affirmed
• Using standard set out in Brinker, employer must make breaks available but need not ensure employees take them
• Koval v. Pacific Bell Telephone Co. (Cal. App. 2014) • Hourly non-exempt employees alleged failure to provide meal breaks; trial
court denied certification; Court of Appeal affirmed
• Under Brinker, although uniform policy regarding breaks existed, policies were not consistently applied
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California Cases – Certification Denied
• Warren v. Pacific Bell Telephone Co. (Cal. App. 2015) • Employees alleged they were misclassified as exempt outside salespersons;
trial court denied certification; Court of Appeal affirmed
• Court of Appeal found that theories of liability would require individualized assessments into how plaintiffs spent their days
• Mies v. Sephora U.S.A., Inc. (Cal. App. 2015) • Former employee claimed “Specialists” were misclassified as exempt; trial
court determined that central issue was how employees spent their time, not whether a given task was exempt
• Court of Appeal affirmed, finding trial court did not abuse discretion
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PAGA
• California Private Attorney General Act (PAGA) • Allows employees to bring claims on behalf of other employees
• Establishes penalties for Labor Code (and Wage Orders)
• Unclear whether need to satisfy Rule 23 requirements
• PAGA claims attractive to plaintiff’s counsel • Attorneys’ fees available
• Penalties can accrue quickly – $100 for first violation and $200 for each subsequent violation, per employee, per pay period
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Arbitration Waivers
• U.S. Supreme Court • Federal Arbitration Act (FAA) ensures enforcement of arbitration agreements
according to terms (AT&T Mobility v. Concepcion; Am. Exp. Co. v. Italian Colors Rest.)
• Class action waivers in arbitration agreements are enforceable
• California Supreme Court • PAGA representative action claims may not be waived in arbitration
agreement (Iskanian v. CLS Transp. Los Angeles)
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Arbitration Waivers Considerations
• Any distinction between state and federal cases? • Federal courts bound by U.S. Supreme Court and FAA; possibly more likely
to enforce waivers
• CA state courts bound by Iskanian
• Removal where possible
• Rise of PAGA-only actions • Non-removable
• Supreme Court refused to consider case challenging Iskanian
• July 2004 – April 2013: Labor and Workforce Development Agency (LWDA) received $24.5 million in PAGA penalties
• After Iskanian, LWDA received $7.9 million between July 2014 and June 1, 2015 (3x average annual amount)
• Possible Supreme Court decision 31
Seating
• CA Supreme Court asked state Labor Commissioner’s Office to submit amicus brief (Kilby v. CVS Pharmacy Inc.; Henderson v. JPMorgan Chase Bank NA)
• How to interpret “nature of work,” “reasonably permits,” and “suitable seat”
• Employers argue “holistic approach” to look at range of tasks performed
• Employees argue if tasks can be done sitting down, seats must be provided
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Meal and Rest Breaks
• Wert v. US Bank • Smith v. Wells Fargo Bank
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Wage Statements
• Plaintiffs seek both statutory penalties under Labor Code section 226 and civil penalties under PAGA where required information is missing from paystubs • Even technical violations of Labor Code can be basis for PAGA claims
• New California sick leave law requires amount of accrued sick leave available on paystub • If provide unlimited sick leave, may say “unlimited” on pay stub
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On-Call Work
• On-call time is compensable hours worked • Mendiola v. CPS Sec. Solutions, 340 P.3d 355 (Cal. 2015)
• Security guards were on-call at construction worksite, required to reside in trailer. Received no compensation for on-call time unless an alarm required investigation or guard requested relief and had to wait or none available
• No exclusion of “sleep time” even where agreement to do so existed
• On-call rest breaks are permissible • Augustus v. ABM Sec., 233 Cal. App. 4th 1065 (Cal. App. 2015)
• Employer required security guards to keep radios and pagers on during rest periods to respond when needed, but class members regularly took uninterrupted breaks
• Being on call does not constitute work for purposes of providing meal/rest breaks
• Review granted by CA Supreme Court in May 2015 35
Reimbursement for Mobile Devices
• Cochran v. Schwan’s Home Servs., 228 Cal. App. 4th 1137 (Cal. App. 2014) • When employees are required to use personal cell phones for work-related
calls, employers must reimburse them
• Even where the employee has a plan with unlimited minutes, employer must reimburse for a reasonable percentage of cell phone bill
• Reimbursement is always required for the reasonable use of a personal cell phone, not just where employee incurred an extra expense he/she would not have incurred absent the job
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Thank You
Joan Fife Partner
San Francisco
Emilie Woodhead Of Counsel Los Angeles
