Three years ago, I floated the idea that perhaps an agency could come up with a modest “amnesty” program that would give employers a chance to get into compliance with FLSA laws, without facing the draconian consequences such an admission might entail.

Now, late yesterday, the United States Department of Labor announced its own pilot program doing exactly this. 

It’s being called the “PAID” program (Payroll Audit Independent Determination), and is designed to expedite “resolution of inadvertent overtime and minimum wage violations under the FLSA.”

According to a press release:

Employees will receive 100 percent of the back wages paid, without having to pay any litigation expenses, attorneys’ fees, or other costs that may be applicable to private actions.

The PAID program facilitates resolution of potential violations, without litigation, and ensures employees promptly receive the wages they are owed.  Under this program, the Wage and Hour Division will oversee resolution of the potential violations by assessing the amount of wages due and supervising their payment to employees.

The Division will not impose penalties or liquidated damages to finalize a settlement for employers who choose to participate in the PAID program and proactively work with the Division to fix and resolve their potential compensation errors.

But there will be limits.  Employers who are in litigation or currently under investigation are excluded, for example.  Moreover, it is a one-time use; employers can’t keep coming back under it.  And it will require employers to take other steps as well.

The pilot program is being run nationwide for approximately six months, after which the Department will evaluate the pilot program and consider future options.

Employers and their counsel are going to need to do a crash course to learn about its availability.  Some FAQ are available on the DOL website but there’s still more that needs to be filled in.

It’s clear, for example, that this won’t necessarily prevent a private lawsuit from flowing or from employees who might reject this and seek out their own counsel.

And for employers in Connecticut, a word of extreme caution:  There will still be the issue of STATE law violations that aren’t addressed by this program.

Indeed, when I floated this idea with a CT Department of Labor official years ago, he noted that legislation would have to be written because the CTDOL didn’t have the ability to create such a program.

I will continue to monitor this as well as my firm but if you have any interest in FLSA issues, you’ll want to contact your employment counsel to stay up to date on this very important development.

 

 

There is news in the employment law world beyond sexual harassment.  Arbitration clauses to be exact.

Yesterday, the Second Circuit issued a small, but important decision for employers that will continue to limit FLSA wage & hour claims.

The court ruled that an employee’s FLSA claims in court were barred by the arbitration clause contained in his employment agreement.  While it isn’t the first time, it’s clear logic will be tough to ignore.

(The case, Rodriguez-Depena v. Parts Authority, Inc. et al can be downloaded here.)

For the court, it was not even a close call. The court ruled that the Supreme Court’s pronouncement years ago that age discrimination claims were barred by an arbitration clause controlled.

The court also looked at whether its decision in the Cheeks v. Freeport Pancake House, Inc. – which required oversight of settlements of FLSA claims — precluded arbitration. The court said it did not.

The rationale of Cheeks, however, is assurance of the fairness of a settlement of a claim filed in court, not a guarantee of a judicial forum.

For employers in Connecticut it remains to be seen if the Connecticut Supreme Court will be all in on such a logic for state wage & hour law claims, but the federal endorsement of arbitration provisions provide a strong basis for doing so.

The case is yet another sign that employers have a few options when it comes to FLSA claims.  It has previously held that class action waivers for FLSA claims are also valid.  

Nevertheless, employers should once again consider whether mandatory arbitration provisions are right for their workforce, particularly when combined with class action waivers.  Having such provisions in place could make a big difference in the future.

U.S. Department of Labor Headquarters

A federal district court in Texas yesterday struck down (once and for all?) the changes to the overtime rules proposed by the Obama Administration.  Previously, those rules (affecting the white collar exemptions) had been stayed, but the Court’s ruling suggests that there is a fatal flaw to the proposed rules and barred its implementation.

In doing so, the Court said that the salary-level test that was proposed was too high to determine which workers were exempt from overtime compensation.

Of course, there was little chance that these rules were going to get the go-ahead anyways because the Trump administration has shown no desire to support them either politically or in court.  Indeed, in July, the Department of Labor sought public feedback on ways to revise the proposed rule.

The ruling applies to employers nationwide.

While you’ll see a round of headlines today about how this is a big decision, it really should come as no surprise for those of us who have been following this for many months.

So all that guidance last year about how to comply with the new rules? Forget about it for now.

Keep calm and carry on.

 

It never seems to fail; I go on vacation and the Connecticut Supreme Court issues one of the few employment law decisions it issues every year during that week.

Fortunately for all of us, it concerns the fluctuating work week method of overtime computation which most employers in the state consciously either avoid or try not to understand.  (In very basic terms, the formula calculates a pay rate based on the number of hours an employee actually works in a particular weeks.)

I’ve previously discussed the “perils of trying to rely on a fluctuating work week.” As recently as 2012, I said that “while it can provide some benefit for employers, it must be done properly and must not be raised after the fact.”  And I noted way back in 2008 that employers have to jump through a variety of hoops to make sure they are compliant.

Add to this cautionary tale the latest Connecticut Supreme Court case of Williams v. General Nutrition Centers, Inc. 

The court held that overtime pay for retail employees who receive commission cannot be calculated using the federal fluctuating workweek formula.

And beyond that, the court raised two important principles.  

First, it said that Connecticut law does not prohibit the use of the fluctuating method in general. Thus, for most employers and most employees, the use of the fluctuating work week is definitely in play.

Second, and perhaps most critical here, the Court said that Connecticut Department of Labor regulations that govern overtime pay for retail employees do prohibit the use of the fluctuating method for those employees:

By setting forth its own formula for mercantile employers to use when computing overtime pay, one that requires them to divide pay by the usual hours worked to calculate the regular hourly rate, the wage [regulation] leaves no room for an alternative calculation method….The wage order’s command to use a divide by usual hours method therefore precludes use of the fluctuating method’s divide by actual hours method, except, of course, when an employee’s actual hours match his usual hours.

It should be noted as well that while the case concerned retail employees, the regulation at issue applies to all businesses in the “mercantile trade.”

For employers that rely on the fluctuating workweek method of calculating overtime in Connecticut, this case is a good reminder to revisit those practices now to make sure they comply with this new Connecticut case. Seeking the advice of your trusted counsel to look at your particular circumstances is critical given the court’s decision.

My colleague, Gabe Jiran, returns the blog today with this quick post updating us on where things stand on the DOL’s proposed changes to the overtime rules (and providing me with an excuse to link to one of the few songs to mention “overtime” in the title.)

As you may recall from some of the prior posts here, employers scrambled to address the Department of Labor’s changes to the salary threshold for white collar exemptions under the Fair Labor Standards Act.  That change would have increased the salary threshold from $23,360 to $47,476 annually in December, 2016.

However, several states challenged this increase, resulting in a federal court in Texas issuing a nationwide injunction stalling the increase.  Of course, many employers had already made changes to address the increase, but the injunction still stands.

Then the election happened. Which changed everything.

Now, the DOL under the new Trump administration has indicated that it will not advocate for a specific salary level under its regulations, but will instead gather information about the appropriate salary levels.

The DOL has thus issued a request for information to get feedback, which can be accessed here.

What does this mean for employers? While this process will most likely result in an increase in the salary levels, it seems that the DOL will do so based on responses to its request for information rather than arbitrarily setting a salary level.

For now, employers should continue to follow the current regulations and the $23,360 salary level while, of course, also following the Connecticut guidelines where applicable too.

But stay tuned here: Developments in this area now seem on the way.

file101235857424For the last six years, you haven’t seen much on this blog about changes to federal employment laws because, well, there just weren’t any.  What we DID see, however, were changes to regulations and enforcement orders.

Nearly six months into the new Trump administration, we’re now starting to see significant shifts in the federal regulatory scheme too.

A lot of national employment law blogs have been starting to recap them so I’m not going to go too in depth here. Among the changes? A death-knell to the persuader rule, and, earlier this month, a pullback of guidance on joint employment and independent contractor rules.   And it looks like the overtime rule changes are still in limbo as well, with the DOL “rethinking” such rules in news articles this week.

You don’t need to have a law degree to understand that these changes will favor companies.

Last night too, the Trump administration named the final member of a new National Labor Relations Board who will, no doubt, start rolling back other labor law decisions that have favored employees and labor unions as well.

But what will the impact be in Connecticut?

It’s still a bit early to tell, but I think the impact may be muted in some ways. After all, we have a CONNECTICUT Department of Labor that still marches to its own drum.  For example, it has taken a pretty aggressive view on who is (or is not) an employee vs. an independent contractor.

Indeed, as I’ve discussed before, the Obama-era rule changes might have, in fact, helped level the playing field for some Connecticut employers who have felt that they have had to comply with stricter Connecticut rules which made them less competitive nationwide.  With the rollback of some of these rules at the federal level, Connecticut’s higher standards may come back into play more often.

That may be overstating it a bit, but Connecticut employers will have to play catchup to figure out the patchwork of federal and state regulations and the interplay between them.

Perhaps it is more fair to say that things are still shaking out this year for Connecticut employers.  The General Assembly session that just ended was more quiet than most.  But at a national level, employers shouldn’t be too quick to make too many changes because there seems to be many more aspects in flux than in years past.

The only thing I’ll predict for the next six months is that we have all the ingredients in place for a wild roller coaster ride with more changes than we’ve seen in some time.

So buckle up.   Things are just getting interesting.

file0001835967537The Connecticut Supreme Court, in a unanimous decision that will be officially released April 4, 2017, has ruled that employers may not use the “tip credit” for pizza delivery drivers and therefore, the employees must be paid the standard minimum wage.

You can download the decision in Amaral Brothers, Inc. v. Department of Labor here.  The decision is no doubt a disappointment to employers who believe that the Connecticut Department of Labor’s regulations in this area far outstretch the plain language of the applicable wage/hour statute.

The case arises from a request by two Domino’s franchises for a “declaratory ruling” from the Connecticut Department of Labor (DOL) that delivery drivers are “persons, other than bartenders, who are employed in the hotel and restaurant industry, …who customarily and regularly receive gratuities.” The request arises from Conn. Gen. Stat. §31-60(b), which has been amended over the years.

Why would the employer make such a request? In doing so, the employer wanted to take advantage of the “tip credit”, in which employees are paid below the conventional minimum wage, but his or her salary is supplemented by tips from customers.

Originally, as noted by the employer’s brief to the Court: “The DOL denied Plaintiff’s Petition for the following stated reasons: (1) the regulations were valid because they served a remedial purpose, were time-tested and subject to judicial scrutiny…; and (2) the only act of “service” was handing the food to the customer at the customer’s door and so delivery drivers’ duties were not solely serving food as required under Regulations of Connecticut State Agencies § 31-62-E2(c). The DOL’s decision was that only employers of “service employees” as defined by the DOL could utilize the credit, and Plaintiff’s employees were not service employees.

A lower court upheld the DOL’s conclusions “agreeing that the regulations were ‘reasonable’, ‘time tested’, and had ‘received judicial scrutiny and legislative acquiescence’. The court also determined that the ‘minimum wage law should receive a liberal construction.'”  (You can also view the DOL’s brief to the Court here.)

The Connecticut Supreme Court upheld the Department of Labor’s interpretations here finding that the regulations issued by the agency were “not incompatible” with the enabling statute.  In doing so, the Court noted that this is a bit unusual because the employer was contending that the regulations were originally valid when issued, but repealed by implication when there was an amendment to the statute at issue.

The Court’s decision traced the origin of the tip credit in a portion of the decision that only lawyers will love. But then they get to the heart of the matter: “It was reasonable for the department to conclude that the legislature did not intend that employees such as delivery drivers, who have the potential to earn gratuities during only a small portion of their workday, would be subject to a reduction in their minimum wage with respect to time spent traveling to a customer’s home and other duties for which they do not earn gratuities.”

While the court’s decision directly implicates delivery drivers, it only impacts those employed directly by the employer (see also: UberEats, GrubHub etc.).  Nevertheless, in upholding the DOL’s interpretation here, the scope of who falls within the tip credit at restaurants is going to be further challenged in the courts.

Before employers make any further conclusions, Connecticut businesses should also be aware that the scope of the tip credit and of tip pooling is being debated at the federal level as well.  The National Restaurant Association has joined many others in asking the U.S. Supreme Court to hear a case on the subject. We should hear shortly whether the Court will accept such a case.

The Court’s decision is yet another reminder that restaurants in Connecticut should review the situations in which the tip credit is being utilized. Issues regarding tip pooling should be reviewed as well.  This case doesn’t answer all the questions that come up in the restaurant context. But in terms of figuring out the scope of the law, it helps to answer (albeit in a manner not helpful to employers overall) some outstanding questions.

I’ll confess. I’m excited about today’s post.  It’s hard to find something new to do after nearly 10 years of blogging, but I think today’s post is pretty innovative. Unless you read The New York Times “The Conversation” which we’ve tried to copy emulate here.  Except this post (and hopefully others) will be called “The Dialogue”.  Somehow different, right? 

Today’s post tackles some of the legal issues regarding hiring but does so in a back-and-forth format between a management-side attorney (myself) and an employee-side attorney (Nina Pirrotti).  I’d insert a reference to the letters of Alexander Hamilton and Aaron Burr discussing the issues of the day, but then I remembered that ended in a duel, and it’s not exactly what I was foreseeing here.  I think Nina and I can exchange some thoughts without trying to kill one another. 

Anyways, Nina and I have tried something new below.  Nina is a partner at the law firm of Garrison, Levin-Epstein, Fitzgerald and Pirrotti, where she represents employees in all types of matters.  She’s a past-President of the Connecticut Employment Lawyers Association and a frequent presenter on employment law topics.   My thanks to her for being brave enough to try this with me.  Let me know what you think. 

The Dialogue Begins

Dan Schwartz: Welcome to the blog and thanks for engaging in this discussion on employment law. I promise that we here at the blog don’t bite and we pay all of our workers (me) minimum wage. (Ok, that’s a lie. I get nothing for writing the blog, but moving on….)

I know we were planning on talking about some developments in the world of hiring and employment law, but I can’t pass up the opportunity to ask you something about the new Trump Administration.  From the perspective of an attorney who typically represents employees, what are one or two things you’re keeping an eye out for?

nina_t_pirrotti1-150x150Nina Pirrotti: Thank you, Dan, for your warm welcome.  We plaintiffs’ employment lawyers have been feeling mighty chilly since November 8th and have been bracing ourselves ever since for even more frigid temps ahead.  Ironically, I felt the impact of Trump’s election virtually immediately.  On November 9th, I flew to Chicago and spoke at the ABA’s annual Labor & Employment conference.   

The topic of the panel on which I spoke revolved around laws which prohibit employer retaliation against employees for discussing their wages.  The laws are designed to protect female employees who are trying to figure out whether they are being paid less than their male counterparts.  

I was all set to talk about the Paycheck Fairness Act which would have expanded the protection provided by those laws and was expected to be one of the first pieces of legislation signed by Hillary Clinton.  As you can imagine, my plane ride there was consumed with a furious re-write of my outline! The next day I flew to Dallas to participate in the semi-annual Executive Board meeting for the National Employment Lawyers’ Association where we also had to nimbly adjust our focus to reflect the new (surreal) reality.  

I did not thaw out after learning that Trump nominated Andy Puzder, CEO of chain restaurants, including Hardees (which, sadly, is the maker of my all -time favorite breakfast biscuit) to head the Department of Labor.  Puzder’s employee track record, which includes opposing overtime and minimum wage laws and underpaying his own workers is abysmal.   

I can only hope that the rumors that he might back out of consideration prove to be true.  I did feel  a glimmer of hope after I learned this week that Trump has tapped EEOC Commissioner Victoria A. Lipnic as Acting Chair of EEOC.  Lipnic, who was nominated by President Obama, has served as EEOC Commissioner since 2010.

I was also mildly heartened by Trump’s expression of (granted, lukewarm) support in his campaign for pay equity laws and paid FMLA leave, both championed by Hillary Clinton and I can only hope that the person who might most positively influence him in that regard (Ivanka) is able to carry the day.

Unfortunately, the Trump administration does seem poised to reverse or suspend the changes to Fair Labor Standards Act’s overtime rules which went into effect on December 1, 2016.  

Of course, the most important event that we plaintiffs’ employment lawyers are waiting for is the announcement of Trump’s Supreme Court nominee who would replace the very conservative Justice Antonin Scalia.  That person may likely cast the deciding vote on cases that impact the rights of workers in a myriad of ways.  Unfortunately for us, the three oldest justices – Ruth Bader Ginsburg Kennedy  and Breyer  – are liberal or moderate and Trump may have more than one bite at that proverbial apple during his (hopefully only) four-year stint. 

Since your excellent blog has national appeal and one or more of these justices might actually read it, I hereby urge all three of them to eat well, exercise moderately and avoid all high risk activities! Continue Reading The Dialogue: Hiring Employees the Right Way (From Different Sides)

I have this running joke with my wife that anytime I’m on vacation, it seems that big employment news breaks.

And this vacation is no exception.

And it’s probably the biggest employment law news this year. Not the best time for me to have to write a blog post on my phone.  Ah well.  You all will forgive any typos.

Last night, a Texas judge issued a nationwide injunction barring implementation of the new overtime rule that was scheduled to go into effect December 1.

The judge stated:

The parties dispute the scope of the injunction. The State Plaintiffs seek to apply the injunction nationwide. Defendants contend a nationwide injunction is inappropriate. Instead, Defendants suggest the injunction should be limited to the states that showed evidence of irreparable harm. Absent contrary intent from Congress, federal courts have the power to issue injunctions in cases where they have jurisdiction. It is established that “the scope of injunctive relief is dictated by the extent of the violation established, not by the geographical extent of the plaintiff class.” A nationwide injunction is proper in this case. The Final Rule is applicable to all states. Consequently, the scope of the alleged irreparable injury extends nationwide. A nationwide injunction protects both employees and employers from being subject to different EAP exemptions based on location.

I had hinted last Friday that this was a long shot lawsuit but this year we’ve seen more than our fair share of long shots coming true (Cubs anyone?).

It’s possible that this may be appealed but that seems unlikely with a new President set to take office in less than two months.  Rather it seems more likely that the rule is now on hold…perhaps permanently.

In any event, employers that haven’t implemented the plan yet do not need to do so now. The ones that have may wish to roll back any changes (but with caution).  And talk to your local employment attorney.

I’ll have more upon my return next week.

 

I had a lot of plans this week to do another deep dive into an employment law issue but then, well, let’s just say life happens.

Among the things? Lots of questions from clients about the new overtime rules.  While everyone has had months to plan, there are definitely a few procrastinators out there.

But this may (and I emphasize and underline MAY) work out to those procrastinator’s advantage.   Reports this week are that a Texas court is considering issuing an injunction that would stop the overtime rule in its tracks.  The court has indicated that it will consider the matter by November 22nd. And moreover, even if it doesn’t issue an injunction on that date, it will consider the entirety of the case by 11:59:59p on November 30th.

While I still think the lawsuit may be a reach, it doesn’t seem as far fetched as it did a few weeks ago. Earlier this week, a similar Texas court issued a permanent injunction prohibiting the implementation of the so-called “Persuader Rule” from the NLRB.  Government overreach seems to be a theme in Texas.

What should this mean for employers? Well, I still think planning is very much in order. But if employers haven’t yet flipped the switch on their plans, they may want to hold out for a few more days to see if this Texas case leads to anything.

Why? Because once you raise an employee’s salary, for example, it’d be very hard to roll it back.

So procrastinators take heart! Maybe, just maybe, your tardiness will pay off.

But I still wouldn’t count on it.

Author’s note: I will be proverbially “going fishing” for a few days, so don’t expect any late breaking posts until after Thanksgiving here.  I’ll be posting a few “From the Archives” posts in the interim.