Back in 2011, I wondered aloud: Might the impact of new arbitration decisions from the U.S. Supreme Court bring about the end to big wage & hour class actions?

At the time, I said it would be premature.

Seven years later – what’s changed?

Well, as it turns out, wage & hour class actions are not dead. Indeed, based on some statistics, they’re as costly as ever.

Earlier this year, the Workplace Class Action Litigation report noted that just the top ten class action settlements totalled over $2.72 billion in 2017. I’d say the class action is still very much alive and well.

Yet there are still signs on the horizon that employers may be able to fight back a bit on these claims.

Late last month, the Ninth Circuit shot down a potential class action against Uber, on the grounds that the arbitration provision barred class actions.  

It’s a significant victory for the company and highlights a way for companies to push back against the threat of class actions.

But the company may still have another obstacle. According to The Verge, counsel for the Uber drivers, are encouraging the drivers to seek arbitration on an individual basis. Indeed, it is seeking thousands of them.  Consider it the “death by a thousand paper cuts” approach.  Will it work?

Stay tuned.  In the meantime, companies ought to still consider arbitration provisions with class action waivers as I noted earlier this year.

Trying to follow both state and federal wage and hour laws isn’t that hard.

But it isn’t that easy either.

Let’s say you’re a restaurant with a waitstaff.  Like most restaurants nowadays, your customers pay by credit card and you, the employer, have to pay the credit card company a percentage on each sale.

You know there are rules regarding deductions of the wages to employees. But what about tips? Can you take out the percentage of fees being charged by the credit card company on the tips?

According to the U.S. Department of Labor: Yes.

In its fact sheet, the USDOL makes it plain that such actions by an employer do not violate federal law, so long as they are limited to the fees on the tips themselves.

Where tips are charged on a credit card and the employer must pay the credit card company a percentage on each sale, the employer may pay the employee the tip, less that percentage. For example, where a credit card company charges an employer 3 percent on all sales charged to its credit service, the employer may pay the tipped employee 97 percent of the tips without violating the FLSA.

The DOL also has 2006 opinion letter bolstering its views here. Even Connecticut, in an unofficial guidance, permits the practice.

While that aspect is clear, the remaining aspects of tip pooling are still very much being debated.  According to a DOL Field Bulletin this spring, in the Conolidated Appropriations Act, 2018, the Act provided that certain other portions of DOL regulations that barred tip pooling when employers pay tipped employees at least the full FLSA minimum wage and do not claim a tip credit no long have further force or effect.

As a result, according to the DOL, “employers who pay the full FLSA minimum wage are no longer prohibited from allowing employees who are not customarily and regularly tipped—such as cooks and dishwashers—to participate in tip pools.”

And if that weren’t confusing enough, employers in Connecticut also need to comply with the Wage Order drafted by the Connecticut Department of Labor that has additional guidance on tip pooling.

Employers must continue to tread cautiously in the area of wages. Minefields continue to be ever present — and the impact of a failure to comply with the law can be costly.

 

Typically, in our court system, we operate under the “American Rule” which means that parties have to pay their own attorneys’ fees in cases, regardless of whether they win or lose.  (Contrast that with the English Rule which is a “loser pays” system.)

But there is one big exception to the American Rule — and it can be found in lots of employment law cases.   In several instances, the governing statute allows the prevailing party (or, in some instances, just the Plaintiff — read “employee”) to collect attorneys fees.

This is often seen in wage & hour claims, where an overtime claim may get dwarfed by a claim for attorneys’ fees.  One blog pointed out a few years ago in an FLSA case on “how attorney’s fees can grow to be the tail that wags the dog.”

A recent case out of the District Court of Connecticut also shows the impact in employment discrimination cases too.

The decision flows from a jury trial that awarded damages in an employment discrimination case to an individual suing a major employer.  Afterwards, both parties engaged in extensive post-trial litigation concerning attorneys’ fees, damages and more.  Ultimately, the court issued a ruling and then a final ruling after both parties asked for reconsideration.

The court awarded the Plaintiff in the discrimination claim the following:

  • Compensatory damages: $125,000
  • Punitive damages: $175,000
  • Economic damages (back pay): $ $243,711.89
  • Pre-judgment interest (on back pay): $15,665.37
  • Reinstatement

So, ultimately, the verdict is a little more than $550,000.

But the court also awarded attorneys’ fees.  And these fees far exceeded the verdict itself.

Grand total?  $973,083.50 in attorney’s fees and $30,960.24 in costs.

Such awards make employment cases unique animals in the law.  They provide extraordinary incentives to attorneys to not only take such cases, but pursue them.

For employers, the case is a difficult reminder that even when you value the case as somewhat small based on damages, the award of attorneys’ fees can add a substantial amount to what a case is worth.

 

Cars. Lots of really fancy cars.

That about sums up my Sunday in which I went to the Concorso Ferrari & Friends car event in West Hartford Center.  It has one of the biggest collections of ultra-expensive cars in the state — all to benefit the Connecticut Children’s Medical Center.

What I wouldn’t do to commute in the Pagani supercar! (Anyone have an extra $3 million lying around?)

Now, the odds on you commuting in a supercar and wondering if you’re getting paid by your employer are probably about the same as winning Powerball, but it’s still worth asking the question: Why don’t you get paid for commuting to work?

The answer lies in the law and something called the Portal-to-Portal Act. 

The Act states that employers are not required to pay for the time employees spend on activities occurring before or after (“preliminary or postliminary”) they perform the principal activities for which they are employed.

Thus, compensable working time generally does not include time spent:

  • Traveling to or from work.
  • Engaged in incidental activities before or after work.

A few years ago, an argument was made that state law ought to allow for some compensable travel time to and from work if the employee was travelling with tools.

The Connecticut Supreme Court rejected that interpretation saying such laws were pre-empted by the Portal-to-Portal Act.

And yet, the Connecticut Department of Labor continues to advance a regulation on travel time that, according to same court, “was not promulgated pursuant to any formal rule-making procedures or articulated pursuant to any adjudicatory procedures, has not been time-tested or subject to judicial review in this state.”

In any event, commuting with a supercar might be fun — but it doesn’t change whether you get paid for it under the law.

If you ever read the state labor laws (wait, you haven’t?), you sometimes come across provisions that seem like they were written for another generation.

And indeed, they were.

Take, for example, Conn. Gen. Stat. 31-23.  It prohibits children under the age of 16 from working in the “manufacturing, mechanical, mercantile or theatrical industry”.

That seems to make some sense as far as child labor laws are written. Then it goes on.

It also prohibits working in a “restaurant or public dining room.”

Public Dining Rooms? I was about to write this off entirely as just outdated but there is at least one reference I’ve found in Connecticut to a “public dining room”.  Grasso Tech’s culinary arts program advertises a “public dining room” on Facebook, so perhaps we can give them a break.

And then the statute singles out three other businesses to add to the prohibition: any bowling alley, shoe-shining establishment or barber shop.

It seems an odd arrangement for businesses. Some of it can certainly be seen rooted in safety — you wouldn’t necessarily want minors dealing with sharp tools if a barber shop or the equipment of a bowling alley.

Indeed, Conn. Gen. Stat. 31-25 prohibits minors from operating elevators! Tell that to my kids who love pushing the buttons.

My best guess from review of the legislative history, though, is that the statute is rooted in something more nefarious — that these industries would somehow show the dark side of society.

Now, there are some exceptions for other businesses over the last decade or so that I’ve covered previously; golf courses, or cashiers in supermarkets etc. all have some exceptions.

But the bowling alleys and shoe shining establishment bar still stands.

Some laws are hard to change.

It was the last semester of my senior year in college – right after Spring Break – when I heard the news that would forever shape my views on mental illness.

A friend and fellow editor of the college newspaper I worked for, Steven Ochs jumped to his death from one of the many bridges near his hometown in Pittsburgh, PA.

A group of us ended up driving out there across the fields of Pennsylvania to mourn his passing. It was the first time I was a pallbearer at a funeral and I knew then that was something I never wanted to be for a friend again.

Steven was a remarkable young adult.

I wish you could’ve known him.  He wrote amazing columns for our college paper and editorials nearly every weekday.  Thanks to the internet, you can still read a few here.

I can still remember sitting in his newspaper office couch and hearing him talk; he was always a few steps ahead of me.  I thought he had a promising future.

I thought about Steve a bunch last week, when the celebrity suicides of Kate Spade and Anthony Boudrain became headlines.

Those people, along with Steve, seemingly had everything that would want.

And yet.

As anyone who has had a friend or relative commit suicide, there’s a certain amount of second guessing that goes on. What signals did I miss? What could I have done differently? Was I a good enough friend? Why didn’t he ask for help?

And a lot times, it just comes down to a simple question too: Why?

Every suicide of a employee impacts the workplace as well.  And sometimes it is at the workplace itself – but regardless, suicides have been on the rise the last several years. As a Wall Street Journal article from earlier this year noted:

Nationwide, the numbers are small but striking. According to the Bureau of Labor Statistics, suicides at workplaces totaled 291 in 2016, the most recent year of data and the highest number since the government began tallying such events 25 years ago. U.S. suicides overall totaled nearly 45,000 in 2016, a 35% increase compared with 10 years earlier, according to the Centers for Disease Control and Prevention’s National Center for Health Statistics.

Who is most at risk? According to the BLS study, 45- to 54-year-old males had the highest likelihood of committing workplace suicide. And workers in the public sector had a higher propensity for workplace suicide while workers in the private sector suffered the majority of these fatalities. The private industry sectors with the highest propensities for workplace suicide were finance and insurance; professional, scientific and technical services; and health care and social
assistance.

The solutions are far more complex than a simple employment law blog post can capture.  Some of them are rooted in society.  But discussions regarding mental health — and bringing those discussions in the workplace — is often seen as one important step that can be done.  A renewed emphasis on making sure employees know about and use Employee Assistance Programs is also another important step.

HR staff can sometimes be at the front lines.  Figuring out that an employee might need help can be a part of a solution but as we all know, it might still not be enough.

We can only hope that as we raise awareness of this, that we can stop some suicides from occurring so that 25 years from now, someone else isn’t writing a blog post about one of their friends as well.

 

 

As I noted earlier this week, the U.S. Supreme Court has approved of the use of class action waivers in arbitration agreements with employees.

My colleague, Gabe Jiran, has a recap of Epic Systems v. Lewis on my firm’s blog, Employment Law Letter, that you can access here.

So, it’s a foregone conclusion that employers of all shapes and sizes will start using arbitration agreements and insert provisions with class action waivers, right?

Not so fast.

As Jon Hyman astutely noted in his Ohio Employer’s Law Blog yesterday, this decision may not be the panacea employers are looking for.

For example, it might end up being more costly for employers because arbitration may be more costly than litigation.

Moreover, these costs only increase if you are arbitrating dozens, or hundreds, or thousands, of individual claims instead of one class or collective action. Don’t think for a second that this decision will end wage and hour litigation. Instead, plaintiffs’ lawyers, who currently have claimants opt-in to FLSA collective actions, will instead merely file a plethora of individual arbitration claims.

It’s a valid point but I’m not sure I buy into this entirely.  Arbitration may be cheaper in many instances.

Moreover, part of the attraction that some lawyers have to wage/hour class actions are the attorneys’ fees that can get added on to the case automatically.  Filing a lot of individual arbitration cases may be good in theory, but in practice? That’s still a lot of work for a plaintiff’s-side attorney to follow.  While some enterprising attorneys will continue, we may see a thinning in the practice area as a result.

That said, I could certainly see unions encouraging this type of action at some workplaces — the death by 1000 paper cuts is something to keep in mind.

Employers may also be wary of entering into arbitration agreements with class action waivers because of the public backlash against forced arbitration, particularly  in sexual harassment matters.

This is not new — indeed, there was a Law Tribune editorial in 2014 before #metoo was well-known that suggested legislative reforms in the area.

Employers that are seen as enforcing “coercive” arbitration provisions may face a social media or publicity campaign. Each employer will have to figure out its risk tolerance and how it wants to be seen by its employees and the public before implementing arbitration agreements.

Moreover, in states like California, there are statutes that allow for an employee to sue over workplace violations individually as well as on behalf of others, allowing for “representative suits”, similar to class actions.  These “Private Attorneys General Act” cases may become the norm in California.

Could Connecticut follow?

These are just a few of the considerations that employers ought to be thinking about in light of the Epic Systems decision.  The decision certainly provides employers with another tool in managing their workforce. The question on the table now is whether that tool is useful or not.

In an important 5-4 decision, the U.S. Supreme Court this morning held, for the first time, that class or collective action waivers, particularly in wage/hour cases, and contained in arbitration agreements between employers and employees are valid and enforceable.

Because wage and hour class and collective actions are quite costly for employers to defend against, this decision should cause employers in Connecticut (and nationwide) to re-evaluate their employment relationships with employees and consider enacting wide-ranging arbitration agreements that include class-action and collective action waivers.

The decision in Epic Systems Corp. v. Lewis (download here) was just released at 10 a.m. this morning, so I’ll have more in an upcoming post after I’ve had time to digest it, but here’s the summary from the Supreme Court itself:

In each of these cases, an employer and employee entered into a contract providing for individualized arbitration proceedings to resolve employment disputes between the parties. Each employee nonetheless sought to litigate Fair Labor Standards Act and related state law claims through class or collective actions in federal court. Although the Federal Arbitration Act generally requires courts to enforce arbitration agreements as written, the employees argued that its “saving clause” removes this obligation if an arbitration agreement violates some other federal law and that, by requiring individualized proceedings, the agreements here violated the National Labor Relations Act. The employers countered that the Arbitration Act protects agreements requiring arbitration from judicial interference and that neither the saving clause nor the NLRA demands a different conclusion.

Until recently, courts as well as the National Labor Relations Board’s general counsel agreed that such arbitration agreements are enforceable. In 2012, however, the Board ruled that the NLRA effectively nullifies the Arbitration Act in cases like these, and since then other courts have either agreed with or deferred to the Board’s position.

Held: Congress has instructed in the Arbitration Act that arbitration agreements providing for individualized proceedings must be enforced, and neither the Arbitration Act’s saving clause nor the NLRA suggests otherwise.

In doing so, the court relies on two main arguments. First, the Federal Arbitration Act compels this and notes that the Concepcion decision from a few years back foretold this (which I previously previewed in a prior post).  Second, the National Labor Relations Act doesn’t compel a different result.

Justice Gorsuch writes the majority opinion here and concludes: “The policy may be debatable but the law is clear: Congress
has instructed that arbitration agreements like those before us must be enforced as written. ” He criticizes the dissent for its language suggesting a retreat from modern day labor laws:

In the dissent’s view, today’s decision ushers us back to the  Lochner era when this Court regularly overrode legislative policy judgments. The dissent even suggests we have resurrected the long-dead “yellow dog” contract. … But like most apocalyptic warnings, this one proves a false alarm. … Our decision does nothing to override Congress’s policy judgments.

Justice Ginsburg writes the dissent and concludes:

If these untoward consequences stemmed from legislative choices, I would be obliged to accede to them. But the edict that employees with wage and hours claims may seek relief only one-by-one does not come from Congress. It is the result of take-it-or-leave-it labor contracts harking back to the type called “yellow dog,” and of the readiness of this Court to enforce those unbargained-for agreements. The FAA demands no such suppression of the right of workers to take concerted action for their “mutual aid or protection.”

It’s an “Epic” day at the Supreme Court.   Will this have the same effect for state law claims? How should employers implement these changes? When? For all employees?

Lots of questions but today, at least, the Supreme Court answered one of the biggest employment law questions out there.

Today is the last day of the General Assembly session and there are only so many hours to debate and pass bills.

And so, in a year when so many labor & employment law bills were up for consideration, it’s come down to a finish line where just one or two might pass.

The Pay Equity bill I highlighted earlier this week is on to the Governor’s desk, where he has indicated he will sign it.

But the bill making broad changes to the harassment and discrimination laws in the state now appears to be on life support. Perhaps even “mostly dead”.

You will recall from my post earlier this week that the bill passed the Senate with an overwhelming majority with language that seemed to have broad support.

According to a report in CT News Junkie, a deal has yet to be reached in the House and there may be too many issues with it to come to a deal today.

At issue has been the language eliminating the statute of limitations for some sex crimes.  It’s possible that a fix that revises the training requirements could perhaps see it’s way out of the mess but that is seeming increasingly unlikely according to news reports.

There are other bills still floating out there: Paid FMLA, changes to minimum wage, etc. None of them though seems to have enough steam at this stage to get over the finish line.

So stay tuned.  There’s a budget bill that is still up for grabs and the last day always has a way of surprising.

I’ll have a full legislative recap once the dust settles.

Over the weekend, the General Assembly approved a bill prohibiting employers, including the state and its political subdivisions, from asking, or directing a third-party to ask, about a prospective employee’s wage and salary history.

I have previously discussed the measure here.  There were a few versions floating around and it was House Bill 5386 that carried the day (as amended).

The prohibition does not apply in two situations:

  • if the prospective employee voluntarily discloses his or her wage and salary history, or;
  • to any actions taken by an employer, employment agency, or its employees or agents under a federal or state law that specifically authorizes the disclosure or verification of salary history for employment purposes.

While salary may not be inquired, the bill DOES allow an employer to ask about the other elements of a prospective employee’s compensation structure (e.g., stock options), but the employer may not ask about their value.

The bill has a two year statute of limitations. Employers can be found liable for compensatory damages, attorney’s fees and costs, punitive damages, and any legal and equitable relief the court deems just and proper.  This bill amends Conn. Gen. Stat. Sec. 31-40z

As amended, the effective date of the bill is now January 1, 2019.

The final bill is different from a prior bill because it eliminates provisions that generally would have (1) allowed employers to ask about the value of a prospective employee’s stocks or equity, (2) allowed employers to seek a court order to disallow compensatory or punitive damages, and (3) required certain employers to count an employee’s time spent on protected family and medical leave towards the employee’s seniority.

For employers, upon signature from the governor, this bill will become law.  As such, employers should notify all of their hiring personnel of the new restrictions that are likely to go in place effective January 1, 2019. I’ll have more updates after the legislative session winds down this week.