Wage Hour Wage Hour DevelopmentsDevelopments

FLSAFLSA

• Fair Labor Standards Act of 1938Fair Labor Standards Act of 1938– establishes minimum wage, overtime pay,

recordkeeping, and youth employment standards affecting full-time and part-time workers in the private sector and in Federal, State, and local governments

• Minimum Wage section 6Minimum Wage section 6• Overtime section 7Overtime section 7• Child Labor Standards section 12Child Labor Standards section 12

• FLSA may be enforced by private right of FLSA may be enforced by private right of action oraction or– The Wage and Hour Division (Wage-Hour)

administers and enforces FLSA with respect to private employment, State and local government employment, and some Federal employees

– Complaint or “random” investigations• Some special programs

– Special rules apply to State and local government employment involving fire protection and law enforcement activities, volunteer services, and compensatory time off instead of cash overtime pay

Minimum WageMinimum Wage

• Covered, nonexempt workers are entitled to a minimum wage of not less than $7.25 per hour since 2009. Special provisions in South Pacific.

Overtime PayOvertime Pay

• Nonexempt workers must be paid overtime pay at a rate of not less than one and one-half times their regular rates of pay after 40 hours of work in a workweek.

Deductions from PayDeductions from Pay

• Wages required by FLSA are due on the regular payday for the pay period covered.

• Deductions made from wages for such items as cash or merchandise shortages, employer-required uniforms, and tools of the trade, are not legal to the extent that they reduce the wages of employees below the minimum rate required by FLSA or reduce the amount of overtime pay due under FLSA.

Exemptions Exemptions

• The FLSA contains some exemptions from these basic standards. – Specific types of businesses– Specific kinds of work

Common Wage-Related Common Wage-Related Practices Not Covered By Practices Not Covered By

FLSAFLSA• vacation, holiday, severance, or sick payvacation, holiday, severance, or sick pay• meal or rest periodsmeal or rest periods• holidays off, or vacationsholidays off, or vacations• premium pay for weekend or holiday premium pay for weekend or holiday

workwork• pay raises or fringe benefitspay raises or fringe benefits• discharge notices, reason for discharge, discharge notices, reason for discharge,

or immediate payment of final wages to or immediate payment of final wages to terminated employeesterminated employees

Payment of WagesPayment of Wages

• State Law issue – Texas Payday LawState Law issue – Texas Payday Law– Private suit or Texas Workforce Private suit or Texas Workforce

Commission, Labor Law DivisionCommission, Labor Law Division

Maximum HoursMaximum Hours

• FLSA does not limit the number of hours in a day or days in a week an employee may be required or scheduled to work, including overtime hours, if the employee is at least 16 years old.

• Congress set overtime standard, no criminal sanction

Covered EmployeesCovered Employees

• All employees of certain enterprises having workers engaged in interstate commerce, producing goods for interstate commerce, or handling, selling, or otherwise working on goods or materials that have been moved in or produced for such commerce by any person – Being covered does not necessarily mean

entitlement to minimum wage of overtime

Covered EmployersCovered Employers

• covered enterprise is the related activities performed through unified operation or common control by any person or persons for a common business purpose and– whose annual gross volume of sales made or

business done is not less than $500,000 or– is engaged in the operation of a hospital, a

residential institution primarily engaged in the care of the sick, aged, mentally ill; a school or an institution of higher education or

– activity of a public agency.

BUTBUT

•Employees engaged in Employees engaged in commerce and commerce and – Using mail, telephone, or Using mail, telephone, or

shipping, receiving handling shipping, receiving handling goods in interstate commerce goods in interstate commerce usuallyusually covered covered

Domestic Service Domestic Service WorkersWorkers

• Domestic service workers such as day workers, housekeepers, chauffeurs, cooks, or full-time babysitters are covered if:– their cash wages from one employer in

calendar year are at least $1,500 or– they work a total of more than 8 hours a

week for one or more employers.

Tipped EmployeesTipped Employees

• Tipped employees – The employer may consider tips as part

of wages, but the employer must pay at least $2.13 an hour in direct wages.

– Employee must receives at least the applicable minimum wage (see above) when direct wages and the tip credit allowance are combined. If not, employer must make up the difference.

– Employees must retain all of their tips, except to the extent that they participate in a valid tip pooling or sharing arrangement.

Employer-Furnished Facilities

• The reasonable cost or fair value of board, lodging, or other facilities customarily furnished by the employer for the employee's benefit may be considered part of wages.

Sub-Minimum WageSub-Minimum Wage

• InternsInterns• Training Wage - $4.25 for 90 Training Wage - $4.25 for 90

days under 20 years old onlydays under 20 years old only

Exemptions

• Some employees are exempt from the overtime pay provisions or both the minimum wage and overtime pay provisions.

• Two Types – Oddly specific– Stunningly vague

Exemptions from Both Minimum Wage and

Overtime Pay•Stunningly VagueStunningly Vague

– Executive,– Administrative, – Professional employees (including

teachers and academic administrative personnel in elementary and secondary schools),

– Sales employees (outside only), and – Certain computer-related occupations

Oddly SpecificOddly Specific

– Certain seasonal amusement or Certain seasonal amusement or recreational establishments, (camp, recreational establishments, (camp, carnival)carnival)

– certain small newspapers, certain small newspapers, – Seamen employed on foreign vessels, Seamen employed on foreign vessels, – employees engaged in fishing operations, employees engaged in fishing operations, – employees engaged in newspaper deliveryemployees engaged in newspaper delivery– Farmworkers (small farms) Farmworkers (small farms) – Casual babysitters and persons employed Casual babysitters and persons employed

as companions to the elderly or infirmas companions to the elderly or infirm

Overtime Exemption OnlyOvertime Exemption Only– Certain commissioned employees of retail or Certain commissioned employees of retail or

service establishments; service establishments; – auto, (or similar) sales-workers; auto, (or similar) sales-workers; – or parts-clerks and mechanics servicing autos, or parts-clerks and mechanics servicing autos,

trucks, or farm implements, primarily at dealerstrucks, or farm implements, primarily at dealers– Employees of railroads and air carriers, taxi Employees of railroads and air carriers, taxi

drivers, drivers, – certain employees of motor carriers, seamen on certain employees of motor carriers, seamen on

American vessels, and local delivery employees American vessels, and local delivery employees paid on approved trip rate planspaid on approved trip rate plans

– Announcers, news editors, and chief engineers of Announcers, news editors, and chief engineers of certain non-metropolitan broadcasting stationscertain non-metropolitan broadcasting stations

Overtime Exemption Overtime Exemption Only, cont’dOnly, cont’d

– Domestic service workers living in the Domestic service workers living in the employer's residence;employer's residence;

– Employees of motion picture theaters Employees of motion picture theaters andand

– FarmworkersFarmworkers

Recordkeeping

• requires employers to keep records on wages, hours• personal information, including

employee's name, home address, occupation, sex, and birth date if under 19 years of age

• hour and day when workweek begins• total hours worked each workday and

each workweek

Recordkeeping, cont’dRecordkeeping, cont’d

– total hours worked each workday and each workweek

– total daily or weekly straight-time earnings

– regular hourly pay rate for any week when overtime is worked

– total overtime pay for the workweek

Employer BurdenEmployer Burden• Employers at their peril not keeping Employers at their peril not keeping

recordsrecords– Employees may put on testimony of hours Employees may put on testimony of hours

worked EVEN IF only approximateworked EVEN IF only approximate– Employer burden to show overstated or not in Employer burden to show overstated or not in

good faithgood faith– Courts hold that an employer cannot complain

about the speculative nature of employees’ damages estimates when the imprecision arises precisely because of the employer’s failure to maintain the required records. Reich v. Stewart, 121 F.3d 400 (8th Cir. 1997).

Computing Overtime Pay

• Overtime must be paid at a rate of at least one and one-half times the employee's regular rate of pay for each hour worked in a workweek in excess of the 40 (few exceptions)

• the regular rate includes all payments made by the employer to or on behalf of the employee (not fringe benefits)

• Individuals “regarded as” disabled not Individuals “regarded as” disabled not entitled to reasonable accommodationentitled to reasonable accommodation

Hourly rate 

– If more than 40 hours are worked, at least one and one-half times the regular rate for each hour over 40 is due. Example: An employee paid $8.00 an hour works 44 hours in a workweek. The employee is entitled to at least one and one-half times $8.00, or $12.00, for each hour over 40. Pay for the week would be $320 for the first 40 hours, plus $48.00 for the four hours of overtime – a total of $368.00.

Piece RatePiece Rate– The regular rate of pay for an employee

paid on a piecework basis is obtained by dividing the total weekly earnings by the total number of hours worked. • The employee is entitled to an additional one-half

times this regular rate for each hour over 40, plus the full piecework earnings. Example: An employee paid on a piecework basis works 45 hours in a week and earns $405. The regular rate of pay for that week is $405 divided by 45, or $9.00 an hour. In addition to the straight-time pay, the employee is also entitled to $4.50 (half the regular rate) for each hour over 40

Salary– The regular rate for an employee paid a

salary for a regular or specified number of hours a week is obtained by dividing the salary by the number of hours for which the salary is intended to compensate. The employee is entitled to an additional one-half times this regular rate for each hour over 40, plus time and a half for hours not contemplated, plus the salary.

Fluctuating WorkweekFluctuating Workweek

• If, under the employment agreement, a salary sufficient to meet the minimum wage requirement in every workweek is paid as straight time for whatever number of hours are worked in a workweek, – the regular rate is obtained by dividing the

salary by the number of hours worked that week.

– Overtime is computed as ½ the regular rate for that week

RemediesRemedies

• Back Pay for two years, measured from Back Pay for two years, measured from the date of filingthe date of filing– But WH Div tolling agreementsBut WH Div tolling agreements– Three years for willful violationsThree years for willful violations

• Usually evidence of knowledge that practice was Usually evidence of knowledge that practice was unlawfulunlawful

• ““Automatic” liquidated damages = back Automatic” liquidated damages = back paypay

• Attorneys’ fees & costs to prevailing Attorneys’ fees & costs to prevailing plaintiffplaintiff

Collective ActionsCollective Actions

• Section 16(b) says only a party is Section 16(b) says only a party is you give consent, different than you give consent, different than class action opt-outclass action opt-out

• Usual way for multiple plaintiff is Usual way for multiple plaintiff is opt-inopt-in– Court approved noticeCourt approved notice– Employee (and former) employee Employee (and former) employee

list usually requiredlist usually required– Similarly situatedSimilarly situated

Class Action WaiversClass Action Waivers

• Employers seek to have employees waive Employers seek to have employees waive right to bring class action/collective action right to bring class action/collective action lawsuitslawsuits

• NLRB says violation of rights to concerted NLRB says violation of rights to concerted activity activity In re D.R. Horton, In re D.R. Horton, 357 NLRB 184 357 NLRB 184 (2012)(2012)

• Fifth Circuit disagreed, approved such Fifth Circuit disagreed, approved such agreements as long as they specifically agreements as long as they specifically preserve employee right to make complaint preserve employee right to make complaint to NLRB to NLRB DR Horton v. NLRBDR Horton v. NLRB, 737 F. 3d 344 , 737 F. 3d 344 (5(5thth Cir. 2013) Cir. 2013)

Certification and Notice Certification and Notice in Collective Action in Collective Action

CasesCases• Lee v. Metrocare ServicesLee v. Metrocare Services, 980 F. , 980 F.

Supp. 2d 754 (ND Tex. 2013)Supp. 2d 754 (ND Tex. 2013)– Affirms prevailing use of Lusardi v. Xerox Affirms prevailing use of Lusardi v. Xerox

standard (DNJ Case 1987)standard (DNJ Case 1987)– “[T]he court need not find uniformity

in each and every aspect of employment” to find class members are “similarly situated.”

– some identifiable facts or legal nexus that binds the claims

FLSA Rights of FLSA Rights of Undocumented AliensUndocumented Aliens

• Lucas et al v. Jerusalem Café, LLC, 721 F.3d 927 (8th Cir. 2013) Undocumented Undocumented alien employees won FLSA claims at trialalien employees won FLSA claims at trial

• Employer argued on appeal FLSA doesn’t Employer argued on appeal FLSA doesn’t apply to undocumented apply to undocumented

• Court called this the Al Capone DefenseCourt called this the Al Capone Defense– “acceptance ... of jobs on substandard terms

as to wages and working conditions can seriously depress wage scales and working conditions”

Offers of JudgmentOffers of Judgment

• Genesis HealthCare Corp v. Symczyk, 133 S.C.• 1523 (2013)

– Court found a rule 68 offer of judgment mooted any collective action where the offer provided complete relief

• BUT Sandoz v. Singular Wireless, LLC, 553 F.3d 913 (5th Cir. 2008)– Rule 68 offer cannot moot an FLSA collective action

because “the relation back principle applies to ensure that defendants cannot unilaterally ‘pick off’ collective action representatives and thwart the availability of collective actions under the FLSA.”

– But NO concession that the relief was complete

Fluctuating Workweek in Fluctuating Workweek in Misclassification CasesMisclassification Cases

• Black et al v. SettlePou, 732 F.3d 492 (5th Cir.

2013)• Query: How do we decide if this was a Query: How do we decide if this was a

fluctuating workweek situation?fluctuating workweek situation?

55thth Circuit Adopted Rule Circuit Adopted Rule• 1. Employer and employee “have

agreed on a fixed salary for varying hours” worked each week;

• 2. Salary is paid as agreed;• 3. Hours fluctuate as anticipated;• 4. Agreement need not be in writing

and can be implied from the course of conduct, or the understanding of the parties, and other circumstances.

Factors Weighing against Factors Weighing against FWW ApplicationFWW Application

• When hired as non-exempt, the agreement was for a fixed weekly salary plus time-and-a-half overtime;– When reclassified as exempt, there was no

written or specific agreement as to the number of hours the salary covered;

– HR Director testified she was unaware of any FWW agreement with Black;

– Employer testified the fulltime workweek was 37 ½ hrs;

Application cont’dApplication cont’d

• Employee Handbook defined “fulltime” as 37 ½ hrs/week

• Payroll records defined Black as “fulltime employee”

• Plaintiff testified her regular schedule was 37 ½ hrs/week and her salary was intend to cover those hours.

Course of ConductCourse of Conduct

• When Plaintiff worked more than 37 ½ hours in a week and was not paid overtime she immediately and repeatedly made verbal and written complaints to her supervisor and the HR Director

• Fifth Circuit said acceptance of pay alone does not constitute an agreement – there also must be an understanding by employee that the fixed salary pays for all hours worked each week

RetaliationRetaliation

• Section 215(a)(3) unlawful to Section 215(a)(3) unlawful to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this Act, or has testified or is about to testify in any such proceeding

• Broadly construed to further remedial Broadly construed to further remedial provisions of the Actprovisions of the Act

Retaliation AnalysisRetaliation Analysis

• McDonnell Douglas burden shiftingMcDonnell Douglas burden shifting– plaintiff claiming retaliation under §215

must first prove a prima facie case of retaliation by showing he • (1) engaged in protected activity• (2) was subjected to adverse employment

action following the protected activity; and • (3) a causal connection between the activity

and the adverse action.” Connor v. Celanese Ltd., 428 F. Supp. 628, 638 (S.D. Tex. 2006)

Burden ShiftsBurden Shifts

• If prima facie case shown, If prima facie case shown, employer must show a legitimate, non retaliatory reason for the adverse action

• If employer meets its burden, plaintiff then must show that the employer’s stated reason for the adverse employment action is pretextual

A Complaint is a A Complaint is a ComplaintComplaint

• Oral complain to company official is Oral complain to company official is enough to invoke protection enough to invoke protection Kasten v. Saint‐Gobain Performance Plastics Corp., 131 S.Ct. 1325 (2011)

• Informal workplace complaints are sufficient Hagan v. Echostar, 529 F.3d 617 (5th Cir. 2008)

• Conversation with DOL official enough Truex v. Hearst Communications, Inc., 96 F.Supp. 2d 652 (S.D. Tex. 2000)

Good Faith Belief Good Faith Belief enough?enough?

• Courts in other circuits have Courts in other circuits have addressed whether an employee is addressed whether an employee is protected while making a complaint protected while making a complaint of a practice that is later found not a of a practice that is later found not a violationviolation– 77thth and 10 and 10thth Circuits and district courts Circuits and district courts

in 2in 2ndnd and 3rd circuits have found it is and 3rd circuits have found it is

Arbitration AgreementsArbitration Agreements

• FLSA Actions may be subject to FLSA Actions may be subject to arbitration agreements arbitration agreements Carter v. Countrywide Credit Industries, Inc., 362 F.3d 294 (5th Cir. 2004)

SettlementsSettlements• As a general rule, FLSA claims may

not be validly settled without the approval of either the DOL or the court in which the action is filed. See 29 U.S.C. § 216(c)

• Except – Martinez v. Bohls, 361 F.Supp.2d 608 (W.D.

Tex. 2005)(finding a private release of FLSA claims valid where a bona fide dispute existed as to the amount of hours worked, or compensation due, at the time the parties entered into the compromise and release)

Thank YouThank You