Wage & Hour Compliance

By Jaclyn W. Hamlin

Seyfarth Synopsis: Do ambulance drivers working twenty-four hour shifts have to be available all twenty-four hours, even when they’re eating or resting? The Ninth Circuit wants the California Supreme Court’s opinion.

A former ambulance driver in California filed a claim alleging violations of federal and state wage and hour laws. Dylan Stewart worked for San Luis Ambulance, Inc. (SLA) under a written agreement requiring him to work twenty-four hour shifts, during which time he was required to be on duty and ready to respond to emergency calls that could come in at any time, but not to actively perform work for all twenty-four hours. Stewart acknowledged that he was paid for all twenty-four hours of his shifts, “irrespective of whether he was responding to emergencies; engaging in other employment related duties; or eating, sleeping, or enjoying leisure at the ambulance station.” His employment records and activity logs reflected that he was able to take meal and rest breaks on every shift. However, Stewart claimed that he was entitled to “compensation for an additional two hours of work for each day that he worked without proper meal or rest periods,” as well as to penalties for his former employer’s alleged failure to timely or accurately pay him premium wages.

The District Court ruled against Stewart, granting summary judgment to the ambulance service. Stewart appealed, and the Ninth Circuit concluded that it was unable to rule on his case without clarification of the proper interpretation of a state wage order, in light of earlier California State Court precedent. In its order, in Stewart v. San Luis Ambulance, Inc., No. 15-56943 (9th Cir. 2017), the Ninth Circuit referred the case to the California Supreme Court for guidance on three questions under the California Labor Code:

1) Must an ambulance service relieve attendants of the obligation to be available to respond to emergency calls that come in while the attendant is on a rest period during a four hour shift?

2) May an ambulance service require attendants working 24-hour shifts to be available to respond to emergency calls that come in while the attendant is on a meal break, without a written agreement containing an on-duty meal period revocation clause?

3) Does an employee have a claim for violation of the obligation to pay a “premium wage” for meal periods, when the employer does not include the premium wage in the employee’s pay or pay statements?

The Ninth Circuit asked the California Supreme Court to weigh in on the questions in light of conflicting authority between State wage orders and State court precedent. The Ninth Circuit instructed the parties to notify it within fourteen days of the California Supreme Court’s acceptance or rejection of certification, and again within fourteen days if the Court issues an opinion, but no other timeline was given in which court-watchers might expect the California Supreme Court to act.

In other words…. Stay tuned. We will continue to watch this case with interest.

For further discussion of California-specific employment cases and issues, check out Seyfarth’s California Peculiarities Employment Law Blog.

For more information on this topic, please contact the author, your Seyfarth Attorney, or any member of Seyfarth Shaw’s Wage & Hour LitigationTeam or the Labor & Employment Team.

By Christopher M. Cascino

Synopsis: On May 25, 2017, Seyfarth attorneys Chris DeGroff, Noah Finkel, and Brad Livingston presented their insights on how the Trump administration will affect employers.  Specifically, they discussed the effect the Trump administration is having and will have on the EEOC, the DOL’s Wage and Hour Division, and the NLRB.  All presenters agreed that, while the Trump administration will have an effect on these agencies, it will take time for the changes to take place.

The Presentation

Chris began the presentation by discussing the EEOC.  He observed that the new administration has not yet replaced the high-ranking EEOC officials who set EEOC policy.  He pointed out that the majority of the EEOC still consists of Democratic appointees, though observed that this will change around July 2017.  He further pointed out that the General Counsel position remains unfilled.  When that is filled, Chris thinks we should have a better idea about the direction the EEOC will head in the Trump administration.

Chris discussed the ways in which the Trump administration might affect the EEOC’s strategic enforcement priorities.  For example, Chris pointed out that the EEOC’s strategic priority of eliminating systemic barriers to hiring will likely be a focus of a Trump administration focused on job growth, while strategic priorities like eliminating pay disparities might be less of a focus to the administration.

Chris concluded by pointing out that the EEOC has shown itself to be resilient to changes in administrations.  In the past, it has been aggressive after changes from a Democratic to a Republican administration.  That trend appears to have continued, as the EEOC’s lawsuit filings are up 75% over this time last year.  Chris observed that this may be because the EEOC may be trying to justify continued funding from what could be a less friendly administration.

Noah then spoke about how the Trump administration will affect the DOL’s Wage and Hour Division.  Like Chris, Noah pointed out that Trump has not been able to fill the key DOL positions.  While the administration has put in place a Secretary of Labor, none of the three key policymaking positions in the Wage & Hour Division – the Administrator, Deputy Administrator, and Solicitor of Labor – have been filled by Trump’s administration.  In fact, the   Administrator and Deputy Administrator positions are vacant, and the current Solicitor of Labor is temporary.  Noah observed that, when the administration fills these positions, we will have a better idea about how the Wage and Hour Division will function under the Trump administration.

Noah stated that, though the DOL’s Wage and Hour Division grew under the Obama administration, there are no proposed changes to its funding in the Trump administration’s proposed budget.  As a result, like with the EEOC, while there could be a change in the focus of wage and hour investigations, the actual number of investigations will probably remain steady.

Noah pointed out that probably the biggest outstanding question is how the Trump DOL will handle the rule promulgated under the Obama administration raising the wage needed to qualify for the white collar exemption.  Currently, the rule is not in effect because a federal judge enjoined the DOL from enforcing it.  The injunction is on appeal and, to date, the Trump administration has not filed a brief on the appeal.  Noah said we should look for the Trump administration’s position on appeal to see where the law is heading on the wage needed for the white collar exemption.  For more information about Noah’s presentation, see link.

Brad  then presented on changes to expect from the NLRB.  As with the EEOC and the DOL’s Wage & Hour Division, Brad stated that change within the NLRB will take time because the Trump administration has not yet put its appointees into place.  At this point, there are two vacancies on the five member NLRB.  Its chair is a Republican appointee whose term ends this December, and its other two current members are Democratic appointees whose terms end in late 2018 and 2019.  Although Trump can create a Republican-appointed majority by filling the two vacancies, he has not done so.

Brad stated that even after Republican appointees are a majority of the NLRB, change will take time because the NLRB tends to interpret the law in decisions rather than through rulemaking.  As a result, it will have to wait for the right case to come before it before it can change its view of the law.

Brad argued that the Obama administration’s NLRB was the most aggressive in limiting the rights of employers and expanding the rights of individual employees and unions in history.  He emphasized that, while a Trump NLRB will likely take a different course and even overturn many of the recent decisions of the NLRB, it will take time before these changes are made.  For more information about Brad’s presentation, see link.

Implications For Employers

While the Trump administration will result in changes to the way government agencies interact with employers, these changes will occur gradually.  Further, employers should not expect a decrease in enforcement actions brought by government agencies against employers.  The latest budget proposal out of the Trump administration keeps funding for these agencies steady, which will allow them to continue to operate at the level they operated at in the prior administration.

 

By Alex Passantino

As the nation waited for the final states to be called in the early morning hours on Wednesday, we here at the Wage & Hour Litigation Blog focused on our one thing: what impact would the result have on the DOL’s overtime exemption regulations scheduled to go into effect on December 1, 2016?  How does the election of a Republican House, a Republican Senate, and President-Elect Donald Trump change what employers should be doing as we speed towards the December 1 deadline?

The short answer is that — at least for the near-term — employers should continue the same way as they have been, with a laser focus on being in compliance by December 1.

That being said, there are a couple of ways that the regulations can be stopped before December 1.   And there are a couple of others that may change the game after December 1.

The first path is through the Eastern District of Texas. As we have reported previously, 21 states and dozens of trade associations filed separate lawsuits (which since have been consolidated) challenging the overtime exemptions rules on a variety of grounds.  A hearing on the states’ motion for injunctive relief is scheduled for next week, on November 16.  The trade associations are being permitted to participate as amici in the states’ case, and also have filed an expedited motion for summary judgment.  It is possible that the judge will enjoin the rules in advance of the December 1 effective date.  As is the case with most litigation, however, that result is less than certain.

A second pre-December 1 path to stopping — or at least delaying — the overtime exemption regulations is through Senator Alexander’s Overtime Reform and Review Act, S. 3464.  That bill would — by statute, not by regulation — increase the salary level to $692 per week on December 1, 2016, then increase it again in 2018, 2019, and 2020 until it hit $913/week.  The bill also contains special provisions protecting nonprofit, state and local government, and education employers from salary increases unless certain conditions are met.  Although the Senate has been expected to take up the bill upon return to Capitol Hill, the short legislative calendar and the threat of a veto by President Obama pose significant hurdles to relief before the December 1 deadline.

Once we get into 2017, there are additional tools at the disposal of Congress and a Trump Administration. With the new salary level taking effect nearly eight weeks before Inauguration Day, however, there will be substantial political calculations involved in any use of those tools.

One tool is the seldom-used Congressional Review Act, a law that allows Congress to review and disapprove new agency regulations within prescribed time periods. Congress could pass a “resolution of disapproval” of the new regulations that would have the effect of rescinding the rules.  Under the CRA, any regulation issued within the final 60 legislative days before Congress adjourns sine die is treated as having been issued on the 15th legislative day of the next session of Congress.  This allows the CRA resolution to be considered by the new Congress and, in this case, the new President, which makes it much more likely that the resolution will be successful.  Because the final 60 legislative days can be counted only in retrospect, the regulations that might be subject to this procedure are unknown.  An early estimate placed the “deadline” at May 16, 2016.  The overtime exemption rules were issued on May 23, 2016, which would place them within the review period.  Whether they actually fall within that period depends on how much Congress is in session over the coming weeks.  Assuming the overtime exemption rules fall within the relevant period, in the next session of Congress, and after January 20, 2017, President Trump could sign the CRA resolution, which would make it as if the rules never existed.

Finally, we could see rulemaking by the Trump Administration, such as a notice-and-comment rulemaking revising the salary level downward and/or eliminating the three-year automatic update provision. Going through the notice-and-comment process would be time-consuming and likely would not result in any relief on the salary level until well into 2017, at best.

Ultimately, employers should continue their efforts to be compliant by December 1. There are far too many variables at this point to conclude otherwise.

By Robert Nobile, Courtney Stieber and Samuel Sverdlov

Introduction

Employers of technology innovators should beware the employment traps and risks associated with think tank operations and retreats, such as hackathons. Hackathons are company-sponsored competitions, where either teams or individual software developers (and now increasingly other types of professionals) (here) are given a timed task to complete, usually over the course of a weekend, on the employer’s premises.  Over the last five years, these events have exploded in popularity, generating products such as GroupMe or the beloved Facebook timeline.

Types of Hackathons

Two types of hackathons, in particular, may trigger employment law risks: 1) internal hackathons, focused on innovation by employees already employed by the company; and 2) external hackathons, where the purpose is to recruit elite programmers or other professionals from a highly competitive talent pool. In hosting these hackathons, questions may arise as to whether the event is compensable under wage and hour law, who owns the intellectual property developed during the event, and whether hackathons themselves may be deemed to be a pre-employment test.

Best Practices for Employers

To stay ahead of the potential hackathon risks, employers hosting hackathons are well advised to:

  • For internal hackathons, to the extent practicable, limit participation to employees exempt from overtime under the FLSA and applicable state laws.
  • If non-exempt employees are invited to participate in an internal hackathon, consider compensating such employees for their time spent participating, including overtime where applicable. Build in break time as required by law.
  • Companies that anticipate routinely conducting hackathons should consider including language in their employee handbook to make clear that participation in hackathons is entirely “voluntary” and that employees should not be under the impression that “promotion or advancement is dependent upon participation in the contest.”
  • Companies hosting external recruitment hackathons should avoid having potential applicants work on actual company problems or software, or be prepared to pay the recruits as employees for such work. Rather, to stay focused on the purpose of a recruitment event, companies should pose hypothetical or theoretical problems in the field for the recruits to tackle.
  • Companies hosting external recruitment hackathons must consider whether the hackathon is for the recruit’s benefit or the company’s benefit; if the latter, the company may be obligated to compensate recruits for their participation.
  • Consider having participants in external recruitment hackathons sign terms and conditions, for instance, acknowledging the purpose of the hackathon and that participation in the hackathon does not guarantee them a position with the company and that they will not be paid since the exercise is to assess their technical skills and is not work being performed for the employer’s benefit. Such terms and conditions could also designate ownership of the product developed through the hackathon.
  • Because hackathons are a relatively new tool for development and innovation, how they will ultimately be viewed and analyzed by the Department of Labor and the courts is an open question. Companies should proceed with the utmost caution in this arena and consult with their employment counsel when planning or running a hackathon to address these and any other issues that may be anticipated.
  • For more information on Hackathons, please see our article “The Human Resource Guide to Hackathons” appearing in the January/February 2016 edition of HR Advisor: Legal & Practical Guidance, Thomson Reuters. You may also contact the authors or your Seyfarth attorney.

 

By Christine Hendrickson, Valerie J. Hoffman, Lawrence Z. Lorber, Annette Tyman

If there was any doubt that pay equity is major risk area for employers, that doubt should now be erased.  This morning, on the seventh anniversary of the signing of the Lilly Ledbetter Fair Pay Act, the EEOC made a startling announcement.

The EEOC announced its intention to submit to the Office of Management and Budget (OMB) a major revision to the Employer Information Report (EEO-1) which will require that all employers with more than 100 employees submit compensation data to the EEOC beginning in 2017.  At a White House ceremony, President Obama, Secretary of Labor Perez and EEOC Chair Yang announced the new initiative stating that the availability of pay data will allow the EEOC and the OFCCP to better target compensation issues and address pay disparities.

This proposal suggests that the new EEO-1 form will take the place of the Department of Labor’s Office of Federal Contract Compliance Programs’ (OFCCP) pending “Equal Pay Report” regulations, which would have affected only federal contractors and subcontractors. For more information, see our earlier alert on the Equal Pay Report here.

Written comments to the EEOC’s proposal will be due 60 days after it is published in the Federal Register, an action that is expected to occur on Monday, February 1, putting the close of the comment period in early April 2016. We expect that hundreds, if not thousands of comments will be received.

What is Currently Required?

Currently, employers with more than 100 employees, and federal contractors or subcontractors with more than 50 employees are required to collect and provide to the EEOC information about employees’ race/ethnicity and sex in each of ten job categories (e.g., Executive & Senior-Level Officials and Managers, First/Mid-Level Officials & Managers, Professionals, Technicians, Sales Workers, Administrative Support Workers, Craft Workers, Operatives, Labors and Helpers, and Service Workers).

What Pay Data Would Be Required?

Beginning in September 2017, employers with more than 100 employees would also be required to report on the W-2 earnings and hours worked for all employees by race/ethnicity and gender.  Federal contractors and subcontractors with between 50 and 99 employees will only be required to submit the current EEO-1 form without compensation data.

For each of the ten EEO-1 job categories, the proposed EEO-1 report will require compensation data to be categorized in twelve pay bands. The pay bands track those used by the Bureau of Labor Statistics in the Occupation Employment Statistics Survey as follows:

Pay Band 1 >19,239
Pay Band 2 $19,240-$24,439
Pay Band 3 $24,240-$30,679
Pay Band 4 $30,680-$38,999
Pay Band 5 $39,000-$49,919
Pay Band 6 $49,920-$62,919
Pay Band 7 $62,920-80,079
Pay Band 8 $80,080-$101,919
Pay Band 9 $101,920-$128,959
Pay Band 10 $128,960-$163,799
Pay Band 11 $163,800-$207,999 and
Pay Band 12 <$208,000

So, for example, an employer would report that it employs ten African-American men who are Craft Workers in the second pay band ($19,240-$24,439) or that it employs four White women in the Professional job category who are in the seventh pay band ($62,920-$80,079).

Unlike the OFCCP’s proposal, which required year-end W-2 compensation data, the EEOC’s proposal will require W-2 earnings for the previous twelve months from any pay period between July 1st and September 30th (same as the current EEO-1 report). As the proposal requests W-2 information, this will include salary, bonuses, commissions, tips, taxable fringe benefits, and other forms of reportable earnings. The EEOC suggests that such a requirement will not be burdensome to employers as HR data systems allow W-2 wage reporting by any specified date range.  This does not necessary align with employers’ experience, however, especially when pulling commission data. The proposal estimates the new requirements will cost less than $400 per employer the first year and a few hundred dollars per year after that, a gross underestimation of the burden on employers to collect and report this information.

To help address the concerns anticipated in response to the OFCCP’s proposal, the EEOC’s proposal requires that part-time or partial year employment be normalized by also requiring employers to publish hours worked by the employees in each job category and pay band.  For example, an employer would report that the ten African-American men who are Craft Workers in the second pay band worked a total of 10,000 hours.  This data is still largely meaningless to assess pay equity, however, as eligibility for overtime, commissions, bonuses are typically not the same for full-time, and partial-year or part-time employees.

Impact on Employers

It is difficult to overstate the impact that this could have on employer.

The EEOC explicitly says it will use the pay information to “discern potential pay discrimination.”  It will do so by comparing variations within and across job categories. However, the pay bands do not take into effect legally accepted variables, such as seniority, level of responsibility, and education.  We expect many false positive results with employers then needing to defend their compensation systems.  When the OFCCP published its proposed regulations in 2014, the Agency indicated that it would use the compensation data to create industry compensation standards which will then be used as benchmarks for both the OFCCP and the contractor community and would have been part of the methodology used to prioritize which contractors will be selected for OFCCP audits. Because the OFCCP will have access to the new reports, their agenda will likely not change.

Further, because EEO-1 information is reported by enterprise (i.e., the parent company and all subsidiaries), this will allow the EEOC to compare compensation within a location, across the organization and enterprise-wide.  In addition, the EEOC said it will use the data to compare employers by industry or metropolitan area.

There are also significant unaddressed data privacy concerns for employers. The proposal acknowledges that the EEOC cannot release EEO-1 data and therefore the company supplied EEO-1 cannot be disclosed pursuant to a Freedom of Information Act or otherwise.  However, EEO-1 data can be used in litigation.  The OFCCP states that it will review requests for the report under Exemption 4 of the Freedom of Information Act and the Trade Secrets Act.  While we have been successful opposing requests for disclosure of the EEO-1 form to the OFCCP in individual cases, the new form will undoubtedly be subject to additional scrutiny and requests for disclosure.

It’s More Important than Ever to Act Proactively!

So where do we go from here? In light of this development, the OFCCP’s focus on fair pay, and recent state action on pay equity (including in California, New York, and Massachusetts), all employers would be well-advised to conduct a proactive pay equity analysis now, to address any areas of concern before data is reported to the EEOC and/or the OFCCP.   Seyfarth Shaw’s Pay Equity Cross-Practice L&E Team, coordinates the efforts of its Employment Analytics Group, Workplace Counseling and Solutions Group, and its Complex Discrimination Litigation Group.  We are ready to help guide you through this process.

In our third installment of articles looking at the employment law cases being heard by the US Supreme Court this fall term, Tyson Foods Inc. v. Bouaphakeo will have importance in both the wage & hour and class action litigation worlds. “Donning and Doffing “ – who knew!

 Another Watershed Moment for Class Actions?  SCOTUS to
Address Limits on Statistical Proof In Class and Collective Actions

 By Michael Kopp

In a case that is certain to provide an important sequel to the Dukes decision, the Supreme Court will hear argument next week on Tyson Foods Inc. v. Bouaphakeo, to address (1) the use of statistical averaging in class actions to prove liability and damages, and (2) whether courts may certify a class that includes individuals with no injury.

Tyson Foods is important because it will likely set further markers on how far the court’s prohibitions against statistical modelling extend, and more significantly, how these concepts apply to collective actions under the Fair Labor Standards Act. For this reason, employers’ eyes are on Tyson Foods, as the Supreme Court has not previously addressed how Dukes’ analysis applies to collective actions under the FLSA, and whether the FLSA’s “similarly situated” standard differs from Rule 23(b).

The road to the Supremes.  Tyson Foods reached the Supreme Court by way of a divided Eighth Circuit opinion affirming a $5.8 million verdict on an off-the-clock class wage claim. Plaintiffs claimed that Tyson’s Iowa meat processing facility had not paid over 3000 plant workers for the time they spent changing in and out of their work gear and walking to and from the production line.  The district court found there was a common question as to whether the challenged time was compensable, and certified the case as a collective action as to the FLSA claim, and as Rule 23 class action as to the state law wage and hour claims.

Tyson unsuccessfully attempted to decertify the class, and argued neither liability nor damages were “capable of classwide resolution … in one stroke,” as required by Dukes.  Tyson pointed to variations in the type and amount of equipment worn by employees in the hundreds of classifications at issue, and highlighted the disparities in the routines and amount of time employees spent on these tasks. Unpersuaded, the district court permitted a nine-day jury trial on the class claims, where plaintiffs used a statistical model to calculate the “average” time employees spent on the donning, doffing and walking activities at issue.  These average activity times were then extrapolated to the class members.  Although plaintiffs’ expert conceded that the actual times for these activities varied considerably – and over 200 class members suffered no injury at all – the jury nonetheless awarded a lump sum verdict, to be divided among all class members.

Divided approaches to Dukes.  The divided Eighth Circuit panel’s majority opinion and dissent highlight the inconsistent approaches lower courts have taken in interpreting Dukes. The panel majority found that there was a common question concerning whether the activities were compensable under the FLSA and state law, and that plaintiffs had “prove[n] liability for the class as a whole, using employee time records to establish individual damages.”

The dissent took the majority to task for ignoring the considerable differences in donning and doffing times, employee routes to their work stations, the amount of time Tyson allotted for such activities, shortened time shifts, “and a myriad of other relevant factors.” Using statistical models to gloss over those differences violated Dukes’ requirement that the action generate “common answers apt to drive the resolution of the litigation.”  Moreover, the dissent highlighted the critical problem with the majority’s distinction between the classwide liability determination and the individual damages analysis.  Unlike other class claims, establishing a violation in wage and hour actions generally turns upon and “includes the measure of a class member’s individual damages.”  In other words, an employer is only liable to an individual if the employee has actually suffered an injury, such as the compensable loss of overtime.  For that reason, a verdict that “result[s] in a single-sum, class-wide verdict from which each class member, damaged or not, will receive” compensation, is fundamentally inconsistent with Dukes’ prohibition against “trial by formula.”

Why This Case Matters.  First, the Supreme Court will have the opportunity to clarify the extent of Dukes limitations on the use of statistical techniques to establish damages and liability.  Second, the case has particular significance in the wage and hour context, because it provides the opportunity for the Supreme Court to weigh in for the first time as to whether the standards for certifying a Rule 23(b) class action apply to collective FLSA actions, and whether the FLSA’s “similarly situated” standard alters the analysis.  Third, the case provides the opportunity for the court to address Tyson Food’s constitutional argument that an award of monetary damages to uninjured class members is impermissible.  This is particularly critical, as it is a common feature for wage and hour actions to include class members with no identifiable actual wage loss or injury.

Stay Tuned … This case is set for oral argument on Tuesday, November 10, so be on the lookout for a follow up blog post here when a decision is reached.

If you would like more information regarding this article, please contact the author or your Seyfarth attorney.

By Erin Dougherty Foley and Craig B. Simonsen

The U.S. Department of Labor (DOL), due to pending litigation, had not begun to enforce the Fair Labor Standards Act (FLSA) final rule on protections relating to most home care workers, which rules had an effective date of January 1, 2015. That litigation has now concluded, and the DOL rule has been upheld.

The DOL had previously announced a time-limited non-enforcement policy because it was a party to a federal lawsuit regarding the revised regulations. The U.S. Court of Appeals for the District of Columbia issued an opinion in that case which upheld the rule that many home care workers may now be subject to minimum wage and overtime pay protections. Home Care Association of America v. Weil, No. 15-5018 (D.C. Cir. August 21, 2015). The Court of Appeals opinion reversing the District Court’s orders and upholding the rule, became effective on October 13, 2015, when the Court of Appeals issued its mandate to the District Court.

In the underlying rulemaking, the DOL had promulgated changes to its regulations governing the FLSA’s Section 13(a)(15) “companionship” exemption, and the Section 13(b)(21) overtime exemption for “live-in domestics.” The final rule provided that third-party employers would no longer be able to rely on these exemptions. The final rule had been published in October 2013. 78 Fed. Reg. 60454 (Oct. 1, 2013).

In a DOL blog about the final rule, the DOL noted that it “gives these nearly 2 million workers the same basic protections already provided to most U.S. workers – including those who perform the same jobs in nursing homes.” Specifically, under the rule, “direct care workers [such as home health aides, personal care aides, and certified nursing assistants] employed by third-party employers, such as home care agencies, will receive minimum wage and overtime protection.” In other words, home care workers may now be entitled to the same wages as employees performing similar duties in professional healthcare and nursing home facilities. “Workers employed solely by a family or individual may be covered if they are performing medically-related duties or are providing more than a limited amount of care in addition to fellowship and protection.” (Emphasis added.)

In further clarification, as explained in the DOL press release, “direct care workers who perform medically-related services for which training is typically a prerequisite are not companionship workers and therefore are entitled to the minimum wage and overtime.” Also under the rule, individual workers who are employed “only by the person receiving services or that person’s family or household and engaged primarily in fellowship and protection (providing company, visiting or engaging in hobbies) and care incidental to such activities, will still be considered exempt from the FLSA’s minimum wage and overtime protections.” (Emphasis added.)

The DOL has now indicated that it will begin enforcement of the FLSA Final Rule on November 12, 2015. At that time, from November 12 through December 31, 2015, the DOL will be in a “second phase of the time-limited non-enforcement policy,” that it had announced in October 2014, during which time it will “exercise prosecutorial discretion” in determining whether or not to bring enforcement actions, with “particular consideration given to the extent to which States and other entities have made good faith efforts to bring their home care programs into compliance with the FLSA since the promulgation of the Final Rule.” 79 Fed. Reg. 60974 (October 9, 2014).

For employers, including home-care agencies and other third-party employers, now would be the time to assess whether these exemptions will be available, as they likely may be, and take steps to come into compliance with the FLSA’s minimum-wage, overtime, and timekeeping requirements. Indeed, employers in these industries should be moving toward promptly completing steps in that direction. Consider also whether state or other local laws might require that these same employees be paid minimum-wage and overtime compensation without regard to these FLSA exemptions.

If you have any questions on this topic contact the authors, a member of Seyfarth’s Health Care Practice Group, or your Seyfarth attorney.

By Annette Tyman, Christine Hendrickson and Kristina M. Launey

Yesterday, October 6, California Governor Jerry Brown signed the   California Fair Pay Act, which media observers have called the nation’s most aggressive equal pay law. The Fair Pay Act will be effective January 1, 2016 for employers with California-based employees.

How Does This Law Differ From Current Laws Addressing Pay Discrimination?

Click here for a Management Alert to learn more.

By Jacob Oslick

iStock_000023258402MediumWe have previously reported and blogged about challenges to paying employees through debit card-like “paycards.” A recent Pennsylvania decision has amplified those concerns.

In a case of first impression, the trial court in Luzerne County, Pennsylvania found that paying employees through mandatory payroll cards does not comply with a Pennsylvania law, the Wage Payment and Collection Law, which requires “wages” to be paid through either “lawful money of the United States” or a “check.” Siciliano v. Mueller, Case No. 2013-07010 (Pa. Com. Pl., Luzerne Cnty. 2015) (citing 43 P.S. § 260.3). Pennsylvania adopted this statutory language decades ago, principally to bar employers from paying employees in scrip (i.e., worthless Monopoly-style company money). But, if the Court’s ruling stands, Pennsylvania employers may now face liability if they pay their employees through a debit card instead of cash, check, or — upon the employee’s written consent — direct deposit. See 7 P.S. § 6121 (defining “check” to include direct deposit, if an employee requests direct deposit in writing).

Citing Black’s Law Dictionary, the Siciliano Court reasoned that payroll cards are not “lawful money of the United States,” because they are not “bills and coins” that have been approved “in a country for the payment of debts, the purchase of goods, and other exchanges of value.” Nor are they a check, because they are not “an unconditional written order” to “pay certain sum of money on demand.” Rather, the Court opined, payroll debit cards can only be turned into “lawful money” after a visit to the bank or ATM. Thus, the Court determined, the WPCL’s “plain language” compelled finding that payroll cards did not comply with the WPCL’s “lawful money” or “check” requirements. As a result, the Court effectively held that the employer’s practice of paying employees through paycards constituted a per se WPCL violation.

To its credit, the Court recognized that reasonable minds can differ, and certified the case for an immediate appeal to Pennsylvania’s Superior Court (intermediate appellate court). And the Court’s opinion might not hold up on appeal. For instance, despite the WPCL’s literal language, Pennsylvania courts have typically interpreted “wages” broadly, to encompass various forms of compensation — such as stock options and free rent — that are clearly neither “lawful money of the United States” nor “check[s].” See generally Braun v. Wal-Mart Stores, Inc., 24 A.3d 875, 954 (2011) aff’d, 106 A.3d 656 (Pa. 2014); Walker v. Washbasket Wash & Dry, 2001 WL 770804, at *15 (E.D. Pa. 2001). Moreover, the Court’s opinion – if upheld – could have bizarre consequences. It could, for instance, potentially forbid a Pennsylvania employers from offering their workers various non-monetary perks that do not fit within the WPCL’s relatively narrow definition of “fringe benefits and wage supplements.” As an example, using the Siciliano court’s logic, a brewer who gives his employees a free case of beer a week might get slapped with a WPCL suit, on the grounds that beer – though delicious – is sadly not “lawful money of the United States.”

Still, the prospect exists that the Superior Court will affirm the trial court’s ruling. If it does, plaintiffs will likely argue that, because they did not receive “lawful money of the United States,” they received no “wages” at all. Accordingly, plaintiffs will likely contend that their employer owes them full back wages, plus liquidated damages, even though they already received their pay on paycards. The statutory text, and the sheer equities, render such a result unlikely. Indeed, the WPCL expressly permits employers to claim a right of “set-off” that would may eliminate most of the plaintiffs’ claimed damages. And the WPCL, similarly, also permits employers to assert counterclaims. Thus, there is a good chance that the Court will permit the employer to use the original paycard payments to set-off any claimed damages or, alternatively, permit the employer to recover the original paycard payments to prevent unjust enrichment. In either circumstance, Plaintiff’s damages would be minimal (other than, perhaps, statutory attorneys’ fees). That being said, courts do sometimes reach results that seem irrational and unfair. And, in this case, permitting any recovery is likely irrational and unfair, given the nitpicky “gotcha” nature of plaintiff’s claims.

In any event, Pennsylvania employers should consider this decision carefully in deciding whether to revise existing paycard policies.

Jacob Oslick is an Associate in Seyfarth’s New York office. He is an experienced New York and Pennsylvania litigator. He has served as counsel of record in over 60 Pennsylvania matters. If you would like further information on this topic, please contact your Seyfarth attorney or Jacob Oslick at JOslick@seyfarth.com.

President Obama announced last night that the DOL would be releasing its proposed amendments to the white collar exemption regulations today.

Our colleagues from the Wage Hour Litigation Practice Group blog about these matters and have been tracking the progress of the rules proposal during the past year and are already formulating how these new regulations may impact employers across the court.  To learn more, please review their blog posted here.