Articles Posted in Overtime

Owen H. Laird

If you are a regular reader of this blog, you are undoubtedly aware of the multi-year effort to raise the salary threshold for the purposes of overtime exemption under the Fair Labor Standards Act. If you are not a regular reader, then the previous sentence may not have made much sense.

To refresh: the Fair Labor Standards Act (FLSA) is the federal law that provides for minimum wage, overtime pay, and other wage-and-hour rights. The FLSA requires employers to pay their employees overtime pay – that is, pay at one-and-a-half times their normal rate – for all hours worked above forty (40) per workweek. However, the FLSA creates a number of exemptions to the overtime pay requirement: categories of workers who are not entitled to overtime pay, even if they work more than forty hours in a workweek. For example, employers are not required to provide overtime pay to certain “exempt” employees: people with professional degrees, managers, executives, artists, administrators, and many tech workers, to name a few. However, in order to qualify as exempt, an employee needs to earn as much or more than the “salary threshold,” which is currently $455 per week, or $23,660 per year. In other words, a manager who earns less than $455 a week would be entitled to overtime pay, while a manager who earns more than $455 a week would not, even if their job duties are identical.

By Owen H. Laird, Esq.

Last month, President Trump laid out a tax cut plan that, among other things, would lower the corporate tax rate to fifteen percent from the current rate of thirty-five percent. This reduction in the corporate tax rate is one of the most significant changes proposed by Trump; his plan would primarily benefit corporations and the wealthy. Although President Trump is constantly in the headlines, even to the extent that a signature tax proposal is overshadowed, it is important to pay attention to the less sensational actions taken by the Trump administration that will have long-lasting effects on the American public.

A recent article in the New York Times delved into potential effect of the drastic cut to the corporate tax rate: if the corporate tax rate is significantly less than the personal income tax rate, individuals would be incentivized to form corporations and pass any income they earned through that corporate entity, forsaking the traditional employee-employer relationship. Many workers are already considered “independent contractors” rather than employees. If these independent contractors formed a C-corporation and ran their income through it, that income would be taxed at the corporate rate, rather than the normal individual rate. If the tax incentives were high enough, whole classes of workers might choose to restructure their employment by becoming independent contractors and incorporate themselves in order to lower their tax burdens.

Lev Craig

On May 2, 2017, the Republican-majority U.S. House of Representatives passed H.R. 1180, or the “Working Families Flexibility Act.” The bill, which will now move to the U.S. Senate for consideration, would amend the Fair Labor Standards Act (FLSA) to enable employers to offer employees accrued paid time off for overtime hours worked, in place of cash wages.

The act would amend § 207 of the FLSA to add a provision stating that “[a]n employee may receive, […] in lieu of monetary overtime compensation, compensatory time off at a rate not less than one and one-half hours for each hour of employment for which overtime compensation is required.” In other words, the law would allow employees to choose between receiving overtime premium pay and accruing compensatory time off, or “comp time,” for any hours worked over 40 in a work week. According to the terms of the bill, employers cannot force employees to accrue comp time rather than receive overtime pay, and the employer and employee must enter into a written agreement in order for the employee to use the comp time option. Employees’ accrued comp time would be capped at 160 hours, which the employee would be allowed to cash out for its monetary value at any time, and employers would be required to pay employees the cash value of any unused time at the end of the year.

Lev Craig

On April 12, 2017, the Second Circuit affirmed the district court’s decision in Saleem v. Corporate Transportation Group, Ltd., finding that a group of black-car drivers had been properly classified as independent contractors under the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL). The court held that the drivers’ significant degree of independence prevented them from establishing that they were employees within the meaning of the FLSA or NYLL.

Under New York law, black cars are defined as a “type of for‐hire vehicle (along with livery vehicles and limousines) that provide ground transportation by prearrangement with customers.” The Saleem plaintiffs are a group of black-car drivers serving clients throughout the tri-state area; the defendants were operators and administrators of a black-car dispatch, which sells black-car franchises to individual drivers and refers the dispatcher’s clients to the driver. Each driver signed an agreement with a franchisor, stating that the driver was not an “employee or agent” but instead a “subscriber to [the franchisor’s] services offered,” that the driver would “at all times be free from [the franchisor’s] control or direction,” and that the franchisor would not “control, supervise or direct” the driver’s work. The agreements did not prohibit drivers from transporting customers for other companies, including competitors, but did require that drivers comply with policies set out by each franchisor, such as rules concerning dress code and vehicle cleanliness.

Lev Craig

On March 13, 2017, the U.S. Court of Appeals for the First Circuit reversed the district court’s granting of summary judgment in O’Connor v. Oakhurst Dairy, an unpaid overtime case brought by delivery drivers for Oakhurst Dairy (“Oakhurst”), a Maine local milk and cream company. The First Circuit found that the district court had incorrectly categorized the drivers as exempt from overtime under an ambiguous section of the Maine state wage-and-hour law—all, as First Circuit Judge David J. Barron wrote in the O’Connor opinion, “[f]or want of a comma.”

The O’Connor plaintiffs filed suit in the United States District Court for the District of Maine in May 2014, seeking unpaid overtime wages under the Fair Labor Standards Act (“FLSA”) and the overtime provisions of the Maine state wage-and-hour statute, 26 M.R.S.A. § 664(3). They alleged that Oakhurst had misclassified them as exempt under Exemption F of the Maine state overtime law, which states that employees engaged in “canning, processing, preserving, freezing, drying, marketing, storing, packing for shipment or distribution of […] [p]erishable foods” do not receive overtime protections.

Lev Craig

Last week, a Texas federal district court granted a temporary injunction in State of Nevada v. U.S. Department of Labor, blocking the implementation of a new Department of Labor (DOL) overtime regulation that was previously scheduled to go into effect today, December 1, 2016.

The new regulation was developed in response to a 2014 directive from President Obama to the Secretary of Labor, instructing the DOL to revise federal regulations for executive, administrative, and professional overtime exemptions, aiming to ensure that the salary threshold for these exemptions—i.e., the minimum annual salary an employee must make before they could possibly be considered “exempt” from overtime requirements—more accurately reflected current income distribution.

Edgar M. Rivera, Esq.

In Smiley v. E.I. DuPont de Nemours & Co., the Court of Appeals for the Third Circuit held that employers could not offset compensation given to their employees for bona fide meal breaks against required overtime.

Plaintiffs filed a putative collective action and class action against DuPont—the world’s fourth largest chemical company—seeking overtime compensation for time they spent donning and doffing their uniforms and protective gear and performing “shift relief” before and after their regularly scheduled shifts. DuPont contended that it could offset compensation it gave plaintiffs for meal breaks during their shift—for which DuPont was not required to provide compensation under the FLSA—against such required overtime. Under the FLSA, an employer must pay its employees for time worked, which does not include bona fide meal breaks.

Yarelyn Mena and Edgar M. Rivera, Esq.

In a 2014 case, Martin v. The United States, the United States Court of Federal Claims held that an employer’s late payment of wages violates the Fair Labor Standards Act (“FLSA”) and may trigger liquidated ”double payment” damages. The case arose out of the 2013 government shutdown (October 1, 2013 to October 16, 2013) which resulted in the untimely payment of wages to government workers.

Towards the end of 2013, Congress failed to issue funds for government workers, forcing the federal government into a partial shutdown. The shutdown took place in the first two weeks of October 2013, in the middle of a pay period, which resulted in plaintiffs unpaid government employees being paid only for work from September 22 to September 30, and not the first five days in October. Two weeks after their scheduled payday the plaintiffs received pay for those five days. They argued that the federal government’s failure to pay them for hours worked resulted in (i) underpayment that constituted a minimum wage violation, (ii) failure to pay non-exempt employees for overtime hours worked, and (iii) failure to pay even exempt employees for overtime hours worked.

Jennifer Melendez

On September 22, 2015, Texas-based oil and gas services provider Halliburton agreed to pay over $18 million to 1,000 of its nationwide employees following an investigation by the U.S. Department of Labor (DOL). The DOL is a  federal agency tasked with enforcing the Fair Labor Standards Act (FLSA). The FLSA requires that covered employees receive overtime pay for all hours worked above 40 hours in the workweek.

Halliburton is one of the largest oil and gas providers in the energy industry and employs over 70,000 employees. In an investigation intended to crack down on oil and gas companies that are non compliant with the FLSA, the DOL discovered that Halliburton misclassfied 1,000 of its employees as exempt from overtime pay. These employees included field service representatives, pipe recovery specialists, drilling tech advisors, perforating specialists and reliability tech specialists. Halliburton also neglected to keep records of hours worked by those employees. Failing to keep accurate records of employees’ hours and misclassifying employees as exempt from overtime are violations of the FLSA.  According to the DOL, in order to be exempt from overtime, a position generally must meet specific job criteria and have a salary of no less than $455 a week. Secretary of Labor, Thomas Perez, stated:

Yarelyn Mena

On April 10, 2014, New York Attorney General Eric Schneiderman issued warning letters to thirteen New York retail chains, including Gap Inc. and Target Corp., notifying each that their “on-call” scheduling practices may violate New York law. On-call scheduling, a phenomenon chiefly in the retail industry, allows employers to cancel employees’ scheduled shifts and demand they pick up unscheduled shifts with little notice.

New York law requires employees who report to work before their scheduled shift, “be paid for at least four hours, or the number of hours in the regularly scheduled shift, whichever is less, at the basic minimum hourly wage.” On-call scheduling lets employers quickly staff their stores on busy days, and send employees home early on slow days, thus, saving money on payroll at the expense of employee convenience. Employers often send employees home on slow days without proper compensation. On-call scheduling is not only a detriment to employee’s salaries, but also to their well-being; employees, especially those who must plan child care or other family accommodations around their work shifts, are greatly inconvenienced by erratic scheduling.