Articles Posted in Wage and Hour

Owen H. Laird, Esq.

The U.S. Supreme Court recently agreed to hear two cases that will have major ramifications for workers across the country. One case threatens one of organized labor’s most important rights, and the other impacts employees of car dealerships nationwide.

The Court agreed to hear arguments on Janus v. American Federation of State, County and Municipal Employees, which concerns a union’s right to take dues from non-members who are in the same bargaining unit as members the union represents. This issue of union dues has been long, and corporate interests have been successful in gradually rolling back organized labor’s ability to raise funds.

Lev Craig

Last week, on September 13, 2017, the U.S. District Court for the Eastern District of Pennsylvania denied Uber’s motion for partial summary judgment in Razak v. Uber Technologies, Inc. This decision allows a putative class of Philadelphia-based Uber drivers to move forward with claims against Uber for failing to compensate them for “on-call” time they spent logged into the Uber app, but not driving customers.

The Fair Labor Standards Act (FLSA) requires employers to compensate employees for all hours worked, including on-call time: hours worked where “the employee is required to remain on the employer’s premises, or […] although not required to remain on the employer’s premises, finds his time on call away from the employer’s premises is so restricted that it interferes with personal pursuits.” The recent rise of gig economy work— individual projects and tasks picked up at a worker’s discretion, often using apps like Uber and TaskRabbit—has presented a challenge to the existing model of on-call time, as courts are asked to consider what constitutes compensable on-call time for workers who may never report to a central place of employment or who are, at least to some degree, able to work whenever they choose.

Edgar M. Rivera

On August 31, 2017, in State of Nevada v. United States Department of Labor, the U.S. District Court for the Eastern District of Texas invalidated the Department of Labor’s final rule, which increased the salary threshold for “white collar” exemptions under the Fair Labor Standards Act (FLSA).

Employers claiming that an employee is exempt under the executive, administrative, or professional exemption from FLSA overtime requirements (called the “white collar” exemptions since they pertain to white-collar workers) must show that the employee performs specific job functions (the duties test) and is paid a salary above a certain threshold (the salary test). Under the Obama Administration, the Department of Labor promulgated a final rule that would double the salary threshold, moving it from $455 a week (or $23,660 annually) to $913 a week (or $47,476 annually). The new salary level is based on the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage and most impoverished U.S. census region—the South—which comprises the states Texas, Oklahoma, Arkansas, Louisiana, Mississippi, Alabama, Georgia, Florida Tennessee, Kentucky, West Virginia, Maryland, Delaware, Virginia, Washington D.C., North Carolina, and South Carolina. The final rule was intended to go into effect on December 1, 2016.

Lev Craig

On August 3, 2017, the U.S. Circuit Court of Appeals for the Seventh Circuit ruled against the plaintiffs in Allen v. City of Chicago, a Fair Labor Standards Act (FLSA) collective action brought by Chicago area police officers. The court found that the officers were not entitled to overtime pay for off-duty work they had performed on their mobile devices because the city had not known that plaintiffs were not being compensated for their work and because plaintiffs had not been prevented from requesting overtime pay.

The FLSA requires employers to compensate employees for all hours worked, and to compensate most employees at the overtime premium rate for all hours worked in excess of 40 in a work week. This requirement is strict: So long as an employer is aware that an employee has performed work, the employer must fully compensate the employee for all hours worked, “even if [the employer] did not ask for the work, even if they did not want the work done, and even if they had a rule against doing the work.” If an employer does not want employees to work overtime hours, it is the employer’s obligation to “exercise its control and see that the work is not performed,” not the employee’s obligation to avoid working overtime hours. However, the FLSA’s mandate does not go so far as to cover work that the employer “did not know about, and had no reason to know about”; employees also have a duty to accurately report their time to their employer, and employees who fail to do so or who actively prevent their employer from learning of their hours worked are not covered by this protection.

Edgar M. Rivera, Esq.

In McKeen-Chaplin v. Provident Savings Bank, FSB, the Ninth Circuit ruled that mortgage underwriters employed by a bank were entitled to overtime compensation for hours worked in excess of 40 in a work week.  The Ninth Circuit held that, because the mortgage underwriters’ primary job duty did not relate to the bank’s management or general business operations, they did not fall under the administrative exemption to the overtime requirements of the Fair Labor Standards Act (FLSA).

To show that an employee qualifies for the FLSA’s administrative exemption, an employer must demonstrate that the employee’s primary duty involves office or “non-manual work directly related to the management policies or general business operations” of the employer or its customers. This requirement is met if the employee engages in “running the business itself or determining its overall course or policies,” not just in the day-to-day carrying out of the business’ affairs. Said otherwise, “an employee must perform work directly related to assisting with the running or servicing of the business, as distinguished, for example, from working on a manufacturing production line or selling a product in a retail or service establishment.”

By Owen H. Laird, Esq.

As you may know, many municipalities and local governments have enacted minimum wage increases over the past few years as part of a “fight for $15” campaign. New York City, Los Angeles, and Seattle are a few of the cities that are implementing increases in the minimum wage, ultimately raising it to $15 an hour for most workers. Illinois is in the process of passing a wage bill that would increase the minimum wage statewide.  Proponents of these bills and laws generally take the position that raising the minimum wage will result in higher wages and better working conditions for employees. Two recent studies attempted to assess the economic effects of Seattle’s wage laws and came to strikingly different conclusions.

In January 2016, Seattle increased its minimum wage for large companies to $13 per hour, as part of a series of increases that would ultimately move the minimum wage in the city from $9 per hour in 2014 to $15 in the future.  Two studies—one by UC Berkeley’s Institute for Research on Labor and Employment, the other by economists from the University of Washington—reached opposite conclusions on the impact the increases have had on workers in Seattle, with the Berkeley study finding that workers earned more money and the University of Washington study finding that they earned less.

Lev Craig

Last September, we reported on a new Seattle worker scheduling law that was created to address the erratic and unpredictable schedules that often plague retail, restaurant, and fast-food workers. On May 30, 2017, New York City passed similar legislation for fast-food and retail workers when Mayor Bill de Blasio signed into law the “Fair Work Week” legislative package, a group of five bills which create several new requirements for NYC fast-food and retail employers. The Fair Work Week laws were passed to aid the tens of thousands of NYC workers who are, as Mayor de Blasio stated, “forced to deal with an arbitrary schedule at a job where they still don’t always make ends meet.”

The Fair Work Week package, which will go into effect on November 26, 2017, aims to ensure more stable and predictable schedules and paychecks for workers by setting restrictions on how and when fast-food and retail employers can schedule employees for work. The city introduced the Fair Work Week initiative last year—as we reported last fall—to address issues related to “flexible scheduling,” a problematic practice which often affects low-wage workers such as fast-food and retail employees. “Flexible scheduling” policies exploit workers by requiring them to be “on call” for work, with no guarantee of actually being assigned hours, or forcing them to accept an employer’s decision to cancel, shorten, or otherwise alter their shift with little or no notice.

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.