Category Archives: Wage and Hour Laws

Register Now! Managing Employee Medical Issues in the Workplace Webinar – September 12th

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Webinar-TemplateJoin Rebecca Dobbs Bush and Joe Trevino, on September 12 at noon CT as they share valuable insight and best practices to help business owners and human resource professionals navigate the quagmire of managing employee medical issues in the workplace. 

Managing employee medical issues has become more challenging due to increasingly complex regulations. In order to minimize risk, employers must learn to effectively handle requests for accommodations, paid and unpaid leaves of absence, employee benefits, and wage and hour issues; areas that are ripe for abuse.

When employee medical issues are handled on a fair and consistent basis and abuses are prevented, a positive workplace culture is fostered, and employee morale, retention and productivity are improved.

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Changes in the Air – Employers Considering Prior Salary When Setting Wages Need to Know the Applicable Laws

Contributed by Michael Wong, April 18, 2018

The Equal Pay Act can create significant exposure for employers, if not considered when setting female employees’ wages – especially if you are relying upon a female applicant’s prior salary history and there is a difference in the pay of similar male employees.

33186296 - wage gap concept with blue figure symbolizing men and red pawn women

Wage gap concept with blue figure symbolizing men and red symbolizing women

The Equal Pay Act is dangerous for employers because plaintiffs are not required to prove discriminatory intent by the employer. All a plaintiff must show is that there is a wage disparity for equal work requiring the same skill, effort and responsibility, which is performed under similar working conditions. Once a plaintiff establishes that, the burden shifts to an employer to establish that the difference is based on one of the following four statutory exceptions:

  • a seniority system;
  • a merit system;
  • a system which measures earnings by quantity or quality of production; or
  • a differential based on any other factor other than sex.

Historically, the Equal Employment Opportunity Commission (EEOC) and the federal Appellate Courts for the Second (Connecticut, New York and Vermont), Eighth (Arkansas, Iowa, Minnesota, Missouri, Nebraska, South Dakota and North Dakota), Tenth (Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming) and Eleventh (Alabama, Florida, and Georgia) Circuits have taken the position that employers may consider prior salary as a mix of factors to set female employee wages without violating the Equal Pay Act – but prior salary cannot be the sole factor for any wage differential with a male employee in a similar role. On the other hand, the Seventh Circuit (Illinois, Indiana and Wisconsin) has held that using prior salary alone is a basis other than sex for wage differential that does not violate the Equal Pay Act.

Recently, the U.S. Court of Appeals for the Ninth Circuit (California, Alaska, Arizona, Hawaii, Idaho, Montana, Nevada, Oregon and Washington) took its prior decisions a step farther by finding that prior salary does not fit within the exception of a factor other than sex because it is not a legitimate measure of work experience, ability, performance, or any other job-related quality. In doing so, the Ninth Circuit held that allowing employers to consider prior salary would simply continue the gender-based assumptions and discrimination that the Equal Pay Act was intended to stop.

This recent decision falls in line with the increasing number of state and local laws being passed that prohibit employers from asking applicants for prior salary information. States and cities/municipalities that currently have laws prohibiting employers from requesting/considering prior salary information include the following:

  • California (all employers)
  • Massachusetts (all employers)
  • Oregon (all employers)
  • Delaware (all employers)
  • New York (state employers)
  • New Jersey (public employers)
  • Puerto Rico (all employers)
  • San Francisco (all employers)
  • New Orleans (city positions)
  • New York City (all employers)
  • Albany County, New York (all employers)
  • Philadelphia (all employers – currently subject to legal challenge)
  • Pittsburgh (city positions).

With these changes you need to be aware of the laws impacting your operations and if you want to request and/or consider prior salary history when setting wages. If you are not sure, seek legal counsel in reviewing your employment practices.

 

Considerations for Utilizing the DOL’s Pilot “PAID” Program

Contributed by Sara Zorich and Michael Hughes, April 16, 2018

In April 2018, the US Department of Labor (DOL) Wage and Hour Division, launched  the six-month pilot Payroll Audit Independent Determination (PAID) program which provides a voluntary framework for employers to self-report potential FLSA overtime and minimum wage violations to the DOL and to resolve those violations without incurring additional penalties or liquidated damages. There are important benefits (and potential risks) to consider before signing up for PAID:

  • Wage Hour

    Dollar bills with clock in background

    The benefit of the program is that if an employer self-reports, the DOL will only require the employer to pay back wages owed to current and former employees, but not liquidated damages (double the back wages) or civil money penalties. The employer can obtain a release from the employees under the FLSA, thereby fully resolving the violation without paying attorney’s fees or engaging in a class action lawsuit.

  • One risk of the PAID program for employers is that the company is exposing itself to potential liability. The DOL has indicated the process will be fast (estimated 90 days start to finish), and the company will be required to pay 100% of the back wages due based on the audit on the next pay period after the DOL’s determination. But the biggest risk is that not all employees will accept the payment though the PAID program and instead will choose to file an individual or class-action lawsuit. The employer itself may have laid the groundwork for the employee to collect liquidated damages and attorney’s fees in federal court. Moreover, the PAID program will not provide a release for state wage and hour claims, even if employees cash their back wage check.
  • Additionally, the DOL has discretion to accept or decline any company from the PAID program; however the DOL has stated (in a webinar on April 10, 2018) if the company is declined, that declination will not be used to start a DOL audit.

PAID might be the right avenue for a company to address wage and hour compliance issues, but companies should speak with their labor and employment counsel to fully understand the risks and benefits of the PAID program prior to voluntary submission.

Is Your Company’s “Flexible Scheduling” Policy a Violation of Wage and Hour Law?

Contributed by Amanda Biondolino, October 25, 2017

An employer who allows its employees the “flexibility” to self-schedule time off the clock must make sure that it is paying its employees for all time worked. And beware, under the Fair Labor Standards Act (FLSA), “hours worked” is not limited to only that time an employee spends performing his or her job duties. Short breaks of twenty minutes or less are also counted as hours worked and must be paid.

The Third Circuit Court of Appeals recently held as a bright-line rule: Where breaks of twenty minutes or less are in question, the time must be paid. The court adopted the U.S. Department of Labor policy rationale that “breaks of twenty minutes or less are insufficient to allow for anything other than the kind of activity (or inactivity) that, by definition, primarily benefits the employer.” There will not be a factual analysis, or a case-by-case determination. Simply stated, if an employee is at the worksite, and is taking time away from their work-related duties for twenty minutes or less, they must be compensated for that time.

In the case decided by the Third Circuit, the employer did not deny that it permitted its call-center employees to log off their computers and use their time free from any work related duties, but it refused to call those time periods “breaks.” Rather, the employer considered it part of a “flexible time” policy, in which employees could take an unlimited amount of unpaid time away from work at any time, for any duration, and for any reason.

The court rejected the employer’s attempt to characterize time in a way that deprived employees of rights they were entitled to under the FLSA and considered the time an employee spent logged off the computer as a “break.” The employer violated the FLSA by not compensating employees for breaks that lasted twenty minutes or less.

Bottom Line: This is a reminder to employers that all policies and procedures should be vetted by experienced labor and employment counsel. In addition, all time worked including break periods should be accurately recorded, not only to comply with the record-keeping requirements of FLSA, but to document any abuse.

Employers should also keep in mind that some states may have their own break requirements that employers in those states must follow. Therefore, it is imperative that employers review their break policies and check applicable laws to ensure compliance with both federal and state law.

Although federal wage and hour laws do not generally mandate employee breaks, and state laws may vary, a strict policy that forces employees to choose between getting paid and basic necessities such as using the restroom runs contrary to “humanitarian and remedial” purpose of the act and will violate the law. These kinds of short breaks must be compensated. The FLSA and corresponding state wage and hour laws are designed to protect employees, and will be liberally construed.

 

 

Salary History Inquiry Bill Down But Far From Out

Contributed by Noah A. Frank, September 19, 2017

wage

On June 28, 2017, HB 2462, an amendment to the Illinois Equal Pay Act, passed both chambers of Illinois General Assembly. The bill would have made an employer’s inquiry into an applicants’ wage, benefits, and other compensation history an unlawful form of discrimination. Even worse for Illinois employers, the bill would allow for compensatory damages, special damages of up to $10,000, injunctive relief, and attorney fees through a private cause of action with a five (5) year statute of limitations.

On August 25, 2017, Governor Rauner vetoed the bill with a special message to the legislature that, while the gender wage gap must be eliminated, Illinois’ new law should be modeled after Massachusetts’s “best-in-the-country” law on the topic, and that he would support a bill that more closely resembled Massachusetts’ law.

The bill, which passed 91 to 24 in the House, and 35 to 18 in the Senate, could be reintroduced as new or amended legislation following the Governor’s statement, or the General Assembly could override the veto (71 votes are needed in the House, and 36 in the Senate, so this is possible) with the current language.

Why is this important?

With the Trump Administration, we have seen an increase in local regulation of labor and employment law. This means that employers located in multiple states, counties, and cities must carefully pay attention to the various laws impacting their workforces. Examples of this type of “piecemeal legislation” we have already seen in Illinois and across the country include local ordinances impacting minimum wage, paid sick leave, and other mandated leaves. Additionally, laws that go into effect in other jurisdictions may foreshadow changes at home as well (e.g., Illinois’s governor pointing towards Massachusetts’s exemplary statue).

Had it become law, this amendment would have effective required employers to keep applications and interview records (even for those they did not hire) for five years to comply with the statute of limitations for an unlawful wage inquiry (the Illinois Equal Pay Act already imposes a five year status of limitations for other discriminatory pay practices). By contrast, under Federal law, application records must be kept for only one year from the date of making the record or the personnel action involved (2 years for educational institutions and state and local governments).

What do you do now?

While the law has not gone into effect as of the date of this blog, it is likely that some form of the salary history amendment will ultimately become law in Illinois. Businesses should carefully review their job applications, interview questions, and related policies to avoid inquiries that may lead to challenges in the hiring process.

Additionally, record retention (and destruction!) policies should be reviewed for compliance with these and other statutes – as well as to ensure data integrity and security.

Finally, seek the advice of experienced employment counsel for best practices in light of national trends to remain proactive with an ounce of prevention

Donning and Doffing Compensable – What Does Your CBA Say?

Contributed by Carlos Arévalo, June 6, 2016

On March 24, 2016, we reported on a U.S. Supreme Court’s decision involving litigation by workers at meat-processing facilities who alleged they were entitled to overtime pay and damages because they were not paid for time spent “donning and doffing” protective gear. A critical issue in that case was the plaintiff’s use of statistical data to prove their claim, which the Supreme Court found appropriate, and which ultimately resulted in a $5.8 million judgment.

Shortly after that Supreme Court’s decision, the Tenth Circuit issued a ruling on yet another “donning and doffing” case. In Castaneda v. JBS USA, LLC, the Tenth Circuit affirmed the trial court’s judgment in favor of the employer, concluding that employees failed to show that an agreed upon pre-calculated time in their compensation scheme (in a collective bargaining agreement (CBA)) did not adequately compensate them for their time changing in and out of safety clothing and equipment and walking to their job posts.

Wage-Hour2In Castaneda, the employees at a beef-processing plant were part of a CBA that incorporated set measured times to don and doff safety clothing and equipment. The so called “plug time” was the result of industrial engineering studies that calculated the time needed by employees (which were position-specific) to put on and take off safety clothing.  A subsequent agreement resulted in additional “plug time” for pre- and post- shift walking time between the locker room and the production floor. Following adoption of the CBA, the plaintiffs sought to recover retroactive unpaid wages for uncompensated work, including pre- and post-shift time spent donning and doffing clothing and protective gear, washing equipment and themselves, and walking to and from their job posts. Plaintiffs also pursued compensation for their entire meal break, or at a minimum for their time donning, doffing, washing and walking at the beginning and the end of the meal break.

In rejecting the plaintiffs’ claims, the Tenth Circuit first noted that pre- and post- time devoted to changing clothes was not compensable under  §203(o) of the Fair Labor Standards Act (FLSA) if it was so determined under the CBA. [Section 203(o) allows employers and unions to pay its unionized employees for the time they spend before and after their shifts putting on and taking off safety clothing and related items.]  Secondly, the court stated that the time to remove non-clothing items was not generally compensable if the time to do so was de minimis.  Finally, the court added that if time spent performing an activity was not compensable, it would not become a “principal activity,” and therefore compensable, simply because the employer agreed to incorporate it as part of the so-called “plug time” in the CBA.

Because JBS and the Union agreed to incorporate “plug time” compensation in the CBA, the Tenth Circuit deferred to the CBA and held that the parties should be able to govern not only whether “changing time” and “walking time” were compensable activities, but also how such activities should be compensated.

Unionized employers should examine their collective bargaining agreements to determine if they have a provision regarding donning or doffing, and if not, whether they want to add express language to minimize the possibility of future disputes. Experienced labor and employment counsel can help negotiate effective provisions into a collective bargaining agreement.

 

The U.S. Supreme Court Ruling Paves Way for Wage and Hour Plaintiffs to Win Class Action Cases

Contributed by Julie Proscia

On Tuesday March 22, 2016, the U.S. Supreme Court ruled against one of the world’s largest food processors, affirming a $5.8 million judgment.  This ruling just made it a little bit easier for wage and hour plaintiffs to win class actions.  In a 6-2 decision the Court held that plaintiff employees can use averages and other statistical analyses to establish class liability.

In 2007, workers at one of the meat-processing facilities sued the company for uncompensated wages alleging that they were entitled to overtime pay and damages because they were not paid for time spent donning and doffing (time spent putting on and taking off protective equipment and walking to work stations).

pay overtimeIn order to establish the time spent donning and doffing, plaintiffs utilized individual timesheets, as well as, an average of time spent donning and doffing. The averages were based on the timesheets and the calculations from 744 observations of employees.  The Iowa jury found in favor of the plaintiffs and awarded $2.9 million in unpaid wages. An additional 2.9 million dollars in liquidated damages was subsequently awarded. In 2014 a split 8th Circuit Appellate panel upheld the judgment.

When the case came before the U.S. Supreme Court, the defendant argued that the usage of averages in statistical data was improper. Specifically, they argued against the use of averages as the time it takes an individual to put on and remove protective gear and walk to the assigned areas varies between individuals. The majority of the Supreme Court did not agree with this argument and instead indicated that averages would not even be necessary if the defendant had maintained proper records. In doing so, the Court essentially held that there is no general rule barring the use of statistics to prove class-wide liability in a class action such as this one.

The Supreme Court decision is a reminder to not only compensate for time spent donning and doffing but to keep proper time records. The failure to do so can result not only in wage and hour damages but liquidated damages.