Ninth Circuit Issues Split Decisions on Compensation for Travel Time and "Off-the-Clock" Work
Employees who drive company vehicles between home and work will find little to cheer about in a recent Ninth Circuit decision . . . unless they live in California. In Rutti v. Lojack Corporation, a three-judge panel refused to relax the rule that commuting time is non-compensable under the Fair Labor Standards Act (FLSA).
The employee, who installed vehicle recovery systems, contended that his travel time between home and worksites was compensable under the FLSA and California law because his employer required him to drive company vehicles and significantly restricted his activities while doing so. For example, the employer prohibited the employee from transporting passengers and engaging in personal pursuits, and required him to drive directly to and from the worksite with his cell phone turned on.
All three judges rejected that argument under the FLSA, holding that use of an employer's vehicle to commute is non-compensable even if it is a condition of employment and that the restrictions placed on the employee's activities were incidental to his principal job activities. The unanimous panel also rejected the employee's argument that his commuting time was compensable under the "continuous workday doctrine," under which an employee's workday generally lasts until he has completed all of his principal activities during the day.
Continue Reading...2009 Mid-Term Federal Legislative Update
We expected many changes in federal labor and employment law in 2009 - for the first time in years, Democrats control the White House and both houses of Congress and have the political ability to make significant reforms. However, not much has happened in 2009: we have only significant labor and employment bill signed into law. To be fair, President Obama and the Congress have had other things to worry about: a war or two, a lousy economy, health care and selecting a new White House dog to name a few.
But, the 2009-2010 legislative session is still not over, and Congress may yet pass some of the many labor and employment-related bills still pending. Employers may want to take note, as some of these may become law before the end of the session in 2010. Click on "continue reading" for a complete list.
Continue Reading...Managers Individually Liable for Unpaid Wages Despite Employer's Bankruptcy
A recent case should strike fear into the hearts of all upper-level managers and human resources professionals: in Boucher v. Shaw, the Ninth Circuit ruled that individual managers were liable for their subordinates' unpaid wages, even though the employer company filed for bankruptcy.
In Boucher, a group of former casino employees sued the CEO, CFO and the labor relations manager of their former employer, the Castaways Hotel, Casino and Bowling Center. The three managers moved to dismiss, arguing that they were not "employers" that could be liable for unpaid wages under the Fair Labor Standards Act (FLSA), and that they should receive protections from the Castaways' bankruptcy filing.
The Ninth Circuit noted that under the FLSA, the term "employer" is to be construed broadly to include individuals who have “control over the nature and structure of the employment relationship,” or “economic control” over that relationship. It concluded that the three executives, two of whom were also alleged to be co-owners of the casino, fit that definition of "employer." The court also found that because the three executives were not parties to the bankruptcy proceeding, they were not entitled to any bankruptcy protections.
As the World of Work reported earlier this month, the Washington Supreme Court reached a similar ruling based on almost identical facts in Morgan v. Kingen. These cases should serve as a reminder to managers everywhere: if your business is failing, you may want to prioritize paying your employees' wages over everything else. Failure to do so may lead to personal liability.
Federal Minimum Wage Rises to $7.25/Hour Today
If you pay your employees minimum wage, prepare to give them a raise effective today: the federal minimum wage increases to $7.25 per hour, effective July 24. Of course, you may live in a state that has a higher minimum wage; in that case, employers are obligated to pay the higher of the two wages. Click here for a state-by-state list of minimum wage rates.
What's that you say? This won't affect your business since you pay higher than the minimum wage? Don't be so sure. According to this article from the New York Times, increases in the minimum wage tend to have a ripple effect, as employees with wage rates above the minimum wage want to maintain their lead over their lower-earning counterparts.
Think the increase in the minimum wage is too much? You're not alone. As this article from the Associated Press points out, some business are concerned that the increase in the minimum wage will slow down the economic recovery. On the other hand, the Times points out that even with this increase, the minimum wage is still no higher now, after inflation, than it was in the early 1980s, and it is 17 percent lower than its peak in 1968.
Proposed "LAW" Would Index Federal Minimum Wage to Poverty Level
The recently proposed Living American Wage Act (LAW) would tie the federal minimum wage to the federal poverty threshold for a family of two with one child. Introduced last week by Rep. Al Green (D-Texas), LAW would index the minimum wage to 15 percent above the poverty line for a full-time worker, or about $8.20 per hour in wages, and it would increase the minimum wage every four years to maintain a wage at least 15 percent above the poverty line. For more information, click to read Rep. Green’s press release on LAW.
Such an indexed minimum wage would not be unique. Oregon adjusts its minimum wage each year based on the U.S. City Average Consumer Price Index for All Urban Consumers for All Items. Currently, Oregon's minimum wage is $8.40 per hour. For a list of the minimum wages in other states, click here for the Department of Labor's handy list of minimum wages by state, effective January 1, 2009
We’ll keep watching to see if LAW becomes law. Until then, please note that the federal minimum wage will increase to $7.25 per hour effective July 24, 2009.
Seventh Circuit Rules FLSA Doesn't Protect Verbal Complaints
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Most employment lawyers and HR professionals know that firing an employee for making a complaint about being paid properly is a recipe for disaster. This week in Kasten v. Saint-Gobain Performance Plastics Corp., the Seventh Circuit Court of Appeals thought differently, at least for verbal complaints about violations of the Fair Labor Standards Act.
The plaintiff, Kevin Kasten, was reprimanded three times for failing to clock in and out. In response, he complained that the location of the time clock was illegal because, among other things, it prevented employees from being paid for time donning and doffing protective gear. After Kasten failed to clock in a fourth time, he was terminated. Kasten sued under the FLSA, claiming that he had been terminated in retaliation for his complaint.
The FLSA protects employees who have "filed any complaint" under FLSA and whose employers retaliate against them for complaining. The Seventh Circuit ruled that because a complaint must be "filed," verbal complaints are not protected by FLSA.
The takeaway? Despite this ruling, we at the World of Work think that employers should be wary of terminating employees for verbal complaints. As others have noted, the case law in other circuits may contradict the Seventh Circuit on this issue. Even more crucially, plaintiffs making verbal complaints may have other causes of action under state statutory law or common law.
DOL Secures $3.4 Million Settlement for NY Car Wash Employees
A portend of things to come in federal wage enforcment? Yesterday, a group of New York car washes have agreed to pay over one thousand current and former employees a total of $3.4 million to settle a lawsuit filed by the Department of Labor (DOL) alleging violations of the Fair Labor Standards Act (FLSA). Click here to read the consent decree in Solis v. LMC et al.
As we reported back in May, the Department of Labor received a budget increase of 10 percent and is devoting most of that increase to enforcement. Employers can expect to see more activity from the DOL to enforce wage and hour laws, especially large cases against groups of employers.
In the meantime, sit back, relax and enjoy Rose Royce:
Federal Minimum Wage Increases to $7.25 Effective July 24
Employers take note: the federal minimum wage increases to $7.25 per hour effective July 24, 2009. For more information, check out the Department of Labor's Fair Labor Standards Act site.
Of course, many states also have minimum wage laws, an where an employee is subject to both state and federal minimum wage laws, the employee is entitled to the higher minimum wage. Click here for the Department of Labor's handy list of minimum wages by state, effective January 1, 2009. (Note: the chart does not accurately reflect that Nevada's minimum wage will increase effective July 1, 2009 increase from $5.85 per hour to $6.55 per hour, while the minimum wage for employees not receiving health benefits will increase from $6.85 per hour to $7.55 per hour).
Need the Department of Labor's minimum wage posters? Here they are:
Minnesota Wal-Mart Employees Get $54 Million Christmas Present
Wal-Mart Stores Inc. announced yesterday that it will pay $54.25 million to settle a class-action lawsuit over allegations that Wal-Mart made its employees work during break time and off the clock after regular working hours. The class consists of approximately 100,000 current and former hourly employees who worked at Minnesota Wal-Marts and Sam's Clubs between September 11, 1998 and November 14, 2008. Click here to read MSNBC's coverage of the settlement.
This isn't Wal-Mart's first major settlement, and it might not be the last: according to Wal-Mart's 10-K filings with the SEC, it has to date settled 76 similar class-action lawsuits across the country. The lesson for employers? Carefully follow the wage and hour laws of each state in which you do business. If you have employees in Minnesota, the state's Department of Labor and Industries has a great website with lots of valuable compliance tips and information.
Washington's Minimum Wage To Rise to $8.55 January 1, 2009
Washington employers get ready to give your minimum-wage employees a raise: effective January 1, 2009, Washington's minimum wage will increase to $8.55 per hour, allowing Washington to maintain the highest minimum wage in the country. For more information, click here to read the Department of Labor and Industries' Press Release. Washington's current minimum wage is $8.07 per hour.
As previously reported in the World of Work, Oregon's minimum wage will increase to $8.40 also effective January 1, 2009. Following voter initiatives, both Oregon and Washington now tie their minimum wages increases to the Consumer Price Index.
The federal minimum wage is now $6.55 per hour, but will go up to $7.25 per hour effective July 24, 2009. For information on minimum wages in other states, check out this interactive map of the United States showing minimum wage rates, available from the U.S. Department of Labor.
Cosmetology Teachers, Not Day Care Teachers, Overtime Exempt
Cosmetology teachers, but not day care teachers, are exempt from the Fair Labor Standards Act's (FLSA's) overtime and minimum wage rules, according to two recent opinion letters from the Department of Labor.
The FLSA contains an exemption for professional employees, including any “teacher in elementary or secondary schools.” Cosmetology teachers qualify for the exemption, according to the DOL, because they teach in an accredited secondary school and because their primary duty is "teaching and instructing students in cosmetology theory." Yes, you read that correctly: cosmetology theory. Click here to read the DOL's opinion letter on cosmetologists.
Day care teachers, on the other hand, do not qualify for the exemption because they do not teach in a qualifying institution. According to the DOL, “[u]nless the daycare center provides grade school curriculums, introductory programs in kindergarten, or nursery school programs in elementary education of the sort described in [the act], the instructors are not within the scope of the teacher exemption of the FLSA.” Click here to read the DOL's opinion letter on day care teachers.
What lesson can we learn from these opinions? The FLSA exemptions are highly technical and not always intuitive. If you are classifying your employees as FLSA-exempt, not only should you make sure the employees meet all of the duties tests under the statute and regulations, but also that your organization meets any requirements that may be imposed as well. For more guidance on the FLSA exemptions, read this compliance guide on the FLSA from our friends at the DOL.
