BLOGS: Fair Labor Standards Act Law

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Friday, February 29, 2008, 5:55 PM

Part-Time Employees and Salary Requirements for Exempt Status

In an opinion letter issued on February 14, 2008, the United States Department of Labor confirmed that an employee is not exempt under the FLSA if the employer provides a prorated salary of less than $455 per week for part-time work. An employer requested an opinion as to whether an employee would qualify as exempt if his hours were reduced to 20 per week with a commensurate reduction in salary to $15,000 annually. Prior to the reduction, the employee was previously paid $30,000 annually for working full-time. The DOL stated that there is no provision in the FLSA which permits reduction of the $455 per week salary requirement when an employee's hours are reduced. An employee must receive a salary of $455 in each week in which he or she performs any work regardless of the number of days or hours worked to qualify as exempt.

Of course, if an employee is only working 20 hours per week, he will not be entitled to overtime under the FLSA. However, employers must still be certain that the employee is receiving at least minimum wage for those hours worked.

Wednesday, February 27, 2008, 2:48 PM

Trouble in the Family: Employee Complaints and Retaliation

Published courtesy of Thompson Publishing. The following article will appear in Thompson Publishing legal publications in March 2008.

"[A]s a matter of business judgment there can be only one course open to management when an employee persists in giving it the finger." Liberty Mutual Ins. Co. v. NLRB, 592 F.2d 595, 6060 (1st Cir. 1979) (Aldrich, J., concurring).

This observation embodies a typical reaction to employee complaints, but the conventional wisdom it reflects is no longer legally wise. The law bristles with protections of so-called whistleblowers—those hardy souls who defy their employers by reporting perceived problems, internally or externally; legislatures are fond of conferring rights and remedies for those who might be targets for retaliation, and the judiciary may fill in the blanks. As a result, the Fourth Circuit's recent decision in Darveau v. Detecon Inc. (No. 06-2092, Jan. 31, 2008) should come as no surprise.

Click here to read the rest of the article.

Collective Action Filed Against Smithfield Foods' Pork Processing Facility

Another "donning and doffing" collective action lawsuit has been filed in federal court in North Carolina. Targeting Smithfield Foods' pork processing facility in Tar Heel, North Carolina, a would-be class of current and former production and support employees claim that they were not paid all wages and overtime they were due.

This new proposed collective action comes on the heels of a similar suit filed last year by workers at another Smithfield facility in North Carolina. This suit mirrors the donning and doffing suits that are being aimed at the poultry processing industry, as we noted here last week.

Alleging violations of the FLSA and North Carolina's Wage and Hour Act, the thrust of plaintiff's complaint is that they were not compensated for donning and doffing time, nor for time spent preparing for work, obtaining and sanitizing equipment and clothing, and walking between worksites. According to the plaintiffs, this uncompensated time occurred before and after working time and during unpaid lunch breaks.

Interestingly, the plaintiffs concede that Smithfield had a policy of paying employees who had to wear certain protective gear four minutes per day for "clothes changing time." Other than that, however, the plaintiffs contend that Smithfield only paid workers for time actually working on the production line, which they termed "gang time" or "line time." When all unpaid time was actually added up, the plaintiffs claim that class members spent "as much as 35 minutes or more per day performing uncompensated work."

The plaintiffs believe that at least 5000 current and former Smithfield employees are members of the class, and that they are owed in excess of $5 million, plus interest, costs and attorneys fees.

The action is captioned Jerome McNeil & Sidney L. Townsend v. Smithfield Foods, Inc. & Smithfield Packing Company, Inc., and is pending in the U.S. District for the Eastern District of North Carolina. Insiders suggest it is not coincidental that Smithfield recently filed a major lawsuit against the United Food & Commercial Workers, with which the company has had a long-running series of disputes arising out of the attempted unionization of the company's Tar Heel plant. (Tar Heel is a small community in northern Bladen County, NC, about 20 miles south of Fayetteville; Smithfield is by far the largest employer in the County.)

Tuesday, February 26, 2008, 9:02 AM

Call Center Salaried Nurses Sue Wellpoint, FLSA Overtime Violations Alleged

Wellpoint, Inc., a health insurance and managed care provider to one in nine Americans, has been sued by nurses who staff WellPoint's call center alleging that they were denied overtime pay for at least 3 years. The lawsuit, filed in the United States District Court of Northern New York, proposes a collective action to address the nurses' FLSA and state overtime law complaints.

The nurses' jobs included answering telephone calls and entering data into the WellPoint computer system for case management, utilization review, and/or medical management purposes. The nurses were all paid on a salaried basis, a fact that they allege was illegal and done so as to prevent the nurses from being paid the overtime wages that they would have earned as hourly employees.

The nurses further claim that WellPoint failed to keep records of the time that the nurses actually worked, which if the employees were to be awarded overtime would be problematic for WellPoint's defense and mitigation of damages.

For more on this lawsuit, click here to read the story in Employment360. To read the complaint in Ruggles, Fay, et al. v. WellPoint, Inc., case number 08-cv-00201, click here.

Thursday, February 21, 2008, 1:18 PM

Poultry Litigation Still Ruffles Feathers

FLSA "donning and doffing" litigation against Pilgrim's Pride Corp. has been transferred to a multidistrict litigation panel in US District Court for the Western District of Arkansas, sitting in El Dorado. Both private complaints and one filed by the US Department of Labor focus on time spent by employees who put on personal protective equipment before their work shift begins and remove it after the day's duties are over. This is, of course, part of a nationwide attack on compensation practices in the poultry industry which cynics say is heavily influenced by the United Food and Commercial Workers Union. These cases, like their counterparts brought against other major poultry processors, seek collective or "class" treatment; many also attempt to join claims under state wage-hour laws in the same litigation.

Tuesday, February 19, 2008, 11:27 AM

Charlie Edwards to Present on FLSA Issues

Charlie Edwards will speak at the Strafford Publications' teleconference panel, "Defending Wage and Hour Collective and Class Claims - Best Practices for Defeating Class Certification and Mitigating Damages". Other panel members include: Susan Linda A. Allderdice, Member, Epstein Becker & Green and Lisa A. Schreter, Littler Mendelson.

Charlie is a co-author of the Womble Carlyle Fair Labor Standards Act Blog.

Live 90-Minute CLE Teleconference with Interactive Q&A
Wednesday, March 26, 2008
1:00-2:30pm Eastern

For more information or to register, go here.

Tuesday, February 5, 2008, 4:25 PM

Caribou Coffee Agrees to FLSA Settlement

Caribou Coffee Co. said it has agreed to pay more than $2.7 million to settle a labor dispute.

Minnesota-based Caribou (Nasdaq: CBOU) was sued in 2005 by three former employees who alleged that the company misclassified its retail coffeehouse managers as exempt from overtime provisions, which they said was a violation of the Fair Labor Standards Act. The suit was eventually expanded to class status, including other current and former managers.

Caribou said Monday in an SEC filing that it would settle the suit by agreeing to pay $2.7 million, plus its share of payroll taxes.

Click here to read about the settlement (pdf).

Monday, February 4, 2008, 11:10 AM

Fourth Circuit Rolls Out Yet Another FLSA Case

Your FLSA bloggers aren't the only ones who watch recent developments in employment law. The Womble Carlyle NC Appellate Blog just posted this informative piece on a new decision from the Fourth Circuit.

Click here to read (permalink).

Friday, February 1, 2008, 2:09 PM

Fourth Circuit Rules for Employees in an Arbitration of FLSA Class Action Claims

This week, the U.S. Court of Appeals for the Fourth Circuit issued an opinion of interest concerning both the FLSA and the law of arbitration. In Long John Silver's v. Cole, (4th Cir. Jan. 28, 2008) a group of former restaurant managers and managerial assistants filed suit against their employer, claiming they were subjected to unlawful "payroll deductions and salary giveback to cover losses," which resulted in their not being paid all the compensation they earned. The employer had a mandatory arbitration agreement, so the case was submitted to binding arbitration under the rules of the American Arbitration Association (AAA). The employees then sought to make the case a class action.

The key issue in the case was a dispute over how to determine who was allowed to be in the class of plaintiffs. The employees argued the AAA's rules of class action arbitration should apply, which provide that members of the class had to affirmatively "opt out" of the case. The employer disagreed and argued that the issue was governed by the FLSA, which requires that would-be members of a class affirmatively "opt in" to be entitled to participate. The employer contended that the "opt in" procedure was a substantive right under the FLSA which could not be waived in a private agreement to arbitrate. The arbitrator agreed with the employees and applied the AAA's "opt in" rule. After the conclusion of the arbitration, which found in favor of the employees, the employer took the issue to the Fourth Circuit.

Applying the very limited scope of review allowed in arbitration cases, the Fourth Circuit affirmed the arbitration award. In sum, the Court found that it was not clear from the statute whether Congress intended the FLSA's "opt in" requirement to be a non-waivable right, and noted that no other court had ever decided the issue. Because it was "debatable" whether the FLSA's "opt in" requirement was a substantive, non-waivable right, the Court found that the arbitrator "did his job" in reaching his decision and affirmed the award.

The Fourth Circuit's decision is binding on all federal courts in Maryland, Virginia, West Virginia, North Carolina, and South Carolina. The full opinion is available on the Fourth Circuit’s website.

This decision should make employers take note for two reasons. First, if unencumbered by the FLSA's "opt in" requirement, it is easier for plaintiff-employees to bring larger FLSA collective actions against employers, even if the matter is subject to a binding arbitration agreement. Second, because of this, employers should dust off their arbitration policies and agreements to make sure they understand what cases and claims fall within the agreement, and that they actually want those cases decided in arbitration instead of in court. As this case emphasizes, once a claim is in arbitration, because of the great deference given to arbitration decisions by the courts, it is very difficult to appeal or challenge an arbitration ruling once it has been made.

Another note: This ruling cuts both ways. If a class member needn't opt in to take advantage of a favorable ruling, what if the arbitration goes against the plaintiff? Will judicial deference to the arbitration result close the door to those who never appeared in the case and whose factual circumstances may be dramatically different from those presented to the arbitrator? And what if the arbitrator finds for the plaintiff but against everyone else? With the ever-increasing pressure to avoid litigation costs in favor of the "less-expensive, faster" arbitration remedy, but the concomitant effort by the plaintiffs’ bar to make arbitration just like litigation but with almost no ability to appeal, expect this debate to continue.
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