BLOGS: Fair Labor Standards Act Law

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Monday, August 25, 2008, 4:29 PM

Essential Functions Include Overtime

This one isn't an FLSA decision, but it's strangely related: Glena Tjernagel was a part-time production employee in Gates Rubber's plant in Boone, Iowa for more than nine years before acquiring full-time status in 2004. The facility manufactures hydraulic and industrial hoses, and Tjernagel's job entailed a degree of physical exertion; the regular shift consists of 8 hours, with overtime, including on weekends, to meet production demands. In 2005, plant employees worked 22 Saturdays; there were no light duty assignments. In May of that year, Tjernagel was diagnosed with multiple sclerosis; over the next few months, she left the production line to take extra breaks, sometimes returning before shift change and sometimes not. On November 2, 2005, after a company-requested work capacity evaluation, her physician imposed several work restrictions, concluding with "No overtime." Several modifications to her work station were made, but the HR manager reminded Tjernagel that "the plant worked overtime and Tjernagel could not be treated differently than other production workers." Two months later, although Tjernagel had worked no overtime in the interim and had not been asked to do so, her employment was terminated "because she could not work overtime and because of her other work restrictions." Tjernagel was advised of her right to seek peer review under company policy.

Her physician provided a new work capacity review which dropped the overtime restriction but was otherwise the same as the previous one. A dialogue between the doctor and the company physician was thwarted when Tjernagel's attorney took the position that such a discussion would be "problematic" without the attorney's presence. Given this failure to communicate, Gates declared the process at an end and triggered the 21-day peer review period. Tjernagel's doctor then faxed a "no restrictions" work release, but Tjernagel inexplicably omitted it from the materials she submitted in support of her appeal, including only the two work capacity evaluations. The five-member review panel - three hourly production employees and two management members from another plant - unanimously upheld the termination.

Tjernagel sued under the Americans with Disabilities Act, the Iowa Civil Rights Act, and the Family and Medical Leave Act, claiming discrimination and retaliation; a federal district court granted the company's motion for summary judgment on all counts, and Tjernagel appealed only as to disability discrimination under federal and state law, abandoning her FMLA and retaliation allegations. Affirming the district court opinion, the Eighth Circuit found Tjernagel was neither substantially limited in a major life activity nor regarded as disabled. But as an alternative rationale, the court said Tjernagel was unable to perform the essential functions of her job because she couldn't work overtime and had a substantial number of other restrictions which were determined by her alone, based on how she felt. The court focused on overtime: "An employer's mandatory overtime requirement has been recognized as an essential job function," is "akin to job presence," and "attendance at work is a necessary job function." So even assuming she had a disability, no reasonable accommodation could be made because all the production jobs required overtime. Tjernagel v. The Gates Corporation, 8th Cir. No. 07-3101 (July 9, 2008).

There are several morals to this story: Not all essential job duties are "major life activities." Make sure your internal appeals have all the right information included. Resist the temptation to complicate the process by demanding attorney intervention at every stage. Beware of the overreaching medical restriction which renders an employee unqualified to stay at work - especially if those restrictions can evaporate when the choice is keeping or losing a job. And remember there's nothing wrong with "forcing" employees to work overtime - unless, of course, you run into a court that disagrees with that premise.

Click here to read the case...

Friday, August 22, 2008, 12:47 PM

Housekeeping at USDOL

A July 28 Notice of Proposed Rulemaking from the US Department of Labor announced a plan to make so-called "clean-up" amendments to Fair Labor Standards Act regulations. while the initial notice set September 11 as a response cutoff, that deadline has now been extended to September 26. While the changes and clarifications are too numerous to discuss here, some which may be of particular interest are the following:

> Commuting Time: Travel time in employer-provided vehicles wouldn't be compensable if use of the vehicle is "conducted under an agreement between the employer and the employee or the employer's representative." The agreement can be a union contract, a written agreement with the employee, or an "understanding based on established industry or company practice." (Rather than rely on an unwritten "understanding," it would seem prudent to have documentary proof. -- Ed.)

> Stock Options which meet specified criteria would not be included in the "rugular rate" for purposes of overtime computation.

> Fluctuating Work Week: This quite complex area of the regulations would be clarified to eliminate current counterproductive regulatory results. For salaried nonexempt workers whose weekly hours vary, and who nonetheless receive a fixed salary (without overtime premium pay added), the new rules would no longer jeopardize the fluctuating workweek computation if the employer gave a shift differential, hazardous duty compensation, or the like in addition to the base salary. (This is still a tricky subject, and great care must be taken to get it right. the new language would simply remove one obstacle. -- Ed.)

> Tipped Employees: Two new provisions would deal with this topic: (1) The minimum cash hourly wage required for eligible tipped employees would be $2.13, and the allowable hourly credit would be the difference between the otherwise-required minimum hourly wage (now $6.55, and $7.25 after July 24, 2009). (2) New tip credit rules would deny the employer the use of a tip credit unless affected employees are informed of the applicable legal requirements and the employee is allowed to retain tips he or she receives. Tip pooling still is allowed,and the employer may both take a credit for the reasonable cost of meals provided to the employee and may require acceptance of the meal allowance as a condition of employment.

> Youth Opportunity: Employees who are younger than 20 can be paid a minimum wage of $4.25 per hour for their first 90 consecutive calendar days on the job. However, employers are forbidden to displace or penalize other employees (i.e., by cutting hours, pay or benefits) "for the purpose of" hiring youth workers. (Expect some employer to get targeted for an early test case on this one. -- Ed.) By the way, the Genetic Information Nondiscrimination Act of 2008 ("GINA") included an unrelated section boosting civil monetary penalties for child labor violations by 10% - to a $11,000 maximum - as well as upping the penalty for violations resulting in death or "serious injury" (a defined term) to $100,000. (Pundits predict that similar increases are likely for OSHA penalties as soon as Congress gets around to it. -- Ed.)

The remaining adjustments deal with situations which are industry-specific - "salesmen, partsmen and mechanics" (sorry - the gender designations are theirs) selling and servicing automobiles and boats, but not those dealing with trailers or aircraft; agricultural workers on water storage or irrigation projects; and food bank workers. Two more would affect the public sector: There would be a new definition for "fire protection activities" which would include some EMTs and paramedics, and adjustments to compensatory time standards would be made. (Remember that compensatory time outside the public sector is not permitted by the FLSA with the exception of the special health care rules. Some employers are still operating on the erroneous assumption that overtime compensation can be awarded by reducing the hours worked the following week to reach a 40-or-less average. Not so. -- Ed.)

American Takes a Mulligan

Related Update: (8/26/08): Skycaps Try to Widen Classes in 2 Bag Suits

Related Update (8/22/08) : US Airways Seeks Emergency Exit From Skycaps Suit

Related Update: US Airways to replace skycaps at Dulles International Airport

Our post on May 20 ("Checking Out at Curbside") detailed the outcome of DiFiore v. American Airlines, Inc. But as the great philosopher warned, "It ain't over 'til it's over." Federal district judge William Young has ordered a retrial because of a misleading jury instruction, setting aside more than $283,000 of the $325,000+ verdict to eight skycaps who serviced American flights but were actually employed by G2 Secure Staff; the ninth successful plaintiff, who was a direct employee of the airline, gets to keep the money.

The new flight is occasioned by conflict over the proper interpretation of a Massachusetts tips statute; plaintiffs had argued, and the court had told the jury, that since the law creates liability for certain service charges paid to employers "or other persons" which aren't passed on to those who perform the services, American could be forced to pay over the fees to the skycaps. The confusion comes from the language of the statute itself: a fee charged by an "employer" can be recovered from the employer, while a fee paid by a consumer to "an employer or other person" can be recovered from the payee is the consumer expects the payment to be in lieu of a tip. The fees here were levied by the airline, not the plaintiffs' employer, and the court felt the jury might not have distinguished between the two portions of the tips law.

Not surprisingly, plaintiffs' counsel says the order is "overly technical," and a motion for reconsideration is expected. This comes on the heels of the dismissal of nationwide class action claims that a new no-tipping policy had been instituted in retaliation for the earlier litigation. Other aspects of the class action have been stayed pending final judgment in DiFiore - which now may be a good while off. Watch the monitor for further announcements; it promises to be a bumpy ride.

Read more from Employment Law360

Wednesday, August 6, 2008, 9:31 AM

Come and Get It! Meal Breaks and Rest Breaks: Employee Responsibility to Take Not Employer Responsibility to Ensure under New California Decisions.

In late July, the California Court of Appeals issued an important ruling (unless overturned by the California Supreme Court) on meal and rest breaks in Brinker Restaurant Corporation v. Superior Court of San Diego County (Hohnbaum). In Brinker, the court denied the plaintiffs' motion for certification because meal and rest breaks were not "ensured", but rather needed to be "made available" to employees, which raised too many individualized issues for collective action. Not only does the Brinker decision appear to make certification of meal or rest break issues unlikely, but the decision also provides employers with some relatively lax guidelines for such breaks in that employers must authorize and permit such breaks (and therefore, not impede or prevent their being taken), but not ensure employees do take them. Finally, Brinker would not appear to allow a claim for employees working off the clock unless the employer knew (or should have known) of the off-the-clock work and encouraged or coerced such off-the-clock work. All of these implications from the Brinker decision may provide employers in California with some measure of relief, although they must keep in mind while collective actions may not be likely, individualized lawsuits can be brought (and can be successful against employers) for these same issues.

Wells Fargo employees suing for wage and hour violations, including alleged missed meal breaks and unpaid overtime, lost their effort for certification this week when a California court of appeals denied their motion in Gabriella v. Wells Fargo Financial, Inc., 06-cv-04347. The court ruled that the employees could not prove that class wide policies resulted in the missed breaks, largely relying on the Brinker decision.

Employers shouldn't expect guidance from the California Supreme Court any time soon if recent denials of certification are any indication. Just this month, the California Supreme Court denied Dollar Financial Group, Inc.'s petition to review a case involving issues of meal and rest breaks in the case Bufil v. Dollar Financial Group, Inc., case number A118143, in the First Appellate District, Division 4.

For more on the decision in Gabriella v. Wells Fargo Financial, Inc., click here.

The recent Brinker decision can be read by clicking here.

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