Wage and Hour Law and Practice

Voters in Massachusetts have approved a statewide law mandating employers with at least 11 employees provide those employees with up to 40 hours of paid sick time per year.  This mandate makes Massachusetts the third state requiring paid sick days, behind Connecticut and California.  Under the new law, effective July 1, 2015, Massachusetts employees can

The White House and the Department of Labor (DOL) released a proposed rule that would raise the minimum wage for employees under federal contracts from $7.25 to $10.10 per hour, a 39% increase.  The proposed rule implements Executive Order 13658, Establishing a Minimum Wage for Contractors, which was signed by President Obama on February 12, 2014.  That order applies to new and renegotiated contracts starting January 1, 2015.
Continue Reading DOL Publishes Rule to Raise Minimum Wage to $10.10 on Federal Contractors

The Seventh Circuit recently held that a purchaser in an “asset deal” of a business in receivership was found to be a successor employer for the purposes of a $500,000 wage/hour settlement. The liability was imposed on the purchaser even though the contract formalizing the asset deal expressly excluded that liability. Teed v. Thomas & Betts Power Solutions, LLC. Found here.
Continue Reading Successor Liability in “Asset Deal” Extends to Wage/Hour Liability

Lawsuits under the minimum wage and overtime laws have become a cottage industry. Filings of these lawsuits have increased 400% from 2000 to 2011. Why? While some reasons may depend upon whom you ask (and their political leanings), there are clearly some trends, as noted in a recent article here.

A few reasons:

  • The Fair Labor Standards Act (FLSA) was passed in 1938 and the substance of its provisions has remained constant since then. But, our economy has changed dramatically – from a primarily manufacturing-based economy then, to a primarily service-based economy now. This leads to some “square peg/round hole” problems as employers try to apply concepts from a bygone era to a new economic reality.

    Continue Reading Wage and Hour: Why So Many Lawsuits?

Employees in Michigan, Ohio, Kentucky and Tennessee who believe they have been wrongfully denied workers’ compensation benefits now have a new weapon – RICO. In Brown v. Cassens Transport Co., 6th Cir., No. 10-2334, 4/6/12, five employees sued their employer, a claims adjuster and a doctor alleging conspiracy to deny them workers’ compensation benefits. The Sixth Circuit Court of Appeals ruled that the lawsuit stated a claim under RICO.

RICO, the Racketeer Influenced and Corrupt Organizations Act, requires that an alleged victim identify four elements: (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity. Each element requires an additional analysis: an “enterprise” is marked by association and control; a “pattern” requires a showing of “continuity”, which is continuous and related behavior that amounts to, or poses a threat of, continued criminal violations; and “racketeering activity” involves the violation of designated federal laws. In addition, an alleged victim must allege that he was injured in his business or property “by reason of” a violation of RICO’s substantive provisions.
Continue Reading Sixth Circuit Recognizes Potential RICO Claim If Employees Wrongfully Denied Workers’ Compensation Benefits

tip poolingOn February 13, 2012, the federal district court for the Middle District of Tennessee granted conditional certification of a class action case under the Fair Labor Standards Act (“FLSA”) against Coyote Ugly saloons. As reported by Law360, the court conditionally certified several distinct classes, the most interesting of which is all employees who “worked as bartenders, barbacks, or waitresses at any company-owned Coyote Ugly saloon at any time within the last three years who were required to contribute their tips to a “tip pool” in which security guards also participated.” Under the FLSA, an employer may take a “tip credit” against the minimum wage owed to employees.  That is, an employer may pay a tipped employee $2.13 an hour under the FLSA (note that the amount of the tip wage can vary by state or local law), and then rely on the tips received by a server to make up the difference between $2.13 and the minimum wage. (If the tips received by the employee are insufficient to bring the employee’s compensation up to minimum wage, the employer must make up the difference.)

The FLSA also permits a “tip pool”; that is, an employer may require servers to contribute a portion of their tips to a tip pool and then pay out the funds in the tip pool to other employees who “customarily and regularly” receive tips (See Wage and Hour Fact Sheet #15: Tipped Employees under the Fair Labor Standards Act).  Such a rule immediately reveals the nature of the challenge in complying with the FLSA regulations regarding a tip pool.  If the employees “customarily and regularly” received tips directly, they wouldn’t need to be in a tip pool!  The regulations and case law have gradually come to define an employee who “customarily and regularly” receives tips as an employee who participates in directly providing service to the customer – such as the hostess at the front door and perhaps a busboy or bartender (as opposed to the dishwasher in the “back of the house”.)  One of the factors used to determine whether an employee may be paid out of the tip pool is the extent to which they have any “face-to-face” contact with the customer.  See Kilgore v. Outback Steakhouse of Florida, Inc., 160 F.3d 294 (6th Cir. 1998)
Continue Reading Do Bouncers Provide Customer Service? The Challenges of Tip Pooling

In a move that could significantly increase employer costs in the home care market, the Department of Labor has published proposed rules that will severely limit the current minimum wage and overtime exemptions for those who provide “companionship services.”

The proposed rules basically do two things:

  1. The rules narrow the definition of “companionship services. The

Jury dutyMost Tennessee employers are required to pay employees their “usual compensation” for jury duty.  But, what time is included in the phrase “jury duty” for the purpose of paying employees who serve?

That question was the subject of a recent Tennessee Attorney General opinion.  The Attorney General clarified that, under Tennessee law, jury duty

A federal appeals court recently held that a job applicant cannot sue a prospective employer for retaliation under the Fair Labor Standards Act (FLSA). 

In the case, Dellinger v. Science Applications International Corp., the employee had to complete a security clearance form after a conditional offer of employment.  The form asked the applicant if she had been involved in any non-criminal court actions.  The applicant disclosed she had sued her former employer for wage/hour violations.  The employer then withdrew the offer of employment. As a result, the job applicant sued for retaliation.

In ruling that the applicant did not have a claim, the Fourth Circuit Court of Appeals (the federal appeals court for appeals from Maryland, North Carolina, South Carolina, Virginia and West Virginia), explained that the anti-retaliation provision of the FLSA applies only to actual employers, not prospective employers.  The Court recognized the compelling argument of the job applicant but still held that extending the law as requested would go beyond the law’s plain language.  An applicant who never began or performed any work could not, by the language of the FLSA, be an ’employee,’ the Court said.

Continue Reading Should Employers Now Ask All Applicants If They Have Sued Under FLSA On A Background Check?