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CURRENT TRENDS AND TOPICS UNDERFAIR LABOR STANDARDS ACT
Don FotyKennedy Hodges, LLP
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Background
Significant increase in the number of FLSA filings
1990 – 880 cases filed nationwide
2014 – 8,086 cases filed nationwide
Both the DOL and the Plaintiffs’ Bar have been very active recently
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Department of Labor
In 2014, DOL brought over 10,000 cases nationwide
50/50 minimum wage and overtime claims
Most common industries targeted Restaurant –
5,118 Healthcare –
1,581 Agriculture –
1,430 Day Care – 1,144 Hotel – 1,049
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Plaintiff’s Bar
4,859 FLSA cases filed in federal court past 6 months Florida – 1,128 New York – 918 Texas – 643 Georgia – 298 Illinois - 228
Does not include wage and hour cases filed in state court – i.e. California
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Industries Targeted Nationally
1st - Restaurant Tip Credit Violations Requiring non-tip generating work at less than minimum
wage 2nd - Retail
Off-the-clock claims for bag checks Unpaid meetings Misclassification of store managers as exempt
3rd - Transportation Independent contractor violations Paying by the mile without overtime
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Industries Targeted - Texas
Oil and Gas Industry Administrative
Exemption Day Rate Independent
Contractor Regular Rate of
Pay Meal Break
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29 C.F.R. § 541.200
Administrative Exemption
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Duties Test
A. “primary duty” of performing office or non-manual work directly related to the management or “general business operations” of the employer or the employer’s customers
B. “primary duty” that includes the exercise of discretion and independent judgment with respect to matters of significance
Clark v. Centene Co. of Texas, LLP, 44 F. Supp. 3d 674 (W.D. Tex. 2014)
Hanson, et al. v. Camin Cargo Control, Inc., 2015 WL 1737394 (Apr. 16, 2015)
Zannikos, et al. v. Oil Inspections (USA), Inc., 605 Fed. App’x 349 (Mar. 27, 2015)
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Hanson v. Camin Cargo
Class of dispatchers in the oil and gas inspection industry
Summary judgment was granted by Magistrate Judge Smith
Reasoning: Element 2 not satisfied Dispatchers did not perform work related to
“general business operations” but to work related to the “service” provided to customers
Ancillary duties do not matter – only “primary” duty
Did not need to address element 3
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Zannikos v. Oil Inspections
Marine superintendents who performed the following tasks:
Monitored oil transfers to ensure that it complied with the law Monitored loading of cargo to ensure that the it complied with the
law Reported losses and errors Ensured that transfers complied with company safety policies and
national standards Performed quality control functions, including inspecting loads
and equipment to identify potential problems with equipment or procedures
Made recommendations for quality control Oversaw the work of independent inspectors during the transfer
process
Ensured that the inspectors were using proper equipment and taking proper measurements
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Zannikos v. Oil Inspections
Affirmed summary judgment of the trial court that the administrative exemption not applicable
Reasoning – the plaintiffs did not exercise sufficient “independent judgment and discretion” Observed the process – no independent
judgment and discretion Reported non-compliance – no independent
judgment and discretion Enforced pre-established policies and national
guidelines – no independent judgment and discretion
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Day Rate Violations
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Day Rate
Question – do the “white collar” exemptions apply to a worker who is paid solely on a day rate basis?
Element 1 – “Compensated on a salary or fee basis at a rate of note less than $455 per week”
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Salary/Fee Basis Requirement
Regulations identify at least 7 different methods to pay an employee (1) hourly, (2) piece rate, (3) day rate, (4) job rate, (5)
salary, (6) fee basis, and (7) commissions
Only two are permissible for the “white collar” exemptions
Trahan v. Honghua Am., LLC, No. CIV.A. H-11-2271, 2013 WL 2617894, at *13 (S.D. Tex. June 10, 2013)
“To fall under the highly compensated employee exemption, an employee must be paid on a
salary or fee basis.…Here, Defendant's own evidence makes clear that Plaintiffs were paid on an hourly basis, not on a salaried basis.”
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Salary Defined
Guaranteed, pre-determined amount each week that is not subject to variations based upon quantity or quality of work - 29 C.F.R. § 541.602
The employee must receive the same amount each week regardless of the number of hours or days worked.
Worker paid a day rate is not paid a predetermined amount each week
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Fee Basis Defined
Set amount paid based upon the accomplishment of a single task. - 29 C.F.R. § 541.605
“[p]ayments based on the number of hours or
days worked and not on the accomplishment of a given single task are not considered payment on a fee basis.” - 29 C.F.R. § 541.605
Paid based upon number of days worked
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Conclusion
Do the white collar exemptions apply to a worker paid solely on a day rate basis?
Answer: No
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DOL Administrator’s Interpretation 2015-1
Independent Contractors
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AI Number 2015-1
July 15, 2015 – DOL Wage and Hour Division issued AI Number 2015-1
Guidance to courts for determining when a worker is an employee or independent contractor
AI concludes – “most workers are employees under the FLSA’s broad definition.”
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Control Factor
Minimized control factor “FLSA covers workers of an employer even if
the employer does not exercise the requisite control over the worker.”
“Economic dependence” is all that is necessary for control
Control factor does not take overtake the other factors
Full time worker, deriving all of his income from one employer will likely be considered an “employee”
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Deference to AI
Martin v. Cooper Elec., Supply Co., 940 F.2d 896 (3rd Cir. 1991) DOL interpretations of the FLSA – “should be
given ‘considerable and in some cases decisive weight.’”
O’Conner v. Uber Tech., Inc., 2015 WL 5138097 (N.D. Cal. Sept. 1, 2015) Relied upon AI to certify case as Rule 23 Class
Action
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Regular Rate of Pay
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Regular Rate of Pay
All remuneration for employment must included except for those specifically excluded: Business expense reimbursements Premium payments for overtime Contributions to bona fide plans for
retirement, life, accident, health insurance, or similar benefits
Discretionary bonuses Gifts
29 U.S.C. § 207(e)
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Business Expense Reimbursements
Employer bears the burden of proving that a reimbursed expense should be excluded Picton v. Excel Group, Inc., 192 F. Supp. 2d
706 (E.D. Tex. 2001). Two part test:
A. Is the payment primarily for the “benefit or convenience” of the employee or the employer?
B. If the payment is primarily for the “benefit or convenience” of the employer, than was the amount a reasonable approximate of the actual expense
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Per Diem Payments
“[I]f the amount of the per diem or other subsistence payment is based upon and thus varies with the number of hours worked per day or week, such payments are part of the regular rate in their entirety.” DOL Field Operations Handbook
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Gagnon v. United Technisource
Fifth Circuit affirmed summary judgment for an employee for the employer’s failure to include the amount of a per diem in the regular rate of pay
Amount of per diem was expressed in terms of an hourly rate
Increased depending upon the number of hours worked
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Hanson v. Camin Cargo
Employer gave employees $7 per day if they worked 8 hours
Plus an extra $7 for each additional 4 hours worked up to $21 per day
Summary judgment for employees Amount of the payment was “based upon and
varies with the number of hours worked.”
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Car/Mileage Payments
Reimbursement for cost of home to work travel always for the “benefit or convenience” of employee
Howe v. Hoffman-Curtis Partners, Ltd., 2005 W. 6443877 (S.D. Tex. 2005) $10,000 per year car allowance Only travel was home to work travel Summary judgment for employee
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Car/Mileage Payment
Reimbursement for work related travel, i.e. not home to work travel, must still be a reasonable approximation of actual expenses.
Hanson, et al. v. Camin Cargo Control, Inc., 2015 WL 1737394 (Apr. 16, 2015) Undisputed that workers drove their vehicles for work Reimbursed a combination of an annual car allowance
plus a per mile reimbursement With both payments, reimbursed at a rate of $2.32
per mile on average Summary judgment for workers
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Meal Payments
Two regulations 29 C.F.R. § 778.217(d) – employer paying
for employee lunches constitutes wages 29 C.F.R. § 531.32 – “meals are always
regarded as primarily for the benefit and convenience of the employee.“
DOL Field Operations Handbook – meals furnished by employer are wages
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Bonuses
Non-discretionary bonuses must be included in the regular rate of pay
Few bonuses are truly discretionary If employer announces in advance the ability to
earn the bonus and sets requirements to earn the bonus, it is non-discretionary
Bonuses designed to encourage more efficient operations or for employees to work harder are not discretionary
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Meal Breaks
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Regulations
Some breaks are compensable, others are not
“Rest Break” – Compensable 29 C.F.R. § 785.18 – “rest periods of short
durations, running from about 5 minutes to 20 minutes” are compensable
“Meal Break” – Not Compensable 29 C.F.R. § 785.19 – employees do not need
to be paid for actual meal periods of 30 min or more
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But Meal Breaks Can Be Compensable
Meal breaks are compensable under the following situations Employee performs work during the meal
break, or
“[T]he meal period is used predominantly for the benefit of the employer” Limitations on the employees’ personal
freedom that benefits the employer Restrictions are placed on the employees’
activities Frequency of the employees being
interrupted for work activities
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Naylor v. Securiguard
Fifth Circuit examined whether time spent during a meal break was compensable Employer provided a 30 min meal break Required the guards to drive a company car to
a designated break building 12 min away While driving could engage in any personal
activities such as eating, smoking, or talking on the phone
Result – less than 30 min actually eating meal
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Naylor v. Securiguard
Fifth Circuit reversed the trial court’s summary judgment in favor of the employer
Fact issue as to whether the 12 min drive to the break area “predominantly benefited the employer or the employee”
“a jury could find that preventing an employee from eating…for twelve out of thirty minutes during every break is a meaningfuly limitation on the employee’s freedom”
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Important Recent Decisions
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Offers of Judgment
What happens when an employer tenders a Rule 68 offer of judgment less than full relief?
Answer: Case is not moot Payne v. Progressive Fin. Servs., Inc., 748 F.3d
605 (5th Cir. 2014) An offer of judgment that “does not offer to
meet the plaintiff’s full demand for relief—does not render the plaintiff’s claims moot.”
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Offers of Judgment
What happens when an employer tenders an offer of judgment that does meet the individual plaintiff’s full demand in a class or collective action prior to certification?
Answer: Case is not moot Hooks v. Landmark Industries, Inc., 797 F.3d
309 (5th Cir. 2015) “Given that Hooks’ individual claim was not
mooted by the unaccepted offer, neither were the class claims.”
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Hooks v. Landmark
Plaintiff made a withdrawal from an ATM and was charged a fee without notice
Plaintiff filed a claim under the Electronic Funds Transfer Act as a class action
Before moving for class certification, Landmark tendered an offer of judgment for the maximum amount available under the statute
Trial court dismissed the case
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Hooks v. Landmark
Fifth Circuit reversed relying upon Justice Kagan’s dissent in Genesis “[A]n unaccepted offer of judgment cannot
moot a case.” Fifth Circuit stated: “[i]t is hornbook law that the
rejection of an offer nullifies the offer.” Result – Hooks’ individual claim not moot and the
class claims not moot
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Other Circuits
Other Circuit Courts Agree with Fifth Circuit:
Chapman v. First Index, Inc., 2015 WL 4652878 (7th Cir. 2015)
Diaz v. First Am. Home Buyers Prot. Corp., 732 F.3d 948 (9th Cir. 2013)
Stein v. Buccaneers Ltd. P’Ship, 772 F.3d 698 (11th Cir. 2014)
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Conditional Certification
Email notice and electronic signature commonplace Dyson v. Stuart Petroleum Testers, Inc., 308 F.R.D. 510
(W.D. Tex. 2015)
“Happy Camper” affidavits not persuasive to contest conditional certification Vassallo v. Goodman Networks, Inc., 2015 WL 3793208
(E.D. Tex. 2015)
Job titles not dispositive Tamz v. BHP Billiton Petroleum, 2015 WL 7075971 (W.D.
Tex. 2015)
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Settlement of FLSA Claims
Bodle v. TXL Mortg. Corp., 788 F.3d 159 (5th Cir. 2015) General release of claims not sufficient to
waive FLSA claims Distinguished Martin v. Spring Break #83
In Martin, money was paid to the workers to resolve a genuine dispute over wages and hours worked
In Bodle, the general release did not envision FLSA claims and no money was paid to resolve a genuine dispute concerning wages and hours worked.
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Supreme Court Cases
Tyson Foods Inc. v. Bouphakeo, cert granted 135 S.Ct. 2806 (2015)
Campbell-Ewald Co. v. Gomez, cert granted 135 S. Ct. 2311 (2015)
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