Third Circuit Limits Ability to Certify Wage/Hour Class Actions – Making “Off-the-Clock” Matters Difficult to Certify and Likely Increasing Litigation of Wage/Hour Claims Against New Jersey Employers in State Courts

Simao, Sal - 300dpi
Salvador Simao

On Christmas Eve, the Third Circuit issued a decision restricting certification of wage/hour classes for off-the-clock cases and increasing the threshold for other wage/hour matters. See Ferreras v. American Airlines, Inc. (Dec. 24, 2019). While this decision may reduce the number of wage/hour class actions certified in the Third Circuit (which covers Pennsylvania, New Jersey, Delaware, and the Virgin Islands), it is predicted to cause an increase in the number of wage/hour class action filings in New Jersey state courts. As discussed in our previous legal alert, the recently enacted New Jersey Wage Theft Act by itself will undoubtedly spark an increase in New Jersey state court filings because of the significant increase in damages and lower burden of proof compared to the federal Fair Labor Standards Act (FLSA). The Third Circuit’s decision will likely result in even more state court wage/hour class action filings. Continue reading

DOL Issues Opinion Letters Providing Guidance on Nondiscretionary Lump Sum Bonuses and Per-Project Payments

 

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Priya Amin

Executive Summary: The U.S. Department of Labor (DOL) issued two Fair Labor Standards Act (FLSA) opinion letters on January 7, 2020, addressing questions regarding overtime calculation for nondiscretionary lump sum bonuses and per-project payments under the salary basis test. In the first opinion letter, the DOL ultimately stated that the appropriate method for calculating overtime pay on nondiscretionary lump sum bonus earnings that cannot be identified with particular workweeks is allocating the bonus equally to each workweek. In the second opinion letter, the DOL concluded that a “per-project” payment may satisfy the salary basis test, even in situations where the employee is earning “extra compensation” working on additional projects. Continue reading

A (Temporary) Reprieve for Mandatory Workplace Arbitration

Overview

On December 30, 2019, a federal judge in the Eastern District of California entered an order temporarily halting the enforcement of AB 51, California’s new anti-mandatory arbitration law. AB 51, which was set to go into effect on January 1, 2020, makes it illegal for an employer to require an employee or applicant to waive the right to pursue a civil action as a condition of employment. While AB 51 does not directly reference arbitration, the clear purpose of the law is to halt the use of mandatory workplace arbitration agreements in California. Continue reading

Judicial Approval Not Required for Offers of Judgment in FLSA Cases

Shooman, Jeff - 300dpi
Jeff Shooman

Executive Summary: On December 6, 2019, a sharply divided panel of the Second Circuit (covering New York, Connecticut, and Vermont) ruled that judicial approval of Fair Labor Standard Act (FLSA) settlements resolved under Federal Rule of Civil Procedure 68’s offer of judgment mechanism is not required. In the Second Circuit, FLSA settlements typically require judicial approval for fairness under a 2015 Second Circuit decision called Cheeks v. Freeport Pancake House. However, the Second Circuit held that where FLSA plaintiffs resolve their disputes with employers by accepting an offer of judgment, judicial approval, in that narrow instance, is not required under Cheeks. Continue reading