“Better Ingredients, Better Pay?” – Federal Court Provides Guidance on FLSA Compliance and Reimbursement of Expenses for Pizza Delivery Drivers

Executive Summary: On November 5, 2019, a federal district court in Ohio issued a decision clarifying the law governing whether owners of 73 Papa John’s franchised locations violated the Fair Labor Standards Act (FLSA) by failing to adequately reimburse their delivery drivers for expenses incurred in using their own vehicles to complete deliveries. In deferring to the Department of Labor (DOL) Field Operations Handbook, the court held that where employees are paid at or close to minimum wage and they use their own vehicles to make deliveries, the proper measure of minimum wage compliance for pizza delivery drivers is to either (1) track and pay delivery drivers’ actual expenses incurred or (2) pay the mileage reimbursement rate set by the Internal Revenue Service (IRS). See Hatmaker v. PJ Ohio, LLC, 2019 U.S. Dist. LEXIS 191790 (S.D. Ohio Nov. 5, 2019). Continue reading

DOL Pivots, Providing Guidance Likely To Mitigate Recent Blitz of Minimum Wage Class Actions Related to Sleep Time And Off Duty Time Spent In Vehicles

Executive Summary: Almost all long-haul drivers are exempt from overtime under the motor carrier exemption to the Fair Labor Standards Act (FLSA). However, these same drivers are not exempt from the FLSA’s minimum wage requirements. Due to the ongoing driver shortage, drivers’ rates far exceed the minimum wage, especially when considering the Motor Carrier Safety Act limits on-duty hours to 60 per week. So it’s no surprise that many motor carriers were caught off guard when federal courts found them liable for not paying minimum wage because they failed to count the time drivers spent sleeping as hours worked. In guidance issued July 22, 2019 the United States Department of Labor (DOL) addressed the circumstances when time in the sleeper berth is compensable and shifted the burden to drivers to prove they were performing compensable work in the berth, providing “straightforward” guidance for the motor carrier industry and a defense to the minimum wage claims. Continue reading

Judge Refuses To Dismiss Domino’s Collective Action Without Seeing Settlement Agreement

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Russell Jackson

On May 17, 2019, Judge Renee Marie Bumb of the United States District Court for the District of New Jersey rejected the parties’ request to dismiss a Fair Labor Standards Act (“FLSA”) lawsuit without the Judge’s review of the settlement agreements.  In doing so, the District Court ordered defendants to submit the settlement agreement reached with the named plaintiff or attest that no agreement covering FLSA claims exists.  The case is Kessler v. Joarder Props., LLC, 2019 U.S. Dist. LEXIS 83571 (D.N.J. May 17, 2019) and is a reminder for employers engaged in FLSA litigation that obtaining court approval is a requirement before dismissal of the action is proper. Continue reading

How Many Benefits are Included in the Calculation of Regular Rate? The World May Never Know

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Louis Britt

On March 28, 2019, the Department of Labor (“DOL”) issued a lengthy and detailed Notice of Proposed Rulemaking (“NPRM”) to revise the regulations governing how employers should calculate “regular rate” under the Fair Labor Standards Act (“FLSA”). Upon release, the DOL set a deadline for public notice and comment of May 28, 2019. However, citing the interest expressed by “law firms, unions, and advocacy organizations,” the DOL extended the period for public comment to June 12, 2019. Continue reading

Ninth Circuit Applies Dynamex Retroactively

Executive Summary: In 2018, the California Supreme Court adopted the “ABC test” for determining whether workers are independent contractors under California wage orders (the Dynamex decision). For a discussion of that decision, please see our May 3, 2018 Alert. The ABC test makes it more difficult in many cases for companies to classify a worker as an independent contractor than under the prior generally-applied common law test. As such, the adoption of the ABC test increases many California employers’ exposure for minimum wage, overtime, meal and rest periods, and other benefits owed to employees but not to independent contractors. On May 2, 2019, in Vasquez v. Jan-Pro Franchising International, Inc., the Ninth Circuit concluded that the ABC test should be applied retroactively to situations that arose before the Dynamex decision came out. Continue reading