DOL Attempts to End Confusion Regarding Bonuses and the Use of the Fluctuating Workweek

Background: The US Department of Labor’s Wage and Hour Division (DOL) is attempting to provide clarity and predictability to one of the most confusing areas of wage and hour law – the fluctuating workweek. The Fair Labor Standards Act (FLSA) requires employers to pay non-exempt employees time and a half their regular rate of pay for hours worked over forty in each week. However, if certain conditions are met, the DOL allows employers to pay “a fixed salary for fluctuating hours” and overtime at a half-time rate. See 20 CFR 778.114. The general requirements for utilizing the fluctuating workweek method are: 1) an agreement with the employee to pay “a fixed amount” each week regardless of the hours worked, 2) that the employee’s hours fluctuate week to week, 3) that the fixed amount will be greater than the minimum wage for all hours worked in any given week and 4) the overtime rate is equal to half of “the amount of the salary” divided by the total hours worked in a week. The definition of the terms “fixed amount” and “amount of salary” within the regulation has led to disagreement among courts, and arguably the DOL itself, on whether any additional compensation would negate an employer’s ability to use this method of overtime computation. Where some courts have disallowed all bonuses and additional compensation, other courts attempt to resolve this by creating a dichotomy between “productivity based” (for example commissions) bonuses and “hours based” (for example night shift differential) bonuses, finding that only productivity bonuses are compatible with the fluctuating workweek method of compensation. However, there are bonuses (such as for retention, safety and referral) that do not fall neatly into either category. This confusion regarding additional compensation has dissuaded employers from utilizing this method of overtime compensation or not paying any supplemental compensation other than a fixed weekly amount. The DOL’s new proposed rule attempts to address this confusion. Continue reading

Non-Exempt Employees Traveling for Work: How to Manage the Time Clock

Douglas, Jeff - 300dpi
Jeffrey Douglas

There may be instances where non-exempt employees are required to travel for business.  This is a common practice in the fashion industry where regular trips to factories throughout the world are a regular part of the business.  Non-exempt employees traveling for business can create serious wage and hour implications that, if not addressed properly, can lead to unaccounted for compensable time and overtime liability.  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

Russell_Jackson_IL
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