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

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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

Judicial Approval Not Required for Offers of Judgment in FLSA Cases

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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

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

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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