Some bargains are not as they seem. An asset-acquiring Company discovered this the hard way in Teed v. Thomas & Betts Power Solutions. In the case, at an auction, Thomas & Betts purchased the assets of a company in receivership. It knew that a judgment of $500,000 had been entered against the former company in a lawsuit under the Fair Labor Standards Act (FLSA). Therefore, it made the purchase contingent upon the express condition that it be “free and clear of all liabilities.” Under (Wisconsin) state law, that, in combination with the common law principle that an asset purchaser generally does not assume liabilities, would have protected Thomas & Betts.Continue reading this entry
For many years, the traditional practice has been that settlements of claims brought, and waivers of claims arising, under the FLSA required approval either from the Department of Labor (DOL) or a court. This rationale has followed from a decision from a federal appellate court dating back to 1982 determining that lawsuits for unpaid compensation under the FLSA cannot be settled without approval from the court. Because of this history, many wage-and-hour practitioners advise that releases of FLSA claims in private pre-litigation settlement or separation agreements might not be enforceable because they lack court or DOL approval. However, two federal decisions within the last year might indicate that change — allowing more flexible and confidential evaluation and resolution of FLSA claims — may be afoot.
The Fair Labor Standards Act (FLSA) requires an employer to compensate any employee who is not exempt from its provisions at a rate that is “not less than one and one-half times the regular” wage rate paid to the employee for all work time performed by the employee in excess of 40 hours (“overtime”) during the employee’s “workweek.” The employer retains discretion under the FLSA to set employee workweeks, which can vary depending on an employee’s classification or employer requirements provided the workweek for each employee consists of a consecutive period of 168 hours.Continue reading this entry
Students and recent graduates are often willing to work for experience rather than pay as an entre into their chosen profession. Likewise, employers relish the thought of offering on-the-job training without pay. While on the surface it seems to be a win/win situation, internships and volunteerism will violate federal law unless they satisfy certain criteria.Continue reading this entry
In the new year, you may be planning to purge records in an effort to create virtual or physical space and to save money on the cost of storing unnecessary records. However, before you do so, it is important to be familiar with federal and state document retention rules.Continue reading this entry
Butterball is the most recent company to settle claims of workers who said they were not properly compensated for “donning and doffing” protective wear. Donning and doffing refers to the time workers spend changing into and out of required protective gear for a job. Butterball workers in North Carolina filed a lawsuit alleging Butterball failed to pay workers for putting on, taking off, and cleaning protective equipment the workers were required to use in processing poultry. On November 17, 2011, Butterball reached a $4 million settlement that covers Butterball’s payment obligations, but does not include $2.2 million that the plaintiffs’ attorneys will seek for attorneys’ fees and costs.
While it has been said that “no one can serve two masters,” in our modern society many people work for two or more employers at the same time. This multiple employment can have significant consequences under state and federal wage and hour laws and other areas. Thus, without realizing it, under the Fair Labor Standards Act, an employer may become liable financially for the unpaid or underpaid wages of an employee, or for a discrimination claim brought by an employee under Title VII because of the employee’s connections to a second or third employer.
It seems that the NLRB files a complaint every month against an employer claiming an illegal reaction to a Facebook posting, taking the position that social media complaints are protected activity if they touch on topics of employee collective concern. Now, an employer has finally won a social-media-based retaliation case.
In recently finalized amendments to employment regulation 29 CFR § 531.52 (published on April 5, 2011) issued under the Fair Labor Standards Act (FLSA) (the "Amended Rule"), the Labor Department further clarified its position with respect to tip credits under 29 CFR § 531 and employees’ ownership rights over their tips.
Increasingly, employers are wrestling with how best to monitor and limit employees’ use of the Internet to conduct non-work-related activities. The issue may become more pressing in an FLSA overtime case, when an employer suspects (or an employee admits) that he or she spent a considerable amount of time during the work day using the Internet to conduct non-work-related activities. In such instances, the employer must decide how best to obtain proof of the employee’s conduct. One option may be issuing third-party subpoenas to the various Web sites and online services utilized by the employee, but that path is not without difficulty.
The federal FLSA establishes various wage and hour standards and rules, and also includes an anti-retaliation provision making it clear that it is illegal for an employer to discharge or discriminate against an employee who has “filed any complaint” relating to issues covered by the FLSA. In Kasten v. Saint-Gobain Performance Plastics Corporation , handed down on March 22, 2011, the U.S. Supreme Court looked at the issue of whether “complaints” covered by this provision can be oral as well as written.
Pharmaceutical sales representatives are not in sales, at least for the purpose of wage-and-hour laws. Reversing a lower court’s decision, the Second Circuit Court of Appeals ruled that pharmaceutical sales representatives could not qualify for the “outside sales” or administrative exemptions to the overtime pay requirements of the federal FLSA.
The FLSA (and many states’ laws based upon it) requires employers to pay overtime wages to employees who work more than 40 hours a week, unless the employees fall within certain limited exemptions. To qualify for the outside sales exemption, an employee’s primary duty must be making sales or obtaining orders or contracts. Department of Labor regulations explain that employees “make sales” if they obtain a commitment to buy. Pharmaceutical representatives cannot make direct sales or obtain a commitment to buy because their products can only be sold with a prescription. Instead, the rep calls on physicians with product samples and information to encourage the doctors to prescribe the company’s products. Whether doctors do so is up to their professional judgment. Moreover, while a doctor may “commit” to prescribing a product (sometimes just to get rid of the sales rep), he is under no legal obligation to do so. Indeed, doctors cannot lawfully make such a binding commitment.
The Court acknowledged that the sales reps were engaged in promotional work, but it deferred to regulations stating that “promotional activities designed to stimulate sales that will be made by someone else are not exempt sales work.” Since the sales reps did not actually make the sale, their promotion of the company’s products could not qualify them as exempt salespersons.
The Court also ruled that the pharmaceutical sales reps did not qualify under the administrative exemption. That exemption to the overtime laws requires employees to “exercise discretion and independent judgment with respect to matters of significance” to the business. The regulations define “discretion and independent judgment” as “more than simply the need to use skill in applying well-established techniques and procedures prescribed by the employer.” Since the reps had no role in formulating the message they delivered, no authority to deviate from that message, and no authority to answer any question without a pre-formulated script, the Court ruled that they could not meet the requirement for discretion and independent judgment.
This case should serve as a wake-up call for any employer whose “sales” employees promote products without making actual sales, particularly where their promotional efforts are scripted or controlled. If you are not paying such employees minimum wage and overtime now, you may need to start.
Internships abound. A recent New York Times article indicated that in 1992, only 17 percent of graduating students held internship positions. In 2008 that figure skyrocketed to 50 percent. Businesses across the country have a bevy of internship programs where relatively young and inexperienced students or post-graduates can obtain unpaid work. These interns sacrifice the immediate monetary gain of a paying job in the hopes of gaining job experience that will be more valuable to them in the long haul. But be warned: just because an intern is willing to work for free does not mean that you can legally take them into your business as an unpaid employee.
The U.S. Department of Labor (DOL) has made clear that unpaid interns are often covered by the Fair Labor Standards Act (FLSA). This means that private-sector interns who qualify as "employees" rather than "trainees" typically must be paid at least the minimum wage, and must be paid overtime compensation if they work more than 40 hours in a workweek. Thus some, but not all, interns are employees under the FLSA.
An intern whose work serves only his or her own interest is not an employee of a company that simply provides aid or instruction to the intern. Whether an intern is an employee depends on the facts and circumstances surrounding the internship, and the DOL recently re-published a list of the six factors used to determine whether an intern is an employee under the FLSA (and thus must be paid minimum wage and overtime). These six factors are as follows:
- The internship, even though it includes actual operation of the facilities of the employer, is similar to training that would be given in an educational environment
- The internship experience is for the benefit of the intern
- The intern does not displace regular employees, but works under close supervision of existing staff
- The employer that provides the training derives no immediate advantage from the activities of the intern and on occasion its operations may actually be impeded
- The intern is not necessarily entitled to a job at the conclusion of the internship
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship
If all of the factors listed above are met, then an employment relationship does not exist under the FLSA, and the act’s minimum wage and overtime provisions do not apply to the intern.