Wage and Hour Defense Blog

Wage and Hour Defense Blog

California Passes First $15 Minimum Wage Law – Employment Law This Week

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The top story on Employment Law This Week is California’s statewide $15 minimum wage.

On April 4, Governor Jerry Brown signed a bill that will raise California’s minimum wage to 15 dollars an hour by 2022 for companies with more than 25 employees. The increase will begin next year, moving from 10 dollars an hour to $10.50. California – one of the world’s biggest economies – is the first U.S. state to commit to a 15 dollar minimum wage. And the trend is continuing, with similar legislation signed in New York last week as well. David Jacobs from Epstein Becker Green has more on the trend and what employers in California can do to prepare.

View the episode below or learn more about the New York legislation in an EBG Act Now Advisory.

Minimum Wage Rates Increased in New York

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Evan J. Spelfogel

Evan J. Spelfogel

On March 31, 2016, New York Governor Andrew Cuomo signed into law a bill increasing the statewide minimum wage on a phased in basis over the next five years, to $15.00 per hour in some, but not all New York counties (“Minimum Wage Law”).  This is in addition to a bill enacted on December 31, 2015, that increased the subminimum wage for tipped employees in the hospitality industry from $5 to $7.50 per hour.

The Minimum Wage Law now provides for a tiered increase from the current statewide rate of $9.00, to $11, $13, and $15 per hour effective December 31, 2016, 2017, and 2018 respectively, for work performed in New York City for employers with more than 10 employees.  A slightly longer phase in period, running to December 2019, is provided for New York City employers with 10 or fewer employees and for Westchester, Nassau, and Suffolk counties. For these counties, the minimum wage is set to increase to $10.00 per hour by December 31, 2016, and then $1 every year until reaching $15.00 per hour on December 31, 2021.

For work performed in other counties throughout NY State, the minimum wage increase will be more gradual, increasing to $9.70 per hour on December 31, 2016, followed by a 70 cent increase every year until December 31, 2020, when the minimum wage will reach $12.50 per hour.  After December 31, 2020, the minimum wage in these counties will continue to increase on an indexed schedule to be set by the Director of the Division of Budget (“DOB”) in consultation with the Commissioner of Labor.

Clarification of California’s Obscure “Suitable Seating” Wage Rule Likely to Lead to More Employers Providing Seats – and to More Class Actions Against Those Who Don’t

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Clarification Of California’s Obscure “Suitable Seating” Wage Rule Likely To Lead To More Employers Providing Seats – And To More Class Actions Against Those Who Don’tWe have written previously about California’s obscure wage rule pertaining to “suitable seating,” which requires that some employers provide some employees with “suitable seating” in some circumstances if the “nature of the work reasonably permits it” – and exposes employers to significant penalties if they do not do so.

Faced with a dearth of guidance on the obscure rule and with a wave of class actions following the discovery of the rule by the plaintiffs’ bar, the Ninth Circuit Court of Appeals threw up its hands last year and asked the California Supreme Court to answer a few questions relating to the law.

In a decision issued on April 4, 2016 in Kirby v. CVS Pharmacy, Inc., the California Supreme Court did so.

And the California Supreme Court’s answers to the questions posed to it seem certain to lead to at least two results.

First, many employers will need to reassess their practices and determine whether it is reasonable to provide seats to employees.  This will be a particularly important assessment for employers in the hospitality and retail industries, where employers often expect employees to stand while working in order to show customers that they are attentive and available.

Second, the California Supreme Court’s clarification is certain to lead to a rise in the filing of class actions alleging that employers have unlawfully refused to provide suitable seating.

The questions that were posed to the California Supreme Court, and a summary of the Court’s answers, are as follows:

Question 1: Does the phrase “nature of the work” refer to individual tasks performed throughout the workday, or to the entire range of an employee’s duties performed during a given day or shift?

Answer: The “nature of the work” refers to an employee’s tasks performed at a given location for which a right to a suitable seat is claimed, rather than a “holistic” consideration of the entire range of an employee’s duties anywhere on the jobsite during a complete shift. If the tasks being performed at a given location reasonably permit sitting, and provision of a seat would not interfere with performance of any other tasks that may require standing, a seat is called for.

Question 2When determining whether the nature of the work “reasonably permits” use of a seat, what factors should courts consider? Specifically, are an employer’s business judgment, the physical layout of the workplace, and the characteristics of a specific employee relevant factors?

Answer: Whether the nature of the work reasonably permits sitting is a question to be determined objectively based on the totality of the circumstances. An employer’s business judgment and the physical layout of the workplace are relevant but not dispositive factors. The inquiry focuses on the nature of the work, not an individual employee’s characteristics.

Question 3: If an employer has not provided any seat, must a plaintiff prove a suitable seat is available in order to show the employer has violated the seating provision?

Answer: The nature of the work aside, if an employer argues there is no suitable seat available, the burden is on the employer to prove unavailability.

The Court explained, “There is no principled reason for denying an employee a seat when he spends a substantial part of his workday at a single location performing tasks that could reasonably be done while seated, merely because his job duties include other tasks that must be done standing.”

The California Supreme Court’s opinion should help employers assess whether and when to make seating available to employees.  And employers should review their practices promptly to try to comply with the law.  Now that the California Supreme Court has provided some much needed guidance on the issue, employers can expect that their practices will be challenged, and those challenges will often come in the context of class action lawsuits.

California Minimum Wage Increases Will Affect Exempt Salaries, Too

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Kevin Sullivan

Kevin Sullivan

On March 31, 2016, the California legislature passed a bill that will gradually increase the state minimum wage to $15 per hour by 2022. Governor Jerry Brown is expected to sign the bill on April 4, 2016. This increase will impact employers statewide. Not only will it affect the wages of many non-exempt employees, but it will also result in an increase in the minimum salary paid to employees who qualify for most overtime exemptions.

The bill calls for the minimum wage to increase to $10.50 per hour effective January 1, 2017, $11.00 per hour effective January 1, 2018, and then an additional one dollar per hour each year until it reaches $15 per hour effective January 1, 2022. (For employers with 25 or fewer employees, each of the minimum wage increases would start a year later such that $15 per hour minimum would not go into effect until January 2023.)

Importantly, once the minimum wage reaches $15 per hour, it may then be further increased annually by up to 3.5% to account for inflation based upon the national consumer price index.

Built into the bill is an “off-ramp” provision that allows the governor to pause any scheduled increase for one year if either economy or budget conditions are met. Once the $15 per hour minimum wage has been reached, the “off-ramp” provision expires.

While this increase will certainly have an impact on labor budgets for employers with hourly, non-exempt employees, the impact on employers with salaried, exempt employees cannot be ignored. Because most exempt employees in California must make at least twice the minimum wage on an annual basis, the current minimum salary for exempt employees who work for employers having more than 25 employees will increase from $41,600 to $43,680 effective January 1, 2017. It will then increase to $45,760 effective January 1, 2018, $49,920 effective January 1, 2019, $54,080 effective January 1, 2020, $58,240 effective January 1, 2021, and $62,400 effective January 1, 2022.

FLSA Settlement Terms: Be Sure They’ll Pass Judicial Muster

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Brian W. Steinbach, attorney at Epstein Becker Green, has a post on the Hospitality Labor and Employment Law Blog that will be of interest to many of our readers: “Southern District of New York’s Rejection of FLSA Settlement Highlights Need to Settle on Terms That Will Pass Judicial Muster.”

Following is an excerpt:

In rejecting the terms of a collective action settlement in Yun v. Ippudo USA Holdings, No. 14-CV-8706 (S.D.N.Y. March 24, 2016) the United States District Court for the Southern District of New York has confirmed the significance of last year’s Second Circuit Court of Appeals decision in Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2015)Cheeks held that parties cannot enter into an enforceable private settlement of Fair Labor Standards Act (“FLSA”) claims without the approval of either the district court or the Department of Labor. Yun shows what this means in practice by highlighting the issues that may arise in seeking to obtain approval.

Read the full post here.

High Court Says Statistical Analysis Can Establish Classwide Liability – Employment Law This Week

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The new episode of Employment Law This Week features the U.S. Supreme Court’s easing of class certification standards in a case against Tyson Foods.

In Iowa, a group of Tyson employees brought a hybrid class and collective action for unpaid overtime spent changing clothes and walking to their work area. An expert determined the average amount of time spent on those activities, and the employees relied on those averages to get class certified and prove liability and damages. On appeal, Tyson argued that the employees should never have been grouped into a single class, because each employee took different amounts of time for the unpaid activities. But the Supreme Court ruled that this representative sample could be used to establish classwide liability, and the case will move forward in the district court.

View the episode below or read more about the case in an earlier blog post.

Supreme Court Approves Use of Statistical Evidence in Affirming $5.8 Million Employee Victory in Class Action Against Tyson Foods

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US Supreme CourtOn March 22, 2016, the United States Supreme Court issued its much anticipated decision in Tyson Foods, Inc. v. Bouaphakeo, a donning and doffing case in which a class of employees had been awarded $2.9 million following a 2011 jury trial that relied on statistical evidence. (A subsequent liquidated damages award brought the total to $5.8 million.)

In a 6-2 opinion, the Supreme Court affirmed that award.  While the Supreme Court’s decision may not have been the outcome many were expecting, the Court did not issue a broad ruling regarding the use of statistical evidence in class actions, and the decision may prove to have limited application.

In 2007, Tyson Foods employees at a meat processing facility in Iowa filed suit under both state law and the Fair Labor Standards Act (“FLSA”), alleging that they were not paid overtime for the time spent donning and doffing protective gear.  Because Tyson Foods did not have records of the amount of time employees actually spent in those activities, employees’ filled the “evidentiary gap” at through the presentation of representative evidence. This included not only employee testimony and video recordings, but, most importantly, an expert study showing the average time employees spent in such activities as observed by the expert.

In seeking to reverse the jury award, Tyson Foods argued to both the Eighth Circuit Court of Appeals and the Supreme Court that the amount of time spent donning and doffing varied from person to person – and that some persons did not work sufficient time to be entitled to overtime in any event – such that individualized issues predominated over common ones. And Tyson Foods argued that the use of statistical evidence presented it from presenting individualized defenses.

In making these and other arguments, Tyson Foods sought a broad ruling prohibiting the use of statistical evidence in class actions. The Supreme Court rejected that request, concluding that such a rule would “reach too far.” And it explained that its landmark 2011 Wal-Mart v. Dukes decision “does not stand for the broad proposition that a representative sample is an impermissible means of establishing class-wide liability.”

Instead, the Supreme Court held that a “representative or statistical sample, like all evidence, is a means to establish or defend against liability. Its permissibility turns not on the form a proceeding takes — be it a class or individual action — but on the degree to which the evidence is reliable in proving or disproving the elements of the relevant cause of action.” It further explained, “Whether and when statistical evidence can be used to establish classwide liability will depend on the purpose for which the evidence is being introduced and on ‘the elements of the underlying cause of action’ . . . .”

Under the facts presented to it, the Supreme Court  concluded that statistics could be used to infer the amount of time Tyson Foods employees spent donning and doffing because those statistics could have been used in individual suits by the employees.

Importantly, in reaching its conclusion, just as it declined to issue a blanket rule forbidding the use of statistical evidence, the Court also declined to issue a broad rule affirming the use of statistical evidence in all class actions.

The Court noted that its opinion “is not to say that all inferences drawn from representative evidence in an FLSA case are ‘just and reasonable.’ . . . . Representative evidence that is statistically inadequate or based on implausible assumptions could not lead to a fair or accurate estimate of the uncompensated hours an employee has worked.”  In other words, a defendant can challenge an expert’s methodology, which Tyson Foods did not do.

The Court concluded its discussion of representative evidence by declining to issue any broad rule: “The Court reiterates that, while petitioner, respondents, or their respective amici may urge adoption of broad and categorical rules governing the use of representative and statistical evidence in class actions, this case provides no occasion to do so. Whether a representative sample may be used to establish classwide liability will depend on the purpose for which the sample is being introduced and on the underlying cause of action. In FLSA actions, inferring the hours an employee has worked from a study such as [the expert’s] has been permitted by the Court so long as the study is otherwise admissible. . . . The fairness and utility of statistical methods in contexts other than those presented here will depend on facts and circumstances particular to those cases.”

While the decision is a victory for Tyson Foods employees, it is those sentences quoted directly above that will likely limit the decision from having widespread application.  The decision will no doubt be cited by plaintiffs’ counsel in class and collective actions to support their efforts to use statistical evidence to establish both liability and damages in their cases, even where there are individuals who have not been harmed. And defense counsel in those cases will just as certainly point to language in the decision that would indicate that it is a narrow ruling limited to its facts.

Not unimportantly, one issue left unaddressed by the Court pertains to Tysons Foods’ argument that uninjured class members should not recover damages.  The Court declined to address that issue, holding that that question was not fairly presented to it in this case because the damages award has not yet been distributed and  the record does not indicate how it will be done. Accordingly, Tyson Foods may raise a challenge to the allocation method when the case returns to the trial court for distribution of the award to address persons who were not injured.

Even Betty White Can Be Sued for Alleged Wage-Hour Violations

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Betty WhiteIt is often said that no employer is immune from a wage-hour lawsuit. That no matter how diligent an employer is about complying with wage-hour laws, there is nothing to prevent an employee from alleging that it did not comply in full with the law, leaving it to the attorneys and the court to sort things out. Perhaps the best evidence that no employer is immune from a wage-hour lawsuit came on Thursday, March 17, 2016. That is the date that history will always reflect that a wage-hour lawsuit was filed against Betty White.

Yes, that Betty White. Ninety-four year old Betty White. Sue Ann Nivens from The Mary Tyler Moore Show. Rose from The Golden Girls. Betty White from The Betty White Show, and hundreds of talk shows, game shows, and commercials. One of the most recognizable faces of television for the past 50 years.  And one of the most universally adored. That Betty White. Sued. For wage-hour violations.

On March 17, 2016, a former domestic named Anita Maynard filed suit against Betty White in state court in Los Angeles, alleging that she was not paid minimum wages or overtime, was not permitted to take meal and rest periods in compliance with the law, and was not paid all wages due to her when her employment ended. (The lawsuit is known as Anita Maynard v. Betty White Ludden.  Some will recall Ms. White’s late husband, Allen Ludden, who hosted Password in the 1960s and 1970s before succumbing to cancer.) Now, we have no idea whether the claims have any merit.  And, like many single-plaintiff wage suits, it may well be dismissed or settled quietly without anyone knowing much. But we do know this: if Betty White can be sued for wage-hour laws, then any employer can be.

And that is just another reminder of how important it is for employers to try to ensure compliance with wage-hour laws.

Oregon Enacts New Minimum Wage Requirements – Employment Law This Week

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The new episode of Employment Law This Week features Oregon’s new three-tiered minimum wage system.

Oregon is the latest of the many states and municipalities that have acted to raise the minimum wage. The state has enacted an unusual system with three distinct minimum wage rates. The highest tier covers the Portland Metropolitan Area, the lowest covers non-urban counties, and all other counties fall in the middle tier. The state has laid out a schedule for incremental increases of the wage each year. Starting July 1st, 2016, the highest rate will be $9.75 an hour. This new system could prove complicated to implement for Oregon employers with locations in multiple counties.

View the episode below and read more about this new system in an earlier post on this blog.

Wage and Hour Division’s Latest Newsletter Confirms Its Aggressive Approach

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Wage and Hour Division’s Latest Newsletter Confirms Its Aggressive Approach

Infographic by DOL Wage and Hour Division.

The Department of Labor’s Wage and Hour Division, which is charged with enforcing federal wage laws, has just issued its latest newsletter.

Included in the newsletter is the Division’s presentation of a variety of statistics relating to its efforts.

Among the statistics reported by the Division:

  • It has assisted more than 1.7 million workers since 2009.
  • It has recovered approximately $1.6 billion for workers since 2009.
  • It recovered more than $246 million in back wages in 2015 alone for more than 240,000 workers.
  • In 2015, the Division found violations in 79% of its investigations.

What do these statistics mean for employers?

They mean that the Wage and Hour Division was not just talking when it said it would aggressively investigate and pursue wage-hour issues, including the misclassification of workers as independent contractors and the failure to pay employees for work performed off-the-clock.

Those statistics alone should serve as a reminder to employers to review their policies and practices to try to ensure compliance with wage-hour laws.  No employer wants to be part of these statistics next year.

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