Wage & Hour Defense Blog : Wage & Hour Lawyer & Attorney : Epstein Becker Green Law Firm : DOL Enforcement, FLSA Coverage

by Michael Kun

It has not received much publicity -- yet -- but Representative Alan Grayson of Florida has introduced the Paid Vacation Act, a proposed amendment to the Fair Labor Standards Act.

In short, if passed, the Paid Vacation Act would require employers with 100 or more employees to provide one week of paid vacation each year to each of its employees who had worked for 25 weeks or 1,250 hours. Three years after passage, the Act would require those employers to provide two weeks of paid vacation, and smaller employers (those with more than 50 employees) would have to provide one week of vacation.

Of course, the overwhelming majority of employers already provide employees with paid vacation, so the Act would have little or no impact upon them.

As for the remainder, without going into all of the business reasons an employer might have for not providing paid vacation, one has to question whether this is really the time to be considering such an amendment to the FLSA.

The economic climate in the country is dire enough, and employers in virtually every industry have had to conduct layoffs just to remain in business.

Employees aren't concerned about vacations. They're concerned about keeping their jobs.

Is adding another business cost to struggling businesses wise, knowing that it would likely force some of those businesses to conduct additional layoffs or reduce employee compensation?

Or might someone be playing to the masses by proposing it?

Of course, time will tell whether the Paid Vacation Act gains any traction. But it certainly seems that this is one bill that deserves to be tabled until the economy (hopefully) rebounds.
 

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As hurricane season is fast approaching, we thought it an appropriate time to offer some thoughts and tips on the wage and hour issues that should be addressed in your company's policies and procedures.  The attached reference tool contains answers to common questions such as:

• Can we dock the salaries of exempt employees who do not come to work during a hurricane or timely return to work afterwards?
• What rules must we follow regarding paying employees who are absent because of weather?
• What do we do if we can't find employees to give them their paychecks?

Although the attached brochure is aimed at Texas employers, if you have operations anywhere along the Gulf Coast, you may find it helpful. 

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by Michael Kun and Kathryn McGuigan

In recent years, the alleged misclassification of employees under California’s wage and hour laws has been a hotly contested issue and the subject of a great many class actions. Faced with several appeals pending before it, the Ninth Circuit has now sought guidance from the California Supreme Court on the outside salesperson and administrative exemption tests as they apply to pharmaceutical sales representatives. Such guidance should prove invaluable to employers in the industry, and to parties to these claims.

 In D’Este v. Bayer Corporation, 07-56577 (9th Cir. 2009), a pharmaceutical sales representative brought a class action lawsuit against her employer, claiming that she had been misclassified as an exempt employee and had not been paid overtime or provided meal and rest breaks in compliance with California’s wage and hour laws. The district court granted summary judgment in favor of the employer, finding that the employee was exempt under California’s outside salesperson exemption; it declined to reach the question whether she was exempt under the administrative exemption. The employee appealed to the Ninth Circuit.

 D’Este is not the only class action on appeal to the Ninth Circuit on this issue. Three other class actions on appeal before the Ninth Circuit -- and four other class actions filed in the Central District of California -- all involve the question of whether pharmaceutical sales representatives are exempt under California’s outside salesperson and administrative exemptions.

 In light of the number of actions regarding the classification of pharmaceutical sales representatives, the Ninth Circuit certified the following two questions to the California Supreme Court:

 1. Does a pharmaceutical sales representative qualify as an “outside salesperson” under Industrial Welfare Commission’s (“IWC”) Wage Orders 1-2001 and 4-2001 if the pharmaceutical sales representative spends more than half the working time away from the employer’s place of business and personally interacts with doctors and hospitals on behalf of drug companies for the purpose of increasing individual doctors’ prescriptions of specific drugs?

 2. Is a pharmaceutical sales representative involved in duties and responsibilities that meet the requirements of a person employed in an administrative capacity as defined under IWC Wage Order 4-2001?

 The Ninth Circuit will accept the California Supreme Court’s decisions on these questions.

 The California Supreme Court’s review of these questions should provide employers with a clear understanding of the application of outside salesperson and administrative exemptions from overtime and meal and rest break requirements for pharmaceutical sales representatives employed in California. The Supreme Court’s ruling will provide invaluable guidance to employers in the industry about how to classify these persons going forward, and a clearer understanding to parties already litigating this issue. Should the ruling suggest that these persons normally fall under one or both exemption, litigation of these claims by pharmaceutical sales representatives may end. Should the ruling suggest that these persons normally fall under neither exemption, a new wave of class actions could be expected.

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 By Michael Kun

     The wage hour class action epidemic that has plagued California employers for the last decade or so appears to have no end.

    If anyone tells you otherwise, they are not paying enough attention. 

    And if they tell you the California Supreme Court is about to put an end to the epidemic, they are mistaken about that, too. 

    The California Supreme Court couldn't put an end to it even if it wanted to, at least not with the issues now before it.  And who is to say that they want to do that anyway?

    As in recent years, employers and their counsel are awaiting several important rulings from the California Supreme Court that relate to these wage hour class actions.   

    In Brinker v. Superior Court and Brinkley v. Superior Court, the Supreme Court should finally clarify whether employers must "ensure" that meal and rest periods be taken, or merely make them "available" to employees.

    In Arias v. Superior Court, the Supreme Court should finally clarify whether claims brought under the Private Attorneys General Act ("PAGA") for alleged Labor Code violations must be brought as a class action and satisfy the requirements for class treatment, or whether an employee can represent a group of employees merely by filing suit under PAGA. 

    And in Pineda v. Superior Court, the Supreme Court should finally clarify whether California's Unfair Competition Law allows employees restitutionary recovery of "waiting time" penalties.

    More than a few commentators are predicting victories for employers in all four cases. 

    Hopefully, no one is placing any bets.  Predicting what the California Supreme Court will do is, respectfully, a fool's game. 

    At the beginning of the decade, many predicted an employer friendly ruling from the Supreme Court in Sav-On v. Superior Court, anticipating that the Supreme Court would hold that wage-hour claims were not appropriate for class treatment, killing the epidemic early.  Those predictions, of course, were wrong.  Very wrong. 

    Little more than two years ago, most commentators predicted that the Supreme Court would rule that premiums for missed meal and rest breaks were "penalties," rather than "wages," and hold that they were subject to a one-year limitations period, rather than three (or four) years.  The ruling in Murphy v. Kenneth Cole, of course, was otherwise, surprising virtually everyone.  And, unless there's a signed and dated document to prove it, anyone who tells you that he or she expected that the Supreme Court was going to rule that premiums for missed breaks were somehow "wages," not "penalties," just isn't being candid with you.   

    So, what should employers expect the Court to do in Brinker, Brinkley, Arias and Pineda?

    No predictions here.

    But, reading the cases, the applicable statutes and their legislative history would suggest that employer friendly decisions should be rendered in Brinker, Brinkley and Pineda -- and, unfortunately, an employee friendly decision in Arias (largely because of missing verbiage in the statute specifiying that PAGA claims are to be brought as class claims). 

    But there's an enormous difference between should and will.

    Based on the Supreme Court's recent history in employment cases -- particularly Sav-On and Murphy --  it would seem prudent for employers to adopt the same conservative, New England-ish approach that, until recently, fans of the Boston Red Sox favored for years-- expect the worst, and be pleasantly surprised if something better arrives. 

    That said, anyone who believes that even employer friendly decisions will put an end to the wage hour class action epidemic in California is mistaken.

    These cases make far too much money for plaintiffs' lawyers, and they are not going to walk away from them without finding ways to get around any unfavorable Supreme Court decision. 

    And getting around them may not be too difficult. 

    If, for instance, the Supreme Court rules that meal and rest periods need only be made "available," not "ensured," you can be certain that plaintiff's counsel will simply change the boilerplate allegations in their complaints to say that meal and rest periods were not made "available." 

    In the few seconds it takes to make a global change in a document, even an employer friendly Supreme Court decision could effectively be undone. 

    And in the few seconds it takes to pick up the phone, calls will be placed to legislators throughout the state demanding that the laws be rewritten to provide that breaks must be "ensured," which would completely undo that Supreme Court decision.  

    Such is the life of the employer who does business in California.

    Even a victory can be taken away. 

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One of the issues that repeatedly rears its head in wage and hour litigation and Department of Labor investigations is whether employees are being compensated properly for meal periods.  One practice that is almost always controversial, in this regard, is the automatic payroll deduction for lunch.

Absent thorough policies and safeguards to prevent inaccurate timekeeping, the automatic deduction is a significant legal risk that should be used with extreme caution.  The reason -- it is too easy for employees to claim they have been asked to work through lunch, or that they can not always leave their workstation at the designated time to take advantage of the full period.  Some tips to avoid "he said - she said" litigation in this area include the following.

1. Implement a clear off the clock policy explaining that employees should not work off the clock and should report any supervisor who makes such a request.
2. Maintain clear procedures for "exceptions" to automatic lunch deductions so that supervisors can correct payroll as warranted by special circumstances or business needs.
3. Require employees to acknowledge any deviation from automatic deduction practices.
4. Train managers on the importance of payroll polices and procedures.

Following these simple steps can help avoid misunderstandings and eventual litigation.  Even if you prevail, wage and hour litigation can be fact intensive and expensive.  Accordingly, this is one area where you can ill afford to not have comprehensive policies and procedures in place.

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