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

Suppose a group of your salaried employees sues your company under the Fair Labor Standards Act, claiming they’ve been improperly classified as exempt and are entitled to overtime pay for the last three years. And suppose you’re concerned about the strength of your exemption defense and want to calculate your potential exposure. Do you calculate the employees’ overtime hours at 1.5 times their regular rate? Or can you assert that even if the employees were improperly classified, their salary paid them at a straight time rate for all their overtime hours, and therefore any liability should be calculated at only a half-time rate? 

The answer depends on how many hours the employees’ salary was intended to cover. 

Here’s why. The FLSA requires that employers pay non-exempt employees overtime pay for hours worked in excess of 40 per week at a rate not less than one and one-half times the employee’s regular rate of pay.  29 U.S.C. § 207(a)(1).  The regular rate must be “must be drawn from what happens under the employment contract.” 29 C.F.R. § 778.108. Suppose you agree to pay an employee a weekly salary of $1,000 for a 40 hour workweek. The regular rate is determined by dividing total compensation by the number of hours the salary is intended to compensate. 29 C.F.R. § 778.113. Here, the employee’s regular rate is $25 per hour. If a court determines that the position is non-exempt, your company will be liable for overtime at 1.5 times the regular rate, i.e. $37.50.

Employers and salaried employees often do not have a specific agreement as to how many hours of work are required or expected. But if the facts warrant a conclusion that the salary was intended to cover a 40 hour workweek, the employer will still be liable for overtime hours at 1.5 times the regular rate. In a recent case, Talbot v. Lakeview Center, Inc., Case No. 3:06cv378/MCR/MD (N.D. Fla., February 2, 2010), the employer posted two job opening advertisements that listed the hours of employment as 8 a.m. to 5 p.m., Monday through Friday. Plaintiffs were expected to be on the job during normal business hours and did not believe they were permitted to work fewer than 40 hours per week. Although plaintiffs understood that evening or weekend work would sometimes be required, the employer used a “flex time” arrangement that permitted plaintiffs to arrive at work late if required to work on an evening or weekend. The court found these facts consistent with a contract for a 40 hour week and held that the employer was liable for overtime at 1.5 times the regular rate.

For employers, there is a better way. If you’ve made it clear to salaried employees that their salary covers all hours worked, irrespective of the number of hours they work, you can argue that the employees’ salary already compensated them at a straight time rate for all hours worked, and that even if the employees are found to be non-exempt, any overtime should be calculated at a half-time rate. Courts sometimes characterize this as a retroactive application of the “fluctuating workweek” method.

Under the Department of Labor’s “fixed salary for a fluctuating workweek” rule, “where there is a clear mutual understanding of the parties,” an employer can pay a non-exempt employee a fixed salary that serves as compensation for all hours worked if it is sufficient to compensate the employee for all straight time hours worked at a rate not less than the minimum wage and the employee is paid an additional one-half of the regular rate for all overtime hours. See 29 C.F.R. § 778.114. To be clear, when you treat employees as exempt, you are not actually utilizing the “fluctuating workweek” method because, by definition, you are not paying the employees any overtime. But if your exemption argument fails, many courts will allow you to apply the rule retroactively to limit overtime liability to a half-time rate.

For example, in Blackmon v. Brookshire Grocery Co., 835 F. 2d 1135 (5^th Cir. 1988), the plaintiffs had been promoted with the understanding that they would be paid a fixed weekly salary, and would work whatever number of hours were required to get the job done. The trial court found that plaintiffs were not exempt and calculated overtime at 1.5 times their regular rate. On appeal, the Fifth Circuit Court of Appeals, citing the fluctuating workweek rule, held that a half-time rate was appropriate. In Saizan v. Delta Concrete Prods. Co., 209 F. Supp. 2d 639, 640 (M.D. La. 2002), the court, citing Blackmon, reached the same conclusion. In Sutton v. Legal Services Corp., 11 W.H Cas.2d 401, 404 (D.C.Sup.2006), the court stated that “virtually every court that has considered the question” has upheld the remedial use of half-time in failed exemption cases.

A January 14, 2009 Department of Labor opinion letter (FLSA2009-3),  in which the DOL endorsed the fluctuating workweek method to compute the retroactive payment of overtime to misclassified employees, lends support to Blackmon and similar cases.

But recently, at least two courts have held that the fluctuating workweek method cannot apply retroactively. In In re Texas EZPawn Fair Labor Stds. Act Litig., 633 F. Supp. 2d 395 (W.D. Tex. 2008), the court stated that applying the method not only as a way to pay an employee, but also as a way to remedy misclassification, is inconsistent with the remedial provisions of the FLSA. In Russell v. Wells Fargo and Co., No. C 07-3993 (N.D. Cal. Nov. 17, 2009), the court reached the same conclusion and specifically found the DOL opinion letter (FLSA2009-3) unpersuasive.

In Torres v. Bacardi Global Brands Promotions, Inc., 482 F. Supp. 2d 1379 (S.D. Fla. 2007), the court side-stepped the issue altogether and held that the application of the fluctuating workweek method was not at issue because the employer was not relying on it.  The court nevertheless agreed with the employer that because the plaintiff had “already received his regular rate for all hours worked,” he was only entitled to half-time for those hours worked in excess of forty per week.  

While there is some disagreement in the case law about whether it is proper to use a half-time rate to calculate overtime liability in a failed exemption case, there is little or no disagreement that half-time is applicable, if at all, only where the employees’ salaries were intended to cover all hours worked. If the evidence shows that the employees’ salaries were intended to cover a 40-hour workweek, the employer’s half-time argument will fail.

And make no mistake, the difference between calculating overtime at a half-time rate and 1.5 times the regular rate is dramatic. As noted above, an employee who is paid a $1,000 weekly salary for a 40-hour workweek has a regular rate of $25 per hour. Ten hours of overtime will cost the employer $375 in back pay (25 x 1.5 x 10 = $375). Now consider an employee who is paid a $1,000 weekly salary with a clear understanding that her salary covers all hours worked. In a week in which the employee works 50 hours, the regular rate is $20 per hour. Using a half-time rate, the employer’s liability for ten hours of overtime is only $100 (20 x 0.5 x 10 = $100), a $375% difference.  

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By Doug Weiner

In a recently reported case, Applebee’s’ servers alleged they spent a “substantial” amount of time performing non-tipped work, such as cleaning and maintenance, and should be paid the minimum wage 29 U.S.C § 206(A)(1)(c) of $7.25 rather than the direct wage 29 U.S.C. § 203(m) of $2.13 the FLSA 29 U.S.C. § 203(t) allows 29 C.F.R. § 516.28 tipped employees. Fast v. Applebee's International, Inc.  

Applebee’s contends there is no “dual job”, 29 C.F.R. § 531.56(e) as the server’s primary duty is customer satisfaction, and cleaning and maintenance duties are related to the servers primary duty. The court held it was a question of law which duties were included in the definition of a “tipped occupation”, and questions of fact which duties employees actually performed, and the time spent performing them.

The court denied the restaurant’s motion for summary judgment, rejecting the argument that the duties of, for example, cleaning bathrooms are related to the duties of serving food. However, the court emphasized it was the servers’ burden to prove they had worked more than 20% of their time performing non tipped work. Myers v. Copper Cellar Corp., 192 F.3d 546 (6th Cir. 1999)

Certified for appeal to the Eighth Circuit is the district court's holding that Section 30d00(e) of the Department of Labor's Field Operations Handbook is persuasive authority for the holding that, where more than 20% of a tipped employee's time is spent on non tipped work, the employer cannot take the tip credit for that time, and must pay the full minimum wage committed to non-tipped work. 

As an example of how fact specific each case must be analyzed, EBG wage & hour litigator Mark Beutler, in a case involving skycaps, successfully persuaded a court that incidental duties, such as bringing the bags to security were related to the tipped duty of serving the customer. In that case, the court found that all of the skycaps’ duties constituted tipped work, so there was no application of the 20% rule. Pellon v. Business Representation Int'l, Inc., 528 F. Supp. 2d 1306 (S.D. Fla. 2007). The court also held that to segregate the various tasks performed by skycaps, for purposes of assessing whether they were germane or not to the job of skycap, would be infeasible and require constant surveillance. The Pellon decision was later affirmed by the Eleventh Circuit.   

Dual jobs may exist in many varieties. There may be servers who are asked to perform duties as ice sculpturs, or pastry decorators, or floral arrangers. There may be bussers who make salads or wash dishes between lunch and dinner. Employers are well advised to keep good records of the time employees spend performing each duty in a dual job circumstance. See 29 C.F.R. § 785.13 The court emphasized it was an employer’s duty to record the time spent in tipped and non-tipped work.  29 C.F.R. § 516.28 

Douglas Weiner formerly served the U.S. Department of Labor as Senior Trial Attorney for the New York Regional Solicitor’s office for many years. He now exclusively represents management in wage hour and other employment matters.

Reply to this blog post for a discount to EBG’s CLE Hospitality Client Briefing

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The New York State Department of Labor ("DOL") has recently made available important new information for employers regarding their obligations under Section 195.1 of the Labor Law including notice of pay rates, pay dates and other information.

As we previously reported (see EBG Client Alerts of December 11, and October 30, 2009), pursuant to Section 195.1 of the Labor Law (the "Statute"), as of October 26, 2009, employers must provide newly hired New York employees with written notice of their: (1) pay rate; (2) overtime pay rate (if they qualify for overtime pay); and (3) regular paydays.

Such notice must be given at the time of hiring, before the employee performs any work. The employer must keep the original notice for at least six years, and the employee must be provided with a copy.

The DOL initially did not provide guidance on what type of form an employer was required to utilize for this purpose. Then, late last year, it decided that employers must use the "official" form issued by the DOL on its Web site. Next, as we advised in December 2009, the DOL determined that no particular form is required; rather, employers are permitted to create their own forms (or simply include the requisite information in an offer letter), or use any "official" form published by the DOL.

Model Notices, Guidance and Instructions on the DOL's Web site

The DOL recently made available on its Web site: (1) additional forms for employers' use (the "Model Notices"); (2) guidelines (the "Guidelines") for complying with the Statute; and (3) instructions (the "Instructions") for completing the Model Notices. Model Notices for the following categories of employees have been published on the DOL's Web site at http://www.labor.state.ny.us/workerprotection/laborstandards/workprot/lshmpg.shtm:

• Hourly Rate Employees
• Employees with Multiple Hourly Rates (if employee is paid more than one rate for different types of work or different shifts)
• Employees Paid a Weekly Rate or Salary for a Fixed Number of Hours (if employee works 40 or fewer hours in a week)
• Employees Paid a Salary for Varying Hours, Day Rate, Piece Rate, Flat Rate or Other Non-Hourly Pay
• Prevailing Rate and Other Jobs
• Exempt Employees

Important Information Regarding Notice to Exempt Employees

As stated above, employers need not use the Model Notices published by the DOL. However, if employers create their own forms, or simply include the required information in the text of an offer letter, they must be aware of certain additional requirements, aside from those set forth in the Statute. This is because the text of the Statute includes a statement that the required notices "shall conform to any requirements established by the [Commissioner of Labor] with regard to content and form." While neither the Guidelines nor the Instructions referenced above have the force of an order or a legal opinion issued by the DOL, both can be interpreted as requirements "established by the [Commissioner of Labor] with regard to content and form" of the required notice.

The Guidelines and Instructions both include certain requirements that are not found anywhere within the text of the Statute. For example, and most significantly, the Guidelines and Instructions provide that employers are to include the specific overtime exemption(s) under which an exempt employee falls (e.g., executive, administrative and/or professional). While currently, the Guidelines state that employers "should" include this information, and the Instructions state that employers "must" include this information, we have been informed by the DOL that the Instructions will be changed such that specifying the applicable exemption(s) will be required by both documents (i.e., not merely suggested). Other requirements found in the Guidelines and/or Instructions but that do not appear in the Statute include a requirement that notice must be provided "before any work is performed" and that the employer must maintain the form for at least six years.

No Model Notices for Commissioned Salespersons

As of this date, no Model Notice has been made available by the DOL for commissioned salespersons. The Guidelines, however, provide that employers may include the required information from the Statute within the text of a commission agreement between the employer and the employee, so long as that agreement satisfies the requirements of both Section 191.1(c) of the Labor Law (e.g., the terms of employment must be in writing and include how wages, salary, drawing account, commissions and all other monies earned and payable shall be calculated, and must be signed by both the employer and the employee and kept on file by the employer) and Section 195.1.

Should Employers use the Model Notices?

Employers who elect to use the Model Notices should be aware that those models contain information that is not required in the Statute, the Instructions or the Guidelines, such as the name, title and signature of the employer's representative who prepared the form, as well as a general statement regarding overtime pay in New York State (i.e., the Model Notices state that "[m]ost employees in New York State must be paid overtime wages of 1½ times their regular rate of pay for all hours worked over 40 hours per workweek. A very limited number of specific categories of employees must be paid overtime at a lower rate or not at all."). Although it is unclear whether the DOL will deem an employer to be in compliance with the law if this information is omitted from forms prepared by the employer, as discussed above, inclusion of this information could be deemed to be a "requirement[ ] established by the [Commissioner of Labor] with regard to content and form."

Finally, although the DOL permits employers to use their own forms to satisfy the requirements of the Statute, if they opt to do so, employers must ensure that those forms meet all of the requirements of the Statute (including the requirements set forth in the recently published Guidelines and Instructions). It should be noted that the DOL advised that employers should review the Guidelines and Instructions online from time to time, as the contents of those documents are subject to change. Finally, regardless of whether employers choose to comply with the requirements of the Statute by using the Model Notices (or a modified form of the Model Notices), their own forms, or by simply including the applicable information in offer letters or commission agreements, it is prudent to include an at-will statement, confirming the employer's right to change an employee's pay rate, pay day or other terms and conditions of employment in the future.

For more information about this Client Alert, please contact:

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By Teresa Maestrelli

The Miami-Dade Board of County Commissioners recently approved a Wage Theft Ordinance designed to make it easier for employees to take legal action against employers that fail to pay (or underpay) them. Under the new ordinance, the county will rely on a streamlined hearing examiner process to address complaints by employees.

The unanimous vote made Miami-Dade the first county in the nation to adopt a countywide wage theft law.[1]  For nearly a year, members of the South Florida Wage Theft Task Force - a coalition of union, immigrant, faith, women’s and legal services organizations - worked with County Commissioner Natacha Seijas, the principal sponsor of the ordinance, to craft and introduce the ordinance. 

The ordinance bars wage theft, and allows the county to use its police powers to intervene and help recover workers’ back pay. The ordinance specifically applies to private sector employees and employers in cases involving at least $60 (the “threshold amount”). Under the ordinance, wages include pay for daily, hourly, or piece work at a rate no less than the highest applicable rate established under federal, state, or local law.

Wage-Theft Violations:

An employer that fails to pay a portion of wages due to an employee, according to the wage rate applicable to that employee, within a “reasonable time” from the date on which the work was performed by the employee, shall be wage theft. The ordinance establishes a presumption that a “reasonable time” is no later than 14 calendar days from the date on which the work is performed. Employers may lengthen the period of time between the date work is performed and the date the employee is paid wages, for a period not to exceed 30 days, upon express written agreement signed by the employee.

Procedures for Wage-Theft Complaints:

An aggrieved employee may file a complaint with the county alleging a violation of the ordinance.  The complaint must set forth the facts upon which it is based with sufficient specificity to identify the employer and for the county to determine both that an allegation of wage theft has been made, and that the threshold amount has been met. Upon determining that the complaint alleges wage theft, the county will then serve the complaint on the employer, which will have 20 days to file an answer.

Hearing Before Hearing Examiner:

Upon request by either party, a hearing will be held before a Hearing Examiner appointed by the county. In conducting any hearing to determine whether a violation of the ordinance has occurred, the Hearing Examiner will have the authority to administer oaths, issue subpoenas, compel the production of and receive evidence. The burden of proof by a preponderance of the evidence rests upon the complainant/employee.

Upon the conclusion of the hearing, an adjudicative final order will be issued and served upon the parties setting forth written findings of fact and conclusions of law.

Enforcement of Violations:

At the conclusion of the hearing and upon a finding of a wage violation, the employer will be ordered to pay wage restitution to the affected employee in an amount equal to three times the amount of back wages that the employer is found to have unlawfully failed to pay the employee. The county will further order the employer to pay the Board of County Commissioners an assessment of costs not to exceed actual administrative processing costs and costs of hearing.  The new ordinance provides for additional penalties for failing to comply with the Hearing Examiner’s order.  

As demonstrated above, the penalties for violation of the ordinance can be costly. Employers in Miami-Dade County need to be sure that they comply with the new ordinance by timely paying wages due to their employees. As stated, the new ordinance establishes a presumption that a reasonable time is no later than 14 calendar days from the date on which the work is performed, however, employers are free to modify that (for a period not to exceed 30 days) by an express written agreement signed by the employee.  

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By Kara Maciel

Another luxury New York hotel is the latest target in a constant stream of wage and hour class actions against the hotel and restaurant industry challenging the industry’s practices relating to tip pools and service charges. At issue in the lawsuit filed in February 2010 is the common practice in the hotel and restaurant industry of charging private dining/banquet customers a mandatory service charge in lieu of the customer leaving a voluntary tip or gratuity on the day of the event. According to the plaintiffs’ complaint, a 21.5 percent service charge is added to the customer’s bill for the event, but only 15 percent of that amount is distributed to the waitstaff. The complaint asserts that customers are led to believe that the entire service charge is a gratuity to be paid to the employees who worked the event. The plaintiffs also complain about the hotel’s practice concerning “special banquet gratuities” that are received from customers and distributed to non-banquet employees, instead of to the waitstaff who worked the particular event. The plaintiffs claim to represent a class of more than 100 employees and seek more than $5 million in damages.

Mandatory service charges and their distribution among waitstaff have plagued the hospitality industry for years. Federal courts interpret the federal law differently and states have enacted their own statutes that place employers in constant uncertainty, depending on where they are located. Under the Federal Fair Labor Standards Act (FLSA), a mandatory service charge is not a “tip” because customers are not given the discretion to determine whether to pay it or how much to provide to the server. Accordingly, under federal law, a hotel may retain any or all of the service charge, and the hotel must decide whether to distribute some – or any – of the service charge to an employee, so long as the employee earns at least the minimum wage.

Some state laws, however, vary and require employers to distribute 100 percent of the mandatory service charge to the servers or other members of the waitstaff. In Massachusetts and New York, for example, no portion of the mandatory service charge may be distributed outside of the non-supervisory waitstaff if the customer reasonably believed that the charge constituted a gratuity. In the case mentioned above that was filed recently in New York, the plaintiffs are relying on a 2008 New York State Court of Appeals case, Samiento v. World Yacht, Inc., which concluded that when a mandatory service charge has been represented to the customer as compensation for the waitstaff in lieu of a tip or gratuity, that service charge must be distributed to the waitstaff. In New York, the statute of limitations extends six years, rather than the three years under the FLSA. The Massachusetts Tip Statute, which was amended in 2004 to clarify who is defined as “waitstaff,” similarly restricts any non-waitstaff personnel from sharing in the distribution of the mandatory service charge. In 2008, Massachusetts amended its statute to provide for mandatory treble damages for a violation of the wage and hour law.

Employers have received some good news from courts recently. In early February, employers in Massachusetts received a favorable opinion in Hernandez v. Hyatt Corp., when the Chief Judge of the Business Law Section determined that the 2008 amendment calling for mandatory treble damages only applies prospectively. On February 23, 2010, the U.S. Court of Appeals for the Ninth Circuit concluded that, under the FLSA, a restaurant is permitted to require its waitstaff to participate in a tip pool that redistributes some of the tips to the kitchen staff, so long as the employer does not use the tip credit to satisfy an employee’s minimum wage.

To avoid the customer confusion and exposure seen in these cases, banquet documentation given to customers should clearly delineate how much is billed for a mandatory service charge intended as compensation for employees and how much is billed as an “administrative fee” that the hotel retains to cover overhead and other costs. Moreover, hotels and restaurants should communicate to their employees how much the employees will receive of the mandatory service charge and who will share in that service charge. Hospitality employers in Massachusetts and New York should closely monitor judicial developments of their respective state’s laws to ensure compliance, as violations can lead to costly settlements and verdicts.

With the flood of class actions, hotel and restaurant employers must make compliance with federal and state wage and hour laws a top priority throughout the remainder of 2010. Conducting regular self-audits, in consultation with legal counsel, should be a best practice for all employers. Every investigation and lawsuit is unique and cannot be defended with a one-size-fits-all defense. Having, as part of your team, counsel who knows the hospitality industry and the unique challenges facing your hotel or restaurant will help keep companies out of court and exposure to a minimum.
 

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By Kathryn T. McGuigan and Douglas Weiner

In a landmark decision upholding the validity of the employer’s mandatory tip pool, on February 23, 2010, the U.S. Court of Appeals for the Ninth Circuit issued its opinion in Misty Cumbie v. Woody Woo, Inc. No. 08-35718. The court held that where the employer paid a direct wage of at least minimum wage to restaurant wait staff, requiring them to participate in a tip-pooling arrangement with other restaurant employees does not violate the Fair Labor Standards Act. (“FLSA”)..

The Oregon restaurant took no tip credit, rather paid its wait staff a direct hourly wage in excess of the applicable minimum wage requirement. In addition to their hourly wage, the servers received a portion of the daily tips, distributed to employees through a tip pool. The restaurant required the wait staff to participate in its tip pool that included all restaurant employees, except managers. The largest portion of the pool went to the kitchen staff, employees not customarily tipped in the restaurant industry. 

A server filed a class action lawsuit against the restaurant alleging that the tip-pooling arrangement violated the minimum wage, and tip provisions of the FLSA. In granting the restaurant’s motion to dismiss the case, the District Court found that there is nothing in the text of the FLSA that restricts employee tip pooling arrangements when no tip credit is taken, thus the restaurant’s tip pooling arrangement was valid. In a well reasoned opinion specially refuting the Secretary of Labor’s arguments submitted in an amicus brief, the Ninth Circuit affirmed citing the Supreme Court’s adage that an agreement is per se valid, “unless subject to statutory interference”.

The Cumbie Court held when an employer does not take a tip credit, it may lawfully require servers to participate in a tip pool with employees who are not customarily tipped. 

Although the court’s ruling appears reasonable and persuasive, it is not clear what the Department of Labor’s enforcement policy will be, or whether this court’s ruling will be adopted in other circuits. As this issue develops we will update this blog.

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by Michael Kun

    The California wage-hour epidemic has entered its second decade.

    While there is little on the horizon to suggest that these cases are about to come to an end, there are a few glimmers of hope now. 

    The first glimmer of hope comes from a case that has been pending before the California Supreme Court since 2008.  California employers continue to await a ruling on meal and rest breaks from the California Supreme Court in Brinker.  A ruling that breaks need only be "made available," not "ensured," may not put an end to meal and rest break class actions, but it should slow them down considerably and make it exceedingly difficult to certify a class in most cases.

    The second glimmer of hope comes from this week's Hertz decision from the United States Supreme Court, which suggests that more class actions in California will now be removable to federal court under the Class Action Fairness Act.  Foreign companies previously had difficulty removing cases in California because they often did the most business in California or had the most employees there simply because of its size. As the court explained in Arellano v. Home Depot U.S.A., Inc., 245 F.Supp.2d 1102, 1107 (S.D. Cal. 2003), “it is unlikely that Congress intended that every corporation that does more business in California than any other state should be considered a citizen of California.”  It looks like the Supreme Court agrees, and now a "nerve center" test will be used.  Employers with headquarters outside California now should be able to remove many class actions filed in California as a result. 

    Now, there is a third glimmer of hope in the form of new bill that could change the game further. 

    The key word is "could."

    In an interview I did with EmploymentLaw360 last year, I mentioned the need to reform California's class action procedures to provide more guidance to the trial courts. Too much discretion for the trial courts, and not enough guidance, has created an untenable situation in which one judge could certify a class where the judge in the very next courtroom might have denied certification, leaving employers lost and often with no recourse other than to settle in the face of uncertainty. I also mentioned the need to address a form of litigation that rewarded plaintiff's attorneys, often for doing little work and often at the expense of their own clients. http://www.law360.com/articles/123717

    I wish I could say that my comments were profound, or that someone read my comments and decided to act.  It's enough to know that someone shared my thoughts and decided to do something about it.

    California Assembly Member Audrey Strickland has introduced a bill to reform California's class action procedures based on the "lack of clear standards for certifiction and management of class actions":  http://info.sen.ca.gov/pub/09-10/bill/asm/ab_0001-0050/abx8_38_bill_20100210_introduced.html

    The bill proposes standards modeled after Rule 23 of the Federal Rules of Civil Procedure, removing "any presumption or policy in favor of class certification," and only allowing class actions to proceed where all criteria are met. 

    That change alone would be a welcome one for class action defendants in California.

    But the bill goes further.  It also proposes a system by which a defendant can propose a settlement to the court that has not been approved by plaintiff's counsel, essentially removing one of the largest obstacles to settlement -- plaintiff's counsel who hold up settlements out of self-interest.

    Sounds logical to you and me.  And sounds like something the plaintiff's bar will fight to the death.  (Feel free to insert your own joke here about class action plaintiff's lawyers taking 40% of multi-million dollar settlements, often for doing little more than showing up for a mediation, where they meet their clients for the first time.  Think that doesn't happen?  I'm handling a class action now where plaintiff's counsel met their client for the first time 2 years after the lawsuit had been filed.  And, no, you didn't misread that last sentence.)

    Will this bill get passed?

    Will it gain any traction at all?

    If it were anywhere other than California, you would have to think there was a chance, perhaps even a significant one, that the bill would become law, even with some revision.

    But it's California. 

    The plaintiff's bar, and legislators counting their votes for the next election, may not let Ms. Strickland's bill get far.  And they will make Ms. Strickland's next election hellish.  In fact, they're probably already preparing fliers explaining to voters how Ms. Strickland is trying to make it more difficult for them to get money in lawsuits. 

    Now you can insert your own joke about why California is teetering on the edge of bankruptcy.  Again.   

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Florida led the nation in Fair Labor Standards Act lawsuits in 2009. Statistics generated from PACER (Public Access to Court Electronic Records) show that about 2000 new cases were filed in United States District Courts in Florida last year, far more than in any other state. 

Of course, Florida is not the only hotbed of wage-hour litigation. California, which has its own, more rigorous wage-hour laws, has a large number of wage-hour cases filed in its state court system. Texas and New York are also seeing increasing numbers of wage-hour cases.

But when it comes to the FLSA, the Sunshine State rules. The reasons for this are somewhat mysterious. Are Florida employees more litigious than in other states? Do Florida employers violate the FLSA more often? Is there a more active plaintiff-side employment bar in Florida? I suspect the answer is a combination of all these factors, plus good old-fashioned word of mouth. Here’s what I mean: the vast majority of FLSA cases settle before trial. FLSA settlements generally must be approved by a court, see Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350 (11th Cir. 1982), and many judges refuse to allow FLSA settlements to be confidential. And even if the terms of a settlement are confidential, a settling plaintiff can always disclose that the case has been “resolved amicably,” or words to that effect. Whatever the exact words, the message is clear – the plaintiff got a nice check. It’s like that old shampoo commercial from the 70’s: a settling plaintiff tells two friends, and they tell two friends, and so on and so on… Pretty soon you have 2000 FLSA cases on the docket.

So what can a Florida employer do to avoid being named in an FLSA lawsuit? Well, the best advice I can offer is to make every reasonable effort to comply with FLSA. That may seem obvious, but it’s not as easy as it sounds because the FLSA can be counterintuitive; its rules are often inconsistent with what seem to be reasonable and ethical business practices. But if you learn what the FLSA requires, and adopt policies and practices that are consistent with the law, you will go a long way toward avoiding a lawsuit. And, yes, get the advice of a qualified employment lawyer if you are unsure about what to do. Believe me, it will be far less expensive than litigation.

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