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

 On June 16, the Department of Labor issued an “Administrator’s Interpretation” addressing the compensability of time spent by employees changing clothes and equipment before and after work (commonly referred to as “donning and doffing). The Interpretation reversed opinion letters on the subject  issued by the Bush administration in 2002 and 2007, and lowered the standard for employees to seek compensation for such activities.

The Interpretation addressed two issues. First, the advisory notes that Section 203(o) of the Fair Labor Standards Act (FLSA), which allows employers to negotiate with a Union to exclude from compensable time certain donning and doffing activities, should be narrowly interpreted. The DOL concluded that time spent “changing clothes” (which can be lawfully excluded under the express terms or by custom or practice under a collective bargaining agreement) does not include time spent donning and doffing safety or protective equipment in the meat packing and other industries. Second, the DOL opined that even non compensable time spent “changing clothes” would constitute the start of the continuous work day, thus making any walking or waiting time after that point compensable.

Employers in industries where workers regularly change clothes, wear safety equipment, or clean up after work should take note of this important change in DOL position, including meat packing, healthcare, manufacturing, and hazardous jobs. Although the decision is aimed primarily at unionized workforces, it has much broader implications. Companies in these industries should:

·         Review any applicable collective bargaining agreements to determine the scope of any agreed upon exclusion (or limitation) of employee compensation for donning and doffing time and seek legal advice on whether such agreement is still enforceable after this Interpretation.

·         For both union and non-union employers, it is critical to conduct an audit of payroll practices to verify the point at which employees don any protective equipment or changes clothes and whether employees are being compensated for all time after this point until the employees change back into street clothes or remove the protective equipment.

·         Employers should not allow employees to change into any specialized work clothing (such as gloves, smocks, or special boots) or don any safety equipment before the shift starts or the intended start of the work day, since this could trigger an obligation to pay employees for all time thereafter (even if they are simply walking or waiting and not performing any work).

·         Employers should review the location of changing areas and their proximity to time clocks to ensure that any walking time after employees have started their work day by donning specialized clothing or equipment is adequately captured in the payroll system.

            If you have any questions, please contact the Co-Chairs of the Firm’s Wage and Hour Sub-practice Group, Michael Kun or David Barron

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By:  Douglas Weiner

The following sounds like a “win-win” situation, doesn’t it? An enthusiastic and energetic individual approaches you with a proposal to volunteer his or her time and services to gain valuable experience in your industry. “After all,” reasons the prospective volunteer, “how can I get my first job if I have no experience in the field of my choice?” Ambitious job seekers may approach an employer volunteering to work as an unpaid “trainee” or “intern” to gain skills, experience and contacts in their chosen field.

However, vigilant employers will not merely accept the prospective intern’s agreement to do volunteer work, but will apply the required legal analysis.  Despite the individual's offer to work for free, the Department of Labor may reclassify the individual as an employee, and require the employer to pay back wages for all hours worked, including overtime.     

An unpaid internship must be primarily for the benefit of the trainee, rather than the employer. Certain employers have established training programs for interns that do qualify for exclusion from the Fair Labor Standards Act. The criteria an employer must satisfy is set forth in Fact Sheet #71: The Test for Unpaid Interns  When all six criteria are met, an employment relationship does not exist under the FLSA, and the federal minimum wage and overtime provisions do not apply to the individual. 

For employers considering an unpaid internship program for one or more individuals, we recommend certain policies, practices and procedures be implemented as precautionary measures.

• Distinguish interns from employees. Create written policies devoted exclusively to the interns; avoid using the same policies and handbooks for both interns and employees.
   
• Review handbooks to remove terminology from written policies that blurs the line distinguishing interns from employees (for example, written policies should not say that an intern is being “hired”, or refer to interns as “Associates” or “Summer Associates” .).
   
• Require a signed written statement from the prospective intern evidencing the understanding that the intern has no expectation of wages, and the employer makes no guarantee of a job at the end of the internship.
   
• Document expense reimbursements, if any, to specific expenses with receipts to evidence that there were bona fide expenses incurred by the intern that were, in fact, reimbursed. Without records the DOL may conclude the “expense reimbursements” were disguised wages.

Conclusion

Employers must carefully assess the benefits, and risks, of managing an unpaid internship. Unless an employer is able to establish that the criteria set forth in Fact Sheet #71 are met, the DOL is likely to find that an intern is an employee who must be paid minimum wage and overtime.

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By: Douglas Weiner

A faculty comprised of Defense counsel and Plaintiffs’ counsel presented strategic insights to those who gathered at the American Conference Institute’s 9th National Forum on Wage Hour Claims and Class Actions. I had the pleasure of moderating a judicial panel comprised of six federal jurists who offered practitioners key insights from their experience in presiding over cases alleging violation of the Fair Labor Standards Act. In addition to the substantive issues of class and collective action litigation, I took the opportunity to ask the judges what tips they had for wage-hour litigators to make effective presentations in their courtrooms. After a lively discussion, led by the Honorable Roger B. Cosby, the consensus of the members of the judicial panel was that practitioners would benefit from the following points:

1. Know the Judge: Judges are not all the same, so find out as much as you can about the District Judge and Magistrate Judge assigned to your case. 
    
2. Know Opposing Counsel: Attorneys are not all the same either. 
    
3. First Impressions Count: The Initial Conference is often your first opportunity to make an impression on the judge. You want to be viewed as “competent” and “reasonable”. 
    
4. There is More Than One Way to Litigate a Wage Hour case: Litigation does not yield to universal, cookie-cutter strategies. If you are successful in simplifying a complex case for the Judge, you assume the role of Trusted Guide.
    
5. Be the Trusted Guide: Many cases are a jumble of disputed facts, conflicting theories and theories of claims. Judges often look for the one thread that will unravel the whole tangled mess. You want to be the person the Court will look to and trusts to show them how to emerge from the legal morass. Your role in this capacity depends a great deal on how the Court sees you from the outset.
    
6. Settlement Conference Submission: If the judge does not ask for pre-settlement conference submissions, ask for leave to submit a short one, and find out whether the court requires them to be exchanged. You want the settlement judge going into the conference with the notion that the outcome you espouse is the fairer one. 

The judicial panel was comprised of Hon. Donetta W. Ambrose, U.S. District Court, W.D. Pa; Hon. Warren W. Eginton, U.S. District Court, D. Conn.; Hon. Raymond L. Erickson, U.S. District Court, D. Minn., Hon. Roger B. Cosbey, U.S. District Court, N.D. Ind.; Hon. Suzanne H. Segal, U.S. District Court, C.D. Cal.; and Hon. Stephen J. Murphy, III, Eastern District of Mich.

Douglas Weiner is a Senior Trial Counsel in the Labor and Employment practice in the EpsteinBeckerGreen New York office. He has 30 years of federal wage-hour litigation experience with the U.S. Department of Labor. As Senior Trial Attorney for the New York Regional Solicitor's Office, Mr. Weiner was the lead prosecutor on many of the Department’s most significant wage-hour and whistleblower cases, including those pursuant to Sarbanes-Oxley and the Fair Labor Standards Act. Mr. Weiner now represents employers in government audits and defends employers in wage-hour class and collective actions.

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by Michael Kun and Aaron Olsen

Already besieged by wage-hour lawsuits, employers with operations in California may see more of these cases, or may be brought into wage-hour litigation where they might not have been before, as a result of a new decision by the California Supreme Court expanding the definition of "employer." The decision creates greater exposure to litigation for those companies that use the services of independent contractors, temporary agencies or other similar entities with whom the employer has a close relationship.

The plaintiffs in Martinez v. Combs were seasonal agricultural workers who picked strawberries for Munoz & Sons (“Munoz”). Munoz sold strawberries through a number of merchants, including Apio, Inc. (“Apio”) and Combs Distribution Co. (“Combs”). The merchants would routinely enter the strawberry fields to describe how they wanted the strawberries packaged and to check the quality of the packaged strawberries before they shipped. The merchants would point out mistakes to Munoz's foreman, as well as directly to the strawberry pickers. After the price of strawberries declined, Munoz failed to pay its strawberry pickers and subsequently declared bankruptcy. In addition to suing their employer, Plaintiffs also sued Apio and Combs for a variety of California Labor Code violations, including failure to pay a minimum wage. The central issue on appeal was whether the strawberry merchants, Apio and Combs, were considered joint employers of plaintiffs under the California Labor Code.

In order to determine whether the strawberry merchants were employers and thus liable for Labor Code violations, the Court examined various definitions of “employer.” After engaging in a lengthy review of 98 years worth of legislative history, the Court adopted the Industrial Welfare Commission’s ("IWC") broad definition of "employer." The Court held that the IWC was authorized by the legislature to define this term as it saw fit, holding that to "employ" someone means: (a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law employment relationship. In adopting the IWC’s position, the Court rejected defendants’ argument that California law incorporates the “economic realities” test used in the federal Fair Labor Standards Act ("FLSA"). The “suffer or permit to work” definition is the broadest of the three definitions.

The plaintiffs argued that the strawberry merchants, Apio and Combs, “suffered or permitted” plaintiffs to work because they knew plaintiffs were working and the work benefitted the merchants. The Court rejected this argument. The court found that because Munoz, not Apio or Combs, had the power to hire and fire plaintiffs, to set their wages and hours, and to tell plaintiffs when and where to report to work, Apio and Combs did not “suffer or permit” plaintiffs to work. Likewise, although Apio and Combs had representatives in the strawberry fields that gave instructions to plaintiffs, that did not mean that they exercised control over plaintiffs. The court noted that there was no evidence to suggest that Munoz’s employees viewed the representatives of Apio or Combs to be their supervisors. Instead, plaintiffs believed that Munoz and Munoz’s foreman were their supervisors.

Although there will undoubtedly be more litigation about the definition of an employer, Martinez provides useful guidance for companies to evaluate the contracts that they have with their vendors, contractors and temporary employment agencies so that they do not unwittingly become liable for another company’s Labor Code violations. This case illustrates the fine line between conducting quality control over another company’s work product and controlling the conditions of the other company’s employees. Likewise, the case shows how companies can minimize the risk of being classified as "joint employers" if they make it clear in their contract and in practice that the other entity has the sole right to hire, pay, discipline and terminate the workers.

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