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

By Daniel R. Levy

On November 16, 2011, the New Jersey Appellate Division held that registered nurses are exempt from overtime compensation under the New Jersey Wage and Hour Law (“NJWHL”), N.J.S.A. 34:11-56a1 to 56a30, even if paid on an hourly basis, because they fall within the “professional” exemption. Anderson v. Phoenix Health Care, Inc., A-2607-10T2 (N.J. App. Div. Nov. 16, 2011). The Court further held that, even if registered nurses were not exempt, a claim for overtime compensation may nevertheless fail under the NJWHL’s good faith exception, N.J.S.A. 34:11-56a25.2, if the employer establishes that it conformed to the Division of Wage and Hour Compliance’s (“Division”) “longstanding interpretation that registered nurses are not entitled to overtime so long as they are compensated in excess of the weekly minimum” salary required for exemption.

The NJWHL requires that employees pay one-and-one-half times an employee’s hourly wage for each hour worked in excess of forty hours per week. Excepted from this general rule are individuals employed in a bona fide executive, administrative, professional or outside sales capacity. N.J.A.C. 12:56-7.1. Under N.J.A.C. 12:56-7.3(a), which was in effect until mid- 2011, a professional was defined as an employee whose primary duties consisted of work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study, as distinguished from a general academic education, and who is compensated not less than $400.00 per week. The regulation, however, has since been superseded by regulations adopted on August 15, 2011 that adopted the federal regulations under the federal Fair Labor Standards Act (“FLSA”). N.J.A.C. 12:56-7.2(a); 43 N.J.R. 2353.

In Anderson, plaintiffs, registered nurses formerly employed by Phoenix Health Care, Inc., filed a putative class action seeking relief for overtime compensation under the NJWHL. Plaintiffs moved for class certification and defendants cross-moved for summary judgment, arguing that registered nurses are exempt from the NJWHL’s overtime requirements and asserting that plaintiffs’ claims were otherwise barred by the NJWHL’s good faith defense. The trial judge granted defendants’ cross-motion, and plaintiffs appealed.

On appeal, the Court affirmed dismissal of plaintiffs’ NJWHL claim despite plaintiffs’ argument that they were not exempt because they were paid on an hourly, not salaried, basis. The Court reasoned that although the applicable regulation did not expressly exempt professionals paid on an hourly basis, such as a majority of registered nurses, “the NJWHL was not intended to permit overtime to such employees when they are compensated at least as much as the weekly minimum referred to in N.J.A.C. 12:56-7.3(a)(5).” The Court also held that summary judgment was appropriate based upon the NJWHL’s good faith exception because defendants conformed to the Division’s “longstanding interpretation that registered nurses are not entitled to overtime so long as they are compensated in excess of the weekly minimum.”

In a footnote, the Court recognized that N.J.A.C. 12:56-7.3 was superseded by regulations adopting the federal regulations under the FLSA. Those federal regulations state, in pertinent part, that “[r]egistered nurses who are registered by the appropriate State examining board generally meet the duties requirements for the learned professional exemption but licensed practical nurses generally do not qualify as exempt learned professionals.” 29 C.F.R. 541.301(e)(2). The Court stated that it was not opining as to whether the result would be the same under the newly adopted regulations. 

Employers should proceed with caution as a result of the Court’s decision in Anderson, specifically because it construed regulations that have been superseded.  If New Jersey courts continue to follow this ruling under the newly promulgated regulations, it may lead to inconsistent results under the NJWHL and FLSA. It is clear that registered nurses paid on a salary basis will likely qualify under the professional exemption under both the NJWHL and the FLSA. 

It remains unclear, however, whether registered nurses paid on an hourly basis will be found exempt under the NJWHL. In order for a registered nurse to be exempt under the FLSA, the registered nurse must be paid on a salary basis. See 29 C.F.R. 541.600(e) (stating that the salary requirement applies to nurses); Anani v. CVS Rx Servs., 788 F.Supp.2d 55 (E.D.N.Y. 2011) (registered nurses perform exempt duties and question of whether they are, in fact, exempt turns on whether they are paid on a salary basis). If New Jersey courts follow the FLSA regulations, as the newly promulgated New Jersey regulations state they will, registered nurses paid on an hourly basis will not be found exempt under the NJWHL. If, however, the decision in Anderson is followed under the new regulations, then registered nurses paid on an hourly basis will likely be found to be exempt under the NJWHL.         

By Michael Kun and Betsy Johnson

In a much-anticipated decision, the California Supreme Court has expanded the scope of California’s complex wage-hour laws to non-resident employees who perform work in California.  While the decision leaves more than a few questions unanswered, it will require a great many employers to review their overtime and other payroll practices.  Perhaps just as importantly, it will likely open the door to lawsuits, including class actions, regarding  prior overtime and payroll practices.

The case, Sullivan v. Oracle, has had a tortured history.  In the case, several Arizona and Colorado residents who were employed as instructors by Oracle, which is headquartered in California, filed suit alleging that they were entitled to overtime under California law on those occasions when they performed services in California.   Oracle had treated the instructors as exempt employees and did not pay them overtime.  Because the issue was a novel one involving interpretation of California state laws, the federal Ninth Circuit Court of Appeal certified issues for the California State Supreme Court to decide.

As employers with operations in the state know, California law differs from the federal Fair Labor Standards Act (“FLSA”) in many ways.  Overtime exemptions under California law are analyzed differently than under the FLSA, turning not on what an individual’s “primary” duties are, but on the duties in which they are “primarily” engaged (i.e., spending more than 50% of their time).  In addition, California law provides for daily overtime for work performed by non-exempt employees beyond 8 hours in a day, and for double time for work performed beyond 12 hours in a day.  California law also requires employers to provide meal and rest breaks to non-exempt employees.

Addressing this issue for the first time, the California Supreme Court concluded that California’s overtime laws in fact apply to those non-resident employees who travel to and perform services in California.  The Court concluded that the state overtime laws make no distinctions between residents and non-residents, and explained that it would defeat the purpose of those laws if employers could simply “import unprotected workers from other states.”

The decision is limited to “California-based” employers. However, the Court did not provide a definition for this term. As such, employers based outside California should not ignore Sullivan.  There is every reason to believe that non-resident workers of employers based outside California will contend that they, too, should be covered by California’s wage-hour laws when working in the state.  And, based on the broad language in Sullivan, there is every reason to believe the California Supreme Court might agree.

What Employers Should Do Now:

Employers should review their payroll practices for exempt and non-exempt employees, to avoid running afoul of Sullivan and California wage-hour laws when sending employees to work in California.  Among other things:

• When sending employees classified as “exempt” to California, employers will want to determine whether those individuals are properly classified as “exempt” under California law and, if not, treat them as non-exempt employees during those periods of time when they are working in California 
• When sending “non-exempt” employees to California, employers will want to ensure that they treat those employees in compliance with California wage-hour laws, including providing daily overtime and complying with California meal and rest break laws
• When sending “non-exempt” employees to California, employers will also want to ensure that they are complying with California law requiring payment for travel time.  Indeed, the Sullivan decision would suggest that while “non-exempt” employees traveling to California for work will need to be compensated for their travel time in accordance with California law as soon as they reach the California border – a tricky issue, to say the least, particularly for employees traveling by air. 

By:  Kara M. Maciel

The Department of Labor’s Wage and Hour Division in Norfolk, Virginia has announced that it will be stepping up its compliance audits and enforcement efforts against area hotels. In the past few years, the DOL stated it found violations at about 60% of local hotels. According to the DOL, the agency recently made spot checks at 10 area hotels since April. This is just one part of the agency’s nationwide enforcement program and its “Plan/Prevent/Protect” initiative against the hospitality industry. Common violations assessed by the DOL include:

·         Payment of overtime. Under the FLSA, employees are entitled to overtime for any hours worked over 40 per week. For employers who have multiple hotels or facilities, when employees work at different locations in a work week, it is imperative that the employer coordinate its payroll systems to aggregate the employee’s time worked at both jobs in order to ensure that proper overtime is being paid. The DOL is finding that when an employee works at one hotel 20 hours per week, and 25 hours at another hotel, the employee is not paid overtime.   

·         Unlawful deductions. Many hospitality employers require employees to reimburse the hotel for a uniform through payroll deductions. However, an employer may not lawfully deduct from an employee’s wages for the cost of a uniform if it reduces the employee’s hourly wage below the minimum wage. Thus, for employees who are paid the minimum wage or tipped employees for whom the employer takes the tip credit, the hotel cannot deduct for a uniform if it drops the employee below the minimum wage.     

·         Working through meal breaks. Another common violation in the hospitality industry relates to workplaces in which the employer voluntarily provides a meal break. Under the FLSA, an employee, who is provided with a bona fide meal break, must be completely relieved of duty.  If an employee clocks out for lunch, and then is asked to clock back in to perform some work, the employee must be paid for the entire meal break, and not just for the time back on the clock. For many employers who automatically deduct for meal breaks or who fail to pay for the full meal period when it is interrupted, this could represent a significant liability. 

Now, more than ever, employers in the hospitality industry should be vigilant in their wage and hour compliance with federal and state law. Especially in light of the DOL’s recent roll-out of its Smartphone “app,” which allows workers to track their hours and evaluate the amount of overtime earned, workers are being armed with ample resources to bring claims of unpaid wage against the employers. 

A report by the Government Accountability Office found that the Department of Labor's Wage and Hour Division, the federal agency charged with enforcing minimum wage, overtime and other labor laws, "is failing in that role, leaving millions of workers vulnerable," according to an article in today's New York Times.

One of the reports concerned the Division's office in Miami:

When an undercover agent posing as a dishwasher called four times to complain about not being paid overtime for 19 weeks, the division’s office in Miami failed to return his calls for four months, and when it did, the report said, an official told him it would take 8 to 10 months to begin investigating his case.

The report concludes that "Labor has left thousands of actual victims of wage theft who sought federal government assistance with nowhere to turn." 

Nowhere to turn? In Florida that's simply not true.  As anyone who pays attention to court filings can tell you, dozens of workers each week, many on the low end of the pay scale, file claims for overtime and minimum wage violations in Florida state and federal courts.  Indeed, as previously reported here, according to the Administrative Office of the United States Courts, for the past five years the Southern District of Florida alone has averaged 28.7% of all Fair Labor Standards Act cases filed in the United States.  The notion that workers have "nowhere to turn" is absurd.  They need only turn to one of Florida's many wage-hour lawyers, who have turned wage-hour litigation into a cottage industry in the sunshine state.  Does the GAO not realize that the FLSA permits private lawsuits, and in fact encourages them through its fee-shifting provisions? Why would an employee need the Wage and Hour Division when he has the Shavitz Law Firm or The Celler Legal Group in his corner?