Depending on the jurisdictions within which they operate, certain employers and their counsel will soon see a significant change in early mandatory discovery requirements in individual wage-hour cases brought under the Fair Labor Standards Act (“FLSA”).

A new set of initial discovery protocols recently published by the Federal Judicial Center (“FJC”), entitled Initial Discovery Protocols For Fair Labor Standards Act Cases Not Pleaded As Collective Actions (“FLSA Protocols”), available here, expands a party’s initial disclosure requirements to include additional documents and information relevant to FLSA cases. These Protocols apply, however, only to FLSA lawsuits that have been filed in participating courts that have implemented the Protocols by local rule or by standing, general, or individual case order. (At least one court has already adopted the Initial FLSA Protocols — the Southern District of Texas, Houston Division.) Also, as the title of this initiative makes clear, these protocols do not apply to FLSA actions styled as collective actions.

The goal of the FLSA Protocols in requiring an up-front exchange of information is to help frame issues to be resolved in the case, minimize potential opportunities for gamesmanship, and enable the court and parties to plan for more efficient and targeted discovery.  To that end, the Protocols focus on the type of information that is most likely to be useful in narrowing the issues in such cases.

Specifically, both parties must produce materials such as employment agreements, compensation agreements, and offer letters; documents recording the plaintiff’s wages and/or hours worked; written complaints from the plaintiff regarding the wages or overtime and any response; and documents showing the defendant’s good faith or willfulness.  The employer must also produce its wage and hour-related policies, procedures, or guidelines, as well as relevant portions of any employee handbook.  Additionally, both parties must identify the plaintiff’s start and end dates of employment, job title and duties, supervisors and managers, and any individuals having knowledge of the relevant facts.  The relevant time period for the FLSA Protocols mirrors the FLSA’s statute of limitations, which is two years before the date the Complaint was filed, or three years if the plaintiff’s complaint alleges a willful violation.

If adopted by a court, the FLSA Protocols will supersede the initial disclosure requirements set forth in Rule 26(a)(1) of the Federal Rules of Civil Procedure (“FRCP”); however, they will not supplant parties’ subsequent discovery obligations under the FRCP.   To address potential concerns by either party regarding the confidentiality of any documents or information to be exchanged, the FLSA Protocols include a model interim protective order allowing a party to designate documents or information as “confidential,” limiting their use to the particular case.

The FLSA Protocols are the second set of case-specific discovery protocols to be developed and implemented in the federal courts.  The FJC published the first set of protocols, the Initial Discovery Protocols for Employment Cases Alleging Adverse Action (“Employment Protocols”), in November 2011, and they have since been adopted by over 50 judges and on a district-wide basis in multiple jurisdictions around the country.

According to a FJC report issued in October 2015, cases filed in courts that adopted the Employment Protocols had less motion practice (both discovery-related and dispositive motions) than comparison cases, and they were more likely to settle. In a follow-up memorandum published a year later, the FJC found that the Employment Protocols had been more widely accepted by the federal judiciary than expected, despite the fact they specifically carve out from their application specific employment-related cases such as those arising under the FLSA and Family Medical Leave Act.

Like the Employment Protocols, the FLSA Protocols may very well become a helpful tool for employers being sued in FLSA litigations because they require early disclosure of relevant information that will help the parties to a litigation assess the strength of the plaintiff’s claims and employer’s defenses quickly and allow them to make informed decisions as to best strategies, including whether potential early resolution is appropriate.  Query, however, whether such potential early disclosure could alternatively be achieved by requiring federal district courts to maintain more rigorous case management plan deadlines.

Whether the FLSA Protocols will ultimately result in greater efficiency in the discovery process or an increase in early case resolution remains to be seen.  The FJC has announced that it will monitor their use, including by evaluating cases conducted in accordance with the Protocols’ early discovery requirements. Because many plaintiff-employees and their counsel file lawsuits as a collective action, rather than on an individual basis, as a matter of course, it is unclear how big of an impact the FLSA Protocols will actually have on non-collective FLSA litigation.  In fact, it is possible the FLSA Protocols could actually incentivize plaintiff’s counsel to file actions on a collective basis, rather than as individual plaintiff lawsuits, in order to avoid the additional work at the outset of a case.  If so, then expanding the Protocols to include collective actions would likely have a more resounding impact.  Should the Protocols find success with the participating federal judiciary, then perhaps they will be expanded, in both jurisdiction and scope, to include collective actions.  Only time will tell, and we will be sure to keep you apprised of all developments with this new initiative.

In a case of first impression that may have a significant impact upon wage-hour class actions in California, the California Court of Appeal has held that “joint employers” are not vicariously liable for each other’s alleged meal period violations.

In reaching this conclusion, the Court of Appeal affirmed an award of summary judgment in favor of a temporary staffing company in a class action where the plaintiffs sought to hold the staffing company liable for alleged meal period violations they alleged they suffered while working for its client.

The decision provides something of a roadmap for what companies should consider doing if they wish to shield themselves from “joint employer” liability on wage-hour claims in California.  Among the steps employers may want to take are providing employees with written instructions to inform the employer if they are ever prevented from taking meal periods, and including provisions in contracts requiring the entities that they do business with to comply with federal, state and local laws in their interactions with those employees.

Featured on Employment Law This Week:  A California federal judge has ruled that a former GrubHub delivery driver was an independent contractor, not an employee.

The judge found that the company did not have the required control over its drivers for the plaintiff to establish that he is an employee. This decision comes as companies like Uber and Lyft are also facing lawsuits that accuse them of misclassifying employees as independent contractors. Carlos Becerra, from Epstein Becker Green, has more.

Watch the segment below and read our recent post.

Recently, a number of proposed class and collective action lawsuits have been filed on behalf of so-called “gig economy” workers, alleging that such workers have been misclassified as independent contractors. How these workers are classified is critical not only for workers seeking wage, injury and discrimination protections only available to employees, but also to employers desiring to avoid legal risks and costs conferred by employee status.  While a number of cases have been tried regarding other types of independent contractor arrangements (e.g., taxi drivers, insurance agents, etc.), few, if any, of these types of cases have made it through a trial on the merits – until now.

In Lawson v. GrubHub, Inc., the plaintiff, Raef Lawson, a GrubHub restaurant delivery driver, alleged that GrubHub misclassified him as an independent contractor in violation of California’s minimum wage, overtime, and expense reimbursement laws.  In September and October 2017, Lawson tried his claims before a federal magistrate judge in San Francisco.  After considering the evidence and the relevant law, on February 8, 2018, the magistrate judge found that, while some factors weighed in favor of concluding that Lawson was an employee of GrubHub, the balance of factors weighed against an employment relationship, concluding that he was an independent contractor.

The court’s decision was guided by the California Supreme Court’s multi-factor test set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal.3d 341 (1989), which focuses on “whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.”  There are also a number of secondary factors.

Among other things, the court found that Grubhub did not control how Lawson made deliveries or what his appearance was during deliveries. GrubHub also did not require Lawson to undergo any training or control when or where Lawson worked – that is, Lawson had complete control of his schedule and territory.  And, Grubhub did not control how or when Lawson delivered the restaurant orders he chose to accept.  Whereas GrubHub controlled some aspects of Lawson’s work, such as determining the rates he would be paid, the court gave those minimal weight.  On balance, the court concluded that “the right to control factor weighs strongly in favor of finding that Mr. Lawson was an independent contractor.”

The court also considered the secondary factors under the Borello test.  Some secondary factors weighed in favor of an employment relationship – for example, Lawson’s delivery work was part of GrubHub’s regular business, the type of work did not require a significant amount of skill, and Lawson was not engaged in a distinct delivery business such that GrubHub was just one of his clients.  Yet, weighing all of the factors above, the court found that “Grubhub’s lack of all necessary control over [] Lawson’s work, including how he performed deliveries and even whether or for how long,” was paramount.

Lawson is certainly a welcome decision for companies hiring independent contractors to perform a part of their regular business.  Nevertheless, the court’s emphasis on the particulars of GrubHub’s relationship with Lawson, issues regarding Lawson’s credibility and the possibility that the California Supreme Court may moot this decision in Dynamex Operations West Inc. v. Superior Court (considering whether to replace Borello with a test that would make it easier for workers to show they are employees rather than independent contractors), argued just two days before the Lawson decision, mean that such companies should continue closely examining the manner in which they classify their workers.  Moreover, although Lawson should provide some support to relationships governed by California law, its impact in other jurisdictions may be negligible.  For now, employers should continue to keep in mind that there is no one deciding factor to determine whether someone performing work for a company is an employee or an independent contractor.  A number of factors must be considered.

Our colleagues Michael S. Kun, Jeffrey H. Ruzal, and Kevin Sullivan at Epstein Becker Green co-wrote a “Wage and Hour Self-Audits Checklist” for the Lexis Practice Advisor.

The checklist identifies the main risk categories for wage and hour self-audits. To avoid potentially significant liability for wage and hour violations, employers should consider wage and hour self-audits to identify and close compliance gaps.

Click here to download the Checklist in PDF format.  Learn more about the Lexis Practice Advisor.

This excerpt from Lexis Practice Advisor®, a comprehensive practical guidance resource providing insight from leading practitioners, is reproduced with the permission of LexisNexis. Reproduction of this material, in any form, is specifically prohibited without written consent from LexisNexis.

In Tze-Kit Mui v. Massachusetts Port Authority, Massachusetts’ highest court held that Massachusetts law does not require employers to pay departing employees for accrued, unused sick time within the timeframe prescribed for “wages,” as the term is defined by the Massachusetts Wage Act.

In reaching its decision, the Court analyzed the plain meaning of “wages” under the Act and concluded that the legislature did not intend that “wages” would include sick time. The decision removes a significant concern for Massachusetts employers who are strictly liable for treble damages — and can face criminal liability —  for failing to pay wages in a timely manner.

The case involved an employee Massachusetts Port Authority (“Massport”), who retired while disciplinary charges were pending against him.  Massport discharged the plaintiff for cause weeks after his retirement.  Following a grievance procedure, his discharge was overturned by an arbitrator who found that the plaintiff could not have been discharged because he had already retired.

The plaintiff had 2,232 hours of unused sick time at retirement. Since a discharged employee is not eligible for sick pay under Massport’s sick time policy, Massport did not pay the plaintiff for his unused sick time until after the arbitrator’s decision finding that he had retired prior to being discharged.  The payment occurred more than one year after the plaintiff’s retirement.

The plaintiff filed suit, seeking treble damages for alleged violations of the Massachusetts Wage Act. Under the act, an employer must pay wages or salary earned by a departing employee “in full on the following regular pay day.”  A discharged employee must be paid wages or salary earned “in full on the day of his [or her] discharge.”

The plaintiff argued that Massport had violated the act by failing to timely compensate him for his unused sick pay. The plaintiff’s motion for judgment on the pleadings in the Superior Court was granted.  Massport appealed, and the Massachusetts Supreme Judicial Court transferred the case from the Appeals Court.

In evaluating whether sick pay qualifies as wages under Massachusetts law, the Court looked to the plain language of the Act to discern legislative intent. The act defines “wages” to include “any holiday or vacation payments due an employee under an oral or written agreement,” but does not reference sick pay.  The Court declined to read sick pay into the definition where it had not been expressly included by the legislature.

In addition, the Court explained that vacation time is different from sick time. The crucial distinction is that sick time, as defined by Massachusetts law, can only be used if the employee or a family member is ill, whereas vacation time can be used for any reason.  The Court reasoned that, because employees do not have an absolute right to use sick time, Massachusetts law does not require employers to compensate employees for accrued, unused sick time, and employers can adopt “use it or lose it” sick time policies.  Since employers are not required by law compensate employees for unused sick time, the court concluded “such time is clearly not a wage under the act.”

Under its policy, Massport agreed to pay departing employees for accrued, unused sick time as long as the employee had worked at Massport for two years and had not been terminated for cause. The Court characterized this arrangement as a “contingent bonus.”  Commissions are the only contingent compensation considered wages under the act provided that they “ha[ve] been definitely determined and due and ha[ve] become payable to [the] employee.”  The Court declined to extend the definition of “wages” to include other types of contingent compensation.

Finally, the Court concluded that, under the circumstances of the case, it would have been impossible for Massport to comply with the Act. The issue of the plaintiff’s separation date was not resolved until the payment deadline provided by the Act had lapsed.  Because compliance would not have been possible in this case, interpreting the act to include sick pay as wages would lead to an absurd result.

While the decision is a favorable one for employers who do business in Massachusetts, given the significant liability that employers may incur for failing to comply with the Act, Massachusetts employers should confer with counsel when wage payment issues arise.

In a move allowing increased flexibility for employers and greater opportunity for unpaid interns to gain valuable industry experience, the United States Department of Labor (“DOL”) recently issued Field Assistance Bulletin No. 2018-2, adopting the “primary beneficiary” test used by several federal appellate courts to determine whether unpaid interns at for-profit employers are employees for purposes of the Fair Labor Standards Act. If interns are, indeed, deemed employees, they must be paid minimum wage and overtime, and cannot serve as interns without pay. The “primary beneficiary” test adopted by the DOL examines the economic reality of the relationship between the unpaid intern and the employer to determine which party is the primary beneficiary of the relationship. Unlike the DOL’s previous test, the “primary beneficiary” test allows for greater flexibility because no single factor is determinative.

Along with its announcement of this change, the DOL also issued a new Fact Sheet which sets forth the following seven factors that make up the “primary beneficiary” test:

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

For more information on the DOL’s adoption of the “primary beneficiary” test and actions employers may want to take given this change, go to our Act Now Advisory on this topic.

As 2017 comes to a close, recent headlines have underscored the importance of compliance and training. In this Take 5, we review major workforce management issues in 2017, and their impact, and offer critical actions that employers should consider to minimize exposure:

  1. Addressing Workplace Sexual Harassment in the Wake of #MeToo
  2. A Busy 2017 Sets the Stage for Further Wage-Hour Developments
  3. Your “Top Ten” Cybersecurity Vulnerabilities
  4. 2017: The Year of the Comprehensive Paid Leave Laws
  5. Efforts Continue to Strengthen Equal Pay Laws in 2017

Read the full Take 5 online or download the PDF.

In 2017, a great many states and localities passed laws increasing minimum wages beginning on January 1, 2018. (Some passed laws that will be effective on July 1, 2018 or other dates.)

Below is a summary of the minimum wage updates (and related tipped minimum wage requirements, where applicable) that go into effect on January 1, 2018, unless otherwise indicated.

Current New
State Categories Minimum Wage Tipped Minimum Wage Minimum Wage Tipped Minimum Wage
Alaska $9.80 $9.84
Arizona $10.00 $7.00 $10.50 $7.50
26 or more employees $10.50 $11.00
25 or fewer employees $10.00 $10.50
Colorado $9.30 $6.28 $10.20 $7.18
Florida $8.10 $5.08 $8.25 $5.23
Hawaii $9.25 $8.50 $10.10 $9.35
Maine $9.00 $5.00 $10.00 $5.00
Michigan $8.90 $3.38 $9.25 $3.52
Large employer (annual gross revenue of $500,000 or more) $9.50 $9.65
Small employer (annual gross revenue of less than $500,000) $7.75 $7.87
Missouri $7.70 $3.85 $7.85 $3.925
Montana $8.15 $8.30
New Jersey $8.44 $6.31 $8.60 $6.47
New York (effective December 31, 2017)
NYC – more than 10 employees $11.00 $7.50* $13.00 $8.70
NYC – 10 or fewer employees $10.50 $7.50 $12.00 $8.00
Nassau, Suffolk, & Westchester Counties $10.00 $7.50 $11.00 $7.50
Remainder of State $9.70 $7.50 $10.40 $7.50
Ohio $8.15 $4.08 $8.30 $4.15
Rhode Island $9.60 $3.89 $10.10 $3.89
South Dakota $8.65 $4.325 $8.85 $4.425
Vermont $10.00 $5.00 $10.50 $5.25
Washington $11.00 $11.50

*Different rules apply based on certain industries, such as for food service, fast food (within New York City), and hospitality industries.

Current New
Location Categories Minimum Wage Tipped Minimum Wage Minimum Wage Tipped Minimum Wage
Flagstaff, AZ $10.50 $11.00
Cupertino, CA $12.00 $13.50  
El Cerrito, CA $12.25 $13.60  
Los Altos, CA $12.00 $13.50  
Milpitas, CA $11.00 $12.00  
Mountain View, CA $13.00 $15.00  
Oakland, CA $12.86 $13.23  
Palo Alto, CA $12.00 $13.50  
Richmond, CA $12.30 $13.41  
Sacramento, CA 40 or more employees $10.50 $11.00  
San Jose, CA $12.00 $13.50  
San Mateo, CA  
501(c)(3) non-profit $10.50 $12.00  
Other businesses $12.00 $13.50  
Santa Clara, CA $11.10 $13.00  
Sunnyvale, CA $13.00 $15.00  
Bangor, ME $8.25 $4.125 $9.00 $4.50
New Mexico          
Albuquerque, NM
No healthcare provided $8.80 $5.30 $8.95 $5.35
Health care provided $7.80 $5.30 $7.95 $5.35
Bernalillo County $8.70 $2.13 $8.85 $2.13
Seattle, WA  
Small employer (500 or fewer employees) – without tips and/or medical benefits $13.00 $14.00  
Small employer (500 or fewer employees) – with tips and/or medical benefits $11.00 $11.50  
Large employer (501 or more employees) – without medical benefits $15.00 $15.45  
Large employer (501 or more employees) – with medical benefits $13.50 $15.00  
Tacoma, WA $11.15 $12.00  



Our colleague Steven M. Swirsky at Epstein Becker Green has a post on the Management Memo blog that will be of interest to our readers: “NLRB Reverses Key Rulings: Returns to Pre-Obama Board Test for Deciding Joint-Employer Status and for Determining Whether Handbooks, Rules and Policies Violate the NLRA – Assessment of 2014 Expedited Election Rules and Future Changes Also Announced.”

Following is an excerpt:

It should come as no surprise that recent days have seen a stream of significant decisions and other actions from the National Labor Relations Board as Board Chairman Philip A. Miscimarra’s term moves towards its December 16, 2017 conclusion.  Chairman Miscimarra, while he was in a minority of Republican appointees from his confirmation during July 2013 and as a new majority has taken shape with the confirmation of Members Marvin Kaplan and William Emanuel, has clearly and consistently explained why he disagreed with the actions of the Obama Board in a range of areas, including the 2015 adoption of a much relaxed standard for determining joint-employer status in Browning-Ferris Industries, the standard adopted in Lutheran Heritage Village for determining whether a work rule or policy, whether in a handbook or elsewhere would be found to unlawfully interfere with employees’ rights under Section 7 of the National Labor Relations Act to engage concerted action with respect to their terms and conditions of employment, and his disagreement with the expedited election rules that the Board adopted through amendments to the Board’s election rules. …

In Hy-Brand Industrial Contractors Ltd. and Brandt Construction Co., decided on December 14, 2017, in a 34-2 decision, the Board has discarded the standard adopted in Browning-Ferris, and announced that it was returning to the previous standard and test for determining joint-employer status and returning to its earlier “direct and  immediate control standard.”  …

In The Boeing Company, also decided on December 14, 2017, the Board adopted new standards for determining whether “facially neutral workplace rules, policies and employee handbook standards unlawfully interfere with the exercise” of employees rights protected by the NLRA. …

Noting that the 2014 Election Rules were adopted over the dissent of Chairman Miscimarra and then Member Harry Johnson, and the fact that these rules have now been effect for more than two years, on December 14th, the Board, over the dissents of Members Mark Pearce and Lauren McFerren, both of who were appointed by President Obama, published a Request for Information, seeking comment …

Read the full post here.