Should Employers Keep Wage and Hour Records for Independent Contractors? 2018-10-04T10:23:12+00:00

Posted on October 4, 2018

The Department of Labor successfully stated a claim for record-keeping violations against a franchisor, because the franchisor failed to keep records on the hours worked by the specific individuals actually performing work under the franchise agreements. Using a franchise agreement, a janitorial company engaged corporations – and only corporations – to provide services to the company’s clients. The franchisees were typically one or two person operations, and the owners of the franchisees typically did the actual work themselves. The DOL sued the franchisor janitorial company, alleging that it failed to keep required records for those individuals who actually performed work for the company’s clients. At first, its use of franchise agreements protected the janitorial company; the case was dismissed by the trial court. But the Circuit Court reinstated the suit. The DOL’s allegations that the individuals performing the work were economically dependent on the janitorial company were enough to allege that those individuals were, by law, employees of the franchisor janitorial company, and therefore enough to allege the janitorial company was required to keep the FLSA records. Acosta v. Jani-King of Oklahoma, Inc., No. 17-6179 (10^th Cir. Oct. 3, 2018)

Beware! An employer’s corporate structure – including even arguably proper use of independent contractors – might not protect you from record-keeping requirements. This suit will continue and might result in increased record-keeping requirements for all employers who use independent contractors. To be safe, you should know who is doing the work and the hours they keep.

The More Things Change… The More They Stay The Same. 2018-01-09T11:59:27+00:00

Posted on January 9, 2018

By Chance Hill

On January 5, 2018, the U.S. Department of Labor (DOL) reissued 17 previously withdrawn opinion letters addressing a wide variety of topics under the Fair Labor Standards Act (FLSA). Such letters respond to specific questions submitted to the DOL’s Wage and Hour Division (WHD) and constitute an important form of guidance for employers and employees regarding the application of FLSA requirements and other laws to their workplaces. Employers may be able to use opinion letters for their affirmative defenses and receive deference by the courts if employers act “in conformity with” an opinion letter and in “good faith,” according to the Portal-to-Portal Act of 1947. The aforementioned 17 letters concerned inquiries ranging from questions about the exempt status of civilian helicopter pilots under Section 13(a)(1) of the FLSA to whether bonuses should be included in calculating employees’ regular rates pursuant to Section 7(e) of the FLSA.

The Obama Administration had withdrawn these opinion letters and discontinued the longstanding practice of issuing such letters while in office. (Instead, the Obama Administration issued a handful of documents that it referred to as “Administrator’s Interpretations.”) In his statement regarding these 17 opinion letters, the Trump Administration’s WHD Acting Administrator Bryan L. Jarrett reissued “the verbatim text” of each withdrawn opinion letter and asserted that it “is an official statement of WHD policy and an official ruling for the purposes of the Portal-to-Portal Act, 29 U.S.C. § 259.”

Click here to view DOL’s reissued opinion letters.

Salary Threshold Regs Un-enjoined? 2017-06-09T13:56:36+00:00

Posted on June 9, 2017

By John Alan Doran

Wednesday a group of Chipotle employees brought suit in New Jersey federal court alleging FLSA violations stemming from Chipotle’s failure to follow the Obama-era salary-basis regulations. As you will recall, these regulations doubled the salary threshold for the so-called white collar exemptions, thereby rendering millions of workers eligible for overtime. But, you will also remember that a federal judge entered an order last year enjoining those regulations before they became effective, and that injunction was nation-wide (S&H Blog Post: Salary Threshold Change Stopped). So are these Chipotle employees just sore losers or did we just misunderstand the meaning of “injunction?” The plaintiffs in this case are arguing that, while a federal court did preliminarily enjoin the DOL from implementing and enforcing the salary-basis regs, the regs nonetheless became effective automatically under the Administrative Procedures Act because the court did not enter a permanent injunction. The plaintiff’s argument seems like a real long-shot, but it is yet another twist in the unbelievably circuitous route these regs have taken.

DOL Trashes Obama-Era “Guidance” 2017-06-09T13:11:12+00:00

Posted on June 9, 2017

By John Alan Doran

Wednesday the DOL announced that it was withdrawing two critical pieces of “guidance” issued under the Obama administration. The first piece addressed the DOL’s rather narrow view of who is an independent contractor (S&H Blog Post: DOL Says Employers Are Morons). The second piece established an extremely broad view of joint employment (S&H Blog Post: Joint Employment Wage/Hour). Taken together, the guidance pieces made it much harder for employers to navigate through the gig economy. The withdrawal of these guidance pieces obviously helps employers who use contractors or have potentially joint employer relationships. But the DOL did not suggest what enforcement strategy it may follow in the absence of these guidances, so the impact in real-world terms remains to be seen. Nonetheless, this provides some indication that our new Secretary of Labor is moving forward, at least in some respects, to reverse some of the prior administration’s approaches.

College Athletes (Still) Not Employees 2017-04-28T15:50:26+00:00

Posted on April 28, 2017

By Lindsay Hesketh

The District Court for the Northern District of California has weighed in on whether student athletes are “employees” under the law. On April 25, 2017, the Court dismissed a proposed class action brought by a former University of Southern California football player. The suit was against the NCAA and PAC-12 Conference for violations of the FLSA and California Labor Code.

In dismissing the claim, the Court relied in part on the Seventh Circuit’s 2016 decision holding former track and field student athletes were not employees. Here, the plaintiff argued college football is different from track and field because football brings in more revenue. No luck. Without addressing other policy implications, the Court declined to draw a line between revenue-generating and non-revenue-generating college sports. The Court also rejected the athlete’s comparison of college athletics to work-study programs, noting sports exist for the primary benefit of the students and not the school.

This is only the latest in the pay-for-play college athlete saga. Stand by.

Read the full decision: Dawson v. NCAA, et al., Case No. 16-cv-05487-RS (N.D. Cal. April 25, 2017).

AZ Supremes: Prop 206 Is Law 2017-03-15T18:08:23+00:00

Posted on March 15, 2017

By John Alan Doran

Yesterday the Arizona Supreme Court issued a death knell to the pending legal challenge to Prop. 206. As you will recall from our blog post, last November our citizenry passed a referendum that raised the minimum wage and imposed mandatory paid leave on employers. The minimum wage hike took effect in January, while the paid leave provision becomes effective in July. The ensuing legal challenge to Prop. 206 found no traction, and met its demise yesterday when the Court unanimously rejected the appeal. Given the exigencies of the situation, the Court issued its ruling without a supporting opinion, but promised to publish an actual opinion when ready to do so. It appears that Prop. 206 is the law of the State, and only constitutional/political solutions remain. In the meantime, hello minimum wage hikes and paid leave.

Cheerleaders Slam NFL with Suit 2017-02-06T11:06:26+00:00

Posted on February 6, 2017

By Mercedes Pineda

Just before the Big Game, a former cheerleader for the San Francisco 49ers “Gold Rush Girls” filed a class action lawsuit against the NFL, claiming the league conspired to keep the female athletes’ pay below market value. Seeking up to $300 million in damages, the suit claims cheerleaders earn a paltry flat wage per game (250% to 650% less than what NFL mascots earn) while going uncompensated for hours of rehearsal time and community outreach events. Adding insult to injury, the cheerleaders are prohibited from working for any other professional cheerleading team, even outside of the NFL, and are forbidden from discussing their wages. The complaint accuses the league, its teams, owners, high-ranking management officials, and heads of the cheerleading squads of plotting in various meetings to underpay the female athletes. It also alleges that the conspiracy was enforced through fear and intimidation, with cheerleaders threatened that they could easily be replaced for failing to perform in any way. While certainly not the first lawsuit filed by NFL cheerleaders, it is the first to claim the NFL is a joint employer and to allege antitrust violations. Food for thought coming off the League’s biggest event of the year.

DOL Brief Argues Against Injunction 2016-12-16T09:23:44+00:00

Posted on December 16, 2016

By Bill Wright

As we all know, a federal judge blocked the Final Rule from the Department of Labor (“DOL”) that would have roughly doubled the salary threshold for executive, administrative and professional exempt employees. Now, the DOL has filed its appellate brief, looking to overturn that injunction.

The DOL’s arguments are predictable. Although the judge said he was only blocking the new salary threshold, not blocking all use of a salary threshold test, the DOL brief argues that judge’s reasoning would apply to any salary threshold test; but, both the appellate court and the Supreme Court have approved the use of salary threshold tests in the past. In addition, the DOL brief argues that the Final Rule did not merely add context to ambiguous terms in a statute; instead the DOL was exercising authority explicitly granted under the FLSA. The salary threshold test is neither arbitrary, capricious, nor manifestly contrary to law.

We knew the DOL would turn this brief around quickly, but barring a miracle, the new administration will take office before the appellate court reaches a decision in the case. Of course, ‘tis the season for divine intervention.

Salary Change Stopped – Now What? 2016-11-22T17:05:15+00:00

Posted on November 22, 2016

By Bill Wright

A federal court has ruled that the U.S. Department of Labor might have overstepped its boundaries by implementing a salary threshold of $913 a week for executive, administrative and professional exemptions. But if you have been planning to comply with the regulation by next Thursday, what are you supposed to do about it?

First, there is a possibility that the court of appeals will see the issue differently than the district court. Consequently, we have no certainty about the salary threshold for these exemptions.

Second, the injunction is not permanent. Consequently, again, we have no certainty about the salary threshold for these exemptions.

Third, if you changed previously salaried employees to hourly and made them non-exempt, everything is fine. You can leave them as non-exempt, pay them overtime premium pay, and you will be complying with the law however it turns out.

But, if you gave exempt employees raises, how do you roll them back now? Everything depends on how you communicated the raises. If you made no contracts or other enforceable promises, you can reduce salaries again just as easily as you increased them. The problem is the employee relations – smoothing over the employee’s unhappiness over the bait and switch. At this point, we don’t know whether to laugh or cry.

Given the late date for this ruling, it is hard to see how we could have certainty about this rule before DJ Trump takes office. His administration might decide to drop the appeal, or to accept a permanent injunction.

Salary Threshold Change Stopped 2016-11-22T16:41:03+00:00

Posted on November 22, 2016

By Bill Wright

The U.S. District Court for the Eastern District of Texas has temporarily enjoined the Department of Labor’s new salary threshold test for executive, administrative and professional employees. The court found that the terms – executive, administrative and professional – had functional meanings but did not imply any particular salary or status. The court also found that the new threshold — $913 a week – was so high that it effectively took over the duties test, substituting status for function. Consequently, the court found the plaintiffs had shown a likelihood of success on the merits; the new regulation was likely to be contrary to the Fair Labor Standards Act.

The result is that, as of this moment, employers nationwide do not have to comply with the new regulation on December 1, 2016. Watch for a fast run to the court of appeals!

Nevada et al. v. US DOL, Civil Action No. 4:16-CV-00731 (E.D. Tex. Nov. 22, 2016).

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