Advanced Wage/Hour Issues: Wrinkles of “Work Time” and Exemptions January 30, 2013 Jill Kirila, Partner Squire Sanders (US) LLP Labor & Employment jill.kirila@squiresanders.com +1.614.365.2772 Meghan E. Hill Squire Sanders (US) LLP Labor & Employment meghan.hill@squiresanders.com +.614.365.2720 37 Offices in 18 Countries
DOL Enforcement • Continued aggressive enforcement • “Fissured” Industries Targeted • Shaming • Liquidated damages and consent decrees becoming the norm 2
PRIVATE ACTIONS • 7,064 FLSA cases were filed in 2012 up from 2,035 filed in 2002 • Reasons for continued increase in FLSA litigation: Outdated FLSA and state wage and hour laws which do not address changes in technology Lack of clarity in existing law, making it difficult to classify who is and is not exempt from overtime pay Guaranteed attorney fees 3
HOT AREAS • Use of Technology • Donning/Doffing • Joint Employer • Rounding • Independent Contractor Misclassification 4
True or False? • It is permissible to round employees’ time to the nearest 6 minutes. • It is permissible to pay an employee for donning and doffing his essential protective gear but not pay for the time the employee then spends getting coffee and walking to his work station. • There are not federal law requirements regarding the timing of payment OT compensation. • Private waivers of FLSA claims are invalid (unapproved by court or DOL). 5
Hours Worked Refresher • Any time spent performing activities that are primarily for the employer’s benefit are compensable hours worked • All time spent in physical or mental exertion primarily for the benefit of the employer is compensable hours worked • Employer must compensate for all compensable hours worked if the employer knew or should have known the employee was working regardless of if the hours were recorded 6
Portal-to-Portal Act • Amended FLSA and relieves employers of the obligation to compensate an employee for “activities [that] are preliminary to or postliminary to [the] principal activity or activities” of employment. 29 U.S.C. § 245(a)(2). • In general, “checking in and out and waiting in line to do so, changing clothes, washing up or showering, and waiting in line to receive pay checks” are not compensable under the FLSA. 29 C.F.R. § 790.7(g). 7
Workday • Portal-to-Portal Act did not change definition of “workday” • The “workday” is generally defined as “the period between the commencement and completion on the same workday of an employee’s principal activity or activities.” • Activities that take place between the first and last principal activities of the day are generally compensable. • The Supreme Court has interpreted “principal activity or activities” to include “‘all activities which are an integral and indispensable part of the principal activities.’” 8
Integral & Indispensable • Necessary to the principal work performed Required by law, company policy or the nature of the work performed • Primarily benefit the employer 9
Donning & Doffing – Union Employers Congress enacted 29 U.S.C. § 203(o), which excludes changing clothes and washing from the measured working hours under the FLSA, if such activities have been excluded by custom or practice under a bona fide CBA. 10
Hours Worked Technology 11
Technology & Hours Worked • Blackberries, iPhones and Cell Phones • Use of Technology at Home and Effects on Travel Time • Time Using Technology While at Work 13
Hypothetical Admin working for ABC Co. is eager to move up in the company and please her bosses. On her drive into work she checks her work voicemail and gets to the office 15 minutes early to boot up her computer, get her coffee, and check her email. Every night after she puts her kids to bed, she logs onto ABC’s internet access to check her work email. She follows up on any outstanding issues and finalizes documents for the next day. 14
Hypothetical cont. ABC requires employees to record all hours work, including those worked from home, into its timekeeping system which can be accessed from home. Admin never enters her time from home. Admin gets passed over for promotion. She sues ABC alleging unpaid hours worked. She claims that she regularly worked an extra 10 hours a week even though she never entered any time from home. 15
Smartphone Apps 16
Restricting Access In a survey by the HR Policy Association in 2011, a third of the 155 large member organizations that responded said they have restricted telecommuting as a result of wage and hour lawsuits, and 56% said they have curbed the use of communications devices outside the office. More American workers sue employers for overtime pay, USA Today ( 4/19/2012) 18
Monitoring Employees’ Hours • Computer logging • ID badges • Parking garages • Cell phone records • GPS 19
Tips for Employers • Audits • Smartphone and cell phone policies • Policies Recording Work Time • Limit contact “after hours” • Telecommuting policies • Monitoring • Social Media Policy 20
Recording Work Time • Rounding DOL says nearest five or six minutes permissible, even 15 minutes okay – But see California case— See’s Candy Shops 21
Joint Employer • Third Circuit created new test • Factors not exhaustive • Does the alleged employer have: Authority to hire and fire employees; Authority to promulgate work rules and assignments, and set conditions of employment, including compensation, benefits, and hours; Day-to-day supervision, including employee discipline; and Control of employee records, including payroll, insurance, or taxes 22
Joint Employer • Remember different Circuits have different tests!! “Economic Realities” Test • DOL test: 29 C.F.R. § 791.2 (joint employment relationship may be found where employers share an employee’s services, where one employer is acting in the interest of another employer or where the employers are not completely disassociated with respect to the employment of the individual and may be deemed to share control of the employee). 23
Overview of White Collar Exemptions • Executive Employee • Administrative Employee • Professional Employee • Highly Compensated Employee • Computer Employee • Outside Sales Employee 24
Administrative Employee Exemption • Paid at least $455 per week • Job Duties: Primary Duty : perform office or non-manual work directly related to the management or general business operations of the employer. Discretion : primary duty must include the exercise of discretion and independent judgment with respect to matters of significance. 25
Administrative Employee Exemption • Recent Attacks: Financial Sector – Mortgage Bankers Association v. Solis Insurance 26
Professional Exemption • Primary Duty Requiring advanced knowledge In a field of science or learning Customarily acquired by a prolonged course of specialized instruction (usually 4 years or more) • Discretion Consistently Exercises discretion and independent judgment • Intellectual Performs work that is predominately intellectual • Minimum Salary $455 per week Exception: Lawyers, physicians and teachers 27
Outside Sales • Primary duty is making sales; Christopher v. SmithKline Beecham Corp. and • The employee must be customarily and regularly engaged away from the employer’s place or places of business. How often is that?? • No salary requirement 28
Other FLSA Issues to Note • Waiver/Settlement of FLSA claims Martin v. Spring Break (5 th Circuit) – Parties may reach private compromises as to FLSA claims where there is a bona fide dispute as to the amount of hours worked or compensation due. A release of a party's rights under the FLSA is enforceable under such circumstances . Split in Circuits – Supreme Court did not accept • Timing of Overtime Payment General rule: pay on the regular pay day for the period in which the work week ends Payroll Schedules (state and federal issue) 29
Audits • Hours worked • Pay frequency • Exempt status • Independent Contractors 30
Credit Information • For those you who require CLE/CPD or HRCI credits please note the following states have been approved, California, Florida, Ohio and Texas; as well as Arizona, New York, and New Jersey through state reciprocity rules. If you require credit in a jurisdiction not pre- approved we can assist. • Tomorrow you will receive an email with a link to an online affidavit. Open this link and complete the form. Don’t forget to include the affirmation code on the form. Once completed, PDF a copy of the signed form to Robin Hallagan at robin.hallagan@squiresanders.com • Remember to complete the webinar survey immediately following the end of this presentation. You are required to complete this evaluation before receiving a certificate of attendance. 31
Questions? Jill Kirila, Partner Squire Sanders (US) LLP Labor & Employment jill.kirila@squiresanders.com +1.614.365.2772 Meghan E. Hill Squire Sanders (US) LLP Labor & Employment Meghan.hill@squiresanders.com +.614.365.2720 37 Offices in 18 Countries
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