Recently in Wages and Hours Category

May 12, 2011

Wage and Hour App Lets Workers Track Hours on Their Phones

Earlier this week, the federal Department of Labor (DOL) announced the release of its first smartphone application: a timesheet that allows employees to keep track of their work hours and calculate how much they are owed, in straight wages and overtime. (I learned about it over at the Workplace Prof Blog.) The DOL says it hopes to provide updates to the free app that allow employees to keep track of bonuses, commissions, tips, holiday pay, and more. 

As the DOL press release says, the information this app helps employees track "could prove invaluable" in a Wage and Hour Investigation. Here's why: If an employer fails to keep accurate records of hours worked by its employees (as required by the Fair Labor Standards Act), then the DOL will presume that any records the employees can produce are correct. The employer can try to overcome this presumption, but without proper wage and hour records -- and facing employees who have tracked their hours in real time on their smartphones, using an app created by the government agency conducting the investigation -- it's going to be a steep uphill battle. 

April 14, 2011

Labor Department Regulations on Tip Credits and More

Last week, the federal Department of Labor (DOL) issued its final "clean-up" regulations, tweaking a number of existing rules to bring them in line with laws that have passed and court cases that were decided since the regulations were last reviewed. Although the proposed regulations (issued during the Bush Administration) included several changes that generated a lot of discussion, the final regulations are more scaled back. 

The most significant discussion in the final regulations involves tip credits. Under the Fair Labor Standards Act (FLSA), employers may pay tipped employees less than the minimum wage -- down to a floor of $2.13 an hour -- as long as employees make enough in tips to bring their earnings up to at least the minimum hourly wage. If there is a shortfall, the employer must make up the difference. (Some states do not allow employers to take a tip credit; in these states, which include California, employers must pay service employees the full minimum wage for every hour worked.) This has long been the law, but the final regulations clarify a few points:

  • Whether or not an employer takes a tip credit, all tips an employee earns belong to that employee, except for any amount the employee is required to "tip out" (contribute to a legitimate tip pool). Employers aren't entitled to any part of the tip pool. At least one court had held that an employer who doesn't take a tip credit need not let employees keep their tips, as long as the employees were left with at least the minimum wage. The regulations specifically dispute the holding of this case. 
  • Only employees who regularly and customarily receive tips can participate in the tip pool -- and again, this rule applies whether or not the employer takes a tip credit. Employees who don't typically receive tips, such as cooks and dishwashers, may not participate in the pool. The final regulations don't set a limit on how much of their tips employees may be required to put in the pool; in fact, they state explicitly that the law "does not impose a maximum contribution percentage." Previous guidance documents and opinion letters from the DOL had put a maximum on the amount employees could be required to contribute, or said that employees could not be required to contribute more than was customary in their industry, but these limits did not make it into the final regulations. Once the employer comes up with an amount, however, it is required to notify employees how much they will be required to contribute to the pool.
  • Employees are entitled to notice if the employer will take a tip credit. This notice must include: (1) the hourly cash wage the employer will pay the employee; (2) the amount of tips that the employer will take as a tip credit (that is, the employer will count that amount toward the employee's wages, to meet the minimum wage requirement); (3) that the employee is entitled to retain all tips received except any amount the employee is required to contribute to a valid tip pooling arrangement limited to employees who customarily and regularly receive tips; and (4) that the tip credit shall not apply to any employee who has not been informed of these requirements. The final regulations do not require this notice to be in writing; employers may inform employees orally, if they wish. As a practical matter, however, employers who plan to take a tip credit should provide written notice, so they can later prove that they properly notified employees, if necessary. 
Some other changes included in the final regulations exclude stock options from an employee's regular rate of pay (used to determine overtime), clarify the exemptions for firefighters and salesmen, partsmen, and mechanics of certain vehicles; exclude volunteers at private nonprofit food banks from the definition of an "employee" covered by the FLSA, even if those volunteers receive groceries from the bank; and clarify that time an employee spends commuting in a company car doesn't count as compensable work time. 

The biggest change the regulations ultimately didn't make had to do with fluctuating workweeks, in which a nonexempt employee receives a fixed salary that is understood to compensate the employee for all hours worked during the week. If the employee works more than 40 hours in a week, the salary is divided by the number of hours worked that week to come up with an hourly wage, and the employee is entitled to half of that amount for every hour worked over 40 as an overtime premium. The proposed regulations sought to explicitly allow employers to pay these employees bonuses, commissions, and other types of compensation in addition to their set salary, without running afoul of the rule and without having to count those amounts toward the employee's hourly pay. Ultimately, the final regulations didn't allow this; in its comments, the DOL reasoned that this would give employers an incentive to reduce set salaries and move that money to bonuses and other types of excluded compensation, to minimize their overtime obligations. 

March 24, 2011

Supreme Court: Oral Complaints Trigger Retaliation Protection

In yet another win for an employee claiming retaliation, the Supreme Court decided this week that an employee's oral complaints of violations of the Fair Labor Standards Act could protect that employee from employer retaliation. (The case is called Kasten v. Saint-Gobain Performance Plastics Corporation.)

Kevin Kasten claimed that he had made numerous oral complaints within the company -- to his supervisor, his lead operator, the operations manager, and human resources personnel -- about the location of the company's time clocks, which were situated between where the employees had to don their protective gear and where the employees actually had to work. This meant that employees were not paid for the time they spend putting on their gear at the beginning of their shift and taking it off at the end, in violation of the Fair Labor Standards Act (FLSA). 

In a separate lawsuit, a federal court found in Kasten's favor on the underlying complaint about the time clocks. The lawsuit that made it to the Supreme Court was about Kasten's retaliation claim: He alleged that he was disciplined and ultimately fired because of his complaints to the company. The company countered that Kasten was fired because he refused to use the time clocks. It also argued that Kasten couldn't claim retaliation, because the FLSA protects only employees who "file" a complaint, which must be done in writing. 

The Supreme Court found for Kasten. Consulting the dictionary, other provisions of the statute, and other sources, the Court found that the term "file" doesn't necessarily require a document. The Court also found that requiring employees to put complaints in writing would thwart the statute's protective purpose by discouraging complaints from those who are less educated, illiterate, or simply overworked. On the other hand, the Court agreed with the employer that the employee's complaint had to be sufficient to put the company on notice of the problem in order to trigger the law's retaliation provisions. So the Court came up with this standard:

To fall within the scope of the antiretaliation provision, a complaint must be sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute and a call for their protection.  

In an odd twist, the Court explicitly declined to address whether the employee must make a complaint to a governmental agency to be protected, even though the case involved an employee who complained only to the employer. (In other words, if the employee must complain to an agency, Kasten doesn't have a retaliation claim.) Apparently, the employer hadn't kept this argument alive properly on appeal, so the Court wasn't required to consider it. And in the majority opinion, Justice Breyer argued that there was no need for the Court to resolve this question, because it wasn't necessary to the Court's decision in the case. Still, it's a fairly large issue to leave undecided, especially when the claims of the actual employee in the case depend on how it's resolved. 

March 14, 2011

Department of Labor Program Connects Employees to Lawyer Referral Service

A few months ago, the federal Department of Labor (DOL) began its Bridge to Justice program. This program refers certain employees who have filed complaints with the DOL to the American Bar Association's attorney referral service. These complaints involve alleged violations of the Family and Medical Leave Act (FMLA) and the Fair Labor Standards Act (FLSA). 

Once an employee files a complaint, the DOL may attempt to settle the employee's claim, conduct an investigation, and even pursue litigation against the employer. However, due to limited resources, the DOL can't investigate and resolve every one of the more than 35,000 complaints it receives each year. And, the DOL has its own enforcement priorities, areas in which it is more likely to be aggressive in pursuing complaints. Right now, those priorities are heavily focused on contingent workforce issues: nontraditional work relationships, including employee leasing, use of independent contractors, and franchising, which can create confusion about the nature of the employment relationship, the identity of the employer, and what rights employees in these arrangements are owed. 

The DOL has said that it might inform an employee about the ABA referral system immediately after the employee files a complaint, if the employee indicates a desire to pursue a private cause of action against the employer. The DOL might also refer the employee at any point when the agency decides not to continue its efforts at conciliation, investigation, or litigation on the employee's behalf. Once this decision is made, the DOL will send the employee a letter with contact information for the referral system. Along with the letter, the employee will receive a form to request certain documents from the DOL's file, including documents the employee has provided, the employee's own statement to the DOL, and the DOL's calculation of back wages owed the employee, if applicable. An employee who wants other documents from the DOL's file must file a request under the Freedom of Information Act (FOIA). 

Employers will be informed if the DOL decides not to pursue an employee's claims further, but will not be specifically told that the DOL has given the employee information on the referral service. Employers are not entitled to receive the documents available to employees absent a FOIA request. 

This program is brand new, so it remains to be seen what effect it will have on FMLA and wage and hour litigation. Presumably, the DOL decides not to pursue at least some of these cases because the employee's claims are weak, which means a lawyer is likely to decline the case as well. Also, employees don't have to take their claims to the DOL in the first place. Because there's no "exhaustion" requirement under the FMLA or FLSA, employees can bypass the agency and go straight to a lawyer if they believe their rights have been violated -- and many employees with strong claims do. I'll be interested to see statistics, once they are available, on whether this program increases the number of FMLA and FLSA cases filed -- and won -- by employees who have been through the DOL process. 
April 30, 2010

Department of Labor Announces New Compliance Strategy

Earlier this week, the Department of Labor (DOL) announced its regulatory agenda for Spring 2010. As always, the plan includes a number of discrete areas where the DOL plans to draft or revise regulations (for example, to require coal mine operators to inspect areas where miners will be working). This time around, the agenda also includes a broad paradigm shift: The DOL wants to replace what it calls a "catch me if you can" model, in which violations are stemmed only if and when the DOL steps in, to a "plan/prevent/protect" model, in which employers take the lead in finding, fixing, and preventing workplace problems.

What will this mean in practice? It's not entirely clear, as the DOL hasn't yet issued any proposed regulations or concrete details of how the plan will shape up. However, The New York Times reported today that the new approach will require employers to draft compliance plans explaining how they will make sure they aren't violating workplace safety and wage and hour laws. Employers will also be required to document key decisions -- for example, why the employer has determined that an employee is exempt from overtime or that a worker should be classified as an independent contractor rather than an employee -- and then provide that documentation to both the worker and the DOL. 


December 11, 2009

Regulatory Agenda: ADA, ADEA, FMLA, and Record Keeping Requirements

The federal agencies have released their Regulatory Plan and Unified Agenda of Regulatory and Deregulatory Actions (known as the "Unified Agenda.") Twice a year, federal agencies must provide this information to let the public know what regulatory actions they're planning and to coordinate rulemaking among the agencies.

The Unified Agenda can be somewhat daunting, both in length and in jargon (OMB Watch, a nonprofit that works to promote greater transparency in federal regulatory and budget matters, has a nice guide to some of the terms used in the Unified Agenda). Each federal agency that's included in the Unified Agenda must indicate what rulemaking it has planned in coming months. The list of agencies in the current Unified Agenda is here; when you click on an agency's link, you can see its statement.

The EEOC has identified two regulatory priorities:

  1. Implementing the employment provisions of the Americans with Disabilities Act Amendments Act (ADAAA). The EEOC issued proposed regulations on the ADAAA in September 2009 (you can check out my blog post reviewing the regs here), and asked for public comments to be submitted by November 23. Now, the agency must review all of those comments and come up with final regulations.
  2. Amending its regulations on the "reasonable factor other than age" defense to an age discrimination claim under the Age Discrimination in Employment Act (ADEA), an issue the Supreme Court addressed last year. (Here's my blog post on that case, Meacham v. Knolls Atomic Power Laboratory.)

The Department of Labor painted with a broader brush: It begins its regulatory plan with a sort of mission statement, lising 12 "strategic outcomes," from improving health benefits to helping injured workers return to the job, all intended to further the agency's goal of "good jobs for everyone." Here are the specific regulatory proposals that interested me:

  1. Updates to the child labor regulations.
  2. A review of the military leave provisions and the 2009 regulations interpreting the Family and Medical Leave Act (FMLA).
  3. Changes to the record keeping regulation for Fair Labor Standards Act (FLSA). 
October 14, 2009

Working Fewer Hours for Less Pay

Layoffs have been much in the news for more than a year, and with good reason: Unemployment has reached 9.8%, and is expected to continue growing in the months to come. But lost jobs aren't the only employment story of the economic downturn. Many struggling companies are trying to get more for less -- more work out of their employees for less money, that is. When companies combine layoffs with pay cuts and hour cuts, the inescapable result is that remaining employees have to work harder for less pay.

As statistics show: The Bureau of Labor Statistics (BLS) has released its latest figures on what it calls "labor productivity," a measure of employee output per hour as compared to the cost of that labor. Here's the good news: Employee productivity is up by 6.6% in the second quarter of this year. (Way to go, people!) The bad news is that we realized this improvement not by boosting overall productivity -- which actually declined by 1.5% -- but by working faster. Work hours declined by 7.6% in the same period. (This decline encompasses hours lost both to reduced work schedules and to layoffs.) In fact, the New York Times reported today that pay cuts -- which are often tied to reduced hours -- are more common now than at any time since the Depression.

Even those at the bottom of the economic ladder are facing declining wages: Colorado has said that it will have to cut the minimum wage from $7.28 an hour to $7.24 an hour as a result of deflation. Colorado is one of ten states in which the minimum wage is tied to inflation. This type of legislation is typically intended to protect low wage workers by making sure that the minimum wage keeps up with the cost of living. But when the cost of living drops, these laws requires the minimum wage to drop along with it.   

October 1, 2009

The Secret Ingredient at Cafe Gratitude

Those of us who live in the Bay Area are familiar with Cafe Gratitude, a small chain of raw food restaurants. These restaurants have a particular atmosphere and culture, one that feels very familiar to me as a local child of the 60s and 70s. I think of it as "control-freak hippie," an apparently easy-going presentation with a very strident center. (As in, "Hey people, I think it would be really cool if we could all DO THIS EXACTLY THE WAY I WANT RIGHT NOW!") 

A game created by the founders, called Abounding River, is available to play at the many shared tables, so diners can explore "Being Abundance" and discover a "Spiritual Foundation that opens up to a whole new way of looking at money and resources" (quotes from the Cafe's website). Everything on the menu is called "I am [positive adjective]", such as "I am worthy," "I am present," or "I am dazzling." And that's what you have to call it when you order: If you try to get away with, "I'd like the pesto pizza," you will be gently encouraged to call it by its true name ("you mean, 'I am sensational'?"). And when your pizza arrives, the server smiles, looks you in the eyes, sets it in front of you, and says, "you are so sensational!" The staff is friendly, the atmosphere is warm, and there are rules.  

As the East Bay Express recently reported, the Cafe's philosophy and culture stem from the Landmark Forum (which grew out of est (Erhardt Seminar Training)), a "transformative learning" program whose graduates sometimes recruit others in ways so insistent that it can feel like proselytizing.

As some Cafe employees have discovered: According to the Express article, all employees are "encouraged" to attend the Landmark Forum, a weekend-long introductory course, and all managers are required to go -- and pay for it. Managers hold daily "clearings," "during which employees answer a series of questions before 're-creating' each other in a process aimed at freeing the workers to be present and alive in the moment for the job" (quote from the Express article). 

Would you like a side of "I am litigious" with that? Because there could be some employment law problems here, as the article also points out. First of all, employers that require employees to attend training sessions have to pay for it -- twice. The employer has to pay the cost of the training, and then has to pay employees for the hours they spend doing it. Then there's the potential religious discrimination problem: Whether or not the Landmark Forum or the owners of Cafe Gratitude would describe their philosophies as "religious," the belief in human potential -- that we create our own reality -- may itself conflict with a religious view that a higher power does the creating. And, if an employer fires or disciplines those who don't share the company's official belief system or complain about feeling pressure to adopt it, an experience one employee described in the Express article, a retaliation claim may not be far behind.   

September 25, 2009

Low Wage Worker Survey Reveals Widespread Wage and Hour Violations

Earlier this month, a report was released on a 2008 survey of low-wage workers in the cities of Chicago, Los Angeles, and New York. The title of the report, "Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in America's Cities," kind of gives away the ending. The statistics are truly shocking:

  • More than a quarter of those surveyed reported that they had received less than the minimum wage in the previous week, and 60% of those reported being underpaid by more than $1 per hour.
  • More than three-quarters(!) of those surveyed reported not being paid for overtime worked in the previous week -- and they averaged 11 hours of weekly overtime.
  • Almost a quarter worked off the clock (and weren't paid for it), and nearly two-thirds of those entitled to a meal break didn't receive the full, uninterrupted, work-free break required by law.
  • 41% had illegal deductions taken from their paycheck (for breakage or to pay for tools or other items required for work, for example).
  • 43% of those who had made a complaint or tried to form a union in the past year faced retaliation. One-fifth reported that they had not complained about a serious workplace problem in the past year, primarily because they feared losing their job.

Secretary of Labor Hilda Solis told the New York Times that the report "shows that we still have a major task before us." She also indicated that she's in the process of hiring 250 more wage and hour investigators.

To find out more about wage and hour laws, including the minimum wage, overtime, and what counts as an hour worked, see the Compensation and Benefits section of Nolo's website.  

September 19, 2009

It's a Man's, Man's, Man's, Mancession

Despite some signs of an economic rebound in the stock market, housing sales, and other areas, unemployment continues to rise. Earlier this month, the Bureau of Labor Statistics announced that the national unemployment rate has reached 9.7%. The San Francisco Chronicle reported that the jobless rate in California has hit 12.2%, with 2.25 million residents of the Golden State out of work and actively looking for new jobs.

People are starting to refer to our current economic situation as a "mancession," because so many who have lost their jobs are male. Nationally, the BLS reports that the male unemployment rate is 10.1%, while the female unemployment rate is only 7.6%. As a result of this skew, women now make up virtually half of the workforce, for the first time in history.

This morning, the New York Times reported on one effect of these statistics: Women who left the workforce after having children are trying to return to work, often to replace a spouse's lost income or hedge against the possibility of a spouse's layoff down the road. 

The article focuses on women who had the option of staying home with their children, so it's necessarily limited in scope to the upper end of the economic spectrum. A lot of the women profiled were attorneys, for example. And, it's a little bit hard to find too much sympathy for someone who had to return to work in part to offset investment losses "in the healthy six figures." Still, it's one more fundamental change attributable to the recession.

I'm interested in hearing how this gender shift in employment will affect overall pay and benefits. Not every working woman is an attorney pulling down a six-figure salary. In fact, women tend to earn less than men on average (currently thought to be about 80 cents on the dollar), are more likely to work part-time jobs, and are less likely to receive benefits. Will the gender shift -- and the resulting increase in families being supported primarily by women's work -- lead to higher pay and benefits for women? Or will pay and benefits decrease as women increase their participation in the labor force?