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Posts Tagged ‘DOL’

DOL To Rescind 2011 Tip-Pooling Regulations

Posted on: December 19th, 2017

By: Timothy J. Holdsworth

In 2011, the U.S. Department of Labor (“DOL”) revised its regulations to support its position that the Fair Labor Standards Act (“FLSA”) requires that tipped employees retain all their tips regardless of whether the employer takes the tip credit for those employees. These regulations have repeatedly been challenged in courts, and circuits have split over their legality. In addition, several states (Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington) have enacted legislation requiring employers to pay tipped employees the state minimum wage, effectively abolishing the federal tip credit.

As we predicted, in the wake of this litigation and legislation the DOL has issued a Notice of Proposed Rulemaking (“NPRM”) announcing its intent to reverse these 2011 regulations in part. The DOL now proposes to rescind the portion of the regulations that apply to employers that do not take a tip credit, but instead pay wages of at least the federal minimum wage.

One major effect of this change is that employers would now be able to create tip-pooling arrangements that include employees who do not regularly and customarily receive tips. For example, a restaurant could share tips among both servers and dishwashers. In its NPR, the DOL acknowledges that its proposed changes will allow employers and employees greater flexibility in determining their pay policies and allow employers to reduce wage disparities among all employees that contribute to customers’ experience.

The DOL will be accepting public comments on its proposed changes until February 5, 2018. We will update you once the DOL announces the finalized changes, but we do not expect the DOL to modify the changes significantly (if they decide to do so at all). Until the portions of the regulation are rescinded, employers need to be sure their tip policies comply with the current interpretation of the 2011 regulation in their circuit. Additionally, employers need to comply with any applicable state and local compensation laws and regulations regarding tips and tip-pooling, as they could face liability under those laws regardless of the proposed changes discussed in this blog.

If you have any questions about these changes or would like more information on navigating wage and hour laws, please contact Timothy J. Holdsworth at [email protected].

Are We There Yet?: Auto Service Advisor Exempt Status Under the FLSA Makes Return Trip to the Supreme Court

Posted on: November 28th, 2017

By: Will Collins

Last year, the Supreme Court narrowly avoided a collision with the question of whether service advisors at car dealerships are exempt as “salesmen” under the overtime requirements of the Fair Labor Standards Act (FLSA). However, as Encino Motorcars, LLC v. Navarro returns to the Supreme Court, the case is poised to squarely address this issue and, hopefully, provide much-needed clarity.

As previously discussed, the Supreme Court sent the Encino case back to the Ninth Circuit Court of Appeals to reconsider the exempt status of service advisors, instructing the Ninth Circuit to give no deference to the Department of Labor’s (DOL) regulations providing that service advisors were not exempt.

After considering the case on remand, the Ninth Circuit still held that service advisors do not fall within the FLSA’s exemption for “salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles.” As a result, the Supreme Court will again consider the exempt status of auto service advisors and all indications are that the Court will resolve the discrepancy between the DOL regulations, the Ninth Circuit decision, and prior decisions by the Fifth and Fourth Circuits.

After a long road of uncertainty, many are hopeful that the Supreme Court will provide clarity when it finally resolves this issue. As the case is scheduled for oral argument in January, we will continue to monitor the case and provide an update of any developments.

If you have any questions or would like more information, please contact Will Collins at [email protected].

Updates on the “Joint Employer” Standard

Posted on: October 10th, 2017

By: Tim Holdsworth

More than two years have passed since the National Labor Relations Board (“NLRB”) handed down its new and controversial joint employer standard in Browning-Ferris Industries of California, 362 NLRB No. 186 (August 27, 2015). As you may recall, that decision greatly expanded the standard under which an entity could be found as a joint employer under the National Labor Relations Act (“NLRA”). In departing from its own well-established standards, the NLRB announced that they will no longer require a joint employer to possess and exercise authority to control employees’ terms and conditions of employment, but instead will find sufficient control if the entity merely reserves this authority. They also announced they will no longer require the employer’s control to be exercised directly and immediately. Instead, the NLRB declared that control exercised indirectly, such as through an intermediary, can establish the requisite control.

The U.S. Department of Labor (“DOL”) adopted a similar standard for who it considered a “joint employer” under the Fair Labor Standards Act (“FLSA”) and the Migrant and Seasonal Agricultural Worker Protection Act shortly thereafter.

Neither of these controversial steps has fared well. The Browning-Ferris decision has been under attack in courts, while the DOL rescinded its guidance earlier this year under new Labor Secretary Alex Acosta.

Legislative efforts also have been made to give further guidance to businesses that have struggled with the uncertain and convoluted joint employer scheme. Recently, the U.S. House of Representatives Education and Workforce Committee approved a bill that would amend both the NLRA and FLSA to require that a company exert “direct, actual and immediate” control over workers to be considered an employer.

We will continue to monitor this legislation and provide any updates. For now, however, employers need to know that the Browning-Ferris standard is still in effect.

If you have any questions about federal, state, or local wage and hour laws, please contact Tim Holdsworth at [email protected] or any of the attorneys in FMG’s Labor & Employment Law Section.

Wage and Hour Issues Evolving at a Rapid Pace

Posted on: March 6th, 2013

By: Brad Adler and Marty Heller

ConfidentialWage and hour lawsuits continue to be some of the fastest growing civil suits in our court system. In Georgia alone, FLSA lawsuits increased 40 percent in 2012, outpacing the approximately 13 percent increase nationwide by a significant margin.

Mirroring this increase in suits is an increase in significant decisions interpreting various aspects of the FLSA. For instance, the settlement of FLSA cases is an area that continues to be ripe for debate. Traditionally, courts have held that FLSA lawsuits cannot be settled unless the court reviews and approves the parties’ settlement agreement. Lynn’s Food Stores, Inc. v. U.S. Dept. of Labor, 679 F.2d 1350, 1353 (11th Cir. 1982).

A recent ruling from the Eastern District of New York, however, challenges this notion. In Picerni v. Bilingual SEIT & Preschool, Inc., the court concluded that private settlements of FLSA cases generally do not require court approval. The court distinguished the Lynn ruling as applying only in cases where there are atypical facts, such as pro se plaintiffs or where the defendant settles to avoid a Department of Labor investigation. While this case provides hope that a new trend may be established allowing settlement of FLSA cases without court approval, the Eleventh Circuit precedent set in the Lynn’s case continues to control wage and hour claims brought in federal courts in the states of Georgia, Florida and Alabama.

The requirement that courts review and approve FLSA settlements can be significant for employers, because it creates a potential public relations problem since most employers want settlement agreements to remain confidential. In non-FLSA cases, employers avoid this issue by including a confidentiality clause in the settlement agreement. The inclusion of such a clause in a typical employment claim is expected (and lawful), but there is a growing trend among federal judges to reject settlement agreements in FLSA claims that contain confidentiality provisions.

A recent case in the U.S. District Court for the Northern District of Georgia highlights this trend. The parties (both represented by counsel) submitted a proposed settlement agreement, which contained a confidentiality provision, for review and approval. The Court rejected the agreement due to the confidentiality provision, stating “[a] confidentiality provision furthers resolution of no bona fide dispute between the parties; rather, compelled silence unreasonably frustrates implementation of the ‘private-public’ rights granted by the FLSA and thwarts Congress’s intent to insure widespread compliance with the statute.” The Court also found that sealing the settlement agreement “thwarts Congress’s intent both to advance employees’ awareness of their rights and to ensure pervasive implementation of the FLSA in the workplace.”

This case represents a growing trend among federal courts around the country. As such, companies wishing to settle FLSA lawsuits likely will continue to find it increasingly difficult to ensure that such settlements are confidential. Of course, an employer and plaintiff are free to settle a wage and hour matter privately and the plaintiff may file a stipulation of dismissal. However, without court approval of the settlement, the release is not binding on any future claim by the plaintiff, and the employer runs the risk (albeit a low one) that the employee may re-file their action and seek additional compensation for any amount allegedly not paid as part of the resolution.

DOL Issues Final Rule Implementing FMLA Expansions for Military Caregivers and Airline Flight Crew Employees

Posted on: February 6th, 2013

By: La’Vonda McLean

injured service-memberOn February 5, 2013, the Department of Labor (“DOL”) issued its Final Rule implementing statutory amendments to the FMLA regarding leave for military caregivers and airline flight crews.  These statutory changes incorporate amendments made by the National Defense Authorization Act for Fiscal Year 2010 (“FY 2010 NDAA”) and the Airline Flight Crew Technical Corrections Act (“AFCTCA”).  The final rule also clarifies changes regarding the calculation of intermittent or reduced schedule leave.

Before the FY 2010 NDAA was enacted, military caregiver leave was limited to eligible employees who were the family members of current service-members with a serious injury or illness incurred in the line of duty on active duty.  The DOL’s Final Rule, however, expands military caregiver leave to eligible employees who are family members of certain veterans with a serious injury or illness incurred or aggravated in the line of duty on active duty and that manifested before or after the veteran left active duty.

The Final Rule expands the definition of serious injury or illness for a current service-member to include preexisting conditions that were aggravated by service in the line of duty on active duty.  The Final Rule also expands qualifying exigency leave to eligible employees with a spouse, son, daughter, or parent in the Regular Armed Forces.  Before the Final Rule, a qualifying exigency only included members of the National Guard and Reserves.

The DOL’s Final Rule also amends the regulations to implement the AFCTCA.  The AFCTCA established a special minimum hours of service eligibility requirement for airline flight crew-members and flight attendants that reflect the unique scheduling requirements of the airline industry.  The Final Rule modifies the FMLA’s existing rules so that airline flight crew-members and flight attendants are better able to qualify for coverage under the FMLA based on the hours of service eligibility requirement.

The DOL’s announcement is available here.